# EDGAR Filing Document

**Accession Number:** 0001911795
**File Stem:** 0001193125-26-187158
**Filing Date:** 2026-4
**Character Count:** 1929516
**Document Hash:** beec00eb0c5e1272e20988fd7b6d18da
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001193125-26-187158.hdr.sgml**: 20260428

**ACCESSION NUMBER**: 0001193125-26-187158

**CONFORMED SUBMISSION TYPE**: 486BPOS

**PUBLIC DOCUMENT COUNT**: 27

**FILED AS OF DATE**: 20260428

**DATE AS OF CHANGE**: 20260428

**EFFECTIVENESS DATE**: 20260430

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** PIMCO California Flexible Municipal Income Fund
- **CENTRAL INDEX KEY:** 0001911795

**ORGANIZATION NAME:**
- **EIN:** 000000000
- **STATE OF INCORPORATION:** MA

**FILING VALUES:**
- **FORM TYPE:** 486BPOS
- **SEC ACT:** 1940 Act
- **SEC FILE NUMBER:** 811-23781
- **FILM NUMBER:** 26908180

**BUSINESS ADDRESS:**
- **STREET 1:** 1633 BROADWAY
- **CITY:** NEW YORK
- **STATE:** NY
- **ZIP:** 10019
- **BUSINESS PHONE:** 844-312-2113

**MAIL ADDRESS:**
- **STREET 1:** 1633 BROADWAY
- **CITY:** NEW YORK
- **STATE:** NY
- **ZIP:** 10019
**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** PIMCO California Flexible Municipal Income Fund
- **CENTRAL INDEX KEY:** 0001911795

**ORGANIZATION NAME:**
- **EIN:** 000000000
- **STATE OF INCORPORATION:** MA

**FILING VALUES:**
- **FORM TYPE:** 486BPOS
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 333-262811
- **FILM NUMBER:** 26908179

**BUSINESS ADDRESS:**
- **STREET 1:** 1633 BROADWAY
- **CITY:** NEW YORK
- **STATE:** NY
- **ZIP:** 10019
- **BUSINESS PHONE:** 844-312-2113

**MAIL ADDRESS:**
- **STREET 1:** 1633 BROADWAY
- **CITY:** NEW YORK
- **STATE:** NY
- **ZIP:** 10019

?xml version='1.0' encoding='ASCII'? PIMCO California Flexible Municipal Income Fund

As filed with the Securities and Exchange Commission on April 28, 2026

1933 Act File No. 333-262811

1940 Act File No. 811-23781

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM N-2

(Check appropriate box or boxes)

REGISTRATION STATEMENT

☒

UNDER

THE SECURITIES ACT OF 1933

Pre-Effective Amendment No.

☐Post-Effective Amendment No. 4

☒

and

REGISTRATION STATEMENT

☒

UNDER

THE INVESTMENT COMPANY ACT OF 1940

Amendment No. 6

☒

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PIMCO California Flexible Municipal Income Fund

(Exact Name of Registrant as Specified in Charter)

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1633 Broadway

New York, New York 10019

(Address of Principal Executive Offices)

(Number, Street, City, State, Zip Code)

(844) 312-2113

(Registrant's Telephone Number, including Area Code)

Ryan G. Leshaw

c/o Pacific Investment Management Company LLC

650 Newport Center Drive

Newport Beach, California 92660

(Name and Address (Number, Street, City, State, Zip Code) of Agent for Service)

Copies of Communications to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

David C. Sullivan, Esq. Adam M. Schlichtmann, Esq.Ropes & Gray LLPPrudential Tower, 800 Boylston StreetBoston, Massachusetts 02199 Douglas P. Dick, Esq.Adam T. Teufel, Esq.Dechert LLP1900 K Street, N.W.Washington, D.C. 20006

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Approximate Date of Proposed Public Offering:

As soon as practicable after the effective date of this Registration Statement.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

☐ Check box if the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans.

☒ Check box if any securities being registered on this Form will be offered on a delayed or continuous basis in reliance on Rule 415 under the Securities Act of 1933 ("Securities Act"), other than securities offered in connection with a dividend reinvestment plan.

☐ Check box if this Form is a registration statement pursuant to General Instruction A.2 or a post-effective amendment thereto.

☐ Check box if this Form is a registration statement pursuant to General Instruction B or a post-effective amendment thereto that will become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act.

☐ Check box if this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction B to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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| | | | |
|:---|:---|:---|:---|
| It is proposed that this filing will become effective (check appropriate box): | It is proposed that this filing will become effective (check appropriate box): | It is proposed that this filing will become effective (check appropriate box): | It is proposed that this filing will become effective (check appropriate box): |
| ☐ | when declared effective pursuant to Section 8(c), or as follows: | when declared effective pursuant to Section 8(c), or as follows: | when declared effective pursuant to Section 8(c), or as follows: |
| ☐ | immediately upon filing pursuant to paragraph (b) of <br>Rule 486.<br>| ☒ | on April 30, 2026 pursuant to paragraph (b) of <br>Rule 486.<br>|
| ☐ | 60 days after filing pursuant to paragraph (a) of <br>Rule 486.<br>| ☐ | on (date) pursuant to paragraph (a) of Rule 486. |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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| | |
|:---|:---|
| If appropriate, check the following box: | If appropriate, check the following box: |
| ☐ | This post-effective amendment designates a new effective date for a previously filed post-effective amendment. |
| ☐ | This Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities <br>Act, and the Securities Act registration statement number of the earlier effective registration statement for the <br>same offering is: ______.<br>|
| ☐ | This Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, and the <br>Securities Act registration statement number of the earlier effective registration statement for the same offering is: <br>______.<br>|
| ☐ | This Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, and the <br>Securities Act registration statement number of the earlier effective registration statement for the same offering is: <br>______.<br>|

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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| | |
|:---|:---|
| Check each box that appropriately characterizes the Registrant: | Check each box that appropriately characterizes the Registrant: |
| ☒ | Registered Closed-End Fund (closed-end company that is registered under the Investment Company Act of 1940 <br>("Investment Company Act")).<br>|
| ☐ | Business Development Company (closed-end company that intends or has elected to be regulated as a business <br>development company under the Investment Company Act).<br>|
| ☒ | Interval Fund (Registered Closed-End Fund or a Business Development Company that makes periodic repurchase <br>offers under Rule 23c-3 under the Investment Company Act).<br>|
| ☐ | A.2 Qualified (qualified to register securities pursuant to General Instruction A.2 of this Form). |
| ☐ | Well-Known Seasoned Issuer (as defined by Rule 405 under the Securities Act). |
| ☐ | Emerging Growth Company (as defined by Rule 12b-2 under the Securities Exchange Act of 1934 ("Exchange <br>Act").<br>|
| ☐ | If an Emerging Growth Company, indicate by check mark if the registrant has elected not to use the extended <br>transition period for complying with any new or revised financial accounting standards provided pursuant to <br>Section 7(a)(2)(B) of Securities Act.<br>|
| ☐ | New Registrant (registered or regulated under the Investment Company Act for less than 12 calendar months <br>preceding this filing).<br>|

---

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EXPLANATORY NOTE

This Post-Effective Amendment No. 4 (the "Amendment") to the Registration Statement on Form N-2 of PIMCO

California Flexible Municipal Income Fund (the "Registrant") is being filed pursuant to Rule 486(b) under the

Securities Act of 1933, as amended, to provide updated financial information and make certain other changes to the

Registrant's Prospectus and Statement of Additional Information.

This Amendment is organized as follows: (a) Prospectus; (b) Statement of Additional Information; and (c) Part C

information relating to the Registrant.

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PIMCO California Flexible Municipal Income Fund

Prospectus

April 30, 2026

PIMCO California Flexible Municipal Income Fund

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

  <u>Common Shares</u>   <br>   <u>InstitutionalClass</u> <u>ClassA-1</u> <u>ClassA-2</u> <u>ClassA-3</u> <u>ClassA-4</u> <br> PIMCO California Flexible Municipal Income Fund CAFLX CAFMX CAFNX CAFOX CAFPX

Neither the U.S. Securities and Exchange Commission nor the U.S. Commodity

Futures Trading Commission has approved or disapproved of these securities or

determined that this prospectus is truthful or complete. Any representation to

the contrary is a criminal offense.

The Fund.

PIMCO California Flexible Municipal Income Fund (the "Fund") is a

diversified,

closed-end management investment company that continuously offers its shares of beneficial

interest, par value of $0.00001 per share (the "Common Shares"), and is operated as an

"interval fund." The Fund currently has five separate classes of Common Shares: Institutional

Class, Class A-1, Class A-2, Class A-3 and Class A-4.

Investment Objectives.

The Fund seeks to provide high current income exempt from federal

and California income tax. Capital appreciation is a secondary objective.

Investment Strategy.

The Fund attempts to achieve these objectives by investing, under

normal circumstances, at least 80% of its net assets (plus any borrowings for investment

purposes) in a portfolio of municipal bonds and other municipal securities (including

investments in loans, pools of loans, mortgages, pools of mortgages, and other debt

instruments), the interest from which, in the opinion of bond counsel for the issuer at the time

of issuance (or on the basis of other authority believed by Pacific Investment Management

Company LLC ("PIMCO" or the "Investment Manager") to be reliable), is exempt from federal

income tax and California income tax (i.e., excluded from gross income for income tax

purposes but not necessarily exempt from the alternative minimum tax or from the income

taxes of any other state or of a local government) (the "80% policy"). To a lesser extent, the

Fund also expects to invest in a full range of preferred securities with an emphasis on

preferred securities that, at the time of issuance, are eligible to pay dividends that qualify for

certain favorable federal income tax treatment.

Portfolio Contents.

California municipal bonds generally are issued by or on behalf of the

State of California and its political subdivisions, financing authorities and their agencies. By

concentrating its investments in California municipal securities, the Fund will be subject to

California State-Specific Risk, among other risks. Both within and outside the 80% policy, the

Fund may invest in debt securities of an issuer located outside of California. The Fund's 80%

policy is a fundamental policy, which may not be changed without the approval of the holders

of a majority of the Fund's outstanding Common Shares and Preferred Shares (as defined

![](g121406g2img4604813b2.gif)

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below) voting together as a single class, and of the holders of a majority of the outstanding Preferred Shares voting as a separate class.

The Fund may invest without limit in municipal bonds and other securities that are rated below investment grade (or unrated but determined by

PIMCO to be of comparable quality). Bonds 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 "junk bonds." The Fund may also invest without limit

in investment grade securities.

Included within the general category of municipal bonds in which the Fund may invest are loans (including participations and assignments) and

participations in lease obligations.

The Fund may invest in and/or originate loans, including, without limitation, to, on behalf of, authorized by, sponsored by, and/or in connection

with a project for which authority and responsibility lies with one or more U.S. states or territories, cities in a U.S. state or territory, or political

subdivisions, agencies, authorities or instrumentalities of such states, territories or cities, which may be in the form of whole loans, assignments,

participations, secured and unsecured notes, senior and second lien loans, mezzanine loans, bridge loans or similar investments, including to

borrowers that are unrated or have credit ratings that are determined by one or more nationally recognized statistical rating organizations

("NRSROs") and/or PIMCO to be below investment grade.

In addition to the other types of securities and assets described in this section, the Fund may invest the balance of its assets (i.e., not towards its

80% policy noted above) in securities and assets that produce taxable income. Such assets are normally expected to include, but are not limited

to, preferred securities, with an emphasis on preferred securities that, at the time of issuance, are eligible to pay dividends that qualify for certain

favorable federal income tax treatment, such as dividends that are treated as qualified dividend income and eligible for the dividends received

deduction (in each instance, provided certain requirements and holding periods are satisfied).

It is possible that the Fund could own no preferred securities at any given time, including, for example, if municipal securities are expected to

produce a higher yield than preferred securities on an after-tax basis.

Subject to the Fund's investment policies described above, the Fund may invest in other securities, including commercial paper, securities eligible

for resale under Rule 144A of the Securities Act of 1933, as amended (the "Securities Act"), other privately placed securities and other debt

securities subject to federal and/or California income tax, including privately negotiated debt obligations with respect to which the principal and/or

interest is determined by reference to the performance of a benchmark asset, market or interest rate (an "embedded index"), such as specific

securities, an index of securities or specified interest rates, or the differential performance of two assets or markets, such as indexes reflecting

bonds. The rate of interest on an income-producing security may be fixed, floating or variable. The Fund may also engage in credit spread trades.

A credit spread trade is an investment position relating to a difference in the prices or interest rates of two bonds or other securities, in which the

value of the investment position is determined by changes in the difference between the prices or interest rates, as the case may be, of the

respective securities. The Fund may purchase and sell securities on a when-issued, delayed delivery or forward commitment basis and may

engage in short sales. 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. The Fund may also invest up to 5% of its total assets in securities of

other investment companies (including those advised by PIMCO), including closed-end funds, exchange-traded funds and other open-end funds,

that invest primarily in municipal bonds and other municipal securities of the types in which the Fund may invest directly.

The Fund may, but is not required to, invest in derivative instruments, such as options, futures or forward contracts or swap agreements. For

purposes of the Fund's 80% policy, the Fund currently values its derivative instruments based on their market value. The Fund may, without

limitation, seek to obtain market exposure to the securities in which it primarily invests by entering into a series of purchase and sale contracts or

by using other investment techniques (such as buybacks or dollar rolls). The Fund may use derivative instruments for other purposes, including

to seek to increase liquidity, provide efficient portfolio management, broaden investment opportunities (including taking short or negative

positions), implement a tax or cash management strategy, gain exposure to a particular security or segment of the market, modify the effective

duration of the Fund's portfolio investments and/or enhance total return.

To the extent consistent with the applicable liquidity requirements for interval funds under Rule 23c-3 of the Investment Company Act of 1940, as

amended, the Fund may invest without limit in illiquid investments.

Interval Fund/Repurchase Offers.

The Fund is an "interval fund," a type of fund that, in order to provide liquidity to shareholders, has adopted a

fundamental investment policy to make quarterly offers to repurchase between 5% and 25% of its outstanding Common Shares at net asset

value. Subject to applicable law and approval of the Fund's Board of Trustees, for each quarterly repurchase offer, the Fund currently expects to

offer to repurchase 10% of the Fund's outstanding Common Shares at net asset value.

Leverage.

The Fund currently utilizes leverage through its outstanding Remarketable Variable Rate MuniFund Term Preferred Shares ("RVMTP

Shares" and, together with any other preferred shares the Fund may have outstanding, "Preferred Shares"). The Fund may also choose to add

leverage through the use of tender option bonds, the issuance of additional Preferred Shares or the use of reverse repurchase agreements,

selling credit default swaps, dollar rolls/buybacks and borrowings, such as through bank loans or commercial paper and/or other credit facilities.

The Fund may issue additional Preferred Shares without the approval of holders of Common Shares ("Common Shareholders"). If the Fund

issues additional 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. Leveraging transactions pursued by the

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ii

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Fund may increase its duration and sensitivity to interest rate

changes and other market risks

. The Fund may also enter into transactions other

than those noted above that may give rise to a form of leverage including, among others, futures and forward contracts (including foreign

currency exchange contracts), total return swaps and other derivative transactions, loans of portfolio securities, short sales and when-issued,

delayed delivery and forward commitment transactions. The Fund may utilize certain kinds of leverage, including, without limitation, tender option

bonds, opportunistically and may choose to increase or decrease, or eliminate entirely, its use of 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. The Fund may also determine

to increase its leverage through the issuance of additional Preferred Shares, or decrease the leverage it currently maintains through its

outstanding Preferred Shares through Preferred Share redemptions or tender offers and may or may not determine to replace such leverage

through other sources. By using leverage, the Fund seeks to obtain a higher return for Common Shareholders than if the Fund did not use

leverage. Leveraging is a speculative technique and there are special risks and costs involved. There can be no assurance that a leveraging

strategy will be used or that it will be successful during any period in which it is employed.

Investment Manager.

The Fund's investment manager is Pacific Investment Management Company LLC. As of December 31,

2025

, PIMCO

had approximately $

2.26 trillion in assets under management

, including $1.84 trillion in third-party client assets

.

■

The Fund's Common Shares are not listed for trading on any national securities exchange. The Fund's Common Shares

have no trading market and no market is expected to develop.

■

An investment in the Fund is not suitable for investors who need certainty about their ability to access all of the money

they invest in the short term.

■

Even though the Fund will make quarterly repurchase offers for its outstanding Common Shares, currently expected to

be for 10% per quarter, investors should consider Common Shares of the Fund to be an illiquid investment.

■

There is no guarantee that you will be able to sell your Common Shares at any given time or in the quantity that you

desire.

■

There is no assurance that the Fund will be able to make any distributions to Common Shareholders and, if it makes

distributions, that they will not decline or that any distributions will be at any particular level or correspond to any

particular "yield."

Institutional Class, Class A-1, Class A-2, Class A-3 and Class A-4 Common Shares are offered in this prospectus. Each share class represents

an investment in the same portfolio of investments, but each class has its own expense structure and arrangements for shareholder services or

distribution, which allows you to choose the class that best fits your situation and eligibility requirements. Class A-1, Class A-2, Class A-3 and

Class A-4 Common Shares are primarily offered and sold to retail investors by certain broker-dealers that are members of the Financial Industry

Regulatory Authority and that have agreements with PIMCO Investments LLC, the Fund's principal underwriter and distributor, to sell Class A-1,

Class A-2, Class A-3 and/or Class A-4 Common Shares, but may be made available through other financial firms, including banks and trust

companies and to specified benefit plans and other retirement accounts. Only certain investors are eligible to purchase Institutional

Class Common Shares. See "Plan of Distribution – Share Classes."

Institutional Class

The minimum initial investment for Institutional Class Common Shares is $1 million per account, except that the minimum investment may be

higher or lower for certain financial firms that submit orders on behalf of their customers,

including retail investors in separately managed

accounts (i.e., wrap accounts) managed by PIMCO,

the Trustees and certain employees and their extended family members of PIMCO and its

affiliates. There is no minimum subsequent investment amount. See "Plan of Distribution – Share Classes."

Class A-1, Class A-2, Class A-3 and Class A-4

The minimum initial investment for Class A-1, Class A-2, Class A-3 and Class A-4 Common Shares is $2,500 per account, except that the

minimum investment may be higher or lower for certain financial firms that submit orders on behalf of their customers, the Trustees and certain

employees and their extended family members of PIMCO and its affiliates. The minimum subsequent investment amount for Class A-1,

Class A-2, Class A-3 and Class A-4 Common Shares is $50. See "Plan of Distribution – Purchasing Shares."

Investors should carefully consider the Fund's risks and investment objectives, as an investment in the Fund may not be appropriate

for all investors and is not designed to be a complete investment program.

Before buying any of the Fund's Common Shares, you should read the discussion of the principal risks of investing in the Fund in

"Principal Risks of the Fund" beginning on page

of this prospectus. No assurance can be given that the Fund's investment

objectives will be achieved, and you could lose all of your investment in the Fund.

The Fund's Common Shares do not represent a deposit or obligation of, and are not guaranteed or endorsed by, any bank or other insured

depository institution, and are not federally insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other

government agency.

The Fund's Common Shares are sold at a public offering price equal to their net asset value per share, plus a sales charge, where applicable.

See "Plan of Distribution-Purchasing Shares."

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iii

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Please read this prospectus carefully before deciding whether to invest and retain it for future reference. It sets forth concisely the information

about the Fund that a prospective investor ought to know before investing in the Fund. The Fund has filed with the Securities and Exchange

Commission ("SEC") a Statement of Additional Information dated April 30,

2026

, as supplemented from time to time

(the "Statement of Additional

Information")

, containing additional information about the Fund

. The Statement of Additional Information is incorporated by reference into this

prospectus, which means it is part of this prospectus for legal purposes. The Fund also produces both annual and semi-annual reports that will

contain important information about the Fund. Copies of the Statement of Additional Information and the Fund's annual and semi-annual reports,

when available, may be obtained upon request, without charge, by calling 844.312.2113 or by writing to the Fund at Regulatory Document

Request, 650 Newport Center Drive, Newport Beach, California 92660. You may also call this toll-free telephone number to request other

information about the Fund or to make shareholder inquiries. The Statement of Additional Information and the most recent annual and

semi-annual reports are available free of charge on the Fund's website at www.pimco.com. Information on, or accessible through, the Fund's

website is not a part of, and is not incorporated into, this prospectus. You may also access reports and other information about the Fund on the

EDGAR Database on the SEC's Internet site at www.sec.gov. You may get copies of this information, with payment of a duplication fee, by

electronic request at the following e-mail address: publicinfo@sec.gov.

The Fund has not authorized anyone to provide you with information other than that contained or incorporated by reference in this prospectus.

The Fund does not take any responsibility for, and does not provide any assurances as to the reliability of, any other information that others may

give you. The Fund is not making an offer of these securities in any jurisdiction where the offer is not permitted. You should not assume that the

information contained in this prospectus is accurate as of any date other than the date on the front of this prospectus. The Fund's business,

financial condition, results of operations and prospects may have changed since that date.

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iv

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**Table of Contents**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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| | |
|:---|:---|
|  | Page |
| [Prospectus Summary](#xx_7ac25417-c08c-447e-a43b-c48df99907da_1) | 1 |
| [Summary of Fund Expenses](#xx_fc96a39d-296f-4c83-8079-438a285af8fe_1) | 28 |
| [Financial Highlights](#xx_209e9f22-c914-4365-b5c4-d2d69101072c_2) | 31 |
| [The Fund](#xx_cd97e83e-2f6f-46cf-969c-2ceff3975100_1) | 34 |
| [Use of Proceeds](#xx_cd97e83e-2f6f-46cf-969c-2ceff3975100_1) | 34 |
| [The Fund's Investment Objectives and Strategies](#xx_cd97e83e-2f6f-46cf-969c-2ceff3975100_1) | 34 |
| [Use of Leverage](#xx_cd97e83e-2f6f-46cf-969c-2ceff3975100_15) | 48 |
| [Principal Risks of the Fund](#xx_cd97e83e-2f6f-46cf-969c-2ceff3975100_17) | 50 |
| [How the Fund Manages Risk](#xx_cd97e83e-2f6f-46cf-969c-2ceff3975100_38) | 71 |
| [Management of the Fund](#xx_398bcd4e-0da1-4646-aa80-fbd177840fbd_1) | 73 |
| [Plan of Distribution](#xx_398bcd4e-0da1-4646-aa80-fbd177840fbd_4) | 76 |
| [Information Regarding State Escheatment Laws](#xx_398bcd4e-0da1-4646-aa80-fbd177840fbd_14) | 86 |
| [Periodic Repurchase Offers](#xx_398bcd4e-0da1-4646-aa80-fbd177840fbd_15) | 87 |
| [How Fund Shares are Priced](#xx_398bcd4e-0da1-4646-aa80-fbd177840fbd_17) | 89 |
| [Distributions](#xx_6231f753-baae-4116-86b5-0cd42bd7954b_1) | 92 |
| [Dividend Reinvestment Plan](#xx_6231f753-baae-4116-86b5-0cd42bd7954b_2) | 93 |
| [Description of Capital Structure and Shares](#xx_6231f753-baae-4116-86b5-0cd42bd7954b_2) | 93 |
| [Anti-Takeover and Other Provisions in the Declaration of Trust and Bylaws](#xx_6231f753-baae-4116-86b5-0cd42bd7954b_7) | 98 |
| [Tax Matters](#xx_6231f753-baae-4116-86b5-0cd42bd7954b_8) | 99 |
| [Shareholder Servicing Agent, Custodian and Transfer Agent](#xx_6231f753-baae-4116-86b5-0cd42bd7954b_10) | 101 |
| [Independent Registered Public Accounting Firm](#xx_6231f753-baae-4116-86b5-0cd42bd7954b_10) | 101 |
| [Legal Matters](#xx_6231f753-baae-4116-86b5-0cd42bd7954b_11) | 102 |
| [Appendix](#xx_b1802296-caca-4d11-a0b1-725b75c7e868_1)<br>[A - Description of Securities Ratings](#xx_b1802296-caca-4d11-a0b1-725b75c7e868_1)<br>| A<br>-<br>1<br>|

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PIMCO California Flexible Municipal

Income Fund

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Prospectus Summary

This is only a summary. This summary may not contain all of the

information that you should consider before investing in PIMCO

California Flexible Municipal Income Fund's (the "Fund") shares of

beneficial interest, par value of $0.00001 per share (the "Common

Shares"). You should review the more detailed information contained in

this prospectus and in the Statement of Additional Information. In

particular, you should carefully read the risks of investing in the Fund's

Common Shares, as discussed under "Principal Risks of the Fund."

The Fund

The Fund is a

diversified, closed-end management investment company

that continuously offers its Common Shares. The Fund commenced

operations on June 27, 2022. The Fund is operated as an "interval

fund" (as defined below). The Fund currently has five separate classes of

Common Shares: Institutional Class, Class A-1, Class A-2, Class A-3 and

Class A-4. An investment in the Fund may not be appropriate for all

investors.

Continuous Offering

The Fund continuously offers its Common Shares through PIMCO

Investments LLC (the "Distributor"), as principal underwriter, on a best

efforts basis. Except as set forth below, Common Shares are sold at their

offering price, which is net asset value ("NAV") per share. While neither

the Fund nor the Distributor impose an initial sales charge on

Institutional Class, Class A-1 or Class A-3 Common Shares, if you buy

Institutional Class, Class A-1 or Class A-3 Common Shares through

certain financial firms, they may directly charge you transaction or other

fees in such amount as they may determine. Please consult your

financial firm for additional information.

Unless you are eligible for a waiver, Class A-2 and Class A-4 Common

Shares are sold at a public offering price equal to their net asset value

plus an initial sales charge. The initial sales charge varies depending

upon the size of your purchase. The minimum initial investment for

Institutional Class Common Shares is $1 million per account. The

minimum initial investment for Class A-1, Class A-2, Class A-3 and

Class A-4 Common Shares is $2,500 per account. These investment

minimums may be higher or lower for certain financial firms that submit

orders on behalf of their customers, the Trustees and certain employees

and their extended family members of Pacific Investment Management

Company LLC ("PIMCO" or the "Investment Manager") and its

affiliates. The minimum subsequent investment amount for Class A-1,

Class A-2, Class A-3 and Class A-4 Common Shares is $50. Proceeds

from the offering will be held by the Fund's custodian.

For additional information regarding each share class please see "Plan

of Distribution – Share Classes" in this prospectus. The Fund and the

Distributor each reserves the right, in its sole discretion, to reject any

purchase order, in whole or in part. Shareholders will not have the right

to redeem their Common Shares. However, as described below, in order

to provide some liquidity to shareholders, the Fund will conduct periodic

repurchase offers for a portion of its outstanding Common Shares.

Periodic Repurchase Offers

The Fund is an "interval fund," a type of fund that, in order to provide

liquidity to shareholders, has adopted a fundamental investment policy

to make quarterly offers to repurchase between 5% and 25% of its

outstanding Common Shares at NAV. Subject to applicable law and

approval of the Fund's Board of Trustees (the "Board" or "Board of

Trustees"), for each quarterly repurchase offer, the Fund currently

expects to offer to repurchase 10% of the Fund's outstanding Common

Shares at NAV. Written notification of each quarterly repurchase offer

(the "Repurchase Offer Notice") will be sent to shareholders at least

21 calendar days before the repurchase request deadline (i.e., the date

by which shareholders can tender their Common Shares in response to a

repurchase offer) (the "Repurchase Request Deadline"). Subject to

Board approval, Repurchase Request Deadlines are expected to occur

each February, May, August and November, and Repurchase Offer

Notices are expected to be sent to shareholders each January, April, July

and October preceding each such Repurchase Request Deadline. The

Fund's Common Shares are not listed on any securities exchange, and

the Fund

anticipates that no

secondary market will develop for its

Common Shares. Accordingly,

shareholders

may not be able to sell

Common Shares when and/or in the amount

desired

. Investors should

consider Common Shares of the Fund to be an illiquid investment. Thus,

the Common Shares are appropriate only as a long-term investment. In

addition, the Fund's repurchase offers may subject the Fund and

shareholders to special risks. See "Principal Risks of the Fund —

Repurchase Offers Risk."

Investment Objectives and Strategies

Investment Objectives

The Fund seeks to provide high current income exempt from federal and

California income tax. Capital appreciation is a secondary objective. The

Fund attempts to achieve these objectives by investing, under normal

circumstances, at least 80% of its net assets (plus any borrowings for

investment purposes) in a portfolio of municipal bonds and other

municipal securities, the interest from which, in the opinion of bond

counsel for the issuer at the time of issuance (or on the basis of other

authority believed by PIMCO to be reliable), is exempt from federal

income tax and California income tax (i.e., excluded from gross income

for income tax purposes but not necessarily exempt from the alternative

minimum tax or from the income taxes of any other state or of a local

government), as described under "Portfolio Contents" below. In

pursuing its investment objectives, the Fund may invest without limit in

investment grade securities and may invest without limit in below

investment grade securities.

Portfolio Management Strategies

Flexible allocation strategy.

The Fund seeks to achieve its

investment objectives by utilizing a flexible, multi-sector tax-efficient

approach to investing, under normal circumstances, primarily in

municipal bonds and other municipal securities that carry interest

payments that are exempt from federal and California income tax. The

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PIMCO California Flexible Municipal Income Fund \|

Prospectus

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principal issuers of these securities are state and local governments and

their agencies located in any of the fifty states, as well as in Puerto Rico

and other U.S. territories and possessions. To a lesser extent, the Fund

also expects to invest in a full range of preferred securities with an

emphasis on preferred securities that, at the time of issuance, are

eligible to pay dividends that qualify for certain favorable federal income

tax treatment. With PIMCO's macroeconomic analysis as the basis for

top-down investment decisions, the Fund seeks to offer investors an

actively-managed municipal bond portfolio that aims to capitalize on

what PIMCO believes are attractive opportunities in California and, to a

lesser extent, other states, and across sectors within the California and

U.S. municipal markets.

Investment selection strategies.

In selecting securities for the

Fund, PIMCO develops an outlook for interest rates and the economy,

analyzes credit and call risks, and uses other security selection

techniques. The proportion of the Fund's assets committed to

investment in securities with particular characteristics (such as quality,

sector, interest rate or maturity) varies based on PIMCO's outlook for the

U.S. economy.

PIMCO attempts to preserve and enhance the value of the Fund's

holdings relative to the municipal bond market, generally,

and may use

analytical models that test and evaluate the sensitivity of those holdings

to changes in interest rates and yield relationships. There is no

guarantee that PIMCO's investment selection techniques will produce

the desired results. In selecting investments for the Fund, PIMCO may

use proprietary quantitative models that are developed and maintained

by PIMCO, and which are subject to change over time without notice in

PIMCO's discretion.

Credit quality.

The Fund may invest without limit in municipal bonds

and other securities of any credit quality, including without limitation, in

securities that are, at the time of purchase, rated below "investment

grade" by at least one of Moody's Ratings ("Moody's"), S&P Global

Ratings ("S&P") or Fitch Ratings, Inc. ("Fitch"), or unrated but

determined by PIMCO to be of comparable quality

to securities so rated

.

"Investment grade" means a rating, in the case of Moody's, of Baa3 or

higher, or in the case of S&P and Fitch, of BBB- or higher. Bonds 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 "junk bonds." Bonds in

the lowest investment grade category may also be considered to

possess some speculative characteristics by certain rating agencies. The

Fund may also invest without limit in investment grade securities. The

Fund generally expects to invest at least 60% of its total assets in above

investment grade securities and not more than 40% of its total assets in

below investment grade securities, but may determine to allocate more

heavily or exclusively to either category at any time and from time to

time based on PIMCO's economic outlook, market conditions, and other

factors.

Independent credit analysis.

PIMCO relies primarily on its own

analysis of the credit quality and risks associated with individual

municipal bonds and other municipal securities 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 to identify investments that are undervalued 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 municipal

bonds or other securities.

Duration management.

The Fund does not target a specific duration

or maturity for the municipal bonds and other securities in which it

invests, and the Fund's average portfolio duration, as calculated by

PIMCO may vary significantly depending on market conditions and other

factors. 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. The longer a security's duration, the more sensitive it will be to

changes in interest rates. The portfolio managers focus on municipal

bonds with the potential to offer attractive current income, typically

looking for bonds that can provide consistently attractive current yields

or that are trading at competitive market prices. Capital appreciation, if

any, generally arises from decreases in interest rates or improving credit

fundamentals for a particular state, municipality or issuer.

Portfolio Contents

The Fund will invest, under normal circumstances, at least 80% of its

net assets (plus any borrowings for investment purposes) in a portfolio

of municipal bonds and other municipal securities (including

investments in loans, pools of loans, mortgages, pools of mortgages,

and other debt instruments), the interest from which, in the opinion of

bond counsel for the issuer at the time of issuance (or on the basis of

other authority believed by PIMCO to be reliable), is exempt from

federal income tax and California income tax (i.e., excluded from gross

income for income tax purposes but not necessarily exempt from the

alternative minimum tax or from the income taxes of any other state or

of a local government) (the "80% policy"). California municipal bonds

generally are issued by or on behalf of the State of California and its

political subdivisions, financing authorities and their agencies. By

concentrating its investments in California municipal securities, the Fund

will be subject to California State-Specific Risk, among other risks. Both

within and outside the 80% policy, the Fund may invest in debt

securities of an issuer located outside of California. The Fund's 80%

policy is a fundamental policy, which may not be changed without the

approval of the holders of a majority of the Fund's outstanding

Common Shares and Preferred Shares (as defined below) voting

together as a single class, and of the holders of a majority of the

outstanding Preferred Shares voting as a separate class.

The Fund may invest without limit in municipal bonds and other

securities that are rated below investment grade (or unrated but

determined by PIMCO to be of comparable quality). Bonds 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 "junk bonds." The Fund

may also invest without limit in investment grade securities.

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April 30,

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Prospectus

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PIMCO California Flexible Municipal Income Fund

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Included within the general category of municipal bonds in which the

Fund may invest are loans (including participations and assignments of

loans and loans originated by the Fund) and participations in lease

obligations. A lease obligation is an obligation in the form of a lease or

installment purchase that is issued by a state or local government to

acquire equipment and facilities. Income from such obligations generally

is exempt from state and local tax in the state of issuance. Lease

obligations may be secured or unsecured. Lease obligations do not

constitute general obligations of the municipality for which the

municipality's taxing power is pledged.

The Fund may invest in and/or originate loans, including, without

limitation, to, on behalf of, authorized by, sponsored by, and/or in

connection with a project for which authority and responsibility lies with

one or more U.S. states or territories, cities in a U.S. state or territory, or

political subdivisions, agencies, authorities or instrumentalities of such

states, territories or cities, which may be in the form of whole loans,

assignments, participations, secured and unsecured notes, senior and

second lien loans, mezzanine loans, bridge loans or similar investments,

including to borrowers that are unrated or have credit ratings that are

determined by one or more NRSROs and/or PIMCO to be below

investment grade. 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

Internal Revenue Code of 1986, as amended (the "Code"), in order to

qualify as a regulated investment company (a "RIC"). The loans

acquired by the Fund may be of the type that count towards the

Fund's 80% policy or they may be loans that produce income that is

subject to regular federal income tax or California income tax.

In addition to the other types of securities and assets described in this

section, the Fund may invest the balance of its assets (i.e., not towards

its 80% policy noted above) in securities and assets that produce

taxable income. Such assets are normally expected to include, but are

not limited to, preferred securities, with an emphasis on preferred

securities that, at the time of issuance, are eligible to pay dividends that

qualify for certain favorable federal income tax treatment, such as

dividends that are treated as qualified dividend income and eligible for

the dividends received deduction (in each instance, provided certain

requirements and holding periods are satisfied). The Fund may also

invest non-80% policy assets in other municipal bonds (like those of

other jurisdictions, such as New York and Puerto Rico). See "Tax

Matters." It is possible that the Fund could own no preferred securities

at any given time, including, for example, if municipal securities are

expected to produce a higher yield than preferred securities on an

after-tax basis.

Subject to the Fund's investment policies described above, the Fund may

invest in other securities, including commercial paper, securities eligible

for resale under Rule 144A of the Securities Act of 1933, as amended

(the "Securities Act"), and other privately placed securities, and other

debt securities subject to federal and/or California income tax, including

privately negotiated debt obligations with respect to which the principal

and/or interest is determined by reference to the performance of a

benchmark asset, market or interest rate (an "embedded index"), such

as specific securities, an index of securities or specified interest rates, or

the differential performance of two assets or markets, such as indexes

reflecting bonds. The rate of interest on an income-producing security

may be fixed, floating or variable. The Fund may also engage in credit

spread trades. A credit spread trade is an investment position relating to

a difference in the prices or interest rates of two bonds or other

securities, in which the value of the investment position is determined

by changes in the difference between the prices or interest rates, as the

case may be, of the respective securities. The Fund may purchase and

sell securities on a when-issued, delayed delivery or forward

commitment basis and may engage in short sales. The Fund may use

derivative instruments for other purposes, including to seek to increase

liquidity, provide efficient portfolio management, broaden investment

opportunities (including taking short or negative positions), implement

a tax or cash management strategy, gain exposure to a particular

security or segment of the market, modify the effective duration of the

Fund's portfolio investments and/or enhance total return. 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. The Fund may also

invest up to 5% of its total assets in securities of other investment

companies (including those advised by PIMCO), including closed-end

funds, exchange-traded funds and other open-end funds, that invest

primarily in municipal bonds and other municipal securities of the types

in which the Fund may invest directly.

The Fund may, but is not required to, invest in derivative instruments,

such as options, futures or forward contracts or swap agreements. For

purposes of the Fund's 80% policy, the Fund currently values its

derivative instruments based on their market value. The Fund may,

without limitation, seek to obtain market exposure to the securities in

which it primarily invests by entering into a series of purchase and sale

contracts or by using other investment techniques (such as buybacks or

dollar rolls).

The Fund has received exemptive relief from the Securities and

Exchange Commission (the "SEC") that, to the extent the Fund relies on

such relief, permits it to (among other things) co-invest with certain

other persons, including certain affiliates of the Investment Manager

and certain public or private funds managed by PIMCO and its affiliates,

subject to certain terms and conditions. The exemptive relief from the

SEC with respect to co

-

investments imposes extensive conditions on any

co-investments made in reliance on such relief.

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\| PIMCO California Flexible Municipal Income Fund

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Prospectus

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To the extent consistent with the applicable liquidity requirements for

interval funds under Rule 23c-3 under the Investment Company Act of

1940, as amended (the "Act"

or the "1940 Act"), the Fund may invest

without limit in illiquid investments.

Use of Leverage

The Fund currently utilizes leverage through its outstanding

Remarketable Variable Rate MuniFund Term Preferred Shares ("RVMTP

Shares" and, together with any other preferred shares the Fund may

have outstanding, "Preferred Shares"). The Fund may also choose to

add leverage through the use of tender option bonds, the issuance of

additional Preferred Shares or the use of reverse repurchase

agreements, selling credit default swaps, dollar rolls/buybacks or

borrowings, such as through bank loans or commercial paper and/or

other credit facilities. The Fund may also enter into transactions other

than those noted above that may give rise to a form of leverage

including, among others, futures and forward contracts (including

foreign currency exchange contracts), total return swaps and other

derivative transactions, loans of portfolio securities, short sales and

when-issued, delayed delivery and forward commitment transactions.

The Fund may utilize certain kinds of leverage, including, without

limitation, tender option bonds, opportunistically and may choose to

increase or decrease, or eliminate entirely, its use of 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.

The Fund may also determine to increase its leverage through the

issuance of additional Preferred Shares, or decrease the leverage it

currently maintains through its outstanding Preferred Shares through

Preferred Share redemptions or tender offers and may or may not

determine to replace such leverage. The Fund may issue additional

Preferred Shares without the approval of holders of Common Shares

("Common Shareholders"). If the Fund issues additional 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. Leveraging transactions pursued by the Fund may increase

its duration and sensitivity to interest rate

changes and other market

risks

. The Fund's net assets attributable to its Preferred Shares and the

net proceeds the Fund obtains from the issuance of additional Preferred

Shares or the use of tender option bonds or other forms of leverage will

be invested in accordance with the Fund's investment objectives and

policies as described in this prospectus. So long as the rate of return, net

of applicable Fund expenses, on the debt obligations and other

investments purchased by the Fund exceeds the dividend rates payable

on the Preferred Shares together with the costs to the Fund of other

leverage it utilizes, the investment of the Fund's assets attributable to

leverage will generate more income than will be needed to pay the costs

of the leverage. If so, and all other things being equal, the excess may be

used to pay higher dividends to Common Shareholders than if the Fund

were not so leveraged. There can be no assurance these circumstances

will occur.

The Fund is subject to the requirement under the Act 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 Act, the Fund is not permitted to issue Preferred Shares

unless, immediately after such issuance, the value of the Fund's total net

assets (as defined below) is at least 200% of the liquidation value of

any outstanding Preferred Shares and the newly issued 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, the Fund is

not 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 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 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 outstanding preferred

shares is 250% (or 200% when no preferred shares are 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 the Fund has outstanding preferred shares is 25% (or 20% when

no preferred shares are 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

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April 30,

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Prospectus

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PIMCO California Flexible Municipal Income Fund

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Section 18 of the 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.

The Fund's ability to utilize leverage is also limited by asset coverage

requirements and other guidelines imposed by the terms of the

Preferred Shares and are imposed by rating agencies that provide

ratings for the Preferred Shares which are more restrictive than the

limitations imposed by the Act noted above. Please see "Description of

Capital Structure and Shares - Preferred Shares."

Leveraging is a speculative technique and there are special risks and

costs involved. The Fund cannot assure you that its use of Preferred

Shares and any other forms of leverage (such as tender option bonds)

will be successful or result in a higher yield on your Common Shares.

When leverage is used, the net asset value of the Common Shares and

the yield to Common Shareholders will be more volatile. In addition,

dividends paid on Preferred Shares (including the Preferred Shareholder

Gross-Up (as described below)) and interest and other expenses borne

by the Fund with respect to its use of tender option bonds or other

forms of leverage are borne by the Common Shareholders (and not by

the holders of Preferred Shares ("Preferred Shareholders")) and result in

a reduction of the net asset value of the Common Shares. In addition,

because the fees received by the Investment Manager are based on the

total managed assets of the Fund, which includes total assets of the

Fund (including assets attributable to any reverse repurchase

agreements, dollar rolls/buybacks, tender option bonds, borrowings and

Preferred Shares that may be outstanding, if any), the Investment

Manager has a financial incentive for the Fund to use certain forms of

leverage (e.g., Preferred Shares and tender option bonds), which may

create a conflict of interest between the Investment Manager, on the

one hand, and the Common Shareholders, on the other hand.

The Fund also may borrow money in order to repurchase its shares or as

a temporary measure for extraordinary or emergency purposes,

including for the payment of dividends or the settlement of securities

transactions which otherwise might require untimely dispositions of

portfolio securities held by the Fund. Please see "Use of Leverage,"

"Principal Risks of the Fund – Leverage Risk" for additional information

regarding leverage and related risks.

Investment Manager

PIMCO serves as the Investment Manager for the Fund. Subject to the

supervision of the Board, PIMCO is responsible for managing the

investment activities of the Fund and the Fund's business affairs and

other administrative matters. David Hammer, Amit Arora and Kyle

Christine are jointly and primarily responsible for the day-to-day

management of the Fund.

PIMCO is located at 650 Newport Center Drive, Newport Beach, CA

92660. Organized in 1971, PIMCO provides investment management

and advisory services to private accounts of institutional and individual

clients and to RICs. PIMCO is a majority-owned indirect subsidiary of

Allianz SE, a publicly traded European insurance and financial services

company. As of December 31,

2025

, PIMCO had approximately $

2.26 trillion in assets under management

, including $1.84 trillion in

third-party client assets

.

Distributions

The Fund intends to distribute substantially all of its net investment

income to shareholders in the form of dividends. The Fund intends to

declare income dividends daily and distribute them monthly to

shareholders of record. Distributions can only be made from net

investment income after paying any accrued dividends to holders of the

Preferred Shares. At least annually, the Fund also intends to distribute to

you your pro rata share of any available net capital gain and taxable

ordinary income, if any. Net short-term capital gains may be paid more

frequently. The dividends that the Fund pays will depend on a number of

factors, including dividends payable on any Preferred Shares issued by

the Fund, including the Preferred Shareholder Gross-Up (as defined and

described below) (and expenses associated with other forms of

leverage).

Although it does not currently intend to do so, the Board may change

the Fund's dividend policy and the amount or timing of Fund

distributions, based on a number of factors. Unless shareholders specify

otherwise,

distributions

will be reinvested in Common Shares of the

Fund in accordance with the Fund's dividend reinvestment plan (the

"Plan"). The Fund may pay distributions from sources that may not be

available in the future and that are unrelated to the Fund's performance,

such as from offering proceeds and/or borrowings. See "Distributions"

and "Dividend Reinvestment Plan."

The Preferred Shares pay dividend distributions at a stated rate, which

rate is based generally on the assumption that such dividend

distributions will consist entirely of dividends that pass through the

character of exempt interest earned by the Fund and are therefore not

taxable to shareholders for regular federal and California income tax

purposes ("exempt-interest dividends"). Internal Revenue Service

("IRS") rules nonetheless require a RIC having two or more classes of

stock for U.S. federal income tax purposes to characterize amounts

distributed as dividends to each class for the taxable year in accordance

with their pro rata share of income or gains of any type. Therefore, the

Fund might be required to characterize a portion of dividends paid to

Preferred Shareholders as ordinary income or capital gain dividends. The

terms of such Preferred Shares provide further that, in the event less

than the entire amount of any particular dividend distribution paid

pursuant to the stated rate were to consist of "exempt-interest

dividends" (i.e., if a portion of any particular dividend were to derive

from ordinary income or capital gain, including short-term capital gain

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5 Prospectus

\| PIMCO California Flexible Municipal Income Fund

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Prospectus

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taxable as ordinary income when distributed), the amount of such

dividend would increase by an amount (the "Preferred Shareholder

Gross-Up") such that the after-tax amount of such dividend, as

increased by the Preferred Shareholder Gross-Up, would equal the total

amount the holder of such Preferred Shares would have received if the

dividend at the stated rate had consisted entirely of "exempt-interest

dividends." Any Preferred Shareholder Gross-Up would reduce the

amount that would otherwise be distributable to Common

Shareholders.

The Fund might not distribute all or a portion of any net capital gain for

a taxable year. If the Fund does not distribute all of its net capital gain

for a taxable year, it will pay federal income tax on the retained gain.

Each Common Shareholder of record as of the end of the Fund's taxable

year will include in income for federal income tax purposes, as

long-term capital gain, his or her share of the retained gain, will be

deemed to have paid his or her proportionate share of the tax paid by

the Fund on such retained gain, and will be entitled to an income tax

credit or refund for that share of the tax. The Fund will treat the retained

capital gain amount as a substitute for equivalent cash distributions. The

Fund will send shareholders detailed tax information with respect to the

Fund's distributions annually. See "Tax Matters."

Distributor, Custodian and Transfer Agent

PIMCO Investments LLC, an affiliate of PIMCO, serves as the Fund's

principal underwriter and distributor. State Street Bank and Trust

Company serves as the primary custodian of the Fund's assets and also

provides certain fund accounting, sub-administrative and compliance

services to the Fund on behalf of the Investment Manager. UMB Bank,

n.a. serves as a custodian of the Fund for the purpose of processing

investor subscriptions and repurchases. SS&C Global Investor and

Distribution Solutions, Inc. serves as the Fund's transfer agent and

dividend disbursement agent. The Bank of New York Mellon serves as

transfer agent, registrar, redemption and paying agent and calculation

agent with respect to the RVMTP Shares.

Unlisted Closed-End Fund Structure; Limited

Liquidity

The Fund's Common Shares are not listed for trading on any securities

exchange. There is currently no secondary market for its Common Shares

and the Fund does not expect any secondary market to develop for its

Common Shares.

Common

Shareholders of the Fund are not able to

have their Common Shares redeemed or otherwise sell their Common

Shares on a daily basis because the Fund is an unlisted closed-end fund.

In order to provide liquidity to

Common Shareholders

, the Fund is

structured as an "interval fund" and conducts quarterly repurchase

offers for a portion of its outstanding Common Shares, as described

herein. Investors should consider Common Shares of the Fund to be an

illiquid investment. An investment in the Fund is suitable only for

long-term investors who can bear the risks associated with the limited

liquidity of the Common Shares. Investors should consider their

investment goals, time horizons and risk tolerance before investing in

the Fund.

Investor Suitability

An investment in the Fund involves a considerable amount of risk. It is

possible that you will lose money. An investment in the Fund is suitable

only for investors who can bear the risks associated with the limited

liquidity of the Common Shares and should be viewed as a long-term

investment. Before making your investment decision, you should (i)

consider the suitability of this investment with respect to your

investment objectives and personal financial situation and (ii) consider

factors such as your personal net worth, income, age, risk tolerance and

liquidity needs. An investment in the Fund should not be viewed as a

complete investment program.

Principal Risks of the Fund

Limited Prior History

The Fund is a

diversified, closed-end management investment company

with a limited history of operations and is designed for long-term

investors and not as a trading vehicle.

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

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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

and environmental

change,

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 pre-refunded Municipal Bonds. Pre-refunded

Municipal Bonds are tax-exempt bonds that have been refunded to a

call date prior to the final maturity of principal, or, in the case of

pre-refunded Municipal Bonds commonly referred to as

"escrowed-to-maturity bonds," to the final maturity of principal, and

remain outstanding in the municipal market. The payment of principal

and interest of the pre-refunded Municipal Bonds held by the Fund is

funded from securities in a designated escrow account that holds

U.S. Treasury securities or other obligations of the U.S. Government

(including its agencies and instrumentalities ("Agency Securities")). As

the payment of principal and interest is generated from securities held

in an escrow account established by the municipality and an

independent escrow agent, the pledge of the municipality has been

fulfilled and the original pledge of revenue by the municipality is no

longer in place. Pre-refunded and/or escrowed to maturity Municipal

Bonds may bear an investment grade rating (for example, if re-rated by

a rating service or, if not re-rated, determined by PIMCO to be of

comparable quality) because they are backed by U.S. Treasury securities,

Agency Securities or other investment grade securities. For the

avoidance of any doubt, PIMCO's determination of an issue's credit

rating will generally be used for compliance with the Fund's investment

parameters when an issue either loses its rating or is not re-rated upon

pre-refunding. The escrow account securities pledged to pay the

principal and interest of the pre-refunded municipal bond do not

guarantee the price movement of the bond before maturity. Issuers of

municipal bonds refund in advance of maturity the outstanding higher

cost debt and issue new, lower cost debt, placing the proceeds of the

lower cost issuance into an escrow account to pre-refund the older,

higher cost debt. Investment in pre-refunded municipal bonds held by

the Fund may subject the Fund to interest rate risk and market risk. In

addition, while a secondary market exists for pre-refunded municipal

bonds, if the Fund sells pre-refunded municipal bonds prior to maturity,

the price received may be more or less than the original cost, depending

on market conditions at the time of sale.

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.

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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.

California State

-Specific Risk

The Fund invests in

municipal bonds issued by or on behalf of the State

of California and its political subdivisions,

financing authorities and their

agencies

,

and therefore may

be affected significantly by

economic,

regulatory

, social,

environmental or public health developments

affecting the ability of California tax-

exempt

issuers to pay interest or

repay principal

or otherwise affect the value of such securities

. Certain

issuers of

California municipal bonds have experienced serious financial

difficulties in the past, including credit rating downgrades,

and the

reoccurence

of these difficulties may impair

the ability of certain

California issuers

to pay principal or interest on their obligations

particularly given large budget deficits

. Provisions of the

California

Constitution and

State statutes

that

limit the taxing and spending

authority of

California

governmental entities may impair the ability of

California

issuers to pay principal and/or interest on their obligations.

While California

's economy

is broad,

it does have major concentrations

in advanced technology

,

aerospace and defense-related

manufacturing

,

trade, entertainment,

real estate and financial services

, and may be

sensitive to economic problems affecting those industries

,

and its

government

revenues

tend to rely heavily on certain earners

(revenues

therefore are likely to be more volatile and to be adversely affected if

the number of such earners (or their recognized income within a

particular period of time) decreases). Future California

political and

economic developments,

including

constitutional amendments,

legislative measures, executive orders, administrative regulations,

litigation

and voter initiatives as well as environmental events

or natural

disasters

,

including but not limited to an earthquake or a wildfire

,

pandemics, epidemics or social unrest could

create a major dislocation

of the California economy and significantly affect the ability of state and

local governments to raise money to pay principal and interest on their

municipal securities and

have an adverse effect on the debt obligations

of

California

issuers.

Municipal Project-Specific Risk

The Fund may be more sensitive to adverse economic, business or

political developments if it invests a substantial portion of its assets in

the bonds of specific projects (such as those relating to education,

health care, housing, transportation and utilities), industrial

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development bonds, or in general obligation bonds, particularly if there

is a large concentration from issuers in a single state. The value of

municipal securities can be affected by the political, economic, legal, and

legislative landscape of the particular issuer's locality, municipal sector

events or actual or perceived changes in economic, social, or public

health conditions. 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. Lower income tax rates could 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 Project Housing-Related Risk

The Fund may invest in the bonds of projects focused on low-income,

affordable or other housing developments and businesses located in

low-income areas or invest in or originate loans that finance or are

generally related to such projects. There are significant risks associated

with the Fund's investment in the bonds of these types of projects and

loans related to such projects. There may be federal, state and local

governmental regulatory restrictions on the operation, rental and

transfer of these projects, such as the requirement that the owners of

these affordable housing developments rent or sell certain residential

units to persons or families of low or moderate income and that the

amount of rent that may be charged for these units may be less than

market rates. These restrictions may adversely affect economic

performance relative to properties that are not subject to these

restrictions. There are also no assurances that a project owner will be

able to achieve and maintain sufficient rental income in order to pay all

operating expenses and maintenance and repair costs of such a project

and the debt service on the related bonds or loan on a timely basis. In

the event that a project owner is unable to pay all such costs, expenses

and debt service, a default on the related bonds or loan is likely to occur.

Moreover, as a result of economic, market and other factors, the risks of

the Fund's investment in such municipal project housing-related

securities may be heightened due to the possibility of reduced tax or

other revenue available to issuers of municipal project housing-related

securities causing an increase of budgetary and financial pressure on

either the municipality or other issuers of municipal securities.

Puerto Rico-Specific Risk

The Fund invests in Municipal Bonds issued by Puerto Rico or its

instrumentalities and may be affected by certain developments, such as

political, economic, environmental, social, regulatory or debt

restructuring developments that impact the ability or obligation of

Puerto Rico municipal issuers to pay interest or repay principal or

otherwise affect the value of such securities. Certain issuers of Puerto

Rico Municipal Bonds have experienced significant financial difficulties

and the continuation or reoccurrence of these difficulties may impair

their ability to pay principal or interest on their obligations. Provisions of

the Puerto Rico Constitution and Commonwealth laws, including a

federally appointed oversight board to oversee the Commonwealth's

financial operations, which limit the taxing and spending authority of

Puerto Rico governmental entities may impair the ability of Puerto Rico

issuers to pay principal and/or interest on their obligations. Puerto Rico's

economy has sizable concentrations in certain industries, such as the

manufacturing and service industries, and may be sensitive to economic

problems affecting those industries. Future Puerto Rico-related

developments, such as political and economic developments,

constitutional amendments, legislative measures, executive orders,

administrative regulations, litigation, debt restructuring, tax base

erosion, changes in trade policies or tariffs affecting Puerto Rico's

economy and voter initiatives as well as environmental events, natural

disasters, pandemics, epidemics or social unrest could have an adverse

effect on the debt obligations of Puerto Rico issuers.

New York State-Specific Risk

The Fund may invest in municipal bonds issued by or on behalf of the

State of New York and its political subdivisions, financing authorities

and their agencies, and therefore may be affected significantly by

political, economic, social, environmental or regulatory developments

affecting the ability of New York tax-exempt issuers to pay interest or

repay principal or otherwise affect the value of such securities. Certain

issuers of New York municipal bonds have experienced serious financial

difficulties in the past, including credit rating downgrades, and

reoccurrence of these difficulties may impair the ability of certain

New York issuers to pay principal or interest on their obligations,

particularly given large budget deficits that have been identified and

may continue. Provisions of the New York Constitution and State

statutes which limit the taxing and spending authority of New York

governmental entities may impair the ability of New York issuers to pay

principal and/or interest on their obligations. While New York's economy

is broad, it does have major concentrations in certain industries, such as

financial services, and may be sensitive to economic problems affecting

those industries, and its government revenues tend to rely heavily on

certain earners (revenues therefore are likely to be more volatile and to

be adversely affected if the number of such earners (or their recognized

income within a particular period of time) decreases). Future New York

political and economic developments, constitutional amendments,

legislative measures, executive orders, administrative regulations,

litigation and voter initiatives as well as environmental events, natural

disasters, pandemics, epidemics or social unrest could have an adverse

effect on the debt obligations of New York issuers to pay principal or

interest on their obligations. The financial health of New York City

affects that of the State, and when New York City experiences financial

difficulty it may have an adverse effect on New York municipal bonds

held by the Fund. The economic and financial condition of New York also

may be affected by various financial, social, economic, environmental,

political and geopolitical factors.

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 Federal

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Home Loan Banks ("FHLBs") or the Federal Home Loan Mortgage

Corporation ("FHLMC"), are supported by the right of the issuer to

borrow from the U.S. Treasury; others, such as those of the Federal

National Mortgage Association ("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.

AMT Bonds Risk

Investments by the Fund in "AMT Bonds," which are municipal

securities that pay interest that is taxable under the federal alternative

minimum tax applicable to noncorporate taxpayers, may expose the

Fund to certain risks in addition to those typically associated with

municipal bonds. Interest or principal on AMT Bonds paid out of current

or anticipated revenues from a specific project or specific asset may be

adversely impacted by declines in revenue from the project or asset.

Declines in general business activity, economic disruptions, public health

emergencies, or extreme weather and disaster events could also affect

the economic viability of facilities that are the sole source of revenue to

support AMT Bonds. AMT Bonds may also be less liquid than other

municipal securities, which could make them more difficult to sell in

stressed market conditions. In addition, changes in federal tax law could

alter the treatment of AMT Bonds. In this regard, AMT Bonds may entail

greater risks than general obligation municipal bonds. For shareholders

subject to the federal alternative minimum tax, a portion of the Fund's

distributions may not be exempt from gross federal income, which may

give rise to alternative minimum tax liability.

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. 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 in

interest rates. Inflation-indexed bonds, including Treasury

Inflation-Protected Securities ("TIPS"), decline in value when real

interest rates rise. In certain interest rate environments, such as when

real interest rates are rising faster than nominal interest rates,

inflation-indexed bonds may experience greater losses than other fixed

income securities with similar durations.

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 a 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

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

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

adversely affect a 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.

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 a 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 a 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

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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.

The Fund may invest in debtor-in-possession financings (commonly

known as "DIP financings"). DIP financings are arranged when an entity

seeks the protections of the bankruptcy court under Chapter 11 of the

U.S. Bankruptcy Code. These financings allow the entity to continue its

business operations while reorganizing under Chapter 11. Such

financings constitute senior liens on an unencumbered security (i.e., a

security not subject to other creditors' claims). There is a risk that the

entity will not emerge from Chapter 11 and be forced to liquidate its

assets under Chapter 7 of the U.S. Bankruptcy Code. In the event of a

liquidation, the Fund's only recourse will be against the property

securing the DIP financing.

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, 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 the 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

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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 invest in and/or originate loans, including, without

limitation, to, on behalf of, authorized by, sponsored by, and/or in

connection with a project for which authority and responsibility lies with

one or more U.S. states or territories, cities in a U.S. state or territory, or

political subdivisions, agencies, authorities or instrumentalities of such

states, territories or cities, 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, including to borrowers that are unrated or have credit

ratings that are determined by one or more NRSROs and/or PIMCO to

be below investment grade. 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 loans acquired by the Fund may be

of the type that count towards the Fund's 80% policy or they may be

loans that produce income that is subject to regular federal income tax.

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.

Insurance Risk

The Fund may purchase municipal securities that are secured by

insurance, bank credit agreements or escrow accounts. The credit quality

of the companies that provide such credit enhancements will affect the

value of those securities.

The Fund also faces the risk that insurance

coverage may become unavailable or prohibitively expensive for certain

municipal securities.

If the insurer of a municipal security suffers a

downgrade in its credit rating

,

or

is subject to an actual or perceived

deterioration in its credit quality, or

the market discounts the value of

the insurance provided by the insurer, the rating of the underlying

municipal security will be more relevant and the value of the municipal

security would more closely, if not entirely, reflect such rating. In such a

case, the value of insurance associated with a municipal security would

decline and may not add any value. The insurance feature of a municipal

security does not guarantee the full payment of principal and interest

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through the life of an insured obligation, the market value of the insured

obligation or the net asset value of the common shares represented by

such insured obligation.

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.

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.

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,

a repurchase

agreement, a borrower of portfolio securities

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. Debt

instruments backed by an issuer's taxing authority may be subject to

legal limits on the issuer's power to increase taxes or otherwise to raise

revenue or may be dependent on legislative appropriation or

government aid. Certain debt instruments are backed only by revenues

derived from a particular project or source, rather than by an issuer's

taxing authority, and thus may have a greater risk of default. 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)

.

Municipal bonds are subject to the risk that litigation, legislation or

other political events, local business or economic conditions, or the

bankruptcy of the issuer could have a significant effect on an issuer's

ability to make payments of principal and/or interest. 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.

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.

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Liquidity Risk

To the extent consistent with the applicable liquidity requirements for

interval funds under Rule 23c-3 of the Act, the Fund may invest without

limit in illiquid investments. 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 regulatory limitations on investments in

illiquid investments and the difficulty in purchasing and selling such

securities or instruments, may be unable to achieve its desired level of

exposure to a certain sector. To the extent that the Fund'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.

Repurchase Offers Risk

As described under "Periodic Repurchase Offers" above, the Fund is an

"interval fund" and, in order to provide liquidity to shareholders, the

Fund, subject to applicable law, conducts quarterly repurchase offers of

the Fund's outstanding Common Shares at NAV, subject to approval of

the Board. In each quarter, such repurchase offers will be for at least 5%

and not more than 25% of its outstanding Common Shares at NAV,

pursuant to Rule 23c-3 under the Act.

The Fund currently expects to conduct quarterly repurchase offers for

10% of its outstanding Common Shares under ordinary circumstances.

The Fund believes that these repurchase offers are generally beneficial

to the Fund's shareholders, and repurchases generally will be funded

from available cash or sales of portfolio securities. However, repurchase

offers and the need to fund repurchase obligations may affect the ability

of the Fund to be fully invested or force the Fund to maintain a higher

percentage of its assets in liquid investments, which may harm the

Fund's investment performance. Moreover, diminution in the size of the

Fund through repurchases may result in untimely sales of portfolio

securities (with associated imputed transaction costs, which may be

significant), and may limit the ability of the Fund to participate in new

investment opportunities or to achieve its investment objectives. The

Fund may accumulate cash by holding back (i.e., not reinvesting)

payments received in connection with the Fund's investments. The Fund

believes that payments received in connection with the Fund's

investments will generate sufficient cash to meet the maximum

potential amount of the Fund's repurchase obligations. If at any time

cash and other liquid assets held by the Fund are not sufficient to meet

the Fund's repurchase obligations, the Fund intends, if necessary, to sell

investments. To the extent the Fund employs investment leverage,

repurchases of Common Shares would compound the adverse effects of

leverage in a declining market. In addition, if the Fund borrows to

finance repurchases, interest on that borrowing will negatively affect

Common Shareholders who do not tender their Common Shares by

increasing the Fund's expenses and reducing any net investment

income. If a repurchase offer is oversubscribed, the Fund may, but is not

required to, determine to increase the amount repurchased by up to 2%

of the Fund's outstanding shares as of the date of the Repurchase

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Request Deadline. In the event that the Fund determines not to

repurchase more than the repurchase offer amount, or if shareholders

tender more than the repurchase offer amount plus 2% of the Fund's

outstanding shares as of the date of the Repurchase Request Deadline,

the Fund will repurchase the Common Shares tendered on a pro rata

basis, and shareholders will have to wait until the next repurchase offer

to make another repurchase request. As a result, shareholders may be

unable to liquidate all or a given percentage of their investment in the

Fund during a particular repurchase offer. Notwithstanding the

foregoing, the Fund may accept all Common Shares tendered for

repurchase by shareholders who own less than one hundred Common

Shares and who tender all of their Common Shares, before prorating

Common Shares tendered by other shareholders; provided that, if a

shareholder holds shares through a financial intermediary, such

intermediary may not be willing or able to arrange for this treatment on

such shareholder's behalf. Some shareholders, in anticipation of

proration, may tender more Common Shares than they wish to have

repurchased in a particular quarter, thereby increasing the likelihood

that proration will occur. A shareholder may be subject to market and

other risks, and the NAV of Common Shares tendered in a repurchase

offer may decline between the Repurchase Request Deadline and the

date on which the NAV for tendered Common Shares is determined. In

addition, the repurchase of Common Shares by the Fund may be a

taxable event to shareholders.

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 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 a 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. A 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 a 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

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

should be considered speculative. See "The Fund's Investment

Objectives and Strategies—Portfolio Contents—High Yield Securities"

for additional information.

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.

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 perceiving 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

. 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 potential speed of such trading and

other technologies may exacerbate the impact of any such

flaws

,

particularly where such incidents are exploited by other artificially

intelligent systems

and may act

to impair or prevent the intervention of

a human control.

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 will face higher risks of

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Prospectus

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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 current 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.

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

calculation of its NAV, and such NAV calculation issues may result in

inaccurately calculated NAV, 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.

Municipal Bond Market Risk.

The amount of public

information available about the municipal bonds in the Fund's

portfolio is generally less than that for corporate equities or bonds,

and the investment performance of the Fund may therefore be

more dependent on the analytical abilities of PIMCO than would

be a stock fund or taxable bond fund. The secondary market for

municipal bonds, particularly below investment grade bonds in

which the Fund may invest, also tends to be less well-developed

and less 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.

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 objectives.

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 such

NAV calculation issues may result in inaccurately calculated NAVs,

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PIMCO California Flexible Municipal Income Fund

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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.

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.

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 any outstanding Preferred Shares or the net proceeds that the Fund

obtains from its use of tender option bonds, derivatives or other forms

of leverage, if any, will be invested in accordance with the Fund's

investment objectives and policies as described in this prospectus.

Dividends payable with respect to any Preferred Shares outstanding and

interest expense payable by the Fund with respect to any tender option

bonds, 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 dividend rate on any

Preferred Shares outstanding, including the Preferred Shareholder

Gross-Up, and the interest expenses and other costs to the Fund of such

other 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

(including interest expenses on tender option bonds and the dividend

rate on any outstanding Preferred Shares, including the Preferred

Shareholder Gross-Up) 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"),

which

it may be

required to

do at inopportune times, 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 movements. 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 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

repurchase

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

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19 Prospectus

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Prospectus

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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.

In addition to tender option bonds and any future issuance of Preferred

Shares, the Fund may engage in other transactions that may give rise to

a form of leverage including, among others loans of portfolio securities,

short sales and when-issued, delayed delivery and forward commitment

transactions, credit default swaps, reverse repurchases, 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. The

Fund may offset derivatives positions against one another or against

other assets to manage effective market exposure resulting from

derivatives in its portfolio. To the extent that any offsetting positions do

not behave in relation to one another as expected, the Fund may

perform as if it is leveraged through use of these derivative strategies.

See "Use of Leverage."

The Fund is required to satisfy certain regulatory and rating agency asset

coverage requirements in connection with its use of Preferred Shares.

Accordingly, any decline in the net asset value of the Fund's investments

could result in the risk that the Fund will fail to meet its asset coverage

requirements for any such Preferred Shares or the risk of the Preferred

Shares being downgraded by a rating agency. The Fund's current

investment income might not be sufficient to meet the dividend

requirements on preferred shares outstanding. In order to address these

types of events, the Fund might need to liquidate investments in order

to fund a redemption of some or all of Preferred Shares. Liquidations at

inopportune times or at times of adverse economic conditions may

result in a loss to the Fund. At other times, these liquidations may result

in gain at the Fund level and thus in additional taxable distributions to

Common Shareholders. See "Tax Matters" for more information. Any

Preferred Shares, total return swaps, reverse repurchases, tender option

bonds, loans of portfolio securities, short sales and when-issued,

delayed delivery and forward commitment transactions, credit default

swaps, reverse repurchases 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.

When the Fund issues Preferred Shares, the Fund pays (and the

Common Shareholders bear) all costs and expenses relating to the

issuance and ongoing maintenance of Preferred Shares. In addition,

holders of any Preferred Shares issued by the Fund would have

complete priority over Common Shareholders in the distribution of the

Fund's assets. Furthermore, Preferred Shareholders, voting separately as

a single class, have the right to elect two members of the Board at all

times and to elect a majority of the trustees in the event two full years'

dividends on the Preferred Shares are unpaid, and also have separate

class voting rights on certain matters. Accordingly, Preferred

Shareholders may have interests that differ from those of Common

Shareholders, and may at times have disproportionate influence over

the Fund's affairs.

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.

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.

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

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produce adverse tax consequences (for example, the Fund's income and

gain-generating strategies may generate current income and 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 use of derivatives involves risks different from, and possibly greater

than, the risks associated with investing directly in securities and other

traditional investments. Derivatives 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 itself.

Participation in the markets for derivative instruments involves

investment risks and transaction costs to which the Fund may not be

subject absent the use of these strategies. The skills needed to

successfully execute derivative strategies may be different from those

needed for other types of transactions. If the Fund incorrectly forecasts

the value and/or creditworthiness of securities, currencies, interest rates,

counterparties or other economic factors involved in a derivative

transaction, the Fund might have been in a better position if the Fund

had not entered into such derivative transaction. In evaluating the risks

and contractual obligations associated with particular derivative

instruments, it is important to consider that certain derivative

transactions

,

may be modified or terminated

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.

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.

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When a derivative is used as a hedge against a position that the Fund

holds, any loss generated by the derivative generally should be

substantially offset by gains on the hedged investment, and vice versa.

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.

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 Act. See

"How Fund Shares are Priced." 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.

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

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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.

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.

Private Placements 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.

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 direct or indirect fully-owned subsidiaries, including their

custodians and the platforms acting as loan servicers for the Fund or its

direct or indirect fully-owned 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 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.

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.

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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.

Other Investment Companies Risk

The Fund may invest up to 5% of its total assets in securities of other

investment companies (including those advised by PIMCO), including

closed-end funds, exchange-traded funds and other open-end funds,

that invest primarily in municipal bonds and other municipal securities

of the types in which the Fund may invest directly. 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 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."

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 the sum 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 for 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 qualify to pay exempt-interest dividends, at least 50% of the value of

the total assets of the Fund must consist of obligations exempt from

federal income tax as of the close of each quarter of the Fund's taxable

year. Fund distributions reported as exempt-interest dividends are not

generally taxable to Fund shareholders for regular U.S. federal income

tax purposes, but they may be subject to state and local taxes and/or

federal alternative minimum tax. If the proportion of taxable

investments held by the Fund exceeds 50% of the Fund's total assets as

of the close of any quarter of the Fund's taxable year, the Fund will not

for that taxable year satisfy the general eligibility test that otherwise

permits it to pay exempt-interest dividends.

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The value of the Fund's investments and its net asset value may be

adversely affected by changes in tax rates and policies. Because interest

income from municipal securities is normally not subject to regular

federal income taxation, the attractiveness of municipal securities in

relation to other investment alternatives is affected by changes in

federal income tax rates or changes in the tax-exempt status of interest

income from municipal securities. Any proposed or actual changes in

such rates or exempt status, therefore, can significantly affect the

demand for and supply, liquidity and marketability of municipal

securities. This could in turn affect the Fund's net asset value and ability

to acquire and dispose of municipal securities at desirable yield and

price levels. Additionally, the Fund is not a suitable investment for

individual retirement accounts, for other tax-exempt or tax-deferred

accounts or for investors who are not sensitive to the federal income tax

consequences of their investments.

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

its interests or the interests of its 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 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.

Distribution Rate Risk

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 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.

Additionally, the

distribution rate is not indicative of the Fund's performance and may not

correlate with the actual returns generated by the Fund's investments.

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 Objectives 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.

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

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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.

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.

Geopolitical Conflicts Risk

The occurrence of geopolitical conflicts, war or terrorist activities could

have adverse impacts on markets in various and unpredictable ways. For

example,

the armed conflict among the United

States, Israel, and Iran

has caused, and could continue to cause, significant market disruptions

and volatility. The conflict has had a particular negative impact on oil

and gas markets, which could have a broader adverse effect on many

sectors of the global economy in the future. In addition,

following

Russia's large-scale invasion of Ukraine in February 2022, Russia, and

other countries, persons and entities that were viewed as having

provided material aid to Russia's aggression against Ukraine, became

the subject of economic sanctions and import and export controls

imposed by countries throughout the world, including the United States.

Such measures have had and may continue to have an adverse effect on

the Russian, Belarusian and other securities and economies. Additional

examples include, but are not limited to, heightened concerns of trade

disputes, which could result in increased tariffs, trade restrictions or

other retaliatory countermeasures. The extent, duration and impact of

geopolitical conflicts and related market impacts are difficult to

ascertain, but could be significant and could have significant adverse

effects on regional and global economies and the markets for certain

securities and commodities, such as oil, natural gas, steel and aluminum,

as well as other sectors, and on the Fund's investments.

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

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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.

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 Amended and Restated Agreement and Declaration of Trust

includes 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. See "Anti-Takeover and Other Provisions in the

Declaration of Trust and Bylaws."

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27 Prospectus

\| PIMCO California Flexible Municipal Income Fund

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![](g121406g2logo.gif)

PIMCO California Flexible Municipal

Income Fund

------

Summary of Fund Expenses

This table is intended to assist investors in understanding the various

costs and expenses directly or indirectly associated with investing in the

Fund. You may qualify for sales charge discounts on Class A-2 and/or

Class A-4 Common Shares of the Fund if you and your family invest, or

agree to invest in the future, in a certain amount of Class A-1, Class A-2,

Class A-3 and/or Class A-4 common shares of the Fund (to the extent

available) or other eligible closed-end interval funds that are sponsored

by PIMCO. More information about these and other discounts is

available in the "Plan of Distribution—Share Classes" section on page

of this prospectus or from your financial advisor.

Shareholder Transaction Expenses (fees paid directly from

your investment):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Institutional<br>Class<br>| Class A-1 | Class A-2 | Class A-3 | Class A-4 |
| Maximum Initial Sales Charge <br>(Load) Imposed on Purchases <br>(as a percentage of offering <br>price)<br>| None<br>(1)<br>| None<br>(1)<br>| 3.00% | None<br>(1)<br>| 3.00% |
| Maximum Early Withdrawal <br>Charge (Load) (as a percentage <br>of the lower of the original <br>purchase price or repurchase <br>price)<br>|  |  | 1.00% |  | 1.00% |
| Dividend Reinvestment Fees |  |  |  |  |  |

---

While neither the Fund nor the Distributor impose an initial sales charge, if you buy

Institutional Class, Class A-1 or Class A-3 Common Shares through certain financial

firms, they may directly charge you transaction or other fees in such amount as they

may determine. Please consult your financial firm for additional information.

Annual Fund Operating Expenses (as a percentage of Net

Assets Attributable to Common Shares (reflecting leverage

attributable to Preferred Shares representing approximately

18.30 % of the Fund's total managed assets)):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | Institutional<br>Class<br>| Class A-1 | Class A-2 | Class A-3 | Class A-4 |
| Management Fees<br>(1)<br>| 0.92% | 0.92% | 0.92% | 0.92% | 0.92% |
| Distribution and/or Service <br>(12b-1) Fees<br>| N/A | 0.50% | 0.50% | 0.75% | 0.75% |
| Dividend and Other Costs on <br>Preferred Shares<br>(2)<br>(3)<br>| 1.01% | 1.01% | 1.01% | 1.01% | 1.01% |
| Other Expenses<br>(4)<br>| 0.11% | 0.11% | 0.11% | 0.11% | 0.11% |
| Acquired Fund Fees and <br>Expenses (Underlying Fund <br>Expenses)<br>(5)<br>| 0.10% | 0.10% | 0.10% | 0.10% | 0.10% |
| Total Annual Fund <br>Operating Expenses<br>| 2.14% | 2.64% | 2.64% | 2.89% | 2.89% |
| Fee Waiver and/or Expense <br>Reimbursement<br>(6)<br>| (0.01%) | (0.01%) | (0.01%) | (0.01%) | (0.01%) |
| Total Annual Fund <br>Operating Expenses After <br>Fee Waiver and/or Expense <br>Reimbursement<br>(2)<br>| 2.13% | 2.63% | 2.63% | 2.88% | 2.88% |

---

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 0.75% of the Fund's

total managed assets. The Fund (and not PIMCO) is 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 unified management fee and definition of "total managed assets."

"Dividend and Other Costs on Preferred Shares" will be borne by the Fund separately

from the management fees paid to PIMCO. Excluding such expenses, estimated Total

Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement are

1.12 %,

1.62 %,

1.62 %,

1.87 % and

1.87 % for Institutional Class, Class A-1, Class A-2,

Class

A-3 and Class A-4 shares, respectively.

"Dividend and Other Costs on Preferred Shares" reflect the Fund's Preferred Shares in

an amount representing approximately

18.30 % of the Fund's total managed assets, at

an estimated annual dividend cost to the Fund of

4.57 % (based on estimated

Preferred Share dividend rates as of December 31,

2025), and including the

amortization of Preferred Share offering costs of $

360,000

over the three-year term of

the Preferred Shares. The actual dividend rate paid on any Preferred Shares issued by

the Fund will vary over time in accordance with variations in market interest rates. See

"Use of Leverage" and "Description of Capital Structure." Dividend and Other Costs

on Preferred Shares are borne directly by the Fund and will be reflected in the Fund's

financial statements.

"Other Expenses" are based on estimated amounts for the current fiscal year.

Acquired Fund Fees and Expenses are based on the expense ratios of the other

investment companies in which the Fund invests, which may change substantially over

time and, therefore, significantly affect the Acquired Fund Fees and Expenses. Acquired

Fund Fees and Expenses are borne indirectly by the Fund, but they will not be reflected

in the Fund's financial statements; and the information presented in the table will

differ from that presented in the Fund's financial highlights.

PIMCO has contractually agreed, through May 2,

2027

, to waive its management fee,

or reimburse the Fund, to the extent that organizational expenses and pro rata

Trustees' fees exceed 0.10% of the Fund's average daily net assets (the "Expense

Limitation Agreement"). Under the Expense Limitation Agreement, in any month in

which the investment management agreement is in effect, PIMCO is entitled to

reimbursement by the Fund of any portion of the management fee reduced as set forth

above (the "Reimbursement Amount") during the previous thirty-six months, provided

that such amount paid to PIMCO will not (1) together with any recoupment of

organizational expenses, pro rata share of expenses related to obtaining or

maintaining a Legal Entity Identifier and pro rata trustee fees or management fees

exceed 0.10% of average daily net assets; (2) exceed the total Reimbursement

Amount; or (3) include any amounts previously reimbursed to PIMCO. For the

avoidance of doubt, any reimbursement of PIMCO's management fee pursuant to the

Expense Limitation Agreement plus any recoupment of organizational expenses, pro

rata share of expenses related to obtaining or maintaining a Legal Entity Identifier and

pro rata Trustees' fees will not exceed the lesser of (i) the expense limit in effect at the

time of waiver or reimbursement and (ii) the expense limit in effect at the time of

recoupment. This Expense Limitation Agreement will automatically renew for one-year

terms unless PIMCO provides written notice to the Fund at least 30 days prior to the

end of the then current term.

Example

As required by relevant SEC regulations, the following example

illustrates the expenses (including any applicable sales charge) that you

would pay on a $1,000 investment in the Common Shares, assuming a

5% annual return

(1) :

If you redeem your shares at the end of each period:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | 1 Year | 3 Years | 5 Years | 10 Years |
| Institutional Class | $22 | $67 | $115 | $247 |
| Class A-1 | $27 | $82 | $140 | $297 |
| Class A-2 | $66 | $109 | $166 | $318 |
| Class A-3 | $29 | $89 | $152 | $321 |
| Class A-4 | $68 | $117 | $178 | $342 |

---

------

PIMCO California Flexible Municipal Income Fund \|

Prospectus

![](g121406g2img4604813b2.gif)

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PIMCO California Flexible Municipal Income Fund

------

If you do not redeem your shares:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | 1 Year | 3 Years | 5 Years | 10 Years |
| Class A-2 | $56 | $109 | $166 | $318 |
| Class A-4 | $58 | $117 | $178 | $342 |

---

(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, Dividend and Other Costs on

Preferred Shares and Other Expenses set forth in the Annual

Fund Operating

Expenses

table are accurate, that the Total Annual Fund Operating Expenses (as described

above) remain the same for all periods shown, 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. In addition to the fees and expenses

described above, you may also be required to pay transaction or other fees on

purchases of Institutional Class, Class A-1, Class A-2, Class A-3 or Class A-4 Common

Shares of the Fund, which are not reflected in the example.

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29 Prospectus

\| PIMCO California Flexible Municipal Income Fund

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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PIMCO California Flexible Municipal Income Fund

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Financial Highlights

The financial highlights table set forth below is intended to help you understand the Fund's recent financial performance. Information shown reflects

performance of the Fund's Institutional Class and Class A-1. Because Class A-2, Class A-3 and Class A-4 Common Shares of the Fund had not

commenced operations as of December 31,

2025

, no performance data for such share classes is provided. The information in the table below is for

the fiscal period ended December 31,

2025

, and the fiscal years and/or periods, as applicable, ended December 31,

2024,

2023 and 2022, audited by

PricewaterhouseCoopers LLP ("PwC"), whose report on such financial statements is contained in the Fund's December 31,

2025

annual report and is

incorporated by reference into the Statement of Additional Information.

References to Notes to Financial Statements are to the notes included in the

Fund's annual shareholder report dated December

31, 2025.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  | Investment Operations | Investment Operations | Investment Operations | Less Distributions<br>(c) | Less Distributions<br>(c) | Less Distributions<br>(c) |  |
| Selected Per Share Data<br>for the Year or Period Ended^:<br>| Net Asset Value<br>Beginning of<br>Year<br>or Period<br>(a)<br>| Net<br>Investment<br>Income (Loss)<br>(b)<br>| Net Realized/<br>Unrealized<br>Gain (Loss)<br>| Total | From Net<br>Investment<br>Income<br>| From Net<br>Realized<br>Capital<br>Gain<br>| Total | Net Asset<br>Value<br>End<br>of<br>Year or Period<br>(a)<br>|
| PIMCO California Flexible Municipal Income Fund | PIMCO California Flexible Municipal Income Fund | PIMCO California Flexible Municipal Income Fund | PIMCO California Flexible Municipal Income Fund | PIMCO California Flexible Municipal Income Fund |  |  |  |  |
| Institutional Class |  |  |  |  |  |  |  |  |
| 12/31/2025 | $10.18<br>| $0.37<br>| $(0.05)<br>| $0.32<br>| $(0.37)<br>| $(0.02)<br>| $(0.39)<br>| $10.11<br>|
| 12/31/2024 | 10.26 | 0.35 | (0.03) | 0.32 | (0.34) | (0.06) | (0.40) | 10.18 |
| 12/31/2023 | 9.83 | 0.37 | 0.42 | 0.79 | (0.36) | 0.00 | (0.36) | 10.26 |
| 06/27/2022 - 12/31/2022 | 10.00 | 0.17 | (0.18) | (0.01) | (0.16) | 0.00 | (0.16) | 9.83 |
| Class A-1 |  |  |  |  |  |  |  |  |
| 12/31/2025 | $10.18<br>| $0.32<br>| $(0.05)<br>| $0.27<br>| $(0.32)<br>| $(0.02)<br>| $(0.34)<br>| $10.11<br>|
| 12/31/2024 | 10.26 | 0.29 | (0.03) | 0.26 | (0.28) | (0.06) | (0.34) | 10.18 |
| 01/31/2023 - 12/31/2023 | 10.15 | 0.30 | 0.10 | 0.40 | (0.29) | 0.00 | (0.29) | 10.26 |

---

^

A zero balance may reflect actual amounts rounding to less than $0.01 or 0.01%.

\*

Annualized, except for organizational expense, if any.

(a) Net asset value includes

adjustments required by U.S. GAAP

.

These values,

and

other performance figures relying on them, such as average annual total return data included in the

Fund's prospectus and in any shareholder reports,

may differ from net asset values and performance reported elsewhere

with respect to

the Fund.

(b) Per share amounts based on average number of common shares outstanding during the year or period.

(c) The tax characterization of distributions is determined in accordance with federal income tax regulations. See Note 2, Distributions—Common Shares, in the Notes to Financial

Statements for more information.

(d) Total return figures include

adjustments required by U.S. GAAP

.

These values,

and

other performance figures relying on them, such as average annual total return data included in the

Fund's prospectus and in any shareholder reports,

may differ from net asset values and performance reported elsewhere

with respect to

the Fund. Additionally, excludes initial sales

charges and contingent deferred sales charges.

(e) Ratio includes interest expense which primarily relates to participation in borrowing and financing transactions, dividends paid to RVMTP shareholders and the amortization of debt

issuance costs of these Preferred Shares. See Note 13, Preferred Shares, in the Notes to Financial Statements for more information.

(f) Expense ratio as presented is calculated based on average net assets for the period presented. Due to significant fluctuations in total net assets during the period, the expense ratio to

average net assets differs from the total operating expense ratio in effect for each class. See Note 9, Fees and Expenses, in the Notes to Financial Statements for additional information

on how the Fund's expenses are calculated.

(g) Certain organizational costs were incurred prior to the commencement of operations and reflected in the financial statements accompanying the initial registration statement. If the

Fund had incurred all organization and trustee related expenses in the current period, the ratio of expenses to average net assets excluding waivers and ratio of expenses to average

net assets excluding interest expense and waivers would have been 1.98% and 1.93% respectively.

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31 Prospectus

\| PIMCO California Flexible Municipal Income Fund

------

Prospectus

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Ratios/Supplemental Data | Ratios/Supplemental Data | Ratios/Supplemental Data | Ratios/Supplemental Data | Ratios/Supplemental Data | Ratios/Supplemental Data | Ratios/Supplemental Data |
|  |  | Ratios to Average Net Assets | Ratios to Average Net Assets | Ratios to Average Net Assets | Ratios to Average Net Assets | Ratios to Average Net Assets |  |
| Total<br>Return<br>(d)<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net Assets<br>Applicable<br>to Common<br>Shareholders End<br>of Year<br>or Period<br>&nbsp;&nbsp;&nbsp;&nbsp;(000s)<br>| Expenses<br>(e)<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Expenses<br>Excluding<br>Waivers<br>(e)<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Expenses<br>Excluding<br>Interest<br>Expense<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Expenses<br>Excluding<br>Interest<br>Expense<br>and Waivers<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net<br>Investment<br>Income (Loss)<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Portfolio<br>Turnover<br>Rate<br>|
| 3.24<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$108851<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2.03<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2.04<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1.02<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1.03<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3.67<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 36<br> %<br>|
| 3.19 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;93970 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.35 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.38 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.04 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.07 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.37 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;52 |
| 8.21 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;82578 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.78 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.92 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.75 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.89 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.72 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;52 |
| (0.08)<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;46863 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0.65<br> \*<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.18<br>\*<br>(g)<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.60<br>\*<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.13<br>\*<br>(g)<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3.38<br> \*<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;53 |
| 2.73<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$11555<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2.53<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2.54<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1.52<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1.53<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3.17<br> %<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 36<br> %<br>|
| 2.59 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10162 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.85 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.88 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.54 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.57 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.78 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;52 |
| 4.04 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4634 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.36<br>\*<br>(f)<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.42<br>\*<br>(f)<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.33<br>\*<br>(f)<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.39<br>\*<br>(f)<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.27<br>\*<br>| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;52 |

---

------

April 30,

2026

\|

Prospectus

------

PIMCO California Flexible Municipal Income Fund

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | RVMTP<br>(3) | RVMTP<br>(3) | RVMTP<br>(3) | RVMTP<br>(3) |
| Selected Per Share Data for<br>the Year or Period Ended^:<br>| Total Amount<br>Outstanding<br>| Asset Coverage per<br>Preferred Share<br>(1)<br>| Involuntary<br>Liquidating<br>Preference per<br>Preferred Share<br>(2)<br>| Average<br>Market Value per<br>Preferred Share<br>(4)<br>|
| 12/31/2025 | $25000000<br>| $581560<br>| $100000<br>| N/A |
| 12/31/2024 | 25000000 | 516380 | 100000 | N/A |
| 12/31/2023 | N/A | N/A | N/A | N/A |
| 06/27/2022 – 12/31/2022 | N/A | N/A | N/A | N/A |

---

(1) "Asset Coverage per Preferred Share" means the ratio that the value of the total assets of the Fund, less all liabilities and indebtedness not represented by

Remarkable Variable Rate

MuniFund Term Preferred Shares ("

RVMTP Shares

")

, bears to the aggregate of the involuntary liquidation preference of

RVMTP Shares, expressed as a dollar amount per

Preferred

Share.

(2) "Involuntary Liquidating Preference" means the amount to which a holder of the RVMTP

Shares

would be entitled upon the involuntary liquidation of the Fund in preference to the

Common Shareholders, expressed as a dollar amount per Preferred Share.

(3) RVMTP Shares. Prior to December 6, 2021, certain RVMTP Shares were Variable Rate MuniFund Term Preferred Shares. See Note 13, Preferred Shares.

(4)

The RVMTP Shares have no readily ascertainable market value. The liquidation value of the RVMTP Shares represents its liquidation preference, which approximates fair value of the

shares less any unamortized debt issuance costs. See Note 13, Preferred Shares, in the Notes to Financial Statements for more information.

------

33 Prospectus

\| PIMCO California Flexible Municipal Income Fund

------

Prospectus

------

The Fund

The Fund is a

diversified, closed-end management investment company

registered under the Act. The Fund continuously offers its Common

Shares and is operated as an "interval fund." The Fund currently has five

separate classes of Common Shares: Institutional Class, Class A-1,

Class A-2, Class A-3 and Class A-4. The Fund was organized as a

Massachusetts business trust on February 8, 2022, pursuant to a

Declaration of Trust (the "Declaration"), which is governed by the laws

of The Commonwealth of Massachusetts. The Fund commenced

operations on June 27, 2022. The Fund has limited operating history as

of the date of this prospectus. The Fund's principal office is located at

1633 Broadway, New York, New York 10019.

Use of Proceeds

The Fund will invest the proceeds of the continuous offering of Common

Shares on an ongoing basis in accordance with its investment objectives

and policies as stated below. It is currently anticipated that the Fund will

be able to invest all or substantially all of the net proceeds according to

its investment objectives and policies within approximately three

months after receipt of the proceeds, depending on the amount and

timing of proceeds available to the Fund as well as the availability of

investments consistent with the Fund's investment objectives and

policies, and except to the extent proceeds are held in cash to pay

dividends or expenses, satisfy repurchase offers or for temporary

defensive purposes. Pending such investment, it is anticipated that the

proceeds of an offering will be invested in high quality, short-term,

municipal or other tax-exempt securities, although the Fund may, if

necessary, also invest in other high-quality, short-term securities.

The Fund's Investment Objectives and Strategies

Investment Objectives

The Fund seeks to provide high current income exempt from federal and

California income tax. Capital appreciation is a secondary objective. The

types of securities and instruments in which the Fund may invest are

summarized under "The Fund's Investment Objectives and

Policies-Portfolio Management Strategies – Portfolio Contents and

Other Information."

Portfolio Management Strategies

PIMCO serves as the Investment Manager of the Fund and manages the

Fund's portfolio. See "Management of the Fund." The portfolio

management strategies and techniques to be utilized by PIMCO are

described below.

Flexible Allocation Strategy.

The Fund seeks to achieve its

investment objectives by utilizing a flexible, multi-sector tax-efficient

approach to investing, under normal circumstances, primarily in

municipal bonds and other municipal securities that carry interest

payments that are exempt from federal and California income tax. The

principal issuers of these securities are state and local governments and

their agencies located in any of the fifty states, as well as in Puerto Rico

and other U.S. territories and possessions. To a lesser extent, the Fund

also expects to invest in a full range of preferred securities with an

emphasis on preferred securities that, at the time of issuance, are

eligible to pay dividends that qualify for certain favorable federal income

tax treatment. With PIMCO's macroeconomic analysis as the basis for

top-down investment decisions, the Fund seeks to offer investors an

actively-managed municipal bond portfolio that aims to capitalize on

what PIMCO believes are attractive opportunities in California and, to a

lesser extent, other states, and across sectors within the California and

U.S. municipal markets.

Investment selection strategies.

In selecting securities for the

Fund, PIMCO develops an outlook for interest rates and the economy,

analyzes credit and call risks, and uses other security selection

techniques. The proportion of the Fund's assets committed to

investment in securities with particular characteristics (such as quality,

sector, interest rate or maturity) varies based on PIMCO's outlook for the

U.S. economy.

PIMCO attempts to preserve and enhance the value of the Fund's

holdings relative to the municipal bond market, generally,

and may use

analytical models that test and evaluate the sensitivity of those holdings

to changes in interest rates and yield relationships. There is no

guarantee that PIMCO's investment selection techniques will produce

the desired results. In selecting investments for the Fund, PIMCO may

use proprietary quantitative models that are developed and maintained

by PIMCO, and which are subject to change over time without notice in

PIMCO's discretion.

Credit quality.

The Fund may invest without limit in municipal bonds

and other securities of any credit quality, including without limitation, in

securities that are, at the time of purchase, rated below "investment

grade" by at least one of Moody's, S&P or Fitch, or unrated but

determined by PIMCO to be of comparable quality

to securities so rated

.

"Investment grade" means a rating, in the case of Moody's, of Baa3 or

higher, or in the case of S&P and Fitch, of BBB- or higher. Bonds 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 "junk bonds." Bonds in

the lowest investment grade category may also be considered to

possess some speculative characteristics by certain rating agencies. The

Fund may also invest without limit in investment grade securities. The

Fund generally expects to invest at least 60% of its total assets in above

investment grade securities and not more than 40% of its total assets in

below investment grade securities, but may determine to allocate more

heavily or exclusively to either category at any time and from time to

time based on PIMCO's economic outlook, market conditions, and other

factors.

Independent credit analysis.

PIMCO relies primarily on its own

analysis of the credit quality and risks associated with individual

municipal bonds and other municipal securities 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 to identify investments that are undervalued or

that offer attractive yields relative to PIMCO's assessment of their credit

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

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important to the extent that the Fund invests in high yield municipal

bonds or other securities.

Duration management.

The Fund does not target a specific duration

or maturity for the municipal bonds and other securities in which it

invests, and the Fund's average portfolio duration, as calculated by

PIMCO may vary significantly depending on market conditions and other

factors. 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.

The longer a security's duration, the more sensitive it will be to changes

in interest rates. The portfolio managers focus on municipal bonds with

the potential to offer attractive current income, typically looking for

bonds that can provide consistently attractive current yields or that are

trading at competitive market prices. Capital appreciation, if any,

generally arises from decreases in interest rates or improving credit

fundamentals for a particular state, municipality or issuer.

Portfolio Contents and Other Information

Investment Parameters

The Fund will invest, under normal circumstances, at least 80% of its

net assets (plus any borrowings for investment purposes) in a portfolio

of municipal bonds and other municipal securities, the interest from

which, in the opinion of bond counsel for the issuer at the time of

issuance (or on the basis of other authority believed by PIMCO to be

reliable), is exempt from federal income tax and California income tax

(i.e., excluded from gross income for income tax purposes but not

necessarily exempt from the alternative minimum tax or from the

income taxes of any other state or of a local government) (the "80%

policy"). California municipal bonds generally are issued by or on behalf

of the State of California and its political subdivisions, financing

authorities and their agencies. By concentrating its investments in

California municipal securities, the Fund will be subject to California

State-Specific Risk, among other risks. Both within and outside the 80%

policy, the Fund may invest in debt securities of an issuer located

outside of California (for example, other jurisdictions may also issue

securities, the interest from which, in the opinion of bond counsel for

the issuer at the time of issuance or other authority believed by PIMCO

to be reliable is exempt from federal income tax and California income

tax). The Fund's 80% policy is a fundamental policy, which may not be

changed without the approval of the holders of a majority of the Fund's

outstanding Common Shares and Preferred Shares 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. See "Description of Capital Structure and Shares – Preferred Shares

– Voting Rights" for additional information with respect to the voting

rights of holders of Preferred Shares.

The Fund may invest without limit in municipal bonds and other

securities that are rated below investment grade (or unrated but

determined by PIMCO to be of comparable quality). Bonds 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 "junk bonds." The Fund

may also invest without limit in investment grade securities.

Included within the general category of municipal bonds in which the

Fund may invest are loans (including participations and assignments)

and participations in lease obligations. A lease obligation is an

obligation in the form of a lease or installment purchase that is issued

by a state or local government to acquire equipment and facilities.

Income from such obligations generally is exempt from state and local

tax in the state of issuance. Lease obligations may be secured or

unsecured. Lease obligations do not constitute general obligations of

the municipality for which the municipality's taxing power is pledged.

The Fund may invest in and/or originate loans, including, without

limitation, to, on behalf of, authorized by, sponsored by, and/or in

connection with a project for which authority and responsibility lies with

one or more U.S. states or territories, cities in a U.S. state or territory, or

political subdivisions, agencies, authorities or instrumentalities of such

states, territories or cities, which may be in the form of whole loans,

assignments, participations, secured and unsecured notes, senior and

second lien loans, mezzanine loans, bridge loans or similar investments,

including to borrowers that are unrated or have credit ratings that are

determined by one or more NRSROs and/or PIMCO to be below

investment grade. 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.

In addition to other types of securities and assets described in this

section, the Fund may invest the balance of its assets (i.e., not towards

its 80% policy noted above) in securities and assets that produce

taxable income. Such assets are normally expected to include, but are

not limited to, preferred securities, with an emphasis on preferred

securities that, at the time of issuance, are eligible to pay dividends that

qualify for certain favorable federal income tax treatment, such as

dividends that are treated as qualified dividend income and eligible for

the dividends received deduction (in each instance, provided certain

requirements and holding periods are satisfied). See "Tax Matters."

It is possible that the Fund could own no preferred securities at any

given time, including, for example, if municipal securities are expected

to produce a higher yield than preferred securities on an after-tax basis.

Subject to the Fund's investment policies described above, the Fund may

invest in other securities, including securities eligible for resale under

Rule 144A of the Securities Act, and other privately placed securities,

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and other debt securities subject to federal and/or California income

tax, including privately negotiated debt obligations with respect to

which the principal and/or interest is determined by reference to the

performance of a benchmark asset, market or interest rate (an

"embedded index"), such as specific securities, an index of securities or

specified interest rates, or the differential performance of two assets or

markets, such as indexes reflecting bonds. The rate of interest on an

income-producing security may be fixed, floating or variable. The Fund

may also engage in credit spread trades. A credit spread trade is an

investment position relating to a difference in the prices or interest rates

of two bonds or other securities, in which the value of the investment

position is determined by changes in the difference between the prices

or interest rates, as the case may be, of the respective securities. The

Fund may purchase and sell securities on a when-issued, delayed

delivery or forward commitment basis and may engage in short sales.

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.

The Fund may also invest up to 5% of its total assets in securities of

other investment companies (including those advised by PIMCO),

including closed-end funds, exchange-traded funds and other open-end

funds, that invest primarily in municipal bonds and other municipal

securities of the types in which the Fund may invest directly.

The Fund may, but is not required to, invest in derivative instruments,

such as options, futures and forward contracts or swap agreements. For

purposes of the Fund's 80% policy, the Fund currently values its

derivative instruments based on their market value. The Fund may,

without limitation, seek to obtain market exposure to the securities in

which it primarily invests by entering into a series of purchase and sale

contracts or by using other investment techniques (such as buybacks or

dollar rolls). The Fund may use derivative instruments for other

purposes, including to seek to increase liquidity, provide efficient

portfolio management, broaden investment opportunities (including

taking short or negative positions), implement a tax or cash

management strategy, gain exposure to a particular security or segment

of the market, modify the effective duration of the Fund's portfolio

investments and/or enhance total return.

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 with certain other persons, including certain affiliates of the

Investment Manager and certain public or private funds managed by

PIMCO and its affiliates, subject to certain terms and conditions. The

exemptive relief from the SEC with respect to co

-

investments imposes

extensive conditions on any co-investments made in reliance on such

relief.

To the extent consistent with the applicable liquidity requirements for

interval funds under Rule 23c-3 under the Act, the Fund may invest

without limit in illiquid investments.

Temporary defensive investments.

The Fund may make short-term

investments when attempting to respond to adverse market, economic,

political, or other conditions, as determined by PIMCO. Upon PIMCO's

recommendation, the Fund may, for temporary defensive purposes,

deviate from its investment strategy by investing some or all of its total

assets in investments such as high grade debt securities, including high

quality, short-term debt securities, and cash and cash equivalents. The

Fund may not achieve its investment objectives when it does so.

The following provides additional information regarding the types of

securities and other instruments in which the Fund will ordinarily invest.

A more detailed discussion of these and other instruments and

investment techniques that may be used by the Fund is provided under

"Investment Objectives and Policies" in the Statement of Additional

Information.

Municipal Bonds

Municipal bonds share the attributes of debt/fixed income securities in

general, but are generally issued by states, municipalities and other

political subdivisions, agencies, authorities and instrumentalities of

states and multi-state agencies or authorities. They may be either

taxable or tax-exempt instruments. The municipal bonds that the Fund

may purchase include, without limitation, general obligation bonds and

limited obligation bonds (or revenue bonds), including industrial

development bonds issued pursuant to former federal tax law. General

obligation bonds are obligations involving the credit of an issuer

possessing taxing power and are payable from such issuer's general

revenues and not from any particular source. Limited obligation bonds

are payable only from the revenues derived from a particular facility or

class of facilities or, in some cases, from the proceeds of a special excise

or other specific revenue source or annual revenues. Tax-exempt private

activity bonds and industrial development bonds generally are also

limited obligation bonds and thus are not payable from the issuer's

general revenues. The credit and quality of private activity bonds and

industrial development bonds are usually related to the credit of the

corporate user of the facilities. Payment of interest on and repayment of

principal of such bonds is the responsibility of the corporate user (and/or

any guarantor).

The Fund may invest in pre-refunded municipal bonds. Pre-refunded

municipal bonds are bonds that have been refunded to a call date prior

to the final maturity of principal, or, in the case of pre-refunded

municipal bonds commonly referred to as "escrowed-to-maturity

bonds," to the final maturity of principal, and remain outstanding in the

municipal market. The payment of principal and interest of the

pre-refunded municipal bonds held by the Fund is funded from

securities in a designated escrow account that holds U.S. Treasury

securities or other obligations of the U.S. Government (including its

agencies and instrumentalities ("Agency Securities")). Interest payments

on pre-refunded bonds issued on or prior to December 31, 2017 are

exempt from federal income tax; pre-refunded bonds issued after

December 31, 2017 will not qualify for such tax-advantaged treatment.

Pre-refunded municipal bonds usually will bear an AAA/Aaa rating (if a

re-rating has been requested and paid for) because they are backed by

U.S. Treasury securities or Agency Securities. The escrow account

securities pledged to pay the principal and interest of the pre-refunded

municipal bond do not guarantee the price movement of the bond

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before maturity. Issuers of municipal bonds refund in advance of

maturity the outstanding higher cost debt and issue new, lower cost

debt, placing the proceeds of the lower cost issuance into an escrow

account to pre-refund the older, higher cost debt. Investment in

pre-refunded municipal bonds held by the Fund may subject the Fund to

interest rate risk and market risk. In addition, while a secondary market

exists for pre-refunded municipal bonds, if the Fund sells pre-refunded

municipal bonds prior to maturity, the price received may be more or

less than the original cost, depending on market conditions at the time

of sale.

The Fund may invest in municipal lease obligations. A lease is not a full

faith and credit obligation of the issuer and is usually backed only by the

borrowing government's unsecured pledge to make annual

appropriations for lease payments. There have been challenges to the

legality of lease financing in numerous states, and, from time to time,

certain municipalities have considered not appropriating money for

lease payments. In deciding whether to purchase a lease obligation for

the Fund, PIMCO will assess the financial condition of the borrower or

obligor, the merits of the project, the level of public support and other

credit characteristics of the obligor, and the legislative history of lease

financing in the state. These securities may be less readily marketable

than other municipal securities.

Some longer-term municipal bonds give the investor the right to "put"

or sell the security at par (face value) within a specified number of days

following the investor's request—usually one to seven days. This

demand feature enhances a security's liquidity by shortening its effective

maturity and enables it to trade at a price equal to or very close to par. If

a demand feature terminates prior to being exercised, the Fund would

hold the longer-term security, which could experience substantially more

volatility.

The Fund may invest in municipal warrants, which are essentially call

options on municipal bonds. In exchange for a premium, municipal

warrants give the purchaser the right, but not the obligation, to

purchase a municipal bond in the future. The Fund may purchase a

warrant to lock in forward supply in an environment in which the

current issuance of bonds is sharply reduced. Like options, warrants may

expire worthless and may have reduced liquidity.

The Fund may invest in municipal bonds with credit enhancements such

as letters of credit, municipal bond insurance and standby bond

purchase agreements ("SBPAs"). Letters of credit are issued by a third

party, usually a bank, to enhance liquidity and to ensure repayment of

principal and any accrued interest if the underlying municipal bond

should default. Municipal bond insurance, which is usually purchased by

the bond issuer from a private, nongovernmental insurance company,

provides an unconditional and irrevocable guarantee that the insured

bond's principal and interest will be paid when due. Insurance does not

guarantee the price of the bond. The credit rating of an insured bond

reflects the credit rating of the insurer, based on its claims-paying ability.

The obligation of a municipal bond insurance company to pay a claim

extends over the life of each insured bond. Although defaults on insured

municipal bonds have been low to date and municipal bond insurers

have met their claims, there is no assurance that this will continue. A

higher-than expected default rate could strain the insurer's loss reserves

and adversely affect its ability to pay claims to bondholders. Because a

significant portion of insured municipal bonds that have been issued

and are outstanding is insured by a small number of insurance

companies, not all of which have the highest credit rating, an event

involving one or more of these insurance companies, such as a credit

rating downgrade, could have a significant adverse effect on the value

of the municipal bonds insured by such insurance company or

companies and on the municipal bond markets as a whole. An SBPA is a

liquidity facility provided to pay the purchase price of bonds that cannot

be re-marketed. The obligation of the liquidity provider (usually a bank)

is only to advance funds to purchase tendered bonds that cannot be

re-marketed and does not cover principal or interest under any other

circumstances. The liquidity provider's obligations under the SBPA are

usually subject to numerous conditions, including the continued

creditworthiness of the underlying borrower.

Tender Option Bonds.

The Fund may invest in trust certificates

issued in tender option bond programs. In a tender option bond

transaction ("TOB"), a tender option bond trust ("TOB Trust") issues

floating rate certificates ("TOB Floater") and residual interest

certificates ("TOB Residual") and utilizes the proceeds of such issuance

to purchase a fixed-rate municipal bond ("Fixed Rate Bond") that either

is owned or identified by the Fund. The TOB Floater is generally issued to

third party investors (typically a money market fund) and the TOB

Residual is generally issued to the Fund, which sold or identified the

Fixed Rate Bond. The TOB Trust divides the income stream provided by

the Fixed Rate Bond to create two securities, the TOB Floater, which is a

short-term security, and the TOB Residual, which is a longer-term

security. The interest rates payable on the TOB Residual issued to the

Fund bear an inverse relationship to the interest rate on the TOB Floater.

The interest rate on the TOB Floater is reset by a remarketing process

typically every 7 to 35 days. After income is paid on the TOB Floater at

current rates, the residual income from the Fixed Rate Bond goes to the

TOB Residual. Therefore, rising short-term rates result in lower income

for the TOB Residual, and vice versa. In the case of a TOB Trust that

utilizes the cash received (less transaction expenses) from the issuance

of the TOB Floater and TOB Residual to purchase the Fixed Rate Bond

from the Fund, the Fund may then invest the cash received in additional

securities, generating leverage for the Fund. Other PIMCO-managed

accounts may also contribute municipal bonds to a TOB Trust into which

the Fund has contributed Fixed Rate Bonds. If multiple PIMCO-managed

accounts participate in the same TOB Trust, the economic rights and

obligations under the TOB Residual will be shared among the funds

ratably in proportion to their participation in the TOB Trust.

The TOB Residual may be more volatile and less liquid than other

municipal bonds of comparable maturity. In most circumstances, the

TOB Residual holder bears substantially all of the underlying Fixed Rate

Bond's downside investment risk and also benefits from any

appreciation in the value of the underlying Fixed Rate Bond.

Investments in a TOB Residual typically will involve greater risk than

investments in Fixed Rate Bonds.

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A TOB Residual held by the Fund provides the Fund with the right to: (1)

cause the holders of the TOB Floater to tender their notes at par, and (2)

cause the sale of the Fixed Rate Bond held by the TOB Trust, thereby

collapsing the TOB Trust. TOB Trusts are generally supported by a

liquidity facility provided by a third party bank or other financial

institution (the "Liquidity Provider") that provides for the purchase of

TOB Floaters that cannot be remarketed. The holders of the TOB Floaters

have the right to tender their certificates in exchange for payment of par

plus accrued interest on a periodic basis (typically weekly) or on the

occurrence of certain mandatory tender events. The tendered TOB

Floaters are remarketed by a remarketing agent, which is typically an

affiliated entity of the Liquidity Provider. If the TOB Floaters cannot be

remarketed, the TOB Floaters are purchased by the TOB Trust either from

the proceeds of a loan from the Liquidity Provider or from a liquidation

of the Fixed Rate Bond.

The TOB Trust may also be collapsed without the consent of the Fund, as

the TOB Residual holder, upon the occurrence of certain "tender option

termination events" (or "TOTEs") as defined in the TOB Trust

agreements. Such termination events typically include the bankruptcy or

default of the municipal bond, a substantial downgrade in credit quality

of the municipal bond, or a judgment or ruling that interest on the Fixed

Rate Bond is subject to federal income taxation. Upon the occurrence of

a termination event, the TOB Trust would generally be liquidated in full

with the proceeds typically applied first to any accrued fees owed to the

trustee, remarketing agent and liquidity provider, and then to the

holders of the TOB Floater up to par plus accrued interest owed on the

TOB Floater and a portion of gain share, if any, with the balance paid

out to the TOB Residual holder. In the case of a mandatory termination

event ("MTE"), after the payment of fees, the TOB Floater holders would

be paid before the TOB Residual holders (i.e., the Fund). In contrast, in

the case of a TOTE, after payment of fees, the TOB Floater holders and

the TOB Residual holders would be paid pro rata in proportion to the

respective face values of their certificates.

If there are insufficient proceeds from the liquidation of the TOB Trust,

the party that would bear the losses would depend upon whether the

Fund holds a non-recourse TOBs Residual or a recourse TOBs Residual. If

the Fund holds a non-recourse TOBs Residual, the Liquidity Provider or

holders of the TOBs Floaters would bear the losses on those securities

and there would be no recourse to the Fund's assets. If the Fund holds a

recourse TOBs Residual, the Fund (and, indirectly, holders of the Fund's

Common Shares) would typically bear the losses. In particular, if the

Fund holds a recourse TOBs Residual, it will typically have entered into

an agreement pursuant to which the Fund would be required to pay to

the Liquidity Provider the difference between the purchase price of any

TOBs Floaters put to the Liquidity Provider by holders of the TOBs

Floaters and the proceeds realized from the remarketing of those TOBs

Floaters or the sale of the assets in the TOBs Issuer. The Fund may invest

in both non-recourse and recourse TOBs Residuals to leverage its

portfolio.

The TOB Trust may draw upon a loan from the Liquidity Provider to

purchase the tendered TOB Floaters. Any loans made by the Liquidity

Provider will be secured by the purchased TOB Floaters held by the TOB

Trust and will be subject to an interest rate agreed with the Liquidity

Provider.

The use of TOBs typically will impact the Fund's duration and cause the

Fund to be subject to increased duration and interest rate risk.

Bonds

The Fund may invest in a wide variety of bonds of varying maturities

issued by non-U.S. (foreign) and U.S. corporations and other business

entities, governments and quasi-governmental entities

and

municipalities and

other issuers. Bonds may include, among other

things, fixed or variable/floating-rate debt obligations, including bills,

notes, debentures, money market instruments and similar instruments

and securities. Bonds generally are used by corporations as well as

governments and other issuers to borrow money from investors. The

issuer pays the investor a fixed or variable rate of interest and normally

must repay the amount borrowed on or before maturity. Certain bonds

are "perpetual" in that they have no maturity date.

Reverse Repurchase Agreements and Dollar Rolls/Buybacks

As described under "Use of Leverage" the Fund may use, among other

things, reverse repurchase agreements and/or dollar rolls/buybacks to

add leverage to its portfolio. Under a reverse repurchase agreement, the

Fund sells securities to a bank or broker

-

dealer and agrees to

repurchase the securities at a mutually agreed future date and price. A

dollar roll/buyback is similar to a reverse repurchase agreement except

that the counterparty with which the Fund enters into a dollar

roll/buyback transaction is not obligated to return the same securities as

those originally sold by the Fund, but only securities that are

"substantially identical." Generally, the effect of a reverse repurchase

agreement or dollar roll/buyback transaction is that the Fund can

recover and reinvest all or most of the cash invested in the portfolio

securities involved during the term of the agreement and still be entitled

to the returns associated with those portfolio securities, thereby

resulting in a transaction similar to a borrowing and giving rise to

leverage for the Fund. The Fund will incur interest expense as a cost of

utilizing reverse repurchase agreements and dollar rolls/buybacks. In the

event the buyer of securities under a reverse repurchase agreement or

dollar roll/buyback files for bankruptcy or becomes insolvent, the Fund's

use of the proceeds of the agreement may be restricted pending a

determination by the other party, or its trustee or receiver, whether to

enforce the Fund's obligation to repurchase the securities.

Loans and Other Indebtedness; Loan Acquisitions,

Participations and Assignments

The Fund may purchase indebtedness and participations in loans

held

and/or originated by private financial institutions

,

including commercial

and residential mortgage loans, corporate loans and consumer loans,

as

well as interests and/or servicing or similar rights in such loans. Such

instruments may be secured or unsecured and may be newly-originated

(and may be specifically designed for the Fund). Such investments are

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different from traditional debt securities in that debt securities are part

of a large issue of securities to the public whereas indebtedness may

not be a security for purposes of the Securities Act and may represent a

specific loan to a borrower. Loan participations typically represent direct

participation, together with other parties, in a loan to a borrower, and

generally are offered by banks or other financial institutions or lending

syndicates. The Fund may participate in such syndications, or can buy all

or part of a loan, becoming a lender. When purchasing indebtedness

and loan participations, the Fund assumes the credit risk associated

with the borrower and may assume the credit risk associated with an

interposed bank or other financial intermediary. The indebtedness and

loan participations that the Fund may acquire may not be rated by any

nationally recognized rating service.

A loan is often administered by an agent bank acting as agent for all

holders. The agent bank administers the terms of the loan, as specified

in the loan agreement. In addition, the agent bank is normally

responsible for the collection of principal and interest payments from

the borrower and the apportionment of these payments to the credit of

all institutions which are parties to the loan agreement. Unless, under

the terms of the loan or other indebtedness, the Fund has direct

recourse against the borrower, the Fund may have to rely on the agent

bank or other financial intermediary to apply appropriate credit

remedies against a borrower.

A financial institution's employment as agent bank might be terminated

in the event that it fails to observe a requisite standard of care or

becomes insolvent. A successor agent bank would generally be

appointed to replace the terminated agent bank, and assets held by the

agent bank under the loan agreement should remain available to

holders of such indebtedness. However, if assets held by the agent bank

for the benefit of the Fund were determined to be subject to the claims

of the agent bank's general creditors, the Fund might incur certain costs

and delays in realizing payment on a loan or loan participation and

could suffer a loss of up to its entire investment, including principal

and/or interest. In situations involving other interposed financial

institutions (e.g., an insurance company or governmental agency)

similar risks may arise.

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 values 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. In

the event of the bankruptcy of a borrower, the Fund could experience

delays or limitations in its ability to realize the benefits of any collateral

securing a loan.

The Fund may acquire loan participations with credit quality comparable

to that of issuers of its securities investments. Indebtedness of

borrowers whose creditworthiness is poor involves substantially greater

risks, and may be highly speculative. Some borrowers may never pay off

their indebtedness, or may pay only a small fraction of the amount

owed. Consequently, when acquiring indebtedness of borrowers with

poor credit, the Fund bears a substantial risk of losing the entire amount

invested. The Fund may make purchases of indebtedness and loan

participations to achieve income and/or capital appreciation

, rather than

to seek income

.

Loans and other types of direct indebtedness (which the Fund acquires

or otherwise gains exposure to) may not be readily marketable and may

be subject to restrictions on resale. 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"). In

some cases,

negotiations involved in disposing of indebtedness may require weeks

to complete. Consequently, some indebtedness may be difficult or

impossible to dispose of readily at what the Investment Manager

believes to be a fair price. In addition, valuation of illiquid indebtedness

involves a greater degree of judgment in determining the Fund's net

asset value than if that value were based on available market

quotations, and could result in significant variations in the Fund's daily

share price. At the same time, some loan interests are traded among

certain financial institutions and accordingly may be deemed liquid.

Please refer to "Illiquid Investments" for further discussion of regulatory

considerations and constraints relating to investment liquidity.

Investments in loan participations are considered to be debt obligations

for purposes of the Fund's investment restriction relating to the lending

of funds or assets.

In purchasing loans, the Fund will compete with a broad spectrum of

lenders. Increased competition for, or a diminishment in the available

supply of, qualifying loans could result in lower yields on such loans,

which could reduce Fund performance.

Investments in loans through a purchase of a loan or a direct

assignment of a financial institution's interests with respect to the loan

may involve additional risks to the Fund. The purchaser of an

assignment typically succeeds to all the rights and obligations under the

loan agreement with the same rights and obligations as the assigning

lender. Assignments may, however, be arranged through private

negotiations between potential assignees and potential assignors, and

the rights and obligations acquired by the purchaser of an assignment

may differ from, and be more limited than, those held by the assigning

lender. For example, if a loan is foreclosed, the Fund could become

owner, in whole or in part, of any collateral and would bear the costs

and liabilities associated with owning and holding or disposing of the

collateral. In addition, it is conceivable that under emerging legal

theories of lender liability, the Fund could be held liable. It is unclear

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whether loans and other forms of direct indebtedness offer securities

law protections against fraud and misrepresentation. In the absence of

definitive regulatory guidance, the Fund relies on the Investment

Manager's research in an attempt to avoid situations where fraud or

misrepresentation could adversely affect the Fund.

The Fund may invest in debtor-in-possession financings (commonly

known as "DIP financings"). DIP financings are arranged when an entity

seeks the protections of the bankruptcy court under Chapter 11 of the

U.S. Bankruptcy Code. These financings allow the entity to continue its

business operations while reorganizing under Chapter 11. Such

financings constitute senior liens on unencumbered security (i.e.,

security not subject to other creditors' claims). There is a risk that the

entity will not emerge from Chapter 11 and be forced to liquidate its

assets under Chapter 7 of the U.S. Bankruptcy Code. In the event of

liquidation, the Fund's only recourse will be against the property

securing the DIP financing.

In making a direct loan, the Fund is exposed to the risk that the

borrower may default or become insolvent and, consequently, that the

Fund will lose money on the loan. Furthermore, direct loans may subject

the Fund to liquidity and interest rate risk and certain direct loans may

be deemed illiquid. Direct loans are not publicly traded and may not

have a secondary market. The lack of a secondary market for direct loans

may have an adverse impact on the ability of the Fund to dispose of a

direct loan and/or to value the direct loan.

Various state licensing requirements could apply to the Fund with

respect to investments in loans and similar assets. The licensing

requirements could apply depending on the location of the borrower,

the location of the collateral securing the loan, or the location where the

Fund or PIMCO operates or has offices. In states in which it is licensed,

the Fund or PIMCO will be required to comply with applicable laws and

regulations, including consumer protection and anti-fraud laws, which

could impose restrictions on the Fund's or PIMCO's ability to take

certain actions to protect the value of its investments in such assets and

impose compliance costs. Failure to comply with such laws and

regulations could lead to, among other penalties, a loss of the Fund's or

PIMCO's license, which in turn could require the Fund to divest assets

located in or secured by real property located in that state. These risks

will also apply to issuers and entities in which the Fund invests that hold

similar assets, as well as any origination company or servicer in which

the Fund owns an interest.

Loan origination and servicing companies are routinely involved in legal

proceedings concerning matters that arise in the ordinary course of their

business. These legal proceedings range from actions involving a single

plaintiff to class action lawsuits with potentially tens of thousands of

class members. In addition, a number of participants in the loan

origination and servicing industry (including control persons of industry

participants) have been the subject of regulatory actions by state

regulators, including state attorneys general, and by the federal

government. Governmental investigations, examinations or regulatory

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

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

Fund seeks to engage in origination and/or servicing directly, or has a

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

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

litigation, regulatory actions and other proceedings. As a result, the

Fund may be required to pay legal fees, settlement costs, damages,

penalties or other charges, any or all of which could materially adversely

affect the Fund and its holdings.

Loan Origination

The Fund may invest in and/or originate loans, including, without

limitation, to, on behalf of, authorized by, sponsored by, and/or in

connection with a project for which authority and responsibility lie with

one or more U.S. states or territories, cities in a U.S. state or territory, or

political subdivisions, agencies, authorities or instrumentalities of such

states, territories or cities. These loans 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, including to borrowers that are unrated or

have credit ratings that are determined by one or more NRSROs and/or

PIMCO to be below investment grade. 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 a 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 loans acquired by the Fund may be of the type that count

towards the Fund's 80% policy or they may be loans that produce

income that is subject to regular federal income tax or California income

tax.

In making a direct loan, the Fund is exposed to the risk that the

borrower may default or become insolvent and, consequently, that the

Fund will lose money on the loan. Furthermore, direct loans may subject

the Fund to liquidity and interest rate risk, and certain direct loans may

be deemed illiquid. Direct loans are not publicly traded and may not

have a secondary market. The lack of a secondary market for direct loans

may have an adverse impact on the ability of the Fund to dispose of a

direct loan and/or to value the direct loan.

When engaging in direct lending, the Fund's performance may depend,

in part, on the ability of the Fund to originate loans on advantageous

terms. In originating and purchasing loans, the Fund will often compete

with a broad spectrum of lenders. Increased competition for, or a

diminishment in the available supply of, qualifying loans could result in

lower yields on and/or less advantageous terms of such loans, which

could reduce Fund performance.

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As part of its lending activities, the Fund may originate loans (including

subprime loans) to borrowers that are experiencing significant financial

or business difficulties, including borrowers involved in bankruptcy or

other reorganization and liquidation proceedings or that are rated

"below investment grade" by a NRSRO or unrated. Although the terms

of such financing may result in significant financial returns to the Fund,

they involve a substantial degree of risk. The level of analytical

sophistication, both financial and legal, necessary for successful

financing to borrowers experiencing significant business and financial

difficulties is unusually high. Different types of assets may be used as

collateral for the Fund's loans and, accordingly, the valuation of and

risks associated with such collateral will vary by loan. There is no

assurance that the Fund will correctly evaluate the value of the assets

collateralizing the Fund's loans or the prospects for a successful

reorganization or similar action. In any reorganization or liquidation

proceeding relating to a borrower that the Fund funds, the Fund may

lose all or part of the amounts advanced to the borrower or may be

required to accept collateral with a value less than the amount of the

loan advanced by the Fund or its affiliates to the borrower. Furthermore,

in the event of a default by a borrower, the Fund may have difficulty

disposing of the assets used as collateral for a loan.

Bridge loans are short-term loan arrangements (e.g., 12 to 18 months)

typically made by a borrower in anticipation of intermediate-term or

long-term permanent financing. Most bridge loans are structured as

floating-rate debt with step-up provisions under which the interest rate

on the bridge loan rises over time. Thus, the longer the loan remains

outstanding, the more the interest rate increases. In addition, bridge

loans commonly contain a conversion feature that allows the bridge

loan investor to convert its loan interest into senior exchange notes if

the loan has not been prepaid in full on or prior to its maturity date.

Bridge loans may be subordinate to other debt and may be secured or

unsecured. Like any loan, bridge loans involve credit risk. 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.

Various state licensing requirements could apply to the Fund with

respect to the origination, acquisition, holding, servicing, foreclosure

and/or disposition of loans and similar assets. The licensing

requirements could apply depending on the location of the borrower,

the location of the collateral securing the loan, or the location where the

Fund or PIMCO operates or has offices. In states in which it is licensed,

the Fund or PIMCO will be required to comply with applicable laws and

regulations, including consumer protection and anti-fraud laws, which

could impose restrictions on the Fund's or PIMCO's ability to take

certain actions to protect the value of its holdings in such assets and

impose compliance costs. Failure to comply with such laws and

regulations could lead to, among other penalties, a loss of the Fund's or

PIMCO's license, which in turn could require the Fund to divest assets

located in or secured by real property located in that state. These risks

will also apply to issuers and entities in which the Fund invests that hold

similar assets, as well as any origination company or servicer in which

the Fund owns an interest. Loan origination and servicing companies

are routinely involved in legal proceedings concerning matters that arise

in the ordinary course of their business. These legal proceedings range

from actions involving a single plaintiff to class action lawsuits with

potentially tens of thousands of class members. In addition, a number of

participants in the loan origination and servicing industry (including

control persons of industry participants) have been the subject of

regulatory actions by state regulators, including state attorneys general,

and by the federal government. Governmental investigations,

examinations, regulatory actions, or private lawsuits, including

purported class action lawsuits, may adversely affect such companies'

financial results. To the extent the Fund seeks to engage in origination

and/or servicing directly, or has a financial interest in, or is otherwise

affiliated with, an origination or servicing company, the Fund will be

subject to enhanced risks of litigation, regulatory actions and other

proceedings. As a result, the Fund may be required to pay legal fees,

settlement costs, damages, penalties or other charges, any or all of

which could materially adversely affect the Fund and its holdings.

Commercial Paper

Commercial paper represents short-term unsecured promissory notes

issued in bearer form by corporations such as banks or bank holding

companies and finance companies. The rate of return on commercial

paper may be linked or indexed to the level of exchange rates between

the U.S. dollar and a foreign currency or currencies.

U.S. Government Securities

U.S. government securities are obligations of and, in certain cases,

guaranteed by, the U.S. government, its agencies or instrumentalities.

The U.S. government does not guarantee the NAV of the Fund's

Common Shares. Some U.S. government securities, such as Treasury bills,

notes

,

bonds, and securities guaranteed by GNMA, are supported by the

full faith and credit of the United States; others, such as those of the

Federal Home Loan Banks ("FHLBs") or the Federal Home Loan

Mortgage Corporation ("FHLMC"), are supported by the right of the

issuer to borrow from the U.S. Department of the Treasury (the

"U.S. Treasury"); others, such as those of FNMA, are supported by the

discretionary authority of the U.S. government to purchase the agency's

obligations; and still others are supported only by the credit of the

instrumentality. U.S. government securities may include zero coupon

securities, which do not distribute interest on a current basis and tend to

be subject to greater risk than interest-paying securities of similar

maturities. The U.S. government securities in which the Fund may invest

may pay fixed, floating, variable or adjustable interest rates.

Preferred Securities

Preferred securities represent an equity interest in a company that

generally entitles the holder to receive, in preference to the holders of

other stocks such as common stocks, dividends and a fixed share of the

proceeds resulting from liquidation of the company. Unlike common

stocks, preferred securities usually do not have voting rights. Preferred

securities in some instances are convertible into common stock. Some

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preferred securities also entitle their holders to receive additional

liquidation proceeds on the same basis as holders of a company's

common stock, and thus also represent an ownership interest in the

company. Some preferred securities offer a fixed rate of return with no

maturity date. Because they never mature, these preferred securities

may act like long-term bonds, can be more volatile than other types of

preferred securities and may have heightened sensitivity to changes in

interest rates. Other preferred securities have a variable dividend,

generally determined on a quarterly or other periodic basis, either

according to a formula based upon a specified premium or discount to

the yield on particular U.S. Treasury securities or based on an auction

process, involving bids submitted by holders and prospective purchasers

of such securities. Although they are equity securities, preferred

securities have certain characteristics of both debt securities and

common stock. They are like debt securities in that their stated income is

generally contractually fixed. They are like common stocks in that they

do not have rights to precipitate bankruptcy proceedings or collection

activities in the event of missed payments. Furthermore, preferred

securities have many of the key characteristics of equity due to their

subordinated position in an issuer's capital structure and because their

quality and value are heavily dependent on the profitability of the issuer

rather than on any legal claims to specific assets or cash flows. Because

preferred securities represent an equity ownership interest in a

company, their value usually will react more strongly than bonds and

other debt instruments to actual or perceived changes in a company's

financial condition or prospects, or to fluctuations in the equity markets.

In order to be payable, dividends on preferred securities must be

declared by the issuer's board of directors. In addition, distributions on

preferred securities may be subject to deferral and thus may not be

automatically payable. Income payments on some preferred securities

are cumulative, causing dividends and distributions to accrue even if

they are not declared by the board of directors of the issuer or otherwise

made payable. Other preferred securities are non-cumulative, meaning

that skipped dividends and distributions do not continue to accrue.

There is no assurance that dividends on preferred securities in which the

Fund invests will be declared or otherwise made payable.

Preferred securities have a liquidation value that generally equals their

original purchase price at the date of issuance. The market values of

preferred securities may be affected by favorable and unfavorable

changes affecting the issuers' industries or sectors. They also may be

affected by actual and anticipated changes or ambiguities in the tax

status of the security and by actual and anticipated changes or

ambiguities in tax laws, such as changes in corporate and individual

income tax rates or the characterization of dividends as tax-advantaged.

The dividends paid on the preferred securities in which the Fund may

invest might not be eligible for tax-advantaged "qualified dividend"

treatment. See "Tax Matters." Because the claim on an issuer's earnings

represented by preferred securities may become disproportionately large

when interest rates fall below the rate payable on the securities or for

other reasons, the issuer may redeem preferred securities, generally after

an initial period of call protection in which the security is not

redeemable. Thus, in declining interest rate environments in particular,

the Fund's holdings of higher dividend-paying preferred securities may

be reduced and the Fund may be unable to acquire securities paying

comparable rates with the redemption proceeds.

Bank Capital Securities and Bank Obligations

The Fund may invest in bank capital securities of both non-U.S. (foreign)

and U.S. issuers. Bank capital securities are issued by banks to help fulfill

their regulatory capital requirements. There are three common types of

bank capital: Lower Tier II, Upper Tier II and Tier I. Upper Tier II securities

are commonly thought of as hybrids of debt and preferred securities.

Upper Tier II securities are often perpetual (with no maturity date),

callable and have a cumulative interest deferral feature. This means that

under certain conditions, the issuer bank can withhold payment of

interest until a later date. However, such deferred interest payments

generally earn interest. Tier I securities often take the form of trust

preferred securities.

The Fund may also invest in other bank obligations including, without

limitation, CoCos, certificates of deposit, bankers' acceptances and fixed

time deposits. 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. Certificates of deposit are negotiable certificates that are

issued against funds deposited in a commercial bank for a definite

period of time and that earn a specified return. Bankers' acceptances

are negotiable drafts or bills of exchange, normally drawn by an

importer or exporter to pay for specific merchandise, which are

"accepted" by a bank, meaning, in effect, that the bank unconditionally

agrees to pay the face value of the instrument on maturity. Fixed time

deposits are bank obligations payable at a stated maturity date and

bearing interest at a fixed rate. Fixed time deposits may be withdrawn

on demand by the investor, but may be subject to early withdrawal

penalties which vary depending upon market conditions and the

remaining maturity of the obligation. There are generally no contractual

restrictions on the right to transfer a beneficial interest in a fixed time

deposit to a third party, although there is generally no market for such

deposits. The Fund may also hold funds on deposit with its custodian

bank in an interest-bearing account for temporary purposes.

High Yield Securities

The Fund may invest without limit in debt instruments that are, at the

time of purchase, rated below "investment grade" by at least one of

Moody's, S&P Global Ratings or Fitch, or unrated but determined by

PIMCO to be of comparable quality. "Investment grade" means a

rating, in the case of Moody's, of Baa3 or higher, or in the case of S&P

and Fitch, of BBB-or higher. The Fund may invest in securities of

stressed, distressed or defaulted issuers, which include securities at risk

of being in default as to the repayment of principal and/or interest at

the time of acquisition by the Fund or that are rated in the lower rating

categories by one or more NRSROs (for example, Ca or lower by

Moody's or CC or lower by S&P or Fitch) or, if unrated, are determined

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by PIMCO to be of comparable quality. The Fund may invest in defaulted

securities and debtor-in-possession financings. Below investment grade

securities are commonly referred to as "high yield" securities or "junk

bonds." High yield securities involve a greater degree of risk (in

particular, a greater risk of default) than, and special risks in addition to,

the risks associated with investment grade debt obligations. While

offering a greater potential opportunity for capital appreciation and

higher yields, high yield securities typically entail greater potential price

volatility and may be less liquid than higher-rated securities. High yield

securities may be regarded as predominantly speculative with respect to

the issuer's continuing ability to make timely principal and interest

payments. They also may be more susceptible to real or perceived

adverse economic and competitive industry conditions than higher-rated

securities. Debt securities in the lowest investment grade category also

may be considered to possess some speculative characteristics by

certain ratings agencies.

The market values of high yield securities tend to reflect individual

developments of the issuer to a greater extent than do higher-quality

securities, which tend to react mainly to fluctuations in the general level

of interest rates. In addition, lower-quality debt securities tend to be

more sensitive to general economic conditions. Certain emerging market

governments that issue high yield securities in which the Fund may

invest are among the largest debtors to commercial banks, foreign

governments and supranational organizations, such as the World Bank,

and may not be able or willing to make principal and/or interest

payments as they come due.

Credit ratings and unrated securities

Rating agencies are private services that provide ratings of the credit

quality of debt obligations. Appendix A to this prospectus describes the

various ratings assigned to debt obligations by Moody's, S&P and Fitch.

As noted in Appendix A, Moody's, S&P and Fitch may modify their

ratings of securities to show relative standing within a rating category,

with the addition of numerical modifiers (1, 2 or 3) in the case of

Moody's, and with the addition of a plus (+) or minus (-) sign in the case

of S&P and Fitch. Ratings assigned by a rating agency are not absolute

standards of credit quality and do not evaluate market risks. Rating

agencies may fail to make timely changes in credit ratings, and an

issuer's current financial condition may be better or worse than a rating

indicates. The Fund will not necessarily sell a security when its rating is

reduced below its rating at the time of purchase. PIMCO does not rely

solely on credit ratings, and develops its own analysis of issuer credit

quality. The ratings of a debt security may change over time. Moody's,

S&P and Fitch monitor and evaluate the ratings assigned to securities

on an ongoing basis. As a result, debt instruments held by the Fund

could receive a higher rating (which would tend to increase their value)

or a lower rating (which would tend to decrease their value) during the

period in which they are held by the Fund.

The Fund may purchase unrated securities (which are not rated by a

rating agency) if PIMCO determines, in its sole discretion, that the

security is of comparable quality to a rated security that the Fund may

purchase. In making determinations, PIMCO may take into account

different factors than those taken into account by rating agencies, and

PIMCO's rating of a security may differ from the rating that a rating

agency may have given the same securities. Unrated securities may be

less liquid than comparable rated securities and involve the risk that a

portfolio manager may not accurately evaluate the security's

comparative credit rating. Analysis of the creditworthiness of issuers of

high yield securities may be more complex than for issuers of

higher-quality fixed income securities. The Fund's success in achieving its

investment objectives may depend more heavily on the portfolio

manager's creditworthiness analysis than if the Fund invested

exclusively in higher-quality and higher-rated securities.

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

Zero-coupon bonds pay interest only at maturity rather than at intervals

during the life of the security. Like zero-coupon bonds, "step up" bonds

pay no interest initially but eventually begin to pay a coupon rate prior

to maturity, which rate may increase at stated intervals during the life of

the security. Partial payment in kind loans and bonds ("PIKs") are debt

obligations that pay "interest" in the form of other debt obligations,

instead of in cash. Each of these instruments is normally issued and

traded at a deep discount from face value. Zero-coupon bonds, step-ups

and PIKs allow an issuer to avoid or delay the need to generate cash to

meet current interest payments and, as a result, may involve greater

credit risk than bonds that pay interest currently or in cash. The Fund

would be required to distribute the income on these instruments as it

accrues, even though the Fund will not receive the income on a current

basis or in cash. Thus, the Fund may have to sell investments, including

when it may not be advisable to do so, to make income distributions to

its shareholders.

Inflation-Indexed Bonds

Inflation-indexed bonds (other than municipal inflation-indexed bonds

and certain corporate inflation-indexed bonds) are fixed income

securities the principal value of which is periodically adjusted according

to the rate of inflation. If the index measuring inflation falls, the

principal value of inflation-indexed bonds (other than municipal

inflation-indexed bonds and certain corporate inflation-indexed bonds)

will be adjusted downward, and consequently the interest payable on

these securities (calculated with respect to a smaller principal amount)

will be reduced. Repayment of the original bond principal upon maturity

(as adjusted for inflation) is guaranteed in the case of Treasury Inflation

Protected Securities ("TIPS"). For bonds that do not provide a similar

guarantee, the adjusted principal value of the bond repaid at maturity

may be less than the original principal. TIPS may also be divided into

individual zero-coupon instruments for each coupon or principal

payment (known as "iSTRIPS"). An iSTRIP of the principal component of

a TIPS issue will retain the embedded deflation floor that will allow the

holder of the security to receive the greater of the original principal or

inflation-adjusted principal value at maturity. iSTRIPS may be less liquid

than conventional TIPS because they are a small component of the TIPS

market. Municipal inflation-indexed securities are municipal bonds that

pay coupons based on a fixed rate plus CPI. With regard to municipal

inflation-indexed bonds and certain corporate inflation-indexed bonds,

the inflation adjustment is typically reflected in the semi-annual coupon

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payment. As a result, the principal value of municipal inflation-indexed

bonds and such corporate inflation-indexed bonds does not adjust

according to the rate of inflation. At the same time, the value of

municipal inflation-indexed securities and such corporate

inflation-indexed securities generally will not increase if the rate of

inflation decreases. Because municipal inflation-indexed securities and

corporate inflation-indexed securities are a small component of the

municipal bond and corporate bond markets, respectively, they may be

less liquid than conventional municipal and corporate bonds.

The value of inflation-indexed bonds is expected to change in response

to changes in real interest rates. Real interest rates are tied to the

relationship between nominal interest rates and the rate of inflation. If

nominal interest rates increase at a faster rate than inflation, real

interest rates may rise, leading to a decrease in value of

inflation-indexed bonds. Any increase in the principal amount of an

inflation-indexed bond will be considered taxable ordinary income, even

though investors do not receive their principal until maturity. See "Tax

Matters" in this prospectus and "Taxation" in the Statement of

Additional Information.

Variable- and Floating-Rate Securities

Variable- and floating-rate instruments are instruments that pay interest

at rates that adjust whenever a specified interest rate changes and/or

that reset on predetermined dates (such as the last day of a month or

calendar quarter). In addition to loans, variable- and floating-rate

instruments may include, without limitation, instruments such as

catastrophe and other event-linked bonds, bank capital securities,

unsecured and/or secured loans (including, but not limited to, bank

and/or other syndicated loans and non-syndicated (private direct)

loans), corporate bonds, money market instruments and certain types of

mortgage-related and other asset-backed securities. Due to their

variable- or floating-rate features, these instruments will generally pay

higher levels of income in a rising interest rate environment and lower

levels of income as interest rates decline. For the same reason, the

market value of a variable- or floating-rate instrument is generally

expected to have less sensitivity to fluctuations in market interest rates

than a fixed-rate instrument, although the value of a variable- or

floating-rate instrument may nonetheless decline as interest rates rise

and due to other factors, such as changes in credit quality.

The Fund may invest in floating rate debt instruments ("floaters") and

engage in credit spread trades. The interest rate on a floater is a variable

rate which is tied to another interest rate, such as a money-market index

or U.S. Treasury bill rate. The interest rate on a floater resets periodically,

typically every six months. Due to the interest rate reset feature, floaters

provide the Fund with a certain degree of protection against rises in

interest rates, although the Fund will participate in any declines in

interest rates as well. A credit spread trade is an investment position

relating to a difference in the prices or interest rates of two bonds or

other securities, in which the value of the investment position is

determined by changes in the difference between the prices or interest

rates, as the case may be, of the respective securities.

Inverse Floaters

An inverse floater is a type of debt instrument that bears a floating or

variable interest rate that moves in the opposite direction to interest

rates generally or the interest rate on another security or index. Changes

in interest rates generally, or the interest rate of the other security or

index, inversely affect the interest rate paid on the inverse floater, with

the result that the inverse floater's price will be considerably more

volatile than that of a fixed-rate bond. The Fund may invest without

limitation in inverse floaters, which brokers typically create by depositing

an income-producing instrument, which may be a mortgage-related

asset, in a trust. The trust in turn issues a variable rate security and

inverse floaters. The interest rate for the variable rate security is typically

determined by an index or an auction process, while the inverse floater

holder receives the balance of the income from the underlying

income-producing instrument less an auction fee. The market prices of

inverse floaters may be highly sensitive to changes in interest rates and

prepayment rates on the underlying securities, and may decrease

significantly when interest rates increase or prepayment rates change. In

a transaction in which the Fund purchases an inverse floater from a

trust, and the underlying bond was held by the Fund prior to being

deposited into the trust, the Fund typically treats the transaction as a

secured borrowing for financial reporting purposes. As a result, for

financial reporting purposes, the Fund will generally incur a non-cash

interest expense with respect to interest paid by the trust on the

variable rate securities, and will recognize additional interest income in

an amount directly corresponding to the non-cash interest expense.

Therefore, the Fund's NAV per Common Share and performance are not

affected by the non-cash interest expense. This accounting treatment

does not apply to inverse floaters acquired by the Fund when the Fund

did not previously own the underlying bond.

Derivatives

The Fund may, but is not required to, utilize various derivative strategies

(both long and short positions) for investment purposes, leveraging

purposes, or in an attempt to hedge against market, credit, interest rate,

currency and other risks in the portfolio. See "Use of Leverage."

Additionally, the Fund may invest in futures and other derivatives that

provide relevant 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, as applicable. Generally, derivatives are financial contracts

whose value depends upon, or is derived from, the value of an

underlying asset, reference rate or index, and may relate to, among

others, individual debt instruments, interest rates, currencies or currency

exchange rates, commodities and related indexes. Examples of

derivative instruments that the Fund may use include, without

limitation, futures and forward contracts (including foreign currency

exchange contracts), call and put options (including options on futures

contracts), credit default swaps, total return swaps, basis swaps and

other swap agreements. 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. The Fund's

use of derivative instruments involves risks different from, or possibly

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greater than, the risks associated with investment directly in securities

and other more traditional investments. See "Principal Risks of the

Fund—Derivatives Risk." Certain types of derivative instruments that

the Fund may utilize are described elsewhere in this section, including

those described under "Municipal Bonds—Tender Option Bonds,"

"—Certain Interest Rate Transactions," and "—Credit Default Swaps"

Please see "Investment Objectives and Policies—Derivative

Instruments" in the Statement of Additional Information for additional

information about these and other derivative instruments that the Fund

may use and the risks associated with such instruments. There is no

assurance that these derivative strategies will be available at any time

or that PIMCO will determine to use them for the Fund or, if used, that

the strategies will be successful. In addition, the Fund may be subject to

certain restrictions on its use of derivative strategies imposed by

guidelines of one or more regulatory authorities or rating agencies that

may issue ratings for any Preferred Shares issued by the Fund.

Rule 144A Securities

The Fund may invest in securities that have not been registered for

public sale, but that are eligible for purchase and sale pursuant to

Rule 144A under the Securities Act. Rule 144A permits certain qualified

institutional buyers, such as the Fund, to trade in privately placed

securities that have not been registered for sale under the Securities Act.

Illiquid Investments

To the extent consistent with the applicable liquidity requirements for

interval funds under Rule 23c-3 of the Act, the Fund may invest without

limit in illiquid investments. PIMCO may be subject to significant delays

in disposing of illiquid investments, and other transaction costs that are

higher than those for transactions in liquid investments may entail

registration expenses and other transaction costs that are higher than

those for transactions in liquid investments. The term "illiquid

investments" for this purpose means any investment that the Fund

reasonably expects cannot be sold or disposed of in current market

conditions in seven calendar days or less without the sale or disposition

significantly changing the market value of the investment. Restricted

investments, i.e., investments subject to legal or contractual restrictions

on resale, may be illiquid. However, some restricted investments (such as

investments issued pursuant to Rule 144A under the Securities Act, and

certain commercial paper) may be treated as liquid, although they may

be relatively less liquid than registered investments traded on

established secondary markets.

Other Investment Companies

The Fund may invest up to 5% of its total assets in securities of other

investment companies (including those advised by PIMCO), including

closed-end funds, exchange-traded funds and other open-end funds,

that invest primarily in municipal bonds and other municipal securities

of the types in which the Fund may invest directly. The Fund may invest

in certain money market funds and/or short-term bond funds ("Central

Funds"), to the extent permitted by the Act, the rules thereunder or any

exemptive relief therefrom. The Central Funds are registered investment

companies created for use by certain registered investment companies

advised by PIMCO in connection with their cash management activities.

When investing in another investment company, the Fund generally will

consider such investment company's 80% policy for purposes of

determining whether to treat an investment therein towards the

Fund's 80% policy or, if the investment company does not have an 80%

policy, the Fund may consider the underlying investment company's

portfolio holdings and related information.

In general, under the Act, an investment company such as the Fund may

not (i) own more than 3% of the outstanding voting securities of any

one registered investment company, (ii) invest more than 5% of its total

assets in the securities of any single registered investment company or

(iii) invest more than 10% of its total assets in securities of other

registered investment companies.

The Fund may invest in other investment companies to gain broad

market or sector exposure or for cash management purposes, including

during periods when it has large amounts of uninvested cash (such as

the period shortly after the Fund receives the proceeds of the offering of

its Common Shares) or when PIMCO believes share prices of other

investment companies offer attractive values.

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 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, other

investment companies may also be leveraged and will therefore be

subject to the same leverage risks described in this prospectus.

As a shareholder of an investment company or other pooled vehicle, the

Fund may indirectly bear investment advisory fees, supervisory and

administrative fees, service fees and other fees which are in addition to

the fees the Fund pays its service providers. To the extent such cash

collateral is invested in an affiliated money market or short-term mutual

fund, such fees generally will not be waived, and PIMCO expects to

select such investment without considering or canvassing the universe

of available unaffiliated investment companies.

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. As a shareholder of a money

market fund or cash management pooled investment vehicle, a Fund

would indirectly bear the fees and expenses of the underlying fund or

account which are in addition to the fees the Fund pays its service

providers.

SEC regulations concerning investments by registered investment

companies in the securities of other registered investment companies

may, among other things, limit investment flexibility. This could

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adversely impact the Fund's investment strategies and operations. The

"Investment Objectives and Policies - Regulatory

Matters

" section in the

Statement of Additional Information discusses these changes in further

detail.

Foreign (Non-U.S.) Investments

The Fund may invest in instruments of corporate and other foreign

(non-U.S.) issuers, and in instruments traded principally outside of the

United States. The Fund may invest in sovereign and other debt

securities issued by foreign governments and their respective

sub-divisions, agencies or instrumentalities, government sponsored

enterprises and supranational government entities. Supranational

entities include international organizations that are organized or

supported by one or more government entities to promote economic

reconstruction or development and by international banking institutions

and related governmental agencies. As a holder of such debt securities,

the Fund may be requested to participate in the rescheduling of such

debt and to extend further loans to governmental entities. In addition,

there are generally no bankruptcy proceedings similar to those in the

United States by which defaulted foreign debt securities may be

collected. Investing in foreign securities involves special risks and

considerations not typically associated with investing in U.S. securities.

PIMCO generally considers an instrument to be economically tied to a

non-U.S. country if the issuer is a foreign (non-U.S.) government (or any

political subdivision, agency, authority or instrumentality of such

government), or if the issuer is organized under the laws of a

non-U.S. country. In the case of money market instruments, other than

commercial paper and certificates of deposits, such instruments will be

considered economically tied to a non-U.S. country if the issuer of such

money market instrument is organized under the laws of a

non-U.S. country. In the case of commercial paper and certificates of

deposit, such instruments will be considered economically tied to a

non-U.S. country if the "country of exposure" of such instrument is a

non-U.S. country, as determined by the criteria set forth below. With

respect to derivative instruments, PIMCO generally considers such

instruments to be economically tied to non-U.S. countries if the

underlying assets are foreign currencies (or baskets or indexes of such

currencies) or instruments or securities that are issued by foreign

governments, or issuers organized under the laws of a non-U.S. country

(or if the underlying assets are money market instruments, other than

commercial paper and certificates of deposit, if the issuer of such money

market instrument is organized under the laws of a non-U.S. country) or,

in the case of underlying assets that are commercial paper or certificates

of deposit, if the "country of exposure" of such money market

instrument is a non-U.S. country). A security's "country of exposure" is

determined by PIMCO using certain factors provided by a third-party

analytical service provider. The factors are applied in order such that the

first factor to result in the assignment of a country determines the

"country of exposure." Both the factors and the order in which they are

applied may change in the discretion of PIMCO. The current factors,

listed in the order in which they are applied, are: (i) if an asset-backed or

other collateralized security, the country in which the collateral backing

the security is located; (ii) the "country of risk" of the issuer; (iii) if the

security is guaranteed by the government of a country (or any political

subdivision, agency, authority or instrumentality of such government),

the country of the government or instrumentality providing the

guarantee; (iv) the "country of risk" of the issuer's ultimate parent; or (v)

the country where the issuer is organized or incorporated under the

laws thereof. "Country of risk" is a separate four-part test determined

by the following factors, listed in order of importance: (i) management

location; (ii) country of primary listing; (iii) sales or revenue attributable

to the country; and (iv) reporting currency of the issuer. Further, where a

derivative instrument is exposed to an index, PIMCO generally considers

the derivative to be economically tied to each country represented by

the components of the underlying index pursuant to the criteria set forth

in the preceding sentence.

The Fund may invest in Brady Bonds, which are securities created

through the exchange of existing commercial bank loans to sovereign

entities for new obligations in connection with a debt restructuring.

Investments in Brady Bonds may be viewed as speculative. Brady Bonds

acquired by the Fund may be subject to restructuring arrangements or

to requests for new credit, which may cause the Fund to realize a loss of

interest or principal on any of its portfolio holdings.

The foreign securities in which the Fund may invest include without

limitation Eurodollar obligations and "Yankee Dollar" obligations.

Eurodollar obligations are U.S. dollar-denominated certificates of

deposit and time deposits issued outside the U.S. capital markets by

foreign branches of U.S. banks and by foreign banks. Yankee Dollar

obligations are U.S. dollar-denominated obligations issued in the

U.S. capital markets by foreign banks. Eurodollar and Yankee Dollar

obligations are generally subject to the same risks that apply to

domestic debt issues, notably credit risk, interest rate risk, market risk

and liquidity risk. Additionally, Eurodollar (and to a limited extent,

Yankee Dollar) obligations are subject to certain sovereign risks. One

such risk is the possibility that a sovereign country might prevent

capital, in the form of U.S. dollars, from flowing across its borders. Other

risks include adverse political and economic developments; the extent

and quality of government regulation of financial markets and

institutions; the imposition of foreign withholding or other taxes; market

disruptions, the possibility of security suspensions; the expropriation or

nationalization of foreign issuers or the imposition of sanctions or other

similar measures.

Short Sales

The Fund may make short sales of securities (i) to offset potential

declines in long positions in similar securities, (ii) to increase the

flexibility of the Fund, (iii) for investment return, (iv) as part of a risk

arbitrage strategy, and (v) as part of its overall portfolio management

strategies involving the use of derivative instruments. A short sale is a

transaction in which the Fund sells a security it does not own in

anticipation that the market price of that security will decline or will

underperform relative to other securities held in the Fund's portfolio.

When the Fund makes a short sale, it must borrow the security sold

short and deliver it to the broker-dealer through which it made the short

sale as collateral for its obligation to deliver the security upon

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conclusion of the sale. The Fund may have to pay a fee to borrow

particular securities or maintain an arrangement with a broker to

borrow securities, and would often be obligated to pay over any accrued

interest and dividends on such borrowed securities.

A short sale is "against the box" to the extent that the Fund

contemporaneously owns, or has the right to obtain at no added cost,

securities identical to those sold short.

If the price of the security sold short increases between the time of the

short sale and the time that the Fund replaces the borrowed security,

the Fund will incur a loss; conversely, if the price declines, the Fund will

realize a capital gain. Any gain will be decreased, and any loss

increased, by the transaction costs described above. The successful use

of short selling may be adversely affected by imperfect correlation

between movements in the price of the security sold short and the

securities being hedged.

The Fund may invest pursuant to a risk arbitrage strategy to take

advantage of a perceived relationship between the value of two

securities. Frequently, a risk arbitrage strategy involves the short sale of

a security.

A short sale is "against the box" to the extent that the Fund

contemporaneously owns, or has the right to obtain at no added cost,

securities identical to those sold short. The Fund will engage in short

selling to the extent permitted by the federal securities laws and rules

and interpretations thereunder. To the extent the Fund engages in short

selling in foreign (non-U.S.) jurisdictions, the Fund will do so to the

extent permitted by the laws and regulations of such jurisdiction.

The Fund may also engage in so-called "naked" short sales (i.e., short

sales that are not "against the box"), in which case the Fund's losses

could theoretically be unlimited, in cases where the Fund is unable for

whatever reason to close out its short position. The Fund has the

flexibility to engage in short selling to the extent permitted by the Act

and rules and interpretations thereunder.

Certain Interest Rate Transactions

In order to reduce the interest rate risk inherent in the Fund's underlying

investments and capital structure, the Fund may (but is not required to)

enter into interest rate swap transactions. Interest rate swaps involve

the exchange by the Fund with a counterparty of their respective

commitments to pay or receive interest, such as an exchange of fixed

rate payments for floating rate payments. These transactions generally

involve an agreement with the swap counterparty to pay a fixed or

variable rate payment in exchange for the counterparty paying the Fund

the other type of payment stream (i.e., variable or fixed). The payment

obligation would be based on the notional amount of the swap. Other

forms of interest rate swap agreements in which the Fund may invest

include, without limitation, interest rate caps, under which, in return for

a premium, one party agrees to make payments to the other to the

extent that interest rates exceed a specified rate, or "cap;" interest rate

floors, under which, in return for a premium, one party agrees to make

payments to the other to the extent that interest rates fall below a

specified rate, or "floor;" and interest rate "collars," under which a

party sells a cap and purchases a floor or vice versa in an attempt to

protect itself against interest rate movements exceeding given minimum

or maximum levels. The Fund may (but is not required to) use interest

rate swap transactions with the intent to reduce or eliminate the risk

that an increase in short-term interest rates could pose for the

performance of the Fund's Common Shares as a result of leverage, and

also may use these instruments for other hedging or investment

purposes. Any termination of an interest rate swap transaction could

result in a termination payment by or to the Fund.

Credit Default Swaps

The Fund may enter into credit default swaps for both investment and

risk management purposes, as well as to add leverage to the Fund's

portfolio. A credit default swap may have as reference obligations one

or more securities that are not currently held by the Fund. The protection

"buyer" in a credit default swap is generally obligated to pay the

protection "seller" an upfront or a periodic stream of payments over the

term of the contract provided that no credit event, such as a default, on

a reference obligation has occurred. If a credit event occurs, the seller

generally must pay the buyer the "par value" (full notional value) of the

swap in exchange for an equal face amount of deliverable obligations of

the reference entity described in the swap, or the seller may be required

to deliver the related net cash amount, if the swap is cash

settled. Rather than exchange the bonds for par value, a single cash

payment may be due from the protection seller representing the

difference between the par value of the bonds and the current market

value of the bonds (which may be determined through an auction). The

Fund may be either the buyer or seller in the transaction. If the Fund is a

buyer and no credit event occurs, the Fund may recover nothing if the

swap is held through its termination date. However, if a credit event

occurs, the buyer generally may elect to receive the full notional value of

the swap from the seller, who, in turn, generally will recover an amount

significantly lower than the equivalent face amount of the obligations of

the reference entity, whose value may have significantly decreased,

through (i) physical delivery of such obligations by the buyer, (ii) cash

settlement or (iii) an auction process. As a seller, the Fund generally

receives an upfront payment or a fixed rate of income throughout the

term of the swap provided that there is no credit event. As the seller, the

Fund would effectively add leverage to its portfolio because, in addition

to its total net assets, the Fund would be subject to investment exposure

on the notional amount of the swap.

