Pacific Investment Management Company LLC: investment adviser

products. PIMCO is a provider of solutions services,

(“Allianz”), a global financial services company based in

offering a menu of sophisticated strategies, analysis, and

Germany, although our operations are separate from,

advice for clients in all types of market conditions. While

and autonomous of, Allianz. Please refer to Appendix A

these services have greatly evolved over time, one thing

for PIMCO’s Principal Owners.

that has not changed is our mission to provide the

PIMCO’s Global Offices. As a global investment

highest quality investment management services.

manager, PIMCO uses the resources of our offices

As a leading provider of discretionary investment

around the world to provide portfolio management,

management services, PIMCO employs a broad range of

research, and trading services for client accounts (each, a

portfolio management tools that seek to appropriately

“Client” or “Account”). The PIMCO entity with which a

manage risk, hedge exposures, and seek returns

client has contracted supervises any services provided by

consistent with Client guidelines. We have considerable

one or more of our global offices.

experience in an array of global investment strategies,

Our People. PIMCO was founded on the philosophy that

which include both fixed income and equity strategies. As

hard work, high standards of excellence, and the desire to be the best are critical to our success. Biographical and other information relating to certain key investment management personnel is contained in the supplement to this brochure.

Assets Under Management As of December 31, 2025, PIMCO managed approximately $3,666,935,101,247 of regulatory assets under management and $2,255,965,449,422 of net assets

markets evolve, we will seek to employ new strategies and manage new products. For additional information relating to our strategies, methods of analysis, and material risks associated with our significant strategies, please see “Methods of Analysis, Investment Strategies, and Risk of Loss” in Item 8. Portfolio Management. PIMCO provides investment management services to Clients through a global team of investment professionals.

under management, respectively. For purposes of

The investment professionals employed by PIMCO are

calculating our regulatory AUM, we include assets that

devoted primarily to the management of Accounts. Client

we manage on behalf of Allianz-affiliated companies, as well as the assets of clients contracted with the non-U.S. investment advisers affiliated with PIMCO listed in Appendix C (the “Non-U.S. Advisers”), except PIMCO Prime Real Estate GmbH, which files reports with the SEC as an Exempt Reporting Adviser, and its subsidiary, PIMCO Prime Real Estate Asia Pacific Pte. Ltd.

Our Services

portfolio management teams include portfolio managers, risk managers, research analysts, economists, and others who assist in the development of investment ideas, implementation of portfolio strategies, and risk analysis. PIMCO has an Investment Committee comprised of senior portfolio managers and headed by PIMCO's Group Chief Investment Officer and Chief Investment Officers. The Investment Committee determines key portfolio management strategies. Guided by these key strategies,

Our Organization. Since 1971, we have provided

individual portfolio management teams then make

discretionary investment management services to clients

investment decisions for their respective Accounts.

throughout the world. PIMCO began as a manager of

Separate Account Management. The client

fees associated with insourced or outsourced services will

management team, which acts as the bridge between

be borne by PIMCO or, subject to applicable offering

separate account Clients (each, a “Separate Account”)

documents or investment management agreements, a

and their PIMCO portfolio managers, is devoted to client

Client. In addition, PIMCO, and not Clients, could benefit

service. One of the advantages of this approach is that it

from certain fee reduction arrangements under certain

permits our portfolio managers to concentrate the vast

such agreements. For additional information, please see

majority of their time on investment activities. Client

“Payments Made to Service Providers and Other Third

management professionals work closely with the

Parties” in Item 5.

portfolio management team to implement each Separate Account’s investment guidelines. Client management professionals also are responsible for day-to-day servicing of Separate Accounts and play an integral role in helping to develop investment ideas and strategies in conjunction with the portfolio management team.

Asset Management. PIMCO (both directly and through the use of Affiliated Service Providers) provides asset management services related to the management and monitoring of certain investments through a dedicated team of asset managers. Such activities include, among others: (i) assisting with asset and liability servicing, such

Business Management. PIMCO’s business management

as seeking to ensure that all principal and interest is

team provides the infrastructure for the operation of the

received for loan agreements and that debt obligations

firm and includes the Legal and Compliance, Human

are satisfied; (ii) monitoring assets pledged as collateral

Resources, Operations, Finance, and Technology

for financing; and (iii) supporting asset servicing

departments. One key function of the business

functions as appropriate. In certain instances, senior

management team is to manage back-office operations.

members of the asset management division may function

We have outsourced certain back-office operations to

both as asset managers and portfolio managers.

State Street Bank and Trust Company and its affiliates (together, “SSBT”), a firm specializing in back-office trade processing, settlement, and accounting operations. This enables us to focus the majority of our people and resources on what we do best – managing investments and servicing clients. SSBT administers the following functions on our behalf, including, but not limited to: (i) coordinating asset transitions; (ii) assisting with the maintenance and update of our security master database; (iii) processing trades; (iv) communicating trade and settlement directives to the relevant account’s custodian banks; and (v) facilitating failed trade and overdraft compensation claims. While SSBT provides our back-office services, we actively supervise all work performed on behalf of our Clients in connection with these services. PIMCO may insource or outsource certain processes or functions in connection with a variety of services that it provides in its administrative or other capacities without notice to Clients. Depending upon the nature of the services, and subject to applicable law and agreements,

Non-Discretionary Services. In addition to our discretionary investment management services, PIMCO also provides non-discretionary investment management and non-discretionary advisory services to certain clients. Some clients grant PIMCO limited discretion with respect to the assets in their Account (“Non-Discretionary Accounts”). For example, a Client may require that PIMCO seek the Client’s approval prior to any buy or sell transactions in the Client’s Account. In these instances, our ability to transact on behalf of the Client will be limited. Therefore, a Non-Discretionary Account may not be able to obtain comparable discounts that we may negotiate on aggregated transactions, it may pay higher transaction costs or brokerage commissions, and we may be unable to achieve the most favorable execution depending on the circumstances of the transaction and the limitations of the Account. Similarly, a NonDiscretionary Account may not be able to participate in certain investment opportunities. For these reasons, a Non-Discretionary Account may achieve lower returns compared to a comparable Account that grants PIMCO

full discretion. For additional information on Non-

Securities Lending. PIMCO generally does not enter into

Discretionary Accounts, please see “Conflicts Relating to

securities lending arrangements for our Clients (other

Non-Discretionary Advisory Services” in Item 11.

than for the PIMCO Funds, as described in their

Other Services. PIMCO engages in related business activities, including the licensing of intellectual property with respect to, for example, the development of

respective offering documents). However, from time to time with the agreement of a Client, we may enter into or facilitate securities lending arrangements for that Client.

methodologies for compiling and calculating a

Under typical securities lending arrangements, a

benchmark index. We license or sell our intellectual

manager loans a security held in a client’s portfolio to a

property rights in such methodologies to third parties

broker-dealer in exchange for collateral. This collateral

who use such methodologies to create and issue

can consist of either cash collateral or non-cash collateral

investment products that are based on such indices

(i.e., other securities). In addition, Clients would typically

and/or correlated to the underlying components of such

continue to receive interest or dividends on the securities

indices. We also license or sell our intellectual property

lent. The client may earn potentially enhanced returns

rights in such methodologies to third parties who use

from these arrangements by collecting finance charges

such methodologies to hedge or reinsure such

on the loan or by reinvesting cash collateral to earn a

investment products, develop a benchmark index, or

positive net return. Such returns are generally shared

calculate performance on a financial product. In certain

between the client and the securities lending agent, and

cases, such third parties pay us a portion of the

the risk associated with the investment of collateral is

subscription or licensing fees they receive in connection

generally borne by the client.

with such indices, or a percentage of the total assets allocated to investment products that are based on or reference such indices. In connection with the licensing of our indices, in certain cases we will receive a fee for entering into certain hedging transactions on behalf of the licensee of the index (or another third party) or for permitting third parties to engage in such hedging transactions.

Some Clients have established separate securities lending arrangements through their custodian or other service provider. If a Client has entered into these arrangements, the Client and its custodian or service provider are responsible for adhering to the requirements of such arrangements, including ensuring that the securities or other assets in the Account are available for any securities lending transactions. PIMCO shall neither have

Other examples of related business activities include,

nor accept any liability, authority, or power to determine,

among other things, entities owned by or otherwise

or influence the determination, whether to loan any

affiliated with us or owned by certain Clients that we

security in an Account or recall any security that has been

manage or sponsor, including Clients that are pooled

lent from an Account by a Client or a Client’s custodian

investment vehicles (“PIMCO Funds” or “Funds”), providing

or service provider. For Accounts that we actively

loan servicing, consulting, legal, accounting, tax, due

manage, we execute transactions based on a number of

diligence, sourcing, origination, asset management, or

factors, including market conditions and best execution,

other services to certain Clients or portfolio companies or

and generally do not consider factors relating to a

other investments directly or indirectly owned by such

Client’s securities lending arrangements, such as whether

Clients. PIMCO Aurora LLC (the “Services Company”) is a

the Client’s custodian may need to recall securities on

wholly-owned subsidiary of PIMCO and service provider

loan to settle the sales transactions. We have established

for certain Clients. For additional information relating to

policies and procedures in the event there is a loss or

the Services Company, please see “Payments Made to

overdraft in connection with a transaction. For additional

Service Providers and Other Third Parties” in Item 5.

information relating to the claims process, including any loss relating to PIMCO’s sale of a security that is not

available in an Account due to such Client’s securities

providing indemnities, filing proofs of claim, engaging in

lending activities, please see “Claims Process” in Item 12.

or defending litigation including as part of an ad hoc or

For additional information relating to securities lending,

other group, and or otherwise participating in such

please see “Securities Lending Transaction Risk” in Item

transactions, or taking similar actions at our discretion,

8.

where permitted, on behalf of PIMCO Funds and Separate

Litigation, Class Actions, and Bankruptcies. As an investment manager, PIMCO is asked from time to time to decide whether to participate in litigation, including by filing proofs of claim in class actions for assets held in an Account. As a general matter, it is the Client’s responsibility to monitor and analyze its portfolio and consult with its own advisers and custodian about whether it may have litigation claims that it should consider pursuing. Generally, PIMCO cannot, without express Client written authorization, exercise any rights a Client may have in participating in, commencing, or defending suits or legal proceedings, including class actions for assets held or previously held in an Account, although we undertake such activities for the PIMCO Funds. In the case of Separate Account Clients, upon mutual agreement between PIMCO and the Client, and receipt of a letter of authorization and Power of Attorney, PIMCO will assist Clients or their custodian in assembling transaction information to file a proof of claim (e.g., a

Accounts in order for those Funds and Clients to participate (or participate to the extent PIMCO believes desirable) in the bankruptcy, reorganization, or other corporate event, although we are under no obligation to do so. Any such action will bind the Client with respect to the securities or other investments with respect to which the action was taken. In connection with such corporate events, PIMCO may (i) accept, receive, purchase, or subscribe for securities or other instruments (including, but not limited to, common stock and private equity) into an Account, and (ii) hold such securities or instruments for a reasonable time in an Account, in each case, that may or may not be referenced or otherwise permitted in an Account’s investment guidelines, provided such actions are in the best interests of the Account. In addition, to the extent that a Client holds assets subject to bankruptcy claims, PIMCO may, but is not obligated to, take such actions in its discretion in order to realize the value of such asset.

class action or bankruptcy claim) on behalf of their

Clients that are currently or were formerly investors in,

Account. When submitting proofs of claim on behalf of

or otherwise involved with, investments that are the

Clients, PIMCO will not include securities purchased on

subject of a legal action may or may not (depending on

behalf of a Client by another investment manager or

the circumstances) be parties to the particular legal

otherwise held outside of the Account. Further, Clients

action, with the result that a Client may participate in an

may be precluded from filing a direct claim against an

action in which not all Clients with similar investments

issuer where PIMCO files a proof of claim on behalf of a

may participate. In these instances, non-participating

Client. Generally, a Separate Account’s custodian should

Clients may benefit from the results of such actions

receive all documents for these matters because the

without bearing or otherwise being subject to the

securities are held in the Client’s name at the custodian,

associated fees, costs, expenses, and liabilities. In

and the Separate Account Client should direct its

connection with these actions, PIMCO Funds and

custodian as to the manner in which such matters should

Separate Account Clients may be sued or otherwise be

be handled. Notwithstanding the above, in connection

named as defendants.

with bankruptcies, reorganizations, debt workouts, or other corporate events, PIMCO may, and in some cases does, enter into documents and take any and all such actions as may be necessary to facilitate such transactions, including entering into restructuring support agreements, transaction support agreements, releases of claims,

Tailoring Services to Client Needs Upon selecting an investment strategy, Clients typically provide PIMCO with specific investment parameters in the form of investment guidelines. The investment guidelines may include, for example, restrictions on investing in

certain assets, such as product types, issuers, or securities

advice under a Wrap Program, PIMCO is responsible for

or transaction types with certain attributes. The investment

managing the Account in accordance with the selected

guidelines form a part of our investment management

investment strategy and any “reasonable restrictions”

agreement with a Client, and we manage the Account

imposed by the Wrap Program Client, and for this service

within these confines. Clients should be aware, however,

PIMCO typically receives a portion of the Wrap Program

that certain restrictions can limit our ability to act, and as a

fee from the Sponsor or is paid a fee by the Wrap

result, the Account’s performance may differ from and

Program Client. PIMCO is generally not responsible for

may be lower than that of other Accounts that have not

determining whether a particular Wrap Program,

limited our discretion. In certain circumstances, Clients and

PIMCO’s investment style, or a specific PIMCO strategy is

PIMCO will agree to fund an Account before relevant

suitable, appropriate, or advisable for any particular Wrap

counterparty, custody, or similar relationships are fully

Program participant. For these reasons and others, while

established. In such circumstances, PIMCO may be delayed

a same or similar PIMCO strategy might be available

in making some or all of the types of investments

through a Wrap Program, the management, execution,

contemplated by the Account’s investment guidelines, and

performance, and fees for a strategy can and will differ

the Account’s actual performance may differ from its

from other Clients, as discussed in greater detail below.

performance were it able to immediately invest in all

PIMCO provides investment advice to both discretionary

instruments and transact with all counterparties

Wrap Programs, where PIMCO makes decisions with

contemplated by the Account’s investment guidelines.

respect to the investments and trading in the selected

Important Information About Procedures For Establishing a New Client Relationship To help the government fight the funding of terrorism and money laundering activities, federal law requires certain financial institutions to obtain, verify, record, and in certain instances, report information that identifies each Client (and, in the case of legal entity customers, their beneficial owners) who opens an Account or establishes a relationship. Accordingly, when PIMCO establishes a relationship with a Client, when appropriate, we ask for the Client’s name, address, and other information or documentation (e.g., a formation document or tax document), as well as information about the Client’s beneficial owners (if applicable), that will allow us to identify and verify the Client and the source of Client funds that are being invested. Failure to provide requested information, either at account opening or during the lifetime of the account, may result in us declining to open the Account, or

strategy for the portion of the portfolio PIMCO manages (“Discretionary Wrap Programs”), and non-discretionary Wrap Programs, where PIMCO provides an investment allocation to a Sponsor who determines whether and when to invest and trade (“Non-Discretionary Wrap Programs”), in each case as discussed in greater detail below. Generally, in a typical Wrap Program, each Wrap Program Client enters into an agreement with a Sponsor, who provides or arranges for the provision of an array of services, typically covered by a single combined fee, including some or all of the following: (i) assistance with establishing client goals and objectives; (ii) asset allocation analysis, security selection and other portfolio management services; (iii) selection of investment advisers, sub-advisers, custodians, and/or broker-dealers; (v) trade execution; and (v) ongoing monitoring, reporting, and client support. Clients access certain Wrap

freezing, blocking, or terminating the Account.

Programs through an intermediary such as a bank,

Wrap and Similar Program Services

the Sponsor, in which case the intermediary may provide

broker-dealer, or other investment adviser rather than

PIMCO also offers investment management services

some, or all, of the functions otherwise provided by a

through wrap fee programs (“Wrap Programs”) that are

Sponsor. The services to be performed by the Sponsor,

sponsored by banks, broker-dealers, or other investment

PIMCO, or others in these Wrap Programs, and related

advisers (each, a “Sponsor”). As a provider of investment

fees, are generally detailed in the relevant agreements

between or among the Client, the Sponsor, PIMCO,

As a provider of investment advice under a Wrap

and/or any other parties. With respect to a Sponsor that

Program, PIMCO is generally not responsible for

is a registered investment adviser, the provided services,

determining whether a particular Wrap Program,

other terms, conditions, and information related to the

PIMCO’s investment style, or a specific PIMCO strategy is

Wrap Program are also described in the Wrap Program

suitable, appropriate, or advisable for any particular Wrap

disclosure documents and the agreement between the

Program Client. Rather, such determinations are

Client and the Sponsor. Sponsors that are not registered

generally the responsibility of the Sponsor and the Client

investment advisers may, but are not required to, provide

(or the Client’s financial advisor and the Client), and

a similar Wrap Program disclosure document (each Wrap

PIMCO is responsible only for managing the Account in

Program disclosure document, whether for a registered

accordance with the selected investment strategy and

investment adviser or another Sponsor, a “Wrap Program

any “reasonable restrictions” imposed by the Wrap

Brochure”). All Wrap Program Clients and prospective

Program Client. In the course of providing services to

Wrap Program Clients should carefully review the terms of

Wrap Program accounts advised by a financial advisor,

the agreement with the Sponsor and the relevant Wrap

PIMCO generally relies on information or directions

Program Brochure to understand the terms, services,

communicated by the financial advisor acting with

minimum account size, and any additional fees or

apparent authority on behalf of its client. PIMCO reserves

expenses that are associated with a Wrap Program

the right, in its sole discretion, to reject for any reason

account.

any Wrap Program Client referred to it.

PIMCO makes available through Wrap Programs certain

PIMCO may from time to time engage one or more

of the same or similar strategies that are available to

third-party investment advisers to provide sub-advisory

institutional clients or through Funds; however, not all of

services to PIMCO for certain strategies that are offered

PIMCO’s strategies are available through Wrap Programs,

to Wrap Program Clients. PIMCO (and not the Client) will

and not every PIMCO strategy that is available through a

be responsible for compensating any such sub-adviser. In

particular Wrap Program will be available through other

particular, PIMCO has entered into agreements with

Wrap Programs. Further, the manner in which PIMCO

Research Affiliates, LLC (“RA”) to develop and offer

executes a strategy through Wrap Programs may differ

multiple PIMCO products, including strategies available

from how that same or a similar strategy is executed

in Wrap Programs (“RA Strategies”) for which PIMCO

through another Wrap Program or for a Fund or

serves as investment adviser and RA as sub-adviser.

institutional Client. For instance, the execution of a

PIMCO expects that such RA Strategies will be

particular strategy in a Wrap Program may differ from

implemented through a third-party sub-adviser engaged

the execution of the same or a similar strategy for a Fund

by PIMCO. Under some arrangements, PIMCO will

or institutional Client due to the need to adhere to

facilitate the delivery of a model portfolio developed by

“reasonable restrictions” imposed by the Wrap Program

RA to a third-party manager who will be responsible for

Client as discussed below, or due to the use of affiliated

implementing the model portfolio on a discretionary

no-fee registered investment companies or other

basis; under these arrangements, neither PIMCO nor RA

affiliated commingled vehicles rather than individual

will be acting as investment adviser to the third-party

securities. Accordingly, the performance of a strategy

manager’s clients. The terms of PIMCO’s agreements with

available through a Wrap Program may differ from the

such third-party managers, sub-advisers, and/or RA

performance of the same or a similar strategy that is

create economic disincentives for PIMCO to terminate or

executed through another Wrap Program or for a Fund

recommend the termination of such third-party

or institutional Client.

managers, sub-advisers, and/or RA.

“Reasonable restrictions” imposed by a Wrap Program

Sponsor at higher asset levels. These fees paid to PIMCO

Client serve to limit PIMCO’s freedom of action with

by such Sponsors may be negotiable, with the

respect to an Account, and as a result, the performance

relationship size being a factor in negotiation. Affiliated

of Accounts for which such investment restrictions are

Sponsors, if any, will have an incentive to recommend

imposed will differ from, and may be worse than, the

PIMCO’s services over the services of unaffiliated

performance of Accounts within the same strategy that

managers. Sponsors may apply different methods of

do not have such restrictions.

analysis, use different types of information, or apply

For its services, PIMCO typically receives a portion of the wrap or other fee paid to the Sponsor or is paid a fee by the Wrap Program Client. For additional information

different thresholds in determining whether to recommend an affiliated manager than are applied when recommending an unaffiliated manager.

relating to the nature of Wrap Program arrangements,

Depending upon the particular Wrap Program, accounts

including the fees charged by the Sponsor and paid to

may be funded with cash and/or securities. Restrictions

PIMCO, please see “Fees and Compensation” in Item 5.

as to funding with securities in-kind are described in the

Typically, the investment management services we provide in connection with Wrap Programs are discretionary. In Discretionary Wrap Programs, PIMCO is generally responsible for causing the portion of each Discretionary Wrap Program Account that is managed by PIMCO to engage in transactions that are appropriate for the selected strategy. Wrap Program Accounts within a particular strategy are generally managed similarly, subject to a Wrap Program Client’s ability to impose “reasonable restrictions” (such as a prohibition on holding the securities of a particular issuer within the Wrap Program Account). Because PIMCO’s advisory services to these Accounts are strategy-dependent,

relevant Wrap Program Brochure and may include certain securities or types of securities that will be liquidated by PIMCO or the Sponsor. Under normal circumstances, Accounts will generally be fully invested in accordance with the relevant investment strategy within 90 days of PIMCO commencing management of the Account. To the extent that an account is funded with portfolio securities rather than solely cash, implementation may be further delayed because any in-kind contributions that are not consistent with the Account’s intended investment strategy will be liquidated at the Wrap Program Client’s risk and expense and without taking into account any adverse tax consequences to the Wrap Program Client.

PIMCO will not accept a restriction that PIMCO believes

While the Sponsor is responsible for most aspects of the

would be inconsistent with the applicable investment

relationship with a Wrap Program Client, PIMCO personnel

strategy.

who are knowledgeable about the Wrap Program Account

PIMCO participates in Wrap Programs that may be sponsored by affiliates or unaffiliated third parties. PIMCO generally does not compensate Sponsors for PIMCO’s inclusion in a Wrap Program or for introductions of Clients through a Wrap Program, although PIMCO makes payments to some Sponsors related to set-up, support, maintenance, servicing, account services, and other costs. Such Sponsors may have an incentive to recommend PIMCO’s services over the services of another manager. The portion of the total wrap fee paid to PIMCO by certain Sponsors includes breakpoints reducing the effective fee rate payable to PIMCO and thus increasing the amount retained by the

and its management will be reasonably available to Wrap Program Clients for consultation (either individually or in conjunction with Sponsor personnel), upon a Wrap Program Client’s request, as required by applicable law or as agreed between PIMCO and the Sponsor. Because the Sponsor is generally responsible for reports to Wrap Program Clients, typically PIMCO will supply the Sponsor with information necessary for the Sponsor to provide such reports directly to Wrap Program Clients. Upon request or as agreed with a Sponsor, PIMCO may provide investment holdings, transactions, and performance reports directly to Discretionary Wrap Program Clients on a periodic basis. Moreover, with respect to each

Discretionary Wrap Program Client, PIMCO reviews each

neither the Client nor the Sponsor is required to select

managed portfolio periodically to ensure it is managed in

the PIMCO ETF in order for PIMCO to manage a Client

accordance with the applicable investment objectives,

Account.

guidelines, and restrictions.

Certain investment strategies offered through a Wrap

In addition, PIMCO may be engaged as a sub-adviser by

Program may include an allocation to one or more

other investment advisers to manage client accounts

PIMCO Funds, including PIMCO Funds that are operated

outside of a Discretionary Wrap Program (“Direct

as interval funds. Rebalancing transactions in an Account

Managed Account”).

that includes an allocation to a PIMCO Fund, including,

For certain cash management purposes (including, but not limited, to the investment of cash balances, to maintain exposure pending available investment opportunities, or to maintain exposure during Sponsoror Client-directed tax selling) or as otherwise directed by Sponsor or the Client, PIMCO may utilize a variety of security types, including U.S. Government bonds, money market funds, and, upon the Client’s authorization, the PIMCO Ultra Short Government Active ETF (the “PIMCO ETF”). To the extent a Sponsor or Client has provided such authorization and the Client’s Account invests in the PIMCO ETF, the Client will bear the fees and expenses of the PIMCO ETF in addition to the fees and expenses the Client pays to PIMCO for the management of the Client’s Account. The PIMCO ETF’s fees include fees that are paid to PIMCO for services PIMCO provides to the PIMCO ETF. PIMCO will have discretion to determine the amount of assets in a Client Account that will be invested in the PIMCO ETF, and because PIMCO collects fees from the PIMCO ETF that are in addition to the fees that are paid to PIMCO to manage the Client Account, PIMCO will

but not limited to, liquidations, sales, exchanges, and redemptions, may cause the Account to realize gains or losses for income tax purposes. In addition, it may not be possible to achieve an exact allocation to the targeted asset allocation levels in all circumstances. Investment in a Wrap Program strategy that includes allocation to an interval fund includes additional liquidity risks. Although an interval fund is expected to make quarterly repurchase offers for its outstanding shares, investors should consider shares of an interval fund to be an illiquid investment. An investment in an interval fund is suitable only for long-term investors who can bear the risks associated with the limited liquidity of its shares. Shareholders will not be able to liquidate their investment in an interval fund other than as a result of repurchases of their shares, and then only on a limited basis. An investment in an interval fund is not suitable for investors who need certainty about their ability to access all of the money they invest in the short term. Any investment in a PIMCO Fund is subject to the terms and conditions of its registration statement.

have an incentive to allocate Account investments to the

With respect to Discretionary Wrap Programs and Direct

PIMCO ETF, even where a similar unaffiliated fund or ETF

Managed Accounts, PIMCO has entered into an

would be appropriate for the account and be available

arrangement with Archer IMS, LLC (“Archer”) under which

for a lower fee. An investment in a PIMCO ETF may result

Archer performs certain administrative and operational

in an Account experiencing lower performance and/or

functions, such as accounting, reconciliation, trade

higher fees than it would have had if the Account did not

settlement, recordkeeping, billing, and reporting.

invest in PIMCO Funds. PIMCO does not expect to

Typically, these services are paid for by PIMCO and not

consider any ETFs managed by other managers for cash

the Discretionary Wrap Program Clients.

management purposes where the Client or Sponsor has authorized PIMCO to invest in the PIMCO ETF for such purposes. The Client and/or the Sponsor may select another investment vehicle or account for cash management purposes at any time without penalty, and

In addition to the advisory services we provide in the Discretionary Wrap Programs, we also provide nondiscretionary investment management services to Sponsors who exercise investment discretion. In NonDiscretionary Wrap Programs, we typically provide a

model portfolio (which includes allocations to direct

party, and/or a portfolio of securities (collectively,

investments or to PIMCO Funds, and may include third-

“underlying investments”). These Model Portfolios are

party funds, or a combination thereof in PIMCO’s

licensed or otherwise made available (including through

discretion) to be analyzed and implemented by the

Non-Discretionary Wrap Programs) to third-party

Sponsor or another manager at the Sponsor’s discretion.

managers and intermediaries. Such firms may use Model

Further, in Non-Discretionary Wrap Programs, the

Portfolios as investment strategies for managing their

Sponsor or other manager is typically responsible for

underlying clients’ accounts. Model Portfolios seek to

applying any client-imposed restrictions to the model

provide exposure to investment strategies that

portfolio. In certain Non-Discretionary Wrap Programs,

collectively reflect PIMCO’s investment outlook. Model

the Sponsor who exercises investment discretion may

Portfolio allocations are based on what PIMCO believes

direct PIMCO to place orders for the execution of

to be generally accepted investment theory. As further

purchase and sale transactions for Wrap Program Client

described below, a variety of factors influence the

portfolios. In such case, trades for the Wrap Program

inclusion or exclusion of an underlying investment in a

Client will typically occur after trades placed for non-

Model Portfolio. In adjusting Model Portfolios, PIMCO

wrap Accounts, potentially resulting in inferior execution

considers, among other things, the results of quantitative

for Wrap Program Clients. Similarly, for Non-

modeling. Such quantitative modeling is designed to

Discretionary Wrap Program Clients, to the extent PIMCO

optimize each Model Portfolio’s allocation and align with

does not have trading authority, it is likely that a Sponsor

the Model Portfolio’s investment objective and internal

will execute trades after PIMCO has made similar trades

PIMCO guidelines, and it takes into account various

for its non-wrap Clients, and such execution may be

factors or inputs, as determined by PIMCO, including

impacted by PIMCO’s execution.

third-party data, to generate a suggested allocation for

Stable Value Investment Management Services PIMCO offers a wide variety of stable value services, including: (i) full-service stable value management where PIMCO handles all aspects of the stable value investment strategy; (ii) investment-only fixed income management where PIMCO is hired directly by plan sponsors to manage their stable value portfolio; and (iii) fixed income sub-advisory services where PIMCO is hired by other stable value managers and insurance companies to manage all or a portion of the assets of a fixed income portfolio. PIMCO manages Separate Account portfolios for large institutional defined contribution plans, as well as a stable value commingled vehicle for the small- and mid-sized defined contribution marketplace.

Model Portfolios PIMCO develops and maintains model portfolios (“Model

the Model Portfolios. PIMCO’s investment team then reviews the quantitative output and adjusts the output to reflect variables, which may include, among other things, the anticipated trade size, and qualitative investment insights. PIMCO Model Portfolio allocations are ultimately subject to the discretion of PIMCO’s investment team. Model Portfolio allocations are not based on any particular investor’s financial situation, or need; however, in some instances a Model Portfolio may be designed or modified to meet certain investment guideline parameters of third-party platforms on which the Model Portfolio(s) may be made available. Unless specifically stated otherwise, Model Portfolios are not intended to be, and should not be construed as, a forecast, research, investment advice, or a recommendation for any specific PIMCO or other strategy, product, or service.

Portfolios”) that are typically comprised of PIMCO Funds,

The risks of a Model Portfolio allocation depend on the

including ETFs and/or interval funds, but may also be

risks of the underlying investments represented in the

comprised of separately managed accounts managed by

Model Portfolio allocation. For additional information

PIMCO or a third party, pooled investment vehicles

relating to material risks, please see “Methods of

managed by a third party, indices administered by a third

Analysis, Investment Strategies, and Risk of Loss” in Item

8. The Model Portfolio allocation is also subject to the

Systems into the portfolio selection and trading process;

risk that the selection of the underlying investments and

and (v) whether actual market events correspond to one

the allocation and reallocation of such investments may

or more assumptions underlying the Systems. For

not produce the desired result. Model Portfolios are

additional information relating to Systems and System

constructed in reliance on forward-looking assumptions,

Incidents, please see “Quantitative Investing Risk” in Item

forecasts, and estimates, and, as a result, Model

8.

Portfolios do not fully reflect the impact that material economic and market factors might have had on PIMCO’s decision making if PIMCO had actually managed a portfolio with assets pursuant to the Model Portfolio since its inception. Model Portfolios also do not reflect the impact of future material economic and market factors not available at the time of allocation. The allocations to underlying investments in a Model Portfolio have changed over time and may change in the future. The selection and weighting process across underlying investments is partially informed by return estimates driven by PIMCO’s Systems, as further discussed in “Quantitative Investing Risk” in Item 8. These Systems 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 takes reasonable steps to develop and use Systems appropriately and effectively, there can be no assurance that PIMCO will successfully do so. Errors may occur in the design, writing, testing, validation, maintenance, 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, changes in the behavior of market participants, or the application of such Systems. The quality of the resulting analysis, including the Model Portfolio allocations, depends on a number of factors including: (i) the accuracy and quality of data inputs into the Systems; (ii) the mathematical and analytical assumptions and underpinnings of the Systems’ coding; (iii) the accuracy in translating those assumptions into program code or interpreting the output of a System by another System in order to facilitate a change in market conditions; (iv) the successful integration of the various

PIMCO does not recommend or select money market or other cash-equivalent sweep vehicles for purposes of implementation of such cash allocations, which shall be the responsibility of the implementing investment professional. Information about Model Portfolios is made available on certain financial intermediary and other platforms and is updated periodically in accordance with the Model Portfolio’s defined production schedule and with the overriding objective of achieving fair and equitable treatment of investor accounts over time. With respect to Model Portfolios, under normal circumstances, platforms will receive notice of updated model allocations within a 24-hour period and are expected to execute trades on the same business day of receipt or prior to market open on the anticipated trade date. For Model Portfolios that hold ETFs, under normal circumstances, platforms will receive updated model allocations after market close on the business day preceding the anticipated trade date or prior to market open on the anticipated trade date. In the event that a particular platform’s business needs require updated allocations to be delivered during a pre-specified window that falls outside of the delivery window described in the preceding sentence, PIMCO will make reasonable efforts to work with those platforms to deliver updated allocations within such timeframe. In connection with the Model Portfolios, Archer (a third-party Service Provider) performs certain administrative and operational functions, including the dissemination of updates to Model Portfolios to platforms. Any investment in an investment company will be subject to the terms and conditions of the investment company’s prospectus. The investment results achieved by a Model Portfolio at any given time, including for the same or similar investments, could and will differ from the investment results achieved by other PIMCO Funds or Accounts for

which PIMCO acts as investment adviser, including Funds

financial intermediaries who receive Model Portfolio

or Accounts with names, investment objectives,

information. Transactions ultimately placed by such

benchmarks, policies, and/or portfolio management

intermediaries for their investors or by the Funds or

teams similar to the Model Portfolio. There is no

Accounts may be subject to price movements,

guarantee that the use of a Model Portfolio will result in

particularly with large orders relative to the given

effective investment outcomes. In addition, PIMCO

security’s trading volume, which may result in execution

cannot guarantee the availability for purchase of any

prices that are less favorable. Further, while PIMCO takes

Fund or investment product, as applicable, at any

reasonable steps in an effort to mitigate the market

particular time or, to the extent a Model Portfolio

impact caused by transactions for accounts over which

includes an allocation to ETFs, that an active trading

PIMCO has investment or trading authority, because

market for ETF shares will develop or be maintained or

PIMCO does not control the intermediary’s execution of

that their listing will continue or remain unchanged.

transactions for its clients, PIMCO cannot control the

Model Portfolios are developed in part on the basis of

market impact of such transactions to the same extent

historical data regarding particular economic factors and

that it may be able for accounts over which PIMCO has

securities prices that may be ineffective as a result of

trading authority. Such intermediaries are expected to

changes in the market and/or changes in the behavior of

have sole authority and responsibility for the selection of

other market participants.

broker-dealers and the execution of transactions for their

Model Portfolios are provided “as-is,” and PIMCO makes no express or implied warranties of merchantability, suitability, or fitness for a particular purpose or use. Although PIMCO takes reasonable steps to develop Model Portfolios, there can be no assurance that PIMCO

client accounts. PIMCO is not responsible for placing orders for the execution of Model Portfolio transactions involving assets of such intermediary client accounts or for giving instructions to the intermediary with respect thereto.

will successfully do so. Errors may occur in the design,

Customized Target Date Strategy

testing, validation, monitoring, maintenance,

myTDF® is a customized target date model (“myTDF

transmission, or implementation of Model Portfolios. PIMCO generally does not classify errors and/or mistakes that it may make in connection with a Model Portfolio to be Trade Errors (as defined below), and PIMCO is not responsible for losses associated with errors and/or mistakes related to a Model Portfolio.

Model”). myTDF is made available to participating retirement plans and plan fiduciaries through services provided by a “myTDF Manager,” which is either (i) PIMCO, or (ii) a third-party investment manager that licenses the myTDF Model from PIMCO. In the case of a third-party myTDF Manager, that third party is

Certain Model Portfolios are expected to consist of a

responsible for implementing the methodology for plan

portfolio of securities. Such Model Portfolios may be

participants, and PIMCO has no discretion related to the

used by PIMCO to manage Funds and Accounts at the

management of such plan participant accounts. Use of

same time such Model Portfolios are provided to

these non-discretionary services are subject to the risks

intermediaries. It is expected that intermediary firms

described under “Model Portfolios” above.

could be provided updates to such Model Portfolios

The myTDF Model incorporates certain demographic

and/or implement updates to such Model Portfolios subsequent to PIMCO implementing updates to such Model Portfolios for Funds or Accounts. Accordingly, PIMCO Funds or Accounts that follow a Model Portfolio may be competing for applicable investment or disposition opportunities with accounts managed by

factors, which may include an individual’s age, salary, assets, savings rate, and/or company retirement plan match rate, and is designed to assign more personalized investment allocations for plan participants of retirement plans that have selected the myTDF services. The myTDF service uses a PIMCO proprietary methodology to

construct various portfolios that include PIMCO-advised

minimum asset size, as noted in Appendix B; however,

CITs (each, a “myTDF Portfolio” and collectively “myTDF

such minimums may be waived by PIMCO in its sole

Portfolios”). Such construction is based on quantitative

discretion. PIMCO also provides customized products

and qualitative data relating to various risk metrics, long-

and services, including non-discretionary investment

term market trends, correlation of asset types, and

management services, upon mutual agreement, and fees

actuarial assumptions of life expectancy and retirement.

for such products and services are separately negotiated.

The myTDF Model is hosted by and made available to participating plan recordkeepers (“Plan Providers”) through one or more technology providers responsible for the operation of the myTDF Model and hosting the myTDF Model on the technology provider’s platform. Pursuant to an automated process, the technology provider’s platform provides Plan Providers an interface so that the Plan Provider may provide participant data to be inputted into the myTDF Model. Plan Providers place trade transactions to implement the myTDF Model for plan participants and are responsible for following the investment allocations specified by the myTDF service. The Plan Provider, and not PIMCO, selects the myTDF Portfolio on behalf of plan participants, and there is no guarantee such Plan Providers will allocate in accordance with the recommendations under a myTDF Portfolio. Plan

Our fees are generally billed quarterly or monthly in arrears; however, some Clients opt to pay fees in advance at their own discretion. If a Client opts to pay its management fees in advance, and the applicable agreement is ultimately terminated prior to the end of the billing period, the management fees will be prorated for the portion of the billing period in which the agreement was in effect, and PIMCO will issue the Client a refund for any excess fees. In the event that PIMCO revises a Client’s invoice after the payment of fees (e.g., due to revised market values from the Client’s custodian), PIMCO will issue the Client a refund or credit on a pending invoice, as applicable, in accordance with its billing policies. In addition, as described herein, PIMCO also charges performance-based fees in certain circumstances.

participants should review the documentation provided

Separate Accounts. For discretionary investment

by their plan sponsor for more information about myTDF

management services to Separate Accounts, PIMCO

and the myTDF model.

typically charges a fee that is based on a percentage of the

Where PIMCO is not the myTDF Manager, PIMCO instead licenses the myTDF Model to a third-party myTDF Manager that acts in a fiduciary capacity with respect to Plan Providers, participating plans, and plan participants. The third-party myTDF Manager, and not PIMCO, has discretion for deciding if and how to utilize the myTDF Model with respect to any Plan Provider, participating plan, or its participants. PIMCO is not responsible for any selection or ongoing monitoring related to the fiduciary services provided to a plan or plan participant by a thirdparty myTDF Manager.

ITEM 5. Fees and Compensation Generally, PIMCO’s fees for providing discretionary investment management services are based upon a percentage of the market value of assets under management. Accounts are generally subject to a

Separate Account’s assets under management. Customized fee arrangements may be available for Clients, such as those with performance-based fees or for strategies for which fees are based on notional assets or commitment amount, where fees are individually negotiated. Fees are also individually negotiated for larger Accounts, Accounts where service needs deviate markedly from the types of service typically required by Separate Accounts, and Accounts that may involve other special circumstances or restrictions. Our fees take into account, among other things, a Separate Account’s investment strategy, the level of discretion given to PIMCO, the extent of the Separate Account’s servicing requirements including reporting, the Client’s total assets under management aggregated across the Client’s relationship with PIMCO (whether directly or indirectly) and certain of its affiliates, the source of the assets, relationship to PIMCO (i.e., whether the Client is an affiliate or employee), and the

type and nature of the Separate Account. PIMCO is

Funds that follow the same or similar strategies. If a

generally not obligated to provide notice to, or obtain the

Separate Account’s investment guidelines permit

consent of, one Client when reducing, waiving, or

investments in our Funds, we will provide the Client with

modifying fees or other contractual terms with any other

a list of the Funds in which the Account is permitted to

Client. Certain employees or former employees of PIMCO

invest, together with a schedule showing the applicable

investing in a Separate Account managed by PIMCO or

fee rates and rebates, where applicable. If we purchase

its affiliates pay reduced management fees in connection

interests in unaffiliated funds, such as ETFs or other

with their investment. In addition, certain Separate

funds, that are not advised or sub-advised by PIMCO, the

Account Clients have negotiated and may from time to

Separate Account will pay the fees and expenses of these

time seek to negotiate most favored nation (“MFN” and

funds in addition to the Separate Account fees.

each, an “MFN Client”) clauses in their investment

Additionally, to the extent set forth and agreed upon in a

management agreements with PIMCO. These provisions

Client’s investment management agreement, certain

generally require PIMCO to notify the MFN Client if

Accounts will bear certain operating and other expenses

PIMCO has entered or subsequently enters into a more

associated with their Account.

favorable fee arrangement with a similarly situated or comparable Client and, where applicable, offer the MFN Client the same fee arrangement. The applicability of these MFN provisions typically depends on the degree of similarity between Clients based on certain factors, including, but not limited to, the amount of assets under management, overall (direct or indirect) relationship size, fee structure, servicing level including reporting requirements, source of assets, relationship to PIMCO (i.e., whether the Client is an affiliate or employee), investment strategy, guidelines, and reporting requirements. PIMCO does not agree to MFN provisions in all circumstances.

PIMCO Registered Funds. PIMCO provides discretionary investment management services to U.S. registered and non-U.S. registered funds (each, a “Registered Fund”). Each Registered Fund’s offering documents will include information about the fees and expenses paid by the Registered Fund. Portfolio management fees and any additional compensation paid to PIMCO may be waived by PIMCO in its sole discretion, both voluntarily and on a negotiated basis with a Registered Fund’s Board or similar body, or a Registered Fund’s sponsor (though not with individual investors in a U.S. Registered Fund). We may receive additional compensation for administrative

With respect to discretionary Separate Accounts, if a

or other services provided to these Registered Funds as

Client gives us discretion to use Client assets on which

described in the respective Registered Fund’s offering

we charge an asset-based management fee to purchase

documents.

interests in the Funds, we will generally rebate a portion of the Separate Account fees back to the Client in an amount that approximates the advisory fee of the Fund in which the Client invested, unless otherwise agreed or disclosed to the Client. In some circumstances, no such rebate is provided, such as in cases where the Separate Account’s assets are invested in a Fund that does not charge an advisory fee, and the only advisory fees charged to the Client are charged at the Separate Account level. Depending on the Fund, we also rebate all or a portion of the Fund’s supervisory and administrative fee. The rebate amount may differ by Fund, and, in certain instances (e.g., certain Funds that follow the Total Return Strategy), the rebate amount may be different for

PIMCO Private Funds. PIMCO provides discretionary investment management services to U.S. and non-U.S. domiciled private funds that are not registered under the Investment Company Act of 1940, as amended (the “1940 Act”), and whose interests are not registered under the Securities Act of 1933, as amended (the “Securities Act”) (each, a “Private Fund”). Certain Private Funds are managed on a standalone basis, while others are managed as part of a “master-feeder” structure wherein one or more feeder funds invest their assets in one or more master funds, or in parallel with other funds. Each Private Fund’s offering documents include information about the fees and expenses paid by the

Private Fund. For discretionary investment management

result of its investment in the underlying PIMCO Fund. In

services to Private Funds, we are paid management fees

addition, in certain cases, PIMCO (or its affiliates) receives

from each Private Fund’s assets, generally ranging from

fees for providing services to Clients, Funds, or portfolio

0.00% to 2.00%, which are typically based on invested

companies. Fees for these services may be borne by a

and reinvested capital (and in some cases, committed

Private Fund, subject to its governing documents, and

capital) or net asset value. These management fees are

may not be reduced or offset against the other fees paid

negotiable, are typically paid in arrears, and may vary for

by the Private Fund to PIMCO.

different Private Fund investors. The management fees and other fees and distributions paid by Private Funds described herein are generally subject to modification, waiver, rebate, or reduction, or may be calculated differently with respect to any investor, by PIMCO in its sole discretion, both voluntarily and on a negotiated basis with selected investors via side letter and other arrangements. The fee structures described herein may be modified from time to time. Fees may differ among investors in the same Private Fund. In certain cases, we are also paid administration fees from a Private Fund’s assets, generally ranging from 0.00% to 0.45%, which are also typically based on invested and reinvested capital or net asset value, as applicable. In some cases, the management fees and administration fees described above are paid on a combined, or unified, basis, and such fees for certain Private Funds may be based on notional value, as described in the offering documents for such Private Fund. In addition, PIMCO and/or its affiliates receive performance-based fees or profit allocations (e.g., “carried interest”) with respect to certain of our Private Funds, as further discussed in “Performance-Based Fees and Side-by-Side Management” in Item 6. Each Private Fund also ordinarily bears its own organizational expenses (in some cases, subject to a cap). Each Private Fund also bears certain operating expenses with feeder funds typically bearing a pro rata share of expenses associated with their respective master funds and certain

Certain investors in a Private Fund who are employees, business associates, and other “friends and family” of PIMCO, its affiliates, or their personnel (including any related entities established by any of the foregoing, such as trusts, charitable programs, endowments or related programs, family investment vehicles, and other estate planning vehicles) (collectively, “Adviser Investors”) will not typically pay management fees or other incentive or performance-based compensation in connection with their investment in a Private Fund or may pay a reduced rate. Furthermore, PIMCO, from time to time, will establish certain investment vehicles through which Adviser Investors or other third parties may invest alongside one or more Accounts in one or more investment opportunities, which generally do not pay management fees or other incentive or performancebased compensation. PIMCO also serves as an investment manager to CITs. We are paid portfolio management and/or performancebased fees for discretionary investment management services to these CITs, and investments in certain of the CITs managed by PIMCO may be subject to additional fees on account of their underlying investments. PIMCO’s Non-Discretionary and Other Business Initiatives. Fees for these services are individually negotiated and depend on the type and complexity of the services requested. Clients and prospective clients should contact their PIMCO Account representative for additional

other expenses associated with the feeder fund’s own

information.

specific operations. Further details of these expenses are

Additional Costs. With respect to investment

described in the Private Fund’s offering and other

management services, a Client may also incur brokerage

documents. Certain Private Funds invest in other PIMCO

commissions, mark-ups or mark-downs, and other

Funds. Depending on the terms of the investing Private

transaction costs associated with transactions that are

Fund, PIMCO may or may not rebate a portion of any

executed in the Account. For additional information

additional fees paid by the investing Private Fund as a

relating to our brokerage practices, please see

“Brokerage Practices” in Item 12. In addition, Clients may

Service Providers will provide services in respect of an

incur taxes as a result of transactions undertaken in their

Account, its related investing vehicles, portfolio

Account. Further, a Client may also be subject to

investments, securitizations, and/or other entities in

payment of value-added, withholding, or other

which the Account invests, in respect of transactions in

applicable taxes, which may be assessed, due, or owed in

which the Account or such entities participate. Service

connection with the payment of fees to PIMCO. Although

Providers may be engaged to perform multiple functions

we are under no obligation to do so, PIMCO will inform

in respect of investments, which will give rise to certain

Clients on a reasonable efforts basis to the extent it is

conflicts of interest. For instance, any servicer that also

aware of any known tax withholdings.

functions as valuation agent in respect of an investment

Payments Made to Service Providers and Other Third Parties. PIMCO and its affiliates also engage or

may face conflicts of interest in carrying out multiple functions.

otherwise transact with one or more Service Providers (as

Certain Service Providers are or will be owned by, or

defined herein) in connection with their investment

otherwise related to or affiliated with, an Account or

processes and ongoing operations, including in respect

another PIMCO Client, including a Fund (e.g., originators

of the organization and operations of Accounts and their

and servicers), and in certain cases, Service Providers are

portfolio investments. “Service Providers” include

expected to be, or are, owned by, employed by, or

consultants, advisors, transaction finders, sourcers and

otherwise related to, PIMCO, Allianz, their affiliates,

other persons involved in the identification or origination

and/or their respective employees, consultants, and other

of investment opportunities, operating partners, loan and

personnel (each, including the Services Company, an

other servicers, loan and other originators, collateral

“Affiliated Service Provider”).

managers, program managers, property and other asset managers, leasing agents, asset monitors and administrators (including copyright administrators), developers, development managers, project managers, investment bankers, brokers, accountants, valuation agents, waterfall agents, calculation agents, paying agents, transfer agents and intermediaries, billing and collection agents, trustees, master servicers, software providers, tax preparers and consultants, analytic service providers, data management and reporting providers, technology professionals, technology providers, ESG providers, investor subscription platform providers, transfer service providers, pricing/modeling service providers, insurance providers, appraisers, industry or sector experts, joint venture partners and development partners, regulatory and compliance service providers, contract employees, legal counsel, and/or temporary employees (as well as secondees of any of the foregoing), and other persons providing similar types of services, whether working onsite at PIMCO offices or offsite.

In certain cases, Affiliated Service Providers or personnel thereof will not be employees of PIMCO or its affiliates, notwithstanding the fact that they can have attributes of employees of PIMCO or its affiliates (e.g., they may have dedicated offices at PIMCO, or an affiliate thereof, use email addresses, telephone numbers, and other contact information that are similar to those used by personnel of PIMCO or its affiliates, participate in general meetings and events for personnel of PIMCO or its affiliates, work on matters for PIMCO or its affiliates as their primary or sole business activity, and/or be compensated on a weekly or monthly basis rather than on a project basis), and in other cases, such Service Providers will be employees of PIMCO or its affiliates with respect to certain activities, even though they are not considered PIMCO employees, affiliates, or personnel for purposes of certain provisions of an Account’s investment management agreements or offering or governing documents, including portions thereof relating to PIMCO expenses and transaction fees (“Dual Service Providers”). Dual Service Providers will have a variety of roles and titles with respect to their employment with PIMCO or its

affiliates, and will include legal, paralegal, finance, tax,

any other fees, costs, expenses, and liabilities incurred

accounting, technology, compliance, valuation,

through the use or engagement of Service Providers by

operational, analytics, and asset management

an Account (including, for the avoidance of doubt, the

professionals and employees, among others. Portfolio

Services Company or another Affiliated Service Provider)

managers and other investment professionals of PIMCO

will be borne (directly or indirectly) by an Account and

or its affiliates may also serve as Dual Service Providers.

will not offset fees payable to PIMCO, even though such

Currently, all personnel of the Services Company are employees of PIMCO or an indirect subsidiary thereof, and these individuals provide services on behalf of both the entity that employs them and the Services Company. In the future, some individuals may be employed by and provide services exclusively on behalf of the Services Company, while others will continue to be Dual Service Providers. An Account may in the future use other Affiliated Service Providers. Services provided by Affiliated Service Providers include organizational services, investment-related services, asset management-related services, administrative and operational services, and capital markets and investment banking-related services, as described in an Account’s definitive legal documents. The Services Company and/or other Affiliated Service Providers may also provide services in addition to those listed in an Account’s applicable documents, and if the costs of those services could be Account expenses if provided by a third-party service provider, then they will be Account expenses when provided by the Services Company and/or any other Affiliated Service Provider where permitted by the Account’s applicable documents. Fees paid to the Services Company and/or other Affiliated Service Providers (including other Dual Service Providers) will not be treated as transaction fees and will not offset or otherwise reduce the fees payable to PIMCO. 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 in a manner consistent with the responsibilities of PIMCO. Fees, costs, and expenses associated with certain technology platforms, which shall include the cost of the technology itself (e.g., software, hardware, license fees, data, and other costs), and the expenses associated with implementing and maintaining the relevant platform, or

amounts may be substantial. For example, an Account’s use of Dual Service Providers means that the Account will bear (directly or indirectly) a portion of the compensation and overhead paid to employees of PIMCO and its affiliates that would otherwise have been borne by PIMCO and its affiliates. Therefore, PIMCO has an incentive to cause an Account to rely on Dual Service Providers, as doing so will reduce the expenses borne by PIMCO, thereby increasing PIMCO’s profitability. Compensation arrangements with Service Providers (including Affiliated Service Providers) may be structured in various ways, including project-based fees, time-based (e.g., hourly, weekly, or monthly) fees, asset-based fees, flat fees, fees calculated on a basis-point or percentage basis, origination fees, placement fees, servicing fees, transaction-based or success-based fees, incentive fees and similar compensation (e.g., management promote), and/or a profits or equity interest in a portfolio investment. Service Providers will not be required to provide services “at cost” and therefore are expected to earn a profit from providing services to an Account. Any profit earned by Affiliated Service Providers (and, if applicable, indirectly by PIMCO and its affiliates and/or their respective employees, consultants, and other personnel) for services in respect of an Account is not expected to be shared with the Account or its investors, and will not offset fees payable to PIMCO. Although PIMCO has adopted various policies and procedures intended to mitigate or otherwise manage conflicts of interest, 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. Wrap Programs. Wrap Program Clients typically pay a fee to the Sponsor based on assets managed through the Wrap Program. This fee generally covers most, or all, of the investment advisory services provided by PIMCO

(and any sub-adviser engaged by PIMCO) through the

the wrap fee charged, the amount and type of account

Wrap Program. Each Sponsor pays to PIMCO a

activity (for example, whether transactions must

negotiated fee, generally based on Wrap Program assets

frequently be executed away from the Sponsor or the

managed by PIMCO. Thus, in effect, PIMCO receives a

Sponsor’s designated broker-dealer at an increased

portion of the wrap fee paid by each Wrap Program

charge), the value of custodial and other services

Client to the Sponsor. Because, among other things, the

provided, and other factors, the wrap fee may exceed the

scope of services provided by PIMCO through a Wrap

aggregate fees that the Client might pay other parties for

Program is narrower than those PIMCO might provide to

these services, if they were obtained separately. In this

a Client that receives PIMCO’s services directly, the

respect, Clients should be aware that for certain PIMCO

effective fee rates charged by PIMCO to Sponsors are

strategies (e.g., municipal bond and other fixed income

typically less than what would be applicable to Accounts

strategies), PIMCO will typically execute fixed income

managed directly; however, a Wrap Program Client’s

security transactions for Wrap Program Accounts

wrap fee can be higher than the aggregate fees that the

according to PIMCO’s trade allocation policy and

Client might otherwise pay for these services, if they were

procedures, which will in most cases result in such trades

obtained separately.

being executed away from the Sponsor or the Sponsor’s

In some Wrap Programs, PIMCO’s advisory fees are not included within the wrap fee. Instead, the Wrap Program Client compensates PIMCO directly for such advisory services. Although the Wrap Program fee generally covers the Wrap Program services, Wrap Program Clients may be subject to additional fees and expenses such as: (i) commissions and other expenses on trades executed away from the Sponsor or the Sponsor’s designated broker-dealer(s); (ii) mark-ups and mark-downs on fixed income transactions; (iii) expenses related to cash sweep services or vehicles or other investment vehicles, including ETFs; and (iv) taxes and charges such as exchange fees and transfer taxes. In addition, assets managed pursuant to certain Wrap Program strategies that have the ability to invest in a PIMCO ETF will bear the fees and expenses of such PIMCO ETF, which include fees that are paid to PIMCO for services it provides to the PIMCO ETF. Such fees may be in addition to the fees

designated broker-dealer. With respect to these trades, Clients should also be aware that Sponsors typically do not include commissions, commission equivalents (such as mark-ups or mark-downs), or other transactionrelated expenses with respect to fixed income transactions within the wrap fee or may have limited capability to execute such transactions. As noted above, the wrap fee typically covers only certain transactions, such as transactions in equity securities that are executed through the Sponsor or the designated broker-dealer, so Wrap Program Clients would not get the full benefit of the wrap fee to the extent that such trades are executed away from the Sponsor or the Sponsor’s designated broker-dealer. However, as noted in Item 7, “Types of Clients,” PIMCO typically requires non-Wrap Program Accounts managed by it directly to meet minimum account sizes that are typically significantly higher than the minimum account size required by a Wrap Program.

PIMCO receives for managing assets through the Wrap

As noted in Item 4, “Wrap and Similar Program Services,”

Program.

in the event a Wrap Program Client or the Sponsor has

Clients should carefully review the Sponsor’s Wrap Program Brochure and the agreement between the Client and Sponsor prior to participating in any Wrap Program and, in particular, consider the services that are covered by the wrap fee as they relate to the management styles and trading methods being employed by portfolio managers within the Wrap Program. Depending upon

authorized PIMCO to invest in the PIMCO ETF for cash management purposes, the Client will bear the fees and expenses of the PIMCO ETF in addition to the fees and expenses the Client pays for the management of the Client’s Account. This includes fees that are paid to PIMCO for services PIMCO provides to the PIMCO ETF.

