PIMCO Funds

Statement of Additional Information

This Statement of Additional Information is not a prospectus, and should be read in conjunction with the prospectuses of PIMCO Funds (the “Trust”), as described below and as supplemented from time to time.

The Trust is an open-end management investment company (“mutual fund”) currently consisting of 67 separate portfolios (each such portfolio discussed in this Statement of Additional Information is referred to herein as a “Fund” and collectively as the “Funds”). The Trust offers up to twelve classes of shares of each of its Funds.

Certain Funds’ Class A, B, C and R shares are offered through the Bond Funds Prospectus dated October 1, 2009, certain Funds’ Institutional Class, Classes M and P, Administrative Class and Class D shares are offered through the Bond Funds Prospectus dated October 1, 2009, certain Funds’ Class A, B, C and R shares are offered through the Strategic Markets Funds Prospectus dated October 1, 2009, certain Funds’ Institutional Class, Class P, Administrative Class and Class D shares are offered through the Strategic Markets Funds Prospectus dated October 1, 2009, the Short-Term, Low Duration, High Yield, Total Return, CommodityRealReturn Strategy and Real Return Funds’ Class A, B, C and R shares are offered through a Prospectus dated October 1, 2009, the Short-Term, Low Duration, High Yield, Total Return, Total Return II, Total Return III, CommodityRealReturn Strategy and Real Return Funds’ Institutional Class, Class P, Administrative Class and Class D shares are offered through a prospectus dated October 1, 2009, the Real Income 2019 and Real Income 2029 Funds’ Institutional Class, Class P, Administrative Class and Class D shares and Class A and C shares are offered through separate prospecutses each dated August 28, 2009, and the Tax Managed Real Return Fund’s Institutional Class, Class P, Administrative Class and Class D shares and Class A and C shares are offered through separate prospecutses each dated October 28, 2009 as amended or supplemented from time to time (collectively, the “Prospectuses”). A copy of the Prospectuses may be obtained free of charge at the address and telephone number listed below.

Pacific Investment Management Company LLC (“PIMCO” or the “Adviser”), 840 Newport Center Drive, Newport Beach, California 92660, is the investment adviser to the Funds.

Copies of Prospectuses and annual or semi-annual reports may be obtained free of charge at the addresses and telephone number(s) listed below.

Institutional Class, Classes M and P, Administrative Class and Class D Prospectuses, Annual and Semi-Annual Reports: PIMCO Funds 840 Newport Center Drive Newport Beach, California 92660 Telephone: (800) 927-4648 Classes A, B, C and R Prospectuses, Annual and Semi-Annual Reports: Allianz Global Investors Distributors LLC 1345 Avenue of the Americas New York, New York 10105 Telephone: (800) 426-0107

October 1, 2009 (as revised as of October 28, 2009)

TABLE OF CONTENTS

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THE TRUST	1
INVESTMENT OBJECTIVES AND POLICIES	1
U.S. Government Securities	2
Municipal Bonds	2
Mortgage-Related and Asset-Backed Securities	12
Real Estate Securities and Related Derivatives	17
Bank Obligations	17
Loan Participations and Assignments	18
Corporate Debt Securities	19
High Yield Securities (“Junk Bonds”)	19
Creditor Liability and Participation on Creditors Committees	20
Variable and Floating Rate Securities	20
Inflation-Indexed Bonds	21
Event-Linked Exposure	21
Convertible Securities	22
Equity Securities	23
Preferred Stock	24
Warrants to Purchase Securities	24
Foreign Securities	24
Foreign Currency Transactions	28
Foreign Currency Exchange-Related Securities	29
Borrowing	30
Derivative Instruments	32
Hybrid Instruments	41
Exchange-Traded Notes	42
Delayed Funding Loans and Revolving Credit Facilities	42
When-Issued, Delayed Delivery and Forward Commitment Transactions	43
Infrastructure Investments	43
Short Sales	44
Illiquid Securities	44
Loans of Portfolio Securities	45
Investments in Underlying PIMCO Funds	45
Social Investment Policies	45
Investments in the Wholly-Owned Subsidiary	46
Government Intervention in Financial Markets	46
INVESTMENT RESTRICTIONS	47
Fundamental Investment Restrictions	47
Non-Fundamental Investment Restrictions	48
Non-Fundamental Operating Policies Relating to the Sale of Shares of the Total Return Fund in Japan	51
MANAGEMENT OF THE TRUST	53
Trustees and Officers	53
Trustees	53
Executive Officers	54
Securities Ownership	55
Trustee Ownership of the Investment Adviser and Principal Underwriter, and Their Control Persons	56
Standing Committees	57
Compensation Table	59
Investment Adviser	59
Advisory Agreements	60
Advisory Fee Rates	61
Advisory Fee Payments	62
Advisory Fees Waived and Recouped	64

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	Page
Sub-Advisory Fee Payments	64
Proxy Voting Policies and Procedures	65
Fund Administrator	65
Supervisory and Administrative Fee Rates	66
Supervisory and Administrative Fee Payments	68
Supervisory and Administrative Fees Waived and Recouped	69
OTHER PIMCO INFORMATION	70
PORTFOLIO MANAGERS	70
Other Accounts Managed	70
Conflicts of Interest	74
Portfolio Manager Compensation	74
Securities Ownership	76
DISTRIBUTION OF TRUST SHARES	77
Distributor and Multi-Class Plan	77
Initial Sales Charge and Contingent Deferred Sales Charge	78
Distribution and Servicing Plans for Class A, Class B, Class C and Class R Shares	79
Payments Pursuant to Class A Plan	83
Payments Pursuant to Class B Plan	85
Payments Pursuant to Class C Plan	86
Payments Pursuant to Class R Plan	88
Distribution Plan for Administrative Class Shares and Administrative Services Plans for Administrative and Class P Shares	91
Payments Pursuant to the Administrative Class Plans	92
Payments Pursuant to the Class P Plan	93
Additional Information About Institutional Class, Administrative Class, Class M and Class P Shares	93
Plan for Class D Shares	94
Payments Pursuant to Class D Plan	95
Purchases, Exchanges and Redemptions	96
Additional Information about Purchases, Exchanges and Redemptions of Class  A, Class B, Class C and Class R Shares	99
Additional Information About the Shares	118
Request for Multiple Copies of Shareholder Documents	118
PORTFOLIO TRANSACTIONS AND BROKERAGE	118
Investment Decisions and Portfolio Transactions	118
Brokerage and Research Services	119
Brokerage Commissions Paid	119
Holdings of Securities of the Trust’s Regular Brokers and Dealers	121
Portfolio Turnover	133
Disclosure of Portfolio Holdings	134
Large Trade Notifications	135
NET ASSET VALUE	135
TAXATION	136
Distributions	138
Sales of Shares	139
Potential Pass-Through of Tax Credits	139
Backup Withholding	139
Options, Futures and Forward Contracts, and Swap Agreements	140
Short Sales	140
Passive Foreign Investment Companies	140
Foreign Currency Transactions	141
Foreign Taxation	141
Original Issue Discount and Market Discount	142
Constructive Sales	142

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	Page
IRAs and Other Retirement Plans	142
Non-U.S. Shareholders	142
Other Taxation	143
OTHER INFORMATION	143
Capitalization	143
Information on Global Bond Fund (U.S. Dollar-Hedged)	144
Voting Rights	145
Control Persons and Principal Holders of Securities	145
Code of Ethics	222
Custodian, Transfer Agent and Dividend Disbursing Agent	222
Independent Registered Public Accounting Firm	222
Counsel	223
Registration Statement	223
Financial Statements	223

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THE TRUST

The Trust is an open-end management investment company (“mutual fund”) currently consisting of separate investment portfolios, including:

All Asset Fund	Long-Term U.S. Government Fund
All Asset All Authority Fund	Low Duration Fund
California Intermediate Municipal Bond Fund	Low Duration Fund II
California Short Duration Municipal Income Fund	Low Duration Fund III
CommodityRealReturn Strategy Fund®	Moderate Duration Fund
Convertible Fund	Money Market Fund
Developing Local Markets Fund	Mortgage-Backed Securities Fund
Diversified Income Fund	Municipal Bond Fund
EM Fundamental IndexPLUS™ TR Strategy Fund	MuniGO Fund
Emerging Local Bond Fund	New York Municipal Bond Fund
Emerging Markets and Infrastructure Bond Fund	Real Income 2019 Fund
Emerging Markets Bond Fund	Real Income 2029 Fund
Extended Duration Fund	Real Return Fund
Floating Income Fund	Real Return Asset Fund
Foreign Bond Fund (Unhedged)	RealRetirement® 2010 Fund
Foreign Bond Fund (U.S. Dollar-Hedged)	RealRetirement® 2020 Fund
Fundamental Advantage Total Return Strategy Fund	RealRetirement® 2030 Fund
Fundamental IndexPLUS™ Fund	RealRetirement® 2040 Fund
Fundamental IndexPLUS™ TR Fund	RealRetirement® 2050 Fund
Global Advantage Strategy Bond Fund	RealEstateRealReturn Strategy Fund
Global Bond Fund (Unhedged)	Short Duration Municipal Income Fund
Global Bond Fund (U.S. Dollar-Hedged)	Short-Term Fund
Global Multi-Asset Fund	Small Cap StocksPLUS® TR Fund
GNMA Fund	StocksPLUS® Fund
Government Money Market Fund	StocksPLUS® Long Duration Fund
High Yield Fund	StocksPLUS® TR Short Strategy Fund
High Yield Municipal Bond Fund	StocksPLUS® Total Return Fund
Income Fund	Tax Managed Real Return Fund
International StocksPLUS® TR Strategy Fund (Unhedged)	Total Return Fund
International StocksPLUS® TR Strategy Fund (U.S. Dollar-Hedged)	Total Return Fund II
Investment Grade Corporate Bond Fund	Total Return Fund III
Long Duration Total Return Fund	Treasury Money Market Fund
Long-Term Credit Fund	Unconstrained Bond Fund
	Unconstrained Tax Managed Bond Fund

INVESTMENT OBJECTIVES AND POLICIES

The investment objectives and general investment policies of each Fund are described in the Prospectuses. Consistent with each Fund’s investment policies, each Fund may invest in “Fixed Income Instruments,” which are defined in the Prospectuses. Additional information concerning the characteristics of certain of the Funds’ investments is set forth below.

The All Asset and All Asset All Authority Funds, which are separate Funds, invest substantially all of their assets in other Funds, except the RealRetirement^® 2010, RealRetirement^® 2020, RealRetirement^® 2030, RealRetirement^® 2040 and RealRetirement^® 2050 Funds (collectively, the “RealRetirement^® Funds”), Global-Multi-Asset Fund and each other. The other Funds in which the All Asset and All Asset All Authority Funds invest are referred to in this Statement of Additional Information as “Underlying PIMCO Funds.” By investing in Underlying PIMCO Funds, the All Asset, All Asset All Authority and any other funds of funds managed by PIMCO that invest all or a significant portion of their assets in the Underlying PIMCO Funds (together with the All Asset and All Asset All Authority Funds, the “PIMCO Funds of Funds”), may have indirect exposure to some or all of the securities and instruments described below depending upon how their assets are allocated among the Underlying PIMCO Funds. Since the PIMCO Funds of Funds invest substantially all or a significant portion of their assets in the Underlying PIMCO Funds, investment decisions made with respect to the PIMCO Funds of Funds could under certain circumstances negatively impact the Underlying PIMCO Funds, including with respect to the

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expenses and investment performance of the Underlying PIMCO Funds. Similarly, certain funds managed by investment advisers affiliated with PIMCO (“Affiliated Funds of Funds”) may invest some or all of their assets in the Underlying PIMCO Funds, and investment decisions made with respect to Affiliated Funds of Funds similarly could under certain circumstances negatively impact the Underlying PIMCO Funds, including with respect to the expenses and investment performance of the Underlying PIMCO Funds. Please see “Investments in the Underlying PIMCO Funds” below for more information regarding potential risks to the Underlying PIMCO Funds.

The Global Multi-Asset and RealRetirement^® Funds may also invest in any Underlying PIMCO Funds except the All Asset and All Asset All Authority Funds and each other. However, the Global Multi-Asset Fund and RealRetirement^® Funds may also invest in a combination of affiliated fund and unaffiliated funds, which may or may not be registered under the 1940 Act, Fixed Income Instruments, equity securities, forwards and derivatives, to the extent permitted under the 1940 Act or exemptive relief therefrom.

The CommodityRealReturn Strategy Fund^® may pursue its investment objective by investing in the PIMCO Cayman Commodity Fund I Ltd., a wholly-owned subsidiary of the Fund organized under the laws of the Cayman Islands (the “CRRS Subsidiary”). The CRRS Subsidiary is advised by PIMCO, and has the same investment objective and will generally be subject to the same fundamental, non-fundamental and certain other investment restrictions as the Fund; however, the CRRS Subsidiary (unlike the Fund) may invest without limitation in commodity-linked swap agreements and other commodity-linked derivative instruments. The Fund and CRRS Subsidiary may test for compliance with certain investment restrictions on a consolidated basis, except that with respect to its investments in certain securities that may involve leverage, the CRRS Subsidiary will comply with asset segregation or “earmarking” requirements to the same extent as the Fund. By investing in the CRRS Subsidiary, the Fund is indirectly exposed to the risks associated with the CRRS Subsidiary’s investments. The derivatives and other investments held by the CRRS Subsidiary are generally similar to those held by the Fund and are subject to the same risks that apply to similar investments if held directly by the Fund. See below “Investment Objectives and Policies—Investments in the Wholly-Owned Subsidiary” for a more detailed discussion of the Fund’s CRRS Subsidiary.

The Global Multi-Asset Fund may pursue its investment objective by investing in the PIMCO Cayman Commodity Fund II Ltd., a wholly-owned subsidiary of the Fund organized under the laws of the Cayman Islands (the “GMA Subsidiary,” together with the CRRS Subsidiary, the “Subsidiaries”). The GMA Subsidiary is advised by PIMCO, and has the same investment objective and will generally be subject to the same fundamental, non-fundamental and certain other investment restrictions as the Fund; however, the GMA Subsidiary (unlike the Fund) may invest without limitation in commodity-linked swap agreements and other commodity-linked derivative instruments. The Fund and GMA Subsidiary may test for compliance with certain investment restrictions on a consolidated basis, except that with respect to its investments in certain securities that may involve leverage, the GMA Subsidiary will comply with asset segregation or “earmarking” requirements to the same extent as the Fund. By investing in the GMA Subsidiary, the Fund is indirectly exposed to the risks associated with the GMA Subsidiary’s investments. The derivatives and other investments held by the GMA Subsidiary are generally similar to those held by the Fund and are subject to the same risks that apply to similar investments if held directly by the Fund. See below “Investment Objectives and Policies—Investments in the Wholly-Owned Subsidiary” for a more detailed discussion of the Fund’s GMA Subsidiary.

U.S. Government Securities

U.S. Government securities are obligations of and, in certain cases, guaranteed by, the U.S. Government, its agencies or instrumentalities. The U.S. Government does not guarantee the net asset value of the Funds’ shares. Some U.S. Government securities, such as Treasury bills, notes and bonds, and securities guaranteed by the Government National Mortgage Association (“GNMA”), are supported by the full faith and credit of the United States; others, such as those of the Federal Home Loan Banks, are supported by the right of the issuer to borrow from the U.S. Department of the Treasury (the “U.S. Treasury”); others, such as those of the Federal National Mortgage Association (“FNMA”), are supported by the discretionary authority of the U.S. Government to purchase the agency’s obligations; and still others, such as those of the Student Loan Marketing Association, are supported only by the credit of the instrumentality. U.S. Government securities may include zero coupon securities, which do not distribute interest on a current basis and tend to be subject to greater risk than interest-paying securities of similar maturities.

Municipal Bonds

Each Fund (except the Government Money Market and Treasury Money Market Funds) may invest in securities issued by states, municipalities and other political subdivisions, agencies, authorities and instrumentalities of states and multi-state agencies or authorities. It is a policy of each of the California Intermediate Municipal Bond, California Short Duration Municipal Income, High Yield Municipal Bond, Municipal Bond, MuniGO, New York Municipal Bond, and Short Duration Municipal Income Funds (each a “Municipal Fund,” and collectively, the “Municipal Funds”) to have at least 80% of its net

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assets plus borrowings for investment purposes invested in investments, the income of which is exempt from federal income tax (“Municipal Bonds”). In the case of the California Intermediate Municipal Bond and California Short Duration Municipal Income Funds, the Funds will invest, under normal circumstances, at least 80% of their net assets plus borrowing for investment purposes in investments, the income of which is exempt from federal income tax and California income tax. In the case of the New York Municipal Bond Fund, the Fund will invest, under normal circumstances, at least 80% of its net assets plus borrowing for investment purposes in investments, the income of which is exempt from federal income tax and New York income tax. The ability of a Municipal Fund to invest in securities other than Municipal Bonds is limited by a requirement of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”) that at least 50% of the applicable Municipal Fund’s total assets be invested in Municipal Bonds at the end of each calendar quarter. In addition, each of the Tax Managed Real Return and Unconstrained Tax Managed Bond Funds seeks to invest under normal circumstances at least 50% of its assets in Municipal Bonds.

The California Intermediate Municipal Bond and California Short Duration Municipal Income Funds may concentrate their investments in California Municipal Bonds and will therefore be exposed to California state-specific risks. Similarly, the New York Municipal Bond Fund may concentrate its investments in New York Municipal Bonds and therefore will be exposed to New York state-specific risks. State-specific risks are discussed in the “Summary of Risks” section of the Prospectuses and in this “Municipal Bonds” section of this Statement of Additional Information. The High Yield Municipal Bond, Municipal Bond, Short Duration Municipal Income and Unconstrained Tax Managed Bond Funds may, from time to time, invest more than 25% of their total assets in Municipal Bonds of issuers in California and New York, and the MuniGO Fund may, from time to time, invest more than 25% of its assets in Municipal Bonds of issuers in California. Accordingly, such Funds, to the extent they invest more than 25% in California or New York, will be subject to the California and New York State state-specific risks discussed in the “Summary of Risks” section of the Prospectuses and in this “Municipal Bonds” section of this Statement of Additional Information, but none of these Funds have any present intention to invest more than that amount in a particular state.

Municipal Bonds share the attributes of debt/fixed income securities in general, but are generally issued by states, municipalities and other political subdivisions, agencies, authorities and instrumentalities of states and multi-state agencies or authorities. Specifically, California and New York Municipal Bonds generally are issued by or on behalf of the State of California and New York, respectively, and their political subdivisions and financing authorities, and local governments. The Municipal Bonds which the Funds may purchase include general obligation bonds and limited obligation bonds (or revenue bonds), including industrial development bonds issued pursuant to former federal tax law. General obligation bonds are obligations involving the credit of an issuer possessing taxing power and are payable from such issuer’s general revenues and not from any particular source. Limited obligation bonds are payable only from the revenues derived from a particular facility or class of facilities or, in some cases, from the proceeds of a special excise or other specific revenue source. Tax-exempt private activity bonds and industrial development bonds generally are also revenue bonds and thus are not payable from the issuer’s general revenues. The credit and quality of private activity bonds and industrial development bonds are usually related to the credit of the corporate user of the facilities. Payment of interest on and repayment of principal of such bonds is the responsibility of the corporate user (and/or any guarantor).

Each Fund that may invest in Municipal Bonds (except the MuniGO Fund), and in particular the Municipal Funds (except the MuniGO Fund) and the Unconstrained Tax Managed Bond Fund, may invest 25% or more of its total assets in Municipal Bonds that finance similar projects, such as those relating to education, health care, housing, transportation, and utilities, and 25% or more of its total assets in industrial development bonds. A Fund may be more sensitive to adverse economic, business or political developments if it invests a substantial portion of its assets in the bonds of similar projects or industrial development bonds.

Each Fund that may invest in Municipal Bonds may invest in pre-refunded Municipal Bonds. Pre-refunded Municipal Bonds are tax-exempt bonds that have been refunded to a call date prior to the final maturity of principal, or, in the case of pre-refunded Municipal Bonds commonly referred to as “escrowed-to-maturity bonds,” to the final maturity of principal, and remain outstanding in the municipal market. The payment of principal and interest of the pre-refunded Municipal Bonds held by a Fund is funded from securities in a designated escrow account that holds U.S. Treasury securities or other obligations of the U.S. Government (including its agencies and instrumentalities (“Agency Securities”)). While still tax-exempt, pre-refunded Municipal Bonds usually will bear a Aaa rating (if a re-rating has been requested and paid for) because they are backed by U.S. Treasury or Agency securities. As the payment of principal and interest is generated from securities held in an escrow account established by the municipality and an independent escrow agent, the pledge of the municipality has been fulfilled and the original pledge of revenue by the municipality is no longer in place. The escrow account securities pledged to pay the principal and interest of the pre-refunded Municipal Bond do not guarantee the price movement of the bond before maturity. Issuers of Municipal Bonds refund in advance of maturity the outstanding higher cost debt and issue new, lower cost debt, placing the proceeds of the lower cost issuance into an escrow account to pre-refund

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the older, higher cost debt. Investment in pre-refunded Municipal Bonds held by a Fund may subject the Fund to interest rate risk and market risk. In addition, while a secondary market exists for pre-refunded Municipal Bonds, if a Fund sells pre-refunded Municipal Bonds prior to maturity, the price received may be more or less than the original cost, depending on market conditions at the time of sale. To the extent permitted by the Securities and Exchange Commission and the Internal Revenue Service, a Fund’s investment in pre-refunded Municipal Bonds backed by U.S. Treasury and Agency securities in the manner described above, will, for purposes of diversification tests applicable to certain Funds, be considered an investment in the respective U.S. Treasury and Agency securities.

Under the Internal Revenue Code, certain limited obligation bonds are considered “private activity bonds” and interest paid on such bonds is treated as an item of tax preference for purposes of calculating federal alternative minimum tax liability. The California Short Duration Municipal Income, MuniGO, Short Duration Municipal Income and Unconstrained Tax Managed Bond Funds do not intend to invest in securities whose interest is subject to the federal alternative minimum tax.

Each Fund (except the Government Money Market and Treasury Money Market Funds) may invest in Build America Bonds. Build America Bonds are tax credit bonds created by the American Recovery and Reinvestment Act of 2009, which authorizes state and local governments to issue Build America Bonds as taxable bonds in 2009 and 2010, without volume limitations, to finance any capital expenditures for which such issuers could otherwise issue traditional tax-exempt bonds. State and local governments may receive a direct federal subsidy payment for a portion of their borrowing costs on Build America Bonds equal to 35% of the total coupon interest paid to investors. The state or local government issuer can elect to either take the federal subsidy or pass the 35% tax credit along to bondholders. A Fund’s investments in Build America Bonds will result in taxable income and the Fund may elect to pass through to shareholders the corresponding tax credits. The tax credits can generally be used to offset federal income taxes and the alternative minimum tax, but such credits are generally not refundable. Build America Bonds involve similar risks as Municipal Bonds, including credit and market risk. They are intended to assist state and local governments in financing capital projects at lower borrowing costs and are likely to attract a broader group of investors than tax-exempt Municipal Bonds. For example, taxable funds, including Funds other than the Municipal Funds, may choose to invest in Build America Bonds. Although Build America Bonds are only authorized for 2009 and 2010, the program may result in reduced issuance of tax-exempt Municipal Bonds. As a result, Funds that invest in tax-exempt Municipal Bonds, such as the Municipal Funds, may increase their holdings of Build America Bonds and other investments permitted by the Funds’ respective investment objectives and policies.

The Funds may invest in municipal lease obligations. A lease is not a full faith and credit obligation of the issuer and is usually backed only by the borrowing government’s unsecured pledge to make annual appropriations for lease payments. There have been challenges to the legality of lease financing in numerous states, and, from time to time, certain municipalities have considered not appropriating money for lease payments. In deciding whether to purchase a lease obligation, the Funds will assess the financial condition of the borrower, the merits of the project, the level of public support for the project, and the legislative history of lease financing in the state. These securities may be less readily marketable than other municipals. The Funds also may purchase unrated lease obligations if determined by PIMCO to be of comparable quality to rated securities in which the Fund is permitted to invest.

The Funds may seek to enhance their yield through the purchase of private placements. These securities are sold through private negotiations, usually to institutions or mutual funds, and may have resale restrictions. Their yields are usually higher than comparable public securities to compensate the investor for their limited marketability. A Fund may not invest more than 15% (10% in the case of the Government Money Market, Money Market and Treasury Money Market Funds) of its net assets in illiquid securities, including unmarketable private placements.

Some longer-term Municipal Bonds give the investor the right to “put” or sell the security at par (face value) within a specified number of days following the investor’s request - usually one to seven days. This demand feature enhances a security’s liquidity by shortening its effective maturity and enables it to trade at a price equal to or very close to par. If a demand feature terminates prior to being exercised, a Fund would hold the longer-term security, which could experience substantially more volatility.

The Funds that may invest in Municipal Bonds (except the MuniGO Fund) may invest in municipal warrants, which are essentially call options on Municipal Bonds. In exchange for a premium, municipal warrants give the purchaser the right, but not the obligation, to purchase a Municipal Bond in the future. A Fund may purchase a warrant to lock in forward supply in an environment where the current issuance of bonds is sharply reduced. Like options, warrants may expire worthless and they may have reduced liquidity. A Fund will not invest more than 5% of its net assets in municipal warrants.

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The Funds may invest in Municipal Bonds with credit enhancements such as letters of credit, municipal bond insurance and Standby Bond Purchase Agreements (“SBPAs”). Letters of credit are issued by a third party, usually a bank, to enhance liquidity and ensure repayment of principal and any accrued interest if the underlying Municipal Bond should default. Municipal bond insurance, which is usually purchased by the bond issuer from a private, nongovernmental insurance company, provides an unconditional and irrevocable guarantee that the insured bond’s principal and interest will be paid when due. Insurance does not guarantee the price of the bond or the share price of any fund. The credit rating of an insured bond reflects the credit rating of the insurer, based on its claims-paying ability. The obligation of a municipal bond insurance company to pay a claim extends over the life of each insured bond. Although defaults on insured Municipal Bonds have been low to date and municipal bond insurers have met their claims, there is no assurance this will continue. A higher-than-expected default rate could strain the insurer’s loss reserves and adversely affect its ability to pay claims to bondholders. Because a significant portion of insured Municipal Bonds that have been issued and are outstanding is insured by a small number of insurance companies, not all of which have the highest credit rating, an event involving one or more of these insurance companies, such as a credit rating downgrade, could have a significant adverse effect on the value of the Municipal Bonds insured by that insurance company and on the Municipal Bond markets as a whole. An SBPA is a liquidity facility provided to pay the purchase price of bonds that cannot be re-marketed. The obligation of the liquidity provider (usually a bank) is only to advance funds to purchase tendered bonds that cannot be remarketed and does not cover principal or interest under any other circumstances. The liquidity provider’s obligations under the SBPA are usually subject to numerous conditions, including the continued creditworthiness of the underlying borrower.

The Funds (except the Government Money Market, Money Market and Treasury Money Market Funds) may invest in Residual Interest Bonds (“RIBs”), which brokers create by depositing a Municipal Bond in a trust. The trust in turn issues a variable rate security and RIBs. The interest rate on the short-term component is determined by the remarketing broker-dealer, while the RIB holder receives the balance of the income from the underlying Municipal Bond. Therefore, rising short-term interest rates result in lower income for the RIB, and vice versa. An investment in RIBs typically will involve greater risk than an investment in a fixed rate bond. RIBs have interest rates that bear an inverse relationship to the interest rate on another security or the value of an index. Because increases in the interest rate on the other security or index reduce the residual interest paid on a RIB, the value of a RIB is generally more volatile than that of a fixed rate bond. RIBs have interest rate adjustment formulas that generally reduce or, in the extreme, eliminate the interest paid to the Funds when short-term interest rates rise, and increase the interest paid to the Funds when short-term interest rates fall. RIBs have varying degrees of liquidity that approximate the liquidity of the underlying bond(s), and the market price for these securities is volatile. RIBs can be very volatile and may be less liquid than other Municipal Bonds of comparable maturity. These securities will generally underperform the market of fixed rate bonds in a rising interest rate environment, but tend to outperform the market of fixed rate bonds when interest rates decline or remain relatively stable. Although volatile, RIBs typically offer the potential for yields exceeding the yields available on fixed rate bonds with comparable credit quality, coupon, call provisions and maturity. To the extent permitted by each Fund’s investment objectives and general investment policies, a Fund (except the Government Money Market, Money Market and Treasury Money Market Funds) may invest in RIBs without limitation.

In a transaction in which a Fund purchases a RIB from a trust, and the underlying Municipal Bond was held by the Fund prior to being deposited into the trust, the Fund treats the transaction as a secured borrowing for financial reporting purposes. As a result, the Fund will incur a non-cash interest expense with respect to interest paid by the trust on the variable rate securities, and will recognize additional interest income in an amount directly corresponding to the non-cash interest expense. Therefore, the Fund’s net asset value per share and performance are not affected by the non-cash interest expense. This accounting treatment does not apply to RIBs acquired by the Funds where the Funds did not previously own the underlying Municipal Bond.

The Funds also may invest in participation interests. Participation interests are various types of securities created by converting fixed rate bonds into short-term, variable rate certificates. These securities have been developed in the secondary market to meet the demand for short-term, tax-exempt securities. The Funds will invest only in such securities deemed tax-exempt by a nationally recognized bond counsel, but there is no guarantee the interest will be exempt because the Internal Revenue Service (“IRS”) has not issued a definitive ruling on the matter.

Municipal Bonds are subject to credit and market risk. Generally, prices of higher quality issues tend to fluctuate less with changes in market interest rates than prices of lower quality issues and prices of longer maturity issues tend to fluctuate more than prices of shorter maturity issues.

The Funds may purchase and sell portfolio investments to take advantage of changes or anticipated changes in yield relationships, markets or economic conditions. The Funds also may sell Municipal Bonds due to changes in PIMCO’s evaluation of the issuer or cash needs resulting from redemption requests for Fund shares. The secondary market for

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Municipal Bonds typically has been less liquid than that for taxable debt/fixed income securities, and this may affect the Fund’s ability to sell particular Municipal Bonds at then-current market prices, especially in periods when other investors are attempting to sell the same securities. Additionally, Municipal Bonds rated below investment grade (i.e., high yield Municipal Bonds) may not be as liquid as higher-rated Municipal Bonds. Reduced liquidity in the secondary market may have an adverse impact on the market price of a Municipal Bond and on a Fund’s ability to sell a Municipal Bond in response to changes or anticipated changes in economic conditions or to meet the Fund’s cash needs. Reduced liquidity may also make it more difficult to obtain market quotations based on actual trades for purposes of valuing a Fund’s portfolio. For more information on high yield securities please see “High Yield Securities (“Junk Bonds”)” below.

Prices and yields on Municipal Bonds are dependent on a variety of factors, including general money-market conditions, the financial condition of the issuer, general conditions of the Municipal Bond market, the size of a particular offering, the maturity of the obligation and the rating of the issue. A number of these factors, including the ratings of particular issues, are subject to change from time to time. Information about the financial condition of an issuer of Municipal Bonds may not be as extensive as that which is made available by corporations whose securities are publicly traded.

Each Fund that may invest in Municipal Bonds may purchase custodial receipts representing the right to receive either the principal amount or the periodic interest payments or both with respect to specific underlying Municipal Bonds. In a typical custodial receipt arrangement, an issuer or third party owner of Municipal Bonds deposits the bonds with a custodian in exchange for two classes of custodial receipts. The two classes have different characteristics, but, in each case, payments on the two classes are based on payments received on the underlying Municipal Bonds. In no event will the aggregate interest paid with respect to the two classes exceed the interest paid by the underlying Municipal Bond. Custodial receipts are sold in private placements. The value of a custodial receipt may fluctuate more than the value of a Municipal Bond of comparable quality and maturity.

Obligations of issuers of Municipal Bonds are subject to the provisions of bankruptcy, insolvency and other laws affecting the rights and remedies of creditors. Congress or state legislatures may seek to extend the time for payment of principal or interest, or both, or to impose other constraints upon enforcement of such obligations. There is also the possibility that as a result of litigation or other conditions, the power or ability of issuers to meet their obligations for the payment of interest and principal on their Municipal Bonds may be materially affected or their obligations may be found to be invalid or unenforceable. Such litigation or conditions may from time to time have the effect of introducing uncertainties in the market for Municipal Bonds or certain segments thereof, or of materially affecting the credit risk with respect to particular bonds. Adverse economic, business, legal or political developments might affect all or a substantial portion of a Fund’s Municipal Bonds in the same manner. In particular, the California Intermediate Municipal Bond, California Short Duration Municipal Income and New York Municipal Bond Funds are subject to the risks inherent in concentrating investment in a particular state or region. The following summarizes information drawn from official statements, and other public documents available relating to issues potentially affecting securities offerings of issuers domiciled in the states of California and New York. Neither the Funds nor PIMCO have independently verified the information, but have no reason to believe that it is substantially different.

California. Each Fund investing in California Municipal Bonds, and in particular the California Intermediate Municipal Bond and California Short Duration Municipal Income Funds, may be particularly affected by political, economic or regulatory developments affecting the ability of California tax-exempt issuers to pay interest or repay principal. Provisions of the California Constitution and State statutes that limit the taxing and spending authority of California governmental entities may impair the ability of California governmental issuers to maintain debt service on their obligations. Future California political and economic developments, constitutional amendments, legislative measures, executive orders, administrative regulations, litigation and voter initiatives could have an adverse effect on the debt obligations of California issuers. The information set forth below constitutes only a brief summary of a number of complex factors which may impact issuers of California Municipal Bonds. The information is derived from sources that are generally available to investors, including information promulgated by the State’s Department of Finance, the State’s Treasurer’s Office, and the Legislative Analyst’s Office. The information is intended to give a recent historical description and is not intended to indicate future or continuing trends in the financial or other positions of California. Such information has not been independently verified by the Funds, and the Funds assume no responsibility for the completeness or accuracy of such information. It should be noted that the financial strength of local California issuers and the creditworthiness of obligations issued by local California issuers is not directly related to the financial strength of the State or the creditworthiness of obligations issued by the State, and there is no obligation on the part of the State to make payment on such local obligations in the event of default.

Certain debt obligations held by a Fund may be obligations of issuers that rely in whole or in substantial part on California state government revenues for the continuance of their operations and payment of their obligations. Whether and to what extent the California Legislature will continue to appropriate a portion of the State’s General Fund to counties, cities

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and their various entities, which depend upon State government appropriations, is not entirely certain. To the extent local entities do not receive money from the state government to pay for their operations and services, their ability to pay debt service on obligations held by the Funds may be impaired.

Certain tax-exempt securities in which the Funds may invest may be obligations payable solely from the revenues of specific institutions, or may be secured by specific properties, which are subject to provisions of California law that could adversely affect the holders of such obligations. For example, the revenues of California health care institutions may be subject to state laws, and California law limits the remedies of a creditor secured by a mortgage or deed of trust on real property.

With a gross state product in excess of $1 trillion, California’s economy is the largest state economy in the United States and one of the largest in the world. In addition to its size, California’s economy is diverse, with no industry sector accounting for more than one-quarter of the State’s output. While California’s economy is broad, it does have major concentrations in high technology, aerospace and defense-related manufacturing, entertainment, real estate and financial services, and may be sensitive to economic factors affecting those industries.

In March 2004, voters approved Proposition 57, the California Economic Recovery Bond Act, authorizing the issuance of up to $15 billion in Economic Recovery Bonds (“ERBs”) to finance the State’s negative General Fund balance. Under the Act, the State will not be permitted to use more than $15 billion of net proceeds of any bonds issued to address the inherited debt. The ERBs replace the previously authorized “Fiscal Recovery Bonds.”

The repayment of the ERBs are secured by a pledge of revenues from an increase in the State’s share of the sales and use tax of 0.25% starting July 1, 2004, which are deposited in the Fiscal Recovery Fund. Local governments’ shares of the sales and use tax are expected to decrease by a commensurate amount. These new sales and use tax rates will automatically revert to previous levels as soon as the ERBs are repaid. The repayment of the ERBs may be accelerated with transfers from the State’s Budget Stabilization Fund, as specified in the Balanced Budget Amendment. In the event the dedicated revenue falls short, the State also would pledge its full faith and credit by using General Fund revenues to repay the debt service. As of January 10, 2009, California had outstanding approximately $56.9 billion in long-term general obligation bonds. California announced the issuance of approximately $6.5 billion in March 2009 and $6.8 billion in April 2009 in general obligations bonds

Also in March 2004, voters approved Proposition 58, which amended the California State Constitution to require balanced budgets in the future, yet this has not prevented the State from enacting budgets that rely on borrowing. Proposition 58 requires the State to contribute to a special reserve of 1% of revenues in 2006-07, 2% in 2007-08, and 3% in subsequent years. This special reserve will be used to repay the ERBs and provide a “rainy-day” fund for future economic downturns or natural disasters. The amendment allows the Governor to declare a fiscal emergency whenever he or she determines that General Fund revenues will decline below budgeted expenditures, or expenditures will increase substantially above available resources. Finally, it requires the State legislature to take action on legislation proposed by the Governor to address fiscal emergencies. In January 2008, California Governor Arnold Schwarzenegger declared a fiscal emergency and the 2008-09 budget proposed, pursuant to the Governor’s authority under Proposition 58, to suspend the pre-payment of ERBs scheduled for 2008-09 and to sell the remaining $3.3 billion of authorized ERBs to rebuild 2008’s budget reserve. The California Legislature adopted the proposals in February 2008.

California, like the rest of the nation, recently has experienced a severe economic downturn. The outlook for the national economy is for slower growth for 2009. Real GDP is projected to shrink 2.2% in 2009. The nation’s economic difficulties are expected to continue into 2010, with a projected growth in real GDP of 1.5% with unemployment exceeding 9%. The outlook for the California economy is for negative growth in 2009, followed by weak growth in 2010. Both the California and national economies continue to face falling home prices, worsening credit availability, shrinking equity values and growing job losses. Both economies were very weak during the first half of 2009, and it is difficult to gauge how long it will be before the economies recover. As a result of these economic difficulties, in July 2009, the State budget shortfall is estimated at $26.3 billion for the 2009-10 fiscal year (“FY”).

The housing slump has been deeper in California than most states, and declining prices and increasing subprime mortgage rates have led to record mortgage delinquencies and home foreclosures in California. Upward resets of subprime mortgage rates have made payments unaffordable for many borrowers in the State, and several large financial institutions have reported substantial losses on subprime mortgages and securities backed by these mortgages. In addition, uncertainty about the mortgage market and increased financial market volatility have prompted lenders to tighten credit standards.

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Employment data also reflect the difficult economy. Non-farm payroll employment is forecasted to fall by 1.6 percent in 2009 and 0.5 percent in 2010, as compared to a 0.6 percent decline in 2008. The State’s unemployment rate rose from 5.9 percent in January 2008 to 11.5 percent in May 2009. Personal income in California is projected to grow 2 percent in 2009 and 2.1 percent in 2010, as compared to 3.7 percent in 2008. Taxable sales in California have continued to decelerate and new vehicle registrations also continued to fall.

General Fund revenue collections for the month of September 2008 were $923 million below forecast, and the revenues collected in November 2008 amounted to $1.3 billion, or 18.5 percent below expectations. In a statement released October 1, 2008, State Controller John Chiang indicated that based on projected declines in revenues coupled with questionable cash solutions in the State budget, California will need to borrow $7 billion to meet all of its obligations through the FY ending June 30, 2009. The State sold $5 billion of Revenue Anticipation Notes (“RANs”) in a public offering during the week of October 13, 2008, but cancelled the November sale of the remaining $2 billion in RANs. Governor Schwarzenegger indicated that if California is unable to obtain the necessary level of financing to maintain government operations, it may be forced to turn to the U.S. Treasury for short-term financing.

In 2009, California’s credit rating was downgraded by Moody’s Investor Services, Inc. (“Moody’s”), Standard & Poor’s Rating Services (“S&P”) and Fitch, Inc. (“Fitch”). As of July 6, 2009, California’s general obligation bonds were assigned ratings of A2, A, and A- by Moody’s, S&P and Fitch, respectively. In the summer of 2009, both Moody’s and S&P indicated that further ratings downgrades are possible. The agencies continue to monitor the State’s budget deliberations closely to determine whether to alter the ratings. It should be recognized that these ratings are not an absolute standard of quality, but rather general indicators. Such ratings reflect only the view of the originating rating agencies, from which an explanation of the significance of such ratings may be obtained. There is no assurance that a particular rating will continue for any given period of time or that any such rating will not be revised downward or withdrawn entirely if, in the judgment of the agency establishing the rating, circumstances so warrant. A downward revision or withdrawal of such ratings, or either of them, may affect the market price of the State municipal obligations in which a Fund invests.

Revenue bonds represent both obligations payable from State revenue-producing enterprises and projects, which are not payable from the General Fund, and conduit obligations payable only from revenues paid by private users of facilities financed by such revenue bonds. Such enterprises and projects include transportation projects, various public works and exposition projects, educational facilities (including the California State University and University of California systems), housing, health facilities, and pollution control facilities.

On September 23, 2008, Governor Schwarzenegger signed the State’s budget, which came a record 85 days late. The 2008 Budget Act addressed the projected $24.3 billion budget deficit and projected a modest reserve of $1.7 billion in 2008-09, although it projected a deficit of $1.0 billion in 2009-10. While the budget did not resolve the State’s persistent structural budget deficit, it included a budget reform measure aimed at stabilizing the budget while avoiding borrowing from local governments or transportation funds. Expenditure reductions account for 47 percent of all savings, more than any other category. As a result of these reductions, the budget held General Fund spending to virtually no growth in 2008-09—$103.4 billion in 2008-09 compared to $103.3 billion in 2007-08. The budget included a reduction of $850 million in the General Fund, or 1 percent below the amounts proposed in the budget bill adopted by the Legislature. This reduction is due to: (i) $510 million in General Fund vetoes; and (ii) $340 million in General Fund savings due to the delay in enacting this budget and the effect of Executive Order S-09-08. The budget delay slowed or halted many activities of government for nearly three months, and the Executive Order terminated the services of temporary employees and reduced overtime for State employees.

In light of economic developments since enactment of the 2008 budget, Governor Schwarzenegger ordered a special session of the Legislature and proposed a variety of spending reductions and revenue increases to bring spending closer in line with available revenues. Governor Schwarzenegger declared a fiscal emergency for the second time in December 2008, stating that the budget deficit will reach $41.6 billion through June 2010 if no action is taken. The Governor has called for a combination of $4.5 billion in cuts and $4.7 billion in new revenues from tax law changes to address California’s widening $15 billion deficit. The proposals include a plan to temporarily increase State sales tax to 8.75 percent from 7.25 percent for 3 years, as well as adding a 9.9 percent-per-barrel severance tax on oil drilled in the State.

On January 16, 2009, the State announced that it would delay the distribution of state tax refunds. On February 17, 2009, after the State Legislature was unable to agree on a budget, the Governor announced layoffs of 10,000 government workers and the halting of the last 275 state-funded public works projects still in operation. Closing these projects will save the State an estimated $3.8 billion this year. In June 2009, California announced that it was unable to meet its financial commitments and would be issuing IOUs to creditors.

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In July 2009, a budget was passed to close a projected budget shortfall of $24 billion for the 2009-10 FY. The budget includes $16 billion in spending cuts, including $8 billion from education and $1 billion each from salaries, prisons and health care. The State’s current economic problems heighten the risk of investing in California Municipal Bonds. There is a heightened risk of an interruption in payments to holders of California Municipal Bonds, such as the Funds. There is also a heightened risk of a further downgrade in the credit ratings of the State’s general obligation debt, which could adversely affect the market value of the California Municipal Bonds held by the Funds.

The State is a party to numerous legal proceedings, many of which normally occur in governmental operations and which, if decided against the State, might require the State to make significant future expenditures or impair future revenue sources.

Constitutional and statutory amendments as well as budget developments may affect the ability of California issuers to pay interest and principal on their obligations. The overall effect may depend upon whether a particular California tax-exempt security is a general or limited obligation bond and on the type of security provided for the bond. It is possible that measures affecting the taxing or spending authority of California or its political subdivisions may be approved or enacted in the future.

New York. Funds investing in New York Municipal Bonds, and in particular the New York Municipal Bond Fund, may be particularly affected by political, economic or regulatory developments affecting the ability of New York tax-exempt issuers to pay interest or repay principal. Investors should be aware that certain issuers of New York tax-exempt securities have at times experienced serious financial difficulties. A reoccurrence of these difficulties may impair the ability of certain New York issuers to maintain debt service on their obligations. The following information provides only a brief summary of the complex factors affecting the financial situation in New York and is derived from sources that are generally available to investors, including the New York State Division of the Budget and the New York City Office of Management and Budget. The information is intended to give a recent historical description and is not intended to indicate future or continuing trends in the financial or other positions of New York. Such information has not been independently verified by the Funds and the Funds assume no responsibility for the completeness or accuracy of such information. It should be noted that the creditworthiness of obligations issued by local New York issuers may be unrelated to the creditworthiness of obligations issued by New York city and state agencies, and that there is no obligation on the part of New York State to make payment on such local obligations in the event of default.

New York has historically been one of the wealthiest states in the nation, maintaining the third largest economy in the United States behind California and Texas. For decades, however, the State’s economy grew more slowly than that of the nation as a whole, gradually eroding the State’s relative economic affluence, as urban centers lost the more affluent to the suburbs and people and businesses migrated to the southern and the western United States. Factors that may adversely affect the New York State economy include additional write-downs by the financial sector associated with subprime mortgages; deteriorating credit markets, thereby lowering business investment and prolonging recovery; and increases in the cost of energy and food prices, thereby increasing the risk of high inflation.

Relative to other states, New York has for many years imposed a very high state and local tax burden on residents. The burden of state and local taxation in combination with the many other causes of regional economic dislocation, has contributed to the decisions of some businesses and individuals to relocate outside of, or not locate within, New York. The economic and financial condition of the State also may be affected by various financial, social, economic and political factors. For example, the securities industry is more central to New York’s economy than to the national economy, therefore any significant decline in stock market performance could adversely affect the State’s income and employment levels. Furthermore, such social, economic and political factors can be very complex, may vary from year to year and can be the result of actions taken not only by the State and its agencies and instrumentalities, but also by entities, such as the Federal government, that are not under the control of the State.

The fiscal stability of New York State is related to the fiscal stability of the State’s municipalities, its agencies and authorities (which generally finance, construct and operate revenue-producing public benefit facilities). This is due in part to the fact that agencies, authorities and local governments in financial trouble often seek State financial assistance. The experience has been that if New York City or any of its agencies or authorities suffers serious financial difficulty, then the ability of the State, New York City, the State’s political subdivisions, agencies and authorities to obtain financing in the public credit markets, and the market price of outstanding New York tax-exempt securities, is adversely affected.

State actions affecting the level of receipts and disbursements, the relative strength of the State and regional economies and actions of the federal government may create budget gaps for the State. Moreover, even an ostensibly balanced budget may still contain several financial risks. These risks include the possibility of broad economic factors,

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additional spending needs, revenues that may not materialize and proposals to reduce spending or raise revenues that have been previously rejected by the Legislature. To address a potential imbalance in any given FY, the State would be required to take actions to increase receipts and/or reduce disbursements as it enacts the budget for that year. Under the State Constitution, the Governor is required to propose a balanced budget each year. There can be no assurance, however, that the Legislature will enact the proposals or that the State’s actions will be sufficient to preserve budgetary balance in a given fiscal year or to align recurring receipts and disbursements in future fiscal years. The fiscal stability of the State is related to the fiscal stability of its public authorities. Authorities have various responsibilities, including those that finance, construct and/or operate revenue-producing public facilities. Authorities are not subject to the constitutional restrictions on the incurrence of debt that apply to the State itself, and may issue bonds and notes within the amounts and restrictions set forth in their legislative authorization.

Authorities are generally supported by revenues generated by the projects financed or operated, such as tolls charged for use of highways, bridges or tunnels, charges for electric power, electric and gas utility services, rentals charged for housing units and charges for occupancy at medical care facilities. In addition, State legislation authorizes several financing techniques for authorities. Also, there are statutory arrangements providing for State local assistance payments otherwise payable to localities, to be made under certain circumstances directly to the authorities. Although the State has no obligation to provide additional assistance to localities whose local assistance payments have been paid to authorities under these arrangements, if local assistance payments are diverted the affected localities could seek additional State assistance. Some authorities also receive monies from State appropriations to pay for the operating costs of certain of their programs.

Over the near and long term, New York State and New York City may face economic problems. New York City continues to be adversely affected by the nation-wide collapse of the housing market, increasing energy prices, the declining dollar and the tightening of credit. New York City accounts for a large portion of the State’s population and personal income, and New York City’s financial health affects the State in numerous ways. New York City continues to require significant financial assistance from the State and depends on State aid to both enable it to balance its budget and to meet its cash requirements. The State could also be affected by the ability of the City to market its securities successfully in the public credit markets as well as by shifts upward or downward in the State’s real estate market.

The national and State economies continue to be weak. The State’s Division of Budget (“DOB”) expects the slowdown in economic activity to persist until at least the end of calendar year 2009. A weaker national economy and more severe financial sector woes are projected to negatively affect the State economy as well. The State’s enacted budget for FY 2009-10 closes the largest budget gap ever faced by the State. The combined current services budget gap for 2008-09 and 2009-10 totaled $20.1 billion (2008-09: $2.2 billion; 2009-10: $17.9 billion), before the gap-closing actions approved by the Governor and Legislature and the receipt of Federal aid. The combined current-services gap for 2008-09 and 2009-10 grew steadily over the past year, increasing four-fold since May 2008. The $15 billion increase in the gap, to $20.1 billion, was due almost exclusively to the precipitous decline in projected receipts, reflecting the severity of the current economic downturn and dislocation in the financial markets. The current recession has been characterized by a loss of vast sums of wealth from depressed equity and real estate markets. As of the fourth quarter of 2008, an unprecedented $12.8 trillion in net wealth had been lost nationwide since the third quarter of calendar year 2007. This is expected to have a substantial impact on taxable income and, by extension, State tax receipts.

The 2009-10 gap-closing actions can be grouped into three general categories: (1) actions that reduce current services spending in the General Fund on a recurring basis; (2) actions that increase revenues on a recurring basis; and (3) transactions that increase revenues or lower spending in 2009-10, but that are not expected to recur. To close the two-year budget gap in 2008-09 and 2009-10, the Governor and Legislature approved a total of $13.9 billion in gap-closing actions, including $6.5 billion in actions to restrain spending, $5.4 billion in actions to increase receipts, and $2 billion in non-recurring actions (more than half of which were used in 2008-09 to close a gap that opened in the last half of the fiscal year). In addition, the gap-closing plan includes $6.15 billion in direct fiscal relief that the Federal government is providing to the State under the American Recovery and Reinvestment Act of 2009 (“ARRA”) to stabilize State finances and help prevent reductions in essential services. The President signed the ARRA on February 17, 2009, after the Governor had submitted his Executive Budget. By law, the direct Federal fiscal relief must be used effectively and expeditiously to promote economic recovery, and may not be allocated for other purposes, such as funding reserves or paying down debt.

In January 2009, the DOB lowered its U.S. forecasts for corporate profits, equity market prices, employment growth, and wages in calendar year 2009. Real U.S. GDP is projected to decline for four consecutive quarters starting with the third quarter of calendar year 2008. DOB projects the U.S. economy to contract by 1.4 percent in 2009, following growth of 1.2 percent in 2008. With the accelerated loss of jobs projected for 2009, wage growth is also expected to fall. The substantial decline in wage growth is expected to reduce personal income growth from 3.8 percent in 2008 to 1.8 percent in 2009. DOB projects inflation as measured by growth in the Consumer Price Index of 0.1 percent for 2009, following 3.9 percent for 2008.

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With the financial markets at the heart of the recent economic downturn, the DOB expects layoffs from the State’s financial services sector to total approximately 60,000 as strained financial institutions seek to cut costs and newly merged banks seek to reduce duplication of services. The DOB also expects private sector job losses to total about 180,000, with declines anticipated for all major industrial sectors except for health and education. The loss of manufacturing jobs is expected to accelerate going forward, particularly in auto-related industries. The State’s real estate market will continue to weaken in 2009, with office vacancy rates expected to rise due to falling employment, tight credit market conditions, and completed construction coming online. In addition, a weak global economy and strong dollar are expected to negatively affect the State’s export-related and tourism industries. State employment is now expected to fall 1.9 percent for 2009, with private sector jobs projected to fall 2.2 percent, following growth of 0.3 percent for both total and private employment for 2008. DOB projects a decline in total State wages of 4.1 percent for 2009, largely driven by a decline of 48 percent in bonus payments in the finance and insurance industries, following an estimated increase of 1.1 percent for 2008. Declines in both the wage and non-wage components of income is expected to result in a decline in total personal income of 1.6 percent for 2009, following 2.3 percent growth for 2008.

The impact of the recession on tax collections is expected to register in the current fiscal year. The DOB has lowered the estimate of General Fund tax receipts by $492 million in the current year and $2.1 billion in FY 2009-10. Projections of General Fund personal income tax receipts were reduced by approximately $225 million for 2008-09 and $1.77 billion in 2009-10. In FY 2008-09, the revisions reflect an expected decrease in estimated tax payments and withholding, offset in part by an expected increase in final returns. In FY 2009-10, the revisions reflect falling wage growth and lower withholding and estimated tax payments, consistent with the updated economic forecast.

In January 2009, New York City Mayor Michael Bloomberg presented the City’s FY 2010 preliminary budget and an updated four year financial plan. The Mayor outlined a plan to close a $4 billion deficit for FY 2010 through nearly $1 billion in new agency gap closing actions, keeping controllable expenses virtually flat as well as revenue enhancements, including possible sales tax increases and long-term cost containment measures. The continued decline in the economy and the proposed State budget caused the City’s FY 2010 deficit to grow from the $1.3 billion estimated in November 2008 to $4 billion.

New York City’s general debt limit, as provided in the New York State Constitution, is 10 percent of the five-year rolling average of the full value of taxable City real property. The City’s FY 2009 general debt-incurring power of $70.42 billion is projected to rise to $75.24 billion in FY 2010, $79 billion in FY 2011, and $80.63 billion in FY 2012.

New York City has the largest population of any city in the U.S., and it is obligated to maintain a complex and aging infrastructure. The City bears responsibility for more school buildings, firehouses, health facilities, community colleges, roads, bridges, libraries, and police precincts than any other municipality in the country. Capital bond proceeds are used for the construction and rehabilitation of these facilities. Bond proceeds are also used for financing shorter-lived capital items such as comprehensive computer systems.

The City’s general obligation debt was $34.19 billion at the beginning of FY 2009. After including contract and other liability and adjusting for appropriations, the City’s indebtedness that is counted toward the debt limit totaled $42.64 billion at the beginning of FY 2009. This indebtedness is expected to grow to $59.26 billion by the beginning of FY 2012. The City was below its general debt limit by $27.78 billion on July 1, 2008 and is projected to be below the general limit by $24.27 billion on July 1, 2009, by $24.6 billion on July 1, 2010, and by $22.78 billion by July 1, 2011.

In addition to general obligation bonds, the City maintains several additional credits, including bonds issued by the New York City Transitional Finance Authority (“NYCTFA”) and TSASC, Inc. (“TSASC”). The debt-incurring capacities of NYCTFA and TSASC total $17.3 billion of which $14.8 billion has been utilized to finance the City’s capital program. Also included in the $17.3 billion capacity is $2.0 billion of recovery bonds issued for general fund expenses in the aftermath of the World Trade Center disaster. The NYCTFA has exhausted its general debt-incurring power as of July 1, 2007. The City’s debt has grown from $2,490 per capita in FY 1990 to $7,153 by FY 2008, an increase of 187 percent. Over the same period, the cumulative growth rate in debt per capita exceeded the rate of inflation by 115 percentage points and the growth rate of City tax revenues by 32 percentage points. Based on an analysis of financial statements released by other jurisdictions, New York City leads a sample of large U.S. cities in debt burden per capita by a margin of more than two to one.

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As of July 6, 2009, New York State’s general obligation bonds are rated AA, Aa3, and AA- by S&P, Moody’s, and Fitch, respectively. The City’s general obligation credit ratings were upgraded by all three agencies in 2007 and have remained unchanged. New York City’s general obligation debt was rated Aa3 by Moody’s, AA by S&P and AA- by Fitch. Such ratings reflect only the view of the originating rating agencies, from which an explanation of the significance of such ratings may be obtained. There is no assurance that a particular rating will continue for any given period of time or that any such rating will not be revised downward or withdrawn entirely if, in the judgment of the agency originally establishing the rating, circumstances so warrant. A downward revision or withdrawal of such ratings, or either of them, may have an effect on the market price of the State municipal obligations in which a Fund invests.

Mortgage-Related and Asset-Backed Securities

Mortgage-related securities are interests in pools of residential or commercial mortgage loans, including mortgage loans made by savings and loan institutions, mortgage bankers, commercial banks and others. Pools of mortgage loans are assembled as securities for sale to investors by various governmental, government-related and private organizations. See “Mortgage Pass-Through Securities.” Certain of the Funds also may invest in debt securities which are secured with collateral consisting of mortgage-related securities (see “Collateralized Mortgage Obligations”).

Mortgage Pass-Through Securities. Interests in pools of mortgage-related securities differ from other forms of debt securities, which normally provide for periodic payment of interest in fixed amounts with principal payments at maturity or specified call dates. Instead, these securities provide a monthly payment which consists of both interest and principal payments. In effect, these payments are a “pass-through” of the monthly payments made by the individual borrowers on their residential or commercial mortgage loans, net of any fees paid to the issuer or guarantor of such securities. Additional payments are caused by repayments of principal resulting from the sale of the underlying property, refinancing or foreclosure, net of fees or costs which may be incurred. Some mortgage-related securities (such as securities issued by GNMA) are described as “modified pass-through.” These securities entitle the holder to receive all interest and principal payments owed on the mortgage pool, net of certain fees, at the scheduled payment dates regardless of whether or not the mortgagor actually makes the payment.

The rate of pre-payments on underlying mortgages will affect the price and volatility of a mortgage-related security, and may have the effect of shortening or extending the effective duration of the security relative to what was anticipated at the time of purchase. To the extent that unanticipated rates of pre-payment on underlying mortgages increase the effective duration of a mortgage-related security, the volatility of such security can be expected to increase. The residential mortgage market in the United States recently has experienced difficulties that may adversely affect the performance and market value of certain of the Funds’ mortgage-related investments. Delinquencies and losses on residential mortgage loans (especially subprime and second-lien mortgage loans) generally have increased recently and may continue to increase, and a decline in or flattening of housing values (as has recently been experienced and may continue to be experienced in many housing markets) may exacerbate such delinquencies and losses. Borrowers with adjustable rate mortgage loans are more sensitive to changes in interest rates, which affect their monthly mortgage payments, and may be unable to secure replacement mortgages at comparably low interest rates. Also, a number of residential mortgage loan originators have recently experienced serious financial difficulties or bankruptcy. Owing largely to the foregoing, reduced investor demand for mortgage loans and mortgage-related securities and increased investor yield requirements have caused limited liquidity in the secondary market for mortgage-related securities, which can adversely affect the market value of mortgage-related securities. It is possible that such limited liquidity in such secondary markets could continue or worsen.

The principal governmental guarantor of mortgage-related securities is GNMA. GNMA is a wholly owned United States Government corporation within the Department of Housing and Urban Development. GNMA is authorized to guarantee, with the full faith and credit of the United States Government, the timely payment of principal and interest on securities issued by institutions approved by GNMA (such as savings and loan institutions, commercial banks and mortgage bankers) and backed by pools of mortgages insured by the Federal Housing Administration (the “FHA”), or guaranteed by the Department of Veterans Affairs (the “VA”).

Government-related guarantors (i.e., not backed by the full faith and credit of the United States Government) include FNMA and the Federal Home Loan Mortgage Corporation (“FHLMC”). FNMA is a government-sponsored corporation the common stock of which is owned entirely by private stockholders. FNMA purchases conventional (i.e., not insured or guaranteed by any government agency) residential mortgages from a list of approved seller/servicers which include state and federally chartered savings and loan associations, mutual savings banks, commercial banks and credit unions and mortgage bankers. Pass-through securities issued by FNMA are guaranteed as to timely payment of principal and interest by FNMA, but are not backed by the full faith and credit of the United States Government. FHLMC was created by Congress in 1970 for the purpose of increasing the availability of mortgage credit for residential housing. It is a government-sponsored

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corporation formerly owned by the twelve Federal Home Loan Banks but now the common stock is owned entirely by private stockholders. FHLMC issues Participation Certificates (“PCs”), which are pass-through securities, each representing an undivided interest in a pool of residential mortgages. FHLMC guarantees the timely payment of interest and ultimate collection of principal, but PCs are not backed by the full faith and credit of the United States Government.

On September 6, 2008, the Federal Housing Finance Agency (“FHFA”) placed FNMA and FHLMC into conservatorship. As the conservator, FHFA succeeded to all rights, titles, powers and privileges of FNMA and FHLMC and of any stockholder, officer or director of FNMA and FHLMC with respect to FNMA and FHLMC and the assets of FNMA and FHLMC. FHFA selected a new chief executive officer and chairman of the board of directors for each of FNMA and FHLMC.

On September 7, 2008, the U.S. Treasury announced three additional steps taken by it in connection with the conservatorship. First, the U.S. Treasury entered into a Senior Preferred Stock Purchase Agreement with each of FNMA and FHLMC pursuant to which the U.S. Treasury will purchase up to an aggregate of $100 billion of each of FNMA and FHLMC to maintain a positive net worth in each enterprise. This agreement contains various covenants that severely limit each enterprise’s operations. In exchange for entering into these agreements, the U.S. Treasury received $1 billion of each enterprise’s senior preferred stock and warrants to purchase 79.9% of each enterprise’s common stock. Second, the U.S. Treasury announced the creation of a new secured lending facility which is available to each of FNMA and FHLMC as a liquidity backstop. Third, the U.S. Treasury announced the creation of a temporary program to purchase mortgage-backed securities issued by each of FNMA and FHLMC. Both the liquidity backstop and the mortgage-backed securities purchase program are scheduled to expire in December 2009.

FNMA and FHLMC are continuing to operate as going concerns while in conservatorship and each remain liable for all of its obligations, including its guaranty obligations, associated with its mortgage-backed securities. The liquidity backstop and the Senior Preferred Stock Purchase Agreement are both intended to enhance each of FNMA’s and FHLMC’s ability to meet its obligations.

Under the Federal Housing Finance Regulatory Reform Act of 2008 (the “Reform Act”), which was included as part of the Housing and Economic Recovery Act of 2008, FHFA, as conservator or receiver, has the power to repudiate any contract entered into by FNMA or FHLMC prior to FHFA’s appointment as conservator or receiver, as applicable, if FHFA determines, in its sole discretion, that performance of the contract is burdensome and that repudiation of the contract promotes the orderly administration of FNMA’s or FHLMC’s affairs. The Reform Act requires FHFA to exercise its right to repudiate any contract within a reasonable period of time after its appointment as conservator or receiver.

FHFA, in its capacity as conservator, has indicated that it has no intention to repudiate the guaranty obligations of FNMA or FHLMC because FHFA views repudiation as incompatible with the goals of the conservatorship. However, in the event that FHFA, as conservator or if it is later appointed as receiver for FNMA or FHLMC, were to repudiate any such guaranty obligation, the conservatorship or receivership estate, as applicable, would be liable for actual direct compensatory damages in accordance with the provisions of the Reform Act. Any such liability could be satisfied only to the extent of FNMA’s or FHLMC’s assets available therefor.

In the event of repudiation, the payments of interest to holders of FNMA or FHLMC mortgage-backed securities would be reduced if payments on the mortgage loans represented in the mortgage loan groups related to such mortgage-backed securities are not made by the borrowers or advanced by the servicer. Any actual direct compensatory damages for repudiating these guaranty obligations may not be sufficient to offset any shortfalls experienced by such mortgage-backed security holders.

Further, in its capacity as conservator or receiver, FHFA has the right to transfer or sell any asset or liability of FNMA or FHLMC without any approval, assignment or consent. Although FHFA has stated that it has no present intention to do so, if FHFA, as conservator or receiver, were to transfer any such guaranty obligation to another party, holders of FNMA or FHLMC mortgage-backed securities would have to rely on that party for satisfaction of the guaranty obligation and would be exposed to the credit risk of that party.

In addition, certain rights provided to holders of mortgage-backed securities issued by FNMA and FHLMC under the operative documents related to such securities may not be enforced against FHFA, or enforcement of such rights may be delayed, during the conservatorship or any future receivership. The operative documents for FNMA and FHLMC mortgage-backed securities may provide (or with respect to securities issued prior to the date of the appointment of the conservator may have provided) that upon the occurrence of an event of default on the part of FNMA or FHLMC, in its capacity as guarantor, which includes the appointment of a conservator or receiver, holders of such mortgage-backed securities have the right to

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replace FNMA or FHLMC as trustee if the requisite percentage of mortgage-backed securities holders consent. The Reform Act prevents mortgage-backed security holders from enforcing such rights if the event of default arises solely because a conservator or receiver has been appointed. The Reform Act also provides that no person may exercise any right or power to terminate, accelerate or declare an event of default under certain contracts to which FNMA or FHLMC is a party, or obtain possession of or exercise control over any property of FNMA or FHLMC, or affect any contractual rights of FNMA or FHLMC, without the approval of FHFA, as conservator or receiver, for a period of 45 or 90 days following the appointment of FHFA as conservator or receiver, respectively.

Commercial banks, savings and loan institutions, private mortgage insurance companies, mortgage bankers and other secondary market issuers also create pass-through pools of conventional residential mortgage loans. Such issuers may be the originators and/or servicers of the underlying mortgage loans as well as the guarantors of the mortgage-related securities. Pools created by such non-governmental issuers generally offer a higher rate of interest than government and government-related pools because there are no direct or indirect government or agency guarantees of payments in the former pools. However, timely payment of interest and principal of these pools may be supported by various forms of insurance or guarantees, including individual loan, title, pool and hazard insurance and letters of credit, which may be issued by governmental entities or private insurers. Such insurance and guarantees and the creditworthiness of the issuers thereof will be considered in determining whether a mortgage-related security meets the Trust’s investment quality standards. There can be no assurance that the private insurers or guarantors can meet their obligations under the insurance policies or guarantee arrangements. The Funds may buy mortgage-related securities without insurance or guarantees if, through an examination of the loan experience and practices of the originators/servicers and poolers, PIMCO determines that the securities meet the Trust’s quality standards. Securities issued by certain private organizations may not be readily marketable. A Fund will not purchase mortgage-related securities or any other assets which in PIMCO’s opinion are illiquid if, as a result, more than 15% of the value of the Fund’s net assets will be illiquid (10% in the case of the Government Money Market, Money Market and Treasury Money Market Funds).

Mortgage-backed securities that are issued or guaranteed by the U.S. Government, its agencies or instrumentalities, are not subject to the Funds’ industry concentration restrictions, set forth below under “Investment Restrictions,” by virtue of the exclusion from that test available to all U.S. Government securities. In the case of privately issued mortgage-related securities, the Funds take the position that mortgage-related securities do not represent interests in any particular “industry” or group of industries. The assets underlying such securities may be represented by a portfolio of first lien residential mortgages (including both whole mortgage loans and mortgage participation interests) or portfolios of mortgage pass-through securities issued or guaranteed by GNMA, FNMA or FHLMC. Mortgage loans underlying a mortgage-related security may in turn be insured or guaranteed by the FHA or the VA. In the case of private issue mortgage-related securities whose underlying assets are neither U.S. Government securities nor U.S. Government-insured mortgages, to the extent that real properties securing such assets may be located in the same geographical region, the security may be subject to a greater risk of default than other comparable securities in the event of adverse economic, political or business developments that may affect such region and, ultimately, the ability of residential homeowners to make payments of principal and interest on the underlying mortgages.

Collateralized Mortgage Obligations (“CMOs”). A CMO is a debt obligation of a legal entity that is collateralized by mortgages and divided into classes. Similar to a bond, interest and prepaid principal is paid, in most cases, on a monthly basis. CMOs may be collateralized by whole mortgage loans or private mortgage bonds, but are more typically collateralized by portfolios of mortgage pass-through securities guaranteed by GNMA, FHLMC, or FNMA, and their income streams.

CMOs are structured into multiple classes, often referred to as “tranches,” with each class bearing a different stated maturity and entitled to a different schedule for payments of principal and interest, including pre-payments. Actual maturity and average life will depend upon the pre-payment experience of the collateral. In the case of certain CMOs (known as “sequential pay” CMOs), payments of principal received from the pool of underlying mortgages, including pre-payments, are applied to the classes of CMOs in the order of their respective final distribution dates. Thus, no payment of principal will be made to any class of sequential pay CMOs until all other classes having an earlier final distribution date have been paid in full.

In a typical CMO transaction, a corporation (“issuer”) issues multiple series (e.g., A, B, C, Z) of CMO bonds (“Bonds”). Proceeds of the Bond offering are used to purchase mortgages or mortgage pass-through certificates (“Collateral”). The Collateral is pledged to a third party trustee as security for the Bonds. Principal and interest payments from the Collateral are used to pay principal on the Bonds in the order A, B, C, Z. The Series A, B, and C Bonds all bear current interest. Interest on the Series Z Bond is accrued and added to principal and a like amount is paid as principal on the Series A, B, or C Bond currently being paid off. When the Series A, B, and C Bonds are paid in full, interest and principal on the Series Z Bond begins to be paid currently. CMOs may be less liquid and may exhibit greater price volatility than other types of mortgage- or asset-backed securities.

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Commercial Mortgage-Backed Securities include securities that reflect an interest in, and are secured by, mortgage loans on commercial real property. Many of the risks of investing in commercial mortgage-backed securities reflect the risks of investing in the real estate securing the underlying mortgage loans. These risks reflect the effects of local and other economic conditions on real estate markets, the ability of tenants to make loan payments, and the ability of a property to attract and retain tenants. Commercial mortgage-backed securities may be less liquid and exhibit greater price volatility than other types of mortgage- or asset-backed securities.

Other Mortgage-Related Securities. Other mortgage-related securities include securities other than those described above that directly or indirectly represent a participation in, or are secured by and payable from, mortgage loans on real property, including mortgage dollar rolls, CMO residuals or stripped mortgage-backed securities (“SMBS”). Other mortgage-related securities may be equity or debt securities issued by agencies or instrumentalities of the U.S. Government or by private originators of, or investors in, mortgage loans, including savings and loan associations, homebuilders, mortgage banks, commercial banks, investment banks, partnerships, trusts and special purpose entities of the foregoing.

CMO Residuals. CMO residuals are mortgage securities issued by agencies or instrumentalities of the U.S. Government or by private originators of, or investors in, mortgage loans, including savings and loan associations, homebuilders, mortgage banks, commercial banks, investment banks and special purpose entities of the foregoing.

The cash flow generated by the mortgage assets underlying a series of CMOs is applied first to make required payments of principal and interest on the CMOs and second to pay the related administrative expenses and any management fee of the issuer. The residual in a CMO structure generally represents the interest in any excess cash flow remaining after making the foregoing payments. Each payment of such excess cash flow to a holder of the related CMO residual represents income and/or a return of capital. The amount of residual cash flow resulting from a CMO will depend on, among other things, the characteristics of the mortgage assets, the coupon rate of each class of CMO, prevailing interest rates, the amount of administrative expenses and the pre-payment experience on the mortgage assets. In particular, the yield to maturity on CMO residuals is extremely sensitive to pre-payments on the related underlying mortgage assets, in the same manner as an interest-only (“IO”) class of stripped mortgage-backed securities. See “Other Mortgage-Related Securities—Stripped Mortgage-Backed Securities.” In addition, if a series of a CMO includes a class that bears interest at an adjustable rate, the yield to maturity on the related CMO residual will also be extremely sensitive to changes in the level of the index upon which interest rate adjustments are based. As described below with respect to stripped mortgage-backed securities, in certain circumstances a Fund may fail to recoup fully its initial investment in a CMO residual.

CMO residuals are generally purchased and sold by institutional investors through several investment banking firms acting as brokers or dealers. Transactions in CMO residuals are generally completed only after careful review of the characteristics of the securities in question. In addition, CMO residuals may, or pursuant to an exemption therefrom, may not have been registered under the Securities Act of 1933, as amended (the “1933 Act”). CMO residuals, whether or not registered under the 1933 Act, may be subject to certain restrictions on transferability, and may be deemed “illiquid” and subject to a Fund’s limitations on investment in illiquid securities.

Adjustable Rate Mortgage-Backed Securities. Adjustable rate mortgage-backed securities (“ARMBSs”) have interest rates that reset at periodic intervals. Acquiring ARMBSs permits a Fund to participate in increases in prevailing current interest rates through periodic adjustments in the coupons of mortgages underlying the pool on which ARMBSs are based. Such ARMBSs generally have higher current yield and lower price fluctuations than is the case with more traditional fixed income debt securities of comparable rating and maturity. In addition, when prepayments of principal are made on the underlying mortgages during periods of rising interest rates, a Fund can reinvest the proceeds of such prepayments at rates higher than those at which they were previously invested. Mortgages underlying most ARMBSs, however, have limits on the allowable annual or lifetime increases that can be made in the interest rate that the mortgagor pays. Therefore, if current interest rates rise above such limits over the period of the limitation, a Fund, when holding an ARMBS, does not benefit from further increases in interest rates. Moreover, when interest rates are in excess of coupon rates (i.e., the rates being paid by mortgagors) of the mortgages, ARMBSs behave more like fixed income securities and less like adjustable rate securities and are subject to the risks associated with fixed income securities. In addition, during periods of rising interest rates, increases in the coupon rate of adjustable rate mortgages generally lag current market interest rates slightly, thereby creating the potential for capital depreciation on such securities.

Stripped Mortgage-Backed Securities. SMBS are derivative multi-class mortgage securities. SMBS may be issued by agencies or instrumentalities of the U.S. Government, or by private originators of, or investors in, mortgage loans, including savings and loan associations, mortgage banks, commercial banks, investment banks and special purpose entities of the foregoing.

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SMBS are usually structured with two classes that receive different proportions of the interest and principal distributions on a pool of mortgage assets. A common type of SMBS will have one class receiving some of the interest and most of the principal from the mortgage assets, while the other class will receive most of the interest and the remainder of the principal. In the most extreme case, one class will receive all of the interest (the “IO” class), while the other class will receive all of the principal (the principal-only or “PO” class). The yield to maturity on an IO class is extremely sensitive to the rate of principal payments (including pre-payments) on the related underlying mortgage assets, and a rapid rate of principal payments may have a material adverse effect on a Fund’s yield to maturity from these securities. If the underlying mortgage assets experience greater than anticipated pre-payments of principal, a Fund may fail to recoup some or all of its initial investment in these securities even if the security is in one of the highest rating categories.

Collateralized Debt Obligations. The Funds may invest in collateralized debt obligations (“CDOs”), which include collateralized bond obligations (“CBOs”), collateralized loan obligations (“CLOs”) and other similarly structured securities. CBOs and CLOs are types of asset-backed securities. A CBO is a trust which is backed by a diversified pool of high risk, below investment grade fixed income securities. A CLO is a trust typically collateralized by a pool of loans, which may include, among others, domestic and foreign senior secured loans, senior unsecured loans, and subordinate corporate loans, including loans that may be rated below investment grade or equivalent unrated loans. CDOs may charge management fees and administrative expenses.

For both CBOs and CLOs, the cash flows from the trust are split into two or more portions, called tranches, varying in risk and yield. The riskiest portion is the “equity” tranche which bears the bulk of defaults from the bonds or loans in the trust and serves to protect the other, more senior tranches from default in all but the most severe circumstances. Since it is partially protected from defaults, a senior tranche from a CBO trust or CLO trust typically have higher ratings and lower yields than their underlying securities, and can be rated investment grade. Despite the protection from the equity tranche, CBO or CLO tranches can experience substantial losses due to actual defaults, increased sensitivity to defaults due to collateral default and disappearance of protecting tranches, market anticipation of defaults, as well as aversion to CBO or CLO securities as a class.

The risks of an investment in a CDO depend largely on the type of the collateral securities and the class of the CDO in which a Fund invests. Normally, CBOs, CLOs and other CDOs are privately offered and sold, and thus, are not registered under the securities laws. As a result, investments in CDOs may be characterized by the Funds as illiquid securities, however an active dealer market may exist for CDOs allowing a CDO to qualify for Rule 144A transactions. In addition to the normal risks associated with fixed income securities discussed elsewhere in this Statement of Additional Information and the Funds’ Prospectuses (e.g., interest rate risk and default risk), CDOs carry additional risks including, but are not limited to: (i) the possibility that distributions from collateral securities will not be adequate to make interest or other payments; (ii) the quality of the collateral may decline in value or default; (iii) the Funds may invest in CDOs that are subordinate to other classes; and (iv) the complex structure of the security may not be fully understood at the time of investment and may produce disputes with the issuer or unexpected investment results.

Asset-Backed Securities. Asset-backed securities (“ABS”) are bonds backed by pools of loans or other receivables. ABS are created from many types of assets, including auto loans, credit card receivables, home equity loans, and student loans. ABS are issued through special purpose vehicles that are bankruptcy remote from the issuer of the collateral. The credit quality of an ABS transaction depends on the performance of the underlying assets. To protect ABS investors from the possibility that some borrowers could miss payments or even default on their loans, ABS include various forms of credit enhancement.

Some ABS, particularly home equity loan transactions, are subject to interest-rate risk and prepayment risk. A change in interest rates can affect the pace of payments on the underlying loans, which in turn, affects total return on the securities. ABS also carry credit or default risk. If many borrowers on the underlying loans default, losses could exceed the credit enhancement level and result in losses to investors in an ABS transaction. Finally, ABS have structure risk due to a unique characteristic known as early amortization, or early payout, risk. Built into the structure of most ABS are triggers for early payout, designed to protect investors from losses. These triggers are unique to each transaction and can include: a big rise in defaults on the underlying loans, a sharp drop in the credit enhancement level, or even the bankruptcy of the originator. Once early amortization begins, all incoming loan payments are used to pay investors as quickly as possible.

Consistent with a Fund’s investment objectives and policies, PIMCO also may invest in other types of asset-backed securities.

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Real Estate Securities and Related Derivatives

Certain of the Funds (in particular, the RealEstateRealReturn Strategy Fund) may gain exposure to the real estate sector by investing in real estate-linked derivatives, real estate investment trusts (“REITs”), and common, preferred and convertible securities of issuers in real estate-related industries. Each of these types of investments are subject to risks similar to those associated with direct ownership of real estate, including loss to casualty or condemnation, increases in property taxes and operating expenses, zoning law amendments, changes in interest rates, overbuilding and increased competition, variations in market value, and possible environmental liabilities.

REITs are pooled investment vehicles that own, and typically operate, income-producing real estate. If a REIT meets certain requirements, including distributing to shareholders substantially all of its taxable income (other than net capital gains), then it is not taxed on the income distributed to shareholders. REITs are subject to management fees and other expenses, and so the Funds that invest in REITs will bear their proportionate share of the costs of the REITs’ operations.

There are three general categories of REITs: Equity REITs, Mortgage REITs and Hybrid REITs. Equity REITs invest primarily in direct fee ownership or leasehold ownership of real property; they derive most of their income from rents. Mortgage REITs invest mostly in mortgages on real estate, which may secure construction, development or long-term loans, and the main source of their income is mortgage interest payments. Hybrid REITs hold both ownership and mortgage interests in real estate.

Along with the risks common to different types of real estate-related securities, REITs, no matter the type, involve additional risk factors. These include poor performance by the REIT’s manager, changes to the tax laws, and failure by the REIT to qualify for tax-free distribution of income or exemption under the Investment Company Act of 1940, as amended (the “1940 Act”). Furthermore, REITs are not diversified and are heavily dependent on cash flow.

Bank Obligations

Bank obligations in which the Funds may invest include certificates of deposit, bankers’ acceptances, and fixed time deposits. Certificates of deposit are negotiable certificates issued against funds deposited in a commercial bank for a definite period of time and earning a specified return. Bankers’ acceptances are negotiable drafts or bills of exchange, normally drawn by an importer or exporter to pay for specific merchandise, which are “accepted” by a bank, meaning, in effect, that the bank unconditionally agrees to pay the face value of the instrument on maturity. Fixed time deposits are bank obligations payable at a stated maturity date and bearing interest at a fixed rate. Fixed time deposits may be withdrawn on demand by the investor, but may be subject to early withdrawal penalties which vary depending upon market conditions and the remaining maturity of the obligation. There are no contractual restrictions on the right to transfer a beneficial interest in a fixed time deposit to a third party, although there is no market for such deposits. A Fund will not invest in fixed time deposits which (1) are not subject to prepayment or (2) provide for withdrawal penalties upon prepayment (other than overnight deposits) if, in the aggregate, more than 15% of its net assets (10% in the case of the Government Money Market, Money Market and Treasury Money Market Funds) would be invested in such deposits, repurchase agreements maturing in more than seven days and other illiquid assets.

The California Intermediate Municipal Bond, California Short Duration Municipal Income, Government Money Market, High Yield Municipal Bond, GNMA, Long-Term U.S. Government, Low Duration II, Money Market, Mortgage-Backed Securities, Municipal Bond, MuniGO, New York Municipal Bond, Real Income 2019, Real Income 2029, Short Duration Municipal Income, Total Return II and Treasury Money Market Funds may invest in the same types of bank obligations as the other Funds, but they must be U.S. dollar-denominated. Subject to the Trust’s limitation on concentration of no more than 25% of its total assets in the securities of issuers in a particular industry, there is no limitation on the amount of a Fund’s assets which may be invested in obligations of foreign banks which meet the conditions set forth herein.

Obligations of foreign banks involve somewhat different investment risks than those affecting obligations of United States banks, including the possibilities that their liquidity could be impaired because of future political and economic developments, that their obligations may be less marketable than comparable obligations of United States banks, that a foreign jurisdiction might impose withholding taxes on interest income payable on those obligations, that foreign deposits may be seized or nationalized, that foreign governmental restrictions such as exchange controls may be adopted which might adversely affect the payment of principal and interest on those obligations and that the selection of those obligations may be more difficult because there may be less publicly available information concerning foreign banks or the accounting, auditing and financial reporting standards, practices and requirements applicable to foreign banks may differ from those applicable to United States banks. Foreign banks are not generally subject to examination by any United States Government agency or instrumentality.

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Loan Participations and Assignments

Each Fund (except for the Government Money Market, Money Market, MuniGO and Treasury Money Market Funds) may purchase participations in commercial loans. Such indebtedness may be secured or unsecured. Loan participations typically represent direct participation in a loan to a corporate borrower, and generally are offered by banks or other financial institutions or lending syndicates. The Funds may participate in such syndications, or can buy part of a loan, becoming a part lender. When purchasing loan participations, a Fund assumes the credit risk associated with the corporate borrower and may assume the credit risk associated with an interposed bank or other financial intermediary. The participation interests in which a Fund intends to invest may not be rated by any nationally recognized rating service.

Each Fund (except for the Government Money Market, Money Market, MuniGO and Treasury Money Market Funds) may invest in debtor-in-possession financings (commonly known as “DIP financings”). DIP financings are arranged when an entity seeks the protections of the bankruptcy court under Chapter 11 of the U.S. Bankruptcy Code. These financings allow the entity to continue its business operations while reorganizing under Chapter 11. Such financings constitute senior liens on unencumbered security (i.e., security not subject to other creditors’ claims). There is a risk that the entity will not emerge from Chapter 11 and be forced to liquidate its assets under Chapter 7 of the U.S. Bankruptcy Code. In the event of liquidation, a Fund’s only recourse will be against the property securing the DIP financing.

A loan is often administered by an agent bank acting as agent for all holders. The agent bank administers the terms of the loan, as specified in the loan agreement. In addition, the agent bank is normally responsible for the collection of principal and interest payments from the corporate borrower and the apportionment of these payments to the credit of all institutions which are parties to the loan agreement. Unless, under the terms of the loan or other indebtedness, a Fund has direct recourse against the corporate borrower, the Fund may have to rely on the agent bank or other financial intermediary to apply appropriate credit remedies against a corporate borrower.

A financial institution’s employment as agent bank might be terminated in the event that it fails to observe a requisite standard of care or becomes insolvent. A successor agent bank would generally be appointed to replace the terminated agent bank, and assets held by the agent bank under the loan agreement should remain available to holders of such indebtedness. However, if assets held by the agent bank for the benefit of a Fund were determined to be subject to the claims of the agent bank’s general creditors, the Fund might incur certain costs and delays in realizing payment on a loan or loan participation and could suffer a loss of principal and/or interest. In situations involving other interposed financial institutions (e.g., an insurance company or governmental agency) similar risks may arise.

Purchasers of loans and other forms of direct indebtedness depend primarily upon the creditworthiness of the corporate borrower for payment of principal and interest. If a Fund does not receive scheduled interest or principal payments on such indebtedness, the Fund’s share price and yield could be adversely affected. Loans that are fully secured offer a Fund more protection than an unsecured loan in the event of non-payment of scheduled interest or principal. However, there is no assurance that the liquidation of collateral from a secured loan would satisfy the corporate borrower’s obligation, or that the collateral can be liquidated.

The Funds may invest in loan participations with credit quality comparable to that of issuers of its securities investments. Indebtedness of companies whose creditworthiness is poor involves substantially greater risks, and may be highly speculative. Some companies may never pay off their indebtedness, or may pay only a small fraction of the amount owed. Consequently, when investing in indebtedness of companies with poor credit, a Fund bears a substantial risk of losing the entire amount invested.

Certain Funds that are diversified limit the amount of their total assets that they will invest in any one issuer and all Funds limit the amount of their total assets that they will invest in issuers within the same industry (see “Investment Restrictions”). For purposes of these limits, a Fund generally will treat the corporate borrower as the “issuer” of indebtedness held by the Fund. In the case of loan participations where a bank or other lending institution serves as a financial intermediary between a Fund and the corporate borrower, if the participation does not shift to the Fund the direct debtor-creditor relationship with the corporate borrower, Securities and Exchange Commission (“SEC”) interpretations require the Fund to treat both the lending bank or other lending institution and the corporate borrower as “issuers”. Treating a financial intermediary as an issuer of indebtedness may restrict a Funds’ ability to invest in indebtedness related to a single financial intermediary, or a group of intermediaries engaged in the same industry, even if the underlying borrowers represent many different companies and industries.

Loans and other types of direct indebtedness may not be readily marketable and may be subject to restrictions on resale. In some cases, negotiations involved in disposing of indebtedness may require weeks to complete. Consequently,

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some indebtedness may be difficult or impossible to dispose of readily at what PIMCO believes to be a fair price. In addition, valuation of illiquid indebtedness involves a greater degree of judgment in determining a Fund’s net asset value than if that value were based on available market quotations, and could result in significant variations in the Fund’s daily share price. At the same time, some loan interests are traded among certain financial institutions and accordingly may be deemed liquid. As the market for different types of indebtedness develops, the liquidity of these instruments is expected to improve. In addition, the Funds currently intend to treat indebtedness for which there is no readily available market as illiquid for purposes of the Funds’ limitation on illiquid investments. Investments in loan participations are considered to be debt obligations for purposes of the Trust’s investment restriction relating to the lending of funds or assets by a Fund.

Investments in loans through a direct assignment of the financial institution’s interests with respect to the loan may involve additional risks to the Funds. For example, if a loan is foreclosed, a Fund could become part owner of any collateral, and would bear the costs and liabilities associated with owning and disposing of the collateral. In addition, it is conceivable that under emerging legal theories of lender liability, a Fund could be held liable as co-lender. It is unclear whether loans and other forms of direct indebtedness offer securities law protections against fraud and misrepresentation. In the absence of definitive regulatory guidance, the Funds rely on PIMCO’s research in an attempt to avoid situations where fraud or misrepresentation could adversely affect the Funds.

Corporate Debt Securities

A Fund’s investments in U.S. dollar or foreign currency-denominated corporate debt securities of domestic or foreign issuers are limited to corporate debt securities (corporate bonds, debentures, notes and other similar corporate debt instruments, including convertible securities) which meet the minimum ratings criteria set forth for the Fund, or, if unrated, are in PIMCO’s opinion comparable in quality to corporate debt securities in which the Fund may invest.

The rate of interest on a corporate debt security may be fixed, floating or variable, and may vary inversely with respect to a reference rate. The rate of return or return of principal on some debt obligations may be linked or indexed to the level of exchange rates between the U.S. dollar and a foreign currency or currencies. Debt securities may be acquired with warrants attached.

Securities rated Baa and BBB are the lowest which are considered “investment grade” obligations. Moody’s describes securities rated Baa as “subject to moderate credit risk. They are considered medium-grade and as such may possess certain speculative characteristics.” S&P describes securities rated BBB as “regarded as having adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.” For securities rated BBB, Fitch states that “…expectations of default risk are currently low…capacity for payment of financial commitments is considered adequate, but adverse business or economic conditions are more likely to impair this capacity.” For a discussion of securities rated below investment grade, see “High Yield Securities (“Junk Bonds”)” below.

High Yield Securities (“Junk Bonds”)

Investments in securities rated below investment grade that are eligible for purchase by certain of the Funds are described as “speculative” by Moody’s, S&P and Fitch. Investment in lower rated corporate debt securities (“high yield securities” or “junk bonds”) generally provides greater income and increased opportunity for capital appreciation than investments in higher quality securities, but they also typically entail greater price volatility and principal and income risk. These high yield securities are regarded as predominantly speculative with respect to the issuer’s continuing ability to meet principal and interest payments. Analysis of the creditworthiness of issuers of debt securities that are high yield may be more complex than for issuers of higher quality debt securities.

