SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, for Use of the
Commission Only (as Permitted by
[X] Definitive Proxy Statement Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
PIMCO Strategic Global Government Fund, Inc.
(Name of Registrant as Specified In Its Charter)
N/A
(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:
(2) Aggregate number of securities to which transaction applies:
(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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[_] Fee paid previously with preliminary materials.
[_] 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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Notes:
[LOGO] of PIMCO
PIMCO STRATEGIC GLOBAL GOVERNMENT FUND, INC.
840 Newport Center Drive
Newport Beach, California 92660
(800) 426-5523
Notice of the Annual Meeting of Stockholders
To the Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of PIMCO Strategic Global Government Fund, Inc., formerly RCM
Strategic Global Government Fund, Inc., a Maryland corporation (the "Fund"),
will be held on June 21, 2002, at 10:00 a.m. (Pacific time) at the offices of
Pacific Investment Management Company LLC ("PIMCO"), located at 800 Newport
Center Drive, 6th Floor, Newport Beach, California 92660. At the Meeting, you
and the other stockholders of the Fund will be asked to consider and vote on
the following matters:
1. To elect three directors to the Board of Directors of the Fund.
2. To approve a new investment management agreement between the Fund and
PIMCO.
3. To transact such other business as may properly come before the
Meeting or any adjournment(s) or postponement(s) thereof.
Stockholders of record at the close of business on April 30, 2002 are
entitled to notice of, and to vote at, the Meeting. Regardless of whether you
plan to attend the Meeting, PLEASE COMPLETE, SIGN AND RETURN PROMPTLY THE
ENCLOSED PROXY CARD so that a quorum will be present and the maximum number of
shares may be voted. You may change your vote by written notice to the Fund, by
submission of a subsequent proxy, or by voting in person at the Meeting.
By Order of the Board of Directors,
/s/ Garlin Flynn
Garlin G. Flynn
Secretary
Newport Beach, California
May 20, 2002
PIMCO STRATEGIC GLOBAL GOVERNMENT FUND, INC.
840 Newport Center Drive
Newport Beach, California 92660
(800) 426-5523
Proxy Statement
This Proxy Statement is being provided to the stockholders of PIMCO
Strategic Global Government Fund, Inc., formerly RCM Strategic Global
Government Fund, Inc., a Maryland corporation (the "Fund"), in connection with
the solicitation of proxies by the Board of Directors of the Fund (the "Board
of Directors" or the "Board"). The proxies are to be used at the Annual Meeting
of Stockholders (the "Meeting") to be held at the offices of Pacific Investment
Management Company LLC ("PIMCO"), the Fund's investment manager, located at 800
Newport Center Drive, 6th Floor, Newport Beach, California, 92660, on June 21,
2002 at 10:00 a.m. (Pacific time), and any adjournment(s) thereof, for action
upon the matters set forth in the Notice of the Annual Meeting of Stockholders.
This Proxy Statement and the enclosed form of Proxy were first mailed to
stockholders on or about May 20, 2002.
All shares represented by each properly signed proxy ("Proxy") received
prior to the Meeting will be voted at the Meeting. If a stockholder specifies
how the Proxy is to be voted on any of the business matters to come before the
Meeting, it will be voted in accordance with the specification. If no
specification is made, the Proxy will be voted FOR the election of the
directors nominated by the Board of Directors (Proposal 1) and FOR the approval
of a new investment management agreement between the Fund and PIMCO (Proposal
2). The Proxy may be revoked by a stockholder at any time prior to its use by
written notice to the Fund, by submission of a subsequent Proxy, or by voting
in person at the Meeting.
The representation in person or by proxy of at least a majority of the
outstanding shares of common stock of the Fund entitled to vote is necessary to
constitute a quorum for transacting business at the meeting. For purposes of
determining the presence of a quorum, abstentions, withheld votes or broker
"non-votes" will be counted as present. Broker "non-votes" occur when the Fund
receives a Proxy from a broker or nominee indicating that the broker or nominee
does not have discretionary power to vote on a particular matter and that the
broker or nominee has not received instructions from the beneficial owner or
other person entitled to vote the shares represented by the Proxy.
Proposal 1 requires, for the re-election and election of the nominees to the
Board of Directors, a plurality of the shares cast in the election of directors
at the Meeting. See "Proposal 1--Required Vote." Proposal 2 requires, for the
approval of a new investment management agreement, the affirmative vote of the
holders of a "majority of the outstanding voting securities" of the Fund, as
defined in the Investment Company Act of 1940, as amended (the "1940 Act"). See
"Proposal 2--Required Vote." Withheld votes and broker "non-votes" will not be
counted in favor of Proposal 1. Assuming a quorum is present, abstentions and
broker "non-votes" will have the same effect as a vote against Proposal 2.
The cost of solicitation, including postage, printing and handling, will be
borne by the Fund. The solicitation will be made primarily by mail, but may be
supplemented by telephone calls, and personal interviews by officers, employees
and agents of the Fund.
1
At the close of business on April 30, 2002, the record date for the
determination of stockholders entitled to vote at the Meeting (the "Record
Date"), there were outstanding 34,185,526 shares of common stock. Each such
share is entitled to one vote.
As of the Record Date, Cede & Co., a nominee of Depository Trust Company
("DTC"), owned of record 33,206,203 shares of the Fund, or approximately 97% of
the number of shares entitled to vote at the meeting. DTC is a securities
depository for brokers, dealers and other institutional investors. Securities
are so deposited for the purpose of permitting book entry transfers of
securities among such investors. The Fund does not know the names of beneficial
owners of the shares that have been deposited at DTC. As of the Record Date,
all directors and officers as a group owned, beneficially, less than 1% of the
outstanding shares of the Fund.
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Board of Directors currently consists of three classes of directors.
Directors hold office for staggered terms of three years (or less if they are
filling a vacancy) and until their successors are elected and qualified, or
until their earlier resignation or removal. One class is elected each year to
succeed the directors whose term is expiring. The current term of the Class II
Directors expires at this year's Annual Meeting. The current terms of the Class
I and Class III Directors will expire in 2004 and 2003, respectively, when
their respective successors are elected and qualified.
The Board of Directors has designated James M. Whitaker for re-election at
the Meeting as a Class II director. Mr. Whitaker was re-elected to the Board of
Directors by stockholders on August 26, 1999. If re-elected as a Class II
director, Mr. Whitaker's term will expire at the Annual Meeting of Stockholders
in 2005.
The Board of Directors has designated Carter W. Dunlap, Jr. for election as
a Class II director at the Meeting. If elected as a Class II director, Mr.
Dunlap's term will expire at the Annual Meeting of Stockholders in 2005.
The Board of Directors has designated Brent R. Harris for re-election as a
Class III director at the Meeting. Mr. Harris was elected to the Board of
Directors as a Class III director on February 8, 2002, to serve until the
Meeting. If re-elected as a Class III director, Mr. Harris's term will expire
at the Annual Meeting of Stockholders in 2003.
Each of Francis E. Lundy and Gregory S. Young, Class I directors re-elected
to the Board by stockholders on November 20, 2001, has a remaining term of
approximately two years.
Unless authority is withheld, it is the intention of the persons named in
the enclosed Proxy to vote each Proxy for Messrs. Whitaker, Harris and Dunlap
(the "Nominated Directors"). Each of the Nominated Directors has indicated he
will serve if elected, but if he should be unable to serve, the Proxy holders
may vote in favor of such substitute nominee as the Board of Directors may
designate, or the Board of Directors may leave a vacancy in the Board.
2
The Fund pays each of its directors who were not "interested persons" under
the 1940 Act (the "Disinterested Directors") $6,000 per year and $1,000 per
meeting attended, and reimburses each such director for reasonable expenses
incurred in connection with such meetings. The Fund's Articles of Incorporation
provide that the Fund shall, to the extent permitted by law, indemnify each of
its currently acting and former directors against any and all liabilities and
expenses incurred in connection with their service in such capacities.
The following table provides information concerning the directors and
nominees.
Number of
Portfolios
in Fund Shares of
Complex Common Stock
Term of Overseen of the Fund
Position(s) Office and by Director Other Directorships Held Beneficially
Held with Length of Principal Occupation(s) or Nominee by Director or Nominee Owned as of
Name, Address*, Age Fund Time Served During the Past 5 Years for Director for Director April 30, 2002**
------------------- ----------- ----------- ----------------------- ------------ ------------------------ ----------------
Disinterested Directors
Francis E. Lundy Director Since 2/94 Chairman and 1 Director, Industrialex 36,846
Age 64 President, Technical Manufacturing Corp.
