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SCHEDULE 14A INFORMATION
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(A) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
PIMCO VARIABLE INSURANCE TRUST
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
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[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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PACIFIC INVESTMENT MANAGEMENT COMPANY
PIMCO ADVISORS L.P.
840 Newport Center Drive
Newport Beach, California 92660
January __, 2000
Dear Contract Owners of PIMCO Variable Insurance Trust:
On behalf of the Board of Trustees of PIMCO Variable Insurance Trust
(the "Trust"), we are pleased to invite you to a special meeting of the
shareholders of the Trust to be held at 800 Newport Center Drive, 6th Floor,
Newport Beach, California, 92660 on [March 3], 2000 at [time], Pacific Time.
As discussed in more detail in the enclosed proxy statement, Pacific
Investment Management Company ("PIMCO"), PIMCO Advisors L.P. ("PIMCO Advisors"),
Cadence Capital Management ("Cadence"), and NFJ Investment Group ("NFJ," and
together with PIMCO, PIMCO Advisors and Cadence, the "Advisers"), each an
investment adviser or portfolio manager to portfolios of the Trust
("Portfolios"), will undergo a "change in control" as a result of the
consummation of an agreement entered into by PIMCO Advisors, its two general
partners, PIMCO Advisors Holdings L.P. and PIMCO Partners, G.P., certain of
their affiliates, Allianz of America, Inc., and certain other parties named
pursuant to which Allianz of America will acquire approximately 70% of the
outstanding partnership interests in PIMCO Advisors in a series of transactions
(the "Transaction"). PIMCO, Cadence and NFJ are each a subsidiary of PIMCO
Advisors. At the meeting, you will be asked to consider the following proposals:
. Election of two Trustees to the Board of Trustees.
. Approval of new investment advisory agreement between the Trust
and each of PIMCO and PIMCO Advisors, and new portfolio
management agreements between the PIMCO Advisors and each of
Cadence and NFJ. The new investment advisory and portfolio
management agreements provide that following the Transaction,
the Advisers will provide investment advisory services to each
Portfolio at lower investment advisory fee rates. Please see the
discussion of Proposal II for more details about Portfolio
expenses.
. Approval of changes to each Portfolio's fundamental investment
policies. The changes are intended to simplify and modernize
each Portfolio's fundamental investment policies to enhance
management's ability to manage the Portfolio's assets
efficiently in changing regulatory and investment environments.
<PAGE>
Your vote is important. After reviewing these proposals, your Board of
Trustees unanimously agreed that they are in the best interests of each
Portfolio's shareholders and voted to approve them, as more fully described in
the accompanying proxy statement. Now it is your turn to review the proposals
and vote. For more information about the issues requiring your vote, please
refer to the accompanying proxy statement.
No matter how many shares you own, your timely vote is important. If
you are not able to attend the meeting, then please complete, sign, date and
mail the enclosed proxy promptly in order to avoid the expense of additional
mailing or having our proxy solicitor, DF King & Co., Inc., telephone you.
Thank you in advance for your participation in this important event.
Sincerely,
[___________]
Executive Vice President
<PAGE>
PIMCO Variable Insurance Trust
840 Newport Center Drive
Suite 300
Newport Beach, California 92660
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held
[March 3], 2000
To the Contract Owners of PIMCO Variable Insurance Trust:
Notice is hereby given that a special meeting of shareholders of the
currently operational portfolios (the "Portfolios") of the PIMCO Variable
Insurance Trust (the "Trust") will be held at 800 Newport Center Drive, 6th
Floor, Newport Beach, California, 92660 on [March 3], 2000 at [time], Pacific
Time, or as adjourned from time to time (the "Meeting"), for the following
purposes:
I. To elect Trustees to the Board of Trustees of the Trust;
II. A. To approve a new investment advisory contract;
B. To approve a new portfolio management agreement (Equity
Income, Capital Appreciation, Mid-Cap Growth and Small-Cap
Value Portfolios, only);
III. To approve changes to fundamental investment policies; and
IV. To transact such other business as may properly come before the
Meeting.
After careful consideration, the Trustees of the Trust unanimously
approved each of the proposals and recommend that shareholders vote "FOR" each
proposal.
The matters referred to above are discussed in detail in the proxy
statement attached to this notice. The Board of Trustees has fixed the close of
business on December 20, 1999 as the record date for determining shareholders
entitled to notice of and to vote at the Meeting. Each share of a Portfolio is
entitled to one vote with respect to proposals on which that Portfolio's
shareholders are entitled to vote, with fractional votes for fractional shares.
If you held shares of more than one Portfolio on the record date, you will
receive separate proxy cards for each Portfolio.
<PAGE>
Regardless of whether you plan to attend the Meeting, which you are
cordially invited to attend, PLEASE COMPLETE, SIGN, DATE AND RETURN PROMPTLY THE
ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED, SO THAT YOU WILL BE REPRESENTED AT
THE MEETING. If you have returned a proxy card and are present at the Meeting,
you may change the vote specified in the proxy at that time. However, attendance
in person at the Meeting, by itself, will not revoke a previously tendered
proxy.
By Order of the Board of Trustees
Garlin G. Flynn, Secretary
Newport Beach, California
, 2000
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YOUR VOTE IS IMPORTANT NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY BE. IN
ORDER TO AVOID THE UNNECESSARY EXPENSE OF FURTHER SOLICITATION, WE URGE YOU TO
INDICATE VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD.
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PRELIMINARY PROXY MATERIALS FOR SEC USE ONLY
PROXY STATEMENT
PIMCO VARIABLE INSURANCE TRUST
840 Newport Center Drive
Suite 300
Newport Beach, California 92660
Special Meeting of Shareholders
To be held
[March 3], 2000
This proxy statement and enclosed form of proxy are being furnished in
connection with the solicitation of proxies by the Board of Trustees (the
"Board" or "Trustees") of the PIMCO Variable Insurance Trust (the "Trust") for
use at a special meeting of shareholders of the currently operational portfolios
(the "Portfolios") of the Trust to be held at 800 Newport Center Drive, 6th
Floor, Newport Beach, California 92660 on [March 3], 2000 at [time], Pacific
Time, or as adjourned from time to time (the "Meeting"), for the purposes set
forth below. It is anticipated that the first mailing of proxies and proxy
statements to shareholders will be on or about [January __], 2000.
Shareholder Reports. Shareholders can find important information about
the Portfolios in the annual report dated December 31, 1998 and the semi-annual
report dated June 30, 1999, each of which previously has been furnished to
shareholders. Shareholders may request another copy of these reports by writing
to the Trust at the above address, or by calling the telephone number above.
The Board is soliciting proxies from shareholders of Portfolios with
respect to the following proposals:
I. To elect Trustees to the Board of Trustees of the Trust;
II. A. To approve a new investment advisory contract;
B. To approve a new portfolio management agreement (Equity
Income, Capital Appreciation, Mid-Cap Growth and Small-Cap
Value Portfolios, only);
III. To approve changes to fundamental investment policies; and
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<PAGE>
IV. To transact such other business as may properly come before the
Meeting.
The following table shows the shareholders that are entitled to vote on each
proposal.
<TABLE>
<CAPTION>
Proposal I Proposal II Proposal III
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
A B A B C D E
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Money Market Portfolio x x x x x x x
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Short-Term Bond Portfolio x x x x x x x
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Low Duration Bond Portfolio x x x x x x x
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Real Return Bond Portfolio x x x x x x x
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Total Return Bond Portfolio x x x x x x x
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Total Return Bond Portfolio II x x x x x x x
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High Yield Bond Portfolio x x x x x x x
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Long-Term U.S. Government Fund x x x x x x x
Bond Portfolio
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Global Bond Portfolio x x x x x x
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Foreign Bond Fund x x x x x x
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Emerging Markets Bond Portfolio x x x x x x
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Strategic Balanced Portfolio x x x x x x x
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StocksPLUS Growth & Income x x x x x x x
Portfolio
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Equity Income Portfolio x x x x x x x x
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Capital Appreciation Portfolio x x x x x x x x
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Mid-Cap Growth Portfolio x x x x x x x x
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Small-Cap Value Portfolio x x x x x x x x
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</TABLE>
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<PAGE>
I. ELECTION OF TRUSTEES
Because of the transaction discussed below in Proposal II, the Board has
concluded that it is in the best interests of the Trust that at least 75% of the
Board members be Trustees who are not "interested persons," as that term is
defined in the Investment Company Act of 1940, as amended (the "1940 Act"), of
the Trust or its investment advisers, Pacific Investment Management Company
("PIMCO") and PIMCO Advisors L.P. ("PIMCO Advisors") or its portfolio managers.
To that end, at the Meeting, two Trustees who are not "interested persons" of
the Fund, the investment advisers, or the portfolio managers, and who are
recommended by the Board's Nominating Committee, are proposed for election to
the Trust's Board.
The Nominating Committee, composed of independent Trustees Messrs.
Babcock, Curtis, Kemp and Popejoy, is responsible for the selection, nomination
for appointment, and election of candidates to serve as Trustees of the Trust.
During the fiscal year ended December 31, 1999 there were _____ meetings of the
Nominating Committee, at which there was [100%] attendance.
The Nominating Committee, advised by special independent counsel, met on
December 1, 1999, to consider possible additional candidates to the Board. On
December 16, 1999, the Chairperson of the Nominating Committee reported to the
Board that the Nominating Committee approved the nominations of Mr. E. Philip
Cannon and Mr. J. Michael Hagan (the "Nominees"); recommended to the Board that
the Nominees be elected; and that the nominations be submitted to shareholders
for approval.
In evaluating the Nominees, the Nominating Committee and the Board noted
that Mr. Cannon and Mr. Hagan have significant experience and the background
necessary to make them very valuable additions to the Board as independent
Trustees.
The Board currently includes six additional Trustees, none of whom are
standing for election at the Meeting. These six current Trustees, described
below, previously have been elected by shareholders and will continue to serve
on the Board following the Meeting. If the Nominees are elected at the Meeting,
there will be a total of eight Trustees on the Board all of whom will have been
elected by shareholders.
The Nominees have indicated their willingness to serve as Trustees. The
Board knows of no reason why the Nominees would be unable to serve, but in the
event of any such unavailability, the proxies received will be voted for such
substituted nominee as the Board may recommend.
The persons named as proxies on the enclosed proxy card will vote your
shares for the election of the Nominees unless you withhold authority to vote
for the Nominees in your proxy. If elected by shareholders, the Nominees will
continue to serve as Trustees of the Trust until the next meeting of
shareholders, if any, called for the purpose of electing Trustees, unless an
individual or individuals is sooner succeeded as provided in the Trust's Trust
Instrument. It is proposed, and the Board recommends, that shareholders elect
the Nominees.
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<PAGE>
The following table sets forth certain information concerning the
Nominees.
<TABLE>
<CAPTION>
Name and Age Length of Service Current Position Principal Occupation(s)
on the Board with the Trust During the Past Five Years
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<S> <C> <C> <C>
E. Philip Cannon Nominee Trustee Proprietor, Cannon & Company, an
3838 Olympia affiliate of Inverness Management
Houston, Texas 77019 LLC, a private equity investment
Age 59 firm; and Trustee of PIMCO Funds:
Multi-Manager Series. Formely,
Headmaster, St. John's School,
Houston, Texas; Trustee of Cash
Accumulation Trust ("CAT"); General
Partner, J.B. Poindexter & Co.,
Houston, Texas, a private
partnership; and Partner, Iberia
Petroleum Company, an oil and gas
production company. Mr. Cannon was a
director of WNS Inc., a retailing
company which filed a petition in
bankruptcy within the last five years.
J. Michael Hagan Nominee Trustee Retired from Furon Company where he
6 Merced served as Chairman and CEO from June
San Clemente, California 92673 1991 to 1999, and in other capacities
Age: 60 since 1967. He was previously
associated with Ross Laboratories and
Standard Oil of California. Mr.
Hagan serves on the Boards of
Directors for Ameron International,
Freedom Communications, Remedy Temp
and Saint-Gobain. He is also a
member of the Board of Regents at
Santa Clara University, the Board of
Taller San Jose, and the Board of
Trustees of the South Coast Repertory
Theater.
</TABLE>
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<PAGE>
The following table sets forth certain information concerning each of the
current Trustees, other than the Nominees.
<TABLE>
<CAPTION>
Length of Current
Name and Age Service on Position Principal Occupation(s)
the Board with the Trust During the Past Five Years
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<S> <C> <C> <C>
Brent R. Harris* 2/92-Present Chairman of the Managing Director, PIMCO; Board of
840 Newport Center Drive Board and Trustee Governors, Investment Company
Newport Beach, California 92660 Institute; Chairman and Director, PIMCO
Age 40 Commercial Mortgage Securities Trust,
Inc.; Chairman and Trustee, PIMCO
Variable Insurance Trust.
R. Wesley Burns* 11/97-Present President and Trustee Managing Director, Pacific Investment
840 Newport Center Drive Management Company; President and
Newport Beach, California 92660 Director, PIMCO Commercial Mortgage
Age 40 Securities Trust, Inc.; President and
Trustee, PIMCO Variable Insurance
Trust. Formerly Executive Vice
President, Pacific Investment
Management Company; Executive Vice
President, PIMCO Funds: Multi-Manager
Series.
Guilford C. Babcock 4/87-Present Trustee Associate Professor of Finance,
1500 Park Place University of Southern California;
San Marino, California 91108 Director, PIMCO Commercial Mortgage
Age 68 Securities Trust, Inc.; Trustee, PIMCO
Variable Insurance Trust; Director,
Growth Fund of America and Fundamental
Investors Fund of the Capital Group;
Director, Good Hope Medical Foundation.
Vern O. Curtis 4/87-3/93 and Trustee Private Investor; Director, PIMCO
14158 N.W. Bronson Creek Drive 2/95-Present Commercial Mortgage Securities Trust,
Portland, Oregon 97229 Inc.; Trustee, PIMCO Variable Insurance
Age 65 Trust; Director, Public Storage
Business Parks, Inc., a Real Estate
Investment Trust; Director, Fresh
Choice, Inc. (restaurant company);
Formerly charitable work, The Church of
Jesus Christ of Latter-Day Saints.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Length of Current
Name and Age Service on Position Principal Occupation(s)
the Board with the Trust During the Past Five Years
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<S> <C> <C> <C>
Thomas P. Kemp 4/87-Present Trustee Private Investor; Director, PIMCO
1141 Marine Drive Commercial Mortgage Securities Trust,
Laguna Beach, California 92651 Inc.; Trustee, PIMCO Variable Insurance
Age 69 Trust; Formerly Co-Chairman, U.S.
Committee to Assist Russian Reform;
Director, Union Financial Corp.; Senior
Consultant, World Cup 1994 Organizing
Committee.
William J. Popejoy 7/93-2/95 and Trustee President, Pacific Capital Investors;
29 Chatham Court 8/95-Present Chairman, PacPro (vinyl assembly
Newport Beach, California 92660 products; formerly Western Printing);
Age 61 Director, PIMCO Commercial Mortgage
Securities Trust, Inc.; Trustee, PIMCO
Variable Insurance Trust, Formerly
Director, California State Lottery;
Chief Executive Officer, Orange County,
California.
</TABLE>
___________________
*Mr. Harris and Mr. Burns are "interested persons" of the Trust (as that
term is defined in the 1940 Act) because of their affiliation with PIMCO.
During the fiscal year ended December 31, 1999, there were five meetings
of the Board. There was 100% attendance by Trustees at the meetings of the Board
throughout the period. [confirm]
As of December 15, 1999, the Trustees and officers of the Trust, as a
group, owned less than one percent of the outstanding shares of each Portfolio
in the aggregate, or of any class of shares of any Portfolio.
Board of Trustees - Committees. In addition to the Nominating Committee,
The Trust has a standing Audit Committee that currently consists of all of the
independent Trustees (Messrs. Babcock, Curtis, Kemp and Popejoy). The Audit
Committee reviews both the audit and non-audit work of the Trust's independent
public accountants, submits a recommendation to the Board as to the selection of
independent public accountants, and reviews generally the maintenance of the
Trust's records and the safekeeping arrangements of the Trust's custodian.
During the fiscal year ended December 31, 1999, the Audit Committee met three
times. Each member of the Audit Committee attended 100% of such meetings during
the period in which he was a member of the Audit Committee.
Remuneration of Trustees and Officers. The Trust pays each Trustee who is
not an "interested person" of the Trust an annual retainer of $4,000 and $1,500
for each Board meeting attended in person and $500 for each meeting attended
telephonically, plus reimbursement of
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<PAGE>
related expenses. In addition, a Trustee serving as a Committee Chair, other
than those affiliated with PIMCO or its affiliates, receives an additional
annual retainer of $500. For the fiscal year ended December 31, 1999, the
Trustees who are not "interested persons" as a group received compensation in
the amount of $40,500.
The following table sets forth the compensation paid to each of the
current Trustees of the Trust for the year ended December 31, 1998. Trustees who
are "interested persons" of the Trust do not receive any compensation from the
Portfolios.
<TABLE>
<CAPTION>
Aggregate Compensation Total Compensation from
Name from Trust Trust and Fund Complex*
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<S> <C> <C>
Guilford C. Babcock $10,000 $78,500
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Vern O. Curtis $10,500 $81,000
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Thomas P. Kemp $10,000 $78,500
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William J. Popejoy $10,000 $78,500
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</TABLE>
___________________
* Fund complex includes the Trust, PIMCO Funds: Pacific Investment
Management Series, a registered open-end management investment company,
and PIMCO Commercial Securities Mortgage Trust, Inc., a registered close
end management investment company. For their services as Trustees of the
PIMCO Funds: Pacific Investment Management Series, the Trustees listed
above receive an annual retainer of $45,000 plus $3,000 for each Board of
Trustees, committee, or special meeting attended in person ($500 for each
such meeting attended telephonically), an annual retainer of $1,500
for a Committee Chairmanship, plus reimbursement of related expenses. For
the year ended December 31, 1999, these Trustees, as a group, received
compensation in the amount of $233,500 from PIMCO Funds: Pacific
Investment Management Series.
For their services to PIMCO Commercial Mortgage Securities Trust, Inc.,
the Directors listed above received an annual retainer of $6,000 plus
$1,000 for each Board of Directors, committee, or special meeting
attended in person ($500 for each such meeting attended telephonically),
an annual retainer of $1,500 for a Committee Chairmanship, plus
reimbursement of related expenses. For the one year period ended
December 31, 1999, the Directors who are not "interested persons", as a
group, received compensation in the amount of $42,500 from PIMCO
Commercial Mortgage Securities Trust, Inc.
Material Interest of Trustees. Messrs. Burns and Harris each has a direct
material interest in the transaction described below in Proposal II, pursuant to
which Allianz of America, Inc. ("Allianz of America") will acquire majority
ownership of PIMCO Advisors and certain of its affiliates. Messrs. Burns and
Harris, as managing directors of PIMCO, will receive employment related
compensation and other benefits as a result of the transaction. For a complete
discussion of the transaction, see Proposal II.