High yield securities may be more susceptible to real or perceived adverse economic and competitive industry conditions than investment grade securities. The prices of high yield securities have been found to be less sensitive to interest-rate changes than higher-rated investments, but more sensitive to adverse economic downturns or individual corporate developments. A projection of an economic downturn or of a period of rising interest rates, for example, could cause a decline in high yield security prices because the advent of a recession could lessen the ability of a highly leveraged company to make principal and interest payments on its debt securities. If an issuer of high yield securities defaults, in addition to risking payment of all or a portion of interest and principal, the Funds by investing in such securities may incur additional expenses to seek recovery. In the case of high yield securities structured as zero-coupon or pay-in-kind securities, their market prices are affected to a greater extent by interest rate changes, and therefore tend to be more volatile than securities which pay interest periodically and in cash. PIMCO seeks to reduce these risks through diversification, credit analysis and attention to current developments and trends in both the economy and financial markets.

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The secondary market on which high yield securities are traded may be less liquid than the market for higher grade securities. Less liquidity in the secondary trading market could adversely affect the price at which the Funds could sell a high yield security, and could adversely affect the daily net asset value of the shares. Adverse publicity and investor perceptions, whether or not based on fundamental analysis, may decrease the values and liquidity of high yield securities, especially in a thinly-traded market. When secondary markets for high yield securities are less liquid than the market for higher grade securities, it may be more difficult to value the securities because such valuation may require more research, and elements of judgment may play a greater role in the valuation because there is less reliable, objective data available. PIMCO seeks to minimize the risks of investing in all securities through diversification, in-depth credit analysis and attention to current developments in interest rates and market conditions.

The use of credit ratings as the sole method of evaluating high yield securities can involve certain risks. For example, credit ratings evaluate the safety of principal and interest payments, not the market value risk of high yield securities. Also, credit rating agencies may fail to change credit ratings in a timely fashion to reflect events since the security was last rated. PIMCO does not rely solely on credit ratings when selecting securities for the Funds, and develops its own independent analysis of issuer credit quality. If a credit rating agency changes the rating of a portfolio security held by a Fund, the Fund may retain the portfolio security if PIMCO deems it in the best interest of shareholders.

Creditor Liability and Participation on Creditors Committees

Generally, when a Fund holds bonds or other similar fixed income securities of an issuer, the Fund becomes a creditor of the issuer. A Fund that is a creditor of an issuer may be subject to challenges related to the securities that it holds, either in connection with the bankruptcy of the issuer or in connection with another action brought by other creditors of the issuer, shareholders of the issuer or the issuer itself. A Fund may from time to time participate on committees formed by creditors to negotiate with the management of financially troubled issuers of securities held by the Fund. Such participation may subject a Fund to expenses such as legal fees and may make a Fund an “insider” of the issuer for purposes of the federal securities laws, and therefore may restrict such Fund’s ability to trade in or acquire additional positions in a particular security when it might otherwise desire to do so. Participation by a Fund on such committees also may expose the Fund to potential liabilities under the federal bankruptcy laws or other laws governing the rights of creditors and debtors. A Fund will participate on such committees only when PIMCO believes that such participation is necessary or desirable to enforce the Fund’s rights as a creditor or to protect the value of securities held by the Fund. Further, PIMCO has the authority to represent the Trust, or any Fund(s) thereof, on creditors committees or similar committees and generally with respect to challenges related to the securities held by the Funds relating to the bankruptcy of an issuer or in connection with another action brought by other creditors of the issuer, shareholders of the issuer or the issuer itself.

Variable and Floating Rate Securities

Variable and floating rate securities provide for a periodic adjustment in the interest rate paid on the obligations. The terms of such obligations must provide that interest rates are adjusted periodically based upon an interest rate adjustment index as provided in the respective obligations. The adjustment intervals may be regular, and range from daily up to annually, or may be event based, such as based on a change in the prime rate. The Government Money Market, Money Market and Treasury Money Market Funds may invest in a variable rate security having a stated maturity in excess of 397 calendar days if the interest rate will be adjusted, and such Funds may demand payment of principal from the issuer within that period.

Certain Funds may invest in floating rate debt instruments (“floaters”) and (except for the Government Money Market, Money Market, MuniGO, Real Income 2019, Real Income 2029 and Treasury Money Market Funds) engage in credit spread trades. The interest rate on a floater is a variable rate which is tied to another interest rate, such as a money-market index or Treasury bill rate. The interest rate on a floater resets periodically, typically every six months. While, because of the interest rate reset feature, floaters provide a Fund with a certain degree of protection against rises in interest rates, a Fund will participate in any declines in interest rates as well. A credit spread trade is an investment position relating to a difference in the prices or interest rates of two securities or currencies, where the value of the investment position is determined by movements in the difference between the prices or interest rates, as the case may be, of the respective securities or currencies.

Each of the Funds (except for the Government Money Market, Money Market, MuniGO and Treasury Money Market Funds) also may invest in inverse floating rate debt instruments (“inverse floaters”). The interest rate on an inverse floater resets in the opposite direction from the market rate of interest to which the inverse floater is indexed. An inverse floating rate security may exhibit greater price volatility than a fixed rate obligation of similar credit quality. Each Fund (except for the Government Money Market, Money Market, MuniGO and Treasury Money Market Funds) may invest up to 5% of its total assets in any combination of mortgage-related and or other asset-backed IO, PO, or inverse floater securities.

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See “Mortgage-Related and Other Asset-Backed Securities” for a discussion of IOs and POs. To the extent permitted by each Fund’s investment objectives and general investment policies, a Fund (except for the Government Money Market, Money Market and Treasury Money Market Funds) may invest in RIBs without limitation.

Inflation-Indexed Bonds

Inflation-indexed bonds are fixed income securities whose principal value is periodically adjusted according to the rate of inflation. Two structures are common. The U.S. Treasury and some other issuers use a structure that accrues inflation into the principal value of the bond. Most other issuers pay out the CPI accruals as part of a semiannual coupon.

Inflation-indexed securities issued by the U.S. Treasury have maturities of five, ten or thirty years, although it is possible that securities with other maturities will be issued in the future. The U.S. Treasury securities pay interest on a semi-annual basis, equal to a fixed percentage of the inflation-adjusted principal amount. For example, if a Fund purchased an inflation-indexed bond with a par value of $1,000 and a 3% real rate of return coupon (payable 1.5% semi-annually), and inflation over the first six months was 1%, the mid-year par value of the bond would be $1,010 and the first semi-annual interest payment would be $15.15 ($1,010 times 1.5%). If inflation during the second half of the year resulted in the whole years’ inflation equaling 3%, the end-of-year par value of the bond would be $1,030 and the second semi-annual interest payment would be $15.45 ($1,030 times 1.5%).

If the periodic adjustment rate measuring inflation falls, the principal value of inflation-indexed bonds will be adjusted downward, and consequently the interest payable on these securities (calculated with respect to a smaller principal amount) will be reduced. Repayment of the original bond principal upon maturity (as adjusted for inflation) is guaranteed in the case of U.S. Treasury inflation-indexed bonds, even during a period of deflation. However, the current market value of the bonds is not guaranteed, and will fluctuate. The Funds also may invest in other inflation related bonds which may or may not provide a similar guarantee. If a guarantee of principal is not provided, the adjusted principal value of the bond repaid at maturity may be less than the original principal.

The value of inflation-indexed bonds is expected to change in response to changes in real interest rates. Real interest rates in turn are tied to the relationship between nominal interest rates and the rate of inflation. Therefore, if inflation were to rise at a faster rate than nominal interest rates, real interest rates might decline, leading to an increase in value of inflation-indexed bonds. In contrast, if nominal interest rates increased at a faster rate than inflation, real interest rates might rise, leading to a decrease in value of inflation-indexed bonds.

While these securities are expected to be protected from long-term inflationary trends, short-term increases in inflation may lead to a decline in value. If interest rates rise due to reasons other than inflation (for example, due to changes in currency exchange rates), investors in these securities may not be protected to the extent that the increase is not reflected in the bond’s inflation measure.

The periodic adjustment of U.S. inflation-indexed bonds is tied to the Consumer Price Index for Urban Consumers (“CPI-U”), which is calculated monthly by the U.S. Bureau of Labor Statistics. The CPI-U is a measurement of changes in the cost of living, made up of components such as housing, food, transportation and energy. Inflation-indexed bonds issued by a foreign government are generally adjusted to reflect a comparable inflation index, calculated by that government. There can be no assurance that the CPI-U or any foreign inflation index will accurately measure the real rate of inflation in the prices of goods and services. Moreover, there can be no assurance that the rate of inflation in a foreign country will be correlated to the rate of inflation in the United States.

Any increase in the principal amount of an inflation-indexed bond will be considered taxable ordinary income, even though investors do not receive their principal until maturity.

Event-Linked Exposure

Certain Funds may obtain event-linked exposure by investing in “event-linked bonds” or “event-linked swaps,” or implement “event-linked strategies.” Event-linked exposure results in gains that typically are contingent on the non-occurrence of a specific “trigger” event, such as a hurricane, earthquake, or other physical or weather-related phenomena. Some event-linked bonds are commonly referred to as “catastrophe bonds.” They may be issued by government agencies, insurance companies, reinsurers, special purpose corporations or other on-shore or off-shore entities (such special purpose entities are created to accomplish a narrow and well-defined objective, such as the issuance of a note in connection with a reinsurance transaction). If a trigger event causes losses exceeding a specific amount in the geographic region and time period specified in a bond, a Fund investing in the bond may lose a portion or all of its principal invested in the bond. If no trigger event occurs, the Fund will recover its principal plus interest. For some event-linked bonds, the trigger event or losses

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may be based on company-wide losses, index-portfolio losses, industry indices, or readings of scientific instruments rather than specified actual losses. Often the event-linked bonds provide for extensions of maturity that are mandatory, or optional at the discretion of the issuer, in order to process and audit loss claims in those cases where a trigger event has, or possibly has, occurred. An extension of maturity may increase volatility. In addition to the specified trigger events, event-linked bonds also may expose a Fund to certain unanticipated risks including but not limited to issuer risk, credit risk, counterparty risk, adverse regulatory or jurisdictional interpretations, and adverse tax consequences.

Event-linked bonds are a relatively new type of financial instrument. As such, there is no significant trading history of these securities, and there can be no assurance that a liquid market in these instruments will develop. See “Illiquid Securities” below. Lack of a liquid market may impose the risk of higher transaction costs and the possibility that a Fund may be forced to liquidate positions when it would not be advantageous to do so. Event-linked bonds are typically rated, and a Fund will only invest in catastrophe bonds that meet the credit quality requirements for the Fund.

Convertible Securities

Each Fund (except the Government Money Market, Money Market and Treasury Money Market Funds) may invest in convertible securities, which may offer higher income than the common stocks into which they are convertible.

A convertible security is a bond, debenture, note, preferred stock, or other security that entitles the holder to acquire common stock or other equity securities of the same or a different issuer. A convertible security generally entitles the holder to receive interest paid or accrued until the convertible security matures or is redeemed, converted or exchanged. Before conversion, convertible securities have characteristics similar to non-convertible debt or preferred securities, as applicable. Convertible securities rank senior to common stock in a corporation’s capital structure and, therefore, generally entail less risk than the corporation’s common stock, although the extent to which such risk is reduced depends in large measure upon the degree to which the convertible security sells above its value as a fixed income security. Convertible securities are subordinate in rank to any senior debt obligations of the issuer, and, therefore, an issuer’s convertible securities entail more risk than its debt obligations. Convertible securities generally offer lower interest or dividend yields than non-convertible debt securities of similar credit quality because of the potential for capital appreciation. In addition, convertible securities are often lower-rated securities.

Because of the conversion feature, the price of the convertible security will normally fluctuate in some proportion to changes in the price of the underlying asset, and as such is subject to risks relating to the activities of the issuer and/or general market and economic conditions. The income component of a convertible security may tend to cushion the security against declines in the price of the underlying asset. However, the income component of convertible securities causes fluctuations based upon changes in interest rates and the credit quality of the issuer.

If the convertible security’s “conversion value,” which is the market value of the underlying common stock that would be obtained upon the conversion of the convertible security, is substantially below the “investment value,” which is the value of a convertible security viewed without regard to its conversion feature (i.e., strictly on the basis of its yield), the price of the convertible security is governed principally by its investment value. If the conversion value of a convertible security increases to a point that approximates or exceeds its investment value, the value of the security will be principally influenced by its conversion value. A convertible security will sell at a premium over its conversion value to the extent investors place value on the right to acquire the underlying common stock while holding an income-producing security.

A convertible security may be subject to redemption at the option of the issuer at a predetermined price. If a convertible security held by a Fund is called for redemption, the Fund would be required to permit the issuer to redeem the security and convert it to underlying common stock, or would sell the convertible security to a third party, which may have an adverse effect on the Fund’s ability to achieve its investment objective.

A third party or PIMCO also may create a “synthetic” convertible security by combining separate securities that possess the two principal characteristics of a traditional convertible security, i.e., an income-producing security (“income-producing component”) and the right to acquire an equity security (“convertible component”). The income-producing component is achieved by investing in non-convertible, income-producing securities such as bonds, preferred stocks and money market instruments, which may be represented by derivative instruments. The convertible component is achieved by investing in securities or instruments such as warrants or options to buy common stock at a certain exercise price, or options on a stock index. Unlike a traditional convertible security, which is a single security having a single market value, a synthetic convertible comprises two or more separate securities, each with its own market value. Therefore, the “market value” of a synthetic convertible security is the sum of the values of its income-producing component and its convertible component. For this reason, the values of a synthetic convertible security and a traditional convertible security may respond differently to market fluctuations.

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More flexibility is possible in the assembly of a synthetic convertible security than in the purchase of a convertible security. Although synthetic convertible securities may be selected where the two components are issued by a single issuer, thus making the synthetic convertible security similar to the traditional convertible security, the character of a synthetic convertible security allows the combination of components representing distinct issuers, when PIMCO believes that such a combination may better achieve a Fund’s investment objective. A synthetic convertible security also is a more flexible investment in that its two components may be purchased separately. For example, a Fund may purchase a warrant for inclusion in a synthetic convertible security but temporarily hold short-term investments while postponing the purchase of a corresponding bond pending development of more favorable market conditions.

A holder of a synthetic convertible security faces the risk of a decline in the price of the security or the level of the index involved in the convertible component, causing a decline in the value of the security or instrument, such as a call option or warrant, purchased to create the synthetic convertible security. Should the price of the stock fall below the exercise price and remain there throughout the exercise period, the entire amount paid for the call option or warrant would be lost. Because a synthetic convertible security includes the income-producing component as well, the holder of a synthetic convertible security also faces the risk that interest rates will rise, causing a decline in the value of the income-producing instrument.

A Fund also may purchase synthetic convertible securities created by other parties, including convertible structured notes. Convertible structured notes are income-producing debentures linked to equity, and are typically issued by investment banks. Convertible structured notes have the attributes of a convertible security; however, the investment bank that issues the convertible note, rather than the issuer of the underlying common stock into which the note is convertible, assumes credit risk associated with the underlying investment, and the Fund in turn assumes credit risk associated with the convertible note.

Equity Securities

While the securities in which certain Funds primarily intend to invest are expected to consist of fixed income securities, such Funds (except for the Government Money Market, Money Market, MuniGO, Total Return and Treasury Money Market Funds) may invest in equity securities. While the EM Fundamental IndexPLUS^™ TR Strategy Fund, Fundamental Advantage Total Return Strategy, Fundamental IndexPLUS™, Fundamental IndexPLUS™ TR, International StocksPLUS^® TR Strategy Fund (U.S. Dollar-Hedged), International StocksPLUS^® TR Strategy Fund (Unhedged), Small Cap StocksPLUS^® TR Fund, StocksPLUS^® Fund, StocksPLUS^® Long Duration Fund, StocksPLUS^® TR Short Strategy Fund, and StocksPLUS^® Total Return Fund (together, for purposes of this section only, “Equity-Related Funds”) will normally utilize derivatives to gain exposure to equity securities, each of those Funds may also invest directly in equity securities. Equity securities, such as common stock, represent an ownership interest, or the right to acquire an ownership interest, in an issuer.

Common stock generally takes the form of shares in a corporation. The value of a company’s stock may fall as a result of factors directly relating to that company, such as decisions made by its management or lower demand for the company’s products or services. A stock’s value also may fall because of factors affecting not just the company, but also companies in the same industry or in a number of different industries, such as increases in production costs. The value of a company’s stock also may be affected by changes in financial markets that are relatively unrelated to the company or its industry, such as changes in interest rates or currency exchange rates. In addition, a company’s stock generally pays dividends only after the company invests in its own business and makes required payments to holders of its bonds, other debt and preferred stock. For this reason, the value of a company’s stock will usually react more strongly than its bonds, other debt and preferred stock to actual or perceived changes in the company’s financial condition or prospects. Stocks of smaller companies may be more vulnerable to adverse developments than those of larger companies. Stocks of companies that the portfolio managers believe are fast-growing may trade at a higher multiple of current earnings than other stocks. The value of such stocks may be more sensitive to changes in current or expected earnings than the values of other stocks.

With respect to the Equity-Related Funds, though the Equity-Related Funds do not normally invest directly in equity securities, when index derivatives appear to be overvalued relative to the index, each such Equity-Related Fund may invest all of its assets in a “basket” of index stocks. Individual stocks are selected based on an analysis of the historical correlation between the return of every index stock comprising each Fund’s respective index and the return of the index itself. In such case, PIMCO may employ fundamental analysis of factors such as earnings growth, price to earnings ratio, dividend growth and cash flows to choose among stocks that satisfy the correlation tests. Stocks chosen for the applicable Equity-Related Fund are not limited to those with any particular weighting in the applicable benchmark.

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Different types of equity securities provide different voting and dividend rights and priority in the event of the bankruptcy and/or insolvency of the issuer. In addition to common stock, equity securities may include preferred stock, convertible securities and warrants, which are discussed elsewhere in the Prospectuses and this Statement of Additional Information. Equity securities other than common stock are subject to many of the same risks as common stock, although possibly to different degrees.

Preferred Stock

Each Fund (except for the Government Money Market, Money Market, MuniGO, Total Return and Treasury Money Market Funds) may invest in preferred stock. Preferred stock represents an equity interest in a company that generally entitles the holder to receive, in preference to the holders of other stocks such as common stocks, dividends and a fixed share of the proceeds resulting from a liquidation of the company. Some preferred stocks also entitle their holders to receive additional liquidation proceeds on the same basis as holders of a company’s common stock, and thus also represent an ownership interest in that company.

Preferred stocks may pay fixed or adjustable rates of return. Preferred stock is subject to issuer-specific and market risks applicable generally to equity securities. In addition, a company’s preferred stock generally pays dividends only after the company makes required payments to holders of its bonds and other debt. For this reason, the value of preferred stock will usually react more strongly than bonds and other debt to actual or perceived changes in the company’s financial condition or prospects. Preferred stock of smaller companies may be more vulnerable to adverse developments than preferred stock of larger companies.

Warrants to Purchase Securities

The Funds (except the Government Money Market, Money Market, MuniGO and Treasury Money Market Funds) may invest in or acquire warrants to purchase equity or fixed income securities. Warrants are instruments that give the holder the right, but not the obligation, to buy a security at a specific price for a specific period of time. Changes in the value of a warrant do not necessarily correspond to changes in the value of its underlying security. The price of a warrant may be more volatile than the price of its underlying security, and a warrant may offer greater potential for capital appreciation as well as capital loss. Warrants do not entitle a holder to dividends or voting rights with respect to the underlying security and do not represent any rights in the assets of the issuing company. A warrant ceases to have value if it is not exercised prior to its expiration date. These factors can make warrants more speculative than other types of investments. Bonds with warrants attached to purchase equity securities have many characteristics of convertible bonds and their prices may, to some degree, reflect the performance of the underlying stock. Bonds also may be issued with warrants attached to purchase additional fixed income securities at the same coupon rate. A decline in interest rates would permit a Fund to buy additional bonds at the favorable rate or to sell the warrants at a profit. If interest rates rise, the warrants would generally expire with no value.

A Fund (except the Government Money Market, Money Market and Treasury Money Market Funds) will not invest more than 5% of its net assets in warrants to purchase securities. The Government Money Market, Money Market and Treasury Money Market Funds will not invest in warrants. Warrants acquired in units or attached to securities will be deemed without value for purposes of this restriction.

Foreign Securities

The Government Money Market, MuniGO and Treasury Money Market Funds may not invest in securities of foreign issuers. Each other Fund (except for the California Intermediate Municipal Bond, California Short Duration Municipal Income, High Yield Municipal Bond, Long-Term U.S. Government, Low Duration II, Municipal Bond, New York Municipal Bond, Real Income 2019, Real Income 2029, Short Duration Municipal Income, Tax Managed Real Return and Total Return II Funds) may invest in corporate debt securities of foreign issuers, preferred or preference stock of foreign issuers (except for the Money Market and Total Return Funds), certain foreign bank obligations (see “Bank Obligations”) and U.S. dollar or foreign currency-denominated obligations of foreign governments or their subdivisions, agencies and instrumentalities, international agencies and supranational entities. The GNMA, Money Market and Mortgage-Backed Securities Funds may invest in securities of foreign issuers only if they are U.S. dollar-denominated.

PIMCO generally considers an instrument to be economically tied to a non-U.S. country if the issuer is a foreign government (or any political subdivision, agency, authority or instrumentality of such government), or if the issuer is organized under the laws of a non-U.S. country. In the case of certain money market instruments, such instruments will be considered economically tied to a non-U.S. country if either the issuer or the guarantor of such money market instrument is organized under the laws of a non-U.S. country. With respect to derivative instruments, PIMCO generally considers such instruments to be economically tied to non-U.S. countries if the underlying assets are foreign currencies (or baskets or

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indexes of such currencies), or instruments or securities that are issued by foreign governments or issuers organized under the laws of a non-U.S. country (or if the underlying assets are certain money market instruments, if either the issuer or the guarantor of such money market instruments is organized under the laws of a non-U.S. country).

A Fund that invests in instruments economically tied to non-U.S. countries may invest in a range of countries and, as such, the value of the Fund’s assets may be affected by uncertainties such as international political developments, changes in government policies, changes in taxation, restrictions on foreign investment and currency repatriation, currency fluctuations and other developments in the laws and regulations of countries in which investment may be made.

PIMCO generally considers an instrument to be economically tied to an emerging market country if the issuer or guarantor is a government of an emerging market country (or any political subdivision, agency, authority or instrumentality of such government), if the issuer or guarantor is organized under the laws of an emerging market country, or if the currency of settlement of the security is a currency of an emerging market country. With respect to derivative instruments, PIMCO generally considers such instruments to be economically tied to emerging market countries if the underlying assets are currencies of emerging market countries (or baskets or indexes of such currencies), or instruments or securities that are issued or guaranteed by governments of emerging market countries or by entities organized under the laws of emerging market countries. PIMCO has broad discretion to identify countries that it considers to qualify as emerging markets. In exercising such discretion, PIMCO identifies countries as emerging markets consistent with the strategic objectives of various Funds. For instance, the Emerging Local Bond Fund and Emerging Markets Bond Fund generally will consider a country to be an emerging market country if it is classified as an emerging or developing economy by any supranational organization such as the World Bank or the United Nations, or related entities, or if the country is considered an emerging market country for purposes of constructing emerging markets indices. For all other Funds, a country generally will be considered an emerging market country only if: (i) at least one supranational organization has classified it as an emerging or developing economy; and (ii) no other supranational organization has classified the country as a developed country.

The Developing Local Markets, Diversified Income, Foreign Bond (Unhedged), Foreign Bond (U.S. Dollar-Hedged), Global Advantage Strategy Bond, Global Bond (Unhedged), Global Bond (U.S. Dollar-Hedged), Global Multi-Asset, Emerging Local Bond, Emerging Markets and Infrastructure Bond, Emerging Markets Bond and Floating Income Funds may invest, without limit, in securities and instruments that are economically tied to emerging market countries. Each of the Unconstrained Bond and Unconstrained Tax Managed Bond Funds may invest up to 50% of its total assets in securities and instruments that are economically tied to emerging market countries. Each of the Convertible, EM Fundamental IndexPLUS™ TR Strategy, Extended Duration, Fundamental Advantage Total Return Strategy, Fundamental IndexPLUS™ TR, High Yield, International StocksPLUS^® TR Strategy (Unhedged), International StocksPLUS^® TR Strategy (U.S. Dollar-Hedged), Investment Grade Corporate Bond, Long Duration Total Return, Moderate Duration, Small Cap StocksPLUS^® TR, StocksPLUS^® Long Duration, StocksPLUS^® Total Return and StocksPLUS^® TR Short Strategy Funds may invest up to 15% of its total assets in securities and instruments that are economically tied to emerging market countries. Each remaining Fund that is permitted to invest in foreign (non-U.S.) securities, except for the Income, Money Market and Short-Term Funds, may invest up to 10% of its total assets in securities and instruments that are economically tied to emerging market countries. The Short-Term Fund may invest up to 5% of its total assets in such securities and instruments and the Income Fund may invest up to 20% of its total assets in such securities and instruments.

Investment risk may be particularly high to the extent that a Fund invests in instruments economically tied to emerging market countries. These securities may present market, credit, currency, liquidity, legal, political and other risks different from, or greater than, the risks of investing in developed countries. Certain Funds may invest in emerging markets that may be in the process of opening to trans-national investment, which may increase these risks. Risks particular to emerging market countries include, but are not limited to, the following risks.

General Emerging Market Risk. The securities markets of countries in which the Funds may invest may be relatively small, with a limited number of companies representing a small number of industries. Additionally, issuers in countries in which the Funds may invest may not be subject to a high degree of regulation and the financial institutions with which the Funds may trade may not possess the same degree of financial sophistication, creditworthiness or resources as those in developed markets. Furthermore, the legal infrastructure and accounting, auditing and reporting standards in certain countries in which the Funds may invest may not provide the same degree of investor protection or information to investors as would generally apply in major securities markets.

Nationalization, expropriation or confiscatory taxation, currency blockage, political changes or diplomatic developments could adversely affect the Funds’ investments in a foreign country. In the event of nationalization, expropriation or other confiscation, the Funds could lose their entire investment in that country. Adverse conditions in a certain region can adversely affect securities of other countries whose economies appear to be unrelated. To the extent that the Funds invest a significant portion of their assets in a concentrated geographic area, the Funds will generally have more exposure to regional economic risks associated with those investments.

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Restrictions on Foreign Investment. A number of emerging securities markets restrict foreign investment to varying degrees. Furthermore, repatriation of investment income, capital and the proceeds of sales by foreign investors may require governmental registration and/or approval in some countries. While the Funds that may invest in securities and instruments that are economically tied to emerging market countries will only invest in markets where these restrictions are considered acceptable, new or additional repatriation or other restrictions might be imposed subsequent to the Funds’ investment. If such restrictions were to be imposed subsequent to the Funds’ investment in the securities markets of a particular country, the Funds’ response might include, among other things, applying to the appropriate authorities for a waiver of the restrictions or engaging in transactions in other markets designed to offset the risks of decline in that country. Such restrictions will be considered in relation to the Funds’ liquidity needs and all other acceptable positive and negative factors. Some emerging markets limit foreign investment, which may decrease returns relative to domestic investors. The Funds may seek exceptions to those restrictions. If those restrictions are present and cannot by avoided by the Funds, the Funds’ returns may be lower.

Settlement Risks. Settlement systems in emerging markets may be less well organized than in developed markets. Supervisory authorities may also be unable to apply standards which are comparable with those in developed markets. Thus there may be risks that settlement may be delayed and that cash or securities belonging to the Funds may be in jeopardy because of failures of or defects in the systems. In particular, market practice may require that payment shall be made prior to receipt of the security which is being purchased or that delivery of a security must be made before payment is received. In such cases, default by a broker or bank (the “Counterparty”) through whom the relevant transaction is effected might result in a loss being suffered by the Funds. The Funds will seek, where possible, to use Counterparties whose financial status is such that this risk is reduced. However, there can be no certainty that the Funds will be successful in eliminating or reducing this risk, particularly as Counterparties operating in developing countries frequently lack the substance, capitalization and/or financial resources of those in developed countries.

There may also be a danger that, because of uncertainties in the operation of settlement systems in individual markets, competing claims may arise in respect of securities held by or to be transferred to the Funds. Furthermore, compensation schemes may be non-existent, limited or inadequate to meet the Funds’ claims in any of these events.

Counterparty Risk. Trading in the securities of developing markets presents additional credit and financial risks. The Funds may have limited access to, or there may be a limited number of, potential Counterparties that trade in the securities of emerging market issuers. Governmental regulations may restrict potential Counterparties to certain financial institutions located or operating in the particular emerging market. Potential Counterparties may not possess, adopt or implement creditworthiness standards, financial reporting standards or legal and contractual protections similar to those in developed markets. Currency hedging techniques may not be available or may be limited. The Funds may not be able to reduce or mitigate risks related to trading with emerging market Counterparties. The Funds will seek, where possible, to use Counterparties whose financial status is such that the risk of default is reduced, but the risk of losses resulting from default is still possible.

Government in the Private Sector. Government involvement in the private sector varies in degree among the emerging markets in which the Funds invest. Such involvement may, in some cases, include government ownership of companies in certain sectors, wage and price controls or imposition of trade barriers and other protectionist measures. With respect to any developing country, there is no guarantee that some future economic or political crisis will not lead to price controls, forced mergers of companies, expropriation, or creation of government monopolies, to the possible detriment of the Funds’ investment in that country.

Litigation. The Funds may encounter substantial difficulties in obtaining and enforcing judgments against individuals and companies located in certain developing countries. It may be difficult or impossible to obtain or enforce legislation or remedies against governments, their agencies and sponsored entities.

Fraudulent Securities. It is possible, particularly in markets in developing countries, that purported securities in which the Funds invest may subsequently be found to be fraudulent and as a consequence the Funds could suffer losses.

Taxation. The local taxation of income and capital gains accruing to non-residents varies among developing countries and, in some cases, is comparatively high. In addition, developing countries typically have less well-defined tax laws and procedures and such laws may permit retroactive taxation so that the Funds could in the future become subject to local tax liabilities that had not been anticipated in conducting its investment activities or valuing its assets. The Funds will seek to reduce these risks by careful management of their assets. However, there can be no assurance that these efforts will be successful.

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Political Risks/Risks of Conflicts. Recently, various countries have seen significant internal conflicts and in some cases, civil wars may have had an adverse impact on the securities markets of the countries concerned. In addition, the occurrence of new disturbances due to acts of war or other political developments cannot be excluded. Apparently stable systems may experience periods of disruption or improbable reversals of policy. Nationalization, expropriation or confiscatory taxation, currency blockage, political changes, government regulation, political, regulatory or social instability or uncertainty or diplomatic developments could adversely affect the Funds’ investments. The transformation from a centrally planned, socialist economy to a more market oriented economy has also resulted in many economic and social disruptions and distortions. Moreover, there can be no assurance that the economic, regulatory and political initiatives necessary to achieve and sustain such a transformation will continue or, if such initiatives continue and are sustained, that they will be successful or that such initiatives will continue to benefit foreign (or non-national) investors. Certain instruments, such as inflation index instruments, may depend upon measures compiled by governments (or entities under their influence) which are also the obligors.

Each Fund (except for the California Intermediate Municipal Bond, California Short Duration Municipal Income, Government Money Market, High Yield Municipal Bond, Long-Term U.S. Government, Low Duration II, Money Market, MuniGO, Municipal Bond, New York Municipal Bond, Real Income 2019, Real Income 2029, Short Duration Municipal Income, Tax Managed Real Return, Total Return II and Treasury Money Market Funds) may invest in Brady Bonds. Brady Bonds are securities created through the exchange of existing commercial bank loans to sovereign entities for new obligations in connection with debt restructurings under a debt restructuring plan introduced by former U.S. Secretary of the Treasury, Nicholas F. Brady (the “Brady Plan”). Brady Plan debt restructurings have been implemented in a number of countries, including: Argentina, Bolivia, Brazil, Bulgaria, Costa Rica, the Dominican Republic, Ecuador, Jordan, Mexico, Niger, Nigeria, Panama, Peru, the Philippines, Poland, Uruguay, and Venezuela.

Brady Bonds may be collateralized or uncollateralized, are issued in various currencies (primarily the U.S. dollar) and are actively traded in the over-the-counter secondary market. Brady Bonds are not considered to be U.S. Government securities. U.S. dollar-denominated, collateralized Brady Bonds, which may be fixed rate par bonds or floating rate discount bonds, are generally collateralized in full as to principal by U.S. Treasury zero coupon bonds having the same maturity as the Brady Bonds. Interest payments on these Brady Bonds generally are collateralized on a one-year or longer rolling-forward basis by cash or securities in an amount that, in the case of fixed rate bonds, is equal to at least one year of interest payments or, in the case of floating rate bonds, initially is equal to at least one year’s interest payments based on the applicable interest rate at that time and is adjusted at regular intervals thereafter. Certain Brady Bonds are entitled to “value recovery payments” in certain circumstances, which in effect constitute supplemental interest payments but generally are not collateralized. Brady Bonds are often viewed as having three or four valuation components: (i) the collateralized repayment of principal at final maturity; (ii) the collateralized interest payments; (iii) the uncollateralized interest payments; and (iv) any uncollateralized repayment of principal at maturity (these uncollateralized amounts constitute the “residual risk”).

Most Mexican Brady Bonds issued to date have principal repayments at final maturity fully collateralized by U.S. Treasury zero coupon bonds (or comparable collateral denominated in other currencies) and interest coupon payments collateralized on an 18-month rolling-forward basis by funds held in escrow by an agent for the bondholders. A significant portion of the Venezuelan Brady Bonds and the Argentine Brady Bonds issued to date have principal repayments at final maturity collateralized by U.S. Treasury zero coupon bonds (or comparable collateral denominated in other currencies) and/or interest coupon payments collateralized on a 14-month (for Venezuela) or 12-month (for Argentina) rolling-forward basis by securities held by the Federal Reserve Bank of New York as collateral agent.

Brady Bonds involve various risk factors including residual risk and the history of defaults with respect to commercial bank loans by public and private entities of countries issuing Brady Bonds. There can be no assurance that Brady Bonds in which a Fund may invest will not be subject to restructuring arrangements or to requests for new credit, which may cause the Fund to suffer a loss of interest or principal on any of its holdings.

Investment in sovereign debt can involve a high degree of risk. The governmental entity that controls the repayment of sovereign debt may not be able or willing to repay the principal and/or interest when due in accordance with the terms of the debt. A governmental entity’s willingness or ability to repay principal and interest due in a timely manner may be affected by, among other factors, its cash flow situation, the extent of its foreign reserves, the availability of sufficient foreign exchange on the date a payment is due, the relative size of the debt service burden to the economy as a whole, the governmental entity’s policy toward the International Monetary Fund, and the political constraints to which a governmental entity may be subject. Governmental entities also may depend on expected disbursements from foreign governments,

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multilateral agencies and others to reduce principal and interest arrearages on their debt. The commitment on the part of these governments, agencies and others to make such disbursements may be conditioned on a governmental entity’s implementation of economic reforms and/or economic performance and the timely service of such debtor’s obligations. Failure to implement such reforms, achieve such levels of economic performance or repay principal or interest when due may result in the cancellation of such third parties’ commitments to lend funds to the governmental entity, which may further impair such debtor’s ability or willingness to service its debts in a timely manner. Consequently, governmental entities may default on their sovereign debt. Holders of sovereign debt (including the Funds) may be requested to participate in the rescheduling of such debt and to extend further loans to governmental entities. There is no bankruptcy proceeding by which sovereign debt on which governmental entities have defaulted may be collected in whole or in part.

A Fund’s investments in foreign currency denominated debt obligations and hedging activities will likely produce a difference between its book income and its taxable income. This difference may cause a portion of the Fund’s income distributions to constitute returns of capital for tax purposes or require the Fund to make distributions exceeding book income to qualify as a regulated investment company for federal tax purposes.

Japanese Investment Risk. Certain Funds may invest in securities offered by Japanese issuers. The value of such securities may be significantly affected by economic, political and regulatory developments in Japan. Since 1990, the Japanese economy has experienced serious difficulties. During that period, the Tokyo Stock Price Index, a measure of the Japanese stock market, had fallen more than 50% since its peak in the 1980s. While Japan’s economic performance has shown modest improvements in the mid-2000s, the Japanese government continues to deal with persistent economic problems, including deflation, a banking system that has suffered from non-performing loans, and tax laws that dampen growth. Other factors having a negative impact include a heavy government budget deficit and low interest rates.

The Japanese economy lacks diversification, relying heavily on a small number of industries, including the electronic machinery sector. Japan is relatively poor in natural resources, and so it is dependent on imports, especially in the agricultural sector. It also relies on international trade to procure commodities needed for its strong heavy industrial sector, and therefore it is vulnerable to fluctuations in commodity prices. Japan has a high volume of exports, partly due to the government’s protectionist policies, which have caused tension with Japan’s trading partners, including the United States.

Generally, Japanese corporations are required to provide less disclosure than that required by U.S. law and accounting practice. Japanese accounting and auditing practices differ significantly from U.S. standards in specific areas, including regarding unconsolidated subsidiaries and related structures.

Foreign Currency Transactions

All Funds that may invest in foreign currency-denominated securities also may purchase and sell foreign currency options and foreign currency futures contracts and related options (see “Derivative Instruments”), and may engage in foreign currency transactions either on a spot (cash) basis at the rate prevailing in the currency exchange market at the time or through forward currency contracts (“forwards”). Funds may engage in these transactions in order to protect against uncertainty in the level of future foreign exchange rates in the purchase and sale of securities. These Funds also may use foreign currency options and foreign currency forward contracts to increase exposure to a foreign currency or to shift exposure to foreign currency fluctuations from one country to another. The Tax Managed Real Return Fund may invest up to 5% of its assets in non-U.S. dollar demonitated securities of U.S. issuers.

A forward involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days from the date of the contract agreed upon by the parties, at a price set at the time of the contract. These contracts may be bought or sold to protect a Fund against a possible loss resulting from an adverse change in the relationship between foreign currencies and the U.S. dollar or to increase exposure to a particular foreign currency. Open positions in forwards used for non-hedging purposes will be covered by the segregation or “earmarking” of assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees, and are marked to market daily. Although forwards are intended to minimize the risk of loss due to a decline in the value of the hedged currencies, at the same time, they tend to limit any potential gain which might result should the value of such currencies increase. Forwards will be used primarily to adjust the foreign exchange exposure of each Fund with a view to protecting the outlook, and the Funds might be expected to enter into such contracts under the following circumstances:

Lock In. When PIMCO desires to lock in the U.S. dollar price on the purchase or sale of a security denominated in a foreign currency.

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Cross Hedge. If a particular currency is expected to decrease against another currency, a Fund may sell the currency expected to decrease and purchase a currency which is expected to increase against the currency sold in an amount approximately equal to some or all of the Fund’s portfolio holdings denominated in the currency sold.

Direct Hedge. If PIMCO wants to a eliminate substantially all of the risk of owning a particular currency, and/or if PIMCO thinks that a Fund can benefit from price appreciation in a given country’s bonds but does not want to hold the currency, it may employ a direct hedge back into the U.S. dollar. In either case, a Fund would enter into a forward contract to sell the currency in which a portfolio security is denominated and purchase U.S. dollars at an exchange rate established at the time it initiated the contract. The cost of the direct hedge transaction may offset most, if not all, of the yield advantage offered by the foreign security, but a Fund would hope to benefit from an increase (if any) in value of the bond.

Proxy Hedge. PIMCO might choose to use a proxy hedge, which may be less costly than a direct hedge. In this case, a Fund, having purchased a security, will sell a currency whose value is believed to be closely linked to the currency in which the security is denominated. Interest rates prevailing in the country whose currency was sold would be expected to be closer to those in the United States and lower than those of securities denominated in the currency of the original holding. This type of hedging entails greater risk than a direct hedge because it is dependent on a stable relationship between the two currencies paired as proxies and the relationships can be very unstable at times.

Costs of Hedging. When a Fund purchases a foreign bond with a higher interest rate than is available on U.S. bonds of a similar maturity, the additional yield on the foreign bond could be substantially reduced or lost if the Fund were to enter into a direct hedge by selling the foreign currency and purchasing the U.S. dollar. This is what is known as the “cost” of hedging. Proxy hedging attempts to reduce this cost through an indirect hedge back to the U.S. dollar.

It is important to note that hedging costs are treated as capital transactions and are not, therefore, deducted from a Fund’s dividend distribution and are not reflected in its yield. Instead such costs will, over time, be reflected in a Fund’s net asset value per share.

The forecasting of currency market movement is extremely difficult, and whether any hedging strategy will be successful is highly uncertain. Moreover, it is impossible to forecast with precision the market value of portfolio securities at the expiration of a foreign currency forward contract. Accordingly, a Fund may be required to buy or sell additional currency on the spot market (and bear the expense of such transaction) if PIMCO’s predictions regarding the movement of foreign currency or securities markets prove inaccurate. In addition, the use of cross-hedging transactions may involve special risks, and may leave a Fund in a less advantageous position than if such a hedge had not been established. Because foreign currency forward contracts are privately negotiated transactions, there can be no assurance that a Fund will have flexibility to roll-over a foreign currency forward contract upon its expiration if it desires to do so. Additionally, there can be no assurance that the other party to the contract will perform its services thereunder.

Certain Funds may hold a portion of their assets in bank deposits denominated in foreign currencies, so as to facilitate investment in foreign securities as well as protect against currency fluctuations and the need to convert such assets into U.S. dollars (thereby also reducing transaction costs). To the extent these monies are converted back into U.S. dollars, the value of the assets so maintained will be affected favorably or unfavorably by changes in foreign currency exchange rates and exchange control regulations

Tax Consequences of Hedging. Under applicable tax law, the Funds may be required to limit their gains from hedging in foreign currency forwards, futures, and options. Although the Funds are expected to comply with such limits, the extent to which these limits apply is subject to tax regulations as yet unissued. Hedging also may result in the application of the mark-to-market and straddle provisions of the Internal Revenue Code. Those provisions could result in an increase (or decrease) in the amount of taxable dividends paid by the Funds and could affect whether dividends paid by the Funds are classified as capital gains or ordinary income.

Foreign Currency Exchange-Related Securities

Foreign currency warrants. Foreign currency warrants such as Currency Exchange Warrants^SM (“CEWs^SM”) are warrants which entitle the holder to receive from their issuer an amount of cash (generally, for warrants issued in the United States, in U.S. dollars) which is calculated pursuant to a predetermined formula and based on the exchange rate between a specified foreign currency and the U.S. dollar as of the exercise date of the warrant. Foreign currency warrants generally are exercisable upon their issuance and expire as of a specified date and time. Foreign currency warrants have been issued in connection with U.S. dollar-denominated debt offerings by major corporate issuers in an attempt to reduce the foreign currency exchange risk which, from the point of view of prospective purchasers of the securities, is inherent in the

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international fixed-income marketplace. Foreign currency warrants may attempt to reduce the foreign exchange risk assumed by purchasers of a security by, for example, providing for a supplemental payment in the event that the U.S. dollar depreciates against the value of a major foreign currency such as the Japanese yen or the euro. The formula used to determine the amount payable upon exercise of a foreign currency warrant may make the warrant worthless unless the applicable foreign currency exchange rate moves in a particular direction (e.g., unless the U.S. dollar appreciates or depreciates against the particular foreign currency to which the warrant is linked or indexed). Foreign currency warrants are severable from the debt obligations with which they may be offered, and may be listed on exchanges. Foreign currency warrants may be exercisable only in certain minimum amounts, and an investor wishing to exercise warrants who possesses less than the minimum number required for exercise may be required either to sell the warrants or to purchase additional warrants, thereby incurring additional transaction costs. In the case of any exercise of warrants, there may be a time delay between the time a holder of warrants gives instructions to exercise and the time the exchange rate relating to exercise is determined, during which time the exchange rate could change significantly, thereby affecting both the market and cash settlement values of the warrants being exercised. The expiration date of the warrants may be accelerated if the warrants should be delisted from an exchange or if their trading should be suspended permanently, which would result in the loss of any remaining “time value” of the warrants (i.e., the difference between the current market value and the exercise value of the warrants), and, in the case the warrants were “out-of-the-money,” in a total loss of the purchase price of the warrants. Warrants are generally unsecured obligations of their issuers and are not standardized foreign currency options issued by the Options Clearing Corporation (“OCC”). Unlike foreign currency options issued by OCC, the terms of foreign exchange warrants generally will not be amended in the event of governmental or regulatory actions affecting exchange rates or in the event of the imposition of other regulatory controls affecting the international currency markets. The initial public offering price of foreign currency warrants is generally considerably in excess of the price that a commercial user of foreign currencies might pay in the interbank market for a comparable option involving significantly larger amounts of foreign currencies. Foreign currency warrants are subject to significant foreign exchange risk, including risks arising from complex political or economic factors.

Principal exchange rate linked securities. Principal exchange rate linked securities (“PERLs^SM”) are debt obligations the principal on which is payable at maturity in an amount that may vary based on the exchange rate between the U.S. dollar and a particular foreign currency at or about that time. The return on “standard” principal exchange rate linked securities is enhanced if the foreign currency to which the security is linked appreciates against the U.S. dollar, and is adversely affected by increases in the foreign exchange value of the U.S. dollar; “reverse” principal exchange rate linked securities are like the “standard” securities, except that their return is enhanced by increases in the value of the U.S. dollar and adversely impacted by increases in the value of foreign currency. Interest payments on the securities are generally made in U.S. dollars at rates that reflect the degree of foreign currency risk assumed or given up by the purchaser of the notes (i.e., at relatively higher interest rates if the purchaser has assumed some of the foreign exchange risk, or relatively lower interest rates if the issuer has assumed some of the foreign exchange risk, based on the expectations of the current market). Principal exchange rate linked securities may in limited cases be subject to acceleration of maturity (generally, not without the consent of the holders of the securities), which may have an adverse impact on the value of the principal payment to be made at maturity.

Performance indexed paper. Performance indexed paper (“PIPs^SM”) is U.S. dollar-denominated commercial paper the yield of which is linked to certain foreign exchange rate movements. The yield to the investor on performance indexed paper is established at maturity as a function of spot exchange rates between the U.S. dollar and a designated currency as of or about that time (generally, the index maturity two days prior to maturity). The yield to the investor will be within a range stipulated at the time of purchase of the obligation, generally with a guaranteed minimum rate of return that is below, and a potential maximum rate of return that is above, market yields on U.S. dollar-denominated commercial paper, with both the minimum and maximum rates of return on the investment corresponding to the minimum and maximum values of the spot exchange rate two business days prior to maturity.

Borrowing

Except as described below, each Fund may borrow money to the extent permitted under the 1940 Act, and as interpreted, modified or otherwise permitted by regulatory authority having jurisdiction, from time to time. This means that, in general, a Fund may borrow money from banks for any purpose in an amount up to  ¹/3 of the Fund’s total assets. A Fund also may borrow money for temporary administrative purposes in an amount not to exceed 5% of the Fund’s total assets.

Specifically, provisions of the 1940 Act require a Fund to maintain continuous asset coverage (that is, total assets including borrowings, less liabilities exclusive of borrowings) of 300% of the amount borrowed, with an exception for borrowings not in excess of 5% of the Fund’s total assets made for temporary administrative purposes. Any borrowings for temporary administrative purposes in excess of 5% of the Fund’s total assets must maintain continuous asset coverage. If the 300% asset coverage should decline as a result of market fluctuations or other reasons, a Fund may be required to sell some of its portfolio holdings within three days to reduce the debt and restore the 300% asset coverage, even though it may be disadvantageous from an investment standpoint to sell securities at that time.

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As noted below, a Fund also may enter into certain transactions, including reverse repurchase agreements, mortgage dollar rolls, and sale-buybacks, that can be viewed as constituting a form of borrowing or financing transaction by the Fund. To the extent a Fund covers its commitment under a reverse repurchase agreement (or economically similar transaction) by the segregation or “earmarking” of assets determined in accordance with procedures adopted by the Trustees, equal in value to the amount of the Fund’s commitment to repurchase, such an agreement will not be considered a “senior security” by the Fund and therefore will not be subject to the 300% asset coverage requirement otherwise applicable to borrowings by the Funds. Borrowing will tend to exaggerate the effect on net asset value of any increase or decrease in the market value of a Fund’s portfolio. Money borrowed will be subject to interest costs which may or may not be recovered by appreciation of the securities purchased. A Fund also may be required to maintain minimum average balances in connection with such borrowing or to pay a commitment or other fee to maintain a line of credit; either of these requirements would increase the cost of borrowing over the stated interest rate. The Global Bond Fund (U.S. Dollar-Hedged) has adopted a non-fundamental investment restriction under which the Fund may not borrow in excess of 10% of the value of its total assets and then only from banks as a temporary measure to facilitate the meeting of redemption requests (not for leverage) or for extraordinary or emergency purposes. The Total Return Fund has adopted a non-fundamental investment restriction under which the Fund, so long as its shares are being offered in Japan, may not borrow money in excess of 10% of the value (taken at the lower of cost or current value) of its total assets (not including the amount borrowed) at the time the borrowing is made, except for extraordinary or emergency purposes, such as in the case of a merger, amalgamation or the like. Non-fundamental investment restrictions may be changed without shareholder approval.

A Fund may enter into reverse repurchase agreements, mortgage dollar rolls, and economically similar transactions. A reverse repurchase agreement involves the sale of a portfolio-eligible security by a Fund to another party, such as a bank or broker-dealer, coupled with its agreement to repurchase the instrument at a specified time and price. Under a reverse repurchase agreement, the Fund continues to receive any principal and interest payments on the underlying security during the term of the agreement. The Fund typically will segregate or “earmark” assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees, equal (on a daily mark-to-market basis) to its obligations under reverse repurchase agreements. However, reverse repurchase agreements involve the risk that the market value of securities retained by the Fund may decline below the repurchase price of the securities sold by the Fund which it is obligated to repurchase. With respect to reverse repurchase agreements in which banks are counterparties, the Fund may treat such transactions as bank borrowings, which would be subject to the Fund’s limitations on borrowings. Such treatment would, among other things, restrict the aggregate of such transactions (plus any other borrowings) to one-third of a Fund’s total assets (except the Global Bond Fund (U.S. Dollar-Hedged) and the Total Return Fund).

A “mortgage dollar roll” is similar to a reverse repurchase agreement in certain respects. In a “dollar roll” transaction a Fund sells a mortgage-related security, such as a security issued by GNMA, to a dealer and simultaneously agrees to repurchase a similar security (but not the same security) in the future at a pre-determined price. A “dollar roll” can be viewed, like a reverse repurchase agreement, as a collateralized borrowing in which a Fund pledges a mortgage-related security to a dealer to obtain cash. Unlike in the case of reverse repurchase agreements, the dealer with which a Fund enters into a dollar roll transaction is not obligated to return the same securities as those originally sold by the Fund, but only securities which are “substantially identical.” To be considered “substantially identical,” the securities returned to a Fund generally must: (1) be collateralized by the same types of underlying mortgages; (2) be issued by the same agency and be part of the same program; (3) have a similar original stated maturity; (4) have identical net coupon rates; (5) have similar market yields (and therefore price); and (6) satisfy “good delivery” requirements, meaning that the aggregate principal amounts of the securities delivered and received back must be within 0.01% of the initial amount delivered.

A Fund’s obligations under a dollar roll agreement must be covered by segregated or “earmarked” liquid assets equal in value to the securities subject to repurchase by the Fund. As with reverse repurchase agreements, to the extent that positions in dollar roll agreements are not covered by segregated or “earmarked” liquid assets at least equal to the amount of any forward purchase commitment, such transactions would be subject to the Funds’ restrictions on borrowings. Furthermore, because dollar roll transactions may be for terms ranging between one and six months, dollar roll transactions may be deemed “illiquid” and subject to a Fund’s overall limitations on investments in illiquid securities.

A Fund also may effect simultaneous purchase and sale transactions that are known as “sale-buybacks.” A sale-buyback is similar to a reverse repurchase agreement, except that in a sale-buyback, the counterparty who purchases the security is entitled to receive any principal or interest payments make on the underlying security pending settlement of the Fund’s repurchase of the underlying security. A Fund’s obligations under a sale-buyback typically would be offset by liquid assets equal in value to the amount of the Fund’s forward commitment to repurchase the subject security.

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Derivative Instruments

In pursuing their individual objectives, the Funds (except for the Government Money Market, Money Market, MuniGO and Treasury Money Market Funds) may, to the extent permitted by their investment objectives and policies, purchase and sell (write) both put options and call options on securities, swap agreements, securities indexes, commodity indexes and foreign currencies, and enter into interest rate, foreign currency, index and commodity futures contracts and purchase and sell options on such futures contracts (“futures options”) for hedging purposes, to seek to replicate the composition and performance of a particular index, or as part of their overall investment strategies, except that those Funds that may not invest in foreign currency-denominated securities may not enter into transactions involving currency futures or options. The Funds (except for the California Intermediate Municipal Bond, California Short Duration Municipal Income, High Yield Municipal Bond, GNMA, Government Money Market, Long-Term U.S. Government, Low Duration II, Money Market, Mortgage-Backed Securities, Municipal Bond, MuniGO, New York Municipal Bond, Real Income 2019, Real Income 2029, Short Duration Municipal Income, Total Return II and Treasury Money Market Funds) also may purchase and sell foreign currency options for purposes of increasing exposure to a foreign currency or to shift exposure to foreign currency fluctuations from one country to another. A Fund (except for the Government Money Market, Money Market, MuniGO, Real Income 2019, Real Income 2029 and Treasury Money Market Funds) also may enter into swap agreements with respect to interest rates, commodities, and indexes of securities or commodities, and to the extent it may invest in foreign currency-denominated securities, may enter into swap agreements with respect to foreign currencies. The Funds may invest in structured notes. If other types of financial instruments, including other types of options, futures contracts, or futures options are traded in the future, a Fund also may use those instruments, provided that the Board of Trustees determines that their use is consistent with the Fund’s investment objective.

The value of some derivative instruments in which the Funds invest may be particularly sensitive to changes in prevailing interest rates, and, like the other investments of the Funds, the ability of a Fund to successfully utilize these instruments may depend in part upon the ability of PIMCO to forecast interest rates and other economic factors correctly. If PIMCO incorrectly forecasts such factors and has taken positions in derivative instruments contrary to prevailing market trends, the Funds could be exposed to the risk of loss.

The Funds might not employ any of the strategies described below, and no assurance can be given that any strategy used will succeed. If PIMCO incorrectly forecasts interest rates, market values or other economic factors in using a derivatives strategy for a Fund, the Fund might have been in a better position if it had not entered into the transaction at all. Also, suitable derivative transactions may not be available in all circumstances. The use of these strategies involves certain special risks, including a possible imperfect correlation, or even no correlation, between price movements of derivative instruments and price movements of related investments. While some strategies involving derivative instruments can reduce the risk of loss, they can also reduce the opportunity for gain or even result in losses by offsetting favorable price movements in related investments or otherwise, due to the possible inability of a Fund to purchase or sell a portfolio security at a time that otherwise would be favorable or the possible need to sell a portfolio security at a disadvantageous time because the Fund is required to maintain asset coverage or offsetting positions in connection with transactions in derivative instruments, and the possible inability of a Fund to close out or to liquidate its derivatives positions. In addition, a Fund’s use of such instruments may cause the Fund to realize higher amounts of short-term capital gains (generally taxed at ordinary income tax rates) than if it had not used such instruments. For Funds that gain exposure to an asset class using derivative instruments backed by a collateral portfolio of Fixed Income Instruments, changes in the value of the Fixed Income Instruments may result in greater or lesser exposure to that asset class than would have resulted from a direct investment in securities comprising that asset class.

Options on Securities and Indexes. A Fund may, to the extent specified herein or in the Prospectuses, purchase and sell both put and call options on fixed income or other securities or indexes in standardized contracts traded on foreign or domestic securities exchanges, boards of trade, or similar entities, or quoted on NASDAQ or on an over-the-counter market, and agreements, sometimes called cash puts, which may accompany the purchase of a new issue of bonds from a dealer.

An option on a security (or index) is a contract that gives the holder of the option, in return for a premium, the right to buy from (in the case of a call) or sell to (in the case of a put) the writer of the option the security underlying the option (or the cash value of the index) at a specified exercise price at any time during the term of the option. The writer of an option on a security has the obligation upon exercise of the option to deliver the underlying security upon payment of the exercise price or to pay the exercise price upon delivery of the underlying security. Upon exercise, the writer of an option on an index is obligated to pay the difference between the cash value of the index and the exercise price multiplied by the specified multiplier for the index option. (An index is designed to reflect features of a particular financial or securities market, a specific group of financial instruments or securities, or certain economic indicators.)

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If a Fund writes a call option on a security or an index, it may “cover” its obligation under the call option by owning the security underlying the call option, by having an absolute and immediate right to acquire that security without additional cash consideration (or, if additional cash consideration is required, cash or other assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees, in such amount are segregated or “earmarked”) upon conversion or exchange of other securities held by the Fund, or by maintaining with its custodian assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees, in an amount equal to the market value of the security or index underlying the option. A call option written by a Fund is also covered if the Fund holds a call on the same security or index as the call written where the exercise price of the call held is (i) equal to or less than the exercise price of the call written, or (ii) greater than the exercise price of the call written, provided the difference is maintained by the Fund in segregated or “earmarked” assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees. A put option on a security or an index written by a Fund is “covered” if the Fund segregates or “earmarks” assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees equal to the exercise price. A put option written by a Fund is also covered if the Fund holds a put on the same security or index as the put written where the exercise price of the put held is (i) equal to or greater than the exercise price of the put written, or (ii) less than the exercise price of the put written, provided the difference is maintained by the Fund in segregated or “earmarked” assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees.

If an option written by a Fund expires unexercised, the Fund realizes a capital gain equal to the premium received at the time the option was written. If an option purchased by a Fund expires unexercised, the Fund realizes a capital loss equal to the premium paid. Prior to the earlier of exercise or expiration, an exchange traded option may be closed out by an offsetting purchase or sale of an option of the same series (type, exchange, underlying security or index, exercise price, and expiration). There can be no assurance, however, that a closing purchase or sale transaction can be effected when the Fund desires.

A Fund may sell put or call options it has previously purchased, which could result in a net gain or loss depending on whether the amount realized on the sale is more or less than the premium and other transaction costs paid on the put or call option which is sold. Prior to exercise or expiration, an option may be closed out by an offsetting purchase or sale of an option of the same series. A Fund will realize a capital gain from a closing purchase transaction if the cost of the closing option is less than the premium received from writing the option, or, if it is more, the Fund will realize a capital loss. If the premium received from a closing sale transaction is more than the premium paid to purchase the option, the Fund will realize a capital gain or, if it is less, the Fund will realize a capital loss. The principal factors affecting the market value of a put or a call option include supply and demand, interest rates, the current market price of the underlying security or index in relation to the exercise price of the option, the volatility of the underlying security or index, and the time remaining until the expiration date.

The premium paid for a put or call option purchased by a Fund is an asset of the Fund. The premium received for an option written by a Fund is recorded as a deferred credit. The value of an option purchased or written is marked to market daily and is valued at the closing price on the exchange on which it is traded or, if not traded on an exchange or no closing price is available, at the mean between the last bid and asked prices.

The Funds may write covered straddles consisting of a combination of a call and a put written on the same underlying security. A straddle will be covered when sufficient assets are deposited to meet the Funds’ immediate obligations. The Funds may use the same liquid assets to cover both the call and put options where the exercise price of the call and put are the same, or the exercise price of the call is higher than that of the put. In such cases, the Funds will also segregate or “earmark” liquid assets equivalent to the amount, if any, by which the put is “in the money.”

Risks Associated with Options on Securities and Indexes. There are several risks associated with transactions in options on securities and on indexes. For example, there are significant differences between the securities and options markets that could result in an imperfect correlation between these markets, causing a given transaction not to achieve its objectives. A decision as to whether, when and how to use options involves the exercise of skill and judgment, and even a well-conceived transaction may be unsuccessful to some degree because of market behavior or unexpected events.

The writer of an option has no control over the time when it may be required to fulfill its obligation as a writer of the option. Once an option writer has received an exercise notice, it cannot effect a closing purchase transaction in order to terminate its obligation under the option and must deliver the underlying security at the exercise price. If a put or call option purchased by the Fund is not sold when it has remaining value, and if the market price of the underlying security remains equal to or greater than the exercise price (in the case of a put), or remains less than or equal to the exercise price (in the case of a call), the Fund will lose its entire investment in the option. Also, where a put or call option on a particular security is purchased to hedge against price movements in a related security, the price of the put or call option may move more or less than the price of the related security.

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There can be no assurance that a liquid market will exist when a Fund seeks to close out an option position. If a Fund were unable to close out an option that it had purchased on a security, it would have to exercise the option in order to realize any profit or the option may expire worthless.

If trading were suspended in an option purchased by a Fund, the Fund would not be able to close out the option. If restrictions on exercise were imposed, the Fund might be unable to exercise an option it has purchased. Except to the extent that a call option on an index written by the Fund is covered by an option on the same index purchased by the Fund, movements in the index may result in a loss to the Fund; however, such losses may be mitigated by changes in the value of the Fund’s securities during the period the option was outstanding.

To the extent that a Fund writes a call option on a security it holds in its portfolio and intends to use such security as the sole means of “covering” its obligation under the call option, the Fund has, in return for the premium on the option, given up the opportunity to profit from a price increase in the underlying security above the exercise price during the option period, but, as long as its obligation under such call option continues, has retained the risk of loss should the price of the underlying security decline. If a Fund were unable to close out such a call option, the Fund would not be able to sell the underlying security unless the option expired without exercise.

Foreign Currency Options. Funds that invest in foreign currency-denominated securities may buy or sell put and call options on foreign currencies. These Funds may buy or sell put and call options on foreign currencies either on exchanges or in the over-the-counter market. A put option on a foreign currency gives the purchaser of the option the right to sell a foreign currency at the exercise price until the option expires. A call option on a foreign currency gives the purchaser of the option the right to purchase the currency at the exercise price until the option expires. Currency options traded on U.S. or other exchanges may be subject to position limits which may limit the ability of a Fund to reduce foreign currency risk using such options. Over-the-counter options differ from traded options in that they are two-party contracts with price and other terms negotiated between buyer and seller, and generally do not have as much market liquidity as exchange-traded options.

Futures Contracts and Options on Futures Contracts. A futures contract is an agreement between two parties to buy and sell a security or commodity for a set price on a future date. These contracts are traded on exchanges, so that, in most cases, either party can close out its position on the exchange for cash, without delivering the security or commodity. An option on a futures contract gives the holder of the option the right to buy or sell a position in a futures contract to the writer of the option, at a specified price and on or before a specified expiration date.

Each Fund (except for the Government Money Market, Money Market, MuniGO, Real Income 2019, Real Income 2029 and Treasury Money Market Funds) may invest in futures contracts and options thereon (“futures options”) with respect to, but not limited to, interest rates, commodities, and security or commodity indexes. The Real Income 2019 and Real Income 2029 Funds may invest in futures contracts on U.S. Treasury securities. To the extent that a Fund may invest in foreign currency-denominated securities, it also may invest in foreign currency futures contracts and options thereon.

An interest rate, commodity, foreign currency or index futures contract provides for the future sale by one party and purchase by another party of a specified quantity of a financial instrument, commodity, foreign currency or the cash value of an index at a specified price and time. A futures contract on an index is an agreement pursuant to which two parties agree to take or make delivery of an amount of cash equal to the difference between the value of the index at the close of the last trading day of the contract and the price at which the index contract was originally written. Although the value of an index might be a function of the value of certain specified securities, no physical delivery of these securities is made. A public market exists in futures contracts covering a number of indexes as well as financial instruments and foreign currencies, including: the S&P 500; the S&P Midcap 400; the Nikkei 225; the NYSE composite; U.S. Treasury bonds; U.S. Treasury notes; GNMA Certificates; three-month U.S. Treasury bills; 90-day commercial paper; bank certificates of deposit; Eurodollar certificates of deposit; the Australian dollar; the Canadian dollar; the British pound; the Japanese yen; the Swiss franc; the Mexican peso; and certain multinational currencies, such as the euro. It is expected that other futures contracts will be developed and traded in the future. Certain of the Funds also may invest in commodity futures contracts and options thereon. A commodity futures contract is an agreement between two parties, in which one party agrees to buy a commodity, such as an energy, agricultural or metal commodity from the other party at a later date at a price and quantity agreed-upon when the contract is made.

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A Fund may purchase and write call and put futures options, as specified for that Fund in the Prospectuses. Futures options possess many of the same characteristics as options on securities and indexes (discussed above). A futures option gives the holder the right, in return for the premium paid, to assume a long position (call) or short position (put) in a futures contract at a specified exercise price at any time during the period of the option. Upon exercise of a call option, the holder acquires a long position in the futures contract and the writer is assigned the opposite short position. In the case of a put option, the opposite is true. A call option is “in the money” if the value of the futures contract that is the subject of the option exceeds the exercise price. A put option is “in the money” if the exercise price exceeds the value of the futures contract that is the subject of the option.

Pursuant to a claim for exemption filed with the Commodity Futures Trading Commission (“CFTC”) on behalf of the Funds, neither the Trust nor any of the individual Funds is deemed to be a “commodity pool” or “commodity pool operator” under the Commodity Exchange Act (“CEA”), and they are not subject to registration or regulation as such under the CEA. PIMCO is not deemed to be a “commodity pool operator” with respect to its service as investment adviser to the Funds.

Limitations on Use of Futures and Futures Options. A Fund that may use futures and futures options will only enter into futures contracts and futures options which are standardized and traded on a U.S. or foreign exchange, board of trade, or similar entity, or quoted on an automated quotation system.

When a purchase or sale of a futures contract is made by such Fund, the Fund is required to deposit with its custodian (or broker, if legally permitted) a specified amount of assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees (“initial margin”). The margin required for a futures contract is set by the exchange on which the contract is traded and may be modified during the term of the contract. Margin requirements on foreign exchanges may be different than U.S. exchanges. The initial margin is in the nature of a performance bond or good faith deposit on the futures contract which is returned to the Fund upon termination of the contract, assuming all contractual obligations have been satisfied. Each Fund expects to earn interest income on its initial margin deposits. A futures contract held by a Fund is valued daily at the official settlement price of the exchange on which it is traded. Each day a Fund pays or receives cash, called “variation margin,” equal to the daily change in value of the futures contract. This process is known as “marking to market.” Variation margin does not represent a borrowing or loan by a Fund but is instead a settlement between the Fund and the broker of the amount one would owe the other if the futures contract expired. In computing daily net asset value, each Fund will mark to market its open futures positions.

A Fund is also required to deposit and maintain margin with respect to put and call options on futures contracts written by it. Such margin deposits will vary depending on the nature of the underlying futures contract (and the related initial margin requirements), the current market value of the option, and other futures positions held by the Fund.

Although some futures contracts call for making or taking delivery of the underlying securities or commodities, generally these obligations are closed out prior to delivery by offsetting purchases or sales of matching futures contracts (same exchange, underlying security or index, and delivery month). Closing out a futures contract sale is effected by purchasing a futures contract for the same aggregate amount of the specific type of financial instrument or commodity with the same delivery date. If an offsetting purchase price is less than the original sale price, a Fund realizes a capital gain, or if it is more, a Fund realizes a capital loss. Conversely, if an offsetting sale price is more than the original purchase price, a Fund realizes a capital gain, or if it is less, a Fund realizes a capital loss. The transaction costs must also be included in these calculations.

The Funds may write covered straddles consisting of a call and a put written on the same underlying futures contract. A straddle will be covered when sufficient assets are deposited to meet the Funds’ immediate obligations. A Fund may use the same liquid assets to cover both the call and put options where the exercise price of the call and put are the same, or the exercise price of the call is higher than that of the put. In such cases, the Funds will also segregate or “earmark” liquid assets equivalent to the amount, if any, by which the put is “in the money.”

When purchasing a futures contract, a Fund will maintain with its custodian (and mark-to-market on a daily basis) assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees, that, when added to the amounts deposited with a futures commission merchant as margin, are equal to the market value of the futures contract. Alternatively, a Fund may “cover” its position by purchasing a put option on the same futures contract with a strike price as high or higher than the price of the contract held by the Fund.

When selling a futures contract, a Fund will maintain with its custodian (and mark-to-market on a daily basis) assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees, that are equal to the

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market value of the futures contract. Alternatively, a Fund may “cover” its position by owning the instruments underlying the futures contract (or, in the case of an index futures contract, a portfolio with a volatility substantially similar to that of the index on which the futures contract is based), or by holding a call option permitting the Fund to purchase the same futures contract at a price no higher than the price of the contract written by the Fund (or at a higher price if the difference is maintained in liquid assets with the Trust’s custodian).

With respect to futures contracts that are not legally required to “cash settle,” a Fund may cover the open position by setting aside or “earmarking” liquid assets in an amount equal to the market value of the futures contract. With respect to futures that are required to “cash settle,” however, a Fund is permitted to set aside or “earmark” liquid assets in an amount equal to the Fund’s daily marked to market (net) obligation, if any, (in other words, the Fund’s daily net liability, if any) rather than the market value of the futures contract. By setting aside or “earmarking” assets equal to only its net obligation under cash-settled futures, a Fund will have the ability to utilize these contracts to a greater extent than if the Fund were required to segregate or “earmark” assets equal to the full market value of the futures contract.

When selling a call option on a futures contract, a Fund will maintain with its custodian (and mark-to-market on a daily basis) assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees, that, when added to the amounts deposited with a futures commission merchant as margin, equal the total market value of the futures contract underlying the call option. Alternatively, the Fund may cover its position by entering into a long position in the same futures contract at a price no higher than the strike price of the call option, by owning the instruments underlying the futures contract, or by holding a separate call option permitting the Fund to purchase the same futures contract at a price not higher than the strike price of the call option sold by the Fund.

When selling a put option on a futures contract, a Fund will maintain with its custodian (and mark-to-market on a daily basis) assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees, that equal the purchase price of the futures contract, less any margin on deposit. Alternatively, the Fund may cover the position either by entering into a short position in the same futures contract, or by owning a separate put option permitting it to sell the same futures contract so long as the strike price of the purchased put option is the same or higher than the strike price of the put option sold by the Fund.

To the extent that securities with maturities greater than one year are used to segregate or “earmark” assets to cover a Fund’s obligations under futures contracts and related options, such use will not eliminate the risk of a form of leverage, which may tend to exaggerate the effect on net asset value of any increase or decrease in the market value of a Fund’s portfolio, and may require liquidation of portfolio positions when it is not advantageous to do so. However, any potential risk of leverage resulting from the use of securities with maturities greater than one year may be mitigated by the overall duration limit on a Fund’s portfolio securities. Thus, the use of a longer-term security may require a Fund to hold offsetting short-term securities to balance the Fund’s portfolio such that the Fund’s duration does not exceed the maximum permitted for the Fund in the Prospectuses.

The requirements for qualification as a regulated investment company also may limit the extent to which a Fund may enter into futures, futures options and forward contracts. See “Taxation.”

Risks Associated with Futures and Futures Options. There are several risks associated with the use of futures contracts and futures options as hedging techniques. A purchase or sale of a futures contract may result in losses in excess of the amount invested in the futures contract. There can be no guarantee that there will be a correlation between price movements in the hedging vehicle and in the Fund securities being hedged. In addition, there are significant differences between the securities and futures markets that could result in an imperfect correlation between the markets, causing a given hedge not to achieve its objectives. The degree of imperfection of correlation depends on circumstances such as variations in speculative market demand for futures and futures options on securities, including technical influences in futures trading and futures options, and differences between the financial instruments being hedged and the instruments underlying the standard contracts available for trading in such respects as interest rate levels, maturities, and creditworthiness of issuers. A decision as to whether, when and how to hedge involves the exercise of skill and judgment, and even a well-conceived hedge may be unsuccessful to some degree because of market behavior or unexpected interest rate trends.

Futures contracts on U.S. Government securities historically have reacted to an increase or decrease in interest rates in a manner similar to that in which the underlying U.S. Government securities reacted. To the extent, however, that a Fund enters into such futures contracts, the value of such futures will not vary in direct proportion to the value of such Fund’s holdings of U.S. Government securities. Thus, the anticipated spread between the price of the futures contract and the hedged security may be distorted due to differences in the nature of the markets. The spread also may be distorted by differences in initial and variation margin requirements, the liquidity of such markets and the participation of speculators in such markets.

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Futures exchanges may limit the amount of fluctuation permitted in certain futures contract prices during a single trading day. The daily limit establishes the maximum amount that the price of a futures contract may vary either up or down from the previous day’s settlement price at the end of the current trading session. Once the daily limit has been reached in a futures contract subject to the limit, no more trades may be made on that day at a price beyond that limit. The daily limit governs only price movements during a particular trading day and therefore does not limit potential losses because the limit may work to prevent the liquidation of unfavorable positions. For example, futures prices have occasionally moved to the daily limit for several consecutive trading days with little or no trading, thereby preventing prompt liquidation of positions and subjecting some holders of futures contracts to substantial losses.

There can be no assurance that a liquid market will exist at a time when a Fund seeks to close out a futures or a futures option position, and that Fund would remain obligated to meet margin requirements until the position is closed. In addition, many of the contracts discussed above are relatively new instruments without a significant trading history. As a result, there can be no assurance that an active secondary market will develop or continue to exist.

Risks Associated with Commodity Futures Contracts. There are several additional risks associated with transactions in commodity futures contracts.

Storage. Unlike the financial futures markets, in the commodity futures markets there are costs of physical storage associated with purchasing the underlying commodity. The price of the commodity futures contract will reflect the storage costs of purchasing the physical commodity, including the time value of money invested in the physical commodity. To the extent that the storage costs for an underlying commodity change while a Fund is invested in futures contracts on that commodity, the value of the futures contract may change proportionately.

Reinvestment. In the commodity futures markets, producers of the underlying commodity may decide to hedge the price risk of selling the commodity by selling futures contracts today to lock in the price of the commodity at delivery tomorrow. In order to induce speculators to purchase the other side of the same futures contract, the commodity producer generally must sell the futures contract at a lower price than the expected future spot price. Conversely, if most hedgers in the futures market are purchasing futures contracts to hedge against a rise in prices, then speculators will only sell the other side of the futures contract at a higher futures price than the expected future spot price of the commodity. The changing nature of the hedgers and speculators in the commodity markets will influence whether futures prices are above or below the expected future spot price, which can have significant implications for a Fund. If the nature of hedgers and speculators in futures markets has shifted when it is time for a Fund to reinvest the proceeds of a maturing contract in a new futures contract, the Fund might reinvest at higher or lower futures prices, or choose to pursue other investments.

Other Economic Factors. The commodities which underlie commodity futures contracts may be subject to additional economic and non-economic variables, such as drought, floods, weather, livestock disease, embargoes, tariffs, and international economic, political and regulatory developments. These factors may have a larger impact on commodity prices and commodity-linked instruments, including futures contracts, than on traditional securities. Certain commodities are also subject to limited pricing flexibility because of supply and demand factors. Others are subject to broad price fluctuations as a result of the volatility of the prices for certain raw materials and the instability of supplies of other materials. These additional variables may create additional investment risks which subject a Fund’s investments to greater volatility than investments in traditional securities.

Additional Risks of Options on Securities, Futures Contracts, Options on Futures Contracts, and Forward Currency Exchange Contracts and Options Thereon. Options on securities, futures contracts, options on futures contracts, forward currency exchange contracts and options on forward currency exchange contracts may be traded on foreign exchanges. Such transactions may not be regulated as effectively as similar transactions in the United States; may not involve a clearing mechanism and related guarantees, and are subject to the risk of governmental actions affecting trading in, or the prices of, foreign securities. The value of such positions also could be adversely affected by (i) other complex foreign political, legal and economic factors, (ii) lesser availability than in the United States of data on which to make trading decisions, (iii) delays in the Trust’s ability to act upon economic events occurring in foreign markets during non-business hours in the United States, (iv) the imposition of different exercise and settlement terms and procedures and margin requirements than in the United States, and (v) lesser trading volume.

Swap Agreements and Options on Swap Agreements. Each Fund (except for the Government Money Market, Money Market, MuniGO, Real Income 2019, Real Income 2029 and Treasury Money Market Funds) may engage in swap

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transactions, including, but not limited to, swap agreements on interest rates, security or commodity indexes, specific securities and commodities, and credit and event-linked swaps. To the extent a Fund may invest in foreign currency-denominated securities, it also may invest in currency exchange rate swap agreements. A Fund also may enter into options on swap agreements (“swap options”).

A Fund may enter into swap transactions for any legal purpose consistent with its investment objectives and policies, such as for the purpose of attempting to obtain or preserve a particular return or spread at a lower cost than obtaining a return or spread through purchases and/or sales of instruments in other markets, to protect against currency fluctuations, as a duration management technique, to protect against any increase in the price of securities a Fund anticipates purchasing at a later date, or to gain exposure to certain markets in the most economical way possible.

Swap agreements are two party contracts entered into primarily by institutional investors for periods ranging from a few weeks to more than one year. In a standard “swap” transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments, which may be adjusted for an interest factor. The gross returns to be exchanged or “swapped” between the parties are generally calculated with respect to a “notional amount,” i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate, in a particular foreign currency, or in a “basket” of securities or commodities representing a particular index. A “quanto” or “differential” swap combines both an interest rate and a currency transaction. Other forms of swap agreements include interest rate caps, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates exceed a specified rate, or “cap”; interest rate floors, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates fall below a specified rate, or “floor”; and interest rate collars, under which a party sells a cap and purchases a floor or vice versa in an attempt to protect itself against interest rate movements exceeding given minimum or maximum levels. Consistent with a Fund’s investment objectives and general investment polices, certain of the Funds may invest in commodity swap agreements. For example, an investment in a commodity swap agreement may involve the exchange of floating-rate interest payments for the total return on a commodity index. In a total return commodity swap, a Fund will receive the price appreciation of a commodity index, a portion of the index, or a single commodity in exchange for paying an agreed-upon fee. If the commodity swap is for one period, a Fund may pay a fixed fee, established at the outset of the swap. However, if the term of the commodity swap is more than one period, with interim swap payments, a Fund may pay an adjustable or floating fee. With a “floating” rate, the fee may be pegged to a base rate, such as the London Interbank Offered Rate, and is adjusted each period. Therefore, if interest rates increase over the term of the swap contract, a Fund may be required to pay a higher fee at each swap reset date.

A Fund also may enter into swap options. A swap option is a contract that gives a counterparty the right (but not the obligation) in return for payment of a premium, to enter into a new swap agreement or to shorten, extend, cancel or otherwise modify an existing swap agreement, at some designated future time on specified terms. Each Fund (except for the Government Money Market, Money Market, MuniGO, Real Income 2019, Real Income 2029 and Treasury Money Market Funds) may write (sell) and purchase put and call swap options.

Depending on the terms of the particular option agreement, a Fund will generally incur a greater degree of risk when it writes a swap option than it will incur when it purchases a swap option. When a Fund purchases a swap option, it risks losing only the amount of the premium it has paid should it decide to let the option expire unexercised. However, when a Fund writes a swap option, upon exercise of the option the Fund will become obligated according to the terms of the underlying agreement.

Most other types of swap agreements entered into by the Funds would calculate the obligations of the parties to the agreement on a “net basis.” Consequently, a Fund’s current obligations (or rights) under a swap agreement will generally be equal only to the net amount to be paid or received under the agreement based on the relative values of the positions held by each party to the agreement (the “net amount”). A Fund’s current obligations under a swap agreement will be accrued daily (offset against any amounts owed to the Fund) and any accrued but unpaid net amounts owed to a swap counterparty will be covered by the segregation or “earmarking” of assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees, to avoid any potential leveraging of a Fund’s portfolio. Obligations under swap agreements so covered will not be construed to be “senior securities” for purposes of the Fund’s investment restriction concerning senior securities.

A Fund also may enter into credit default swap agreements. The credit default swap agreement may have as reference obligations one or more securities that are not currently held by the Fund. The protection “buyer” in a credit default contract is generally obligated to pay the protection “seller” an upfront or a periodic stream of payments over the term of the contract provided that no credit event, such as a default, on a reference obligation has occurred. If a credit event occurs, the seller generally must pay the buyer the “par value” (full notional value) of the swap in exchange for an equal face amount of

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deliverable obligations of the reference entity described in the swap, or the seller may be required to deliver the related net cash amount, if the swap is cash settled. A Fund may be either the buyer or seller in the transaction. If the Fund is a buyer and no credit event occurs, the Fund may recover nothing if the swap is held through its termination date. However, if a credit event occurs, the buyer generally may elect to receive the full notional value of the swap in exchange for an equal face amount of deliverable obligations of the reference entity whose value may have significantly decreased. As a seller, a Fund generally receives an upfront payment or a fixed rate of income throughout the term of the swap provided that there is no credit event. As the seller, a Fund would effectively add leverage to its portfolio because, in addition to its total net assets, a Fund would be subject to investment exposure on the notional amount of the swap.

The spread of a credit default swap is the annual amount the protection buyer must pay the protection seller over the length of the contract, expressed as a percentage of the notional amount. When spreads rise, market perceived credit risk rises and when spreads fall, market perceived credit risk falls. Wider credit spreads and decreasing market values, when compared to the notional amount of the swap, represent a deterioration of the referenced entity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. For credit default swap agreements on asset-backed securities and credit indices, the quoted market prices and resulting values, as well as the annual payment rate, serve as an indication of the current status of the payment/performance risk.

Credit default swap agreements involve greater risks than if a Fund had invested in the reference obligation directly since, in addition to general market risks, credit default swaps are subject to illiquidity risk, counterparty risk and credit risk. A Fund will enter into credit default swap agreements only with counterparties that meet certain standards of creditworthiness. A buyer generally also will lose its investment and recover nothing should no credit event occur and the swap is held to its termination date. If a credit event were to occur, the value of any deliverable obligation received by the seller, coupled with the upfront or periodic payments previously received, may be less than the full notional value it pays to the buyer, resulting in a loss of value to the seller. The Fund’s obligations under a credit default swap agreement will be accrued daily (offset against any amounts owing to the Fund). In connection with credit default swaps in which a Fund is the buyer, the Fund will segregate or “earmark” cash or assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees, or enter into certain offsetting positions, with a value at least equal to the Fund’s exposure (any accrued but unpaid net amounts owed by the Fund to any counterparty), on a marked-to-market basis. In connection with credit default swaps in which a Fund is the seller, the Fund will segregate or “earmark” cash or assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees, or enter into offsetting positions, with a value at least equal to the full notional amount of the swap (minus any amounts owed to the Fund). Such segregation or “earmarking” will ensure that the Fund has assets available to satisfy its obligations with respect to the transaction and will limit any potential leveraging of the Fund’s portfolio. Such segregation or “earmarking” will not limit the Fund’s exposure to loss.

In January 2009, the SEC issued temporary rules to allow for clearinghouses to facilitate certain credit default swap transactions between one or more counterparties. A clearinghouse may act as the intermediary, or central counterparty, in credit default swap transactions, reducing the risk of a counterparty defaulting on a transaction while providing a central location for regulators to view traders’ positions and prices. The use of a clearinghouse for credit default swaps is voluntary and the temporary rules are in effect from January 22, 2009 until November 30, 2010. In March 2009 the SEC approved exemptions to allow the CME Group, Inc. and InterContinental, Inc. to operate a clearinghouse for credit default swaps. Similarly, dealers of credit-default swaps in Europe agreed in February 2009 to use a clearinghouse in the European Union to guarantee derivatives. Nine banks and brokers, including Deutsche Bank AG, JPMorgan Chase & Co., and Barclays PLC, committed to start using one or more clearinghouses within the 27-nation region by the end of July 2009. The clearinghouse(s) will be funded by their members. In response to these developments, in March 2009 the Financial Industry Regulatory Authority (“FINRA”) proposed a pilot program imposing margin rules for credit default swap transactions executed by a registered broker-dealer and cleared by the CME Group, Inc. or other central counterparty platforms. FINRA speculates that the creation of CDS central counterparties will result in an increasing volume of CDS transactions being handled through broker-dealers instead of through affiliated entities of investment banks as in the past. FINRA’s pilot program is set to expire November 30, 2010.

Whether a Fund’s use of swap agreements or swap options will be successful in furthering its investment objective will depend on PIMCO’s ability to predict correctly whether certain types of investments are likely to produce greater returns than other investments. Moreover, a Fund bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty. The Funds will enter into swap agreements only with counterparties that meet certain standards of creditworthiness (generally, such counterparties would have to be eligible counterparties under the terms of the Funds’ repurchase agreement guidelines). Certain restrictions imposed on the Funds by the Internal Revenue Code may limit the Funds’ ability to use swap agreements. The swaps market is largely unregulated. It is possible that developments in the swaps market, including potential government regulation, could adversely affect a Fund’s ability to terminate existing swap agreements or to realize amounts to be received under such agreements.

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Swaps are highly specialized instruments that require investment techniques, risk analyses, and tax planning different from those associated with traditional investments. The use of a swap requires an understanding not only of the referenced asset, reference rate, or index but also of the swap itself, without the benefit of observing the performance of the swap under all possible market conditions. Because they are two party contracts that may be subject to contractual restrictions on transferability and termination and because they may have terms of greater than seven days, swap agreements may be considered to be illiquid and subject to a Fund’s limitation on investments in illiquid securities. However, the Trust has adopted procedures pursuant to which PIMCO may determine swaps (including swap options) to be liquid under certain circumstances. To the extent that a swap is not liquid, it may not be possible to initiate a transaction or liquidate a position at an advantageous time or price, which may result in significant losses.

Like most other investments, swap agreements are subject to the risk that the market value of the instrument will change in a way detrimental to a Fund’s interest. A Fund bears the risk that PIMCO will not accurately forecast future market trends or the values of assets, reference rates, indexes, or other economic factors in establishing swap positions for the Fund. If PIMCO attempts to use a swap as a hedge against, or as a substitute for, a portfolio investment, the Fund will be exposed to the risk that the swap will have or will develop imperfect or no correlation with the portfolio investment. This could cause substantial losses for the Fund. While hedging strategies involving swap instruments can reduce the risk of loss, they can also reduce the opportunity for gain or even result in losses by offsetting favorable price movements in other Fund investments. Many swaps are complex and often valued subjectively.

Certain swap agreements are exempt from most provisions of the CEA and, therefore, are not regulated as futures or commodity option transactions under the CEA, pursuant to regulations approved by the CFTC. To qualify for this exemption, a swap agreement must be entered into by “eligible participants,” which includes the following, provided the participants’ total assets exceed established levels: a bank or trust company, savings association or credit union, insurance company, investment company subject to regulation under the 1940 Act, commodity pool, corporation, partnership, proprietorship, organization, trust or other entity, employee benefit plan, governmental entity, broker-dealer, futures commission merchant, natural person, or regulated foreign person. To be eligible, natural persons and most other entities must have total assets exceeding $10 million; commodity pools and employee benefit plans must have assets exceeding $5 million. In addition, an eligible swap transaction must meet three conditions. First, the swap agreement may not be part of a fungible class of agreements that are standardized as to their material economic terms. Second, the creditworthiness of parties with actual or potential obligations under the swap agreement must be a material consideration in entering into or determining the terms of the swap agreement, including pricing, cost or credit enhancement terms. Third, swap agreements may not be entered into and traded on or through a multilateral transaction execution facility.

This exemption is not exclusive, and participants may continue to rely on existing exclusions for swaps, such as the Policy Statement issued in July 1989 which recognized a safe harbor for swap transactions from regulation as futures or commodity option transactions under the CEA or its regulations. The Policy Statement applies to swap transactions settled in cash that (1) have individually tailored terms, (2) lack exchange-style offset and the use of a clearing organization or margin system, (3) are undertaken in conjunction with a line of business, and (4) are not marketed to the public.

Correlation Risk for Certain Funds. In certain cases, the value of derivatives may not correlate perfectly, or at all, with the value of the assets, reference rates or indexes they are designed to closely track. In this regard, certain Funds seek to achieve their investment objectives, in part, by investing in derivatives positions that are designed to closely track the performance (or inverse performance) of an index on a daily basis. However, the overall investment strategies of these Funds are not designed or expected to produce returns which replicate the performance (or inverse performance) of the particular index, and the degree of variation could be substantial, particularly over longer periods. There are a number of factors which may prevent a mutual fund, or derivatives or other strategies used by a fund, from achieving desired correlation (or inverse correlation) with an index. These may include, but are not limited to: (i) the impact of fund fee, expenses and transaction costs, including borrowing and brokerage costs/bid-ask spreads, which are not reflected in index returns; (ii) differences in the timing of daily calculations of the value of an index and the timing of the valuation of derivatives, securities and other assets held by a fund and the determination of the net asset value of fund shares; (iii) disruptions or illiquidity in the markets for derivative instruments or securities in which a fund invests; (iv) a fund having exposure to or holding less than all of the securities in the underlying index and/or having exposure to or holding securities not included in the underlying index; (v) large or unexpected movements of assets into and out of a fund (due to share purchases or redemptions, for example), potentially resulting in the fund being over- or under-exposed to the index; (vi) the impact of accounting standards or changes thereto; (vii) changes to the applicable index that are not disseminated in advance; (viii) a possible need to conform a fund’s portfolio holdings to comply with investment restrictions or policies or regulatory or tax law requirements; and (ix) fluctuations in currency exchange rates.

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In addition, in the case of Funds that use short derivatives positions in an attempt to produce returns which vary inversely with the performance of an index on a daily basis, such as the PIMCO StocksPLUS^® TR Short Strategy Fund, for periods greater than one day, the effect of compounding may result in the performance of the derivatives, and the Fund’s performance attributable to those positions, to be either greater than or less than the inverse of the index performance, and the extent of the variation could be substantial due to market volatility and other factors.

