Fund Description: PIMCO Investment Grade Corporate Bond Index Exchange-Traded Fund is an exchange-traded index fund or Index ETF which is a separate investment portfolio of the, PIMCO ETF Trust an open-ended investment management company. FUND OBJECTIVE: PIMCO Investment Grade Corporate Bond Index Fund seeks to provide total return that closely corresponds, before fees and expenses, to the total return of the BofA Merrill Lynch US Corporate Index. INDEX DESCRIPTION: The BofA Merrill Lynch US Corporate Index is comprised of U.S. dollar denominated investment grade corporate debt securities publicly issued in the U.S. domestic market with at least one year remaining term to final maturity. As of July 31, 2010, there were 4,153 issues in the Index. The securities comprising the Index have an investment grade rating and an investment grade rated country of risk. In addition, qualifying securities must have a minimum $250 million of outstanding face value and a fixed coupon schedule. Original issue zero coupon bonds, debt issued simultaneously in the Eurobond and U.S. domestic bond markets, 144A securities and corporate pay-in-kind securities qualify for inclusion in the Index. Callable perpetual securities qualify for inclusion in the Index provided they are at least one year from the first call date. Fixed-to-floating rate securities also qualify provided they are callable within the fixed rate period and are at least one year from last call prior to the date the bond transitions from a fixed to a floating rate security. The Index is capitalization-weighted and the composition of Component Securities is updated monthly. Cash flows from bond payments that are received during the month are retained in the Index, without earning reinvestment income, until removal at the end of the month as part of the rebalancing. FUND STRATEGY: The Fund seeks to achieve its investment objective by investing under normal circumstances at least 80% of its total assets (exclusive of collateral held from securities lending) in the component securities of the Index. The Fund may invest the remainder of its assets in Fixed Income Instruments that are not Component Securities, but which is believed will help the Fund track its Index, as well as in cash and investment grade, liquid short-term instruments, forwards or derivatives, such as options, futures contracts or swap agreements, and shares of affiliated bond funds. The Fund may invest in securities rated Baa or higher or, if unrated, determined to be of comparable quality. The average portfolio duration of this Fund will closely correspond to the duration of its Index, which as of July 31, 2010 was 6.44 years. Duration is a measure of the expected life of a fixed income security that is used to determine the sensitivity of a security’s price to changes in interest rates. An indexing approach is used in managing the Fund’s investments. The Fund employs a representative sampling strategy in seeking to achieve its investment objective. In using this strategy, PIMCO, the Fund's Investment Manager, seeks to invest in a combination of Component Securities and other instruments such that the combination effectively provides exposure to the Index. In using a representative sampling strategy, the Fund may not track its Index with the same degree of accuracy as a fund that replicates each of the Component Securities of the Index. Unlike many investment companies, the Fund does not attempt to outperform the index the Fund tracks. An indexing approach may eliminate the chance that the Fund will substantially outperform its Index but also may reduce some of the risks of active management. Indexing seeks to achieve lower costs by keeping portfolio turnover low in comparison to actively managed investment companies. The Fund may invest in derivative instruments, such as options, futures contracts or swap agreements, and may invest in mortgage-related and other asset-backed securities. The Fund may invest in U.S. dollar-denominated securities of foreign issuers, including securities and instruments economically tied to emerging market countries. The Fund may purchase and sell securities on a when-issued, delayed delivery or forward commitment basis. The Fund may, without limitation, seek to obtain market exposure to the securities in which it primarily invests by entering into a series of purchase and sale contracts or by using other investment techniques (such as buy backs). The total return sought by the Fund consists of income earned on the Fund’s investments, plus capital appreciation, if any, which generally arises from decreases in interest rates. FUND MANAGEMENT: PIMCO serves as the investment manager for the Fund and is responsible for managing the investment activities of the Funds, the Funds’ business affairs and other administrative matters, subject to the supervision of the Board of Trustees.