Instrument - San (coating and
Francisco; Vice application techniques
President, Zygo for electronics
Corporation industry).
(technology
manufacturing and
sales).
James M. Whitaker Director, Since 2/94 Attorney at Law, sole 1 None None
Age 59 Vice practitioner.
Chairman
of the
Board
Gregory S. Young Director Since 3/01 Principal, Teton 1 None None
Age 45 Capital Management
(private equity
venture capital).
Carter W. Dunlap, Jr. Nominee N/A Principal, Dunlap 1 None None
Age 46 for Equity Management
Director (investment
advisory).
------------------------------------------------------------------------------------------------------------------------------
Interested Director
Brent R. Harris+ Director, Since 2/02 Managing Director 66 None None
Age 42 Chairman, and Executive
President Committee Member,
PIMCO; and Board of
Governors,
Investment Company
Institute.
3
--------
* Unless otherwise indicated, the address of each director is 840 Newport
Center Drive, Newport Beach, California 92660.
** Constituting in the aggregate less than 1% of the outstanding shares of the
Fund.
+ Mr. Harris is an "interested person" of the Fund within the meaning of the
1940 Act due to his affiliation with PIMCO, the Fund's investment manager,
as set forth above.
For directors and nominees who are "interested persons" within the meaning
of the 1940 Act, positions held with affiliated persons of the Fund (other than
as set forth above) are listed in the following table.
Name of Director or Nominee Positions held with affiliated persons of the Fund
--------------------------- --------------------------------------------------
Brent R. Harris Trustee or Director (as applicable) and Chairman, three registered investment
companies in the fund complex that includes funds advised by PIMCO and
Allianz Dresdner Asset Management of America L.P. ("ADAM LP"), formerly
PIMCO Advisors L.P. (the "PIMCO Fund Complex"); and Director and Vice
President Stocks Plus Management, Inc.
For directors and nominees, the following table states the dollar range of
equity securities beneficially owned by the director or nominee in the Fund
and, on an aggregate basis, in any registered investment companies overseen or
to be overseen by the director or nominee in the "family of investment
companies."
Aggregate Dollar Range of Equity
Securities in All Funds Overseen
or to be Overseen by Director or
Dollar Range of Equity Nominee in Family of Investment
Name of Director or Nominee Securities in the Fund* Companies*
--------------------------- ----------------------- --------------------------------
Disinterested Directors
Francis E. Lundy (greater than)$100,000 (greater than)$100,000
James M. Whitaker None None
Gregory S. Young None None
Carter W. Dunlap, Jr. None None
------------------------------------------------------------------------------------
Interested Director
Brent R. Harris None (greater than)$100,000
--------
* Securities are valued as of April 30, 2002.
4
For directors and nominees who are not "interested persons" with the meaning
of the 1940 Act, the following table provides information concerning the
beneficial ownership of the director or nominee and his immediate family
members in securities of PIMCO or a person (other than a registered investment
company) directly or indirectly controlling, controlled by, or under common
control with PIMCO.
Name of
Owners and
Relationships
to Director Value of
Name of Director or Nominee or Nominee Company Title of Class Securities Percent of Class
--------------------------- ------------- ------- -------------- ---------- ----------------
Francis E. Lundy N/A N/A N/A N/A N/A
James M. Whitaker N/A N/A N/A N/A N/A
Gregory S. Young N/A N/A N/A N/A N/A
Carter W. Dunlap, Jr. N/A N/A N/A N/A N/A
The following table provides information about compensation received by
directors during the fiscal year ended January 31, 2002.
Total
Pension or Estimated Compensation
Retirement Annual From Fund
Aggregate Benefits Accrued Benefits and Fund
Compensation as Part of Fund Upon Complex Paid
Name of Person, Position From Fund Expenses Retirement to Directors
------------------------ ------------ ---------------- ---------- ------------
Disinterested Directors
Francis E. Lundy $17,500 None None $17,500
James M. Whitaker $17,500 None None $17,500
Gregory S. Young $17,500 None None $17,500
------------------------------------------------------------------------------
Interested Director
Brent R. Harris N/A* N/A N/A N/A
--------
* Mr. Harris did not serve as a Director or officer of the Fund during the
fiscal year ended January 31, 2002. In addition, pursuant to the investment
management agreement between the Fund and PIMCO, PIMCO compensates those
directors who are affiliated persons of PIMCO.
Board Committees and Meetings. The Board of Directors has a standing Audit
Oversight Committee. The responsibilities of the Audit Oversight Committee
include reviewing and making recommendations to the Board concerning the Fund's
financial and accounting reporting procedures and selection of the Fund's
independent auditors. The Audit Oversight Committee meets with the Fund's
independent auditors, reviews the Fund's financial statements and generally
assists the Board in fulfilling its responsibilities relating to corporate
accounting and reporting practices.
The members of the Audit Oversight Committee include only Disinterested
Directors. The Audit Oversight Committee currently consists of Messrs. Lundy,
Whitaker and Young (Chairman). Each member of the Audit Oversight Committee is
"independent" as defined in Sections 303.01(B)(2)(a) and (3) of the listing
standards of the New York Stock Exchange, on which shares of the Fund's common
stock are listed. The Board of Directors has adopted a written charter for the
Audit Oversight Committee, a copy of which was included in the proxy statement
for the 2001 Annual Meeting of Stockholders. The report of the Audit Oversight
Committee, dated March 19, 2002, is attached to this Proxy Statement as
Appendix B.
5
The Board has a Nominating Committee composed solely of Disinterested
Directors. The Nominating Committee is responsible for reviewing candidates to
fill vacancies on the Board. The Nominating Committee will review nominees
recommended by stockholders. Such recommendations should be submitted in
writing to Garlin G. Flynn, Secretary to the Fund, at the address of the
principal executive offices of the Fund, with a copy to J.B. Kittredge at Ropes
& Gray, One International Place, Boston, Massachusetts 02110-2624.
The Board has a Fair Valuation Committee, whose sole member is Brent R.
Harris. The Fair Valuation Committee is responsible for overseeing the
implementation by the investment manager of the Fund's policies and procedures
for fair valuing securities for which market quotations are not readily
available.
With respect to the fiscal year ended January 31, 2002, the Board of
Directors held four regular meetings and six special meetings. The Audit
Oversight Committee met three times in separate session during the fiscal year
ended January 31, 2002. The Nominating Committee met once in separate session
during the fiscal year ended January 31, 2002. The Fair Valuation Committee was
established by the Board in December 2001 and held no meetings during the
fiscal year ended January 31, 2002. Each director serving during the fiscal
year ended January 31, 2002 attended at least 75% of the regular and special
meetings of the Board and meetings of the committees on which such director
served. During the fiscal year ended January 31, 2002, Mr. Lundy was a director
of a company with a class of securities registered pursuant to Section 12 of
the Securities Exchange Act of 1934, as amended (the "1934 Act") or subject to
the requirements of Section 15(d) of the 1934 Act or a company registered as an
investment company under the 1940 Act (other than the Fund).
Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of
the 1934 Act requires the Fund's officers and directors and certain other
persons to file timely certain reports regarding ownership of, and transactions
in, the Fund's securities with the Securities and Exchange Commission. Copies
of the required filings must also be furnished to the Fund. Based solely on its
review of such forms received by it, or written representations from certain
reporting persons, the Fund believes that during the fiscal year ended on
January 31, 2002, all applicable Section 16(a) filing requirements were met.
Required Vote. Reelection and election of the nominees to the Board of
Directors (Proposal 1) will require the affirmative vote of a plurality of the
votes cast in the election of directors at the Meeting, in person or by proxy.
The Board of Directors of the Fund Unanimously Recommends That You Vote FOR
Proposal 1.
6
APPROVAL OF INVESTMENT MANAGEMENT AGREEMENT
BETWEEN THE FUND AND PIMCO
(PROPOSAL 2)
Stockholders of the Fund are being asked to approve a new investment
management agreement between the Fund and PIMCO (the "New Investment Management
Agreement"), which would take effect following its approval by stockholders and
upon its execution by the parties. The New Investment Management Agreement
would have an initial term of two years following its execution, continuing in
effect thereafter from year to year if its continuance is approved at least
annually in accordance with relevant provisions of the 1940 Act.
