Fund Description: PIMCO Broad U.S. TIPS 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 Broad U.S. TIPS Index Fund ETF seeks to provide total return that closely corresponds, before fees and expenses, to the total return of the Merrill Lynch US Inflation-Linked Treasury Index. INDEX DESCRIPTION: The Merrill Lynch US Inflation-Linked Treasury Index is an unmanaged index comprised of TIPS (Treasury Inflation Protected Securities). TIPS are publicly issued, dollar denominated U.S. Government securities issued by the U.S. Treasury that have principal and interest payments linked to actual inflation (as measured by the Consumer Price Index). Their payments are supported by the full faith and credit of the United States. The TIPS in the Index have a minimum $1 billion of outstanding face value, have at least 1 year remaining to maturity and have interest and principal payments tied to inflation. Original issue zero coupon bonds can be included in the Index and the amounts outstanding of qualifying coupon securities are not reduced by any portions that have been stripped. The Index is capitalization-weighted and the composition of TIPS is updated monthly. Intra-month cash flows are reinvested daily, at the beginning-of-month 1-month Libid rate, until the end of the month at which point all cash is removed from the Index. It is not possible to invest directly in the Index. 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 dollar-weighted average portfolio maturity of this Fund will closely correspond to the average maturity of its Index, which as of July 31, 2009 was 9.38 years. 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 by investing 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. 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 real interest rates and in the case of inflation-linked bonds, increased inflation. 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.