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<PAGE>
THE BOARD, INCLUDING THE TRUSTEES WHO ARE NOT "INTERESTED PERSONS",
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE NOMINEES UNDER PROPOSAL I. UNMARKED
PROXIES WILL BE SO VOTED.
II. APPROVAL OF A NEW INVESTMENT ADVISORY AND
PORTFOLIO MANAGEMENT CONTRACTS
Introduction. PIMCO, located at 840 Newport Center Drive, Suite 300,
Newport Beach, California, 92660, has served as investment adviser to the Money
Market Portfolio, Short-Term Bond Portfolio, Low Duration Bond Portfolio, Real
Return Bond Portfolio, Total Return Bond Portfolio, Total Return Bond Portfolio
II, High Yield Bond Portfolio, Long-Term U.S. Government Bond Portfolio, Global
Bond Portfolio, Foreign Bond Portfolio, Emerging Markets Bond Portfolio
(collectively, the "Fixed Income Portfolios"), and the Strategic Balanced and
StocksPLUS Growth and Income Portfolios since their respective inceptions.
PIMCO currently serves as adviser to these Portfolios pursuant to an investment
advisory contract dated _____, (the "PIMCO Contract").
PIMCO Advisors, located at 800 Newport Center Drive, 6th Floor, Newport
Beach, California, 92660 has served as investment adviser to the PIMCO Equity
Income, Capital Appreciation, Mid-Cap Growth and Small-Cap Value Portfolios
since their respective inceptions. PIMCO Advisors currently serves as adviser to
the Funds pursuant to an investment advisory contract between PIMCO Advisors and
the Trust dated ________, 1998 (the "PIMCO Advisors Contract"). For each of
these Portfolios, PIMCO Advisors has engaged subsidiary partnerships of PIMCO
Advisors to serve as portfolio managers ("Portfolio Managers"). Accordingly,
Cadence Capital Management ("Cadence"), under the management and control of
PIMCO Advisors, manages the PIMCO Capital Appreciation and Mid-Cap Growth
Portfolios pursuant to a portfolio management agreement between PIMCO Advisors
and Cadence dated _______, 1998 (the "Cadence Contract"). NFJ Investment Group
("NFJ"), under the management and control of PIMCO Advisors, manages the PIMCO
Equity Income and Small-Cap Value Portfolios pursuant to a portfolio management
agreement between PIMCO Advisors and NFJ dated ______, 1998 (the "NFJ
Contract").
In addition, PIMCO serves as the administrator of the Portfolios pursuant
to an amended and restated administration services agreement between PIMCO and
the Trust, dated December 31, 1997, as supplemented on February 23, 1999 (the
"Administration Agreement"). Pursuant to a sub-administration contract dated
________, 199_, PIMCO has engaged PIMCO Advisors, as sub-administrator, to
provide certain administrative services to the PIMCO Equity Income Portfolio,
Capital Appreciation Portfolio, Mid-Cap Growth Portfolio and Small-Cap Value
Portfolios. PIMCO Funds Distributors LLC, located at 2187 Atlantic Street,
Stamford, Connecticut 06902, serves as the principal underwriter of the
Portfolios' shares.
PIMCO is a subsidiary partnership of PIMCO Advisors. The general partners
of PIMCO Advisors are PIMCO Partners, G.P. ("Partners G.P.") and PIMCO Advisors
Holdings L.P. ("PAH"). Partners G.P. is a general partnership between PIMCO
Holding LLC, a Delaware limited liability company and an indirect wholly-owned
subsidiary of Pacific Life Insurance Company ("Pacific Life"), and PIMCO
Partners LLC ("Partners LLC"), a California limited
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<PAGE>
liability company controlled by the current managing directors and two former
managing directors of PIMCO (the "Managing Directors"). PAH is a publicly-traded
Delaware limited partnership and its primary source of income is its
proportionate share of the net income of PIMCO Advisors. Partners G.P. is the
sole general partner of PAH. The address of all of the above entities, with the
exception of Pacific Life, is 840 Newport Center Drive, Newport Beach,
California 92660. Pacific Life is located at 700 Newport Center Drive, Newport
Beach, California 92660.
PIMCO, PIMCO Advisors, Cadence and NFJ (collectively, the "Advisers") will
undergo a "change in control" as a result of the consummation of the transaction
described below, resulting in the assignment, and therefore automatic
termination of the PIMCO Advisory Contract, the PIMCO Advisors Contract, the
Cadence Advisory Contract, and the NFJ Advisory Contract (collectively the
"Advisory Contacts"). It is proposed that the Advisers continue to serve as
investment advisers and portfolio managers of the Portfolios following
completion of the transaction. Therefore, in connection with the transaction
and as required by the 1940 Act, shareholders of each Portfolio are being asked
in Proposal II to approve new investment advisory and portfolio management
contracts, on behalf of each Portfolio which are substantially identical (except
for certain reduced advisory fees) to the corresponding Advisory Contract,
(collectively, the "New Advisory Contracts). The Board recommends that
shareholders approve the New Advisory Contracts. If the New Advisory Contracts
are approved, PIMCO will continue to serve as administrator under the
Administration Agreement. Forms of the New Advisory Contracts and Administration
Agreement are attached as Appendix A.
Information about the Advisers, their executive officers and directors,
their other investment company clients, and their brokerage policies is
presented in Appendix B.
Description of the Transaction. On October 31, 1999, PIMCO Advisors, PAH,
Partners G.P., certain of their affiliates, Allianz of America, and certain
other parties named therein entered into an Implementation and Merger Agreement
(the "Merger Agreement") pursuant to which Allianz of America will acquire
majority ownership of PIMCO Advisors (the "Transaction").
The Merger Agreement provides for the acquisition of PAH by Allianz of
America through a merger of an indirect subsidiary of Allianz of America with
and into PAH. In the merger, each of the outstanding limited partnership and
general partner units in PAH will be converted into the right to receive,
without interest, an amount in cash equal to $38.75 per unit, subject to a
potential downward adjustment if PIMCO Advisors' investment advisory revenue
base, expressed as a "revenue run rate," declines (excluding market-based
changes) below a specified level (the "Unit Transaction Price"). In no event
will the Unit Transaction Price be reduced below $31.00 per unit. As a result of
the merger, PAH will become an indirect wholly owned subsidiary of Allianz of
America.
Immediately following the merger, subsidiaries of Allianz of America will,
in a series of transactions, acquire approximately 70% of the outstanding
partnership interests in PIMCO Advisors, including the approximately 44%
interest held by PAH. As part of the Transaction, a
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<PAGE>
subsidiary of Allianz of America will acquire Partners GP through an acquisition
of the managing general partner interest in Partners GP from PIMCO Partners LLC
(the managing general partner of Partners GP) for approximately $5.5 million.
Pacific Life, which through subsidiaries owns approximately a 30% interest in
PIMCO Advisors will retain an indirect interest in PIMCO Advisors following the
closing. In connection with the closing, Allianz of America will enter into a
put/call arrangement for the possible disposition of Pacific Life's indirect
interest in PIMCO Advisors.
The Transaction is expected to be completed by the end of the first quarter
of 2000, although there is no assurance that the Transaction will be completed.
Completion of the Transaction is subject to a number of conditions, including,
among others,(i) the approval of the public unitholders of PAH, (ii) the receipt
of certain regulatory approvals and (iii) PIMCO Advisors' revenue run-rate
(excluding market-based changes) for all accounts managed by PIMCO Advisors and
its subsidiaries being at least 75% of the September 30, 1999 amount. Approval
of the New Advisory Contracts by the shareholders of the Portfolios will count
toward satisfaction of condition (iii) described in the preceding sentence. If
the Transaction is not completed for any reason, the Advisory Contracts will
remain in effect. In the event the New Advisory Contracts are not approved by
the Portfolios' shareholders and the Transaction is completed, the Board will
consider appropriate action.
Post-Transaction Structure and Operations. Upon completion of the
Transaction, PIMCO Advisors and its subsidiaries, including PIMCO, Cadence and
NFJ, will be controlled by Allianz of America. Allianz of America is a holding
company that owns several insurance and financial service companies and is a
subsidiary of Allianz AG, which, together with its subsidiaries, comprises the
world's second largest insurance group as measured by premium income. Allianz of
America will control PIMCO Advisors, and its subsidiaries, through its managing
member interest in PacPartners LLC, which will be the sole general partner of
PIMCO Advisors following the Transaction. While Allianz of America will control
PacPartners LLC, Pacific Life will hold a portion of its continuing interest in
PIMCO Advisors through an interest in PacPartners LLC.
Operationally, PIMCO is expected to become a unit of Allianz Asset
Management ("AAM"), the division of Allianz AG that coordinates global Allianz
AG asset management activities. PIMCO is expected to remain operationally
independent, and to become the global fixed income investment management
division of Allianz AG, and is currently expected to continue to operate in the
United States under its existing name.
Both William S. Thompson Jr., the current Chief Executive Officer of PIMCO,
and William H. Gross, the current Chief Investment Officer of PIMCO, will have
roles on the Executive Committee of AAM, with Mr. Thompson serving as the
Executive Committee's Deputy Chairman. In the Transaction, Messrs. Thompson and
Gross will enter into employment contracts with a term of seven years following
the Transaction. Other key employees of PIMCO and PIMCO Advisors, including the
Managing Directors, have also contractually agreed to remain with PIMCO and
PIMCO Advisors, for significant periods following the Transaction.
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Description of Allianz and Its Affiliates. Allianz AG, the parent of
Allianz of America, is a publicly traded German Aktiengesellschaft and which,
together with its subsidiaries comprise the world's second largest insurance
group as measured by premium income. Allianz is a leading provider of financial
services, particularly in Europe, and is represented in 68 countries world-wide
through subsidiaries, branch and representative offices, and other affiliated
entities. The Allianz group currently has assets under management of more than
$390 billion, and in its last fiscal year wrote approximately $50 billion in
gross insurance premiums. After completion of the Transaction, the Advisers and
Allianz group combined will have over $650 billion in assets under management.
Allianz AG's address is: Allianz Aktiengesellschaft, Koniginstrasse 28, D-80802,
Munich, Germany.
Significant institutional shareholders of Allianz currently include,
without limitation, Dresdner Bank AG, Deutsche Bank AG, Munich Reinsurance and
HypoVereinsbank. Dresdner Bank AG and Deutsche Bank AG, as well as certain
broker-dealers controlled by or affiliated with these entities, such as Bankers
Trust Company, BT Alex Brown, Inc., Morgan Grenfell and Kleinwort Benson
(collectively, the "Affiliated Brokers"), may be considered to be affiliated
persons of the Advisers. Once the Transaction is completed, absent an SEC
exemption or other relief, the Portfolios generally would be precluded from
effecting principal transactions with the Affiliated Brokers, and their ability
to purchase securities being underwritten by an Affiliated Broker or to utilize
the Affiliated Brokers for agency transactions would be subject to restrictions.
The Advisers do not believe that applicable restrictions on transactions with
the Affiliated Brokers described above will materially adversely affect their
ability, post-closing, to provide services to the Portfolios, the Portfolios'
ability to take advantage of market opportunities, or the Portfolios' overall
performance.
Anticipated Impact of the Transaction on Management of the Portfolios.
PIMCO Advisors and PIMCO have received structural and contractual protections as
terms of the Transaction that ensure operational autonomy and continuity of
management. PIMCO Advisors and PIMCO are confident that Allianz AG is committed
to the people and process that have led to their success over the years.
Accordingly, the Transaction should have no immediate impact, other than as
already noted above, on the management of the Portfolios or the Advisers'
capacity to provide the type, quality, or quantity of services that it currently
provides, and the Portfolios should continue to receive the same high quality of
service after the Transaction. As discussed below, however, PIMCO believes that
the Transaction offers the potential to enhance significantly its future ability
to deliver quality investment advisory services.
The Benefits of the Transaction. PIMCO anticipates that the Transaction
with Allianz AG will benefit PIMCO and the Portfolios in a variety of ways,
including the following:
. PIMCO's investment expertise will be enhanced because of the business
experience and relationships that Allianz AG has built around the
globe, particularly in Europe. PIMCO's access to European markets and
business opportunities will be greatly enhanced by Allianz AG's
experience and relationships. The combined global resources of PIMCO
and Allianz AG will allow PIMCO to take advantage of the growth in
international markets and the explosive potential for premier money
managers in the global marketplace.
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. Allianz AG has a team of fixed income professionals in place that
currently manage more than $100 billion in assets. Integration of
these professionals and assets with PIMCO provides an excellent
opportunity for furthering PIMCO's global fixed income expertise.
. The rotation of many of PIMCO's key investment professionals through
international offices and overseas personnel through PIMCO's offices
will result in more-seasoned professionals with global experience.
. The combination will provide additional career opportunities for
PIMCO professionals, furthering PIMCO's ability to attract and retain
the best people.
. Allianz AG has a stated growth strategy to be among the top five
providers of its services in the world's key markets, which is a key
factor in PIMCO's decision to go ahead with the Transaction. The
combined entity will be the sixth-largest investment manager in the
world. The Transaction will significantly increase assets under
PIMCO's management, and will offer the opportunity for continued
growth in the future. Strong relative investment results depend on a
sound, disciplined investment process and effective execution; size
can be a benefit to both.
Section 15(f) of the 1940 Act. Section 15(f) provides a non-exclusive safe
harbor for an investment adviser or any affiliated persons to receive any amount
or benefit in connection with a "change in control" of the investment adviser to
an investment company as long as two conditions are satisfied. First, an "unfair
burden" must not be imposed on investment company clients of the adviser as a
result of the transaction, or any express or implied terms, conditions or
understandings applicable to the transaction. The term "unfair burden" (as
defined in the 1940 Act) includes any arrangement during the two-year period
after the transaction whereby the investment adviser (or predecessor or
successor adviser), or any "interested person" (as defined in the 1940 Act) of
any such adviser, receives or is entitled to receive any compensation, directly
or indirectly, from such an investment company or its security holders (other
than fees for bona fide investment advisory or other services) or from any other
person in connection with the purchase or sale of securities or other property
to, from or on behalf of such investment company. The Board has been advised
that PIMCO Advisors and PIMCO are aware of no circumstances arising from the
Transaction that might result in an unfair burden being imposed on the Trust.
The second condition of Section 15(f) is that during the three-year period after
the transaction, at least 75% of each such investment company's board of
directors must not be "interested persons" (as defined on the 1940 Act) of the
investment adviser (or predecessor or successor adviser). Allianz AG and each of
the other parties to the Agreement have agreed to use their reasonable best
efforts to ensure compliance with Section 15(f) as it applies to the Transaction
during such two-year period.
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The Contracts. The Advisory Contracts. The Advisers have served as
investment advisers/portfolio managers to the Portfolios of the Trust since each
Portfolio's commencement of investment operations. Each Advisory Contract has
been submitted for approval by shareholders of the applicable Portfolio prior to
the Portfolio's commencement of operations.
Under the terms of the Advisory Contracts, the Advisers are responsible for
making investment decisions and placing orders for the purchase and sale of each
Portfolios investments directly with the issuers or with brokers or dealers
selected by it at its discretion. The Advisers also furnish to the Board, which
has overall responsibility for the business and affairs of the Portfolios,
periodic reports on the investment performance of the Portfolio.
The Advisers are obligated to manage each Portfolio in accordance with
applicable laws and regulations. The investment advisory services of the
Advisers to the Portfolios are not exclusive under the terms of the Advisory
Contracts. The Advisers are free to, and do, render investment advisory
services to others.
Consistent with the requirements of the 1940 Act, each Advisory Contract
provides that the Advisers generally are not liable to the Portfolios for any
mistake in judgment, or otherwise, except by reason of willful misfeasance, bad
faith or gross negligence in the performance of the Advisers' duties or by
reason of its reckless disregard of its obligations and duties under the
Advisory Contract.
The Advisory Contracts may be terminated by a Portfolio without penalty
upon not fewer than 60 days' notice by the Board or by a vote of the holders of
a majority of the Portfolio's outstanding shares voting as a single class, or
upon not fewer than 60 days' notice by the Advisers. As noted above, the
Advisory Contracts terminate automatically in the event of their "assignment"
(as defined in the 1940 Act).
Information about investment advisory fees paid to the Advisers and the
administrative fees paid to PIMCO, including aggregate investment advisory fees
and administrative fees by each Portfolio during the fiscal year ended December
31, 1998, is set forth in Appendix C.
The New Advisory Contracts. The New Advisory Contracts are substantially
similar to the Advisory Contracts, except for the level of fees paid under the
New Advisory Contracts. By the closing of the Transaction, the Trust intends to
adopt a multiple class structure under which it will offer both Institutional
and Administrative Class Shares. Under the New Advisory Contracts, shareholders
of the Portfolios will pay lower investment advisory fees than the Portfolios
currently pay under the Advisory Contracts. In addition, for certain
Portfolios, shareholders will pay lower administrative fees than the Portfolios
currently pay under the Administration Agreement. Each Portfolio will also
adopt an administrative services plan (the "Services Plan"), under which
shareholders of Administrative Class Shares will pay a service fee for various
administrative services provided or procured by PIMCO. Following the adoption
of the multiple class structure, current shareholders will own Administrative
Class shares of the Portfolios. Total Portfolio operating expenses for
Administrative Class shares of each Portfolio, however, will be no greater than
the current operating expenses paid by the Portfolios and in some cases, the
total Portfolio operating expenses will be lower. Current Portfolio operating
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expenses, as well as the Portfolio operating expenses as proposed under the
multiple class structure are set forth in Exhibit C.
As noted previously, the Advisers do not anticipate that the Transaction
will cause any reduction in the quality or types of services now provided to the
Portfolios or have any adverse effect on the Advisers' ability to fulfill its
obligations to the Portfolios. No change is anticipated in the investment
philosophies and practices currently followed by the Portfolios.
At the December 1, 1999 meeting of the Board, the New Advisory Contracts
were approved unanimously by the Board, including all of the Trustees who are
not parties to the New Advisory Contracts or "interested persons" (as defined in
the 1940 Act) of any such party (other than as Trustees of the Trust). The New
Advisory Contracts, as approved by the Board, are submitted for approval by the
shareholders of the Portfolios.
If the New Advisory Contracts are approved by shareholders, they will take
effect immediately after the closing of the Transaction. The New Advisory
Contracts will remain in effect for two years from the date they take effect,
and, unless earlier terminated, will continue from year to year thereafter,
provided that each such continuance is approved annually with respect to each
Contract and Portfolio (i) by the Board or by the vote of a majority of the
outstanding voting securities of the particular Portfolio, and, in either case,
(ii) by a majority of the Portfolio's Trustees who are not parties to the New
Advisory Contracts or interested persons of any such party (other than as
Trustees of the Trust).