Termination of the Prior Investment Management Agreement. The Fund was
previously a party to an investment management agreement with Dresdner RCM
Global Investors LLC ("Dresdner RCM"), dated November 20, 2001 (the "Prior
Investment Management Agreement"). On December 17, 2001, the Board of Directors
of the Fund, including the Disinterested Directors, unanimously approved the
continuance of the Prior Investment Management Agreement until March 31, 2002.
The Prior Investment Management Agreement was last submitted to a vote of, and
approved by, stockholders of the Fund on November 20, 2001, in connection with
a change in control of Dresdner RCM that, pursuant to the 1940 Act, had
resulted in the "assignment" and automatic termination of the investment
management agreement between the Fund and Dresdner RCM that had been in effect
immediately prior to such change in control.
In December 2001, Dresdner RCM informed the Board of Directors of the Fund
that, effective March 31, 2002, Dresdner RCM would discontinue its fixed-income
portfolio management operations in its San Francisco office, and notified the
Fund that it proposed to terminate the Prior Investment Management Agreement on
or prior to that date. Dresdner RCM also informed the Board that it was
proposing that PIMCO assume management of its fixed-income clients, including
the Fund. PIMCO, a majority-owned subsidiary of Allianz Aktiengesellschaft
("Allianz AG"), became an affiliate of Dresdner RCM following Allianz AG's
acquisition of substantially all of the outstanding shares of capital stock of
Dresdner Bank AG ("Dresdner Bank"), the parent company of Dresdner RCM, on July
23, 2001.
The Prior Investment Management Agreement under which Dresdner RCM provided
advisory services to the Fund terminated as of the close of business on
February 8, 2002. The Fund is currently operating under an Interim Investment
Management Agreement (as defined below) with PIMCO.
Directors' Consideration and Approval of Interim and New Investment
Management Agreements. The acquisition of Dresdner Bank by Allianz AG resulted
in duplicative fixed-income portfolio management capabilities in the combined
firm. Dresdner RCM and the Board of Directors explored a number of options to
resolve this redundancy while still having Dresdner RCM's fixed-income
management personnel (the "Fixed-Income Team") continue to manage the Fund,
including a proposed joint venture among the Fixed-Income Team and various
other entities. The Disinterested Directors met separately with counsel on
October 4, October 16, October 24, October 29, and November 20, 2001 to
consider these options. Upon being notified by Dresdner RCM that none of these
proposed options was viable and that it intended to terminate the Prior
Investment Management Agreement, the Board of Directors considered alternative
advisory arrangements for the Fund, including the proposal that PIMCO
7
succeed Dresdner RCM as investment manager. To assist their deliberations, the
Disinterested Directors enlisted the services of an independent consultant to
gather comparative data concerning advisory fees and administrative expenses
paid by investment companies similar to the Fund and reviewed the consultant's
findings.
On December 11 and December 21, 2001, the Disinterested Directors requested
in writing that PIMCO provide certain materials and information that the Board
considered reasonably necessary to evaluate the proposed investment management
contract. On December 17, 2001 and February 1, 2002, the Board of Directors met
in person and considered the proposal that PIMCO serve as investment manager to
the Fund. At these meetings, the Board interviewed various representatives of
PIMCO and reviewed written materials supplied by PIMCO concerning the firm's
structure, investment management operations, investment advisory and
administrative personnel, and experience and performance as a fixed-income
investment manager. The Board also considered the levels of fees paid by other
fund clients of PIMCO and PIMCO's proposal to perform additional services for
total fees that were less than those charged by Dresdner RCM.
On February 1, 2002, the Board, including the Disinterested Directors,
unanimously approved, pursuant to Rule 15a-4 under the 1940 Act, an interim
investment management agreement between the Fund and PIMCO (the "Interim
Investment Management Agreement"), which became effective as of the close of
business on February 8, 2002 (the "Effective Date"). In approving the Interim
Investment Management Agreement, the Board determined that, because the terms
and conditions of the Interim and Prior Investment Management Agreements are
identical (other than their effective and expiration dates, the lower rate of
compensation payable to PIMCO, and certain provisions required by Rule 15a-4),
the scope and quality of services that PIMCO would provide for the Fund under
the Interim Investment Management Agreement would be at least equivalent to the
scope and quality of services that were provided under the Prior Investment
Management Agreement. On February 1, 2002, the Board also approved the Interim
Administrative Services Agreement (as defined below), which became effective on
the Effective Date. See below, "Interim and New Administrative Services
Agreements."
On March 19, 2002, the Board of Directors, including the Disinterested
Directors, met in person and unanimously approved the New Investment Management
Agreement with PIMCO, which would take effect after its approval by
stockholders of the Fund and upon its execution by the parties and would have
an initial term of two years, continuing thereafter from year to year if its
continuance is approved at least annually in accordance with relevant
provisions of the 1940 Act. Prior to this meeting, the Disinterested Directors
requested that PIMCO provide certain information concerning projected annual
expenses of the Fund under the New Investment Management Agreement to
supplement the information provided by PIMCO in connection with the Board's
approval of the Interim Investment Management Agreement. In approving the New
Investment Management Agreement, the Board considered PIMCO's experience as a
fixed-income investment manager and the nature and quality of the investment
management and non-investment services expected to be rendered to the Fund by
PIMCO. The Board also reviewed and considered the qualifications and experience
of those employees of PIMCO who would manage the Fund's assets; the terms of
the New Investment Management Agreement, including the fact that the rate of
compensation payable to PIMCO for advisory services would be lower than the
rate of compensation paid under the Prior Investment Management Agreement; the
report of the special consultant to the
8
Disinterested Directors concerning advisory fees payable by comparable funds;
the projected overall annual expenses of the Fund under PIMCO management, as
compared to the actual overall expenses of the Fund during the last fiscal
year; and the benefits accruing to PIMCO as a result of its affiliation with
the Fund.
As a result of its investigation and deliberations, the Board of Directors,
including the Disinterested Directors, voted unanimously on March 19, 2002 to
approve the New Investment Management Agreement with PIMCO and to recommend it
for the approval of stockholders at the Meeting.
Since the Effective Date, PIMCO has provided investment advisory services to
the Fund under the Interim Investment Management Agreement and has been
compensated at an annual rate equal to 0.85% of the Fund's average daily net
assets for such services. Pursuant to Rule 15a-4, any advisory fees that may be
earned by PIMCO under the Interim Investment Management Agreement will be
placed in an interest-bearing escrow account with the Fund's custodian or a
bank and will be fully paid to PIMCO only upon stockholder approval of the New
Investment Management Agreement. If the New Investment Management Agreement is
not approved by stockholders, PIMCO will be paid, out of the escrow account,
the lesser of any costs incurred in performing under the Interim Investment
Management Agreement (plus interest earned on that amount while in escrow) or
the total amount in the escrow account (plus interest earned). In addition, the
Interim Investment Management Agreement is terminable, without the payment of
any penalty, by a vote of the Board of Directors or a "majority of the
outstanding voting securities of the Fund," as defined in the 1940 Act, upon 10
calendar days' written notice to PIMCO. The Interim Investment Management
Agreement will remain in effect until the earlier of (i) 150 days following the
Effective Date, unless terminated sooner in accordance with Rule 15a-4, or (ii)
the date that stockholders of the Fund have approved, and the parties have
executed, the New Investment Management Agreement.
Interim and New Administrative Services Agreements. In connection with its
approval of the Interim Investment Management Agreement, the Board of Directors
also voted unanimously to terminate the administration agreement, dated as of
February 24, 1994 (the "Prior Administration Agreement"), between the Fund and
State Street Bank and Trust Company ("State Street"), pursuant to which State
Street provided certain administrative services to the Fund and was compensated
as follows: 0.06% on the first $250 million of the Fund's average daily net
assets, 0.03% of the next $250 million of average daily net assets and 0.01% on
average daily net assets in excess of $500 million; and an annual accounting
fee of $90,000. At the Fund's net assets of $382,831,054 on January 31, 2002,
this formula would have resulted in an effective fee of approximately 0.07% per
annum of the Fund's net assets. The Board unanimously approved an interim
administrative services agreement between the Fund and PIMCO (the "Interim
Administrative Services Agreement"), which became effective on the Effective
Date, pursuant to which PIMCO would provide substantially the same
administrative services which State Street provided under the Prior
Administration Agreement and be compensated at an annual rate equal to 0.05% of
the Fund's net assets. On March 19, 2002, the Board of Directors unanimously
approved a new administrative services agreement between the Fund and PIMCO
(the "New Administrative Services Agreement") to become effective on the
effective date of the New Investment Management Agreement. See below,
"Additional Information - Administrator and Custodian." The terms of the New
Administrative Services Agreement, including the scope of services provided and
the rate of compensation, are identical to the terms of the Interim
Administrative Services Agreement, with the exception of its effective date and
its term. Given the
9
asset breakpoints in the fee structure under the Prior Administration
Agreement, the magnitude of the decrease in the administration fee payable
under the New Administrative Services Agreement would diminish if the net
assets of the Fund were to increase above their level on January 31, 2002. If
the net assets of the Fund were to increase to a level greater than
$662,500,000, the administration fee payable under the New Administrative
Services Agreement would actually be higher than the fee payable for comparable
services under the Prior Administration Agreement, although Fund management
currently does not expect the Fund's net assets to increase to such a level.