The spread of a credit default swap is the annual amount the protection

buyer must pay the protection seller over the length of the contract,

expressed as a percentage of the notional amount. When spreads rise,

market perceived credit risk rises and when spreads fall, market

perceived credit risk falls. Wider credit spreads and decreasing market

values, when compared to the notional amount of the swap, represent a

deterioration of the referenced entity's credit soundness and a greater

likelihood or risk of default or other credit event occurring as defined

under the terms of the agreement. For credit default swaps on

asset-backed securities and credit indexes, the quoted market prices and

resulting values, as well as the annual payment rate, serve as an

indication of the current status of the payment/performance risk.

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Credit default swaps involve greater risks than if the Fund had invested

in the reference obligation directly since, in addition to general market

risks, credit default swaps are subject to leverage risk, illiquidity risk,

counterparty risk and credit risk, among other risks associated with

derivative instruments. A buyer generally also will lose its investment

and recover nothing should no credit event occur and the swap is held

to its termination date. If a credit event were to occur, the value of any

deliverable obligation received by the seller, coupled with the upfront or

periodic payments previously received, may be less than the full notional

value it pays to the buyer, resulting in a loss of value to the seller. The

Fund's obligations under a credit default swap will be accrued daily

(offset against any amounts owing to the Fund).

When-Issued, Delayed Delivery and Forward Commitment

Transactions

The Fund may purchase or sell securities that it is eligible to purchase or

sell on a when-issued basis, may purchase or sell such securities for

delayed delivery and may make contracts to purchase or sell such

securities for a fixed price at a future date beyond normal settlement

time (forward commitments). When-issued transactions, delayed

delivery purchases and forward commitments involve a risk of loss if the

value of the securities declines prior to the settlement date. This risk is in

addition to the risk that the Fund's other assets will decline in value.

Therefore, these transactions may result in a form of leverage and

increase the Fund's overall investment exposure. Typically, no income

accrues on securities the Fund has committed to purchase prior to the

time delivery of the securities is made. When the Fund has sold a

security on a when-issued, delayed delivery or forward commitment

basis, the Fund does not participate in future gains or losses with

respect to the security. If the other party to a transaction fails to pay for

the securities, the Fund could suffer a loss. Additionally, when selling a

security on a when-issued, delayed delivery or forward commitment

basis without owning the security, the Fund will incur a loss if the

security's price appreciates in value such that the security's price is

above the agreed-upon price on the settlement date.

Repurchase Agreements

The Fund may enter into repurchase agreements, in which the Fund

purchases a security from a bank or broker-dealer

that agrees to

repurchase the security at the Fund's cost plus interest within a specified

time. If the party agreeing to repurchase should default, the Fund will

seek to sell the securities which it holds. This could involve procedural

costs or delays in addition to a loss on the securities if their value should

fall below their repurchase price. The security subject to a repurchase

agreement may be or become illiquid. These events could also trigger

adverse tax consequences for the Fund.

Lending of Portfolio Securities

For the purpose of achieving income, the Fund may lend its portfolio

securities to brokers, dealers or other financial institutions provided a

number of conditions are satisfied, including that the loan is fully

collateralized. See "Investment Objectives and Policies—Securities

Loans" in the Statement of Additional Information for details. When the

Fund lends portfolio securities, its investment performance will continue

to reflect changes in the value of the securities loaned. The Fund will

also receive a fee or interest on the collateral. Securities lending involves

the risk of loss of rights in the collateral or delay in recovery of the

collateral if the borrower fails to return the security loaned or becomes

insolvent, or the risk of loss due to the investment performance of the

collateral. The Fund may pay lending fees to the party arranging the

loan, which may be an affiliate of the Fund. See "Principal Risks of the

Fund—Securities Lending Risk."

Portfolio Turnover

The length of time the Fund has held a particular security is not

generally a consideration in investment decisions. A change in the

securities held by the Fund is known as "portfolio turnover." The Fund

may engage in frequent and active trading of portfolio securities to

achieve its investment objectives, particularly during periods of volatile

market movements. High portfolio turnover (e.g., over 100%) generally

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. Sales of

portfolio securities may also result in realization of taxable capital gains,

including short-term capital gains (which are generally treated as

ordinary income upon distribution in the form of dividends). The trading

costs and tax effects associated with portfolio turnover may adversely

affect the Fund's performance.

Use of Leverage

The Fund currently utilizes leverage through its outstanding Preferred

Shares. The Fund may also choose to add leverage through the use of

tender option bonds, the issuance of additional Preferred Shares, or the

use of reverse repurchase agreements, selling credit default swaps,

dollar rolls/buybacks and borrowings, such as through bank loans or

commercial paper and/or other credit facilities. The Fund may also enter

into transactions other than those noted above that may give rise to a

form of leverage including, among others, futures and forward contracts

(including foreign currency exchange contracts), total return swaps and

other derivative transactions, loans of portfolio securities, short sales

and when-issued, delayed delivery and forward commitment

transactions.

The Fund may utilize certain kinds of leverage, including, without

limitation, tender option bonds, opportunistically and may choose to

increase or decrease, or eliminate entirely, its use of 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.

The Fund may also determine to increase its leverage through the

issuance of additional Preferred Shares, or decrease the leverage it

currently maintains through its outstanding Preferred Shares through

Preferred Share redemptions or tender offers and may or may not

determine to replace such leverage. The Fund may issue additional

Preferred Shares without the approval of the Common Shareholders. If

the Fund issues additional 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

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costs and expenses may be significant. Leveraging transactions pursued

by the Fund may increase its duration and sensitivity to interest rate

movements. The Fund's net assets attributable to its Preferred Shares

and the net proceeds the Fund obtains from the issuance of additional

preferred shares or the use of tender option bonds or other forms of

leverage will be invested in accordance with the Fund's investment

objectives and policies as described in this prospectus. So long as the

rate of return, net of applicable Fund expenses, on the debt obligations

and other investments purchased by the Fund exceeds the dividend

rates payable on the Preferred Shares together with the costs to the

Fund of other leverage it utilizes, the investment of the Fund's assets

attributable to leverage will generate more income than will be needed

to pay the costs of the leverage. If so, and all other things being equal,

the excess may be used to pay higher dividends to Common

Shareholders than if the Fund were not so leveraged. There can be no

assurance these circumstances will occur.

The Fund is subject to the requirement under the Act 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 Act, the Fund is not permitted to issue preferred shares

unless, immediately after such issuance, the value of the Fund's total net

assets (as defined below) is at least 200% of the liquidation value of

any outstanding Preferred Shares and the newly issued 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, the Fund is

not 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 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). 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 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 outstanding preferred shares is 250% (or 200% when

no preferred shares are 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 the

Fund has outstanding preferred shares is 25% (or 20% when no

preferred shares are 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 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 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. The Fund cannot assure you that its use of Preferred

Shares and any other forms of leverage (such as tender option bonds)

will be successful or result in a higher yield on your Common Shares.

When leverage is used, the net asset value of the Common Shares and

the yield to Common Shareholders will be more volatile. In addition,

dividends paid on Preferred Shares (including the Preferred Shareholder

Gross-Up (as described below)) and interest and other expenses borne

by the Fund with respect to its use of tender option bonds or other

forms of leverage are borne by the Common Shareholders (and not by

the holders of Preferred Shares ("Preferred Shareholders")) and result in

a reduction of the net asset value of the Common Shares. In addition,

because the fees received by the Investment Manager are based on the

total managed assets of the Fund, which includes total assets of the

Fund (including assets attributable to any reverse repurchase

agreements, dollar rolls/buybacks, tender option bonds, borrowings and

Preferred Shares that may be outstanding, if any), the Investment

Manager has a financial incentive for the Fund to use certain forms of

leverage (e.g., Preferred Shares and tender option bonds), which may

create a conflict of interest between the Investment Manager, on the

one hand, and the Common Shareholders, on the other hand.

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The Fund also may borrow money in order to repurchase its shares or as

a temporary measure for extraordinary or emergency purposes,

including for the payment of dividends or the settlement of securities

transactions which otherwise might require untimely dispositions of

portfolio securities held by the Fund.

The Fund's ability to utilize leverage may also be limited by asset

coverage requirements and other guidelines imposed by the terms of

the Preferred Shares or imposed by rating agencies that provide ratings

for the Preferred Shares which are more restrictive than the limitations

imposed by the Act noted above.

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 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%. The table below

assumes the Fund's continued use of Preferred Shares

representing

approximately

18.30 % of the Fund's total average managed assets. The

table below also assumes that the Fund will pay dividends on Preferred

Shares at an estimated annual effective Preferred Share dividend rate of

4.57 % (based on the Preferred Share dividend rate under market

conditions as of December 31,

2025

, and including the amortization of

Preferred Shares offerings costs of $

360,000

over the three-year term

of the Preferred Shares). Based on such estimates, the annual return

that the Fund's portfolio must experience (net of expenses) in order to

cover the costs of the Fund's leverage would be

0.66 %. The information

below does not reflect the Fund's potential 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 Act, such

as certain derivative instruments.

These assumed investment portfolio returns are hypothetical figures and

are not necessarily indicative of the investment portfolio returns

experienced or expected to be experienced by the Fund. Your actual

returns may be greater or less than those appearing below. In addition,

actual borrowing expenses associated with the use of tender option

bonds or the issuance of Preferred Shares by the Fund may vary

frequently and may be significantly higher or lower than the rate used

for the example below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Assumed Portfolio Total Return (net <br>of expenses)<br>| (10.00)% | (5.00)% | 0.00% | 5.00% | 10.00% |
| Common Shares Total Return | (13.06)% | (6.94)% | (0.81)% | 5.31% | 11.44% |

---

Common Shares Total Return is composed of two elements – the

distributions paid by the Fund to Common Shareholders (the amount of

which is largely determined by the net investment income of the Fund

after paying dividend payments on any Preferred Shares issued by the

Fund and expenses on any forms of leverage outstanding) and gains or

losses on the value of the securities and other instruments the Fund

owns. As required by SEC rules, the table assumes that the Fund is more

likely to suffer capital losses than to enjoy capital appreciation. For

example, to assume a total return of 0%, the Fund must assume that

the income it receives on its investments is entirely offset by losses in

the value of those investments. This table reflects hypothetical

performance of the Fund'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, any benefits of such

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 objectives and policies. As noted

above, the Fund's willingness to use 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.

Principal Risks of the Fund

The NAV of the Common Shares will fluctuate with and be affected by,

among other things, various principal risks of the Fund and its

investments which are summarized below.

Limited Prior History

The Fund is a

diversified, closed-end management investment company

with a limited history of operations and is designed for long-term

investors and not as a trading vehicle.

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

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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 pre-refunded Municipal Bonds. Pre-refunded

Municipal Bonds are tax-exempt bonds that have been refunded to a

call date prior to the final maturity of principal, or, in the case of

pre-refunded Municipal Bonds commonly referred to as

"escrowed-to-maturity bonds," to the final maturity of principal, and

remain outstanding in the municipal market. The payment of principal

and interest of the pre-refunded Municipal Bonds held by the Fund is

funded from securities in a designated escrow account that holds

U.S. Treasury securities or other obligations of the U.S. Government

(including its agencies and instrumentalities ("Agency Securities")). As

the payment of principal and interest is generated from securities held

in an escrow account established by the municipality and an

independent escrow agent, the pledge of the municipality has been

fulfilled and the original pledge of revenue by the municipality is no

longer in place. Pre-refunded and/or escrowed to maturity Municipal

Bonds may bear an investment grade rating (for example, if re-rated by

a rating service or, if not re-rated, determined by PIMCO to be of

comparable quality) because they are backed by U.S. Treasury securities,

Agency Securities or other investment grade securities. For the

avoidance of any doubt, PIMCO's determination of an issue's credit

rating will generally be used for compliance with the Fund's investment

parameters when an issue either loses its rating or is not re-rated upon

pre-refunding. The escrow account securities pledged to pay the

principal and interest of the pre-refunded municipal bond do not

guarantee the price movement of the bond before maturity. Issuers of

municipal bonds refund in advance of maturity the outstanding higher

cost debt and issue new, lower cost debt, placing the proceeds of the

lower cost issuance into an escrow account to pre-refund the older,

higher cost debt. Investment in pre-refunded municipal bonds held by

the Fund may subject the Fund to interest rate risk and market risk. In

addition, while a secondary market exists for pre-refunded municipal

bonds, if the Fund sells pre-refunded municipal bonds prior to maturity,

the price received may be more or less than the original cost, depending

on market conditions at the time of sale.

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.

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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.

California State

-Specific Risk

The Fund invests in

municipal bonds issued by or on behalf of the State

of California and its political subdivisions,

financing authorities and their

agencies

,

and therefore may

be affected significantly by

economic,

regulatory

, social,

environmental or public health developments

affecting the ability of California tax-

exempt

issuers to pay interest or

repay principal

or otherwise affect the value of such securities

. Certain

issuers of

California municipal bonds have experienced serious financial

difficulties in the past, including credit rating downgrades,

and the

reoccurence

of these difficulties may impair

the ability of certain

California issuers

to pay principal or interest on their obligations

particularly given large budget deficits

. Provisions of the

California

Constitution and

State statutes

that

limit the taxing and spending

authority of

California

governmental entities may impair the ability of

California

issuers to pay principal and/or interest on their obligations.

While California

's economy

is broad,

it does have major concentrations

in advanced technology

,

aerospace and defense-related

manufacturing

,

trade, entertainment,

real estate and financial services

, and may be

sensitive to economic problems affecting those industries

,

and its

government

revenues

tend to rely heavily on certain earners

(revenues

therefore are likely to be more volatile and to be adversely affected if

the number of such earners (or their recognized income within a

particular period of time) decreases). Future California

political and

economic developments,

including

constitutional amendments,

legislative measures, executive orders, administrative regulations,

litigation

and voter initiatives as well as environmental events

or natural

disasters

,

including but not limited to an earthquake or a wildfire

,

pandemics, epidemics or social unrest could

create a major dislocation

of the California economy and significantly affect the ability of state and

local governments to raise money to pay principal and interest on their

municipal securities and

have an adverse effect on the debt obligations

of

California

issuers.

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Municipal Project-Specific Risk

The Fund may be more sensitive to adverse economic, business or

political developments if it invests a substantial portion of its assets in

the bonds of specific projects (such as those relating to education,

health care, housing, transportation and utilities), industrial

development bonds, or in general obligation bonds, particularly if there

is a large concentration from issuers in a single state. The value of

municipal securities can be affected by the political, economic, legal, and

legislative landscape of the particular issuer's locality, municipal sector

events or actual or perceived changes in economic, social, or public

health conditions. 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. Lower income tax rates could 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 Project Housing-Related Risk

The Fund may invest in the bonds of projects focused on low-income,

affordable or other housing developments and businesses located in

low-income areas or invest in or originate loans that finance or are

generally related to such projects. There are significant risks associated

with the Fund's investment in the bonds of these types of projects and

loans related to such projects. There may be federal, state and local

governmental regulatory restrictions on the operation, rental and

transfer of these projects, such as the requirement that the owners of

these affordable housing developments rent or sell certain residential

units to persons or families of low or moderate income and that the

amount of rent that may be charged for these units may be less than

market rates. These restrictions may adversely affect economic

performance relative to properties that are not subject to these

restrictions. There are also no assurances that a project owner will be

able to achieve and maintain sufficient rental income in order to pay all

operating expenses and maintenance and repair costs of such a project

and the debt service on the related bonds or loan on a timely basis. In

the event that a project owner is unable to pay all such costs, expenses

and debt service, a default on the related bonds or loan is likely to occur.

Moreover, as a result of economic, market and other factors, the risks of

the Fund's investment in such municipal project housing-related

securities may be heightened due to the possibility of reduced tax or

other revenue available to issuers of municipal project housing-related

securities causing an increase of budgetary and financial pressure on

either the municipality or other issuers of municipal securities.

Puerto Rico-Specific Risk

The Fund invests in Municipal Bonds issued by Puerto Rico or its

instrumentalities and may be affected by certain developments, such as

political, economic, environmental, social, regulatory or debt

restructuring developments that impact the ability or obligation of

Puerto Rico municipal issuers to pay interest or repay principal or

otherwise affect the value of such securities. Certain issuers of Puerto

Rico Municipal Bonds have experienced significant financial difficulties

and the continuation or reoccurrence of these difficulties may impair

their ability to pay principal or interest on their obligations. Provisions of

the Puerto Rico Constitution and Commonwealth laws, including a

federally appointed oversight board to oversee the Commonwealth's

financial operations, which limit the taxing and spending authority of

Puerto Rico governmental entities may impair the ability of Puerto Rico

issuers to pay principal and/or interest on their obligations. Puerto Rico's

economy has sizable concentrations in certain industries, such as the

manufacturing and service industries, and may be sensitive to economic

problems affecting those industries. Future Puerto Rico-related

developments, such as political and economic developments,

constitutional amendments, legislative measures, executive orders,

administrative regulations, litigation, debt restructuring, tax base

erosion, changes in trade policies or tariffs affecting Puerto Rico's

economy and voter initiatives as well as environmental events, natural

disasters, pandemics, epidemics or social unrest could have an adverse

effect on the debt obligations of Puerto Rico issuers.

New York State-Specific Risk

The Fund may invest in municipal bonds issued by or on behalf of the

State of New York and its political subdivisions, financing authorities

and their agencies, and therefore may be affected significantly by

political, economic, social, environmental or regulatory developments

affecting the ability of New York tax-exempt issuers to pay interest or

repay principal or otherwise affect the value of such securities. Certain

issuers of New York municipal bonds have experienced serious financial

difficulties in the past, including credit rating downgrades, and

reoccurrence of these difficulties may impair the ability of certain

New York issuers to pay principal or interest on their obligations,

particularly given large budget deficits that have been identified and

may continue. Provisions of the New York Constitution and State

statutes which limit the taxing and spending authority of New York

governmental entities may impair the ability of New York issuers to pay

principal and/or interest on their obligations. While New York's economy

is broad, it does have major concentrations in certain industries, such as

financial services, and may be sensitive to economic problems affecting

those industries, and its government revenues tend to rely heavily on

certain earners (revenues therefore are likely to be more volatile and to

be adversely affected if the number of such earners (or their recognized

income within a particular period of time) decreases). Future New York

political and economic developments, constitutional amendments,

legislative measures, executive orders, administrative regulations,

litigation and voter initiatives as well as environmental events, natural

disasters, pandemics, epidemics or social unrest could have an adverse

effect on the debt obligations of New York issuers to pay principal or

interest on their obligations. The financial health of New York City

affects that of the State, and when New York City experiences financial

difficulty it may have an adverse effect on New York municipal bonds

held by the Fund. The economic and financial condition of New York also

may be affected by various financial, social, economic, environmental,

political and geopolitical factors.

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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 Federal

Home Loan Banks ("FHLBs") or the Federal Home Loan Mortgage

Corporation ("FHLMC"), are supported by the right of the issuer to

borrow from the U.S. Treasury; others, such as those of the Federal

National Mortgage Association ("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.

AMT Bonds Risk

Investments by the Fund in "AMT Bonds," which are municipal

securities that pay interest that is taxable under the federal alternative

minimum tax applicable to noncorporate taxpayers, may expose the

Fund to certain risks in addition to those typically associated with

municipal bonds. Interest or principal on AMT Bonds paid out of current

or anticipated revenues from a specific project or specific asset may be

adversely impacted by declines in revenue from the project or asset.

Declines in general business activity, economic disruptions, public health

emergencies, or extreme weather and disaster events could also affect

the economic viability of facilities that are the sole source of revenue to

support AMT Bonds. AMT Bonds may also be less liquid than other

municipal securities, which could make them more difficult to sell in

stressed market conditions. In addition, changes in federal tax law could

alter the treatment of AMT Bonds. In this regard, AMT Bonds may entail

greater risks than general obligation municipal bonds. For shareholders

subject to the federal alternative minimum tax, a portion of the Fund's

distributions may not be exempt from gross federal income, which may

give rise to alternative minimum tax liability.

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. 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 in

interest rates. Inflation-indexed bonds, including Treasury

Inflation-Protected Securities ("TIPS"), decline in value when real

interest rates rise. In certain interest rate environments, such as when

real interest rates are rising faster than nominal interest rates,

inflation-indexed bonds may experience greater losses than other fixed

income securities with similar durations.

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 a 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

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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 a 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.

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 a 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 a 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.

The Fund may obtain exposure to loans made to private investment

vehicles, including private funds that are not registered under the 1940

Act. Such loans may be for various purposes, including but not limited

to, subscription line or "sub-line" credit facilities secured by the uncalled

capital commitments of such private investment vehicles' investors.

Although such capital commitments are typically subject to legally

binding agreements, there can be no assurance that the investors will

meet their funding obligations when called. As a result, the Fund may be

subject to the risk of delay or default in repayment of the loan, which

could negatively impact the Fund's performance. Additionally, the Fund

may face liquidity risks if the private investment vehicle is unable to

draw on capital commitments in a timely manner.

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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, 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

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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

Investment Manager

.

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 invest in and/or originate loans, including, without

limitation, to, on behalf of, authorized by, sponsored by, and/or in

connection with a project for which authority and responsibility lies with

one or more U.S. states or territories, cities in a U.S. state or territory, or

political subdivisions, agencies, authorities or instrumentalities of such

states, territories or cities, 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, including to borrowers that are unrated or have credit

ratings that are determined by one or more NRSROs and/or PIMCO to

be below investment grade. 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 loans acquired by the Fund may be

of the type that count towards the Fund's 80% policy or they may be

loans that produce income that is subject to regular federal income tax.

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.

Insurance Risk

The Fund may purchase municipal securities that are secured by

insurance, bank credit agreements or escrow accounts. The credit quality

of the companies that provide such credit enhancements will affect the

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value of those securities.

The Fund also faces the risk that insurance

coverage may become unavailable or prohibitively expensive for certain

municipal securities.

If the insurer of a municipal security suffers a

downgrade in its credit rating

,

or

is subject to an actual or perceived

deterioration in its credit quality, or

the market discounts the value of

the insurance provided by the insurer, the rating of the underlying

municipal security will be more relevant and the value of the municipal

security would more closely, if not entirely, reflect such rating. In such a

case, the value of insurance associated with a municipal security would

decline and may not add any value. The insurance feature of a municipal

security does not guarantee the full payment of principal and interest

through the life of an insured obligation, the market value of the insured

obligation or the net asset value of the common shares represented by

such insured obligation.

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. 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.

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.

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,

a repurchase

agreement, a borrower of portfolio securities

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. Debt

instruments backed by an issuer's taxing authority may be subject to

legal limits on the issuer's power to increase taxes or otherwise to raise

revenue or may be dependent on legislative appropriation or

government aid. Certain debt instruments are backed only by revenues

derived from a particular project or source, rather than by an issuer's

taxing authority, and thus may have a greater risk of default. 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)

.

Municipal bonds are subject to the risk that litigation, legislation or

other political events, local business or economic conditions, or the

bankruptcy of the issuer could have a significant effect on an issuer's

ability to make payments of principal and/or interest. 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.

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

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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.

Liquidity Risk

To the extent consistent with the applicable liquidity requirements for

interval funds under Rule 23c-3 of the Act, the Fund may invest without

limit in illiquid investments. 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 regulatory limitations on investments in

illiquid investments and the difficulty in purchasing and selling such

securities or instruments, may be unable to achieve its desired level of

exposure to a certain sector. To the extent that the Fund'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.

Repurchase Offers Risk

As described under "Periodic Repurchase Offers" above, the Fund is an

"interval fund" and, in order to provide liquidity to shareholders, the

Fund, subject to applicable law, conducts quarterly repurchase offers of

the Fund's outstanding Common Shares at NAV, subject to approval of

the Board. In each quarter, such repurchase offers will be for at least 5%

and not more than 25% of its outstanding Common Shares at NAV,

pursuant to Rule 23c-3 under the Act.

The Fund currently expects to conduct quarterly repurchase offers for

10% of its outstanding Common Shares under ordinary circumstances.

The Fund believes that these repurchase offers are generally beneficial

to the Fund's shareholders, and repurchases generally will be funded

from available cash or sales of portfolio securities. However, repurchase

offers and the need to fund repurchase obligations may affect the ability

of the Fund to be fully invested or force the Fund to maintain a higher

percentage of its assets in liquid investments, which may harm the

Fund's investment performance. Moreover, diminution in the size of the

Fund through repurchases may result in untimely sales of portfolio

securities (with associated imputed transaction costs, which may be

significant), and may limit the ability of the Fund to participate in new

investment opportunities or to achieve its investment objectives. The

Fund may accumulate cash by holding back (i.e., not reinvesting)

payments received in connection with the Fund's investments. The Fund

believes that payments received in connection with the Fund's

investments will generate sufficient cash to meet the maximum

potential amount of the Fund's repurchase obligations. If at any time

cash and other liquid assets held by the Fund are not sufficient to meet

the Fund's repurchase obligations, the Fund intends, if necessary, to sell

investments. To the extent the Fund employs investment leverage,

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repurchases of Common Shares would compound the adverse effects of

leverage in a declining market. In addition, if the Fund borrows to

finance repurchases, interest on that borrowing will negatively affect

Common Shareholders who do not tender their Common Shares by

increasing the Fund's expenses and reducing any net investment

income. If a repurchase offer is oversubscribed, the Fund may, but is not

required to, determine to increase the amount repurchased by up to 2%

of the Fund's outstanding shares as of the date of the Repurchase

Request Deadline. In the event that the Fund determines not to

repurchase more than the repurchase offer amount, or if shareholders

tender more than the repurchase offer amount plus 2% of the Fund's

outstanding shares as of the date of the Repurchase Request Deadline,

the Fund will repurchase the Common Shares tendered on a pro rata

basis, and shareholders will have to wait until the next repurchase offer

to make another repurchase request. As a result, shareholders may be

unable to liquidate all or a given percentage of their investment in the

Fund during a particular repurchase offer. Notwithstanding the

foregoing, the Fund may accept all Common Shares tendered for

repurchase by shareholders who own less than one hundred Common

Shares and who tender all of their Common Shares, before prorating

Common Shares tendered by other shareholders; provided that, if a

shareholder holds shares through a financial intermediary, such

intermediary may not be willing or able to arrange for this treatment on

such shareholder's behalf. Some shareholders, in anticipation of

proration, may tender more Common Shares than they wish to have

repurchased in a particular quarter, thereby increasing the likelihood

that proration will occur. A shareholder may be subject to market and

other risks, and the NAV of Common Shares tendered in a repurchase

offer may decline between the Repurchase Request Deadline and the

date on which the NAV for tendered Common Shares is determined. In

addition, the repurchase of Common Shares by the Fund may be a

taxable event to shareholders.

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 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 a 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. A 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 a 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

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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. See "The Fund's Investment

Objectives and Strategies—Portfolio Contents—High Yield Securities"

for additional information.

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.

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 perceiving 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)

,

and

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 potential speed of such trading and

other technologies may exacerbate the impact of any such incidents,

particularly where such

flaws

are exploited by other artificially

intelligent systems

and may act

to impair or prevent the intervention of

a human control.

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

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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 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.

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

calculation of its NAV, and such NAV calculation issues may result in

inaccurately calculated NAV, 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.

Municipal Bond Market Risk.

The amount of public

information available about the municipal bonds in the Fund's

portfolio is generally less than that for corporate equities or bonds,

and the investment performance of the Fund may therefore be

more dependent on the analytical abilities of PIMCO than would

be a stock fund or taxable bond fund. The secondary market for

municipal bonds, particularly below investment grade bonds in

which the Fund may invest, also tends to be less well-developed

and less 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.

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 objectives.

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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 such

NAV calculation issues may result in inaccurately calculated NAVs,

delays in NAV calculation and/or the inability to calculate NAVs over

extended periods. The Fund may be unable to recover any losses

associated with such failures.

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.

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 any outstanding Preferred Shares or the net proceeds that the Fund

obtains from its use of tender option bonds, derivatives or other forms

of leverage, if any, will be invested in accordance with the Fund's

investment objectives and policies as described in this prospectus.

Dividends payable with respect to any Preferred Shares outstanding and

interest expense payable by the Fund with respect to any tender option

bonds, 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 dividend rate on any

Preferred Shares outstanding, including the Preferred Shareholder

Gross-Up, and the interest expenses and other costs to the Fund of such

other 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

(including interest expenses on tender option bonds and the dividend

rate on any outstanding Preferred Shares, including the Preferred

Shareholder Gross-Up) 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"), which it may be

required to do at inopportune times, 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 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

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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

repurchase

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.

In addition to tender option bonds and any future issuance of Preferred

Shares, the Fund may engage in other transactions that may give rise to

a form of leverage including, among others loans of portfolio securities,

short sales and when-issued, delayed delivery and forward commitment

transactions, credit default swaps, reverse repurchases, 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. The

Fund may offset derivatives positions against one another or against

other assets to manage effective market exposure resulting from

derivatives in its portfolio. To the extent that any offsetting positions do

not behave in relation to one another as expected, the Fund may

perform as if it is leveraged through use of these derivative strategies.

See "Use of Leverage."

The Fund is required to satisfy certain regulatory and rating agency asset

coverage requirements in connection with its use of Preferred Shares.

Accordingly, any decline in the net asset value of the Fund's investments

could result in the risk that the Fund will fail to meet its asset coverage

requirements for any such Preferred Shares or the risk of the Preferred

Shares being downgraded by a rating agency. The Fund's current

investment income might not be sufficient to meet the dividend

requirements on preferred shares outstanding. In order to address these

types of events, the Fund might need to liquidate investments in order

to fund a redemption of some or all of Preferred Shares. Liquidations at

inopportune times or at times of adverse economic conditions may

result in a loss to the Fund. At other times, these liquidations may result

in gain at the Fund level and thus in additional taxable distributions to

Common Shareholders. See "Tax Matters" for more information. Any

Preferred Shares, total return swaps, reverse repurchases, tender option

bonds, loans of portfolio securities, short sales and when-issued,

delayed delivery and forward commitment transactions, credit default

swaps, reverse repurchases 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.

When the Fund issues Preferred Shares, the Fund pays (and the

Common Shareholders bear) all costs and expenses relating to the

issuance and ongoing maintenance of Preferred Shares. In addition,

holders of any Preferred Shares issued by the Fund would have

complete priority over Common Shareholders in the distribution of the

Fund's assets. Furthermore, Preferred Shareholders, voting separately as

a single class, have the right to elect two members of the Board at all

times and to elect a majority of the trustees in the event two full years'

dividends on the Preferred Shares are unpaid, and also have separate

class voting rights on certain matters. Accordingly, Preferred

Shareholders may have interests that differ from those of Common

Shareholders, and may at times have disproportionate influence over

the Fund's affairs.

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.

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.

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

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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

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 use of derivatives involves risks different from, and possibly greater

than, the risks associated with investing directly in securities and other

traditional investments. Derivatives 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 itself.

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.

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

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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.

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.

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 Act. See

"How Fund Shares are Priced." 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.

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

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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.

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.

Private Placements 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.

Privacy and Data Security Risk

The 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 direct or indirect fully-owned

subsidiaries, including their custodians and the platforms acting as loan

servicers for the Fund or its direct or indirect fully-owned 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 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,

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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.

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.

Other Investment Companies Risk

The Fund may invest up to 5% of its total assets in securities of other

investment companies (including those advised by PIMCO), including

closed-end funds, exchange-traded funds and other open-end funds,

that invest primarily in municipal bonds and other municipal securities

of the types in which the Fund may invest directly. 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 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."

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 the sum 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 for 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

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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 qualify to pay exempt-interest dividends, at least 50% of the value of

the total assets of the Fund must consist of obligations exempt from

federal income tax as of the close of each quarter of the Fund's taxable

year. Fund distributions reported as exempt-interest dividends are not

generally taxable to Fund shareholders for regular U.S. federal income

tax purposes, but they may be subject to state and local taxes and/or

federal alternative minimum tax. If the proportion of taxable

investments held by the Fund exceeds 50% of the Fund's total assets as

of the close of any quarter of the Fund's taxable year, the Fund will not

for that taxable year satisfy the general eligibility test that otherwise

permits it to pay exempt-interest dividends.

The value of the Fund's investments and its net asset value may be

adversely affected by changes in tax rates and policies. Because interest

income from municipal securities is normally not subject to regular

federal income taxation, the attractiveness of municipal securities in

relation to other investment alternatives is affected by changes in

federal income tax rates or changes in the tax-exempt status of interest

income from municipal securities. Any proposed or actual changes in

such rates or exempt status, therefore, can significantly affect the

demand for and supply, liquidity and marketability of municipal

securities. This could in turn affect the Fund's net asset value and ability

to acquire and dispose of municipal securities at desirable yield and

price levels. Additionally, the Fund is not a suitable investment for

individual retirement accounts, for other tax-exempt or tax-deferred

accounts or for investors who are not sensitive to the federal income tax

consequences of their investments.

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

its interests or the interests of its 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 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.

Distribution Rate Risk

The Fund's distribution rate 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.

The distribution rate

is not indicative of the Fund's performance and may not correlate with

the actual returns generated by the Fund's investments.

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 Objectives 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.

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

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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.

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.

Geopolitical Conflicts Risk

The occurrence of geopolitical conflicts, war or terrorist activities could

have adverse impacts on markets in various and unpredictable ways. For

example,

the armed conflict among the United

States, Israel, and Iran

has caused, and could continue to cause, significant market disruptions

and volatility. The conflict has had a particular negative impact on oil

and gas markets, which could have a broader adverse effect on many

sectors of the global economy in the future. In addition,

following

Russia's large-scale invasion of Ukraine in February 2022, Russia, and

other countries, persons and entities that were viewed as having

provided material aid to Russia's aggression against Ukraine, became

the subject of economic sanctions and import and export controls

imposed by countries throughout the world, including the United States.

Such measures have had and may continue to have an adverse effect on

the Russian, Belarusian and other securities and economies. Additional

examples include, but are not limited to, heightened concerns of trade

disputes, which could result in increased tariffs, trade restrictions or

other retaliatory countermeasures. The extent, duration and impact of

geopolitical conflicts and related market impacts are difficult to

ascertain, but could be significant and could have significant adverse

effects on regional and global economies and the markets for certain

securities and commodities, such as oil, natural gas, steel and aluminum,

as well as other sectors, and on the Fund's investments.

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.,

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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.

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 includes 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. See "Anti-Takeover and Other Provisions in the

Declaration of Trust and Bylaws."

How the Fund Manages Risk

Hedging and Related Strategies

The Fund may (but is not required to) use various investment strategies

to attempt to hedge exposure to reduce the risk of price fluctuations of

its portfolio securities, the risk of loss, and to preserve capital.

Derivatives strategies and instruments that the Fund may use include:

financial futures contracts; short sales; other types of swap agreements

or options thereon; options on financial futures; and options based on

either an index of municipal securities or taxable debt securities whose

prices, PIMCO believes, correlate with the prices of the Fund's

investments. Income earned by the Fund from its hedging and related

transactions may be subject to one or more special U.S. federal income

tax rules that can affect the amount, timing and/or character of

distributions to Common Shareholders. For instance, many hedging

activities will be treated as capital gain and, if not offset by net realized

capital loss, will be distributed to shareholders in taxable distributions. If

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effectively used, hedging strategies will offset in varying percentages

losses incurred on the Fund's investments due to adverse interest rate

changes. There is no assurance that these hedging strategies will be

available at any time or that PIMCO will determine to use them for the

Fund or, if used, that the strategies will be successful. PIMCO may

determine not to engage in hedging strategies or to do so only in

unusual circumstances or market conditions. In addition, the Fund may

be subject to certain restrictions on its use of hedging strategies

imposed by guidelines of one or more ratings agencies that may issue

ratings on any Preferred Shares issued by the Fund.

Management of Investment Portfolio and Capital Structure to

Limit Leverage Risk

The Fund may take certain actions if short-term interest rates increase or

market conditions otherwise change (or the Fund anticipates such an

increase or change) and the Fund's leverage begins (or is expected) to

adversely affect Common Shareholders. In order to attempt to offset

such a negative impact of leverage on Common Shareholders, the Fund

may shorten the average maturity or duration of its investment portfolio

(by investing in short-term, high quality securities or implementing

certain hedging strategies). The Fund also may attempt to reduce

leverage by redeeming or otherwise purchasing Preferred Shares or by

reducing any holdings in other instruments that create leverage. As

explained above under "Principal Risks of the Fund-Leverage Risk," the

success of any such attempt to limit leverage risk depends on PIMCO's

ability to accurately predict interest rate or other market changes.

Because of the difficulty of making such predictions, the Fund may not

be successful in managing its interest rate exposure in the manner

described above.

Use of Derivatives

The Fund may use derivative instruments for other purposes, including

to seek to increase liquidity, provide efficient portfolio management,

broaden investment opportunities (including taking short or negative

positions)

, implement a tax or cash management strategy, gain

exposure to a particular security or segment of the market, modify the

effective duration of the Fund's portfolio investments and/or enhance

total return.

Investment Limitations

In addition, the Fund has adopted certain investment limitations

designed to limit investment risk. See "Investment Restrictions" in the

Statement of Additional Information for a description of these

limitations.

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Management of the Fund

Trustees and Officers

The business of the Fund is managed under the direction of the Fund's Board including supervision of the duties performed by the Investment

Manager. The Board is currently composed of

seven

Trustees of the Fund ("Trustees"),

five

of whom are not "interested persons" of the Fund (as that

term is defined by Section 2(a)(19) of the Act). The Trustees meet periodically throughout the year to discuss and consider matters concerning the

Fund and to oversee the Fund's activities, including its investment performance, compliance program and risks associated with its activities. The

names and business addresses of the Trustees and officers of the Fund and their principal occupations and other affiliations during the past five years

are set forth under "Management of the Fund" in the Statement of Additional Information.

Investment Manager

PIMCO serves as the investment manager for the Fund. Subject to the supervision of the Board, PIMCO is responsible for managing the investment

activities of the Fund and the Fund's business affairs and other administrative matters.

PIMCO is located at 650 Newport Center Drive, Newport Beach, CA 92660. Organized in 1971, PIMCO provides investment management and

advisory services to private accounts of institutional and individual clients and to registered investment companies. PIMCO is a majority-owned

indirect subsidiary of Allianz SE, a publicly traded European insurance and financial services company. As of December 31,

2025

, PIMCO had

approximately $

2.26 trillion in assets under management

, including $1.84 trillion in third-party client assets

.

Assets include $81.0

billion (as of

September

30, 2025) in assets managed by Prime Real Estate (formerly Allianz Real Estate), an affiliate and wholly-owned subsidiary of PIMCO and

PIMCO Europe GmbH, that includes PIMCO Prime Real Estate GmbH, PIMCO Prime Real Estate LLC and their subsidiaries and affiliates. PIMCO Prime

Real Estate LLC investment professionals provide investment management and other services as dual personnel through Pacific Investment

Management Company LLC. PIMCO Prime Real Estate GmbH operates separately from PIMCO.

PIMCO may retain affiliates to provide various administrative and other services required by the Fund.

Investment Management Agreement

Pursuant to an investment management agreement between the Investment Manager and the Fund (the "Investment Management Agreement"), the

Fund has agreed to pay the Investment Manager an annual fee, payable monthly, in an amount equal to 0.75% of the Fund's "total managed

assets." Total managed assets means the total assets of the Fund (including assets attributable to any reverse repurchase agreements, dollar

rolls/buybacks, tender option bonds, borrowings and Preferred Shares that may be outstanding, if any) minus accrued liabilities (other than liabilities

representing reverse repurchase agreements, dollar rolls/buybacks, tender option bonds and borrowings). For purposes of calculating "total managed

assets," the liquidation preference of any Preferred Shares outstanding is not considered a liability. By way of clarification, with respect to any reverse

repurchase agreement or similar transaction, "total managed assets" includes any proceeds from the sale of an asset of the Fund to a counterparty in

such a transaction, in addition to the value of the underlying asset as of the relevant measuring date. Furthermore, to the extent applicable, assets

attributable to tender option bonds would be included as assets irrespective of whether or not they are included as assets for financial reporting

purposes. However, to the extent the Fund does not contribute municipal bonds to a tender option bond trust but holds residual interests issued by

such trust, the tender option bonds outstanding would not be included in the calculation of "total managed assets." In addition, for purposes of

calculating "total managed assets," the Fund's derivative investments will be valued based on their market value.

Pursuant to the Investment Management Agreement, PIMCO shall provide to the Fund investment guidance and policy direction in connection with

the management of the Fund, including oral and written research, analysis, advice and statistical and economic data and information. In addition,

under the terms of the Investment Management Agreement, subject to the general supervision of the Board, PIMCO provides or causes to be

furnished all supervisory and administrative and other services reasonably necessary for the operation of the Fund under the unified management fee,

including but not limited to the supervision and coordination of matters relating to the operation of the Fund, including any necessary coordination

among the custodian, transfer agent, dividend disbursing agent, and recordkeeping agent (including pricing and valuation of the Fund), accountants,

attorneys, and other parties performing services or operational functions for the Fund; the provision of adequate personnel, office space,

communications facilities, and other facilities necessary for the effective supervision and administration of the Fund, as well as the services of a

sufficient number of persons competent to perform such supervisory and administrative and clerical functions as are necessary for compliance with

federal securities laws and other applicable laws; the maintenance of the books and records of the Fund; the preparation of all federal, state, local and

foreign tax returns and reports for the Fund; the preparation, filing and distribution of any proxy materials (except as provided below), periodic reports

to shareholders and other regulatory filings; the provision of administrative services to shareholders for the Fund including the maintenance of a

shareholder information telephone number, the provision of certain statistical information and performance of the Fund, an internet website (if

requested), and maintenance of privacy protection systems and procedures; the preparation and filing of such registration statements and other

documents with such authorities as may be required to register a new class of shares of the Fund; the taking of other such actions as may be required

by applicable law (including establishment and maintenance of a compliance program for the Fund); and the provision of administrative services to

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shareholders as necessary, including: the maintenance of a shareholder call center; shareholder transaction processing; the provision of certain

statistical information and performance of the Fund; a web servicing platform and internet website; access by PIMCO representatives to databases to

assist with shareholder inquiries and reports; oversight of anti-money laundering monitoring systems and procedures; and processing of client

registration applications.

Under the Investment Management Agreement, PIMCO will pay all expenses incurred by it in connection with its obligations under the Investment

Management Agreement with respect to the Fund, with the exception of certain expenses that are assumed by the Fund pursuant to the Investment

Management Agreement. In addition, PIMCO is responsible for the following costs expenses: expenses of all audits by the Fund's independent public

accountants; expenses of the Fund's transfer agent, registrar, dividend disbursing agent, and recordkeeping agent; expenses and fees paid to agents

and intermediaries for sub-transfer agency, sub-accounting and other shareholder services on behalf of shareholders of Shares of the Fund (or Shares

of a particular Share class) held through omnibus and networked, record shareholder accounts (together, "Sub-Transfer Agency Expenses"), except

where Sub-Transfer Agency Expenses are paid pursuant to a Rule 12b-1 or similar plan adopted by the Board; expenses of the Fund's custodial

services, including any recordkeeping services provided by the custodian; expenses of obtaining quotations for calculating the value of the Fund's net

assets; expenses of maintaining the Fund's tax records; certain expenses and fees, including legal fees, incident to meetings of the Fund's

shareholders; certain expenses associated with the preparation, printing and distribution of the Fund's prospectuses, notices and proxy statements,

press releases and reports to existing shareholders; certain expenses associated with the preparation and filing of registration statements and

updates thereto and reports with regulatory bodies; expenses associated with the maintenance of the Fund's existence and qualification to do

business; expenses (including registration fees) of issuing, redeeming and repurchasing (including expenses associated with the Fund's repurchases

pursuant to Rule 23c-3 under the Act); expenses associated with registering and qualifying for sale Common Shares with federal and state securities

authorities following the initial registration of its Common Shares under the Securities Act (i.e., that are not organizational and offering expenses of

the Fund specified below) and following any registration of a new class of shares of the Fund subsequent to its initial registration; and the expense of

qualifying and listing existing Common Shares with any securities exchange or other trading system; the Fund's ordinary legal fees, including the legal

fees that arise in the ordinary course of business for a Massachusetts business trust, registered as a closed-end management investment company

and, as applicable, that operates as an "interval fund" pursuant to Rule 23c-3 under the Act, or that is listed for trading with a securities exchange or

other trading system; costs of printing certificates representing Common Shares of the Fund, if any; the Fund's pro rata portion of the fidelity bond

required by Section 17(g) of the Act, or other insurance premiums; and organizational and offering expenses, including registration (including share

registration) fees, legal, marketing, printing, accounting and other expenses, in connection with any registration of a new class of shares of the Fund

subsequent to its initial registration.

The Fund (and not PIMCO) is responsible for certain fees and expenses that are not covered by the unified management fee under the Investment

Management Agreement. These include salaries and other compensation or expenses, including travel expenses, of any of the Fund's executive

officers and employees, if any, who are not officers, directors, shareholders, members, partners or employees of PIMCO or its subsidiaries or affiliates;

taxes and governmental fees, if any, levied against the Fund; brokerage fees and commissions, and other portfolio transaction expenses incurred by or

for the Fund (including, without limitation, fees and expenses of outside legal counsel or third-party consultants retained in connection with

reviewing, negotiating and structuring specialized loans and other investments made by the Fund, and any costs associated with originating loans,

asset securitizations, alternative lending-related strategies and so-called "broken-deal costs" (e.g., fees, costs, expenses and liabilities, including, for

example, due diligence-related fees, costs, expenses and liabilities, with respect to unconsummated investments)); expenses of the Fund's securities

lending (if any), including any securities lending agent fees, as governed by a separate securities lending agreement; costs, including interest

expenses, of borrowing money or engaging in other types of leverage financing including, without limitation, through the use by the Fund of reverse

repurchase agreements, dollar rolls/buybacks, bank borrowings, credit facilities and tender option bonds; costs, including dividend and/or interest

expenses and other costs (including, without limitation, offering and related legal costs, fees to brokers, fees to auction agents, fees to transfer

agents, fees to ratings agencies and fees to auditors associated with satisfying ratings agency requirements for any Preferred Shares or other

securities issued by the Fund and other related requirements in the Fund's organizational documents) associated with the Fund's issuance, offering,

redemption and maintenance of any Preferred Shares, commercial paper or other instruments (such as the use of reverse repurchase agreements,

dollar rolls/buybacks, bank borrowings, credit facilities and tender option bonds) for the purpose of incurring leverage; fees and expenses of any

underlying funds or other pooled vehicles in which the Fund invests; dividend and interest expenses on short positions taken by the Fund; fees and

expenses, including travel expenses, and fees and expenses of legal counsel retained for their benefit, of Trustees who are not officers, employees,

partners, shareholders or members of PIMCO or its subsidiaries or affiliates; extraordinary expenses, including extraordinary legal expenses, as may

arise, including, without limitation, expenses incurred in connection with litigation, proceedings, other claims, and the legal obligations of the Fund to

indemnify its Trustees, officers, employees, shareholders, distributors, and agents with respect thereto; fees and expenses, including legal, printing and

mailing, solicitation and other fees and expenses associated with and incident to shareholder meetings and proxy solicitations involving contested

elections of Trustees, shareholder proposals or other non-routine matters that are not initiated or proposed by Fund management; organizational and

offering expenses of the Fund, including registration (including Share registration fees), legal, marketing, printing, accounting and other expenses,

associated with organizing the Fund in its state of jurisdiction and in connection with the initial registration of the Fund under the Act and the initial

registration of its Common Shares under the Securities Act (i.e., through the effectiveness of the Fund's initial registration statement on Form N-2) and

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fees and expenses associated with seeking, applying for and obtaining formal exemptive, no-action and/or other relief from the SEC in connection

with the issuance of multiple share classes; except as otherwise provided as an expense of PIMCO, any expenses allocated or allocable to a specific

class of Common Shares, including without limitation sub-transfer agency expenses and distribution and/or services fees paid pursuant to a

Rule 12b-1 or similar plan adopted by the Board for a particular share class; and expenses of the Fund which are capitalized in accordance with

generally accepted accounting principles.

PIMCO may earn a profit on the management fee paid by the Fund. Also, under the terms of the Investment Management Agreement, PIMCO, and

not Common Shareholders, would benefit from any price decreases in third-party services, including decreases resulting from an increase in net

assets.

Because the management fee received by PIMCO is based on the average daily total managed assets of the Fund, which includes total assets of the

Fund (including assets attributable to any reverse repurchase agreements, dollar rolls/buybacks, tender option bonds, borrowings and Preferred

Shares that may be outstanding, if any), PIMCO has a financial incentive for the Fund to utilize reverse repurchase agreements, dollar rolls/buybacks,

tender option bonds and borrowings or to issue Preferred Shares, which may create a conflict of interest between PIMCO, on the one hand, and

Common Shareholders, on the other hand.

A discussion regarding the basis for the Board's approval of the Fund's Investment Management Agreement is available in the Fund's semi-annual

report to shareholders for the fiscal half-year ended June 30,

2025

.

Expense Limitation Agreement

PIMCO has contractually agreed, through May 2,

2027

, to waive its management fee, or reimburse the Fund, to the extent that organizational

expenses, pro rata share of expenses related to obtaining or maintaining a Legal Entity Identifier and pro rata Trustees' fees exceed 0.10% of the

Fund's average daily net assets (the "Expense Limitation Agreement"). The Expense Limitation Agreement will automatically renew for one-year terms

unless PIMCO provides written notice to the Fund at least 30 days prior to the end of the then current term.

Under the Expense Limitation Agreement, in any month in which the investment management agreement is in effect, PIMCO is entitled to

reimbursement by the Fund of any portion of the management fee reduced as set forth above (the "Reimbursement Amount") during the previous

thirty-six months, provided that such amount paid to PIMCO will not (1) together with any recoupment of organizational expenses, pro rata share of

expenses related to obtaining or maintaining a Legal Entity Identifier and pro rata trustee fees or management fees exceed 0.10% of average daily

net assets; (2) exceed the total Reimbursement Amount; or (3) include any amounts previously reimbursed to PIMCO. For the avoidance of doubt, any

reimbursement of PIMCO's management fee pursuant to the Expense Limitation Agreement plus any recoupment of organizational expenses and pro

rata Trustees' fees will not exceed the lesser of (i) the expense limit in effect at the time of waiver or reimbursement and (ii) the expense limit in effect

at the time of recoupment.

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Portfolio Managers

The following individuals share primary responsibility for managing the Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | | |
|:---|:---|:---|
| Portfolio Manager(s) | Since | Recent Professional Experience |
| David Hammer | Since Inception | &nbsp;&nbsp;&nbsp;Mr. Hammer is a Managing Director in the Newport Beach office and leads municipal bond portfolio <br>management, with oversight of the firm's municipal investment grade, high yield, taxable, and separately <br>managed accounts. He is the lead portfolio manager on PIMCO's municipal bond fund complex, <br>including investment grade, high yield, state-specific, closed-end funds, and interval funds. Prior to <br>rejoining PIMCO in 2015, he was a managing director at Morgan Stanley, where he was head of <br>municipal trading, risk management, and research. He has investment experience since 2002 and holds <br>an undergraduate degree from Syracuse University.<br>|
| Amit Arora | Since Inception | &nbsp;&nbsp;&nbsp;Mr. Arora is an Executive Vice President and portfolio manager in the Newport Beach office and a <br>member of the credit and liability-driven portfolio management teams. He manages credit portfolios <br>focusing on investment grade and long credit. He was previously a senior member of PIMCO's global risk <br>management team. Prior to joining PIMCO in 2009, he was an executive director, responsible for credit <br>hybrids and exotics trading at J.P. Morgan. Mr. Arora was previously with Bear Stearns as a managing <br>director on the structured credit trading desk, responsible for credit derivative products in investment <br>grade and high yield credits. He has also worked on the foreign exchange Treasury desk at Citibank. He <br>has investment experience since 1997 and holds an MBA from NYU Stern School of Business and a <br>bachelor's degree in mechanical engineering from the Indian Institute of Technology (IIT Bombay). He is <br>a Certified Financial Risk Manager (FRM).<br>|
| Kyle Christine | Since Inception | &nbsp;&nbsp;&nbsp;Mr. Christine is a Senior Vice President and municipal bond portfolio manager in the Newport Beach <br>office. He is a portfolio manager on PIMCO's municipal bond fund complex, including investment grade, <br>high yield, state-specific, closed-end funds, and interval funds. He is also a member of the insurance <br>solutions team for multi-asset insurance accounts and has previously served as a rotating member of <br>PIMCO's Americas portfolio committee. Prior to joining PIMCO in 2017, he was an institutional high <br>yield and taxable municipal bond trader at Morgan Stanley. He has investment and financial services <br>experience since 2013 and holds an undergraduate degree from Union College (NY).<br>|

---

Please see the Statement of Additional Information for additional information about other accounts managed by the portfolio managers, the portfolio

managers' compensation and the portfolio managers' ownership of shares of the Fund.

Control Persons

A control person is a person who owns, either directly or indirectly, beneficially more than 25% of the voting securities of a company. As of April

,

2026

, the Fund could be deemed to be under the control of Allianz Fund Investments, Inc. and Charles Schwab & Co., Inc. It is anticipated that each

of these parties will eventually no longer be a control person of the Fund over time, due to the continuous offering of the Fund's Common Shares.

Please see "Securities Ownership" in the Fund's Statement of Additional Information for additional information on any control persons.

Additional Information

The Trustees are responsible generally for overseeing the management of the Fund. The Trustees authorize the Fund to enter into service agreements

with the Investment Manager, the Distributor and other service providers in order to provide, and in some cases authorize service providers to procure

through other parties, necessary or desirable services on behalf of the Fund. Shareholders are not intended to be third-party beneficiaries of such

service agreements.

Neither this prospectus, the Fund's Statement of Additional Information, any contracts filed as exhibits to the Fund's registration statement, nor any

other communications or disclosure documents from or on behalf of the Fund creates a contract between a shareholder of the Fund and the Fund, a

service provider to the Fund, and/or the Trustees or officers of the Fund. The Trustees may amend this prospectus, the Statement of Additional

Information, and any other contracts to which the Fund is a party, and interpret the investment objectives, policies, restrictions and contractual

provisions applicable to the Fund without shareholder input or approval, except in circumstances in which shareholder approval is specifically required

by law (such changes to fundamental investment policies) or where a shareholder approval requirement is specifically disclosed in this prospectus or

the Statement of Additional Information.

Plan of Distribution

PIMCO Investments LLC, an affiliate of PIMCO, is the principal underwriter and distributor of the Fund's Common Shares pursuant to a distribution

contract (the "Distribution Contract") with the Fund. The Distributor, located at 1633 Broadway, New York, New York 10019, is a broker-dealer

registered with the SEC and is a member of the Financial Industry Regulatory Authority ("FINRA"). The Distributor is a wholly-owned subsidiary of

PIMCO and an indirect subsidiary of Allianz Asset Management. The Distributor does not participate in the distribution of non-PIMCO managed

registered fund products.

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The Distributor acts as the distributor of Common Shares for the Fund on a best efforts basis, subject to various conditions, pursuant to the terms of

the Distribution Contract. The Distributor is not obligated to sell any specific amount of Common Shares of the Fund.

Common Shares of the Fund are continuously offered through the Distributor. As discussed below, the Fund may authorize one or more intermediaries

(e.g., broker-dealers and other financial firms) to receive orders on its behalf. The Common Shares will be offered at NAV per share (plus any

applicable sales load) calculated each regular business day. Please see "How Fund Shares are Priced" below.

The Fund and the Distributor have the sole right to accept orders to purchase Common Shares and reserve the right to reject any order in whole or in

part.

The Fund's Common Shares are not listed for trading on any securities exchange. There is currently no secondary market for the Fund's Common

Shares and the Fund does not anticipate that a secondary market will develop for its Common Shares. Investors should consider Common Shares of

the Fund to be an illiquid investment. Neither the Investment Manager nor the Distributor intends to make a market in the Fund's Common Shares.

The Fund has agreed to indemnify the Distributor and certain of the Distributor's affiliates against certain liabilities, including certain liabilities arising

under the Securities Act. To the extent consistent with applicable law, the Distributor has agreed to indemnify the Fund and each Trustee against

certain liabilities under the Securities Act, as amended, and in connection with the services rendered to the Fund.

Share Classes

The Fund has adopted a Multi-Class Plan pursuant to Rule 18f-3 under the Act. Although the Fund is not an open-end investment company, it has

undertaken to comply with the terms of Rule 18f-3 as a condition of an exemptive order under the Act which permits it to have, among other things, a

multi-class structure and distribution and shareholder servicing fees. Under the Multi-Class Plan, shares of each class of the Fund represent an equal

pro rata interest in the Fund and, generally, have identical voting, dividend, liquidation, and other rights, preferences, powers, restrictions, limitations,

qualifications and terms and conditions, except that: (a) each class has a different designation; (b) each class of shares bears any class-specific

expenses; and (c) each class shall have separate voting rights on any matter submitted to shareholders in which the interests of one class differ from

the interests of any other class, and shall have exclusive voting rights on any matter submitted to shareholders that relates solely to that class.

The Fund currently has five separate classes of Common Shares: Institutional Class, Class A-1, Class A-2, Class A-3 and Class A-4. Each class of

Common Shares represents an investment in the same portfolio of investments, but each class has its own expense structure and arrangements for

shareholder services or distribution, which allows you to choose the class that best fits your situation and eligibility requirements.

■

Institutional Class Common Shares are offered for investment to investors such as pension and profit sharing plans, employee benefit trusts,

endowments, foundations, corporations and individuals that can meet the minimum investment. Institutional Class Common Shares may also

be offered through certain financial firms

(including through retail separately managed accounts (i.e., wrap accounts) managed by PIMCO)

that

charge their customers transaction or other fees with respect to their customers' investments in the Fund.

■

Class A-1, Class A-2, Class A-3 and Class A-4 Common Shares are not available for purchase directly from the Distributor and are primarily

offered and sold to retail investors by certain broker-dealers which are members of FINRA and which have agreements with the Distributor to

sell Class A-1, Class A-2, Class A-3 and/or Class A-4 Common Shares, but may be made available through other financial firms, including banks

and trust companies and to specified benefit plans (as defined below) and other retirement accounts.

Class A-1, Class A-2, Class A-3 and Class A-4 Distribution and Servicing Plans

The Fund has adopted separate Distribution and Servicing Plans for the Class A-1, Class A-2, Class A-3 and Class A-4 Common Shares of the Fund.

Each Distribution and Servicing Plan operates in a manner consistent with Rule 12b-1 under the Act, which regulates the manner in which an

open-end investment company may directly or indirectly bear the expenses of distributing its shares. Although the Fund is not an open-end

investment company, it has undertaken to comply with the terms of Rule 12b-1 as a condition of an exemptive order under the Act which permits it to

have, among other things, a multi-class structure and distribution and shareholder servicing fees. Each Distribution and Servicing Plan permits the

Fund to compensate the Distributor for providing or procuring through financial firms, distribution, administrative, recordkeeping, shareholder and/or

related services with respect to the Class A-1, Class A-2, Class A-3 or Class A-4 Common Shares, as applicable. Most or all of the distribution and/or

service fees are paid to financial firms through which Common Shareholders may purchase and/or hold Class A-1, Class A-2, Class A-3 and Class A-4

Common Shares, as applicable. Because these fees are paid out of the applicable share class's assets on an ongoing basis, over time they will increase

the cost of an investment in Class A-1, Class A-2, Class A-3 or Class A-4 Common Shares and may cost you more than other types of sales charge.

The maximum annual rates at which the distribution and/or servicing fees may be paid under the Distribution and Servicing Plan for Class A-1

Common Shares (calculated as a percentage of the Fund's average daily net assets attributable to the Class A-1 Common Shares) is 0.50%.

The maximum annual rates at which the distribution and/or servicing fees may be paid under the Distribution and Servicing Plan for Class A-2

Common Shares (calculated as a percentage of the Fund's average daily net assets attributable to the Class A-2 Common Shares) is 0.50%.

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The maximum annual rates at which the distribution and/or servicing fee may be paid under the Distribution and Servicing Plan for Class A-3

Common Shares (calculated as a percentage of the Fund's average daily net assets attributable to the Class A-3 Common Shares) is 0.75%.

The maximum annual rates at which the distribution and/or servicing fee may be paid under the Distribution and Servicing Plan for Class A-4

Common Shares (calculated as a percentage of the Fund's average daily net assets attributable to the Class A-4 Common Shares) is 0.75%.

Servicing Arrangements

The Fund's Common Shares may be available through certain broker-dealers, banks, trust companies, insurance companies and other financial firms

that have entered into selling and/or

shareholder servicing

arrangements with respect to the Fund. A financial firm is one that, in exchange for

compensation, sells, among other products, registered investment company shares (including the shares offered in this prospectus) or provides

services for registered investment company shareholders.

These financial firms provide varying investment products, programs, platforms and accounts, through which investors may purchase Common Shares

of the Fund. Selling and/or shareholder servicing arrangements typically include processing orders for shares, generating account and confirmation

statements, sub-accounting, account maintenance, tax reporting, collecting and posting distributions to investor accounts and disbursing cash

dividends as well as other investment or administrative services required for the particular firm's products, programs, platform and accounts. These

financial firms may impose additional or different conditions than the Fund on purchases of Common Shares. They may also independently establish

and charge their customers or program participants transaction fees, account fees and other amounts in connection with purchases of Common

Shares in addition to any fees imposed by the Fund. These additional fees may vary and over time could increase the cost of an investment in the Fund

and lower investment returns. Each financial firm is responsible for transmitting to its customers and program participants a schedule of any such fees

and information regarding any additional or different conditions regarding purchases. Shareholders who are customers of these financial firms or

participants in programs serviced by them should contact the financial firm for information regarding these fees and conditions.

PIMCO and/or its affiliates may make payments to financial firms for the shareholder services provided. These payments are made out of PIMCO's or

its affiliates' resources, including the management fees paid to PIMCO under the Fund's Investment Management Agreement. The actual services

provided by these firms, and the payments made for such services, vary from firm to firm and, in some instances, vary with respect to a single firm

according to investment channel. The payments are based on a fixed dollar amount for each account and position maintained by the financial firm

and/or a percentage of the value of shares held by investors through the firm. Please see the Statement of Additional Information for more

information.

These payments may be material to financial firms relative to other compensation paid by the Fund, PIMCO and/or its affiliates (as applicable) and

may be in addition to other fees and payments, such as distribution and/or service fees

(12b-1)

, revenue sharing or "shelf space" fees and event

support, other non-cash compensation and charitable contributions paid to or at the request of such firms (described below). Also, the payments may

differ depending on the share class or investment channel and may vary from amounts paid to the Fund's transfer agent for providing similar services

to other accounts. PIMCO and/or its affiliates do not control these financial firms' provision of the services for which they are receiving payments.

Other Payments to Financial Firms

Some or all of the sales charges, distribution fees and servicing fees described above are paid or "reallowed" to the financial firm, including their

financial professionals through which you purchase your shares.

Revenue Sharing/Marketing Support.

The Distributor or PIMCO (for purposes of this subsection only, collectively, "PIMCO")

make

payments

and

provide

other incentives to financial firms as compensation for services such as providing the Fund with "shelf space," or a higher profile for the

financial firms' financial professionals and their customers, placing the Fund on the financial firms' preferred or recommended fund list, granting

PIMCO access to the financial firms' financial professionals and furnishing marketing support and other specified services. These payments may be

significant to the financial firms.

A number of factors are considered in determining the amount of these additional payments to financial firms. On some occasions, such payments

may be conditioned upon levels of sales, including the sale of a specified minimum dollar amount of the shares of the Fund and/or other funds

sponsored by PIMCO together or a particular class of shares, during a specified period of time. PIMCO also makes payments to one or more financial

firms based upon factors such as the amount of assets a financial firm's clients have invested in the Fund and the quality of the financial firm's

relationship with PIMCO and/or its affiliates.

The additional payments described above are made from PIMCO's (or its affiliates') own assets (and sometimes, therefore referred to as "revenue

sharing") pursuant to agreements with financial firms and do not change the price paid by investors for the purchase of the Fund's shares or the

amount the Fund will receive as proceeds from such sales. These payments may be made to financial firms (as selected by PIMCO) that have sold

significant amounts of shares of the Fund or other funds sponsored by PIMCO. In certain cases, the payments described in the preceding sentence

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may be subject to minimum payment levels or vary based on the management fee or total expense ratio of the Fund. In lieu of payments pursuant to

the foregoing terms, PIMCO makes, in certain instances, payments of an agreed upon amount which normally will not exceed the amount that would

have been payable pursuant to the formula as of the effective date of the agreement.

Ticket Charges.

In addition to the payments described above, PIMCO makes payments to financial firms in connection with certain transaction fees

(also referred to as "ticket charges") incurred by the financial firms.

Event Support; Other Non-Cash Compensation; Charitable Contributions.

In addition to the payments described above, PIMCO pays

and/or reimburses, at its own expense, financial firms' sponsorship and/or attendance at conferences, seminars or informational meetings (which may

include events held through video technology, to the extent permitted by applicable regulation) ("event support"), provides financial firms or their

personnel with occasional tickets to events or other entertainment (which, in some instances, is held virtually), meals and small gifts

and

pays or

provides reimbursement for reasonable travel and lodging expenses for attendees of PIMCO educational events ("other non-cash compensation")

and makes charitable contributions to valid charitable organizations at the request of financial firms ("charitable contributions") to the extent

permitted by applicable law, rules and regulations.

Visits; Training; Education.

In addition to the payments described above,

wholesale

representatives and employees of PIMCO or its affiliates visit

financial firms on a regular basis to educate financial professionals and other personnel about the Fund and to encourage the sale or

recommendation of Fund shares to their clients. PIMCO may also provide (or compensate consultants or other third parties to provide) other relevant

training and education to a financial firm's financial professionals and other personnel.

Platform Support; Consultant Services.

PIMCO also may make payments or reimbursements to financial firms or their affiliated companies,

which may be used for their platform development, maintenance, improvement and/or the availability of services including, but not limited to,

platform education and communications, relationship management support, development to support new or changing products, eligibility for

inclusion on sample fund line-ups, trading or order taking platforms and related infrastructure/technology and/or legal, risk management and

regulatory compliance infrastructure in support of investment-related products, programs and services (collectively, "platform support"). PIMCO may

also make payments to third party law firms or other service providers that provide certain due diligence services to financial firms with respect to the

Fund and/or PIMCO in connection with such financial firm determining whether to include the Fund on its platform. Subject to applicable law, PIMCO

and its affiliates may also provide investment advisory services to financial firms and their affiliates and may execute brokerage transactions on behalf

of the Fund with such financial firms' affiliates. These financial firms or their affiliates may, in the ordinary course of their financial firm business,

recommend that their clients utilize PIMCO's investment advisory services or invest in the Fund or in other products sponsored or distributed by

PIMCO or its affiliates. Some platform support arrangements also may entitle the Distributor or PIMCO to ancillary benefits such as reduced fees to

attend a financial firm's event or conference or elimination of one-time setup fees, such as CUSIP charges that financial firms otherwise may charge.

In addition, PIMCO may pay investment consultants or their affiliated companies for certain services including technology, operations, tax, or audit

consulting services and may pay such firms for PIMCO's attendance at investment forums sponsored by such firms (collectively, "consultant

services").

Data.

PIMCO also may make payments or reimbursements to financial firms or their affiliated companies for various studies, surveys, industry data,

research and information about, and contact information for, particular financial professionals who have sold, or may in the future sell, shares of the

Fund or other PIMCO-advised funds (i.e., "data"). Such payments may relate to the amount of assets a financial firm's clients have invested in the

Fund or other PIMCO-advised funds.

Payments.

Payments for items including event support, platform support, data and consultant services (but not including certain account services),

as well as revenue sharing, are, in certain circumstances, bundled and allocated among these categories in PIMCO's discretion. Portions of such

bundled payments allocated by PIMCO to revenue sharing shall remain subject to the percentage limitations on revenue sharing payments disclosed

above. The financial firms receiving such bundled payments may characterize or allocate the payments differently from PIMCO's internal allocation. In

addition, payments made by PIMCO to a financial firm and allocated by PIMCO to a particular category of services can in some cases result in benefits

related to, or enhance the eligibility of, PIMCO or the Fund to receive, services provided by the financial firm that may be characterized or allocated to

one or more other categories of services. If investment advisers, distributors or affiliated persons of funds make payments and provide other incentives

in differing amounts, financial firms and their financial professionals may have financial incentives for recommending a particular fund over other

funds. In addition, depending on the arrangements in place at any particular time, a financial firm and its financial professionals also may have a

financial incentive for recommending a particular share class over other share classes.

A shareholder who holds Fund Common Shares

through a financial firm should consult with the shareholder's financial professional and review carefully any disclosure by the

financial firm as to its compensation received by the financial professional.

Although the Fund may use financial firms that sell Fund

Common Shares to effect transactions for the Fund's portfolio, the Fund and PIMCO will not consider the sale of Fund Common Shares as a factor

when choosing financial firms to effect those transactions. For further details about payments made by PIMCO to financial firms, please see the

Statement of Additional Information.

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Purchasing Shares

The following section provides basic information about how to purchase Common Shares of the Fund.

The Fund typically does not offer or sell its shares to non-U.S. residents. For purposes of this policy, a U.S. resident is defined as an account with (i) a

U.S. address of record and (ii) all account owners residing in the U.S. at the time of sale.

In the interest of economy and convenience, certificates for shares will not be issued.

If you are eligible to buy Institutional Class Common Shares as well as Class A-1, Class A-2, Class A-3 or Class A-4 Common Shares, you should buy

Institutional Class Common Shares because Class A-2 and Class A-4 Common Shares may be subject to sales charges, and each of Class A-1,

Class A-2, Class A-3 and Class A-4 Common Shares will pay an annual distribution and/or service fee.

Individual shareholders who purchase Common Shares through financial intermediaries, pensions or profit sharing plans may not be eligible to hold

Common Shares outside of their respective plan or financial intermediary platform. Certain broker-dealers with agreements with the distributor are

authorized to receive purchase and repurchase requests for transmission to the Fund and in some cases may designate other financial intermediaries

to receive such orders.

Class A-1, Class A-2, Class A-3 and Class A-4 Common Shares

Eligible investors may purchase Class A-1, Class A-2, Class A-3 and Class A-4 Common Shares through their broker-dealer or other financial firm.

Class A-1, Class A-2, Class A-3 and Class A-4 Common Shares are not available for purchase directly from the Distributor.

■

Through your broker-dealer or other financial firm.

Class A-1, Class A-2, Class A-3 and Class A-4 Common Shares are primarily offered and sold to retail investors by certain broker-dealers that

are members of FINRA and that have agreements with the Distributor to offer Class A-1, Class A-2, Class A-3 and/or Class A-4 Common Shares,

but may be made available through other financial firms, including banks and trust companies and to specified benefit plans and other

retirement accounts. Your broker-dealer or other financial firm may establish

different

minimum investment requirements than the Fund and

may also independently charge you transaction or other fees and additional amounts (which may vary) in return for its services, which will

reduce your return. Shares you purchase through your broker-dealer or other financial firm will normally be held in your account with that firm

and instructions for buying, selling, exchanging or transferring Class A-1, Class A-2, Class A-3 or Class A-4 Common Shares must be submitted

by your broker-dealer or other financial firm on your behalf.

Institutional Class Common Shares

Eligible investors may purchase Institutional Class Common Shares in the following ways:

■

Through your broker-dealer or other financial firm.

Institutional Class Common Shares may be offered through certain financial firms

(including through retail separately managed accounts (i.e., wrap accounts) managed by PIMCO)

that charge their customers transaction or

other fees with respect to their customers' investments in the Fund. Your broker-dealer or other financial firm may establish higher or lower

minimum investment requirements than the Fund and may also independently charge you transaction or other fees and additional amounts

(which may vary) in return for its services, which will reduce your return. Shares you purchase through your broker-dealer or other financial firm

will normally be held in your account with that firm. If you purchase shares through a broker-dealer or other financial firm, instructions for

buying, selling, exchanging or transferring Institutional Class Common Shares must be submitted by your financial firm or broker-dealer on your

behalf.

■

Through the Distributor.

You should discuss your investment with your financial advisor before you make a purchase to be sure the Fund is

appropriate for you. Investors who meet the minimum investment amount and wish to invest directly in Institutional Class Common Shares may

obtain an Account Application online at pimco.com/forms or by calling 844.312.2113. If you do not list a financial advisor and his/her

brokerage firm on the Account Application, the Distributor is designated as the broker of record, but solely for purposes of acting as your agent

to purchase shares.

The completed Account Application may be submitted using the following methods:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Facsimile: 844.643.0432

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Overnight Mail:

PIMCO Interval Funds

801 Pennsylvania Avenue

Suite 219993

Kansas City, MO 64105-1307

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Regular Mail:

PIMCO Interval Funds

P.O. Box 219993

Kansas City, MO 64121-9993

E-mail:

PIMCOAltProcessing

@

SSCInc

.com

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

For inquiries, please call 844.312.2113.

Payment for the purchase of Common Shares may be made by check payable to the PIMCO Interval Funds and sent to the Regular Mail address

above; or by wiring federal funds to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

PIMCO Interval Funds

United Missouri Bank

928 Grand Blvd

Kansas City, MO 64106

ABA 101000695

DDA 9872291743

ACCT: Your PIMCO Account Number

FFC: Shareholder Name and Fund Identifier

Before wiring federal funds, the investor must provide order instructions to the transfer agent by facsimile at 844.643.0432 or by e-mail at

PIMCOAltProcessing

@

SSCInc

.com.

Under normal circumstances, in

order to receive the current day's NAV, order instructions must be received in good

order prior to the close of regular trading on the New York Stock Exchange ("NYSE") (normally

4:00 p.m., Eastern time) ("NYSE Close"). Instructions

must include the name and signature of an

authorized

person designated on the Account Application ("Authorized Person"), account name, account

number, name of the Fund and dollar amount. Payments received without order instructions could result in a processing delay or a return of wire.

Failure to send the accompanying payment on the same day may result in the cancellation of the order.

An investor may place a purchase order for Common Shares without first wiring federal funds if the purchase amount is to be derived from an

advisory account managed by PIMCO or one of its affiliates, or from an account with a broker-dealer or other financial firm that has established a

processing relationship with the Fund on behalf of its customers

Investment Minimums

■

Class A-1, Class A-2, Class A-3 and Class A-4 Common Shares.

The following investment minimums apply for purchases of Class A-1,

Class A-2, Class A-3 and Class A-4 Common Shares:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| Initial Investment | Subsequent Investments |
| $2,500 per account | $50 |

---

■

Institutional Class Common Shares.

The following investment minimums apply for purchases of Institutional Class Common Shares:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| Initial Investment | Subsequent Investments |
| $1 million per account |  |

---

The initial investment minimums may be

modified

for certain financial firms that submit orders on behalf of their customers

, including retail investors

in separately managed accounts (i

.

e.,

wrap accounts) managed by PIMCO.

The Fund or the Distributor may lower or waive the minimum initial

investment for certain classes of shares or categories of investors at their discretion. The minimum initial investment may also be

modified

for the

Trustees and certain employees and their extended family members of PIMCO and its affiliates. For these purposes, "extended family members" shall

include such person's spouse or domestic partner, as recognized by applicable state law, children, siblings, current brother/sister-in-laws, parents, and

current father/mother-in-laws. Please see the Statement of Additional Information for details.

■

Additional Investments.

An investor may purchase additional Institutional Class Common Shares of the Fund at any time by sending a

facsimile or e-mail as outlined above. If you invest in Common Shares through a broker-dealer, contact your financial firm for information on

purchasing additional Common Shares.

■

Other Purchase Information.

Purchases of the Fund's Common Shares will be made in full and fractional shares.

The Fund and the

Distributor each reserves the right, in its sole discretion, to suspend the offering of shares of the Fund or to reject any purchase order, in whole

or in part for reasons such as compliance with anti-money laundering or sanctions obligations and requirements.

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Sales Charge - Class A-2 and Class A-4 Common Shares

This section includes important information about sales charge reduction programs available to investors in Class A-2 and/or Class A-4 Common

Shares of the Fund and describes information or records you may need to provide to the Distributor or your financial firm in order to be eligible for

sales charge reduction programs.

Unless you are eligible for a waiver, the public offering price you pay when you buy Class A-2 or Class A-4 Common Shares of the Fund is the NAV of

the shares plus an initial sales charge. The initial sales charge varies depending upon the size of your purchase, as set forth below. No sales charge is

imposed where Class A-2 or Class A-4 Common Shares are issued to you pursuant to the automatic reinvestment of income dividends or capital gains

distributions. For investors investing in Class A-2 or Class A-4 Common Shares of the Fund through a financial intermediary, it is the responsibility of

the financial intermediary to ensure that you obtain the proper "breakpoint" discount.

Because the offering price is calculated to two decimal places, the dollar amount of the sales charge as a percentage of the offering price and your

net amount invested for any particular purchase of Fund shares may be higher or lower depending on whether downward or upward rounding was

required during the calculation process.

Class A-2 and Class A-4 Common Shares are subject to a 3.00% maximum sales charge as a percentage of the offering price (3.09% as a percentage

of net amount invested).

Class A-2 Common Shares are subject to the following sales charge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | | |
|:---|:---|:---|
| Your Investment | As a % of Public<br>Offering Price<br>| As a % of Net<br>Amount Invested<br>|
| Less than $100,000 | 2.00%<br>(1)<br>| 2.04%<br>(1)<br>|
| $100000 - $249999.99 | 1.00% | 1.01% |
| $250,000 and over | 0.00%<br>(2)<br>| 0.00%<br>(2)<br>|

---

(1) Although the Fund is permitted to charge a maximum sales charge of 3.00%, the Fund has elected to currently charge a maximum sales charge of 2.00%.

(2) As shown, investors that purchase $250,000 or more of the Fund's Class A-2 Common Shares will not pay any initial sales charge on the purchase. However, unless eligible for a

waiver, purchases of $250,000 or more of Class A-2 Common Shares will be subject to an early withdrawal charge of 1.00% if the shares are repurchased during the first 12 months

after their purchase. See "Early Withdrawal Charges - Class A-2 and Class A-4 Common Shares" and "Sales at Net Asset Value" below.

Class A-4 Common Shares are subject to the following sales charge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | | |
|:---|:---|:---|
| Your Investment | As a % of Public<br>Offering Price<br>| As a % of Net<br>Amount Invested<br>|
| Less than $100,000 | 2.00%<br>(1)<br>| 2.04%<br>(1)<br>|
| $100000 - $249999.99 | 1.00% | 1.01% |
| $250,000 and over | 0.00%<br>(2)<br>| 0.00%<br>(2)<br>|

---

(1) Although the Fund is permitted to charge a maximum sales charge of 3.00%, the Fund has elected to currently charge a maximum sales charge of

2.00%.

(2) As shown, investors that purchase $250,000 or more of the Fund's Class A-4 Common Shares will not pay any initial sales charge on the purchase. However, unless eligible for a

waiver, purchases of $250,000 or more of Class A-4 Common Shares will be subject to an early withdrawal charge of 1.00% if the shares are repurchased during the first 12 months

after their purchase. See "Early Withdrawal Charges - Class A-2 and Class A-4 Common Shares" and "Sales at Net Asset Value" below.

Investors in the Fund may reduce or eliminate sales charges applicable to purchases of Class A-2 or Class A-4 shares through utilization of the

Combined Purchase Privilege, Right of Accumulation, Letter of Intent or Reinstatement Privilege. These programs will apply to purchases of closed-end

interval funds that PIMCO sponsors currently or in the future (collectively, "Eligible Funds"), which offer Class A-1, Class A-2, Class A-3 and/or

Class A-4 Common Shares. These programs are summarized below and described in the Statement of Additional Information. Eligible Funds do not

include any open-end funds sponsored by PIMCO.

Combined Purchase Privilege and Right of Accumulation (Breakpoints).

A Qualifying Investor (as defined below) may qualify for a reduced

sales charge on Class A-2 or Class A-4 Common Shares at the breakpoint levels disclosed herein by combining concurrent purchases of the Class A-1,

Class A-2, Class A-3 and/or Class A-4 common shares of one or more Eligible Funds into a single purchase (the "Combined Purchase Privilege"). In

addition, a Qualifying Investor may obtain a reduced sales charge on Class A-2 or Class A-4 common shares by adding the purchase value of

Class A-1, Class A-2, Class A-3 and/or Class A-4 common shares of an Eligible Fund with the current aggregate net asset value of all Class A-1,

Class A-2, Class A-3 and/or Class A-4 common shares of any Eligible Fund held by accounts for the benefit of such Qualifying Investor (the "Right of

Accumulation" or "Cumulative Quantity Discount").

The term "Qualifying Investor" refers to:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

1. an individual, such individual's spouse or domestic partner, as recognized by applicable state law, or such individual's children under the age of

21 years (each a "family member") (including family trust\* accounts established by such a family member); or

2. a trustee or other fiduciary for a single trust (except family trusts\* noted above), estate or fiduciary account although more than one

beneficiary may be involved; or

3. an employee benefit plan of a single employer.

\*

For these purposes, a "family trust" is one in which a family member, as defined in section (1) above, or a direct lineal descendant(s) of such person is/are the beneficiary(ies), and such

person or another family member, direct lineal ancestor or sibling of such person is/are the trustee(s).

While a shareholder's positions in Class A-1 and Class A-3 common shares of other Eligible Funds are accounted for with respect to reaching a

breakpoint level on purchases of Class A-2 or Class A-4 common shares of any Eligible Fund, because neither the Eligible Funds nor their

distributor

impose an initial sales charge on Class A-1 or Class A-3 common shares of other Eligible Funds, the Combined Purchase Privilege and Right of

Accumulation programs do not apply to that share class. Class A-1 and Class A-3 common shares of other Eligible Funds that count towards reaching

a breakpoint level on purchases of Class A-2 or Class A-4 common shares of any Eligible Fund through the Combined Purchase Privilege and Right of

Accumulation programs are still subject to transaction or other fees that may be charged by certain financial firms, as those programs do not impact

the imposition of such fees.

Letter of Intent. Investors may also obtain a reduced sales charge on purchases of Class A-2 and/or Class A-4 Common Shares of the Fund by means

of a written Letter of Intent which expresses an intent to invest not less than $250,000 within a period of 13 months in Class A-1, Class A-2,

Class A-3 and/or Class A-4 common shares of any Eligible Fund(s). The maximum intended investment allowable in a Letter of Intent is $250,000.

Each purchase of shares under a Letter of Intent will be made at the public offering price or prices applicable at the time of such purchase to a single

purchase of the dollar amount indicated in the Letter of Intent. The value of the investor's account(s) linked to a Letter of Intent will be included at the

start date of the Letter of Intent. A Letter of Intent is not a binding obligation to purchase the full amount indicated. Shares purchased with the first

5% of the amount indicated in the Letter of Intent will be held in escrow (while remaining registered in your name) to secure payment of the higher

sales charges applicable to the shares actually purchased in the event the full intended amount is not purchased. If the full amount indicated is not

purchased, a sufficient amount of such escrowed shares will be involuntarily repurchased to pay the additional sales charge applicable to the amount

actually purchased, if necessary. Dividends on escrowed shares, whether paid in cash or reinvested in additional Eligible Fund shares, are not subject

to escrow. When the full amount indicated has been purchased, the escrow will be released. Repurchases during the Letter of Intent period will not

count against the shareholder.

In making computations concerning the amount purchased for purposes of a Letter of Intent, market appreciation in the value of the shareholder's

Class A-1, Class A-2, Class A-3 and/or Class A-4 common shares of Eligible Funds will not be included.

■

Method of Valuation of Accounts

. To determine whether a shareholder qualifies for a reduction in sales charge on a purchase of Class A-2

and/or Class A-4 Common Shares of the Fund, the public offering price of the shares is used for purchases relying on the Combined Purchase

Privilege or a Letter of Intent and the amount of the total current purchase (including any sales load) plus the NAV (at the close of business on

the day of the current purchase) of shares previously acquired is used for the Right of Accumulation (Cumulative Quality Discount).

Reinstatement Privilege

. A Class A-2 or Class A-4 shareholder who has caused any or all of his or her shares to be repurchased may reinvest all or

any portion of the repurchase proceeds in Class A-1, Class A-2, Class A-3 and/or Class A-4 common shares of any Eligible Fund at NAV without any

sales charge, provided that such reinvestment is made within 120 calendar days after the repurchase date. The limitations and restrictions of this

program are fully described in the Statement of Additional Information.

Sales at Net Asset Value.

In addition to the programs summarized above, Class A-2 and Class A-4 Common Shares, which are available for

purchase only through a broker-dealer or other financial firm, may be sold at NAV without an initial sales charge to certain types of accounts or

account holders, including: current or former Trustees, officers and employees of the Fund or PIMCO, and by directors, officers and current or former

employees of the Distributor or certain of PIMCO's affiliates if the account was established while employed; purchases made through wrap accounts

or certain types of group omnibus plans sponsored by employers; professional or charitable organizations; investors engaging in certain transactions

related to IRAs or other qualified retirement plan accounts; retirement plans that are maintained or sponsored by financial firms, provided the

financial firms have entered into an agreement with the Distributor related to such plans; investors making certain purchases following the

announcement of the liquidation of Fund or a share class; and any other person for which the Distributor determines that there will be minimal cost

borne by the Distributor associated with the sale. Please see the Statement of Additional Information for additional details.

Exchanges.

&nbsp;&nbsp;&nbsp;&nbsp;Exchanges of Common Shares for Class A-2 or Class A-4 Common Shares of the Fund or Class A-2 and/or Class A-4 common shares of

other Eligible Funds, at the direction of a financial intermediary (as described under "Exchanging Shares" below) will not be subject to a sales charge.

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Early Withdrawal Charges - Class A-2 and Class A-4 Common Shares

Unless you are eligible for a waiver, as described under "Sales at Net Asset Value", if you purchase $250,000 or more of Class A-2 or Class A-4

Common Shares (and, thus, pay no initial sales charge) of the Fund, you will be subject to a 1% early withdrawal charge ("EWC") if your Class A-2 or

Class A-4 Common Shares are repurchased within 12 months of their purchase. The Class A-2 and Class A-4 EWCs do not apply if you are otherwise

eligible to purchase Class A-2 or Class A-4 Common Shares without an initial sales charge or are eligible for a waiver of the EWC.

How EWCs will be Calculated

An EWC is imposed on repurchases of Class A-2 and Class A-4 Common Shares on the amount of the repurchase which causes the current value of

your account for the particular class of Common Shares of the Fund to fall below the total dollar amount of your purchase payments subject to the

EWC.

The following rules apply under the method for calculating EWCs:

■

Common Shares acquired through the reinvestment of dividends or capital gains distributions will be repurchased first and will not be subject

to any EWC.

■

For the repurchase of all other Common Shares, the EWC will be based on either your original purchase price or the then current NAV of the

Common Shares being sold, whichever is lower. To illustrate this point, consider Common Shares purchased at an NAV of $10. If the Fund's

NAV per Common Share at the time of repurchase is $12, the EWC will apply to the purchase price of $10. If the NAV per Common Share at the

time of repurchase is $8, the EWC will apply to the $8 current NAV per Common Share.

■

EWCs will be deducted from the proceeds of your repurchase, not from amounts remaining in your account.

■

In determining whether an EWC is payable, it is assumed that you will have

submitted for repurchase

first the lot of Common Shares which will

incur the lowest EWC.

Reductions and Waivers of Initial Sales Charges and EWCs

The initial sales charges and EWCs on Class A-2 or Class A-4 Common Shares may be reduced or waived under certain purchase arrangements and

for certain categories of investors. See "Sales at Net Asset Value" above for information on such reductions or waivers that may be applicable to

Class A-2 and Class A-4 initial sales charges.

EWCs on Class A-2 and Class A-4 Common Shares may be reduced or waived for repurchases where the shareholder can demonstrate hardship,

which shall be determined in the sole discretion of the Distributor, and there will be minimal cost borne by the Distributor associated with the

repurchase, which shall be determined in the sole discretion of the Distributor. In addition, investors will not be subject to EWCs for certain

transactions where the Distributor did not pay at the time of purchase the amount it normally would have to the broker-dealer.

Required Shareholder Information and Records.

In order for investors in Class A-2 or Class A-4 Common Shares of the Fund to take advantage of

sales charge reductions, an investor or his or her financial firm must notify the Fund that the investor qualifies for such a reduction. If the Fund is not

notified that the investor is eligible for these reductions, the Fund will be unable to ensure that the reduction is applied to the investor's account. An

investor may have to provide certain information or records to his or her financial firm or the Fund to verify the investor's eligibility for breakpoint

discounts or sales charge waivers.

An investor may be asked to provide information or records, including account statements, regarding shares of the Fund or other Eligible Funds held

in:

■

any account of the investor at another financial firm; and

■

accounts of Qualifying Investors at any financial firm.

Exchanging Shares

Exchanges Across Eligible Funds:

Subject to the terms and conditions below, shares of one class of common shares of other Eligible Funds may be

exchanged, at the shareholder's option, for shares of the same class or another class of Common Shares of the Fund. Shareholders may also move

their investment in Common Shares of the Fund into shares of the same class or another class of common shares of other Eligible Funds in

conjunction with quarterly repurchases made by the Fund. In this case, rather than tendering shares for cash, the shareholder would elect to have the

dollar value of those Common Shares accepted for purchases of shares of the other Eligible Funds. Such exchanges for shares of other Eligible Funds

must occur in conjunction with quarterly repurchases made by the Fund and will be subject to those repurchase offer risks, such as the risk that

shareholders may be unable to liquidate all or a given percentage of their investment in the Fund during a particular repurchase offer, that are

described elsewhere in this prospectus. See "Principal Risks of the Fund - Repurchase Offers Risk."

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The total value of shares being exchanged into the Fund must at least equal the minimum investment requirement applicable to the relevant class of

Common Shares of the Fund, and the total value of shares being exchanged out of the Fund into other Eligible Funds must meet the minimum

investment requirements of those Eligible Funds, as applicable. Other than exchanges at the direction of a financial intermediary (as described below),

shares of the Fund or other Eligible Funds related to such exchanges will be subject to any sales charges, EWCs and/or waivers applicable to such

classes of shares.

Intra-Fund Exchanges:

Common

Shares of one class of the Fund may be exchanged at any time, at a shareholder's option, directly for

Common Shares

of another class of the Fund (an "intra-fund exchange"), subject to the terms and conditions described below and provided that the shareholder for

whom the intra-fund exchange is being requested meets the eligibility requirements of the class into which such shareholder seeks to exchange.

Additional information regarding the eligibility requirements of different share classes, including investment minimums and intended distribution

channels is described under "Purchasing Shares" and "Investment Minimums" above.

Shares of one class of the Fund will be exchanged for shares of a different class of the Fund on the basis of their respective NAVs. Ongoing fees and

expenses incurred by a given share class will differ from those of other share classes, and a shareholder receiving new shares in an intra-fund

exchange may be subject to higher or lower total expenses following such exchange.

Financial Intermediary-Directed Exchanges:

Financial intermediaries may, in connection with a change in a client's account type, at the direction of a

client, or otherwise in accordance with a financial intermediary's policies and procedures, direct the Fund on behalf of the intermediary's clients to

exchange shares of one class of Common Shares of the Fund for shares of another class of Common Shares of the Fund,

subject to availability,

or

exchange Common Shares of the Fund for the same class or another class of common shares of another Eligible Fund. Any such exchange will not be

subject to a sales charge. Class A-1, Class A-2, Class A-3 and Class A-4 Common Shares of the Fund are, however, subject to higher annual operating

expenses than Institutional Class Common Shares. See "Summary of Fund Expenses." The Fund will only complete such an exchange at the direction

of a financial intermediary and without making inquiry as to whether the exchange is consistent with the particular intermediary's policies and

procedures or the client's account type and/or suitability criteria. An investor should contact his or her financial intermediary to learn more about the

details of this exchange feature and whether and under what circumstances it may apply in accordance with the investor's arrangements with the

particular intermediary.

Shares Purchased or Held Through Financial Intermediaries

The Fund's sales charge waivers and discounts disclosed in this prospectus are available for qualifying purchases and are generally available through

financial firms. The availability of sales charge waivers and discounts may depend on the particular financial intermediary or type of account through

which you purchase or hold Fund shares. There are currently no sales charge waivers, discounts and/or breakpoints available through any specific

financial intermediary required to be disclosed by the Fund. Any such sales charge waivers, discounts and/or breakpoints will be set forth in an

appendix to this prospectus.

While neither the Fund nor the Distributor impose an initial sales charge on Institutional Class, Class A-1 or Class A-3 Common Shares, if you buy

Institutional Class, Class A-1 or Class A-3 Common Shares through certain financial firms they may directly charge you transaction or other fees in

such amount as they may determine. Please consult your financial firm for additional information.

Signature Validation

When a signature validation is called for, a Medallion signature guarantee or Signature validation program ("SVP") stamp may be required. A

Medallion signature guarantee is intended to provide signature validation for transactions considered financial in nature, and an SVP stamp is

intended to provide signature validation for transactions non-financial in nature. In certain situations, a notarized signature may be used instead of a

Medallion signature guarantee or an SVP stamp. A Medallion signature guarantee or SVP stamp may be obtained from a domestic bank or trust

company, broker, dealer, clearing agency, savings association or other financial institution which is participating in a Medallion program or SVP

recognized by the Securities Transfer Association. When a Medallion signature guarantee or SVP stamp is required, signature validations from

financial institutions which are not participating in one of these programs will not be accepted. Please note that financial institutions participating in

a recognized Medallion program

or providing SVP stamps

may still be ineligible to provide a signature validation for transactions of greater than a

specified dollar amount. The Fund may change the signature validation requirements from time to time upon notice to shareholders, which may be

given by means of a new or supplemented prospectus. Shareholders should contact the Fund for additional details regarding the Fund's signature

validation requirements.

In addition, PIMCO or the Fund may reject a Medallion signature guarantee or SVP stamp.

In addition, corporations, trusts, and other institutional organizations are required to furnish evidence of the authority of the persons designated on

the Account Application to effect transactions for the organization.

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Request for Multiple Copies of Shareholder Documents

To reduce expenses, it is intended that only one copy of the Fund's prospectus and each annual and semi-annual report to shareholders or notice of

availability, when available, will be

sent

to those addresses shared by two or more accounts. If you wish to receive individual copies of these

documents and your shares are held directly with the Fund, call the Fund at 844.312.2113. You will receive the additional copy within 30 days after

receipt of your request by the Fund. Alternatively, if your shares are held through a financial institution, please contact the financial institution directly.

Acceptance and Timing of Purchase

and Repurchase

Orders

Under normal circumstances, a purchase order received by the Fund or its designee prior to the NYSE Close, on a day the Fund is open for business,

together with payment made in one of the ways described above will be effected at that day's NAV plus any applicable sales charge. An order

received after the

close of regular trading on the NYSE

will be effected at the NAV determined on the next business day. However, orders received by

certain retirement plans and other financial firms on a business day prior to the

close of regular trading on the NYSE

and communicated to the Fund

or its designee prior to such time as agreed upon by the Fund and financial firm will be effected at the NAV determined on the business day the order

was received by the financial firm. The Fund is "open for business" on each day the NYSE is open for trading, which excludes the following holidays:

New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Juneteenth National Independence Day, Independence Day,

Labor Day, Thanksgiving Day and Christmas Day. On any day that regular trading on the NYSE closes earlier than scheduled, the Fund reserves the

right to: (i) advance the time as of which the NAV is calculated and, therefore, the time by which purchase orders must be received to receive that

day's NAV or (ii) accept purchase orders until, and calculate its NAV as of, the normally scheduled NYSE Close. On any day that the NYSE is closed

when it would normally be open for business, the Fund may accept purchase orders until, and calculate its NAV as of, the normally scheduled close of

regular trading on the NYSE or such other time that the Fund may determine.

If your shares are held with a broker, dealer or other financial intermediary with an agreement with the distributor ("Authorized Intermediary"), all

orders must be received by the Authorized Intermediary in good order before NYSE Close on trade date. All purchase orders received by an Authorized

Intermediary must be transmitted to the Fund in good order prior to 9:00 a.m. ET on the following business day. The Fund will be deemed to have

received a purchase order when an authorized broker or, if applicable, a broker's authorized designee, receives such order, so long as this purchase

order is transmitted to the Fund in good order by 9:00 a.m. ET the following day. Purchase orders received by the Fund after 9:00 a.m. ET will be

processed at the Fund's NAV next computed. For repurchase requests, if your Authorized Intermediary fails to timely submit your repurchase request

to the Fund's transfer agent in good order, you will be unable to tender your Shares until a subsequent repurchase offer, and your request would need

to be resubmitted to the Fund. If your account is held directly at the Fund's transfer agent (and as a result you receive statements directly from PIMCO

Investments LLC), orders must be received in good order by the Fund's transfer agent, SS&C Global Investor and Distribution Solutions Inc., prior to

NYSE Close. Neither the Fund nor its service providers (including PIMCO Investments LLC) shall bear any responsibility for gains or losses resulting

from an Authorized Intermediary's failure to transmit a trade instruction in good order to the Fund's transfer agent timely.

The Fund reserves the right to close if the primary trading markets of the Fund's portfolio instruments are closed and the Fund's management believes

that there is not an adequate market to meet purchase requests. On any business day when the Securities Industry and Financial Markets Association

("SIFMA") recommends that the securities markets close trading early, the Fund may close trading early. Purchase orders will be accepted only on

days which the Fund is open for business.

The Fund and the Distributor each reserves the right, in its sole discretion, to accept or reject any order for purchase of Fund Common Shares in whole

or in part. The sale of Common Shares may be suspended during any period in which the NYSE is closed other than weekends or holidays, or if

permitted by the rules of the SEC, when trading on the NYSE is restricted or during an emergency which makes it impracticable for the Fund to

dispose of its securities or to determine fairly the value of its net assets, or during any other period as permitted by the SEC for the protection of

investors.

Information Regarding State Escheatment Laws

It is important that the Fund maintain a correct address for each direct shareholder. An incorrect address may cause a direct shareholder's account

statements and other mailings to be returned to the Fund. Closed-end fund accounts can be considered abandoned property. States increasingly are

looking at inactive closed-end fund accounts as possible abandoned or unclaimed property. Under certain circumstances, the Fund (or the broker or

custodian of record having beneficial owner information) may be legally obligated to escheat (or transfer) an investor's account to the appropriate

state's unclaimed property administrator. The Fund will not be liable to investors or their representatives for good faith compliance with state

unclaimed or abandoned property (escheatment) laws.

Escheatment laws vary by state, and states have different criteria for defining inactivity and abandoned property. Generally, a closed-end account may

be subject to "escheatment" (i.e., considered to be abandoned or unclaimed property) if the account owner has not initiated any activity in the

account or contacted the fund for an "inactivity period" as specified in applicable state laws. Typically, an investor's last known address of record

determines the state that has jurisdiction.

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The process described above, and the application of state escheatment laws, may vary depending on how shareholders hold their shares in the Fund.

If your shares are held directly with the Fund, please proactively contact the Fund's transfer agent at 844.312.2113 at least annually to ensure your

account remains in active status. Alternatively, if your shares are held through a financial institution, please work with your financial institution

directly to check your account status.

Verification of Identity and Compliance with Economic Sanctions and Anti-Money Laundering Laws

To help the federal government combat the funding of terrorism and money laundering activities, federal law generally requires all financial

institutions to obtain, verify

,

record,

and

,

in certain instances, report

information that identifies each person

,

or the control person

(s)

and/

or beneficial

owner

(s) of legal entity customers

,

that opens a new account, and to determine whether such person's

name

,

or

the names of such control person

(s)

and/

or beneficial owners of legal entity customers,

appears on government lists of known or suspected terrorists and terrorist organizations. As a

result, unless there is an applicable exception or exemption, the Fund must obtain the following information for each person

,

or the control person

(s)

and/

or

beneficial owner

(s) of legal

entity customers,

that opens a new account:

&nbsp;&nbsp;&nbsp;&nbsp;1. Name;

&nbsp;&nbsp;&nbsp;&nbsp;2. Date of birth (for individuals);

&nbsp;&nbsp;&nbsp;&nbsp;3. Residential or business street address; and

&nbsp;&nbsp;&nbsp;&nbsp;4. Social security number, taxpayer identification number, or other identifying number.

Federal law prohibits the Fund and other financial institutions from opening a new account unless they receive the minimum identifying information

listed above, unless there is an applicable exception or exemption.

Individuals may also be asked for a copy of their driver's license, passport or other identifying document in order to verify their identity. In addition, it

may be necessary to verify an individual's identity by cross-referencing the identification information with a consumer report or other electronic

database. Additional information may be required to open accounts for corporations and other entities, and the Fund or its affiliates or agents may

request information about the investor's source of funds and source of wealth before permitting investment in the Fund.

After an account is opened, the Fund may restrict your ability to purchase additional Common Shares until your identity is verified and all other

requested information is provided to the Fund's satisfaction. The Fund also may close or freeze your account and redeem your shares or take other

appropriate action if it is unable to verify your identity or obtain other requested information within a reasonable time at any point in the lifecycle of

the account.

The Fund and its affiliates

may be

subject to

anti-money laundering laws in addition to those set forth above, as well as laws that restrict them from

dealing with entities, individuals, organizations and/or investments that are subject to applicable sanctions regimes. Compliance with applicable

economic sanctions, anti-money laundering, and anti-terrorist financing laws also may cause PIMCO to block, freeze

,

or (in some cases)

reject or

liquidate an account if, for example, PIMCO is unable to obtain from an investor information it requires to satisfy its anti-money laundering or

economic sanctions compliance obligations, or has reason to suspect that the investor may be engaged in, or that the investor

'

s funds derive from,

illicit activity

,

or sanctioned persons.

Such actions may have adverse effects on the Fund or investors.

Each investor acknowledges that (i) if the Fund

or its affiliates or agents reasonably believes that such investor (or any of its underlying beneficial owners) is the subject or target of relevant

economic or trade sanctions program or has used proceeds of crime to fund their investment, (ii) if the investor fails to provide information to the

Fund or its affiliates or agents for purposes of assessing the Fund's compliance with economic or trade sanctions or anti-money laundering laws, or

(iii) if otherwise required by applicable law or

regulations

, the Fund or its affiliates or agents may, in their sole discretion, undertake appropriate

actions to ensure compliance with applicable law or regulations, including but not limited to freezing, segregating or redeeming such investor's

subscription in the Fund and/or making disclosures to appropriate regulators. In this event, the affected investor shall have no claim against the Fund

or any of its affiliates or agents, for any form of damages that result from any of the aforementioned actions.

Periodic Repurchase Offers

The Fund is a closed-end interval fund and, to provide liquidity and the ability to receive NAV on a disposition of at least a portion of your Common

Shares, makes periodic offers to repurchase Common Shares. No shareholder will have the right to require the Fund to repurchase its Common

Shares, except as permitted by the Fund's interval structure. No public market for the Common Shares exists, and none is expected to develop in the

future. Consequently, shareholders generally will not be able to liquidate their investment other than as a result of repurchases of their Common

Shares by the Fund, and then only on a limited basis.

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The Fund has adopted, pursuant to Rule 23c-3 under the Act, a fundamental policy, which cannot be changed without shareholder approval, requiring

the Fund to offer to repurchase at least 5% and up to 25% of its Common Shares at NAV on a regular schedule. Although the policy permits

repurchases of between 5% and 25%

,

or such other amounts as may be permitted under applicable rules and regulations or no-action, exemptive or

other relief,

of the Fund's outstanding Common Shares, for each quarterly repurchase offer, the Fund currently expects to offer to repurchase 10% of

the Fund's outstanding Common Shares at NAV subject to approval of the Board. The schedule requires the Fund to make repurchase offers every

three months.

Repurchase Dates

The Fund will make quarterly repurchase offers. Subject to Board approval, Repurchase Request Deadlines are expected to occur each February, May,

August and November, and Repurchase Offer Notices are expected to be sent to shareholders each January, April, July and October preceding each

such Repurchase Request Deadline. As discussed below, the date on which the repurchase price for Common Shares is determined will occur no later

than the 14th day after the Repurchase Request Deadline (or the next business day, if the 14th day is not a business day). A repurchase schedule

setting forth each of these dates for the Fund's current calendar year is available on the Fund's website at www.pimco.com.

Repurchase Request Deadline

The date by which shareholders wishing to tender Common Shares for repurchase must respond to the repurchase offer will be no more than

fourteen days before the Repurchase Pricing Date (defined below). When a repurchase offer commences, the Fund sends, at least 21 days before the

Repurchase Request Deadline, written notice to each shareholder setting forth, among other things:

■

The percentage of outstanding Common Shares that the Fund is offering to repurchase and how the Fund will purchase Common Shares on a

pro rata basis if the offer is oversubscribed.

■

The date on which a shareholder's repurchase request is due.

■

The date that will be used to determine the Fund's NAV applicable to the repurchase offer (the "Repurchase Pricing Date").

■

The date by which the Fund will pay to shareholders the proceeds from their Common Shares accepted for repurchase.

■

The NAV of the Common Shares as of a date no more than seven days before the date of the written notice and the means by which

shareholders may ascertain the NAV.

■

The procedures by which shareholders may tender their Common Shares and the right of shareholders to withdraw or modify their tenders

before the Repurchase Request Deadline.

■

The circumstances in which the Fund may suspend or postpone the repurchase offer.

This notice may be included in a shareholder report or other Fund document. Shareholders that hold shares through a financial intermediary will need

to ask their financial intermediary to submit their repurchase requests and tender shares on their behalf.

The Repurchase Request Deadline will

be strictly observed.

If a shareholder's repurchase request is not submitted to the Fund's transfer agent in properly completed form by the

Repurchase Request Deadline, the shareholder will be unable to sell his or her shares to the Fund until a subsequent repurchase offer, and the

shareholder's request for that offer must be resubmitted. If a shareholder's Authorized Intermediary will submit his or her repurchase request, the

shareholder should submit his or her request to the Authorized Intermediary in the form requested by the Authorized Intermediary sufficiently in

advance of the Repurchase Request Deadline to allow the Authorized Intermediary to submit the request to the Fund. If a shareholder's Authorized

Intermediary is unable or fails to submit the shareholder's request to the Fund in a timely manner, or if the shareholder fails to submit his or her

request to the shareholder's Authorized Intermediary, the shareholder will be unable to sell his or her shares to the Fund until a subsequent

repurchase offer, and the shareholder's request for that offer must be resubmitted.

Shareholders may withdraw or change a repurchase request with a proper instruction submitted in good form at any point before the Repurchase

Request Deadline.

Determination of Repurchase Price and Payment for Shares

The Repurchase Pricing Date will occur no later than the 14th day after the Repurchase Request Deadline (or the next business day, if the 14th day is

not a business day). The Fund expects to distribute payment to shareholders within three (3) business days after the Repurchase Pricing Date and will

distribute such payment in settlement of the Fund's repurchase of shares no later than seven (7) calendar days after such Repurchase Pricing Date.

The Fund's NAV per share may change materially between the date a repurchase offer is mailed and the Repurchase Request Deadline, and it may

also change materially between the Repurchase Request Deadline and Repurchase Pricing Date. The method by which the Fund calculates NAV is

discussed below under "How Fund Shares are Priced." During the period an offer to repurchase is open, shareholders may obtain the current NAV by

visiting www.pimco.com or calling the Fund's transfer agent at 844.312.2113.

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Suspension or Postponement of Repurchase Offers

The Fund may suspend or postpone a repurchase offer in limited circumstances set forth in Rule 23c-3 under the Act, as described below, but only

with the approval of a majority of the Trustees, including a majority of Trustees who are not "interested persons" of the Fund, as defined in the Act.

The Fund may suspend or postpone a repurchase offer as may be permitted under Rule 23c-3, including (but not limited to): (1) if making or effecting

the repurchase offer would cause the Fund to lose its status as a RIC under Subchapter M of the Code; (2) for any period during which the NYSE or

any other market in which the securities owned by the Fund are principally traded is closed, other than customary weekend and holiday closings, or

during which trading in such market is restricted; (3) for any period during which an emergency exists as a result of which disposal by the Fund of

securities owned by it is not reasonably practicable, or during which it is not reasonably practicable for the Fund fairly to determine the value of its net

assets; or (4) for such other periods as the SEC may by order permit for the protection of shareholders of the Fund.

Oversubscribed Repurchase Offers

There is no minimum number of Common Shares that must be tendered before the Fund will honor repurchase requests. However, the Fund's Trustees

set for each repurchase offer a maximum percentage of Common Shares that may be repurchased by the Fund, which is currently expected to be 10%

of the Fund's outstanding Common Shares. In the event a repurchase offer by the Fund is oversubscribed, the Fund may repurchase, but is not

required to repurchase, additional Common Shares up to a maximum amount of 2% of the outstanding Common Shares of the Fund. If the Fund

determines not to repurchase additional Common Shares beyond the repurchase offer amount, or if shareholders tender an amount of Common

Shares greater than that which the Fund is entitled to repurchase, the Fund will repurchase the Common Shares tendered on a pro rata

basis. However, the foregoing will not prohibit the Fund from accepting all Common Shares tendered for repurchase by shareholders who own less

than one hundred (100) Common Shares and who tender all of their Common Shares, before prorating Common Shares tendered by other

shareholders; provided that if a shareholder holds his or her shares through an Authorized Intermediary, such shareholder's Authorized Intermediary

may not be willing or able to arrange for this treatment on the shareholder's behalf.

If any Common Shares that you wish to tender to the Fund are not repurchased because of proration, you will have to wait until the next repurchase

offer and resubmit a new repurchase request, and your repurchase request will not be given any priority over other shareholders' requests. Thus, there

is a risk that the Fund may not purchase all of the Common Shares you wish to have repurchased in a given repurchase offer or in any subsequent

repurchase offer. In anticipation of the possibility of proration, some shareholders may tender more Common Shares than they wish to have

repurchased in a particular quarter, increasing the likelihood of proration.

There is no assurance that you will be able to tender your Common Shares when or in the amount that you desire.

Consequences of Repurchase Offers

From the time the Fund distributes or publishes each repurchase offer notification until the Repurchase Pricing Date for that offer, the Fund must

maintain liquid assets at least equal to the percentage of its Common Shares subject to the repurchase offer. For this purpose, "liquid assets" means

assets that may be sold or otherwise disposed of in the ordinary course of business, at approximately the price at which the Fund values them, within

the period between the Repurchase Request Deadline and the repurchase payment deadline, or which mature by the repurchase payment deadline.

The Fund is also permitted to borrow up to the maximum extent permitted under the Act to meet repurchase requests.

If the Fund borrows to finance repurchases, interest on that borrowing will negatively affect shareholders who do not tender their Common Shares by

increasing the Fund's expenses and reducing any net investment income. There is no assurance that the Fund will be able sell a significant amount of

additional Common Shares so as to mitigate these effects.

These and other possible risks associated with the Fund's repurchase offers are described under "Principal Risks of Investment in the

Fund-Repurchase Offers Risk" above. In addition, the repurchase of Common Shares by the Fund will be a taxable event to shareholders, potentially

even to those shareholders that do not participate in the repurchase. For a discussion of these tax consequences, see "Tax Matters" below and

"Taxation" in the Statement of Additional Information.

How Fund Shares are Priced

The

price of the Fund's Common Shares is based on the Fund's

NAV

.

The NAV

of the Fund's Common Shares is determined by dividing the total value

of the Fund's portfolio investments and other assets, less any liabilities, by the total number of

Common Shares

outstanding.

On each day that the NYSE is open, the Fund's Common Shares are ordinarily valued as of the NYSE Close. Information that becomes known to the

Fund or its agents after the time as of which NAV has been calculated on a particular day will not generally be used to retroactively adjust the price of

a security or the NAV determined earlier that day. If regular trading on the NYSE closes earlier than scheduled, the Fund

reserves the right to

(i) calculate its NAV as of the earlier closing time or

(ii) calculate its NAV as of the normally scheduled close of regular trading on the NYSE for that day.

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The Fund generally does not calculate its NAV

during

days on which the NYSE is

closed

.

However,

if

the NYSE is closed on a day it would normally be

open for business, the Fund

reserves the right to

calculate its NAV as of the normally scheduled

close of regular trading on the NYSE for the day

or

such other time that the Fund may determine.

For purposes of calculating NAV, portfolio securities and other assets for which market quotations are readily available are valued at market value. A

market quotation is readily available only when that quotation is a quoted price (unadjusted) in active markets for identical investments that the Fund

can access at the measurement date, provided that a quotation will not be readily available if it is not reliable. Market value is generally determined

on the basis of official closing prices or the last reported sales prices. The Fund will normally use pricing data for domestic equity securities received

shortly after the NYSE Close and does not normally take into account trading, clearances or settlements that take place after the NYSE Close. A

foreign (non-U.S.) equity security traded on a foreign exchange or on more than one exchange is typically valued using pricing information from the

exchange considered by PIMCO to be the primary exchange. If market value pricing is used, a foreign (non-U.S.) equity security will be valued as of

the close of trading on the foreign exchange, or the NYSE Close, if the NYSE Close occurs before the end of trading on the foreign exchange.

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 Act. As a general principle, the fair value of a security or asset is the price that would be received to sell an asset or paid to transfer a liability in an

orderly transaction between market participants at the measurement date. Pursuant to Rule 2a-5, the Board has designated PIMCO as the valuation

designee ("Valuation Designee") for the Fund to perform the fair value determination relating to all Fund investments. PIMCO may carry out its

designated responsibilities as Valuation Designee through various teams and committees. The Valuation Designee's policies and procedures govern

the Valuation Designee's selection and application of methodologies for determining and calculating the fair value of Fund investments. The Valuation

Designee may value portfolio securities for which market quotations are not readily available and other Fund assets utilizing inputs from pricing

services, quotation reporting systems, valuation agents and other third-party sources (together, "Pricing Sources").

Domestic and foreign (non-U.S.) fixed income securities, non-exchange-traded derivatives, and equity options are normally valued on the basis of

quotes obtained from brokers and dealers or Pricing Sources using data reflecting the earlier closing of the principal markets for those securities.

Prices obtained from Pricing Sources may be based on, among other things, information provided by market makers or estimates of market values

obtained from yield data relating to investments or securities with similar characteristics. Certain fixed income securities purchased on a

delayed-delivery basis are marked to market daily until settlement at the forward settlement date. Exchange-traded options, except equity options,

futures and options on futures are valued at the settlement price determined by the relevant exchange. Swap agreements are valued on the basis of

bid quotes obtained from brokers and dealers or market-based prices supplied by Pricing Sources. With respect to any portion of the Fund's assets

that are invested in one or more open-end management investment companies (other than exchange-traded funds), the Fund's NAV will be

calculated based upon the NAVs of such investments.

If a foreign (non-U.S.) equity security's value has materially changed after the close of the security's primary exchange or principal market but before

the NYSE Close, the security may be valued at fair value. Foreign (non-U.S.) equity securities that do not trade when the NYSE is open are also valued

at fair value. With respect to foreign (non-U.S.) equity securities, the Fund may determine the fair value of investments based on information provided

by Pricing Sources and other third party vendors, which may recommend fair value or adjustments with reference to other securities, indexes or assets.

In considering whether fair valuation is required and in determining fair values, the Valuation Designee may, among other things, consider significant

events (which may be considered to include changes in the value of U.S. securities or securities indexes) that occur after the close of the relevant

market and before the NYSE Close. The Fund may utilize modeling tools provided by third-party vendors to determine fair values of non-U.S. securities.

For these purposes, unless otherwise determined by the Valuation Designee, any movement in the applicable reference index or instrument ("zero

trigger") between the earlier close of the applicable foreign market and the NYSE Close may be deemed to be a significant event, prompting the

application of the pricing model (effectively resulting in daily fair valuations)

.

Foreign (non-U.S.) exchanges may permit trading in foreign (non-U.S.)

equity securities on days when the Fund is not open for business, which may result in the Fund's portfolio investments being affected when

shareholders are unable to buy or sell shares.

Investments valued in currencies other than the U.S. dollar are converted to the U.S. dollar using exchange rates obtained from Pricing Sources. As a

result, the value of such investments and, in turn, the NAV of the Fund's shares may be affected by changes in the value of currencies in relation to

the U.S. dollar. The value of investments traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be

affected significantly on a day that the Fund is not open for business. As a result,

to the extent that

the Fund

holds

foreign (non-U.S.) investments

,

the

value of those investments

may change at times when shareholders are unable to buy or sell shares and the value of such investments will be

reflected in the Fund's next calculated NAV.

Fair valuation may require subjective determinations about the value of a security. While the Fund's and Valuation Designee's policies and procedures

are intended to result in a calculation of the Fund's NAV that fairly reflects security values as of the time of pricing, the Fund cannot ensure that fair

values accurately reflect the price that the Fund could obtain for a security if it were to dispose of that security as of the time of pricing (for instance,

in a forced or distressed sale). The prices used by the Fund may differ from the value that would be realized if the securities were sold.

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Under certain circumstances, the per share NAV of a class of the Fund's shares may be different from the per share NAV of another class of shares as

a result of the different daily expense accruals applicable to each class of shares.

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Distributions

The Fund currently intends to declare income dividends daily and

distribute them to Common Shareholders monthly, which may be at

rates that reflect the past and projected net income of the Fund. Subject

to applicable law, the Fund may fund a portion of its distributions with

gains from the sale of portfolio securities and other sources.

Distributions can only be made from net investment income after paying

any accrued dividends to holders of the Preferred Shares. The dividend

rate that the Fund pays on its Common Shares may vary as portfolio and

market conditions change, and will depend on a number of factors,

including without limitation the amount of the Fund's undistributed net

investment income and net short- and long-term capital gains, as well

as dividends payable on any Preferred Shares issued by the Fund

(including any Preferred Share Gross-Up) and the costs of any other

leverage obtained by the Fund (including interest expenses on any

tender option bonds, reverse repurchase agreements, dollar

rolls/buybacks and borrowings). The rate of distributions on the

Common Shares and the Fund's dividend policy could change based on

a number of factors, including the amount of the Fund's undistributed

net investment income and historical and projected investment income

and the amount of the expenses and dividend rates on any outstanding

Preferred Shares (and other forms of leverage). For a discussion of

factors that may cause the Fund's income and capital gains (and

therefore the dividend) to vary, see "Principal Risks of the Fund." The

Fund intends to distribute each year substantially all of its net

investment income and net short-term capital gains. In addition, at least

annually, the Fund intends to distribute net realized long-term capital

gains not previously distributed, if any. The net investment income of the

Fund consists of all income (other than net short-term and long-term

capital gains) less all expenses of the Fund (after it pays accrued

dividends on any outstanding Preferred Shares). The Fund's distribution

rates may be based, in part, on projections as to annual cash available

for distribution and, therefore, the distributions paid by the Fund for any

particular month may be more or less than the amount of cash available

to the Fund for distribution for that monthly period.

The Fund may distribute less than the entire amount of net investment

income earned in a particular period. The undistributed net investment

income would be available to supplement future distributions. As a

result, the distributions paid by the Fund for any particular monthly

period may be more or less than the amount of net investment income

actually earned by the Fund during the period. Undistributed net

investment income will be added to the Fund's NAV and,

correspondingly, distributions from undistributed net investment income

will be deducted from the Fund's NAV.

The Fund's Preferred Shares pay dividend distributions at a stated rate,

which rate is based generally on the assumption that such dividend

distributions will consist entirely of dividends that pass through the

character of exempt interest earned by the Fund and are therefore not

taxable to shareholders for regular federal and California income tax

purposes ("exempt-interest dividends"). IRS rules nonetheless require a

RIC having two or more classes of stock for U.S. federal income tax

purposes to characterize amounts distributed as dividends to each class

for the taxable year in accordance with their pro rata share of income or

gains of any type. Therefore, the Fund might be required to characterize

a portion of dividends paid to Preferred Shareholders as ordinary

income or capital gain dividends. The terms of such Preferred Shares

provide further that, in the event less than the entire amount of any

particular dividend distribution paid pursuant to the stated rate were to

consist of "exempt-interest dividends" (i.e., if a portion of any particular

dividend were to derive from ordinary income or capital gain, including

short-term capital gain taxable as ordinary income when distributed),

the amount of such dividend would increase by an amount (a "Preferred

Shareholder Gross-Up") such that the after-tax amount of such

dividend, as increased by the Preferred Shareholder Gross-Up, would

equal the total amount the holder of such Preferred Shares would have

received if the dividend at the stated rate had consisted entirely of

"exempt-interest dividends." The Preferred Shareholder Gross-Up will

be calculated (i) without consideration being given to the time value of

money, (ii) assuming that no Preferred Shareholder is subject to the

federal alternative minimum tax, and (iii) assuming that the portion of

any dividend distribution (including the amount of any Preferred

Shareholder Gross-Up) that is not an exempt interest dividend would be

taxable (x), in the hands of the initial purchaser of the Preferred Shares

(or certain of its affiliates), at the maximum combined marginal regular

federal corporate income tax rate and California state tax rate (including

any surtax), and (y), in the hands of any other holder, at the greater of

(a) the maximum combined marginal regular federal individual income

tax rate (taking into account the 3.8% Medicare contribution tax on net

investment income) and California state tax rate (including any surtax)

applicable to ordinary income or net capital gain, as applicable, or (b)

the maximum combined marginal regular federal corporate income tax

rate and California state tax rate (including any surtax) applicable to

ordinary income or net capital gain, as applicable, in each case

disregarding the effect of any other state or local taxes. Any Preferred

Shareholder Gross-Up would reduce the amount that would otherwise

be distributable to Common Shareholders.

The tax treatment and characterization of the Fund's distributions may

vary significantly from time to time because of the varied nature of the

Fund's investments. If the Fund estimates that a portion of one of its

dividend distributions may be comprised of amounts from sources other

than net investment income in accordance with its internal policies,

accounting records and related accounting practices, the Fund will

notify shareholders of record of the estimated composition of such

distribution through a Section 19 Notice. For these purposes, the Fund

estimates the source or sources from which a distribution is paid, to the

close of the period as of which it is paid, in reference to its internal

accounting records and related accounting practices. If, based on such

accounting records and practices, it is estimated that a particular

distribution does not include capital gains or paid-in surplus or other

capital sources, a Section 19 Notice generally would not be issued. It is

important to note that differences exist between the Fund's daily

internal accounting records and practices, the Fund's financial

statements presented in accordance with U.S. GAAP, and recordkeeping

practices under income tax regulations. For instance, the Fund's internal

accounting records and practices may take into account, among other

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factors, tax-related characteristics of certain sources of distributions that

differ from treatment under U.S. GAAP. Examples of such differences

may include, among others, the treatment of paydowns on

mortgage-backed securities purchased at a discount and periodic

payments under interest rate swap contracts. Accordingly, among other

consequences, it is possible that the Fund may not issue a Section 19

Notice in situations where the Fund's financial statements prepared

later and in accordance with U.S. GAAP and/or the final tax character of

those distributions might later report that the sources of those

distributions included capital gains and/or a return of capital.

The tax characterization of the Fund's distributions made in a taxable

year cannot finally be determined until at or after the end of the year. As

a result, there is a possibility that the Fund may make total distributions

during a taxable year in an amount that exceeds the Fund's net

investment income and net realized capital gains (as reduced by any

capital loss carryforwards) for the relevant year. For example, the Fund

may distribute amounts early in the year that are derived from

short-term capital gains, but incur net short-term capital losses later in

the year, thereby offsetting short-term capital gains out of which

distributions have already been made by the Fund. In such a situation,

the amount by which the Fund's total distributions exceed net

investment income and net realized capital gains would generally be

treated as a tax-free return of capital up to the amount of a

shareholder's tax basis in his or her Common Shares, with any amounts

exceeding such basis treated as gain from the sale of Common Shares.

In general terms, a return of capital would occur where 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. A return of capital is not taxable,

but it reduces a shareholder's tax basis in the Common Shares, thus

reducing any loss or increasing any gain on a subsequent taxable

disposition by the shareholder of the Common Shares. The Fund will

send shareholders detailed tax information with respect to the Fund's

distributions annually. See "Tax Matters."

The Act currently limits the number of times the Fund may distribute

long-term capital gains in any tax year, which may increase the

variability of the Fund's distributions and result in certain distributions

being comprised more or less heavily than others of long-term capital

gains currently eligible for favorable income tax rates.

Unless a Common Shareholder elects to receive distributions in cash, all

distributions

(net of applicable withholding tax) of

Common

Shareholders whose shares are registered with the plan agent will be

automatically reinvested in additional Common Shares under the Plan.

See "Dividend Reinvestment Plan."

The Board may change the Fund's distribution policy and the amount or

timing of distributions, based on a number of factors, including the

amount of the Fund's undistributed net investment income and net

short- and long-term capital gains and historical and projected net

investment income and net short- and long-term capital gains.

Dividend Reinvestment Plan

Pursuant to the Plan, all Common Shareholders will have all dividends,

including any capital gain dividends

(net of applicable withholding tax)

,

reinvested automatically in additional Common Shares by SS&C Global

Investor and Distribution Solutions, Inc., as agent for the Common

Shareholders (the "Plan Agent"), unless the shareholder elects to

receive cash. An election to receive cash may be revoked or reinstated at

the option of the shareholder. In the case of record shareholders such as

banks, brokers or other nominees that hold Common Shares for others

who are the beneficial owners, the Plan Agent will administer the Plan

on the basis of the number of Common Shares certified from time to

time by the record shareholder as representing the total amount

registered in such shareholder's name and held for the account of

beneficial owners who are to participate in the Plan. Shareholders

whose shares are held in the name of a bank, broker or nominee should

contact the bank, broker or nominee for details.

Common Shares received under the Plan will be issued to you at their

NAV on the ex-dividend date; there is no sales or other charge for

reinvestment. You are free to withdraw from the Plan and elect to

receive cash at any time by giving written notice to the Plan Agent or by

contacting your broker or dealer, who will inform the Fund. Your request

must be received by the Fund at least ten days prior to the payment

date of the distribution to be effective for that dividend or capital gain

distribution.

The Plan Agent provides written confirmation of all transactions in the

shareholder accounts in the Plan, including information you may need

for tax records. Any proxy you receive will include all Common Shares

you have received under the Plan.

Automatically reinvested dividends and distributions are taxed in the

same manner as cash dividends and distributions. See "Tax Matters."

The Fund and the Plan Agent reserve the right to amend or terminate

the Plan. There is no direct service charge to participants in the Plan;

however, the Fund reserves the right to amend the Plan to include a

service charge payable by the participants. If the Plan is amended to

include such service charges, the Plan Agent will include a notification

to registered Common Shareholders with the Plan Agent. Additional

information about the Plan may be obtained from the Plan Agent.

Description of Capital Structure and Shares

The following is a brief description of the capital structure of the Fund.

This description does not purport to be complete and is subject to and

qualified in its entirety by reference to the Declaration and the Fund's

Bylaws, as amended and restated through the date hereof (the

"Bylaws"). The Declaration and Bylaws are each exhibits to the

registration statement of which this prospectus is a part.

The Fund is an unincorporated voluntary association with transferable

shares of beneficial interest (commonly referred to as a "Massachusetts

business trust") established under the laws of The Commonwealth of

Massachusetts by the Declaration. The Declaration provides that the

Trustees of the Fund may authorize separate classes of shares of

beneficial interest. Preferred Shares (such as the RVMTP Shares) may be

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issued in one or more series, with such par value and with such rights as

determined by the Board, by action of the Board without the approval of

the Common Shareholders.

The following table shows, for each class of authorized securities of the

Fund, the amount of (i) shares authorized and (ii) shares outstanding,

each as of March 31,

2026

:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | | | |
|:---|:---|:---|:---|
| (1) | (2) | (3) | (4) |
| Title of Class | Amount<br>Authorized<br>| Amount Held by<br>the Fund for<br>its Account<br>| Amount<br>Outstanding<br>Exclusive of<br>Amount Shown<br>Under Column (3)<br>|
| Institutional Class Common Shares | Unlimited | 0 | 10945696 |
| Class A-1 Common Shares | Unlimited | 0 | 1248486 |
| Series 2054 RVMTP Shares | Unlimited | 0 | 250 |

---

Common Shares

The Declaration authorizes the issuance of an unlimited number of

Common Shares. The Common Shares will be issued with a par value of

$0.00001 per share. The Fund currently has five separate classes of

Common Shares: Institutional Class, Class A-1, Class A-2, Class A-3 and

Class A-4. An investment in any share class of the Fund represents an

investment in the same assets of the Fund. However, the ongoing fees

and expenses for each share class may be different. The fees and

expenses for the Fund are set forth in "Summary of Fund Expenses"

above. Certain share class details are set forth in "Plan of Distribution"

above.

Common Shareholders will be entitled to the payment of dividends and

other distributions when, as and if declared by the Board after payment

of preferential amounts payable to holders of Preferred Shares. All

Common Shares have equal rights to the payment of dividends and the

distribution of assets upon liquidation after payment of the preferential

amounts payable to holders of Preferred Shares. Common Shares will,

when issued, be fully paid and, subject to matters discussed in

"Anti-Takeover and Other Provisions in the Declaration of Trust and

Bylaws," non-assessable, and will have no pre-emptive or conversion

rights or rights to cumulative voting. Upon liquidation of the Fund, after

paying or adequately providing for the payment of all liabilities of the

Fund and the liquidation preference with respect to any outstanding

Preferred Shares, and upon receipt of such releases, indemnities and

refunding agreements as they deem necessary for their protection, the

Trustees may distribute the remaining assets of the Fund among the

Fund's Common Shareholders.

The Fund does not intend to hold annual meetings of shareholders. If

the Fund does hold a meeting of shareholders, Common Shares of the

Fund entitle their holders to one vote for each Common Share held;

however, separate votes are taken by each class of Common Shares on

matters affecting an individual class of Common Shares. Each fractional

share shall be entitled to a proportionate fractional vote, except as

otherwise provided by the Declaration, Bylaws, or required by applicable

law. So long as any Preferred Shares are outstanding, holders of

Preferred Shares will be able to elect two Trustees and vote as a

separate class on certain matters.

The Fund will send unaudited reports at least semiannually and audited

financial statements annually to all of its Common Shareholders.

The Common Shares are not, and are not expected to be, listed for

trading on any national securities exchange nor is there expected to be

any secondary trading market in the Common Shares.

Preferred Shares

The Declaration authorizes the issuance of an unlimited number of

preferred shares. Preferred shares may be issued in one or more classes

or series, with such par value and rights as determined by the Board, by

action of the Board without the approval of the Common Shareholders.

On January 12, 2024, the Fund issued 250 RVMTP Shares in a single

series of Remarketable Variable Rate MuniFund Term Preferred Shares,

Series 2054 (the "RVMTP Shares"). The RVMTP Shares have a par value

of $0.00001 per share and liquidation preference of $100,000 per

share. The RVMTP Shares have various rights that were approved by the

Board without the approval of the Common Shareholders, which are

specified in the Fund's Bylaws. Certain rights, terms and conditions of

the RVMTP Shares are summarized below:

Distribution Preference.

Any Preferred Shares, including,

without limitation, the RVMTP Shares, have complete priority over the

Common Shares as to distribution of assets.

RVMTP Share Dividends.

The dividend rate paid on the RVMTP

Shares is determined over the course of a seven-day period, which

generally commences each Thursday and ends the following Wednesday

(the "Rate Period"). The dividends per share for the RVMTP Shares for a

given Rate Period are dependent on the RVMTP Share dividend rate (the

"RVMTP Share Dividend Rate") for that Rate Period. The RVMTP Share

Dividend Rate is equal to (i) the sum of the Index Rate

plus (ii) the

Applicable Spread

(including the Spread Adjustment

, as applicable)

plus (iii) the Failed Remarketing Spread

, if applicable. The dividend per

RVMTP Share for the Rate Period is then determined as described in the

table below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | | | | |
|:---|:---|:---|:---|:---|
| Dividend Rate |  | Rate Period Fraction | RVMTP <br>Shares <br>Liquidation <br>Preference<br>| Dividend |
|  |  | Number of days in the Rate<br>Period (or a part thereof)<br>|  |  |
| Dividend Rate | X | Divided by | 100000 | Dividends per <br>RVMTP Share<br>|
|  |  | Total number of<br>days in the year<br>|  |  |

---

(1) The Index Rate is determined by reference to a weekly, high-grade index comprised of

seven-day, tax-exempt variable rate demand notes, generally the Securities Industry

and Financial Markets Association Municipal Swap Index.

(2) The Applicable Spread for a Rate Period is a percentage per annum that is based on (i)

the long term rating most recently assigned by the applicable ratings agency to such

series of the RVMTP Shares, and (ii) the "Spread Adjustment."

(3) The "Spread Adjustment" means, (i) for the period from the date of original issuance of

the RVMTP Shares, January 12, 2024 to and including the date that is six months prior

to the then current RVMTP Early Term Redemption Date (as defined below) ("Rate

Period Termination Date"), 0%, and (ii) for the period after the Rate Period Termination

Date, 2.00%.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

(4) The Failed Remarketing Spread with respect to a series of RVMTP Shares means (i) for

so long as two or more Failed Remarketings have not occurred, 0%, and (ii) following

the second occurrence of a Failed Remarketing, 0.25% multiplied by the number of

Failed Remarketings that have occurred after the first Failed Remarketing. A "Failed

Remarketing," with respect to the RVMTP Shares, will occur if any RVMTP Shares

subject to a Mandatory Tender Event due to the Fund designating a Special Terms

Period have not been either retained by the holders or successfully remarketed by the

Mandatory Tender Date (each as defined below).

(5) An increased RVMTP Share Dividend Rate could be triggered by the Fund's failure to

comply with certain requirements relating to such series of the RVMTP Shares, certain

actions taken by the applicable ratings agency or certain determinations regarding the

tax status of such series of the RVMTP Shares made by a court or other applicable

governmental authority. The RVMTP Share Dividend Rate will in no event exceed 15%

per year.

RVMTP Special Terms Period.

The Fund, at its option, may

designate special terms applicable to all of the outstanding RVMTP

Shares in a series for a certain period (a "Special Terms Period")

pursuant to a notice of special terms. Such special terms may differ from

those provided in the current governing documents of the RVMTP

Shares and may include, without limitation, changes to the RVMTP

Dividend Rate, dividend payment dates, redemption provisions

(including, without limitation, the RVMTP Term Redemption Date or the

RVMTP Early Term Redemption Date), required Effective Leverage Ratio,

and the Preferred Shareholder Gross-Up (each as defined below);

provided that such special terms do not affect the parity ranking of the

RVMTP Shares to any other class or series of Preferred Shares then

outstanding with respect to dividends or distribution of assets upon

dissolution, liquidation, or winding up of the affairs of the Fund. No

Special Terms Period with respect to the RVMTP Shares will become

effective unless certain conditions are satisfied, including that all of the

RVMTP Shares in such series are remarketed (except with respect to any

RVMTP Shares whose holders have elected to retain their RVMTP

Shares for the Special Terms Period). A Special Terms Period will not

become effective before the 24-month anniversary of the date of

original issue of the RVMTP Shares.

Preferred Shareholder Gross-Up.

As noted above, RVMTP Shares

each pay dividend distributions at stated rates, which rates are based

generally on the assumption that such dividend distributions consist

entirely of "exempt-interest dividends" (as defined above under

"Distributions"). The terms of the RVMTP Shares provide further that, in

the event less than the entire amount of any particular dividend

distribution paid pursuant to the stated rate were to consist of

"exempt-interest dividends" (i.e., if a portion of any particular dividend

were to derive from ordinary income or capital gain, including

short-term capital gain taxable as ordinary income when distributed),

the amount of such dividend would increase by an amount (the

"Preferred Shareholder Gross-Up") such that the after-tax amount of

such dividend, as increased by the Preferred Shareholder Gross-Up,

would equal the total amount the holder of such RVMTP Shares would

have received if the dividend at the stated rate had consisted entirely of

"exempt-interest dividends." The Preferred Shareholder Gross-Up is

calculated (i) without consideration being given to the time value of

money, (ii) assuming that no holder of RVMTP Shares is subject to the

federal alternative minimum tax, and (iii) assuming that the portion of

any dividend distribution (including the amount of the Preferred

Shareholder Gross-Up) that is not an exempt interest dividend would be

taxable (x), in the hands of the initial purchaser of the RVMTP Shares (or

certain of its affiliates), at the maximum marginal regular federal

corporate income tax rate (or, in the case of a California Holder of the

RVMTP Shares, the maximum marginal combined regular federal and

California corporate income tax rate, taking account of the federal

income tax deductibility of state and local taxes paid or incurred), and

(y) in the case of any other holder, at the greater of (a) the maximum

marginal regular federal individual income tax rate (or, in the case of a

California Holder of the RVMTP Shares, the maximum marginal

combined regular federal and California individual income tax rate,

taking account of the federal income tax deductibility of state and local

taxes paid or incurred) (taking into account the 3.8% Medicare

contribution tax on net investment income) applicable to ordinary

income or net capital gain, as applicable, or (b) the maximum marginal

regular federal corporate income tax rate (or, in the case of a California

Holder of the RVMTP Shares, the maximum marginal combined regular

federal and California corporate income tax rate, taking account of the

federal income tax deductibility of state and local taxes paid or incurred)

applicable to ordinary income or net capital gain, as applicable, in each

case disregarding the effect of any state or local taxes other than

California taxes, as applicable. Any Preferred Shareholder Gross-Up will

reduce the amount that would otherwise be distributable to Common

Shareholders.

Liquidation Preference.

In the event of any voluntary or involuntary

liquidation, dissolution or winding up of the affairs of the Fund, holders

of RVMTP Shares are entitled to receive a preferential liquidating

distribution (equal to the original purchase price per share of $100,000

plus accumulated and unpaid dividends thereon, whether or not earned

or declared) before any distribution of assets is made to Common

Shareholders.

Voting Rights.

Under the Act, Preferred Shares (including, without

limitation, the RVMTP Shares) are required to be voting shares and to

have equal voting rights with Common Shares. Except as otherwise

indicated in this prospectus or the Statement of Additional Information,

and except as otherwise required by applicable law, Preferred Shares

vote together with Common Shareholders as a single class.

In addition, holders of Preferred Shares, including RVMTP Shares, voting

as a separate class, are entitled to elect two of the Fund's trustees. The

remaining trustees are elected by Common Shareholders and Preferred

Shareholders, voting together as a single class. In the unlikely event that

two full years of accrued dividends are unpaid on the Preferred Shares,

the holders of all outstanding Preferred Shares voting as a separate

class, are entitled to elect a majority of the Fund's trustees until all

dividends in arrears with respect to the Preferred Shares have been paid

or declared and set apart for payment. In order for the Fund to take

certain actions or enter into certain transactions, a separate class vote of

Preferred Shareholders is required, in addition to the single class vote of

the holders of Preferred Shares and Common Shares.

1940 Act Asset Coverage.

In accordance with the Fund's governing

documents and the Act, the Fund is required to maintain certain asset

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coverage with respect to all outstanding senior securities of the Fund

which are stocks for purposes of the Act, including the RVMTP Shares.

Under the Act, the Fund is not permitted to issue preferred shares

unless, immediately after such issuance, the value of the Fund's total net

assets (as defined below) is at least 200% of the liquidation value of

any outstanding preferred shares and the newly issued 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, the Fund is

not permitted to declare or pay common share dividends unless

immediately thereafter the Fund has a minimum asset coverage ratio of

200% with respect to all outstanding senior securities of the Fund

which are stocks for purposes of the Act after deducting the amount of

such common share dividends.

In addition, under the terms of the RVMTP Shares, the Fund must

maintain an "asset coverage," as defined for purposes of Section 18(h)

of the Act, of at least 225% with respect to all outstanding preferred

shares, including all previously issued outstanding preferred shares (or

such other asset coverage as may in the future be specified in or under

the Act or by rule, regulation or order of the SEC as the minimum asset

coverage for senior securities which are shares of stock of a closed-end

investment company).

Additional Investment Limitations.

Under the terms of purchase

agreements between the Fund and the initial investor in the RVMTP

Shares, the Fund is subject to various investment limitations. These

investment limitations are in addition to, and may be more restrictive

than, those to which the Fund is subject in accordance with its

investment objectives and policies as described herein and in the

Statement of Additional Information.

Effective Leverage Ratio Requirement.

In accordance with the

Bylaws, without the prior written consent of the holders of RVMTP

Shares, the Fund's Effective Leverage Ratio may not exceed 45% (or

46% solely by reason of fluctuations in the market value of the Fund's

portfolio securities) as of the close of business on any business day. If

the Fund fails to comply with any additional requirements relating to

the calculation of the Effective Leverage Ratio requirement applicable to

the RVMTP Shares and, in any such case, such failure is not cured as of

the close of business on the date that is ten business days following the

business day on which such non-compliance is first determined (the

"Effective Leverage Ratio Cure Date"), the Fund shall cause the

Effective Leverage Ratio to not exceed 45% (or 46% solely by reason of

fluctuations in the market value of the Fund's portfolio securities), by (i)

not later than the close of business on the business day next following

the Effective Leverage Ratio Cure Date, engaging in transactions

involving or relating to any floating rate securities not owned by the

Fund and/or any inverse floating rate securities owned by the Fund,

including the purchase, sale or retirement thereof, (ii) to the extent

permitted by law, not later than the close of business on the second

business day next following the Effective Leverage Ratio Cure Date,

causing a notice of redemption to be issued for the redemption of a

sufficient number of Preferred Shares, in accordance with the terms of

the Preferred Shares, or (iii) engaging in any combination, in the Fund's

discretion, of the actions contemplated by clauses (i) and (ii).

Issuance of Additional Preferred Shares.

So long as any RVMTP

Shares are outstanding, the Fund may, without the vote or consent of

the holders thereof, authorize, establish and create and issue and sell

shares of one or more series of Preferred Shares ranking on a parity with

RVMTP Shares as to the payment of dividends and the distribution of

assets upon dissolution, liquidation or the winding up of the affairs of

the Fund, in addition to then outstanding series of RVMTP Shares,

including additional series of RVMTP Shares, and authorize, issue and

sell additional shares of any such Series of Preferred Shares then

outstanding or so established or created, including additional series of

RVMTP Shares, in each case in accordance with applicable law, provided

that the Fund shall, immediately after giving effect to the issuance of

such Preferred Shares and to its receipt and application of the proceeds

thereof, including to the redemption of Preferred Shares with such

proceeds, have "asset coverage," as defined for the purposes of

Section 18(h) of the Act, of at least 225% and an effective leverage

ratio not exceeding 45% (calculated according to the terms of the

section below entitled "Preferred Shares-Calculation of Effective

Leverage Ratio").

Calculation of Effective Leverage Ratio.

For purposes of

determining whether the effective leverage requirement discussed

above is satisfied, the "Effective Leverage Ratio" on any date shall

mean the quotient of: (i) The sum of (A) the aggregate liquidation

preference of the Fund's "senior securities" (as that term is defined in

the Act) that are stock for purposes of the Act, excluding, without

duplication, (1) any such senior securities for which the Fund has issued

a notice of redemption and either has delivered deposit securities or

sufficient securities or funds, (as applicable in accordance with the terms

of such senior securities) to the paying agent for such senior securities

or otherwise has adequate deposit securities or sufficient securities or

funds on hand for the purpose of such redemption (as applicable in

accordance with the terms of such senior securities) and (2) any such

senior securities that are to be redeemed with net proceeds from the

sale of the RVMTP Shares, for which the Fund has delivered deposit

securities or sufficient securities or funds (as applicable in accordance

with the terms of such senior securities) to the paying agent for such

senior securities or otherwise has adequate deposit securities or

sufficient securities or funds on hand (as applicable in accordance with

the terms of such senior securities) for the purpose of such redemption;

(B) the aggregate principal amount of the Fund's "senior securities

representing indebtedness" (as that term is defined in the Act giving

effect to any interpretations thereof by the SEC or its staff); (C) the

aggregate principal amount of floating rate securities corresponding to

any associated residual floating rate securities not owned by the Fund

(less the aggregate principal amount of any such floating rate securities

owned by the Fund and corresponding to the associated residual

floating rate securities owned by the Fund); and (D) the aggregate

amount of the purchase price component payable for a repurchase

under reverse repurchase agreements entered into by the Fund; divided

by (ii) the sum of (A) the market value of the Fund's total assets

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(including amounts attributable to senior securities, but excluding any

assets consisting of deposit securities or funds referred to in clauses

(A)(1) and (A)(2) above), less the amount of the Fund's accrued

liabilities (other than liabilities for the aggregate principal amount of

"senior securities representing indebtedness" (as that term is defined in

the Act, giving effect to any interpretations thereof by the SEC or its

staff), including floating rate securities), (B) the aggregate principal

amount of floating rate securities not owned by the Fund that

correspond to the associated inverse floating rate securities owned by

the Fund; and (C) the aggregate amount of the purchase price

component payable for a repurchase under reverse repurchase

agreements entered into by the Fund.

Ratings Agency Guidelines.

The Fund has obtained ratings for the

RVMTP Shares from Fitch. For so long as Fitch is rating the RVMTP

Shares, the Fund has agreed to adhere to separate guidelines and asset

coverage requirements specific to Fitch ("Fitch Preferred Shares Asset

Coverage") as described in Fitch's published Closed-End Funds and

Market Value Structures Rating Criteria ("Fitch Rating Criteria"). These

guidelines may be changed by Fitch, in its sole discretion, from time to

time. These guidelines impose asset coverage or portfolio composition

requirements that may be more stringent than those imposed on the

Fund by the Act.

Satisfaction of Fitch Preferred Shares Asset Coverage for the RVMTP

Shares requires that the Fund satisfy both a "Fitch Total

Overcollateralization Test" ("Fitch Total OC") and a "Fitch Net Over

Collateralization Test" ("Fitch Net OC", and together with Fitch Total

OC, the "Fitch OC Tests"), in each case to be consistent with the

then-current rating of the RVMTP Shares assigned by Fitch using the

calculations set forth in the Fitch Rating Criteria, including information

therein relating to diversification guidelines as applied to the Fund.

The Fund has agreed that it will adhere to the Fitch OC Tests as

described above as of the close of business on the last business day of

each month for so long as Fitch is rating the RVMTP Shares. If the Fund

fails to adhere to the Fitch OC Tests as described in the preceding

sentence, the Fund will cure such failure (including, without limitation,

by causing a notice of redemption to be issued for the redemption of a

sufficient number of the Fund's Preferred Shares) within ten days

following the business day on which such failure is first determined.

Fitch may change its rating methodologies for evaluating and providing

ratings for shares of closed-end funds at any time and in its sole

discretion, perhaps substantially. Such a change could adversely affect

the ratings assigned to the Fund's Preferred Shares, the dividend rates

paid thereon, and the expenses borne by the Fund's Common

Shareholders.

Mandatory Redemptions.

The RVMTP Shares are subject to a

mandatory term redemption date of January 12, 2054, subject to the

Fund's right to extend the term with the consent of the holders of the

RVMTP Shares (the "RVMTP Share Term Redemption Date"). There is no

assurance that the term of the RVMTP Shares will be extended.

In addition, with respect to each series of RVMTP Shares, a "Mandatory

Tender Event" will occur on each date that is (i) 20 business days before

each 42-month anniversary of the date of original issue of such series of

the RVMTP Shares (each such anniversary, an "RVMTP Early Term

Redemption Date"), (ii) the date the Fund delivers a notice designating

a Special Terms Period, and (iii) 20 business days before the end of a

Special Terms Period (provided that no subsequent Terms Period is

designated). If any RVMTP Shares subject to a Mandatory Tender Event

upon an RVMTP Early Term Redemption Date or upon the end of a

Special Terms Period have not been either retained by the holders or

remarketed by the Mandatory Tender Date, the Fund will redeem such

RVMTP Shares on the RVMTP Early Term Redemption Date.

(1) With respect to the Mandatory Tender Events described in clauses (i), (ii) and (iii)

above, the corresponding "Mandatory Tender Date" means, respectively: (i) the date

that is an RVMTP Early Term Redemption Date of such series of RVMTP Share, (ii) the

date on which the related Special Terms Period becomes effective, and (iii) the last day

of the related Special Terms Period (subject, in each case, to the holders' election to

retain their RVMTP Shares).

The RVMTP Shares are also subject to mandatory redemption by the

Fund, in whole or in part, in certain circumstances, such as the failure by

the Fund to comply with asset coverage and/or effective leverage ratio

requirements described above (and the failure to cure any such failure

within the applicable cure period) or certain actions taken by the

applicable ratings agency.

Term Redemption and Early Term Redemption Liquidity

Account.

At least six months prior to the RVMTP Share Term

Redemption Date or the RVMTP Early Term Redemption Date (each, a

"Redemption Date"), the Fund will maintain segregated assets of a

minimum credit rating quality with a market value equal to at least

110% of the redemption price of all outstanding RVMTP Shares to be

redeemed until the redemption of all such outstanding RVMTP Shares,

as applicable. The Fund will include certain liquid and/or highly rated

assets in an amount equal to 20% of such segregated assets with five

months remaining to the Redemption Date, which amount will increase

monthly by 20% and reach 100% with one month remaining to the

Redemption Date.

Optional Redemption.

The Fund may redeem, in whole or from time

to time in part, the outstanding RVMTP Shares at a redemption price

per share equal to (i) the liquidation preference of the RVMTP Shares,

($100,000 per share) plus (ii) an amount equal to all unpaid dividends

and other distributions on such RVMTP Shares, as applicable,

accumulated from and including the date of issuance to (but excluding)

the date of redemption (whether or not earned or declared by the Fund,

but without interest thereon) plus (iii) any applicable optional

redemption premium.

(2) If the Fund redeems RVMTP Shares prior to the first anniversary of the date of original

issuance of the RVMTP Shares, the applicable optional redemption premium will be

equal to the product of (i) the Applicable Spread for such RVMTP share in effect on the

date of the optional redemption and (ii) the liquidation preference of such RVMTP

Share and (iii) a fraction, the numerator of which is the number of calendar days from

and including the date of redemption to and excluding the first anniversary of the date

or original issuance and the denominator of which is the actual number of calendar

days from and including January 12, 2024 to and excluding the first anniversary of the

date or original issuance. If either (a) the optional redemption date for such RVMTP

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Share either occurs on or after the first anniversary of the date or original issuance or

(b) the Fund notifies JPMorgan Chase Bank, N.A. ("JPMorgan") that the optional

redemption date has been called in connection with a redemption of common shares

as described in Section 6.20 of the Amended and Restated Purchase Agreement, then

the applicable optional redemption premium will be zero. If fewer than all of the

outstanding RVMTP Shares of a Series are to be redeemed, the shares of such Series to

be redeemed shall be selected either (A) pro rata among the holders of such Series, (B)

by lot, or (C) in such other manner as the Board may determine to be fair and

equitable.

RVMTP Mandatory Tender.

Upon the occurrence of a Mandatory

Tender Event with respect to a series of RVMTP Shares, all RVMTP

Shares in such series will be subject to mandatory tender (subject to the

holders' election to retain their RVMTP Shares) and the Fund will issue

or cause to be issued a notice of mandatory tender to the holders of

such RVMTP Shares for remarketing on the Mandatory Tender Date.

Common Share Repurchases.

In the event that the Fund notifies

JPMorgan that it will repurchase its common shares more frequently

than quarterly or repurchase more than 12% of its issued and

outstanding Common Shares in connection with a single repurchase

offer, the Fund must redeem all of the RVMTP Shares held by JPMorgan

by the date of such common share repurchase if JPMorgan requests

such redemption in writing to the Fund within five (5) business days

after receiving such notice.

Anti-Takeover and Other Provisions in the

Declaration of Trust and Bylaws

The Declaration and the Bylaws include provisions that could limit the

ability of other entities or persons to acquire control of the Fund or to

convert the Fund to open-end status.

As described below, the Declaration grants special approval rights with

respect to certain matters to members of the Board who qualify as

"Continuing Trustees," which term means a Trustee who either (i) has

been a member of the Board for a period of at least thirty-six months (or

since the commencement of the Fund's operations, if less than

thirty-six months) or (ii) was nominated to serve as a member of the

Board by a majority of the Continuing Trustees then members of the

Board.

The Declaration requires the affirmative vote or consent of at least

seventy-five percent (75%) of the Board and holders of at least

seventy-five percent (75%) of the Fund's shares to authorize certain

Fund transactions not in the ordinary course of business, including a

merger or consolidation or share exchange, any shareholder proposal as

to specific investment decisions made or to be with respect to the assets

of the Fund or issuance or transfer by the Fund of the Fund's shares

having an aggregate fair market value of $1,000,000 or more (except

as may be made pursuant to a public offering, the Fund's Plan or upon

exercise of any stock subscription rights), unless the transaction is

authorized by both a majority of the Trustees and seventy-five percent

(75%) of the Continuing Trustees (in which case no shareholder

authorization would be required by the Declaration, but may be

required in certain cases under the Act). The Declaration also requires

the affirmative vote or consent of holders of at least seventy-five

percent (75%) of the Fund's shares entitled to vote on the matter to

authorize a conversion of the Fund from a closed-end to an open-end

investment company, unless the conversion is authorized by both a

majority of the Trustees and seventy-five percent (75%) of the

Continuing Trustees (in which case shareholders would have only the

minimum voting rights required by the Act with respect to the

conversion). Also, the Declaration provides that the Fund may be

terminated at any time by vote or consent of at least seventy-five

percent (75%) of the Fund's shares or, alternatively, by vote or consent

of both a majority of the Trustees and seventy-five percent (75%) of the

Continuing Trustees. See "Anti-Takeover and Other Provisions in the

Declaration of Trust and By-Laws" in the Statement of Additional

Information for a more detailed summary of these provisions.

The Trustees may from time to time grant other voting rights to

shareholders with respect to these and other matters in the Bylaws,

certain of which are required by the Act.

The overall effect of these provisions is to render more difficult the

accomplishment of a merger or the assumption of control of the Fund

by a third party. These provisions also provide, however, the advantage

of potentially requiring persons seeking control of the Fund to negotiate

with its management regarding the price to be paid and facilitating the

continuity of the Fund's investment objectives and policies. The Board

has considered the foregoing anti-takeover provisions and concluded

that they are in the best interests of the Fund and its shareholders,

including Common Shareholders.

The foregoing is intended only as a summary and is qualified in its

entirety by reference to the full text of the Declaration and the Bylaws,

both of which are on file with the SEC.

Under Massachusetts law, shareholders could, in certain circumstances,

be held personally liable for the obligations of the Fund. However, the

Declaration contains an express disclaimer of shareholder liability for

debts or obligations of the Fund and requires that notice of such limited

liability be given in each agreement, obligation or instrument entered

into or executed by the Fund or the Trustees. The Declaration further

provides for indemnification out of the assets and property of the Fund

for all loss and expense of any shareholder held personally liable for the

obligations of the Fund. Thus, the risk of a shareholder incurring

financial loss on account of shareholder liability is limited to

circumstances in which the Fund would be unable to meet its

obligations. The Fund believes that the likelihood of such circumstances

is remote.

Forum for Adjudication of Disputes

The Bylaws provide that unless the Fund consents in writing to the

selection of an alternative forum, the sole and exclusive forum for (i) any

action or proceeding brought on behalf of the Fund or one or more of

the shareholders, (ii) any action asserting a claim of breach of a fiduciary

duty owed by any Trustee, officer, other employee of the Fund, or the

Fund's investment adviser to the Fund or the Fund's shareholders, (iii)

any action asserting a breach of contract by the Fund, by any Trustee,

officer or other employee of the Fund, or by the Fund's investment

adviser, (iv) any action asserting a claim arising pursuant to any

provision of the Massachusetts Business Corporation Act, Chapter 182

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of the Massachusetts General Laws or the Declaration or the Bylaws, (v)

any action to interpret, apply, enforce or determine the validity of the

Declaration or the Bylaws or any agreement contemplated by any

provision of the Act, the Declaration or the Bylaws, or (vi) any action

asserting a claim governed by the internal affairs doctrine shall be

within the federal or state courts in the Commonwealth of

Massachusetts (each, a "Covered Action").