If the shareholders of any Portfolio should fail to approve the New
Advisory Contract pertaining to that Portfolio, the Transaction may not be
consummated. If the Transaction is not consummated, PIMCO Advisors, Cadence,
NFJ, and PIMCO will continue to serve as advisers for all of the Portfolios
under the current Advisory Contracts. The Trust intends to implement the
multiple class structure regardless of whether the Transaction consummated.
The Administration Agreement. Under the terms of the Administration
Agreement, PIMCO provides administrative services to each Portfolio, including
administrative and clerical functions, certain shareholder servicing functions
and supervision of the services rendered to the Portfolios by other persons,
including the custodian and transfer agent. In approving the New Advisory
Contracts, the Board has considered that PIMCO receives fees for the services it
provides under the Administration Agreement, and may receive fees for services
provided to or procured for Administrative Class Shares under the Services Plan.
The Administration Agreement may be terminated by a Portfolio without
penalty upon not fewer than 60 days' notice by the Board or by a vote of the
holders of a majority of the Portfolio's outstanding shares voting as a single
class, or upon not fewer than 60 days' notice by PIMCO.
Interests of Certain Persons in the Transaction. The Managing Directors,
each of which is a member of Partners LLC, will receive new employment and
consulting agreements. The initial term of the employment agreements will be
five years from the closing of the Transaction (seven years for Messrs. Gross
and Thompson). Each Managing Director will
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receive an annual salary, and will be entitled to participate in PIMCO's Non-
Qualified Profit Sharing Plan and Class B Unit Purchase Plan, as well as the
PIMCO Advisors Retention Plan for Executives of PIMCO.
Under PIMCO's current profit sharing plan, the Managing Directors and other
executive employees of PIMCO share in a pool equal to 45% of the adjusted net
profit of PIMCO. After the Transaction, the profit sharing plan will be amended
to reduce the profit sharing percentage from 45% to 30% of adjusted net profit
over a five-year period. Under the amended profit sharing plan, the pool from
which the profits are calculated will include profits from certain other fixed
income advisors owned by Allianz AG and its affiliates. For the first two years
after the Transaction, the profit sharing pool will be guaranteed at least $10
million per year from PIMCO's management of insurance assets from affiliates
owned by Allianz AG.
Under the Class B Unit Purchase Plan, participants will be able to purchase
Class B Units of PIMCO, which, in the aggregate, will entitle the holders to
distributions equal to 15% of the adjusted net profit of PIMCO. The Retention
Plan provides fixed and variable retention arrangements for each of the Managing
Directors and other key employees of PIMCO. The 14 managing directors of PIMCO
who were managing directors on the date of the Merger Agreement will in the
aggregate receive retention payments of $85.8 million per year for each of the
five years following the Transaction, subject to continued employment.
In addition to the foregoing, pursuant to 1994 Employment Termination
Agreements, PIMCO Holding LLC must pay to the current and former Managing
Directors who are parties to those contracts noncompete payments equal to
distribution on, or sales proceeds of, an aggregate of 17,402,107 Class A units
of limited partnership in PIMCO Advisors. Eight of the current Managing
Directors--Messrs. Gross, Hague, Harris, Meiling, Muzzy, Podlich, Powers and
Thompson--have agreed to amend their 1994 Employment Termination Agreements.
Under the amendments, these eight Managing Directors will receive payments in
satisfaction of the noncompete payments due under the 1994 Employment
Termination Agreements. Payments will be made 84% in cash and 16% in stock of
Allianz AG, the parent of Allianz of America, with an assumed value of $273.99
per share, the average trading price for the stock of Allianz AG for the 30 days
prior to October 4, 1999, the date of public announcement of discussions between
Allianz AG and PIMCO Advisors. Two of the eight current Managing Directors, who
are not full-time employees of PIMCO but who will continue as consultants, will
receive their payments solely in cash. The aggregate payment at the closing of
the Transaction to the eight current Managing Directors whose 1994 Employment
Termination Agreements will be amended will have a value of $603.6 million
(based on 15,575,835 Advisors Class A Units and a price of $38.75 per unit).
Upon completion of the Transaction, all outstanding unit options under the
1998 Unit Incentive Plan, whether exercisable or not, will be cancelled and
terminated and will represent the right to receive a cash payment equal to the
excess of the Unit Transaction Price over the exercise price per unit of the
option, together with interest on such amount at 8% per annum through the date
such payment is made. The Managing Directors hold unit option awards for an
aggregate of 2,080,000 units of PIMCO Advisors, at an average exercise price of
$16.13 per
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unit, which will result in payments of approximately $47 million in the
aggregate at the closing of the Transaction. The Managing Directors, as well as
certain executive officers of PIMCO, will also participate in the Deferred
Compensation Plan, under which units of PIMCO Advisors held in trust under the
plan will be exchanged by the plan's trustee for cash in an amount per unit
equal to the Unit Transaction Price. Any unvested account balances reflecting
discount investment or reinvestment of deferred compensation will vest.
Certain executive officers of PIMCO will also receive additional benefits
resulting from the Transaction. Any options for units of PIMCO Advisors held by
these persons will be converted to a right to receive the difference between the
exercise price for such options and the Unit Transaction Price, together with
interest on such amount at 8% per annum through the date such payment is made.
In addition, certain officers of the Trust who are executive officers of PIMCO
Advisors will be eligible to receive payments during the five year period
following the Transaction pursuant to employment retention plans.
As a result of the direct and indirect interests in the Transaction and in
PIMCO and its affiliates, including any employment arrangements with PIMCO and
its affiliates, each of the Managing Directors and executive officers of PIMCO
identified in Appendix B may be deemed to have a substantial interest in
shareholder approval of the New Advisory Contract.
Evaluation by the Board of Trustees. The Board, advised by special
independent counsel, has determined that, in approving the New Contracts on
behalf of the Portfolios, the Trust can best assure itself that the services
currently provided to the Portfolios by the Advisers, their officers, and
employees will continue without interruption after the Transaction. The Board
believes that, like the Advisory Contracts, the New Advisory Contracts will
enable the Portfolios to obtain high quality services at a cost that is
appropriate, reasonable, and in the best interests of each Portfolio and its
shareholders.
In determining whether or not it was appropriate to approve the New
Advisory Contracts and to recommend approval to shareholders, the Board,
including the Trustees who are not parties to the New Advisory Contracts or
interested persons of such parties, considered various materials and
representations provided by the Advisers and considered a report provided by
Allianz AG, and was advised by independent legal counsel with respect to these
matters.
Information considered by the Trustees included, among other things, the
following: (1) the Advisers' representation that the same persons responsible
for management of the Portfolios currently are expected to continue to manage
the Portfolios under the New Advisory Contracts, thus helping to ensure
continuity of management; (2) that the compensation to be received by the
Advisers under the New Advisory Contracts is lower than the compensation paid
under the Advisory Contracts, which the Board previously has determined to be
fair and reasonable; (3) the Advisers' representation that they will not seek to
increase the rate of advisory fees paid by the Portfolios for a period of at
least two years following the Transaction; (4) the commonality of the terms and
provisions of the New Advisory Contracts with the terms of the Advisory
Contracts; (5) representations made by PIMCO concerning the potential impact of
affiliated brokerage relationships on the Advisers' ability to provide services
to the Portfolios,
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and on the Portfolios' ability to engage in portfolio transactions; (6) the
representations by PIMCO and Allianz AG that the integration of Allianz AG's and
the Advisers' operations could produce benefits to shareholders through
economies of scale, expansion of PIMCO's investment expertise through the
addition of Allianz AG fixed income investment business expertise and global
relationships, the expansion of PIMCO's investment research capabilities, and
the ability to enhance the quality of services provided to shareholders; (7) the
nature and quality of the services rendered by the Advisers under the Advisory
Contracts; (8) the fairness of the compensation payable to the Advisers under
the Advisory Contracts; (9) the results achieved by the Advisers for the
Portfolios; and (10) the high quality of the personnel, operations, financial
condition, investment management capabilities, methodologies, and performance of
the Advisers.
Based upon its review, the Board determined that, by approving the New
Advisory Contracts, the Portfolios can best be assured that services from the
Advisers will be provided without interruption. The Board also determined that
the New Advisory Contracts are in the best interests of each Portfolio and its
shareholders. Accordingly, after consideration of the above factors, and such
other factors and information it considered relevant, the Board unanimously
approved the New Advisory Contracts and voted to recommend their approval by
each Portfolio's shareholders.
THE BOARD, INCLUDING THE INDEPENDENT TRUSTEES, RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" APPROVAL OF THE NEW ADVISORY CONTRACTS AS PROVIDED UNDER PROPOSAL II.
UNMARKED PROXIES WILL BE SO VOTED.
III. APPROVAL OF CHANGES TO
FUNDAMENTAL INVESTMENT POLICIES
The 1940 Act requires an investment company to adopt certain fundamental
investment policies that can be changed only by a shareholder vote. In the
past, fundamental policies were adopted by the Trust on behalf of the Portfolios
in order to reflect regulatory, business or industry conditions that were in
effect at the time the particular action was taken. Because of the opportunity
afforded by this Meeting, the Board has reviewed each Portfolio's fundamental
policies with the goal of simplifying, modernizing and making consistent to the
extent possible the fundamental policies of the Portfolios.
This Proposal seeks shareholder approval of changes that are intended to
accomplish that goal. The proposed changes to each Portfolio's fundamental
policies are discussed in detail below. Except for the policy on borrowing as
discussed below, none of the proposed policies materially differs from the
respective Portfolio's current comparable policy. The formulation of each
proposed policy differs from the current policy in the interest of uniformity
and simplicity. Each Portfolio's policies with respect to the concentration of
investments, borrowing, the
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issuance of senior securities, and lending differ from the current policies of
each Portfolio in that the requirements of the 1940 Act are not described in
detail. Therefore, the new policies that govern each Portfolio would be
determined by reference to the provisions of the 1940 Act, the rules thereunder,
and applicable interpretations of the Commission or its staff, rather than the
express terms of the policies.
The Board believes that eliminating the differences among the Portfolios'
fundamental restrictions will enhance management's ability to manage the
Portfolios' assets efficiently in changing regulatory and investment
environments, and permit management and the Board to review and monitor
investment policies more easily. In addition, standardizing the fundamental
investment restrictions of the Portfolios will assist the Portfolios in making
required regulatory filings in a more efficient and cost-effective manner. The
proposed changes in fundamental restrictions will allow each Portfolio greater
investment flexibility to respond to future investment opportunities. The Board
does not anticipate, however, that the changes, individually or in the
aggregate, will result in a material change in the level of investment risk
associated with an investment in each Portfolio.
The text and a summary description of each proposed change to each
Portfolio's fundamental restrictions are set forth below. The current
fundamental investment policies for each Portfolio that correspond to the
proposed fundamental investment policies are set forth in Appendix E. If
approved by the Portfolios' shareholders at the Meeting, the proposed changes to
the Portfolios' fundamental restrictions will be adopted by each Portfolio. The
Portfolios' Statement of Additional Information will be revised to reflect those
changes as soon as practicable following the Meeting. If the shareholders of a
Portfolio fail to approve any proposed fundamental policy, the current policy
(if any) will remain in effect. If approved by the Portfolios' shareholders at
the Meeting, the proposed changes to the Portfolios' fundamental restrictions
will be adopted by each Portfolio. The Portfolios' Statement of Additional
Information will be revised to reflect those changes as soon as practicable
following the Meeting. Approval of the proposed fundamental policies with
respect to a Portfolio requires the affirmative vote of a majority of the
outstanding voting securities, as defined above, of the Portfolio.
Shareholders of each Portfolio will be asked to vote on each proposed
fundamental policy separately on the enclosed proxy card.
a. Concentration (All Portfolios). The Portfolios' current policy on
industry concentration prohibits the purchase of securities if it would result
in more than 25% of the market value of a Portfolio's total assets being
invested in securities of one or more issuers having their principal business
activities in the same industry. The current policy does not apply to
investments in U.S. Government securities, and, in the case of the Money Market
Portfolio, investments in securities or obligations of U.S. banks.
The Board recommends that shareholders vote to replace the current
fundamental policy on concentration with the following fundamental policy:
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Each Portfolio may not concentrate its investments in a particular
industry, as that term is used in the Investment Company Act of 1940, as
amended, and as interpreted, modified, or otherwise permitted by regulatory
authority having jurisdiction, from time to time (except that the Money
Market Portfolio may concentrate its investments in securities or
obligations issued by U.S. banks).
While the 1940 Act does not define what constitutes "concentration" in an
industry, the staff of the Commission takes the position that investment of more
than 25% of a Portfolio's assets in an industry constitutes concentration. If a
Portfolio's fundamental policy prohibits the Portfolio from concentrating in an
industry, the Portfolio may not invest more than 25% of its assets in the
applicable industry unless it discloses the specific conditions under which it
will change its concentration policy. Each Portfolio is permitted to adopt
reasonable definitions of what constitutes an industry, or it may use standard
classifications promulgated by the Commission, or some combination thereof.
Because each Portfolio may create its own reasonable industry classifications,
the Board believes that it is not necessary to include such matters in the
fundamental policy of a Portfolio. The proposed concentration policy will
retain the exception that excludes the Money Market Portfolio investment in
securities or obligations issued by U.S. banks, which is common among money
market funds.
b. Diversification (Only the following Portfolios: Money Market, Short-
Term Bond, Low Duration Bond, Total Return Bond, Total Return Bond II, High
Yield Bond, Long-Term U.S. Government Bond, Strategic Balanced, StockPLUS Growth
and Income, Equity Income, Capital Appreciation, Mid-Cap Growth and Small-Cap
Value (each a "Diversified Portfolio")). Under the current diversification
policy, each Diversified Portfolio, with respect to 75% of the value of its
total assets, may not purchase more than 10% of the voting securities of any one
issuer or invest more than 5% of the value of its total assets in the securities
of any one issuer, with an exception for investments in U.S. Government
securities.
Currently, the restrictions pertaining to diversification are contained in
two separate fundamental policies. The Board recommends that the Diversified
Portfolios' current fundamental policies on diversification be consolidated and
replaced with the following fundamental investment restriction:
Each Portfolio may not, with respect to 75% of the Portfolio'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 Portfolio's
total assets would be invested in the securities of that issuer, or (ii)
the Portfolio would hold more than 10% of the outstanding voting securities
of that issuer.
The proposed diversification policy does not differ in substance from the
current diversification policies, but serves to simplify and combine the
Diversified Portfolio's current policies into a single, uniform fundamental
policy.
c. Borrowing and Senior Securities (All Portfolios). Under its current
fundamental policy on borrowing and senior securities, each Portfolio, may not
borrow money, issue senior
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securities, or pledge, mortgage or hypothecate its assets, except that the
Portfolio may (i) borrow from banks or enter into reverse repurchase agreements,
provided that the Portfolio maintains asset coverage of 300%, and (ii) enter
into certain transactions on derivative instruments, including options, futures,
or options on futures.
To simplify and modernize each Portfolio's current fundamental policy on
borrowing and the issuance of senior securities, the Board recommends that the
shareholders vote to approve the following fundamental policy:
Each Portfolio may not borrow money or issue any senior security, except as
permitted under the Investment Company Act of 1940, as amended, and as
interpreted, modified, or otherwise permitted by regulatory authority
having jurisdiction, from time to time.
The primary purpose of the proposed change is to standardize the
restrictions and conform them to the current regulatory requirements and
evolving market environment. Reverse repurchase agreement transactions and
industry derivative instruments are now permitted, and would be permitted under
the proposed policy. The 1940 Act requires borrowings to have 300% asset
coverage, which requirement would, therefore, remain unchanged under the
proposed policy. Although each Portfolio would not be limited to borrowing for
temporary or emergency purposes, each Portfolio would nevertheless be subject to
the 1940 Act's coverage requirements. In addition, subject to the receipt of
any necessary regulatory approval and Board authorization, the Portfolios may
borrow money directly from certain of the other Portfolios.
The proposed policy will also allow each Portfolio to issue senior
securities to the full extent permitted under the 1940 Act. Although the
definition of a "senior security" involves complex statutory and regulatory
concepts, a senior security is generally an obligation of a Portfolio that has a
claim to the Portfolio's assets or earnings that takes precedence over the
claims of the Portfolio's shareholders. The 1940 Act generally prohibits mutual
funds from issuing any senior securities with limited exceptions; however, under
current SEC staff interpretations, mutual funds are permitted to engage in
certain types of transactions that might be considered "senior securities" as
long as certain conditions are satisfied. The Portfolios currently engage and
would engage in transactions that could be considered to involve "senior
securities" only in accordance with applicable regulatory requirements under the
1940 Act.
Adoption of the proposed policy is not expected to materially affect the
operation of the Portfolios, and the Board does not anticipate that the proposed
fundamental policy will change the level of investment risk associated with an
investment in the Portfolios. However, adoption of the proposed policies will
allow the Portfolios to respond to legal, regulatory and market developments
that may make the use of permissible borrowings and the issuance of senior
securities advantageous to the Portfolios and their shareholders.
d. Loans (All Portfolios). The current fundamental policy on loans for
each Portfolio prohibits the making of loans, except loans of portfolio
securities, entry into repurchase agreements, and the purchase of debts
obligations, to the extent these transactions are consistent with the
Portfolio's investment objectives and policies. The Board recommends that the
-22-
<PAGE>
shareholders vote to replace the Portfolios' current fundamental policies with
the following fundamental investment policy:
Each Portfolio may not make loans, except as permitted under the Investment
Company Act of 1940, as amended, and as interpreted, modified, or otherwise
permitted by regulatory authority having jurisdiction, from time to time.
The proposed policy, unlike the current policy, does not specify the
particular types of lending in which each Portfolio is permitted to engage;
instead, the proposed policy permits each Portfolio to lend only in a manner and
to an extent in accordance with applicable law. Subject to the receipt of any
necessary regulatory approval and Board authorization, each Portfolio may enter
into certain lending arrangements that would benefit the Portfolio and its
shareholders, including interfund lending agreements under which certain of the
Portfolios could lend money directly to the other Portfolios. The proposed
policy would provide the Portfolios with greater flexibility and maximize each
Portfolio's lending capabilities, thereby allowing the Portfolios to respond
more effectively to regulatory, industry and market developments.
e. Investments in other Investment Companies (All Portfolios). The Board
recommends that shareholders vote to adopt the following fundamental investment
policy for each Portfolio:
Notwithstanding any other fundamental investment policy or limitation, it
is a fundamental policy of each Portfolio that it may elect, in the future,
to 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 Portfolio.
The proposed fundamental policy will permit each Portfolio to adopt a
"master/feeder" structure whereby one or more funds (the "feeder funds") invest
all of their assets in another fund (the "master fund"). The master/feeder
structure has the potential, under certain circumstances, to minimize
administration costs and maximize the possibility of gaining a broader investor
base. Currently, none of the Portfolios intend to establish a master/feeder
structure; however, the Board recommends that each Portfolio's shareholders
adopt the proposed policy that will permit this structure in the event the Board
determines to recommend the adoption of a master/feeder structure by a
Portfolio. The proposed fundamental policy would also give each Portfolio
flexibility to invest in other investment companies to the extent permitted by
the 1940 Act.