Risk of Potential Government Regulation of Derivatives. It is possible that government regulation of various types of derivative instruments, including futures and swap agreements, may limit or prevent a Fund from using such instruments as a part of its investment strategy, and could ultimately prevent a Fund from being able to achieve its investment objective. In 2008, multiple committees of the U.S. Congress have held hearings investigating the rise in energy and agricultural prices and the role that the futures market and swap market participants may have played in this phenomenon. The CFTC is also investigating allegations of price manipulation in certain commodity markets. Some Members of Congress have introduced legislation that would impose limits on the maximum position that could be held by a single trader in energy-related contracts and would subject certain commodity- or energy-related swap agreements to new forms of regulation that could create barriers to commodity-related investment activity. While none of this regulatory or legislative activity has a direct, immediate effect upon the Funds, it is not possible to predict the course of future legislation or regulation in this area. It is possible that if these or similar measures were to become law, they could potentially limit or completely restrict the ability of a Fund to use these instruments as a part of its investment strategy. Limits or restrictions applicable to the counterparties with which the Funds engage in derivative transactions could also prevent the Funds from using these instruments. These risks may be particularly acute for those Funds, such as the CommodityRealReturn Strategy Fund^®, that make extensive use of commodity-related derivative instruments in seeking to achieve their investment objectives.

Hybrid Instruments

A hybrid instrument is a type of potentially high-risk derivative that combines a traditional stock, bond, or commodity with an option or forward contract. Generally, the principal amount, amount payable upon maturity or redemption, or interest rate of a hybrid is tied (positively or negatively) to the price of some commodity, currency or securities index or another interest rate or some other economic factor (each a “benchmark”). The interest rate or (unlike most fixed income securities) the principal amount payable at maturity of a hybrid security may be increased or decreased, depending on changes in the value of the benchmark. An example of a hybrid could be a bond issued by an oil company that pays a small base level of interest with additional interest that accrues in correlation to the extent to which oil prices exceed a certain predetermined level. Such a hybrid instrument would be a combination of a bond and a call option on oil.

Hybrids can be used as an efficient means of pursuing a variety of investment goals, including currency hedging, duration management, and increased total return. Hybrids may not bear interest or pay dividends. The value of a hybrid or its interest rate may be a multiple of a benchmark and, as a result, may be leveraged and move (up or down) more steeply and rapidly than the benchmark. These benchmarks may be sensitive to economic and political events, such as commodity shortages and currency devaluations, which cannot be readily foreseen by the purchaser of a hybrid. Under certain conditions, the redemption value of a hybrid could be zero. Thus, an investment in a hybrid may entail significant market risks that are not associated with a similar investment in a traditional, U.S. dollar-denominated bond that has a fixed principal amount and pays a fixed rate or floating rate of interest. The purchase of hybrids also exposes a Fund to the credit risk of the issuer of the hybrids. These risks may cause significant fluctuations in the net asset value of the Fund. Each Fund, except for the CommodityRealReturn Strategy Fund^®, will not invest more than 5% of its total assets in hybrid instruments.

Certain hybrid instruments may provide exposure to the commodities markets. These are derivative securities with one or more commodity-linked components that have payment features similar to commodity futures contracts, commodity options, or similar instruments. Commodity-linked hybrid instruments may be either equity or debt securities, leveraged or unleveraged, and are considered hybrid instruments because they have both security and commodity-like characteristics. A portion of the value of these instruments may be derived from the value of a commodity, futures contract, index or other economic variable. The Funds will only invest in commodity-linked hybrid instruments that qualify under applicable rules of the CFTC for an exemption from the provisions of the CEA.

Certain issuers of structured products such as hybrid instruments may be deemed to be investment companies as defined in the 1940 Act. As a result, the Funds’ investments in these products may be subject to limits applicable to investments in investment companies and may be subject to restrictions contained in the 1940 Act.

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Structured Notes and Indexed Securities. Structured notes are derivative debt instruments, the interest rate or principal of which is determined by an unrelated indicator (for example, a currency, security, commodity or index thereof). The terms of the instrument may be “structured” by the purchaser and the borrower issuing the note. Indexed securities may include structured notes as well as securities other than debt securities, the interest rate or principal of which is determined by an unrelated indicator. Indexed securities may include a multiplier that multiplies the indexed element by a specified factor and, therefore, the value of such securities may be very volatile. The terms of structured notes and indexed securities may provide that in certain circumstances no principal is due at maturity, which may result in a loss of invested capital. Structured notes and indexed securities may be positively or negatively indexed, so that appreciation of the unrelated indicator may produce an increase or a decrease in the interest rate or the value of the structured note or indexed security at maturity may be calculated as a specified multiple of the change in the value of the unrelated indicator. Therefore, the value of such notes and securities may be very volatile. Structured notes and indexed securities may entail a greater degree of market risk than other types of debt securities because the investor bears the risk of the unrelated indicator. Structured notes or indexed securities also may be more volatile, less liquid, and more difficult to accurately price than less complex securities and instruments or more traditional debt securities. To the extent a Fund invests in these notes and securities, however, PIMCO analyzes these notes and securities in its overall assessment of the effective duration of the Fund’s holdings in an effort to monitor the Fund’s interest rate risk.

Exchange-Traded Notes

Exchange-traded notes (“ETNs”) are senior, unsecured, unsubordinated debt securities whose returns are linked to the performance of a particular market benchmark or strategy minus applicable fees. ETNs are traded on an exchange (e.g., the New York Stock Exchange) during normal trading hours. However, investors can also hold the ETN until maturity. At maturity, the issuer pays to the investor a cash amount equal to the principal amount, subject to the day’s market benchmark or strategy factor.

ETNs do not make periodic coupon payments or provide principal protection. ETNs are subject to credit risk and the value of the ETN may drop due to a downgrade in the issuer’s credit rating, despite the underlying market benchmark or strategy remaining unchanged. The value of an ETN may also be influenced by time to maturity, level of supply and demand for the ETN, volatility and lack of liquidity in underlying assets, changes in the applicable interest rates, changes in the issuer’s credit rating, and economic, legal, political, or geographic events that affect the referenced underlying asset. When a Fund invests in ETNs it will bear its proportionate share of any fees and expenses borne by the ETN. A Fund’s decision to sell its ETN holdings may be limited by the availability of a secondary market. In addition, although an ETN may be listed on an exchange, the issuer may not be required to maintain the listing and there can be no assurance that a secondary market will exist for an ETN.

ETNs are also subject to tax risk. No assurance can be given that the IRS will accept, or a court will uphold, how the Funds characterize and treat ETNs for tax purposes. Further, the IRS and Congress are considering proposals that would change the timing and character of income and gains from ETNs.

An ETN that is tied to a specific market benchmark or strategy may not be able to replicate and maintain exactly the composition and relative weighting of securities, commodities or other components in the applicable market benchmark or strategy. Some ETNs that use leverage can, at times, be relatively illiquid and, thus, they may be difficult to purchase or sell at a fair price. Leveraged ETNs are subject to the same risk as other instruments that use leverage in any form.

The market value of ETN shares may differ from their market benchmark or strategy. This difference in price may be due to the fact that the supply and demand in the market for ETN shares at any point in time is not always identical to the supply and demand in the market for the securities, commodities or other components underlying the market benchmark or strategy that the ETN seeks to track. As a result, there may be times when an ETN share trades at a premium or discount to its market benchmark or strategy.

Delayed Funding Loans and Revolving Credit Facilities

Each Fund (except for the Government Money Market, Money Market and Treasury Money Market Funds and Municipal Funds) may enter into, or acquire participations in, delayed funding loans and revolving credit facilities. Delayed funding loans and revolving credit facilities are borrowing arrangements in which the lender agrees to make loans up to a maximum amount upon demand by the borrower during a specified term. A revolving credit facility differs from a delayed funding loan in that as the borrower repays the loan, an amount equal to the repayment may be borrowed again during the term of the revolving credit facility. Delayed funding loans and revolving credit facilities usually provide for floating or variable rates of interest. These commitments may have the effect of requiring a Fund to increase its investment in a company at a time when it might not otherwise decide to do so (including at a time when the company’s financial condition

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makes it unlikely that such amounts will be repaid). To the extent that a Fund is committed to advance additional funds, it will at all times segregate or “earmark” assets, determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees, in an amount sufficient to meet such commitments.

A Fund (except for the Government Money Market, Money Market and Treasury Money Market Funds and Municipal Funds) may invest in delayed funding loans and revolving credit facilities with credit quality comparable to that of issuers of its securities investments. Delayed funding loans and revolving credit facilities may be subject to restrictions on transfer, and only limited opportunities may exist to resell such instruments. As a result, a Fund may be unable to sell such investments at an opportune time or may have to resell them at less than fair market value. The Funds currently intend to treat delayed funding loans and revolving credit facilities for which there is no readily available market as illiquid for purposes of the Funds’ limitation on illiquid investments. For a further discussion of the risks involved in investing in loan participations and other forms of direct indebtedness see “Loan Participations and Assignments.” Participation interests in revolving credit facilities will be subject to the limitations discussed in “Loan Participations and Assignments.” Delayed funding loans and revolving credit facilities are considered to be debt obligations for purposes of the Trust’s investment restriction relating to the lending of funds or assets by a Fund.

When-Issued, Delayed Delivery and Forward Commitment Transactions

Each of the Funds (except for the Government Money Market and Treasury Money Market Funds) may purchase or sell securities on a when-issued, delayed delivery, or forward commitment basis. When such purchases or sales are outstanding, the Fund will segregate or “earmark” until the settlement date assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees or otherwise cover its position in an amount sufficient to meet the Fund’s obligation. Typically, no income accrues on securities a Fund has committed to purchase prior to the time delivery of the securities is made, although a Fund may earn income on securities it has segregated or “earmarked.”

When purchasing a security on a when-issued, delayed delivery, or forward commitment basis, the Fund assumes the rights and risks of ownership of the security, including the risk of price and yield fluctuations, and takes such fluctuations into account when determining its net asset value. Because the Fund is not required to pay for the security until the delivery date, these risks are in addition to the risks associated with the Fund’s other investments. If the other party to a transaction fails to deliver the securities, the Fund could miss a favorable price or yield opportunity. If the Fund remains substantially fully invested at a time when when-issued, delayed delivery, or forward commitment purchases are outstanding, the purchases may result in a form of leverage.

When a Fund has sold a security on a when-issued, delayed delivery, or forward commitment basis, the Fund does not participate in future gains or losses with respect to the security. If the other party to a transaction fails to pay for the securities, the Fund could suffer a loss. Additionally, when selling a security on a when-issued, delayed delivery, or forward commitment basis without owning the security, a Fund will incur a loss if the security’s price appreciates in value such that the security’s price is above the agreed upon price on the settlement date.

A Fund may dispose of or renegotiate a transaction after it is entered into, and may purchase or sell when-issued, delayed delivery or forward commitment securities before the settlement date, which may result in a gain or loss. There is no percentage limitation on the extent to which the Funds may purchase or sell securities on a when-issued, delayed delivery, or forward commitment basis.

Infrastructure Investments

Infrastructure entities include companies in the infrastructure business and infrastructure projects and assets representing a broad range of businesses, types of projects and assets. The risks that may be applicable to an infrastructure entity vary based on the type of business, project or asset, its location, the developmental stage of a project and an investor’s level of control over the management or operation of the entity.

Infrastructure entities are typically subject to significant government regulations and other regulatory and political risks, including expropriation; political violence or unrest, including war, sabotage or terrorism; and unanticipated regulatory changes by a government or the failure of a government to comply with international treaties and agreements. Additionally, an infrastructure entity may do business with state-owned suppliers or customers that may be unable or unwilling to fulfill their contractual obligations. Changing public perception and sentiment may also influence a government’s level of support or involvement with an infrastructure entity.

Companies engaged in infrastructure development and construction and infrastructure projects or assets that have not been completed will be subject to construction risks, including construction delays; delays in obtaining permits and

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regulatory approvals; unforeseen expenses resulting from budget and cost overruns; inexperienced contractors and contractor errors; and problems related to project design and plans. Due to the numerous risks associated with construction and the often incomplete or unreliable data about projected revenues and income for a project, investing in the construction of an infrastructure project involves significant risks. The ability to obtain initial or additional financing for an infrastructure project is often directly tied to its stage of development and the availability of operational data. A project that is complete and operational is more likely to obtain financing than a project at an earlier stage of development. Additionally, an infrastructure entity may not be able to obtain needed additional financing, particularly during periods of turmoil in the capital markets. The cost of compliance with international standards for project finance may increase the cost of obtaining capital or financing for a project. Alternatively, an investment in debt securities of infrastructure entities may also be subject to prepayment risk if lower-cost financing becomes available.

Infrastructure projects or assets may also be subject to operational risks, including the project manager’s ability to manage the project; unexpected maintenance costs; government interference with the operation of an infrastructure project or asset; obsolescence of project; and the early exit of a project’s equity investors. Additionally, the operator of an infrastructure project or asset may not be able pass along the full amount of any cost increases to customers.

An infrastructure entity may be organized under a legal regime that may provide investors with limited recourse against the entity’s assets, the sponsor or other non-project assets and there may be restrictions on the ability to sell or transfer assets. Financing for infrastructure projects and assets is often secured by cash flows, underlying contracts, and project assets. An investor may have limited options and there may be significant costs associated with foreclosing upon any assets that secure repayment of a financing.

Short Sales

Each of the Funds (except for the Government Money Market and Treasury Money Market Funds), particularly the Fundamental Advantage Total Return Strategy Fund and StocksPLUS^® TR Short Strategy Fund, may make short sales of securities as part of its overall portfolio management strategies involving the use of derivative instruments and to offset potential declines in long positions in similar securities. A short sale is a transaction in which a Fund sells a security it does not own in anticipation that the market price of that security will decline.

When a Fund makes a short sale, it must borrow the security sold short and deliver it to the broker-dealer through which it made the short sale as collateral for its obligation to deliver the security upon conclusion of the sale. The Fund may have to pay a fee to borrow particular securities and is often obligated to pay over any accrued interest and dividends on such borrowed securities.

If the price of the security sold short increases between the time of the short sale and the time that the Fund replaces the borrowed security, the Fund will incur a loss; conversely, if the price declines, the Fund will realize a capital gain. Any gain will be decreased, and any loss increased, by the transaction costs described above. The successful use of short selling may be adversely affected by imperfect correlation between movements in the price of the security sold short and the securities being hedged.

To the extent that a Fund engages in short sales, it will provide collateral to the broker-dealer and (except in the case of short sales “against the box”) will maintain additional asset coverage in the form of segregated or “earmarked” assets that PIMCO determines to be liquid in accordance with procedures established by the Board of Trustees and that is equal to the current market value of the securities sold short, or will ensure that such positions are covered by “offsetting” positions, until the Fund replaces the borrowed security. A short sale is “against the box” to the extent that the Fund contemporaneously owns, or has the right to obtain at no added cost, securities identical to those sold short. The Funds will engage in short selling to the extent permitted by the federal securities laws and rules and interpretations thereunder. To the extent a Fund engages in short selling in foreign (non-U.S.) jurisdictions, the Fund will do so to the extent permitted by the laws and regulations of such jurisdiction.

Illiquid Securities

The Funds may invest up to 15% of their net assets in illiquid securities (10% in the case of the Government Money Market, Money Market and Treasury Money Market Funds). The term “illiquid securities” for this purpose means securities that cannot be disposed of within seven days in the ordinary course of business at approximately the amount at which a Fund has valued the securities. Illiquid securities are considered to include, among other things, written over-the-counter options, securities or other liquid assets being used as cover for such options, repurchase agreements with maturities in excess of seven days, certain loan participation interests, fixed time deposits which are not subject to prepayment or provide for withdrawal penalties upon prepayment (other than overnight deposits), and other securities whose disposition is restricted under the federal securities laws (other than securities issued pursuant to Rule 144A under the 1933 Act and certain commercial paper that PIMCO has determined to be liquid under procedures approved by the Board of Trustees).

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Illiquid securities may include privately placed securities, which are sold directly to a small number of investors, usually institutions. Unlike public offerings, such securities are not registered under the federal securities laws. Although certain of these securities may be readily sold, others may be illiquid, and their sale may involve substantial delays and additional costs.

Loans of Portfolio Securities

For the purpose of achieving income, each Fund (except the Real Income 2019 and Real Income 2029 Funds) may lend its portfolio securities to brokers, dealers, and other financial institutions, provided: (i) the loan is secured continuously by collateral consisting of U.S. Government securities, cash or cash equivalents (negotiable certificates of deposits, bankers’ acceptances or letters of credit) maintained on a daily mark-to-market basis in an amount at least equal to the current market value of the securities loaned; (ii) the Fund may at any time call the loan and obtain the return of the securities loaned; (iii) the Fund will receive any interest or dividends paid on the loaned securities; and (iv) the aggregate market value of securities loaned will not at any time exceed 33 1/3% of the total assets of the Fund. A Fund’s performance will continue to reflect the receipt of either interest through investment of cash collateral by the Fund in permissible investments, or a fee, if the collateral is U.S. Government securities. Securities lending involves the risk of loss of rights in the collateral or delay in recovery of the collateral should the borrower fail to return the securities loaned or become insolvent. A Fund may pay lending fees to the party arranging the loan.

Investments in Underlying PIMCO Funds

The PIMCO Funds of Funds invest substantially all or a significant portion of their assets in Underlying PIMCO Funds. Please see the “Principal Investments and Strategies” section in the Prospectuses for a description of the asset allocation strategies and general investment policies of each Fund. In some cases, the PIMCO Funds of Funds and Affiliated Funds of Funds may be the predominant or sole shareholders of a particular Underlying PIMCO Fund. As noted above, investment decisions made with respect to the PIMCO Funds of Funds and Affiliated Funds of Funds could, under certain circumstances, negatively impact the Underlying PIMCO Funds.

For instance, the PIMCO Funds of Funds and Affiliated Funds of Funds may purchase and redeem shares of an Underlying PIMCO Fund as part of a reallocation or rebalancing strategy, which may result in the Underlying PIMCO Fund having to sell securities or invest cash when it otherwise would not do so. Such transactions could increase an Underlying PIMCO Fund’s transaction costs and accelerate the realization of taxable income if sales of securities resulted in gains. The PIMCO Funds of Funds and PIMCO have adopted asset reallocation guidelines, which are designed to minimize potentially disruptive purchases and redemption activities by the PIMCO Funds of Funds.

Social Investment Policies

The Low Duration Fund III and Total Return Fund III will not, as a matter of non-fundamental operating policy, invest in the securities of any issuer determined by PIMCO to be engaged principally in the provision of healthcare services, the manufacture of alcoholic beverages, tobacco products, pharmaceuticals, military equipment, the operation of gambling casinos or in the production or trade of pornographic materials. To the extent possible on the basis of information available to PIMCO, an issuer will be deemed to be principally engaged in an activity if it derives more than 10% of its gross revenues from such activities (“Socially-Restricted Issuers”). Evaluation of any particular issuer with respect to these criteria may involve the exercise of subjective judgment by PIMCO. PIMCO’s determination of Socially-Restricted Issuers at any given time will, however, be based upon its good faith interpretation of available information and its continuing and reasonable best efforts to obtain and evaluate the most current information available, and to utilize such information, as it becomes available, promptly and expeditiously in portfolio management for the Funds. In making its analysis, PIMCO may rely upon, among other things, information contained in such publications as those produced by the Investor Responsibility Research Center, Inc.

Additionally, the Low Duration Fund III and the Total Return Fund III will not, as a matter of nonfundamental operating policy, invest directly in securities of issuers that are engaged in certain business activities in or with the Republic of the Sudan (“Sudan-Related Issuers”). In applying the policy noted in the prior sentence, PIMCO will not invest directly in companies who own or control property or assets in Sudan; have employees or facilities in Sudan; provide goods or services to companies domiciled in Sudan; obtain goods or services from Sudan; have distribution agreements with companies domiciled in Sudan; issue credits or loans to companies domiciled in Sudan; or purchase goods or commercial paper issued by the Government of Sudan. In analyzing whether an issuer is a Sudan-Related Issuer, PIMCO may rely upon, among other things, information from a list provided by an independent third party.

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The Low Duration Fund III and Total Return Fund III may invest in derivative instruments whose returns are based, in whole or in part, on securities issued by Socially-Restricted Issuers or Sudan-Related Issuers where the counterparties to such transactions are not themselves either Socially-Restricted Issuers or Sudan-Related Issuers. With respect to derivatives based on securities of Socially-Restricted Issuers or Sudan-Related Issuers, including, but not limited to, credit default swaps, the Low Duration Fund III or the Total Return Fund III may be obligated to take possession of the underlying securities in certain circumstances. In such cases, the Low Duration Fund III or the Total Return Fund III, as applicable, will use reasonable efforts to divest themselves of these securities and may incur a loss in doing so.

Because the Low Duration Fund III and the Total Return Fund III adhere to the social investment policies described above, these Funds may be required to forego certain investment opportunities and their associated returns.

Investments in the Wholly-Owned Subsidiary

Investments in the Subsidiaries are expected to provide the CommodityRealReturn Strategy Fund^® and Global Multi-Asset Fund, respectively, with exposure to the commodity markets within the limitations of Subchapter M of the Internal Revenue Code and recent IRS revenue rulings, as discussed below under “Taxation.” The Subsidiaries are companies organized under the laws of the Cayman Islands, and are overseen by their own board of directors. The CommodityRealReturn Strategy Fund^® is the sole shareholder of the CRRS Subsidiary, and it is not currently expected that shares of the CRRS Subsidiary will be sold or offered to other investors. The Global Multi-Asset Fund is the sole shareholder of the GMA Subsidiary, and it is not currently expected that shares of the GMA Subsidiary will be sold or offered to other investors.

It is expected that the Subsidiaries will invest primarily in commodity-linked derivative instruments, including swap agreements, commodity options, futures and options on futures, backed by a portfolio of inflation-indexed securities and other Fixed Income Instruments. Although the CommodityRealReturn Strategy Fund^® and Global Multi-Asset Fund may enter into these commodity-linked derivative instruments directly, each Fund will likely gain exposure to these derivative instruments indirectly by investing in its Subsidiary. To the extent that PIMCO believes that these commodity-linked derivative instruments are better suited to provide exposure to the commodities market then commodity index-linked notes, each Fund’s investment in its Subsidiary will likely increase. The Subsidiaries will also invest in inflation-indexed securities and other Fixed Income Instruments, which are intended to serve as margin or collateral for the respective Subsidiary’s derivatives position. To the extent that the CommodityRealReturn Strategy Fund^® and/or Global Multi-Asset Fund invest in their respective Subsidiaries, such Fund may be subject to the risks associated with those derivative instruments and other securities, which are discussed elsewhere in the applicable Prospectuses and this Statement of Additional Information.

While the Subsidiaries may be considered similar to investment companies, they are not registered under the 1940 Act and, unless otherwise noted in the applicable Prospectuses and this Statement of Additional Information, are not subject to all of the investor protections of the 1940 Act and other U.S. regulations. Changes in the laws of the United States and/or the Cayman Islands could result in the inability of the CommodityRealReturn Strategy Fund^®, Global Multi-Asset Fund and/or the Subsidiaries to operate as described in the applicable Prospectuses and this Statement of Additional Information and could negatively affect the Funds and their shareholders.

Government Intervention in Financial Markets

Recent instability in the financial markets has led the U.S. Government to take a number of unprecedented actions designed to support certain financial institutions and segments of the financial markets that have experienced extreme volatility, and in some cases a lack of liquidity. Federal, state, and other governments, their regulatory agencies, or self regulatory organizations may take actions that affect the regulation of the instruments in which the Funds invest, or the issuers of such instruments, in ways that are unforeseeable. Legislation or regulation may also change the way in which the Funds themselves are regulated. Such legislation or regulation could limit or preclude a Fund’s ability to achieve its investment objective.

Governments or their agencies may also acquire distressed assets from financial institutions and acquire ownership interests in those institutions. The implications of government ownership and disposition of these assets are unclear, and such a program may have positive or negative effects on the liquidity, valuation and performance of the Funds’ portfolio holdings. Furthermore, volatile financial markets can expose the Funds to greater market and liquidity risk and potential difficulty in valuing portfolio instruments held by the Funds. The Funds have established procedures to assess the liquidity of portfolio holdings and to value instruments for which market prices may not be readily available. PIMCO will monitor developments and seek to manage the Funds in a manner consistent with achieving each Fund’s investment objective, but there can be no assurance that it will be successful in doing so.

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INVESTMENT RESTRICTIONS

Fundamental Investment Restrictions

Each Fund’s investment objective, except for the All Asset All Authority, California Short Duration Municipal Income, Developing Local Markets, EM Fundamental IndexPLUS™ TR Strategy, Emerging Local Bond, Emerging Markets and Infrastructure Bond, Extended Duration, Floating Income, Foreign Bond (Unhedged), Fundamental Advantage Total Return Strategy, Fundamental IndexPLUS™, Fundamental IndexPLUS™ TR, Global Advantage Strategy Bond, Global Bond (U.S. Dollar-Hedged), Global Multi-Asset, Government Money Market, High Yield Municipal Bond, Income, International StocksPLUS^® TR Strategy (Unhedged), International StocksPLUS^® TR Strategy (U.S. Dollar-Hedged), Long-Term Credit, Long Duration Total Return, MuniGO, Real Income 2019, Real Income 2029, RealEstateRealReturn Strategy, RealRetirement^® 2010, RealRetirement^® 2020, RealRetirement^® 2030, RealRetirement^® 2040, RealRetirement^® 2050, Small Cap StocksPLUS^® TR, StocksPLUS^® Long Duration, StocksPLUS^® TR Short Strategy, Tax Managed Real Return, Treasury Money Market, Unconstrained Bond and Unconstrained Tax Managed Bond Funds, as set forth in the Prospectuses under the heading “Principal Investments and Strategies,” together with the investment restrictions set forth below, is a fundamental policy of the Fund and may not be changed with respect to a Fund without shareholder approval by vote of a majority of the outstanding shares of that Fund.

(1) A Fund may not concentrate its investments in a particular industry, as that term is used in the 1940 Act, and as interpreted, modified, or otherwise permitted by regulatory authority having jurisdiction, from time to time (except that the Money Market Fund may concentrate its investments in securities or obligations issued by U.S. banks).

(2) A Fund may not, with respect to 75% of the Fund’s total assets, purchase the securities of any issuer, except securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities, if, as a result (i) more than 5% of the Fund’s total assets would be invested in the securities of that issuer, or (ii) the Fund would hold more than 10% of the outstanding voting securities of that issuer; (This investment restriction is not applicable to the All Asset, All Asset All Authority, California Intermediate Municipal Bond, California Short Duration Municipal Income, CommodityRealReturn Strategy, Developing Local Markets, Emerging Local Bond, Emerging Markets Bond, Foreign Bond (Unhedged), Foreign Bond (U.S. Dollar-Hedged), Global Advantage Strategy Bond, Global Bond (Unhedged), Global Bond (U.S. Dollar-Hedged), Global Multi-Asset, High Yield Municipal Bond, Income, International StocksPLUS^® TR Strategy (Unhedged), International StocksPLUS^® TR Strategy (U.S. Dollar-Hedged), MuniGO, New York Municipal Bond, Real Income 2019, Real Income 2029, RealEstateRealReturn Strategy, RealRetirement^® 2010, RealRetirement^® 2020, RealRetirement^® 2030, RealRetirement^® 2040, RealRetirement^® 2050, Real Return, Real Return Asset, StocksPLUS^® TR Short Strategy and Tax Managed Real Return Funds.) For the purpose of this restriction, each state and each separate political subdivision, agency, authority or instrumentality of such state, each multi-state agency or authority, and each guarantor, if any, are treated as separate issuers of Municipal Bonds.

(3) A Fund may not purchase or sell real estate, although it may purchase securities secured by real estate or interests therein, or securities issued by companies which invest in real estate, or interests therein.

(4) A Fund may not purchase or sell commodities or commodities contracts or oil, gas or mineral programs. This restriction shall not prohibit a Fund, subject to restrictions described in the Prospectuses and elsewhere in this Statement of Additional Information, from purchasing, selling or entering into futures contracts, options on futures contracts, foreign currency forward contracts, foreign currency options, hybrid instruments, or any interest rate or securities-related or foreign currency-related hedging instrument, including swap agreements and other derivative instruments, subject to compliance with any applicable provisions of the federal securities or commodities laws (This restriction is not applicable to the Global Bond Fund (U.S. Dollar-Hedged), but see non-fundamental restriction “F”).

(5) A Fund may borrow money or issue any senior security, only as permitted under the 1940 Act, as amended, and as interpreted, modified, or otherwise permitted by regulatory authority having jurisdiction, from time to time.

(6) A Fund may make loans, only as permitted under the 1940 Act, as amended, and as interpreted, modified, or otherwise permitted by regulatory authority having jurisdiction, from time to time.

(7) A Fund may not act as an underwriter of securities of other issuers, except to the extent that in connection with the disposition of portfolio securities, it may be deemed to be an underwriter under the federal securities laws.

(8) Notwithstanding any other fundamental investment policy or limitation, it is a fundamental policy of each Fund that it may pursue its investment objective by investing in one or more underlying investment companies or vehicles that have substantially similar investment objectives, policies and limitations as the Fund.

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(9) The High Yield Municipal Bond, Municipal Bond, MuniGO and Short Duration Municipal Income Funds will invest, under normal circumstances, at least 80% of their assets in investments the income of which is exempt from federal income tax.

(10) The California Intermediate Municipal Bond and California Short Duration Municipal Income Funds will invest, under normal circumstances, at least 80% of their assets in investments the income of which is exempt from both federal income tax and California income tax.

(11) The New York Municipal Bond Fund will invest, under normal circumstances, at least 80% of its assets in investments the income of which is exempt from both federal income tax and New York income tax.

For purposes of Fundamental Investment Restrictions No. 9, 10 and 11, the term “assets,” as defined in Rule 35d-1 under the 1940 Act, means net assets, plus the amount of any borrowings for investment purposes.

Non-Fundamental Investment Restrictions

Each Fund is also subject to the following non-fundamental restrictions and policies (which may be changed by the Trust’s Board of Trustees without shareholder approval) relating to the investment of its assets and activities.

(A) A Fund may not invest more than 15% of its net assets (10% in the case of the Government Money Market, Money Market and Treasury Money Market Funds) taken at market value at the time of the investment in “illiquid securities,” which are defined to include securities subject to legal or contractual restrictions on resale (which may include private placements), repurchase agreements maturing in more than seven days, certain loan participation interests, fixed time deposits which are not subject to prepayment or provide for withdrawal penalties upon prepayment (other than overnight deposits), certain options traded over the counter that a Fund has purchased, securities or other liquid assets being used to cover such options a Fund has written, securities for which market quotations are not readily available, or other securities which legally or in PIMCO’s opinion may be deemed illiquid (other than securities issued pursuant to Rule 144A under the Securities Act of 1933, as amended, and certain commercial paper that PIMCO has determined to be liquid under procedures approved by the Board of Trustees).

(B) A Fund may not purchase securities on margin, except for use of short-term credit necessary for clearance of purchases and sales of portfolio securities, but it may make margin deposits in connection with covered transactions in options, futures, options on futures and short positions.

(C) Each Fund (except for the Government Money Market, Money Market and Treasury Money Market Funds) may invest up to 5% of its total assets (taken at market value at the time of investment) in any combination of mortgage-related or other asset-backed interest only, principal only, or inverse floating rate securities.

(D) The Global Bond Fund (U.S. Dollar-Hedged) may not borrow money in excess of 10% of the value (taken at the lower of cost or current value) of the Fund’s total assets (not including the amount borrowed) at the time the borrowing is made, and then only from banks as a temporary measure to facilitate the meeting of redemption requests (not for leverage) which might otherwise require the untimely disposition of portfolio investments or for extraordinary or emergency purposes (Such borrowings will be repaid before any additional investments are purchased.); or pledge, hypothecate, mortgage or otherwise encumber its assets in excess of 10% of the Fund’s total assets (taken at cost) and then only to secure borrowings permitted above (The deposit of securities or cash or cash equivalents in escrow in connection with the writing of covered call or put options, respectively, is not deemed to be pledges or other encumbrances. For the purpose of this restriction, collateral arrangements with respect to the writing of options, futures contracts, options on futures contracts, and collateral arrangements with respect to initial and variation margin are not deemed to be a pledge of assets and neither such arrangements nor the purchase or sale of futures or related options are deemed to be the issuance of a senior security).

(E) A Fund may not maintain a short position, or purchase, write or sell puts, calls, straddles, spreads or combinations thereof, except on such conditions as may be set forth in the Prospectuses and in this Statement of Additional Information.

(F) The Global Bond Fund (U.S. Dollar-Hedged) may not purchase or sell commodities or commodity contracts except that the Fund may purchase and sell financial futures contracts and related options.

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(G) In addition, the Trust has adopted the following non-fundamental investment policies that may be changed on 60 days’ notice to shareholders:

(1) The GNMA Fund will invest, under normal circumstances, at least 80% of its assets in GNMA investments.

(2) The Mortgage-Backed Securities Fund will invest, under normal circumstances, at least 80% of its assets in mortgage investments.

(3) The Investment Grade Corporate Bond Fund will invest, under normal circumstances, at least 80% of its assets in investment grade corporate bond investments.

(4) The High Yield Fund will invest, under normal circumstances, at least 80% of its assets in high yield investments.

(5) The Long-Term U.S. Government Fund will invest, under normal circumstances, at least 80% of its assets in U.S. Government investments.

(6) Each of the Global Bond (Unhedged) and Global Bond (U.S. Dollar-Hedged) Funds will invest, under normal circumstances, at least 80% of its assets in bond investments.

(7) Each of the Foreign Bond (Unhedged) and Foreign Bond (U.S. Dollar-Hedged) Funds will invest, under normal circumstances, at least 80% of its assets in foreign bond investments.

(8) The Emerging Markets Bond Fund will invest, under normal circumstances, at least 80% of its assets in emerging market bond investments.

(9) The Convertible Fund will invest, under normal circumstances, at least 80% of its assets in convertible investments.

(10) The Floating Income Fund will invest, under normal circumstances, at least 80% of its assets in investments that effectively enable the Fund to achieve a floating rate of income.

(11) The Developing Local Markets Fund will invest under normal circumstances at least 80% of its assets in currencies of, or Fixed Income Instruments denominated in the currencies of, developing markets.

(12) The Emerging Local Bond Fund will invest under normal circumstances at least 80% of its assets in Fixed Income Instruments denominated in currencies of countries with emerging securities markets.

(13) Each of the Unconstrained Bond and Unconstrained Tax Managed Bond Funds will invest, under normal circumstances, at least 80% of its assets in Fixed Income Instrument investments.

(14) The Global Advantage Strategy Bond Fund will invest, under normal circumstances, at least 80% of its assets in Fixed Income Instrument investments.

(15) The Government Money Market Fund will invest, under normal circumstances, at least 80% of its assets in U.S. government securities.

(16) The Treasury Money Market Fund will invest, under normal circumstances, at least 80% of its assets in U.S. Treasury securities.

(17) The Long-Term Credit Fund will invest, under normal circumstances, at least 80% of its assets in Fixed Income Instruments investments.

(18) The Emerging Markets and Infrastructure Bond Fund will invest, under normal circumstances, at least 80% of its assets in a portfolio consisting of Fixed Income Instruments that are economically tied to emerging market countries and Fixed Income Instruments that are issued by infrastructure entities, projects or assets.

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For purposes of these policies, the term “assets,” as defined in Rule 35d-1 under the 1940 Act, means net assets plus the amount of any borrowings for investment purposes. In addition, for purposes of these policies, investments may be represented by forwards or derivatives such as options, futures contracts, or swap agreements. Further, for purposes of these policies, a Fund may “look through” a repurchase agreement to the collateral underlying the agreement (typically, government securities), and apply the repurchase agreement toward the 80% investment requirement based on the type of securities comprising its collateral. For purposes of these policies, the term “convertible investments” includes synthetic convertible securities created by PIMCO and those created by other parties such as investment banks.

Currency Hedging. The Trust has adopted a non-fundamental policy pursuant to which each Fund that may invest in securities denominated in foreign currencies, except for the Convertible Fund, Developing Local Markets Fund, Diversified Income Fund, EM Fundamental IndexPLUS^™ TR Strategy Fund, Emerging Local Bond Fund, Emerging Markets and Infrastructure Bond, Emerging Markets Bond Fund, Floating Income Fund, Foreign Bond Fund (Unhedged), Global Advantage Strategy Bond Fund, Global Bond Fund (Unhedged), Global Multi-Asset Fund, Income Fund, and International StocksPLUS^® TR Strategy Fund (Unhedged), will normally limit its foreign currency exposure (from non-U.S. dollar-denominated securities or currencies) to 20% of its total assets. Each of the Unconstrained Bond Fund and Unconstrained Tax Managed Bond Fund will normally limit its foreign currency exposure (from non-U.S. dollar-denominated securities or currencies) to 35% of its total assets. The Income Fund will normally limit its foreign currency exposure (from non-U.S. dollar-denominated securities or currencies) to 10% of its total assets. With respect to the fixed income investments of the EM Fundamental IndexPLUS^™ TR Strategy Fund and International StocksPLUS^® TR Strategy Fund (Unhedged), each Fund will normally limit its foreign currency exposure (from non-U.S. dollar-denominated securities or currencies) to 20% of its total assets. There can be no assurance that currency hedging techniques will be successful.

Under the 1940 Act, a “senior security” does not include any promissory note or evidence of indebtedness where such loan is for temporary purposes only and in an amount not exceeding 5% of the value of the total assets of the issuer at the time the loan is made. A loan is presumed to be for temporary purposes if it is repaid within sixty days and is not extended or renewed. To the extent that borrowings for temporary administrative purposes exceed 5% of the total assets of a Fund (except for the Global Bond Fund (U.S. Dollar-Hedged)), such excess shall be subject to the 300% asset coverage requirement.

To the extent a Fund covers its commitment under a reverse repurchase agreement (or economically similar transaction) by the segregating or “earmarking” of assets determined to be liquid in accordance with procedures adopted by the Board of Trustees, equal in value to the amount of the Fund’s commitment to repurchase, such an agreement will not be considered a “senior security” by the Fund and therefore will not be subject to the 300% asset coverage requirement otherwise applicable to borrowings by the Fund.

The staff of the SEC has taken the position that purchased over-the-counter (“OTC”) options and the assets used as cover for written OTC options are illiquid securities. Therefore, the Funds have adopted an investment policy pursuant to which a Fund will not purchase or sell OTC options if, as a result of such transactions, the sum of: 1) the market value of OTC options currently outstanding which are held by the Fund, 2) the market value of the underlying securities covered by OTC call options currently outstanding which were sold by the Fund and 3) margin deposits on the Fund’s existing OTC options on futures contracts, exceeds 15% of the net assets of the Fund, taken at market value, together with all other assets of the Fund which are illiquid or are otherwise not readily marketable. However, if an OTC option is sold by the Fund to a primary U.S. Government securities dealer recognized by the Federal Reserve Bank of New York and if the Fund has the unconditional contractual right to repurchase such OTC option from the dealer at a predetermined price, then the Fund will treat as illiquid such amount of the underlying securities equal to the repurchase price less the amount by which the option is “in-the-money” (i.e., current market value of the underlying securities minus the option’s strike price). The repurchase price with the primary dealers is typically a formula price which is generally based on a multiple of the premium received for the option, plus the amount by which the option is “in-the-money.” This policy is not a fundamental policy of the Funds and may be amended by the Board of Trustees without the approval of shareholders. However, the Funds will not change or modify this policy prior to the change or modification by the SEC staff of its position.

For purposes of applying the Funds’ investment policies and restrictions (as stated in the Prospectuses and this Statement of Additional Information) swap agreements are generally valued by the Funds at market value. In the case of a credit default swap sold by a Fund (i.e., where the Fund is selling credit default protection), however, the Fund will value the swap at its notional amount. The manner in which certain securities or other instruments are valued by the Funds for purposes of applying investment policies and restrictions may differ from the manner in which those investments are valued by other types of investors.

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The Funds interpret their policy with respect to concentration in a particular industry under Fundamental Investment Restriction 1, above, to apply to direct investments in the securities of issuers in a particular industry, as defined by the Trust. For purposes of this restriction, a foreign government is considered to be an industry. Mortgage-backed securities that are issued or guaranteed by the U.S. Government, its agencies or instrumentalities are not subject to the Funds’ industry concentration restrictions, by virtue of the exclusion from that test available to all U.S. Government securities. Similarly, Municipal Bonds issued by states, municipalities and other political subdivisions, agencies, authorities and instrumentalities of states and multi-state agencies and authorities are not subject to the Funds’ industry concentration restrictions. In the case of privately issued mortgage-related securities, or any asset-backed securities, the Trust takes the position that such securities do not represent interests in any particular “industry” or group of industries. With respect to investments in Underlying PIMCO Funds by the All Asset Fund, All Asset All Authority Fund, Global Multi-Asset Fund and the RealRetirement^® Funds, the Trust takes the position that investments in Underlying PIMCO Funds are not considered an investment in a particular industry, and portfolio securities held by an Underlying PIMCO Fund in which these Funds may invest are not considered to be securities purchased by these Funds for purposes of the Trust’s policy on concentration.

A Fund may invest in certain derivative instruments which, while representing a relatively small amount of the Fund’s net assets, provide a greater amount of economic exposure to a particular industry. To the extent that a Fund obtains economic exposure to a particular industry in this manner, it may be subject to similar risks of concentration in that industry as if it had invested in the securities of issuers in that industry directly.

The Funds interpret their policy with respect to the purchase and sale of commodities or commodities contracts under Fundamental Investment Restriction 4 above to permit the Funds, subject to each Fund’s investment objectives and general investment policies (as stated in the Prospectuses and elsewhere in this Statement of Additional Information), to invest in commodity futures contracts and options thereon, commodity-related swap agreements, hybrid instruments, and other commodity-related derivative instruments.

The Funds interpret their policies with respect to borrowing and lending to permit such activities as may be lawful for the Funds, to the full extent permitted by the 1940 Act or by exemption from the provisions therefrom pursuant to exemptive order of the SEC. Pursuant to an exemptive order issued by the SEC on November 19, 2001, the Funds may enter into transactions among themselves with respect to the investment of daily cash balances of the Funds in shares of the money market and/or short-term bond funds, as well as the use of daily excess cash balances of the money market and/or short-term bond funds in inter-fund lending transactions with the other Funds for temporary cash management purposes. The interest paid by a Fund in such an arrangement will be less than that otherwise payable for an overnight loan, and will be in excess of the overnight rate the money market and/or short-term bond funds could otherwise earn as lender in such a transaction.

Non-Fundamental Operating Policies Relating to the Sale of Shares of the Total Return Fund in Japan

In connection with an offering of Administrative Class shares of the Total Return Fund in Japan, the Trust has adopted the following non-fundamental operating policies (which may be changed by the Trust’s Board of Trustees without shareholder approval) with respect to the Total Return Fund. Non-fundamental policies numbered (1) through (8) will remain in effect only so long as (i) they are required in accordance with standards of the Japanese Securities Dealers Association and (ii) shares of the Total Return Fund are being offered in Japan.

(1) The Trust will not sell shares of the Total Return Fund in Japan except through Allianz Global Investors Distributors LLC.

(2) The Trust has appointed, and will maintain the appointment of, a bank or trust company as the place for safe-keeping of its assets in connection with the Total Return Fund.

(3) The Tokyo District Court shall have the jurisdiction over any and all litigation related to transactions in any class of shares of the Total Return Fund acquired by Japanese investors as required by Article 26, Item 4 of the Rules Concerning Transactions of Foreign Securities of the Japan Securities Dealers Association.

(4) The Total Return Fund may not make short sales of securities or maintain a short position for the account of the Fund unless the total current value of the securities being the subject of the short sales or the short position is equal to or less than the net asset value of the Total Return Fund.

(5) The Total Return Fund may not borrow money in excess of 10% of the value (taken at the lower of cost or current value) of its total assets (not including the amount borrowed) at the time the borrowing is made, except for extraordinary or emergency purposes, such as in the case of a merger, amalgamation or the like.

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(6) The Total Return Fund may not acquire more than 50% of the outstanding voting securities of any issuer, if aggregated with the portion of holding in such securities by any and all other mutual funds managed by PIMCO.

(7) The Total Return Fund may not invest more than 15% of its total assets in voting securities privately placed mortgage securities or unlisted voting securities which cannot be readily disposed of. This restriction shall not be applicable to securities determined by PIMCO to be liquid and for which a market price (including a dealer quotation) is generally obtainable or determinable.

(8) None of the portfolio securities of the Total Return Fund may be purchased from or sold or loaned to any Trustee of the Trust, PIMCO, acting as investment advisor of the Trust, or any affiliate thereof or any of their directors, officers or employees, or any major shareholder thereof (meaning a shareholder who holds to the actual knowledge of PIMCO, on his own account whether in his own or other name (as well as a nominee’s name), 10% or more of the total issued outstanding shares of such a company) acting as principal or for their own account unless the transaction is made within the investment restrictions set forth in the Fund’s Prospectus and Statement of Additional Information and either (i) at a price determined by current publicly available quotations (including a dealer quotation) or (ii) at competitive prices or interest rates prevailing from time to time on internationally recognized securities markets or internationally recognized money markets (including a dealer quotation).

(9) For as long as the Total Return Fund offers its shares for sale in Japan, it shall not invest in any stock or equities, and it shall manage its entrusted assets with the purpose of investing in public and company bonds consistent with qualifying as a “public and company bond investment trust” under the Income Tax Law of Japan.

All percentage limitations on investments described in the restrictions relating to the sale of shares in Japan will apply at the time of the making of an investment and shall not be considered violated unless an excess or deficiency occurs or exists immediately after and as a result of such investment. If any violation of the foregoing investment restrictions occurs, the Trust will, promptly after discovery of the violation, take such action as may be necessary to cause the violation to cease, which shall be the only obligation of the Trust and the only remedy in respect of the violation.

If any of the foregoing standards shall, at any time when shares of the Total Return Fund are being offered for subscription by the Trust in Japan or thereafter, no longer be required in accordance with the standards of the Japanese Securities Dealers Association, then such standards shall no longer apply.

While the Total Return Fund will invest its assets in a manner intended to result in its treatment as a “public and company bond investment trust” for Japanese tax purposes, in the event that this result is not obtained, the Fund and its shareholders could be adversely affected, Japanese individual investors may be subject to capital gains taxes upon redemptions of the Fund’s shares, and Japanese shareholders may not be able to credit U.S. withholding taxes on income from the Fund against Japanese withholding taxes on income from the Fund. Any such tax obligations incurred by Japanese investors are obligations of the Fund’s Japanese shareholders, and not of the Fund or its trustees, officers or non-Japanese investors.

Unless otherwise indicated, all limitations applicable to Fund investments (as stated above and elsewhere in this Statement of Additional Information or in the Prospectuses) apply only at the time a transaction is entered into. Any subsequent change in a rating assigned by any rating service to a security (or, if unrated, deemed to be of comparable quality), or change in the percentage of Fund assets invested in certain securities or other instruments, or change in the average duration of a Fund’s investment portfolio, resulting from market fluctuations or other changes in a Fund’s total assets will not require a Fund to dispose of an investment until PIMCO determines that it is practicable to sell or close out the investment without undue market or tax consequences to the Fund.

Certain of the Funds have investment policies, limitations, or practices that are applicable “normally” or under “normal circumstances” or “normal market conditions” (as stated above and elsewhere in this Statement of Additional Information or in the Prospectuses). Pursuant to the discretion of PIMCO and a Fund’s sub-adviser, if any, these investment policies, limitations, or practices may not apply during periods of abnormal purchase or redemption activity or during periods of unusual or adverse market, economic, political or other conditions. Such market, economic or political conditions may include periods of abnormal or heightened market volatility, strained credit and/or liquidity conditions, or increased governmental intervention in the markets or industries. During such periods, a Fund may not invest according to its principal investment strategies or in the manner in which its name may suggest, and may be subject to different and/or heightened risks. It is possible that such unusual or adverse conditions may continue for extended periods of time.

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MANAGEMENT OF THE TRUST

Trustees and Officers

The business of the Trust is managed under the direction of the Trust’s Board of Trustees. Subject to the provisions of the Trust’s Declaration of Trust, its By-Laws and Massachusetts law, the Board of Trustees has all powers necessary and convenient to carry out this responsibility, including the election and removal of the Trust’s officers.

The charts below identify the Trustees and executive officers of the Trust. Unless otherwise indicated, the address of all persons below is 840 Newport Center Drive, Newport Beach, CA 92660.

Trustees

Name, Age and Position Held with Trust*	Term of Office and Length of Time Served /+/	Principal Occupation(s) During Past 5 Years	Number of Funds in Fund Complex Overseen by Trustee*	Other Directorships Held by Trustee
Interested Trustees1
Brent R. Harris (49) Chairman of the Board and Trustee	02/1992 to present	Managing Director and member of Executive Committee, PIMCO; Formerly, Chairman and Director, PCM Fund, Inc.	108	Chairman and Trustee, PIMCO Variable Insurance Trust; Trustee, PIMCO ETF Trust, Director, StocksPLUS® Management, Inc.; and member of Board of Governors and Executive Committee, Investment Company Institute.
Richard M. Weil (46) Trustee	02/2009 to present	Managing Director and member of Executive Committee, PIMCO	108	Trustee, PIMCO Variable Insurance Trust and Trustee, PIMCO ETF Trust.
Independent Trustees
E. Philip Cannon (68) Trustee	05/2000 to present	Proprietor, Cannon & Company (an investment firm); Formerly, President, Houston Zoo. Formerly, Trustee Allianz Funds (formerly, PIMCO Funds: Multi-Manager Series); Formerly, Director, PCM Fund, Inc.	108	Trustee, PIMCO Variable Insurance Trust; and Trustee, PIMCO ETF Trust
Vern O. Curtis (75) Trustee	04/1987 to 02/1993 and 02/1995 to present	Private Investor; Formerly, Director, PCM Fund, Inc.	108	Trustee, PIMCO Variable Insurance Trust; and Trustee, PIMCO ETF Trust.
J. Michael Hagan (69) Trustee	05/2000 to present	Private Investor and Business Advisor (primarily to manufacturing companies); Formerly, Director, Remedy Temp (staffing); Formerly, Director, PCM Fund, Inc.	108	Trustee, PIMCO Variable Insurance Trust; Trustee, PIMCO ETF Trust; Director, Ameron International (manufacturing); and Director, Fleetwood Enterprises (manufacturer of housing and recreational vehicles).

53

Name, Age and Position Held with Trust*	Term of Office and Length of Time Served /+/	Principal Occupation(s) During Past 5 Years	Number of Funds in Fund Complex Overseen by Trustee*	Other Directorships Held by Trustee
Ronald C Parker (58) Trustee	07/2009 to present	Adjunct Professor, Linfield College; Trustee and Chair of the Investment Committee, Oregon Health Science University Foundation; Formerly, Vice Chairman, Hampton Affiliates (forestry products)	108	Trustee, PIMCO Variable Insurance Trust; and Trustee, PIMCO ETF Trust
William J. Popejoy (71) Trustee	07/1993 to 02/1995 and 08/1995 to present	Private Investor; Formerly, Director, New Century Financial Corporation (mortgage banking); Formerly, Director, PCM Fund, Inc.	108	Trustee, PIMCO Variable Insurance Trust; and Trustee, PIMCO ETF Trust.

^* The information for the individuals listed is as of June 30, 2009.

^/+/ Trustees serve until their successors are duly elected and qualified.

¹ Mr. Harris and Mr. Weil are “interested persons” of the Trust (as that term is defined in the 1940 Act) because of their affiliations with PIMCO.

Executive Officers

Name, Age and Position Held with Trust*	Term of Office and Length of Time Served	Principal Occupation(s) During Past 5 Years
Brent R. Harris (49) President	03/2009 to present	Managing Director and member of Executive Committee, PIMCO.
David C. Flattum (44) Chief Legal Officer	11/2006 to present	Managing Director and General Counsel, PIMCO. Formerly, Executive Vice President, PIMCO, Managing Director, Chief Operating Officer and General Counsel, Allianz Global Investors of America L.P. and Partner at Latham & Watkins LLP.
Jennifer E. Durham (38) Chief Compliance Officer	07/2004 to present	Executive Vice President, PIMCO. Formerly; Senior Vice President, PIMCO. Formerly, Vice President and Legal/Compliance Manager, PIMCO.
William H. Gross (65) Senior Vice President	04/1987 to present	Managing Director and Co-Chief Investment Officer, PIMCO.
Richard M. Weil (46) Senior Vice President	05/2009 to present	Managing Director and member of Executive Committee, PIMCO.
Mohamed El-Erian (50) Senior Vice President	05/2008 to present	Managing Director, Co-Chief Investment Officer and Chief Executive Officer, PIMCO. Formerly, President and CEO of Harvard Management Company. Formerly, Managing Director, PIMCO.
J. Stephen King, Jr. (46) Vice President-Senior Counsel, Secretary	05/2005 to present (since 10/2007 as Secretary)	Senior Vice President and Attorney, PIMCO. Formerly Vice President, PIMCO and Associate, Dechert LLP.

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Name, Age and Position Held with Trust*	Term of Office and Length of Time Served	Principal Occupation(s) During Past 5 Years
Peter G. Strelow (38) Vice President	05/2008 to present	Executive Vice President, PIMCO. Formerly, Senior Vice President and Vice President, PIMCO.
Henrik P. Larsen (39) Vice President	02/1999 to present	Senior Vice President, PIMCO. Formerly, Vice President, PIMCO.
John P. Hardaway (52) Treasurer	08/1990 to present	Executive Vice President, PIMCO. Formerly, Senior Vice President, PIMCO.
Joshua D. Ratner (32) Assistant Secretary	10/2007 to present	Vice President and Attorney, PIMCO. Formerly, Associate, Skadden, Arps, Slate, Meagher & Flom LLP and Associate, Ropes & Gray LLP.
Stacie D. Anctil (39) Assistant Treasurer	11/2003 to present	Senior Vice President, PIMCO. Formerly, Vice President, PIMCO. Formerly, Specialist, PIMCO.
Erik C. Brown (41) Assistant Treasurer	02/2001 to present	Senior Vice President, PIMCO. Formerly, Vice President, PIMCO.
Trent W. Walker (35) Assistant Treasurer	05/2007 to present	Senior Vice President, PIMCO. Formerly, Vice President, PIMCO. Formerly, Senior Manager, PricewaterhouseCoopers LLP.

^* The information for the individuals listed is as of June 30, 2009.

Securities Ownership

Listed below for each Trustee is a dollar range of securities beneficially owned in the Funds together with the aggregate dollar range of equity securities in all registered investment companies overseen by each Trustee that are in the same family of investment companies as the Trust, as of December 31, 2008.

Name of Trustee	Name of Fund	Dollar Range of Equity Securities in the Funds	Aggregate Dollar Range of Equity Securities in All Funds Overseen by Trustee in Family of Investment Companies
Interested Trustees
Brent R. Harris	All Asset Fund	Over $100,000	Over $100,000
	All Asset All Authority Fund	Over $100,000
	CommodityRealReturn Strategy Fund®	Over $100,000
	Developing Local Markets Fund	Over $100,000
	Emerging Local Bond Fund	Over $100,000
	Emerging Markets Bond Fund	$1 - $10,000
	Global Bond Fund (Unhedged)	Over $100,000
	High Yield Municipal Bond Fund	Over $100,000
	RealEstateRealReturn Strategy Fund	Over $100,000
	Total Return Fund	$10,001 - $50,000
Richard M. Weil1	California Short Duration Municipal Income Fund	Over $100,000	Over $100,000
	Emerging Markets Bond Fund	Over $100,000
	Foreign Bond Fund (Unhedged)	Over $100,000
	High Yield Fund	Over $100,000

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Independent Trustees
E. Philip Cannon	All Asset Fund	Over $100,000	Over $100,000
	Emerging Markets Bond Fund	$10,001 - $50,000
	Fundamental IndexPLUS™ TR Fund	Over $100,000
	International StocksPLUS® TR Strategy Fund (Unhedged)	$10,001 - $50,000
	International StocksPLUS® TR Strategy Fund (U.S. Dollar-Hedged)	Over $100,000
	Real Return Fund	$50,001 - $100,000
	StocksPLUS® Total Return Fund	Over $100,000
	Total Return Fund	Over $100,000
Vern O. Curtis	Short-Term Duration Fund	Over $100,000	Over $100,000
	Real Return Fund	Over $100,000
	Total Return Fund	Over $100,000
J. Michael Hagan	All Asset All Authority Fund	$1 - $10,000	Over $100,000
	CommodityRealReturn Strategy Fund®	$1 - $10,000
	Real Return Asset Fund	$1 - $10,000
Ronald C. Parker2	N/A	N/A	N/A
William J. Popejoy	Short-Term Duration Fund	Over $100,000	Over $100,000

¹ Mr. Weil joined the Board of Trustees on February 25, 2009.

² Mr. Parker joined the Board of Trustees on July 21, 2009.

The table below sets forth, to the best of the Trust’s knowledge, the approximate percentage of applicable classes of Funds owned by the Trust’s Officers and Trustees, as a group, as of September 30, 2009.

Fund	Class	Percent
All Asset All Authority Fund	Institutional	1.20	%
California Short Duration Municipal Bond Fund	Institutional	4.57	%
Fundamental IndexPLUS™ TR Fund	A	2.50	%
High Yield Municipal Bond Fund	Institutional	2.31	%
International StocksPLUS® TR Strategy Fund (Unhedged)	A	2.60	%
International StocksPLUS® TR Strategy Fund (U.S. Dollar-Hedged)	A	1.85	%
StocksPLUS® TR Short Strategy Fund	Institutional	4.58	%

To the best of the Trust’s knowledge, as of September 30, 2009, the Trustees and Officers of the Trust, as a group, owned less than 1% of the shares of each class of each Fund not listed in the above table.

Trustee Ownership of the Investment Adviser and Principal Underwriter, and Their Control Persons

No independent Trustee (or his immediate family members) had any direct or indirect interest, the value of which exceeds $120,000, in the investment adviser, the principal underwriter of the Trust, or any entity controlling, controlled by or under common control with the investment adviser or the principal underwriter of the Trust (not including registered investment companies). Set forth in the table below is information regarding each independent Trustee’s (and his immediate family members’) share ownership in securities of the investment adviser of the Trust, the principal underwriter of the Trust, and any entity controlling, controlled by or under common control with the investment adviser or principal underwriter of the Trust (not including registered investment companies), as of December 31, 2008.

Name of Trustee	Name of Owners and Relationships to Trustee	Company	Title of Class	Value of Securities	Percent of Class
E. Philip Cannon	None	None	None	None	None
Vern O. Curtis	None	None	None	None	None
J. Michael Hagan	None	None	None	None	None
William J. Popejoy	None	None	None	None	None

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No independent Trustee or immediate family member has during the two most recently completed calendar years had: (i) any material interest, direct or indirect, in any transaction or series of similar transactions, in which the amount involved exceeds $120,000; (ii) any securities interest in the principal underwriter of the Trust or the investment adviser or their affiliates (other than the Trust); or (iii) any direct or indirect relationship of any nature, in which the amount involved exceeds $120,000, with:

• the Funds;

• an officer of the Funds;

• an investment company, or person that would be an investment company but for the exclusions provided by sections 3(c)(1) and 3(c)(7) of the 1940 Act, having the same investment adviser or principal underwriter as the Funds or having an investment adviser or principal underwriter that directly or indirectly controls, is controlled by, or is under common control with the investment adviser or principal underwriter of the Funds;

• an officer or an investment company, or a person that would be an investment company but for the exclusions provided by sections 3(c)(1) and 3(c)(7) of the 1940 Act, having the same investment adviser or principal underwriter as the Funds or having an investment adviser or principal underwriter that directly or indirectly controls, is controlled by, or is under common control with the investment adviser or principal underwriter of the Funds;

• the investment adviser or principal underwriter of the Funds;

• an officer of the investment adviser or principal underwriter of the Funds;

• a person directly or indirectly controlling, controlled by, or under common control with the investment adviser or principal underwriter of the Funds; or

• an officer of a person directly or indirectly controlling, controlled by, or under common control with the investment adviser or principal underwriter of the Funds.

Standing Committees

The Trust has a standing Audit Committee that consists of all of the independent Trustees (Messrs. Cannon, Curtis, Hagan and Popejoy). The Audit Committee reviews both the audit and non-audit work of the Trust’s independent registered public accounting firm, submits a recommendation to the Board of Trustees as to the selection of an independent registered public accounting firm, and reviews generally the maintenance of the Trust’s records and the safekeeping arrangement of the Trust’s custodian. During the fiscal year ended March 31, 2009, the Audit Committee met 4 times.

The Board of Trustees has formed a Valuation Committee whose function is to monitor the valuation of portfolio securities and other investments and, as required by the Trust’s valuation policies, when the Board of Trustees is not in session it shall determine the fair value of portfolio holdings after consideration of all relevant factors, which determinations shall be reported to the full Board of Trustees. The Valuation Committee currently consists of Messrs. Harris, Weil, Hardaway and Brown and Ms. Anctil. However, the members of this committee may be changed by the Board of Trustees from time to time. During the fiscal year ended March 31, 2009, there were 18 meetings of the Valuation Committee.

The Trust also has a Governance Committee, composed of independent Trustees (Messrs. Cannon, Curtis, Hagan and Popejoy), that is responsible for the selection and nomination of candidates to serve as Trustees of the Trust. The Governance Committee has a policy in place for considering nominees recommended by shareholders.

The Governance Committee will consider potential trustee nominees recommended by shareholders provided that the proposed nominees: (i) satisfy any minimum qualifications of the Trust for its Trustees and (ii) are not “interested persons” of the Trust or the investment adviser within the meaning of the 1940 Act.

In addition, potential trustee nominees recommended by shareholders must fulfill the following requirements:

(a) The nominee may not be the nominating shareholder, a member of the nominating shareholder group, or a member of the immediate family of the nominating shareholder or any member of the nominating shareholder group;

57

(b) Neither the nominee nor any member of the nominee’s immediate family may be currently employed or employed within the last year by any nominating shareholder entity or entity in a nominating shareholder group;

(c) Neither the nominee nor any immediate family member of the nominee is permitted to have accepted directly or indirectly, during the year of the election for which the nominee’s name was submitted, during the immediately preceding calendar year, or during the year when the nominee’s name was submitted, any consulting, advisory, or other compensatory fee from the nominating shareholder or any member of a nominating shareholder group;

(d) The nominee may not be an executive officer or director (or person performing similar functions) of the nominating shareholder or any member of the nominating shareholder group, or of an affiliate of the nominating shareholder or any such member of the nominating shareholder group; and

(e) The nominee may not control (as “control” is defined in the 1940 Act) the nominating shareholder or any member of the nominating shareholder group (or in the case of a shareholder or member that is a fund, an interested person of such shareholder or member as defined by Section 2(a)(19) of the 1940 Act).

The nominating shareholder or shareholder group must meet the following requirements:

(a) Any shareholder or shareholder group submitting a proposed nominee must beneficially own, either individually or in the aggregate, more than 5% of a series of the Trust’s securities that are eligible to vote at the time of submission of the nominee and at the time of the annual meeting where the nominee may be elected. Each of the securities used for purposes of calculating this ownership must have been held continuously for at least two years as of the date of the nomination. In addition, such securities must continue to be held through the date of the meeting. The nominating shareholder or shareholder group must also bear the economic risk of the investment and the securities used for purposes of calculating the ownership cannot be held “short”; and

(b) The nominating shareholder or shareholder group must also submit a certification which provides the number of shares which the person or group has (i) sole power to vote or direct the vote; (ii) shared power to vote or direct the vote; (iii) sole power to dispose or direct the disposition of such shares; and (iv) shared power to dispose or direct the disposition of such shares. In addition, the certification shall provide that the shares have been held continuously for at least two years.

A nominating shareholder or shareholder group may not submit more proposed nominees than the number of Board positions open each year. All shareholder recommended nominee submissions must be received by the Trust by the deadline for submission of any shareholder proposals which would be included in the Trust’s proxy statement, if any.

Shareholders recommending potential trustee nominees must substantiate compliance with these requirements at the time of submitting their proposed trustee nominee to the attention of the Trust’s Secretary. Notice to the Trust’s Secretary should be provided in accordance with the deadline specified above and include, (i) the shareholder’s contact information; (ii) the trustee nominee’s contact information and the number of shares owned by the proposed nominee; (iii) all information regarding the proposed nominee that would be required to be disclosed in solicitations of proxies for elections of trustees required by Regulation 14A of the Securities Exchange Act of 1934, as amended (“1934 Act”); and (iv) a notarized letter executed by the proposed nominee, stating his or her intention to serve as a nominee and be named in the Trust’s proxy statement, if nominated by the Board of Trustees, to be named as a trustee if so elected.

During the fiscal year ended March 31, 2009, there were 5 meetings of the Governance Committee.

58

Compensation Table

The following table sets forth information regarding compensation received by the Trustees for the fiscal year ended March 31, 2009.

Name and Position	Aggregate Compensation from Trust1, 2		Total Compensation from Trust and Fund Complex Paid to Trustees3
E. Philip Cannon, Trustee	$	148,500	$	180,127
Vern O. Curtis, Trustee	$	148,250	$	179,877
J. Michael Hagan, Trustee	$	164,500	$	198,127
Ronald C. Parker, Trustee4		N/A		N/A
William J. Popejoy, Trustee	$	150,000	$	182,627

¹ During the Trust’s fiscal year ended March 31, 2009, each Trustee, other than those affiliated with PIMCO or its affiliates, received an annual retainer of $100,000, plus $9,500 for each Board of Trustees meeting attended in person, $750 ($1,000 in the case of the audit committee chair) for each committee meeting attended and $1,500 for each Board of Trustees meeting attended telephonically, plus reimbursement of related expenses. In addition, the audit committee chair received an additional annual retainer of $15,000 and each other committee chair received an additional annual retainer of $1,500.

² The amounts shown in this column represent the aggregate compensation before deferral with respect to the Trust’s fiscal year ended March 31, 2009. Mr. Cannon deferred compensation of $36,000 from the Trust during the fiscal year ended March 31, 2009. The cumulative deferred compensation (including interest) accrued with respect to Mr. Cannon, from the Trust, as of the Trust’s fiscal year ended March 31, 2009 is $720,088.46.

³ For the period ended March 31, 2009, each Trustee also served as a Director of PCM Fund, Inc., a registered closed-end management investment company, as a Trustee of PIMCO Variable Insurance Trust, a registered open-end management investment company and as a Trustee of PIMCO ETF Trust a registered open-end management investment company. For their services to PCM Fund, Inc., each Director, who is unaffiliated with PIMCO or its affiliates, received an annual retainer of $6,000, plus $1,000 for each Board of Directors meeting attended in person, $250 for each committee meeting attended and $500 for each Board of Directors meeting attended telephonically, plus reimbursement of related expenses. In addition, the audit committee chair received an additional annual retainer of $1,000 and each other committee chair received an additional annual retainer of $500. As of April 23, 2008, each Trustee ceased serving as a Director of PCM Fund, Inc. in connection with the transition of PIMCO from investment adviser to investment sub-adviser of PCM Fund, Inc.

For their services to PIMCO Variable Insurance Trust, each Trustee, who is unaffiliated with PIMCO or its affiliates, received an annual retainer of $15,000, plus $2,375 for each Board of Trustees meeting attended in person, $500 for each committee meeting attended and $750 for each Board of Trustees meeting attended telephonically, plus reimbursement of related expenses. In addition, the audit committee chair received an additional annual retainer of $2,000 and each other committee chair received an additional annual retainer of $500.

For their services to PIMCO ETF Trust, each Trustee, who is unaffiliated with PIMCO or its affiliates, received an annual retainer of $10,000, plus $1,000 for each Board of Trustees meeting attended in person, $250 for each committee meeting attended and $500 for each Board of Trustees meeting attended telephonically, plus reimbursement of related expenses. In addition, the audit committee chair received an additional annual retainer of $1,000 and each other committee chair received an additional annual retainer of $500.

⁴ Mr. Parker joined the Board of Trustees on July 21, 2009.

Investment Adviser

PIMCO, a Delaware limited liability company, serves as investment adviser to the Funds pursuant to an investment advisory contract (“Advisory Contract”) between PIMCO and the Trust. PIMCO also serves as investment adviser to the Subsidiaries. PIMCO is located at 840 Newport Center Drive, Newport Beach, California 92660. PIMCO had approximately $841 billion of assets under management as of June 30, 2009.

PIMCO is a majority owned subsidiary of Allianz Global Investors of America L.P. (“Allianz Global Investors”) with a minority interest held by PIMCO Partners, LLC, a California limited liability company. PIMCO Partners, LLC is owned by the current managing directors and executive management of PIMCO. Through various holding company structures, Allianz Global Investors is majority owned by Allianz SE.

PIMCO has engaged Research Affiliates, LLC (“Research Affiliates”), a California limited liability company, to serve as asset allocation sub-adviser to the All Asset Fund and All Asset All Authority Fund pursuant to separate asset allocation sub-advisory agreements (“Asset Allocation Sub-Advisory Agreements”), as sub-adviser to the, Fundamental Advantage Total Return Strategy, Fundamental IndexPLUS™and Fundamental IndexPLUS™ TR Funds pursuant to a sub-advisory agreement (“RAFI^® Sub-Advisory Agreement”), and as sub-adviser to the EM Fundamental IndexPLUS™ TR Strategy Fund pursuant to a separate sub-advisory agreement (“EM Sub-Advisory Agreement”). Research Affiliates was organized in March 2002 and is located at 620 Newport Center Drive, Suite 900, Newport Beach, California, 92660.

Allianz SE is a European based, multinational insurance and financial services holding company and a publicly traded German company. As of December 31, 2008, the Allianz Group (including PIMCO) had third-party assets under management of over €703 billion.

The general partner of Allianz Global Investors has substantially delegated its management and control of Allianz Global Investors to a Management Board. The Management Board of Allianz Global Investors is comprised of John C. Maney.

There are currently no significant institutional shareholders of Allianz SE. Dresdner Bank AG was sold to Commerzbank AG in January 2009 and Allianz SE now owns approximately 14% of Commerzbank AG. Certain broker-dealers that might be controlled by, or affiliated with, Allianz SE may be considered to be affiliated persons of PIMCO and/or AGID. (Broker-dealer affiliates of such significant institutional shareholders, if any, are sometimes referred to herein as “Affiliated Brokers.”) Absent an SEC exemption or other regulatory relief, the Funds generally are precluded from effecting principal transactions with the Affiliated Brokers, and the Funds’ ability to purchase securities being underwritten

59

by an Affiliated Broker or a syndicate including an Affiliated Broker is subject to restrictions. Similarly, the Funds’ ability to utilize the Affiliated Brokers for agency transactions is subject to the restrictions of Rule 17e-1 under the 1940 Act. PIMCO does not believe that the restrictions on transactions with the Affiliated Brokers described above will materially adversely affect its ability to provide services to the Funds, the Funds’ ability to take advantage of market opportunities, or the Funds’ overall performance.

Advisory Agreements

The Fund pays for the advisory and supervisory and administrative services it requires under what is essentially an all-in fee structure.

PIMCO is responsible for making investment decisions and placing orders for the purchase and sale of the Trust’s investments directly with the issuers or with brokers or dealers selected by it in its discretion. See “Portfolio Transactions and Brokerage,” below. PIMCO also furnishes to the Board of Trustees, which has overall responsibility for the business and affairs of the Trust, periodic reports on the investment performance of each Fund.

Under the terms of the Advisory Contract, PIMCO is obligated to manage the Funds in accordance with applicable laws and regulations. The investment advisory services of PIMCO to the Trust are not exclusive under the terms of the Advisory Contract. PIMCO is free to, and does, render investment advisory services to others.

Following the expiration of the two year period commencing with the effectiveness of the Advisory Contract, it will continue in effect on a yearly basis provided such continuance is approved annually (i) by the holders of a majority of the outstanding voting securities of the Trust or by the Board of Trustees and (ii) by a majority of the independent Trustees. The Advisory Contract may be terminated without penalty by vote of the Trustees or the shareholders of the Trust, or by PIMCO, on 60 days’ written notice by either party to the contract and will terminate automatically if assigned.

As discussed in “Investment Objectives and Policies” above, the CommodityRealReturn Strategy Fund^® may pursue its investment objective by investing in the CRRS Subsidiary and the Global Multi-Asset Fund may pursue its investment objective by investing in the GMA Subsidiary. The Subsidiaries have each entered into a separate contract with PIMCO whereby PIMCO provides investment advisory and other services to the Subsidiaries (the “Subsidiary Advisory Contracts”). In consideration of these services, each Subsidiary pays PIMCO a management fee and an administrative services fee at the annual rates of 0.49% and 0.20%, respectively. PIMCO has contractually agreed to waive the advisory fee and the supervisory and administrative fee it receives from the CommodityRealReturn Strategy Fund^® in an amount equal to the management fee and administrative services fee, respectively, paid to PIMCO by the CRRS Subsidiary. This waiver may not be terminated by PIMCO, and will remain in effect for as long as PIMCO’s contract with the CRRS Subsidiary is in place. PIMCO has contractually agreed to waive the advisory fee and the supervisory and administrative fee it receives from the Global Multi-Asset Fund in an amount equal to the management fee and administrative services fee, respectively, paid to PIMCO by the GMA Subsidiary. This waiver may not be terminated by PIMCO, and will remain in effect for as long as PIMCO’s contract with the GMA Subsidiary is in place.

The Subsidiary Advisory Contracts will continue in effect until terminated. The Subsidiary Advisory Contracts are each terminable by either party thereto, without penalty, on 60 days’ prior written notice, and shall terminate automatically in the event (i) it is “assigned” by PIMCO (as defined in the Investment Advisers Act of 1940, as amended (the “Advisers Act”)); or (ii) the Advisory Contract between the Trust, acting for and on behalf of the CommodityRealReturn Strategy Fund^® and/or the Global Multi-Asset Fund, as applicable, and PIMCO is terminated.

PIMCO employs Research Affiliates to provide asset allocation services to the All Asset Fund and All Asset All Authority Fund pursuant to separate Asset Allocation Sub-Advisory Agreements. Under each Asset Allocation Sub-Advisory Agreement, Research Affiliates is responsible for recommending how the assets of the Funds are allocated and reallocated from time to time among the Underlying PIMCO Funds. The Funds indirectly pay a proportionate share of the advisory fees paid to PIMCO by the Underlying PIMCO Funds in which the Funds invest. Research Affiliates is not compensated directly by the All Asset Fund or All Asset All Authority Fund, but is paid by PIMCO. Under the terms of each Asset Allocation Sub-Advisory Agreement, Research Affiliates is obligated to sub-advise the All Asset and All Asset All Authority Funds in accordance with applicable laws and regulations.

Each Asset Allocation Sub-Advisory Agreement will continue in effect with respect to the All Asset Fund and the All Asset All Authority Funds, respectively, for two years from its respective effective date, and thereafter on a yearly basis provided such continuance is approved annually (i) by the holders of a majority of the outstanding voting securities of the Trust or by the Board of Trustees and (ii) by a majority of the independent Trustees. Each Asset Allocation Sub-Advisory

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Agreement may be terminated without penalty by vote of the Trustees or its shareholders, or by PIMCO, on 60 days’ written notice by either party to the contract and will terminate automatically if assigned. If Research Affiliates ceases to serve as sub-advisor of the Funds, PIMCO will either assume full responsibility therefor, or retain a new asset allocation sub-adviser, subject to the approval of the Board of Trustees and, if required, the Fund’s shareholders.

PIMCO also employs Research Affiliates to provide sub-advisory services to the Fundamental Advantage Total Return Strategy Fund, Fundamental IndexPLUS™ Fund and Fundamental IndexPLUS™ TR Fund pursuant to the RAFI^® Sub-Advisory Agreement. Under the RAFI^® Sub-Advisory Agreement, Research Affiliates is responsible for providing, subject to the supervision of PIMCO, investment advisory services in connection with the Funds’ use of Enhanced RAFI^®1000 derivatives. More specifically, Research Affiliates will provide to the Funds’ swap counterparties model portfolios of Enhanced RAFI^®1000 securities so that the counterparties can provide total return swaps based on Enhanced RAFI^®1000 to the Funds. Research Affiliates is not compensated directly by the Funds, but is paid by PIMCO. If any investment company that is sponsored by PIMCO and sub-advised by Research Affiliates, including, without limitation, the PIMCO Funds of Funds (each a “PIMCO Sponsored Fund”), invests in either the Fundamental Advantage Total Return Strategy, Fundamental IndexPLUS™ or Fundamental IndexPLUS™ TR Fund, Research Affiliates will waive any fee to which it would be entitled under the RAFI^® Sub-Advisory Agreement with respect to any assets of the PIMCO Sponsored Fund invested in such Fund.

PIMCO also employs Research Affiliates to provide sub-advisory services to the EM Fundamental IndexPLUS™ TR Strategy Fund pursuant to the EM Sub-Advisory Agreement. Under the EM Sub-Advisory Agreement, Research Affiliates is responsible for providing, subject to the supervision of PIMCO, investment advisory services in connection with the Fund’s use of Enhanced RAFI^® Emerging Markets Fundamental Index derivatives. More specifically, Research Affiliates will provide to the Fund’s swap counterparties model portfolios of Enhanced RAFI^® Emerging Markets securities so that the counterparties can provide total return swaps based on the Enhanced RAFI^® Emerging Markets Fundamental Index to the Fund. Research Affiliates is not compensated directly by the Fund, but is paid by PIMCO. If any of the PIMCO Sponsored Funds invests in the EM Fundamental IndexPLUS™ TR Strategy Fund, Research Affiliates will waive any fee to which it would be entitled under the EM Sub-Advisory Agreement with respect to any assets of the PIMCO Sponsored Fund invested in such Fund.

Under the terms of the RAFI^®Sub-Advisory Agreement and EM Sub-Advisory Agreement, Research Affiliates is obligated to provide advice to the EM Fundamental IndexPLUS™ TR Strategy, Fundamental Advantage Total Return Strategy, Fundamental IndexPLUS™ and Fundamental IndexPLUS™ TR Funds, as applicable, in accordance with applicable laws and regulations. The RAFI^®Sub-Advisory Agreement and EM Sub-Advisory Agreement will continue in effect with respect to the EM Fundamental IndexPLUS™ TR Strategy Fund, Fundamental Advantage Total Return Strategy Fund, Fundamental IndexPLUS™ Fund and Fundamental IndexPLUS™ TR Fund, as applicable, for two years from its effective date, and thereafter on a yearly basis provided such continuance is approved annually with respect to each such Fund (i) by the holders of a majority of the outstanding voting securities of the Trust or by the Board of Trustees and (ii) by a majority of the independent Trustees. The RAFI^®Sub-Advisory Agreement and EM Sub-Advisory Agreement may be terminated, without penalty, with respect to the applicable Fund by: (i) a vote of the majority of such Fund’s outstanding voting securities; (ii) a vote of a majority of the Board of Trustees upon 60 days’ written notice; (iii) PIMCO upon 60 days’ written notice; or (iv) Research Affiliates upon 60 days’ written notice. The RAFI^®Sub-Advisory Agreement and EM Sub-Advisory Agreement will terminate automatically in the event of their assignment.

Advisory Fee Rates

Each Fund either currently pays, or will pay, a monthly investment advisory fee at an annual rate based on average daily net assets of the Funds as follows:

Fund	Advisory Fee Rate
Government Money Market, Money Market and Treasury Money Market Funds	0.12	%
All Asset Fund	0.175	%
California Short Duration Municipal Income and Short Duration Municipial Income Funds	0.18	%
Real Income 2019 and Real Income 2029 Funds	0.19	%
All Asset All Authority, Municipal Bond and MuniGO Funds	0.20	%
California Intermediate Municipal Bond, Long-Term U.S. Government and New York Municipal Bond Funds	0.225	%
Floating Income, High Yield Municipal Bond, Long-Term Credit and Real Return Asset Funds	0.30	%
StocksPLUS® Long Duration Fund	0.35	%
StocksPLUS® Total Return and International StocksPLUS® TR Strategy (Unhedged) Funds	0.39	%

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Fund	Advisory Fee Rate
Convertible, Global Advantage Strategy Bond and Unconstrained Tax Managed Bond Funds	0.40	%
StocksPLUS® TR Short Strategy and Small Cap StocksPLUS® TR Funds	0.44	%
Developing Local Markets, Diversified Income, Emerging Local Bond, Emerging Markets Bond, Fundamental IndexPLUS™ and International StocksPLUS® TR Strategy (U.S. Dollar-Hedged) Funds	0.45	%
CommodityRealReturn Strategy and RealEstateRealReturn Strategy Funds	0.49	%
Fundamental IndexPLUS™ TR Fund	0.54	%
Unconstrained Bond Fund	0.60	%
Fundamental Advantage Total Return Strategy Fund	0.64	%
RealRetirement® 2010 and RealRetirement® 2020 Funds	0.70	%*
RealRetirement® 2030 Fund	0.75	%*
RealRetirement® 2040 and RealRetirement® 2050 Funds	0.80	%*
EM Fundamental IndexPLUS™ TR Strategy and Emerging Markets and Infrastructure Bond Funds	0.85	%
Global Multi-Asset Fund	0.90	%
All other Funds	0.25	%

* As the RealRetirement^® Funds approach their target dates, the Funds’ investment advisory contract provides that certain Funds’ advisory fee will periodically decrease over time according to set intervals. The following table provides information with respect to such advisory fee adjustments.

RealRetirement^® Fund Advisory Fee Schedule

(stated as a percentage of the average daily net assets of each Fund taken separately)

	Date
Fund	March 31, 2009		April 1, 2015		April 1, 2020		April 1, 2025		April 1, 2030		April 1, 2035
RealRetirement® 2010 Fund	0.70	%	0.70	%	0.70	%	0.70	%	0.70	%	0.70	%
RealRetirement® 2020 Fund	0.70		0.70		0.70		0.70		0.70		0.70
RealRetirement® 2030 Fund	0.75		0.70		0.70		0.70		0.70		0.70
RealRetirement® 2040 Fund	0.80		0.75		0.75		0.70		0.70		0.70
RealRetirement® 2050 Fund	0.80		0.80		0.80		0.75		0.75		0.70

Advisory Fee Payments

The advisory fees paid by each Fund that was operational during the fiscal years ended March 31, 2009, 2008 and 2007 were as follows:

Fund	Year Ended 3/31/09		Year Ended 3/31/08		Year Ended 3/31/07
All Asset Fund	$	24,005,333	$	23,228,851	$	22,290,719
All Asset All Authority Fund		2,553,401		1,428,943		1,652,720
California Intermediate Municipal Bond Fund		298,094		307,220		319,703
California Short Duration Municipal Income Fund		148,629		28,796		4,010
CommodityRealReturn Strategy Fund®		56,152,248		62,640,116		60,269,001
Convertible Fund		2,903,115		1,279,201		220,572
Developing Local Markets Fund		20,361,286		19,470,402		13,282,900
Diversified Income Fund		9,610,100		12,115,581		8,120,779
EM Fundamental IndexPLUSTM TR Strategy Fund		219,089		N/A		N/A
Emerging Local Bond Fund		8,136,993		6,845,292		279,454
Emerging Markets Bond Fund		12,837,173		11,622,013		11,516,250
Extended Duration Fund		526,262		134,955		4,505

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Fund	Year Ended 3/31/09	Year Ended 3/31/08	Year Ended 3/31/07
Floating Income Fund	3,093,741	12,261,231	9,498,669
Foreign Bond Fund (U.S. Dollar-Hedged)	7,447,052	6,344,918	6,075,892
Foreign Bond Fund (Unhedged)	6,737,667	6,801,099	4,707,395
Fundamental Advantage Total Return Strategy Fund	2,830,204	98,675	N/A
Fundamental IndexPLUS™ Fund	1,111,489	2,409,586	1,066,581
Fundamental IndexPLUS™ TR Fund	2,784,958	3,235,882	2,447,223
Global Advantage Strategy Bond Fund	3,351	N/A	N/A
Global Bond Fund (U.S. Dollar-Hedged)	573,303	532,663	511,419
Global Bond Fund (Unhedged)	2,419,197	2,564,184	2,348,819
Global Multi-Asset Fund	566,635	N/A	N/A
GNMA Fund	1,617,525	831,135	653,704
Government Money Market Fund	5,470	N/A	N/A
High Yield Fund	15,792,723	17,762,780	17,861,758
High Yield Municipal Bond	594,705	427,628	30,579
Income Fund	759,913	285,210	0
International StocksPLUS® TR Strategy Fund (U.S. Dollar-Hedged)	1,468,950	2,613,894	3,277,933
International StocksPLUS® TR Strategy Fund (Unhedged)	224,186	271,028	79,251
Investment Grade Corporate Bond Fund	3,635,072	203,726	154,281
Long Duration Total Return Fund	3,478,733	672,622	5,026
Long-Term Credit Fund	0	N/A	N/A
Long-Term U.S. Government Fund	2,521,761	3,312,855	3,563,177
Low Duration Fund	26,047,783	25,723,351	27,713,735
Low Duration Fund II	738,078	748,683	894,833
Low Duration Fund III	309,198	384,732	280,883
Moderate Duration Fund	3,799,333	3,874,197	4,169,294
Money Market Fund	644,320	465,209	455,666
Mortgage-Backed Securities Fund	2,196,759	1,502,153	1,114,746
Municipal Bond Fund	1,205,907	1,028,145	944,324
New York Municipal Bond Fund	251,461	153,571	97,433
Real Return Asset Fund	11,955,206	6,016,526	9,575,768
Real Return Fund	34,522,214	30,115,720	33,574,300
RealEstateRealReturn Strategy Fund	3,170,967	910,531	1,173,285
RealRetirement® 2010 Fund	20,617	0	N/A
RealRetirement® 2020 Fund	20,217	0	N/A
RealRetirement® 2030 Fund	20,255	0	N/A
RealRetirement® 2040 Fund	20,695	0	N/A
RealRetirement® 2050 Fund	20,447	0	N/A
Short Duration Municipal Income Fund	495,121	492,928	643,010
Short-Term Fund	10,231,289	10,121,132	9,077,989
Small Cap StocksPLUS® TR Fund	1,533,424	116,780	27,792
StocksPLUS® Fund	1,182,752	2,612,974	3,219,352
StocksPLUS® Long Duration Fund	426,632	183,315	N/A
StocksPLUS® Total Return Fund	774,403	1,414,988	1,370,250
StocksPLUS® TR Short Strategy Fund	877,729	755,841	756,807
Total Return Fund	329,078,289	272,679,937	242,621,878
Total Return Fund II	6,070,771	5,460,494	5,236,554
Total Return Fund III	5,579,012	5,158,841	4,728,039
Unconstrained Bond Fund	1,474,419	N/A	N/A
Unconstrained Tax Managed Bond Fund	2,428	N/A	N/A

63

Advisory Fees Waived and Recouped

PIMCO has contractually agreed, for the All Asset Fund and All Asset All Authority Fund, to reduce its advisory fee to the extent that the Underlying PIMCO Fund Expenses attributable to advisory and supervisory and administrative fees exceed certain amounts of the total assets each Fund has invested in Underlying PIMCO Funds. PIMCO may recoup these waived fees in future periods, not exceeding three years, provided total expenses, including such recoupment, do not exceed the annual expense limit. In addition, PIMCO has contractually agreed to reduce total annual fund operating expenses for certain Funds by waiving a portion of its advisory fee, which cannot be recouped. PIMCO also has contractually agreed to waive the advisory fee it receives from the CommodityRealReturn Strategy Fund^® in an amount equal to the management fee paid to PIMCO by the CRRS Subsidiary, which cannot be recouped. PIMCO also has contractually agreed to waive the advisory fee it receives from the Global Multi-Asset Fund in an amount equal to the management fee paid to PIMCO by the GMA Subsidiary, which cannot be recouped. Advisory fees waived during the fiscal years ended March 31, 2009, 2008 and 2007 were as follows:

Fund	Year Ended 3/31/09		Year Ended 3/31/08		Year Ended 3/31/07
All Asset Fund	$	3,423,693	$	3,056,916	$	140,664
All Asset All Authority Fund		0		55,050		0
CommodityRealReturn Strategy Fund®		6,324,892		3,841,255		1,250,158
Fundamental IndexPLUSTM Fund		0		0		135,735
Fundamental IndexPLUSTM TR Fund		0		0		257,495
Global Advantage Strategy Bond Fund		542		N/A		N/A
Global Multi-Asset Fund		270,726		N/A		N/A
High Yield Municipal Bond Fund		19,823		11,777		0
Income Fund		151,981		57,039		0
RealRetirement® 2010 Fund		15,254		0		N/A
RealRetirement® 2020 Fund		15,544		0		N/A
RealRetirement® 2030 Fund		14,664		0		N/A
RealRetirement® 2040 Fund		13,733		0		N/A
RealRetirement® 2050 Fund		12,927		0		N/A

Previously waived advisory fees recouped during the fiscal years ended March 31, 2009, 2008 and 2007 were as follows:

Fund	Year Ended 3/31/09	Year Ended 3/31/08		Year Ended 3/31/07
All Asset Fund	0	$	222,344	$	77,332
All Asset All Authority Fund	0		55,050		0

Sub-Advisory Fee Payments

PIMCO paid the following fees to Research Affiliates in connection with the Asset Allocation Sub-Advisory Agreements and RAFI^® Sub-Advisory Agreement during the fiscal years ended March 31, 2009, 2008 and 2007:

Fund	Year Ended 3/31/09		Year Ended 3/31/08		Year Ended 3/31/07
All Asset Fund	$	24,005,333	$	23,228,851	$	22,290,719
All Asset All Authority Fund		2,553,401		1,428,943		1,652,720
EM Fundamental IndexPLUSTM TR Strategy Fund*		8		N/A		N/A
Fundamental Advantage Total Return Strategy Fund**		7,923		31		N/A
Fundamental IndexPLUS™ Fund		93,652		161,819		23,923
Fundamental IndexPLUS™ TR Fund		129,347		163,064		29,913

* The Fund began operations on November 26, 2008.