In the event PIMCO is engaged as a sub-adviser by

involves the construction of various portfolios that

investment advisers to manage client accounts outside of

include PIMCO-advised CITs. A conflict of interest exists

a Discretionary Wrap Program, PIMCO is typically paid a

with respect to PIMCO selecting those CITs for these

portion of that investment adviser’s fee from the client,

services because PIMCO and its affiliates provide services

although under certain circumstances PIMCO may be

and receive fees from the CITs, and therefore the

compensated directly by the client.

investments in CITs that result from these services will

Basic fee schedules for PIMCO’s investment management services are outlined in Appendix B. Such fee schedules are subject to change and may be negotiable. Model Portfolios. As described above, most Model Portfolios are expected to consist of 100% Funds or a very significant percentage of Funds, although in limited cases PIMCO may be engaged to create Model Portfolios that include products or Accounts managed by PIMCO or a third party, pooled investment vehicles managed by a third party, indices administered by a third party, or a portfolio of securities. A conflict of interest exists with respect to PIMCO selecting the Funds for the Model Portfolios because PIMCO and its affiliates provide services and receive fees from the Funds, and therefore the Model Portfolios’ investments in Funds will benefit PIMCO and its affiliates. While in certain arrangements PIMCO may be compensated for delivering the Model Portfolios, including, but not limited to, arrangements where Model Portfolios include investments in fixed income securities, the fees that PIMCO and its affiliates receive from the Model Portfolios’ investments in the PIMCO Funds are typically PIMCO’s only compensation with respect to the Model Portfolios. This conflict of interest could result in Model Portfolios with lower performance or higher fees than they would have had if the Model Portfolios did not invest in PIMCO Funds. In addition to the foregoing, PIMCO may sub-license certain model portfolio information it obtains from a third party to financial intermediaries. For example, PIMCO expects to facilitate the delivery of a model portfolio developed by RA to one or more third-party managers who will be responsible for implementing the model portfolio on a discretionary basis. PIMCO will be compensated for such sub-licensing arrangements.

benefit PIMCO and its affiliates. This conflict of interest could result in investors who use these services experiencing lower performance or higher fees than they would have had if they did not invest in the CITs through these services. In addition, under some arrangements related to the myTDF Model, PIMCO will be paid a model access fee that is separate from and in addition to the fees it receives for the investment advisory services it provides to the PIMCO-advised CITs. Allocation of Expenses. PIMCO manages multiple Accounts which have investment objectives that currently, and may in the future, overlap with those of one or more other Accounts. The appropriate allocation of expenses and fees for investments and investment opportunities between or among Accounts will be determined by PIMCO and its related persons, respectively, in their good faith discretion, consistent with PIMCO’s expense allocation policies and procedures, which are designed to allocate expenses in a fair and equitable manner among Accounts. In addition, fees and expenses, including fees and expenses of Service Providers, such as the Services Company and other Affiliated Service Providers, will be allocated in accordance with the applicable offering or governing documents or investment management agreement. To the extent not addressed therein, PIMCO, to the extent it has the authority to do so, will make any such allocation determination in a fair and reasonable manner using its good faith judgment, notwithstanding its interest (if any) in the allocation. As a result, in exercising discretion to allocate fees and expenses, PIMCO is faced with a variety of potential conflicts of interest, which are disclosed in the applicable offering or governing documents or investment management agreement. For additional information relating to potential conflicts, please see

Customized Target Date Service. The myTDF Model

“Potential Conflicts Relating to Advisory Activities” in

described in Item 4, “Customized Target Date Strategy,"

Item 11.

ITEM 6. Performance-Based Fees and Side-By-Side Management

PIMCO sponsors or advises a business development

As discussed above, certain of our Clients and clients of

structured and operated in a manner permitting it to be

our affiliates (“Affiliate Clients”) will pay us or our affiliates performance-based fees or investment profit allocations in the form of a performance allocation or carried interest, meaning fees based on a share of capital gains or capital appreciation of the assets of a client. Such performance-based fees and investment profit allocations may create potential conflicts of interest because PIMCO and its affiliates manage Clients and Affiliate Clients with such fee arrangements side-by-side with Clients and Affiliate Clients that we charge a fixed fee based on assets under management, including that

company and real estate investment trusts (REITs). PIMCO also sponsors a holding company conglomerate that is exempt from the definition of “investment company” under the Investment Company Act. As noted in Item 4, Clients may access our investment management services directly, through pooled investment vehicles, or through Wrap Programs. Certain Wrap Programs also impose overall Wrap Program minimums and/or minimums required to maintain an investment option. Wrap Program minimums are determined by the Wrap Program Sponsor. Please consult the Sponsor’s Wrap Program Brochure for more information.

we (and our supervised persons) have an incentive to

Privacy Policy. We are strongly committed to protecting

favor accounts where we receive a performance-based

the privacy of our Clients’ information, including non-

fee. For additional information relating to risks associated

public personal information, and as a matter of policy will

with side-by-side management and how PIMCO

not disclose such information, except as required or

manages these risks, please see “Other Financial Industry

permitted by law or for our everyday business purposes,

Activities and Affiliations” in Item 10 and “Code of Ethics,

such as to process transactions or to service an Account.

Participation, or Interest in Client Transactions, and

In the ordinary course of our business, we and certain of

Personal Trading” in Item 11.

our Service Providers need to obtain certain information

ITEM 7. Types of Clients

from Clients. In such cases, we may share our Clients’ information with third-party Service Providers who are

Our Clients. Our global client base includes corporate

acting on our behalf or for our Client’s benefit. In certain

pension plans, foundations, endowments, public

instances, we will share such information with affiliated

retirement plans, corporate treasury assets, governments

and unaffiliated third parties subject to applicable laws

and sovereign wealth funds, insurance companies, high

and regulations. For example, we will provide Client

net-worth individuals, family offices, multi-employer

information, including non-public personal information,

retirement plans, financial institutions, intermediaries, retail

to SSBT so that SSBT may provide services to an Account.

investors, and pooled investment vehicles, including both

We will also provide such information to a third party

affiliated and unaffiliated U.S. and non-U.S. registered and

where a Client has given us consent to do so (such as to

unregistered funds, among others. We have minimum

the Client’s Custodian), at the request of a regulator, or

account size requirements for Separate Accounts. Please

where we are required to disclose the information by law

see our standard fee schedules outlined in Appendix B for

or regulation. We have adopted privacy policies and

more information regarding Separate Account minimums,

procedures that are designed to prevent the

which may be waived at PIMCO’s discretion. PIMCO also

unauthorized disclosure and use of Client information,

acts, or has acted, as an investment adviser or collateral

including non-public personal information. Please refer

manager to a number of unregistered structured products,

to Appendix E for PIMCO’s Client Privacy Policy.

including, but not limited to, Collateralized Debt Obligations (“CDOs”), Collateralized Loan Obligations (“CLOs”), and similar structured finance products.

Use of Information. Any information provided by PIMCO to a specific Client is intended to be used solely by the recipient in considering the products or services described

therein and may not be used for any other reason,

economic and market conditions applicable to the asset,

whether personal or otherwise.

and take into account a range of factors, including, but

ITEM 8. Methods of Analysis, Investment Strategies, and Risk of Loss Methods of Analysis and Investment Strategies PIMCO’s macroeconomic forecasting, comprehensive sector and asset analysis, and rigorous risk management processes address the challenges of a rapidly changing world. In evaluating securities and other instruments and assets, we generally take into account a number of factors, including the fundamental, technical, and cyclical characteristics of an asset. For example, PIMCO’s analysis of mortgage-backed securities includes analysis of security structures and mortgage prepayment rates using proprietary and third-party analytic tools and databases. Our analysis of investments in public and private foreign issuers and assets, particularly in emerging market countries, includes any of the following: (i) country risk analysis; (ii) consideration of global trading relationships, such as free trade agreements; (iii) visits with company management; and (iv) meetings with official creditors, government officers, business leaders, academics, economists, and politicians. PIMCO’s analysis of senior loans and bank loans typically includes direct contact with the agent bank, issuer, and/or borrower. Like our fixed income strategies, our analysis of equities also involves various sources and types of research and may include discussions or visits with company management. We seek to identify securities that are undervalued by the market in comparison to our own determination of the company’s value, taking into account criteria such as assets, book value, cash flow, and earnings estimates. As part of our analysis, PIMCO conducts its own research on issuers and/or has adopted internal processes for

not limited to, the nature of the asset, the ratings assigned by certain rating agencies, the operational history of the issuer, the issuer’s cash position, leverage and cash flow, the issuer’s position in the industry, the structure of the issuer’s debt obligations, and political dynamics. Unlike Agency Ratings, Internal Ratings may assess not only probabilities of default but also expected loss upon default. PIMCO monitors the factors influencing the rating and may periodically re-evaluate Internal Ratings to determine whether changes are necessary. Because Internal Ratings may emphasize certain factors or apply different methodologies than Agency Ratings, there are, or may in the future be, occasions when an Internal Rating is higher or lower than a corresponding Agency Rating for the same issue or issuer. Similarly, events resulting in changes in Agency Ratings will not necessarily result in changes to Internal Ratings or result in changes at similar times. For certain instruments that are not rated by a third-party credit rating agency (such as fixed income instruments issued by sovereign entities), PIMCO may assign an implied agency rating that is derived from the long-term local currency rating of the country (“Implied Rating”). To the extent permitted by applicable Client guidelines, Internal Ratings or Implied Ratings will be used where no Agency Rating is available. Please refer to Appendix D for a description of certain of PIMCO’s current methods of analysis and investment strategies. Certain PIMCO Funds or investment products use a combination of strategies or strategies not described in Appendix D. Notwithstanding the foregoing, PIMCO may engage in methods of analysis and investment strategies of any and all types, which exist now or are hereafter created, and uses sub-advisers at times to effectuate any such

assigning internally generated credit ratings (“Internal

methods of analysis or investment strategies.

Ratings”), which can differ from ratings provided by

Material Risks of Significant Strategies and Significant Methods of Analysis

third-party credit rating agencies (“Agency Ratings”). Internal Ratings reflect PIMCO’s view of an issuer’s creditworthiness, and PIMCO utilizes a process that may differ from the process used by third-party rating agencies. Internal Ratings are designed to reflect current

The following is a summary of the material risks associated with the significant strategies and significant methods of analysis used by PIMCO. Investing in

securities and other instruments and assets involves risk

objectives or strategies. In particular, (i) AIFMD or the

of loss that Clients should be prepared to bear; however,

AIFM Law increases the regulatory burden and costs of

Clients should be aware that not all of the risks listed

doing business in the European Economic Area (“EEA”)

herein will pertain to every Account as certain risks may

member states or the United Kingdom (the “UK”); (ii)

only apply to certain investment strategies. Furthermore,

AIFMD or the AIFM Law imposes extensive disclosure

the risks listed herein are not intended to be a complete

and/or other obligations on certain Accounts and

description or enumeration of the risks associated with

underlying investments that are located or marketed in

the significant strategies and significant methods of

EEA member states or the UK, potentially disadvantaging

analysis used by PIMCO. Other risks may exist now or

an Account when compared to non-AIF/AIFM

may arise in the future.

competitors that may not be subject to the requirements

An investment in an Account is highly risky. There can be no assurance that an Account will achieve its investment objective or any particular level of returns. An investor may lose all of its money by investing in an

of AIFMD or the AIFM Law; and (iii) AIFMD and the AIFM Law, as applicable, restrict the marketing of certain Accounts to prospective investors in certain states within the EEA and the UK.

Account. Among other things, an Account may invest in

In some or all EEA member states and the UK, PIMCO

assets that are underperforming or non-performing

may choose not to market an Account at its own

and/or in securities of issuers who are under financial

initiative or otherwise take any action that would result in

stress. By their nature, such investments involve a high

any measure giving effect to or supplementing the

degree of financial risk, and there can be no assurance

AIFMD or the AIFM Law applying to PIMCO and the

that an Account’s return objectives will be realized or

Account. In this respect, PIMCO may decide to only

that there will be any return of capital. Any losses in an

accept investors where such investors approached

Account will be borne solely by investors in the Account

PIMCO at their own initiative or where any measure

and not by PIMCO or any of its affiliates (except to the

taken to give effect to or supplement the AIFMD or the

extent they invest capital in the Account, in which case

AIFM Law would not otherwise apply to PIMCO or the

they, with respect to such capital invested, will bear

Account or any person acting on their behalf. There is a

their pro rata portions of such loss).

risk that an EEA member state or UK regulatory or

EU Alternative Investment Fund Managers Directive and UK Alternative Investment Fund Managers Regulations Risk. Certain Accounts are likely to be considered “alternative investment funds” (“AIFs”) for purposes of the European Union’s Alternative Investment Fund Managers Directive 2011/61/EU, including all national, implementing, or supplementary measures, laws, and regulations (“AIFMD”), and the United Kingdom Alternative Investment Fund Managers Regulations 2013, as amended including by the European Union (Withdrawal) Act 2018 (the “AIFM Law”), and PIMCO is considered an “alternative investment fund manager” (“AIFM”). It is possible that AIFMD or the AIFM Law could restrict certain Accounts from being operated in the manner and on the terms envisaged by PIMCO and/or limit PIMCO’s ability to carry out an Account’s investment

governmental authority may reach a different conclusion than PIMCO and find that the relevant measures taken in order to give effect to or supplement the AIFMD or the AIFM Law in one or more EEA member states or the UK do apply to PIMCO or the Account. Such a finding may result in a regulatory or governmental authority or court in one or more EEA member states or the UK requiring PIMCO or the Account to return any capital or other funds to investors or otherwise seeking to take other enforcement or remedial action against PIMCO and/or the Account. This may result in a reduction in the overall amount of capital available to the Account that limits, in turn, the range of investment strategies and investments that the Account is able to pursue and make or otherwise result in a loss to the Account. Additionally, there is a risk that failure to adhere to the AIFMD or the AIFM Law could result in penalties or other sanctions, which,

among other things, could limit PIMCO’s ability to

and safety regulation, economic sanctions and export

achieve the AIF’s investment objective.

controls, statutory limits on the age of aircraft and

Arbitrage Risk. An Account that invests in securities purchased pursuant to an arbitrage strategy in order to take advantage of a perceived relationship between the values of two securities presents certain risks. Securities

restrictions in certain jurisdictions on the age of aircraft for import, and other factors leading to the obsolescence of aircraft models; and (vi) airline governance and management ability to execute business strategies.

purchased or sold short pursuant to an arbitrage strategy

Asset Allocation Risk. An Account’s risks directly

may not perform as intended, which may result in a loss

correspond to the risks of the asset classes in which it

to the Account. In addition, disruptions in market

invests. Investing in multiple asset classes (either directly

conditions or limitations on an Account’s ability to access

or indirectly) such as through pooled investment

certain markets or securities may reduce the

vehicles, can facilitate diversification, but also creates

effectiveness of arbitrage strategies. Forecasting market

exposure to the risks of many different areas of the

movements is difficult, and securities may be mispriced

market. The direct or indirect allocation of an Account’s

or improperly valued by PIMCO. Securities issued by the

assets among various asset classes and market sectors

same entity, or securities otherwise considered similar,

could cause the Account to underperform other accounts

may not be priced or valued similarly across markets or

with a similar investment objective. By contrast, an

in the same market, and attempts to profit from pricing

Account with narrower guidelines may receive higher

differences may not be successful for several reasons,

allocations of investments, which may limit allocations to

including unexpected changes in pricing and valuation.

other Accounts.

To the extent an Account uses derivatives to pursue certain strategies, the Account is subject to the additional risk that the derivative’s performance does not correlate perfectly, if at all, with the value of an underlying asset, reference rate, or index. Additionally, issuers of a security purchased pursuant to an arbitrage strategy are often engaged in significant corporate events, such as restructurings, acquisitions, mergers, takeovers, tender offers or exchanges, or liquidations. Such events may not be completed as initially planned or may fail.

AMT Bond Risk. “AMT Bonds,” which are municipal securities that pay interest that is taxable under the federal alternative minimum tax applicable to noncorporate taxpayers, may expose an Account 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 could also

Aircraft and Aviation-Specific Risk. The supply and

affect the economic viability of facilities that are the sole

demand for aircraft and other aviation-related assets is

source of revenue to support AMT Bonds. In this regard,

affected by various cyclical and non-cyclical factors that

AMT Bonds may entail greater risks than general

are not under an Account’s control, some of which include:

obligation municipal bonds. AMT Bonds may also be less

(i) passenger and freight air travel demand; (ii) increased

liquid than other municipal securities, which could make

supply due to the sale of aircraft portfolios; (iii) political

them more difficult to sell in stressed market conditions.

and other events, including war, acts of terrorism, civil

In addition, changes in federal tax law could alter the

unrest, outbreaks of epidemic and/or pandemic diseases,

treatment of AMT Bonds. For investors subject to the

storms, weather events, and natural disasters; (iv)

federal alternative minimum tax, a portion of an

operating costs, availability and cost of jet fuel, and

Account’s distributions may not be exempt from gross

general economic conditions affecting airline operations;

federal income, which may give rise to alternative

(v) governmental regulation, including new airworthiness

minimum tax liability.

directives issued by aviation authorities, environmental

Artificial Intelligence Risk. PIMCO utilizes artificial

PIMCO’s ability to operate certain business functions may

intelligence, including so-called “generative AI,” machine

be impaired.

learning, and natural language processing techniques (collectively, “AI”) in its business operations, to inform and augment its investment decision making, client services, and other business purposes, including for potential productivity enhancements. In connection with the development, deployment, and use of AI technology, as well as other so-called “big data” analytics practices (which for purposes of this disclosure, refer to the techniques used to collect, clean and analyze large, diverse datasets collected from multiple sources), PIMCO collects a range of data including business and personal information. PIMCO’s ability to use, manage, and aggregate data may be limited by the effectiveness of its policies, systems, and practices that govern how data is acquired, validated, used, stored, protected, processed, and shared. Deficiencies in the practices associated with data collection, training AI technology on large data sets, and big data analytics, and difficulties approximating gaps in data, obtaining data from reliable sources, and validating data could adversely impact the accuracy and effectiveness of AI and “big data” analytics. Failure to manage data effectively and to aggregate data in an accurate and timely manner may limit PIMCO’s ability to manage current and emerging risks and changing business needs and to adapt to the use of new technologies and tools, including those involving AI. As novel uses of AI continue to proliferate, PIMCO expects that its employees and consultants will continue to explore ways to leverage AI tools and features to support day-to-day activities. While PIMCO restricts certain third-party and open-source AI tools or features, PIMCO personnel’s use of other third-party tools or features or proprietary tools poses additional risks relating to the protection of PIMCO’s proprietary data, including the potential exposure of PIMCO’s or its clients’ and investors’ confidential information to unauthorized recipients and the misuse of PIMCO’s or third-party intellectual property, which could adversely affect PIMCO or an Account. In addition, if any such third-party AI tools experiences disruption, errors, security incidents, vendor ownership changes, or other adverse developments,

AI models that PIMCO uses may rely on historical data or assumptions that may not remain stable over time, or PIMCO may rely on third-party AI models that are upgraded or modified in ways that negatively impact their performance for our specific use cases (“model drift”). If model drift or other model-related deficiencies are not promptly detected and addressed, core business operations that rely on these AI models may be adversely affected. Further, PIMCO may fail to utilize AI tools or features as effectively as other managers, resulting in worse performance or service. Use of AI tools may result in allegations or claims against PIMCO or an Account related to the violation of thirdparty intellectual property rights, violation of data privacy rights, unauthorized access to or use of proprietary information, breach of contractual obligations, and failure to comply with open-source software requirements. Additionally, AI tools may produce biased, inaccurate, misleading, incomplete, or otherwise flawed outputs that could be hard to detect and lead to errors in PIMCO’s and its personnel’s decision-making, portfolio management, or other business activities, which could have a negative impact on PIMCO or on the performance of an Account. To the extent PIMCO uses such outputs to inform its actions, it could incur operational inefficiencies, competitive harm, brand or reputational harm, or other adverse impacts on its business and operations. Such AI tools or features could also be used against PIMCO or an Account in criminal or negligent ways including in connection with heightened cybersecurity risks. As the use and availability of AI tools and features have grown, AI continues to be subject to evolving laws and regulations and has received scrutiny under evolving regulatory expectations. In the U.S., federal and state lawmakers and government agencies have been examining the use of AI in a variety of industries, including financial services. These lawmakers and agencies have issued, proposed, or adopted a variety of rules and other guidance regarding the use of AI. PIMCO could face regulatory scrutiny or litigation relating to the

use of AI, big data, and our data collection practices,

a particular industry may alter, perhaps to a materially

including for alleged violations of third-party privacy,

adverse extent, the ability of PIMCO or an Account to

intellectual property, or other rights, or alleged breach of

utilize AI in the manner it has, or has planned to, to-date

contractual obligations, such as licensing or limitations

and may have an adverse impact on the ability of PIMCO

on the use of data. PIMCO personnel may input

or an Account to continue to operate as intended.

confidential information, including material non-public information (“MNPI”) or personal information, into AI tools, resulting in such information becoming part of a dataset that is accessible by third-party AI tools and users, and this could subject us to legal or regulatory investigations or actions.

Banking Risk. An Account will maintain funds with one or more banks or other depository institutions (“Banking Institutions”), which may include U.S. and non-U.S. Banking Institutions, and will enter into credit facilities or have other financial relationships with Banking Institutions. Not all such Accounts will be custodial

AI similarly faces an uncertain regulatory landscape in

accounts or have the protections associated with

many non-U.S. jurisdictions. For example, the Artificial

custodial accounts. The distress, impairment, or failure of

Intelligence Act (Regulation (EU) 2024/1689) (“EU AI Act”)

one or more Banking Institutions with whom the

came into force in August 2024, and applies to operators

Account, its portfolio investments, and/or PIMCO

within the entire value chain for certain artificial

transact may inhibit the ability of the Account or its

intelligence systems and the data used to train, test, and

portfolio investments to access depository accounts or

deploy these systems. The EU AI Act introduces

lines of credit at all or in a timely manner. In such cases,

obligations in phases, with the majority of obligations

the Account may be forced to delay or forgo investments

becoming enforceable starting August 2026. The EU AI

or to call capital when it is not otherwise desirable to do

Act imposes material requirements on both the providers

so, resulting in lower performance for the Account. In the

and deployers of certain AI systems. The EU has also

event of such a failure of a Banking Institution where the

introduced revisions to the EU Product Liability Directive,

Account or one or more of its portfolio investments hold

which entered into force on December 9, 2024, intended

depository accounts, access to such accounts could be

to facilitate claims for damages brought by EU users of

restricted, and FDIC protection may not be available for

AI. In the UK, the government pledged in July 2024 to

balances in excess of amounts insured by the FDIC.

introduce legislation imposing obligations on developers

Similar considerations may apply to Banking Institutions

of the most powerful AI models. This framework is

in other jurisdictions not subject to FDIC protection. In

expected to take the form of a principles-based regime

such instances, the Account and its affected portfolio

intended to foster the growth and development of AI

investments may not recover such excess uninsured

technologies. No formal information has been released,

amounts and instead, would only have an unsecured

but an AI bill is expected to be introduced to Parliament

claim against the Banking Institution and participate pro

in 2026, and sector-specific guidance has already been

rata with other unsecured creditors in the residual value

published by regulators in the UK, including the

of the Banking Institution’s assets. The loss of amounts

Competition and Markets Authority and the Information

maintained with a Banking Institution or the inability to

Commissioner’s Office.

access such amounts for a period of time, even if

The enactment or expansion of both U.S. and non-U.S. laws and regulations relating to the use of AI in PIMCO’s operations could result in increased compliance costs and/or adversely affect the operations or performance of PIMCO or an Account. Ongoing and future regulatory actions with respect to general AI use or the use of AI in

ultimately recovered, could be materially adverse to the Account or its portfolio investments. One or more investors could also be similarly affected and unable to fund capital contributions, further delaying or deferring new investments. In addition, PIMCO may not be able to identify all potential solvency or stress concerns with respect to a Banking Institution or to transfer assets from

one bank to another in a timely manner in the event a

of a fully developed market which may cause illiquidity,

Banking Institution comes under stress or fails. Even if

high price volatility, and a diminished demand. Price

Banking Institutions with whom the Account, its portfolio

movements of carbon credits are influenced by, among

investments, and/or PIMCO transact remain solvent

other things, their current and perceived future market

during times of economic stress, volatility in the banking

value, green technology developments, the price of

sector could contribute to, cause, or intensify an

natural gas and coal, weather patterns, and the level of

economic recession, increase the costs of capital and

world economic activity. In addition, international

banking services, or result in such entities being unable

national, and regional carbon regulation is still

to obtain or refinance indebtedness at all or on as

developing and may change in response to new

favorable terms as could otherwise have been obtained.

legislation, treaties, or other governmental regulation,

Call Risk. An Account that invests in fixed income securities will be subject to the risk that an issuer may exercise its right to redeem (i.e., call) a fixed income

which may have an adverse impact on an Account. The timing and volume of delivery of such credits can also be uncertain and may be subject to transfer disruptions.

security earlier than expected (a call). Issuers may call

Climate Change and Severe Weather Risk. An Account

outstanding securities prior to their maturity for a number

may acquire investments that are located in, or have

of reasons, including declining interest rates, changes in

operations in, areas which are susceptible to the risks

credit spreads, and improvements in the issuer’s credit

associated with climate change or severe weather events,

quality. If an issuer calls a security that an Account has

which may cause the Account to underperform. For

invested in, the Account may not recoup the full amount

example, any investments located in coastal regions may

of its initial investment, may not realize the full anticipated

be affected by future increases in sea levels or in the

earnings from the investment, and/or may be forced to

frequency or severity of hurricanes and tropical storms,

reinvest in lower-yielding securities, securities with greater

whether such increases are caused by global climate

credit risks, or securities with other, less favorable features.

changes or other factors. There may be significant

Carbon Markets and Carbon Credit Trading Risk. Unlike traditional securities and commodities (e.g., oil and gas) markets, mandatory carbon markets are unique because the primary driver of demand is the existence of a regulatory framework imposing legal obligations or incentives that drive market participation, such as the obligation on certain operating entities that need to procure allowances or offsets to comply with law, and thus establishing a market for the sale and purchase of such carbon credits, including offsets, in which an Account may invest. Accordingly, and as international experience has previously demonstrated, carbon markets are sensitive to regulatory developments, and prices can vary widely based on governmental decisions, inaction, or change in policies. An Account may invest in transferable instruments whose value is linked to underlying quotas such as carbon credits. The trading markets for carbon credits are still developing and therefore do not possess the attributes

physical impacts of climate change that have the potential to have a material effect on the Account’s business and operations. Physical impacts of climate change may include, but are not limited to, increased storm intensity and severity of weather (e.g., floods or hurricanes), rising sea levels, fires, droughts, and extreme and changing temperatures. As a result of these impacts from climate-related events and severe weather events more generally, an Account may be vulnerable to the following non-exhaustive list of risks: (i) property damage to the Account‘s investments; (ii) indirect financial and operational impacts from disruptions to the operations of the Account‘s investments from severe weather; (iii) increased insurance premiums and deductibles or a decrease in the availability of coverage for investments in areas subject to severe weather; (iv) decreased net migration to areas in which investments are located, resulting in lower than expected demand for both investments and the products and services of the Account’s investments; (v) increased insurance claims and

liabilities; (vi) increased energy and/or other costs

Collateralized Debt Obligation and Other Structured

impacting operational returns; (vii) changes in the

Product Risk. The following risks are more extensively

availability or quality of water, food, or other natural

described in the relevant offering documents. The risks of

resources on which the Account’s business depends; (viii)

an investment in a CDO depend largely on the type of

decreased demand for consumer and other products or

the collateral securities and the class of the CDO in which

services resulting from physical changes associated with

an Account invests. In addition to the risks associated

climate change or severe weather events more generally

with investment in such underlying assets, the structure

(e.g., warmer temperature, decreasing shoreline, or fires

and characteristics of a CDO present certain additional

could reduce demand for residential and commercial

risks. Due to the complex nature of a CDO, an investment

properties previously viewed as desirable); (ix) incorrect

in a CDO may not perform as expected. An investment in

long-term valuation of an equity investment or risks

a CDO also is subject to the risk that the issuer and the

relating to a debt instrument due to changing conditions

investors may interpret the terms of the instrument

not previously anticipated at the time of the investment;

differently, giving rise to disputes. CDOs are subject to

and (x) economic distributions arising from the

the typical risks associated with fixed income securities.

foregoing.

In addition to the other risks associated with investment

CFIUS & National Security/Investment Clearance Risk. Certain investments by an Account that involve a business connected with or related to national security (including critical technology, critical infrastructure, or sensitive data) may be subject to review and approval by the Committee on Foreign Investment in the United States (“CFIUS”) and/or non-U.S. national security/investment clearance regulators. In the event

in fixed income securities, investing in CDOs may entail a variety of unique risks. Among other risks, CDOs may be subject to 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.

that CFIUS or another regulator reviews one or more of

Normally, collateralized bond obligations (“CBOs”), CLOs,

an Account’s proposed or existing investments, it is

and other CDOs are privately offered and sold, and thus

possible that CFIUS or another regulator will seek to

are not registered under securities laws. For CBOs, CLOs,

impose limitations on or prohibit one or more of an

and CDOs, cash flows are split into two or more portions,

Account’s investments or unwind a transaction. Such

called tranches, varying in risk and yield. The riskiest

limitations or restrictions may prevent an Account from

portion is the “equity” tranche (i.e., subordinated debt)

pursuing certain investments, cause delays with respect

which bears the first loss from any defaults from the

to consummating such investments, or require an

bonds or loans in the CDO, CBO, or CLO, although more

Account to consummate an investment on terms that are

senior tranches may also bear losses. Additional risks of

less advantageous than would be the case absent such

CDOs, CBOs, and CLOs include, without limitation: (i) the

restrictions. Where an Account is required to unwind a

possibility that distributions from collateral securities will

transaction, in addition to incurring additional legal,

be insufficient to make interest or other payments; (ii) the

administrative, and other costs, an Account may have to

possibility that the quality of the collateral may decline in

dispose of the investment at a price that is less than it

value or default; (iii) the performance of a structure of the

would have received had PIMCO managed the

issuer thereof, the availability of any credit enhancement,

investment to exit at a different time or under different

the level and timing of payments and recoveries on and

circumstances. Any of these outcomes could adversely

the characteristics of the underlying receivables, loans, or

affect an Account’s performance with respect to such

other assets that are being securitized, remoteness of

investments, and thus the Account’s performance as a

those assets from the originator or transferor, the

whole.

adequacy of and ability to realize upon any related

collateral and the capability of the servicer of the

commodities can also present risks associated with

securitized assets; (iv) the price of a structured finance

transportation, delivery, custody, storage and

investment, if required to be sold, may also be subject to

maintenance, illiquidity, and the unavailability of accurate

certain market and liquidity risks for securities of its type

market valuations.

at the time of sale; (v) if the particular structured product is invested in a security in which an Account is also invested, this would tend to increase an Account’s overall exposure to the credit of the issuer of such securities, at least on an absolute, if not 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 issuer and the investors may interpret the terms of the instrument differently, giving rise to disputes with the issuer or among investors regarding the characterization of proceeds or unexpected investment results; and (viii) losses caused by defaults on underlying assets are borne first by the holders of subordinate tranches. Tranches are categorized as senior, mezzanine, and subordinated/equity, according to their degree of risk. If there are defaults or the CLO’s collateral otherwise underperforms, scheduled payments to senior tranches take precedence over those of mezzanine tranches, and scheduled payments to mezzanine tranches take precedence over those of subordinated/equity tranches. Commodity Risk. An Account’s investments in commodity-linked investments, including physical commodities and commodity derivatives, may subject the Account to greater volatility than investments in traditional securities. The value of physical commoditylinked investments and commodities may be affected by changes in overall market movements, foreign currency exchange rates, commodity index volatility, changes in inflation, interest rates, or supply and demand factors affecting a particular industry or underlying commodity market, such as climate changes, 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. Investments in

To the extent an Account concentrates assets in a particular sector of the commodities market (such as oil, metal, digital assets deemed to be commodities, or environmental or agricultural products), it may be more susceptible to risks associated with those sectors. An Account’s investments in physical commodities or digital assets deemed to be commodities may be subject to additional risks associated with theft, fraud, cyber hacking, and failure to make or take delivery of the commodity, which may result from the failure of counterparties, clearinghouses, or other intermediaries to fulfill delivery obligations, or from operational complications associated with the holding, settlement, or custody of the physical commodity, all of which may result in a loss to the Account. The prices for commodities in those sectors may fluctuate widely due to factors such as supply and demand disruptions in major producing or consuming regions and governmental regulatory policies. Further, PIMCO’s ability to invest in certain commodity interests may be limited due to applicable regulations pertaining to position limits. Conflict Risk. Recently, various countries have experienced significant geopolitical conflicts, including civil wars, which 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 may occur. 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, trade restrictions, or other similar measures, could adversely affect an Account’s investments whether or not the Account is directly invested in the affected jurisdiction or impacted area. In

certain regions, the transformation from a centrally

previously relaxed sanctions are re-imposed (including

planned, socialist economy to a more market-oriented

with respect to countries undergoing transformation),

economy has also resulted in many economic and social

such sanctions or trade restrictions may result in adverse

disruptions and distortions. Moreover, there can be no

impacts, as further described in “Sanctions, Anti-

assurance that the economic, regulatory, and political

Corruption, Anti-Money Laundering, and Related

initiatives necessary to achieve and sustain such a

Considerations.” Any of these outcomes could adversely

transformation will continue or, if such initiatives

affect an Account’s performance with respect to such

continue and are sustained, that they will be successful or

investments, and thus an Account’s performance as a

that such initiatives will continue to benefit foreign (or

whole.

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: (i) conflict in connection with the ongoing armed conflict between Russia and Ukraine in Europe; (ii) the Iranian conflict and the ongoing armed conflict between Hamas and Israel in the Middle East; and (iii) 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 respective 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 may be impacted. These impacts could result in restricted or no access to certain markets, investments, service providers, or counterparties, thus negatively affecting an Account’s investments in securities and instruments that are economically tied to the applicable region, including, without limitation, 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 an Account. 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

Consumer Loan Risk. Certain Accounts may hold or be exposed to consumer loans (including through a Structured Investment), including credit card receivables, automobile or motorcycle loans, student loans, peer-topeer loans, litigation finance loans, unsecured consumer credit loans, or other loans. These loans are subject to risks of prepayment, delinquency, default, foreclosure, and other risks similar to those present in mortgage loans. The ability of a borrower to repay any such loan is dependent on a number of factors, including the income and assets of the borrower. An Account may invest in consumer loans that have been made to borrowers of varying creditworthiness, and it may invest in consumer loans that have been extended pursuant to inappropriate or nonexistent underwriting guidelines or to fraudulent origination practices. Such loans are also subject to extensive and unpredictable regulation, as well as debtor relief laws, which may impede collection efforts relating to, or otherwise impact the value of, the Account’s investments therein. Consumer loans may be backed by collateral (e.g., automobile or motorcycle loans), or they may be unsecured, which exposes the Account to default risk as an unsecured creditor of an individual borrower. Where a consumer loan is backed by collateral, the service of such loan may be unable to enforce upon the collateral, or the value of the collateral may have degraded. Federal lawmakers, regulators such as the Consumer Financial Protection Bureau, and 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 the timing

customized and as a result may be subject to, among

and/or the amount of collections. Please also see

others, liquidity risk and pricing transparency risks.

“Government and Regulatory Risk” below.

Corporate debt securities are subject to the risk of the

Control Position Risk. An Account may seek investment

issuer’s inability to meet principal and interest payments

opportunities that allow the Account to have a

on the obligation and may also be subject to price

meaningful influence on the management, operations,

volatility due to such factors as interest rate sensitivity,

and strategic direction of one or more portfolio

market perception of the creditworthiness of the issuer

investments in which it invests. The exercise of control

and general market liquidity. When interest rates rise, the

over an investment may impose additional risks of

value of corporate debt securities can be expected to

liability for environmental damage, product defects,

decline. Debt securities with longer maturities tend to be

failure to supervise management, pension and other

more sensitive to interest rate movements than those

fringe benefits, violation of governmental regulations

with shorter maturities. Company defaults can impact the

(including securities laws, anti-corruption laws, anti-

level of returns generated by corporate debt securities.

money laundering laws, and economic sanctions), or

An unexpected default can reduce income and the

other types of related liabilities in which the limited

capital value of a corporate debt security. Furthermore,

liability characteristics of an Account may be ignored,

market expectations regarding economic conditions and

particularly when the portfolio company operates in a

the likely number of corporate defaults may impact the

regulated industry. The exercise of control and/or

value of corporate debt securities.

meaningful influence over a portfolio company could expose the assets of an Account to claims by such portfolio company, its security holders, and its creditors, which may lead to losses for the Account. In addition, the exercise of control and/or meaningful influence may subject an Account to certain bankruptcy or securities law restrictions or requirements, which could (among other things) impact the liquidity of an Account’s investment and/or subject the Account to filing or reporting requirements.

Credit Risk. An Account could experience losses if the issuer or guarantor of a fixed income security (including a security purchased with securities lending collateral), the counterparty to a derivatives contract or a repurchase agreement, a borrower of portfolio securities, or the issuer or guarantor of collateral, is unable or unwilling, or is perceived (whether by market participants, rating agencies, pricing services or otherwise) as unable or unwilling to make timely principal and/or interest payments, or to otherwise honor its obligations. The risk

Corporate Debt Security Risk. Corporate debt securities

that such issuer, guarantor or counterparty is less willing

include corporate bonds, debentures, notes (which are

or able to do so is heightened in market environments

transferable securities listed or traded on a regulated

where interest rates are rising. The downgrade of the

market), and other similar corporate debt instruments,

credit rating of a security or of the issuer of a security

including convertible securities. Debt securities may be

held by the Account may decrease its value. Securities

acquired with warrants attached. Corporate income-

are subject to varying degrees of credit risk, which are

producing securities may also include forms of preferred

often reflected in credit ratings. Measures such as

or preference stock. The rate of interest on a corporate

average credit quality may not accurately reflect the true

debt security may be fixed, floating, or variable, and may

credit risk of the Account. This is especially the case if the

vary inversely with respect to a reference rate. The rate of

Account consists of securities with widely varying credit

return or return of principal on some debt obligations

ratings. Therefore, an Account with an average credit

may be linked or indexed to the level of exchange rates

rating that suggests a certain credit quality may in fact be

between the USD and a different currency or currencies.

subject to greater credit risk than the average would

In addition, corporate debt securities may be highly

suggest. This risk is greater to the extent an Account uses

leverage or derivatives in connection with the

scope transactions are subject to additional expenses

management of the Account, which would be magnified

and penalties as a consequence of the CSDR settlement

in the event that initial or variation margin is not

discipline regime, such expenses and penalties may be

provided by the counterparty to such transactions (or not

charged to the Account depending upon their

provided below a certain threshold amount).

characterization.

CSDR-Related Risk. The European Union adopted a

Currency Risk. If an Account invests directly in non-U.S.

settlement discipline regime under Regulation (EU) No

currencies or in securities that trade in, and receive

909/2014 and the accompanying regulatory technical

revenues in, non-U.S. currencies, or in derivatives or

standards (“CSDR”). The aim of the settlement discipline

other instruments that provide exposure to non-U.S.

regime under CSDR is to reduce the number of

currencies, it will be subject to the risk that those

settlement fails that occur in EEA central securities

currencies will decline in value relative to the U.S. dollar,

depositories (“CSDs”) and to address settlement fails

or, in the case of hedging positions, that the U.S. dollar

where they occur. The key elements of the regime (which

will decline in value relative to the currency being

continues to evolve) are: (i) cash penalties, as EEA CSDs

hedged. Currency rates in foreign countries may fluctuate

are required to impose cash penalties on participants

significantly over short periods of time for a number of

that cause settlement fails and distribute these to

reasons, including changes in interest or inflation rates,

receiving participants affected by settlement fails; and (ii)

balance of payments and governmental surpluses or

allocations and confirmations, as EEA investment firms

deficits, intervention (or the failure to intervene) by U.S.

are required to take measures to prevent settlement fails,

or foreign governments, central banks or supranational

including putting in place arrangements with their

entities such as the International Monetary Fund, or by

professional clients to communicate securities allocations

the imposition of currency controls or other political

and transaction confirmations. Mandatory buy-ins remain

developments in the U.S. or abroad. As a result, an

a part of the regulation but are not currently

Account’s investments in or exposure to non-U.S.

implemented. The mandatory buy-in process may be

currencies and/or non-U.S. currency-denominated

implemented under the regulation if it were considered

securities may reduce the returns of the Account.

necessary to address the level of settlement fails in the

Currency risk may be particularly high to the extent that

European Union and certain other conditions were met.

an Account invests in non-U.S. currencies or engages in

These requirements apply (or in the case of the mandatory buy-in regime, may apply) to transactions in transferable securities (e.g., shares and bonds), money

non-U.S. currency transactions that are economically tied to emerging market countries. Please see “Emerging Markets Risk” below.

market instruments, units in funds, and emission

Although an Account may attempt to hedge its currency

allowances that are to be settled via an EEA CSD and, in

exposure into the U.S. dollar, it may not be successful in

the case of any mandatory buy-in requirements only, are

reducing the effects of currency fluctuations. An Account

admitted to trading or traded on an EEA trading venue or

may also hedge from one foreign currency to another.

cleared by an EEA central counterparty (except, in the

An Account’s use of currency hedging may not be

case of shares and cash penalties or any mandatory buy-

successful, and the use of such strategies may lower an

out process, if the principal trading venue for trading in

Account’s potential returns.

the shares is located outside of the EEA).

Custodial Risk. A custodian will have custody of an

The implementation of the CSDR settlement discipline

Account’s assets, including securities, cash, distributions,

regime for Accounts that enter into in-scope transactions

and rights accruing to an Account’s securities accounts. If

may result in increased operational and compliance costs

the custodian holds cash on behalf of an Account, an

being borne directly or indirectly by such Account. If in-

Account may be an unsecured creditor in the event of

the insolvency of the custodian. An Account will be

capital position of an Account. Additionally, changes in

subject to credit risk and operational risk with respect to

applicable law or regulation could alter how client assets

the custodian. Operational and other risks, including risk

are treated in the event of a bankruptcy, insolvency, or

of failed settlement, may be exacerbated by the

liquidation of an FCM. Further, certain assets of an

shortening of the standard settlement cycle for

Account may be held by non-U.S. affiliates of the

numerous U.S. securities, including, for example, if

Account’s Custodian and entities not affiliated with the

securities purchased for an Account have a shorter

Custodian. Assets held outside the U.S. may be subject to

settlement cycle than securities being sold. In addition,

legal regimes that provide fewer or different investment

an Account will be subject to compliance processes,

protections than the U.S. (including with respect to the

procedures, and restrictions of the custodian, some of

priority of any claims that an Account may have upon a

which may be more restrictive than the law requires and

bankruptcy, insolvency, or liquidation of any affiliate,

may impact the ability of the Account to conduct

which may result in an Account being an unsecured

transactions. A Custodian may hold an Account’s

creditor of such affiliate rather than having a priority

securities through third parties such as clearing

“customer” claim). Placement of the Custodian or any of

corporations, other brokers, or banks. As a result, an

its affiliates or other sub-custodian in bankruptcy or a

Account may be subject to credit risk with respect to

similar proceeding outside of the U.S. could result in a

such third parties, as well as the Custodian.

great deal of uncertainty as to the status of assets or the

For example, an Account that executes futures transactions or holds cleared derivatives positions typically does so through various futures commission merchants (“FCMs”), as referred to as clearing brokers.

ultimate recovery, if any, of such assets held by such custodian. Clients should consult directly with their Custodian for additional information on such arrangements.

Under the Commodity Exchange Act (the “CEA”), FCMs

Information Security and Cybersecurity Risk. As the

are required to maintain future customers’ assets (other

use of complex information technology and

than assets used to trade foreign futures or options on

communications systems, including cloud-based

foreign boards of trade, which must be maintained as the

technology, has become more prevalent and

secured amount for foreign futures or options) and

interconnected in the course of business, Accounts have

cleared swaps customers’ assets in accounts segregated

become potentially more susceptible to operational and

from the FCM’s proprietary assets. Notwithstanding these

information security risks resulting from breaches in

segregation requirements, an Account may be subject to

cybersecurity despite the efforts of PIMCO, an Account,

a loss in the event of the bankruptcy or insolvency of its

or their Service Providers to adopt technologies,

clearing broker. If an Account’s clearing broker becomes

processes, and practices intended to mitigate these risks.

bankrupt or insolvent, commits fraud, fails to maintain

Disruptions or failures that affect service providers,

accurate records, or otherwise defaults on its obligations,

counterparties, market participants, or issuers of

an Account may not recover all amounts owed to it in

securities held by an Account may adversely affect

respect of its trading, even if the relevant clearinghouse

PIMCO or an Account, including by causing losses or

has fully discharged obligations. In such circumstances,

impairing PIMCO’s or an Account’s operations.

an Account’s recovery may be limited to a pro rata share

Information relating to an Account’s investments has

of the funds available in the applicable customer

been and will in the future be delivered electronically,

segregation pool for the relevant asset class, even where

which can give rise to a number of risks, including, but

property is specifically traceable to the Account. Financial

not limited to, the risks that such communications may

distress, fraud, or misrepresentation at an FCM,

contain computer viruses or other defects, may not be

custodian, or any intermediary could result in significant

accurately replicated on other systems, or may be

losses and could impair the operational capabilities or

intercepted, deleted, or interfered with, without the

counterparties or issuers and cause an Account’s

knowledge of the sender or the intended recipient.

investment to lose value. Cybersecurity failures or

A breach in cybersecurity refers to both intentional and unintentional cyber events that may, among other things, cause an Account to lose proprietary information, suffer data corruption and/or destruction, result in the unauthorized release or other misuse of confidential information, lose operational capacity, or otherwise disrupt normal business operations. Cybersecurity breaches may involve unauthorized access to the digital information systems that support an Account (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, cybersecurity breaches involving third-party Service Providers that provide services to PIMCO or an Account (including, but not limited to, vendors, advisers, sub-advisers, administrators, transfer agents, regulatory

breaches may also result in significant disruptions to the business operations of PIMCO, its Service Providers, or other third parties, as well as impediments to trading, violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, reimbursement or other compensation costs, increased insurance premiums, additional compliance and cybersecurity risk management costs, and other adverse consequences. In addition, PIMCO may incur substantial costs related to investigation and remediation of the cybersecurity incident, increasing and upgrading cybersecurity protections including its administrative, technical, organizational, and physical controls, acts of identity theft, unauthorized use or loss of proprietary information, adverse investor reaction, increased insurance premiums or difficulties obtaining insurance coverage, litigation, regulatory actions, or other legal risks.

authorities, custodians, registry operators, distributors,

PIMCO has established business continuity plans and risk

and other third parties), trading counterparties, and

management systems designed to reduce the risks

issuers in which an Account invests can also subject an

associated with cybersecurity failures or breaches.

Account to many of the same risks associated with direct

However, there are inherent limitations in these plans

cybersecurity breaches. Geopolitical tensions can

and systems, including that certain risks may not have

increase the scale and sophistication of deliberate

been identified, in large part because different or

cybersecurity attacks, particularly those from nation-

unknown threats may emerge in the future. As such,

states or from entities with nation-state backing, who

there is no guarantee that such efforts will succeed,

may desire to use cybersecurity attacks to cause damage

especially because PIMCO does not directly control the

or create leverage against geopolitical rivals. PIMCO’s use

cybersecurity systems of issuers, trading counterparties,

of cloud-based Service Providers could heighten or

Service Providers, or other third parties, and threat actors

change these risks. In addition, work-from-home

are continuously evolving their methods of attack. This

arrangements by PIMCO or its Service Providers could

evolution has been substantial over recent years, and

increase all of the above risks, create additional data and

PIMCO or third parties may fail to keep pace with the

information accessibility concerns, and make an Account,

evolution in the threat landscape. There is also a risk that

PIMCO, or their Service Providers susceptible to

cybersecurity breaches may not be detected.

operational disruptions, any of which could adversely impact their operations.

Data Center Investment Risk. Investments in data center assets involve many relatively unique and acute

Cybersecurity failures or breaches may result in financial

risks. Project revenues can be affected by numerous

losses to an Account. For example, cybersecurity failures

factors, including economic and market conditions,

or breaches involving trading counterparties or issuers in

political events, competition, regulation, and the financial

which an Account invests could adversely impact such

position and business strategy of customers.

Unanticipated changes in the availability or price of

supply or mitigate any such damage, thereby

inputs necessary for the operation of an investment may

heightening the risks of third-party claims. These assets

adversely affect the overall profitability of such

may also be impacted by the interests of local

investments. Events outside the control of PIMCO or a

communities and stakeholders, which may affect the

given investment could significantly reduce the revenues

operation of such assets. Certain of these communities

generated or significantly increase the expense of

may have or develop interests or objectives which are

constructing, operating, maintaining, or restoring the

different from, or in conflict with, those of the Account

Account’s investments. Such events may include, but are

and/or its investments.

not limited to, political action, governmental regulation, demographic changes, economic conditions, government macroeconomic policies, political events, social instability, natural disasters (e.g., fire, floods, earthquakes, and typhoons), grid and fiber connectivity (e.g., complete fallout caused by damage to power and fiber lines), power infrastructure availability (e.g. outages or complete shutdowns of substations), changes in weather, changes in demand for products or services, bankruptcy or financial difficulty of a major customer, acts of war or terrorism, and other unforeseen circumstances or operational incidents. As a general matter, the operation and maintenance of data center assets involve various risks and are subject to substantial regulation, many of which may not be under the control of the owner/operator, including labor issues, performance of infrastructure, failure of technology to perform as anticipated, structural failures and accidents, and the need to comply with the directives of government authorities. Although investments may maintain insurance to protect against certain risks, such insurance would typically be subject to deductibles and coverage limits, and may not be sufficient to recoup all losses incurred by a particular investment. Furthermore, once digital infrastructure assets of an investment become operational, they may face significant competition from other digital infrastructure assets. Certain investments may have a national or regional profile. Given this profile and/or irreplaceable nature of certain strategic assets, such assets may constitute a higher risk target for terrorist acts or political actions, such as expropriation. There is also a higher probability that if an owner/operator of such assets fails to make services available, users of such services may incur significant damage and may be unable to replace the

Environmental laws, regulations, and regulatory initiatives play a significant role in the infrastructure industry generally and can have a substantial impact on such investments. Failure to comply with any such laws, regulations, or other requirements could lead to, among other things, government fines, stop-work injunctions, or other liabilities and could have a materially detrimental impact on the financial performance of the Account’s investments. The ordinary operation of, or the occurrence of an accident with respect to an energy-dependent asset could cause major environmental damage, which may result in significant financial distress to the corresponding investment if not covered by insurance, and, even if covered by insurance, may still have a materially detrimental impact on the Account and its investments as a result of adverse publicity or related consequences. Data Source Risk. PIMCO uses a variety of proprietary and non-proprietary data to evaluate securities and formulate investment advice. If such data feeds become corrupted, compromised, or discontinued in any material manner, or become undeliverable or inaccessible in a timely manner, PIMCO’s investment models may not be properly formulated. The failure to receive the data feeds or receive the data feeds in a timely manner may leave an Account unable to trade, and may expose the Account to risk of loss or loss of opportunities, especially if the loss of the data feed coincides with turbulent market conditions. PIMCO also subscribes to external data sources for various purposes and functions, including making investment decisions. While PIMCO believes those third-party data sources to be generally reliable, PIMCO does not guarantee that the data received will be

accurate or complete and is not responsible for errors by

perfectly with, or may be more sensitive to, market

these sources.

events than, its underlying asset, rate, or index. In that

Derivatives Risk. Derivatives are financial contracts whose value depends on, or is derived from, the value of an underlying asset, reference rate, or index. A variety of derivatives may be available to an Account, depending on the specific type of Account and the applicable offering documents and/or investment guidelines. In implementing certain of its significant investment strategies, PIMCO may use derivatives as a substitute for taking a position in the underlying asset, as part of strategies designed to gain exposure to, for example, issuers, portions of the yield curve, indices, sectors, currencies, and/or geographic regions, and/or to reduce exposure to other risks, such as interest rate, credit, or currency risk. PIMCO may also use derivatives for leverage, in which case their use would involve leveraging risk, and in some cases, may subject an Account to the potential for unlimited loss (e.g., when using certain call options). The use of derivatives or other similar instruments may cause an Account’s investment returns to be impacted by the performance of assets such Account does not own and result in such Account’s total investment exposure exceeding the value of its portfolio. An Account’s use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. Derivatives are subject to a number of risks described elsewhere in this section, such

event, derivatives entered into for an Account might not accomplish their objective and could result in losses to an Account or increased losses incurred on a portfolio asset. An Account investing in a derivative could lose more than the initial amount invested, and derivatives may increase the volatility of an Account, especially in unusual or extreme market conditions. Certain derivatives have the potential for unlimited loss regardless of the size of the initial investment. The 1940 Act and related rules no longer require asset segregation for derivatives transactions entered into by registered investment companies; however, asset segregation may still be utilized for risk management or other purposes. An Account 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 an Account. Non-centrally-cleared overthe-counter (“OTC”) derivatives are also subject to increased 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 derivatives may not be available for non-centrally-cleared OTC derivatives. While derivatives that are centrally cleared generally are expected to have lower counterparty risk than OTC derivatives, central clearing does not eliminate counterparty risk.

as liquidity risk (which may be heightened for highly-

Derivatives that are cleared by a central clearing

customized derivatives, and in the event of a credit event

organization can still be subject to different risks,

or default of the underlying asset), interest rate risk,

including the creditworthiness of the central clearing

market risk, call risk, leverage risk, counterparty

organization and its members.

(including credit) risk, emerging markets risk, corporate debt securities risk, operational risk (such as documentation issues, settlement issues, and systems failures), legal risk, management risk, 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 risks associated with the underlying asset, reference rate, or index. Derivatives also involve the risk that changes in the value of a derivative instrument may not correlate

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

For example, derivatives transactions in which the

consecutive days with little or no trading.

Account may engage are either now or may in the future

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 may be modified or terminated, absent a default or termination event, only by mutual consent of an Account and its counterparty, and certain derivative transactions may be terminated before their scheduled termination date by the counterparty or an Account, as the case may be, including upon the occurrence of certain Account-related or counterparty-related events, which may result in losses or gains to an Account based on the market value of the derivative transactions entered into between the Account and the counterparty. Upon the expiration or termination of a particular contract, an Account may be unable to maintain a desired investment exposure or hedge position as had been expressed by such contract if the counterparty to such contract is unwilling to enter into a new contract, and no other appropriate counterparty can be found, which could cause losses to the Account. Furthermore, after such an expiration or termination of a particular contract, an Account may have fewer counterparties with which to engage in additional derivative transactions, which could lead to potentially

be subject to mandatory central clearing of transactions, which includes additional margin requirements and in certain cases trading on electronic platforms, pre- and post-trade transparency reporting requirements, mandatory bilateral exchange of variation, and initial margin for non-cleared swaps. Counterparty credit risk with respect to derivatives has also been impacted by rules and regulations adopted in the U.S., the EU, the UK, and certain other jurisdictions. These rules and regulations will affect the derivatives market and may significantly eliminate, delay, and/or modify an Account’s ability to exercise remedies, such as the termination of transactions, netting of obligations, and realization on collateral in the event of an insolvency of its counterparties (or their affiliates). In some cases, such rules and regulations would permit the liabilities of such counterparties to an Account to be reduced, eliminated, or converted to equity (sometimes referred to as a “bail in”). These and other regulatory developments may impair the effectiveness or raise the costs of an Account’s derivative transactions, impede the effective implementation of the Account’s derivatives strategies, or adversely affect the Account’s performance. Please also see “Government and Regulatory Risk” below.

greater counterparty risk exposure to one or more

Digital Asset Risk. Certain Accounts may enter into

counterparties, and which could increase the cost of

derivatives contracts based on Bitcoin, Ether, or other

entering into certain derivatives. In such cases, the

digital assets or may hold and/or invest in digital assets

Account may lose money. Derivatives used for hedging or

directly, including, but not limited to, Bitcoin and/or

risk management may not operate as intended or may

Ether, and may also purchase securities that provide

expose an Account to additional risks. In addition,

exposure to Bitcoin, Ether, or other digital assets,

derivatives used for hedging may partially protect an

including securities issued by funds, other pooled

Account from the risks they were intended to hedge but

investment vehicles, or companies that invest in such

not fully mitigate the impact of such risks.

digital assets. Digital assets, including “blockchain”

The regulation of the derivatives markets has increased over the past several years, and implementation of current regulations with respect to derivatives markets as well as additional future regulation of such 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.

assets, digital “tokens,” and “cryptocurrencies,” are part of a new and rapidly evolving industry that is subject to a high degree of volatility in value/price and regulatory uncertainty. Most digital currencies are not issued or backed by any government, bank, or central organization, but instead only exist natively on online, peer-to-peer, distributed networks that act as a public

and immutable record of all transactions in the

governance of a digital asset network may not receive

underlying digital currency.

sufficient support from users and miners or validators,

Digital asset prices have been subject to periods of excessive volatility in the past, and such periods can be expected to recur. Price volatility is influenced by many unpredictable factors, such as market perception, the development of competing digital assets, changes in government regulation, the occurrence of an adverse incident relating to one or more digital assets (including stablecoins and digital assets not held by Accounts), inflation rates, interest rate movements, and general economic and political conditions. The prevalence of excessive leverage in digital asset markets and the use of auto-deleveraging mechanisms by digital asset trading platforms, as demonstrated by the “Crypto Crash” on October 10, 2025, can also amplify price declines and exacerbate volatility, potentially resulting in rapid and significant losses to an Account's digital asset holdings. In addition, digital assets have no centralized pricing source which may pose valuation challenges. Further, digital asset networks face significant scaling challenges that can lead to high fees or slow transaction settlement times, and efforts to increase the volume and speed of transactions on digital networks may not be successful. In addition, if the digital asset award for mining or validating blocks and transaction fees for recording transactions on a digital network are not sufficiently high to incentivize miners or validators, they may cease expanding processing power or demand high transaction fees, which could negatively impact the value of digital assets. Digital assets that utilize blockchain technologies were only introduced relatively recently, and the medium-tolong term value of digital assets is subject to a number of factors relating to the capabilities and development of blockchain technologies and to the fundamental investment characteristics of digital assets and investor sentiment. Digital asset networks, including the Bitcoin and the Ethereum networks, are part of a new and rapidly evolving industry, and the value of digital assets depends on the development and acceptance of these digital asset networks. Changes and proposed changes in the

which may negatively affect that digital asset network’s ability to grow and respond to challenges. Moreover, in the past, flaws in the source code for digital assets have been exposed and exploited, including flaws that disabled some functionality for users and/or resulted in the theft of users’ digital assets. The cryptography underlying certain digital assets could prove to be flawed or ineffective, or developments in mathematics and/or technology, including advances in digital computing, algebraic geometry, and quantum computing, could result in such cryptography becoming ineffective. In any of these circumstances, a malicious actor may be able to take an Account’s digital assets, which would adversely affect the value of the Account and cause losses that may not be recovered. Separate from the cybersecurity risks of digital asset networks, entities that custody or facilitate the transfers or trading of digital assets have been frequent and successful targets of cybersecurity and other malicious attacks, leading to significant theft of digital assets. Entities that custody or facilitate the transfers or trading of digital assets, including large and well-established entities, have also been the subject of allegations of fraud, regulatory violations (including with respect to money laundering), malfeasance, and mismanagement, resulting in substantial losses for customers and material adverse impacts on the digital assets markets generally. For the reasons discussed above or for other reasons, functionality of a digital asset network may be negatively affected such that it is no longer attractive to users, thereby dampening demand for the applicable digital asset. The manner in which ownership of digital assets is recorded and managed introduces unique risks. For example, a unique private key is required to access, use, or transfer a digital asset on a blockchain or distributed ledger. Digital asset balances are generally maintained as an address on the blockchain and are accessed through private keys, which may be held by a market participant or a custodian, or directly by a customer or client. Although digital asset transactions are typically publicly available on a blockchain or distributed ledger, the public

address does not maintain the identity of the controller,

regulatory compliance, or the assets backing customer

owner, or holder of the private key. Unlike bank and

deposits. Unlike broker-dealers registered with the SEC,

brokerage accounts, exchanges and custodians that hold

digital asset exchanges are not required to maintain

digital assets do not always identify the owner. The

possession of the digital assets deposited by customers.

opaque underlying or spot market poses asset

As a result, digital assets held in an account at an

verification challenges for market participants, regulators,

exchange are subject to the risk that the exchange

and auditors, and as a result, there is an increased risk of

operator may sell, lend, or otherwise rehypothecate

manipulation and fraud, including the potential for Ponzi

those digital assets, subjecting them to risk of loss, or

schemes, bucket shops, and pump and dump schemes

that those digital assets may be lost as a result of fraud

which could adversely impact the value of digital assets

or other bad acts of the exchange operator or its

and digital asset derivatives. Additionally, there is a risk

employees. To the extent that a digital asset exchange, as

that an Account could inadvertently transact with, or

a result of fraud, the rehypothecation of customer assets,

receive digital assets from, persons or entities subject to

or otherwise, becomes insolvent or fails to return its

sanctions imposed by OFAC or other governmental

customers’ digital assets upon a withdrawal request, the

authorities, or otherwise involved in money laundering or

rights of the exchange’s customers to recover deposited

other illicit activities, potentially resulting in the freezing

digital assets are uncertain, a customer may have limited

or loss of digital assets, transactional restrictions, or

or no recourse to recover its digital assets, and any such

reputational harm.

recovery may be subject to the uncertainties of

Furthermore, the ownership of certain digital assets may be highly concentrated among a small number of holders, who may exert significant influence over market prices through large-scale transactions, increasing volatility and adversely affecting the value of an Account's digital asset holdings. Accounts may trade digital assets on an OTC basis or on a digital asset exchange. Opportunities to trade digital assets OTC may be limited, and OTC platforms may impose minimum trade size or other requirements that an Account is unable to satisfy. Exchanges on which digital assets trade generally are relatively new and regulation of such exchanges is continuing to evolve, and may therefore be more exposed to fraud, mismanagement and failure than established, regulated exchanges for other products.

bankruptcy or insolvency proceedings. Accordingly, such customers could incur material losses. Further, the marketplace may lose confidence in, or may experience problems relating to, digital asset trading venues. Digital asset trading venues may impose daily, weekly, monthly, or customer-specific transaction or distribution limits, or suspend withdrawals entirely, rendering the exchange of digital assets for fiat currency difficult or impossible. Participation in digital asset trading venues requires users to take on credit risk by transferring digital assets from a personal account to a third party’s account. Digital asset exchanges generally purchase digital assets for their own account and allocate positions to customers through internal bookkeeping entries while maintaining exclusive control of the private keys related to such digital assets. Due to the lack of regulatory oversight and opaque nature of the digital asset marketplace, this practice

Any fraud, manipulation, security failure, or operational

creates a risk that a digital asset exchange may not hold

problems experienced by digital asset trading venues

sufficient digital assets and funds to satisfy its obligations

could result in a reduction or complete loss in the value

and that such deficiency may not be easily identified or

of the digital assets. Furthermore, many such digital asset

discovered.

trading venues, including digital asset exchanges and

Certain digital asset networks operate on a system where

OTC trading venues, do not provide the public with significant information regarding their ownership structure, management teams, corporate practices,

only holders of the relevant digital assets (who are required to “pledge” an amount of their digital assets to a “smart contract” governing the network) may validate

new blocks on the blockchain. These digital asset

remain subject to technical, operational, and adoption

networks are said to use a “proof of stake” model, and

risks. Future changes to digital asset networks and the

new blocks on the blockchain are sometimes said to be

implementation of additional scaling solutions may lead

“verified” or “validated,” as opposed to “mined.” Digital

to a decrease in the value and/or an increase in the

asset networks that use a proof of stake model typically

volatility of the applicable digital assets or the digital

reward validators with transaction fees, as opposed to a

asset market more broadly.

set reward of digital assets (e.g., a “block reward”). The process by which blocks are validated on proof of stake digital asset networks varies greatly, but typically new blocks are proposed by one holder of the digital assets (determined by an algorithm included in the smart contract governing the network) and agreed to by a consensus of other holders of the relevant digital asset. If validators demand higher transaction fees in exchange for validating new blocks in a digital asset blockchain, the demand for that digital asset and, accordingly, its value, may be adversely impacted. In addition, validators on proof of stake networks may engage in maximal extractable value ("MEV") strategies, whereby they reorder, insert, or censor transactions within a block to extract additional profit, which may result in increased transaction costs, failed or delayed transactions, or other adverse consequences for an Account. Furthermore, smart contracts are subject to coding errors, vulnerabilities, and exploits that may result in the loss or theft of digital assets, transaction failures, or other irreversible and unforeseen adverse consequences.