THE BOARD, INCLUDING THE INDEPENDENT TRUSTEES, RECOMMENDS THAT SHAREHOLDERS OF
EACH PORTFOLIO VOTE "FOR" EACH PROPOSED CHANGE TO THE PORTFOLIO'S FUNDAMENTAL
INVESTMENT POLICIES AS SET FORTH IN THIS PROPOSAL III. UNMARKED PROXIES WILL BE
SO VOTED.
IV. OTHER BUSINESS
The Trustees do not know of any matters to be presented at the Meeting
other than those set forth in this proxy statement. If other business should
properly come before the Meeting,
-23-
<PAGE>
proxies will be voted in accordance with the judgment of the persons named in
the accompanying proxy.
VOTING INFORMATION
Proxy Solicitation. The costs of the Meeting, including the solicitation of
proxies, will be paid by PIMCO Advisors and Allianz of America. The principal
solicitation will be by mail, but proxies also may be solicited by telephone,
telegraph, the internet or personal interview by officers or agents of the
Trust. D.F. King has been retained to assist with proxy solicitation activities
(including assembly and mailing of materials to shareholders). To obtain the
necessary representation at the Meeting, supplementary solicitations may be made
at a cost not expected to exceed $_____. The Trust will forward to record owners
proxy materials for any beneficial owners that such record owners may represent.
Shareholder Voting. Shareholders of record at the close of business on
December 20, 1999 (the "Record Date") are entitled to notice of, and to vote
at, the Meeting. Each shareholder is entitled to one vote for each full share
and an appropriate fraction of a vote for each fractional share held.
As of the Record Date, the following number of shares of the Portfolios
representing the corresponding number of votes, were outstanding:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Portfolio Number of Shares Outstanding Number of Votes
- ------------------------------------------------- ---------------------------- ---------------
<S> <C> <C>
Money Market Portfolio
- ------------------------------------------------------------------------------------------------
Short-Term Bond Portfolio
- ------------------------------------------------------------------------------------------------
Low Duration Bond Portfolio
- ------------------------------------------------------------------------------------------------
Real Return Bond Portfolio
- ------------------------------------------------------------------------------------------------
Total Return Bond Portfolio
- ------------------------------------------------------------------------------------------------
Total Return Bond Portfolio II
- ------------------------------------------------------------------------------------------------
High Yield Bond Portfolio
- ------------------------------------------------------------------------------------------------
Long-Term U.S. Government Bond Portfolio
- ------------------------------------------------------------------------------------------------
Global Bond Portfolio
- ------------------------------------------------------------------------------------------------
Foreign Bond Portfolio
- ------------------------------------------------------------------------------------------------
Emerging Markets Bond Portfolio
- ------------------------------------------------------------------------------------------------
Strategic Balanced Portfolio
- ------------------------------------------------------------------------------------------------
StocksPLUS Growth and Income Portfolio
- ------------------------------------------------------------------------------------------------
Equity Income Portfolio
- ------------------------------------------------------------------------------------------------
</TABLE>
-24-
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Portfolio Number of Shares Outstanding Number of Votes
- ------------------------------------------------- ---------------------------- ---------------
<S> <C> <C>
Capital Appreciation Portfolio
- ------------------------------------------------------------------------------------------------
Mid-Cap Growth Portfolio
- ------------------------------------------------------------------------------------------------
Small-Cap Value Portfolio
- ------------------------------------------------------------------------------------------------
</TABLE>
As of December 15, 1999, the persons owning of record or beneficially 5% or
more of the indicated Portfolios are set forth in Appendix E.
Insurance companies that use shares of the Portfolios as funding media for
their variable insurance contracts will vote shares of the Portfolios held by
each of their separate accounts in accordance with instructions received from
owners of the variable insurance contracts. An insurance company also will vote
shares of the Portfolios held in each such separate account for which it has not
received timely instructions in the same proportion as it votes shares held by
that separate account for which it has received instructions. An insurance
company whose separate account invests in the Portfolios will vote shares held
by its general account and its subsidiary in the same proportion as other votes
cast by all of its separate accounts in the aggregate. Shareholders and
variable insurance contract owners permitted to give instructions, and the
number of shares for which such instruction may be given to be voted at the
Meeting and any adjournment will be determined as of the Record Date.
Timely, properly executed proxies will be voted as instructed by
shareholders. A shareholder may revoke his or her proxy at any time prior to
its exercise by written notice addressed to the Secretary of the PIMCO Variable
Insurance Trust at 840 Newport Center Drive, Suite 300, Newport Beach,
California 92660 or by voting in person at the Meeting. However, attendance in
person at the Meeting, by itself, will not revoke a previously tendered proxy.
The presence in person or by proxy of the holders of a majority of the
outstanding shares of each Portfolio is required to constitute a quorum at the
Meeting. Shares held by shareholders present in person or represented by proxy
at the Meeting will be counted both for the purposes of determining the presence
of a quorum and for calculating the votes cast on the issues before the Meeting.
Abstentions will also be counted for quorum purposes.
Broker "non-votes" (that is, proxies from brokers or nominees indicating
that such persons have not received instructions from the beneficial owner or
other persons entitled to vote shares on a particular matter with respect to
which the brokers or nominees do not have discretionary power) will have the
same effect as abstentions in determining whether an issue has received the
requisite approval. Where the broker or nominee has no discretion to vote the
shares as to a proposal before the Meeting, the non-voted shares will be
excluded from the pool of shares voted on the proposal. Thus, abstentions and
non-votes will have the same effect as a negative vote on issues requiring the
affirmative vote of a specified portion of the Trust's outstanding shares, but
will not be considered votes cast and thus will have no effect on matters
requiring approval of a specified percentage of votes cast.
-25-
<PAGE>
In the event that a quorum is present at the Meeting but sufficient votes
to approve any proposal are not received, the persons named as proxies may
propose one or more adjournments of the Meeting to permit further solicitation
of proxies or to obtain the vote required for approval of one or more proposals.
Any such adjournment will require the affirmative vote of a majority of those
shares represented at the Meeting in person or by proxy. If a quorum is
present, the persons named as proxies will vote those proxies which they are
entitled to vote FOR the proposal in favor of such an adjournment and will vote
those proxies required to be voted AGAINST the proposal against any such
adjournment. A shareholder vote may be taken prior to any adjournment of the
Meeting on any proposal for which there are sufficient votes for approval, even
though the Meeting is adjourned as to other proposals.
Required Vote. Shareholders of the Portfolios vote together on Proposal I,
separately by Portfolio on Proposals II and III, and as necessary on the other
Proposals. Approval of Proposal I requires the vote of shareholders owning of
record a plurality of the shares of the Trust present at the Meeting, if a
quorum is present. Approval of Proposals II and III each requires the vote of a
"majority of the outstanding voting securities" entitled to vote on the
Proposal, as defined in the 1940 Act, which means that the vote of 67% or more
of the voting securities entitled to vote on the Proposal that are present at
the Meeting if the holders of more than 50% of the outstanding shares are
present or represented by proxy, or the vote of more than 50% of the outstanding
voting securities entitled to vote on the Proposal, whichever is less.
Shareholder Proposals. The Trust does not hold regular shareholders'
meetings. Shareholders wishing to submit proposals for inclusion in a proxy
statement for a subsequent shareholders' meeting should send their written
proposals to the Secretary of the Trust at the address set forth on the cover of
this proxy statement. Proposals must be received a reasonable time prior to the
date of a meeting of shareholders to be considered for inclusion in the proxy
materials for a meeting. Timely submission of a proposal does not, however,
necessarily mean that the proposal will be included. Persons named as proxies
for any subsequent shareholders' meeting will vote in their discretion with
respect to proposals submitted on an untimely basis.
To ensure the presence of a quorum at the Meeting, prompt execution and return
of the enclosed proxy is requested. A self-addressed, postage-paid envelope is
enclosed for your convenience.
By Order of the Board of Trustees
___________________________________
Garlin G. Flynn, Secretary
__________, 2000
Newport Beach, California
-26-
<PAGE>
APPENDIX A
----------
FORM OF
INVESTMENT ADVISORY CONTRACT
PIMCO Variable Insurance Trust
840 Newport Center Drive
Newport Beach, California 92260
____________________, 2000
[Name]
840 Newport Center Drive
Newport Beach, California 92260
Dear Sirs:
This will confirm the agreement between the undersigned (the "Trust") and [
] (the "Adviser") as follows:
1. The Trust is an open-end investment company which currently has 17
separate investment portfolios, [ ] of which are subject to this agreement:
[Names of Portfolios] (the "Portfolios"). Additional investment portfolios may
be established in the future. This Contract shall pertain to the Portfolios and
to such additional investment portfolios as shall be designated in Supplements
to this Contract, as further agreed between the Trust and the Adviser. The Trust
engages in the business of investing and reinvesting the assets of each
Portfolio in the manner and in accordance with the investment objective and
restrictions applicable to that Portfolio as specified in the currently
effective Prospectus (the "Prospectus") for the Trust included in the
registration statement, as amended from time to time (the "Registration
Statement"), filed by the Trust under the Investment Company Act of 1940 (the
"1940 Act") and the Securities Act of 1933 ("1933 Act"). Copies of the
documents referred to in the preceding sentence have been furnished to the
Adviser. Any amendments to those documents shall be furnished to the Adviser
promptly. Pursuant to a Distribution Contract, as amended (the "Distribution
Contract"), between the Trust and PIMCO Funds Distribution Company (the
"Distributor"), the Trust has employed the Distributor to serve as principal
underwriter for the shares of beneficial interest of the Trust. Pursuant to an
Administration Agreement ("Administration Agreement") between the Trust and the
Adviser, the Trust has also retained the Adviser to provide the Trust with
administrative and other services.
2. The Trust hereby appoints the Adviser to provide the investment
advisory services specified in this Contract and the Adviser hereby accepts such
appointment.
A-1
<PAGE>
3. (a) The Adviser shall, at its expense, (i) employ or associate with
itself such persons as it believes appropriate to assist it in performing its
obligations under this contract and (ii) provide all services, equipment and
facilities necessary to perform its obligations under this Contract.
(b) The Trust shall be responsible for all of its expenses and
liabilities, including compensation of its Trustees who are not affiliated with
the Adviser, the Distributor or any of their affiliates; taxes and governmental
fees; interest charges; fees and expenses of the Trust's independent accountants
and legal counsel; trade association membership dues; fees and expenses of any
custodian (including maintenance of books and accounts and calculation of the
net asset value of shares of the Trust), transfer agent, registrar and dividend
disbursing agent of the Trust; expenses of issuing, selling, redeeming,
registering and qualifying for sale shares of beneficial interest in the Trust;
expenses of preparing and printing share certificates, prospectuses and reports
to shareholders or other appropriate recipients, notices, proxy statements and
reports to regulatory agencies; the cost of office supplies, including
stationery; travel expenses of all officers, Trustees and employees; insurance
premiums; brokerage and other expenses of executing portfolio transactions;
expenses of shareholders' or variable insurance contract holders' meetings;
organizational expenses; and extraordinary expenses. Notwithstanding the
foregoing, the Trust may enter into a separate agreement, which shall be
controlling over this contract, as amended, pursuant to which some or all of the
foregoing expenses of this Section 3(b) shall be the responsibility of the other
party or parties to that agreement.
4. (a) The Adviser shall provide to the Trust investment guidance and
policy direction in connection with the management of the Portfolios, including
oral and written research, analysis, advice, and statistical and economic data
and information.
Consistent with the investment objectives, policies and restrictions
applicable to the Trust and the Portfolios, the Adviser will determine the
securities and other assets to be purchased or sold by each Portfolio and will
determine what portion of each Portfolio shall be invested in securities or
other assets, and what portion, if any, should be held uninvested.
The Trust will have the benefit of the investment analysis and
research, the review of current economic conditions and trends and the
consideration of long-range investment policy generally available to investment
advisory clients of the Adviser. It is understood that the Adviser will not use
any inside information pertinent to investment decisions undertaken in
connection with this Contract that may be in its possession or in the possession
of any of its affiliates, nor will the Adviser seek to obtain any such
information.
(b) The Adviser also shall provide to the officers of the Trust
administrative assistance in connection with the operation of the Trust and the
Portfolios, which shall include (i) compliance with all reasonable requests of
the Trust for information, including information required in connection with the
Trust's filings with the Securities and Exchange Commission and state securities
commissions, and (ii) such other services as the Adviser shall from time to time
determine to be necessary or useful to the administration of the Trust and the
Portfolios.
A-2
<PAGE>
(c) As manager of the assets of the Portfolios, the Adviser shall make
investments for the account of the Portfolios in accordance with the Adviser's
best judgment and within the investment objectives, policies, and restrictions
set forth in the Prospectus, the 1940 Act and the provisions of the Internal
Revenue Code relating to regulated investment companies that serve as underlying
investment media of variable insurance contracts, subject to policy decisions
adopted by the Trust's Board of Trustees.
(d) The Adviser shall furnish to the Trust's Board of Trustees
periodic reports on the investment performance of the Trust and the Portfolios
and on the performance of its obligations under this Contract and shall supply
such additional reports and information as the Trust's officers or Board of
Trustees shall reasonably request.
(e) On occasions when the Adviser deems the purchase or sale of a
security to be in the best interest of a Portfolio as well as other of its
clients, the Adviser, to the extent permitted by applicable law, may aggregate
the securities to be so sold or purchased in order to obtain the best execution
of the order or lower brokerage commissions, if any. The Adviser may also on
occasion purchase or sell a particular security for one or more clients in
different amounts. On either occasion, and to the extent permitted by applicable
law and regulations, allocation of the securities so purchased or sold, as well
as the expenses incurred in the transaction, will be made by the Adviser in the
manner it considers to be the most equitable and consistent with its fiduciary
obligations to the Trust and to such other customers.
(f) The Adviser may cause a Portfolio to pay a broker which provides
brokerage and research services to the Adviser a commission for effecting a
securities transaction in excess of the amount another broker might have
charged. Such higher commissions may not be paid unless the Adviser determines
in good faith that the amount paid is reasonable in relation to the services
received in terms of the particular transaction or the Adviser's overall
responsibilities to the Trust and any other of the Adviser's clients.
5. (a) The Adviser shall immediately notify the Trust in the event (1)
that the Securities and Exchange Commission has censured the Adviser; placed
limitations upon its activities, functions or operations; suspended or revoked
its registration as an investment adviser; or has commenced proceedings or an
investigation that may result in any of these actions, (2) upon having a
reasonable basis for believing that any Portfolio has ceased to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code, or
(3) upon having a reasonable basis for believing that any Portfolio has ceased
to comply with the diversification provisions of Section 817(h) of the Internal
Revenue Code or the Regulations thereunder. The Adviser further agrees to
notify the Trust immediately of any material fact known to the Adviser
respecting or relating to the Adviser that is not contained in the Registration
Statement or Prospectus for the Trust, or any amendment or supplement thereto,
or of any statement contained therein that becomes untrue.
(b) The Adviser shall be responsible for making inquiries and for
reasonably ensuring that any employee of the Adviser, any person or firm that
the Adviser has employed or with which it has associated, or any employee has
not, to the best of the Adviser's knowledge, in
A-3
<PAGE>
any material connection with the handling of Trust assets: (i) been convicted,
in the last ten (10) years, of any felony or misdemeanor arising out of conduct
involving embezzlement, fraudulent conversion, or misappropriation of funds or
securities, or involving violations of Sections 1341, 1342, or 1343 of Title 18,
United States Code; or (ii) been found by any state regulatory authority, within
the last ten (10) years, to have violated or to have acknowledged violation of
any provision of any state insurance law involving fraud, deceit or knowing
misrepresentation; or (iii) been found by any federal or state regulatory
authorities, within the last ten (10) years, to have violated or to have
acknowledged violation of any provisions of federal or state securities laws
involving fraud, deceit or knowing misrepresentation.
6. The Adviser shall give the Trust the benefit of the Adviser's best
judgment and efforts in rendering services under this Contract. As an
inducement to the Adviser's undertaking to render these services, the Trust
agrees that the Adviser shall not be liable under this Contract for any mistake
in judgment or in any other event whatsoever, provided that nothing in this
Contract shall be deemed to protect or purport to protect the Adviser against
any liability to the Trust or its shareholders to which the Adviser would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of the Adviser's duties under this Contract or by
reason of the Adviser's reckless disregard of its obligations and duties
hereunder.
7. In consideration of the services to be rendered by the Adviser under
this Contract, each Portfolio shall pay the Adviser a monthly fee on the first
business day of each month, based upon the average daily value (as determined on
each business day at the time set forth in the Prospectus for determining net
asset value per share) of the net assets of the Portfolio during the preceding
month, at the following annual rates: [___%].
If the fees payable to the Adviser pursuant to this paragraph 7 begin
to accrue before the end of any month or if this Contract terminates before the
end of any month, the fees for the period from that date to the end of that
month or from the beginning of that month to the date of termination, as the
case may be, shall be prorated according to the proportion which the period
bears to the full month in which the effectiveness or termination occurs. For
purposes of calculating the monthly fees, the value of the net assets of each
Portfolio shall be computed in the manner specified in the Prospectus for the
computation of net asset value. For purposes of this Contract, a "business day"
is any day the New York Stock Exchange is open for trading or as otherwise
provided in the Trust's prospectus.
8. If the aggregate expenses of every character incurred by, or allocated
to, the Trust in any fiscal year, other than interest, taxes, brokerage
commissions and other portfolio transaction expenses, other expenditures which
are capitalized in accordance with generally accepted accounting principles and
any extraordinary expense (including, without limitation, litigation and
indemnification expense), but including the fees payable under this Contract
("includable expenses"), shall exceed any expense limitations applicable to the
Trust, the Adviser shall pay the Trust an amount equal to that excess. With
respect to portions of a fiscal year in which this Contract shall be in effect,
the foregoing limitations shall be prorated according to the proportion which
that portion of the fiscal year bears to the full fiscal year. At the end of
each month of the Trust's fiscal year, the Adviser will review the includable
expenses accrued during that fiscal year
A-4
<PAGE>
to the end of the period and shall estimate the contemplated includable expenses
for the balance of that fiscal year. If, as a result of that review and
estimation, it appears likely that the includable expenses will exceed the
limitations referred to in this paragraph 8 for a fiscal year with respect to
the Trust, the monthly fees relating to the Trust payable to the Adviser under
this Contract and under the Administration Agreement for such month shall be
reduced, subject to a later reimbursement to reflect actual expenses, by an
amount equal to a pro rata portion (prorated on the basis of the remaining
months of the fiscal year, including the month just ended) of the amount by
which the includable expenses for the fiscal year (less an amount equal to the
aggregate of actual reductions made pursuant to this provision with respect to
prior months of the fiscal year) are expected to exceed the limitations provided
in this paragraph 8. For purposes of the foregoing, the value of the net assets
of each Portfolio of the Trust shall be computed in the manner specified in
paragraph 6, and any payments required to be made by the Adviser shall be made
once a year promptly after the end of the Trust's fiscal year.
