r77q1e.txt
PIMCO Variable Insurance Trust
Approval of Renewal of the Amended and Restated Investment Advisory
Contract, Asset Allocation Sub-Advisory Agreements, and Supervision and
Administration Agreement
On August 13-14, 2012, the Board of Trustees (the "Board") of PIMCO
Variable Insurance Trust (the "Trust"), including all of the independent
Trustees, approved the Trust's Amended and Restated Investment Advisory
Contract with Pacific Investment Management Company LLC ("PIMCO"), on
behalf of each of the Trust's portfolios (the "Portfolios"), for an
additional one-year term through August 31, 2013. The Board also
considered and approved for an additional one-year term through August 31,
2013, the Supervision and Administration Agreement (together with the
Amended and Restated Investment Advisory Contract, the "Agreements") with
PIMCO, on behalf of the Portfolios. The Board also considered and
approved the renewal of the Asset Allocation Sub-Advisory Agreements
(the "Asset Allocation Agreements") with Research Affiliates, LLC
("RALLC"), on behalf of the PIMCO All Asset Portfolio and PIMCO All Asset
All Authority Portfolio, each a series of the Trust, for an additional
one-year term through August 31, 2013.
The information, material factors and conclusions that formed the basis for
the Board's approvals of the Agreements and the Asset Allocation Agreements
are described below.
1. Information Received
(a) Materials Reviewed: During the course of each year, the Trustees
receive a wide variety of materials relating to the services provided by
PIMCO and RALLC. At each of its quarterly meetings, the Board reviews the
Portfolios' investment performance and a significant amount of information
relating to Portfolio operations, including the Portfolios' compliance
program, shareholder services, valuation, custody, distribution, and other
information relating to the nature, extent and quality of services provided
by PIMCO and RALLC to the Trust. In considering whether to approve the
renewal of the Agreements and Asset Allocation Agreements, the Board also
reviewed supplementary information, including, but not limited to,
comparative industry data with regard to investment performance, advisory
and supervisory and administrative fees and expenses, financial and
profitability information regarding PIMCO and RALLC, information about the
personnel providing investment management services and supervisory and
administrative services to the Portfolios, and, if available, information
about the fees charged and services provided by PIMCO to other clients
with similar investment mandates as the Portfolios. The Board also
reviewed material provided by counsel to the Trust and the independent
Trustees, which included, among other things, a memorandum outlining legal
duties of the Board in considering the continuation of the Agreements.
(b) Review Process: In connection with the renewal of the
Agreements and the Asset Allocation Agreements, the Board reviewed written
materials prepared by PIMCO and RALLC in response to requests from counsel
to the Trust. The Board also requested and received assistance and advice
regarding applicable legal standards from Trust counsel, and reviewed
comparative fee and performance data prepared at the Board's request by
Xxxxxx, Inc. ("Lipper"), an independent provider of investment company
performance and fee and expense data. The Board also heard oral
presentations on matters related to the Agreements and Asset Allocation
Agreements and met both as a full Board and as the independent Trustees,
without management present, at the August 13-14, 2012 meeting. The
independent Trustees also met with counsel to the Trust on August 6, 2012
to discuss the materials presented. In addition, the independent
Trustees requested and received from PIMCO additional information
including, but not limited to, information related to Portfolio
profitability and comparative performance information.
The approval determinations were made on the basis of each Trustee's
business judgment after consideration of all the information presented.
Individual Trustees may have given different weights to certain factors
and assigned various degrees of materiality to information received in
connection with the approval process. In deciding to approve the renewal
of the Agreements and Asset Allocation Agreements, the Board did not
identify any single factor or particular information that, in isolation,
was controlling. This summary describes the most important, but not all,
of the factors considered by the Board.
2. Nature, Extent and Quality of Services
(a) PIMCO, RALLC, their Personnel, and Resources: The Board
considered the depth and quality of PIMCO's investment management process,
including: the experience, capability and integrity of its senior
management and other personnel; the low turnover rates of its key personnel;
the overall financial strength and stability of its organization; and the
ability of its organizational structure to address the recent growth in
assets under management. The Board also considered that PIMCO makes
available to its investment professionals a variety of resources and
systems relating to investment management, compliance, trading, performance
and portfolio accounting. The Board noted PIMCO's commitment to investing
in information technology supporting investment management and compliance,
as well as PIMCO's continuing efforts to attract and retain qualified
personnel and to maintain and enhance its resources and systems. The Board
considered PIMCO's policies, procedures and systems to assure compliance
with applicable laws and regulations and its commitment to these programs;
its efforts to keep the Trustees informed about matters relevant to the
Portfolios and their shareholders; and its attention to matters that may
involve conflicts of interest with the Trusts. The Board also considered
PIMCO's continuous investment in new disciplines and talented personnel,
which has allowed PIMCO to introduce innovative new funds over time.