The U.S. Congress, SEC, CFTC, certain state regulators, and other U.S. and non-U.S. government or quasigovernmental agencies have asserted authority over digital assets. Those entities and other U.S. and non-U.S. government or quasi-governmental agencies have recently and may, in the future, adopt laws, regulations, directives, or other guidance that have a material effect on digital assets and digital asset makers and service providers. These governmental entities have also engaged in significant enforcement activity related to digital assets in the past and may do so again in the future. The effect of any future U.S. federal or state or non-U.S. legal or regulatory changes or enforcement activity is impossible to predict, but such change could be substantial and adverse to the value of an Account’s digital asset investments. For example, if a digital asset held by an Account is determined to be a “security” by the SEC or another U.S. or non-U.S. regulator, it may adversely affect the value or functionality of the digital asset. Furthermore, the taxation of digital currencies is uncertain and continues to evolve in many jurisdictions.

PIMCO does not currently expect to cause Accounts to

In the United States, the Internal Revenue Service ("IRS")

stake their digital assets, although PIMCO reserves the

has issued, and may continue to issue, guidance and

right to do so. Staking involves pledging digital assets to

regulations that impose new or expanded reporting

a validator node operator, which may be the digital asset

requirements on digital asset holders and service

custodian or a third party. In doing so, the Account will

providers. Failure to accurately report digital asset

receive a portion of the transaction fees. Staking will be

transactions could result in penalties, interest, or other

subject to additional risks, which will vary depending on

adverse tax consequences to an Account. The evolving

the protocols that govern the networks. Digital asset

and uncertain nature of digital asset taxation may also

networks that currently operate on a proof of work basis

result in unexpected tax liabilities or changes in the after-

may transition to a proof of stake model. Certain digital

tax returns of an Account's digital asset investments.

asset networks, including the Ethereum network, have transitioned or may in the future transition from a proof of work model to a proof of stake model, and may undertake other significant changes to their networks, including the implementation of sharding and other scaling solutions. Such transitions and network upgrades

Tokenized Asset Risk. Accounts may hold digital assets representing a direct interest in, or indirect ownership of or exposure to, securities, commodities, loans or other credit instruments, real estate, or other ”real world” assets (“Tokenized Assets”). Investments in Tokenized

Assets are generally subject to similar risks as other

blockchain-based representations of ownership or to

digital assets, including cybersecurity, smart contract, and

address the unique characteristics of tokenized interests

liquidity risks (see “Digital Assets Risk” for more

in real-world assets. As a result, there can be no

information). Additionally, the underlying assets

assurance that a holder of Tokenized Assets will have

represented by Tokenized Assets may not be adequately

legally enforceable rights to the underlying assets in all

insured by traditional insurance policies for losses arising

relevant jurisdictions, and the ability of an Account to

from blockchain-related events, smart contract failures,

assert or protect its ownership interests may be subject

cyberattacks, or other risks specific to the tokenization

to material uncertainty, particularly in cross-border

infrastructure, thereby increasing the risk of

transactions or in the event of the issuer's insolvency.

unrecoverable loss associated with an Account's

These risks will be greater where the issuer or a third

Tokenized Asset holdings. Tokenized Assets are also

party associated with the issuer is required to take

subject to the risks associated with the assets underlying

additional actions to acquire, dispose of, maintain,

the Tokenized Assets (e.g., Tokenized Assets representing

service, or otherwise take discretionary actions related to

an indirect interest in real property or direct investment

the underlying assets.

in fixed income instruments will be subject to the risks associated with a direct investment in real property or fixed income investments, as applicable), and, as a general matter, will be subject to an Account’s investment guidelines and objectives that are applicable to the assets underlying the Tokenized assets. Such Tokenized Assets may depend on external data feeds or "oracles" to provide pricing, valuation, or other off-chain information to the blockchain or smart contracts governing the Tokenized Assets. Such oracles may provide inaccurate, delayed, stale, or manipulated data, whether due to technical failures, cyberattacks, or other causes. Errors or manipulation in oracle data could adversely affect the valuation, settlement, or functioning of Tokenized Assets, and could result in material losses to an Account. There can be no assurance that the oracles used in connection with any Tokenized Assets will perform accurately or reliably at all times. Further, Tokenized Assets will be subject to risks associated with any investment in a third-party pool of assets, including the risk that the issuer of the Tokenized Assets does not actually own or control the assets purportedly represented by the Tokenized Assets such that the holder’s claim to the underlying assets may not be enforceable. The legal enforceability of ownership claims with respect to Tokenized Assets may also vary significantly across jurisdictions where existing legal frameworks governing property rights, securities law, and contract law have not been updated to recognize

The models used to tokenize securities and other assets vary significantly in terms of structure and the rights, obligations, and benefits associated with a Tokenized Asset may or may not be materially different from those of the underlying security or asset. A Tokenized Asset may or may not represent a direct ownership interest in, or contractual obligation of, the issuer of the underlying security or asset and, accordingly, may or may not confer upon the holder any of the rights that would be afforded to a direct holder of the underlying security or asset. In addition, holders of Tokenized Assets may be exposed to risks with respect to the issuer or other third parties involved in the tokenization process, such as bankruptcy or insolvency, to which a direct holder of the underlying security or asset would not necessarily be exposed. Additionally, Tokenized Assets will be indirectly subject to custody, credit, and other risks in respect of the Tokenized Asset issuer’s service providers, who may be related to the issuer. An Account that holds Tokenized Assets may be required to open an account with such service providers to hold or access its Tokenized Assets (including to place trades related thereto) only through specialized electronic platforms associated therewith. There can be no guarantee that such platforms will perform as expected or be available at all times. In times of distress, it may be challenging to access any rights to remove the underlying asset from the token in order to hold it directly. Tokenized Assets, in particular when

transacting through a specialized electronic platform,

code may contain errors or limitations that lead to

may have limited or no liquidity, and an Account’s ability

disruptions in services. In addition, there may be few or

to liquidate its Tokenized Asset position may be subject

no counterparties available using these settlement

to limitations that adversely affect the execution price. An

technologies. As a result, Tokenized Assets that clear and

Account that invests in Tokenized Assets may not hold a

settle on these systems may be less liquid than similar

direct interest in the asset or assets underlying those

securities purchased through traditional clearance and

Tokenized Assets and may not be entitled to exercise any

settlement systems. For additional information relating to

voting, consent, or other rights associated with the

regulatory considerations and liquidity constraints, please

underlying assets. In addition, there can be no guarantee

also see “Liquidity Risk” below.

that the value of any Tokenized Asset will accurately represent the value of the underlying assets, and in some cases, Tokenized Assets may trade at a significant discount to the value of the underlying assets. The performance of Tokenized Assets may also deviate from the underlying assets due to additional expenses borne by the issuer in respect of the Tokenized Assets or its ownership of the underlying assets. Tokenized Asset markets may be dominated by a small number of issuers, platforms, or service providers, creating concentration risk. The failure, fraud, insolvency, or regulatory action against a dominant issuer or platform could have outsized adverse effects on the broader tokenized asset market and on the value and liquidity of an Account's Tokenized Asset holdings. Finally, as with digital assets generally, the regulatory treatment of Tokenized Assets may not always be clear, both in the United States and in non-U.S. jurisdictions, and is subject to change. Compliance with multiple regulatory frameworks may increase costs and operational complexity, and any failure to comply could result in adverse consequences to an Account, including restrictions on its ability to hold, trade, or dispose of its Tokenized Assets. PIMCO and other market participants, including issuers, exchanges and trading platforms, may utilize new and emerging technologies, including permissioned and permissionless blockchain networks, for the clearance and settlement of Tokenized Assets purchased on behalf of an Account. The use of these technologies in this way is novel, and could subject Accounts to risks, including risks related to settlement failures or delays in settlement, failures in the technology, or regulatory risk. Novel settlement technologies may not function as intended and the underlying computer

Any investment in Tokenized Assets is subject to a variety of risks, which if realized would have a negative, and potentially material, impact on the Account and its investment performance. Digital Asset Futures Risk. Accounts may invest in exchange-traded futures contracts referencing digital assets. Like all futures, digital asset futures are derivatives and are subject to the risks associated with derivatives contracts. The primary risks associated with digital asset futures contracts are imperfect correlation, liquidity, volatility, leverage, credit, and market risk, as well as futures commission merchants, clearinghouse, and counterparty risk. There can be no guarantee that there will be a correlation between price movements in the digital asset futures and the underlying asset. The market for digital asset futures is relatively new and is still developing. As a result, digital asset futures markets are thinly traded relative to other futures markets. Trading in the cash digital asset market is more difficult as compared to more traditional cash markets, and in particular, short selling digital assets remains challenging and costly. As a result of these features of the digital asset cash market, market makers and arbitrageurs may not be as willing to participate in the digital asset futures market as they are in other futures markets, which may limit an Account's ability to transact at desired prices or times. Regulatory changes may alter the nature of digital asset futures investments or restrict the operations of digital asset networks or platforms, potentially requiring significant daily variation margin payments. Each of these factors may increase the likelihood that the price of digital asset futures will be volatile and/or will deviate from the price of the underlying asset.

Digital asset futures may experience significant price

futures contracts and may significantly impact

volatility. For example, exchange-specified collateral for

performance. Extended periods of contango (where

Bitcoin futures is substantially higher than for most other

longer-dated contracts trade at higher prices) or

futures contracts, and collateral requirements may be set

backwardation (where shorter-dated contracts trade at

as a percentage of the value of the contract, which

higher prices) may cause significant losses to an Account

means that collateral requirements for long positions can

due to unfavorable roll pricing.

increase if the price of the contract rises. In addition, futures commission merchants may require collateral beyond the exchange’s minimum requirement. Futures commission merchants may also restrict trading activity in digital asset futures by imposing position limits, prohibiting selling short the future or prohibiting trades where the executing broker places a trade on behalf of another broker (so-called “give-up transactions”). Specifically, Bitcoin futures are subject to daily limits that may impede a market participant’s ability to exit a position during a period of high volatility. Margin requirements and position limits imposed by exchanges or futures commission merchants may limit an Account's ability to achieve its desired level of exposure to digital asset futures. Exchanges where digital assets are traded (which are the source of the price(s) used to determine the cash settlement amount for digital asset futures) have experienced technical and operational issues, making digital asset prices unavailable at times. The cash market in digital assets has been the target of fraud and manipulation, which could affect the pricing, volatility, and liquidity of the futures contracts. In addition, if settlement prices for digital asset futures are unavailable (which may occur following a trading suspension

Short digital asset futures positions are subject to theoretically unlimited losses, and the significant price volatility historically exhibited by digital assets and digital asset futures may result in substantial losses to an Account. Even small digital asset futures investments can disproportionately increase an Account's exposure to digital asset markets, amplifying losses during periods of market volatility, and losses on digital asset futures positions may exceed the principal amount invested. For additional information, please also see “Derivatives Risk.” Disposition of Investment Risk. An Account may dispose of its investments through whatever manner it deems to be advisable, including through asset sales, repackaging transactions, securitizations, strategic transactions and other mergers and acquisitions activity, and/or any combination thereof. Therefore, the disposition of Account investments will be subject to the risks associated with the particular exit strategy utilized. Certain disposition techniques and structures may expose an Account to liability for (among other things) potential securities laws violations, breaches of representations and warranties, risk retention obligations, and repurchase or “putback” obligations with respect to

imposed by the exchange due to large price movements,

securitizations or similar structures.

following a “fork” of the digital asset, or for other

Distressed Company Risk. An Account that invests in

reasons), or PIMCO determines such settlement prices

securities of distressed companies, which generally trade

are unreliable, the fair value of an Account’s digital asset

below “par” or full value, may be subject to greater levels

futures may be determined by reference, in whole or in

of market, credit, issuer, and liquidity risk than a portfolio

part, to the cash market in the underlying asset. These

that does not invest in such securities. Securities of

circumstances may be more likely to occur with respect

distressed companies include both debt and equity

to digital asset futures than with respect to futures on

securities. Debt securities of distressed companies are

more traditional assets.

considered predominantly speculative with respect to the

An Account may "roll" digital asset futures positions by

issuers’ continuing ability to make principal and interest

closing positions approaching expiration and opening new positions with later expiration dates, which typically involves substantially higher costs than rolling other

payments. Distressed securities and any securities received in an exchange for such securities may be subject to restrictions on sale. Issuers of distressed

company securities may also be involved in

significant short-term price movements of stocks subject

restructurings or bankruptcy proceedings that may not

to dividend capture trading, and may result in negative

be successful, or other financial difficulties which may

tax consequences.

cause the value of their securities to fluctuate rapidly or unpredictably. An economic downturn or period of rising interest rates could adversely affect the market for these securities and reduce the Account’s ability to sell these securities (i.e., liquidity risk). If the issuer of a debt security is in default with respect to interest or principal payments, the Account may lose the value of its entire investment. Investments in distressed securities often involve increased control position risk and litigation risk. PIMCO may take actions in a stressed or distressed situation which result in disputes or litigation, which could impose costs on the Account and could result in actions which decrease the value of the securities in the Account.

Emerging Markets Risk. Foreign (non-U.S.) investment risk may be particularly high to the extent that an Account invests in securities and other investments that are economically tied to countries with developing economies (often referred to as emerging markets). Emerging market securities or other investments may present market, credit, currency, liquidity, volatility, inflation, custody, regulatory uncertainty, legal, political, technical, headline, reputational, and other risks different from and potentially greater than the risks of investing in securities and instruments economically tied to developed foreign countries. These risks are heightened in frontier markets, a subset of emerging markets, which are generally less economically developed, have smaller

Dividend-Oriented Stock Risk. Accounts that may invest

or less liquid capital markets, and/or have more limited

in dividend-oriented securities carry certain risks. Issuers

market infrastructure than other traditional emerging

that have paid regular dividends or distributions to

markets, and therefore may entail greater risks.

shareholders may not continue to do so in the future. An issuer may reduce or eliminate future dividends or distributions at any time and for any reason, which may result in a decrease in the value of the security held by an Account or an Account receiving less income. During certain market conditions, the securities of issuers that have paid regular dividends or distributions may not be widely available or may be highly concentrated in particular sectors of the market. The value of a security of an issuer that has paid dividends in the past may decrease if the issuer reduces or eliminates future payments to its shareholders. If the dividends or distributions received by an Account decrease, the Account’s performance may be impacted. Equity securities with higher dividend yields may be sensitive to changes in interest rates, and as interest rates rise, the prices of such securities may fall, which may result in losses to an Account. An Account's use of a dividend capture strategy (i.e., purchasing an equity security shortly before the issuer pays a dividend and selling it shortly thereafter) exposes an Account to higher portfolio turnover, increased trading costs, and the potential for capital loss, particularly in the event of

To the extent an Account invests in emerging market securities or other investments that are economically tied to a particular region, country or group of countries, the Account may be more sensitive to adverse political or social events affecting that region, country, or group of countries. Economic, business, political, or social instability may affect emerging market securities differently, and often more severely, than developed market securities. An Account that focuses its investments in multiple asset classes of emerging market securities may have a limited ability to mitigate losses in an environment that is adverse to emerging market securities in general. Emerging market securities or other investments may also be more volatile, less liquid, more difficult to value and are often more vulnerable to market and economic events than are developed market securities. Rising interest rates, combined with widening credit spreads, could negatively impact the value of emerging market debt and increase funding costs for foreign issuers. In such a scenario, foreign issuers might not be able to service their debt obligations, the market for emerging market debt could suffer from reduced

liquidity, and any investing Accounts could lose money.

Inflation and rapid fluctuations in inflation rates have

The economy of some emerging markets may be

had, and may continue to have, negative effects on the

particularly exposed to or affected by a certain industry

economies and securities markets of certain emerging

or sector, and therefore issuers and/or securities of such

market countries.

emerging markets may be more affected by the performance of such industries or sectors. The Public Company Accounting Oversight Board, which regulates auditors of U.S. public companies, is unable to inspect audit work papers in certain foreign countries. Investors in foreign countries often have limited rights and few practical remedies to pursue shareholder claims, including class actions or fraud claims, and the ability of the SEC, the U.S. Department of Justice, and other authorities to bring and enforce actions, or obtain information needed to pursue or enforce such judgments, against foreign issuers or foreign persons is limited. Emerging market countries typically have less established regulatory, disclosure, legal, accounting, recordkeeping, and financial reporting systems than those in more developed markets, which may increase the potential for market manipulation or reduce the scope or quality of financial information available to investors. In addition, foreign companies with securities listed on U.S. exchanges may be delisted if they do not meet U.S. accounting standards and auditor oversight requirements, which may decrease the liquidity and value of the securities. In determining whether an instrument is economically tied to an emerging market country, PIMCO will use such factors and criteria as it deems reasonable in its discretion, which may differ from the factors and criteria used by others. Adverse conditions in a certain region can adversely affect securities of other countries whose economies appear to be unrelated. To the extent that an Account invests a portion of its assets in a concentrated geographic area, the Account will

Emerging securities markets may have different clearance and settlement procedures, which may be unable to keep pace with the volume of securities transactions or otherwise make it difficult to engage in such transactions. Settlement problems may cause the Account to miss attractive investment opportunities, hold a portion of the assets in cash pending investment, or be delayed in disposing of a portfolio security. Such a delay could result in liability to a purchaser of the security. Custody services in many emerging market countries remain undeveloped. The Account will be investing in emerging market countries where the current law and market practice carry fewer safeguards than in more developed markets, including the protection of client securities against claims from general creditors in the event of the insolvency of an agent selected to hold securities on behalf of an Account, and the Account’s custodian and PIMCO have assumed no liability for losses resulting from the Account acting in accordance with such practice. 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 of investments in or related to those regions. These investments are also more susceptible to the adverse impacts described in “Sanctions, Anti-Corruption, Anti-Money Laundering and Related Considerations.” Any of these outcomes could adversely affect an Account’s performance with respect to such investments,

generally have more exposure to regional economic risks

and thus an Account’s performance as a whole.

associated with that geographic area.

Environmental, Social, and Governance Risk. An

The currencies of emerging market countries may

Account that employs environmental, social, and/or

experience significant declines against the U.S. dollar, and devaluation may occur subsequent to investments in these currencies by an Account. Many emerging market countries have experienced substantial, and in some periods extremely high rates of inflation for many years.

governance (“ESG”) investment objectives, guidelines, and/or restrictions (“ESG Account”), carries the risk that the Account’s performance may differ from non-ESG Accounts. For example, an ESG Account’s objectives, guidelines, and/or restrictions could affect the Account’s

exposure to certain sectors or types of investments,

these engagement activities, an ESG Account may

which could negatively impact the Account’s

purchase securities that do not currently engage in ESG

performance. In determining the efficacy of an issuer's

practices to PIMCO’s satisfaction, in an effort to improve

ESG practices, PIMCO will use its own proprietary

an issuer’s ESG practices. Successful application of an

assessments of ESG factors and, when appropriate,

ESG Account’s investing strategy and PIMCO’s

references standards as set forth by recognized global

engagement efforts will depend on PIMCO’s skill in

organizations such as the United Nations. As described in

properly identifying and analyzing ESG factors, and there

Appendix D, ESG factors may also be considered in the

can be no assurance that the strategy or techniques

investment research process in Accounts that do not

employed will be successful. Changes in political,

employ ESG investment objectives, guidelines, and/or

regulatory, tax, and/or other conditions in the U.S. and

restrictions where they may be material to assessing the

abroad with respect to ESG factors, including climate-

risk and return profile of an investment. ESG factors that

related activities, may cause fluctuations in markets and

may be taken into account include, but are not limited to,

securities prices around the world, which could

climate change risks, social inequality, shifting consumer

negatively impact the value of an Account’s investments.

preferences, regulatory risks, talent management, or misconduct at an issuer. All these factors may not be taken into account in connection with a particular investment or portfolio. In addition, regional differences in social responsibility norms and practices may be taken into account by PIMCO. ESG investing is qualitative and subjective by nature, and there is no guarantee that the factors utilized by PIMCO, or any judgment exercised by PIMCO will reflect the opinions of any particular Client, and the factors utilized by PIMCO may differ from the factors that any particular Client considers relevant in evaluating an issuer’s ESG practices. In evaluating an issuer, PIMCO is dependent upon information and data from the issuer or third-party reporting that may be incomplete, inaccurate, inconsistent, or unavailable, which could cause PIMCO to incorrectly assess an issuer’s business practices with respect to ESG practices, lead to misaligned investments, and adversely impact an Account’s performance and objectives. In addition, an issuer’s ESG practices or PIMCO’s assessment of an issuer’s ESG practices may change over time, including in response to relevant legal and regulatory developments. ESG Accounts may seek to exclude issuers determined by PIMCO to be fundamentally misaligned with sustainability principles. In addition, PIMCO will endeavor, where appropriate, to work collaboratively with management towards these sustainability objectives where PIMCO believes doing so may materially improve the risk or return profile of the investment. As a result of

In recent years, a number of jurisdictions have adopted and continue to adopt new laws, regulations and policies which may expressly restrict the ability of certain entities, including government owned or controlled entities, to make or exclude certain investments, including investments that government regulators designate as supporting or boycotting the fossil fuels or arms manufacturing industries. A number of jurisdictions have also adopted, and continue to adopt, new laws, regulations, and policies which expressly require or otherwise encourage the consideration of, or reporting of, ESG factors. Jurisdictions’ laws, regulations, and policies have in some instances shifted quickly due to political change. Such current or future laws also may preclude an Account from certain proxy voting decisions that it believes to be advantageous to investors. This is an evolving area of law and policy, and future developments may be adverse to an Account. Equity Securities Risk. Equity securities represent an ownership interest, or the right to acquire an ownership interest, in an issuer. Equity securities also include, among other things, common stocks, preferred securities, convertible stocks, and warrants. The values of equity securities or equity-related securities, such as common stocks and preferred securities, may decline due to general market conditions that are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general

outlook for corporate earnings, changes in inflation,

in related sectors that may share common characteristics,

interest or currency rates, or adverse investor sentiment

are often subject to similar business risks and regulatory

generally. They may also decline due to factors that

burdens, and whose securities may react similarly to the

affect a particular industry or industries, such as labor

types of events and factors described above, which will

shortages or increased production costs and competitive

subject the Account to greater risk. An Account also will be

conditions within an industry. Conversely, a change in

subject to focused investment risk to the extent that it

financial condition or other event affecting a single issuer

invests a substantial portion of its assets in a particular

or industry may adversely impact securities markets as a

issuer, market, asset class, country, or geographic region.

whole. Equity securities and equity-related securities

Please also see “Foreign Investment Risk” and “Emerging

generally have greater price volatility than most fixed

Markets Risk.”

income securities. These risks are generally magnified in the case of equity investments in distressed companies. In addition, preferred securities may be subject to greater credit risk or other risks, such as risks related to deferred and omitted distributions, limited or no voting rights, liquidity constraints, interest rate changes, regulatory or tax changes, and special redemption or call rights.

Escheatment Risk. In accordance with state “unclaimed property” laws, shares or interests of a PIMCO Fund, or assets held in an Account, may legally be considered abandoned and required to be transferred to the relevant state (also known as “escheatment”) under various circumstances. These circumstances, which vary by state, can include inactivity (e.g., no investor-initiated

Collateral Risk. Fixed income securities may be secured by

contact for a certain period), returned mail (e.g., when

collateral, but such security does not eliminate the risk of

mail sent to an investor is returned by the post office as

loss. Collateral may decline in value, prove illiquid or difficult

undeliverable), uncashed checks, or a combination of

to realize upon default, and enforcement may be

these. An incorrect address may cause an investor’s

complicated by cross-border legal issues, competing claims

account statements and other mailings to be returned to

from senior or pari passu creditors, or intercreditor

a PIMCO Fund or an investor’s financial intermediary.

arrangements. Additionally, an Account’s security interest

Since states’ statutory requirements regarding inactivity

may be impaired by borrower fraud or inadequate controls

differ, it is important for investors to regularly contact

resulting in double pledging of assets, by concentration in a

their financial intermediary or a PIMCO Fund’s transfer

single collateral type or pool, or by failures to properly

agent. State escheatment laws, and the application of the

perfect or maintain liens in accordance with applicable law.

process described above, may vary by state, by an

Focused Investment Risk. To the extent that an Account focuses its investments in a particular industry, the Account’s portfolio will be more susceptible to events or factors affecting companies in that industry. These may include, but are not limited to, governmental regulation,

investor’s financial intermediary, and/or depending on how investors hold their shares or interests in a PIMCO Fund. Neither PIMCO nor a PIMCO Fund will be liable to investors or their representatives for good faith compliance with escheatment laws.

inflation, rising interest rates, cost increases in raw materials,

Foreign Investment Risk. An Account that invests in

fuel and other operating expenses, technological

non-U.S. securities may experience more rapid and

innovations that may render existing products and

extreme changes in value than an Account that invests

equipment obsolete, competition from new entrants, high

exclusively in securities of U.S. companies or government

research and development costs, increased costs associated

entities. The securities markets of many foreign countries

with compliance with environmental or other regulations,

are relatively small or less developed, with a limited

and other economic, market, political, or other

number of companies representing a small number of

developments specific to that industry. Also, an Account

industries. Additionally, issuers of foreign securities are

may invest a substantial portion of its assets in companies

usually not subject to the same degree of regulation as

U.S. issuers. Reporting, legal, accounting, corporate

Adverse conditions in a certain region can adversely

governance, and auditing standards of foreign (non-U.S.)

affect securities of other countries whose economies

countries differ, in some cases significantly, from U.S.

appear to be unrelated. Further, an Account that

standards. Global economies and financial markets are

authorizes PIMCO to transact in foreign markets may be

becoming increasingly interconnected, and conditions

subject to the regulatory regime of that jurisdiction,

and events in one country, region, or financial market

which may adversely impact the Account as described

may adversely impact issuers in a different country,

below under “Government and Regulatory Risk.” To the

region, or financial market. Foreign market trading hours,

extent that an Account invests a significant portion of its

clearance and settlement procedures, and holiday

assets in a specific geographic region, or in securities

schedules may limit an Account’s ability to buy and sell

denominated in a particular foreign currency, the

securities. Certain foreign exchanges impose

Account will generally have more exposure to regional

requirements on the transaction settlement process with

economic risks, including weather emergencies and

respect to certain securities, such as requirements to pre-

natural disasters, associated with foreign investments.

deliver securities (for a sale) or pre-fund cash (for a buy)

Foreign securities may become less liquid in response to

to a broker’s account. Such requirements may limit an

market developments or adverse investor perceptions, or

account’s ability to transact in such securities in a timely

become illiquid after purchase by an Account, particularly

manner and will subject the account to the risk of loss

during periods of market turmoil, and may render

that could result if the broker is unable or unwilling to

holdings in that foreign country illiquid or even

meet its obligations with respect to pre-delivered

worthless. A reduction in trading in securities of issuers

securities or pre-funded cash. Investments in foreign

located in countries whose economies are heavily

markets may also be adversely affected by U.S. or foreign

dependent upon trading with key partners may have an

governmental actions, such as the imposition of capital

adverse impact on an Account’s investments.

controls, nationalization of companies or industries,

Additionally, events and evolving conditions in certain

expropriation of assets, the imposition of punitive taxes,

markets or regions may alter the risk profile of

currency blockage, political changes, diplomatic

investments tied to those markets or regions. This may

developments, trade restrictions (including tariffs), war,

cause investments tied to such markets or regions to

or the imposition of sanctions or other similar measures.

become riskier or more volatile, even when investments

The governments of certain countries may prohibit or

in such markets or regions were perceived as

impose substantial restrictions on foreign investing in

comparatively stable historically. Moreover, non-U.S. laws

their capital markets or in certain sectors or industries,

may require investments to be held outside of standard

which can decrease the investment opportunities for

custodial arrangements, which can lead to additional

Accounts subject to such limits. In addition, restrictions

risks and possible conflicts with U.S. laws.

may be imposed after an Account has invested in a jurisdiction, possibly forcing an account to dispose of an investment at an inopportune time or price.

Furthermore, repatriation of investment income, capital and the proceeds of sales by foreign investors may require governmental registration and/or approval in some countries.

Futures/Cleared Swap Risk for Separate Accounts. The CFTC has established guidance that may adversely affect the treatment, and/or increase the risk exposure, of Separate Accounts under customer agreements with an FCM (including with respect to futures and cleared derivatives transactions). Pursuant to this guidance, such agreements between an FCM and a Separate Account

In addition, a foreign government may limit or cause

customer may not preclude the FCM from calling the

delay in the convertibility or repatriation of its currency

underlying beneficial owner of the Separate Account for

which would adversely affect the U.S. dollar value and/or

margin or otherwise guarantee the beneficial owner

liquidity of investments denominated in that currency.

against or limit the beneficial owner’s loss. For Separate

Accounts, this means that an FCM must retain the ability

disease, or adverse investor sentiment generally. The

to ultimately call for additional funds from the beneficial

market value of an Account’s investments may decline

owner and to look to funds in other accounts of the

for a number of reasons, including increases in defaults

same beneficial owner held by that FCM, including assets

resulting from changes in overall economic conditions

in other accounts of the same beneficial owner managed

and widening of credit spreads. Unfavorable market

by PIMCO, as well as assets of that beneficial owner

conditions may also increase funding costs, limit access

managed by other investment managers. For purposes of

to the capital markets, or result in credit terms changing

CFTC regulations governing disbursement of margin

or credit becoming unavailable. These events could have

from clearing member customer accounts, the CFTC has

an adverse effect on an Account’s investments and the

adopted a rule that allows an FCM to treat the separate

Account’s overall performance.

accounts of a beneficial owner cleared by such FCM (e.g., accounts managed by different investment managers or different accounts managed by the same manager) as separate for margining purposes in the ordinary course of business, provided certain conditions are met (e.g., the beneficial owner and its separate accounts are solvent, margin calls are met within the timeframes prescribed by the rule, and an event of default has not occurred). However, if the foregoing conditions are not met, there is a risk that Separate Account assets and/or PIMCO’s margining practices could be impacted. For instance, if another investment manager does not meet a margin call from an FCM in respect of a beneficial owner for which PIMCO manages a Separate Account, the FCM may withhold the return of margin for the Separate Account based on the CFTC’s rule that exposure should be viewed at the beneficial owner (rather than separate account) level. These and other regulatory developments may impair the effectiveness, increase exposure risks or raise the costs of a Separate Account’s futures and/or cleared derivatives transactions, impede the effective implementation of the Separate Account’s futures and/or cleared derivatives strategies, or adversely affect the Separate Account’s performance. Please also see “Derivatives Risk” and “Government and Regulatory Risk.” General Economic and Market Risk. The value of an Account’s investments could be affected by factors affecting the economy and securities markets generally, such as real or perceived adverse economic conditions, supply and demand for particular instruments, changes in the general outlook for certain markets or corporate earnings, interest rates, announcements of political information, bank failures, natural disasters, outbreaks of

An Account is subject to the risk that natural disasters and geopolitical and other events (e.g., wars, terrorism, and outbreaks of disease) will disrupt securities markets and adversely affect global economies and markets, thereby decreasing the value of the Account’s investments. Events such as war, military conflicts, terrorism, and related geopolitical risks have led, and may in the future lead, to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets generally. Those events could also have an acute effect on individual issuers or related groups of issuers. These risks could also adversely affect individual issuers or related groups of issuers, securities markets, interest rates, auctions, secondary trading, ratings, credit risk, inflation, deflation, and other factors relating to an Account’s investments. At such times, an Account’s exposure to the risks described elsewhere in this section, including market risk, liquidity risk, foreign investment risk, currency risk, and credit and counterparty risk, will likely increase. Events such as health pandemics or outbreaks of disease, such as the COVID-19 pandemic, may lead to increased short-term market volatility and may have adverse longterm effects on the U.S. and world economies and markets generally. Health pandemics or outbreaks could result in a general economic decline in a given region, or globally, particularly if the outbreak persists for an extended period of time or spreads globally. This could have an adverse impact on an Account’s investments, or an Account’s ability to source new investments or to realize its investments. Pandemics and similar events could also have an acute effect on individual issuers or

related groups of issuers and could adversely affect

trade, manufacturing, development, and investment in

securities markets, interest rates, auctions, secondary

the jurisdictions in which an Account may invest, and any

trading, ratings, credit risk, inflation, deflation, and other

negative sentiments towards the U.S. as a result of such

factors relating to an Account’s investments or PIMCO’s

changes, could adversely affect the performance of an

operations. Additionally, the risks related to health

Account’s investments. In particular, the outcome of U.S.

pandemics or outbreaks of disease are heightened due

presidential and other elections creates uncertainty with

to uncertainty as to whether such an event would qualify

respect to the legal and regulatory regimes in which an

as a force majeure event. If a force majeure event is

Account and its investments operate, which could have a

determined to have occurred, a counterparty to an

material adverse impact on an Account and its

Account or a portfolio investment may be relieved of its

investments. In addition, negative sentiments towards

obligations under certain contracts to which it is a party,

the U.S. among non-U.S. customers and among non-U.S.

or, if it has not, the Account and its investments may be

employees or prospective employees could adversely

required to meet their contractual obligations, despite

affect sales or hiring and retention, respectively, in

potential constraints on their operations and/or financial

investments.

stability. Either outcome could adversely impact investments and the Account’s performance.

Government and Regulatory Risk. Legal, tax, and regulatory changes (both within and outside the U.S.)

Market disruptions can prevent an Account from

could occur and may adversely affect Accounts and their

implementing its investment program for a period of

ability to pursue their investment strategies and/or

time and achieving its investment objective. For example,

increase the costs of implementing such strategies. New

a disruption may cause an Account’s derivatives

(or revised) laws or regulations may be imposed by the

counterparties to discontinue offering derivatives on

CFTC, the SEC, the Internal Revenue Service, the

some underlying commodities, securities, reference rates,

Department of Labor, the U.S. Federal Reserve or other

or indices, or to offer such products on a more limited

banking regulators, the Financial Crimes Enforcement

basis.

Network (“FinCEN”), the Office of Foreign Assets Control

Market uncertainty may have a significant impact on the business of an Account. Among other things, the level of investment opportunities may decline from PIMCO’s current expectations. One possible consequence is that an Account may take a longer than anticipated period to invest capital, and/or the Account may be relatively concentrated in a limited number of investments. Consequently, during this period, the returns (if any) realized by Investors may be substantially adversely affected by the unfavorable performance of a small number of these investments. Although PIMCO believes that certain market dislocations will result in attractive investment opportunities, an Account may not be able to time the acquisition or disposition of its investments correctly, which could result in further depreciation in values. Changes in U.S. social, political, regulatory, and economic conditions or in laws and policies governing foreign

(“OFAC”), or other governmental regulatory authorities or self-regulatory organizations that supervise the financial markets (including non-U.S. regulatory authorities, to the extent applicable), of which the potential impact on the value of securities and other assets held by an Account is unknown. These agencies have been empowered to promulgate a variety of rules pursuant to financial reform legislation in the U.S. The current regulatory posture of governments and regulators may have the effect of reducing market liquidity, market resiliency, and money supply, such as through higher rates, tighter financial regulations, and proposals that may prevent certain investors or investment vehicles from participating in certain markets. An Account may also be adversely affected by changes in the enforcement or interpretation of existing statutes and rules by courts and/or these governmental regulatory authorities or self-regulatory organizations. Moreover, legal and regulatory changes may adversely affect an Account’s ability to obtain

financing by (among other things) reducing the

actions in the event of market emergencies. The

availability of financing and/or adversely impacting

regulation of derivatives transactions, funds and

financing costs and other terms.

Accounts that engage in such transactions, and the

The financial services industry is subject to extensive regulation. Banking regulators have broad and largely discretionary powers, which include prohibiting “unsafe or unsound” practices, requiring affirmative actions to correct any violation or practice, issuing administrative orders that can be judicially enforced, directing increases in capital, directing the sale of subsidiaries or other assets, limiting dividends and distributions, restricting growth, assessing civil monetary penalties, removing officers and directors, and terminating deposit insurance. These actions and other regulatory requirements could have a material adverse effect on an investment in an Account. The financial institutions in which an Account will invest and with which an Account will transact are subject to laws, regulations, administrative actions, and policies in each location in which they operate. There can be no assurance that an Account, PIMCO, or any of their affiliates will avoid regulatory examinations or enforcement actions in the future. Even if an investigation or proceeding did not result in a sanction, or if the sanction imposed against an Account, PIMCO, or their respective affiliates was small in monetary amount, the adverse publicity relating to the investigation, proceeding, or imposition of any such sanction could harm an Account, PIMCO, or their respective affiliates’ reputations, which may adversely affect an Account’s investment performance by hindering its ability to obtain favorable financing or consummate a potentially profitable investment. The regulatory environment is evolving, and changes in the regulation or taxation of private investment funds may adversely affect the value of the investments held by an Account and the ability of an Account to execute its investment strategy. In addition, the securities and derivatives (including futures) markets are subject to comprehensive statutes, regulations, and margin requirements. The CFTC, the SEC, the FDIC, other U.S. and non-U.S. regulators, and self-regulatory organizations and exchanges are authorized to take extraordinary

sponsors of such funds is an evolving area of law and is subject to modification by government, self-regulatory organization, and judicial action. For example, the U.S. government has enacted legislation that provides for the regulation of the derivatives market, including clearing, margin, reporting, and registration requirements. The CFTC, the SEC, and other U.S. regulators have put in place and continue to develop rules and regulations enacting the provisions of the Dodd-Frank Act. The E.U., the U.K., and numerous other jurisdictions have implemented (and are in the process of implementing) similar requirements that will affect an Account when it enters into derivatives transactions with a counterparty organized in that jurisdiction or otherwise subject to that jurisdiction’s derivatives regulation. The effect of any future regulatory change on an Account could be substantial and adverse. The SEC has finalized new rules requiring the central clearing of certain cash and repurchase transactions involving U.S. Treasuries. Historically, such transactions have not been required to be cleared, and voluntary clearing of such transactions has generally been limited. Cleared cash and repurchase transactions involving U.S. Treasuries are subject to many of the same risks as derivatives that are cleared by a central clearing organization (see “Derivatives Risks” above). Given the limited number of clearing agencies offering central clearing of these transactions, central clearing is expected to result in a concentration of risk in relatively few clearing agencies. Failure or financial distress of a clearing agency could have a significant effect on the financial markets. Additionally, market participants are expected to face higher costs as a result of central clearing due to margin requirements and fees. The transition to central clearing could potentially reduce liquidity in the market, including by limiting the number of counterparties with whom an Account or other market participant may execute repurchase agreements or reverse repurchase agreements in respect of U.S. Treasuries, or because such Account or other market

participant cannot access the clearing platform due to

be sufficiently high as to justify the cost of the hedge, or

regulatory, operational, or other constraints. The market

because it does not foresee the occurrence of the risk.

for such transactions may also be impacted to the extent

Moreover, there is no guarantee that such intended

liquidity is split among different clearinghouses. Market

hedging strategy will be successful in hedging out the

participants may experience significant operational

subject risks.

challenges and incur increased operational and legal costs in connection with implementation of this new clearing mandate. Once implemented, these rules could make it more difficult for an Account to execute certain investment strategies and may have an adverse effect on an Account's ability to generate returns.

High Yield Risk. Accounts that invest in high yield securities and unrated securities of similar credit quality (commonly known as “high yield securities” or “junk bonds”) may be subject to greater levels of market, credit, call, and liquidity risk than Accounts that do not invest in such securities. These securities are considered

FinCEN is engaged in rulemaking requiring certain

predominantly speculative by rating agencies with

investment advisers to adopt anti-money laundering

respect to an issuer’s continuing ability to make principal

programs and to adopt customer identification

and interest payments, and their values may be more

programs. FinCEN has indicated that it intends to

volatile than other types of securities. An economic

delegate examination of compliance with these rules to

downturn or individual corporate developments could

the SEC, and there can be no assurance that an Account,

adversely affect the market for these securities and

PIMCO, or any of their affiliates will avoid regulatory

reduce an Account’s ability to sell these securities at an

examination and possibly enforcement actions relating to

advantageous time or price. An economic downturn

compliance with these rules in the future.

would generally lead to a higher non-payment rate, and

While it is currently difficult to predict the full impact of these or any other new rules, such rules could make it more difficult for an Account to execute certain investment strategies and may have a material adverse effect on an Account’s ability to generate returns. Hedging Risk. PIMCO engages in hedging transactions. To the extent PIMCO employs a hedging strategy, the success of any such hedging strategy will depend, in part, upon PIMCO’s ability to correctly assess the degree of correlation between the performance of the instruments used in the hedging strategy and the performance of the investments being hedged. Since the characteristics of many securities change as markets change or time passes, the success of such hedging strategy will also be subject to PIMCO’s ability to continually recalculate, readjust, and execute hedges in an efficient and timely manner. While PIMCO may enter into hedging transactions to seek to reduce risk, such transactions may result in a poorer overall performance than if PIMCO had not engaged in such hedging transactions. Additionally, PIMCO may not hedge against a particular risk because it does not regard the probability of the risk occurring to

a high yield security may lose significant market value before a default occurs. The Account 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 an Account 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 an Account having to reinvest the proceeds in other high yield securities or similar instruments that may pay lower interest rates. An Account may also be subject to greater levels of liquidity risk than funds that do not invest in high yield securities. In addition, the high yield securities in which an Account invests may not be listed on any exchange, and a secondary market for such securities may be comparatively illiquid relative to markets for other more liquid fixed income securities. Consequently, transactions in high yield securities may involve greater costs than

transactions in more actively traded securities. A lack of

Inflation and Deflation Risk. An Account may be

publicly available information, irregular trading activity,

subject to inflation and deflation risk. Inflation risk is the

and wide bid/ask spreads, among other factors, may in

risk that the value of assets or income from an Account’s

certain circumstances make high yield debt more difficult

investments will be worth less in the future as inflation

to sell at an advantageous time or price than other types

decreases the value of payments at future dates. Inflation

of securities or instruments. These factors may result in

poses a “stealth” threat to investors because it reduces

an Account being unable to realize full value for these

savings and investment returns. Central banks, such as

securities and/or may result in an Account not receiving

the U.S. Federal Reserve, generally attempt to control

the proceeds from a sale of a high yield security for an

inflation by regulating the pace of economic activity.

extended period after such sale, each of which could

They typically attempt to affect economic activity by

result in losses to an Account. In addition, adverse

raising and lowering short-term interest rates. At times,

publicity and investor perceptions, whether or not based

governments may attempt to manage inflation through

on fundamental analysis, may decrease the values and

fiscal policy, such as by raising taxes or reducing

liquidity of high yield securities, especially in thinly

spending, thereby reducing economic activity.

traded markets. When secondary markets for high yield

Conversely, governments can attempt to combat

securities are less liquid than the market for other types

deflation with tax cuts and increased spending designed

of securities, it may be more difficult to value the

to stimulate economic activity. Inflation rates may change

securities because such valuation may require more

frequently and significantly as a result of various factors,

research, and elements of judgment may play a greater

including unexpected shifts in the domestic or global

role in the valuation because there is less reliable,

economy and changes in economic policies, and an

objective data available. Please also see “Senior Loan

Account’s investments may not keep pace with inflation,

Risk” for certain other risks associated with high yield

which may result in losses to investors. As inflation

securities.

increases, the real value of an Account’s portfolio could

Inflation-Indexed Security Risk. Inflation-indexed debt securities are subject to the effects of actual or anticipated changes in market interest rates caused by factors other than inflation (real interest rates). In general, the value of an inflation-indexed security, including Treasury inflation-protected securities (“TIPS”), tends to decrease when real interest rates increase and can increase when real interest rates decrease. Thus generally, during periods of rising inflation, the value of inflation-indexed securities will tend to increase, and during periods of deflation, their value will tend to decrease. Interest payments on inflation-indexed securities are unpredictable and will fluctuate as the principal and interest are adjusted for inflation. There can be no assurance that the inflation index used (i.e., the Consumer Price Index) will accurately measure the real rate of inflation in the prices of goods and services.

decline, and the interest payments on Account borrowings, if any, may increase. 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 or materially impair the ability of distressed issuers to restructure, which may result in a decline in the value of an Account’s portfolio. Though an Account may enter into instruments related to inflation or deflation (such as inflation-indexed bonds), it will be under no obligation to do so. 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 policy.

Because municipal and corporate inflation-indexed

Interest Rate Risk. Interest rate risk is the risk that fixed

securities are a small component of their respective bond

income securities and other instruments in an Account

markets, they may be subject to liquidity risk.

will fluctuate in value due to changes in interest rates. A

wide variety of factors can cause interest rates (or yields

transactions (e.g., derivatives) may also be affected by

of U.S. Treasury securities or yields of other types of

the change in interest rates. Declines in market value, if

bonds) to change, including, but not limited to, central

not offset by any corresponding gains on hedging

bank monetary policies, changing inflation or real growth

instruments, may ultimately reduce earnings or result in

rates, the market for bonds, and general economic

losses to the Account. A portfolio’s average duration may

conditions. For example, as nominal interest rates rise,

not accurately reflect the interest rate risk of the

the value of certain fixed income securities or dividend-

portfolio, especially if the portfolio consists of securities

paying equity securities held by an Account is likely to

with widely varying durations. PIMCO or an Account may

decrease. A nominal interest rate can be described as the

not be able to hedge against changes in interest rates or

sum of a real interest rate and an expected inflation rate.

may choose not to do so for cost or other reasons.

Interest rate changes can be sudden and unpredictable,

Additionally, any hedges may not work as intended.

and an Account may lose money as a result of

Rising interest rates could also affect the value of an

movements in interest rates. Fixed income securities with

Account’s investment in a PIMCO Fund.

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 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. 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 an Account 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 value of the Account. Dividend-paying equity securities, particularly those whose market price is closely related to their yield, may be more sensitive to changes in interest rates, and during periods of rising interest rates, the values of such securities may decline, which may result in losses for an Account. An Account’s other investments and

Convexity is an additional measure used to understand a security’s or Account’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 that interest rate decreases result in declining duration (i.e., increased sensitivity in prices in response to rising and/or declining 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, Accounts holding such securities may be subject to a greater risk of losses in periods of rising interest rates. Reference Benchmark Risk. The London Interbank Offered Rate (“LIBOR”) was the offered rate for shortterm Eurodollar deposits between major international banks. The terms of investments, financings, or other transactions (including certain derivatives transactions) to which an Account may be a party have historically been tied to LIBOR. In connection with the global transition away from LIBOR led by regulators and market participants, as a result of benchmark reforms, LIBOR was last published on a representative basis at the end of June 2023, and its publication ended completely on

September 30, 2024. Alternative reference rates to LIBOR

Transitional Provision) (EU Exit) Regulations 2019 (SI

have been established in most major currencies, and

2019/657) and other statutory instruments. Following the

markets in these new rates are continuing to develop

implementation of these reforms, the manner of

(e.g., the Secured Overnight Financing Rate (“SOFR”) for

administration of benchmarks has changed and may

USD-LIBOR). There remain residual risks associated with

continue to change in the future, with the result that

the transition that may impact markets or particular

relevant benchmarks may perform differently than in the

investments, and as such, the full impact of the transition

past, the use of benchmarks that are not compliant with

on an Account or the financial instruments in which an

the new standards by certain supervised entities may be

Account invests cannot yet be fully determined.

restricted, and certain benchmarks have been or may in

SOFR is an index rate calculated based on short-term repurchase agreements backed by U.S. Treasury instruments. While LIBOR was an unsecured rate, SOFR is a secured rate, and there can be no assurance that SOFR will perform in the same way as LIBOR would have at any

the future be eliminated entirely. Such changes could cause increased market volatility and disruptions in liquidity for instruments that rely on or are impacted by such benchmarks. Additionally, there could be other consequences which cannot be predicted.

time, including, without limitation, as a result of changes

Certain financial institutions have in the past been

in interest and yield rates in the market, monetary policy,

accused by various regulators of manipulating certain

bank credit risk, market volatility, or global or regional

reference rates (e.g., LIBOR), and have been alleged to

economic, financial, political, regulatory, judicial, or other

have altered costs when reporting them to regulators.

events. It is possible that SOFR will be discontinued or

There can be no assurance that the rate-setting process

fundamentally altered in a manner that is materially

for reference rates will not be affected by similar conduct

adverse to the interests of an Account. If the manner in

in the future, or that any investigations into the rate-

which SOFR is calculated is changed, that change may

setting process and any related litigation will not result in

result in a reduction of the amount of interest payable on

disruptive changes in the process used to determine

SOFR-linked floating rate instruments and the trading

reference rates or the use of reference rates going

prices of such instruments. Additionally, daily changes in

forward.

SOFR have, on occasion, been more volatile than daily changes in other benchmark or market rates. The return on and value of SOFR-linked floating rate instruments may fluctuate more than floating rate instruments that are linked to less volatile rates, although occasional, increased daily volatility in SOFR may not necessarily lead to more volatile interest payments.

Investments in Latin American Countries Risk. As an international emerging market, Latin America has historically suffered from social, political, and economic instability. Certain Latin American countries have experienced, and may continue to experience, high rates of inflation, high interest rates, exchange rate fluctuations, large amounts of external debt, balance of

In addition, interest rates or other types of rates and

payments and trade difficulties and extreme poverty and

indices which are classed as “benchmarks” have been the

unemployment. Investing in the region is subject to

subject of ongoing national and international regulatory

additional risk caused by periods of regional conflict,

reform, including under the European Union regulation

political corruption, money laundering, economic

on indices used as benchmarks in financial instruments

sanctions, totalitarianism, protectionist measures,

and financial contracts (known as the “Benchmarks

nationalization, hyperinflation, debt crises, sudden and

Regulation”). The Benchmarks Regulation has been

large currency devaluation, and intervention by the

assimilated into UK law by virtue of the European Union

military in civilian and economic spheres. Additionally, a

(Withdrawal) Act 2018 (as amended), subject to

number of Latin American countries are among the

amendments made by the Benchmarks (Amendment and

largest debtors of developing countries and have a long

history of foreign debt and default. The majority of Latin

issuers (or permit such issuers to suspend trading) during

American economies have become highly dependent

market disruptions, and that such suspensions may be

upon foreign credit and loans from external sources to

widespread and increase the risk of market manipulation;

fuel their state-sponsored economic plans. As a result of

(o) different regulatory and audit requirements related to

their dependence on foreign credit and loans, a number

the quality of financial statements of Chinese issuers; (p)

of Latin American economies face significant economic

limitations on the ability to inspect the quality of audits

difficulties due to tightened international credit supplies.

performed in China, particularly the Public Company

Recovery from economic downturns in Latin America has

Accounting Oversight Board’s (“PCAOB”) lack of access to

historically been slow, and any such recovery, if

inspect PCAOB-registered accounting firms in China

sustained, may be gradual.

which could result in the failure to disclose certain

Investments in the People’s Republic of China Risk. Certain Accounts may invest in securities and instruments that are economically tied to the People’s Republic of China (excluding Hong Kong, Macau, and Taiwan for the purpose of this disclosure, unless otherwise specified

material information; (q) limitations on the ability of U.S. authorities to enforce actions against non-U.S. companies and non-U.S. persons; and (r) limitations on the rights and remedies of investors as a matter of laws and regulations.

herein) (“PRC”). Such investment may be made through

Although the PRC has experienced a relatively stable

various available market access programs. In addition to

political environment in recent years, there is no

risks associated with investing in non-U.S. securities and

guarantee that such stability will be maintained in the

in emerging markets, investing in the PRC presents other

future. The PRC is controlled by the Communist Party,

risks, including, without limitation: (a) inefficiencies

and investments in the PRC are subject to risks

resulting from erratic growth; (b) the unavailability of

associated with greater governmental control over and

consistently reliable economic or financial data; (c)

involvement in the economy, including controls on

potentially high rates of inflation; (d) dependence on

foreign investment in the PRC and limitations on

exports and international trade; (e) relatively high levels

repatriation of invested capital. For example, there are

of asset price volatility and difficulties in the settlement

certain regulatory restrictions on, among others,

of securities; (f) potential shortage of liquidity and limited

investment scope, repatriation of funds, foreign

accessibility by foreign investors, including as a result of

shareholding limit, and account structure.

sanctions; (g) greater competition from regional economies; (h) fluctuations in currency exchange rates or currency devaluation by the PRC government or central bank, particularly in light of the relative lack of currency hedging instruments; (i) the relatively small size and absence of operating history of many PRC companies; (j) the developing nature of the legal and regulatory framework for securities markets, custody arrangements and commerce; (k) uncertainty and potential changes with respect to the rules and regulations of the Qualified Foreign Investor (“QFI”) program and other market access programs through which such investments are made; (l) the commitment of the PRC government to continue with its economic reforms; (m) increasing restrictions on private property ownership; (n) possibility that Chinese regulators may suspend trading in Chinese

As a result of PRC regulatory requirements, an Account may be limited in its ability to invest in securities or instruments tied to the PRC and/or may be required to liquidate its holdings in securities or instruments tied to the PRC. Under certain instances, such as when the price of the securities is at a low level, the involuntary liquidations may result in losses for an Account. In addition, securities exchanges in the PRC typically have the right to suspend or limit trading in traded securities. The PRC government or relevant PRC regulators may also implement policies that may adversely affect the PRC financial markets. Such suspensions, limitations or policies may have a negative impact on the performance of an Account’s investments.