9. The Trust and the Adviser acknowledge that the Trust will offer its
shares so that it may serve as an investment vehicle for variable annuity
contracts and variable life insurance policies issued by insurance companies, as
well as to qualified pension and retirement plans and other appropriate
investors. Shares of the Portfolios may be offered only to separate accounts and
general accounts of insurance companies that are approved in writing by the
Adviser. The Adviser shall be under no obligation to investigate insurance
companies to which the Trust offers or proposes to offer its shares.
10. (a) This Contract shall become effective with respect to the
Portfolios on _________________, 2000 (and, with respect to any amendment, or
with respect to any additional portfolio, the date of the amendment or
Supplement hereto) and shall continue in effect with respect to a Portfolio for
a period of more than two years from that date (or, with respect to any
additional portfolio, the date of the Supplement) only so long as the
continuance is specifically approved at least annually (i) by the vote of a
majority of the outstanding voting securities (as defined in the 1940 Act) of
the Portfolio or by the Trust's Board of Trustees and (ii) by the vote, cast in
person at a meeting called for the purpose, of a majority of the Trust's
trustees who are not parties to this Contract or "interested persons" (as
defined in the 1940 Act) of any such party.
(b) This Contract may be terminated with respect to a Portfolio (or
any additional portfolio) at any time, without the payment of any penalty, by a
vote of a majority of the outstanding voting securities (as defined in the 1940
Act) of the Portfolio or by a vote of a majority of the Trust's entire Board of
Trustees on 60 days' written notice to the Adviser or by the Adviser on 60 days'
written notice to the Trust. This Contract (or any Supplement hereto) shall
terminate automatically in the event of its assignment (as defined in the 1940
Act).
11. Except to the extent necessary to perform the Adviser's obligations
under this Contract, nothing herein shall be deemed to limit or restrict the
right of the Adviser, or any affiliate of the Adviser, or any employee of the
Adviser, to engage in any other business or to devote time and attention to the
management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other corporation,
firm, individual or association.
A-5
<PAGE>
12. The investment management services of the Adviser to the Trust under
this contract are not to be deemed exclusive as to the Adviser and the Adviser
will be free to render similar services to others.
13. This Contract shall be construed in accordance with the laws of the
State of California, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act.
14. The Declaration of Trust establishing the Trust, dated ____________,
provides that the name "PIMCO Variable Insurance Trust" refers to the trustees
under the Declaration collectively as trustees and not as individuals or
personally, and that no shareholder, trustee, officer, employee or agent of the
Trust shall be subject to claims against or obligations of the Trust to any
extent whatsoever, but that the Trust estate only shall be liable.
If the foregoing correctly sets forth the agreement between the Trust and
the Adviser, please so indicate by signing and returning to the Trust the
enclosed copy hereof.
Very truly yours,
PIMCO VARIABLE INSURANCE TRUST
By: ______________________________
Title:
ACCEPTED:
[ ]
By: ______________________________
Title:
A-6
<PAGE>
FORM OF
PORTFOLIO MANAGEMENT AGREEMENT
PIMCO Advisors L.P.
800 Newport Center Drive
Newport Beach, California 92260
____________________, 2000
[ ]
[ ]
Dear Sirs:
This will confirm the agreement between the undersigned (the "Adviser") and
[ ] (the "Portfolio Manager") as follows:
1. PIMCO Variable Insurance Trust (the "Trust") is an open-end investment
company which currently has multiple separate investment portfolios, two of
which are subject to this agreement: [Names of Portfolios] (the "Portfolios").
The Adviser serves as investment adviser to the Portfolios pursuant to an
Investment Advisory Contract dated the date hereof. Additional investment
portfolios may be established in the future. This agreement shall pertain to the
Portfolios and to such additional investment portfolios as shall be designated
in supplements to this agreement, as further agreed between the Adviser and the
Portfolio Manager. The Trust engages in the business of investing and
reinvesting the assets of each Portfolio in the manner and in accordance with
the investment objective and restrictions applicable to that Portfolio as
specified in the currently effective Prospectuses (the "Prospectus") for the
Trust included in the registration statement, as amended from time to time (the
"Registration Statement"), filed by the Trust under the Investment Company Act
of 1940 (the "1940 Act") and the Securities Act of 1933 (the "1933 Act").
Copies of the documents referred to in the preceding sentence have been
furnished to the Portfolio Manager. Any amendments to those documents shall be
furnished to the Portfolio Manager promptly.
2. The Adviser hereby appoints the Portfolio Manager to provide the
portfolio management services specified in this agreement and the Portfolio
Manager hereby accepts such appointment.
3. (a) The Portfolio Manager shall, at its expense, (i) employ or
associate with itself such persons as it believes appropriate to assist it in
performing its obligations under this agreement, and (ii) provide all services,
equipment and facilities necessary to perform its obligations under this
agreement.
A-7
<PAGE>
(b) Under the terms of the Investment Advisory Contract, the Trust
shall be responsible for all of its expenses and liabilities, including
compensation of its Trustees who are not affiliated with the Adviser, the
distributor of its shares or any of their affiliates; taxes and governmental
fees; interest charges; fees and expenses of the Trust's independent accountants
and legal counsel; trade association membership dues; fees and expenses of any
custodian (including maintenance of books and accounts and calculation of the
net asset value of shares of the Trust), transfer agent, registrar and dividend
disbursing agent of the Trust; expenses of issuing, selling, redeeming,
registering and qualifying for sale shares of beneficial interest in the Trust;
expenses of preparing and printing share certificates, Prospectuses and reports
to shareholders or other appropriate recipients, notices, proxy statements and
reports to regulatory agencies; the cost of office supplies, including
stationery; travel expenses of all officers, Trustees and employees; insurance
premiums; brokerage and other expenses of executing portfolio transactions;
expenses of shareholders' or variable insurance contract holders' meetings;
organizational expenses; and extraordinary expenses. Notwithstanding the
foregoing, the Trust may enter into a separate agreement, which shall be
controlling over this agreement, as amended, pursuant to which some or all of
the foregoing expenses of this Section 3(b) shall be the responsibility of the
other party or parties to that agreement.
4. (a) The Portfolio Manager shall provide to the Trust investment
guidance and policy direction in connection with the management of the
Portfolios, including oral and written research, analysis, advice, and
statistical and economic data and information.
Consistent with the investment objectives, policies and restrictions
applicable to the Trust and the Portfolios, the Portfolio Manager will determine
the securities and other assets to be purchased or sold by each Portfolio and
will determine what portion of each Portfolio shall be invested in securities or
other assets, and what portion, if any, should be held uninvested.
The Trust will have the benefit of the investment analysis and
research, the review of current economic conditions and trends and the
consideration of long-range investment policy generally available to investment
advisory clients of the Portfolio Manager. It is understood that the Portfolio
Manager will not use any inside information pertinent to investment decisions
undertaken in connection with this agreement that may be in its possession or in
the possession of any of its affiliates, nor will the Portfolio Manager seek to
obtain any such information.
(b) The Portfolio Manager also shall provide to the officers of the
Trust and to the Adviser administrative assistance in connection with the
operation of the Trust and the Portfolios, which shall include (i) compliance
with all reasonable requests of the Trust and the Adviser for information,
including information required in connection with the Trust's filings with the
Securities and Exchange Commission and state securities commissions, and (ii)
such other services as the Portfolio Manager shall from time to time determine
to be necessary or useful to the administration of the Trust and the Portfolios.
(c) As manager of the assets of the Portfolios, the Portfolio Manager
shall make investments for the account of the Portfolios in accordance with the
Portfolio Manager's best judgment and within the investment objectives,
policies, and restrictions set forth in the Prospectus,
A-8
<PAGE>
the 1940 Act and the provisions of the Internal Revenue Code relating to
regulated investment companies that serve as underlying investment media of
variable insurance contracts, subject to policy decisions adopted by the Trust's
Board of Trustees and to the supervision of the Adviser.
(d) The Portfolio Manager shall furnish to the Trust's Board of
Trustees periodic reports on the investment performance of the Trust and the
Portfolios and on the performance of its obligations under this Contract and
shall supply such additional reports and information as the Trust's officers or
Board of Trustees or the Adviser shall reasonably request.
(e) On occasions when the Portfolio Manager deems the purchase or sale
of a security to be in the best interest of a Portfolio as well as other of its
clients, the Portfolio Manager, to the extent permitted by applicable law, may
aggregate the securities to be so sold or purchased in order to obtain the best
execution of the order or lower brokerage commissions, if any. The Portfolio
Manager may also on occasion purchase or sell a particular security for one or
more clients in different amounts. On either occasion, and to the extent
permitted by applicable law and regulations, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction, will be
made by the Portfolio Manager in the manner it considers to be the most
equitable and consistent with its fiduciary obligations to the Trust and to such
other customers.
(f) The Portfolio Manager may cause a Portfolio to pay a broker that
provides brokerage and research services to the Portfolio Manager a commission
for effecting a securities transaction in excess of the amount another broker
might have charged. Such higher commissions may not be paid unless the
Portfolio Manager determines in good faith that the amount paid is reasonable in
relation to the services received in terms of the particular transaction or the
Portfolio Manager's overall responsibilities to the Trust and any other of the
Portfolio Manager's clients.
5. (a) The Portfolio Manager shall immediately notify the Trust and the
Adviser in the event (1) that the Securities and Exchange Commission has
censured the Portfolio Manager; placed limitations upon its activities,
functions or operations; suspended or revoked its registration as an investment
adviser; or has commenced proceedings or an investigation that may result in any
of these actions, (2) upon having a reasonable basis for believing that any
Portfolio has ceased to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code, or (3) upon having a reasonable basis
for believing that any Portfolio has ceased to comply with the diversification
provisions of Section 817(h) of the Internal Revenue Code or the Regulations
thereunder. The Portfolio Manager further agrees to notify the Trust and the
Adviser immediately of any material fact known to the Portfolio Manager
respecting or relating to the Portfolio Manager that is not contained in the
Registration Statement or Prospectus for the Trust, or any amendment or
supplement thereto, or of any statement contained therein that becomes untrue.
(b) The Portfolio Manager shall be responsible for making inquiries
and for reasonably ensuring that any employee of the Portfolio Manager, any
person or firm that the Portfolio Manager has employed or with which it has
associated, or any employee has not, to the best of the Portfolio Manager's
knowledge, in any material connection with the handling of Trust assets: (i)
been convicted, in the last ten (10) years, of any felony or misdemeanor arising
out of conduct involving embezzlement, fraudulent conversion, or
misappropriation of funds or securities,
A-9
<PAGE>
or involving violations of Sections 1341, 1342, or 1343 of Title 18, United
States Code; or (ii) been found by any state regulatory authority, within the
last ten (10) years, to have violated or to have acknowledged violation of any
provision of any state insurance law involving fraud, deceit or knowing
misrepresentation; or (iii) been found by any federal or state regulatory
authorities, within the last ten (10) years, to have violated or to have
acknowledged violation of any provisions of federal or state securities laws
involving fraud, deceit or knowing misrepresentation.
6. The Portfolio Manager shall give the Trust the benefit of the
Portfolio Manager's best judgment and efforts in rendering services under this
agreement. As an inducement to the Portfolio Manager's undertaking to render
these services, the Adviser agrees that the Portfolio Manager shall not be
liable under this agreement for any mistake in judgment or in any other event
whatsoever, provided that nothing in this agreement shall be deemed to protect
or purport to protect the Portfolio Manager against any liability to the Adviser
or to the Trust or its shareholders to which the Portfolio Manager would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of the Portfolio Manager's duties under this
agreement or by reason of the Portfolio Manager's reckless disregard of its
obligations and duties hereunder.
7. In consideration of the services to be rendered by the Portfolio
Manager under this agreement, the Adviser shall pay the Portfolio Manager a
monthly fee on the first business day of each month, based upon the average
daily value (as determined on each business day at the time set forth in the
Prospectus for determining net asset value per share) of the net assets of the
Portfolio during the preceding month, at the following annual rates: [___]
If the fees payable to the Portfolio Manager pursuant to this
paragraph 7 begin to accrue before the end of any month or if this agreement
terminates before the end of any month, the fees for the period from that date
to the end of that month or from the beginning of that month to the date of
termination, as the case may be, shall be prorated according to the proportion
which the period bears to the full month in which the effectiveness or
termination occurs. For purposes of calculating the monthly fees, the value of
the net assets of each Portfolio shall be computed in the manner specified in
the Prospectus for the computation of net asset value. For purposes of this
agreement, a "business day" is any day the New York Stock Exchange is open for
trading or as otherwise provided in the Prospectus.
8. The Portfolio Manager acknowledges that the Trust will offer its
shares so that it may serve as an investment vehicle for variable annuity
contracts and variable life insurance policies issued by insurance companies, as
well as to qualified pension and retirement plans and other appropriate
investors. Shares of the Portfolios may be offered only to separate accounts and
general accounts of insurance companies that are approved in writing by the
Adviser. The Portfolio Manager shall be under no obligation to investigate
insurance companies to which the Trust offers or proposes to offer its shares.
9. (a) This Contract shall become effective with respect to the
Portfolios on _________________, 2000 (and, with respect to any amendment, or
with respect to any additional portfolio, the date of the amendment or
supplement hereto) and shall continue in effect with respect to a Portfolio for
a period of more than two years from that date (or, with respect to any
additional
A-10
<PAGE>
portfolio, the date of the supplement) only so long as the continuance is
specifically approved at least annually (i) by the vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of the Portfolio or
by the Trust's Board of Trustees and (ii) by the vote, cast in person at a
meeting called for the purpose, of a majority of the Trust's trustees who are
not parties to this agreement or "interested persons" (as defined in the 1940
Act) of any such party.
(b) This agreement may be terminated with respect to a Portfolio (or
any additional portfolio) at any time, without the payment of any penalty, by
the Adviser, by a vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Portfolio or by a vote of a majority of the
Trust's entire Board of Trustees on 60 days' written notice to the Portfolio
Manager or by the Portfolio Manager on 60 days' written notice to the Trust and
the Adviser. This agreement (or any supplement hereto) shall terminate
automatically in the event of its assignment (as defined in the 1940 Act) or in
the event of the termination of the Investment Advisory Contract.
10. Except to the extent necessary to perform the Portfolio Manager's
obligations under this agreement, nothing herein shall be deemed to limit or
restrict the right of the Portfolio Manager, or any affiliate of the Portfolio
Manager, or any employee of the Portfolio Manager, to engage in any other
business or to devote time and attention to the management or other aspects of
any other business, whether of a similar or dissimilar nature, or to render
services of any kind to any other corporation, firm, individual or association.
11. The portfolio management services of the Portfolio Manager to the
Trust under this agreement are not to be deemed exclusive as to the Portfolio
Manager, and the Portfolio Manager will be free to render similar services to
others.
12. This agreement shall be construed in accordance with the laws of the
State of California, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act.
A-11
<PAGE>
If the foregoing correctly sets forth the agreement between the Adviser and
the Portfolio Manager, please so indicate by signing and returning to the
Adviser the enclosed copy hereof.
Very truly yours,
PIMCO ADVISORS L.P.
By: ____________________________________
Title:
ACCEPTED:
By: ___________________________________
Title:
[ ]
A-12
<PAGE>
FORM OF
ADMINISTRATION AGREEMENT
ADMINISTRATION AGREEMENT, made this ____ day of _____________, 1997 between
PIMCO Variable Insurance Trust (the "Trust"), a Delaware business trust, and
Pacific Investment Management Company (the "Administrator" or "PIMCO"), a
general partnership organized under the laws of California.
WHEREAS, the Trust is registered with the Securities and Exchange
Commission ("SEC") as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue shares of beneficial interest
("Shares") in separate series with each such series representing interests in a
separate portfolio of securities and other assets; and
WHEREAS, the Trust has established ten series, which are designated as the
Money Market Portfolio; the Short-Term Bond Portfolio; the Low Duration Bond
Portfolio; the High Yield Bond Portfolio the Total Return Bond Portfolio; the
Global Bond Portfolio; the Emerging Markets Bond Portfolio; the Foreign Bond
Portfolio; the StocksPLUS Growth and Income Portfolio; and the Strategic
Balanced Portfolio; such series, together with any other series subsequently
established by the Trust, with respect to which the Trust desires to retain the
Administrator to render administrative services hereunder, and with respect to
which the Administrator is willing to do so, being herein collectively referred
to also as the "Portfolios"; and
WHEREAS, pursuant to an Investment Advisory Contract dated ___________,
1997, between the Trust and PIMCO ("Investment Advisory Contract"), the Trust
has retained PIMCO to provide investment advisory services with respect to the
Portfolios in the manner and on the terms set forth therein; and
WHEREAS, the Trust wishes to retain PIMCO to provide administrative and
other services to the Trust with respect to the Portfolios in the manner and on
the terms hereinafter set forth; and
WHEREAS, PIMCO is willing to furnish such services in the manner and on the
terms hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties agree as follows:
1. Appointment. The Trust hereby appoints PIMCO as its
-----------
Administrator, to provide the administrative and other services with respect to
the Portfolios for the period and on
A-13
<PAGE>
the terms set forth in this Agreement. The Administrator accepts such
appointment and agrees during such period to render the services herein set
forth for the compensation herein provided.
In the event the Trust establishes and designates additional series
with respect to which it desires to retain the Administrator to render
administrative and other services hereunder, it shall notify the Administrator
in writing. If the Administrator is willing to render such services it shall
notify the Trust in writing, whereupon such additional series shall become a
Portfolio hereunder.
2. Duties. Subject to the general supervision of the Board of
Trustees, the Administrator shall provide all administrative and other services
reasonably necessary for the operation of the Portfolios other than the
investment advisory services provided pursuant to the Investment Advisory
Contract.