Description of the Prior and New Investment Management Agreements. The
provisions of the New Investment Management Agreement that is being submitted
for stockholder approval are substantially the same as those of the Prior
Investment Management Agreement, except for its effective date and term, the
rate of compensation payable to PIMCO for advisory services thereunder (which
is lower than the rate of compensation that was payable to Dresdner RCM under
the Prior Investment Management Agreement), a provision permitting the Fund to
use the name "PIMCO" during the term of the agreement and certain differences
deemed by the Board to be immaterial. The description of the New Investment
Management Agreement set forth below is qualified in its entirety by the
provisions of the New Investment Management Agreement, a form of which is
attached to this Proxy Statement as Appendix A. As used below, the term
"Investment Manager" means, with respect to the Prior Investment Management
Agreement, Dresdner RCM, and with respect to the New Investment Management
Agreement, PIMCO.
Under the Prior and New Investment Management Agreements, the Investment
Manager furnishes investment management services to the Fund, subject to the
provisions of the 1940 Act and the Fund's investment objectives, policies,
procedures and investment restrictions. Such services include: (a) managing the
investment and reinvestment of the Fund's assets, (b) providing investment
research advice and supervision for the Fund in accordance with the Fund's
investment objectives, policies and restrictions, (c) furnishing suitable
office space for the Fund, and (d) maintaining books and records with respect
to the Fund's portfolio transactions.
The Prior Investment Management Agreement, whose term would otherwise have
expired on March 31, 2002, would have continued in effect thereafter from year
to year if its continuance were approved at least annually (i) by the Board of
Directors or by the vote of a majority of outstanding voting securities of the
Fund and (ii) by vote of a majority of the Disinterested Directors of the Fund,
cast in person at a meeting called for the purpose of voting on such approval
(the conditions in (i) and (ii) together referred to below as the "1940 Act
Continuation Requirements"). The New Investment Management Agreement would take
effect after its approval by a majority of outstanding voting securities of the
Fund and its execution by the parties and would have an initial term of two
years from the date of such execution, continuing in effect thereafter from
year to year if its continuance were approved at least annually in accordance
with the 1940 Act Continuation Requirements. The Prior Investment Management
Agreement could have been, and the New Investment Management Agreement may be,
terminated (i) at any time, without the payment of any penalty, either by the
Board of Directors or by the vote of a majority of the outstanding voting
securities of the Fund, on 60 days' written notice to the Investment Manager,
or (ii) by the Investment Manager on 60 days' written notice to the Fund. Each
of the Prior and New Investment Management Agreements would terminate
automatically in the event of its "assignment" (as defined in the 1940 Act).
10
Under the Prior Investment Management Agreement, the Fund paid Dresdner RCM
a fee calculated daily and paid monthly, at an annual rate equal to 0.95% of
the Fund's average daily net assets. In addition, in connection with the recent
merger of Dresdner RCM Global Strategic Income Fund, Inc. into the Fund (the
"Merger"), which closed on January 18, 2002, the Fund entered into an agreement
with Dresdner RCM whereby Dresdner RCM would (i) waive its advisory fee in
excess of a rate of 0.75% per annum on those net assets of the Fund following
the Merger that exceeded the Fund's pre-Merger net asset level (resulting in an
effective advisory fee under the Prior Investment Management Agreement, i.e.,
fees divided by net assets, of approximately 0.93% at current asset levels),
and (ii) waive that portion of its advisory fee during the first year following
the Merger as might be necessary to ensure that the Fund's total operating
expenses during that period, plus nonrecurring Merger-related expenses, would
be at least $75,000 less than what these expenses were projected to be using an
estimated expense ratio computed on the assumption that the Merger had not
occurred.
Under the New Investment Management Agreement, the Fund would pay PIMCO a
fee calculated weekly and paid monthly at an annual rate equal to 0.85% of the
Fund's average weekly net assets.
Fees recorded for advisory services provided by Dresdner RCM under the Prior
Investment Management Agreement for the fiscal year ended January 31, 2002 were
$3,237,628. Neither Dresdner RCM nor any person affiliated with Dresdner RCM
received any other fees from the Fund for services provided to the Fund during
the fiscal year ended January 31, 2002. Had the terms of the New Investment
Management Agreement been in effect during the last fiscal year, the Fund would
have paid in the aggregate $3,057,760 for investment advisory services. This
would have represented a decrease of approximately 6% from what the Fund
actually paid to Dresdner RCM during this period.
Information About PIMCO. Pacific Investment Management Company LLC
("PIMCO") is located at 840 Newport Center Drive, Suite 300, Newport Beach,
California 92660. PIMCO is a limited liability company formed under Delaware
law in 1971. The managing member of PIMCO is Allianz Dresdner Asset Management
of America, L.P. ("ADAM LP"), 888 San Clemente Drive, Suite 100. Newport Beach,
California 92660. The principal executive officer of PIMCO is William S.
Thompson.
PIMCO is an investment counseling firm which is 91% owned by ADAM LP and 9%
owned by PIMCO Partners, LLC ("PPLLC"). PPLLC is a California limited liability
company owned by the current Managing Directors of PIMCO. ADAM LP was organized
as a limited partnership under Delaware law in 1987. ADAM LP's sole general
partner is Allianz-PacLife Partners LLC. Allianz-PacLife Partners LLC is a
Delaware limited liability company with two members, ADAM U.S. Holding LLC, a
Delaware limited liability company and Pacific Asset Management LLC, a Delaware
limited liability company. ADAM U.S. Holding LLC's sole member is Allianz
Dresdner Asset Management of America LLC, a Delaware limited liability company,
which is a wholly-owned subsidiary of Allianz of America, Inc., which is wholly
owned by Allianz Aktiengesellschaft ("Allianz AG"). Pacific Asset Management
LLC is a wholly-owned subsidiary of Pacific Life Insurance Company, which is a
wholly-owned subsidiary of Pacific Mutual Holding Company. Allianz AG
indirectly holds a controlling interest in Allianz Dresdner Asset Management of
America L.P. Pacific Life Insurance Company owns an indirect minority equity
interest in Allianz Dresdner Asset Management of America L.P. Pacific Life
Insurance Company is a California-based insurance company. Allianz AG is a
European-based, multinational insurance and financial services holding company.
11
The following officers of the Fund are either members, directors, officers
or employees of PIMCO: Brent R. Harris (President), R. Wesley Burns (Senior
Vice President), Pasi Hamalainen (Senior Vice President), Daniel J. Ivascyn
(Senior Vice President), Mohamed El-Erian (Senior Vice President), Jeffrey M.
Sargent (Senior Vice President), Henrik P. Larsen (Vice President), Michael J.
Willemsen (Vice President), Garlin G. Flynn (Secretary), John P. Hardaway
(Treasurer), Erik C. Brown (Assistant Treasurer). The officers of the Fund
collectively own less than 1% of the outstanding shares of the Fund. Each of
Messrs. Harris, Burns, Hamalainen and El-Erian have an indirect equity interest
in PIMCO by virtue of their interests in PPLLC.
Additional Information. In connection with the purchase of Dresdner RCM by
PIMCO's parent company, Allianz AG, PIMCO compensated Dresdner RCM for certain
costs associated with the closing of its San Francisco fixed-income group in
March 2002. These costs included severance payments for affected employees of
Dresdner RCM, including Luke D. Knecht, a managing director of Dresdner RCM who
served as Director, Chairman and President of the Fund during the fiscal year
ended January 31, 2002. Severance payments from Dresdner RCM to Mr. Knecht
totaled $194,857. By virtue of the compensation he received from Dresdner RCM
during the transition period, Mr. Knecht may be deemed to have had a material
interest in PIMCO's appointment as investment manager under the Interim
Investment Management Agreement.