** The Fund began operations on February 29, 2008.

64

Proxy Voting Policies and Procedures

PIMCO has adopted written proxy voting policies and procedures (“Proxy Policy”) as required by Rule 206(4)-6 under the Advisers Act. The Proxy Policy has been adopted by the Trust as the policies and procedures that PIMCO will use when voting proxies on behalf of the Funds. Recognizing that proxy voting is a rare event in the realm of fixed income investing and is typically limited to solicitation of consent to changes in features of debt securities, the Proxy Policy also applies to any voting rights and/or consent rights of PIMCO, on behalf of the Funds, with respect to debt securities, including but not limited to, plans of reorganization, and waivers and consents under applicable indentures.

The Proxy Policy is designed and implemented in a manner reasonably expected to ensure that voting and consent rights are exercised in the best interests of the Funds and their shareholders. Each proxy is voted on a case-by-case basis taking into consideration any relevant contractual obligations as well as other relevant facts and circumstances at the time of the vote. In general, PIMCO reviews and considers corporate governance issues related to proxy matters and generally supports proposals that foster good corporate governance practices. PIMCO may vote proxies as recommended by management on routine matters related to the operation of the issuer and on matters not expected to have a significant economic impact on the issuer and/or its shareholders.

PIMCO will supervise and periodically review its proxy voting activities and implementation of the Proxy Policy. PIMCO will review each proxy to determine whether there may be a material conflict between PIMCO and the Funds. If no conflict exists, the proxy will be forwarded to the appropriate portfolio manager for consideration. If a conflict does exist, PIMCO will seek to resolve any such conflict in accordance with the Proxy Policy. PIMCO seeks to resolve any material conflicts of interest by voting in good faith in the best interest of the Funds. If a material conflict of interest should arise, PIMCO will seek to resolve such conflict in the Funds’ best interest by pursuing any one of the following courses of action: (i) convening a committee to assess and resolve the conflict; (ii) voting in accordance with the instructions of the Board of Trustees; (iii) voting in accordance with the recommendation of an independent third-party service provider; (iv) suggesting to the Board of Trustees that the Fund engage another party to determine how the proxy should be voted; (v) delegating the vote to a third-party service provider; or (vi) voting in accordance with the factors discussed in the Proxy Policy.

Information about how the Funds voted proxies relating to portfolio securities held during the most recent twelve month period ended June 30th is available no later than the following August 31st without charge, upon request, by calling the Trust at 1-866-746-2606, on the Trust’s website at http://www.pimco-funds.com, on the Distributor’s website at http://www.allianzinvestors.com, and on the SEC’s website at http://www.sec.gov.

Copies of the written Proxy Policy and the factors that PIMCO may consider in determining how to vote proxies for the Funds are available by calling the Trust at 1-866-746-2606, on the Trust’s website at http://www.pimco-funds.com and on the Distributor’s website at http://www.allianzinvestors.com.

Fund Administrator

PIMCO also serves as Administrator to the Funds pursuant to a supervision and administration agreement (the “Supervision and Administration Agreement”) with the Trust. The Supervision and Administration Agreement replaces the Third Amended and Restated Administration Agreement and the administrative fees payable thereunder. Pursuant to the Supervision and Administration Agreement, PIMCO provides the Funds with certain supervisory, administrative and shareholder services necessary for Fund operations and is responsible for the supervision of other Fund service providers, and receives a supervisory and administrative fee in return. PIMCO may in turn use the facilities or assistance of its affiliates to provide certain services under the Supervision and Administration Agreement, on terms agreed between PIMCO and such affiliates. The supervisory and administrative services provided by PIMCO include but are not limited to: (1) shareholder servicing functions, including preparation of shareholder reports and communications, (2) regulatory compliance, such as reports and filings with the SEC and state securities commissions, and (3) general supervision of the operations of the Funds, including coordination of the services performed by the Funds’ transfer agent, custodian, legal counsel, independent registered public accounting firm, and others. PIMCO (or an affiliate of PIMCO) also furnishes the Funds with office space facilities required for conducting the business of the Funds, and pays the compensation of those officers, employees and Trustees of the Trust affiliated with PIMCO. In addition, PIMCO, at its own expense, arranges for the provision of legal, audit, custody, transfer agency and other services for the Funds, and is responsible for the costs of registration of the Trust’s shares and the printing of Prospectuses and shareholder reports for current shareholders.

65

Supervisory and Administrative Fee Rates

PIMCO has contractually agreed to provide the foregoing services, and to bear these expenses, at the following rates for each class of each Fund (each expressed as a percentage of the Fund’s average daily net assets attributable to its classes of shares on an annual basis):

Fund	Institutional and Administrative Classes		Class A, B and C		Class D(1)		Class M		Class P		Class R
All Asset Fund	0.05	%	0.40	%	0.45	%	N/A		0.15	%	0.45	%
All Asset All Authority Fund	0.05	%	0.40	%	0.45	%	N/A		0.15	%	N/A
California Intermediate Municipal Bond Fund	0.22	%	0.30	%	0.55	%	N/A		0.32	%	N/A
California Short Duration Municipal Income Fund	0.15	%	0.30	%	0.55	%	N/A		0.25	%	N/A
CommodityRealReturn Strategy Fund®	0.25	%	0.50	%	0.75	%	N/A		0.35	%	N/A
Convertible Fund	0.25	%	N/A		N/A		N/A		0.35	%	N/A
Developing Local Markets Fund	0.40	%	0.55	%	0.80	%	N/A		0.50	%	N/A
Diversified Income Fund	0.30	%	0.45	%	0.70	%	N/A		0.40	%	N/A
EM Fundamental IndexPLUS™ TR Strategy Fund	0.40	%	N/A		N/A		N/A		0.50	%	N/A
Emerging Local Bond Fund	0.45	%	0.65	%	0.90	%	N/A		0.55	%	N/A
Emerging Markets and Infrastructure Bond Fund	0.40	%	N/A		N/A		N/A		N/A		N/A
Emerging Markets Bond Fund	0.38	%	0.55	%	0.80	%	N/A		0.48	%	N/A
Extended Duration Fund	0.25	%	N/A		N/A		N/A		0.35	%	N/A
Floating Income Fund	0.25	%	0.40	%	0.65	%	N/A		0.35	%	N/A
Foreign Bond Fund (Unhedged)	0.25	%	0.45	%	0.65	%	N/A		0.35	%	N/A
Foreign Bond Fund (U.S. Dollar-Hedged)	0.25	%	0.45	%	0.65	%	N/A		0.35	%	0.45	%
Fundamental Advantage Total Return Strategy Fund	0.25	%	0.40	%	0.65	%	N/A		0.35	%	N/A
Fundamental IndexPLUS™ Fund	0.25	%	N/A		0.65	%	N/A		0.35	%	N/A
Fundamental IndexPLUS™ TR Fund	0.25	%	0.40	%	0.65	%	N/A		0.35	%	N/A
Global Advantage Strategy Bond Fund	0.30	%	0.45	%	0.70	%	N/A		0.40	%	0.45	%
Global Bond Fund (Unhedged)	0.30	%	N/A		0.60	%	N/A		N/A		N/A
Global Bond Fund (U.S. Dollar-Hedged)	0.30	%	0.45	%	N/A		N/A		0.40	%	N/A
Global Multi-Asset Fund	0.05	%	0.40	%	0.65	%	N/A		0.15	%	0.40	%
GNMA Fund	0.25	%	0.40	%	0.65	%	N/A		0.35	%	N/A
Government Money Market Fund	0.06	%	0.21	%	0.31	%	0.06	%	0.16	%	0.06	%
High Yield Fund	0.30	%	0.40	%	0.65	%	N/A		0.40	%	0.40	%
High Yield Municipal Bond Fund	0.25	%	0.30	%	0.55	%(2)	N/A		0.35	%	N/A
Income Fund	0.20	%	0.40	%	0.50	%	N/A		0.30	%	0.40	%
International StocksPLUS® TR Strategy Fund (U.S. Dollar-Hedged)	0.30	%	0.45	%	0.70	%	N/A		0.40	%	N/A
International StocksPLUS® TR Strategy Fund (Unhedged)	0.25	%	0.40	%	0.65	%	N/A		0.35	%	N/A
Investment Grade Corporate Bond Fund	0.25	%	0.40	%	0.65	%	N/A		0.35	%	N/A
Long Duration Total Return Fund	0.25	%	N/A		N/A		N/A		0.35	%	N/A
Long-Term Credit Fund	0.25	%	N/A		N/A		N/A		0.35	%	N/A
Long-Term U.S. Government Fund	0.25	%	0.40	%	N/A		N/A		0.35	%	N/A
Low Duration Fund	0.21	%	0.35	%	0.50	%	N/A		0.31	%	0.35	%
Low Duration Fund II	0.25	%	N/A		N/A		N/A		N/A		N/A
Low Duration Fund III	0.25	%	N/A		N/A		N/A		0.35	%	N/A
Moderate Duration Fund	0.21	%	N/A		N/A		N/A		N/A		N/A
Money Market Fund	0.20	%	0.35	%	N/A		N/A		0.30	%	N/A
Mortgage-Backed Securities Fund	0.25	%	0.40	%	0.65	%	N/A		0.35	%	N/A
Municipal Bond Fund	0.24	%	0.30	%	0.55	%	N/A		0.34	%	N/A
MuniGO Fund	0.20	%	0.30	%	0.55	%	N/A		N/A		N/A
New York Municipal Bond Fund	0.22	%	0.30	%	0.55	%	N/A		0.32	%	N/A
Real Income 2019 Fund	0.20	%	0.35	%	0.60	%	N/A		0.30	%	N/A
Real Income 2029 Fund	0.20	%	0.35	%	0.60	%	N/A		0.30	%	N/A
Real Return Fund	0.20	%	0.40	%	0.60	%	N/A		0.30	%	0.40	%
Real Return Asset Fund	0.25	%	N/A		N/A		N/A		N/A		N/A

66

Fund	Institutional and Administrative Classes		Class A, B and C		Class D(1)		Class M		Class P		Class R
RealEstateRealReturn Strategy Fund	0.25	%	0.45	%	0.65	%	N/A		0.35	%	N/A
RealRetirement® 2010 Fund	0.05	%	0.40	%	0.65	%	N/A		0.15	%	0.40	%
RealRetirement®2020 Fund	0.05	%	0.40	%	0.65	%	N/A		0.15	%	0.40	%
RealRetirement® 2030 Fund	0.05	%	0.40	%	0.65	%	N/A		0.15	%	0.40	%
RealRetirement® 2040 Fund	0.05	%	0.40	%	0.65	%	N/A		0.15	%	0.40	%
RealRetirement® 2050 Fund	0.05	%	0.40	%	0.65	%	N/A		0.15	%	0.40	%
Short Duration Municipal Income Fund	0.15	%	0.30	%	0.55	%	N/A		0.25	%	N/A
Short-Term Fund	0.20	%	0.30	%	0.50	%	N/A		0.30	%	0.30	%
Small Cap StocksPLUS® TR Fund	0.25	%	0.40	%	0.65	%	N/A		0.35	%	N/A
StocksPLUS® Fund	0.25	%	0.40	%	0.65	%	N/A		0.35	%	0.40	%
StocksPLUS® Long Duration Fund	0.24	%	N/A		N/A		N/A		N/A		N/A
StocksPLUS® TR Short Strategy Fund	0.25	%	0.40	%	0.65	%	N/A		0.35	%	N/A
StocksPLUS® Total Return Fund	0.25	%	0.40	%	0.65	%	N/A		0.35	%	N/A
Tax Managed Real Return Fund	0.20	%	0.35	%	0.60	%	N/A		0.30	%	N/A
Total Return Fund	0.21	%	0.40	%	0.50	%	N/A		0.31	%	0.40	%
Total Return Fund II	0.25	%	N/A		N/A		N/A		N/A		N/A
Total Return Fund III	0.25	%	N/A		N/A		N/A		0.35	%	N/A
Treasury Money Market Fund	0.06	%	0.21	%	0.31	%	0.06	%	0.16	%	0.06	%
Unconstrained Bond Fund	0.30	%	0.45	%	0.70	%	N/A		0.40	%	0.45	%
Unconstrained Tax Managed Bond Fund	0.30	%	0.45	%	0.70	%	N/A		0.40	%	N/A

⁽¹⁾ As described below, the Supervision and Administration Agreement includes a plan adopted under Rule 12b-1 which provides for the payment of up to 0.25% of the Class D Supervisory and Administrative Fee rate as reimbursement for expenses in respect of activities that may be deemed to be primarily intended to result in the sale of Class D shares.

⁽²⁾ PIMCO has contractually agreed through July 31, 2010 to waive 0.05% of the Supervisory and Administrative Fee to 0.25%.

Except for the expenses paid by PIMCO, the Trust bears all costs of its operations. The Funds are responsible for: (i) salaries and other compensation of any of the Trust’s executive officers and employees who are not officers, directors, stockholders, or employees of PIMCO or its subsidiaries or affiliates; (ii) taxes and governmental fees; (iii) brokerage fees and commissions and other portfolio transaction expenses; (iv) costs of borrowing money, including interest expenses; (v) fees and expenses of the Trustees who are not “interested persons” of PIMCO or the Trust, and any counsel retained exclusively for their benefit (except the All Asset and All Asset All Authority Funds); (vi) extraordinary expenses, including costs of litigation and indemnification expenses; (vii) expenses, such as organizational expenses, which are capitalized in accordance with generally accepted accounting principles; and (viii) any expenses allocated or allocable to a specific class of shares (“class-specific expenses”).

Class-specific expenses include distribution and service fees payable with respect to different classes of shares and supervisory and administrative fees as described above, and may include certain other expenses as permitted by the Trust’s Seventh Amended and Restated Multi-Class Plan (the “Multi-Class Plan”) adopted pursuant to Rule 18f-3 under the 1940 Act and subject to review and approval by the Trustees.

The Supervision and Administration Agreement may be terminated by the Trustees, or by a vote of a majority of the outstanding voting securities of the Trust, Fund or Class as applicable, at any time on 60 days’ written notice. Following the expiration of the one-year period commencing with the effectiveness of the Supervision and Administration Agreement, it may be terminated by PIMCO, also on 60 days’ written notice.

The All Asset, All Asset All Authority, Global Multi-Asset and RealRetirement^® Funds indirectly pay a proportionate share of the supervisory and administrative fees paid to PIMCO by the Underlying PIMCO Funds in which they invest.

The Supervision and Administration Agreement is subject to annual approval by the Board of Trustees, including a majority of the Trustees who are not interested persons of the Trust (as that term is defined in the 1940 Act). The current

67

Supervision and Administration Agreement, dated August 11, 2008, as supplemented from time to time, was approved by the Board of Trustees, including all of the independent Trustees at a meeting held on August 11, 2008. In approving the Supervision and Administration Agreement, the Trustees determined that: (1) the Supervision and Administration Agreement is in the best interests of the Funds and their shareholders; (2) the services to be performed under the Supervision and Administration Agreement are services required for the operation of the Funds; (3) PIMCO is able to provide, or to procure, services for the Funds which are at least equal in nature and quality to services that could be provided by others; and (4) the fees to be charged pursuant to the Supervision and Administration Agreement are fair and reasonable in light of the usual and customary charges made by others for services of the same nature and quality.

Under the Supervision and Administration Agreement, the Administrator or an affiliate may pay financial service firms a portion of the Class D supervisory and administrative fees in return for the firms’ services (normally not to exceed an annual rate of 0.35% of a Fund’s average daily net assets attributable to Class D shares purchased through such firms). The Supervision and Administration Agreement includes a plan specific to Class D shares that has been adopted in conformity with the requirements set forth under Rule 12b-1 of the 1940 Act to allow for payment of up to 0.25% per annum of the Class D supervisory and administrative fees as reimbursement for expenses in respect of activities that may be deemed to be primarily intended to result in the sale of Class D shares. The principal types of activities for which such payments may be made are services in connection with the distribution and marketing of Class D shares and/or the provision of shareholder services. See “Distribution of Trust Shares—Plan for Class D Shares.”

Supervisory and Administrative Fee Payments

The supervisory and administrative fees (formerly named “administrative fee” prior to August 2008) paid by each Fund that was operational during the fiscal years ended March 31, 2009, 2008 and 2007 were as follows:

Fund	Year Ended 3/31/09		Year Ended 3/31/08		Year Ended 3/31/07
All Asset Fund	$	16,919,009	$	18,140,051	$	18,789,686
All Asset All Authority Fund		3,262,231		1,763,403		1,787,075
California Intermediate Municipal Bond Fund		323,773		336,608		368,935
California Short Duration Municipal Income Fund		147,154		30,422		3,422
CommodityRealReturn Strategy Fund®		37,003,043		42,452,304		43,010,296
Convertible Fund		1,814,447		799,500		137,850
Developing Local Markets Fund		19,475,611		18,375,828		12,468,146
Diversified Income Fund		6,737,216		8,547,331		5,813,790
EM Fundamental IndexPLUS™ TR Strategy Fund		103,104		N/A		N/A
Emerging Local Bond Fund		9,086,311		7,615,868		310,504
Emerging Markets Bond Fund		12,271,461		11,343,247		11,402,703
Extended Duration Fund		526,280		134,508		4,505
Floating Income Fund		2,831,766		10,945,158		8,690,469
Foreign Bond Fund (U.S. Dollar-Hedged)		8,328,026		7,328,552		7,316,615
Foreign Bond Fund (Unhedged)		7,628,088		7,807,770		5,663,102
Fundamental Advantage Total Return Strategy Fund		1,106,364		38,545		N/A
Fundamental IndexPLUS™ Fund		617,537		1,338,674		666,617
Fundamental IndexPLUS™ TR Fund		1,340,396		1,582,020		1,327,690
Global Advantage Strategy Bond Fund		2,526		N/A		N/A
Global Bond Fund (U.S. Dollar-Hedged)		747,933		694,515		679,451
Global Bond Fund (Unhedged)		2,903,372		3,077,016		2,818,583
Global Multi-Asset Fund		70,244		N/A		N/A
GNMA Fund		2,191,735		1,082,297		862,407
Government Money Market Fund		2,735		N/A		N/A
High Yield Fund		19,401,016		20,901,455		21,488,478
High Yield Municipal Bond Fund		544,705		409,270		33,343
Income Fund		628,256		231,262		N/A
International StocksPLUS® TR Strategy Fund (U.S. Dollar-Hedged)		1,016,111		1,727,986		1,936,755
International StocksPLUS® TR Strategy Fund (Unhedged)		147,234		166,870		45,125
Investment Grade Corporate Bond Fund		3,888,586		265,359		197,828
Long Duration Total Return Fund		3,478,739		672,622		5,026
Long-Term Credit Fund		0		N/A		N/A
Long-Term U.S. Government Fund		3,241,419		4,096,274		4,307,861

68

Fund	Year Ended 3/31/09	Year Ended 3/31/08	Year Ended 3/31/07
Low Duration Fund	23,962,597	21,938,919	23,787,439
Low Duration Fund II	738,078	748,683	894,833
Low Duration Fund III	309,199	384,732	280,883
Moderate Duration Fund	3,112,503	3,099,357	3,335,435
Money Market Fund	1,537,002	1,073,086	1,044,016
Mortgage-Backed Securities Fund	2,622,211	1,839,134	1,386,755
Municipal Bond Fund	1,402,510	1,273,271	1,239,686
New York Municipal Bond Fund	287,709	186,557	128,308
Real Return Asset Fund	9,213,411	4,297,518	6,839,834
Real Return Fund	40,144,706	35,481,740	40,724,958
RealEstateRealReturn Strategy Fund	1,725,197	584,952	773,956
RealRetirement® 2010 Fund	2,159	0	N/A
RealRetirement® 2020 Fund	2,107	0	N/A
RealRetirement® 2030 Fund	1,596	0	N/A
RealRetirement® 2040 Fund	1,423	0	N/A
RealRetirement® 2050 Fund	1,399	0	N/A
Short Duration Municipal Income Fund	590,263	590,333	711,306
Short-Term Fund	8,629,198	8,561,818	7,768,097
Small Cap StocksPLUS® TR Fund	873,262	64,288	14,372
StocksPLUS® Fund	1,403,433	2,733,744	2,921,878
StocksPLUS® Long Duration Fund	292,548	125,702	N/A
StocksPLUS® Total Return Fund	568,606	970,209	875,725
StocksPLUS® TR Short Strategy Fund	607,681	420,776	386,615
Total Return Fund	301,838,955	233,419,025	210,833,796
Total Return Fund II	6,070,771	5,445,745	5,236,768
Total Return Fund III	5,579,012	5,158,841	4,728,043
Unconstrained Bond Fund	880,759	N/A	N/A
Unconstrained Tax Managed Bond Fund	1,942	N/A	N/A

Supervisory and Administrative Fees Waived and Recouped

PIMCO has contractually agreed to reduce total annual fund operating expenses for certain Funds by waiving a portion of its supervisory and administrative fee or reimbursing such Funds, to the extent that they would exceed, due to the payment of organizational expenses and pro rata Trustees’ fees, the sum of such Fund’s advisory fee (prior to the application of any applicable advisory fee waiver), distribution and service fees, as applicable, supervisory and administrative fees (prior to the application of any applicable supervisory and administrative fee waiver) and other expenses borne by such Fund not covered by the supervisory and administrative fee as described above (other than organizational expenses and pro rata Trustees’ fees), plus 0.49 basis points. PIMCO may recoup these waivers and reimbursements for a period not exceeding three years, provided that total expenses, including such recoupment, do not exceed the annual expense limit. PIMCO also has contractually agreed for the High Yield Municipal Bond Fund’s current fiscal year to waive a portion of its supervisory and administrative fee equal to 0.15% of the average daily net assets attributable in the aggregate to the Fund’s Class A, Class C and Class D shares, which cannot be recouped. In addition, PIMCO has contractually agreed to waive the supervisory and administrative fee it receives from the CommodityRealReturn Strategy Fund^® in an amount equal to the administrative services fee paid to PIMCO by the CRRS Subsidiary, which cannot be recouped. PIMCO has also agreed to waive, first, the supervisory and administrative fee and, to the extent necessary, the advisory fee it receives from the Global Multi-Asset and RealRetirement^® Funds in an amount equal to the Underlying PIMCO Fund expenses attributable to advisory and supervisory and administrative fees at the Underlying PIMCO Fund level. With respect to the RealRetirement^® Funds, this waiver may not be terminated by PIMCO and will remain in effect for as long as PIMCO manages the RealRetirement^® Funds. In addition, PIMCO has contractually agreed to waive the supervisory and administrative fee it receives from the Global Multi-Asset Fund in an amount equal to the administrative services fee paid to PIMCO by the GMA Subsidiary, which cannot be recouped.

69

Supervisory and administrative fees waived during the fiscal years ended March 31, 2009, 2008 and 2007 were as follows:

Fund	Year Ended 3/31/09		Year Ended 3/31/08		Year Ended 3/31/07
California Short Duration Municipal Income Fund	$	0	$	0	$	37,492
CommodityRealReturn Strategy Fund®		2,581,588		1,567,859		510,269
Emerging Local Bond Fund		0		0		27,586
Extended Duration Fund		0		0		23,815
Fundamental Advantage Total Return Fund		0		26,214		N/A
Global Advantage Strategy Bond Fund		351		N/A		N/A
High Yield Municipal Bond Fund		49,112		35,496		74,267
Income Fund		0		86,499		N/A
Long Duration Total Return Fund		0		0		22,031
Money Market Fund		200,724		0		50,178
Short Duration Municipal Income Fund		0		0		97,991
Short-Term Fund		0		0		234,808
Small Cap StocksPLUS® TR Fund		0		0		69,820
StocksPLUS® Long Duration Fund		0		34,856		N/A
Unconstrained Bond Fund		129		N/A		N/A

Previously waived suprvisoiry and administrative fees recouped during the fiscal years ended March 31, 2009, 2008 and 2007 were as follows:

Fund	Year Ended 3/31/09		Year Ended 3/31/08		Year Ended 3/31/07
All Asset All Authority Fund	$	0	$	0	$	35,926
California Short Duration Municipal Income		36		629		N/A
Developing Local Markets Fund		867		6,918		7,177
Emerging Local Bond		276		2,292		N/A
Extended Duration		218		2,303		N/A
Fundamental IndexPLUSTM Fund		63		813		611
Fundamental IndexPLUSTM TR Fund		93		934		1,107
High Yield Municipal Bond		315		6,215		N/A
International StocksPLUS® TR Strategy Fund (Unhedged)		128		0		0
Long Duration Total Return		1,271		11,194		N/A
Small Cap StocksPLUS® TR Fund		48		6,224		N/A
StocksPLUS® TR Short Strategy Fund		0		0		7,181

OTHER PIMCO INFORMATION

PIMCO may from time to time develop methodologies for compiling and calculating a benchmark index. PIMCO may license or sell its intellectual property rights in such methodologies to third parties who may use such methodologies to develop a benchmark index. Such third parties may pay to PIMCO a portion of the subscription or licensing fees the third party receives in connection with such indices. PIMCO may pay out of its own resources a fee to such third parties for certain data related to such indices. A Fund may use such an index as the Fund’s primary or secondary benchmark index but would not bear any fees for such use.

PORTFOLIO MANAGERS

Other Accounts Managed

Certain of the portfolio managers who are primarily responsible for the day-to-day management of the Funds also manage other registered investment companies, other pooled investment vehicles and other accounts, as indicated below. The following tables identify, as of March 31, 2009 (except as noted below): (i) the Fund(s) managed by the specified portfolio manager; (ii) the number of other registered investment companies, pooled investment vehicles and other accounts managed by the portfolio manager; and (iii) the total assets of such companies, vehicles and accounts, and the number and total assets of such companies, vehicles and accounts with respect to which the advisory fee is based on performance. Information pertaining to accounts managed by Mr. Hu is as of July 31, 2009.

	Total Number of Accounts	Total Assets of All Accounts (in $millions)		Number of Accounts Paying a Performance Fee	Total Assets of Accounts Paying a Performance Fee (in $millions)
Arnott1
Registered Investment Companies	8	$	12,670	0		0
Other Pooled Investment Vehicles	25	$	1,473	2	$	110
Other Accounts	28	$	3,754	3	$	80

70

	Total Number of Accounts	Total Assets of All Accounts (in $millions)		Number of Accounts Paying a Performance Fee	Total Assets of Accounts Paying a Performance Fee (in $millions)
Bhansali2
Registered Investment Companies	6	$	276	0		N/A
Other Pooled Investment Vehicles	14	$	2,894	0		N/A
Other Accounts	7	$	1,893	2	$	38
Cummings3
Registered Investment Companies	20	$	5,401	0		N/A
Other Pooled Investment Vehicles	4	$	660	0		N/A
Other Accounts	51	$	3,069	0		N/A
Dialynas4
Registered Investment Companies	25	$	5,955	0		N/A
Other Pooled Investment Vehicles	16	$	7,775	0		N/A
Other Accounts	146	$	39,288	13	$	5,522
El-Erian5
Registered Investment Companies	2	$	271	0		N/A
Other Pooled Investment Vehicles	5	$	633	0		N/A
Other Accounts	128	$	23,207	3	$	210
Gomez6
Registered Investment Companies	3	$	3,513	0		N/A
Other Pooled Investment Vehicles	13	$	3,145	0		N/A
Other Accounts	12	$	3,480	0		N/A
Gross7
Registered Investment Companies	40	$	198,018	0		N/A
Other Pooled Investment Vehicles	20	$	7,763	2	$	264
Other Accounts	65	$	29,023	21	$	9,902
Hu8
Registered Investment Companies	0	$	0	0		N/A
Other Pooled Investment Vehicles	0	$	0	0		N/A
Other Accounts	0	$	0	0		N/A
Ivascyn9
Registered Investment Companies	7	$	2,835	0		N/A
Other Pooled Investment Vehicles	8	$	2,361	4	$	758
Other Accounts	11	$	34,157	0		N/A
Kiesel10
Registered Investment Companies	7	$	11,081	0		N/A
Other Pooled Investment Vehicles	16	$	7,112	2	$	499
Other Accounts	60	$	10,388	3	$	615
Mather11
Registered Investment Companies	14	$	9,387	0		N/A
Other Pooled Investment Vehicles	57	$	21,574	2	$	715
Other Accounts	74	$	14,734	14	$	3,887
McCulley12
Registered Investment Companies	14	$	14,935	0		N/A

71

	Total Number of Accounts	Total Assets of All Accounts (in $millions)		Number of Accounts Paying a Performance Fee	Total Assets of Accounts Paying a Performance Fee (in $millions)
Other Pooled Investment Vehicles	11	$	1,222	0		N/A
Other Accounts	64	$	12,521	3	$	961
Mewbourne13
Registered Investment Companies	9	$	5,469	0		N/A
Other Pooled Investment Vehicles	32	$	3,346	0		N/A
Other Accounts	102	$	18,192	16	$	3,399
Posch14
Registered Investment Companies	0	$	0	0		N/A
Other Pooled Investment Vehicles	0	$	0	0		N/A
Other Accounts	0	$	0	0		N/A
Rodosky15
Registered Investment Companies	7	$	7,228	0		N/A
Other Pooled Investment Vehicles	3	$	1,008	1	$	447
Other Accounts	75	$	22,801	6	$	2,123
Simon16
Registered Investment Companies	5	$	14,955	0		N/A
Other Pooled Investment Vehicles	7	$	2,288	1	$	378
Other Accounts	40	$	17,489	10	$	3,941
Toloui17
Registered Investment Companies	1	$	7	0		N/A
Other Pooled Investment Vehicles	3	$	576	1	$	494
Other Accounts	8	$	1,249	1	$	138
Worah18
Registered Investment Companies	23	$	36,885	0		N/A
Other Pooled Investment Vehicles	27	$	4,187	0		N/A
Other Accounts	73	$	23,703	15	$	4,456

¹ Mr. Arnott manages the All Asset Fund, which has $10,894.5 million in total assets under management, and the All Asset All Authority Fund, which has $1,465.7 million in total assets under management.

² Dr. Bhansali manages the RealRetirement^® 2010 Fund, which has $2.9 million in total assets under management, the RealRetirement^® 2020 Fund, which has $2.7 million in total assets under management, the RealRetirement^® 2030 Fund, which has $2.4 million in total assets under management, the RealRetirement^® 2040 Fund, which has $2.1 million in total assets under management, and the RealRetirement^® 2050 Fund, which has $2.0 million in total assets under management. Dr. Bhansali also co-manages the Global Multi-Asset Fund, which has $264.3 million in total assets under management.

³ Mr. Cummings manages the California Intermediate Municipal Bond Fund, which has $108.8 million in total assets under management, the California Short Duration Municipal Income Fund, which has $128.6 million in total assets under management, the High Yield Municipal Bond Fund, which has $6,392.2 million in total assets under management, the Municipal Bond Fund, which has $454.5 million in total assets under management, the New York Municipal Bond Fund, which has $130.7 million in total assets under management, and the Short Duration Municipal Income Fund, which has $194.9 million in total assets under management. Mr. Cummings also co-manages the MuniGO Fund, which had not commenced operations as of March 31, 2009. Mr. Cummings also co-manages the Tax Managed Real Return Fund, which had not commenced operations as of October 28, 2009.

⁴ Mr. Dialynas manages the International StocksPLUS^® TR Strategy Fund (U.S. Dollar-Hedged), which has $231.9 million in total assets under management, the Unconstrained Bond Fund, which has $956.2 million of total assets under management, and the Unconstrained Tax Managed Bond Fund, which has $7.7 million of total assets under management.

⁵ Dr. El-Erian co-manages the Global Multi-Asset Fund which has $264.3 million in total assets under management, and co-manages the Global Advantage Strategy Bond Fund, which has $6.9 million of total assets under management.

72

⁶ Mr. Gomez manages the Developing Local Markets Fund, which has $1,939 million in total assets under management, and the Emerging Local Bond Fund, which has $1,536.3 million in total assets under management.

⁷ Mr. Gross manages the Fundamental Advantage Total Return Strategy Fund, which has $221.8 million in total assets under management, the Fundamental IndexPLUS™ Fund, which has $62.5 million in total assets under management, the Fundamental IndexPLUS™ TR Fund, which has $553.8 million in total assets under management, the International StocksPLUS^® TR Strategy Fund (Unhedged), which has $38.8 million in total assets under management, the Low Duration Fund, which has $10,025.1 million in total assets under management, the Low Duration Fund II, which has $357 million in total assets under management, the Low Duration Fund III, which has $115 million in total assets under management, the Moderate Duration Fund, which has $1,592.1 million in total assets under management, the Total Return Fund, which has $145,002.5 million in total assets under management, the Total Return Fund II, which has $2,609.6 million in total assets under management, the Total Return Fund III, which has $2,232.8 million in total assets under management, the Small Cap StocksPLUS^® TR Fund, which has $485.9 million in total assets under management, the StocksPLUS^® Fund, which has $239.7 million in total assets under management, the StocksPLUS^® Total Return Fund, which has $130.5 million in total assets under management, the StocksPLUS^® TR Short Strategy Fund, which has $117 million in total assets under management, the EM Fundamental IndexPLUS™ TR Strategy Fund, which has $179.2 million in total assets under management, the Convertible Fund, which has $1,022.1 million in total assets under management and the High Yield Fund, which has $6,392.2 million in total assets under management.

⁸ Mr. Hu manages the Real Income 2019 and Real Income 2029 Funds, which had not commenced operations as of August 28, 2009. Mr. Hu also co-manages the Tax Managed Real Return Fund, which had not commenced operations as of October 28, 2009.

⁹ Mr. Ivascyn manages the the Income Fund, which has $164.4 million in total assets under management.

¹⁹ Mr. Kiesel manages the Investment Grade Corporate Bond Fund, which has $3,767.5 million in total assets under management, and the Long-Term Credit Fund, which had not commenced operations as of March 31, 2009.

¹¹ Mr. Mather manages the Foreign Bond Fund (Unhedged), which has $1,910.8 million in total assets under management, the Foreign Bond Fund (U.S. Dollar-Hedged), which has $2,690.1 million in total assets under management, the Global Bond Fund (Unhedged), which has $728.7 million in total assets under management, and the Global Bond Fund (U.S. Dollar-Hedged), which has $168.4 million in total assets under management.

¹² Mr. McCulley manages the Money Market Fund, which has $656.4 million in total assets under management and the Short-Term Fund, which has $4,290.4 million in total assets under management, the Government Money Market, which has $53.2 million in total assets under management. Mr. McCulley also manages the Treasury Money Market Funds, which has not commenced operations as of March 31, 2009.

¹³ Mr. Mewbourne manages the Diversified Income Fund, which has $1,934.3 million in total assets under management, and the Floating Income Fund, which has $723.2 million in total assets under management. Mr. Mewbourne also co-manages the Global Multi-Asset Fund, which has $264.3 million in total assets under management, and the Emerging Markets Bond Fund, which has $2,265.5 in total assets under management.

¹⁴ Ms. Posch manages the Emerging Markets and Infrastructure Bond Fund, which had not commenced operations as of March 31, 2009.

¹⁵ Mr. Rodosky manages the Extended Duration Fund, which has $196.1 million in total assets under management, the Long Duration Total Return Fund, which has $2,430.3 million in total assets under management, the Long-Term U.S. Government Fund, which has $974.3 million in total assets under management, and the StocksPLUS^® Long Duration Fund, which has $208.7 million in total assets under management.

¹⁶ Mr. Simon manages the GNMA Fund, which has $1,039.9 million in total assets under management, and the Mortgage-Backed Securities Fund, which has $454.5 million in total assets under management.

¹⁷ Mr. Toloui is a co-manager of the Global Advantage Strategy Bond Fund, which has $6.9 million in total assets under management.

¹⁸ Mr. Worah manages the CommodityRealReturn Strategy Fund^®, which has $7.002.2 million in total assets under management, the Real Return Fund, which has $12,031.4 million in total assets under management, the Real Return Asset Fund, which has $3,090.4 million in total assets under management, and the RealEstateRealReturn Strategy Fund, which has $171.6 million in total assets under management.

Conflicts of Interest

From time to time, potential conflicts of interest may arise between a portfolio manager’s management of the investments of a Fund, on the one hand, and the management of other accounts, on the other. The other accounts might have similar investment objectives or strategies as the Funds, track the same index a Fund tracks or otherwise hold, purchase, or sell securities that are eligible to be held, purchased or sold by the Funds. The other accounts might also have different investment objectives or strategies than the Funds.

73

Knowledge and Timing of Fund Trades. A potential conflict of interest may arise as a result of the portfolio manager’s day-to-day management of a Fund. Because of their positions with the Funds, the portfolio managers know the size, timing and possible market impact of a Fund’s trades. It is theoretically possible that the portfolio managers could use this information to the advantage of other accounts they manage and to the possible detriment of a Fund.

Investment Opportunities. A potential conflict of interest may arise as a result of the portfolio manager’s management of a number of accounts with varying investment guidelines. Often, an investment opportunity may be suitable for both a Fund and other accounts managed by the portfolio manager, but may not be available in sufficient quantities for both the Fund and the other accounts to participate fully. Similarly, there may be limited opportunity to sell an investment held by a Fund and another account. PIMCO has adopted policies and procedures reasonably designed to allocate investment opportunities on a fair and equitable basis over time.

Under PIMCO’s allocation procedures, investment opportunities are allocated among various investment strategies based on individual account investment guidelines and PIMCO’s investment outlook. PIMCO has also adopted additional procedures to complement the general trade allocation policy that are designed to address potential conflicts of interest due to the side-by-side management of the Funds and certain pooled investment vehicles, including investment opportunity allocation issues.

Performance Fees. A portfolio manager may advise certain accounts with respect to which the advisory fee is based entirely or partially on performance. Performance fee arrangements may create a conflict of interest for the portfolio manager in that the portfolio manager may have an incentive to allocate the investment opportunities that he or she believes might be the most profitable to such other accounts instead of allocating them to a Fund. PIMCO has adopted policies and procedures reasonably designed to allocate investment opportunities between the Funds and such other accounts on a fair and equitable basis over time.

All Asset and All Asset All Authority Funds. Because the All Asset and the All Asset All Authority Funds invest substantially all of their assets in the Underlying PIMCO Funds, Research Affiliates believes that the potential conflicts of interest discussed above are mitigated. However, if any PIMCO Sponsored Fund including, without limitation, the PIMCO Funds of Funds, invests in either the EM Fundamental IndexPLUS^™ TR Strategy Fund, Fundamental Advantage Total Return Strategy Fund, Fundamental IndexPLUS™ Fund or Fundamental IndexPLUS™ TR Fund, Research Affiliates will waive any fee to which it would be entitled under the RAFI^® Sub-Advisory Agreement or EM Sub-Advisory Agreement, as applicable, with respect to any assets of the PIMCO Sponsored Fund invested in such Fund. Accordingly, PIMCO and Research Affiliates believe that the potential conflicts of interest discussed above also are mitigated.

Portfolio Manager Compensation

PIMCO has adopted a “Total Compensation Plan” for its professional level employees, including its portfolio managers, that is designed to pay competitive compensation and reward performance, integrity and teamwork consistent with the firm’s mission statement. The Total Compensation Plan includes a significant incentive component that rewards high performance standards, work ethic and consistent individual and team contributions to the firm. The compensation of portfolio managers consists of a base salary, a bonus, and may include a retention bonus. Portfolio managers who are Managing Directors of PIMCO also receive compensation from PIMCO’s profits. Certain employees of PIMCO, including portfolio managers, may elect to defer compensation through PIMCO’s deferred compensation plan. PIMCO also offers its employees a non-contributory defined contribution plan through which PIMCO makes a contribution based on the employee’s compensation. PIMCO’s contribution rate increases at a specified compensation level, which is a level that would include portfolio managers.

Salary and Bonus. Base salaries are determined by considering an individual portfolio manager’s experience and expertise and may be reviewed for adjustment annually. Portfolio managers are entitled to receive bonuses, which may be significantly more than their base salary, upon attaining certain performance objectives based on predetermined measures of group or department success. These goals are specific to individual portfolio managers and are mutually agreed upon annually by each portfolio manager and his or her manager. Achievement of these goals is an important, but not exclusive, element of the bonus decision process.

In addition, the following non-exclusive list of qualitative criteria (collectively, the “Bonus Factors”) may be considered when determining the bonus for portfolio managers:

• 3-year, 2-year and 1-year dollar-weighted and account-weighted, pre-tax investment performance as judged against the applicable benchmarks for each account managed by a portfolio manager (including the Funds) and relative to applicable industry peer groups;

74

• Appropriate risk positioning that is consistent with PIMCO’s investment philosophy and the Investment Committee/CIO approach to the generation of alpha;

• Amount and nature of assets managed by the portfolio manager;

• Consistency of investment performance across portfolios of similar mandate and guidelines (reward low dispersion);

• Generation and contribution of investment ideas in the context of PIMCO’s secular and cyclical forums, portfolio strategy meetings, Investment Committee meetings, and on a day-to-day basis;

• Absence of defaults and price defaults for issues in the portfolios managed by the portfolio manager;

• Contributions to asset retention, gathering and client satisfaction;

• Contributions to mentoring, coaching and/or supervising; and

• Personal growth and skills added.

A portfolio manager’s compensation is not based directly on the performance of any Fund or any other account managed by that portfolio manager. Final bonus award amounts are determined by the PIMCO Compensation Committee.

Investment professionals, including portfolio managers, are eligible to participate in a Long Term Cash Bonus Plan (“Cash Bonus Plan”), which provides cash awards that appreciate or depreciate based upon the performance of PIMCO’s parent company, Allianz Global Investors, and PIMCO over a three-year period. The aggregate amount available for distribution to participants is based upon Allianz Global Investors’ profit growth and PIMCO’s profit growth. Participation in the Cash Bonus Plan is based upon the Bonus Factors, and the payment of benefits from the Cash Bonus Plan, is contingent upon continued employment at PIMCO.

Key employees of PIMCO, including certain Managing Directors, Executive Vice Presidents, and Senior Vice Presidents, are eligible to participate in the PIMCO Class M Unit Equity Participation Plan, a long-term equity plan. The Class M Unit Equity Participation Plan grants options on PIMCO equity that vest in years three, four and five. Upon vesting, the options will convert into PIMCO M Units, which are non-voting common equity of PIMCO. M Units pay out quarterly distributions equal to a pro-rata share of PIMCO’s net profits. There is no assured liquidity and they may remain outstanding perpetually.

Profit Sharing Plan. Instead of a bonus, portfolio managers who are Managing Directors of PIMCO receive compensation from a non-qualified profit sharing plan consisting of a portion of PIMCO’s net profits. Portfolio managers who are Managing Directors receive an amount determined by the Partner Compensation Committee, based upon an individual’s overall contribution to the firm and the Bonus Factors. Under his employment agreement, William Gross receives a fixed percentage of the profit sharing plan.

Allianz Transaction Related Compensation. In May 2000, a majority interest in the predecessor holding company of PIMCO was acquired by a subsidiary of Allianz AG (currently known as Allianz SE) (“Allianz”). In connection with the transaction, Mr. Gross received a grant of restricted stock of Allianz, the last of which vested on May 5, 2005.

Portfolio managers who are Managing Directors also have long-term employment contracts, which guarantee severance payments in the event of involuntary termination of a Managing Director’s employment with PIMCO.

Research Affiliates. Robert D. Arnott, through his family trust, is the majority owner and sole voting member of Research Affiliates. Mr. Arnott receives a fixed base salary and periodic capital distributions from Research Affiliates. Capital distributions are not fixed, rather they are dependent upon profits generated by Research Affiliates. Mr. Arnott’s compensation as manager is not dependent on the performance of the Funds. Research Affiliates also has a defined benefit plan.

75

Securities Ownership

To the best of the Trust’s knowledge, the table below shows the dollar range of shares of the Funds beneficially owned as of March 31, 2009 (except as noted below), by each portfolio manager of the Funds.

Portfolio Manager	Funds Managed by Portfolio Manager	Dollar Range of Shares Owned
Arnott	All Asset	None
	All Asset All Authority	Over $1,000,000
Bhansali	RealRetirement® 2010	None
	RealRetirement® 2020	None
	RealRetirement® 2030	None
	RealRetirement® 2040	None
	RealRetirement® 2050	None
	Global Multi-Asset	None
Cummings1	California Intermediate Municipal Bond	None
	California Short Duration Municipal Income	None
	High Yield Municipal Bond	$10,001 to $50,000
	Municipal Bond	None
	New York Municipal Bond	None
	Short Duration Municipal Income	None
Dialynas	International StocksPLUS® TR Strategy (U.S. Dollar-Hedged)	None
	Unconstrained Bond	None
	Unconstrained Tax Managed	None
El-Erian	Global Multi Asset	$100,001-$500,000
	Global Advantage Strategy Bond	None
Gomez	Developing Local Markets	$10,001-$50,000
	Emerging Local Bond	$10,001-$50,000
Gross	Total Return	Over $1,000,000
	Total Return II	None
	Total Return III	None
	StocksPLUS®	None
	Low Duration	None
	Low Duration II	None
	Low Duration III	None
	StocksPLUS® TR Short Strategy	None
	StocksPLUS® TR	None
	Fundamental IndexPLUS™	None
	Fundamental IndexPLUS™ TR	None
	Moderate Duration	None
	Small Caps StocksPLUS® TR	None
	International StocksPLUS® TR Strategy (Unhedged)	None
	Fundamental Advantage Total Return Strategy	None
	Convertible	None
	High Yield	$100,001-$500,000
	EM Fundamental IndexPLUS™ TR Strategy	None
Hu2	N/A	N/A
Ivascyn	Income	None
Kiesel	Investment Grade Corporate	None
	Long-Term Credit	None
Mather	Foreign Bond (Unhedged)	$1-$10,000
	Foreign Bond (U.S. Dollar-Hedged)	None
	Global Bond (Unhedged)	None
	Global Bond (U.S. Dollar-Hedged)	None
McCulley3	Money Market	$100,001-$500,000
	Short-Term	None
	Government Money Market	None
Mewbourne	Floating Income	$50,001-$100,000
	Diversified Income	$100,001-$500,000
	Global Multi-Asset	$500,001-$999,999
	Emerging Markets Bond	$1 - $10,000
Posch4	N/A	N/A
Rodosky	Long-Term U.S. Government	None
	Extended Duration	None
	Long Duration Total Return	None
	StocksPLUS® Long Duration	None

76

Portfolio Manager	Funds Managed by Portfolio Manager	Dollar Range of Shares Owned
Simon	Mortgage-Backed Securities	None
	GNMA	None
Toloui	Global Advantage Strategy Bond	None
Worah	CommodityRealReturn Strategy	$50,001-$100,000
	Real Return	$50,000-$100,000
	Real Return Asset	None
	RealEstateRealReturn Strategy	None

¹ Mr. Cummings also manages the MuniGO Fund, which had not commenced operations as of March 31, 2009. Mr. Cummings also co-manages the Tax Managed Real Return Fund, which had not commenced operations as of October 28, 2009.

² Mr. Hu manages the Real Income 2019 and Real Income 2029 Funds, which had not commenced operations as of August 28, 2009. Mr. Hu also co-manages the Tax Managed Real Return Fund, which had not commenced operations as of October 28, 2009.

³ Mr. McCulley also manages the Treasury Money Market Fund which had not commenced operations as of March 31, 2009.

⁴ Ms. Posch manages the Emerging Markets and Infrastructure Bond Fund which had not commenced operations as of March 31, 2009.

DISTRIBUTION OF TRUST SHARES

Distributor and Multi-Class Plan

Allianz Global Investors Distributors LLC (the “Distributor”) serves as the principal underwriter of each class of the Trust’s shares pursuant to a distribution contract (“Distribution Contract”) with the Trust which is subject to annual approval by the Board of Trustees. The Distributor is an indirect subsidiary of Allianz Global Investors. The Distributor, located at 1345 Avenue of the Americas, New York, NY 10105, is a broker-dealer registered with the SEC. The Distribution Contract is terminable with respect to a Fund or class without penalty, at any time, by the Fund or class by not more than 60 days’ nor less than 30 days’ written notice to the Distributor, or by the Distributor upon not more than 60 days’ nor less than 30 days’ written notice to the Trust. The Distributor is not obligated to sell any specific amount of Trust shares.

The Distribution Contract will continue in effect with respect to each Fund and each class of shares thereof for successive one-year periods, provided that each such continuance is specifically approved (i) by the vote of a majority of the Trustees who are not interested persons of the Trust (as defined in the 1940 Act) and who have no direct or indirect financial interest in the Distribution Contract, the Supervision and Administration Agreement or the Distribution and/or Servicing Plans described below; and (ii) by the vote of a majority of the entire Board of Trustees cast in person at a meeting called for that purpose. If the Distribution Contract is terminated (or not renewed) with respect to one or more Funds or classes thereof, it may continue in effect with respect to any class of any Fund as to which it has not been terminated (or has been renewed).

The Trust may offer up to twelve classes of shares: Class A, Class B, Class C, Class D, Class J, Class K, Class M, Class P, Class R, the Institutional Class, Administrative Class and the Adviser Class. At this time only the Class A, Class B, Class C, Class D, Class M, Class P, Class R, the Institutional Class, and the Administrative Class are offered. Class J, Class K and the Adviser Class are not currently offered.

Class A, Class B and Class C shares of the Trust are offered through firms (“participating brokers”) which are members of FINRA, which was created in July 2007 through the consolidation of NASD, Inc. and the member regulation, enforcement and arbitration functions of the New York Stock Exchange (“NYSE”) and which have dealer agreements with the Distributor, or which have agreed to act as introducing brokers for the Distributor (“introducing brokers”).

Class D shares are generally offered to clients of financial services firms, such as broker-dealers or registered investment advisors, with which the Distributor has an agreement for the use of PIMCO Funds in particular investment products, programs or accounts for which a fee may be charged.

Class M shares are generally offered primarily for direct investment by investors such as pension and profit sharing plans, employee benefit trusts, endowments, foundations, corporations, high net worth individuals and through intermediary trading platforms and portals that provide specialized sub-accounting and shareholder processing services.

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Class P shares are offered through certain asset allocation, wrap fee and other similar programs offered by broker-dealers and other intermediaries. Broker-dealers, other intermediaries, pension and profit-sharing plans, employee benefit trusts and employee benefit plan alliances also may purchase Class P shares. These entities may purchase Class P shares only in the plan or program for which the shares are being acquired will not require the Fund to pay any type of administrative payment per participant account to any third party.

Class R shares generally are available only to 401(k) plans, 457 plans, employer sponsored 403(b) plans, profit sharing and money purchase pension plans, defined benefit plans, non-qualified deferred compensation plans and other accounts whereby the plan or the plan’s financial service firm has an agreement with the Distributor or the Administrator to utilize Class R shares in certain investment products or programs (collectively, “retirement plans”). In addition, Class R shares also are generally available only to retirement plans where Class R shares are held on the books of the Funds through omnibus accounts (either at the plan level or at the level of the financial service firm). Class R shares are not available to retail or institutional non-retirement accounts, traditional and Roth IRAs (except through omnibus accounts), Coverdell Education Savings Accounts, SEPs, SAR-SEPs, SIMPLE IRAs, or individual 403(b) plans, or through the PIMCO CollegeAccess 529 Plan. Financial service firms may provide or arrange for the provision of some or all of the shareholder servicing, account maintenance and other services required by retirement plan accounts and their plan participants, for which fees or expenses may be charged in addition to those described in the Prospectus and Statement of Additional Information.

Institutional Class shares are offered primarily for direct investment by investors such as pension and profit sharing plans, employee benefit trusts, endowments, foundations, corporations and high net worth individuals. (Institutional Class shares also may be offered through certain financial intermediaries that charge their customers transaction or other fees with respect to the customer’s investment in the Funds.)

Administrative Class shares are offered primarily through employee benefit plans alliances, broker-dealers, and other intermediaries, and each Fund pays service or distribution fees to such entities for services they provide to Administrative Class shareholders.

The Trust has adopted a Multi-Class Plan pursuant to Rule 18f-3 under the 1940 Act. Under the Multi-Class Plan, shares of each class of each Fund represent an equal pro rata interest in such Fund and, generally, have identical voting, dividend, liquidation, and other rights, preferences, powers, restrictions, limitations, qualifications and terms and conditions, except that: (a) each class has a different designation; (b) each class of shares bears any class-specific expenses allocated to it; and (c) each class has exclusive voting rights on any matter submitted to shareholders that relates solely to its distribution or service arrangements, and each class has separate voting rights on any matter submitted to shareholders in which the interests of one class differ from the interests of any other class.

Each class of shares bears any class specific expenses allocated to such class, such as expenses related to the distribution and/or shareholder servicing of such class. In addition, each class may, at the Board of Trustees’ discretion, also pay a different share of other expenses, not including advisory or custodial fees or other expenses related to the management of the Trust’s assets, if these expenses are actually incurred in a different amount by that class, or if the class receives services of a different kind or to a different degree than the other classes. All other expenses are allocated to each class on the basis of the net asset value of that class in relation to the net asset value of the particular Fund. In addition, each class may have a differing sales charge structure, and differing exchange and conversion features.

Initial Sales Charge and Contingent Deferred Sales Charge

As described in the Class A, B and C Prospectuses under the caption “Investment Options (Class A, B and C Shares),” Class A shares of the Trust (except with respect to the Government Money Market, Money Market and Treasury Money Market Funds) are sold pursuant to an initial sales charge, which declines as the amount of purchase reaches certain defined levels. For the fiscal years ended March 31, 2008, March 31, 2007 and March 31, 2006, the Distributor received an aggregate of $20,561,243, $14,412,330, and $37,425,308, respectively, and retained $2,298,539, $1,756,913, and $4,890,665, respectively, in initial sales charges paid by Class A shareholders of the Trust.

Each Fund may sell its Class A shares at net asset value without an initial sales charge to certain categories of investors, including current or retired officers, trustees, directors or employees of the Trust, PIMCO or the Distributor, and certain other affiliates of PIMCO or the Distributor, a parent, brother or sister of any such officer, trustee, director or employee or a spouse or child of any of the foregoing persons. The Trust believes that this arrangement encourages affiliated persons of the Funds to invest in the Funds, which further aligns the interest of the Funds and those persons affiliated with them.

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As described in the Class A, B and C Prospectuses under the caption “Investment Options (Class A, B and C Shares),” a contingent deferred sales charge is imposed upon certain redemptions of the Class A, Class B and Class C shares. No contingent deferred sales charge is currently imposed upon redemptions of Class D, Class M, Class P, Class R, Institutional Class, or Administrative Class shares. Because contingent deferred sales charges are calculated on a fund-by-fund basis, shareholders should consider whether to exchange shares of one fund for shares of another fund prior to redeeming an investment if such an exchange would reduce the contingent deferred sales charge applicable to such redemptions.

During the fiscal years ended March 31, 2009, March 31, 2008 and March 31, 2007, the Distributor received the following aggregate amounts in contingent deferred sales charges on Class A shares, Class B shares and Class C shares of the Funds:

	Year Ended 3/31/09		Year Ended 3/31/08		Year Ended 3/31/07
Class A	$	1,186,600	$	714,830	$	1,113,649
Class B		3,519,743		6,962,016		13,953,591
Class C		3,484,599		1,594,134		3,286,601

In certain cases described in the Class A, B and C Prospectuses, the contingent deferred sales charge is waived on redemptions of Class A, Class B or Class C shares for certain classes of individuals or entities on account of (i) the fact that the Trust’s sales-related expenses are lower for certain of such classes than for classes for which the contingent deferred sales charge is not waived, (ii) waiver of the contingent deferred sales charge with respect to certain of such classes is consistent with certain Internal Revenue Code policies concerning the favored tax treatment of accumulations, and (iii) with respect to certain of such classes, considerations of fairness, and competitive and administrative factors.

Distribution and Servicing Plans for Class A, Class B, Class C and Class R Shares

As stated in the text of the Class A, B and C Prospectuses under the caption “Management of the Trust—Distribution and Servicing (12b-1) Plans,” and in the Class R Prospectuses under the caption “How to Buy and Sell Shares,” Class A, Class B, Class C and Class R shares of the Trust are continuously offered through participating brokers which are members of the FINRA and which have dealer agreements with the Distributor, or which have agreed to act as introducing brokers.

Pursuant to separate Distribution and Servicing Plans for Class A, Class B and Class C shares (the “Retail Plans”), as well as Class R shares, as described in the Class A, B and C Prospectuses and the Class R Prospectuses, in connection with the distribution of Class B, Class C and Class R shares of the Trust, the Distributor receives certain distribution fees from the Trust, and in connection with personal services rendered to Class A, Class B, Class C and Class R shareholders of the Trust and the maintenance of shareholder accounts, the Distributor receives certain servicing fees from the Trust. Subject to the percentage limitations on these distribution and servicing fees set forth below, the distribution and servicing fees may be paid with respect to services rendered and expenses borne in the past with respect to Class A, Class B, Class C and Class R shares as to which no distribution and servicing fees were paid on account of such limitations. As described in the Class A, B and C Prospectuses and the Class R Prospectuses, the Distributor pays (i) all or a portion of the distribution fees it receives from the Trust to participating and introducing brokers, and (ii) all or a portion of the servicing fees it receives from the Trust to participating and introducing brokers, certain banks and other financial intermediaries.

The Distributor makes distribution and servicing payments to participating brokers and servicing payments to certain banks and other financial intermediaries (including retirement plans, their service providers and their sponsors) in connection with the sale of Class B, Class C and Class R shares and servicing payments to participating brokers, certain banks and other financial intermediaries in connection with the sale of Class A shares. In the case of Class A shares, these parties are also compensated based on the amount of the front-end sales charge reallowed by the Distributor, except in cases where Class A shares are sold without a front-end sales charge (although the Distributor may pay brokers additional compensation in connection with sales of Class A shares without a sales charge). In the case of Class B shares, participating brokers and other financial intermediaries are compensated by an advance of a sales commission by the Distributor. In the case of Class C shares, part or all of the first year’s distribution and servicing fee is generally paid at the time of sale. Pursuant to a Distribution Contract with the Trust, with respect to each Fund’s Class A, Class B, Class C and Class R shares, the Distributor bears various other promotional and sales related expenses, including the cost of printing and mailing Prospectuses to persons other than current shareholders.

The Retail Plans were adopted pursuant to Rule 12b-l under the 1940 Act and are of the type known as “compensation” plans. This means that, although the Trustees of the Trust are expected to take into account the expenses of the Distributor and its predecessors in their periodic review of the Retail Plans, the fees are payable to compensate the Distributor for services rendered even if the amount paid exceeds the Distributor’s expenses.

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The distribution fee applicable to Class B, Class C and Class R shares may be spent by the Distributor on any activities or expenses primarily intended to result in the sale of Class B, Class C or Class R shares, respectively, including compensation to, and expenses (including overhead and telephone expenses) of, financial consultants or other employees of the Distributor or of participating or introducing brokers who engage in distribution of Class B, Class C or Class R shares, printing of Prospectuses and reports for other than existing Class B, Class C or Class R shareholders, advertising, and preparation, printing and distribution of sales literature. The servicing fee, applicable to Class A, Class B, Class C and Class R shares of the Trust, may be spent by the Distributor on personal services rendered to shareholders of the Trust and the maintenance of shareholder accounts, including compensation to, and expenses (including telephone and overhead expenses) of, financial consultants or other employees of participating or introducing brokers, certain banks and other financial intermediaries (including retirement plans, their service providers and their sponsors who provide services to plan participants) who aid in the processing of purchase or redemption requests or the processing of dividend payments, who provide information periodically to shareholders showing their positions in a Fund’s shares, who forward communications from the Trust to shareholders, who render ongoing advice concerning the suitability of particular investment opportunities offered by the Trust in light of the shareholders’ needs, who respond to inquiries from shareholders relating to such services, or who train personnel in the provision of such services. Distribution and servicing fees also may be spent on interest relating to unreimbursed distribution or servicing expenses from prior years.

Many of the Distributor’s sales and servicing efforts involve the Trust as a whole, so that fees paid by Class A, Class B, Class C or Class R shares of any Fund may indirectly support sales and servicing efforts relating to the other Funds’ shares of the same class and vice versa. In reporting its expenses to the Trustees, the Distributor itemizes expenses that relate to the distribution and/or servicing of a single Fund’s shares, and allocates other expenses among the Funds based on their relative net assets. Expenses allocated to each Fund are further allocated among its classes of shares annually based on the relative sales of each class, except for any expenses that relate only to the sale or servicing of a single class. The Distributor may make payments to brokers (and with respect to servicing fees only, to certain banks and other financial intermediaries) of up to the following percentages annually of the average daily net assets attributable to shares in the accounts of their customers or clients:

	Servicing Fee(1)		Distribution Fee(1)
Class A
Government Money Market, Money Market and Treasury Money Market Funds	0.10	%	None
All other Funds	0.25	%	None
Class B(2)
All Funds	0.25	%	0.75	%
Class C - Shares purchased on or after 7/1/91(3)
Government Money Market, Money Market and Treasury Money Market Funds	0.10	%	None
California Intermediate Municipal Bond, California Short Duration Municipal Income, Floating Income, New York Municipal Bond, Short Duration Municipal Income and Short-Term Funds	0.25	%	0.30	%
Low Duration, Municipal Bond, MuniGO, Real Income 2019, Real Income 2029, Real Return, StocksPLUS® and Tax Managed Real Return Funds	0.25	%	0.50	%
All other Funds	0.25	%	0.75	%
Class C - Shares purchased prior to 7/1/91
Money Market Fund	0.10	%	None
All other Funds	0.25	%	None
Class R
All Funds	0.25	%	0.25	%

⁽¹⁾ Applies, in part, to Class A, Class B and Class C shares of the Trust issued to former shareholders of PIMCO Advisors Funds in connection with the reorganizations/mergers of series of PIMCO Advisors Funds as/with Funds of the Trust in a transaction which took place on January 17, 1997.

⁽²⁾ Payable only with respect to shares outstanding for one year or more.

⁽³⁾ Payable only with respect to shares outstanding for one year or more except in the case of shares for which no payment is made to the party at the time of sale.

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Some or all of the sales charges, distribution fees and servicing fees described above are paid or “reallowed” to the broker, dealer or financial adviser (collectively, “financial firms”) through which you purchase your shares. A financial firm is one that, in exchange for compensation, sells, among other products, mutual fund shares (including shares of the Trust) or provides services for mutual fund shareholders. Financial firms include brokers, dealers, insurance companies and banks. The Distributor, PIMCO and their affiliates may from time to time pay additional cash bonuses or provide other incentives or make other payments to financial firms in connection with the sale or servicing of Class A, Class B, Class C and Class R shares of the Funds and for other services such as, without limitation, providing the Funds with “shelf space” or a higher profile for the financial firms’ financial consultants and their customers, placing the Funds on the financial firms’ preferred or recommended fund list or otherwise identifying the Funds as being part of a complex to be accorded a higher degree of marketing support than complexes not making such payments, granting the Distributor access to the financial firms’ financial consultants (including through the firms’ intranet websites) in order to promote the Funds, promotions in communications with financial firms’ customers such as in the firms’ internet websites or in customer newsletters, providing assistance in training and educating the financial firms’ personnel, and furnishing marketing support and other specified services. The actual services provided, and the payments made for such services, vary from firm to firm. These payments may be significant to the financial firms and also may take the form of sponsorship of seminars or informational meetings or payment for attendance by persons associated with the financial firms at seminars or informational meetings.

A number of factors will be considered in determining the amount of these additional payments to financial firms. On some occasions, such payments may be conditioned upon levels of sales, including the sale of a specified minimum dollar amount of the shares of a Fund and/or all of the Funds and/or other funds sponsored by the Distributor, PIMCO and their affiliates together or a particular class of shares, during a specified period of time. The Distributor, PIMCO and their affiliates also may make payments to one or more participating financial firms based upon factors such as the amount of assets a financial firm’s clients have invested in the Funds and the quality of the financial firm’s relationship with the Distributor, PIMCO and their affiliates.

The additional payments described above are made from the Distributor’s or PIMCO’s (or their affiliates’) own assets pursuant to agreements with brokers and do not change the price paid by investors for the purchase of a Fund’s shares or the amount a Fund will receive as proceeds from such sales. These payments may be made, to financial firms selected by the Distributor, generally to the financial firms that have sold significant amounts of shares of the Funds. The level of payments made to a financial firm in any future year will vary and generally will not exceed the sum of (a) 0.10% of such year’s fund sales by that financial firm and (b) 0.06% of the assets attributable to that financial firm invested in equity funds sponsored by the Distributor and 0.03% of the assets invested in fixed-income funds sponsored by the Distributor. In certain cases, the payments described in the preceding sentence are subject to certain minimum payment levels. In lieu of payments pursuant to the foregoing formulae, the Distributor, PIMCO or their affiliates may make payments of an agreed upon amount which will not exceed the amount that would have been payable pursuant to the formulae.

The additional payments and incentives described above may be made to brokers or third party administrators in addition to amounts paid to participating financial firms for providing shareholder services to shareholders holding Fund shares in nominee or street name, including without limitation, the following services: processing and mailing trade confirmations, monthly statements, prospectuses, annual reports, semi-annual reports, and shareholder notices and other SEC-required communications; capturing and processing tax data; issuing and mailing dividend checks to shareholders who have selected cash distributions; preparing record date shareholder lists for proxy solicitations; collecting and posting distributions to shareholder accounts; and establishing and maintaining systematic withdrawals and automated investment plans and shareholder account registrations. The actual services provided, and the payments made for such services, vary from firm to firm. For these services, the Distributor or its affiliates, may pay (i) annual per account charges that in the aggregate generally range from $0 to $6 per account, and in some cases up to $12 per account, for networking fees for NSCC-cleared accounts and from $14 to $19 for services to omnibus accounts, or (ii) an annual fee of up to 0.25% and, in some cases, up to 0.35% of the value of the assets in the relevant accounts. These payments may be material to financial intermediaries relative to other compensation paid by a Fund and/or PIMCO, the Distributor and their affiliates and may be in addition to any (i) distribution and/or servicing (12b-1) fees and (ii) the revenue sharing or “shelf space” fees disclosed elsewhere herein paid to such financial intermediaries. The payments described above may differ depending on the Fund and may vary from amounts paid to the Trust’s transfer agent for providing similar services to other accounts. PIMCO and the Distributor do not audit the financial intermediaries to determine whether such intermediary is providing the services for which they are receiving such payments.

If investment advisers, distributors or affiliates of mutual funds pay bonuses and incentives in differing amounts, financial firms and their financial consultants may have financial incentives for recommending a particular mutual fund over other mutual funds. In addition, depending on the arrangements in place at any particular time, a financial firm and its

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financial consultants also may have a financial incentive for recommending a particular share class over other share classes. Because financial firms and plan recordkeepers may be paid varying amounts per class for sub-transfer agency and related recordkeeping services, the service requirements of which also may vary by class, this may create an additional incentive for financial firms and their financial advisors to favor one fund complex over another or one fund class over another. Also, you should review carefully any disclosure by the financial firm as to its compensation.

As of the date of the Statement of Additional Information, the Distributor and PIMCO anticipate that the firms that will receive the additional payments described above for distribution services and/or educational support include:

AG Edwards & Sons, Inc.	ML Stern & Co., LLC
Advantage Capital Corp.	Morgan Stanley & Co.
AIG Financial Advisors, Inc.	Mutual Service Corporation
American General Securities Inc.	NatCity Investments
American Portfolios Financial Services Inc.	National Planning Holdings, Inc.
Ameriprise Financial Services, Inc.	Northwestern Mutual Investment Services LLC
Associated Financial Group, Inc.	Oppenheimer & Co., Inc.
AXA Advisors, LLC	Piper Jaffray
Banc of America Investment Services, Inc.	Questar Capital
Banc One Securities Investment	Raymond James & Associates Inc.
CCO Investment Services	Raymond James Financial Services, Inc.
Chase Investment Services, Corp.	RBC Capital Markets Corp.
Citigroup Global Markets Inc.	RBC Dain Rauscher, Inc.
Comerica Securities	Robert W. Baird
Commonwealth Financial Network	Royal Alliance Associates Inc.
E*TRADE	Securities America, Inc.
First Allied Securities, Inc.	Sterne Agee
FSC Securities Corp.	Summit Brokerage Services Inc.
Janney, Montgomery, Scott	SunTrust Investment Services
Jefferson Pilot Securities Corporation	UBS Financial Services, Inc.
Legg Mason Wood Walker, Inc.	United Planners’ Financial Services of America
Linsco/Private Ledger Corporation	Wachovia Securities, Inc.
McDonald Investments	Waterstone Financial Group
Merrill Lynch, Pierce, Fenner & Smith Inc.	WM Financial Services

The Distributor expects that additional firms may be added to this list from time to time. Wholesale representatives of the Distributor, PIMCO and their affiliates visit brokerage firms on a regular basis to educate financial advisors about the Funds and to encourage the sale of Fund shares to their clients. The costs and expenses associated with these efforts may include travel, lodging, sponsorship at educational seminars and conferences, entertainment and meals. Although a Fund may use financial firms that sell Fund shares to make transactions for the Fund’s portfolio, the Fund will not consider the sale of Fund shares as a factor when choosing financial firms to make those transactions.

If in any year the Distributor’s expenses incurred in connection with the distribution of Class B, Class C and Class R shares and, for Class A, Class B, Class C and Class R shares, in connection with the servicing of shareholders and the maintenance of shareholder accounts, exceed the distribution and/or servicing fees paid by the Trust, the Distributor would recover such excess only if the Retail Plan with respect to such class of shares continues to be in effect in some later year when the distribution and/or servicing fees exceed the Distributor’s expenses. The Trust is not obligated to repay any unreimbursed expenses that may exist at such time, if any, as the relevant Retail Plan terminates.

Each Retail Plan may be terminated with respect to any Fund to which the Plan relates by vote of a majority of the Trustees who are not interested persons of the Trust (as defined in the 1940 Act) and who have no direct or indirect financial interest in the operation of the Plan or the Distribution Contract (“Disinterested Trustees”) or by vote of a majority of the outstanding voting securities of the relevant class of that Fund. Any change in any Retail Plan that would materially increase the cost to the class of shares of any Fund to which the Plan relates requires approval by the affected class of shareholders of that Fund. The Trustees review quarterly written reports of such costs and the purposes for which such costs have been incurred. Each Retail Plan may be amended by vote of the Disinterested Trustees cast in person at a meeting called for the purpose. As long as the Retail Plans are in effect, selection and nomination of those Trustees who are not interested persons of the Trust shall be committed to the discretion of such Disinterested Trustees.

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The Retail Plans will continue in effect with respect to each Fund and each class of shares thereof for successive one-year periods, provided that each such continuance is specifically approved (i) by the vote of a majority of the Disinterested Trustees and (ii) by the vote of a majority of the entire Board of Trustees cast in person at a meeting called for that purpose.

The Retail Plans went into effect for the Trust in January 1997 (December 2002 for Class R shares). If a Retail Plan is terminated (or not renewed) with respect to one or more Funds, it may continue in effect with respect to any class of any Fund as to which it has not been terminated (or has been renewed).

The Trustees believe that the Retail Plans will provide benefits to the Trust. The Trustees believe that the Retail Plans will result in greater sales and/or fewer redemptions of Trust shares, although it is impossible to know for certain the level of sales and redemptions of Trust shares that would occur in the absence of the Retail Plans or under alternative distribution schemes. Although the Funds’ expenses are essentially fixed, the Trustees believe that the effect of the Retail Plans on sales and/or redemptions may benefit the Trust by reducing Fund expense ratios and/or by affording greater flexibility to portfolio managers. From time to time, expenses of the Distributor incurred in connection with the sale of Class B, Class C and Class R shares of the Funds, and in connection with the servicing of Class B, Class C and Class R shareholders of the Funds and the maintenance of shareholder accounts, may exceed the distribution and servicing fees collected by the Distributor. The Trustees consider such unreimbursed amounts, among other factors, in determining whether to cause the Funds to continue payments of distribution and servicing fees in the future with respect to Class B, Class C and Class R shares.

As compensation for services rendered and borne by the Distributor in connection with personal services rendered to Class R shareholders of the Trust and the maintenance of Class R shareholder accounts (including in each case the accounts of plan participants where shares are held by a retirement plan or its financial service firm through an omnibus account), the Trust pays the Distributor servicing fees up to the current rate of 0.25% and distribution fees up to the current rate of 0.25% (each calculated as a percentage of each Fund’s average daily net assets attributable to Class R shares).

Payments Pursuant to Class A Plan

For the fiscal years ended March 31, 2009, March 31, 2008 and March 31, 2007, the Trust paid the Distributor an aggregate of $67,049,211, $56,476,658 and $57,166,641, respectively, pursuant to the Distribution and Servicing Plan for Class A shares, of which the indicated amounts were attributable to the following operational Funds:

Fund	Year Ended 3/31/09		Year Ended 3/31/08		Year Ended 3/31/07
All Asset Fund	$	3,451,469	$	3,737,117	$	3,947,652
All Asset All Authority Fund		1,242,887		629,429		629,671
California Intermediate Municipal Bond Fund		94,862		80,545		101,432
California Short Duration Municipal Income Fund		49,220		12,640		541
CommodityRealReturn Strategy Fund®		4,367,709		5,231,378		5,443,476
Developing Local Markets Fund		838,557		507,347		250,899
Diversified Income Fund		235,367		293,514		241,968
Emerging Local Bond Fund		41,114		5,151		N/A
Emerging Markets Bond Fund		656,110		750,535		817,011
Floating Income Fund		233,920		666,423		718,696
Foreign Bond Fund (U.S. Dollar-Hedged)		605,768		606,342		684,514
Foreign Bond Fund (Unhedged)		581,674		672,265		637,899
Fundamental Advantage Total Return Strategy Fund		914		N/A		N/A
Fundamental IndexPLUS™ TR Fund		49,935		80,932		64,914
Global Advantage Strategy Bond Fund		94		N/A		N/A
Global Bond Fund (U.S. Dollar-Hedged)		48,661		42,982		49,418
Global Multi-Asset Fund		15,251		0		0
GNMA Fund		498,899		224,531		151,413
High Yield Fund		1,722,286		1,907,451		2,126,225
High Yield Municipal Bond Fund		153,431		93,746		10,406
Income Fund		15,311		2,139		N/A

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Fund	Year Ended 3/31/09	Year Ended 3/31/08	Year Ended 3/31/07
International StocksPLUS® TR Strategy Fund (U.S. Dollar-Hedged)	20,668	43,125	45,236
International StocksPLUS® TR Strategy Fund (Unhedged)	2,432	2,224	28
Investment Grade Corporate Bond Fund	223,685	74,606	52,431
Long-Term U.S. Government Fund	525,145	501,645	385,848
Low Duration Fund	4,161,014	3,158,482	3,222,487
Money Market Fund	146,941	86,249	75,862
Mortgage-Backed Securities Fund	164,624	117,045	92,646
Municipal Bond Fund	205,371	175,516	175,201
New York Municipal Bond Fund	71,256	53,500	43,865
Real Return Fund	7,844,482	6,817,246	7,958,799
RealEstateRealReturn Strategy Fund	46,790	67,881	96,327
RealRetirement® 2010 Fund	356	N/A	N/A
RealRetirement® 2020 Fund	352	N/A	N/A
RealRetirement® 2030 Fund	56	N/A	N/A
RealRetirement® 2040 Fund	45	N/A	N/A
RealRetirement® 2050 Fund	36	N/A	N/A
Short Duration Municipal Income Fund	252,758	183,669	204,569
Short-Term Fund	707,471	550,120	592,892
Small Cap StocksPLUS® TR Fund	1,583	291	104
StocksPLUS® Fund	184,763	303,302	338,319
StocksPLUS® Total Return Fund	46,928	86,531	99,587
StocksPLUS® TR Short Strategy Fund	96,325	15,254	582
Total Return Fund	37,317,147	28,695,505	27,905,723
Unconstrained Bond Fund	125,355	N/A	N/A
Unconstrained Tax Managed Bond Fund	192	N/A	N/A

During the fiscal year ended March 31, 2009, the amounts collected pursuant to the Distribution and Servicing Plan for Class A shares were used as follows: sales commissions and other compensation to sales personnel, $56,320,297; preparing, printing and distributing sales material and advertising (including preparing, printing and distributing Prospectuses to non-shareholders), and other expenses (including data processing, legal and operations), $10,727,675.

These totals, if allocated among (i) sales commissions and compensation and (ii) sales materials and other expenses for each operational Fund, were as follows:

Fund	Sales Commissions and Compensation		Sales Material and Other Expenses		Total
All Asset All Authority Fund	$	1,066,958	$	203,230	$	1,270,189
All Asset Fund		1,967,661		374,793		2,342,454
California Intermediate Municipal Bond Fund		78,038		14,864		92,902
California Short Duration Municipal Income Fund		60,757		11,573		72,329
CommodityRealReturn Strategy Fund®		1,977,191		376,608		2,353,799
Developing Local Markets Fund		310,549		59,152		369,701
Diversified Income Fund		144,485		27,521		172,006
Emerging Local Bond Fund		23,674		4,509		28,184
Emerging Markets Bond Fund		412,072		78,490		490,562
Floating Income Fund		103,264		19,669		122,933
Foreign Bond Fund (U.S. Dollar-Hedged)		407,467		77,613		485,080
Foreign Bond Fund (Unhedged)		320,178		60,986		381,164
Fundamental Advantage Total Return Strategy Fund		1,497		285		1,782
Fundamental IndexPLUS™ TR Fund		15,499		2,952		18,452
Global Advantage Strategy Bond Fund		2,839		541		3,380
Global Bond Fund (U.S. Dollar-Hedged)		33,212		6,326		39,538
Global Multi-Asset Fund		80,618		15,356		95,973
GNMA Fund		671,664		127,936		799,600

84

Fund	Sales Commissions and Compensation	Sales Material and Other Expenses	Total
High Yield Fund	1,217,195	231,847	1,449,041
High Yield Municipal Bond Fund	111,378	21,215	132,593
Income Fund	30,367	5,784	36,151
International StocksPLUS® TR Strategy Fund (U.S. Dollar-Hedged)	10,173	1,938	12,110
International StocksPLUS® TR Strategy Fund (Unhedged)	1,058	201	1,259
Investment Grade Corporate Bond Fund	729,186	138,893	868,079
Long-Term U.S. Government Fund	393,321	74,918	468,240
Low Duration Fund	3,190,269	607,670	3,797,939
Money Market Fund	391,765	74,622	466,386
Mortgage-Backed Securities Fund	169,411	32,269	201,680
Municipal Bond Fund	172,190	32,798	204,988
New York Municipal Bond Fund	56,709	10,802	67,511
Real Return Fund	6,098,930	1,161,701	7,260,631
RealEstateRealReturn Strategy Fund	13,505	2,572	16,078
RealRetirement® 2010 Fund	512	98	610
RealRetirement® 2020 Fund	410	78	488
RealRetirement® 2030 Fund	125	24	149
RealRetirement® 2040 Fund	59	11	71
RealRetirement® 2050 Fund	39	8	47
Short Duration Municipal Income Fund	173,465	33,041	206,506
Short-Term Fund	739,040	140,770	879,810
Small Cap StocksPLUS® TR Fund	1,613	307	1,920
StocksPLUS® Fund	104,576	19,919	124,495
StocksPLUS® Total Return Fund	23,606	4,496	28,103
StocksPLUS® TR Short Strategy Fund	84,028	16,005	100,033
Total Return Fund	34,541,916	6,579,412	41,121,328
Unconstrained Bond Fund	385,117	73,356	458,473
Unconstrained Tax Managed Bond Fund	2,711	516	3,227

Payments Pursuant to Class B Plan

For the fiscal years ended March 31, 2009, March 31, 2008 and March 31, 2007, the Trust paid the Distributor an aggregate of $24,580,016, $32,129,755, and $39,940,224, respectively, pursuant to the Distribution and Servicing Plan for Class B shares, of which the indicated amounts were attributable to the following operational Funds:

Fund	Year Ended 3/31/09		Year Ended 3/31/08		Year Ended 3/31/07
All Asset Fund	$	1,902,871	$	2,518,291	$	2,899,273
CommodityRealReturn Strategy Fund®		1,663,781		2,207,623		2,694,467
Diversified Income Fund		321,622		499,433		346,317
Emerging Markets Bond Fund		485,634		656,655		751,459
Foreign Bond Fund (U.S. Dollar-Hedged)		157,690		231,125		339,066
Global Bond Fund (U.S. Dollar-Hedged)		52,664		60,581		72,636
GNMA Fund		315,776		300,221		335,678
High Yield Fund		1,985,219		3,452,101		4,466,132
International StocksPLUS® TR Strategy Fund (U.S. Dollar-Hedged)		55,825		136,844		138,722
Long-Term U.S. Government Fund		277,955		333,907		402,302
Low Duration Fund		1,313,491		1,827,692		2,540,411
Money Market Fund		629,939		505,252		501,779
Mortgage-Backed Securities Fund		127,391		162,450		146,023
Municipal Bond Fund		186,500		269,175		321,909
Real Return Fund		4,881,098		6,541,597		8,718,513
RealEstateRealReturn Strategy Fund		51,180		95,951		129,627
Short-Term Fund		84,158		117,887		157,422
StocksPLUS® Fund		137,267		299,712		443,935
StocksPLUS® Total Return Fund		110,613		198,141		190,772
Total Return Fund		9,839,341		11,715,117		14,343,781

85

During the fiscal year ended March 31, 2009, the amounts collected pursuant to the Distribution and Servicing Plan for Class B shares were used as follows: sales commissions and other compensation to sales personnel, $20,647,213; preparing, printing and distributing sales material and advertising (including preparing, printing and distributing Prospectuses to non-shareholders), and other expenses (including data processing, legal and operations), $3,932,802.

These totals, if allocated among (i) sales commissions and compensation and (ii) sales materials and other expenses for each operational Fund, were as follows:

Fund	Sales Commissions and Compensation		Sales Material and Other Expenses		Total
All Asset Fund	$	1,373,301	$	261,581	$	1,634,882
CommodityRealReturn Strategy Fund®		839,530		159,910		999,440
Diversified Income Fund		232,896		44,361		277,257
Emerging Markets Bond Fund		370,599		70,590		441,189
Foreign Bond Fund (U.S. Dollar-Hedged)		123,183		23,463		146,646
Global Bond Fund (U.S. Dollar-Hedged)		43,415		8,270		51,685
GNMA Fund		390,544		74,389		464,933
High Yield Fund		1,360,368		259,118		1,619,486
International StocksPLUS® TR Strategy Fund (U.S. Dollar-Hedged)		26,969		5,137		32,106
Long-Term U.S. Government Fund		268,187		51,083		319,270
Low Duration Fund		1,051,293		200,246		1,251,539
Money Market Fund		724,018		137,908		861,926
Mortgage-Backed Securities Fund		105,174		20,033		125,207
Municipal Bond Fund		136,752		26,048		162,800
RealEstateRealReturn Strategy Fund		19,237		3,664		22,901
Real Return Fund		3,786,143		721,170		4,507,313
Short-Term Fund		83,544		15,913		99,458
StocksPLUS® Fund		69,534		13,245		82,779
StocksPLUS® Total Return Fund		56,018		10,670		66,688
Total Return Fund		9,586,508		1,826,001		11,412,510

Payments Pursuant to Class C Plan

For the fiscal years ended March 31, 2009, March 31, 2008 and March 31, 2007, the Trust paid the Distributor an aggregate of $83,280,921, $76,455,240, and $86,461,236, respectively, pursuant to the Distribution and Servicing Plan for Class C shares, of which the indicated amounts were attributable to the following operational Funds:

Fund	Year Ended 3/31/09		Year Ended 3/31/08		Year Ended 3/31/07
All Asset Fund	$	10,854,734	$	12,226,479	$	14,360,354
All Asset All Authority Fund		2,190,212		1,341,965		1,424,325
CommodityRealReturn Strategy Fund®		7,962,602		10,027,919		12,773,802
Developing Local Markets Fund		1,261,018		805,729		311,973
Diversified Income Fund		792,107		1,161,232		1,044,838
Emerging Local Bond Fund		49,797		12,825		N/A
Emerging Markets Bond Fund		928,429		1,249,074		1,540,098
Floating Income Fund		259,466		594,386		564,767
Foreign Bond Fund (U.S. Dollar-Hedged)		485,503		564,651		769,531
Foreign Bond Fund (Unhedged)		789,084		916,138		932,646
Fundamental Advantage Total Return Strategy Fund		1,377		N/A		N/A
Fundamental IndexPLUS™ TR Fund		67,540		133,463		85,540

86

Fund	Year Ended 3/31/09	Year Ended 3/31/08	Year Ended 3/31/07
Global Advantage Strategy Bond Fund	399	N/A	N/A
Global Bond Fund (U.S. Dollar-Hedged)	152,450	151,148	168,021
Global Multi-Asset Fund	24,798	N/A	N/A
GNMA Fund	674,745	317,587	329,041
High Yield Fund	3,914,125	5,710,350	6,800,097
High Yield Municipal Bond Fund	238,263	109,408	2,119
Income Fund	35,042	6,084	0
International StocksPLUS® TR Strategy Fund (U.S. Dollar-Hedged)	50,636	123,208	128,633
International StocksPLUS® TR Strategy Fund (Unhedged)	1,982	3,423	157
Investment Grade Corporate Bond	262,197	75,054	65,001
Long-Term U.S. Government Fund	551,175	428,349	379,480
Low Duration Fund	2,788,586	2,869,780	3,755,246
Money Market Fund	98,806	61,673	63,714
Mortgage-Backed Securities Fund	301,357	277,678	248,228
Municipal Bond Fund	410,445	474,908	499,124
Real Return Fund	11,780,115	10,363,003	13,768,970
RealEstateRealReturn Strategy Fund	105,515	174,871	251,854
RealRetirement® 2010 Fund	339	N/A	N/A0
Short Duration Municipal Income Fund	107,922	120,635	151,877
Short-Term Fund	575,076	594,837	728,915
Small Cap StockPLUS® TR Fund	5,711	3,758	519
StocksPLUS® Fund	399,718	681,665	753,328
StocksPLUS® Total Return Fund	122,322	222,212	244,924
StocksPLUS® TR Short Strategy Fund	56,051	7,396	195
Total Return Fund	34,898,902	24,644,351	24,313,919
Unconstrained Bond Fund	82,293	N/A	N/A
Unconstrained Tax Managed Bond Fund	81	N/A	N/A

During the fiscal year ended March 31, 2009, the amounts collected pursuant to the Distribution and Servicing Plan for Class C shares were used as follows: sales commissions and other compensation to sales personnel, $69,955,739; preparing, printing and distributing sales material and advertising (including preparing, printing and distributing Prospectuses to non-shareholders), and other expenses (including data processing, legal and operations), $13,324,902.