The Trustees considered the steps that PIMCO has taken in recent years
with respect to active management of counterparty risk, such as
implementing procedures requiring daily collateral adjustments and frequent
communication between credit analysts and the counterparty risk committee.
The Trustees considered that, over the last year, PIMCO has continued to
strengthen the process it uses to assess the financial stability of
broker-dealers with which the Portfolios do business, to manage collateral
and to protect portfolios from an unforeseen deterioration in the
creditworthiness of trading counterparties. The Trustees considered that
PIMCO continued to invest in automated documentation management systems to
better track trade documentation with broker-dealers.
The Trustees also considered new services and service enhancements that
PIMCO has implemented since the Agreements were last renewed in 2011,
including, but not limited to, adoption of the summary prospectus format
for offering documents, undertaking significant technology and outsourcing
initiatives; expanding the quality management system for
processes/activities; completing the implementation of a prospectus
content management system; developing a "Pricing Portal" to streamline
and automate certain pricing functions; continuing to implement fair
valuation level assignments per FAS 157; migrating shareholder confirmation
and first-dollar prospectus delivery to a new third-party service provider;
streamlining processes to enable earlier daily net asset value delivery to
major intermediary clients; working with another service provider to
expand a unique quality assurance platform; implementing a proprietary
application developed for cash flow reporting to portfolio managers;
implementing new cost basis reporting; working with an accounting firm to
analyze the impact of the Foreign Account Tax Compliance Act; and engaging
in extensive preparation and testing to respond quickly in the event of a
crisis involving the Eurozone.
Similarly, the Board considered the asset-allocation services provided by
RALLC to the PIMCO All Asset Portfolio. The Board noted that the PIMCO
All Asset All Authority Portfolio had not commenced offering shares as of
June 30, 2012. The Board considered the depth and quality of RALLC's
investment management and research capabilities, the experience and
capabilities of its portfolio management personnel, and in particular the
experience and capabilities of Xxxxxx Xxxxxx, RALLC's principal, and the
overall financial strength of the organization.
Ultimately, the Board concluded that the nature, extent and quality of
services proposed to be provided by PIMCO under the Agreements and by
RALLC under the Asset Allocation Agreements are likely to benefit the
Portfolios and their shareholders.
(b) Other Services: The Board considered PIMCO's policies,
procedures and systems to assure compliance with applicable laws and
regulations and its commitment to these programs; its efforts to keep the
Trustees informed about matters relevant to each Portfolio and its
shareholders; and its attention to matters that may involve conflicts of
interest. The Board also considered the nature, extent, quality and cost
of supervisory and administrative services provided by PIMCO to the
Portfolios under the Supervision and Administration Agreement. The Board
noted that the Supervision and Administration Agreement was approved at
the August 2008 Board meeting to replace the Trust's previous
Administration Agreement. The purpose of the change was to reflect the
increased scope and complexity of supervisory and administrative services
that PIMCO had been providing to the Trust. The Board considered the terms
of the Trust's Supervision and Administration Agreement, under which the
Trust pays for the supervisory and administrative services it requires
under what is essentially an all-in fee structure (the "unified fee").
In return, PIMCO provides or procures supervisory and administrative
services and bears the costs of various third party services required by
the Portfolios, including audit, custodial, portfolio accounting, legal,
transfer agency and printing costs. The Board noted that the scope and
complexity of the supervisory and administrative services provided by
PIMCO under the Supervision and Administration Agreement continue to
increase. The Board considered PIMCO's provision of these services and
supervision of the Trust's third party service providers to assure that
these service providers continue to provide a high level of service
relative to alternatives in the market.
Ultimately, the Board concluded that the nature, extent and quality of the
services provided by PIMCO has benefited and will likely continue to
benefit the Portfolios and their shareholders.