The Bylaws further provide that if any Covered Action is filed in a court

other than in a federal or state court sitting within the Commonwealth

of Massachusetts (a "Foreign Action") in the name of any shareholder,

such shareholder shall be deemed to have consented to (i) the personal

jurisdiction of the federal and state courts within The Commonwealth of

Massachusetts in connection with any action brought in any such courts

to enforce the preceding sentence (an "Enforcement Action") and (ii)

having service of process made upon such shareholder in any such

Enforcement Action by service upon such shareholder's counsel in the

Foreign Action as agent for such shareholder.

Any person purchasing or otherwise acquiring or holding any interest in

shares of beneficial interest of the Fund will be (i) deemed to have

notice of and consented to the foregoing paragraph and (ii) deemed to

have waived any argument relating to the inconvenience of the forum

referenced above in connection with any action or proceeding described

in the foregoing paragraph.

This forum selection provision may limit a shareholder's ability to bring a

claim in a judicial forum that it finds favorable for disputes with

Trustees, officers or other agents of the Fund and its service providers,

which may discourage such lawsuits with respect to such claims and

increase the costs for a shareholder to pursue such claims. If a court

were to find the forum selection provision contained in the Bylaws to be

inapplicable or unenforceable in an action, the Fund may incur

additional costs associated with resolving such action in other

jurisdictions. This forum selection provision shall not apply to claims

made under federal securities laws. The enforceability of exclusive forum

provisions is questionable.

Derivative and Direct Claims of Shareholders

The Declaration contains provisions regarding derivative and direct

claims of shareholders. As used in the Declaration, a "direct"

shareholder claim refers to a claim based upon alleged violations of a

shareholder's individual rights independent of any harm to the Fund,

including a shareholder's voting rights under Article V of the Declaration

or Article 10 of the Bylaws, rights to receive a dividend payment as may

be declared from time to time, rights to inspect books and records, or

other similar rights personal to the shareholder and independent of any

harm to the Fund. Any other claim asserted by a shareholder, including

without limitation any claims purporting to be brought on behalf of the

Fund or involving any alleged harm to the Fund, are considered a

"derivative" claim.

A shareholder or group of shareholders may not bring or maintain any

court action, proceeding or claim on behalf of the Fund or any series or

class of shares without first making demand on the Trustees requesting

the Trustees to bring or maintain such action, proceeding or claim. Such

demand shall not be excused under any circumstances, including claims

of alleged interest on the part of the Trustees. The Trustees shall consider

such demand within 90 days of its receipt by the Fund. In their sole

discretion, the Trustees may submit the matter to a vote of shareholders

of the Fund or a series or class of shares, as appropriate. Any decision by

the Trustees to bring, maintain or settle (or not to bring, maintain or

settle) such court action, proceeding or claim, or to submit the matter to

a vote of shareholders shall be made by the Trustees in their business

judgment and shall be binding upon the shareholders and no suit,

proceeding or other action shall be commenced or maintained after a

decision to reject a demand. Any Trustee who is not an "interested

person" (within the meaning of Section 2(a)(19) of the Act) of the Fund

acting in connection with any demand or any proceeding relating to a

claim on behalf of or for the benefit of the Fund shall be deemed to be

independent and disinterested with respect to such demand, proceeding

or claim.

A shareholder or group of shareholders may not bring or maintain a

direct action or claim for monetary damages against the Fund or the

Trustees predicated upon an express or implied right of action under the

Declaration (excepting rights of action permitted under Section 36(b) of

the Act), nor shall any single shareholder, who is similarly situated to

one or more other shareholders with respect to the alleged injury, have

the right to bring such an action, unless such group of shareholders or

shareholder has obtained authorization from the Trustees to bring the

action. The requirement of authorization shall not be excused under any

circumstances, including claims of alleged interest on the part of the

Trustees. The Trustees shall consider such request within 90 days of its

receipt by the Fund. In their sole discretion, the Trustees may submit the

matter to a vote of shareholders of the Fund or series or class of shares,

as appropriate. Any decision by the Trustees to settle or to authorize (or

not to settle or to authorize) such court action, proceeding or claim, or

to submit the matter to a vote of shareholders, shall be made in their

business judgment and shall be binding on all shareholders.

Any person purchasing or otherwise acquiring or holding any interest in

shares of beneficial interest of the Fund will be deemed to have notice

of and consented to the foregoing provisions. These provisions may limit

a shareholder's ability to bring a claim against the Trustees, officers or

other agents of the Fund and its service providers, which may

discourage such lawsuits with respect to such claims.

These provisions in the Declaration regarding derivative and direct

claims of shareholders shall not apply to claims made under federal

securities laws.

Tax Matters

This section summarizes some of the U.S. federal income tax

consequences to U.S. persons of investing in the Fund; the

consequences under other tax laws and to non-U.S. shareholders may

differ. Shareholders should consult their tax advisors as to the possible

application of federal, state, local or non-U.S. income tax laws. This

summary is based on the Code, U.S. Treasury regulations, and other

applicable authority, all as of the date of this prospectus. These

authorities are subject to change by legislative or administrative action,

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possibly with retroactive effect. Please see the Statement of Additional

Information for additional information regarding the tax aspects of

investing in the Fund.

Treatment as a Regulated Investment Company

The Fund has elected to be treated, and intends each year to qualify and

be eligible, to be treated, as a RIC under Subchapter M of the Code. A

RIC is not subject to U.S. federal income tax at the corporate level on

income and gains from investments that are distributed in a timely

manner to shareholders in the form of dividends. The Fund's failure to

qualify as a RIC would result in corporate-level taxation, thereby

reducing the return on your investment.

As described under "Use of Leverage" above, if at any time when

Preferred Shares or other senior securities are outstanding the Fund

does not meet applicable asset coverage requirements, it will be

required to suspend distributions to Common Shareholders until the

requisite asset coverage is restored. Any such suspension may cause the

Fund to pay a U.S. federal income and excise tax on undistributed

income or gains and may, in certain circumstances, prevent the Fund

from qualifying for treatment as a RIC. The Fund may repurchase,

prepay, or otherwise retire Preferred Shares or other senior securities, as

applicable, in an effort to comply with the distribution requirement

applicable to RICs.

Taxes on Fund Distributions

A shareholder subject to U.S. federal income tax will generally be

subject to tax on Fund distributions. For U.S. federal income tax

purposes, Fund distributions will generally be taxable to a shareholder

as either ordinary income or capital gains. Fund dividends consisting of

distributions of investment income generally are taxable to shareholders

as ordinary income. The municipal bonds in which the Fund primarily

invests are generally issued by states, cities, or a political subdivision,

agency, authority or instrumentality of such state or city, the interest on

which is generally exempt from regular federal income tax, and Fund

distributions of such interest that the Fund properly reports to you as

"exempt-interest dividends" will generally not be subject to regular

federal income tax. An investment in the Fund may result in liability for

federal alternative minimum tax for individual shareholders.

Distributions of net investment income other than "exempt-interest

dividends" will generally be taxable to shareholders as ordinary income.

The federal tax exemption for exempt-interest dividends from the Fund

does not necessarily result in the exemption of such dividends from

state and local taxes although the Fund intends to arrange its affairs so

that a portion of such distributions will be exempt from personal income

taxes in California. The Fund will seek to produce income that is

generally exempt from federal income tax and will not benefit investors

in tax-advantaged retirement plans or individuals not subject to federal

income tax. Further, the Fund will seek to produce income that is

generally exempt from California income tax and will not provide any

state tax benefit to individuals that are not subject to California income

tax.

Federal taxes on Fund distributions of capital gains are determined by

how long the Fund owned or is deemed to have owned the investments

that generated the capital gains, rather than how long a shareholder

has owned the shares. Distributions of net capital gains (that is, the

excess of net long-term capital gains over net short-term capital losses,

in each case determined with reference to any loss carryforwards) that

are properly reported by the Fund as capital gain dividends generally

will be treated as long-term capital gains includible in a shareholder's

net capital gains and taxed to individuals at reduced rates. The Fund

does not expect a significant portion of its distributions to be treated as

long-term capital gains. Distributions of net short-term capital gains in

excess of net long-term capital losses generally will be taxable to

shareholders as ordinary income. Distributions that the Fund properly

reports to individual shareholders as "qualified dividend income" are

taxable at the reduced rates applicable to long-term capital gains

provided that both the individual shareholder and the Fund meet certain

holding period and other requirements.

The Code generally imposes a 3.8% Medicare contribution tax on the

"net investment income" of certain individuals, trusts and estates to the

extent their adjusted gross income exceeds certain threshold amounts.

Net investment income generally includes for this purpose dividends

(other than exempt-interest dividends) paid by the Fund, including any

capital gain dividends, and including net capital gains recognized on the

sale, redemption or exchange of shares of the Fund. Shareholders are

advised to consult their tax advisors regarding the possible implications

of this additional tax on their investment in the Fund.

The ultimate tax characterization of the Fund's distributions made in a

taxable year cannot be determined finally until after the end of that

taxable year. As a result, there is a possibility that the Fund may make

total distributions during a taxable year in an amount that exceeds the

Fund's current and accumulated earnings and profits. In that case, the

excess generally would be treated as return of capital and would reduce

a shareholder's tax basis in the applicable shares, with any amounts

exceeding such basis treated as gain from the sale of such shares. A

return of capital is not taxable, but it reduces a shareholder's tax basis

in the shares, thus reducing any loss or increasing any gain on a

subsequent taxable disposition by the shareholder of the Common

Shares. A shareholder whose distributions are reinvested in Common

Shares under the Plan will be treated for U.S. federal income tax

purposes as having received an amount in distribution equal to the fair

market value of the Common Shares issued to the shareholder, which

amount will also be equal to the net asset value of such shares. For

U.S. federal income tax purposes, all distributions are generally taxable

in the manner described above, whether a shareholder takes them in

cash or they are reinvested pursuant to the Plan in additional shares of

the Fund. See "Dividend Reinvestment Plan" above for further details.

Fund distributions are taxable to shareholders as described above even

if they are paid from income or gains earned by the Fund before a

shareholder's investment (and thus were included in the price the

shareholder paid).

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The IRS currently requires a RIC that the IRS recognizes as having two or

more "classes" of stock for U.S. federal income tax purposes to allocate

to each such class proportionate amounts of each type of its income

(such as ordinary income and capital gains) based upon the percentage

of total dividends distributed to each class for the tax year. Accordingly,

if the Fund issues one or more series of Preferred Shares, the Fund will

allocate capital gain dividends for each tax year between and among its

Common Shares and each such series of its Preferred Shares in

proportion to the total dividends paid to each class with respect to such

tax year. Dividends qualifying and not qualifying for the dividends

received deduction, as qualified dividend income or as exempt-interest

dividends will similarly be allocated between and among Common

Shares and each series of Preferred Shares, as and when issued.

Certain Fund Investments

The Fund's investments in certain debt instruments could cause the

Fund to recognize taxable income in excess of the cash generated by

such investments (which may require the Fund to liquidate other

investments in order to make required distributions).

The Fund may at times buy tax-exempt investments at a discount from

the price at which they were originally issued, especially during periods

of rising interest rates. For federal income tax purposes, some or all of

this market discount will be included in the Fund's ordinary income and

will be taxable to you as such when it is distributed.

Accordingly, it is possible that a portion of the distributions of the Fund

will be taxable to you as such when it is distributed.

Taxes When you Dispose of Your Common Shares

Any gain resulting from the disposition of Common Shares that is

treated as a sale or exchange for U.S. federal income tax purposes

generally will be taxable to shareholders as capital gains for U.S. federal

income tax purposes.

Shareholders who offer, and are able to sell all of the Common Shares

they hold or are deemed to hold in response to a repurchase offer (as

described above) generally will be treated as having sold their shares

and generally will recognize a capital gain or loss. In the case of

shareholders who tender or are able to sell fewer than all of their

shares, it is possible that any amounts that the shareholder receives in

such repurchase will be taxable as a dividend to such shareholder. In

addition, there is a risk that shareholders who do not tender any of their

shares for repurchase, or whose percentage interest in the Fund

otherwise increases as a result of the repurchase offer, will be treated

for U.S. federal income tax purposes as having received a taxable

dividend distribution as a result of their proportionate increase in the

ownership of the Fund. The Fund's use of cash to repurchase shares

could adversely affect its ability to satisfy the distribution requirements

for treatment as a RIC. The Fund could also recognize income in

connection with its liquidation of portfolio securities to fund share

repurchases. Any such income would be taken into account in

determining whether such distribution requirements are satisfied.

Backup Withholding

The Fund is generally required to withhold and remit to the U.S. Treasury

a percentage of the taxable distributions and redemption proceeds paid

to any shareholder who fails to properly furnish the Fund with a correct

taxpayer identification number, who has under-reported dividend or

interest income, or who fails to certify to the Fund that he, she or it is

not subject to such withholding. The backup withholding rules may also

apply to distributions that are properly reported as exempt-interest

dividends.

General

The foregoing discussion relates solely to U.S. federal income tax laws.

Dividends and distributions also may be subject to state and local taxes.

Shareholders are urged to consult their tax advisors regarding specific

questions as to federal, state, local, and, where applicable, foreign taxes.

Foreign investors should consult their tax advisors concerning the tax

consequences of ownership of Common Shares of the Fund.

The foregoing is a general and abbreviated summary of the applicable

provisions of the Code and related regulations currently in effect. For

the complete provisions, reference should be made to the pertinent

Code sections and regulations. The Code and regulations are subject to

change by legislative or administrative actions.

Please see "Taxation" in the Statement of Additional Information for

additional information regarding the tax aspects of investing in

Common Shares of the Fund.

Shareholder Servicing Agent, Custodian and

Transfer Agent

The primary custodian of the assets of the Fund is State Street Bank and

Trust Company. State Street Bank and Trust Company's principal

business address is 2323 Grand Boulevard, 5

th

Floor, Kansas City, MO

64108. The primary custodian performs custodial and fund accounting

services as well as sub-administrative and compliance services on behalf

of the Fund. UMB Bank, n.a. also serves as a custodian of the Fund for

the purpose of processing investor subscriptions and repurchases. UMB

Bank, n.a.'s principal business address is 1010 Grand Boulevard, Kansas

City, MO 64106.

SS&C Global Investor and Distribution Solutions, Inc., 801 Pennsylvania

Avenue, Suite 219993, Kansas City, MO 64105-1307, serves as the

Fund's transfer agent, registrar, dividend disbursement agent and

shareholder servicing agent, as well as agent for the Plan.

The Bank of New York Mellon, 240 Greenwich Street, New York,

New York 10286, serves as transfer agent, registrar, redemption and

paying agent and calculation agent with respect to the RVMTP Shares.

Independent Registered Public Accounting Firm

PwC serves as independent registered public accounting firm for the

Fund. PwC provides audit services, tax assistance and consultation in

connection with review of SEC and IRS filings.

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Legal Matters

Certain legal matters will be passed on for the Fund by Ropes & Gray

LLP, 800 Boylston Street, Prudential Tower, Boston, Massachusetts

02199-3600.

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Appendix A

Description of Securities Ratings

The Fund's investments may range in quality from securities rated in the

lowest category in which the Fund is permitted to invest to securities

rated in the highest category (as rated by Moody's,

S

&

P

or Fitch, or, if

unrated, determined by PIMCO to be of comparable quality) to

securities so rated. The percentage of the Fund's assets invested in

securities in a particular rating category will vary. The following terms

are generally used to describe the credit quality of fixed income

securities:

High Quality Debt Securities

are those rated in one of the two highest

rating categories (the highest category for commercial paper) or, if

unrated, deemed comparable by PIMCO.

Investment Grade Debt Securities

are those rated in one of the four

highest rating categories, or, if unrated, deemed comparable by PIMCO.

Below Investment Grade High Yield Securities ("Junk Bonds"),

are

those rated lower than Baa by Moody's, BBB by

S

&

P

or Fitch, and

comparable securities. They are deemed predominantly speculative with

respect to the issuer's ability to repay principal and interest.

The following is a description of Moody's,

S

&

P

and Fitch's rating

categories applicable to fixed income securities.

Moody's Ratings

Global Long-Term Rating Scale

Ratings assigned on Moody's global long-term rating

scale

are

forward-looking opinions of the relative credit risks of financial

obligations issued by non-financial corporates, financial institutions,

structured finance vehicles, project finance vehicles, and public sector

entities. Long-term ratings are assigned to issuers or obligations with an

original maturity of eleven months or more and reflect both on the

likelihood of a default or impairment on contractual financial

obligations and the expected financial loss suffered in the event of

default or impairment.

Aaa: Obligations rated Aaa are judged to be of the highest quality,

subject to the lowest level of credit risk.

Aa: Obligations rated Aa are judged to be of high quality and are

subject to very low credit risk.

A: Obligations rated A are judged to be upper-medium grade and are

subject to low credit risk.

Baa: Obligations rated Baa are judged to be medium-grade and subject

to moderate credit risk and as such may possess certain speculative

characteristics.

Ba: Obligations rated Ba are judged to be speculative and are subject to

substantial credit risk.

B: Obligations rated B are considered speculative and are subject to

high credit risk.

Caa: Obligations rated Caa are judged to be speculative of poor

standing and are subject to very high credit risk.

Ca: Obligations rated Ca are highly speculative and are likely in, or very

near, default, with some prospect of recovery of principal and interest.

C: Obligations rated C are the lowest rated and are typically in default,

with little prospect for recovery of principal or interest.

Moody's appends numerical modifiers 1, 2, and 3 to each generic rating

classification from Aa through Caa. The modifier 1 indicates that the

obligation ranks in the higher end of its generic rating category; the

modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a

ranking in the lower end of that generic rating category. Additionally, a

"(hyb)" indicator is appended to all ratings of hybrid securities issued by

banks, insurers, finance companies, and securities firms.\*

\* By their terms, hybrid securities allow for the omission of scheduled

dividends, interest, or principal payments, which can potentially result in

impairment if such an omission occurs. Hybrid securities may also be

subject to contractually allowable write-downs of principal that could

result in impairment. Together with the hybrid indicator, the long-term

obligation rating assigned to a hybrid security is an expression of the

relative credit risk associated with that security.

Medium-Term Note Program Ratings

Moody's assigns provisional ratings to medium-term note (MTN) or

similar programs and definitive ratings to the individual debt securities

issued from them (referred to as drawdowns or notes).

MTN program ratings are intended to reflect the ratings likely to be

assigned to drawdowns issued from the program with the specified

priority of claim (e.g.

, senior or subordinated). To capture the contingent

nature of a program rating, Moody's assigns provisional ratings to MTN

programs. A provisional rating is denoted by a (P) in front of the rating.

The rating assigned to a drawdown from a rated MTN or bank/deposit

note program is definitive in nature, and may differ from the program

rating if the drawdown is exposed to additional credit risks besides the

issuer's default, such as links to the defaults of other issuers, or has

other structural features that warrant a different rating. In some

circumstances, no rating may be assigned to a drawdown.

Moody's encourages market participants to contact Moody's Ratings

Desks or visit www.moodys.com directly if they have questions

regarding ratings for specific notes issued under a medium-term note

program. Unrated notes issued under an MTN program may be assigned

an NR (not rated) symbol.

Global Short-Term Rating Scale

Ratings assigned on Moody's global short-term rating

scale

are

forward-looking opinions of the relative credit risks of financial

obligations issued by non-financial corporates, financial institutions,

structured finance vehicles, project finance vehicles, and public sector

entities. Short-term ratings are assigned to obligations with an original

maturity of thirteen months or less and reflect both on the likelihood of

a default or impairment on contractual financial obligations and the

expected financial loss suffered in the event of default or impairment.

Moody's employs the following designations to indicate the relative

repayment ability of rated issuers:

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P-1: Ratings of Prime-1 reflect a superior ability to repay short-term

obligations.

P-2: Ratings of Prime-2 reflect a strong ability to repay short-term

obligations.

P-3: Ratings of Prime-3 reflect an acceptable ability to repay short-term

obligations.

NP: Issuers (or supporting institutions) rated Not Prime do not fall within

any of the Prime rating categories.

National Scale Long-Term Ratings

Moody's long-term National Scale Ratings (NSRs) are opinions of the

relative creditworthiness of issuers and financial obligations within a

particular country. NSRs are not designed to be compared among

countries; rather, they address relative credit risk within a given country.

Moody's assigns national scale ratings in certain local capital markets in

which investors have found the global rating scale provides inadequate

differentiation among credits or is inconsistent with a rating scale

already in common use in the country.

In each specific country, the last two characters of the rating indicate

the country in which the issuer is located or the financial obligation was

issued (e.g.,

Aaa.ke for Kenya).

Aaa.n: Issuers or issues rated Aaa.n demonstrate the strongest

creditworthiness relative to other domestic issuers and issuances.

Aa.n: Issuers or issues rated Aa.n demonstrate very strong

creditworthiness relative to other domestic issuers and issuances.

A.n: Issuers or issues rated A.n

demonstrate

above-average

creditworthiness relative to other domestic issuers and issuances.

Baa.n: Issuers or issues rated Baa.n

demonstrate

average

creditworthiness relative to other domestic issuers and issuances.

Ba.n: Issuers or issues rated Ba.n demonstrate below-average

creditworthiness relative to other domestic issuers and issuances.

B.n: Issuers or issues rated B.n demonstrate weak creditworthiness

relative to other domestic issuers and issuances.

Caa.n: Issuers or issues rated Caa.n demonstrate very weak

creditworthiness relative to other domestic issuers and issuances.

Ca.n: Issuers or issues rated Ca.n demonstrate extremely weak

creditworthiness relative to other domestic issuers and issuances.

C.n: Issuers or issues rated C.n demonstrate the weakest

creditworthiness relative to other domestic issuers and issuances.

Moody's appends numerical modifiers 1, 2, and 3 to each generic rating

classification from Aa through Caa. The modifier 1 indicates that the

obligation ranks in the higher end of its generic rating category; the

modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a

ranking in the lower end of that generic rating category.

National Scale Short-Term Ratings

Moody's short-term NSRs are opinions of the ability of issuers or

issuances in a given country, relative to other domestic issuers or

issuances, to repay debt obligations that have an original maturity not

exceeding thirteen months. Short-term NSRs in one country should not

be compared with short-term NSRs in another country, or with Moody's

global ratings. There are four categories of short-term national scale

ratings, generically denoted N-1 through N-4 as defined below.

In each specific country, the first two letters indicate the country in

which the issuer is located (e.g.

, KE-1 through KE-4 for Kenya).

N-1: N-1 issuers or issuances represent the strongest likelihood of

repayment of short-term debt obligations relative to other domestic

issuers or issuances.

N-2: N-2 issuers or issuances represent an above average likelihood of

repayment of short-term debt obligations relative to other domestic

issuers or issuances.

N-3: N-3 issuers or issuances represent an average likelihood of

repayment of short-term debt obligations relative to other domestic

issuers or issuances.

N-4: N-4 issuers or issuances represent a below average likelihood of

repayment of short-term debt obligations relative to other domestic

issuers or issuances.

The short-term rating symbols P-1.za, P-2.za, P-3.za and NP.za are used

in South Africa.

US Municipal

Short-Term

Debt

Ratings

The Municipal Investment Grade (MIG) scale is used for U.S. municipal

cash flow notes, bond anticipation notes and certain other short-term

obligations, which typically mature in three years or less.

MIG 1: This designation denotes superior credit quality. Excellent

protection is afforded by established cash flows, highly reliable liquidity

support, or demonstrated broad-based access to the market for

refinancing.

MIG 2: This designation denotes strong credit quality. Margins of

protection are ample, although not as large as in the preceding group.

MIG 3: This designation denotes acceptable credit quality. Liquidity and

cash-flow protection may be narrow, and market access for refinancing

is likely to be less well-established.

SG: This designation denotes speculative-grade credit quality. Debt

instruments in this category may lack sufficient margins of protection.

Demand Obligation Ratings

For

variable rate demand obligations (VRDOs), a two-component rating

is assigned.

Moody'

s assigns both

a long-term rating and a short-term

payment

obligation rating. The long-term rating addresses the issuer's

ability to meet scheduled principal and interest payments. The

short-term payment obligation rating addresses the ability of the issuer

or the liquidity provider to meet any purchase price payment obligation

resulting from optional tenders ("on demand") and/or mandatory

tenders of the VRDO. The short-term payment obligation rating uses the

Variable Municipal Investment Grade (VMIG) scale.

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For VRDOs, Moody's typically assigns a VMIG rating if the frequency of

the payment obligation is less than every three years. If the frequency of

the payment obligation is less than three years, but the obligation is

payable only with remarketing proceeds, the VMIG short-term rating is

not assigned and it is denoted as "NR".

VMIG 1: This designation denotes superior credit quality. Excellent

protection is afforded by the superior short-term credit strength of the

liquidity provider and structural and legal protections.

VMIG 2: This designation denotes strong credit quality. Good protection

is afforded by the strong short-term credit strength of the liquidity

provider and structural and legal protections.

VMIG 3: This designation denotes acceptable credit quality. Adequate

protection is afforded by the satisfactory short-term credit strength of

the liquidity provider and structural and legal protections.

SG: This designation denotes speculative-grade credit quality. Demand

features rated in this category may be supported by a liquidity provider

that does not have a sufficiently strong short-term rating or may lack

the structural or legal protections.

S

&

P Global

Ratings

Long-Term Issue Credit Ratings

\*

Issue credit ratings are based, in varying degrees, on S&P Global

Ratings' ("S&P") analysis of the following considerations:

■

Likelihood of payment—capacity and willingness of the obligor to

meet its financial commitments on an obligation in accordance

with the terms of the obligation;

■

Nature and provisions of the financial obligation and the promise

S&P imputes; and

■

Protection afforded by, and relative position of, the financial

obligation in the event of a bankruptcy, reorganization, or other

arrangement under the laws of bankruptcy and other laws

affecting creditors' rights.

Issue ratings are an assessment of default risk, but may incorporate an

assessment of relative seniority or ultimate recovery in the event of

default. Junior obligations are typically rated lower than senior

obligations, to reflect lower priority in bankruptcy, as noted above. (Such

differentiation may apply when an entity has both senior and

subordinated obligations, secured and unsecured obligations, or

operating company and holding company obligations)

.

Investment Grade

AAA: An obligation rated 'AAA' has the highest rating assigned by S&P.

The obligor's capacity to meet its financial commitments on the

obligation is extremely strong.

AA: An obligation rated 'AA' differs from the highest-rated obligations

only to a small degree. The obligor's capacity to meet its financial

commitments on the obligation is very strong.

A: An obligation rated 'A' is somewhat more susceptible to the adverse

effects of changes in circumstances and economic conditions than

obligations in higher-rated categories. However, the obligor's capacity to

meet its financial commitments on the obligation is still strong.

BBB: An obligation rated 'BBB' exhibits adequate protection parameters.

However, adverse economic conditions or changing circumstances are

more likely to weaken the obligor's capacity to meet its financial

commitments on the obligation.

Speculative Grade

Obligations rated 'BB', 'B', 'CCC', 'CC', and 'C' are regarded as having

significant speculative characteristics. 'BB' indicates the least degree of

speculation and 'C' the highest. While such obligations will likely have

some quality and protective characteristics, these may be outweighed by

large uncertainties or major exposure to adverse conditions.

BB: An obligation rated 'BB' is less vulnerable to nonpayment than other

speculative issues. However, it faces major ongoing uncertainties or

exposure to adverse business, financial, or economic conditions that

could lead to the obligor's inadequate capacity to meet its financial

commitments on the obligation.

B: An obligation rated 'B' is more vulnerable to nonpayment than

obligations rated 'BB', but the obligor currently has the capacity to meet

its financial commitments on the obligation. Adverse business, financial,

or economic conditions will likely impair the obligor's capacity or

willingness to meet its financial commitments on the obligation.

CCC: An obligation rated 'CCC' is currently vulnerable to nonpayment,

and is dependent upon favorable business, financial, and economic

conditions for the obligor to meet its financial commitments on the

obligation. In the event of adverse business, financial, or economic

conditions, the obligor is not likely to have the capacity to meet its

financial commitments on the obligation.

CC: An obligation rated 'CC' is currently highly vulnerable to

nonpayment. The 'CC' rating is used when a default has not yet

occurred

but S&P expects default to be a virtual certainty, regardless of

the anticipated time to default.

C: An obligation rated 'C' is currently highly vulnerable to nonpayment,

and the obligation is expected to have lower relative seniority or lower

ultimate recovery compared with obligations that are rated higher.

D: An obligation rated 'D' is in default or in breach of an imputed

promise. For non-hybrid capital instruments, the 'D' rating category is

used when payments on an obligation are not made on the date due,

unless S&P believes that such payments will be made within the next

five business days in the absence of a stated grace period or within the

earlier of the stated grace period or the next 30 calendar days. The 'D'

rating also will be used upon the filing of a bankruptcy petition or the

taking of similar action and where default on an obligation is a virtual

certainty, for example due to automatic stay provisions. A rating on an

obligation is lowered to 'D' if it is subject to a distressed debt

restructuring.

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\*

Ratings

from 'AA' to 'CCC' may be modified by the addition of a plus

(+) or minus (-) sign to show relative standing within the rating

categories.

Short-Term Issue Credit Ratings

A-1: A short-term obligation rated 'A-1' is rated in the highest category

by S&P. The obligor's capacity to meet its financial commitments on the

obligation is strong. Within this category, certain obligations are

designated with a plus sign (+). This indicates that the obligor's capacity

to meet its financial commitments on these obligations is extremely

strong.

A-2: A short-term obligation rated 'A-2' is somewhat more susceptible

to the adverse effects of changes in circumstances and economic

conditions than obligations in higher rating categories. However, the

obligor's capacity to meet its financial commitments on the obligation is

satisfactory.

A-3: A short-term obligation rated 'A-3' exhibits adequate protection

parameters. However, adverse economic conditions or changing

circumstances are more likely to weaken an obligor's capacity to meet

its financial commitments on the obligation.

B: A short-term obligation rated 'B' is regarded as vulnerable and has

significant speculative characteristics. The obligor currently has the

capacity to meet its financial commitments; however, it faces major

ongoing uncertainties that could lead to the obligor's inadequate

capacity to meet its financial commitments.

C: A short-term obligation rated 'C' is currently vulnerable to

nonpayment and is dependent upon favorable business, financial, and

economic conditions for the obligor to meet its financial commitments

on the obligation.

D: A short-term obligation rated 'D' is in default or in breach of an

imputed promise. For non-hybrid capital instruments, the 'D' rating

category is used when payments on an obligation are not made on the

date due, unless S&P believes that such payments will be made within

any stated grace period. However, any stated grace period longer than

five business days will be treated as five business days. The 'D' rating

also will be used upon the filing of a bankruptcy petition or the taking

of a similar action and where default on an obligation is a virtual

certainty, for example due to automatic stay provisions. A rating on an

obligation is lowered to 'D' if it is subject to a distressed debt

restructuring.

Dual Ratings: Dual ratings may be assigned to debt issues that have a

put option or demand feature. The first component of the rating

addresses the likelihood of repayment of principal and interest as due,

and the second component of the rating addresses only the demand

feature. The first component of the rating can relate to either a

short-term or long-term transaction and accordingly use either

short-term or long-term rating symbols. The second component of the

rating relates to the put option and is assigned a short-term rating

symbol (for example, 'AAA/A-1+' or 'A-1+/ A-1'). With U.S. municipal

short-term demand debt, the U.S. municipal short-term note rating

symbols are used for the first component of the rating (for example,

'SP-1+/A-1+').

Active Qualifiers

S&P uses the following qualifiers that limit the scope of a rating. The

structure of the transaction can require the use of a qualifier such as a

'p' qualifier, which indicates the rating addresses the principal portion of

the obligation only. A qualifier appears as a suffix and is part of the

rating.

L: Ratings qualified with 'L' apply only to amounts invested up to federal

deposit insurance limits.

p: This suffix is used for issues in which the credit factors, the terms, or

both, that determine the likelihood of receipt of payment of principal are

different from the credit factors, terms

,

or both that determine the

likelihood of receipt of interest on the obligation. The 'p' suffix indicates

that the rating addresses the principal portion of the obligation only and

that the interest is not rated.

prelim: Preliminary ratings, with the 'prelim' suffix, may be assigned to

obligors or obligations, including financial programs, in the

circumstances described below. Assignment of a final rating is

conditional on the receipt by S&P of appropriate documentation. S&P

reserves the right not to issue a final rating. Moreover, if a final rating is

issued, it may differ from the preliminary rating.

■

Preliminary ratings may be assigned to obligations, most

commonly structured and project finance issues, pending receipt

of final documentation and legal opinions.

■

Preliminary ratings may be assigned to obligations that will likely

be issued upon the obligor's emergence from bankruptcy or

similar reorganization, based on late-stage reorganization plans,

documentation, and discussions with the obligor. Preliminary

ratings may also be assigned to the obligors. These ratings

consider the anticipated general credit quality of the reorganized

or post-bankruptcy issuer as well as attributes of the anticipated

obligation(s).

■

Preliminary ratings may be assigned to entities that are being

formed or that are in the process of being independently

established when, in S&P's opinion, documentation is close to

final. Preliminary ratings may also be assigned to the obligations

of these entities.

■

Preliminary ratings may be assigned when a previously unrated

entity is undergoing a well-formulated restructuring,

recapitalization, significant financing or other transformative

event, generally at the point that investor or lender commitments

are invited. The preliminary rating may be assigned to the entity

and to its proposed obligation(s). These preliminary ratings

consider the anticipated general credit quality of the obligor, as

well as attributes of the anticipated obligation(s), assuming

successful completion of the transformative event. Should the

transformative event not occur, S&P would likely withdraw these

preliminary ratings.

■

A preliminary recovery rating may be assigned to an obligation

that has a preliminary issue credit rating.

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t: This symbol indicates termination structures that are designed to

honor their contracts to full maturity or, should certain events occur, to

terminate and cash settle all their contracts before their final maturity

date.

cir: This symbol indicates a Counterparty Instrument Rating (CIR), which

is a forward-looking opinion about the creditworthiness of an issuer in a

securitization structure with respect to a specific financial obligation to

a counterparty (including interest rate swaps, currency swaps, and

liquidity facilities). The CIR is determined on an ultimate payment basis;

these opinions do not take into account timeliness of payment.

Inactive Qualifiers (no longer applied or outstanding)

\*: This symbol indicated that the rating was contingent upon S&P

receipt of an executed copy of the escrow agreement or closing

documentation confirming investments and cash flows. Discontinued

use in August 1998.

c: This qualifier was used to provide additional information to investors

that the bank may terminate its obligation to purchase tendered bonds

if the long-term credit rating of the issuer was lowered to below an

investment-grade level and/or the issuer's bonds were deemed taxable.

Discontinued use in January 2001.

G: The letter 'G' followed the rating symbol when a fund's portfolio

consisted primarily of direct U.S. government securities.

i: This suffix was used for issues in which the credit factors, terms, or

both that determine the likelihood of receipt of payment of interest are

different from the credit factors, terms, or both that determine the

likelihood of receipt of principal on the obligation. The 'i' suffix indicated

that the rating addressed the interest portion of the obligation only. The

'i' suffix was always used in conjunction with the 'p' suffix, which

addresses likelihood of receipt of principal. For example, a rated

obligation could have been assigned a rating of 'AAApNRi' indicating

that the principal portion was rated 'AAA' and the interest portion of

the obligation was not rated.

pi: This qualifier was used to indicate ratings that were based on an

analysis of an issuer's published financial information, as well as

additional information in the public domain. Such ratings did not,

however, reflect in-depth meetings with an issuer's management and

therefore, could have been based on less comprehensive information

than ratings without a 'pi' suffix. Discontinued use as of December 2014

and as of August 2015 for Lloyd's Syndicate Assessments.

pr: The letters 'pr' indicate that the rating was provisional. A provisional

rating assumed the successful completion of a project financed by the

debt being rated and indicates that payment of debt service

requirements was largely or entirely dependent upon the successful,

timely completion of the project. This rating, however, while addressing

credit quality subsequent to completion of the project, made no

comment on the likelihood of or the risk of default upon failure of such

completion.

q: A 'q' subscript indicates that the rating is based solely on quantitative

analysis of publicly available information. Discontinued use in April

2001. r: The 'r' modifier was assigned to securities containing extraordinary

risks, particularly market risks, that are not covered in the credit rating.

The absence of an 'r' modifier should not be taken as an indication that

an obligation would not exhibit extraordinary noncredit-related risks.

S&P discontinued the use of the 'r' modifier for most obligations in June

2000 and for the balance of obligations (mainly structured finance

transactions) in November 2002.

Fitch Ratings

Long-Term Credit Ratings

Investment Grade

Rated entities in a number of sectors, including financial and

non-financial corporations, sovereigns, insurance companies and certain

sectors within public finance, are generally assigned Issuer Default

Ratings ("IDRs"). IDRs are also assigned to certain entities or

enterprises in global infrastructure, project finance

and public finance.

IDRs opine on an entity's relative vulnerability to default (including by

way of a distressed debt exchange) on financial obligations. The

threshold default risk addressed by the IDR is generally that of the

financial obligations whose non-payment would best reflect the

uncured failure of that entity. As such, IDRs also address relative

vulnerability to bankruptcy, administrative receivership or similar

concepts.

In aggregate, IDRs provide an ordinal ranking of issuers based on the

agency's view of their relative vulnerability to default, rather than a

prediction of a specific percentage likelihood of default.

AAA: Highest credit quality. 'AAA' ratings denote the lowest expectation

of default risk. They are assigned only in cases of exceptionally strong

capacity for payment of financial commitments. This capacity is highly

unlikely to be adversely affected by foreseeable events.

AA: Very high credit quality. 'AA' ratings denote expectations of very low

default risk. They indicate very strong capacity for payment of financial

commitments. This capacity is not significantly vulnerable to foreseeable

events.

A: High credit quality. 'A' ratings denote expectations of low default risk.

The capacity for payment of financial commitments is considered strong.

This capacity may, nevertheless, be more vulnerable to adverse business

or economic conditions than is the case for higher ratings.

BBB: Good credit quality. 'BBB' ratings indicate that expectations of

default risk are currently low. The capacity for payment of financial

commitments is considered adequate, but adverse business or economic

conditions are more likely to impair this capacity.

Speculative Grade

BB: Speculative. 'BB' ratings indicate an elevated vulnerability to default

risk, particularly in the event of adverse changes in business or

economic conditions over time; however, business or financial flexibility

exists that supports the servicing of financial commitments.

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A-5 Prospectus

\| PIMCO California Flexible Municipal Income Fund

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Prospectus

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B: Highly speculative. 'B' ratings indicate that material default risk is

present, but a limited margin of safety remains. Financial commitments

are currently being met; however, capacity for continued payment is

vulnerable to deterioration in the business and economic environment.

CCC: Substantial credit risk. Very low margin for safety. Default is a real

possibility.

CC: Very high levels of credit risk. Default of some kind appears

probable.

C: Near default.

A default or default-like process has begun, or for a closed funding

vehicle, payment capacity is irrevocably impaired. Conditions that are

indicative of a 'C' category rating for an issuer include:

a. the issuer has entered into a grace or cure period following

non-payment of a material financial obligation;

b. the formal announcement by the issuer or their agent of a distressed

debt exchange;

c. a closed financing vehicle where payment capacity is irrevocably

impaired such that it is not expected to pay interest and/or principal in

full during the life of the transaction, but where no payment default is

imminent.

RD: Restricted default. 'RD' ratings indicate an issuer that in Fitch's

opinion has experienced an uncured payment default or distressed debt

exchange on a bond, loan or other material financial obligation but has

not entered into bankruptcy filings, administration, receivership,

liquidation or other formal winding-up procedure, and has not

otherwise ceased operating. This would include:

i. the selective payment default on a specific class or currency of debt;

ii. the uncured expiry of any applicable original grace period, cure period

or default forbearance period following a payment default on a bank

loan, capital markets security or other material financial obligation.

D: Default. 'D' ratings indicate an issuer that in Fitch's opinion has

entered into bankruptcy filings, administration, receivership, liquidation

or other formal winding-up procedure or that has otherwise ceased

business and debt is still outstanding. Default ratings are not assigned

prospectively to entities or their obligations; within this context,

non-payment on an instrument that contains a deferral feature or grace

period will generally not be considered a default until after the

expiration of the deferral or grace period, unless a default is otherwise

driven by bankruptcy or other similar circumstance, or by a distressed

debt exchange.

In all cases, the assignment of a default rating reflects the agency's

opinion as to the most appropriate rating category consistent with the

rest of its universe of ratings, and may differ from the definition of

default under the terms of an issuer's financial obligations or local

commercial practice.

The modifiers

'

+

'

or

'

-

'

may be appended to a rating to denote relative

status within major rating categories. For example, the rating category

'AA' has three notch-specific rating levels ('AA+'; 'AA'; 'AA-'; each a

rating level). Such suffixes are not added to 'AAA' ratings and ratings

below the 'CCC' category.

Recovery Ratings

Recovery Ratings are assigned to selected individual securities and

obligations, most frequently for individual obligations of corporate

finance issuers with IDRs in speculative grade categories.

Among the factors that affect recovery rates for securities are the

collateral, the seniority relative to other obligations in the capital

structure (where appropriate), and the expected value of the company

or underlying collateral in distress.

The Recovery Rating scale is based on the expected relative recovery

characteristics of an obligation upon the curing of a default, emergence

from insolvency or following the liquidation or termination of the

obligor or its associated collateral.

Recovery Ratings are an ordinal scale and do not attempt to precisely

predict a given level of recovery. As a guideline in developing the rating

assessments, the agency employs broad theoretical recovery bands in its

ratings approach based on historical averages and analytical judgment,

but actual recoveries for a given security may deviate materially from

historical averages.

RR1:

Outstanding recovery prospects given default.

'RR1' rated

securities have characteristics consistent with securities historically

recovering 91%-100% of current principal and related interest.

RR2:

Superior recovery prospects given default.

'RR2' rated securities

have characteristics consistent with securities historically recovering

71%-90% of current principal and related interest.

RR3:

Good recovery prospects given default.

'RR3' rated securities have

characteristics consistent with securities historically recovering

51%-70% of current principal and related interest.

RR4:

Average recovery prospects given default.

'RR4' rated securities

have characteristics consistent with securities historically recovering

31%-50% of current principal and related interest.

RR5:

Below average recovery prospects given default.

'RR5' rated

securities have characteristics consistent with securities historically

recovering 11%-30% of current principal and related interest.

RR6:

Poor recovery prospects given default.

'RR6' rated securities have

characteristics consistent with securities historically recovering 0%-10%

of current principal and related interest.

Short-Term Credit Ratings

A short-term issuer or obligation rating is based in all cases on the

short-term vulnerability to default of the rated entity and relates to the

capacity to meet financial obligations in accordance with the

documentation governing the relevant obligation. Short-term deposit

ratings may be adjusted for loss severity. Short-Term Ratings are

assigned to obligations whose initial maturity is viewed as "short term"

based on market convention (a long-term rating can also be used to rate

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April 30,

2026

\|

Prospectus

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PIMCO California Flexible Municipal Income Fund

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an issue with short maturity). Typically, this means a timeframe of up to

13 months for corporate, sovereign, and structured obligations, and up

to 36 months for obligations in U.S. public finance markets.

F1:

Highest short-term credit quality.

Indicates the strongest intrinsic

capacity for timely payment of financial commitments; may have an

added

'

+

'

to denote any exceptionally strong credit feature.

F2:

Good short-term credit quality.

Good intrinsic capacity for timely

payment of financial commitments.

F3:

Fair short-term credit quality.

The intrinsic capacity for timely

payment of financial commitments is adequate.

B:

Speculative short-term credit quality.

Minimal capacity for timely

payment of financial commitments, plus heightened vulnerability to near

term adverse changes in financial and economic conditions.

C:

High short-term default risk.

Default is a real possibility.

RD:

Restricted default.

Indicates an entity that has defaulted on one or

more of its financial commitments, although it continues to meet other

financial obligations. Typically applicable to entity ratings only.

D:

Default.

Indicates a broad-based default event for an entity, or the

default of a short-term obligation.

For the short-term rating category of 'F1', a '+' may be appended. For

VRs, the modifiers '+' or '–' may be appended to a rating to denote

relative status within categories from 'aa' to 'ccc'. For Derivative

Counterparty Ratings, the modifiers '+' or '–' may be appended to the

ratings within 'AA(dcr)' to 'CCC(dcr)' categories.

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A-7 Prospectus

\| PIMCO California Flexible Municipal Income Fund

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![](g121406g2logo.gif)

![](g121406g2signup.gif)

As permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund's annual and semi-annual

shareholder reports will no longer be sent by mail, unless you specifically request paper copies from the Fund or from your financial

intermediary, such as a broker-dealer or bank. Instead, the shareholder reports will be made available on a website, and you will be

notified by mail each time a report is posted and provided with a website link to access the report. Instructions for requesting paper

copies will be provided by the Fund or your financial intermediary. Paper copies of the Fund's shareholder reports are required to be

provided free of charge by the Fund or financial intermediary.

PIF0004_043026

------

**PIMCO CALIFORNIA FLEXIBLE MUNICIPAL INCOME FUND**

**Statement of Additional Information**

**April 30, 2026**

PIMCO California Flexible Municipal Income Fund (the "Fund") is a diversified, closed-end management investment company that continuously offers its shares of beneficial interest, par value of $0.00001 per share (the "Common Shares") and is operated as an "interval fund." The Fund currently has five separate classes of Common Shares: Institutional Class, Class A-1, Class A-2, Class A-3 and Class A-4.

This Statement of Additional Information relating to the Common Shares of the Fund is not a prospectus, and should be read in conjunction with the Fund's prospectus relating thereto dated April 30, 2026, as supplemented from time to time (the "Prospectus"). This Statement of Additional Information does not include all information that a prospective investor should consider before purchasing Common Shares, and investors should obtain and read the Prospectus prior to purchasing such shares.

Pacific Investment Management Company LLC ("PIMCO" or the "Investment Manager"), 650 Newport Center Drive, Newport Beach, California 92660, is the investment manager to the Fund.

A copy of the Prospectus and [<u>annual report</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312526094226/d786968dncsr.htm) or [<u>semi-annual report</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312525196904/d32253dncsrs.htm) for the Fund may be obtained free of charge at the telephone number and address listed below or by visiting www.pimco.com.

PIMCO California Flexible Municipal Income Fund

Regulatory Document Request

650 Newport Center Drive

Newport Beach, California 92660

Telephone: 844.312.2113

Capitalized terms used but not defined in this Statement of Additional Information have the meanings ascribed to them in the Prospectus.

------

**Table of Contents**

---

| | |
|:---|:---|
| [THE FUND](#xx_dbecda79-e880-48e1-a692-770c8a529e30_1) | 1  |
| [INVESTMENT OBJECTIVES AND POLICIES](#xx_dbecda79-e880-48e1-a692-770c8a529e30_1) | 1  |
| [INVESTMENT RESTRICTIONS](#xx_dbecda79-e880-48e1-a692-770c8a529e30_81) | 81  |
| [MANAGEMENT OF THE FUND](#xx_dbecda79-e880-48e1-a692-770c8a529e30_84) | 84  |
| [Portfolio Managers](#xx_dbecda79-e880-48e1-a692-770c8a529e30_102) | 102  |
| [DISTRIBUTION OF FUND SHARES](#xx_dbecda79-e880-48e1-a692-770c8a529e30_111) | 111  |
| [REPURCHASE OF COMMON SHARES](#xx_dbecda79-e880-48e1-a692-770c8a529e30_129) | 129  |
| [PORTFOLIO TRANSACTIONS AND BROKERAGE](#xx_dbecda79-e880-48e1-a692-770c8a529e30_130) | 130  |
| [DISTRIBUTIONS](#xx_dbecda79-e880-48e1-a692-770c8a529e30_133) | 133  |
| [DESCRIPTION OF CAPITAL STRUCTURE AND SHARES](#xx_dbecda79-e880-48e1-a692-770c8a529e30_133) | 133  |
| [ANTI-TAKEOVER AND OTHER PROVISIONS IN THE DECLARATION OF TRUST AND BYLAWS](#xx_dbecda79-e880-48e1-a692-770c8a529e30_138) | 138  |
| [CONVERSION TO OPEN-END FUND](#xx_dbecda79-e880-48e1-a692-770c8a529e30_141) | 141  |
| [NET ASSET VALUE](#xx_dbecda79-e880-48e1-a692-770c8a529e30_141) | 141  |
| [TAXATION](#xx_dbecda79-e880-48e1-a692-770c8a529e30_141) | 141  |
| [PERFORMANCE RELATED AND COMPARATIVE INFORMATION](#xx_dbecda79-e880-48e1-a692-770c8a529e30_160) | 160  |
| [CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSEMENT AGENT](#xx_dbecda79-e880-48e1-a692-770c8a529e30_160) | 160  |
| [INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM](#xx_dbecda79-e880-48e1-a692-770c8a529e30_160) | 160  |
| [COUNSEL](#xx_dbecda79-e880-48e1-a692-770c8a529e30_160) | 160  |
| [REGISTRATION STATEMENT](#xx_dbecda79-e880-48e1-a692-770c8a529e30_160) | 160  |
| [FINANCIAL STATEMENTS](#xx_dbecda79-e880-48e1-a692-770c8a529e30_161) | 161  |
| [Appendix](#xx_09f5a3fe-1ba2-4cb9-93a9-cfeafc61225f_1)[A – PROCEDURES FOR SHAREHOLDERS TO SUBMIT NOMINEE CANDIDATES](#xx_09f5a3fe-1ba2-4cb9-93a9-cfeafc61225f_1) | A-1 |

---

i

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**THE FUND**

The Fund is a diversified, closed-end management investment company that continuously offers its Common Shares and is operated as an "interval fund." The Fund was formed on February 8, 2022 as a Massachusetts business trust and commenced investment operations on June 27, 2022. The Fund has five separate classes of Common Shares: Institutional Class, Class A-1, Class A-2, Class A-3 and Class A-4.

**INVESTMENT OBJECTIVES AND POLICIES**

The investment objectives and general investment policies of the Fund are described in the Prospectus. Additional information concerning the characteristics of certain of the Fund's investments, strategies and risks is set forth below. Unless a strategy or policy described below is specifically prohibited by the investment restrictions listed in the Prospectus, by the investment restrictions under "Investment Restrictions" in this Statement of Additional Information, or by applicable law, the Fund may engage in each of the practices described below. However, the Fund is not required to engage in any particular transaction or purchase any particular type of securities or investment even if to do so might benefit the Fund. Unless otherwise stated herein, all investment policies of the Fund may be changed by the Board of Trustees (the "Board") without shareholder approval. In addition, the Fund may be subject to restrictions on its ability to utilize certain investments or investment techniques. Unless otherwise stated herein, these additional restrictions may be changed with the consent of the Board but without approval by or notice to shareholders.

**High Yield Securities ("Junk Bonds") and Securities of Distressed Companies**

The Fund may invest without limit in debt instruments that are, at the time of purchase, rated below "investment grade" by at least one of Moody's Ratings ("Moody's"), S&P Global Ratings ("S&P") or Fitch Ratings Inc. ("Fitch"), or unrated but determined by PIMCO to be of comparable quality. The Fund may also invest in defaulted securities and debtor-in-possession financings. A description of the ratings categories used is set forth in Appendix A to the Prospectus.

A security is considered to be below "investment grade" quality if it is either (1) not rated in one of the four highest rating categories by one of the nationally recognized statistical rating organizations ("NRSROs") (i.e., rated Ba or below by Moody's, BB or below by S&P or BB or below by Fitch) or (2) if unrated, determined by PIMCO to be of comparable quality to obligations so rated. Investments in securities rated below investment grade are described as "speculative" by Moody's, S&P and Fitch, and are commonly referred to as "high yield" securities or "junk bonds." Additional information about Moody's, S&P's and Fitch's securities ratings is included in Appendix A to the Prospectus.

Investment in lower rated corporate debt securities ("high yield securities" or "junk bonds") and securities of distressed companies generally provides greater income and increased opportunity for capital appreciation than investments in higher quality securities, but they also typically entail greater price volatility and principal and income risk. Securities of distressed companies include both debt and equity securities. High yield securities and debt securities of distressed companies are regarded as predominantly speculative with respect to the issuer's continuing ability to meet principal and interest payments. Issuers of high yield and distressed company securities may be involved in restructurings or bankruptcy proceedings that may not be successful. Analysis of the creditworthiness of issuers of debt securities that are high yield or debt securities of distressed companies may be more complex than for issuers of higher quality debt securities.

High yield securities and debt securities of distressed companies may be more susceptible to real or perceived adverse economic and competitive industry conditions than investment grade securities. A projection of an economic downturn, for example, could cause a decline in prices of high yield securities and debt securities of distressed companies because the advent of a recession could lessen the ability of a highly leveraged company to make principal and interest payments on its debt securities, and a high yield security may lose significant market value before a default occurs. If an issuer of securities defaults, in addition to risking payment of all or a portion of interest and principal, the Fund, by investing in such securities, may incur additional expenses to seek recovery of their respective investments. In the case of securities structured as zero-coupon or pay-in-kind securities, their market prices are affected to a greater extent by interest rate changes, and therefore tend to be more volatile than securities which pay interest periodically and in cash. PIMCO seeks to reduce these risks through diversification, credit analysis and attention to current developments and trends in both the economy and financial markets.

------

High yield and distressed company securities may not be listed on any exchange and a secondary market for such securities may be comparatively illiquid relative to markets for other more liquid fixed income securities. Consequently, transactions in high yield and distressed company securities may involve greater costs than transactions in more actively traded securities, which could adversely affect the price at which the Fund could sell a high yield or distressed company security, and could adversely affect the daily net asset value of the shares. 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 a fund being unable to realize full value for these securities and/or may result in a fund not receiving the proceeds from a sale of a high yield or distressed company security for an extended period after such sale, each of which could result in losses to the Fund. Because of the risks involved in investing in high yield securities and securities of distressed companies, an investment in the Fund should be considered speculative.

Analysis of the creditworthiness of issuers of high yield securities and distressed company securities may be more complex than for issuers of higher quality debt securities, and achievement of the Fund's investment objectives may, to the extent of its investments in high yield and distressed company securities, depend more heavily on PIMCO's creditworthiness analysis than would be the case if the Fund were investing in higher quality securities.

High yield securities structured as "zero-coupon" bonds or "payment-in-kind" securities ("PIKs") 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 income greater than the total amount of cash interest the Fund has actually received. Even though such securities do not pay current interest in cash, the Fund nonetheless is required to accrue interest income on these investments and to distribute the interest income on a current basis. Thus, the Fund could be required at times to sell other investments in order to satisfy its distribution requirements (including when it is not advantageous to do so).

The secondary market on which high yield securities are traded may be less liquid than the market for higher grade securities. Less liquidity in the secondary trading market could adversely affect the price at which the Fund could sell a high yield security, and could adversely affect the daily net asset value of the shares. Lower liquidity in secondary markets could adversely affect the value of high yield/high risk securities held by the Fund. While lower rated securities typically are less sensitive to interest rate changes than higher rated securities, the market prices of high yield/high risk securities structured as zero coupon bonds or PIKs may be affected to a greater extent by interest rate changes. In addition, adverse publicity and investor perceptions, whether or not based on fundamental analysis, may decrease the values and liquidity of high yield and distressed company securities, especially in a thinly traded market. When secondary markets for high yield and distressed company securities are less liquid than the market for other types of securities, it may be more difficult to value the securities because such valuation may require more research, and elements of judgment may play a greater role in the valuation because there is less reliable, objective data available. PIMCO seeks to minimize the risks of investing in all securities through diversification, in-depth analysis and attention to current market developments.

The use of credit ratings as the sole method of evaluating high yield securities and debt securities of distressed companies can involve certain risks. For example, credit ratings evaluate the safety of principal and interest payments of a debt security, not the market value risk of a security. Also, credit rating agencies may fail to change credit ratings in a timely fashion to reflect events since the security was last rated. PIMCO does not rely solely on credit ratings when selecting, holding or selling debt securities for a fund and develops its own independent analysis of issuer credit quality.

**Securities Lending**

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 Objectives 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, which may be an affiliate of the Fund. 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.

**Puerto Rico**

Municipal obligations issued by the Commonwealth of Puerto Rico or its political subdivisions, agencies, instrumentalities, or public corporations may be affected by economic, market, political, environmental and social conditions in Puerto Rico. Puerto Rico currently is experiencing significant fiscal and economic challenges, including substantial debt service obligations, high levels of unemployment, underfunded public retirement systems, and persistent government budget deficits. These challenges may negatively affect the value of the Fund's investments in Puerto Rico municipal securities. Major ratings agencies have downgraded the general obligation debt of Puerto Rico to below investment grade and continue to maintain a negative outlook for this debt, which increases the likelihood that the rating will be lowered further or discontinued. Puerto Rico has previously defaulted on its debt by failing to make full payment due on its outstanding bonds, and there can be no assurance that Puerto Rico will be able to satisfy its future debt obligations. Further downgrades or defaults may place additional strain on the Puerto Rican economy and may negatively affect the value, liquidity, and volatility of the Fund's investments in Puerto Rico municipal securities. Legislation, including legislation that would allow Puerto Rico to restructure its municipal debt obligations, thus increasing the risk that Puerto Rico may never pay off municipal indebtedness, or may pay only a small fraction of the amount owed, could also impact the value of the Fund's investments in Puerto Rico municipal securities.

These challenges and uncertainties have been exacerbated by recent natural disasters that have struck Puerto Rico. In September 2017, two successive hurricanes caused significant damage to Puerto Rico, and resulted in severe flooding and infrastructure damage, including damage to the Commonwealth's water, power, and telecommunications infrastructure, and resulted in more than 1 million people losing power. Estimates suggest that the hurricanes caused more than $80 billion in damage, which led to additional strain on Puerto Rico's economic situation. In late December 2019 and January 2020, a series of earthquakes caused an estimated $200 million in damage to Puerto Rico. The aftershocks from these earthquakes may continue for years, and it is not currently possible to predict the extent of the damage that could arise from any aftershocks. The length of time needed to rebuild Puerto Rico's infrastructure is unclear, but could amount to years, during which the Commonwealth is likely to be in an uncertain economic state. The full extent of the negative impact of these (or future) natural disasters on Puerto Rico's economy and foreign investment in Puerto Rico is difficult to estimate.

**New York State**

The Fund may invest in municipal bonds issued by or on behalf of the State of New York and its political subdivisions, financing authorities and their agencies, and therefore may be affected significantly by political, economic or regulatory developments affecting the ability of New York tax-exempt issuers to pay interest or repay principal. Certain issuers of New York municipal bonds have experienced serious financial difficulties in the past and reoccurrence of these difficulties may impair the ability of certain New York issuers to pay principal or interest on their obligations. Provisions of the New York Constitution and State statutes which limit the taxing and spending authority of New York governmental entities may impair the ability of New York issuers to pay principal and/or interest on their obligations. While New York's economy is broad, it does have major concentrations in certain industries, such as financial services, and may be sensitive to economic problems affecting those industries. Future New York political and economic developments, constitutional amendments, legislative measures, executive orders, administrative regulations, litigation and voter initiatives as well as environmental events, natural disasters, pandemics, epidemics or social unrest could have an adverse effect on the debt obligations of New York issuers to pay principal or interest on their obligations. The financial health of New York City affects that of the State, and when New York City experiences financial difficulty it may have an adverse effect on New York municipal bonds held by the Fund. The growth rate of New York has at times been somewhat slower than the nation overall. The economic and financial condition of New York also may be affected by various financial, social, economic, environmental, political and geopolitical factors.

**Mortgage-Related and Other Asset-Backed Securities**

Mortgage-related securities are interests in pools of residential or commercial mortgage loans, including mortgage loans made by savings and loan institutions, mortgage bankers, commercial banks and others. Such mortgage loans

------

may include reperforming loans ("RPLs"), which are loans that have previously been delinquent but are current at the time securitized. Pools of mortgage loans are assembled as securities for sale to investors by various governmental, government-related and private organizations. The Fund may invest in a variety of mortgage-related and other asset-backed securities ("ABS") issued by government agencies or other governmental entities or by private originators or issuers.

The financial downturn of the late 2000s adversely affected the market for mortgage-related securities. The downturn saw dramatic declines in the housing market, with falling home prices and increasing foreclosures and unemployment, and significant asset write-downs by financial institutions. Between 2008 and 2009, the market for mortgage-related securities (and other ABS) was particularly adversely impacted by, among other factors, the failure of certain large financial institutions and the events leading to the conservatorship and the control by the U.S. government of the Federal National Mortgage Association ("FNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC"), as described below. These events, coupled with the general economic downturn, resulted in a substantial level of uncertainty in the financial markets, particularly with respect to mortgage-related investments. There is no assurance that the U.S. government would take similar or further action to support the mortgage-related securities industry, as it has in the past, should the economy experience another downturn. Further, any future government actions may significantly alter the manner in which the mortgage-related securities market functions. Each of these factors could ultimately increase the risk that the Fund could realize losses on mortgage-related securities.

The mortgage-related securities in which the Fund may invest include, without limitation, mortgage pass-through securities, collateralized mortgage obligations ("CMOs"), commercial or residential mortgage-backed securities, mortgage dollar rolls/buy backs, CMO residuals, stripped mortgage-backed securities ("SMBS") and other securities that directly or indirectly represent a participation in, or are secured by and payable from, mortgage loans on real property. The Fund may also invest in other types of ABS, including collateralized debt obligations ("CDOs"), which include collateralized bond obligations ("CBOs"), collateralized loan obligations ("CLOs") and other similarly structured securities. The mortgage-related securities in which the Fund may invest may pay variable or fixed rates of interest.

Through investments in mortgage-related securities, including those that are issued by private issuers, the Fund may have some exposure to subprime loans as well as to the mortgage and credit markets generally. Private issuers include commercial banks, savings associations, mortgage companies, investment banking firms, finance companies and special purpose finance entities (called "special purpose vehicles" or "SPVs") and other entities that acquire and package mortgage loans for resale as mortgage-related securities.

***Mortgage Pass-Through Securities****.* Mortgage pass-through securities are securities representing interests in "pools" of mortgage loans secured by residential or commercial real property. Interests in pools of mortgage-related securities differ from other forms of debt securities, which normally provide for periodic payment of interest in fixed or variable amounts with principal payments at maturity or specified call dates. Instead, these securities provide a monthly payment which consists of both interest and principal payments. In effect, these payments are a "pass-through" of the monthly payments made by the individual borrowers on their residential or commercial mortgage loans, net of any fees paid to the issuer or guarantor of such securities. Additional payments are caused by repayments of principal resulting from the sale of the underlying property, refinancing or foreclosure, net of fees or costs which may be incurred. Some mortgage-related securities (such as securities issued by the Government National Mortgage Association ("GNMA")) are described as "modified pass-through." These securities entitle the holder to receive all interest and principal payments owed on the mortgage pool, net of certain fees, at the scheduled payment dates regardless of whether or not the mortgagor actually makes the payment.

The rate of prepayments on underlying mortgages will affect the price and volatility of a mortgage-related security, and may have the effect of shortening or extending the effective duration of the security relative to what was anticipated at the time of purchase. Early repayment of principal on some mortgage-related securities (arising from prepayments of principal due to the sale of the underlying property, refinancing, or foreclosure, net of fees and costs that may be incurred) may expose the Fund to a lower rate of return upon reinvestment of principal. Also, if a security subject to prepayment has been purchased at a premium, the value of the premium would be lost in the event of prepayment. Like other fixed income securities, when interest rates rise, the value of a mortgage-related security generally will decline; however, when interest rates are declining, the value of mortgage-related securities with prepayment features may not increase as much as other fixed income securities. Adjustable rate mortgage-related and other ABS are also subject to some interest rate risk. For example, because interest rates on most adjustable rate

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mortgage- and other ABS only reset periodically (e.g., monthly or quarterly), changes in prevailing interest rates (and particularly sudden and significant changes) can be expected to cause some fluctuations in the market value of these securities, including declines in value as interest rates rise. In addition, to the extent that unanticipated rates of prepayment on underlying mortgages increase the effective duration of a mortgage-related security, the volatility of such security can be expected to increase.

The residential mortgage market in the United States has experienced in the past, and could experience in the future, difficulties that may adversely affect the performance and market value of certain of the Fund's mortgage-related investments. Delinquencies, defaults and losses on residential mortgage loans may increase substantially over certain periods. A decline in or flattening of housing values may exacerbate such delinquencies and losses on residential mortgages. Borrowers with adjustable rate mortgage loans are more sensitive to changes in interest rates, which affect their monthly mortgage payments, and may be unable to secure replacement mortgages at comparably low interest rates. As a result of the 2008 financial crisis, a number of residential mortgage loan originators experienced serious financial difficulties or bankruptcy. Owing largely to the foregoing, reduced investor demand for mortgage loans and mortgage-related securities and increased investor yield requirements caused limited liquidity in the secondary market for certain mortgage-related securities, which adversely affected the market value of mortgage-related securities. It is possible that such limited liquidity in such secondary markets could recur or worsen in the future.

***Agency Mortgage-Related Securities.*** Payment of principal and interest on some mortgage pass-through securities (but not the market value of the securities themselves) may be guaranteed by the full faith and credit of the U.S. government (in the case of securities guaranteed by GNMA) or guaranteed by agencies or instrumentalities of the U.S. government (in the case of securities guaranteed by the FNMA or the FHLMC). The principal governmental guarantor of mortgage-related securities is GNMA. GNMA is a wholly-owned U.S. government corporation within the U.S. Department of Housing and Urban Development (the "Department of Housing and Urban Development"). GNMA is authorized to guarantee, with the full faith and credit of the U.S. government, the timely payment of principal and interest on securities issued by institutions approved by GNMA (such as savings and loan institutions, commercial banks and mortgage bankers) and backed by pools of mortgages insured by the Federal Housing Administration (the "FHA"), or guaranteed by the Department of Veterans Affairs (the "VA").

Government-related guarantors (i.e., not backed by the full faith and credit of the U.S. government) include FNMA and FHLMC. FNMA is a government-sponsored corporation. FNMA primarily purchases conventional (i.e., not insured or guaranteed by any government agency) residential mortgages from a list of approved seller/servicers, which includes state and federally chartered savings and loan associations, mutual savings banks, commercial banks, credit unions and mortgage bankers. Pass-through securities issued by FNMA are guaranteed as to timely payment of principal and interest by FNMA but are not backed by the full faith and credit of the U.S. government.

FNMA and FHLMC also securitize RPLs. For example, in FNMA's case, the RPLs are single-family, fixed rate reperforming loans that generally were previously placed in a mortgage-backed securities trust guaranteed by FNMA, purchased from the trust by FNMA and held as a distressed asset after four or more months of delinquency, and subsequently became current (i.e., performing) again. Such RPLs may have exited delinquency through efforts at reducing defaults (e.g., loan modification). In selecting RPLs for securitization, FNMA follows certain criteria related to length of time the loan has been performing, the type of loan (single-family, fixed rate), and the status of the loan as first lien, among other things. FNMA may include different loan structures and modification programs in the future.

Since September 6, 2008, FNMA and FHLMC have operated under a conservatorship administered by the Federal Housing Finance Agency ("FHFA"). As the conservator, FHFA succeeded to all rights, titles, powers and privileges of FNMA and FHLMC and of any stockholder, officer or director of FNMA and FHLMC with respect to FNMA and FHLMC and the assets of FNMA and FHLMC. In connection with the conservatorship, the U.S. Department of the

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Treasury (the "U.S. Treasury") entered into a Senior Preferred Stock Purchase Agreement to provide additional financing to FNMA and FHLMC.

FNMA and FHLMC continue to operate as going concerns while in conservatorship and each remains liable for all of its obligations, including its guaranty obligations, associated with its mortgage-backed securities. The Senior Preferred Stock Purchase Agreement is intended to enhance each of FNMA's and FHLMC's ability to meet its obligations. The FHFA has indicated that the conservatorship of each enterprise will end when the director of FHFA determines that FHFA's plan to restore the enterprise to a safe and solvent condition has been completed.

Under the Federal Housing Finance Regulatory Reform Act of 2008 (the "Reform Act"), which was included as part of the Housing and Economic Recovery Act of 2008, FHFA, as conservator or receiver, has the power to repudiate any contract entered into by FNMA or FHLMC prior to FHFA's appointment as conservator or receiver, as applicable, if FHFA determines, in its sole discretion, that performance of the contract is burdensome and that repudiation of the contract promotes the orderly administration of FNMA's or FHLMC's affairs. The Reform Act requires FHFA to exercise its right to repudiate any contract within a reasonable period of time after its appointment as conservator or receiver.

FHFA, in its capacity as conservator, has indicated that it has no intention to repudiate the guaranty obligations of FNMA or FHLMC because FHFA views repudiation as incompatible with the goals of the conservatorship. However, in the event that FHFA, as conservator or if it is later appointed as receiver for FNMA or FHLMC, were to repudiate any such guaranty obligation, the conservatorship or receivership estate, as applicable, would be liable for actual direct compensatory damages in accordance with the provisions of the Reform Act. Any such liability could be satisfied only to the extent of FNMA's or FHLMC's assets available therefor.

In the event of repudiation, the payments of interest to holders of FNMA or FHLMC mortgage-backed securities would be reduced if payments on the mortgage loans represented in the mortgage loan groups related to such mortgage-backed securities are not made by the borrowers or advanced by the servicer. Any actual direct compensatory damages for repudiating these guaranty obligations may not be sufficient to offset any shortfalls experienced by such mortgage-backed security holders.

Further, in its capacity as conservator or receiver, FHFA has the right to transfer or sell any asset or liability of FNMA or FHLMC without any approval, assignment or consent. Although FHFA has stated that it has no present intention to do so, if FHFA, as conservator or receiver, were to transfer any such guaranty obligation to another party, holders of FNMA or FHLMC mortgage-backed securities would have to rely on that party for satisfaction of the guaranty obligation and would be exposed to the credit risk of that party.

In addition, certain rights provided to holders of mortgage-backed securities issued by FNMA and FHLMC under the operative documents related to such securities may not be enforced against FHFA, or enforcement of such rights may be delayed, during the conservatorship or any future receivership. The operative documents for FNMA and FHLMC mortgage-backed securities may provide (or with respect to securities issued prior to the date of the appointment of the conservator may have provided) that upon the occurrence of an event of default on the part of FNMA or FHLMC, in its capacity as guarantor, which includes the appointment of a conservator or receiver, holders of such mortgage-backed securities have the right to replace FNMA or FHLMC as trustee if the requisite percentage of mortgage-backed securities holders consent. The Reform Act prevents mortgage-backed security holders from enforcing such rights if the event of default arises solely because a conservator or receiver has been appointed. The Reform Act also provides that no person may exercise any right or power to terminate, accelerate or declare an event of default under certain contracts to which FNMA or FHLMC is a party, or obtain possession of or exercise control over any property of FNMA or FHLMC, or affect any contractual rights of FNMA or FHLMC, without the approval of FHFA, as conservator or receiver, for a period of 45 or 90 days following the appointment of FHFA as conservator or receiver, respectively.

FHFA and the White House have made public statements regarding plans to consider ending the conservatorships of FNMA and FHLMC. In the event that FNMA and FHLMC are taken out of conservatorship, it is unclear how the capital structure of FNMA and FHLMC would be constructed and what effects, if any, there may be on FNMA's and FHLMC's creditworthiness and guarantees of certain mortgage-backed securities. It is also unclear whether the U.S. Treasury would continue to enforce its rights or perform its obligations under the Senior Preferred Stock

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Programs. Should FNMA's and FHLMC's conservatorship end, there could be an adverse impact on the value of their securities, which could cause losses to the Fund.

FNMA and FHLMC have entered into a joint initiative to develop and operate a common securitization platform for the issuance of a uniform mortgage-backed security (the "Single Security Initiative") that aligns the characteristics of FNMA and FHLMC certificates. In June 2019, under the Single Security Initiative, FNMA and FHLMC started issuing uniform mortgage-backed securities in place of their current offerings of to-be-announced-eligible securities. The Single Security Initiative seeks to support the overall liquidity of the to-be-announced ("TBA") market and aligns the characteristics of FNMA and FHLMC certificates. The long-term effects that the Single Security Initiative may have on the market for TBA and other mortgage-backed securities are uncertain.

However, timely payment of interest and principal of these pools may be supported by various forms of insurance or guarantees, including individual loan, title, pool and hazard insurance and letters of credit, which may be issued by governmental entities, private insurers or the mortgage poolers. The insurance and guarantees are issued by governmental entities, private insurers or the mortgage poolers. Such insurance and guarantees, and the creditworthiness of the issuers thereof, will be considered in determining whether a mortgage-related security meets the Fund's investment quality standards. There can be no assurance that insurers or guarantors can meet their obligations under the insurance policies or guarantee arrangements. The Fund may buy mortgage-related securities without insurance or guarantees. Securities issued by certain private organizations may not be readily marketable. Please refer to "Illiquid Investments" for further discussion of regulatory considerations and constraints relating to investment liquidity.

Privately issued mortgage-related securities are 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. As a result, the mortgage loans underlying privately issued mortgage-related securities may, and frequently do, have less favorable collateral, credit risk or other underwriting characteristics than government or government-sponsored mortgage-related securities and have wider variances in a number of terms including interest rate, term, size, purpose and borrower characteristics. Mortgage pools underlying privately issued mortgage-related securities more frequently include second mortgages, high loan-to-value ratio mortgages and manufactured housing loans, in addition to commercial mortgages and other types of mortgages where a government or government sponsored entity guarantee is not available. The coupon rates and maturities of the underlying mortgage loans in a privately-issued mortgage-related securities pool may vary to a greater extent than those included in a government guaranteed pool, and the pool may include subprime mortgage loans. Subprime loans are loans made to borrowers with weakened credit histories or with a lower capacity to make timely payments on their loans. For these reasons, the loans underlying these securities have had in many cases higher default rates than those loans that meet government underwriting requirements.

The risk of non-payment is greater for mortgage-related securities that are backed by loans that were originated under weak underwriting standards, including loans made to borrowers with limited means to make repayment. A level of risk exists for all loans, although, historically, the poorest performing loans have been those classified as subprime. Other types of privately issued mortgage-related securities, such as those classified as pay-option adjustable rate or Alt-A have also performed poorly. Even loans classified as prime have experienced higher levels of delinquencies and defaults. The substantial decline in real property values across the U.S. has exacerbated the level of losses that investors in privately issued mortgage-related securities have experienced. It is not certain when these trends may reverse. Market factors that may adversely affect mortgage loan repayment include adverse economic conditions, unemployment, a decline in the value of real property, or an increase in interest rates.

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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.

The Fund may purchase privately issued mortgage-related securities that are originated, packaged and serviced by third party entities. It is possible these third parties could have interests that are in conflict with the holders of mortgage-related securities, and such holders (such as the Fund) could have rights against the third parties or their affiliates. For example, if a loan originator, servicer or its affiliates engaged in negligence or willful misconduct in carrying out its duties, then a holder of the mortgage-related security could seek recourse against the originator/servicer or its affiliates, as applicable. Also, as a loan originator/servicer, the originator/servicer or its affiliates may make certain representations and warranties regarding the quality of the mortgages and properties underlying a mortgage-related security. If one or more of those representations or warranties is false, then the holders of the mortgage-related securities (such as the Fund) could trigger an obligation of the originator/servicer or its affiliates, as applicable, to repurchase the mortgages from the issuing trust.

Notwithstanding the foregoing, many of the third parties that are legally bound by trust and other documents have failed to perform their respective duties, as stipulated in such trust and other documents, and investors have had limited success in enforcing terms. To the extent third party entities involved with privately issued mortgage-related securities are involved in litigation relating to the securities, actions may be taken that are adverse to the interests of holders of the mortgage-related securities, including the Fund. For example, third parties may seek to withhold proceeds due to holders of the mortgage-related securities, including the Fund, to cover legal or related costs. Any such action could result in losses to the Fund.

The assets underlying mortgage-related securities may be represented by a portfolio of residential or commercial mortgages (including both whole mortgage loans and mortgage participation interests that may be senior or junior in terms of priority of repayment) or portfolios of mortgage pass-through securities issued or guaranteed by GNMA, FNMA or FHLMC. Mortgage loans underlying a mortgage-related security may in turn be insured or guaranteed by the FHA or the VA. In the case of privately issued mortgage-related securities whose underlying assets are neither U.S. government securities nor U.S. government-insured mortgages, to the extent that real properties securing such assets may be located in the same geographical region, the security may be subject to a greater risk of default than other comparable securities in the event of adverse economic, political or business developments that may affect such region and, ultimately, the ability of residential homeowners to make payments of principal and interest on the underlying mortgages.

***Collateralized Mortgage Obligations.*** A CMO is a debt obligation of a legal entity that is collateralized by mortgages and divided into classes. Similar to a bond, interest and prepaid principal is paid, in most cases, semi-annually or on a monthly basis. CMOs may be collateralized by whole mortgage loans or private mortgage bonds, but are more typically collateralized by portfolios of mortgage pass-through securities guaranteed by GNMA, FHLMC, or FNMA, and their income streams.

CMOs are structured into multiple classes, often referred to as "tranches," with each class bearing a different stated maturity and entitled to a different schedule for payments of principal and interest, including prepayments. Actual maturity and average life will depend upon the prepayment experience of the collateral. In the case of certain CMOs (known as "sequential pay" CMOs), payments of principal received from the pool of underlying mortgages, including prepayments, are applied to the classes of CMOs in the order of their respective final distribution dates. Thus, no payment of principal will be made to any class of sequential pay CMOs until all other classes having an earlier final distribution date have been paid in full.

In a typical CMO transaction, a corporation ("issuer") issues multiple series (e.g., A, B, C, Z) of CMO bonds ("Bonds"). Proceeds of the Bond offering are used to purchase mortgages or mortgage pass-through certificates ("Collateral"). The Collateral is pledged to a third party trustee as security for the Bonds. Principal and interest payments from the Collateral are used to pay principal on the Bonds in the order A, B, C, Z. The Series A, B, and C Bonds all bear current interest. Interest on the Series Z Bond is accrued and added to principal and a like amount is paid as principal on the Series A, B, or C Bond currently being paid off. When the Series A, B, and C Bonds are paid in full, interest and principal on the Series Z Bond begins to be paid currently.

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CMOs may be less liquid and may exhibit greater price volatility than other types of mortgage- or asset-backed securities.

As CMOs have evolved, some classes of CMO bonds have become more common. For example, the Fund may invest in parallel-pay and planned amortization class ("PAC") CMOs and multi-class pass-through certificates. Parallel-pay CMOs and multi-class pass-through certificates are structured to provide payments of principal on each payment date to more than one class. These simultaneous payments are taken into account in calculating the stated maturity date or final distribution date of each class, which, as with other CMO and multi-class pass-through structures, must be retired by its stated maturity date or final distribution date but may be retired earlier. PACs generally require payments of a specified amount of principal on each payment date. PACs are parallel-pay CMOs with the required principal amount on such securities having the highest priority after interest has been paid to all classes. Any CMO or multi-class pass-through structure that includes PAC securities must also have support tranches-known as support bonds, companion bonds or non-PAC bonds-which lend or absorb principal cash flows to allow the PAC securities to maintain their stated maturities and final distribution dates within a range of actual prepayment experience. These support tranches are subject to a higher level of maturity risk compared to other mortgage-related securities, and usually provide a higher yield to compensate investors. If principal cash flows are received in amounts outside a pre-determined range such that the support bonds cannot lend or absorb sufficient cash flows to the PAC securities as intended, the PAC securities are subject to heightened maturity risk. Consistent with the Fund's investment objectives and policies, PIMCO may invest in various tranches of CMO bonds, including support bonds.

CMOs that are issued or guaranteed by the U.S. government or by any of its agencies or instrumentalities will be considered U.S. government securities by the Fund, while other CMOs, even if collateralized by U.S. government securities, will have the same status as other privately issued securities for purposes of applying the Fund's diversification tests.

***FHLMC Collateralized Mortgage Obligations***. FHLMC CMOs are debt obligations of FHLMC issued in multiple classes having different maturity dates which are secured by the pledge of a pool of conventional mortgage loans purchased by FHLMC. Payments of principal and interest on the CMOs are made semi-annually, as opposed to monthly. The amount of principal payable on each semi-annual payment date is determined in accordance with FHLMC's mandatory sinking fund schedule, which in turn, is equal to approximately 100% of FHA prepayment experience applied to the mortgage collateral pool. All sinking fund payments in the CMOs are allocated to the retirement of the individual classes of bonds in the order of their stated maturities. Payment of principal on the mortgage loans in the collateral pool in excess of the amount of FHLMC's minimum sinking fund obligation for any payment date are paid to the holders of the CMOs as additional sinking fund payments. Because of the "pass-through" nature of all principal payments received on the collateral pool in excess of FHLMC's minimum sinking fund requirement, the rate at which principal of the CMOs is actually repaid is likely to be such that each class of bonds will be retired in advance of its scheduled maturity date.

If collection of principal (including prepayments) on the mortgage loans during any semi-annual payment period is not sufficient to meet FHLMC's minimum sinking fund obligation on the next sinking fund payment date, FHLMC agrees to make up the deficiency from its general funds.

Criteria for the mortgage loans in the pool backing the FHLMC CMOs are identical to those of FHLMC PCs. FHLMC has the right to substitute collateral in the event of delinquencies and/or defaults.

***Commercial Mortgage-Backed Securities***. Commercial mortgage-backed securities include securities that reflect an interest in, and are secured by, mortgage loans on commercial real property. Many of the risks of investing in commercial mortgage-backed securities reflect the risks of investing in the real estate securing the underlying mortgage loans. These risks reflect the effects of local and other economic conditions on real estate markets, the ability of tenants to make loan payments, and the ability of a property to attract and retain tenants. Commercial mortgage-backed securities may be less liquid and exhibit greater price volatility than other types of mortgage- or asset-backed securities.

***CMO Residuals.*** CMO residuals are mortgage securities issued by agencies or instrumentalities of the U.S. government or by private originators of, or investors in, mortgage loans, including savings and loan associations, homebuilders, mortgage banks, commercial banks, investment banks and special purpose entities of the foregoing.

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The cash flow generated by the mortgage assets underlying a series of CMOs is applied first to make required payments of principal and interest on the CMOs and second to pay the related administrative expenses and any management fee of the issuer. The residual in a CMO structure generally represents the interest in any excess cash flow remaining after making the foregoing payments. Each payment of such excess cash flow to a holder of the related CMO residual represents income and/or a return of capital. The amount of residual cash flow resulting from a CMO will depend on, among other things, the characteristics of the mortgage assets, the coupon rate of each class of CMO, prevailing interest rates, the amount of administrative expenses and the prepayment experience on the mortgage assets. In particular, the yield to maturity on CMO residuals is extremely sensitive to prepayments on the related underlying mortgage assets, in the same manner as an interest-only ("IO") class of SMBS. See "Stripped Mortgage-Backed Securities" below. In addition, if a series of a CMO includes a class that bears interest at an adjustable rate, the yield to maturity on the related CMO residual will also be extremely sensitive to changes in the level of the index upon which interest rate adjustments are based. As described below with respect to SMBSs, in certain circumstances the Fund may fail to recoup fully its initial investment in a CMO residual.

CMO residuals are generally purchased and sold by institutional investors through several investment banking firms acting as brokers or dealers. In addition, CMO residuals may, or pursuant to an exemption therefrom, may not, have been registered under the Securities Act of 1933, as amended (the "Securities Act"). CMO residuals, whether or not registered under the Securities Act, may be subject to certain restrictions on transferability. Please refer to "Illiquid Investments" for further discussion of regulatory considerations and constraints relating to investment liquidity.

***Adjustable Rate Mortgage-Backed Securities***. Adjustable rate mortgage-backed securities ("ARMBSs") have interest rates that reset at periodic intervals. Acquiring ARMBSs permits the Fund to participate in increases in prevailing current interest rates through periodic adjustments in the coupons of mortgages underlying the pool on which ARMBSs are based. In addition, when prepayments of principal are made on the underlying mortgages during periods of rising interest rates, the Fund can reinvest the proceeds of such prepayments at rates higher than those at which they were previously invested. Mortgages underlying most ARMBSs, however, have limits on the allowable annual or lifetime increases that can be made in the interest rate that the mortgagor pays. Therefore, if current interest rates rise above such limits over the period of the limitation, the Fund, when holding an ARMBS, does not benefit from further increases in interest rates. Moreover, when interest rates are in excess of coupon rates (i.e., the rates being paid by mortgagors) of the mortgages, ARMBSs behave more like fixed income securities and less like adjustable rate securities and are subject to the risks associated with fixed income securities. In addition, during periods of rising interest rates, increases in the coupon rate of adjustable rate mortgages generally lag current market interest rates slightly, thereby creating the potential for capital depreciation on such securities.

***Stripped Mortgage-Backed Securities.*** SMBS are derivative multi-class mortgage securities. SMBS may be issued by agencies or instrumentalities of the U.S. government, or by private originators of, or investors in, mortgage loans, including savings and loan associations, mortgage banks, commercial banks, investment banks and special purpose entities of the foregoing.

SMBS are usually structured with two classes that receive different proportions of the interest and principal distributions on a pool of mortgage assets. A common type of SMBS will have one class receiving some of the interest and most of the principal from the mortgage assets, while the other class will receive most of the interest and the remainder of the principal. In the most extreme case, one class will receive all of the interest (the "IO" class), while the other class will receive all of the principal (the principal-only or "PO" class). The yield to maturity on an IO class is extremely sensitive to the rate of principal payments (including prepayments) on the related underlying mortgage assets, and a rapid rate of principal payments may have a material adverse effect on the Fund's yield to maturity from these securities. If the underlying mortgage assets experience greater than anticipated prepayments of principal, the Fund may fail to recoup some or all of its initial investment in these securities even if the security is in one of the highest rating categories.

***Other Mortgage-Related Securities.*** Other mortgage-related securities include securities other than those described above that directly or indirectly represent a participation in, or are secured by and payable from, mortgage loans on real property, including mortgage dollar rolls/buy backs, CMO residuals or SMBS. Other mortgage-related securities may be equity or debt securities issued by agencies or instrumentalities of the U.S. government or by private originators of, or investors in, mortgage loans, including savings and loan associations, homebuilders, mortgage banks, commercial banks, investment banks, partnerships, trusts and special purpose entities of the foregoing.

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Mortgage-related securities include, among other things, securities that reflect an interest in reverse mortgages. In a reverse mortgage, a lender makes a loan to a homeowner based on the homeowner's equity in his or her home. Repayment of the interest or principal for the loan is generally not required until the homeowner dies, sells the home, or ceases to use the home as his or her primary residence.

There are three general types of reverse mortgages: (1) single-purpose reverse mortgages, which are offered by certain state and local government agencies and nonprofit organizations; (2) federally-insured reverse mortgages, which are backed by the Department of Housing and Urban Development; and (3) proprietary reverse mortgages, which are privately offered loans. A mortgage-related security may be backed by a single type of reverse mortgage. Reverse mortgage-related securities include agency and privately issued mortgage-related securities. The principal government guarantor of reverse mortgage-related securities is GNMA.

Reverse mortgage-related securities may be subject to risks different than other types of mortgage-related securities due to the unique nature of the underlying loans. The date of repayment for such loans is uncertain and may occur sooner or later than anticipated. The timing of payments for the corresponding mortgage-related security may be uncertain. The loans may react differently than traditional home loans to market events, in light of differences in the ways reverse mortgages are structured, qualifying requirements, among other reasons. Additionally, there can be no assurance that service providers to reverse mortgage trusts ("RMTs") will diligently and appropriately execute their duties with respect to servicing such trusts. As a result, investors (which may include the Fund) in notes issued by RMTs may be deprived of payments to which they are entitled. This could result in losses to the Fund. Investors, including the Fund, may determine to pursue negotiations or legal claims or otherwise seek compensation from RMT service providers in certain instances. This may involve the Fund incurring costs and expenses associated with such actions.

***Asset-Backed Securities.*** The Fund may invest in, or have exposure to, ABS, which are securities that represent a participation in, or are secured by and payable from, a stream of payments generated by particular assets, most often a pool or pools of similar assets (e.g., trade receivables). ABS are created from many types of assets, including, but not limited to, auto loans, accounts receivable such as credit card receivables and hospital account receivables, home equity loans, student loans, boat loans, mobile home loans, recreational vehicle loans, manufactured housing loans, aircraft leases, computer leases, syndicated bank loans, peer-to-peer loans and litigation finance loans. These loans or other receivables are subject to risks of prepayment, delinquency and default similar to those present in mortgage loans. Consumer loans may be backed by collateral (as in automobile loans) or they may be unsecured. Moreover, Congress, regulators, such as the Consumer Financial Protection Bureau, and the individual states may further regulate the consumer credit industry in ways that make it more difficult for servicers of such loans to collect payments on such loans, resulting in reduced collections. Changes to federal or state bankruptcy or debtor relief laws may also impede collection efforts or alter timing and amount of collections. The credit quality of an ABS transaction depends on the performance of the underlying assets. To protect ABS investors from the possibility that some borrowers could miss payments or even default on their loans, ABS include various forms of credit enhancement.

The underlying assets (e.g., loans) are subject to prepayments that shorten the securities' weighted average maturity and may lower their return. If the credit support or enhancement is exhausted, losses or delays in payment may result if the required payments of principal and interest are not made. The value of these securities also may change because of changes in the market's perception of the creditworthiness of the servicing agent for the pool, the originator of the pool, or the financial institution or trust providing the credit support or enhancement. Typically, there is no perfected security interest in the collateral that relates to the financial assets that support ABS. ABS have many of the same characteristics and risks as the mortgage-backed securities described above.

The Fund may purchase or have exposure to commercial paper, including asset-backed commercial paper ("ABCP"), that is issued by structured investment vehicles or other conduits. These conduits may be sponsored by mortgage companies, investment banking firms, finance companies, hedge funds, private equity firms and special purpose finance entities. ABCP typically refers to a short-term debt security, the payment of which is supported by cash flows from underlying assets, or one or more liquidity or credit support providers, or both. Assets backing ABCP include credit card, car loan and other consumer receivables and home or commercial mortgages, including subprime mortgages. The repayment of ABCP issued by a conduit depends primarily on the cash collections received from the conduit's underlying asset portfolio and the conduit's ability to issue new ABCP. Therefore, there could be losses to the Fund if investing in ABCP in the event of credit or market value deterioration in the conduit's underlying portfolio, mismatches in the timing of the cash flows of the underlying asset interests and the repayment obligations of maturing

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ABCP, or the conduit's inability to issue new ABCP. To protect investors from these risks, ABCP programs may be structured with various protections, such as credit enhancement, liquidity support, and commercial paper stop-issuance and wind-down triggers. However, there can be no guarantee that these protections will be sufficient to prevent losses to investors in ABCP. Some ABCP programs provide for an extension of the maturity date of the ABCP if, on the related maturity date, the conduit is unable to access sufficient liquidity through the issue of additional ABCP. This may delay the sale of the underlying collateral and the Fund may incur a loss if the value of the collateral deteriorates during the extension period. Alternatively, if collateral for ABCP deteriorates in value, the collateral may be required to be sold at inopportune times or at prices insufficient to repay the principal and interest on the ABCP. ABCP programs may provide for the issuance of subordinated notes as an additional form of credit enhancement. The subordinated notes are typically of a lower credit quality and have a higher risk of default. To the extent the Fund purchases these subordinated notes, it will have a higher likelihood of loss than investors in the senior notes.

Some ABS, particularly home equity loan transactions, are subject to interest-rate risk and prepayment risk. A change in interest rates can affect the pace of payments on the underlying loans, which in turn, affects total return on the securities. ABS also carry credit or default risk. If many borrowers on the underlying loans default, losses could exceed the credit enhancement level and result in losses to investors in an ABS transaction. Additionally, the value of ABS is subject to risks associated with the servicers' performance. 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 the security holders in and to the underlying collateral. Finally, ABS have structure risk due to a unique characteristic known as early amortization, or early payout, risk. Built into the structure of most ABS are triggers for early payout, designed to protect investors from losses. These triggers are unique to each transaction and can include: a big rise in defaults on the underlying loans, a sharp drop in the credit enhancement level, or even the bankruptcy of the originator. Once early amortization begins, all incoming loan payments (after expenses are paid) are used to pay investors as quickly as possible based upon a predetermined priority of payment.

Consistent with the Fund's investment objectives and policies, PIMCO also may invest in other types of ABS (such as credit card receivables or student loans). Other ABS may be collateralized by the fees earned by service providers. The value of ABS may be substantially dependent on the servicing of the underlying asset pools and is therefore subject to risks associated with the negligence by, or defalcation of, their servicers. In certain circumstances, the mishandling of related documentation may also affect the rights of the security holders in and to the underlying collateral. The insolvency of entities that generate receivables or that utilize the assets may result in added costs and delays in addition to losses associated with a decline in the value of the underlying assets.

Investors should note that Congress from time to time may consider actions that would limit or remove the explicit or implicit guarantee of the payment of principal and/or interest on many types of ABS. Any such action would likely adversely impact the value of such securities.

***Collateralized Bond Obligations, Collateralized Loan Obligations and Other Collateralized Debt Obligations.*** The Fund may invest in each of CBOs, CLOs, other CDOs and other similarly structured securities. CBOs, CLOs and other CDOs are types of ABS. A CBO is a trust that is often backed by a diversified pool of high risk, below investment grade fixed income securities. The collateral can be from many different types of fixed income securities such as high-yield debt, residential privately issued mortgage-related securities, commercial privately issued mortgage-related securities, trust preferred securities and emerging market debt. A CLO is a trust typically collateralized by a pool of loans, which may include, among others, domestic and foreign senior secured loans, senior unsecured loans and subordinate corporate loans, including loans that may be rated below investment grade or equivalent unrated loans. Other CDOs are trusts backed by other types of assets representing obligations of various parties. CBOs, CLOs and other CDOs may charge management fees and administrative expenses.

For CBOs, CLOs and other 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 bears the first loss from any defaults from the bonds or loans in the trust, although more senior tranches may also bear losses. Since it is partially protected from defaults, a senior tranche from a CBO trust, CLO trust or trust of another CDO typically has higher ratings and lower yields than their underlying securities, and can be rated investment grade. Despite the protection from the equity tranche, CBO, CLO or other CDO tranches can experience substantial losses due to actual defaults, increased sensitivity to defaults due to collateral default and disappearance of protecting tranches, market anticipation of defaults, as well as aversion to CBO, CLO or other CDO securities as a class.

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The risks of an investment in a CBO, CLO or other CDO vary depending on the type of the collateral securities and the class of the instrument in which the Fund invests, among other factors. Normally, CBOs, CLOs and other CDOs are privately offered and sold, and thus, are not registered under the securities laws. Please refer to "Illiquid Investments" below for further discussion of regulatory considerations and constraints relating to investment liquidity. In addition to the normal risks associated with fixed income securities discussed elsewhere in this Statement of Additional Information and the Prospectus (e.g., prepayment risk, credit risk, liquidity risk, market risk, structural risk, legal risk and interest rate risk (which may be exacerbated if the interest rate payable on a structured financing changes based on multiples of changes in interest rates or inversely to changes in interest rates) and default risk), CBOs, CLOs and other CDOs carry additional risks including, but are not limited to: (i) the possibility that distributions from collateral securities will not be adequate to make interest or other payments; (ii) the quality of the collateral may decline in value or default; (iii) the performance of a structure or the issuer thereof, the availability of any credit enhancement, the level and timing of payments and recoveries on and the characteristics of the underlying receivables, loans or other assets that are being securitized, remoteness of those assets from the originator or transferor, the adequacy of and ability to realize upon any related collateral and the capability of the servicer of the securitized assets; (iv) the price of a structured finance investment, if required to be sold, may also be subject to certain market and liquidity risks for securities of its type at the time of sale; (v) if the particular structured product is invested in a security in which a Fund is also invested, this would tend to increase a Fund's overall exposure to the credit of the issuer of such securities, at least on an absolute, if not on a relative basis; (vi) the assets collateralizing any CDO may have more correlated performance than expected at the time of structuring such CDO and therefore may perform worse than projected in a default scenario; (vii) the risk that the Fund may invest in CBOs, CLOs or other CDOs that are subordinate to other classes; and (viii) the complex structure of the security may not be fully understood at the time of investment and may produce disputes with the issuer or unexpected investment results.

**Real Estate Assets and Related Derivatives**

The Fund may generally gain exposure to the real estate sector by investing in real-estate linked derivatives, real estate investment trusts ("REITs"), pooled investment vehicles (including registered investment companies and private funds or other pooled investment vehicles that would qualify as "investment companies" under the Investment Company Act of 1940, as amended (the "Act" or "1940 Act") but for an applicable exemption or exclusion) that invest in real estate investments, and common, preferred and convertible securities of issuers in real estate-related industries. The Fund may also invest in loans or other investments secured by real estate (other than mortgage-backed securities) and may, as a result of default, foreclosure or otherwise, take possession of and hold real estate as a direct owner (see "Loans and Other Indebtedness; Loan Acquisitions, Participations and Assignments" below). Each of these types of investments are subject, directly or indirectly, to risks associated with ownership of real estate, including changes in the general economic climate or local conditions, including reduced demand for commercial and office space as well as increased maintenance or tenant improvement costs to convert properties for other uses, default risk of tenants and borrowers, the financial condition of tenants, buyers and sellers, and the inability to re-lease space on attractive terms or to obtain mortgage financing on a timely basis or at all, loss to casualty or condemnation, increases in property taxes and operating expenses, zoning law amendments, changes in interest rates, overbuilding and increased competition, including competition based on rental rates, variations in market value, changes in the financial condition of tenants, changes in operating costs, attractiveness and location of the properties, adverse changes in the real estate markets generally or in specific sectors of the real estate industry and possible environmental liabilities. Real estate income and values may also be affected by demographic trends, such as population shifts or changing tastes, preferences (such as remote work arrangements) and social values. Real estate-related investments may entail leverage and may be highly volatile.

REITs are pooled investment vehicles that own, and typically operate, income-producing real estate. Some REITs also finance real estate. If a REIT meets certain requirements, including distributing to shareholders substantially all of its taxable income (other than net capital gains), then it is generally not taxed on the income distributed to shareholders. REITs are subject to management fees and other expenses, and so the Fund would bear its proportionate share of the costs of the REITs' operations if it invests in REITs. Dividends received by the Fund from a REIT generally will not constitute qualified dividend income. REITs may not provide complete tax information to the Fund until after the calendar year-end. Consequently, because of the delay, it may be necessary for the Fund to request permission from the Internal Revenue Service ("IRS") to extend the deadline for issuance of Form 1099-DIV.

Along with the risks common to different types of real estate related securities, REITs, no matter the type, involve additional risk factors. These include poor performance by the REIT's manager, changes to the tax laws, and failure by

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the REIT to qualify for favorable tax treatment afforded to REITs under the Internal Revenue Code of 1986, as amended (the "Code"), or exemption under the 1940 Act. Furthermore, REITs are not typically diversified and are heavily dependent on cash flow. Investments in REIT equity securities could require the Fund to accrue and distribute income not yet received by the Fund. On the other hand, investments in REIT equity securities can also result in the Fund's receipt of cash in excess of the REIT's earnings; if the Fund distributes such amounts, such distribution could constitute a return of capital to Fund shareholders for federal income tax purposes. In addition, REITs are not typically diversified because they invest in a limited number of properties, a narrow geographic area, or a single type of property. Also, the organizational documents of a REIT may contain provisions that make changes in control of the REIT difficult and time-consuming. Finally, private REITs are not traded on a national securities exchange. As such, these products are generally illiquid, though they may offer limited liquidity or limited liquidity that may change. This reduces the ability of the Fund to redeem its investment early. Private REITs are also generally harder to value and may bear higher fees than public REITs.

Some of the REITs in which the Fund may invest may be permitted to hold senior or residual interests in real estate mortgage investment conduits ("REMICs") or debt or equity interests in taxable mortgage pools ("TMPs"). REMICs are special purpose vehicles used to pool mortgage loans and issue mortgage-backed securities. They are designed to hold a fixed pool of mortgages and issue multiple classes of interests, known as tranches, to investors. REMICs are treated as pass-through entities for tax purposes, meaning that income is passed directly to investors thereby avoiding double taxation. The primary purpose of REMICs is to securitize mortgage loans, providing liquidity and diversification to investors. The Fund may also hold interests in "Re-REMICs", which are interests in securitizations formed by the contribution of asset backed or other similar securities into a trust which then issues securities in various tranches. The Fund may participate in the creation of a Re-REMIC by contributing assets to the trust and receiving junior and/or senior securities in return. The purpose of Re-REMICs is to restructure existing mortgage-backed securities to better meet investor needs, manage risk and enhance liquidity. An interest in a Re-REMIC security may be riskier than the securities originally held by and contributed to the trust, and the holders of the Re-REMIC securities will bear the costs associated with the securitization. Both REMICs and Re-REMICs play significant roles in the mortgage-backed securities market, offering mechanisms for the securitization and re-securitization of mortgage loans.

**Foreign (Non-U.S.) Securities**

Subject to the limitations set forth in the Prospectus, the Fund may invest in instruments of corporate and other foreign (non-U.S.) issuers, and in instruments traded principally outside of the United States. The Fund may invest in sovereign and other debt securities issued by foreign governments and their respective sub-divisions, agencies or instrumentalities, government sponsored enterprises and supranational government entities. The Fund may also invest directly in foreign currencies, including currencies of emerging market countries.

The foreign securities in which the Fund may invest include without limit Eurodollar obligations and "Yankee Dollar" obligations. Eurodollar obligations are U.S. dollar-denominated certificates of deposit and time deposits issued outside the U.S. capital markets by foreign branches of U.S. banks and by foreign banks. Yankee Dollar obligations are U.S. dollar-denominated obligations issued in the U.S. capital markets by foreign banks. Eurodollar and Yankee Dollar obligations are generally subject to the same risks that apply to domestic debt issues, notably credit risk, interest rate risk, market risk and liquidity risk. Additionally, Eurodollar (and to a limited extent, Yankee Dollar) obligations are subject to certain sovereign risks. One such risk is the possibility that a sovereign country might prevent capital, in the form of U.S. dollars, from flowing across its borders. Other risks include adverse political and economic developments; the extent and quality of government regulation of financial markets and institutions; the imposition of foreign withholding or other taxes; and the expropriation or nationalization of foreign issuers.

The Fund may also invest in American Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs") or Global Depositary Receipts ("GDRs"). ADRs are U.S. dollar-denominated receipts issued generally by domestic banks and represent the deposit with the bank of a security of a non-U.S. issuer. EDRs are foreign currency-denominated receipts similar to ADRs and are issued and traded in Europe, and are publicly traded on exchanges or over-the-counter ("OTC") in the United States. GDRs may be offered privately in the United States and also trade in public or private markets in other countries. ADRs, EDRs and GDRs may be issued as sponsored or unsponsored programs. In sponsored programs, an issuer has made arrangements to have its securities trade in the form of ADRs, EDRs or GDRs. In unsponsored programs, the issuer may not be directly involved in the creation of the program. Although regulatory requirements with respect to sponsored and unsponsored programs are generally

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similar, in some cases it may be easier to obtain financial information from an issuer that has participated in the creation of a sponsored program.

Investing in non-U.S. securities involves special risks and considerations not typically associated with investing in U.S. securities. These include: differences in accounting, auditing and financial reporting standards, legal and corporate governance standards, generally higher commission rates on non-U.S. portfolio transactions, the possibility of expropriation or confiscatory taxation, adverse changes in investment or exchange control regulations (which may include suspension of the ability to transfer currency from a country), market disruption, the possibility of security suspensions, political instability which can affect U.S. investments in non-U.S. countries, the imposition of sanctions and other similar measures and potential restrictions on the flow of international capital. In addition, foreign securities and the Fund's income in respect of those securities may be subject to foreign taxes, including taxes withheld from payments on those securities, which would reduce the Fund's return on such securities. Non-U.S. securities often trade with less frequency and volume than domestic securities and therefore may exhibit greater price volatility. Changes in foreign exchange rates will affect the value of those securities that are denominated or quoted in currencies other than the U.S. dollar. The currencies of non-U.S. countries may experience significant declines against the U.S. dollar, and devaluation may occur subsequent to investments in these currencies by the Fund.

Investment in sovereign debt can involve a high degree of risk. The governmental entity that controls the repayment of sovereign debt may not be able or willing to repay the principal and/or interest when due in accordance with the terms of the debt. A governmental entity's willingness or ability to repay principal and interest due in a timely manner may be affected by, among other factors, its cash flow situation, the extent of its foreign reserves, the availability of sufficient foreign exchange on the date a payment is due, the relative size of the debt service burden to the economy as a whole, the governmental entity's policy toward the International Monetary Fund, and the political constraints to which a governmental entity may be subject. Governmental entities also may depend on expected disbursements from foreign governments, multilateral agencies and others to reduce principal and interest arrearages on their debt. The commitment on the part of these governments, agencies and others to make such disbursements may be conditioned on a governmental entity's implementation of economic reforms and/or economic performance and the timely service of such debtor's obligations. Failure to implement such reforms, achieve such levels of economic performance or repay principal or interest when due may result in the cancellation of such third parties' commitments to lend funds to the governmental entity, which may further impair such debtor's ability or willingness to service its debts in a timely manner. Consequently, governmental entities may default on their sovereign debt. Holders of sovereign debt (including the Fund) may be requested to participate in the rescheduling of such debt and to extend further loans to governmental entities. There is no bankruptcy proceeding by which sovereign debt on which governmental entities have defaulted may be collected in whole or in part.

The investments in foreign currency denominated debt obligations, if any, and hedging activities by the Fund would likely produce a difference between the Fund's book income and its taxable income. This difference may cause a portion of the Fund's income distributions to constitute returns of capital for tax purposes or require the Fund to make distributions exceeding book income to qualify as a regulated investment company ("RIC") for U.S. federal tax purposes. The Fund's investments in non-U.S. securities may increase or accelerate the amount of ordinary income recognized by shareholders. See "Taxation."

*Euro- and European Union-related risks.* In the past, economic crisis brought several small economies in Europe to the brink of bankruptcy and many other economies into recession and weakened the banking and financial sectors of many European countries. For example, the governments of Greece, Spain, Portugal, and the Republic of Ireland experienced severe economic and financial difficulties between 2009 and 2012, an event that is commonly referred to as the "European sovereign debt crisis." As was the case during the European sovereign debt crisis, large public deficits could cause some European countries to become dependent on assistance from other European governments and institutions or other central banks or supranational agencies such as the International Monetary Fund. Assistance may be dependent on a country's implementation of reforms or reaching a certain level of performance. Failure to reach those objectives or an insufficient level of assistance could result in a deep economic downturn. Responses to economic or financial difficulties by European governments, central banks and others, including austerity measures and reforms, may be ineffective, may limit future economic growth or recovery, and/or may result in social unrest or other unintended consequences. Any of the foregoing events could significantly affect the value of the Fund's European investments.

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The national politics of European countries can be unpredictable and subject to influence by disruptive political groups or ideologies. The occurrence of conflicts, war or terrorist activities in Europe could have an adverse impact on financial markets. For example, Russia launched a large-scale invasion of Ukraine in February 2022. The extent, duration and impact of Russia's military action in Ukraine, related sanctions, trade restrictions and retaliatory actions are difficult to ascertain, but could be significant and have severe adverse effects on the region, and beyond including significant adverse effects on the regional, European, and global economies and the markets for certain securities and commodities, such as oil and natural gas, as well as other sectors, and on the Fund's investments in securities and instruments that are economically tied to the region, including declines in value and reductions in liquidity.

The Economic and Monetary Union of the European Union ("EMU") is comprised of the European Union ("EU") members that have adopted the euro currency. By adopting the euro as its currency, a member state relinquishes control of its own monetary policies. As a result, European countries are significantly affected by fiscal and monetary policies implemented by the EMU and European Central Bank. The euro currency may not fully reflect the strengths and weaknesses of the various economies that comprise the EMU and Europe generally.

It is possible that one or more EMU member countries could abandon the euro and return to a national currency and/or that the euro will cease to exist as a single currency in its current form. The effects of such an abandonment or a country's forced expulsion from the euro on that country, the rest of the EMU, and global markets are impossible to predict, but are likely to be negative. The exit of any country out of the euro may have an extremely destabilizing effect on other Eurozone countries and their economies and a negative effect on the global economy as a whole. Such an exit by one country may also increase the possibility that additional countries may exit the euro should they face similar financial difficulties. In addition, in the event of one or more countries' exit from the euro, it may be difficult to value investments denominated in euros or in a replacement currency.

*Investments in Russia.* The Fund may have investments in securities and instruments that are economically tied to Russia. In determining whether an instrument is economically tied to Russia, PIMCO uses the criteria for determining whether an instrument is economically tied to an emerging market country as set forth above under "Non-U.S. Securities." In addition to the risks listed above under "Non-U.S. Securities," investing in Russia presents additional risks. In particular, investments in Russia are subject to the risk that the United States and/or other countries may impose economic sanctions, export or import controls or other similar measures. 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 of securities transactions by certain investors, restricting dealings with entities that are critical to the infrastructure of securities and related transactions in specific jurisdictions, and freezing Russian assets or those of particular countries, entities or persons with ties to Russia (e.g., Belarus). Such sanctions or 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 objective. For example, certain investments in Russian companies or instruments tied to Russian companies 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 portfolio holdings at a disadvantageous time or price or to continue to hold investments that the Fund no longer seeks to hold. It is also possible that such sanctions, export or import controls, or other similar measures may prevent U.S.-based entities that provide services to the Fund from transacting with Russian or Belarusian entities. Under such circumstances, the Fund may not receive payments due with respect to certain investments, such as the payments due in connection with the Fund's holding of a fixed income security. In addition, such sanctions and 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. More generally, investments in Russian securities are highly speculative and involve significant risks and special considerations not typically associated with investments in the securities markets of the U.S. and most other developed countries. Over the past century, Russia has experienced political, social and economic turbulence and has endured decades of communist rule under which tens of millions of its citizens were collectivized into state agricultural and industrial enterprises. Since the collapse of the Soviet Union, Russia's government has been faced with the daunting task of stabilizing its domestic economy, while transforming it into a modern and efficient structure able to compete in international markets and respond to the needs of its citizens. However, to date, many of

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the country's economic reform initiatives have floundered. In this environment, there is always the risk that the nation's government will abandon the current program of economic reform and replace it with radically different political and economic policies that would be detrimental to the interests of foreign investors, a risk that has been at least partially realized in connection with Russia's countersanctions. Further changes could entail a return to a centrally planned economy and nationalization of private enterprises similar to what existed under the old Soviet Union.

Russia has attempted, and may attempt in the future, to assert its influence in the region surrounding it through economic or military measures. As a result of Russia's large-scale invasion of Ukraine, Russia, and other countries, persons and entities that have provided material aid to Russia's aggression against Ukraine, have been the subject of economic sanctions and import and export controls imposed by countries throughout the world, including the United States. Such measures have had and may continue to have an adverse effect on the Russian, Belarusian and other securities and economies, which may, in turn, negatively impact the Fund. 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, selling and financing restrictions, withdrawal of financial intermediaries, boycotts or changes in consumer or purchaser preferences, sanctions, export or 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. However, there is also a possibility that certain countries may begin to ease sanctions as part of a negotiated effort to achieve peace. In the event that some, but not all, relevant jurisdictions ease sanctions, the Fund may not be able to benefit from the easing of certain jurisdictions' sanctions.

Poor accounting standards, inept management, pervasive corruption, insider trading and crime, and inadequate regulatory protection for the rights of investors all pose a significant risk, particularly to foreign investors. In addition, there is the risk that the Russian tax system will not be reformed to prevent inconsistent, retroactive, and/or exorbitant taxation, or, in the alternative, the risk that a reformed tax system may result in the inconsistent and unpredictable enforcement of the new tax laws. Investments in Russia may be subject to the risk of nationalization or expropriation of assets. Regional armed conflict and its collateral economic and market effects may also pose risks for investments in Russia.

Compared to most national securities markets, the Russian securities market suffers from a variety of problems not encountered in more developed markets. There is little long-term historical data on the Russian securities market because it is relatively new and a substantial proportion of securities transactions in Russia are privately negotiated outside of stock exchanges. The inexperience of the Russian securities market and the limited volume of trading in securities in the market may make obtaining accurate prices on portfolio securities from independent sources more difficult than in more developed markets. Additionally, because of less stringent auditing and financial reporting standards than apply to U.S. companies, there may be little reliable corporate information available to investors. As a result, it may be difficult to assess the value or prospects of an investment in Russian companies. Securities of Russian companies also may experience greater price volatility than securities of U.S. companies. These issues can be magnified as a result of sanctions and other similar measures that may be imposed and the Russian government's response.

Because of the recent formation of the Russian securities market as well as the underdeveloped state of the banking and telecommunications systems, settlement, clearing and registration of securities transactions are subject to significant 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 still can 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 defined according to entries in the company's share register and normally evidenced by extracts from the register or by

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formal share certificates. These services may be carried out by the companies themselves or by registrars located throughout Russia. 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 even mere oversight. While the Fund will endeavor to ensure that its interest continues to be appropriately recorded either itself or through a custodian or other agent by inspecting the share register and by obtaining extracts of share registers through regular confirmations, these extracts have no legal enforceability and it is possible that subsequent illegal amendment or other fraudulent act may deprive the Fund of its ownership rights or improperly dilute its interests.

In addition, 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. Furthermore, significant delays or problems may occur in registering the transfer of securities, which could cause the Fund to incur losses due to a counterparty's failure to pay for securities the Fund has delivered or the Fund's inability to complete its contractual obligations because of theft or other reasons.

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. The Fund also may experience difficulty in obtaining and/or enforcing judgments in Russia.

The Russian economy is heavily dependent upon the export of a range of commodities including most industrial metals, forestry products, oil and gas. Accordingly, it is strongly affected by international commodity prices and is particularly vulnerable to any weakening in global demand for these products, and to sanctions or other actions that may be directed at the Russian economy as a whole or at Russian oil, natural gas, metals or timber industries.

Foreign investors also face a high degree of currency risk when investing in Russian securities and a lack of available currency hedging instruments. In addition, Russia has implemented certain capital controls on foreign portfolio investments and there is the risk that the Russian government will impose additional capital controls on foreign portfolio investments. Such capital controls may prevent the sale of a portfolio of foreign assets and the repatriation of investment income and capital.

***Political Risks/Risks of Conflicts.*** Recently, various countries have seen significant geopolitical conflicts and in some cases, civil wars may have had an adverse impact on the securities markets of the countries concerned. In addition, the occurrence of new disturbances due to acts of war, terrorism or other political developments cannot be excluded. Apparently stable systems may experience periods of disruption or improbable reversals of policy. Nationalization, expropriation or confiscatory taxation, currency blockage, political changes, government regulation, political, regulatory or social instability or uncertainty or diplomatic developments, including the imposition of sanctions (including tariffs), trade restrictions or other similar measures, could adversely affect the Fund's investments, whether or not the Fund is directly invested in the affected jurisdiction or impacted area. The transformation from a centrally planned, socialist economy to a more market oriented economy has also resulted in many economic and social disruptions and distortions. Moreover, there can be no assurance that the economic, regulatory and political initiatives necessary to achieve and sustain such a transformation will continue or, if such initiatives continue and are sustained, that they will be successful or that such initiatives will continue to benefit foreign (or non-national) investors. Certain instruments, such as inflation index instruments, may depend upon measures compiled by governments (or entities under their influence) which are also the obligors.

Recent examples of the risks above include heightened concerns of trade disputes, which could result in increased tariffs, trade restrictions or other retaliatory countermeasures. For example, the recent developments in relations between the United States and China, potential or actual conflict between China and Taiwan, loss of life and disaster

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connected to ongoing armed conflict between Russia and Ukraine in Europe, the Iranian conflict, the ongoing armed conflict between Hamas and Israel and the conflict in connection with U.S. intervention and political upheaval in Venezuela in South America. The extent, duration and impact of these conflicts, related sanctions, trade restrictions and retaliatory actions are difficult to ascertain, but could be significant and have severe adverse effects on the region and beyond, including significant adverse effects on the regional or global economies and the markets for certain securities, commodities and currencies. Depending on the nature of the military conflict, companies worldwide operating in many sectors, including energy, financial services and defense, amongst others may be impacted. These impacts could result in restricted or no access to certain markets, investments, service providers or counterparties, thus negatively affecting the Fund's investments in securities and instruments that are economically tied to the applicable region, and include (but are not limited to) declines in value and reductions in liquidity. Increased volatility, currency fluctuations, liquidity constraints, counterparty default, valuation and settlement difficulties and operational risk resulting from such conflicts may also negatively impact the performance of the Fund. Such events may result in otherwise historically "low-risk" strategies performing with unprecedented volatility and risk. In addition, to the extent new sanctions or trade restrictions are imposed or previously relaxed sanctions are reimposed (including with respect to countries undergoing transformation), such sanctions or trade restrictions may prevent the Fund from pursuing certain investments, cause delays or other impediments with respect to consummating such investments or divestments, require divestment or freezing of investments on unfavorable terms, render divestment of underperforming investments impracticable, negatively impact the Fund's ability to achieve its investment objective, prevent the Fund from receiving payments otherwise due it, increase diligence and other similar costs to the Fund, render valuation of affected investments challenging, or require the Fund to consummate an investment on terms that are less advantageous than would be the case absent such restrictions. Any of these outcomes could adversely affect the Fund's performance with respect to such investments, and thus the Fund's performance as a whole.

**Emerging Market Securities**

The Fund may invest in securities that are economically tied to an emerging market country. PIMCO generally considers an instrument to be economically tied to an emerging market country if: the issuer is organized under the laws of an emerging market country; the currency of settlement of the security is a currency of an emerging market country; the security is guaranteed by the government of an emerging market country (or any political subdivision, agency, authority or instrumentality of such government); for an asset-backed or other collateralized security, the country in which the collateral backing the security is located is an emerging market country; or the security's "country of exposure" is an emerging market country, as determined by the criteria set forth below.

With respect to derivative instruments, PIMCO generally considers such instruments to be economically tied to emerging market countries if the underlying assets are currencies of emerging market countries (or baskets or indexes of such currencies), or instruments or securities that are issued or guaranteed by governments of emerging market countries or by entities organized under the laws of emerging market countries or if an instrument's "country of exposure" is an emerging market country. A security's "country of exposure" is determined by PIMCO using certain factors provided by a third-party analytical service provider. The factors are applied in order such that the first factor to result in the assignment of a country determines the "country of exposure." Both the factors and the order in which they are applied may change in the discretion of PIMCO. The current factors, listed in the order in which they are applied, are: (i) if an asset-backed or other collateralized security, the country in which the collateral backing the security is located, (ii) the "country of risk" of the issuer, (iii) if the security is guaranteed by the government of a country (or any political subdivision, agency, authority or instrumentality of such government), the country of the government or instrumentality providing the guarantee, (iv) the "country of risk" of the issuer's ultimate parent, or (v) the country where the issuer is organized or incorporated under the laws thereof. "Country of risk" is a separate four-part test determined by the following factors, listed in order of importance: (i) management location, (ii) country of primary listing, (iii) sales or revenue attributable to the country, and (iv) reporting currency of the issuer. PIMCO has broad discretion to identify countries that it considers to qualify as emerging markets. In exercising such discretion, PIMCO identifies countries as emerging markets consistent with the strategic objectives of the Fund. For example, the Fund may consider a country to be an emerging market country based on a number of factors including, but not limited to, if the country is classified as an emerging or developing economy by any supranational organization such as the World Bank or the United Nations, or related entities, or if the country is considered an emerging market country for purposes of constructing emerging markets indices. In some cases, this approach may result in PIMCO identifying a particular country as an emerging market with respect to the Fund, that may not be identified as an emerging market with respect to other funds managed by PIMCO.

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The risks of investing in non-U.S. securities are particularly high when the issuers are tied economically to countries with developing or "emerging market" economies. Countries with "emerging market" economies are those with securities markets that are, in the opinion of PIMCO, less sophisticated than more developed markets in terms of participation by investors, analyst coverage, liquidity and regulation. Investing in emerging market countries involves certain risks not typically associated with investing in U.S. securities, and imposes risks greater than, or in addition to, risks of investing in non-U.S., developed countries. These risks include: greater risks of nationalization or expropriation of assets or confiscatory taxation; currency devaluations and other currency exchange rate fluctuations; greater social, economic and political uncertainty and instability (including the risk of war); more substantial government involvement in the economy; less government supervision and regulation of the securities markets and participants in those markets; controls on foreign investment and limitations on repatriation of invested capital and on the Fund's ability to exchange local currencies for U.S. dollars; unavailability of currency hedging techniques in certain emerging market countries; the fact that companies in emerging market countries may be smaller, less seasoned and newly organized companies; the difference in, or lack of, auditing and financial reporting standards, which may result in unavailability of material information about issuers; the risk that it may be more difficult to obtain and/or enforce a judgment in a court outside the United States; the imposition of sanctions or other similar measures; and greater price volatility, substantially less liquidity and significantly smaller market capitalization of securities markets. In addition, a number of emerging market countries restrict, to various degrees, foreign investment in securities, and high rates of inflation and rapid fluctuations in inflation rates have had, and may continue to have, negative effects on the economies and securities markets of certain emerging market countries. Also, any change in the leadership or politics of emerging market countries, or the countries that exercise a significant influence over those countries, may halt the expansion of or reverse the liberalization of foreign investment policies now occurring and adversely affect existing investment opportunities.

Emerging market countries typically have less established legal, accounting 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 against such issuers. Foreign issuers 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. In addition, countries with emerging securities markets may additionally experience problems with share registration, settlement and custody, which may result in losses to the Fund.

Nationalization, expropriation or confiscatory taxation, currency blockage, political changes or diplomatic developments, including the imposition of sanctions or other similar measures, could adversely affect the Fund's investments in a foreign 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 that country. The U.S. government may renegotiate some of its global trade relationships with foreign governments and may impose or threaten to impose significant tariffs. The imposition of tariffs, trade restrictions, currency restrictions or similar actions (or retaliatory measures taken in response to such actions) could contribute to volatility or overall declines in the U.S. and global investment markets. Adverse conditions in a certain region can adversely affect securities of other countries whose economies appear to be unrelated. To the extent the Fund invests in emerging market securities that are economically tied to a particular region, country or group of countries, the Fund may be more sensitive to adverse political or social events affecting that region, country or group of countries. Emerging markets may also be more susceptible to fraud, corruption, money laundering and economic sanctions risk, which may result in negative commercial consequences in relation to the value, liquidity, and tradability to those regions. Economic, business, political or social instability may affect emerging market securities differently, and often more severely, than developed market securities.

The Fund may also invest in Brady Bonds. Brady Bonds are securities created through the exchange of existing commercial bank loans to sovereign entities for new obligations in connection with debt restructurings under a debt restructuring plan introduced by former U.S. Secretary of the Treasury, Nicholas F. Brady (the "Brady Plan"). Brady Plan debt restructurings have been implemented in a number of countries, including: Argentina, Bolivia, Brazil, Bulgaria, Costa Rica, the Dominican Republic, Ecuador, Jordan, Mexico, Niger, Nigeria, Panama, Peru, the Philippines, Poland, Uruguay, and Venezuela. Beginning in the early 2000s, certain countries began retiring their Brady Bonds, including Brazil, Colombia, Mexico, the Philippines and Venezuela.

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Brady Bonds may be collateralized or uncollateralized, are issued in various currencies (primarily the U.S. dollar) and are actively traded in the OTC secondary market. Brady Bonds are not considered to be U.S. government securities. U.S. dollar-denominated, collateralized Brady Bonds, which may be fixed rate par bonds or floating rate discount bonds, are generally collateralized in full as to principal by U.S. Treasury zero coupon bonds having the same maturity as the Brady Bonds. Interest payments on these Brady Bonds generally are collateralized on a one-year or longer rolling-forward basis by cash or securities in an amount that, in the case of fixed rate bonds, is equal to at least one year of interest payments or, in the case of floating rate bonds, initially is equal to at least one year's interest payments based on the applicable interest rate at that time and is adjusted at regular intervals thereafter. Certain Brady Bonds are entitled to "value recovery payments" in certain circumstances, which in effect constitute supplemental interest payments but generally are not collateralized. Brady Bonds are often viewed as having three or four valuation components: (i) the collateralized repayment of principal at final maturity; (ii) the collateralized interest payments; (iii) the uncollateralized interest payments; and (iv) any uncollateralized repayment of principal at maturity (these uncollateralized amounts constitute the "residual risk").

Brady Bonds involve various risk factors including residual risk and the history of defaults with respect to commercial bank loans by public and private entities of countries issuing Brady Bonds. There can be no assurance that Brady Bonds in which the Fund may invest will not be subject to restructuring arrangements or to requests for new credit, which may cause the Fund to suffer a loss of interest or principal on any of its holdings.

**Foreign Currency Transactions**

The Fund may purchase and sell foreign currency options and foreign currency futures contracts and related options (see "Derivative Instruments"), and may engage in foreign currency transactions either on a spot (cash) basis at the rate prevailing in the currency exchange market at the time or through forward currency contracts ("forwards"). The Fund may engage in these transactions in order to attempt to protect against uncertainty in the level of future foreign exchange rates in the purchase and sale of securities. The Fund may also use foreign currency options, foreign currency forward contracts, foreign currency futures and foreign currency spot transactions to increase exposure to a foreign currency or to shift exposure to foreign currency fluctuations from one currency to another. Since some foreign exchange transactions for the Fund are directed to the Fund's custodian for execution, execution of such transactions may be better or worse than comparable transactions effected by other intermediaries.

A forward involves an obligation to purchase or sell a certain amount of a specific currency at a future date, which may be three business days or more from the date of the contract agreed upon by the parties, at a price set at the time of the contract. These contracts may be bought or sold to protect the Fund against a possible loss resulting from an adverse change in the relationship between foreign currencies and the U.S. dollar or to increase exposure to a particular foreign currency. Although, when used for hedging, forwards are intended to manage the risk of loss due to a decline in the value of the hedged currencies, at the same time, they tend to limit any potential gain which might result should the value of such currencies increase. Forwards are subject to the risks discussed under "Derivative Instruments" below. Forwards are used primarily to adjust the foreign exchange exposure of the Fund with a view to protecting the outlook, and the Fund might be expected to enter into such contracts under the following circumstances:

***Lock In.*** When PIMCO desires to lock in the U.S. dollar price on the purchase or sale of a security denominated in a foreign currency.

***Cross Hedge.*** If a particular currency is expected to decrease against another currency, the Fund may sell the currency expected to decrease and purchase a currency which is expected to increase against the currency sold in an amount approximately equal to some or all of the Fund's portfolio holdings denominated in the currency sold.

***Direct Hedge.*** If PIMCO wants to eliminate substantially all of the risk of owning a particular currency, and/or if PIMCO thinks that the Fund can benefit from price appreciation in a given country's bonds but does not want to hold the currency, it may employ a direct hedge back into the U.S. dollar. In either case, the Fund would enter into a forward contract to sell the currency in which a portfolio security is denominated and purchase U.S. dollars at an exchange rate established at the time it initiated the contract. The cost of the direct hedge transaction may offset most, if not all, of the yield advantage offered by the foreign security, but the Fund would hope to benefit from an increase (if any) in the value of the bond.

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***Proxy Hedge.*** The Fund might choose to use a proxy hedge, which may be less costly than a direct hedge. In this case, the Fund, having purchased a security, will sell a currency whose value is believed to be closely linked to the currency in which the security is denominated. Interest rates prevailing in the country whose currency was sold would be expected to be closer to those in the United States and lower than those of securities denominated in the currency of the original holding. This type of hedging entails greater risk than a direct hedge because it is dependent on a stable relationship between the two currencies paired as proxies and the relationships can be very unstable at times.

***Costs of Hedging.*** When the Fund purchases a foreign (non-U.S.) bond with a higher interest rate than is available on U.S. bonds of a similar maturity, the additional yield on the foreign (non-U.S.) bond could be substantially reduced or lost if the Fund were to enter into a direct hedge by selling the foreign currency and purchasing the U.S. dollar. This is what is known as the "cost" of hedging. Proxy hedging attempts to reduce this cost through an indirect hedge back to the U.S. dollar.

It is important to note that hedging costs are treated as capital transactions and are not, therefore, deducted from the Fund's dividend distribution and are not reflected in its yield. Instead such costs will, over time, be reflected in the Fund's net asset value per share.

The Fund may enter into foreign currency transactions as a substitute for cash investments and for other investment purposes not involving hedging, including, without limitation, to exchange payments received in a foreign currency into U.S. dollars or in anticipation of settling a transaction that requires the Fund to deliver a foreign currency.

The forecasting of currency market movement is extremely difficult, and whether any hedging strategy will be successful is highly uncertain. Moreover, it is impossible to forecast with precision the market value of portfolio securities at the expiration of a foreign currency forward contract. Accordingly, the Fund may be required to buy or sell additional currency on the spot market (and bear the expense of such transaction) if PIMCO's predictions regarding the movement of foreign currency or securities markets prove inaccurate. Also, foreign currency transactions, like currency exchange rates, can be affected unpredictably by intervention (or the failure to intervene) by U.S. or foreign governments or central banks, or by currency controls or political developments. Such events may prevent or restrict the Fund's ability to enter into foreign currency transactions, force the Fund to exit a foreign currency transaction at a disadvantageous time or price or result in penalties for the Fund, any of which may result in a loss to the Fund. In addition, the use of cross-hedging transactions may involve special risks, and may leave the Fund in a less advantageous position than if such a hedge had not been established. Because foreign currency forward contracts are privately negotiated transactions, there can be no assurance that the Fund will have the flexibility to roll-over a foreign currency forward contract upon its expiration if it desires to do so. Additionally, there can be no assurance that the other party to the contract will perform its services thereunder. Under definitions adopted by the Commodity Futures Trading Commission ("CFTC") and the Securities and Exchange Commission ("SEC"), many non-deliverable foreign currency forwards are considered swaps for certain purposes, including the determination of whether such instruments are subject to a trade execution and clearing requirement as discussed further in "Risks of Potential Government Regulation of Derivatives" and "Additional Risk Factors in Cleared Derivatives Transactions." These changes are expected to reduce counterparty risk as compared to bilaterally negotiated contracts.

The Fund may hold a portion of its assets in bank deposits denominated in foreign currencies, so as to facilitate investment in foreign securities as well as to protect against currency fluctuations and the need to convert such assets into U.S. dollars (thereby also reducing transaction costs). To the extent these monies are converted back into U.S. dollars, the value of the assets so maintained will be affected favorably or unfavorably by changes in foreign currency exchange rates and exchange control regulations.

***Tax Consequences of Hedging.*** Under applicable tax law, the Fund may be required to limit its gains from hedging in foreign currency forwards, futures, and options. Although the Fund is expected to comply with such limits, the extent to which these limits apply is subject to tax regulations as yet unissued. Hedging also may result in the application of the mark-to-market and straddle provisions of the Code. Those provisions could result in an increase (or decrease) in the amount of taxable dividends paid by the Fund and could affect whether dividends paid by the Fund are classified as capital gains or ordinary income.

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***Currency Exposure.*** The Fund currently is not subject to a limit on foreign currency exposures. However, if the Fund were to become subject to a percentage limit on its foreign currency exposure (from non-U.S. dollar- denominated securities or currencies), the Fund would calculate its total currency exposures by netting long and short exposures to the same currency, and for positions involving long and short exposures to different currencies, counting the greater absolute value as between the long and short exposures. For example, if the Fund were to have long exposure to euros equivalent to 15% of the Fund's total assets, and short exposure to euros equivalent to 5% of the Fund's total assets, the Fund's net exposure to euros for purposes of this percentage based limitation on foreign currency exposure would be 10% of the Fund's total assets (15% minus 5%). If the Fund were to have long exposure to euros equivalent to 15% of the Fund's total assets, and short exposure to Japanese yen equivalent to 5% of the Fund's total assets, the Fund's greater absolute value exposure as between these positions is 15% of the Fund's total assets (15% ˃ 5%), and 15% would count for purposes of the Fund's percentage based limitation on foreign currency exposure.

**Foreign Currency Exchange-Related Securities**

*Foreign Currency Warrants.* Foreign currency warrants such as Currency Exchange Warrants™ are warrants which entitle the holder to receive from their issuer an amount of cash (generally, for warrants issued in the United States, in U.S. dollars) which is calculated pursuant to a predetermined formula and based on the exchange rate between a specified foreign currency and the U.S. dollar as of the exercise date of the warrant. Foreign currency warrants generally are exercisable upon their issuance and expire as of a specified date and time. Foreign currency warrants have been issued in connection with U.S. dollar-denominated debt offerings by major corporate issuers in an attempt to reduce the foreign currency exchange risk which, from the point of view of prospective purchasers of the securities, is inherent in the international fixed income marketplace. Foreign currency warrants may attempt to reduce the foreign exchange risk assumed by purchasers of a security by, for example, providing for a supplemental payment in the event that the U.S. dollar depreciates against the value of a major foreign currency such as the Japanese yen or the euro. The formula used to determine the amount payable upon exercise of a foreign currency warrant may make the warrant worthless unless the applicable foreign currency exchange rate moves in a particular direction (e.g., unless the U.S. dollar appreciates or depreciates against the particular foreign currency to which the warrant is linked or indexed). Foreign currency warrants are severable from the debt obligations with which they may be offered, and may be listed on exchanges. Foreign currency warrants may be exercisable only in certain minimum amounts, and an investor wishing to exercise warrants who possesses less than the minimum number required for exercise may be required either to sell the warrants or to purchase additional warrants, thereby incurring additional transaction costs. In the case of any exercise of warrants, there may be a time delay between the time a holder of warrants gives instructions to exercise and the time the exchange rate relating to exercise is determined, during which time the exchange rate could change significantly, thereby affecting both the market and cash settlement values of the warrants being exercised. The expiration date of the warrants may be accelerated if the warrants should be delisted from an exchange or if their trading should be suspended permanently, which would result in the loss of any remaining "time value" of the warrants (i.e., the difference between the current market value and the exercise value of the warrants), and, in the case the warrants were "out-of-the-money," in a total loss of the purchase price of the warrants. Warrants are generally unsecured obligations of their issuers and are not standardized foreign currency options issued by the Options Clearing Corporation (the "OCC"). Unlike foreign currency options issued by the OCC, the terms of foreign exchange warrants generally will not be amended in the event of governmental or regulatory actions affecting exchange rates or in the event of the imposition of other regulatory controls affecting the international currency markets. The initial public offering price of foreign currency warrants is generally considerably in excess of the price that a commercial user of foreign currencies might pay in the interbank market for a comparable option involving significantly larger amounts of foreign currencies. Foreign currency warrants are subject to significant foreign exchange risk, including risks arising from complex political or economic factors.

*Principal Exchange Rate Linked Securities.* Principal exchange rate linked securities ("PERLs") are debt obligations the principal on which is payable at maturity in an amount that may vary based on the exchange rate between the U.S. dollar and a particular foreign currency at or about that time. The return on "standard" PERLs is enhanced if the foreign currency to which the security is linked appreciates against the U.S. dollar, and is adversely affected by increases in the foreign exchange value of the U.S. dollar; "reverse" PERLs are like "standard" securities, except that their return is enhanced by increases in the value of the U.S. dollar and adversely impacted by increases in the value of foreign currency. Interest payments on the securities are generally made in U.S. dollars at rates that reflect the degree of foreign currency risk assumed or given up by the purchaser of the notes (i.e., at relatively higher interest rates if the purchaser has assumed some of the foreign exchange risk, or relatively lower interest rates if the issuer has assumed some of the foreign exchange risk, based on the expectations of the current market). PERLs may in limited

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cases be subject to acceleration of maturity (generally, not without the consent of the holders of the securities), which may have an adverse impact on the value of the principal payment to be made at maturity.

*Performance Indexed Paper.* Performance indexed paper ("PIPs") is U.S. dollar-denominated commercial paper the yield of which is linked to certain foreign exchange rate movements. The yield to the investor on PIPs is established at maturity as a function of spot exchange rates between the U.S. dollar and a designated currency as of or about that time (generally, the index maturity two days prior to maturity). The yield to the investor will be within a range stipulated at the time of purchase of the obligation, generally with a guaranteed minimum rate of return that is below, and a potential maximum rate of return that is above, market yields on U.S. dollar-denominated commercial paper, with both the minimum and maximum rates of return on the investment corresponding to the minimum and maximum values of the spot exchange rate two business days prior to maturity.

**U.S. Government Securities**

U.S. government securities are obligations of, and, in certain cases, guaranteed by, the U.S. government, its agencies or instrumentalities. The U.S. government does not guarantee the net asset value of the Fund's shares. U.S. government securities are subject to market and interest rate risk, and may be subject to varying degrees of credit risk. Some U.S. government securities, such as Treasury bills, notes and bonds, and securities guaranteed by GNMA, are supported by the full faith and credit of the United States; others, such as those of the Federal Home Loan Banks, are supported by the right of the issuer to borrow from the U.S. Treasury; others, such as those of the FNMA, are supported by the discretionary authority of the U.S. government to purchase the agency's obligations; and still others, such as securities issued by members of the Farm Credit System, are supported only by the credit of the agency, instrumentality or corporation. U.S. government securities may include zero coupon securities, which do not distribute interest on a current basis and tend to be subject to greater risk than interest-paying securities of similar maturities.

Securities issued by U.S. government agencies or GSEs may not be guaranteed by the U.S. Treasury. GNMA, a wholly owned U.S. government corporation, is authorized to guarantee, with the full faith and credit of the U.S. government, the timely payment of principal and interest on securities issued by institutions approved by GNMA and backed by pools of mortgages insured by the FHA or guaranteed by the VA. Government-related guarantors (i.e., not backed by the full faith and credit of the U.S. government) include the FNMA and the FHLMC. Pass-through securities issued by FNMA are guaranteed as to timely payment of principal and interest by FNMA but are not backed by the full faith and credit of the U.S. government. FHLMC guarantees the timely payment of interest and ultimate collection of principal, but its PCs are not backed by the full faith and credit of the U.S. government.

U.S. government securities include securities that have no coupons, or have been stripped of their unmatured interest coupons, individual interest coupons from such securities that trade separately, and evidence of receipt of such securities. Such securities may pay no cash income, and are purchased at a deep discount from their value at maturity. Because interest on zero coupon securities is not distributed on a current basis but is, in effect, compounded, zero coupon securities tend to be subject to greater risk than interest-paying securities of similar maturities. Custodial receipts issued in connection with so-called trademark zero coupon securities, such as Certificate of Accrual on Treasury Securities ("CATs") and treasury investment growth receipts ("TIGRs"), are not issued by the U.S. Treasury, and are therefore not U.S. government securities, although the underlying bond represented by such receipt is a debt obligation of the U.S. Treasury. Other zero coupon Treasury securities (e.g., Separate Trading of Registered Interest and Principal of Securities ("STRIPs") and coupons under book-entry safekeeping ("CUBEs")) are direct obligations of the U.S. government.

**Municipal Securities**

The Fund will invest, under normal circumstances, at least 80% of its net assets (plus any borrowings for investment purposes) in a portfolio of municipal bonds and other municipal securities, the interest from which, in the opinion of bond counsel for the issuer at the time of issuance (or on the basis of other authority believed by PIMCO to be reliable), is exempt from federal and California income tax (i.e., excluded from gross income for federal income tax purposes but not necessarily exempt from the federal alternative minimum tax ("AMT") or from the income taxes of any other state or of a local government) (the "80% policy"). California municipal bonds generally are issued by or on behalf of the State of California and its political subdivisions, financing authorities and their agencies. Within the 80% policy, the Fund may invest in debt securities of an issuer located outside of California whose interest is, in the opinion of bond counsel for the issuer at the time of issuance, exempt from federal and California income tax. By

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concentrating its investments in California municipal securities, the Fund will be subject to California State-Specific Risk, among other risks. The Fund's 80% policy is a fundamental policy, which may not be changed without the approval of the holders of a majority of the Fund's outstanding Common Shares and Preferred Shares (as defined below) voting together as a single class, and of the holders of a majority of the outstanding Preferred Shares voting as a separate class.

Municipal securities include debt obligations issued by governmental entities to obtain funds for various public purposes, including the construction of a wide range of public facilities, the refunding of outstanding obligations, the payment of general operating expenses, and the extension of loans to public institutions and facilities. Municipal securities take the form of investments in loans, pools of loans, mortgages, pools of mortgages, and other debt instruments, as to which there is an opinion that income therefrom is not subject to federal income tax, including but not limited to certain affordable housing loans, etc. Municipal securities can be classified into two principal categories, including "general obligation" bonds and other securities and "revenue" bonds and other securities. General obligation bonds are secured by the issuer's full faith, credit and taxing power for the payment of principal and interest. Revenue securities are payable only from the revenues derived from a particular facility or class of facilities or, in some cases, from the proceeds of a special excise tax or other specific revenue source, such as the user of the facility being financed. Municipal securities also may include "moral obligation" securities, which normally are issued by special purpose public authorities. If the issuer of moral obligation securities is unable to meet its debt service obligations from current revenues, it may draw on a reserve fund, the restoration of which is a moral commitment but not a legal obligation of the governmental entity that created the special purpose public authority. Municipal securities may be structured as fixed-, variable- or floating-rate obligations or as zero-coupon, PIKs and step-coupon securities and may be privately placed or publicly offered.

Municipal securities may include municipal bonds, municipal notes and municipal leases. Municipal bonds are debt obligations of a governmental entity that obligate the municipality to pay the holder a specified sum of money at specified intervals and to repay the principal amount of the loan at maturity.

The Fund may invest in instruments, or participations in instruments, issued in connection with lease obligations or installment purchase contract obligations of municipalities ("municipal lease obligations"). Although municipal lease obligations do not constitute general obligations of the issuing municipality, a lease obligation may be backed by the municipality's covenant to budget for, appropriate funds for and make the payments due under the 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 in the relevant years. Municipal lease obligations may be less readily marketable than other municipal securities.

Projects financed with certificates of participation generally are not subject to state constitutional debt limitations or other statutory requirements that may apply to other municipal securities. Payments by the public entity on the obligation underlying the certificates are derived from available revenue sources. That revenue might be diverted to the funding of other municipal service projects. Payments of interest and/or principal with respect to the certificates are not guaranteed and do not constitute an obligation of a state or any of its political subdivisions.

Municipal leases may also be subject to "abatement risk." The leases underlying certain municipal lease obligations may state that lease payments are subject to partial or full abatement. That abatement might occur, for example, if material damage to or destruction of the leased property interferes with the lessee's use of the property. However, in some cases that risk might be reduced by insurance covering the leased property, or by the use of credit enhancements such as letters of credit to back lease payments, or perhaps by the lessee's maintenance of reserve monies for lease payments. While the obligation might be secured by the lease, it might be difficult to dispose of that property in case of a default.

Municipal notes may be issued by governmental entities and other tax-exempt issuers in order to finance short-term cash needs or, occasionally, to finance construction. Most municipal notes are general obligations of the issuing entity payable from taxes or designated revenues expected to be received within the relevant fiscal period. Municipal notes generally have maturities of one year or less. Municipal notes can be subdivided into two sub-categories: (i) municipal commercial paper and (ii) municipal demand obligations. Municipal commercial paper typically consists of very short-term unsecured negotiable promissory notes that are sold, for example, to meet seasonal working capital or interim construction financing needs of a governmental entity or agency. While these

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obligations are intended to be paid from general revenues or refinanced with long-term debt, they frequently are backed by letters of credit, lending agreements, note repurchase agreements or other credit facility agreements offered by banks or institutions.

Municipal demand obligations can be subdivided into two general types: variable rate demand notes and master demand obligations. Variable rate demand notes are tax-exempt municipal obligations or participation interests that provide for a periodic adjustment in the interest rate paid on the notes. They permit the holder to demand payment of the notes, or to demand purchase of the notes at a purchase price equal to the unpaid principal balance, plus accrued interest either directly by the issuer or by drawing on a bank letter of credit or guaranty issued with respect to such note. The issuer of the municipal obligation may have a corresponding right to prepay at its discretion the outstanding principal of the note plus accrued interest upon notice comparable to that required for the holder to demand payment. The variable rate demand notes in which the Fund may invest are payable, or are subject to purchase, on demand usually on notice of seven calendar days or less. The terms of the notes generally provide that interest rates are adjustable at intervals ranging from daily to six months.

Master demand obligations are tax-exempt municipal obligations that provide for a periodic adjustment in the interest rate paid and permit daily changes in the amount borrowed. The interest on such obligations is, in the opinion of counsel for the borrower, excluded from gross income for federal income tax purposes (but not necessarily for alternative minimum tax ("AMT") purposes). Although there is no secondary market for master demand obligations, such obligations are considered by the Fund to be liquid because they are payable upon demand.

Investing in municipal securities is subject to certain risks. There are variations in the quality of municipal securities, both within a particular classification and between classifications, and the rates of return on municipal securities can depend on a variety of factors, including general money market conditions, the financial condition of the issuer, general conditions of the municipal bond market, the size of a particular offering, the maturity of the obligation, and the rating of the issue. The ratings of NRSROs represent their opinions as to the quality of municipal securities. It should be emphasized, however, that these ratings are general and are not absolute standards of quality, and municipal securities with the same maturity, interest rate, and rating may have different rates of return while municipal securities of the same maturity and interest rate with different ratings may have the same rate of return.

The payment of principal and interest on most municipal securities purchased by the Fund will depend upon the ability of the issuers to meet their obligations. An issuer's obligations under its municipal securities are subject to the provisions of bankruptcy, insolvency, and other laws affecting the rights and remedies of creditors, such as the United States Bankruptcy Code. The power or ability of an issuer to meet its obligations for the payment of interest on and principal of its municipal securities may be materially adversely affected by litigation or other conditions.

There are particular considerations and risks relevant to investing in a portfolio of a single state's municipal securities, such as the greater risk of the concentration of portfolio holdings. Each state's municipal securities may include, in addition to securities issued by the relevant state and its political subdivisions, agencies, authorities and instrumentalities, securities issued by the governments of Guam, Puerto Rico or the U.S. Virgin Islands. These securities may be subject to different risks than municipal securities issued by the relevant state and its political subdivisions, agencies, authorities and instrumentalities.

The Fund ordinarily purchases municipal securities whose interest, in the opinion of bond counsel, is excluded from gross income for federal income tax purposes and California income taxes. The opinion of bond counsel may assert that such interest is not an item of tax preference for the purposes of the AMT or is exempt from certain other state or local taxes. There is no assurance that the applicable taxing authority will agree with this opinion. In the event, for example, the IRS determines that an issuer does not comply with relevant tax requirements, interest payments from a security could become federally taxable, possibly retroactively to the date the security was issued. As a shareholder of the Fund, you may be required to file an amended tax return as a result, reporting such income as taxable.

***Municipal Bonds***. Municipal bonds share the attributes of debt/fixed income securities in general, but are generally issued by states, municipalities and other political subdivisions, agencies, authorities and instrumentalities of states and multi-state agencies or authorities. Specifically, California and New York municipal bonds generally are issued by or on behalf of the State of California and New York, respectively, and their political subdivisions and financing authorities, and local governments. The municipal bonds that the Fund may purchase include general obligation bonds and limited obligation bonds (or revenue bonds), including industrial development bonds issued

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pursuant to former federal tax law. General obligation bonds are obligations involving the credit of an issuer possessing taxing power and are payable from such issuer's general revenues and not from any particular source or annual revenues. Limited obligation bonds are payable only from the revenues derived from a particular facility or class of facilities or, in some cases, from the proceeds of a special excise or other specific revenue source. Tax-exempt private activity bonds and industrial development bonds generally are also revenue bonds and thus are not payable from the issuer's general revenues. The credit and quality of private activity bonds and industrial development bonds are usually related to the credit of the corporate user of the facilities. Payment of interest on and repayment of principal of such bonds is the responsibility of the corporate user (and/or any guarantor). The Fund does not expect to be eligible to pass through to shareholders the tax-exempt character of interest earned on municipal bonds. The Fund may be more sensitive to adverse economic, business or political developments if it invests a substantial portion of its assets in industrial development bonds.

The Fund may invest in pre-refunded municipal bonds. Pre-refunded municipal bonds are tax-exempt bonds that have been refunded to a call date prior to the final maturity of principal, or, in the case of pre-refunded municipal bonds commonly referred to as "escrowed-to-maturity bonds," to the final maturity of principal, and remain outstanding in the municipal market. The payment of principal and interest of the pre-refunded municipal bonds held by the Fund is funded from securities in a designated escrow account that holds U.S. Treasury securities or other obligations of the U.S. government (including its agencies and instrumentalities ("Agency Securities")). As the payment of principal and interest is generated from securities held in an escrow account established by the municipality and an independent escrow agent, the pledge of the municipality has been fulfilled and the original pledge of revenue by the municipality is no longer in place. Pre-refunded and/or escrowed to maturity municipal bonds may bear an investment grade rating (for example, if re-rated by a rating service or, if not re-rated, determined by PIMCO to be of comparable quality) because they are backed by U.S. Treasury securities, Agency Securities or other investment grade securities. For the avoidance of any doubt, PIMCO's determination of an issuer's credit rating will generally be used for compliance with the Fund's investment parameters when an issue either loses its rating or is not re-rated upon pre-refunding. The escrow account securities pledged to pay the principal and interest of the pre-refunded municipal bond do not guarantee the price movement of the bond before maturity. Issuers of municipal bonds refund in advance of maturity the outstanding higher cost debt and issue new, lower cost debt, placing the proceeds of the lower cost issuance into an escrow account to pre-refund the older, higher cost debt. Investments in pre-refunded municipal bonds held by the Fund may subject the Fund to interest rate risk, market risk and credit risk. In addition, while a secondary market exists for pre-refunded municipal bonds, if the Fund sells pre-refunded municipal bonds prior to maturity, the price received may be more or less than the original cost, depending on market conditions at the time of sale. To the extent permitted by the SEC and the IRS, the Fund's investment in pre-refunded municipal bonds backed by U.S. Treasury and Agency securities in the manner described above, will, for purposes of diversification tests applicable to the Fund, be considered an investment in the respective U.S. Treasury and Agency securities.

Under the Code, certain limited obligation bonds are considered "private activity bonds" and interest paid on such bonds is treated as an item of tax preference for purposes of calculating federal AMT liability.

The Fund may purchase custodial receipts representing the right to receive either the principal amount or the periodic interest payments or both with respect to specific underlying municipal bonds. In a typical custodial receipt arrangement, an issuer or third party owner of municipal bonds deposits the bonds with a custodian in exchange for two classes of custodial receipts. The two classes have different characteristics, but, in each case, payments on the two classes are based on payments received on the underlying municipal bonds. In no event will the aggregate interest paid with respect to the two classes exceed the interest paid by the underlying municipal bond. Custodial receipts are sold in private placements. The value of a custodial receipt may fluctuate more than the value of a municipal bond of comparable quality and maturity.

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will result in taxable income and the Fund may elect to pass through to holders of the Fund's Common Shares ("Common Shareholders") any corresponding tax credits. Such tax credits can generally be used to offset federal income taxes and the AMT, but such credits are generally not refundable. Build America Bonds or similar taxable municipal bonds involve similar risks as tax-exempt municipal bonds, including credit and market risk. They are intended to assist state and local governments in financing capital projects at lower borrowing costs and are likely to attract a broader group of investors than tax-exempt municipal bonds. Although Build America Bonds were only authorized for issuance during 2009 and 2010, the program may have resulted in reduced issuance of tax-exempt municipal bonds during the same period.

The Build America Bond program expired on December 31, 2010, at which point no further issuance of new Build America Bonds was permitted. As of the date of this Statement of Additional Information, there is no indication that Congress will renew the program to permit issuance of new Build America Bonds.

Some longer-term municipal bonds give the investor the right to "put" or sell the security at par (face value) within a specified number of days following the investor's request - usually one to seven days. This demand feature enhances a security's liquidity by shortening its effective maturity and enables it to trade at a price equal to or very close to par. If a demand feature terminates prior to being exercised, the Fund would hold the longer-term security, which could experience substantially more volatility.

***Certain Risks of Investing in Municipal Bonds.*** Economic downturns and budgetary constraints could make municipal bonds more susceptible to downgrade, default and bankruptcy. In addition, difficulties in the municipal bond markets could result in increased illiquidity, volatility and credit risk, and a decrease in the number of municipal bond investment opportunities. The value of municipal bonds may also be affected by uncertainties involving the taxation of municipal bonds or the rights of municipal bond holders in the event of a bankruptcy. Proposals to restrict or eliminate the federal income tax exemption for interest on municipal bonds are introduced before Congress from time to time. These legal uncertainties could affect the municipal bond market generally, certain specific segments of the market, or the relative credit quality of particular securities.

The Fund may purchase and sell portfolio investments to take advantage of changes or anticipated changes in yield relationships, markets or economic conditions. The Fund may also sell municipal bonds due to changes in PIMCO's evaluation of the issuer or cash needs resulting from repurchase requests for the Fund's shares. The secondary market for municipal bonds typically has been less liquid than that for taxable debt/fixed income securities, and this may affect the Fund's ability to sell particular municipal bonds at then-current market prices, especially in periods when other investors are attempting to sell the same securities.

Additionally, municipal bonds rated below investment grade (i.e., high yield municipal bonds) may not be as liquid as higher-rated municipal bonds. Reduced liquidity in the secondary market may have an adverse impact on the market price of a municipal bond and on the Fund's ability to sell a municipal bond in response to changes or anticipated changes in economic conditions or to meet the Fund's cash needs. Reduced liquidity may also make it more difficult to obtain market quotations based on actual trades for purposes of valuing the Fund's portfolio. For more information on high yield securities please see "High Yield Securities ("Junk Bonds") and Securities of Distressed Companies" above.

Prices and yields on municipal bonds are dependent on a variety of factors, including general money-market conditions, the financial condition of the issuer, general conditions of the municipal bond market, the size of a particular offering, the maturity of the obligation and the rating of the issue. A number of these factors, including the ratings of particular issues, are subject to change from time to time. Information about the financial condition of an issuer of municipal bonds may not be as extensive as that which is made available by corporations whose securities are publicly traded.

The perceived increased likelihood of default among issuers of municipal bonds has resulted in constrained illiquidity, increased price volatility and credit downgrades of issuers of municipal bonds. Local and national market forces - such as declines in real estate prices and general business activity - may result in decreasing tax bases, fluctuations in interest rates, and increasing construction costs, all of which could reduce the ability of certain issuers of municipal bonds to repay their obligations. Certain issuers of municipal bonds have also been unable to obtain additional financing through, or must pay higher interest rates on, new issues, which may reduce revenues available for issuers of municipal bonds to pay existing obligations. In addition, events have demonstrated that the lack of

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disclosure rules in this area can make it difficult for investors to obtain reliable information on the obligations underlying municipal bonds. Adverse developments in the municipal bond market may negatively affect the value of all or a substantial portion of the Fund's holdings in municipal bonds.

In 2025, Congress considered potential reductions in federal funding to the states in a variety of ways, including but not limited to Medicaid funding, which could meaningfully increase costs for the impacted states. To the extent any state absorbs additional costs attributable to changes in federal funding, such changes may strain a state's budget, divert state funding from other potential expenditures or lead to additional borrowing or financing, all of which could negatively impact the state's Municipal Bonds.

From time to time, proposals have been introduced before Congress for the purpose of restricting or eliminating the federal income tax exemption for interest on certain types of municipal bonds. Additionally, certain other proposals have been introduced that would have the effect of taxing a portion of exempt interest and/or reducing the tax benefits of receiving exempt interest. It can be expected that similar proposals may be introduced in the future. As a result of any such future legislation, the availability of such municipal bonds for investment by the Fund and the value of such municipal bonds held by the Fund may be affected. In addition, it is possible that events occurring after the date of a municipal bond's issuance, or after the Fund's acquisition of such obligation, may result in a determination that the interest paid on that obligation is taxable, in certain cases retroactively.

Obligations of issuers of municipal bonds are subject to the provisions of bankruptcy, insolvency and other laws affecting the rights and remedies of creditors. Congress or state legislatures may seek to extend the time for payment of principal or interest, or both, or to impose other constraints upon enforcement of such obligations. There is also the possibility that as a result of litigation or other conditions, the power or ability of issuers to meet their obligations for the payment of interest and principal on their municipal bonds may be materially affected or their obligations may be found to be invalid or unenforceable. Such litigation or conditions may from time to time have the effect of introducing uncertainties in the market for municipal bonds or certain segments thereof, or of materially affecting the credit risk with respect to particular bonds. Adverse economic, business, legal or political developments might affect all or a substantial portion of the Fund's municipal bonds in the same manner.