(a) Administrative Services. These services shall include the
following: (i) coordinating matters relating to the operation of the
Portfolios including any necessary coordination among the adviser or
advisers to the Portfolios, the custodian, transfer agent (if any),
dividend disbursing agent, and recordkeeping agent (including pricing
and valuation of the Portfolios), insurance companies, accountants,
attorneys, and other parties performing services or operational
functions for the Portfolios; (ii) providing the Portfolios, at the
Administrator's expense, with the services of a sufficient number of
persons competent to perform such administrative and clerical
functions as are necessary to ensure compliance with federal
securities laws and state insurance laws as well as other applicable
laws, and to provide effective administration of the Portfolios; (iii)
maintaining or supervising the maintenance by third parties of such
books and records of the Trust and the Portfolios as may be required
by applicable federal or state law other than the records and ledgers
maintained under the Investment Advisory Contract; (iv) preparing or
supervising the preparation by third parties of all federal, state,
and local tax returns and reports of the Portfolios required by
applicable law; (v) preparing, filing, and arranging for the
distribution of proxy materials and periodic reports to shareholders
of the Portfolios or other appropriate parties as required by
applicable law; (vi) preparing and arranging for the filing of such
registration statements and other documents with the SEC and other
federal and state regulatory authorities as may be required to
register the shares of the Trust and qualify the Trust to do business
or as otherwise required by applicable law; (vii) taking such other
action with respect to the Portfolios, as may be required by
applicable law, including without limitation the rules and regulations
of the SEC and of state securities and insurance commissions and other
regulatory agencies; and (viii) providing the Portfolios, at the
Administrator's expense, with adequate personnel, office space,
communications facilities, and other facilities necessary for the
Portfolios' operations as contemplated in this Agreement.
A-14
<PAGE>
(b) Other Services. The Administrator shall also procure on
behalf of the Trust and the Portfolios, and at the expense of the
Administrator, the following persons to provide services to the
Portfolios, to the extent necessary: (i) a custodian or custodians
for the Portfolios to provide for the safekeeping of the Portfolios'
assets; (ii) a recordkeeping agent to maintain the portfolio
accounting records for the Portfolios; (iii) a transfer agent for the
Portfolios; and (iv) a dividend disbursing agent for the Portfolios.
The Trust may be a party to any agreement with any of the persons
referred to in this Section 3(b).
(c) The Administrator shall also make its officers and employees
available to the Board of Trustees and officers of the Trust for
consultation and discussions regarding the administration of the
Portfolios and services provided to the Portfolios under this
Agreement.
(d) In performing these services, the Administrator:
(i) Shall conform with the 1940 Act and all rules and
regulations thereunder, all other applicable federal and state laws
and regulations, with any applicable procedures adopted by the Trust's
Board of Trustees, and with the provisions of the Trust's Registration
Statement filed an Form N-1A as supplemented or amended from time to
time.
(ii) Will make available to the Trust, promptly upon
request, any of the Portfolios' books and records as are maintained
under this Agreement, and, upon request by the Trust, will furnish to
regulatory authorities having the requisite authority any such books
and records and any information or reports in connection with the
Administrator's services under this Agreement that may be requested in
order to ascertain whether the operations of the Trust are being
conducted in a manner consistent with applicable laws and regulations.
(iii) Will regularly report to the Trust's Board of
Trustees on the services provided under this Agreement and will
furnish the Trust's Board of Trustees with respect to the Portfolios
such periodic and special reports as the Trustees may reasonably
request.
3. Documentation. The Trust has delivered copies of each of the
following documents to the Administrator and will deliver to it all future
amendments and supplements thereto, if any:
(a) the Trust's Registration Statement as filed with the SEC and
any amendments thereto; and
A-15
<PAGE>
(b) exhibits, powers of attorneys, certificates and any and all
other documents relating to or filed in connection with the
Registration Statement described above.
4. Independent Contractor. The Administrator shall for all purposes
herein be deemed to be an independent contractor and shall, unless otherwise
expressly provided herein or authorized by the Board of Trustees of the Trust
from time to time, have no authority to act for or represent the Trust in any
way or otherwise be deemed its agent.
5. Compensation. As compensation for the services rendered under
this Agreement, the Trust shall pay to the Administrator a monthly fee,
calculated as a percentage (on an annual basis) of the average daily value of
the net assets of each of the Portfolios during the preceding month. The fee
rates applicable to each Portfolio shall be set forth in a schedule to this
Agreement. The fees payable to the Administrator for all of the Portfolios
shall be computed and accrued daily and paid monthly. If the Administrator
shall serve for less than any whole month, the foregoing compensation shall be
prorated.
6. Non-Exclusivity. It is understood that the services of the
Administrator hereunder are not exclusive, and the Administrator shall be free
to render similar services to other investment companies and other clients.
7. Expenses. During the term of this Agreement, the Administrator
will pay all expenses incurred by it in connection with its obligations under
this Agreement, except such expenses as are assumed by the Portfolios under this
Agreement, and any expenses that are paid under the terms of the Investment
Advisory Contract. The Administrator assumes and shall pay for maintaining its
staff and personnel and shall, at its own expense provide the equipment, office
space, office supplies (including stationery), and facilities necessary to
perform its obligations under this Agreement. In addition, the Administrator
shall bear the following expenses under this Agreement:
(a) Expenses of all audits by Trust's independent public
accountants;
(b) Expenses of the Trust's transfer agent, registrar, dividend
disbursing agent, and shareholder recordkeeping services;
(c) Expenses of the Trust's custodial services including any
recordkeeping services provided by the custodian;
(d) Expenses of obtaining quotations for calculating the value of
each Portfolio's net assets;
(e) Expenses of obtaining Portfolio Activity Reports for each
Portfolio;
(f) Expenses of maintaining the Trust's tax records;
A-16
<PAGE>
(g) Costs and/or fees, including legal fees, incident to meetings
of the Trust's shareholders or of any contract owners with contract
value allocated to the Trust, the preparation, printing and mailings
of prospectuses, notices and proxy statements and reports of the Trust
to its shareholders or other appropriate recipients, the filing of
reports with regulatory bodies, the maintenance of the Trust's
existence and qualification to do business, and the expense of
issuing, redeeming, registering and qualifying for sale, shares with
federal and state securities and/or insurance authorities;
(h) The Trust's ordinary legal fees, including the legal fees
that arise in the ordinary course of business for a Delaware business
trust registered as an open-end management investment company;
(i) Costs of printing certificates representing shares of the
Trust;
(j) The Trust's pro rata portion of the fidelity bond required by
Section 17(g) of the 1940 Act, or other insurance premiums; and
(k) Association membership dues.
The Trust shall bear the following expenses:
(a) Salaries and other compensation or expenses, including travel
expenses, of any of the Trust's executive officers and employees, if
any, who are not officers, directors, stockholders, partners or
employees of the Administrator or its subsidiaries or affiliates;
(b) Taxes and governmental fees, if any, levied against the Trust
or any of its Portfolios;
(c) Brokerage fees and commissions, and other portfolio
transaction expenses incurred for any of the Portfolios;
(d) Costs, including the interest expenses, of borrowing money;
(e) Fees and expenses, including travel expenses, and fees and
expenses of legal counsel retained for their benefit, of trustees who
are not officers, employees, partners or shareholders of PIMCO or its
subsidiaries or affiliates;
(f) Extraordinary expenses, including extraordinary legal
expenses, as may arise, including expenses incurred in connection with
litigation, proceedings, other claims and the legal obligations of the
Trust to indemnify its trustees, officers, employees, shareholders,
distributors, and agents with respect thereto;
A-17
<PAGE>
(g) Organizational and offering expenses of the Trust and the
Portfolios, and any other expenses which are capitalized in accordance
with generally accepted accounting principles; and
(h) Any expenses allocated or allocable to a specific class of
shares.
8. Liability. The Administrator shall give the Trust the benefit of
the Administrator's best efforts in rendering services under this Agreement.
The Administrator may rely on information reasonably believed by it to be
accurate and reliable. As an inducement for the Administrator's undertaking to
render services under this Agreement, the Trust agrees that neither the
Administrator nor its stockholders, officers, directors, or employees shall be
subject to any liability for, or any damages, expenses or losses incurred in
connection with, any act or omission or mistake in judgment connected with or
arising out of any services rendered under this Agreement, except by reason of
willful misfeasance, bad faith, or gross negligence in performance of the
Administrator's duties, or by reason of reckless disregard of the
Administrator's obligations and duties under this Agreement. This provision
shall govern only the liability to the Trust of the Administrator and that of
its stockholders, officers, directors, and employees, and shall in no way govern
the liability to the Trust or the Administrator or provide a defense for any
other person including persons that provide services for the Portfolios as
described in Section 2(b) of this Agreement.
9. Term and Continuation. This Agreement shall take effect as of
the date indicated above, and shall remain in effect, unless sooner terminated
as provided herein, for two years from such date, and shall continue thereafter
on an annual basis with respect to each Portfolio provided that such continuance
is specifically approved at least annually (a) by the vote of a majority of the
Board of Trustees of the Trust, or (b) by vote of a majority of the outstanding
voting shares of the Portfolios, and provided continuance is also approved by
the vote of a majority of the Board of Trustees of the Trust who are not parties
to this Agreement or "interested persons" (as defined in the 1940 Act) of the
Trust, or PIMCO, cast in person at a meeting called for the purpose of voting on
such approval.
This Agreement may be terminated:
(a) by the Trust at any time with respect to the services
provided by the Administrator, by vote of a majority of the entire
Board of Trustees of the Trust or by a vote of a majority of the
outstanding voting shares of the Trust or, with respect to a
particular Portfolio, by vote of a majority of the outstanding voting
shares of such Portfolio, on 60 days' written notice to the
Administrator;
(b) at or after the expiration of the two-year period commencing
the date of its effectiveness, by the Administrator at any time,
without the payment of any penalty, upon 60 days' written notice to
the Trust.
A-18
<PAGE>
10. Use of Name. It is understood that the name "Pacific Investment
Management Company" or "PIMCO" or any derivative thereof or logo associated with
those names are the valuable property of PIMCO and its affiliates, and that the
right of the Trust and/or the Portfolios to use such names (or derivatives or
logos) shall be governed by the Investment Advisory Contract.
11. Notices. Notices of any kind to be given to the Administrator by
the Trust shall be in writing and shall be duly given if mailed or delivered to
the Administrator at 840 Newport Center Drive, Newport Beach, California 92660,
or to such other address or to such individual as shall be specified by the
Administrator. Notices of any kind to be given to the Trust by the
Administrator shall be in writing and shall be duly given if mailed or delivered
to 840 Newport Center Drive, Newport Beach, California 92660, or to such other
address or to such individual as shall be specified by the Trust.
12. Trust Obligation. Notice is hereby given that the Agreement has
been executed on behalf of the Trust by a trustee of the Trust in his or her
capacity as trustee and not individually. The obligations of this Agreement
shall only be binding upon the assets and property of the Trust and shall not be
binding upon any trustee, officer, or shareholder of the Trust individually.
13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original.
14. Miscellaneous. (a) This Agreement shall be governed by the laws
of California, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Investment Advisers Act of 1940, or any rule
or order of the SEC thereunder.
(b) If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby and, to this extent,
the provisions of this Agreement shall be deemed to be severable. To
the extent that any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise with regard to
any party, hereunder, such provisions with respect to other parties
hereto shall not be affected thereby.
(c) the captions in this Agreement are included for convenience
only and in no way define any of the provisions hereof or otherwise
affect their construction or effect.
(d) This Agreement may not be assigned by the Trust or the
Administrator without the consent of the other party.
A-19
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below on the day and year first above
written.
PIMCO VARIABLE INSURANCE TRUST
________________________________ By: __________________________________
Attest Title:
Title:
PACIFIC INVESTMENT MANAGEMENT COMPANY
________________________________ By: __________________________________
Attest Title:
Title:
A-20
<PAGE>
Schedule to
Administration Agreement
<TABLE>
<CAPTION>
Fund Fee Rate
---- --------
<S> <C>
</TABLE>
A-21
<PAGE>
APPENDIX B
----------
Information About the Investment Advisers
PIMCO, PIMCO Advisors, Cadence, and NFJ
The address of PIMCO and PIMCO Advisors is 840 Newport Center Drive, Suite
300, Newport Beach, California 92660. The address of Cadence is
____________________. The address of NFJ is 2121 San Jacinto, Suite 1840,
Dallas, Texas 75201. PIMCO, PIMCO Advisors, Cadence, and NFJ are registered as
investment advisers under the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), and are registered as commodity trading advisors with the
Commodity Futures Trading Commission.
PIMCO AND PIMCO Advisors
The directors and principal executive officers of PIMCO and PIMCO Advisors,
their principal occupations and dates of service are shown below. Unless
otherwise indicated, the business address of each director and officer is 840
Newport Center Drive, Suite 300, Newport Beach, California 92660.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Name
Length of Service Position and Principal Occupation
- ------------------------------------------------------------------------------------------------------
<S> <C>
William S. Thompson Managing Director, Chief Executive Officer and Management Committee
April 1993 to Present Member, PIMCO and PIMCO Management, Inc.; Member of Management Board
and Executive Committee, PIMCO Advisors L.P.; President and Chief
Executive Officer, PIMCO Partners G.P.; President, Chief Executive
Officer and Member, PIMCO Partners LLC.
- ------------------------------------------------------------------------------------------------------
William R. Benz, II Managing Director, PIMCO; Director and Managing Director, PIMCO
June 1986 to Present Management, Inc.; Member of PIMCO Partners LLC.
- ------------------------------------------------------------------------------------------------------
Robert Wesley. Burns Managing Director, and Management Committee Member, PIMCO, Managing
February 1987 to Present Director, PIMCO Management, Inc.
- ------------------------------------------------------------------------------------------------------
Chris P. Dialynas Managing Director and Management Committee Member, PIMCO, Managing
July 1983 to Present Director, PIMCO Management, Inc.
- ------------------------------------------------------------------------------------------------------
Mohamed A. El-Erian Managing Director, PIMCO and PIMCO Management, Inc. [confirm]
May 1999 to Present
- ------------------------------------------------------------------------------------------------------
William H. Gross Managing Director, PIMCO; Director and Managing Director, PIMCO
June 1971 to Present Management, Inc.; Director and Vice President, StocksPLUS Management,
Inc.; Member of Management Board, PIMCO Advisors; Member of PIMCO
Partners LLC.
- ------------------------------------------------------------------------------------------------------
</TABLE>
B-1
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Name
Length of Service Position and Principal Occupation
- ------------------------------------------------------------------------------------------------------
<S> <C>
John L. Hague Managing Director and Management Committee Member, PIMCO. Director
September 1987 to Present and Managing Director, PIMCO Management, Inc. Member of PIMCO
Partners LLC.
- ------------------------------------------------------------------------------------------------------
Pasi M. Hamalainen Managing Director, PIMCO and PIMCO Management, Inc. [confirm]
January 1994 to Present
- ------------------------------------------------------------------------------------------------------
Brent R. Harris Managing Director, and Management Committee Member, PIMCO. Director
June 1985 to Present and Managing Director, PIMCO Management, Inc.; Director and Vice
President, StocksPLUS Management, Inc.; Member of Management Board
and Executive Committee, PIMCO Advisors; Member of PIMCO Partners LLC.
- ------------------------------------------------------------------------------------------------------
Brent L. Holden Managing Director, PIMCO and PIMCO Management, Inc. [confirm]
December 1989 to Present
- ------------------------------------------------------------------------------------------------------
Margaret E. Isberg Managing Director, PIMCO and PIMCO Management, Inc.
August 1983 to Present
- ------------------------------------------------------------------------------------------------------
John S. Loftus Managing Director, PIMCO and PIMCO Management, Inc. [confirm]
August 1986 to Present
- ------------------------------------------------------------------------------------------------------
Dean S. Meiling Managing Director, PIMCO. Director and Managing Director, PIMCO
December 1976 to Present Management, Inc.; Member of PIMCO Partners LLC
- ------------------------------------------------------------------------------------------------------
James F. Muzzy Managing Director and Management Committee Member, PIMCO; Director
September 1971 to Present and Managing Director, PIMCO Management, Inc.; Director and Vice
President, StocksPLUS Management, Inc.; Member of PIMCO Partners LLC
- ------------------------------------------------------------------------------------------------------
William F. Podlich, III Managing Director, PIMCO; Director and Managing Director, PIMCO
June 1966 to Present Management, Inc.; Member of Management Board, PIMCO Advisors; Member
of PIMCO Partners LLC.
- ------------------------------------------------------------------------------------------------------
William C. Powers Managing Director, PIMCO; Director and Managing Director, PIMCO
January 1991 to Present Management, Inc.
- ------------------------------------------------------------------------------------------------------
Ernest L. Schmider Managing Director, PIMCO and PIMCO Management, Inc. [confirm]
March 1994 to Present
- ------------------------------------------------------------------------------------------------------
Lee R. Thomas Director and Managing Director, PIMCO and PIMCO Management, Inc.;
April 1995 to Present Member of PIMCO Partners LLC.
- ------------------------------------------------------------------------------------------------------
Benjamin L. Trosky Managing Director and Management Board Member, PIMCO; Director and
October 1990 to Present Managing Director, PIMCO Management, Inc.
- ------------------------------------------------------------------------------------------------------
Leslie A. Barbi Executive Vice President, PIMCO and PIMCO Management, Inc.
July 1993 to Present
- ------------------------------------------------------------------------------------------------------
A. Benjamin Ehlert Executive Vice President, PIMCO and PIMCO Management, Inc.
March 1962 to Present
- ------------------------------------------------------------------------------------------------------
</TABLE>
B-2
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Name
Length of Service Position and Principal Occupation
- ------------------------------------------------------------------------------------------------------
<S> <C>
Robert A. Ettl Executive Vice President, PIMCO and PIMCO Management, Inc.
April 1995 to Present
- ------------------------------------------------------------------------------------------------------
Gordon C. Hally Executive Vice President, PIMCO and PIMCO Management, Inc.
May 1982 to Present
- ------------------------------------------------------------------------------------------------------
Douglas M. Hodge Executive Vice President, PIMCO and PIMCO Management, Inc.
April 1989 to Present
- ------------------------------------------------------------------------------------------------------
Sharon K. Kilmer Executive Vice President, PIMCO and PIMCO Management, Inc.
May 1998 to Present
- ------------------------------------------------------------------------------------------------------
Paul A. McCulley Executive Vice President, PIMCO and PIMCO Management, Inc.
April 1999 to Present
- ------------------------------------------------------------------------------------------------------
Joseph V. McDevitt Executive Vice President and Director of European Marketing, PIMCO
February 1998 to Present and PIMCO Management, Inc.
- ------------------------------------------------------------------------------------------------------
George H. Wood Executive Vice President, PIMCO and PIMCO Management, Inc.
June 1995 to Present
- ------------------------------------------------------------------------------------------------------
George C. Allan Senior Vice President, PIMCO and PIMCO Management, Inc.
April 1980 to Present
- ------------------------------------------------------------------------------------------------------
Tammie J. Arnold Senior Vice President, PIMCO and PIMCO Management, Inc.
August 1993 to Present
- ------------------------------------------------------------------------------------------------------
Michael R. Asay Senior Vice President, PIMCO and PIMCO Management, Inc.
April 1998 to Present
- ------------------------------------------------------------------------------------------------------
Andrew Brick Senior Vice President, PIMCO and PIMCO Global Advisors (Singapore)
September 1998 to Present PTE Limited.
- ------------------------------------------------------------------------------------------------------
John B. Brynjolfsson Senior Vice President, PIMCO and PIMCO Management, Inc.