In connection with its approval of the Interim Investment Management
Agreement with PIMCO, the Board of Directors accepted the resignation of Luke
D. Knecht as Director, Chairman and President of the Fund, effective as of
February 8, 2002. The Board appointed Brent R. Harris, a managing director of
PIMCO, as Director, Chairman and President to fill the vacancy created by Mr.
Knecht's resignation. In addition, the Board removed, without cause, those
persons who had previously served as officers of the Fund, and appointed as
officers the persons named above under the caption "Information About PIMCO,"
who are either members, directors, officers or employees of PIMCO.
At a special meeting of the Board held on February 21, 2002, the Board
unanimously approved a change in the name of the Fund from "RCM Strategic
Global Government Fund, Inc." to "PIMCO Strategic Global Government Fund, Inc."
The Fund's name change became effective on March 19, 2002. There has been no
change to the Fund's ticker symbol on the New York Stock Exchange, which
remains "RCS."
During the fiscal year ended January 31, 2002, no commissions were paid to
affiliated brokers of Dresdner RCM.
Section 15(f) of the 1940 Act. PIMCO has informed the Fund that it and its
affiliates intend to use all commercially reasonable efforts to assure
compliance with the conditions of Section 15(f) of the 1940 Act. Section 15(f)
provides a nonexclusive safe harbor for an investment manager to a registered
investment company or any affiliated persons thereof to receive any amount or
benefit in connection with a sale of any interest in the investment manager
that results in an assignment of an advisory contract with such registered
investment company (the "Transaction") as long as two conditions are met.
First, no "unfair burden" may be imposed on the investment company as a result
of the Transaction, or any express or implied terms, conditions or
understandings applicable thereto. As defined in the 1940 Act, the term
12
"unfair burden" includes any arrangement during the two-year period after the
Transaction whereby the investment manager (or predecessor or successor
adviser), or any interested person of any such adviser, receives or is entitled
to receive any compensation, directly or indirectly, from the investment
company or its security holders (other than fees for bona fide investment
advisory or other services), or from any person in connection with the purchase
or sale of securities or other property to, from, or on behalf of the
investment company (other than bona fide ordinary compensation as principal
underwriter of the investment company). The second condition of Section 15(f)
is that, during the three-year period immediately following the Transaction, at
least 75% of an investment company's board of directors must not be "interested
persons" of the investment manager or the predecessor investment manager within
the meaning of the 1940 Act.
The Board of Directors of the Fund has not been advised by PIMCO of any
circumstances arising from the transition of the fixed-income advisory
operations of Dresdner RCM to PIMCO that might result in the imposition of an
"unfair burden" on the Fund. Further, the composition of the Board of Directors
currently complies with the provisions of Section 15(f).
Required Vote. The affirmative vote of the holders of a "majority of
outstanding voting securities" of the Fund, as defined in the 1940 Act, is
required to approve the New Investment Management Agreement (Proposal 2).
"Majority of the outstanding voting securities" under the 1940 Act and for this
purpose means the lesser of (i) 67% or more of the shares of common stock of
the Fund represented at the Meeting if more than 50% of the outstanding shares
of common stock are represented, or (ii) more than 50% of the outstanding
shares of common stock of the Fund.
The Board of Directors of the Fund Unanimously Recommends That You Vote FOR
Proposal 2.
ADDITIONAL INFORMATION ABOUT THE FUND
Executive and Other Officers of the Fund. In addition to the information
set forth above with respect to Brent R. Harris, the Fund's President, the
table below provides certain information concerning the executive officers of
the Fund and certain other officers who perform similar duties. Officers hold
office at the pleasure of the Board and until their successors are appointed
and qualified or until their earlier resignation or removal. Officers and
employees of the Fund who are principals, officers or employees of PIMCO are
not compensated by the Fund. Unless otherwise noted, the address of all
officers is 840 Newport Center Drive, Newport Beach, California 92660.
Terms of Office
Position(s) Held and Length of Principal Occupation(s)
Name and Age with Fund Time Served During the Past 5 Years
------------ ---------------- --------------- -----------------------
R. Wesley Burns Senior Vice President Since 2/02 Managing Director, PIMCO;
Age 42 Formerly, Executive Vice President,
PIMCO.
13
Terms of Office
Position(s) Held and Length of Principal Occupation(s)
Name and Age with Fund Time Served During the Past 5 Years
------------ ---------------- --------------- -----------------------
Mohamed El-Erian Senior Vice President Since 2/02 Managing Director, PIMCO;
Age 43 Formerly, Managing Director,
Salomon Smith Barney/Citibank.
Pasi Hamalainen Senior Vice President Since 2/02 Managing Director, PIMCO.
Age 34
Daniel J. Ivascyn Senior Vice President Since 2/02 Senior Vice President, PIMCO.
Age 32 Formerly, Vice President, PIMCO.
Jeffrey M. Sargent Senior Vice President, Since 2/02 Senior Vice President, PIMCO.
Age 39
Henrik P. Larsen Vice President Since 2/02 Vice President, PIMCO. Formerly,
Age 32 Manager, PIMCO.
Michael J. Willemsen Vice President Since 2/02 Vice President, PIMCO. Formerly,
Age 42 Manager, PIMCO.
Garlin G. Flynn Secretary Since 2/02 Specialist, PIMCO. Formerly, Senior
Age 55 Fund Administrator, PIMCO.
John P. Hardaway Treasurer Since 2/02 Senior Vice President, PIMCO.
Age 44 Formerly, Vice President, PIMCO.
Erik C. Brown Assistant Treasurer Since 2/02 Vice President, PIMCO. Formerly,
Age 34 Tax Senior Manager, Deloitte &
Touche LLP and Tax Manager,
PricewaterhouseCoopers, LLP.
For officers of the Fund, positions held with affiliated persons of the Fund
(other than as set forth above) are listed in the following table.
Name Positions held with affiliated persons of the Fund
---- --------------------------------------------------
R. Wesley Burns President and Trustee or Director (as applicable), three registered investment
companies in the PIMCO Fund Complex; and Director, PIMCO Funds: Global
Investors plc and PIMCO Global Advisors (Ireland) Limited.
Mohamed El-Erian None.
Pasi Hamalainen None.
Daniel J. Ivascyn Senior Vice President, PIMCO Commercial Mortgage Securities Trust, Inc.
14
Name Positions held with affiliated persons of the Fund
---- --------------------------------------------------
Jeffrey M. Sargent Senior Vice President, three registered investment companies in the PIMCO
Fund Complex; and Vice President, PIMCO Funds: Multi-Manager Series.
Henrik P. Larsen Vice President, four registered investment companies in the PIMCO Fund
Complex.
Michael J. Willemsen Vice President, three registered investment companies in the PIMCO Fund
Complex.
Garlin G. Flynn Secretary, three registered investment companies in the PIMCO Fund Complex;
and Assistant Secretary, PIMCO Funds: Multi-Manager Series.
John P. Hardaway Treasurer, four registered investment companies in the PIMCO Fund Complex.
Erik C. Brown Assistant Treasurer, four registered investment companies in the PIMCO Fund
Complex.
Administrator; Custodian; Transfer Agent. PIMCO provides certain
administrative services to the Fund pursuant to the Interim Administrative
Services Agreement. State Street Bank and Trust Company, 801 Pennsylvania
Avenue, Kansas City, Missouri 64105, is the Fund's custodian. EquiServe Trust
Company, N.A., 150 Royall Street, Canton, Massachusetts 02021, is the Fund's
transfer agent.
Under the Interim Administrative Services Agreement, PIMCO provides
reporting and accounting services to the Fund, including: overseeing the
determination and publication of the Fund's net asset value in accordance with
the Fund's policy, and the maintenance of certain books and records of the Fund
required by applicable law; preparing the Fund's federal, state and local
income tax returns for review by the independent accountants and filing by the
treasurer; reviewing the appropriateness, and arranging for payment, of Fund
expenses, and overseeing the calculation of fees paid to the Fund's investment
manager, custodian and transfer agent; preparing for review and approval by the
Fund's officers financial information for the Fund's semi-annual and annual
reports, proxy statements and other communications with stockholders;
consulting with the Fund's officers, independent accountants, legal counsel,
custodian and transfer agent to establish accounting policies for the Fund; and
responding to, or referring to the Fund's officers or transfer agent, any
stockholder inquiries relating to the Fund. For its services as administrator,
PIMCO is compensated by the Fund monthly at an annual rate equal to 0.05% of
the average weekly value of Fund's net assets during the preceding month.