These totals, if allocated among (i) sales commissions and compensation and (ii) sales materials and other expenses for each operational Fund, were as follows:

Fund	Sales Commissions and Compensation		Sales Material and Other Expenses		Total
All Asset Fund	$	5,960,781	$	1,135,387	$	7,096,168
All Asset All Authority Fund		1,770,196		337,180		2,107,376
CommodityRealReturn Strategy Fund®		3,057,534		582,387		3,639,922
Developing Local Markets Fund		520,292		99,103		619,395
Diversified Income Fund		446,071		84,966		531,037
Emerging Local Bond Fund		35,873		6,833		42,706
Emerging Markets Bond Fund		515,382		98,168		613,550
Floating Income Fund		207,235		39,473		246,709
Foreign Bond Fund (U.S. Dollar-Hedged)		300,758		57,287		358,045
Foreign Bond Fund (Unhedged)		384,407		73,220		457,627
Fundamental Advantage Total Return Strategy		2,756		525		3,280
Fundamental IndexPLUS™ TR Fund		20,942		3,989		24,931
Global Advantage Strategy Bond Fund		2,919		556		3,475
Global Bond Fund (U.S. Dollar-Hedged)		96,401		18,362		114,763
Global Multi-Asset Fund		119,280		22,720		141,999
GNMA Fund		1,026,582		195,539		1,222,122

87

Fund	Sales Commissions and Compensation	Sales Material and Other Expenses	Total
High Yield Fund	2,277,092	433,732	2,710,824
High Yield Municipal Bond Fund	179,101	34,114	213,215
Income Fund	50,597	9,637	60,234
International StocksPLUS® TR Strategy Fund (U.S. Dollar-Hedged)	19,595	3,732	23,327
International StocksPLUS® TR Strategy Fund (Unhedged)	505	96	601
Investment Grade Corporate Bond	851,395	162,171	1,013,566
Long-Term U.S. Government Fund	401,298	76,438	477,736
Low Duration Fund	2,588,616	493,070	3,081,685
Money Market Fund	900,570	171,537	1,072,107
Mortgage-Backed Securities Fund	247,260	47,097	294,357
Municipal Bond Fund	378,697	72,133	450,830
RealEstateRealReturn Strategy Fund	28,627	5,453	34,079
Real Return Fund	10,974,821	2,090,442	13,065,263
RealRetirement® 2010 Fund	721	137	858
RealRetirement® 2020 Fund	57	11	67
RealRetirement® 2030 Fund	573	109	682
RealRetirement® 2040 Fund	50	9	59
RealRetirement® 2050 Fund	55	11	66
Short Duration Municipal Income Fund	134,845	25,685	160,530
Short-Term Fund	885,385	168,645	1,054,030
Small Cap StockPLUS TR	5,737	1,093	6,830
StocksPLUS® Fund	208,969	39,804	248,773
StocksPLUS® Total Return Fund	46,721	8,899	55,620
StocksPLUS® TR Short Strategy	76,429	14,558	90,987
Total Return Fund	34,938,966	6,655,041	41,594,006
Unconstrained Bond Fund	290,410	55,316	345,726
Unconstrained Tax Managed Bond Fund	1,238	236	1,473

Payments Pursuant to Class R Plan

For the fiscal years ended March 31, 2009, March 31, 2008 and March 31, 2007, the Trust paid the Distributor an aggregate of $4,741,843, $2,483,387, and $1,809,721, respectively, pursuant to the Distribution and Servicing Plan for Class R shares, of which the indicated amounts were attributable to the following operational Funds:

Fund	Year Ended 3/31/09		Year Ended 3/31/08		Year Ended 3/31/07
All Asset Fund	$	5,822	$	1,130	$	82
Foreign Bond Fund (U.S. Dollar-Hedged)		48,589		23,131		21,419
Global Advantage Strategy Bond Fund		16		N/A		N/A
Global Multi-Asset Fund		194		N/A		N/A
High Yield Fund		76,409		81,760		69,890
Income Fund		77		51		0
Low Duration Fund		187,884		41,924		68,330
Real Return Fund		625,405		348,128		287,651
RealRetirement® 2010 Fund		38		N/A		N/A
RealRetirement® 2020 Fund		29		N/A		N/A
RealRetirement® 2030 Fund		28		N/A		N/A
RealRetirement® 2040 Fund		27		N/A		N/A
RealRetirement® 2050 Fund		33		N/A		N/A
Short-Term Fund		12,218		3,848		3,053
StocksPLUS® Fund		9,428		13,701		11,136
Total Return Fund		3,764,738		1,969,713		1,348,160
Unconstrained Bond Fund		10,908		N/A		N/A

88

During the fiscal year ended March 31, 2009, the amounts collected pursuant to the Distribution and Servicing Plan for Class R shares were used as follows: sales commissions and other compensation to sales personnel, $3,983,148; preparing, printing and distributing sales material and advertising (including preparing, printing and distributing Prospectuses to non-shareholders), and other expenses (including data processing, legal and operations), $758,695

These totals, if allocated among (i) sales commissions and compensation and (ii) sales materials and other expenses for each operational Fund, were as follows:

Fund	Sales Commissions and Compensation		Sales Material and Other Expenses		Total
All Asset Fund	$	6,475	$	1,233	$	7,709
Foreign Bond Fund (U.S. Dollar-Hedged)		26,321		5,014		31,335
Global Advantage Strategy Bond Fund		93		18		111
Global Multi-Asset Fund		483		92		575
High Yield Fund		47,501		9,048		56,549
Income Fund		69		13		82
Low Duration Fund		70,342		13,399		83,741
Real Return Fund		493,491		93,998		587,490
RealRetirement® 2010 Fund		113		21		134
RealRetirement® 2020 Fund		25		5		30
RealRetirement® 2030 Fund		26		5		31
RealRetirement® 2040 Fund		24		5		29
RealRetirement® 2050 Fund		34		7		41
Short-Term Fund		8,216		1,565		9,781
StocksPLUS® Fund		3,656		696		4,352
Total Return Fund		3,295,881		627,787		3,923,668
Unconstrained Bond Fund		30,397		5,790		36,187

From time to time, expenses of principal underwriters incurred in connection with the distribution of Class B and Class C shares of the Funds, and in connection with the servicing of Class A, Class B, Class C and Class R shareholders of the Funds and the maintenance of Class A, Class B, Class C and Class R shareholder accounts, may exceed (or be less than) the distribution and/or servicing fees collected by the Distributor. As of March 31, 2009, such expenses were approximately $970,978.75 in excess of payments under the Class A Plan, $18,745,000 in excess of payments under the Class B Plan, $27,907,174 in excess of payments under the Class C Plan and $1,004,000 in excess of payments under the Class R Plan.

The allocation of such excess (on a pro rata basis) among the operational Funds listed below as of March 31, 2009 was as follows:

Fund	Class A	Class B	Class C	Class R
All Asset Fund	33,923	1,246,780	2,386,321	1,632
All Asset All Authority Fund	18,395	—	708,675	—
California Intermediate Municipal Bond Fund	1,345	—	—	—
California Short Duration Municipal Income Fund	1,047	—	—	—
CommodityRealReturn Strategy Fund®	34,087	762,185	1,224,044	—
Developing Local Markets Fund	5,354	—	208,292	—
Diversified Income Fund	2,491	211,439	178,579	—
Emerging Local Bond Fund	408	—	14,361	—
Emerging Markets Bond Fund	7,104	336,456	206,326	—
Floating Income Fund	1,780	—	82,964	—
Foreign Bond Fund (U.S. Dollar-Hedged)	7,025	111,834	120,405	6,635
Foreign Bond Fund (Unhedged)	5,520	—	153,892	—
Fundamental Advantage Total Return Strategy	26		1,103	—
Fundamental IndexPLUS™ TR Fund	267	—	8,384	—
Global Advantage Strategy Bond Fund	49		1,169	24
Global Bond Fund (U.S. Dollar-Hedged)	573	39,415	38,593	—
Global Multi-Asset Fund	1,390		47,752	122

89

GNMA Fund	11,580	354,563	410,979	—
High Yield Fund	20,985	1,235,038	911,604	11,973
High Yield Municipal Bond Fund	1,920	—	71,701	—
Income Fund	524	—	20,256	17
International StocksPLUS® TR Strategy Fund (U.S. Dollar-Hedged)	175	24,485	7,845	—
International StocksPLUS® TR Strategy Fund (Unhedged)	18	—	202	—
Investment Grade Corporate Bond Fund	12,571	—	340,845	—
Long-Term U.S. Government Fund	6,781	243,479	160,655	—
Low Duration Fund	55,001	954,438	1,036,319	17,731
Money Market Fund	6,754	657,315	360,532	—
Mortgage-Backed Securities Fund	2,921	95,484	289	—
Municipal Bond Fund	2,969	124,153	151,607	—
New York Municipal Bond Fund	978	—	—	—
RealEstateRealReturn Strategy Fund	233	17,465	11,460	—
Real Return Fund	105,147	3,437,328	4,393,627	124,390
RealRetirement® 2010 Fund	9		289	28
RealRetirement® 2020 Fund	7	—	23	6
RealRetirement® 2030 Fund	2	—	230	6
RealRetirement® 2040 Fund	1	—	20	6
RealRetirement® 2050 Fund	1		22	9
Short Duration Municipal Income Fund	2,991	—	53,984	—
Short-Term Fund	12,741	75,847	354,452	2,071
Small Cap StocksPLUS® TR Fund	28	—	2,297	—
StocksPLUS® Fund	1,803	63,128	83,658	921
StocksPLUS® Total Return Fund	407	50,857	18,704	—
StocksPLUS® TR Short Strategy Fund	1,449	—	30,597	—
Total Return Fund	595,513	8,703,310	13,987,362	830,766
Unconstrained Bond Fund	6,640		116,262	7,662
Unconstrained Tax Managed Bond Fund	47		495	—

The allocation of such excess among the operational Funds, calculated as a percentage of net assets of each Fund listed below as of March 31, 2009 was as follows:

Fund	Class A		Class B		Class C		Class R
All Asset Fund	0.00338	%	0.91	%	0.29	%	0.080	%
All Asset All Authority Fund	0.00338	%	0.00	%	0.29	%	0.000	%
California Intermediate Municipal Bond Fund	0.00338	%	0.00	%	0.00	%	0.000	%
California Short Duration Municipal Income Fund	0.00338	%	0.00	%	0.00	%	0.000	%
CommodityRealReturn Strategy Fund®	0.00338	%	0.91	%	0.29	%	0.000	%
Developing Local Markets Fund	0.00338	%	0.00	%	0.29	%	0.000	%
Diversified Income Fund	0.00338	%	0.91	%	0.29	%	0.000	%
Emerging Local Bond Fund	0.00338	%	0.00	%	0.29	%	0.000	%
Emerging Markets Bond Fund	0.00338	%	0.91	%	0.29	%	0.000	%
Floating Income Fund	0.00338	%	0.00	%	0.29	%	0.000	%
Foreign Bond Fund (Unhedged)	0.00338	%	0.00	%	0.29	%	0.000	%
Foreign Bond Fund (U.S. Dollar-Hedged)	0.00338	%	0.91	%	0.29	%	0.080	%
Fundamental Advantage Total Return Strategy	0.00338	%	0.00	%	0.29	%	0.000	%
Fundamental IndexPLUS™ TR Fund	0.00338	%	0.00	%	0.29	%	0.000	%
Global Advantage Strategy Bond Fund	0.00338	%	0.00	%	0.29	%	0.080	%
Global Bond Fund (U.S. Dollar-Hedged)	0.00338	%	0.91	%	0.29	%	0.000	%
Global Multi-Asset Fund	0.00338	%	0.00	%	0.29	%	0.080	%
GNMA Fund	0.00338	%	0.91	%	0.29	%	0.000	%
High Yield Fund	0.00338	%	0.91	%	0.29	%	0.080	%
High Yield Municipal Bond Fund	0.00338	%	0.00	%	0.29	%	0.000	%
Income Fund	0.00338	%	0.00	%	0.29	%	0.080	%
International StocksPLUS® TR Strategy Fund (U.S. Dollar-Hedged)	0.00338	%	0.91	%	0.29	%	0.000	%
International StocksPLUS® TR Strategy Fund (Unhedged)	0.00338	%	0.00	%	0.29	%	0.000	%
Investment Grade Corporate Bond Fund	0.00338	%	0.00	%	0.29	%	0.000	%

90

Fund	Class A		Class B		Class C		Class R
Long-Term U.S. Government Fund	0.00338	%	0.91	%	0.29	%	0.000	%
Low Duration Fund	0.00338	%	0.91	%	0.29	%	0.080	%
Money Market Fund	0.00338	%	0.91	%	0.29	%	0.000	%
Mortgage-Backed Securities Fund	0.00338	%	0.91	%	0.00	%	0.000	%
Municipal Bond Fund	0.00338	%	0.91	%	0.29	%	0.000	%
New York Municipal Bond Fund	0.00338	%	0.00	%	0.00	%	0.000	%
RealEstateRealReturn Strategy Fund	0.00338	%	0.91	%	0.29	%	0.000	%
Real Return Fund	0.00338	%	0.91	%	0.29	%	0.080	%
RealRetirement® 2010 Fund	0.00338	%	0.00	%	0.29	%	0.080	%
RealRetirement® 2020 Fund	0.00338	%	0.00	%	0.29	%	0.080	%
RealRetirement® 2030 Fund	0.00338	%	0.00	%	0.29	%	0.080	%
RealRetirement® 2040 Fund	0.00338	%	0.00	%	0.29	%	0.080	%
RealRetirement® 2050 Fund	0.00338	%	0.00	%	0.29	%	0.080	%
Short Duration Municipal Income Fund	0.00338	%	0.00	%	0.29	%	0.000	%
Short-Term Fund	0.00338	%	0.91	%	0.29	%	0.080	%
Small Cap StocksPLUS® TR Fund	0.00338	%	0.00	%	0.29	%	0.000	%
StocksPLUS® TR Short Strategy Fund	0.00338	%	0.00	%	0.29	%	0.000	%
StocksPLUS® Fund	0.00338	%	0.91	%	0.29	%	0.080	%
StocksPLUS® Total Return Fund	0.00338	%	0.91	%	0.29	%	0.000	%
Total Return Fund	0.00338	%	0.91	%	0.29	%	0.080	%
Unconstrained Bond Fund	0.00338	%	0.00	%	0.29	%	0.080	%
Unconstrained Tax Managed Bond Fund	0.00338	%	0.00	%	0.29	%	0.000	%

Distribution Plan for Administrative Class Shares and Administrative Services Plans for Administrative and Class P Shares

The Trust has adopted an Administrative Services Plan and Administrative Distribution Plan with respect to the Administrative Class shares of each Fund (together, the “Administrative Class Plans”). The Trust also adopted an Administrative Services Plan with respect to Class P shares of each existing Fund as of August 31, 2008, except the Global Multi-Asset Fund (the “Class P Plan”). The Class P Plan was terminated on September 1, 2008.

Under the terms of the Administrative Distribution Plan for Administrative Class shares, the Trust is permitted to reimburse, out of the assets attributable to the Administrative Class shares of each Fund, in amounts up to 0.25% on an annual basis of the average daily net assets of the Fund’s Administrative Class shares, financial intermediaries for costs and expenses incurred in connection with the distribution and marketing of the Administrative Class shares and/or the provision of certain shareholder services to its customers that invest in Administrative Class shares of the Funds. Such services may include, but are not limited to, the following: providing facilities to answer questions from prospective investors about a Fund; receiving and answering correspondence, including requests for Prospectuses and statements of additional information; preparing, printing and delivering Prospectuses and shareholder reports to prospective shareholders; complying with federal and state securities laws pertaining to the sale of Administrative Class shares; and assisting investors in completing application forms and selecting dividend and other account options.

Under the terms of the Administrative Services Plan for Administrative Class shares, the Trust is permitted to reimburse, out of the assets attributable to the Administrative Class shares of each Fund, in amounts up to 0.25% on an annual basis of the respective average daily net assets of the Fund’s Administrative Class shares, financial intermediaries that provide certain administrative services for Administrative Class shareholders of the Funds. Under the terms of the Class P Plan, which terminated on September 1, 2008, the Trust was entitled to pay, out of the assets attributable to the Class P shares of each existing Fund as of August 31, 2008, except the Global Multi-Asset Fund, 0.10% on an annual basis of the average daily net assets of Class P shares of the Fund to financial intermediaries that provide certain administrative services to Class P shareholders of the Funds. Such administrative services may include, but are not limited to, the following functions: receiving, aggregating and processing shareholder orders; furnishing shareholder sub-accounting; providing and maintaining elective shareholder services such as check writing and wire transfer services; providing and maintaining pre-authorized investment plans; communicating periodically with shareholders; acting as the sole shareholder of record and nominee for shareholders; maintaining accounting records for shareholders; answering questions and handling correspondence from shareholders about their accounts; and performing similar account administrative services.

The same entity may not receive fees under both of the Administrative Class Plans with respect to the same assets of the Administrative Class shares. Fees paid pursuant to either of the Administrative Class Plans may be paid for shareholder

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services and the maintenance of shareholder accounts, and therefore may constitute “service fees” for purposes of applicable rules of the FINRA. Each of the Administrative Class Plans have been adopted in accordance with the requirements of Rule 12b-1 under the 1940 Act and will be administered in accordance with the provisions of that rule, except that shareholders will not have the voting rights set forth in Rule 12b-1 with respect to the Administrative Services Plans for Administrative Class shares that they will have with respect to the Administrative Distribution Plan for Administrative Class shares.

Each of the Administrative Class Plans provides that it may not be amended to materially increase the costs which Administrative Class shareholders may bear under the Plans without the approval of a majority of the outstanding voting securities of the Administrative Class and by vote of a majority of both (i) the Trustees of the Trust and (ii) those Trustees who are not “interested persons” of the Trust (as defined in the 1940 Act) and who have no direct or indirect financial interest in the operation of the Plan or any agreements related to it (the “Plan Trustees”), cast in person at a meeting called for the purpose of voting on the Plan and any related amendments.

Each of the Administrative Class Plans provides that it may not take effect until approved by vote of a majority of both (i) the Trustees of the Trust and (ii) the disinterested Trustees defined above. The Administrative Distribution Plan for Administrative Class shares further provides that it may not take effect unless approved by the vote of a majority of the outstanding voting securities of the Administrative Class.

Each of the Administrative Class Plans provides that it shall continue in effect so long as such continuance is specifically approved at least annually by the Trustees and the disinterested Trustees defined above. Each of the Administrative Class Plans provides that any person authorized to direct the disposition of monies paid or payable by a class pursuant to that Plan or any related agreement shall provide to the Trustees, and the Board of Trustees shall review at least quarterly, a written report of the amounts so expended and the purposes for which such expenditures were made.

Each of the Administrative Class Plans is a “reimbursement plan,” which means that fees are payable to the relevant financial intermediary only to the extent necessary to reimburse expenses incurred pursuant to such plan. Each of the Administrative Class Plans provides that expenses payable under the Administrative Class Plans may be carried forward for reimbursement for up to twelve months beyond the date in which the expense is incurred, subject to the limit that not more that 0.25% of the average daily net assets of the Administrative Class shares may be used in any month to pay expenses under the Administrative Class Plans. Each of the Administrative Class Plans requires that the Administrative Class shares incur no interest or carrying charges.

Rules of the FINRA limit the amount of distribution fees that may be paid by mutual funds. “Service fees,” defined to mean fees paid for providing shareholder services or the maintenance of accounts (but not transfer agency services) are not subject to the limits. The Trust believes that some, if not all, of the fees paid pursuant to the Administrative Class Plans will qualify as “service fees” and therefore will not be limited by FINRA rules which limit distribution fees. However, service fees are limited by FINRA rules that limit service fees to 0.25% of a Fund’s average annual net assets.

Payments Pursuant to the Administrative Class Plans

For the fiscal years ended March 31, 2009, March 31, 2008 and March 31, 2007, the Trust paid qualified service providers an aggregate amount of $76,719,109, $70,031,257, and $59,055,775, respectively, pursuant to the Administrative Services Plan and the Administrative Distribution Plan. Such payments were allocated among the Funds with operational Administrative Class shares listed below as follows:

Fund	Year Ended 3/31/09		Year Ended 3/31/08		Year Ended 3/31/07
All Asset Fund	$	336,636	$	401,493	$	340,000
California Intermediate Municipal Bond Fund		3,315		4,378		4,395
CommodityRealReturn Strategy Fund®		2,389,560		2,544,781		1,748,906
Convertible Fund		47,889		33		30
Developing Local Markets Fund		39,287		19,239		13
Diversified Income Fund		11,800		12,859		11,065
Emerging Local Bond Fund		24,527		14,261		0
Emerging Markets Bond Fund		77,749		67,613		76,179
Floating Income Fund		22		8,207		16,653
Foreign Bond Fund (U.S. Dollar-Hedged)		94,305		117,045		132,567
Foreign Bond Fund (Unhedged)		1,943,917		1,850,392		771,124
Fundamental IndexPLUS™ Fund		22		32		29

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Fund	Year Ended 3/31/09	Year Ended 3/31/08	Year Ended 3/31/07
Fundamental IndexPLUS™ TR Fund	23	32	28
Global Bond Fund (Unhedged)	463,079	270,810	218,574
Global Bond Fund (U.S. Dollar-Hedged)	29	29	29
High Yield Fund	1,860,446	2,118,163	1,989,640
Income Fund	25	26	0
International StocksPLUS® TR Strategy Fund (Unhedged)	20	27	9
Investment Grade Corporate Bond Fund	3,124	790	2,986
Long-Term U.S. Government Fund	296,436	250,170	225,961
Low Duration Fund	1,106,522	803,699	748,452
Low Duration Fund II	2,460	2,014	2,425
Low Duration Fund III	78	63	59
Money Market Fund	15,856	12,201	23,386
Mortgage-Backed Securities Fund	428,870	134,348	32,700
Municipal Bond Fund	2,288	1,820	2,519
Real Return Fund	2,010,760	1,323,877	1,116,006
RealRetirement® 2010 Fund	17	N/A	N/A
RealRetirement® 2020 Fund	16	N/A	N/A
RealRetirement® 2030 Fund	16	N/A	N/A
RealRetirement® 2040 Fund	15	N/A	N/A
RealRetirement® 2050 Fund	15	N/A	N/A
Short Duration Municipal Income Fund	35,931	341	25
Short-Term Fund	4,138,244	4,052,863	2,612,847
StocksPLUS® Fund	15,912	44,751	85,493
Total Return Fund	61,126,175	55,715,690	48,605,855
Total Return Fund II	177,793	215,033	247,495
Total Return Fund III	65,929	44,177	40,324

The remaining Funds did not make payments under the Administrative Class Plans.

Payments Pursuant to the Class P Plan

Class P shares of the Funds were not operational during the fiscal year ended March 31, 2008. Thus, no payments were made pursuant to the Class P plans during this period.

Additional Information About Institutional Class, Administrative Class, Class M and Class P Shares

Institutional Class, Administrative Class, Class M and Class P shares of the Trust may be offered through brokers, other financial intermediaries and other entities, such as retirement or savings plans and their sponsors or service providers (“service agents”), that have established a shareholder servicing relationship with the Trust on behalf of their customers. The Trust pays no compensation to such entities other than service and/or distribution fees paid with respect to Administrative Class shares. The Distributor, PIMCO and their affiliates may pay, out of their own assets and at no cost to the Funds, amounts to service agents for providing bona fide shareholder services to shareholders holding Institutional Class or Administrative Class shares through such service agents. Such services may include, but are not limited to, the following: processing and mailing trade confirmations, monthly statements, prospectuses, annual reports, semi-annual reports and shareholder notices and other SEC required communications; capturing and processing tax data; issuing and mailing dividend checks to shareholders who have selected cash distributions; preparing record date shareholder lists for proxy solicitations; collecting and posting distributions to shareholder accounts; and establishing and maintaining systematic withdrawals and automated investment plans and shareholder account registrations. Service agents may impose additional or different conditions than the Trust on the purchase, redemption or exchanges of Trust shares by their customers. Service agents also may independently establish and charge their customers transaction fees, account fees and other amounts in connection with purchases, sales and redemption of Trust shares in addition to any fees charged by the Trust. Each service agent is responsible for transmitting to its customers a schedule of any such fees and information regarding any additional or different conditions regarding purchases and redemptions. Shareholders who are customers of service agents should consult their service agents for information regarding these fees and conditions.

PIMCO and/or its affiliates make payments to selected service agents for providing administrative, sub-transfer agency, sub-accounting and other shareholder services to shareholders holding Class P shares in nominee or street name, including, without limitation, the following services: receiving, aggregating and processing purchase, redemption and

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exchange orders at the service agent level; providing and maintaining elective services with respect to Class P shares such as check writing and wire transfer services; providing and maintaining pre-authorized investment plans; communicating periodically with shareholders; acting as the sole shareholder of record and nominee for holders of Class P shares; maintaining account records for shareholders; answering questions and handling correspondence from shareholders about their accounts; issuing confirmations for transactions by shareholders; collecting and posting distributions to shareholder accounts; capturing and processing tax data; processing and mailing trade confirmations, monthly statements, prospectuses, shareholder reports and other SEC-required communications; and performing similar account administrative services. The actual services provided, and the payments made for such services, vary from firm to firm. PIMCO currently estimates that it and/or its affiliates will pay up to 0.10% per annum of the value of Class P share assets in the relevant accounts out of PIMCO’s and/or its affiliates’resources, including the Class P supervisory and administrative fees paid to PIMCO under the Trust’s Supervision and Administration Agreement, to service agents for providing the services described above. Payments described above may be material to service agents relative to other compensation paid by the Funds and/or PIMCO and/or its affiliates and may be in addition to other fees, such as the revenue sharing or “shelf space” fees paid to such service agents. The payments described above may differ depending on the Fund and may vary from amounts paid to the Trust’s transfer agent for providing similar services to other accounts. PIMCO and/or its affiliates do not audit the service agents to determine whether such agents are providing the services for which they are receiving such payments.

With respect to Class M shares, PIMCO and/or its affiliates may make payments to selected service agents for providing sub-accounting, administrative and/or shareholder processing services that are in addition to the supervisory and administrative fees paid by the Funds. The actual services provided, and the payments made for such services, vary from firm to firm. PIMCO and/or its affiliates will pay an amount that may be based on a fixed dollar amount, the number of customer accounts maintained by the institution, or a percentage of the value of shares sold to, or held by, customers of the service agent out of PIMCO’s and/or its affiliates’ resources, including the Class M supervisory and administrative fees paid to PIMCO under the Trust’s Supervision and Administration Agreement, to service agents for providing the services described above. Payments described above may be material to service agents relative to other compensation paid by the Funds and/or PIMCO and/or its affiliates and may be in addition to other fees, such as the revenue sharing or “shelf space” fees paid to such service agents. The payments described above may differ depending on the Fund and may vary from amounts paid to the Trust’s transfer agent for providing similar services to other accounts. PIMCO and/or its affiliates do not audit the service agents to determine whether such agents are providing the services for which they are receiving such payments.

In addition, the Distributor, PIMCO and their affiliates also may make payments out of their own resources, at no cost to the Funds, to financial intermediaries for services which may be deemed to be primarily intended to result in the sale of Institutional Class, Administrative Class, Class M or Class P shares of the Funds. The payments described in this section may be significant to the payors and the payees.

Plan for Class D Shares

As described under “Management of the Trust—Administrator,” the Funds’ Supervision and Administration Agreement includes a plan adopted pursuant to Rule 12b-1 under the 1940 Act which provides for the payment of up to 0.25% of the Class D supervisory and administrative fees as reimbursement for expenses in respect of activities that may be deemed to be primarily intended to result in the sale of Class D shares (the “Class D Plan”).

Specifically, the Supervision and Administration Agreement provides that the Administrator shall provide in respect of Class D shares (either directly or by procuring through other entities, including various financial services firms such as broker-dealers and registered investment advisors (“Service Organizations”)) some or all of the following services and facilities in connection with direct purchases by shareholders or in connection with products, programs or accounts offered by such Service Organizations (“Special Class D Services”): (i) facilities for placing orders directly for the purchase of a Fund’s shares and tendering a Fund’s Class D shares for redemption; (ii) advertising with respect to a Fund’s Class D shares; (iii) providing information about the Funds; (iv) providing facilities to answer questions from prospective investors about the Funds; (v) receiving and answering correspondence, including requests for Prospectuses and statements of additional information; (vi) preparing, printing and delivering Prospectuses and shareholder reports to prospective shareholders; (vii) assisting investors in applying to purchase Class D shares and selecting dividend and other account options; and (viii) shareholder services provided by a Service Organization that may include, but are not limited to, the following functions: receiving, aggregating and processing shareholder orders; furnishing shareholder sub-accounting; providing and maintaining elective shareholder services such as check writing and wire transfer services; providing and maintaining pre-authorized investment plans; communicating periodically with shareholders; acting as the sole shareholder of record and nominee for shareholders; maintaining accounting records for shareholders; answering questions and handling correspondence from shareholders about their accounts; issuing confirmations for transactions by shareholders; performing similar account

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administrative services; providing such shareholder communications and recordkeeping services as may be required for any program for which the Service Organization is a sponsor that relies on Rule 3a-4 under the 1940 Act; and providing such other similar services as may reasonably be requested to the extent the Service Organization is permitted to do so under applicable statutes, rules, or regulations.

The Administrator has entered into an agreement with the Distributor under which the Distributor is compensated for providing or procuring certain of the Class D Services at the rate of 0.25% per annum of all assets attributable to Class D shares sold through the Distributor. A financial intermediary may be paid for its services directly or indirectly by the Funds, PIMCO, the Distributor or their affiliates in amounts normally not to exceed an annual rate of 0.35% of a Fund’s average daily net assets attributable to its Class D shares and purchased through such financial intermediary for its clients. The Trust and the Administrator understand that some or all of the Special Class D Services pursuant to the Supervision and Administration Agreement may be deemed to represent services primarily intended to result in the sale of Class D shares. The Supervision and Administration Agreement includes the Class D Plan to account for this possibility. The Supervision and Administration Agreement provides that any portion of the fees paid thereunder in respect of Class D shares representing reimbursement for the Administrator’s and the Distributor’s expenditures and internally allocated expenses in respect of Class D Services of any Fund shall not exceed the rate of 0.25% per annum of the average daily net assets of such Fund attributable to Class D shares. In addition to the other payments described in this paragraph, the Distributor, PIMCO and their affiliates also may make payments out of their own resources, at no cost to the Funds, to financial intermediaries for services which may be deemed to be primarily intended to result in the sale of Class D shares of the Funds. The payments described in this paragraph may be significant to the payors and the payees.

In accordance with Rule 12b-1 under the 1940 Act, the Class D Plan may not be amended to increase materially the costs which Class D shareholders may bear under the Plan without approval of a majority of the outstanding Class D shares, and by vote of a majority of both (i) the Trustees of the Trust and (ii) those Trustees (“disinterested Class D Plan Trustees”) who are not “interested persons” of the Trust (as defined in the 1940 Act) and who have no direct or indirect financial interest in the operation of the Plan or any agreements related to it, cast in person at a meeting called for the purpose of voting on the Plan and any related amendments. The Class D Plan may not take effect until approved by a vote of a majority of both (i) the Trustees of the Trust and (ii) the disinterested Class D Plan Trustees. In addition, the Class D Plan may not take effect unless it is approved by the vote of a majority of the outstanding Class D shares and it shall continue in effect so long as such continuance is specifically approved at least annually by the Trustees and the disinterested Class D Plan Trustees.

With respect to the Class D Plan, the Supervision and Administration Agreement requires the Administrator to present reports as to out-of-pocket expenditures and internal expenses allocations of the Administrator and the Distributor at least quarterly and in a manner that permits the disinterested Class D Plan Trustees to determine that portion of the Class D supervisory and administrative fees paid thereunder which represents reimbursements in respect of Special Class D Services.

Rules of the FINRA limit the amount of distribution fees that may be paid by mutual funds. “Service fees,” defined to mean fees paid for providing shareholder services or the maintenance of accounts (but not transfer agency services) are not subject to the limits. The Trust believes that most, if not all, of the fees paid pursuant to the Class D Plan will qualify as “service fees” and therefore will not be limited by FINRA rules which limit distribution fees. However, service fees are limited by FINRA rules that limit service fees to 0.25% of a Fund’s average annual net assets.

Payments Pursuant to Class D Plan

For the fiscal year ended March 31, 2009, March 31, 2008 and March 31, 2007, the Trust paid $28,929,423, $21,808,998, and $21,113,685, respectively, pursuant to the Class D Plan, of which the indicated amounts were attributable to the following operational Funds:

Fund	Year Ended 3/31/09		Year Ended 3/31/08		Year Ended 3/31/07
All Asset Fund	$	698,479	$	792,642	$	902,273
All Asset All Authority Fund		120,159		39,485		28,880
California Intermediate Municipal Bond Fund		6,141		5,322		6,909
California Short Duration Municipal Income Fund		7,181		377		12
CommodityRealReturn Strategy Fund®		2,222,379		2,594,803		3,077,842
Developing Local Markets Fund		1,140,668		1,072,562		772,980
Diversified Income Fund		61,175		75,751		76,806
Emerging Local Bond Fund		21,207		8,288		N/A
Emerging Markets Bond Fund		377,069		460,647		553,493

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Fund	Year Ended 3/31/09	Year Ended 3/31/08	Year Ended 3/31/07
Floating Income Fund	70,881	276,167	316,110
Foreign Bond Fund (U.S. Dollar-Hedged)	349,436	412,692	578,531
Foreign Bond Fund (Unhedged)	371,741	357,039	323,575
Fundamental Advantage Total Return Strategy Fund	101	N/A	N/A
Fundamental IndexPLUS™ Fund	72	26	6
Fundamental IndexPLUS™ TR Fund	18,279	25,579	45,548
Global Advantage Strategy Bond Fund	57	N/A	N/A
Global Bond Fund (Unhedged)	567	N/A	N/A
Global Multi-Asset Fund	6,138	N/A	N/A
GNMA Fund	210,478	39,620	30,246
High Yield Fund	1,059,798	992,226	1,066,806
High Yield Municipal Bond Fund	32,564	16,135	2,164
Income Fund	5,163	729	0
International StocksPLUS® TR Strategy Fund (U.S. Dollar-Hedged)	14,054	38,567	9,341
International StocksPLUS® TR Strategy Fund (Unhedged)	2,931	1,425	92
Investment Grade Corporate Bond Fund	133,278	9,351	3,898
Low Duration Fund	1,263,989	1,053,192	1,199,884
Mortgage-Backed Securities Fund	437,266	334,557	262,140
Municipal Bond Fund	95,345	114,259	106,143
New York Municipal Bond Fund	59,787	33,858	19,675
Real Return Fund	2,655,578	2,148,883	2,459,989
RealEstateRealReturn Strategy Fund	51,192	14,915	27,479
RealRetirement® 2010 Fund	31	N/A	N/A
RealRetirement® 2020 Fund	94	N/A	N/A
RealRetirement® 2030 Fund	32	N/A	N/A
RealRetirement® 2040 Fund	21	N/A	N/A
RealRetirement® 2050 Fund	22	N/A	N/A
Short Duration Municipal Income Fund	63,447	73,983	75,150
Short-Term Fund	215,206	167,817	231,138
Small Cap StocksPLUS® TR Fund	313	821	86
StocksPLUS® Fund	10,763	17,827	32,506
StocksPLUS® Total Return Fund	15,157	12,388	9,282
StocksPLUS® TR Short Strategy Fund	71,281	3,991	184
Total Return Fund	16,971,489	10,613,079	8,896,871
Unconstrained Bond Fund	88,345	N/A	N/A
Unconstrained Tax Managed Bond Fund	69	N/A	N/A

Purchases, Exchanges and Redemptions

Purchases, exchanges and redemptions of Class A, Class B, Class C and Class R shares are discussed in the applicable Prospectuses under the headings “Buying Shares,” “Exchanging Shares,” and “Selling Shares,” and that information is incorporated herein by reference. Purchases, exchanges and redemptions of Institutional Class, Class M, Class P, Administrative Class and Class D shares are discussed in the applicable Prospectuses under the headings “Purchasing Shares,” “Exchange Privilege,” and “Redeeming Shares,” and that information is incorporated herein by reference.

Certain managed account clients of PIMCO may purchase shares of the Trust. To avoid the imposition of duplicative fees, PIMCO may be required to make adjustments in the management fees charged separately by PIMCO to these clients to offset the management fees and expenses paid indirectly through a client’s investment in the Trust.

Certain clients of PIMCO whose assets would be eligible for purchase by one or more of the Funds may purchase shares of the Trust with such assets. Assets so purchased by a Fund will be valued in accordance with procedures adopted by the Board of Trustees.

The minimum initial investment for shares of the Institutional Class, Class M, Class P and Administrative Class is $5 million, except that the minimum investment may be modified for certain financial intermediaries that submit trades on behalf of underlying investors. The Fund or the Distributor may lower or waive the minimum initial investment for certain

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categories of investors at their discretion. The minimum initial investment for employees of PIMCO and its affiliates is $25,000 (employee accounts are defined as those that contain the employee’s name on the account). The minimum initial investment for single defined contribution plans is $100,000, provided that the plan has 250 eligible participants or is associated with an existing plan that meets the minimum investment criteria. The investment minimum for shareholders with existing accounts is $200,000, provided that the current market value of the account is at least $1,000,000. For omnibus accounts, all minimums stated above apply at the omnibus level and not at the underlying investor level.

The minimum initial investment in Class D shares of any Fund is $1,000, with a minimum subsequent investment of $50 per Fund. The minimum investment may be modified for certain financial intermediaries that submit trades on behalf of underlying investors. The Fund or the Distributor may lower or waive the minimum initial investment for certain categories of investors at their discretion.

To obtain more information about exceptions to the minimum initial investment for Institutional Class, Class M, Class P, Administrative Class and Class D shares, please call the Trust at 1-800-927-4648 or the Distributor at 1-800-426-0107.

Certain shares of the Funds are not qualified or registered for sale in all states. Prospective investors should inquire as to whether shares of a particular Fund or class are available for offer and sale in their state of domicile or residence. Shares of a Fund may not be offered or sold in any state unless registered or qualified in that jurisdiction, unless an exemption from registration or qualification is available.

As described in the Class A, B, C and R Prospectuses under the caption “Exchanging Shares,” and in the Institutional Class, Class M, Class P, Administrative Class and Class D Prospectuses under the caption “Exchange Privilege,” a shareholder may exchange shares of any Fund for shares of the same class of any other Fund of the Trust, any series of Allianz Funds (formerly known as PIMCO Funds: Multi-Manager Series), or any series of Allianz Funds Multi-Strategy Trust that is available for investment, each on the basis of their respective net asset values. This exchange privilege may in the future be extended to cover any “interval” funds that may be established and managed by the Adviser and its affiliates. A shareholder may also exchange Class M shares of any Fund for Institutional Class shares of any other Fund of the Trust, any series of Allianz Funds, or any series of Allianz Funds Multi-Strategy Trust that is available for investment. The original purchase date(s) of shares exchanged for purposes of calculating any contingent deferred sales charge will carry over to the investment in the new Fund. For example, if a shareholder invests in the Class C shares of one Fund and 6 months later (when the contingent deferred sales charge upon redemption would normally be 1%) exchanges his shares for Class C shares of another Fund, no sales charge would be imposed upon the exchange but the investment in the other Fund would be subject to the 1% contingent deferred sales charge until one year after the date of the shareholder’s investment in the first Fund as described in the applicable Prospectus.

Shares of one class of a Fund may be exchanged, at a shareholder’s option, directly for shares of another class of the same Fund (an “intra-Fund exchange”), subject to the terms and conditions described below and to such other fees and charges as set forth in the applicable Prospectus(es) (including the imposition or waiver of any sales charge (load) or contingent deferred sales charge (CDSC)), provided that the shareholder for whom the intra-Fund exchange is being requested meets the eligibility requirements of the class into which such shareholder seeks to exchange. Additional information regarding the eligibility requirements of different share classes, including investment minimums and intended distribution channels, is provided under “Distribution of Trust Shares” above, and/or in the applicable Prospectus(es). Shares of a Fund will be exchanged for shares of a different class of the same Fund on the basis of their respective net asset values. Ongoing fees and expenses incurred by a given share class will differ from those of other share classes, and a shareholder receiving new shares in an intra-Fund exchange may be subject to higher or lower total expenses following such exchange. In addition to changes in ongoing fees and expenses, a shareholder receiving new shares in an intra-Fund exchange may be required to pay an initial sales charge (load) or CDSC. Generally, intra-Fund exchanges into Class A shares will be subject to a Class A sales charge unless otherwise noted below, and intra-Fund exchanges out of Class A, Class B or Class C shares will be subject to the standard schedule of CDSCs for the share class out of which the shareholder is exchanging, unless otherwise noted below. If Class B shares are exchanged for Class A shares, a Class A sales charge will not apply but a shareholder will be responsible for paying any applicable CDSCs attributable to those Class B shares. If Class C shares are exchanged for Class A shares, a shareholder will be responsible for paying any Class C CDSCs and any applicable Class A sales charge. With respect to shares subject to a CDSC, if less than all of an investment is exchanged out of one class of a Fund, any portion of the investment exchanged will be from the lot of shares that would incur the lowest CDSC if such shares were being redeemed rather than exchanged. Shareholders generally should not recognize gain or loss for U.S. federal income tax purposes upon such an intra-Fund exchange, provided that the transaction is undertaken and processed, with respect to any shareholder, as a direct exchange transaction. If an intra-Fund exchange incurs a CDSC or sales charge, Fund shares may be redeemed to pay such charge, and that redemption will be taxable. Shareholders should consult their tax advisors as to the federal, foreign, state and local tax consequences of an intra-Fund exchange.

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For each Fund (except for Government Money Market and Treasury Money Market Funds), orders for exchanges accepted prior to the close of regular trading on the NYSE on any day the Trust is open for business will be executed at the respective net asset values determined as of the close of business that day. Orders for exchanges received after the close of regular trading on the NYSE on any business day will be executed at the respective net asset values determined at the close of the next business day.

For the Government Money Market and Treasury Money Market Funds, orders for exchanges accepted prior to 5:00 p.m., Eastern time, (or an earlier cut-off time if the Fund closes early (the “cut-off time”) on any day that the Government Money Market and Treasury Money Market Funds are open for business will be executed at the respective net asset values determined as of 5:30 p.m., Eastern time. Orders for exchanges received after the cut-off time on any day that the Government Money Market and Treasury Money Market Funds are open for business will be executed at the respective net asset values determined as of 5:30 p.m., Eastern time, the next day the Government Money Market and Treasury Money Market Funds are open for business. Requests to exchange shares of the Government Money Market and Treasury Money Market Funds for shares of other Funds of the Trust, any series of Allianz Funds, or any series of Allianz Funds Multi-Strategy Trust received after 4:00 p.m., Eastern time, will be effected at the next day’s net asset value for those funds.

An excessive number of exchanges may be disadvantageous to the Trust. Therefore, the Trust, in addition to its right to reject any exchange, reserves the right to adopt a policy of terminating the exchange privilege of any shareholder who makes more than a specified number of exchanges in a 12-month period or in any calendar quarter. The Trust reserves the right to modify or discontinue the exchange privilege at any time.

The Trust reserves the right to suspend or postpone redemptions during any period when: (a) trading on the NYSE is restricted, as determined by the SEC, or the NYSE is closed for other than customary weekend and holiday closings; (b) the SEC has by order permitted such suspension; or (c) an emergency, as determined by the SEC, exists, making disposal of portfolio securities or valuation of net assets of a Fund not reasonably practicable.

The Trust is committed to paying in cash all requests for redemptions by any shareholder of record of the Funds, limited in amount with respect to each shareholder during any 90-day period to the lesser of (i) $250,000, or (ii) 1% of the net asset value of the Trust at the beginning of such period. Although the Trust will normally redeem all shares for cash, it may, in unusual circumstances, redeem amounts in excess of the lesser of (i) or (ii) above by payment in kind of securities held in the Funds’ portfolios.

The Trust has adopted procedures under which it may make redemptions-in-kind to shareholders who are affiliated persons of a Fund. Under these procedures, the Trust generally may satisfy a redemption request from an affiliated person in-kind, provided that: (1) the redemption-in-kind is effected at approximately the affiliated shareholder’s proportionate share of the distributing Fund’s current net assets, and thus does not result in the dilution of the interests of the remaining shareholders; (2) the distributed securities are valued in the same manner as they are valued for purposes of computing the distributing Fund’s net asset value; (3) the redemption-in-kind is consistent with the Fund’s Prospectus and Statement of Additional Information; and (4) neither the affiliated shareholder nor any other party with the ability and the pecuniary incentive to influence the redemption-in-kind selects, or influences the selection of, the distributed securities.

Due to the relatively high cost of maintaining smaller accounts, the Trust reserves the right to redeem shares in any account for their then-current value (which will be promptly paid to the investor) if at any time, due to shareholder redemption, the shares in the account do not have a value of at least a specified amount, the minimums of which are currently set at $250 for Class A, Class B and Class C shares, $2,000 for Class D shares, $50,000 for Class R shares, and $100,000 for Institutional Class, Administrative Class, Class M and Class P shares ($10,000 with respect to Institutional Class and Administrative Class accounts opened before January 1, 1995). The Prospectuses may set higher minimum account balances for one or more classes from time to time depending upon the Trust’s current policy. An investor will be notified that the value of his account is less than the minimum and allowed at least 30 days to bring the value of the account up to at least the specified amount before the redemption is processed. The Declaration of Trust also authorizes the Trust to redeem shares under certain other circumstances as may be specified by the Board of Trustees. The Trust also may charge periodic account fees for accounts that fall below minimum balances, as described in the Prospectuses.

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Additional Information about Purchases, Exchanges and Redemptions of Class A, Class B, Class C and Class R Shares

How to Buy Shares—Class A, Class B, Class C and Class R Shares. Class A, Class B, Class C and Class R shares of each Fund are continuously offered through the Trust’s principal underwriter, the Distributor and through other firms that have dealer agreements with the Distributor (“participating brokers”) or that have agreed to act as introducing brokers for the Distributor (“introducing brokers”). The Distributor is an affiliate of Allianz Global Investors Fund Management LLC (“Allianz Global Fund Management”), the investment adviser and administrator to the Funds that are series of the Allianz Trust, the investment manager to the Funds that are series of the Multi-Strategy Trust and a subsidiary of Allianz.

Purchases Through a Financial Advisor. Class A, Class B or Class C shares maybe purchased through a financial advisor.

Purchases By Mail. Investors who wish to invest in Class A, Class B or Class C shares by mail may send a completed application form along with a check payable to Allianz Global Investors Distributors LLC, to the Distributor at:

Allianz Global Investors Distributors LLC

P.O. Box 8050

Boston, MA 02266-8050

(The Distributor does not provide investment advice and will not accept any responsibility for the selection of investments because it does not have access to the information necessary to assess an investor’s financial situation). All shareholders who establish accounts by mail will receive individual confirmations of each purchase, redemption, dividend reinvestment, exchange or transfer of Fund shares, including the total number of Fund shares owned as of the confirmation date, except that purchases resulting from the reinvestment of daily-accrued dividends and/or distributions will be confirmed once each calendar quarter. See “Distributions” in the applicable Fund’s Prospectus. An investor may obtain information regarding direct investment or any other features or plans offered by the Trusts by calling the Distributor at 1-800-426-0107 or by calling the investor’s broker.

Purchases are accepted subject to collection of checks at full value and conversion into federal funds. Payment by a check drawn on any member of the Federal Reserve System can normally be converted into federal funds within two business days after receipt of the check. Checks drawn on a non-member bank may take up to 15 days to convert into federal funds. In all cases, the purchase price is based on the net asset value next determined after the purchase order and check are accepted, even though the check may not yet have been converted into federal funds.

The Distributor reserves the right to require payment by wire or official U.S. bank check. The Distributor generally does not accept payments made by cash, money order, temporary/starter checks, credit cards, traveler’s checks, credit card checks, or checks drawn on non-U.S. banks even if payment may be effected through a U.S. bank.

Purchases By Telephone. An investor may elect to purchase shares after enrolling in Fund Link (see “Allianz Funds and PIMCO Funds Fund Link” in this section below). An investor can purchase fund shares over the phone. To initiate such purchases, call 1-800-426-0107.

Purchasing Class R Shares. Class R shares are generally available only to 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans, defined benefit plans, non-qualified deferred compensation plans, health care benefit funding plans, and other specified benefit plans and accounts whereby the plan or the plan’s financial service firm has an agreement with the Distributor or an Adviser to utilize Class R shares in certain investment products or programs (each such plan or account, a “Class R Eligible Plan”). Class R shares are not available to traditional and Roth IRAs (except through omnibus accounts), SEPs, SAR-SEPs, SIMPLE IRAs, 403(b)(7) custodial accounts, Coverdell Education Savings Accounts or retail or institutional benefit plans other than those specified above. Additionally, Class R shares are generally available only to Class R Eligible Plans where Class R shares are held on the books of the Funds through omnibus accounts (either at the plan level or at the level of the financial services firm level). Although Class R shares may be purchased by a plan administrator directly from the Distributor, specified benefit plans that purchase Class R shares directly from the Distributor must hold their shares in an omnibus account at the benefit plan level. Plan participants may not directly purchase Class R shares from the Distributor.

Subsequent Purchases of Shares—Class A, Class B and Class C Shares. Subsequent purchases of Class A, Class B or Class C shares can be made as indicated above by mailing a check with a letter describing the investment or with the additional investment portion of a confirmation statement. Except for subsequent purchases through the Allianz Funds and

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PIMCO Funds Auto-Invest plan, the Allianz Funds and PIMCO Funds Auto-Exchange plan, tax-qualified programs and the Allianz Funds and PIMCO Funds Fund Link referred to below, and except during periods when an Automatic Withdrawal Plan is in effect, the minimum subsequent purchase in any Fund is $50. All payments should be made payable to Allianz Global Investors Distributors LLC and should clearly indicate the shareholder’s account number. Checks should be mailed to the address above under “Purchases By Mail” in this section.

Unavailable or Restricted Funds. Certain Funds and/or share classes are not currently offered to the public as of the date of this Statement of Additional Information. Please see the applicable Prospectuses for details.

Additional Information About Purchasing Shares—Class A, Class B and Class C Shares. Shares may be purchased at a price equal to their net asset value per share next determined after receipt of an order plus a sales charge, which may be imposed either (i) at the time of the purchase in the case of Class A shares (the “initial sales charge alternative”), (ii) on a contingent deferred basis in the case of Class B shares (the “deferred sales charge alternative”) or (iii) by the deduction of an ongoing asset-based sales charge in the case of Class C shares (the “asset-based sales charge alternative”). Class R shares may be purchased at a price equal to their net asset value per share next determined after receipt of an order. In certain circumstances, Class A and Class C shares are also subject to a CDSC. See “Alternative Purchase Arrangements” in this section. Purchase payments for Class B and Class C shares are fully invested at the net asset value next determined after acceptance of the trade. Purchase payments for Class A shares, less the applicable sales charge, are invested at the net asset value next determined after acceptance of the trade.

All purchase orders (except purchase orders for the Government Money Market and Treasury Money Market Funds, which are discussed below) received by the Distributor prior to the close of regular trading (normally 4:00 p.m., Eastern time) on the New York Stock Exchange on a regular business day are processed at that day’s offering price. However, orders received by the Distributor after the offering price is determined that day from dealers, brokers or certain retirement plans that have an agreement with the Adviser or the Distributor will receive such offering price if the orders were received by the dealer, broker or retirement plan from its customer prior to such determination and were transmitted to and received by the Distributor or the Transfer agent prior to 9:30 a.m., Eastern time on the next business day. Purchase orders received on other than a regular business day will be executed on the next succeeding regular business day. The Distributor, in its sole discretion, may accept or reject any order for purchase of Fund shares. The sale of shares will be suspended on any day on which the New York Stock Exchange is closed and, if permitted by the rules of the Securities and Exchange Commission, when trading on the New York Stock Exchange is restricted or during an emergency that makes it impracticable for the Funds to dispose of their securities or to determine fairly the value of their net assets, or during any other period as permitted by the Securities and Exchange Commission for the protection of investors.

Purchase orders for the Government Money Market and Treasury Money Market Funds received by either Fund or its designee prior to 5:30 p.m., Eastern time (or an earlier time if a Fund closes early) on a day such Fund is open for business, will be processed at that day’s net asset value. Orders received by the Distributor from financial service firms after 5:30 p.m., Eastern time, will be processed at that day’s net asset value if the orders were received by the firm from its customer prior to 5:30 p.m., Eastern time and were transmitted to and received by the Distributor prior to such time as agreed upon by the Distributor and firm. The Government Money Market and Treasury Money Market Funds are “open for business” on each day the New York Stock Exchange and Federal Reserve are open, which excludes the following holidays: New Year’s Day, Martin Luther King, Jr. Day, Presidents’ Day, Good Friday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day and Christmas Day. Each Fund reserves the right to close if the primary trading markets of a Fund’s portfolio instruments are closed and the Fund’s management believes that there is not an adequate market to meet purchase, redemption or exchange requests. On any business day when the Securities Industry and Financial Markets Association recommends that the securities markets close trading early, the Government Money Market or Treasury Money Market Fund may close trading early. Purchase orders for Government Money Market and Treasury Money Market Fund shares will be accepted only on days on which a Fund is open for business. If a purchase order is received by the Distributor on a day when the Fund is not open for business, it will be processed on the next succeeding day a Fund is open for business (according to the succeeding day’s net asset value).

Minimum Purchase Amounts. Except for purchases through the Allianz Funds and PIMCO Funds Auto-Invest plan, the Allianz Funds and PIMCO Funds Auto-Exchange plan, investments pursuant to the Uniform Gifts to Minors Act, tax-qualified plans and, to the extent agreed to by the Distributor, wrap programs referred to in this section below under “Alternative Purchase Arrangements—Sales at Net Asset Value,” and purchases by certain registered representatives as described below under “Registered Representatives’ Investments,” the minimum initial investment in Class A, Class B or Class C shares of any Fund is $1,000, with a minimum additional investment of $50 per Fund, and there is no minimum initial or additional investment in Class R shares because Class R shares may only be purchased through omnibus accounts. For information about dealer commissions and other payments to dealers, see “Alternative Purchase Arrangements” in this

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section below. Persons selling Fund shares may receive different compensation for selling Class A, Class B, Class C or Class R shares. Normally, Fund shares purchased through participating brokers are held in the investor’s account with that broker. No share certificates will be issued except, and to the extent, provided in the applicable prospectus.

Tax-Qualified Specified Benefit and Other Plans. The Distributor makes available specified benefit plan services and documents for Individual Retirement Accounts (IRAs), including Roth IRAs, for which Boston Safe Deposit & Trust Company serves as trustee and for IRA Accounts under the Internal Revenue Code. The Distributor makes available services and prototype documents for Simplified Employee Pension Plans (SEP). In addition, prototype documents are available for establishing 403(b)(7) custodial accounts with Boston Safe Deposit & Trust Company as custodian. This form of account is available to employees of certain non-profit organizations.

For purposes of this section, “Plan Investor” means any of the following: 401(k) plan, profit-sharing plan, money purchase pension plan, defined benefit plan, 457 plan, employer-sponsored 403(b) plan, non-qualified deferred compensation plan, health care benefit funding plan and specified benefit plans and accounts whereby the plan or the plan’s financial service firm has an agreement with the Distributor or an Adviser to utilize Class R shares in certain investment products or programs, or other benefit plan specified as such by the Distributor. The term “Plan Investor” does not include an IRA, Roth IRA, SEP IRA, SIMPLE IRA, SAR-SEP IRA, 403(b)(7) custodial account, a Coverdell Education Savings Account or a College Access 529 Plan Account.

The minimum initial investment for all Plan Investors, IRAs, Roth IRAs, SEP IRAs, SIMPLE IRAs, SAR-SEP IRAs and 403(b)(7) custodial accounts are set forth in the table under “Specified Benefit Account Minimums” in this section below. For Plan Investors invested in a Fund through “omnibus” account arrangements, there is no minimum initial investment per plan participant. Instead, there is a minimum initial investment per plan, which is agreed upon by the Distributor and the financial intermediary maintaining the omnibus account. However, any Plan Investor that has existing positions in the Funds and that does not already maintain an omnibus account with a Fund and would like to invest in such Fund is subject to the minimum initial investment set forth in the table under “Specified Benefit Account Minimums” in this section below.

Allianz Funds and PIMCO Funds Auto-Invest. The Allianz Funds and PIMCO Funds Auto-Invest plan provides for periodic investments into a shareholder’s account with the Trust by means of automatic transfers of a designated amount from the shareholder’s bank account. The minimum investment for eligibility in the Allianz Funds and PIMCO Funds Auto-Invest plan is $1,000 per Fund. Investments may be made monthly or quarterly, and may be in any amount subject to a minimum of $50 per month for each Fund in which shares are purchased through the plan. Further information regarding the Allianz Funds and PIMCO Funds Auto-Invest plan is available from the Distributor or participating brokers. An investor may enroll by completing the appropriate section on the account application, or may obtain an Auto-Invest application by calling the Distributor or the investor’s broker. The use of the Allianz Funds and PIMCO Funds Auto-Invest plan may be limited for certain Funds and/or share classes at the discretion of the Distributor.

Registered Representatives’ Investments. Current registered representatives and other full-time employees of participating brokers or such persons’ spouses or trusts or custodial accounts for their minor children may purchase Class A shares at net asset value without a sales charge. The minimum initial investment in each case is $1,000 per Fund and the minimum subsequent investment is $50.

Uniform Gifts to Minors Act Investments. For investments pursuant to the Uniform Gifts to Minors Act, the minimum initial investment in Class A, Class B and Class C shares of any Fund is $1,000, with a minimum additional investment of $50 per Fund.

Allianz Funds and PIMCO Funds Auto-Exchange. The Allianz Funds and PIMCO Funds Auto-Exchange plan establishes regular, periodic exchanges from one Fund account to another Fund account. The plan provides for regular investments into a shareholder’s account in a specific Fund by means of automatic exchanges of a designated amount from another Fund account of the same class of shares and with identical account registration.

Exchanges may be made monthly or quarterly, and may be in any amount subject to a minimum of $1,000 to open a new Fund account and of $50 for any existing Fund account for which shares are purchased through the plan.

Further information regarding the Allianz Funds and PIMCO Funds Auto-Exchange plan is available from the Distributor at 1-800-426-0107 or participating brokers. An investor may enroll by completing an application, which may be obtained from the Distributor or by telephone request at 1-800-426-0107. The use of Allianz Funds and PIMCO Funds Auto-Exchange plan may be limited for certain Funds and/or other share classes at the option of the Distributor, and as set forth in the Prospectus. For more information on exchanges, see “Exchange Privilege” in this section below.

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Allianz Funds and PIMCO Funds Fund Link. Allianz Funds and PIMCO Funds Fund Link (“Fund Link”) connects an investor’s Fund account(s) with a bank account. Fund Link may be used for subsequent purchases and for redemptions and other transactions described under “How to Redeem” in this section. Purchase transactions are effected by electronic funds transfers from the shareholder’s account at a U.S. bank or other financial institution that is an Automated Clearing House (“ACH”) member. Investors may use Fund Link to make subsequent purchases of shares in any amount greater than $50. To initiate such purchases, call 1-800-426-0107. All such calls will be recorded. Fund Link is normally established within 45 days of receipt of a Fund Link application by Boston Financial Data Services, Inc. (the “Transfer Agent”), the Funds’ transfer agent for Class A, B, C and R shares. The minimum investment by Fund Link is $50 per Fund. Shares will be purchased on the regular business day the Distributor receives the funds through the ACH system, provided the funds are received before the close of regular trading on the New York Stock Exchange (or, for the Government Money Market and Treasury Money Market Funds, before 5:30 p.m., Eastern time on each day the New York Stock Exchange and Federal Reserve are open for business). If the funds are received after the close of regular trading, the shares will be purchased on the next regular business day.

Fund Link privileges must be requested on the account application. To establish Fund Link on an existing account, complete a Fund Link application, which is available from the Distributor or the investor’s broker, with signatures guaranteed from all shareholders of record for the account. See “Signature Guarantee” in this section below. Such privileges apply to each shareholder of record for the account unless and until the Distributor receives written instructions from a shareholder of record canceling such privileges. Changes of bank account information must be made by completing a new Fund Link application signed by all owners of record of the account, with all signatures guaranteed. The Distributor, the Transfer Agent and the Fund may rely on any telephone instructions believed to be genuine and will not be responsible to shareholders for any damage, loss or expenses arising out of such instructions. The Fund reserves the right to amend, suspend or discontinue Fund Link privileges at any time without prior notice. Fund Link does not apply to shares held in broker “street name” accounts or in other omnibus accounts.

Signature Guarantee. When a signature guarantee is called for, a “medallion” signature guarantee will be required. A medallion signature guarantee may be obtained from a domestic bank or trust company, broker, dealer, clearing agency, savings association or other financial institution that is participating in a medallion program recognized by the Securities Transfer Association. The three recognized medallion programs are the Securities Transfer Agents Medallion Program (STAMP), Stock Exchanges Medallion Program (SEMP) and New York Stock Exchange, Inc. Medallion Signature Program (NYSE MSP). Signature guarantees from financial institutions that are not participating in one of these programs will not be accepted. Please note that financial institutions participating in a recognized medallion program may still be ineligible to provide a signature guarantee for transactions of greater than a specified dollar amount.

The Distributor reserves the right to modify its signature guarantee standards at any time. The Funds may change the signature guarantee requirements from time to time upon notice to shareholders, which may, but is not required to, be given by means of a new or supplemented prospectus. Shareholders should contact the Distributor for additional details regarding the Funds’ signature guarantee requirements.

Account Registration Changes. Changes in registration or account privileges may be made in writing to the Transfer Agent. Signature guarantees may be required. See “Signature Guarantee” in this section above. All correspondence must include the account number and must be sent to:

Regular Mail:

Allianz Global Investors Distributors LLC

P.O. Box 8050

Boston, MA 02266-8050

Overnight Mail:

Allianz Global Investors Distributors LLC

c/o Boston Financial Data Services, Inc.

30 Dan Road

Canton, MA 02021-2809

Minimum Account Size—Class A, Class B and Class C Shares. Due to the relatively high cost to the Funds of maintaining small accounts, shareholders are asked to maintain an account balance in each Fund in which the shareholder

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invests at least the amount necessary to open the type of account involved. If a shareholder’s balance for any Fund is below such minimum for three months or longer, the applicable Fund’s administrator shall have the right (except in the case of retirement accounts) to close that Fund account after giving the shareholder 60 days in which to increase the account balance. The shareholder’s Fund account will not be liquidated if the reduction in size is due solely to market decline in the value of the shareholder’s Fund shares or if the aggregate value of the shareholder’s accounts (and the accounts of the shareholder’s spouse and his or her children under the age of 21 years), or all of the accounts of an employee benefits plan of a single employer, in Funds of the Allianz Trust, Multi-Strategy Trust and PIMCO Trust exceeds $50,000.

Transfer on Death Registration. The Distributor may accept “transfer on death” (“TOD”) registration requests from investors. The laws of a state selected by the Distributor in accordance with the Uniform TOD Security Registration Act will govern the registration. The Distributor may require appropriate releases and indemnifications from investors as a prerequisite for permitting TOD registration. The Distributor may from time to time change these requirements (including by changes to the determination as to which state’s law governs TOD registrations).

Summary of Minimum Investments and Account Size. The following table provides a summary of the minimum initial investment, minimum subsequent investment and minimum account size for each type of account (including Specified Benefit Accounts):

Type of Account	Initial Minimum Investment		Subsequent Minimum Investment		Minimum Account Size
Regular/General Retail Accounts	$	1,000 per Fund	$	50 per Fund	$	1,000
IRA	$	1,000 per Fund	$	50 per Fund	$	1,000
Roth IRA	$	1,000 per Fund	$	50 per Fund	$	1,000
UTMA	$	1,000 per Fund	$	50 per Fund	$	1,000
UGMA	$	1,000 per Fund	$	50 per Fund	$	1,000
Auto-Invest	$	1,000 per Fund	$	50 per Fund	$	1,000
Auto-Exchange	$	1,000 per Fund	$	50 per Fund	$	1,000
SEP IRA established on or before March 31, 2004	$	50 per Fund/per participant	$	50 per Fund/per participant	$	50
SEP IRA established after March 31, 2004	$	1,000 per Fund/per participant	$	50 per Fund/per participant	$	1,000
SIMPLE IRA*	$	50 per Fund/per participant	$	50 per Fund/per participant	$	50
SAR-SEP IRA*	$	50 per Fund/per participant	$	50 per Fund/per participant	$	50
403(b)(7) custodial account plan established on or before March 31, 2004	$	50 per Fund/per participant	$	50 per Fund/per participant	$	50
403(b)(7) custodial account plan established after March 31, 2004	$	1,000 per Fund/per participant	$	50 per Fund/per participant	$	1,000
Plan Investors held through omnibus accounts-

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Type of Account	Initial Minimum Investment		Subsequent Minimum Investment		Minimum Account Size
Plan Level	$	0	$	0	$	0
Participant Level	$	0	$	0	$	0
Plan Investors held through non-omnibus accounts (individual participant accounts) established on or before March 31, 2004	$	50 per Fund	$	50 per Fund	$	50
Plan Investors held through non-omnibus accounts (individual participant accounts) established after March 31, 2004	$	1,000 per Fund	$	50 per Fund	$	1,000

* The minimums apply to existing accounts only. No new SIMPLE-IRA or SAR-SEP IRA accounts are being accepted.

Alternative Purchase Arrangements. The Funds offer investors up to four classes of shares (Class A, Class B, Class C and Class R) in the applicable Fund’s Prospectus. Class A, Class B and Class C shares bear sales charges in different forms and amounts and bear different levels of expenses, as described below. Class R shares do not bear a sales charge, but are subject to expenses that vary from those levied on Class A, Class B or Class C shares, and are available only to Class R Eligible Plans. Through separate prospectuses, certain of the Funds currently offer up to five additional classes of shares in the United States: Class D, Class M, Class P, Institutional Class and Administrative Class shares. Class D shares are offered through financial intermediaries. Class M shares are offered through certain brokers and financial intermediaries that have established a shareholder servicing relationship with the Trust. Class P shares are offered primarily through certain asset allocation, wrap fee and other fee-based programs sponsored by broker-dealers and other financial intermediaries. Institutional Class shares are offered to pension and profit sharing plans, employee benefit trusts, endowments, foundations, corporations and other high net worth individuals. Administrative Class shares are offered primarily through employee benefit plan alliances, broker-dealers and other intermediaries. Similar to Class R shares, Class D, Class M, Class P, Institutional Class and Administrative Class shares are sold without a sales charge and have different expenses than Class A, Class B, Class C and Class R shares. As a result of lower sales charges and/or operating expenses, Class D, Class M, Class P, Institutional Class and Administrative Class shares are generally expected to achieve higher investment returns than Class A, Class B, Class C or Class R shares. To obtain more information about the other classes of shares, please call the applicable Trust at 1-800-927-4648 (for Institutional Class, Administrative Class, and Class P shares) or the Distributor at 1-800-426-0107 (for Class D shares).

The alternative purchase arrangements described in this Statement of Additional Information are designed to enable a retail investor to choose the method of purchasing Fund shares that is most beneficial to the investor based on all factors to be considered, including the amount and intended length of the investment, the particular Fund and whether the investor intends to exchange shares for shares of other Funds. Generally, when making an investment decision, investors should consider the anticipated life of an intended investment in the Funds, the size of the investment, the accumulated distribution and servicing fees plus CDSCs on Class B or Class C shares, the initial sales charge plus accumulated servicing fees on Class A shares (plus a CDSC in certain circumstances), the possibility that the anticipated higher return on Class A shares due to the lower ongoing charges will offset the initial sales charge paid on such shares, the automatic conversion of Class B shares into Class A shares and the difference in the CDSCs applicable to Class A, Class B and Class C shares.

Investors should understand that initial sales charges, servicing and distribution fees and CDSCs are all used directly or indirectly to fund the compensation of financial intermediaries that sell Fund shares. Depending on the arrangements in place at any particular time, a financial intermediary may have a financial incentive for recommending a particular share class over other share classes.

Class A. The initial sales charge alternative (Class A) might be preferred by investors purchasing shares of sufficient aggregate value to qualify for reductions in the initial sales charge applicable to such shares. Similar reductions are not

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available on the contingent deferred sales charge alternative (Class B) or the asset-based sales charge alternative (Class C). Class A shares are subject to a servicing fee but are not subject to a distribution fee and, accordingly, such shares are expected to pay correspondingly higher dividends on a per share basis. However, because initial sales charges are deducted at the time of purchase, not all of the purchase payment for Class A shares is invested initially. Class B and Class C shares might be preferable to investors who wish to have all purchase payments invested initially, although remaining subject to higher distribution and servicing fees and, for certain periods, being subject to a CDSC. An investor who qualifies for an elimination of the Class A initial sales charge should also consider whether the investor anticipates redeeming shares in a time period that will subject such shares to a CDSC as described below. Class A shares of the Government Money Market, Money Market and Treasury Money Market Funds are not subject to an initial sales charge or a CDSC. See “Class A Deferred Sales Charge” in this section below.

Class B. Class B shares might be preferred by investors who intend to invest in the Funds for longer periods and who do not intend to purchase shares of sufficient aggregate value to qualify for sales charge reductions applicable to Class A shares. Both Class B and Class C shares can be purchased at net asset value without an initial sales charge. However, unlike Class C shares, Class B shares convert into Class A shares after they have been held for a period of time, as described in each Fund’s prospectus. After the conversion takes place, the shares will no longer be subject to a CDSC, and will be subject to the servicing fees charged for Class A shares, which are lower than the distribution and servicing fees charged on either Class B or Class C shares. See “Deferred Sales Charge Alternative—Class B Shares” in this section below. Class B shares are not available for purchase by Plan Investors or by SEP IRAs, SIMPLE IRAs, SAR-SEP IRAs and 403(b)(7) custodial accounts. Traditional and Roth IRAs may invest in Class B shares.

Class B shares of the Low Duration, Money Market, Municipal Bond, Real Return, Short-Term and StocksPLUS^® Funds may only be (i) acquired through the exchange of Class B shares of other Funds; or (ii) purchased by persons who held Class B shares of the Low Duration, Money Market, Municipal Bond, Real Return, Short-Term or StocksPLUS^® Funds at the close of business on September 30, 2004. If a shareholder redeem all Class B shares of the Low Duration, Money Market, Municipal Bond, Real Return, Short-Term and StocksPLUS^® Funds in the shareholder’s account, the shareholder cannot purchase new Class B shares thereafter (although Class B shares of these Funds may still be acquired through exchange). The Funds may waive this restriction for certain specified benefit plans that were invested in Class B shares of the Low Duration, Money Market, Municipal Bond, Real Return, Short-Term or StocksPLUS^® Funds at the close of business on September 30, 2004.

Class C. Class C shares might be preferred by investors who intend to purchase shares that are not of sufficient aggregate value to qualify for Class A sales charges of 1% or less and who wish to have all purchase payments invested initially. Class C shares are preferable to Class B shares for investors who intend to maintain their investment for intermediate periods and therefore may also be preferable for investors who are unsure of the intended length of their investment. Unlike Class B shares, Class C shares are not subject to a CDSC after they have been held for one year (eighteen months for Class C shares of the CommodityRealReturn Strategy, International StocksPLUS^® TR Strategy (U.S. Dollar-Hedged) and RealEstateRealReturn Strategy Funds are subject to only a 1% CDSC during the first year (or eighteen months). Class C shares of the Government Money Market, Money Market and Treasury Money Market Funds are not subject to a CDSC. However, because Class C shares do not convert into Class A shares, Class B shares are preferable to Class C shares for investors who intend to maintain their investment in the Funds for long periods. See “Asset-Based Sales Charge Alternative—Class C Shares” in this section below.

Class R. Only Class R Eligible Plans may purchase Class R shares. Class R shares might be preferred by a Class R Eligible Plan that intends to invest retirement plan assets held through omnibus accounts and does not intend to purchase shares of sufficient aggregate value to qualify for sales charge reductions applicable to Class A shares. Class R shares are preferable to Class B and Class C shares because Class R shares are not subject to a CDSC and are subject to lower aggregate distribution and/or service (12b-1) fees and may be preferable to Class A shares because Class R shares are not subject to the initial sales charge imposed on Class A shares.

In determining which class of shares to purchase, an investor should always consider whether any waiver or reduction of a sales charge or a CDSC is available. See generally “Initial Sales Charge Alternative—Class A Shares” and “Waiver of Contingent Deferred Sales Charges” in this section below.

The maximum purchase of Class B shares of a Fund in a single purchase is $49,999. The maximum purchase of Class C shares of a Fund in a single purchase is $499,999 ($249,999 for the California Short Duration Municipal Income, Floating Income, Low Duration, Short-Term and Short Duration Municipal Income Funds). If an investor intends to purchase Class B or Class C shares: (i) for more than one Fund and the aggregate purchase price for all such purchases will exceed $49,999 for Class B shares or $499,999 ($249,999 for the California Short Duration Municipal Income, Floating Income,

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Low Duration, Short-Term and Short Duration Municipal Income Funds) for Class C shares or (ii) for one Fund in a series of transactions and the aggregate purchase amount will exceed $49,999 for Class B shares or $499,999 ($249,999 for the California Short Duration Municipal Income, Floating Income, Low Duration, Short-Term and Short Duration Municipal Income Funds) for Class C shares, then in either such event the investor should consider whether purchasing another share class may be in the investor’s best interests. The Funds may refuse any order to purchase shares.

For a description of the Distribution and Servicing Plans and distribution and servicing fees payable thereunder with respect to Class A, Class B, Class C and Class R shares, see “Distribution and Servicing (12b-1) Plans” in the prospectuses.

Waiver of Contingent Deferred Sales Charges. The CDSC applicable to Class A and Class C shares is currently waived for:

(i) any partial or complete redemption in connection with (a) required minimum distributions to IRA account owners or beneficiaries who are age 70 ¹/2 or older or (b) distributions to participants in employer-sponsored retirement plans upon attaining age 59 ¹/2 or on account of death or permanent and total disability (as defined in Section 22(e) of the Internal Revenue Code) that occurs after the purchase of Class A or Class C shares;

(ii) any partial or complete redemption in connection with a qualifying loan or hardship withdrawal from an employer sponsored retirement plan;

(iii) any complete redemption in connection with a distribution from a qualified employer retirement plan in connection with termination of employment or termination of the employer’s plan and the transfer to another employer’s plan or to an IRA;

(iv) any partial or complete redemption following death or permanent and total disability (as defined in Section 22(e) of the Internal Revenue Code) of an individual holding shares for his or her own account and/or as the last survivor of a joint tenancy arrangement (this provision, however, does not cover an individual holding in a fiduciary capacity or as a nominee or agent or a legal entity that is other than an individual or the owners or beneficiaries of any such entity) provided the redemption is requested within one year of the death or initial determination of disability and provided the death or disability occurs after the purchase of the shares;

(v) any redemption resulting from a return of an excess contribution to a qualified employer retirement plan or an IRA;

(vi) up to 10% per year of the value of a Fund account that (a) has the value of at least $10,000 at the start of such year and (b) is subject to an Automatic Withdrawal Plan;

(vii) redemptions by Trustees, officers and employees of any of the Trust, and by directors, officers and employees of the Distributor, Allianz, Allianz Global Fund Management or PIMCO;

(viii) redemptions effected pursuant to a Fund’s right to involuntarily redeem a shareholder’s Fund account if the aggregate net asset value of shares held in such shareholder’s account is less than a minimum account size specified in such Fund’s prospectus;

(ix) involuntary redemptions caused by operation of law;

(x) redemptions of shares of any Fund that is combined with another Fund, investment company, or personal holding company by virtue of a merger, acquisition or other similar reorganization transaction;

(xi) redemptions by a shareholder who is a participant making periodic purchases of not less than $50 through certain employer sponsored savings plans that are clients of a broker-dealer with which the Distributor has an agreement with respect to such purchases;

(xii) redemptions effected by trustees or other fiduciaries who have purchased shares for employer-sponsored plans, the trustee, administrator, fiduciary, broker, trust company or registered investment adviser for which has an agreement with the Distributor with respect to such purchases;

(xiii) redemptions in connection with IRA accounts established with Form 5305-SIMPLE under the Internal Revenue Code for which the Trust is the designated financial institution;

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(xiv) a redemption by a holder of Class A shares who purchased $1,000,000 ($250,000 in the case of the California Short Duration Municipal Income, Floating Income, Low Duration, Short Duration Municipal Income and Short-Term Funds) or more of Class A shares (and therefore did not pay a sales charge) where the participating broker or dealer involved in the sale of such shares waived the commission it would normally receive from the Distributor pursuant to an agreement with the Distributor;

(xv) a redemption by a holder of Class A or Class C shares where the participating broker or dealer involved in the purchase of such shares waived all payments it normally would receive from the Distributor at the time of purchase (i.e., commissions or reallowances of initial sales charges and advancements of service and distribution fees); and

(xvi) a redemption by a holder of Class A or Class C shares where, by agreement with the Distributor, the participating broker or dealer involved in the purchase of such shares waived a portion of any payment it normally would receive from the Distributor at the time of purchase (or otherwise agreed to a variation from the normal payment schedule) in connection with such purchase.

The CDSC applicable to Class B shares is currently waived for any partial or complete redemption in each of the following cases:

(i) in connection with required minimum distributions to IRA account owners or to plan participants or beneficiaries who are age 70 ¹/2 or older;

(ii) involuntary redemptions caused by operation of law;

(iii) redemption of shares of any Fund that is combined with another Fund, investment company, or personal holding company by virtue of a merger, acquisition or other similar reorganization transaction;

(iv) following death or permanent and total disability (as defined in Section 22(e) of the Internal Revenue Code) of an individual holding shares for his or her own account and/or as the last survivor of a joint tenancy arrangement (this provision, however, does not cover an individual holding in a fiduciary capacity or as a nominee or agent or a legal entity that is other than an individual or the owners or beneficiaries of any such entity) provided the redemption is requested within one year of the death or initial determination of disability and further provided the death or disability occurs after the purchase of the shares;

(v) up to 10% per year of the value of a Fund account that (a) has a value of at least $10,000 at the start of such year and (b) is subject to an Automatic Withdrawal Plan (See “How to Redeem—Automatic Withdrawal Plan” in this section); and

(vi) redemptions effected pursuant to a Fund’s right to involuntarily redeem a shareholder’s Fund account if the aggregate net asset value of shares held in the account is less than a minimum account size specified in the Fund’s prospectus.

The Distributor may require documentation prior to waiver of the CDSC for any class, including distribution letters, certification by plan administrators, applicable tax forms, death certificates, physicians’ certificates (e.g., with respect to disabilities), etc.

Exempt Transactions; No CDSCs or Payments to Brokers. Investors will not be subject to CDSCs, and brokers and dealers will not receive any commissions or reallowances of initial sales charges or advancements of service and distribution fees, on the transactions described below (which are sometimes referred to as “Exempt Transactions”):

• A redemption by a holder of Class A or Class C shares where the participating broker or dealer involved in the purchase of such shares waived all payments it normally would receive from the Distributor at the time of purchase (e.g., commissions and/or reallowances of initial sales charges and advancements of service and distribution fees).

• A redemption by a holder of Class A or Class C shares where, by agreement with the Distributor, the participating broker or dealer involved in the purchase of such shares waived a portion of any payment it normally would receive from the Distributor at the time of purchase (or otherwise agreed to a variation from the normal payment schedule) in connection with such purchase.

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• A redemption by a holder of Class A shares of the California Short Duration Municipal Income, Floating Income, Low Duration, Short Duration Municipal Income and Short-Term Funds purchased through a dealer that sold $250,000 or more of Class A shares of the Funds.

Initial Sales Charge Alternative – Class A Shares. Class A shares are sold at a public offering price equal to their net asset value per share plus a sales charge, as set forth in each Fund’s prospectus. As indicated in this section below under “Class A Deferred Sales Charge,” certain investors who purchase $1,000,000 ($250,000 in the case of the California Short Duration Municipal Income, Floating Income, Low Duration, Short Duration Municipal Income and Short-Term Funds) or more of any Fund’s Class A shares (and thus pay no initial sales charge) may be subject to a CDSC of up to 1% if they redeem such shares during the first 18 months after their purchase. Class A shares of the Government Money Market, Money Market and Treasury Money Market Funds are not subject to an initial sales charge or CDSC.

Each Fund receives the entire net asset value of its Class A shares purchased by investors (i.e., the gross purchase price minus the applicable sales charge). The Distributor receives the sales charge shown above listed in each Fund’s prospectus less any applicable discount or commission “reallowed” to participating brokers. The Distributor may, however, elect to reallow the entire sales charge to participating brokers for all sales with respect to which orders are placed with the Distributor for any particular Fund during a particular period. During such periods as may from time to time be designated by the Distributor, the Distributor will pay an additional amount of up to 0.50% of the purchase price on sales of Class A shares of all or selected Funds purchased to each participating broker that obtains purchase orders in amounts exceeding thresholds established from time to time by the Distributor.

Shares issued pursuant to the automatic reinvestment of income dividends or capital gains distributions are issued at net asset value and are not subject to any sales charges.

Under the circumstances described below, investors may be entitled to pay reduced sales charges for Class A shares.

These discounts and commissions may be increased pursuant to special arrangements from time to time agreed upon between the Distributor and certain participating brokers.

Right of Accumulation and Combined Purchase Privilege (Breakpoints). A Qualifying Investor (as defined below) may qualify for a reduced sales charge on Class A shares (the “Combined Purchase Privilege”) by combining concurrent purchases of the Class A shares of one or more Eligible Funds (as defined below) into a single purchase. In addition, a Qualifying Investor may qualify for a reduced sale charge on Class A shares (the “Right of Accumulation” or “Cumulative Quantity Discount”) by combining the purchase of Class A shares of an Eligible Fund with the current aggregate net asset value of all Class A, B, and C shares of any Eligible Fund held by accounts for the benefit of such Qualifying Investor. An Eligible Fund is a Fund (other than the Government Money Market, Money Market and Treasury Money Market Funds) that offers Class A shares.

The term “Qualifying Investor” refers to:

(i) an individual, such individual’s spouse, such individual’s children under the age of 21 years, or such individual’s siblings (each a “family member”) (including family trust* accounts established by such a family member)

or

(ii) a trustee or other fiduciary for a single trust (except family trusts* noted above), estate or fiduciary account although more than one beneficiary may be involved

or

(iii) an employee benefit plan of a single employer.

*For the purpose of determining whether a purchase would qualify for a reduced sales charge under the Combined Purchase Privilege or Right of Accumulation, a “family trust” is one in which a family member(s) described in section (i) above is/are a beneficiary/ies and such person(s) and/or another family member is the trustee.

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Shares purchased or held through a Plan Investor or any other employer-sponsored benefit program do not count for purposes of determining whether an investor qualifies for a Cumulative Quantity Discount.

Letter of Intent. An investor may also obtain a reduced sales charge on purchases of Class A shares by means of a written Letter of Intent, which expresses an intention to invest not less than $50,000 within a period of 13 months in Class A shares of any Eligible Fund(s) (which does not include the Government Money Market, Money Market and Treasury Money Market Funds). The maximum intended investment amount allowable in a Letter of Intent is $1,000,000 (except for Class A shares of the California Short Duration Municipal Income, Floating Income, Low Duration Fund, Short Term Fund, and Short Duration Municipal Income Fund, for which the maximum intended investment amount is $100,000). Each purchase of shares under a Letter of Intent will be made at the public offering price or prices applicable at the time of such purchase to a Single Purchase of the dollar amount indicated in the Letter. At the investor’s option, a Letter of Intent may include purchases of Class A shares of any Eligible Fund made not more than 90 days prior to the date the Letter of Intent is signed; however, the 13-month period during which the Letter of Intent is in effect will begin on the date of the earliest purchase to be included and the sales charge on any purchases prior to the Letter of Intent will not be adjusted. In making computations concerning the amount purchased for purpose of a Letter of Intent, any redemptions during the operative period are deducted from the amount invested.

Investors qualifying for the Combined Purchase Privilege described above may purchase shares of the Eligible Funds (which does not include the Government Money Market, Money Market and Treasury Money Market Funds) under a single Letter of Intent. A Letter of Intent is not a binding obligation to purchase the full amount indicated. The minimum initial investment under a Letter of Intent is 5% of such amount. Shares purchased with the first 5% of the amount indicated in the Letter of Intent will be held in escrow (while remaining registered in the investor’s name) to secure payment of the higher sales charge applicable to the shares actually purchased in the event the full intended amount is not purchased. If the full amount indicated is not purchased, a sufficient amount of such escrowed shares will be involuntarily redeemed to pay the additional sales charge applicable to the amount actually purchased, if necessary. Dividends on escrowed shares, whether paid in cash or reinvested in additional Eligible Fund shares, are not subject to escrow. When the full amount indicated has been purchased, the escrow will be released.

If an investor wishes to enter into a Letter of Intent in conjunction with an initial investment in Class A shares of a Fund, the investor should complete the appropriate portion of the account application. Current Class A shareholders desiring to do so may obtain a form of Letter of Intent by contacting the Distributor at 1-800-426-0107 or any broker participating in this program.

Shares purchased or held through a Plan Investor or any other employer-sponsored benefit program do not count for purposes of determining whether an investor has qualified for a reduced sales charge through the use of a Letter of Intent.

Reinstatement Privilege. A Class A shareholder who has caused any or all of his shares (other than shares of the Government Money Market, Money Market and Treasury Money Market Funds that were not acquired by exchanging Class A shares of another Fund) to be redeemed may reinvest all or any portion of the redemption proceeds in Class A shares of any Eligible Fund at net asset value without any sales charge, provided that such reinvestment is made within 120 calendar days after the redemption or repurchase date. Shares are sold to a reinvesting shareholder at the net asset value next determined. See “How Net Asset Value is Determined” in the applicable Fund’s prospectus. A reinstatement pursuant to this privilege will not cancel the redemption transaction and, consequently, any gain or loss so realized may be recognized for federal tax purposes except that no loss may be recognized to the extent that the proceeds are reinvested in shares of the same Fund within 30 days. The reinstatement privilege may be utilized by a shareholder only once, irrespective of the number of shares redeemed, except that the privilege may be utilized without limit in connection with transactions whose sole purpose is to transfer a shareholder’s interest in a Fund to his Individual Retirement Account or other qualified retirement plan account. An investor may exercise the reinstatement privilege by written request sent to the Distributor or to the investor’s broker.

Sales at Net Asset Value. Each Fund may sell its Class A shares at net asset value without a sales charge to

(i) current or retired officers, trustees, directors or employees of any of the Trust, Allianz Funds, or Multi-Strategy Trust, Allianz, Allianz Global Fund Management, PIMCO or the Distributor, other affiliates of Allianz Global Fund Management and funds advised or subadvised by any such affiliates, in any case at the discretion of Allianz Global Fund Management, PIMCO or the Distributor; a parent, brother or sister of any such officer, trustee, director or employee or a spouse or child of any of the foregoing persons, or any trust, profit-sharing or pension plan for the benefit of any such person and to any other person if the Distributor anticipates that there will be minimal sales expenses associated with the sale;

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(ii) current registered representatives and other full-time employees of participating brokers or such persons’ spouses or for trust or custodial accounts for their minor children;

(iii) trustees or other fiduciaries purchasing shares for certain plans sponsored by employers, professional organizations or associations or charitable organizations, the trustee, administrator, recordkeeper, fiduciary, broker, trust company or registered investment adviser for which has an agreement with the Distributor, Allianz Global Fund Management or PIMCO with respect to such purchases (including provisions related to minimum levels of investment in a Trust), and to participants in such plans and their spouses purchasing for their account(s) or IRAs;

(iv) participants investing through accounts known as “wrap accounts” established with brokers or dealers approved by the Distributor where such brokers or dealers are paid a single, inclusive fee for brokerage and investment management services;

(v) client accounts of broker-dealers or registered investment advisers affiliated with such broker-dealers with which the Distributor, Allianz Global Fund Management or PIMCO has an agreement for the use of a Fund in particular investment products or programs or in particular situations;

(vi) accounts for which the company that serves as trustee or custodian either (a) is affiliated with Allianz Global Fund Management or PIMCO or (b) has a specific agreement to that effect with the Distributor; and

(vii) investors who purchase shares in “Exempt Transactions,” as described in this section under “Exempt Transactions; No CDSCs or Payments to Brokers” above.

The Distributor will only pay service fees and will not pay any initial commission or other fees to dealers upon the sale of Class A shares to the purchasers described in sub-paragraphs (i) through (vii) above except that the Distributor will pay initial commissions to any dealer for sales to purchasers described under sub-paragraph (iii) above provided such dealer has a written agreement with the Distributor specifically providing for the payment of such initial commissions.

Notification of Distributor. In many cases, neither the Trust, Allianz Funds, Allianz Funds Multi-Strategy Trust, the Distributor nor the Transfer Agent will have the information necessary to determine whether a quantity discount or reduced sales charge is applicable to a purchase. An investor or participating broker must notify the Distributor whenever a quantity discount or reduced sales charge is applicable to a purchase and must provide the Distributor with sufficient information at the time of purchase to verify that each purchase qualifies for the privilege or discount, including such information as is necessary to obtain any applicable “combined treatment” of an investor’s holdings in multiple accounts. Upon such notification, the investor will receive the lowest applicable sales charge. For investors investing in Class A shares through a financial intermediary, it is the responsibility of the financial intermediary to ensure that the investor obtains the proper quantity discount or reduced sales charge. The quantity discounts and commission schedules described above may be modified or terminated at any time.

Class A Deferred Sales Charge. For purchases of Class A shares of all Funds (except the California Short Duration Municipal Income, Floating Income, Government Money Market, Low Duration, Money Market, Short Duration Municipal Income, Short-Term and Treasury Money Market Funds), investors who purchase $1,000,000 or more of Class A shares (and, thus, purchase such shares without any initial sales charge) may be subject to a 1% CDSC if such shares are redeemed within 18 months of their purchase. Certain purchases of Class A shares of the California Short Duration Municipal Income, Floating Income, Low Duration, Short Duration Municipal Income and Short-Term Funds described in this section above under “Initial Sales Charge—Class A Shares” will be subject to a CDSC of 0.75% (for the Low Duration Fund) or 0.50% (for the California Short Duration Municipal Income, Floating Income, Short Duration Municipal Income and Short-Term Funds) if such shares are redeemed within 18 months after their purchase. The CDSCs described in this paragraph are sometimes referred to as the “Class A CDSC.” The Class A CDSC does not apply to investors purchasing any Fund’s Class A shares if such investors are otherwise eligible to purchase Class A shares without any sales charge because they are described under “Sales at Net Asset Value” in this section above.

For purchases subject to the Class A CDSC, a CDSC will apply for any redemption of such Class A shares that occurs within 18 months of their purchase. No CDSC will be imposed if the shares redeemed have been acquired through the reinvestment of dividends or capital gains distributions or if the amount redeemed is derived from increases in the value of the account above the amount of purchase payments subject to the CDSC. In determining whether a CDSC is payable, it is assumed that the shareholder will redeem first the lot of Class A shares that will incur the lowest CDSC. Any CDSC imposed on a redemption of Class A shares is paid to the Distributor. The manner of calculating the CDSC on Class A shares is described below in this section under “Calculation of CDSC on Shares Purchased After December 31, 2001.”

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The Class A CDSC does not apply to Class A shares of the Government Money Market, Money Market and Treasury Money Market Funds. However, if Class A shares of these Funds are purchased in a transaction that, for any other Fund, would be subject to the CDSC (i.e., a purchase of $1,000,000 or more ($249,999 or more in the case of the California Short Duration Municipal Income, Floating Income, Low Duration, Short Duration Municipal Income and Short-Term Funds)) and are subsequently exchanged for Class A shares of any other Fund, a Class A CDSC will apply to the shares of the Fund(s) acquired by exchange for a period of 18 months from the date of the exchange.

The Class A CDSC is currently waived in connection with certain redemptions as described in this section above under “Alternative Purchase Arrangements—Waiver of Contingent Deferred Sales Charges.” For more information about the Class A CDSC, call the Distributor at 1-800-426-0107.