In particular, to the extent that the Fund invests a significant portion of its assets in municipal bonds issued by California and New York issuers, the Fund may be subject to the risks inherent in concentrating investment in a particular state or region. The following summarizes information drawn from official statements, and other public documents as of the date of this SAI available relating to issues potentially affecting securities offerings of issuers domiciled in the states of California and New York. The following information regarding the states of California and New York and their local units of government is a summary and does not purport to explain, predict, or fully describe the complex factors, including both economic and political conditions, affecting the financial condition of and situation in the states and is based on information in publicly available documents. Neither the Fund nor PIMCO have independently verified the information.

***California.*** To the extent the Fund invests in municipal bonds issued by California issuers, it may be particularly affected by political, economic, regulatory, social, environmental, or public health developments affecting the ability of California tax exempt issuers to pay interest or repay principal.

Provisions of the California Constitution and State statutes that limit the taxing and spending authority of California governmental entities may impair the ability of California governmental issuers to maintain debt service on their obligations. Future California political and economic developments, constitutional amendments, legislative measures, executive orders, administrative regulations, litigation and voter initiatives as well as environmental events, natural disasters, pandemics, epidemics, or social unrest could have an adverse effect on the debt obligations of California issuers. The information set forth below constitutes only a brief summary of a number of complex factors that may impact issuers of California municipal bonds. The information is derived from sources that are generally available to investors, including but not limited to information promulgated by the State's Department of Finance, the State's Treasurer's Office, and the Legislative Analyst's Office ("LAO"). The information is intended to give a recent historical description and is not intended to indicate future or continuing trends in the financial or other positions of California. Such information has not been independently verified by the Fund, and the Fund assumes no responsibility for the completeness or accuracy of such information. It should be noted that the financial strength of local California issuers and the creditworthiness of obligations issued by local California issuers are not directly related to the financial

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strength of the State or the creditworthiness of obligations issued by the State, and there is no obligation on the part of the State to make payment on such local obligations in the event of default.

Certain debt obligations held by the Fund may be obligations of issuers that rely in whole or in substantial part on California state government revenues for the continuance of their operations and payment of their obligations. Whether and to what extent the California Legislature will continue to appropriate a portion of the State's General Fund to counties, cities and their various entities, which depend upon State government appropriations, is not entirely certain. To the extent local entities do not receive money from the State government to pay for their operations and services, their ability to pay debt service on obligations held by the Fund may be impaired.

Certain tax exempt securities in which the Fund may invest may be obligations payable solely from the revenues of specific institutions, or may be secured by specific properties, which are subject to provisions of California law that could adversely affect the holders of such obligations. For example, the revenues of California health care institutions may be subject to state laws, and California law limits the remedies of a creditor secured by a mortgage or deed of trust on real property.

California's economy, the largest state economy in the United States, has major components in high technology, trade, entertainment, manufacturing, government, tourism, construction and services, and may be sensitive to economic factors affecting those industries.

Prolonged inflationary pressures and changing interest rates could also adversely affect California's economy. It is not possible to predict the long-term economic environment as it relates to California. Additionally, California has faced an operating deficit in fiscal year 2025-2026, and it is projected that California will face an operating deficit in each subsequent fiscal year through 2029-2030.

A failure by California to meet its debt obligations could lead to a significant decline in the value, liquidity, and marketability of Fund investments.

The unemployment rate in California was 5.6% as of November 2025. The State's unemployment rate was above the national average of 4.6% at that time.

The budget for fiscal year 2025-2026 ("2025-26 Enacted Budget") was signed into law in June 2025. The 2024-25 Enacted Budget projects General Fund revenues and transfers to be approximately $215.7 billion (a decrease of 4.9% compared with revised estimates for fiscal year 2024-25). Against these revenues and transfers, the 2025-26 Enacted Budget provides for General Fund expenditures of approximately $228.4 billion (a decrease of 2.2% compared with revised estimates for fiscal year 2024-2025). The 2025-26 Enacted Budget sets aside reserves of $15.7 billion. The 2025-26 Enacted Budget includes a package of budgetary solutions to address an $11.8 billion budget deficit. In particular, the budget seeks to bridge the budget deficit through spending reductions totaling $2.8 billion, additional revenue sources and internal borrowing totaling $7.8 billion, and fund shifts totaling $1.2 billion.

The Governor released his proposed budget for fiscal year 2026-27 on January 2026 ("2026-27 Governor's Budget"). The 2026-27 Governor's Budget projects that General Fund revenues and transfers will be $227.4 billion and expenditures will be $248.3 billion.

Following the release of the 2026-27 Governor's Budget, the Legislative Analyst's Office ("LAO") released its report on the 2026-27 Governor's Budget ("LAO Report"). The LAO Report notes that the 2026-2027 Governor's Budget projected that it is roughly balanced, primarily attributing such projection to the 2026-2027 Governor's Budget's revenue estimates, which are considerably higher than the LAO's estimates. The LAO Report notes that these higher revenue estimates are offset by higher spending. The LAO Report also notes that the 2026-2027 Governor's Budget projects multi-year deficits, which the LAO believes indicate systemic issues regarding California's financial stability.

Moody's Ratings ("Moody's"), S&P Global Ratings ("S&P") and Fitch Ratings, Inc. ("Fitch") assign ratings to California's long-term general obligation bonds, which represent their opinions as to the quality of the municipal bonds they rate. As of March 18, 2026, California's general obligation bonds were assigned ratings of Aa2, AA- and AA by Moody's, S&P and Fitch, respectively. The ratings agencies continue to monitor the State's budget deliberations

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closely to determine whether to alter the ratings. It should be recognized that these ratings are not an absolute standard of quality, but rather general indicators. Such ratings reflect only the view of the originating rating agencies, from which an explanation of the significance of such ratings may be obtained. There is no assurance that a particular rating will continue for any given period of time or that any such rating will not be revised downward or withdrawn entirely if, in the judgment of the agency establishing the rating, circumstances so warrant. A downward revision or withdrawal of such ratings, or either of them, may affect the market price of the State municipal obligations in which the Fund invests.

The State is a party to numerous legal proceedings, many of which normally occur in governmental operations and which, if decided against the State, might require the State to make significant future expenditures or impair future revenue sources. Constitutional and statutory amendments as well as budget developments may affect the ability of California issuers to pay interest and principal on their obligations. The overall effect may depend upon whether a particular California tax exempt security is a general or limited obligation bond and on the type of security provided for the bond. It is possible that measures affecting the taxing or spending authority of California or its political subdivisions may be approved or enacted in the future.

Additionally, California is prone to natural disasters and climate events, including earthquakes, wildfires, mudslides, floods and droughts. Such events have periodically resulted in significant disruptions to the California economy and required substantial expenditures from the state government. California lies within an active geologic region that is subject to major seismic activity, which could result in increased frequency and severity of earthquakes. There can be no guarantee that future natural disasters and climate events will not have a significant detrimental effect on the State. The specific timing of natural disasters and climate events, and the severity of their impact on the State, is unpredictable and could be significant. The State is limited in its ability to mitigate the fiscal impact of natural disasters and climate events on the State budget, and there can be no assurance that current or any future measures to mitigate natural disasters will be effective.

***New York.*** To the extent the Fund invests in municipal bonds issued by New York issuers, it may be particularly affected by political, economic or regulatory developments affecting the ability of New York tax exempt issuers to pay interest or repay principal. Investors should be aware that certain issuers of New York tax exempt securities have at times experienced serious financial difficulties. A reoccurrence of these difficulties may impair the ability of certain New York issuers to maintain debt service on their obligations. The following information provides only a brief summary of the complex factors affecting the financial situation in New York (as used in this section, the "State" or "New York") and is derived from sources that are generally available to investors, including, but not limited to, the New York State Division of the Budget ("DOB") and the New York City Office of Management and Budget. The information is intended to give a recent historical description and is not intended to indicate future or continuing trends in the financial or other positions of New York. Such information has not been independently verified by the Fund, and the Fund assumes no responsibility for the completeness or accuracy of such information. It should be noted that the creditworthiness of obligations issued by local New York issuers may be unrelated to the creditworthiness of obligations issued by New York City (as used in this section, the "City" or "New York City") and State agencies, and that there is no obligation on the part of New York State to make payment on such local obligations in the event of default.

Relative to other states, New York has for many years imposed a very high state and local tax burden on residents. The burden of state and local taxation, in combination with the many other causes of regional economic dislocation, has contributed to the decisions of some businesses and individuals to relocate outside of, or not locate within, New York. The economic and financial condition of the State also may be affected by various financial, social, economic, environmental, political, and geopolitical factors as well as natural disasters, epidemics, pandemics, and social unrest. For example, the securities industry is more central to New York's economy than to the national economy. Therefore, any significant decline in stock market performance could adversely affect the State's income and employment levels. Furthermore, such financial, social, economic, environmental, political, and geopolitical factors can be very complex, may vary from year to year and can be the result of actions taken not only by the State and its agencies and instrumentalities, but also by entities, such as the Federal government, that are not under the control of the State.

The fiscal stability of New York is related to the fiscal stability of the State's municipalities, its agencies and authorities (which generally finance, construct and operate revenue-producing public benefit facilities). This is due in part to the fact that agencies, authorities and local governments in financial trouble often seek State financial

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assistance. In the event that New York City or any of its agencies or authorities suffers serious financial difficulty, then the ability of the State, New York City, and the State's political subdivisions, agencies and authorities to obtain financing in the public credit markets, and the market price of outstanding New York tax exempt securities, may be adversely affected.

State actions affecting the level of receipts and disbursements, the relative strength of the State and regional economies and actions of the Federal government may create budget gaps for the State. Moreover, even an ostensibly balanced budget may still contain several financial risks. These risks include the impact of broad economic factors, additional spending needs, revenues that may not materialize and proposals to reduce spending or raise revenues that have been previously rejected by the Legislature. To address a potential imbalance in any given fiscal year, the State would be required to take actions to increase receipts and/or reduce disbursements as it enacts the budget for that year. Under the State Constitution, the Governor is required to propose a balanced budget each year. There can be no assurance, however, that the Legislature will enact such proposals or that the State's actions will be sufficient to preserve budgetary balance in a given fiscal year or to align recurring receipts and disbursements in future fiscal years. The fiscal stability of the State is related to the fiscal stability of its public authorities. Authorities have various responsibilities, including those that finance, construct and/or operate revenue-producing public facilities. Authorities may issue bonds and notes within the amounts and restrictions set forth in their respective legislative authorization.

Authorities are generally supported by revenues generated by the projects financed or operated, such as tolls charged for use of highways, bridges or tunnels; charges for electric power, electric and gas utility services; rentals charged for housing units and charges for occupancy at medical care facilities. Since the State has no actual or contingent liability for the payment of this type of public authority indebtedness, it is not classified as either State-supported debt or State-related debt. Some authorities, however, receive monies from State appropriations to pay for the operating costs of certain programs. In addition, State legislation authorizes several financing techniques for authorities. Also, there are statutory arrangements providing for State local assistance payments otherwise payable to localities, to be made under certain circumstances directly to the authorities, in order to secure the payment of debt service on their revenue bonds and notes. Although the State has no obligation to provide additional assistance to localities whose local assistance payments have been paid to authorities under these arrangements, if local assistance payments are diverted, the affected localities could seek additional State assistance.

Over the near and long term, New York and New York City may face economic problems. New York City accounts for a large portion of the State's population and personal income, and New York City's financial health affects the State in numerous ways. New York City continues to require significant financial assistance from the State and depends on State aid to both enable it to balance its budget and to meet its cash requirements. The State could also be affected by the ability of the City to market its securities successfully in the public credit markets.

Prolonged inflationary pressures and changing interest rates could also adversely affect New York's economy. It is not possible to predict the long-term economic environment as it relates to New York.

The budget for fiscal year 2025-26 was signed into law in May 2025, and in October 2025, a mid-year update revised financial projections for fiscal year 2025-26. The mid-year update estimated that General Fund receipts were expected to total $117.7 billion in fiscal year 2025-26, a decrease of $1.6 billion from fiscal year 2024-2025. General Fund disbursements, including transfers to other funds, were expected to total $126.5 billion in fiscal year 2024-25, an increase of approximately $17.8 billion from fiscal year 2025-2026. Due to these and other revisions, DOB estimated that the General Fund would end fiscal year 2025-26 with a balance of $48.1 billion due to the projected opening General Fund balance of approximately $57.9 billion.

In January 2026, the Governor introduced the Proposed Executive Budget Financial Plan for fiscal year 2027 ("2026-27 Governor's Budget"). The 2026-27 Governor's Budget projects $121.9 billion in General Fund receipts, an annual increase of $521 million from estimates for fiscal year 2026. These receipts are expected to consist of $34.7 billion in personal income tax revenues (an increase of $2.1 billion from fiscal year 2026), $10.9 billion in consumption/use tax receipts (an increase of $292 million from fiscal year 2026), and a $789 million decrease in business tax receipts. Against these revenues, the 2026-27 Governor's Budget calls for $126.8 billion in General Fund expenditures, leaning on the opening fund balance.

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New York is prone to natural disasters and climate events, including hurricanes. Such events have, in the past, resulted in significant disruptions to the New York economy and required substantial expenditures from the state government.

The State's economy continues to face significant risks, including, but not limited to, the effects of: national and international events; climate change, extreme weather events and other natural disasters; pandemics; instability in the Euro Zone and eastern Europe; major terrorist events; hostilities or war; social unrest; population shifts; changes in international trade policies, consumer confidence, oil supplies and oil prices; cyber security attacks; Federal statutory and regulatory changes concerning financial sector activities; changes concerning financial sector bonus payouts; and shifts in monetary policy affecting interest rates and the financial markets.

New York's unemployment rate was 4.5% as of November 2025. The State's unemployment rate was below the national average of 4.6% at that time.

New York City is the largest city in the U.S., and has a complex, varied and aging infrastructure and is also subject to many of the risks facing the State of New York. New York City's general debt limit, as provided in the New York State Constitution, is 10 percent of the five-year rolling average of the full value of taxable City real property. New York City's general obligation debt outstanding was $46.7 billion as of June 30, 2025. After including contract and other liability and adjusting for appropriations, the City's indebtedness that is counted toward the debt limit was $44.4 billion below the City's debt-incurring limit as of July 1, 2025. The City is projected to have remaining debt-incurring capacity of $37.4 billion on July 1, 2026, $32.1 billion on July 1, 2027, and $26.9 billion on July 1, 2028.

In addition to general obligation bonds, the City maintains several additional credits, including bonds issued by the New York City Transitional Finance Authority ("NYCTFA") and Tobacco Settlement Asset Securitization Corporation ("TSASC"). At the end of fiscal year 2025, NYCTFA debt backed by personal income tax revenues accounted for approximately $55.6 billion of debt. In July 2009, the State Legislature granted NYCTFA the authority to issue additional debt up to $13.5 billion for general capital purposes. The City exhausted the $13.5 billion bonding limit in fiscal year 2007. In July 2009, the State Legislature authorized NYCTFA to issue debt beyond the $13.5 billion limit. However, this additional borrowing is subject to the City's general debt limit. Thus, additional borrowing above the $13.5 billion limit is secured by personal income tax revenues and counted under the City's general debt limit. In April 2024 the State Legislature granted NYCTFA the authority to increase the total amount of outstanding NYCTFA bonds backed by tax revenues above the City's general debt limit to $21.5 billion beginning on July 1, 2024, and, in connection with fiscal year 2026 budget legislation, $30.5 billion on July 1, 2025. Starting July 1, 2024, these revised thresholds are considered when calculating New York City's indebtedness within the debt limit. In addition to this capacity, the NYCTFA is authorized to issue up to $9.4 billion of Building Aid Revenue Bonds (BARBs) for education purposes. As of the end of fiscal year 2025, approximately $7.5 billion of these bonds were outstanding. Debt service for these bonds is supported by building aid payments the City receives from the State. At the end of fiscal year 2025, TSASC debt totaled approximately $909 million.

As of March 18, 2026, New York State's general obligation bonds are rated AA+, Aa1, and AA+ by S&P, Moody's and Fitch, respectively. As of March 18, 2026, New York City's general obligation debt was rated AA, Aa2, and AA by S&P, Moody's, and Fitch, respectively. Such ratings reflect only the view of the originating rating agencies, from which an explanation of the significance of such ratings may be obtained. There is no assurance that a particular rating will continue for any given period of time or that any such rating will not be revised downward or withdrawn entirely if, in the judgment of the agency originally establishing the rating, circumstances so warrant. A downward revision or withdrawal of such ratings, or either of them, may have an effect on the market price of the State municipal obligations in which the Fund invests.

***Puerto Rico.*** Because the Fund may invest in municipal securities issued by Puerto Rico, the Fund may be particularly affected by political, economic, environmental, social, regulatory or restructuring developments affecting the ability of Puerto Rican municipal issuers to pay interest or repay principal. As a result of the ongoing financial challenges faced by Puerto Rico, the Commonwealth's economic circumstances may change negatively and more rapidly than usual, and the Commonwealth may be less able to maintain up-to-date information for the public.

Beginning in 2006, the Commonwealth began to face significant budget shortfalls and endured continuous economic decline through 2018. On June 30, 2016, the Puerto Rico Oversight, Management, and Economic Stability

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Act ("PROMESA") was signed into law by President Obama. PROMESA established a federally-appointed oversight board (the "Oversight Board") to oversee the Commonwealth's financial operations and allows the Commonwealth and its instrumentalities, with approval of the Oversight Board, to file cases to restructure debt and other obligations in a "Title III" proceeding. Title III incorporates many provisions of the federal Bankruptcy Code and incorporates legal mechanisms for a litigation stay and restructuring of pension and debt obligations, among other provisions. Title III petitions were filed for, among others, the Commonwealth, the Puerto Rico Sales Tax Financing Corporation, and the Puerto Rico Electric Power Authority, three of the largest issuers of Commonwealth debt. The Oversight Board is required by law to remain in place until, based on audited financials, four consecutive fiscal years have ended with balanced operations and Puerto Rico has demonstrated affordable market access to short-term and long-term credit markets at reasonable interest rates.

The Commonwealth was in bankruptcy proceedings for approximately seven years. However, in the first quarter of 2022, the central government of Puerto Rico executed a debt exchange and exited bankruptcy, which impacted a majority of Puerto Rico's outstanding debt. A debt adjustment plan (the "Plan") was approved by Puerto Rico's bankruptcy court in January 2022, and the debt exchange became effective in March 2022. Puerto Rico's direct debt obligations were reduced from $34.3 billion to $7.4 billion, and its annual debt service was reduced from $4.2 billion to $1.15 billion.

The Plan requires that Puerto Rico adopt debt management policies in order to ensure that debt service does not become unmanageable. The policies dictate, among other things, that debt proceeds may only be used to fund capital projects and that debt to cover deficits will no longer be acceptable. Future debt refundings are required to result in cash flow savings each fiscal year and may not raise principal. Additionally, new debt is required to begin amortizing within two years and may not have a maturity greater than 30 years.

The Plan has substantially reduced the outstanding debt obligations of Puerto Rico and certain of its instrumentalities, but there can be no assurances that Puerto Rico will be able to negotiate settlements with respect to its remaining outstanding debt and Title III proceedings. In addition, the composition of the Oversight Board has changed significantly in recent years, and there can be no guarantee that the members of the Oversight Board will approve future restructuring agreements with other creditors.

The budget process will continue to require the Oversight Board, the governor of Puerto Rico, and Puerto Rico's Legislative Assembly to develop a budget that complies with the fiscal plan developed by the Oversight Board and the governor of Puerto Rico.

On June 6, 2025, the Oversight Board certified a revised 2024 fiscal plan ("Revised Fiscal Plan"), which included an updated fiscal year 2025 revenue forecast for Puerto Rico. The Revised Fiscal Plan projections reflect $13.8 billion of General Fund revenues for fiscal year 2025, an increase of $148 million from previous fiscal year 2025 estimates. These revenues include estimated personal income tax receipts of $3.0 billion, sales and use receipts of $3.1 billion, and corporation tax receipts of $4.3 billion.

On June 27, 2025, the budget for fiscal year 2026 was certified. The fiscal year 2026 budget provides for General Fund expenditures of approximately $13.1 billion. General Fund allocations in the fiscal year 2026 budget to education and health care were approximately $1.6 billion and $3.0 billion, respectively.

The Commonwealth's budget is impacted by extensive unfunded pension obligations related to its retirement systems, which include the Employees Retirement System, the Teachers Retirement System, and the Judiciary Retirement System. The Commonwealth's pension systems operate on a "pay-as-you-go" basis, and the General Fund has assumed any payments that the pension systems could not make. As a result, the Commonwealth may have fewer resources for other priorities, including payments on its outstanding debt obligations. Alternatively, the Commonwealth may be forced to raise revenue or issue additional debt. Either outcome could increase pressure on the Commonwealth's budget, which could have an adverse impact on the Fund's investments in Puerto Rico.

Investors should be aware that Puerto Rico relies heavily on transfers from the federal government related to specific programs and activities in the Commonwealth. These transfers include, among others, entitlements for previously performed services, or those resulting from contributions to programs such as Social Security, Veterans' Benefits, Medicare and U.S. Civil Service retirement pensions, as well as grants such as Nutritional Assistance Program grants and Pell Grant scholarships for higher education. There is considerable uncertainty about which federal

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policy changes may be enacted in the coming years and the economic impact of those changes. Due to the Commonwealth's dependence on federal transfers, any actions that reduce or alter these transfers may cause increased fiscal stress in Puerto Rico, which may have a negative impact on the value of the Commonwealth's municipal securities.

There can be no assurances that the Commonwealth will not continue to face severe fiscal stress or that such circumstances will not become even more difficult in the future. Furthermore, there can be no guarantee that future developments will not have a materially adverse impact on the Commonwealth's finances. Any further deterioration in the Commonwealth's financial condition may have a negative effect on the payment of principal and interest, the marketability, liquidity or value of the securities issued by the Commonwealth, which could reduce the performance of the Fund.

Since PROMESA was enacted, there have been various legal proceedings initiated by creditors of Puerto Rico and other constituencies. These groups asserted a number of complex legal claims that questioned the efficacy and validity of PROMESA, calling into question the validity of Oversight Board appointments. The U.S. Supreme Court ultimately decided that the appointment of the members to the Oversight Board was valid. In addition, certain Title III proceedings remain ongoing and certain Plans of Adjustment remain subject to judicial attack. The Commonwealth, its officials and employees are named as defendants in legal proceedings that occur in the normal course of governmental operations. Some of these proceedings involve claims for substantial amounts, which if decided against the Commonwealth might require the Commonwealth to make significant future expenditures or substantially impair future revenue sources. Because of the prospective nature of these proceedings, it is not presently possible to predict the ultimate outcome of such proceedings, estimate the potential impact on the ability of the Commonwealth to pay debt service costs on its obligations, or determine what impact, if any, such proceedings may have on the Fund's investments.

In September 2017, two successive hurricanes — Irma and Maria — caused severe damage to Puerto Rico. The Commonwealth's infrastructure was severely damaged by high winds and substantial flooding, including damage to the Commonwealth's water, power, and telecommunications infrastructure, and resulted in more than 1 million people losing power. In late December 2019 and January 2020, a series of earthquakes, including a magnitude 6.4 earthquake—the strongest to hit the island in more than a century—caused extensive damage. The aftershocks from these earthquakes may continue for years, and it is not currently possible to predict the extent of the damage that could arise from any aftershocks. The full extent of the natural disasters' impact on Puerto Rico's economy and foreign investment in Puerto Rico is difficult to estimate. There can be no assurances that future catastrophic weather events or natural disasters will not cause similar damage or that Puerto Rico will receive the necessary aid to rebuild from the damage caused by such catastrophic weather events or natural disasters.

Prolonged inflationary pressures and changing interest rates could also adversely affect Puerto Rico's economy. It is not possible to predict the long-term economic environment as it relates to Puerto Rico.

A large portion of Puerto Rico's debt has now been restructured. To the extent this debt restructuring effort has a negative impact on the liquidity or value of Puerto Rican municipal securities, a Fund's investments and its performance may be adversely affected. Puerto Rico's restructured general obligation debt is not currently rated by Moody's, S&P, or Fitch.

***Tender Option Bonds.*** The Fund may invest in trust certificates issued in tender option bond ("TOB") programs. In a TOB transaction, a tender option bond trust ("TOB Trust") issues floating rate certificates ("TOB Floater") and residual interest certificates ("TOB Residual") and utilizes the proceeds of such issuance to purchase a fixed-rate municipal bond ("Fixed Rate Bond") that either is owned or identified by the Fund. The TOB Floater is generally issued to third party investors (typically a money market fund) and the TOB Residual is generally issued to the Fund, which sold or identified the Fixed Rate Bond. The TOB Trust divides the income stream provided by the Fixed Rate Bond to create two securities, the TOB Floater, which is a short-term security, and the TOB Residual, which is a longer-term security. The interest rates payable on the TOB Residual issued to the Fund bear an inverse relationship to the interest rate on the TOB Floater. The interest rate on the TOB Floater is reset by a remarketing process typically every 7 to 35 days. After income is paid on the TOB Floater at current rates, the residual income from the Fixed Rate Bond goes to the TOB Residual. Therefore, rising short-term rates result in lower income for the TOB Residual, and vice versa. In the case of a TOB Trust that utilizes the cash received (less transaction expenses) from the issuance of the TOB Floater and TOB Residual to purchase the Fixed Rate Bond from the Fund, the Fund may then invest the cash

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received in additional securities, generating leverage for the Fund. Other PIMCO-managed accounts may also contribute municipal bonds to a TOB Trust into which the Fund has contributed Fixed Rate Bonds. If multiple PIMCO-managed accounts participate in the same TOB Trust, the economic rights and obligations under the TOB Residual will be shared among the funds ratably in proportion to their participation in the TOB Trust.

The TOB Residual may be more volatile and less liquid than other municipal bonds of comparable maturity. In most circumstances the TOB Residual holder bears substantially all of the underlying Fixed Rate Bond's downside investment risk and also benefits from any appreciation in the value of the underlying Fixed Rate Bond. Investments in a TOB Residual typically will involve greater risk than investments in Fixed Rate Bonds.

A TOB Residual held by the Fund provides the Fund with the right to: (1) cause the holders of the TOB Floater to tender their notes at par, and (2) cause the sale of the Fixed-Rate Bond held by the TOB Trust, thereby collapsing the TOB Trust. TOB Trusts are generally supported by a liquidity facility provided by a third party bank or other financial institution (the "Liquidity Provider") that provides for the purchase of TOB Floaters that cannot be remarketed. The holders of the TOB Floaters have the right to tender their certificates in exchange for payment of par plus accrued interest on a periodic basis (typically weekly) or on the occurrence of certain mandatory tender events. The tendered TOB Floaters are remarketed by a remarketing agent, which is typically an affiliated entity of the Liquidity Provider. If the TOB Floaters cannot be remarketed, the TOB Floaters are purchased by the TOB Trust either from the proceeds of a loan from the Liquidity Provider or from a liquidation of the Fixed Rate Bond.

The TOB Trust may also be collapsed without the consent of the Fund, as the TOB Residual holder, upon the occurrence of certain "tender option termination events" (or "TOTEs") as defined in the TOB Trust agreements. Such termination events typically include the bankruptcy or default of the municipal bond, a substantial downgrade in credit quality of the municipal bond, or a judgment or ruling that interest on the Fixed Rate Bond is subject to federal income taxation. Upon the occurrence of a termination event, the TOB Trust would generally be liquidated in full with the proceeds typically applied first to any accrued fees owed to the trustee, remarketing agent and liquidity provider, and then to the holders of the TOB Floater up to par plus accrued interest owed on the TOB Floater and a portion of gain share, if any, with the balance paid out to the TOB Residual holder. In the case of a mandatory termination event, after the payment of fees, the TOB Floater holders would be paid before the TOB Residual holders (i.e., the Fund). In contrast, in the case of a TOTE, after payment of fees, the TOB Floater holders and the TOB Residual holders would be paid pro rata in proportion to the respective face values of their certificates. If there are insufficient proceeds from the liquidation of the TOB Trust, the party that would bear the losses would depend upon whether the Fund holds a non-recourse TOBs Residual or a recourse TOBs Residual. If the Fund holds a non-recourse TOBs Residual, the Liquidity Provider or holders of the TOBs Floaters would bear the losses on those securities and there would be no recourse to the Fund's assets. If the Fund holds a recourse TOBs Residual, the Fund (and, indirectly, holders of the Fund's Common Shares) would typically bear the losses. In particular, if the Fund holds a recourse TOBs Residual, it will typically have entered into an agreement pursuant to which the Fund would be required to pay to the Liquidity Provider the difference between the purchase price of any TOBs Floaters put to the Liquidity Provider by holders of the TOBs Floaters and the proceeds realized from the remarketing of those TOBs Floaters or the sale of the assets in the TOBs Issuer. The Fund may invest in both non-recourse and recourse TOBs Residuals to leverage its portfolio.

In December 2013, regulators finalized rules implementing Section 619 (the "Volcker Rule") and Section 941 (the "Risk Retention Rules") of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"). Both the Volcker Rule and the Risk Retention Rules apply to TOB programs and place restrictions on the way certain sponsors may participate in TOB programs. Specifically, the Volcker Rule generally prohibits banking entities from engaging in proprietary trading or from acquiring or retaining an ownership interest in, or sponsoring, a hedge fund or private equity fund ("covered fund"), subject to certain exemptions and limitations. TOB programs generally are considered to be covered funds under the Volcker Rule, and, thus, may not be sponsored by a banking entity absent an applicable exemption. The Volcker Rule does not provide for any exemption that would allow banking entities to sponsor TOBs in the same manner as they did prior to the Volcker Rule's compliance date, which was July 21, 2017.

The Risk Retention Rules took effect in December 2016 and require the sponsor to a TOB Trust to retain at least five percent of the credit risk of the underlying assets supporting the TOB Trust's municipal bonds. The Risk Retention Rules may adversely affect the Fund's ability to engage in TOB Trust transactions or increase the costs of such transactions in certain circumstances.

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Under the new TOB Trust structure, the Liquidity Provider or remarketing agent will no longer purchase the tendered TOB Floaters, even in the event of failed remarketing. This may increase the likelihood that a TOB Trust will need to be collapsed and liquidated in order to purchase the tendered TOB Floaters. The TOB Trust may draw upon a loan from the Liquidity Provider to purchase the tendered TOB Floaters. Any loans made by the Liquidity Provider will be secured by the purchased TOB Floaters held by the TOB Trust and will be subject to an interest rate agreed with the Liquidity Provider.

**Corporate Debt Securities**

The Fund may invest in corporate debt securities of U.S. issuers and foreign issuers, and/or it may hold its assets in these securities for cash management purposes. The investment return of corporate debt securities reflects interest earnings and changes in the market value of the security. The market value of a corporate debt obligation may generally be expected to rise and fall inversely with interest rates generally. There also exists the risk that the issuers of the securities may not be able to meet their obligations on interest or principal payments at the time called for by an instrument. The Fund's investments in U.S. dollar or foreign currency-denominated corporate debt securities of domestic or foreign issuers are limited to corporate debt securities (corporate bonds, debentures, notes and other similar corporate debt instruments, including convertible securities) which meet the minimum ratings criteria set forth for the Fund, or, if unrated, are in PIMCO's opinion comparable in quality. Corporate income-producing securities may include forms of preferred or preference stock.

The rate of interest on a corporate debt security may be fixed, floating or variable, and may vary inversely with respect to a reference rate. The rate of return or return of principal on some debt obligations may be linked or indexed to the level of exchange rates between the U.S. dollar and a foreign currency or currencies. Corporate debt securities may be acquired with warrants attached. In addition, corporate debt securities may be highly customized and as a result may be subject to, among others, liquidity risk and pricing transparency risks.

Corporate debt securities are subject to the risk of the issuer's inability to meet principal and interest payments on the obligation and may also be subject to price volatility due to such factors as interest rate sensitivity, market perception of the creditworthiness of the issuer and general market liquidity. When interest rates rise, the value of corporate debt securities can be expected to decline. Debt securities with longer maturities tend to be more sensitive to interest rate movements than those with shorter maturities. Company defaults can impact the level of returns generated by corporate debt securities. An unexpected default can reduce income and the capital value of a corporate debt security. Furthermore, market expectations regarding economic conditions and the likely number of corporate defaults may impact the value of corporate debt securities.

Securities rated Baa and BBB are the lowest which are considered "investment grade" obligations. Moody's describes securities rated Baa as "judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics." S&P describes securities rated BBB as exhibiting adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to weaken the obligor's capacity to meet its financial commitments on the obligation. Fitch describes securities rated BBB as having good credit quality with current low expectations of default. The capacity for payment of financial commitments is considered adequate, but adverse business or economic conditions are more likely to impair this capacity." For a discussion of securities rated below investment grade, see "High Yield Securities ("Junk Bonds") and Securities of Distressed Companies."

**Commercial Paper**

Commercial paper represents short-term unsecured promissory notes issued in bearer form by corporations such as banks or bank holding companies and finance companies. The Fund may invest in commercial paper of any credit quality consistent with the Fund's investment objectives and policies, including unrated commercial paper. See Appendix A to the Prospectus for a description of the ratings assigned by Moody's, S&P and Fitch to commercial paper. The rate of return on commercial paper may be linked or indexed to the level of exchange rates between the U.S. dollar and a foreign currency or currencies.

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**Convertible Securities**

The Fund may invest in convertible securities, which may offer higher income than the common stocks into which they are convertible. A convertible security is a bond, debenture, note, preferred security, or other security that entitles the holder to acquire common stock or other equity securities of the same or a different issuer. A convertible security generally entitles the holder to receive interest paid or accrued until the convertible security matures or is redeemed, converted or exchanged. Before conversion, convertible securities have characteristics similar to non-convertible debt securities or preferred securities, as applicable. Convertible securities rank senior to common stock in a corporation's capital structure and, therefore, generally entail less risk than the corporation's common stock, although the extent to which such risk is reduced depends in large measure upon the degree to which the convertible security sells above its value as a fixed income security. Convertible securities are subordinate in rank to any senior debt obligations of the issuer, and, therefore, an issuer's convertible securities entail more risk than its debt obligations. Convertible securities generally offer lower interest or dividend yields than non-convertible debt securities of similar credit quality because of the potential for capital appreciation. In addition, convertible securities are often lower-rated securities.

Because of the conversion feature, the price of the convertible security will normally fluctuate in some proportion to changes in the price of the underlying asset, and as such is subject to risks relating to the activities of the issuer and/or general market and economic conditions. The income component of a convertible security may tend to cushion the security against declines in the price of the underlying asset. However, the income component of convertible securities causes fluctuations based upon changes in interest rates and the credit quality of the issuer.

If the convertible security's "conversion value," which is the market value of the underlying common stock that would be obtained upon the conversion of the convertible security, is substantially below the "investment value," which is the value of a convertible security viewed without regard to its conversion feature (i.e., strictly on the basis of its yield), the price of the convertible security is governed principally by its investment value. If the conversion value of a convertible security increases to a point that approximates or exceeds its investment value, the value of the security will be principally influenced by its conversion value. A convertible security will sell at a premium over its conversion value to the extent investors place value on the right to acquire the underlying common stock while holding an income-producing security.

A convertible security may be subject to redemption at the option of the issuer at a predetermined price. If a convertible security held by the Fund is called for redemption, the Fund would be required to permit the issuer to redeem the security and convert it to underlying common stock, or would sell the convertible security to a third party, which may have an adverse effect on the Fund's ability to achieve its investment objectives. The Fund generally would invest in convertible securities for their favorable price characteristics and total return potential and would normally not exercise an option to convert unless the security is called or conversion is forced.

The Fund may invest in so-called "synthetic convertible securities," which are composed of two or more different securities whose investment characteristics, taken together, resemble those of convertible securities. A third party or PIMCO may create a "synthetic" convertible security by combining separate securities that possess the two principal characteristics of a traditional convertible security, i.e., an income-producing security ("income-producing component") and the right to acquire an equity security ("convertible component"). The income-producing component is achieved by investing in non-convertible, income-producing securities such as bonds, preferred securities and money market instruments, which may be represented by derivative instruments. The convertible component is achieved by investing in securities or instruments such as warrants or options to buy common stock at a certain exercise price, or options on a stock index. Unlike a traditional convertible security, which is a single security having a single market value, a synthetic convertible comprises two or more separate securities, each with its own market value. Therefore, the "market value" of a synthetic convertible security is the sum of the values of its income-producing component and its convertible component. For this reason, the values of a synthetic convertible security and a traditional convertible security may respond differently to market fluctuations.

More flexibility is possible in the assembly of a synthetic convertible security than in the purchase of a convertible security. Although synthetic convertible securities may be selected where the two components are issued by a single issuer, thus making the synthetic convertible security similar to the traditional convertible security, the character of a synthetic convertible security allows the combination of components representing distinct issuers. A synthetic convertible security also is a more flexible investment in that its two components may be purchased

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separately. For example, the Fund may purchase a warrant for inclusion in a synthetic convertible security but temporarily hold short-term investments while postponing the purchase of a corresponding bond pending development of more favorable market conditions.

A holder of a synthetic convertible security faces the risk of a decline in the price of the security or the level of the index or security involved in the convertible component, causing a decline in the value of the security or instrument, such as a call option or warrant purchased to create the synthetic convertible security. Should the price of the stock fall below the exercise price and remain there throughout the exercise period, the entire amount paid for the call option or warrant would be lost. Because a synthetic convertible security includes the income-producing component as well, the holder of a synthetic convertible security also faces the risk that interest rates will rise, causing a decline in the value of the income-producing component.

*Contingent Convertible Instruments.* Contingent convertible securities ("CoCos") are a form of hybrid debt security issued primarily by non-U.S. issuers, which have loss absorption mechanisms built into their terms. 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 common stock of the issuer or have their principal written down (including potentially to zero) upon the occurrence of certain triggering events ("triggers") generally linked to regulatory capital thresholds or regulatory actions calling into question the issuing banking institution's continued viability as a going-concern. In certain scenarios, investors in CoCos may suffer a loss of capital ahead of equity holders or when equity holders do not. There is no guarantee that the Fund will receive a return of principal on CoCos. Any indication that an automatic write-down or conversion event may occur can be expected to have an adverse effect on the market price of CoCos. CoCos are often rated below investment grade and are subject to the risks of high yield securities. Because CoCos are issued primarily by financial institutions, CoCos may present substantially increased risks at times of financial turmoil, which could affect financial institutions more than companies in other sectors and industries. 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.

CoCos' unique equity conversion or principal write-down features are tailored to the issuing banking institution and its regulatory requirements. Some additional risks associated with CoCos include, but are not limited to:

● *Loss absorption risk.* CoCos may be subject to an automatic write-down (i.e., the automatic write-down of the principal amount or value of the securities, potentially to zero, and the cancellation of the securities) under certain circumstances, which could result in the Fund losing a portion or all of its investment in such securities. In addition, the Fund may not have any rights with respect to repayment of the principal amount of the securities that has not become due or the payment of interest or dividends on such securities for any period from (and including) the interest or dividend payment date falling immediately prior to the occurrence of such automatic write-down. An automatic write-down could also result in a reduced income rate if the dividend or interest payment is based on the security's par value. In addition, CoCos have fully discretionary coupons. This means coupons can potentially be cancelled at the issuer's discretion or at the request of the relevant regulatory authority in order to help the issuer absorb losses and may be suspended in the event there are insufficient distributable reserves.

● *Subordinated instruments.* CoCos will, in the majority of circumstances, be issued in the form of subordinated debt instruments in order to provide the appropriate regulatory capital treatment prior to a conversion. Accordingly, in the event of liquidation, dissolution or winding-up of an issuer prior to a conversion having occurred, the rights and claims of the holders of the CoCos, such as the Fund, against the issuer in respect of or arising under the terms of the CoCos shall generally rank junior to the claims of all holders of unsubordinated obligations of the issuer and may also become junior to other obligations of the issuer. In addition, if the CoCos are converted into the issuer's underlying equity securities following a

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conversion event (i.e., a "trigger"), each holder will be subordinated due to their conversion from being the holder of a debt instrument to being the holder of an equity instrument.

● *Market value will fluctuate based on unpredictable factors.* The trading behavior of a given issuer's CoCos may be strongly impacted by the trading behavior of other issuers' CoCos, such that negative information from an unrelated CoCo may cause a decline in value of one or more CoCos held by the Fund. Accordingly, the trading behavior of CoCos may not follow the trading behavior of other similarly structured securities. The value of CoCos is unpredictable and will be influenced by many factors including, without limitation: (i) the creditworthiness of the issuer and/or fluctuations in such issuer's applicable capital ratios; (ii) supply and demand for the CoCos; (iii) general market conditions and available liquidity; and (iv) economic, financial and political events that affect the issuer, its particular market or the financial markets in general.

**Equity Securities**

Subject to the Fund's investment policies, the Fund may hold common stocks and other equity securities from time to time, including, without limitation, those it has received through the conversion of a convertible security held by the Fund or in connection with the restructuring of a debt security. Common stocks include common shares and other common equity interests issued by private or public issuers. The Fund may invest in securities that have not been registered for public sale in the U.S. or relevant non-U.S. jurisdictions, including without limit securities eligible for purchase and sale pursuant to Rule 144A under the Securities Act, or relevant provisions of applicable non-U.S. law, and other securities issued in private placements. The market price of common stocks and other equity securities may go up or down, sometimes rapidly or unpredictably. Equity securities may decline in value due to factors affecting equity securities markets generally, particular industries represented in those markets, or the issuer itself. The values of equity securities may decline due to general market conditions that are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, levels of public debt and deficits, changes (or anticipated changes) in interest or currency rates or adverse investor sentiment generally. They may also decline due to factors that affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities generally have greater price volatility than fixed income securities. These risks are generally magnified in the case of equity investments in distressed companies.

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, which are discussed elsewhere in the Prospectus and this Statement of Additional Information. 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**

Preferred securities represent an equity interest in a company that generally entitles the holder to receive, in preference to the holders of other stocks such as common stocks, dividends and a fixed share of the proceeds resulting from a liquidation of the company. Some preferred securities also entitle their holders to receive additional liquidation proceeds on the same basis as holders of a company's common stock, and thus also represent an ownership interest in that company. Preferred securities are subject to issuer-specific and market risks applicable generally to equity securities. In addition, a company's preferred securities generally pay dividends only after the company makes required payments to holders of its bonds and other debt. For this reason, the value of preferred securities will usually react more strongly than bonds and other debt to actual or perceived changes in the company's financial condition or prospects. Preferred securities of smaller companies may be more vulnerable to adverse developments than preferred securities of larger companies.

The value of a company's preferred securities may fall as a result of factors relating directly to that company's products or services. A preferred security's value may also fall because of factors affecting not just the company, but companies in the same industry or in a number of different industries, such as increases in production costs.

The value of preferred securities may also be affected by changes in financial markets that are relatively unrelated to the company or its industry, such as changes in interest rates or currency exchange rates. In addition, a company's

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preferred securities generally pay dividends only after the company makes required payments to holders of its bonds and other debt. For this reason, the value of preferred securities will usually react more strongly than bonds and other debt to actual or perceived changes in the company's financial condition or prospects. Preferred securities of smaller companies may be more vulnerable to adverse developments than those of larger companies.

***Adjustable Rate and Auction Preferred Securities****.* Typically, the dividend rate on an adjustable rate preferred security is determined prospectively each quarter by applying an adjustment formula established at the time of issuance of the security. Although adjustment formulas vary among issues, they typically involve a fixed premium or discount relative to rates on specified debt securities issued by the U.S. Treasury or SOFR. With respect to adjustment formulas relative to rates on specified debt securities issued by the U.S. Treasury, typically, an adjustment formula will provide for a fixed premium or discount adjustment relative to the highest base yield of three specified U.S. Treasury securities: the 90-day Treasury bill, the 10-year Treasury note and the 20-year Treasury bond. The premium or discount adjustment to be added to or subtracted from this highest U.S. Treasury base rate yield is fixed at the time of issue and cannot be changed without the approval of the holders of the security. The dividend rate on another type of preferred security in which the Fund may invest, commonly known as auction preferred securities, is adjusted at intervals that may be more frequent than quarterly, such as every 7 or 49 days, based on bids submitted by holders and prospective purchasers of such securities and may be subject to stated maximum and minimum dividend rates. The issues of most adjustable rate and auction preferred securities currently outstanding are perpetual, but are redeemable after a specified date, or upon notice, at the option of the issuer. Certain issues supported by the credit of a high-rated financial institution provide for mandatory redemption prior to expiration of the credit arrangement. No redemption can occur if full cumulative dividends are not paid. Although the dividend rates on adjustable and auction preferred securities are generally adjusted or reset frequently, the market values of these preferred securities may still fluctuate in response to changes in interest rates. Market values of adjustable preferred securities also may substantially fluctuate if interest rates increase or decrease once the maximum or minimum dividend rate for a particular security is approached. Auctions for U.S. auction preferred securities have failed since early 2008, and the dividend rates payable on such preferred securities since that time typically have been paid at their maximum applicable rate (typically a function of a reference rate of interest). PIMCO expects that auction preferred securities will continue to pay dividends at their maximum applicable rate for the foreseeable future and cannot predict whether or when the auction markets for auction preferred securities may resume normal functioning.

***Fixed Rate Preferred Securities.*** Some fixed rate preferred securities in which the Fund may invest, known as perpetual preferred securities, offer a fixed return with no maturity date. Because they never mature, perpetual preferred securities act like long-term bonds and can be more volatile than and more sensitive to changes in interest rates than other types of preferred securities that have a maturity date. The Fund may also invest in sinking fund preferred securities. These preferred securities also offer a fixed return, but have a maturity date and are retired or redeemed on a predetermined schedule. The shorter duration of sinking fund preferred securities makes them perform somewhat like intermediate-term bonds and they typically have lower yields than perpetual preferred securities.

**Bank Obligations**

The Fund may invest in bank capital securities of both non-U.S. (foreign) and U.S. issuers. Bank capital securities are issued by banks to help fulfill their regulatory capital requirements. There are three common types of bank capital: Lower Tier II, Upper Tier II and Tier I. Bank capital is generally, but not always, of investment grade quality. Upper Tier II securities are commonly thought of as hybrids of debt and preferred securities. Upper Tier II securities are often perpetual (with no maturity date), callable and have a cumulative interest deferral feature. This means that under certain conditions, the issuer bank can withhold payment of interest until a later date. However, such deferred interest payments generally earn interest. Tier I securities often take the form of trust preferred securities.

Bank obligations in which the Fund may invest include, without limitation, certificates of deposit, bankers' acceptances and fixed time deposits. Certificates of deposit are negotiable certificates issued against funds deposited in a commercial bank for a definite period of time and that earn a specified return. Bankers' acceptances are negotiable drafts or bills of exchange, normally drawn by an importer or exporter to pay for specific merchandise, which are "accepted" by a bank, meaning, in effect, that the bank unconditionally agrees to pay the face value of the instrument on maturity. Fixed time deposits are bank obligations payable at a stated maturity date and bearing interest at a fixed rate. Fixed time deposits may be withdrawn on demand by the investor, but may be subject to early withdrawal penalties which vary depending upon market conditions and the remaining maturity of the obligation. There are

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generally no contractual restrictions on the right to transfer a beneficial interest in a fixed time deposit to a third party, although there is generally no market for such deposits.

The activities of U.S. banks and most foreign banks are subject to comprehensive regulations which, in the case of U.S. regulations, have undergone substantial changes in the past decade and are currently subject to legislative and regulatory scrutiny. The enactment of new legislation or regulations, as well as changes in interpretation and enforcement of current laws, may affect the manner of operations and profitability of U.S. and foreign banks. Significant developments in the U.S. banking industry have included increased competition from other types of financial institutions, increased acquisition activity and geographic expansion. Banks may be particularly susceptible to certain economic factors, such as interest rate changes and adverse developments in the market for real estate. Fiscal and monetary policy and general economic cycles can affect the availability and cost of funds, loan demand and asset quality and thereby impact the earnings and financial conditions of banks.

U.S. and global markets recently have experienced increased volatility, including as a result of the recent failures of certain U.S. and non-U.S. banks, which could be harmful to the Fund and issuers in which it invests. For example, if a bank at which the Fund or an 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. If a bank that provides a subscription line credit facility, asset-based facility, other credit facility and/or other services to an issuer or to a fund fails, the issuer or fund could be unable to draw funds under its credit facilities or obtain replacement credit facilities or other services from other lending institutions with similar terms.

Issuers in which the Fund may invest can be affected by volatility in the banking sector. Even if banks used by issuers in which the Fund invests remain solvent, continued volatility in the banking sector could contribute to, cause or intensify an economic recession, increase the costs of capital and banking services or result in the issuers being unable to obtain or refinance indebtedness at all or on as favorable terms as could otherwise have been obtained. Conditions in the banking sector are evolving, and the scope of any potential impacts to the Fund and issuers, both from market conditions and also potential legislative or regulatory responses, are uncertain. Such conditions and responses, as well as a changing interest rate environment, can contribute to decreased market liquidity and erode the value of certain holdings, including those of U.S. and non-U.S. banks. Continued market volatility and uncertainty and/or a downturn in market and economic and financial conditions, as a result of developments in the banking industry or otherwise (including as a result of delayed access to cash or credit facilities), could have an adverse impact on the Fund and issuers in which it invests.

Obligations of foreign banks involve somewhat different investment risks than those affecting obligations of U.S. banks, including the possibilities that their liquidity could be impaired because of future political and economic developments, that their obligations may be less marketable than comparable obligations of U.S. banks, that a foreign jurisdiction might impose withholding or other taxes on interest income payable on those obligations, that foreign deposits may be seized or nationalized, that foreign governmental restrictions such as exchange controls may be adopted which might adversely affect the payment of principal and interest on those obligations and that the selection of those obligations may be more difficult because there may be less publicly available information concerning foreign banks and the accounting, auditing and financial reporting standards, practices and requirements applicable to foreign banks may differ from those applicable to U.S. banks. Foreign banks are not generally subject to examination by any U.S. government agency or instrumentality.

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

The Fund may purchase indebtedness and participations in loans held and/or originated by private financial institutions, including commercial and residential mortgage loans, corporate loans and consumer loans, as well as interests and/or servicing or similar rights in such loans. Such instruments may be secured or unsecured and may be newly-originated (and may be specifically designed for the Fund). Indebtedness is different from traditional debt securities in that debt securities are part of a large issue of securities to the public whereas indebtedness may not be a security and may represent a specific commercial loan to a borrower. Loan participations typically represent direct participation, together with other parties, in a loan to a borrower, and generally are offered by banks or other financial institutions or lending syndicates. The Fund may participate in such syndications, or can buy part or all of a loan. When purchasing indebtedness and loan participations, the Fund assumes the credit risk associated with the corporate borrower and may assume the credit risk associated with an interposed bank or other financial intermediary. The indebtedness and loan participations that the Fund may acquire may not be rated by any NRSROs.

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A loan is often administered by an agent bank acting as agent for all holders. The agent bank administers the terms of the loan, as specified in the loan agreement. In addition, the agent bank is normally responsible for the collection of principal and interest payments from the corporate borrower and the apportionment of these payments to the credit of all institutions which are parties to the loan agreement. Unless, under the terms of the loan or other indebtedness, the Fund has direct recourse against the corporate borrower, the Fund may have to rely on the agent bank or other financial intermediary to apply appropriate credit remedies against a borrower. This may subject the Fund to delays, expenses and risks that are greater than those that would be involved if the Fund could enforce its rights directly against the borrower. Also, in the event of the insolvency of the lender or interposed bank or other financial intermediary who sold the participation interest to the Fund, the Fund may not have any exclusive or senior claim with respect to the lender's interest in the corporate loan, or in the collateral securing the corporate loan. If the Fund has purchased the whole loan, the Fund would assume all of the rights of the lender in a commercial loan, including the right to receive payments of principal and interest and other amounts directly from the borrower and to enforce its rights as a lender directly against the borrower.

A financial institution's employment as agent bank might be terminated in the event that it fails to observe a requisite standard of care or becomes insolvent. A successor agent bank would generally be appointed to replace the terminated agent bank, and assets held by the agent bank under the loan agreement would likely remain available to holders of such indebtedness. However, if assets held by the agent bank for the benefit of the Fund were determined to be subject to the claims of the agent bank's general creditors, the Fund might incur certain costs and delays in realizing payment on a loan or loan participation and could suffer a loss of principal and/or interest. In situations involving other interposed financial institutions (e.g., an insurance company or governmental agency) similar risks may arise.

Purchasers of loans and other forms of direct indebtedness depend primarily upon the creditworthiness of the borrower for payment of principal and interest. If the Fund does not receive scheduled interest or principal payments on such indebtedness, the Fund's share price and/or yield of the Common Shares could be adversely affected. Loans that are fully secured offer the Fund more protection than an unsecured loan in the event of non-payment of scheduled interest or principal. However, there is no assurance that the liquidation of collateral from a secured loan would satisfy the borrower's obligation, or that the collateral can be liquidated. In the event of the bankruptcy of a borrower, the Fund could experience delays or limitations in its ability to realize the benefits of any collateral securing a loan.

The Fund may acquire loans and loan participations with credit quality comparable to that of issuers of its securities investments. Indebtedness of companies whose creditworthiness is poor and/or subprime in quality involves substantially greater risks, and may be highly speculative. Some companies may never pay off their indebtedness, or may pay only a small fraction of the amount owed. Consequently, when acquiring indebtedness of companies with poor credit, the Fund bears a substantial risk of losing the entire amount of the instrument acquired. The Fund may make purchases of indebtedness and loan participations to achieve income and/or capital appreciation. Because the Fund establishes a direct contractual relationship with the lender or participant, the Fund is subject to the credit risk of the lender or participant in addition to the usual credit risk of the borrower and any agent bank. Under normal market conditions, loan participations that sell at a discount to the secondary loan price may indicate the borrower has credit problems or other issues associated with the credit risk of the loan. To the extent the credit problems are not resolved, loan participations may not appreciate in value.

In addition, 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 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 extend 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.

The Fund will limit the amount of its total assets that it will invest in any one issuer and the Fund will limit the amount of its total assets that it will invest in issuers within the same industry. For purposes of this limit, the Fund generally will treat the corporate borrower as the "issuer" of indebtedness held by the Fund. In the case of loan participations where a bank or other lending institution serves as a financial intermediary between the Fund and the borrower, if the participation does not shift to the Fund the direct debtor-creditor relationship with the borrower, SEC interpretations require the Fund to treat both the lending bank or other lending institution and the borrower as "issuers." Treating a financial intermediary as an issuer of indebtedness may restrict the Fund's ability to invest in

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indebtedness related to a single financial intermediary, or a group of intermediaries engaged in the same industry, even if the underlying borrowers represent many different companies and industries.

Loans and other types of direct indebtedness (which the Fund may purchase in or otherwise gain exposure to) may not be readily marketable and may be subject to restrictions on resale. A secondary market in corporate loans may be subject to irregular trading activity, wide bid/ask spreads and extended trade settlement periods, which may impair the ability to accurately value existing and prospective investments and to realize in a timely fashion the full value on sale of a corporate loan. 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 due 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"). In some cases, negotiations involved in disposing of indebtedness may require weeks to complete. Consequently, some indebtedness may be difficult or impossible to dispose of readily at what PIMCO believes to be a fair price. In addition, valuation of illiquid indebtedness involves a greater degree of judgment in determining the Fund's net asset value than if that value were based on available market quotations, and could result in significant variations in the Fund's daily share price. At the same time, some loan interests are traded among certain financial institutions and accordingly may be deemed liquid. As the market for different types of indebtedness develops, the liquidity of these instruments may improve. Acquisitions of loan participations are considered to be debt obligations for purposes of the Fund's investment restriction relating to the lending of funds or assets by the Fund.

In purchasing loans, the Fund will compete with a broad spectrum of lenders. Increased competition for, or a diminishment in the available supply of, qualifying loans could result in lower yields on and/or less advantageous terms of such loans, which could reduce Fund performance.

If the Fund or its direct or indirect fully-owned Subsidiary trust is required to be licensed in any particular jurisdiction in order to originate, acquire, hold, dispose or foreclose loans, obtaining the required license may not be viable (because, for example, it is not possible or practical) and the Fund or its Subsidiary trust may be unable to restructure its holdings to address the licensing requirement. In that case, the Fund or its Subsidiary trust may be forced to cease activities involving the affected loans, or may be forced to sell such loans. If a state regulator or court were to determine that the Fund or its Subsidiary trust acquired, held or foreclosed a loan without a required state license, the Fund or its Subsidiary trust could be subject to penalties or other sanctions, prohibited or restricted in its ability to enforce its rights under the loan, or subject to litigation risk or other losses or damages.

Investments in loans through a purchase of a loan or a direct assignment of a financial institution's interests with respect to a loan may involve additional risks to the Fund. The purchaser of an assignment typically succeeds to all the rights and obligations under the loan agreement with the same rights and obligations as the assigning lender. Assignments may, however, be arranged through private negotiations between potential assignees and potential assignors, and the rights and obligations acquired by the purchaser of an assignment may differ from, and be more limited than, those held by the assigning lender. 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 (see "Real Estate Assets and Related Derivatives" above). In addition, it is conceivable that under emerging legal theories of lender liability, the Fund could be held liable as co-lender. It is unclear whether loans and other forms of direct indebtedness offer securities law protections against fraud and misrepresentation. In the absence of definitive regulatory guidance, the Fund relies on the Investment Manager's research in an attempt to avoid situations where fraud or misrepresentation could adversely affect the Fund.

The Fund may obtain exposure to loans made to private investment vehicles, including private funds that are not registered under the 1940 Act. Such loans may be for various purposes, including but not limited to, subscription line or "sub-line" credit facilities secured by the uncalled capital commitments of such private investment vehicles' investors. Although such capital commitments are typically subject to legally binding agreements, there can be no assurance that the investors will meet their funding obligations when called. As a result, the Fund may be subject to the risk of delay or default in repayment of the loan, which could negatively impact the Fund's performance. Additionally, the Fund may face liquidity risks if the private investment vehicle is unable to draw on capital commitments in a timely manner.

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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.

The Fund may make, participate in or acquire debtor-in-possession financings (commonly known as "DIP financings"). DIP financings are arranged when an entity seeks the protections of the bankruptcy court under Chapter 11 of the U.S. Bankruptcy Code ("Chapter 11"). These financings allow the entity to continue its business operations while reorganizing under Chapter 11. Such financings constitute senior liens on unencumbered security (i.e., security not subject to other creditors' claims). There is a risk that the entity will not emerge from Chapter 11 and be forced to liquidate its assets under Chapter 7 of the U.S. Bankruptcy Code. In the event of liquidation, the Fund's only recourse will be against the property securing the DIP financing.

The Fund may acquire residential mortgage loans and unsecured consumer loans through direct or indirect fully-owned Subsidiaries. The Subsidiaries directly holding a beneficial interest in loans will be formed as domestic common law or statutory trusts with a federally chartered bank serving as trustee. Each such fully-owned Subsidiary trust will hold the beneficial interests of loans and the federally chartered bank acting as trustee will hold legal title to the loans for the benefit of the Subsidiary trust and/or the trust's beneficial owners (i.e., the Fund or its direct or indirect fully-owned Subsidiary). State licensing laws typically exempt federally chartered banks from their licensing requirements, and federally chartered banks may also benefit from federal preemption of state laws, including any licensing requirements. The use of common law or statutory trusts with a federally chartered bank serving as trustee is intended to address any state licensing requirements that may be applicable to purchasers or holders of loans, including state licensing requirements related to foreclosure. The Fund believes that such direct or indirect fully-owned Subsidiary trusts will not be treated as associations or publicly traded partnerships taxable as corporations for U.S. federal income tax purposes, and that therefore, the Subsidiary trusts will not be subject to U.S. federal income tax at the Subsidiary level. Investments in residential mortgage loans or unsecured consumer loans through entities that are not so treated can potentially be limited by the Fund's intention to qualify as a RIC under Subchapter M of the Code, and limit the Fund's ability to qualify as such.

Investments in loans may include unfunded loan commitments, which are contractual obligations for future funding. Unfunded loan commitments may include revolving credit facilities, which may obligate the Fund to supply additional cash to the borrower on demand. Unfunded loan commitments represent a future obligation in full, even though a percentage of the committed amount may not be utilized by the borrower. When investing in a loan participation, the Fund has the right to receive payments of principal, interest and any fees to which it is entitled only from the agent selling the loan agreement and only upon receipt of payments by the agent from the borrower. The Fund may receive a commitment fee based on the undrawn portion of the underlying line of credit portion of a loan. In certain circumstances, the Fund may receive a penalty fee upon the prepayment of a loan by a borrower.

Some lending platforms (or their affiliates) may attempt to take advantage of policies in certain states that allow lenders to make loans at advantageous interest rates by incorporating choice of law provisions into loan agreements that hold that the agreements are to be governed by the laws of those lender-friendly states. In the event that a borrower or state regulator successfully invalidates such choice-of-law clause, platforms (of their affiliates) may not be able to collect some or all of the interest and principal due on such loans; such loans may not be found to be enforceable or the platforms (or their affiliates) could become subject to penalties and damages. Other platforms may engage in arrangements with funding banks where the platform assists the bank in originating loans that are funded by the bank. In some cases, the loans are sold to the platforms and the platforms as assignees of the bank under applicable law and precedent utilize the bank's rate and fee exportation authority. At least one federal circuit court has cast doubt upon this theory and other litigation challenges the ability of assignees to utilize a bank's exportation authority as an assignee of the bank's loans.

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**Loan Origination**

The Fund may invest in and/or originate loans, including, without limitation, to, on behalf of, authorized by, sponsored by, and/or in connection with a project for which authority and responsibility lies with one or more U.S. states or territories, cities in a U.S. state or territory, or political subdivisions, agencies, authorities or instrumentalities of such states, territories or cities, which may be in the form of whole loans, assignments, participations, secured and unsecured notes, senior and second lien loans, mezzanine loans, bridge loans or similar investments, including to borrowers that are unrated or have credit ratings that are determined by one or more NRSROs and/or PIMCO to be below investment grade. 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 loans acquired by the Fund may be of the type that count towards the Fund's 80% policy or they may be loans that produce income that is subject to regular federal income tax. 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.

Direct loans between the Fund and a borrower may not be administered by an underwriter or agent bank. The Fund may provide financing to borrowers directly or through companies acquired (or created) and owned by or otherwise affiliated with the Fund. The terms of the direct loans, including the duration of the loan, are negotiated with borrowers in private transactions and the Fund is not limited in the size of loans it may originate, including with respect to a single borrower, other than pursuant to any applicable law. A direct loan may be secured or unsecured. The Fund will retain all fees received in connection with originating or structuring the terms of any such investment.

In determining whether to make a direct loan, the Fund will rely primarily upon the creditworthiness of the borrower and/or any collateral for payment of interest and repayment of principal. In making a direct loan, the Fund is exposed to the risk that the borrower may default or become insolvent and, consequently, that the Fund will lose money on the loan. Furthermore, direct loans may subject the Fund to liquidity and interest rate risk and certain direct loans may be deemed illiquid. Direct loans are not publicly traded and may not have a secondary market. The lack of a secondary market for direct loans may have an adverse impact on the ability of the Fund to dispose of a direct loan and/or to value the direct loan. When engaging in direct lending, the Fund's performance may depend, in part, on the ability of the Fund to originate loans on advantageous terms. In originating and purchasing loans, the Fund will often compete with a broad spectrum of lenders. Increased competition for, or a diminishment in the available supply of, qualifying loans could result in lower yields on and/or less advantageous terms of such loans, which could reduce Fund performance.

As part of its lending activities, the Fund may originate loans to companies that are experiencing significant financial or business difficulties, including companies involved in bankruptcy or other reorganization and liquidation proceedings or that are rated "below investment grade" by a national recognized ratings agency. Although the terms of such financing may result in significant financial returns to the Fund, they involve a substantial degree of risk. The level of analytical sophistication, both financial and legal, necessary for successful financing to companies experiencing significant business and financial difficulties is unusually high. Different types of assets may be used as collateral for the Fund's loans and, accordingly, the valuation of and risks associated with such collateral will vary by loan. There is no assurance that the Fund will correctly evaluate the value of the assets collateralizing the Fund's loans or the prospects for a successful repayment or a successful reorganization or similar action. In any reorganization or liquidation proceeding relating to a company that the Fund funds, the Fund may lose all or part of the amounts advanced to the borrower or may be required to accept collateral with a value less than the amount of the loan advanced by the Fund or its affiliates to the borrower. Furthermore, in the event of a default by a borrower, the Fund may have difficulty disposing of the assets used as collateral for a loan.

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Various state licensing requirements could apply to the Fund with respect to the origination, acquisition, holding, servicing, foreclosure and/or disposition of loans and similar assets. The licensing requirements could apply depending on the location of the borrower, the location of the collateral securing the loan, or the location where the Fund or PIMCO operates or has offices. In states in which it is licensed, the Fund or PIMCO will be required to comply with applicable laws and regulations, including consumer protection and anti-fraud laws, which could impose restrictions on the Fund's or PIMCO's ability to take certain actions to protect the value of its holdings in such assets and impose compliance costs. Failure to comply with such laws and regulations could lead to, among other penalties, a loss of the Fund's or PIMCO's license, which in turn could require the Fund to divest assets located in or secured by real property located in that state. These risks will also apply to issuers and entities in which the Fund invests that hold similar assets, as well as any origination company or servicer in which the Fund owns an interest.

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. These legal proceedings range from actions involving a single plaintiff to class-action lawsuits with potentially tens of thousands of class members. In addition, a number of participants in the loan origination and servicing industry (including control persons of industry participants) have been the subject of regulatory actions by state regulators, including state attorneys general, and by the federal government. Governmental investigations, examinations or regulatory actions, or private lawsuits, including purported class action lawsuits, may adversely affect such companies' 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.

**Loans**

To the extent the Fund invests in loans, the Fund may be subject to greater levels of credit risk, call (or "prepayment") risk, settlement risk and liquidity risk, than funds that do not invest in such securities. These instruments are considered predominantly speculative with respect to an issuer's continuing ability to make principal and interest payments, and may be more volatile than other types of securities. An economic downturn or individual corporate developments could adversely affect the market for these instruments and reduce the Fund's ability to sell these instruments at an advantageous time or price. An economic downturn would generally lead to a higher non-payment rate, and a loan may lose significant market value before a default occurs. The Fund may also be subject to greater levels of liquidity risk than funds that do not invest in 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 less liquid 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 difficult to value accurately or 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. Loans may have extended trade settlement periods, which may result in cash not being immediately available to the Fund. As a result, transactions in loans that settle on a delayed basis may limit the Fund's ability to make additional investments or satisfy the Fund's repurchase obligations. The Fund may seek to satisfy any short-term liquidity needs resulting from an extended trade settlement process by, among other things, selling portfolio assets, holding additional cash or entering into temporary borrowing arrangements with banks and other potential funding sources. 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

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instruments that may pay lower interest rates. Loans in which the Fund invests may or may not be collateralized, although the loans may not be fully collateralized and the collateral may be unavailable or insufficient to meet the obligations of the borrower. The Fund may have limited rights to exercise remedies against such collateral or a borrower, and loan agreements may impose certain procedures that delay receipt of the proceeds of collateral or require the Fund to act collectively with other creditors to exercise its rights with respect to a loan. Loans may not be considered securities under the federal securities laws. In such circumstances, fewer legal protections may be available with respect to the Fund's investment in loans. In particular, if a loan is not considered a security under the federal securities laws, certain legal protections normally available to securities investors under the federal securities laws, such as those against fraud and misrepresentation, may not be available. Because of the risks involved in investing in loans, an investment in the Fund that invests in such instruments should be considered speculative.

Loans that are covenant-lite obligations contain fewer maintenance covenants than other types of loans, 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 obligations may carry more risk than traditional loans as they allow borrowers to engage in activities that would otherwise be difficult or impossible under a covenant-heavy loan agreement. In the event of default, covenant-lite obligations may exhibit diminished recovery values as the lender may not have the opportunity to negotiate with the borrower prior to default. The Fund may have a greater risk of loss on investments in covenant-lite obligations as compared to investments in traditional loans.

Secondary trades of loans may have extended settlement periods. Any settlement of a secondary market purchase of loans in the ordinary course, on a settlement date beyond the period expected by loan market participants (i.e., T+7 for par/near par loans and T+20 for distressed loans, in other words more than seven or twenty business days beyond the trade date, respectively) is subject to the "delayed compensation" rules prescribed by the Loan Syndications and Trading Association ("LSTA") and addressed in the LSTA's standard loan documentation for par/near par trades and for distressed trades. "Delayed compensation" is a pricing adjustment comprised of certain interest and fees, which is payable between the parties to a secondary loan trade. The LSTA introduced a requirements-based rules program in order to incentivize shorter settlement times for secondary transactions and discourage certain delay tactics that create friction in the loan syndications market by, among other things, mandating that the buyer of a loan satisfy certain "basic requirements" as prescribed by the LSTA no later than T+5 in order for the buyer to receive the benefit of interest and other fees accruing on the purchased loan from and after T+7 for par/near par loans (for distressed trades, T+20) until the settlement date, subject to certain specific exceptions. These "basic requirements" generally require a buyer to execute the required trade documentation and to be, and remain, financially able to settle the trade no later than T+7 for par/near par loans (and T+20 for distressed trades). In addition, buyers are required to fund the purchase price for a secondary trade upon receiving notice from the agent of the effectiveness of the trade in the agent's loan register. The Fund, as a buyer of a loan in the secondary market, would need to meet these "basic requirements" or risk forfeiting all or some portion of the interest and other fees accruing on the loan from and after T+7 for par/near par loans (for distressed trades, T+20) until the settlement date. The "delayed compensation" mechanism does not mitigate the other risks of delayed settlement or other risks associated with investments in loans.

Investors should be aware that the Fund's investment in a loan may result in the Fund or PIMCO receiving information about the issuer that may be deemed material, non-public information. Under such circumstances, the Fund's investment opportunities may be limited, as trading in securities of such issuer may be restricted. Additionally, PIMCO may seek to avoid receiving material, non-public information about issuers of loans. As a result, PIMCO may forgo certain investment opportunities or be disadvantaged as compared to other investors that do not restrict information that they receive from loan issuers.

***Second Lien or Other Subordinated (Mezzanine) or Unsecured Loans or Debt.*** The Fund may invest in unsecured loans and subordinated or mezzanine obligations including second and lower lien loans and the mezzanine and equity (or "first loss") tranches of CLO issues. In addition to the risks described above, second lien or other subordinated (mezzanine) or unsecured loans or debt generally are subject to similar risks as those associated with investments in senior loans. In addition, because second lien or other subordinated (mezzanine) or unsecured loans or debt are subordinated in payment and/or lower in lien priority to senior loans, they are subject to 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

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subordinated unsecured loans or debt, which are not backed by a security interest in any specific collateral. Second lien or subordinated loans or debt, both secured and unsecured, may have greater price volatility than senior loans and may be less liquid. There is also a possibility that originators will not be able to sell participations in second lien loans and subordinated loans or debt, both secured and unsecured, which would create greater credit risk exposure. Second lien or other subordinated or unsecured loans or debt of below investment grade quality share risks similar to those associated with investments in other below investment grade securities and obligations.

**Delayed Draw and Delayed Funding Loans and Revolving Credit Facilities**

The Fund may also enter into, or acquire participations in, delayed draw and delayed funding loans and revolving credit facilities. Delayed draw and delayed funding loans and revolving credit facilities are borrowing arrangements in which the lender agrees to make loans up to a maximum amount upon demand by the borrower during a specified term. A revolving credit facility differs from a delayed draw and delayed funding loan in that as the borrower repays the loan, an amount equal to the repayment may be borrowed again during the term of the revolving credit facility. Delayed draw and delayed funding loans and revolving credit facilities usually provide for floating or variable rates of interest. These commitments may have the effect of requiring the Fund to increase its investment in an issuer at a time when it might not otherwise decide to do so (including at a time when the issuer's financial condition makes it unlikely that such amounts will be repaid).

The Fund may invest in delayed draw and delayed funding loans and revolving credit facilities with credit quality comparable to that of issuers of its securities investments. 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. For a further discussion of the risks involved in investing in loan participations and other forms of direct indebtedness see "Loans and Other Indebtedness; Loan Acquisitions, Participations and Assignments." Participation interests in revolving credit facilities will be subject to the limitations discussed in "Loans and Other Indebtedness; Loan Acquisitions, Participations and Assignments." Delayed draw and delayed funding loans and revolving credit facilities are considered to be debt obligations for purposes of the Fund's investment restriction relating to the lending of funds or assets by the Fund.

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

The Fund may invest directly or indirectly in zero-coupon securities, "step-ups" and PIKs. Zero-coupon securities are debt obligations that do not entitle the holder to any periodic payments of interest either for the entire life of the obligation or for an initial period after the issuance of the obligations. Like zero-coupon bonds, "step-up" bonds pay no interest initially but eventually begin to pay a coupon rate prior to maturity, which rate may increase at stated intervals during the life of the security. PIKs are debt obligations that pay "interest" in the form of other debt obligations instead of cash. Each of these instruments is normally issued and traded at a deep discount from face value. The amount of the discount varies depending on such factors as the time remaining until maturity of the securities, prevailing interest rates, the liquidity of the security and the perceived credit quality of the issuer. The market prices of zero-coupon bonds, step-ups and PIKs generally are more volatile than the market prices of debt instruments that pay interest currently and in cash and are likely to respond to changes in interest rates to a greater degree than do other types of securities having similar maturities and credit quality.

In order to satisfy a requirement for qualification as a RIC under the Code, an investment company, such as the Fund, must distribute each year at least 90% of its net investment income, including the original issue discount ("OID") accrued on zero-coupon bonds, step-ups and PIKs. Because the Fund will not, on a current basis, receive cash payments from the issuer of these securities in respect of any accrued OID, in some years, the Fund may have to sell other portfolio holdings in order to obtain cash to satisfy the distribution requirements under the Code even though investment considerations might otherwise make it undesirable for the Fund to sell securities at such time. Under many market conditions, investments in zero-coupon bonds, step-ups and PIKs may be illiquid, making it difficult for the Fund to dispose of them or determine their current value.

**Variable and Floating Rate Securities**

Variable and floating rate securities provide for a periodic adjustment in the interest rate paid on the obligations. The terms of such obligations must provide that interest rates are adjusted periodically based upon an interest rate

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adjustment index as provided in the respective obligations. The adjustment intervals may be regular, and range from daily up to annually, or may be event based, such as based on a change in the prime rate.

The Fund may invest in floating rate debt instruments, including variable and floating rate loans. Variable and floating rate securities are securities that pay interest at rates that adjust whenever a specified interest rate changes, float at a fixed margin above a generally recognized base lending rate and/or reset or are redetermined (e.g., pursuant to an auction) on specified dates (such as the last day of a month or calendar quarter). These instruments may include, without limitation, variable-rate preferred securities, bank loans, money market instruments and certain types of mortgage-backed and other asset-backed instruments. Due to their variable- or floating-rate features, these instruments will generally pay higher levels of income in a rising interest rate environment and lower levels of income as interest rates decline. For the same reason, the market value of a variable- or floating-rate instrument is generally expected to have less sensitivity to fluctuations in market interest rates than a fixed-rate instrument, although the value of a floating-rate instrument may nonetheless decline as interest rates rise and due to other factors, such as changes in credit quality.

The Fund may invest in floating rate debt instruments ("floaters") and engage in credit spread trades. The interest rate on a floater is a variable rate which is tied to another interest rate, such as a money-market index or U.S. Treasury bill rate. The interest rate on a floater resets periodically, typically every six months. While, because of the interest rate reset feature, floaters provide the Fund with a certain degree of protection against rises in interest rates, the Fund will participate in any declines in interest rates as well. A credit spread trade is an investment position relating to a difference in the prices or interest rates of two securities or currencies where the value of the investment position is determined by movements in the difference between the prices or interest rates, as the case may be, of the respective securities or currencies.

The Fund may also invest without limit in inverse floating rate debt instruments ("inverse floaters"). The interest rate on an inverse floater resets in the opposite direction from the market rate of interest to which the inverse floater is indexed. An inverse floater may exhibit greater price volatility than a fixed rate obligation of similar credit quality. See "Mortgage-Related and Other Asset-Backed Securities" above. The Fund's investments in variable- and floating-rate securities may require the Fund to accrue and distribute income not yet received. As a result, in order to generate cash to make the requisite distributions, the Fund may be required to sell securities in its portfolio that it would otherwise have continued to hold. See "Taxation."

The Fund may invest in residual interest bonds. The term "residual interest bonds" generally includes TOB trust residual interest certificates and instruments designed to receive residual interest payments or other excess cash flows from collateral pools once other interest holders and expenses have been paid.

**Inflation-Indexed Bonds**

The Fund may invest in inflation-indexed bonds. Inflation-indexed bonds are fixed income securities whose principal value is periodically adjusted according to the rate of inflation. Two structures are common. The U.S. Treasury and some other issuers use a structure that accrues inflation into the principal value of the bond. Many other issuers pay out the Consumer Price Index accruals as part of a semiannual coupon.

Inflation-indexed securities issued by the U.S. Treasury have maturities of approximately five, ten or thirty years, although it is possible that securities with other maturities will be issued in the future. The U.S. Treasury securities pay interest on a semi-annual basis equal to a fixed percentage of the inflation-adjusted principal amount. For example, if the Fund purchased an inflation-indexed bond with a par value of $1,000 and a 3% real rate of return coupon (payable 1.5% semi-annually), and the rate of inflation over the first six months was 1%, the mid-year par value of the bond would be $1,010 and the first semi-annual interest payment would be $15.15 ($1,010 times 1.5%). If inflation during the second half of the year resulted in the whole year's inflation equaling 3%, the end-of-year par value of the bond would be $1,030 and the second semi-annual interest payment would be $15.45 ($1,030 times 1.5%).

If the periodic adjustment rate measuring inflation falls, the principal value of inflation-indexed bonds will be adjusted downward, and consequently the interest payable on these securities (calculated with respect to a smaller principal amount) will be reduced. Repayment of the original bond principal upon maturity (as adjusted for inflation) is guaranteed in the case of a U.S. Treasury inflation-indexed bond, even during a period of deflation, although the inflation-adjusted principal received could be less than the inflation-adjusted principal that had accrued to the bond at

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the time of purchase. However, the current market value of the bonds is not guaranteed and will fluctuate. The Fund also may invest in other inflation-related bonds which may or may not provide a similar guarantee. If a guarantee of principal is not provided, the adjusted principal value of the bond repaid at maturity may be less than the original principal.

The value of inflation-indexed bonds is expected to change in response to changes in real interest rates. Real interest rates in turn are tied to the relationship between nominal interest rates and the rate of inflation. Therefore, if inflation were to rise at a faster rate than nominal interest rates, real interest rates might decline, leading to an increase in value of inflation-indexed bonds. In contrast, if nominal interest rates increase at a faster rate than inflation, real interest rates might rise, leading to a decrease in value of inflation-indexed bonds.

While these securities are expected to provide protection from long-term inflationary trends, short-term increases in inflation may lead to a decline in value. If interest rates rise due to reasons other than inflation (for example, due to changes in currency exchange rates), investors in these securities may not be protected to the extent that the increase is not reflected in the bond's inflation measure.

The periodic adjustment of U.S. inflation-indexed bonds is tied to the Consumer Price Index for All Urban Consumers ("CPI-U"), which is not seasonally adjusted and which is calculated monthly by the U.S. Bureau of Labor Statistics. The CPI-U is a measurement of changes in the cost of living, made up of components such as housing, food, transportation and energy. Inflation-indexed bonds issued by a foreign (non-U.S.) government are generally adjusted to reflect a comparable inflation index calculated by that government. There can be no assurance that the CPI-U or any foreign (non-U.S.) inflation index will accurately measure the real rate of inflation in the prices of goods and services. Moreover, there can be no assurance that the rate of inflation in a foreign (non-U.S.) country will be correlated to the rate of inflation in the United States.

Any increase in the principal amount of an inflation-indexed bond will be considered taxable ordinary income, even though investors do not receive their principal until maturity. As a result, in order to generate cash to make the requisite distributions, the Fund may be required to sell securities in its portfolio that it would otherwise have continued to hold. See "Taxation."

**Event-Linked Bonds**

The Fund may obtain event-linked exposure by investing in or gaining exposure to reinsurance contracts (through sidecars or otherwise), "event-linked bonds," or "event-linked swaps," or by implementing "event-linked strategies." Event-linked exposure results in gains that typically are contingent on the non-occurrence of a specific "trigger" event, such as a hurricane, earthquake or other physical or weather-related phenomena. Some event-linked bonds are commonly referred to as "catastrophe bonds." They may be issued by government agencies, insurance companies, reinsurers, special purpose corporations or other on-shore or off-shore entities (such special purpose entities are created to accomplish a narrow and well-defined objective, such as the issuance of a note in connection with a reinsurance transaction). If a trigger event causes losses exceeding a specific amount in the geographic region and time period specified in a bond or other instruments, the Fund may lose a portion or all of its principal invested in the bond or other instruments. If no trigger event occurs or losses for the event are less than projected, the Fund will recover its principal plus interest and/or make a positive return on its investment. For some event-linked bonds or other instruments, the trigger event or losses may be based on company-wide losses, index-portfolio losses, industry indices or readings of scientific instruments rather than specified actual losses. Often the event-linked bonds or other instruments provide for extensions of maturity that are mandatory, or optional at the discretion of the issuer, in order to process and audit loss claims in those cases where a trigger event has, or possibly has, occurred. An extension of maturity may increase volatility. The Fund may also invest in reinsurance contracts (through insurance-linked securities, sidecars or otherwise). This may include "excess of loss" contracts, wherein the reinsurer accepts liability only if and when losses exceed a specified amount, and proportional reinsurance, wherein the reinsurer accepts a pro rata portion of the premiums and liabilities of the cedant associated with a specified business or a portfolio if insurance contracts. Reinsurance transactions may involve significant insurance brokerage fees, fronting fees and other transaction costs. In addition to the specified trigger events, event-linked bonds also may expose the Fund to certain unanticipated risks including but not limited to issuer risk, credit risk, counterparty risk, adverse regulatory or jurisdictional interpretations and adverse tax consequences.

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There can be no assurance that a liquid market will develop for event-linked bonds. Lack of a liquid market may impose the risk of higher transaction costs and the possibility that the Fund may be forced to liquidate positions when it would not be advantageous to do so. Event-linked bonds are typically rated, and the Fund will only invest in event-linked bonds that meet the credit quality requirements for the Fund.

**Commodities**

The Fund may purchase or sell derivatives, securities or other instruments that provide exposure to commodities. The Fund's investments in commodities-related instruments may subject the Fund to greater volatility than investments in traditional securities. The value of commodity-related instruments may be affected by changes in overall market movements, foreign currency exchange rates, commodity index volatility, changes in interest rates, or supply and demand factors affecting a particular industry or commodity market, such as drought, floods, weather, livestock disease, pandemics and public health emergencies, embargoes, taxation, war, terrorism, cyber hacking, economic and political developments, environmental proceedings, tariffs, changes in storage costs, availability of transportation systems, and international economic, political and regulatory developments. An unexpected surplus of a commodity caused by one of the aforementioned factors, for example, may cause a significant decrease in the value of the commodity (and a decrease in the value of any investments directly correlated to the commodity). Conversely, an unexpected shortage of a commodity caused by one of the aforementioned factors may cause a significant increase in the value of the commodity (and a decrease in the value of any investments inversely correlated to that commodity). The commodity markets are subject to temporary distortions and other disruptions due to, among other factors, lack of liquidity, the participation of speculators, and government regulation and other actions.

The Fund may focus its commodity-related investments in a particular sector of the commodities market (such as gold, oil, metal, carbon or agricultural products). As a result, to the extent the Fund focuses its investments in a particular sector of the commodities market, the Fund may be more susceptible to risks associated with those sectors, including the risk of loss due to adverse economic, business or political developments affecting a particular sector. See "Derivative Instruments" below for a more detailed discussion of risks related to commodities, including additional discussion of commodity-related derivative instruments.

**Derivative Instruments**

The Fund may, but is not required to, utilize various derivative strategies (both long and short positions) involving the purchase or sale of futures and forward contracts (including foreign currency exchange contracts), call and put options, credit default swaps, total return swaps, basis swaps and other swap agreements and other derivative instruments for investment purposes, leveraging purposes or in an attempt to hedge against market, credit, interest rate, currency and other risks in the portfolio.

Generally, derivatives are financial contracts whose value depends on, or is derived from, the value of an underlying asset, reference rate or index and may relate to, among other things, stocks, bonds, interest rates, currencies or currency exchange rates, commodities, related indexes and other assets. The following describes certain derivative instruments and products in which the Fund may invest and risks associated therewith. The derivatives market is always changing and the Fund may invest in derivatives other than those shown below.

In pursuing its investment objectives, the Fund may, to the extent permitted by its investment objectives and policies, purchase and sell (write) both put options and call options on securities, swap agreements, recovery locks, securities indexes, commodity indexes, foreign currencies and other instruments, and enter into interest rate, foreign currency, index and commodity futures contracts and purchase and sell options on such futures contracts ("futures options") for hedging purposes, to seek to replicate the composition and performance (or inverse performance) of a particular index, or as part of its overall investment strategies and enter into other types of instruments under which a Fund is or may be required to make payment or delivery of cash or other assets during the life of the instrument or at maturity or early termination. The Fund also may purchase and sell foreign currency options for purposes of increasing exposure to a foreign currency or to shift exposure to foreign currency fluctuations from one currency to another. The Fund also may enter into swap agreements with respect to interest rates, commodities, indexes of securities or commodities and, to the extent it may invest in foreign currency-denominated securities, may enter into swap agreements with respect to foreign currencies. The Fund may invest in structured notes and enter into transactions involving other similar instruments as discussed herein. All of these transactions are referred to collectively herein as "derivatives". If other types of financial instruments, including other types of options, futures contracts, or futures

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options are traded in the future, the Fund also may use those instruments, provided that their use is consistent with the Fund's investment objectives.

The value of some derivative instruments in which the Fund invests may be particularly sensitive to changes in prevailing interest rates, and, like the other investments of the Fund, the ability of the Fund to successfully utilize these instruments may depend in part upon the ability of PIMCO to forecast interest rates and other economic factors correctly. If PIMCO incorrectly forecasts such factors and has taken positions in derivative instruments contrary to prevailing market trends, the Fund could be exposed to additional, unforeseen risks, including the risk of loss.

The Fund might not employ any of the strategies described herein, and no assurance can be given that any strategy used will succeed. Like most other investments, derivatives are subject to the risk that the market value of the instrument will change in a way detrimental to the Fund's interest. If PIMCO incorrectly forecasts interest rates, market values or other economic factors in using a derivatives strategy for the Fund, the Fund might have been in a better position if it had not entered into the transaction at all. Also, suitable derivatives transactions may not be available in all circumstances. Further, the usage of derivatives is subject to basis risk, which exists when the price of a derivative position diverges from the price of its underlying instruments, and/or there is a mismatch between an asset and the derivative's reference asset, which may result in losses to the Fund. Because many derivatives have a leverage component, adverse changes in the value or level of the underlying asset, reference rate or index could result in a loss substantially greater than the amount invested in the derivative itself. The use of certain derivatives involves the risk that a loss may be sustained as a result of the failure of another party (usually referred to as a "counterparty") to make required payments or otherwise comply with the contract's terms. Counterparty risk also includes the risks of having concentrated exposure to a counterparty. Using derivatives is also subject to operational and legal risks. Operational risk generally refers to risk related to potential operational issues, including documentation issues, settlement issues, systems failures, inadequate controls, and human error. Legal risk generally refers to insufficient documentation, insufficient capacity or authority of counterparty, or legality or enforceability of a contract. While some strategies involving derivative instruments can reduce the risk of loss, they can also reduce the opportunity for gain or even result in losses by offsetting favorable price movements in related investments or otherwise. This is due in part to liquidity risk which refers to the possible inability of the Fund to purchase or sell a portfolio security at a time that otherwise would be favorable or the possible need to sell a portfolio security at a disadvantageous time and the possible inability of the Fund to close out or to liquidate its derivatives positions. 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 to 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. In addition, the Fund's use of such instruments may cause the Fund to realize higher amounts of short-term capital gains (generally taxed upon distribution at ordinary income tax rates) than if it had not used such instruments. If the Fund gains exposure to an asset class using derivative instruments backed by a collateral portfolio of fixed income instruments, changes in the value of the fixed income instruments may result in greater or lesser exposure to that asset class than would have resulted from a direct investment in securities comprising that asset class. The Fund may invest in derivatives to the extent permitted by the 1940 Act and the rules and interpretations thereunder and other federal securities laws.

Participation in the markets for derivative instruments involves investment risks and transaction costs to which the Fund may not be subject absent the use of these strategies. The skills needed to successfully execute derivative strategies may be different from those needed for other types of transactions. If the Fund incorrectly forecasts the value and/or creditworthiness of securities, currencies, interest rates, counterparties or other economic factors involved in a derivative transaction, the Fund might have been in a better position if the Fund had not entered into such derivative transaction. In evaluating the risks and contractual obligations associated with particular derivative instruments, it is important to consider that certain derivative transactions may be modified or terminated only by mutual consent of the Fund and its counterparty and certain derivative transactions may be terminated by the counterparty or the Fund, as the case may be, upon the occurrence of certain Fund-related or counterparty-related events, which may result in losses or gains to the Fund based on the market value of the derivative transactions entered into between the Fund and the counterparty. In addition, such early terminations may result in taxable events and accelerate gain or loss recognition for tax purposes. It may not be possible for the Fund to modify, terminate, or offset the Fund's obligations or the Fund's exposure to the risks associated with a derivative transaction prior to its termination or maturity date, which may create a possibility of increased volatility and/or decreased liquidity to the Fund. Upon the expiration or termination of a particular contract, the Fund may wish to retain the Fund'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 or

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unable to enter into the new contract and no other appropriate counterparty can be found, which could cause the Fund not to be able to maintain certain desired investment exposures or not to be able to hedge other investment positions or risks, which could cause losses to the Fund. Furthermore, after such an expiration or termination of a particular contract, the Fund may have fewer counterparties with which to engage in additional derivative transactions, which could lead to potentially greater counterparty risk exposure to one or more counterparties and which could increase the cost of entering into certain derivatives. In such cases, the Fund may lose money.

As noted elsewhere, the Fund may, to the extent permitted by its investment objective(s) and policies, write (sell) derivatives contracts or otherwise become an obligor under a derivative transaction. These transactions may produce current income 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 put option may be dwarfed by the losses the Fund may incur if the put 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 rate, 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 taxable as ordinary income), as discussed further below, 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 net asset value ("NAV") declines.

The Fund may engage in investment strategies, including the use of derivatives, to, among other things, seek to generate current, distributable income without regard to possible declines in the Fund's net asset value. The Fund's income and gain-generating strategies, including certain derivatives strategies, may 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 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 investments, or arising from its use of derivatives. Consequently, 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 tax treatment of certain derivatives may be open to different interpretations. Any recharacterization of payments made or received by the Fund pursuant to derivatives potentially could affect the amount, timing or characterization of Fund distributions. In addition, the tax treatment of such investment strategies may be changed by regulation or otherwise. Also, suitable derivative and/or hedging transactions may not be available in all circumstances, and there can be no assurance that the Fund will be able to identify or employ a desirable derivative and/or hedging transaction at any time or from time to time or, if a strategy is used, that it will be successful.

The Fund may sell call or put options in return for a premium or purchase call or put options by paying a premium. The premium received by the Fund would not be included in the Fund's income at the time of receipt. The premium paid by the Fund would be a non-deductible capital expenditure. If a call option sold by the Fund or a put option purchased by the Fund were to be exercised, the Fund could realize a gain or loss. If a call option purchased by the Fund or a put option sold by the Fund were to be exercised, the Fund's basis in the optioned instrument would be adjusted by the premium. If a call or put option were to lapse, the premium would be treated as a capital gain or loss. A call or put option may constitute a "straddle" for U.S. federal tax purposes and therefore be subject to the straddle rules described above.

***Options on Securities and Indexes.*** The Fund may, to the extent specified herein or in the Prospectus, purchase and sell both put and call options on equity, fixed income or other securities (including securities to be purchased in when-issued, delayed delivery and forward commitment transactions)or indexes in standardized contracts traded on foreign or domestic securities exchanges, boards of trade, or similar entities, or quoted on the National Association of Securities Dealers Automated Quotations ("NASDAQ") System or on an OTC market, and agreements, sometimes called cash puts, which may accompany the purchase of a new issue of bonds from a dealer. Among other reasons, the Fund may purchase put options to protect holdings in an underlying or related security against a decline in market value, and may purchase call options to protect against increases in the prices of securities it intends to purchase pending its ability to invest in such securities in an orderly manner.

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An option on a security (or index) is a contract that gives the holder of the option, in return for a premium, the right to buy from (in the case of a call) or sell to (in the case of a put) the writer of the option the security underlying the option (or the cash value of an option that is on an index or cash settled) at a specified exercise price, often at any time during the term of the option for American options or only at expiration for European options. The writer of an option on a security that requires physical delivery has the obligation upon exercise of the option to deliver the underlying security upon payment of the exercise price (in the case of a call) or to pay the exercise price upon delivery of the underlying security (in the case of a put). Certain put options written by the Fund, which counterparties may use as a source of liquidity, may be structured to have an exercise price that is less than the market value of the underlying securities that would be received by the Fund. Upon exercise, the writer of an option on an index or a cash-settled option on a security is obligated to pay the difference between the cash value of the index and the exercise price multiplied by the specified multiplier for the option. An index is designed to reflect features of a particular financial or securities market, a specific group of financial instruments or securities, or certain economic indicators.

The Fund may write calls and/or puts on instruments the Fund owns or otherwise has exposure to (covered calls or covered puts) or write calls and/or puts on instruments to which the Fund has no exposure (naked calls or naked puts) in return for a premium. Under a call or put writing strategy (either directly or indirectly through an asset-linked note), the Fund typically would expect to receive cash (or a premium) for having written (sold) a call or put option, which enables a purchaser of the call to buy from (or the purchaser of the put to sell to) the Fund the asset on which the option is written at a certain price within a specified time frame.

Writing call or put options will limit the Fund's opportunity to profit from an increase in the market value and other returns of the underlying asset to the exercise price (plus the premium received). In particular, this will mean that the Fund's maximum potential gain via a covered call or put will generally be expected to be the premium received from writing a covered call or put option plus the difference between any lower price at which the Fund acquired exposure to the applicable underlying asset and any higher price at which a purchaser of the call or put option may exercise the call or put option. Therefore, covered calls and covered puts can result in losses and detract from the Fund's total returns even though the call or put options produce premiums and may initially produce gain and cash flow to the Fund (and therefore Fund distributions) for having written the call or put options. The Fund's maximum potential gain via a naked call or put will generally be expected to be limited to the premium received from writing a naked call or put option.

Buying a call option or put option will generally involve the Fund paying a premium on the option, which may detract from returns and may not limit losses. The Fund may lose the initial amount invested in the call option or put option.

Basis risk exists when the price of a derivative position diverges from the price of the underlying instruments, and/or there is a mismatch between an asset and the derivative's reference asset, which may result in excess losses to the Fund. Under certain market conditions, it may not be economically feasible to initiate a transaction or liquidate a position in time to avoid a loss or take advantage of an opportunity.

If an option written by the Fund expires unexercised, the Fund realizes a capital gain equal to the premium received at the time the option was written. If an option purchased by the Fund expires unexercised, the Fund realizes a capital loss equal to the premium paid. Prior to the earlier of exercise or expiration, an exchange-traded option may be closed out by an offsetting purchase or sale of an option of the same series (type, exchange, underlying security or index, exercise price, and expiration). There can be no assurance, however, that a closing purchase or sale transaction can be effected when the Fund desires.

In addition, the Fund may sell put or call options it has previously purchased, which could result in a net gain or loss depending on whether the amount realized on the sale is more or less than the premium and other transaction costs paid on the put or call option which is sold. Prior to the exercise or expiration, an option may be closed out by an offsetting purchase or sale of an option of the same series.

The Fund will realize a capital gain from a closing purchase transaction if the cost of the closing option is less than the premium received from writing the option, or, if it is more, the Fund will realize a capital loss. If the premium received from a closing sale transaction is more than the premium paid to purchase the option, the Fund will realize a capital gain or, if it is less, the Fund will realize a capital loss. The principal factors affecting the market value of a put or a call option include supply and demand, interest rates, the current market price of the underlying security or index

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in relation to the exercise price of the option, the volatility of the underlying security or index, and the time remaining until the expiration date.

The premium paid for a put or call option purchased by the Fund is an asset of the Fund. The premium received for an option written by the Fund is recorded as a deferred credit. The value of an option purchased or written is marked-to-market daily and is valued at the closing price on the exchange on which it is traded or, if not traded on an exchange or no closing price is available, at the mean between the last bid and ask prices.

The Fund may write straddles consisting of a combination of a call and a put written on the same underlying security.

***OTC Options.*** Pursuant to policies adopted by the Fund's Board, purchased OTC options and the assets used as cover for OTC options written by the Fund may be treated as liquid.

***Risks Associated with Options on Securities and Indexes.*** There are several risks associated with transactions in options on securities and on indexes. For example, there are significant differences between the securities and options markets that could result in an imperfect correlation between these markets, causing a given transaction not to achieve its objectives. A decision as to whether, when and how to use options involves the exercise of skill and judgment, and even a well-conceived transaction may be unsuccessful to some degree because of market behavior or unexpected events.

The writer of an American option often has no control over the time when it may be required to fulfill its obligation as a writer of the option. Once an option writer has received an exercise notice, it cannot effect a closing purchase transaction in order to terminate its obligation under the option and must deliver the underlying security at the exercise price. To the extent the Fund writes a put option, the Fund has assumed the obligation during the option period to purchase the underlying investment from the put buyer at the option's exercise price if the put buyer exercises its option, regardless of whether the value of the underlying investment falls below the exercise price. This means that the Fund that writes a put option may be required to take delivery of the underlying investment and make payment for such investment at the exercise price. This may result in losses to the Fund and may result in the Fund holding the underlying investment for some period of time when it is disadvantageous to do so. If a put or call option purchased by the Fund is not sold when it has remaining value, and if the market price of the underlying security remains equal to or greater than the exercise price (in the case of a put), or remains less than or equal to the exercise price (in the case of a call), the Fund will lose its entire investment in the option. Also, where a put or call option on a particular security is purchased to hedge against price movements in a related security, the price of the put or call option may move more or less than the price of the related security.

There can be no assurance that a liquid market will exist when the Fund seeks to close out an option position. If the Fund were unable to close out an option that it had purchased on a security, it would have to exercise the option in order to realize any profit or the option may expire worthless.

If trading were suspended in an option purchased by the Fund, the Fund would not be able to close out the option. If restrictions on exercise were imposed, the Fund might be unable to exercise an option it has purchased. Movements in the index may result in a loss to the Fund; however, such losses may be mitigated by changes in the value of the Fund's securities during the period the option was outstanding.

To the extent that the Fund writes a call option on a security it holds in its portfolio, the Fund has, in return for the premium on the option, given up the opportunity to profit from a price increase in the underlying security above the exercise price during the option period, but, as long as its obligation under such call option continues, has retained the risk of loss should the price of the underlying security decline.

***Foreign Currency Options.*** To the extent the Fund invests in foreign currency-denominated securities, it may buy or sell put and call options on foreign currencies. In addition, the Fund may buy or sell put and call options on foreign currencies either on exchanges or in the OTC market. A put option on a foreign currency gives the purchaser of the option the right to sell a foreign currency at the exercise price until the option expires. A call option on a foreign currency gives the purchaser of the option the right to purchase the currency at the exercise price until the option expires. Currency options traded on U.S. or other exchanges may be subject to position limits which may limit the ability of the Fund to reduce foreign currency risk using such options. OTC options differ from exchange-traded

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options in that they are bilateral contracts with price and other terms negotiated between buyer and seller, and generally do not have as much market liquidity as exchange-traded options. Under definitions adopted by the CFTC and SEC, many foreign currency options are considered swaps for certain purposes, including determination of whether such instruments are subject to a trade execution and clearing requirement as discussed further in "Risks of Potential Government Regulation of Derivatives."

***Futures Contracts and Options on Futures Contracts.*** A futures contract is an agreement to buy or sell a security or other asset for a set price on a future date. These contracts are traded on exchanges, so that, in most cases, a party can close out its position on the exchange for cash, without delivering the underlying security or other underlying asset. An option on a futures contract gives the holder of the option the right to buy or sell a position in a futures contract from or to the writer of the option, at a specified price and on or before a specified expiration date. The Fund may invest in futures contracts and options thereon ("futures options") with respect to, but not limited to, interest rates, commodities, and security or commodity indexes. To the extent that the Fund may invest in foreign currency-denominated securities, it also may invest in foreign currency futures contracts and options thereon.

An interest rate, commodity, foreign currency or index futures contract provides for the future sale or purchase of a specified quantity of a financial instrument, commodity, foreign currency or the cash value of an index at a specified price and time. A futures contract on an index is an agreement pursuant to which a party agrees to pay or receive an amount of cash equal to the difference between the value of the index at the close of the last trading day of the contract and the price at which the index contract was originally written. Although the value of an index might be a function of the value of certain specified securities, no physical delivery of these securities is made.

A public market exists in futures contracts covering a number of indexes as well as financial instruments and foreign currencies. It is expected that other futures contracts will be developed and traded in the future. Certain futures contracts on indexes, financial instruments or foreign currencies may represent new investment products that lack performance track records.

The Fund may also invest in commodity futures contracts and options thereon. A commodity futures contract is an agreement to buy or sell a commodity, such as an energy, agricultural, metal or carbon commodity at a later date at a price and quantity agreed-upon when the contract is bought or sold.

The Fund may purchase and write call options on futures or put options on futures. Futures options possess many of the same characteristics as options on securities and indexes (discussed above). A futures option gives the holder the right, in return for the premium paid, to assume a long position (call) or short position (put) in a futures contract at a specified exercise price at any time during the period of the option. Upon exercise of a call option, the holder acquires a long position in the futures contract and the writer is assigned the opposite short position. In the case of a put option, the opposite is true.

***Limitations on Use of Futures and Futures Options.*** When a purchase or sale of a futures contract is made by the Fund, the Fund is required to deposit with its custodian a specified amount of assets determined to be liquid by PIMCO ("initial margin"). The margin required for a futures contract is set by the exchange on which the contract is traded and may be modified during the term of the contract. Margin requirements on foreign exchanges may be different than U.S. exchanges. The initial margin is in the nature of a performance bond or good faith deposit on the futures contract which is returned to the Fund upon termination of the contract, assuming all contractual obligations have been satisfied. The Fund expects to earn interest income on its initial margin deposits. A futures contract held by the Fund is valued daily at the official settlement price of the exchange on which it is traded. Each day the Fund pays or receives cash, called "variation margin," equal to the daily change in value of the futures contract. This process is known as "marking to market." Variation margin does not represent a borrowing or loan by the Fund but is instead a settlement between the Fund and the broker of the amount one would owe the other if the futures contract expired. In computing daily net asset value, the Fund will mark-to-market its open futures positions.

The Fund is also required to deposit and maintain margin with respect to put and call options on futures contracts written by it. Such margin deposits will vary depending on the nature of the underlying futures contract (and the related initial margin requirements), the current market value of the option, and other futures positions held by the Fund. Customer account agreements and related addenda govern cleared derivatives transactions such as futures, options on futures, and cleared OTC derivatives. Such transactions require posting of initial margin as determined by each relevant clearing agency which is segregated in an account at a futures commission merchant ("FCM") registered

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with the CFTC. In the United States, counterparty risk may be reduced as creditors of an FCM cannot have a claim to Fund assets in the segregated account. Portability of exposure reduces risk to the Fund. Variation margin, or changes in market value, are generally exchanged daily, but may not be netted between futures and cleared OTC derivatives unless the parties have agreed to a separate arrangement in respect of portfolio margining.

Although some futures contracts call for making or taking delivery of the underlying securities or commodities, generally these obligations are closed out prior to delivery by offsetting purchases or sales of matching futures contracts (i.e., with the same exchange, underlying security or index, and delivery month). Closing out a futures contract sale is effected by purchasing an offsetting futures contract for the same aggregate amount of the specific type of financial instrument or commodity with the same delivery date. If an offsetting purchase price is less than the original sale price, the Fund realizes a capital gain, or if it is more, the Fund realizes a capital loss.

Conversely, if an offsetting sale price is more than the original purchase price, the Fund realizes a capital gain, or if it is less, the Fund realizes a capital loss. Any transaction costs must also be included in these calculations.

The requirements for qualification as a RIC also may limit the extent to which the Fund may enter into futures, futures options or forward contracts.

***Commodity Pool Operators and Commodity Trading Advisors.*** The CFTC has adopted regulations that subject registered investment companies and their investment advisers to regulation by the CFTC if the registered investment company invests more than a prescribed level of its liquidation value in commodity futures, options on futures commodities or commodity futures, swaps, or other financial instruments regulated under the Commodity Exchange Act of 1936, as amended ("CEA") and the rules thereunder ("commodity interests"), or if the fund markets itself as providing investment exposure to such instruments. As of the date of this Statement of Additional Information, pursuant to CFTC Rule 4.5, PIMCO has claimed an exclusion from the definition of commodity pool operator ("CPO") under the CEA with respect to the Fund, and is therefore not subject to registration or regulation as a CPO with respect to the Fund. To remain eligible for this exclusion the Fund must comply with certain limitations, including limits on its ability to use any commodity interests and limits on the manner in which the Fund holds out its use of such commodity interests. These limitations may restrict the Fund's ability to pursue its investment strategy, increase the costs of implementing its strategy, increase expenses of the Fund, and/or adversely affect the Fund's total return.

***Risks Associated with Futures and Futures Options.*** There are several risks associated with the use of futures contracts and futures options as hedging techniques. A purchase or sale of a futures contract may result in losses in excess of the amount invested in the futures contract. There can be no guarantee that there will be a correlation between price movements in the hedging vehicle and in the Fund securities being hedged. In addition, there are significant differences between the securities and futures markets that could result in an imperfect correlation between the markets, causing a given hedge not to achieve its objectives. The degree of imperfection of correlation depends on circumstances such as variations in speculative market demand for futures and futures options on securities, including technical influences in futures trading and futures options, and differences between the financial instruments being hedged and the instruments underlying the standard contracts available for trading in such respects as interest rate levels, maturities, and creditworthiness of issuers. A decision as to whether, when and how to hedge involves the exercise of skill and judgment, and even a well-conceived hedge may be unsuccessful to some degree because of market behavior or unexpected interest rate trends.

Additionally, the price of index futures may not correlate perfectly with movement in the relevant index due to certain market distortions. First, all participants in the futures market are subject to margin deposit and maintenance requirements. Rather than meeting additional margin deposit requirements, investors may close futures contracts through offsetting transactions which could distort the normal relationship between the index and futures markets. Second, the deposit requirements in the futures market are less onerous than margin requirements in the securities market, and as a result, the futures market may attract more speculators than does the securities market. Increased participation by speculators in the futures market may also cause temporary price distortions. In addition, trading hours for foreign stock index futures may not correspond perfectly to hours of trading on the foreign exchange to which a particular foreign stock index futures contract relates. This may result in a disparity between the price of index futures and the value of the relevant index due to the lack of continuous arbitrage between the index futures price and the value of the underlying index.

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Futures contracts on U.S. government securities historically have reacted to an increase or decrease in interest rates in a manner similar to that in which the underlying U.S. government securities reacted. To the extent, however, that the Fund enters into such futures contracts, the value of such futures will not vary in direct proportion to the value of the Fund's holdings of U.S. government securities. Thus, the anticipated spread between the price of the futures contract and the hedged security may be distorted due to differences in the nature of the markets. The spread also may be distorted by differences in initial and variation margin requirements, the liquidity of such markets and the participation of speculators in such markets.

Futures exchanges may limit the amount of fluctuation permitted in certain futures contract prices during a single trading day. The daily limit establishes the maximum amount that the price of a futures contract may vary either up or down from the previous day's settlement price at the end of the current trading session. Once the daily limit has been reached in a futures contract subject to the limit, no more trades may be made on that day at a price beyond that limit. The daily limit governs only price movements during a particular trading day and therefore does not limit potential losses because the limit may work to prevent the liquidation of unfavorable positions. For example, futures prices have occasionally moved to the daily limit for several consecutive trading days with little or no trading, thereby preventing prompt liquidation of positions and subjecting some holders of futures contracts to substantial losses.

There can be no assurance that a liquid market will exist at a time when the Fund seeks to close out a futures or a futures option position, and that the Fund would remain obligated to meet margin requirements until the position is closed. In addition, many of the contracts discussed above are relatively new instruments without a significant trading history. As a result, there can be no assurance that an active secondary market will develop or continue to exist.

***Risks Associated with Commodity Futures Contracts.*** There are several additional risks associated with transactions in commodity futures contracts, including but not limited to:

● *Storage.* Unlike the financial futures markets, in the commodity futures markets there are costs of physical storage associated with purchasing the underlying commodity. The price of the commodity futures contract will reflect the storage costs of purchasing the physical commodity, including the time value of money invested in the physical commodity. To the extent that the storage costs for an underlying commodity change while the Fund is invested in futures contracts on that commodity, the value of the futures contract may change proportionately.

● *Reinvestment.* In the commodity futures markets, producers of the underlying commodity may decide to hedge the price risk of selling the commodity by selling futures contracts today to lock in the price of the commodity at delivery tomorrow. In order to induce speculators to purchase the other side of the same futures contract, the commodity producer generally must sell the futures contract at a lower price than the expected future spot price. Conversely, if most hedgers in the futures market are purchasing futures contracts to hedge against a rise in prices, then speculators will only sell the other side of the futures contract at a higher futures price than the expected future spot price of the commodity. The changing nature of the hedgers and speculators in the commodity markets will influence whether futures prices are above or below the expected future spot price, which can have significant implications for the Fund. If the nature of hedgers and speculators in futures markets has shifted when it is time for the Fund to reinvest the proceeds of a maturing contract in a new futures contract, the Fund might reinvest at higher or lower futures prices, or choose to pursue other investments.

● *Other Economic Factors.* The commodities which underlie commodity futures contracts may be subject to additional economic and non-economic variables, such as drought, floods, weather, livestock disease, embargoes, tariffs, and international economic, political and regulatory developments. These factors may have a larger impact on commodity prices and commodity-linked instruments, including futures contracts, than on traditional securities. Certain commodities are also subject to limited pricing flexibility because of supply and demand factors. Others are subject to broad price fluctuations as a result of the volatility of the prices for certain raw materials and the instability of supplies of other materials. These additional variables may create additional investment risks which subject the Fund's investments to greater volatility than investments in traditional securities.

***Additional Risks of Options on Securities, Futures Contracts, Futures Options, and Forward Currency Exchange Contracts and Options Thereon.*** Options on securities, futures contracts, futures options, forward currency exchange contracts and options on forward currency exchange contracts may be traded on foreign (non-U.S.) exchanges. Such

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transactions may not be regulated as effectively as similar transactions in the United States; may not involve a clearing mechanism and related guarantees; and are subject to the risk of governmental actions affecting trading in, or the prices of, foreign (non-U.S.) securities. The value of such positions also could be adversely affected by: (i) other complex foreign (non-U.S.) political, legal and economic factors; (ii) lesser availability than in the United States of data on which to make trading decisions; (iii) delays in the Fund's ability to act upon economic events occurring in foreign (non-U.S.) markets during non-business hours in the United States; (iv) the imposition of different exercise and settlement terms and procedures and margin requirements than in the United States; and (v) lesser trading volume.

***Swap Agreements and Options on Swap Agreements.*** The Fund may engage in swap transactions, including, but not limited to, swap agreements on interest rates, security or commodity indexes, specific securities and commodities, and credit and event-linked swaps. To the extent the Fund may invest in foreign (non-U.S.) currency-denominated securities, it also may invest in currency exchange rate swap agreements. The Fund also may enter into options on swap agreements ("swaptions").

The Fund may enter into swap transactions for any legal purpose consistent with its investment objectives and policies, such as attempting to obtain or preserve a particular return or spread at a lower cost than obtaining a return or spread through purchases and/or sales of instruments in other markets, to protect against currency fluctuations, as a duration management technique, to protect against any increase in the price of securities the Fund anticipates purchasing at a later date, or to gain exposure to certain markets in a more cost efficient manner.

OTC swap agreements are generally bilateral contracts entered into primarily by institutional investors for periods ranging from a few weeks to more than one year. In a standard OTC swap transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or "swapped" between the parties are generally calculated with respect to a "notional amount," i.e., the return on or change in value of a particular dollar amount invested at a particular interest rate, in a particular foreign (non-U.S.) currency, or in a "basket" of securities or commodities representing a particular index. A "quanto" or "differential" swap combines both an interest rate and a currency transaction. Certain swap agreements, such as interest rate swaps, are traded on exchanges and cleared through central clearing counterparties. Other forms of swap agreements include interest rate caps, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates exceed a specified rate, or "cap"; interest rate floors, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates fall below a specified rate, or "floor"; and interest rate collars, under which a party sells a cap and purchases a floor or vice versa in an attempt to protect itself against interest rate movements exceeding given minimum or maximum levels. A total return swap agreement is a contract in which one party agrees to make periodic payments to another party based on the change in market value of underlying assets, which may include a single stock, a basket of stocks, or a stock index during the specified period, in return for periodic payments based on a fixed or variable interest rate or the total return from other underlying assets. Consistent with the Fund's investment objectives and general investment policies, the Fund may invest in commodity swap agreements. For example, an investment in a commodity swap agreement may involve the exchange of floating-rate interest payments for the total return on a commodity index. In a total return commodity swap, the Fund will receive the price appreciation of a commodity index, a portion of the index, or a single commodity in exchange for paying an agreed-upon fee. If the commodity swap is for one period, the Fund may pay a fixed fee, established at the outset of the swap. However, if the term of the commodity swap is more than one period, with interim swap payments, the Fund may pay an adjustable or floating fee. With a "floating" rate, the fee may be pegged to a base rate and is adjusted each period. Therefore, if interest rates increase over the term of the swap contract, the Fund may be required to pay a higher fee at each swap reset date.

The Fund also may enter into combinations of swap agreements in order to achieve certain economic results. For example, the Fund may enter into two swap transactions, one of which offsets the other for a period of time. After the offsetting swap transaction expires, the Fund would be left with the economic exposure provided by the remaining swap transaction. The intent of such an arrangement would be to lock in certain terms of the remaining swap transaction that the Fund may wish to gain exposure to in the future without having that exposure during the period the offsetting swap is in place.

The Fund also may enter into swaptions. A swaption is a contract that gives a counterparty the right (but not the obligation) in return for payment of a premium, to enter into a new swap agreement or to shorten, extend, cancel or otherwise modify an existing swap agreement, at some designated future time on specified terms. The Fund may write (sell) and purchase put and call swaptions.

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Depending on the terms of the particular option agreement, the Fund will generally incur a greater degree of risk when it writes a swaption than it will incur when it purchases a swaption. When the Fund purchases a swaption, it risks losing only the amount of the premium it has paid should it decide to let the option expire unexercised. However, when the Fund writes a swaption, upon exercise of the option the Fund will become obligated according to the terms of the underlying agreement.

The Fund also may enter into forward volatility agreements, also known as volatility swaps. In a volatility swap, the counterparties agree to make payments in connection with changes in the volatility (i.e., the magnitude of change over a specified period of time) of an underlying reference instrument, such as a currency, rate, index, security or other financial instrument. Volatility swaps permit the parties to attempt to hedge volatility risk and/or take positions on the projected future volatility of an underlying reference instrument. For example, the Fund may enter into a volatility swap in order to take the position that the reference instrument's volatility will increase over a particular period of time. If the reference instrument's volatility does increase over the specified time, the Fund will receive a payment from its counterparty based upon the amount by which the reference instrument's realized volatility level exceeds a volatility level agreed upon by the parties. If the reference instrument's volatility does not increase over the specified time, the Fund will make a payment to the counterparty based upon the amount by which the reference instrument's realized volatility level falls below the volatility level agreed upon by the parties. Payments on a volatility swap will be greater if they are based upon the mathematical square of volatility (i.e., the measured volatility multiplied by itself, which is referred to as "variance"). This type of a volatility swap is frequently referred to as a variance swap. The Fund may potentially engage in variance swaps.

Most types of swap agreements entered into by the Fund will calculate the obligations of the parties to the agreement on a "net basis." Consequently, the Fund's current obligations (or rights) under a swap agreement will generally be equal only to the net amount to be paid or received under the agreement based on the relative values of the positions held by each party to the agreement (the "net amount"). The Fund's current obligations under a swap agreement will be accrued daily (offset against any amounts owed to the Fund).

The Fund also may enter into OTC and cleared credit default swap agreements. A credit default swap agreement may reference one or more debt securities or obligations that are not currently held by the Fund. The protection "buyer" in an OTC credit default swap contract is generally obligated to pay the protection "seller" an upfront or a periodic stream of payments over the term of the contract until a credit event, such as a default, on a reference obligation has occurred. If a credit event occurs, the seller generally must pay the buyer the "par value" (full notional value) of the swap in exchange for an equal face amount of deliverable obligations of the reference entity described in the swap, or the seller may be required to deliver the related net cash amount if the swap is cash settled. The Fund may be either the buyer or seller in the transaction. If the Fund is a buyer and no credit event occurs, the Fund may recover nothing if the swap is held through its termination date. However, if a credit event occurs, the buyer may receive the full notional value of the swap in exchange for an equal face amount of deliverable obligations of the reference entity whose value may have significantly decreased.

As a seller, the Fund generally receives an upfront payment or a fixed rate of income throughout the term of the swap provided that there is no credit event. As the seller, the Fund would effectively add leverage to its portfolio because, in addition to its total net assets, the Fund would be subject to investment exposure on the notional amount of the swap.

The spread of a credit default swap is the annual amount the protection buyer must pay the protection seller over the length of the contract, expressed as a percentage of the notional amount. When spreads rise, market-perceived credit risk rises and when spreads fall, market-perceived credit risk falls. Wider credit spreads and decreasing market values, when compared to the notional amount of the swap, represent a deterioration of the credit soundness of the issuer of the reference obligation and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. For credit default swap agreements on asset-based securities and credit indices, the quoted market prices and resulting values, as well as the annual payment rate, serve as an indication of the current status of the payment/performance risk.

Credit default swap agreements sold by the Fund may involve greater risks than if the Fund had invested in the reference obligation directly since, in addition to general market risks, credit default swaps are subject to illiquidity risk, counterparty risk (with respect to OTC credit default swaps) 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

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event were to occur, the value of any deliverable obligation received by the seller, coupled with the upfront or periodic payments previously received, may be less than the full notional value it pays to the buyer, resulting in a loss of value to the seller. In addition, there may be disputes between the buyer and seller of a credit default swap agreement or within the swaps market as a whole as to whether a credit event has occurred or what the payment should be. Such disputes could result in litigation or other delays, and the outcome could be adverse for the buyer or seller. The Fund's obligations under a credit default swap agreement will be accrued daily (offset against any amounts owing to the Fund).

The Dodd-Frank Act and related regulatory developments require the clearing of certain standardized OTC derivative instruments that the CFTC and SEC have defined as "swaps." Separately, under the trade execution requirement, swap transactions subject to the clearing requirement must be traded on either a Designated Contract Market ("DCM") or Swap Execution Facility ("SEF") unless no DCM "makes the swap available to trade." Uncleared swaps are subject to certain margin requirements that mandate the posting and collection of minimum margin amounts on certain uncleared swaps transactions, which may result in the Fund and its counterparties posting higher margin amounts for uncleared swaps than would otherwise be the case. To the extent the Fund is required by regulation to post collateral, it could potentially incur costs, including in procuring eligible assets to meet collateral requirements, associated with such posting. PIMCO will continue to monitor developments in this area, particularly to the extent regulatory changes affect the Fund's ability to enter into swap agreements.

Whether the Fund's use of swap agreements or swaptions will be successful in furthering its investment objectives will depend on PIMCO's ability to predict correctly whether certain types of investments are likely to produce greater returns than other investments. Moreover, the Fund bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty.

The Fund will enter into OTC swap agreements only with counterparties that meet certain standards of creditworthiness. Certain restrictions imposed on the Fund by the Code may limit the Fund's ability to use swap agreements. The swaps market is subject to increasing regulations, in both U.S. and non-U.S. markets. It is possible that developments in the swaps market, including additional government regulation, could adversely affect the Fund's ability to terminate existing swap agreements or to realize amounts to be received under such agreements.

Swaps are highly specialized instruments that require investment techniques, risk analyses, and tax planning different from those associated with traditional investments. The use of a swap requires an understanding not only of the reference asset, reference rate, or index but also of the swap itself, without the benefit of observing the performance of the swap under all possible market conditions. Because OTC swap agreements are bilateral contracts that may be subject to contractual restrictions on transferability and termination and because they may have remaining terms of greater than seven days, swap agreements may be considered to be illiquid and subject to regulatory limitations on investments in illiquid investments. Please refer to "Illiquid Investments" for further discussion of regulatory considerations and constraints relating to investment liquidity. To the extent that a swap is not liquid, it may not be possible to initiate a transaction or liquidate a position at an advantageous time or price, which may result in significant losses.

Like most other investments, swap agreements are subject to the risk that the market value of the instrument will change in a way detrimental to the Fund's interest. The Fund bears the risk that PIMCO will not accurately forecast future market trends or the values of assets, reference rates, indexes, or other economic factors in establishing swap positions for the Fund. If PIMCO attempts to use a swap as a hedge against, or as a substitute for, a portfolio investment, the Fund will be exposed to the risk that the swap will have or will develop imperfect or no correlation with the portfolio investment. This could cause substantial losses for the Fund. While hedging strategies involving swap instruments can reduce the risk of loss, they can also reduce the opportunity for gain or even result in losses by offsetting favorable price movements in other Fund investments. Many swaps are complex and often valued subjectively.

The Fund also may enter into recovery locks. A recovery lock is an agreement between two parties that provides for a fixed payment by one party and the delivery of a reference obligation, typically a bond, by the other party upon the occurrence of a credit event, such as a default, by the issuer of the reference obligation. Recovery locks are used to "lock in" a recovery amount on the reference obligation at the time the parties enter into the agreement. In contrast to a credit default swap where the final settlement amount may be dependent on the market price for the reference obligation upon the credit event, a recovery lock fixes the settlement amount in advance and is not dependent on the

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market price of the reference obligation at the time of the credit event. Unlike certain other types of derivatives, recovery locks generally do not involve upfront or periodic cash payments by either of the parties. Instead, payment and settlement occurs after there has been a credit event. If a credit event does not occur prior to the termination date of a recovery lock, the agreement terminates and no payments are made by either party. The Fund may enter into a recovery lock to purchase or sell a reference obligation upon the occurrence of a credit event. The Fund's obligations under a recovery lock will be determined daily.

Recovery locks are subject to the risk that PIMCO will not accurately forecast the value of a reference obligation upon the occurrence of a credit event. For example, if the Fund enters into a recovery lock and agrees to deliver a reference obligation in exchange for a fixed payment upon the occurrence of a credit event, the value of the reference obligation or eventual recovery on the reference obligation following the credit event may be greater than the fixed payment made by the counterparty to the Fund. If this occurs, the Fund will incur a loss on the transaction. In addition to general market risks, recovery locks are subject to illiquidity risk, counterparty risk and credit risk. The market for recovery locks is relatively new and is smaller and less liquid than the market for credit default swaps and other derivatives. Elements of judgment may play a role in determining the value of a recovery lock. It may not be possible to enter into a recovery lock at an advantageous time or price. The Fund will only enter into recovery locks with counterparties that meet certain standards of creditworthiness.

***Correlation Risk.*** In certain cases, the value of derivatives may not correlate perfectly, or at all, with the value of the assets, reference rates or indexes they are designed to closely track. There are a number of factors which may prevent the Fund, or derivatives or other strategies used by the Fund, from achieving desired correlation with an index. These may include, but are not limited to: (i) the impact of portfolio fees, expenses and transaction costs, including borrowing and brokerage costs/bid-ask spreads, which are not reflected in index returns; (ii) differences in the timing of daily calculations of the value of an index and the timing of the valuation of derivatives, securities and other assets held by the Fund and the determination of the net asset value of Fund shares; (iii) disruptions or illiquidity in the markets for derivative instruments or securities in which the Fund invests; (iv) the Fund having exposure to or holding less than all of the securities in the underlying index and/or having exposure to or holding securities not included in the underlying index; (v) large or unexpected movements of assets into and out of a portfolio (due to share purchases or redemptions, for example), potentially resulting in the portfolio being over- or under-exposed to the index; (vi) the impact of accounting standards or changes thereto; (vii) changes to the applicable index that are not disseminated in advance; (viii) a possible need to conform the Fund's portfolio holdings to comply with investment restrictions or policies or regulatory or tax law requirements; and (ix) fluctuations in currency exchange rates.

***Structured Notes.*** Structured notes are derivative debt instruments, the interest rate or principal of which is determined by an unrelated indicator (for example, a currency, security, commodity or index thereof). The terms of the instrument may be "structured" by the purchaser and the borrower issuing the note. Indexed securities may include structured notes as well as securities other than debt securities, the interest rate or principal of which is determined by an unrelated indicator. The value of these notes will rise or fall in response to changes in the unrelated indicator. These notes expose the Fund economically to movements in the prices of the unrelated indicator. Indexed securities may include a multiplier that multiplies the indexed element by a specified factor and, therefore, the value of such securities may be very volatile. The terms of structured notes and indexed securities may provide that in certain circumstances no principal is due at maturity, which may result in a loss of invested capital. Structured notes and indexed securities may be positively or negatively indexed, so that appreciation of the unrelated indicator may produce an increase or a decrease in the interest rate or the value of the structured note or indexed security at maturity may be calculated as a specified multiple of the change in the value of the unrelated indicator. Therefore, the value of such notes and securities may be very volatile. These notes also are subject to similar risks that in general affect the values of debt securities, such as credit, market and interest rate risks. Structured notes and indexed securities may entail a greater degree of market risk than other types of debt securities because the investor also bears the risk of the unrelated indicator. Structured notes or indexed securities also may be more volatile, relatively less liquid, and more difficult to accurately price than less complex securities and instruments or more traditional debt securities. To the extent the Fund invests in these notes and securities, however, PIMCO analyzes these notes and securities in its overall assessment of the effective duration of the Fund's holdings in an effort to monitor the Fund's interest rate risk. At the maturity of the note, the Fund may receive more or less principal than it originally invested. The Fund might receive interest payments on the note that are more or less than the stated coupon interest payments. Certain issuers of structured products may be deemed to be investment companies as defined in the Act. As a result, the Fund's investments in these structured products may be subject to limits applicable to investments in investment companies and may be subject to restrictions contained in the Act.

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***Risks of Potential Government Regulation of Derivatives.*** It is possible that additional government regulation of various types of derivative instruments, including futures, options and swap agreements and regulation of certain market participants' use of the same, may limit or prevent the Fund from using such instruments as a part of its investment strategy, and could ultimately prevent the Fund from being able to achieve its investment objective. It is impossible to fully predict the effects of past, present or future legislation and regulation by multiple regulators in this area, but the effects could be substantial and adverse. It is possible that legislative and regulatory activity could limit or restrict the ability of the Fund to use certain instruments as a part of its investment strategy. Limits or restrictions applicable to the counterparties or issuers, as applicable, with which the Fund engages in derivative transactions could also limit or prevent the Fund from using certain instruments.

There is a possibility of future regulatory changes altering, perhaps to a material extent, the nature of an investment in the Fund or the ability of the Fund to continue to implement its investment strategies. The futures, options and swaps markets are subject to comprehensive statutes, regulations, and margin requirements. In addition, the SEC, CFTC and the exchanges are authorized to take extraordinary actions in the event of a market emergency, including, for example, the implementation or reduction of speculative position limits, the implementation of higher margin requirements, the establishment of daily price limits and the suspension of trading.

The SEC, CFTC, and other regulators have completed substantial rulemakings related to derivatives pursuant to the Dodd-Frank Act.

The SEC, the CFTC, and the Prudential Regulators (as well as foreign regulators) have adopted margin requirements for non-centrally cleared swaps. Some of these requirements apply to transactions in which the Fund is or will be a counterparty. Such requirements could increase the amount of margin required to be provided by the Fund in connection with its derivatives transactions or could require increased documentation and, therefore, make derivatives transactions more expensive. These rules have been phased in over time, and it is possible that the market has yet to absorb their full impact.

The regulation of futures, options and swaps transactions in the United States is a changing area of law and is subject to modification by government and judicial action. The CFTC and various exchanges have rules limiting the maximum net long or short positions which any person or group may own, hold or control in any given futures contract or option on such futures contract. PIMCO will need to consider whether the exposure created under these contracts might exceed the applicable limits in managing the Fund, and the limits may constrain the ability of the Fund to use such contracts. In addition, the CFTC has established position limits for 25 specified physical commodity futures and related options contracts traded on exchanges, other futures contracts and related options directly or indirectly linked to such 25 specified contracts, and any OTC transactions that are economically equivalent to the 25 specified contracts. The position limits rules apply to both the Fund and its swap dealer counterparties. If a swap dealer is unable to rely on certain exemptions, such as the bona fide hedging speculative OTC transaction capacity the swap dealer has available for the Fund, the swap dealer may have limited speculative OTC transaction capacity for the Fund.

Swap dealers, major market participants and swap counterparties are experiencing, and may continue to experience, new and additional compliance burdens and associated costs. Regulatory limits and requirements may negatively impact the Fund's ability to meet its investment objective either through limits or requirements imposed on it or upon its counterparties. In particular, position limits imposed on the Fund or its counterparties may impact the Fund's ability to invest in futures, options and swaps in a manner that efficiently meets its investment objective. In addition, and as described below, the SEC adopted a rule related to the use of derivatives, reverse repurchase agreements and certain other transactions by registered investment companies. These and future requirements, including margin requirements, changes to the CFTC speculative position limits regime and mandatory clearing, may increase the cost of the Fund's investments and cost of doing business even if not directly applicable to the Fund, which could adversely affect investors.

Also, in the event of a counterparty's (or its affiliate's) insolvency, the possibility exists that the Fund's ability to exercise remedies, such as the termination of transactions, netting of obligations and realization on collateral, could be stayed or eliminated under new special resolution regimes adopted in the United States, the EU and various other jurisdictions. Such regimes provide government authorities broad authority to intervene when a financial institution is experiencing financial difficulty. In particular, in the EU, governmental authorities could reduce, eliminate, or convert to equity the liabilities to the Fund of a counterparty experiencing financial difficulties (sometimes referred to as a "bail in").

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***Additional Risk Factors in Cleared Derivatives Transactions.*** Some types of swaps (including interest rate swaps and credit default index swaps on North American and European indices) are required to be centrally cleared, and additional types of swaps may be required to be centrally cleared in the future. In a cleared derivatives transaction, the Fund's counterparty is a clearing house, rather than a bank or broker. Since the Fund is not a member of clearing houses and only members of a clearing house can participate directly in the clearing house, the Fund will hold cleared derivatives through accounts at clearing members. In cleared derivatives transactions, the Fund will make payments (including margin payments) to and receive payments from a clearing house through its accounts at clearing members. Clearing members guarantee performance of their clients' obligations to the clearing house.

In many ways, centrally cleared derivative arrangements are less favorable to registered funds than bilateral arrangements. For example, the Fund may be required to provide greater amounts of margin for cleared derivatives transactions than for bilateral derivatives transactions. Also, in contrast to bilateral derivatives transactions, following a period of notice to the Fund, a clearing member generally can require termination of existing cleared derivatives transactions at any time or increases in margin requirements above the margin that the clearing member required at the beginning of a transaction. Clearing houses also have broad rights to increase margin requirements for existing transactions or to terminate transactions at any time. Any increase in margin requirements or termination by the clearing member or the clearing house could interfere with the ability of the Fund to pursue its investment strategy. Further, any increase in margin requirements by a clearing member could also expose the Fund to greater credit risk to its clearing member, because margin for cleared derivatives transactions in excess of clearing house margin requirements typically is held by the clearing member. Also, the Fund is subject to risk if it enters into a derivatives transaction that is required to be cleared (or that PIMCO expects to be cleared), and no clearing member is willing or able to clear the transaction on the Fund's behalf. While the documentation in place between the Fund and its clearing members generally provides that the clearing members will accept for clearing all transactions submitted for clearing that are within credit limits (specified in advance) for the Fund, the Fund is still subject to the risk that no clearing member will be willing or able to clear a transaction. In those cases, the transaction might have to be terminated, and the Fund could lose some or all of the benefit of the transaction, including loss of an increase in the value of the transaction and/or loss of hedging protection offered by the transaction. In addition, the documentation governing the relationship between the Fund and the clearing members is developed by the clearing members and generally is less favorable to the Fund than typical bilateral derivatives documentation. For example, this documentation generally includes a one-way indemnity by the Fund in favor of the clearing member, indemnifying the clearing member against losses it incurs in connection with acting as the Fund's clearing member, and the documentation typically does not give the Fund any rights to exercise remedies if the clearing member defaults or becomes insolvent.

Some types of cleared derivatives are required to be executed on an exchange or on a swap execution facility (a "SEF"). A SEF is a trading platform where multiple market participants can execute derivatives by accepting bids and offers made by multiple other participants in the platform. This execution requirement may make it more difficult and costly for funds, such as the Fund, to enter into highly tailored or customized transactions. Trading swaps on a SEF may offer certain advantages over traditional bilateral OTC trading, such as ease of execution, price transparency, increased liquidity and/or favorable pricing. Execution through a SEF is not, however, without additional costs and risks, as parties are required to comply with SEF and CFTC rules and regulations, including disclosure and recordkeeping obligations, and SEF rights of inspection, among others. SEFs typically charge fees, and if the Fund executes derivatives on a SEF through a broker intermediary, the intermediary may impose fees as well. The Fund also may be required to indemnify a SEF, or a broker intermediary who executes swaps on a SEF on the Fund's behalf, against any losses or costs that may be incurred as a result of the Fund's transactions on the SEF. In addition, the Fund may be subject to execution risk if it enters into a derivatives transaction that is required to be cleared, and no clearing member is willing to clear the transaction on the Fund's behalf. In that case, the transaction might have to be terminated, and the Fund could lose some or all of the benefit of any increase in the value of the transaction after the time of the trade.

These and other new rules and regulations could, among other things, further restrict the Fund's ability to engage in, or increase the cost to the Fund of, derivatives transactions, for example, by making some types of derivatives no longer available to the Fund, increasing margin or capital requirements, or otherwise limiting liquidity or increasing transaction costs. These regulations are relatively new and evolving, so their potential impact on the Fund and the financial system are not yet known. While the new regulations and the central clearing of some derivatives transactions are designed to reduce systemic risk (i.e., the risk that the interdependence of large derivatives dealers could cause a number of those dealers to suffer liquidity, solvency or other challenges simultaneously), there is no assurance that the

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new clearing mechanisms will achieve that result, and in the meantime, as noted above, central clearing will expose the Fund to new kinds of risks and costs.

***A Note on Commodity-Linked Derivatives.*** The Fund may seek to gain exposure to the commodity markets by investing in commodity-linked derivative instruments, swap transactions, or index-linked or commodity linked structured notes.

The value of a commodity-linked derivative investment generally is based upon the price movements of a physical commodity (such as energy, mineral, or agricultural products), a commodity futures contract or commodity index, or other economic variable based upon changes in the value of commodities or the commodities markets. See "Swap Agreements and Options on Swap Agreements" above for further detail about swap transactions.

Further, the Fund may invest in derivative debt instruments with principal and/or coupon payments linked to the value of commodities, commodity futures contracts or the performance of commodity indices. These are "commodity-linked" or "index-linked" notes, and are sometimes referred to as "structured notes" because the terms of the debt instrument may be structured by the issuer of the note and the purchaser of the note. See "Structured Notes" above for further discussion of these notes.

The Fund's investments in commodity-linked instruments may bear on or be limited by the Fund's intention to qualify as a RIC under the Code. See "Taxation."

**Leverage and Borrowing**

The Fund currently utilizes leverage through its outstanding Remarketable Variable Rate MuniFund Term Preferred Shares ("RVMTP Shares" and, together with any other preferred shares the Fund may have outstanding, "Preferred Shares"). The Fund may also choose to add leverage through the use of TOBs, the issuance of additional Preferred Shares, or the use of reverse repurchase agreements, credit default swaps, dollar rolls/buybacks or borrowings, such as through bank loans or commercial paper and/or other credit facilities. Information regarding the terms and features of the Preferred Shares is provided under "Description of Capital Structure and Shares" in the Prospectus. The Fund may also enter into transactions other than those noted above that may give rise to a form of leverage including, among others, futures and forward contracts (including foreign currency exchange contracts), total return swaps and other derivative transactions, loans of portfolio securities, short sales and when-issued, delayed delivery and forward commitment transactions.

The Fund utilizes certain kinds of leverage, including, without limitation, TOBs, opportunistically and may choose to increase or decrease, or eliminate entirely, its use of 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. The Fund may also determine to increase its leverage through the issuance of additional Preferred Shares, or decrease the leverage it currently maintains through its outstanding Preferred Shares through Preferred Share redemptions or tender offers and may or may not determine to replace such leverage. The Fund's Board may authorize the issuance of additional Preferred Shares without the approval of Common Shareholders. If the Fund issues additional 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. Leveraging transactions pursued by the Fund may increase its duration and sensitivity to interest rate movements. The Fund's net assets attributable to its Preferred Shares and the net proceeds the Fund obtains from the issuance of additional preferred shares or the use of TOBs or other forms of leverage will be invested in accordance with the Fund's investment objectives and policies as described in the Prospectus.

The Fund's use of derivatives and other similar instruments is generally subject to a value-at-risk leverage limit, derivatives risk management program, and reporting requirements under Rule 18f-4 unless the Fund qualifies as "limited derivatives user" as defined in the rule or the Fund's use of such an instrument satisfies the conditions of certain exemptions under the rule.

The use of these forms of leverage increases the volatility of the Fund's investment portfolio and could result in larger losses to Common Shareholders than if these strategies were not used. See "Principal Risks of the Fund—Leverage Risk" in the Prospectus. To the extent that the Fund engages in borrowings, it may prepay a portion

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of the principal amount of the borrowing to the extent necessary in order to maintain the required asset coverage. Failure to maintain asset coverage requirements could result in an event of default.

The Fund's ability to utilize leverage is also limited by asset coverage requirements and other guidelines imposed by the terms of the Preferred Shares and imposed by rating agencies that provide ratings for the Preferred Shares (currently, Fitch), which are more restrictive than the limitations imposed by the Act noted above. Please see "Description of Capital Structure and Shares-Preferred Shares."

*Leveraging is a speculative technique and there are special risks and costs involved.* The Fund cannot assure you that its use of Preferred Shares and any other forms of leverage (such as TOBs) will be successful or result in a higher yield on your Common Shares. When leverage is used, the net asset value of the Common Shares and the yield to Common Shareholders will be more volatile. See "Principal Risks of the Fund—Leverage Risk" in the Prospectus. In addition, dividends paid on Preferred Shares (including the Preferred Shareholder Gross-Up (as described below)) and interest and other expenses borne by the Fund with respect to its use of TOBs or other forms of leverage are borne by the Common Shareholders (and not by the holders of Preferred Shares ("Preferred Shareholders")) and result in a reduction of the net asset value of the Common Shares. When the Fund reduces or discontinues its use of leverage ("deleveraging"), which it may be required to do at inopportune times, 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. In addition, because the fees received by the Investment Manager are based on the Fund's "total managed assets," which includes total assets of the Fund (including assets attributable to any reverse repurchase agreements, dollar rolls/buybacks, TOBs, borrowings and Preferred Shares that may be outstanding, if any), the Investment Manager has a financial incentive for the Fund to use certain forms of leverage (e.g., Preferred Shares and TOBs), which may create a conflict of interest between the Investment Manager, on the one hand, and the Common Shareholders, on the other hand. For purposes of calculating "total managed assets," the Fund's derivatives will be valued based on their market value. The transactions discussed herein can be subject to the risks discussed under "Derivative Instruments" above, in addition to the risks discussed in this section.

Please see "Use of Leverage" and "Principal Risks of the Fund—Leverage Risk" in the Prospectus for additional information regarding leverage and related risks. In addition, dividend, interest and other costs and expenses borne by the Fund with respect to its use of reverse repurchase agreements, borrowings or any other forms of leverage are borne by the Common Shareholders and result in a reduction of the net asset value of the Common Shares.

The Fund also may borrow money in order to repurchase its shares or as a temporary measure for extraordinary or emergency purposes, including for the payment of dividends or the settlement of securities transactions which otherwise might require untimely dispositions of portfolio securities held by the Fund.

**Reverse Repurchase Agreements**

The Fund may enter into reverse repurchase agreements and economically similar transactions. A reverse repurchase agreement involves the sale of a portfolio-eligible security by the Fund to another party, such as a bank or broker-dealer, coupled with its agreement to repurchase the instrument at a specified time and price. Under a reverse repurchase agreement, the Fund continues to be entitled to receive any principal and interest payments on the underlying security during the term of the agreement. Reverse repurchase agreements involve the risk that the market value of securities retained by the Fund may decline below the repurchase price of the securities sold by the Fund which it is obligated to repurchase. With respect to reverse repurchase agreements in which banks are counterparties, the Fund may treat such transactions as bank borrowings, which would be subject to the Fund's limitations on borrowings. Such treatment would, among other things, restrict the aggregate of such transaction (plus any other borrowings) to one-third of the Fund's total assets. Such transactions also can be subject to the risks discussed under "Derivative Instruments" above, in addition to the risks discussed in this section.

The Fund also may effect simultaneous purchase and sale transactions that are known as "sale-buybacks." A sale-buyback is similar to a reverse repurchase agreement, except that in a sale-buyback, the counterparty that purchases the security is entitled to receive any principal or interest payments made on the underlying security pending settlement of the Fund's repurchase of the underlying security.

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The Fund may enter into reverse repurchase agreements or economically similar transactions without regard to the aforementioned 33 1/3% limitation if effected in compliance with the requirements of Rule 18f-4.

**Mortgage Dollar Rolls/Buybacks**

A mortgage dollar roll/buyback is similar to a reverse repurchase agreement in certain respects. In a "dollar roll" or "buyback" transaction, the Fund sells a mortgage-related security, such as a security issued by GNMA, to a dealer and simultaneously agrees to repurchase a similar security (but not the same security) in the future at a predetermined price. A "dollar roll/buyback" can be viewed, like a reverse repurchase agreement, as a collateralized borrowing in which the Fund pledges a mortgage-related security to a dealer to obtain cash. Unlike reverse repurchase agreements, the dealer with which the Fund enters into a dollar roll/buyback transaction is not obligated to return the same securities as those originally sold by the Fund, but only securities which are "substantially identical," which generally means that the securities repurchased will bear the same interest rate and a similar maturity as those sold, but the pools of mortgages collateralizing those securities may have different prepayment histories than those sold.

It is possible that changing government regulation may affect the Fund's use of these strategies. Changes in regulatory requirements concerning margin for certain types of financing transactions, such as repurchase agreements, reverse repurchase agreements, and securities lending and borrowing, could impact the Fund's ability to utilize these investment strategies and techniques.

**Repurchase Agreements**

The Fund may invest in repurchase agreements. A repurchase agreement is a contractual agreement whereby the seller of securities agrees to repurchase the same security at a specified price on a future date agreed upon by the parties. The agreed upon repurchase price determines the yield during the Fund's holding period. Repurchase agreements are considered to be loans collateralized by the underlying security that is the subject of the repurchase contract. Income generated from transactions in repurchase agreements will be taxable. The Fund bears a risk of loss in the event that the other party to a repurchase agreement defaults on its obligations and the Fund is delayed or prevented from exercising its rights to dispose of the collateral securities. This risk includes the risk of procedural costs or delays in addition to a loss on the securities if their value should fall below their repurchase price.

**Credit-Linked Trust Certificates**

The Fund may invest in credit-linked trust certificates, which are investments in a limited purpose trust or other vehicle which, in turn, invests in a basket of derivative instruments, such as credit default swaps, total return swaps, basis swaps, interest rate swaps and other derivative transactions or securities, in order to provide exposure to the high yield or another debt securities market. For instance, the Fund may invest in credit-linked trust certificates as a cash management tool in order to gain exposure to the high yield markets and/or to remain fully invested when more traditional income-producing securities are not available, including during the period when the net proceeds of this offering and any future offering are being invested.

Like an investment in a bond, investments in these credit-linked trust certificates represent the right to receive periodic income payments (in the form of distributions) and payment of principal at the end of the term of the certificate. However, these payments are conditioned on the Fund's receipt of payments from, and the Fund's potential obligations to, the counterparties to the derivative instruments and other securities in which the trust invests. For instance, the trust may sell one or more credit default swaps, under which the trust would receive a stream of payments over the term of the swap agreements provided that no event of default has occurred with respect to the referenced debt obligation upon which the swap is based. If a default occurs, the stream of payments may stop and the trust would be obligated to pay to the counterparty the par (or other agreed upon value) of the referenced debt obligation. This, in turn, would reduce the amount of income and principal that the Fund would receive as an investor in the trust. Please see "Derivative Instruments-Swap Agreements and Options on Swap Agreements" in this Statement of Additional Information for additional information about credit default swaps. The Fund's investments in these instruments are indirectly subject to the risks associated with derivative instruments, including, among others, credit risk, default or similar event risk, counterparty risk, interest rate risk, leverage risk and management risk. It is expected that the trusts which issue credit-linked trust certificates will constitute "private" investment companies, exempt from registration under the Act. Therefore, the certificates will be subject to the risks described under "Other Investment Companies," and will not be subject to applicable investment limitations and other regulation imposed by the Act (although the

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Fund will remain subject to such limitations and regulation, including with respect to its investments in the certificates). Although the trusts are typically private investment companies, they generally are not actively managed such as a "hedge fund" might be. It is also expected that the certificates will be exempt from registration under the Securities Act. Accordingly, there may be no established trading market for the certificates and they may constitute illiquid investments. See "Principal Risks of the Fund-Liquidity Risk" in the Prospectus. If market quotations are not readily available for the certificates, they will be valued by the Fund at fair value as determined by the Valuation Designee (as defined herein). See "How Fund Shares are Priced" in the Prospectus.

**When-Issued, Delayed Delivery and Forward Commitment Transactions**

The Fund may purchase or sell securities on a when-issued, delayed delivery, or forward commitment basis. These transactions may be known as TBA transactions.

When purchasing a security on a when-issued, delayed delivery or forward commitment basis, the Fund assumes the rights and risks of ownership of the security, including the risk of price and yield fluctuations, and takes such fluctuations into account when determining its net asset value. Because the Fund is not required to pay for the security until the delivery date, these risks are in addition to the risks associated with the Fund's other investments. If the other party to a transaction fails to deliver the securities, the Fund could miss a favorable price or yield opportunity. If the Fund remains substantially fully invested at a time when when-issued, delayed delivery or forward commitment purchases are outstanding, the purchases may result in a form of leverage.

When the Fund has sold a security on a when-issued, delayed delivery or forward commitment basis, the Fund does not participate in future gains or losses with respect to the security. If the other party to a transaction fails to pay for the securities, the Fund could suffer a loss. Additionally, when selling a security on a when-issued, delayed delivery, or forward commitment basis without owning the security, the Fund will incur a loss if the security's price appreciates in value such that the security's price is above the agreed-upon price on the settlement date.

The Fund may dispose of or renegotiate a transaction after it is entered into, and may purchase or sell when-issued, delayed delivery or forward commitment securities before the settlement date, which may result in a capital gain or loss. There is no percentage limitation on the extent to which the Fund may purchase or sell securities on a when-issued, delayed delivery or forward commitment basis.

The Fund may purchase or sell securities, including mortgage-backed securities, in the TBA market. A TBA purchase commitment is a security that is purchased or sold for a fixed price and the underlying securities are announced at a future date. Financial Industry Regulatory Authority ("FINRA") rules include mandatory margin requirements for the TBA market that may require the Fund to post collateral in connection with its TBA transactions. There is no similar requirement applicable to the Fund's TBA counterparties. The required collateralization of TBA trades could increase the cost of TBA transactions to the Fund and impose added operational complexity. Such transactions also can be subject to the risks discussed under "Derivative Instruments" above.

**Common Stocks**

Common stock generally takes the form of shares in a corporation. The value of a company's stock may fall as a result of factors directly relating to that company, such as decisions made by its management or lower demand for the company's products or services. A stock's value also may fall because of factors affecting not just the company, but also companies in the same industry or in a number of different industries, such as increases in production costs. The value of a company's stock also may be affected by changes in financial markets that are relatively unrelated to the company or its industry, such as changes in interest rates or currency exchange rates. In addition, a company's stock generally pays dividends only after the company invests in its own business and makes required payments to holders of its bonds, other debt and preferred securities. For this reason, the value of a company's stock will usually react more strongly than its bonds, other debt and preferred securities to actual or perceived changes in the company's financial condition or prospects. Stocks of smaller companies may be more vulnerable to adverse developments than those of larger companies. Stocks of companies that the portfolio managers believe are fast-growing may trade at a higher multiple of current earnings than other stocks. The value of such stocks may be more sensitive to changes in current or expected earnings than the values of other stocks.

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**Short Sales**

The Fund may make short sales of securities: (i) to offset potential declines in long positions in similar securities; (ii) to increase the flexibility of the Fund; (iii) for investment return; (iv) as part of a risk arbitrage strategy; and (v) as part of its overall portfolio management strategies involving the use of derivative instruments. A short sale is a transaction in which the Fund sells a security it does not own in anticipation that the market price of that security will decline or will underperform relative to other securities held in the Fund's portfolio.

When the Fund makes a short sale, it will often borrow the security sold short and deliver it to the broker-dealer through which it made the short sale as collateral for its obligation to deliver the security upon conclusion of the sale. In connection with short sales of securities, the Fund may pay a fee to borrow securities or maintain an arrangement with a broker to borrow securities, and is often obligated to pay over any accrued interest and dividends on such borrowed securities.

If the price of the security sold short increases between the time of the short sale and the time that the Fund replaces the borrowed security, the Fund will incur a loss; conversely, if the price declines, the Fund will realize a capital gain. Any gain will be decreased, and any loss increased, by the transaction costs described above. If the Fund engages in short sales as part of a hedging strategy, the successful use of short selling may be adversely affected by imperfect correlation between movements in the price of the security sold short and the securities being hedged.

The Fund may invest pursuant to a risk arbitrage strategy to take advantage of a perceived relationship between the value of two securities. Frequently, a risk arbitrage strategy involves the short sale of a security.

The Fund will engage in short selling to the extent permitted by the federal securities laws and rules and interpretations thereunder. To the extent the Fund engages in short selling in foreign (non-U.S.) jurisdictions, the Fund will do so to the extent permitted by the laws and regulations of such jurisdiction.

The Fund may also engage in so-called "naked" short sales (i.e., short sales that are not "against the box"), in which case the Fund's losses could theoretically be unlimited, in cases where the Fund is unable for whatever reason to close out its short position. The Fund has the flexibility to engage in short selling to the extent permitted by the Act and rules and interpretations thereunder. Such transactions also can be subject to the risks discussed under "Derivative Instruments" above. Restrictions on and/or reporting of short selling and short positions may negatively impact and materially impair the Fund's ability to execute certain transactions.

**Illiquid Investments**

To the extent consistent with the applicable liquidity requirements for interval funds under Rule 23c-3 under the Act, the Fund may invest without limit in illiquid investments. PIMCO may be subject to significant delays in disposing of illiquid investments, and transactions in illiquid investments may entail registration expenses and other transaction costs that are higher than those for transactions in liquid investments. The term "illiquid investments" for this purpose means any investment that the Fund reasonably expects cannot be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment.

**Rule 144A Securities**

In addition to the Fund's investments in privately placed and unregistered securities, the Fund may also invest in securities sold pursuant to Rule 144A under the Securities Act. Such securities are commonly known as "144A securities" and may only be resold under certain circumstances to other institutional buyers. 144A securities frequently trade in an active secondary market. As a result of the resale restrictions on 144A securities, there is a greater risk that they will become illiquid than securities registered with the SEC. Please refer to "Illiquid Investments" for further discussion of regulatory considerations and constraints relating to investment liquidity.

**Other Investment Companies**

To the extent consistent with its investment objectives and strategies and permissible under the 1940 Act, the Fund may also invest up to 5% of its total assets in securities of other investment companies (including those advised

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by PIMCO), including closed-end funds, exchange-traded funds and other open-end funds, that invest primarily in municipal bonds and other municipal securities of the types in which the Fund may invest directly. The Fund may invest in certain money market funds and/or short-term bond funds ("Central Funds"), to the extent permitted by the Act, the rules thereunder or exemptive relief therefrom. The Central Funds are registered investment companies created for use by certain registered investment companies advised by PIMCO in connection with their cash management activities. The Fund treats its investments in other investment companies that invest primarily in types of securities in which the Fund may invest directly as investments in such types of securities for purposes of the Fund's investment policies (e.g., the Fund's investment in an investment company that invests primarily in debt securities will be treated by the Fund as an investment in a debt security).

In general, under the Act, an investment company such as the Fund may not (i) own more than 3% of the outstanding voting securities of any one registered investment company, (ii) invest more than 5% of its total assets in the securities of any single registered investment company or (iii) invest more than 10% of its total assets in securities of other registered investment companies (the "3-5-10% Limitations"). The SEC adopted new Rule 12d1-4 under the Act, which provides an exemption to permit acquiring funds to invest in the securities of other registered investment companies in excess of the 3-5-10% Limitations, subject to certain conditions. In connection with the adoption of Rule 12d1-4, the SEC adopted certain other regulatory changes and took other actions related to the ability of the Fund to invest in another investment company in excess of the 3-5-10% Limitations.

The Fund may invest in other investment companies (including those advised by PIMCO) to gain broad market or sector exposure or for cash management purposes, including during periods when it has large amounts of uninvested cash (such as the period shortly after the Fund receives the proceeds of the offering of its Common Shares) or when PIMCO believes share prices of other investment companies offer attractive values. The Fund may invest in certain money market funds and/or short-term bond funds ("Central Funds"), to the extent permitted by the Act, the rules thereunder or exemptive relief therefrom. The Central Funds are registered investment companies created for use by certain registered investment companies advised by PIMCO in connection with their cash management activities.

As a shareholder in an investment company, the Fund will bear its ratable share of that investment company's expenses and would remain subject to payment of the Fund's management fees and other expenses with respect to assets so invested. Common Shareholders would therefore be subject to duplicative expenses to the extent the Fund invests in other investment companies. In addition, the securities of other investment companies may also be leveraged and will therefore be subject to the same leverage risks described in the Prospectus and herein.

**Private Placements**

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. 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.

**Significant Risk Transfer Instruments**

Significant Risk Transfer instruments ("SRTs") provide exposures to portfolios of loans or other reference obligations ("Reference Assets"). SRTs typically allow the issuer or counterparty to transfer the credit risk associated with the Reference Assets to investors. SRTs may take the form of a type of credit linked securities (see "Structured Products-Credit Linked Securities") or derivatives instruments such as credit default swap agreements. SRTs are subject to the risks associated with credit-linked securities or derivatives instruments, as applicable. Among other risks, SRTs are subject to the credit risk associated with the issuer or counterparty and the risks associated with the potential losses of the Reference Assets (including credit risk of underlying obligors, market risk, and interest rate risk). SRTs may provide leveraged exposure to the Reference Assets, through leverage inherent to the SRT or through leverage obtained by financing. Leveraged exposure subjects the Fund to risk of magnified losses. In connection with the Fund's exposure to SRTs, the Fund may have a contractual relationship with the issuer of the SRT only, and not with the obligors of the underlying Reference Assets. As such, the Fund generally will have no right to enforce compliance by the obligors of the Reference Assets with the terms of such Reference Assets. The Fund will not directly benefit from the collateral supporting the Reference Assets and will not have the benefit of the remedies that would normally

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be available to a holder of such obligations. In addition, in the event of the insolvency of the issuer or counterparty of the SRT, the Fund may be treated as a general creditor of such issuer or counterparty, as applicable, and may not have a secured claim with respect to any underlying Reference Asset obligation.

**Fund Operations**

*Operational Risk.* An investment in the Fund, like any fund, can involve operational risks arising from factors such as processing errors, human errors, inadequate or failed internal or external processes, failures in systems and technology, changes in personnel and errors caused by third-party service providers. The occurrence of any of these failures, errors or breaches could result in a loss of information, regulatory scrutiny, reputational damage or other events, any of which could have a material adverse effect on the Fund. While the Fund seeks to manage such events through controls and oversight, there may still be failures that could cause losses to the Fund.