In addition, the government of the PRC exercises

contractual claims with respect to the operating

significant control over economic growth through direct

company may be deemed unenforceable in the PRC, thus

and heavy involvement in resource allocation and

limiting (or eliminating) the remedies and rights available

monetary policy, control over payment of foreign

to the offshore company and its investors. Such legal

currency denominated obligations and provision of

uncertainty may also be exploited against the interests of

preferential treatment to particular industries and/or

the offshore company and its investors. Further, the

companies. Economic reform programs in the PRC have

interests of the equity owners of the operating company

contributed to growth, but there is no guarantee that

may conflict with the interests of the investors of the

such reforms will continue. The Chinese government has

offshore company, and the fiduciary duties of the officers

from time to time taken actions that influence the prices

and directors of the operating company may differ from,

at which certain goods may be sold, encourage

or conflict with, the fiduciary duties of the officers and

companies to invest or concentrate in particular

directors of the offshore company. Foreign companies

industries, induce mergers between companies in certain

listed on U.S. exchanges, including offshore companies

industries and induce private companies to publicly offer

that utilize a VIE structure, also could face delisting or

their securities to increase or continue the rate of

other ramifications for failure to meet the requirements

economic growth, control the rate of inflation or

of the SEC, the PCAOB or other United States regulators.

otherwise regulate economic expansion. It may do so in

Any of the foregoing risks and events could negatively

the future as well, which could potentially have a

impact an Account’s performance.

significant adverse effect on economic conditions in China.

The PRC’s currency (i.e., Renminbi/RMB) is not entirely determined by the market but is instead managed at

Certain Accounts may obtain exposure to companies

artificial levels relative to the U.S. dollar. This can lead to

based or operated in the PRC by investing through legal

sudden and large adjustments in the currency, which, in

structures known as variable interest entities (“VIEs”). In

turn, can have a disruptive and negative effect on foreign

such cases, the Chinese operating company establishes

investors. The PRC also may restrict the free conversion

an offshore company, and the offshore company enters

of its currency into foreign currencies, including the U.S.

into contractual arrangements with the operating

dollar. Currency repatriation restrictions may have the

company. These contractual arrangements are intended

effect of making securities and instruments tied to the

to give the offshore company the ability to exercise

PRC relatively illiquid, particularly in connection with

power over and obtain economic rights from the

withdrawal requests.

operating company. Shares of the offshore company, in turn, are listed and traded on exchanges outside of the PRC and are available to non-Chinese investors such as an Account. There is a risk that the PRC might prohibit the use of VIEs or eliminate their ability to transmit economic or governance rights to non-Chinese investors at any time. The future stance of the PRC on VIEs and the potential impact of any new regulations remain uncertain. Investments involving a VIE may also pose additional risks because such investments are made through a company whose interests in the underlying operating company are established through contract rather than through equity ownership. For example, in the event of a dispute, the offshore company’s

The application of tax laws (e.g., the imposition of withholding taxes on dividend or interest payments) or confiscatory taxation may also affect an Account’s investment in the PRC. Because the rules governing taxation of investments in securities and instruments economically tied to the PRC are not always clear, PIMCO may provide for capital gains taxes on an Account if it invests in such securities and instruments by reserving both realized and unrealized gains from disposing or holding securities and instruments economically tied to the PRC. This approach is based on current market practice and PIMCO’s understanding of the applicable tax rules. Changes in market practice or understanding of the

applicable tax rules may result in the amounts reserved

Account to obtain information about underlying

being too great or too small relative to actual tax

investors, increase diligence and other similar costs to

burdens.

the Account, render valuation of China-related

In recent years, various governmental bodies have considered and, in some cases, imposed sanctions, trade and investment restrictions, and/or notification requirements targeting the PRC (inclusive of Hong Kong and Macau), and it is possible that additional restrictions may be imposed in the future. For example, in January 2025, a new “outbound investment” regulatory regime

investments challenging, or require the Account 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 Account’s performance with respect to such investments, and thus the Account’s performance as a whole.

took effect in the U.S., which prohibits or requires

External relations, such as the China-U.S. relationship

notification with respect to certain transactions involving

regarding trade, currency exchange, and intellectual

PRC-affiliated companies (inclusive of Hong Kong and

property protection, among other things, could also have

Macau) that operate in specified sensitive technology

implications with respect to capital flow and business

sectors, including advanced semiconductors and

operations. U.S. social, political, regulatory, and economic

microelectronics, quantum information technologies, and

conditions prompting changes in laws and policies

certain areas and uses of artificial intelligence. The

governing foreign trade, manufacturing, developments,

Comprehensive Outbound Investment National Security

and investments in the PRC could adversely affect the

Act, which became law in December 2025, contemplates

performance of an Account’s investments. For example,

potential expansion of the regime to additional sensitive

in recent years, the U.S. federal government

technology sectors and jurisdictions. In addition, the

implemented an aggressive trade policy with respect to

relationship between the PRC and Taiwan is particularly

the PRC, including imposing tariffs on certain imports of

sensitive, and hostilities between the PRC and Taiwan

the PRC, criticizing the PRC government for its trade

may present a risk to an Account’s investments in the

policies, taking actions against individual PRC companies,

PRC.

imposing sanctions on certain officials of the Hong Kong

Given the complex and evolving relationship between the PRC and certain other countries, it is difficult to predict the impact of such sanctions or restrictions on market conditions or an Account’s investments. Further, complying with such sanctions or restrictions may prevent PIMCO or an Account from pursuing certain investments, cause delays or other impediments with respect to consummating such investments, require notification of such investments to government authorities, require divestment or freezing of investments on unfavorable terms, render divestment of underperforming investments impracticable, negatively impact the Account’s ability to achieve its investment objective, prevent the Account from receiving payments otherwise due it, negatively impact the value of an

government, the PRC central government, and certain employees of Chinese technology companies, adding a number of Chinese companies to the Department of Commerce’s Entity list, and issuing executive orders that prohibit certain transactions with certain China-based companies and their respective subsidiaries. Various U.S. statutes and executive orders have designated the PRC as a “foreign adversary,” and the U.S. government has announced that it intends to take further actions to deter U.S. investments relating to the PRC’s Military-Civil Fusion strategy. The UK also suspended its extradition treaty with Hong Kong and extended its arms embargo on China to Hong Kong. It is possible that additional sanctions, export controls and/or investment restrictions will be announced.

Account’s investment, restrict participation in certain

The PRC government has implemented, and may further

investments by certain investors, require PIMCO or the

implement, measures including retaliatory measures in

response to new trade policies, treaties, sanctions, and

issuer’s financial condition or credit rating, changes in

tariffs imposed by the U.S. government, which could

government regulations affecting the issuer or its

negatively impact the value or liquidity of an Account’s

competitive environment, and strategic initiatives such as

investments, the ability of an Account to repatriate

mergers, acquisitions, or dispositions and the market

existing assets located in the PRC, or an Account’s ability

response to any such initiatives, financial leverage,

to invest in the PRC or PRC-related securities or other

reputation, or reduced demand for the issuer’s goods or

investments.

services, as well as the historical and prospective

Certain other countries have also implemented similar measures, and it is possible that additional sanctions, export controls, and/or investment restrictions will be announced. Escalation of China-U.S. tensions resulting

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.

from these events and the retaliatory countermeasures

Leveraging Risk. Accounts may generate investment

that the national and state governments have taken and

leverage by borrowing money. In addition, certain

may take (including U.S. sanctions and anti-sanction laws

investment transactions including, but not limited to,

in China), as well as other economic, social, or political

reverse repurchase agreements, loans of portfolio

unrest in the future, could have a material adverse effect

securities, and the use of when-issued, delayed delivery,

on or could limit the activities of PIMCO, an Account or

or forward commitment transactions, may give rise to a

its investments. For additional information relating to

form of leverage. The use of derivatives may also create

sanction-related risks, please see “Sanctions, Anti-

leveraging risk. Leverage is a speculative technique that

Corruption, Anti-Money Laundering, and Related Risks”

may expose an Account to greater risk and increased

below.

costs. For example, leverage may cause an Account to set

Investment-Related Information Risk. PIMCO receives and generates various kinds of investment-related data and other information from Clients or other sources, including information related to trends and budgets, and financial, industry, market, business operations, customers, suppliers, competitors, and other metrics. PIMCO expects to use this information in a manner that may provide a material benefit to PIMCO, its affiliates, or to certain Clients without compensating or otherwise benefitting the Client from which such information was obtained, including an Account. This information may, in certain instances, include MNPI which may have been received or generated in connection with actual or prospective investments of PIMCO’s Clients. For additional information relating to MNPI, please see “Material Non-Public Information/Insider Trading” in Item 11. Issuer Risk. The value of a security may decline for a number of reasons that related to the issuer, such as management performance, major litigation, investigations or other controversies, changes in the

aside or liquidate portfolio assets to satisfy its obligations, including at times when it may be disadvantageous to do so. Leveraging transactions pursued by an Account may increase its duration and sensitivity to interest rate movements and other market risks. In addition, leverage, including borrowing, may cause an Account to be more volatile than if the Account had not been leveraged because leverage tends to exaggerate the effect of any increase or decrease in the value of an Account’s portfolio securities and may lead to a loss in the Account in excess of the capital commitment. Interest, fees, and other expenses of leverage are generally borne entirely by the Account, which would have the effect of reducing investment returns. For some Accounts, fees received by PIMCO will be based on an Account’s total assets (including assets attributable to certain types of leverage). In these circumstances, PIMCO has a financial incentive for the Account to use certain forms of leverage, which may create a conflict of interest between PIMCO, on the one hand, and its Clients or other investors in an Account, on the other.

Limited Asset Risk. When the value of an Account falls

volatility in the fixed income markets. Such issues may be

below the PIMCO minimum account size established by

exacerbated during periods of economic uncertainty.

PIMCO for a particular strategy, PIMCO may be limited in pursuing the objectives of the Account. For example, PIMCO may be constrained in its ability to gain exposure to certain instruments because the allocation may not be meaningful (i.e., an odd lot allocation). Therefore, the Account may be less diversified than other Accounts with assets that exceed the minimum account size. Similarly, the Account may have performance dispersion that is greater than other Accounts in the same investment strategy due to variations in portfolio holdings.

In such cases, due to potential limitations on investments in illiquid securities and the difficulty in purchasing and selling such securities or instruments, an Account may be unable to achieve its desired level of exposure to a certain sector or may be unable to sell investments when desired or at a favorable price. Illiquid securities may be difficult to value, especially under changing market conditions. To the extent that an Account’s principal investment strategy involves securities of companies with smaller market capitalizations, foreign (non-U.S.)

Liquidity Risk. Liquidity risk exists when particular

securities, 4(a)(2) investments, Regulation S securities,

investments are difficult to purchase or sell and may be

illiquid sectors of fixed income securities, derivatives, or

particularly pronounced for long-term investments. An

securities with substantial market and/or credit risk, the

Account’s investments in illiquid securities may reduce

Account will tend to have the greatest exposure to

the returns of the Account because it may be unable to

liquidity risk. Further, fixed income securities with longer

sell the illiquid securities at an advantageous time or

durations until maturity face heightened levels of

price or possibly require an Account to dispose of other

liquidity risk as compared to fixed income securities with

investments at unfavorable times or prices in order to

shorter durations until maturity. Furthermore, certain

satisfy its obligations, which could prevent the Account

Accounts that invest in illiquid securities have regular

from taking advantage of other investment

withdrawal or redemption rights, and such Accounts may

opportunities. Additionally, the market for certain

be delayed or otherwise unable to meet withdrawal or

investments may become illiquid under adverse market

redemption requests if they are unable to dispose of

or economic conditions independent of any specific

illiquid positions in an orderly manner. In these

adverse changes in the conditions of a particular issuer,

circumstances, an Account may, in accordance with the

such as during political events (including periods of rapid

terms of its organizational documents, elect to suspend

interest rate changes). There can be no assurance that an

withdrawals or redemptions, including on a partial

investment that is deemed to be liquid when purchased

and/or temporary basis. For example, an Account may

will continue to be liquid while it is held by an Account

determine to suspend withdrawals or redemptions in a

and/or when an Account wishes to dispose of it. Bond

manner intended to restrict redemptions or withdrawals

markets have consistently grown over the past three

with respect to the portion of such Account’s portfolio

decades, while the capacity for traditional dealer

consisting of certain illiquid positions until such positions

counterparties to engage in fixed income trading has not

have been liquidated. PIMCO has, and may again in the

kept pace and in some cases has decreased. As a result,

future, institute new structures or shares classes for an

dealer inventories of corporate bonds, which provide a

Account that are intended to affect such a partial

core indication of the ability of financial intermediaries to

suspension with respect to illiquid securities.

“make markets,” are at or near historic lows in relation to market size. Because market makers provide stability to the market through their intermediary services, the significant reduction in dealer inventories could potentially lead to decreased liquidity and increased

Liquidity risk also refers to the risk that an Account 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. An Account may

to accept collateral with a value less than the amount of

have to sell a security at a disadvantageous time or price

the loan advanced by the Account or its affiliates to the

to meet such obligations. Actions by governments and

borrower.

regulators may have the effect of reducing market liquidity, market resiliency, and money supply, such as through higher rates and tighter financial regulations.

In addition, originating loans could subject the Account, PIMCO, or their affiliates, to various regulatory regimes, such as lender licensing requirements. Some lender

Originated Investments Risk. An Account may originate

licensing regimes may provide for exemptions from

certain investments and may syndicate a portion of one

licensing for certain activities, and if PIMCO or its

or more investments to other affiliated funds or third

Accounts rely on such exemptions, there is risk that the

parties, subject to the completion of each purchaser’s

relevant regulator could disagree with the applicability of

own investment-review process, the Account’s

the exemption and impose fines, restrict activities, or take

investment guidelines, and applicable law. In originating

other adverse actions. As a result of complying with such

and purchasing loans, an Account competes with a broad

regulatory regimes, restrictions may be placed on an

spectrum of lenders, some of which may have greater

Account or PIMCO’s ability to take certain actions to

financial resources than the Account. Increased

protect the value of its investments in such assets and

competition for, or a diminishment in the available

impose compliance costs. Loan origination and servicing

supply of, qualifying loans could result in lower yields on

companies are routinely involved in legal proceedings

such loans, which could reduce returns to Accounts. Prior

concerning matters that arise in the ordinary course of

to any syndication of such loans, or if such syndication is

business. These legal proceedings range from actions

not successful, an Account’s exposure to the originated

involving a single plaintiff to class action lawsuits with

investment may exceed the exposure that the Account

potentially tens of thousands of class members. In

intends to have over the long-term or would have had if

addition, a number of participants in the loan origination

it had purchased such investment in the secondary

and servicing industry (including control persons of

market rather than originating it. Specifically, if an

industry participants) have been the subject of regulatory

Account is unable to sell, assign, or successfully close

actions by state regulators, including state Attorneys

transactions for the loans that it originates, the Account

General, and by the federal government. Governmental

will be forced to hold its interest in such loans for an

investigations, examinations or regulatory actions, or

indeterminate period of time. This could result in an

private lawsuits, including purported class action

Account’s investments being over-concentrated in

lawsuits, may adversely affect such companies’ financial

certain borrowers. In such circumstances, the Account

results. To the extent an Account seeks to engage in

may elect to sell all or a portion of an originated

origination and/or servicing directly, or has a financial

investment at a loss in order to rebalance the Account’s

interest in, or is otherwise affiliated with, an origination

portfolio. The level of analytical sophistication, both

or servicing company, the Account will be subject to

financial and legal, necessary for successful financing to

enhanced risks of litigation, regulatory actions, and other

borrowers, particularly borrowers experiencing significant

proceedings. As a result, an Account may be required to

business and financial difficulties, is unusually high. There

pay legal fees, settlement costs, damages, penalties, or

is no assurance that PIMCO will correctly evaluate the

other charges, any or all of which could materially

value of the assets collateralizing an Account’s loans or

adversely affect the Account and its investments.

the prospects for successful repayment or a successful reorganization or similar action. In any reorganization or liquidation proceeding relating to a company that an Account lends to, the Account may lose all or part of the amounts advanced to the borrower or may be required

A number of regulatory authorities have taken action against certain loan originators and servicers for alleged violations of laws. Certain of those actions prohibit those servicers from pursuing foreclosure actions. In the future,

additional jurisdictions could seek similar limitations on

or valuation of the securities and instruments involved in

the ability of loan servicers to take actions (such as

such strategies may change unexpectedly, which may

pursuing foreclosures) that may be essential to service

result in reduced returns or losses to the Account. Each

and preserve the value of the loans on behalf of their

Account is also subject to the risk that deficiencies in the

holders. Any such limitations that applied to a servicer of

internal systems or controls of PIMCO or another service

the loans could adversely affect the holder’s ability to

provider will cause losses for the Account or hinder

realize proceeds on such loans.

Account operations. For example, trading delays or errors

Management Risk. Each actively managed Account is subject to management risk. PIMCO and each individual portfolio manager will apply investment techniques and risk analyses and will, in some cases, rely partially or entirely upon or be informed by one or more quantitative models in making investment decisions for actively managed Accounts. PIMCO and each portfolio manager may determine that certain factors are more significant than others, but there can be no guarantee that these decisions will produce the desired results, or that the due diligence conducted by PIMCO and its portfolio managers will evaluate every factor prior to

(both human and systematic) could prevent an Account from purchasing a security expected to appreciate in value. Additionally, legislative, regulatory, or tax developments may affect the investment techniques available to PIMCO and the individual portfolio manager in connection with managing an Account. There also can be no assurance that any personnel of PIMCO, including the portfolio manager(s) for an Account, 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 an Account’s ability to realize its investment objective.

investing in a company or issuer and expose all material

Market Risk. The market price of securities owned by an

risks associated with an investment. Additionally, PIMCO

Account may go up or down, sometimes rapidly or

and its portfolio managers may not be able to identify

unpredictably. Securities may decline in value due to

suitable investment opportunities and may face

factors affecting securities or credit markets generally or

competition from other investment managers when

particular industries represented in the securities

identifying and consummating certain investments. There

markets. The value of a security may decline due to

can be no assurance that PIMCO will be able to identify

general market conditions that are not specifically related

and obtain a sufficient number of investment

to a particular company, such as real or perceived

opportunities to invest the full amount of capital that

adverse economic conditions, changes in the general

may be available in an Account. Certain securities or

outlook for corporate earnings, changes in inflation,

other instruments in which an Account seeks to invest

interest or currency rates, adverse changes to credit

may not be available in the quantities desired. In

markets, or adverse investor sentiment generally. The

addition, regulatory restrictions, actual or potential

value of a security may also decline due to factors that

conflicts of interest, or other considerations may cause

affect a particular industry or industries, such as labor

PIMCO to restrict or prohibit participation in certain

shortages, increased production costs, or competitive

investments. In such circumstances, PIMCO or the

conditions within an industry. During a general downturn

individual portfolio managers may determine to pursue

in the securities markets, multiple asset classes may

other investments and/or purchase other securities or

decline in value simultaneously, even if the performance of

instruments as substitutes. Such other investments,

those asset classes is not otherwise historically correlated.

substitute securities or instruments, may not perform as

Investments may also be negatively impacted by market

intended, which could result in losses to the Account. To

disruptions and by attempts by other market participants

the extent an Account employs strategies targeting

to manipulate the prices of particular investments. Current

perceived pricing inefficiencies, arbitrage strategies, or

market conditions may pose heightened risks with respect

similar strategies, it is subject to the risk that the pricing

to Accounts that invest in fixed income securities. Any

interest rate increases could cause the value of an Account

residential property. The ability of a borrower to repay a

that invests in fixed income securities to decrease. As such,

loan secured by income-producing property is

fixed income securities markets may experience

dependent primarily upon the successful operation of

heightened levels of interest rate, volatility, and liquidity

such property. If the net operating income of the

risk.

property is reduced (as can occur as a result of property

Additionally, exchanges and securities markets may close early, close late, or issue trading halts on specific securities, which may result in, among other things, an Account being unable to buy or sell certain securities or

management decisions, competition from other properties, and changes in law or regulation, among other factors), the borrower’s ability to repay the loan may be impaired.

financial instruments at an advantageous time or

In addition, various state licensing requirements may

accurately price its portfolio investments.

apply with respect to investments in loans, including

Minority Investments Risk. Accounts, especially Accounts focusing on debt securities, will generally hold minority or non-controlling interests. Such investments may not give PIMCO the ability to influence the management of the issuer or to elect a representative to the issuer’s board of directors. In addition, the management of the issuer or its shareholders may have economic or business interests which are inconsistent with those of Accounts, and they may be in a position to take action contrary to such Account’s investment objectives. A minority or non-controlling interest may be especially adverse to Accounts in circumstances, such as certain stressed or distressed situations, where an

mortgage loans, and other similar assets. The licensing requirements could apply depending on the location of the borrower or the location of the collateral securing the loan. In states in which it is required to be licensed, PIMCO or the Account will be required to comply with applicable laws and regulations, including consumer protection and anti-fraud laws, which could impose restrictions on PIMCO's ability to take certain actions to protect the value of investments in such assets and impose compliance costs. Failure to comply with such laws and regulations could, among other penalties, require an Account to divest assets located in or secured by real property at disadvantageous times or prices.

element of control or influence might be beneficial to the

For additional information relating to certain other risks

subject investment.

associated with investing in mortgage loans, please also

Mortgage Loan Risk. Residential mortgage loans are secured by single-family residential property and are

see “Mortgage-Related and Other Asset-Backed Securities Risk” and “Real Estate Risk.”

subject to risks of delinquency and foreclosure and risks

Mortgage-Related and Other Asset-Backed Securities

of loss. An Account may hold or be exposed to non-

Risk. Mortgage-related and other asset-backed

qualified residential mortgage loans made to borrowers

securities represent interests in “pools” of mortgages or

who have poor or limited credit histories, employment

other assets, such as consumer loans or receivables held

history, and/or tax documentation and, as a result, do not

in trust, and often involve risks that are different from or

qualify as qualified mortgages. An Account may also hold

possibly more acute than risks associated with other

or be exposed to mortgages secured by junior liens on a

types of debt instruments. Generally, rising interest rates

property. Such mortgages have materially higher rates of

tend to extend the duration of fixed rate mortgage-

delinquency, foreclosure, and risk of loss. Commercial

related securities, making them more sensitive to

mortgage loans are generally secured by multi-family or

changes in interest rates. Compared to other fixed

commercial property and are subject to risks of

income investments with similar maturity and credit,

delinquency and foreclosure, and risks of loss may be

mortgage-related securities may increase in value to a

greater than similar risks associated with residential

lesser extent when interest rates decline and may decline

mortgage loans that are secured by single-family

in value to a similar or greater extent when interest rates

rise. As a result, during periods of rising interest rates, if

securities may include receivables of any kind, including,

an Account holds mortgage-related securities, it may

without limitation, such items as motor vehicle

exhibit additional volatility since individual mortgage

installment sales or installment loan contracts, leases of

holders are less likely to exercise prepayment options,

various types of real and personal property, and

thereby putting additional downward pressure on the

receivables from credit card agreements. Subject to its

value of these securities. This is known as extension risk.

investment guidelines and applicable law, an Account

In addition, both adjustable and fixed rate mortgage-

may invest in any tranche of mortgage-related or other

related securities are subject to prepayment risk. When

asset-backed securities, including junior and/or equity

interest rates decline, borrowers may pay off their

tranches, which generally carry higher levels of the

mortgages sooner than expected. This can reduce the

foregoing risks. Direct investments in mortgages and

returns of an Account because the Account may have to

other types of collateral are subject to risks similar (and

reinvest that money at lower prevailing interest rates. In

in some cases to a greater degree) to those described

addition, the creditworthiness, servicing practices, and

above. Please also see “Mortgage Loan Risk.”

financial viability of the servicers of the underlying mortgage pools present significant risks. For instance, a servicer may be required to make advances in respect of delinquent loans underlying the mortgage-related securities; however, servicers experiencing financial difficulties may not be able to perform these obligations. Additionally, both mortgage-related securities and assetbacked securities are subject to risks associated with fraud or negligence by, or defalcation of, their servicers. If PIMCO or its affiliates or Accounts originates mortgagerelated securities or asset-backed securities, its Accounts may be subject to lender liability and other risks.

Municipal Securities Risk. Municipal securities are issued by or on behalf of states, territories, possessions, local governments, and their agencies and other instrumentalities and may be secured by the issuer’s general obligations or by the revenue associated with a specific capital project. Both “general obligation” municipal bonds and “revenue” bonds are subject to interest rate, credit, and market risk, as well as uncertainties related to the tax status of a municipal bond or the rights of investors invested in these securities. The ability of an issuer to make payments could be affected by litigation, legislation, or other

Mortgage-related securities are also subject to the risks

political events, or the bankruptcy of the issuer. In the

of the underlying loans. In some circumstances, a

event of bankruptcy of such an issuer, an Account

servicer’s or originator’s mishandling of documentation

investing in the issuer’s securities could experience

related to the underlying collateral (e.g., failure to

delays in collecting principal and interest, and the

properly document a security interest in the underlying

Account may not, be able to collect all principal and

collateral) may affect the rights of security holders in and

interest to which it is entitled in all circumstances. In

to the underlying collateral. In addition, the underlying

addition, imbalances in supply and demand in the

loans may have been extended pursuant to inappropriate

municipal market may result in a deterioration of liquidity

or nonexistent underwriting guidelines or to fraudulent

and lack of price transparency in the market. At certain

origination practices. The owner of a mortgage-backed

times, this may affect pricing, execution, and transaction

security’s ability to recover against the sponsor, servicer,

costs associated with a particular trade. The value of

or originator is uncertain and is often limited.

certain municipal securities, in particular obligation debt,

An Account’s investments in other asset-backed securities are subject to risks similar to those associated with mortgage-related securities, as well as additional risks associated with the nature of the assets and the servicing of those assets. The underlying assets of asset-backed

may also be adversely affected by rising health care costs, increasing unfunded pension liabilities, changes in accounting standards, and by the phasing out of federal programs providing financial support. 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

These restrictions may adversely affect economic

municipal bond market, the size of a particular offering,

performance relative to properties that are not subject to

the maturity of the obligation, and the rating of the issue.

these restrictions. There are also no assurances that a

Municipal securities may be less liquid than taxable

project owner will be able to achieve and maintain

bonds, and there may be less publicly available

sufficient rental income in order to pay all operating

information on the financial condition of municipal

expenses and maintenance and repair costs of such a

securities issuers than for issuers of other securities. The

project and the debt service on the related bonds or loan

investment performance of an Account investing in

on a timely basis. In the event that a project owner is

municipal securities may therefore be more dependent

unable to pay all such costs, expenses, and debt service,

on the analytical abilities of PIMCO than if the Account

a default on the related bonds or loan is likely to occur.

held other types of investments, such as stocks or taxable bonds. The secondary market for municipal securities also tends to be less well-developed or liquid than many other securities markets, a by-product of lower capital commitments to the asset class by the dealer community, which may adversely affect an Account’s ability to sell municipal securities it holds at attractive prices or to value municipal securities. Lower rated municipal bonds are subject to greater credit and market risk than higher quality municipal bonds.

Sanctions, Anti-Corruption, Anti-Money Laundering, and Related Risks. Economic sanctions administered by the U.S. and other jurisdictions may prohibit PIMCO, its personnel, and an Account from engaging in transactions with or in certain countries, with or in specified sectors of certain countries, with certain individuals and companies, and with respect to certain products (including digital assets) and securities. PIMCO seeks to comply with all applicable economic sanctions laws, including U.S. and non-U.S. sanctions laws. In some cases, PIMCO will seek

Certain Accounts may invest in municipal securities,

to comply with U.S. or non-U.S. sanctions laws even if the

including taxable municipal securities, issued by Puerto

direct applicability of those laws is unclear. PIMCO may

Rico. An Account’s investments in municipal securities

be compelled to comply with such laws even if the Client

issued by Puerto Rico may be particularly affected by

or Account is not otherwise subject to such laws, which

political, economic, regulatory, or restructuring

may in certain circumstances present conflicts of law

developments affecting the ability of Puerto Rican

situations.

municipal issuers to pay interest or repay principal.

In the U.S., OFAC generally administers and enforces

Municipal Project Housing-Related Risk. An Account

laws, Executive Orders, and regulations establishing U.S.

may invest in the bonds of projects focused on low-

economic and trade sanctions that prohibit or restrict

income, affordable, or other housing developments and

dealings with specified countries, entities, individuals,

businesses located in low-income areas or invest in or

commodities, and securities, and in specified sectors of

originate loans that finance or are generally related to

certain countries. These sanctions impose restrictions on

such projects. There are significant risks associated with

an Account’s investment activities and may apply in the

an Account’s investment in the bonds of these types of

same manner regardless of whether a transaction is

projects and loans related to such projects. There may be

denominated in digital currency or traditional fiat

federal, state, and local governmental regulatory

currency.

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.

The type and severity of sanctions and other similar measures, including counter sanctions and other retaliatory actions that may be imposed can vary broadly in scope. These types of measures may include, but are not limited to, banning a sanctioned country or certain persons or entities associated with such country from

global payment systems that facilitate cross-border

all, relevant jurisdictions ease sanctions, Accounts may

payments, restricting securities transactions, restricting

not be able to benefit from the easing of certain

dealings with entities that are critical to the infrastructure

jurisdictions’ sanctions, even if the Account is domiciled

of securities and related transactions in specific

in a jurisdiction that is subject to easing of sanctions. The

jurisdictions, restricting transactions in specified sectors

sanctions risks (including credit and currency risks)

of certain countries, and freezing the assets of particular

related to any PIMCO Fund or Account exposed to these

countries, entities, or persons. The impact of sanctions

regions, or to persons or entities who provide support for

and similar measures is often difficult to ascertain, but

Russia’s war in Ukraine, are heightened.

could, among other things, result in a decline in the value and/or liquidity of affected securities, downgrades in the credit ratings of affected securities, currency devaluation or volatility, and increased market volatility and disruption in the securities or sanctioned country and throughout the world. Sanctions and other similar measures could directly or indirectly limit or prevent an Account from buying and selling securities, receiving interest or principal payments due on the securities, significantly delay or prevent the settlement of securities transactions, adversely impact an Account’s liquidity and performance, and/or prevent the liquidation, closure, or other activities of a Fund or Account holding sanctioned securities. In addition, should an existing investment become the subject of sanctions or other restrictions, PIMCO may be required to block the investment, block or reject payments due in connection with the investment, be unable to divest or transfer an asset (including an underperforming asset), or (if permitted) may dispose of the investment at a price that is less than it would have received should PIMCO have managed the investment to exit at a different time or under different circumstances.

PIMCO also seeks to comply with all applicable anticorruption laws. This may include both U.S. and non-U.S. anti-corruption laws. In some countries, there is a greater acceptance than in the U.S. of public sector corruption. An Account may be adversely affected because of its unwillingness (or the unwillingness of PIMCO and/or its affiliates) to participate in or otherwise be associated with transactions that violate laws or regulations prohibiting engaging in corrupt practices. Such laws and regulations may make it difficult in certain circumstances for an Account to pursue certain investment opportunities and for portfolio investments to obtain or retain certain business. In addition, PIMCO seeks to comply with applicable antimoney laundering and anti-terrorist financing laws. These laws, inter alia, may prohibit PIMCO and Accounts from knowingly participating in or assisting financial transactions, including investments in and by an Account or the PIMCO Funds, which involve the proceeds of certain specified unlawful activities, generally regardless of transaction type or value. Compliance with applicable anti-money laundering and anti-terrorist financing laws also may cause PIMCO to block, freeze, or (in some

Military action by Russia in Ukraine has led to and may

cases) reject or liquidate the account of a Client if, for

lead to additional sanctions and export control

example, PIMCO is unable to obtain from the Client

restrictions being levied by the U.S., European Union, UK,

information it requires to satisfy its anti-money

Canada, and other countries against Russia, Belarus,

laundering or sanctions obligations, or has reason to

certain regions in Ukraine, and persons and entities who

suspect that the Client may be engaged in, or that the

provide support for Russia’s war against Ukraine. The

Client’s funds derive from, illicit activity or sanctioned

sanctions measures implemented against these regions

persons. Such actions may have adverse effects on the

have evolved rapidly and may continue to do so.

Client or Account, as well as on any Fund(s) in which the

However, there is also a possibility that certain countries

Client or Account is invested. Further, many jurisdictions

may begin to ease sanctions as part of a negotiated

are in the process of changing or enhancing their anti-

effort to achieve peace. In the event that some, but not

money laundering laws and regulatory guidance, in

response to which it may be necessary for PIMCO to

regarding investment allocations, the adequacy of

update its internal controls, make additional reports to

disclosure to customers to whom our products are

applicable regulators, and/or seek additional identifying

distributed through those channels, including with

information or beneficial ownership information from

respect to frequency and complexity of the valuation

Clients.

process for private assets and liquidity and execution of

The U.S. Department of Justice and the SEC have historically devoted significant resources to enforcement of the U.S. Foreign Corrupt Practices Act (the “FCPA”). Similarly, OFAC has aggressively pursued enforcement of U.S. economic sanctions. Other jurisdictions, including the UK and Member States of the European Union (“EU”), have also established expansive anti-bribery laws and the UK and EU have implemented economic sanctions against a range of countries and persons. Violations of the FCPA, OFAC’s sanctions regulations, or other applicable anti-bribery laws, anti-money laundering laws, anti-corruption laws, and sanctions requirements, or economic sanctions (including violations by partners or controlled investments) could result in, among other

timely processes, such as ongoing general management and satisfying investor redemption requests in accordance with organizational documents. There is a risk that PIMCO employees involved in the direct distribution of our products, or employees who oversee independent advisors, brokerage firms, and other third parties around the world involved in distributing our products, do not follow our compliance and supervisory procedures. Many of these vehicles could also face significant additional litigation risks, including the increased potential for class actions and other investor lawsuits, which could distract our employees, including our investment executives, and ultimately have a negative impact on PIMCO.

things, civil and criminal penalties, material fines, profit

Operational Risk. Accounts are subject to operational

disgorgement, injunctions on future conduct, securities

risk associated with the provision of investment

litigation and a general loss of investor confidence, any

management and other services by PIMCO and an

one of which could adversely affect an Account or Fund’s

Account’s other Service Providers. Operational risk is the

ability to achieve its investment objective and/or conduct

risk that deficiencies in PIMCO’s internal systems

its operations.

(including communications and information systems) or

New Investment Vehicle Risk. Certain new investment vehicles, including vehicles that accept qualified individual (non-institutional) investors primarily sourced through third-party brokerage firms, banks, third-party feeder providers, and independent investment advisers (“Retail Vehicles”), will expand PIMCO’s client base and could subject PIMCO to new and greater levels of public regulatory scrutiny, regulation, risk of litigation, and reputational risks. The distribution of products suitable for individual investors, including through new channels, whether directly or through market intermediaries, could expose PIMCO to allegations of improper conduct and/or actions by state and federal regulators in the U.S. and regulators in jurisdictions outside of the U.S. with respect to, among other things, product suitability, investor classification, compliance with securities laws, anti-money laundering requirements, conflicts of interest

controls, or in those of Service Providers to whom PIMCO has contractually delegated or engaged to perform certain of its responsibilities or on which it otherwise relies, may cause losses for an Account or hinder Account operations. For example, trading delays or errors caused by PIMCO or its Service Providers, including data providers, could prevent an Account from purchasing a security that PIMCO expects will appreciate in value, thus reducing the Account’s opportunity to benefit from the security’s appreciation. Additionally, PIMCO provides regular and ad-hoc reporting to Clients, and such reports may contain errors or omissions. The risk of such errors is heightened in the case of customized requests. While PIMCO has adopted reasonable measures to identify and mitigate such operational risks, there can be no guarantee that these efforts will always be successful. PIMCO is generally not contractually liable to Accounts for operational losses associated with operational risk.

Originating Loans to Companies in Distressed

directors of companies which are insolvent or

Situations and Related Risks. As part of their

approaching insolvency, such persons may have fiduciary

investment activities, an Account or its affiliates may

obligations to consider the interest of creditors of such

originate financing to companies that are experiencing

entity, as well as the shareholders of such entity. The

significant financial or business difficulties, including

interests of such parties may be adverse to the interests

companies involved in bankruptcy or other

of an Account. These fiduciary obligations may conflict

reorganization and liquidation proceedings. Although the

with PIMCO’s obligation to an Account, and PIMCO may

terms of such financing may result in significant financial

cause its representatives to resign from such positions in

returns to an Account, they involve a substantial degree

order to reduce such conflicts. Any involvement by

of risk. The level of analytical sophistication, both

PIMCO representatives (including through serving on a

financial and legal, necessary for successful financing to

board of directors, or permanent or ad hoc creditors or

companies experiencing significant business and financial

steering committees) may also entail a substantial time

difficulties is unusually high. There is no assurance that

commitment, which may limit such representatives’

PIMCO will correctly evaluate the value of the assets

ability to participate in other Account matters and

collateralizing the Account’s financing or the prospects

investments. PIMCO may be provided with material non-

for successful repayment or a successful reorganization

public information that may restrict its ability to trade in

or similar action. In any reorganization or liquidation

a company’s securities or be subject to other limitations

proceeding relating to a company that an Account funds,

on trading. Conversely, an Account may trade in the

the Account may lose all or part of the amounts

company’s securities while engaged in the company’s

advanced to the borrower or may be required to accept

restructuring activities, which creates a risk of litigation

collateral with a value less than the amount of the

and liability that may cause the Account to incur

financing advanced by the Account or its affiliates to the

significant legal fees and potential losses. As the Account

borrower.

will typically indemnify any person serving on a

Participation on Creditors’ Committees Risk. Although it has no obligation to do so, PIMCO, on behalf of one or more Accounts, may participate on committees formed by creditors to negotiate the management or potential restructuring of financially troubled companies that may or may not be in bankruptcy, or the Account may seek to negotiate directly with the debtors with respect to restructuring issues. If an Account does join a creditors’ committee, the participants on the committee would be interested in obtaining an outcome that is in their

committee on its behalf, indemnification payments could adversely affect the return on the Account’s investment in a portfolio company. In certain cases, an Account may not be permitted to serve on a committee even where it would desire to do so as a result of the Account’s holdings of other securities of an issuer or may decline to serve because of these or other conflicts. For additional information, please see “Inconsistent Investment Positions, Timing of Competing Transactions, and Other Conflicts” in Item 11.

respective individual best interests, and there can be no

Pooled Investment Vehicle and Pass-Through Entity

assurance of obtaining results most favorable to the

Risk. Where permitted by the Client’s investment

Account in such proceedings. While such involvement

guidelines, an Account may invest or take short positions

may enable PIMCO to enhance the value of an Account’s

in pooled investment vehicle and pass-through entities,

portfolio investments, it may also prevent the Account

including affiliated or third-party unregistered investment

from freely disposing of such portfolio investments, while

vehicles, investment companies registered under the 1940

also exposing it to legal claims and adverse publicity

Act (including exchange-traded funds and closed-end

(including claims of breach of fiduciary duties, securities

companies), master limited partnerships, and REITs

claims, and other management-related claims). In

(collectively, “Pooled Investment Vehicles”). An Account’s

addition, if PIMCO’s representatives are serving as

investment in Pooled Investment Vehicles may result in

the Account bearing the fees and expenses of the Pooled

make such purchase or a sale of an investment more

Investment Vehicle, in addition to those of the Account,

difficult or, ultimately, prevent it.

subject to applicable legal and contractual restrictions. To the extent an Account invests directly in Pooled Investment Vehicles and other “pass-through” entities which are treated as partnerships for federal income taxation purposes, the Account must rely on such vehicles to deliver to it certain tax information that is necessary to complete the Account’s own tax returns. If this information is not delivered to the Account in a timely fashion, the Account will be delayed in providing tax information to the investors. An Account will be dependent on the manager or sponsor of any Pooled Investment Vehicle and may have limited or no ability to influence such manager or sponsor’s actions. Moreover, managers or sponsors of Pooled Investment Vehicles may have inconsistent interests with those of an Account and may take or block actions in a manner adverse to an Account’s interests. An Account may have little opportunity to negotiate the terms of an investment in a Pooled Investment Vehicle and may receive incomplete or unreliable information in connection with evaluating any such investment. An Account’s ability to withdraw from or transfer its investment in certain Pooled Investment Vehicles will also typically be limited.

An Account may invest in exchange-traded funds (“ETFs”), as well as derivatives and/or options on ETFs. ETFs are hybrid investment companies that are registered as openend investment companies or unit investment trusts but possess some of the characteristics of closed-end funds. ETFs often hold a portfolio of common stocks that is intended to track the price and dividend performance of a particular index but may also be actively managed. The market price for ETF shares may be higher or lower than the ETF’s net asset value. Passive ETF Risk. Investments in passive exchange traded funds entail certain risks. In particular, investments in such ETFs involve the risk that the ETF may not achieve its investment objective, among other reasons, because of regulatory restrictions, including exchange rules. Unlike the index, an ETF incurs advisory and administrative expenses and transaction costs in trading securities. In addition, the timing and magnitude of cash inflows and outflows from and to investors buying and redeeming shares in the ETF could create cash balances that cause the ETF’s performance to deviate from the index (which remains “fully invested” at all times). Performance of an ETF and the index it is designed to track also may diverge

While an Account may invest in Pooled Investment

because the composition of the index and the securities

Vehicles managed by PIMCO or its affiliates, such

held by the ETF may occasionally differ. Although ETFs will

affiliation may not mitigate the above risks or otherwise

generally trade close to net asset value, market volatility,

provide the Account with preferential rights.

lack of an active trading market for ETF shares, disruptions

An Account may engage in transactions with Pooled Investment Vehicles that involve high levels of complexity (e.g., spin-outs, acquisitions of cornerstone positions, portfolios of co-investments and direct investments, and fund restructurings). These transactions may present additional risks that are not present in primary investment transactions or more traditional secondary interest transactions. In particular, any such transaction will typically involve higher transaction costs, increased

at market participants (such as Authorized Participants or market makers), and any disruptions in the ordinary functioning of the creation/redemption process may result in ETF shares trading significantly above (at a “premium”) or below (at a “discount”) net asset value. In addition, errors in the construction, calculation, or transmission of an index could cause an ETF’s price to differ materially from its index. As a result, an Account may sustain significant losses when transacting in ETF shares.

regulatory risk, and the consent of or negotiations with the

Portfolio Holdings Risk. PIMCO serves as investment

Pooled Investment Vehicle’s sponsor and/or underlying

adviser to various Funds that may have investment

investors and other qualification requirements that may

objectives, strategies, and portfolio holdings that are substantially similar to or overlap with those of an

Account, and in some cases, the Funds may publicly

including research, forecasting, selection, optimization,

disclose portfolio holdings. For example, portfolio

order routing, execution, and allocation processes

holdings for PIMCO-advised actively managed ETFs are

(together, “Systems”). These Systems, which may be

required, by the terms of the applicable SEC exemptive

employed together and operate without human

relief, to be publicly disclosed each business day.

intervention, rely heavily on the use of proprietary and

Similarly, PIMCO serves as an investment adviser to

nonproprietary data, software, hardware, and intellectual

Separate Accounts that may have investment objectives,

property, including data, software, and hardware that

strategies, and portfolio holdings that are substantially

may be licensed or otherwise obtained from third parties.

similar to or overlap with those of an Account, and the

The use of such Systems has inherent limitations and

Separate Account holdings that are disclosed to the

risks. Although PIMCO takes reasonable steps to develop

Client or others under the terms of the Client’s

and use Systems appropriately and effectively, there can

investment management agreement could be similar or

be no assurance that it will be successful in doing so. The

identical to Account holdings. As a result, it is possible

Systems are extremely complex and may involve the use

that other market participants may use such information

of financial, economic, econometric and statistical

for their own benefit, which could negatively impact an

theories, research and modeling, and related translation

Account’s execution of purchase and sale transactions.

into computer code. Errors may occur in the design,

Private Credit Risk. An Account may obtain exposure to certain less liquid or illiquid private credit investments, generally involving corporate borrowers. Typically, private credit investments are not traded in public markets and are less liquid or potentially illiquid, such that an Account may not be able to resell some or all of its holdings for extended periods, which may be several years, or at or near the price at which an Account is valuing its investments. An Account may focus its private credit investments in a particular industry or sector or select industries or sectors. Investment performance of such industries or sectors may thus at times have an outsized impact on the performance of an Account. Additionally, private credit investments can range in credit quality depending on security-specific factors, including total leverage, amount of leverage senior to the security in question, variability in the issuer’s cash flows, the size of the issuer, the quality of assets securing debt, and the degree to which such assets cover the subject company’s debt obligations. The issuers of the Account’s private credit investment will often be leveraged, as a result of recapitalization transactions, and may not be rated by national credit rating agencies. Quantitative Investing Risk. PIMCO employs and/or relies on algorithms, models, or other systems in connection with many of its investment activities,

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, optimizations, 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 Accounts. 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

come from third-party sources, it is inevitable that not all

unanticipated trades or failure or delays in executing

desired and/or relevant data will be available to, or

intended trades, failure to properly allocate trades, failure

processed by, PIMCO at all times. Where incorrect or

to properly gather and organize available data, or failure

incomplete data is available, PIMCO may, and often will,

to identify hedging or other risk management

continue to generate forecasts and make investment

opportunities or targets, all of which may adversely

decisions based on the data available. Additionally,

impact Accounts.

PIMCO may determine that certain available data, while

Given the complexity of the investments and strategies of certain Accounts, PIMCO relies on quantitative models, data, and 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 Accounts. Such models, data, and algorithms are used to construct sets of transactions and investments, to implement, route, and execute investment decisions, and

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 thirdparty 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.

to provide risk management insights. When the third-

Further, if incorrect market or other data is entered into

party models, data, or algorithms prove to be incorrect or

an otherwise properly functioning System, the Systems’

incomplete, any decisions or investments made in

resulting output, including proposed trades or

reliance thereon expose Accounts to additional risks. For

investment recommendations, may be inconsistent with

example, PIMCO does not have the same insight or

the underlying investment strategy. Even if data is input

access into the construction, coding, or testing of the

correctly, prices anticipated by the data through the

third-party algorithms as it would for proprietary models,

Systems may differ substantially from market prices,

data, or algorithms, and PIMCO and applicable Accounts

especially for financial instruments with complex

will be exposed to systems, cybersecurity, and other risks

characteristics, such as derivatives, in which certain

associated with the third-party models, data, or

Accounts may invest. Most Systems require continual

algorithms. For these reasons, and subject to PIMCO

monitoring and enhancements, and there is no

satisfying its standard of care, PIMCO generally will not

guarantee that such monitoring and enhancements will

compensate Accounts for any losses associated with

be successful or that Systems will operate as intended.

third-party models, data, or algorithms, and Accounts

The successful deployment of the investment strategy,

generally will bear all such losses. PIMCO, subject to

the portfolio construction process, and/or the trading

satisfying its standard of care, generally does not expect

process could be severely compromised by software or

to disclose certain such events to applicable Accounts.

hardware malfunctions, viruses, glitches, connectivity

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

loss, system crashes, or various other System Incidents, including, in particular, where multiple Systems contribute to the process, particularly where there is no human intervention (e.g., where one System develops a signal or possible trade, 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

repeatedly in reliance on the preceding automated

of financing; (xiv) bankruptcy and other credit risks of

transaction). System Incidents may be difficult to detect,

tenants, operating partners, or other relevant parties; (xv)

and PIMCO may not immediately or ever detect certain

natural catastrophes, war, terrorism, vandalism, and

System Incidents, which may have an increasing impact

squatting or holding over; (xvi) risk of uninsurable losses;

on an Account over time. PIMCO has adopted policies

(xvii) breach of contract relating to real estate; (xviii)

and procedures that it believes are reasonably designed

development or construction cost overruns; and (xix) the

to prevent, detect, escalate, and remediate System

quality, viability, and strategy of third-party developers,

Incidents. PIMCO will address System Incidents in

operators, managers, servicers, or controlling parties.

accordance with this policy, but there is no guarantee that measures taken to address a System Incident will be successful. PIMCO generally does not classify System Incidents as Trade Errors (as defined below), and Accounts 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 Clients. For additional information relating to Trade Errors, please see “Brokerage Practices” in Item 12.

Real estate historically has experienced significant fluctuations and cycles in value, and an Account may buy and/or sell investments at less than optimal times. 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. In addition, real estate values have been subject to substantial fluctuations and declines on a local, regional, and national basis in the past and may continue to be in the future. During

Real Estate Risk. An Account that invests in real estate,

periods of rising interest rates, real estate securities may

real estate-related securities, or real estate-linked

lose appeal for investors who may seek higher yields

derivative instruments is subject to risks directly or

from other income-producing investments. Rising

indirectly associated with ownership of real estate, as well

interest rates may also contribute to financing for

as risks associated with the real estate market generally.

property purchases and improvements becoming more

The real estate industry is extensively regulated at the

costly and difficult to obtain. Developments following the

federal, state, and local levels and is subject to frequent

onset of COVID-19 adversely impacted certain

regulatory change. In addition, real estate investments

commercial real estate markets, including the deferral of

are subject to a variety of inherent risks that may have an

mortgage payments, renegotiated commercial mortgage

adverse impact on the values of, and returns (if any)

loans, commercial real estate vacancies or outright

from, such investments, including, but not limited to,

mortgage defaults, and the potential acceleration of

risks related to: (i) lack of liquidity; (ii) difficulty in

macro trends, such as work from home and online

valuation; (iii) changes in local, national, and international

shopping, which may negatively impact certain industries

economic conditions; (iv) supply and demand, including

such as brick-and-mortar retail.

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; (v) interest rate fluctuations; (vi) zoning laws and entitlements; (vii) regulatory overlays; (viii) environmental liabilities; (ix) energy prices; (x) title risks; (xi) the ongoing need for capital improvements; (xii) patent or latent defects in improvements; (xiii) availability

Separately, certain Service Providers to the Account and/or its subsidiaries are expected to be Dual Service Providers, resulting in conflicts, as further discussed in “Other Conflicts” in Item 11. An investment in REITs or in a security or derivative instrument that is linked to the value of a REIT is subject to additional risks, such as poor performance by the manager of the REIT, adverse changes to the tax laws, or failure by the REIT to qualify for tax-free pass-through of income under applicable law, as amended. In addition,

some REITs have limited diversification because they

The Account may invest in private real estate investments

invest in a limited number of properties, a narrow

directly or indirectly through one or more REIT

geographic area, or a single type of property. Also, the

subsidiaries. Exposure to private commercial real estate

organizational documents of a REIT may contain

comes with a variety of risks. Lease defaults, terminations

provisions that make changes in control of the REIT

by one or more tenants, or landlord-tenant disputes may

difficult and time-consuming. Investments in non-traded

reduce the REIT Subsidiary’s revenues and net income,

REITs are generally subject to greater risks than

which would reduce the amount of income payable by

investments in publicly-traded REITs, including liquidity

the REIT Subsidiary to the Account. Any of these

and valuation risks. REITs are sometimes informally

situations may result in extended periods during which

characterized as equity REITs, mortgage REITs, and

there is a significant decline in revenues, or no revenues

hybrid REITs. Equity REITs invest the majority of their

generated by a property. If this occurred, it could

assets directly in real property. They derive their income

adversely affect the Account’s performance.

primarily from rents received and any profits on the sale of their properties. Equity REITs can also realize capital gains by selling properties that have appreciated in value. Mortgage REITs invest the majority of their assets in real estate mortgages and derive most of their income from mortgage interest payments. As its name suggests, hybrid REITs combine characteristics of both equity REITs and mortgage REITs.

An Account or some of the REITs in which an Account may invest may be permitted to hold regular or residual interests in real estate mortgage investment conduits (“REMICs”) or debt or equity interests in taxable mortgage pools (“TMPs”). An Account may also hold interests in “Re-Securitizations,” which are interests in securitizations formed by the contribution of asset backed or other similar securities into a trust which then

An investment in a REIT, or in a real estate-linked

issues securities in various tranches. An Account may

derivative instrument linked to the value of a REIT, is

participate in the creation of a Re-Securitization by

subject to the risks that impact the value of the

contributing assets to the trust and receiving junior

underlying properties of the REIT. Risks associated with

and/or senior securities in return. An interest in a Re-

the underlying properties are noted above, as are

REMIC security may be riskier than the securities

demographic trends, which may affect real estate income

originally held by and contributed to the trust, and the

and values. The securities of REITs involve greater risks

holders of the Re-Securitizations securities will bear the

than those associated with larger, more established

costs associated with the securitization.

companies and may be subject to more abrupt or erratic price movements resulting from factors such as interest rate changes, economic conditions, real estate market conditions (such as oversupply of real estate for rent or sale or vacancies, potentially for extended periods), reduced demand for commercial and office space, increased maintenance or tenant improvement costs, and increased costs to convert properties for other uses, as well as default risk and credit quality of tenants and borrowers. For example, the value of these securities may decline when interest rates rise, and the value will also be affected by the real estate market generally and by the management or development of the underlying properties of the REIT.

Please also see “Mortgage Loans Risk” and “MortgageRelated and Other Asset-Backed Securities Risk.” Prepayment Risk. The terms of loans in which an Account invests may be subject to early redemption features, refinancing options, prepayment options, or similar provisions which, in each case, could result in the issuer repaying the principal on an obligation held by the Account earlier than expected, either with or without a prepayment premium. This may happen when there is a decline in interest rates or when the borrower’s improved credit or operating or financial performance allows the refinancing of certain classes of debt with lower cost debt. Assuming an improvement in the credit market conditions, early repayments of the obligations held by

the Account could increase. The yield of the Account’s

subject to greater price fluctuations than higher quality

investment assets may be affected if the rate of

collateral and collateral with shorter maturities. If the

prepayments differs from PIMCO’s expectations. In

repurchase agreement counterparty were to default,

addition, there is no assurance that the Account will be

lower quality collateral may be more difficult to liquidate

able to reinvest proceeds received from prepayments in

than higher quality collateral. Should the counterparty

assets that satisfy the Account’s investment objectives,

default and the amount of collateral not be sufficient to

and any delay in reinvesting such proceeds may

cover the counterparty’s repurchase obligation, the Client

materially affect the performance of the Account.

would retain the status of an unsecured creditor of the

Conversely, if the prepayment does not occur within the

counterparty (i.e., the position the Client would normally

Account’s term, or if the investment does not otherwise

be in if it were to hold, pursuant to its investment

become liquid, the term of the Account may be longer

policies, other unsecured debt securities of the defaulting

than expected or the Account may make distributions in-

counterparty) with respect to the amount of the shortfall.

kind. Furthermore, changes in prepayment rates could

As an unsecured creditor, the Client would be at risk of

reduce the value of loans directly held by the Account or

losing some or all of the principal and income involved in the

underlying a security held by the Account, and volatility

transaction. Repurchase agreements and purchase and sale

in prepayment risks may impair the Account’s ability to

contracts may be entered into only with financial institutions

maintain targeted amounts of leverage on its portfolio

that meet certain minimum capital requirements.

and result in reduced earnings, losses, and/or the

Repurchase agreements subject an Account to

reduced availability of cash.

counterparty credit risks as otherwise described above.

Reliance on Portfolio Company Management Risk.

Please also see “Government and Regulatory Risk.”

The success or failure of a portfolio company investment

Restricted Securities Risk. An Account’s investments

may depend to a significant extent on the portfolio

may include securities (“restricted securities”) that have

company’s management team, including in cases where

not been registered for sale to the public under the U.S.

PIMCO and/or Accounts control the portfolio company.