For Class A shares outstanding for 18 months or more, the Distributor may also pay participating brokers annual servicing fees of 0.25% (0.10% for the Government Money Market, Money Market and Treasury Money Market Funds) of the net asset value of such shares.

Deferred Sales Charge Alternative – Class B Shares. Class B shares are sold at their current net asset value without any initial sales charge. The full amount of an investor’s purchase payment will be invested in shares of the Fund(s) selected.

Calculation of CDSC on Shares Purchased After December 31, 2001. A CDSC may be imposed on Class A, Class B or Class C shares under certain circumstances. A CDSC is imposed on shares redeemed within a certain number of years after their purchase. When shares are redeemed, any shares acquired through the reinvestment of dividends or capital gains distributions will be redeemed first and will not be subject to any CDSC. For the redemption of all other shares, the CDSC will be based on either the shareholder’s original per-share purchase price or the then current net asset value of the shares being sold, whichever is lower. CDSCs will be deducted from the proceeds of the shareholder’s redemption, not from the amounts remaining in the shareholder’s account. In determining whether a CDSC is payable, it is assumed that the shareholder will redeem first the lot of shares that will incur the lowest CDSC. Class B shares are not available for purchase by employer sponsored retirement plans.

Whether a CDSC is imposed and the amount of the CDSC will depend on the number of years since the investor purchased the shares being redeemed. See the Fund’s prospectus for information about any applicable CDSCs.

Class B shares are subject to higher distribution fees than Class A shares for a fixed period after their purchase, after which they automatically convert to Class A shares and are no longer subject to such higher distribution fees. See each Fund’s prospectus for information about the conversion of Class B shares to Class A shares. The Class B CDSC is currently waived in connection with certain redemptions as described in this section above under “Alternative Purchase Arrangements—Waiver of Contingent Deferred Sales Charges.” For more information about the Class B CDSC, call the Distributor at 1-800-426-0107.

Calculation of CDSC on Shares Purchased On or Before December 31, 2001. The manner of calculating the CDSC on Class B and Class C shares (and where applicable, Class A shares) purchased before December 31, 2001 differs from that described in this section above under “Calculation of CDSC on Shares Purchased After December 31, 2001.” A CDSC will be imposed on Class B shares if an investor redeems an amount that causes the current value of the investor’s account for a Fund to fall below the total dollar amount of purchase payments subject to the CDSC, except that no CDSC is imposed if the shares redeemed have been acquired through the reinvestment of dividends or capital gains distributions or if the amount redeemed is derived from increases in the value of the account above the amount of purchase payments subject to the CDSC. It is assumed that the shareholder will redeem first the lot of shares that will incur the lowest CDSC. In determining whether an amount is available for redemption without incurring a CDSC, the purchase payments made for all Class B shares in the shareholder’s account for the particular Fund are aggregated, and the current value of all such shares is aggregated. Any CDSC imposed on a redemption of Class B shares is paid to the Distributor. The manner of calculating the CDSC on Class B shares purchased after December 31, 2001 differs and is described above.

For investors investing in Class B shares through a financial intermediary, it is the responsibility of the financial intermediary to ensure that the investor is credited with the proper holding period for the shares redeemed.

Except as otherwise disclosed herein or in the appropriate Prospectus(es), Class B shares that are received in an exchange will be subject to a CDSC to the same extent as the shares exchanged. In addition, Class B shares that are received in an exchange will convert into Class A shares at the same time as the original shares would have converted into Class A shares. For example, Class B shares of the Trust received in an exchange for Class B shares of Allianz Trust purchased on or after October 1, 2004, will convert into Class A shares after the fifth year. Class C shares received in exchange for Class C

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shares with a different CDSC period will have the same CDSC period as the shares exchanged. Furthermore, shares that are received in an exchange will be subject to the same CDSC calculation as the shares exchanged. In other words, shares received in exchange for shares purchased after December 31, 2001 will be subject to the same manner of CDSC calculation as the shares exchanged.

Conversion of Class B Shares Purchased Through Reinvestment of Distributions. For purposes of determining the date on which Class B shares convert into Class A shares, a Class B share purchased through the reinvestment of dividends or capital gains distributions (a “Distributed Share”) will be considered to have been purchased on the purchase date (or deemed purchase date) of the Class B share through which such Distributed Share was issued.

Asset-Based Sales Charge Alternative – Class C Shares. Class C shares are sold at their current net asset value without any initial sales charge. A CDSC is imposed if an investor redeems Class C shares within a certain time period after their purchase. When shares are redeemed, any shares acquired through the reinvestment of dividends or capital gains distributions will be redeemed first and will not be subject to any CDSC. For the redemption of all other shares, the CDSC will be based on either the shareholder’s original per-share purchase price or the then current net asset value of the shares being sold, whichever is lower. CDSCs will be deducted from the proceeds of the shareholder’s redemption, not from the amounts remaining in the shareholder’s account. In determining whether a CDSC is payable, it is assumed that the shareholder will redeem first the lot of shares that will incur the lowest CDSC. All of an investor’s purchase payments are invested in shares of the Fund(s) selected.

Whether a CDSC is imposed and the amount of the CDSC will depend on the number of years since the investor made a purchase payment from which an amount is being redeemed. Purchases are subject to a CDSC as described in each Fund’s prospectus.

Any CDSC imposed on a redemption of Class C shares is paid to the Distributor. For investors investing in Class C shares through a financial intermediary, it is the responsibility of the financial intermediary to ensure that the investor is credited with the proper holding period for the shares redeemed. Unlike Class B shares, Class C shares do not automatically convert to any other class of shares of the Funds.

The manner of calculating the CDSC on Class C shares is the same as that of Class B shares purchased after December 31, 2001, as described in this section above under “Calculation of CDSC on Shares Purchased After December 31, 2001.” Except as described below, for sales of Class C shares made and services rendered to Class C shareholders, the Distributor expects to make payments to participating brokers, at the time the shareholder purchases Class C shares of a Fund. The Distributor does not expect to make any payment for sales of Class C shares or services rendered for the Government Money Market, Money Market and Treasury Money Market Funds. For sales of Class C shares made to participants making periodic purchases of not less than $50 through certain employer sponsored savings plans that are clients of a broker-dealer with which the Distributor has an agreement with respect to such purchases, no payments are made at the time of purchase. Financial intermediaries that receive distribution and/or service fees may in turn pay and/or reimburse all or a portion of these fees to their customers. During such periods as may from time to time be designated by the Distributor, the Distributor will pay an additional amount of up to 0.50% of the purchase price on sales of Class C shares of all or selected Funds purchased to each participating broker that obtains purchase orders in amounts exceeding thresholds established from time to time by the Distributor.

In addition, after the time of shareholder purchase for sales of Class C shares made and services rendered to Class C shareholders, the Distributor expects to make annual payments to participating brokers.

The Class C CDSC is currently waived in connection with certain redemptions as described in this section above under “Alternative Purchase Arrangements—Waiver of Contingent Deferred Sales Charges.” For more information about the Class C CDSC, contact the Distributor at 1-800-426-0107.

No Sales Charge Alternative – Class R Shares. Class R shares are sold at their current net asset value without any initial sales charge. The full amount of the investor’s purchase payment will be invested in shares of the Fund(s). Class R shares are not subject to a CDSC upon redemption by an investor. For sales of Class R shares made and services rendered to Class R shareholders, the Distributor expects to make payments to participating brokers and, with respect to servicing fees, other financial intermediaries (which may include specified benefit plans, their service providers and their sponsors), at the time the shareholder purchases Class R shares, of up to 0.50% (representing up to 0.25% distribution fees and up to 0.25% servicing fees) of the purchase.

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Information For All Share Classes. Brokers and other financial intermediaries provide varying arrangements for their clients to purchase and redeem Fund shares. Some may establish higher minimum investment requirements than set forth above. Firms may arrange with their clients for other investment or administrative services and may independently establish and charge transaction fees and/or other additional amounts to their clients for such services, which charges would reduce clients’ return. Firms also may hold Fund shares in nominee or street name as agent for and on behalf of their customers. In such instances, the Trust’s Transfer Agent will have no information with respect to or control over accounts of specific shareholders. Such shareholders may obtain access to their accounts and information about their accounts only from their broker. In addition, certain privileges with respect to the purchase and redemption of shares or the reinvestment of dividends may not be available through such firms. Some firms may participate in a program allowing them access to their clients’ accounts for servicing including, without limitation, transfers of registration and dividend payee changes; and may perform functions such as generation of confirmation statements and disbursement of cash dividends.

Exchange Privilege—Class A, Class B, Class C and Class R Shares. Except with respect to exchanges for shares of Funds for which sales may be suspended to new investors or as provided in the applicable Fund’s prospectus or in this Statement of Additional Information, a shareholder may exchange Class A, Class B, Class C and Class R shares of any Fund for the same Class of shares of any other Fund in an account with identical registration on the basis of their respective net asset values, except that a sales charge will apply on exchanges of Class A shares of the Government Money Market, Money Market and Treasury Money Market Funds on which no sales charge was paid at the time of purchase. For Class R shares, specified benefit plans may also limit exchanges to Funds offered as investment options in the plan and exchanges may only be made through the plan administrator. Class A shares of the Government Money Market, Money Market and Treasury Money Market Funds may be exchanged for Class A shares of any other Fund, but the usual sales charges applicable to investments in such other Fund apply on shares for which no sales charge was paid at the time of purchase. Shares of one Class of a Fund may also be exchanged directly for shares of another Class of the same Fund, as described (and subject to the conditions and restrictions set forth) in this section under “Distribution of Trust Shares—Purchases, Exchanges and Redemptions” in the applicable Statement of Additional Information. There are currently no other exchange fees or charges. Exchanges are subject to any minimum initial purchase requirements for each share class of each Fund, except with respect to exchanges effected through the Trust’s Auto-Exchange plan. An exchange will constitute a taxable sale for federal income tax purposes.

Investors who maintain their account with the Distributor may exchange shares by a written exchange request sent to Allianz Global Investors Distributors LLC, P.O. Box 8050, Boston, MA 02266-8050 or, unless the investor has specifically declined telephone exchange privileges on the account application or elected in writing not to utilize telephone exchanges, by a telephone request to the Distributor at 1-800-426-0107. The Trust will employ reasonable procedures to confirm that instructions communicated by telephone are genuine, and may be liable for any losses due to unauthorized or fraudulent instructions if it fails to employ such procedures. The Trust will require a form of personal identification prior to acting on a caller’s telephone instructions, will provide written confirmations of such transactions and will record telephone instructions. Exchange forms are available from the Distributor at 1-800-426-0107 and may be used if there will be no change in the registered name or address of the shareholder. Changes in registration information or account privileges may be made in writing to the Transfer Agent, Boston Financial Data Services, Inc., at Allianz Global Investors Distributors LLC, P.O. Box 8050, Boston, MA 02266-8050 or by use of forms that are available from the Distributor. A signature guarantee is required. See “Signature Guarantee” in this section. Telephone exchanges, for all Funds except the Government Money Market and Treasury Money Market Funds, may be made between 9:00 a.m., Eastern time and the close of regular trading (normally 4:00 p.m., Eastern time) on the New York Stock Exchange on any day the Exchange is open (generally weekdays other than normal holidays). For the Government Money Market and Treasury Money Market Funds, orders for exchanges accepted prior to 5:00 p.m., Eastern time, (or an earlier cut-off time if the Funds close early) on a day that the New York Stock Exchange and Federal Reserve are open for business will be executed at the respective net asset values determined as of 5:30 p.m., Eastern time.

The Trust reserves the right to refuse exchange purchases (or purchase and redemption and/or redemption and purchase transactions) if, in the judgment of an Adviser or a Fund’s Sub-Adviser, such transaction would adversely affect a Fund and its shareholders. In particular, a pattern of transactions characteristic of “market timing” strategies may be deemed by an Adviser to be detrimental to a Trust or a particular Fund. Although the Trust has no current intention of terminating or modifying the exchange privilege, each reserves the right to do so at any time. Except as otherwise permitted by the Securities and Exchange Commission, each Trust will give 60 days’ advance notice to shareholders of any termination or material modification of the exchange privilege. Because the Funds will not always be able to detect market timing activity, investors should not assume that the Funds will be able to detect or prevent all market timing or other trading practices that may disadvantage the Funds. For example, it is more difficult for the Funds to monitor trades that are placed by omnibus or other nominee accounts because the broker, retirement plan administrator, fee-based program sponsor or other financial intermediary maintains the record of the applicable Fund’s underlying beneficial owners. For further information about exchange privileges, contact the participating broker or call the Distributor at 1-800-426-0107.

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With respect to Class B and Class C shares, or Class A shares subject to a CDSC, if less than all of an investment is exchanged out of a Fund, any portion of the investment exchanged will be from the lot of shares that would incur the lowest CDSC if such shares were being redeemed rather than exchanged.

Except as otherwise disclosed in the applicable Prospectus(es), shares that are received in an exchange will be subject to the same CDSC as the shares exchanged. For example, Class C shares that have a twelve-month CDSC period received in exchange for Class C shares that have an eighteen-month CDSC period will have the same CDSC period as the shares exchanged (in this case, eighteen months).

Shareholders should take into account the effect of any exchange on the applicability of any CDSC that may be imposed upon any subsequent redemption.

Investors may also select the Allianz Funds and PIMCO Funds Auto-Exchange plan, which establishes automatic periodic exchanges. For further information on automatic exchanges see “How to Buy Shares—Allianz Funds and PIMCO Funds Auto-Exchange” in this section above.

Redemptions of Class A, Class B, Class C and Class R Shares. Class A, Class B, Class C or Class R shares may be redeemed through a participating broker, by telephone, by submitting a written redemption request directly to the Transfer Agent (for non-broker accounts) or through an Automatic Withdrawal Plan or Allianz Funds and PIMCO Funds Fund Link, if available. Class R shares may be redeemed only through the plan administrator, and not directly by the plan participant.

A CDSC may apply to a redemption of Class A, Class B or Class C shares. See “Alternative Purchase Arrangements” in this section above. Shares are redeemed at their net asset value next determined after a redemption request has been received as described below, less any applicable CDSC. There is no charge by the Distributor (other than an applicable CDSC) with respect to a redemption; however, a participating broker who processes a redemption for an investor may charge customary commissions for its services (which may vary). Dealers and other financial services firms are obligated to transmit orders promptly. Requests for redemption received by dealers or other firms prior to the close of regular trading (normally 4:00 p.m., Eastern time) on the New York Stock Exchange on a regular business day and received by the Distributor prior to the close of the Distributor’s business day will be confirmed at the net asset value effective at the closing of the Exchange on that day, less any applicable CDSC.

Other than an applicable CDSC, a shareholder will not pay any special fees or charges to a Trust or the Distributor when the shareholder sells shares. However, if a shareholder sells shares through a broker, dealer or other financial intermediary, that firm may charge the shareholder a commission or other fee for processing the shareholder’s redemption request.

Redemptions of Fund shares may be suspended when trading on the New York Stock Exchange is restricted or during an emergency that makes it impracticable for the Funds to dispose of their securities or to determine fairly the value of their net assets, or during any other period as permitted by the Securities and Exchange Commission for the protection of investors. Under these and other unusual circumstances, the Trust may suspend redemptions or postpone payments for more than seven days, as permitted by law.

Direct Redemption. A shareholder’s original account application permits the shareholder to redeem by written request and by telephone (unless the shareholder specifically elects not to utilize telephone redemptions) and to elect one or more of the additional redemption procedures described below. A shareholder may change the instructions indicated on his original account application, or may request additional redemption options, only by transmitting a written direction to the Transfer Agent. Requests to institute or change any of the additional redemption procedures will require a signature guarantee.

Redemption proceeds will normally be mailed to the redeeming shareholder within seven days or, in the case of wire transfer or Fund Link redemptions, sent to the designated bank account within one business day. Fund Link redemptions may be received by the bank on the second or third business day. In cases where shares have recently been purchased by personal check, redemption proceeds may be withheld until the check has been collected, which may take up to 15 days. To avoid such withholding, investors should purchase shares by certified or bank check or by wire transfer.

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Written Requests. To redeem shares in writing (whether or not represented by certificates), a shareholder must send the following items to the Transfer Agent, Boston Financial Data Services, Inc., at Allianz Global Investors Distributors LLC, P.O. Box 8050, Boston, MA 02266-8050:

(1) a written request for redemption signed by all registered owners exactly as the account is registered on the Transfer Agent’s records, including fiduciary titles, if any, and specifying the account number and the dollar amount or number of shares to be redeemed;

(2) for certain redemptions described below, a guarantee of all signatures on the written request or on the share certificate or accompanying stock power, if required, as described in this section under “Signature Guarantee” in this section;

(3) any share certificates issued for any of the shares to be redeemed (see “Certificated Shares” in this section below); and

(4) any additional documents that may be required by the Transfer Agent for redemption by corporations, partnerships or other organizations, executors, administrators, trustees, custodians or guardians, or if the redemption is requested by anyone other than the shareholder(s) of record.

Transfers of shares are subject to the same requirements. A signature guarantee is not required for a redemption requested by and payable to all shareholders of record for the account that is to be sent to the address of record for that account. To avoid delay in redemption or transfer, shareholders having any questions about these requirements should contact the Transfer Agent in writing or call the Distributor at 1-800-426-0107 before submitting a request. Redemption or transfer requests will not be honored until all required documents have been completed by the shareholder and received by the Transfer Agent. This redemption option does not apply to shares held in broker “street name” accounts. Shareholders whose shares are held in broker “street name” accounts must redeem through their broker. Plan participants must redeem through their plan administrator.

If the proceeds of the redemption (i) are to be paid to a person other than the record owner, (ii) are to be sent to an address other than the address of the account on the Transfer Agent’s records or (iii) are to be paid to a corporation, partnership, trust or fiduciary, the signature(s) on the redemption request and on the certificates, if any, or stock power must be guaranteed as described above, except that the Distributor may waive the signature guarantee requirement for redemptions up to $2,500 by a trustee of a qualified specified benefit plan, the administrator for which has an agreement with the Distributor.

Telephone Redemptions. Each Trust accepts telephone requests for redemption of uncertificated shares, except for investors who have specifically declined telephone redemption privileges on the account application or elected in writing not to utilize telephone redemptions. The proceeds of a telephone redemption will be sent to the record shareholder at his record address. Changes in account information must be made in a written authorization with a signature guarantee. See “Signature Guarantee” in this section. Telephone redemptions will not be accepted during the 30-day period following any change in an account’s record address. This redemption option does not apply to shares held in broker “street name” accounts. Shareholders whose shares are held in broker “street name” accounts must redeem through their broker. Plan participants must redeem through their plan administrator.

By completing an account application, an investor agrees that the applicable Trust, the Distributor and the Transfer Agent shall not be liable for any loss incurred by the investor by reason of the Trust accepting unauthorized telephone redemption requests for his account if the Trust reasonably believes the instructions to be genuine. Thus, shareholders risk possible losses in the event of a telephone redemption not authorized by them. Each Trust may accept telephone redemption instructions from any person identifying himself as the owner of an account or the owner’s broker where the owner has not declined in writing to utilize this service. Each Trust will employ reasonable procedures to confirm that instructions communicated by telephone are genuine, and may be liable for any losses due to unauthorized or fraudulent instructions if it fails to employ such procedures. Each Trust will require a form of personal identification prior to acting on a caller’s telephone instructions, will provide written confirmations of such transactions and will record telephone instructions.

A shareholder making a telephone redemption should call the Distributor at 1-800-426-0107 and state (i) the name of the shareholder as it appears on the Transfer Agent’s records, (ii) his account number with the applicable Trust, (iii) the amount to be withdrawn and (iv) the name of the person requesting the redemption. Usually the proceeds are sent to the investor on the next Trust business day after the redemption is effected, provided the redemption request is received prior to the close of regular trading (normally 4:00 p.m., Eastern time) on the New York Stock Exchange that day (or, for the

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Government Money Market and Treasury Money Market Funds, prior to 5:30 p.m., Eastern time on each day the New York Stock Exchange and Federal Reserve are open for business). If the redemption request is received after the close of the New York Stock Exchange, the redemption is effected on the following Trust business day at that day’s net asset value and the proceeds are usually sent to the investor on the second following Trust business day. Each Trust reserves the right to terminate or modify the telephone redemption service at any time. During times of severe disruptions in the securities markets, the volume of calls may make it difficult to redeem by telephone, in which case a shareholder may wish to send a written request for redemption as described under “Written Requests” in this section above. Telephone communications may be recorded by the Distributor or the Transfer Agent.

Fund Link Redemptions. If a shareholder has established Fund Link, the shareholder may redeem shares by telephone and have the redemption proceeds sent to a designated account at a financial institution. Fund Link is normally established within 45 days of receipt of a Fund Link application by the Transfer Agent. To use Fund Link for redemptions, call the Distributor at 1-800-426-0107. Subject to the limitations set forth in this section above under “Telephone Redemptions,” the Distributor, a Trust and the Transfer Agent may rely on instructions by any registered owner believed to be genuine and will not be responsible to any shareholder for any loss, damage or expense arising out of such instructions. Requests received by the Transfer Agent prior to the close of regular trading (normally 4:00 p.m., Eastern time) on the New York Stock Exchange on a business day (or, for the Government Money Market and Treasury Money Market Funds, prior to 5:30 p.m., Eastern time on each day the New York Stock Exchange and Federal Reserve are open for business) will be processed at the net asset value on that day and the proceeds (less any CDSC) will normally be sent to the designated bank account on the following business day and received by the bank on the second or third business day. If the redemption request is received after the close of regular trading on the New York Stock Exchange (or, for the Government Money Market and Treasury Money Market Funds, after 5:30 p.m., Eastern time on a day the New York Stock Exchange and Federal Reserve are open for business), the redemption is effected on the following business day. Shares purchased by check may not be redeemed through Fund Link until such shares have been owned (i.e., paid for) for at least 15 days. Fund Link may not be used to redeem shares held in certificated form.

Changes in bank account information must be made by completing a new Fund Link application, signed by all owners of record of the account, with all signatures guaranteed. See “Signature Guarantee” in this section. See “Allianz Funds and PIMCO Funds Fund Link” for information on establishing the Fund Link privilege. The Trust, Allianz Funds or Allianz Funds Multi-Strategy Trust may terminate the Fund Link program at any time without notice to its shareholders. This redemption option does not apply to shares held in broker “street name” accounts. Shareholders whose shares are held in broker “street name” accounts must redeem through their broker. Plan participants must redeem through their plan administrator. Fund Link may not be available to all Funds and/or share classes at the option of the Distributor.

Allianz Funds and PIMCO Funds Automated Telephone System. Allianz Funds and PIMCO Funds Automated Telephone System (“ATS”) is an automated telephone system that enables shareholders to perform a number of account transactions automatically using a touch-tone telephone. ATS may be used on already-established Fund accounts after the shareholder obtains a Personal Identification Number (PIN) by calling the special ATS number: 1-800-223-2413.

Purchasing Shares. A shareholder may purchase shares by telephone by calling 1-800-223-2413. A shareholder must have established ATS privileges to link the shareholder’s bank account with the Fund to pay for these purchases.

Exchanging Shares. With the Allianz Funds and PIMCO Funds Exchange Privilege, a shareholder can exchange shares automatically by telephone from the shareholder’s Fund Link Account to another Allianz Funds or PIMCO Funds account the shareholder has already established by calling 1-800-223-2413. Please refer to “Exchange Privilege” in this section for details.

Redemptions. A shareholder may redeem shares by telephone automatically by calling 1-800-223-2413 and the Fund will send the proceeds directly to the shareholder’s Fund bank account. Please refer to “How to Redeem” in this section for details. Plan participants must process their transactions through their plan administrator, and may not use ATS.

Expedited Wire Transfer Redemptions. If a shareholder has given authorization for expedited wire redemption, shares can be redeemed and the proceeds sent by federal wire transfer to a single previously designated bank account. Requests received by a Trust prior to the close of the New York Stock Exchange will result in shares being redeemed that day at the next determined net asset value (less any CDSC, if applicable). Normally the proceeds will be sent to the designated bank account the following business day. The bank must be a member of the Federal Reserve wire system. Delivery of the proceeds of a wire redemption request may be delayed by the applicable Trust for up to seven days if the Distributor deems it appropriate under then current market conditions. Once authorization is on file with a Trust, such Trust will honor requests by any person identifying himself as the owner of an account or the owner’s broker by telephone at 1-800-426-0107 or by

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written instructions. A Trust cannot be responsible for the efficiency of the Federal Reserve wire system or the shareholder’s bank. The Trust does not currently charge for wire transfers. The shareholder is responsible for any charges imposed by the shareholder’s bank. The minimum amount that may be wired is $2,500. Each Trust reserves the right to change this minimum or to terminate the wire redemption privilege. Shares purchased by check may not be redeemed by wire transfer until such shares have been owned (i.e., paid for) for at least 15 days. Expedited wire transfer redemptions may be authorized by completing a form available from the Distributor. Wire redemptions may not be used to redeem shares in certificated form. To change the name of the single bank account designated to receive wire redemption proceeds, it is necessary to send a written request with signatures guaranteed to Allianz Global Investors Distributors LLC, P.O. Box 8050, Boston, MA 02266-8050. See “Signature Guarantee” in this section. This redemption option does not apply to shares held in broker “street name” accounts. Shareholders whose shares are held in broker “street name” accounts must redeem through their broker. Plan participants must redeem through their plan administrator.

Certificated Shares. To redeem shares for which certificates have been issued, the certificates must be mailed to or deposited with the applicable Trust, duly endorsed or accompanied by a duly endorsed stock power or by a written request for redemption. Signatures must be guaranteed as described under “Signature Guarantee” in this section. Further documentation may be requested from institutions or fiduciary accounts, such as corporations, custodians (e.g., under the Uniform Gifts to Minors Act), executors, administrators, trustees or guardians (“institutional account owners”). The redemption request and stock power must be signed exactly as the account is registered, including indication of any special capacity of the registered owner.

Automatic Withdrawal Plan. An investor who owns or buys shares of a Fund having a net asset value of $10,000 or more may open an Automatic Withdrawal Plan and have a designated sum of money paid monthly (or quarterly) to the investor or another person. Such a plan may be established by completing the appropriate section of the account application or by obtaining an Automatic Withdrawal Plan application from the Distributor or the broker. If an Automatic Withdrawal Plan is set up after the account is established providing for payment to a person other than the record shareholder or to an address other than the address of record, a signature guarantee is required. See “Signature Guarantee” in this section. In the case of Uniform Gifts to Minors or Uniform Transfers to Minors accounts, the application must state that the proceeds will be for the beneficial interest of the minor. Class A, Class B and Class C shares of any Fund are deposited in a plan account and all distributions are reinvested in additional shares of the particular class of the Fund at net asset value. Shares in a plan account are then redeemed at net asset value (less any applicable CDSC) to make each withdrawal payment. Any applicable CDSC may be waived for certain redemptions under an Automatic Withdrawal Plan. See “Alternative Purchase Arrangements—Waiver of Contingent Deferred Sales Charges” in this section above.

Redemptions for the purpose of withdrawals are ordinarily made on the business day selected by the investor at that day’s closing net asset value. Checks are normally mailed on the following business day. If the date selected by the investor falls on a weekend or holiday, the Transfer Agent will normally process the redemption on the preceding business day. Payment will be made to any person the investor designates; however, if the shares are registered in the name of a trustee or other fiduciary, payment will be made only to the fiduciary, except in the case of a profit-sharing or pension plan where payment will be made to the designee. As withdrawal payments may include a return of principal, they cannot be considered a guaranteed annuity or actual yield of income to the investor. The redemption of shares in connection with an Automatic Withdrawal Plan may result in a gain or loss for tax purposes. Continued withdrawals in excess of income will reduce and possibly exhaust invested principal, especially in the event of a market decline. The maintenance of an Automatic Withdrawal Plan concurrently with purchases of additional shares of the Fund would be disadvantageous to the investor because of the CDSC that may become payable on such withdrawals in the case of Class A, Class B or Class C shares and because of the initial sales charge in the case of Class A shares. For this reason, the minimum investment accepted for a Fund while an Automatic Withdrawal Plan is in effect for that Fund is $1,000, and an investor may not maintain a plan for the accumulation of shares of the Fund (other than through reinvestment of distributions) and an Automatic Withdrawal Plan at the same time. The Trust or the Distributor may terminate or change the terms of the Automatic Withdrawal Plan at any time.

Because the Automatic Withdrawal Plan may involve invasion of capital, investors should consider carefully with their own financial advisers whether the plan and the specified amounts to be withdrawn are appropriate in their circumstances. The Trust and the Distributor make no recommendations or representations in this regard.

Additional Information About the Shares

Independent financial intermediaries unaffiliated with PIMCO may perform shareholder servicing functions with respect to certain of their clients whose assets may be invested in the Funds. These services, normally provided by PIMCO directly to Trust shareholders, may include the provision of ongoing information concerning the Funds and their investment performance, responding to shareholder inquiries, assisting with purchases, redemptions and exchanges of Trust shares, and other services. PIMCO may pay fees to such entities for the provision of these services which PIMCO normally would perform, out of PIMCO’s own resources.

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From time to time, PIMCO may pay or reimburse broker-dealers, banks, recordkeepers or other financial institutions for PIMCO’s attendance at investment forums sponsored by such firms, or PIMCO may co-sponsor such investment forums with such financial institutions. Payments and reimbursements for such activities are made out of PIMCO’s own assets and at no cost to the Funds. These payments and reimbursements may be made from profits received by PIMCO from advisory fees and supervisory and administrative fees paid to PIMCO by the Trust. Such activities may provide incentives to financial institutions to sell shares of the Funds. Additionally, these activities may give PIMCO additional access to sales representatives of such financial institutions, which may increase sales of Fund shares.

Request for Multiple Copies of Shareholder Documents

To reduce expenses, it is intended that only one copy of the Funds’ Prospectuses and each annual and semi-annual report will be mailed to those addresses shared by two or more accounts. If you wish to receive individual copies of these documents and your shares are held directly with the Trust, call the Trust at 1-800-927-4648 for Class P, Institutional Class, Administrative Class or Class M shares or 1-800-426-0107 for all other share classes. Alternatively, if your shares are held through a financial institution, please contact it directly. Within 30 days after receipt of your request by the Trust, the Trust will begin sending you individual copies.

PORTFOLIO TRANSACTIONS AND BROKERAGE

Investment Decisions and Portfolio Transactions

Investment decisions for the Trust and for the other investment advisory clients of PIMCO are made with a view to achieving their respective investment objectives. Investment decisions are the product of many factors in addition to basic suitability for the particular client involved (including the Trust). Some securities considered for investments by the Funds also may be appropriate for other clients served by PIMCO. Thus, a particular security may be bought or sold for certain clients even though it could have been bought or sold for other clients at the same time, including accounts in which PIMCO, its officers or employees may have a financial interest. If a purchase or sale of securities consistent with the investment policies of a Fund and one or more of these clients served by PIMCO is considered at or about the same time, transactions in such securities will be allocated among the Fund and other clients pursuant to PIMCO’s trade allocation policy that is designed to ensure that all accounts, including the Funds, are treated fairly, equitably, and in a non-preferential manner, such that allocations are not based upon fee structure or portfolio manager preference.

PIMCO may acquire on behalf of its clients (including the Trust) securities or other financial instruments providing exposure to different aspects of the capital and debt structure of an issuer, including without limitation those that relate to senior and junior/subordinate obligations of such issuer. In certain circumstances, the interests of those clients exposed to one portion of the issuer’s capital and debt structure may diverge from those clients exposed to a different portion of the issuer’s capital and debt structure. PIMCO may advise some clients or take actions for them in their best interests with respect to their exposures to an issuer’s capital and debt structure that may diverge from the interests of other clients with different exposures to the same issuer’s capital and debt structure.

PIMCO may aggregate orders for the Funds with simultaneous transactions entered into on behalf of other clients of PIMCO when, in PIMCO’s reasonable judgment, aggregation may result in an overall economic benefit to the Funds and other clients in terms of pricing, brokerage commissions or other expenses. When feasible, PIMCO allocates trades prior to execution. When pre-execution allocation is not feasible, PIMCO promptly allocates trades following established and objective procedures. Allocations generally are made at or about the time of execution and before the end of the trading day. As a result, one account may receive a price for a particular transaction that is different from the price received by another account for a similar transaction on the same day. In general, trades are allocated among portfolio managers on a pro rata basis (to the extent a portfolio manager decides to participate fully in the trade), for further allocation by each portfolio manager among that manager’s eligible accounts. In allocating trades among accounts, portfolio managers generally consider a number of factors, including, but not limited to, each account’s deviation (in terms of risk exposure and/or performance characteristics) from a relevant model portfolio, each account’s investment objectives, restrictions and guidelines, its risk exposure, its available cash, and its existing holdings of similar securities. Once trades are allocated, they may be reallocated only in unusual circumstances due to recognition of specific account restrictions.

In some cases, PIMCO may sell a security on behalf of a client, including the Funds, to a broker-dealer that thereafter may be purchased for the accounts of one or more of PIMCO’s other clients, including the Funds, from that or another broker-dealer. PIMCO has adopted procedures it believes are reasonably designed to obtain the best execution for the transactions by each account.

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Brokerage and Research Services

There is generally no stated commission in the case of fixed income securities, which are traded in the over-the-counter markets, but the price paid by the Trust usually includes an undisclosed dealer commission or mark-up. In underwritten offerings, the price paid by the Trust includes a disclosed, fixed commission or discount retained by the underwriter or dealer. Transactions on U.S. stock exchanges and other agency transactions involve the payment by the Trust of negotiated brokerage commissions. Such commissions vary among different brokers. Also, a particular broker may charge different commissions according to such factors as the difficulty and size of the transaction. Transactions in foreign securities generally involve the payment of fixed brokerage commissions, which are generally higher than those in the United States.

PIMCO places all orders for the purchase and sale of portfolio securities, options and futures contracts for the relevant Fund and buys and sells such securities, options and futures for the Trust through a substantial number of brokers and dealers. In so doing, PIMCO uses its best efforts to obtain for the Trust the best execution available. In seeking best execution, PIMCO, having in mind the Trust’s best interests, considers all factors it deems relevant, including, by way of illustration, price, the size of the transaction, the nature of the market for the security, the amount of the commission, the timing of the transaction taking into account market prices and trends, the reputation, experience and financial stability of the broker-dealer involved and the quality of service rendered by the broker-dealer in other transactions. Changes in the aggregate amount of brokerage commissions paid by a Fund from year-to-year may be attributable to changes in the asset size of the Fund, the volume of portfolio transactions effected by the Fund, the types of instruments in which the Fund invests, or the rates negotiated by PIMCO on behalf of the Funds.

Brokerage Commissions Paid

For the fiscal years ended March 31, 2009, 2008 and 2007, the following amounts of brokerage commissions were paid by each operational Fund:

Fund	Year Ended 3/31/09	Year Ended 3/31/08		Year Ended 3/31/07
All Asset Fund	N/A		N/A		N/A
All Asset All Authority Fund	N/A		N/A		N/A
California Intermediate Municipal Bond Fund	754	$	8,117	$	8,418
California Short Duration Municipal Income Fund	0		59		26
CommodityRealReturn Strategy Fund®	780,853		1,182,222		1,014,371
Convertible Fund	374,945		122,629		13,970
Developing Local Markets Fund	38,370		N/A		0
Diversified Income Fund	121,666		236,661		131,905
EM Fundamental IndexPLUS™ TR Strategy Fund	5,858		N/A		N/A
Emerging Local Bond Fund	13,298		1,924		0
Emerging Markets Bond Fund	110,358		171,681		418,768
Extended Duration Fund	16,697		5,845		832
Floating Income Fund	76,063		191,910		140,298
Foreign Bond Fund (U.S. Dollar-Hedged)	651,923		928,764		325,787
Foreign Bond Fund (Unhedged)	733,318		913,464		243,444
Fundamental Advantage Total Return Strategy Fund	165,873		9,548		N/A
Fundamental IndexPLUS™ Fund	41,187		56,971		11,153
Fundamental IndexPLUS™ TR Fund	41,883		82,498		61,601
Global Advantage Strategy Bond Fund	0		N/A		N/A
Global Bond Fund (U.S. Dollar-Hedged)	56,578		77,540		41,421
Global Bond Fund (Unhedged)	280,358		324,881		161,866
Global Multi-Asset Fund	6,971		N/A		N/A
GNMA Fund	7,910		5,489		3,458
Government Money Market Fund	0		N/A		N/A
High Yield Fund	201,357		186,136		731,450
High Yield Municipal Bond Fund	1,270		6,954		241
Income Fund	2,594		2,978		N/A
International StocksPLUS® TR Strategy Fund (U.S. Dollar-Hedged)	62,460		185,831		71,208

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Fund	Year Ended 3/31/09	Year Ended 3/31/08	Year Ended 3/31/07
International StocksPLUS® TR Strategy Fund (Unhedged)	4,440	9,219	1,632
Investment Grade Corporate Bond Fund	170,348	9,675	6,247
Long Duration Total Return Fund	105,183	59,618	1,316
Long-Term Credit Fund	0	N/A	N/A
Long-Term U.S. Government Fund	120,938	449,162	1,791,273
Low Duration Fund	310,625	1,099,284	1,714,665
Low Duration Fund II	10,500	32,929	44,324
Low Duration Fund III	3,833	14,885	14,238
Moderate Duration Fund	46,273	170,884	226,993
Money Market Fund	0	0	0
Mortgage-Backed Securities Fund	13,695	18,499	13,046
Municipal Bond Fund	10,015	21,879	28,021
New York Municipal Bond Fund	815	585	3,270
Real Return Asset Fund	217,870	654,145	119,876
Real Return Fund	956,470	1,012,999	1,033,538
RealEstateRealReturn Strategy Fund	61,648	52,937	44,285
RealRetirement® 2010 Fund	3,151	0	N/A
RealRetirement® 2020 Fund	3,150	11	N/A
RealRetirement® 2030 Fund	3,161	40	N/A
RealRetirement® 2040 Fund	3,150	136	N/A
RealRetirement® 2050 Fund	3,132	136	N/A
Short Duration Municipal Income Fund	8,545	26,515	13,663
Short-Term Fund	167,498	519,454	173,544
Small Cap StocksPLUS® TR Fund	426,313	11,527	2,001
StocksPLUS® Fund	276,395	348,076	339,056
StocksPLUS® Long Duration Fund	48,451	18,575	N/A
StocksPLUS® Total Return Fund	74,721	109,119	85,285
StocksPLUS® TR Short Strategy Fund	137,463	58,175	54,853
Total Return Fund	5,308,393	14,223,208	11,340,729
Total Return Fund II	131,409	277,671	223,155
Total Return Fund III	96,117	232,462	212,436
Unconstrained Bond Fund	15,833	N/A	N/A
Unconstrained Tax Managed Bond Fund	823	N/A	N/A

PIMCO places orders for the purchase and sale of portfolio investments for the Funds’ accounts with brokers or dealers selected by it in its discretion. In effecting purchases and sales of portfolio securities for the account of the Funds, PIMCO will seek the best execution of the Funds’ orders. In doing so, a Fund may pay higher commission rates than the lowest available when PIMCO believes it is reasonable to do so in light of the value of the brokerage and research services provided by the broker effecting the transaction, as discussed below. Although the Trust may use broker-dealers that sell Fund shares to effect the Trust’s portfolio transactions, the Trust and PIMCO will not consider the sale of Fund shares as a factor when selecting broker-dealers to execute those transactions.

It has for many years been a common practice in the investment advisory business for advisers of investment companies and other institutional investors to receive research services from broker-dealers which execute portfolio transactions for the clients of such advisers. Consistent with this practice, PIMCO may receive research services from many broker-dealers with which PIMCO places the Trust’s portfolio transactions. PIMCO also may receive research or research related credits from brokers which are generated from underwriting commissions when purchasing new issues of fixed income securities or other assets for a Fund. These services, which in some cases also may be purchased for cash, include such matters as general economic and security market reviews, industry and company reviews, evaluations of securities and recommendations as to the purchase and sale of securities. Some of these services are of value to PIMCO in advising various of its clients (including the Trust), although not all of these services are necessarily useful and of value in managing the Trust. The management fee paid by the Trust would not be reduced in the event that PIMCO and its affiliates received such services.

As permitted by Section 28(e) of the 1934 Act, PIMCO may cause the Trust to pay a broker-dealer which provides “brokerage and research services” (as defined in the 1934 Act) to PIMCO an amount of disclosed commission or spread for effecting a securities transaction for the Trust in excess of the commission or spread which another broker-dealer would have charged for effecting that transaction.

120

As noted above, PIMCO may purchase new issues of securities for the Trust in underwritten fixed price offerings. In these situations, the underwriter or selling group member may provide PIMCO with research in addition to selling the securities (at the fixed public offering price) to the Trust or other advisory clients. Because the offerings are conducted at a fixed price, the ability to obtain research from a broker-dealer in this situation provides knowledge that may benefit the Trust, other PIMCO clients, and PIMCO without incurring additional costs. These arrangements may not fall within the safe harbor of Section 28(e) because the broker-dealer is considered to be acting in a principal capacity in underwritten transactions. However, the FINRA has adopted rules expressly permitting broker-dealers to provide bona fide research to advisers in connection with fixed price offerings under certain circumstances. As a general matter in these situations, the underwriter or selling group member will provide research credits at a rate that is higher than that which is available for secondary market transactions.

PIMCO may place orders for the purchase and sale of portfolio securities with a broker-dealer that is affiliated to PIMCO where, in PIMCO’s judgment, such firm will be able to obtain a price and execution at least as favorable as other qualified broker-dealers.

Pursuant to applicable sections under the 1940 Act, a broker-dealer that is an affiliate of the Adviser or sub-adviser may receive and retain compensation for effecting portfolio transactions for a Fund if the commissions paid to such an affiliated broker-dealer by a Fund do not exceed one per centum of the purchase or sale price of such securities.

Since the securities in which certain Funds invest consist primarily of fixed income securities, which are generally not subject to stated brokerage commissions, as described above, their investments in securities subject to stated commissions generally constitute a small percentage of the aggregate dollar amount of their transactions.

SEC rules further require that commissions paid to such an affiliated broker-dealer, or PIMCO by a Fund on exchange transactions not exceed “usual and customary brokerage commissions.” The rules define “usual and customary” commissions to include amounts that are “reasonable and fair compared to the commission, fee or other remuneration received or to be received by other brokers in connection with comparable transactions involving similar securities being purchased or sold on a securities exchange during a comparable period of time.” The Funds did not pay any commissions to affiliated brokers during the fiscal years ended March 31, 2009, 2008 and 2007.

Holdings of Securities of the Trust’s Regular Brokers and Dealers

The following table indicates the value of each operational Fund’s aggregate holdings, in thousands, of the securities of its regular brokers or dealers for the fiscal year ended March 31, 2009.

All Asset All Authority Fund
	State Street Bank & Trust Co.	$	266
California Intermediate Municipal Bond Fund
	Banc of America Securities LLC		802
	Citigroup Global Markets, Inc.		283
	State Street Bank & Trust Co.		105
California Short Duration Municipal Income Fund
	Morgan Stanley Group, Inc.		243
	Banc of America Securities LLC		120
	Wachovia Securities		97
	Citigroup Global Markets, Inc.		57
CommodityRealReturn Strategy Fund®
	JPMorgan Chase & Co.		536,637
	Banc of America Securities LLC		172,135
	Citigroup Global Markets, Inc.		160,570
	Wachovia Securities		74,172
	Morgan Stanley Group, Inc.		70,362
	Goldman Sachs & Co.		68,748
	Merrill Lynch, Pierce, Fenner, & Smith		58,237

121

	Barclays Capital, Inc.	52,278
	Credit Suisse USA, Inc.	33,766
	UBS Warburg LLC	11,810
	Lehman Brothers, Inc.	10,088
	Deutsche Bank Securities, Inc.	3,643
Convertible Fund
	Banc of America Securities LLC	45,209
	Citigroup Global Markets, Inc.	34,810
	Goldman Sachs & Co.	6,590
	Citigroup Global Markets, Inc.	4,438
	State Street Bank & Trust Co.	3,430
	UBS Warburg LLC	1,551
	Merrill Lynch, Pierce, Fenner, & Smith	1,430
	JPMorgan Chase & Co.	975
	Morgan Stanley Group, Inc.	766
	Banc of America Securities LLC	617
	Lehman Brothers, Inc.	57
Developing Local Markets Fund
	Citigroup Global Markets, Inc.	123,325
	JPMorgan Chase & Co.	123,255
	Wachovia Securities	66,448
	Banc of America Securities LLC	42,549
	Goldman Sachs & Co.	40,056
	Merrill Lynch, Pierce, Fenner, & Smith	40,710
	Morgan Stanley Group, Inc.	20,280
	Lehman Brothers, Inc.	10,151
	Barclays Capital, Inc.	8,382
	Credit Suisse USA, Inc.	7,314
	Deutsche Bank Securities, Inc.	2,225
Diversified Income Fund
	JPMorgan Chase & Co.	121,583
	Banc of America Securities LLC	40,547
	Morgan Stanley Group, Inc.	35,269
	Credit Suisse USA, Inc.	25,082
	Goldman Sachs & Co.	24,582
	Citigroup Global Markets, Inc.	24,116
	Wachovia Securities	23,680
	Barclays Capital, Inc.	21,050
	Merrill Lynch, Pierce, Fenner, & Smith	19,299
	UBS Warburg LLC	13,926
	Lehman Brothers, Inc.	5,312
	Deutsche Bank Securities, Inc.	1,322
Emerging Local Bond Fund
	Citigroup Global Markets, Inc.	67,018
	Banc of America Securities LLC	21,185
	JPMorgan Chase & Co.	20,298
	State Street Bank & Trust Co.	17,043
	Morgan Stanley Group, Inc.	13,241
	Merrill Lynch, Pierce, Fenner, & Smith	9,885
	Barclays Capital, Inc.	7,593
	UBS Warburg LLC	5,670
	Wachovia Securities	3,054
	Credit Suisse USA, Inc.	1,580

122

	Lehman Brothers, Inc.	1,425
	Goldman Sachs & Co.	300
	Deutsche Bank Securities, Inc.	198
Emerging Markets Bond Fund
	Citigroup Global Markets, Inc.	59,922
	Morgan Stanley Group, Inc.	51,008
	JPMorgan Chase & Co.	41,305
	Banc of America Securities LLC	34,498
	Goldman Sachs & Co.	26,075
	Merrill Lynch, Pierce, Fenner, & Smith	21,624
	Wachovia Securities	16,675
	Barclays Capital, Inc.	5,388
	UBS Warburg LLC	5,255
	Deutsche Bank Securities, Inc.	4,073
	Credit Suisse USA, Inc.	4,040
	Lehman Brothers, Inc.	2,750
EM Fundamental IndexPLUSTM TR Strategy Fund
	JPMorgan Chase & Co.	3,321
	Wachovia Securities	2,941
	Banc of America Securities LLC	2,185
	Citigroup Global Markets, Inc.	2,098
	Merrill Lynch, Pierce, Fenner, & Smith	1,825
	Goldman Sachs & Co.	1,312
	Morgan Stanley Group, Inc.	883
	State Street Bank & Trust Co.	654
	Deutsche Bank Securities, Inc.	358
Extended Duration Fund
	Banc of America Securities LLC	1,435
	Greenwich Capital Markets, Inc.	941
	State Street Bank & Trust Co.	854
	JPMorgan Chase & Co.	347
	Goldman Sachs & Co.	153
	Credit Suisse USA, Inc.	3
	Deutsche Bank Securities, Inc.	3
Floating Income Fund
	Banc of America Securities LLC	42,479
	Citigroup Global Markets, Inc.	31,262
	JPMorgan Chase & Co.	23,556
	Morgan Stanley Group, Inc.	13,709
	Goldman Sachs & Co.	6,544
	Credit Suisse USA, Inc.	6,353
	UBS Warburg LLC	4,403
	Barclays Capital, Inc.	4,201
	Merrill Lynch, Pierce, Fenner, & Smith	2,538
	Lehman Brothers, Inc.	1,761
	Deutsche Bank Securities, Inc.	324
Foreign Bond Fund (Unhedged)
	JPMorgan Chase & Co.	114,073
	Citigroup Global Markets, Inc.	93,953
	Merrill Lynch, Pierce, Fenner, & Smith	59,878
	Banc of America Securities LLC	53,212
	Goldman Sachs & Co.	41,304
	UBS Warburg LLC	37,442

123

	Credit Suisse USA, Inc.	36,831
	Morgan Stanley Group, Inc.	30,970
	Barclays Capital, Inc.	22,753
	Wachovia Securities	16,402
	Lehman Brothers, Inc.	12,088
	Deutsche Bank Securities, Inc.	2,993
	State Street Bank & Trust Co.	2,326
Foreign Bond Fund (U.S. Dollar-Hedged)
	JPMorgan Chase & Co.	150,373
	Citigroup Global Markets, Inc.	94,817
	Banc of America Securities LLC	57,582
	Merrill Lynch, Pierce, Fenner, & Smith	55,646
	Morgan Stanley Group, Inc.	51,102
	UBS Warburg LLC	37,690
	Credit Suisse USA, Inc.	33,920
	Goldman Sachs & Co.	25,041
	Wachovia Securities	21,614
	Barclays Capital, Inc.	20,068
	Deutsche Bank Securities, Inc.	6,043
	Lehman Brothers, Inc.	2,999
	Greenwich Capital Markets, Inc.	2,967
Fundamental Advantage Total Return Strategy Fund
	JPMorgan Chase & Co.	23,009
	Banc of America Securities LLC	11,868
	Merrill Lynch, Pierce, Fenner, & Smith	7,392
	Goldman Sachs & Co.	5,228
	Morgan Stanley Group, Inc.	5,225
	UBS Warburg LLC	3,129
	Citigroup Global Markets, Inc.	1,583
	Wachovia Securities	1,480
	Lehman Brothers, Inc.	1,213
	Banc of America Securities LLC	1,019
Fundamental IndexPLUSTM Fund
	Wachovia Securities	3,746
	JPMorgan Chase & Co.	3,745
	Goldman Sachs & Co.	3,086
	Banc of America Securities LLC	2,250
	Merrill Lynch, Pierce, Fenner, & Smith	1,674
	State Street Bank & Trust Co.	1,106
	Citigroup Global Markets, Inc.	999
	Lehman Brothers, Inc.	851
	Morgan Stanley Group, Inc.	796
	Deutsche Bank Securities, Inc.	357
Fundamental IndexPLUSTM TR Fund
	JPMorgan Chase & Co.	27,485
	Banc of America Securities LLC	21,367
	Citigroup Global Markets, Inc.	14,602
	Merrill Lynch, Pierce, Fenner, & Smith	11,627
	Goldman Sachs & Co.	10,073
	Morgan Stanley Group, Inc.	9,135
	State Street Bank & Trust Co.	5,269
	Deutsche Bank Securities, Inc.	3,529
	Wachovia Securities	3,358

124

	UBS Warburg LLC	1,106
	Barclays Capital, Inc.	788
	Lehman Brothers, Inc.	561
	Greenwich Capital Markets, Inc.	437
	Credit Suisse USA, Inc.	356
Global Advantage Strategy Bond Fund
	State Street Bank & Trust Co.	602
	Citigroup Global Markets, Inc.	173
	JPMorgan Chase & Co.	154
	Deutsche Bank Securities, Inc.	138
	Banc of America Securities LLC	100
	Merrill Lynch, Pierce, Fenner, & Smith	58
	Wachovia Securities	38
	Morgan Stanley Group, Inc.	31
	Goldman Sachs & Co.	23
Global Bond Fund (Unhedged)
	JPMorgan Chase & Co.	51,323
	Banc of America Securities LLC	27,277
	Citigroup Global Markets, Inc.	25,002
	Merrill Lynch, Pierce, Fenner, & Smith	16,492
	Goldman Sachs & Co.	12,711
	Morgan Stanley Group, Inc.	11,970
	Credit Suisse USA, Inc.	11,170
	Wachovia Securities	8,051
	UBS Warburg LLC	7,873
	Barclays Capital, Inc.	6,002
	Lehman Brothers, Inc.	2,684
	Deutsche Bank Securities, Inc.	1,840
	State Street Bank & Trust Co.	946
Global Bond Fund (U.S. Dollar-Hedged)
	JPMorgan Chase & Co.	10,205
	Citigroup Global Markets, Inc.	6,906
	Banc of America Securities LLC	3,628
	Morgan Stanley Group, Inc.	3,328
	Goldman Sachs & Co.	3,176
	Merrill Lynch, Pierce, Fenner, & Smith	2,962
	Wachovia Securities	1,766
	Credit Suisse USA, Inc.	1,704
	UBS Warburg LLC	1,586
	Barclays Capital, Inc.	1,216
	Deutsche Bank Securities, Inc.	950
	State Street Bank & Trust Co.	916
	Lehman Brothers, Inc.	301
Global Multi-Asset Fund
	Banc of America Securities LLC	6,247
	Citigroup Global Markets, Inc.	5,021
	JPMorgan Chase & Co.	3,516
	Wachovia Securities	1,076
	State Street Bank & Trust Co.	517
GNMA Fund
	JPMorgan Chase & Co.	68,390
	Merrill Lynch, Pierce, Fenner, & Smith	12,289
	Citigroup Global Markets, Inc.	12,285

125

	Credit Suisse USA, Inc.	10,169
	Morgan Stanley Group, Inc.	5,455
	Banc of America Securities LLC	4,128
	Goldman Sachs & Co.	3,884
	Lehman Brothers, Inc.	437
Government Money Market Fund
	Barclays Capital, Inc.	7,800
	JPMorgan Chase & Co.	6,700
	Goldman Sachs & Co.	5,300
	State Street Bank & Trust Co.	100
High Yield Fund
	JPMorgan Chase & Co.	98,968
	Citigroup Global Markets, Inc.	72,636
	Banc of America Securities LLC	72,074
	Morgan Stanley Group, Inc.	60,231
	Merrill Lynch, Pierce, Fenner, & Smith	50,265
	Goldman Sachs & Co.	42,688
	Barclays Capital, Inc.	38,585
	Banc of America Securities LLC	38,027
	UBS Warburg LLC	19,514
	Citigroup Global Markets, Inc.	8,119
	Credit Suisse USA, Inc.	6,561
	Lehman Brothers, Inc.	3,780
	Wachovia Securities	1,547
	Deutsche Bank Securities, Inc.	702
	Lehman Brothers, Inc.	459
High Yield Municipal Bond Fund
	Banc of America Securities LLC	1,622
	State Street Bank & Trust Co.	1,090
	Citigroup Global Markets, Inc.	595
Income Fund
	JPMorgan Chase & Co.	13,834
	Banc of America Securities LLC	9,952
	Citigroup Global Markets, Inc.	7,928
	Credit Suisse USA, Inc.	7,403
	Goldman Sachs & Co.	2,535
	Morgan Stanley Group, Inc.	1,854
	Merrill Lynch, Pierce, Fenner, & Smith	1,121
	Lehman Brothers, Inc.	722
	Deutsche Bank Securities, Inc.	581
	State Street Bank & Trust Co.	301
	Barclays Capital, Inc.	163
	Banc of America Securities LLC	155
	UBS Warburg LLC	111
	Citigroup Global Markets, Inc.	3
International StocksPLUS® TR Strategy Fund (Unhedged)
	JPMorgan Chase & Co.	3,518
	Banc of America Securities LLC	2,134
	Citigroup Global Markets, Inc.	1,871
	Goldman Sachs & Co.	1,331
	Merrill Lynch, Pierce, Fenner, & Smith	1,122
	Barclays Capital, Inc.	991
	Morgan Stanley Group, Inc.	778

126

	Credit Suisse USA, Inc.	576
	State Street Bank & Trust Co.	570
	Wachovia Securities	300
	Deutsche Bank Securities, Inc.	207
	Lehman Brothers, Inc.	122
	UBS Warburg LLC	86
International StocksPLUS® TR Strategy Fund (U.S. Dollar-Hedged)
	JPMorgan Chase & Co.	11,233
	Banc of America Securities LLC	8,457
	Citigroup Global Markets, Inc.	8,340
	Merrill Lynch, Pierce, Fenner, & Smith	6,201
	Goldman Sachs & Co.	5,158
	UBS Warburg LLC	4,129
	Deutsche Bank Securities, Inc.	3,777
	Barclays Capital, Inc.	2,083
	Morgan Stanley Group, Inc.	1,997
	State Street Bank & Trust Co.	1,713
	Wachovia Securities	1,026
	Lehman Brothers, Inc.	217
	Credit Suisse USA, Inc.	183
Investment Grade Corporate Bond Fund
	JPMorgan Chase & Co.	166,717
	Citigroup Global Markets, Inc.	135,590
	Goldman Sachs & Co.	111,038
	Morgan Stanley Group, Inc.	106,108
	Banc of America Securities LLC	84,717
	Merrill Lynch, Pierce, Fenner, & Smith	75,983
	Wachovia Securities	50,193
	Barclays Capital, Inc.	10,586
	Credit Suisse USA, Inc.	9,815
	UBS Warburg LLC	8,771
	State Street Bank & Trust Co.	8,237
	Banc of America Securities LLC	6,240
	Lehman Brothers, Inc.	3,123
	Citigroup Global Markets, Inc.	684
	Goldman Sachs & Co.	46
Long Duration Total Return Fund
	JPMorgan Chase & Co.	90,562
	Banc of America Securities LLC	53,212
	Goldman Sachs & Co.	42,520
	Citigroup Global Markets, Inc.	42,396
	Morgan Stanley Group, Inc.	30,244
	Wachovia Securities	28,417
	Merrill Lynch, Pierce, Fenner, & Smith	25,421
	State Street Bank & Trust Co.	11,446
	Credit Suisse USA, Inc.	9,851
	UBS Warburg LLC	7,858
	Barclays Capital, Inc.	4,914
	Greenwich Capital Markets, Inc.	3,466
	Lehman Brothers, Inc.	1,212
	Banc of America Securities LLC	212
	Deutsche Bank Securities, Inc.	3

127

Long Term U.S. Government Fund
	JPMorgan Chase & Co.	27,664
	Banc of America Securities LLC	26,564
	Morgan Stanley Group, Inc.	15,330
	Goldman Sachs & Co.	7,481
	Wachovia Securities	1,952
	Credit Suisse USA, Inc.	1,065
	Deutsche Bank Securities, Inc.	504
	Citigroup Global Markets, Inc.	22
Low Duration Fund
	JPMorgan Chase & Co.	655,636
	Banc of America Securities LLC	407,516
	Citigroup Global Markets, Inc.	304,368
	Merrill Lynch, Pierce, Fenner, & Smith	244,353
	Goldman Sachs & Co.	144,308
	Wachovia Securities	123,473
	Morgan Stanley Group, Inc.	113,841
	Banc of America Securities LLC	26,743
	Lehman Brothers, Inc.	22,886
	Credit Suisse USA, Inc.	10,474
	State Street Bank & Trust Co.	10,000
	Greenwich Capital Markets, Inc.	5,294
	Deutsche Bank Securities, Inc.	4,660
Low Duration Fund II
	Banc of America Securities LLC	21,275
	JPMorgan Chase & Co.	19,828
	Goldman Sachs & Co.	7,871
	Citigroup Global Markets, Inc.	7,867
	Merrill Lynch, Pierce, Fenner, & Smith	4,225
	Morgan Stanley Group, Inc.	3,976
	Wachovia Securities	3,556
	State Street Bank & Trust Co.	1,270
	Lehman Brothers, Inc.	657
	Banc of America Securities LLC	424
	Deutsche Bank Securities, Inc.	319
	Greenwich Capital Markets, Inc.	292
	Credit Suisse USA, Inc.	193
Low Duration Fund III
	Banc of America Securities LLC	6,590
	Citigroup Global Markets, Inc.	4,958
	JPMorgan Chase & Co.	4,633
	Lehman Brothers, Inc.	4,338
	Morgan Stanley Group, Inc.	2,755
	Goldman Sachs & Co.	2,348
	Merrill Lynch, Pierce, Fenner, & Smith	1,525
	State Street Bank & Trust Co.	1,032
	UBS Warburg LLC	798
	Banc of America Securities LLC	424
	Wachovia Securities	299
	Greenwich Capital Markets, Inc.	292
	Credit Suisse USA, Inc.	151
Moderate Duration Fund
	Banc of America Securities LLC	34,467
	Citigroup Global Markets, Inc.	33,263

128

	JPMorgan Chase & Co.	33,161
	Morgan Stanley Group, Inc.	13,496
	Merrill Lynch, Pierce, Fenner, & Smith	12,919
	Goldman Sachs & Co.	10,509
	Wachovia Securities	8,801
	Credit Suisse USA, Inc.	8,468
	Banc of America Securities LLC	4,245
	Lehman Brothers, Inc.	1,824
	Greenwich Capital Markets, Inc.	220
Money Market Fund
	JPMorgan Chase & Co.	132,600
	Barclays Capital, Inc.	17,600
	Credit Suisse USA, Inc.	17,100
	State Street Bank & Trust Co.	250
Mortgage-Backed Securities Fund
	JPMorgan Chase & Co.	73,424
	Banc of America Securities LLC	21,157
	Merrill Lynch, Pierce, Fenner, & Smith	12,349
	Citigroup Global Markets, Inc.	11,098
	Morgan Stanley Group, Inc.	8,716
	Credit Suisse USA, Inc.	6,052
	State Street Bank & Trust Co.	3,000
	Wachovia Securities	1,376
	Goldman Sachs & Co.	748
	Lehman Brothers, Inc.	679
Municipal Bond Fund
	Banc of America Securities LLC	5,549
	JPMorgan Chase & Co.	2,447
	Citigroup Global Markets, Inc.	2,152
New York Municipal Bond Fund
	Morgan Stanley Group, Inc.	1,072
	Banc of America Securities LLC	441
	State Street Bank & Trust Co.	415
Real Return Fund
	Banc of America Securities LLC	227,367
	JPMorgan Chase & Co.	214,937
	Citigroup Global Markets, Inc.	206,438
	Goldman Sachs & Co.	180,970
	Morgan Stanley Group, Inc.	178,708
	Wachovia Securities	160,786
	Merrill Lynch, Pierce, Fenner, & Smith	115,615
	Barclays Capital, Inc.	94,740
	UBS Warburg LLC	74,439
	Credit Suisse USA, Inc.	22,413
	Lehman Brothers, Inc.	17,256
	Banc of America Securities LLC	6,792
	Deutsche Bank Securities, Inc.	434
Real Return Asset Fund
	JPMorgan Chase & Co.	106,281
	Banc of America Securities LLC	84,502
	Morgan Stanley Group, Inc.	72,157
	UBS Warburg LLC	66,461
	Merrill Lynch, Pierce, Fenner, & Smith	61,765

129

	Citigroup Global Markets, Inc.	59,380
	Barclays Capital, Inc.	47,210
	Credit Suisse USA, Inc.	33,849
	Wachovia Securities	33,060
	Goldman Sachs & Co.	16,388
	Lehman Brothers, Inc.	2,366
	Deutsche Bank Securities, Inc.	969
	Banc of America Securities LLC	425
RealEstateRealReturn Strategy Fund
	JPMorgan Chase & Co.	10,093
	Credit Suisse USA, Inc.	6,289
	Banc of America Securities LLC	4,162
	Goldman Sachs & Co.	2,286
	UBS Warburg LLC	2,096
	Barclays Capital, Inc.	1,793
	Citigroup Global Markets, Inc.	1,614
	Morgan Stanley Group, Inc.	1,575
	Merrill Lynch, Pierce, Fenner, & Smith	301
	Wachovia Securities	281
	Lehman Brothers, Inc.	126
Short Duration Municipal Income Fund
	State Street Bank & Trust Co.	3,355
	Banc of America Securities LLC	2,812
	JPMorgan Chase & Co.	902
	Citigroup Global Markets, Inc.	793
Short-Term Fund
	JPMorgan Chase & Co.	240,908
	Banc of America Securities LLC	129,888
	Morgan Stanley Group, Inc.	105,087
	Goldman Sachs & Co.	84,933
	Merrill Lynch, Pierce, Fenner, & Smith	83,593
	Citigroup Global Markets, Inc.	81,944
	Wachovia Securities	71,497
	UBS Warburg LLC	42,204
	State Street Bank & Trust Co.	12,238
	Barclays Capital, Inc.	9,650
	Lehman Brothers, Inc.	7,712
	Deutsche Bank Securities, Inc.	3,526
	Greenwich Capital Markets, Inc.	2,107
	Credit Suisse USA, Inc.	444
Small Cap StocksPLUS® TR Fund
	JPMorgan Chase & Co.	28,912
	Banc of America Securities LLC	21,226
	Citigroup Global Markets, Inc.	17,337
	Morgan Stanley Group, Inc.	9,701
	Wachovia Securities	6,632
	State Street Bank & Trust Co.	5,510
	Goldman Sachs & Co.	5,448
	Merrill Lynch, Pierce, Fenner, & Smith	4,221
	Greenwich Capital Markets, Inc.	3,401
	Deutsche Bank Securities, Inc.	1,630
	Barclays Capital, Inc.	484
	Credit Suisse USA, Inc.	96

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	Lehman Brothers, Inc.	88
	UBS Warburg LLC	27
StocksPLUS® Fund
	JPMorgan Chase & Co.	23,370
	Citigroup Global Markets, Inc.	12,559
	Wachovia Securities	12,328
	Banc of America Securities LLC	5,287
	Morgan Stanley Group, Inc.	5,003
	Lehman Brothers, Inc.	1,997
	Deutsche Bank Securities, Inc.	1,216
	Merrill Lynch, Pierce, Fenner, & Smith	586
	Credit Suisse USA, Inc.	459
	Goldman Sachs & Co.	222
StocksPLUS® Long Duration Fund
	Citigroup Global Markets, Inc.	4,726
	JPMorgan Chase & Co.	3,773
	Banc of America Securities LLC	3,439
	Goldman Sachs & Co.	3,217
	Morgan Stanley Group, Inc.	2,884
	Wachovia Securities	2,728
	Credit Suisse USA, Inc.	1,634
	Merrill Lynch, Pierce, Fenner, & Smith	531
	Greenwich Capital Markets, Inc.	507
	State Street Bank & Trust Co.	492
	Barclays Capital, Inc.	132
	UBS Warburg LLC	86
StocksPLUS® TR Short Strategy Fund
	Banc of America Securities LLC	8,932
	JPMorgan Chase & Co.	8,443
	State Street Bank & Trust Co.	5,139
	Morgan Stanley Group, Inc.	4,214
	Citigroup Global Markets, Inc.	3,775
	UBS Warburg LLC	1,397
	Wachovia Securities	1,352
	Merrill Lynch, Pierce, Fenner, & Smith	1,334
	Lehman Brothers, Inc.	1,158
	Goldman Sachs & Co.	431
	Deutsche Bank Securities, Inc.	429
	Banc of America Securities LLC	297
	Greenwich Capital Markets, Inc.	72
	Credit Suisse USA, Inc.	34
StocksPLUS® Total Return Fund
	JPMorgan Chase & Co.	7,295
	Barclays Capital, Inc.	6,554
	Citigroup Global Markets, Inc.	5,306
	Goldman Sachs & Co.	4,503
	Merrill Lynch, Pierce, Fenner, & Smith	3,064
	Banc of America Securities LLC	2,407
	Wachovia Securities	1,257
	State Street Bank & Trust Co.	1,229
	Morgan Stanley Group, Inc.	752
	Lehman Brothers, Inc.	746
	Deutsche Bank Securities, Inc.	572

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	UBS Warburg LLC	513
	Greenwich Capital Markets, Inc.	147
	Credit Suisse USA, Inc.	8
Total Return Fund
	JPMorgan Chase & Co.	4,565,799
	Citigroup Global Markets, Inc.	3,125,785
	Banc of America Securities LLC	2,504,581
	Merrill Lynch, Pierce, Fenner, & Smith	2,228,874
	Goldman Sachs & Co.	2,200,071
	Morgan Stanley Group, Inc.	1,669,927
	Wachovia Securities	1,656,782
	Deutsche Bank Securities, Inc.	644,838
	Barclays Capital, Inc.	585,678
	Credit Suisse USA, Inc.	368,952
	UBS Warburg LLC	301,952
	Lehman Brothers, Inc.	205,631
	Greenwich Capital Markets, Inc.	60,139
	State Street Bank & Trust Co.	30,840
Total Return Fund II
	JPMorgan Chase & Co.	108,163
	Banc of America Securities LLC	76,066
	Citigroup Global Markets, Inc.	60,963
	Goldman Sachs & Co.	40,262
	Morgan Stanley Group, Inc.	34,479
	Wachovia Securities	19,698
	Merrill Lynch, Pierce, Fenner, & Smith	18,415
	Credit Suisse USA, Inc.	13,888
	UBS Warburg LLC	7,909
	Banc of America Securities LLC	6,367
	Lehman Brothers, Inc.	3,228
	State Street Bank & Trust Co.	2,311
	Greenwich Capital Markets, Inc.	1,741
	Deutsche Bank Securities, Inc.	1,676
Total Return Fund III
	JPMorgan Chase & Co.	83,785
	Citigroup Global Markets, Inc.	60,034
	Banc of America Securities LLC	50,902
	Morgan Stanley Group, Inc.	48,087
	Goldman Sachs & Co.	36,856
	Barclays Capital, Inc.	23,356
	Merrill Lynch, Pierce, Fenner, & Smith	20,961
	Wachovia Securities	19,665
	Banc of America Securities LLC	13,923
	Deutsche Bank Securities, Inc.	9,339
	Lehman Brothers, Inc.	3,714
	UBS Warburg LLC	2,993
	Greenwich Capital Markets, Inc.	2,544
	State Street Bank & Trust Co.	2,252
	Credit Suisse USA, Inc.	1,627
Unconstrained Bond Fund
	Citigroup Global Markets, Inc.	16,642
	Banc of America Securities LLC	14,970
	Morgan Stanley Group, Inc.	13,388

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	Merrill Lynch, Pierce, Fenner, & Smith	11,799
	JPMorgan Chase & Co.	10,512
	Goldman Sachs & Co.	9,976
	JPMorgan Chase & Co.	8,300
	Wachovia Securities	5,213
	UBS Warburg LLC	2,475
	Credit Suisse USA, Inc.	1,345
	Banc of America Securities LLC	1,274
	Deutsche Bank Securities, Inc.	1,217
	State Street Bank & Trust Co.	571
	Barclays Capital, Inc.	294
	Lehman Brothers, Inc.	16
Unconstrained Tax Managed Bond Fund
	State Street Bank & Trust Co.	1,989
	Banc of America Securities LLC	124

Portfolio Turnover

A change in the securities held by a Fund is known as “portfolio turnover.” PIMCO manages the Funds without regard generally to restrictions on portfolio turnover. See “Taxation” below. Trading in fixed income securities does not generally involve the payment of brokerage commissions, but does involve indirect transaction costs. The use of futures contracts may involve the payment of commissions to futures commission merchants. High portfolio turnover (e.g., greater than 100%) involves correspondingly greater expenses to a Fund, including brokerage commissions or dealer mark-ups and other transaction costs on the sale of securities and reinvestments in other securities. The higher the rate of portfolio turnover of a Fund, the higher these transaction costs borne by the Fund generally will be. Such sales may result in realization of taxable capital gains (including short-term capital gains which are generally taxed to shareholders at ordinary income tax rates).

The portfolio turnover rate of a Fund is calculated by dividing (a) the lesser of purchases or sales of portfolio securities for the particular fiscal year by (b) the monthly average of the value of the portfolio securities owned by the Fund during the particular fiscal year. In calculating the rate of portfolio turnover, there is excluded from both (a) and (b) all securities, including options, whose maturities or expiration dates at the time of acquisition were one year or less. Proceeds from short sales and assets used to cover short positions undertaken are included in the amounts of securities sold and purchased, respectively, during the year. Portfolio turnover rates for each Fund that was operational as of the Trust’s most recent fiscal year end are provided in the applicable Prospectuses under the “Financial Highlights”.

The All Asset, All Asset All Authority, Global Multi-Asset and RealRetirement^® Funds indirectly bear the expenses associated with the portfolio turnover of the Underlying PIMCO Funds, which may have fairly high portfolio turnover rates (i.e., in excess of 100%). Shareholders in the All Asset, All Asset All Authority, Global Multi-Asset and RealRetirement^® Funds also may bear expenses directly or indirectly through sales of securities held by the Funds and the Underlying PIMCO Funds which result in realization of taxable capital gains. To the extent such gains relate to securities held for one year or less, such gains will be short-term taxable gains taxed at ordinary income tax rates when distributed to shareholders who are individuals.

Each of the Developing Local Markets Fund, Extended Duration Fund, Floating Income Fund, Fundamental Advantage Total Return Strategy Fund, Fundamental IndexPLUS^TM Fund, Fundamental IndexPLUS^TM TR Fund, Investment Grade Corporate Bond Fund, Low Duration Fund II, Moderate Duration Fund, New York Municipal Bond Fund, Short-Term Fund, StocksPLUS^® Fund and StocksPLUS^® TR Short Strategy Fund experienced a higher portfolio turnover rate compared to its prior fiscal year. The Funds bought and sold for forward settlement more frequently during the 12 month period ended March 31, 2009 than the 12 month period ended March 31, 2008.

Disclosure of Portfolio Holdings

Policies and Procedures Generally. The Trust has adopted portfolio holdings disclosure policies and procedures to govern the disclosure of the securities holdings of the Funds (the “Disclosure Policy”). The Disclosure Policy is designed to protect the confidentiality of the Funds’ non-public portfolio holdings information, to prevent the selective disclosure of such information, and to ensure compliance by PIMCO and the Funds with the federal securities laws, including the 1940 Act and the rules promulgated thereunder and general principles of fiduciary duty.

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Monitoring and Oversight. The Trust’s Chief Compliance Officer (“CCO”) is responsible for ensuring that PIMCO has adopted and implemented policies and procedures reasonably designed to ensure compliance with the Disclosure Policy and, to the extent the CCO considers necessary, the CCO shall monitor PIMCO’s compliance with its policies and procedures.

Any exceptions to the Disclosure Policy may be made only if approved by the Trust’s CCO upon determining that the exception is in the best interests of the Fund and its shareholders. The CCO must report any exceptions made to the Disclosure Policy to the Trust’s Board of Trustees at its next regularly scheduled meeting.

Quarterly Disclosure. The Funds will publicly disclose the complete schedule of each Fund’s holdings, as reported on a quarter-end basis, by making the information publicly available in a manner consistent with requirements established by the SEC. You may view a Fund’s complete schedule of portfolio holdings for the most recently completed quarter online at http://www.pimco.com, or obtain a copy of the schedule by calling PIMCO at 1-866-746-2606. This information will be available no earlier than the day on which it is transmitted to shareholders in the Funds’ annual and semi-annual reports, or filed with the SEC on Form N-Q, which will occur on or about the sixtieth day after a quarter’s end.

The Funds file their complete schedules of securities holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q will be available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.

Defaulted/Distressed Securities. PIMCO may, in its discretion, publicly disclose portfolio holdings information at any time with respect to securities held by the Funds that are in default or experiencing a negative credit event. Any such disclosure will be broadly disseminated via PIMCO’s website at http://www.pimco.com, the Distributor’s website at http://www.allianzinvestors.com, or by similar means.

Confidential Dissemination of Portfolio Holdings Information. No disclosure of non-public portfolio holdings information may be made to any unaffiliated third party except as set forth in this section. This prohibition does not apply to information sharing with the Funds’ service providers, such as the Funds’ investment adviser, sub-advisers (if any), distributor, custodian, transfer agent, administrator, sub-administrator (if any), accountant, counsel, securities class action claims services administrator, financial printer, proxy voting agent, lender and other select third party service providers (collectively, the “Service Providers”), who generally need access to such information in the performance of their contractual duties and responsibilities. Such Service Providers are subject to duties of confidentiality, including a duty not to trade on non-public information, imposed by law and/or contract.

A Fund or PIMCO may, to the extent permitted under applicable law, distribute non-public information regarding a Fund, including portfolio holdings information, more frequently to certain third parties, such as mutual fund analysts and rating and ranking organizations (e.g., Moody’s, Standard & Poor’s, Fitch, Morningstar and Lipper Analytical Services, etc.), pricing information vendors, analytical service providers (e.g., Abel/Noser Corp., FT Interactive Data, etc.) and potential Service Providers that have a legitimate business purpose in receiving such information. PIMCO currently has an ongoing arrangement to distribute non-public portfolio holdings information for the Government Money Market Fund to Moody’s solely for the purpose of Moody’s rating the Fund. The distribution of non-public information must be authorized by an officer of the Trust or PIMCO after determining the requested disclosure is in the best interests of the Fund and its shareholders and after consulting with and receiving approval from PIMCO’s legal department. Any recipient of non-public information will be subject to a confidentiality agreement that contains, at a minimum, provisions specifying that: (1) the Funds’ non-public information provided is the confidential property of the Funds and may not be used for any purpose except in connection with the provision of services to the Funds and, in particular, that such information may not be traded upon; (2) the recipient of the non-public information agrees to limit access to the information to its employees and agents who are subject to a duty to keep and treat such information as confidential; and (3) upon written request from the Funds or PIMCO, the recipient of the non-public information shall promptly return or destroy the information, except as otherwise required by applicable law or such recipient’s record retention policies and procedures. Neither the Funds nor PIMCO may receive compensation or consideration in connection with the distribution of non-public portfolio holdings information.

Non-Specific Information. Under the Disclosure Policy, the Funds or PIMCO may distribute non-specific information about the Funds and/or summary information about the Funds at any time. Such information will not identify any specific portfolio holding, but may reflect, among other things, the quality or character of a Fund’s holdings.

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Large Trade Notifications

A Fund or its agent may from time to time receive notice that a current or prospective shareholder will place, or that a financial intermediary has received, an order for a large trade in a Fund’s shares. The Fund may determine to enter into portfolio transactions in anticipation of that order, even though the order will not be placed or processed until the following business day, as applicable. This practice provides for a closer correlation between the time shareholders place trade orders and the time a Fund enters into portfolio transactions based on those orders, and permits the Fund to be more fully invested in investment securities, in the case of purchase orders, and to more orderly liquidate its investment positions, in the case of redemption orders. On the other hand, the current or prospective shareholder or financial intermediary, as applicable, may not ultimately place or process the order. In this case, a Fund may be required to borrow assets to settle the portfolio transactions entered into in anticipation of that order, and would therefore incur borrowing costs. The Funds may also suffer investment losses on those portfolio transactions. Conversely, the Funds would benefit from any earnings and investment gains resulting from such portfolio transactions.

NET ASSET VALUE

Net asset value is determined as indicated under “How Fund Shares are Priced” in the Prospectuses. For all Funds other than the Government Money Market and Treasury Money Market Funds, net asset value will not be determined on the following holidays: New Year’s Day, Martin Luther King, Jr. Day, President’s Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. For the Government Money Market and Treasury Money Market Funds, net asset value will not be determined on the following holidays: New Year’s Day, Martin Luther King, Jr. Day, President’s Day, Good Friday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day. The Government Money Market and Treasury Money Market Funds reserve the right to close, and not determine net asset value, if the primary trading markets of the Government Money Market and Treasury Money Market Funds’ portfolio instruments are closed and PIMCO believes that there is not an adequate market to meet purchase, redemption or exchange requests for the Government Money Market and Treasury Money Market Funds. On any business day when the Securities Industry and Financial Markets Association (“SIFMA”) recommends that the securities markets close trading early, the Government Money Market and Treasury Money Market Funds may close trading early and determine net asset value as of an earlier time.

For all Funds other than the Government Money Market, Money Market and Treasury Money Market Funds, portfolio securities and other assets for which market quotations are readily available are valued at market value. Market value is determined on the basis of last reported sales prices, or if no sales are reported, as is the case for most securities traded over-the-counter, at the mean between representative bid and asked quotations obtained from a quotation reporting system, established market makers or independent pricing services. For NASDAQ traded securities, market value also may be determined on the basis of the NASDAQ Official Closing Price instead of the last reported sales price. Fixed income securities, including those to be purchased under firm commitment agreements (other than obligations having a maturity of 60 days or less), are normally valued on the basis of quotes obtained from brokers and dealers or independent pricing services, which take into account appropriate factors such as institutional-sized trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data.

The Government Money Market, Money Market and Treasury Money Market Funds’ securities are valued using the amortized cost method of valuation. This involves valuing a security at cost on the date of acquisition and thereafter assuming a constant accretion of a discount or amortization of a premium to maturity, regardless of the impact of fluctuating interest rates on the market value of the instrument. While this method provides certainty in valuation, it may result in periods during which value, as determined by amortized cost, is higher or lower than the price a Fund would receive if it sold the instrument. During such periods the yield to investors in a Fund may differ somewhat from that obtained in a similar investment company which uses available market quotations to value all of its portfolio securities.

The SEC’s regulations require the Government Money Market, Money Market and Treasury Money Market Funds to adhere to certain conditions. The Board of Trustees, as part of its responsibility within the overall duty of care owed to the shareholders, is required to establish procedures reasonably designed, taking into account current market conditions and each Fund’s investment objective, to stabilize the net asset value per share as computed for the purpose of distribution and redemption at $1.00 per share. The Trustees’ procedures include a requirement to periodically monitor, as appropriate and at such intervals as are reasonable in light of current market conditions, the relationship between the amortized cost value per share and the net asset value per share based upon available indications of market value. The Board of Trustees will consider what steps should be taken, if any, in the event of a difference of more than 1/2 of 1% between the two. The Board of Trustees will take such steps as it considers appropriate, (e.g., selling securities to shorten the average portfolio maturity) to minimize any material dilution or other unfair results which might arise from differences between the two. Each Fund also is required to maintain a dollar-weighted average portfolio maturity of 90 days or less, to limit its investments to instruments having remaining maturities of 397 days or less (except securities held subject to repurchase agreements having 397 days or less maturity) and to invest only in securities determined by PIMCO under procedures established by the Board of Trustees to be of high quality with minimal credit risks.

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Each Fund’s liabilities are allocated among its classes. The total of such liabilities allocated to a class plus that class’s distribution and/or servicing fees (if any) and any other expenses specially allocated to that class are then deducted from the class’s proportionate interest in the Fund’s assets, and the resulting amount for each class is divided by the number of shares of that class outstanding to produce the class’s “net asset value” per share. Under certain circumstances, the per share net asset value of the Class B and Class C shares of the Funds that do not declare regular income dividends on a daily basis may be lower than the per share net asset value of the Class A shares as a result of the daily expense accruals of the distribution fee applicable to the Class B and Class C shares. Generally, when Funds pay income dividends, those dividends are expected to differ over time by approximately the amount of the expense accrual differential between a particular Fund’s classes.

TAXATION

The following summarizes certain additional federal income tax considerations generally affecting the Funds and their shareholders. The discussion is for general information only and does not purport to consider all aspects of U.S. federal income taxation that might be relevant to beneficial owners of shares of the Funds. The discussion is based upon current provisions of the Internal Revenue Code, existing regulations promulgated thereunder, and administrative and judicial interpretations thereof, all of which are subject to change, which change could be retroactive. The discussion applies only to beneficial owners of Fund shares in whose hands such shares are capital assets within the meaning of Section 1221 of the Internal Revenue Code, and may not apply to certain types of beneficial owners of shares (such as insurance companies, tax exempt organizations, and broker-dealers) who may be subject to special rules. Persons who may be subject to tax in more than one country should consult the provisions of any applicable tax treaty to determine the potential tax consequences to them. Prospective investors should consult their own tax advisers with regard to the federal tax consequences of the purchase, ownership and disposition of Fund shares, as well as the tax consequences arising under the laws of any state, foreign country, or other taxing jurisdiction. The discussion here and in the Prospectuses is not intended as a substitute for careful tax planning.

Each Fund intends to qualify annually and elect to be treated as a regulated investment company under the Internal Revenue Code. To qualify as a regulated investment company, each Fund generally must, among other things, (a) derive in each taxable year at least 90% of its gross income from dividends, interest, payments with respect to securities loans, and gains from the sale or other disposition of stock, securities or foreign currencies, net income from certain “qualified publicly traded partnerships,” or other income derived with respect to its business of investing in such stock, securities or currencies (“Qualifying Income Test”); (b) diversify its holdings so that, at the end of each quarter of the taxable year, (i) at least 50% of the market value of the Fund’s assets is represented by cash, U.S. Government securities, the securities of other regulated investment companies and other securities, with such other securities of any one issuer limited for the purposes of this calculation to an amount not greater than 5% of the value of the Fund’s total assets and 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of the value of its total assets is invested in the securities of any one issuer (other than U.S. Government securities or the securities of other regulated investment companies), the securities of certain controlled issuers in the same or similar trades or businesses, or the securities of one or more “qualified publicly traded partnerships”; and (c) distribute each taxable year the sum of (i) at least 90% of its investment company taxable income (which includes dividends, interest and net short-term capital gains in excess of any net long-term capital losses) and (ii) 90% of its tax exempt interest, net of expenses allocable thereto. The Treasury Department is authorized to promulgate regulations under which gains from foreign currencies (and options, futures, and forward contracts on foreign currency) would constitute qualifying income for purposes of the Qualifying Income Test only if such gains are directly related to investing in securities. To date, such regulations have not been issued.

If a Fund failed to qualify as a regulated investment company accorded special tax treatment in any taxable year, a Fund would be subject to tax on its taxable income at corporate rates, and all distributions from earnings and profits, including any distributions of net tax-exempt income and net long-term capital gains, would be taxable to shareholders as ordinary income. Some portions of such distributions may be eligible for the dividends received deduction in the case of corporate shareholders and reduced rates of taxation on qualified dividend income in the case of individuals. In addition, a Fund could be required to recognize unrealized gains, pay substantial taxes and interest and make substantial distributions before requalifying as a regulated investment company that is accorded special tax treatment.

As described in the applicable Prospectuses, the CommodityRealReturn Strategy and Global Multi-Asset Funds may gain exposure to the commodities markets through investments in commodity index-linked derivative instruments. On December 16, 2005, the IRS issued Revenue Ruling 2006-01 which held that income derived from commodity index-linked swaps would not be qualifying income. As such, each Fund’s ability to utilize commodity index-linked swaps as part of its investment strategy is limited to a maximum of 10 percent of its gross income, respectively.

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A subsequent revenue ruling, Revenue Ruling 2006-31, clarified the holding of Revenue Ruling 2006-01 by providing that income from alternative investment instruments (such as certain commodity index-linked notes) that create commodity exposure may be considered qualifying income under the Internal Revenue Code. The IRS has also issued private letter rulings in which the IRS specifically concluded that income from certain commodity index-linked notes is qualifying income. Based on the reasoning in such rulings, each Fund will continue to seek to gain exposure to the commodity markets primarily through investments in commodity-linked notes and through investments in its Subsidiary (as discussed below).

As discussed in “Investment Objectives and Policies—Investments in the Wholly-Owned Subsidiary,” each Fund intends to invest a portion of its assets in its Subsidiary, each of which will be classified as a corporation for U.S. federal income tax purposes. The IRS has also issued private rulings in which the IRS specifically concluded that income derived from investment in a subsidiary will also be qualifying income.

Foreign corporations, such as the Subsidiaries, will generally not be subject to U.S. federal income taxation unless they are deemed to be engaged in a U.S. trade or business. It is expected that the Subsidiaries will conduct their activities in a manner so as to meet the requirements of a safe harbor under Section 864(b)(2) of the Internal Revenue Code under which the Subsidiaries may engage in trading in stocks or securities or certain commodities without being deemed to be engaged in a U.S. trade or business. However, if certain of either Subsidiary’s activities were determined not to be of the type described in the safe harbor (which is not expected), then the activities of such Subsidiary may constitute a U.S. trade or business, or be taxed as such.

In general, foreign corporations, such as the Subsidiaries, that do not conduct a U.S. trade or business are nonetheless subject to tax at a flat rate of 30 percent (or lower tax treaty rate), generally payable through withholding, on the gross amount of certain U.S.-source income that is not effectively connected with a U.S. trade or business. There is presently no tax treaty in force between the U.S. and the Cayman Islands that would reduce this rate of withholding tax. It is not expected that the Subsidiaries will derive income subject to such withholding tax.

Each Subsidiary will be treated as a controlled foreign corporation (“CFC”). The CommodityRealReturn Strategy Fund will be treated as a “U.S. shareholder” of the CRRS Subsidiary and the Global Multi-Asset Fund will be treated as a “U.S. shareholder” of the GMA Subsidiary. As a result, each Fund will be required to include in gross income for U.S. federal income tax purposes all of its Subsidiary’s “subpart F income,” whether or not such income is distributed by such Subsidiary. It is expected that all of the Subsidiaries’ income will be “subpart F income.” Each Fund’s recognition of its Subsidiary’s “subpart F income” will increase such Fund’s tax basis in its Subsidiary. Distributions by the Subsidiary to its respective Fund will be tax-free, to the extent of its previously undistributed “subpart F income,” and will correspondingly reduce such Fund’s tax basis in its Subsidiary. “Subpart F income” is generally treated as ordinary income, regardless of the character of the Subsidiary’s underlying income. If a net loss is realized by a Subsidiary, such loss is not generally available to offset the income earned by such Subsidiary’s parent Fund.

Based on Revenue Ruling 2006-31, IRS guidance and advice of counsel, each Fund will seek to gain exposure to the commodity markets primarily through investments in commodity index-linked notes and through investments in its Subsidiary. The use of commodity index-linked notes involves specific risks. Applicable Prospectuses, under the heading “Characteristics and Risks of Securities and Investment Techniques—Derivatives” provide further information regarding commodity index-linked notes, including the risks associated with these instruments.