3. Investment Performance
The Board received and examined information from PIMCO concerning the
Portfolios' year-to-date, one-, three-, five-, seven- and ten-year
performance, as available, for the periods ended May 31, 2012 and other
performance data, as available, for the periods ended June 30, 2012 (the
"PIMCO Report") and from Lipper concerning the Portfolios' one-, three-,
five- and ten-year performance, as available, for the periods ended May 31,
2012 (the "Lipper Report").
The Board considered information regarding both the short-term and
long-term investment performance of each Portfolio relative to its peer
group and relevant benchmark index as provided to the Board in advance of
each of its quarterly meetings throughout the year, including the PIMCO
Report and the Lipper Report, which were provided in advance of the August
13-14, 2012 meeting.
The Board noted that, for periods ending May 31, 2012, the Administrative
Class of 75%, 86% and 100% of the Portfolios outperformed their Lipper
category median in the one-year, three-year and five-year periods,
respectively. The Board considered that other classes of each Portfolio
would have substantially similar performance to that of the Administrative
Class of the relevant Portfolio on a relative basis because all of the
classes are invested in the same portfolio of securities and that
differences in performance among classes could principally be attributed
to differences in the distribution and servicing expenses of each class.
The Board also considered that the investment objectives of certain of the
Portfolios may not always be identical to those of the other funds in
their respective peer groups and that the Lipper categories do not
separate funds based upon maturity or duration, do not account for the
Portfolios' hedging strategies, do not distinguish between enhanced index
and actively managed equity strategies, do not include as many subsets as
the Portfolios offer (i.e., Portfolios may be placed in a "catch-all"
category to which they do not properly belong) and do not account for
certain fee waivers. The Board noted that, due to these differences,
performance comparisons between certain of the Portfolios and their
so-called peers may be inexact.
The Board noted that 89% or more of the assets of the Trust had
outperformed their respective benchmarks on a net-of-fees basis over the
three-year, five-year and ten-year periods ending May 31, 2012 (based on
the performance of the Administrative Class). The Board also noted that
nine of 12 Portfolios, representing 89% of the total assets of the Trust,
had outperformed their respective benchmark indexes over the five-year
period ending May 31, 2012, on a net-of-fees basis. The Board discussed
actions that have been taken by PIMCO to improve performance and took note
of PIMCO's plans to monitor performance going forward. The Board also
considered that the Trust has experienced an increase in net assets, with
assets managed within the Trust exceeding $22.2 billion as of May 31, 2012.
The Board considered PIMCO's discussion of the intensive nature of managing
bond funds, noting that it requires the consideration of a number of
factors, including: varying maturities, prepayments, collateral management,
counter-party management, pay-downs, credit events, workouts, derivatives
and net new issuance in the bond market. The Board noted that in addition
to managing these factors, PIMCO must also balance risk controls and
strategic positions in each portfolio it manages. Despite these challenges,
the Board noted that PIMCO has generated "alpha" (i.e., non-market
correlated excess performance) for its clients, including the Trust.
The Board ultimately determined, within the context of all of its
considerations in connection with the Agreements, that the Trust's overall
investment performance was strong, and concluded that PIMCO's performance
record and process in managing the Portfolios indicates that its continued
management is likely to benefit the Portfolios and their shareholders,
and merits the approval of the continuation of the Agreements.
4. Advisory Fees, Supervisory and Administrative Fees and Total Expenses
The Board considered that PIMCO strives to price funds with total expense
ratios at or below the respective Lipper median, while providing premium or
innovative investment offerings. PIMCO reported to the Board that, in
proposing fees for any Portfolio or class of shares, it considers a number
of factors, including the type and complexity of the services provided,
the cost of providing services, the risk assumed by PIMCO in the provision
of services, the impact on potential returns from different levels of fees,
the competitive marketplace for financial products, and the attractiveness
of potential Portfolio returns to current and potential investors. Fees
charged to or proposed for different Portfolios for advisory services and
supervisory and administrative services may vary in light of these various
factors. The Board also noted that PIMCO reviews the Portfolios' fee
levels and carefully considers reductions where appropriate. Further, the
Board noted that PIMCO believes that the growth in the Trusts' assets under
management and longer-term net inflows provide evidence of proper and
effective pricing.