Securities Act pursuant to an exemption from

A member of a portfolio company’s management team

registration. Restricted securities are generally only sold

may engage in activities that pose legal, regulatory,

to institutional investors in private sales from the issuer

financial, reputational, or other risks to the investment,

or from an affiliate of the issuer. These securities may be

and such activities may be difficult or impossible to

less liquid than securities registered for sale to the

detect.

general public. The liquidity of a restricted security may

Repurchase Agreement Risk. In any repurchase transaction to which an Account is a party, collateral for a repurchase agreement may include cash items and obligations issued by the U.S. Government or its agencies or instrumentalities. For certain Accounts, however, collateral may include instruments other than cash items and obligations issued by the U.S. Government or its agencies or instrumentalities, including securities that the Account could not hold directly under its investment strategies without the repurchase obligation. The type of collateral underlying repurchase agreements may also pose certain risks for an Account. Lower quality collateral and collateral with longer maturities may be

be affected by a number of factors, including: (i) the credit quality of the issuer; (ii) the frequency of trades and quotes for the security; (iii) the number of dealers willing to purchase or sell the security and the number of other potential purchasers; (iv) dealer undertakings to make a market in the security; and (v) the nature of the security and the nature of marketplace trades. Also, restricted securities may be difficult to value because market quotations may not be readily available. Second Lien Loan Risk. First lien leveraged loans generally include loans that are not (and cannot by their terms become) subordinate in right of payment to any other obligation of the obligor of the loan and are

secured by a valid first-priority perfected security interest

interests from existing investors or other types of

or lien in, to, or on specified collateral securing the

“structured” secondary investments that provide

obligor’s obligations under the related loan. Second lien

economic exposure to existing private funds or their

loans are subordinated (with respect to liquidation

investments. In many cases, the economic, financial, and

preferences with respect to pledged collateral) to other

other information available to and used by PIMCO in

secured obligations of the related obligors secured by all

selecting and structuring such secondary investments

or a portion of the collateral securing such loan. Second

may be incomplete or unreliable. Valuation of secondary

lien loans may be subordinated to senior secured

investments may be difficult since there generally will be

obligations, including first lien leveraged loans, with

no established market for such interests. Often PIMCO

respect to specific collateral of the obligor, and in the

will also not have the opportunity to negotiate the terms

event that the proceeds or value of such collateral is

of the underlying private funds or obtain the rights and

insufficient to repay the first lien debt obligations, the

privileges it might obtain if it acquired the interests

second lien loans will likely suffer a loss of principal and

directly from the fund. Moreover, the purchase price of

interest. Second lien loans generally have rights that are

secondary transactions will be subject to negotiation with

subordinated to those of the senior secured obligations.

the sellers of such interests and may, in certain cases,

Second lien loans are subject to the same risks as senior

require an Account’s assumption of certain contingent

secured loans, including credit risk, market risk, liquidity

liabilities resulting from activity that transpired prior to

risk, and interest rate risk. However, due to the

the acquisition, such as an indemnification obligation in

subordinated nature of these loans they involve a higher

respect of an act or omission occurring prior to the date

degree of overall risk than the senior secured loans of

of the acquisition of the secondary investment. Further,

the same obligor.

secondary transactions may involve conflicts with other

Second lien loans are typically subject to intercreditor arrangements, the provisions of which may prohibit or

Accounts which may hold positions in the underlying funds or their investments.

restrict the ability of the holder of a second lien loan to:

Securitization Risk. In connection with the acquisition,

(i) exercise remedies against the collateral with respect to

financing, or disposition of certain investments, an

their second liens; (ii) challenge any exercise of remedies

Account may participate in the securitization of certain

against the collateral by the first lien lenders with respect

investments, including through the formation of one or

to their first liens; (iii) challenge the enforceability or

more securitizations, CLOs, or repackaged securities, while

priority of the first liens on the collateral; and (iv) exercise

sometimes retaining the exposure to the performance of

certain other secured creditor rights, both before and

these investments. This would sometimes involve creating a

during a bankruptcy of the borrower. In addition, during

special purpose vehicle, contributing or selling a pool of

a bankruptcy of the obligor, the holder of a second lien

assets to such special purpose vehicle (each, a “Securitized

loan may not be required to give advance consent to: (i)

Vehicle”), and selling debt or equity interests in such

any use of cash collateral approved by the first lien

Securitized Vehicle to purchasers (including potentially

creditors; (ii) sales of collateral approved by the first lien

other clients of PIMCO, which may result in conflicts of

lenders and the bankruptcy court, so long as the second

interest). An Account may retain equity of the Securitized

liens continue to attach to the sale proceeds; and (iii)

Vehicle, together possibly with other tranches as well. In the

debtor-in-possession financings.

case of loans or securities that the Securitized Vehicle has

Secondary Transactions in Private Fund Interests Risk. An Account may acquire interests in private funds that have completed their closings. Secondary transactions may consist of purchases of underlying private fund

sold instead of retained, the Securitized Vehicle or an Account may be required to indemnify purchasers for losses or expenses incurred as a result of a breach of a representation or warranty. Any significant repurchases or indemnification payments could materially and adversely

affect the liquidity, financial condition, and operating results

Senior Loan Risk. An Account that invests in senior loans

of the Securitized Vehicle and/or any Account which

is subject to heightened credit risk, call risk, settlement

participated or invested in the securitization.

risk, risk of subordination to other creditors, insufficient

Subject to certain exceptions, ”risk retention” rules in the U.S. require the “sponsor” of a securitization transaction (or a majority-owned affiliate of the sponsor) to retain, unhedged, a portion of the credit risk associated with the securitization. In addition, “risk retention” rules in the EU and the UK place a requirement on EU and UK institutional investors to ensure that the required retention is made by the “originator,” “sponsor,” or “original lender.” In addition, it is possible that PIMCO or an Account will be considered to be a sponsor (or in respect of the EU or UK risk retention rules, a sponsor, originator, or original lender) of a securitization and as a result be required to comply (directly or indirectly) with the risk retention rule requirements. Securitization transactions are subject to the risk of refinancings whereby certain holders of a Securitized Vehicle (including potentially other clients of PIMCO) have a right to call other securities of the securitization and take possession of the securitization’s assets. Although existing holders of the Securitized Vehicle are expected to receive the principal back at par, a "take out" accelerates the repayment process for existing holders, subjecting them to reinvestment risk and reduced future interest in such assets. Securities Lending Transaction Risk. Accounts that engage in securities lending transactions are subject to risks such as: (i) borrower credit risk (e.g., delays in collateral recovery and losses of collateral rights if the borrower of the securities fails to return the securities loaned or becomes insolvent, to the extent such losses are not compensated by a third-party lending agent); (ii) risks associated with the instruments in which cash collateral is invested, including losses experienced by and defaults of such instruments; and (iii) loss of investment value of the security if the borrow is unable to return it, for example, in the event that the security becomes sanctioned or cannot otherwise be returned, and compensation paid does not reflect PIMCO’s value of the security.

or lack of protection under federal securities laws, and liquidity risk. Senior loans are often issued by heavily indebted companies and therefore can be particularly susceptible to a wide variety of risks. Senior loans may not be backed by adequate collateral and can be subject to faster payment schedules than other types of obligations. These instruments are considered predominately speculative with respect to an issuer’s continuing ability to make principal and interest payments and may be more volatile and more difficult to value than other types of instruments, including other debt securities. In addition, an economic downturn or individual corporate developments could adversely affect the market for these instruments and reduce an Account’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 senior loan may lose significant market value before a default occurs. In addition, the senior loans in which an Account invests may not be listed on any exchange, and a secondary market for such loans may be less liquid than markets for other more liquid fixed income securities. Consequently, transactions in senior loans may involve greater costs than transactions in more actively traded instruments. Restrictions on transfers in loan agreements, a lack of publicly available information, irregular trading activity, and wide bid/ask spreads among other factors, may, in certain circumstances, make senior loans difficult to value accurately or sell at an advantageous time or price than other types of securities or instruments. These factors may result in an Account being unable to realize full value for the senior loans and/or may result in an Account not receiving the proceeds from a sale of a senior loan for an extended period after such sale, each of which could result in losses to the Account. Senior loans may have extended trade settlement periods, which may result in sale proceeds not being immediately available to an Account, which could make it difficult for an Account to make additional investments or meet redemption requests or

other cash requirements like margin calls. An Account

the Accounts holding such senior loans. However, even

may seek to satisfy any short-term liquidity needs

when PIMCO restricts itself from receiving MNPI and

resulting from an extended trade settlement process by,

foregoes a possible opportunity to engage in a private

among other things, selling Account assets, holding

transaction, PIMCO ultimately may not trade in the

additional cash or entering into temporary borrowing

securities of such issuer.

arrangements with banks, and other potential funding sources. Loan purchasers have no entitlement to receive from loan sellers delayed compensation payments that are intended to incentivize shorter settlement periods. Consequently, there is no certainty that PIMCO will be able to obtain delayed compensation payments in connection with loan transactions. If an issuer of a senior loan prepays or redeems the loan prior to maturity, an Account may have to reinvest the proceeds in instruments that pay lower interest rates. To the extent that an Account invests in senior loans that are covenantlite obligations, the Account may have fewer rights against a borrower (e.g., fewer or no maintenance covenants) and may have a greater risk of loss on such investments as compared to investments in traditional loans. Senior loans in which an Account invests may 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. An Account 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 Account to act collectively with other creditors to exercise its rights with respect to a senior loan. Senior loans may not be considered “securities,” and therefore purchasers, such as an Account, may not be entitled to rely on the anti-fraud protections of the federal securities laws. Loans and other debt instruments that are not in the form of securities may therefore offer less legal protection to the Account in the event of fraud or misrepresentation.

Servicer-Related Risk. In addition to other risks associated with structured investments, the creditworthiness, servicing practices, and viability of the servicers are also significant risks. For example, commercial mortgage-backed securities or CDOs may provide that the servicer is required to make advances in respect of delinquent mortgage loans. However, servicers experiencing financial difficulties may not be able to perform these obligations. Servicers who have sought bankruptcy protection may not be required to advance such amounts due to application of the provisions of bankruptcy law. Even if a servicer were able to advance amounts in respect of delinquent mortgage loans, its obligation to make such advances may be limited to the extent that it does not expect to recover such advances due to the deteriorating credit of the delinquent mortgage loans. In addition, a servicer’s obligation to make such advances may be limited to the amount of its servicing fee. Short Exposure Risk. Short sales and short positions are subject to special risks. A short sale involves the sale by an Account of a security that it does not own with the hope of purchasing the same security at a later date at a lower price. An Account may also enter into a short position through a forward commitment or a short derivative position through a futures contract or swap agreement. If the price of the security or derivative has increased during this time, then the Account will incur a loss equal to the increase in price from the time that the short sale was entered into, plus any transaction costs (i.e., premiums and interest) paid to the broker-dealer to borrow securities. Therefore, short sales involve the risk

In addition, in certain circumstances, PIMCO may restrict

that losses may be exaggerated, potentially losing more

itself from receiving material non-public information

money than the actual cost of the investment, especially

(“MNPI”) with respect to an issuer of senior loans so as

in the case of leveraged short positions. By contrast, a

not to restrict its ability to trade in other securities of

loss on a long position arises from decreases in the value

such issuer, even if such information may be beneficial to

of the security and is limited by the fact that a security’s

value cannot decrease below zero. Periods of unusual or

purpose entities that pool funds to seek potential

adverse market economic, regulatory, or political

acquisition opportunities (collectively, “SPACs”). SPACs

conditions generally may exist for extended periods of

and similar entities have no operating history or ongoing

time, and during these periods, an Account may not be

business other than seeking to complete a business

able, fully or partially, to implement its short selling

combination with one or more companies, and as a

strategy. In response to market events, the SEC and

result, the value of each of their securities is particularly

regulatory authorities in other jurisdictions may adopt

dependent on the ability of the entity’s management to

(and in certain cases, have adopted) bans on, and/or

identify and complete a successful business combination.

reporting requirements for, short sales of certain

Some SPACs may pursue acquisitions only within certain

securities, including short positions on such securities

industries or regions, which may increase the volatility of

acquired through swaps. Also, there is the risk that the

their prices and limit the number of companies they

counterparty to the short position or the broker-dealer

consider as targets for a potential business combination

will not fulfill its contractual obligations, causing a loss to

transaction. An investment in a SPAC is subject to a

the Account.

variety of risks, including: (i) as a newly formed company

Small-Cap and Mid-Cap Company Risk. Investments in small-capitalization and mid-capitalization companies involve greater risk than investments in largecapitalization companies. The general risks associated with fixed income securities and equity securities are particularly pronounced for securities issued by companies with smaller market capitalizations. These companies may have limited product lines, markets, or financial resources, or they may depend on a small or inexperienced management group. As a result, they may be subject to greater levels of credit, market, and issuer risk. Securities of smaller companies may trade less frequently and in lesser volumes than more widely held securities, and their values may fluctuate more sharply than other securities. They may also have limited liquidity. These securities may therefore be more vulnerable to adverse developments than securities of larger companies, and the Account may have difficulty purchasing or selling securities positions in smaller companies at prevailing market prices. Also, there may be less publicly available information about smaller companies or less market interest in their securities as compared to larger companies. Companies with medium-sized market capitalizations may have risks similar to those of smaller companies. SPAC Risk. An Account may invest in units of, shares of, warrants to purchase stock of, and other interests in special purpose acquisition companies or similar special

with no operating history, there is no basis on which to evaluate the ability to achieve the SPAC’s business objective; (ii) an attractive business combination target may not be identified at all, and the SPAC may be required to liquidate and return any remaining monies to shareholders; (iii) shareholders may not be afforded an opportunity to vote on the proposed business combination; (iv) a business combination, if effected, may prove unsuccessful, and an investment in the SPAC may lose value, including, without limitation, at the effective time of the business combination; (v) the warrants or other rights with respect to the SPAC held by an Account may expire worthless or may be repurchased or retired by the SPAC at an unfavorable price; (vi) an Account may agree to forfeit its redemption rights or may be delayed in receiving any; (vii) an investment in a SPAC may be diluted in connection with the business combination or by additional financings; (viii) shareholders may lose the principal value of their investment if they do not redeem their investment in the SPAC prior to the effective time of the business combination; (ix) no or only a thinly traded market for shares of or interests in a SPAC may develop, leaving an Account unable to sell its interest in the SPAC or to sell its interest only at a price below what an Account believes is the intrinsic value of its interest in the SPAC; and (x) the values of investments in SPACs may be highly volatile and may depreciate significantly over time. In addition, an Account may invest in the at-risk capital of a SPAC in the form of direct or indirect interests in

such SPAC’s founder shares and private placement

unwillingness to make principal or interest payments in a

warrants or loans to a SPAC to finance working capital

timely fashion. A sovereign entity’s failure to make timely

needs. An investment in the at-risk capital of a SPAC is

payments on its debt can result from many factors,

subject to complete loss if the SPAC does not complete a

including, without limitation: (i) insufficient foreign

business combination, and an Account may be liable for

currency reserves or an inability to sufficiently manage

additional obligations of the sponsor entity beyond its

fluctuations in relative currency valuations; (ii) an inability

initial investment in the at-risk capital. Investments in a

or unwillingness to satisfy the demands of creditors

SPAC sponsor consist of securities issued on a private

and/or relevant supranational entities regarding debt

placement basis, which are subject to legal and

service or economic reforms; (iii) the size of the debt

contractual lock-ups and transfer restrictions and are

burden relative to economic output and tax revenues; (iv)

illiquid. In connection with a business combination, a

cash flow difficulties; (v) and other political and social

SPAC sponsor may agree to forfeitures, earn outs,

considerations. The risk of loss to an Account in the

additional lock-ups, or other agreements that may have

event of a sovereign debt default or other adverse credit

the effect of reducing the value of any such investments.

event is heightened by the unlikelihood of any formal

An Account may also invest in an equity or debt financing, or other financing arrangements, undertaken by a SPAC in connection with the initial business combination. Investors in these financing transactions typically are required to commit capital at the time a proposed business combination is announced, or

recourse or means to enforce its rights as a holder of the sovereign debt. In addition, sovereign debt restructurings, which may be shaped by entities and factors beyond an Account’s control, may result in a loss in value of an Account’s sovereign debt holdings or affect an Account’s ability to dispose of an investment.

otherwise provide near-term liquidity to a SPAC, and

From time to time, uncertainty regarding potential

such investments are subject to significant diminution in

increases in the statutory debt ceiling could increase the

value if the trading prices of the publicly traded equity of

risk that the U.S. government may default on payments

the SPAC diminishes following closing of the business

on certain U.S. government securities, cause the credit

combination transaction, or if the terms of such financing

rating of the U.S. government to be downgraded,

prove to be unfavorable. Any securities issued in such

increase volatility in the stock and bond markets, result in

financing transactions likely will be unregistered and may

higher interest rates, reduce prices of U.S. Treasury

be subject to additional contractual limitations on

securities, and/or increase the costs of various kinds of

disposition.

debt.

In connection with an investment in the at-risk capital of

Position Limits Risk. PIMCO’s ability to invest in certain

a SPAC, PIMCO may have the ability to appoint one or

derivatives may be constrained by applicable regulations

more persons to the board of any such SPAC. Any such

pertaining to position limits. Certain regulators and

board member may become aware of MNPI that could

exchanges have, and continue to develop, rules limiting

impact PIMCO’s ability to trade in the securities of certain

the positions which any person or group may own, hold,

issuers. Other Clients and Affiliate Clients may sponsor,

or control in certain derivatives. In applying such limits,

or invest in, a SPAC, which may have similar or different

certain regulators and exchanges require that the adviser

interests in such a SPAC, which may result in potential or

aggregate any positions over which it has trading

actual conflicts of interest.

control. In some instances, position limits apply directly

Sovereign Debt Risk. An Account that invests in fixed income instruments issued by sovereign entities may decline in value as a result of default or other adverse credit events resulting from the issuer’s inability or

to Clients, as beneficial owners of the positions (e.g., CFTC and exchange limits and certain position limits imposed by non-U.S. regulators). In such circumstances, Clients are responsible for ensuring that their

accumulated position in the derivative position across all

other financial instrument in respect of which such

their relevant investments does not exceed the

distribution is received. Similarly, if an anticipated catalyst

applicable position limit. In addition to other risks

produces an unanticipated result or does not in fact

involving investments in derivatives, investments in

occur, the Account may choose to sell the portfolio

derivatives that have position limits may be subject to

investment at a loss or hold the portfolio investment and

regulatory risk associated with exceeding an applicable

ultimately recover less than the amount of its initial

position limit and could be required to reduce or

investment. Any risk management strategies employed

liquidate positions in order to comply with such limits.

cannot fully insulate the Account from the risks inherent

Similarly, PIMCO could be required to reduce or liquidate

in its planned activities. Moreover, in certain situations,

positions that it manages in order to comply with such

the Account may be unable to, or may choose not to,

limits or may not be able to fully or effectively implement

implement risk management strategies because of the

a trading strategy, in order to comply with such limits. In

costs involved or other relevant circumstances.

such circumstances, such limits may prevent an Account from holding positions that may otherwise be beneficial or profitable. Any such liquidation or limited implementation could result in substantial costs. PIMCO has implemented procedures to reasonably mitigate such risks, but there is no guarantee that such efforts will always be successful.

Special Servicing of Mortgage Loan Risk. An Account may not control the special servicing of the mortgage loans or other debt underlying the securities in which the Account may invest, and in such cases, the special servicer may take actions that could adversely affect an Account’s interests. PIMCO or its affiliates may hold an economic interest in a special servicer. Such interests

Further, federal speculative position limits apply to swaps

may create conflicts of interest, as decisions made by the

on agricultural, energy, and metals commodities that are

special servicer may be made in the servicer’s best

“economically equivalent,” as defined by the CFTC, to

interests (of for the interests of its owners), which may be

certain futures contracts. Uncertainty surrounding which

adverse to the interests of other PIMCO Accounts.

swaps qualify as “economically equivalent” may result in compliance challenges, as well as the modifications, reductions, or liquidations noted above. An overly broad application of the definition could result in unnecessary restrictions in position sizes, whereas an overly narrow application could pose risks of position limit overages.

Overall control over the special servicing of the mortgage loans or other debt underlying the securities in which an Account may invest may be held by a directing certificate holder, which is typically appointed by the holders of the most subordinate class of such securities then outstanding. Accounts ordinarily will not have the right

“Special Situation” Investment Risk. An Account may

to appoint the directing certificate holder. In connection

make investments in “special situations” on a control or

with the servicing of the specially serviced loans, the

non-control basis, including recapitalizations, spinoffs,

related special servicer may, at the direction of the

corporate and financial restructurings, acquiring, or

directing certificate holder, take actions that could

otherwise taking control of a pooled investment vehicle

adversely affect an Account’s interests.

(such as a REIT) or its assets, litigation, or other catalystorientated situations. Such investments are subject to greater uncertainty and are often difficult to assess. In any such investment opportunity, there exists the risk that the relevant transaction either will be unsuccessful, will take considerable time, or will result in a distribution of cash or a new security the value of which will be less than the purchase price to the Account of the security or

Stable Value Risk. Although stable value investments seek to reduce the risk of principal loss, investing in such an option involves risk, including loss of principal. These risks could result in a decline of an Account’s portfolio value or cause a withdrawal or transfer from the portfolio to occur at less than a participant’s invested value. An investment in a stable value account may be worth more or less than the original cost when redeemed.

Diversification does not ensure against loss. Stable value

264) that restricts the ability of a wide range of

investment contracts involve several unique risks, which

governmental bodies and persons or entities from or

include but are not limited to: (i) a stable value

domiciled in foreign countries of concern to directly or

investment contract issuer could default, become

indirectly own or acquire interests in “real property” (e.g.,

insolvent, file for bankruptcy protection, or otherwise be

land, buildings, fixtures, and all other improvements to

deemed by the plan’s auditor to no longer be financially

land) located in the relevant states, subject to certain

responsible; (ii) an event or condition outside the normal

limited exceptions (such laws as in effect from time to

operation of the plan may occur (e.g., plan changes,

time, the “State Real Estate Laws”). Certain portfolio

employer bankruptcy, significant layoffs, plant closings,

investments made by an Account may constitute

corporate spin-offs, divestitures, or restructurings); (iii)

investments in “real property” for purposes of these laws

some portfolio securities could become impaired or

(such portfolio investments, “Restricted Investments”). In

default; (iv) certain communications from the plan or the

the event that any of an Account’s direct or indirect

plan’s agents may cause an investment contract to not

investors are residents of or domiciled in any foreign

pay benefits at contract value; or (v) there could be a

country of concern, as defined in the applicable U.S.

change in tax law or accounting rules. Any of these risks,

state’s laws (e.g., the People’s Republic of China) (any

if realized, may cause a write-down in the value of the

such direct or indirect investor, a “Covered Investor”), the

Account and a risk of loss of all or a part of a

Account could be prohibited from acquiring certain real

participant’s invested value in an Account. Stable value

property interests or required to divest such interests

pooled funds in which an Account invests have similar

which could adversely affect the Account’s investment

risks, including the risk that the pooled fund may fail to

strategy and returns. In addition, in order to comply with

make a timely payment to the Account or may pay less

the State Real Estate Laws, the Account may restrict the

than the Account’s invested value in the pooled fund.

indirect ownership of any Restricted Investments by such

State-Specific Risk. An Account that concentrates its

Covered Investors.

investments in a particular state’s municipal bonds may be

In the event that PIMCO determines to restrict the

affected significantly by economic, regulatory, or political

indirect ownership of Restricted Investments by Covered

developments affecting the ability of the state’s issuers to

Investors, PIMCO may determine, in its sole discretion,

pay interest or repay principal. Any provisions of the

whether to do so: (i) by excluding Covered Investors from

state’s constitution and statutes which limit the taxing and

the relevant Restricted Investment(s); (ii) by causing the

spending authority of the state governmental entities may

mandatory withdrawal of such Covered Investors from

impair the ability of the state’s issuers to pay principal

the Fund; or (iii) by taking other steps to maintain

and/or interest on their obligations. Each state’s economy

compliance with applicable law and otherwise acting in

may be sensitive to economic problems affecting

the best interests of the Account and its investors. Any

particular industries. Current and future state political and

such determination by PIMCO may increase the pro rata

economic developments, constitutional amendments,

interest of each investor that is not a Covered Investor in

legislative measures, executive orders, administrative

that particular Restricted Investment (in the case of an

regulations, litigation, and voter initiatives could have an

exclusion) or in all future portfolio investments (in the

adverse effect on the debt obligations of the state’s

case of a mandatory withdrawal) and may decrease the

issuers.

pro rata interest of each investor that is not a Covered

State Law Restrictions on Ownership of Real Property Risk. Certain U.S. states have proposed, enacted, or are in the process of adopting new legislation (e.g., Florida Statute §692.201-692.205, commonly referred to as SB

Investor in all portfolio investments that are not Restricted Investments (in the case of an exclusion). In addition, any such determination by PIMCO may increase the pro rata interest of each Covered Investor in all

portfolio investments that are not Restricted Investments

relationship with a Sub-Adviser which may create a

(in the case of an exclusion).

disincentive for PIMCO to terminate or recommend the

Given the developing nature of the State Real Estate Laws and, in some cases, uncertainty of any enforcement regime and interpretation of exceptions, it is difficult to predict the full scope of their impact on an Account’s portfolio investments and investor base. Sub-Adviser Risk. In accordance with the terms of the applicable governing documents for a Separate Account or PIMCO Fund, PIMCO may from time to time utilize other investment advisers, which may or may not be affiliated with PIMCO (collectively, “Sub-Advisers”), for the purpose of participating in particular market opportunities or executing particular strategies that PIMCO believes can be effectively accessed and/or managed by such Sub-Advisers. In general, the methods of analysis and investment strategies undertaken on behalf of a Separate Account or PIMCO Fund will be subject to substantially similar material risks whether performed by PIMCO or a Sub-Adviser. To the extent that PIMCO utilizes Sub-Advisers to effectuate the investment objectives of a Separate Account or PIMCO Fund, the Sub-Adviser, subject to oversight by PIMCO, would be involved in the day-to-day management of such Separate Account or PIMCO Fund, and such Separate Account or PIMCO Fund will be subject to the possible defaults or misconduct of such Sub-Advisers. Conversely, in some circumstances, regulatory restrictions, conflicts of interest, or other considerations may cause PIMCO, in its oversight role, to intervene with respect to a Sub-Adviser’s day-to-day management of a Separate Account or PIMCO Fund and require certain alterations to the Sub-Adviser’s proposed investment

termination of a Sub-Adviser. In addition, PIMCO has agreements with Research Affiliates, LLC (“RA”) to develop and offer multiple PIMCO Fund, Separate Account products, and/or Wrap Program (“RA Strategies”) for which PIMCO serves as investment adviser and RA as sub-adviser, the terms of which may create economic disincentives for PIMCO to terminate or recommend the termination of RA as sub-adviser. Synthetic Convertible Securities Risk. Synthetic convertible securities involve the combination of separate securities that possess the two principal characteristics of a traditional convertible security (i.e., an income-producing component and a right to acquire an equity security). Synthetic convertible securities are often achieved, in part, through investments in warrants or options to buy common stock (or options on a stock index) and therefore are subject to the risks associated with derivatives. The value of a synthetic convertible security will respond differently to market fluctuations than a traditional convertible security because a synthetic convertible is composed of two or more separate securities or instruments, each with its own market value. Because the convertible component is typically achieved by investing in warrants or options to buy common stock at a certain exercise price, or options on a stock index, synthetic convertible securities are also subject to the risks associated with derivatives. In addition, if the value of the underlying common stock or the level of the index involved in the convertible component falls below the exercise price of the warrant or option, the warrant or option may lose all value.

activities with respect to such Separate Account or

Tax Risk. Tax laws and regulations applicable to an

PIMCO Fund. Although in some cases PIMCO may pay a

Account are subject to change, and unanticipated tax

Sub-Adviser fee from fees that it receives from an

liabilities could be incurred by investors as a result of

Account, in other cases an Account may pay fees directly

such changes. Investors should consult their own tax

to the Sub-Adviser, as well as to PIMCO.

advisors to determine the potential tax-related

PIMCO generally has the right to terminate a SubAdviser. Therefore, PIMCO may terminate a Sub-Adviser even when a client may not wish to do so. In addition, in certain cases PIMCO has an economic or other

consequences of investing in a Separate Account, Registered Fund, CIT, or Private Fund. PIMCO is generally not required to consider the tax status or tax needs of an

Account when managing investments, although it may

the Underlying Index, and the transaction costs of buying

choose to do so.

and selling securities, especially when rebalancing an

Third Party Involvement Risk. An Account may hold a portion of its investments through partnerships, joint ventures, securitization vehicles, or other entities with third-party investors (collectively, “joint ventures”). Joint venture investments involve various risks, including: (i) the risk that the Account will not be able to implement investment decisions or exit strategies because of limitations on the Account’s control under applicable agreements with joint venture partners; (ii) the risk that a joint venture partner may be compromised due to internal disputes or problems at the joint venture partner; (iii) the risk that a joint venture partner may

Account’s portfolio to reflect changes in the composition of the Underlying Index. Performance of an Account and the Underlying Index may vary due to asset valuation differences and differences between an Account’s portfolio and the Underlying Index due to legal restrictions, cost, or liquidity restraints. This variance may be heightened during periods of increased market volatility or other unusual market conditions. In addition, an Account’s use of a representative sampling approach may cause the account to be less correlated to the return of the Underlying Index than if the account held all the securities in the Underlying Index.

become bankrupt or may at any time have economic or

Trade Claim Risk. Trade claims are purchased from

business interests or goals that are inconsistent with

creditors of companies in financial difficulty and often

those of the Account; (iv) the risk that a suitable

involved in bankruptcy proceedings, or from various third

replacement joint venture partner may not exist or be

parties, including suppliers of goods or services,

able to be engaged if needed; (v) the risk that the

landlords, and judgment creditors. For purchasers such

activities of a joint venture partner may increase

as an Account, trade claims offer the potential for profits

regulatory or legal risk to applicable Account(s) and/or

since they are often purchased at a significant discount

PIMCO; (vi) the risk that a joint venture partner may be in

from face value and consequently, may generate capital

a position to take action contrary to the Account’s

appreciation in the event that the market value of the

objectives or fails to perform its obligations in respect of

claim increases as the debtor’s financial position

the joint venture; (vii) the risk of liability based upon the

improves or the claim is paid. An investment in trade

actions of a joint venture partner; and (viii) the risk of

claims is very speculative and carries a high degree of

disputes or litigation with such partner and the inability

risk. Trade claims are illiquid instruments which generally

to enforce fully all rights (or the incurrence of additional

do not pay interest, and there can be no guarantee that

risk in connection with enforcement of rights) one

the debtor will ever be able to satisfy the obligation on

partner may have against the other, including in

the trade claim. Additionally, there can be restrictions on

connection with foreclosure on partner loans because of

the purchase, sale, and/or transferability of trade claims

risks arising under state law. In addition, an Account may

during all or part of a bankruptcy proceeding. The

be liable for actions of its joint venture partners. While an

markets in trade claims are not regulated by federal

Account may (but is not obligated to) obtain reporting or

securities laws or the SEC. The purchase and sale of trade

oversight rights with respect to its joint ventures, any

claims are generally consummated by written contract

such rights may be insufficient to mitigate these risks.

between the parties and contain customary language

Tracking Error Risk. Certain Accounts seek to track the performance of a specified benchmark or index (an “Underlying Index”). Such an Account’s portfolio may not closely track or align with and may deviate from the Underlying Index for a number of reasons. An Account incurs operating expenses, which are not applicable to

regarding the return of a portion of the purchase price in the event that all or a portion of the claim is disallowed or rejected. Because trade claims are unsecured, holders of trade claims may have a lower priority in terms of payment than certain other creditors in a bankruptcy proceeding. Further, the validity of trade claims may be challenged by a debtor or by other creditors, and if such

challenge is successful, validity of the trade claims may

trading costs and tax risk associated with portfolio

be rejected in whole or in part, which would require the

turnover may adversely affect an Account’s performance.

sellers to return the purchase price consideration, which

The use of futures or other forward settling derivatives

may or may not have been paid by the seller.

may result in the appearance of higher portfolio turnover

Trade Policy Risk. The U.S. government has imposed and proposed tariffs, export controls, and other trade restrictions on imports from various countries and

as positions are “rolled forward” in order to maintain a specific exposure. Accordingly, portfolio turnover rates may vary based on how such rates are calculated.

regions, and continues to pursue an evolving trade policy

United Kingdom’s Exit from the European Union and

agenda that includes reciprocal tariffs and other

Related Risks. An Account may face potential risks

measures affecting global trade. These policies remain

associated with the UK’s withdrawal from the EU, which

subject to ongoing change, and the direction, scope, and

took place on January 31, 2020. The UK and the EU have

duration of future trade actions are highly uncertain.

agreed to a Trade and Cooperation Agreement which

Such actions as well as the responses of other countries

sets out the agreement for certain parts of the future

and actors could significantly exacerbate other risks

relationship between the EU and the UK from January 1,

associated with an Account and result in adverse changes

2021. The Trade and Cooperation Agreement does not

to, among other things: (i) general economic and market

provide the UK with the same level of rights or access to

conditions; (ii) shipping and transportation costs and

all goods and services in the EU as the UK previously

supply chain constraints; (iii) interest rates, currency

maintained as a member of the EU. In particular the

exchange rates, and expenses associated with currency

Trade and Cooperation Agreement does not include an

management transactions; (iv) demand for investments;

agreement on financial services, which is yet to be

(v) available credit in certain markets; (vi) import and

agreed and is unlikely to be concluded. Accordingly,

export activity from certain markets; (vii) laws,

uncertainty remains in certain areas as to the future

regulations, treaties, pacts, accords, and governmental

relationship between the UK and the EU.

policies; and (viii) the ability of an Account’s investments to implement strategies to produce expansion, reduce costs, improve operations, or otherwise enhance the value of the Account’s investments therein. Such tariffs have the potential to gravely impact markets, global supply and demand, import/export policies, and the availability of labor in certain markets, and there is no guarantee that additional tariffs or similar measures will not be implemented. The foregoing could adversely impact the operations of an Account and its ability to realize investment objectives in a timely manner.

The withdrawal and related process may impact an Account’s appetite and/or approach to investing in assets located within the UK and the EU. The UK’s future relationship with the EU is still not clear, and the shape of the future regulatory landscape is not yet defined. It will ultimately depend on how the UK renegotiates the regulation of the provision of financial services within and to persons in the European Union. The legal, political, and economic uncertainty generally resulting from the UK exit from the EU may adversely impact both EU and UK-based businesses. This uncertainty may also

Turnover/Frequent Trading Risk. A change in the

result in an economic slowdown and/or a deteriorating

securities held by an Account is known as “portfolio

business environment in the UK and in one or more

turnover.” Higher portfolio turnover is a result of

other EU member states.

frequent trading and involves correspondingly greater expenses to an Account, including brokerage commissions or dealer mark-ups and other transaction costs on the sale of securities and reinvestments in other securities. Such sales may also represent tax risk. The

Furthermore, the exit of the UK from the EU could have a material impact on the UK’s economy and the future growth of that economy, impacting adversely an Account’s investments in the UK. It could also result in prolonged uncertainty regarding aspects of the UK’s

economy and damage customers’ and investors’

insurance costs that are not economically justifiable,

confidence. Any of these events, as well as an exit or

and in some cases, any insurance (even if obtained) may

expulsion of a member state other than the UK from the

be insufficient to compensate an Account in the event

EU, could have a material adverse effect on an Account.

of such a loss. In the event of a catastrophic loss or

Unsecured Debt Risk. Accounts may invest in unsecured debt instruments that are not secured by collateral. In the event of default on an unsecured debt instrument, the first priority lien holder has first claim to the underlying collateral of the debt instrument. It is possible that no collateral value would remain for an unsecured holder and therefore result in a complete or partial loss. Because unsecured debt instruments are lower in priority of payment to secured debt instruments, they are subject to the additional risk that the cash flow of the borrower may be insufficient to meet scheduled payments after giving effect to the secured obligations of the borrower. Unsecured debt instruments generally have greater price volatility than secured debt instruments and may be less liquid. Unsecured Obligation Risk. Accounts may acquire direct or indirect interests in unsecured obligations, which may be subordinated to other obligations of the obligor and generally have greater credit, insolvency, and liquidity risk than is typically associated with investment grade obligations and secured obligations. Unsecured obligations generally have lower rates of recovery than secured obligations following a default.

natural disaster or other casualty to a property, an Account’s insurance coverage may not be sufficient to cover the full current market value or replacement cost of its lost investment. In addition, inflation, changes in building codes and ordinances, environmental considerations, provisions in loan documents encumbering the portfolio properties pledged as collateral for loans, and other factors may also make it economically impractical to use insurance proceeds to replace improvements on a property if it is damaged or destroyed. Damage to property underlying an Account’s investment resulting from such losses could have a material adverse effect on an Account’s investments. If an uninsured loss occurs or a loss exceeds policy limits, an Account could lose both its invested capital and anticipated revenues from the affected properties, thereby reducing an Account’s returns (if any). In addition, if an Account invests in mortgage loans secured by, or other investments that derive their value from, real property, the occurrence of a natural disaster could impair the value of the collateral and thereby negatively affect the financial condition and results of an Account.

Also, in the event of the insolvency of an obligor of any

In general, losses related to terrorism are becoming

unsecured obligation, the holders of such unsecured

harder and more expensive to insure against. Most

obligation will be considered general, unsecured

insurers exclude terrorism coverage from their all-risk

creditors of the obligor, will have fewer rights than

policies, and in some cases, the insurers are offering

secured creditors of the obligor, and will be subordinate

significantly limited coverage against terrorist acts for

to the secured creditors with respect to the related

additional premiums, which can greatly increase the

collateral.

total costs of casualty insurance for a property. As a

Uninsured Losses Risk. Properties owned by an Account or underlying the Account’s investments may be covered by comprehensive liability, fire, flood (where appropriate), rental loss, and extended insurance coverage. However, certain types of losses (e.g., hurricanes, floods, wars, terrorist attacks, forest fires, earthquakes, or other natural or man-made disasters or casualty events) may be uninsurable or may involve

result, it is likely that not all of an Account’s investments in properties will be insured against damages attributable to acts of terrorism. Further, an Account or its tenants may not maintain adequate insurance coverage against liability for personal injury and property damage in the event of accidents or other casualty events in connection with such properties. Any

future disasters may also adversely affect the liquidity

determined based on the Account value, and the

of both affected and unaffected assets.

performance of the Account. This may result in potential

Valuation Risk. The process of valuing securities for which reliable market quotations are not available is based on inherent uncertainties, and the resulting values may differ from values that would have been determined

conflicts of interest where PIMCO is exercising discretion regarding the fair valuation process. PIMCO will seek to take appropriate measures to mitigate any such conflicts of interest.

had readily available market quotations been available

Value Investing Risk. Value investing attempts to

for such securities. As a result, the values placed on such

identify companies that are believed to be undervalued.

securities by PIMCO or a PIMCO Fund may differ from

Value investments typically have prices that are low

values placed on such securities by other investors or a

relative to factors such as the company’s earnings, cash

Client’s custodian or Client’s pricing agent and from

flow, or dividends. A value investment may decrease in

prices at which such securities may ultimately be sold.

price or may not increase in price as anticipated by

Where reliable market quotations are not available,

PIMCO, or the Sub-Adviser, as applicable, if it continues

PIMCO may consider MNPI as part of the information

to be undervalued by the market, or the factors that the

that may contribute to a fair value determination. PIMCO

portfolio manager believes will cause the investment’s

will generally use market quotations (if available) to value

price to increase do not occur. A value investing style

investments even if it has MNPI which could suggest

may perform better or worse than equity portfolios that

such quotations are not correct. In addition, where

focus on growth investments or that have a broader

PIMCO deems appropriate, third-party pricing

investment mandate.

information, which may be indicative of, or used as an input in determining, fair value may be used, but such

ITEM 9. Disciplinary Information

information may at times not be available regarding

On December 1, 2016, PIMCO entered into a settlement

certain assets or, if available, may not be considered

agreement with the SEC relating to disclosures in

reliable. Even if considered reliable, such third-party

connection with the PIMCO Active Bond Exchange-

information might not ultimately reflect the price

Traded Fund’s (BOND) performance attribution during

obtained for that security in a market transaction, which

the first four months of its existence in 2012 and the

could be higher or lower than the third-party pricing

valuation of 43 smaller-sized (“odd-lot”) positions of

information. Disruptions in the credit markets have from

non-agency mortgage-backed securities using third-

time to time resulted in a severe lack of liquidity for

party vendor prices, as well as PIMCO’s compliance

many securities or other financial instruments or assets,

policies and procedures related to these matters. Under

making them more difficult to value and, in many cases,

the terms of the settlement, PIMCO agreed to pay to the

putting significant downward pressure on prices. This risk

SEC $19.8 million, which includes a penalty, fee

will be enhanced for Accounts (in particular, certain

disgorgement, and interest. PIMCO has enhanced its

Private Funds) in respect of which market quotations are

pricing and disclosure policies to address the SEC’s

not expected to be obtainable for many of the Account’s

findings and, as part of the settlement, retained an

assets.

independent compliance consultant to review its policies

In addition, an Account may rely on various third-party

regarding the valuation of smaller-sized positions.

sources to calculate its market value. As a result, the

On June 16, 2023, PIMCO entered into a settlement

Account is subject to certain operational risks associated

agreement with the SEC relating to certain disclosures in

with reliance on Service Providers and Service Providers’

the 2014 and 2015 annual shareholder reports of PIMCO

data sources. In addition, the values placed on securities

Global StocksPLUS & Income Fund (“PGP”) regarding

will affect the value of the applicable Accounts, any fees

PGP’s use of paired interest rate swaps in its portfolio.

Under the terms of the settlement, PIMCO agreed to pay

Wholly-Owned Subsidiary Advisor Affiliations

to the SEC a civil monetary penalty in the amount of $6.5

On October 1, 2020, PIMCO and Allianz completed the

million. Prior to the SEC’s investigation, PIMCO had updated the disclosures in PGP’s 2016 annual shareholder report. On June 16, 2023, PIMCO entered into a settlement agreement with the SEC relating to an error in the fee waiver calculation used by PIMCO’s third-party vendor that caused certain advisory fees to be under-waived

transition of the oversight of PIMCO Prime Real Estate GmbH (“PPRE GmbH”) to an affiliate of PIMCO. PPRE GmbH operates separately from PIMCO. For additional information relating to PPRE GmbH, please see “Potential Conflicts Relating to Advisory Activities” in Item 11.

from April 2011 to November 2017 and charged to

Other Affiliations

PIMCO All Asset All Authority Fund (“A4”). Under the

The Services Company serves as a Service Provider for

terms of the settlement, PIMCO agreed to pay to the SEC

certain Accounts, their related investing vehicles,

a civil monetary penalty in the amount of $2.5 million.

portfolio investments, securitizations, and/or other

Prior to the SEC’s investigation, PIMCO had identified the

entities in which the Account invests and/or in respect of

error, publicly disclosed the issue, and implemented a

transactions in which the Account or such entities

plan that reimbursed A4 and its shareholders for any

participate. Currently, some personnel of the Services

losses associated with the fee waiver miscalculation. In

Company are employees of PIMCO or an affiliate thereof,

addition, PIMCO has enhanced its policies and

and these individuals will provide services on behalf of

procedures relating to its oversight of the third-party

both the entity that employs them and the Services

vendor’s advisory fee calculations.

Company. For additional information relating to the

PIMCO and its management persons have no other reportable disciplinary history.

ITEM 10. Other Financial Industry Activities and Affiliations

Services Company, please see “Payments Made to Service Providers and Other Third Parties” in Item 5 and “Other Conflicts - Clients, Service Providers, and Vendors” in Item 11.

Affiliations and Conflicts of Interest

Registration of Management Persons as Registered Representatives of a Broker-Dealer

We are committed to providing Clients with service of

Certain of PIMCO’s management persons are registered,

that we act in the best interests of our Clients.

or have an application pending to register, as

Nevertheless, there are circumstances where Clients’

representatives of PIMCO’s affiliated, registered broker-

interests conflict with PIMCO’s interests, the interests of

dealer, PIMCO Investments LLC (“PI”). PI is registered with

our affiliates, the interests of other Clients, or the

the SEC and is a member of the Financial Industry

interests of Affiliate Clients. Some of these conflicts of

Regulatory Authority, Inc. (“FINRA”).

interest are inherent to our business. We have adopted

Registration as Commodity Pool Operator and Commodity Trading Advisor PIMCO is registered with the CFTC as a commodity pool operator and commodity trading advisor, and in certain circumstances qualifies as an exempt commodity pool operator. Certain of PIMCO’s personnel are listed as principals and/or as associated persons of PIMCO with the CFTC.

the highest quality, and we are guided by the principle

policies and procedures that are reasonably designed to address conflicts of interest. We are majority owned by Allianz, a global financial services company, and have various wholly-owned subsidiaries and other controlled affiliates engaged in investment advisory and related businesses. Accordingly, we are affiliated with various U.S. and non-U.S. investment advisers, broker-dealers, and pooled investment vehicles, among other financial entities. For

additional information regarding our affiliates, please

Broker-Dealers. PI is a broker-dealer that serves as the

refer to Appendix C. From time to time PIMCO engages

distributor and principal underwriter of the PIMCO

in business activities with some or all of these companies,

Funds, PIMCO Variable Insurance Trust, PIMCO Equity

subject to our policies and procedures governing how we

Series, PIMCO Equity Series VIT, PIMCO ETF Trust, PIMCO

handle conflicts of interest. We also engage our affiliates

Managed Accounts Trust, and PIMCO interval funds. PI

to provide other services to our Clients in accordance

also provides services such as marketing support for

with applicable law. Similarly, our affiliates may lend

initial offerings of PIMCO-managed closed-end and

money to or engage in investment transactions with our

mutual funds and shareholder servicing thereafter,

Clients, subject to applicable law. Additionally, PIMCO

performs marketing and shareholder services with

may participate in an affiliated securitization or financing

respect to certain offshore funds (such as PIMCO Funds:

opportunity to the fullest extent (i.e., 100%), without any

Global Investor Series plc), acts as placement agent for

third-party participation.

certain Private Funds and certain Affiliate Clients, may, for

PIMCO and its affiliates advise a number of Clients and Affiliate Clients, respectively, which include other affiliates. PIMCO and its affiliates may advise some Clients or Affiliate Clients or take actions for such Clients that differ from recommendations or actions taken for other Clients or Affiliate Clients. PIMCO and its affiliates are not obligated to recommend to any or all Clients or Affiliate Clients any investments that it recommends to, or purchases or sells for, certain other Clients or Affiliate Clients. PIMCO’s employees regularly share among each

a fee or without a fee, participate in the private placement or structuring of co-investment vehicles and in investments that may be purchased by or sold by Accounts, and as sub-placement agent for certain access funds managed by third-party investment advisers (“Access Funds”) that invest substantially all of their assets in PIMCO Private Funds or Registered Funds, and provides marketing services with respect to the CITs. PI also acts as solicitor for certain Client Accounts (including the Wrap Programs).

other information, perceptions, advice and

PIMCO employees who are involved in marketing or

recommendations about market trends, the valuations

soliciting these products are also licensed, registered

and credit ratings of individual securities, and investment

representatives of PI. These employees, in appropriate

strategies, except where restricted by applicable controls

circumstances and consistent with Clients’ objectives,

related to information sharing established by PIMCO or

recommend to investment management Clients or

by applicable law or regulation. In addition, PIMCO

prospective clients the purchase of shares in PIMCO

shares with or receives similar information from certain of

Funds or other PIMCO-managed investment companies

its affiliates, including PIMCO Prime Real Estate LLC

or pooled investment vehicles that PI distributes or

(“PPRE LLC”), and in certain situations, PPRE GmbH,

underwrites or PIMCO advisory services.

subject to applicable controls, law, and/or regulation. Persons associated with PIMCO or its affiliates have investments in securities, pooled investment vehicles, or other assets, including real estate, which are recommended to Clients or Affiliated Clients or held in Accounts, subject to compliance with our policies regarding personal investments. For additional information relating to potential conflicts of interest arising from our relationships and activities with our affiliates, please see “Code of Ethics, Participation or Interest in Client Transactions and Personal Trading” in Item 11.

With the exception of the Access Funds, these investment companies or pooled investment vehicles typically pay investment management and supervisory and administrative fees to PIMCO, and certain share classes pay distribution and/or service fees to PI, including 12b-1 fees, sales loads, and/or contingent deferred sales charges. In addition to these fees and charges, PIMCO pays, from its own profits, a fee to PI for marketing and related services that PI provides to certain PIMCO Registered Funds. Certain of PI’s registered

representatives are employees of PI, in which case such

to engage in potential transactions. Subject to applicable

PI employees are supervised persons of PIMCO.

law, affiliated broker-dealers engaging in such activities

PI employees receive commissions or other compensation for the sale of certain products, such as certain PIMCO-managed open-end funds, closed-end funds (including interval funds), exchange traded funds, separately managed accounts, private funds, and investments that may be purchased by Accounts. The compensation may be paid at different levels for different products, and takes a number of variables into account, which may provide an incentive to PI employees to promote, recommend, or solicit the sale of a particular product over another. Pursuant to policy, no PI registered representative 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 employee, PI, or PIMCO. Certain affiliates of PIMCO (in particular, PI) act as broker-dealers and may manage or otherwise participate in underwriting syndicates and/or selling groups with respect to portfolio investments, including in connection with mergers, acquisitions, and restructurings, the structuring and offering of asset backed securities and other securitizations, or otherwise be involved in the private placement of debt or equity securities or instruments issued by portfolio investments. Similarly, these affiliates may arrange or provide financing for such investments alone or with other lenders, which could include Accounts managed by PIMCO or its affiliates. Affiliated broker-dealers may also source, structure, or

will generally receive underwriting fees, placement commissions, referral fees, financing fees, interest payments, or other compensation with respect to such activities, which are not required to be shared with an Account, and which will not reduce or otherwise offset other fees paid or otherwise borne by an Account. This conflict provides an incentive for PIMCO to cause an Account to engage in a transaction where PI will receive a fee, even if other transactions would be more beneficial. Where an affiliated broker-dealer serves as underwriter with respect to an investment’s securities, an Account will generally be subject to a “lock-up” period following the offering under applicable regulations or agreements during which time its ability to sell any securities that it continues to hold is restricted. This could prejudice an Account’s ability to dispose of such securities at an opportune time. In addition, in circumstances where a portfolio investment becomes distressed and the participants in an offering undertaken by such investment have a valid claim against the underwriter, an Account would have a conflict in determining whether to sue an affiliated broker-dealer. In circumstances where an unaffiliated broker-dealer has underwritten an offering, the issuer of which becomes distressed, an Account will also have a conflict in determining whether to bring a claim on the basis of concerns regarding PIMCO and/or its affiliates’ relationship with the broker-dealer.

otherwise originate investment opportunities for

PIMCO’s relationship with affiliated broker-dealers gives

Accounts and receive compensation, placement

rise to conflicts of interest between it and Funds and

commissions, or referral fees (from the Account, the

Accounts managed by PIMCO or its affiliates. In general,

issuer, or otherwise, including from accounts managed

PIMCO and its affiliates have an incentive to cause an

by third parties) in connection with such activities.

Account to retain or otherwise transact with affiliated

Affiliated broker-dealers could, as a consequence of such

broker-dealers instead of unaffiliated broker-dealers or

activities, hold positions in instruments and securities

other counterparties. PIMCO and its affiliates could also

issued by portfolio investments and engage in

have an incentive to structure certain investment

transactions that could be appropriate investments for an

transactions so that the transactions require the use of an

Account. In addition, it is possible that through these

affiliated broker-dealer. In addition, an affiliated broker-

activities, PIMCO and/or its affiliates will come into the

dealer could cause investors that are strategically

possession of information that limits an Account’s ability

important to PIMCO or its affiliates to receive an

allocation ahead of others. Furthermore, affiliated broker-

supplement for such associated person. The names and

dealers may also provide services, including those

biographical information for other employees of the

described above, to third parties, including competitors

Participating Affiliates who provide services to Clients

of PIMCO, an Account, one or more of its investments, or

under an MOU is available upon request.

their affiliates. This may create additional conflicts of interest, including where such affiliated broker-dealer is acting as a placement agent or underwriter of third-party securities that could otherwise be acquired by an Account.

PIMCO also acts as a sub-adviser for certain open-end registered investment companies sponsored by third parties. In addition, PIMCO and/or certain of the Investment Adviser Affiliates act as sub-adviser to accounts advised by the Non-U.S. Advisers. Certain of the

Other Investment Advisers or Financial Planners. In

Non-U.S. Advisers also provide administrative services in

rendering investment management services to Clients,

relation to Accounts advised by PIMCO and/or the

including U.S. registered investment companies, PIMCO

Investment Adviser Affiliates.

uses the resources of the certain of the investment adviser affiliates listed in Appendix C (the “Investment Adviser Affiliates”) and the Non-U.S. Advisers to provide portfolio management, research, and trading services. Client fees are allocated between PIMCO and/or the Investment Adviser Affiliate and the Non-U.S. Adviser based on a number of factors, including, but not limited to, relevant U.S. and foreign tax laws and the types of services provided in the relevant jurisdiction. Under Memoranda of Understanding (“MOUs”) between PIMCO and the NonU.S. Advisers, each of the Non-U.S. Advisers 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 management and trading resources of unregistered advisory affiliates subject to the regulatory supervision of the registered adviser. Each Participating Affiliate and any of their respective employees who provide services to clients of PIMCO 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. The Participating Affiliates have agreed to submit to the jurisdiction of the SEC and to the jurisdiction of the U.S. courts for actions arising under the U.S. securities laws in connection with the investment management services they provide for any PIMCO Clients. To the extent an associated person of a Participating Affiliate has discretionary authority over the assets of a Client contracted with PIMCO, the Client will receive a brochure

Management of Affiliated Assets. PIMCO manages assets for Allianz and other direct and indirect equity holders in Allianz Asset Management of America LLC and other Allianz affiliates. The amounts of such assets managed by PIMCO may from time to time be material to PIMCO’s investment management business and may present potential conflicts of interest relating to PIMCO’s activities involving its affiliates, the allocation of PIMCO’s personnel or other resources among Clients, trade allocations, and other matters. For additional information, please see “Code of Ethics, Participation or Interest in Client Transactions, and Personal Trading” in Item 11. Other Activities and Relationships. Certain employees or consultants of PIMCO and its affiliates serve on (or as an advisor or observer to) the boards of directors of portfolio companies of investment management Clients, and other employees may serve on such boards in the future. In addition, certain PIMCO employees may serve on the advisory boards of investment management clients and other institutions. Serving in such capacities may give rise to conflicts to the extent that an employee’s fiduciary duties to a portfolio company as a director may conflict with the interests of an investment management Client, or the employee’s duties to such other institution and may increase the risk that the relevant Clients will be subject to control person liabilities. Any such conflicts will be handled on a caseby-case basis. In addition, Accounts or investments held in those Accounts may be required to indemnify PIMCO

employees for liability associated with serving as a

that restrict trading by supervised persons. Supervised

director.

persons are required to disclose their personal securities

Many PIMCO Fund and other Account offering or governing documents provide for the indemnification or limitation of liability of PIMCO and its affiliates or employees against losses relating to PIMCO’s provision of advisory or other services. Such indemnification provisions may result in investors in such Accounts having a more limited right of action in certain cases than they would in the absence of such standards. As a result, the application of these provisions may result in such Account bearing significant financial losses even where such losses were caused by the negligence (even if heightened) of such covered PIMCO employees.

ITEM 11. Code of Ethics, Participation or Interest in Client Transactions, and Personal Trading Code of Ethics We have implemented policies and procedures relating to, among other things, portfolio management and trading practices, personal investment transactions, and insider trading that are designed to prevent or address conflicts of interest. Our policies and procedures, including the PIMCO Code of Ethics (the “Code”), apply to all PIMCO supervised persons and are intended to help appropriately mitigate conflicts of interest with respect to Clients if they occur. The Code is available to any Client or prospective client upon request. In addition, PPRE LLC has implemented policies and procedures that apply to all PPRE LLC employees and are designed to prevent or address conflicts of interest specific to PPRE LLC’s real estate business. The Code sets out standards of conduct and is reasonably designed to help us detect and prevent or address potential conflicts of interest. The Code covers personal investment transactions of all supervised persons and their immediate family members, which includes most persons sharing the same household as the employee. Although the Code permits supervised persons to trade in securities for their own accounts, the Code contains preclearance procedures, reporting requirements, and other provisions

accounts upon commencing employment at PIMCO and must submit duplicate securities account statements and confirmations. We also conduct an active monitoring program of personal trading. Supervised persons must agree to use a broker-dealer that has been approved by our Compliance Department and must grant our Compliance Department access to personal securities account information. The Code also contains disclosure and preclearance procedures with respect to certain personal real estate investments to the extent supervised persons focus on real estate investing on behalf of Clients, and disclosure, preclearance, and other procedures with respect to digital asset investments to the extent supervised persons focus on or have access to certain information regarding digital asset investing on behalf of Clients. Blackout Periods. Certain supervised persons who are involved in executing Client transactions or who are involved in researching or recommending securities are subject to more restrictive trading prohibitions when such supervised persons or the firm is also trading in the security for Clients. Violations of the Code of Ethics. Any supervised person who violates the Code may be subject to remedial actions, including, but not limited to, profit disgorgement, a percentage reduction in discretionary performance compensation that would otherwise be awarded, censure, demotion, suspension or dismissal. Supervised persons are also required to promptly report any violation of the Code of which they become aware and complete a certification regarding their compliance with the Code at least annually.

Gifts and Entertainment

Affiliate Client the same or a different, including

Our Policy on Gifts, Entertainment, and Related Anti-

potentially opposite, strategy or position. In addition, to

Corruption Measures limits the giving and receiving of certain meals, gifts, and entertainment by our employees. Our personnel occasionally receive, participate in, or provide entertainment for legitimate business purposes, subject to applicable law and limitations set forth in our

the extent permitted by applicable law, Clients may engage in investment transactions that may result in other Clients or Affiliate Clients being relieved of obligations, or that may cause other Clients or Affiliate Clients to divest certain investments. The purchase,

policies.

holding, and sale of investments by Clients may enhance

Political and Charitable Contributions

value of other Clients’ or Affiliate Clients’ investments.

or reduce the profitability or increase or decrease the

PIMCO’s policies prohibit PIMCO from directly or

Similarly, our management of Client assets may benefit

indirectly making, soliciting, or coordinating any political

us or our affiliates, including where we benefit from

or charitable contributions for the purpose of obtaining

transactions involving investment by discretionary

or retaining potential or existing public clients or their

Accounts and also receive advisory fees (or such other

personnel. Employees are permitted to make personal

fees) from non-discretionary Accounts investing in the

political or charitable contributions in accordance with

same or related opportunities. For example, and as

applicable law and PIMCO’s policies. Employees are

discussed further herein, Clients may, to the extent

required to obtain pre-approval before they (or their

permitted by applicable law, invest directly or indirectly

immediate family members) make, solicit, or coordinate

in the securities of companies in which PIMCO or an

any contributions to a political candidate, government

affiliate or other employees, for itself or its clients, has an

official, political party, or political action committee.

equity, debt, or other interest. In addition, because

Potential Conflicts Relating to Advisory Activities PIMCO is a leading global investment management firm that offers a wide variety of products and services to a diverse global client base. In addition, PIMCO is affiliated with Allianz. Accordingly, there are numerous conflicts of interest that may arise in connection with PIMCO’s and its affiliates’ advisory and other activities, including, but not limited to, those identified below.

certain Clients are affiliates of PIMCO (including Allianz) or have investors who are affiliates or employees of PIMCO, we will have incentives to resolve conflicts of interest in favor of these Clients over other Clients. In addition, PIMCO manages strategies on behalf of its Clients that are similar to the strategies managed by our affiliates on behalf of Affiliate Clients, which gives rise to certain other potential conflicts of interest, as discussed in more detail below. We have established a Conflicts

The results of our investment activities for a Client may

Committee and related policies and procedures that seek

differ significantly from the results achieved by us for

to identify, manage, and/or mitigate such potential

other Clients, or by our affiliates for Affiliate Clients. We

conflicts of interest, although they may not be successful

will manage the assets of a Client in accordance with the

in doing so.

investment mandate and investment guidelines selected by such Client.