July 1985 to Present
- ------------------------------------------------------------------------------------------------------
Wendy W. Cupps Senior Vice President, PIMCO and PIMCO Management, Inc.
August 1994 to Present
- ------------------------------------------------------------------------------------------------------
Michael G. Dow Senior Vice President, PIMCO, PIMCO Management, Inc. and PIMCO Funds:
May 1995 to Present
- ------------------------------------------------------------------------------------------------------
John P. Hardaway Senior Vice President and Manager of Investment Operations
July 1990 to Present Accounting, PIMCO; Senior Vice President, PIMCO Management, Inc.
- ------------------------------------------------------------------------------------------------------
</TABLE>
B-3
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Name
Length of Service Position and Principal Occupation
- ------------------------------------------------------------------------------------------------------
<S> <C>
David C. Hinman Senior Vice President, PIMCO and PIMCO Management, Inc.
July 1995 to Present
- ------------------------------------------------------------------------------------------------------
Dwight F. Holloway, Jr. Senior Vice President, PIMCO and PIMCO Management, Inc.
February 1993 to Present
- ------------------------------------------------------------------------------------------------------
Mark T. Hudoff Senior Vice President, PIMCO and PIMCO Management, Inc.
February 1996 to Present
- ------------------------------------------------------------------------------------------------------
James M. Keller Senior Vice President, PIMCO and PIMCO Management, Inc.
February 1996 to Present
- ------------------------------------------------------------------------------------------------------
Raymond G. Kennedy Senior Vice President, PIMCO and PIMCO Management, Inc.
September 1996 to Present
- ------------------------------------------------------------------------------------------------------
Scott A. Mather Senior Vice President, PIMCO and PIMCO Management, Inc.
July 1998 to Present
- ------------------------------------------------------------------------------------------------------
Kristen S. Monson Senior Vice President, PIMCO and PIMCO Management, Inc.
July 1986 to Present
- ------------------------------------------------------------------------------------------------------
Thomas J. Otterbein Senior Vice President, PIMCO and PIMCO Management, Inc.
July 1994 to Present
- ------------------------------------------------------------------------------------------------------
Mohan V. Phansalkar Senior Vice President, Senior Legal Officer and Assistant Secretary,
February 1999 to Present PIMCO and PIMCO Management, Inc.
- ------------------------------------------------------------------------------------------------------
Scott L. Roney Senior Vice President, PIMCO and PIMCO Management, Inc.
April 1993 to Present
- ------------------------------------------------------------------------------------------------------
Michael J. Rosborough Senior Vice President, PIMCO and PIMCO Management, Inc.
August 1994 to Present
- ------------------------------------------------------------------------------------------------------
Leland T. Scholey Senior Vice President, PIMCO, PIMCO Management, Inc. and PIMCO Funds:
July 1984 to Present
- ------------------------------------------------------------------------------------------------------
Michael A. Yetter Senior Vice President, PIMCO and PIMCO Management, Inc.
January 1984 to Present
- ------------------------------------------------------------------------------------------------------
Augustine Ariza Vice President, PIMCO and PIMCO Management, Inc.
September 1997 to Present
- ------------------------------------------------------------------------------------------------------
Brian P. Baker Vice President, PIMCO and PIMCO Management, Inc.
August 1997 to Present
- ------------------------------------------------------------------------------------------------------
</TABLE>
B-4
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Name
Length of Service Position and Principal Occupation
- ------------------------------------------------------------------------------------------------------
<S> <C>
Stephen B. Beaumont Vice President, PIMCO and PIMCO Management, Inc.
January 1997 to Present
- ------------------------------------------------------------------------------------------------------
Gregory A. Bishop Vice President, PIMCO and PIMCO Management, Inc.
March 1997 to Present
- ------------------------------------------------------------------------------------------------------
Sabrina Callin Vice President, PIMCO and PIMCO Management, Inc.
July 1998 to Present
- ------------------------------------------------------------------------------------------------------
Marcia Clark Vice President, PIMCO and PIMCO Management, Inc.
February 1984 to Present
- ------------------------------------------------------------------------------------------------------
Jerry L. Coleman Vice President, PIMCO and PIMCO Management, Inc.
June 1987 to Present
- ------------------------------------------------------------------------------------------------------
Cyrille Conseil Vice President, PIMCO and PIMCO Management, Inc.
October 1999 to Present
- ------------------------------------------------------------------------------------------------------
Doug Cummings Vice President, PIMCO and PIMCO Management, Inc.
January 1998 to Present
- ------------------------------------------------------------------------------------------------------
David J. Dorff Vice President, PIMCO and PIMCO Management, Inc.
February 1993 to Present
- ------------------------------------------------------------------------------------------------------
Anita Dunn Vice President, PIMCO and PIMCO Management, Inc.
October 1987 to Present
- ------------------------------------------------------------------------------------------------------
Sandra Durn Vice President, PIMCO and PIMCO Management, Inc.
March 1999 to Present
- ------------------------------------------------------------------------------------------------------
Stephanie D. Evans Vice President, PIMCO and PIMCO Management, Inc.
June 1993 to Present
- ------------------------------------------------------------------------------------------------------
Steve A. Foulke Vice President, PIMCO and PIMCO Management, Inc.
February 1996 to Present
- ------------------------------------------------------------------------------------------------------
Ursula T. Frisch Vice President and Director of Latin American Investor Services,
December 1992 to Present PIMCO; Vice President, PIMCO Management, Inc.
- ------------------------------------------------------------------------------------------------------
Yuri P. Garbuzov Vice President, PIMCO and PIMCO Management, Inc.
July 1997 to Present
- ------------------------------------------------------------------------------------------------------
Joseph D. Hattesohl Vice President and Manager of Financial Reporting and Taxation,
February 1995 to Present PIMCO; Vice President, PIMCO Management, Inc.;
- ------------------------------------------------------------------------------------------------------
</TABLE>
B-5
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Name
Length of Service Position and Principal Occupation
- ------------------------------------------------------------------------------------------------------
<S> <C>
Raymond C. Hayes Vice President, PIMCO, PIMCO Management, Inc. and PIMCO Funds:
February 1992 to Present Pacific Investment Management Company. Formerly Marketing Director,
Pacific Financial Asset Management Corporation.
- ------------------------------------------------------------------------------------------------------
Liza M. Hocson Vice President, PIMCO and PIMCO Management, Inc.
December 1959 to Present
- ------------------------------------------------------------------------------------------------------
Thomas J. Kelleher Vice President, PIMCO, PIMCO Management, Inc. and PIMCO Funds:
March 1996 to Present Pacific Investment Management Company.
- ------------------------------------------------------------------------------------------------------
Mark R. Kiesel Vice President, PIMCO and PIMCO Management, Inc.
July 1996 to Present
- ------------------------------------------------------------------------------------------------------
Steven P. Kirkbaumer Vice President, PIMCO and PIMCO Management, Inc.
October 1997 to Present
- ------------------------------------------------------------------------------------------------------
David C. Lown Vice President, PIMCO and PIMCO Management, Inc.
December 1995 to Present
- ------------------------------------------------------------------------------------------------------
Laura M. Lyon Vice President, PIMCO and PIMCO Management, Inc.
October 1995 to Present
- ------------------------------------------------------------------------------------------------------
Andre J. Mallegol Vice President, PIMCO, PIMCO Management, Inc. and PIMCO Funds:
March 1997 to Present
- ------------------------------------------------------------------------------------------------------
Michael E. Martini Vice President, PIMCO and PIMCO Management, Inc.
August 1993 to Present
- ------------------------------------------------------------------------------------------------------
Scott W. Martin Vice President, PIMCO and PIMCO Management, Inc.
September 1998 to Present
- ------------------------------------------------------------------------------------------------------
Benjamin L. Mayer Vice President, PIMCO and PIMCO Management, Inc.
June 1998 to Present
- ------------------------------------------------------------------------------------------------------
Mark E. Metsch Vice President, PIMCO and PIMCO Management, Inc.
June 1990 to Present
- ------------------------------------------------------------------------------------------------------
Jonathan D. Moll Vice President, PIMCO and PIMCO Management, Inc.
October 1998 to Present
- ------------------------------------------------------------------------------------------------------
Doris S. Nakamura Vice President, PIMCO and PIMCO Management, Inc.
March 1998 to Present
- ------------------------------------------------------------------------------------------------------
Mark D. Nelleman Vice President, PIMCO and PIMCO Management, Inc.
July 1996 to Present
- ------------------------------------------------------------------------------------------------------
</TABLE>
B-6
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Name
Length of Service Position and Principal Occupation
- ------------------------------------------------------------------------------------------------------
<S> <C>
Douglas J. Ongaro Vice President, PIMCO, PIMCO Management, Inc. and PIMCO Funds:
April 1995 to Present
- ------------------------------------------------------------------------------------------------------
Kumar Palghat Vice President, PIMCO and PIMCO Management, Inc.
October 1997 to Present
- ------------------------------------------------------------------------------------------------------
Keith Perez Vice President, PIMCO and PIMCO Management, Inc.
January 1998 to Present
- ------------------------------------------------------------------------------------------------------
Elizabeth M. Philipp Vice President, PIMCO and PIMCO Management, Inc.
August 1996 to Present
- ------------------------------------------------------------------------------------------------------
David J. Pittman Vice President, PIMCO, PIMCO Management, Inc. and PIMCO Funds:
July 1997 to Present
- ------------------------------------------------------------------------------------------------------
Terry A. Randall Vice President, PIMCO and PIMCO Management, Inc.
April 1998 to Present
- ------------------------------------------------------------------------------------------------------
Mark Romano Vice President, PIMCO, PIMCO Management, Inc. and PIMCO Funds:
January 1997 to Present Pacific Investment Management Series.
- ------------------------------------------------------------------------------------------------------
Cathy Rowe Vice President, PIMCO and PIMCO Management, Inc.
August 1980 to Present
- ------------------------------------------------------------------------------------------------------
Seth R. Ruthen Vice President, PIMCO and PIMCO Management, Inc.
July 1995 to Present
- ------------------------------------------------------------------------------------------------------
Jeffrey M. Sargent Vice President and Manager of Investment Operations Shareholder
July 1989 to Present Services, PIMCO; Vice President, PIMCO Management, Inc.; Senior Vice
President, PIMCO Funds:
- ------------------------------------------------------------------------------------------------------
Steve Schulist Vice President, PIMCO and PIMCO Management, Inc.
July 1996 to Present
- ------------------------------------------------------------------------------------------------------
Iwona Schibisz Vice President, PIMCO and PIMCO Management, Inc.
May 1980 to Present
- ------------------------------------------------------------------------------------------------------
Denise C. Seliga Vice President, PIMCO and PIMCO Management, Inc.
January 1990 to Present
- ------------------------------------------------------------------------------------------------------
Rita J. Seymour Vice President, PIMCO and PIMCO Management, Inc.
July 1994 to Present
- ------------------------------------------------------------------------------------------------------
Christopher Sullivan Vice President, PIMCO and PIMCO Management, Inc.
August 1997 to Present
- ------------------------------------------------------------------------------------------------------
Kyle J. Theodore Vice President, PIMCO and PIMCO Management, Inc.
- ------------------------------------------------------------------------------------------------------
</TABLE>
B-7
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Name
Length of Service Position and Principal Occupation
- ------------------------------------------------------------------------------------------------------
<S> <C>
July 1998 to Present
- ------------------------------------------------------------------------------------------------------
Roni K. Trinidad Vice President, PIMCO and PIMCO Management, Inc.
August 1984 to Present
- ------------------------------------------------------------------------------------------------------
Richard E. Tyson Vice President, PIMCO and PIMCO Management, Inc.
November 1995 to Present
- ------------------------------------------------------------------------------------------------------
Peter A. Van de Zilver Vice President, PIMCO and PIMCO Management, Inc.
November 1992 to Present
- ------------------------------------------------------------------------------------------------------
Koichi Watanabe Vice President, PIMCO; Executive Vice President and Director, PIMCO
July 1998 to Present Global Advisors (Japan) Limited.
- ------------------------------------------------------------------------------------------------------
Marilyn K. Wegener Vice President, PIMCO and PIMCO Management, Inc.
September 1989 to Present
- ------------------------------------------------------------------------------------------------------
Paul C. Westhead Vice President, PIMCO and PIMCO Management, Inc.
July 1996 to Present
- ------------------------------------------------------------------------------------------------------
David Young Vice President, PIMCO and PIMCO Management, Inc.
January 1994 to Present
- ------------------------------------------------------------------------------------------------------
Changhong Zhu Vice President, PIMCO and PIMCO Management, Inc.
March 1999 to Present
- ------------------------------------------------------------------------------------------------------
William D. Cvengros President and Chief Executive Officer of PIMCO Advisors
____________ to Present
- ------------------------------------------------------------------------------------------------------
Stephen J. Treadway Executive Vice President of PIMCO Advisors
____________ to Present
- ------------------------------------------------------------------------------------------------------
Kenneth M. Poovey Chief Operating Officer, Management Board Member,
_________ to Present PIMCO Advisors
- ------------------------------------------------------------------------------------------------------
Robert M. Fitzgerald Chief Financial Officer and Treasurer, PIMCO, PIMCO Management,
February 1995 to Present Inc., StocksPLUS Management LLC, Cadence Capital Management, Inc.,
NFJ Investment Group, NFJ Management Inc.
- ------------------------------------------------------------------------------------------------------
Richard M. Weil Assistant Secretary, PIMCO, PIMCO Management, Inc., Cadence Capital
March 1996 to Present Management, and PIMCO Funds Distributors LLC; General Counsel, PIMCO
Advisors; Secretary, Cadence Capital Management, Inc., NFJ
Management, Inc., Parametric Management, Inc., NFJ Investment Group,
Parametric Portfolio Associates, and StocksPLUS Management, Inc.;
Vice President, PIMCO Funds:
- ------------------------------------------------------------------------------------------------------
Vinh T. Nguyen Controller, PIMCO; Vice President and Controller, PIMCO Advisors,
April 1995 to Present Cadence Capital Management, Inc., NFJ Management, Inc., Parametric
Management, Inc., StocksPLUS Management, Inc., PIIMCO Funds
Distributors LLC, PIMCO Management, Inc.
- -----------------------------------------------------------------------------------------------------
</TABLE>
Cadence Capital Management
Cadence directors and principal executive officers, their principal occupations
and dates of service are shown below. Unless otherwise indicated, the business
address of each director and officer is Exchange Place, 53 State Street, Boston,
Massachusetts 02109.
B-8
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Name
Length of Service Position and Principal Occupation
- ----------------- ---------------------------------
- -----------------------------------------------------------------------------------------------------
<S> <C>
David B. Breed Managing Director and Chief Financial Officer, Cadence; Director,
March 1988 to Present Managing Director and Chief Executive Officer, Cadence Capital
Management, Inc.; Member of Operating Board of PIMCO Advisors L.P.
- -----------------------------------------------------------------------------------------------------
William B. Bannick Managing Director and Executive Vice President, Cadence; Director and
October 1992 to Present Managing Director, Cadence Capital Management, Inc.
- -----------------------------------------------------------------------------------------------------
Mike Skillman Managing Director, Cadence
March 1999 to Present
- -----------------------------------------------------------------------------------------------------
Katherine A. Burdon Managing Director, Cadence
January 1993 to Present
- -----------------------------------------------------------------------------------------------------
</TABLE>
NFJ Investment Group
NFJ directors and principal executive officers, their principal occupations and
dates of service are shown below. Unless otherwise indicated, the business
address of each director and officer is 2121 San Jacinto, Suite 1840, Dallas,
Texas 75201.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Name
Length of Service Position and Principal Occupation
- ----------------- ---------------------------------
<S> <C>
- -----------------------------------------------------------------------------------------------------
Chris Najork Managing Director, NFJ; Director, Managing Director and Chairman, NFJ
February 1989 to Management, Inc.
Present
- -----------------------------------------------------------------------------------------------------
Ben J. Fischer Managing Director and Chief Financial Officer, NFJ; Director and Managing
February 1989 to Director, NFJ Management, Inc.
Present
- -----------------------------------------------------------------------------------------------------
John L. Johnson Managing Director, NFJ; Director and Managing Director, NFJ Management, Inc.