As a regulated investment company, a Fund generally will not be subject to U.S. federal income tax on its investment company taxable income and net capital gains (any net long-term capital gains in excess of the sum of net short-term capital losses and capital loss carryovers from prior years) designated by the Fund as capital gain dividends, if any, that it distributes to shareholders on a timely basis. Each Fund intends to distribute to its shareholders, at least annually, all or substantially all of its investment company taxable income and any net capital gains. In addition, amounts not distributed by a Fund on a timely basis in accordance with a calendar year distribution requirement are subject to a nondeductible 4% excise tax. To avoid the tax, a Fund must distribute during each calendar year an amount equal to the sum of (1) at least 98% of its ordinary income (not taking into account any capital gains or losses) for the calendar year, (2) at least 98% of its capital gains in excess of its capital losses (and adjusted for certain ordinary losses) for the twelve month period ending on October 31, and (3) all ordinary income and capital gains for previous years that were not distributed during such years. A distribution will be treated as paid on December 31 of the calendar year if it is declared by a Fund in October, November, or December of that year to shareholders of record on a date in such a month and paid by the Fund during January of the following year. Such

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distributions will be taxable to shareholders (other than those not subject to federal income tax) in the calendar year in which the distributions are declared, rather than the calendar year in which the distributions are received. To avoid application of the excise tax, each Fund intends to make its distributions in accordance with the calendar year distribution requirement.

Distributions

Each Municipal Fund and the Unconstrained Tax Managed Bond Fund must have at least 50% of its total assets invested in Municipal Bonds at the end of each calendar quarter so that dividends derived from its net interest income on Municipal Bonds and so designated by the Fund will be “exempt-interest dividends,” which are generally exempt from federal income tax when received by an investor. A portion of the distributions paid by a Municipal Fund and the Unconstrained Tax Managed Bond Fund may be subject to tax as ordinary income (including certain amounts attributable to bonds acquired at a market discount). In addition, any distributions of net short-term capital gains would be taxed as ordinary income and any distribution of capital gain dividends would be taxed as long-term capital gains. Certain exempt-interest dividends, as described in the applicable Prospectuses, may increase alternative minimum taxable income for purposes of determining a shareholder’s liability for the alternative minimum tax. In addition, exempt-interest dividends allocable to interest from certain “private activity bonds” will not be tax exempt for purposes of the regular income tax to shareholders who are “substantial users” of the facilities financed by such obligations or “related persons” of “substantial users.” The tax-exempt portion of dividends paid for a calendar year constituting “exempt-interest dividends” will be designated after the end of that year and will be based upon the ratio of net tax-exempt income to total net income earned by the Fund during the entire year. That ratio may be substantially different than the ratio of net tax-exempt income to total net income earned during a portion of the year. Thus, an investor who holds shares for only a part of the year may be allocated more or less tax-exempt interest dividends than would be the case if the allocation were based on the ratio of net tax-exempt income to total net income actually earned by the Fund while the investor was a shareholder. All or a portion of interest on indebtedness incurred or continued by a shareholder to purchase or carry shares of a Municipal Fund or the Unconstrained Tax Managed Bond Fund will not be deductible by the shareholder. The portion of interest that is not deductible is equal to the total interest paid or accrued on the indebtedness multiplied by the percentage of the Fund’s total distributions (not including distributions of the excess of net long-term capital gains over net short-term capital losses) paid to the shareholder that are exempt-interest dividends. Under rules used by the IRS for determining when borrowed funds are considered used for the purpose of purchasing or carrying particular assets, the purchase of shares may be considered to have been made with borrowed funds even though such funds are not directly traceable to the purchase of shares. Future changes in federal and/or state laws could possibly have a negative impact on the tax treatment and/or value of municipal securities.

Shareholders of the Municipal Funds and the Unconstrained Tax Managed Bond Fund receiving social security or railroad retirement benefits may be taxed on a portion of those benefits as a result of receiving tax exempt income (including exempt-interest dividends distributed by the Fund). The tax may be imposed on up to 50% of a recipient’s benefits in cases where the sum of the recipient’s adjusted gross income (with certain adjustments, including tax-exempt interest) and 50% of the recipient’s benefits, exceeds a base amount. In addition, up to 85% of a recipient’s benefits may be subject to tax if the sum of the recipient’s adjusted gross income (with certain adjustments, including tax-exempt interest) and 50% of the recipient’s benefits exceeds a higher base amount. Shareholders receiving social security or railroad retirement benefits should consult with their tax advisors.

In years when a Fund distributes amounts in excess of its earnings and profits, such distributions may be treated in part as a return of capital. A return of capital is not taxable to a shareholder and has the effect of reducing the shareholder’s basis in the shares. Since certain of the Municipal Funds’ and the Unconstrained Tax Managed Bond Fund’s expenses attributable to earning tax-exempt income do not reduce such Fund’s current earnings and profits, it is possible that distributions, if any, in excess of such Fund’s net tax-exempt and taxable income will be treated as taxable dividends to the extent of such Fund’s remaining earnings and profits (i.e., the amount of such expenses).

Except for exempt-interest dividends paid by the Municipal Funds and the Unconstrained Tax Managed Bond Fund, all dividends and distributions of a Fund, whether received in shares or cash, generally are taxable and must be reported on each shareholder’s federal income tax return. Dividends paid out of a Fund’s investment company taxable income will be taxable to a U.S. shareholder as ordinary income. Distributions received by tax-exempt shareholders will not be subject to federal income tax to the extent permitted under the applicable tax exemption.

Although a portion of the dividends paid by certain Funds may qualify for the deduction for dividends received by corporations and/or the reduced tax rate for individuals on certain dividends, it is not expected that any such portion would be significant. Further, the reduced rate for individuals on certain dividends is scheduled to expire after 2010. Dividends paid by certain other Funds generally are not expected to qualify for the deduction for dividends received by corporations and/or the reduced tax rate for individuals on certain dividends. Distributions of net capital gains, if any, designated as capital gain

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dividends, are taxable as long-term capital gains, regardless of how long the shareholder has held a Fund’s shares and are not eligible for the dividends received deduction. Any distributions that are not from a Fund’s investment company taxable income or net realized capital gains may be characterized as a return of capital to shareholders or, in some cases, as capital gain. The tax treatment of dividends and distributions will be the same whether a shareholder reinvests them in additional shares or elects to receive them in cash. The maximum tax on long-term capital gains is currently scheduled to increase from 15% to 20% in 2010.

The All Asset, All Asset All Authority, Global Multi-Asset and RealRetirement^® Funds will not be able to offset gains realized by one Underlying Fund in which the Funds invest against losses realized by another Underlying Fund in which the Funds invest. Redemptions of shares in an Underlying Fund could also result in a gain and/or income to the All Asset, All Asset All Authority, Global Multi-Asset and RealRetirement^® Funds. The Funds’ use of the fund-of-funds structure could therefore affect the amount, timing and character of distributions to shareholders.

Sales of Shares

Upon the disposition of shares of a Fund (whether by redemption, sale or exchange), a shareholder may realize a gain or loss. Such gain or loss will be capital gain or loss if the shares are capital assets in the shareholder’s hands, and will be long-term or short-term generally depending upon the shareholder’s holding period for the shares. Any loss realized on a disposition will be disallowed to the extent the shares disposed of are replaced within a period of 61 days beginning 30 days before and ending 30 days after the shares are disposed of. In such a case, the basis of the shares acquired will be adjusted to reflect the disallowed loss. Any loss realized by a shareholder on a disposition of shares held by the shareholder for six months or less will be treated as a long-term capital loss to the extent of any distributions of capital gain dividends received by the shareholder with respect to such shares. If a Fund redeems a shareholder in-kind rather than in cash, the shareholder would realize the same gain or loss as if the shareholder had been redeemed in cash. Further, the shareholder’s basis in the securities received in the in-kind redemption would be the securities’ fair market value on the date of the in-kind redemption.

Depending on the All Asset, All Asset All Authority, Global Multi-Asset and RealRetirement^® Funds’ percentage ownership in an Underlying Fund both before and after a redemption, each Fund’s redemption of shares of such Underlying Fund may cause the Funds to be treated as not receiving capital gain income on the amount by which the distribution exceeds the Fund’s tax basis in the shares of the Underlying Fund, but instead to be treated as receiving a dividend taxable as ordinary income on the full amount of the distribution. This could cause shareholders of the All Asset, All Asset All Authority, Global Multi-Asset and RealRetirement^® Funds to recognize higher amounts of ordinary income than if the shareholders had held the shares of the Underlying Funds directly. Redemptions of shares in an Underlying Fund could also cause additional distributable gains to shareholders.

Potential Pass-Through of Tax Credits

If a Fund invests in Build America Bonds, created by the American Recovery and Reinvestment Act of 2009, or any other qualified tax credit bonds, the investment will result in taxable income to such Fund. The applicable Fund may elect to pass through to shareholders the applicable interest income and available tax credits, in which case shareholders will be required to report both the interest income and tax credits as taxable income. Shareholders may be able to claim the tax credits on their federal tax returns against their income tax, including alternative minimum tax, liability. However, such tax credits are generally not refundable. There is no assurance that a Fund will elect to pass through any such income and credits.

Backup Withholding

A Fund may be required to withhold up to 28% of all taxable distributions payable to shareholders who fail to provide the Fund with their correct taxpayer identification number or to make required certifications, or who have been notified by the IRS that they are subject to backup withholding. Corporate shareholders and certain other shareholders specified in the Internal Revenue Code generally are exempt from such backup withholding. Backup withholding is not an additional tax. Any amounts withheld may be credited against the shareholder’s U.S. federal tax liability.

Options, Futures and Forward Contracts, and Swap Agreements

Some of the options, futures contracts, forward contracts, and swap agreements used by the Funds may be “section 1256 contracts.” Any gains or losses on section 1256 contracts are generally considered 60% long-term and 40% short-term capital gains or losses (“60/40”) although certain foreign currency gains and losses from such contracts may be treated as ordinary in character. Also, section 1256 contracts held by a Fund at the end of each taxable year (and, for purposes of the 4% excise tax, on certain other dates as prescribed under the Internal Revenue Code) are “marked to market” with the result that unrealized gains or losses are treated as though they were realized and the resulting gain or loss is treated as ordinary or 60/40 gain or loss.

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Generally, the hedging transactions and certain other transactions in options, futures and forward contracts undertaken by a Fund, may result in “straddles” for U.S. federal income tax purposes. In some cases, the straddle rules also could apply in connection with swap agreements. The straddle rules may affect the character of gains (or losses) realized by a Fund. In addition, losses realized by a Fund on positions that are part of a straddle may be deferred under the straddle rules, rather than being taken into account in calculating the taxable income for the taxable year in which such losses are realized. Because only a few regulations implementing the straddle rules have been promulgated, the tax consequences of transactions in options, futures, forward contracts, and swap agreements to a Fund are not entirely clear. The transactions may increase the amount of short-term capital gain realized by a Fund which is taxed as ordinary income when distributed to shareholders.

A Fund may make one or more of the elections available under the Internal Revenue Code which are applicable to straddles. If a Fund makes any of the elections, the amount, character and timing of the recognition of gains or losses from the affected straddle positions will be determined under rules that vary according to the election(s) made. The rules applicable under certain of the elections operate to accelerate the recognition of gains or losses from the affected straddle positions.

Because application of the straddle rules may affect the character of gains or losses, defer losses and/or accelerate the recognition of gains or losses from the affected straddle positions, the amount which must be distributed to shareholders, and which will be taxed to shareholders as ordinary income or long-term capital gain, may be increased or decreased substantially as compared to a fund that did not engage in such hedging transactions.

Rules governing the tax aspects of swap agreements are in a developing stage and are not entirely clear in certain respects. Accordingly, while the Funds intend to account for such transactions in a manner they deem to be appropriate, the IRS might not accept such treatment. If it did not, the status of a Fund as a regulated investment company might be affected. The Trust intends to monitor developments in this area.

Certain requirements that must be met under the Internal Revenue Code in order for a Fund to qualify as a regulated investment company, including the qualifying income and diversification requirements applicable to a Fund’s assets may limit the extent to which a Fund will be able to engage in transactions in options, futures contracts, forward contracts, and swap agreements.

In addition, the use of swaps or other derivatives could adversely affect the character (capital gain vs. ordinary income) of the income recognized by the Funds for federal income tax purposes, as well as the amount and timing of such recognition, as compared to a direct investment in underlying securities, and could result in a Fund’s recognition of income prior to the receipt of any corresponding cash. As a result of the use of swaps and derivatives, a larger portion of the Fund’s distributions may be treated as ordinary income than would have been the case if the Fund did not enter into such swaps or derivatives. The tax treatment of swap agreements and other derivatives may also be affected by future legislation or Treasury Regulations and/or guidance issued by the Internal Revenue Service that could affect the character, timing and/or amount of a Fund’s taxable income or gains and distributions made by the Fund.

Short Sales

Certain Funds, particularly the Fundamental Advantage Total Return Strategy and StocksPLUS^® TR Short Strategy Funds, may make short sales of securities. Short sales may increase the amount of short-term capital gain realized by a Fund, which is taxed as ordinary income when distributed to shareholders. Short sales also may be subject to the “Constructive Sales” rules, discussed below.

Passive Foreign Investment Companies

Certain Funds may invest in the stock of foreign corporations which may be classified under the Internal Revenue Code as passive foreign investment companies (“PFICs”). In general, a foreign corporation is classified as a PFIC for a taxable year if at least one-half of its assets constitute investment-type assets or 75% or more of its gross income is investment-type income. If a Fund receives a so-called “excess distribution” with respect to PFIC stock, the Fund itself may be subject to tax on a portion of the excess distribution, whether or not the corresponding income is distributed by the Fund to stockholders. In general, under the PFIC rules, an excess distribution is treated as having been realized ratably over the period during which the Fund held the PFIC stock. A Fund itself will be subject to tax on the portion, if any, of an excess distribution that is so allocated to prior taxable years and an interest factor will be added to the tax, as if the tax had been payable in such prior taxable years. Certain distributions from a PFIC as well as gain from the sale of PFIC stock are treated as excess distributions. Excess distributions are characterized as ordinary income even though, absent application of the PFIC rules, certain excess distributions might have been classified as capital gain.

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A Fund may be eligible to elect alternative tax treatment with respect to PFIC stock. Under an election that currently is available in some circumstances, a Fund generally would be required to include in its gross income its share of the earnings of a PFIC on a current basis, regardless of whether distributions are received from the PFIC in a given year. If this election were made, the special rules, discussed above, relating to the taxation of excess distributions, would not apply. Alternatively, another election may be available that would involve marking to market a Fund’s PFIC shares at the end of each taxable year (and on certain other dates prescribed in the Internal Revenue Code), with the result that unrealized gains are treated as though they were realized and reported as ordinary income. Any mark-to-market losses and any loss from an actual disposition of PFIC shares would be deductible as ordinary losses to the extent of any net mark-to-market gains included in income with respect to such shares in prior years. If this election were made, tax at the Fund level under the PFIC rules would generally be eliminated, but the Fund could, in limited circumstances, incur nondeductible interest charges. A Fund’s intention to qualify annually as a regulated investment company may limit its elections with respect to PFIC shares.

Because the application of the PFIC rules may affect, among other things, the character of gains and the amount of gain or loss and the timing of the recognition of income with respect to PFIC shares, and may subject a Fund itself to tax on certain income from PFIC shares, the amount that must be distributed to shareholders and will be taxed to shareholders as ordinary income or long-term capital gain may be increased or decreased substantially as compared to a fund that did not invest in PFIC shares.

Foreign Currency Transactions

Under the Internal Revenue Code, gains or losses attributable to fluctuations in exchange rates which occur between the time a Fund accrues income or other receivables or accrues expenses or other liabilities denominated in a foreign currency and the time the Fund actually collects such receivables or pays such liabilities generally are treated as ordinary income or loss. Similarly, on disposition of debt securities denominated in a foreign currency and on disposition of certain other instruments, gains or losses attributable to fluctuations in the value of the foreign currency between the date of acquisition of the security or contract and the date of disposition also are treated as ordinary gain or loss. These gains and losses, referred to under the Internal Revenue Code as “section 988” gains or losses, may increase or decrease the amount of a Fund’s investment company taxable income to be distributed to its shareholders as ordinary income.

Foreign Taxation

Income received by the Funds from sources within foreign countries may be subject to withholding and other taxes imposed by such countries. Tax conventions between certain countries and the U.S. may reduce or eliminate such taxes. In addition, PIMCO intends to manage the Funds with the intention of minimizing foreign taxation in cases where it is deemed prudent to do so. If more than 50% of the value of a Fund’s total assets at the close of its taxable year consists of securities of foreign corporations, the Fund will be eligible to elect to “pass-through” to the Fund’s shareholders the amount of foreign income and similar taxes paid by the Fund. If this election is made, a shareholder generally subject to tax will be required to include in gross income (in addition to taxable dividends actually received) his pro rata share of the foreign taxes paid by the Fund, and may be entitled either to deduct (as an itemized deduction) his or her pro rata share of foreign taxes in computing his taxable income or to use it (subject to limitations) as a foreign tax credit against his or her U.S. federal income tax liability. No deduction for foreign taxes may be claimed by a shareholder who does not itemize deductions. Each shareholder will be notified within 60 days after the close of the Fund’s taxable year whether the foreign taxes paid by the Fund will “pass-through” for that year.

Generally, a credit for foreign taxes is subject to the limitation that it may not exceed the shareholder’s U.S. tax attributable to his or her total foreign source taxable income. For this purpose, if the pass-through election is made, the source of a Fund’s income will flow through to shareholders of the Trust. With respect to such Fund, gains from the sale of securities will be treated as derived from U.S. sources and certain currency fluctuation gains, including fluctuation gains from foreign currency-denominated debt securities, receivables and payables will be treated as ordinary income derived from U.S. sources. The limitation on the foreign tax credit is applied separately to foreign source passive income, and to certain other types of income. Shareholders may be unable to claim a credit for the full amount of their proportionate share of the foreign taxes paid by the Fund. Various other limitations, including a minimum holding period requirement, apply to limit the credit and/or deduction for foreign taxes for purposes of regular federal tax and/or alternative minimum tax.

Although the All Asset, All Asset All Authority, Global Multi-Asset and RealRetirement^® Funds may be entitled to a deduction for such taxes paid by an Underlying Fund in which each Fund invests, the All Asset, All Asset All Authority, Global Multi-Asset and RealRetirement^® Funds will not be able to pass any such credit or deduction through to their own shareholders.

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Original Issue Discount and Market Discount

Some of the debt securities (with a fixed maturity date of more than one year from the date of issuance) that may be acquired by a Fund may be treated as debt securities that are issued originally at a discount. Generally, the amount of the original issue discount (“OID”) is treated as interest income and is included in income over the term of the debt security, even though payment of that amount is not received until a later time, usually when the debt security matures. A portion of the OID includable in income with respect to certain high-yield corporate debt securities may be treated as a dividend for federal income tax purposes.

Some of the debt securities (with a fixed maturity date of more than one year from the date of issuance) that may be acquired by a Fund in the secondary market may be treated as having market discount. Generally, any gain recognized on the disposition of, and any partial payment of principal on, a debt security having market discount is treated as ordinary income to the extent the gain, or principal payment, does not exceed the “accrued market discount” on such debt security. Market discount generally accrues in equal daily installments. A Fund may make one or more of the elections applicable to debt securities having market discount, which could affect the character and timing of recognition of income.

Some debt securities (with a fixed maturity date of one year or less from the date of issuance) that may be acquired by a Fund may be treated as having acquisition discount, or OID in the case of certain types of debt securities. Generally, the Fund will be required to include the acquisition discount, or OID, in income over the term of the debt security, even though payment of that amount is not received until a later time, usually when the debt security matures. The Fund may make one or more of the elections applicable to debt securities having acquisition discount, or OID, which could affect the character and timing of recognition of income.

A Fund generally will be required to distribute dividends to shareholders representing discount on debt securities that is currently includable in income, even though cash representing such income may not have been received by the Fund. Cash to pay such dividends may be obtained from sales proceeds of securities held by the Fund.

Constructive Sales

Certain rules may affect the timing and character of gain if a Fund engages in transactions that reduce or eliminate its risk of loss with respect to appreciated financial positions. If a Fund enters into certain transactions in property while holding substantially identical property, the Fund would be treated as if it had sold and immediately repurchased the property and would be taxed on any gain (but not loss) from the constructive sale. The character of gain from a constructive sale would depend upon the Fund’s holding period in the property. Loss from a constructive sale would be recognized when the property was subsequently disposed of, and its character would depend on the Fund’s holding period and the application of various loss deferral provisions of the Internal Revenue Code.

IRAs and Other Retirement Plans

If you invest in a Fund through an IRA or other retirement plan you should consult with your own tax adviser on the applicable rules for such IRA or retirement plan with respect to plan qualification requirements, limits on contributions and distributions, and required distributions from IRAs and retirement plans. As an example, there could be tax penalties on distributions from an IRA or retirement plan prior to age 59 ¹/2 and, under current law, there are minimum distribution requirements applicable to the IRAs or retirement plans at age 70 ¹/2.

Non-U.S. Shareholders

Withholding of Income Tax on Dividends: Under U.S. federal tax law, dividends paid on shares beneficially held by a person who is a “foreign person” within the meaning of the Internal Revenue Code, are, in general, subject to withholding of U.S. federal income tax at a rate of 30% of the gross dividend, which may, in some cases, be reduced by an applicable tax treaty. However, if a beneficial holder who is a foreign person has a permanent establishment in the United States, and the shares held by such beneficial holder are effectively connected with such permanent establishment and, in addition, the dividends are effectively connected with the conduct by the beneficial holder of a trade or business in the United States, the dividend will be subject to U.S. federal net income taxation at regular income tax rates. Distributions of long-term net realized capital gains will not be subject to withholding of U.S. federal income tax.

Under legislation enacted in 2004, which was recently extended, a Fund is generally able to designate certain distributions to foreign persons as being derived from certain net interest income or net short-term capital gains and such designated distributions are generally not subject to U.S. tax withholding. Although the Funds expect to make allowable designations for dividends declared, the provision is currently scheduled to expire for the Funds’ tax year beginning after March 31, 2010. It should also be noted that the provision does not eliminate all withholding on distributions by Funds to foreign investors. Distributions that are derived from any dividends on corporate stock or from ordinary income other than U.S. source interest would still be subject to withholding. Foreign currency gains, foreign source interest, and ordinary income from swaps or investments in PFICs would still be subject to withholding when distributed to foreign investors. There can be no assurance as to the amount of distributions that would not be subject to withholding when paid to foreign persons.

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Income Tax on Sale of a Fund’s shares: Under U.S. federal tax law, a beneficial holder of shares who is a foreign person is not, in general, subject to U.S. federal income tax on gains (and is not allowed a deduction for losses) realized on the sale of such shares unless (i) the shares in question are effectively connected with a permanent establishment in the United States of the beneficial holder and such gain is effectively connected with the conduct of a trade or business carried on by such holder within the United States or (ii) in the case of an individual holder, the holder is present in the United States for a period or periods aggregating 183 days or more during the year of the sale and certain other conditions are met.

State and Local Tax: A beneficial holder of shares who is a foreign person may be subject to state and local tax in addition to the federal tax on income referred above.

Estate and Gift Taxes: Under existing law, upon the death of a beneficial holder of shares who is a foreign person, such shares will be deemed to be property situated within the United States and will be subject to U.S. federal estate tax. For foreign individuals dying before January 1, 2010, a portion of the applicable Fund shares will not be subject to estate tax to the extent that the applicable Fund holds certain qualifying obligations. If at the time of death the deceased holder is a resident of a foreign country and not a citizen or resident of the United States, such tax will be imposed at graduated rates from 18% to 55% on the total value (less allowable deductions and allowable credits) of the decedent’s property situated within the United States. In general, there is no gift tax on gifts of shares by a beneficial holder who is a foreign person.

The availability of reduced U.S. taxation pursuant to any applicable treaties depends upon compliance with established procedures for claiming the benefits thereof and may further, in some circumstances, depend upon making a satisfactory demonstration to U.S. tax authorities that a foreign investor qualifies as a foreign person under U.S. domestic tax law and such treaties.

Other Taxation

Distributions also may be subject to additional state, local and foreign taxes, depending on each shareholder’s particular situation. Under the laws of various states, distributions of investment company taxable income generally are taxable to shareholders even though all or a substantial portion of such distributions may be derived from interest on certain federal obligations which, if the interest were received directly by a resident of such state, would be exempt from such state’s income tax (“qualifying federal obligations”). However, some states may exempt all or a portion of such distributions from income tax to the extent the shareholder is able to establish that the distribution is derived from qualifying federal obligations. Moreover, for state income tax purposes, interest on some federal obligations generally is not exempt from taxation, whether received directly by a shareholder or through distributions of investment company taxable income (for example, interest on FNMA Certificates and GNMA Certificates). Each Fund will provide information annually to shareholders indicating the amount and percentage of a Fund’s dividend distribution which is attributable to interest on federal obligations, and will indicate to the extent possible from what types of federal obligations such dividends are derived. Shareholders are advised to consult their own tax advisers with respect to the particular tax consequences to them of an investment in a Fund.

OTHER INFORMATION

Capitalization

The Trust is a Massachusetts business trust established under a Declaration of Trust dated February 19, 1987, as amended and restated March 31, 2000. The capitalization of the Trust consists solely of an unlimited number of shares of beneficial interest with a par value of $0.0001 each. The Board of Trustees may establish additional series (with different investment objectives and fundamental policies) at any time in the future. Establishment and offering of additional series will not alter the rights of the Trust’s shareholders. When issued, shares are fully paid, non-assessable, redeemable and freely transferable. Shares do not have preemptive rights or subscription rights. In liquidation of a Fund, each shareholder is entitled to receive his pro rata share of the net assets of that Fund.

Under Massachusetts law, shareholders could, under certain circumstances, be held personally liable for the obligations of the Trust. However, the Declaration of Trust disclaims liability of the shareholders, Trustees or officers of the Trust for acts or obligations of the Trust, which are binding only on the assets and property of the Trust, and requires that notice of the disclaimer be given in each contract or obligation entered into or executed by the Trust or the Trustees. The Declaration of Trust also provides for indemnification out of Trust property for all loss and expense of any shareholder held personally liable for the obligations of the Trust. The risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which such disclaimer is inoperative or the Trust itself is unable to meet its obligations, and thus should be considered remote.

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Information on Global Bond Fund (U.S. Dollar-Hedged)

The table below sets forth the average annual total return of certain classes of shares of the Global Bond Fund (U.S. Dollar-Hedged) (which was a series of PIMCO Advisors Funds (“PAF”) prior to its reorganization as a Fund of the Trust on January 17, 1997) for the periods ended March 31, 2009. Accordingly, “Inception Date of Fund” refers to the inception date of the PAF predecessor series. Since Class A shares were offered since the inception of Global Bond Fund (U.S. Dollar-Hedged), total return presentations for periods prior to the Inception Date of the Institutional Class are based on the historical performance of Class A shares, adjusted to reflect that the Institutional Class does not have a sales charge, and the different operating expenses associated with the Institutional Class, such as 12b-1 distribution and servicing fees and administrative fee charges.

Total Return for Periods Ended March 31, 2009*

Fund	Class**	1 Year	5 Years	10 Years	Since Inception of Fund (Annualized)	Inception Date of Fund	Inception Date of Class
Global Bond (U.S. Dollar-Hedged)	Institutional Return Before Taxes	-4.21	3.03	4.91	6.39	10/02/95	02/25/98
	Institutional Return After Taxes on Distributions++	-6.91	1.13	2.71	3.67
	Institutional Return After Taxes on Distributions and Sale of Fund Shares++	-2.78	1.54	2.89	3.81
	Class A Return Before Taxes	-8.16	1.84	4.09	5.68		10/02/95
	Class A Return After Taxes on Distributions++	-10.63	0.10	2.06	3.12
	Class A Return After Taxes on Distributions and Sale of Fund Shares++	-5.35	0.62	2.28	3.29
	Class B Return Before Taxes	-8.39	1.78	3.94	5.56		10/02/95
	Class C Return Before Taxes	-6.19	1.86	3.71	5.18		10/02/95

++ After-tax returns are calculated using the highest historical individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown, and the after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. In some cases the return after taxes may exceed the return before taxes due to an assumed tax benefit from any losses on a sale of Fund shares at the end of the measurement period. After-tax returns are for Institutional Class and Class A shares only. After-tax returns for Class B and Class C shares will vary.

* Average annual total return presentations for a particular class of shares assume payment of the current maximum sales charge (if any) applicable to that class at the time of purchase and assume that the maximum CDSC (if any) for Class A, Class B and Class C shares was deducted at the times, in the amounts, and under the terms discussed in the Class A, B and C Prospectus.

** Institutional Class total return presentations for periods prior to the Inception Date of that class reflect the prior performance of Class A shares of the former PAF series, adjusted to reflect the fact that there are no sales charges on Institutional Class shares of the Fund. The adjusted performance also reflects any different operating expenses associated with Institutional Class shares. These include (i) 12b-1 distribution and servicing fees, which are not paid by the Institutional Class but are paid by Class A (at a maximum rate of 0.25% per annum), and (ii) administrative fee charges, which are lower for Institutional class shares (at a differential of 0.15% per annum).

Note also that, prior to January 17, 1997, Class A, Class B and Class C shares of the Global Bond Fund (U.S. Dollar-Hedged) were subject to a variable level of expenses for such services as legal, audit, custody and transfer agency services. As described in the Class A, B and C Prospectus, for periods subsequent to January 17, 1997, Class A, Class B and Class C shares of the Trust are subject to a fee structure which essentially fixes these expenses (along with other administrative expenses) under a single administrative fee based on the average daily net assets of the Fund attributable to Class A, Class B and Class C shares. Under the current fee structure, the Global Bond Fund (U.S. Dollar-Hedged) is expected to have lower total Fund operating expenses than its predecessor had under the fee structure for PAF (prior to January 17, 1997). All other things being equal, the higher expenses of PAF would have adversely affected total return performance for the Fund after January 17, 1997.

The method of adjustment used in the table above for periods prior to the Inception Date of Institutional Class shares of the Global Bond Fund (U.S. Dollar - Hedged) resulted in performance for the period shown that is higher than if the historical Class A performance were not adjusted to reflect the lower operating expenses of the newer class. The following table shows the lower performance figures that would be obtained if the performance for the Institutional Class was calculated by tacking to the Institutional Class’ actual performance the actual performance of Class A shares (with their higher operating expenses) for periods prior to the initial offering date of the newer class (i.e. the total return presentations below are based, for periods prior to the inception date of the Institutional Class, on the historical performance of Class A shares adjusted to reflect the current sales charges associated with Class A shares, but not reflecting lower operating expenses associated with the Institutional Class, such as lower administrative fee charges and/or distribution and servicing fee charges).

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Total Return for Periods Ended March 31, 2009

(with no adjustment for operating expenses of the Institutional

Class for periods prior to its Inception Date)

Fund	Class	1 Year	5 Years	10 Years	Since Inception of Fund (Annualized)
Global Bond (U.S. Dollar-Hedged)	Institutional	-4.21	3.03	4.91	6.32

Voting Rights

Under the Declaration of Trust, the Trust is not required to hold annual meetings of Trust shareholders to elect Trustees or for other purposes. It is not anticipated that the Trust will hold shareholders’ meetings unless required by law or the Declaration of Trust. In this regard, the Trust will be required to hold a meeting to elect Trustees to fill any existing vacancies on the Board of Trustees if, at any time, fewer than a majority of the Trustees have been elected by the shareholders of the Trust. In addition, the Declaration of Trust provides that the holders of not less than two-thirds of the outstanding shares of the Trust may remove a person serving as Trustee either by declaration in writing or at a meeting called for such purpose. The Trustees are required to call a meeting for the purpose of considering the removal of a person serving as Trustee if requested in writing to do so by the holders of not less than ten percent of the outstanding shares of the Trust. In the event that such a request was made, the Trust has represented that it would assist with any necessary shareholder communications. Shareholders of a class of shares have different voting rights with respect to matters that affect only that class.

The Trust’s shares do not have cumulative voting rights, so that the holder of more than 50% of the outstanding shares may elect the entire Board of Trustees, in which case the holders of the remaining shares would not be able to elect any Trustees. To avoid potential conflicts of interest, the All Asset, All Asset All Authority, Global Multi-Asset and RealRetirement^® Funds will vote shares of each Underlying PIMCO Fund which they own in proportion to the votes of all other shareholders in the Underlying PIMCO Fund. In addition, to the extent the Funds own shares of a money market fund or short-term bond fund pursuant to the November 19, 2001 SEC exemptive order discussed above, the Funds will vote such shares in proportion to the votes of all other shareholders of the respective money market or short-term bond fund.

Control Persons and Principal Holders of Securities

As of October 15, 2009, the following persons owned of record or beneficially 5% or more of the noted class of shares of the following Funds.

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
ALL ASSET ALL AUTHORITY FUND	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	35,094,009.686	*	34.01%
ALL ASSET ALL AUTHORITY FUND	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	20,133,428.982		19.51%
ALL ASSET ALL AUTHORITY FUND	Institutional	**	LPL FBO LPL CUSTOMERS, ATTN: MUTUAL FUND OPERATIONS, 1 BEACON ST FL 22, BOSTON MA 02108-3107	7,410,740.888		7.18%
ALL ASSET ALL AUTHORITY FUND	Institutional	**	TRUST COMPANY OF ILLINOIS, ATTN DOUG G EYLES, 1901 BUTTERFIELD RD STE 1000, DOWNERS GROVE IL 60515-4007	6,867,164.476		6.66%

145

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
ALL ASSET ALL AUTHORITY FUND	A	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	11,800,526.762		19.02%
ALL ASSET ALL AUTHORITY FUND	A	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	4,943,436.942		7.97%
ALL ASSET ALL AUTHORITY FUND	A	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	3,375,278.669		5.44%
ALL ASSET ALL AUTHORITY FUND	C	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	9,650,557.504	*	25.62%
ALL ASSET ALL AUTHORITY FUND	C	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	5,374,028.672		14.27%
ALL ASSET ALL AUTHORITY FUND	C	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	2,030,776.642		5.39%
ALL ASSET ALL AUTHORITY FUND	C	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	1,911,494.593		5.07%
ALL ASSET ALL AUTHORITY FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	4,355,626.504	*	34.66%
ALL ASSET ALL AUTHORITY FUND	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	13,000,437.282	*	60.76%
ALL ASSET ALL AUTHORITY FUND	P	**	CITIGROUP GLOBAL MARKETS INC, HOUSE ACCOUNT, 700 RED BROOK BLVD, OWINGS MILLS MD 21117-5184	7,311,825.112	*	34.17%
ALL ASSET FUND	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200	124,484,237.173		13.72%

146

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
			LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003
ALL ASSET FUND	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	89,025,950.968		9.82%
ALL ASSET FUND	Administrative	**	JOHN HANCOCK LIFE INS CO (USA), ATTN LIZ SEELEY, RPS SEG FUNDS/ACCOUNTING ET- 7,601 CONGRESS ST, BOSTON MA 02210-2804	5,892,776.922	*	50.73%
ALL ASSET FUND	Administrative	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	3,352,479.945	*	28.86%
ALL ASSET FUND	A	**	UBS WM USA, XXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	7,949,540.052		8.71%
ALL ASSET FUND	A	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	7,173,294.612		7.86%
ALL ASSET FUND	A	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	4,718,296.626		5.17%
ALL ASSET FUND	B	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	943,715.650		6.96%
ALL ASSET FUND	B	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	705,999.419		5.20%
ALL ASSET FUND	C	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	14,941,657.202		17.51%
ALL ASSET FUND	C	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	9,934,965.761		11.64%

147

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
ALL ASSET FUND	C	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	5,294,821.111		6.21%
ALL ASSET FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	10,242,204.417	*	42.73%
ALL ASSET FUND	D	**	AMERITRADE INC FBO XXXXX, PO BOX 2226, OMAHA NE 68103-2226	1,220,992.894		5.09%
ALL ASSET FUND	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	8,186,041.802	*	51.21%
ALL ASSET FUND	P	**	CITIGROUP GLOBAL MARKETS INC, HOUSE ACCOUNT, 700 RED BROOK BLVD, OWINGS MILLS MD 21117-5184	6,223,589.617	*	38.93%
ALL ASSET FUND	R	**	UMB BANK N/A, FIDUCIARY FOR TAX DEFERRED A/C’S, 1 SECURITY BENEFIT PLACE, TOPEKA KS 66636-1000	128,010.240	*	32.83%
ALL ASSET FUND	R	**	SECURITY BENEFIT LIFE INS CO,SBL VA ACCOUNT XXXXX, 1 SW SECURITY BENEFIT PL, TOPEKA KS 66636-1000	54,474.361		13.97%
ALL ASSET FUND	R	**	CAPITAL BANK & TRUST COMPANY TTEE F, CHAMPLAIN ORTHODONTIC ASSOC LTD 401, 8515 E ORCHARD RD 2T2, GREENWOOD VLG CO 80111-5002	32,706.735		8.39%
ALL ASSET FUND	R	**	TD AMERITRADE TR CO, CO# XXXXX, PO BOX 17748, DENVER CO 80217-0748	23,695.523		6.08%
CALIFORNIA INTERMEDIATE MUNICIPAL BOND FUND	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	2,938,381.349	*	47.36%
CALIFORNIA INTERMEDIATE MUNICIPAL BOND FUND	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	1,105,633.333		17.82%
CALIFORNIA INTERMEDIATE MUNICIPAL BOND FUND	Institutional		WILLIAM C POWERS, 840 NEWPORT CENTER DR STE 100, NEWPORT BEACH CA 92660	497,396.170		8.02%

148

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
CALIFORNIA INTERMEDIATE MUNICIPAL BOND FUND	A	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	761,348.719		19.18%
CALIFORNIA INTERMEDIATE MUNICIPAL BOND FUND	A	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	614,656.051		15.49%
CALIFORNIA INTERMEDIATE MUNICIPAL BOND FUND	A	**	NFS LLC FEBO, RACHAEL BALYEAT TTEE, OF THE RACHAEL BALYEAT REV TRU, U/A 11/9/83, 2510 GREEN ST, SAN FRANCISCO CA 94123-4629	309,342.717		7.79%
CALIFORNIA INTERMEDIATE MUNICIPAL BOND FUND	A	**	NFS LLC FEBO, PAMC LTD, COLLATERAL RESTRICTED, ATTN: ALLAN SHUBIN, 531 WEST COLLEGE ST, LOS ANGELES CA 90012-2315	223,455.400		5.63%
CALIFORNIA INTERMEDIATE MUNICIPAL BOND FUND	A	**	FIRST CLEARING, LLC,A/C XXXXX, WASIM KHWAJA &, SAMIA KHWAJA JT WROS, 2051 PORT CHELSEA PL, NEWPORT BEACH CA 92660-5351	220,939.049		5.57%
CALIFORNIA INTERMEDIATE MUNICIPAL BOND FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	210,847.922	*	54.83%
CALIFORNIA INTERMEDIATE MUNICIPAL BOND FUND	D	**	NFS LLC FEBO, MICHAEL N AGOSTINO, 1800 CLEVELAND RD, GLENDALE CA 91202-1014	33,916.348		8.82%
CALIFORNIA INTERMEDIATE MUNICIPAL BOND FUND	D	**	AMERITRADE INC FBO XXXXX, PO BOX 2226, OMAHA NE 68103-2226	20,474.052		5.32%
CALIFORNIA INTERMEDIATE MUNICIPAL BOND FUND	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	135,469.506	*	99.18%
CALIFORNIA SHORT DURATION MUNICIPAL INCOME FUND	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	4,858,422.181	*	51.78%
CALIFORNIA SHORT DURATION MUNICIPAL INCOME FUND	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	1,366,012.806		14.56%

149

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
CALIFORNIA SHORT DURATION MUNICIPAL INCOME FUND	Institutional		ROSESTONE PARTNERS LP, 2500 SAND HILL RD STE 200, MENLO PARK CA 94025-7063	773,512.839		8.24%
CALIFORNIA SHORT DURATION MUNICIPAL INCOME FUND	Institutional	**	HDS HOLDINGS LP, 9601 WILSHIRE BLVD STE 602, BEVERLY HILLS CA 90210-5208	593,604.449		6.33%
CALIFORNIA SHORT DURATION MUNICIPAL INCOME FUND	A	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD FL 9, JERSEY CITY NJ 07310-2055	1,908,938.763	*	25.43%
CALIFORNIA SHORT DURATION MUNICIPAL INCOME FUND	A	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCT FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY STREET, SAN FRANCISCO CA 94104-4151	1,074,856.844		14.32%
CALIFORNIA SHORT DURATION MUNICIPAL INCOME FUND	A	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	895,629.037		11.93%
CALIFORNIA SHORT DURATION MUNICIPAL INCOME FUND	A	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	603,351.354		8.04%
CALIFORNIA SHORT DURATION MUNICIPAL INCOME FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCT FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY STREET, SAN FRANCISCO CA 94104-4151	662,612.154	*	75.60%
CALIFORNIA SHORT DURATION MUNICIPAL INCOME FUND	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	2,144,136.615	*	100.00%
COMMODITYREALRETURN® STRATEGY FUND	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	377,139,527.481	*	31.91%
COMMODITYREALRETURN® STRATEGY FUND	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	228,963,773.447		19.37%
COMMODITYREALRETURN® STRATEGY FUND	Institutional	**	FIRST UNION NATIONAL BANK, ACCT XXXXX, OMNIBUS CASH/CASH NC-1151,1525	76,290,098.917		6.45%

150

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
			WEST WT HARRIS BLVD, CHARLOTTE NC 28262-8522
COMMODITYREALRETURN® STRATEGY FUND	Institutional	**	ALL ASSET PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	75,624,428.718		6.40%
COMMODITYREALRETURN® STRATEGY FUND	Institutional	**	PRUDENTIAL INVESTMENT MANAGEMENT, SERVICES FBO MUTUAL FUND CLIENTS, 100 MULBERRY ST, 3 GATEWAY CENTER FL 11, MAIL STOP NJ 05-11-20, NEWARK NJ 07102-4000	64,015,618.647		5.42%
COMMODITYREALRETURN® STRATEGY FUND	Administrative	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	108,007,897.960	*	87.78%
COMMODITYREALRETURN® STRATEGY FUND	A	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD FL 9, JERSEY CITY NJ 07310-2055	27,203,885.382		14.07%
COMMODITYREALRETURN® STRATEGY FUND	A	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	13,119,168.334		6.78%
COMMODITYREALRETURN® STRATEGY FUND	B	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	1,845,815.744		12.99%
COMMODITYREALRETURN® STRATEGY FUND	B	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	1,459,076.289		10.27%
COMMODITYREALRETURN® STRATEGY FUND	B	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	1,061,667.959		7.47%
COMMODITYREALRETURN® STRATEGY FUND	C	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	19,954,641.862		22.99%
COMMODITYREALRETURN® STRATEGY FUND	C	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	12,263,255.069		14.13%

151

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
COMMODITYREALRETURN® STRATEGY FUND	C	**	UBS WM USA,XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	8,052,065.748		9.28%
COMMODITYREALRETURN® STRATEGY FUND	C	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	5,313,379.533		6.12%
COMMODITYREALRETURN® STRATEGY FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	43,542,021.815	*	47.01%
COMMODITYREALRETURN® STRATEGY FUND	D	**	AMERITRADE INC FBO XXXXX, PO BOX 2226, OMAHA NE 68103-2226	5,118,473.348		5.53%
COMMODITYREALRETURN® STRATEGY FUND	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	22,240,304.481	*	36.90%
COMMODITYREALRETURN® STRATEGY FUND	P	**	FIRST COMMAND BANK, 1 FIRST COMM PLAZA, FORT WORTH TX 76109-4998	17,843,720.682	*	29.61%
COMMODITYREALRETURN® STRATEGY FUND	P	**	CITIGROUP GLOBAL MARKETS INC, HOUSE ACCOUNT, 700 RED BROOK BLVD, OWINGS MILLS MD 21117-5184	10,656,552.616		17.68%
CONVERTIBLE FUND	Institutional	**	ALL ASSET PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	29,241,381.875	*	80.86%
CONVERTIBLE FUND	Institutional	**	ALL ASSET PVIT PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	2,564,661.473		7.09%
CONVERTIBLE FUND	Institutional	**	ALL ASSET ALL AUTHORITY FUND, PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	2,390,958.906		6.61%
CONVERTIBLE FUND	Administrative	**	GENWORTH FINANCIAL TRUST COMPANY, FBO GFWM & MUTUAL CLIENTS & FOR THE, BENEFIT OF OTHER CUST CLIENTS, 3200 N CENTRAL AVE STE 700, PHOENIX AZ 85012-2468	2,946,664.198	*	99.85%

152

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
DEVELOPING LOCAL MARKETS FUND	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	38,543,811.439	*	29.48%
DEVELOPING LOCAL MARKETS FUND	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	25,394,322.192		19.42%
DEVELOPING LOCAL MARKETS FUND	Institutional	**	ALL ASSET PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	13,692,285.832		10.47%
DEVELOPING LOCAL MARKETS FUND	Institutional	**	AMERITRADE INC FOR THE EXCLUSIVE, BENEFIT OF OUR CLIENT, P O BOX 2226, OMAHA NE 68103-2226	8,261,921.608		6.32%
DEVELOPING LOCAL MARKETS FUND	Administrative	**	JP MORGAN CHASE TTEE FBO, DO NOT SCAN DICKINSON WRIGHT PLLC, EMPLOYEE SAVINGS PL 401K PLAN, 9300 WARD PKWY, KANSAS CITY MO 64114-3317	74,576.977	*	58.15%
DEVELOPING LOCAL MARKETS FUND	Administrative	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	45,416.318	*	35.41%
DEVELOPING LOCAL MARKETS FUND	Administrative	**	FIFTH THIRD BANK TTEE FBO, VARIOUS FASCORE RECORDKEPT PLANS, C/O FASCORE, 8515 E ORCHARD RD 2T2, GREENWOOD VLG CO 80111-5002	8,147.695		6.35%
DEVELOPING LOCAL MARKETS FUND	A	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	3,277,030.683		17.12%
DEVELOPING LOCAL MARKETS FUND	A	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	1,265,155.800		6.61%
DEVELOPING LOCAL MARKETS FUND	C	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	1,550,309.098		18.04%
DEVELOPING LOCAL MARKETS FUND	C	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	957,479.116		11.14%

153

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
DEVELOPING LOCAL MARKETS FUND	C	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	615,125.074		7.16%
DEVELOPING LOCAL MARKETS FUND	C	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	457,863.215		5.33%
DEVELOPING LOCAL MARKETS FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	8,970,186.792	*	33.19%
DEVELOPING LOCAL MARKETS FUND	D	**	TR CO OF AMERICA, FBO #XXXXX, PO BOX 6503, ENGLEWOOD CO 80155-6503	3,019,938.281		11.17%
DEVELOPING LOCAL MARKETS FUND	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	3,698,797.607	*	81.99%
DEVELOPING LOCAL MARKETS FUND	P	**	CITIGROUP GLOBAL MARKETS INC, HOUSE ACCOUNT, 700 RED BROOK BLVD, OWINGS MILLS MD 21117-5184	749,210.352		16.61%
DIVERSIFIED INCOME FUND	Institutional	**	ALL ASSET PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	44,909,451.863		19.67%
DIVERSIFIED INCOME FUND	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	22,916,566.372		10.04%
DIVERSIFIED INCOME FUND	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	22,666,661.104		9.93%
DIVERSIFIED INCOME FUND	Institutional	**	JP MORGAN CHASE NOMINEES, AUSTRALIA ACF - FUNDS SA, LV 35, 259 GEORGE ST, SYDNEY NSW AUSTRALIA 2000	17,649,469.252		7.73%
DIVERSIFIED INCOME FUND	Institutional	**	MAC & CO A/C XXXXX, PO BOX 3198, 525 WILLIAM PENN PL, PITTSBURGH PA 15230-3198	14,353,522.169		6.29%

154

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
DIVERSIFIED INCOME FUND	Institutional	**	PRUDENTIAL INVESTMENT MANAGEMENT, SERVICES FBO MUTUAL FUND CLIENTS, 100 MULBERRY ST, 3 GATEWAY CENTER FL 11, MAIL STOP NJ 05-11-20, NEWARK NJ 07102-4000	11,941,525.788		5.23%
DIVERSIFIED INCOME FUND	Administrative	**	NEW YORK LIFE TRUST COMPANY, 169 LACKAWANNA AVE, PARSIPPANY NJ 07054-1007	415,038.816	*	79.83%
DIVERSIFIED INCOME FUND	Administrative	**	JP MORGAN CHASE BANK CUST, FBO DICKINSON WRIGHT PLLC EMPLOYEE, SAVINGS PLAN (LIFESTYLE FUND), 9300 WARD PKWY, KANSAS CITY MO 64114-3317	71,898.637		13.83%
DIVERSIFIED INCOME FUND	Administrative	**	VANGUARD FIDUCIARY TRUST CO, 100 VANGUARD BLVD VM-613, OUTSIDE FUNDS, MALVERN PA 19355-2331	32,217.081		6.20%
DIVERSIFIED INCOME FUND	A	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	857,293.859		8.43%
DIVERSIFIED INCOME FUND	B	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	248,010.613		9.21%
DIVERSIFIED INCOME FUND	B	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	136,561.083		5.07%
DIVERSIFIED INCOME FUND	C	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	1,313,036.663		16.46%
DIVERSIFIED INCOME FUND	C	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	765,786.420		9.60%
DIVERSIFIED INCOME FUND	C	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	505,615.731		6.34%
DIVERSIFIED INCOME FUND	C	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCT FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101	438,180.105		5.49%

155

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
			MONTGOMERY STREET, SAN FRANCISCO CA 94104-4151
DIVERSIFIED INCOME FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	1,778,559.336	*	58.08%
DIVERSIFIED INCOME FUND	P	**	CITIGROUP GLOBAL MARKETS INC, HOUSE ACCOUNT, 700 RED BROOK BLVD, OWINGS MILLS MD 21117-5184	508,808.032	*	73.63%
DIVERSIFIED INCOME FUND	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	172,973.707	*	25.03%
EM FUNDAMENTAL INDEXPLUS TR FUND	Institutional	**	ALL ASSET PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	13,357,335.352	*	74.26%
EM FUNDAMENTAL INDEXPLUS TR FUND	Institutional	**	ALL ASSET ALL AUTHORITY FUND, PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	2,189,563.000		12.17%
EM FUNDAMENTAL INDEXPLUS TR FUND	Institutional	**	ALL ASSET PVIT PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	2,189,563.000		12.17%
EMERGING LOCAL BOND FUND	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	30,807,329.133	*	31.84%
EMERGING LOCAL BOND FUND	Institutional	**	ALL ASSET PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	21,180,000.335		21.89%
EMERGING LOCAL BOND FUND	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	13,621,933.641		14.08%
EMERGING LOCAL BOND FUND	Institutional	**	MCWOOD & CO, PO BOX 29522, RALEIGH NC 27626-0522	6,160,764.106		6.37%

156

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
EMERGING LOCAL BOND FUND	Administrative	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	417,603.202	*	86.21%
EMERGING LOCAL BOND FUND	Administrative	**	MORGAN STANLEY & CO FBO, QUENTIN & SARAH GALLIVAN TTEES, GALLIVAN REVOC FAM TR, DTD 12/13/2002,2624 GREEN ST, SAN FRANCISCO CA 94123-4607	54,327.654		11.22%
EMERGING LOCAL BOND FUND	A	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	905,896.316		16.57%
EMERGING LOCAL BOND FUND	A	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	367,973.779		6.73%
EMERGING LOCAL BOND FUND	C	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	207,649.713		16.77%
EMERGING LOCAL BOND FUND	C	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	100,086.624		8.08%
EMERGING LOCAL BOND FUND	C	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	74,096.746		5.98%
EMERGING LOCAL BOND FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCT FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY STREET, SAN FRANCISCO CA 94104-4151	8,815,799.507	*	36.95%
EMERGING LOCAL BOND FUND	D	**	AMERITRADE INC FBO XXXXX, PO BOX 2226, OMAHA NE 68103-2226	3,426,185.352		14.36%
EMERGING LOCAL BOND FUND	D	**	GENWORTH FINANCIAL TRUST COMPANY, FBO GENWORTH FINANCIAL WEALTH, MANAGEMENT & MUTUAL FUND CLIENTS, FBO OTHER CUSTODIAL ACCOUNTS, 3200 NORTH CENTRAL AVENUE, PHOENIX AZ 85012-2425	2,245,914.761		9.41%

157

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
EMERGING LOCAL BOND FUND	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	659,337.837	*	73.37%
EMERGING LOCAL BOND FUND	P	**	CITIGROUP GLOBAL MARKETS INC, HOUSE ACCOUNT, 700 RED BROOK BLVD, OWINGS MILLS MD 21117-5184	157,026.103		17.47%
EMERGING MARKETS AND INFRASTRUCTURE BOND FUND	Institutional	**	STATE STREET KANSAS CITY FBO, PIMCO GLOBAL MULTI-ASSET FND, ATTN: CHUCK NIXON, 801 PENNSYLVANIA AVE, KANSAS CITY MO 64105-1307	3,069,540.543	*	85.81%
EMERGING MARKETS AND INFRASTRUCTURE BOND FUND	Institutional	**	ALLIANZ GLOBAL INVESTORS OF, AMERICA LP, ATTN: DONNA THOMPSON, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046	304,132.500		8.50%
EMERGING MARKETS BOND FUND	Institutional	**	FIRST UNION NATIONAL BANK, ACCT XXXXX, OMNIBUS CASH/CASH NC-1151, 1525 WEST WT HARRIS BLVD, CHARLOTTE NC 28262-8522	38,765,418.435		21.08%
EMERGING MARKETS BOND FUND	Institutional	**	ALL ASSET PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	21,865,065.479		11.89%
EMERGING MARKETS BOND FUND	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	19,275,261.686		10.48%
EMERGING MARKETS BOND FUND	Institutional	**	PRUDENTIAL INVESTMENT MANAGEMENT, SERVICES FBO MUTUAL FUND CLIENTS, 100 MULBERRY ST, 3 GATEWAY CENTER FL 11, MAIL STOP NJ 05-11-20, NEWARK NJ 07102-4000	14,537,862.723		7.91%
EMERGING MARKETS BOND FUND	Institutional	**	FIRST UNION NATIONAL BANK PORTFOLIO, STRATEGIES CASH ACCOUNT, A/C# XXXXX, 1525 WEST WT HARRIS BL CMG 3C4 1151, CHARLOTTE NC 28288-0001	12,776,722.342		6.95%
EMERGING MARKETS BOND FUND	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	9,760,744.385		5.31%

158

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
EMERGING MARKETS BOND FUND	Administrative	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	869,134.449	*	72.63%
EMERGING MARKETS BOND FUND	Administrative	**	AMERITRADE INC FOR THE EXCLUSIVE, BENEFIT OF OUR CLIENTS, PO BOX 2226, AHA NE 68103-2226	227,075.257		18.98%
EMERGING MARKETS BOND FUND	A	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	4,966,952.044		19.38%
EMERGING MARKETS BOND FUND	A	**	HARTFORD LIFE INSURANCE CO, 401K SEPARATE ACCOUNT, PO BOX 2999, HARTFORD CT 06104-2999	2,491,536.316		9.72%
EMERGING MARKETS BOND FUND	B	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	517,190.275		11.72%
EMERGING MARKETS BOND FUND	C	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	1,443,228.842		13.75%
EMERGING MARKETS BOND FUND	C	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	978,752.377		9.32%
EMERGING MARKETS BOND FUND	C	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	944,178.332		8.99%
EMERGING MARKETS BOND FUND	C	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	805,502.356		7.67%
EMERGING MARKETS BOND FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	9,555,728.140	*	46.81%
EMERGING MARKETS BOND FUND	D	**	AMERITRADE INC FBO XXXXX, PO BOX 2226, OMAHA NE 68103-2226	1,738,596.133		8.52%
EMERGING MARKETS BOND FUND	P	**	CITIGROUP GLOBAL MARKETS INC, HOUSE ACCOUNT, 700 RED BROOK BLVD, OWINGS MILLS MD 21117-5184	1,524,095.558	*	45.58%

159

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
EMERGING MARKETS BOND FUND	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	1,335,203.699	*	39.93%
EXTENDED DURATION FUND	Institutional	**	PATTERSON & CO FBO OMNIBUS, REINVEST/REINVEST XXXXX, 1525 W WT HARRIS BLVD NC-1076, CHARLOTTE NC 28288	5,639,097.215	*	32.56%
EXTENDED DURATION FUND	Institutional		REED ELSEVIER US RETIREMENT PLAN, ATTN LYNN FORMICA, 2 NEWTON PL STE 350, NEWTON MA 02458-1643	5,267,494.829	*	30.41%
EXTENDED DURATION FUND	Institutional	**	DINGLE & CO, C/O COMERICA BANK, ATTN XXXXX/MUTUAL FUNDS, PO BOX 75000, DETROIT MI 48275-0001	2,108,949.305		12.18%
EXTENDED DURATION FUND	Institutional	**	SEI PRIVATE TRUST COMPANY, C/O M&T BANK ID 337, ONE FREEDOM VALLEY DR, OAKS PA 19456-9989	1,361,718.471		7.86%
EXTENDED DURATION FUND	Institutional	**	MAC & CO A/C XXXXX, FBO HOMESTAKE, MUTUAL FD OPS, PO BOX 3198, 525 WILLIAM PENN PLACE, PITTSBURGH PA 15230-3198	961,021.758		5.55%
EXTENDED DURATION FUND	P	**	SAXON & CO, FBO: XXXXX, P.O BOX 7780-1888, PHILADELPHIA PA 19182-0001	79,822.669	*	98.81%
FLOATING INCOME FUND	Institutional	**	ALL ASSET PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	19,245,234.838	*	48.11%
FLOATING INCOME FUND	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	4,285,414.732		10.71%
FLOATING INCOME FUND	Institutional		UNIVERSITY OF MAINE SYSTEM, ATTN MARY ALLEN, 16 CENTRAL ST, BANGOR ME 04401-5106	2,909,337.803		7.27%
FLOATING INCOME FUND	Institutional	**	ALL ASSET ALL AUTHORITY FUND, PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	2,908,981.878		7.27%

160

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
FLOATING INCOME FUND	Institutional	**	ALL ASSET PVIT PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	2,383,727.429		5.96%
FLOATING INCOME FUND	Administrative	**	ALLIANZ GLOBAL INVESTORS OF, AMERICA LP, ATTN: DONNA THOMPSON, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046	1,132.564	*	100.00%
FLOATING INCOME FUND	A	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD FL 9, JERSEY CITY NJ 07310-2055	676,261.030		8.21%
FLOATING INCOME FUND	C	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	548,157.265		10.99%
FLOATING INCOME FUND	C	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	252,266.620		5.06%
FLOATING INCOME FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	1,676,062.213	*	52.06%
FLOATING INCOME FUND	D	**	AMERITRADE INC FBO XXXXX, PO BOX 2226, OMAHA NE 68103-2226	194,558.879		6.04%
FLOATING INCOME FUND	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	440,375.288	*	99.73%
FOREIGN BOND FUND (U.S. DOLLAR-HEDGED)	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	68,052,281.447	*	36.08%
FOREIGN BOND FUND (U.S. DOLLAR-HEDGED)	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	37,862,437.308		20.07%
FOREIGN BOND FUND (U.S. DOLLAR-HEDGED)	Institutional	**	PATTERSON & CO FBO OMNIBUS, XXXXX NC-1151, 1525 WEST WT HARRIS BLVD, NC1151, CHARLOTTE NC 28288	27,999,382.674		14.84%

161

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
FOREIGN BOND FUND (U.S. DOLLAR-HEDGED)	Administrative	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	1,920,369.562	*	71.49%
FOREIGN BOND FUND (U.S. DOLLAR-HEDGED)	Administrative	**	WELLS FARGO BANK NA FBO, MONEYGRAM PENS PLAN MAP,XXXXX, PO BOX 1533, MINNEAPOLIS MN 55480-1533	287,503.142		10.70%
FOREIGN BOND FUND (U.S. DOLLAR-HEDGED)	Administrative	**	COMMUNITY BANK NA AS CUSTODIAN, FBO UBS PR CLIENTS, ATTN BENEFIT PLAN ADMINISTRATORS, 6 RHOADS DR, UTICA NY 13502-6317	150,378.340		5.60%
FOREIGN BOND FUND (U.S. DOLLAR-HEDGED)	A	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	3,231,937.501		16.66%
FOREIGN BOND FUND (U.S. DOLLAR-HEDGED)	A	**	PRUDENTIAL INVESTMENT MGTS SERVICE, (FBO) MUTUAL FUND CLIENTS, ATTN PRUCHOICE UNIT, 100 MULBERRY STREET, MAIL STOP NJ 05-11-20, NEWARK NJ 07102-4056	2,504,288.960		12.91%
FOREIGN BOND FUND (U.S. DOLLAR-HEDGED)	A	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	2,222,491.227		11.45%
FOREIGN BOND FUND (U.S. DOLLAR-HEDGED)	B	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	125,736.147		10.61%
FOREIGN BOND FUND (U.S. DOLLAR-HEDGED)	C	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	791,026.496		17.29%
FOREIGN BOND FUND (U.S. DOLLAR-HEDGED)	C	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	500,806.297		10.94%
FOREIGN BOND FUND (U.S. DOLLAR-HEDGED)	C	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	407,523.475		8.91%
FOREIGN BOND FUND (U.S. DOLLAR-HEDGED)	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO	7,992,477.716	*	59.09%

162

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
			CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151
FOREIGN BOND FUND (U.S. DOLLAR-HEDGED)	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	1,217,079.456	*	48.01%
FOREIGN BOND FUND (U.S. DOLLAR-HEDGED)	P	**	CITIGROUP GLOBAL MARKETS INC, HOUSE ACCOUNT, 700 RED BROOK BLVD, OWINGS MILLS MD 21117-5184	1,148,297.219	*	45.29%
FOREIGN BOND FUND (U.S. DOLLAR-HEDGED)	R	**	UMB BANK NA, FIDUCIARY FOR VARIOUS TAX DEFERRED, ACCOUNTS, ATTN FINANCE DEPARTMENT, 1 SW SECURITY BENEFIT PL, TOPEKA KS 66636-1000	250,135.957	*	31.94%
FOREIGN BOND FUND (U.S. DOLLAR-HEDGED)	R	**	UMB BANK N/A, FIDUCIARY FOR TAX DEFERRED A/C’S, 1 SECURITY BENEFIT PLACE, TOPEKA KS 66636-1000	206,337.463	*	26.34%
FOREIGN BOND FUND (U.S. DOLLAR-HEDGED)	R	**	SECURITY BENEFIT LIFE INS CO, SBL VARIABLE ANNUITY ACCOUNT XXXXX, ATTN FINANCE DEPARTMENT, 1 SW SECURITY BENEFIT PL, TOPEKA KS 66636-1000	90,336.882		11.53%
FOREIGN BOND FUND (U.S. DOLLAR-HEDGED)	R	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	39,263.812		5.01%
FOREIGN BOND FUND (UNHEDGED)	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	47,242,283.646	*	31.83%
FOREIGN BOND FUND (UNHEDGED)	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	42,971,105.502	*	28.95%
FOREIGN BOND FUND (UNHEDGED)	Institutional		PRODUCER-WRITERS GUILD OF AMERICA, PENSION PLAN, 1015 N HOLLYWOOD WAY, BURBANK CA 91505-2526	8,861,136.147		5.97%
FOREIGN BOND FUND (UNHEDGED)	Institutional	**	M & T BANK FBO NATIONAL ROOFING, INDUSTRY PENSION PLAN, ONE M & T PLAZA, 8TH FLOOR, BUFFALO NY 14203-2309	7,888,607.242		5.32%

163

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
FOREIGN BOND FUND (UNHEDGED)	Institutional	**	PATTERSON & CO, FBO OMNIBUS CASH/CASH, 1525 W WT HARRIS BLVD, CHARLOTTE NC 28288	7,611,453.429		5.13%
FOREIGN BOND FUND (UNHEDGED)	Administrative	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	2,478,039.585	*	52.22%
FOREIGN BOND FUND (UNHEDGED)	Administrative	**	STC & CO PARTNERSHIP, C/O SPRINGFIELD TRUST COMPANY, 1906 E BATTLEFIELD ST, SPRINGFIELD MO 65804-3878	1,964,003.330	*	41.38%
FOREIGN BOND FUND (UNHEDGED)	A	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD FL 9, JERSEY CITY NJ 07310-2055	3,317,063.391		13.91%
FOREIGN BOND FUND (UNHEDGED)	A	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	3,074,132.842		12.90%
FOREIGN BOND FUND (UNHEDGED)	A	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	1,338,737.083		5.62%
FOREIGN BOND FUND (UNHEDGED)	C	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	1,382,156.106		19.35%
FOREIGN BOND FUND (UNHEDGED)	C	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	1,353,015.320		18.94%
FOREIGN BOND FUND (UNHEDGED)	C	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	608,383.877		8.52%
FOREIGN BOND FUND (UNHEDGED)	C	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	481,815.742		6.74%
FOREIGN BOND FUND (UNHEDGED)	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO	9,108,272.525	*	44.22%

164

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
			CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151
FOREIGN BOND FUND (UNHEDGED)	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	1,340,670.041	*	44.55%
FOREIGN BOND FUND (UNHEDGED)	P	**	CITIGROUP GLOBAL MARKETS INC, HOUSE ACCOUNT, 700 RED BROOK BLVD, OWINGS MILLS MD 21117-5184	973,750.545	*	32.36%
FUNDAMENTAL ADVANTAGE TOTAL RETURN STRATEGY FUND	Institutional	**	ALL ASSET PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	144,819,364.271	*	68.72%
FUNDAMENTAL ADVANTAGE TOTAL RETURN STRATEGY FUND	Institutional	**	ALL ASSET ALL AUTHORITY FUND, PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	39,553,485.884		18.77%
FUNDAMENTAL ADVANTAGE TOTAL RETURN STRATEGY FUND	Institutional	**	ALL ASSET PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	21,340,966.403		10.13%
FUNDAMENTAL ADVANTAGE TOTAL RETURN STRATEGY FUND	A	**	RAYMOND JAMES & ASSOC INC, FBO EDWARD F MCNULTY, 805 N REEDS RD, DOWNINGTOWN PA 19335-4560	79,821.099		5.49%
FUNDAMENTAL ADVANTAGE TOTAL RETURN STRATEGY FUND	C	**	AMERICAN ENTERPRISE INV SVCS, A/C XXXXX, 707 2ND AVENUE SOUTH, MINNEAPOLIS MN 55402-2405	15,716.171		6.04%
FUNDAMENTAL ADVANTAGE TOTAL RETURN STRATEGY FUND	D	**	AMERITRADE INC FBO XXXXX, PO BOX 2226, OMAHA NE 68103-2226	50,891.119		5.46%
FUNDAMENTAL INDEXPLUS FUND	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	4,516,627.654	*	40.34%
FUNDAMENTAL INDEXPLUS FUND	Institutional	**	ALL ASSET PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	1,789,250.416		15.98%

165

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
FUNDAMENTAL INDEXPLUS FUND	Institutional		BUTLER UNIVERSITY, MR BRUCE E. ARICK, 4600 SUNSET AVE, INDIANAPOLIS IN 46208-3487	1,115,859.169		9.97%
FUNDAMENTAL INDEXPLUS FUND	Institutional	**	SEI PRIVATE TRUST COMPANY, C/O FIRST TENNESSEE ID 683, ATTN MUTUAL FD ADMINISTRATOR, ONE FREEDOM VALLEY DRIVE, OAKS PA 19456-9989	997,226.486		8.91%
FUNDAMENTAL INDEXPLUS FUND	Administrative	**	ALLIANZ GLOBAL INVESTORS OF, AMERICA LP, ATTN: DONNA THOMPSON, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046	1,228.909	*	100.00%
FUNDAMENTAL INDEXPLUS FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	1,642.481	*	62.21%
FUNDAMENTAL INDEXPLUS FUND	D	**	ALLIANZ GLOBAL INVESTORS, ATTN VINH NGUYEN, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046	997.544	*	37.79%
FUNDAMENTAL INDEXPLUS TR FUND	Institutional	**	ALL ASSET PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	12,941,072.723	*	51.10%
FUNDAMENTAL INDEXPLUS TR FUND	Institutional		THE UCLA FOUNDATION, ATTN: NEAL AXELROD, 10920 WILSHIRE BLVD STE 900, LOS ANGELES CA 90024-6506	6,524,048.480	*	25.76%
FUNDAMENTAL INDEXPLUS TR FUND	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	2,367,747.922		9.35%
FUNDAMENTAL INDEXPLUS TR FUND	Institutional	**	ALL ASSET PVIT PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	1,492,915.381		5.90%
FUNDAMENTAL INDEXPLUS TR FUND	Institutional	**	ALL ASSET ALL AUTHORITY FUND, PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	1,439,363.163		5.68%

166

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
FUNDAMENTAL INDEXPLUS TR FUND	Administrative	**	ALLIANZ GLOBAL INVESTORS OF, AMERICA LP, ATTN: DONNA THOMPSON, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046	1,291.657	*	100.00%
FUNDAMENTAL INDEXPLUS TR FUND	A	**	RAYMOND JAMES & ASSOC INC, FBO DECATUR MEMORIAL HOSPITAL, CAPITAL ACCOUNT, 2300 N EDWARD ST, DECATUR IL 62526-4163	111,970.632		15.39%
FUNDAMENTAL INDEXPLUS TR FUND	C	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	90,688.442		16.37%
FUNDAMENTAL INDEXPLUS TR FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	158,797.411	*	45.75%
FUNDAMENTAL INDEXPLUS TR FUND	D	**	NFS LLC FEBO, FMTC TTEE, TPMG SAVINGS PLANS, FBO JOSEPH F TERDIMAN MD, 30 OAK MOUNTAIN CT, SAN RAFAEL CA 94903-1038	48,416.757		13.95%
FUNDAMENTAL INDEXPLUS TR FUND	D	**	AMERITRADE INC FBO XXXXX, PO BOX 2226, OMAHA NE 68103-2226	43,623.608		12.57%
FUNDAMENTAL INDEXPLUS TR FUND	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	333,772.063	*	99.69%
GLOBAL ADVANTAGE STRATEGY BOND FUND	Institutional	**	ALL ASSET PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	24,290,938.837	*	56.46%
GLOBAL ADVANTAGE STRATEGY BOND FUND	Institutional	**	STATE STREET KANSAS CITY FBO, PIMCO GLOBAL MULTI-ASSET FND, ATTN: CHUCK NIXON, 801 PENNSYLVANIA AVE, KANSAS CITY MO 64105-1307	8,456,408.739		19.66%
GLOBAL ADVANTAGE STRATEGY BOND FUND	Institutional	**	ALL ASSET ALL AUTHORITY FUND, PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	3,505,923.949		8.15%

167

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
GLOBAL ADVANTAGE STRATEGY BOND FUND	Institutional	**	ALL ASSET PVIT PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	3,026,395.806		7.03%
GLOBAL ADVANTAGE STRATEGY BOND FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	2,155,648.274	*	76.15%
GLOBAL ADVANTAGE STRATEGY BOND FUND	D	**	AMERITRADE INC FBO XXXXX, PO BOX 2226, OMAHA NE 68103-2226	160,176.297		5.66%
GLOBAL ADVANTAGE STRATEGY BOND FUND	P	**	LPL FBO LPL CUSTOMERS, ATTN MUTUAL FUND OPERATIONS, 1 BEACON ST FL 22, BOSTON MA 02108-3107	47,207.405	*	82.79%
GLOBAL ADVANTAGE STRATEGY BOND FUND	P	**	JANNEY MONTGOMERY SCOTT LLC, A/C XXXXX, JOSEPH L DEPAOLO IRA, 1801 MARKET STREET, PHILADELPHIA PA 19103-1675	4,397.537		7.71%
GLOBAL ADVANTAGE STRATEGY BOND FUND	P	**	JANNEY MONTGOMERY SCOTT LLC, A/C XXXXX, LINDA M NADOLNY IRA, 1801 MARKET STREET, PHILADELPHIA PA 19103-1675	4,397.537		7.71%
GLOBAL ADVANTAGE STRATEGY BOND FUND	R	**	UMB BANK NA C/F, WILLIAM F O’ ROURKE, IRA, REGENCY COVE, #1 PELICAN DRIVE, TAMPA FL 33611	1,370.160	*	57.45%
GLOBAL ADVANTAGE STRATEGY BOND FUND	R	**	ALLIANZ GLOBAL INVESTORS, ATTN VINH NGUYEN, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046	1,014.645	*	42.55%
GLOBAL BOND FUND (U.S. DOLLAR HEDGED)	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	5,969,430.598	*	39.12%
GLOBAL BOND FUND (U.S. DOLLAR HEDGED)	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	1,451,052.876		9.51%
GLOBAL BOND FUND (U.S. DOLLAR HEDGED)	Institutional	**	NORTHERN TRUST COMPANY FBO, WEIL GOTSHAL & MANGES PARTNERS, PENSION, 50 S LASALLE, CHICAGO IL 60675-0001	933,870.227		6.12%

168

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
GLOBAL BOND FUND (U.S. DOLLAR HEDGED)	Institutional	**	MAC & CO A/C XXXXX, MUTUAL FUND OPS-TC, PO BOX 3198,525 WILLIAM PENN PLACE, PITTSBURGH PA 15230-3198	916,416.536		6.01%
GLOBAL BOND FUND (U.S. DOLLAR HEDGED)	Administrative	**	AMERITRADE INC FOR THE EXCLUSIVE, BENEFIT OF OUR CLIENTS, PO BOX 2226, OMAHA NE 68103-2226	6,115.254	*	81.70%
GLOBAL BOND FUND (U.S. DOLLAR HEDGED)	Administrative	**	ALLIANZ GLOBAL INVESTORS OF, AMERICA LP, ATTN: DONNA THOMPSON, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046	1,369.574		18.30%
GLOBAL BOND FUND (U.S. DOLLAR HEDGED)	A	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	206,746.114		10.14%
GLOBAL BOND FUND (U.S. DOLLAR HEDGED)	A	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	191,163.662		9.38%
GLOBAL BOND FUND (U.S. DOLLAR HEDGED)	B	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, RSEY CITY NJ 07311	35,975.070		8.00%
GLOBAL BOND FUND (U.S. DOLLAR HEDGED)	B	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD FL 9, JERSEY CITY NJ 07310-2055	29,583.965		6.58%
GLOBAL BOND FUND (U.S. DOLLAR HEDGED)	B	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	27,766.709		6.17%
GLOBAL BOND FUND (U.S. DOLLAR HEDGED)	B	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	25,008.365		5.56%
GLOBAL BOND FUND (U.S. DOLLAR HEDGED)	C	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	238,328.910		15.23%
GLOBAL BOND FUND (U.S. DOLLAR HEDGED)	C	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	153,293.059		9.80%

169

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
GLOBAL BOND FUND (U.S. DOLLAR HEDGED)	C	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	147,544.655		9.43%
GLOBAL BOND FUND (U.S. DOLLAR HEDGED)	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	120,067.352	*	64.04%
GLOBAL BOND FUND (U.S. DOLLAR HEDGED)	P	**	CITIGROUP GLOBAL MARKETS INC, HOUSE ACCOUNT, 700 RED BROOK BLVD, OWINGS MILLS MD 21117-5184	58,631.180	*	31.27%
GLOBAL BOND FUND (UNHEDGED)	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	18,020,118.448	*	25.90%
GLOBAL BOND FUND (UNHEDGED)	Institutional		BLUE CROSS & BLUE SHIELD OF, MASSACHUSETTS HMO BLUE INC, ATTN KEITH F RENALDI, LANDMARK CENTER 401 PARK DR, BOSTON MA 02215	7,853,768.063		11.29%
GLOBAL BOND FUND (UNHEDGED)	Institutional		BLUE CROSS BLUE SHIELD OF, MASSACHUSETTS INC INDEMNITY, LANDMARK CENTER TREASURY 01/07, 401 PARK DR, BOSTON MA 02215-3325	6,200,071.279		8.91%
GLOBAL BOND FUND (UNHEDGED)	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	5,787,267.162		8.32%
GLOBAL BOND FUND (UNHEDGED)	Institutional	**	STATE STREET KANSAS CITY FBO, PIMCO GLOBAL MULTI-ASSET FND, ATTN: CHUCK NIXON, 801 PENNSYLVANIA AVE, KANSAS CITY MO 64105-1307	5,786,667.162		8.32%
GLOBAL BOND FUND (UNHEDGED)	Institutional		TUFTS ASSOCIATED HEALTH MAINTENANCE, ORGANIZATION INC, 705 MOUNT AUBURN ST, WATERTOWN MA 02472-1508	5,319,227.461		7.64%
GLOBAL BOND FUND (UNHEDGED)	Administrative	**	JOHN HANCOCK LIFE INS CO (USA), ATTN LIZ SEELEY, RPS SEG FUNDS/ACCOUNTING ET-7, 601 CONGRESS ST, BOSTON MA 02210-2804	13,050,785.433	*	71.44%
GLOBAL BOND FUND (UNHEDGED)	Administrative	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200	3,853,000.497		21.09%

170

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
			LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003
GLOBAL BOND FUND (UNHEDGED)	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	117,737.662	*	46.89	%
GLOBAL MULTI-ASSET FUND	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	23,984,857.916	*	46.72	%
GLOBAL MULTI-ASSET FUND	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	10,816,587.196		21.07	%
GLOBAL MULTI-ASSET FUND	Institutional	**	PRUDENTIAL INVESTMENT MANAGEMENT, SERVICES FBO MUTUAL FUND CLIENTS, 100 MULBERRY ST, 3 GATEWAY CENTER FL 11, MAIL STOP NJ 05-11-20, NEWARK NJ 07102-4000	2,836,130.723		5.52	%
GLOBAL MULTI-ASSET FUND	A	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD FL 9, JERSEY CITY NJ 07310-2055	5,892,627.738		23.84	%
GLOBAL MULTI-ASSET FUND	A	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	1,752,043.713		7.09	%
GLOBAL MULTI-ASSET FUND	A	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	1,671,487.366		6.76	%
GLOBAL MULTI-ASSET FUND	C	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	2,970,277.959		23.14	%
GLOBAL MULTI-ASSET FUND	C	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	997,831.654		7.77	%
GLOBAL MULTI-ASSET FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	3,498,275.521	*	54.63	%

171

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
GLOBAL MULTI-ASSET FUND	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	3,310,165.654	*	79.51	%
GLOBAL MULTI-ASSET FUND	P	**	CITIGROUP GLOBAL MARKETS INC, HOUSE ACCOUNT, 700 RED BROOK BLVD, OWINGS MILLS MD 21117-5184	782,230.696		18.79	%
GLOBAL MULTI-ASSET FUND	R	**	NFS LLC FEBO, MARTIN DOBBINS, MARINA DOBBINS, 53 BRECK AVE, BRIGHTON MA 02135-3055	15,270.516	*	57.78	%
GLOBAL MULTI-ASSET FUND	R		VICKI COOPER, PRIVATE A/C MANAGEMENT, 201 ALBEN BARKLEY DR, PADUCAH KY 42001-4465	2,522.704		9.55	%
GLOBAL MULTI-ASSET FUND	R	**	NFS LLC FEBO, STATE STREET BANK & TR TTEE, BAYLOR HLTH CARE SYS RET SVGS, FBO JASON PAUL FISCH, 2100 PURDUE DR, ALLEN TX 75002-8586	2,034.991		7.70	%
GLOBAL MULTI-ASSET FUND	R	**	NFS LLC FEBO, JOHN AXTEN, JUDITH A AXTEN, 75 BRADFORD RD, WESTON MA 02493-2142	1,562.023		5.91	%
GNMA FUND	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	16,186,028.367	*	39.04	%
GNMA FUND	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	11,811,046.387	*	28.49	%
GNMA FUND	Institutional	**	AMERITRADE INC FOR THE EXCLUSIVE, BENEFIT OF OUR CLIENT, PO BOX 2226, OMAHA NE 68103-2226	5,265,312.318		12.70	%
GNMA FUND	A	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD FL 9, JERSEY CITY NJ 07310-2055	5,654,435.384		17.35	%
GNMA FUND	A	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	2,504,665.888		7.69	%

172

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
GNMA FUND	B	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	236,730.895		6.74	%
GNMA FUND	B	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	205,086.246		5.84	%
GNMA FUND	C	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	3,090,680.827		17.05	%
GNMA FUND	C	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	1,387,904.882		7.66	%
GNMA FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	11,082,877.152	*	71.34	%
GNMA FUND	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	2,000,676.105	*	82.11	%
GNMA FUND	P	**	CITIGROUP GLOBAL MARKETS INC, HOUSE ACCOUNT, 700 RED BROOK BLVD, OWINGS MILLS MD 21117-5184	369,610.235		15.17	%
GOVERNMENT MONEY MARKET FUND	A	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	82,327.520	*	28.53	%
GOVERNMENT MONEY MARKET FUND	A	**	PERSHING LLC, P. O. BOX 2052, JERSEY CITY NJ 07303-2052	55,029.590		19.07	%
GOVERNMENT MONEY MARKET FUND	A	**	PERSHING LLC, P. O. BOX 2052, JERSEY CITY NJ 07303-2052	23,932.770		8.29	%
GOVERNMENT MONEY MARKET FUND	A	**	PERSHING LLC, P. O. BOX 2052, JERSEY CITY NJ 07303-2052	16,730.140		5.80	%
GOVERNMENT MONEY MARKET FUND	C		LUCY TOSATTO, 630 N EMERSON AVE, WICHITA KS 67212-3528	127,170.670	*	62.17	%
GOVERNMENT MONEY MARKET FUND	C		MILDRED D MENDOZA, 11075 BENTON ST APT 130, LOMA LINDA CA 92354-3140	35,405.360		17.31	%

173

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
GOVERNMENT MONEY MARKET FUND	C	**	SSB&T CUST IRA FBO, NORMA A LEVESQUE, 6 BAMFORTH RD APT 6, VERNON ROCKVL CT 06066-5122	10,920.000		5.34	%
GOVERNMENT MONEY MARKET FUND	M	**	MAC & CO A/C XXXXX, ATTN MUTUAL FUND OPS, PO BOX 3198 525 WILLIAM PENN, PITTSBURGH PA 15230-3198	26,000,000.000	*	36.16	%
GOVERNMENT MONEY MARKET FUND	M		TRINITY UNIVERSITY, ATTN BUSINESS OFFICE ENDOW, ONE TRINITY PLACE, SAN ANTONIO TX 78212-7200	15,749,121.600		21.91	%
GOVERNMENT MONEY MARKET FUND	M	**	WELLS FARGO BANK NA FBO, MARIN COMMUNITY FOUNDATION, PO BOX 1533, MINNEAPOLIS MN 55480-1533	15,670,271.120		21.80	%
GOVERNMENT MONEY MARKET FUND	M		BELKORP HOLDINGS INC, 5400 CARILLON PT, KIRKLAND WA 98033-7357	7,012,733.350		9.75	%
GOVERNMENT MONEY MARKET FUND	P	**	ALLIANZ GLOBAL INVESTORS OF, AMERICA LP, ATTN: DONNA THOMPSON, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046	10,009.460	*	100.00	%
HIGH YIELD FUND	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	126,147,743.808		23.79	%
HIGH YIELD FUND	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN; MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	81,608,034.513		15.39	%
HIGH YIELD FUND	Institutional	**	FIRST UNION NATIONAL BANK, ACCT XXXXX, OMNIBUS CASH/CASH NC-1151, 1525 WEST WT HARRIS BLVD, CHARLOTTE NC 28262-8522	44,686,026.886		8.43	%
HIGH YIELD FUND	Administrative	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	43,952,045.805	*	58.76	%
HIGH YIELD FUND	Administrative	**	VANTAGE TRUST- NAV, ATTN: OUTSIDE MUTUAL FUNDS GROUP, 777 N CAPITOL ST NE STE 600, WASHINGTON DC 20002-4290	5,998,250.764		8.02	%

174

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED	PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
HIGH YIELD FUND	Administrative	**	VANTAGE TRUST- UNITIZED, ATTN: OUTSIDE MUTUAL FUNDS GROUP, 777 N CAPITOL ST NE STE 600, WASHINGTON DC 20002-4290	4,336,022.395	5.80	%
HIGH YIELD FUND	A	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	6,349,202.896	6.31	%
HIGH YIELD FUND	A	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	6,013,880.087	5.98	%
HIGH YIELD FUND	A	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	5,659,053.974	5.62	%
HIGH YIELD FUND	B	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	1,696,842.129	8.54	%
HIGH YIELD FUND	B	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	1,539,551.369	7.75	%
HIGH YIELD FUND	B	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	1,118,281.566	5.63	%
HIGH YIELD FUND	B	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD FL 9, JERSEY CITY NJ 07310-2055	1,048,089.454	5.28	%
HIGH YIELD FUND	C	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	8,633,548.372	16.02	%
HIGH YIELD FUND	C	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	5,382,480.413	9.99	%
HIGH YIELD FUND	C	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	3,404,134.433	6.32	%

175

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
HIGH YIELD FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	41,880,647.175	*	56.13	%
HIGH YIELD FUND	D	**	AMERITRADE INC FBO XXXXX, PO BOX 2226, OMAHA NE 68103-2226	4,245,246.226		5.69	%
HIGH YIELD FUND	P	**	CITIGROUP GLOBAL MARKETS INC, HOUSE ACCOUNT, 700 RED BROOK BLVD, OWINGS MILLS MD 21117-5184	4,337,300.430	*	32.85	%
HIGH YIELD FUND	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	2,779,371.669		21.05	%
HIGH YIELD FUND	P	**	WILMINGTON TR CO TTEE, U/A W/WILMINGTON TR CO PENSION, TR A/C XXXXX, C/O MUTUAL FUNDS, PO BOX 8882, WILMINGTON DE 19899-8882	1,026,392.962		7.77	%
HIGH YIELD FUND	R	**	AMERICAN UNITED INSURANCE CO TTEE, GROUP RETIREMENT ANNUITY, PO BOX 368, INDIANAPOLIS IN 46206-0368	1,177,314.444	*	40.37	%
HIGH YIELD FUND	R	**	ING, ENHANCED K-CHOICE, TRUSTEE: RELIANCE TRUST COMPANY, 400 ATRIUM DRIVE, SOMERSET NJ 08873-4162	288,007.096		9.88	%
HIGH YIELD FUND	R	**	AMERICAN UNITED INSURANCE CO TTEE, UNIT INVESTMENT TRUST, PO BOX 368, INDIANAPOLIS IN 46206-0368	167,862.268		5.76	%
HIGH YIELD MUNICIPAL BOND FUND	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	8,067,064.381	*	73.83	%
HIGH YIELD MUNICIPAL BOND FUND	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	1,242,685.640		11.37	%
HIGH YIELD MUNICIPAL BOND FUND	A	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	896,615.726		8.28	%

176

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
HIGH YIELD MUNICIPAL BOND FUND	A	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	822,654.983		7.60	%
HIGH YIELD MUNICIPAL BOND FUND	A	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	650,143.985		6.01	%
HIGH YIELD MUNICIPAL BOND FUND	A	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	554,063.346		5.12	%
HIGH YIELD MUNICIPAL BOND FUND	C	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	1,091,206.670		22.30	%
HIGH YIELD MUNICIPAL BOND FUND	C	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	727,449.205		14.86	%
HIGH YIELD MUNICIPAL BOND FUND	C	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	333,482.899		6.81	%
HIGH YIELD MUNICIPAL BOND FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	863,121.788		18.52	%
HIGH YIELD MUNICIPAL BOND FUND	D	**	AMERITRADE INC FBO XXXXX, PO BOX 2226, OMAHA NE 68103-2226	754,459.321		16.19	%
HIGH YIELD MUNICIPAL BOND FUND	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	390,285.072	*	99.69	%
INCOME FUND	Institutional	**	ALL ASSET PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	24,893,724.577	*	72.29	%
INCOME FUND	Institutional	**	ALL ASSET ALL AUTHORITY FUND, PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	5,078,357.387		14.75	%

177

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
INCOME FUND	Institutional	**	ALL ASSET PVIT PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	3,282,098.233		9.53	%
INCOME FUND	Administrative	**	ALLIANZ GLOBAL INVESTORS OF, AMERICA LP, ATTN: DONNA THOMPSON, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046	1,167.155	*	100.00	%
INCOME FUND	A	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	230,813.159		10.94	%
INCOME FUND	A	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	135,921.446		6.45	%
INCOME FUND	C	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	638,479.508	*	40.10	%
INCOME FUND	C	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	80,607.489		5.06	%
INCOME FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	250,863.009	*	41.35	%
INCOME FUND	D	**	NFS LLC FEBO, REGIONS BANK, REGIONS BANK TTEE, 14 BONITA DR, B HAM AL 35209-2004	36,536.593		6.02	%
INCOME FUND	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	169,642.290	*	99.62	%
INCOME FUND	R	**	MG TRUST COMPANY CUST FBO, NICK BARBIERI TRUCKING 401K PLAN, 700 17TH STREET, SUITE 300, DENVER CO 80202-3531	2,440.351	*	67.90	%
INCOME FUND	R	**	ALLIANZ GLOBAL INVESTORS, ATTN VINH	1,153.619	*	32.10	%