*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 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 and natural/environmental disasters or events, which can all negatively impact the securities markets, interest rates, secondary trading, ratings, credit risk, inflation, deflation, 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.

A widespread health crisis, such as a global pandemic, could cause substantial market volatility, exchange trading suspensions or restrictions and closures of securities exchanges and businesses. Such a health care crisis could impact the ability to complete redemptions, and adversely impact investments held by the Fund. For example, the outbreak of COVID-19, a respiratory disease caused by a novel coronavirus, caused volatility, severe market dislocations and liquidity constraints in many markets, including markets for the securities the Fund holds. The transmission of COVID-19 and efforts to contain its spread resulted in travel restrictions and disruptions, closed international borders, enhanced health screenings at ports of entry and elsewhere, disruption of and delays in healthcare service preparation and delivery, quarantines, event and service cancellations or interruptions, disruptions to business operations (including staff furloughs and reductions) and supply chains, and a reduction in consumer and business spending, as well as general economic concern and uncertainty. These disruptions led to instability in the market place, including equity and debt market losses and overall volatility, and the jobs market. The impact of COVID-19, and other infectious illness outbreaks, epidemics or pandemics that may arise in the future, could adversely affect the economies of many nations or the entire global economy, the financial well-being and performance of individual issuers, borrowers and sectors and the health of the markets generally in potentially significant and unforeseen ways. In addition, the impact of infectious illnesses, such as COVID-19, in emerging market countries may be greater due to generally less established healthcare systems. Public health crises may exacerbate other pre-existing political, social and economic risks in certain countries or globally.

The foregoing could lead to a significant economic downturn or recession, increased market volatility, a greater number of market closures, higher default rates and adverse effects on the values and liquidity of securities or other assets. Such impacts, which may vary across asset classes, may adversely affect the performance of the Fund. In certain cases, an exchange or market may close or issue trading halts on specific securities or even the entire market, which may result in the Fund being, among other things, unable to buy or sell certain securities or financial instruments or to accurately price their investments.

*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 has become potentially more susceptible to operational and information security risks resulting from breaches in cyber security. A breach in cyber security refers to both intentional and unintentional cyber events that may, among other things, cause the Fund to lose proprietary

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information, suffer data corruption and/or destruction or 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 digital information systems that support the Fund (e.g., through "hacking," ransomware or malicious software coding) or outside attacks such as denial-of-service attacks (i.e., efforts to make network services unavailable to intended users), but may also result from intentionally or unintentionally harmful acts of PIMCO personnel. In addition, cyber security breaches involving third party service providers that provide services to PIMCO or the Fund (including but not limited to vendors, advisers, sub-advisers, administrators, transfer agents, regulatory authorities, custodians, registry operators, distributors and other third parties), trading counterparties and issuers in which the Fund invests can also subject the Fund to many of the same risks associated with direct cyber security breaches. Recently, geopolitical tensions may have increased the scale and sophistication of deliberate cybersecurity attacks, particularly those from nation-states or from entities with nation-state backing. PIMCO's use of cloud-based service providers could heighten or change these risks. In addition, work-from-home arrangements by PIMCO or its service providers could increase all of the above risks, create additional data and information accessibility concerns, and make the Fund, PIMCO 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.

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 potential speed of such trading and technologies may exacerbate the impact of any such flaws, particularly where such flaws are exploited by other artificially intelligent systems and may act to impair or prevent the intervention of a human control.

**Portfolio Turnover**

A change in the securities held by the Fund and reinvestment of the proceeds is known as "portfolio turnover." PIMCO manages the Fund without regard generally to restrictions on portfolio turnover. Trading in equity securities

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involves the payment of brokerage commissions, which are transaction costs paid by 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 may involve the payment of commissions to FCMs. High portfolio turnover (e.g., greater than 100%) 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 generally would be taxed at ordinary income tax rates when distributed to shareholders). See "Taxation."

The portfolio turnover rate of the Fund is calculated by dividing (a) the lesser of purchases or sales of portfolio securities for the particular fiscal year by (b) the monthly average of the value of the portfolio securities owned by the Fund during the particular fiscal year. In calculating the rate of portfolio turnover, there is excluded from both (a) and (b) all derivatives and all securities, including options, whose maturities or expiration dates at the time of acquisition were one year or less and any short sales that the Fund does not intend to maintain for more than one year. Proceeds from short sales and, in accordance with current federal securities laws, rules and staff positions, assets used to cover short positions undertaken, are included in the amounts of securities sold and purchased, respectively, during the year.

For the fiscal years ended December 31, 2025, December 31, 2024, and December 31, 2023, the Fund's portfolio turnover rate was 36%, 52%, and 52% respectively.

**Warrants to Purchase Securities**

The Fund may invest in or acquire warrants to purchase equity or fixed income securities. Warrants are instruments that give the holder the right, but not the obligation, to buy a security directly from an issuer at a specific price for a specific period of time. Changes in the value of a warrant do not necessarily correspond to changes in the value of its underlying security. The price of a warrant may be more volatile than the price of its underlying security, and a warrant may offer greater potential for capital appreciation as well as capital loss. Warrants do not entitle a holder to dividends or voting rights with respect to the underlying security, do not represent any rights in the assets of the issuing company and are subject to the risk that the issuer-counterparty may fail to honor its obligations. A warrant ceases to have value if it is not exercised prior to its expiration date. These factors can make warrants more speculative than other types of investments. Bonds with warrants attached to purchase equity securities have many characteristics of convertible bonds and their prices may, to some degree, reflect the performance of the underlying stock. Bonds also may be issued with warrants attached to purchase additional fixed income securities at the same coupon rate. A decline in interest rates would permit the Fund to buy additional bonds at the favorable rate or to sell the warrants at a profit. If interest rates rise, the warrants would generally expire with no value. The Fund may from time to time use non-standard warrants, including low exercise price warrants or low exercise price options ("LEPOs"), to gain exposure to issuers in certain countries. LEPOs are different from standard warrants in that they do not give their holders the right to receive a security of the issuer upon exercise. Rather, LEPOs pay the holder the difference in price of the underlying security between the date the LEPO was purchased and the date it is sold. Additionally, LEPOs entail the same risks as other OTC derivatives, including the risks that the counterparty or issuer of the LEPO may not be able to fulfill its obligations, that the holder and counterparty or issuer may disagree as to the meaning or application of contractual terms, or that the instrument may not perform as expected. Furthermore, while LEPOs may be listed on an exchange, there is no guarantee that a liquid market will exist or that the counterparty or issuer of a LEPO will be willing to repurchase such instrument when the Fund wishes to sell it.

**Loans of Portfolio Securities**

Subject to certain conditions described in the Prospectus and below, the Fund may make secured loans of its portfolio securities to brokers, dealers and other financial institutions amounting to no more than one-third of its total assets. The risks in lending portfolio securities, as with other extensions of credit, include possible delay in recovery of the securities or possible loss of rights in the collateral should the borrowers (which typically include broker-dealers and other financial services companies) fail financially. Securities loans are made to broker-dealers pursuant to agreements requiring that loans be continuously secured by collateral consisting of U.S. government securities, cash or cash equivalents (negotiable certificates of deposit, bankers' acceptances or letters of credit) maintained on a daily mark-to-market basis in an amount at least equal at all times to the market value of the securities lent. The borrower pays to the Fund, as the lender, an amount equal to any dividends or interest received on the securities lent.

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The Fund may invest only the cash collateral received in interest-bearing, short-term securities or receive a fee from the borrower. In the case of cash collateral, the Fund typically pays a rebate to the lender. Although voting rights or rights to consent with respect to the loaned securities pass to the borrower, the Fund, as the lender, retains the right to call the loans and obtain the return of the securities loaned at any time on reasonable notice, and it will do so in order that the securities may be voted by the Fund if the holders of such securities are asked to vote upon or consent to matters materially affecting the investment. The Fund may also call such loans in order to sell the securities involved. The Fund's performance will continue to reflect changes in the value of the securities loaned and will also reflect the receipt of either interest, through investment of cash collateral by the Fund in permissible investments, or a fee, if the collateral is U.S. government securities.

**Quantitative Investing** 

PIMCO employs and/or relies on algorithms, models or other systems in connection with many of its investment activities, including research, forecasting, selection, optimization, order routing, execution, and allocation processes (together, "Systems"). These Systems, which may be employed together and operate without human intervention, rely heavily on the use of proprietary and nonproprietary data, software, hardware, and intellectual property, including data, software and hardware that may be licensed or otherwise obtained from third parties. The use of such Systems has inherent limitations and risks. Although PIMCO seeks to develop and use Systems appropriately and effectively, there can be no assurance that it will successfully do so. The Systems are extremely complex and may involve the use of financial, economic, econometric and statistical theories, research and modeling and related translation into computer code. Errors may occur in the design, writing, testing, validation, monitoring, and/or implementation of Systems, including in the manner in which Systems function together. The effectiveness of Systems may diminish over time, including as a result of market changes and changes in the behavior of market participants. The quality of the resulting analysis, investment selections, portfolio construction, asset allocations, proposed and executed trades, risk management, allocations of investment opportunities and trading strategies depends on a number of factors including the accuracy and quality of data inputs into the Systems, including through automated and manual integration of completed transactions, the mathematical and analytical assumptions and underpinnings of the Systems' coding, the accuracy in translating those analytics into program code or interpreting the output of a System by another System in order to facilitate a transaction, change in market conditions, the successful integration of the various Systems into the portfolio selection and trading process and whether actual market events correspond to one or more assumptions underlying the Systems. Accordingly, Systems are subject to errors and/or mistakes ("System Incidents") that may adversely impact the Fund. For example, System Incidents may result in Systems performing in a manner other than as intended, including, but not limited to, failure to achieve desired performance or investment objectives, execution of unanticipated trades or failure or delays in executing intended trades, failure to properly allocate trades, failure to properly gather and organize available data, or failure to identify hedging or other risk management opportunities or targets, all of which may adversely impact the Fund.

PIMCO relies on quantitative models, data, execution and trading algorithms (including, without limitation, algorithms utilized in third-party automated trading platforms that match buyers and sellers based on price and other characteristics of the underlying investment) supplied by third parties for certain funds. Such models, data and algorithms are used to construct sets of transactions and investments, to implement, route, and execute investment decisions, and to provide risk management insights. When the third-party models, data or algorithms prove to be incorrect or incomplete, any decisions or investments made in reliance thereon expose applicable funds to additional risks. For example, PIMCO does not have the same insight or access into the construction, coding or testing of the algorithms, and PIMCO and applicable funds will be exposed to systems, cyber security and other risks associated with the third party models, data or algorithms. For these reasons, and subject to PIMCO satisfying its standard of care, PIMCO generally will not compensate applicable funds for any losses associated with third-party models, data, or algorithms, and applicable funds will bear all such losses. PIMCO, subject to satisfying its standard of care, generally does not expect to disclose certain such events to applicable funds.

The Systems rely heavily on appropriate data inputs and it is impossible and impracticable to factor all relevant, available data into the Systems. PIMCO will use its discretion to determine what data to gather and what subset of data the Systems utilize. In addition, due to the automated nature of gathering data, the volume and depth of data available, the complexity and often manual nature of data cleaning, and the fact that the data may come from third-party sources, it is inevitable that not all desired and/or relevant data will be available to, or processed by, PIMCO at all times. Where incorrect or incomplete data is available, PIMCO may, and often will, continue to generate forecasts and make investment decisions based on the data available. Additionally, PIMCO may determine that certain available data,

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while potentially useful in generating forecasts and/or making investment decisions, is not cost effective to gather due to, among other factors, the technology costs or third-party vendor costs and, in such cases, PIMCO will not utilize such data. PIMCO has full discretion to select the data it utilizes, and may elect to use or may refrain from using any specific data or type of data in the Systems. The data used in the development and use of Systems may not be the most accurate data available or free of errors.

Further, if incorrect market or other data are entered into an otherwise properly functioning System, the System's resulting output, including proposed trades or investment recommendations, may be inconsistent with the underlying investment strategy. Even if data is input correctly, prices anticipated by the data through the Systems may differ substantially from market prices, especially for financial instruments with complex characteristics, such as derivatives, in which the Fund may invest. Most Systems require continual monitoring and enhancements, and there is no guarantee that such monitoring and enhancements will be successful or that Systems will operate as intended. The successful deployment of the investment strategy, the portfolio construction process and/or the trading process could be severely compromised by software or hardware malfunctions, viruses, glitches, connectivity loss, system crashes or various other System Incidents, including, in particular, where multiple Systems contribute to the process, in particular where there is no human intervention (e.g., where one System develops a signal or possible trade and another System interprets or optimizes that recommended signal or possible trade to facilitate a trade order, another System routes and executes that trade order, and another System allocates the completed trade, and where this process runs again in reliance on the preceding automated transaction). System Incidents may be difficult to detect and PIMCO may not immediately or ever detect certain System Incidents, which may have an increasing impact on the Fund over time. PIMCO has adopted policies and procedures that it believes are reasonably designed to prevent, detect, escalate and remediate System Incidents. PIMCO will address System Incidents in accordance with this policy but there is no guarantee that measures taken to address a System Incident will be successful.

PIMCO has policies and procedures that address identification and correction of errors that may occur in connection with PIMCO's management of the Fund and other client accounts ("Trade Errors"). PIMCO generally does not classify System Incidents to be Trade Errors and applicable funds generally will bear all losses associated with System Incidents, subject to PIMCO satisfying its standard of care. Further, PIMCO generally does not expect to disclose System Incidents to the Fund.

With respect to errors in PIMCO's trade allocation process, whether the result of a System Incident or otherwise, PIMCO will generally seek to take steps it deems appropriate to achieve the intended allocation; however, PIMCO may determine that such intended allocation is no longer possible or desirable. Funds will bear the economic impact, if any, associated with any change to the allocation, subject to PIMCO satisfying its standard of care.

**Government Intervention**

Governmental and quasi-governmental authorities and regulators throughout the world have in the past responded to major economic disruptions with a variety of significant fiscal and monetary policy changes, including but not limited to, direct capital infusions into companies and financial markets, economic relief packages and changes to interest rates. The introduction and adoption of these packages could cause market disruption and volatility. In addition, the end of any such program could cause market downturns, disruptions and volatility, particularly if markets view the ending as premature. There can be no guarantee that any such measures taken in the past or in connection with future events (within the United States or other affected countries throughout the world) will be sufficient to have their intended effect. In addition, an unexpected or quick reversal of such measures could cause market downturns, disruptions, volatility and inflation, which could adversely affect the Fund's investments.

In addition, federal, state, and other governments, their regulatory agencies, or self-regulatory organizations may take actions that affect the regulation of the instruments in which the Fund invests, or the issuers of such instruments, in ways that are unforeseeable. Legislation or regulation may also change the way in which the Fund itself is regulated. Such legislation or regulation could limit or preclude the Fund's ability to achieve its investment objectives. Also, while such legislation or regulations are intended to strengthen markets, systems, and public finances, they could affect fund expenses and the value of fund investments in unpredictable ways.

The current direction of governments and regulators may have the effect of reducing market liquidity, market resiliency and money supply, whether through higher rates, tighter financial regulations or the Liquidity Rule proposals that may prevent mutual funds from participating in certain markets. During periods when interest rates are low (or

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negative), the Fund's yield (or total return) may also be low and fall below zero. Very low or negative interest rates may heighten interest rate risk. The Fund may be subject to heightened levels of interest rate risk because the U.S. Federal Reserve (the "Federal Reserve") has raised interest rates. To the extent the Federal Reserve continues to raise interest rates, there is a risk that rates across the financial system may rise. Changing interest rates 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 and/or volatility.

Governments or their agencies may also acquire distressed assets from financial or other institutions and acquire ownership interests in those institutions. Such a program may have positive or negative effects on the liquidity, valuation and performance of the Fund's portfolio holdings. Furthermore, volatile financial markets can expose the Fund to greater market and liquidity risk and potential difficulty in valuing portfolio instruments held by the Fund. The Fund has established procedures to assess the liquidity of portfolio holdings and to value instruments for which market prices may not be readily available.

The value of the Fund's holdings is also generally subject to the risk of future local, national, or global economic disturbances based on unknown weaknesses in the markets in which the Fund invests. In the event of such a disturbance, issuers of securities held by the Fund may experience significant declines in the value of their assets and even cease operations, or may receive government assistance accompanied by increased restrictions on their business operations or other government intervention. In addition, it is not certain that the U.S. government will intervene in response to a future market disturbance and the effect of any such future intervention cannot be predicted. It is difficult for issuers to prepare for the impact of future financial downturns, although companies can seek to identify and manage future uncertainties through risk management programs.

**Regulatory Matters**

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, affect who can invest in the Fund, and limit and/or preclude the Fund's ability to achieve its investment objective. Government regulation may change frequently and may have significant adverse consequences on the Fund and on investors. Moreover, government regulation may have unpredictable and unintended effects.

Certain instruments in which the Fund may invest have historically referenced the London Interbank Offered Rate ("LIBOR") to, among other things, determine payment obligations, financing terms, hedging strategies or investment value. LIBOR was traditionally an average interest rate, determined by the ICE Benchmark Administration, that banks charge one another for the use of short-term money. As of June 30, 2023, LIBOR was determined to be no longer representative but certain settings of LIBOR continued to be published synthetically until September 30, 2024. Publication of all LIBOR settings has since permanently ceased. Alternative reference rates to LIBOR have been established in most major currencies, and markets in these new rates are continuing to develop (e.g., the Secured Overnight Financing Rate (SOFR) for USD-LIBOR). While the transition from LIBOR has been substantially completed, there remains residual risks associated with the transition that may impact markets or particular investments and, as such, the full impact of the transition on the Fund or the financial instruments in which the Fund invests cannot yet be fully determined. For example, so-called "tough legacy" contracts have LIBOR interest rate provisions with no fallback provisions contemplating the permanent discontinuation of LIBOR, fallback provisions which may have not effectively resulted in a transition away from LIBOR prior to LIBOR's replacement date or otherwise have inadequate fallback provisions. On March 15, 2022, the Adjustable Interest Rate (LIBOR) Act was signed into law. This law provides a statutory fallback mechanism on a nationwide basis to replace LIBOR with a benchmark rate that is selected by the Board of Governors of the Federal Reserve System based on SOFR for tough legacy contracts governed by U.S. law. On February 27, 2023, the Federal Reserve System's final rule in connection with this law became effective, establishing benchmark replacements based on SOFR and Term SOFR (a forward-looking measurement of market expectations of SOFR implied from certain derivatives markets) for applicable tough legacy contracts. Certain of the Fund's investments may have involved individual tough legacy contracts which may be subject to the Adjustable Interest Rate (LIBOR) Act or were subject to synthetic LIBOR and no assurances can be given that these measures will have had the intended effects.

Additionally, alteration of the terms of a debt instrument or a modification of the terms of other types of contracts to replace LIBOR or another interbank offered rate ("IBOR") with a new reference rate could result in a taxable

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exchange and the realization of income and gain/loss for U.S. federal income tax purposes. The IRS has issued final regulations regarding the tax consequences of the transition from IBOR to a new reference rate in debt instruments and non-debt contracts. Under the final regulations, alteration or modification of the terms of a debt instrument to replace an operative rate that uses a discontinued IBOR with a qualified rate (as defined in the final regulations) including true up payments equalizing the fair market value of contracts before and after such IBOR transition, to add a qualified rate as a fallback rate to a contract whose operative rate uses a discontinued IBOR or to replace a fallback rate that uses a discontinued IBOR with a qualified rate would not be taxable. These federal income tax consequences would apply only to the shareholders of the Fund (including the insurance companies offering the variable products and other variable insurance funds), but there would not be federal income tax consequences to the owners of the Variable Contracts. The IRS may provide additional guidance, with potential retroactive effect.

The SEC has implemented Rule 18f-4, which regulates the use of derivatives, reverse repurchase agreements and certain other transactions by registered investment companies. The Fund's trading of derivatives and other transactions that create future payment or delivery obligations is subject to value-at-risk ("VaR") leverage limits and derivatives risk management program and reporting requirements. Generally, these requirements apply unless the Fund satisfies a "limited derivatives users" exception that is included in the final rule. Under the rule, when a fund trades reverse repurchase agreements or similar financing transactions, including certain TOBs, it needs to aggregate the amount of indebtedness associated with the reverse repurchase agreements or similar financing transactions with the aggregate amount of any other senior securities representing indebtedness when calculating the fund's asset coverage ratio or treat all such transactions as derivatives transactions. Reverse repurchase agreements or similar financing transactions aggregated with other indebtedness do not need to be included in the calculation of whether the Fund satisfies the limited derivatives users exception, but for funds subject to the VaR testing requirement, reverse repurchase agreements and similar financing transactions must be included for purposes of such testing whether treated as derivatives transactions or not. The SEC also provided guidance in connection with the rule regarding the use of securities lending collateral that may limit the Fund's securities lending activities. In addition, under the rule, a fund is permitted to invest in a security on a when-issued or forward-settling basis, or with a non-standard settlement cycle, and the transaction will be deemed not to involve a senior security (as defined under Section 18(g) of the Act), provided that, (i) the Fund intends to physically settle the transaction and (ii) the transaction will settle within 35 days of its trade date (the "Delayed-Settlement Securities Provision"). A fund may otherwise engage in when-issued, forward-settling and non-standard settlement cycle securities transactions that do not meet the conditions of the Delayed-Settlement Securities Provision so long as the Fund treats any such transaction as a "derivatives transaction" for purposes of compliance with the rule. Furthermore, under the rule, the Fund is permitted to enter into an unfunded commitment agreement, and such unfunded commitment agreement will not be subject to the asset coverage requirements under the Act, if the Fund reasonably believes, at the time it enters into such agreement, that it will have sufficient cash and cash equivalents to meet its obligations with respect to all such agreements as they come due. These and other proposed and adopted regulatory requirements may limit the ability of the Fund to use derivatives, reverse repurchase agreements and similar financing transactions, when-issued, delayed delivery and forward commitment transactions, and unfunded commitment agreements as part of its investment strategies. These requirements may increase the cost of the Fund's investments and cost of doing business, which could adversely affect investors. PIMCO cannot predict the effects of these requirements on the Fund. PIMCO intends to monitor developments and seek to manage the Fund in a manner consistent with achieving the Fund's investment objectives, but there can be no assurance that it will be successful in doing so.

In September 2023, the SEC adopted amendments to Rule 35d-1 under the Act, the rule governing fund naming conventions (the "Names Rule"). In general, the Names Rule requires funds with certain types of names to adopt a policy to invest at least 80% of their assets in the type of investment suggested by the name. The amendments expand the scope of the current rule to include any term used in a fund name that suggests the fund makes investments that have, or whose issuers have, particular characteristics. Additionally, the amendments modify the circumstances under which a fund may deviate from its 80% investment policy and address the calculation methodology of derivatives instruments for purposes of the rule. The amendments became effective December 11, 2023. On March 14, 2025, the SEC extended the compliance date from December 11, 2025 to June 11, 2026 for fund groups with $1 billion in net assets and modified the operation of the compliance dates to allow for compliance based on the timing of certain annual disclosure and reporting obligations that are tied to the fund's fiscal year-end.

In December 2023, the SEC adopted rule amendments providing that any covered clearing agency ("CCA") for U.S. Treasury securities require its direct participants (which generally would be a bank or broker-dealer) to submit for clearance and settlement all eligible secondary market transactions in U.S. Treasury securities to which the direct

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participant is a counterparty. The clearing mandate includes in its scope all repurchase or reverse repurchase agreements of such direct participants collateralized by U.S. Treasury securities (collectively, "Treasury repo transactions") of a type accepted for clearing by a registered CCA, including both bilateral Treasury repo transactions and triparty Treasury repo transactions where a bank agent provides custody, collateral management and settlement services.

The Treasury repo transactions of registered funds with any direct participants of a CCA will be subject to the mandatory clearing requirement.

On February 25, 2025, the SEC extended the compliance date applicable to the clearing mandate for Treasury repo transactions. Under the extended compliance date, market participants, absent an exemption, will be required to clear Treasury repo transactions under the rule as of June 30, 2027. The clearing mandate is expected to result in a fund being required to clear all or substantially all of its Treasury repo transactions as of the compliance date, and the fund may incur costs in connection with entering into new agreements (or amending existing agreements) with direct participants of a CCA and potentially other market participants and taking other actions to comply with the new requirements. In addition, upon the compliance date taking effect, the costs and benefits of entering into Treasury repo transactions to a fund may be impacted as compared to Treasury repo transactions a fund may enter prior to the compliance date. PIMCO will monitor developments in the Treasury repo transactions market as the implementation period progresses.

In August 2024, the SEC adopted amendments to the reporting requirements on Form N-PORT and Form N-CEN. Under the amendments, funds must file Form N-PORT reports on a monthly basis within 30 days of month end, and each report will be made public 60 days after month end. Additionally, funds will be required to identify and provide certain information about liquidity service providers on Form N-CEN, including the asset classes for which the liquidity service provider provided liquidity classifications and whether the provider was hired or terminated during the period. The compliance date for the amendments to Form N-CEN is November 17, 2025. On April 16, 2025, the SEC extended the compliance date for Form N-PORT amendments to November 17, 2027.

On February 18, 2026, the SEC extended the compliance date for Form N-PORT reporting requirements related to the Names Rule to November 17, 2027 for fund groups with net assets of $10 billion or more. In addition, on February 18, 2026, the SEC proposed amendments to certain reporting requirements on Form N-PORT that would, if adopted, provide that monthly reports must be filed within 45 days of month end and reduce the frequency of publication of reports on Form N-PORT from monthly (within 60 days of each month end) to quarterly (within 60 days after fiscal quarter end).

In addition, regulatory actions or actions taken by law enforcement entities in the United States or outside of the United States may also adversely affect the Fund's investments. For example, assets that become subject to sanctions or that are involved in illegal activities such as money laundering or kleptocracy, may be seized, subject to forfeiture, frozen or otherwise become unmarketable, will lose value or become worthless and consequently adversely affect the Fund's value. Actions such as geographical targeting orders for, or new rulemaking related to, real estate investments, money services businesses or other geographic target orders issued by FinCEN may also lengthen the settlement process, make a real estate asset less liquid and harder to sell, and/or increase costs associated with these portfolio investments.

**CSDR Related Risk**

The European Union has adopted a settlement discipline regime under Regulation (EU) No 909/2014 and the Settlement Discipline Regulatory Technical Standard ("RTS") as they may be modified from time to time ("CSDR" and the settlement discipline regime the "CSDR SDR"). The CSDR SDR aims to reduce the number of settlement fails that occur in EEA central securities depositories ("CSDs") and address settlement fails where they occur. The key elements of the regime are: (i) mandatory buy-ins (so called "MBI") – if a settlement fail continues for a specified period of time after the intended settlement date, a buy-in process must be initiated to effect the settlement; (ii) cash penalties – EEA CSDs are required to impose cash penalties on participants that cause settlement fails and distribute these to receiving participants; and (iii) allocations and confirmations – EEA investment firms are required to take measures to prevent settlement fails, including putting in place arrangements with their professional clients to communicate securities allocations and transaction confirmations.

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The CSDR SDR impacts all firms, no matter where they are in the world, that trade in relevant securities and instruments that ultimately settle at an EU domiciled CSD. Originally the CSDR SDR was due to take effect in its entirety on February 1, 2022. While certain requirements of the CSDR SDR did take effect on that date, principally the application of cash penalties and settlement fails reporting requirements, the MBI was delayed and will not apply until November 2, 2025. In March 2022, the European Commission published a legislative proposal to amend CSDR, including proposals to amend the MBI regime. The most significant proposal for MBI is the introduction of a "two-step" approach pursuant to which MBIs would apply if the cash penalties regime alone does not improve settlement fails in the EU. On December 27, 2023, the CSDR REFIT was published as Regulation (EU) 2023/2845. The CSDR REFIT focused on amending the CSDR in five key areas: settlement discipline (including the pre-conditions for applying mandatory buy-ins after cash penalties), the passporting regime regarding laws in individual member states, banking-type ancillary services from other CSDs, oversight of third country CSDs to require notification of ESMA where it intends to provide settlement services under the law of an EU member state, and cooperation between supervisory authorities in the European Union and individual member states. The form the MBI will take when it does take effect remains unknown.

The implementation of the CSDR SDR for funds that enter into in-scope transactions may result in increased operational and compliance costs being borne directly or indirectly by the Fund. CSDR may also affect liquidity and increase trading costs associated with relevant securities. If in-scope transactions are subject to additional expenses and penalties as a consequence of the CSDR settlement discipline regime, such expenses and penalties may be charged to the Fund.

**Participation on Creditors Committees**

Generally, when the Fund holds bonds or other similar fixed income securities of an issuer, the Fund becomes a creditor of the issuer. If the Fund is a creditor of an issuer, it may be subject to challenges related to the securities that it holds, either in connection with the bankruptcy of the issuer or in connection with another action brought by other creditors of the issuer, shareholders of the issuer or the issuer itself. Although under no obligation to do so, PIMCO, as investment adviser to the Fund, may from time to time have an opportunity to consider, on behalf of the Fund and other similarly situated clients, negotiating or otherwise participating in the restructuring of the Fund's portfolio investment or the issuer of such investment. PIMCO, in its judgment and discretion and based on the considerations deemed by PIMCO to be relevant, may believe that it is in the best interests of the Fund to negotiate or otherwise participate in a restructuring. Accordingly, and subject to applicable procedures approved by the Board, the Fund may from time to time participate on committees formed by creditors to negotiate with the management of financially troubled issuers of securities held by the Fund. Such participation may subject the Fund to expenses such as legal fees and may make the Fund an "insider" of the issuer for purposes of the federal securities laws, and therefore may restrict the Fund's ability to trade in or acquire additional positions in a particular security when it might otherwise desire to do so. Participation by the Fund on such committees also may expose the Fund to potential liabilities under the federal bankruptcy laws or other laws governing the rights of creditors and debtors. Similarly, subject to the above-mentioned procedures, PIMCO may actively participate in bankruptcy court and related proceedings on behalf of the Fund in order to protect the Fund's interests in connection with a restructuring transaction, and PIMCO may cause the Fund to enter into an agreement reasonably indemnifying third parties or advancing from the Fund's assets any legal fees or other costs to third parties, including parties involved in or assisting the Fund with a restructuring transaction, such as trustees, servicers and other third parties. Further, PIMCO has the authority, subject to the above-mentioned procedures, to represent the Fund on creditors' committees (or similar committees) or otherwise in connection with the restructuring of an issuer's debt and generally with respect to challenges related to the securities held by the Fund relating to the bankruptcy of an issuer or in connection with another action brought by other creditors of the issuer, shareholders of the issuer or the issuer itself.

**Short-term Investments/Temporary Defensive Strategies**

The Fund may make short-term investments when attempting to respond to adverse market, economic, political, or other conditions, as determined by PIMCO. Upon PIMCO's recommendation, for temporary defensive purposes, the Fund may invest up to 100% of its net assets in investment grade debt securities, including high quality, short-term debt instruments, credit-linked trust certificates and/or index futures contracts or similar derivative instruments. Such investments may prevent the Fund from achieving its investment objectives.

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**INVESTMENT RESTRICTIONS**

**Fundamental Investment Restrictions**

Except as described below, the Fund, as a fundamental policy, may not, without the approval of the holders of a majority of the Fund's outstanding Common Shares and Preferred Shares voting together as a single class, and of the holders of a majority of the outstanding Preferred Shares voting as a separate class:

1. Concentrate its investments in a particular industry, as that term is used in the Act and as interpreted, modified or otherwise permitted by regulatory authority having jurisdiction, from time to time;

2. Purchase or sell real estate, although it may purchase securities (including municipal bonds) secured by real estate or interests therein, or securities issued by companies that invest in real estate, or interests therein.

3. Purchase or sell commodities or commodities contracts or oil, gas or mineral programs. This restriction shall not prohibit the Fund, subject to restrictions described in the Prospectus and elsewhere in this Statement of Additional Information, from purchasing, selling or entering into futures contracts, options on futures contracts, forward contracts, or any interest rate, securities-related or other derivative instrument, including swap agreements and other derivative instruments, subject to compliance with any applicable provisions of the federal securities or commodities laws.

4. Borrow money or issue any senior security, except to the extent permitted under the Act and as interpreted, modified, or otherwise permitted from time to time by regulatory authority having jurisdiction.

5. Make loans, except to the extent permitted under the Act, as interpreted, modified, or otherwise permitted from time to time by regulatory authority having jurisdiction.

6. Act as an underwriter of securities of other issuers, except to the extent that in connection with the disposition of portfolio securities, it may be deemed to be an underwriter under the federal securities laws.

The Fund will invest, under normal circumstances, at least 80% of its net assets (plus any borrowings for investment purposes) in a portfolio of municipal bonds and other municipal securities, the interest from which, in the opinion of bond counsel for the issuer at the time of issuance (or on the basis of other authority believed by PIMCO to be reliable), is exempt from federal income tax and California income tax (i.e., excluded from gross income for income tax purposes but not necessarily exempt from the AMT or from the income taxes of any other state or of a local government) (the "80% policy"). California municipal bonds generally are issued by or on behalf of the State of California and its political subdivisions, financing authorities and their agencies. Within the 80% policy, the Fund may invest in debt securities of an issuer located outside of California whose interest is, in the opinion of bond counsel for the issuer at the time of issuance, exempt from federal and California income tax. By concentrating its investments in California municipal securities, the Fund will be subject to California State-Specific Risk, among other risks. The Fund's 80% policy is a fundamental policy, which may not be changed without the approval of the holders of a majority of the Fund's outstanding Common Shares and Preferred Shares voting together as a single class, and of the holders of a majority of the outstanding Preferred Shares voting as a separate class.

In addition, the Fund has adopted the following fundamental policies with respect to repurchase offers, which may not be changed without the approval of the holders of a majority of the Fund's outstanding Common Shares and Preferred Shares voting together as a single class, and of the holders of a majority of the outstanding Preferred Shares voting as a separate class:

a. The Fund will make quarterly repurchase offers pursuant to Rule 23c-3 under the Act, as it may be amended from time to time.

b. The Fund will repurchase shares that are tendered by a specific date (the "Repurchase Request Deadline"), which will be established by the Board (the "Board" or "Board of Trustees") in accordance with Rule 23c-3, as amended from time to time. Rule 23c-3 requires the Repurchase Request Deadline to be no less than 21 and no more than 42 days after the Fund sends notification to shareholders of the repurchase offer.

c. There will be a maximum fourteen (14) calendar day period (or the next business day if the 14th calendar day is not a business day) between the Repurchase Request Deadline and the date on which the Fund's net asset value ("NAV") applicable to the repurchase offer is determined (the "Repurchase Pricing Date").

**Other Information Regarding Investment Restrictions**

Subject to the Fund's self-imposed limitations, if any, as they may be amended from time to time, the Fund interprets its policies with respect to leverage and borrowing, issuing senior securities and lending to permit such

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activities as may be lawful for the Fund, to the full extent permitted by the Act or by exemption from the provisions therefrom pursuant to exemptive order of the SEC.

Currently, under the Act, the Fund may generally not lend money or property to any person, directly or indirectly, if such person controls or is under common control with the Fund, except for a loan from the Fund to a company that owns all of the outstanding securities of the Fund, except directors' and qualifying shares.

The phrase "shareholder approval," as used in the Prospectus and this Statement of Information, and the phrase a "majority of the outstanding," when used with respect to particular shares of the Fund (whether voting together as a single class or voting as separate classes), means (i) 67% or more of such shares present at a meeting, if the holders of more than 50% of such shares are present or represented by proxy, or (ii) more than 50% of such shares, whichever is less.

Unless otherwise indicated, all limitations applicable to the Fund's investments (as stated above and elsewhere in this Statement of Additional Information or in the Prospectus) apply only at the time a transaction is entered into. For example, any subsequent change in a rating assigned by any rating service to a security (or, if unrated, deemed by PIMCO to be of comparable quality), or change in the percentage of the Fund's assets invested in certain securities or other instruments, or change in the average maturity or duration of the Fund's investment portfolio, resulting from market fluctuations or other changes in the Fund's total assets will not require the Fund to dispose of an investment.

Under the Fund's policy in paragraph (2) above in "Fundamental Investment Restrictions," for example, where the Fund purchases a loan or other security secured by real estate or interests therein, in the event of a subsequent default, foreclosure, or similar event, the Fund may take possession of and hold the underlying real estate in accordance with its rights under the initial security and subsequently sell or otherwise dispose of such real estate.

Under the Act, a "senior security" does not include any promissory note or evidence of indebtedness where such loan is for temporary purposes only and in an amount not exceeding 5% of the value of the total assets of the issuer at the time the loan is made. A loan is presumed to be for temporary purposes if it is repaid within sixty days and is not extended or renewed.

To the extent the Fund covers its commitment under a derivative instrument by the designation of assets determined by the Investment Manager to be liquid, equal in value to the amount of the Fund's commitment, such instrument will not be considered a "senior security" for purposes of the Fund's limitations on borrowings or the Fund's issuance of Preferred Shares.

Pursuant to policies adopted by the Fund's Board, purchased OTC options and the assets used as cover for OTC options written by the Fund may be treated as liquid. Please refer to "Illiquid Investments" for a further discussion of investment liquidity. It is noted that, while regulatory guidance indicates that assets used for cover may be considered "encumbered," the liquidity classification of assets used for cover is not affected by their status as being used for cover.

For purposes of applying the terms of the Fund's policy in paragraph (1) above (the "industry concentration policy"), the Fund would be deemed to "concentrate" in a particular industry if it invested more than 25% of its total assets in that industry. For purposes of the industry concentration policy, PIMCO will, on behalf of the Fund, make reasonable determinations as to the appropriate industry classification to assign to each security or instrument in which the Fund invests. The definition of what constitutes a particular "industry" is an evolving one, particularly for industries or sectors within industries that are new or are undergoing rapid development. Some securities could reasonably fall within more than one industry category. The Fund's industry concentration policy does not preclude it from focusing investments in issuers in a group of related industrial sectors (such as different types of utilities). For purposes of the industry concentration policy, a foreign government is considered to be an industry, although currency positions are not considered to be an investment in a foreign government for these purposes. Mortgage-related or ABS that are issued or guaranteed as to principal or interest by the U.S. government or its agencies or instrumentalities are not subject to the Fund's industry concentration policy, by virtue of the exclusion from that test available to all U.S. government securities. Similarly, tax-exempt municipal bonds issued by states, municipalities and other political subdivisions, agencies, authorities and instrumentalities of states and multi-state agencies and authorities are not subject to the Fund's industry concentration policy.

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To the extent that an underlying investment company in which the Fund invests has adopted a policy to concentrate its investments in a particular industry, the Fund will, to the extent applicable, take such underlying investment company's concentration policy into consideration for purposes of the Fund's own industry concentration policy.

For purposes of its investment policies and restrictions, with the exception of the Fund's 80% policy to invest, under normal circumstances, at least 80% of its net assets (plus any borrowings for investment purposes) in a portfolio of municipal bonds and other municipal securities, the interest from which, in the opinion of bond counsel for the issuer at the time of issuance (or on the basis of other authority believed by PIMCO to be reliable) is exempt from federal income tax and California income tax (i.e., excluded from gross income for income tax purposes but not necessarily exempt from the AMT or from the income taxes of any other state or of a local government) (the "80% policy"), the Fund may value derivative instruments at market value, notional value or full exposure value (i.e., the sum of the notional amount for the contract plus the market value), or any combination of the foregoing (e.g., notional value for purposes of calculating the numerator and market value for purposes of calculating the denominator for compliance with a particular policy or restriction). For example, the Fund may value credit default swaps at full exposure value for purposes of any credit quality guidelines because such value in general better reflects the Fund's actual economic exposure during the term of the credit default swap agreement. As a result, the Fund may, at times, have notional exposure to an asset class (before netting) that is greater or lesser than the stated limit or restriction noted in the Fund's Prospectus. In this context, both the notional amount and the market value may be positive or negative depending on whether the Fund is selling or buying protection through the credit default swap. For purposes of the Fund's 80% policy, the Fund currently values its derivative instruments based on their market value. The manner in which certain securities or other instruments are valued by the Fund for purposes of applying investment policies and restrictions may differ from the manner in which those investments are valued by other types of investors. Amendments to Rule 35d-1 under the Act adopted in September 2023 modify the circumstances under which a fund may deviate from its 80% investment policy and address the calculation methodology of derivatives instruments for purposes of Rule 35d-1. Accordingly, changes to a Fund's calculation methodology for derivatives instruments for purposes of Rule 35d-1 consistent with such amendments and applicable regulatory interpretations thereof will not constitute a change to the Fund's policy adopted pursuant to Rule 35d-1 and will not require notice or shareholder approval.

From time to time, the Fund may voluntarily participate in actions (for example, rights offerings, conversion privileges, exchange offers, credit event settlements, etc.) including, but not limited to, where the issuer or counterparty offers securities or instruments to holders or counterparties, such as the Fund, and the acquisition is determined to be beneficial to Fund shareholders ("Voluntary Action"). Notwithstanding any percentage investment limitation listed under this "Investment Restrictions" section or any percentage investment limitation of the Act or rules thereunder, if the Fund has the opportunity to acquire a permitted security or instrument through a Voluntary Action, and the Fund will exceed a percentage investment limitation following the acquisition, it will not constitute a violation if, prior to the receipt of the securities or instruments and after announcement of the offering, the Fund sells an offsetting amount of assets that are subject to the investment limitation in question at least equal to the value of the securities or instruments to be acquired.

Unless otherwise indicated, all percentage limitations on Fund investments (as stated throughout this Statement of Additional Information or in the Prospectus) that are not: (i) specifically included in this "Investment Restrictions" section; or (ii) imposed by the Act, rules thereunder, the Code or related regulations (the "Elective Investment Restrictions"), will apply only at the time of investment unless the acquisition is a Voluntary Action. For the avoidance of doubt, unless otherwise stated, all percentage limitations on Fund investments that are (i) specifically included in the "Fundamental Investment Restrictions" section; or (ii) Elective Investment Restrictions, will apply at the time of investment. In addition, and notwithstanding the foregoing, for purposes of this policy, certain Non-Fundamental Investment Restrictions, as noted above, are also considered Elective Investment Restrictions. The percentage limitations and absolute prohibitions with respect to Elective Investment Restrictions are not applicable to the Fund's acquisition of securities or instruments through a Voluntary Action. Certain percentage limitations or absolute prohibitions stated in certain Elective Investment Restrictions by their terms apply only with respect to specific securities or instruments as opposed to asset classes or economic exposures represented by such securities or instruments; for purposes of applying such limitations or prohibitions, the Fund may not count investments in derivatives or other instruments that are not the specific securities or instruments limited or prohibited by the express terms of the Elective Investment Restriction. In such cases, the Fund may obtain greater economic exposure to asset

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classes represented by such specific securities or instruments because such exposure is not restricted by the express terms of the Elective Investment Restriction.

The Fund may engage in roll-timing strategies where the Fund seeks to extend the expiration or maturity of a position, such as a forward contract, futures contract or to-be-announced ("TBA") transaction, on an underlying asset by closing out the position before expiration and contemporaneously opening a new position with respect to the same underlying asset that has substantially similar terms except for a later expiration date. Such "rolls" enable the Fund to maintain continuous investment exposure to an underlying asset beyond the expiration of the initial position without delivery of the underlying asset. Similarly, as certain standardized swap agreements transition from OTC trading to mandatory exchange-trading and clearing due to the implementation of Dodd-Frank Act regulatory requirements, the Fund may "roll" an existing OTC swap agreement by closing out the position before expiration and contemporaneously entering into a new exchange-traded and cleared swap agreement on the same underlying asset with substantially similar terms except for a later expiration date. These types of new positions opened contemporaneous with the closing of an existing position on the same underlying asset with substantially similar terms are collectively referred to as "Roll Transactions." Elective Investment Restrictions (defined in the preceding paragraph), which normally apply at the time of investment, do not apply to Roll Transactions (although Elective Investment Restrictions will apply to the Fund's entry into the initial position). In addition and notwithstanding the foregoing, for purposes of this policy, those Non-Fundamental Investment Restrictions that are considered Elective Investment Restrictions for purposes of the policy on Voluntary Actions (described in the preceding paragraph) are also Elective Investment Restrictions for purposes of this policy on Roll Transactions. The Fund will test for compliance with Elective Investment Restrictions at the time of the Fund's initial entry into a position, but the percentage limitations and absolute prohibitions set forth in the Elective Investment Restrictions are not applicable to the Fund's subsequent acquisition of securities or instruments through a Roll Transaction.

For purposes of applying the terms of the Fund's policy in paragraph (6) above in "Fundamental Investment Restrictions," under the federal securities laws, underwriting securities generally involves purchasing securities directly from an issuer for the purpose of selling (distributing) them or participating in any such activity either directly or indirectly. The Fund's limitation with respect to underwriting securities is not applicable to the extent that, in connection with the disposition of portfolio securities (including by securitization), the Fund may be deemed an underwriter under the federal securities laws.

**MANAGEMENT OF THE FUND**

**Trustees and Officers**

The business of the Fund is managed under the direction of the Board. Subject to the provisions of the Fund's Amended and Restated Agreement and Declaration of Trust, as may be amended from time to time (the "Declaration"), its Bylaws, as may be amended from time to time (the "Bylaws") and Massachusetts law, the Trustees have all powers necessary and convenient to carry out their responsibilities, including the election and removal of the Fund's officers.

**Board Leadership Structure.** The Board consists of seven Trustees, five of whom are not "interested persons" (within the meaning of Section 2(a)(19) of the Act) of the Fund or of the Investment Manager (the "Independent Trustees"), which represents approximately 71% of the Trustees that are Independent Trustees. An Independent Trustee serves as Chair of the Board and is selected by a vote of the majority of the Independent Trustees. The Chair of the Board presides at meetings of the Board, acts as a liaison with service providers, officers, attorneys and other Trustees generally between meetings, and performs such other functions as may be requested by the Board from time to time.

The Board meets regularly four times each year to discuss and consider matters concerning the Fund, and also holds special meetings to address matters arising between regular meetings. The Independent Trustees regularly meet outside the presence of management and are advised by independent legal counsel.

The Board has established five standing Committees to facilitate the Trustees' oversight of the management of the Fund: the Audit Oversight Committee, the Governance and Nominating Committee, the Valuation Oversight Committee, the Contracts Committee and the Performance Committee. The functions and role of each Committee are described below under "Committees of the Board of Trustees." The membership of each Committee (other than the Performance Committee) consists of only the Independent Trustees. The Performance Committee consists of all the

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Trustees. The Independent Trustees believe that participation on each Committee allows them to participate in the full range of the Board's oversight duties.

The Board reviews its leadership structure periodically and has determined that this leadership structure, including an Independent Chair, a supermajority of Independent Trustees and Committee membership limited to Independent Trustees (with the exception of the Performance Committee), is appropriate in light of the characteristics and circumstances of the Fund. In reaching this conclusion, the Board considered, among other things, the predominant role of PIMCO in the day-to-day management of Fund affairs, the extent to which the work of the Board is conducted through the Committees, the number of funds in the Fund Complex (as defined below) overseen by Board members, the variety of asset classes those funds include, the assets of the Fund and the other funds in the Fund Complex and the management, distribution, and other service arrangements of the Fund and such other funds. The Board also believes that its structure, including the presence of two Trustees who are or have been executives with PIMCO or PIMCO-affiliated entities, facilitates an efficient flow of information concerning the management of the Fund to the Independent Trustees.

**Risk Oversight.** The Fund has retained PIMCO to provide investment advisory services and administrative services. Accordingly, PIMCO is immediately responsible for the management of risks that may arise from Fund investments and operations. Some employees of PIMCO serve as the Fund's officers, including the Fund's principal executive officer and principal financial and accounting officer, chief compliance officer and chief legal officer. PIMCO and the Fund's other service providers have adopted policies, processes and procedures to identify, assess and manage different types of risks associated with the Fund's activities. The Board oversees the performance of these functions by PIMCO and the Fund's other service providers, both directly and through the Committee structure it has established. The Board receives from PIMCO a wide range of reports, both on a regular and as-needed basis, relating to the Fund's activities and to the actual and potential risks of the Fund. These include reports on investment and market risks, custody and valuation of Fund assets, compliance with applicable laws, and the Fund's financial accounting and reporting. The Board also regularly will receive, from the Fund's principal underwriter, reports regarding distribution, sales and marketing of the Fund's shares. In addition, the Board meets periodically with the individual portfolio managers of the Fund or their delegates to receive reports regarding the portfolio management of the Fund and its performance, including its investment risks. In the course of these meetings and discussions with PIMCO, the Board has emphasized to the Manager the importance of PIMCO maintaining vigorous risk management programs and procedures with respect to the Fund.

In addition, the Board has appointed a Chief Compliance Officer ("CCO"). The CCO oversees the development of compliance policies and procedures that are reasonably designed to manage the risk of violations of the federal securities laws ("Compliance Policies"). The CCO reports directly to the Independent Trustees, interacts with individuals within PIMCO's organization, and provides presentations to the Board at its quarterly meetings and an annual report on the application of the Compliance Policies. The Board periodically discusses relevant risks affecting the Fund with the CCO at these meetings. The Board has approved the Compliance Policies and reviews the CCO's reports. Further, the Board annually reviews the sufficiency of the Compliance Policies, as well as the appointment and compensation of the CCO.

The Board recognizes that the reports it receives concerning risk management matters are, by their nature, typically summaries of the relevant information. Moreover, the Board recognizes that not all risks that may affect the Fund can be identified in advance; that it may not be practical or cost-effective to eliminate or mitigate certain risks; that it may be necessary to bear certain risks (such as investment-related risks) in seeking to achieve the Fund's investment objectives; and that the processes, procedures and controls employed to address certain risks may be limited in their effectiveness.

The Trustees and officers of the Fund, their year of birth, the positions they hold with the Fund, their term of office and length of time served, a description of their principal occupations during the past five years, the number of portfolios in the Fund Complex (as defined below) that the Trustee oversees and any other public company directorships held by the Trustee are listed in the two tables immediately following. Except as shown, each Trustee's and officer's principal occupation and business experience for the last five years have been with the employer(s) indicated, although in some cases the Trustee may have held different positions with such employer(s).

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The charts below identify the Trustees and officers of the Fund. Unless otherwise indicated, the business address of all persons below is c/o Pacific Investment Management Company LLC, 1633 Broadway, New York, New York 10019.

**Independent Trustees**<sup>(1)</sup>

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|:---|:---|:---|:---|:---|:---|
| **Name, Address**<br> **and Year of** <br> **Birth**<br>| **Position(s)** <br> **Held**<br> **with the Fund**<br>| **Term of Office**<br> **and Length of**<br> **Time Served** <sup>(2)</sup> <br>| **Principal Occupation(s)**<br> **During the Past 5 Years**<br>| **Number of**<br> **Portfolios in**<br> **Fund**<br> **Complex**<br> **Overseen**<br> **by Trustee** <sup>(3)</sup> <br>| **Other** <br> **Directorships**<br> **Held by Trustee**<br> **During the Past**<br> **5 Years**<br>|
| Alan <br> Rappaport<br> 1953<br>| &nbsp;&nbsp; Chair of the <br> Board, <br> Trustee<br>| &nbsp;&nbsp; Chair of the <br> Board <br> (January <br> 2026 -<br> Present); <br> Trustee since <br> Inception<br>| &nbsp;&nbsp; Director, Victory Capital Holdings, <br> Inc., an asset management firm (since <br> 2013). Formerly, Adjunct Professor, <br> New York University Stern School of <br> Business (2011-2020); Lecturer, <br> Stanford University Graduate School <br> of Business (2013-2020); Advisory <br> Director (formerly Vice Chairman), <br> Roundtable Investment Partners <br> (2009-2018); Member of Board of <br> Overseers, NYU Langone Medical <br> Center (2015-2016); Trustee, <br> American Museum of Natural History <br> (2005-2015); Trustee, NYU Langone <br> Medical Center (2007-2015); and Vice <br> Chairman (formerly, Chairman and <br> President), U.S. Trust (formerly, <br> Private Bank of Bank of America, the <br> predecessor entity of U.S. Trust) <br> (2001-2008).<br>| 24 | &nbsp;&nbsp; Trustee, <br> Allianz Funds <br> (2010-2021); <br> Chairman of <br> the Board of <br> Trustees, <br> Virtus <br> Closed-End <br> Funds <br> (2021-2023)<br>|
| Sarah E. <br> Cogan<br> 1956<br>| Trustee | Since 2019 | &nbsp;&nbsp; Retired Partner, Simpson Thacher & <br> Bartlett LLP (law firm) (1989-2018); <br> Director, Girl Scouts of Greater <br> New York, Inc. (since 2016); and <br> Trustee, Natural Resources Defense <br> Council, Inc. (since 2013).<br>| 24 | &nbsp;&nbsp; Trustee, <br> Allianz Funds <br> (2019-2021); <br> Trustee, <br> Virtus Funds <br> (2021-Present)<br>|
| Kathleen A. <br> McCartney<br> 1955<br>| Trustee | Since 2022 | &nbsp;&nbsp; Director (since 2013) and President <br> (since 2020), Five Colleges, Inc., <br> consortium of liberal arts colleges and <br> universities; President Emerita, Smith <br> College (since 2023). Formerly, <br> President, Smith College (2013-2023); <br> Director, American Council on <br> Education Board of Directors, <br> (2015-2019); Director, Consortium on <br> Financing Higher Education Board of <br> Directors (2015-2019); Director, edX <br> Board of Directors, online course <br> provider (2012-2013); Director, <br> Bellwether Education Partners Board, <br> national nonprofit organization <br> (2010-2013); Dean, Harvard Graduate <br> School of Education (2006-2013); and <br> Trustee, Tufts University (2007-2013).<br>| 24 |  |

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Name, Address**<br> **and Year of** <br> **Birth**<br>| **Position(s)** <br> **Held**<br> **with the Fund**<br>| **Term of Office**<br> **and Length of**<br> **Time Served** <sup>(2)</sup><br>| **Principal Occupation(s)**<br> **During the Past 5 Years**<br>| **Number of**<br> **Portfolios in**<br> **Fund**<br> **Complex**<br> **Overseen**<br> **by Trustee** <sup>(3)</sup><br>| **Other** <br> **Directorships**<br> **Held by Trustee**<br> **During the Past**<br> **5 Years**<br>|
| Mark <br> Michel<sup>(4)</sup> <br>1965<br>| Trustee | &nbsp;&nbsp; Since <br> September <br> 2025<br>| &nbsp;&nbsp; Formerly, Audit Partner, Ernst & <br> Young (2004-2025).<br>| 24 |  |
| Sonya Morris <br>(4) <br>1962<br>| Trustee | &nbsp;&nbsp; Since <br> September <br> 2025<br>| &nbsp;&nbsp; Formerly, Managing Director, Harbor <br> Capital Advisors, an investment <br> adviser (2013 -2022); and Senior <br> Investment Consultant (2010 -2013) <br> and Senior Mutual Fund Analyst and <br> Editorial Director (2004 -2010), <br> Morningstar, Inc., a global provider of <br> investment data and research.<br>| 24 | &nbsp;&nbsp; Trustee and <br> Investment <br> Committee <br> Chair, City of <br> Cincinnati <br> Employee <br> Retirement <br> System, a <br> public <br> pension fund <br> (Since 2023)<br>|

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**Interested Trustees** 

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Name, Address** <br> **and**<br> **Year of Birth**<br>| **Position(s)** <br> **Held**<br> **with the Fund**<br>| **Term of Office**<br> **and Length of**<br> **Time Served**<sup>(2)</sup> <br>| **Principal Occupation(s)**<br> **During the Past 5 Years**<br>| **Number of**<br> **Portfolios in**<br> **Fund**<br> **Complex**<br> **Overseen by**<br> **Trustee**<sup>(3)</sup> <br>| **Other** <br> **Directorships**<br> **Held by Trustee**<br> **During the Past**<br> **5 Years**<br>|
| Libby D. <br> Cantrill <sup>(5)</sup> <br>1977<br>| Trustee | Since 2023 | &nbsp;&nbsp; Managing Director, Head of Public <br> Policy, PIMCO (since 2007); <br> Institutional Account Manager, <br> PIMCO (2007-2010); Legislative <br> Aide, House of Representatives <br> (2003-2005); and Investment Banking <br> Analyst, Morgan Stanley (2000-2003).<br>| 24 | &nbsp;&nbsp; Member of <br> the Board of <br> Directors, <br> Covenant <br> House <br> New York <br> (2021-Present); <br> Member of <br> the Board, <br> Securities <br> Industry and <br> Financial <br> Markets <br> Association <br> (2022-Present)<br>|
| David <br> Flattum <sup>(5)(6)</sup> <br>1964<br>| Trustee | Since 2024 | &nbsp;&nbsp; Consultant, PIMCO (2023-present); <br> Global General Counsel, PIMCO <br> (2006-2023); General Counsel and <br> Chief Operating Officer, Allianz Asset <br> Management of America (2001-2006).<br>| 24 |  |

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1. "Independent Trustees" are those Trustees who are not "interested persons" of the Fund (as defined in Section 2(a)(19) of the Act).

2. Under the Fund's Declaration, a Trustee serves during the continued lifetime of the Fund until he or she dies, resigns or is removed, or, if sooner, until the election and qualification of his or her successor.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

3. The Term "Fund Complex" as used herein includes the Fund and any other registered investment company (i) that holds itself out to investors as a related company for purposes of investment and investor services; or (ii) for which PIMCO or an affiliate of PIMCO serves as primary investment adviser.

4. Mr. Michel and Ms. Morris were each appointed as a Trustee of the Fund effective September 18, 2025.

5. Ms. Cantrill and Mr. Flattum are "interested persons" of the Fund, as defined in Section 2(a)(19) of the Act, due to their affiliation with PIMCO and its affiliates.

6. The business address of this Trustee is c/o Pacific Investment Management Company LLC, 650 Newport Center Drive, Newport Beach, CA 92660.

**Officers** 

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| | | | |
|:---|:---|:---|:---|
| **Name, Address**<br> **and Year of Birth**<br>| **Position(s) Held**<br> **with Fund**<br>| **Term of Office and**<br> **Length of Time Served**<sup>+</sup> <br>| **Principal Occupation(s)**<br> **During the Past 5 Years**<br>|
| Joshua D. Ratner<br> 1976<br>| President | Since 2024 | &nbsp;&nbsp; Executive Vice President and <br> Head of Americas Fund <br> Operations – Client, Legal and <br> Funds; Deputy General Counsel, <br> PIMCO. President, <br> PIMCO-Managed Funds, PIMCO <br> Funds, PIMCO Variable Insurance <br> Trust, PIMCO ETF Trust, PIMCO <br> Equity Series, PIMCO Equity <br> Series VIT and PIMCO Flexible <br> Real Estate Income Fund, <br> Director, PIMCO Canada Corp; <br> Director, PIMCO Aurora LLC.<br>|
| Keisha Audain Pressley<br> 1975<br>| &nbsp;&nbsp; Chief <br> Compliance <br> Officer<br>| Since Inception | &nbsp;&nbsp; Executive Vice President and <br> Deputy Chief Compliance Officer, <br> PIMCO. Chief Compliance <br> Officer, PIMCO-Managed Funds, <br> PIMCO Flexible Real Estate <br> Income Fund, PIMCO Funds, <br> PIMCO Variable Insurance Trust, <br> PIMCO ETF Trust, PIMCO <br> Equity Series, PIMCO Equity <br> Series VIT and PIMCO Capital <br> Solutions BDC Corp.<br>|
| Ryan G. Leshaw<sup>1</sup> 1980<br>| &nbsp;&nbsp; Chief Legal <br> Officer and <br> Secretary<br>| &nbsp;&nbsp; Chief Legal Officer – Since 2019 <br> Secretary - Since 2024<br>| &nbsp;&nbsp; Executive Vice President and <br> Deputy General Counsel, PIMCO. <br> Chief Legal Officer and Secretary, <br> PIMCO-Managed Funds, PIMCO <br> Flexible Real Estate Income Fund <br> and PIMCO Capital Solutions <br> BDC Corp. Chief Legal Officer <br> and Secretary, PIMCO Funds, <br> PIMCO Variable Insurance Trust, <br> PIMCO ETF Trust, PIMCO <br> Equity Series and PIMCO Equity <br> Series VIT; Chief Legal Officer, <br> PIMCO Asset-Based Lending Co <br> LLC.<br>|

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------

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| | | | |
|:---|:---|:---|:---|
| **Name, Address**<br> **and Year of Birth**<br>| **Position(s) Held**<br> **with Fund**<br>| **Term of Office and**<br> **Length of Time Served**<sup>+</sup><br>| **Principal Occupation(s)**<br> **During the Past 5 Years**<br>|
| Peter G. Strelow<sup>1</sup> <br>1970<br>| &nbsp;&nbsp; Senior Vice <br> President<br>| Since Inception | &nbsp;&nbsp; Managing Director and Co-Chief <br> Operating Officer, PIMCO. Senior <br> Vice President, PIMCO-Managed <br> Funds, PIMCO Funds, PIMCO <br> Variable Insurance Trust, PIMCO <br> ETF Trust, PIMCO Equity Series <br> and PIMCO Equity Series VIT. <br> Formerly, Chief Administrative <br> Officer, PIMCO.<br>|
| Douglas B. Burrill<br> 1980<br>| Vice President | Since 2022 | &nbsp;&nbsp; Executive Vice President, PIMCO. <br> Vice President, PIMCO-Managed <br> Funds, PIMCO Funds, PIMCO <br> Variable Insurance Trust, PIMCO <br> ETF Trust, PIMCO Equity Series, <br> PIMCO Equity Series VIT, <br> PIMCO Flexible Real Estate <br> Income Fund and PIMCO Capital <br> Solutions BDC Corp.<br>|
| Carol K. Chan<sup>1</sup> 1982<br>| Vice President | Since 2024 | &nbsp;&nbsp; Senior Vice President, PIMCO. <br> Vice President, PIMCO-Managed <br> Funds, PIMCO Flexible Real <br> Estate Income Fund, PIMCO <br> Funds, PIMCO Variable Insurance <br> Trust, PIMCO ETF Trust, PIMCO <br> Equity Series and PIMCO Equity <br> Series VIT.<br>|
| Alyssa M. Creighton<sup>1</sup> 1974<br>| Vice President | Since 2024 | &nbsp;&nbsp; Senior Vice President, PIMCO. <br> Vice President, PIMCO-Managed <br> Funds, PIMCO Flexible Real <br> Estate Income Fund, PIMCO <br> Funds, PIMCO Variable Insurance <br> Trust, PIMCO ETF Trust, PIMCO <br> Equity Series, PIMCO Equity <br> Series VIT and PIMCO Capital <br> Solutions BDC Corp.<br>|
| Jason R. Duran<sup>1</sup> 1977<br>| Vice President | Since 2023 | &nbsp;&nbsp; Senior Vice President, PIMCO. <br> Vice President, PIMCO-Managed <br> Funds, PIMCO Funds, PIMCO <br> Variable Insurance Trust, PIMCO <br> ETF Trust, PIMCO Equity Series <br> and PIMCO Equity Series VIT.<br>|
| Michele N. Ellis <br> 1975<br>| Vice President | Since 2024 | &nbsp;&nbsp; Vice President, PIMCO. Vice <br> President, PIMCO-Managed <br> Funds, PIMCO Flexible Real <br> Estate Income Fund, PIMCO <br> Capital Solutions BDC Corp., <br> PIMCO Funds, PIMCO Variable <br> Insurance Trust, PIMCO ETF <br> Trust, PIMCO Equity Series and <br> PIMCO Equity Series VIT.<br>|

---

------

---

| | | | |
|:---|:---|:---|:---|
| **Name, Address**<br> **and Year of Birth**<br>| **Position(s) Held**<br> **with Fund**<br>| **Term of Office and**<br> **Length of Time Served**<sup>+</sup><br>| **Principal Occupation(s)**<br> **During the Past 5 Years**<br>|
| Kenneth W. Lee<sup>1</sup> <br>1972<br>| Vice President | Since 2022 | &nbsp;&nbsp; Senior Vice President, PIMCO. <br> Vice President, PIMCO-Managed <br> Funds, PIMCO Flexible Real <br> Estate Income Fund, PIMCO <br> Funds, PIMCO Variable Insurance <br> Trust, PIMCO ETF Trust, PIMCO <br> Equity Series, PIMCO Equity <br> Series VIT and PIMCO Capital <br> Solutions BDC Corp.<br>|
| Greg J. Mason<sup>2</sup> <br>1980<br>| Vice President | Since 2023 | &nbsp;&nbsp; Senior Vice President, PIMCO. <br> Vice President, PIMCO-Managed <br> Funds, PIMCO Flexible Real <br> Estate Income Fund, PIMCO <br> Funds, PIMCO Variable Insurance <br> Trust, PIMCO ETF Trust, PIMCO <br> Equity Series and PIMCO Equity <br> Series VIT.<br>|
| Colleen P. McLaughlin<sup>2</sup> <br>1983<br>| Vice President | Since 2024 | &nbsp;&nbsp; Senior Vice President, PIMCO. <br> Vice President, PIMCO-Managed <br> Funds, PIMCO Flexible Real <br> Estate Income Fund, PIMCO <br> Funds, PIMCO Variable Insurance <br> Trust, PIMCO ETF Trust, PIMCO <br> Equity Series and PIMCO Equity <br> Series VIT.<br>|
| Shiv Narain<sup>1</sup> <br>1981<br>| Vice President | Since 2024 | &nbsp;&nbsp; Executive Vice President, PIMCO. <br> Vice President, PIMCO-Managed <br> Funds, PIMCO Flexible Real <br> Estate Income Fund, PIMCO <br> Funds, PIMCO Variable Insurance <br> Trust, PIMCO ETF Trust, PIMCO <br> Equity Series and PIMCO Equity <br> Series VIT.<br>|
| Keith A. Werber<sup>1</sup> <br>1973<br>| Vice President | Since 2022 | &nbsp;&nbsp; Executive Vice President, PIMCO. <br> Vice President, PIMCO-Managed <br> Funds, PIMCO Flexible Real <br> Estate Income Fund, PIMCO <br> Funds, PIMCO Variable Insurance <br> Trust, PIMCO ETF Trust, PIMCO <br> Equity Series, PIMCO Equity <br> Series VIT and PIMCO Capital <br> Solutions BDC Corp.<br>|
| Paul T. Wildermuth<sup>1</sup> <br>1979<br>| Vice President | Since 2024 | &nbsp;&nbsp; Vice President, PIMCO. Vice <br> President, PIMCO-Managed <br> Funds, PIMCO Flexible Real <br> Estate Income Fund, PIMCO <br> Funds, PIMCO Variable Insurance <br> Trust, PIMCO ETF Trust, PIMCO <br> Equity Series and PIMCO Equity <br> Series VIT.<br>|

---

------

---

| | | | |
|:---|:---|:---|:---|
| **Name, Address**<br> **and Year of Birth**<br>| **Position(s) Held**<br> **with Fund**<br>| **Term of Office and**<br> **Length of Time Served**<sup>+</sup><br>| **Principal Occupation(s)**<br> **During the Past 5 Years**<br>|
| Bijal Y. Parikh<sup>1</sup> 1978<br>| Treasurer | Since Inception | &nbsp;&nbsp; Executive Vice President, PIMCO. <br> Treasurer, PIMCO-Managed <br> Funds, PIMCO Flexible Real <br> Estate Income Fund, PIMCO <br> Funds, PIMCO Variable Insurance <br> Trust, PIMCO ETF Trust, PIMCO <br> Equity Series and PIMCO Equity <br> Series VIT.<br>|
| Brandon T. Evans<sup>1</sup> <br>1982<br>| &nbsp;&nbsp; Deputy <br> Treasurer<br>| Since 2022 | &nbsp;&nbsp; Senior Vice President, PIMCO. <br> Deputy Treasurer, <br> PIMCO-Managed Funds. PIMCO <br> Flexible Real Estate Income Fund, <br> PIMCO Funds, PIMCO Variable <br> Insurance Trust, PIMCO ETF <br> Trust, PIMCO Equity Series and <br> PIMCO Equity Series VIT.<br>|
| Erik C. Brown<sup>2</sup> <br>1967<br>| &nbsp;&nbsp; Assistant <br> Treasurer<br>| Since Inception | &nbsp;&nbsp; Executive Vice President, PIMCO. <br> Assistant Treasurer, <br> PIMCO-Managed Funds, PIMCO <br> Flexible Real Estate Income Fund, <br> PIMCO Funds, PIMCO Variable <br> Insurance Trust, PIMCO ETF <br> Trust, PIMCO Equity Series, <br> PIMCO Equity Series VIT and <br> PIMCO Capital Solutions BDC <br> Corp.<br>|
| Laine E. Pacetti<sup>1</sup> <br>1989<br>| &nbsp;&nbsp; Assistant <br> Treasurer<br>| Since 2024 | &nbsp;&nbsp; Vice President, PIMCO. Assistant <br> Treasurer, PIMCO-Managed <br> Funds, PIMCO Flexible Real <br> Estate Income Fund, PIMCO <br> Funds, PIMCO Variable Insurance <br> Trust, PIMCO ETF Trust, PIMCO <br> Equity Series and PIMCO Equity <br> Series VIT.<br>|
| Jason R. Stern<br> 1979<br>| &nbsp;&nbsp; Assistant <br> Treasurer<br>| Since 2024 | &nbsp;&nbsp; Vice President, PIMCO. Assistant <br> Treasurer, PIMCO-Managed <br> Funds, PIMCO Flexible Real <br> Estate Income Fund, PIMCO <br> Funds, PIMCO Variable Insurance <br> Trust, PIMCO ETF Trust, PIMCO <br> Equity Series and PIMCO Equity <br> Series VIT.<br>|
| Chi H. Vu<sup>1</sup> <br>1983<br>| &nbsp;&nbsp; Assistant <br> Treasurer<br>| Since 2024 | &nbsp;&nbsp; Vice President, PIMCO. Assistant <br> Treasurer, PIMCO-Managed <br> Funds, PIMCO Flexible Real <br> Estate Income Fund, PIMCO <br> Funds, PIMCO Variable Insurance <br> Trust, PIMCO ETF Trust, PIMCO <br> Equity Series and PIMCO Equity <br> Series VIT.<br>|

---

The business address of these officers is c/o Pacific Investment Management Company LLC, 650 Newport Center Drive, Newport Beach, California 92660.

------

The business address of these officers is c/o Pacific Investment Management Company LLC, 401 Congress Ave., Austin, Texas 78701.

+

Under the Fund's Bylaws, an officer serves until his or her successor is elected or qualified, or until he or she sooner dies, resigns, is removed or becomes disqualified. Officers hold office at the pleasure of the Trustees.

Each of the Fund's executive officers is an "interested person" of the Fund (as defined in Section 2(a)(19) of the Act) as a result of his or her position(s) set forth in the table above.

**Trustee Qualifications**

The Board has determined that each Trustee is qualified to serve as such based on several factors (none of which alone is decisive). Each Trustee is knowledgeable about the Fund's business and service provider arrangements, in part because he or she serves as trustee or director to a number of other investment companies advised by PIMCO and/or its affiliates with similar arrangements to that of the Fund, or has had significant experience in the investment management and/or financial services industries, or has other experience deemed qualifying by the Board. Among the factors the Board considers when concluding that an individual is qualified to serve on the Board were the following: (i) the individual's business and professional experience and accomplishments; (ii) the individual's ability to work effectively with other members of the Board; (iii) the individual's prior experience, if any, serving on the boards of public companies (including, where relevant, other investment companies) and other complex enterprises and organizations; and (iv) how the individual's skills, experiences and attributes would contribute to an appropriate mix of relevant skills and experience on the Board.

In respect of each current Trustee, the individual's substantial professional accomplishments and prior experience, including, in some cases, in fields related to the operations of the Fund, were a significant factor in the determination by the Board that the individual is qualified to serve as a Trustee of the Fund. The following is a summary of various qualifications, experiences and skills of each Trustee (in addition to business experience during the past five years set forth in the table above) that contributed to the Board's conclusion that an individual is qualified to serve on the Board. References to qualifications, experiences and skills are not intended to hold out the Board or individual Trustees as having any special expertise or experience, and shall not impose any greater responsibility or liability on any such person or on the Board by reason thereof.

**Libby D. Cantrill** — Ms. Cantrill has substantial experience in the investment management industry. Ms. Cantrill has more than 20 years of investment experience and is the Head of Public Policy and is a managing director in PIMCO's portfolio management group. In her role, she analyzes policy and political risk for the firm's Investment Committee and leads U.S. policymaker engagement and policy strategy for the firm. She also works closely with PIMCO's Global Advisory Board and has served as a rotating member of the firm's Executive Committee. Ms. Cantrill is a Chartered Financial Analyst charterholder.

**Sarah E. Cogan** — Ms. Cogan has substantial legal experience in the investment management industry, having served as a partner at a large international law firm in the corporate department for over 25 years and as former head of the registered funds practice. She has extensive experience in oversight of investment company boards through her experience as counsel to the Independent Trustees of certain PIMCO-Managed Funds and as counsel to other independent trustees, investment companies and asset management firms.

**David Flattum —** Mr. Flattum joined PIMCO as Global General Counsel in 2006. Previously, he was General Counsel and Chief Operating Officer of Allianz Asset Management of America and a partner at the law firm of Latham & Watkins, specializing in mergers and acquisitions. He has served in numerous leadership capacities, including as Chair of PIMCO's Audit, Risk, Conflicts, and Pricing Committees and as Chief Legal Officer for the PIMCO Funds. He retired from his role as Global General Counsel of PIMCO at the end of 2023 and has continued to stay engaged with PIMCO as a consultant.

**Kathleen A. McCartney** — Ms. McCartney has substantial board experience, having served on a number of nonprofit boards, as trustee of Tufts University, director of the American Council on Education, director of the Consortium on Financing Higher Education, founding board member of edX, and director of the Bellwether Education Partners board. She also has substantial senior executive experience as the President Emerita and former President of Smith College and director of Five Colleges, Inc.

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**Mark Michel** — Mr. Michel has substantial experience in the investment management industry, having served as a partner at a large audit and consulting firm in the wealth and asset management practice for over 20 years. He has extensive experience in the oversight of audits for large mutual fund complexes and other financial institutions. He also serves as the Audit Oversight Committee's Chair and has been determined by the Board to be an "audit committee financial expert."

**Sonya Morris** — Ms. Morris has substantial senior executive experience in the investment management industry, having served as a managing director at a large asset manager. She has extensive experience in oversight of investment managers and with institutional and retail distribution channels through her experience at asset management and investment research companies. In addition, she has served as trustee and investment committee chair of a midsized public pension fund. Ms. Morris is a Chartered Financial Analyst charterholder.

**Alan Rappaport** — Mr. Rappaport has substantial senior executive experience in the financial services industry. He formerly served as Chairman and President of the Private Bank of Bank of America and as Vice Chairman of U.S. Trust and as an Advisory Director of an investment firm.

**Committees of the Board of Trustees**

**Audit Oversight Committee.** The Board has established an Audit Oversight Committee, in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), currently consisting of Messrs. Michel and Rappaport and Mses. Cogan, McCartney and Morris, each of whom is an Independent Trustee. Mr. Michel is the current Chair of the Fund's Audit Oversight Committee.

The Audit Oversight Committee provides oversight with respect to the internal and external accounting and auditing procedures of the Fund and, among other things, determines the selection of an independent registered public accounting firm for the Fund and considers the scope of the audit, approves all audit and permitted non- audit services proposed to be performed by those auditors on behalf of the Fund and approves non-audit services to be performed by the auditors for certain affiliates, including PIMCO and entities in a control relationship with PIMCO that provide services to the Fund where the engagement relates directly to the operations and financial reporting of the Fund. The Audit Oversight Committee considers the possible effect of those services on the independence of the Fund's independent registered public accounting firm. During the fiscal year ended December 31, 2025, the Audit Oversight Committee met three times. Each member of the Fund's Audit Oversight Committee is "independent," as independence for audit committee members is defined in the currently applicable listing standards of the NYSE, on which the Common Shares of the Fund are listed.

**Governance and Nominating Committee.** The Board has established a Governance and Nominating Committee composed solely of Independent Trustees, currently consisting of Messrs. Michel and Rappaport and Mses. Cogan, McCartney and Morris. Ms. McCartney is the current Chair of the Governance and Nominating Committee. The primary purposes and responsibilities of the Governance and Nominating Committee are: (i) advising and making recommendations to the Board on matters concerning Board governance and related Trustee practices, and (ii) the screening and nomination of candidates for election to the Board as Independent Trustees.

The responsibilities of the Governance and Nominating Committee include considering and making recommendations to the Fund's Board regarding: (1) governance, retirement and other policies, procedures and practices relating to the Board and the Trustees; (2) in consultation with the Chair of the Board, matters concerning the functions and duties of the Trustees and committees of the Board; (3) the size of the Board and, in consultation with the Chair of the Board, the Board's committees and their composition; and (4) Board and committee meeting procedures. The Committee will also periodically review and recommend for approval by the Board the structure and levels of compensation and any related benefits to be paid or provided by the Fund to the Independent Trustees for their services on the Board and any committees on the Board.

The Governance and Nominating Committee is responsible for reviewing and recommending qualified candidates to the Board in the event that a position is vacated or created or when Trustees are to be re-elected. During the fiscal year ended December 31, 2025, the Governance and Nominating Committee met three times. Each member of the Fund's Governance and Nominating Committee is "independent," as independence for audit committee members is defined in the currently applicable listing standards of the NYSE, on which the Common Shares of the Fund are listed.

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*Qualifications, Evaluation and Identification of Trustee Nominees.* The Governance and Nominating Committee of the Fund requires that Trustee candidates have a college degree or equivalent business experience. When evaluating candidates, the Governance and Nominating Committee may take into account a wide variety of factors including, but not limited to: (i) availability and commitment of a candidate to attend meetings and perform his or her responsibilities on the Board, (ii) relevant industry and related experience, (iii) educational background, (iv) ability, judgment and expertise and (v) overall diversity of the Board's composition. The process of identifying nominees involves the consideration of candidates recommended by one or more of the following sources: (i) the Fund's current Trustees, (ii) the Fund's officers, (iii) the Fund's investment adviser, (iv) the Fund's shareholders and (v) any other source the Committee deems to be appropriate. The Governance and Nominating Committee may, but is not required to, retain a third-party search firm at the Fund's expense to identify potential candidates.

*Consideration of Candidates Recommended by Shareholders.* The Governance and Nominating Committee will review and consider nominees recommended by shareholders to serve as Trustees, provided that the recommending shareholder follows the "Procedures for Shareholders to Submit Nominee Candidates", which are set forth as Appendix B to the Fund's Governance and Nominating Committee Charter and attached as Appendix A to this Statement of Additional Information. Among other requirements, these procedures provide that the recommending shareholder must submit any recommendation in writing to the Fund, to the attention of the Fund's Secretary, at the address of the principal executive offices of the Fund and that such submission must be received at such offices not less than 45 days nor more than 75 days prior to the date of the Board or shareholder meeting at which the nominee would be elected. Any recommendation must include certain biographical and other information regarding the candidate and the recommending shareholder, and must include a written and signed consent of the candidate to be named as a nominee and to serve as a Trustee if elected. The foregoing description of the requirements is only a summary. Please refer to Appendix B to the Governance and Nominating Committee Charter, which is attached to this Statement of Additional Information as Appendix A for details.

The Governance and Nominating Committee has full discretion to reject nominees recommended by shareholders, and there is no assurance that any such person properly recommended and considered by the Committee will be nominated for election to the Board.

*Diversity.* The Governance and Nominating Committee takes diversity of a particular nominee and overall diversity of the Board into account when considering and evaluating nominees for Trustee. The Board has adopted a diversity policy and, when considering a nominee's and the Board's diversity, the Committee generally considers the manner in which each nominee's professional experience, education, expertise in matters that are relevant to the oversight of the Fund (e.g., investment management, distribution, accounting, trading, compliance, legal), general leadership experience, and life experience are complementary and, as a whole, contribute to the ability of the Board to oversee the Fund.

**Valuation Oversight Committee.** The Board has established a Valuation Oversight Committee, currently consisting of Messrs. Michel and Rappaport and Mses. Cogan, McCartney and Morris. Mr. Michel is the current Chair of the Valuation Oversight Committee. The Valuation Oversight Committee has been delegated responsibility by the Board for overseeing determination of the fair value of the Fund's portfolio securities and other assets. The Valuation Oversight Committee reviews and approves procedures for the fair valuation of the Fund's portfolio securities and periodically reviews reports and assessments provided by the Investment Manager pursuant to the Fund's valuation procedures and the Investment Manager's pricing policy. With respect to the fair valuation of portfolio securities for which market quotations are not readily available, the Investment Manager has been designated as "Valuation Designee" for the Fund in accordance with Rule 2a-5 under the Act. The Fund's Valuation Oversight Committee reports to the Board periodically as to the Committee's activities and oversight of the Investment Manager's administration of the Fund's valuation procedures and the Valuation Designee's carrying out of its responsibilities under Rule 2a-5. During the fiscal year ended December 31, 2025, the Valuation Oversight Committee met four times.

**Contracts Committee.** The Board has established a Contracts Committee, currently consisting of Messrs. Michel and Rappaport and Mses. Cogan, McCartney and Morris. Ms. Cogan serves as the current Chair of the Fund's Contracts Committee. The Contracts Committee meets as the Board deems necessary to review the performance of, and the reasonableness of the fees paid to, as applicable, the Fund's investment adviser(s) and any sub-adviser(s), administrators(s) and principal underwriters(s) and to make recommendations to the Board regarding the approval and continuance of the Fund's contractual arrangements for investment advisory, sub-advisory, administrative and distribution services, as applicable. The Contracts Committee also may review and evaluate the terms of other

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contracts or amendments thereto with the Fund's other major service providers at the Board's request. During the fiscal year ended December 31, 2025, the Contracts Committee met three times.

**Performance Committee.** The Board has established a Performance Committee, currently consisting of Messrs. Michel, Rappaport and Flattum and Mses. Cantrill, Cogan, McCartney and Morris. Ms. Morris is the current Chair of the Performance Committee. The Performance Committee's responsibilities include reviewing the performance of the Fund and any changes in investment philosophy, approach and personnel of the Investment Manager. During the fiscal year ended December 31, 2025, the Performance Committee met four times.

**Securities Ownership**

For each Trustee, the following table discloses the dollar range of equity securities in the Fund beneficially owned by the Trustee and, on an aggregate basis, in any registered investment companies overseen by the Trustee within the Fund's family of investment companies as of December 31, 2025:

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| | | |
|:---|:---|:---|
| **Name of Trustee** | **Dollar Range of Equity**<br> **Securities in the Fund**<br>| **Aggregate Dollar Range of**<br> **Equity Securities in All**<br> **Registered Investment**<br> **Companies Overseen by**<br> **Trustee in Family of**<br> **Investment Companies\***<br>|
| **Independent Trustees** |  |  |
| Sarah E. Cogan |  | Over $100,000 |
| Kathleen A. McCartney |  | Over $100,000 |
| Mark Michel\*\* |  |  |
| Sonya Morris\*\* |  |  |
| Alan Rappaport |  | Over $100,000 |
| **Interested Trustees** |  |  |
| Libby D. Cantrill |  |  |
| David Flattum |  |  |

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\*

The term "Family of Investment Companies" as used herein includes the Fund and the following registered investment companies: PIMCO California Municipal Income Fund, PIMCO Municipal Income Fund II, PIMCO New York Municipal Income Fund II, PIMCO Dynamic Income Fund, PIMCO Corporate & Income Opportunity Fund, PIMCO Corporate & Income Strategy Fund, PCM Fund, Inc., PIMCO Access Income Fund, PIMCO Dynamic Income Opportunities Fund, PIMCO High Income Fund, PIMCO Income Strategy Fund, PIMCO Income Strategy Fund II, PIMCO Global StocksPLUS®& Income Fund, PIMCO Strategic Income Fund, Inc., PIMCO Dynamic Income Strategy Fund, PIMCO Flexible Emerging Markets Income Fund, PIMCO California Flexible Municipal Income Fund, PIMCO Flexible Municipal Income Fund, PIMCO Flexible Credit Income Fund and each series of PIMCO Managed Accounts Trust.

\*\*

Mr. Michel and Ms. Morris were each appointed as a Trustee of the Fund effective September 18, 2025.

To the Fund's knowledge, the following table provides information regarding each class of securities owned beneficially in an investment adviser or principal underwriter of the Fund, or a person (other than a registered investment company) directly or indirectly controlling, controlled by, or under common control with an investment adviser or principal underwriter of the Fund as of December 31, 2025 by Independent Trustees and their immediate family members:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Name of Trustee** | **Name of Owners**<br> **and Relations**<br> **to Trustee**<br>| **Company** | **Title of Class** | **Value of**<br> **Securities**<br>| **Percent**<br> **of Class**<br>|
| Sarah E. Cogan  | None | N/A | N/A | N/A | N/A |
| Kathleen A. McCartney | None | N/A | N/A | N/A | N/A |

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Name of Trustee** | **Name of Owners**<br> **and Relations**<br> **to Trustee**<br>| **Company** | **Title of Class** | **Value of**<br> **Securities**<br>| **Percent**<br> **of Class**<br>|
| Mark Michel\* | None | N/A | N/A | N/A | N/A |
| Sonya Morris\* | None | N/A | N/A | N/A | N/A |
| Alan Rappaport | None | N/A | N/A | N/A | N/A |

---

\*

Mr. Michel and Ms. Morris were each appointed as a Trustee of the Fund effective September 18, 2025.

As of March 31, 2026, the Fund's officers and Trustees as a group owned less than 1% of the outstanding Common Shares.

Except as noted below in the table, to the Fund's knowledge, no persons own of record 5% or more of any class of the Fund's shares, and no person is reflected on the books and records of the Fund as owning beneficially 5% or more of the outstanding shares of any class of the Fund as of April 7, 2026.

---

| | | |
|:---|:---|:---|
| **Name/Address of Shareholder** | **Share Class** | **Percentage of Class** |
| ALLIANZ FUND INVESTMENTS INC <br> 5701 GOLDEN HILLS DR <br> MINNEAPOLIS MN 55416-1297<br>| Institutional | 24.33% |
| CHARLES SCHWAB & CO INC SPECIAL CUSTODY A/C FBO <br> CUSTOMERS ATTN MUTUAL FUNDS <br> 211 MAIN ST <br> SAN FRANCISCO CA 94105-1901<sup>(1)</sup> <br>| Institutional | 46.36% |
| YASHWANTH NELAPATI PLEDGED TO ML LENDER <br> XXXX DIAMOND ST <br> SAN FRANCISCO CA XXXXX<br>| Class A-1 | 15.10% |
| KEERTI & SNEHA MELKOTE TTEES U/A DTD <br> XX/XX/XXXX MELKOTE FAMILY TRUST PLEDGED TO ML <br> LENDER <br> XXXXX CARNELIAN GLEN CT <br> SARATOGA CA XXXXX<br>| Class A-1 | 7.46% |
| LAURA K SHAWVER TTEE U/A DTD XX/XX/XXXX BY <br> LAURA K SHAWVER <br> XXXX AVENIDA DE LAS PESCAS <br> LA JOLLA CA XXXXX<br>| Class A-1 | 6.60% |
| ERIC R ROBERTS ET AL TTEE U/A DTD XX/XX/XXXX <br> ERIC & BARBARA ROBERTS <br> XXXX TR PLEDGED TO ML LENDER X BURRELL CT <br> TIBURON CA XXXX<br>| Class A-1 | 5.36% |
| JANICE M NEWFIELD TTEE U/A DTD XX/XX/XXXX BY <br> JANICE M NEWFIELD <br> XXXX BERKELEY AVE <br> LOS ANGELES CA XXXX-XX<br>| Class A-1 | 6.85% |

---

(1) Individual/entity owned 25% or more of the outstanding shares of beneficial interest of the Fund, and therefore may be presumed to "control" the Fund, as that term is defined in the Act. A control person may be able to determine the outcome of a matter put to a shareholder vote. It is anticipated that these parties will eventually no longer be control persons of the Fund over time, due to the continuous offering of the Fund's Common Shares.

------

**Trustees' Compensation**

Each of the Independent Trustees also serves as a trustee of PIMCO California Municipal Income Fund, PIMCO Municipal Income Fund II, PIMCO New York Municipal Income Fund II, PIMCO Access Income Fund, PIMCO Corporate & Income Strategy Fund, PIMCO Corporate & Income Opportunity Fund, PIMCO Dynamic Income Fund, PIMCO Dynamic Income Opportunities Fund, PIMCO High Income Fund, PIMCO Income Strategy Fund, PIMCO Income Strategy Fund II, PIMCO Global StocksPLUS® & Income Fund, PIMCO Dynamic Income Strategy Fund, PCM Fund, Inc. and PIMCO Strategic Income Fund, Inc., each a closed-end management investment company for which PIMCO serves as investment manager (together, the "PIMCO Closed-End Funds"), as well as PIMCO Flexible Emerging Markets Income Fund, PIMCO Flexible Credit Income Fund, PIMCO California Flexible Municipal Income Fund and PIMCO Flexible Municipal Income Fund, each a closed-end management investment company that is operated as an "interval fund" for which the Investment Manager serves as investment manager (the "PIMCO Interval Funds") and PIMCO Managed Accounts Trust ("PMAT"), an open-end investment management company with multiple series for which PIMCO serves as investment adviser and administrator (together with the PIMCO Closed-End Funds and the PIMCO Interval Funds, the "PIMCO-Managed Funds"). Effective August 1, 2025, the PIMCO Municipal Income Fund and PIMCO Municipal Income Fund III merged with and into PIMCO Municipal Income Fund II, PIMCO New York Municipal Income Fund and PIMCO New York Municipal Income Fund III merged with and into PIMCO New York Municipal Income Fund II, and PIMCO California Municipal Income Fund II and PIMCO California Municipal Income Fund III merged with and into PIMCO California Municipal Income Fund.

Effective January 1, 2026, each Independent Trustee receives annual compensation of $275,000 for his or her service on the Boards of the PIMCO-Managed Funds, payable quarterly; the Independent Chair of the Boards receives an additional $100,000 per year, payable quarterly; the Audit Oversight Committee Chair receives an additional $35,000 annually, payable quarterly; the Governance and Nominating Committee Chair receives an additional $15,000 annually, payable quarterly; the Performance Committee Chair receives an additional $15,000 annually, payable quarterly; the Valuation Oversight Committee Chair receives an additional $10,000 annually, payable quarterly; and the Contracts Committee Chair receives an additional $30,000 annually, payable quarterly. Trustees are also reimbursed for meeting related expenses.

Each Trustee's compensation for his or her service as a Trustee on the Boards of the PIMCO-Managed Funds and other costs in connection with joint meetings of such Funds are allocated among the PIMCO-Managed Funds, as applicable, on the basis of fixed percentages as among PMAT, the PIMCO Interval Funds and the PIMCO Closed-End Funds. Trustee compensation and other costs are then further allocated pro rata among the individual funds within each grouping based on each such fund's relative net assets.

The Fund has no employees. The Fund's officers and Interested Trustees (Ms. Cantrill and Mr. Flattum) are compensated by PIMCO or its affiliates, as applicable.

The Trustees do not currently receive any pension or retirement benefits from the Fund or the Fund Complex (see below).

The following table sets forth information regarding the compensation received by the Independent Trustees for the fiscal year ended December 31, 2025, the Independent Trustees received the compensation set forth in the table below for serving as Trustees of the Fund and other funds in the same Fund Complex as the Fund. Each officer and each Trustee who is a director, officer, partner, member or employee of the Investment Manager, or of any entity controlling, controlled by or under common control with the Investment Manager, including any Interested Trustee, serves without any compensation from the Fund.

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Name of Trustee** | **Aggregate**<br> **compensation**<br> **from the Fund**<br> **for the Fiscal**<br> **Year Ended**<br> **December 31, 2025**<sup>#</sup> <br>| **Pension or**<br> **Retirement**<br> **Benefits**<br> **Accrued as**<br> **Part of Fund**<br> **Expenses**<br>| **Estimated**<br> **Annual Benefits**<br> **Upon Retirement**<br>| **Total Compensation**<br> **from the Fund**<br> **Complex Paid to**<br> **the Trustees for**<br> **the Calendar**<br> **Year Ended**<br> **December 31, 2025\***<br>|
| Sarah E. Cogan | $1555 | N/A | N/A | $305000 |
| Deborah A. DeCotis \*\* | $1912 | N/A | N/A | $375000 |

---

------

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Name of Trustee** | **Aggregate**<br> **compensation**<br> **from the Fund**<br> **for the Fiscal**<br> **Year Ended**<br> **December 31, 2025**<sup>#</sup><br>| **Pension or**<br> **Retirement**<br> **Benefits**<br> **Accrued as**<br> **Part of Fund**<br> **Expenses**<br>| **Estimated**<br> **Annual Benefits**<br> **Upon Retirement**<br>| **Total Compensation**<br> **from the Fund**<br> **Complex Paid to**<br> **the Trustees for**<br> **the Calendar**<br> **Year Ended**<br> **December 31, 2025\***<br>|
| Kathleen A. McCartney | $1402 | N/A | N/A | $275000 |
| Mark Michel\*\*\* | $346 | N/A | N/A | $68750 |
| Sonya Morris\*\*\* | $346 | N/A | N/A | $68750 |
| Alan Rappaport | $1479 | N/A | N/A | $290000 |
| E. Grace <br> Vandecruze\*\*\*\*<br>| $1632 | N/A | N/A | $320000 |

---

#

Ms. Cantrill and Mr. Flattum are interested persons of the Fund and do not receive compensation from the Fund for their services as Trustees.

\*

The Term "Fund Complex" as used herein includes the Fund and any other registered investment company (i) that holds itself out to investors as a related company for purposes of investment and investor services; or (ii) for which PIMCO or an affiliate of PIMCO serves as primary investment adviser.

\*\*

Ms. DeCotis retired from the Board of the Fund as of March 6, 2026. In connection with her retirement, Ms. DeCotis entered into an agreement pursuant to which she was engaged as a consultant to the Board on an as-requested basis through December 31, 2026. Pursuant to the consulting agreement, for the calendar year 2026, Ms. DeCotis was paid the equivalent of one year of her prior Independent Trustee compensation from the Fund Complex of $275,000.

\*\*

Mr. Michel and Ms. Morris were each appointed as a Trustee of the Fund effective September 18, 2025.

\*\*\*\*

Ms. Vandecruze retired from the Board of the Funds as of December 31, 2025.

**Codes of Ethics**

The Fund, PIMCO and PIMCO Investments LLC, the Fund's principal underwriter, have each adopted a code of ethics under Rule 17j-1 of the Act. These codes permit personnel subject to the codes to invest in securities, including securities that may be purchased or held by the Fund. The codes of ethics are available on the EDGAR Database on the SEC's Internet site at http://www.sec.gov, and copies may be obtained, after paying a duplicating fee, by electronic request at the following email address: publicinfo@sec.gov.

**Investment Manager**

PIMCO, a Delaware limited liability company, serves as investment manager to the Fund pursuant to an investment management agreement (the "Investment Management Agreement") between PIMCO and the Fund. PIMCO is located at 650 Newport Center Drive, Newport Beach, California 92660. As of December 31, 2025, PIMCO had approximately $2.26 trillion in assets under management, including $1.84 trillion in third party assets under management.

PIMCO is a majority owned subsidiary of Allianz Asset Management of America LLC ("Allianz Asset Management") with a minority interest held by Allianz Asset Management U.S. Holding II LLC, each, a Delaware limited liability company, and by certain current and former officers of PIMCO. Allianz Asset Management was organized as a limited liability company under Delaware law in 2000. Allianz Asset Management of America LP merged with Allianz Asset Management, with the latter being the surviving entity, effective January 1, 2023. Following the merger, Allianz Asset Management is PIMCO LLC's managing member and direct parent entity. Through various holding company structures, Allianz Asset Management is majority owned by Allianz SE. Allianz SE is a European based, multinational insurance and financial services holding company and a publicly traded German company.

The management and operational oversight of Allianz Asset Management are carried out by its Management Board, the sole member of which is currently Tucker J. Fitzpatrick.

------

As of the date of this Statement of Additional Information, there are no significant institutional shareholders of Allianz SE.

Absent an SEC exemption or other regulatory relief, the Fund generally is precluded from effecting principal transactions with brokers that are deemed to be affiliated persons of the Fund or PIMCO, and the Fund's ability to purchase securities being underwritten by an affiliated broker or a syndicate including an affiliated broker is subject to restrictions. Similarly, the Fund's ability to utilize the affiliated brokers for agency transactions is subject to the restrictions of Rule 17e-1 under the Act. PIMCO does not believe that the restrictions on transactions with the affiliated brokers described above will materially adversely affect its ability to provide services to the Fund, the Fund's ability to take advantage of market opportunities, or the Fund's overall performance.

**Investment Management Agreement**

The Fund pays for the advisory and supervisory and administrative services it requires under what is essentially an all-in fee structure (the "unified management fee").

PIMCO, subject to the supervision of the Board, is responsible for providing investment guidance and policy direction in connection with the management of the Fund, including oral and written research, analysis, advice, and statistical and economic data and information. Consistent with the investment objectives, policies and restrictions applicable to the Fund, PIMCO determines the securities and other assets to be purchased or sold by the Fund and determines what portion, consistent with any applicable investment restrictions, shall be invested in securities or other assets, and what portion, if any, should be held uninvested. Under the Investment Management Agreement, the Fund has the benefit of the investment analysis and research, the review of current economic conditions and trends and the consideration of long-range investment policy generally available to investment advisory clients of PIMCO.

Under the terms of the Investment Management Agreement, PIMCO is obligated to manage the Fund in accordance with applicable laws and regulations. PIMCO's investment advisory services to the Fund are not exclusive under the terms of the Investment Management Agreement. PIMCO is free to, and does, render investment advisory services to others.

In addition, under the terms of the Investment Management Agreement, subject to the general supervision of the Board, PIMCO provides or causes to be furnished all supervisory and administrative and other services reasonably necessary for the operation of the Fund under the unified management fee, including but not limited to the supervision and coordination of matters relating to the operation of the Fund, including any necessary coordination among the custodian, transfer agent, dividend disbursing agent, and recordkeeping agent (including pricing and valuation of the Fund), accountants, attorneys, and other parties performing services or operational functions for the Fund; the provision of adequate personnel, office space, communications facilities, and other facilities necessary for the effective supervision and administration of the Fund, as well as the services of a sufficient number of persons competent to perform such supervisory and administrative and clerical functions as are necessary for compliance with federal securities laws and other applicable laws; the maintenance of the books and records of the Fund; the preparation of all federal, state, local and foreign tax returns and reports for the Fund; the preparation, filing and distribution of any proxy materials (except as provided below), periodic reports to shareholders and other regulatory filings; the provision of administrative services to shareholders for the Fund including the maintenance of a shareholder information telephone number, the provision of certain statistical information and performance of the Fund, an internet website (if requested), and maintenance of privacy protection systems and procedures; the preparation and filing of such registration statements and other documents with such authorities as may be required to register a new class of shares of the Fund; the taking of other such actions as may be required by applicable law (including establishment and maintenance of a compliance program for the Fund); and the provision of administrative services to shareholders as necessary, including: the maintenance of a shareholder call center; shareholder transaction processing; the provision of certain statistical information and performance of the Fund; a web servicing platform and internet website; access by PIMCO representatives to databases to assist with shareholder inquiries and reports; oversight of anti-money laundering monitoring systems and procedures; repurchase fee application and monitoring systems and procedures (if applicable); and processing of client registration applications.

Under the Investment Management Agreement, PIMCO will pay all expenses incurred by it in connection with its obligations under the Investment Management Agreement with respect to the Fund, with the exception of certain expenses that are assumed by the Fund pursuant to the Investment Management Agreement. In addition, PIMCO is

------

responsible for the following costs and expenses: expenses of all audits by the Fund's independent public accountants; expenses of the Fund's transfer agent, registrar, dividend disbursing agent, and recordkeeping agent; expenses and fees paid to agents and intermediaries for sub-transfer agency, sub-accounting and other shareholder services on behalf of shareholders of Shares of the Fund (or Shares of a particular Share class) held through omnibus and networked, record shareholder accounts (together, "Sub-Transfer Agency Expenses"), except where Sub-Transfer Agency Expenses are paid pursuant to a Rule 12b-1 or similar plan adopted by the Board; expenses of the Fund's custodial services, including any recordkeeping services provided by the custodian; expenses of obtaining quotations for calculating the value of the Fund's net assets; expenses of maintaining the Fund's tax records; certain expenses and fees, including legal fees, incident to meetings of the Fund's shareholders; certain expenses associated with the preparation, printing and distribution of the Fund's prospectuses, notices and proxy statements, press releases and reports to existing shareholders; certain expenses associated with the preparation and filing of registration statements and updates thereto and reports with regulatory bodies; expenses associated with the maintenance of the Fund's existence and qualification to do business; expenses (including registration fees) of issuing, redeeming and repurchasing (including expenses associated with the Fund's repurchases pursuant to Rule 23c-3 under the Act); expenses associated with registering and qualifying for sale Common Shares with federal and state securities authorities following the initial registration of its Common Shares under the Securities Act (i.e., that are not organizational and offering expenses of the Fund specified below) and following any registration of a new class of shares of the Fund subsequent to its initial registration; and the expense of qualifying and listing existing Common Shares with any securities exchange or other trading system; the Fund's ordinary legal fees, including the legal fees that arise in the ordinary course of business for a Massachusetts business trust, registered as a closed-end management investment company and, as applicable, that operates as an "interval fund" pursuant to Rule 23c-3 under the Act, or that is listed for trading with a securities exchange or other trading system; costs of printing certificates representing Common Shares of the Fund, if any; the Fund's pro rata portion of the fidelity bond required by Section 17(g) of the Act, or other insurance premiums; and organizational and offering expenses, including registration (including share registration) fees, legal, marketing, printing, accounting and other expenses, in connection with any registration of a new class of shares of the Fund subsequent to its initial registration.

The Fund (and not PIMCO) is responsible for certain fees and expenses that are not covered by the unified management fee under the Investment Management Agreement. These include salaries and other compensation or expenses, including travel expenses, of any of the Fund's executive officers and employees, if any, who are not officers, directors, shareholders, members, partners or employees of PIMCO or its subsidiaries or affiliates; taxes and governmental fees, if any, levied against the Fund; brokerage fees and commissions, and other portfolio transaction expenses incurred by or for the Fund (including, without limitation, fees and expenses of outside legal counsel or third-party consultants retained in connection with reviewing, negotiating and structuring specialized loans and other investments made by the Fund, and any costs associated with originating loans, asset securitizations, alternative lending-related strategies and so-called "broken-deal costs" (e.g., fees, costs, expenses and liabilities, including, for example, due diligence-related fees, costs, expenses and liabilities, with respect to unconsummated investments)); expenses of the Fund's securities lending (if any), including any securities lending agent fees, as governed by a separate securities lending agreement; costs, including interest expenses, of borrowing money or engaging in other types of leverage financing including, without limitation, through the use by the Fund of reverse repurchase agreements, dollar rolls/buy backs, bank borrowings, credit facilities and TOBs; costs, including dividend and/or interest expenses and other costs (including, without limitation, offering and related legal costs, fees to brokers, fees to auction agents, fees to transfer agents, fees to ratings agencies and fees to auditors associated with satisfying ratings agency requirements for preferred shares or other securities issued by the Fund and other related requirements in the Fund's organizational documents) associated with the Fund's issuance, offering, redemption and maintenance of any preferred shares, commercial paper or other instruments (such as the use of reverse repurchase agreements, dollar rolls/buy backs, bank borrowings, credit facilities and TOBs) for the purpose of incurring leverage; fees and expenses of any underlying funds or other pooled vehicles in which the Fund invests; dividend and interest expenses on short positions taken by the Fund; fees and expenses, including travel expenses, and fees and expenses of legal counsel retained for their benefit, of Trustees who are not officers, employees, partners, shareholders or members of PIMCO or its subsidiaries or affiliates; extraordinary expenses, including extraordinary legal expenses, as may arise, including, without limitation, expenses incurred in connection with litigation, proceedings, other claims, and the legal obligations of the Fund to indemnify its Trustees, officers, employees, shareholders, distributors, and agents with respect thereto; fees and expenses, including legal, printing and mailing, solicitation and other fees and expenses associated with and incident to shareholder meetings and proxy solicitations involving contested elections of Trustees, shareholder proposals or other non-routine matters that are not initiated or proposed by Fund management; organizational and offering expenses of the Fund, including registration (including Share registration fees), legal, marketing, printing,

------

accounting and other expenses, associated with organizing the Fund in its state of jurisdiction and in connection with the initial registration of the Fund under the Act and the initial registration of its Common Shares under the Securities Act (i.e., through the effectiveness of the Fund's initial registration statement on Form N-2) and fees and expenses associated with seeking, applying for and obtaining formal exemptive, no-action and/or other relief from the SEC in connection with the issuance of multiple share classes; except as otherwise provided as an expense of PIMCO, any expenses allocated or allocable to a specific class of Common Shares, including without limitation sub-transfer agency expenses and distribution and/or service fees paid pursuant to a Rule 12b-1 or similar plan adopted by the Board for a particular share class; and expenses of the Fund which are capitalized in accordance with generally accepted accounting principles.

PIMCO may earn a profit on the management fee paid by the Fund. Also, under the terms of the Investment Management Agreement, PIMCO, and not Common Shareholders, would benefit from any price decreases in third-party services, including decreases resulting from an increase in net assets.

The Investment Management Agreement was initially approved by the Trustees of the Fund (including all of the Trustees who are not "interested persons" of the Fund) at a meeting held for such purpose. A discussion regarding the basis for Board approval of the Fund's Investment Management Agreement is available in the Fund's semiannual report to shareholders. The Investment Management Agreement will remain in full force and effect, unless sooner terminated by the Fund, until August 1, 2026 and shall continue thereafter on an annual basis provided that such continuance is specifically approved at least annually (i) by the vote of a majority of the outstanding voting securities of the Fund or by the Fund's Board; and (ii) by the vote, cast in person at a meeting called for such purpose, of a majority of the Fund's Independent Trustees. It can also be terminated with respect to the Fund at any time, without payment of any penalty by a vote of a majority of the outstanding voting securities of the Fund or by a vote of a majority of the Fund's entire Board on 60 days' written notice to PIMCO, or by PIMCO on 60 days' written notice to the Fund. Additionally, the Investment Management Agreement will terminate automatically in the event of its assignment. The Investment Management Agreement may not be materially amended with respect to the Fund without a vote of a majority of the outstanding voting securities of the Fund.

Pursuant to the Investment Management Agreement, the Fund has agreed to pay PIMCO an annual management fee, payable on a monthly basis, at the annual rate of 0.75% of the Fund's average daily total managed assets. "Total managed assets" means the total assets of the Fund (including assets attributable to any reverse repurchase agreements, dollar rolls/buy backs, TOBs, borrowings and preferred shares that may be outstanding) minus accrued liabilities (other than liabilities representing reverse repurchase agreements, dollar rolls/buy backs, TOBs and borrowings). For purposes of calculating "total managed assets," the liquidation preference of any preferred shares outstanding is not considered a liability. By way of clarification, with respect to any reverse repurchase agreement, dollar roll or similar transaction, "total managed assets" includes any proceeds from the sale of an asset of the Fund to a counterparty in such a transaction, in addition to the value of the underlying asset as of the relevant measuring date. Furthermore, to the extent applicable, assets attributable to TOBs would be included as assets irrespective of whether or not they are included as assets for financial reporting purposes. However, to the extent the Fund does not contribute municipal bonds to a TOB trust but holds residual interests issued by such trust, the TOBs outstanding would not be included in the calculation of "total managed assets." In addition, for purposes of calculating "total managed assets," the Fund's derivative investments will be valued based on their market value. All fees and expenses are accrued daily and deducted before payment of dividends to investors.

Because the management fee received by PIMCO is based on the average daily total managed assets of the Fund, which includes total assets of the Fund (including assets attributable to any reverse repurchase agreements, dollar rolls/buy backs, TOBs, borrowings and preferred shares that may be outstanding, if any,) PIMCO has a financial incentive for the Fund to utilize reverse repurchase agreements, dollar rolls/buy backs, TOBs and borrowings or to issue preferred shares, which may create a conflict of interest between PIMCO, on the one hand, and Common Shareholders, on the other hand.

The Investment Management Agreement provides that neither PIMCO nor its members, officers, directors or employees shall be subject to any liability for, or any damages, expenses or losses incurred in connection with, any act or omission or mistake in judgment connected with or arising out of any services rendered under the Investment Management Agreement, except by reason of willful misfeasance, bad faith or gross negligence in performance of PIMCO's duties, or by reason of reckless disregard of PIMCO's obligations and duties under the Investment Management Agreement.

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In rendering investment advisory services to the Fund, PIMCO may use the resources of one or more foreign (non-U.S.) affiliates that are not registered under the Investment Advisers Act of 1940, as amended (the "Advisers Act") (the "PIMCO Overseas Affiliates"), to provide portfolio management, research and trading services to the Fund under the Memorandums of Understanding ("MOUs"). Each of the PIMCO Overseas Affiliates are Participating Affiliates of PIMCO as that term is used in relief granted by the staff of the SEC allowing U.S. registered advisers to use investment advisory and trading resources of unregistered advisory affiliates subject to the regulatory supervision of the registered adviser. Each PIMCO Overseas Affiliate and any of their respective employees who provide services to the Funds are considered under the MOUs to be "associated persons" of PIMCO as that term is defined in the Advisers Act for purposes of PIMCO's required supervision.

Pursuant to the Investment Management Agreement, the Fund paid the Investment Manager the following amounts for the fiscal years ended December 31, 2025, December 31, 2024, and December 31, 2023.

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| | |
|:---|:---|
| **Fiscal Year** | **Management Fee**<br> **Paid by Fund**<br>|
| December 31, 2025 | &nbsp;&nbsp; $1023676 |
| December 31, 2024 | &nbsp;&nbsp; $903860 |
| December 31, 2023 | &nbsp;&nbsp; $459101 |

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**Expense Limitation Agreement**

PIMCO has contractually agreed, through May 2, 2027, to waive its management fee, or reimburse the Fund, to the extent that organizational and offering expenses, the payment of expenses associated with obtaining or maintaining a Legal Entity Identifier, and/or payment of the Fund's pro rata Trustees' fees exceed 0.10% of the Fund's net assets (the "Expense Limit"). Under an expense limitation agreement, in any month in which the investment management agreement is in effect, PIMCO is entitled to reimbursement by the Fund of any portion of the management fee reduced as set forth above (the "Reimbursement Amount") during the previous thirty-six months, provided that such amount paid to PIMCO will not: (1) together with any recoupment of organizational and offering expenses, the payment of expenses associated with obtaining or maintaining a Legal Entity Identifier, and pro rata Trustees' fees exceed 0.10% of average net assets; (2) exceed the total Reimbursement Amount; or (3) include any amounts previously reimbursed to PIMCO. For the avoidance of doubt, any reimbursement of PIMCO's management fee pursuant to the expense limitation agreement plus any recoupment of organizational expenses and pro rata Trustees' fees will not exceed the lesser of (i) the expense limit in effect at the time of waiver or reimbursement and (ii) the expense limit in effect at the time of recoupment. This expense limitation agreement will automatically renew for one-year terms unless PIMCO provides written notice to the Fund at least 30 days prior to the end of the then current term.

**Management Fees Waived and Recouped**

For the fiscal years ended December 31, 2025, December 31, 2024, and December 31, 2023, the following amounts of management fees were waived and recouped by PIMCO:

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| | | |
|:---|:---|:---|
| **Fiscal Year** | **Management Fees**<br> **Waived**<br>| **Previously Waived Management Fees Recouped**  |
| December 31, 2025 | &nbsp;&nbsp; $14656 | &nbsp;&nbsp; $111490 |
| December 31, 2024 | &nbsp;&nbsp; $27653 | &nbsp;&nbsp; $96266 |
| December 31, 2023 | &nbsp;&nbsp; $62504 | &nbsp;&nbsp; $0 |

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In addition, the Management Fee Waiver Agreement will terminate upon termination of the Investment Management Agreement, or it may be terminated by the Fund, without payment of any penalty, upon notice to PIMCO at its principal place of business.

**Portfolio Managers**

**Other Accounts Managed.** The portfolio managers who are jointly and primarily responsible for the day-to-day management of the Fund also manage the other registered investment companies, other pooled investment vehicles and/or other accounts indicated below. The following table identifies, as of December 31, 2025: (i) the number of other registered investment companies, pooled investment vehicles and other accounts managed by the portfolio managers

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(exclusive of the Fund); and (ii) the total assets of such other companies, vehicles and accounts, and the number and total assets of such companies, vehicles and accounts with respect to which the management fee is based on performance.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Total Number of**<br> **Other Accounts**<br>| **Total Assets of**<br> **All Other Accounts**<br> **(in $millions)**<br>| **Number of**<br> **Other Accounts**<br> **Paying a**<br> **Performance Fee**<br>| **Total Assets of**<br> **Other Accounts**<br> **Paying a**<br> **Performance Fee**<br> **(in $millions)**<br>|
| **David Hammer**<sup>1</sup> <br>|  |  |  |  |
| Registered Investment Companies | &nbsp;&nbsp; 20 | &nbsp;&nbsp; $23127.90  | &nbsp;&nbsp; 0 | &nbsp;&nbsp; $0.00 |
| Other Pooled Investment Vehicles | &nbsp;&nbsp; 7 | &nbsp;&nbsp; $1668.74  | &nbsp;&nbsp; 4 | &nbsp;&nbsp; $1054.84  |
| Other Accounts | &nbsp;&nbsp; 181 | &nbsp;&nbsp; $19943.11  | &nbsp;&nbsp; 0 | &nbsp;&nbsp; $0.00 |
| **Amit Arora**<sup>2</sup> <br>|  |  |  |  |
| Registered Investment Companies | &nbsp;&nbsp; 10 | &nbsp;&nbsp; $65005.46  | &nbsp;&nbsp; 0 | &nbsp;&nbsp; $0.00 |
| Other Pooled Investment Vehicles | &nbsp;&nbsp; 28 | &nbsp;&nbsp; $18920.62  | &nbsp;&nbsp; 1 | &nbsp;&nbsp; $158.91  |
| Other Accounts | &nbsp;&nbsp; 235 | &nbsp;&nbsp; $53155.12  | &nbsp;&nbsp; 3 | &nbsp;&nbsp; $1556.25  |
| **Kyle Christine**<sup>3</sup> <br>|  |  |  |  |
| Registered Investment Companies | &nbsp;&nbsp; 16 | &nbsp;&nbsp; $17541.08  | &nbsp;&nbsp; 0 | &nbsp;&nbsp; $0.00 |
| Other Pooled Investment Vehicles | &nbsp;&nbsp; 0 | &nbsp;&nbsp; $0.00 | &nbsp;&nbsp; 0 | &nbsp;&nbsp; $0.00 |
| Other Accounts | &nbsp;&nbsp; 5 | &nbsp;&nbsp; $63186.22  | &nbsp;&nbsp; 0 | &nbsp;&nbsp; $0.00 |

---

Mr. Hammer co-manages the Fund, which had $108.6 million total assets under management as of December 31, 2025.

Mr. Arora co-manages the Fund, which had $108.6 million total assets under management as of December 31, 2025.

Mr. Christine co-manages the Fund, which had $108.6 million total assets under management as of December 31, 2025.

**Conflicts of Interest** 

From time to time, potential and actual conflicts of interest may arise between a portfolio manager's management of the investments of the Fund, on the one hand, and the management of other accounts, on the other. Potential and actual conflicts of interest may also arise as a result of PIMCO's other business activities and PIMCO's possession of material non-public information ("MNPI") about an issuer. Other accounts managed by a portfolio manager might have similar investment objectives or strategies as the Fund, track the same index the Fund tracks or otherwise hold, purchase, or sell securities that are eligible to be held, purchased or sold by the Fund. The other accounts might also have different investment objectives or strategies than the Fund. Investors should be aware that investments made by the Fund and the results achieved by the Fund at any given time, including for the same or similar instruments, are not expected to be the same as those made by 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. This may be attributable to a wide variety of factors, including, but not limited to, the use of a different strategy or portfolio management team, the execution venue(s) used for a given strategy or fund, when a particular fund commenced operations or the size of a particular fund, in each case as compared to other similar funds. Potential and actual conflicts of interest may also arise as a result of PIMCO serving as investment adviser to accounts that invest in the Fund or to accounts in which the Fund invests. In this case, such conflicts of interest could in theory give rise to incentives for PIMCO to, among other things, vote proxies, purchase or redeem shares of the underlying account, or take other actions with respect to the underlying account, in a manner beneficial to the investing account and/or PIMCO but detrimental to the underlying account. Such conflicts of interest could similarly in theory give rise to incentives for PIMCO to, among other things, vote proxies or purchase or redeem shares of the underlying account, or take other actions with respect to the underlying account, in a manner beneficial to the underlying account and/or PIMCO and that may or may not be detrimental to the investing account. For example, even if there is a fee waiver or reimbursement in place relating to the Fund's investment in an underlying account, or relating to an investing account's investment in the Fund, this will not necessarily eliminate all conflicts of interest, as PIMCO could nevertheless have a financial incentive to favor investments in PIMCO-affiliated funds and managers (for example, to

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increase the assets under management of PIMCO or a fund, product or line of business, or otherwise provide support to, certain funds, products or lines of business), which could also impact the manner in which certain transaction fees are set. Conversely, PIMCO's duties to the Fund, as well as regulatory or other limitations applicable to the Fund, may affect the courses of action available to PIMCO-advised accounts (including the Fund) that invest in the Fund in a manner that is detrimental to such investing accounts. In addition, regulatory restrictions, actual or potential conflicts of interest or other considerations may cause PIMCO to restrict or prohibit participation in certain investments. Because PIMCO is affiliated with Allianz SE, a large multi-national financial institution (together with its affiliates, "Allianz"), conflicts similar to those described below may occur between the Fund or other accounts managed by PIMCO and PIMCO's affiliates or accounts managed by those affiliates. Those affiliates (or their clients), which generally operate autonomously from PIMCO, may take actions that are adverse to the Fund or other accounts managed by PIMCO. In many cases, PIMCO will not be in a position to mitigate those actions or address those conflicts, which could adversely affect the performance of the Fund or other accounts managed by PIMCO (each, a "Client," and collectively, the "Clients"). In addition, because certain Clients are affiliates of PIMCO or have investors who are affiliates or employees of PIMCO, PIMCO may have incentives to resolve conflicts of interest in favor of these Clients over other Clients.

<u>Knowledge and Timing of Fund Trades</u>. A potential conflict of interest may arise as a result of the portfolio manager's day-to-day management of the Fund. Because of their positions with the Fund, the portfolio managers know the size, timing and possible market impact of the Fund's trades. It is theoretically possible that the portfolio managers could use this information to the advantage of other accounts they manage and to the possible detriment of the Fund.

<u>Cross Trades.</u> A potential conflict of interest may arise in instances where the Fund buys an instrument from a Client or sells an instrument to a Client (each, a "cross trade"). Such conflicts of interest may arise, among other reasons, as a result of PIMCO representing the interests of both the buying party and the selling party in the cross trade or because the price at which the instrument is bought or sold through a cross trade may not be as favorable as the price that might have been obtained had the trade been executed in the open market. PIMCO effects cross trades when appropriate pursuant to procedures adopted under applicable rules and SEC guidance. Among other things, such procedures require that the cross trade is consistent with the respective investment policies and investment restrictions of both parties and is in the best interests of both the buying and selling accounts.

<u>Selection of Service Providers.</u> PIMCO, its affiliates and its employees may have relationships with service providers that recommend, or engage in transactions with or for, the Fund, and these relationships may influence PIMCO's selection of these service providers for the Fund. Additionally, as a result of these relationships, service providers may have conflicts that create incentives for them to promote the Fund over other funds or financial products. In such circumstances, there is a conflict of interest between PIMCO and the Fund if the Fund determines not to engage or continue to engage these service providers.

<u>Investment Opportunities.</u> A potential conflict of interest may arise as a result of the portfolio manager's management of a number of accounts with varying investment guidelines. Often, an investment opportunity may be suitable for one or more Clients, including Clients with similar names, investment objectives and policies, and/or portfolio management teams, but may not be available in sufficient quantities for all accounts to participate fully. In addition, regulatory issues applicable to PIMCO or the Fund or other accounts may result in the Fund not receiving securities that may otherwise be appropriate for it. Similarly, there may be limited opportunity to sell an investment held by the Fund and another Client. PIMCO has adopted policies and procedures reasonably designed to allocate investment opportunities on a fair and equitable basis over time. In addition, regulatory issues applicable to PIMCO or one or more Clients may result in certain Clients, not receiving securities that may otherwise be appropriate for them.

PIMCO seeks to allocate orders across eligible Client accounts with similar investment guidelines and investment styles fairly and equitably, taking into consideration relevant factors including, among others, applicable investment restrictions and guidelines, including regulatory restrictions; Client account-specific investment objectives, restrictions and other Client instructions, as applicable; risk tolerances; amounts of available cash; the need to rebalance a Client account's portfolio (e.g., due to investor contributions and redemptions); whether the allocation would result in a Client account receiving a trivial amount or an amount below the established minimum quantity; regulatory requirements; the origin of the investment; the bases for an issuer's allocation to PIMCO; and other Client account-specific factors. As part of PIMCO's trade allocation process, portions of new fixed income investment opportunities are distributed among Client account categories where the relevant portfolio managers seek to participate in the investment. Those portions are then further allocated among the Client accounts within such categories pursuant

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to PIMCO's trade allocation policy. Portfolio managers managing quantitative strategies and specialized accounts, such as those focused on international securities, mortgage-backed securities, bank loans, or other specialized asset classes, will likely receive an increased distribution of new fixed income investment opportunities where the investment involves a quantitative strategy or specialized asset class that matches the investment objective or focus of the Client account category. PIMCO seeks to allocate fixed income investments to Client accounts with the general purpose of maintaining consistent concentrations across similar accounts and achieving, as nearly as possible, portfolio characteristic parity among such accounts. Client accounts furthest from achieving portfolio characteristic parity typically receive priority in allocations. With respect to an order to buy or sell an equity security in the secondary market, PIMCO seeks to allocate the order across Client accounts with similar investment guidelines and investment styles fairly and equitably over time, taking into consideration the relevant factors discussed above.

Any particular allocation decision among Client accounts may be more or less advantageous to any one Client or group of Clients, including the Fund, and certain allocations will, to the extent consistent with PIMCO's fiduciary obligations, deviate from a pro rata basis among Clients in order to address for example, differences in legal, tax, regulatory, risk management, concentration, exposure, Client guideline limitations and/or mandate or strategy considerations for the relevant Clients. PIMCO may determine that an investment opportunity or particular purchases or sales are appropriate for one or more Clients, but not appropriate for other Clients, including Clients with similar names, investment objectives and policies, and/or portfolio management teams, or are appropriate or suitable for, or available to, Clients but in different sizes, terms, or timing than is appropriate or suitable for other Clients. For example, some Clients have higher risk tolerances than other Clients, such as private funds, which, in turn, allows PIMCO to allocate a wider variety and/or greater percentage of certain types of investments (which may or may not outperform other types of investments) to such Clients. Further, the respective risk tolerances of different types of Clients may change over time as market conditions change. Those Clients receiving an increased allocation as a result of the effect of their respective risk tolerance may be Clients that pay higher investment management fees or that pay incentive fees. In addition, certain Client account categories focusing on certain types of investments or asset classes will be given priority in new issue distribution and allocation with respect to the investments or asset classes that are the focus of their investment mandate. Similarly, portfolio managers who are responsible for structuring or monitoring certain investments may be given priority in the allocation process for the accounts they manage. PIMCO may also take into account the bases for an issuer's allocation to PIMCO, for example, by giving priority allocations to Client accounts holding existing positions in the issuer's debt if the issuer's allocation to PIMCO is based on such holdings. PIMCO also may determine not to allocate to or purchase or sell for certain Clients all investments for which all Clients may be eligible

Legal, contractual, or regulatory issues and/or related expenses applicable to PIMCO or one or more Clients may result in certain Clients not receiving securities that may otherwise be appropriate for them or may result in PIMCO selling securities out of Client accounts even if it might otherwise be beneficial to continue to hold them. Additional factors that are taken into account in the distribution and allocation of investment opportunities to Client accounts include, without limitation: ability to utilize leverage and risk tolerance of the Client account; the amount of discretion and trade authority given to PIMCO by the Client; availability of other similar investment opportunities; the Client account's investment horizon and objectives; hedging, cash and liquidity needs of the portfolio; minimum increments and lot sizes; and underlying benchmark factors. Given all of the foregoing factors, the amount, timing, structuring, or terms of an investment by a Client, including the Fund, may differ from, and performance may be lower than, investments and performance of other Clients, including those that may provide greater fees or other compensation (including performance-based fees or allocations) to PIMCO. PIMCO has also adopted additional procedures to complement the general trade allocation policy that are designed to address potential conflicts of interest due to the side-by-side management of the Fund and certain pooled investment vehicles, including investment opportunity allocation issues.

From time to time, PIMCO may take an investment position or action for one or more Clients that may be different from, or inconsistent with, an action or position taken for one or more other Clients having similar or differing investment objectives. These positions and actions may adversely impact, or in some instances may benefit, one or more affected Clients (including Clients that are PIMCO affiliates) in which PIMCO has an interest, or which pays PIMCO higher fees or a performance fee. For example, a Client may buy a security and another Client may establish a short position in that same security. The subsequent short sale may result in a decrease in the price of the security that the other Client holds. Similarly, transactions or investments by one or more Clients may have the effect of diluting or otherwise disadvantaging the values, prices or investment strategies of another Client.

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When PIMCO implements for one Client a portfolio decision or strategy ahead of, or contemporaneously with, similar portfolio decisions or strategies of another Client, market impact, liquidity constraints or other factors could result in one or more Clients receiving less favorable trading results, the costs of implementing such portfolio decisions or strategies could be increased or such Clients could otherwise be disadvantaged. On the other hand, potential conflicts may also arise because portfolio decisions regarding a Client may benefit other Clients. For example, the sale of a long position or establishment of a short position for a Client may decrease the price of the same security sold short by (and therefore benefit) other Clients, and the purchase of a security or covering of a short position in a security for a Client may increase the price of the same security held by (and therefore benefit) other Clients.

Under certain circumstances, a Client may invest in a transaction in which one or more other Clients are expected to participate, or already have made or will seek to make, an investment. In addition, to the extent permitted by applicable law, a Client may also engage in investment transactions that may result in other Clients being relieved of obligations, or that may cause other Clients to divest certain investments (e.g., a Client may make a loan to, or directly or indirectly acquire securities or indebtedness of, a company that uses the proceeds to refinance or reorganize its capital structure, which could result in repayment of debt held by another Client). Such Clients (or groups of Clients) may have conflicting interests and objectives in connection with such investments, including with respect to views on the operations or activities of the issuer involved, the targeted returns from the investment and the timeframe for, and method of, exiting the investment. When making such investments, PIMCO may do so in a way that favors one Client over another Client, even if both Clients are investing in the same security at the same time. Certain Clients may invest on a "parallel" basis (i.e., proportionately in all transactions at substantially the same time and on substantially the same terms and conditions). In addition, other accounts may expect to invest in many of the same types of investments as another account. However, there may be investments in which one or more of such accounts does not invest (or invests on different terms or on a non-pro rata basis) due to factors such as legal, tax, regulatory, business, contractual or other similar considerations or due to the provisions of a Client's governing documents. Decisions as to the allocation of investment opportunities among such Clients present numerous conflicts of interest, which may not be resolved in a manner that is favorable to a Client's interests. To the extent an investment is not allocated pro rata among such entities, a Client could incur a disproportionate amount of income or loss related to such investment relative to such other Client.

In addition, Clients may invest alongside one another in the same underlying investments or otherwise pursuant to a substantially similar investment strategy as one or more other Clients. In such cases, certain Clients may have preferential liquidity and information rights relative to other Clients holding the same investments, with the result that such Clients will be able to withdraw/redeem their interests in underlying investments in priority to Clients who may have more limited access to information or more restrictive withdrawal/redemption rights. Clients with more limited information rights or more restrictive liquidity may therefore be adversely affected in the event of a downturn in the markets.

Further, potential conflicts may be inherent in PIMCO's use of multiple strategies. For example, conflicts will arise in cases where different Clients invest in different parts of an issuer's capital structure, including circumstances in which one or more Clients may own private securities or obligations of an issuer and other Clients may own or seek to acquire private securities of the same issuer. For example, a Client may acquire a loan, loan participation or a loan assignment of a particular borrower in which one or more other Clients have an equity investment, or may invest in senior debt obligations of an issuer for one Client and junior debt obligations or equity of the same issuer for another Client.

PIMCO may also, for example, direct a Client to invest in a tranche of a structured finance vehicle, such as a CLO or CDO, where PIMCO is also, at the same or different time, directing another Client to make investments in a different tranche of the same vehicle, which tranche's interests may be adverse to other tranches. PIMCO may also cause a Client to purchase from, or sell assets to, an entity, such as a structured finance vehicle, in which other Clients may have an interest, potentially in a manner that will have an adverse effect on the other Clients. There may also be conflicts where, for example, a Client holds certain debt or equity securities of an issuer, and that same issuer has issued other debt, equity or other instruments that are owned by other Clients or by an entity, such as a structured finance vehicle, in which other Clients have an interest.

In each of the situations described above, PIMCO may take actions with respect to the assets held by one Client that are adverse to the other Clients, for example, by foreclosing on loans, by putting an issuer into default, or by

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exercising rights to purchase or sell to an issuer, causing an issuer to take actions adverse to certain classes of securities, or otherwise. In negotiating the terms and conditions of any such investments, or any subsequent amendments or waivers or taking any other actions, PIMCO may find that the interests of a Client and the interests of one or more other Clients could conflict. In these situations, decisions over items such as whether to make the investment or take an action, proxy voting, corporate reorganization, how to exit an investment, or bankruptcy or similar matters (including, for example, whether to trigger an event of default or the terms of any workout) may result in conflicts of interest. Similarly, if an issuer in which a Client and one or more other Clients directly or indirectly hold different classes of securities (or other assets, instruments or obligations issued by such issuer or underlying investments of such issuer) encounters financial problems, decisions over the terms of any workout will raise conflicts of interests (including, for example, conflicts over proposed waivers and amendments to debt covenants). For example, a debt holder may be better served by a liquidation of the issuer in which it may be paid in full, whereas an equity or junior bond holder might prefer a reorganization that holds the potential to create value for the equity holders. In some cases PIMCO may refrain from taking certain actions or making certain investments on behalf of Clients in order to avoid or mitigate certain conflicts of interest or to prevent adverse regulatory or other effects on PIMCO, or may sell investments for certain Clients (in each case potentially disadvantaging the Clients on whose behalf the actions are not taken, investments not made, or investments sold). In other cases, PIMCO may not refrain from taking actions or making investments on behalf of certain Clients that have the potential to disadvantage other Clients. In addition, PIMCO may take actions or refrain from taking actions in order to mitigate legal risks to PIMCO or its affiliates or its Clients even if disadvantageous to a Client's account. Moreover, a Client may invest in a transaction in which one or more other Clients are expected to participate, or already have made or will seek to make, an investment.

Additionally, certain conflicts may exist with respect to portfolio managers who make investment decisions on behalf of several different types of Clients. Such portfolio managers may have an incentive to allocate trades, time or resources to certain Clients, including those Clients who pay higher investment management fees or that pay incentive fees or allocations, over other Clients. These conflicts may be heightened with respect to portfolio managers who are eligible to receive a performance allocation under certain circumstances as part of their compensation.

From time to time, PIMCO personnel may come into possession of MNPI which, if disclosed, might affect an investor's decision to buy, sell or hold a security. Should a PIMCO employee come into possession of MNPI with respect to an issuer, he or she generally will be prohibited from communicating such information to, or using such information for the benefit of, Clients, which could limit the ability of Clients to buy, sell or hold certain investments, thereby limiting the investment opportunities or exit strategies available to Clients. In addition, holdings in the securities or other instruments of an issuer by PIMCO or its affiliates may affect the ability of a Client to make certain acquisitions of or enter into certain transactions with such issuer. PIMCO has no obligation or responsibility to disclose such information to, or use such information for the benefit of, any person (including Clients). Moreover, restrictions imposed by or through third-party automated trading platforms could affect a Client's ability to transact through, or the quality of execution achieved through, such platforms.

PIMCO maintains one or more restricted lists of companies whose securities are subject to certain trading prohibitions due to PIMCO's business activities. PIMCO may restrict trading in an issuer's securities if the issuer is on a restricted list or if PIMCO has MNPI about that issuer. In some situations, PIMCO may restrict Clients from trading in a particular issuer's securities in order to allow PIMCO to receive MNPI on behalf of other Clients. A Client may be unable to buy or sell certain securities until the restriction is lifted, which could disadvantage the Client. PIMCO may also be restricted from making (or divesting of) investments in respect of some Clients but not others. In some cases, PIMCO may not initiate or recommend certain types of transactions, or may otherwise restrict or limit its advice relating to certain securities if a security is restricted due to MNPI or if PIMCO is seeking to limit receipt of MNPI.

PIMCO may conduct litigation or engage in other legal actions on behalf of one or more Clients. In such cases, Clients may be required to bear certain fees, costs, expenses and liabilities associated with the litigation. Other Clients that are or were investors in, or otherwise involved with, the subject investments may or may not (depending on the circumstances) be parties to such litigation actions, with the result that certain Clients may participate in litigation actions in which not all Clients with similar investments may participate, and such nonparticipating Clients may benefit from the results of such litigation actions without bearing or otherwise being subject to the associated fees, costs, expenses and liabilities. PIMCO, for example, typically does not pursue legal claims on behalf of its separate accounts. Furthermore, in certain situations, litigation or other legal actions pursued by PIMCO on behalf of a Client may be brought against or be otherwise adverse to a portfolio company or other investment held by a Client.

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<u>Co-Investments.</u> The 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 with certain other persons, 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. Co-investment transactions may give rise to conflicts of interest or perceived conflicts of interest among the Fund and its affiliates. The exemptive relief from the SEC with respect to co-investments imposes extensive 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 participate in an investment to a lesser extent. An inability to receive the desired allocation to potential investments may affect the Fund's ability to achieve the desired investment returns. In the event investment opportunities are allocated among the Fund and its affiliates pursuant to co-investment exemptive relief, the Fund may not be able to structure its investment portfolio in the manner desired. Although PIMCO will endeavor to allocate investment opportunities in a fair and equitable manner, the Fund will generally not be permitted to co-invest in any issuer in which a fund managed by PIMCO or any of its downstream affiliates (other than the Fund and its downstream affiliates) currently has an investment. However, the Fund would be able to co-invest with funds managed by PIMCO or any of its downstream affiliates, subject to compliance with existing regulatory guidance, applicable regulations and its allocation procedures. Pursuant to co-investment exemptive 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 the Fund has made an investment. From time to time, the Fund and its affiliates may make investments at different levels of an issuer's capital structure or otherwise in different classes of an issuer's securities. Such investments inherently give rise to conflicts of interest or perceived conflicts of interest between or among the various classes of securities that may be held by such entities. PIMCO has adopted procedures governing the co-investment in securities acquired in private placements with certain clients of PIMCO.

The foregoing is not a complete list of conflicts to which PIMCO or Clients may be subject. PIMCO seeks to review conflicts on a case-by-case basis as they arise. Any review will take into consideration the interests of the relevant Clients, the circumstances giving rise to the conflict, applicable PIMCO policies and procedures, and applicable laws. Clients (and investors in the Fund) should be aware that conflicts will not necessarily be resolved in favor of their interests and may in fact be resolved in a manner adverse to their interests. PIMCO will attempt to resolve such matters fairly, but even so, matters may be resolved in favor of other Clients which pay PIMCO higher fees or performance fees or in which PIMCO or its affiliates have a significant proprietary interest. Clients (and investors in the Fund) should also be aware that the Fund may experience losses associated with decisions or actions directly or indirectly attributable to PIMCO, and PIMCO may determine whether compensation to the Fund for such losses is appropriate in view of its standard of care, which may also be subject to the Board's review. PIMCO will attempt to resolve such matters fairly subject to applicable PIMCO policies and procedures, and applicable laws, but even so, such matters may not be resolved in favor of Clients' (and Fund investors') interests and may in fact be resolved in a manner adverse to their interests. There can be no assurance that any actual or potential conflicts of interest will not result in a particular Client or group of Clients receiving less favorable investment terms in or returns from certain investments than if such conflicts of interest did not exist.

Conflicts like those described above may also occur between Clients, on the one hand, and PIMCO or its affiliates, on the other. These conflicts will not always be resolved in favor of the Client. In addition, because PIMCO is affiliated with Allianz, a large multi-national financial institution, conflicts similar to those described above may occur between clients of PIMCO and PIMCO's affiliates or accounts managed by those affiliates. Those affiliates (or their clients), which generally operate autonomously from PIMCO, may take actions that are adverse to PIMCO's Clients. In many cases, PIMCO will have limited or no ability to mitigate those actions or address those conflicts, which could adversely affect Client performance. In addition, certain regulatory or internal restrictions may prohibit PIMCO from using certain brokers or investing in certain companies (even if such companies are not affiliated with Allianz) because of the applicability of certain laws and regulations or internal Allianz policies applicable to PIMCO, Allianz SE or their affiliates. An account's willingness to negotiate terms or take actions with respect to an investment may also be, directly or indirectly, constrained or otherwise impacted to the extent Allianz SE, PIMCO, and/or their affiliates, directors, partners, managers, members, officers or personnel are also invested therein or otherwise have a connection to the subject investment (e.g., serving as a trustee or board member thereof).

Certain service providers to the Fund are expected to be owned by or otherwise related to or affiliated with a Client, and in certain cases, such service providers are expected to be, or are 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,

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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, taking into account the relevant facts and circumstances, and consistent with PIMCO's responsibilities. 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.

<u>Performance Fees</u>. A portfolio manager may advise certain accounts with respect to which the management fee is based entirely or partially on performance. Performance fee arrangements may create a conflict of interest for the portfolio manager in that the portfolio manager may have an incentive to allocate the investment opportunities that he or she believes might be the most profitable to such other accounts instead of allocating them to the Fund. PIMCO has adopted policies and procedures reasonably designed to allocate investment opportunities between the Fund and such other accounts on a fair and equitable basis over time.

**Portfolio Manager Compensation**

PIMCO's and its affiliates' approach to compensation seeks to provide professionals with a compensation process that is driven by values of collaboration, openness, responsibility and excellence.

Generally, compensation packages consist of three components. The compensation program for portfolio managers is designed to align with clients' interests, emphasizing each portfolio manager's ability to generate long-term investment success for clients, among other factors. A portfolio manager's compensation is not based solely on the performance of the Fund or any other account managed by that portfolio manager:

*Base Salary –* Base salary is determined based on core job responsibilities, positions/levels and market factors. Base salary levels are reviewed annually, when there is a significant change in job responsibilities or position, or a significant change in market levels.

*Variable Compensation –* In addition to a base salary, portfolio managers have a variable component of their compensation, which is based on a combination of individual and company performance and includes both qualitative and quantitative factors. The following non-exhaustive list of qualitative and quantitative factors is considered when determining total compensation for portfolio managers:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● Performance measured over a variety of longer- and shorter-term periods, including 5-year, 4-year, 3-year, 2-year and 1-year dollar-weighted and account-weighted, pre-tax total and risk-adjusted investment performance as judged against the applicable benchmarks (which may include internal investment performance-related benchmarks) for each account managed by a portfolio manager (including the Fund) and relative to applicable industry peer groups; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● Amount and nature of assets managed by the portfolio manager.

The variable compensation component of an employee's compensation may include a deferred component. The deferred portion will generally be subject to vesting and may appreciate or depreciate based on the performance of PIMCO and/or its affiliates. PIMCO's Long-Term Incentive Plan provides participants with deferred cash awards that appreciate or depreciate based on PIMCO's operating earnings over a rolling three-year period. Additionally, PIMCO's Carried Interest Plan provides eligible participants (i.e. those who provide services to PIMCO's alternative funds) a percentage of the carried interest otherwise payable to PIMCO if the applicable performance measurements described in the alternative fund's partnership agreements are achieved.

Portfolio managers who are Managing Directors of PIMCO receive compensation from a non-qualified profit sharing plan consisting of a portion of PIMCO's net profits. Portfolio managers who are Managing Directors receive an amount determined by the Partner Compensation Committee, based upon an individual's overall contribution to the firm.

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**Securities Ownership**

The following table discloses the dollar range of equity securities beneficially owned by the portfolio managers of the Fund. The information is as of December 31, 2025.

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| | |
|:---|:---|
| **Name of Portfolio Manager** | **Dollar Range of Equity**<br> **Securities in the Fund**<br>|
| David Hammer | &nbsp;&nbsp; None |
| Amit Arora | &nbsp;&nbsp; None |
| Kyle Christine | &nbsp;&nbsp; None |

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**Proxy Voting Policies and Procedures**

PIMCO has adopted written proxy voting policies and procedures ("Proxy Policy") as required by Rule 206(4)6 under the Advisers Act. The Fund has adopted the Proxy Policy of PIMCO when voting proxies on its own behalf.

*<u>Policy Statement:</u>* The Proxy Policy is intended to foster PIMCO's compliance with its fiduciary obligations and applicable law; the Proxy Policy applies to any voting or consent rights with respect to securities held in accounts over which PIMCO has discretionary voting authority. The Proxy Policy is designed in a manner reasonably expected to ensure that voting and consent rights are exercised in the best interests of PIMCO's clients.

*<u>Overview:</u>* Proxies generally describe corporate action-consent rights (relative to fixed income securities) and proxy voting ballots (relative to fixed income or equity securities) as determined by the issuer or custodian. It is PIMCO's policy to exercise any voting or consent rights with respect to securities held in accounts over which PIMCO has discretionary voting authority consistent with PIMCO's fiduciary obligations and applicable law. Each proxy is voted on a case-by-case basis, taking into account relevant facts and circumstances. When considering client proxies, PIMCO may determine not to vote a proxy in limited circumstances. Additionally, there may be operational circumstances that prevent PIMCO's proxy voting elections from being processed, and in such circumstances, PIMCO will take reasonable steps to submit votes on behalf of clients.

**Equity Securities.** The term "equity securities" means common and preferred stock, including common and preferred shares issued by investment companies; it does not include debt securities convertible into equity securities. PIMCO has retained an Industry Service Provider ("ISP") to provide research and voting recommendations for proxies relating to equity securities in accordance with the ISP's guidelines. By following the guidelines of an independent third party, PIMCO seeks to mitigate potential conflicts of interest PIMCO may have with respect to proxies covered by the ISP. PIMCO will follow the recommendations of the ISP unless: (i) the ISP does not provide a voting recommendation; or (ii) PIMCO decides to override the ISP's voting recommendation. In either such case as described above, PIMCO will review the proxy to determine whether an actual or potential conflict of interest, or the appearance of one exists. When the ISP does not provide a voting recommendation, the relevant portfolio manager or analyst will make a determination regarding how, or if, the proxy will be voted by completing required documentation.

**Fixed Income Securities.** Fixed income securities can be processed as proxy ballots or corporate action-consents at the discretion of the issuer/custodian. Voting or consent rights shall not include matters which are primarily decisions to buy or sell investments, such as tender offers, exchange offers, conversions, put options, redemptions, and Dutch auctions. When processed as proxy ballots, the ISP generally does not provide a voting recommendation and their role is limited to election processing and recordkeeping. When processed as corporate action-consents, PIMCO will review all election forms to determine whether a material conflict of interest, or the appearance of one, exists with respect to the portfolio manager's or analyst's consent election. PIMCO's Credit Research and Portfolio Management Groups are responsible for issuing recommendations on how to vote proxy ballots and corporation action-consents with respect to fixed income securities.

**Resolution of Potential and Identified Conflicts of Interest.** The Proxy Policy permits PIMCO to seek to resolve or mitigate material conflicts of interest by pursuing any one of several courses of action. With respect to material conflicts of interest between PIMCO and a client account, the Proxy Policy permits PIMCO to either: (i) convene a working group to assess and resolve the conflict (the "Proxy Working Group"); or (ii) vote in accordance with protocols previously established by the Proxy Policy, the Proxy Working Group and/or other relevant procedures approved by PIMCO's Legal and Compliance department or PIMCO's Conflict Committee with respect to specific types of conflicts.

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PIMCO will supervise and periodically review its proxy voting activities and the implementation of the Proxy Policy. PIMCO's Proxy Policy, and information about how PIMCO voted a client's proxies, is available upon request.

**ISP Oversight**. Consistent with its fiduciary obligations, PIMCO will perform periodic due diligence and oversight of ISPs engaged to provide PIMCO with proxy voting research and recommendations. PIMCO's due diligence and oversight process includes, but is not limited to, the evaluation of: the ISP's capacity and competency to provide proxy voting research and recommendations including the adequacy and quality of the ISP's operational infrastructure as it relates to its process for seeking timely input from issuers and its voting methodologies and the ISP's compliance program.

**Sub-Adviser Engagement.** As an investment manager, PIMCO may exercise its discretion to engage a sub-adviser to provide portfolio management services to certain funds. Consistent with its management responsibilities, the Sub-Adviser may assume the authority for voting proxies on behalf of PIMCO for these Funds. Sub-Advisers may utilize third parties to perform certain services related to their portfolio management responsibilities. As a fiduciary, where a sub-adviser exercises voting authority, PIMCO will maintain oversight of the investment management responsibilities (which may include proxy voting) performed by the Sub-Adviser and contracted third parties.

Information about how PIMCO voted the Fund's proxies for the most recent twelve-month period ended June 30th (Form N-PX) will be available no later than the following August 31st, without charge, upon request, by calling the Fund at 1-800-927-4648, on the Fund's website at www.pimco.com and on the SEC's website at http://www.sec.gov.

**DISTRIBUTION OF FUND SHARES**

PIMCO Investments LLC (the "Distributor") serves as the principal underwriter in the continuous public offering of the Fund's shares pursuant to a distribution contract ("Distribution Contract") with the Fund, which is subject to annual approval by the Board. The Distributor is a wholly-owned subsidiary of PIMCO and an indirect subsidiary of Allianz Asset Management. The Distributor does not participate in the distribution of non-PIMCO managed registered fund products. As noted in further detail below, under a separate marketing services agreement between PIMCO and the Distributor, PIMCO compensates the Distributor for providing various marketing services for the Fund. Furthermore, representatives of the Distributor ("Account Managers") may also be employees or associated persons of PIMCO. Because of these affiliations with PIMCO, the interests of the Distributor may conflict with the interests of Fund investors.

As noted above, PIMCO pays the Distributor a fee for marketing and related services pursuant to a Marketing Services Agreement between PIMCO and the Distributor. These payments are made to the Distributor from PIMCO's profits and are in addition to the revenue the Distributor earns under its Distribution Contract with the Fund. The fee is payable on a monthly basis at a current annual rate of 0.20 percent of gross fund sales in the month ("gross fund sales" includes the aggregate gross dollar value of sales of the Fund and certain other PIMCO-managed funds during the applicable month, with certain exclusions). In addition, pursuant to the Marketing Services Agreement, PIMCO pays the Distributor a fee at the annual rate of 0.10 percent of the average daily net asset value of the shares of the Fund, and certain other PIMCO-managed funds.

The Distributor, located at 1633 Broadway, New York, NY 10019, is a broker-dealer registered with the SEC and is a member of FINRA. All account inquiries should be mailed to the Fund's transfer agent, and should not be mailed to the Distributor.

The Distribution Contract will continue in effect with respect to the Fund for successive one-year periods, provided that each such continuance is specifically approved: (i) by the vote of a majority of the Trustees who are not interested persons of the Fund (as defined in the Act) and who have no direct or indirect financial interest in the Distribution Contract or the Investment Management Agreement; and (ii) by the vote of a majority of the entire Board cast in person at a meeting called for that purpose.

The Distributor acts as the distributor of Common Shares for the Fund on a best efforts basis, subject to various conditions, pursuant to the terms of the Distribution Contract. The Distributor is not obligated to sell any specific amount of Common Shares of the Fund.

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The Fund generally does not offer or sell its shares outside of the United States, except to certain investors in approved jurisdictions and in conformity with local legal requirements.

**Account Managers' Compensation**

Compensation for the Account Managers discussed in this section has five main components: base pay, quarterly incentive compensation, an annual bonus, commissions, and certain special bonuses/commissions.

*Base Pay.* All Account Managers receive some amount of base pay — a predetermined and fixed annual salary paid in bi-weekly installments. From time to time, the Distributor reviews the minimum base salary to confirm it is consistent with a reasonable wage and that there is an appropriate ratio between base salary and the other three compensation components.

*Quarterly Incentive Compensation.* Account Managers are eligible to receive quarterly incentive payments for the sale of certain products, including mutual funds, ETFs, interval funds, private funds and retail separately managed accounts (i.e., wrap accounts). Account Managers do not receive higher compensation for selling fund classes with distribution fees, for sales at approved firms. Additionally, Account Managers receive the same incentive compensation for products utilizing the same investment strategy (i.e. Total Return, Short Term, etc). Account Managers employed by the Distributor are eligible to receive compensation, ascending by product categorization, with respect to sales of the following: Base/Core, Diversifiers, Strategic, Active ETFs and Alternative Strategies (each as defined from time-to-time by the Distributor) which can be adjusted based on achievement of goals and net flows. The Distributor only distributes investment products managed by PIMCO, and accordingly Account Managers compensation does not distinguish between proprietary and non-proprietary products. The Distributor reserves the right to determine the amount of compensation payable to Account Managers in its sole discretion.

*Annual Bonus.* Account Managers are eligible to receive an annual bonus. The annual bonus is determined through numerous factors, including a manager's assessment that takes into consideration the Account Manager's job and sales performance, both in absolute terms and relative to other Account Managers, as applicable, as well as PIMCO's and the Distributor's performance. The Distributor may use various metrics to assess or compare the job performance of Account Managers. Such metrics generally are indicative of the Account Manager's success in the areas of, among others, financial advisor satisfaction and the Account Manager's product knowledge, responsiveness, and effectiveness. Annual bonuses may form a significant part of an Account Manager's overall compensation.

*Commissions.* Account Managers are eligible to receive commissions for the sale of certain products, including mutual funds, closed-end funds (including interval funds), and retail separately managed accounts (i.e., wrap accounts). Account Managers do not receive higher commissions for selling fund classes with distribution fees, for sales at approved firms. Additionally, Account Managers receive the same commission for products eligible for commissions utilizing the same investment strategy (i.e., Total Return, Short Term, etc., other than certain PIMCO Variable Insurance Trust ("PVIT") and PIMCO Equity Series VIT ("PESVIT") sales). Account Managers employed by the Distributor are eligible to receive compensation, ascending by product type, with respect to sales of the following: Short Term Strategies, PVIT and PESVIT Funds sold through Allianz Life variable insurance products, Total Return Strategies, Select Strategies, and Select Focus Strategies (each as defined, from time to time, by the Distributor). Account Managers may receive commissions from the sale of other products, including closed-end funds, whose commission rates may be higher than those product types noted above. The Distributor reserves the right to determine the amount of commissions payable to Account Managers in its sole discretion.

*Other Compensation.* From time to time Account Managers may receive special bonuses, including monthly bonuses, or other rewards in connection with the Distributor's incentive programs that reward certain performance-related metrics. Account Managers may receive commissions from the sale of other products, including closed-end funds, whose commission rates may be higher than those product types noted above.

**Potential Conflicts of Interest** 

As described above, PI Account Managers are eligible to receive compensation, in addition to their base pay, which could represent a significant portion of an Account Manager's compensation. A factor that is evaluated in determining such compensation is the Account Manager's success in marketing and selling products distributed by PI.

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Account Managers may have a financial incentive to offer certain types of products to you, the financial professional, and the offering of such products may be considered, among other factors, in the assessment of an Account Manager's performance.

As described above, Account Managers who offer certain products may receive compensation as a direct or indirect result of a financial professional's selection of those products, which could represent a significant portion of an Account Manager's compensation; an Account Manager's quarterly bonus could be reduced depending on the size of a transaction or transactions and the composition of the Account Manager's net sales for the year-to-date period. This compensation may be more than what the Account Manager would receive if the financial professional had selected other products. Therefore, Account Managers may have a financial incentive to offer certain products. For example, Alternatives Strategies offer higher compensation than Active ETFs, which offer higher compensation than Strategic Strategies, and so on, as noted above. Under policies applicable to all Account Managers, no Account Manager is permitted to promote, recommend, or solicit the sale of one product over another solely because that product will provide higher revenue or compensation to the Account Manager, PI, or PIMCO. Please review all product materials and disclosures before selecting an investment product.

**Multi-Class Plan**

The Fund has adopted a Multi-Class Plan pursuant to Rule 18f-3 under the Act. Although the Fund is not an open-end investment company, it has undertaken to comply with the terms of Rule 18f-3 as a condition of an exemptive order under the Act which permits it to have, among other things, a multi-class structure and distribution and/or shareholder servicing fees. Under the Multi-Class Plan, shares of each class of the Fund represent an equal pro rata interest in the Fund and, generally, have identical voting, dividend, liquidation, and other rights, preferences, powers, restrictions, limitations, qualifications and terms and conditions, except that: (a) each class has a different designation; (b) each class of shares bears any class-specific expenses; and (c) each class shall have separate voting rights on any matter submitted to shareholders in which the interests of one class differ from the interests of any other class, and shall have exclusive voting rights on any matter submitted to shareholders that relates solely to that class.

The Fund currently has five separate classes of Common Shares: Institutional Class, Class A-1, Class A-2, Class A-3 and Class A-4. Each class of Common Shares represents an investment in the same portfolio of investments, but each class has its own expense structure and arrangements for shareholder services or distribution, which allows you to choose the class that best fits your situation and eligibility requirements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● **Institutional Class Common Shares** are offered for investment to investors such as pension and profit sharing plans, employee benefit trusts, endowments, foundations, corporations, pooled investment vehicles and other entities operating as "feeder funds," and high net worth individuals that can meet the minimum investment amount. Institutional Class Common Shares also may be offered through certain financial firms (including through retail separately managed accounts (i.e., wrap accounts) managed by PIMCO) that charge their customers transaction or other fees with respect to the customer's investment in the Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● **Class A-1, Class A-2, Class A-3 and Class A-4 Common Shares** are not available for purchase directly from the Distributor. Class A-1, Class A-2, Class A-3 and Class A-4 Common Shares are primarily offered and sold to retail investors by broker-dealers which are members of FINRA and which have agreements with the Distributor, but may be made available through other financial firms, including banks and trust companies and to specified benefit plans (as defined below) and other retirement accounts.

Financial firms may provide or arrange for the provision of some or all of the shareholder servicing, account maintenance and other services required by specified benefit plan accounts and their participants, for which fees or expenses may be charged in addition to those described in the Prospectus and Statement of Additional Information.

The Fund has agreed to indemnify the Distributor and certain of the Distributor's affiliates against certain liabilities, including certain liabilities arising under the Securities Act. To the extent consistent with applicable law, the Distributor has agreed to indemnify the Fund and each Trustee against certain liabilities under the Securities Act, as amended, and in connection with the services rendered to the Fund.

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**Class A-1, Class A-2, Class A-3 and Class A-4 Distribution and Servicing Plans**

The Fund has adopted separate Distribution and Servicing Plans for the Class A-1, Class A-2, Class A-3 and Class A-4 Common Shares of the Fund. Each Distribution and Servicing Plan operates in a manner consistent with Rule 12b-1 under the Act, which regulates the manner in which an open-end investment company may directly or indirectly bear the expenses of distributing its shares. Although the Fund is not an open-end investment company, it has undertaken to comply with the terms of Rule 12b-1 as a condition of an exemptive order under the Act which permits it to have, among other things, a multi-class structure and distribution and/or shareholder servicing fees. Each Distribution and Servicing Plan permits the Fund to compensate the Distributor for providing or procuring through financial firms, distribution, administrative, recordkeeping, shareholder and/or related services with respect to the Class A-1, Class A-2, Class A-3 or Class A-4 Common Shares, as applicable. Most or all of the distribution and/or service fees are paid to financial firms through which Common Shareholders may purchase and/or hold Class A-1, Class A-2, Class A-3 and Class A-4 Common Shares, as applicable.

Because these fees are paid out of the applicable share class's assets on an ongoing basis, over time they will increase the cost of an investment in Class A-1, Class A-2, Class A-3 or Class A-4 Common Shares and may cost you more than other sales charges.