The Board reviewed the advisory fees, supervisory and administrative fees
and total expenses of the Portfolios (each as a percentage of average net
assets) and compared such amounts with the average and median fee and
expense levels of other similar funds. With respect to advisory fees, the
Board reviewed data from Lipper that compared the average and median
advisory fees of other funds in an "Expense Group" of comparable funds,
as well as the universe of other similar funds. The Board noted that most
Portfolios have total expense ratios that fall below the median expenses
of their Lipper universe.
The Board also reviewed data comparing the Portfolios' advisory fees to
the standard fee rate PIMCO charges to separate accounts and other
investment companies with a similar investment strategy, and found them to
be comparable. The Trustees noted that the advisory fees for the Portfolios
were equal to or lower than PIMCO separate account fees in nine out of 14
strategies. In cases where the fees for other clients were lower than
those charged to the Portfolios, the Trustees noted that the differences
in fees were attributable to various factors, including differences in the
services provided by PIMCO to the Portfolios, the manner in which similar
portfolios may be managed, different requirements with respect to
liquidity management and the implementation of other regulatory
requirements, and the fact that separate accounts may have other
contractual arrangements that justify different levels of fees.
The Board also considered the Portfolios' supervisory and administrative
fees, comparing them to similar funds in the report supplied by Xxxxxx.
The Board considered that as the Portfolios' business has become
increasingly complex, PIMCO has provided an increasingly broad array of
fund supervisory and administrative functions. The Board considered the
Trust's unified fee structure, under which each Portfolio pays for the
supervisory and administrative services it requires for one set fee, and
in return, PIMCO provides or procures supervisory and administrative
services and bears the costs of various third party services required by
the Portfolios, including audit, custodial, portfolio accounting, legal,
transfer agency and printing costs. The Board considered that many other
funds pay for these services separately, and thus it is difficult to
directly compare the Portfolios' unified supervisory and administrative
fees with the fees paid by other funds for administrative services alone.
The Board considered that the unified supervisory and administrative fee
leads to fund fees that are fixed, rather than variable, and that the
fixed fees were viewed by many in the industry as a positive attribute of
the Portfolios. The Board concluded that the Portfolios' supervisory and
administrative fees were reasonable in relation to the value of the
services provided, including the services provided to different classes
of shareholders, and that the expenses assumed contractually by PIMCO
under the Supervision and Administration Agreement represent, in effect,
a cap on overall fund expenses which is beneficial to the Portfolios and
their shareholders.
The Board considered the Portfolios' total expenses and discussed those
Portfolios and/or classes of Portfolios that have above median expenses.
The Board noted that several Portfolios launched in recent years have been
unique products that have few, if any peers, and cannot easily be grouped
with comparable funds. Moreover, the Board considered that, in some
instances, PIMCO believes the Lipper categories offer imperfect comparisons
because they are overly broad or do not account for the impact of certain
fee waivers. Upon comparing the Portfolios' total expenses to other funds
in the Expense Groups provided by Xxxxxx, the Board found the Portfolios'
total expenses to be reasonable.
The Trustees also considered the advisory fees charged to the Portfolios
that operate as funds of funds (the "Funds of Funds") and the advisory
services provided in exchange for such fees. The Trustees determined that
such services were in addition to the advisory services provided to the
underlying series in which the Funds of Funds may invest and, therefore,
such services were not duplicative of the advisory services provided to
the underlying series. The Board also considered the various fee waiver
agreements in place for the Funds of Funds.
The Board noted that, with few exceptions, PIMCO has maintained Portfolio
fees at the same guaranteed level as implemented when the unified fee was
adopted, and has reduced fees for a number of Portfolios in prior years.
The Board further noted that, although the unified fee structure does not
have breakpoints, it implicitly reflects economies of scale by fixing the
absolute level of Portfolio fees at competitive levels even if the
Portfolios' operating costs rise when assets remain flat or decrease
over time.
Based on the information presented by PIMCO, RALLC and Lipper, members of
the Board then determined, in the exercise of their business judgment,
that the level of the advisory fees and supervisory and administrative
fees charged by PIMCO under the Agreements, as well as the total expenses
of the Portfolios, are reasonable and renewal of the Agreements and the
Asset Allocation Agreements will likely benefit the Portfolios and their
shareholders.
5. Adviser Costs, Level of Profits and Economies of Scale
The Board reviewed information regarding PIMCO's costs of providing
services to the Portfolios as a whole, as well as the resulting level of
profits to PIMCO, noting that those results were slightly lower than the
previous year, and within the ranges, but above the median of publicly held
investment management companies reported by Lipper and Strategic Insight.