Independent Auditors. PricewaterhouseCoopers LLP ("PwC"), 1055 Broadway,
Kansas City, Missouri 64105, independent accountants, has been selected by the
Board of Directors as the independent auditors of the Fund for the current
fiscal year. During the fiscal year ended January 31, 2002, PwC, 160 Federal
Street, Boston, Massachusetts 02110, served as the Fund's independent auditors.
The Audit Oversight Committee of the Board of Directors of the Fund
unanimously recommended the selection of PwC, and the Board unanimously
approved such selection, on March 19, 2002. This firm also serves as the
auditor for various other funds for which PIMCO serves as investment manager.
15
A representative of PwC, if requested by any stockholder, will be present
via telephone at the Meeting to respond to appropriate questions from
stockholders.
The following table sets forth the aggregate fees billed for professional
services rendered by PwC during the Fund's fiscal year ended January 31, 2002:
Financial Information
Systems Design and
Audit Fees Implementation Fees All Other Fees
---------- ------------------- --------------
$31,200 N/A $174,000
The fees disclosed under the captions "Financial Information Systems Design
and Implementation Fees" and "All Other Fees" include fees billed for services,
if any, rendered during the Fund's most recent fiscal year to the Fund, to
Dresdner RCM and to any entity controlling, controlled by or under common
control with Dresdner RCM that provided services to the Fund.
In approving the selection of PwC, the Audit Oversight Committee of the Fund
considered, in addition to other practices and requirements relating to the
selection of the Fund's auditors, whether the nonaudit services covered in the
table above under "Financial Information Systems Design and Implementation
Fees" and "All Other Fees" performed by PwC for the Fund, for Dresdner RCM and
for certain related parties are compatible with maintaining the independence of
PwC as the Fund's principal accountants.
Other Business. As of the date of this Proxy Statement, the Fund's
management and PIMCO know of no business to come before the Meeting other than
as set forth in the Notice of the Annual Meeting of Stockholders. If any other
business is properly brought before the Meeting, or any adjournment thereof,
the persons named as Proxies will vote in their sole discretion.
Adjournment. In the event that sufficient votes in favor of the proposals
set forth in the Notice of the Annual Meeting of Stockholders are not received
by the time scheduled for the Meeting, the persons named as Proxies may propose
one or more adjournments of the Meeting after the date set for the original
Meeting to permit further solicitation of Proxies with respect to any of such
proposals. In addition, if, in the judgment of the persons named as Proxies, it
is advisable to defer action on one or both proposals, the persons named as
Proxies may propose one or more adjournments of the Meeting for a reasonable
time. Any such adjournments will require the affirmative vote of a majority of
the votes cast on the question in person or by Proxy at the session of the
Meeting to be adjourned, as required by the Fund's Articles of Incorporation
and By-Laws. The persons named as Proxies will vote in favor of such
adjournment those Proxies which they are entitled to vote in favor of such
proposals. They will vote against any such adjournment those Proxies required
to be voted against any of such proposals. The costs of any additional
solicitation and of any adjourned session will be borne by the Fund. Any
proposals for which sufficient favorable votes have been received by the time
of the Meeting will be acted upon and such action will be final regardless of
whether the Meeting is adjourned to permit additional solicitation with respect
to any other proposal.
Annual Report. The Fund's 2002 Annual Report to Stockholders was mailed to
stockholders on or about April 1, 2002. Additional copies of the Annual Report
may be obtained without charge from EquiServe by calling (800) 426-5523 or by
writing to P.O. Box 43011, Providence, Rhode Island 02940-3011.
16
Stockholder Proposals for 2003 Annual Meeting. Stockholders submitting
proposals intended to be included in the Fund's 2003 Proxy Statement must
ensure that such proposals are received by the Fund, in good order and
complying with all applicable legal requirements, no later than January 20,
2003. Stockholders submitting any other proposals intended to be presented at
the next annual meeting must ensure that such proposals are received by the
Fund, in good order and complying with all applicable legal requirements,
between March 21, 2003 and April 5, 2003. It is currently anticipated that the
2003 Annual Meeting of Stockholders will be held prior to July 31, 2003.
Stockholder proposals should be addressed to Garlin G. Flynn, Secretary, at the
address of the principal executive offices of the Fund, with a copy to J.B.
Kittredge at Ropes & Gray, One International Place, Boston, Massachusetts
02110-2624.
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY PROMPTLY TO ENSURE THAT A
QUORUM IS PRESENT AT THE ANNUAL MEETING. A SELF-ADDRESSED, POSTAGE-PAID
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
May 20, 2002
17
APPENDIX A
PIMCO STRATEGIC GLOBAL GOVERNMENT FUND, INC.
INVESTMENT MANAGEMENT AGREEMENT
This investment management agreement (the "Agreement") is made as of this
day of , 2002 between PIMCO Strategic Global Government
Fund, Inc., formerly RCM Strategic Global Government Fund, Inc., a Maryland
corporation (the "Fund"), and Pacific Investment Management Company LLC, a
Delaware limited liability company (the "Manager").
WITNESSETH:
WHEREAS, the Fund is a non-diversified closed-end management investment
company registered under the Investment Company Act of 1940, as amended, and
the rules and regulations thereunder (the "1940 Act"); and
WHEREAS, the Fund has been organized for the purpose of investing its assets
and desires to avail itself of the experience, sources of information, advice,
assistance and facilities available to the Manager and to have the Manager
perform for it various investment management services; and the Manager is
willing to furnish the investment management services sought by the Fund on the
terms and conditions hereinafter set forth;
WHEREAS, a majority of the directors of the Fund are not "interested
persons" of the Fund, within the meaning of the 1940 Act ("Disinterested
Directors"), and the Disinterested Directors select and nominate any other
Disinterested Directors of the Fund;
WHEREAS, the Board of Directors of the Fund (the "Board"), including a
majority of the Disinterested Directors, has voted in person to approve this
Agreement at a meeting called for the purpose of voting on such approval.
NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, it is agreed as follows:
1. The Fund hereby appoints the Manager to act as investment manager to the
Fund on the terms set forth in this Agreement. The Manager accepts such
appointment and agrees to render the services herein described, for the
compensation herein provided.
2. Subject to the supervision of the Board and to the express provisions
and limitations set forth in the Fund's Articles of Incorporation, By-Laws,
and Form N-2 and Form N-14 Registration Statements (the "Registration
Statements") under the 1940 Act, each as it may be amended from time to
time, the Manager shall have full discretionary authority to manage the
investment and reinvestment of the Fund's assets and to provide investment
research advice and supervision of the Fund's portfolio in accordance with
the Fund's investment objectives, policies and restrictions as stated in the
Fund's
A-1
Registration Statements, as such Registration Statements may be amended from
time to time. The services to be provided under this Section 2 shall be
subject to the following understandings:
(a) The Manager shall provide supervision of the Fund's investments and
shall determine from time to time the investments or securities that
will be purchased, retained, sold or loaned by the Fund, and the portion
of the assets that will be invested in securities or otherwise. Subject
to the limitations in this Section 2, the Manager is empowered hereby,
through any of its principals or employees, to take any of the following
actions for the benefit of the Fund:
(i) to invest and reinvest in stocks, bonds, notes, trade acceptances,
commercial paper, structured instruments, and other obligations of
every description issued or incurred by governmental or
quasi-governmental bodies or their agencies, authorities or
instrumentalities, or by corporations, trusts, associations,
partnerships, or other firms or entities;
(ii) to invest and reinvest in loans and deposits at interest on call or
on time, whether or not secured by collateral;
(iii) to purchase and sell put and call options, financial futures and
put and call options on such financial futures, and to enter into
transactions with respect to swaps, caps, floors, and other similar
instruments.