Overview of Trade Aggregation Process. PIMCO typically aggregates Client orders where appropriate in

However, we may give advice, and take action, with

an effort to obtain more favorable execution, to the

respect to a Client that competes or conflicts with the

extent permitted by internal policies and procedures,

advice we may give to, or an investment action we take

Client investment management agreements, and

on behalf of, other Clients or with the advice our affiliates

applicable law.

give to or take on behalf of Affiliate Clients. For example, we may buy or sell positions for one Client while we or our affiliates are undertaking for another Client or

From time to time, order aggregation may not be possible because a security or other instrument is thinly

traded or otherwise not able to be aggregated and

intervention. Accordingly, PIMCO may execute

allocated among all Clients and Affiliate Clients eligible

transactions in the same investments at or around the

for and seeking the investment opportunity; therefore,

same time on behalf of Clients with a quantitative

Clients and Affiliated Clients may be limited in, or

strategy and Clients with other PIMCO strategies. In such

precluded from, participating in an aggregated trade.

instances, PIMCO Clients may not achieve the same level

Also, an issuer in which Clients or Affiliated Clients wish

of execution, and transactions executed on behalf of

to invest may have threshold limitations on aggregate

quantitative strategies may adversely affect the execution

ownership interests arising from legal or regulatory

of transactions on behalf of non-quantitative strategies

requirements or company ownership restrictions (e.g.,

and vice versa. Further, to the extent trading for

poison pills or other restrictions in organizational

quantitative strategies is not aggregated with other

documents), which may have the effect of limiting the

PIMCO strategies, non-quantitative strategies will not be

potential size of the investment opportunity and thus the

able to participate in or receive allocations of certain

ability of Clients to participate in the opportunity.

investment opportunities, and vice versa; however,

Fixed Income. Subject to our policies and procedures, PIMCO will, in appropriate circumstances, aggregate fixed income trades for a Client with trades in the same security for other Clients. For additional information relating to PIMCO’s trade allocation policies and procedures and potential conflicts associated with such activities, please see “Overview of Trade Allocation Process” below. Equity. Subject to our policies and procedures, we may also, in appropriate circumstances, aggregate equity trades for a Client with trades in the same security for other Clients. If there are multiple orders in the same security placed at or around the same time and on the same terms, the orders will generally be aggregated if it is determined that aggregation is consistent with our duty of best execution. When transactions are aggregated and it is not possible, due to prevailing trading activity or otherwise, to receive the same price or execution on the entire volume of securities purchased or sold (or if an aggregated order is filled in parts on a given day), the participating Accounts will generally receive the weighted average execution price and will generally bear commissions, fees, and charges on a pro rata basis. In certain circumstances, trading for quantitative strategies may not be aggregated with other PIMCO strategies because these transactions are executed systematically in accordance with the particular strategy’s quantitative investment model through the use of Systems, including, in many cases, without human

allocation of investment opportunities will otherwise be consistent with PIMCO’s trade allocation policy as described further below. Due to the use of these Systems by some Accounts and not others, or for other reasons, Accounts may compete with one another for investment opportunities, which may decrease Account returns. Certain Accounts engaged in non-quantitative strategies may also use similar Systems; in these cases, trading will generally not be aggregated with other Accounts, even if those other Accounts utilize a similar investment strategy. Such trading may not achieve the same level of execution, both more and less favorable, as trades that are aggregated with other PIMCO Clients. Portfolio Trading. Subject to PIMCO’s policies and procedures, PIMCO may engage in “portfolio trading” for certain Accounts, which involves grouping similar, but not identical, securities and selling them as a single transaction. Not all Accounts are eligible to participate in portfolio trading, and this approach may not achieve the same execution quality as trading the same security, or individual securities, on a standalone basis. Portfolio trading also presents potential conflicts of interest, including conflicts relating to valuation and the allocation of proceeds among participating Accounts. These conflicts could result in some Accounts being disadvantaged relative to some Accounts as compared to other Accounts. Although PIMCO has adopted policies and procedures designed to manage and mitigate these conflicts, those measures may not always be effective.

Overview of Trade Allocation Process. The objective of

income securities, including securities that offer similar

PIMCO’s trade allocation policy is to allocate investment

attributes and exposures. PIMCO’s fixed income

opportunities across Accounts in a manner that is fair

portfolios are managed to target ranges for portfolio risk

and equitable over time. PIMCO’s procedures are

exposures and performance characteristics, which will

designed to ensure that trade allocations are timely, that

typically be similar for Accounts with similar investment

no set of trade allocations is accomplished to unfairly

guidelines and objectives, but because of the features of

advantage one Client over another and that over time

fixed income securities, and other factors including

PIMCO’s Accounts are treated equitably, even though a

Account specific factors, the specific fixed income

specific trade or series of trades might have the effect of

securities in the Accounts often differ. Portfolio managers

benefiting one Account over another when viewed in

are responsible for allocating among their Accounts with

isolation.

the general purpose of maintaining consistent

Each portfolio manager allocates trades among his or her eligible Accounts. PIMCO’s trade allocation policy does not mandate a single method for allocation of investments to Accounts. In allocating trades, portfolio managers seek to allocate orders across Accounts with similar investment guidelines and objectives fairly and equitably over time, taking into consideration relevant factors, including, without limitation: (i) the nature of the security or instrument and associated risk characteristics; (ii) applicable Account investment restrictions and guidelines, including regulatory restrictions, and other Client instructions; (iii) risk tolerances; (iv) amounts of available cash; (v) the need to rebalance an Account’s portfolio (e.g., due to investor contributions and redemptions); (vi) whether the allocation would result in an Account receiving a trivial amount or an amount below the established minimum quantity; and (vii) other Account-specific factors. In the event that an allocation

concentrations across similar Accounts and achieving, as nearly as possible, portfolio characteristic parity among such Accounts, subject to the additional factors described above. Although Accounts with similar investment guidelines and objectives generally share common target ranges for risk exposures and performance characteristics, differences in actual risk exposures and performance characteristics may occur for a variety of reasons, including, without limitation, subsequent valuation differences in securities that, at the time of acquisition, had similar risk exposures and portfolio characteristics, the timing of purchases needed to construct portfolios for new Accounts, Account rebalancing due to contributions or withdrawals and/or excess cash in existing accounts, Account sensitivities, preferences, guidelines or restrictions that require variation from target ranges, or measurement benchmarks unique to some Accounts.

decision is not approved in time to meet internal or

When an Account varies from a relevant risk exposure or

external timelines, including, but not limited to, delays in

performance characteristic target and such variance is

confirming that a particular investment is acceptable

not expected based on factors relevant to the Account, a

under an Account’s guidelines, PIMCO will allocate to

goal of portfolio management, upon identifying any such

another Account or Accounts, pending resolution of the

variance, is generally to manage that Account toward

issue, but may reallocate to the original intended

portfolio characteristic parity with targets. When

allocation if the issue is resolved with sufficient time prior

executing a transaction, whether for the purpose of

to settlement. In these circumstances, if PIMCO is not

aligning an Account or group of Accounts within a

able to resolve the issue in a timely manner prior to

prescribed risk target range or in connection with an

settlement, an affected Account will not receive an

opportunistic transaction, portfolio managers may

allocation, and the Account may be adversely impacted.

identify a particular risk characteristic or “common

Fixed Income. Fixed income investments present certain allocation considerations because of the variety of fixed

target” for participating Accounts to achieve within the relevant risk target range. In such circumstances, the portfolio managers will instruct that the transaction be

allocated among Accounts with similar investment

at all, in such opportunities. Where applicable, the offering

guidelines and objectives to align, as nearly as possible,

documents for relevant Private Funds contain more

each Account to the relevant risk target range.

information about how investment opportunities may be

Accordingly, the Accounts that may be farthest from

allocated with respect to such funds.

parity, as compared to other participating Accounts, for the relevant target range may receive priority in such allocation.

Equity. With respect to an order to buy or sell an equity security in the secondary market, a portfolio manager is responsible for allocating the order across Accounts with

As part of PIMCO’s trade allocation process, portions of

similar investment guidelines and investment styles fairly

new fixed income investment opportunities are

and equitably over time, taking into consideration the

distributed among Account categories where relevant

relevant factors discussed above.

portfolio managers seek to participate in the investment. Those portions are then further allocated among the Accounts within such categories pursuant to PIMCO’s trade allocation policy, as described above. Portfolio managers managing quantitative strategies and specialized Accounts, such as Accounts 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 Account category, which may adversely affect an Account. In addition, quantitative strategies and certain other Accounts or types of Accounts will have access to certain trading platforms in PIMCO’s discretion that may result in priority of trade allocations over other Accounts or more favorable execution. In certain instances, issuers, underwriters, or counterparties may restrict participation in new issue distributions or other specialized investment opportunities to specific market participants, which may result in such opportunities not being available to, or allocated among, certain Client accounts, even where otherwise suitable.

Non-Standard Transactions. Non-standard transactions (“NSTs”) often involve bespoke investments that involve direct negotiations of terms other than price with a borrower, issuer, originator, or other counterparty. Although NSTs may involve fixed income or equity securities, they generally will involve unique, new, and/or non-standard allocation considerations. In seeking to achieve fair and equitable treatment of Client Accounts over time, certain allocation methodologies may be adopted from time to time based on a variety of transaction-specific factors including, without limitation, the nature of the instrument, divisibility of the investment, whether the proposed investment is a “follow-on” investment, contractual terms, liquidity profile and risk profile of the investment, tax-related considerations, leverage constraints, and related expenses. Potential Conflicts of Interest Stemming from Trade Aggregation and Allocation. Allocating orders among Accounts can create potential conflicts of interest, particularly in circumstances where the availability of investment opportunities is limited. These conflicts include, without limitation, the receipt of greater fees or compensation (including performance fees or similar incentive compensation) from some Accounts, or

Some Private Funds or other Accounts may be limited or

because we are affiliated or have other relationships with

restricted in their ability to participate in certain investment

certain Accounts. To address these potential conflicts of

products, including initial public offerings (“IPOs”) pursuant

interest, PIMCO has developed allocation policies and

to certain restrictions, such as IPO allocation rules issued by

procedures that are reasonably designed to achieve fair

FINRA or certain privately offered securities that may only

and equitable allocations of investment opportunities

be purchased by certain entities. This may result in some

among Accounts over time. Notwithstanding the

Accounts not being able to fully participate, or to participate

foregoing, any particular allocation decision among

Accounts may be more or less advantageous to any one

classes that are the focus of their investment mandate.

Account or group of Accounts, and certain allocations

Similarly, portfolio managers who are responsible for

will, to the extent consistent with our fiduciary

structuring or monitoring certain investments may be

obligations, deviate from a pro rata basis among

given priority in the allocation process for the Accounts

Accounts in order to address factors such as variances

they manage. With respect to certain commercial real

from risk exposure, portfolio characteristic parity or

estate equity investments, certain PPRE Accounts have an

target ranges, risk management, concentration, exposure,

allocation priority relative to other PIMCO Accounts that

investment management agreements and Account

are permitted to invest in the same type of real estate

guideline limitations, and/or mandate or strategy

investment. As a result, PIMCO Accounts may be

considerations for the relevant Accounts, as well as

disadvantaged in the competition for applicable real

differences in legal, tax, and regulatory requirements. We

estate investment or disposition opportunities. PIMCO

may determine that an investment opportunity or

does not expect this allocation priority to have a material

particular purchases or sales are appropriate for one or

impact on other Accounts. We may also take into

more Accounts, but not appropriate for other Accounts,

account the bases for an issuer’s allocation to PIMCO, for

or are appropriate or suitable for, or available to,

example, by giving priority allocations to Accounts

Accounts but in different sizes, terms, or timing than is

holding existing positions in the issuer’s debt if the

appropriate or suitable for other Accounts. For example,

issuer’s allocation to PIMCO is based on such holdings.

some Accounts, such as Private Funds, have higher risk

We also may determine not to allocate to or purchase or

tolerances than other Accounts, which, in turn, allows

sell for certain Accounts all investments for which

PIMCO to allocate a wider variety and/or greater

Accounts may be eligible. In addition, legal, contractual,

percentage of certain types of investments (which may or

or regulatory issues and/or related expenses applicable

may not outperform other types of investments) to such

to PIMCO or one or more Accounts may result in certain

Accounts. Further, participating Accounts may not

Accounts not receiving securities or other instruments

receive a pro rata portion of a transaction because the

that may otherwise be appropriate for them or may

portfolio manager is seeking to achieve portfolio

result in PIMCO selling securities or other instruments

characteristic parity, as discussed above, and certain

out of Accounts even if it might otherwise be beneficial

Accounts participating in the transaction are outside of

to continue to hold them. Additional factors that are

or farther from a designated risk exposure or

taken into account in the distribution and allocation of

performance characteristic target range than other

investment opportunities to Accounts include, without

participating Accounts. Those Accounts receiving an

limitation: (i) ability to utilize leverage and risk tolerance

increased allocation as a result of the effect of their

of the Account; (ii) the amount of discretion and trade

respective risk tolerance may be Clients that pay higher

authority given to us by the Account; (iii) availability of

investment management fees or that pay incentive fees

other similar investment opportunities; (iv) the Account’s

or that PIMCO otherwise has an incentive to benefit. For

investment horizon and objectives; (v) hedging, cash, and

additional information, please see “Performance-Based

liquidity needs of the portfolio; (vi) minimum increments

Fees and Side-By-Side Management” in Item 11. In

and lot sizes; and (vii) underlying benchmark factors.

addition, certain Account categories focusing on certain

Given all of the foregoing factors, the amount, timing,

types of investments or asset classes (e.g., emerging

structuring, or terms of an investment by an Account

market securities, mortgage-backed securities, bank

may differ from, and performance may be lower than,

loans, commercial real estate equity investments, data

investments and performance of other Accounts,

center investments, or other specialized strategies) will

including those that may provide greater fees or other

be given priority in new issue distribution and transaction

compensation (including performance-based fees or

allocation with respect to the investments or asset

allocations) to PIMCO. To mitigate these potential or

actual conflicts and assure compliance with PIMCO’s

to PIMCO or PIMCO Clients, notwithstanding the fact

trade allocation policy, PIMCO has developed and

that certain investment professionals may be dual

maintains reporting systems that: (i) monitor Accounts

personnel of PIMCO and PPRE GmbH. As a result, an

for relative performance and other surveillance measures

Account may be disadvantaged in the competition for

as compared to other Accounts with similar investment

applicable investment or disposition opportunities.

guidelines and objectives, (ii) assist portfolio managers in determining each Account’s eligibility to participate in particular trades, based on their respective investment guidelines and objectives, and (iii) monitor variances in overall risk and performance characteristics across Accounts with similar investment guidelines and objectives.

Certain individuals are dual personnel such that they provide services on behalf of both PIMCO and PPRE GmbH. PIMCO and PPRE GmbH have implemented controls intended to address the conflicts associated with these arrangements, including potential conflicts arising from the sharing of information resulting from these arrangements. However, it is possible that not all

Certain conflicts of interest may arise from situations in

conflicts will be identified or, if identified, addressed in a

which PIMCO does not aggregate and allocate trades

way that is favorable to PIMCO’s Clients.

among Clients and Affiliate Clients. Although PIMCO coordinates its trading activities with certain Investment Adviser Affiliates and Non-U.S. Advisers, for other Investment Adviser Affiliates and Non-U.S. Advisers, PIMCO and those affiliates trade separately. In such case, PIMCO and these advisers will generally not coordinate their trading activities or allocate opportunities to the other’s clients. Because PIMCO manages strategies for its Clients that are similar to strategies managed by PIMCO’s affiliates for Affiliate Clients, this could result in Clients of PIMCO and Affiliate Clients of Investment Adviser Affiliates and NonU.S. Advisers competing for investment or disposition opportunities. In addition, PIMCO’s affiliates will not have an incentive to share investment recommendations or analysis with PIMCO, in order to protect investment opportunities for Affiliate Clients. For example, certain PIMCO Clients are permitted to invest in the same type of commercial real estate investments as PPRE GmbH, an affiliate whose investment management operations operate autonomously from PIMCO. It will not always be clear whether a particular investment opportunity should be allocated to a PIMCO Client or to accounts managed by PPRE GmbH. As a result, a PIMCO Client and other investment vehicles managed or advised by PIMCO may be disadvantaged in the competition for applicable investment or disposition opportunities.

As noted in Item 4 above, PIMCO engages Research Affiliates, LLC (“RA”) to develop and offer products for certain investment vehicles which may include PIMCO Funds, Separate Accounts, and/or Wrap Programs (“RA Strategies”). In connection with the RA Strategies, RA will provide PIMCO, or counterparties designated by PIMCO (or, in the case of Wrap Programs, sub-advisers engaged by PIMCO), with relevant proprietary model portfolio or portfolios for purposes of developing equity total return swaps based on such model portfolio or portfolios, as applicable. PIMCO may sub-license to financial intermediaries certain model portfolio information it obtains from RA. It is expected that such intermediaries will be provided updates to RA model portfolio information on a different schedule than PIMCO receives such updates. Accordingly, PIMCO Funds or Accounts that follow an RA Strategy may be competing for applicable investment or disposition opportunities with accounts managed by financial intermediaries who receive RA model portfolio information. Transactions ultimately placed by such intermediaries for their investors or by the Funds or Accounts may be subject to price movements, particularly with large orders relative to the given security’s trading volume, which may result in execution prices that are less favorable. Further, while PIMCO takes reasonable steps in an effort to mitigate the

Investment opportunities available to PPRE GmbH or

market impact caused by transactions for accounts over

PPRE GmbH clients will not necessarily be made available

which PIMCO has investment or trading authority,

because PIMCO does not control the intermediary’s

may be applicable in the particular circumstance. Our

execution of transactions for its clients, PIMCO cannot

apportionment of trades may not be strictly pro rata

control the market impact of such transactions to the

depending on our determination of all relevant factors

same extent that it may be able to for accounts over

such as lot size, relative liquidity of the position, existing or

which PIMCO has trading authority. Such intermediaries

targeted account weightings in particular securities,

are expected to have sole authority and responsibility for

account size, cash availability, diversification requirements,

the selection of broker-dealers and the execution of

investment objectives, investment restrictions, and time

transactions for their client accounts. PIMCO is not

horizons, which may result in more particularized

responsible for placing orders for the execution of

allocations. Please also see “Brokerage Practices” in Item

transactions involving assets of such intermediary client

12.

accounts or for giving instructions to the intermediary with respect thereto.

Conflicts Relating to Non-Discretionary Advisory Services. We provide non-discretionary investment

Wrap Program Allocations. Generally, a Wrap

management services, pursuant to which we may advise a

Program’s fee arrangements include structural features,

Client with respect to purchasing, selling, holding, valuing,

such as “all inclusive” fee arrangements that effectively

or exercising rights associated with particular investments,

discount commissions to zero on trades executed with

or a Client may direct the purchase of a particular

the Sponsor or the Sponsor’s designated broker-dealers

investment that will be managed by PIMCO pursuant to an

in consideration of the Wrap Program fee paid. These

investment management agreement. In these

arrangements cause transactions executed away from the

circumstances, we generally do not execute purchases or

Sponsor or the Sponsor’s designated broker-dealer to be

sales on behalf of the Client, or a Client may require that

more costly to a Wrap Program Client from a commission

PIMCO seek the Client’s approval prior to executing any

viewpoint than the same order would be if not executed

buy or sell transactions for the Client’s Account.

away. As a result, Wrap Program Clients may receive less

Discretionary and non-discretionary Clients may hold the

favorable net prices or poorer executions than might be

same or similar instruments, and PIMCO may receive

the case if PIMCO had full discretion to select broker-

advisory fees where opportunities developed or accessed

dealers to execute these transactions. However, with

through discretionary Accounts are also made available to

regard to transactions in fixed income securities,

non-discretionary Accounts. Where PIMCO is given

commissions, commission equivalents (such as markups or

authority to execute transactions upon the approval of a

markdowns), or other transaction-related expenses are

non-discretionary Client, there could be timing differences

generally not included in Wrap Program fee arrangements.

related to the provision of advice to a non-discretionary

In such cases, PIMCO will typically aggregate fixed income

Client for consideration and that Client’s determination of

securities orders among the Wrap Programs of different

whether or not to act on the advice. As a result, trades

Sponsors and then execute such orders according to its

may be executed for discretionary Clients in advance of

trade allocation policy and procedures. As set forth in

executions for non-discretionary Clients, potentially

“Overview of Trade Aggregation Process” and “Overview

disadvantaging the non-discretionary Clients. Non-

of Trade Allocation Process” above, the overriding

discretionary Clients may not be able to participate in

objective of our trade allocation policy is to achieve fair

aggregated transactions due to such timing differences. As

and equitable treatment of Accounts over time. PIMCO

a result, non-discretionary Clients may not be able to

seeks to ensure that trade allocations are timely, that no

benefit from the most favorable price for a particular

set of trade allocations is accomplished to unfairly

investment or may not be able to participate in certain

advantage one client over another, and that over time our

investment opportunities. This may also occur with respect

Clients are treated equitably, subject to any contractual or

to trades executed for Non-Discretionary Wrap Programs,

other considerations, including those discussed above, as

where PIMCO provides a model portfolio to be analyzed

in the same underlying issuer. In these situations,

and implemented by the Sponsor or another manager.

potential conflicts may arise should the underlying issuer

Inconsistent Investment Positions, Timing of Competing Transactions, and Other Conflicts. From time to time, we 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 or Affiliate Clients having similar or differing investment objectives, mandates, or guidelines. These positions and actions may adversely impact, or in some instances may benefit, one or more affected Clients (including Clients that are our affiliates) or Affiliate Clients in which we have an interest, or which pay us higher fees or a performance fee. For example, a Client or Affiliate Client may buy a security, and another Client or Affiliate Client may establish a short position in that same security. Such inconsistent positions may arise with respect to quantitative/systematic strategies, for example, when the investment model establishes a short position, and one or more other Clients maintain a long position. The subsequent short sale may result in a decrease in the price of the security that the other Client or Affiliate Client holds a long position. Similarly, transactions or investments by one or more Clients or Affiliate Clients may have the effect of diluting or otherwise disadvantaging the values, prices, or investment strategies of another Client or Affiliate Client. Additionally, in certain circumstances, Client assets in

undergo a credit event, and PIMCO must exercise discretion whether to elect physical or cash settlement at the eventual CDS auction for participating Accounts. For example, PIMCO’s settlement election on behalf of Accounts with sell protection positions could have an adverse effect on Accounts with buy protection positions. When we implement for one Client a portfolio decision or strategy ahead of, or contemporaneously with, similar portfolio decisions or strategies of another Client or Affiliate Client, market impact, liquidity constraints, or other factors could result in one or more Clients or Affiliate Clients receiving less favorable trading results, the costs of implementing such portfolio decisions or strategies could be increased, or such Clients or Affiliate Clients could otherwise be disadvantaged. On the other hand, potential conflicts may also arise because portfolio decisions regarding a Client or Affiliate Client may benefit other Clients or Affiliate Clients. For example, the sale of a long position or establishment of a short position for a Client or Affiliate Client may decrease the price of the same security sold short by (and therefore benefit) other Clients or Affiliate Clients, and the purchase of a security or covering of a short position in a security for a Client or Affiliate Client may increase the price of the same security held by (and therefore benefit) other Clients or Affiliate Clients.

discretionary Accounts may be deployed in connection

Under certain circumstances, a Client could invest in a

with offerings of securities, including to support or

transaction in which one or more other Clients or Affiliate

facilitate larger syndicated transactions. This may create

Clients are expected to participate, or already have made

incentives to allocate such opportunities or structure

or will seek to make an investment. Such Clients or

transactions in a manner that benefits PIMCO or its

Affiliate Clients may have conflicting interests and

affiliates.

objectives in connection with such investments, including

In addition, a Client or Affiliate Clients may engage in or otherwise participate in transactions that have the effect of providing financing to other Accounts (or their portfolio companies) or to PIMCO or its affiliates. A Client or Affiliate Clients may also enter into sell protection credit default swap transactions in which PIMCO has caused or may cause other Clients or Affiliate Clients to enter into buy protection credit default swap transactions

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 or Affiliate Client over another Client or Affiliate Client, even if both Clients and Affiliate Clients are investing in the same security at the same time. Certain Clients or Affiliate Clients (typically, certain Private Funds) may

invest on a “parallel” basis (i.e., proportionately in all

Although we generally do not actively trade or manage

transactions at substantially the same time and on

assets on our own behalf, from time to time, PIMCO or

substantially the same terms and conditions). In addition,

an affiliate may invest on its own behalf, as principal, for

other Clients invest in many of the same types of

strategic or other reasons (i.e., a proprietary investment).

investments as another Client or Affiliate Client. However,

This may occur, for example, when the investment is an

there may be investments in which one or more of such

equity interest (e.g., stock or warrants) made in

Clients do not invest (or invest on different terms or on a

connection with PIMCO’s use of a product or service

non-pro rata basis) due to factors such as legal, tax,

supplied by the issuer. In connection with these

regulatory, business, contractual, financial, or other

proprietary investments, PIMCO may eventually hold

similar considerations, or due to the provisions of a

common stock or other publicly traded equity and may

Client’s or Affiliate Client’s governing documents.

ultimately dispose of or hedge its exposure, as principal,

Decisions as to the allocation of investment

to such proprietary investment. Such proprietary

opportunities among such Clients and Affiliate Clients

investments may be suitable for, or alternatively

present numerous conflicts of interest, which may not be

competitive with, an Account. In either case, PIMCO is

resolved in a manner that is favorable to a Client’s

permitted to allocate such investments away from an

interests. To the extent an investment is not allocated pro

Account to PIMCO.

rata among such entities, as described above, a Client could incur a disproportionate amount of income or loss related to such investment relative to such other Client.

These proprietary investments can ultimately result in conflicts with Accounts that also invest (including debt and equity investments) in or transact with the issuer or

In addition, certain Clients and or Affiliate Clients invest

with other companies which may be transacting with the

alongside one another in the same underlying

issuer. In other cases, an Account may be prohibited

investments, or otherwise pursuant to a substantially

from making or disposing of an investment in the

similar investment strategy, as one or more other Clients

proprietary investment, or a related instrument, even

or Affiliate Clients. In such cases, certain Clients (such as

when it would be in the Account’s best interest to do so.

Separate Accounts) or Affiliate Clients may have

Although PIMCO will seek to mitigate and address such

preferential liquidity and information rights relative to

conflicts in a fair and reasonable manner, it may not be

other Clients or Affiliate Clients holding the same

able to do so, and will have an incentive to favor PIMCO’s

investments, with the result that such Clients or Affiliate

interests over the Account’s interests. PIMCO generally

Clients will be able to withdraw/redeem their interests in

seeks to avoid committing to such investments if they

underlying investments in priority to Clients or Affiliate

would otherwise be suitable for and there is an

Clients who may have more limited access to information

investment interest on behalf of an Account; however,

or more restrictive withdrawal/redemption rights.

there is no guarantee that such measures will adequately

Similarly, certain Clients and/or Affiliate Clients are

mitigate the potential or actual conflicts, and PIMCO will

expected to invest in an Account, such as a Private Fund,

have an incentive to favor its interests over an Account’s

and that Account may have access to additional or

interests.

different information regarding the portfolio and its activities relative to other investors, which information may inform such Client or Affiliate Client’s decision to invest in or withdraw from the Account. Clients with more limited information rights or more restrictive liquidity may therefore be adversely affected in the event of a downturn in the markets.

PIMCO and or its affiliates or Accounts may make investments in other investment advisers. These advisers may or may not be integrated or otherwise affiliated with PIMCO. Therefore, the activities of those investment advisers may conflict with PIMCO's activities with respect to competition for investment opportunities, allocation opportunities, and other matters.

Further, potential conflicts may be inherent in our use of

PIMCO’s or its affiliates’ “risk retention” requirements.

multiple strategies. For example, conflicts will arise in

PIMCO may also cause Clients or Affiliate Clients to

cases where different Clients or Affiliate Clients invest in

invest in or otherwise engage in transactions that have

different parts of an issuer’s capital structure, including

the effect of supporting the growth of new lines of

circumstances in which one or more Clients or Affiliate

business being developed by PIMCO and/or its affiliates.

Clients may own private securities or obligations of an

In each of the situations described above, we may take

issuer, and other Clients or Affiliate Clients may own or

actions with respect to the assets held by one Client or

seek to acquire securities of the same issuer. For

Affiliate Clients that are adverse to the other Clients or

example, a Client or Affiliate Client may acquire a loan,

Affiliate Clients, for example, by foreclosing on loans,

loan participation, or a loan assignment of a particular

disposing of equity or by putting an issuer into default,

borrower in which one or more other Clients or Affiliate

or by exercising rights to purchase or sell to an issuer or

Clients have an equity investment or may invest in senior

liquidate an issuer, causing an issuer to take actions

debt obligations of an issuer for one Client or Affiliate

adverse to certain classes of securities, or otherwise. In

Client and junior debt obligations or equity of the same

negotiating the terms and conditions of any such

issuer for another Client or Affiliate Client.

investments, or any subsequent amendments or waivers

We may also, for example, direct a Client to invest in a tranche of a structured finance vehicle, such as a CLO or CDO, where we or an affiliate are also, at the same or different time, directing another Client or Affiliate Client to make investments in a different tranche of the same vehicle, which tranche’s interests may be adverse to other tranches, either now or in the future. We may also cause a Client or Affiliate Client to purchase from, or sell assets to, an entity, such as a structured finance vehicle, in which other Clients or Affiliate Clients may have an interest, potentially in a manner that will have an adverse effect on the other Clients or Affiliate Client. 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 Affiliate Client or by an entity, such as a structured finance vehicle, in which other Clients or Affiliate Client have an interest. PIMCO may also cause Clients to invest in structured finance vehicles or other entities managed or serviced by PIMCO or its affiliates to which PIMCO, its affiliates, or other Clients or Affiliate Clients contributed assets. This could lead to conflicts where, for example, Clients that own securities of the issuer may benefit from pursuing claims against the Clients or Affiliate Clients or PIMCO affiliates that contributed assets. PIMCO may also structure and/or cause Clients to invest in or otherwise transact with vehicles whose purpose is to mitigate

or taking any other actions, we may find that the interests of a Client or Affiliate Client and the interests of one or more other Clients or Affiliate Clients could conflict. In these situations, conflicts of interest may arise with respect to decisions such as: (i) whether to make the investment; (ii) whether to exercise certain rights; (iii) whether to take or determine not to take an action; (iv) how to exit an investment; and (v) how to make determinations relating to proxy voting, corporate reorganizations, bankruptcy, or similar matters (including, for example, whether to trigger an event of default or the terms of any workout). In addition, decisions over the operations or activities of the issuer involved, the target returns from the investment, the timeframe for or method of exiting the investment, or bankruptcy matters (including, for example, decisions over whether to trigger an event of default or over 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 or Affiliate 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

Account. Furthermore, with respect to investments for

holds the potential to create value for the equity holders.

which it does exercise influence or control, there can be no

In some cases PIMCO may refrain from taking certain

assurance that PIMCO will be able to impact matters that

actions or making certain investments on behalf of

adversely impact the Account or its investments. For

Clients in order to avoid or mitigate certain conflicts of

example, directors appointed by PIMCO on behalf of an

interest or to prevent adverse regulatory or other effects

Account will have duties to persons other than the Account

on PIMCO, or may sell investments for certain Clients or

and/or may recuse themselves from matters presenting

Affiliate Clients (in each case potentially disadvantaging

actual or potential conflicts of interest.

the Clients or Affiliate 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 or Affiliate Clients that have the potential to disadvantage other Clients or Affiliate Clients. In addition, PIMCO may take actions or refrain from taking actions in order to mitigate legal risks to PIMCO or its affiliates or another Client or Affiliate Client even if disadvantageous to a Client.

PIMCO and its clients have received exemptive relief from the SEC relating to possible side-by-side investments by an Account and Registered Fund(s). The terms of the relief may limit investment opportunities available to an Account, the terms, conditions, and structure of such investment opportunities, and an Account’s ability to make follow-on investments or dispose of investments except in compliance with the relief. Alternatively, in some cases, an Account may be constrained in its ability to negotiate the terms of an investment, even if it could be advantageous to do so, in

Examples of when PIMCO may determine to refrain from

order that it may invest alongside Registered Funds in

or proceed with pursuing investments that could have

certain investments without relying upon the relief.

conflicting effects on Clients include, but are not limited to: (i) when PIMCO or its affiliates are providing (or may provide) advice or services to an entity involved in such activity or transaction; (ii) when PIMCO or an affiliate may be engaged in the same or a related activity or transaction to that being considered on behalf of the Client; (iii) when there are political, public relations, or other reputational considerations relating to counterparties or other participants in such activity or transaction; or (iv) when such activity or transaction on behalf of or in respect of a Client could affect in tangible or intangible ways PIMCO, its affiliates, and/or other Clients or Affiliate Clients. Certain portfolio investments may engage in activities or take actions that adversely impact the Account or its investments. With respect to investments for which it does not exercise influence or control, PIMCO will likely have limited or no ability to impact such matters. In addition, if other clients of PIMCO have a controlling interest and exercise influence or control over the management or operational decisions of an investment, such decisions may, at times, be in direct conflict with the interests of the

It is expected that Accounts will compete with PIMCO, Funds, or other affiliates of PIMCO with respect to investment opportunities. Similarly, it is expected that certain portfolio investments will be in competition with investments owned by or affiliated with PIMCO, Funds, or other affiliates of PIMCO (e.g., investments in similar geographic regions or markets may compete with respect to customers, tenants, and/or purchasers). PIMCO will be subject to conflicts of interest in resolving such matters. For instance, PIMCO may be incentivized to use Account information for the benefit of a competitor entity, or to direct business to entities with respect to which PIMCO expects to receive higher fees or other compensation. 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 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. For example,

Clients or Affiliate Clients may benefit from the results of

when a portfolio manager receives compensation in the

such litigation actions without bearing or otherwise

form of incentive fees or allocations with respect to an

being subject to the associated fees, costs, expenses, and

Account for which they do not manage, the portfolio

liabilities. PIMCO, for example, typically does not pursue

manager may be incentivized to take actions that are not in

legal claims on behalf of its Separate Accounts.

the best interests of the Account the portfolio manager

Furthermore, in certain situations, litigation or other legal

manages. To mitigate these conflicts, PIMCO’s policies and

actions pursued by PIMCO or its affiliates on behalf of a

procedures seek to ensure that all Clients are treated fairly

Client or Affiliate Client may be brought against or

and equitably over time without consideration of PIMCO’s

otherwise adverse to a portfolio company or other

or its affiliates’ (or such personnel’s) pecuniary, investment,

investment held by a Client or Affiliate Client.

or other financial interests.

PIMCO or its affiliates may have conflicts with respect to

Portfolio managers may also have an incentive to manage

the exercise of proxies, consents, and similar rights. In

the Account in a manner that temporarily improves the

addition, PIMCO may restrict or otherwise limit its

appearance of the Account’s performance before the end of

governance or voting rights with respect to a Client

a reporting period. For example, a portfolio manager may (i)

investment in order to avoid certain regulatory

place market-moving orders in a security that is held in an

consequences that could result in additional costs and

Account to increase the market price and, as a result, the

disclosure obligations for, or impose restrictions on

value of the holdings in the Account, and/or (ii) sell holdings

PIMCO, its affiliates, and/or other Clients or Affiliate

that have experienced losses and purchase high-performing

Clients. This could have a negative impact on the Clients

securities at the end of the period so that the list of

whose voting rights are limited.

holdings reported includes the securities that performed well and excludes the securities that performed poorly. Such trading practices, also known as “portfolio pumping” and “window dressing,” are prohibited.

Similarly, PIMCO proprietary entities, as applicable, could be allocated (and if structured as a U.S. operating company, are expected to be allocated) at least half or more of the voting rights or governance rights, including

In addition, certain strategies are only able to accommodate

the right to elect at least half of the board of directors,

a limited amount of capital or can become more

with respect to an aggregating entity (which could be a

challenging to implement as assets increase above certain

limited liability company), even where other Funds (or

levels. In situations where PIMCO is paid asset-based fees,

other Clients or third-party co-investors) own a majority

PIMCO has an incentive to accept new assets or form

of the economics or equity in the entity. Where PIMCO

products with qualities similar to existing products in

proprietary entities, other Accounts or other co-investors

situations that may disadvantage existing Clients.

have interests or requirements that do not align with

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 or Affiliate 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

those of a different Account, including in particular differing liquidity needs or desired investment horizons, conflicts of interest relating to the manner in which the voting or governance rights of an aggregating entity (or similar entity) are exercised, will in certain cases arise, potentially resulting in an adverse impact on an Account. For additional information relating to PIMCO’s proxy voting policy, please see “Voting Client Securities” in Item 17.

which not all Clients or Affiliate Clients with similar

While we have highlighted what we believe to be

investments may participate, and such non-participating

reasonably foreseeable actual or potential material

conflicts, the foregoing is not a complete list of conflicts

and/or their affiliates, directors, partners, managers,

to which PIMCO or Clients may be subject. Any conflict of

members, officers, or personnel are also invested therein,

interest will be reviewed on a case-by-case basis. Any

or otherwise have a connection to the subject investment

review will take into consideration the interests of the

(e.g., serving as a trustee or board member thereof).

relevant Clients, the circumstances giving rise to the conflict, applicable PIMCO policies and procedures, and applicable laws. Clients (and investors in PIMCO Funds) 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 or Affiliate Clients, which pay PIMCO higher fees or performance fees, or in which PIMCO or its affiliates have a significant proprietary interest. 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 of the nature 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 has numerous affiliates, including Allianz, a large multi-national financial institution, conflicts similar to those described above may occur between PIMCO’s Clients and these affiliates or Affiliate Clients. These affiliates or Affiliate Clients, certain of which generally operate autonomously from PIMCO, may take actions that are adverse to PIMCO’s Clients. In many cases, including on account of their autonomous operations, 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 restrictions may prohibit us 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 applicable to PIMCO, Allianz, 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, PIMCO,

Clients (including investors in the PIMCO Funds) should also be aware that a Client may experience losses associated with decisions or actions directly or indirectly attributable to PIMCO, and PIMCO may determine whether compensation to the Client for such losses is appropriate in view of its standard of care. 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’ (including Fund investors’) interests and may in fact be resolved in a manner adverse to their interests. Performance-Based Fees and Side-By-Side Management. As discussed above and in Item 6, “Performance-Based Fees and Side-by-Side Management,” PIMCO manages different types of Accounts having different fee arrangements. Side-by-side management of different types of Accounts raises potential conflicts of interest. For example, Registered Funds generally pay management fees based on a fixed percentage of assets under management, Separate Accounts and Private Funds may have more varied fee structures, including a combination of asset-based and performance-based compensation (e.g., carried interest), and Wrap Fee Clients are subject to wrap fees of which PIMCO receives a portion for its advisory services. Where (i) the actions taken on behalf of one Account may affect other similar or different Accounts (e.g., because such Accounts have the same or similar investment styles or otherwise compete for investment opportunities, have potentially conflicting investments or investment styles, or have differing ability to engage in short sales and economically similar transactions), and (ii) PIMCO and its personnel have different interests in such Accounts (e.g., PIMCO or its related persons are exposed to differing potential for gain or loss through different compensation structures, including circumstances where some Accounts pay only asset-based fees while others are subject to

performance-based or incentive fees or allocations),

affiliates, officers, directors, or employees) may purchase

PIMCO has an incentive to favor certain Accounts over

investments on behalf of and in anticipation of opening a

others that are less lucrative to PIMCO or its affiliates, or

Private Fund to hold such investment. Such investments

to favor Accounts in which it or its affiliates have a

may be transferred to the Private Fund. Generally, to the

significant proprietary interest.

extent permitted by law, the Private Fund would pay a

In addition, although PIMCO is not the book of record for Accounts, PIMCO has incentives to influence the valuation of certain investments. For example, where applicable, PIMCO could be incentivized to employ valuation methodologies or take other actions that: (i) improve an Account’s track record; (ii) minimize losses from investments that have experienced a permanent impairment that must be returned prior to receiving performance-based or incentive fees or allocations; or

rate of interest and purchase the investment at cost. Additionally, certain Private Funds that are generally expected to invest on a “parallel” basis (i.e., proportionately in all transactions at substantially the same time and on substantially the same terms and conditions) may engage in transactions at the end of the offering period that are intended to rebalance the portfolio in accordance with the final size and/or available capital of each respective entity.

(iii) increase fees payable to PIMCO or its affiliates.

In other cases, subject to applicable law and a Private

Similarly, when PIMCO receives performance-based fees

Fund’s governing documents, PIMCO or a related person

or allocations, or PIMCO portfolio management

(including its affiliates, officers, directors, or employees)

personnel have a financial incentive to achieve gains in

may invest in a Private Fund (the “Affiliated Initial

excess of the disincentive to suffer losses (e.g., through

Investor”) prior to the admittance of other non-affiliated

incentive compensation arrangements), PIMCO and/or

investors to facilitate potential investments by such

such personnel have an incentive to choose investments

Private Fund, with the Affiliated Initial Investor being

that are riskier or more speculative than might otherwise

repaid (at cost plus, in PIMCO’s discretion, an interest

be chosen. PIMCO may also be incentivized to hold on to

charge) and withdrawing from the Private Fund. The

investments that have poor prospects for improvement

potential repayment to the Affiliated Initial Investor gives

in order to receive ongoing fees in the interim and,

rise to conflicts of interest. In particular, PIMCO may be

potentially, additional compensation (e.g., carried

incentivized to have the Private Fund admit non-affiliated

interest) if such asset’s value appreciates in the future.

investors as soon as possible to enable the Affiliated

Depending on the structure of the arrangement,

Initial Investor to be repaid and withdraw. In addition, the

performance-based fees and allocations provide for

Private Fund will repay the Affiliated Initial Investor

compensation to PIMCO on unrealized gains and provide

regardless of the performance of or any developments

a financial disincentive to the client to terminate the

relating to the investment at the time of repayment,

advisory arrangement. To mitigate these conflicts,

which could result in the Affiliated Initial Investor

PIMCO’s policies and procedures seek to provide that

receiving proceeds in excess of the investment’s current

investment and valuation decisions are made based on

valuation or the investment being subject to material

the best interests of Clients, in accordance with

issues when non-affiliated investors are admitted.

applicable law, and without consideration of PIMCO’s (or such personnel’s) pecuniary, investment, or other financial interests.

For the purposes of determining if 25% or more of a pooled vehicle is represented by PIMCO or a related person, PIMCO will calculate based upon the assets of

Certain Principal Transactions in Connection with the

the pooled vehicle as a whole and not any particular class

Organization of a Private Fund. On occasion and

of interests.

subject to applicable law and a Private Fund’s governing documents, PIMCO or a related person (including its

Potential Restrictions and Conflicts Relating to Information Possessed or Provided By PIMCO

PIMCO’s investment management activities or through

Availability of Proprietary Information. In connection

PIMCO personnel generally will be prohibited from

with its activities, certain persons within PIMCO at times will receive information regarding proposed investment activities for PIMCO, its affiliates, Clients, or Affiliate Clients that is not generally available to the public. There will be no obligation on the part of PIMCO to make available for use by a Client, or to effect transactions on behalf of a Client on the basis of, any such information. In many cases, such persons will be prohibited from disclosing or using such information for their own benefit or for the benefit of any other person, including Clients. Similarly, one or more Clients will have, as a result of receiving client reports or otherwise, access to information regarding PIMCO’s transactions or views that are not available to other Clients and may act on such information through accounts managed by persons other than PIMCO. Such transactions could negatively impact Clients through market movements or by decreasing the pool of available securities or liquidity. Clients may also be adversely affected by cash flows and market movements arising from purchase and sale transactions, as well as increases of capital in, and withdrawals of capital from, Accounts of other Clients. These effects can be more pronounced in thinly traded securities and less liquid markets. A potential conflict of interest may arise as a result of the portfolio manager’s day-to-day management of an Account. Because of their role in managing Client Accounts, the portfolio managers know the size, timing, and possible market impact of a Client’s trades. It is possible that the portfolio managers could use this information, or other information including MNPI learned from the investments made by the Client, to the advantage of other Clients or Affiliate Clients they manage and to the possible detriment of a Client. Material Non-Public Information/Insider Trading. 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. Employees may obtain such information through

employees’ outside activities. Under applicable law, improperly disclosing or using such information for their personal benefit or for the benefit of any other person, regardless of whether that person is a Client. Accordingly, 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 shall have 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. We have implemented procedures, including those described herein relating to information barriers, which are designed to control the flow of and prohibit the misuse of such information (e.g., illegal securities trading based on the information) by PIMCO, our employees, and on behalf of our Clients. Similarly, no employee who is aware of MNPI that relates to any other company or entity in circumstances in which such person is deemed to be an insider, or is otherwise subject to restrictions under federal securities laws, may buy or sell securities of that company or otherwise take advantage of, or pass on to others, such MNPI in violation of applicable law. Information Barriers. To control the flow of MNPI within the PIMCO organization and to prevent its misuse, PIMCO has established policies and procedures that are designed to control receipt of MNPI and, where appropriate, erect information barriers. These information barriers include, as dictated by the applicable facts and circumstances, the physical, technological, and

operational separation (“walling off”) of certain of

PIMCO will, in many cases, rely on public information in

PIMCO’s business units or personnel, as well as other

connection with the valuation of certain securities when

policies and procedures designed to prevent the

another business unit within PIMCO or one of its affiliates

unauthorized access to, or dissemination of, MNPI.

may be otherwise in possession of MNPI suggesting that

Information barriers have been established between

such valuations may be inaccurate.

certain groups of designated personnel who often have access to confidential information, including MNPI, and the rest of PIMCO, which is not intended to have access to such information. The purpose of these information barriers is, among other things, to limit the receipt of MNPI to such personnel who often have access to confidential information, such that the investment activities of the rest of PIMCO are not otherwise restricted because the designated personnel may have MNPI that would be imputed to the rest of PIMCO in the absence of an information barrier. PIMCO has established, and is expected to continue to establish, additional information barriers when appropriate, including in connection with certain investments or business units. As a result, MNPI may not be transmitted to PIMCO personnel even if the information would be beneficial (and otherwise not conflict with relevant securities laws) for Accounts managed by other PIMCO personnel. Other Trading Restrictions. In addition, PIMCO maintains certain restricted lists of securities and issuers that are subject to certain trading restrictions due to PIMCO’s and its affiliates’ business activities. We generally will restrict trading in an issuer’s securities if the issuer is on a restricted list, or if we otherwise have MNPI about that issuer. In some situations, we may restrict Clients from trading in a particular issuer’s securities in order to allow PIMCO or its affiliates to receive MNPI on behalf of other Clients or Affiliate Clients. An Account may be unable to buy or sell certain securities until the restriction is lifted, which could disadvantage the Account. In some situations, PIMCO could be restricted from making, or divesting of, investments in respect of some Clients but not others. In some cases, we may not initiate or recommend certain types of transactions or may otherwise restrict or limit our advice relating to certain securities if a security is restricted due to MNPI or if we are seeking to limit receipt of MNPI. In addition,

Other Conflicts Clients, Service Providers, and Vendors. As a general matter, PIMCO will provide an Account with ongoing research, analysis, advice, and judgments regarding individual investments, general economic conditions and trends, and long-range investment policy, including by providing oversight and advice with respect to the management of and strategy relating to an Account’s assets, and will oversee the execution of purchase and sale orders on behalf of an Account. PIMCO and its affiliates also provide, and will be compensated by an Account or its investments for providing a variety of services for, and rendering advice to, various Clients and Affiliate Clients, including issuers of securities that PIMCO or its affiliates may recommend for purchase or sale to Clients or Affiliate Clients. From time to time, we recommend and/or execute transactions on behalf of Clients or Affiliate Clients, securities or other investment products in which PIMCO, its affiliates, or other related persons have a financial interest as the investment manager, broker-dealer, general partner (or equivalent), or trustee, or as a co-investor in such investment products. For instance, PIMCO may from time to time trade in investments issued by our Clients or Affiliate Clients. PIMCO has a potential conflict in such circumstances because PIMCO or its affiliates may be incentivized to favor its Clients or Affiliate Clients that issue securities over the Client or Affiliate Clients on whose behalf PIMCO is making the investment. Similarly, some of our Service Providers, certain distributors or placement agents of our Funds, and/or vendors are issuers of securities that PIMCO may trade in from time to time. We may determine that it is in the best interests of our Clients to purchase securities issued by one of these entities. To the extent any Service Provider in which an Account, PIMCO, Clients, and/or its affiliates have made an investment provides services to a

third party, these relationships may give rise to additional

be provided by PIMCO employees, PIMCO has an

conflicts of interest. For example, such third party may

incentive to retain such Service Providers and have them

compete for the same investment opportunities being

be paid by an Account rather than hiring employees or

serviced by PIMCO and its affiliates.

otherwise paying for these services out of its own

Where appropriate and permitted under an Account’s governing documents, we may from time to time

resources, particularly since the fees, costs, expenses, and liabilities of these parties may be substantial.

recommend that certain of our Clients file claims or

PIMCO will have the discretion to recommend that an

threaten action against other parties. To the extent such

Account or a portfolio investment retain or utilize

party is a Client or Affiliate Client, Service Provider,

Affiliated Service Providers (including the Services

distributor, or other vendor, we may have a disincentive

Company), and this will also give rise to conflicts of

to recommend such action. It is PIMCO’s general policy

interest. Although PIMCO intends to select Service

when making investment decisions not to take into

Providers that it believes are aligned with the Account’s

account the fact that an issuer is our Client, Affiliate

investment objective and strategy and will enhance

Client, Service Provider, distributor, or vendor.

portfolio investment performance or operations, PIMCO

Service Providers may be engaged to perform multiple functions in respect of investments, which will give rise to certain conflicts of interest. For instance, any servicer that also functions as valuation agent in respect of an investment will be incentivized to produce higher valuations for the investment. Certain Service Providers may also source potential transactions for an Account. To the extent such Service Providers are affiliated or otherwise have relationships with PIMCO, this will give rise to conflicts of interest, as PIMCO will be incentivized to have the Account pursue such transactions due to the tangible or intangible benefits to such Service Providers. Such Service Providers will be incentivized to recommend or source investments that may not be favorable to an Account to the extent the Service Provider’s compensation is not aligned to the Account’s objectives. Accounts are expected to engage in transactions with Affiliated Service Providers, including Dual Service Providers. For example, certain Accounts acquire loans from an affiliated origination company or other affiliated entity, utilize an affiliated servicer to service mortgages, and/or utilize an affiliated collateral or program manager, as applicable (depending on whether such loans are held directly or indirectly through a securitization). Similarly, because certain services provided by Service Providers, such as the identification or analysis of investments and/or legal, accounting, or tax services, might otherwise

will have an incentive to recommend a Service Provider (including a related person) because of PIMCO’s financial or business interest. Additionally, there is a possibility that PIMCO, because of such incentive or for other reasons, will favor such retention or continuation with such Affiliated Service Providers, even if a better price and/or quality could be obtained from another Service Provider. Whether or not PIMCO receives a financial or other benefit from recommending such Affiliated Service Providers, and whether or not PIMCO seeks to obtain a market rate for such services to be provided by the Affiliated Service Provider, there can be no assurance that the Service Provider is the most qualified to provide the applicable services or that the services are provided at the most favorable rate. Affiliated Service Providers, including Dual Service Providers, will not be required to provide services “at cost” and therefore are expected to earn a profit from providing services to the Account. In addition, any such Affiliated Service Provider may have duties to parties other than the Account, and the Account will not be able to control or influence the standards or actions of such Service Provider notwithstanding its affiliation. Any such Affiliated Service Provider may also be acquired by one or more third parties, which may or may not be affiliated with PIMCO, which could reduce or eliminate any benefits the Account previously received by virtue of its prior affiliation.

An account’s use of Dual Service Providers means that

multiple PIMCO affiliated entities, the allocation of

the Account will bear (directly or indirectly) a portion of

opportunities and expenses among the relevant entities

the compensation and overhead paid to employees of

will require the exercise of discretion; and (vii) with

PIMCO and its affiliates and which would otherwise be

respect to Dual Service Providers, the apportionment of

borne by PIMCO and its affiliates. Therefore, PIMCO has

working time and/or other services and the

an incentive to cause the Account to rely on Dual Service

determination of amounts charged will be subject to

Providers, as doing so will reduce the expenses borne by

PIMCO’s discretion and involve conflicts of interest.

PIMCO, increasing PIMCO’s profitability.

Service Providers or their affiliates may have business,

Examples of potential conflicts of interest arising from

personal, financial, or other relations with PIMCO, its

Affiliated Service Providers may include, but are not

advisory clients, and/or their respective portfolio

limited to, the following: (i) while PIMCO will have an

investments. Such Service Providers may be investors in

incentive to cause an Account to utilize Affiliated Service

an Account, sources of investment opportunities, co-

Providers, there can be no guarantee that such Service

investors, or commercial counterparties, which will give

Providers will have a positive impact on the Account or

rise to certain conflicts of interest. Additionally, certain

its investments, or that they will have more expertise or

employees of PIMCO may be a “dual hatted” employee

produce results better than unaffiliated Service Providers;

of or have family members or relatives employed by such

(ii) PIMCO will be less incentivized to pursue remedies

Service Providers. These relationships may influence

and enforce rights against an Affiliated Service Provider

PIMCO in deciding whether to select or recommend such

as compared to an unaffiliated Service Provider; (iii)

Service Providers to perform services for an Account or

PIMCO will be incentivized to utilize an Affiliated Service

its portfolio investments.

Provider in order to support such entity, benefit or reduce amounts owed by the other users of or purchasers from such entity, and/or benefit the PIMCO affiliated owners of such entity (which may not include the Client), including by generating fees or other compensation paid to such entity, which will not typically offset or reduce fees or other amounts paid by the Account; (iv) while the amounts paid to, and engagement terms with, any Affiliated Service Provider will be determined in PIMCO’s commercially reasonably discretion by taking into account the relevant facts and circumstances in a manner consistent with its responsibilities, PIMCO will be incentivized to agree to more favorable compensation and other terms with an Affiliated Service Provider than with an unaffiliated Service Provider, and such terms will not necessarily be confirmed as being comparable to the market rates for such services; (v) to the extent an Account acquires or sells an interest in an Affiliated Service Provider to another PIMCO affiliate, such investment will likely be illiquid and difficult to value, and such valuation will result in conflicts of interest; (vi) to the extent any Affiliated Service Provider is owned by or services

An Account may invest in or acquire entities (directly or indirectly) that provide services to, or are used for investing by PIMCO, Clients, Affiliate Clients, and their respective affiliates (such investments, “Platform Investments”). An Account may make such investments alone or together with other affiliated and non-affiliated entities, including other Clients or Affiliate Clients. With respect to any affiliated co-investors, conflicts will arise in connection with allocating the economic interests, costs, expenses, and liabilities of Platform Investments and in negotiating the terms of such investments, including indemnification and risk- and cost-sharing provisions. In addition, conflicts will arise with respect to such investments’ ongoing operations, including with respect to the management of assets, financing matters, and the timing and nature of the investment’s disposition. An Account may not have ultimate control of a Platform Investment, which may affect its ability to fully utilize such platform. Given that the co-investors may have different investment horizons (or for other reasons), they may seek to buy or sell interests in the Platform Investment to one another, which will give rise to

conflicts particularly since the interests in any Platform

have a relationship, such as by providing principal

Investment are likely to be illiquid and difficult to value.

protection, insurance, or other services.

With respect to the provision of services to affiliates, a Platform Investment may be less inclined to negotiate terms or enforce remedies against affiliates or related parties. The entities that utilize a Platform Investment may be different than the ones that own the Platform Investment (or may utilize the Platform Investment to a different extent than their ownership interests), which will further elevate such conflicts.

Additionally, PIMCO or certain PIMCO Funds or other Accounts may contract with one or more broker-dealers or placement agents to assist in the placement of interests in a Fund or Account. Such broker-dealers or placement agents typically receive a flat fee or in some cases, a percentage of the investments they bring to the respective Fund. Basing the placement agent’s compensation on an investor’s decision to invest creates

A Platform Investment may compensate its management

a conflict of interest by incentivizing the placement agent

team in a number of ways, including through cash

or broker-dealer to attract investors when it may not be

payments, annual salaries and bonuses, incentive-based

in the investors’ best interests to subscribe.

compensation, fees for services, or a combination of the foregoing. An Account would bear the cost of such compensation and all other Platform Investment expenses (including start-up, operating, and overhead expenses) through its direct or indirect interest in the Platform Investment. Moreover, such compensation and any fees payable to a Platform Investment will not reduce or otherwise offset fees borne by an Account, notwithstanding that a Platform Investment’s services and personnel may in some cases be similar to or overlap with the services provided by or personnel of PIMCO. A Platform Investment may generate investment opportunities for Clients or Affiliate Clients, including an Account. For example, a Platform Investment that is a loan originator may be a potential source of loan investments. Whether or not an Account invests in a Platform Investment, PIMCO will have an incentive to cause an Account to acquire investments from or otherwise transact with a Platform Investment, even if similar or more favorable investment opportunities can be acquired from other sources.

In circumstances where an investment becomes distressed, and the participants in an offering undertaken by such investment have a valid claim against the underwriter, a conflict may arise in determining whether to sue a PIMCO affiliated broker-dealer, including PI. In circumstances where an unaffiliated broker-dealer has underwritten an offering, the issuer of which becomes distressed, the Account will also have a conflict in determining whether to bring a claim on the basis of concerns regarding PIMCO’s and/or its affiliates’ relationship with the broker-dealer. PIMCO believes that the nature and range of Affiliate Clients to whom PIMCO’s affiliates render investment banking and other services, as well as the nature and range of PIMCO’s own Clients, is such that it generally would be inadvisable to exclude such Clients or Affiliate Clients that are also issuers or that act as distributors of PIMCO products from a Client’s portfolio. Accordingly, unless a Client’s governing documents prohibit such investments, it is likely that the Client holdings will include the securities of issuers for whom PIMCO or its

PIMCO and its affiliates may arrange for or provide

affiliates perform investment management and other

financing or leverage for a Private Fund’s investment

services. Moreover, Client portfolios may include the

program and/or investments, and the Private Fund may

securities of companies in which PIMCO’s affiliates make

pledge or sell assets (including pursuant to reverse

a market or in which PIMCO or its affiliates, its officers

repurchase agreements) to PIMCO and its affiliates in

and employees, and its affiliates’ other related persons

connection therewith. Additionally, certain Accounts may

and their officers or employees have positions.

invest in securities for which Allianz or its affiliates may

In addition, PIMCO and its Clients may engage common legal counsel and other advisers in a particular

transaction, including a transaction in which there may

including information relating to an Account’s identity,

be conflicts of interest. Members of law firms or other

transactions, and holdings. For example, PIMCO provides

Service Providers engaged to represent Clients may be

such information to custodians, counterparties, and

investors in a PIMCO Fund and may also represent one

Service Providers so that they may process transactions

or more portfolio companies or investors in a PIMCO

or provide services to Accounts. In addition, and in all

Fund. In the event of a significant dispute or divergence

cases subject to a confidentiality and non-disclosure

of interest between PIMCO, its Clients, and/or its

agreement, PIMCO shares Client and Account

affiliates, the parties may engage separate counsel in the

information with affiliated technology companies, HUB

sole discretion of PIMCO and its affiliates, and separate

and Beacon Platform Inc., for the purpose of developing

representation may be required in litigation and other

and testing systems and/or operating platforms that

circumstances.