The maximum annual rates at which the distribution and/or servicing fee may be paid under the Distribution and Servicing Plan for Class A-1 Common Shares (calculated as a percentage of the Fund's average daily net assets attributable to the Class A-1 Common Shares) is 0.50%.

The maximum annual rates at which the distribution and/or servicing fee may be paid under the Distribution and Servicing Plan for Class A-2 Common Shares (calculated as a percentage of the Fund's average daily net assets attributable to the Class A-2 Common Shares) is 0.50%.

The maximum annual rates at which the distribution and/or servicing fee may be paid under the Distribution and Servicing Plan for Class A-3 Common Shares (calculated as a percentage of the Fund's average daily net assets attributable to the Class A-3 Common Shares) is 0.75%.

The maximum annual rates at which the distribution and/or servicing fee may be paid under the Distribution and Servicing Plan for Class A-4 Common Shares (calculated as a percentage of the Fund's average daily net assets attributable to the Class A-4 Common Shares) is 0.75%.

The fee payable pursuant to each Distribution and Servicing Plan may be used by the Distributor to provide or procure distribution services and shareholder services in respect of Class A-1, Class A-2, Class A-3 and Class A-4 Shares, as applicable (either directly or by procuring through other entities, including various financial services firms such as broker-dealers and registered investment advisors ("Service Organizations")). Distribution services include some or all of the following services and facilities in connection with direct purchases by shareholders or in connection with products, programs or accounts offered by such Service Organizations: (i) facilities for placing orders directly for the purchase of the Fund's shares; (ii) advertising with respect to the Fund's Class A-1, Class A-2, Class A-3 or Class A-4 shares; (iii) providing information about the Fund; (iv) providing facilities to answer questions from prospective investors about the Fund; (v) receiving and answering correspondence, including requests for prospectuses and statements of additional information; (vi) preparing, printing and delivering prospectuses and shareholder reports to prospective shareholders; (vii) assisting investors in applying to purchase Class A-1, Class A-2, Class A-3 or Class A-4 shares and selecting dividend and other account options.

Shareholder services may include, but are not limited to, the following functions: (i) receiving, aggregating and processing shareholder orders; (ii) furnishing shareholder sub-accounting; (iii) providing and maintaining elective shareholder services such as check writing and wire transfer services; (iv) providing and maintaining pre-authorized investment plans; (v) communicating periodically with shareholders; (vi) acting as the sole shareholder of record and nominee for shareholders; (vii) maintaining accounting records for shareholders; (viii) answering questions and handling correspondence from shareholders about their accounts; (ix) issuing confirmations for transactions by shareholders; (x) performing similar account administrative services; (xi) providing such shareholder communications and recordkeeping services as may be required for any program for which a Service Organization is a sponsor that relies on Rule 3a-4 under the Act; (xii) and providing such other similar services as may reasonably be requested to the extent a Service Organization is permitted to do so under applicable statutes, rules, or regulations. The distribution

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and/or servicing fee may be spent by the Distributor for the services rendered to Class A-1, Class A-2, Class A-3 and Class A-4 shareholders as set forth above, but will generally not be spent by the Distributor on recordkeeping charges, accounting expenses, transfer costs or custodian fees.

In accordance with Rule 12b-1 under the Act, none of Distribution and Servicing Plans may be amended to increase materially the costs which the applicable class of shareholders may bear under the applicable Plan without approval of a majority of the outstanding Class A-1, Class A-2, Class A-3 or Class A-4 Common Shares, as applicable, and by vote of a majority of both: (i) the Trustees of the Fund; and (ii) those Trustees who are not "interested persons" of the Fund (as defined in the Act) and who have no direct or indirect financial interest in the operation of any of the Distribution and Servicing Plans or any agreements related to them (the "12b-1 Plan Trustees"), cast at a meeting called for the purpose of voting on the Plan and any related amendments. The Plan may not take effect until approved by a vote of a majority of both: (i) the Trustees of the Fund; and (ii) the 12b-1 Plan Trustees. Each Plan shall continue in effect so long as such continuance is specifically approved at least annually by the Trustees and the 12b-1Plan Trustees. Each Plan may be terminated at any time, without penalty, by vote of a majority of the 12b-1 Plan Trustees or by a vote of a majority of the outstanding Class A-1, Class A-2, Class A-3 or Class A-4 Common Shares of the Fund. Pursuant to each Plan, the Board will be provided with quarterly reports of amounts expended under the Plan and the purpose for which such expenditures were made.

FINRA rules limit the amount of distribution fees that may be paid by registered investment companies out of their assets as a percentage of total new gross sales. "Service fees," defined to mean fees paid for providing shareholder services or the maintenance of accounts (but not transfer agency or sub-account services), are not subject to these limits on distribution fees. Some portion of the fees paid pursuant to each Distribution Plan may qualify as "service fees" (or fees for ministerial, recordkeeping or administrative activities) and therefore will not be limited by FINRA rules which limit distribution fees as a percentage of total new gross sales. However, FINRA rules limit service fees to 0.25% of a fund's average annual net assets.

For the fiscal years ended December 31, 2025, December 31, 2024 and December 31, 2023, the Fund paid the Distributor $53,592 pursuant to the Distribution and Servicing Plan for Class A-1 shares. For the fiscal year ended December 31, 2024 and December 31, 2023, the Fund did not pay the Distributor pursuant to the Distribution and Servicing Plan for Class A-2, Class A-3 and Class A-4 shares, as the share classes have not launched.

**Additional Payments to Financial Firms**

*Revenue Sharing/Marketing Support.* The Distributor or PIMCO (for purposes of this subsection only, collectively, "PIMCO") makes payments and provides other incentives to financial firms as compensation for services such as providing the Fund with "shelf space," or a higher profile for the financial firms' financial professionals and their customers, placing the Fund on financial firms' preferred or recommended fund list or otherwise identifying the Fund as being part of a complex to be accorded a higher degree of marketing support than complexes whose distributor or investment adviser is not making such payments, granting PIMCO access to the financial firms' financial professionals (including through the firms' intranet websites or other proprietary communications systems and channels) in order to promote the Fund, promotions in communications with financial firms' customers such as in the firms' internet websites or in customer newsletters, providing assistance in training and educating the financial firms' personnel, and furnishing marketing support and other specified services. The actual services provided, and the payments made for such services, vary from firm to firm. These payments may be significant to the financial firms.

A number of factors are considered in determining the amount of these additional payments to financial firms. On some occasions, such payments may be conditioned upon levels of sales, including the sale of a specified minimum dollar amount of the shares of the Fund and/or other funds sponsored by PIMCO together or a particular class of shares, during a specified period of time. PIMCO also makes payments to one or more financial firms based upon factors such as the amount of assets a financial firm's clients have invested in the Fund and the quality of the financial firm's relationship with PIMCO and/or its affiliates.

The additional payments described above are made from PIMCO's (or its affiliates,) own assets (and sometimes, therefore referred to as "revenue sharing") pursuant to agreements with financial firms and do not change the price paid by investors for the purchase of the Fund's shares or the amount the Fund will receive as proceeds from such sales. These payments may be made to financial firms (as selected by PIMCO) that have sold significant amounts of shares of the Fund or other PIMCO-sponsored funds. In certain cases, the payments described above may be subject to

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minimum payment levels or vary based on the management fee or total expense ratio of the relevant Fund(s) which normally will not exceed the amount that would have been payable pursuant to the formula as of the effective date of the agreement.

*Ticket Charges.* In addition to the payments described above, PIMCO makes payments to financial firms in connection with certain transaction fees (also referred to as "ticket charges") incurred by the financial firms.

***Event Support; Other Non-Cash Compensation; Charitable Contributions***. In addition to the payments described above, PIMCO pays and/or reimburses, at its own expense, financial firms' sponsorship and/or attendance at conferences, elite performer gatherings, seminars or informational meetings (which may include events held through video technology, to the extent permitted by applicable regulation ("event support")), provides financial firms or their personnel with occasional tickets to events or other entertainment (which in some instances is held virtually), meals and small gifts or pays or provides reimbursement for reasonable travel and lodging expenses for attendees of PIMCO educational events ("other non-cash compensation"), and makes charitable contributions to valid charitable organizations at the request of financial firms ("charitable contributions") to the extent permitted by applicable law, rules and regulations.

***Visits; Training; Education.*** In addition to the payments described above, wholesaler representatives and employees of PIMCO or its affiliates visit financial firms on a regular basis to educate financial professionals and other personnel about the Fund and to encourage the sale or recommendation of Fund shares to their clients. PIMCO may also provide (or compensate consultants or other third parties to provide) other relevant training and education to a financial firm's financial professionals and other personnel.

***Platform Support; Consultant Services.*** PIMCO also may make payments or reimbursements to financial firms or their affiliated companies, which may be used for their platform development, maintenance, improvement and/or the availability of services including, but not limited to, platform education and communications, relationship management support, development to support new or changing products, eligibility for inclusion on sample fund line-ups, trading or order taking platforms and related infrastructure/technology and/or legal, risk management and regulatory compliance infrastructure in support of investment-related products, programs and services (collectively, "platform support"). PIMCO may also make payments to third party law firms or other service providers that provide certain due diligence services to financial firms with respect to the Fund and/or PIMCO in connection with such financial firm determining whether to include the Fund on its platform. Such payments typically relate to the amount of assets a financial firm's clients have invested in the Fund or other PIMCO-advised funds. In certain instances, platform support payments are made for the purpose of supporting services provided by a financial firm's servicing of shareholder accounts, including, but not limited to, handling toll-free telephone inquiries, processing shareholder communications and providing information to shareholders on their investments. PIMCO may also make payments to third party law firms or other service providers that provide certain due diligence services to financial firms with respect to the Fund and/or PIMCO in connection with such financial firm determining whether to include the Fund on its platform. In addition, PIMCO may also pay for the cost of third party product trainings on behalf of, and/or for the benefit of, third party financial firms which market PIMCO interval funds.

Subject to applicable law, PIMCO and its affiliates may also provide investment advisory services to financial firms and their affiliates and may execute brokerage transactions on behalf of the Fund with such financial firms' affiliates. These financial firms or their affiliates may, in the ordinary course of their financial firm business, recommend that their clients utilize PIMCO's investment advisory services or invest in the Fund or in other products sponsored or distributed by PIMCO or its affiliates.

Although platform support payments are not primarily intended to compensate financial firms for distribution of Fund shares or to encourage the sale of Fund shares, these payments may provide an additional incentive to certain financial firms to actively promote the sale of Fund shares and retain positions in the Fund in anticipation of increasing or retaining platform support payments. Some platform support arrangements also may entitle the Distributor or PIMCO to ancillary benefits such as reduced fees to attend a financial firm's event or conference or elimination of one-time setup fees, such as CUSIP charges that financial firms otherwise may charge. In addition, PIMCO may pay financial firms or their affiliated companies for certain services including technology, operations, tax, or audit consulting services and may pay such firms for PIMCO's attendance at investment forums sponsored by such firms (collectively, "consultant services"). Such arrangements do not impact the amount of the management fee charged by PIMCO to the Fund.

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***Data.*** PIMCO also may make payments or reimbursements to financial firms or their affiliated companies for various studies, surveys, industry data, research and information about, and contact information for, particular financial professionals who have sold, or may in the future sell, shares of the Fund or other PIMCO-advised funds (i.e., "data"). Such payments may relate to the amount of assets a financial firm's clients have invested in the Fund or other PIMCO-advised funds.

***Payments.*** Payments for items including event support, platform support, data and consultant services (but not including certain account services discussed below), as well as revenue sharing, are, in certain circumstances, bundled and allocated among these categories in PIMCO's discretion. The financial firms receiving such bundled payments may characterize or allocate the payments differently from PIMCO's internal allocation. In addition, payments made by PIMCO to a financial firm and allocated by PIMCO to a particular category of services can in some cases result in benefits related to, or enhance the eligibility of PIMCO or the Fund to receive, services provided by the financial firm that may be characterized or allocated to one or more other categories of services.

As of March 31, 2026, PIMCO anticipates that the firms that will receive the additional payments for marketing support for the Fund, shelf space or other services as described above include the following firms. Also included in the list below are firms with which PIMCO has an agreement pertaining to services that PIMCO categorizes as "account services," as described below, where such agreement calls for the financial firm to be identified.

Cambridge Investment Research Advisors, Inc.

Carson Wealth Management

Charles Schwab & Co., Inc.

Commonwealth Financial Network

Fidelity Brokerage Services, LLC

Fidelity Investments Institutional Operations Company Inc.

Institutional Capital Network, Inc.

LPL Financial LLC

Merrill Lynch, Pierce, Fenner & Smith, Incorporated

MML Investors Services, LLC

National Financial Services LLC

Osaic Institutions, Inc.

Osaic Wealth, Inc.

Rockefeller Financial LLC

Sanctuary Wealth Group, LLC

Signature Estate and Investment Advisors

UBS Financial Services, Inc.

Wintrust Investments LLC

PIMCO expects that additional firms may be added to this list from time to time or may receive one-time payments without anticipation of receiving future additional payments.

Subject to applicable law, PIMCO and its affiliates may also provide investment advisory services to financial firms and their affiliates and may execute brokerage transactions on behalf of the Fund with such financial firms' affiliates. These financial firms or their affiliates may, in the ordinary course of their financial firm business, recommend that their clients utilize PIMCO's investment advisory services or invest in the Fund or in other products sponsored or distributed by PIMCO or its affiliates.

***Account Services.*** In addition to the payments, reimbursements and incentives described above, further amounts are, in certain circumstances, paid by PIMCO to financial firms for providing services with respect to shareholders holding Fund shares in nominee or street name, including, but not limited to, the following services: providing explanations and answering inquiries regarding the Fund and shareholder accounts; providing recordkeeping and other administrative services, including preparing record date shareholder lists for proxy solicitation; maintaining records of and facilitating purchases by shareholders of shares of the Fund; maintaining records of and facilitating repurchases of Common Shares by the Fund, including in connection with the Fund's quarterly repurchase offers or other repurchases described in the Fund's prospectus and elsewhere in this Statement of Additional Information; processing and mailing transaction confirmations, periodic statements, prospectuses, shareholder reports, shareholder notices and other SEC-required communications to shareholders; providing periodic statements to certain benefit plans and participants in such plans of the Fund held for the benefit of each participant in the plan; processing, collecting and posting distributions to their accounts; issuing and mailing dividend checks to shareholders who have selected cash distributions; assisting in the establishment and maintenance of shareholder accounts; providing account designations, addresses and other information; capturing and processing tax data; establishing and maintaining automated investment plans and shareholder account registrations; providing sub-accounting services; providing recordkeeping services related to shareholder purchase and Fund repurchase transactions, including providing such information as may be necessary to assure compliance with applicable blue sky requirements; and performing similar administrative services as requested by PIMCO to the extent that the firm is permitted by applicable statute, rule or regulation to provide such

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information or services. The actual services provided, and the payments made for such services, vary from firm to firm and, in some instances, vary with respect to a single firm according to investment channel. Such services may be referred to under a variety of descriptions, including sub-accounting, sub-transfer agency, administrative or shareholder services.

For these services, PIMCO pays an annual fee based on a per annum percentage of the value of the assets in the relevant accounts or annual per account charges. These payments are made out of PIMCO's own resources. Such resources may include the management fees paid to PIMCO under the Fund's Investment Management Agreement. Additionally, although these payments are made out of PIMCO's own resources, in some cases the levels of such payments may vary by share class of the Fund in relation to advisory fees, total annual operating expenses or other payments made by the applicable share class to PIMCO; additionally, in some cases, the levels of such payments varies across and within share classes of the Fund in relation to investment channel and may differ from the amounts paid by PIMCO with respect to other PIMCO-sponsored funds for which the financial firm provides shareholder services. In addition, PIMCO may pay financial firms a flat fee by Fund or share class to cover certain set-up costs. These payments, taken together in the aggregate, may be material to financial firms relative to other compensation paid by the Fund and/or PIMCO and may be in addition to any (a) distribution and/or servicing (12b-1) fees; (b) marketing support, revenue sharing, platform support or "shelf space" fees; and (c) event support, other non-cash compensation and charitable contributions disclosed above and paid to or at the request of such financial firms or their personnel. The additional servicing payments and set-up fees described above may differ depending on the share class or investment channel and may vary from amounts paid to the Fund's transfer agent for providing similar services to other accounts.

If investment advisers, distributors or affiliated persons of funds make payments and provide other incentives in differing amounts, financial firms and their financial professionals may have financial incentives for recommending a particular fund over other funds. Some platform arrangements also may entitle PIMCO or its affiliates to ancillary benefits such as reduced fees to attend a financial firm's event or conference or elimination of one-time setup fees, such as CUSIP charges that financial firms otherwise may charge. In addition, depending on the arrangements in place at any particular time, a financial firm and its financial professionals also may have a financial incentive for recommending a particular share class over other share classes or may favor a particular investment channel over other such channels. Because financial firms may be paid varying amounts per class for sub-accounting and related recordkeeping services, the service requirements of which also may vary by class, this may create an additional incentive for financial firms and their financial professionals to favor one fund complex over another or one fund class over another. You should review carefully any disclosure by the financial firm or plan recordkeepers as to its compensation.

In certain circumstances, PIMCO or its affiliates may pay or reimburse financial firms for distribution and/or shareholder services out of PIMCO's or its affiliates' own assets when the Distributor does not receive associated distribution and/or service (12b-1) fees from the Fund. These payments and reimbursements may be made from profits received by PIMCO or its affiliates from other fees paid by the Fund. Such activities by PIMCO or its affiliates may provide incentives to financial firms to purchase or market shares of the Fund. Additionally, these activities and arrangements may give PIMCO or its affiliates additional access to sales representatives of such financial firms, which may increase sales of Fund shares. The payments described in this paragraph may be significant to payors and payees.

**Purchasing Shares**

The following section provides basic information about how to purchase Common Shares of the Fund. The Fund typically does not offer or sell its shares to non-U.S. residents. For purposes of this policy, a U.S. resident is defined as an account with (i) a U.S. address of record and (ii) all account owners residing in the U.S. at the time of sale.

The Fund and the Distributor each reserve the right, in its sole discretion, to suspend the offering of shares of the Fund or to reject any purchase order, in whole or in part, when, in the judgment of management, such suspension or rejection is in the best interests of the Fund or for other reasons such as compliance with anti-money laundering or sanctions obligations and requirements.

In the interest of economy and convenience, certificates for shares will not be issued.

------

Purchases of Fund shares are discussed under the "Plan of Distribution - Purchasing Shares" section of the Prospectus, and that information is incorporated herein by reference.

If you are eligible to buy Institutional Class Common Shares as well as Class A-1, Class A-2, Class A-3 or Class A-4 Common Shares, you should buy Institutional Class Common Shares because Class A-2 and Class A-4 Common Shares may be subject to sales charges, and each of Class A-1, Class A-2, Class A-3 and Class A-4 Common Shares will pay an annual distribution and/or service fee.

***Class A-1, Class A-2, Class A-3 and Class A-4 Common Shares***. Eligible investors may purchase Class A-1, Class A-2, Class A-3 and Class A-4 Common Shares through their broker-dealer or other financial firm. Class A-1, Class A-2, Class A-3 and Class A-4 Common Shares are not available for purchase directly from the Distributor.

**Through your broker-dealer or other financial firm**. Class A-1, Class A-2, Class A-3 and Class A-4 Common Shares are primarily offered and sold to retail investors by certain broker-dealers that are members of FINRA and that have agreements with the Distributor to offer Class A-1, Class A-2, Class A-3 and/or Class A-4 Common Shares, but may be made available through other financial firms, including banks and trust companies and to specified benefit plans and other retirement accounts. Your broker-dealer or other financial firm may establish higher or lower minimum investment requirements than the Fund and may also independently charge you transaction or other fees and additional amounts (which may vary) in return for its services, which will reduce your return. Shares you purchase through your broker-dealer or other financial firm will normally be held in your account with that firm and instructions for buying, selling, exchanging or transferring Class A-1, Class A-2, Class A-3 or Class A-4 Common Shares must be submitted by your broker-dealer or other financial firm on your behalf.

**Institutional Class Common Shares*.*** Eligible investors may purchase Institutional Class Common Shares in the following ways:

**Through your broker-dealer or other financial firm*.*** Institutional Class Common Shares may be offered through certain financial firms (including through retail separately managed accounts (i.e., wrap accounts) managed by PIMCO) that charge their customers transaction or other fees with respect to their customers' investments in the Fund. Your broker-dealer or other financial firm may establish higher or lower minimum investment requirements than the Fund and may also independently charge you transaction or other fees and additional amounts (which may vary) in return for its services, which will reduce your return. Shares you purchase through your broker-dealer or other financial firm will normally be held in your account with that firm. If you purchase shares through a broker-dealer or other financial firm, instructions for buying, selling, exchanging or transferring Institutional Class Common Shares must be submitted by your financial firm or broker-dealer on your behalf.

**Through the Distributor*.*** You should discuss your investment with your financial advisor before you make a purchase to be sure the Fund is appropriate for you. Individual investors who meet the minimum investment amount and wish to invest directly in Institutional Class Common Shares may obtain an Account Application online at pimco.com or by calling 844.312.2113. If you do not list a financial advisor and his/her brokerage firm on the Account Application, the Distributor is designated as the broker of record, but solely for purposes of acting as your agent to purchase shares.

------

The completed Account Application may be submitted using the following methods:

---

| | |
|:---|:---|
| **Facsimile:** |  |
| 844.643.0432 |  |
| **Overnight Mail:**<br> PIMCO Interval Funds<br> C/O SS&C Global Investor & Distribution <br> Solutions, Inc.<br> 801 Pennsylvania Avenue<br> Suite 219993<br> Kansas City, MO 64105-1307<br>| &nbsp;&nbsp; **Regular Mail:**<br> PIMCO Interval Funds<br> P.O. Box 219993<br> Kansas City, MO 64121-9993<br>|
| **E-mail:** |  |
| pimcoaltprocessing@dstsystems.com |  |

---

For inquiries, please call 844.312.2113.

Payment for the purchase of Common Shares may be made by check payable to the PIMCO Interval Funds and sent to the Regular Mail address above; or by wiring federal funds to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

PIMCO Interval Funds

United Missouri Bank

928 Grand Blvd

Kansas City, MO 64106

ABA 101000695

DDA 98-7229-174-3

ACCT: Your PIMCO Account Number

FFC: Shareholder Name and Fund Identifier

Before wiring federal funds, the investor must provide order instructions to the transfer agent by facsimile at 844.643.0432 or by e-mail at pimcoaltprocessing@dstsystems.com. In order to receive the current day's NAV, order instructions must be received in good order prior to the close of regular trading on the New York Stock Exchange ("NYSE") (ordinarily 4:00 p.m., Eastern time) ("NYSE Close"). Instructions must include the name and signature of an appropriate person designated on the Account Application ("Authorized Person"), account name, account number, name of the Fund and dollar amount. Payments received without order instructions could result in a processing delay or a return of wire. Failure to send the accompanying payment on the same day may result in the cancellation of the order.

An investor may place a purchase order for Common Shares without first wiring federal funds if the purchase amount is to be derived from an advisory account managed by PIMCO or one of its affiliates, or from an account with a broker-dealer or other financial firm that has established a processing relationship with the Fund on behalf of its customers.

**Investment Minimums**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● ***Class A-1, Class A-2, Class A-3 and Class A-4 Common Shares.*** The following investment minimums apply for purchases of Class A-1, Class A-2, Class A-3 and Class A-4 Common Shares:

---

| | |
|:---|:---|
| **Initial Investment** | **Subsequent Investments** |
| $2,500 per account | $50 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● ***Institutional Class Common Shares.*** The following investment minimums apply for purchases of Institutional Class Common Shares:

------

---

| | |
|:---|:---|
| **Initial Investment** | **Subsequent Investments** |
| $1 million per account |  |

---

The initial investment minimums may be higher or lower for certain financial firms that submit orders on behalf of their customers (including through retail separately managed accounts (i.e., wrap accounts) managed by PIMCO). The Fund or the Distributor may lower or waive the initial investment minimums for certain classes of shares or categories of investors at their discretion. The minimum initial investment may also be modified for the Trustees and certain employees and their extended family members of PIMCO and its affiliates. For these purposes, "extended family members" shall include such person's spouse or domestic partner, as recognized by applicable state law, children, siblings, current brother/sister-in-laws, parents, and current father/mother-in-laws.

● **Additional Investments.** An investor may purchase additional Institutional Class Common Shares of the Fund at any time by sending a facsimile or e-mail as outlined above. If you invest in Common Shares through a broker-dealer, contact your financial firm for information on purchasing additional Common Shares.

● **Other Purchase Information.** Purchases of the Fund's Common Shares will be made in full and fractional shares.

**Sales Charge - Class A-2 and Class A-4 Common Shares**

This section includes important information about sales charge reduction programs available to investors in Class A-2 and/or Class A-4 Common Shares of the Fund and describes information or records you may need to provide to the Distributor or your financial firm in order to be eligible for sales charge reduction programs.

Unless you are eligible for a waiver, the public offering price you pay when you buy Class A-2 or Class A-4 Common Shares of the Fund is the NAV of the shares plus an initial sales charge. The initial sales charge varies depending upon the size of your purchase, as set forth below. No sales charge is imposed where Class A-2 or Class A-4 Common Shares are issued to you pursuant to the automatic reinvestment of income dividends or capital gains distributions. For investors investing in Class A-2 or Class A-4 Common Shares of the Fund through a financial intermediary, it is the responsibility of the financial intermediary to ensure that you obtain the proper "breakpoint" discount.

The Fund may sell its Class A-2 and Class A-4 Common Shares at NAV without an initial sales charge to certain categories of investors, including current or retired officers, trustees, directors or employees of the Fund, PIMCO or the Distributor. The Fund believes that this arrangement encourages those persons to invest in the Fund, which further aligns the interest of the Fund and those persons. See "Sales at Net Asset Value" below for more information.

Because the offering price is calculated to two decimal places, the dollar amount of the sales charge as a percentage of the offering price and your net amount invested for any particular purchase of Fund shares may be higher or lower depending on whether downward or upward rounding was required during the calculation process.

Class A-2 Common Shares are subject to a 3.00% maximum sales charge as a percentage of the offering price (3.09% as a percentage of net amount invested).

Class A-2 Common Shares are subject to the following sales charge:

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| | | | |
|:---|:---|:---|:---|
| **Your Investment** | **As a % of**<br> **public offering price**<br>| **As a % of**<br> **net amount invested**<br>| **Discount or commission**<br> **to dealers as %**<br> **of public offering price**<br>|
| Less than $100,000 | &nbsp;&nbsp; 2.00%<sup>1</sup> <br>| &nbsp;&nbsp; 2.04%<sup>1</sup> <br>| &nbsp;&nbsp; 2.00% |
| $100000 – $249999.99 | &nbsp;&nbsp; 1.00% | &nbsp;&nbsp; 1.01% | &nbsp;&nbsp; 1.00% |
| $250,000 and over | &nbsp;&nbsp; 0.00%<sup>2</sup> <br>| &nbsp;&nbsp; 0.00%<sup>2</sup> <br>| &nbsp;&nbsp; 0.00% |

---

Although the Fund is permitted to charge a maximum sales charge of 3.00%, the Fund has elected to currently charge a maximum sales charge of 2.00%.

------

<sup>2</sup>

As shown, investors that purchase $250,000 or more of the Fund's Class A-2 Common Shares will not pay any initial sales charge on the purchase. However, except with regard to purchases described below under "Sales at Net Asset Value", purchases of $250,000 or more of Class A-2 Common Shares will be subject to an early withdrawal charge of 1.00% if the Common Shares are repurchased during the first 12 months after their purchase. The Distributor will pay a commission of 1.00% to dealers that sell amounts of $250,000 or more of Class A-2 Common Shares. See "Early Withdrawal Charges - Class A-2 and Class A-4 Common Shares" below.

Class A-4 Common Shares are subject to a 3.00% maximum sales charge as a percentage of the offering price (3.09% as a percentage of net amount invested).

Class A-4 Common Shares are subject to the following sales charge:

---

| | | | |
|:---|:---|:---|:---|
| **Your Investment** | **As a % of**<br> **Public Offering Price**<br>| **As a % of**<br> **Net Amount Invested**<br>| **Discount or commission**<br> **to dealers as %**<br> **of public offering price**<br>|
| Less than $100,000 | &nbsp;&nbsp; 2.00%<sup>1</sup> <br>| &nbsp;&nbsp; 2.04%<sup>1</sup> <br>| &nbsp;&nbsp; 2.00% |
| $100000 – $249999.99 | &nbsp;&nbsp; 1.00% | &nbsp;&nbsp; 1.01% | &nbsp;&nbsp; 1.00% |
| $250,000 and over | &nbsp;&nbsp; 0.00%<sup>2</sup> <br>| &nbsp;&nbsp; 0.00%<sup>2</sup> <br>| &nbsp;&nbsp; 0.00% |

---

Although the Fund is permitted to charge a maximum sales charge of 3.00%, the Fund has elected to currently charge a maximum sales charge of 2.00%.

As shown, investors that purchase $250,000 or more of the Fund's Class A-4 Common Shares will not pay any initial sales charge on the purchase. However, except with regard to purchases described below under "Sales at Net Asset Value", purchases of $250,000 or more of Class A-4 Common Shares will be subject to an early withdrawal charge of 1.00% if the Common Shares are repurchased during the first 12 months after their purchase. The Distributor will pay a commission of 1.00% to dealers that sell amounts of $250,000 or more of Class A-4 Common Shares. See "Early Withdrawal Charges - Class A-2 and Class A-4 Common Shares" below.

Investors in the Fund may reduce or eliminate sales charges applicable to purchases of Class A-2 or Class A-4 Common Shares through utilization of the Combined Purchase Privilege, Right of Accumulation, Letter of Intent or Reinstatement Privilege. These programs (described below) will apply to purchases of other closed-end interval funds that PIMCO sponsors currently or in the future (collectively, "Eligible Funds"), which offer Class A-1, Class A-2, Class A-3 and/or Class A-4 common shares. Eligible Funds do not include open-end funds sponsored by PIMCO.

**Combined Purchase Privilege and Right of Accumulation (Breakpoints**). A Qualifying Investor (as defined below) may qualify for a reduced sales charge on Class A-2 or Class A-4 Common Shares at the breakpoint levels disclosed herein by combining concurrent purchases of the Class A-1, Class A-2, Class A-3 and/or Class A-4 common shares of one or more Eligible Funds into a single purchase (the "Combined Purchase Privilege"). In addition, a Qualifying Investor may obtain a reduced sales charge on Class A-2 or Class A-4 Common Shares by adding the purchase value of Class A-1, Class A-2, Class A-3 and/or Class A-4 common shares of an Eligible Fund with the current aggregate net asset value of all Class A-1, Class A-2, Class A-3 and/or Class A-4 common shares of any Eligible Fund held by accounts for the benefit of such Qualifying Investor (the "Right of Accumulation" or "Cumulative Quantity Discount").

The term "Qualifying Investor" refers to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● an individual, such individual's spouse or domestic partner, as recognized by applicable state law, or such individual's children under the age of 21 years (each a "family member") (including family trust\* accounts established by such a family member); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● a trustee or other fiduciary for a single trust (except family trusts\* noted above), estate or fiduciary account although more than one beneficiary may be involved; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● an employee benefit plan of a single employer.

\*

For these purposes, a "family trust" is one in which a family member, as defined in section (1) above, or a direct lineal descendant(s) of such person is/are the beneficiary(ies), and such person or another family member, direct lineal ancestor or sibling of such person is/are the trustee(s).

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While a shareholder's positions in Class A-1 and Class A-3 common shares of other Eligible Funds are accounted for with respect to reaching a breakpoint level on purchases of Class A-2 or Class A-4 common shares of any Eligible Fund, because neither the Eligible Funds nor their distributor impose an initial sales charge on Class A-1 or Class A-3 common shares of other Eligible Funds, the Combined Purchase Privilege and Right of Accumulation programs do not apply to these share classes. Class A-1 or Class A-3 common shares of other Eligible Funds that count towards reaching a breakpoint level on purchases of Class A-2 or Class A-4 common shares of any Eligible Fund through the Combined Purchase Privilege and Right of Accumulation programs are still subject to transaction or other fees that may be charged by certain financial firms, as those programs do not impact the imposition of such fees.

**Letter of Intent.** Investors may also obtain a reduced sales charge on purchases of Class A-2 and/or Class A-4 Common Shares of the Fund by means of a written Letter of Intent which expresses an intent to invest not less than $250,000 within a period of 13 months in Class A-1, Class A-2, Class A-3 and/or Class A-4 common shares of any Eligible Fund(s). The maximum intended investment allowable in a Letter of Intent is $250,000. Each purchase of shares under a Letter of Intent will be made at the public offering price or prices applicable at the time of such purchase to a single purchase of the dollar amount indicated in the Letter of Intent. The value of the investor's account(s) linked to a Letter of Intent will be included at the start date of the Letter of Intent. A Letter of Intent is not a binding obligation to purchase the full amount indicated. Shares purchased with the first 5% of the amount indicated in the Letter of Intent will be held in escrow (while remaining registered in your name) to secure payment of the higher sales charges applicable to the shares actually purchased in the event the full intended amount is not purchased. If the full amount indicated is not purchased, a sufficient amount of such escrowed shares will be involuntarily repurchased to pay the additional sales charge applicable to the amount actually purchased, if necessary. Dividends on escrowed shares, whether paid in cash or reinvested in additional Eligible Fund shares, are not subject to escrow. When the full amount indicated has been purchased, the escrow will be released. Repurchases during the Letter of Intent period will not count against the shareholder.

In making computations concerning the amount purchased for purposes of a Letter of Intent, market appreciation in the value of the shareholder's Class A-1, Class A-2, Class A-3 and/or Class A-4 common shares of Eligible Funds will not be included.

*Method of Valuation of Accounts.* To determine whether a shareholder qualifies for a reduction in sales charge on a purchase of Class A-2 and/or Class A-4 Common Shares of the Fund, the public offering price of the shares is used for purchases relying on the Combined Purchase Privilege or a Letter of Intent and the amount of the total current purchase (including any sales load) plus the NAV (at the close of business on the day of the current purchase) of shares previously acquired is used for the Right of Accumulation.

**Reinstatement Privilege.** A Class A-2 or Class A-4 shareholder who has caused any or all of his or her shares to be repurchased may reinvest all or any portion of the repurchase proceeds in Class A-1, Class A-2, Class A-3 and/or Class A-4 common shares of any Eligible Fund at net asset value without any sales charge, provided that such reinvestment is made within 120 calendar days after the repurchase date. Shares are sold to a reinvesting shareholder at the net asset value next determined. See "How Fund Shares are Priced" in the Prospectus. A reinstatement pursuant to this privilege will not cancel the repurchase transaction and, consequently, any gain or loss so realized may be recognized for federal tax purposes except that no loss may be recognized to the extent that the proceeds are reinvested in shares of the same Fund within 30 days. The reinstatement privilege may be utilized by a shareholder only once per year per account (per 365 days), irrespective of the number of shares repurchased, except that the privilege may be utilized without limit in connection with transactions whose sole purpose is to transfer a shareholder's interest in the Fund to his or her Individual Retirement Account or other qualified retirement plan account (if applicable). An investor may exercise the reinstatement privilege by written request sent to the Fund or to the investor's financial firm. Investors who were not assessed a sales charge upon the purchase of their shares may not utilize the reinstatement privilege with respect to reinvestment of such shares following their repurchase.

***Sales at Net Asset Value.***

In addition to the programs summarized above, Class A-2 or Class A-4 Common Shares, which are available for purchase only through a broker-dealer or other financial firm, may be sold at NAV without an initial sales charge to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) current, retired, or former officers, trustees, directors or employees of the Fund (including accounts established for former employees or extended family of former employees established while

------

employed), PIMCO Funds, PIMCO Equity Series, Allianz Funds, or Allianz Funds Multi-Strategy Trust, Allianz, Allianz Global Investors U.S. LLC, PIMCO or the Distributor, other affiliates of Allianz Global Investors U.S. LLC and funds advised or sub-advised by any such affiliates, in any case at the discretion of PIMCO or the Distributor; their spouse or domestic partner, as recognized by applicable state law, children, siblings, current brother/sister-in-laws, parents, and current father/mother-in-laws ("extended family"), or family trust account for their benefit, or any trust, profit-sharing or pension plan for the benefit of any such person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) current registered representatives and other full-time employees of broker-dealers that have selling agreements with the Distributor or such persons' spouse or domestic partner, as recognized by applicable state law, children under 21, and family trust accounts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) trustees or other fiduciaries purchasing shares through certain group omnibus plans (such as 401(k), 403(b), Health Savings Accounts, 457, Profit Sharing/Keogh, Money Purchase Pension and Defined Benefit; not including individual participant directed accounts (i.e., accounts listed in the Fund's records as for the benefit of a named individual), SEP-IRAs, SIMPLE IRAs, SARSEP IRAs and 403(b)7 custodial accounts) sponsored by employers, professional organizations or associations, or charitable organizations that qualify for 501(c)(3) status under the Internal Revenue Code;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) investors rolling over assets from specified benefit plans to IRAs or other qualified retirement plan accounts if such assets were invested in the Fund at the time of distribution;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) participants investing through accounts known as "wrap accounts" established with broker-dealers approved by the Distributor where such broker-dealers are paid a single, inclusive fee for brokerage and investment management services;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) client accounts of broker-dealers or registered investment advisers affiliated with such broker-dealers that use Class A-2 or Class A-4 Common Shares in particular investment products or programs or in particular situations in which the broker-dealer will make Class A-2 or Class A-4 Common Shares available for purchase at NAV (e.g., through self-directed brokerage service platforms or investment advisory programs);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) accounts for which the company that serves as trustee or custodian either (a) is affiliated with PIMCO or (b) has a specific agreement to serve as trustee or custodian of the account with the Distributor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) investors following the public announcement of the Board's approval of a plan of liquidation for the Fund or for another share class of the Fund until the liquidation date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) investors making an exchange from a taxable account invested in a PIMCO Interval Fund to the Fund held in an IRA or other qualified retirement plan account for the purpose of making a contribution to the IRA or other qualified retirement plan account;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) investors exchanging proceeds of required minimum distributions from an IRA or other qualified retirement plan account invested in a PIMCO Interval Fund to a taxable account invested in the Fund;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) investors acquiring Class A-2 or Class A-4 Common Shares as a result of any automatic conversion of their shares of another class of the Fund into Class A-2 or Class A-4 Common Shares; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii) any other person if the Distributor anticipates that there will be minimal cost borne by the Distributor associated with the sale. . What qualifies as "minimal cost" borne by the Distributor will be determined in the sole discretion of the Distributor but will be applied uniformly to all shareholders seeking a waiver for which there will be such minimal cost.

The Distributor will only pay Rule 12b-1 fees and will not pay any initial commission or other fees to broker-dealers upon the sale of Class A-2 or Class A-4 Common Shares to the purchasers described in sub-paragraphs (i) through (xii) above. In addition, the Distributor will only pay distribution and/or service fees and will not pay any initial commission or other fees to broker-dealers upon the sale of Class A-2 and Class A-4 Common Shares of the Fund following the public announcement of the Board's approval of a plan of liquidation for the Fund.

***Exchanges***

Shares of one class of the Fund or one class of common shares of other Eligible Funds may be exchanged for shares of the same class or another class of Common Shares of the Fund without a sales charge. The Fund will only complete an exchange at the direction of a financial intermediary. Contact your financial intermediary to learn more about the details of this exchange feature. See "Exchanging Shares" below for additional information.

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***Early Withdrawal Charges - Class A-2 and Class A-4 Common Shares***

Unless you are eligible for a waiver, if you purchase $250,000 or more of Class A-2 or Class A-4 Common Shares (and, thus, pay no initial sales charge) of the Fund, you will be subject to a 1% early withdrawal charge ("EWC") if your Class A-2 or Class A-4 Common Shares are repurchased within 12 months of their purchase. If the financial firm through which you purchased your Common Shares does not receive any upfront commission from the Distributor at the time of purchase, you will not be subject to an EWC upon repurchase. The Class A-2 and Class A-4 EWCs do not apply if you are otherwise eligible to purchase Class A-2 or Class A-4 Common Shares without an initial sales charge or are eligible for a waiver of the EWC.

***How EWCs will be Calculated***

An EWC is imposed on repurchases of Class A-2 or Class A-4 Common Shares on the amount of the repurchase which causes the current value of your account for the particular class of Common Shares of the Fund to fall below the total dollar amount of your purchase payments on which you paid no initial sales charge as a result of reaching a breakpoint on the initial purchase and have not been held 12 months.

The following rules apply under the method for calculating EWCs:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● Common Shares acquired through the reinvestment of dividends or capital gains distributions will be repurchased first and will not be subject to any EWC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● For the repurchase of all other Common Shares, the EWC will be based on either your original purchase price or the then current NAV of the Common Shares being sold, whichever is lower. To illustrate this point, consider Common Shares purchased at an NAV of $10. If the Fund's NAV per Common Share at the time of repurchase is $12, the EWC will apply to the purchase price of $10. If the NAV per Common Share at the time of repurchase is $8, the EWC will apply to the $8 current NAV per Common Share.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● EWCs will be deducted from the proceeds of your repurchase, not from amounts remaining in your account.

In determining whether an EWC is payable, it is assumed that you will have repurchased first the lot of Common Shares which will incur the lowest EWC.

***Reductions and Waivers of Initial Sales Charges and EWCs***

The initial sales charges and EWCs on Class A-2 Common Shares may be reduced or waived under certain purchase arrangements and for certain categories of investors. See "Sales Charge - Class A-2 and Class A-4 Common Shares" above for information on Class A-2 and Class A-4 initial sales charges.

EWCs on Class A-2 or Class A-4 Common Shares may be reduced or waived for:

(i) any partial or complete repurchase following death or permanent and total disability (as defined in Section 22(e) of the Internal Revenue Code) of an individual holding shares for his or her own account and/or as the last survivor of a joint tenancy arrangement (this provision, however, does not cover the death or disability of an individual holding shares in a fiduciary capacity or as a nominee or agent, nor does it cover the death or disability of the owners, trustees or beneficiaries of a legal entity) provided the repurchase is requested within one year of the death or initial determination of disability and provided the death or disability occurs after the purchase of the shares;

(ii) repurchases by current or former Trustees, officers and employees of the Fund or any of the PIMCO Interval Funds, and by directors, officers and current or former employees of the Distributor, Allianz, Allianz Global Fund Management or PIMCO if the account was established while employed;

(iii) repurchases of shares of the Fund if it is combined with another Eligible Fund, investment company, or personal holding company by virtue of a merger, acquisition or other similar reorganization transaction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) repurchases where the shareholder can demonstrate hardship;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) repurchases where there will be minimal cost borne by the Distributor associated with the repurchase;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

(vi) an intra-fund exchange of shares of one class of Common Shares of the Fund for shares of another class of Common Shares of the Fund, or exchange Common Shares of the Fund for the same class or another class of common shares of another Eligible Fund where the initial shares were purchased at NAV and no commission was paid;

(vii) repurchases following the public announcement of the Board's approval of a plan of liquidation for the Fund or for another share class of the Fund.

What qualifies as "hardship" and "minimal cost" borne by the Distributor will be determined in the sole discretion of the Distributor. The Distributor follows how IRS regulations classify "hardship" – a financial hardship may occur when an individual has an immediate and heavy financial need and the money to be withdrawn from the shareholder's account is necessary to meet that need. The Distributor generally determines an EWC waiver or reduction to be of "minimal cost" where the shareholder can demonstrate that the repurchase triggering the EWC was inadvertently executed during the period subject to the EWC and substantially all of the EWC period has lapsed.

The Fund may require documentation prior to waiver of the EWC for any class, including distribution letters, certification by plan administrators, applicable tax forms, death certificates, physicians' certificates (e.g., with respect to disabilities), etc. In addition, investors will not be subject to EWCs for certain transactions where the Distributor did not pay at the time of purchase the amount it normally would have to the broker-dealer.

***Required Shareholder Information and Records***

In order for investors in Class A-2 or Class A-4 Common Shares of the Fund to take advantage of sales charge reductions, an investor or his or her financial firm must notify the Fund that the investor qualifies for such a reduction. If the Fund is not notified that the investor is eligible for these reductions, the Fund will be unable to ensure that the reduction is applied to the investor's account. An investor may have to provide certain information or records to his or her financial firm or the Fund to verify the investor's eligibility for breakpoint discounts or sales charge waivers. An investor may be asked to provide information or records, including account statements, regarding shares of the Fund or other Eligible Funds held in:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● any account of the investor at another financial firm; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● accounts of Qualifying Investors at any financial firm.

**Exchanging Shares**

*Exchanges Across Eligible Funds:* Subject to the terms and conditions below, shares of one class of common shares of other Eligible Funds may be exchanged, at the shareholder's option, for shares of the same class or another class of Common Shares of the Fund. Shareholders may also move their investment in Common Shares of the Fund into shares of the same class or another class of common shares of other Eligible Funds in conjunction with quarterly repurchases made by the Fund. In this case, rather than tendering shares for cash, the shareholder would elect to have the dollar value of those Common Shares accepted for purchases of shares of the other Eligible Funds. Such exchanges for shares of other Eligible Funds must occur in conjunction with quarterly repurchases made by the Fund and will be subject to those repurchase offer risks, such as the risk that shareholders may be unable to liquidate all or a given percentage of their investment in the Fund during a particular repurchase offer, that are described in the Prospectus. See "Principal Risks of the Fund - Repurchase Offers Risk."

The total value of shares being exchanged into the Fund must at least equal the minimum investment requirement applicable to the relevant class of Common Shares of the Fund, and the total value of shares being exchanged out of the Fund into other Eligible Funds must meet the minimum investment requirements of those Eligible Funds, as applicable. Other than exchanges at the direction of a financial intermediary (as described below), shares of the Fund or other Eligible Funds related to such exchanges will be subject to any sales charges, EWCs and/or waivers applicable to such classes of shares.

*Intra-Fund Exchanges:* Common Shares of one class of the Fund may be exchanged at any time, at a shareholder's option, directly for shares of another class of the Fund (an "intra-fund exchange"), subject to the terms and conditions described below and provided that the shareholder for whom the intra-fund exchange is being requested meets the eligibility requirements of the class into which such shareholder seeks to exchange. Additional information

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regarding the eligibility requirements of different share classes, including investment minimums and intended distribution channels is described under "Purchasing Shares" and "Investment Minimums" above.

Common Shares of one class of the Fund will be exchanged for shares of a different class of the Fund on the basis of their respective NAVs. Ongoing fees and expenses incurred by a given share class will differ from those of other share classes, and a shareholder receiving new shares in an intra-fund exchange may be subject to higher or lower total expenses following such exchange.

*Financial Intermediary-Directed Exchanges:* Financial intermediaries may, in connection with a change in a client's account type, at the direction of a client, or otherwise in accordance with a financial intermediary's policies and procedures, direct the Fund on behalf of the intermediary's clients to exchange shares of one class of Common Shares of the Fund for shares of another class of Common Shares of the Fund, or exchange Common Shares of the Fund for the same class or another class of common shares of another Eligible Fund. Any such exchange will not be subject to any sales charges or EWCs. Class A-1 Common Shares of the Fund are, however, subject to higher annual operating expenses than Institutional Class Common Shares. See "Summary of Fund Expenses" in the Prospectus. The Fund will only complete such an exchange at the direction of a financial intermediary and without making inquiry as to whether the exchange is consistent with the particular intermediary's policies and procedures or the client's account type and/or suitability criteria. An investor should contact his or her financial intermediary to learn more about the details of this exchange feature and whether and under what circumstances it may apply in accordance with the investor's arrangements with the particular intermediary.

**Shares Purchased or Held Through Financial Intermediaries**

The availability of sales charge waivers and discounts may depend on the particular financial intermediary or type of account through which you purchase or hold Fund shares. The Fund's sales charge waivers and discounts disclosed above are available for qualifying purchases and are generally available through financial firms unless otherwise specified in Appendix B (Financial Firm-Specific Sales Charge Waivers and Discounts) to the Prospectus.

The sales charge waivers, discounts and/or breakpoints available through certain other financial intermediaries are set forth in Appendix B to the Prospectus, and may differ from those available for purchases made directly from the Distributor or certain other financial firms. Please contact your financial firm for more information regarding applicable sales charge waivers, discounts and/or breakpoints available to you and the financial firm's related policies and procedures.

While neither the Fund nor the Distributor impose an initial sales charge on Institutional Class, Class A-1 or Class A-3 Common Shares, if you buy Institutional Class, Class A-1 or Class A-3 Common Shares through certain financial firms they may directly charge you transaction or other fees in such amount as they may determine. Please consult your financial firm for additional information.

*Additional Information about Purchases.* Shares may be purchased at a price equal to their net asset value per share, plus any applicable sales charge, next determined after receipt of an order. Under normal circumstances, all purchase orders received by the Fund or its designee prior to the NYSE Close on a regular business day are processed at that day's offering price. However, orders received by the Fund or its designee after the offering price is determined that day from financial firms or certain retirement plans will receive such offering price if the orders were received by the financial firm or retirement plan from its customer or participant prior to such offering price determination and were transmitted to and received by the Fund or its designee prior to such time as agreed upon by the Distributor or Investment Manager in accordance with an agreement or as allowed by applicable law. Purchase orders will be accepted only on days on which the Fund is open for business. If a purchase order is received on a day when the Fund is not open for business, it will be processed on the next succeeding day the Fund is open for business (according to the succeeding day's net asset value). The Fund is "open for business" on each day the NYSE is open for trading, which excludes the following holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Juneteenth National Independence Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. On any day that regular trading on the NYSE closes earlier than scheduled, the Fund reserves the right to: (i) advance the time as of which the NAV is calculated and, therefore, the time by which purchase orders must be received to receive that day's NAV or (ii) accept purchase orders until, and calculate its NAV as of, the normally scheduled NYSE Close. On any day that the NYSE is closed when it would normally be open for business, the Fund

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may accept purchase orders until, and calculate its NAV as of, the normally scheduled close of regular trading on the NYSE or such other time that the Fund may determine.

If your shares are held with a broker, dealer or other financial intermediary with an agreement with the distributor ("Authorized Intermediary"), all orders must be received by the Authorized Intermediary in good order before NYSE Close on trade date. All purchase orders received by an Authorized Intermediary must be transmitted to the Fund in good order prior to 9:00am ET on the following business day. The Fund will be deemed to have received a purchase order when an authorized broker or, if applicable, a broker's authorized designee, receives such order, so long as this purchase order is transmitted to the Fund in good order by 9:00am ET the following day. Purchase orders received by the Fund after 9:00am ET will be processed at the Fund's NAV next computed. For repurchase requests, if your Authorized Intermediary fails to timely submit your repurchase request to the Fund's transfer agent in good order, you will be unable to tender your Shares until a subsequent repurchase offer, and your request would need to be resubmitted to the Fund. If your account is held directly at the Fund's transfer agent (and as a result you receive statements directly from PIMCO Investments LLC), orders must be received in good order by the Fund's transfer agent, SS&C Global Investor and Distribution Solutions Inc., prior to NYSE Close. Neither the Fund nor its service providers (including PIMCO Investments LLC) shall bear any responsibility for gains or losses resulting from an Authorized Intermediary's failure to transmit a trade instruction in good order to the Fund's transfer agent timely.

The Fund reserves the right to close if the primary trading markets of the Fund's portfolio instruments are closed and the Fund's management believes that there is not an adequate market to meet purchase requests. On any business day when the Securities Industry and Financial Markets Association recommends that the securities markets close trading early, the Fund may close trading early.

Broker-dealers and other financial firms are obligated to transmit purchase orders promptly. The Fund and the Distributor each reserves the right, in its sole discretion, to accept or reject any order for purchase of Fund shares. The sale of shares may be suspended on any day on which the NYSE is closed and, if permitted by the rules of the SEC, when trading on the NYSE is restricted or during an emergency that makes it impracticable for the Fund to dispose of its securities or to determine fairly the value of its net assets, or during any other period as permitted by the SEC for the protection of investors.

*Signature Validation.* When a signature validation is called for, a Medallion signature guarantee or Signature validation program ("SVP") stamp may be required. A Medallion signature guarantee is intended to provide signature validation for transactions considered financial in nature, and an SVP stamp is intended to provide signature validation for transactions non-financial in nature. In certain situations, a notarized signature may be used instead of a Medallion signature guarantee or an SVP stamp. A Medallion signature guarantee or SVP stamp may be obtained from a domestic bank or trust company, broker, dealer, clearing agency, savings association or other financial institution which is participating in a Medallion program or Signature validation program recognized by the Securities Transfer Association. When a Medallion signature guarantee or SVP stamp is required, signature validations from financial institutions which are not participating in one of these programs will not be accepted. Please note that financial institutions participating in a recognized Medallion program may still be ineligible to provide a signature validation for transactions of greater than a specified dollar amount. The Fund may change the signature validation requirements from time to time upon notice to shareholders, which may be given by means of a new or supplemented prospectus. Shareholders should contact the Fund for additional details regarding the Fund's signature validation requirements.

*Account Registration and Privilege Changes.* Changes in registration or account privileges may be made in writing. Signature validation may be required. See "Signature Validation" above. All correspondence must include the account number and may be submitted using the following methods:

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| | |
|:---|:---|
| 844.643.0432 |  |
| **Overnight Mail:** | **Regular Mail:** |
| PIMCO Interval Funds | PIMCO Interval Funds |
| C/O SS&C Global Investor & Distribution <br> Solutions, Inc.<br>| P.O. Box 219993 |
| 801 Pennsylvania Avenue | Kansas City, MO 64121-9993 |
| Suite 219993 |  |

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| |
|:---|
| Kansas City, MO 64105-1307 |
| **Email:** |
| pimcoaltprocessing@dstsystems.com |

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For inquiries, please call 844.312.2113.

If you invest through a broker-dealer, contact your financial firm for information on changes in registration or account privileges.

*Information for Shares of the Fund.* Broker-dealers and other financial intermediaries provide varying arrangements for their clients to purchase Fund shares. Some may establish higher or lower minimum investment requirements than set forth above. Firms may arrange with their clients for other investment or administrative services and may independently establish and charge transaction or other fees and/or other additional amounts to their clients for such services, which charges would reduce clients' return. Firms also may hold Fund shares in nominee or street name as agent for and on behalf of their customers. In such instances, the Fund's transfer agent will have no information with respect to or control over accounts of specific shareholders. Such shareholders may obtain access to their accounts and information about their accounts only from their broker. In addition, certain privileges with respect to the purchase and redemption of shares or the reinvestment of dividends may not be available through such firms. Some firms may participate in a program allowing them access to their clients' accounts for servicing including, without limitation, transfers of registration and dividend payee changes; and may perform functions such as generation of confirmation statements and disbursement of cash dividends.

**Request for Multiple Copies of Shareholder Documents**

To reduce expenses, it is intended that only one copy of the Prospectus and each annual and semi-annual report or notice of availability, when available, will be mailed to those addresses shared by two or more accounts. If you wish to receive individual copies of these documents and your shares are held in the Fund's account, call the Fund at 844.312.2113. You will receive the additional copy within 30 days after receipt of your request by the Fund. Alternatively, if your shares are held through a financial institution, please contact the financial institution.

**REPURCHASE OF COMMON SHARES**

In order to provide some liquidity to shareholders, the Fund makes quarterly offers to repurchase between 5% and 25% of its outstanding Common Shares at net asset value. Although the policy permits repurchases of between 5% and 25% of the Fund's outstanding Common Shares, for each quarterly repurchase offer, the Fund currently expects to offer to repurchase 10% of the Fund's outstanding Common Shares at NAV, subject to approval of the Board. Notices of each quarterly repurchase offer are sent to shareholders at least 21 days before the "Repurchase Request Deadline" (i.e., the date by which shareholders can tender their Common Shares in response to a repurchase offer). The Fund determines the NAV applicable to repurchases no later than the 14 days after the Repurchase Request Deadline (or the next business day, if the 14th day is not a business day) (the "Repurchase Pricing Date"). The Fund expects to distribute payment to shareholders within three business days after the Repurchase Pricing Date and will distribute such payment no later than seven (7) calendar days after such date. The Fund's Common Shares are not listed on any securities exchange, and the Fund anticipates that no secondary market will develop for its Common Shares. Investors should consider Common Shares of the Fund to be an illiquid investment. Accordingly, you may not be able to sell Common Shares when and/or in the amount that you desire. Thus, Common Shares are appropriate only as a long-term investment. In addition, the Fund's repurchase offers may subject the Fund and shareholders to special risks.

The section entitled "Periodic Repurchase Offers" in the Prospectus discusses the type and timing of notice for repurchase offers, the effects of oversubscribed repurchase offers, the determination of the repurchase price, payment by the Fund for Common Shares tendered in a repurchase offer, the effect of repurchase policies on the liquidity of the Fund, the consequences of repurchase offers and other details regarding the repurchase offers, including associated risks. The Fund's fundamental policies with respect to repurchase offers are discussed in "Investment Restrictions" in this Statement of Additional Information.

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See "Principal Risks of the Fund - Repurchase Offers Risk" in the Prospectus for a description of the risks associated with the Fund's repurchase offers. In addition, the repurchase of Common Shares by the Fund will be a taxable event to shareholders. For a discussion of these tax consequences, see "Taxation" below.

In addition to the Fund's policy to make periodic repurchase offers as described above, the Board may consider additional repurchases of its Common Shares on the open market or in private transactions, the making of a tender offer for such shares, or the conversion of the Fund to an open-end investment company (described below). The Fund cannot assure you that its Board will decide to take or propose any of these actions.

Subject to its investment limitations, the Fund may borrow to finance the repurchase of shares or to make a tender offer. Interest on any borrowings to finance share repurchase transactions or the accumulation of cash by the Fund in anticipation of share repurchases or tenders will reduce the Fund's net income and gains. Any share repurchase, tender offer or borrowing that might be approved by the Board would have to comply with the Act and the rules and regulations thereunder and other applicable law.

Notwithstanding the foregoing, at any time when the Fund's RVMTP Shares are outstanding, the Fund may not purchase, redeem or otherwise acquire for consideration any of its Common Shares unless and only if: (i) immediately after such transaction, the Fund would satisfy the asset coverage with respect to the RVMTP Shares required by the Fund's Bylaws and the Act; (ii) full cumulative dividends on the Preferred Shares on or prior to the date of the transaction have been declared and paid (or have been declared and sufficient funds for the payment thereof have been deposited with the paying agent for the RVMTP Shares); and (iii) the Fund has deposited sufficient deposit securities with respect to the Preferred Shares to be redeemed for which a notice of redemption has been given or was required pursuant to the Fund's Bylaws.

**PORTFOLIO TRANSACTIONS AND BROKERAGE**

**Investment Decisions and Portfolio Transactions**

Investment decisions for the Fund and for the other investment advisory clients of PIMCO are made with a view to achieving their respective investment objectives. Investment decisions are the product of many factors in addition to basic suitability for the particular client involved (including the Fund). Some securities considered for investments by the Fund also may be appropriate for other clients served by PIMCO. Thus, a particular security may be bought or sold for certain clients even though it could have been bought or sold for other clients at the same time, including accounts in which PIMCO, its affiliates and its employees may have a financial interest. If a purchase or sale of securities consistent with the investment policies of the Fund and one or more of these clients served by PIMCO is considered at or about the same time, transactions in such securities will be allocated among the Fund and other clients pursuant to PIMCO's trade allocation policy, as applicable, that is designed to ensure that all accounts, including the Fund, are treated fairly, equitably, and in a non-preferential manner, such that allocations are not based upon fee structure or portfolio manager preference. Where applicable, PIMCO considers relevant ESG factors in its investment research process with the goal of enhancing risk-adjusted returns. Integrating relevant factors into the evaluation process does not mean that ESG related information is the sole or primary consideration for an investment decision. PIMCO's portfolio managers and analyst teams consider a variety of factors including the materiality of those factors to make investment decisions. Where material, ESG factors can be important considerations when evaluating long-term investment opportunities and risks for asset classes, where applicable. The materiality of ESG considerations to investment decisions typically varies across asset classes, strategies, products and valuations.

PIMCO may acquire on behalf of its clients (including the Fund) securities or other financial instruments providing exposure to different aspects of the capital and debt structure of an issuer, including without limitation those that relate to senior and junior/subordinate obligations of such issuer. In certain circumstances, the interests of those clients exposed to one portion of the issuer's capital and debt structure may diverge from those clients exposed to a different portion of the issuer's capital and debt structure. PIMCO may advise some clients or take actions for them in their best interests with respect to their exposures to an issuer's capital and debt structure that may diverge from the interests of other clients with different exposures to the same issuer's capital and debt structure.

PIMCO may aggregate orders for the Fund with simultaneous transactions entered into on behalf of its other clients when, in its reasonable judgment, aggregation may result in an overall economic benefit to the Fund and the other clients in terms of pricing, brokerage commissions or other expenses. When feasible, PIMCO allocates trades

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prior to execution. When pre-execution allocation is not feasible, PIMCO promptly allocates trades following established and objective procedures. Allocations generally are made at or about the time of execution and before the end of the trading day. As a result, one account may receive a price for a particular transaction that is different from the price received by another account for a similar transaction on the same day. In general, trades are allocated among portfolio managers on a pro rata basis (to the extent a portfolio manager decides to participate fully in the trade), for further allocation by each portfolio manager among that manager's eligible accounts. In allocating trades among accounts, portfolio managers generally consider a number of factors, including, but not limited to, each account's deviation (in terms of risk exposure and/or performance characteristics) from a relevant model portfolio, each account's investment objectives, restrictions and guidelines, its risk exposure, its available cash, and its existing holdings of similar securities. Once trades are allocated, they may be reallocated only in unusual circumstances due to recognition of specific account restrictions. In some cases, PIMCO may sell a security on behalf of a client, including the Fund, to a broker-dealer that thereafter may be purchased for the accounts of one or more other clients, including the Fund, from that or another broker-dealer. PIMCO has adopted procedures it believes are reasonably designed to obtain the best execution for the transactions by each account.

**Brokerage and Research Services**

There is generally no stated commission in the case of fixed income securities, which are often traded in the OTC markets, but the price paid by the Fund usually includes an undisclosed dealer commission or mark-up. In underwritten offerings, the price paid by the Fund includes a disclosed, fixed commission or discount retained by the underwriter or dealer. Transactions on U.S. stock exchanges and other agency transactions involve the payment by the Fund of negotiated brokerage commissions. Such commissions vary among different brokers. Also, a particular broker may charge different commissions according to such factors as the difficulty and size of the transaction. Transactions in foreign securities generally involve the payment of fixed brokerage commissions, which are generally higher than those in the United States. Transactions in fixed income securities on certain foreign exchanges may involve commission payments.

PIMCO places all orders for the purchase and sale of portfolio securities, options, futures contracts, swap agreements and other instruments for the Fund and buys and sells such securities, options, futures, swap agreements and other instruments for the Fund through a substantial number of brokers and dealers, as well as automated trading platforms ("ATPs"). In so doing, PIMCO uses its best efforts to obtain for the Fund the best execution available, except to the extent it may be permitted to pay higher brokerage commissions as described below. In seeking best execution, PIMCO, having in mind the Fund's best interests, considers all factors it deems relevant, including, by way of illustration, price, the size of the transaction, the nature of the market for the security, the amount of the commission, the timing of the transaction taking into account market prices and trends, the reputation, experience and financial stability of the broker-dealer (or ATP) involved and the quality of service rendered by the broker-dealer (or ATP) in other transactions, ATPs may charge fees, such as access or transaction fees, similar to commissions or mark-ups. Changes in the aggregate amount of brokerage commissions paid by the Fund from year-to-year may be attributable to changes in the asset size of the Fund, the volume of the portfolio transactions effected by the Fund, the types of instruments in which the Fund invests, or the rates negotiated by PIMCO on behalf of the Fund. Although the Fund may use financial firms that sell Fund shares to effect transactions for the Fund's portfolio, neither the Fund nor PIMCO will consider the sale of Fund shares as a factor when choosing financial firms to effect those transactions.

**Brokerage Commissions Paid**

For the fiscal years ended December 31, 2025, December 31, 2024 and December 31, 2023, the following amounts of brokerage commissions were paid by the Fund:

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| | |
|:---|:---|
| **Fiscal Year** | **Brokerage Commissions Paid** |
| 12/31/2025 | &nbsp;&nbsp; $1489 |
| 12/31/2024 | &nbsp;&nbsp; $4173 |
| 12/31/2023 | &nbsp;&nbsp; $34 |

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PIMCO places orders for the purchase and sale of portfolio investments for the Fund's account with brokers or dealers or ATPs selected by it in its discretion. In effecting purchases and sales of portfolio securities for the account of the Fund, PIMCO will seek the best price and execution of the Fund's orders. In doing so, the Fund may pay higher

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commission rates than the lowest available when PIMCO believes it is reasonable to do so in light of the value of the brokerage and research services provided by the broker effecting the transaction, as discussed below.

It has for many years been a common practice in the investment advisory business for advisers of investment companies and other institutional investors to receive research and brokerage products and services (together, "services") from broker-dealers that execute portfolio transactions for the clients of such advisers. Consistent with this practice, PIMCO may receive research services from many broker-dealers with which PIMCO places the Fund's portfolio transactions. PIMCO also may receive research or research related credits from brokers that are generated from underwriting commissions when purchasing new issues of fixed income securities or other assets for the Fund. These services, which in some cases may also be purchased for cash, include such matters as general economic and security market reviews, industry and company reviews, evaluations of securities and recommendations as to the purchase and sale of securities and services related to the execution of securities transactions. Some of these services are of value to PIMCO in advising various of its clients (including the Fund), although not all of these services are necessarily useful and of value in managing the Fund. Conversely, research and brokerage services provided to the Fund by broker-dealers in connection with trades executed on behalf of other clients of PIMCO may be useful to PIMCO in managing the Fund, although not all of these services may be necessarily useful and of value to PIMCO in managing such other clients.

In reliance on the "safe harbor" provided by Section 28(e) of the Exchange Act, as amended, PIMCO may cause the Fund to pay broker-dealers which provide them with "brokerage and research services" (as defined in the Exchange Act) an amount of commission for effecting a securities transaction for the Fund in excess of the commission which another broker-dealer would have charged for effecting that transaction if PIMCO determines in good faith that the commission is reasonable in relation to the value of the brokerage and research services provided by the broker-dealer viewed in terms of either a particular transaction or PIMCO's overall responsibilities to the advisory accounts for which PIMCO exercises investment discretion.

PIMCO may place orders for the purchase and sale of exchanged-listed portfolio securities with a broker-dealer that is an affiliate of PIMCO where, in the judgment of PIMCO, such firm will be able to obtain a price and execution at least as favorable as other qualified broker-dealers.

Pursuant to rules of the SEC, a broker-dealer that is an affiliate of PIMCO may receive and retain compensation for effecting portfolio transactions for the Fund on a national securities exchange of which the broker-dealer is a member if the transaction is "executed" on the floor of the exchange by another broker which is not an "associated person" of the affiliated broker-dealer, and if there is in effect a written contract between PIMCO and the Fund expressly permitting the affiliated broker-dealer to receive and retain such compensation.

SEC rules further require that commissions paid to such an affiliated broker dealer, or PIMCO by the Fund on exchange transactions not exceed "usual and customary brokerage commissions." The rules define "usual and customary" commissions to include amounts which are "reasonable and fair compared to the commission, fee or other remuneration received or to be received by other brokers in connection with comparable transactions involving similar securities being purchased or sold on a securities exchange during a comparable period of time."

The Fund did not pay any commissions to affiliated brokers in the fiscal years ended December 31, 2025, December 31, 2024 and fiscal period ended December 31, 2023.

**Holdings of Securities of the Fund's Regular Brokers and Dealers**

The following table lists the regular brokers or dealers of the Fund whose securities the Fund acquired during the fiscal year ended December 31, 2025, as well as the Fund's holdings in such brokers or dealers as of December 31, 2025.

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| | |
|:---|:---|
| **Broker or Dealer** | **Value of Securities**<br> **Held by the Fund as**<br> **of December 31, 2025 ($000)**<br>|
| JPMorgan Chase & Co. | &nbsp;&nbsp; $124 |

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**DISTRIBUTIONS**

See "Distributions" in the Prospectus for information relating to distributions to Fund shareholders.

**DESCRIPTION OF CAPITAL STRUCTURE AND SHARES**

The following is a brief description of the capital structure of the Fund. This description does not purport to be complete and is subject to and qualified in its entirety by reference to the Declaration and the Fund's Bylaws, as amended and restated through the date hereof (the "Bylaws"). The Declaration and Bylaws are each exhibits to the registration statement of which this Statement of Additional Information is a part.

The Fund is an unincorporated voluntary association with transferable shares of beneficial interest (commonly referred to as a "Massachusetts business trust") established under the laws of The Commonwealth of Massachusetts by the Declaration. The Declaration provides that the Trustees of the Fund may authorize separate classes of shares of beneficial interest. Preferred Shares (such as the RVMTP Shares) may be issued in one or more series, with such par value and with such rights as determined by the Board, by action of the Board without the approval of the Common Shareholders.

**Common Shares**

The Declaration authorizes the issuance of an unlimited number of Common Shares. The Common Shares will be issued with a par value of $0.00001 per share. The Fund currently has five separate classes of Common Shares: Institutional Class, Class A-1, Class A-2, Class A-3 and Class A-4. An investment in any share class of the Fund represents an investment in the same assets of the Fund. However, the ongoing fees and expenses for each share class may be different. The fees and expenses for the Fund are set forth in "Summary of Fund Expenses" above. Certain share class details are set forth in "Plan of Distribution" above.

Common Shareholders will be entitled to the payment of dividends and other distributions when, as and if declared by the Board after payment of preferential amounts payable to holders of Preferred Shares. All Common Shares of the Fund have equal rights as to the payment of dividends and the distribution of assets upon liquidation of the Fund. The Common Shares currently outstanding have been fully paid and, subject to matters discussed in "Anti-Takeover and Other Provisions in the Declaration of Trust and Bylaws-Shareholder Liability" below, are non-assessable, and have no pre-emptive or conversion rights or rights to cumulative voting. Upon liquidation of the Fund, after paying or adequately providing for the payment of all liabilities of the Fund and the liquidation preference with respect to any outstanding preferred shares, and upon receipt of such releases, indemnities and refunding agreements as they deem necessary for their protection, the Trustees may distribute the remaining assets of the Fund among the Fund's Common Shareholders.

The Fund does not intend to hold annual meetings of shareholders. If the Fund does hold a meeting of shareholders, Common Shares of the Fund entitle their holders to one vote for each Common Share held; however, separate votes are taken by each class of Common Shares on matters affecting an individual class of Common Shares. Each fractional share shall be entitled to a proportionate fractional vote, except as otherwise provided by the Declaration, Bylaws, or required by applicable law. So long as any Preferred Shares are outstanding, holders of Preferred Shares will be able to elect two Trustees and vote as a separate class on certain matters.

The Fund will send unaudited reports at least semiannually and audited financial statements annually to all of its Common Shareholders.

The Common Shares are not, and are not expected to be, listed for trading on any national securities exchange nor is there expected to be any secondary trading market in the Common Shares.

**Preferred Shares**

The Declaration authorizes the issuance of an unlimited number of preferred shares. Preferred shares may be issued in one or more classes or series, with such par value and rights as determined by the Board, by action of the Board without the approval of the Common Shareholders.

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On January 12, 2024, the Fund issued 250 RVMTP Shares in a single series of Remarketable Variable Rate MuniFund Term Preferred Shares, Series 2054 (the "RVMTP Shares"). The RVMTP Shares have a par value of $0.00001 per share and liquidation preference of $100,000 per share. The RVMTP Shares have various rights that were approved by the Board without the approval of the Common Shareholders, which are specified in the Fund's Bylaws. Certain rights, terms and conditions are summarized below:

*Distribution Preference.* Any Preferred Shares, including, without limitation, the RVMTP Shares, have complete priority over the Common Shares as to distribution of assets.

*RVMTP Share Dividends.* The dividend rate paid on the RVMTP Shares is determined over the course of a seven-day period which generally commences each Thursday and ends the following Wednesday (the "Rate Period"). The dividends per share for the RVMTP Shares for a given Rate Period are dependent on the RVMTP Share dividend rate (the "RVMTP Share Dividend Rate") for that Rate Period. The RVMTP Share Dividend Rate is equal to (i) the sum of the Index Rate<sup>1</sup> plus (ii) the Applicable Spread<sup>2</sup> (including the "Spread Adjustment"<sup>3</sup>,as applicable) plus (iii) the Failed Remarketing Spread<sup>4</sup>, if applicable. The dividend per RVMTP Share for the Rate Period is then determined as described in the table below.<sup>5</sup>

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Dividend Rate** |  | **Rate Period Fraction** |  | **RVMTP Shares**<br> **Liquidation**<br> **Preference**<br>| **Dividend** |
| Dividend Rate | X | Number of days in the Rate Period <br> (or a part thereof)<br>| X | 100000 | Dividends per RVMTP Share |
| Dividend Rate | X | Divided by Total number of days <br> in the year<br>| X | 100000 | Dividends per RVMTP Share |

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The Index Rate is determined by reference to a weekly, high-grade index comprised of seven-day, tax-exempt variable rate demand notes, generally the Securities Industry and Financial Markets Association Municipal Swap Index.

The Applicable Spread for a Rate Period is a percentage per annum that is based on (i) the long term rating most recently assigned by the applicable ratings agency to such series of the RVMTP Shares, and (ii) the "Spread Adjustment."

The "Spread Adjustment" means, (i) for the period from the date of original issuance of the RVMTP Shares, January 12, 2024 to and including the date that is six months prior to the then current RVMTP Early Term Redemption Date (as defined below) ("Rate Period Termination Date"), 0%, and (ii) for the period after the Rate Period Termination Date, 2.00%.

The Failed Remarketing Spread with respect to a series of RVMTP Shares means (i) for so long as two or more Failed Remarketings have not occurred, 0%, and (ii) following the second occurrence of a Failed Remarketing, 0.25% multiplied by the number of Failed Remarketings that have occurred after the first Failed Remarketing. A "Failed Remarketing," with respect to the RVMTP Shares, will occur if any RVMTP Shares subject to a Mandatory Tender Event due to the Fund designating a Special Terms Period have not been either retained by the holders or successfully remarketed by the Mandatory Tender Date (each as defined below).

An increased RVMTP Share Dividend Rate could be triggered by the Fund's failure to comply with certain requirements relating to such series of the RVMTP Shares, certain actions taken by the applicable ratings agency or certain determinations regarding the tax status of such series of the RVMTP Shares made by a court or other applicable governmental authority. The RVMTP Share Dividend Rate will in no event exceed 15% per year.

*Preferred Shareholder Gross-Up.* As noted above, RVMTP Shares each pay dividend distributions at stated rates, which rates are based generally on the assumption that such dividend distributions consist entirely of "exempt-interest dividends" (as defined below under "Taxation—Exempt-Interest Dividends"). The terms of the RVMTP Shares provide further that, in the event less than the entire amount of any particular dividend distribution paid pursuant to the stated rate were to consist of "exempt-interest dividends" (i.e., if a portion of any particular dividend were to derive from ordinary income or capital gain, including short-term capital gain taxable as ordinary income when distributed), the amount of such dividend would increase by an amount (the "Preferred Shareholder Gross-Up") such that the after-tax amount of such dividend, as increased by the Preferred Shareholder Gross-Up, would equal the total amount the holder of such RVMTP Shares would have received if the dividend at the stated rate had consisted entirely of "exempt-interest dividends." The Preferred Shareholder Gross-Up is calculated (i) without consideration being given

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to the time value of money, (ii) assuming that no holder of RVMTP Shares is subject to the federal AMT, and (iii) assuming that the portion of any dividend distribution (including the amount of the Preferred Shareholder Gross-Up) that is not an exempt interest dividend would be taxable (x), in the hands of the initial purchaser of the RVMTP Shares (or certain of its affiliates), at the maximum marginal regular federal corporate income tax rate (or, in the case of a California Holder of the RVMTP Shares, the maximum marginal combined regular federal and California corporate income tax rate, taking account of the federal income tax deductibility of state and local taxes paid or incurred), and (y) in the case of any other holder, at the greater of (a) the maximum marginal regular federal individual income tax rate (or, in the case of a California Holder of the RVMTP Shares, the maximum marginal combined regular federal and California individual income tax rate, taking account of the federal income tax deductibility of state and local taxes paid or incurred) (taking into account the 3.8% Medicare contribution tax on net investment income) applicable to ordinary income or net capital gain, as applicable, or (b) the maximum marginal regular federal corporate income tax rate (or, in the case of a California Holder of the RVMTP Shares, the maximum marginal combined regular federal and California corporate income tax rate, taking account of the federal income tax deductibility of state and local taxes paid or incurred) applicable to ordinary income or net capital gain, as applicable, in each case disregarding the effect of any state or local taxes other than California taxes, as applicable. Any Preferred Shareholder Gross-Up will reduce the amount that would otherwise be distributable to Common Shareholders.

*Liquidation Preference.* In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Fund, holders of RVMTP Shares are entitled to receive a preferential liquidating distribution (equal to the original purchase price per share of $100,000 plus accumulated and unpaid dividends thereon, whether or not earned or declared) before any distribution of assets is made to Common Shareholders.

*Voting Rights.* Under the Act, Preferred Shares (including, without limitation, the RVMTP Shares) are required to be voting shares and to have equal voting rights with Common Shares. Except as otherwise indicated in the Prospectus or this Statement of Additional Information, and except as otherwise required by applicable law, Preferred Shares vote together with Common Shareholders as a single class.

In addition, holders of Preferred Shares, including RVMTP Shares, voting as a separate class, are entitled to elect two of the Fund's trustees. The remaining trustees are elected by Common Shareholders and Preferred Shareholders, voting together as a single class. In the unlikely event that two full years of accrued dividends are unpaid on the Preferred Shares, the holders of all outstanding Preferred Shares voting as a separate class, are entitled to elect a majority of the Fund's trustees until all dividends in arrears with respect to the Preferred Shares have been paid or declared and set apart for payment. In order for the Fund to take certain actions or enter into certain transactions, a separate class vote of Preferred Shareholders is required, in addition to the single class vote of the holders of Preferred Shares and Common Shares.

*1940 Act Asset Coverage*. In accordance with the Fund's governing documents and the Act, the Fund is required to maintain certain asset coverage with respect to all outstanding senior securities of the Fund which are stocks for purposes of the Act, including the RVMTP Shares.

Under the Act, the Fund is not permitted to issue preferred shares unless, immediately after such issuance, the value of the Fund's total net assets (as defined below) is at least 200% of the liquidation value of any outstanding preferred shares and the newly issued 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, the Fund is not permitted to declare or pay common share dividends unless immediately thereafter the Fund has a minimum asset coverage ratio of 200% with respect to all outstanding senior securities of the Fund which are stocks for purposes of the Act after deducting the amount of such common share dividends.

In addition, under the terms of the RVMTP Shares, the Fund must maintain an "asset coverage," as defined for purposes of Section 18(h) of the Act, of at least 225% with respect to all outstanding preferred shares, including all previously issued outstanding preferred shares (or such other asset coverage as may in the future be specified in or under the Act or by rule, regulation or order of the United States Securities and Exchange Commission as the minimum asset coverage for senior securities which are shares of stock of a closed-end investment company).

*Additional Investment Limitations.* Under the terms of purchase agreements between the Fund and the initial investor in the RVMTP Shares, the Fund is subject to various investment limitations. These investment limitations are

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in addition to, and may be more restrictive than, those to which the Fund is subject in accordance with its investment objectives and policies as described herein and in the Prospectus.

*Effective Leverage Ratio Requirement.* In accordance with the Bylaws, without the prior written consent of the holders of RVMTP Shares, the Fund's Effective Leverage Ratio may not exceed 45% (or 46% solely by reason of fluctuations in the market value of the Fund's portfolio securities) as of the close of business on any business day. If the Fund fails to comply with any additional requirements relating to the calculation of the Effective Leverage Ratio requirement applicable to the RVMTP Shares and, in any such case, such failure is not cured as of the close of business on the date that is ten business days following the business day on which such non-compliance is first determined (the "Effective Leverage Ratio Cure Date"), the Fund shall cause the Effective Leverage Ratio to not exceed 45% (or 46% solely by reason of fluctuations in the market value of the Fund's portfolio securities), by (i) not later than the close of business on the business day next following the Effective Leverage Ratio Cure Date, engaging in transactions involving or relating to any floating rate securities not owned by the Fund and/or any inverse floating rate securities owned by the Fund, including the purchase, sale or retirement thereof, (ii) to the extent permitted by law, not later than the close of business on the second business day next following the Effective Leverage Ratio Cure Date, causing a notice of redemption to be issued for the redemption of a sufficient number of Preferred Shares, in accordance with the terms of the Preferred Shares, or (iii) engaging in any combination, in the Fund's discretion, of the actions contemplated by clauses (i) and (ii).

*Issuance of Additional Preferred Shares.* So long as any RVMTP Shares are outstanding, the Fund may, without the vote or consent of the holders thereof, authorize, establish and create and issue and sell shares of one or more series of Preferred Shares ranking on a parity with RVMTP Shares as to the payment of dividends and the distribution of assets upon dissolution, liquidation or the winding up of the affairs of the Fund, in addition to then outstanding series of RVMTP Shares, including additional series of RVMTP Shares, and authorize, issue and sell additional shares of any such Series of Preferred Shares then outstanding or so established or created, including additional series of RVMTP Shares, in each case in accordance with applicable law, provided that the Fund shall, immediately after giving effect to the issuance of such Preferred Shares and to its receipt and application of the proceeds thereof, including to the redemption of Preferred Shares with such proceeds, have "asset coverage," as defined for the purposes of Section 18(h) of the Act, of at least 225% and an effective leverage ratio not exceeding 45% (calculated according to the terms of the section below entitled "Preferred Shares-Calculation of Effective Leverage Ratio").

*Calculation of Effective Leverage Ratio.* 

For purposes of determining whether the effective leverage requirement discussed above is satisfied, the "Effective Leverage Ratio" on any date shall mean the quotient of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The sum of (A) the aggregate liquidation preference of the Fund's "senior securities" (as that term is defined in the Act) that are stock for purposes of the Act, excluding, without duplication, (1) any such senior securities for which the Fund has issued a notice of redemption and either has delivered deposit securities or sufficient securities or funds, (as applicable in accordance with the terms of such senior securities) to the paying agent for such senior securities or otherwise has adequate deposit securities or sufficient securities or funds on hand for the purpose of such redemption (as applicable in accordance with the terms of such senior securities) and (2) any such senior securities that are to be redeemed with net proceeds from the sale of the RVMTP Shares, for which the Fund has delivered deposit securities or sufficient securities or funds (as applicable in accordance with the terms of such senior securities) to the paying agent for such senior securities or otherwise has adequate deposit securities or sufficient securities or funds on hand (as applicable in accordance with the terms of such senior securities) for the purpose of such redemption; (B) the aggregate principal amount of the Fund's "senior securities representing indebtedness" (as that term is defined in the Act giving effect to any interpretations thereof by the SEC or its staff); (C) the aggregate principal amount of floating rate securities corresponding to any associated residual floating rate securities not owned by the Fund (less the aggregate principal amount of any such floating rate securities owned by the Fund and corresponding to the associated residual floating rate securities owned by the Fund); and (D) the aggregate amount of the purchase price component payable for a repurchase under reverse repurchase agreements entered into by the Fund; divided by

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The sum of (A) the market value of the Fund's total assets (including amounts attributable to senior securities, but excluding any assets consisting of deposit securities or funds referred to in clauses

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(A)(1) and (A)(2) above), less the amount of the Fund's accrued liabilities (other than liabilities for the aggregate principal amount of "senior securities representing indebtedness" (as that term is defined in the Act, giving effect to any interpretations thereof by the SEC or its staff), including floating rate securities), (B) the aggregate principal amount of floating rate securities not owned by the Fund that correspond to the associated inverse floating rate securities owned by the Fund; and (C) the aggregate amount of the purchase price component payable for a repurchase under reverse repurchase agreements entered into by the Fund.

*Ratings Agency Guidelines.* The Fund has obtained ratings for the RVMTP Shares from Fitch. For so long as Fitch is rating the RVMTP Shares, the Fund has agreed to adhere to separate guidelines and asset coverage requirements specific to Fitch ("Fitch Preferred Shares Asset Coverage") as described in Fitch's published Closed-End Funds and Market Value Structures Rating Criteria ("Fitch Rating Criteria"). These guidelines may be changed by Fitch, in its sole discretion, from time to time. These guidelines impose asset coverage or portfolio composition requirements that may be more stringent than those imposed on the Fund by the Act.

Satisfaction of Fitch Preferred Shares Asset Coverage for the RVMTP Shares requires that the Fund satisfy both a "Fitch Total Overcollateralization Test" ("Fitch Total OC") and a "Fitch Net Over Collateralization Test" ("Fitch Net OC", and together with Fitch Total OC, the "Fitch OC Tests"), in each case to be consistent with the then-current rating of the RVMTP Shares assigned by Fitch using the calculations set forth in the Fitch Rating Criteria, including information therein relating to diversification guidelines as applied to the Fund. The Fund will use the calculations set forth in any updates to or subsequent version of the Fitch Rating Criteria formally adopted by Fitch with respect to the ratings of outstanding remarketable variable rate munifund preferred shares issued by registered closed-end funds within a reasonable time from the date of such adoption.

The Fund has agreed that it will adhere to the Fitch OC Tests as described above as of the close of business on the last business day of each month for so long as Fitch is rating the RVMTP Shares. If the Fund fails to adhere to the Fitch OC Tests as described in the preceding sentence, the Fund will cure such failure (including, without limitation, by causing a notice of redemption to be issued for the redemption of a sufficient number of the Fund's Preferred Shares) within ten days following the business day on which such failure is first determined.

Fitch may change its rating methodologies for evaluating and providing ratings for shares of closed-end funds at any time and in its sole discretion, perhaps substantially. Such a change could adversely affect the ratings assigned to the Fund's Preferred Shares, the dividend rates paid thereon, and the expenses borne by the Fund's Common Shareholders.

*Mandatory Redemptions.* The RVMTP Shares are subject to a mandatory term redemption date of January 12, 2054, subject to the Fund's right to extend the term with the consent of the holders of the RVMTP Shares (the "RVMTP Share Term Redemption Date"). There is no assurance that the term of the RVMTP Shares will be extended.

In addition, with respect to each series of RVMTP Shares, a "Mandatory Tender Event" will occur on each date that is (i) 20 business days before each 42-month anniversary of the date of original issue of such series of the RVMTP Shares (each such anniversary, an "RVMTP Early Term Redemption Date"), (ii) the date the Fund delivers a notice designating a Special Terms Period, and (iii) 20 business days before the end of a Special Terms Period (provided that no subsequent Terms Period is designated). If any RVMTP Shares subject to a Mandatory Tender Event upon an RVMTP Early Term Redemption Date or upon the end of a Special Terms Period have not been either retained by the holders or remarketed by the Mandatory Tender Date, the Fund will redeem such RVMTP Shares on the RVMTP Early Term Redemption Date.<sup>1</sup>

<sup>1</sup>

With respect to the Mandatory Tender Events described in clauses (i), (ii) and (iii) above, the corresponding "Mandatory Tender Date" means, respectively: (i) the date that is the 42 month anniversary of the date of original issue of such series of RVMTP Share, (ii) the date on which the related Special Terms Period becomes effective, and (iii) the last day of the related Special Terms Period (subject, in each case, to the holders' election to retain their RVMTP Shares).

The RVMTP Shares are also subject to mandatory redemption by the Fund, in whole or in part, in certain circumstances, such as the failure by the Fund to comply with asset coverage and/or effective leverage ratio requirements described above (and the failure to cure any such failure within the applicable cure period) or certain actions taken by the applicable ratings agency.

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*Term Redemption and Early Term Redemption Liquidity Account.* At least six months prior to the RVMTP Share Term Redemption Date or the RVMTP Early Term Redemption Date (each, a "Redemption Date"), the Fund will maintain segregated assets of a minimum credit rating quality with a market value equal to at least 110% of the redemption price of all outstanding RVMTP Shares to be redeemed until the redemption of all such outstanding RVMTP Shares, as applicable. The Fund will include certain liquid and/or highly rated assets in an amount equal to 20% of such segregated assets with five months remaining to the Redemption Date, which amount will increase monthly by 20% and reach 100% with one month remaining to the Redemption Date.

*Optional Redemption.* The Fund may redeem, in whole or from time to time in part, the outstanding RVMTP Shares at a redemption price per share equal to (i) the liquidation preference of the RVMTP Shares ($100,000 per share) plus (ii) an amount equal to all unpaid dividends and other distributions on such RVMTP Shares, as applicable, accumulated from and including the date of issuance to (but excluding) the date of redemption (whether or not earned or declared by the Fund, but without interest thereon) plus (iii) any applicable optional redemption premium.<sup>2</sup>

<sup>2</sup>

If the Fund redeems RVMTP Shares prior to the first anniversary of its closing date, the applicable optional redemption premium will be equal to the product of (i) the Applicable Spread for such RVMTP share in effect on the date of the optional redemption and (ii) the liquidation preference of such RVMTP Share and (iii) a fraction, the numerator of which is the number of calendar days from and including the date of redemption to and excluding the first anniversary of the closing date and the denominator of which is the actual number of calendar days from and including January 12, 2024 to and excluding the first anniversary of the closing date. If either (a) the optional redemption date for such RVMTP Share either occurs on or after the first anniversary of the closing or (b) the Fund notifies JPMorgan Chase Bank, N.A. ("JPMorgan") that the optional redemption date has been called in connection with a redemption of common shares as described in Section 6.20 of the Amended and Restated Purchase Agreement, then zero. If fewer than all of the outstanding RVMTP Shares of a Series are to be redeemed, the shares of such Series to be redeemed shall be selected either (A) pro rata among the holders of such Series, (B) by lot, or (C) in such other manner as the Board may determine to be fair and equitable.

*RVMTP Mandatory Tender.* Upon the occurrence of a Mandatory Tender Event with respect to a series of RVMTP Shares, all RVMTP Shares in such series will be subject to mandatory tender (subject to the holders' election to retain their RVMTP Shares) and the Fund will issue or cause to be issued a notice of mandatory tender to the holders of such RVMTP Shares for remarketing on the Mandatory Tender Date.

*Common Share Repurchases.* In the event that the Fund notifies JPMorgan that it will repurchase its common shares more frequently than quarterly or repurchase more than 12% of its issued and outstanding Common Shares in connection with a single repurchase offer, the Fund must redeem all of the RVMTP Shares held by JPMorgan by the date of such common share repurchase if JPMorgan requests such redemption in writing to the Fund within five (5) business days after receiving such notice.

**ANTI-TAKEOVER AND OTHER PROVISIONS IN THE DECLARATION OF TRUST AND BYLAWS**

**Anti-Takeover Provisions**

The Declaration and the Bylaws include provisions that could limit the ability of other entities or persons to acquire control of the Fund or to convert the Fund to open-end status.

As described below, the Declaration grants special approval rights with respect to certain matters to members of the Board who qualify as "Continuing Trustees," which term means a Trustee who either (i) has been a member of the Board for a period of at least thirty-six months (or since the commencement of the Fund's operations, if less than thirty-six months) or (ii) was nominated to serve as a member of the Board by a majority of the Continuing Trustees then members of the Board.

The Declaration requires the affirmative vote or consent of at least seventy-five percent (75%) of the Board and holders of at least seventy-five percent (75%) of the Fund's shares to authorize certain Fund transactions not in the ordinary course of business, including a merger or consolidation or share exchange, any shareholder proposal as to specific investment decisions made or to be made with respect to the assets of the Fund or issuance or transfer by the Fund of the Fund's shares having an aggregate fair market value of $1,000,000 or more (except as may be made pursuant to a public offering, the Fund's dividend reinvestment plan or upon exercise of any stock subscription rights),

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unless the transaction is authorized by both a majority of the Trustees and seventy-five percent (75%) of the Continuing Trustees (in which case no shareholder authorization would be required by the Declaration, but may be required in certain cases under the Act). The Declaration also requires the affirmative vote or consent of holders of at least seventy-five percent (75%) of the Fund's shares entitled to vote on the matter to authorize a conversion of the Fund from a closed-end to an open-end investment company, unless the conversion is authorized by both a majority of the Trustees and seventy-five percent (75%) of the Continuing Trustees (in which case shareholders would have only the minimum voting rights required by the Act with respect to the conversion). Also, the Declaration provides that the Fund may be terminated at any time by vote or consent of at least seventy-five percent (75%) of the Fund's shares or, alternatively, by vote or consent of both a majority of the Trustees and seventy-five percent (75%) of the Continuing Trustees upon written notice to shareholders of the Fund.

The Trustees may from time to time grant other voting rights to shareholders with respect to these and other matters in the Bylaws, certain of which are required by the Act.

The overall effect of these provisions is to render more difficult the accomplishment of a merger or the assumption of control of the Fund by a third party. These provisions also provide, however, the advantage of potentially requiring persons seeking control of the Fund to negotiate with its management regarding the price to be paid and facilitating the continuity of the Fund's investment objectives and policies. The Board has considered the foregoing anti-takeover provisions and concluded that they are in the best interests of the Fund and its shareholders, including Common Shareholders.

The foregoing is intended only as a summary and is qualified in its entirety by reference to the full text of the Declaration and the Bylaws, both of which are on file with the SEC.

**Shareholder Liability**

Under Massachusetts law, shareholders could, in certain circumstances, be held personally liable for the obligations of the Fund. However, the Declaration contains an express disclaimer of shareholder liability for debts or obligations of the Fund and requires that notice of such limited liability be given in each agreement, obligation or instrument entered into or executed by the Fund or the Trustees. The Declaration further provides for indemnification out of the assets and property of the Fund for all loss and expense of any shareholder held personally liable for the obligations of the Fund. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which the Fund would be unable to meet its obligations. The Fund believes that the likelihood of such circumstances is remote.

**Liability of Trustees**

The Declaration provides that the obligations of the Fund are not binding upon the Trustees of the Fund individually, but only upon the assets and property of the Fund. The Declaration provides further that a Trustee or officer shall be liable for his or her own willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the office of Trustee or officer, and for nothing else, and shall not be liable for errors of judgment or mistakes of fact or law. No provision of the Declaration, however, shall limit or eliminate any duty under the federal securities laws (including any fiduciary duties of loyalty and care) that a Trustee or officer owes to the Fund with respect to claims asserted under the federal securities laws.

**Forum for Adjudication of Disputes**

The Bylaws provide that unless the Fund consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any action or proceeding brought on behalf of the Fund or one or more of the shareholders, (ii) any action asserting a claim of breach of a fiduciary duty owed by any Trustee, officer, other employee of the Fund, or the Fund's investment adviser to the Fund or the Fund's shareholders, (iii) any action asserting a breach of contract by the Fund, by any Trustee, officer or other employee of the Fund, or by the Fund's investment adviser, (iv) any action asserting a claim arising pursuant to any provision of the Massachusetts Business Corporation Act, Chapter 182 of the Massachusetts General Laws or the Declaration or the Bylaws, (v) any action to interpret, apply, enforce or determine the validity of the Declaration or the Bylaws or any agreement contemplated by any provision of the Act, the Declaration or the Bylaws, or (vi) any action asserting a claim governed by the internal affairs doctrine shall be within the federal or state courts in the Commonwealth of Massachusetts (each, a "Covered Action").

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The Bylaws further provide that if any Covered Action is filed in a court other than in a federal or state court sitting within the Commonwealth of Massachusetts (a "Foreign Action") in the name of any shareholder, such shareholder shall be deemed to have consented to (i) the personal jurisdiction of the federal and state courts within The Commonwealth of Massachusetts in connection with any action brought in any such courts to enforce the preceding sentence (an "Enforcement Action") and (ii) having service of process made upon such shareholder in any such Enforcement Action by service upon such shareholder's counsel in the Foreign Action as agent for such shareholder.

Any person purchasing or otherwise acquiring or holding any interest in shares of beneficial interest of the Fund will be (i) deemed to have notice of and consented to the foregoing paragraph and (ii) deemed to have waived any argument relating to the inconvenience of the forum referenced above in connection with any action or proceeding described in the foregoing paragraph.

This forum selection provision may limit a shareholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with Trustees, officers or other agents of the Fund and its service providers, which may discourage such lawsuits with respect to such claims and increase the costs for a shareholder to pursue such claims. If a court were to find the forum selection provision contained in the Bylaws to be inapplicable or unenforceable in an action, the Fund may incur additional costs associated with resolving such action in other jurisdictions. This forum selection provision shall not apply to claims made under federal securities laws. The enforceability of exclusive forum provisions is questionable.

**Derivative and Direct Claims of Shareholders**

The Declaration contains provisions regarding derivative and direct claims of shareholders. As used in the Declaration, a "direct" shareholder claim refers to a claim based upon alleged violations of a shareholder's individual rights independent of any harm to the Fund, including a shareholder's voting rights under Article V of the Declaration or Article 10 of the Bylaws, rights to receive a dividend payment as may be declared from time to time, rights to inspect books and records, or other similar rights personal to the shareholder and independent of any harm to the Fund. Any other claim asserted by a shareholder, including without limitation any claims purporting to be brought on behalf of the Fund or involving any alleged harm to the Fund, are considered a "derivative" claim.

A shareholder or group of shareholders may not bring or maintain any court action, proceeding or claim on behalf of the Fund or any series or class of shares without first making demand on the Trustees requesting the Trustees to bring or maintain such action, proceeding or claim. Such demand shall not be excused under any circumstances, including claims of alleged interest on the part of the Trustees. The Trustees shall consider such demand within 90 days of its receipt by the Fund. In their sole discretion, the Trustees may submit the matter to a vote of shareholders of the Fund or a series or class of shares, as appropriate. Any decision by the Trustees to bring, maintain or settle (or not to bring, maintain or settle) such court action, proceeding or claim, or to submit the matter to a vote of shareholders shall be made by the Trustees in their business judgment and shall be binding upon the shareholders and no suit, proceeding or other action shall be commenced or maintained after a decision to reject a demand. Any Trustee who is not an "interested person" (within the meaning of Section 2(a)(19) of the Act) of the Fund acting in connection with any demand or any proceeding relating to a claim on behalf of or for the benefit of the Fund shall be deemed to be independent and disinterested with respect to such demand, proceeding or claim.

A shareholder or group of shareholders may not bring or maintain a direct action or claim for monetary damages against the Fund or the Trustees predicated upon an express or implied right of action under the Declaration, nor shall any single shareholder, who is similarly situated to one or more other shareholders with respect to the alleged injury, have the right to bring such an action, unless such group of shareholders or shareholder has obtained authorization from the Trustees to bring the action. The requirement of authorization shall not be excused under any circumstances, including claims of alleged interest on the part of the Trustees. The Trustees shall consider such request within 90 days of its receipt by the Fund. In their sole discretion, the Trustees may submit the matter to a vote of shareholders of the Fund or series or class of shares, as appropriate. Any decision by the Trustees to settle or to authorize (or not to settle or to authorize) such court action, proceeding or claim, or to submit the matter to a vote of shareholders, shall be made in their business judgment and shall be binding on all shareholders.

Any person purchasing or otherwise acquiring or holding any interest in shares of beneficial interest of the Fund will be deemed to have notice of and consented to the foregoing provisions. These provisions may limit a

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shareholder's ability to bring a claim against the Trustees, officers or other agents of the Fund and its service providers, which may discourage such lawsuits with respect to such claims.

These provisions in the Declaration regarding derivative and direct claims of shareholders shall not apply to claims made under federal securities laws.

**CONVERSION TO OPEN-END FUND**

The Fund's Board may also from time to time consider submitting to the Fund's shareholders a proposal to convert the Fund to an open-end investment company. In determining whether to exercise its sole discretion to submit this issue to shareholders, the Board would consider all factors then relevant, including the size of the Fund, the extent to which shareholders have adequate liquidity through repurchase offers, the extent to which the Fund's capital structure is leveraged and the possibility of re-leveraging the spread, if any, between the yields on securities in the Fund's portfolio and dividend charges on any Preferred Shares issued by the Fund and general market and economic conditions.

The Declaration requires the affirmative vote or consent of holders of at least seventy-five percent (75%) of each class of the Fund's shares entitled to vote on the matter to authorize a conversion of the Fund from a closed-end to an open-end investment company, unless the conversion is authorized by both a majority of the Board and seventy-five percent (75%) of the Continuing Trustees (as defined above under "Anti-Takeover and Other Provisions in the Declaration of Trust and Bylaws — Anti-Takeover Provisions"). This seventy-five percent (75%) shareholder approval requirement is higher than is required under the Act. In the event that a conversion is approved by the Trustees and the Continuing Trustees as described above, the minimum shareholder vote required under the Act would be necessary to authorize the conversion. Currently, the Act would require approval of the holders of a "majority of the outstanding" Common Shares and Preferred Shares voting together as a single class, and the holders of a "majority of the outstanding" Preferred Shares voting as a separate class, in order to authorize a conversion. If the Fund were to convert to an open-end investment company, it would be required to redeem all Preferred Shares then outstanding (requiring in turn that it liquidate a portion of its investment portfolio).

Shareholders of an open-end investment company may require the company to redeem their shares on any business day (except in certain circumstances as authorized by or under the Act) at their net asset value, less such redemption charge, if any, as might be in effect at the time of redemption, whereas the Fund currently makes only quarterly offers to repurchase its Common Shares (typically 5% per quarter), and shareholders do not have the right to otherwise have shares redeemed. Open-end companies are thus subject to more frequent periodic out-flows that can complicate portfolio management in comparison to the Fund. As described above, the Fund, like an open-end company, intends to engage in a continuous offering of its shares.

**NET ASSET VALUE**

Net asset value is determined as indicated under "How Fund Shares Are Priced" in the Prospectus. The Fund's net asset value will not be determined on the following holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Juneteenth National Independence Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.

**TAXATION**

The following discussion of U.S. federal income tax consequences of investment in Common Shares of the Fund is based on the Code, U.S. Treasury regulations, and other applicable authority, as of the date of this Statement of Additional Information. These authorities are subject to change by legislative or administrative action, possibly with retroactive effect. The following discussion is only a summary of some of the important U.S. federal income tax considerations generally applicable to investments in Common Shares of the Fund. This summary does not purport to be a complete description of the U.S. federal income tax considerations applicable to an investment in Common Shares of the Fund. There may be other tax considerations applicable to particular shareholders. For example, except as otherwise specifically noted herein, we have not described certain tax considerations that may be relevant to certain types of holders subject to special treatment under the U.S. federal income tax laws, including shareholders subject to the U.S. federal AMT, insurance companies, tax-exempt organizations, pension plans and trusts, RICs, dealers in securities, shareholders holding Common Shares through tax-advantaged accounts (such as 401(k) plans or individual

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retirement accounts), financial institutions, shareholders holding Common Shares as part of a hedge, straddle, or conversion transaction, entities that are not organized under the laws of the United States or a political subdivision thereof, and persons who are neither citizens nor residents of the United States. This summary assumes that investors hold Common Shares as capital assets (within the meaning of the Code). Shareholders should consult their own tax advisors regarding their particular situation and the possible application of U.S. federal, state, local, non-U.S. or other tax laws, and any proposed tax law changes.

**Taxation of the Fund**

The Fund has elected and intends each year to qualify and be eligible to be treated as a RIC under Subchapter M of the Code. In order to qualify for the special tax treatment accorded RICs and their shareholders, the Fund must, among other things: (a) derive at least 90% of its gross income for each taxable year from (i) dividends, interest, payments with respect to certain securities loans, and gains from the sale or other disposition of stock, securities or foreign currencies, or other income (including but not limited to gains from options, futures, or forward contracts) derived with respect to its business of investing in such stock, securities, or currencies and (ii) net income derived from interests in "qualified publicly traded partnerships" (as defined below); (b) diversify its holdings so that, at the end of each quarter of the Fund's taxable year, (i) at least 50% of the value of the Fund's total assets consists of cash and cash items (including receivables), U.S. government securities, securities of other RICs, and other securities limited in respect of any one issuer to a value not greater than 5% of the value of the Fund's total assets and not more than 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of the value of the Fund's total assets is invested, including through corporations in which the Fund owns a 20% or more voting stock interest, (x) in the securities (other than those of the U.S. government or other RICs) of any one issuer or of two or more issuers that the Fund controls and that are engaged in the same, similar, or related trades or businesses, or (y) in the securities of one or more qualified publicly traded partnerships (as defined below); and (c) distribute with respect to each taxable year at least 90% of the sum of its investment company taxable income (as that term is defined in the Code without regard to the deduction for dividends paid—generally, taxable ordinary income and the excess, if any, of net short-term capital gains over net long-term capital losses) and any net tax-exempt interest income for such year.

In general, for purposes of the 90% gross income requirement described in paragraph (a) above, income derived from a partnership will be treated as qualifying income only to the extent such income is attributable to items of income of the partnership that would be qualifying income if realized directly by the RIC. However, 100% of the net income derived from an interest in a "qualified publicly traded partnership" (a partnership (x) the interests in which are traded on an established securities market or are readily tradable on a secondary market or the substantial equivalent thereof and (y) that derives less than 90% of its income from the qualifying income described in paragraph (a)(i) above) will be treated as qualifying income. In general, such entities will be treated as partnerships for U.S. federal income tax purposes because they meet the passive income requirement under Code section 7704(c)(2). In addition, although in general the passive loss rules of the Code do not apply to RICs, such rules do apply to a RIC with respect to items attributable to an interest in a qualified publicly traded partnership.

For purposes of the diversification test in (b) above, the term "outstanding voting securities of such issuer" will include the equity securities of a qualified publicly traded partnership. Also, for purposes of the diversification test in (b) above, the identification of the issuer (or, in some cases, issuers) of a particular Fund investment can depend on the terms and conditions of that investment. In some cases, identification of the issuer (or issuers) is uncertain under current law, and an adverse determination or future guidance by the IRS with respect to issuer identification for a particular type of investment may adversely affect the Fund's ability to meet the diversification test in (b) above.

If the Fund qualifies as a RIC that is accorded special tax treatment, the Fund will not be subject to U.S. federal income tax on income or gains distributed in a timely manner to Common Shareholders in the form of dividends (including Capital Gain Dividends, as defined below). If the Fund were to fail to meet the income, diversification, or distribution tests described above, the Fund could in some cases cure such failure, including by paying a Fund-level tax, paying interest, making additional distributions, or disposing of certain assets. If the Fund were ineligible to or otherwise did not cure such failure for any year, or were otherwise to fail to qualify as a RIC accorded special tax treatment for such year, the Fund would be subject to tax on its taxable income at corporate rates, and all distributions from earnings and profits, including any distributions of net tax-exempt income and net long-term capital gains, would be taxable to Common Shareholders as ordinary income. Some portions of such distributions may be eligible for the dividends-received deduction in the case of corporate shareholders and may be eligible to be treated as "qualified dividend income" in the case of shareholders taxed as individuals, provided, in both cases, that the shareholder meets

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certain holding period and other requirements in respect of the Fund's Common Shares (as described below). In addition, the Fund could be required to recognize unrealized gains, pay substantial taxes and interest and make substantial distributions before re-qualifying as a RIC that is accorded special tax treatment.

The Fund intends to distribute to its shareholders, at least annually, all or substantially all of its investment company taxable income (computed without regard to the dividends-paid deduction), its net tax-exempt income (if any) and its net capital gain (that is, the excess of net long-term capital gain over net short-term capital loss, in each case determined with reference to any loss carryforwards). Any taxable income including any net capital gain retained by the Fund will be subject to tax at the Fund level at regular corporate rates. In the case of net capital gain, the Fund is permitted to designate the retained amount as undistributed capital gain in a timely notice to its shareholders who would then, in turn, (i) be required to include in income for U.S. federal income tax purposes, as long-term capital gain, their share of such undistributed amount, and (ii) be entitled to credit their proportionate shares of the tax paid by the Fund on such undistributed amount against their U.S. federal income tax liabilities, if any, and to claim refunds on a properly filed U.S. tax return to the extent the credit exceeds such liabilities. If the Fund makes this designation, for U.S. federal income tax purposes, the tax basis of Common Shares owned by a shareholder of the Fund will be increased by an amount equal to the difference between the amount of undistributed capital gains included in the shareholder's gross income under clause (i) of the preceding sentence and the tax deemed paid by the shareholder under clause (ii) of the preceding sentence. The Fund is not required to, and there can be no assurance that the Fund will, make this designation if it retains all or a portion of its net capital gain in a taxable year.

As described under "Use of Leverage" in the Prospectus, if at any time when Preferred Shares are outstanding the Fund does not meet applicable asset coverage requirements, it will be required to suspend distributions to Common Shareholders until the requisite asset coverage is restored. Any such suspension may cause the Fund to pay a U.S. federal income and excise tax on undistributed income or gains and may, in certain circumstances, prevent the Fund from qualifying for treatment as a RIC. The Fund may repurchase, or otherwise retire Preferred Shares, as applicable, in an effort to comply with the distribution requirement applicable to RICs.

Capital losses in excess of capital gains ("net capital losses") are not permitted to be deducted against the Fund's net investment income. Instead, potentially subject to certain limitations, the Fund may carry net capital losses from any taxable year forward to subsequent taxable years to offset capital gains, if any, realized during such subsequent taxable years. Capital loss carryforwards are reduced to the extent they offset current-year net realized capital gains, whether the Fund retains or distributes such gains. If the Fund incurs or has incurred net capital losses, those losses will be carried forward to one or more subsequent taxable years without expiration. Any such carryforward losses will retain their character as short-term or long-term. In the event that the Fund were to experience an ownership change as defined under the Code, the capital loss carryforwards and other favorable tax attributes of the Fund, if any, may be subject to limitation. The Fund's available capital loss carryforwards, if any, will be set forth in its annual shareholder report for each fiscal year.

In determining its net capital gain, including in connection with determining the amount available to support a Capital Gain Dividend (as defined below), its taxable income and its earnings and profits, a RIC generally may elect to treat part or all of any post-October capital loss (defined as any net capital loss attributable to the portion, if any, of the taxable year after October 31 or, if there is no such loss, the net long-term capital loss or net short-term capital loss attributable to such portion of the taxable year) or late-year ordinary loss (generally, the sum of its (i) net ordinary loss from the sale, exchange or other taxable disposition of property, attributable to the portion, if any, of the taxable year after October 31, and its (ii) other net ordinary loss attributable to the portion, if any, of the taxable year after December 31) as if incurred in the succeeding taxable year.

If the Fund were to fail to distribute in a calendar year at least an amount equal to the sum of 98% of its ordinary income for such year and 98.2% of its capital gain net income recognized for the one-year period ending on October 31 of such year (or November 30 or December 31 of that year if the Fund is permitted to elect and so elects), plus any such amounts retained from the prior year, the Fund would be subject to a nondeductible 4% excise tax on the undistributed amounts. For purposes of the required excise tax distribution, a RIC's ordinary gains and losses from the sale, exchange, or other taxable disposition of property that would otherwise be taken into account after October 31 (or November 30 or December 31 of that year if the RIC makes the election described above) generally are treated as arising on January 1 of the following calendar year; in the case of a RIC with a December 31 year end that makes the election described above, no such gains or losses will be so treated. Also, for these purposes, the Fund will be treated as having distributed any amount on which it is subject to corporate income tax for the taxable year ending within the

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calendar year. The Fund intends generally to make distributions sufficient to avoid imposition of the 4% excise tax, although there can be no assurance that it will be able to or will do so.

**Fund Distributions**

The Fund intends to declare income dividends daily and distribute them to Common Shareholders monthly. Unless a shareholder elects otherwise, all distributions (net of applicable withholding tax) will be automatically reinvested in additional Common Shares of the Fund pursuant to the Fund's dividend reinvestment plan (the "Plan"). A shareholder whose distributions are reinvested in Common Shares under the Plan will be treated for U.S. federal income tax purposes as having received an amount in distribution equal to the fair market value of the Common Shares issued to the shareholder, which amount will also be equal to the net asset value of such shares. For U.S. federal income tax purposes, all distributions are generally taxable in the manner described below, whether a shareholder takes them in cash or they are reinvested pursuant to the Plan in additional shares of the Fund. Fund distributions generally will be taxable to shareholders in the calendar year in which the distributions are declared, rather than the calendar year in which the distributions are received. See the discussion below regarding distributions declared in October, November or December for further information. Distributions received by tax-exempt shareholders generally will not be subject to U.S. federal income tax to the extent permitted under applicable tax law.

For U.S. federal income tax purposes, distributions of investment income other than exempt-interest dividends (described below) are generally taxable as ordinary income. Taxes on distributions of capital gains are determined by how long the Fund owned (or is deemed to have owned) the investments that generated the gains, rather than how long a shareholder has owned his or her Common Shares. In general, the Fund will recognize long-term capital gain or loss on investments it has owned (or is deemed to have owned) for more than one year, and short-term capital gain or loss on investments it has owned (or is deemed to have owned) for one year or less. Tax rules can alter the Fund's holding period in investments and thereby affect the tax treatment of gain or loss in respect of such investments. Distributions of net capital gain that are properly reported by the Fund as capital gain dividends ("Capital Gain Dividends") will be taxable to shareholders as long-term capital gains includible in net capital gain and taxed to individuals at reduced rates relative to ordinary income. Distributions of net short-term capital gain (as reduced by any net long-term capital loss for the taxable year) will be taxable to shareholders as ordinary income. The IRS and the U.S. Treasury have issued regulations that impose special rules in respect of Capital Gain Dividends received through partnership interests constituting "applicable partnership interests" under Section 1061 of the Code.

Distributions of investment income reported by the Fund as "qualified dividend income" received by an individual will be taxed at the reduced rates applicable to net capital gain. In order for some portion of the dividends received by a Fund shareholder to be qualified dividend income, the Fund must meet holding period and other requirements with respect to some portion of the dividend-paying stocks in its portfolio and the shareholder must meet holding period and other requirements with respect to the Fund's shares. In general, a dividend will not be treated as qualified dividend income (at either the Fund or shareholder level) (1) if the dividend is received with respect to any share of stock held for fewer than 61 days during the 121-day period beginning on the date which is 60 days before the date on which such share becomes ex-dividend with respect to such dividend (or, in the case of certain preferred securities, 91 days during the 181-day period beginning 90 days before such date), (2) to the extent that the recipient is under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property, (3) if the recipient elects to have the dividend income treated as investment income for purposes of the limitation on deductibility of investment interest, or (4) if the dividend is received from a foreign corporation that is (a) not eligible for the benefits of a comprehensive income tax treaty with the United States (with the exception of dividends paid on stock of such a foreign corporation readily tradable on an established securities market in the United States) or (b) treated as a passive foreign investment company ("PFIC").

In general, dividends of net investment income received by corporate shareholders of the Fund will qualify for the dividends-received deduction generally available to corporations only to the extent of the amount of eligible dividends received by the Fund from domestic corporations for the taxable year if certain holding period and other requirements are met at both the shareholder and Fund levels. The Fund does not expect a significant portion of distributions to be eligible for the dividends-received deduction.

Distributions by the Fund to its shareholders that the Fund properly reports as "section 199A dividends," as defined and subject to certain conditions described below, are treated as qualified REIT dividends in the hands of non-corporate shareholders. Non-corporate shareholders are permitted a federal income tax deduction equal to 20% of

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qualified REIT dividends received by them, subject to certain limitations. Very generally, a "section 199A dividend" is any dividend or portion thereof that is attributable to certain dividends received by a RIC from REITs to the extent such dividends are properly reported as such by the RIC in a written notice to its shareholders. A section 199A dividend is treated as a qualified REIT dividend only if the shareholder receiving such dividend holds the dividend-paying RIC shares for at least 46 days of the 91-day period beginning 45 days before the shares become ex-dividend, and is not under an obligation to make related payments with respect to a position in substantially similar or related property. The Fund is permitted to report such part of its dividends as section 199A dividends as are eligible, but is not required to do so.

Any distribution of income that is attributable to (i) income received by the Fund in lieu of dividends with respect to securities on loan pursuant to a securities lending transaction or (ii) dividend income received by the Fund on securities it temporarily purchased from a counterparty pursuant to a repurchase agreement that is treated for U.S. federal income tax purposes as a loan by the Fund, will not constitute qualified dividend income to non-corporate shareholders and will not be eligible for the dividends-received deduction for corporate shareholders. Similarly, any distribution of income that is attributable to (i) income received by the Fund in lieu of tax-exempt interest with respect to securities on loan or (ii) tax-exempt interest received by the Fund on tax-exempt securities it temporarily purchased from a counterparty pursuant to a repurchase agreement that is treated for U.S. federal income tax purposes as a loan by the Fund, will not constitute an exempt-interest dividend to shareholders.

Certain distributions reported by the Fund as section 163(j) interest dividends may be treated as interest income by shareholders for purposes of the tax rules applicable to interest expense limitations under Code section 163(j). Such treatment by the shareholder is generally subject to holding period requirements and other potential limitations, although the holding period requirements are generally not applicable to dividends declared by money market funds and certain other funds that declare dividends daily and pay such dividends on a monthly or more frequent basis. The amount that the Fund is eligible to report as a section 163(j) dividend for a tax year is generally limited to the excess of the Fund's business interest income over the sum of the Fund's (i) business interest expense and (ii) other deductions properly allocable to the Fund's business interest income.

The IRS currently requires a RIC that the IRS recognizes as having two or more "classes" of stock for U.S. federal income tax purposes to allocate to each such class proportionate amounts of each type of its income (such as ordinary income and capital gains) based upon the percentage of total dividends distributed to each class for the tax year. Accordingly, if the Fund issues one or more series of Preferred Shares, the Fund will allocate Capital Gain Dividends for each tax year between and among its Common Shares and each such series of its Preferred Shares in proportion to the total dividends paid to each class with respect to such tax year, and in a manner intended to comply with both applicable IRS rules and SEC requirements regarding the frequency of distributions of capital gains. Dividends qualifying for the dividends received deduction, as qualified dividend income or as exempt-interest dividends will be allocated between and among Common Shares and each such series of Preferred Shares separately from dividends that do not so qualify, in each case in proportion to the total dividends paid to each share class for the Fund's tax year.

The Code generally imposes a 3.8% Medicare contribution tax on the net investment income of certain individuals, trusts and estates to the extent their income exceeds certain threshold amounts. For these purposes, "net investment income" generally includes, among other things, (i) distributions paid by the Fund of net investment income (other than exempt-interest dividends, described below) and capital gains as described above, and (ii) any net gain from the sale, exchange or other taxable disposition of Fund shares. Common Shareholders are advised to consult their tax advisors regarding the possible implications of this additional tax on their investment in the Fund.

If, in and with respect to any taxable year, the Fund makes a distribution in excess of its current and accumulated "earnings and profits," the excess distribution will be treated as a return of capital to the extent of a shareholder's tax basis in his or her Common Shares, and thereafter as capital gain. A return of capital is not taxable, but it reduces a shareholder's basis in his or her shares, thus reducing any loss or increasing any gain on a subsequent taxable disposition by the shareholder of such shares. If the Fund issues one or more series of Preferred Shares, where one or more such distributions occur in and with respect to any taxable year of the Fund, the available earnings and profits will be allocated first to the distributions made to the holders of such Preferred Shares, and only thereafter to distributions made to Common Shareholders. In such case, the Preferred Shareholders will receive a disproportionate share of the distributions, if any, treated as dividends, and the holders of the Common Shares will receive a disproportionate share of the distributions, if any, treated as a return of capital.

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A distribution by the Fund will be treated as paid on December 31 of any calendar year if it is declared by the Fund in October, November or December with a record date in such a month and paid by the Fund during January of the following calendar year. Such distributions will be taxable to shareholders in the calendar year in which the distributions are declared, rather than the calendar year in which the distributions are received.

As required by federal law, detailed federal tax information with respect to each calendar year will be furnished to shareholders early in the succeeding year.

Dividends and distributions on Common Shares are generally subject to U.S. federal income tax as described herein to the extent they do not exceed the Fund's realized income and gains, even though such dividends and distributions may economically represent a return of a particular shareholder's investment. Such distributions are likely to occur in respect of Common Shares purchased at a time when the Fund's net asset value reflects unrealized gains or income or gains that are realized but not yet distributed. Such realized income and gains may be required to be distributed even when the Fund's net asset value also reflects unrealized losses.

If the Fund holds, directly or indirectly, one or more Build America Bonds issued before January 1, 2011, or other tax credit bonds issued on or before December 31, 2017, on one or more applicable dates during a taxable year, it is possible that the Fund will elect to permit its shareholders to claim a tax credit on their income tax returns equal to each shareholder's proportionate share of tax credits from the applicable bonds that otherwise would be allowed to the Fund. In such a case, a shareholder will be deemed to receive a distribution of money with respect to its Fund shares equal to the shareholder's proportionate share of the amount of such credits and be allowed a credit against the shareholder's U.S. federal income tax liability equal to the amount of such deemed distribution, subject to certain limitations imposed by the Code on the credits involved. Even if the Fund is eligible to pass through tax credits to shareholders, the Fund may choose not to do so.

If for any taxable year the Fund were not a "publicly offered" RIC within the meaning of Code Section 67(c)(2)(B), certain of the Fund's direct and indirect expenses would be subject to special "pass-through" rules. Very generally, pursuant to U.S. Treasury regulations, expenses of a RIC that is not "publicly offered," except those specific to its status as a RIC or separate entity (e.g., registration fees or transfer agency fees), are subject to special "pass-through" rules. These expenses (which include direct and certain indirect advisory fees) are treated as additional dividends to certain Fund shareholders (generally including other RICs that are not "publicly offered," individuals and entities that compute their taxable income in the same manner as an individual) and, under current law, are not deductible by those shareholders that are individuals (or entities that compute their taxable income in the same manner as an individual).

**Exempt-Interest Dividends**

The Fund will be qualified to pay dividends that pass through the character of exempt interest earned by the Fund ("exempt-interest dividends") to its shareholders if, at the close of each quarter of the Fund's taxable year, at least 50% of the total value of the Fund's assets consists of obligations the interest on which is exempt from federal income tax under Section 103(a) of the Code. Distributions that the Fund reports as exempt-interest dividends are treated as interest excludable from shareholders' gross income for federal income tax purposes but may be taxable for federal AMT purposes and for state and local purposes.

Part or all of the interest on indebtedness, if any, incurred or continued by a shareholder to purchase or carry shares of the Fund paying exempt-interest dividends is not deductible. The portion of interest that is not deductible is equal to the total interest paid or accrued on the indebtedness, multiplied by the percentage of the Fund's total distributions (not including distributions from net long-term capital gains) paid to the shareholder that are exempt-interest dividends. Under rules used by the IRS to determine when borrowed funds are considered used for the purpose of purchasing or carrying particular assets, the purchase of shares may be considered to have been made with borrowed funds even though such funds are not directly traceable to the purchase of shares.

A shareholder who receives Social Security or railroad retirement benefits should consult his or her tax adviser to determine what effect, if any, an investment in the Fund may have on the federal taxation of such benefits. Exempt-interest dividends generally are included in income for purposes of determining the amount of benefits that are taxable.

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In general, exempt-interest dividends, if any, attributable to interest received on certain private activity obligations and certain industrial development bonds will not be tax-exempt to any shareholders who are "substantial users" of the facilities financed by such obligations or bonds or who are "related persons" of such substantial users.

The Fund will notify its shareholders in a written statement of the portion of distributions for the taxable year that constitutes exempt-interest dividends.

Exempt-interest dividends may be taxable for purposes of the federal AMT. For individual shareholders, exempt-interest dividends that are derived from interest on private activity bonds that are issued after August 7, 1986 (other than a "qualified 501(c)(3) bond," as such term is defined in the Code) generally must be included in an individual's tax base for purposes of calculating the shareholder's liability for U.S. federal AMT.

In order for the Fund to distribute exempt-interest dividends for purposes of the California personal income tax, at least 50% of the value of the Fund's total assets at the end of each quarter of each taxable year must consist of California state or local obligations and/or U.S. federal obligations, the interest from which is exempt from California personal income taxation. If the Fund qualifies to distribute exempt-interest dividends and reports these distributions as such to Fund shareholders, all distributions of the Fund attributable to interest income earned on such California state or local obligations and/or U.S. federal obligations for the taxable year of the Fund will be exempt from California personal income tax.

**Sales, Exchanges or Repurchases of Shares**

The sale, exchange or repurchase of Fund shares may give rise to a gain or loss. In general, any gain or loss realized upon a taxable disposition of Fund shares treated as a sale or exchange for U.S. federal income tax purposes will be treated as long-term capital gain or loss if the shares have been held for more than 12 months. Otherwise, such gain or loss on the taxable disposition of Fund shares will be treated as short-term capital gain or loss. However, any loss realized upon a taxable disposition of Fund shares held for six months or less (i) will be treated as long-term, rather than short-term, to the extent of any long-term capital gain distributions received (or deemed received) by the shareholder with respect to the shares and (ii) generally will be disallowed to the extent of any exempt-interest dividends received by the shareholder with respect to the shares. All or a portion of any loss realized upon a taxable disposition of Fund shares will be disallowed under the Code's "wash sale" rule if other substantially identical shares of the Fund are purchased within 30 days before or after the disposition. In such a case, the basis of the newly purchased shares will be adjusted to reflect the disallowed loss.

A repurchase by the Fund of a shareholder's shares pursuant to a repurchase offer (as described in the Prospectus) generally will be treated as a sale or exchange of the shares by a shareholder provided that (i) the shareholder tenders, and the Fund repurchases, all of such shareholder's shares (and such shareholder does not hold and is not deemed to hold any Preferred Shares), thereby reducing the shareholder's percentage ownership of the Fund, whether directly or by attribution under Section 318 of the Code, to 0%, (ii) the shareholder meets numerical safe harbors under the Code with respect to percentage voting interest and reduction in ownership of the Fund following completion of the repurchase offer, or (iii) the repurchase offer otherwise results in a "meaningful reduction" of the shareholder's ownership percentage interest in the Fund, which determination depends on a particular shareholder's facts and circumstances.

If a tendering shareholder's proportionate ownership of the Fund (determined after applying the ownership attribution rules under Section 318 of the Code) is not reduced to the extent required under the tests described above, such shareholder will be deemed to receive a distribution from the Fund under Section 301 of the Code with respect to the shares held (or deemed held under Section 318 of the Code) by the shareholder after the repurchase offer (a "Section 301 distribution"). The amount of this distribution will equal the price paid by the Fund to such shareholder for the shares sold, and will be taxable as a dividend, i.e., as ordinary income, to the extent of the Fund's current or accumulated earnings and profits allocable to such distribution, with the excess treated as a return of capital reducing the shareholder's tax basis in the shares held after the repurchase offer, and thereafter as capital gain. In the event a repurchase is treated as a Section 301 distribution, any Fund shares held by a shareholder thereafter will be subject to basis adjustments in accordance with the provisions of the Code.

Provided that no tendering shareholder is treated as receiving a Section 301 distribution as a result of selling shares pursuant to a particular repurchase offer, shareholders who do not sell shares pursuant to that repurchase offer

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will not realize constructive distributions on their shares as a result of other shareholders selling shares in the repurchase offer. In the event that any tendering shareholder is deemed to receive a Section 301 distribution, it is possible that shareholders whose proportionate ownership of the Fund increases as a result of that repurchase offer, including shareholders who do not tender any shares, will be deemed to receive a constructive distribution under Section 305(c) of the Code in an amount equal to the increase in their percentage ownership of the Fund as a result of the repurchase offer. Such constructive distribution will be treated as a dividend to the extent of current or accumulated earnings and profits allocable to it.

Use of the Fund's cash to repurchase shares may adversely affect the Fund's ability to satisfy the distribution requirements for treatment as a RIC described above. The Fund may also recognize income in connection with the sale of portfolio securities to fund share purchases, in which case the Fund would take any such income into account in determining whether such distribution requirements have been satisfied.

The foregoing discussion does not address the tax treatment of tendering shareholders who do not hold their shares as a capital asset. Such shareholders should consult their own tax advisors on the specific tax consequences to them of participating or not participating in the repurchase offer.

**Issuer Deductibility of Interest**

A portion of the interest paid or accrued on certain high-yield discount obligations owned by the Fund may not, and interest paid on debt obligations, if any, that are considered for tax purposes to be payable in the equity of the issuer or a related party will not, be deductible to the issuer.

This may affect the cash flow of the issuer. If a portion of the interest paid or accrued on certain high-yield discount obligations is not deductible, that portion will be treated as a dividend paid by the issuer for purposes of the corporate dividends received deduction. In such cases, if the issuer of the high-yield discount obligations is a domestic corporation, dividend payments by the Fund may be eligible for the dividends-received deduction to the extent attributable to the deemed dividend portion of such accrued interest.

**Original Issue Discount, Payment-in-Kind Securities, Market Discount, Preferred Securities and Commodity-Linked Notes**

Some debt obligations with a fixed maturity date of more than one year from the date of issuance (and zero-coupon debt obligations with a fixed maturity date of more than one year from the date of issuance) will be treated as debt obligations that are issued originally at a discount. Generally, the amount of the OID is treated as interest income and is included in the Fund's income and required to be distributed over the term of the debt obligation, even though payment of that amount is not received until a later time, upon partial or full repayment or disposition of the debt obligation. Increases in the principal amount of an inflation-indexed bond will generally be treated as OID.

Some debt obligations with a fixed maturity date of more than one year from the date of issuance that are acquired by the Fund in the secondary market may be treated as having "market discount." Very generally, market discount is the excess of the stated redemption price of a debt obligation (or in the case of an obligation issued with OID, its "revised issue price") over the purchase price of such obligation. Generally, (i) any gain recognized on the disposition of, and any partial payment of principal on, a debt obligation having market discount is treated as ordinary income to the extent the gain, or principal payment, does not exceed the "accrued market discount" on such debt obligation, (ii) alternatively, the Fund may elect to accrue market discount currently, in which case the Fund will be required to include the accrued market discount on such debt obligations in the Fund's income (as ordinary income) and thus distribute it over the term of the debt obligations, even though payment of that amount is not received until a later time, upon partial or full repayment or disposition of the debt obligations and (iii) the rate at which the market discount accrues, and thus is included in the Fund's income, will depend upon which of the permitted accrual methods the Fund elects. The Fund reserves the right to revoke such an election at any time pursuant to applicable IRS procedures. In the case of higher-risk securities, the amount of market discount may be unclear. See "Higher-Risk Securities."

From time to time, a substantial portion of the Fund's investments in loans and other debt obligations could be treated as having OID and/or market discount, which, in some cases could be significant. To generate sufficient cash to

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make the requisite distributions, the Fund may be required to sell securities in its portfolio (including when it is not advantageous to do so) that it otherwise would have continued to hold.

A portion of the OID accrued on certain high yield discount obligations may not be deductible to the issuer and will instead be treated as a dividend paid by the issuer for purposes of the dividends-received deduction. In such cases, if the issuer of the high yield discount obligations is a domestic corporation, dividend payments by the Fund may be eligible for the dividends-received deduction to the extent attributable to the deemed dividend portion of such OID.

Some debt obligations with a fixed maturity date of one year or less from the date of issuance may be treated as having OID or, in certain cases, "acquisition discount" (very generally, the excess of the stated redemption price over the purchase price). The Fund will be required to include the OID or acquisition discount in income (as ordinary income) and thus distribute it over the term of the debt obligation, even though payment of that amount is not received until a later time, upon partial or full repayment or disposition of the debt obligation. The rate at which OID or acquisition discount accrues, and thus is included in the Fund's income, will depend upon which of the permitted accrual methods the Fund elects.

Some preferred securities may include provisions that permit the issuer, at its discretion, to defer the payment of distributions for a stated period without any adverse consequences to the issuer. If the Fund owns a preferred security that is deferring the payment of its distributions, the Fund may be required to report income for U.S. federal income tax purposes to the extent of any such deferred distributions even though the Fund has not yet actually received the cash distribution.

In addition, pay-in-kind obligations will, and commodity-linked notes may, give rise to income that is required to be distributed and is taxable even though the Fund receives no interest payment in cash on the security during the year.

If the Fund holds the foregoing kinds of obligations, or other obligations subject to special rules under the Code, the Fund may be required to pay out as an income distribution each year an amount which is greater than the total amount of cash interest the Fund actually received. Such distributions may be made from the cash assets of the Fund or by disposition of portfolio securities, if necessary (including when it is not advantageous to do so). The Fund may realize gains or losses from such dispositions, including short-term capital gains taxable as ordinary income. In the event the Fund realizes net capital gains from such transactions, its shareholders may receive a larger capital gain distribution than they might otherwise receive in the absence of such transactions.

**Higher-Risk Securities**

The Fund may invest in debt obligations that are in the lowest rating categories or are unrated, including debt obligations of issuers not currently paying interest or who are in default. Investments in debt obligations that are at risk of or in default present special tax issues for the Fund. Tax rules are not entirely clear about issues such as whether or to what extent the Fund should recognize market discount on a debt obligation, when the Fund may cease to accrue interest, OID or market discount, when and to what extent the Fund may take deductions for bad debts or worthless securities and how the Fund should allocate payments received on obligations in default between principal and income. These and other related issues will be addressed by the Fund when, as and if it invests in such securities, in order to seek to ensure that it distributes sufficient income to preserve its status as a RIC and does not become subject to federal income or excise tax.

**Securities Purchased at a Premium**

Very generally, where the Fund purchases a bond at a price that exceeds the redemption price at maturity (i.e., at a premium), the Fund may elect to amortize the premium over the remaining term of the bond which election would apply to all bonds (other than bonds the interest on which is excludible from gross income for U.S. federal income tax purposes) held by the Fund. In the case of a taxable bond, if the Fund makes such election, which election is irrevocable without consent of the IRS, the Fund reduces the current taxable income from the bond by the amortized premium and reduces its tax basis in the bond by the amount of such offset; upon the disposition or maturity of such bonds, the Fund is permitted to deduct any remaining premium allocable to a prior period. If the Fund does not elect to take bond premium into account currently, it will recognize a capital loss when the bond matures. In the case of a tax-exempt bond, tax rules require the Fund to reduce its tax basis by the amount of amortized premium.

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**Catastrophe Bonds**

The proper tax treatment of income or loss realized by the retirement or sale of certain catastrophe bonds is unclear. The Fund will report such income or loss as capital or ordinary income or loss in a manner consistent with any IRS position on the subject following the publication of such a position.

**Loan Origination**

Income and gains from certain of the Fund's activities, including fees received in connection with the origination of loans, may not constitute qualifying income to a RIC for purposes of the 90% gross income test described above. If the Fund's income or gain from a particular investment or activity which in certain cases may be determined retroactively, and were determined to constitute non-qualifying income, 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.

**Passive Foreign Investment Companies**

Equity investments by the Fund in certain PFICs could subject the Fund to a U.S. federal income tax (including interest charges) on distributions received from the PFIC or on proceeds received from the disposition of shares in the PFIC. This tax cannot be eliminated by making distributions to Fund shareholders. However, the Fund may elect to treat a PFIC as a "qualified electing fund" (i.e., make a "QEF election"), in which case the Fund will be required to include its share of the company's income and net capital gains annually, regardless of whether it receives any distribution from the company. Under U.S. Treasury regulations, any such income or net capital gain of the PFIC that is required to be included in the Fund's gross income is qualifying income to the extent derived with respect to the Fund's business of investing in stock, securities or currencies. The Fund also may make an election to mark the gains (and to a limited extent losses) in such holdings "to the market" as though it had sold and repurchased its holdings in those PFICs on the last day of the Fund's taxable year. Such gains and losses are treated as ordinary income and loss. The QEF and mark-to-market elections may accelerate the recognition of income (without the receipt of cash) and increase the amount required to be distributed by the Fund to avoid taxation. Making either of these elections therefore may require the Fund to sell other investments (including when it is not advantageous to do so) to meet its distribution requirement, which also may accelerate the recognition of gain and affect the Fund's total return. Because it is not always possible to identify a foreign corporation as a PFIC, the Fund may incur the tax and interest charges described above in some instances. Dividends paid by PFICs will not be eligible to be treated as "qualified dividend income."

**Investments in Real Estate**

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 above. If the Fund's income or gain from a particular investment were determined to constitute non-qualifying income which in certain cases may be determined retroactively, and, the Fund's nonqualifying income from all sources 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.

**Certain Investments in REITs**

Any investment by the Fund in equity securities of REITs (including a REIT subsidiary) may result in the Fund's receipt of cash in excess of the REIT's earnings; if the Fund distributes these amounts, these distributions could constitute a return of capital to Fund shareholders for U.S. federal income tax purposes. Investments in REIT equity securities also may require the Fund to accrue and to distribute income not yet received. To generate sufficient cash to make the requisite distributions, the Fund may be required to sell securities in its portfolio (including when it is not advantageous to do so) that it otherwise would have continued to hold. Dividends received by the Fund from a REIT generally will not constitute qualified dividend income. See also "Taxation of REIT Subsidiaries" below.

Distributions by the Fund to its shareholders that the Fund properly reports as "section 199A dividends," as defined and subject to certain conditions described below, are treated as qualified REIT dividends in the hands on non-corporate shareholders. Because of the nature of the rules governing how REITs report their income and the

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timing of REITs issuing year-end tax information, to the extent the Fund invests in REITs, the Fund may need to estimate the character of distributions paid to its shareholders from REIT distributions. In addition, after the calendar year-end, REITs may recharacterize the nature of the distributions paid during that year. As a result, the composition of the Fund's distributions as reported initially may differ from the final composition determined after calendar year-end and reported to the Fund's shareholders on their year-end tax information statements.

**Taxation of REIT Subsidiaries**

A REIT Subsidiary is a private real estate investment company that may invest in certain real estate and real estate-related investments and that intends to elect to be taxed as a REIT beginning with the first year in which it commences material operations.

*Taxation of a REIT - In General.* As long as a REIT Subsidiary qualifies as a REIT, it generally will not be subject to U.S. federal income tax on the portion of its REIT taxable income or capital gain that it timely distributes to its shareholders. A REIT's qualification and taxation as a REIT depends on its ability to satisfy annual income tests, annual distribution tests, quarterly asset tests, and other requirements under the Code on a continuing basis (discussed below). Accordingly, there can be no assurance that a REIT Subsidiary will always remain qualified as a REIT.

A REIT Subsidiary will be subject to U.S. federal income tax at regular corporate rates upon its taxable income or capital gain that is not distributed to its shareholders. In addition, a REIT Subsidiary will be subject to a 4% excise tax if it does not satisfy specific REIT distribution requirements. Any net income from "prohibited transactions" (i.e., dispositions of so-called "dealer property", which is property held primarily for sale to customers in the ordinary course of business) will be subject to a 100% tax. A REIT Subsidiary could also be subject to a 100% penalty tax on certain payments received from or on certain expenses deducted by a "taxable REIT subsidiary" (a "TRS") if any such transaction is not respected by the IRS.

*Failure to Meet Certain REIT Tests.* If a REIT Subsidiary fails to satisfy either of the gross income tests (described below) but maintains its qualification as a REIT because it satisfies certain other requirements, a REIT Subsidiary will still generally be subject to a 100% penalty tax on the amount by which it failed either of the gross income tests, multiplied by a fraction intended to reflect such REIT Subsidiary's profitability. If any REIT Subsidiary fails to satisfy any of the REIT asset tests (also described below) by more than a de minimis amount, due to reasonable cause, and nonetheless maintains its REIT qualification because of specified cure provisions, such REIT Subsidiary will be required to pay a tax equal to the greater of $50,000 or the highest corporate tax rate multiplied by the net income generated by the non-qualifying assets. If any REIT Subsidiary fails to satisfy any provision of the Code that would result in its failure to qualify as a REIT (other than a violation of the REIT gross income or asset tests) and the violation is due to reasonable cause, such REIT Subsidiary may retain its REIT qualification but it will be required to pay a penalty of $50,000 for each such failure.

If any REIT Subsidiary fails to qualify for taxation as a REIT in any taxable year and the relief provisions described herein do not apply, such REIT Subsidiary will be subject to tax on its taxable income at regular corporate rates. As a result, a failure to qualify as a REIT would significantly reduce the cash such REIT Subsidiary would have available to distribute to the Fund and therefore would affect the Fund's total returns. Unless entitled to statutory relief, a REIT Subsidiary would be disqualified as a REIT for the four taxable years following the year during which qualification was lost. It is not possible to state whether a REIT Subsidiary would be entitled to statutory relief.

*Share Ownership Test and Organizational Requirements.* After a REIT's first taxable year, such REIT's shares must be held by a minimum of 100 persons for at least 335 days of a taxable year that is 12 months, or during a proportionate part of a taxable year of less than 12 months (the "100-shareholder test"). With respect to a REIT Subsidiary, the Fund constitutes only one shareholder for purposes of this requirement. In order to satisfy the REIT qualification requirements, a REIT Subsidiary expects to conduct a customary offering of preferred shares, at a purchase price of $1,000 per interest, to approximately 125 individuals who are "accredited investors." No preferred shares would be entitled to vote except as required by law. Each preferred share would entitle the holder to a preference on liquidation equal to the purchase price, plus a preferred return thereon.

After a REIT's first taxable year, not more than 50% in value of such REIT's shares of beneficial interest may be owned directly (or indirectly by applying certain attribution rules) by five or fewer individuals and certain other entities during the last half of any taxable year (the "Five or Fewer Test"). In addition, a REIT must meet certain other organizational requirements, including, but not limited to the requirements that: (i) the beneficial ownership in a REIT

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is evidenced by transferable shares and (ii) such REIT is managed by one or more directors. In order to ensure compliance with the 100-shareholder test and the Five or Fewer Test discussed above, any REIT Subsidiary will place certain restrictions on the transfer and ownership of its equity interests intended to prevent further concentration of share ownership.

The organizational documents of the REIT Subsidiaries contain restrictions on the direct, indirect, beneficial and constructive ownership and transfer of the stock of such REIT Subsidiaries. Specifically, the relevant sections of such constituent documents provide that, subject to certain exceptions, no person or entity may own, or be deemed to own, by virtue of the applicable constructive ownership provisions of the Code, more than 9.8%, in value or in number of shares, whichever is more restrictive, of any of the outstanding shares of a REIT Subsidiary's common shares, the outstanding shares of any class or series of a REIT Subsidiary's preferred shares or the aggregate of the outstanding shares of all classes and series of shares. If a person or entity becomes subject to such "ownership limit," including a shareholder of the Fund by virtue of a violative transfer of Fund shares, the applicable REIT Subsidiary shares held by the Fund in violation of the ownership limit will be automatically transferred to a trust for the exclusive benefit of a charitable organization and the Fund will not be entitled to the rights with respect to such shares.

In addition, the Fund reserves the right, if it believes a REIT Subsidiary is at material risk of violating the REIT Subsidiary's ownership limit, failing the Five or Fewer Test, or otherwise failing to qualify for treatment as a REIT for U.S. federal income tax purposes, to take such steps as it believes reasonably necessary to prevent the REIT Subsidiary from failing to qualify for treatment as a REIT for U.S. federal income tax purposes. These steps might include prohibiting any transfers of shares in the Fund that would cause any single person to own more than 9.8% of the Fund's outstanding shares or causing shares owned by a single person in excess of 9.8% of the Fund's outstanding shares to be transferred to a charitable trust and/or redeemed. However, there can be no assurance such restrictions or steps taken will prevent such REIT Subsidiaries from failing these requirements, and thereby failing to qualify as a REIT.

*Gross Income Tests.* A REIT must satisfy two gross income tests annually to maintain its qualification as a REIT. First, at least 75% of a REIT's gross income for each taxable year must consist of defined types of income that it derives, directly or indirectly, from investments relating to real property or mortgages on real property or qualified temporary investment income. Qualifying income for purposes of that 75% gross income test generally includes: rents from real property; interest on debt secured by mortgages on real property, or on interests in real property; dividends or other distributions on, and gain from the sale of, shares in other REITs; gain from the sale of real estate assets (however, excluding gain or interest from a debt instrument of a publicly offered REIT unless secured by real property); income and gain derived from foreclosure property; and income derived from certain temporary investments of new capital. Second, in general, at least 95% of a REIT's gross income for each taxable year must consist of income that is qualifying income for purposes of the 75% gross income test, other types of interest and dividends, gain from the sale or disposition of shares or securities, or any combination of these. Cancellation of indebtedness income and gross income from the sale of property that a REIT holds primarily for sale to customers in the ordinary course of business is excluded from both the numerator and the denominator in both gross income tests. In addition, income and gain from ''hedging transactions'' that a REIT enters into to hedge indebtedness incurred or to be incurred to acquire or carry real estate assets and that are clearly and timely identified as such will be excluded from both the numerator and the denominator for purposes of the 75% and 95% gross income tests.

If a REIT fails to satisfy one or both of the gross income tests for any taxable year, it may nevertheless qualify as a REIT for the year if it is entitled to relief under certain provisions of the Code. In this case, a penalty tax would still be applicable as discussed above. Generally, it is not possible to state whether in all circumstances a REIT would be entitled to the benefit of these relief provisions.

*Asset Tests.* To qualify as a REIT, a REIT also must satisfy the following asset tests at the end of each quarter of each taxable year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● First, at least 75% of the value of a REIT's total assets must consist of: cash or cash items, including certain foreign currencies; government securities; interests in real property, including leaseholds and options to acquire real property and leaseholds; interests in mortgage loans secured by real property; stock in other REITs and debt instruments issued by "publicly offered REITs"; investments in stock or debt instruments during the one-year period following a REIT's receipt of new capital that it raises through equity offerings or public offerings of debt with at least a five-year term; and generally regular or residual interests in a real estate mortgage investment conduit ("REMIC").

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● Second, of a REIT's investments not included in the 75% asset class, the value of a REIT's interest in any one issuer's securities may not exceed 5% of the value of a REIT's total assets, or the 5% asset test.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● Third, of a REIT's investments not included in the 75% asset class, a REIT may not own more than 10% of the voting power of any one issuer's outstanding securities or 10% of the value of any one issuer's outstanding securities, or the 10% vote test or 10% value test, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● Fourth, no more than 20% (25% for tax years beginning after December 31, 2025) of the value of a REIT's total assets may consist of the securities of one or more TRSs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● Fifth, no more than 25% of the value of a REIT's total assets may consist of the securities of TRSs and other non-TRS taxable subsidiaries and other assets that are not qualifying assets for purposes of the 75% asset test, or the 25% securities test.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;● Sixth, not more than 25% of the value of a REIT's total assets may consist of debt instruments issued by "publicly offered REITs" to the extent not secured by real property or interests in real property.

The Fund intends to monitor the status of assets held by a REIT Subsidiary for purposes of the various asset tests and intends to manage each REIT Subsidiary's portfolio in order to comply at all times with such tests. If a REIT fails to satisfy the asset tests at the end of a calendar quarter, a REIT will not lose its REIT qualification if it is eligible for and satisfies certain cure procedures available under the Code. However, there can be no assurance that any such REIT Subsidiary will not fail to comply with such tests or if it does, be eligible for or able to satisfy any such cure procedures.

*Annual Distribution Requirements.* To qualify as a REIT, a REIT Subsidiary is generally required to make distributions (or be deemed to have done so by declaring consent dividends - which would result in allocation of income to the Fund without corresponding cash distributions) other than capital gain distributions (see discussion below regarding a REIT Subsidiary's ability to retain capital gains), to its shareholders each year in an amount at least equal to 90% of a REIT Subsidiary's taxable income.

Each REIT Subsidiary intends to make timely distributions sufficient to satisfy its annual distribution requirements. In the event the amount of cash distributed to its shareholders is insufficient to meet the 90% distribution requirement, a REIT may declare a consent dividend in order to meet such requirement. A consent dividend is a hypothetical distribution to a REIT's common shareholders (i.e., the Fund) which is required to be treated for U.S. federal income tax purposes as an actual distribution by a REIT, followed by an immediate re-contribution of such amount to a REIT. The amount of any consent dividend must be included in the gross income of each shareholder of a REIT (i.e., the Fund) that would have been entitled to receive such distribution if made in cash. Any phantom income recognized by the Fund from a consent dividend would be includible in the Fund's gross income and accordingly generally the Fund will be required to distribute a corresponding amount to its shareholders.

To the extent that a REIT Subsidiary does not distribute all of its net capital gain or distribute at least 90%, but less than 100% of its REIT taxable income, as adjusted, such REIT Subsidiary would be subject to tax on these amounts at regular corporate rates and would be subject to potential excise tax penalties, as discussed above (see "Taxation of a REIT - In General"). A REIT Subsidiary may elect to retain rather than distribute all or a portion of its net capital gains and pay the tax on the gains. In that case, such REIT Subsidiary may elect to have its shareholders include their proportionate share of the undistributed net capital gains in income as long-term capital gains and receive a credit for their share of the tax paid by such REIT Subsidiary. For purposes of the 4% excise tax described above, any retained amounts would be treated as having been distributed.

**Foreign Currency Transactions**

The Fund's transactions in foreign currencies, foreign currency-denominated debt obligations and certain foreign currency options, futures contracts and forward contracts (and similar instruments) may give rise to ordinary income or loss to the extent such income or loss results from fluctuations in the value of the foreign currency concerned. Any such net gains could require a larger dividend toward the end of the calendar year. Any such net losses will generally reduce and potentially require the recharacterization of prior ordinary income distributions and may accelerate Fund distributions to shareholders and increase the distributions taxed to shareholders as ordinary income. Any net ordinary losses so created cannot be carried forward by the Fund to offset income or gains earned in subsequent taxable years.

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**Options, Futures, and Forward Contracts, Swap Agreements, and other Derivatives**

In general, option premiums received by the Fund are not immediately included in the income of the Fund. Instead, the premiums are recognized when the option contract expires, the option is exercised by the holder, or the Fund transfers or otherwise terminates the option (e.g. through a closing transaction). If a call option written by the Fund is exercised and the Fund sells or delivers the underlying stock, the Fund generally will recognize capital gain or loss equal to (a) the sum of the strike price and the option premium received by the Fund minus (b) the Fund's basis in the stock. Such gain or loss generally will be short-term or long-term depending upon the holding period of the underlying stock. If securities are purchased by the Fund pursuant to the exercise of a put option written by it, the Fund will generally subtract the premium received for purposes of computing its cost basis in the stock purchased. Gain or loss arising in respect of a termination of the Fund's obligation under an option other than through the exercise of the option will be short-term capital gain or loss depending on whether the premium income received by the Fund is greater or less than the amount paid by the Fund (if any) in terminating the transaction. Thus, for example, if an option written by the Fund expires unexercised, the Fund generally will recognize short-term capital gain equal to the premium received.

The Fund's options activities may include transactions constituting straddles for U.S. federal income tax purposes, that is, that trigger the U.S. federal income tax straddle rules contained primarily in Section 1092 of the Code. Such straddles include, for example, positions in a particular security, or an index of securities, and one or more options that offset the former position, including options that are "covered" by the Fund's long position in the subject security. Very generally, where applicable, Section 1092 requires (i) that losses be deferred on positions deemed to be offsetting positions with respect to "substantially similar or related property" to the extent of unrealized gain in the latter, and (ii) that the holding period of such a straddle position that has not already been held for the long-term holding period be terminated and begin anew once the position is no longer part of a straddle. Options on single stocks that are not "deep in the money" may constitute qualified covered calls, which generally are not subject to the straddle rules; the holding period on stock underlying qualified covered calls that are "in the money" although not "deep in the money" will be suspended during the period that such calls are outstanding. Thus, the straddle rules and the rules governing qualified covered calls could cause gains that would otherwise constitute long-term capital gains to be treated as short-term capital gains, and distributions that would otherwise constitute "qualified dividend income" or qualify for the dividends-received deduction to fail to satisfy the holding period requirements and therefore to be taxed as ordinary income or to fail to qualify for the dividends received deduction, as the case may be.

The tax treatment of certain positions entered into by the Fund, including regulated futures contracts, certain foreign currency positions and certain listed non-equity options, will be governed by section 1256 of the Code ("section 1256 contracts"). Gains or losses on section 1256 contracts generally are considered 60% long-term and 40% short-term capital gains or losses ("60/40"), although certain foreign currency gains and losses from such contracts may be treated as ordinary in character. Also, section 1256 contracts held by the Fund at the end of each taxable year (and, for purposes of the 4% excise tax, on certain other dates as prescribed under the Code) are marked-to-market with the result that unrealized gains or losses are treated as though they were realized and the resulting gain or loss is treated as ordinary or 60/40 gain or loss, as applicable.

**Derivatives, Hedging and Other Transactions**

In addition to the special rules described above in respect of futures and options transactions, the Fund's transactions in other derivatives instruments (e.g., forward contracts and swap agreements), as well as any of its hedging, short sale, securities loan or similar transactions may be subject to one or more special tax rules (e.g., notional principal contract, straddle, constructive sale, wash sale and short sale rules). These rules may affect whether gains and losses recognized by the Fund are treated as ordinary or capital, accelerate the recognition of income or gains to the Fund, defer losses to the Fund, and cause adjustments in the holding periods of the Fund's securities, thereby affecting, among other things, whether capital gains and losses are treated as short-term or long-term. These rules could, therefore, affect the amount, timing and/or character of distributions to shareholders.

Because these and other tax rules applicable to these types of transactions are in some cases uncertain under current law, an adverse determination or future guidance by the IRS with respect to these rules (which determination or guidance could be retroactive) may affect whether the Fund has made sufficient distributions, and otherwise satisfied the relevant requirements, to maintain its qualification as a RIC and avoid a fund-level tax.

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**Commodities and Commodity-Linked Instruments**

The Fund's investments in commodities and commodity-linked instruments, if any, 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 commodities and certain commodity-linked instruments do not constitute qualifying income to a RIC for purposes of the 90% gross income test described above. In addition, the tax treatment of some other commodity-linked instruments in which the Fund might invest is not certain, in particular with respect to whether income or gains from such instruments constitute qualifying income to a RIC. If the Fund were to treat income or gain from a particular instrument as qualifying income and the income or gain were later determined not to constitute qualifying income, and, together with any other nonqualifying income, caused the Fund's nonqualifying income to exceed 10% of its gross income in any taxable year, the Fund would fail to qualify as a RIC unless it is eligible to and does pay a tax at the Fund level.

**Book-Tax Differences**

Certain of the Fund's investments in derivative instruments and foreign currency-denominated instruments, and any of the Fund's transactions in foreign currencies and hedging activities, are likely to produce a difference between its book income and the sum of its taxable income and net tax-exempt income (if any). If such a difference arises, and the Fund's book income is less than the sum of its taxable income and net tax-exempt income (if any), the Fund could be required to make distributions exceeding book income to qualify as a RIC that is accorded special tax treatment and to avoid an entity-level tax. In the alternative, if the Fund's book income exceeds the sum of its taxable income (including realized capital gains) and net tax-exempt income, the distribution (if any) of such excess generally will be treated as (i) a dividend to the extent of the Fund's remaining earnings and profits (including earnings and profits arising from tax-exempt income), (ii) thereafter, as a return of capital to the extent of the recipient's basis in its shares and (iii) thereafter as gain from the sale or exchange of a capital asset.

**Short Sales**

If the Fund participates in a short sale and, on the date of such short sale, the Fund either (i) does not hold securities substantially identical to those sold short or (ii) has held such substantially identical securities for one year or less, the character of gain or loss realized on such a short sale generally will be short-term. If the Fund participates in a short sale and, on the date of such short sale, the Fund has held substantially identical securities for more than one year, the character of gain realized on such short sale will be determined by reference to the Fund's holding period in the property actually used to close the short sale; the character of loss realized on such short sale generally will be long term, regardless of the holding period of the securities actually used to close such short sale. Because net short-term capital gain (after reduction by any long-term capital loss) is generally taxed at ordinary income rates, the Fund's short sale transactions can increase the percentage of the Fund's gains that are taxable to shareholders as ordinary income.

**Mortgage-Related Securities**

The Fund may invest directly or indirectly in REMICs (including by investing in residual interests in CMOs with respect to which an election to be treated as a REMIC is in effect) or equity interests in TMPs. Under a notice issued by the IRS in October 2006 and U.S. Treasury regulations that have yet to be issued but may apply retroactively, a portion of the Fund's income (including income allocated to the Fund from a REIT or other pass-through entity) that is attributable to a residual interest in a REMIC or an equity interest in a TMP — referred to in the Code as an "excess inclusion"— will be subject to U.S. federal income tax in all events. This notice also provides, and the regulations are expected to provide, that excess inclusion income of a RIC, such as the Fund, will be allocated to shareholders of the RIC in proportion to the dividends received by such shareholders, with the same consequences as if the shareholders held the related interest directly. As a result, the Fund may not be a suitable investment for charitable remainder trusts ("CRTs"), as noted below.