The Board noted that it had also received information regarding the
structure and manner in which PIMCO's investment professionals were
compensated, and PIMCO's view of the relationship of such compensation to
the attraction and retention of quality personnel. The Board considered
PIMCO's need to invest in technology, infrastructure and staff to reinforce
and offer new services and to accommodate changing regulatory requirements.
With respect to potential economies of scale, the Board found that because
the unified fee protects shareholders against unanticipated increases in
expense ratios due to redemptions, declines in asset values, or increases
in the costs of services provided or procured by PIMCO, economies of scale
are implicitly recognized in the level of the unified fee (which, together
with the advisory fee, serves as a proxy for each Portfolio's overall
expense ratio). The Board noted that PIMCO may share the benefits of
economies of scale with the Portfolios and their shareholders in a number
of ways, including through fee reductions or waivers, the pricing of
Portfolios to scale from inception and the enhancement of services
provided to the Portfolios in return for fees paid. The Trustees also
considered that the unified fee has provided inherent economies of scale
by maintaining fixed fees even if a particular Portfolio's operating costs
rise. The Board reviewed the history of the Portfolios' fee structure,
noting that the unified supervisory and administrative services fee was
an extension of the initial "expense guarantee" under which PIMCO had
agreed to maintain the expense ratio of each Portfolio at specified
levels for a period of time to make the Portfolios attractive to an
institutional shareholder base. The Board noted that additional
Portfolios and share classes have been launched on that institutional
platform, which has meant that, overall, the Portfolios have traditionally
had lower fees than many competitors. The Board noted that, in general,
fee rates for the Portfolios had been set competitively, had been reduced
for some Portfolios over time, had been held steady for most Portfolios
as assets grew and continued to be competitive compared with peers. The
Trustees noted that the absence of breakpoints in the Portfolios'
advisory fees has not harmed shareholders, noting in particular that
breakpoints are a proxy for charging higher fees on lower asset levels
and that when funds lose assets breakpoints may reverse, which causes
expense ratios to increase. Finally, the Board considered that during
the recent market downturn the Portfolios' unified fee has protected
shareholders against an increase in expenses that may accompany declines
in assets.
The Board concluded that the Portfolios' cost structure was reasonable and
that the unified fee structure inherently involves the sharing of economies
of scale between PIMCO and the Portfolios, to the benefit of Portfolio
shareholders.
6. Ancillary Benefits
The Board considered other benefits received by PIMCO and its affiliates
as a result of PIMCO's relationship with the Trust, including possible
ancillary benefits to PIMCO's institutional investment management business
due to the reputation and market penetration of the Portfolios. The Board
also considered that affiliates of PIMCO provide distribution and
shareholder services to the Portfolios and their shareholders, for which
they may be compensated under the unified fee, or through distribution
fees paid pursuant to the Portfolios' Rule 12b-1 plans. The Board
reviewed PIMCO's soft dollar policies and procedures, noting that while
PIMCO has the authority to receive the benefit of research provided by
broker-dealers executing portfolio transactions on behalf of the
Portfolios, it has adopted a policy not to enter into contractual soft
dollar arrangements.
7. Conclusions
Based on its review, including its consideration of each of the factors
referred to above, the Board concluded that the nature, extent and quality
of the services rendered to the Portfolios by PIMCO and RALLC continued to
be excellent and favored the renewal of the Agreements and the Asset
Allocation Agreements. The Board concluded that the Agreements and the
Asset Allocation Agreements continued to be fair and reasonable to the
Portfolios and their shareholders, that the Portfolios' shareholders
received reasonable value in return for the fees paid to PIMCO by the
Portfolios under the Agreements, and the fees paid to RALLC by PIMCO under
the Asset Allocation Agreements, and that the renewal of the Agreements
and the Asset Allocation Agreements was in the best interests of the
Portfolios and their shareholders.
SUPPLEMENT TO
AMENDED AND RESTATED INVESTMENT ADVISORY CONTRACT
PIMCO Variable Insurance Trust
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
February 28, 2012
Pacific Investment Management Company LLC
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
RE: PIMCO Global Diversified Allocation Portfolio (the "Portfolio")
Dear Sirs:
This will confirm the agreement between the undersigned (the "Trust") and
Pacific Investment Management Company LLC (the "Adviser") as follows:
1. This Trust is an open-end investment company organized as a
Delaware statutory trust, and consisting of such investment portfolios as
have been or may be established by the Trustees of the Trust from time to
time. A separate series of shares of beneficial interest of the Trust is
offered to investors with respect to each investment portfolio.