PIMCO expects to use to provide services with respect to

Additionally, PIMCO, its Clients, and its portfolio companies engage other common Service Providers. In certain circumstances, the Service Provider may charge varying rates or engage in different arrangements for services provided to PIMCO, its Clients, and/or the portfolio companies of a Fund. Service Providers often charge varying amounts or otherwise have different fee arrangements for different types of services provided. For

Accounts. Although it is anticipated that such technologies will deliver operational efficiencies to Clients (among other potential benefits), this information sharing involves a conflict of interest. For example, because PIMCO has a financial interest in HUB, PIMCO is incentivized to grow and develop HUB technologies, including through the use of PIMCO Client and Account information.

instance, fees for various types of work often depend on

In addition, PIMCO may enter into formal or informal

the complexity of the matter, the expertise required, and

arrangements with portfolio investments or other parties

the time demands of the Service Provider. This may result

to facilitate the sharing of data and/or data analytics. This

in PIMCO or its affiliates receiving a more favorable rate

information may allow PIMCO, its Clients, and/or other

on services provided to it by such a common Service

portfolio companies to better discern economic or other

Provider than those payable by the Clients and/or the

trends and developments. However, information sharing

portfolio company, or PIMCO receiving a discount on

may involve conflicts of interest between Clients and/or

services even though its Clients and/or the portfolio

between Clients and PIMCO. For example, data analytics

companies receive a lesser, or no, discount. This creates a

based on inputs from one portfolio investment may

conflict of interest between PIMCO, on the one hand, and

inform business decisions by other portfolio investments,

its Clients and/or portfolio companies, on the other hand,

or investment decisions by PIMCO and its affiliates,

in determining whether to engage such Service

without the source of the data being directly

Providers, including the possibility that PIMCO will favor

compensated.

the engagement or continued engagement of such persons if it receives a benefit from such Service Providers, such as lower fees, that it would not receive absent the engagement of such Service Provider by its Clients and/or the portfolio

PIMCO and its affiliates may utilize such data outside of Client activities in a manner that could provide a material benefit to PIMCO, without directly compensating or otherwise benefiting Clients. As a result, PIMCO may have an incentive to pursue investments based on the

Information Sharing. Subject to applicable legal,

data that may be accessible as a result of owning such

regulatory, and contractual requirements, PIMCO, its

investments and/or to utilize such data in a manner that

affiliates, and certain other third parties may obtain or

benefits PIMCO and/or investments held by other Clients.

have access to information about Clients and their Accounts or personnel associated with an Account,

It is impractical, and in many cases impossible, to measure exactly the benefits that any individual entity

may derive from access to or receipt of this type of data,

the geographic location or business activities of the

or to provide for specific and direct monetary

applicable co-investment opportunity; (iv) perception of

compensation from the recipients of a particular benefit

past experiences and relationships with each prospective

to the sources of the data or the purchasing power (as

co-investor; (v) whether or not such person has co-

applicable) that enabled the benefit to be obtained.

invested previously and the ability of any such co-

Co-Investments. Although it is under no obligation to do so, to the extent capacity exists, PIMCO from time to time will offer co-investment opportunities to investors in its Private Funds, Clients, employees, former employees, and/or to unaffiliated or affiliated third parties, including Allianz, its affiliates or employees, or Service Providers. Participants in a co-investment may be required to pay carried interest and fees (including management, administration fees, and placement fees and similar compensation) in connection with such co-investment. For the avoidance of doubt, any such fees or amounts are not considered transaction fees and will not or otherwise offset any fees or carried interest payable to PIMCO or its affiliates. The terms and conditions of any such co-investment may vary among the co-investors. Co-investments are subject to PIMCO’s non-standard transaction, allocation, and other policies and procedures. Subject to the relevant Private Fund’s governing and offering documents and any contractual co-investment requirements or rights, co-investment opportunities will be allocated as determined by PIMCO in its sole discretion, and any such allocations as between investors may not correspond to their pro rata interests in the relevant Private Fund or the size of their Accounts. In determining such allocations, PIMCO will take into account any facts or circumstances it deems appropriate,

investor to respond promptly and appropriately to potential investment opportunities; (vi) perception of the legal, regulatory, reporting, public relations, competitive, confidentiality, or other issues that could potentially arise with respect to any prospective co-investor (including whether the prospective co-investor has a complicated tax structure that would require particular structuring implementation or covenants that would not otherwise be required, as well as any interests a prospective coinvestor has in any competitors of the portfolio investment); (vii) any strategic value or other benefit to PIMCO or its affiliates resulting from offering such coinvestment opportunity to a prospective co-investor, including potential benefits to the growth of PIMCO or its affiliates’ franchise; and (viii) whether the prospective co-investor has demonstrated a long-term and/or continuing commitment to the potential success of the Fund, PIMCO, and/or its affiliates. Co-investment opportunities may also be provided to new investors into PIMCO-advised Funds or Accounts. Subject to any specific agreements to the contrary, PIMCO may use co-investment opportunities to benefit the growth of its franchise, and PIMCO expects to grant certain investors a priority right to participate in coinvestment opportunities. The existence of such priority co-investment rights could result in other investors receiving fewer or no co-investment opportunities.

including, but not limited to: (i) the size of the

Co-investments result in conflicts between a Fund and

prospective co-investor’s investment in the Private Fund

other co-investors, some of whom may be investors in

and any other PIMCO-advised Funds or Accounts, as well

the Fund (e.g., over the price and other terms of such

as prospective future investments therein; (ii) whether

investment, exit strategies, and related matters, including

and the extent to which the prospective co-investor has

the exercise of remedies for their respective investments).

expressed an interest in co-investment opportunities; (iii)

Furthermore, to the extent that a Fund holds interests

PIMCO’s evaluation of the financial resources,

that are different (or more senior) than those held by

sophistication, experience, and expertise of the potential

such other co-investors, PIMCO may be presented with

co-investor, with respect to the execution of co-

decisions involving circumstances where the interests of

investment transactions generally, and with respect to

such co-investors are in conflict with those of the Fund.

To the extent any affiliate or employee of PIMCO

legal, regulatory, commercial, or other reasons. In such

(including Allianz and its affiliates or employees) co-

cases, the Fund may need to seek recourse from its co-

invests with a Fund, such conflicts will be heightened. For

investors for their respective shares of such obligations

example, PIMCO may be incentivized to resolve conflicts

and may not always be successful in doing so. Conflicts

in favor of an affiliate or an Account that pays higher fees

of interest will arise to the extent any such co-investors

to PIMCO or that PIMCO views as strategically important.

are affiliates or employees of an Account or PIMCO. In

Further, because co-investors may not be identified and/or may not agree to invest until relatively late in the investment process, or for other reasons, co-investors may not bear their proportionate share of investmentrelated expenses (including “broken deal” expenses). In certain cases, where permitted by the governing documents, an Account may be required to bear all of the “broken deal,” “dead deal,” or diligence expenses related to unsuccessful co-investment opportunities, as well as the organizational expenses of a related coinvestment vehicle. If a proposed transaction is not

addition, PIMCO may be less incentivized to seek recourse from certain co-investors based on the circumstances (e.g., if an Account has better performance or favorable fee terms). An Account may also enter into structures or arrangements designed to facilitate one or more co-investors’ direct or indirect participation in a coinvestment. Such structures or arrangements may give rise to additional expenses, conflicts, and liabilities for an Account than if such co-investors were not participating, and the Account may not receive any fees or other compensation in respect thereof.

consummated, no such co-investment vehicle generally

PIMCO or its affiliates may establish dedicated co-

will have been formed, and the full amount of any

investment vehicles for specific investors (including

expenses relating to such proposed but not

employees of PIMCO or its affiliates) in order to facilitate

consummated transaction (including, for the avoidance

investments by the relevant investors as co-investment

of doubt, all expenses related to the formation and

parties alongside the Fund. Any such vehicle will be

negotiation of the investment vehicle) (“Dead Deal

established at PIMCO or its affiliates’ sole discretion, and

Costs”) would therefore be borne by the Fund or funds

PIMCO and its affiliates have no obligation to offer a

selected by PIMCO as proposed investors for such

similar opportunity to any other investor.

proposed transaction. Furthermore, even if a proposed transaction is not consummated, and a co-investment vehicle has been formed for the purpose of making an investment in such proposed transaction (or co-investors have otherwise committed to invest in the proposed transactions), some or all of the Dead Deal Costs may, where permitted by the applicable governing documents, nevertheless be borne solely by a Fund or funds selected by PIMCO as proposed investors for such proposed transaction. Similarly, co-investment vehicles (and coinvestors) are not typically allocated any share of breakup fees received in connection with such an unconsummated transaction. In respect of certain co-investments, a Fund may be required to incur indemnification or other obligations that are joint and several in nature, including when one or more co-investors does not incur such obligations for

On occasion, a Private Fund or other Account will “warehouse” an investment whereby it acquires more of an investment than it otherwise would have on behalf of a co-investor in anticipation of a future transfer to such co-investor. The co-investor will typically pay a financing fee or similar compensation in respect of such arrangement in such cases. More information on these arrangements can be found in the offering documents of the relevant Private Fund. There can be no assurance that PIMCO will be successful in offering a co-investment opportunity to a potential coinvestor in whole or in part, that the closing of such coinvestment will be consummated in a timely manner, that the co-investment will take place on terms and conditions that will be preferable for a Fund, or that expenses incurred by a Fund with respect to the syndication of the co-investment will not be substantial.

In the event that PIMCO is not successful in offering a

conflicts of interest in determining whether to utilize a

co-investment opportunity to potential co-investors in

Continuation Fund. These conflicts provide an incentive

whole or in part, a Fund or Account will hold a greater

for PIMCO to favor a valuation that facilitates the

concentration and have exposure in the related

consummation of a transaction that benefits PIMCO or

investment opportunity than was initially intended, which

its affiliates. Although PIMCO may, as part of its valuation

could make the Fund or Account more susceptible to

process, solicit independent third-party valuation

fluctuations in value resulting from adverse economic

indications or bids or engage an independent party to

and/or business conditions with respect thereto. PIMCO

render a fairness assessment with respect to the

has adopted policies and procedures otherwise designed

Continuation Fund, PIMCO is not required to do so and

to manage or mitigate such conflicts.

in any event will retain discretion over the ultimate

To the extent a co-investor is an affiliate, employee, Client, or strategic partner of, or otherwise has a relationship with, PIMCO or its affiliates, the conflicts of interest described herein will be elevated. For instance,

valuation determination. Please also see “Valuation Risk” in Item 8. However, such conflicts will not restrict PIMCO from utilizing a Continuation Fund if it determines to do so in its sole discretion.

PIMCO may be incentivized to allocate co-investment

Proceeds from the sale of Continuation Fund interests to

expenses to the Fund instead of such co-investor.

PIMCO Accounts may indirectly be used to pay other

Consistent with PIMCO’s policies and procedures, the determination of whether a particular transaction represents a co-investment opportunity is often

PIMCO Accounts (e.g., accounts invested in the selling entity) or may otherwise benefit PIMCO, including through the payment of fees.

subjective. PIMCO will determine whether investments

Furthermore, it is possible that new investors will be

represent co-investment opportunities, including for

investing in the Continuation Fund alongside investors

purposes of interpreting any priority or other co-

that will be rolling their interests in the underlying

investment rights, in its sole discretion.

investments, which could result in dilution of rolling

Continuation Funds. PIMCO may establish one or more entities for purposes of purchasing one or more investments from an Account (each such entity, a “Continuation Fund”), and an Account may sell, or otherwise structure the transfer of, such portfolio investments to any such Continuation Fund. Because a transfer may represent the sale of the Account’s entire interest in an investment to the Continuation Fund, an investor’s indirect interest in such investment may be

investors’ indirect interests in the relevant underlying investments and could adversely affect returns to such rolling investors. In addition, new investors may participate in a Continuation Fund on terms that are more favorable than the terms offered to the rolling investors, and rolling investors may bear fees and expenses that exceed the fees and expenses such investors would have borne if they were not to participate in the Continuation Fund.

sold even if the investor does not desire to participate in

An Account seeking to sell investments to a Continuation

the Continuation Fund, and the sale or transfer may

Fund will typically bear the cost of any continuation

occur at a time when the investor would have preferred

transactions, in whole or in part, whether or not such

to maintain its interest in such investment through the

transaction is ultimately consummated. In certain cases,

Account.

the Account may be required to bear all of the “broken

Given that PIMCO or its affiliates may charge management fees, administration fees, and carried interest, receive reimbursements for other fees, costs, and expenses with respect to, and have a capital or other interests in a Continuation Fund, PIMCO will face

deal,” “dead deal,” or diligence expenses related to an unsuccessful continuation transaction, as well as the organizational expenses of a related Continuation Fund. If a proposed continuation transaction is not consummated, no such Continuation Fund generally will

have been formed, and the full amount of any expenses

reduce our fees or other compensation with respect to

relating to such proposed but not consummated

investments in PIMCO-affiliated funds and managers.

continuation transaction (i.e., Dead Deal Costs) would

However, this reduction or rebate, if available, will not

therefore be borne by the Account or accounts selected

necessarily eliminate the conflict, and PIMCO will

by PIMCO as proposed investors for such proposed

nevertheless have a financial incentive to favor

continuation transaction. Furthermore, even if a

investments in PIMCO-affiliated funds and managers

proposed continuation transaction is not consummated,

(e.g., to increase the assets under management of, or

and a Continuation Fund has been formed for the

otherwise provide support to, certain funds, products, or

purpose of making an investment in such proposed

lines of business). Furthermore, although we may be

continuation transaction (or investors have otherwise

permitted to invest in PIMCO-affiliated funds, Clients

committed to invest in the proposed continuation

should not expect us to have better information with

transaction), some or all of the continuation transaction

respect to such PIMCO-affiliated funds than other

Dead Deal Costs may nevertheless be borne solely by the

investors have. Even if we have such information, we may

Account or accounts selected by PIMCO as proposed

not be permitted to act upon it in a way that

investors for such proposed continuation transaction.

disadvantages the other investors in such funds.

Investments in Affiliated Funds. As noted above, if

As noted in Item 4, “Wrap and Similar Program Services,”

permitted by the relevant investment guidelines and

a Wrap Program Client or Sponsor may authorize PIMCO

applicable law, we purchase for Accounts (including

to invest in the PIMCO ETF for cash management

Wrap Program Accounts) interests in PIMCO Funds or

purposes. To the extent a Sponsor or Client has provided

vehicles that are offered by PIMCO or its affiliates for

such authorization and the Client’s Account invests in the

short-term investment purposes (i.e., a cash management

PIMCO ETF, the Client will bear the fees and expenses of

vehicle) as part of the Account’s investment strategy, or

the PIMCO ETF in addition to the fees and expenses the

when we otherwise believe it is in the relevant Client’s

Client pays for the management of the Client’s Account,

best interest to do so. The details of any fee offsets,

and the PIMCO ETF’s fees will include fees that are paid

rebates, or other reduction arrangements in connection

to PIMCO for services PIMCO provides to the PIMCO ETF.

with such investments are provided in the

PIMCO’s authority to invest Wrap Program Client assets

documentation relating to the relevant Account and/or

in the PIMCO ETF creates conflicts of interest. For

underlying fund or vehicle. Wrap Program Clients should

example, investing in the PIMCO ETF will cause a Wrap

be aware that fee offsets are not always offered,

Program Client to incur higher fees and cause PIMCO to

including, but not limited to, situations where the

receive greater compensation and increase assets under

Sponsor, or another manager within the Wrap Program,

management of the PIMCO ETF.

elects to invest in certain PIMCO-affiliated funds or where a PIMCO ETF has been selected for cash management purposes.

Expenses. The appropriate allocation of fees and expenses among Clients will often be unclear and require the exercise of discretion. In certain circumstances, a

In choosing between funds and managers affiliated with

Client will bear expenses related to investments that it

PIMCO, including the Investment Adviser Affiliates, and

does not consummate, and such investments may

those not affiliated with PIMCO, we will have a financial

ultimately be made by other Clients, which may not

incentive to choose PIMCO-affiliated funds and

reimburse the Client initially bearing such expenses.

managers over third parties by reason of the additional

While PIMCO has adopted policies and procedures

investment management, advisory, and other fees or

designed to fairly and equitably allocate expenses,

compensation we or our affiliates may earn. Under

PIMCO will be subject to conflicts of interest in making

certain conditions, we may offset, rebate, or otherwise

such determinations, and there can be no assurance that

errors will not arise in such allocations, or that any

conferences sponsored by such consultants, or for access

allocations (i) will reflect a Client’s pro rata share of such

to studies, surveys, industry data, research, and access to

expenses based on the amounts invested (or anticipated

information about, and contact information for, particular

to be invested) or market value of the investment held

financial advisors who have sold, or may in the future sell,

(or anticipated to be held) by each Client, or (ii) will be in

shares of the Registered Funds (i.e., “leads”). If permitted

proportion to the number of participating Clients or the

by an Account’s documentation or organizational

proportion of time spent on each Client, or that such

documents, PIMCO may cause a Client to pay for these

allocations will not confer an economic benefit on other

services.

entities (including PIMCO and/or its affiliates) at a Client’s expense. For example, PIMCO will have an incentive to allocate expenses to a Client that does not pay incentive compensation.

The determination of whether an expense (e.g., the fees and expenses of consultants, contract employees, outside legal counsel and temporary employees, as well as secondees and any of the foregoing, who work on Client-

In addition, PIMCO or its affiliates may receive

related matters) is appropriately borne by the Client or

management consulting fees, investment banking fees,

PIMCO often cannot be resolved by reference to a pre-

advisory fees, breakup fees, servicing fees, directors’ fees,

existing formula and will require the exercise of

closing fees, transaction fees related to the negotiation

discretion, and PIMCO will be subject to conflicts of

of the acquisition of a portfolio investment, and similar

interest in making such determinations. In particular,

fees (including interest, commitments, or other fees

PIMCO will be incentivized to (i) classify expenses as

received in connection with a bridge financing), whether

borne by a Client as opposed to PIMCO, and (ii) decrease

in cash or in-kind, including options, warrants and other

the level or quality of third-party services provided to a

non-cash consideration by any third party in connection

Client to the extent such services are paid for by PIMCO.

with certain Clients’ actual or contemplated investments

PIMCO has adopted policies and procedures designed to

(collectively, “Special Fees”), provided that, in each case,

mitigate this conflict.

Special Fees will not include any amounts paid as reimbursement for out-of-pocket expenses incurred in connection with providing services in respect of which such Special Fees were paid or any amounts paid to Service Providers. Special Fees are generally allocated among Clients participating in the applicable investment. Certain Clients or investors may be entitled to apply all or a portion of Special Fees allocated to them to reduce management fees otherwise payable to PIMCO. Special Fees not allocated to a participating Client or allocated to a Client without a management fee offset, will be retained by PIMCO or its affiliates, as applicable.

For administrative and other reasons, PIMCO may (i) cause one or more Clients to be invoiced for, advance, or otherwise bear on a temporary basis all or a portion of an expense ultimately intended to be borne in whole or in part by another Client, and/or (ii) make corrective allocations of expenses among Clients to reflect their appropriate share of such expenses. Such measures generally will not include the imposition of an interest charge or other payments designed to compensate a particular Client for temporarily bearing a disproportionate share of expenses, whether for time value, opportunity cost, or otherwise. In addition, the

From time to time, PIMCO or its affiliates, will compensate

allocation of expenses among an Account and other

financial firms or their affiliated companies for certain

PIMCO clients may in certain cases be based on

services, including technology, operations, tax, or audit

estimates, and estimates may not be adjusted in light of

consulting services, or may pay or reimburse financial

actual information. The use of estimates may result in the

firms for certain technology enhancements relevant to

Account bearing a greater share of expenses than it

selling or servicing the Funds, and will pay such firms for

would have if the actual information were used.

permitting PIMCO to attend investment forums and

PIMCO may determine it is appropriate to forego certain

incurred in connection with any actual or potential third-

amounts otherwise payable to an Account if the costs of

party claims or litigation, regulatory inquiries, or any

continuing the Account (e.g., tax reporting expenses)

other of the foregoing, including any settlement,

exceed the amounts payable to the Account, or if the

disgorgement, or judgment, as well as fees and expenses

PIMCO determines that the likelihood of receiving such

associated with engaging experts and other providers in

amounts is low, or the length of time it would take to

connection with such matters, will generally be borne by

receive such amounts does not justify the costs of

the Account. Such expenses would reduce net assets of

continuing the Account. In addition, to the extent

the Account. In addition, an Account’s investment

permitted by applicable law, for similar reasons, PIMCO

activities may subject it to certain risks inherent in

may determine to liquidate an Account prior to the

restructuring, bankruptcy, and similar proceedings.

receipt of amounts payable to the Account, and if such amounts are received following the complete liquidation of the Account, PIMCO will determine in good faith how to dispose of such amounts, which may include donating such amounts to charity. Similar conditions may apply with respect to any liquidating trust or other vehicle established by an Account in connection with dissolving the Account.

Intangible and Other Benefits. PIMCO and its personnel can be expected to receive certain intangible and/or other benefits arising or resulting from their activities on behalf of Clients that will not be offset by fee reductions or otherwise shared with Clients, investors, and/or portfolio companies. For example, airline travel or hotel stays incurred as Client expenses may result in “miles,” “points,” or credit in loyalty or status programs,

An Account, PIMCO, its affiliates, and each of their

and such benefits and/or amounts will, whether or not de

respective direct and indirect partners, members,

minimis or difficult to value, inure exclusively to PIMCO

managers, officers, directors, employees, and agents may

and/or such personnel (and not the Clients, investors,

become involved in litigation or regulatory inquiries

and/or portfolio companies) even though the cost of the

because of their connection to Account activities. Such

underlying service is borne by the Clients, investors

involvement could include, without limitation: (i)

and/or portfolio companies. In addition, PIMCO, its

litigation with third parties (including limited partners,

personnel, and/or other affiliates may, in certain

co-investors, owners, and other stakeholders of portfolio

instances, receive discounts on products and services

investments and entities in which an investment was

provided by portfolio companies owned by Funds

contemplated but not ultimately consummated) and

managed by PIMCO and/or the customers or suppliers of

where an Account, PIMCO, and/or its affiliates may be

such portfolio companies.

named as defendants; (ii) formal and informal proceedings related to litigation (including being called as a witness, being deposed, and being required to comply with extensive document production requests); or (iii) investigations by regulators in connection with the Account’s investment activities or matters involving actual or potential investments. The risk of litigation with third parties will be elevated in situations where an Account exercises control or significant influence over an issuer’s direction, including where the Account owns or is otherwise affiliated with a loan servicer or originator, becomes involved in official or unofficial creditor committees, or becomes involved in activities that may be considered hostile in nature to an issuer. Any expense

Managing Proprietary Capital. We generally do not actively trade or manage assets on our own behalf. However, we manage assets for our affiliates, including, as noted above in Item 10, insurance and other assets of our indirect parent company, Allianz, and other Allianz affiliates. In addition, our affiliates trade or manage assets on their own behalf. Subject to applicable legal requirements, PIMCO employees are generally permitted to invest in certain Clients and Affiliate Clients. From time to time, we buy or sell the same securities and products for Affiliate Clients that we also buy or sell for our Clients, or we pursue investment strategies for our Affiliate Clients that are the same as those of our Clients. We

serve as investment adviser to certain Funds and Model

interest. In addition, PIMCO may be restricted from

Portfolios where PIMCO, our employees, or an affiliate

making certain investments on behalf of some (but not

provides the initial investment, or seed capital. As

necessarily all) Clients as a result of these affiliations or as

discussed in Item 5, “Fees and Compensation,” fees paid

a result of PIMCO or its Clients owning a certain

to PIMCO, including by seed investors, may be waived,

percentage of an underlying issuer. PIMCO may also be

modified, rebated, or reduced, or calculated differently

subject to additional restrictions based upon the

with respect to an investor, as determined by PIMCO in

particular characteristics of the Account. In addition,

its discretion. For additional information, please see

these affiliates may take actions, on their own behalf or

“Investments By PIMCO, Our Employees, and Affiliates”

on behalf of their clients or other related persons, which

below. We also from time to time recommend to or

are adverse to our Clients (including many of the actions

purchase or sell on behalf of Clients, certain Private

discussed above). PIMCO will typically not have any

Funds in which PIMCO, our affiliates, or other related

advance knowledge of these actions by its affiliates and,

persons serve as the general partner, managing member,

even if it does, will typically not have any ability to

or trustee to the fund. We may hedge the exposure of

influence its affiliates’ actions.

affiliated investments in Private Funds to the extent we manage such affiliates’ assets, by trading in other Private Funds or affiliated Accounts or through other methods. The foregoing activities give rise to a potential conflict of interest in the allocation of investment opportunities (such as limited offerings) between our Affiliate Clients and our Accounts. As previously described, we have adopted trade allocation policies and procedures that seek to ensure that all Clients are treated fairly and equitably over time. Additionally, in connection with our employee benefits plans, certain PIMCO employees, or employees of our affiliates, hold interests in funds that we recommend to or purchase or sell on behalf of Clients. Related Persons. PIMCO is a related person of Allianz, our indirect parent, and as such, under certain circumstances may be restricted from entering into agency and other transactions with affiliates of Allianz. PIMCO has undertaken certain procedures to identify broker-dealers affiliated with Allianz and certain affiliates of Allianz. For certain of our Clients, PIMCO also adopted a policy to generally prevent the purchase of securities that have been issued by Allianz, its insurance company subsidiaries, or any control affiliate. Other Clients may, however, transact with Allianz and such subsidiaries and affiliates in connection with their investment activities, including their investments in insurance-linked instruments and other insurance-related transactions, and these transactions will give rise to various conflicts of

Cross Trades. In an effort to reduce transaction costs, increase execution efficiency, and capitalize on timing opportunities, PIMCO and its affiliates are likely to execute cross trades, or sell a security or other instrument for one of its or their Clients to another Client, including (for certain Accounts) in securities or other assets that may be illiquid and difficult to value, without the use of a broker-dealer. PIMCO will perform a cross trade only when it complies with its cross trade policies and procedures, when it is not prohibited under the applicable Client’s investment restrictions or applicable law, and when we believe it is in the best interests of both the selling Account and the buying Account. However, cross trades present an inherent conflict of interest because PIMCO or its affiliates represent the interests of both the selling party and the buying party in the same transaction. As a result, Clients for whom we execute cross trades bear the risk that one or more Clients or Affiliate Clients in the cross trade may be treated more favorably by us than another party, particularly in cases where a party pays us a higher management or performance-based fee or allocation. Additionally, there is a risk that the price of a security or other instrument bought or sold through a cross trade may not be as favorable as it might have been had the trade been executed in the open market or that a Client receives a security that is difficult to dispose of in a market transaction. This could happen, for example, if

market quotations used to determine the cross trade

PIMCO may determine in its discretion to apply similar

price do not reflect the price that would be obtained in

policies to mitigate conflicts of interest. In addition, for

an actual market transaction. The identities of the parties

regulatory or other reasons, we may choose not to

engaging in a cross trade generally will be reported to

execute cross trades for one or more Clients, which could

any registered investment company that also participates

disadvantage those Clients as compared to Clients for

in that cross trade.

whom we perform cross trades.

Under certain circumstances and as set forth in our

In certain limited circumstances, with client consent and

policies, we are likely to execute cross trades on behalf of

if permitted by and in accordance with applicable law, we

our Private Funds in securities or other assets that may

will engage in principal trades between PIMCO affiliated

be illiquid and difficult to value. While PIMCO may (but is

entities, including Allianz and its affiliates, and PIMCO

not required to) engage an independent valuation firm

Clients, including buying securities and other investments

selected by PIMCO that would either value such

as principal from, and selling securities and other

investments or review PIMCO’s valuations, there can be

investments as principal to, an Account. PIMCO and its

no assurance that such valuations will be utilized or

affiliates may retain any profits that they make in such

accurate. In addition, PIMCO may be incentivized to have

transactions. PIMCO and its affiliates may also act as

an Account engage in cross trades to enable the Account

broker or agent for such transactions and receive and

or another PIMCO Client to liquidate in a timely manner,

retain fees in connection therewith without offsetting

including to forego the expenses and other matters

other fees paid to PIMCO or its affiliates. These other

associated with such entity’s continuing operations that

relationships may also result in securities laws restrictions

might otherwise be borne by PIMCO.

on transactions in these instruments by an Account and

To address these and other concerns associated with

otherwise create potential conflicts of interest for PIMCO.

cross trades, our policies generally require that cross

Risk Retention Requirements. Certain Account

trades be affected at the independent “current market

investments (including investments which the Account,

price” of the security or other instrument, as determined

PIMCO, and/or their respective affiliates create or

by reference to independent third-party sources, and

otherwise sponsor) may be subject to certain risk

that we will execute cross trades only in the best interests

retention requirements, which may be satisfied directly or

of both the buying Account and the selling Account.

indirectly by the Account, its affiliates, and/or third

For regulatory or other reasons, PIMCO may choose not to execute cross trades for an Account, which could disadvantage the Account as compared to clients (including affiliated Clients) for whom PIMCO performs cross trades. Under our policies, cross trades are not permitted in Accounts that are subject to ERISA, except as pursuant to PIMCO’s individual exemption from the Department of Labor that permits the in-kind purchase of Fund shares by an ERISA Client Account, another prohibited transaction exemption, or applicable rule or

parties. In addition, certain Accounts are expected to invest in, sponsor, or create funds, vehicles, investment structures, capitalized manager vehicles, and/or other opportunities intended to provide financing or other support to sponsors and other eligible risk retainers, including PIMCO and/or its affiliates. PIMCO, its affiliates, other PIMCO clients, and/or their affiliates are expected to also invest in such funds, vehicles, investment structures, capitalized manager vehicles, and/or other opportunities.

regulation. We may not engage in cross trades for

Allocation of PIMCO Resources. In order for us to

Accounts in which we act as principal in the transaction

adhere to applicable fiduciary obligations to our Clients,

without appropriate consent.

as well as to address and/or mitigate conflicts of interest

Certain transactions, although not technically cross trades, may have similar economic characteristics, and

or regulatory issues, it may not be possible or appropriate to make available all of our resources that

might be relevant to particular investment decisions by

investments. Some consultants or independent

the investment professionals responsible for a particular

contractors that PIMCO hires may have general industry

portfolio or investment program. Such restrictions could

and/or regional expertise, and may serve on the boards

result in such investment professionals making

of directors of, or in other capacities at, portfolio

investment or other decisions for a particular portfolio or

companies. These consultants may have close business or

investment program that are different from the decisions

personal relationships with PIMCO. PIMCO may also

they would make if there were no such limits or

utilize other similar consultants with, for example, more

restrictions. Although our personnel will devote as much

narrow expertise in a particular field. Such consultants

time to each portfolio and investment program as we

and contractors may have tailored compensation

deem appropriate, they will have conflicts in allocating

arrangements specific to their engagement. They may,

their time and services among each portfolio and

for example, receive compensation in multiple forms,

investment program and the other Clients or Affiliate

depending on their individual arrangement and the

Clients now or in the future advised by us and/or our

services they provide, including cash payments from

affiliates. Our personnel will also have ownership or other

PIMCO or its affiliates, a Client or Affiliate Client, or a

interests in other Accounts, as well as other outside

portfolio company, carried interest payments, profit

interests, all of which may influence their decisions on

interests in a portfolio company, equity or stock option

Account-related matters.

grants from a portfolio company, and/or fees relating to

To the extent that PIMCO receives performance fees or allocations from a Client or otherwise receives higher performance fees or allocations or investment management fees than it does with respect to Clients generally, PIMCO will have an economic incentive to allocate additional resources or investment professionals

a particular transaction. As independent contractors, such consultants are generally not affiliates or employees of PIMCO and therefore would not generally be subject to certain restrictions and conditions in a Client’s or Account’s governing documents that relate specifically to employees and affiliates of PIMCO.

to such Client and, to the extent such resources are

Furthermore, in some cases, PIMCO hires third-party

limited, away from other Clients.

Service Providers, including the Services Company, to

PI registered representatives receive differing levels of compensation from the sale of various products (including Wrap Programs), which may create potential conflicts of interest. Under policies applicable to all registered representatives of PI, no registered representative is permitted to recommend one Fund or Wrap Program over another solely because the recommended Fund or Wrap Program will provide higher revenue or compensation to PIMCO, PI, or to the registered representative. On occasion PIMCO will retain third parties, such as accountants, administrators, lenders, bankers, brokers, attorneys, consultants, and independent contractors to provide services to Clients. These services may relate to sourcing, conducting due diligence on, or developing potential investments, as well as structuring, valuing, modeling, managing, monitoring, and disposing of

perform services that PIMCO’s employees could also provide or have in the past provided. Determining whether to engage a Service Provider or a PIMCO employee gives rise to conflicts of interest. For example, in some situations, PIMCO will have an incentive to retain Service Providers rather than hire additional employees and/or to outsource to Service Providers functions that our employees could perform or have previously performed. Personal Relationships with Persons at other Financial Services Firms and Companies. PIMCO seeks to avoid potential conflicts of interest arising from personal relationships employees may have with individuals at other financial services firms. PIMCO’s policies and procedures require employees to disclose such relationships and prohibit employees from allowing personal relationships to influence any work-related

recommendations or decisions for Clients, including

and its affiliates continue to develop their investment

decisions to select broker-dealers.

management and related businesses, including by

Certain personnel and other professionals of PIMCO have friends or relatives that are actively involved in industries and sectors in which an Account invests or has business, or personal, financial, or other relationships with companies in such industries and sectors. For example, such friends or relatives might be officers, directors, personnel, or owners of companies or assets, which are actual or potential investments of an Account, Service Providers to the Account, or other counterparties of an Account. Any transactions involving such persons will give rise to conflicts of interest. For instance, PIMCO may

engaging in strategic transactions involving the acquisition of or investment in other financial services companies or investment vehicles. Strategic transactions pursued by PIMCO or its affiliates for their own accounts may overlap or compete with potential investment opportunities for PIMCO Clients and Accounts. Furthermore, any overlap among investment vehicles and businesses could give rise to additional conflicts of interest, such as those related to competition for the same or related investment opportunities, allocation of resources, and competition for capital from investors.

be less incentivized to negotiate or pursue enforcement

An Account is expected to make investments involving,

measures against such persons and/or the associated

or engage in activities with, parties that have

entities and may be more incentivized to engage or

relationships with, or who are employed by, PIMCO, its

transact with such persons and/or the associated entities

affiliates, and/or their respective personnel, including

and to provide them with favorable fee, compensation,

their actual or prospective clients or fund investors. For

or other economic terms.

example, an Account may (directly or indirectly, including

Investments By PIMCO, Our Employees, and Affiliates. Certain of our qualified employees and affiliates invest in certain vehicles managed by us (or our affiliates) either through general partner entities or as limited partners, shareholders, or otherwise. Such investments may represent a “seed investment” and/or significant amount of these vehicles. In cases where these investments are significant, the large investor(s) (including PIMCO, its employees, and/or affiliates) may have significant influence on the vehicle’s operations or liquidity, which can negatively impact other investors. Withdrawing these investments could disadvantage the vehicles and other

through an investment, joint venture, or other instrument) make loans to such parties or offer products or services for purchase by such parties. In addition, personnel of PIMCO or its affiliates may invest in a personal capacity alongside an Account in certain investments. Such investments and activities will involve conflicts of interest, in particular where (i) an Account may be less incentivized to negotiate transaction terms with, or exercise enforcement or default rights against, such parties, and (ii) investments or other actions by an Account may, directly or indirectly, benefit such parties and/or their investments.

investors invested in the vehicle. These vehicles may in

Certain Accounts expect to invest in funds or products

their discretion reduce all or a portion of the

advised by or affiliated with PIMCO, including those

management fee, performance allocation, or other costs

where PIMCO or an affiliate is attempting to establish

and expenses related to the investments held by such

new products and/or lines of business. For example, an

persons. In addition, such vehicles, especially those with

Account may invest in a REIT or a structured investment

particularly high concentrations of employees, give rise

that is established by, and the investors of which are, one

to potential conflicts of interest, including by creating a

or more other PIMCO-advised funds or accounts. Such

heightened incentive to allocate investment

investments may involve multiple additional levels of fees

opportunities to, and expenses away from, such vehicles.

and other asset-based or performance-based

In addition, PIMCO and its affiliates expect to continue to sponsor and manage new investment vehicles as PIMCO

compensation, and PIMCO may or may not (depending on the circumstances) reduce or waive its management,

administration, and incentive fees or other

derivatives, or other investments require a broker-dealer

compensation, as applicable, so that Clients do not

with a higher level of competence and infrastructure to

indirectly bear the economic burden of such amounts in

help ensure Client transactions are executed without

excess of what they would have borne if such Account

error, delay, or needless expense. As a result, in seeking

were not subject to management, administrative, and

to obtain best execution, we take into account a number

incentive fees, as applicable. In these instances, PIMCO

of factors and criteria based on information available at

will be incentivized to structure such transactions in a

the time, including, but not limited to: (i) price of the

manner that avoids any such reduction or waiver. Even if

security; (ii) any mark-up or mark-down on the security;

PIMCO does reduce or waive such fees or other

(iii) any commission paid to the broker-dealer (including,

compensation, PIMCO may still be incentivized to invest

as relevant to a particular Wrap Program, the extent to

in funds and products advised by or affiliated with

which the Wrap Program fee includes commissions or

PIMCO (e.g., to increase the assets under management

commission equivalents when executed through the

of, or otherwise provide support to, such funds, products,

Sponsor or a designated broker-dealer while transactions

or lines of business) and may be incentivized to delay the

executed away from the Sponsor or the Sponsor’s

disposition or liquidation of such investments.

designated broker-dealer may incur these and other

Account Capacity. Potential conflicts of interest may arise when an Account or investment strategy reaches its investment capacity (i.e., when it gets to a point where accepting additional Accounts or increasing Account or investment strategy size would not be in the best interests of existing Accounts or investors). PIMCO may have an incentive to accept additional investments to increase its assets under management and fees payable to PIMCO when doing so may not be in the best interests of Accounts or investors following a particular strategy or invested in a particular vehicle.

ITEM 12. Brokerage Practices We have policies and procedures that are reasonably designed to ensure that our trading practices are

expenses) or fees charged by the ATP (e.g., access or transaction fees) similar to commissions or mark-ups; (iv) the speed and likelihood of execution within a desired time frame; (v) characteristics of the instrument, including liquidity and the nature of the order; (vi) market conditions; (vii) the ability and willingness of a brokerdealer or ATP to execute in desired volumes; (viii) settlement considerations; (ix) responsiveness; (x) the ability of a broker-dealer or ATP to act on a confidential basis; (xi) the ability of a broker-dealer or ATP to act with minimal market effect; (xii) the creditworthiness of a broker-dealer or ATP in relation to risk created by the transaction; (xiii) the level and experience of operational coordination between the broker-dealer or ATP and PIMCO; (xiv) the willingness and ability of the broker-

conducted in our Clients’ best interests.

dealer to make a market in particular securities; (xv) the

PIMCO’s Broker-Dealer Selection Process

trustworthy behavior; (xvi) infrastructure; (xvii) the

broker-dealer’s or ATP’s reputation for ethical and

An important aspect of our discretionary investment

willingness of a broker-dealer to commit capital to a

management services includes the selection of broker-

particular transaction; (xviii) the market knowledge of the

dealers, as well as automated trading platforms (“ATPs”),

broker-dealer; (xix) the ability of a broker-dealer to

for the execution of Client transactions. It is our policy to

execute difficult transactions in unique and/or complex

seek to obtain best execution on Client transactions and

securities; (xx) available methods of execution, including

to execute client trades on the most advantageous terms

execution venues (such as ATPs); (xxi) the ability of a

reasonably available under the circumstances. Best

broker to execute on an automated basis; (xxii) the

execution is not limited solely to the consideration of the

adequacy and reliability of recordkeeping; (xxiii) whether

lowest available price or commission rate. For example,

the broker-dealer or ATP treats PIMCO fairly in resolving

complicated high-volume transactions in securities,

disputes; (xxiv) any contractual arrangements with the

broker-dealer or ATP; (xxv) whether the broker-dealer

to be paying for such research and/or brokerage services

can provide access to underwritten offerings and

with client commissions (sometimes called “soft dollars”).

secondary markets; (xxvi) under appropriate

PIMCO generally does not negotiate specific soft dollar

circumstances, the availability of research and brokerage

commission payment amounts with broker-dealers or

services provided by the broker-dealer; (xxvii) client

have arrangements with broker-dealers under which a

guidelines, including broker limitations; and (xxviii) other

specified portion of a commission is set aside for PIMCO

considerations relevant to the execution of an order. In

to use in paying for third-party research and/or third-party

addition, we periodically and systematically review the

brokerage services. Nevertheless, broker-dealers may and

execution performance of the broker-dealers and ATPs

do provide PIMCO with research and/or third-party

we use to execute Client trades.

brokerage services, including, among other things,

Soft Dollars. Under current U.S. regulations, an investment manager may cause clients to pay a brokerdealer effecting a securities transaction a commission (which includes a markup, markdown, commission equivalent, or other fee) that is higher than the commission another broker-dealer might have charged if the investment manager determines in good faith that the commission paid was reasonable given the research and/or brokerage services provided by the broker-dealer. An investment manager is typically in a position to make the necessary determination with agency transactions in equity securities and in other circumstances where there is sufficient transparency to objectively determine the transaction price and commission (e.g., where the commission and transaction price are fully and separately disclosed on the confirmation, and the transaction is reported under conditions that provide independent and objective verification of the transaction price), which currently does not exist generally with principal transactions in fixed income securities. Specifically, Section 28(e) of the Securities Exchange Act of 1934, (as amended, the “1934 Act”) and SEC interpretations thereunder, permits investment managers such as PIMCO to cause a Client to pay a broker-dealer a commission that is higher than another broker-dealer might have charged when the investment manager believes that is reasonable given the value of any research and/or brokerage services provided by the broker-dealer that provide lawful and appropriate assistance to the investment manager in its investment decision-making or trade execution processes. In such circumstances, the investment manager may be deemed

research reports, analyses of credit, economic and market data, access to senior executives of companies, access to broker-dealer research analysts, and analyst earnings estimates, which may be created or developed by the broker-dealer, including at our request. There may be circumstances where PIMCO determines that it is appropriate to use a broker-dealer that has provided research on a topic of interest or other products or services and to pay commission rates higher than those that would have been charged by other broker-dealers for the transaction or by other broker-dealers who may not offer such services. PIMCO may do this when it believes a higher commission is reasonable given the value of the research or brokerage services received. From time to time PIMCO may ask, or may accept certain offers from, brokers to arrange for meetings with senior management of corporate issuers. In such instances, PIMCO compensates the broker directly for any agreed upon costs and does not pay for such services with client commissions. In certain circumstances, our Private Funds may be permitted to pay for all or a portion of these costs directly. When PIMCO believes a number of broker-dealers are capable of providing best execution for Client transactions, and PIMCO has negotiated commission rates with those broker-dealers that are similarly favorable to Clients, we may select a broker-dealer that provides us with research or brokerage services that, in our view, offers value in connection with our investment decision-making and trading processes. Research or other brokerage services received may not always be used by or for the benefit of the Client that pays the commissions used to obtain the research or brokerage services.

In selecting broker-dealers that provide research or

directed brokerage orders are completed, and this can

brokerage services that are paid for with soft dollars,

result in the Client’s order being executed on less

potential conflicts of interest may arise between PIMCO

favorable terms than we obtain for non-directed orders.

and its Clients because PIMCO does not produce or pay

In addition, not all broker-dealers have the systems or

for these research or brokerage services, but rather uses

expertise to effectively process transactions that may be

brokerage commissions generated by Client transactions

beneficial for an Account. An Account also may achieve

to pay for them. In these circumstances, PIMCO will have

lower returns compared to Accounts of Clients that do

an incentive to select a broker-dealer based upon the

not ask us to use a specific broker-dealer. As discussed

broker-dealer’s research or brokerage services, instead of

above, Wrap Program fees typically include transaction-

the broker-dealer’s ability to achieve best execution.

specific commissions on agency trades executed by the

Brokerage for Client Referrals. PIMCO does not consider as a factor in selecting or recommending broker-dealers whether it or a PIMCO affiliate receives client or investor referrals from the broker-dealer. However, PIMCO executes transactions through Wrap Program Sponsors or other broker-dealers that also bring clients to PIMCO, which incentivizes PIMCO to transact with that Sponsor or broker-dealer. Additionally, as noted below, a Client may direct PIMCO to use the services of a particular broker-dealer in executing transactions for that Client’s Account. In some cases, the directed broker may have recommended PIMCO as a manager for that Account. Directed Brokerage. Some Clients direct us to use specific broker-dealers for their Account transactions. If a Client directs us to use a specific broker-dealer, it could lose any discounts that we may negotiate on aggregated transactions, pay higher transaction costs or brokerage commissions, and be unable to achieve the most favorable execution. We typically can negotiate better prices or terms with broker-dealers when we include a Client’s trade as part of a larger block of Clients trading the same security. A Client also might not be able to participate in certain investment opportunities because the Client’s broker-dealer may not have access to certain securities, such as new issues or limited inventory bonds. For many securities, it is often to a Client’s advantage to transact with the broker-dealer who is a known marketmaker in the security. Directing us to use a particular broker-dealer might also affect the timing of a Client’s transaction. There may be times when we may not trade with a Client’s directed broker-dealer until all non-

Sponsor or a broker-dealer designated under the Wrap Program (i.e., such trades executed through the Sponsor or designated broker-dealer are effectively at a zero commission rate), but generally do not include dealer commissions, commission equivalents, or spreads on fixed income security transactions. PIMCO will typically execute fixed income security transactions for Wrap Program Accounts according to its trade allocation policy and procedures, which will in most cases result in such trades being executed away from the Sponsor or its designated broker-dealer. Discretionary Wrap Program Clients generally will pay transaction-specific commissions, commission equivalents, or spreads on such trades, in addition to the Wrap Program fees. These transaction fees or charges may be separately charged to the Account or reflected in the security net price paid or received. Transactions in mutual fund shares purchased for Accounts will typically be submitted directly to the transfer agent or distributor of the mutual fund. To the extent PIMCO invests in securities other than fixed income securities, or mutual funds for a Discretionary Wrap Program Client, it is anticipated that PIMCO will typically affect a large percentage of those transactions for a Discretionary Wrap Program Client’s Account with the Sponsor or its designated broker-dealer. In some Wrap Programs, PIMCO may be prohibited from effecting transactions away from the Sponsor or the designated broker-dealer, or a Wrap Program Client may direct that the Sponsor or the designated broker-dealer be used. Counterparty Review Process. Our Counterparty Risk Committee sets standards and criteria for the review of the creditworthiness of our counterparties. For certain

NSTs (e.g., commercial real estate transactions), we will

or instrumentality of the U.S. government if the expected

evaluate the creditworthiness of a counterparty in the

recovery is less than $500.

context of the transaction rather than having the counterparty considered by the Counterparty Risk Committee. In addition to information provided by credit agencies, our team of experienced credit analysts evaluates each approved counterparty using various methods of analysis, including company visits, earnings updates, the broker-dealer’s reputation, our past experience with the broker-dealer, market levels for the counterparty’s debt and equity, the counterparty’s liquidity, and its share of market participation. In certain limited circumstances, private credit transactions will be permitted without counterparty preapproval by the Counterparty Risk Committee. Such transactions must adhere to specific criteria established by the Counterparty Risk Committee.

The European Union has adopted the CSDR settlement regime. 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 Account depending upon their characterization. For additional information relating to CSDR, please see “CSDR-Related Risks” in Item 8. Foreign Currency Transactions. In managing an Account, PIMCO may engage in foreign currency transactions consistent with a Client’s investment guidelines or instructions to PIMCO. Where available, we believe it is in a Client’s best interests to deal directly with a broker-dealer; however, third-party transactions may not be available for certain emerging market or

Claims Process. From time to time custodians or

certain restricted foreign currencies. In these instances,

counterparties make claims or claim payments in

we may trade foreign currency through a Client’s

connection with transactions entered into by PIMCO for

custodian via fax and/or standing instructions. Where a

an Account. Claims are typically transaction expenses

Client has delegated responsibility for cash management

assessed by custodian banks as overdraft charges or by

of their Account to their custodian, including for cash

counterparties for compensation related to the

sweeps and FX transactions, PIMCO has no role in and no

counterparty’s use of funds (e.g., claims that result from

control over executions, and clients may not receive the

failed or late settlement of transactions) or other related

same execution as they do for other transactions in their

claims unique to certain markets. PIMCO addresses such

Account. Clients should contact their custodians directly

claims according to standardized procedures. Any claims

for this information.

over $500 at market rate are reviewed to determine the source of the charge for appropriate resolution, but a fail or claim under $500 at market rate will not generally be reviewed, unless PIMCO determines it is appropriate under the circumstances and consistent with applicable law. From time-to-time, PIMCO will reimburse an

Affiliated Brokers. From time to time, we may place orders with a broker-dealer which is an affiliate of PIMCO, or otherwise engage in transactions where an affiliated broker receives compensation. For additional information, please see “Broker-Dealers” in Item 10.

Account for claims under $500, such as when PIMCO has

Aggregation of Orders

reviewed and determined that it is responsible for the fail

For additional information relating to our trade

or claim but is under no obligation to conduct such

aggregation policies, please see “Code of Ethics,

review, and PIMCO will reimburse ERISA accounts for

Participation or Interest in Client Transactions, and

claims under $500 and greater than $15 where PIMCO is

Personal Trading” in Item 11.

responsible for the claim or where fault has not been determined. Similarly, PIMCO will generally not seek to recover on defaulted securities guaranteed by an agency

Trade Errors. PIMCO has policies and procedures that address identification and correction of errors that may occur in connection with PIMCO’s management of Accounts and PIMCO Funds (“Trade Errors”), consistent

with applicable standards of care and any relevant

Client Account (e.g., an error that results in the loss of an

governing documents. Not all mistakes or errors that are

investment opportunity); (vi) an investment that does not

caused by PIMCO will be considered Trade Errors, and

perform favorably but otherwise complies with applicable

not all Trade Errors will be considered compensable to

contractual requirements; (vii) an error that PIMCO cures

the Account or PIMCO Fund. PIMCO makes its

in accordance with express provisions in an applicable

determinations regarding Trade Errors pursuant to its

Account’s governing documents; (viii) an error resulting

policies and procedures on a case-by-case basis, in its

from unavailability of (or disruptions in) electronic

discretion. PIMCO’s discretion with respect to the

services or other force majeure events; (ix) the purchase

identification, resolution, and notification of Trade Errors

of a security for which a Client is ineligible under the

is a conflict of interest which may be resolved in a

issuer’s prospectus, offering documents, or other issuer-

manner adverse to a Client.

related rules; and/or (x) a failure to follow any formal or

PIMCO’s policies and procedures generally do not require perfect implementation of investment management decisions, trading, processing, or other functions performed by the Adviser. Generally, errors in

informal internal targets, risk or other internal guidelines, or other parameters that may be used to manage risk or otherwise guide decision-making by investment professionals.

judgment in making investment decisions for clients are

When PIMCO determines that a Trade Error has occurred

not considered to be compensable Trade Errors,

for which reimbursement is appropriate, the Account or

including errors in securities analysis and, for

PIMCO Fund will be compensated as determined by

quantitative/systematic strategies, System Incidents (as

PIMCO in its discretion. Resolution of Trade Errors may

defined above), including errors in writing computer

include, but is not limited to, permitting Accounts and

code or other model construction and implementation

PIMCO Funds to retain gains, or reimbursing Accounts or

activities that relate to the process by which investment

PIMCO Funds for losses resulting from the Trade Error. The

decisions are made for an Account (i.e., errors that reflect

calculation of the amount of any gain or loss will depend

subjective judgments or mistakes made at the time of

on the particular facts surrounding the Trade Error, and

developing, testing, or implementing a System or

the methodology used by PIMCO to calculate gain or loss

Systems, or mistakes that concern the process of

(e.g., with respect to the payment of interest) may differ

constructing an investment strategy). Similarly, errors in

based on the facts and circumstances, including the type

process or other mistakes in implementation will not

of Client or for regulatory or other reasons, even for the

generally constitute compensable Trade Errors, including,

same error or errors that otherwise appear similar.

without limitation: (i) an incorrect trade order that is

Compensation is generally expected to be limited to direct

identified and corrected prior to settlement or otherwise

and actual out-of-pocket monetary losses (in certain

corrected in a manner that does not harm a Client; (ii) an

circumstances, net of any associated gains) and will not

error that is the fault of an executing broker-dealer,

include any amounts that PIMCO deems to be uncertain

custodian, counterparty, or other third party (irrespective

or speculative, nor will it cover investment losses not

of whether PIMCO seeks compensation on behalf of the

caused by the Trade Error or other opportunity costs. With

Client from such parties); (iii) a purchase or sale of a

respect to errors in PIMCO’s trade allocation process,

security or financial instrument that violates restrictions

whether the result of a System Incident or otherwise,

arising from a contractual obligation to a third party

PIMCO will generally seek to take steps it deems

other than the applicable Client; (iv) an incorrect over- or

appropriate to achieve the intended allocation; however,

under-allocation of an investment to a Client that does

PIMCO may determine that such intended allocation is no

not otherwise violate that Client’s investment guidelines

longer possible or desirable. Accounts will bear the

or that is otherwise corrected without harming a Client;

economic impact, if any, associated with any change to the

(v) an error that does not result in a transaction in a

allocation or where an allocation cannot be made, subject

to PIMCO satisfying its standard of care. For additional

with respect to guideline compliance. PIMCO has

information relating to PIMCO’s trade allocation process,

implemented processes that are designed to help

please see “Code of Ethics, Participation or Interest In

appropriately mitigate conflicts of interest with respect to

Client Transactions, and Personal Trading” in Item 11.

guideline interpretations that PIMCO makes on behalf of

Clients will not always be notified of Trade Errors or

Client Accounts.

circumstances that might be considered Trade Errors.

ITEM 13. Review of Accounts PIMCO strives to ensure compliance with a Client’s investment guidelines consistent with its fiduciary responsibility to manage the Client’s portfolio in the best interest of the Client. Accordingly, PIMCO maintains a proprietary compliance system that captures the investment parameters from each Client’s guidelines and facilitates automated pre-allocation and post-trade testing for compliance with those parameters. Manual reviews are also performed on a periodic basis for those investment guidelines that cannot be tested automatically. For certain transactions in Accounts, PIMCO will test for compliance on a pre-trade basis, and the trader may not immediately execute the relevant

Reviews of Accounts also occur when investment strategies and objectives are changed by the Client or PIMCO and when significant events occur that are expected to affect the value of the Accounts. From time to time, Accounts may become inconsistent with applicable investment guidelines as a result of market movements or fluctuations, rating downgrades, or other events outside of PIMCO’s control (each, a “Passive Breach”). Although Passive Breaches are typically not considered a breach of an Account’s investment management agreement or investment guidelines, PIMCO generally seeks to review and take appropriate action with respect to such Passive Breaches within thirty days, unless otherwise directed by a Client or specified in a Fund’s offering documents.

transaction. In these instances, to the extent an Account

PIMCO typically furnishes to Separate Account Clients

receives compliance approval to participate in the

written quarterly reports concerning their Accounts.

transaction, such approval will be effective for the

Separate Account reports may include a detailed

remainder of the trading day. PIMCO’s account managers

inventory of all holdings, a performance summary, a

also work closely with the portfolio management team to

written review of past and present strategy, together with

make sure each Client’s guidelines are implemented,

a current economic forecast and statistical portfolio

where applicable. As part of the review process, account

analyses. Monthly accounting reports are also provided

managers or product managers review key risk

upon request by Separate Account Clients. From to time,

characteristics (e.g., portfolio duration) across all of their

certain Clients request that PIMCO monitor for gain/loss

portfolios for consistency, as compared with firm-wide

requirements in their Accounts. PIMCO will undertake

targets for each of our investment strategies, and discuss

reasonable efforts to monitor for such activity; however,

any potential issues with the relevant portfolio managers.

because PIMCO is not the official accounting agent for

Certain aspects or portions of Client guidelines will be

any Account, any such calculations have inherent

subject to reasonable interpretation by PIMCO, and

limitations and may differ from the records of a Client’s

PIMCO may revise such interpretations from time to time

accounting agent.

based on a variety of factors, including, but not limited to,

In situations where PIMCO acts as a myTDF Manager,

changes to market practices or internal or external market or trading conventions, the availability of information, or changes in applicable law. Such interpretations create potential conflicts of interest because of the effect an interpretation may have on PIMCO’s ability to invest in certain securities on behalf of a Client’s Account and/or

plan participant accounts will be reviewed on such frequency as PIMCO, and the applicable plan provider may agree from time to time. For the avoidance of doubt, the foregoing does not apply where a third party acts as a myTDF Manager. In those cases, PIMCO does not provide any fiduciary services.

As noted in Item 4 above, Account reviews and reports

Referral Agents and may be compensated by us or our

may differ for Wrap Program Clients.

affiliates for referral activities. However, when our

ITEM 14. Client Referrals and Other Compensation

employees or affiliates serve as Referral Agents, we will not necessarily provide the separate disclosure document mentioned above. Similarly, PIMCO employees may serve

Compensation from Non-Clients

as Referral Agents for certain of PIMCO’s affiliates.

From time to time, PIMCO engages consultants for

PIMCO, the Registered Funds (with respect to fees

investment-related consulting services, including in

payable in connection with plans adopted pursuant to or

connection with the identification, analysis, and execution

in accordance with Rule 12b-1 under the 1940 Act only),

of investment opportunities, or to provide overall strategic

and/or PI may also pay various fees to broker-dealers

guidance for certain Clients. These consulting firms may

and other financial intermediaries that provide

include our Clients or their affiliates. We may execute

distribution and other services related to such funds,

brokerage transactions for our Clients or engage in other

including, but not limited to, distribution and servicing

transactions with such investment consultants or their

fees payable in connection with plans adopted pursuant

affiliates, and consultants or their affiliates may invest in

to or in accordance with Rule 12b-1 under the 1940 Act,

our Funds or other Accounts with us. These consultants or

upfront commissions on sales of certain classes of the

their affiliates may, in the ordinary course of their business,

Registered Funds, administrative, recordkeeping, sub-

recommend that their clients (“Consultant Clients”) hire us

accounting, and/or networking fees, marketing support

or invest in products that we, or one of our affiliates,

payments, platform payments (as discussed below), and

sponsor. In some circumstances, a Consultant Client might

payments in support of training and educational

not compensate PIMCO directly. Rather, PIMCO may be

seminars sponsored by such financial intermediaries, as

compensated by the Consultant Client’s investment

well as occasional tickets to events or other

consultant or its affiliates out of fees paid by the

entertainment, meals, small gifts to such firms’

Consultant Client to the consultant or its affiliates.

representatives, and charitable contributions to

Referral and Other Compensation Arrangements Although not a general practice, from time to time PIMCO pays compensation for client referrals. To the extent required by law, we require that the person referring a client to us (the “Referral Agent”) enter into a written agreement with us. Under this written agreement, the Referral Agent would be obligated to provide the prospective client with a separate disclosure document before an Account is opened for such prospective client that is designed to be consistent with the requirements of the SEC Marketing Rule. This separate disclosure document provides the prospective client with information regarding the nature of our relationship with the Referral Agent and any referral fees we pay to such Referral Agent. Referral fees are paid by PIMCO and not by our clients.

charitable organizations to the extent permitted by applicable law, rules, and regulations. Furthermore, PIMCO and/or PI 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 PI’s attendance at investment forums sponsored by such firms. PIMCO and/or PI may also pay intermediaries for various studies, surveys, industry data, research, and leads. PIMCO and/or PI may pay intermediaries to make available on their platforms or affiliated platforms certain Model Portfolios. PIMCO and/or PI may pay or reimburse intermediaries for certain technology enhancements relevant to selling or servicing the Funds and Model Portfolios. Certain of the technology payments may be described as “platform payments.” These payments may be used for an intermediary’s development, maintenance, and availability of services

PIMCO employees and employees of affiliates of PIMCO,

including, but not limited to, platform education and

as well as persons unaffiliated with PIMCO, may serve as

communications, relationship management support,

development to support new or changing products,

In the case of Registered Funds and Private Funds

trading platforms and related infrastructure/technology,

advised by PIMCO, such Funds have made arrangements

and/or legal risk management and regulatory compliance

with qualified custodians as disclosed in the relevant

infrastructure in support of investment-related products,

offering and other Fund documents.

programs ,and services.