In general, excess inclusion income allocated to shareholders (i) cannot be offset by net operating losses (subject to a limited exception for certain thrift institutions), (ii) will constitute unrelated business taxable income ("UBTI") to entities (including a qualified pension plan, an individual retirement account, a 401(k) plan, a Keogh plan or other tax-exempt entity) subject to tax on UBTI, thereby potentially requiring such an entity that is allocated excess inclusion income and otherwise might not be required to file a U.S. federal income tax return, to file such a tax return and pay tax on such income, and (iii) in the case of a non-U.S. shareholder, will not qualify for any reduction in

------

U.S. federal withholding tax. A shareholder will be subject to U.S. federal income tax on such inclusions notwithstanding any exemption from such income tax otherwise available under the Code.

**Non-U.S. Taxation**

Income, proceeds and gains received by the Fund from sources within foreign countries may be subject to withholding and other taxes imposed by such countries, which will reduce the return on those investments. Tax treaties between certain countries and the United States may reduce or eliminate such taxes.

If, at the close of its taxable year, more than 50% of the value of the Fund's total assets consists of the securities of foreign corporations, including for this purpose foreign governments, the Fund will be permitted to make an election under the Code that will allow shareholders a deduction or credit for foreign taxes paid by the Fund. In such a case, shareholders will include in gross income from foreign sources their pro rata shares of such taxes. A shareholder's ability to claim an offsetting foreign tax credit or deduction in respect of such foreign taxes is subject to certain limitations imposed by the Code, which may result in the shareholder's not receiving a full credit or deduction (if any) for the amount of such taxes. Shareholders who do not itemize on their U.S. federal income tax returns may claim a credit (but not a deduction) for such foreign taxes. If the Fund does not qualify for or chooses not to make such an election, shareholders will not be entitled separately to claim a credit or deduction for U.S. federal income tax purposes with respect to foreign taxes paid by the Fund; in that case the foreign tax will nonetheless reduce the Fund's taxable income. Even if the Fund elects to pass through to its shareholders foreign tax credits or deductions, tax-exempt shareholders and those who invest in the Fund through tax-advantaged accounts (including those who invest through individual retirement accounts or other tax-advantaged retirement plans), will not benefit from any such tax credit or deduction. Shareholders generally are not expected to be entitled to claim a credit or deduction with respect to foreign taxes incurred by the Fund. This will decrease the Fund's yield on securities subject to such taxes.

**Tax-Exempt Shareholders**

Income of a RIC that would be UBTI if earned directly by a tax-exempt entity will not generally be attributed as UBTI to a tax-exempt shareholder of the RIC. Notwithstanding this "blocking" effect, a tax-exempt shareholder could realize UBTI by virtue of its investment in the Fund if shares in the Fund constitute debt-financed property in the hands of the tax-exempt shareholder within the meaning of Code Section 514(b). A tax-exempt shareholder may also recognize UBTI if the Fund recognizes "excess inclusion income" derived from direct or indirect investments in residual interests in REMICs or equity interests in TMPs as described above, if the amount of such income recognized by the Fund exceeds the Fund's investment company taxable income (after taking into account deductions for dividends paid by the Fund).

In addition, special tax consequences apply to CRTs that invest in RICs that invest directly or indirectly in residual interests in REMICs or equity interests in TMPs. Under legislation enacted in December 2006, if a CRT, as defined in Section 664 of the Code, realizes any UBTI for a taxable year, a 100% excise tax is imposed on such UBTI. Under IRS guidance issued in October 2006, a CRT will not recognize UBTI solely as a result of investing in a RIC that recognizes "excess inclusion income." Rather, if at any time during any taxable year a CRT (or one of certain other tax-exempt shareholders, such as the United States, a state or political subdivision, or an agency or instrumentality thereof, and certain energy cooperatives) is a record holder of a share in a RIC that recognizes "excess inclusion income," then the RIC will be subject to a tax on that portion of its "excess inclusion income" for the taxable year that is allocable to such shareholders at the highest federal corporate income tax rate. The extent to which this IRS guidance remains applicable in light of the December 2006 legislation is unclear. To the extent permitted under the Act, the Fund may elect to specially allocate any such tax to the applicable CRT, or other shareholder, and thus reduce such shareholder's distributions for the year by the amount of the tax that relates to such shareholder's interest in the Fund. CRTs and other tax-exempt shareholders are urged to consult their tax advisors concerning the consequences of investing in the Fund.

**Non-U.S. Shareholders**

Distributions by the Fund to shareholders that are not "United States persons" within the meaning of the Code ("foreign shareholders") properly reported by the Fund as (1) Capital Gain Dividends, (2) short-term capital gain dividends, (3) interest-related dividends, each as defined and subject to certain conditions described below, or (4)

------

exempt-interest dividends generally are not subject to withholding of U.S. federal income tax (except that exempt-interest dividends may be subject to backup withholding).

In general, the Code defines (1) "short-term capital gain dividends" as distributions of net short-term capital gains in excess of net long-term capital losses and (2) "interest-related dividends" as distributions from U.S. source interest income of types similar to those not subject to U.S. federal income tax if earned directly by an individual foreign shareholder, in each case to the extent such distributions are properly reported as such by the Fund in a written notice to shareholders. The exceptions to withholding for Capital Gain Dividends and short-term capital gain dividends do not apply to (A) distributions to an individual foreign shareholder who is present in the United States for a period or periods aggregating 183 days or more during the year of the distribution and (B) distributions attributable to gain that is effectively connected with the conduct by the foreign shareholder of a trade or business within the United States under special rules regarding the disposition of U.S. real property interests ("USRPI") as described below. If the Fund invests in a RIC that pays such distributions to the Fund, such distributions retain their character as not subject to withholding if properly reported when paid by the Fund to foreign shareholders. The exception to withholding for interest-related dividends does not apply to distributions to a foreign shareholder (A) that has not provided a satisfactory statement that the beneficial owner is not a United States person, (B) to the extent that the dividend is attributable to certain interest on an obligation if the foreign shareholder is the issuer or is a 10% shareholder of the issuer, (C) that is within certain foreign countries that have inadequate information exchange with the United States, or (D) to the extent the dividend is attributable to interest paid by a person that is a related person of the foreign shareholder and the foreign shareholder is a controlled foreign corporation.

The Fund is permitted to report such part of its dividends as interest-related or short-term capital gain dividends as are eligible, but is not required to do so. In the case of shares held through an intermediary, the intermediary may withhold even if the Fund reports all or a portion of a payment as an interest-related or short-term capital gain dividend to shareholders.

Foreign shareholders should contact their intermediaries regarding the application of withholding rules to their accounts.

Distributions by the Fund to foreign shareholders other than Capital Gain Dividends, short-term capital gain dividends, interest-related dividends and exempt-interest dividends (e.g., dividends attributable to dividend and foreign-source interest income or to short-term capital gains or U.S. source interest income to which the exception from withholding described above does not apply) are generally subject to withholding of U.S. federal income tax at a rate of 30% (or lower applicable treaty rate).

A foreign shareholder is not, in general, subject to U.S. federal income tax on gains (and is not allowed a deduction for losses) realized on the sale of shares of the Fund unless (i) such gain is effectively connected with the conduct by the foreign shareholder of a trade or business within the United States, (ii) in the case of a foreign shareholder that is an individual, the shareholder is present in the United States for a period or periods aggregating 183 days or more during the year of the sale and certain other conditions are met, or (iii) the special rules relating to gain attributable to the sale or exchange of USRPIs apply to the foreign shareholder's sale of shares of the Fund (as described below). In addition, a repurchase of Fund shares may be subject to U.S. federal income tax withholding to the extent such repurchase is treated as a taxable distribution, as described above (see "Sales, Exchanges or Repurchases of Shares").

Foreign shareholders with respect to whom income from the Fund is effectively connected with a trade or business conducted by the foreign shareholder within the United States will in general be subject to U.S. federal income tax on the income derived from the Fund at the graduated rates applicable to U.S. citizens, residents or domestic corporations, whether such income is received in cash or reinvested in shares of the Fund and, in the case of a foreign corporation, may also be subject to a branch profits tax. If a foreign shareholder is eligible for the benefits of a tax treaty, any effectively connected income or gain will generally be subject to U.S. federal income tax on a net basis only if it is also attributable to a permanent establishment maintained by the shareholder in the United States. More generally, foreign shareholders who are residents in a country with an income tax treaty with the United States may obtain different tax results than those described herein and are urged to consult their tax advisors.

Special rules would apply if the Fund were a qualified investment entity ("QIE") because it is either a "U.S. real property holding corporation" ("USRPHC") or would be a USRPHC but for the operation of certain exceptions to the

------

definition thereof. Very generally, a USRPHC is a domestic corporation that holds USRPIs the fair market value of which equals or exceeds 50% of the sum of the fair market values of the corporation's USRPIs, interests in real property located outside the United States, and other trade or business assets. USRPIs are generally defined as any interest in U.S. real property and any interest (other than solely as a creditor) in a USRPHC or, very generally, an entity that has been a USRPHC in the last five years. A RIC that holds, directly or indirectly, significant interests in REITs may be a USRPHC. Interests in domestically controlled QIEs, including REITs and RICs that are QIEs, not-greater-than-10% interests in publicly traded classes of stock in REITs and not-greater-than-5% interests in publicly traded classes of stock in RICs generally are not USRPIs, but these exceptions do not apply for purposes of determining whether the Fund is a QIE. Furthermore, the U.S. Treasury and the IRS have issued final regulations that would change the rules relating to determining whether a QIE is domestically controlled.

If an interest in the Fund were a USRPI, the Fund would be required to withhold U.S. tax on the proceeds of a share repurchase by a greater-than-5% foreign shareholder or any foreign shareholder if shares of the Fund are not considered regularly traded on an established securities market, in which case such foreign shareholder generally would also be required to file a U.S. tax return and pay any additional taxes due in connection with the repurchase.

If the Fund were a QIE, under a special "look-through" rule, any distributions by the Fund to a foreign shareholder (including, in certain cases, distributions made by the Fund in redemption of its shares) attributable directly or indirectly to (i) distributions received by the Fund from a lower-tier RIC or REIT that the Fund is required to treat as USRPI gain in its hands, or (ii) gains realized by the Fund on the disposition of USRPIs would retain their character as gains realized from USRPIs in the hands of the Fund's foreign shareholders, and would be subject to U.S. withholding tax. In addition, such distributions could result in the foreign shareholder being required to file a U.S. tax return and pay tax on the distributions at regular U.S. federal income tax rates. The consequences to a foreign shareholder, including the rate of such withholding and character of such distributions (e.g., as ordinary income or USRPI gain), would vary depending upon the extent of the foreign shareholder's current and past ownership of the Fund.

The Fund generally does not expect that it will be a QIE. Foreign shareholders should consult their tax advisers and, if holding shares through intermediaries, their intermediaries, concerning the application of these rules to their investment in the Fund.

Foreign shareholders also may be subject to "wash sale" rules to prevent the avoidance of the tax-filing and -payment obligations discussed above through the sale and repurchase of Fund shares.

Distributions will be treated in the manner described above regardless of whether such distributions are paid in cash or invested in additional shares pursuant to the dividend reinvestment plan. A foreign shareholder receiving distributions in the form of additional shares will generally be treated as receiving a distribution in the amount of the fair market value of the distributed shares. If the distribution is subject to withholding tax as described above, only the net after-tax amount will be reinvested in additional shares. If the distribution is "effectively connected" with a U.S. trade or business of the foreign shareholder (and, if required by an applicable tax treaty, is attributable to a U.S. permanent establishment of the foreign shareholder), and the foreign shareholder complies with the applicable certification and disclosure requirements, the full amount of the distribution generally will be reinvested in additional shares and will nevertheless be subject to U.S. federal income tax at the rates and in the manner applicable to U.S. persons generally. The additional shares received by a foreign shareholder pursuant to the dividend reinvestment plan will have a new holding period commencing on the day following the day on which the shares were credited to the foreign shareholder's account.

In order for a foreign shareholder to qualify for any exemptions from withholding described above or for lower withholding tax rates under income tax treaties, or to establish an exemption from backup withholding, a foreign shareholder must comply with special certification and filing requirements relating to its non-U.S. status (including, in general, furnishing an IRS Form W-8BEN, W-8BEN-E or substitute form). Foreign shareholders should consult their tax advisors in this regard.

Special rules (including withholding and reporting requirements) apply to foreign partnerships and those holding Fund shares through foreign partnerships. Additional considerations may apply to foreign trusts and estates. Investors holding Fund shares through foreign entities should consult their tax advisers about their particular situation.

------

A foreign shareholder may be subject to state and local tax and to the U.S. federal estate tax in addition to the U.S. federal income tax referred to above.

**Backup Withholding**

The Fund is generally required to withhold and remit to the U.S. Treasury a percentage of taxable distributions and redemption proceeds, if any, paid to any individual shareholder who fails to properly furnish the Fund with a correct taxpayer identification number, who has under-reported dividend or interest income, or who fails to certify to the Fund that he or she is not subject to such withholding. The backup withholding rules may also apply to distributions that are properly reported as exempt-interest dividends. Backup withholding is not an additional tax. Any amounts withheld may be credited against the shareholder's U.S. federal income tax liability, provided the appropriate information is furnished to the IRS.

**Tax Shelter Reporting Regulations**

Under U.S. Treasury regulations, if a shareholder recognizes a loss $2 million in any single taxable year of $4 million in any combination of taxable years for an individual shareholder, or $10 million in any single taxable year or $20 million in any combination of taxable years for a corporate shareholder, the shareholder must file with the IRS a disclosure statement on IRS Form 8886. Direct owners of portfolio securities are in many cases excepted from this reporting requirement, but under current guidance, shareholders of a RIC are not excepted. Future guidance may extend the current exception from this reporting requirement to shareholders of most or all RICs. The fact that a loss is reportable under these regulations does not affect the legal determination of whether the taxpayer's treatment of the loss is proper. Shareholders should consult their tax advisors to determine the applicability of these regulations in light of their individual circumstances.

**Other Reporting and Withholding Requirements**

Sections 1471-1474 of the Code and the U.S. Treasury and IRS guidance issued thereunder (collectively, "FATCA") generally require the Fund to obtain information sufficient to identify the status of each of its shareholders under FATCA or under an applicable intergovernmental agreement (an "IGA") between the United States and a foreign government. If a shareholder fails to provide the requested information or otherwise fails to comply with FATCA or an IGA, the Fund may be required to withhold under FATCA at a rate of 30% with respect to that shareholder on ordinary dividends. The IRS and the U.S. Treasury have issued proposed regulations providing that these withholding rules will not apply to the gross proceeds of share repurchases or Capital Gain Dividends the Fund pays. If a payment by the Fund is subject to FATCA withholding, the Fund is required to withhold even if such payment would otherwise be exempt from withholding under the rules applicable to foreign shareholders described above (e.g., short-term capital gain dividends and interest-related dividends).

Shareholders that are U.S. persons and own, directly or indirectly, more than 50% of the Fund could be required to report annually their "financial interest" in the Fund's foreign financial accounts, if any, on FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR). Shareholders should consult a tax advisor, and persons investing in the Fund through an intermediary should contact their intermediary, regarding the applicability to them of this reporting requirement.

Each prospective investor is urged to consult its tax adviser regarding the applicability of FATCA and any other reporting requirements with respect to the prospective investor's own situation, including investments through an intermediary.

**Shares Purchased Through Tax-Qualified Plans**

Special tax rules apply to investments through defined contribution plans and other tax-qualified plans. Shareholders should consult their tax advisers to determine the suitability of shares of the Fund as an investment through such plans and the precise effect of an investment on their particular tax situation.

------

**PERFORMANCE RELATED AND COMPARATIVE INFORMATION**

The Fund may quote certain performance-related information and may compare certain aspects of its portfolio and structure to other substantially similar closed-end funds as categorized by Broadridge Financial Solutions, Inc. ("Broadridge"), Morningstar Inc. or other independent services. Comparison of the Fund to an alternative investment should be made with consideration of differences in features and expected performance. The Fund may obtain data from sources or reporting services, such as Bloomberg Financial and Broadridge, which the Fund believes to be generally accurate.

The Fund, in its advertisements, may refer to pending legislation from time to time and the possible effect of such legislation on investors, investment strategy and related matters. At any time in the future, yields and total return may be higher or lower than past yields and there can be no assurance that any historical results will continue.

Past performance is not indicative of future results. At the time Common Shareholders tender their shares for repurchase, they may be worth more or less than their original investment.

**CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSEMENT AGENT**

State Street Bank and Trust Company ("SSTB") serves as the primary custodian for assets of the Fund. SSTB's principal business address is 2323 Grand Boulevard, 5th Floor, Kansas City, MO 64108. The primary custodian performs custodial and fund accounting services. UMB Bank, n.a. ("UMB") also serves as a custodian of the Fund for the purpose of processing investor subscriptions and repurchases. UMB's principal business address is 1010 Grand Boulevard, Kansas City, MO 64106.

SS&C Global Investor & Distribution Solutions, Inc., 801 Pennsylvania Avenue, Suite 219993, Kansas City, MO 64105-1307, serves as the transfer agent and dividend disbursement agent for the Common Shares, as well as agent relating to the Plan for the Common Shares.

The Bank of New York Mellon, 240 Greenwich Street, New York, NY 10286, serves as transfer agent, registrar, redemption and paying agent and calculation agent with respect to the RVMTP Shares.

**INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

PricewaterhouseCoopers LLP ("PwC"), 1100 Walnut Street, Suite 1300, Kansas City, MO 64106, serves as the independent registered public accounting firm for the Fund. PwC provides audit services, tax assistance and other audit related services to the Fund.

**COUNSEL**

Ropes & Gray LLP, Prudential Tower, 800 Boylston Street, Boston, MA 02199, passes upon certain legal matters in connection with shares offered by the Fund, and also acts as counsel to the Fund.

**REGISTRATION STATEMENT**

A Registration Statement on Form N-2, including any amendments thereto (the "Registration Statement"), relating to the Common Shares of the Fund offered hereby, has been filed by the Fund with the SEC, Washington, D.C. The Prospectus and this Statement of Additional Information are parts of, but do not contain all of the information set forth in, the Registration Statement, including any exhibits and schedules thereto. For further information with respect to the Fund and the Common Shares offered or to be offered hereby, reference is made to the Fund's Registration Statement. Statements contained in the Prospectus and this Statement of Additional Information as to the contents of any contract or other document referred to are not necessarily complete and in each instance reference is made to the copy of such contract or other document filed as an exhibit to the Registration Statement, each such statement being qualified in all respects by such reference. Copies of the Registration Statement may be inspected without charge at the SEC's principal office in Washington, D.C., and copies of all or any part thereof may be obtained from the SEC upon the payment of certain fees prescribed by the SEC.

------

**FINANCIAL STATEMENTS**

The Fund's audited financial statements appearing in the Fund's annual shareholder report for the period ended December 31, 2025, are incorporated by reference in this Statement of Additional Information and have been so incorporated in reliance upon the report of PwC, independent registered public accounting firm for the Fund, whose report is included in such [<u>annual shareholder report</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312526094226/d786968dncsr.htm).

The annual shareholder report is available upon request and without charge by writing to the Fund at c/o Pacific Investment Management Company LLC, 650 Newport Center Drive, Newport Beach, California 92660.

PIF004SAI_043026

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**Appendix A – PROCEDURES FOR SHAREHOLDERS TO SUBMIT NOMINEE CANDIDATES**

(Appendix A to the Fund's Governance and Nominating Committee Charter)

A shareholder of a Fund must follow the following procedures in order to submit properly a nominee recommendation for the Committee's consideration.

&nbsp;&nbsp;&nbsp;&nbsp;1. The shareholder must submit any such recommendation (a "Shareholder Recommendation") in writing to a Fund, to the attention of the Secretary, at the address of the principal executive offices of the Fund. Once each quarter, if any Shareholder Recommendations have been received by the Secretary during the quarter, the Secretary will inform the Committee of the new Shareholder Recommendations. Because the Fund does not hold annual or other regular meetings of shareholders for the purpose of electing Trustees, the Committee will accept Shareholder Recommendations on a continuous basis.

&nbsp;&nbsp;&nbsp;&nbsp;2. All Shareholder Recommendations properly submitted to a Fund will be held by the Secretary until such time as (i) the Committee convenes to consider candidates to fill Board vacancies or newly created Board positions (a "Trustee Consideration Meeting") or (ii) the Committee instructs the Secretary to discard a Shareholder Recommendation following a Trustee Consideration Meeting or an Interim Evaluation (as defined below).

&nbsp;&nbsp;&nbsp;&nbsp;3. At a Trustee Consideration Meeting, the Committee will consider each Shareholder Recommendation then held by the Secretary. Following a Trustee Consideration Meeting, the Committee may instruct the Secretary to discard any or all of the Shareholder Recommendations currently held by the Secretary.

&nbsp;&nbsp;&nbsp;&nbsp;4. The Committee may, in its discretion and at any time, convene to conduct an evaluation of validly submitted Shareholder Recommendations (each such meeting, an "Interim Evaluation") for the purpose of determining which Shareholder Recommendations will be considered at the next Trustee Consideration Meeting. Following an Interim Evaluation, the Committee may instruct the Secretary to discard any or all of the Shareholder Recommendations currently held by the Secretary.

&nbsp;&nbsp;&nbsp;&nbsp;5. The Shareholder Recommendation must include: (i) a statement in writing setting forth (A) the name, date of birth, business address, residence address and nationality of the person recommended by the shareholder (the "candidate"); (B) the number of shares of (and class, if any) of the Fund(s) owned of record or beneficially by the candidate, as reported to such shareholder by the candidate; (C) any other information regarding the candidate called for with respect to director nominees by paragraphs (a), (d), (e) and (f) of Item 401 of Regulation S-K or paragraph (b) of Item 22 of Rule 14a-101 (Schedule 14A) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), adopted by the Securities and Exchange Commission (or the corresponding provisions of any regulation or rule subsequently adopted by the Securities and Exchange Commission or any successor agency applicable to the Trust); (D) any other information regarding the candidate that would be required to be disclosed if the candidate were a nominee in a proxy statement or other filing required to be made in connection with the election of Trustees or directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder; and (E) whether the recommending shareholder believes that the candidate is or will be an "interested person" of the Fund (as defined in the Investment Company Act of 1940, as amended) and, if not an "interested person," information regarding the candidate that will be sufficient for the Fund to make such determination; (ii) the written and signed consent of the candidate to be named as a nominee and to serve as a Trustee if elected; (iii) the recommending shareholder's name as it appears on the Fund's books; (iv) the number of shares of (and class, if any) of the Fund(s) owned beneficially and of record by the recommending shareholder; and (v) a description of all arrangements or understandings between the recommending shareholder and the candidate and any other person or persons (including their names) pursuant to which the recommendation is being made by the recommending shareholder. In addition, the Committee may require the candidate to furnish such other information as it may reasonably require or deem necessary to determine the eligibility of such candidate to serve on the Board or to satisfy applicable law.

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**PART C—OTHER INFORMATION**

**Item 25: Financial Statements and Exhibits**

1. Financial Statements

**Included in Part A:**

Financial highlights for the fiscal years ended December 31, 2025, 2024 and 2023 and for the period from June 27, 2022 to December 31, 2022

**Incorporated into Part B by reference to Registrant's most recent** [**<u>Certified Shareholder Report on</u>**](https://www.sec.gov/Archives/edgar/data/1911795/000119312526094226/d786968dncsr.htm)[**<u>Form N-CSR, filed March 5, 2026</u>**](https://www.sec.gov/Archives/edgar/data/1911795/000119312526094226/d786968dncsr.htm) **(File No. 811-23781):**

Schedule of Investments as of December 31, 2025

Statement of Assets and Liabilities as of December 31, 2025

Statement of Operations for the fiscal year ended December 31, 2025

Statement of Changes in Net Assets for the for the fiscal years ended December 31, 2025 and 2024

Notes to Financial Statements

Report of Independent Registered Public Accounting Firm dated February 26, 2026

2. Exhibits

---

| | |
|:---|:---|
| a. | [<u>Amended and Restated Agreement and Declaration of Trust dated June 16, 2022</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312522175763/d271346dex99a2.htm).<sup>(1)</sup> <br>|
| a.1 | [<u>Notice of Change of Trustees dated July 18, 2022</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312523127573/d463578dex99a1.htm).<sup>(2)</sup> <br>|
| a.2 | [<u>Notice of Change of Trustees dated March 13, 2023</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312523127573/d463578dex99a2.htm). <sup>(2)</sup> <br>|
| a.3 | [<u>Notice of Change of Trustees dated May 8, 2023</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312524114555/d759919dex99a3.htm).<sup>(3)</sup> <br>|
| a.4 | [<u>Notice of Change of Trustees dated December 31, 2024</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312525100424/d902583dex99a4.htm).<sup>(6)</sup> <br>|
| a.5 | [<u>Notice of Change of Trustees dated September 18, 2025</u>](d121406dex99a5.htm).\* |
| a.6 | [<u>Notice of Change of Trustees dated December 31, 2025</u>](d121406dex99a6.htm).\* |
| a.7 | [<u>Notice of Change of Trustees dated March 6, 2026</u>](d121406dex99a7.htm).\* |
| b. | [<u>Amended and Restated Bylaws of Registrant dated January 12, 2024</u>](d121406dex99b.htm).\* |
| c. | None.  |
| d.1 | &nbsp;&nbsp;&nbsp; [<u>Article III (Shares) and Article V (Shareholders' Voting Powers and Meetings) of the Amended and</u>](http://www.sec.gov/Archives/edgar/data/1911795/000119312522175763/d271346dex99a2.htm)<br> [<u>Restated Agreement and Declaration of Trust</u>](http://www.sec.gov/Archives/edgar/data/1911795/000119312522175763/d271346dex99a2.htm).<sup>(1)</sup> <br>|
| d.2 | [<u>Article 10 (Shareholders' Voting Powers and Meetings) of the Bylaws of Registrant.</u>](https://www.sec.gov/Archives/edgar/data/0001911795/000119312522045261/d297256dex99b.htm)<sup>(4)</sup> <br>|
| d.3 | [<u>Form of Share Certificate of the Common Shares</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312522175763/d271346dex99d3.htm).<sup>(1)</sup> <br>|
| e. | [<u>Dividend Reinvestment Plan dated March 25, 2022</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312522175763/d271346dex99e.htm).<sup>(1)</sup> <br>|
| f. | None.  |
| g. | &nbsp;&nbsp;&nbsp; [<u>Investment Management Agreement between Registrant and Pacific Investment Management Company</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312522175763/d271346dex99g.htm)<br> [<u>LLC ("PIMCO") dated April 14, 2022</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312522175763/d271346dex99g.htm).<sup>(1)</sup> <br>|
| h.1  | &nbsp;&nbsp;&nbsp; [<u>Amended and Restated Distribution Contract between Registrant and PIMCO Investments LLC dated</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312522175763/d271346dex99h1.htm)<br> [<u>March 21, 2018</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312522175763/d271346dex99h1.htm).<sup>(1)</sup> <br>|
| h.2  | [<u>Amendment No. 6 adding Registrant as a party to Amended and Restated Distribution Contract</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312522175763/d271346dex99h2.htm).<sup>(1)</sup> <br>|
| h.3  | [<u>Form of Selected Dealer Agreement</u>](d121406dex99h3.htm).\* |
| h.4 | [<u>Form of Sales Agreement</u>](https://www.sec.gov/Archives/edgar/data/1723701/000119312522134045/d314588dex99h8.htm).<sup>(7)</sup> <br>|
| h.5  | [<u>Form of Addendum to Sales Agreement</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312525100424/d902583dex99h4.htm).<sup>(6)</sup> <br>|
| i.  | None. |

---

------

---

| | | |
|:---|:---|:---|
|  | j.1  | &nbsp;&nbsp;&nbsp; [<u>Custody and Investment Accounting Agreement between Registrant and State Street Bank and Trust</u>](https://www.sec.gov/Archives/edgar/data/1851077/000119312521212073/d179934dex99j1.htm)<br> [<u>Company dated January 1, 2000 and amendments thereto</u>](https://www.sec.gov/Archives/edgar/data/1851077/000119312521212073/d179934dex99j1.htm).<sup>(1)</sup> <br>|
|  | j.2  | &nbsp;&nbsp;&nbsp; [<u>Supplement to Custody and Investment Accounting Agreement between Registrant and State Street</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312522175763/d271346dex99j2.htm)<br> [<u>Bank and Trust Company</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312522175763/d271346dex99j2.htm). <sup>(1)</sup> <br>|
|  | j.3  | [<u>Custody Agreement between PIMCO and UMB Bank, n.a. dated February 15, 2017</u>](https://www.sec.gov/Archives/edgar/data/1851077/000119312521212073/d179934dex99j3.htm).<sup>(5)</sup> <br>|
|  | j.4  | &nbsp;&nbsp;&nbsp; [<u>Amendment No. 3 to Custody Agreement between PIMCO and UMB Bank, n.a dated March 22, 2024.</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312523127573/d463578dex99j4.htm) <br>&nbsp;&nbsp;&nbsp;&nbsp;(2) <br>|
|  | k.1  | &nbsp;&nbsp;&nbsp; [<u>Agency Agreement between Registrant and SS&C Global Investor & Distribution Solutions, Inc. dated</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312522175763/d271346dex99k1.htm)<br> [<u>February 22, 2017</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312522175763/d271346dex99k1.htm). <sup>(1)</sup> <br>|
|  | k.2  | &nbsp;&nbsp;&nbsp; [<u>Adoption Agreement between Registrant, PIMCO and SS&C Global Investor & Distribution Solutions,</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312522175763/d271346dex99k2.htm)<br> [<u>Inc. dated March 25, 2022</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312522175763/d271346dex99k2.htm).<sup>(1)</sup> <br>|
|  | k.3  | [<u>Management Fee Waiver Agreement between Registrant and PIMCO dated April 14, 2022</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312522175763/d271346dex99k3.htm).<sup>(1)</sup> <br>|
|  | k.4  | [<u>Amended and Restated Expense Limitation Agreement dated April 21, 2023.</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312523127573/d463578dex99k4.htm) <sup>(2)</sup> <br>|
|  | k.5  | [<u>Amended and Restated Distribution and Servicing plan for Class A-1 dated April 14, 2022</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312523127573/d463578dex99k5.htm). <sup>(2)</sup> <br>|
|  | k.6  | [<u>Third Amended and Restated Distribution and Servicing plan for Class A-2 dated April 14, 2022</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312523127573/d463578dex99k6.htm).<sup>(2)</sup> <br>|
|  | k.7  | [<u>Amended and Restated Distribution and Servicing plan for Class A-3 dated April 14, 2022</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312523127573/d463578dex99k7.htm). <sup>(2)</sup> <br>|
|  | k.8  | [<u>Third Amended and Restated Distribution and Servicing plan for Class A-4 dated April 14, 2022</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312523127573/d463578dex99k8.htm). <sup>(2)</sup> <br>|
|  | k.9 | [<u>Fourth Amended and Restated Multi-Class Plan dated March 25, 2022</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312522175763/d271346dex99d4.htm). <sup>(1)</sup> <br>|
|  | k.10  | &nbsp;&nbsp;&nbsp; [<u>Amended and Restated Sub-Administration Agreement between PIMCO, on behalf of Registrant, and</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312522175763/d271346dex99k9.htm)<br> [<u>State Street Bank and Trust Company dated July 2, 2007</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312522175763/d271346dex99k9.htm).<sup>(1)</sup> <br>|
|  | k.11  | &nbsp;&nbsp;&nbsp; [<u>Nineteenth Amendment to Amended and Restated Sub-Administration Agreement between PIMCO, on</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312522175763/d271346dex99k10.htm)<br> [<u>behalf of Registrant, and State Street Bank and Trust Company dated April 22, 2022</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312522175763/d271346dex99k10.htm).<sup>(1)</sup> <br>|
|  | l. | [<u>Opinion and consent of Ropes & Gray LLP</u>](d121406dex99l.htm).\* |
|  | m. | None.  |
|  | n. | [<u>Consent of Registrant's independent registered public accounting firm</u>](d121406dex99n.htm).\* |
|  | o. | None.  |
|  | p. | &nbsp;&nbsp;&nbsp; [<u>Subscription Agreement between Registrant and Allianz Fund Investments, Inc. dated March 25,</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312522175763/d271346dex99p.htm)<br> [<u>2022</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312522175763/d271346dex99p.htm).<sup>(1)</sup> <br>|
|  | q. | None.  |
|  | r.1 | [<u>Code of Ethics of Registrant</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312523127573/d463578dex99r1.htm). <sup>(2)</sup> <br>|
|  | r.2 | [<u>Code of Ethics of Pacific Investment Management Company LLC and PIMCO Investments LLC</u>](d121406dex99r2.htm).\* |
|  | r.3 | &nbsp;&nbsp;&nbsp; [<u>Code of Ethics Pursuant to Section 406 of the Sarbanes-Oxley Act of 2002 for Principal Executive and</u>](https://www.sec.gov/Archives/edgar/data/1896329/000119312524114558/d759913dex99r3.htm)<br> [<u>Senior Financial Officers</u>](https://www.sec.gov/Archives/edgar/data/1896329/000119312524114558/d759913dex99r3.htm).<sup>(3)</sup> <br>|
|  | s.1 | &nbsp;&nbsp;&nbsp; [<u>Powers of Attorney for Libby D. Cantrill, Sarah E. Cogan, Deborah A. DeCotis, David Flattum,</u>](d121406dex99s1.htm)<br> [<u>Kathleen A. McCartney, Mark Michel, Sonya Morris, Alan Rappaport, and E. Grace Vandecruze</u>](d121406dex99s1.htm).\*<br>|
|  | s.2 | [<u>Power of Attorney for Joshua D. Ratner</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312524114555/d759919dex99s2.htm).<sup>(3)</sup> <br>|
|  | s.3 | [<u>Power of Attorney for Bijal Parikh</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312524114555/d759919dex99s3.htm).<sup>(3)</sup> <br>|
|  | s.4 | [<u>Certified Resolution of the Board of Trustees of Registrant</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312522175763/d271346dex99s4.htm).<sup>(1)</sup> <br>|
| <sup>1.</sup> <br>| &nbsp;&nbsp;&nbsp; Incorporated by reference to [<u>Pre-Effective Amendment No. 2 to the Registrant's Registration Statement on</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312522175763/d271346dn2a.htm)<br> [<u>Form N-2, Registration Nos. 333-262811 and 811-23781 (filed June 17, 2022).</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312522175763/d271346dn2a.htm) | &nbsp;&nbsp;&nbsp; Incorporated by reference to [<u>Pre-Effective Amendment No. 2 to the Registrant's Registration Statement on</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312522175763/d271346dn2a.htm)<br> [<u>Form N-2, Registration Nos. 333-262811 and 811-23781 (filed June 17, 2022).</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312522175763/d271346dn2a.htm) |
| <sup>2.</sup> <br>| &nbsp;&nbsp;&nbsp; Incorporated by reference to [<u>Post-Effective Amendment No. 1 to the Registrant's Registration Statement on</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312523127573/d463578d486bpos.htm)<br> [<u>Form N-2, Registration Nos. 333-262811 and 811-23781 (filed April 28, 2023).</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312523127573/d463578d486bpos.htm) | &nbsp;&nbsp;&nbsp; Incorporated by reference to [<u>Post-Effective Amendment No. 1 to the Registrant's Registration Statement on</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312523127573/d463578d486bpos.htm)<br> [<u>Form N-2, Registration Nos. 333-262811 and 811-23781 (filed April 28, 2023).</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312523127573/d463578d486bpos.htm) |
| <sup>3.</sup> <br>| &nbsp;&nbsp;&nbsp; Filed as an exhibit to [Post-Effective Amendment No. 2 to the Registrant's Registration Statement on Form N-2,](https://www.sec.gov/ix?doc=/Archives/edgar/data/0001911795/000119312524114555/d759919d486bpos.htm)<br> [Registration Nos. 333-262811 and 811-23781 (filed April 25, 2024)](https://www.sec.gov/ix?doc=/Archives/edgar/data/0001911795/000119312524114555/d759919d486bpos.htm). | &nbsp;&nbsp;&nbsp; Filed as an exhibit to [Post-Effective Amendment No. 2 to the Registrant's Registration Statement on Form N-2,](https://www.sec.gov/ix?doc=/Archives/edgar/data/0001911795/000119312524114555/d759919d486bpos.htm)<br> [Registration Nos. 333-262811 and 811-23781 (filed April 25, 2024)](https://www.sec.gov/ix?doc=/Archives/edgar/data/0001911795/000119312524114555/d759919d486bpos.htm). |

---

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| | |
|:---|:---|
| <sup>4.</sup> <br>| &nbsp;&nbsp;&nbsp; Incorporated by reference to the Registrant's [<u>Registration Statement on Form N-2, Registration Nos.</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312522045261/d297256dn2.htm)<br> [<u>333-22646987 and 811-23781 (filed February 17, 2022).</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312522045261/d297256dn2.htm) |
| <sup>5.</sup> <br>| &nbsp;&nbsp;&nbsp; Filed as an exhibit to PIMCO Flexible Emerging Markets Income Fund's [<u>Pre-Effective Amendment No. 3 to its</u>](https://www.sec.gov/Archives/edgar/data/1851077/000119312521212073/d179934dn2a.htm)<br> [<u>Registration Statement on Form N-2, Registration Nos. 333-254586 and 811-23648 (filed July 9, 2021).</u>](https://www.sec.gov/Archives/edgar/data/1851077/000119312521212073/d179934dn2a.htm) |
| <sup>6.</sup> <br>| &nbsp;&nbsp;&nbsp; Incorporated by reference to <u>Post-Effective Amendment No. 3 to the Registrant's Registration Statement on</u> <br> <u>Form N-2, Registration Nos. 333-262811 and 811-23781 (filed April 28, 2025).</u> |
| <sup>7.</sup> <br>| &nbsp;&nbsp;&nbsp; Filed as an exhibit to PIMCO Flexible Municipal Income Fund's [<u>Post-Effective Amendment No. 11 to its</u>](https://www.sec.gov/Archives/edgar/data/1723701/000119312522134045/d314588d486bpos.htm)<br> [<u>Registration Statement on Form N-2, Registration Nos. 333-221829 and 811-23314 (filed April 29, 2022).</u>](https://www.sec.gov/Archives/edgar/data/1723701/000119312522134045/d314588d486bpos.htm) |
| <sup>\*</sup> <br>| Filed herewith. |

---

**Item 26: Marketing Arrangements**

See [<u>Amendment No. 6 to the Amended and Restated Distribution Contract</u>](https://www.sec.gov/Archives/edgar/data/1911795/000119312522175763/d271346dex99h2.htm), which is incorporated by reference herein.

**Item 27: Other Expenses of Issuance and Distribution**

Not applicable.

**Item 28: Persons Controlled by or under Common Control with Registrant** 

Not applicable.

**Item 29: Number of Holders of Securities** 

Set forth below is the number of record holders as of April 7, 2026 of each class of securities of the Registrant.

---

| | |
|:---|:---|
| **Title of Class** | **Number of Record Holders** |
| &nbsp;&nbsp; Common shares of beneficial interest, $0.00001 par <br> value per share<br>| 198 |
| &nbsp;&nbsp; Common shares of beneficial interest, $0.00001 par <br> value per share (INST)<br>| 146 |
| &nbsp;&nbsp; Common shares of beneficial interest, $0.00001 par <br> value per share (Class A-1)<br>| 52 |
| Preferred Shares | 5 |

---

**Item 30: Indemnification**

Reference is made to Article VIII, Sections 1 through 4, of the Registrant's Agreement and Declaration of Trust, which is incorporated by reference herein.

Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the "Securities Act"), may be permitted to trustees, officers and controlling persons of the Registrant by the Registrant pursuant to the Trust's Agreement and Declaration of Trust, its Bylaws or otherwise, the Registrant is aware that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and, therefore, is unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by trustees, officers or controlling persons of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such trustees, officers or controlling persons in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

**Item 31: Business and Other Connections of Investment Adviser** 

Pacific Investment Management Company LLC ("PIMCO") is an investment adviser registered under the Advisers Act. The list required by this Item 31 of officers and directors of PIMCO, together with any information as to any business, profession, vocation, or employment of a substantial nature engaged in by such officers and directors during the past two years, is incorporated herein by reference from Form ADV filed by PIMCO pursuant to the Advisers Act (SEC File No. 801-48187).

------

**Item 32: Location of Accounts and Records** 

The account books and other documents required to be maintained by the Registrant pursuant to Section 31(a) of the Investment Company Act of 1940 and the rules thereunder will be maintained at the offices of Pacific Investment Management Company LLC, 1633 Broadway, New York, NY 10019 or the Registrant's custodian, State Street Bank and Trust Company, 2323 Grand Boulevard, 5<sup>th</sup> Floor, Kansas City, MO 64108.

**Item 33: Management Services**

Not applicable.

**Item 34: Undertakings** 

1. Not applicable.

2. Not applicable.

3. The Registrant undertakes:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) To file, during any period in which offers or sales are being made, a post-effective amendment to the registration statement:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) to include any prospectus required by Section 10(a)(3) of the 1933 Act;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) to reflect in the prospectus any facts or events after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) under the 1933 Act if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) That, for the purpose of determining any liability under the 1933 Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of those securities at that time shall be deemed to be the initial bona fide offering thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) that, for the purpose of determining liability under the 1933 Act to any purchaser:

&nbsp;&nbsp;&nbsp;&nbsp;(1) if the Registrant is subject to Rule 430B under the 1933 Act: (A) each prospectus filed by the Registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and (B) each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (x), or (xi) under the 1933 Act for the purpose of providing the information required by Section 10(a) of the 1933 Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. *Provided, however*, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or

&nbsp;&nbsp;&nbsp;&nbsp;(2) if the Registrant is subject to Rule 430C under the 1933 Act: Each prospectus filed pursuant to Rule 424(b)

------

under the 1933 Act as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or prospectuses filed in reliance on Rule 430A under the 1933 Act, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. *Provided, however*, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) That for the purpose of determining liability of the Registrant under the 1933 Act to any purchaser in the initial distribution of securities:

The undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser and will be considered to offer or sell such securities to the purchaser:

&nbsp;&nbsp;&nbsp;&nbsp;(1) any preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 424 under the 1933 Act;

&nbsp;&nbsp;&nbsp;&nbsp;(2) free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by the undersigned Registrant;

&nbsp;&nbsp;&nbsp;&nbsp;(3) the portion of any other free writing prospectus or advertisement pursuant to Rule 482 under the 1933 Act relating to the offering containing material information about the undersigned Registrant or its securities provided by or on behalf of the undersigned Registrant; and

&nbsp;&nbsp;&nbsp;&nbsp;(4) any other communication that is an offer in the offering made by the undersigned Registrant to the purchaser.

4. Not applicable.

5. Not applicable.

6. Insofar as indemnification for liabilities arising under the 1933 Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the 1933 Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the 1933 Act and will be governed by the final adjudication of such issue.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

7. The Registrant undertakes to send by first class mail or other means designed to ensure equally prompt delivery within two business days of receipt of a written or oral request, any Prospectus or Statement of Additional Information.

**NOTICE**

A copy of the Agreement and Declaration of Trust of PIMCO California Flexible Municipal Income Fund (the "Fund"), together with all amendments thereto, is on file with the Secretary of the Commonwealth of Massachusetts, and notice is hereby given that this instrument is executed on behalf of the Fund by any officer or Trustee of the Fund as an officer or Trustee and not individually and that the obligations of or arising out of this instrument are not binding upon any of the Trustees of the Fund or shareholders of the Fund individually, but are binding only upon the assets and property of the Fund.

------

**SIGNATURES**

Pursuant to the requirements of the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended, the Registrant certifies that this Post-Effective Amendment No. 4 to its Registration Statement meets all of the requirements for effectiveness under Rule 486(b) and has duly caused this Post-Effective Amendment No. 4 to its Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Washington in the District of Columbia on the 28<sup>th</sup> day of April, 2026.

---

| | |
|:---|:---|
| PIMCO CALIFORNIA FLEXIBLE MUNICIPAL INCOME FUND | PIMCO CALIFORNIA FLEXIBLE MUNICIPAL INCOME FUND |
| By: | Joshua D. Ratner\*<br>|
| Name: | Joshua D. Ratner |
| Title: | President |

---

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the date indicated.

---

| | | |
|:---|:---|:---|
| **Name** | **Capacity** | **Date** |
| Joshua D. Ratner\*<br>Joshua D. Ratner<br>| President<br> (Principal Executive Officer)<br>| April 28, 2026 |
| Bijal Parikh\*<br>Bijal Parikh<br>| Treasurer<br> (Principal Financial & Accounting Officer)<br>| April 28, 2026 |
| Libby D. Cantrill\*\*<br>Libby D. Cantrill<br>| Trustee | April 28, 2026 |
| Sarah E. Cogan\*\*<br>Sarah E. Cogan<br>| Trustee | April 28, 2026 |
| David Flattum\*\*<br>David Flattum<br>| Trustee | April 28, 2026 |
| Kathleen A. McCartney\*\*<br>Kathleen A. McCartney<br>| Trustee | April 28, 2026 |
| Mark Michel\*\*<br>Mark Michel<br>| Trustee | April 28, 2026 |
| Sonya Morris\*\*<br>Sonya Morris<br>| Trustee | April 28, 2026 |
| Alan Rappaport\*\*<br>Alan Rappaport<br>| Trustee | April 28, 2026 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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| | |
|:---|:---|
| \*By: | /s/ Adam T. Teufel\*\*<br>Adam T. Teufel<br> as attorney-in-fact<br>|

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\*

Pursuant to powers of attorney

\*\*

Pursuant to powers of attorney filed herewith

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**INDEX OF EXHIBITS** 

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| | |
|:---|:---|
| **Exhibit** | **Exhibit Name** |
| a.5 | Notice of Change of Trustees dated September 18, 2025.  |
| a.6 | Notice of Change of Trustees dated December 31, 2025. |
| a.7 | Notice of Change of Trustees dated March 6, 2026.  |
| b. | Amended and Restated Bylaws of Registrant dated January 12, 2024. |
| h.3 | Form of Selected Dealer Agreement. |
| l. | Opinion and consent of Ropes & Gray LLP. |
| n. | Consent of Registrant's independent registered public accounting firm. |
| r.2 | Code of Ethics of Pacific Investment Management Company LLC and PIMCO Investment LLC. |
| s.1 | &nbsp;&nbsp;&nbsp; Power of Attorney for Libby D. Cantrill, Sarah E. Cogan, Deborah A. DeCotis, David Flattum, Kathleen <br> &nbsp;&nbsp;&nbsp;&nbsp;A. McCartney, Mark Michel, Sonya Morris, Alan Rappaport, and E. Grace Vandecruze.<br>|

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## Ex-99.(A)(5)

**PIMCO CALIFORNIA FLEXIBLE MUNICIPAL INCOME FUND** 

**NOTICE OF CHANGE OF TRUSTEES** 

**WHEREAS,** PIMCO California Flexible Municipal Income Fund (the "Trust") is organized as a trust under the laws of the Commonwealth of Massachusetts; and

**WHEREAS,** the Board nominated and appointed each of Mark Michel and Sonya Morris as a Trustee of the Trust, effective as of September 18, 2025;

**NOW, THEREFORE,** as a result of the foregoing Trustee appointments, the nine (9) Trustees of the Trust are:

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| | |
|:---|:---|
| Libby D. Cantrill | 650 Newport Center Drive |
|  | Newport Beach, CA 92660 |
| Sarah E. Cogan | 1633 Broadway |
|  | New York, New York 10019 |
| Deborah A. DeCotis | 1633 Broadway |
|  | New York, New York 10019 |
| David Flattum | 650 Newport Center Drive |
|  | Newport Beach, CA 92660 |
| Kathleen A. McCartney | 1633 Broadway<br> New York, New York 10019 |
| Mark Michel | 1633 Broadway |
|  | New York, New York 10019 |
| Sonya Morris | 1633 Broadway |
|  | New York, New York 10019 |
| Alan Rappaport | 1633 Broadway |
|  | New York, New York 10019 |
| E. Grace Vandecruze | 1633 Broadway |
|  | New York, New York 10019 |

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**IN WITNESS WHEREOF**, this Notice has been subscribed this 29th day of September, 2025, by the undersigned who affirms that the statements made herein are true under the penalties of perjury.

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| |
|:---|
|  <u>/s/ Ryan G. Leshaw</u> |
|  Ryan G. Leshaw, Chief Legal Officer and Secretary |

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Signature Page – PIMCO California Flexible Municipal Income Fund (CAFLX)

## Ex-99.(A)(6)

**PIMCO CALIFORNIA FLEXIBLE MUNICIPAL INCOME FUND** 

**NOTICE OF CHANGE OF TRUSTEES** 

**WHEREAS,** PIMCO California Flexible Municipal Income Fund (the "Trust") is organized as a trust under the laws of the Commonwealth of Massachusetts; and

**WHEREAS,** E. Grace Vandecruze retired as a Trustee of the Trust, effective as of December 31, 2025.

**NOW, THEREFORE,** as a result of the foregoing Trustee retirement, the eight (8) Trustees of the Trust are:

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| | |
|:---|:---|
| Libby D. Cantrill | 650 Newport Center Drive |
|  | Newport Beach, CA 92660 |
| Sarah E. Cogan | 1633 Broadway |
|  | New York, New York 10019 |
| Deborah A. DeCotis | 1633 Broadway |
|  | New York, New York 10019 |
| David Flattum | 650 Newport Center Drive |
|  | Newport Beach, CA 92660 |
| Kathleen A. McCartney | 1633 Broadway<br> New York, New York 10019 |
| Mark Michel | 1633 Broadway |
|  | New York, New York 10019 |
| Sonya Morris | 1633 Broadway |
|  | New York, New York 10019 |
| Alan Rappaport | 1633 Broadway |
|  | New York, New York 10019 |

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**IN WITNESS WHEREOF**, this Notice has been subscribed this 9th day of January, 2026, by the undersigned who affirms that the statements made herein are true under the penalties of perjury.

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| |
|:---|
|  <u>/s/ Ryan G. Leshaw</u> |
|  Ryan G. Leshaw, Chief Legal Officer and Secretary |

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Signature Page – PIMCO California Flexible Municipal Income Fund (CAFLX)

## Ex-99.(A)(7)

**PIMCO CALIFORNIA FLEXIBLE MUNICIPAL INCOME FUND** 

**NOTICE OF CHANGE OF TRUSTEES** 

**WHEREAS,** PIMCO California Flexible Municipal Income Fund (the "Trust") is organized as a trust under the laws of the Commonwealth of Massachusetts; and

**WHEREAS,** Deborah A. DeCotis retired as a Trustee of the Trust, effective as of March 6, 2026.

**NOW, THEREFORE,** as a result of the foregoing Trustee retirement, the seven (7) Trustees of the Trust are:

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Libby D. Cantrill | 650 Newport Center Drive<br> Newport Beach, CA 92660 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Sarah E. Cogan | 1633 Broadway<br> New York, New York 10019 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; David Flattum | 650 Newport Center Drive<br> Newport Beach, CA 92660 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Kathleen A. McCartney | 1633 Broadway<br> New York, New York 10019 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Mark Michel | 1633 Broadway<br> New York, New York 10019 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Sonya Morris | 1633 Broadway<br> New York, New York 10019 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Alan Rappaport | 1633 Broadway<br> New York, New York 10019 |

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**IN WITNESS WHEREOF**, this Notice has been subscribed this 31st day of March, 2026, by the undersigned who affirms that the statements made herein are true under the penalties of perjury.

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| |
|:---|
| <u>/s/ Ryan G. Leshaw</u> |
| Ryan G. Leshaw, Chief Legal Officer and Secretary |

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Signature Page – PIMCO California Flexible Municipal Income Fund (CAFLX)

## Ex-99.(B)

**AMENDED AND RESTATED BYLAWS** 

**of** 

**PIMCO CALIFORNIA FLEXIBLE MUNICIPAL INCOME FUND** 

(Amended and Restated as of January 12, 2024)

**ARTICLE 1** 

**AGREEMENT AND DECLARATION OF TRUST AND PRINCIPAL OFFICE** 

1.1. <u>Principal Office of the Trust</u>. The Trust may have one or more principal offices within or outside of The Commonwealth of Massachusetts as the Trustees may determine or as they may authorize.

1.2. <u>Agreement and Declaration of Trust</u>. These Amended and Restated Bylaws (the "Bylaws") shall be subject to the Agreement and Declaration of Trust, as amended or restated from time to time (the "Declaration of Trust"), of PIMCO California Flexible Municipal Income Fund, the Massachusetts business trust established by the Declaration of Trust (the "Trust"). Capitalized terms used in these Bylaws and not otherwise defined herein shall have the meanings given to such terms in the Declaration of Trust.

**ARTICLE 2** 

**MEETINGS OF TRUSTEES** 

2.1. <u>Regular Meetings</u>. Regular meetings of the Trustees may be held without call or notice at such places and at such times as the Trustees may from time to time determine, provided that notice of the first regular meeting following any such determination shall be given to absent Trustees. A regular meeting of the Trustees may be held without call or notice immediately after and at the same place as any meeting of Shareholders.

2.2. <u>Special Meetings</u>. Special meetings of the Trustees may be held at any time and at any place designated in the call of the meeting when called by the Chair of the Trustees, the President or the Treasurer or by two or more Trustees, sufficient notice thereof being given to each Trustee by the Secretary or an Assistant Secretary or by the officer or the Trustees calling the meeting.

2.3. <u>Notice</u>. It shall be sufficient notice to a Trustee of a special meeting to send notice by mail at least forty-eight hours, or by telegram, telex or telecopy or other electronic transmission method at least twenty-four hours, before the meeting addressed to the Trustee at his or her usual or last known business or residence address (or facsimile number or e-mail address as the case may be) or to give notice to him or her in person or by telephone, voice-mail or e-mail at least twenty-four hours before the meeting. Notice of a meeting need not be given to any Trustee if a written waiver of notice, executed by him or her, before or after the meeting, is filed with the records of the meeting, or to any Trustee who attends the meeting without protesting prior thereto or at its commencement the lack of notice to him or her. Neither notice of a meeting nor a waiver of a notice need specify the purposes of the meeting.

2.4. <u>Quorum</u>. At any meeting of the Trustees a majority of the Trustees then in office shall constitute a quorum. Any meeting may be adjourned from time to time by a majority of the votes cast upon the question, whether or not a quorum is present, and the meeting may be held as adjourned without further notice.

2.5. <u>Telephone Meetings; Consents</u>. Except as otherwise provided in the Declaration of Trust or from time to time in these Bylaws, any action to be taken by the Trustees may be taken at a meeting by means of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other at the same time and participation by such means shall constitute presence in person at a meeting, or by written consents or consents submitted electronically by a majority of the Trustees then in office (or such greater number as may be required by the Declaration of Trust, these Bylaws, or applicable law).

**ARTICLE 3** 

**OFFICERS AND CHAIR OF THE TRUSTEES** 

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3.1. <u>Enumeration; Qualification</u>. The officers of the Trust shall be a President, a Treasurer, a Secretary, a Chief Compliance Officer and such other officers, if any, as the Trustees from time to time may in their discretion elect. The Trust may also have such agents as the Trustees from time to time may in their discretion appoint. Any officer may but need not be a Trustee or a Shareholder. Any two or more offices may be held by the same person.

3.2. <u>Election</u>. The President, the Treasurer, and the Secretary shall be elected by the Trustees. Other officers, if any, may be elected or appointed by the Trustees at the same meeting at which the President, Treasurer and Secretary are elected, or at any other time. If required by the Investment Company Act of 1940, as amended (the "1940 Act"), the Chief Compliance Officer shall be elected or appointed by a majority of the Trustees, as well as a majority of the Trustees who are not Interested Persons of the Trust (the "Independent Trustees"), and otherwise in accordance with Rule 38a-1 (or any successor rule) under the 1940 Act, as such rule may be amended from time to time ("Rule 38a-1"). Vacancies in any office may be filled at any time.

3.3. <u>Tenure</u>. The Chair of the Trustees, if one is elected, the President, the Treasurer, the Secretary and the Chief Compliance Officer shall hold office until their respective successors are chosen and qualified, or in each case until he or she sooner dies, resigns, is removed with or without cause or becomes disqualified, provided that, if required by the 1940 Act, any removal of the Chief Compliance Officer shall be in accordance with Rule 38a-1. Each other officer shall hold office and each agent of the Trust shall retain authority at the pleasure of the Trustees.

3.4. <u>Powers</u>. Subject to the other provisions of these Bylaws, each officer shall have, in addition to the duties and powers herein and set forth in the Declaration of Trust, such duties and powers as are commonly incident to the office occupied by him or her as if the Trust were organized as a Massachusetts business corporation and such other duties and powers as the Trustees may from time to time designate.

3.5. <u>Chair of the Trustees.</u> There may be an office of the Chair of the Trustees, which shall serve on behalf of the Trustees, but shall not be an officer of the Trust. The office of the Chair of the Trustees may be held by more than one person. Any Chair of the Trustees shall be elected by a majority of the Trustees, as well as a majority of the Independent Trustees if required by the 1940 Act. If required by the 1940 Act, any Chair of the Trustees shall be an Independent Trustee and may, but need not, be a shareholder. The powers and the duties of the Chair of the Trustees shall include any and all such powers and duties relating to the operations of the Trustees as, from time to time, may be conferred upon or assigned to such office by the Trustees or as may be required by law, provided that the Chair of the Trustees shall have no individual authority to act for the Trust as an officer of the Trust. In carrying out the responsibilities and duties of the office, the Chair of the Trustees may seek assistance and input from other Trustees or Committees of the Trustees, officers of the Trust and the Trust's investment adviser(s) and other service providers, as deemed necessary or appropriate. The Trustees, including a majority of the Independent Trustees if required by the 1940 Act, may appoint one or more persons to perform the duties of the Chair of the Trustees, in the event of his or her absence at any meeting or in the event of his or her disability.

3.6. <u>President; Vice President</u>. The President shall be the chief executive officer of the Trust. Any Vice President shall have such duties and powers as may be designated from time to time by the Trustees or the President.

3.7. <u>Treasurer; Assistant Treasurer</u>. The Treasurer shall be the chief financial and accounting officer of the Trust, and shall, subject to the provisions of the Declaration of Trust and to any arrangement made by the Trustees with a custodian, investment adviser, sub-adviser or manager, or transfer, shareholder servicing or similar agent, be in charge of the valuable papers, books of account and accounting records of the Trust, and shall have such other duties and powers as may be designated from time to time by the Trustees or by the President. Any Assistant Treasurer shall have such duties and powers as may be designated from time to time by the Trustees or the President.

3.8. <u>Secretary; Assistant Secretary</u>. The Secretary shall record all proceedings of the Shareholders and the Trustees in books to be kept therefor, which books or a copy thereof shall be kept at the principal office of the Trust. In the absence of the Secretary from any meeting of the Shareholders or Trustees, an Assistant Secretary, or if there be none or if he or she is absent, a temporary secretary chosen at such meeting shall record the proceedings thereof in the aforesaid books. Any Assistant Secretary shall have such duties and powers as may be designated from time to time by the Trustees or the President.

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3.9. <u>Chief Compliance Officer</u>. The Chief Compliance Officer shall perform the duties and have the responsibilities of the chief compliance officer of the Trust, including if required by the 1940 Act any such duties and responsibilities imposed by Rule 38a-1, and shall have such other duties and powers as may be designated from time to time by the Trustees.

3.10. <u>Resignations</u>. Any officer may resign at any time by written instrument signed by him or her and delivered to the Chair of the Trustees, if any, the President or the Secretary, or to a meeting of the Trustees. Such resignation shall be effective upon receipt unless specified to be effective at some other time. Except to the extent expressly provided in a written agreement with the Trust, no officer resigning and no officer removed shall have any right to any compensation for any period following his or her resignation or removal, or any right to damages on account of such removal.

**ARTICLE 4** 

**COMMITTEES** 

4.1. <u>Quorum; Voting</u>. Except as provided below or as otherwise specifically provided in the resolutions constituting a Committee of the Trustees and providing for the conduct of its meetings, a majority of the members of any Committee of the Trustees shall constitute a quorum for the transaction of business, and any action of such a Committee may be taken at a meeting by a vote of a majority of the members present (a quorum being present) or evidenced by one or more writings signed by such a majority. Members of a Committee may participate in a meeting of such Committee by means of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other at the same time and participation by such means shall constitute presence in person at a meeting, or by written consents or consents submitted electronically by a majority of the members then in office (or such greater number as may be required by the Declaration of Trust, these Bylaws, or applicable law)

With respect to a Valuation Oversight Committee of the Trustees (or similar committee responsible for valuation oversight and determinations), one or more of the Committee members shall constitute a quorum for the transaction of business.

Except as specifically provided in the resolutions constituting a Committee of the Trustees and providing for the conduct of its meetings, Section 2.3 of these Bylaws relating to special meetings of the Trustees shall govern the notice requirements for Committee meetings, except that it shall be sufficient notice to a Valuation Oversight Committee of the Trustees to send notice by e-mail, telephone, voice message, telegram, telex or telecopy or other electronic means at least fifteen minutes before the meeting.

**ARTICLE 5** 

**REPORTS** 

5.1. <u>General</u>. The Trustees and officers shall render reports at the time and in the manner required by the Declaration of Trust or any applicable law. Officers and Committees shall render such additional reports as they may deem desirable or as may from time to time be required by the Trustees.

**ARTICLE 6** 

**FISCAL YEAR** 

6.1. <u>General</u>. Except as from time to time otherwise determined by the Trustees, the initial fiscal year of the Trust shall end on such date as is determined in advance or in arrears by the Trustees or the Treasurer, and the subsequent fiscal years shall end on such date in subsequent years.

**ARTICLE 7** 

**SEAL** 

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7.1. <u>General</u>. The seal of the Trust shall, subject to alteration by the Trustees, consist of a flat-faced die with the word "Massachusetts", together with the name of the Trust and the year of its organization cut or engraved thereon; provided, however, that unless otherwise required by the Trustees, the seal shall not be necessary to be placed on, and its absence shall not impair the validity of, any document, instrument or other paper executed and delivered by or on behalf of the Trust.

**ARTICLE 8** 

**EXECUTION OF PAPERS** 

8.1. <u>General</u>. Except as the Trustees may generally or in particular cases authorize the execution thereof in some other manner, all deeds, leases, transfers, contracts, bonds, notes, checks, drafts and other obligations made, accepted or endorsed by the Trust shall be executed by the President, any Vice President, the Treasurer or by whomever else shall be designated for that purpose by vote of the Trustees, and need not bear the seal of the Trust.

**ARTICLE 9** 

**UNCERTIFICATED SHARES AND SHARE CERTIFICATES** 

9.1. <u>Uncertificated Shares; Share Certificates</u>. In lieu of issuing certificates for Shares, the Trustees or the transfer agent may either issue receipts therefor or may keep accounts upon the books of the Trust for the record holders of such Shares, who shall in either case be deemed, for all purposes hereunder, to be the holders of certificates for such Shares as if they had accepted such certificates and shall be held to have expressly assented and agreed to the terms hereof.

The Trustees may at any time, but are not required to, authorize the issuance of share certificates. In that event, each Shareholder shall be entitled to a certificate stating the number of Shares owned by him or her, in such form as shall be prescribed from time to time by the Trustees. Any such certificates shall be signed by the President or any Vice President and by the Treasurer or any Assistant Treasurer. Such signatures may be by facsimile if the certificate is signed by a transfer agent, or by a registrar, other than a Trustee, officer or employee of the Trust. In case any officer who has signed or whose facsimile signature has been placed on such certificate shall cease to be such officer before such certificate is issued, it may be issued by the Trust with the same effect as if he or she were such officer at the time of its issuance.

9.2. <u>Loss of Certificates</u>. In case of the alleged loss or destruction or the mutilation of a share certificate, a duplicate certificate may be issued in place thereof, upon such terms as the Trustees shall prescribe.

9.3. <u>Issuance of New Certificates to Pledgee</u>. A pledgee of Shares transferred as collateral security shall be entitled to a new certificate if the instrument of transfer substantially describes the debt or duty that is intended to be secured thereby. Such new certificate shall express on its face that it is held as collateral security, and the name of pledgor shall be stated thereon, who alone shall be liable as a Shareholder and entitled to vote thereon.

9.4. <u>Discontinuance of Issuance of Certificates</u>. Notwithstanding anything to the contrary in this Article 9, the Trustees may at any time discontinue any issuance of share certificates and may, by written notice to each Shareholder, require the surrender of share certificates to the Trust for cancellation. Such surrender and cancellation shall not affect the ownership of Shares in the Trust.

**ARTICLE 10** 

**SHAREHOLDERS' VOTING POWERS AND MEETINGS** 

10.1. <u>Voting Powers</u>. The Shareholders shall have power to vote only (i) for the election or removal of Trustees as provided in Article IV, Sections 1 and 3 of the Declaration of Trust and <u>Exhibit 1</u> hereto, (ii) with respect to any Manager or sub-adviser as provided in Article IV, Section 8 of the Declaration of Trust to the extent required by the 1940 Act, (iii) with respect to certain transactions and other matters to the extent and as provided in Article V, Sections 2 and 3 of the Declaration of Trust and <u>Exhibit 1</u> hereto, (iv) with respect to any termination of this Trust to

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the extent and as provided in Article IX, Section 4 of the Declaration of Trust (for the avoidance of any doubt, Shareholders shall have no separate right to vote with respect to the termination of the Trust or a series or class of Shares if the Trustees (including the Continuing Trustees) exercise their right to terminate the Trust or such series or class pursuant to clauses (ii) or (y) of Article IX, Section 4 of the Declaration of Trust), (v) with respect to any amendment of the Declaration of Trust to the extent and as provided in Article IX, Section 7 of the Declaration of Trust and <u>Exhibit 1</u> hereto, (vi) to the same extent as the stockholders of a Massachusetts business corporation as to whether or not a court action, proceeding or claim should or should not be brought or maintained derivatively or as a class action on behalf of the Trust or the Shareholders, and (vii) with respect to such additional matters relating to the Trust as may be required by law, the Declaration of Trust, these Bylaws or any registration of the Trust with the Securities and Exchange Commission (or any successor agency) or any state, or as the Trustees may consider necessary or desirable. Each whole Share shall be entitled to one vote as to any matter on which it is entitled to vote and each fractional Share shall be entitled to a proportionate fractional vote, except as otherwise provided in the Declaration of Trust, these Bylaws, or required by applicable law(including any voting, Share ownership or similar limitations or requirements that may apply to a Shareholder). Shares of the Trust then entitled to vote shall be voted by individual series except (i) when required by the 1940 Act, Shares shall be voted in the aggregate and not by individual series, (ii) when the Trustees have determined that the matter affects only the interests of one or more series or classes of Shares, then only Shareholders of such series or classes of Shares shall be entitled to vote thereon, and (iii) as otherwise provided in the Declaration of Trust, provided in these Bylaws, or required by applicable law. There shall be no cumulative voting in the election of Trustees. Shares may be voted in person or by proxy. A proxy with respect to Shares held in the name of two or more persons shall be valid if executed by any one of them unless at or prior to exercise of the proxy the Trust receives a specific written notice to the contrary from any one of them. The placing of a Shareholder's name on a proxy pursuant to telephonic or electronically transmitted instructions obtained pursuant to procedures reasonably designed to verify that such instructions have been authorized by such Shareholder shall constitute execution of such proxy by or on behalf of such Shareholder. A proxy purporting to be executed by or on behalf of a Shareholder shall be deemed valid unless challenged at or prior to its exercise and the burden of proving invalidity shall rest on the challenger. Until Shares of a particular class or series are issued, the Trustees may exercise all rights of Shareholders and may take any action required by law, the Declaration of Trust or these Bylaws to be taken by Shareholders as to such class or series. For the avoidance of doubt, the foregoing shall not prevent or limit the application to any Shareholder of any voting, share ownership or similar limitations or requirements set forth in these Bylaws or the Declaration of Trust. For purposes of this Article 10, all preferred shares of beneficial interest of the Trust issued and outstanding, including, without limitation, the Remarketable Variable Rate MuniFund Term Preferred Shares ("RVMTP Shares"), shall be treated as a single class.

Nothing in these Bylaws or the Declaration of Trust shall restrict the power of the Trustees to terminate any series or class of Shares by written notice to the Shareholders of such series or class, whether or not such Shareholders have voted (or are proposed to vote) with respect to a merger, reorganization, sale of assets, or similar transaction involving such series or class of Shares.

10.2. <u>Voting Power and Meetings</u>. Meetings of the Shareholders may be called by both a majority of the Trustees and a majority of the Continuing Trustees for the purpose of electing Trustees as provided in Article IV, Section 1 of the Declaration of Trust, and for such other purposes as may be prescribed by law, by the Declaration of Trust or by these Bylaws. Meetings of the Shareholders may also be called by both a majority of the Trustees and a majority of the Continuing Trustees from time to time for the purpose of taking action upon any other matter deemed by them to be necessary or desirable. A meeting of Shareholders may be held at any such time, day and place as is designated by the Trustees. Notice of any meeting of Shareholders, stating the date, time, place and purpose of the meeting, shall be given or caused to be given by a majority of the Trustees and a majority of the Continuing Trustees at least seven days before such meeting to each Shareholder entitled to vote thereat by leaving such notice with the Shareholder at his or her residence or usual place of business or by mailing such notice, postage prepaid, to the Shareholder's address as it appears on the records of the Trust or by providing notice to such Shareholder by electronic transmission or by any other means permitted by applicable law. Such notice may be given by the Secretary or an Assistant Secretary or by any other officer or agent designated for such purpose by the Trustees. Whenever notice of a meeting is required to be given to a Shareholder under the Declaration of Trust or these Bylaws, a written waiver thereof, executed before or after the meeting by such Shareholder or his or her attorney thereunto authorized and filed with the records of the meeting, shall be deemed equivalent to such notice. Notice of a meeting need not be given to any Shareholder who attends the meeting without protesting prior thereto or at its

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commencement the lack of notice to such Shareholder. No ballot shall be required for any election unless required by a Shareholder present or represented at the meeting and entitled to vote in such election.

10.3. <u>Quorum and Required Vote</u>. Except when a larger quorum is required by any provision of law or the Declaration of Trust or these Bylaws, thirty percent (30%) of the Shares entitled to vote on a particular matter shall constitute a quorum for the transaction of business at a Shareholders' meeting, except that where any provision of law or the Declaration of Trust or these Bylaws permits or requires that holders of any class or series of Shares shall vote as an individual class or series, then thirty percent (30%) (unless a larger quorum is required as specified above) of Shares of that class or series entitled to vote shall be necessary to constitute a quorum for the transaction of business by that class or series. Any lesser number shall be sufficient for adjournments. Any adjourned session or sessions may be held, within a reasonable time after the date set for the original meeting, without the necessity of further notice. Except when a different vote is required by any provision of law or the Declaration of Trust or these Bylaws, a plurality of the quorum of Shares necessary for the transaction of business at a Shareholders' meeting shall decide any questions and a plurality of Shares voted shall elect a Trustee, provided that where any provision of law or of the Declaration of Trust or these Bylaws permits or requires that the holders of any class or series of Shares shall vote as an individual class or series, then a plurality of the quorum of Shares of that class or series necessary for the transaction of business by that class or series at a Shareholders' meeting shall decide that matter insofar as that class or series is concerned.

10.4. <u>Action by Written Consent</u>. Any action taken by Shareholders may be taken without a meeting if a majority of Shareholders entitled to vote on the matter (or such larger proportion thereof as shall be required by any express provision of law or the Declaration of Trust or these Bylaws) consent to the action in writing and such written consents are filed with the records of the meetings of Shareholders. Such consent shall be treated for all purposes as a vote taken at a meeting of Shareholders.

10.5. <u>Record Dates</u>. For the purpose of determining the Shareholders who are entitled to vote or act at any meeting or any adjournment or postponement thereof, or who are entitled to receive payment of any dividend or of any other distribution, the Trustees may from time to time fix a time, or may authorize the officers of the Trust to fix a time, which shall be not more than 90 days before the date of any meeting of Shareholders or the date for the payment of any dividend or of any other distribution, as the record date for determining the Shareholders having the right to notice of and to vote at such meeting and any adjournment or postponement thereof or the right to receive such dividend or distribution, and in such case only Shareholders of record on such record date shall have the right notwithstanding any transfer of Shares on the books of the Trust after the record date; or without fixing such record date the Trustees may for any of such purposes close the register or transfer books for all or any part of such period.

**ARTICLE 11** 

**PROVISIONS RELATING TO THE CONDUCT OF THE TRUST'S BUSINESS** 

11.1. <u>Forum for Adjudication of Disputes</u>. Unless the Trust consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any action or proceeding brought on behalf of the Trust or one or more of the Shareholders, (ii) any action asserting a claim of breach of a fiduciary duty owed by any Trustee, officer, other employee of the Trust, or the Trust's investment adviser to the Trust or the Trust's Shareholders, (iii) any action asserting a breach of contract by the Trust, by any Trustee, officer or other employee of the Trust, or by the Trust's investment adviser, (iv) any action asserting a claim arising pursuant to any provision of the Massachusetts Business Corporation Act, Chapter 182 of the Massachusetts General Laws or the Declaration of Trust or these Bylaws, (v) any action to interpret, apply, enforce or determine the validity of the Declaration of Trust or these Bylaws or any agreement contemplated by any provision of the 1940 Act, the Declaration of Trust or these Bylaws, or (vi) any action asserting a claim governed by the internal affairs doctrine shall be within the federal or state courts in the Commonwealth of Massachusetts (each, a "Covered Action"). Any person purchasing or otherwise acquiring or holding any interest in shares of beneficial interest of the Trust shall be (i) deemed to have notice of and consented to the provisions of this Section 11.1, and (ii) deemed to have waived any argument relating to the inconvenience of the forum referenced above in connection with any action or proceeding described in this Section 11.1.

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If any Covered Action is filed in a court other than in a federal or state court sitting within the Commonwealth of Massachusetts (a "Foreign Action") in the name of any Shareholder, such Shareholder shall be deemed to have consented to (i) the personal jurisdiction of the federal and state courts within The Commonwealth of Massachusetts in connection with any action brought in any such courts to enforce the first paragraph of this Section 11.1 (an "Enforcement Action") and (ii) having service of process made upon such Shareholder in any such Enforcement Action by service upon such Shareholder's counsel in the Foreign Action as agent for such Shareholder.

If any provision or provisions of this Section 11.1 shall be held to be invalid, illegal or unenforceable as applied to any person or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provision(s) in any other circumstance and of the remaining provisions of this Section 11.1 (including, without limitation, each portion of any sentence of this Section 11.1 containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the application of such provision to other persons and circumstances shall not in any way be affected or impaired thereby. The provisions of this Section 11.1 shall not apply to claims made under federal securities laws.

**ARTICLE 12** 

**PREFERRED SHARES** 

12.1. <u>General</u>. The Trust may issue preferred shares, which may be authorized by the Trustees from time to time in one or more series and with such designations, par value, preferences and other rights, qualifications, limitations and restrictions as are determined by the Board of Trustees or a duly authorized committee thereof, pursuant to Article III, Section 1 of the Declaration of Trust. A Statement Establishing and Fixing the Rights and Preferences of one type of such preferred shares, RVMTP Shares (the "RVMTP Shares Statement"), is attached to these Bylaws as <u>Exhibit 1</u>, which is hereby incorporated by reference into and made a part of these Bylaws.

**ARTICLE 13** 

**AMENDMENT TO THE BYLAWS** 

13.1. <u>General</u>. Except to the extent that the Declaration of Trust, other provisions of these Bylaws (including Exhibits relating to preferred shares) or applicable law requires a vote or consent of Shareholders or a higher vote or consent by the Trustees and/or the Continuing Trustees, these Bylaws may be amended, changed, altered or repealed, in whole or part, only by resolution of a majority of the Trustees and a majority of the Continuing Trustees then in office at any meeting of the Trustees, or by one or more writings signed by such Trustees and Continuing Trustees.

13.2. RVMTP Shares Statement. Without limiting the provisions of Section 13.1, the Board of Trustees may, by resolution duly adopted, without shareholder approval (except as otherwise required by the RVMTP Shares Statement or required by applicable law), amend the <u>Exhibit 1</u> hereto to (a) reflect any amendments hereto which the Board of Trustees is entitled to adopt pursuant to the terms of the RVMTP Shares Statement without shareholder approval or (b) add additional series of RVMTP Shares or additional shares of a series of RVMTP Shares (and terms relating thereto) to the series and shares of RVMTP Shares described therein. Each such additional series and all such additional RVMTP Shares shall be governed by the terms of the RVMTP Shares Statement.

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Exhibit 1

Statement Establishing and Fixing the Rights and Preferences of the Remarketable

Variable Rate MuniFund Term Preferred Shares

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**PIMCO CALIFORNIA FLEXIBLE MUNICIPAL INCOME FUND** 

**STATEMENT ESTABLISHING AND FIXING THE RIGHTS AND PREFERENCES** 

**OF REMARKETABLE VARIABLE RATE MUNIFUND TERM PREFERRED SHARES** 

**DATED JANUARY 12, 2024** 

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**Table of Contents** 

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| | | |
|:---|:---|:---|
|  |  | **Page** |
| <u>Article 1 DEFINITIONS</u> | <u>Article 1 DEFINITIONS</u> | 1 |
| <u>1.1</u> | <u>Definitions</u> | 1 |
| <u>1.2</u> | <u>Interpretation</u> | 13 |
| <u>1.3</u> | <u>Liability of Officers, Trustees and Shareholders</u> | 14 |
| <u>Article 2 TERMS APPLICABLE TO ALL SERIES OF REMARKETABLE VARIABLE RATE MUNIFUND TERM PREFERRED SHARES</u> | <u>Article 2 TERMS APPLICABLE TO ALL SERIES OF REMARKETABLE VARIABLE RATE MUNIFUND TERM PREFERRED SHARES</u> | 14 |
| <u>2.1</u> | <u>Number of Shares; Ranking</u> | 14 |
| <u>2.2</u> | <u>Dividends and Distributions</u> | 14 |
| <u>2.3</u> | <u>Liquidation Rights</u> | 20 |
| <u>2.4</u> | <u>Coverage & Leverage Tests</u> | 21 |
| <u>2.5</u> | <u>Mandatory Tender and Remarketing</u> | 22 |
| <u>2.6</u> | <u>Redemption</u> | 25 |
| <u>2.7</u> | <u>Voting Rights</u> | 33 |
| <u>2.8</u> | <u>Rating Agencies</u> | 37 |
| <u>2.9</u> | <u>Issuance of Additional Preferred Shares</u> | 37 |
| <u>2.10</u> | <u>Status of Redeemed or Repurchased RVMTP Shares</u> | 38 |
| <u>2.11</u> | <u>Distributions with respect to Taxable Allocations</u> | 38 |
| <u>2.12</u> | <u>Term Redemption Liquidity Account and Liquidity Requirement for Term Redemption or Early Term Redemption</u> | 39 |
| <u>2.13</u> | <u>Global Certificate</u> | 41 |
| <u>2.14</u> | <u>Notice</u> | 41 |
| <u>2.15</u> | <u>Termination</u> | 41 |
| <u>2.16</u> | <u>Appendices</u> | 41 |
| <u>2.17</u> | <u>Actions on Other than Business Days</u> | 41 |
| <u>2.18</u> | <u>Modification</u> | 42 |
| <u>2.19</u> | <u>Transfers</u> | 42 |
| <u>2.20</u> | <u>No Additional Rights</u> | 43 |

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(i) ------

**PIMCO CALIFORNIA FLEXIBLE MUNICIPAL INCOME FUND** 

**STATEMENT ESTABLISHING AND FIXING THE RIGHTS AND PREFERENCES** 

**OF REMARKETABLE VARIABLE RATE MUNIFUND TERM PREFERRED SHARES** 

PIMCO CALIFORNIA FLEXIBLE MUNICIPAL INCOME FUND (the "<u>Fund</u>"), a Massachusetts business trust, certifies that:

**RECITALS** 

**FIRST**: The Fund is authorized under Article III of the Fund's Agreement and Declaration of Trust, as amended (which, as hereafter restated or amended from time to time, is herein called the "<u>Declaration</u>"), to issue an unlimited number of Preferred Shares (as defined below), par value $0.00001 per share.

**SECOND**: Pursuant to the authority expressly vested in the Board of Trustees of the Fund by Article III of the Declaration, the Board of Trustees has, by resolution, authorized the issuance of Preferred Shares, $0.00001 par value per share, of the Fund, such shares to be classified as Remarketable Variable Rate MuniFund Term Preferred Shares ("<u>RVMTP</u>"), and such RVMTP to be issued in one or more series (each such series, a "<u>Series</u>"). The terms related to a Series may be set forth in this Statement through an Appendix (as defined below) attached hereto or in a separate Statement.

**THIRD**: The number of shares, preferences, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption, of each Series of RVMTP subject to this Statement, as now or hereafter authorized by the Board of Trustees, are set forth in this Statement, as modified, amended or supplemented from time to time in an appendix to this Statement (each, an "<u>Appendix</u>" and collectively, the "<u>Appendices</u>") specifically relating to such Series as now or hereafter authorized by the Board of Trustees (each such Series being referred to herein as a "<u>Series of RVMTP Shares</u>," "<u>RVMTP Shares of a Series</u>" or a "<u>Series</u>", and shares of all such Series subject to this Statement being referred to herein individually, as an "<u>RVMTP Share</u>" and collectively, as the "<u>RVMTP Shares</u>").

**ARTICLE 1 DEFINITIONS** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1 <u>Definitions</u>. Unless the context or use indicates another or different meaning or intent and except with respect to any Series as specifically provided in the Appendix applicable to such Series, each of the following terms when used in this Statement shall have the meaning ascribed to it below, whether such term is used in the singular or plural and regardless of tense:

"<u>1940 Act</u>" means the Investment Company Act of 1940, as amended, and the rules and regulations thereunder, or any successor statute.

"<u>1940 Act Asset Coverage</u>" means "asset coverage," as defined for purposes of Section 18(h) of the 1940 Act and in accordance with Rule 18f-4 thereunder, as applicable, of at least 225% with respect to all outstanding senior securities of the Fund which are stocks for purposes of the 1940 Act, including all outstanding RVMTP Shares (or such other asset coverage as may in the future be specified in or under the 1940 Act or by rule, regulation or order of the United States Securities and Exchange Commission as the minimum asset coverage for senior

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securities which are shares of stock of a closed-end investment company), determined on the basis of values calculated as of a time within 48 hours (only including Business Days) next preceding the time of such determination.

"<u>1940 Act Asset Coverage Cure Date</u>" means, with respect to the failure by the Fund to maintain 1940 Act Asset Coverage as of the close of business on a Business Day (as required by <u>Section</u> <u>2.4(a)</u> hereof), the date that is thirty (30) calendar days following such Business Day.

"<u>Additional Amount Payment</u>" means a payment to a Holder of RVMTP Shares (other than a California Holder) of an amount which, when combined with the amount of the portion of any dividend to which a Taxable Allocation relates, and after imposition of U.S. federal income tax, taking into account the assumptions in the immediately following sentence, equals the after tax dollar amount of the dividend that would have been received by such Holder if no Taxable Allocation had been made with respect to such dividend. Such Additional Amount Payment shall be calculated (i) without consideration being given to the time value of money; (ii) assuming that no Holder is subject to the federal alternative minimum tax with respect to dividends received from the Fund; and (iii) assuming that each Taxable Allocation and each Additional Amount Payment (except to the extent such Additional Amount Payment is reported as an exempt-interest dividend for purposes of Section 852(b)(5) of the Code) would be taxable, (x) in the case of the Purchaser (or (1) any entity taxed as a corporation that (i) joins in filing a consolidated federal corporate income tax return with the Purchaser, or (ii) is otherwise an affiliate of the Purchaser and is taxed as a corporation (excluding any such entity that is taxed as a regulated investment company under Subchapter M of the Code), or (2) any entity that is a direct or indirect wholly-owned subsidiary of one or more of the entities described in clause (1) (each of the entities described in clauses (1) or (2), a "<u>Corporate Affiliate</u>")) at the maximum marginal regular federal corporate income tax rate applicable to ordinary income or net capital gain, as applicable, in effect at the time such Additional Amount Payment is paid, disregarding in each case the effect of any state or local taxes, or (y) in the case of any other Holder (including for the avoidance of doubt, any tender option bond trust (or similar vehicle or arrangement used for providing financing for municipal obligations and municipal closed-end fund preferred shares)) at the greater of (A) the rate expressed in clause (x), or (B) the maximum marginal regular federal individual income tax rate applicable to ordinary income or net capital gain, as applicable, in effect at the time such Additional Amount Payment is paid, disregarding in each case the effect of any state or local taxes, assuming that section 1411 of the Code is applicable.

"<u>Additional California Amount Payment</u>" means a payment to a California Holder of RVMTP Shares of an amount which, when combined with the amount of the portion of any dividend to which a Taxable Allocation relates, and after imposition of U.S. federal income tax and California State income tax, taking into account the assumptions in the immediately following sentence, equals the after tax dollar amount of the dividend that would have been received by such California Holder if no Taxable Allocation had been made with respect to such dividend. Such Additional California Amount Payment shall be calculated (i) without consideration being given to the time value of money; (ii) assuming that no California Holder is subject to the federal alternative minimum tax with respect to dividends received from the Fund; and (iii) assuming that each Taxable Allocation and each Additional California Amount Payment (except to the extent such Additional California Amount Payment is reported as an exempt-interest dividend for purposes of Section 852(b)(5) of the Code) would be taxable, (x) in the case of the Purchaser (or

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any Corporate Affiliate), at the maximum marginal combined regular federal and California corporate income tax rate (taking account of the federal income tax deductibility of state and local taxes paid or incurred) applicable to ordinary income or net capital gains, as applicable, in effect at the time such Additional California Amount Payment is paid or (y) in the case of any other California Holder (including for the avoidance of doubt, any tender option bond trust (or similar vehicle or arrangement used for providing financing for municipal obligations and municipal closed-end fund preferred shares)), the maximum marginal combined regular federal and California individual income tax rate (taking account of the federal income tax deductibility of state and local taxes paid or incurred) applicable to ordinary income or net capital gains, as applicable, in effect at the time such Additional California Amount Payment is paid, assuming that section 1411 of the Code is applicable..

"<u>Adviser</u>" means Pacific Investment Management Company LLC, a Delaware limited liability company, or such other entity as shall be then serving as the investment adviser of the Fund, and shall include, as appropriate, any sub-adviser duly appointed by the Adviser.

"<u>Agent Member</u>" means a Person with an account at the Securities Depository that holds one or more RVMTP Shares through the Securities Depository, directly or indirectly, for a Designated Owner and that will be authorized and instructed, directly or indirectly, by a Designated Owner to disclose information to the Remarketing Settlement Agent, if any, and/or the Calculation and Paying Agent with respect to such Designated Owner.

"<u>Appendices</u>" and "<u>Appendix</u>" shall have the respective meanings as set forth in the Recitals of this Statement.

"<u>Applicable Spread</u>" means, with respect to any Rate Period for any Series of RVMTP Shares, the percentage per annum equal to the sum of (i) the percentage per annum set forth opposite the applicable credit rating most recently assigned to such Series by the Rating Agency in the table below on the Rate Determination Date for such Rate Period plus (ii) the Spread Adjustment:

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| | |
|:---|:---|
| **Long-Term Ratings\*** | **Long-Term Ratings\*** |
| **Fitch** | **Applicable Spread\*\*** |
| AAA to AA | 1.25% |
| AA- | 1.35% |
| A+ | 1.45% |
| A | 1.60% |
| A- | 1.85% |
| BBB+ | 2.25% |
| BBB | 2.50% |
| BBB- | 2.75% |
| Non-investment grade/Not Rated | 3.75% |

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\*And/or the equivalent ratings of any other Rating Agency then rating the RVMTP Shares utilizing the highest of the ratings of the Rating Agencies then rating the RVMTP Shares.

\*\*Unless an Increased Rate Period is in effect and is continuing, in which case the Increased Rate shall be the Index Rate for such Increased Rate Period plus 2.00% plus the Applicable Spread.

"<u>Banks</u>" shall have the meaning as set forth in <u>Section</u> <u>2.19(a)</u>.

"<u>Below Investment Grade</u>" means, with respect to any Series of RVMTP Shares and as of any date, the following ratings with respect to each Rating Agency (to the extent it is a Rating Agency on such date):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) lower than BBB-, in the case of Fitch; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) lower than an equivalent long-term credit rating to that set forth in clause (i), in the case of any other Rating Agency

"<u>Board of Trustees</u>" means the Board of Trustees of the Fund or any duly authorized committee thereof as permitted by applicable law.

"<u>Business Day</u>" means any day (a) other than a day on which commercial banks in The City of New York, New York are required or authorized by law or executive order to close and (b) on which the New York Stock Exchange is not closed.

"<u>By-Laws</u>" means the By-Laws of the Fund as amended or restated from time to time.

"<u>California Holder</u>" means, solely for purposes of the definition of "Additional California Amount Payment" and Section 2.11 hereof, (i) a Holder who is a natural person subject to California State taxation on his or her income; or (ii) a Holder, other than a natural person, that seeks to pay dividends (or make other distributions or allocations of income) that are exempt from California State income tax. For all other purposes, a "California Holder" means a "Holder."

"<u>Calculation and Paying Agent</u>" means, with respect to any Series, The Bank of New York Mellon and its successors or any other calculation and paying agent appointed by the Fund with respect to such Series.

"<u>Calculation</u> <u>and Paying Agent Agreement</u>" means, with respect to any Series, the Calculation and Paying Agent Agreement dated January 12, 2024 by and among the Calculation and Paying Agent, the Fund and certain other Persons, and as the same may be amended, restated or modified from time to time, or any similar agreement between the Fund and any other calculation and paying agent appointed by the Fund.

"<u>Closed-End Funds</u>" shall have the meaning as set forth in <u>Section</u> <u>2.19(a)</u>.

"<u>Closing Date</u>" means January 12, 2024.

"<u>Code</u>" means the Internal Revenue Code of 1986, as amended.

"<u>Common Shares</u>" means the common shares of beneficial interest, par value $0.00001 per share, of the Fund.

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"<u>Conditional Acceptance</u>" shall have the meaning as set forth in <u>Section</u> <u>2.6(a)(ii)(B)</u>.

"<u>Custodian</u>" means a bank, as defined in Section 2(a)(5) of the 1940 Act, that has the qualifications prescribed in paragraph 1 of Section 26(a) of the 1940 Act, or such other entity as shall be providing custodian services to the Fund as permitted by the 1940 Act or any rule, regulation, or order thereunder, and shall include, as appropriate, any similarly qualified sub-custodian duly appointed by the Fund.

"<u>Custodian Agreement</u>" means any Custodian Agreement by and between the Custodian and the Fund.

"<u>Date of Original Issue</u>" means, with respect to any Series, the date specified as the Date of Original Issue for such Series in the Appendix for such Series.

"<u>Declaration</u>" shall have the meaning as set forth in the Recitals of this Statement.

"<u>Default</u>" shall mean a Dividend Default or a Redemption Default.

"<u>Deposit Securities</u>" means, as of any date, any United States dollar-denominated security or other investment of a type described below that either (i) is a demand obligation payable to the holder thereof on any Business Day or (ii) has a maturity date, mandatory redemption date or mandatory payment date, on its face or at the option of the holder, preceding the relevant Redemption Date, Dividend Payment Date or other payment date in respect of which such security or other investment has been deposited or set aside as a Deposit Security:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) cash or any cash equivalent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) any U.S. Government Obligation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) any Municipal Security that has a credit rating from at least one NRSRO that is the highest applicable rating generally ascribed by such NRSRO to Municipal Securities with substantially similar terms as of the date of this Statement (or such rating's future equivalent or, if not rated, as determined by PIMCO to be of comparable quality), including (A) any such Municipal Security that has been pre-refunded by the issuer thereof with the proceeds of such refunding having been irrevocably deposited in trust or escrow for the repayment thereof and (B) any such fixed or variable rate Municipal Security that qualifies as an eligible security under Rule 2a-7 under the 1940 Act;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) any investment in any money market fund registered under the 1940 Act that qualifies under Rule 2a-7 under the 1940 Act, or similar investment vehicle described in Rule 12d1-1(b)(2) under the 1940 Act, that invests principally in Municipal Securities or U.S. Government Obligations or any combination thereof; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) any letter of credit from a bank or other financial institution that has a credit rating from at least one NRSRO that is the highest applicable rating generally ascribed by such NRSRO to bank deposits or short-term debt of similar banks or other financial institutions as of the date of this Statement (or such rating's future equivalent or, if not rated, as determined by PIMCO to be of comparable quality).

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"<u>Designated Owner</u>" means a Person in whose name RVMTP Shares of any Series are recorded as beneficial owner of such RVMTP Shares by the Securities Depository, an Agent Member or other securities intermediary on the records of such Securities Depository, Agent Member or securities intermediary, as the case may be.

"<u>Designated Owner Term Extension Request</u>" shall have the meaning as set forth in <u>Section</u> <u>2.6(a)(ii)(A)</u>.

"<u>Dividend Default</u>" shall have the meaning as set forth in <u>Section</u> <u>2.2(g)(i)(A)</u>.

"<u>Dividend Payment Date</u>" means, with respect to any Series, the first Business Day of each calendar month that any shares of such Series are Outstanding; <u>provided</u>, <u>however</u>, that with respect to any Series for which the first Dividend Period, as specified in the Appendix relating to such Series, is longer than one (1) month, the first Dividend Payment Date for such Series shall be the first Business Day of the calendar month immediately following the end of such Dividend Period.

"<u>Dividend Period</u>" means, with respect to any Series, the Dividend Period for such Series set forth in the Appendix for such Series.

"<u>Dividend Rate</u>" means, with respect to any Rate Period for a Series of RVMTP Shares and subject to the adjustment described in <u>Section</u> <u>2.11(a)</u>, the sum of the Index Rate for such Rate Period plus the Applicable Spread for such Rate Period <u>plus the Failed Remarketing Spread (if applicable)</u>; <u>provided</u>, <u>however</u>, that with respect to any Increased Rate Period, the Dividend Rate shall mean the Increased Rate for such Increased Rate Period; and <u>provided</u> <u>further</u> that the Dividend Rate for any Rate Period shall in no event exceed the Maximum Rate.

"<u>Early Term Redemption Date</u>" means, with respect to any Series, the date specified as the Early Term Redemption Date (if any) in the Appendix for such Series.

"<u>Early Term Redemption Price</u>" means with respect to any Series, the price per share equal to the Liquidation Preference per share plus an amount equal to all unpaid dividends and other distributions on such RVMTP Shares accumulated from and including the Date of Original Issue of such Series of RVMTP Shares to (but excluding) the Early Term Redemption Date with respect to such Series of RVMTP Shares (whether or not earned or declared by the Fund, but excluding interest thereon).

"<u>Effective Leverage Ratio</u>" shall have the meaning as set forth in <u>Section</u> <u>2.4(d)</u>.

"<u>Effective Leverage Ratio Cure Date</u>" shall have the meaning as set forth in <u>Section</u> <u>2.6(b)(ii)(A)</u>.

"<u>Electronic Means</u>" means email transmission, facsimile transmission or other similar electronic means of communication providing evidence of transmission (but excluding online communications systems covered by a separate agreement) acceptable to the sending party and the receiving party, in any case if operative as between any two parties, or, if not operative, by telephone (promptly confirmed by any other method set forth in this definition), which, in the case of notices to the Calculation and Paying Agent and the Custodian, shall be sent by such means to each of its representatives set forth in the Calculation and Paying Agent Agreement and the Custodian Agreement, respectively.

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"<u>Exchange Act</u>" means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.

"<u>Failed Remarketing</u>" shall have the meaning set forth in Section 2.5(c)(i).

"<u>Failed Remarketing Spread</u>" means (i) for so long as two or more Failed Remarketings have not occurred, 0%, and (ii) following the second occurrence of a Failed Remarketing, 0.25% multiplied by the number of Failed Remarketings that have occurred after the first Failed Remarketing.

"<u>Fitch</u>" means Fitch Ratings, a part of the Fitch Group, and any successor or successors thereto.

"<u>Fund</u>" shall have the meaning as set forth in the Preamble to this Statement. Any reference herein or in the Purchase Agreement to the Fund's assets or investments shall include (or "look through" to) any assets or investments of any wholly-owned subsidiary of the Fund.

"<u>Holder</u>" means, with respect to the RVMTP Shares of any Series or any other security issued by the Fund, a Person in whose name such security is registered in the registration books of the Fund maintained by the Calculation and Paying Agent or otherwise.

"<u>Holder Term Extension Request</u>" shall have the meaning as set forth in <u>Section</u> <u>2.6(a)(iii)</u>.

"<u>Increased Rate</u>" means, with respect to any Series, the Increased Rate for such Series set forth in the Appendix for such Series.

"<u>Increased Rate Period</u>" shall have the meaning as set forth in <u>Section</u> <u>2.2(g)(i)</u>.

"<u>Index Rate</u>" means, with respect to any Series, the Index Rate for such Series set forth in the Appendix for such Series.

"<u>Initial Rate Period</u>" means, with respect to the RVMTP Shares of any Series, the period commencing on and including the Date of Original Issue thereof and ending on, and including, the next succeeding calendar day that is a Wednesday (or if such Wednesday is not a Business Day, the next succeeding Business Day).

"<u>Liquidation Preference</u>" means, with respect to any Series, the amount specified as the liquidation preference per share for that Series in the Appendix for such Series.

"<u>Liquidity Account Initial Date</u>" means, with respect to any Series, the date designated as the Liquidity Account Initial Date in the Appendix for such Series.

"<u>Liquidity Account Investments</u>" means Deposit Securities or any other security or investment owned by the Fund that is rated not less than A3 by Moody's, A- by Standard & Poor's, A- by Fitch or an equivalent rating by any other NRSRO (or any such rating's future equivalent) or if not rated, determined by the Adviser to be of comparable quality.

"<u>Liquidity Requirement</u>" shall have the meaning as set forth in <u>Section</u> <u>2.12(b)</u>.

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"<u>Lock-Out Date</u>" means, with respect to any Series, the Lock-Out Date for such Series set forth in the Appendix for such Series.

"<u>Mandatory 1940 Act Asset Coverage Redemption Price</u>" shall have the meaning as set forth in <u>Section</u> <u>2.6(b)(i)(A)</u>.

"<u>Mandatory Tender</u>" means, in connection with a Remarketing, the required tender of all RVMTP Shares of a particular Series (except to the extent affirmatively retained by any applicable Holder of RVMTP Shares of such Series pursuant to Section 2.5(a)(iv)) to the Remarketing Settlement Agent for purchase on the applicable Mandatory Tender Date.

"<u>Mandatory Tender Date</u>" shall have the meaning as set forth in <u>Section</u> <u>2.5(a)(iii)(C)</u>.

"<u>Mandatory Tender Event</u>" shall have the meaning as set forth in <u>Section</u> <u>2.5(a)(i)(C)</u>.

"<u>Mandatory Tender Redemption Date</u>" shall have the meaning as set forth in <u>Section</u> <u>2.6(a)(iv)</u>.

"<u>Mandatory 1940 Act Asset Coverage Redemption Price</u>" shall have the meaning as set forth in <u>Section</u> <u>2.6(b)(i)(A)</u>.

"<u>Market Value</u>" of any asset of the Fund means, for securities for which market quotations are readily available, the market value thereof determined on the basis of official closing prices or the last reported sales prices on the valuation date, or if no sales are reported on the valuation date, based on quotes obtained from established market makers or prices (including evaluated prices) supplied by the Fund's approved pricing services, quotation reporting systems and other third-party sources. Investments for which market quotes or market-based valuations are not readily available are valued at fair value as determined in good faith by the Board of Trustees or persons acting at their direction.

"<u>Majority Holders</u>" means the Holders of greater than 50% of the outstanding Shares of any Series.

"<u>Maximum Rate</u>" means 15% per annum.

"<u>Moody's</u>" means Moody's Investors Service, Inc. and any successor or successors thereto.

"<u>Municipal Securities</u>" means municipal securities as described under the heading "Portfolio Contents" in the prospectus or other offering document for a Series of RVMTP Shares.

"<u>No Adverse Effect Opinion</u>" means an opinion of counsel to the effect that the requested action, if undertaken, will not have an adverse effect on any of the opinions of counsel delivered in connection with the issuance of the RVMTP Shares.

"<u>Notice of Mandatory Tender</u>" shall have the meaning set forth in <u>Section</u> <u>2.5(a)(ii)</u>.

"<u>Notice of Redemption</u>" shall have the meaning as set forth in <u>Section</u> <u>2.6(</u><u>e</u><u>)(i)</u>.

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"<u>Notice of Special Terms Period</u>" shall have the meaning as set forth in <u>Section</u> <u>2.2(h)(iii)</u>.

"<u>Notice of Taxable Allocation</u>" shall have the meaning as set forth in <u>Section</u> <u>2.11(a)</u>.

"<u>NRSRO</u>" means (a) each of Fitch, Moody's and Standard & Poor's so long as such Person is a nationally recognized statistical rating organization within the meaning of Section 3(a)(62) of the Exchange Act and (b) any other nationally recognized statistical rating organization within the meaning of Section 3(a)(62) of the Exchange Act that is not an "affiliated person" (as defined in Section 2(a)(3) of the 1940 Act) of the Fund.

"<u>Optional Redemption Date</u>" shall have the meaning as set forth in <u>Section</u> <u>2.6(c)(i)</u>.

"<u>Optional Redemption Premium</u>" means, with respect to any Series, the premium payable by the Fund upon the redemption of RVMTP Shares of such Series at the option of the Fund, as set forth in the Appendix for such Series.

"<u>Optional Redemption Price</u>" shall have the meaning as set forth in <u>Section</u> <u>2.6(c)(i)</u>.

"<u>Other Rating Agency</u>" means each Rating Agency, if any, other than Fitch, Standard & Poor's, or Moody's then providing a rating for the RVMTP Shares pursuant to the request of the Fund and with the consent of the Holders of a majority of the RVMTP Shares, which shall not be unreasonably withheld by such Holders.

"<u>Outstanding</u>" means, as of any date with respect to RVMTP Shares of any Series, the number of RVMTP Shares of such Series theretofore issued by the Fund except (without duplication):

any RVMTP Shares of such Series theretofore exchanged, cancelled, retired or redeemed or delivered to the Calculation and Paying Agent for cancellation or redemption in accordance with the terms hereof;

any RVMTP Shares of such Series as to which the Fund shall has given a Notice of Redemption and irrevocably deposited with the Calculation and Paying Agent sufficient Deposit Securities to redeem such shares in accordance with <u>Section</u> <u>2.</u><u>6</u> hereof; and

any RVMTP Shares of such Series as to which the Fund is the Holder or the Designated Owner.

"<u>PCAOB</u> Standards" shall have the meaning set forth in <u>Section</u> <u>2.2(g)(i)(K)</u>.

"<u>Person</u>" means and includes an individual, a partnership, a trust, a corporation, a limited liability company, an unincorporated association, a joint venture or other entity or a government or any agency or political subdivision thereof.

"<u>PIMCO Person</u>" means the Adviser or any affiliated person (as defined in Section 2(a)(3) of the 1940 Act) of the Adviser (other than the Fund, in the case of a redemption or purchase

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of the RVMTP Shares which are to be cancelled within ten (10) calendar days of purchase by the Fund).

"<u>Preferred Shares</u>" means the authorized preferred shares of beneficial interest of the Fund, including RVMTP Shares of each Series, shares of any other series of preferred shares of beneficial interest now or hereafter issued by the Fund, and any other shares of beneficial interest hereafter authorized and issued by the Fund of a class having priority over another class as to distribution of assets or payments of dividends.

"<u>Pro Rata Allocation</u>" shall have the meaning set forth in <u>Section</u> <u>2.6(b)(i)(A)</u>.

"<u>Purchase Agreement</u>" means (i) with respect to the initial Series of RVMTP Shares issued pursuant to this Statement, the Purchase Agreement dated as of January 12, 2024 between the Fund and the Purchaser and (ii) with respect to any subsequent Series of RVMTP Shares issued pursuant to this Statement, the purchase agreement or other similar agreement for the RVMTP Shares of such Series (if any) specified in the Appendix for such Series, in each case as such agreement may be amended, restated, or modified from time to time.

"<u>Purchaser</u>" means JPMorgan Chase Bank N.A.

"<u>Rate Determination Date</u>" means, with respect to the Initial Rate Period for any Series of RVMTP Shares, the calendar day immediately preceding the Date of Original Issue of such Series and, with respect to any Subsequent Rate Period for any Series of RVMTP Shares, the last calendar day of the immediately preceding Rate Period for such Series or, if such calendar day is not a Business Day, the next succeeding Business Day; <u>provided</u>, <u>however</u>, that the next succeeding Rate Determination Date will be determined without regard to any prior extension of a Rate Determination Date to a Business Day.

"<u>Rate Period</u>" means, with respect to any Series of RVMTP Shares, the Initial Rate Period and any Subsequent Rate Period of the RVMTP Shares of such Series.

"<u>Rate Period Termination Date</u>" means, with respect to any Series, the Rate Period Termination Date for such Series set forth in the Appendix for such Series.

"<u>Rating</u> <u>Agency</u>" means, as of any date and in respect of a Series of RVMTP Shares, (i) any of Fitch, Moody's, or Standard & Poor's, to the extent it maintains a rating on the RVMTP Shares of such Series on such date and has not been replaced as a Rating Agency in accordance with <u>Section</u> <u>2.8</u> and (ii) any Other Rating Agency designated as a Rating Agency on such date in accordance with <u>Section</u> <u>2.8</u>. In the event that at any time any Rating Agency (i) ceases to be a Rating Agency for purposes of any Series of RVMTP Shares and such Rating Agency has been replaced by an Other Rating Agency in accordance with <u>Section</u> <u>2.8</u>, any references to any credit rating of the replaced Rating Agency in this Statement or any Appendix shall be deleted for purposes hereof as provided below and shall be deemed instead to be references to the equivalent credit rating of the Other Rating Agency that has replaced such Rating Agency as of the most recent date on which such replacement Other Rating Agency published credit ratings for such Series of RVMTP Shares or (ii) designates a new rating definition for any credit rating of such Rating Agency with a corresponding replacement rating definition for such credit rating of such Rating Agency, any references to such replaced rating definition of such Rating Agency contained in this Statement or any Appendix shall instead be deemed to be references to such corresponding

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replacement rating definition. In the event that at any time the designation of any Rating Agency as a Rating Agency for purposes of any Series of RVMTP Shares is terminated in accordance with <u>Section</u> <u>2.8</u>, any rating of such terminated Rating Agency, to the extent it would have been taken into account in any of the provisions of this Statement or the Appendix for such Series, shall be disregarded, and only the ratings of the then-designated Rating Agencies for such Series shall be taken into account for purposes of this Statement and such Appendix.

"<u>Rating Agency Guidelines</u>" means the guidelines of any Rating Agency, as they may be amended or modified from time to time, compliance with which is required to cause such Rating Agency to continue to issue a rating with respect to a Series of RVMTP Shares for so long as such Series is Outstanding.

"<u>Rating Agency Withdrawal</u>" shall have the meaning set forth in <u>Section</u> <u>2.2(g)(i)(C)</u>.

"<u>Ratings Event</u>" shall have the meaning set forth in <u>Section</u> <u>2.2(g)(i)</u>.

"<u>Redemption Date</u>" means with respect to a redemption pursuant to <u>Section</u> <u>2.6(a)(i), (b) or (c)</u>, the date fixed for redemption as stated in the Notice of Redemption with respect to such redemption.

"<u>Redemption Default</u>" shall have the meaning as set forth in <u>Section</u> <u>2.2(g)(i)(B)</u>.

"<u>Redemption Price</u>" shall mean the Term Redemption Price, the Mandatory 1940 Act Asset Coverage Redemption Price, the Mandatory Tender Redemption Price or the Optional Redemption Price, as applicable.

"<u>Registration Rights Agreement</u>" means (i) with respect to the initial Series of RVMTP Shares issued pursuant to this Statement, the Registration Rights Agreement to be dated as of January 12, 2024 between the Fund and the Purchaser and (ii) with respect to any subsequent Series of RVMTP Shares issued pursuant to this Statement, the registration rights agreement or other similar agreement for the RVMTP Shares of such Series (if any) specified in the Appendix for such Series, in each case, as such agreement may be amended, restated, or modified from time to time.

"<u>Remarketing</u>" means the offering of RVMTP Shares for resale as described in <u>Section</u> <u>2.5(b)</u>. RVMTP Shares that are remarketed in connection with a Remarketing are described as having been "Remarketed".

"<u>Remarketing Purchase Price</u>" means, with respect to the RVMTP Shares subject to a Remarketing, a price per share equal to the Liquidation Preference per share plus an amount equal to all unpaid dividends and other distributions on such RVMTP Shares accumulated from and including the Date of Original Issue of such RVMTP Shares to (but excluding) the Mandatory Tender Date for such RVMTP Shares (whether or not earned or declared by the Fund, but excluding interest thereon).

"<u>Remarketing Settlement Agent</u>" means the entity appointed as such by the Fund with respect to a Remarketing of any Series of the RVMTP Shares and any additional or successor entities appointed by the Fund pursuant to a Remarketing Settlement Agent Agreement with the Fund.

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"<u>Remarketing Settlement Agent Agreement</u>" means the Remarketing Settlement Agent Agreement, if any, with respect to the RVMTP Shares, between the Fund and the Remarketing Settlement Agent and any other party thereto, as amended, modified or supplemented from time to time, or any similar agreement with a successor Remarketing Settlement Agent.

"<u>RVMTP</u>" shall have the meaning as set forth in the Recitals of this Statement.

"<u>RVMTP Shares</u>" shall have the meaning as set forth in the Recitals of this Statement.

"<u>RVMTP Shares of a Series</u>" shall have the meaning as set forth in the Recitals of this Statement.

"<u>Securities Act</u>" means the U.S. Securities Act of 1933, as amended, and the rules and regulations thereunder.

"<u>Securities Depository</u>" shall mean The Depository Trust Company and its successors and assigns or any other securities depository selected by the Fund that agrees to follow the procedures required to be followed by such securities depository as set forth in this Statement with respect to the RVMTP Shares.

"<u>Series</u>" and "<u>Series of RVMTP Shares</u>" shall have the meanings as set forth in the Recitals of this Statement.

"<u>SIFMA Municipal Swap Index</u>" means the Securities Industry and Financial Markets Association Municipal Swap Index, or such other weekly, high-grade index comprised of seven-day, tax-exempt variable rate demand notes produced by Bloomberg L.P. or its successor, or as otherwise designated by the Securities Industry and Financial Markets Association; <u>provided</u>, <u>however</u>, that if such index is no longer produced by Bloomberg L.P. or its successor, then SIFMA Municipal Swap Index shall mean (i) the S&P Municipal Bond 7 Day High Grade Rate Index produced by Standard & Poor's Financial Services LLC or its successors or (ii) if the S&P Municipal Bond 7 Day High Grade Rate Index is no longer produced, such other reasonably comparable index selected in good faith by the Board of Trustees of the Fund.

"<u>Special Terms Period</u>" shall have the meaning as set forth in <u>Section</u> <u>2.2(h)(i)</u>.

"<u>Spread Adjustment</u>" means, with respect to any Series, the Spread Adjustment for such Series set forth in the Appendix for such Series.

"<u>Standard</u> <u>& Poor's</u>" means Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC business, and any successor or successors thereto.

"<u>Statement</u>" means this Statement Establishing and Fixing the Rights and Preferences of Remarketable Variable Rate MuniFund Term Preferred Shares, as it may be amended from time to time in accordance with its terms.

"<u>Subsequent Rate Period</u>" means, with respect to any Series of RVMTP Shares, the period consisting of seven (7) calendar days, but adjusted in each case to reflect any changes when the regular calendar day that is a Rate Determination Date is not a Business Day, from, and including, the first calendar day following the Initial Rate Period of such Series to, and including,

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the next Rate Determination Date for such Series and any period thereafter from, and including, the first calendar day following a Rate Determination Date for shares of such Series to, and including, the next succeeding Rate Determination Date for shares of such Series.

"<u>Tax Event</u>" shall have the meaning as set forth in <u>Section</u> <u>2.2(g)(i)</u><u>(E)</u>.

"<u>Taxable Allocation</u>" means, with respect to any Series, the characterization of all or a portion of any dividend paid in respect of such Series as net capital gains or other income taxable for regular federal and California individual income tax purposes.

"<u>Term Redemption Amount</u>" shall have the meaning as set forth in <u>Section</u> <u>2.12(a)</u>.

"<u>Term Redemption Date</u>" means, with respect to any Series, the date specified as the Term Redemption Date in the Appendix for such Series, as such date may be extended in accordance with <u>Section</u> <u>2.6(a)</u> or as may otherwise be agreed in writing by the Fund and the Holders of 100% of the Outstanding RVMTP Shares of such Series.

"<u>Term Redemption Liquidity Account</u>" shall have the meaning as set forth in <u>Section</u> <u>2.12(a)</u>.

"<u>Term Redemption Price</u>" shall have the meaning as set forth in <u>Section</u> <u>2.6(a)</u>.

"<u>U.S. Government Obligations</u>" means direct obligations of the United States or of its agencies or instrumentalities that are entitled to the full faith and credit of the United States or of its agencies or instrumentalities and that, other than United States Treasury Bills, provide for the periodic payment of interest and the full payment of principal at maturity or call for redemption.

"<u>Voting Period</u>" shall have the meaning as set forth in <u>Section</u> <u>2.7(b)(i)</u>.

With respect to any Series, any additional definitions specifically set forth in the Appendix relating to such Series and any amendments to any definitions specifically set forth in the Appendix relating to such Series, as such Appendix may be amended from time to time, shall be incorporated herein and made part hereof by reference thereto, but only with respect to such Series.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2 <u>Interpretation</u>. The headings preceding the text of Sections included in this Statement are for convenience only and shall not be deemed part of this Statement or be given any effect in interpreting this Statement. The use of the masculine, feminine or neuter gender or the singular or plural form of words herein shall not limit any provision of this Statement. The use of the terms "including" or "include" shall in all cases herein mean "including, without limitation" or "include, without limitation," respectively. Reference to any Person includes such Person's successors and assigns to the extent such successors and assigns are permitted by the terms of any applicable agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity or individually. Reference to any agreement (including this Statement), document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof. Except as otherwise expressly set forth herein, reference to any law means such law as amended, modified, codified, replaced or re-enacted, in whole or in part, including rules, regulations, enforcement procedures and any interpretations promulgated thereunder. Underscored references to Sections shall refer to those portions of this Statement. The use of the

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terms "hereunder," "hereof," "hereto" and words of similar import shall refer to this Statement as a whole and not to any particular Article, Section or clause of this Statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.3 <u>L</u><u>iability of Officers, Trustees and Shareholders</u>. A copy of the Declaration is on file with the Secretary of the Commonwealth of Massachusetts, and notice hereby is given that this Statement is executed on behalf of the Fund by an officer of the Fund in his or her capacity as an officer of the Fund and not individually and that the obligations of the Fund under or arising out of this Statement are not binding upon any of the trustees, officers or shareholders individually but are binding only upon the assets and properties of the Fund. All persons extending credit to, contracting with or having a claim against the Fund must look solely to the Fund's assets and property for the enforcement of any claims against the Fund as none of the Fund's officers, agents or shareholders, whether past, present or future, assume any personal liability for obligations entered on behalf of the Fund.

**TERMS APPLICABLE TO ALL SERIES OF** 

**REMARKETABLE VARIABLE RATE MUNIFUND TERM PREFERRED SHARES** 

Except for such changes and amendments hereto with respect to a Series of RVMTP Shares that are specifically contemplated by the Appendix relating to such Series, each Series of RVMTP Shares subject to this Statement shall have the following terms:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 <u>Number of Shares; Ranking</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The number of authorized shares constituting any Series of RVMTP Shares shall be as set forth with respect to such Series in the Appendix hereto relating to such Series. No fractional RVMTP Shares shall be issued.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The RVMTP Shares of each Series shall rank on a parity with RVMTP Shares of each other Series and with shares of any other series of Preferred Shares as to the payment of dividends and the distribution of assets upon dissolution, liquidation or winding up of the affairs of the Fund. The RVMTP Shares of each Series shall have preference with respect to the payment of dividends and as to distribution of assets upon dissolution, liquidation or winding up of the affairs of the Fund over the Common Shares as set forth herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) No Holder of RVMTP Shares shall have, solely by reason of being such a Holder, any pre-emptive or other right to acquire, purchase or subscribe for any RVMTP Shares or Common Shares or other securities of the Fund which it may hereafter issue or sell.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2 <u>Dividends and Distributions</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Holders of RVMTP Shares of any Series shall be entitled to receive, when, as and if declared by, or under authority granted by, the Board of Trustees, out of funds legally available therefor in accordance with the Declaration, this Statement, and applicable law, and in preference to dividends and other distributions on Common Shares, cumulative cash dividends and other distributions on each share of such Series at the Dividend Rate for such Series, calculated as set forth herein, and no more. Dividends and other distributions on the RVMTP Shares of any Series shall accumulate from the Date of Original Issue with respect to such Series. The amount of dividends per share payable on RVMTP Shares of a Series on any Dividend

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Payment Date shall equal the sum of the dividends accumulated but not yet paid for each Rate Period (or part thereof) in the related Dividend Period. The amount of dividends per share of a Series accumulated for each such Rate Period (or part thereof) shall be computed by (i) multiplying the Dividend Rate in effect for RVMTP Shares of such Series for such Rate Period (or part thereof) by a fraction, the numerator of which shall be the actual number of calendar days in such Rate Period (or part thereof) and the denominator of which shall be the actual number of calendar days in the year in which such Rate Period (or such part thereof) occurs (365 or 366) and (ii) multiplying the product determined pursuant to clause (i) by the Liquidation Preference for a share of such Series.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Dividends on RVMTP Shares of each Series with respect to any Dividend Period shall be declared to the Holders of such shares as their names shall appear on the registration books of the Fund at the close of business on each calendar day in such Dividend Period and shall be paid as provided in Section 2.2(f).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) (i) No full dividends or other distributions shall be declared or paid on shares of a Series of RVMTP Shares for any Dividend Period or part thereof unless full cumulative dividends and other distributions due through the most recent dividend payment dates therefor for all outstanding Preferred Shares (including shares of other Series of RVMTP Shares) ranking on a parity with such Series of RVMTP Shares have been or contemporaneously are declared and paid through the most recent dividend payment dates therefor. If full cumulative dividends or other distributions due have not been declared and paid on all such outstanding Preferred Shares of any series, any dividends and other distributions being declared and paid on RVMTP Shares of a Series will be declared and paid as nearly pro rata as possible in proportion to the respective amounts of dividends and other distributions accumulated but unpaid on the shares of each such series of Preferred Shares on the relevant dividend payment date for such series. Subject to <u>Section</u> <u>2.11</u> hereof and Sections 2.3 and 2.4 of the Purchase Agreement, no Holders of RVMTP Shares shall be entitled to any dividends or other distributions, whether payable in cash, property or shares, in excess of full cumulative dividends and other distributions as provided in this <u>Section</u> <u>2.2(c)(i)</u> on such RVMTP Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) For so long as any RVMTP Shares are Outstanding, the Fund shall not: (x) declare or pay any dividend or other distribution (other than a dividend or distribution paid in Common Shares) in respect of the Common Shares, (y) call for redemption, redeem, purchase or otherwise acquire for consideration any Common Shares, or (z) pay any proceeds of the liquidation of the Fund in respect of the Common Shares, unless, in each case, (A) immediately thereafter, the Fund shall have 1940 Act Asset Coverage after deducting the amount of such dividend or distribution or redemption or purchase price or liquidation proceeds, (B) all cumulative dividends and other distributions on all RVMTP Shares and all other series of Preferred Shares ranking on a parity with the RVMTP Shares due on or prior to the date the applicable dividend, distribution, redemption, purchase or acquisition shall have been declared and paid (or shall have been declared and Deposit Securities (in the case of the RVMTP Shares) or other sufficient securities or funds (in the case of other Preferred Shares, as applicable) for the payment thereof shall have been deposited irrevocably with the paying agent for such Preferred Shares) and (C) the Fund shall have deposited Deposit Securities pursuant to and in accordance with the requirements of <u>Section</u> <u>2.6(e)(ii)</u> hereof with respect to Outstanding RVMTP Shares of any Series to be redeemed pursuant to <u>Section</u> <u>2.6(a)</u> or <u>Section</u> <u>2.6(b)</u> hereof for which a Notice of Redemption

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shall have been given or shall have been required to be given in accordance with the terms hereof on or prior to the date of the applicable dividend, distribution, redemption, purchase or acquisition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Any dividend payment made on RVMTP Shares of a Series shall first be credited against the dividends and other distributions accumulated with respect to the earliest Dividend Period for such Series for which dividends and distributions have not been paid.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Not later than 12:00 noon, New York City time, on the Dividend Payment Date for a Series of RVMTP Shares, the Fund shall deposit with the Calculation and Paying Agent Deposit Securities having an aggregate Market Value on such date sufficient to pay the dividends and other distributions, if any, that are payable on such Dividend Payment Date in respect of such Series. The Fund may direct the Calculation and Paying Agent with respect to the investment or reinvestment of any such Deposit Securities so deposited prior to the Dividend Payment Date, provided that such investment consists exclusively of Deposit Securities and provided further that the proceeds of any such investment will be available as same-day funds at the opening of business on such Dividend Payment Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) All Deposit Securities deposited with the Calculation and Paying Agent for the payment of dividends payable on a Series of RVMTP Shares shall be held in trust for the payment of such dividends by the Calculation and Paying Agent for the benefit of the Holders of such Series entitled to the payment of such dividends pursuant to <u>Section</u> <u>2.2(f)</u>. Any moneys paid to the Calculation and Paying Agent in accordance with the foregoing but not applied by the Calculation and Paying Agent to the payment of dividends, including interest earned on such moneys while so held, will, to the extent permitted by law, be repaid to the Fund as soon as possible after the date on which such moneys were to have been so applied, upon request of the Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Dividends and any distributions made pursuant to <u>Section</u> <u>2.11(a)</u> on RVMTP Shares of a Series shall be paid on each Dividend Payment Date for such Series, out of funds legally available therefor under applicable law, when, as and if declared by the Board of Trustees, or under authority granted by, and pursuant to <u>Section</u> <u>2.2(a)</u> hereof, to the Holders of shares of such Series as their names appear on the registration books of the Fund at the close of business on the calendar day immediately preceding such Dividend Payment Date (or if such calendar day is not a Business Day, the next preceding Business Day). Dividends and any distributions made pursuant to <u>Section</u> <u>2.11(a)</u> in arrears on RVMTP Shares of a Series for any past Dividend Period may be declared and paid at any time, without reference to any regular Dividend Payment Date, to the Holders of shares of such Series as their names appear on the registration books of the Fund on such date, not exceeding fifteen (15) calendar days preceding the payment date thereof, as may be fixed by the Board of Trustees. No interest or sum of money in lieu of interest will be payable in respect of any dividend payment or payments or other distributions on RVMTP Shares of any Series which may be in arrears.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) (i) The Dividend Rate on a Series of RVMTP Shares shall be adjusted to the Increased Rate for each Increased Rate Period (as hereinafter defined). Subject to the cure provisions of <u>Section</u> <u>2.2(g)(iii)</u>, a Rate Period with respect to a Series of RVMTP Shares shall be deemed to be an "<u>Increased Rate Period</u>" if on the first calendar day of such Rate Period, (A) the Fund has failed to deposit with the Calculation and Paying Agent by 12:00 noon, New York City time, on a Dividend Payment Date for such Series, Deposit Securities that will provide funds available to the Calculation and Paying Agent on such Dividend Payment Date sufficient to pay

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the full amount of any dividend on such Series payable on such Dividend Payment Date (a "<u>Dividend Default</u>") and such Dividend Default has not ended as contemplated by <u>Section</u> <u>2.2(g)(ii)</u>; (B) the Fund has failed to deposit with the Calculation and Paying Agent by 12:00 noon, New York City time, on an applicable Redemption Date or Mandatory Tender Redemption Date for such Series, Deposit Securities that will provide funds available to the Calculation and Paying Agent on such Redemption Date or Mandatory Tender Redemption Date sufficient to pay the full amount of the Redemption Price payable in respect of such Series on such Redemption Date or Mandatory Tender Redemption Date (a "<u>Redemption Default</u>") and such Redemption Default has not ended as contemplated by <u>Section</u> <u>2.2(g)(ii)</u>; (C) any Rating Agency has withdrawn the credit rating required to be maintained with respect to such Series pursuant to <u>Section</u> <u>2.8</u> other than due to the Rating Agency ceasing to rate tax-exempt closed-end management investment companies generally and such withdrawal is continuing (a "<u>Rating Agency Withdrawal</u>"); (D) a Ratings Event (as defined below) has occurred and is continuing with respect to such Series; (E) (i) a court or other applicable governmental authority has made a final determination that for U.S. federal income tax purposes the RVMTP Shares do not qualify as equity in the Fund and such determination has not been repealed, revoked or rescinded and (ii) such determination results from an act or failure to act on the part of the Fund (a "<u>Tax Event</u>"); (F) the Fund has failed to pay when due the full amount of any Additional Amount Payment required to be paid pursuant to this Statement (other than a failure by the Fund to so pay due to the lack of legally available funds under applicable law or because of any other applicable legal or regulatory restrictions on such payments) (an Increased Rate Period pursuant to this clause (F) will be considered cured on the date the Fund pays the full amount of such Additional Amount Payment required to be paid pursuant to this Statement); (G) the Fund shall have made an investment in violation of Section 6.11 of the Purchase Agreement and failed to dispose of such investment by the tenth (10th) Business Day following receipt by the Fund of written notice of such violation from the Purchaser (an Increased Rate Period pursuant to this clause (G) shall be considered cured on the date the Fund has disposed of any such investments of which it has received such notice); provided, however, that the Fund may, in good faith, notify the Purchaser in writing within five (5) Business Days following the receipt of such written notice from the Purchaser that the Fund disagrees that such investment violates Section 6.11 of the Purchase Agreement, which notification shall include the Fund's rationale for disagreeing, in which case the ten (10) Business Day period noted in this clause (G) shall be extended to fifteen (15) Business Days; (H) any violation of Section 7.15 (other than Section 7.15(c) and Section 7.15(e)) of the Purchase Agreement continuing past the expiration of any grace or cure period provided for therein (an Increased Rate Period pursuant to this clause (H) shall commence on the tenth (10th) Business Day following written notice from the Purchaser of such violation and will be considered cured on the date the Fund returns to compliance with Section 7.15 of the Purchase Agreement); (I) the Fund has failed to maintain settlement of the RVMTP Shares in global book entry form through the Securities Depository (an Increased Rate Period pursuant to this clause (I) will commence on the tenth (10th) Business Day following receipt by the Fund of written notice of such failure from the Purchaser and will be considered cured on the date the Fund next maintains settlement of the RVMTP Shares in global book entry form through the Securities Depository); (J) the Fund files a voluntary application for relief under federal bankruptcy law or any similar application under state law while the Fund is solvent and does not reasonably foresee becoming insolvent (an Increased Rate Period pursuant to this clause (J) will be considered cured on the date such filing or application has been withdrawn, rescinded or dismissed); (K) the audits of the Fund's financial statements are not conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States) (the

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"PCAOB Standards") due to the gross negligence or willful failure by the Fund (an Increased Rate Period pursuant to this clause (K) will commence upon receipt by the Fund of written notice of such failure from the Purchaser and will be considered cured on the date the Fund produces financial statements audited in accordance with the PCAOB Standards); or (L) the Fund has failed to establish the Term Redemption Liquidity Account in accordance with this Statement (an Increased Rate Period pursuant to this clause (L) will be considered cured on the date the Fund next establishes the Term Redemption Liquidity Account in accordance with this Statement). A "<u>Ratings Event</u>" shall be deemed to exist with respect to any Series of RVMTP Shares at any time such RVMTP Shares have a long-term credit rating from at least one-half of the Rating Agencies designated at such time that is Below Investment Grade. For the avoidance of doubt, no determination by any court or other applicable governmental authority that requires the Fund to make an Additional Amount Payment in respect of a Taxable Allocation shall be deemed to be a Tax Event hereunder. For the avoidance of doubt, the Increased Rate, with respect to any Increased Rate Period for a Series of RVMTP Shares, shall be the Index Rate for such Increased Rate Period plus 2.00% plus the Applicable Spread, as defined, without any duplication thereof, regardless of whether one or more than one condition giving rise to an Increased Rate Period shall then be existing and continuing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Subject to the cure provisions of <u>Section</u> <u>2.2(g)(iii)</u>, a Dividend Default or a Redemption Default on a Series of RVMTP Shares shall end on the Business Day on which, by 12:00 noon, New York City time, an amount equal to all accumulated but unpaid dividends on such Series and any unpaid Redemption Price on such Series shall have been deposited irrevocably in trust in same-day funds with the Calculation and Paying Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) No Increased Rate Period for a Series of RVMTP Shares with respect to any Dividend Default or Redemption Default on such Series shall be deemed to have commenced if the amount of any dividend or any Redemption Price due in respect of such Series (if such Default is not solely due to the willful failure of the Fund) is deposited irrevocably in trust, in same-day funds, with the Calculation and Paying Agent by 12:00 noon, New York City time, on a Business Day that is not later than three (3) Business Days after the applicable Dividend Payment Date or Redemption Date for such Series with respect to which such Default occurred, together with an amount equal to the Increased Rate on such shares applied to the aggregate Liquidation Preference of and for any other Increased Rate Period that is in effect for a reason other than such Dividend Default or Redemption Default, if any, of non-payment on a Series of RVMTP Shares of the applicable dividend, determined as provided in <u>Section</u> <u>2.2(a)</u>, or the applicable Redemption Price, determined as provided in <u>Section</u> <u>2.6</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>Designation of Special Terms Period</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Right to Declare a Special Terms Period</u>. The Fund, acting in its sole and absolute discretion but otherwise subject to the terms of this Statement, after the Lock-Out Date, may designate a "<u>Special Terms Period</u>" with respect to any Series of RVMTP Shares (which, for the avoidance of doubt, shall apply to all RVMTP Shares of such Series), during which period, such terms may differ from those provided in this Statement and applicable Appendix and may include, without limitation, changes to the Dividend Rate, Dividend Payment Dates, redemption provisions (including, without limitation, the Term Redemption Date or the Early Term Redemption Date), required Effective Leverage Ratio, and Additional Amount Payment provisions; provided that such special terms shall not, in any event, affect the parity ranking of

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such Series of RVMTP Shares relative to any other Series of RVMTP Shares or any other series of Preferred Shares of the Fund then outstanding as to the payment of dividends and the distribution of assets upon dissolution, liquidation or winding up of the affairs of the Fund. The effectiveness of any change to the terms of the RVMTP Shares pursuant to the exercise by the Fund of its option to designate a Special Terms Period with respect to any Series of RVMTP Shares shall be subject to the filing of an amendment to the terms of such RVMTP Shares that has been approved by the Board of Trustees and approved by 100% of the Holders of the affected Series of RVMTP Shares in the manner set forth in <u>Section</u> <u>2.7(a)</u>. For the avoidance of doubt, (A) the terms of any such Special Terms Period that may be designated pursuant to the foregoing sentence shall amend and/or replace the applicable provisions of this Statement (and/or the relevant Appendix for the affected Series) that are in effect at the time such Special Terms Period is declared and (B) subject to <u>Section</u> <u>2.5(a)</u>, the terms of this Statement that were in effect at the most recent time during which no Special Terms Period was in effect will automatically continue to be in effect immediately following the end of a Special Terms Period unless a subsequent Special Terms Period has been declared that will take effect immediately following the prior Special Terms Period, if the Holders of the RVMTP Shares have made an election to retain the RVMTP Shares with respect to the Mandatory Tender Date corresponding to the final date of such Special Terms Period and/or the RVMTP Shares of any Holders that have not made such election, if any, are Remarketed pursuant to <u>Section</u> <u>2.5(b)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>Length of and Preconditions for Special Terms Period</u>. Any Special Terms Period shall commence on a designated Thursday and end on the earlier of a designated Wednesday or the applicable Redemption Date or Mandatory Tender Redemption Date, as the case may be. A designation of a Special Terms Period shall be effective only if (1) notice thereof shall have been given to the Holders of the affected Series of RVMTP Shares in accordance with <u>Section</u> <u>2.2(h)(ii)</u> and <u>(iii)</u>, (2) full cumulative dividends and any amounts due with respect to redemptions payable on the affected Series of RVMTP Shares prior to such date have been paid in full, (3) such designation of a Special Terms Period shall not become effective prior to twenty-four (24) months subsequent to the Date of Original Issue of the affected Series of RVMTP Shares, (4) all of the Outstanding RVMTP Shares of the affected Series shall be subject to such Special Terms Period, and (5) all of the Outstanding RVMTP Shares of the affected Series that are subject to Remarketing in connection with the redemption triggered by the declaration of the Special Terms Period are successfully Remarketed (except to the extent any applicable Holders of such affected Series of RVMTP Shares have affirmatively elected to retain their RVMTP Shares of such Series for the Special Terms Period). Any failure to satisfy the preconditions to a Special Terms Period shall result in such Special Terms Period not becoming effective.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <u>Notice of Special Terms Period</u>. If the Fund proposes to designate a Special Terms Period, not less than twenty (20) Business Days (or such lesser number of days as may be agreed to from time to time by the Holders of the affected Series of RVMTP Shares and the Remarketing Settlement Agent) nor more than thirty (30) Business Days prior to the date the Fund proposes to designate as the first day of such Special Terms Period, a notice (a "<u>Notice of Special Terms Period</u>") shall be sent by the Fund or its designee by Electronic Means (or by first-class mail, postage prepaid, where the RVMTP Shares of the affected Series are in physical form outside the book-entry system of the Securities Depository) to the Holders of the affected Series of RVMTP Shares, with copies provided by the Fund to the Remarketing Settlement Agent and the Calculation and Paying Agent via Electronic Means and by the Fund or its designee to the

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initial Holder of the affected Series of RVMTP Shares in accordance with the notice provisions in the Purchase Agreement. Each such notice shall state (A) that the Fund has exercised its option to propose a Special Terms Period with respect to such Series of RVMTP Shares, (B) the Rate Determination Date immediately prior to the first day of such Special Terms Period, (C) that such Special Terms Period shall not commence unless the conditions precedent thereto in <u>Section</u> <u>2.2(h)(ii)</u> are satisfied, (D) a description of the special terms to be applicable to such Series of RVMTP Shares and (E) the date upon which such Series of RVMTP Shares shall be subject to Remarketing pursuant to <u>Section</u> <u>2.5(b)</u> (except to the extent affirmatively retained by any applicable Holder of RVMTP Shares of such Series pursuant to <u>Section</u> <u>2.5(a)(iv)</u>). The Fund may provide in any Notice of Special Terms Period that such Special Terms Period is subject to one or more additional conditions precedent, in which case the special terms of such Special Terms Period shall not become effective unless each such additional condition has been satisfied or the Fund has waived each such condition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3 <u>Liquidation Rights</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The RVMTP Shares shall rank on parity with each other, with shares of any other Series of RVMTP Shares, and with shares of any other class or series of Preferred Shares as to distribution of assets upon dissolution, liquidation or winding-up of the affairs of the Fund. In this regard, the provisions of this <u>Section</u> <u>2.3</u> shall be applied consistently with all other Preferred Shares such that Holders of the RVMTP Shares and holders of all other Preferred Shares are treated on parity with one another with respect to any such distribution.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) In the event of any liquidation, dissolution or winding up of the affairs of the Fund, whether voluntary or involuntary, the Holders of RVMTP Shares shall be entitled to receive out of the assets of the Fund available for distribution to shareholders, after satisfying claims of creditors but before any distribution or payment shall be made in respect of the Common Shares, a liquidation distribution equal to the Liquidation Preference for such shares, plus an amount equal to all unpaid dividends and other distributions on such shares accumulated to (but excluding) the date fixed for such distribution or payment on such shares (whether or not earned or declared by the Fund, but without interest thereon), and such Holders shall be entitled to no further participation in any distribution or payment in connection with any such liquidation, dissolution or winding up.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If, upon any liquidation, dissolution or winding up of the affairs of the Fund, whether voluntary or involuntary, the assets of the Fund available for distribution among the Holders of all Outstanding RVMTP Shares and any other outstanding Preferred Shares ranking on a parity with the RVMTP Shares shall be insufficient to permit the payment in full to such Holders of the Liquidation Preference of such RVMTP Shares plus accumulated and unpaid dividends and other distributions on such shares as provided in <u>Section</u> <u>2.3(b)</u> above and the amounts due upon liquidation with respect to such other Preferred Shares, then such available assets shall be distributed among the Holders of such RVMTP Shares and such other Preferred Shares ratably in proportion to the respective preferential liquidation amounts to which they are entitled. In connection with any liquidation, dissolution or winding up of the affairs of the Fund, whether voluntary or involuntary, unless and until the Liquidation Preference on each Outstanding RVMTP Share plus accumulated and unpaid dividends and other distributions on such shares as provided in <u>Section</u> <u>2.3(b)</u> above have been paid in full to the Holders of such shares, no dividends,

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distributions or other payments will be made on, and no redemption, purchase or other acquisition by the Fund will be made by the Fund in respect of, the Common Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Neither the sale of all or substantially all of the property or business of the Fund, nor the merger, consolidation or reorganization of the Fund into or with any other business or statutory trust, corporation or other entity, nor the merger, consolidation or reorganization of any other business or statutory trust, corporation or other entity into or with the Fund shall be a dissolution, liquidation or winding up, whether voluntary or involuntary, for the purpose of this <u>Section</u> <u>2.3</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4 <u>Coverage</u> <u>& Leverage Tests</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>1940 Act Asset Coverage Requirement</u>. For so long as any RVMTP Shares of any Series are Outstanding, the Fund shall have 1940 Act Asset Coverage as of the close of business on each Business Day. If the Fund shall fail to maintain such 1940 Act Asset Coverage as of any time as of which such compliance is required to be determined as aforesaid, the provisions of <u>Section</u> <u>2.6(b)(i)</u> shall be applicable, which provisions to the extent complied with shall constitute the sole remedy for the Fund's failure to comply with the provisions of this <u>Section</u> <u>2.4(a)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Calculation of 1940 Act Asset Coverage</u>. For purposes of determining whether the requirements of <u>Section</u> <u>2.4(a)</u> are satisfied, (i) no RVMTP Shares of any Series or other Preferred Shares shall be deemed to be Outstanding for purposes of any computation required by <u>Section</u> <u>2.4(a)</u> if, prior to or concurrently with such determination, sufficient Deposit Securities (in the case of the RVMTP Shares) or other sufficient securities or funds (in the case of other Preferred Shares, as applicable), in each case in accordance with the terms of such Series or other Preferred Shares, to pay the full redemption price for such Series or other Preferred Shares (or the portion thereof to be redeemed) have been deposited in trust with the paying agent for such Series or other Preferred Shares and the requisite Notice of Redemption for such Series or other Preferred Shares (or the portion thereof to be redeemed) has been given, and (ii) the Deposit Securities or other sufficient securities or funds, as applicable that have been deposited with the applicable paying agent shall not be included as assets of the Fund for purposes of such computation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Effective Leverage Ratio Requirement</u>. Unless the Fund receives the prior written consent of all Holders, for so long as RVMTP Shares of any Series are Outstanding, the Effective Leverage Ratio shall not exceed 45.0% as of the close of business on any Business Day; <u>provided</u>, <u>however</u>, in the event that the Fund's Effective Leverage Ratio exceeds 45.0% on any Business Day solely by reason of fluctuations in the market value of the Fund's portfolio securities, the Effective Leverage Ratio shall not exceed 46.0% as of the close of business on such Business Day. If the Effective Leverage Ratio shall exceed the applicable percentage provided in the preceding sentence as of any time as of which such compliance is required to be determined as aforesaid, the provisions of <u>Section</u> <u>2.6(b)(ii)</u> shall be applicable, which provisions to the extent complied with shall constitute the sole remedy for the Fund's failure to comply with the provisions of this <u>Section</u> <u>2.4(c)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Calculation of Effective Leverage Ratio</u>. For purposes of determining whether the requirements of <u>Section</u> <u>2.4(c)</u> are satisfied, the "<u>Effective Leverage Ratio</u>" on any date shall mean the quotient of:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The sum of (A) the aggregate liquidation preference of the Fund's "senior securities" (as that term is defined in the 1940 Act) that are stock for purposes of the 1940 Act, excluding, without duplication, (1) any such senior securities for which the Fund has issued a Notice of Redemption and either has delivered Deposit Securities or sufficient securities or funds, (as applicable in accordance with the terms of such senior securities) to the paying agent for such senior securities or otherwise has adequate Deposit Securities or sufficient securities or funds on hand for the purpose of such redemption (as applicable in accordance with the terms of such senior securities) and (2) any such senior securities that are to be redeemed with net proceeds from the sale of the RVMTP Shares, for which the Fund has delivered Deposit Securities or sufficient securities or funds (as applicable in accordance with the terms of such senior securities) to the paying agent for such senior securities or otherwise has adequate Deposit Securities or sufficient securities or funds on hand (as applicable in accordance with the terms of such senior securities) for the purpose of such redemption; (B) the aggregate principal amount of the Fund's "senior securities representing indebtedness" (as that term is defined in the 1940 Act giving effect to any interpretations thereof by the Securities and Exchange Commission or its staff); (C) excluding, without duplication, any senior securities representing indebtedness included in (B), the aggregate amount of the purchase price component payable for a repurchase under reverse repurchase agreements entered into by the Fund; and (D) the aggregate principal amount of floating rate securities corresponding to any associated residual floating rate securities not owned by the Fund (less the aggregate principal amount of any such floating rate securities owned by the Fund and corresponding to the associated residual floating rate securities owned by the Fund); divided by

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The sum of (A) the Market Value of the Fund's total assets (including amounts attributable to senior securities, but excluding any assets consisting of Deposit Securities or funds referred to in clauses (A)(1) and (A)(2) of <u>Section</u> <u>2.4(d)(i)</u> above), less the amount of the Fund's accrued liabilities (other than liabilities for the aggregate principal amount of "senior securities representing indebtedness" (as that term is defined in the 1940 Act, giving effect to any interpretations thereof by the Securities and Exchange Commission or its staff), including floating rate securities), (B) excluding, without duplication, any senior securities representing indebtedness included in (A), the aggregate amount of the purchase price component payable for a repurchase under reverse repurchase agreements entered into by the Fund; and (C) the aggregate principal amount of floating rate securities not owned by the Fund that correspond to the associated inverse floating rate securities owned by the Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.5 <u>Mandatory Tender and Remarketing</u>. The RVMTP Shares shall be subject to Mandatory Tender and Remarketing as provided below:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Mandatory Tender of RVMTP Shares</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Subject to the Holders' election to retain the RVMTP Shares provided for in <u>Section</u> <u>2.5(a)(iv)</u> below, any Series of RVMTP Shares shall become subject to Mandatory Tender upon the occurrence of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) any date that is twenty (20) Business Days prior to each Early Term Redemption Date of such Series of RVMTP Shares as set forth in clause (i) of the definition thereof in the Appendix for such Series,

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) any date on which the Fund delivers a Notice of Special Terms Period declaring a Special Terms Period for such Series of RVMTP Shares pursuant to <u>Section</u> <u>2.2(h)</u>, or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) the date that is twenty (20) Business Days prior to the last day of any Special Terms Period, provided that no subsequent Special Terms Period has been designated and agreed by the Holder (each of (A), (B) and (C), a "<u>Mandatory Tender Event</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Upon the occurrence of a Mandatory Tender Event with respect to a Series of RVMTP Shares, the Fund shall issue or cause to be issued a notice of Mandatory Tender for Remarketing on the Mandatory Tender Date (as defined below) to the Holders of such Series of RVMTP Shares through the Securities Depository as a communication from the Securities Depository (the "<u>Notice of Mandatory Tender</u>"). Such Notice of Mandatory Tender shall specify that such Mandatory Tender is subject to the election of the Holders of such Series of RVMTP Shares to retain as described in <u>Section</u> <u>2.5(a)(iv)</u> of this Statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The Mandatory Tender Dates corresponding to the Mandatory Tender Events listed in <u>Section</u> <u>2.5(a)(i)</u> above are as follows, with each Mandatory Tender Date subject to the Holders' election to retain the RVMTP Shares in <u>Section</u> <u>2.5(a)(iv):</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) in the case of a Mandatory Tender Event described in <u>Section</u> <u>2.5(a)(i)(A)</u>, the date twenty (20) Business Days following the date of such Mandatory Tender Event,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) in the case of a Mandatory Tender Event described in Section <u>2.5(a)(i)(B)</u>, the date on which such Special Terms Period becomes effective pursuant to Section <u>2.2(h)</u>, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) in the case of a Mandatory Tender Event described in Section <u>2.5(a)(i)(C)</u>, the last day of the related Special Terms Period (in the case of (A), (B), or (C), such date, the "Mandatory Tender Date").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Notwithstanding <u>Section</u> <u>2.5(a)(i)</u> above, the Holders of any affected Series of RVMTP Shares may elect to retain such RVMTP Shares by providing notice of such election to the Fund no later than the tenth (10<sup>th</sup>) Business Day prior to the Mandatory Tender Date, in which case the affected RVMTP Shares of the electing Holder shall no longer be subject to Mandatory Tender on the corresponding Mandatory Tender Date and shall not be Remarketed pursuant to the procedures described in <u>Section</u> <u>2.5(b)</u> below; provided, however, with respect to any Mandatory Tender Event occurring pursuant to <u>Section</u> <u>2.5(a)(i)(B)</u>, any such election to retain shall not be effective unless accompanied or preceded by a consent to all amendments to the terms of the affected Series RVMTP Shares as required in connection with a designation of a Special Terms Period pursuant to <u>Section</u> <u>2.2(h)(i)</u> above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Remarketing of RVMTP Shares</u>. The RVMTP Shares subject to Mandatory Tender as provided for in this <u>Section</u> <u>2.5</u> shall be Remarketed in accordance with the following procedures:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) A Holder of RVMTP Shares subject to Mandatory Tender may enter into trade documentation with a purchaser for the RVMTP Shares (which, for the avoidance of doubt, shall be with respect to all the RVMTP Shares of such Series) with terms that (A) are reasonably satisfactory to both the Holder of the RVMTP Shares and such purchaser and (B) provide for the sale of the RVMTP Shares subject to Mandatory Tender on the Mandatory Tender Date; provided that (1) the Holder of the RVMTP Shares notifies the Fund in writing of such trade documentation by the Mandatory Tender Date confirming that the trade documentation satisfies the conditions in this sentence and providing that all RVMTP Shares will be sold thereunder and (2) following the Remarketing of RVMTP Shares, via execution of such trade documentation, the Fund shall provide, or cause to be provided, a notice through the Securities Depository cancelling the Mandatory Tender with respect to the RVMTP Shares so Remarketed. At any time following a Mandatory Tender Event and before the corresponding Mandatory Tender Date, the Fund may designate a Remarketing Settlement Agent to assist with the Remarketing in accordance with the terms of the Remarketing Settlement Agent Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) If all of the RVMTP Shares subject to Mandatory Tender are not Remarketed pursuant to <u>Section</u> <u>2.5(b)(i)</u> with binding trade documentation in place by the fifth (5<sup>th</sup>) Business Day preceding the Mandatory Tender Date, then the Fund and its agents shall take the following Remarketing actions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) The Fund shall designate a Remarketing Settlement Agent to assist with the Remarketing in accordance with the terms of the Remarketing Settlement Agent Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) If any purchaser is identified and has agreed by the Mandatory Tender Date to purchase all of the RVMTP Shares subject to Mandatory Tender on the Mandatory Tender Date, the Remarketing Settlement Agent shall (1) give written notice by Electronic Means to the Holders of such RVMTP Shares, with a copy to the Fund and the Calculation and Paying Agent, that the purchaser has been identified and agreed to purchase such RVMTP Shares on the Mandatory Tender Date; (2) collect the Remarketing Purchase Price via wire transfer from such purchaser on the Mandatory Tender Date; (3) wire the Remarketing Purchase Price to the Securities Depository for delivery to the current Holder of the RVMTP Shares subject to Mandatory Tender on the Mandatory Tender Date; and (4) direct that such RVMTP Shares be delivered to the Remarketing Settlement Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) The Remarketing Settlement Agent shall then direct transfer of the RVMTP Shares subject to Mandatory Tender to the purchaser through the Securities Depository on the Mandatory Tender Date.