(iv) to purchase and sell foreign currency and forward contracts on such
foreign currency;
(v) to lend the Fund's portfolio securities to brokers, dealers, other
financial institutions, or other parties, and to engage in
repurchase and reverse repurchase transactions with such entities;
(vi) to buy, sell, or exercise rights and warrants to subscribe for
stock or other securities;
(vii) to execute agreements with broker-dealers, banks, futures
commission merchants, and other financial institutions on behalf of
the Fund for the purpose of entering into any of the foregoing
transactions;
(viii) to purchase, sell, and otherwise enter into transactions with
respect to any instrument not described above that may be
considered a "derivative" instrument;
(ix) to engage in transactions with respect to any other instruments, or
to take any other actions with respect to the Fund's investments,
that the Fund is authorized to invest in or to take pursuant to the
Registration Statements; and
(x) to take such other actions, or to direct the Fund's custodian (the
"Custodian") to take such other actions, as may be necessary or
desirable to carry out the purpose and intent of this paragraph (a)
of this Section 2.
In determining the investments or securities to be purchased or sold by
the Fund, the Manager shall place orders with respect to such instruments
either directly with the issuer or in such markets and through such
underwriters, dealers, brokers, or futures commission merchants
(collectively, "brokers") as in the Manager's best judgment offer the most
favorable price and market for the execution of each transaction; provided,
however, that, to the extent permitted under the Securities
A-2
Exchange Act of 1934, as amended, and the rules and regulations thereunder
(the "1934 Act") and the 1940 Act, the Manager may cause the Fund to place
orders for transactions with brokers that furnish brokerage and research
services, as defined in the 1934 Act, to the Manager or any affiliated
person of the Manager, subject to such policies as the Board may adopt from
time to time with respect to the extent and continuation of this practice.
The Fund understands and agrees that the Manager may effect transactions in
portfolio securities through brokers who may charge an amount in excess of
the amount of commission another broker would have charged, provided that
the Manager determines in good faith that such amount of commission is
reasonable in relation to the value of the brokerage and research services
provided by such broker, viewed in terms of either the specific transaction
or the Manager's overall responsibilities to the Fund and other clients as
to which the Manager or any affiliated person of the Manager exercises
discretionary investment authority. Receipt by the Manager or any affiliated
person of the Manager of any such brokerage research services shall not give
rise to any requirement for abatement or reduction of the Management Fee (as
defined herein) payable by the Fund to the Manager under this Agreement. It
is understood that the services provided by such brokerage firms may be
useful to the Manager or its affiliated persons in connection with their
services to other clients. The Fund agrees that any entity or person
associated with the Manager or any affiliated person of the Manager which is
a member of a national securities exchange is authorized to effect any
transaction on such exchange for the account of the Fund which is permitted
by Section 11(a) of the 1934 Act, and Rule 11a2-2(T) thereunder, and the
Fund hereby consents to the retention of compensation for such transactions
in accordance with Rule 11a2-2(T)(2)(iv).
(b) The Manager agrees to furnish suitable office space for the Fund.
(c) The Manager shall use its best judgment in the performance of its duties
under this Agreement.
(d) The Manager undertakes to perform its duties and obligations under this
Agreement in conformity with the Registration Statements, with the
requirements of the 1940 Act and all other applicable Federal and state
laws and regulations and with the instructions and directions of the
Board, all as may be amended or modified from time to time.
(e) The Manager shall maintain books and records with respect to the Fund's
portfolio transactions and the Manager shall render to the Board such
periodic and special reports as the Board may reasonably request from
time to time. The Manager agrees that all records that it maintains for
the Fund are the property of the Fund and it will surrender promptly to
the Fund any of such records upon the Fund's request.
(f) The Fund understands and agrees:
(i) that the Manager performs investment management services for various
clients and that the Manager may take action with respect to any of
its other clients which may differ from action taken or from the
timing or nature of actions taken with respect to the Fund, so long
as it is the Manager's policy, to the extent reasonably practical, to
allocate investment opportunities to the Fund over time on a fair and
equitable basis relative to other clients;
(ii) that the Manager shall have no obligation to purchase or sell for the
Fund any security that the Manager, or its principals or employees,
may purchase or sell for their own accounts or for the account of any
other client, if, in the opinion of the Manager, such transaction or
investment appears unsuitable, impractical or undesirable for the
Fund; and
A-3
(iii) that, to the extent permitted by applicable laws and regulations, on
occasions when the Manager deems the purchase or sale of a security
or other instrument to be in the best interests of the Fund as well
as of the other clients of the Manager, the Manager may aggregate the
securities to be so sold or purchased when the Manager believes that
to do so would be in the best interests of the Fund. In such event,
allocation of the securities or other instruments so purchased or
sold, as well as the expenses incurred in that transaction, shall be
made by the Manager in the manner the Manager considers to be the
most equitable and consistent with its fiduciary obligations to the
Fund and such other clients.
3. The Manager will bear all of the expenses related to salaries of its
employees and to the Manager's overhead in connection with its duties under
this Agreement. The Manager also will pay all directors' fees and salaries
of the Fund's directors and officers who are affiliated persons (as such
term is defined in the 1940 Act) of the Manager.
Except for the expenses specifically assumed by the Manager, the Fund
will pay all of its expenses, including, without limitation, fees of the
directors not affiliated with the Manager and Board meeting expenses; fees
of the Manager; fees of the Fund's administrator; interest charges; taxes;
charges and expenses of the Fund's legal counsel and independent
accountants, and of the transfer agent, registrar and dividend reinvestment
and disbursing agent of the Fund; expenses of repurchasing shares of the
Fund; expenses of printing and mailing share certificates, stockholder
reports, notices, proxy statements and reports to governmental offices;
brokerage and other expenses connected with the execution, recording and
settlement of portfolio security transactions; expenses connected with
negotiating, effecting purchases or sales or registering privately issued
portfolio securities; fees and expenses of the Custodian and sub-custodians
for all services to the Fund, including safekeeping of funds and securities
and maintaining required books and accounts; expenses of calculating and
publishing the net asset value of the Fund's shares; expenses of membership
in investment company associations; premiums and other costs associated with
the acquisition of a mutual fund directors and officers errors and omissions
liability insurance policy; expenses of fidelity bonding and other insurance
premiums; expenses of stockholders' meetings; Securities and Exchange
Commission ("SEC") and state blue sky registration fees; New York Stock
Exchange listing fees; any fees payable by the Fund to the National
Association of Securities Dealers, Inc.; and its other business and
operating expenses.
4. (a) For the services provided and the expenses assumed pursuant to this
Agreement, the Fund will pay to the Manager a monthly fee in arrears equal
to 0.85% per annum of the Fund's average weekly net assets during the month
(the "Management Fee"). The Fund authorizes the Manager to charge the Fund
for the full amount of the Management Fee as it becomes due and payable
pursuant to this Section 4.
If the Manager shall serve for less than the whole of a month, the
Management Fee shall be prorated.
(b) In the event that the expenses of the Fund exceed any expense
limitation which the Manager may, by written notice to the Fund, voluntarily
declare to be effective with respect to the Fund, subject to such terms and
conditions as the Manager may prescribe in such notice, the Management Fee
due the Manager shall be reduced, and, if necessary, the Manager shall bear
the Fund's expenses to the extent required by such expense limitation.
A-4
5. The Manager shall authorize and permit any of its directors, officers
and employees who may be elected as directors or officers of the Fund to
serve in the capacities in which they are elected.
6. The Manager shall not be liable to the Fund or any of its stockholders
for any error of judgment, mistake of law, or any loss suffered by the Fund
or any of its stockholders in connection with any act or omission in the
performance of its obligations to the Fund or to which this Agreement
relates, except a loss resulting from willful misfeasance, bad faith or
gross negligence on its part in the performance of its duties or from
reckless disregard by it of its obligations and duties under this Agreement.
7. (a) This Agreement shall become effective with respect to the Fund on
the date of its execution and shall continue in effect with respect to the
Fund for a period of more than two years from that date only so long as its
continuance is specifically approved at least annually (i) by the vote of a
majority of the Fund's Board or by the vote of a majority of the outstanding
voting securities of the Fund, as defined in the 1940 Act ("Majority of the
Outstanding Voting Securities") and (ii) by the vote of a majority of the
Directors who are not parties to this Agreement or interested persons of any
party hereto, cast in person at a meeting called for the purpose of voting
on such approval; provided, however, that if the continuance of this
Agreement is submitted to the stockholders of the Fund for their approval
and such stockholders fail to approve such continuance of this Agreement as
provided herein, the Manager may continue to serve hereunder in a manner
consistent with the 1940 Act.
