UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, For Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Under Rule 14a-12
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MUNICIPAL ADVANTAGE FUND INC.
1345 Avenue of the Americas
New York, New York 10105
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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Payment
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of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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1)
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was
determined):
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4)
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Proposed maximum aggregate value of transaction:
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5)
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Total fee paid:
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Fee paid previously with preliminary materials:
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule and the date of its filing.
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Amount previously paid:
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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed:
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Subject to Completion
Preliminary Proxy Statement
Dated as of January 21, 2009
The information in this proxy statement is not complete and may be changed.
PROXY STATEMENT
PIMCO MUNICIPAL ADVANTAGE FUND INC.
Questions & Answers
Relating to the Proposed Liquidation and Dissolution
Q. WHAT IS THIS DOCUMENT AND WHY DID WE SEND IT TO YOU?
A. This booklet contains the Notice of Annual Meeting of Stockholders (the Notice) of PIMCO
Municipal Advantage Fund Inc. (MAF or the Fund) and Proxy Statement, which provide you with
information you should review before voting on the proposals to elect Directors of the Fund and to
liquidate and dissolve the Fund (the Liquidation) that will be presented at the Annual Meeting of
Stockholders (the Meeting).
On December 22, 2008, the Directors of the Fund approved and declared advisable the Liquidation and
directed that the Liquidation pursuant to a Plan of Liquidation and Dissolution (the Plan) be submitted to
stockholders for approval at the Meeting. You are receiving this proxy material because you own
shares of the Fund. The Liquidation will not occur unless it is approved by the Funds
stockholders as described in the Proxy Statement.
Q. WHO IS ELIGIBLE TO VOTE?
A. Stockholders of record at the close of business on December 29, 2008 (the Record Date) are
entitled to vote at the Meeting or any adjournment or postponement of the Meeting. If you owned
shares on the Record Date, you have the right to vote even if you later sold the shares.
Approval of Proposal I (the election of Directors) will require the affirmative vote of a plurality of the votes cast of the
Common Stockholders and Preferred Stockholders, voting as a single class. Approval of Proposal II
(the Liquidation) will require the affirmative vote of at least a majority of the votes entitled to be cast by
holders of Common Shares and Preferred Shares of the Fund, voting together as a single class.
Shares represented by properly executed proxies, unless revoked before or at the Meeting, will be
voted according to Stockholders instructions. If you sign and return a proxy card but do not fill
in a vote for Proposal I or Proposal II, your shares will be voted FOR all of the Director
nominees and FOR the Liquidation. If any other business properly comes before the Meeting, your
shares will be voted at the discretion of the persons named as proxies.
Q. WHY IS THE LIQUIDATION BEING PROPOSED?
A. As discussed in the Proxy Statement, in February 2008, the Board adopted a discount control
policy, intended to reduce the discount to net asset value (NAV) at which the Funds Common
Shares trade. While the discount has narrowed, the Funds Common Shares have continued to trade at a discount to NAV for most of
2008. The Board and
Fund management have been monitoring the trading discount and appropriate steps to be taken under
the discount policy. After reviewing with the Board various options for the Fund, at a special
meeting of the Board of Directors held on December 22, 2008, management recommended to the Board that liquidation is the
most viable option for implementing the discount policy and allowing Common Stockholders to realize
NAV for their shares. Following review and discussions with management, the Board of Directors,
including all of the Directors who are not interested persons of the Fund (as that term is
defined in the Investment Company Act of 1940, as amended (the 1940 Act)), with the
advice and assistance of independent counsel, determined that the proposed Liquidation is in the best
interests of the Fund and its Stockholders, approved the Liquidation and the Plan, and directed that
the proposed Liquidation and Plan be submitted for the vote of the Funds Stockholders.
Q. WHEN WILL THE LIQUIDATION AND DISTRIBUTIONS TO STOCKHOLDERS OCCUR?
A. If the Common and Preferred Stockholders approve the Plan, management, under the oversight of the Directors and officers of the
Fund will proceed to wind up the Funds affairs as soon as reasonably practicable thereafter in a
timeframe that allows for an orderly liquidation of portfolio holdings under then-current market
conditions. The Fund cannot predict at this time how long it will take to accomplish an orderly
liquidation.
Q. WHAT WILL I RECEIVE IN THE EVENT THE PLAN OF LIQUIDATION IS APPROVED?
A.
If you are a Preferred Stockholder, you will receive the amount of $50,000 per each share of preferred stock that you own, plus an amount equal to all accumulated but unpaid dividends thereon
(whether or not earned or declared) to but not including the date of such liquidating distribution, in same-day funds. In the event the assets of the Fund available for distribution upon
liquidation to the Preferred Stockholders are insufficient to make full payments to which such holders are entitled in accordance with the Bylaws of the Fund, payment shall be made pro rata
among all such Preferred Stockholders.
If you are a Common Stockholder, you will receive your pro rata share of what is left for each
share of common stock of the Fund that you own, net of expenses associated with the Liquidation.