178

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
			NGUYEN, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046
INTERNATIONAL STOCKSPLUS TR STRATEGY FUND (U.S. DOLLAR HEDGED)	Institutional	**	ALL ASSET PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	11,946,369.611	*	77.57	%
INTERNATIONAL STOCKSPLUS TR STRATEGY FUND (U.S. DOLLAR HEDGED)	Institutional	**	ALL ASSET PVIT PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	1,566,725.867		10.17	%
INTERNATIONAL STOCKSPLUS TR STRATEGY FUND (U.S. DOLLAR HEDGED)	A	**	NFS LLC FEBO, TOWN OF NEWTOWN EMPLOYEE, HERBERT C ROSENTHAL, U/A 01/01/1985, 45 MAIN STREET, NEWTOWN CT 06470-2134	83,322.729		6.62	%
INTERNATIONAL STOCKSPLUS TR STRATEGY FUND (U.S. DOLLAR HEDGED)	B	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	33,035.540		7.80	%
INTERNATIONAL STOCKSPLUS TR STRATEGY FUND (U.S. DOLLAR HEDGED)	C	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	70,208.348		17.81	%
INTERNATIONAL STOCKSPLUS TR STRATEGY FUND (U.S. DOLLAR HEDGED)	C	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	28,296.176		7.18	%
INTERNATIONAL STOCKSPLUS TR STRATEGY FUND (U.S. DOLLAR HEDGED)	C	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	23,016.662		5.84	%
INTERNATIONAL STOCKSPLUS TR STRATEGY FUND (U.S. DOLLAR HEDGED)	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	2,086,448.912	*	42.85	%
INTERNATIONAL STOCKSPLUS TR STRATEGY FUND (U.S. DOLLAR HEDGED)	D	**	AMERITRADE INC FBO XXXXX, PO BOX 2226, OMAHA NE 68103-2226	1,005,072.915		20.64	%
INTERNATIONAL STOCKSPLUS TR STRATEGY FUND (UNHEDGED)	Institutional	**	ALL ASSET PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	5,614,916.049	*	76.40	%

179

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
INTERNATIONAL STOCKSPLUS TR STRATEGY FUND (UNHEDGED)	Institutional		THE UCLA FOUNDATION, ATTN: NEAL AXELROD, 10920 WILSHIRE BLVD STE 900, LOS ANGELES CA 90024-6506	916,527.104		12.47	%
INTERNATIONAL STOCKSPLUS TR STRATEGY FUND (UNHEDGED)	Institutional	**	ALL ASSET PVIT PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	468,096.154		6.37	%
INTERNATIONAL STOCKSPLUS TR STRATEGY FUND (UNHEDGED)	Administrative	**	ALLIANZ GLOBAL INVESTORS OF, AMERICA LP, ATTN: DONNA THOMPSON, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046	1,161.745	*	100.00	%
INTERNATIONAL STOCKSPLUS TR STRATEGY FUND (UNHEDGED)	A	**	NFS LLC FEBO, TODD SHEINKOPF, CLAUDINE SHEINKOPF, 22 BERESFORD ROAD, CHESTNUT HILL MA 02467-2682	20,632.737		7.54	%
INTERNATIONAL STOCKSPLUS TR STRATEGY FUND (UNHEDGED)	A	**	NFS LLC FEBO, JSH CRUICE, JSH CRUICE JR TTEE, U/A 02/29/00, 68 GREENLEAF AVE, DARIEN CT 06820-3209	13,972.685		5.11	%
INTERNATIONAL STOCKSPLUS TR STRATEGY FUND (UNHEDGED)	C	**	PERSHING LLC, P. O. BOX 2052, JERSEY CITY NJ 07303-2052	30,664.746	*	35.07	%
INTERNATIONAL STOCKSPLUS TR STRATEGY FUND (UNHEDGED)	C	**	SSB&T CUST 403B FBO, CAMAS SCHOOL DISTRICT, TANIS LEE KNIGHT, 1501 NW IVY ST, CAMAS WA 98607-9393	7,837.555		8.96	%
INTERNATIONAL STOCKSPLUS TR STRATEGY FUND (UNHEDGED)	C	**	LPL FINANCIAL SERVICES, A/C XXXXX, 9785 TOWNE CENTRE DRIVE, SAN DIEGO CA 92121-1968	6,670.309		7.63	%
INTERNATIONAL STOCKSPLUS TR STRATEGY FUND (UNHEDGED)	C	**	LPL FINANCIAL SERVICES, A/C XXXXX, 9785 TOWNE CENTRE DRIVE, SAN DIEGO CA 92121-1968	6,064.303		6.94	%
INTERNATIONAL STOCKSPLUS TR STRATEGY FUND (UNHEDGED)	C	**	LPL FINANCIAL, A/C XXXXX, 9785 TOWNE CENTRE DR, SAN DIEGO CA 92121-1968	4,601.920		5.26	%
INTERNATIONAL STOCKSPLUS TR STRATEGY FUND (UNHEDGED)	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	92,409.700	*	63.14	%
INTERNATIONAL STOCKSPLUS TR STRATEGY FUND (UNHEDGED)	D	**	AMERITRADE INC FBO XXXXX, PO BOX 2226, OMAHA NE 68103-2226	27,861.545		19.04	%
INTERNATIONAL STOCKSPLUS TR STRATEGY FUND (UNHEDGED)	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER	4,244.090	*	80.65	%

180

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
			LAKE DR E FL 3, JACKSONVILLE FL 32246-6484
INTERNATIONAL STOCKSPLUS TR STRATEGY FUND (UNHEDGED)	P	**	ALLIANZ GLOBAL INVESTORS OF, AMERICA LP, ATTN: DONNA THOMPSON, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046	1,018.218		19.35	%
INVESTMENT GRADE CORPORATE BOND FUND	Institutional	**	ALL ASSET PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	153,179,813.133	*	32.98	%
INVESTMENT GRADE CORPORATE BOND FUND	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	67,870,630.679		14.61	%
INVESTMENT GRADE CORPORATE BOND FUND	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	39,918,905.750		8.60	%
INVESTMENT GRADE CORPORATE BOND FUND	Institutional	**	ALL ASSET ALL AUTHORITY FUND, PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	6,651,665.922		5.74	%
INVESTMENT GRADE CORPORATE BOND FUND	Administrative	**	DGTC AS CUST AND/OR TTEE FBO, VARIOUS QUALIFIED RETIREMENT PLAN, 711 HIGH ST, ATTN RIS NPIO TRADE DESK, DES MOINES IA 50392-0001	642,493.642	*	44.22	%
INVESTMENT GRADE CORPORATE BOND FUND	Administrative	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	337,514.371		23.23	%
INVESTMENT GRADE CORPORATE BOND FUND	Administrative	**	FIFTH THIRD BANK FBO CINTAS PIMCO, INV GRD CORP BD FD XXXXX, 5001 KINGSLEY DR, CINCINNATI OH 45263-0001	207,683.231		14.29	%
INVESTMENT GRADE CORPORATE BOND FUND	Administrative	**	DGTC AS CUST FBO, VARIOUS QUALIFIED, RETIREMENT PLAN, ATTN RIS NPIO TRADE DESK, 711 HIGH ST, DES MOINES IA 50392-0001	135,952.560		9.36	%
INVESTMENT GRADE CORPORATE BOND FUND	Administrative	**	AMERITRADE INC FOR THE EXCLUSIVE, BENEFIT OF OUR CLIENTS, PO BOX 2226, OMAHA NE 68103-2226	92,088.570		6.34	%

181

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
INVESTMENT GRADE CORPORATE BOND FUND	A	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD FL 9, JERSEY CITY NJ 07310-2055	6,602,804.657		13.68	%
INVESTMENT GRADE CORPORATE BOND FUND	A	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	5,605,030.975		11.62	%
INVESTMENT GRADE CORPORATE BOND FUND	A	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	2,975,880.324		6.17	%
INVESTMENT GRADE CORPORATE BOND FUND	C	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	6,571,160.023	*	25.63	%
INVESTMENT GRADE CORPORATE BOND FUND	C	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	2,744,135.641		10.70	%
INVESTMENT GRADE CORPORATE BOND FUND	C	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	2,646,984.968		10.32	%
INVESTMENT GRADE CORPORATE BOND FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	13,865,543.150	*	50.83	%
INVESTMENT GRADE CORPORATE BOND FUND	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	12,375,061.642	*	82.36	%
INVESTMENT GRADE CORPORATE BOND FUND	P	**	CITIGROUP GLOBAL MARKETS INC, HOUSE ACCOUNT, 700 RED BROOK BLVD, OWINGS MILLS MD 21117-5184	2,527,387.519		16.82	%
LONG DURATION TOTAL RETURN FUND	Institutional	**	ALL ASSET PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	41,311,947.173		13.73	%
LONG DURATION TOTAL RETURN FUND	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	37,884,642.413		12.59	%

182

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
LONG DURATION TOTAL RETURN FUND	Institutional		LORILLARD TOBACCO COMPANY, EMPLOYEES RETIREMENT TRUSTS, C/O LORILLARD TOBACCO COMPANY, 714 GREEN VALLEY RD, GREENSBORO NC 27408-7018	31,739,205.838		10.54	%
LONG DURATION TOTAL RETURN FUND	Institutional	**	PATTERSON & CO FBO OMNIBUS, REIN/REIN, 1525 WEST WT HARRIS BLVD, CHARLOTTE NC 28288	16,943,034.103		5.63	%
LONG DURATION TOTAL RETURN FUND	Institutional	**	ERNST & YOUNG DEFINED BENEFIT, RETIREMENT PLAN TRUST, ATTN TOTAL REWARDS-BENEFITS, 200 PLAZA DR STE 2, SECAUCUS NJ 07094-3607	15,301,838.844		5.08	%
LONG DURATION TOTAL RETURN FUND	P	**	SAXON & CO, FBO: XXXXX, P.O BOX 7780-1888, PHILADELPHIA PA 19182-0001	91,389.789	*	98.89	%
LONG-TERM CREDIT FUND	Institutional	**	ALL ASSET PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	65,515,762.388	*	57.61	%
LONG-TERM CREDIT FUND	Institutional	**	ALL ASSET ALL AUTHORITY FUND, PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	10,289,040.670		9.05	%
LONG-TERM CREDIT FUND	Institutional	**	ALL ASSET PVIT PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	7,368,773.435		6.48	%
LONG-TERM U.S. GOVERNMENT FUND	Institutional	**	ALL ASSET PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	47,127,642.474	*	44.45	%
LONG-TERM U.S. GOVERNMENT FUND	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	18,864,940.291		17.79	%
LONG-TERM U.S. GOVERNMENT FUND	Institutional	**	ALL ASSET ALL AUTHORITY FUND, PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	10,943,247.300		10.32	%

183

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
LONG-TERM U.S. GOVERNMENT FUND	Institutional	**	ALL ASSET PVIT PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	6,367,372.618		6.01	%
LONG-TERM U.S. GOVERNMENT FUND	Administrative	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	4,984,166.982	*	66.40	%
LONG-TERM U.S. GOVERNMENT FUND	Administrative	**	STATE STREET BANK & TRUST CO TTEE, FBO SOUTHERN CALIFORNIA EDISON, STOCK SAVINGS PLUS PLAN, ATTN DEFINED CONTRIBUTION SVC- SPG, 2 AVENUE DE LAFAYETTE, BOSTON MA 02111-1724	2,024,325.398	*	26.97	%
LONG-TERM U.S. GOVERNMENT FUND	A	**	MASSACHUSETTES MUTUAL, LIFE INSURANCE CO, 1295 STATE STREET MIP N255, SPRINGFIELD MA 01111-0001	2,971,236.966		16.39	%
LONG-TERM U.S. GOVERNMENT FUND	A	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	2,305,943.207		12.72	%
LONG-TERM U.S. GOVERNMENT FUND	A	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	925,669.177		5.11	%
LONG-TERM U.S. GOVERNMENT FUND	B	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	261,375.660		13.39	%
LONG-TERM U.S. GOVERNMENT FUND	B	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	141,484.790		7.25	%
LONG-TERM U.S. GOVERNMENT FUND	B	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	98,230.142		5.03	%
LONG-TERM U.S. GOVERNMENT FUND	C	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	1,605,550.049	*	35.87	%

184

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
LONG-TERM U.S. GOVERNMENT FUND	C	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	282,543.939		6.31	%
LONG-TERM U.S. GOVERNMENT FUND	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	525,565.078	*	83.76	%
LONG-TERM U.S. GOVERNMENT FUND	P	**	CITIGROUP GLOBAL MARKETS INC, HOUSE ACCOUNT, 700 RED BROOK BLVD, OWINGS MILLS MD 21117-5184	90,750.790		14.46	%
LOW DURATION FUND	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	170,578,702.146		17.34	%
LOW DURATION FUND	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	143,224,945.986		14.56	%
LOW DURATION FUND	Institutional		MLTC OF AMERICA DUPONT, SAVINGS ATTN, ATTN ERIC HUNT, 1400 MERRILL LYNCH DRIVE 04 3S F, PENNINGTON NJ 08534-4125	69,901,692.414		7.11	%
LOW DURATION FUND	Institutional	**	ALL ASSET PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	50,391,656.555		5.12	%
LOW DURATION FUND	Administrative	**	GENWORTH FINANCIAL TRUST COMPANY, FBO GFWM & MUTUAL CLIENTS & FOR THE, BENEFIT OF OTHER CUST CLIENTS, 3200 N CENTRAL AVE STE 700, PHOENIX AZ 85012-2468	33,911,889.384	*	45.96	%
LOW DURATION FUND	Administrative	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	25,923,715.758	*	35.14	%
LOW DURATION FUND	A	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	46,318,854.771		21.79	%

185

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
LOW DURATION FUND	A	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	24,676,352.304		11.61	%
LOW DURATION FUND	A	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	13,398,981.623		6.30	%
LOW DURATION FUND	A	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	13,162,276.884		6.19	%
LOW DURATION FUND	B	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	793,154.467		8.17	%
LOW DURATION FUND	B	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	640,927.331		6.60	%
LOW DURATION FUND	B	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	536,940.655		5.53	%
LOW DURATION FUND	C	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	13,838,183.688		24.87	%
LOW DURATION FUND	C	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	4,194,436.826		7.54	%
LOW DURATION FUND	C	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	3,862,010.346		6.94	%
LOW DURATION FUND	C	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	3,173,420.522		5.70	%
LOW DURATION FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	33,138,975.311	*	43.68	%

186

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
LOW DURATION FUND	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	20,547,858.940	*	72.01	%
LOW DURATION FUND	P	**	CITIGROUP GLOBAL MARKETS INC, HOUSE ACCOUNT, 700 RED BROOK BLVD, OWINGS MILLS MD 21117-5184	6,260,449.509		21.94	%
LOW DURATION FUND	R	**	DCGT AS TTEE AND/OR CUST, FBO THE CHURCH OF GOD, ATTN NPIO TRADE DESK, 711 HIGH STREET, DES MOINES IA 50309-2732	1,324,780.878	*	43.65	%
LOW DURATION FUND	R	**	ING, ENHANCED K-CHOICE, TRUSTEE: RELIANCE TRUST COMPANY, 400 ATRIUM DRIVE, SOMERSET NJ 08873-4162	211,018.044		6.95	%
LOW DURATION FUND II	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	10,361,097.249		24.43	%
LOW DURATION FUND II	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	3,319,022.143		7.83	%
LOW DURATION FUND II	Institutional		THE MONTEFIORE IPA INC, 200 CORPORATE BLVD S, YONKERS NY 10701-6806	2,929,561.401		6.91	%
LOW DURATION FUND II	Institutional		LANLEX NO 65 PTY LIMITED -, IN LIQUIDATION, ATTN RENI KUMAR - TREASURY ACCT, GPO BOX 9814, SYDNEY NSW 2001, AUSTRALIA	2,627,525.779		6.20	%
LOW DURATION FUND II	Institutional	**	FIRST UNION NATIONAL BANK, ACCT XXXXX, OMNIBUS CASH/CASH NC-1151, 1525 WEST WT HARRIS BLVD, CHARLOTTE NC 28262-8522	2,589,535.503		6.11	%
LOW DURATION FUND II	Institutional		REGENTS OF UNIVERSITY OF MINNESOTA, ATTN STUART MASON, 2221 UNIVERSITY AVE SE SUITE 145, MINNEAPOLIS MN 55414-3165	2,508,891.579		5.92	%
LOW DURATION FUND II	Institutional		CYSTIC FIBROSIS FOUNDATION, 6931 ARLINGTON RD STE 200, BETHESDA MD 20814-5200	2,469,963.229		5.82	%

187

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
LOW DURATION FUND II	Administrative	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	110,656.727	*	91.56	%
LOW DURATION FUND III	Institutional		THE SALVATION ARMY, A GEORGIA CORP, 1424 NORTHEAST EXPWY, ATTN OFFICE OF INVESTMENTS, ATLANTA GA 30329	5,473,684.211	*	27.39	%
LOW DURATION FUND III	Institutional		ST JOSEPH HOSPITAL, FOUNDATION, ATTN: MRS JULIE HOLT, 505 S MAIN ST STE 700, ORANGE CA 92868-4527	2,142,662.229		10.72	%
LOW DURATION FUND III	Institutional		NATIONAL JEWISH HEALTH, STRATEGIC INITIATIVE, ATTN JENNIFER POWERS, FINANCE DEPT, 1400 JACKSON ST, DENVER CO 80206-2762	2,022,054.571		10.12	%
LOW DURATION FUND III	Institutional	**	KNOTFLOAT & CO, C/O STATE STREET BANK & TRUST, 2 AVENUE DE LAFAYETTE, BOSTON MA 02111-1724	1,638,696.010		8.20	%
LOW DURATION FUND III	Institutional	**	DINGLE & CO, C/O COMERICA BANK, ATTN XXXXX/MUTUAL FUNDS, PO BOX 75000, DETROIT MI 48275-0001	1,404,557.479		7.03	%
LOW DURATION FUND III	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	1,082,933.681		5.42	%
LOW DURATION FUND III	Administrative	**	AMERITRADE INC FOR THE EXCLUSIVE, BENEFIT OF OUR CLIENTS, PO BOX 2226, OMAHA NE 68103-2226	10,340.355	*	86.15	%
LOW DURATION FUND III	Administrative	**	PACIFIC INVESTMENT, MANAGEMENT COMPANY LLC, ATTN: DONNA THOMPSON, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046	1,662.188		13.85	%
MODERATE DURATION FUND	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	24,949,029.923		15.04	%
MODERATE DURATION FUND	Institutional	**	THE NORTHERN TRUST COMPANY AS, TRUSTEE FOR THE BENEFIT OF, ACCENTURE PROFIT SHARING AND 401K, TRUST PLAN - DV, PO BOX 92994, CHICAGO IL 60675-0001	20,592,864.584		12.41	%

188

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
MODERATE DURATION FUND	Institutional	**	FBR NATIONAL TRUST COMPANY, FBO NATIONAL AUTOMOBILE DEALERS &, ASSOCIATES RETIREMENT TRUST, 8270 GREENSBORO DR STE 400, MCLEAN VA 22102-3879	16,182,962.459		9.75	%
MODERATE DURATION FUND	Institutional	**	PATTERSON & CO, FBO OMNIBUS C/C/C XXXXX, 1525 W WT HARRIS BLVD # NC-1076, CHARLOTTE NC 28262-8522	9,714,704.069		5.85	%
MONEY MARKET FUND	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	41,670,337.360		21.00	%
MONEY MARKET FUND	Institutional		KANSAS BIOSCIENCE AUTHORITY, 25501 W VALLEY PKWY STE 100, OLATHE KS 66061-8469	30,005,140.520		15.12	%
MONEY MARKET FUND	Institutional	**	MERCER TRUST COMPANY CUST FBO, ABBOTT LABS PUERTO RICO SRP, ATTN DC PLAN ADMIN MS N-4-E, 1 INVESTORS WAY, NORWOOD MA 02062-1599	20,655,370.930		10.41	%
MONEY MARKET FUND	Institutional	**	STATE STREET BANK & TRUST AS CUST, FOR SOUTH DAKOTA HIGHER EDUCATION, SAVINGS TRUST 14-18 YRS, ATTN: TRUST OPERATIONS, 801 PENNSYLVANIA, KANSAS CITY MO 64105-1307	16,949,080.690		8.54	%
MONEY MARKET FUND	Institutional	**	FIRST TRUST CORPORATION., FBO JOHN MARTELLO, A/C XXXXX, PO BOX 173301, DENVER CO 80217-3301	14,748,640.320		7.43	%
MONEY MARKET FUND	Institutional		DREW UNIVERSITY, FISCAL OPERATIONS, 36 MADISON AVENUE, MADISON NJ 07940-1493	10,840,650.200		5.46	%
MONEY MARKET FUND	Institutional	**	STATE STREET BANK & TRUST AS, CUSTODIAN FOR SOUTH DAKOTA HIGHER, EDUCATION SAV TR MONEY MARKET PLUS, ATTN STATE STREET TRUST OPERATION, 801 PENNSYLVANIA AVE, KANSAS CITY MO 64105-1307	10,184,630.290		5.13	%
MONEY MARKET FUND	Administrative	**	RELIANCE TR CO CUST FBO, CORNELL COMPANIES INC 401K PLAN, PO BOX 48529, ATLANTA GA 30362-1529	10,466,297.251	*	46.30	%

189

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
MONEY MARKET FUND	Administrative	**	MERCER TRUST CO TTEE, FBO STRUCTURE TONE ORGANIZATION, 401K PLAN PSP, ATTN DC PLAN ADMIN MS N-6-H, ONE INVESTORS WAY, NORWOOD MA 02062-1599	8,711,253.460	*	38.54	%
MONEY MARKET FUND	Administrative	**	RELIANCE TRUST CO FBO, LFP INC 401K PLAN, PO BOX 48529, ATLANTA GA 30362-1529	1,965,998.467		8.70	%
MONEY MARKET FUND	A	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	7,537,884.070		6.27	%
MONEY MARKET FUND	A	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	6,825,782.790		5.67	%
MONEY MARKET FUND	B	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	2,795,032.475		6.40	%
MONEY MARKET FUND	B	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	2,575,272.254		5.89	%
MONEY MARKET FUND	C	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	6,780,631.750		8.50	%
MORTGAGE-BACKED SECURITIES FUND	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	11,284,570.184	*	29.51	%
MORTGAGE-BACKED SECURITIES FUND	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	8,535,699.029		22.32	%
MORTGAGE-BACKED SECURITIES FUND	Institutional		SOMPO JAPAN INSURANCE COMPANY OF, AMERICA, ATTN TAMMY VAN DUNK, TWO WORLD FINANCIAL CENTER 43RD FL, 225 LIBERTY STREET, NEW YORK NY 10281-1008	3,647,860.621		9.54	%
MORTGAGE-BACKED SECURITIES FUND	Institutional		MCCORMICK TRIBUNE FOUNDATION, 205 NORTH MICHAGAN AVE STE 770, CHICAGO IL 60611	2,436,621.127		6.37	%

190

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
MORTGAGE- BACKED SECURITIES FUND	Institutional	**	DBTCO, PO BOX 747, DUBUQUE IA 52004-0747	2,103,965.883		5.50	%
MORTGAGE-BACKED SECURITIES FUND	Administrative	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	2,907,877.965	*	38.15	%
MORTGAGE-BACKED SECURITIES FUND	Administrative	**	FIRST UNION NATIONAL BANK, 401 S TRYON ST FRB-3, ATT CMG FIDUCIARY OP FUND GR, MAIL CODE: CMG-2-1151, CHARLOTTE NC 28202-1934	1,698,846.913		22.29	%
MORTGAGE-BACKED SECURITIES FUND	Administrative	**	CHARLES SCHWAB & CO SPECIAL CUSTODY, ACCT FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMERS, ATTN: CAROL WU/MUTUAL FUND OPS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	819,510.670		10.75	%
MORTGAGE-BACKED SECURITIES FUND	Administrative	**	MG TRUST COMPANY CUST FBO, HERITAGE VALLEY HEALTH SYSTEM, 403(B), 700 17TH ST STE 300, DENVER CO 80202-3531	521,033.623		6.84	%
MORTGAGE-BACKED SECURITIES FUND	A	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	945,294.519		10.18	%
MORTGAGE-BACKED SECURITIES FUND	A	**	RELIANCE TR CO FBO, RETIREMENT PLANS SERVICED BY METLIF, 8515 E ORCHARD RD 2T2, GREENWOOD VLG CO 80111-5002	488,561.959		5.26	%
MORTGAGE-BACKED SECURITIES FUND	B	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	85,647.416		8.34	%
MORTGAGE-BACKED SECURITIES FUND	B	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	65,917.753		6.42	%
MORTGAGE-BACKED SECURITIES FUND	C	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	1,435,449.310	*	28.31	%
MORTGAGE-BACKED SECURITIES FUND	C	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	764,290.611		15.08	%

191

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
MORTGAGE-BACKED SECURITIES FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	10,252,791.673	*	56.35	%
MORTGAGE-BACKED SECURITIES FUND	D	**	NFS LLC FEBO, AST TRUST COMPANY, FBO XXXXX, PO BOX 52129, PHOENIX AZ 85072-2129	995,696.733		5.47	%
MORTGAGE-BACKED SECURITIES FUND	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	838,949.899	*	84.38	%
MORTGAGE-BACKED SECURITIES FUND	P	**	CITIGROUP GLOBAL MARKETS INC, HOUSE ACCOUNT, 700 RED BROOK BLVD, OWINGS MILLS MD 21117-5184	117,123.697		11.78	%
MUNICIPAL BOND FUND	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	11,379,644.251	*	47.83	%
MUNICIPAL BOND FUND	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	5,710,214.107		24.00	%
MUNICIPAL BOND FUND	Institutional		DEAN HEALTH SYSTEMS INC, ATTN KEVIN STEVENS, 1808 W BELTLINE HWY, MADISON WI 53713-2334	1,243,645.736		5.23	%
MUNICIPAL BOND FUND	Administrative	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	61,799.962	*	52.53	%
MUNICIPAL BOND FUND	Administrative	**	IITC & CO, PO BOX 189, NIWOT CO 80544-0189	33,882.030	*	28.80	%
MUNICIPAL BOND FUND	Administrative	**	PERSHING LLC, ATTN MUTUAL FUNDS, PO BOX 2052, JERSEY CITY NJ 07303-2052	11,514.974		9.79	%
MUNICIPAL BOND FUND	A	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	1,936,261.364		14.34	%
MUNICIPAL BOND FUND	A	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	922,146.839		6.83	%

192

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
MUNICIPAL BOND FUND	A	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	890,289.456		6.59	%
MUNICIPAL BOND FUND	B	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	173,010.152		12.01	%
MUNICIPAL BOND FUND	B	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	114,806.995		7.97	%
MUNICIPAL BOND FUND	B	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	82,777.419		5.75	%
MUNICIPAL BOND FUND	B	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD FL 9, JERSEY CITY NJ 07310-2055	82,166.689		5.70	%
MUNICIPAL BOND FUND	C	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	1,643,337.016		22.09	%
MUNICIPAL BOND FUND	C	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	623,172.650		8.38	%
MUNICIPAL BOND FUND	C	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	490,963.893		6.60	%
MUNICIPAL BOND FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	1,164,314.659	*	58.28	%
MUNICIPAL BOND FUND	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	182,381.524	*	82.36	%
MUNICIPAL BOND FUND	P	**	CITIGROUP GLOBAL MARKETS INC, HOUSE ACCOUNT, 700 RED BROOK BLVD, OWINGS MILLS MD 21117-5184	32,924.533		14.87	%

193

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
MUNIGO	P	**	ALLIANZ GLOBAL INVESTORS OF, AMERICA LP, ATTN: DONNA THOMPSON, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046	995.449	*	100.00	%
NEW YORK MUNICIPAL BOND FUND	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	4,897,187.351	*	57.75	%
NEW YORK MUNICIPAL BOND FUND	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	2,613,993.372	*	30.82	%
NEW YORK MUNICIPAL BOND FUND	Institutional	**	AMERITRADE INC FOR THE EXCLUSIVE, BENEFIT OF OUR CLIENT, PO BOX 2226, OMAHA NE 68103-2226	521,258.572		6.15	%
NEW YORK MUNICIPAL BOND FUND	A		CAROL E MEYER &, STEVE WOOD JTWROS, 223 LEGGET RD, HIGH FALLS NY 12440-5705	334,051.334		9.43	%
NEW YORK MUNICIPAL BOND FUND	A	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	240,942.891		6.80	%
NEW YORK MUNICIPAL BOND FUND	A	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	234,070.866		6.61	%
NEW YORK MUNICIPAL BOND FUND	A	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	220,655.435		6.23	%
NEW YORK MUNICIPAL BOND FUND	A	**	NFS LLC FEBO, SAMUEL P SPORN, SAMUEL SPORN, 593 3RD STREET, BROOKLYN NY 11215-3002	217,609.790		6.14	%
NEW YORK MUNICIPAL BOND FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	1,603,518.428	*	61.69	%
NEW YORK MUNICIPAL BOND FUND	D	**	AMERITRADE INC FBO XXXXX, PO BOX 2226, OMAHA NE 68103-2226	138,247.807		5.32	%
REAL RETURN ASSET FUND	Institutional	**	ALL ASSET PORTFOLIO, ATTN	319,313,244.082	*	76.27	%

194

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
			SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322
REAL RETURN ASSET FUND	Institutional	**	ALL ASSET ALL AUTHORITY FUND, PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	49,898,553.876		11.92	%
REAL RETURN ASSET FUND	Institutional	**	ALL ASSET PVIT PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	39,495,178.223		9.43	%
REAL RETURN FUND	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	178,992,434.991	*	27.90	%
REAL RETURN FUND	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	123,881,676.337		19.31	%
REAL RETURN FUND	Institutional	**	ALL ASSET PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	71,202,524.283		11.10	%
REAL RETURN FUND	Administrative	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	28,781,551.958	*	32.60	%
REAL RETURN FUND	Administrative	**	JOHN HANCOCK LIFE INS CO (USA), ATTN LIZ SEELEY, RPS SEG FUNDS/ACCOUNTING ET-7, 601 CONGRESS ST, BOSTON MA 02210-2804	20,279,262.622		22.97	%
REAL RETURN FUND	Administrative	**	NEW YORK LIFE TRUST COMPANY, 169 LACKAWANNA AVE, PARSIPPANY NJ 07054-1007	4,951,798.546		5.61	%
REAL RETURN FUND	Administrative	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT, OF IT’S CUSTOMERS, ATTN SERVICE TEAM, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	4,836,107.748		5.48	%

195

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
REAL RETURN FUND	A	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	43,300,338.693		13.64	%
REAL RETURN FUND	A	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	31,715,188.085		9.99	%
REAL RETURN FUND	A	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	26,383,741.817		8.31	%
REAL RETURN FUND	B	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	2,889,666.896		8.51	%
REAL RETURN FUND	B	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	2,881,245.092		8.48	%
REAL RETURN FUND	C	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	49,147,258.659	*	26.19	%
REAL RETURN FUND	C	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	17,025,811.503		9.07	%
REAL RETURN FUND	C	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	12,511,431.979		6.67	%
REAL RETURN FUND	C	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	12,328,900.643		6.57	%
REAL RETURN FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	56,865,750.418	*	50.76	%
REAL RETURN FUND	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	39,542,883.248	*	80.65	%

196

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
REAL RETURN FUND	P	**	CITIGROUP GLOBAL MARKETS INC, HOUSE ACCOUNT, 700 RED BROOK BLVD, OWINGS MILLS MD 21117-5184	8,812,991.512		17.97	%
REAL RETURN FUND	R	**	HARTFORD LIFE INSURANCE CO, 401K SEPARATE ACCOUNT, PO BOX 2999, HARTFORD CT 06104-2999	2,987,601.723		16.34	%
REAL RETURN FUND	R	**	UMB BANK N/A, FIDUCIARY FOR TAX DEFERRED A/C’S, 1 SW SECURITY BENEFIT PL, TOPEKA KS 66636-1000	1,887,690.449		10.32	%
REAL RETURN FUND	R	**	SSB&T CUST, FBO ADP FLEX NON-QUALIFIED PLAN, 1 LINCOLN ST, BOSTON MA 02111-2901	1,305,114.491		7.14	%
REAL RETURN FUND	R	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	933,228.860		5.10	%
REALESTATEREALRETURN STRATEGY FUND	Institutional	**	ALL ASSET PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	9,569,879.071	*	46.84	%
REALESTATEREALRETURN STRATEGY FUND	Institutional	**	ALLIANZ FUNDS MULTI-STRATEGY TRUST, ON BEHALF OF ALLIANZ GLOBAL INV SOL, CORE ALLOCATION FUND, AGI SOLUTIONS ATTN STEPHEN SEXAUER, 600 W BROADWAY, SAN DIEGO CA 92101-3311	2,166,292.086		10.60	%
REALESTATEREALRETURN STRATEGY FUND	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	1,844,855.806		9.03	%
REALESTATEREALRETURN STRATEGY FUND	Institutional	**	ALL ASSET ALL AUTHORITY FUND, PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	1,691,892.925		8.28	%
REALESTATEREALRETURN STRATEGY FUND	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	1,417,405.436		6.94	%

197

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
REALESTATEREALRETURN STRATEGY FUND	Institutional	**	ALL ASSET PVIT PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	1,320,721.356		6.46	%
REALESTATEREALRETURN STRATEGY FUND	Institutional		THE THOMAS AND STACEY SIEBEL, FOUNDATION, PO BOX 240, PALO ALTO CA 94302-0240	1,065,150.335		5.21	%
REALESTATEREALRETURN STRATEGY FUND	C	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	157,874.496		7.32	%
REALESTATEREALRETURN STRATEGY FUND	C	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	108,725.838		5.04	%
REALESTATEREALRETURN STRATEGY FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	923,177.934	*	53.41	%
REALESTATEREALRETURN STRATEGY FUND	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	65,475.220	*	78.03	%
REALESTATEREALRETURN STRATEGY FUND	P	**	CITIGROUP GLOBAL MARKETS INC, HOUSE ACCOUNT, 700 RED BROOK BLVD, OWINGS MILLS MD 21117-5184	16,681.859		19.88	%
REALRETIREMENT 2010 FUND	Institutional	**	ALLIANZ GLOBAL INVESTORS OF, AMERICA LP, ATTN: DONNA THOMPSON, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046	370,405.375	*	94.32	%
REALRETIREMENT 2010 FUND	Institutional	**	VANGUARD MARKETING CORPORATION, 100 VANGUARD BLVD, MALVERN PA 19355-2331	22,300.757		5.68	%
REALRETIREMENT 2010 FUND	Administrative	**	ALLIANZ GLOBAL INVESTORS OF, AMERICA LP, ATTN: DONNA THOMPSON, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046	1,242.913	*	100.00	%
REALRETIREMENT 2010 FUND	A	**	NFS LLC FEBO, NFS/FMTC R/O IRA, FBO WILLIAM MICHAEL ENNIS II, 182 KING GEORGE STREET, DANIEL ISLAND SC 29492-8129	12,461.376		19.90	%

198

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
REALRETIREMENT 2010 FUND	A	**	ROBERT W BAIRD & CO. INC., A/C XXXXX, 777 EAST WISCONSIN AVENUE, MILWAUKEE WI 53202-5300	9,189.880		14.68	%
REALRETIREMENT 2010 FUND	A	**	NFS LLC FEBO, RUTH ENNIS, WILLIAM MICHAEL ENNIS II, 182 KING GEORGE STREET, DANIEL ISLAND SC 29492-8129	9,099.329		14.53	%
REALRETIREMENT 2010 FUND	A	**	SSB&T TRUST CO CUST R/O IRA FBO, MARGOT DEVLIN, 416 DOVE CT, LUMBERTON NJ 08048-4234	6,333.986		10.12	%
REALRETIREMENT 2010 FUND	A	**	NFS LLC FEBO, FREDERIKA SUMELIUS, 6373 VINE HILL RD, SEBASTOPOL CA 95472-2051	5,957.993		9.52	%
REALRETIREMENT 2010 FUND	A	**	FIRST CLEARING LLC, A/C XXXXX, FERNE MANN ANTKOWIAK, 644 KERPER ST, PHILADELPHIA PA 19111-4702	5,058.182		8.08	%
REALRETIREMENT 2010 FUND	C	**	RAYMOND JAMES & ASSOC INC CSDN, FBO WALDO W COE IRA, 2344 PINTA DR, WINSTON SALEM NC 27106-9759446	8,069.075	*	25.20	%
REALRETIREMENT 2010 FUND	C		ANNE H MCCLINTIC, 1811 KILGORE RD, GILLETT PA 16925-9434	4,017.371		12.55	%
REALRETIREMENT 2010 FUND	C		STEVEN I FREILICH, 11817 UNION TPKE APT 7F, FOREST HILLS NY 11375-6102	3,990.043		12.46	%
REALRETIREMENT 2010 FUND	C	**	E*TRADE CLEARING LLC, XXXXX, IRA CUST, PO BOX 1542, MERRIFIELD VA 22116-1542	3,317.856		10.36	%
REALRETIREMENT 2010 FUND	C		NEAL L GEORGE &, JUDY R GEORGE, JT TEN WROS NOT TC, 150 DEER TRL, SCOTT CITY KS 67871-4037	3,195.350		9.98	%
REALRETIREMENT 2010 FUND	C	**	RAYMOND JAMES & ASSOC INC CSDN, FBO MARJORIE T KESSEL IRA, 2503 5TH ST, PERU IL 61354-2401	2,685.138		8.38	%
REALRETIREMENT 2010 FUND	C		WILLIAM R MC CLINTIC &, ANNE H MC CLINTIC, JT TEN WROS NOT TC, 1811 KILGORE RD, GILLETT PA 16925-9434	1,865.144		5.82	%
REALRETIREMENT 2010 FUND	D	**	NFS LLC FEBO, FMT CO CUST R/O IRA, FBO DAVID J SANDERS, 1620 BELVEDERE PL, ROUND ROCK TX 78665-5658	4,109.496	*	48.82	%
REALRETIREMENT 2010 FUND	D	**	NFS LLC FEBO, FMT CO CUST R/O IRA, FBO LAURA E DEMERCURIO, 325 HILLCREST AVE, DECATUR GA 30030-2010	1,583.435		18.81	%
REALRETIREMENT 2010 FUND	D	**	ALLIANZ GLOBAL INVESTORS, ATTN VINH NGUYEN, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046	1,225.208		14.56	%

199

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
REALRETIREMENT 2010 FUND	D	**	NFS LLC FEBO, NFS/FMTC IRA, FBO CRISTIAN E BALHARRY, 11327 SW 153RD PL, MIAMI FL 33196-4380	558.931		6.64	%
REALRETIREMENT 2010 FUND	D	**	NFS LLC FEBO, FMT CO CUST R/O IRA, FBO MARK GARTMAN, 5312 WRIGHT WAY S, W BLOOMFIELD MI 48322-2117	535.434		6.36	%
REALRETIREMENT 2010 FUND	R		STRATTON D YATRON WILLIAM P, YATRON FBO, ADELPHI KITCHENS INC RSP, 300 E PENN AVE, ROBESONIA PA 19551	7,505.688	*	58.69	%
REALRETIREMENT 2010 FUND	R	**	NFS LLC FEBO, NFS/FMTC R/O IRA, FBO TIMOTHY M MOREHEAD, 1932 BAYARD AVE, SAINT PAUL MN 55116-1215	4,020.195	*	31.44	%
REALRETIREMENT 2010 FUND	R	**	ALLIANZ GLOBAL INVESTORS, ATTN VINH NGUYEN, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046	1,257.012		9.83	%
REALRETIREMENT 2020 FUND	Institutional	**	ALLIANZ GLOBAL INVESTORS OF, AMERICA LP, ATTN: DONNA THOMPSON, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046	370,076.507	*	97.39	%
REALRETIREMENT 2020 FUND	Administrative	**	ALLIANZ GLOBAL INVESTORS OF, AMERICA LP, ATTN: DONNA THOMPSON, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046	1,237.695	*	100.00	%
REALRETIREMENT 2020 FUND	A	**	PIMCO FUNDS, PIMS DEFERRED TRUST ACCOUNT, FBO E PHILIP CANNON, ATTN MICHELE ELLIS, 1345 AVENUE OF THE AMERICAS, NEW YORK, NY 10105	19,988.136		19.45	%
REALRETIREMENT 2020 FUND	A	**	NFS LLC FEBO, RUTH ENNIS, WILLIAM MICHAEL ENNIS II, 182 KING GEORGE STREET, DANIEL ISLAND SC 29492-8129	12,750.728		12.41	%
REALRETIREMENT 2020 FUND	A	**	NFS LLC FEBO, NFS/FMTC ROLLOVER IRA, FBO WILLIAM MICHAEL ENNIS II, 182 KING GEORGE STREET, DANIEL ISLAND SC 29492-8129	6,831.040		6.65	%
REALRETIREMENT 2020 FUND	A	**	ROBERT W BAIRD & CO. INC., A/C XXXXX, 777 EAST WISCONSIN AVENUE, MILWAUKEE WI 53202-5300	6,692.354		6.51	%
REALRETIREMENT 2020 FUND	A	**	NFS LLC FEBO, NFS/FMTC R/O IRA, FBO JOHN WILLIAM LEMONS, P O BOX 350, HARLAN IA 51537-0350	5,222.376		5.08	%

200

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
REALRETIREMENT 2020 FUND	C	**	AMERICAN ENTERPRISE INVESTMENT SVCS, FBO XXXXX, P.O. BOX 9446, MINNEAPOLIS MN 55474-0001	9,410.991	*	30.30	%
REALRETIREMENT 2020 FUND	C		CHARLES G LAMPLEY IV CUST, FBO ELIZABETH BAIRD LAMPLEY, UNIF TRANS MIN ACT NC, 2911 LAURA RD, SHELBY NC 28150-9316	3,831.057		12.34	%
REALRETIREMENT 2020 FUND	C	**	SSB&T CUST MARANATHA EVANGELICAL, FREE CHURCH 403B PLAN FBO, DANIEL REID, 205 ROYAL CREST DR, RICE LAKE WI 54868-1871	3,160.556		10.18	%
REALRETIREMENT 2020 FUND	C	**	FIRST CLEARING LLC, A/C XXXXX, SHEILA PALMER IRA, FCC AS CUSTODIAN, RR 1 BOX 164, MONTROSE PA 18801-9736	2,952.487		9.51	%
REALRETIREMENT 2020 FUND	C	**	AMERICAN ENTERPRISE INVESTMENT SVCS, FBO XXXXX, P O BOX 9446, MINNEAPOLIS MN 55474-0001	2,670.157		8.60	%
REALRETIREMENT 2020 FUND	C	**	FIRST CLEARING, LLC, A/C XXXXX, DANIEL J MATTHEWS, 58 RICHBORO RD, NEWTOWN PA 18940	2,342.427		7.54	%
REALRETIREMENT 2020 FUND	C		LAURA D LAMPLEY CUST, FBO SYDNEY L LAMPLEY, UNIF TRANS MIN ACT NC, 2911 LAURA RD, SHELBY NC 28150-9316	1,860.820		5.99	%
REALRETIREMENT 2020 FUND	C	**	AMERICAN ENTERPRISE INVESTMENT SVCS, FBO XXXXX, P O BOX 9446, MINNEAPOLIS MN 55440-9446	1,679.751		5.41	%
REALRETIREMENT 2020 FUND	D	**	NFS LLC FEBO, FMT CO CUST R/O IRA, FBO NEIL F GRABOWSKI, 777 FIRST PARISH RD, SCITUATE MA 02066-3128	18,876.598	*	41.39	%
REALRETIREMENT 2020 FUND	D	**	NFS LLC FEBO, NANCY TAYLOR, 6288 WISMER CIR, DUBLIN OH 43016-8474	13,353.955	*	29.28	%
REALRETIREMENT 2020 FUND	D	**	E*TRADE CLEARING LLC, XXXXX, PO BOX 989030, WEST SACRAMENTO CA 95798-9030	4,050.285		8.88	%
REALRETIREMENT 2020 FUND	R	**	MG TR CO CUST FBO, SOUTHERN BEVERAGE CO INC, 700 17TH ST STE 300, DENVER CO 80202-3531	45,279.083	*	83.62	%
REALRETIREMENT 2020 FUND	R		STRATTON D YATRON WILLIAM P, YATRON FBO, ADELPHI KITCHENS INC RSP, 300 E PENN AVE, ROBESONIA PA 19551	7,571.169		13.98	%
REALRETIREMENT 2030 FUND	Institutional	**	ALLIANZ GLOBAL INVESTORS OF, AMERICA	372,111.754	*	92.18	%

201

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
			LP, ATTN: DONNA THOMPSON, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046
REALRETIREMENT 2030 FUND	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	28,842.857		7.14	%
REALRETIREMENT 2030 FUND	Administrative	**	ALLIANZ GLOBAL INVESTORS OF, AMERICA LP, ATTN: DONNA THOMPSON, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046	1,238.821	*	100.00	%
REALRETIREMENT 2030 FUND	A	**	NFS LLC FEBO, THOMAS H JORDAN III, 6255 ZINFANDEL DR, SUWANEE GA 30024-3486	7,461.464		21.79	%
REALRETIREMENT 2030 FUND	A	**	NFS LLC FEBO, JOHN & CHRISTEL K LIMBERGER TT, JOHN & CHRISTEL LIMBERGER RE, TR U/A 7/22/05, 1435 S FERN DR, MOUNT PROSPECT IL 60056-4526	6,524.118		19.05	%
REALRETIREMENT 2030 FUND	A	**	FIRST CLEARING LLC, A/C XXXXX, TAMMIE JOHNSON IRA, FCC AS CUSTODIAN, RR 1 BOX 2A, SPRINGVILLE PA 18844-9702	3,590.164		10.48	%
REALRETIREMENT 2030 FUND	A	**	EDWARD D JONES & CO CUST, FBO BUFFY S MUTTI IRA, 1 WATERING LANE, NORWALK CT 06850-4418	2,607.656		7.61	%
REALRETIREMENT 2030 FUND	A	**	SSB&T CUST ROLLOVER IRA FBO, JAMES P MCNASSAR JR, 17291 S OVERLOOK RD, OREGON CITY OR 97045-9459	2,017.942		5.89	%
REALRETIREMENT 2030 FUND	C	**	FIRST CLEARING LLC, A/C XXXXX, MIRIAM SCHECHTER TTEE, GST EXEMPT TR MIRIAM, 4045 N RICHLAND CT, MILWAUKEE WI 53211-2147	8,877.612		21.30	%
REALRETIREMENT 2030 FUND	C	**	SSB&T CUST IRA, FBO LEE J CAMPBELL, 1918 CARAMESA DR SE, RIO RANCHO NM 87124-8893	4,705.438		11.29	%
REALRETIREMENT 2030 FUND	C	**	SSB&T CUST ROLLOVER IRA, FBO GARY A BOWLES, 6515 ASTAIR NW, ALBUQUERQUE NM 87120-4402	2,861.145		6.87	%
REALRETIREMENT 2030 FUND	C	**	SSB&T CUST ROLLOVER IRA, FBO JAMES R OSWALT, 6702 OERSTED RD NE, RIO RANCHO NM 87144-6561	2,477.747		5.95	%

202

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
REALRETIREMENT 2030 FUND	D	**	NFS LLC FEBO, FMT CO CUST R/O IRA, FBO MITCH KAMPTON, 6565 WETHEROLE ST APT 5E, REGO PARK NY 11374-4779	7,366.031		18.53	%
REALRETIREMENT 2030 FUND	D	**	NFS LLC FEBO, KATE E DOUGLAS, FMT TTEE FRP PS A/C, 15505 132ND PL NE, WOODINVILLE WA 98072-5505	7,066.517		17.77	%
REALRETIREMENT 2030 FUND	D	**	NFS LLC FEBO, FMT CO CUST R/O IRA, FBO SUDHANSHU PANT, 12 ROSE FARM LN, WOBURN MA 01801-2856	6,114.932		15.38	%
REALRETIREMENT 2030 FUND	D	**	E*TRADE CLEARING LLC, XXXXX, IRA CUST, PO BOX 1542, MERRIFIELD VA 22116-1542	4,300.326		10.82	%
REALRETIREMENT 2030 FUND	D	**	NFS LLC FEBO, NFS/FMTC IRA, FBO MARK LYONS III, 682 MINE BROOK RD, FAR HILLS NJ 07931-2597	4,259.470		10.71	%
REALRETIREMENT 2030 FUND	D	**	TD AMERITRADE, PO BOX 2226, OMAHA NE 68103-2226	3,193.160		8.03	%
REALRETIREMENT 2030 FUND	R	**	MG TR CO CUST FBO, SOUTHERN BEVERAGE CO INC, 700 17TH ST STE 300, DENVER CO 80202-3531	14,725.976	*	84.75	%
REALRETIREMENT 2030 FUND	R	**	ALLIANZ GLOBAL INVESTORS, ATTN VINH NGUYEN, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046	1,263.605		7.27	%
REALRETIREMENT 2030 FUND	R	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	1,172.089		6.75	%
REALRETIREMENT 2040 FUND	Institutional	**	ALLIANZ GLOBAL INVESTORS OF, AMERICA LP, ATTN: DONNA THOMPSON, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046	375,264.871	*	98.67	%
REALRETIREMENT 2040 FUND	Administrative	**	ALLIANZ GLOBAL INVESTORS OF, AMERICA LP, ATTN: DONNA THOMPSON, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046	1,253.054	*	100.00	%
REALRETIREMENT 2040 FUND	A	**	LPL FINANCIAL, A/C XXXXX, 9785 TOWNE CENTRE DR, SAN DIEGO CA 92121-1968	5,068.911	*	28.68	%
REALRETIREMENT 2040 FUND	A	**	LPL FINANCIAL, A/C XXXXX, 9785 TOWNE CENTRE DR, SAN DIEGO CA 92121-1968	3,526.893		19.95	%

203

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
REALRETIREMENT 2040 FUND	A	**	LPL FINANCIAL, A/C XXXXX, 9785 TOWNE CENTRE DR, SAN DIEGO CA 92121-1968	2,130.831		12.06	%
REALRETIREMENT 2040 FUND	A	**	SSB&T CUST IRA FBO, HEATHER R BLEDSOE, 12 THOMAS DR, EAST BERLIN PA 17316-9360	1,974.859		11.17	%
REALRETIREMENT 2040 FUND	A	**	ALLIANZ GLOBAL INVESTORS, ATTN VINH NGUYEN, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046	1,246.002		7.05	%
REALRETIREMENT 2040 FUND	C	**	SSB&T CUST SIMPLE, ALLEGAN COUNTY UNITED WAY, FBO DEBRA E JENNINGS, 3091 118TH AVE, ALLEGAN MI 49010-9555	1,299.081	*	46.45	%
REALRETIREMENT 2040 FUND	C	**	ALLIANZ GLOBAL INVESTORS, ATTN VINH NGUYEN, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046	1,278.130	*	45.70	%
REALRETIREMENT 2040 FUND	D	**	NFS LLC FEBO, FMTC TTEE, MICROSOFT 401K PLAN, FBO DEBORAH J ZWANZIGER, 10415 NE 12TH PL UNIT 105, BELLEVUE WA 98004-3699	9,596.370	*	32.16	%
REALRETIREMENT 2040 FUND	D	**	NFS LLC FEBO, FMTC TTEE, MICROSOFT 401K PLAN, FBO TAHREEM KAMPTON, 10415 NE 12TH PL UNIT 105, BELLEVUE WA 98004-3699	7,632.585	*	25.58	%
REALRETIREMENT 2040 FUND	D	**	NFS LLC FEBO, FMTC CUST ROTH IRA, FBO ERIC E CANADA, 2403 HONEYSUCKLE DR, RICHARDSON TX 75082-3331	3,722.256		12.48	%
REALRETIREMENT 2040 FUND	D	**	E*TRADE CLEARING LLC, XXXXX, IRA CUST, PO BOX 1542, MERRIFIELD VA 22116-1542	1,549.000		5.19	%
REALRETIREMENT 2040 FUND	R		STRATTON D YATRON WILLIAM P, YATRON FBO, ADELPHI KITCHENS INC RSP, 300 E PENN AVE, ROBESONIA PA 19551	29,489.210	*	93.60	%
REALRETIREMENT 2050 FUND	Institutional	**	ALLIANZ GLOBAL INVESTORS OF, AMERICA LP, ATTN: DONNA THOMPSON, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046	366,646.567	*	99.47	%
REALRETIREMENT 2050 FUND	Administrative	**	ALLIANZ GLOBAL INVESTORS OF, AMERICA LP, ATTN: DONNA THOMPSON, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046	1,248.093	*	100.00	%

204

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
REALRETIREMENT 2050 FUND	A	**	SSB&T CUST ROTH IRA, FBO MICHAEL J WIECZOREK, 1345 AVENUE OF THE AMERICAS, NEW YORK, NY 10105	1,298.821	*	30.89	%
REALRETIREMENT 2050 FUND	A	**	ALLIANZ GLOBAL INVESTORS, ATTN VINH NGUYEN, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046	1,219.340	*	29.00	%
REALRETIREMENT 2050 FUND	A	**	SSB&T CUST ROTH IRA, FBO TIFFANY N MAYORGA, 7775 PLEASANT VALLEY CT, SALEM OH 44460-9203	449.904		10.70	%
REALRETIREMENT 2050 FUND	A	**	SSB&T CUST ROTH IRA FBO, HEATHER L LIWSKI, 1345 AVENUE OF THE AMERICAS, NEW YORK, NY 10105	389.151		9.26	%
REALRETIREMENT 2050 FUND	A	**	SSB&T CUST SIMPLE IRA, READS PAINT, FBO RICHARD R READ, 625 PICTURESQUE DR, ST GEORGE UT 84770-4325	234.617		5.58	%
REALRETIREMENT 2050 FUND	A	**	EDWARD D JONES & CO CUSTODIAN, FBO ANDY REIMINK RTH, 1611 FORRESTER ST SE, GRAND RAPIDS MI 49508-1466	226.936		5.40	%
REALRETIREMENT 2050 FUND	C	**	ALLIANZ GLOBAL INVESTORS, ATTN VINH NGUYEN, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046	1,262.339	*	33.10	%
REALRETIREMENT 2050 FUND	C		DAVID PRESS TTEE, FBO BOYS & GIRLS CLUB OF CAMARILLO, 401(K) PLAN AND TRUST FBO, GREGORY M STUART, 364 MAKENZIE CT, THOUSAND OAKS CA 91362-3086	713.758		18.72	%
REALRETIREMENT 2050 FUND	C	**	AMERICAN ENTERPRISE INVESTMENT SVCS, FBO XXXXX, P O BOX 9446, MINNEAPOLIS MN 55440-9446	641.711		16.83	%
REALRETIREMENT 2050 FUND	C	**	STIFEL NICOLAUS & CO INC, A/C XXXXX, BARBARA J PETRONE IRA, 501 NORTH BROADWAY, ST LOUIS MO 63102-2131	490.884		12.87	%
REALRETIREMENT 2050 FUND	C		DAVID PRESS TTEE, BOYS & GIRLS CLUB OF CAMARILLO, 401 (K) PLAN FBO KARIN C HEWLETT, 9784 TRENTON LN APT E, VENTURA CA 93004-3714	347.012		9.10	%
REALRETIREMENT 2050 FUND	D	**	NFS LLC FEBO, FMT CO CUST R/O IRA, FBO BRETT A MCAVOY, 1421 N STEELE, MESA AZ 85207-4130	1,488.197		18.75	%

205

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
REALRETIREMENT 2050 FUND	D	**	ALLIANZ GLOBAL INVESTORS, ATTN VINH NGUYEN, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046	1,218.653		15.35	%
REALRETIREMENT 2050 FUND	D	**	VANGUARD BROKERAGE SERVICES, A/C XXXXX, PO BOX 1170, VALLEY FORGE PA 19482-1170	936.037		11.79	%
REALRETIREMENT 2050 FUND	D	**	TD AMERITRADE, PO BOX 2226, OMAHA NE 68103-2226	842.429		10.61	%
REALRETIREMENT 2050 FUND	D	**	E*TRADE CLEARING LLC, XXXXX, IRA CUST, PO BOX 1542, MERRIFIELD VA 22116-1542	490.327		6.18	%
REALRETIREMENT 2050 FUND	D	**	E*TRADE CLEARING LLC, XXXXX, IRA CUST, PO BOX 1542, MERRIFIELD VA 22116-1542	485.526		6.12	%
REALRETIREMENT 2050 FUND	D	**	E*TRADE CLEARING LLC, XXXXX, IRA CUST, PO BOX 1542, MERRIFIELD VA 22116-1542	468.162		5.90	%
REALRETIREMENT 2050 FUND	R	**	ALLIANZ GLOBAL INVESTORS, ATTN VINH NGUYEN, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046	1,265.375	*	44.63	%
REALRETIREMENT 2050 FUND	R		MICHELE N ELLIS &, MICHAEL E ELLIS JTWROS, 1345 AVENUE OF THE AMERICAS, NEW YORK, NY 10105	801.251	*	28.26	%
REALRETIREMENT 2050 FUND	R	**	SSB&T CUST SIMPLE IRA, FURMAN LAND SURVEYORS INC, FBO JUSTIN L BYE, 5303 CHISHOLM TRL, AMARILLO TX 79109-6305	466.511		16.46	%
REALRETIREMENT 2050 FUND	R	**	SSB&T CUST SIMPLE IRA, FURMAN LAND SURVEYORS INC, FBO JENNIFER L CLINTON, 3606 RANDALL ST, AMARILLO TX 79109-4417	298.215		10.52	%
SHORT DURATION MUNICIPAL INCOME FUND	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	6,009,667.994	*	57.82	%
SHORT DURATION MUNICIPAL INCOME FUND	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	1,606,283.124		15.45	%
SHORT DURATION MUNICIPAL INCOME FUND	Institutional		BRENT R HARRIS TTEE, BRENT R HARRIS SEPARATE PROPERTY	565,749.053		5.44	%

206

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
			TR, OF 2005 U/A DTD 9/16/05, 840 NEWPORT CENTER DR STE 100, NEWPORT BEACH CA 92660
SHORT DURATION MUNICIPAL INCOME FUND	Administrative	**	GENWORTH FINANCIAL TRUST COMPANY, FBO GFWM & MUTUAL CLIENTS & FOR THE, BENEFIT OF OTHER CUST CLIENTS, 3200 N CENTRAL AVE STE 700, PHOENIX AZ 85012-2468	655,934.789	*	100.00	%
SHORT DURATION MUNICIPAL INCOME FUND	A	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD FL 9, JERSEY CITY NJ 07310-2055	3,442,619.046		20.22	%
SHORT DURATION MUNICIPAL INCOME FUND	A	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	2,683,063.088		15.76	%
SHORT DURATION MUNICIPAL INCOME FUND	A	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	2,355,010.805		13.83	%
SHORT DURATION MUNICIPAL INCOME FUND	C	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	934,287.853	*	31.91	%
SHORT DURATION MUNICIPAL INCOME FUND	C	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	294,715.298		10.07	%
SHORT DURATION MUNICIPAL INCOME FUND	C	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	194,768.199		6.65	%
SHORT DURATION MUNICIPAL INCOME FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	324,036.799	*	32.81	%
SHORT DURATION MUNICIPAL INCOME FUND	D	**	NFS LLC FEBO, CRAIG J FOLEY, JUDY M FOLEY, 234 FOREST TRL, EDWARDS CO 81632-6022	180,918.369		18.32	%
SHORT DURATION MUNICIPAL INCOME FUND	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	327,362.265	*	78.03	%

207

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
SHORT DURATION MUNICIPAL INCOME FUND	P	**	CITIGROUP GLOBAL MARKETS INC, HOUSE ACCOUNT, 700 RED BROOK BLVD, OWINGS MILLS MD 21117-5184	90,024.469		21.46	%
SHORT-TERM FUND	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN MUTUAL FUNDS DEPARTMENT, 101 MONTGOMERY STREET, SAN FRANCISCO CA 94104-4151	79,830,857.365		16.58	%
SHORT-TERM FUND	Institutional	**	ALL ASSET PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	65,132,438.597		13.53	%
SHORT-TERM FUND	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	61,238,947.729		12.72	%
SHORT-TERM FUND	Institutional	**	STRAFE & CO, FBO SCOT FORGE CO, XXXXX, PO BOX 160, WESTERVILLE OH 43086-0160	24,110,519.587		5.01	%
SHORT-TERM FUND	Administrative	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	162,341,868.215	*	67.04	%
SHORT-TERM FUND	Administrative	**	GENWORTH FINANCIAL TRUST COMPANY, FBO GFWM & MUTUAL CLIENTS & FOR THE, BENEFIT OF OTHER CUST CLIENTS, 3200 N CENTRAL AVE STE 700, PHOENIX AZ 85012-2468	69,997,872.949	*	28.91	%
SHORT-TERM FUND	A	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	26,828,826.528		21.97	%
SHORT-TERM FUND	A	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	17,049,269.809		13.96	%
SHORT-TERM FUND	A	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	6,848,738.495		5.61	%
SHORT-TERM FUND	B	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	55,563.121		6.52	%

208

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
SHORT-TERM FUND	B	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	51,772.181		6.07	%
SHORT-TERM FUND	C	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	5,269,013.969		21.54	%
SHORT-TERM FUND	C	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	1,665,753.253		6.81	%
SHORT-TERM FUND	C	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	1,408,815.524		5.76	%
SHORT-TERM FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	15,539,471.747	*	44.04	%
SHORT-TERM FUND	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	10,402,786.779	*	59.55	%
SHORT-TERM FUND	P	**	CITIGROUP GLOBAL MARKETS INC, HOUSE ACCOUNT, 700 RED BROOK BLVD, OWINGS MILLS MD 21117-5184	6,818,019.255	*	39.03	%
SHORT-TERM FUND	R	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	124,546.901	*	26.24	%
SHORT-TERM FUND	R	**	MG TRUST COMPANY CUST FBO, INTUITIVE RESEARCH & TECHNOLOGY C, 700 17TH ST STE 300, DENVER CO 80202-3531	44,656.723		9.41	%
SHORT-TERM FUND	R	**	FRONTIER TR CO FBO, SANTA’S HEATING & AIR CONDITIONING, XXXXX, PO BOX 10758, FARGO ND 58106-0758	38,515.126		8.12	%
SHORT-TERM FUND	R	**	MG TR CO CUST FBO, ACOMM INC PSP, 700 17TH ST STE 300, DENVER CO 80202-3531	25,511.025		5.38	%

209

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
SHORT-TERM FUND	R	**	NFS LLC FEBO, WILFRED KRENN TTEE, WINCO MANUFATURING CO DEF, BENEFIT PL & TR, 6200 MAPLE AVE, ST LOUIS MO 63130-3305	25,176.234		5.31	%
SMALL CAP STOCKSPLUS® TR FUND	Institutional	**	ALL ASSET PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	9,918,238.369	*	67.91	%
SMALL CAP STOCKSPLUS® TR FUND	Institutional	**	NORTHERN TR CO TTEE FBO, SUNBEAM BATTERYMARCH SMALL AC XXXXX, PO BOX 92956, CHICAGO IL 60675-0001	1,667,642.186		11.42	%
SMALL CAP STOCKSPLUS® TR FUND	Institutional	**	ALL ASSET PVIT PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	1,211,124.823		8.29	%
SMALL CAP STOCKSPLUS® TR FUND	A	**	LPL FINANCIAL, A/C XXXXX, 9785 TOWNE CENTRE DR, SAN DIEGO CA 92121-1968	57,143.125		16.99	%
SMALL CAP STOCKSPLUS® TR FUND	C	**	JANNEY MONTGOMERY SCOTT LLC, A/C XXXXX, SMITHSONIAN EARLY ENRICHMENT, 1801 MARKET STREET, PHILADELPHIA PA 19103-1628	7,488.799		8.05	%
SMALL CAP STOCKSPLUS® TR FUND	C	**	RBC CAPITAL MARKETS CORP FBO, LUIGI MACARI, INDIVIDUAL RETIREMENT ACCOUNT, 33 CENTER DRIVE, WHITESTONE NY 11357-1072	6,424.812		6.90	%
SMALL CAP STOCKSPLUS® TR FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	37,840.435	*	53.59	%
SMALL CAP STOCKSPLUS® TR FUND	D	**	AMERITRADE INC FBO XXXXX, PO BOX 2226, OMAHA NE 68103-2226	13,762.644		19.49	%
SMALL CAP STOCKSPLUS® TR FUND	D	**	NFS LLC FEBO, FMT CO CUST R/O IRA, FBO FREDERICK D MUNDT, 104 WALDEN RIDGE DRIVE, FAIRFIELD GLADE TN 38558-6603	4,551.365		6.45	%
SMALL CAP STOCKSPLUS® TR FUND	D	**	NFS LLC FEBO, STATE STREET BANK & TR TTEE, AETNA 401K PLAN, FBO MICHAEL JAY SIPOS, 920 RIDGEVIEW LANE, AMBLER PA 19002-1849	4,241.782		6.01	%

210

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
SMALL CAP STOCKSPLUS® TR FUND	P	**	ALLIANZ GLOBAL INVESTORS OF, AMERICA LP, ATTN: DONNA THOMPSON, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046	1,058.736	*	100.00	%
STOCKSPLUS® FUND	Institutional	**	STATE STREET KANSAS CITY FBO, PIMCO GLOBAL MULTI-ASSET FND, ATTN: CHUCK NIXON, 801 PENNSYLVANIA AVE, KANSAS CITY MO 64105-1307	14,187,772.293	*	37.62	%
STOCKSPLUS® FUND	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	4,192,638.321		11.12	%
STOCKSPLUS® FUND	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	3,536,699.597		9.38	%
STOCKSPLUS® FUND	Institutional	**	AMERITRADE INC FOR THE EXCLUSIVE, BENEFIT OF OUR CLIENT, PO BOX 2226, OMAHA NE 68103-2226	2,618,426.732		6.94	%
STOCKSPLUS® FUND	Institutional		CONVERSE COLLEGE, 580 E MAIN ST, SPARTANBURG SC 29302-0006	2,033,103.107		5.39	%
STOCKSPLUS® FUND	Administrative	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	172,630.692	*	50.36	%
STOCKSPLUS® FUND	Administrative	**	NEW YORK LIFE TRUST COMPANY, 169 LACKAWANNA AVE, PARSIPPANY NJ 07054-1007	75,994.534		22.17	%
STOCKSPLUS® FUND	Administrative	**	CITY NATIONAL BANK, FBO WESTERN GROWERS ASSOC, RETIREMENT SECURITY PLAN, A/C XXXXX, PO BOX 60520, LOS ANGELES CA 90060-0520	53,189.020		15.51	%
STOCKSPLUS® FUND	Administrative	**	TD AMERITRADE TRUST COMPANY, XXXXX, PO BOX 17748, DENVER CO 80217-0748	21,720.153		6.34	%
STOCKSPLUS® FUND	A	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	1,111,421.561		13.57	%

211

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
STOCKSPLUS® FUND	A	**	WTRISC COMPANY TTEE, FBO IBEW LOCAL 332 PENSION PLAN, PART B, PO BOX 52129, PHOENIX AZ 85072-2129	503,930.553		6.15	%
STOCKSPLUS® FUND	B	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	65,453.753		5.05	%
STOCKSPLUS® FUND	C	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	575,703.251		9.95	%
STOCKSPLUS® FUND	C	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	414,020.247		7.16	%
STOCKSPLUS® FUND	C	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	302,440.679		5.23	%
STOCKSPLUS® FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	306,604.086	*	54.65	%
STOCKSPLUS® FUND	D	**	AMERITRADE INC FBO XXXXX, PO BOX 2226, OMAHA NE 68103-2226	44,202.389		7.88	%
STOCKSPLUS® FUND	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	19,494.598	*	57.67	%
STOCKSPLUS® FUND	P	**	CITIGROUP GLOBAL MARKETS INC, HOUSE ACCOUNT, 700 RED BROOK BLVD, OWINGS MILLS MD 21117-5184	14,311.215	*	42.33	%
STOCKSPLUS® FUND	R	**	CAPITAL BANK & TRUST COMPANY TTEE, FBO STAMPS COM INC 401K PLAN, C/O PLAN PREMIER/FASCORE LLC, 8515 E ORCHARD RD 2T2, GREENWOOD VILLAGE CO 80111-5002	53,489.403		19.23	%
STOCKSPLUS® FUND	R	**	MASSACHUSETTES MUTUAL, LIFE INSURANCE CO, 1295 STATE STREET MIP N255, SPRINGFIELD MA 01111-0001	51,078.117		18.37	%

212

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
STOCKSPLUS® FUND	R	**	NFS LLC FEBO, RICHARD SOLEY TTEE, WILLIAM HOFFMAN TTEE, OBJECT MGMT GRP INC RET PL, 140 KENDRICK ST BLDG A STE 300, NEEDHAM MA 02494-2739	33,043.376		11.88	%
STOCKSPLUS® FUND	R	**	RELIANCE TRUST CO CUST, FBO SPECIAL TREE LTD EMPLOYEE, SALARY SAVINGS & RETIREMENT PLAN, PO BOX 48529, ATLANTA GA 30362-1529	32,505.747		11.69	%
STOCKSPLUS® FUND	R	**	LEONARD MILLER FBO, MILLER ADVERTISING AGENCY INC, PROFIT SHARING PLAN DTD11/29/93, 71 FIFTH AVE, NEW YORK NY 10003-3004	23,549.132		8.47	%
STOCKSPLUS® FUND	R	**	MCB TRUST SERVICES CUST FBO, DANIS ENVIRONMENTAL INDUSTRIES, 700 17TH STREET, SUITE 300, DENVER CO 80202-3531	15,195.224		5.46	%
STOCKSPLUS® LONG DURATION FUND	Institutional	**	NORTHERN TRUST CO CUST, FBO CUMMINS A/C XXXXX, 801 S CANAL ST, CHICAGO IL 60607-4715	14,787,098.110		23.81	%
STOCKSPLUS® LONG DURATION FUND	Institutional		REED ELSEVIER US RETIREMENT PLAN, ATTN LYNN FORMICA, 2 NEWTON PL STE 350, NEWTON MA 02458-1643	10,354,563.660		16.67	%
STOCKSPLUS® LONG DURATION FUND	Institutional		SPX CORPORATION, 13515 BALLANTYNE CORPORATE PL, CHARLOTTE NC 28277-2706	9,847,473.157		15.86	%
STOCKSPLUS® LONG DURATION FUND	Institutional		S D WARREN CO, 225 FRANKLIN ST FL 28, BOSTON MA 02110-2884	9,789,741.651		15.76	%
STOCKSPLUS® LONG DURATION FUND	Institutional		THE NEW YORK TIMES COMPANY PENSION, TRUST, 620 EIGHTH AVE FL 16, NEW YORK NY 10018-1618	8,627,759.458		13.89	%
STOCKSPLUS® LONG DURATION FUND	Institutional	**	STATE STREET BANK & TRUST CO TTEE, FBO ESTEE LAUDER INC RETIREMENT, GROWTH ACCOUNT PLAN TRUST, LAFAYETTE CORPORATE CENTER, 2 AVENUE DE LAFAYETTE-LCC 2J, BOSTON MA 02111	4,343,976.236		6.99	%
STOCKSPLUS® TOTAL RETURN FUND	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	8,180,307.769	*	41.54	%
STOCKSPLUS® TOTAL RETURN FUND	Institutional	**	ALL ASSET PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	5,910,376.882	*	30.01	%

213

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
STOCKSPLUS® TOTAL RETURN FUND	Institutional	**	STATE STREET AS CUST FBO SOUTH, DAKOTA HIGHER EDUCATION TR SELECT, PIMCO STOCKSPLUS TR FD INV PORT, 801 PENNSYLVANIA AVE, KANSAS CITY MO 64105-1307	1,398,854.686		7.10	%
STOCKSPLUS® TOTAL RETURN FUND	A		BPPR AS TRUSTEE, FBO GFR RETIREMENT SAVINGS PLAN, POPULAR STREET BUILDING, 153 PONCE DE LEON AVE 8TH FLOOR, TRUST DIVISION, SAN JUAN PR 00917	457,961.775		21.88	%
STOCKSPLUS® TOTAL RETURN FUND	A	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	184,911.042		8.83	%
STOCKSPLUS® TOTAL RETURN FUND	A	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	184,271.542		8.80	%
STOCKSPLUS® TOTAL RETURN FUND	C	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	144,863.527		12.25	%
STOCKSPLUS® TOTAL RETURN FUND	C	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	116,243.307		9.83	%
STOCKSPLUS® TOTAL RETURN FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	171,711.316		13.11	%
STOCKSPLUS® TOTAL RETURN FUND	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	35,275.900	*	95.11	%
STOCKSPLUS® TR SHORT STRATEGY FUND	Institutional	**	ALL ASSET ALL AUTHORITY FUND, PORTFOLIO, ATTN SHAREHOLDER SERVICES, 840 NEWPORT CENTER DR STE 300, NEWPORT BEACH CA 92660-6322	67,091,010.499	*	92.41	%

214

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
STOCKSPLUS® TR SHORT STRATEGY FUND	A	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD FL 9, JERSEY CITY NJ 07310-2055	8,023,626.056	*	39.61	%
STOCKSPLUS® TR SHORT STRATEGY FUND	A	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	3,117,406.574		15.39	%
STOCKSPLUS® TR SHORT STRATEGY FUND	C	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	549,442.816		19.33	%
STOCKSPLUS® TR SHORT STRATEGY FUND	C	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	544,801.281		19.17	%
STOCKSPLUS® TR SHORT STRATEGY FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	5,194,279.042	*	67.32	%
STOCKSPLUS® TR SHORT STRATEGY FUND	D	**	AMERITRADE INC FBO XXXXX, PO BOX 2226, OMAHA NE 68103-2226	471,587.933		6.11	%
TOTAL RETURN FUND	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	2,620,215,711.663	*	26.12	%
TOTAL RETURN FUND	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	1,326,833,692.641		13.23	%
TOTAL RETURN FUND	Administrative	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	1,119,759,055.643	*	41.93	%
TOTAL RETURN FUND	A	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	212,944,557.304		10.47	%
TOTAL RETURN FUND	A	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	206,675,049.436		10.16	%

215

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
TOTAL RETURN FUND	A	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	123,233,619.272		6.06	%
TOTAL RETURN FUND	B	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	11,909,969.889		11.70	%
TOTAL RETURN FUND	B	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	8,974,870.931		8.81	%
TOTAL RETURN FUND	B	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	5,286,230.487		5.19	%
TOTAL RETURN FUND	C	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	236,169,869.547	*	30.04	%
TOTAL RETURN FUND	C	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	82,136,462.584		10.45	%
TOTAL RETURN FUND	C	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	49,600,089.059		6.31	%
TOTAL RETURN FUND	C	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	39,667,769.213		5.04	%
TOTAL RETURN FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	708,415,495.165	*	59.00	%
TOTAL RETURN FUND	D	**	CITIGROUP GLOBAL MARKETS, INC, XXXXX, ATTN CINDY TEMPESTA 7TH FL, 333 WEST 34TH ST, NEW YORK NY 10001-2402	75,974,065.338		6.33	%
TOTAL RETURN FUND	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	225,274,465.524	*	64.30	%

216

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
TOTAL RETURN FUND	P	**	CITIGROUP GLOBAL MARKETS INC, HOUSE ACCOUNT, 700 RED BROOK BLVD, OWINGS MILLS MD 21117-5184	88,385,266.676	*	25.23	%
TOTAL RETURN FUND	P	**	FIRST COMMAND BANK, 1 FIRST COMM PLAZA, FORT WORTH TX 76109-4998	20,085,741.010		5.73	%
TOTAL RETURN FUND	R	**	HARTFORD LIFE INSURANCE CO, 401K SEPARATE ACCOUNT, PO BOX 2999, HARTFORD CT 06104-2999	15,378,837.016		10.51	%
TOTAL RETURN FUND	R	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	11,399,097.582		7.79	%
TOTAL RETURN FUND	R	**	DCGT AS TTEE AND/OR CUST, FBO PRINCIPAL FINANCIAL GROUP OMNIB, US QUALIFIED, ATTN NPIO TRADE DESK, 711 HIGH STREET, DES MOINES IA 50309-2732	11,238,493.108		7.68	%
TOTAL RETURN FUND	R	**	DCGT AS TTEE AND/OR CUST, FBO VARIOUS QUALIFED PLANS, ATTN NPIO TRADE DESK, 711 HIGH STREET, DES MOINES IA 50309-2732	7,592,912.629		5.19	%
TOTAL RETURN FUND II	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	37,061,217.177		13.83	%
TOTAL RETURN FUND II	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	22,298,214.582		8.32	%
TOTAL RETURN FUND II	Administrative	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	2,752,403.313	*	32.87	%
TOTAL RETURN FUND II	Administrative	**	NEW YORK LIFE TRUST COMPANY, 169 LACKAWANNA AVE, PARSIPPANY NJ 07054-1007	1,655,969.386		19.78	%
TOTAL RETURN FUND II	Administrative	**	ING, FRAMEWORK, TRUSTEE: RELIANCE TRUST COMPANY, 400 ATRIUM DRIVE, SOMERSET NJ 08873-4162	687,348.614		8.21	%

217

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
TOTAL RETURN FUND II	Administrative	**	MERCER TRUST COMPANY TTEE FBO, JOHNSON WORLDWODE ASSOC RET & SAV, ATTN DC PLAN ADMIN TEAM, MAILSTOP N6G, ONE INVESTORS WAY, NORWOOD MA 02062-1599	483,114.859		5.77	%
TOTAL RETURN FUND II	Administrative	**	CHARLES SCHWAB & CO SPECIAL CUSTODY, ACCT FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMERS, ATTN: CAROL WU/MUTUAL FUND OPS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	479,960.227		5.73	%
TOTAL RETURN FUND II	Administrative	**	CBNA AS CUSTODIAN FBO CLIENTS OF, BENEFIT PLANS ADMINSTRATORS, ATTN DEBRA LEKKI, 6 RHOADS DR,UTICA NY 13502-6317	434,504.108		5.19	%
TOTAL RETURN FUND II	Administrative	**	JP MORGAN CHASE AS TTEE FOR, AWG RESTATED 401K PLAN, 9300 WARD PKWY, KANSAS CITY MO 64114-3317	431,476.971		5.15	%
TOTAL RETURN FUND III	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	75,532,057.488	*	26.73	%
TOTAL RETURN FUND III	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	19,321,742.124		6.84	%
TOTAL RETURN FUND III	Administrative	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	3,117,132.465	*	61.18	%
TOTAL RETURN FUND III	Administrative	**	WILMINGTON TRUST CO TTEE FBO, ENVIRONMENTAL DEFENSE RET SVS PL, 403B A/C XXXXX, C/O MUTUAL FUNDS, PO BOX 8880, WILMINGTON DE 19899-8880	591,575.824		11.61	%
TOTAL RETURN FUND III	Administrative	**	RELIANCE TRUST CO CUST, FBO AFTRA NATIONAL 401K, THRIFT SAVINGS PLAN, PO BOX 48529, ATLANTA GA 30362-1529	346,595.020		6.80	%
TOTAL RETURN FUND III	P	**	RBC CAPITAL MARKETS CORP FBO, CARL N PASSAL IRA, 1008 CHESTNUT ST W, VIRGINIA MN 55792-3449	25,210.084	*	44.15	%

218

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
TOTAL RETURN FUND III	P	**	RBC CAPITAL MARKETS CORP FBO, RICHARD D PETERSSON IRA, 2249 WEST 13TH STREET, DULUTH MN 55806-1210	6,295.908		11.03	%
TOTAL RETURN FUND III	P	**	RBC CAPITAL MARKETS CORPORATION FBO, PAUL A SANDSTROM, GRACE SANDSTROM, TOD, 6070 MAPLE GROVE RD, DULUTH MN 55810-9525	5,458.956		9.56	%
TOTAL RETURN FUND III	P	**	RBC CAPITAL MARKETS CORP FBO, SERINE F EGE IRA, 6434 HIGHWAY 61, LITTLE MARAIS MN 55614-4220	3,149.398		5.52	%
UNCONSTRAINED BOND FUND	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	57,988,308.640	*	45.86	%
UNCONSTRAINED BOND FUND	Institutional		TEXAS TREASURY SAFEKEEPING TRUST CO, 208 E 10TH ST FOURTH FL, AUSTIN TX 78701-2407	19,794,142.976		15.65	%
UNCONSTRAINED BOND FUND	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	10,969,290.113		8.68	%
UNCONSTRAINED BOND FUND	Institutional	**	SEI PRIVATE TR CO, C/O STATE STREET ID 571, ATTN MUTUAL FUND ADMIN, ATTN MUTUAL FUND ADMIN, ONE FREEDOM VALLEY DR, OAKS PA 19456-9989	7,276,718.086		5.76	%
UNCONSTRAINED BOND FUND	A	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL, JERSEY CITY NJ 07311	7,961,645.931		16.69	%
UNCONSTRAINED BOND FUND	A	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD FL 9, JERSEY CITY NJ 07310-2055	7,226,477.717		15.15	%
UNCONSTRAINED BOND FUND	C	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	3,567,060.071		20.19	%
UNCONSTRAINED BOND FUND	C	**	MORGAN STANLEY & CO, HARBORSIDE FINANCIAL CENTER, PLAZA II 3RD FL,JERSEY CITY NJ 07311	2,446,318.178		13.84	%
UNCONSTRAINED BOND FUND	C	**	UBS WM USA, XXXXX, OMNI A/C M/F, ATTN DEPT MANAGER, 499 WASHINGTON BLVD 9TH FL, JERSEY CITY NJ 07310-2055	1,581,219.409		8.95	%

219

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
UNCONSTRAINED BOND FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	13,691,469.888	*	36.75	%
UNCONSTRAINED BOND FUND	D	**	AMERITRADE INC FBO XXXXX, PO BOX 2226, OMAHA NE 68103-2226	3,466,240.688		9.31	%
UNCONSTRAINED BOND FUND	D	**	GENWORTH FINANCIAL TRUST COMPANY, FBO GENWORTH FINANCIAL WEALTH, MANAGEMENT & MUTUAL FUND CLIENTS, FBO OTHER CUSTODIAL ACCOUNTS, 3200 NORTH CENTRAL AVENUE, PHOENIX AZ 85012-2425	2,391,132.826		6.42	%
UNCONSTRAINED BOND FUND	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	4,694,580.891	*	71.15	%
UNCONSTRAINED BOND FUND	P	**	CITIGROUP GLOBAL MARKETS INC, HOUSE ACCOUNT, 700 RED BROOK BLVD, OWINGS MILLS MD 21117-5184	1,171,187.021		17.75	%
UNCONSTRAINED BOND FUND	R	**	NFS LLC FEBO, VALERIE HUNTER, MICHAEL HUNTER, 4725 LANGDALE WAY, COLORADO SPRINGS CO 80906-7665	78,856.637		7.55	%
UNCONSTRAINED BOND FUND	R	**	NFS LLC FEBO, SUNNY VISTA LIVING CENTER, KEN MAJERUS, 3515 WINDJAMMER DR, COLORADO SPGS CO 80920-4434	60,767.639		5.82	%
UNCONSTRAINED TAX MANAGED BOND FUND	Institutional	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNT FOR THE, EXCLUSIVE BENEFIT OF OUR CUSTOMERS, ATTN: MUTUAL FUNDS DEPT, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	1,698,238.500	*	58.54	%
UNCONSTRAINED TAX MANAGED BOND FUND	Institutional	**	NFS FOR EXCLUSIVE BENEFIT OF OUR, CUSTOMER, 200 LIBERTY ST, ONE WORLD FINANCIAL CENTER, NEW YORK NY 10281-1003	513,299.944		17.69	%
UNCONSTRAINED TAX MANAGED BOND FUND	Institutional	**	AMERITRADE INC FOR THE EXCLUSIVE, BENEFIT OF OUR CLIENT, PO BOX 2226, OMAHA NE 68103-2226	451,968.040		15.58	%

220

FUND NAME	CLASS		REGISTRATION	SHARES BENEFICIALLY OWNED		PERCENTAGE OF OUTSTANDING SHARES OF CLASS OWNED
UNCONSTRAINED TAX MANAGED BOND FUND	A	**	RAYMOND JAMES & ASSOC INC, FBO MARGARET L AGNONE TTEE, U/A DTD DEC 5, 1987, MARGARET L AGNONE TRUST, 4 ALGER PL, GROSSE POINTE MI 48230-1908	106,675.049		13.66	%
UNCONSTRAINED TAX MANAGED BOND FUND	C	**	MLPF&S FOR THE SOLE BENEFIT, OF ITS CUSTOMERS, ATTN FUND ADMN/#97M, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	16,430.076		9.24	%
UNCONSTRAINED TAX MANAGED BOND FUND	C	**	AMERICAN ENTERPRISE INVESTMENT SVCS, FBO XXXXX, P.O. BOX 9446, MINNEAPOLIS MN 55474-0001	11,672.210		6.57	%
UNCONSTRAINED TAX MANAGED BOND FUND	C	**	NFS LLC FEBO, LEAH D SPIEWAK, TOD BENIFICIARY ON FILE, 25027 ROUND BARN RD, PLAINFIELD IL 60585-7493	9,934.149		5.59	%
UNCONSTRAINED TAX MANAGED BOND FUND	C	**	FIRST CLEARING LLC, A/C XXXXX, SONDRA P HICKS REVOC LIV TR, SONDRA P HICKS TTEE, 9206 LIGGON GREEN LN, GERMANTOWN TN 38139-6980	9,606.148		5.41	%
UNCONSTRAINED TAX MANAGED BOND FUND	D	**	CHARLES SCHWAB & CO INC, SPECIAL CUSTODY ACCOUNTS, FBO CUSTOMERS, ATTN MUTUAL FUNDS, 101 MONTGOMERY ST, SAN FRANCISCO CA 94104-4151	428,778.049	*	67.14	%
UNCONSTRAINED TAX MANAGED BOND FUND	D	**	VANGUARD BROKERAGE SERVICES, A/C XXXXX, PO BOX 1170, VALLEY FORGE PA 19482-1170	92,941.482		14.55	%
UNCONSTRAINED TAX MANAGED BOND FUND	P	**	MERRILL LYNCH PIERCE FENNER, & SMITH INC FOR THE SOLE BENEFIT OF, ITS CUSTOMERS, 4800 DEER LAKE DR E FL 3, JACKSONVILLE FL 32246-6484	6,152.568	*	86.38	%
UNCONSTRAINED TAX MANAGED BOND FUND	P	**	ALLIANZ GLOBAL INVESTORS OF, AMERICA LP, ATTN: DONNA THOMPSON, 680 NEWPORT CENTER DR STE 250, NEWPORT BEACH CA 92660-4046	969.983		13.62	%

* Entity owned 25% or more of the outstanding shares of beneficial interest of the Fund, and therefore may be presumed to “control” the Fund, as that term is defined in the 1940 Act.

** Shares are believed to be held only as nominee.

221

Code of Ethics

The Trust, PIMCO, Research Affiliates and the Distributor each have adopted a Code of Ethics pursuant to the requirements of the 1940 Act and the Advisers Act. These Codes of Ethics permit personnel subject to the Codes of Ethics to invest in securities, including securities that may be purchased or held by the Funds.

Custodian, Transfer Agent and Dividend Disbursing Agent

State Street Bank and Trust Company (“State Street”), 801 Pennsylvania, Kansas City, Missouri 64105, serves as custodian for assets of the Funds. Under the custody agreement, State Street may hold the foreign securities at its principal office at 225 Franklin Street, Boston, Massachusetts 02110, and at State Street’s branches, and subject to approval by the Board of Trustees, at a foreign branch of a qualified U.S. bank, with an eligible foreign subcustodian, or with an eligible foreign securities depository.

Pursuant to rules adopted under the 1940 Act, the Trust may maintain foreign securities and cash in the custody of certain eligible foreign banks and securities depositories. Selection of these foreign custodial institutions is made by the Board of Trustees following a consideration of a number of factors, including (but not limited to) the reliability and financial stability of the institution; the ability of the institution to perform capably custodial services for the Trust; the reputation of the institution in its national market; the political and economic stability of the country in which the institution is located; and further risks of potential nationalization or expropriation of Trust assets. The Board of Trustees reviews annually the continuance of foreign custodial arrangements for the Trust. No assurance can be given that the Trustees’ appraisal of the risks in connection with foreign custodial arrangements will always be correct or that expropriation, nationalization, freezes, or confiscation of assets that would impact assets of the Funds will not occur, and shareholders bear the risk of losses arising from these or other events.

Boston Financial Data Services – Midwest, 330 W. 9th Street, 5th Floor, Kansas City, Missouri 64105 serves as transfer agent and dividend disbursing agent for the Institutional Class, Class M, Class P, Administrative Class and Class D shares of the Funds. Boston Financial Data Services, Inc., P.O. Box 8050, Boston, Massachusetts 02266-8050 serves as transfer agent and dividend disbursing agent for the Class A, Class B, Class C and Class R shares of the Funds.

Independent Registered Public Accounting Firm

PricewaterhouseCoopers LLP, 1100 Walnut Street, Suite 1300, Kansas City, Missouri 64106-2197, serves as the independent registered public accounting firm for the Funds. PricewaterhouseCoopers LLP provides audit services, tax assistance and consultation in connection with review of SEC and IRS filings.

Counsel

Dechert LLP, 1775 I Street, N.W., Washington, D.C. 20006, passes upon certain legal matters in connection with the shares offered by the Trust, and also acts as counsel to the Trust.

Registration Statement

This Statement of Additional Information and the Prospectuses do not contain all of the information included in the Trust’s registration statement filed with the SEC under the 1933 Act with respect to the securities offered hereby, certain portions of which have been omitted pursuant to the rules and regulations of the SEC. The registration statement, including the exhibits filed therewith, may be examined at the offices of the SEC in Washington, D.C.

Statements contained herein and in the Prospectuses as to the contents of any contract or other documents referred to are not necessarily complete, and, in each instance, reference is made to the copy of such contract or other documents filed as an exhibit to the registration statement, each such statement being qualified in all respects by such reference.

Financial Statements

Audited financial statements for the Trust as of March 31, 2009, including the notes thereto, and the reports of PricewaterhouseCoopers LLP thereon, are incorporated herein by reference from the Trust’s March 31, 2009 Annual Reports.

222