(b) Either party hereto may at any time terminate this Agreement by not
more than sixty days' written notice delivered or mailed by registered mail,
postage prepaid, to the other party. Action by the Fund to terminate this
Agreement under this paragraph (b) may be taken either (i) by vote of a
majority of the Board, or (ii) by the affirmative vote of a Majority of the
Outstanding Voting Securities of the Fund.
(c) This Agreement shall terminate automatically in the event of its
assignment (as such term is defined in the 1940 Act and the rules
thereunder).
(d) Termination of this Agreement pursuant to this Section 7 shall be
without the payment of any penalty.
8. Nothing in this Agreement shall limit or restrict the right of any of
the Manager's principals, officers or employees who may also be a director,
officer or employee of the Fund to engage in any other business or to devote
his time and attention in part to management or other aspects of any
business, whether of a similar or a dissimilar nature, nor limit or restrict
the Manager's right to engage in any other business or to render services of
any kind to any other corporation, investment company, firm, individual or
association. The investment management services provided by the Manager
hereunder are not to be deemed exclusive, and the Manager shall be free to
render similar services to others.
9. Any notice or other communication required to be given pursuant to this
Agreement shall be deemed duly given if delivered or mailed by registered
mail, postage prepaid, (i) to the Manager at 840 Newport Center Drive, Suite
300, Newport Beach, CA 92660 or (ii) to the Fund at 840 Newport Center
Drive, Suite 300, Newport Beach, CA 92660.
A-5
10. Concurrently with the execution of this Agreement, the Manager is
delivering to the Fund a copy of Part II of its Form ADV, as revised, on
file with the SEC. The Fund acknowledges receipt of such copy.
11. The Manager's investment authority shall include the authority to
purchase, sell, cover open positions, and generally to deal in financial
futures contracts ands options thereon, in accordance with the Fund's
Registration Statements.
The Manager will: (i) open and maintain brokerage accounts for financial
futures and options (such accounts hereinafter referred to as "brokerage
accounts") on behalf of and in the name of the Fund and (ii) execute for and
on behalf of the Fund, standard customer agreements with a broker or
brokers. The Manager may, using such of the securities and other property in
the Fund as the Manager deems necessary or desirable, direct the custodian
to deposit on behalf of the Fund, original and maintenance brokerage
deposits and otherwise direct payments of cash, cash equivalents and
securities and other property into such brokerage accounts and to such
brokers as the Manager deems desirable or appropriate.
The Manager has delivered to the Fund a copy of its Disclosure Document,
as amended, dated November 30, 2001, on file with the Commodity Futures
Trading Commission. The Fund hereby acknowledges receipt of such copy.
12. The Manager has consented to the use of the name "PIMCO" by the Fund
for so long as this Agreement remains in effect. In the event that this
Agreement shall be terminated for any reason, and in the event that a
subsequent investment management agreement with the Manager or any
successor of the Manager is not entered into by the Fund, the Fund hereby
agrees to take all reasonable action necessary to delete the name "PIMCO"
from the name of the Fund.
13. This Agreement shall be governed by and construed in accordance with
the laws of the State of California.
A-6
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
PIMCO STRATEGIC GLOBAL
Attest: GOVERNMENT FUND, INC.
By: --------------------------------- By: ---------------------------------
Brent R. Harris
Title: Chairman and President
PACIFIC INVESTMENT
Attest: MANAGEMENT COMPANY LLC
By: --------------------------------- By: ---------------------------------
R. Wesley Burns
Title: Managing Director
A-7
APPENDIX B
PIMCO Strategic Global Government Fund, Inc.
Report of the Audit Oversight Committee
The Audit Oversight Committee (the "Committee") oversees the Fund's
financial reporting process on behalf of the Board of Directors of the Fund
(the "Board") and operates under a written Charter adopted by the Board. The
Committee meets with the Fund's management ("Management") and independent
public accountants and reports the results of its activities to the Board.
Management has the primary responsibility for the financial statements and the
reporting process, including the system of internal controls. In connection
with the Committee's and independent accountant's responsibilities, Management
has advised that the Fund's financial statements were prepared in conformity
with generally accepted accounting principles.
The Committee has reviewed and discussed with Management and
PricewaterhouseCoopers LLP ("PwC"), the Fund's independent public accountants,
the audited financial statements of the Fund for the fiscal year ended January
31, 2002. The Committee has discussed with PwC the matters required to be
discussed by Statements on Auditing Standard No. 61 (SAS 61). SAS 61 requires
independent auditors to communicate to the Committee matters including, if
applicable: (1) methods used to account for significant unusual transactions;
(2) the effect of significant accounting policies in controversial or emerging
areas for which there is a lack of authoritative guidance or consensus; (3) the
process used by management in formulating particularly sensitive accounting
estimates and the basis for the auditor's conclusions regarding the
reasonableness of those estimates; and (4) disagreements with management over
the application of accounting principles and certain other matters. The
Committee has received the written disclosures and the letter from PwC required
by Independence Standards Board Standard No. 1 (requiring auditors to make
written disclosures to and discuss with the Committee various matters relating
to the auditor's independence), and has discussed with PwC their independence.
The Committee has also reviewed the aggregate fees billed by PwC for
professional services rendered to the Fund and for non-audit services provided
to Dresdner RCM Global Investors LLC ("Dresdner RCM"), the Fund's investment
manager during the last fiscal year, and any entity controlling, controlled by
or under common control with Dresdner RCM that provided services to the Fund.
As part of this review, the Committee considered, in addition to other
practices and requirements relating to selection of the Fund's independent
auditors, whether the provision of such non-audit services was compatible with
maintaining the independence of PwC.
Based on the foregoing review and discussions, the Committee presents this
Report to the Board and recommends that (1) the audited financial statements
for the fiscal year ended January 31, 2002 be included in the Fund's Annual
Report to stockholders for such fiscal year, (2) such Annual Report be filed
with the Securities and Exchange Commission and the New York Stock Exchange,
and (3) PwC be reappointed as the Fund's independent public accountants.
Submitted March 19, 2002
Gregory S. Young, Chairman
Francis E. Lundy
James M. Whitaker
B-1
PIMCO STRATEGIC GLOBAL
GOVERNMENT FUND, INC.
840 NEWPORT CENTER DRIVE PIMCO STRATEGIC GLOBAL GOVERNMENT FUND, INC.
SUITE 300
NEWPORT BEACH, CA 92660 THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS - JUNE 21, 2002
The undersigned hereby appoints Jeffrey M.
Sargent, Henrik P. Larsen and Garlin G. Flynn,
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
PIMCO Strategic Global Government Fund, Inc.
(the "Fund") held by the undersigned at the
Annual Meeting of Stockholders of the Fund to
be held at 800 Newport Center Drive, 6th
Floor, Newport Beach, California 92660, on
June 21, 2002 at 10:00 a.m. 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 and any adjournments or
postponements thereof.
When properly executed, this proxy will be
voted in the manner specified herein by the
undersigned. IF NO SPECIFICATION IS MADE, THIS
PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
Receipt of the Notice of Annual Meeting and
Proxy Statement is hereby acknowledged.
PLEASE VOTE, SIGN AND DATE THIS PROXY AND
RETURN IT IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
This proxy must be signed by the beneficial
owner of Fund shares. If signing as attorney,
executor, guardian or in some representative
capacity or as an officer of a corporation,
please add title as such.
To vote by Mail
1) Read the Proxy Statement.
2) Check the appropriate boxes on the proxy card below.
3) Sign and date the proxy card.
4) Return the proxy card in the envelope provided.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: PIMCO1 KEEP THIS PORTION FOR YOUR RECORDS
-----------------------------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
PIMCO STRATEGIC GLOBAL GOVERNMENT FUND, INC.
The Board of Directors recommends that you
vote FOR each of the following proposals.
For Withhold For All To withhold authority to vote, mark
1. To elect the Nominees listed below to serve All All Except "For All Except" and write the
as members of the Fund's Board of Directors. nominee's number on the line below
01) Carter W. Dunlap, Jr. [_] [_] [_]
02) Brent R. Harris ____________________________________
03) James M. Whitaker
For Against Abstain
2. To approve a new investment management agreement between the Fund and Pacific Investment [_] [_] [_]
Management Company, LLC
Mark box at right if an address change or comment
has been noted on the reverse side of this card. [_]
Please be sure to sign and date this Proxy.
------------------------------------------ ---------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date