February 1989 to
Present
- -----------------------------------------------------------------------------------------------------
</TABLE>
Other Investment Company Clients
PIMCO, PIMCO Advisors, Cadence, and NFJ
PIMCO also serves as investment adviser or subadviser to the following
investment companies, at the fee rates set forth below, and which had the
following net assets at September
B-9
<PAGE>
30, 1999.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
APPROXIMATE
NAME OF FUND ADVISORY FEE RATE ASSETS
- ------------ ----------------- ------
PIMCO FUNDS
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Total Return Fund Annual rate of 0.25% of average daily $29,440,986,644
net assets
- --------------------------------------------------------------------------------------------------
International Bond Fund Annual rate of 0.25% of average daily 980,741,511
net assets
- --------------------------------------------------------------------------------------------------
Low Duration Fund Annual rate of 0.25% of average daily 4,627,238,397
net assets
- --------------------------------------------------------------------------------------------------
Foreign Bond Fund Annual rate of 0.25% of average daily 582,390,389
net assets
- --------------------------------------------------------------------------------------------------
High Yield Fund Annual rate of 0.25% of average daily 3,567,156,990
net assets
- --------------------------------------------------------------------------------------------------
Low Duration Fund II Annual rate of 0.25% of average daily 467,793,234
net assets
- --------------------------------------------------------------------------------------------------
Total Return Fund III Annual rate of 0.25% of average daily 597,124,044
net assets
- --------------------------------------------------------------------------------------------------
Short-Term Fund Annual rate of 0.25% of average daily 636,452,542
net assets
- --------------------------------------------------------------------------------------------------
Strategic Balanced Fund Annual rate of 0.40% of average daily 165,930,717
net assets
- --------------------------------------------------------------------------------------------------
Low Duration Fund III Annual rate of 0.25% of average daily 25,506,132
net assets
- --------------------------------------------------------------------------------------------------
Long-Term US Government Fund Annual rate of 0.25% of average daily 369,273,712
net assets
- --------------------------------------------------------------------------------------------------
Global Bond Fund Annual rate of 0.25% of average daily 290,651,430
net assets
- --------------------------------------------------------------------------------------------------
StocksPLUS Fund Annual rate of 0.40% of average daily 1,389,882,447
net assets
- --------------------------------------------------------------------------------------------------
Money Market Fund Annual rate of 0.15% of average daily 562,867,363
net assets
- --------------------------------------------------------------------------------------------------
Total Return Fund II Annual rate of 0.25% of average daily 1,024,091,669
net assets
- --------------------------------------------------------------------------------------------------
Global Bond Fund II Annual rate of 0.25% of average daily 43,066,006
net assets
- --------------------------------------------------------------------------------------------------
Real Return Bond Fund Annual rate of 0.25% of average daily 116,842,557
net assets
- --------------------------------------------------------------------------------------------------
Emerging Markets Bond Fund Annual rate of 0.45% of average daily 17,303,393
net assets
- --------------------------------------------------------------------------------------------------
</TABLE>
B-10
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
APPROXIMATE
NAME OF FUND ADVISORY FEE RATE ASSETS
- ------------------------------------ ----------------- -------------------
<S> <C> <C>
Emerging Markets Bond Fund II Annual rate of 0.45% of average daily 218,383,188
net assets
- --------------------------------------------------------------------------------------------------
Total Return Mortgage Fund Annual rate of 0.25% of average daily 4,011,811
net assets
- --------------------------------------------------------------------------------------------------
Low Duration Mortgage Fund Annual rate of 0.25% of average daily 4,193,256
net assets
- --------------------------------------------------------------------------------------------------
Municipal Bond Fund Annual rate of 0.25% of average daily 55,650,611
net assets
- --------------------------------------------------------------------------------------------------
</TABLE>
B-11
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
FRANK RUSSELL INVESTMENT MANAGEMENT
COMPANY
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Fixed Income I Fund Annual rate of 0.25% of net assets $ 158,880,504
based on the average of ending
monthly market values over 3 months,
paid in arrears
- --------------------------------------------------------------------------------------------------
Diversified Bond Fund Annual rate of 0.25% of net assets 121,645,371
based on the average of ending
monthly market values over 3 months,
paid in arrears
- --------------------------------------------------------------------------------------------------
Fixed Income III Fund Annual rate of 0.25% of net assets 158,140,598
based on the average of ending
monthly market values over 3 months,
paid in arrears
- --------------------------------------------------------------------------------------------------
Multistrategy Bond Fund Annual rate of 0.25% of net assets 193,102,561
based on the average of ending
monthly market values over 3 months,
paid in arrears
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
RUSSELL INSURANCE FUNDS
- --------------------------------------------------------------------------------------------------
Core Bond Fund Annual rate of 0.25% of net assets $ 33,478,757
based on the average of ending
monthly market values over 3 months,
paid in arrears
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
THE HARBOR GROUP
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
PACIFIC SELECT SERIES TRUST
- --------------------------------------------------------------------------------------------------
Managed Bond Series Annual rate of 0.50% of average daily $1,053,024,408
net assets on first $25 million;
0.375% on next $25 million; 0.25% on
remaining assets
- --------------------------------------------------------------------------------------------------
Government Securities Series Annual rate of 0.50% of average daily 397,265,729
net assets on first $25 million;
</TABLE>
B-12
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
APPROXIMATE
NAME OF FUND ADVISORY FEE RATE ASSETS
- ------------------------------------ ----------------- -------------------
<S> <C> <C>
0.375% on next $25 million; 0.25% on
remaining assets
- --------------------------------------------------------------------------------------------------
PRUDENTIAL SECURITIES TARGET
PORTFOLIO TRUST
- --------------------------------------------------------------------------------------------------
Intermediate Term Bond Portfolio Annual Rate of 0.25% of average daily $ 113,010,679
net assets
- --------------------------------------------------------------------------------------------------
Total Return Bond Portfolio Annual rate of 0.25% of average daily 66,889,600
net assets
- --------------------------------------------------------------------------------------------------
Total Return Bond Fund Annual rate of 0.25% of average daily Not Open As of
net assets 9/30/99
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
PIMCO COMMERCIAL MORTGAGE
SECURITIES TRUST, INC.
- --------------------------------------------------------------------------------------------------
PIMCO Commercial Mortgage Trust Annual rate of 0.725% of average $ 148,074,899
weekly net assets paid quarterly
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
AMERICAN SKANDIA TRUST
- --------------------------------------------------------------------------------------------------
Total Return Bond Portfolio Annual rate of 0.30% of average daily $1,035,861,299
net assets on first $150 million;
0.25% of average daily net assets on
assets over $150 million paid monthly
- --------------------------------------------------------------------------------------------------
Limited Maturity Bond Portfolio Annual rate of 0.30% of average daily 421,807,622
net assets on first $150 million;
0.25% of average daily net assets on
assets over $150 million paid monthly
- --------------------------------------------------------------------------------------------------
Master Trust Total Return Annual rate of 0.25% of average daily 170,012,653
net assets
- --------------------------------------------------------------------------------------------------
</TABLE>
B-13
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
FREMONT MUTUAL FUNDS, INC.
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Total Return Fund Annual rate of 0.25% of average daily $ 187,068,687
net assets paid quarterly
- --------------------------------------------------------------------------------------------------
Global Bond Fund Annual rate of 0.30% of average daily 24,283,647
net assets paid quarterly
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
PAINEWEBBER MANAGED INVESTMENTS
TRUST
- --------------------------------------------------------------------------------------------------
Low Duration US Government Income Annual rate of 0.25% of average daily $ 122,967,595
Fund net assets
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
PAINEWEBBER SERIES TRUST
- --------------------------------------------------------------------------------------------------
Strategic Fixed Income Annual rate of 0.25% of average daily $ 7,298,286
net assets
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
PAINEWEBBER MANAGED ACCOUNTS
SERVICES PORTFOLIO TRUST
- --------------------------------------------------------------------------------------------------
PACE Government Securities Fixed Annual rate of 0.25% of average daily $ 197,767,164
Income net assets
- --------------------------------------------------------------------------------------------------
PACE Strategic Fixed Income Annual rate of 0.25% of average daily 230,222,525
Investments net assets
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
JACKSON NATIONAL LIFE SERIES TRUST
- --------------------------------------------------------------------------------------------------
JNL/PIMCO Total Return Bond Series Annual rate of 0.25% of average daily $ 9,753,810
net assets excluding the value of
client contributed capital
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
</TABLE>
B-14
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
FORWARD GLOBAL FUND
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Forward Global Fund Annual rate of 0.35% of average daily $ 30,263,618
net assets on amounts under $200
million and 0.30% on amounts over
$200 million
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
PRUDENTIAL INVESTMENTS FUND
MANAGEMENT LLC
- --------------------------------------------------------------------------------------------------
Prudential Diversified Moderate 0.25% of 1% of average daily net $ 23,259,990
Growth assets computed daily and paid monthly
- --------------------------------------------------------------------------------------------------
Prudential Diversified Conservative 0.25% of 1% of average daily net 28,956,072
Growth assets computed daily and paid monthly
- --------------------------------------------------------------------------------------------------
Prudential Diversified Conservative 0.25% of 1% of average daily net 30,034,833
Portfolio assets computed daily and paid monthly
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
MANULIFE
- --------------------------------------------------------------------------------------------------
Manulife Global Bond Trust Annual rate of 0.375% on first $50 $161,197,318
million; 0.35% on $50-200 million;
0.30% on $200-500 million; 0.25%
excess over $500 million of daily net
assets computed daily and paid
monthly
- --------------------------------------------------------------------------------------------------
Manulife Total Return Trust Annual rate of 0.30% on first $50 190,550,262
million; 0.30% on $50-150 million;
0.25% on $150-200 million; 0.25% on
$200-500 million and over of daily
net assets computed daily and paid
monthly
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
</TABLE>
B-15
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
SOLOMON SMITH BARNEY/CONSULTING
GROUPS CAPITAL MARKET FUND
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Intermediate Fixed Income Annual rate of 0.25%, multiplied by a $270,423,858
Investment Portfolio fraction, the numerator of which is
the average daily value of allocated
assets and the denominator of which
is the average daily value of the
Portfolio's total assets computed
daily
- --------------------------------------------------------------------------------------------------
</TABLE>
PIMCO Advisors also serves as investment adviser or subadviser to the following
investment companies, at the fee rates set forth below, and which had the
following net assets at [______, 1999].
<TABLE>
<CAPTION>
NAME OF FUND ADVISORY FEE RATE APPROXIMATE ASSETS
- ------------------------------------ ------------------------------------- --------------------
<S> <C> <C>
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
</TABLE>
Cadence also serves as investment adviser or subadviser to the following
investment companies, at the fee rates set forth below, and which had the
following net assets at [______, 1999].
<TABLE>
<CAPTION>
NAME OF FUND ADVISORY FEE RATE APPROXIMATE ASSETS
- ------------------------------------ ------------------------------------- --------------------
<S> <C> <C>
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
</TABLE>
NFJ also serves as investment adviser or subadviser to the following investment
companies, at the fee rates set forth below, and which had the following net
assets at [______, 1999].
<TABLE>
<CAPTION>
NAME OF FUND ADVISORY FEE RATE APPROXIMATE ASSETS
- ------------------------------------ ------------------------------------- --------------------
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
</TABLE>
B-16
<PAGE>
Brokerage Policies
PIMCO and PIMCO Advisors receive research services from many broker-dealers
with which they place portfolio transactions. Consistent with applicable law,
PIMCO and PIMCO Advisors may cause the Portfolios to pay a broker-dealer which
provides brokerage and research services to PIMCO and PIMCO Advisors an amount
of disclosed commission for effecting a securities transaction for the
Portfolios in excess of the commission which another broker-dealer would have
charged for effecting that transaction. These research services, which in some
cases also may be purchased for cash, include such items as general economic and
securities 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 and PIMCO Advisors in advising various
of its clients (including the Portfolios), although not all of these services
are necessarily of value in managing the Portfolios. The management fees paid
by the Portfolios are not reduced because PIMCO and PIMCO Advisors and its
affiliates receive such services.
Consistent with the Conduct Rules of the National Association of Securities
Dealers, Inc. and subject to seeking the most favorable price and execution
available and such other policies as the Trustees may determine, PIMCO and PIMCO
Advisors may also consider sales of shares of the Portfolios as a factor in the
selection of broker-dealers to execute portfolio transactions for the
Portfolios.
B-17
<PAGE>
APPENDIX C
----------
The table below shows the investment advisory and administrative fees paid by
the Portfolios for the fiscal year ended [December 31, 1998], as well as the
aggregate amount of advisory and administration fees paid by each then-
operational Portfolio for that period. The table also shows the proposed
advisory, administrative, and service fees that will be adopted pursuant to the
multiple-class structure.
<TABLE>
<CAPTION>
Proposed
Current Proposed Proposed Service Fee
Aggregate Aggregate Current Adminis- Advisory Advisory (Adminis-
Portfolio Advisory Adminis- Advisory trative Fee Fee Rate Fee Rate trative Class
Fees trative Fee Fee Rate Rate (All Classes) (All Classes) only)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Money Market N/A N/A 0.30% 0.20% 0.15% 0.20% 0.15%
- ------------------------------------------------------------------------------------------------------------------------------
Short-Term Bond N/A N/A 0.35% 0.25% 0.25% 0.20% 0.15%
- ------------------------------------------------------------------------------------------------------------------------------
Low Duration Bond N/A N/A 0.40% 0.25% 0.25% 0.25% 0.15%
- ------------------------------------------------------------------------------------------------------------------------------
Real Return Bond N/A N/A 0.40% 0.25% 0.25% 0.25% 0.15%
- ------------------------------------------------------------------------------------------------------------------------------
Total Return Bond $12,338 $7,711 0.40% 0.25% 0.25% 0.25% 0.15%
- ------------------------------------------------------------------------------------------------------------------------------
Total Return Bond II N/A N/A 0.40% 0.25% 0.25% 0.25% 0.15%
- ------------------------------------------------------------------------------------------------------------------------------
High Yield Bond $99,024 $49,512 0.50% 0.25% 0.25% 0.25% 0.15%
- ------------------------------------------------------------------------------------------------------------------------------
Long-Term U.S.
Government Bond N/A N/A 0.40% 0.25% 0.25% 0.25% 0.15%
- ------------------------------------------------------------------------------------------------------------------------------
Global Bond N/A N/A 0.60% 0.30% 0.25% 0.50% 0.15%
- ------------------------------------------------------------------------------------------------------------------------------
Foreign Bond N/A N/A 0.60% 0.30% 0.25% 0.50% 0.15%
- ------------------------------------------------------------------------------------------------------------------------------
Emerging Markets Bond N/A N/A 0.65% 0.35% 0.45% 0.40% 0.15%
- ------------------------------------------------------------------------------------------------------------------------------
Strategic Balanced N/A N/A 0.50% 0.25% 0.40% 0.20% 0.15%
- ------------------------------------------------------------------------------------------------------------------------------
StocksPLUS Growth
& Income $57,064 $35,665 0.40% 0.25% 0.40% 0.10% 0.15%
- ------------------------------------------------------------------------------------------------------------------------------
Equity Income N/A N/A 0.60% 0.25% 0.45% 0.25% 0.15%
- ------------------------------------------------------------------------------------------------------------------------------
Capital Appreciation N/A N/A 0.60% 0.25% 0.45% 0.25% 0.15%
- ------------------------------------------------------------------------------------------------------------------------------
Mid-Cap Growth N/A N/A 0.60% 0.25% 0.45% 0.25% 0.15%
- ------------------------------------------------------------------------------------------------------------------------------
Small-Cap Value N/A N/A 0.70% 0.25% 0.60% 0.25% 0.15%
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
C-1
<PAGE>
APPENDIX D
----------
CURRENT FUNDAMENTAL INVESTMENT POLICIES
As a matter of fundamental policy, the Portfolio may not:
Concentration
(1) invest in a security if, as a result of such investment, more than 25%
of its total assets (taken at market value at the time of such
investment) would be invested in the securities of issuers in any
particular industry, except that this restriction does not apply (a) to
securities issued or guaranteed by the U.S. Government or its agencies
or instrumentalities (or repurchase agreements with respect thereto) and
(b) with respect to the Money Market Portfolio, to securities or
obligations issued by U.S. banks;
Diversification
(2) with respect to 75% of its assets, invest in a security if, as a result
of such investment, more than 5% of its total assets (taken at market
value at the time of such investment) would be invested in the
securities of any one issuer, except that this restriction does not
apply to securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities (This investment restriction is not
applicable to the Real Return Bond, Foreign Bond, Global Bond, or
Emerging Markets Bond Portfolios.);
(3) with respect to 75% of its assets, invest in a security if, as a result
of such investment, it would hold more than 10% (taken at the time of
such investment) of the outstanding voting securities of any one issuer
(This restriction is not applicable to the Real Return Bond, Foreign
Bond, Global Bond or the Emerging Markets Bond Portfolios.);
Borrowing and Issuance of Senior Securities
(6) borrow money, issue senior securities, or pledge, mortgage or
hypothecate its assets, except that a Portfolio may (i) borrow from
banks or enter into reverse repurchase agreements, or employ similar
investment techniques, but only if immediately after each borrowing
there is asset coverage of 300% and (ii) enter into transactions in
options, futures, options on futures, and other derivative instruments
as described in the Prospectus and in this Statement of Additional
Information (the deposit of assets in escrow in connection with the
writing of covered put and call options and the purchase of securities
on a when-issued or delayed delivery basis, collateral arrangements with
respect to initial or variation margin deposits for futures contracts
and commitments entered into under swap agreements or other derivative
instruments, will not be deemed to be pledges of a Portfolio's assets);
D-1
<PAGE>
Loans
(7) lend any funds or other assets, except that a Portfolio may, consistent
with its investment objective and policies:
(a) invest in debt obligations, including bonds, debentures, or other
debt securities, bankers' acceptances and commercial paper, even
though the purchase of such obligations may be deemed to be the
making of loans,
(b) enter into repurchase agreements, and
(c) lend its portfolio securities in an amount not to exceed one-
third of the value of its total assets, provided such loans are
made in accordance with applicable guidelines established by the
Securities and Exchange Commission and the Trustees of the Trust.
D-2
<PAGE>
APPENDIX E
----------
As of December 15, 1999, the following persons owned of record or
beneficially 5% or more of the shares of the Portfolios:
<TABLE>
<CAPTION>
Shares Percent
Beneficially of
Owned Class
-----------------------------
<S> <C> <C>
</TABLE>
[COMPLETE]
* Entity owned 25% or more of the outstanding shares of beneficial interest of
the Portfolio, and therefore may be presumed to "control" the Portfolio, as
that term is defined in the 1940 Act.
** Shares are believed to be held only as nominee.
E-1
<PAGE>
PROXY
PIMCO VARIABLE INSURANCE TRUST
[Name of Fund]
SPECIAL MEETING OF SHAREHOLDERS
_________, 2000
The undersigned hereby appoints ____________ and ___________ and each of
them, as his/her attorneys and proxies with full power of substitution to vote
and act with respect to all shares of the __________ Fund held by the
undersigned at the Special Meeting of Shareholders of the Trust to be held at
800 Newport Center Drive, 6th Floor, Newport Beach, California, 92660, on [March
3], 2000, at [time], Pacific Time or as adjourned from time to time, (the
"Meeting"), and instructs them to vote as indicated on the matters referred to
in the Proxy Statement for the Meeting, receipt of which is hereby acknowledged,
with discretionary power to vote upon such other business as may properly come
before the Meeting.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE TRUST. The Board
of Trustees recommends that you vote FOR each of the Nominees and FOR each of
the following proposals:
I. To elect Trustees to the Board of Trustees of the Trust.
[ ] FOR ALL [ ] AGAINST ALL [ ] ABSTAIN
[ ] FOR ALL EXCEPT
______________________________
(Only use to withhold authority to vote on individual Nominees)
II. A. To approve a new investment advisory contract.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
B. To approve a new portfolio management agreement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
III. To approve changes to fundamental investment policies.
a. Concentration
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE>
b. Diversification: [Money Market, Short-Term Bond, Low Duration
Bond, Total Return Bond, Total Return Bond II, High Yield Bond,
Long-Term U.S. Government Bond, Long Duration, Strategic
Balanced, StockPLUS Growth and Income, Equity Income, Capital
Appreciation, Mid-Cap Growth and Small-Cap Value Portfolios]
[ ] FOR [ ] AGAINST [ ] ABSTAIN
c. Borrowing and Senior Securities
[ ] FOR [ ] AGAINST [ ] ABSTAIN
d. Loans
[ ] FOR [ ] AGAINST [ ] ABSTAIN
e. Investments in other Investment Companies
[ ] FOR [ ] AGAINST [ ] ABSTAIN
[ ] FOR ALL EXCEPT __________________
IV. To transact such other business as may properly come before the
Meeting.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS
PROXY WILL BE VOTED FOR ALL OF THE NOMINEES AND FOR ALL OF THE PROPOSALS.
Receipt of the Notice of Special Meeting and Proxy Statement is hereby
acknowledged.
Dated _________________________, 2000
_____________________________________
Name of Shareholder(s) -- Please print or type
_____________________________________
Signature(s) of Shareholder(s)
_____________________________________
Signature(s) of Shareholder(s)
<PAGE>
This proxy must be signed by the beneficial owner of Portfolio shares. If
signing as attorney, executor, guardian or in some representative capacity or as
an officer of a corporation, please add title as such.
PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN IT IN
THE ENCLOSED POSTAGE-PAID ENVELOPE.