For the avoidance of doubt, in the event of a successful Remarketing of all RVMTP Shares subject to Mandatory Tender pursuant to <u>Section</u> <u>2.5(b)</u>, such Mandatory Tender will be cancelled and the Fund shall provide, or cause to be provided, a notice through the Securities Depository cancelling the Mandatory Tender with respect to the RVMTP Shares so Remarketed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Failed Remarketing and Mandatory Tender</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) With respect to a Mandatory Tender Event described in <u>Section</u> <u>2.5(a)(i)(B)</u>, if, for any reason (other than a failure to timely deliver RVMTP Shares subject to a

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Mandatory Tender to the Remarketing Settlement Agent, and only to the extent that such failure to deliver is caused by administrative issues and is cured within two (2) Business Days), all of the RVMTP Shares subject to Mandatory Tender are not Remarketed by the related Mandatory Tender Date pursuant to <u>Section</u> <u>2.5(b)</u>, then (A) a failed remarketing shall be deemed to have occurred (which, for the avoidance of doubt, shall be with respect to all RVMTP Shares subject to the Mandatory Tender) (a "<u>Failed Remarketing</u>") that may trigger the application of a Failed Remarketing Spread as described in clause (ii) of the definition thereof and (B) all such RVMTP Shares shall be retained by their respective Holders, and no such RVMTP Shares shall be purchased on the Mandatory Tender Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) With respect to a Mandatory Tender Event described in Section <u>2.5(a)(i)(A)</u> or <u>2.5(a)(i)(C)</u>, if any RVMTP Shares subject to Mandatory Tender are not Remarketed by the Mandatory Tender Date, then all such RVMTP Shares shall be redeemed by the Fund on the Mandatory Tender Date pursuant to the Mandatory Tender redemption procedure described in <u>Sections 2.6(a)(iv)</u> and <u>2.6(e)</u> below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6 <u>Redemption</u>. Each Series of RVMTP Shares shall be subject to redemption by the Fund as provided below:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Term Redemption and Mandatory Tender Redemption</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Term Redemption. Subject to <u>Section</u> <u>2.6(e)(v)</u>, the Fund shall redeem all RVMTP Shares of a Series then Outstanding on the Term Redemption Date for such Series, out of funds legally available therefor under applicable law, at a price per share equal to the Liquidation Preference per share of such Series plus an amount equal to all unpaid dividends and other distributions on such share of such Series accumulated from and including the Date of Original Issue to (but excluding) the Term Redemption Date for such Series (whether or not earned or declared by the Fund, but excluding interest thereon) (the "<u>Term Redemption Price</u>"); <u>provided</u>, <u>however</u>, that the Term Redemption Date for such Series of RVMTP Shares may be extended pursuant to <u>Section</u> <u>2.6(a)(ii)</u> or <u>Section</u> <u>2.6(a)(iii)</u> below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) (A) The Fund shall have the right, exercisable not more than three hundred and sixty-five (365) calendar days nor less than one hundred and twenty (120) calendar days prior to the Term Redemption Date of a Series of RVMTP Shares, to request by notice (accompanied by a No Adverse Effect Opinion) that each Designated Owner of such RVMTP Shares extend the Term Redemption Date for such Series of RVMTP Shares by at least an additional three hundred and sixty-five (365) calendar days (a "<u>Designated Owner Term Extension Request</u>"), which request may be conditioned upon terms and conditions that are different from the terms and conditions set forth herein or in the Appendix applicable to such Series of RVMTP Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) Each Designated Owner shall, no later than sixty (60) calendar days after receiving a Designated Owner Term Extension Request, notify the Fund and the Calculation and Paying Agent of its acceptance or rejection of such request, which acceptance by such Designated Owner may be conditioned upon terms and conditions that are different from the terms and conditions set forth herein or the terms and conditions proposed the Fund in making a Designated Owner Term Extension Request (a "<u>Conditional Acceptance</u>"). A Conditional Acceptance conditioned upon terms and conditions that are accepted by the Fund and that are

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different from the terms and conditions set forth herein shall be deemed to be a consent by such Designated Owner to amend this Statement to reflect such different terms and conditions, but only with respect to the RVMTP Shares of such Series beneficially owned by such Designated Owner. To the extent that a Designated Owner of RVMTP Shares of a Series of RVMTP Shares subject to a Designated Owner Term Extension Request rejects such Designated Owner Term Extension Request pursuant to this <u>Section</u> <u>2.6(a)(ii)(B),</u> or is deemed to reject such Designated Owner Term Extension Request pursuant to <u>Section</u> <u>2.6(a)(ii)(C)</u> below, the RVMTP Shares of such Series beneficially owned by such Designated Owner shall be subject to redemption as provided in this Statement, without giving effect to any Designated Owner Term Extension Request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) If any Designated Owner fails to notify the Fund or the Calculation and Paying Agent of its acceptance or rejection of the Fund's Designated Owner Term Extension Request within such sixty (60) calendar day period, such failure to respond will be deemed a rejection of such Designated Owner Term Extension Request by such Designated Owner. If a Designated Owner of RVMTP Shares provides a Conditional Acceptance, then the Fund shall have sixty (60) calendar days thereafter to notify such Designated Owner of its acceptance or rejection of the terms and conditions specified in the Conditional Acceptance. The Fund's failure to notify such Designated Owner within such sixty (60) calendar day period will be deemed a rejection of the terms and conditions specified in the Conditional Acceptance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D) Each Designated Owner of a Series of RVMTP Shares may grant or deny any Designated Owner Term Extension Request applicable to such Series of RVMTP Shares in its sole and absolute discretion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(E) Unless the Fund and any Designated Owner of RVMTP Shares that has agreed to a Designated Owner Term Extension Request otherwise agree pursuant to the procedures described in this <u>Section</u> <u>2.6(a)(ii)</u>, in the event that the Term Redemption Date of a Series of RVMTP Shares is extended pursuant to this <u>Section</u> <u>2.6(a)(ii),</u> the Liquidity Account Initial Date, as set forth in the Appendix establishing such Series, shall be extended accordingly, as provided in such Appendix, with respect to the RVMTP Shares of such Series held by such Designated Owner.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The Fund shall have the right, exercisable not less than sixty (60) calendar days prior to the Term Redemption Date of a Series of RVMTP Shares, to request by notice (accompanied by a No Adverse Effect Opinion) to the Holders of 100% of the Outstanding RVMTP Shares of such Series, an extension of the Term Redemption Date (a "<u>Holder</u> <u>Term Extension Request</u>"). Any failure by a Holder to respond or agree to such Holder Term Extension Request in writing within sixty (60) calendar days of the receipt thereof shall be deemed to be a rejection of the extension request and the Term Redemption Date may only be extended pursuant to this <u>Section</u> <u>2.6(a)(iii)</u> upon the written consent of 100% of the Holders of the RVMTP Shares of such Series. In the event that the Term Redemption Date of a Series of RVMTP Shares is extended pursuant to this <u>Section</u> <u>2.6(a)(iii),</u> the Liquidity Account Initial Date, as set forth in the Appendix establishing such Series, shall be extended accordingly, as provided in such Appendix.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) <u>Mandatory Tender Redemption</u>. Following a Mandatory Tender Event of the kind described in Section <u>2.5(a)(i)(A)</u> or <u>2.5(a)(i)(C)</u>, any RVMTP Shares subject to such Mandatory Tender Event that are not subject to an election to retain by the Holders pursuant to Section <u>2.5(a)(iv)</u> and have not been successfully Remarketed by the

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related Mandatory Tender Date pursuant to Section <u>2.5(b)</u> shall be redeemed by the Fund on such Mandatory Tender Date (the date of such redemption, "Mandatory Tender Redemption Date"), at a price per share equal to the Liquidation Preference per share plus an amount equal to all unpaid dividends and other distributions on such RVMTP Shares accumulated from and including the Date of Original Issue of such RVMTP Shares to (but excluding) the Mandatory Tender Redemption Date (whether or not earned or declared by the Fund, but excluding interest thereon) (the "Mandatory Tender Redemption Price").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Mandatory 1940 Act Asset Coverage and Effective Leverage Ratio Redemption</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>1940 Act Asset Coverage Mandatory Redemption</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) If the Fund fails to comply with the 1940 Act Asset Coverage requirement as provided in <u>Section</u> <u>2.4(a)</u> as of any time as of which such compliance is required to be determined in accordance with <u>Section</u> <u>2.4(a)</u> and such failure is not cured as of the 1940 Act Asset Coverage Cure Date other than as a result of the redemption required by this <u>Section</u> <u>2.6(b)(i)</u>, the Fund shall, to the extent permitted by the 1940 Act and Massachusetts law, by the close of business on the second Business Day next following such 1940 Act Asset Coverage Cure Date, cause a Notice of Redemption to be issued, in accordance with the terms of the Preferred Shares to be redeemed. In addition, in accordance with the terms of the Preferred Shares to be redeemed, the Fund shall cause to be deposited Deposit Securities (in the case of the RVMTP Shares) or other sufficient securities or funds (in the case of any other Preferred Shares, as applicable) in trust with the Calculation and Paying Agent or other applicable paying agent, in each case in accordance with the terms of the Preferred Shares to be redeemed for the redemption of a sufficient number of Preferred Shares, which, to the extent permitted by the 1940 Act and Massachusetts law, enable the Fund to meet the requirements of <u>Section</u> <u>2.6(b)(i)(B</u>). The Fund shall allocate such redemption on a pro rata basis among different series of Preferred Shares (including the shares of each Series of RVMTP Shares based upon the proportion that the aggregate liquidation preference of the outstanding Preferred Shares of any series bears to the aggregate liquidation preference of all outstanding series of Preferred Shares (a "<u>Pro Rata Allocation</u>"). In the event that any RVMTP Shares of a Series then Outstanding are to be redeemed pursuant to this <u>Section</u> <u>2.6(b)(i)</u>, the Fund shall redeem such shares, out of funds legally available therefor under applicable law, at a price per share equal to the Liquidation Preference per share of such Series plus an amount equal to all unpaid dividends and other distributions on such share of such Series accumulated from and including the Date of Original Issue to (but excluding) the date fixed for such redemption by the Board of Trustees (whether or not earned or declared by the Fund, but without interest thereon) (the "<u>Mandatory 1940 Act Asset Coverage Redemption Price</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) On the Redemption Date for a redemption contemplated by <u>Section</u> <u>2.6(b)(i)(A)</u>, the Fund shall redeem at the Mandatory 1940 Act Asset Coverage Redemption Price, out of funds legally available therefor, under applicable law, such number of Preferred Shares (which may include at the sole option of the Fund any number or proportion of RVMTP Shares of any Series) as shall be equal to the lesser of (x) the minimum number of Preferred Shares, the redemption of which, if deemed to have occurred immediately prior to the opening of business on the 1940 Act Asset Coverage Cure Date, would result in the Fund having 1940 Act Asset Coverage on such 1940 Act Asset Coverage Cure Date (provided, however, that if there is no such minimum number of RVMTP Shares and other Preferred Shares the redemption

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or retirement of which would have such result, all RVMTP Shares and other Preferred Shares then outstanding shall be redeemed), and (y) the maximum number of Preferred Shares that can be redeemed out of funds expected to be legally available therefor in accordance with the Declaration and applicable law. Notwithstanding the foregoing, in the event that Preferred Shares are redeemed pursuant to this <u>Section</u> <u>2.6(b)(i)</u>, the Fund may at its sole option, but is not required to, include in the number of Preferred Shares being mandatorily redeemed pursuant to this <u>Section</u> <u>2.6(b)(i)</u> a sufficient number of RVMTP Shares of any Series that, when aggregated with other Preferred Shares redeemed by the Fund, would result, if deemed to have occurred immediately prior to the opening of business on the 1940 Act Asset Coverage Cure Date, in the Fund having 1940 Act Asset Coverage on such 1940 Act Asset Coverage Cure Date of up to and including 265%; <u>provided</u> that if the 1940 Act Asset Coverage is increased to greater than 265%, the Optional Redemption Premium shall be due on any such excess redemptions. The Fund shall effect such redemption on the date fixed by the Fund therefor, which date shall not be later than thirty (30) calendar days after such 1940 Act Asset Coverage Cure Date, except that if the Fund does not have funds legally available for the redemption of all of the required number of RVMTP Shares and other Preferred Shares which have been designated to be redeemed or the Fund otherwise is unable to effect such redemption on or prior to thirty (30) calendar days after such 1940 Act Asset Coverage Cure Date, the Fund shall redeem those RVMTP Shares and other Preferred Shares which it was unable to redeem on the earliest practicable date following such thirty (30) calendar day period on which it is able to effect such redemption. If fewer than all of the Outstanding RVMTP Shares of a Series are to be redeemed pursuant to this <u>Section</u> <u>2.6(b)(i)</u>, the number of RVMTP Shares of such Series to be redeemed from the respective Holders shall be selected (A) pro rata among the Outstanding shares of such Series, (B) by lot or (C) in such other manner as the Board of Trustees may determine to be fair and equitable, in each case, in accordance with the 1940 Act; <u>provided</u>, that such method of redemption as set forth in clause (A), (B) or (C) of this <u>Section</u> <u>2.6(b)(i)(B)</u> shall be subject to any applicable procedures established by the Securities Depository.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>Effective Leverage Ratio Mandatory Redemption</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) If (1) the Fund fails to comply with the Effective Leverage Ratio requirement as provided in <u>Section</u> <u>2.4(c)</u> as of any time as of which such compliance is required to be determined in accordance with <u>Section</u> <u>2.4(c),</u> (2) with respect to the initial Series of RVMTP Shares issued pursuant to this Statement, the Fund fails to comply with the Effective Leverage Ratio requirement calculated as set forth in Section 6.12 of the Purchase Agreement applicable to such Series of RVMTP Shares if such requirement is still in effect in accordance with the terms of such Purchase Agreement, or (3) with respect to any other Series of RVMTP Shares issued pursuant to this Statement, the Fund fails to comply with any additional requirements relating to the calculation of the Effective Leverage Ratio pursuant to the Purchase Agreement or Appendix applicable to such Series of RVMTP Shares, and, in any such case, such failure is not cured as of the close of business on the date that is ten (10) Business Days following the Business Day on which such non-compliance is first determined (the "<u>Effective Leverage Ratio Cure Date</u>") other than as a result of the redemption or other actions required by this <u>Section</u> <u>2.6(b)(ii)</u>, the Fund shall cause the Effective Leverage Ratio (calculated in accordance with the requirements applicable to the determination of the Effective Leverage Ratio under this Statement, and under the Appendix and Purchase Agreement for any applicable Series of RVMTP Shares in respect of which the Effective Leverage Ratio is being determined) to not exceed the Effective Leverage

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Ratio required under <u>Section</u> <u>2.4(c)</u> as so determined, by (x) not later than the close of business on the Business Day next following the Effective Leverage Ratio Cure Date, engaging in transactions involving or relating to the floating rate securities not owned by the Fund and/or the inverse floating rate securities owned by the Fund, including the purchase, sale or retirement thereof, (y) to the extent permitted by the 1940 Act and Massachusetts law, not later than the close of business on the second (2<sup>nd)</sup> Business Day next following the Effective Leverage Ratio Cure Date, causing a Notice of Redemption to be issued, and in addition, causing to be irrevocably deposited Deposit Securities (in the case of the RVMTP Shares) or other sufficient securities or funds (in the case of other Preferred Shares, as applicable) in trust with the Calculation and Paying Agent or other applicable paying agent, in each case in accordance with the terms of the Preferred Shares to be redeemed, for the redemption at the redemption price specified in the terms of such Preferred Shares of a sufficient number of Preferred Shares, based upon a number and proportion of each series of Preferred Shares as shall be necessary to effect a Pro Rata Allocation, or (z) engaging in any combination, in the Fund's discretion, of the actions contemplated by clauses (x) and (y) of this <u>Section</u> <u>2.6(b)(ii)(A)</u>. In the event that any RVMTP Shares of a Series are to be redeemed pursuant to clause (y) of this <u>Section</u> <u>2.6(b)(ii)(A)</u>, the Fund shall redeem such RVMTP Shares at a price per RVMTP Share equal to the Mandatory 1940 Act Asset Coverage Redemption Price. Notwithstanding the foregoing, in the event that Preferred Shares are redeemed pursuant to this <u>Section</u> <u>2.6(b)(ii)</u>, the Fund may at its sole option, but is not required to, include in the number of Preferred Shares being mandatorily redeemed pursuant to this <u>Section</u> <u>2.6(b)(ii)</u> a sufficient number of RVMTP Shares of any Series that, when aggregated with other Preferred Shares redeemed by the Fund, would result, if deemed to have occurred immediately prior to the opening of business on the Effective Leverage Ratio Cure Date, in the Fund having an Effective Leverage Ratio on such Effective Leverage Ratio Cure Date of no less than 38%; <u>provided</u> that if the Effective Leverage Ratio is reduced to less than 38%, the Optional Redemption Premium shall be due on any such excess redemptions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) On the Redemption Date for a redemption contemplated by clause (y) of <u>Section</u> <u>2.6(b)(ii)(A)</u>, the Fund shall not redeem more than the maximum number of Preferred Shares that can be redeemed out of funds expected to be legally available therefor in accordance with the Declaration and applicable law. If the Fund is unable to redeem the required number of RVMTP Shares and other Preferred Shares which have been designated to be redeemed in accordance with clause (y) of <u>Section</u> <u>2.6(b)(ii)(A)</u> due to the unavailability of legally available funds, the Fund shall redeem those RVMTP Shares and other Preferred Shares which it was unable to redeem on the earliest practicable date following such Redemption Date on which it is able to effect such redemption (based upon a number and proportion of each series of Preferred Shares as shall be necessary to effect a Pro Rata Allocation). If fewer than all of the Outstanding RVMTP Shares of a Series are to be redeemed pursuant to clause (y) of <u>Section</u> <u>2.6(b)(ii)(A)</u>, the number of RVMTP Shares of such Series to be redeemed from the respective Holders shall be selected (A) pro rata among the Outstanding shares of such Series, (B) by lot or (C) in such other manner as the Board of Trustees may determine to be fair and equitable in each case, in accordance with the 1940 Act; <u>provided</u> that such method of redemption as set forth in clause (A), (B) or (C) of this <u>Section</u> <u>2.6(b)(ii)(B)</u> shall be subject to any applicable procedures established by the Securities Depository.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Optional Redemption</u>.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Subject to the provisions of <u>Section</u> <u>2.6(c)(ii)</u>, the Fund may at its option on any Business Day (an "<u>Optional Redemption Date</u>") redeem in whole or from time to time in part the Outstanding RVMTP Shares of any Series, at a redemption price per RVMTP Share (the "<u>Optional Redemption Price</u>") equal to (x) the Liquidation Preference per RVMTP Share of such Series plus (y) an amount equal to all unpaid dividends and other distributions on such RVMTP Share of such Series accumulated from and including the Date of Original Issue to (but excluding) the Optional Redemption Date (whether or not earned or declared by the Fund, but without interest thereon) plus (z) the Optional Redemption Premium per share (if any) that is applicable to an optional redemption of RVMTP Shares of such Series that is effected on such Optional Redemption Date as set forth in the Appendix relating to such Series; <u>provided</u> that in connection with any (A) redemption pursuant to this <u>Section</u> <u>2.6(c)</u> or pursuant to <u>Section</u> <u>2.6(b)</u> that is effectuated in order to comply with the requirements of the 1940 Act or this Statement, the Purchase Agreement or the Registration Rights Agreement as a result of the repurchase of Common Shares of the Fund as a result of its interval fund structure or (B) any redemption in accordance with <u>Section</u> <u>2.6(a)(iv)</u> or <u>2.6(b)</u> (except as set forth therein), no Optional Redemption Premium specified in clause (z) above or penalty or premium shall be payable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) If fewer than all of the Outstanding RVMTP Shares of a Series are to be redeemed pursuant to <u>Section</u> <u>2.6(c)(i)</u>, the shares of such Series to be redeemed shall be selected either (A) pro rata among the Holders of such Series, (B) by lot or (C) in such other manner as the Board of Trustees may determine to be fair and equitable; <u>provided</u>, in each such case, that such method of redemption as set forth in clause (A), (B) or (C) of this <u>Section</u> <u>2.6(c)(ii)</u> shall be subject to any applicable procedures established by the Securities Depository. Subject to the provisions of this Statement and applicable law, the Board of Trustees will have the full power and authority to prescribe the terms and conditions upon which RVMTP Shares will be redeemed pursuant to this <u>Section</u> <u>2.6(c)</u> from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The Fund may not on any date deliver a Notice of Redemption pursuant to <u>Section</u> <u>2.6(e)</u> in respect of a redemption contemplated to be effected pursuant to this <u>Section</u> <u>2.6(c)</u> unless on such date the Fund reasonably expects to have available Deposit Securities for the Optional Redemption Date contemplated by such Notice of Redemption having a Market Value not less than the amount (including any applicable premium) due to Holders of RVMTP Shares by reason of the redemption of such RVMTP Shares on such Optional Redemption Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) RVMTP Shares of a Series redeemed at the Fund's sole option in accordance with, but solely to the extent contemplated by, <u>Section</u> <u>2.6(a)(iv)</u>, <u>Section</u> <u>2.6(b)(i)</u> or <u>Section</u> <u>2.6(b)(ii)</u> shall be considered mandatorily redeemed pursuant to such Section, as applicable, and not subject to this <u>Section</u> <u>2.6(c)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Redemption upon Ratings Event</u> <u>or a Rating Agency Withdrawal</u>. Upon the occurrence of a Ratings Event or a Rating Agency Withdrawal in respect of a Series of RVMTP Shares, and, in any such case, if such Ratings Event or Rating Agency Withdrawal is not cured as of the close of business on the date that is thirty (30) calendar days following the Business Day on which such Ratings Event or Rating Agency Withdrawal occurs, the Fund shall redeem all RVMTP Shares of such Series within ninety (90) days of the occurrence of any such event, at a price per share equal to the Term Redemption Price.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Procedures for Redemption</u>.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) If the Fund shall determine or be required to redeem, in whole or in part, RVMTP Shares of a Series pursuant to <u>Section</u> <u>2.6(a)(i)</u>, <u>(b)</u> or <u>(c)</u>, the Fund shall deliver a notice of redemption (the "<u>Notice of Redemption</u>"), by overnight delivery, by first class mail, postage prepaid or by Electronic Means to Holders thereof, or request the Calculation and Paying Agent, on behalf of the Fund, to promptly do so by overnight delivery, by first class mail, postage prepaid or by Electronic Means. For the avoidance of doubt, a Notice of Redemption shall not be required if the Fund shall be required to redeem, in whole or in part, RVMTP Shares of a series pursuant to <u>Section</u> <u>2.6(a)(iv)</u>. A Notice of Redemption shall be provided not more than thirty-five (35) calendar days prior to the date fixed for redemption and not less than ten (10) calendar days (or such shorter or longer period as may be consented to by all of the Holders of the RVMTP Shares of such Series, which consent shall not be deemed to be a vote required by <u>Section</u> <u>2.7</u>) prior to the Redemption Date; provided that, in connection with a redemption in accordance with Section 6.20 of the Purchase Agreement, a Notice of Redemption shall be provided at least two (2) Business Days prior to the "<u>Redemption Date</u>". Each such Notice of Redemption shall state: (A) the Redemption Date; (B) the applicable Redemption Price on a per share basis; (C) the Series and number of RVMTP Shares to be redeemed; (D) the CUSIP number for RVMTP Shares of such Series; (E) if applicable, the place or places where the certificate(s) for such shares (properly endorsed or assigned for transfer, if the Board of Trustees requires and the Notice of Redemption states) are to be surrendered for payment of the Redemption Price; (F) that dividends on the RVMTP Shares to be redeemed will cease to accumulate from and after such Redemption Date; and (G) the provisions of this Statement under which such redemption is made. If fewer than all RVMTP Shares held by any Holder are to be redeemed, the Notice of Redemption delivered to such Holder shall also specify the number of RVMTP Shares to be redeemed from such Holder and/or the method of determining such number. The Fund may provide in any Notice of Redemption relating to an optional redemption contemplated to be effected pursuant to <u>Section</u> <u>2.6(c)</u> of this Statement that such redemption is subject to one or more conditions precedent and that the Fund shall not be required to effect such redemption unless each such condition has been satisfied at the time or times and in the manner specified in such Notice of Redemption. No defect in the Notice of Redemption or delivery thereof shall affect the validity of redemption proceedings, except as required by applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) If (1) the Fund shall give a Notice of Redemption or (2) the Fund is required to redeem RVMTP Shares on the Mandatory Tender Date pursuant to <u>Section</u> <u>2.6(a)(iv),</u> then at any time from and after the giving of such Notice of Redemption or Notice of Mandatory Tender, as applicable, and prior to 12:00 noon, New York City time, on the Redemption Date (so long as any conditions precedent to such redemption have been met or waived by the Fund), the Fund shall (A) deposit with the Calculation and Paying Agent Deposit Securities having an aggregate Market Value on the date thereof no less than the Redemption Price of the RVMTP Shares to be redeemed on the Redemption Date and (B) give the Calculation and Paying Agent irrevocable instructions and authority to pay the applicable Redemption Price to the Holders of the RVMTP Shares called for redemption on the Redemption Date. The Fund may direct the Calculation and Paying Agent with respect to the investment of any Deposit Securities consisting of cash so deposited prior to the Redemption Date, provided that the proceeds of any such investment shall be available at the opening of business on the Redemption Date as same-day funds. Notwithstanding the provisions of clause (A) of the preceding sentence, if the Redemption Date is the Term Redemption Date or Early Term Redemption Date, then such deposit of Deposit Securities (which may come in whole or in part from the Term Redemption Liquidity Account)

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shall be made no later than fifteen (15) calendar days prior to the Term Redemption Date or Early Term Redemption Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Upon the date of the deposit of such Deposit Securities, all rights of the Holders of the RVMTP Shares so called for redemption shall cease and terminate except the right of the Holders thereof to receive the Redemption Price thereof and such RVMTP Shares shall no longer be deemed Outstanding for any purpose whatsoever (other than (A) the transfer thereof prior to the applicable Redemption Date and (B) the accumulation of dividends thereon in accordance with the terms hereof up to (but excluding) the applicable Redemption Date, which accumulated dividends, unless previously declared and paid as contemplated by the last sentence of <u>Section</u> <u>2.6(e)(vi)</u> below, shall be payable only as part of the applicable Redemption Price on the Redemption Date). The Fund shall be entitled to receive, promptly after the Redemption Date, any Deposit Securities in excess of the aggregate Redemption Price of the RVMTP Shares called for redemption and redeemed on the Redemption Date. Any Deposit Securities so deposited that are unclaimed at the end of three hundred sixty-five (365) calendar days from the Redemption Date shall, to the extent permitted by law, be repaid to the Fund, after which the Holders of the RVMTP Shares so called for redemption shall look only to the Fund for payment of the Redemption Price thereof. The Fund shall be entitled to receive, from time to time after the Redemption Date, any interest on the Deposit Securities so deposited.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) On or after the Redemption Date, each Holder of RVMTP Shares in certificated form (if any) that are subject to redemption shall surrender the certificate(s) evidencing such RVMTP Shares to the Fund at the place designated in the Notice of Redemption and shall then be entitled to receive the Redemption Price for such RVMTP Shares, without interest, and, in the case of a redemption of fewer than all the RVMTP Shares represented by such certificate(s), a new certificate representing the RVMTP Shares that were not redeemed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) Notwithstanding the other provisions of this <u>Section</u> <u>2.6</u>, except as otherwise required by law, the Fund shall not redeem any RVMTP Shares or other series of Preferred Shares ranking on a parity with the RVMTP Shares with respect to dividends and other distributions unless all accumulated and unpaid dividends and other distributions on all Outstanding RVMTP Shares and shares of other series of Preferred Shares for all applicable past dividend periods (whether or not earned or declared by the Fund) (x) shall have been or are contemporaneously paid or (y) shall have been or are contemporaneously declared and Deposit Securities (in the case of the RVMTP Shares) or other sufficient securities or funds (in the case of other Preferred Shares, as applicable) (in accordance with the terms of such Preferred Shares for the payment of such dividends and other distributions) shall have been or are contemporaneously deposited with the Calculation and Paying Agent or other applicable paying agent for such Preferred Shares in accordance with the terms of such Preferred Shares, provided, however, that the foregoing shall not prevent the purchase or acquisition of Outstanding RVMTP Shares pursuant to an otherwise lawful purchase or exchange offer made on the same terms to Holders of all Outstanding RVMTP Shares and any other series of Preferred Shares for which all accumulated and unpaid dividends and other distributions have not been paid.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) To the extent that any redemption for which a Notice of Redemption has been provided is not made by reason of the absence of legally available funds therefor in accordance with the Declaration, this Statement, and applicable law, such redemption shall be made as soon as practicable to the extent such funds become available. In the case of any

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redemption pursuant to <u>Section</u> <u>2.6(c)</u>, no Redemption Default shall be deemed to have occurred if the Fund shall fail to deposit in trust with the Calculation and Paying Agent the Redemption Price with respect to any shares where (1) the Notice of Redemption relating to such redemption provided that such redemption was subject to one or more conditions precedent and (2) any such condition precedent shall not have been satisfied at the time or times and in the manner specified in such Notice of Redemption. Notwithstanding the fact that a Notice of Redemption has been provided with respect to any RVMTP Shares, dividends may be declared and paid on such RVMTP Shares in accordance with their terms if Deposit Securities for the payment of the Redemption Price of such RVMTP Shares shall not have been deposited in trust with the Calculation and Paying Agent for that purpose.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Calculation</u> <u>and Paying Agent as Trustee of Redemption Payments by Fund</u>. All Deposit Securities transferred to the Calculation and Paying Agent for payment of the Redemption Price of RVMTP Shares called for redemption shall be held in trust by the Calculation and Paying Agent for the benefit of Holders of RVMTP Shares so to be redeemed until paid to such Holders in accordance with the terms hereof or returned to the Fund in accordance with the provisions of <u>Section</u> <u>2.6(e)(iii)</u> above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Compliance With Applicable Law</u>. In effecting any redemption pursuant to this <u>Section</u> <u>2.6</u>, the Fund shall use its best efforts to comply with all applicable conditions precedent to effecting such redemption under the 1940 Act and any applicable law, but shall effect no redemption except in accordance with the 1940 Act and any applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>Modification of Redemption Procedures</u>. Notwithstanding the foregoing provisions of this <u>Section</u> <u>2.6</u>, the Fund may, in its sole discretion and without a shareholder vote, modify the procedures set forth above with respect to notification of redemption for the RVMTP Shares, provided that such modification does not materially and adversely affect the Holders of the RVMTP Shares or cause the Fund to violate any applicable law, rule or regulation; and provided further that no such modification shall in any way alter the rights or obligations of the Calculation and Paying Agent without its prior consent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.7 <u>Voting Rights</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>One Vote Per RVMTP Share</u>. Except as otherwise provided in the Declaration, this Statement, or as otherwise required by law, (i) each Holder of RVMTP Shares shall be entitled to one vote for each RVMTP Share held by such Holder on each matter submitted to a vote of all shareholders of the Fund, and (ii) the holders of outstanding Preferred Shares, including Outstanding RVMTP Shares, and Common Shares shall vote together as a single class; <u>provided</u>, <u>however</u>, that the holders of outstanding Preferred Shares, including Outstanding RVMTP Shares, shall be entitled, as a class, to the exclusion of the Holders of all other securities and Common Shares of the Fund, to elect two trustees of the Fund, it being understood that each Preferred Share, including RVMTP Shares, entitles the Holder thereof to one vote for each Preferred Share in respect to the election of each such trustee. Subject to <u>Section</u> <u>2.7(b)</u>, the Holders of outstanding Common Shares and Preferred Shares, including RVMTP Shares, voting together as a single class, shall elect the balance of the trustees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Voting For Additional Trustees</u>.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Voting Period</u>. During any period in which any one or more of the conditions described in clauses (A) or (B) of this <u>Section</u> <u>2.7(b)(i)</u> shall exist (such period being referred to herein as a "<u>Voting Period</u>"), the number of trustees constituting the Board of Trustees shall be automatically increased by the smallest number that, when added to the two trustees elected exclusively by the Holders of Preferred Shares, including RVMTP Shares, would constitute a majority of the Board of Trustees as so increased by such smallest number; and the Holders of Preferred Shares, including RVMTP Shares, shall be entitled, voting as a class on a one-vote-per-share basis (to the exclusion of the Holders of all other securities and classes of shares of beneficial interest of the Fund), to elect such smallest number of additional trustees, together with the two trustees that such Holders are in any event entitled to elect. A Voting Period shall commence:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) if, at the close of business on any dividend payment date for any outstanding Preferred Shares including any Outstanding RVMTP Shares, accumulated dividends (whether or not earned or declared) on such outstanding Preferred Shares, including the RVMTP Shares, equal to at least two (2) full years' dividends shall be due and unpaid and sufficient cash or specified securities shall not have been deposited with the Calculation and Paying Agent or other applicable paying agent for the payment of such accumulated dividends; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) if at any time Holders of Preferred Shares are otherwise entitled under the 1940 Act to elect a majority of the Board of Trustees.

A Voting Period shall terminate upon all of such conditions ceasing to exist. Upon the termination of a Voting Period, the voting rights described in this <u>Section</u> <u>2.7(b)(i)</u> shall cease, subject always, however, to the revesting of such voting rights in the Holders of Preferred Shares upon the further occurrence of any of the events described in this <u>Section</u> <u>2.7(b)(i)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>Notice of Special Meeting</u>. As soon as practicable after the accrual of any right of the Holders of Preferred Shares to elect additional trustees as described in <u>Section</u> <u>2.7(b)(i)</u>, the Fund shall call a special meeting of such Holders and notify the Calculation and Paying Agent and/or such other Person as is specified in the terms of such Preferred Shares to receive notice (i) by mailing or delivery by Electronic Means or (ii) in such other manner and by such other means as are specified in the terms of such Preferred Shares, a notice of such special meeting to such Holders, such meeting to be held not less than ten (10) nor more than thirty (30) calendar days after the date of the delivery by Electronic Means or mailing of such notice or the delivery of such notice by such other means as are described in clause (ii) above. If the Fund fails to call such a special meeting, it may be called at the expense of the Fund by any such Holder on like notice. The record date for determining the Holders of Preferred Shares entitled to notice of and to vote at such special meeting shall be the close of business on the fifth (5th) Business Day preceding the calendar day on which such notice is mailed or otherwise delivered. At any such special meeting and at each meeting of Holders of Preferred Shares held during a Voting Period at which trustees are to be elected, such Holders, voting together as a class (to the exclusion of the Holders of all other securities and classes of shares of beneficial interest of the Fund), shall be entitled to elect the number of trustees prescribed in <u>Section</u> <u>2.7(b)(i)</u> hereof on a one-vote-per-share basis.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <u>Terms of Office of Existing Trustees</u>. The terms of office of the incumbent trustees of the Fund at the time of a special meeting of Holders of Preferred Shares to

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elect additional trustees in accordance with <u>Section</u> <u>2.7(b)(i)</u> shall not be affected by the election at such meeting by the Holders of RVMTP Shares and such other Holders of Preferred Shares of the number of trustees that they are entitled to elect, and the trustees so elected by the Holders of RVMTP Shares and such other Holders of Preferred Shares, together with the two (2) trustees elected by the Holders of Preferred Shares in accordance with <u>Section</u> <u>2.7(a)</u> hereof and the remaining trustees elected by the holders of the Common Shares and Preferred Shares, shall constitute the duly elected trustees of the Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) <u>Terms of Office of Certain Trustees to Terminate Upon Termination of Voting Period</u>. Simultaneously with the termination of a Voting Period, the terms of office of the additional trustees elected by the Holders of the Preferred Shares pursuant to <u>Section</u> <u>2.7(b)(i)</u> shall terminate, the remaining trustees shall constitute the trustees of the Fund and the voting rights of the Holders of Preferred Shares to elect additional trustees pursuant to <u>Section</u> <u>2.7(b)(i)</u> shall cease, subject to the provisions of the last sentence of <u>Section</u> <u>2.7(b)(i)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Holders of RVMTP Shares to Vote on Certain Matters</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Certain Amendments Requiring Approval of RVMTP Shares</u>. Except as otherwise permitted by the terms of this Statement, so long as any RVMTP Shares are Outstanding, the Fund shall not, without the affirmative vote or consent of the Holders of at least a majority of the RVMTP Shares subject to this Statement Outstanding at the time, voting together as a separate class, amend, alter or repeal the provisions of the Declaration, or this Statement, whether by merger, consolidation or otherwise, so as to materially and adversely affect any preference, right or power of such RVMTP Shares or the Holders thereof; <u>provided</u>, <u>however</u>, that (i) a change in the capitalization of the Fund in accordance with <u>Section</u> <u>2.9</u> hereof shall not be considered to materially and adversely affect the rights and preferences of the RVMTP Shares, and (ii) a division of an RVMTP Share shall be deemed to materially and adversely affect such preferences, rights or powers only if the terms of such division materially and adversely affect the Holders of the RVMTP Shares. For purposes of the foregoing, no matter shall be deemed to materially and adversely affect any preference, right or power of an RVMTP Share of any Series or the Holder thereof unless such matter (i) alters or abolishes any preferential right of such RVMTP Share, or (ii) creates, alters or abolishes any right in respect of redemption of such RVMTP Share (other than solely as a result of a division of an RVMTP Share). So long as any RVMTP Shares are Outstanding, the Fund shall not, without the affirmative vote or consent of the Holders of at least 66 2/3% of the RVMTP Shares Outstanding at the time, voting as a separate class, file a voluntary application for relief under Federal bankruptcy law or any similar application under state law for so long as the Fund is solvent and does not foresee becoming insolvent. For the avoidance of doubt, no vote of the holders of Common Shares shall be required to amend, alter or repeal the provisions of this Statement, including any Appendix hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>1940 Act Matters</u>. Unless a higher percentage is provided for in the Declaration, the affirmative vote of the Holders of at least "a majority of the outstanding Preferred Shares," including all RVMTP Shares Outstanding at the time, voting as a separate class, shall be required (A) to approve any conversion of the Fund from a closed-end to an open-end investment company, (B) to approve any plan of reorganization (as such term is used in the 1940 Act) adversely affecting such shares, or (C) to approve any other action requiring a vote of security holders of the Fund under Section 13(a) of the 1940 Act. For purposes of the foregoing, the vote of a "majority of the outstanding Preferred Shares" means the vote at an annual or special meeting

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duly called of (i) sixty-seven percent (67%) or more of such shares present at a meeting, if the Holders of more than fifty percent (50%) of such shares are present or represented by proxy at such meeting, or (ii) more than fifty percent (50%) of such shares, whichever is less.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <u>Certain Amendments Requiring Approval of Specific Series of RVMTP Shares</u>. Except as otherwise permitted by the terms of this Statement, so long as any RVMTP Shares of a Series are Outstanding, the Fund shall not, without the affirmative vote or consent of the Holders of at least a majority of the RVMTP Shares of such Series, Outstanding at the time, voting as a separate class, amend, alter or repeal the provisions of the Appendix relating to such Series, whether by merger, consolidation or otherwise, so as to materially and adversely affect any preference, right or power set forth in such Appendix of the RVMTP Shares of such Series or the Holders thereof; <u>provided</u>, <u>however</u>, that (i) a change in the capitalization of the Fund in accordance with <u>Section</u> <u>2.9</u> hereof shall not be considered to materially and adversely affect the rights and preferences of the RVMTP Shares of such Series, and (ii) a division of an RVMTP Share shall be deemed to materially and adversely affect such preferences, rights or powers only if the terms of such division materially and adversely affect the Holders of the RVMTP Shares of such Series; and <u>provided</u>, <u>further</u>, that no amendment, alteration or repeal of the obligation of the Fund to (x) pay the Term Redemption Price on the Term Redemption Date for a Series or the Early Term Redemption Price on the Early Term Redemption Date, or (y) accumulate dividends at the Dividend Rate (as set forth in this Statement and the applicable Appendix hereto) for a Series, shall be effected without, in each case, the prior unanimous vote or consent of the Holders of such Series of RVMTP Shares. For purposes of the foregoing, no matter shall be deemed to materially and adversely affect any preference, right or power of an RVMTP Share of a Series or the Holder thereof unless such matter (i) alters or abolishes any preferential right of such RVMTP Share, or (ii) creates, alters or abolishes any right in respect of redemption of such RVMTP Share. For the avoidance of doubt, no vote of the holders of Common Shares shall be required to amend, alter or repeal the provisions of this Statement, including any Appendix hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Voting Rights Set Forth Herein Are Sole Voting Rights</u>. Unless otherwise required by law, the Declaration or this Statement, the Holders of RVMTP Shares shall not have any relative rights or preferences or other special rights with respect to voting such RVMTP Shares other than those specifically set forth in this <u>Section</u> <u>2.7</u>; <u>provided</u>, <u>however</u>, that nothing in this Statement or the Declaration shall be deemed to preclude or limit the right of the Fund (to the extent permitted by applicable law) to contractually agree with any Holder or Designated Owner of RVMTP Shares of any Series that any action or inaction by the Fund shall require the consent or approval of such Holder or Designated Owner.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>No Preemptive Rights or Cumulative Voting</u>. The Holders of RVMTP Shares shall have no preemptive rights or rights to cumulative voting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Voting for Trustees Sole Remedy for Fund's Failure to Declare or Pay Dividends</u>. In the event that the Fund fails to declare or pay any dividends on any Series of RVMTP Shares on the Dividend Payment Date therefor, the exclusive remedy of the Holders of the RVMTP Shares shall be the right to vote for trustees pursuant to the provisions of this <u>Section</u> <u>2.7</u>. Nothing in this <u>Section</u> <u>2.7(f)</u> shall be deemed to affect the obligation of the Fund to accumulate and, if permitted by applicable law, the Declaration and this Statement, pay dividends at the Increased Rate in the circumstances contemplated by <u>Section</u> <u>2.2(g)</u> hereof.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.8 <u>Rating Agencies</u>. The Fund shall use commercially reasonable efforts to cause the Rating Agencies to issue long-term credit ratings with respect to each Series of RVMTP Shares for so long as such Series is Outstanding. The Fund shall use commercially reasonable efforts to comply with any applicable Rating Agency Guidelines. If a Rating Agency shall cease to rate the securities of tax-exempt closed-end management investment companies generally, the Board of Trustees shall terminate the designation of such Rating Agency as a Rating Agency hereunder. The Board of Trustees may elect to terminate the designation of any Rating Agency as a Rating Agency hereunder with respect to a Series of RVMTP Shares so long as either (i) immediately following such termination, there would be at least one Rating Agency with respect to such Series or (ii) it replaces the terminated Rating Agency with another NRSRO (which shall be any one of (a) Fitch, Moody's or S&P or (b) another NRSRO subject to prior written consent of the Majority Holders, if any, as to such other NRSRO) and provides notice thereof to the Holders of such Series; <u>provided</u> that such replacement shall not occur unless such replacement Other Rating Agency shall have at the time of such replacement (x) published a rating for the RVMTP Shares of such Series and (y) entered into an agreement with the Fund to continue to publish such rating subject to the Rating Agency's customary conditions. The Board of Trustees may also elect to designate one or more other NRSROs as Other Rating Agencies hereunder with respect to a Series of RVMTP Shares by notice to the Holders of the RVMTP Shares. The Rating Agency Guidelines of any Rating Agency may be amended by such Rating Agency without the vote, consent or approval of the Fund, the Board of Trustees or any Holder of Preferred Shares, including any RVMTP Shares, or Common Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.9 <u>Issuance of Additional Preferred Shares</u>. So long as any RVMTP Shares are Outstanding, the Fund may, without the vote or consent of the Holders thereof, authorize, establish and create and issue and sell shares of one or more series of Preferred Shares ranking on a parity with RVMTP Shares as to the payment of dividends and the distribution of assets upon dissolution, liquidation or the winding up of the affairs of the Fund, in addition to then Outstanding Series of RVMTP Shares, including additional Series of RVMTP Shares, and authorize, issue and sell additional shares of any such Series of Preferred Shares then outstanding or so established or created including additional Series of RVMTP Shares, in each case in accordance with applicable law, provided that the Fund shall, immediately after giving effect to the issuance of such Preferred Shares and to its receipt and application of the proceeds thereof, including to the redemption of Preferred Shares with such proceeds, have 1940 Act Asset Coverage of at least 225% (calculated

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in the same manner as is contemplated by <u>Section</u> <u>2.4(b)</u>) and an Effective Leverage Ratio not exceeding 45.0% (calculated in the same manner as is contemplated by <u>Section</u> <u>2.4(c)</u>).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.10 <u>Status of Redeemed or Repurchased RVMTP Shares</u>. RVMTP Shares that at any time have been redeemed, exchanged or purchased by the Fund shall, after such redemption or purchase, have the status of authorized but unissued Preferred Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.11 <u>Distributions with respect to Taxable Allocations</u>. Whenever a Taxable Allocation is to be made by the Fund with respect to the RVMTP Shares of a Series with respect to any Dividend Period and neither the Increased Rate nor the Maximum Rate is in effect during such Dividend Period, clause (a), clause (b) or clause (c) of this <u>Section</u> <u>2.11</u>, as applicable, shall govern:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Fund may provide notice to the Calculation and Paying Agent prior to the commencement of any Dividend Period for a Series of RVMTP Shares of the amount of the Taxable Allocation that will be made in respect of shares of such Series for such Dividend Period (a "<u>Notice of Taxable Allocation</u>"). Such Notice of Taxable Allocation will state the amount of the dividends payable in respect of each RVMTP Share of the applicable Series for such Dividend Period that will be a Taxable Allocation and the Fund shall cause the Calculation and Paying Agent to provide the adjustment to the Dividend Rate for each Rate Period (or portion thereof) included in such Dividend Period that will be required in order for the Fund to pay the Additional Amount Payment, or Additional California Amount Payment, as applicable, in respect of the Taxable Allocation made in respect of such RVMTP Shares for such Dividend Period. In lieu of adjusting the Dividend Rate, the Fund may make, in addition to and in conjunction with the payment of regular dividends for such Dividend Period, a supplemental distribution in respect of each share of such series for such Dividend Period equal to the Additional Amount Payment or Additional California Amount Payment, as applicable, payable in respect of the Taxable Allocation made in respect of such share for such Dividend Period. The Fund will use commercially reasonable efforts to make Taxable Allocations in respect of RVMTP Shares of each Series as provided in this <u>Section</u> <u>2.11(a)</u>, and shall make Taxable Allocations as described in <u>Section</u> <u>2.11(b)</u> and/or <u>Section</u> <u>2.11(c)</u> only if such commercially reasonable efforts do not reasonably permit the Fund to make a Taxable Allocation as contemplated by this <u>Section</u> <u>2.11(a)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If the Fund does not provide a Notice of Taxable Allocation as provided in <u>Section</u> <u>2.11(a)</u> with respect to a Taxable Allocation that is made in respect of RVMTP Shares of a Series, the Fund may make one or more supplemental distributions on shares of such Series equal to the Additional Amount Payment or Additional California Amount Payment, as applicable, to be paid to a Holder, or California Holder, as applicable, in respect of such Taxable Allocation. Any such supplemental distribution in respect of RVMTP Shares of a Series may be declared and paid on any date, without reference to any regular Dividend Payment Date, to the Holders, or California Holder, as applicable, of shares of such Series as their names appear on the registration books of the Fund on such date, not exceeding fifteen (15) calendar days preceding the payment date of such supplemental distribution, as may be fixed by the Board of Trustees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If in connection with a redemption of RVMTP Shares, the Fund makes a Taxable Allocation without having either given advance notice thereof pursuant to <u>Section</u> <u>2.11(a)</u> or made one or more supplemental distributions pursuant to <u>Section</u> <u>2.11(b)</u>, the Fund shall direct the Calculation and Paying Agent to send either (but not both) an Additional Amount Payment or Additional California Amount Payment, as applicable, in respect of such Taxable Allocation to

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each Holder and each California Holder, as applicable, of such shares at such Person's address as the same appears or last appeared on the record books of the Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Fund shall not be required to make an Additional Amount Payment or Additional California Amount Payment, as applicable, with respect to RVMTP Shares of any Series (i) with respect to any net capital gain or other taxable income determined by the Internal Revenue Service or any California taxing authority to be allocable in a manner different from the manner used by the Fund, or (ii) with respect to Taxable Allocations made after the latest of (A) nine months after the end of the fiscal year of the Fund to which such Taxable Allocation relates, (B) the date on which the audited financials are issued with respect to the fiscal year of the Fund to which such Taxable Allocation relates, or (C) the date on which final tax statements are filed with respect to the fiscal year of the Fund to which such Taxable Allocation relates. The Fund will promptly give notice to the Calculation and Paying Agent if the Fund receives notice of any such determination, with instructions to forward such notice to each Holder of affected RVMTP Shares during the affected periods at such Holder's address as the same appears or last appeared on the record books of the Fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) With respect to each Holder and each California Holder, the Fund shall only be required, pursuant to this Section 2.11 to pay either an Additional Amount Payment or an Additional California Amount Payment, but not both.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.12 <u>Term Redemption Liquidity Account and Liquidity Requirement</u> <u>for Term Redemption or Early Term Redemption</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) On or prior to the then current Liquidity Account Initial Date with respect to any Series of RVMTP Shares, the Fund shall segregate, by means of appropriate identification on its books and records or otherwise in accordance with the Fund's normal procedures, from the other assets of the Fund (the "<u>Term Redemption Liquidity Account</u>") Liquidity Account Investments with a Market Value equal to at least one hundred ten percent (110%) of the Term Redemption Amount with respect to such Series. The "<u>Term Redemption Amount</u>" for any Series of RVMTP Shares shall be equal to the Redemption Price to be paid on the Term Redemption Date (or, if applicable, the Early Term Redemption Price to be paid on the Early Term Redemption Date) for such Series, based on the number of shares of such Series then Outstanding, assuming for this purpose that the Dividend Rate for such Series in effect at the time of the creation of the Term Redemption Liquidity Account for such Series will be the Dividend Rate in effect for such Series until the Term Redemption Date (or, if applicable, the Early Term Redemption Date) for such Series. Notwithstanding the foregoing, if all RVMTP Shares in such Series have been affirmatively retained pursuant to Section 2.5(a)(iv) and/or remarketed pursuant to Section 2.5(b) before the Early Term Redemption Date, the requirement of the Fund to maintain the Term Redemption Amount as contemplated by this Section 2.12(a) shall lapse and be of no further force and effect with respect to such Early Term Redemption Date. If, on any date after the then current Liquidity Account Initial Date, the aggregate Market Value of the Liquidity Account Investments included in the Term Redemption Liquidity Account for a Series of RVMTP Shares as of the close of business on any Business Day is less than one hundred ten percent (110%) of the Term Redemption Amount with respect to such Series, then the Fund shall take all such necessary actions, including segregating additional assets of the Fund as Liquidity Account Investments, so that the aggregate Market Value of the Liquidity Account Investments included in the Term Redemption Liquidity Account for such Series is at least equal to one hundred ten percent (110%)

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of the Term Redemption Amount with respect to such Series not later than the close of business on the next succeeding Business Day. With respect to assets of the Fund segregated as Liquidity Account Investments with respect to a Series of RVMTP Shares, the Adviser, on behalf of the Fund, shall be entitled on any date to release any Liquidity Account Investments from such segregation and to substitute therefor other Liquidity Account Investments, so long as (i) the assets of the Fund segregated as Liquidity Account Investments at the close of business on such date have a Market Value equal to at least one hundred ten percent (110%) of the Term Redemption Amount with respect to such Series and (ii) the assets of the Fund designated and segregated as Deposit Securities at the close of business on such date have a Market Value equal to at least the Liquidity Requirement (if any) determined in accordance with <u>Section</u> <u>2.12(b)</u> below with respect to such Series for such date. The Fund shall not permit any lien, security interest or encumbrance to be created or permitted to exist on or in respect of any Liquidity Account Investments included in the Term Redemption Liquidity Account for any Series of RVMTP Shares, other than liens, security interests or encumbrances arising by operation of law and any lien of the Custodian with respect to the payment of its fees or repayment for its advances.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Market Value of the Deposit Securities held in the Term Redemption Liquidity Account for a Series of RVMTP Shares, from and after the 15th day of the calendar month (or if such day is not a Business Day, the next succeeding Business Day) that is the number of months preceding the calendar month in which the Term Redemption Date (or, if applicable, the Early Term Redemption Date) for such Series occurs, in each such case as specified in the table set forth below, shall not be less than the percentage of the Term Redemption Amount for such Series set forth below opposite such number of months (the "<u>Liquidity Requirement</u>"), but in all cases subject to the provisions of <u>Section</u> <u>2.12(c)</u> below:

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| | |
|:---|:---|
| Number of Months Preceding Month<br> of Term Redemption Date (or Early<br> Term Redemption Date, as<br> applicable): | Market Value of Deposit Securities as<br> Percentage of Term<br> Redemption Amount |
| 5 | 20% |
| 4 | 40% |
| 3 | 60% |
| 2 | 80% |
| 1 | 100% |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If the aggregate Market Value of the Deposit Securities included in the Term Redemption Liquidity Account for a Series of RVMTP Shares as of the close of business on any Business Day is less than the Liquidity Requirement in respect of such Series for such Business Day, then the Fund shall cause the segregation of additional or substitute Deposit Securities in respect of the Term Redemption Liquidity Account for such Series, so that the aggregate Market Value of the Deposit Securities included in the Term Redemption Liquidity Account for such Series is at least equal to the Liquidity Requirement for such Series not later than the close of business on the next succeeding Business Day.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Deposit Securities included in the Term Redemption Liquidity Account for a Series of RVMTP Shares may be applied by the Fund, in its discretion, towards payment of the Term Redemption Price (or, the Early Term Redemption Price, as applicable) for such Series as contemplated by Section 2.6(e). Upon the deposit by the Fund with the Calculation and Paying Agent of Deposit Securities having an initial combined Market Value sufficient to effect the redemption of the RVMTP Shares of a Series on the Term Redemption Date (or, the Early Term Redemption Date, as applicable) for such Series in accordance with <u>Section</u> <u>2.6(e)(ii)</u>, the requirement of the Fund to maintain the Term Redemption Liquidity Account as contemplated by this <u>Section</u> <u>2.12</u> shall lapse and be of no further force and effect. Upon any extension of the Term Redemption Date (or, the Early Term Redemption Date, as applicable) for a Series of RVMTP Shares pursuant to <u>Section</u> <u>2.6(a)</u>, the then-current Liquidity Account Initial Date for such Series shall be extended as provided in the Appendix relating to such Series, and the requirement of the Fund to maintain the Term Redemption Liquidity Account with respect to such Series in connection with such Liquidity Account Initial Date shall lapse and shall thereafter apply in respect of the Liquidity Account Initial Date for such Series as so extended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.13 <u>Global Certificate</u>. All RVMTP Shares of any Series Outstanding from time to time shall be represented by one or more global certificates for such Series registered in the name of the Securities Depository or its nominee and no registration of transfer of shares of such Series of RVMTP Shares shall be made on the books of the Fund to any Person other than the Securities Depository or its nominee or transferee. The foregoing restriction on registration of transfer shall be conspicuously noted on the face or back of the global certificates. Such global certificates will be deposited with, or on behalf of, The Depository Trust Company and registered in the name of Cede & Co., its nominee. Beneficial interests in the global certificates will be held only through The Depository Trust Company and any of its participants.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.14 <u>Notice</u>. All notices or communications hereunder, unless otherwise specified in this Statement, shall be sufficiently given if in writing and delivered in person, by telecopier, by Electronic Means or by overnight delivery. Notices delivered pursuant to this <u>Section</u> <u>2.14</u> shall be deemed given on the date received.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.15 <u>Termination</u>. In the event that no RVMTP Shares of a Series are Outstanding subject to this Statement, all rights and preferences of the RVMTP Shares of such Series established and designated hereunder shall cease and terminate, and all obligations of the Fund under this Statement with respect to such Series shall terminate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.16 <u>Appendices</u>. The designation of each Series of RVMTP Shares subject to this Statement shall be set forth in an Appendix to this Statement. The Board of Trustees may, by resolution duly adopted, without shareholder approval (except as otherwise provided by this Statement or required by applicable law) (1) amend the Appendix to this Statement relating to a Series so as to reflect any amendments to the terms applicable to such Series including an increase in the number of authorized shares of such Series and (2) add additional Series of RVMTP Shares by including a new Appendix to this Statement relating to such Series.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.17 <u>Actions on Other than Business Days</u>. Unless otherwise provided herein, if the date for making any payment, performing any act or exercising any right, in each case as provided for in this Statement, is not a Business Day, such payment shall be made, act performed or right exercised on the next succeeding Business Day, with the same force and effect as if made or done

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on the nominal date provided therefor, and, with respect to any payment so made, no dividends, interest or other amount shall accrue for the period between such nominal date and the date of payment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.18 <u>Modification</u>. To the extent permitted by <u>Section</u> <u>2.7(c)</u> and any applicable Purchase Agreement, the Board of Trustees, without the vote of the Holders of RVMTP Shares or any other outstanding shares issued by the Fund, may interpret, supplement or amend the provisions of this Statement or any Appendix hereto to supply any omission, resolve any inconsistency or ambiguity or to cure, correct or supplement any defective or inconsistent provision, including any provision that becomes defective after the date hereof because of impossibility of performance or any provision that is inconsistent with any provision of any other Preferred Shares of the Fund and, in addition to the amendments permitted by <u>Sections 2.6(h)</u> and <u>2.7(c)</u> hereof, may amend this Statement with respect to any Series of RVMTP Shares prior to the issuance of RVMTP Shares of such Series.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.19 <u>Transfers</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) A Designated Owner or Holder of any RVMTP Shares of any Series may sell, transfer or otherwise dispose of RVMTP Shares only in whole shares and only to Persons that are (1)(i) "qualified institutional buyers" (as defined in Rule 144A under the Securities Act or any successor provision) in accordance with Rule 144A under the Securities Act or any successor provision that are registered closed-end management investment companies, the shares of which are traded on a national securities exchange ("Closed-End Funds"), banks or entities that are 100% direct or indirect subsidiaries of banks' publicly traded parent holding companies (collectively, "Banks"), companies that are included in the S&P 500 Index (and their direct or indirect wholly owned subsidiaries), insurance companies or registered open-end management investment companies, (ii) tender option bond trusts (or similar vehicles or arrangements used for providing financing for municipal obligations and municipal closed-end fund preferred shares) in which all investors are "qualified institutional buyers" (as defined in Rule 144A under the Securities Act or any successor provision) that are Closed-End Funds, Banks, companies that are included in the S&P 500 Index (and their direct or indirect wholly owned subsidiaries), insurance companies, or registered open-end management investment companies, in each case with respect to clauses (i) and (ii), in accordance with Rule 144A under the Securities Act or pursuant to another available exemption from registration under the Securities Act, in a manner not involving a public offering within the meaning of Section 4(a)(2) of the Securities Act, or (iii) other investors with the prior written consent of the Fund, which consent shall not be unreasonably withheld, and (2) unless the prior written consent of the Fund is obtained, not PIMCO Persons, if such PIMCO Persons would, after such sale and transfer, own more than 20% of the Outstanding RVMTP Shares. Any transfer in violation of the foregoing restrictions shall be void *ab initio*. The restrictions on transfer contained in this <u>Section</u> <u>2.19(a)</u> shall not apply to any RVMTP Shares that are being registered and sold pursuant to an effective registration statement under the Securities Act or to any subsequent transfer of such RVMTP Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If at any time the Fund is not furnishing information pursuant to Section 13 or 15(d) of the Exchange Act, in order to preserve the exemption for resales and transfers under Rule 144A, the Fund shall furnish, or cause to be furnished, to holders of RVMTP Shares and prospective purchasers of RVMTP Shares, upon request, information with respect to the Fund satisfying the requirements of subsection (d)(4) of Rule 144A.

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<u>No Additional Rights</u>. Unless otherwise required by law or the Declaration, the Holders of RVMTP Shares shall not have any relative rights or preferences or other special rights with respect to such RVMTP Shares other than those specifically set forth in this Statement; <u>provided</u>, <u>however</u>, that nothing in this Statement shall be deemed to preclude or limit the right of the Fund (to the extent permitted by applicable law) to contractually agree with any Holder or Designated Owner of RVMTP Shares of any Series with regard to any special rights of such Holder or Designated Owner with respect to its investment in the Fund.

[Signature Page Begins on the Following Page]

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**IN WITNESS WHEREOF**, PIMCO CALIFORNIA FLEXIBLE MUNICIPAL INCOME FUND has caused this Statement to be signed on January 12, 2024 in its name and on its behalf by a duly authorized officer. The Declaration is on file with the Secretary of the Commonwealth of Massachusetts, and the said officer of the Fund has executed this Statement as an officer and not individually, and the obligations and rights of the Fund set forth in this Statement are not binding upon any such officer, or the trustees of the Fund or shareholders of the Fund, individually, but are binding only upon the assets and property of the Fund.

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| | |
|:---|:---|
| **PIMCO CALIFORNIA FLEXIBLE MUNICIPAL INCOME FUND** | **PIMCO CALIFORNIA FLEXIBLE MUNICIPAL INCOME FUND** |
| By: | <u>/s/ Joshua D. Ratner</u> |
| Name: | Joshua D. Ratner |
| Title: | President |

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**APPENDIX A** 

**PIMCO CALIFORNIA FLEXIBLE MUNICIPAL INCOME FUND** 

**REMARKETABLE VARIABLE RATE MUNIFUND TERM PREFERRED SHARES,** 

**SERIES 2054** 

<u>Preliminary Statement and Incorporation By Reference</u> 

This Appendix establishes a Series of Remarketable Variable Rate MuniFund Term Preferred Shares of PIMCO CALIFORNIA FLEXIBLE MUNICIPAL INCOME FUND. Except as set forth below, this Appendix incorporates by reference the terms set forth with respect to all Series of such Remarketable Variable Rate MuniFund Term Preferred Shares in that "Statement Establishing and Fixing the Rights and Preferences of Remarketable Variable Rate MuniFund Term Preferred Shares" effective as of January 12, 2024 (the "<u>RVMTP Statement</u>"). This Appendix has been adopted by resolution of the Board of Trustees of PIMCO CALIFORNIA FLEXIBLE MUNICIPAL INCOME FUND and is effective as of January 12, 2024. Capitalized terms used herein but not defined herein have the respective meanings therefor set forth in the RVMTP Statement.

Section 1. <u>Designation as to Series</u>.

Remarketable Variable Rate MuniFund Term Preferred Shares, Series 2054: A series of 250 Preferred Shares classified as Remarketable Variable Rate MuniFund Term Preferred Shares is hereby designated as the "Remarketable Variable Rate MuniFund Term Preferred Shares, Series 2054" (the "<u>Series</u> <u>2054</u><u> </u><u>RVMTP Shares</u>"). Each share of such Series shall have such preferences, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption, in addition to those required by applicable law and those that are expressly set forth in the Declaration, the Bylaws and the RVMTP Statement (except as the RVMTP Statement may be expressly modified by this Appendix), as are set forth in this <u>Appendix A</u>. The Series 2054 RVMTP Shares shall constitute a separate series of Preferred Shares and of the Remarketable Variable Rate MuniFund Term Preferred Shares and each Series 2054 RVMTP Share shall be identical. The following terms and conditions shall apply solely to the Series 2054 RVMTP Shares:

Section 2. <u>Number of Authorized Shares of Series</u>.

The number of authorized shares is 250.

Section 3. <u>Date of Original Issue with respect to Series</u>.

The Date of Original Issue is January 12, 2024.

Section 4. <u>Liquidation Preference Applicable to Series</u>.

The Liquidation Preference is $100,000.00 per share.

Section 5. <u>Term Redemption Date and Early Term Redemption Date Applicable to Series</u>.

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The Term Redemption Date is January 12, 2054, subject to extension pursuant to Section 2.6(a)(ii) of the RVMTP Statement.

An "Early Term Redemption Date" means (i) every forty-two (42) month anniversary of the Date of Original Issue except for the Term Redemption Date (for the avoidance of doubt, such date to occur once every forty-two (42) months) and (ii) each Mandatory Tender Date as described in Section 2.5(a)(iii)(C); provided that an Early Term Redemption Date shall be deemed not to have occurred with respect to any RVMTP Shares for which an election to retain is made pursuant to Section 2.5(a)(iv) of the RVMTP Statement relating to such Mandatory Tender Event.

Section 6. <u>Dividend Payment Dates Applicable to Series</u>.

The Dividend Payment Dates are the first Business Day of the month next following each Dividend Period, subject to the definition of "Dividend Period" set forth in <u>Section</u> <u>9</u> below, as applicable.

Section 7. <u>Liquidity Account Initial Date Applicable to Series</u>.

The "Liquidity Account Initial Date" is (i) with respect to the Term Redemption Date, the date that is six (6) months prior to the Term Redemption Date or, if applicable, the date that is six (6) months prior to the then current Term Redemption Date as extended pursuant to Section 2.6(a)(ii) of the RVMTP Statement or, if such date is not a Business Day, the next succeeding Business Day and (ii) with respect to the Early Term Redemption Date, the date that is six (6) months prior to the Early Term Redemption Date or, if such date is not a Business Day, the next succeeding Business Day.

Section 8. <u>Exceptions to Certain Definitions Applicable to the Series</u>.

The following definitions contained under the heading "Definitions" in the RVMTP Statement are hereby amended as follows:

Not applicable.

Section 9. <u>Additional Definitions Applicable to the Series</u>.

The following terms shall have the following meanings (with terms defined in the singular having comparable meanings when used in the plural and vice versa), unless the context otherwise requires:

"<u>Dividend Period</u>" means, with respect to the Series 2054 RVMTP Shares, in the case of the first Dividend Period, the period beginning on the Date of Original Issue for such Series and ending on and including January 31, 2024 and for each subsequent Dividend Period, the period beginning on and including the first calendar day of the month following the month in which the previous Dividend Period ended and ending on and including the last calendar day of such month; <u>provided</u>, <u>however</u>, in connection with any voluntary exchange by the Holders thereof of Series 2054 RVMTP Shares for any new series of Remarketable Variable Rate MuniFund Term Preferred Shares or any other securities of the Fund, the Board of Trustees may declare that a Dividend Period shall begin on and include the first calendar day of the month in which such exchange will

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occur and shall end on but not include the date of such exchange, and in such case, the Dividend Payment Date for such dividend shall be the date of such exchange and provided further that, in connection with any reorganization or merger involving the Fund, the Board of Trustees may establish a Dividend Period of less than a month, in which case the Dividend Payment Date for such dividend shall be the first Business Day following the end of such Dividend Period.

"<u>Increased Rate</u>" means, with respect to any Increased Rate Period for the Series 2054 RVMTP Shares, the Index Rate for such Increased Rate Period plus 2.00% plus the Applicable Spread.

"<u>Index Rate</u>" means, with respect to any Rate Period for the Series 2054 RVMTP Shares, (i) the SIFMA Municipal Swap Index made available by approximately 4:00 p.m., New York City time, as determined on the Rate Determination Date relating to such Rate Period or (ii) except as otherwise provided in the definition of "SIFMA Municipal Swap Index" if such index is not made available by 5:00 p.m., New York City time, on such date, the SIFMA Municipal Swap Index as determined on the previous Rate Determination Date; <u>provided</u>, <u>however</u>, if the SIFMA Municipal Swap Index is less than zero (0), the SIFMA Municipal Swap Index will be deemed to be zero (0) for purposes of the determination of "Index Rate."

"<u>Lock-Out Date</u>" means the first anniversary of the Closing Date.

"<u>Optional Redemption Premium</u>" means with respect to each Series 2054 RVMTP Share to be redeemed an amount equal to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) if the Optional Redemption Date for such Series 2054 RVMTP Share occurs prior to the Lock-Out Date, the product of (i) the Applicable Spread for such RVMTP Share in effect on such Optional Redemption Date and (ii) the Liquidation Preference of such RVMTP Share and (iii) a fraction, the numerator of which is the number of calendar days from and including the date of redemption to and excluding the Lock-Out Date and the denominator of which is the actual number of calendar days from and including January 12, 2024 to and excluding the Lock-Out Date; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) if either (i) the Optional Redemption Date for such Series 2054 RVMTP Share either occurs on or after the Lock-Out Date or (ii) the Fund notifies the Purchaser that the Optional Redemption Date has been called in connection with a redemption of Common Shares as described in Section 6.20 of the Purchase Agreement, then, zero.

"<u>Rate Period Termination Date</u>" means the date that is six (6) months prior to the then current Early Term Redemption Date.

"<u>Spread Adjustment</u>" means, (i) for the period from the Closing Date to and including the Rate Period Termination Date, 0% and (ii) for the period after the Rate Period Termination Date, 2.00%.

Section 10. <u>Amendments to Terms of RVMTP Shares Applicable to the Series</u>.

The following provisions contained under the heading "Terms of the RVMTP Shares" in the RVMTP Statement are hereby amended as follows:

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Not applicable.

[Signature page follows.]

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**IN WITNESS WHEREOF**, PIMCO CALIFORNIA FLEXIBLE MUNICIPAL INCOME FUND has caused this Appendix to be signed on January 12, 2024 in its name and on its behalf by a duly authorized officer. The Declaration is on file with the Secretary of the Commonwealth of Massachusetts, and the said officer of the Fund has executed this Appendix as an officer and not individually, and the obligations and rights of the Fund set forth in this Appendix are not binding upon any such officer, or the trustees of the Fund or shareholders of the Fund, individually, but are binding only upon the assets and property of the Fund.

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|:---|:---|
| **PIMCO CALIFORNIA FLEXIBLE MUNICIPAL INCOME FUND** | **PIMCO CALIFORNIA FLEXIBLE MUNICIPAL INCOME FUND** |
| By: | <u>/s/ Joshua D. Ratner</u> |
|  | Name: Joshua D. Ratner |
|  | Title: President |

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## Ex-99.(H)(3)

**PIMCO Alternative Interval Funds** 

**Selected Dealer Agreement** 

Selected Dealer Agreement ("Agreement") between PIMCO Investments LLC ("Distributor") and ("Dealer") dated as of<u> </u>, 20 . CRD#<u> </u>

WHEREAS, each closed-end "interval" investment company set forth in ***Exhibit A*** (each referred to as a "Fund") has appointed Distributor as exclusive agent to sell and distribute each class of shares of the Fund, which are distributed by Distributor and sold by the Fund at their offering prices as set forth in the Fund's prospectus and statement of additional information and as provided in Distributor's Distribution Contract with respect to such Fund; and

WHEREAS, each Fund is operated in accordance with Rule 23c-3 under the Investment Company Act of 1940, as amended (the "1940 Act"); and

WHEREAS, each Fund may offer Shares (as defined below) in multiple classes in accordance with Rule 18f-3 under the 1940 Act; and

WHEREAS, Distributor serves as principal underwriter for the Fund; and

WHEREAS, Distributor and Dealer desire that Dealer participate as a selected dealer in the distribution of Shares of the Fund for which Distributor now or hereinafter serves as principal underwriter, subject to the terms and conditions of this Agreement;

NOW, THEREFORE, Distributor and Dealer hereby agree to the following terms and conditions:

1. <u>Shares.</u> Each Fund offers such classes of shares as set forth in the applicable then current Prospectuses (as defined below) and ***Exhibit A*** (the "Shares").

2. <u>Sales.</u>

(a) Dealer will offer and sell the Shares only at the public offering prices which shall be currently in effect, in accordance with the terms of the applicable then current prospectus and statement of additional information ("SAI") of the Fund (together, the "Prospectuses"). Dealer agrees to act only as principal in such transactions and shall not have authority to act as an agent, broker or employee with respect to the Fund, Distributor or any other dealer in any respect; except that, notwithstanding the foregoing, Dealer is hereby appointed and hereby accepts appointment as a limited agent of the Funds for the sole purpose of receiving orders for the purchase, repurchase or exchange of Shares ("Orders") on behalf of the Funds, either directly from customers of Dealer or through Indirect Intermediaries (as defined in Section 23(ii) hereof) and other intermediaries (including third party administrators) that Dealer appoints as sub-agents for the same limited purpose. Dealer shall be solely responsible for and liable to the Funds or Distributor as a result of any Indirect Intermediary's performance or lack of performance in connection with Dealer's or any Indirect Intermediary's receipt of Orders. The minimum dollar purchase of shares of the Fund by any investor shall be the applicable minimum amount described in the applicable then current Prospectuses, subject to any such waivers as may be described in the Prospectuses. All Orders are subject to acceptance by Distributor on behalf of the Fund and become effective only upon confirmation by Distributor on behalf of the Fund; the Fund and Distributor reserve the right to reject any purchase or exchange Order for any reason or for no reason at all.

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(b) It is expected that each Fund will offer its Shares in a continuous offering at net asset value. The parties acknowledge and agree, however, that there is no assurance that a Fund will engage in a continuous offering of its Shares and may determine not to do so in its sole discretion.

(c) In connection with Dealer's recommendations to its customers regarding investment in a Fund, Dealer agrees to make appropriate disclosures to such customers regarding sales charges and commissions outlined in "Sales Charges & Commissions" below and the risks associated with investing in the Fund, including but not limited to: (i) no secondary market is expected to develop for the Fund's shares; (ii) there is no guarantee that an investor will be able to sell all the shares that the investor desires to sell in the Repurchase Offers (as defined below); (iii) an investor should consider an investment in the Fund to be of limited liquidity; (iv) investing in the Fund's shares may be speculative and involves a high degree of risk; and (v) an investor should carefully read the applicable Prospectuses prior to investing in the Fund, including the risks associated with leverage.

3. <u>Sales Charges</u> <u>& Commissions.</u>

(a) The sales charge applicable to any sale of Shares by Dealer and the dealer discount (commission) applicable to any other Order from Dealer for the purchase of such Shares accepted by Distributor shall be that percentage of the applicable public offering price as set forth in the Prospectuses, subject to the rules of the Financial Industry Regulatory Authority ("FINRA") and applicable law. For Shares for which a Fund does not impose a sales charge or commission, Dealer may impose commissions or other fees ("Dealer<u>-Imposed Commissions</u>") that it may charge in its discretion in accordance with applicable law and regulations and applicable guidance issued by the SEC and FINRA. Dealer acknowledges that Dealer shall be solely responsible for the amount and collection of all Dealer-Imposed Commissions, and Dealer will also be responsible for communicating all necessary information to its customers regarding Dealer-Imposed Commissions.

(b) With respect to any class of Shares sold by Dealer, Dealer will be paid by Distributor a servicing fee equal to an annual percentage of the average daily net asset value of such Shares which are held in accounts by such Dealer on behalf of its customers, as set forth in the Prospectuses.

(c) The rates of any sales charge, dealer discount (commission), or servicing fee paid with respect to any Fund's Shares, including outstanding Shares, are subject to change by Distributor, and sales charges and dealer discounts (commissions) to selected Dealers may be subject to reductions under a variety of circumstances. To obtain any such reductions, Distributor must be notified when the sale(s) takes place which would qualify for the reduced charge and the basis on which the reduction is applicable.

4. <u>EWC.</u> Distributor shall be entitled to any early withdrawal charge ("EWC") on any Shares sold. If any Shares sold by Dealer under the terms of this Agreement are repurchased by the Fund (including without limitation repurchases resulting from an exchange for shares of another fund) or a repurchase request is submitted to the Fund within seven days on which the applicable Fund is open for business (a "Business Day") after the date of the transaction, Dealer shall promptly repay Distributor the full amount of the commission (including any supplemental commission/upfront fees) allowed to Dealer on the original sale. Termination, amendment, or cancellation of this Agreement shall not relieve Dealer from the requirements of this Section 4. If any EWC is waived for certain partial or complete repurchases as described in the applicable Prospectuses, then in any such case Dealer shall remit to Distributor promptly upon notice an amount equal to the commission or distribution fee paid by Distributor to Dealer on such Shares when initially sold less an adjustment equal to the payments received by Distributor on such Shares pursuant to the Distribution and

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Servicing Plans which are defined and described in Section 12 hereof.

5. <u>Authorization.</u> As a selected dealer, Dealer is hereby authorized: (i) to place Orders through Distributor with a Fund or its agent for its Shares to be sold by the Fund to Dealer subject to the applicable terms and conditions governing the placement and acceptance of Orders and subject to the applicable compensation provisions and other terms set forth in the Distribution Contract between the Fund and Distributor and in the applicable then current Prospectuses, and (ii) to tender Shares directly to the Fund or its agent for repurchase subject to the applicable terms and conditions set forth in said Distribution Contract and Prospectuses.

6. <u>Special Provisions Relating to Repurchase Offers.</u> Dealer acknowledges that each Fund has adopted, or will adopt, fundamental policies (which may not be changed without shareholder approval) to make periodic offers to purchase between 5% and 25% of its Shares ("Repurchase Offers") in accordance with Rule 23c-3 under the 1940 Act and as described in the applicable Prospectuses. Repurchase of Shares of a Fund will be made at the net asset value of such Shares in accordance with the applicable Repurchase Offer and Prospectuses, less any applicable EWC and any applicable repurchase fee permitted by Rule 23c-3. Dealer agrees to promptly transmit to its customers any Repurchase Offer notification received from Distributor and, in any event, within the time period by which shareholders must receive such notification, as specified in the applicable Prospectuses and in such notification, and to use its reasonable best efforts to transmit repurchase requests from its customers to the Fund or its transfer agent or other designee by the applicable repurchase request deadline as specified in the applicable Prospectuses and such notification. Dealer expressly acknowledges and agrees that Shares of a Fund will not be repurchased by either the respective Fund (other than through Repurchase Offers, or other tender offers from time to time, if any) or Distributor, and that no secondary market for the Shares of any Fund exists currently or is expected to develop, and therefore that the Shares have very limited liquidity and are appropriate only as a long-term investment. Dealer also expressly acknowledges and agrees that, in the event one or more of its customers cancel their Order for Shares of a Fund after confirmation, such Shares may not be repurchased, remarketed or otherwise disposed of by or through Distributor. Any representation as to a Repurchase Offer or other tender offer by a Fund, other than that which is set forth in the Fund's applicable Prospectuses or a Repurchase Offer notice or tender offer materials, as applicable, issued by the Fund, is expressly prohibited.

7. <u>Timing of Transactions; Compliance Matters.</u>

(a) Dealer agrees to comply with provisions of the Prospectuses and with all applicable laws. Among other things, (i) Dealer shall be responsible for reasonably assuring that only Orders to purchase or exchange Shares received by Dealer or any Indirect Intermediary prior to the Valuation Time (as defined in this Section 7) shall be submitted directly or indirectly by Dealer to the Fund or its transfer agent or other applicable agent for receipt of a price based on the net asset value per Share calculated for that day in accordance with the Prospectus; (ii) Dealer shall be responsible for reasonably assuring that only Orders to repurchase Shares received by Dealer or any Indirect Intermediary prior to the repurchase request deadline shall be submitted directly or indirectly by Dealer to the Fund or its transfer agent or other applicable agent in order to repurchase Shares in the applicable Repurchase Offer; and (iii) Dealer shall cause to be imposed and/or waived applicable repurchase fees only in accordance with the Fund's then current Prospectuses and/or as instructed by Distributor. For purposes of this Agreement, the term "Valuation Time" refers to the time as of which the Shares are valued on each Business Day, currently the close of regular trading on the New York Stock Exchange (normally, 4:00 p.m., Eastern Time) on each day that the New York Stock Exchange is open for business.

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(b) With respect to a purchase or exchange Order received in "good order" (as defined below) by Dealer or Indirect Intermediary on a Business Day, and subject to Section 7(c) below, Dealer must make a best effort to transmit the Order to Distributor or the Funds' transfer agent so that it is received by 9:00 a.m. Eastern time on the next Business Day in order to receive the price per Share determined by the Fund as of the Valuation Time on the Business Day of receipt by Dealer or the Indirect Intermediary (collectively, "Price Protection"); provided, however, that the foregoing Price Protection shall not apply to Orders for Dealer's customers that are record owners of Shares and whose accounts at the Funds' transfer agent are not Level 3 networked accounts and therefor will be time and date stamped upon receipt by the Funds' transfer agent. "Level 3 networked accounts" shall mean accounts of shareholders/beneficial owners of the Funds/Shares subject to the National Securities Clearing Corporation Networking service Level 3. Receipt in "good order" shall mean that all documentation, information, date and time stamps, signatures, and signature guarantees are complete, accurate and legible, and have otherwise been obtained and/or verified to the reasonable satisfaction of the Fund, the Fund's transfer agent, Distributor or the Fund's investment manager, Pacific Investment Management Company LLC, in a manner consistent with industry standards and practices, and are compliant with all requirements of Fund policies, applicable laws, rules and regulations pertaining thereto.

(c) Dealer shall adopt, implement and maintain during the term of this Agreement such policies, procedures and internal controls as are necessary to ensure that Dealer only submits to the appropriate Fund, its transfer agent or a delegate, Orders received in good order by Dealer or an Indirect Intermediary prior to the Valuation Time on each Business Day of the applicable Fund for execution at a price based on the net asset value per Share calculated for that Business Day, in accordance with Rule 23c-3(b)(7)(iii) under the 1940 Act.

(d) Dealer shall establish, implement and maintain an adequate business continuity policy aimed at ensuring, in the case of an interruption to its systems and procedures, the preservation of essential data and functions, and the maintenance of services and activities, or, where that is not possible, the timely recovery of such data and functions and the timely resumption of its services and activities. Dealer shall maintain a log of all business continuity events. In the event that a material business continuity event occurs, Dealer shall advise the Distributor promptly of such event and the steps proposed in order to minimize any interruption to its services hereunder.

8. <u>FINRA.</u> Each party hereto represents that it is a member in good standing of FINRA and agrees to notify the other should it cease to be a member of FINRA and to the automatic termination of this Agreement at that time. Further, each party hereto agrees to abide by the rules of FINRA. This Agreement is in all respects subject, without limitation, to FINRA Rule 2341 (or any successor rule adopted by FINRA) which shall control any provisions to the contrary in this Agreement.

9. <u>Transaction Conditions.</u> Dealer agrees:

(a) To purchase Shares only from the Fund through Distributor or only from Dealer's customers.

(b) To purchase Shares from the Fund only for the purpose of covering Orders already received or for Dealer's bona fide investment.

(c) That Dealer will not purchase any Shares from Dealer's customers at prices lower than the repurchase net asset values next determined by the Fund. If Dealer acts as principal for its own account in purchasing shares for resale to Distributor, Dealer agrees to pay its customer not less than the price that it receives from Distributor. If Dealer acts as agent for its customer in selling Shares to Distributor, Dealer agrees not to charge its customer more than a fair commission or fee for handling the transaction, except that Dealer agrees to receive no

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compensation of any kind based on the reinvestment of repurchase proceeds pursuant to any repurchase privilege, as described in the applicable then current Prospectuses.

(d) That Dealer will not intentionally withhold placing customers' Orders for Shares so as to profit Dealer as a result of such withholding.

10. <u>Settlements.</u> Distributor, as agent for the Fund, shall not accept from Dealer any conditional Orders for Shares. No certificates will be issued for Shares purchased. If payment for the Shares purchased and all necessary applications and documents required by the Fund or Distributor are not received within one Business Day or such other time period as may be required by law, the sale may be cancelled forthwith without any responsibility or liability on Distributor's part or on the part of the Fund (in which case Dealer will be responsible for any loss, including loss of profit, suffered by the Fund resulting from Dealer's failure to make payments or provide documents as aforesaid) or, at Distributor's option, Distributor may cause the Shares ordered to be repurchased by the Fund (in which case Distributor may hold Dealer responsible for any loss).

11. <u>Various Responsibilities Concerning Sales.</u> In connection with sales and offers to sell Shares, Dealer will furnish to each person to whom any such sale or offer is made a copy of the applicable then current prospectus of the Fund. Distributor shall be under no liability to Dealer other than as expressly provided for herein. Notice and other applicable filings for Shares of the Fund in various states are the responsibility of Pacific Investment Management Company LLC or one of its affiliates. Dealer is responsible for any notices or other applicable filings that may be necessary to permit Dealer to engage in the selling of investment company shares in various states. Any printed information which Distributor furnishes Dealer other than the Prospectuses, proxy solicitation materials, tender offer materials, and periodic reports, is Distributor's sole responsibility and not the responsibility of the Fund, and Dealer agrees that the Fund shall have no liability or responsibility to Dealer in these respects unless expressly assumed in connection therewith. Nothing herein contained, however, shall be deemed to be a condition, stipulation or provision binding any persons acquiring any security to waive compliance with any provision of the Securities Act of 1933 (the "1933 Act"), or of the rules and regulations of the Securities and Exchange Commission, or to relieve the parties hereto from any liability arising under the 1933 Act. Dealer will use its best efforts in the development and promotion of sales of Shares and will be responsible for the proper instruction and training of all sales personnel employed by it. Dealer will, upon request, from time to time, supply Distributor with a list of the names and addresses of Dealer's clients who are shareholders of the Fund.

12. <u>Distribution and Service Fee Provisions.</u> So long as Distributor is the sole principal underwriter of each Fund and this Agreement remains in effect, Distributor agrees to pay Dealer each quarter a distribution and/or service fee at annual rate(s) as set forth in the Prospectuses and ***Exhibit A*** ("Distribution and Servicing Fees") applied to the average daily net assets of Shares of the Fund outstanding in such quarter with respect to which Dealer is the broker-dealer of record or record owner (as nominee on behalf of its customers who are the beneficial owners of such Shares). The Distribution and Servicing Fees will be accrued daily as of each calendar day and paid quarterly in arrears by the 15th day of each quarter. Such Distribution and Servicing Fees will be paid by Distributor to Dealer only out of the Distributor's profits. Pursuant to an exemptive order granted to the Funds, each Fund will comply with the provisions of Rule 12b-1 under the 1940 Act and may adopt and operate a plan that complies with Rule 12b-1 (each, a "Distribution and Servicing Plan"). In addition to any terms and conditions set forth in the applicable Prospectus or required by applicable law, any payments made pursuant to this Section 12 shall be subject to the following terms and conditions:

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(a) Any Distribution and Servicing Fees shall be in such amounts as Distributor may from time to time advise Dealer in writing but in any event not in excess of the amounts permitted by any applicable Distribution and Servicing Plan. Any such payments shall be in addition to any dealer discount (commission) allowed to Dealer pursuant to this Agreement.

(b) Dealer shall provide to Distributor and the Fund each calendar quarter such information as shall reasonably be requested by the Distributor or Trustees of the Fund with respect to the fees paid to Dealer pursuant to this Section 12.

(c) Dealer will permit representatives of the Fund and Distributor reasonable access to its personnel and its records to enable them to monitor the quality of services being provided by Dealer pursuant to this Agreement. Dealer shall promptly deliver to the Board of Trustees of the Fund such information as is reasonably necessary to permit the Board of Trustees to make an informed determination whether to continue the applicable Distribution and Servicing Plan or any of them or this Section 12.

(d) The compensation provisions of this Section 12 related to the Distribution and Servicing Plans shall remain in effect for not more than a year and thereafter for successive annual periods only so long as such continuance is specifically approved by the Trustees of the Fund at least annually in conformity with any applicable Distribution and Servicing Plan and the 1940 Act. In the event of the assignment (as defined by the 1940 Act) of this Agreement or in the event of any applicable Distribution and Servicing Plan terminates, is not continued or ceases to remain in effect, then the provisions of this Section 12 shall automatically terminate with respect to the Shares covered by such assignment or such terminated Distribution and Servicing Plan. This Section 12 may be terminated at any time with respect to the Fund without payment of any penalty, by vote of a majority of the Independent Trustees of the Fund (as defined in the applicable Distribution and Servicing Plan) or by vote of a majority of the outstanding voting securities of the Fund on not more than 60 days' written notice to the parties to this Agreement. In addition, the provisions of this Section 12 may be terminated at any time, without penalty, by either party with respect to the Fund on not more than 60 days' nor less than 30 days' written notice in accordance with Section 15 hereof.

13. <u>Prospectuses and Sales Material.</u>

(a) No person is authorized to make any representations concerning Shares of the Fund except those contained in the applicable then current Prospectuses and printed information issued by the Fund or by Distributor as information supplemental to the Prospectuses. Distributor shall supply Prospectuses at no cost to Dealer and reasonable quantities of supplemental sales literature, sales bulletins and additional information as issued. Dealer shall bear all costs related to the delivery of Prospectuses to its customers that are not the record owners of Shares. Dealer agrees not to use other advertising or sales material relating to the Fund, unless permission is granted in writing by Distributor in advance of such use.

(b) Dealer shall not circulate or furnish to any investor any Prospectuses that have been withdrawn or supplemented, except in the latter case with the appropriate supplements.

14. <u>Proxies</u>. Dealer will cooperate with reasonable requests of Distributor and its affiliates in their solicitation of proxies, including through distributing to each of Dealer's clients all proxy material furnished by Dealer or an affiliate on behalf of the Fund. Dealer will comply with all obligations required of it by applicable law, rules or regulations in connection with the solicitation of such proxies.

15. <u>Indemnification; Limitation on Damages.</u>

(a) Dealer shall indemnify and hold harmless the Fund, Distributor and each of their affiliates, directors, trustees, officers, employees, and each person, if any, who controls any of them within the meaning of the 1933 Act (collectively,

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"indemnitees"), against any losses, claims, damages, liabilities or expenses ("Losses") to which an indemnitee may become subject insofar as such Losses or actions in respect thereof arise out of or are based upon (i) Dealer's gross negligence or willful misconduct in performing hereunder; (ii) any material failure by Dealer to comply with any provision of this Agreement, the Prospectuses, other applicable Fund documentation or applicable laws, rules and regulations; (iii) any material breach by Dealer of a representation or warranty made in this Agreement; (iv) any untrue statement or representation made by Dealer with respect to the Fund or Shares other than statements contained in the Prospectuses, sales literature published by the applicable Fund or Distributor, or supplemental material authorized by Distributor; or (v) any Indirect Intermediary's performance or lack of performance in connection with Dealer's or any Indirect Intermediary's receipt of Orders.

(b) Dealer will reimburse an indemnitee for any legal or other expenses reasonably incurred, as incurred, by them in connection with investigating or defending any such Loss, claim or action. This indemnity provided in this Section 15 will be in addition to any liability which Dealer may otherwise have.

(c) If an indemnitee hereunder receives notice of the commencement of an action and wishes to seek indemnification hereunder, the indemnitee will notify the Dealer of such commencement within 10 days after the summons or other first legal process has been served. The omission so to notify the Dealer will not relieve it from any liability that it may have to any indemnitee otherwise than under this Section 15. If any such action is brought against any indemnitee and it properly notifies the Dealer of such commencement, the Dealer may assume the defense thereof with counsel reasonably satisfactory to the indemnitee, and the indemnitee(s) in such action entitled to indemnification hereunder may participate in the defense or preparation of the defense of any such action. If the Dealer elects to assume the defense of any such action and retain counsel: (i) the indemnitee(s) shall bear the fees and expenses of any additional counsel retained by any of them and (ii) the Dealer shall not, without the prior written consent of the indemnitee(s), settle or compromise the liability of the indemnitee(s), or permit a default or consent to the entry of any judgment in respect thereof, unless each indemnitee receives from the claimant a release from all liability in respect of such claim. If the Dealer does not elect to assume the defense of any such action, the Dealer will reimburse the indemnitee(s) named as defendant(s) in such action for the fees and expenses of counsel agreed upon by Dealer and indemnitee.

(d) THE PARTIES AGREE THAT, NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, NO PARTY SHALL BE LIABLE TO ANOTHER PARTY FOR ANY PUNITIVE, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES OF ANY KIND IN CONNECTION WITH THIS AGREEMENT, EVEN IF THE PARTY WHO IS LIABLE HAS BEEN INFORMED IN ADVANCE OF THE POSSIBILITY OF SUCH DAMAGES.

16. <u>Termination.</u> In addition to the termination provisions set forth in Section 12 hereof, either party may cancel this Agreement by giving 30 days' written notice to the other party, and this Agreement shall terminate automatically: (1) with respect to the Fund in the event that the Fund liquidates or reorganizes into another fund, (2) in the event that Dealer ceases to be a member in good standing of FINRA, and (3) upon Dealer violating any anti-money laundering, sanctions, or anti-bribery or corruption laws or engaging in any other unlawful conduct referenced in Section 22.

17. <u>Notice.</u> Any notice under this Agreement shall be in writing and shall be deemed to have been given on the date on which it was either delivered personally to the other party or any officer or partner thereof, or was mailed postpaid or sent by electronic transmission (with machine confirmation) or delivered by overnight courier to the other party at its address as shown below:

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| Distributor: | PIMCO Investments LLC<br> 1633 Broadway, 45th Floor<br> New York, New York 10019<br> Attn: Legal Department<br> Fax: 949-720-8670 |
| Dealer: |  |

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18. <u>Amendment.</u>

(a) The Distributor may amend ***Exhibit A*** hereto without the affirmative consent of Dealer solely upon provision of notice as set forth in Section 17 hereto in the event that Distributor wishes to add one or more new classes of Shares and/or Funds.

(b) In addition, Dealer and Distributor agree that Distributor may amend or modify this Agreement, including the Exhibit hereto, without the consent of Dealer, upon (i) the provision of not less than 30 days' written notice to Dealer or (ii) any act by Dealer in reliance on this Agreement, as amended, including the acceptance of a payment hereunder or the submission of an Order to purchase, repurchase or exchange Shares of any Fund. Notice for all purposes shall be deemed to be given when mailed or electronically transmitted to Dealer. Dealer's submission and the Fund's or its designee's acceptance of an Order to purchase, repurchase or exchange Shares of the Fund after the transmission of such notice shall represent Dealer's acknowledgement and acceptance of the terms and conditions of any such amendment.

19. <u>WRAP Programs.</u> If Dealer is the broker for one or more wrap fee programs where Dealer is paid a single, inclusive fee for brokerage and investment management service (each a "Program" and, collectively, the "Programs") and if Dealer desires to have its clients in the Programs (each a "Program Client" and, collectively, "Program Clients") acquire Shares at the net asset value thereof without any sales charge, then:

(a) Dealer may, subject to Distributor's approval, maintain either (i) one omnibus account per Fund per Program for the Program Clients of such Program or (ii) one account per Fund per Program Client provided each such account is a Level 1 or Level 3 account on National Securities Clearing Corporation's Fund/SERV and/or Networking systems.

(b) When an account has been established after approval by Distributor, Dealer may purchase and sell to the Program Clients covered by such account Shares of the Fund at net asset value (without any sales charges on purchases or EWCs on sales but including any applicable repurchase fees) upon the instructions of Dealer and all in accordance with the terms of this Section, the Prospectuses and the terms of Distributor's Distribution Contract with the Fund, as amended from time to time and applicable law. Notwithstanding the foregoing, any waiver of EWCs on sales is conditioned upon the Dealer providing Distributor on each Business Day separately for each account all purchase, sale and exchange Orders for such day.

(c) Dealer hereby confirms that it maintains in its files proper Program Client authorization to exercise full and continuing authority with regard to the transactions contemplated hereby and with regard to withdrawing and transferring funds on behalf of each Program Client. Dealer has examined such documents and is satisfied that they are authentic and were properly authorized and duly executed and delivered to Dealer by the Program Clients or the designated agents thereof.

(d) Distributor's ability to rely on Dealer's authorization to act on behalf of each Program Client shall be continuing and unqualified and remain in full force and effect until Distributor receives written notice of revocation from Dealer and/or the respective Program Client. Such revocation, however, shall not affect any liability

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in any way resulting from transactions initiated prior to Distributor's receipt of such notice.

20. <u>Assignment.</u> This Agreement shall inure to the benefit of the successors and assigns of either party hereto, provided, however, that Dealer may not assign this Agreement without the prior written consent of Distributor.

21. <u>Privacy.</u> Each party agrees to comply, to the extent applicable, with the requirements of Title V of the Gramm-Leach-Bliley Act, 15 U.S.C. §§ 6801 et seq., as may be amended from time to time, and any regulations adopted thereto, including Regulation S-P of the Securities and Exchange Commission, as well as with any other applicable federal or state privacy laws and regulations, including but not limited to the Massachusetts Standards for the Protection of Personal Information, 201 CMR 17.00, et seq. The parties agree that any "Non-Public Personal Information," as the term is defined in Regulation S-P, that may be disclosed hereunder is disclosed for the specific purpose of permitting the other party to perform the services set forth in this Agreement. Each party agrees that, with respect to such information, it will comply with Regulation S-P and that it will not disclose any Non-Public Personal Information received in connection with this Agreement to any other party, except: (i) to the extent required to carry out the services set forth in this Agreement; (ii) as otherwise required or permitted by law or regulation; or (iii) as requested by any regulatory body or governmental agency or body having jurisdiction over the disclosing party.

22. <u>Anti-Money Laundering; Sanctions; Anti-Corruption.</u>

(a) Dealer represents and warrants that it has developed, implemented, and agrees to maintain an anti-money laundering program, including a customer due diligence program, reasonably designed to comply with all applicable anti-money laundering laws, including but not limited to the Bank Secrecy Act of 1970 ("BSA"), as amended by the USA PATRIOT Act of 2001, and the Money Laundering Control Act of 1986, each as amended from time to time, and any rules adopted thereunder by the Financial Crimes Enforcement Network, and/or any applicable anti-money laundering laws and regulations of other jurisdictions where Dealer conducts business, and any rules adopted thereunder or guidelines issued, administered or enforced by any governmental agency. Dealer further represents and warrants that its anti-money laundering program includes written policies, a designated anti-money laundering compliance officer, ongoing training for employees, an independent audit to test the implementation of the program, a customer identification program, and risk-based procedures for conducting ongoing customer due diligence, to include, but not be limited to: (i) understanding the nature and purpose of customer relationships for the purpose of developing a customer risk profile; and (ii) conducting ongoing monitoring to identify and report suspicious transactions and, on a risk basis, to maintain and update customer information. Dealer further represents and warrants that: (i) its anti-money laundering program shall be applied to its customers that purchase Shares of a Fund, consistent with its written procedures; (ii) it will cooperate with the Distributor and deliver information reasonably requested by the Distributor concerning shareholders that purchased Shares of the Fund sold by Dealer necessary for the Distributor or the Fund to comply with the BSA; (iv) it will notify the Distributor, in writing, if it is found, by its compliance officer, an independent anti-money laundering auditor, or any Federal, state, or self-regulatory agencies, to be in violation of the BSA, any regulation implementing the BSA, or its anti-money laundering program; and (v) Dealer will promptly notify Distributor or a Fund if Dealer concludes that any shareholder has engaged in illegal or other conduct that warrants remedial account actions, such as freezing or closure of the shareholder's account with Dealer, and Dealer will thereafter cooperate in good faith to provide such information as Distributor requires to satisfy its own anti-money laundering obligations.

(b) Dealer represents and warrants that neither it, nor any of its subsidiaries, nor any officer,

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director, or employee of it or its subsidiaries is an individual or entity ("Person") that is, or is controlled by a Person that is (i) the subject of any sanctions administered or enforced by the U.S. Department of Treasury's Office of Foreign Assets Control, the United Nations Security Council, the European Union, His Majesty's Treasury, or any other relevant sanctions authority (collectively, "Sanctions"); or (ii) located, organized or resident in a country or territory that is the subject of Sanctions. Further, Dealer represents and warrants that it has complied with Sanctions in all material respects and has policies, procedures, and internal controls which are reasonably designed to ensure compliance with Sanctions. Dealer and its officers, directors, employees and other representatives will not, in violation of Sanctions, engage in any activities that directly or indirectly involve any Person, country, or territory that is subject to Sanctions. Dealer acknowledges its ongoing and continuing obligations to comply with the applicable Sanctions. Dealer will provide reasonable assistance to Distributor and the Funds in connection with their respective obligations under the applicable Sanctions. Dealer will promptly disclose to Distributor or a Fund if Dealer becomes aware that any shareholder is subject to Sanctions or of any other activity related to this Agreement in breach of this provision, and Distributor may terminate this Agreement with immediate effect in the event of such breach.

(c) Dealer represents, warrants, and covenants that (i) it and its officers, directors, employees, agents and other representatives (together with Dealer, each a "Relevant Person") are subject to written policies and procedures relating to anti-bribery and anti-corruption, and shall not commit, authorize or permit any action in violation of any applicable anti-bribery and corruption laws (such as the U.S. Foreign Corrupt Practices Act and/or the UK Bribery Act, in each case, if applicable); (ii) in connection with any services provided in connection with this Agreement, the Relevant Persons have not taken nor will they take any actions in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving anything of value to, nor have the Relevant Persons received, nor will they receive, any payment or anything of value from, any person (whether directly or indirectly) while knowing that all or some portion of the money or value will be offered, given, promised or received by anyone improperly to influence official action, improperly to obtain or retain business or otherwise secure an illegal advantage; and (iii) it shall create and maintain accurate books and financial records in connection with the services performed under this Agreement. Dealer shall promptly notify Distributor if a Relevant Person becomes aware of any breach of this provision, and Distributor may terminate this Agreement with immediate effect in the event of such breach by any Relevant Person.

23. <u>Agreement to Provide Information.</u> Dealer agrees to provide Distributor or its designee ("Fund Agent"), upon written request, the taxpayer identification number ("TIN") the Individual/International Taxpayer Identification Number ("ITIN"), or other government-issued identifier ("GII"), if known, of any or all Shareholder(s) of the account, the name or other identifier of any investment professional(s) associated with the Shareholder(s) or account (if known), and the amount, date and transaction type (purchase, repurchase, transfer, or exchange) of every purchase, repurchase, transfer, or exchange of Shares held through an account maintained by Dealer during the period covered by the request. Dealer also agrees to provide Distributor or Fund Agent, upon written request, with information to confirm compliance with all applicable anti-money laundering, Sanctions, and anti-bribery or corruption laws.

(i) <u>Period Covered by Request.</u> Requests must set forth a specific period, not to exceed 180 days from the date of the request, for which transaction information is sought. Fund Agent may request transaction information older than 180 days from the date of the request as it deems necessary to investigate compliance with policies established by the Fund for the purpose of eliminating or reducing any dilution of the value of the outstanding Shares issued by the Fund. If

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mutually agreed upon by Fund Agent and Dealer, Dealer will provide the information specified for each trading day in the period.

(ii) <u>Form and Timing of Response.</u> Dealer agrees to provide, promptly upon request of Fund Agent, the requested information specified in this Section 23. If requested by Fund Agent, Dealer agrees to use its best efforts to determine promptly whether any specific person about whom it has received the identification and transaction information specified in this Section 23 is itself a "financial intermediary," as that term is defined in Rule 22c-2 under the 1940 Act (an "Indirect Intermediary") and, upon further request of Fund Agent, promptly either (i) provide (or arrange to have provided) the information set forth in this Section 23 for those Shareholders (as hereinafter defined) who hold an account with an Indirect Intermediary or (ii) restrict or prohibit the Indirect Intermediary from purchasing, in nominee name on behalf of other persons, Shares. Dealer additionally agrees to inform Fund Agent whether it plans to perform (i) or (ii) above. Responses required by this paragraph must be communicated in writing and in a format mutually agreed upon by Dealer and Fund Agent. To the extent practicable, the format for any Shareholder and transaction information provided to Fund Agent shall be consistent with the NSCC Standardized Data Reporting Format.

(iii) <u>Limitations on Use of Information.</u> Distributor agrees not to use and agrees to cause each Fund not to use the information received pursuant to this Section 23 for marketing or any other similar purpose without the prior written consent of the Dealer; provided, however, that this provision shall not limit the use of publicly available information, information already in the possession of Fund Agent, the Fund or their affiliates at the time the information is received pursuant to this Agreement or information which comes into the possession of Fund Agent, the Fund or their affiliates from a third party.

24. <u>Agreement to Restrict Trading.</u> Dealer agrees to execute written instructions from Fund Agent to restrict or prohibit further purchases or exchanges of Shares by a Shareholder that has been identified by Fund Agent as having engaged in transactions in Shares (directly or indirectly through the Dealer's account) that violate policies established or utilized by the Fund or Fund Agent for the purpose of eliminating or reducing any dilution of the value of the outstanding Shares issued by the Fund (*e.g.,* market timing and late trading policies).

(i) <u>Form of Instructions.</u> Instructions must include the TIN, ITIN or GIC, if known, and the specific restriction(s) to be executed. If the TIN, ITIN or GIC is not known, the instructions must include an equivalent identifying number of the Shareholder(s) or account(s) or other agreed upon information to which the instruction relates.

(ii) *Timing of Response*. Dealer agrees to execute instructions from Fund Agent as soon as reasonably practicable, but not later than five Business Days after receipt of the instructions by the Dealer.

(iii) <u>Confirmation by Dealer.</u> Dealer must provide written confirmation to Fund Agent or its designee that Fund Agent's instructions to restrict or prohibit trading have been executed. Dealer agrees to provide confirmation as soon as reasonably practicable, but not later than ten Business Days after the instructions have been executed.

25. <u>Detecting Violations.</u> Dealer agrees to make reasonable efforts to assist the Fund and its service providers (including Distributor) in preventing and detecting market timing and excessive short-term trading with respect to the Shares.

26. <u>Definitions.</u> For purposes of Sections 23 to 27 of this Agreement, the following terms shall have the following meanings, unless a different meaning is clearly required by the context:

(i) The term "promptly" shall mean as soon as practicable but in no event later than 5 Business Days from Dealer's request of the request for information from Fund Agent.

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(ii) The term "Shares" means the interests of Shareholders corresponding to the securities of record issued by the Fund.

(iii) The term "Shareholder" shall have the meaning set forth in Rule 22c-2 under the 1940 Act.

(iv) The term "written" includes electronic writings and facsimile transmissions.

In addition, for purposes of Sections 23 through 27, the term "purchase" does not include the automatic reinvestment of dividends or distributions.

27. <u>Records</u>. Each party shall maintain and preserve all records required by law, rule and regulation to be maintained and preserved in connection with the activities contemplated herein. A party hereto may request of another party, and the requested party shall provide as reasonable, copies of all the historical records relating to transactions between a Fund and the Dealer's customers, written communications regarding the Fund to or from such customers, and other materials reasonably related to transactions between the Fund and the Dealer's customers. In addition, Dealer shall provide representatives of Distributor and the Fund with reasonable access to its personnel and its records to: (i) enable them to monitor the quality of services being provided by Dealer pursuant to this Agreement and Dealer's compliance with this Agreement and applicable law, rule and regulation and (ii) verify amounts payable or owed under this Agreement. The parties shall cooperate in good faith in providing records to one another.

28. <u>Scope.</u> Dealer acknowledges and agrees that this Agreement shall apply to the handling of all transactions in Shares, whether authorized under this Agreement or any other agreement between or among Dealer and each Fund, any transfer agent of the Fund, Distributor, any other Fund Agent or any of their affiliates. Dealer acknowledges and agrees that Sections 7 and 23 to 27 of this Agreement shall apply to the handling of all Fund Orders, whether authorized under this Agreement or any other agreement with the Fund, Distributor, its affiliates or any transfer agent.

29. <u>Governing Law; Arbitration.</u> This Agreement shall be governed by and construed in accordance with the laws of the State of New York. Any disputes between the parties hereto arising in connection with this Agreement shall be submitted to arbitration in accordance with the Code of Arbitration Procedure of FINRA, or similar rules or code as in effect at the time of the submission of any such dispute.

30. <u>Other Agreements.</u> This Agreement shall be binding upon both parties hereto when executed by both parties and supersedes any prior agreement or understanding between Distributor and Dealer with respect to the sale of Shares of each Fund.

31. <u>Headings.</u> The Section headings in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect.

32. <u>Severability.</u> If any provision of this Agreement is held by any court or any act, regulation, rule or decision of any other governmental or supranational body or authority or regulatory or self-regulatory organization to be invalid, illegal or unenforceable for any reason, it shall be invalid, illegal or unenforceable only to the extent so held and shall not affect the validity, legality or enforceability of the other provisions of this Agreement so long as this Agreement, as so modified, continues to express, without material change, the original intentions of the parties as to the subject matter of this Agreement and the deletion of such portion of this Agreement will not substantially impair the respective benefits, obligations, or expectations of the parties to this Agreement.

33. <u>Force Majeure.</u> Notwithstanding any other provisions of this Agreement to the contrary, Distributor and Dealer shall not be responsible

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for delays or errors caused by acts of God or by circumstances beyond their reasonable control, provided that the party relying on this provision has adopted, implemented and appropriately maintained a commercially reasonable and regulatory compliant business continuity plan and makes reasonable efforts to mitigate damages.

34. <u>Survival.</u> The provisions of Sections 15, 21, and 27 hereof shall survive termination of this Agreement.

35. <u>Counterparts.</u> This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement.

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IN WITNESS WHEREOF, the parties hereto execute this Agreement as of the date set forth above.

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|:---|:---|
| PIMCO INVESTMENTS LLC | [DEALER] |
| By: | By: |
| Name: | Name: |
| Title: | Title: |

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**EXHIBIT A** 

**<u>Funds, Classes and Compensation</u>**

I – Classes of Shares with No Fund-Imposed Sales Charges

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;**<u>Fund</u>** | **<u>Classes</u>** | **<u>Compensation (Payor)</u>** |
| &nbsp;&nbsp;&nbsp; PIMCO <br> Flexible Real Estate Income Fund  | Institutional <br> Class  | Sales Charges and Commissions (Distributor): None. While neither the Fund nor the Distributor will impose an initial sales charge or early withdrawal charge, or pay or cause to be paid a discount or commission on Institutional Class shares, if an investor purchases these shares through certain financial firms, such firms may directly charge investors transaction or other fees in such amount as they may determine.<br>Distribution and Service Fees (Distributor): None.<br>|
| &nbsp;&nbsp;&nbsp; PIMCO <br> Flexible Real Estate Income Fund  | Class A-3 | <br> Sales Charges and Commissions (Distributor): None. While neither the Fund nor the Distributor will impose an initial sales charge or early withdrawal charge, or pay or cause to be paid a discount or commission on Class A-3 shares, if an investor purchases these shares through certain financial firms, such firms may directly charge investors transaction or other fees in such amount as they may determine.<br>Distribution and Service Fees (Distributor): Shall be equal to the rate set forth in the applicable Prospectus or SAI with respect to Distribution and/or Service (12b-1) Fees, or such lesser amount as is notified by Distributor to Intermediary, including through disclosure in the SAI. Notwithstanding the foregoing, no fee shall be paid to Intermediary hereunder if Intermediary or any other person is receiving payment for similar services with respect to the same assets.<br>|

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II – Classes of Shares with Fund-Imposed Sales Charges

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|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;**<u>Fund</u>** | **<u>Classes</u>** | **<u>Compensation (Payor)</u>** |
| &nbsp;&nbsp;&nbsp;PIMCO Flexible Real Estate Income Fund | Class A-4 | <br> Sales Charges and Commissions (Distributor): Sales Charges and Commissions, if any, shall refer to the initial sales charges, early withdrawal charges, if any, and the discount or commission to dealers as disclosed in the applicable Prospectus or SAI and/or applicable Fund documentation. With respect to purchase transactions in Class A-4 Shares subject to an initial sales charge/load that are settled "net" of any discount, concession or commission, Distributor shall have no obligation to make any commission payment.<br>Distribution and Service Fees (Distributor): Shall be equal to the rate set forth in the applicable Prospectus or SAI with respect to Distribution and/or Service (12b-1) Fees, or such lesser amount as is notified by Distributor to Intermediary, including through disclosure in the SAI. Notwithstanding the foregoing, no fee shall be paid to Intermediary hereunder if Intermediary or any other person is receiving payment for similar services with respect to the same assets. |
| &nbsp;&nbsp;&nbsp;PIMCO Flexible Real Estate Income Fund | Class F | Sales Charges and Commissions (Distributor): Sales Charges and Commissions, if any, shall refer to the initial sales charges, early withdrawal charges, if any, and the discount or commission to dealers as disclosed in the applicable Prospectus or SAI and/or applicable Fund documentation.<br>Distribution and Service Fees (Distributor): None.<br>|

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## Ex-99.L

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|:---|:---|
| ![LOGO](g121406g0420192841952.jpg) | <br> ROPES & GRAY LLP<br>PRUDENTIAL TOWER<br>800 BOYLSTON STREET<br>BOSTON, MA 02199-3600<br>WWW.ROPESGRAY.COM |

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April 28, 2026

PIMCO California Flexible Municipal Income Fund

1633 Broadway

New York, New York 10019

Ladies and Gentlemen:

We have acted as counsel to PIMCO California Flexible Municipal Income Fund (the "Fund") in connection with the Registration Statement of the Fund on Form N-2 under the Securities Act of 1933 (File No. 333-262811) and the Investment Company Act of 1940 (File No. 811-23781) (the "Registration Statement"), each as amended, with respect to certain of its common shares of beneficial interest, par value of $0.00001 per share (the "Common Shares"). The Common Shares are to be sold pursuant to a Distribution Contract between the Fund and PIMCO Investments LLC ("PIMCO Investments"), substantially in the form filed as an exhibit to the Registration Statement (the "Distribution Contract").

We have examined the Fund's Amended and Restated Agreement and Declaration of Trust on file in the office of the Secretary of State of The Commonwealth of Massachusetts (the "Declaration of Trust"), and the Fund's Amended and Restated Bylaws, and are familiar with the actions taken by the Fund in connection with the issuance and sale of the Common Shares. We have also examined such other documents and records as we have deemed necessary for the purposes of this opinion.

Based upon the foregoing, we are of the opinion that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The Fund is a duly organized and validly existing unincorporated voluntary association with transferable shares under and by virtue of the laws of The Commonwealth of Massachusetts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The Common Shares have been duly authorized and, when issued and paid for in accordance with the Distribution Contract, will be validly issued, fully paid and, except as described in the following paragraph, nonassessable by the Fund.

The Fund is an entity of the type commonly known as a "Massachusetts business trust." Under Massachusetts law, shareholders could, under certain circumstances, be held personally liable for the obligations of the Fund. However, the Declaration of Trust disclaims shareholder liability for acts or obligations of the Fund and requires that a notice of such disclaimer be given in each note, bond, contract, instrument, certificate or undertaking entered into or executed by the Fund or its Trustees. The Declaration of Trust provides for indemnification out of the property of the Fund for all loss and expense of any shareholder of the Fund held personally liable solely by

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![LOGO](g121406g0420192841219.jpg)

reason of his being or having been a shareholder. Thus, the risk of a shareholder's incurring financial loss on account of being a shareholder is limited to circumstances in which the Fund itself would be unable to meet its obligations.

We understand that this opinion is to be used in connection with the registration of the Common Shares for offering and sale pursuant to the Securities Act of 1933, as amended. We consent to the filing of this opinion with and as part of the Registration Statement and to the references to our firm under the captions "Legal Matters" in the prospectus and "Counsel" in the statement of additional information contained in the Registration Statement.

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|:---|
| Very truly yours, |
| <u>/s/ Ropes & Gray LLP</u> |
| Ropes & Gray LLP |

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## Ex-99.N

<u>CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</u> 

We hereby consent to the incorporation by reference in this Registration Statement on Form N-2 of PIMCO California Flexible Municipal Income Fund of our report dated February 26, 2026 relating to the financial statements and financial highlights, which appears in PIMCO California Flexible Municipal Income Fund's Certified Shareholder Report on Form N-CSR for the year ended December 31, 2025. We also consent to the references to us under the headings "Financial Statements", "Independent Registered Public Accounting Firm" and "Financial Highlights" in such Registration Statement.

/s/ PricewaterhouseCoopers LLP

Kansas City, Missouri

April 28, 2026

## Ex-99.(R)(2)

![LOGO](g121406g83g83.jpg)

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**TABLE OF CONTENTS** 

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| | | |
|:---|:---|:---|
| **I.** | **PIMCO Code of Ethics Overview** | 3 |
|  | A. What are the Objectives of the Code? | 3 |
|  | B**.** Who is Subject to the Code? | 3 |
|  | C. What are the Basic Requirements under the Code? | 3 |
|  | D**.** What are the Consequences for Violations of this Code? | 3 |
|  | E. Duty to Report Violations | 3 |
|  | F. Right to communicate Directly with Governmental, Regulatory or Self-Regulatory Bodies | 3 |
| **II.** | **Rules for all Employees** | 4 |
|  | A. What is Required? | 4 |
|  | B. What is Prohibited? | 6 |
| **III.** | **Additional Requirements for Applicable Portfolio Persons** | 7 |
|  | A. All Portfolio Persons | 7 |
|  | B. Real Estate Portfolio Person Obligations | 7 |
|  | C. Cryptocurrency Portfolio Person Obligations | 8 |
| **IV.** | **Additional Requirements for Reporting Persons Under Section 16** | 9 |
| **V.** | **Code Administration** | 9 |
|  | A. Authority to Grant Waivers of the Requirements of the Code | 9 |
|  | B. Non-Employee Personnel | 9 |
|  | C.Annual Report to Boards of Funds that PIMCO Advises or Sub-Advises | 9 |
|  | D. Maintenance of Records | 9 |
| **Appendix I** - Pre-clearance, Reporting, and 30 Calendar Day Rule Requirements and Exclusions by Asset Type | **Appendix I** - Pre-clearance, Reporting, and 30 Calendar Day Rule Requirements and Exclusions by Asset Type | 10 |
| **Appendix II** - Options Trading: Pre-Clearance and 30 Calendar Day Rule | **Appendix II** - Options Trading: Pre-Clearance and 30 Calendar Day Rule | 12 |
| **GLOSSARY** | **GLOSSARY** | 13 |

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CODE OF ETHICS \| July 2025 2

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&nbsp;&nbsp;&nbsp;&nbsp;**I.** **PIMCO CODE OF ETHICS OVERVIEW** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. **What are the Objectives of the Code?** 

This Code of Ethics ("Code") establishes standards of conduct to help Employees avoid potential conflicts that may arise from their Personal Securities Transactions and outside business activities.<sup>1</sup>

Pacific Investment Management Company LLC ("PIMCO") is committed to fostering a culture of honesty and high ethical standards. This Code is designed to assist Employees in adhering to the high ethical standards that PIMCO follows in conducting its business. The following general fiduciary principles must govern your activities:

● **You have a duty to place the interests of clients first.** 

● **You must disclose, avoid, or mitigate any actual or potential conflict of interest.** 

● **You must not take inappropriate advantage of your position at PIMCO.** 

● **You must comply with associated PIMCO policies and procedures and applicable Securities and Commodities Laws.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. **Who is Subject to the Code?** 

The Code applies to PIMCO's directors, officers and employees (each, an "Employee" and collectively, "Employees").<sup>2</sup> The Code also applies to certain non-Employee personnel, as referenced in Section V.B., and certain activities of an Employee's Immediate Family Members.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. **What are the Basic Requirements under the Code?** 

● Acknowledging receipt of the Code and ongoing compliance with the Code

● Reporting Personal Securities Accounts and holdings

● Maintaining Personal Securities Accounts at Approved Brokers<sup>3</sup>

● Pre-clearing and obtaining approval for Personal Securities Transactions

● Disclosing Personal Securities Transactions

● Obtaining approval of activities outside of PIMCO

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. **What are the Consequences for Violations of this Code?** 

Violations of the Code may be subject to remedial actions, pursuant to the Compliance Policy Violations Remedial Guide, which may include termination of employment or any other sanction or remedial action required or permitted by law or regulation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E. **Duty to Report Violations** 

Employees must promptly report any known violations of this Code, whether their own or another Employee's. Reports concerning another Employee's violations may be made anonymously and confidentially to a Compliance Officer in accordance with the **Policy for Reporting Suspicious Activities and Concerns**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;F. **Right to communicate Directly with Governmental, Regulatory or Self-Regulatory Bodies** 

This Code will not be interpreted or applied in any manner that would violate any Employee's legal rights as an employee under applicable law. For example, nothing in this Code or its Appendices attached hereto prohibits or in any way restricts any Employee from reporting possible violations of law or regulation to, otherwise communicating directly with, cooperating with or providing information to any governmental or regulatory body or any self-regulatory organization or making other disclosures that are protected under applicable law or regulations of the Securities and Exchange Commission or any other governmental or regulatory body or self-regulatory organization. An Employee does not need prior PIMCO authorization before taking any such action and an Employee is not required to inform PIMCO if he or she chooses to take such action.

\* \* \*

**The Code includes additional requirements that may restrict your personal securities transactions or other activities in addition to** 

<sup>1</sup> All capitalized terms have the meaning set forth in the Glossary unless otherwise specified herein.

<sup>2</sup> Employees of PIMCO-named subsidiaries and affiliates are subject to this Code unless their local employer has its own code of ethics to which they are subject. A Compliance Officer, in consultation with the Global Chief Compliance Officer, may determine that certain requirements under the Code are inapplicable for Employees who are on formal leave of absence or garden leave.

<sup>3</sup> This is required of Employees of Applicable PIMCO Companies. Reference the PIMCO Approved Brokers list on PIMCO's intranet for the list of Applicable PIMCO Companies.

CODE OF ETHICS \| July 2025 3

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 **those summarized above. Please review the entire Code. If you have any questions, please ask your local Compliance Officer.** 

&nbsp;&nbsp;&nbsp;&nbsp;**II.** **RULES FOR ALL EMPLOYEES** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. **What is Required?** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.** **Acknowledging Receipt of the Code and Ongoing Compliance with the Code** 

PIMCO will provide Employees with a copy of this Code and any amendments. Employees are required to periodically certify their receipt of this Code and any amendments, as well as their ongoing compliance with this Code. Required certifications must be completed within the specified deadline, unless otherwise approved by a Compliance Officer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.** **Reporting Personal Securities Transactions and Holdings** 

Employees must report each of their own and their Immediate Family Member's Personal Securities Accounts<sup>4</sup> and promptly update information regarding these accounts in the event of changes.

Within 10 calendar days of hire or otherwise becoming subject to the Code, Employees must submit via the personal trading system (accessible through the PIMCO Intranet) an initial report of Personal Securities Accounts and all reportable holdings in Financial Instruments and Private Placements, unless subject to an exclusion in Appendix I.

Employees are required to certify on a quarterly basis within 30 calendar days following quarter end that they have reported their own and their Immediate Family Members' Personal Securities Accounts to Compliance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.** **Maintaining Personal Securities Accounts at Approved Brokers** 

Employees of Applicable PIMCO Companies<sup>5</sup> and their Immediate Family Members must maintain their Personal Securities Accounts with an Approved Broker, unless an exemption is granted by a Compliance Officer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.** **Pre-Clearing and Obtaining Approval for Personal Securities Transactions** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. <u>General Pre-Clearance and Approval Requirement</u> 

Employees must pre-clear and receive prior approval for their own and their Immediate Family Members' Personal Securities Transactions, including Initial Public Offerings and Private Placements, unless the transaction is subject to an exclusion in Appendix I.

**<u>Pre-Clearance and Approval Process</u>**

**Step 1:** Input the details of the proposed transaction into the personal trading system (accessible through the PIMCO Intranet) and follow the instructions.

**Step 2:** You will be notified whether the proposed transaction is approved or denied.

**Time Limits:** If the proposed transaction is approved, the approval is valid for the day on which the approval was granted and the following business day, unless you are notified differently by a Compliance Officer. If a Good-until Cancel or Limit Order is not fully executed or filled by the end of the following business day (mid-night local time), you must repeat the pre-clearance process.

<u>If the transaction is not executed within the required timeframe or if you seek to transact in a larger amount than the original pre-clearance request, you MUST repeat the pre-clearance process prior to proceeding with the transaction.</u>

<sup>4</sup> For the avoidance of doubt, Non-Discretionary Accounts and accounts on automated asset allocation platforms must be disclosed and a managed account certification or robo-advised certification, respectively, must be completed in the personal trading system.

<sup>5</sup> Reference the PIMCO Approved Brokers list on PIMCO's intranet for the list of Applicable PIMCO Companies.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. <u>Exclusions from Pre-Clearance Requirement for Non-Discretionary Accounts and Certain Automated Transactions</u> 

Personal Securities Transactions in Non-Discretionary Accounts and certain automated transactions where neither the Employee nor an Immediate Family Member exercises any investment discretion are excluded from the pre-clearance and approval requirement, including: (i) transactions pursuant to an Automatic Investment Plan (including the Allianz Employee Stock Purchase Plan) and (ii) transactions in Personal Securities Accounts held on automated asset allocation platforms.

For the avoidance of doubt, directed sales or any transaction overriding an Automatic Investment Plan's predetermined schedule and allocation must be pre-cleared and approved.<sup>6</sup> Additionally, voluntary corporate actions must be pre-cleared and approved.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.** **Disclosing Personal Securities Transactions** 

Employees must report all transactions in their own and their Immediate Family Member's Personal Securities Accounts (including Private Placements), unless the transaction is subject to an exclusion in Appendix I.

Compliance will receive automated reports for transactions executed in Personal Securities Accounts held at Approved Brokers.

If an Employee or Immediate Family Member maintains (i) Personal Securities Accounts with broker-dealers that are not on the list of Approved Brokers, or (ii) a Beneficial Interest in a Financial Instrument not held in a Personal Securities Account, the Employee must submit quarterly and annual reports via the personal trading system within 30 days of quarter end, unless otherwise approved by a Compliance Officer.

Real Estate Portfolio Persons and Cryptocurrency Portfolio Persons have specific reporting responsibilities described in Section III.B and III.C, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.** **Obtaining Approval for Activities Outside of PIMCO** 

Without prior written approval from PIMCO's General Counsel, the Global Chief Compliance Officer, or their delegate, Employees must not engage in certain activities outside of PIMCO, regardless of whether compensation is received, including: (i) service on a board of directors, including in an advisory capacity, (ii) full- or part-time employment or service for a business organization or non-profit organization other than PIMCO or related to your activities on behalf of PIMCO, (iii) providing financial advice to a private, educational, or charitable organization, (iv) writing a book or periodical for publication<sup>7</sup>, and (v) serving as an employee, independent contractor, sole proprietor, officer, director or partner or accepting compensation in any form other than from PIMCO or one of its affiliates.

A designated Compliance Officer may approve an outside activity if they determine that an Employee's service or activities outside of PIMCO would not be inconsistent with the interests of PIMCO and its clients. Factors that may be considered include any remuneration received or proposed to be received as part of the activity, whether the activity or expected time spent is consistent with your duties to PIMCO and its clients, and any other factors deemed relevant in the Compliance Officer's discretion. Compliance may also stipulate that approval of your participation in the outside activity is subject to specified conditions. Requests to serve on the board of a publicly traded entity will generally be denied.

If approval is granted, Employees are responsible for notifying Compliance immediately if any conflict or potential conflict arises in the course of the outside activity or if the nature of the activity materially changes.

<sup>6</sup> An employee may adjust future percentage investment allocations in the Allianz Employee Stock Purchase Plan without pre-clearance and approval.

<sup>7</sup> Finance-related books or periodicals will be subject to additional review, including by PIMCO's Content Committee.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. **What is Prohibited?** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.** **Insider Trading** 

The fiduciary principles of this Code and applicable Securities and Commodities laws prohibit Employees from trading on the basis of material, non-public information ("MNPI") received from any source or communicating this information to others. This insider trading prohibition applies notwithstanding any applicable pre-clearance exclusions (e.g., in the case of MNPI received with respect to open-end mutual funds advised or sub-advised by PIMCO or its affiliates).<sup>8</sup> If you are unsure about whether information is material or non-public, please consult a Compliance Officer and the **PIMCO MNPI Policy prior to conducting any trading**.

Personal trading requests to purchase or sell any security on the Firmwide Trade Restricted Securities List, or any other applicable Restricted List to which the Employee is subject, will be denied.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.** **Excessive Trading and Market Timing of Mutal Fund Shares** 

Any excessive or inappropriate trading that, in PIMCO's view, interfered with job performance or compromises the duty that PIMCO owes to its clients, is not permitted.

In addition, Employees investing in open-end mutual funds are subject to the terms and restrictions in the respective fund's prospectus, including any restrictions on excessive trading and market timing. Trading shares of an open-end mutual fund in a manner inconsistent with the fund's prospectus is prohibited.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.** **Certain Trading for a Personal Account in the Same Financial Instrument or Related Financial Instrument as Firm Trading** 

Employees and their Immediate Family Members are generally prohibited from transacting in a Financial Instrument or a Related Financial Instrument if the gross aggregate market value exposure of the Employee's and all of the Employee's Immediate Family Members' transactions in that Financial Instrument over a 30-calendar day period across all of the Employee's and their Immediate Family Members' Personal Securities Accounts exceeds $250,000 for securities in the S&P 500<sup>®</sup> Index or $25,000 for securities of all other issuers, and either (i)-there is a pending client order in the Financial Instrument or Related Financial Instrument, or (ii) a client has purchased or sold the Financial Instrument or a Related Financial Instrument on that day.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.** **Trading in an Applicable Blackout Period** 

Employees and their Immediate Family Members may not trade in shares of Allianz SE<sup>9</sup> or shares of a PIMCO-advised or sub-advised closed-end fund during a designated blackout period. A list of applicable blackout periods is accessible through the PIMCO Intranet.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.** **Short-Term Trading** 

If a Personal Securities Transaction is subject to pre-clearance and approval, then Employees and their Immediate Family Members may not engage in any purchase followed by a sale, or any sale followed by a purchase, of the same Financial Instrument within 30 calendar days across all of their Personal Securities Accounts ("30 Day Calendar Rule"), unless subject to an exclusion in Appendix I or otherwise approved by Legal and Compliance.

The date of the first transaction is considered day one, and Employees may not execute a transaction in the opposite direction until day 31.<sup>10</sup> This prohibition applies on a last in/first out basis, even if the purchase and sell transactions occur in different accounts.

If a transaction violates the 30 Calendar Day Rule, Employees may be required to reverse the transaction and absorb any losses or disgorge profits greater than or equal to $25 associated with the short-term trade.

Employees who are reporting persons under Section 16 of the Securities Exchange Act of 1934 should refer to Section IV for additional information.

<sup>8</sup> Non-public information regarding a mutual fund is considered MNPI if such information could materially impact the fund's net asset value.

<sup>9</sup> This restriction also applies to the exercise of cash-settled options or any kind of rights granted under compensation or incentive programs that completely or in part refer to Allianz SE.

<sup>10</sup> Options must have an expiration date that is at least 31 days from the initial purchase or sale date. For avoidance of doubt, employees may trade a different options contract (i.e., different expiration or strike) within 30 calendar days.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.** **IPOs, ICOs, SPACs** 

Pre-clearance requests involving Initial Public Offerings, initial coin offerings, and SPACs generally will be denied.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.** **Futures** 

Investments in Futures, including options on Futures are prohibited.

&nbsp;&nbsp;&nbsp;&nbsp;**III.** **ADDITIONAL REQUIREMENTS FOR APPLICABLE PORTFOLIO PERSONS** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. **All Portfolio Persons<sup>11</sup>** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.** **Pre-Clearance and Approval of non-G-7 Government Securities** 

Portfolio Persons are required to pre-clear and receive prior approval for purchases and sales of direct obligations of national governments, excluding the G-7<sup>12</sup>, and European Union.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.** **General Blackout Period Restrictions for Portfolio Persons** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. <u>Prior to a Client Transaction</u> 

A Portfolio Person and their Immediate Family Members may not transact in a Financial Instrument prior to, and including, seven calendar days before: (i) the Portfolio Person transacts in the same Financial Instrument or a Related Financial Instrument for a client; or (ii) another Portfolio Person's transaction in the same Financial Instrument for a client, if the Portfolio Person knows of such other Portfolio Person's intention to do so.

The blackout period restriction shall apply unless a Compliance Officer provides specific written approval outside of the personal trading system.

**Rules for Research Analysts.** A research analyst and their Immediate Family Members may not transact in the same Financial Instrument, any other Financial Instrument issued by the same issuer, or a Related Financial Instrument that the research analyst is analyzing for a client account (whether such analysis was requested by another person or was undertaken on the research analyst's own initiative). This prohibition remains in effect until the research analyst is notified in writing that the Financial Instrument has been selected or rejected for purchase or sale for a client account or until the research analyst obtains permission to transact in the same Financial Instrument, any other Financial Instrument issued by the same issuer or a Related Financial Instrument from a Managing Director supervisor and a Compliance Officer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. <u>Following a Client Transaction</u> 

A Portfolio Person and their Immediate Family Members may not transact in a Financial Instrument within three calendar days after: (i) the Portfolio Person transacts in the same Financial Instrument or a Related Financial Instrument for a client; or (ii) another Portfolio Person has transacted in such Financial Instrument or a Related Financial Instrument for a client, if the Portfolio Person knows of such other Portfolio Person's intention to do so.

The blackout period restriction shall apply unless a Compliance Officer provides specific written approval outside of the personal trading system.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. **Real Estate Portfolio Person Obligations<sup>13</sup>** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.** **Additional Requirements for Reporting and Pre-Clearance of Real Estate Investments** 

Real Estate Portfolio Persons and their Immediate Family Members must report Real Estate Investments and obtain pre-clearance and prior approval of transactions in Real Estate Investments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.** **Exceptions to Reporting and Pre-Clearance of Real Estate Investment Transactions** 

Real Estate Portfolio Persons are not required to report, pre-clear and obtain prior approval for transactions in Real Estate Investments that are not for investment purposes, this includes transactions involving residential

<sup>11</sup> These requirements do not apply to Cryptocurrency Portfolio Persons in Operations.

<sup>12</sup> G-7 countries are Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.

<sup>13</sup> For purposes of this Section III.B, the term Financial Instrument as it applies to Personal Securities Transactions of Portfolio Persons shall include Real Estate Investment Transactions.

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properties for personal use (e.g., a primary residence or a vacation home)<sup>14</sup>, as well as loans, advances or gifts to Immediate Family Members to assist in their purchase or maintenance of such properties, are not subject to the pre-clearance or reporting requirements.

In addition, transactions involving one- to four-unit residential properties purchased for investment purposes are not subject to pre-clearance, provided such transactions would not (i) constitute a Security (e.g., an interest in an entity of which you are not a general partner, managing member, or equivalent), or (ii) violate any of your responsibilities under the Code. Such transactions are subject to the reporting requirements, however.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. **Cryptocurrency Portfolio Person Obligations** 

The following additional requirements apply to Cryptocurrency Portfolio Persons and their Immediate Family Members.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.** **Additional Requirements for Reporting of Cryptocurrency Accounts** 

Cryptocurrency Portfolio Persons and their Immediate Family Members must report all Cryptocurrency accounts within the personal trading system and provide quarterly and annual statements of transactions and holdings reports to Compliance within 30 calendar days following each quarter end.<sup>15</sup>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.** **Additional Pre-Clearance Requirements** 

Cryptocurrency Portfolio Persons must pre-clear within the personal trade surveillance system and receive approval for all of their own and their Immediate Family Members' transactions in Applicable Cryptocurrency (including purchases, sales, and conversions between Applicable Cryptocurrency and another asset).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.** **Prohibition on Short-Term Trading of Cryptocurrency** 

Cryptocurrency Portfolio Persons and their Immediate Family Members are prohibited from executing opposite-way transactions within 30-calendar days in Applicable Cryptocurrency (purchase and sale, sale and purchase, or equivalent conversions). See Section II.B.5 for further details regarding the short-term trading prohibition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.** **Firm Trading and Blackout Period Restrictions for Personal Transactions in Cryptocurrency** 

Cryptocurrency Portfolio Persons and their Immediate Family Members must not transact in any Applicable Cryptocurrency:

● the same day of a PIMCO client trade in an Applicable Cryptocurrency;

● Prior to, and including, seven calendar days before: (i) the Portfolio Person transacts in the Applicable Cryptocurrency for a PIMCO
client account; or (ii) another Portfolio Person has transacted in the Applicable Cryptocurrency for a PIMCO client account, if the Portfolio Person knows of such other Portfolio Person's intention to do so; and

● Within three calendar days after: (i) the Portfolio Person transacts in the Applicable Cryptocurrency for a PIMCO client account or
(ii) another Portfolio Person has transacted in the Applicable Cryptocurrency for a PIMCO client account, if the Portfolio Person knows of such other Portfolio Person's intention to do so.

The blackout period restriction shall apply unless a Compliance Officer provides specific written approval outside of the personal trading system.

See Section III.A.2, for further details regarding blackout period prohibitions.

<sup>14</sup> Personal use means you will occupy the property for more than two weeks a year or for more than 10 percent of the days that it is available for rent.

<sup>15</sup> A Cryptocurrency Portfolio Persons is responsible for ensuring that all of their Cryptocurrency Accounts are held with a provider that can generate a transactions history report for submission to Compliance.

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&nbsp;&nbsp;&nbsp;&nbsp;**IV.** **ADDITIONAL REQUIREMENTS FOR REPORTING PERSONS UNDER SECTION 16** 

Employees are responsible for determining whether they are subject to Section 16 requirements and arranging appropriate filings.

Employees who are reporting persons under Section 16 of the Securities Exchange Act of 1934 are subject to a 6-month holding period with respect to applicable PIMCO-advised or sub-advised closed-end funds and are subject to certain additional requirements (including that they may not short applicable PIMCO-advised or sub-advised closed-end funds and must pre-clear and obtain prior approval for transferring holdings in PIMCO-advised or sub-advised closed-end funds). Please consult a Compliance Officer for more information.

&nbsp;&nbsp;&nbsp;&nbsp;**V.** **CODE ADMINISTRATION** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. **Authority to Grant Waivers of the Requirements of the Code** 

A Compliance Officer, in consultation with PIMCO's General Counsel or the Global Chief Compliance Officer, has the authority to exempt any Employee or any Personal Investment Transaction from any or all of the provisions of this Code if the Compliance Officer determines that such exemption would not be against the interests of any client and is consistent with applicable laws and regulations, including Rule 204A-1 under the Advisers Act and Rule 17j-1 under the Investment Company Act. The Compliance Officer will prepare and file a written memorandum of any exemption granted, describing the circumstances and reasons for the exemption.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. **Non-Employee Personnel** 

Certain contractors, advisors, long-term consultants, temporary employees, interns and other individuals associated with PIMCO ("non-employee personnel") will be subject to this Code based on the individual's role and responsibilities, among other factors, as determined by Legal and Compliance in consultation with Human Resources and the hiring manager, as appropriate. Non-employee personnel will be notified in the event that they will be subject to the Code. Where determined to be applicable, the obligations of Employees as set forth in this Code shall apply to non-employee personnel, except Section II.A.3.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. **Annual Report to Boards of Funds that PIMCO Advises or Sub-Advises** 

PIMCO will furnish a written report annually to the directors or trustees of each fund that PIMCO advises or sub-advises. Each report will describe any issues arising under this Code, or under procedures implemented by PIMCO to prevent violations of this Code, since PIMCO's last report, including, but not limited to, information about material violations of this Code, procedures and sanctions imposed in response to such material violations, and certify that PIMCO has adopted procedures reasonably necessary to prevent its Employees from violating this Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. **Maintenance of Records** 

Records will be maintained in accordance with PIMCO's Records Management Policy and applicable law.

\* \* \*

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**APPENDIX I - PRE-CLEARANCE, REPORTING, AND 30 CALENDAR DAY RULE REQUIREMENTS AND EXCLUSIONS BY ASSET TYPE** 

All Financial Instruments are subject to pre-clearance and approval unless specifically excluded below. Please contact your local Compliance Officer with questions.

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| | | | |
|:---|:---|:---|:---|
| **Asset Type**<br>**Equities**<br>Shares of common or preferred stock | **Do Transactions Require Pre-clearance and Approval?**<br>**Yes** | **Is Reporting of Securities Required?<sup>1</sup>**<br>**Yes** | **Are Transactions Subject to the 30 Calendar Day Rule?**<br>**Yes** |
| Initial Public Offerings (IPOs)<sup>(2)</sup> | **Yes** | **Yes** | **Yes** |
| American Depository Receipts (ADRs) | **Yes** | **Yes** | **Yes** |
| Options & Warrants on equity securities | **Yes** | **Yes** | **Yes** |
| **Bonds** |  |  |  |
| Corporate or Municipal Bonds | **Yes** | **Yes** | **Yes** |
| Bonds convertible into common stock | **Yes** | **Yes** | **Yes** |
| Direct obligations of non-G-7<sup>(3)</sup> national governments for **Portfolio Persons** | **Yes** | **Yes** | **Yes** |
| Direct obligations of US Government or other G-7,<sup>(3)</sup> and European Union national governments for **Portfolio Persons** | No | **Yes** | No |
| Direct obligations of U.S Government or other national government for **non-Portfolio Persons** | No | **Yes** | No |
| Derivatives on any bonds | **Yes** | **Yes** | **Yes** |
| **Exchange Traded Funds** |  |  |  |
| ETFs advised or sub-advised by PIMCO, and single-stock ETFs<sup>(4)</sup> | **Yes** | **Yes** | **Yes** |
| Single-cryptocurrency ETFs for **Cryptocurrency Portfolio Persons**<sup>(5)</sup> | **Yes** | **Yes** | **Yes** |
| Single-cryptocurrency ETFs for **non-Cryptocurrency Portfolio Persons** | No | **Yes** | No |
| Derivatives on ETFs | **Yes** | **Yes** | **Yes** |
| All other ETFs | No | **Yes** | No |
| **Mutual Funds and Closed-End Funds** |  |  |  |
| Open-end mutual funds advised or sub-advised by PIMCO or an Allianz affiliated entity or unit investment trusts that are exclusively invested in one or more open-end mutual funds that is advised or sub-advised by PIMCO or an Allianz affiliated entity | No | **Yes** | No |
| Unit investment trusts that are invested exclusively in one or more open-end mutual funds that are **NOT** advised or sub-advised by PIMCO or an Allianz affiliated entity | No | **No** | No |
| Open-end mutual funds **NOT** advised or sub-advised by PIMCO or an Allianz affiliated entity | No | No | No |
| Closed-end mutual funds advised or sub-advised by PIMCO | **Yes** | **Yes** | **Yes** |
| Closed-end mutual funds **NOT** advised or sub-advised by PIMCO | **Yes** | **Yes** | **Yes** |
| Interval funds advised or sub-advised by PIMCO or an Allianz affiliated entity | **Yes** | **Yes** | Yes |
| Interval funds **NOT** advised or sub-advised by PIMCO or an Allianz affiliated entity | No | **Yes** | No |
| **Currencies & Commodities** |  |  |  |
| Currencies for investment purposes | **Yes** | **Yes** | **Yes** |
| Currency futures<sup>(6)</sup>, forwards, swaps, or options thereon | **Yes** | **Yes** | **Yes** |
| Forex Spot **NOT** for investment purposes (e.g., to settle an investment transaction) | No | No | No |
| Physical Currencies (e.g., traveling abroad) | No | No | No |

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| | | | |
|:---|:---|:---|:---|
| **Asset Type**<br>**Currencies & Commodities (cont.)**<br>Commodities for investment purposes | **Do Transactions Require Pre-clearance and Approval?**<br>**Yes** | **Is Reporting of Securities Required? <sup>1</sup>**<br>**Yes** | **Are Transactions Subject to the 30 Calendar Day Rule?**<br>**Yes** |
| Commodity futures<sup>(6)</sup>, forwards, swaps, or options thereon | **Yes** | **Yes** | **Yes** |
| Physical Commodities **NOT** for investment purposes (e.g., for personal use) | No | No | No |
| Cryptocurrencies (direct transactions) for **non-Cryptocurrency Portfolio Persons**  | No | No | No |
| Cryptocurrencies (direct transactions) for **Cryptocurrency Portfolio Persons** <sup>(5)</sup> | **Yes** | **Yes** | **Yes** |
| Initial coin offerings (ICOs) <sup>(7)</sup> | **Yes** | **Yes** | **Yes** |
| Derivatives on cryptocurrencies | **Yes** | **Yes** | **Yes** |
| **Other** |  |  |  |
| Private placements, hedge funds, private equity, or any other private offering | **Yes** | **Yes** | **No** |
| Cash equivalents <sup>(8)</sup> | No | No | No |
| Real Estate Physical Property (Commercial or 5 or more residential units) for investment purposes **for non-Real Estate Portfolio Persons** | No | No | No |
| Real Estate Physical Property (Commercial or 5 or more residential units) for investment purposes **for Real Estate Portfolio Persons** | **Yes** | **Yes** | **No** |
| Real Estate Physical Property (1-4 residential units) for investment purposes **for Real Estate Portfolio Persons** | No | **Yes** | No |
| Real Estate Property (personal use) | No | No | No |
| Any Financial Instrument not referenced above | **Yes** | **Yes** | **Yes** |
| **PIMCO/Allianz Retirement and Investment Account Requirements** | **PIMCO/Allianz Retirement and Investment Account Requirements** | **PIMCO/Allianz Retirement and Investment Account Requirements** |  |
| **Account Type** | **Do Transactions Require Pre-clearance and Approval?** | **Is Reporting of the Account**<br> **and Securities Required?** | **Are Transactions Subject to the 30 Calendar Day Rule?** |
| **PIMCO/Allianz Retirement and Investment Accounts** |  |  |  |
| Charles Schwab Personal Choice Retirement Account within the Allianz 401k | **Yes** | **Yes** | **Yes** |
| Allianz Employee Stock Purchase Plan (ESPP) | **Yes** | **Yes** | **Yes** |
| Allianz Executive Deferred Compensation Plan (EDCP) | **Yes** | **Yes** | **Yes** |
| 529 Plan through PIMCO Benefits | No | **Yes** | No |
| PIMCO Direct Investment Accounts | No | **Yes** | No |
| Fund Invest Accounts through Charles Schwab and Fidelity | No | **Yes** | No |
| State Street Global Investor Series | No | **Yes** | No |

---

(1) If an investment account has the ability to invest in a reportable security within its investment options, the account
is reportable to Compliance via the personal trading system.

(2) As a general matter, most pre-clearance requests involving IPOs will be denied.

(3) G-7 countries are Canada, France, Germany, Italy, Japan, the United Kingdom, and
the United States.

(4) As a general matter, most pre-clearance requests involving single-stock ETFs
will be denied.

(5) Cryptocurrency Portfolio Persons are required to report their and Immediate Family Members' Personal Securities
Accounts that hold Applicable Cryptocurrency, pre-clear transactions in Applicable Cryptocurrency, including single-cryptocurrency ETFs on Applicable Cryptocurrency, and abide by the 30 calendar day rule for
Applicable Cryptocurrency. Applicable Cryptocurrency is cryptocurrency that PIMCO is trading on behalf of clients. Cryptocurrency transactions include purchases, sales, and conversions between an Applicable Cryptocurrency and another asset.

(6) Futures, including options on futures are prohibited.

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(7) Initial coin offerings (ICOs) are prohibited for all employees and their Immediate Family Members.

(8) Cash equivalents include bank certificates of deposit ("CDs"), bankers acceptances, commercial paper and
other high quality, non-sovereign short-term debt instruments (with an original maturity less than one year), including repurchase agreements.

**APPENDIX II - OPTIONS TRADING: PRE-CLEARANCE AND 30 CALENDAR DAY RULE** 

The following chart provides specific guidance on pre-clearance and short-term trading prohibitions for options trading.

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;**Option Trading** | **Pre-clearance Required** | **Subject to Short Term Trading Restriction**<br> **("30 Calendar Day Rule")** |
| &nbsp;&nbsp;&nbsp;Purchasing/Selling an Option<sup>16</sup> | Yes | Yes<br>The option's expiration date must be greater than 30 days from the date of the option transaction.<br>An options contract cannot be bought and sold, or sold and bought, within 30 calendar days.<br>For avoidance of doubt, employees may trade a different options contract (i.e., different expiration or strike) within 30 calendar days.<br>|
| &nbsp;&nbsp;&nbsp;Involuntary Option Assignment/Exercise of Existing Option Position  | No<br>Purchase or sale of underlying<br> Security not directed by the<br> Employee | No<br>The acquisition/disposition of a security resulting from an existing option position via an involuntary assignment/exercise is not subject to the 30 Calendar Day Rule |
| &nbsp;&nbsp;&nbsp;Directing an Option Exercise of Existing Options Position  | Yes<br>To exercise an option, the purchase or sale of the underlying security must be pre-cleared before directing the option exercise<br>| Yes<br>After the receipt or disposal of the underlying security due to a directed option exercise, employees are prohibited from executing an opposite way transaction in the underlying security for 30 calendar days |
| &nbsp;&nbsp;&nbsp;Rolling<sup>17</sup> an Option on All Other Underlying Securities | Yes<br>Pre-clearance of both legs of the transaction is required to roll the option | Yes<br>Other options are not allowed to roll within 30 calendar days (i.e., they are subject to the 30 Calendar Day Rule) |

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<sup>16</sup> Voluntary corporate actions require pre-clearance.

<sup>17</sup> The simultaneous closing and opening of an option to extend the expiration or maturity of the initial position to the next available contract period immediately following such expiration or maturity.

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**GLOSSARY** 

The following definitions apply to the capitalized terms used in the Code:

**Applicable Cryptocurrency** – means cryptocurrency that PIMCO is trading on behalf of clients.

**Approved Broker** – means a broker-dealer approved by the Compliance Officer. The list of Approved Brokers for each PIMCO location is accessible through the PIMCO Intranet or can be obtained from the Compliance Officer.

**Automatic Investment Plan** – means a program in which regular periodic purchases (or withdrawals) are made automatically in (or from) investment accounts in accordance with a predetermined schedule and allocation. An Automatic Investment Plan includes a dividend reinvestment plan.

**Beneficial Interest** – means when a person has or shares direct or indirect pecuniary interest in accounts or in reportable Financial Instruments. Pecuniary interest means that a person has the ability to profit, directly or indirectly, or share in any profit from a transaction. Indirect pecuniary interest extends to, unless specifically excepted by a Compliance Officer, an interest in a Financial Instrument held by: (1) a joint account to which you are a party; (2) a partnership in which you are a general partner; (3) a partnership in which you or an Immediate Family Member holds a controlling interest and with respect to which Financial Instrument you or an Immediate Family Member has investment discretion; (4) a limited liability company in which you are a managing member; (5) a limited liability company in which you or an Immediate Family Member holds a controlling interest and with respect to which Financial Instrument you or an Immediate Family Member has investment discretion; (6) a trust in which you or an Immediate Family Member has a vested interest or serves as a trustee with investment discretion; (7) a closely-held corporation in which you or an Immediate Family Member holds a controlling interest and with respect to which Financial Instrument you or an Immediate Family Member has investment discretion; or (8) any account (including retirement, pension, deferred compensation or similar account) in which you or an Immediate Family has a substantial economic interest. A pecuniary interest (thus, Beneficial Interest) may arise with respect to any Financial Instrument including without limitation those (such as private equity and hedge fund investments) obtained through Private Placements.

**Cryptocurrency Account** – solely for the purposes of the Cryptocurrency Portfolio Person addendum, means any Personal Securities Account that holds or is expected to hold Applicable Cryptocurrency.

**Cryptocurrency Portfolio Person** – means any person who directly supports or directs trading in Applicable Cryptocurrency on behalf of PIMCO clients.

**Cryptocurrency** – means any virtual or digital representation of value, token or other asset in which encryption techniques are used to regulate the generation of such assets and to verify the transfer of assets, which is not a Security or otherwise characterized as a security under the relevant law.

**Derivative** – means (1) any Futures (as defined below); and (2) a forward contract, a "swap", a "cap", a "collar", a "floor" and an over-the-counter option (other than an option on a foreign currency, an option on a basket of currencies, an option on a Security or an option on an index of Securities, which are included in the definition of "Security"). Questions regarding whether a particular instrument or transaction is a Derivative for purposes of this policy should be directed to the Compliance Officer or his or her designee. For avoidance of doubt, a derivative on a Cryptocurrency is considered to be a "Derivative" for purposes of the Code.

**Financial Instrument** – means a Security, Derivative, commodity or currency as investment, but does not include Cryptocurrencies. For the avoidance of doubt, futures contracts on Cryptocurrencies are "Financial Instruments" for purposes of the Code.

**Futures** – means a futures contract and an option on a futures contract traded on a U.S. or non-U.S. board of trade, such as the Chicago Board of Trade or the London International Financial Futures Exchange.

**Immediate Family Member**– generally means: (1) an Employee's spouse; (2) any of the following persons sharing the

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same household with the Employee (which does not include temporary house guests): a person's child, stepchild, grandchild, parent, stepparent, grandparent, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-law, legal guardian, adoptive relative, or domestic partner; (3) any person sharing the same household with the Employee (which does not include temporary house guests) that holds an account in which the Employee is a joint owner or listed as a beneficiary; or (4) any person sharing the same household with the Employee in which the Employee contributes to the maintenance of the household and material financial support of such person.

**Initial Public Offering** – means an offering of securities registered under the Securities Act of 1933, the issuer of which, immediately before the registration, was not subject to the reporting requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934. This also includes any non-US equity security offered publicly for the first time in any jurisdiction. Initial Public Offerings excludes fixed-income, preferred, business development companies, registered investment companies, commodity pools and convertible securities offerings.

**Non-Discretionary Account** – means any account managed by a broker dealer, futures commission merchant, or trustee as to which neither the Employee nor an Immediate Family Member: (1) exercises investment discretion; and (2) receives notice of specific transactions prior to execution.

**Personal Securities Account** – means (1) any account (including any custody account, safekeeping account, retirement account such as an IRA or 401(k) plan, and any account maintained by an entity that may act as a broker or principal) in which an Employee has any direct or indirect Beneficial Interest, including Personal Securities Accounts and trusts for the benefit of such persons; and (2) any account maintained for a financial dependent. Thus, the term "Personal Securities Accounts" also includes, among others:

(i) Trusts for which the Employee acts as trustee, executor or custodian;

(ii) Accounts of or for the benefit of a person who receives financial support from the Employee;

(iii) Accounts of or for the benefit of an Immediate Family Member; and

(iv) Accounts in which the Employee is a joint owner or has trading authority.

For the avoidance of doubt, the term "Personal Securities Account" does not include: (1) an account on the U.S. Department of the Treasury's TreasuryDirect system, so long as the securities purchased through and/or held in such account may only be, or were, purchased through a non-competitive bid process; or (2) any account limited to direct holdings of Cryptocurrencies. For avoidance of doubt, an account that holds Derivatives on Cryptocurrencies would constitute a "Personal Securities Account" for purposes of the Code, and is subject to the requirements of Section II.A.2 above.

**Personal Securities Transaction** – means transactions in Securities (whether publicly offered or a Private Placement), Derivatives, currencies for investment purposes and commodities for investment purposes, but does not include direct transactions in a Cryptocurrency, except for Cryptocurrency Portfolio Persons as noted in Appendix IV. For the avoidance of doubt, "Personal Securities Transaction" includes Derivatives on a Cryptocurrency.

**Portfolio Person** – means an Employee who: (1) provides information or advice with respect to the purchase or sale of a Financial Instrument, such as a research analyst; or (2) helps execute a portfolio manager's investment decisions. This includes Portfolio Managers, Economists, Traders, Portfolio Associates/Trade Assistants, Research Analysts, Portfolio Risk Management, members of Capital Markets team, and Asset Management team.

**Private Placement** – means an offering that is exempt from registration under the Securities Act of 1933 pursuant to Section 4(a)(2) or Section 4(a)(5) or pursuant to SEC Rules 504, 505 or 506 under the Securities Act of 1933,

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including hedge funds or private equity funds or similar laws of non-U.S. jurisdictions.

**Real Estate Portfolio Person** – means a Portfolio Person, employees of PIMCO Prime Real Estate LLC, or any other Employee designated by a Compliance Officer, with respect to PIMCO advised private funds that executes transactions in Real Estate Investment.

**Real Estate Investments**– means investments involving real estate for an investment purposes and not for personal use (such as, without limitation, purchases, sales, financings or other forms of investments in office, multifamily, retail, commercial, industrial or hospitality properties or interest in real estate services or service providers), either directly or through investments in funds (other than registered investment companies or publicly traded Securities that are otherwise subject to the Code of Ethics), joint ventures, partnerships, limited liability companies, mortgage or mezzanine loans or other Securities (other than publicly traded Securities that are otherwise subject to the Code of Ethics).

**Related Financial Instrument** – means any Derivative directly tied to the same underlying Financial Instrument, including, but not limited to, any swap, option or warrant to purchase or sell that same underlying Financial Instrument, and any Derivative convertible into or exchangeable for that same underlying Financial Instrument. For example, the purchase and exercise of an option to acquire a Security is subject to the same restrictions that would apply to the purchase of the Security itself.

**Securities and Commodities Laws** – means the securities and/or commodities laws of any jurisdiction applicable to any Employee, including for any employee located in the U.S. or employed by PIMCO, the following laws: Securities Act of 1933, the Securities Exchange Act of 1934, the Sarbanes-Oxley Act of 2002, the Investment Company Act of 1940, the Investment Advisers Act of 1940, Title V of the Gramm-Leach-Bliley Act, any rules adopted by the U.S. Securities and Exchange Commission under any of these statutes, the Bank Secrecy Act as it applies to funds, broker-dealers and investment advisers, and any rules adopted thereunder by the U.S. Securities and Exchange Commission or the U.S. Department of the Treasury, the Commodity Exchange Act, any rules adopted by the U.S. Commodity Futures Trading Commission under this statute, and applicable rules adopted by the National Futures Association.

**Security** – means any note, stock, treasury stock, security future, security-based swap, bond, debenture, evidence of indebtedness, certificate of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract (e.g., investment in a business), voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas or other mineral rights, any put, call, straddle, option, or privilege on any security, (including a certificate of deposit) or on any group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or in general, any interest of instrument commonly known as a "security", or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guaranty of, or warrant or right to subscribe to or purchase any of the foregoing.

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## Ex-99.(S)(1)

**<u>POWER OF ATTORNEY</u>**

We, the undersigned Trustees/Directors of the registered investment companies listed on <u>Schedule A</u> attached hereto (each, a "Fund"), hereby severally constitute and appoint each of Ryan G. Leshaw, Timothy A. Bekkers, Jaime C. Dinan, David C. Sullivan and Adam T. Teufel, and each of them singly, with full powers of substitution and resubstitution, our true and lawful attorney, with full power to them to sign for us, and in our names and in the capacities indicated below, any Registration Statement of any Fund on Form N-1A, Form N-2 or Form N-14, all Pre-Effective Amendments to any such Registration Statement of such Fund, any and all subsequent Post-Effective Amendments to such Registration Statement, including, without limitation, pursuant to Rule 462(d) under the Securities Act of 1933, as amended (the "1933 Act"), any and all supplements, proxy materials or other instruments in connection therewith, and any subsequent Registration Statements for the same offering which may be filed under Rule 462(b) under the 1933 Act, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, the securities regulators of the appropriate states and territories and any other regulatory authority having jurisdiction over the issuance of rights and the offer and sale of shares of beneficial interest of the Fund, any and all agreements, filings, documents, registrations, notices, and other instruments required or permitted to be filed pursuant to the 1933 Act, the Securities Exchange Act of 1934, as amended, the Investment Company Act of 1940, as amended (the "1940 Act"), the Investment Advisers Act of 1940, as amended, the Commodities Exchange Act, as amended, the Federal Securities Laws (as that term is defined in Rule 38a-1 under the 1940 Act), and the rules thereunder, and/or any rules or regulations passed or adopted by the New York Stock Exchange or any other exchange on which a Fund's shares trade (an "Exchange"), the National Futures Association ("NFA"), the Financial Industry Regulatory Authority ("FINRA"), and/or any other self-regulatory organization (each, an "SRO") to whose authority a Fund is subject, and any and all agreements, filings, documents, registrations, notices, and other instruments required or permitted to be filed to comply with the statutes, rules, regulations or law of any state or jurisdiction, including those required to qualify to do business or to engage in a reorganization, merger or liquidation in any such state or jurisdiction (collectively, the "Securities and Commodities Laws"), and to file the same, with all exhibits thereto, and other agreements, documents and other instruments in connection therewith, with the appropriate regulatory body including, but not limited to, the Securities and Exchange Commission, the Commodity Futures Trading Commission, an Exchange, the NFA, FINRA, and any SRO, and/or the securities regulators or other agency or regulatory body of the appropriate states and territories, and generally to do all such things in our names and on our behalf in connection therewith as such attorney deems necessary or appropriate to comply with the Securities and Commodities Laws and all related requirements, granting unto such attorney full power and authority to do and perform each and every act and thing requisite or necessary to be done in connection therewith, as fully to all intents and purposes as we might or could do in person, hereby ratifying and confirming all that such attorney lawfully could do or cause to be done by virtue hereof. This Power of Attorney may be executed in written form, by facsimile or by other means using electronic or digital technology, whether it is a computer-generated signature, an electronic copy of the party's true ink signature or otherwise. This Power of Attorney is governed by Massachusetts state law with respect to each respective Fund that is organized as a Massachusetts business trust and by Maryland state law with respect to each respective Fund that is organized as a Maryland corporation.

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| | | |
|:---|:---|:---|
| **Name** | **Capacity** | **Date** |
| /s/ Libby D. Cantrill<br> Libby D. Cantrill | Trustee/Director | September 17, 2025 |
| /s/ Sarah E. Cogan<br> Sarah E. Cogan | Trustee/Director | September 17, 2025 |
| /s/ Deborah A. DeCotis<br> Deborah A. DeCotis | Trustee/Director | September 17, 2025 |
| /s/ David Flattum<br> David Flattum | Trustee/Director | September 17, 2025 |
| /s/ Kathleen A. McCartney<br> Kathleen A. McCartney | Trustee/Director | September 17, 2025 |
| /s/ Mark Michel<br> Mark Michel | Trustee/Director | September 17, 2025 |
| /s/ Sonya Morris<br> Sonya Morris | Trustee/Director | September 17, 2025 |
| /s/ Alan Rappaport<br> Alan Rappaport | Trustee/Director | September 17, 2025 |
| /s/ E. Grace Vandecruze<br> E. Grace Vandecruze | Trustee/Director | September 17, 2025 |

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**<u>SCHEDULE A</u>**

**FUND NAME AND SYMBOL\*** 

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| | | |
|:---|:---|:---|
| 1. | PCM FUND, INC. | PCM |
| 2. | PIMCO ACCESS INCOME FUND | PAXS |
| 3. | PIMCO CALIFORNIA FLEXIBLE MUNICIPAL INCOME FUND | CAFLX |
| 4. | PIMCO CALIFORNIA MUNICIPAL INCOME FUND | PCQ |
| 5. | PIMCO CALIFORNIA MUNICIPAL INCOME FUND II\*\* | PCK |
| 6. | PIMCO CALIFORNIA MUNICIPAL INCOME FUND III\*\* | PZC |
| 7. | PIMCO CORPORATE & INCOME STRATEGY FUND | PCN |
| 8. | PIMCO CORPORATE & INCOME OPPORTUNITY FUND | PTY |
| 9. | PIMCO DYNAMIC INCOME FUND | PDI |
| 10. | PIMCO DYNAMIC INCOME OPPORTUNITIES FUND | PDO |
| 11. | PIMCO DYNAMIC INCOME STRATEGY FUND | PDX |
| 12. | PIMCO FLEXIBLE EMERGING MARKETS INCOME FUND | EMFLX |
| 13. | PIMCO FLEXIBLE CREDIT INCOME FUND | PFLEX |
| 14. | PIMCO FLEXIBLE MUNICIPAL INCOME FUND | PMFLX |
| 15. | PIMCO GLOBAL STOCKSPLUS & INCOME FUND | PGP |
| 16. | PIMCO HIGH INCOME FUND | PHK |
| 17. | PIMCO INCOME STRATEGY FUND | PFL |
| 18. | PIMCO INCOME STRATEGY FUND II | PFN |
| 19. | PIMCO MUNICIPAL INCOME FUND\*\* | PMF |
| 20. | PIMCO MUNICIPAL INCOME FUND II | PML |
| 21. | PIMCO MUNICIPAL INCOME FUND III\*\* | PMX |
| 22. | PIMCO MUNICIPAL CREDIT INCOME FUND\*\* | PMC |
| 23. | PIMCO NEW YORK MUNICIPAL INCOME FUND\*\* | PNF |
| 24. | PIMCO NEW YORK MUNICIPAL INCOME FUND II | PNI |
| 25. | PIMCO NEW YORK MUNICIPAL INCOME FUND III\*\* | PYN |
| 26. | PIMCO STRATEGIC INCOME FUND, INC. | RCS |
| 27. | PIMCO MANAGED ACCOUNTS TRUST |  |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fixed Income Shares: Series M | FXIMX |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fixed Income Shares: Series C | FXICX |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fixed Income Shares: Series R | FXIRX |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fixed Income Shares: Series TE | FXIEX |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fixed Income Shares: Series LD | FXIDX |

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\* While one ticker symbol per Fund is listed, this Power of Attorney covers all ticker symbols of each Fund.

\*\* Only Ms. Cantrill is a current Trustee of each of PCK, PZC, PMF, PMX, PNF, PYN and PMC.