The Portfolio is a separate investment portfolio of the Trust.
2. The Trust and the Adviser have entered into an Amended and
Restated Investment Advisory Contract ("Contract") dated February 23, 2009
pursuant to which the Trust has employed the Adviser to provide investment
advisory and other services specified in the Contract, and the Adviser has
accepted such employment. As provided in the Contract, the parties may
amend the Contract to add additional series of the Trust, under the same
terms and conditions as set forth in the Contract, and at fee rates set
forth in Exhibit A to the Contract, as may be amended from time to time.
3. The Trust and the Adviser hereby agree to amend the Contract as of
the date hereof to add the Portfolio to Exhibit A and make certain other
changes to Exhibit A. The current Exhibit A is replaced with the new
Exhibit A attached hereto.
4. This Supplement and the Contract shall become effective with
respect to the Portfolio on February 29, 2012 and shall continue in effect
with respect to the Portfolio for a period of more than two years from
that date only so long as the continuance is specifically approved at
least annually (a) 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 (b) 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. This Contract may be terminated with respect to the
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 shall terminate
automatically in the event of its assignment (as defined in the 1940 Act).
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: /S/Xxxxxx X. Xxxxxx
Title: Vice President
ACCEPTED:
PACIFIC INVESTMENT MANAGEMENT COMPANY LLC
By: /s/ Xxxxx X. Xxxxxx
Title: Managing Director
PIMCO FUNDS, on behalf of its series PIMCO Funds: Private Account
Portfolio Series - PIMCO Short-Term Floating NAV Portfolio and PIMCO Funds:
Private Account Portfolio Series - PIMCO Short-Term Floating NAV
Portfolio III
By: /S/Xxxxxx X. Xxxxxx
Title: Vice President
Investment Advisory Contract
EXHIBIT A
(as of February 28, 2012)
PIMCO Variable Insurance Trust
Investment
Portfolio Advisory Fee#
----------------------------------------------- -------------
All Asset Portfolio 0.175%
All Asset All Authority Portfolio 0.20%
CommodityRealReturn Strategy Portfolio 0.49%
Diversified Income Portfolio 0.45%
Emerging Markets Bond Portfolio 0.45%
Foreign Bond Portfolio (Unhedged) 0.25%
Foreign Bond Portfolio (U.S. Dollar-Hedged) 0.25%
Global Advantage Strategy Bond Portfolio 0.40%
Global Bond Portfolio (Unhedged) 0.25%
Global Diversified Allocation Portfolio 0.45%
Global Multi-Asset Managed Volatility Portfolio 1.00%
Global Multi-Asset Portfolio 0.90%
High Yield Portfolio 0.25%
Long-Term U.S. Government Portfolio 0.225%
Low Duration Portfolio 0.25%
Money Market Portfolio 0.12%
Real Return Portfolio 0.25%
Short-Term Portfolio 0.25%
Total Return Portfolio 0.25%
Unconstrained Bond Portfolio 0.60%
# Each Portfolio may invest in shares of PIMCO Funds: Private
Account Portfolio Series - PIMCO Short-Term Floating NAV Portfolio and
PIMCO Funds: Private Account Portfolio Series - PIMCO Short-Term Floating
NAV Portfolio III (each a "PAPS Short-Term Floating NAV Portfolio" and
together, the "PAPS Short-Term Floating NAV Portfolios"), each series of
PIMCO Funds. The PAPS Short-Term Floating NAV Portfolios are offered
only to series of the Trust (each an "Investing Fund") or other series
of registered investment companies for which PIMCO serves as investment
adviser. The PAPS Short-Term Floating NAV Portfolios do not pay an
investment advisory fee to PIMCO. By investing in a PAPS Short-Term
Floating NAV Portfolio, each Investing Fund agrees that 0.005% of the fee
that each Investing Fund is currently obligated to pay PIMCO as indicated
on this Exhibit A, will be designated as compensation for the investment
advisory services PIMCO provides to that PAPS Short-Term Floating NAV
Portfolio under its investment advisory contract with PIMCO.