In the case of Separate Accounts, appointment of a

In addition, PIMCO and/or PI may also make payments to

custodian is a prerequisite to PIMCO’s management of

intermediaries in connection with certain transaction fees

Client assets. Clients must select and appoint their own

(also referred to as “ticket charges”) incurred by such

custodian, whose services and fees will be separate from

intermediaries. A more complete description of the

our fees. As a general matter, Clients are responsible for

additional payments made by PIMCO and/or PI in

independently arranging for all custodial services,

connection with the Registered Funds is available in the

including negotiating custody agreements and fees and

Registered Funds’ prospectuses. Additionally, a Private

opening custodial accounts. We have a process to

Fund may contract with one or more broker-dealers or

confirm that custodians selected by Separate Accounts

placement agents to assist in the placement of interests in

satisfy the requirements applicable to qualified

such Private Fund. Information about any such

custodians. Under a Client’s investment management

engagement, including the compensation payable by

agreement, PIMCO’s authority is generally limited to

PIMCO, PI, and/or the Private Fund to the broker-dealer or

trading authority with respect to the Account in the

placement agent, is disclosed in the Private Fund’s offering

instruments and subject to the investment limits as

documents or is otherwise disclosed to the relevant

specified in the investment management agreement.

investors. For certain financial intermediaries who receive

Notwithstanding anything in a Client’s custody

or whose clients receive Model Portfolios, PIMCO may

agreement with a third-party custodian that purports to

make payments to such intermediaries related to set-up,

give PIMCO powers that may be construed as custody

maintenance, servicing, marketing, support, or other

over such Client’s assets, PIMCO typically unilaterally

costs. Financial intermediaries who receive such

disclaims such authority in order to avoid being deemed

payments have an incentive to recommend PIMCO’s

to have custody over such assets. For Separate Accounts

Model Portfolios over other managers’ model portfolios,

where we may be deemed to have constructive custody

which creates conflicts for the recipients(s) of such

with regard to the payment of fees, or Clients have

payments. In addition, PIMCO has retained a third-party

authorized PIMCO to debit fees from their Accounts, we

wholesale firm that is compensated to market the Models

confirm on an annual basis that each Separate Account’s

to financial professionals at various financial

custodian sends required periodic account statements.

intermediaries, as directed by PIMCO. Similarly, with

Certain Clients will authorize PIMCO to direct their

respect to investment consultants we may engage from

custodian to transfer Account assets to specific third-

time to time, as described above, if any referral

party accounts pursuant to letters of authorization.

arrangements existed between PIMCO and such

PIMCO will not be liable for a custodian’s failure to

consultants, we would require the consultant to disclose to

properly implement such transfers. In these instances,

clients any compensation they receive for their referrals.

PIMCO will implement policies and procedures

ITEM 15. Custody We do not act as a custodian for Client assets. However, under the Advisers Act, PIMCO may, as described further below, be deemed to have constructive custody of Client assets in certain instances.

reasonably designed to comply with applicable law and regulatory guidance applicable to such arrangements. Whether PIMCO is deemed to have custody or not, if a Separate Account Client does not receive its custodian statements, the Client should contact its PIMCO account representative, and we will work with the Client and the

Client’s custodian to ensure that the Client receives this

PIMCO have signed a written investment management

information. Clients should carefully review their

agreement or other document showing the Client’s grant of

custodian statements to ensure they reflect appropriate

discretion or other authority for its portfolio. PIMCO

activity in their Account. Separate Accounts may also

generally receives discretionary authority from Clients (or a

receive statements from PIMCO. Clients should compare

Client’s agent, such as the Sponsor in the context of

the account statements that they receive from their

Discretionary Wrap Programs) to select, and to determine

qualified custodian with those that they receive from

the quantity of, securities or financial instruments to be

PIMCO.

bought or sold for the Client’s portfolio. In exercising its

If there are discrepancies between a Client’s custodian statement and their PIMCO account statement, Clients should contact their custodian or PIMCO account representative for more information. Consistent with PIMCO’s policies and procedures, certain types of Client assets may not be held through a custodian and instead ownership records may be kept by the issuer or agent. In other cases, investments may be certificated and may be evidenced by agreements or instruments which may be difficult or impossible to custody. These custody issues are more common for alternative investments. In the case of Wrap Programs where the Wrap Program Client contracts with the Sponsor and not with PIMCO, PIMCO typically will not be deemed to have custody of such Wrap Program Client assets, although under certain fee payment arrangements for such Wrap Programs, PIMCO could be deemed to have constructive custody of Wrap Program Client assets. In such circumstances, PIMCO confirms on an annual basis that the relevant custodian sends required periodic account statements. From time to time, PIMCO will advise that certain Wrap Program Clients or Direct Managed Account Clients establish brokerage accounts at certain custodial institutions with whom we have a relationship to maintain custody of clients’ assets and to effect trades

discretionary authority to make investment decisions for a Client’s portfolio, PIMCO adheres to the investment policies, limitations, and restrictions of the portfolio. For Wrap Program Accounts, PIMCO’s discretionary authority is limited by the selected mandate’s investment strategy and can be further limited by reasonable, client-imposed restrictions, as discussed in Item 4. With respect to certain Accounts, such as Registered Funds, PIMCO’s authority to trade securities may also be limited by certain securities, tax, and other laws that may, for example, require diversification of investments and impose other limitations. Unless otherwise instructed by a Client, PIMCO typically utilizes Agency Ratings for purposes of credit quality limitations or, in the absence of such ratings, Internal Ratings or Implied Ratings. Some Clients authorize PIMCO to utilize Internal Ratings as a primary credit quality source. In such instances, a Client may allow PIMCO to invest in securities or financial instruments that have Agency Ratings that are lower than those permitted by the Client’s guidelines (if the Internal Rating is higher than the Agency Rating). As discussed in “Non-Discretionary Services” in Item 4, PIMCO also furnishes investment management services to some Clients on a non-discretionary basis, which may include, without limitation, evaluation and risk assessment of Client portfolios.

for their Accounts, but that decision is solely that of the

right or authority to vote proxies with respect to securities on loan pursuant to a securities lending arrangement between a Client and the Client’s custodian, unless PIMCO accepts express contractual authority over the client’s securities lending activities, and this authority includes the ability to recall leased securities. Each proxy is voted on a case-by-case basis, taking into account relevant facts and circumstances in good faith and in the best interest of the Client. When considering Client proxies, PIMCO may determine not to vote a proxy in certain circumstances in accordance with its fiduciary duties or its agreement with a Client. PIMCO will use commercially reasonable efforts to vote on proxies within the timeframe prescribed by the custodian or other agent of the Account. 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. 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. In furtherance of its fiduciary obligations, PIMCO performs due diligence and oversight of the ISP, which includes, but is not limited to, the evaluation of the ISP’s operational processes and ability to provide research and voting recommendations (including the ISP’s operational infrastructure as it relates to its process for seeking timely input from issuers and voting methodologies) and the ISP’s compliance program. By following the guidelines of an independent third party, PIMCO seeks to mitigate conflicts of interest PIMCO could have with respect to proxies covered by the ISP. PIMCO will follow the ISP’s voting recommendation unless: (i) the ISP does not provide a voting recommendation; or (ii) PIMCO determines to override the ISP’s voting recommendation. When the ISP does not provide a voting recommendation, PIMCO will determine how, or if, the proxy will be voted. In each case, the determination will be made in the client’s best interest and consistent with PIMCO’s fiduciary duties. Further

Fixed income securities can be processed as proxy ballots or corporate action consents at the discretion of the issuer/custodian. When processed as proxy ballots, the ISP generally does not provide a voting recommendation, and its role is limited to election processing and recordkeeping. When processed as corporate action consents, PIMCO will review all election forms to determine whether an actual or potential conflict of interest exists with respect to the PM’s consent election. PIMCO’s Credit Research and Portfolio Management Groups are responsible for providing recommendations on how to vote proxy ballots and corporation action-consents with respect to fixed income securities. PIMCO will vote Client (including ERISA Accounts) proxies relating to an interest in a Fund in accordance with the offering or other disclosure, or governing documents or any applicable contract for the Account holding shares of the Fund. Where such documents are silent on the issue, PIMCO will generally vote client proxies relating to an interest in a Fund by “echoing” or “mirroring” the vote of the other shareholders in the underlying Fund, or by applying other appropriate methods in the Policy, unless such practice is prohibited by law, regulation, or the contractual arrangements between the Account and PIMCO. 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 an 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 with respect to specific types of conflicts. These conflicts can favor one Client over another, or favor PIMCO over a Client. This may also result in PIMCO exercising proxies or consents for some Clients in a different manner than it

does for other Clients. Similarly, PIMCO may exercise

Sponsor for a copy of the Sponsor’s proxy voting

investment decision consents differently for some Clients

policies.

than for others. For additional information regarding

such potential conflicts, please see “Code of Ethics,

Sub-Adviser Engagement As an investment manager, PIMCO may exercise its discretion to engage a sub-adviser to provide portfolio management services to certain Accounts. Consistent with its management responsibilities, the sub-adviser will assume the authority for voting proxies on behalf of PIMCO for these Accounts. Sub-advisers may utilize third parties to perform certain services related to their portfolio management responsibilities. As a fiduciary, PIMCO will maintain oversight of the investment management responsibilities performed by the subadviser and contracted third parties.

Alternative Proxy Voting Arrangements With respect to those Client portfolios for which PIMCO is not authorized to vote proxies or give consents in connection with corporate actions, including with respect to securities contributed in-kind to an Account by Wrap Program Clients, such Clients should arrange to receive proxy solicitation materials directly from their custodian. If Clients have questions with respect to a particular proxy solicitation, please contact your PIMCO account representative. In certain Wrap Programs, PIMCO will not be delegated the responsibility to vote proxies held by the Wrap Program Accounts, and instead, the Sponsor or another service provider will generally vote such proxies. Clients in such Wrap Programs should contact the

Appendix A Principal Owners The following affiliated entities own 25% or more of PIMCO directly or indirectly. Principal Owner of PIMCO

Entity in Which Interest is Owned

Allianz SE (publicly-held company)

Allianz Europe B.V.

Allianz Europe B.V.

Allianz of America, Inc.

Allianz of America, Inc.

Allianz Asset Management of America LLC

Allianz Asset Management of America LLC

Pacific Investment Management Company LLC

Appendix B Fee Schedules Our basic Separate Account fee schedules are listed below and are based on a percentage of an Account’s assets. The fee schedules, which are subject to change, may be negotiated under certain circumstances. When determining fee rates, we will take into account, among other things, a Client’s composite, strategy, account discretion, servicing levels and contracting counterparties. Fee rates are listed on a per annum basis. Clients may pay higher or lower fees than outlined below. The fee schedules for Direct Managed Accounts as well as Wrap Programs where we contract directly with a Wrap Program Client for advisory services (as opposed to a Wrap Program where our advisory fee is included within the Wrap Program fee) can be found after the Separate Account fee schedules as follows.

Fixed-Income Commodities

Fixed Fee: First $50 million 0.490% Next $100 million 0.450% Thereafter 0.400% Minimum Account Size: $75 million Performance Fee: Base Fee (Full Authority Guidelines) of 0.150% plus 22.5% of outperformance over the applicable index plus the Base Fee; subject to quarterly draw on the Base Fee; no cap; rolling 12-month measurement period. Minimum Account Size: $100 million

Credit

Bank Loans: First $100 million 0.475% Thereafter 0.400% Minimum Account Size: $100 million Capital Securities First $100 million 0.700% Thereafter 0.500% Minimum Account Size: $75 million Credit Opportunities On All Assets 0.600% Minimum Account Size: $100 million U.S. Investment Grade: First $100 million 0.300% Next $100 million 0.275% Thereafter 0.250% Minimum Account Size: $100 million Global Investment Grade: First $100 million 0.350% Next $100 million 0.300% Thereafter 0.250% Minimum Account Size: $100 million U.S. Investment Grade ESG: First $75 million 0.330% Next $125 million 0.285% Thereafter 0.250% Minimum Account Size: $100 million Global Investment Grade ESG: First $75 million 0.380% Next $125 million 0.315% Thereafter 0.250% Minimum Account Size: $100 million High Yield: First $100 million 0.500% Thereafter 0.300% Minimum Account Size: $75 million Diversified Income: First $100 million 0.500% Next $100 million 0.450% Thereafter 0.400% Minimum Account Size: $100 million

Dynamic Bond First $200 million Thereafter Minimum Account Size:

0.600% 0.550% $100 million

Emerging Local Bonds Standard: First $100 million Thereafter Minimum Account Size:

0.500% 0.450% $100 million

Asia Local Bond: First $100 million Thereafter Minimum Account Size:

0.450% 0.400% $75 million

0.450% 0.350% $100 million

Performance Fee: Base Fee (Full Authority Guidelines) of 0.250% plus 25.0% of outperformance over the applicable index plus the Base Fee; subject to quarterly draw on the Base Fee; no cap; rolling 12-month measurement period. Minimum Account Size:

$100 million

Global Bond Fixed: First $100 million Next $100 million Thereafter Minimum Account Size:

Minimum Account Size:

$100 million

Global ESG First $75 million Next $125 million Thereafter Minimum Account Size:

0.380% 0.315% 0.250% $75 million

Fixed Fee: First $100 million Next $100 million Thereafter Minimum Account Size:

0.300% 0.275% 0.250% $75 million

Performance Fee: Base Fee (Full Authority Guidelines) of 0.150% plus 15% of outperformance over the applicable index plus the Base Fee; subject to quarterly draw on the Base Fee; no cap; rolling 12-month measurement period. Minimum Account Size:

$250 million

Low Duration 0.350% 0.300% 0.250% $75 million

Performance Fee: Base Fee (Full Authority Guidelines) of 0.150% plus 15.0% of outperformance over the applicable index plus the Base Fee; subject to quarterly draw on the Base Fee; no cap; rolling 12-month measurement period. Minimum Account Size: $100 million

Global Advantage® Fixed Fee: First $100 million Next $100 million Thereafter Minimum Account Size:

Base Fee (Full Authority Guidelines) of 0.150% plus 20% of outperformance over the applicable index plus the Base Fee; subject to quarterly draw on the Base Fee; no cap; rolling 12-month measurement period.

Long Duration/Long Credit

Emerging Market Bonds Fixed Fee: First $100 million Thereafter Minimum Account Size:

Performance Fee:

0.450% 0.400% 0.350% $100 million

Fixed Fee: On All Assets Minimum Account Size:

0.250% $75 million

Performance Fee: Base Fee (Full Authority Guidelines) of 0.150% plus 15% of outperformance over the applicable index plus the Base Fee; subject to quarterly draw on the Base Fee; no cap; rolling 12-month measurement period. Minimum Account Size:

$100 million

Low Duration Opportunities First $100 million Next $100 million Thereafter Minimum Account Size:

0.350% 0.300% 0.250% $100 million

Moderate Duration Fixed Fee: First $100 million 0.300% Next $125 million 0.275% Next $300 million 0.240% Thereafter 0.200% Minimum Account Size: $75 million Performance Fee: Base Fee of 0.150% plus 15.0% of outperformance over the applicable index plus the Base Fee; subject to quarterly draw on the Base Fee; no cap; rolling 12-month measurement period. Minimum Account Size: $100 million

Money Market On All Assets Minimum Account Size: Money Market Plus: First $200 million Thereafter Minimum Account Size:

0.1125% $200 million 0.125% 0.100% $200 million

Mortgage Mortgage: On All Assets Minimum Account Size: Mortgage BOLI: First $600 million Next $700 million Thereafter Minimum Account Size:

0.250% $75 million 0.200% 0.175% 0.150% $75 million

Full Discretion: First $50 million 0.250% Next $50 million 0.200% Thereafter 0.180% Minimum Account Size: $50 million Limited Discretion: First $50 million 0.180% Next $50 million 0.125% Thereafter 0.100% Minimum Account Size: $50 million Municipal Cash/Short Term: First $100 million 0.150% Next $100 million 0.140% Thereafter 0.130% Minimum Account Size: $25 million

Municipal Focus $50 million

High Yield Municipal Bonds First $100 million Thereafter Minimum Account Size

0.350% 0.300% $50 million

Short Term Fixed Fee: First $200 million 0.200% Next $200 million 0.150% Thereafter 0.125% Minimum Account Size: $100 million Performance Fee: Base Fee (Full Authority Guidelines) of 0.100% plus 12.5% of outperformance over the applicable index plus the Base Fee; subject to quarterly draw on the Base Fee; no cap; rolling 12-month measurement period. Minimum Account Size:

Short Term Restricted First $200 million Next $300 million Thereafter Minimum Account Size:

$100 million 0.150% 0.125% 0.100% $100 million

First $175 million Next $225 million Thereafter Minimum Account Size:

Stable Value

First $100 million Next $300 million Next $900 million Thereafter Minimum Account Size:

0.215% 0.160% 0.125% $100 million 0.250% 0.200% 0.175% 0.150% $75 million

In addition to asset management fees, stable value portfolios may incur fees or other charges associated with stable value investment contracts issued by insurance companies, banks, and other financial institutions,

Total Return Fixed Fee: First $100 million Next $125 million Next $300 million Thereafter Minimum Account Size:

0.300% 0.275% 0.240% 0.200% $75 million

Performance Fee: Base Fee (Full Authority Guidelines) of 0.150% plus 15.0% of outperformance over the applicable index plus the Base Fee; subject to quarterly draw on the Base Fee; no cap; rolling 12-month measurement period. Minimum Account Size:

$100 million

Total Return ESG

Real Return U.S.: On All Assets Minimum Account Size: Global: On All Assets Minimum Account Size: Region/Single Currency:

0.250% $75 million

Short Term ESG

Municipal Bonds

Fees will vary Minimum Account Size:

On All Assets Minimum Account Size:

0.250% $75 million

First $75 million Next $25 million Thereafter Minimum Account Size:

0.290% $75 million

Equities StocksPLUS®

0.400% 0.270% 0.250% $75 million

Fixed Fee (Conventional Cap-Weighted Indices): First $150 million 0.350% Next $150 million 0.300% Thereafter 0.250% Minimum Account Size: $100 million Performance Fee (Conventional CapWeighted Indices): Base Fee of 0.100% plus 20.0% of outperformance over the applicable index plus the Base Fee; subject to quarterly draw on the Base Fee; no cap; rolling 12-month measurement period. Minimum Account Size: $100 million

StocksPLUS® Absolute Return Fixed Fee (Conventional Cap-Weighted Indices): First $150 million 0.450% Thereafter 0.400% Minimum Account Size: $100 million Performance Fee (Conventional CapWeighted Indices): Base Fee of 0.100% plus 20.0% of outperformance over the applicable index plus the Base Fee; subject to quarterly draw on the Base Fee; no cap; rolling 12-month measurement period. Minimum Account Size:

$100 million

StocksPLUS Long Duration ®

First $300 million Thereafter Minimum Account Size:

0.375% 0.350% $75 million

RAE Fundamental

Europe: First $50 million Next $50 million Thereafter Minimum Account Size:

0.350% 0.300% 0.250% $100 million

Global Developed: First $50 million Next $50 million Thereafter Minimum Account Size:

0.350% 0.300% 0.250% $100 million

Low Volatility U.S. Large: First $50 million Next $50 million Thereafter Minimum Account Size:

0.300% 0.250% 0.200% $100 million

Low Volatility International: First $50 million Next $50 million Thereafter Minimum Account Size: Low Volatility EM: First $50 million Next $50 million Thereafter Minimum Account Size: U.S. Large: First $50 million Next $50 million Thereafter Minimum Account Size:

0.350% 0.300% 0.250% $100 million 0.500% 0.450% 0.400% $100 million 0.300% 0.250% 0.200% $100 million

International: First $50 million Next $50 million Thereafter Minimum Account Size:

0.500% 0.450% 0.400% $100 million

EM: First $50 million Next $50 million Thereafter Minimum Account Size:

0.500% 0.450% 0.400% $100 million

U.S. Small: First $50 million Next $50 million Thereafter Minimum Account Size:

0.400% 0.350% 0.300% $100 million

Small International: First $50 million Next $50 million Thereafter Minimum Account Size:

0.450% 0.400% 0.350% $100 million

Global All Country: First $50 million Next $50 million Thereafter Minimum Account Size:

0.350% 0.300% 0.250% $200 million

Global All Country ex-U.S.: First $50 million Next $50 million Thereafter Minimum Account Size:

0.400% 0.350% 0.300% $200 million

Wrap Program Fee Schedule For Wrap Programs where PIMCO contracts directly with a Wrap Program Client for advisory services (as opposed to a Wrap Program where our advisory fee is included within the Wrap Program fee), a Wrap Program Client may pay us between 0.05% and 0.45% of the assets in the Wrap Program Account.

Appendix C Information Regarding PIMCO Affiliates PIMCO, a Delaware limited liability company, is a majority owned subsidiary of Allianz Asset Management of America LLC (“AAM LLC”), with minority interests held by Allianz Asset Management U.S. Holding II LLC, a Delaware limited liability company and certain current and former officers of PIMCO. Through various holding company structures, AAM LLC is a subsidiary of Allianz SE, a European-based, multinational insurance and financial services holding company and a publicly traded German company. Broker-Dealer Affiliates

Non-U.S. Advisers

PIMCO Global Advisors (Luxembourg)

PIMCO Investments LLC

PIMCO Asia Limited, a Hong Kong-

S.A., a Luxembourg-based investment

PIMCO Canada Corp. PIMCO Europe GmbH

Investment Adviser Affiliates PIMCO Asia Limited PIMCO Asia Pte Ltd. PIMCO Australia Management Limited

based investment adviser regulated

adviser regulated by the Commission

by the Securities and Futures

de Surveillance du Secteur Financier

Commission

PIMCO Investment Management

PIMCO Asia Pte Ltd., a Singapore-

(Shanghai) Limited, a Shanghai-based

based investment adviser regulated by the Monetary Authority of Singapore PIMCO Australia Management Limited, a Sydney-based investment adviser regulated by the Australian Securities

investment adviser regulated by the Asset Management Association of China PIMCO Japan Ltd., a Tokyo-based investment adviser regulated by the

and Investments Commission

Financial Services Agency

PIMCO Australia Pty Ltd.

PIMCO Australia Pty Ltd., a Sydney-

PIMCO Latin America Administradora

PIMCO Canada Corp.

based investment adviser regulated

PIMCO Europe GmbH PIMCO Europe Ltd.

by the Australian Securities and Investments Commission PIMCO Canada Corp., a Toronto-

PIMCO Global Advisors (Ireland)

based investment adviser regulated

Limited

by the Ontario Securities Commission

PIMCO Global Advisors

PIMCO Europe GmbH, a Munich-

(Luxembourg) S.A.

based investment adviser regulated

PIMCO Investment Management

by Federal Financial Supervisory

(Shanghai) Limited

Authority (BaFin)

PIMCO Japan Ltd.

PIMCO Europe Ltd., a London-based

PIMCO Latin America Administradora de Carteiras Ltda. PIMCO Prime Real Estate Asia Pacific Pte. Ltd. PIMCO Prime Real Estate GmbH PIMCO Taiwan Limited

investment adviser regulated by the Financial Conduct Authority

de Carteiras Ltda., a São Paulo-based investment adviser regulated by the Securities and Exchange Commission of Brazil PIMCO Prime Real Estate Asia Pacific Pte. Ltd., a Singapore-based investment adviser and wholly-owned subsidiary of PIMCO Prime Real Estate GmbH regulated by the Monetary Authority of Singapore PIMCO Prime Real Estate GmbH, a Munich-based investment adviser and wholly-owned subsidiary of PIMCO Europe GmbH regulated by

PIMCO Global Advisors (Ireland)

the Financial Markets Authority and

Limited, a Dublin-based investment

the Prudential Supervision and

adviser regulated by the Central Bank

Resolution Authority

of Ireland

PIMCO Taiwan Limited, a Taipeibased investment adviser regulated by the Financial Supervisory Commission

Appendix D Methods of Analysis and Investment Strategies Introduction PIMCO combines top-down macroeconomic forecasting with rigorous bottom-up credit analysis in its investment process. PIMCO’s cyclical and secular economic forums drive the top-down element of the firm’s investment process which begins with an annual secular forum in which investment professionals from all our offices convene. Industry experts give presentations on various global economic and financial topics, followed by discussions among PIMCO’s investment professionals regarding the outlook for the global economy and interest rates over the next three to five years. At the completion of the discussions, the investment professionals collectively determine a bullish, neutral, or bearish outlook. In addition to the secular three to five year horizon, PIMCO’s investment professionals hold quarterly economic forums to discuss near term trends and to establish a cyclical outlook. The portfolio management group considers these outlooks in a separate quarterly meeting to translate global economic themes and specific views on market conditions and relative value into interest rate, sector, quality, and volatility strategies. PIMCO’s bottom-up research on individual securities generally considers such factors as finances, credit quality, call risks and structures. Additionally, PIMCO is a signatory to the United Nations-backed Principles for Responsible Investment (“UNPRI”). The UNPRI recognize that ESG issues can affect the performance of investments and should therefore be given appropriate consideration by investors. Accordingly, PIMCO considers relevant ESG factors in its investment research process with the goal of enhancing our clients’ risk-adjusted returns, including in Accounts that do not employ an ESG Investment Strategy. 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 are important considerations when evaluating long-term investment opportunities and risks for asset classes in both public and private markets, where applicable. The materiality of ESG considerations to investment decisions varies across asset classes, strategies, products, and valuations. Individual PIMCO strategies are discussed below. PIMCO also offers alternative strategies, primarily through private investment vehicles such as private equity funds and hedge funds, as well as separate accounts. These strategies encompass long/short, private equity, private credit, distressed debt, commercial real estate, and other alternative strategies. The details of these investment strategies can be found in the offering documents of the applicable private investment vehicles or accounts. PIMCO also provides a customized target date service to participating retirement plans using a proprietary methodology to construct various portfolios that include PIMCO-advised CITs. This strategy incorporates certain demographic factors to seek to assign more personalized investment allocations for plan participants of retirement plans that use the myTDF Models. The details of a CIT’s investment strategies can be found in the CIT’s declaration of trust, disclosure memorandum, and/or other offering documents (as applicable). The details of a participating retirement plans’ use of myTDF are available from the participating retirement plan.

I.

Traditional Fixed Income Strategies

Convertible Bond Strategy portfolios seek to add value through in-depth fundamental credit research and analytical modeling of equity options and warrants, within the context of our macroeconomic forecasting process. We seek to maintain a balanced risk/reward profile; emphasize modest participation with rising equity prices while shielding against significant declines; emphasize issues with capital appreciation potential and good credit fundamentals; diversify risk across multiple industries and sectors; and use an option-adjusted duration, which will typically not exceed three years. The portfolio’s weighted average delta (a measure of the portfolio’s sensitivity to changing equity values) will generally not exceed 70%. We assess the value of convertible bonds by considering trends in demographics, political factors, and structural changes in the global economy refined by quarterly cyclical economic forecasts. We seek to identify companies with stable or improving credit fundamentals and

one of the nationally recognized credit rating agencies or, if unrated, determined by PIMCO to be of comparable quality. This strategy utilizes a disciplined approach in the credit selection process, as issuer and industry decisions will contribute meaningfully to the performance of the product. In addition to corporate bonds, the strategy may invest in investment-grade sovereign bonds, as well as supranational issuers. While macroeconomic strategies that influence sector and industry decisions are important, bottom-up security selection will most likely be the primary driver of long-term performance. PIMCO’s credit strategy focuses on adding value through a disciplined approach to credit selection combined with top-down macroeconomic forecasts for region and sector rotation. PIMCO’s philosophy and approach to global credit markets is consistent with our conservative, yet innovative, approach toward fixed income markets. Specifically, the philosophy for investing in corporate and sovereign credit markets embodies

prospects for improving equity prices by

three key principles:

evaluating the strength and predictability of each

 Major shifts in portfolio strategy are driven by

company’s cash flow, the quality of assets, the

longer-term or secular trends as opposed to

strength of the management team, the company’s

short-term aberrations in market conditions.

competitive stance and financial flexibility, and the covenants of the convertible security. Finally, we analyze the convertible’s attached equity option or warrant using financial models. Traditionally, we limit investment in any given issuer to under 5%

 An emphasis is placed on adding value through combining bottom-up fundamental credit research with top-down macroeconomic analysis.

and in a single industry to under 15%. Although

 Consistent investment performance is pursued

higher concentrations may provide enhanced

by emphasizing independent research and

relative performance in the short run, over our

prudent diversification with respect to industries

secular horizon, broad diversification seeks to add

and issuers.

value without additional risk.

The strategy is managed in the context of the

Investment-Grade Credit Strategy portfolios

PIMCO outlook for the global economy and

invest primarily in creditworthy corporate issuers

markets, but investment decisions and value-added

having a debt rating of BBB-or greater by at least

opportunities come primarily from traditional

“bottom-up” strategies driving security selection

bottom-up credit analysis.

process and facilitating the identification and

The Credit Absolute Return Strategy uses a

analysis of undervalued securities.

global approach to credit selection with a focus on

The Dynamic Bond Strategy is an absolute

generating attractive absolute returns without the

return-oriented fixed income strategy that is not

constraint of a benchmark. In an effort to achieve

tied to a benchmark nor has significant

this goal, the strategy’s portfolio is constructed

sector/instrument limitations. The strategy is

from PIMCO’s best bottom-up corporate credit

designed to offer the traditional benefits of a core

ideas across investment grade, high yield, bank

bond approach – capital preservation, liquidity,

loans, and other corporate securities. While the

and diversification – but with higher alpha

strategy is designed to adhere to PIMCO’s

potential and the opportunity to mitigate

investment philosophy and risk management

downside risk to a greater degree than what is

process, it will have significant flexibility to

reasonably possible from traditional active fixed

increase and reduce its sensitivity to credit markets

income management approaches. The strategy

in an effort to achieve its absolute return objective

focuses on long-term economic, social, and

in various market environments. Long term

political trends that may have lasting impacts on

performance is expected to be driven both by

investment returns. Over shorter cyclical time

macroeconomic strategies that influence sector

frames, the strategy’s guidelines allow us flexibility

and industry decisions and by bottom-up security

to take on more risk when we identify tactical

selection. In periods when credit offers attractive

opportunities, and it allows for reduction and

relative value, for example, the strategy will likely

diversification of risk when the outlook may be

have a greater exposure to the credit markets. In

more challenging for traditional fixed income

periods where credit spreads are likely to widen,

benchmarks.

the strategy would likely significantly reduce its sensitivity to credit markets through various hedging strategies and focus more on relative value between sectors in an effort to achieve its absolute return objective. Total Return Strategy portfolios use a core bond strategy that seeks to maximize price appreciation and current income with index-like volatility. We use all major sectors of the bond market to implement a diversified set of strategies including sector rotation, yield curve positioning, and duration management. Duration is managed within a moderate range (between three and six years) around the broadest bond market indices. Our investment process uses both “top-down” strategies focused on duration, yield curve positioning, volatility, and sector rotation, and

II.

Asset-Backed Strategies

The Mortgage SOFR Plus Strategy aims to generate consistent excess returns over a SOFR benchmark with limited volatility through active cash management and relative value strategies in mortgages, governments, and derivative instruments. The strategy seeks to capture relative value through long/short strategies by opportunistically extracting value from structural and tactical market mispricings. While we emphasize agency pass-throughs, our mortgage investment process still looks to all segments of the vast MBS market to add value. The Mortgage-Backed Securities Strategy emphasizes actively managed exposure to Agency MBS holdings. We seek securities that offer the

highest total return potential for the lowest amount

approach in the credit selection process and

of risk. We take a multi-faceted approach to MBS

focuses on credits demonstrating solid or

valuation, with three major components:

improving fundamentals, as issuer and industry

 Option-Adjusted Spread (“OAS”): We use OAS modeling as a relative valuation tool when comparing securities, together with supplemental analysis.  Empirical Modeling: Empirical modeling serves as a tool designed to systematically exploit market opportunities. Market prices can reflect prepayment information, and the extent of prepayment information embedded in market prices combined with the liquidity of MBS make empirical analysis a useful tool.  Technical Analysis: The major MBS investors, such as banks, mortgage servicers and insurance companies, are often driven by accounting motives rather than value. As a total return value investor PIMCO seeks to profit from this type of trading.

III.

Duration Strategies

Our duration philosophy is founded on the

decisions will contribute meaningfully to the performance of the product. In addition to longterm corporate bonds, the credit universe includes long-term investment grade sovereign bonds, as well as supranational issuers. While macroeconomic strategies that influence duration, sector and industry decisions are important, bottom-up security selection will most likely be the primary driver of long-term performance. Moderate Duration Strategy portfolios are intermediate core portfolios that seek maximum total return through both current income and price appreciation, consistent with the preservation of capital and prudent risk taking. We utilize all major sectors of the bond market while managing an average portfolio duration ranging between two and five years. This strategy seeks to consistently add value, while maintaining an overall risk level similar to the Barclays Capital Intermediate Government/Credit Index.

principle of diversification, and we seek to

Low Duration Strategy portfolios seek low

maximize total return, consistent with the

volatility of returns and minimal credit risk without

preservation of capital. PIMCO focuses on credit

sacrificing liquidity. Low duration strategies invest

analysis by performing country, industry, company,

within a diversified range of fixed income

and issue analysis to determine which credits to

securities while maintaining average portfolio

add to the clients’ portfolios. We limit risk taking

duration of one to three years under most market

by focusing on managing excess return versus

conditions. The strategy extends duration beyond

tracking error, seeking to minimize the volatility of

traditional money market and short-term vehicles

portfolios’ excess returns in relation to their

to develop a greater opportunity set from which to

benchmarks.

invest. The Low Duration strategy focuses on the

Long Duration/Long Credit Strategy portfolios are primarily composed of long-term investment

higher yielding sectors while attempting to maximize expected total return.

grade credit fixed income securities that seek to

IV.

maximize total return, consistent with the

PIMCO offers two broad styles of equity solutions.

preservation of capital and prudent investment management. The strategy utilizes a disciplined

Enhanced Equity Strategies

First, StocksPLUS combines passive index replication with alpha from fixed income markets.

Second, equity strategies that are sub-advised by

index exposures. StocksPLUS is designed to appeal

Research Affiliates, a global leader in asset

to clients seeking modest excess returns with low

allocation and a pioneer in value equity and smart

tracking error.

beta solutions.

The StocksPLUS Long Duration is an additional

PIMCO’s investment philosophy for the

specialty strategy, in which capital not deployed to

StocksPLUS Strategy is based on the principle that

equity index exposures is invested in a long

equity swaps and futures, when used to obtain

duration style bond portfolio.

long-term equity exposure, offer an attractive means for seeking to enhance equity market returns. As the equity swaps/futures that capture the returns of the equity exposure typically require very little capital, the majority of the cash that an investor allocates to the strategy is available to be invested in a bond alpha strategy. This bond alpha strategy is designed to capitalize on PIMCO’s experience in active fixed income management. The StocksPLUS strategies may appeal to investors for the following reasons:  Magnitude of excess returns: Drawing on PIMCO’s core competencies, the enhanced equity approach benefits from tapping into structurally based sources of alpha that allows PIMCO to achieve a reasonably high magnitude of excess returns which we believe may be particularly attractive to clients.  Consistency of outperformance: The combination of passive replication of equity exposure and independent, structurally based alpha strategies allows us to outperform the market with a high degree of consistency over three-year periods.

PIMCO also offers equity strategies in partnership with Research Affiliates, a global leader in asset allocation strategies and a pioneer in value equity and smart beta solutions. The Research Affiliates Equity (“RAE”) strategy builds on Research Affiliates’ groundbreaking work on Fundamental Indexation by adding additional enhancements and active insights utilizes fundamental weighting and a quantitative rules-based approach to equity investing. PIMCO’s RAE Strategies are sub-advised by industry pioneer Research Affiliates and seek to provide meaningful excess returns at bottom quartile fees. RAE is a rules-based, systematic, active approach to value investing with a longterm record of outperformance and consistency. The strategy seeks to provide the following potential benefits:  Captures robust sources of excess returns: RAE is a systematic strategy that selects undervalued stocks using valuation metrics designed by Research Affiliates, while also incorporating quality and momentum signals to improve performance. The RAE strategy combines several

The StocksPLUS AR Strategy combines the

well-researched measures of each signal to

absolute return bond alpha strategy described

achieve higher returns over time.

above with traditional, capitalization weighted index exposures.

 Capitalizes on market inefficiencies: Selected stocks are weighted based on fundamental

StocksPLUS is the original version of enhanced

measures of company size such as sales, cash

equity at PIMCO and combines a short duration

flows, dividends, and book value. This weighting

fixed income portfolio with capitalization weighted

methodology allows the fund to capitalize on

market inefficiencies by systematically buying

 Multiple Strategies. We employ multiple

low and selling high and benefit from long-term

concurrent strategies and take only moderate

mean reversion in stock prices.

risk in each, thereby seeking to reduce risk of

 Offers the benefits of a systematic equity strategy: The strategy’s unique rules-based approach seeks a consistent investment process, and a contrarian portfolio designed to deliver market outperformance. Research Affiliates Fundamental Index (RAFI) is an investment approach that seeks to systematically rebalance portfolio weights back to fundamental size, allowing mean reversion to drive returns. RAFI Dynamic Multi-Factor ETFs incorporate smart beta research from Research Affiliates and seek to provide diversification and

poor performance arising from any single source. Strategies utilized include duration management, yield curve or maturity structuring, sector rotation and all bottom-up techniques using our in-house credit and quantitative research.  Long-Term Orientation. We maintain a disciplined focus on our secular views to better identify long-term value and prevent our trading decisions from being overly influenced by emotion and short-term market sentiment.  Broad Universe. We select from a broad universe

structural sources of returns through an in-depth

that includes all conventional fixed income

methodology designed to introduce a buy-low,

sectors as well as newer, less traditional sectors,

sell-high discipline to factor investing. The strategy

PIMCO considers a developing market to be any

offers the following potential benefits:

non-U.S. country, excluding those countries that

 Exposure to multiple equity factors that theory and research have linked to higher returns, a combination intended to offer less variance than single factor approaches.  Stocks in each factor portfolio are weighted by fundamental measures such as company size, breaking the link between price and portfolio weight.  A dynamic weighting process that overweights

have been classified by the World Bank as highincome Organization for Economic Cooperation and Development (“OECD”) economies. PIMCO may consider additional countries as developing market countries, based on a broader assessment of their development stage. Our emerging markets and developing markets strategies emphasize high quality countries that offer the most attractive risk-adjusted-return opportunities over a market cycle. We seek to

factors that may be more attractive on a

avoid countries with a high risk of default or

forward-looking basis, reducing the potential

credit deterioration. The following key principles

risk associated with buying expensive factors.

guide our disciplined investment process:

V.

Global Bond Strategies

PIMCO offers a number of developing markets, emerging markets, and global strategies. PIMCO’s approach to global bond investing has three key principles:

 Favor countries with strong or improving underlying fundamentals, attractive valuations, and potential return catalysts.  Synthesize PIMCO’s top-down macroeconomic forecasts with individual country assessments to gauge risks from the external environment and global economy.

 Avoid countries that lack an economic and

trend improvement in creditworthiness. Continued

policy framework supportive of their

growth--a high priority--will require investment,

fundamentals as well as those that are

particularly in infrastructure. In addition, as

susceptible to a de facto deterioration in credit

emerging country governments seek to utilize the

quality or financial contagion due to imbalanced

fiscal credibility, they have built over the past

market technicals.

decade to preserve growth amidst a global

 Complement fundamental analysis with a rigorous security selection process to both ensure consistency between views and portfolio positioning and take advantage of relative value opportunities across and within markets. The Emerging Local Bond Strategy invests primarily in fixed income instruments denominated in the currencies of the emerging markets using processes similar to the Emerging Markets Bond Strategy. The Emerging Markets Bond Strategy uses a multi-step process to guide our emerging markets investment decisions. First, we identify countries’ underlying credit fundamentals (including favoring strong fiscal positions, stable/improving political situations, comfortable reserve levels, and debt profiles that can withstand financial shocks, among others). We then consider the impact of our global outlook on these countries, including prospects for demand from advanced economies, commodity prices, interest rate trends, and other components of the external environment. Finally, we evaluate

recession, their fiscal stimulus measures have been largely directed at infrastructure. This suggests that the strategy may benefit further from cyclical forces currently at work in emerging markets. Emerging markets infrastructure bonds, used tactically, seek to increase performance within both core total return type bond portfolios and dedicated emerging markets accounts. Strategically, the characteristics of emerging markets infrastructure bonds complement traditional asset classes in terms of alpha generation, while providing the additional benefit of diversification. The Global Advantage Strategy is designed to help fixed-income investors seize opportunities produced by dramatic secular shifts in the global economy. The strategy invests in fixed-income securities from both developed and developing markets and is benchmarked to the proprietary PIMCO Global Advantage Bond Index (GLADI™), a GDP-weighted index intended to offer investors an improved fixed-income market “beta.”

the technical conditions of the credit to identify

The Global Bond Strategy is designed to help

both the upside and the imbalances that could

fixed-income investors seize opportunities

potentially lead to market dislocations. This process

produced by dramatic secular shifts in the global

provides the basis for our country weighting,

economy. The strategy invests in fixed-income

duration, curve, currency, and instrument selection

securities from both developed and developing

decisions, as well as relative value assessments.

markets and is benchmarked to the proprietary

Emerging Markets Corporate Bond Strategy is designed for investors seeking to capitalize on the secular factors which favor a strategic allocation to emerging markets more generally: their rising contribution to global economic activity and a

PIMCO Global Advantage Bond Index (GLADI™), a GDP-weighted index intended to offer investors an improved fixed-income market “beta.”

VI.

High Yield Strategies

High Yield and High Yield Spectrum Strategies

VIII.

seek to lower portfolio volatility while enhancing

PIMCO’s Short-Term strategies seek to enhance

returns by investing in below-investment grade fixed income securities. Our global fixed income philosophy embodies these key principles:  Bottom-up credit research incorporating topdown economic framework.  Total return approach, not just yield focused.  Focus on credits with best risk/return profile.  Seek to limit risk through issuer and industry diversification. In addition, the High Yield Spectrum Strategy focuses on global credit opportunity set resulting from expertise in many regions and credit sectors. PIMCO’s credit analysts focus on: 1) business model; 2) cash flow; 3) balance sheet; and 4) security structure. The specific metrics and financial ratios will vary based on the industry and as a result the format of reporting the analysis will also vary. In addition, emphasis on the four factors listed above will also depend on the industry.

VII.

Income Strategies

The Diversified Income Strategy is a multi-sector strategy that invests across a broad spectrum of credit market sectors including global corporate credit both in investment grade and high yield, and emerging market debt. The allocation among each of these markets will vary based on PIMCO’s assessment of global trends and relative valuations. This active and dynamic approach allows for increased responsiveness in asset allocation to changing economic and market conditions while remaining anchored by PIMCO’s investment process and longer-term orientation. The ability to invest globally helps to improve diversification and may allow investors to benefit from differences in business cycles across regions and credit quality trends across credit sectors.

Short-Term Strategies

short term yields with a diversified portfolio of high quality money market and other short maturity, fixed income investments. Emphasis is on principal preservation and maintaining liquidity. The Government Money Market Strategy traditionally invests in short-term, high-quality fixed income securities issued by the U.S. government or its agencies. These include Treasury notes and bills, agency debentures and discount notes, and repurchase agreements collateralized by these securities. Our government money market investment strategy combines a simple core investment philosophy, extensive research analytics, and a highly effective decisionmaking process. We have traditionally used internal modeling and our knowledge of broad market sectors, both domestic and non-U.S., to construct portfolios consistent with client return and volatility objectives. To contain relative performance volatility, we have attempted to manage portfolio return volatility to approximate that of an associated benchmark. The Short-Term Strategy is designed to improve on the return provided by a typical money market vehicle. The strategy invests in high quality money market and short maturity fixed income securities and also may invest a very modest portion of the portfolio in global securities issued outside of the U.S. and can have non-U.S. dollar currency exposure. It differs from traditional money market strategies because it invests in longer maturities and a broader opportunity set of securities which may generate excess relative returns with only a modest increase in risk compared to traditional money market instruments.

U.S. Government Short-Term portfolios of varying

carry interest income that is exempt from federal

maturity ranges that are designed to help investors

tax and in some cases state tax.

meet liquidity needs.

IX.

X.

Real Asset Strategies

Municipal Bond Strategies

Real Return Strategies incorporate real assets that

We manage municipal bond portfolios with the

have a positive correlation to inflation. These assets

same core investment process used for all of our

diversify traditional stock and bond holdings, which

strategies: maximize after-tax total returns;

historically have not performed well in higher

minimize tax liabilities; use a longer-term horizon

inflationary environments. The key real assets we

for decision making; employ extensive risk

focus on are: TIPS and global inflation-linked

analytics; and emphasize multiple value-added

securities; commodities, which historically have

techniques.

provided both diversification and inflation hedging;

We customize our analytics for municipal-specific factors, such as municipal yield volatility, call option costs, and tax exposures. We concentrate on relative value opportunities across global debt sectors, selecting the most fairly valued securities. We seek to hold well-structured municipal bonds,

and real estate, with a focus on securitized real estate. All of PIMCO’s real return products rely on our core competency in fixed income management, with the objective of maximizing real return while seeking preservation of the real capital of a portfolio.

being compensated appropriately for risks relating

Commodities-Based Strategies use indices that

to calls, credit quality, liquidity, tax liabilities, and

calculate the returns to a hypothetical portfolio that

market supply-demand conditions. We avoid

contain only long positions in commodity futures

undue reliance on a limited set of strategies, which

contracts, passively managed, on a fully

could lead to greater return volatilities and large

collateralized basis. The index represents holding

tracking errors relative to the stated benchmark.

positions according to a set of rules that we

We offer a variety of municipal bond strategies and custom solutions including the following municipal bond strategies: California, High Yield, National, New York, Short Duration, and TaxManaged Real Return. National Municipal Bond Strategy portfolios seek to generate and retain a competitive after-tax rate of interest income. A secondary, and important, goal is to generate long-term capital appreciation, consistent with capital preservation.

passively administer. These rules typically require that commodities that are more important in world trade have greater weight in the index. The index also assumes that positions are consistently rolled forward, so that the investor seeking index-like returns is always exposed to changes in the expected future prices of the actual commodities. Moreover, the index assumes unleveraged investment. Finally, a commodity index captures return from multiple sources, including the return on assets that collateralize the futures positions and

Short Duration Municipal Bond Strategy

the price risk assumed by long positions in

portfolios are designed to be appropriate for

commodity futures markets that commodity

investors seeking tax-exempt income. The strategy

producers seek to avoid. Exposure to commodity

consists of a diversified portfolio of primarily short

indices is obtained through positions in commodity

duration, high credit quality municipal bonds that

interests, which may consist of swaps, baskets of

futures contracts or options on futures contracts

highly diversified across asset classes and global

designed to replicate the index.

risk factors. The strategy also uses “tail risk”

The Diversified Real Asset Strategy seeks to gain strategic exposure to TIPS, commodities, and real estate. These asset classes individually and collectively achieve the goals of diversification and inflation-hedging. Diversified Real Asset provides

hedging that seeks to protect the portfolio against sudden market shocks by purchasing inexpensive hedges across various liquid markets. The strategy features a qualitative, forward-looking asset allocation process.

actively managed, strategic exposure to these real

The Inflation Response Multi-Asset Strategy is

return asset classes by tracking a benchmark that

designed to provide a comprehensive portfolio

is composed of 40% Bloomberg U.S. TIPS Index,

solution for investors seeking diversified exposure

25% Bloomberg Commodity Index, and 35% Dow

to the broad opportunity set of inflation-related

Jones U.S. Select REIT Index.

investments, including assets that respond to

Global Real Return Strategies include several types of non-U.S. inflation-adjusted products. Real Estate Strategies seek to capture the performance potential of real estate through investing in derivatives on the Dow Jones U.S. Select Real Estate Investment Trust (REIT) Index or individual REIT securities. Investments in real estate-linked derivative instruments may subject the portfolio to greater volatility than investments in traditional securities. We attempt to enhance this approach by fully collateralizing those derivatives, and then managing the collateral in a way that seeks to outperform the financing rate built into the derivatives. We back our REIT swaps with actively managed TIPS, which should provide an effective inflation hedge. With a longer duration than money markets, TIPS also provide a closer match to the longer duration of liabilities of most investors.

XI.

Asset Allocation

The Global Multi-Asset Strategy invests in global equities, global bonds, diversified commodities, and real estate. The strategy uses a differentiated “risk factor”-based approach to asset allocation and our strategic insight on the global macroeconomy to construct a portfolio that is

different types of inflation. These include TIPS, commodities, emerging market currencies, REITs, and gold. The strategy may also tactically employ floating rate securities in the event of deflation or extreme market shock. PIMCO actively manages the overall asset allocation as well as the underlying exposures in an effort to enhance returns relative to a static, passive approach. By combining these potential benefits, the strategy can serve as a compelling comprehensive investment for those seeking to not only hedge inflation, but also potentially benefit from inflation dynamics. The Tail Risk Strategy utilizes a long-only options-based hedge overlay portfolio to help clients mitigate downside risk. Tail Risk Hedges are typically bespoke portfolios designed to fit a client’s risk profile and can be constructed for traditional and non-traditional portfolios and for portfolios that contain assets, liabilities, or combinations of the two.

XII.

Other Strategies

Bank Loan Strategy portfolios invest primarily in the upper tiers of the U.S. bank loan market that are mainly secured by first-lien asset obligations but also may invest in second-lien debt at much more modest levels, when valuations relative to

associated risks merit investment. We take a

draws upon our global trading platform and active

moderate approach with respect to risk in our

fixed-income management to add additional

bank loan portfolios, emphasizing three key

sources of value. TRENDS aims to deliver the

principles: (1) higher-quality focus; (2)

following benefits:

diversification; and (3) focus on improving credits. The loan selection process typically finishes with thorough, traditional, fundamental credit research on companies within the industries we find attractive, which may include on-site visits. The PIMCO Absolute Return Strategy (“PARS”) is a fundamentally driven discretionary global macro hedge fund strategy. It is afforded significant flexibility in pursuit of its objective to deliver absolute returns. The strategy combines:  Tactically implemented trades based upon PIMCO’s secular and cyclical macroeconomic insights.  Opportunistic, conditional, and relative value trades.  Core: fixed income, credit, and currency exposures with opportunistic positions in equities and commodities. In addition to the strategies discussed above, PIMCO also may, at the client’s request, employ a Tail Risk Strategy, described above, to help mitigate portfolio downside risk.

 May reduce both portfolio volatility and drawdown while generating positive returns: Historically, managed futures have generated positive returns, low to negative correlations with risk assets and strong left tail performance.  Seeks to provide positive returns in varying market environments: Because the strategy is able to establish long and short positions across a variety of asset classes, it has the potential to generate positive returns in any market environment. The PIMCO Multi-Asset Absolute Return Systematic Strategy (“MAARS”) is a systematic quantitative strategy that aims to seek attractive returns by investing across a diversified portfolio of strategies across asset classes, including, but not limited to, relative value, momentum, eventdriven, and other strategies, including those using price-based and non-priced based signals to make investment decisions. The MAARS strategy invests across major asset classes including global equities, fixed income, commodities, and currencies. It seeks to diversify risks that tend to

The PIMCO TRENDS Managed Futures Strategy

dominate most portfolios (i.e., equity) by explicitly

(“TRENDS”) is a systematic trend-following

optimizing toward zero correlation with stocks and

strategy that seeks to capture momentum across

bonds at both the underlying strategy and overall

major asset classes including equities, interest

portfolio levels. MAARS combines:

rates, commodities, and currencies. It is designed

 PIMCO’s global trading platform, and decades of

to achieve positive, risk-adjusted returns with low correlations to traditional market risk factors (i.e. low equity beta), consistent with prudent investment management. The strategy follows a disciplined trading approach informed by PIMCO’s proprietary quantitative analytics and by PIMCO’s market knowledge. Additionally, the strategy

experience generating value from alternative risk premia across traditional and alternative strategies  A disciplined approach to selecting only those underlying strategies that have a rational economic underpinning for a positive risk

premium to exist and persist over time, and can

Enhanced strategies are designed to target a

be implemented efficiently using highly liquid

better overall ESG profile than their investment

instruments

universe. In the context of our ESG Enhanced

 Built-in risk management that accounts for changing market conditions, and reflects varying relative risk/return between our underlying strategies In addition, PIMCO may also build—at the client’s request—custom portfolios of our underlying alternative risk premia strategies as defensive solutions tailored to meet specific risk objectives for their overall investment portfolios. Stable Value portfolios are actively managed, diversified strategies that primarily invest in investment grade fixed income securities and a variety of stable value investment contracts issued by insurance companies, banks, and other financial institutions. Contracts, such as wrap contracts, are intended to help reduce principal volatility of, while providing steady income from, associated fixed income investments. The average duration of a portfolio’s investments will vary over time but

strategies, PIMCO’s investment process for commingled fund offerings applies the following guiding principles, which can also be applied to separately managed accounts:  Exclude: We exclude issuers fundamentally misaligned with sustainability factors, which may be customized for client preferences in separately managed accounts.  Evaluate: Using our proprietary and independent ESG scoring system as one factor in portfolio construction, in addition to externally sourced and internally developed criteria, we seek to optimize ESG portfolios to emphasize companies in each industry and more generally issuers with certain ESG practices, limited carbon footprint and/or high-quality sustainable bond frameworks in order to target higher aggregate ESG scores and/or criteria for these portfolios.  Engage: Our analysts engage with issuers with

will typically have an average duration of two to

the objective of improving investment

four years. The portfolio may also invest in cash or

outcomes. For ESG optimized portfolios, we

other liquid investments, such as a short-term

believe that by allocating capital toward issuers

investment-fund, to help meet portfolio liquidity

willing to improve their ESG-related business

needs.

practices, informed by our engagement activity,

Sustainable Investment Solutions. We have developed a suite of sustainable investment solutions for clients seeking risk-adjusted returns and the explicit inclusion of sustainable factors in the investment selection process. Our sustainable investment solutions are organized into three categories: exclusionary, enhanced, and thematic. Exclusionary strategies restrict a portion of the investment universe by excluding issuers misaligned with specific sustainability factors as defined by a client’s investment objectives.

may have more influence than excluding issuers with poor ESG metrics and favoring those with strong metrics. We conduct engagement based on ESG themes that the firm believes have the most opportunity to reduce risk or capitalize on investment opportunities for each specific issuer. Thematic strategies build on the Enhanced strategies approach and are designed to incorporate a specific environmental and/or social objective or outcome in addition to their financial objectives.

Appendix E PIMCO Client Privacy Policy PIMCO considers customer privacy to be a fundamental aspect of its relationship with clients. PIMCO is committed to maintaining the confidentiality, integrity, and security of its current, prospective, and former clients (collectively “clients”) non-public personal information. PIMCO has developed policies that are designed to protect this confidentiality, while allowing client needs to be served. In the course of providing its clients with products and services, PIMCO and certain of its service providers may obtain non-public personal information about its clients. This information may come from sources such as account applications and other forms, from other written, electronic, or verbal correspondence, from client transactions, from client brokerage or financial advisory firm, financial adviser, or consultant, and/or from information captured on applicable websites. As a matter of policy, PIMCO does not disclose any non-public personal information provided by its clients or gathered by PIMCO to non-affiliated third parties, except as required or permitted by law or for PIMCO’s everyday business purposes, such as to process transactions or service a client account. As is common in the industry, non-affiliated companies may from time to time be used to provide certain services, such as preparing and mailing prospectuses, reports, account statements, and other information, conducting research on client satisfaction, and gathering shareholder proxies. PIMCO (or its affiliates) may also retain non-affiliated companies, to market its products, and may enter into joint marketing arrangements with them and other companies. These companies may have access to client personal and account information but are permitted to use the information solely to provide the specific service or as otherwise permitted by law. PIMCO may also provide client personal and account information to their brokerage or financial advisory firm and/or to their financial adviser or consultant. PIMCO reserves the right to disclose or report personal or account information to non-affiliated third parties in limited circumstances where PIMCO believes in good faith that disclosure is required under law, to cooperate with regulators or law enforcement authorities, to protect its rights or property, or upon reasonable request by any of its mutual funds in which clients have invested. In addition, PIMCO may disclose information about a client or their accounts to a non-affiliated third party at their request or if the client consents in writing to the disclosure. PIMCO may share client information with its affiliates in connection with servicing a client account, and subject to applicable law may provide a client with information about products and services that PIMCO or its affiliates believe may be of interest to the client. The information that PIMCO may share may include, for example, information about PIMCO’s or its mutual funds’ experiences and transactions with a client, their participation in its mutual funds or other investment programs, their ownership of certain types of accounts (such as IRAs), information captured on applicable websites, or other data about their accounts, subject to applicable law. PIMCO’s affiliates, in turn, are not permitted to share client information with non-affiliated entities, except as required or permitted by law. PIMCO takes seriously the obligation to safeguard a client’s non-public personal information. In addition to this policy, PIMCO has implemented procedures that are designed to restrict access to a client’s non-public personal information to its personnel who need to know that information to perform their jobs, such as

servicing a client’s account or notifying a client of new products and services. Physical, electronic, and procedural safeguards are in place to guard a client’s non-public personal information. Information Collected From Websites PIMCO and its service providers and partners collect information from clients and website visitors via websites maintained by PIMCO. The information collected via PIMCO’s website includes client nonpublic personal information, which is used and shared in accordance with this Client Privacy Policy. From time to time, PIMCO may update or revise this privacy policy. If there are changes to the terms of this privacy policy, documents containing the revised policy on the relevant website will be updated.