The actual amount to be received by Common Stockholders is subject to significant uncertainties and
is not possible to predict at this time.
Q. WHAT WILL HAPPEN IF THE PLAN OF LIQUIDATION IS NOT APPROVED BY THE FUNDS STOCKHOLDERS?
A. If the proposed Liquidation and Plan is not approved by the Funds Stockholders, the Fund will continue to
operate as an investment company, with the same investment objectives as in the past, while the
Funds Directors consider whether another course of action would benefit the Fund and its
Stockholders.
Q. DO I NEED TO VOTE MY SHARES WITH RESPECT TO THE PROPOSAL TO ELECT DIRECTORS IF I VOTE TO APPROVE
THE PLAN OF LIQUIDATION?
A. Yes. You should vote your shares with respect to all the proposals set forth in the
accompanying proxy statement.
Q. WHY IS THE BOARD REQUESTING MY VOTE?
A. Maryland law and the Funds Charter require the Fund to obtain stockholder approval prior to the
liquidation and dissolution of the Fund. Consequently the Board is seeking your vote on the
Liquidation.
Q. HOW DOES THE BOARD RECOMMEND YOU VOTE?
A. The Board recommends that you vote FOR all of the Director nominees and FOR the Liquidation.
Q. HOW CAN I VOTE MY SHARES?
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A. Please follow the instructions included on the enclosed proxy card.
Q. WHAT IF I WANT TO REVOKE MY PROXY?
A. You can revoke your proxy at any time prior to its exercise by (i) giving written notice to the
Secretary of the Fund at 1345 Avenue of the Americas, New York, New York 10105, (ii) by authorizing
a later-dated proxy (either by signing and mailing another proxy card, or by calling Broadridge
Financial Solutions, Inc. (the Proxy Solicitor) at 1-866-450-8469) or (iii) by attending the Meeting, requesting return of any previously delivered
proxy and voting in person.
Q. WHOM DO I CALL IF I HAVE QUESTIONS REGARDING THE PROXY?
A. You can call the Proxy Solicitor at 1-866-450-8469.
3
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 26, 2009
PIMCO MUNICIPAL ADVANTAGE FUND INC.
c/o Allianz Global Investors Fund Management LLC
1345 Avenue of the Americas
New York, New York 10105
To the Stockholders of PIMCO Municipal Advantage Fund Inc. (MAF or the Fund):
Notice is hereby given that the Annual Meeting of Stockholders (the Meeting) of the Fund
will be held at the offices of Allianz Global Investors Fund Management LLC (AGIFM or the
Manager), at 1345 Avenue of the Americas, between West 54
th
and West 55
th
Streets, 49th Floor, New York, New York 10105, on Tuesday, February 26, 2009 at 9:30 A.M., Eastern
Time, for the following purposes, all of which are more fully described in the accompanying Proxy
Statement dated January _, 2009:
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I.
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To elect Directors of the Fund, each to hold office for the term indicated and
until his or her successor shall have been elected and qualified;
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II.
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To approve a proposal to liquidate and dissolve the Fund, as set forth in the
Plan of Liquidation and Dissolution adopted by the Board of Directors of the Fund; and
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III.
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To transact such other business as may properly come before the Meeting or any
adjournments or postponements thereof.
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The Board of Directors of the Fund has fixed the close of business on December 29, 2008 as the
record date for the determination of stockholders entitled to notice of, and to vote at, the
Meeting or any adjournment or postponement thereof (the Record Date). The enclosed proxy is
being solicited on behalf of the Board of Directors of the Fund.
The Board of Directors of the Fund recommends a vote FOR Proposals I and II.
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By order of the Board of Directors
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of the Fund
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Thomas J. Fuccillo
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Secretary
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New York, New York
January
, 2009
It is important that your shares be represented at the Meeting in person or by proxy, no matter how
many shares you own. If you do not expect to attend the Meeting, please complete, date, sign and
return the applicable enclosed proxy or proxies in the accompanying envelope, which requires no
postage if mailed in the United States. Please mark and mail your proxy or proxies promptly in
order
to save the Fund any additional costs of further proxy solicitations and in order for the Meeting
to be held as scheduled. Alternatively, you may vote your shares by telephone, the internet or by mail. Instructions regarding all three methods
of voting accompany your proxy card.
2
Subject to Completion
Preliminary Proxy Statement
Dated as of January 21, 2009
The information in this proxy statement is not complete and may be changed.
PIMCO MUNICIPAL ADVANTAGE FUND INC.
c/o Allianz Global Investors Fund Management LLC
1345 Avenue of the Americas
New York, New York 10105
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE SHAREHOLDER MEETING TO BE HELD ON FEBRUARY 26, 2009
The 2009 Proxy Statement and the Annual Report to Shareholders for the fiscal year ended October 31, 2008 are also available at [ ].
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 26, 2009
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation by the Board of
Directors (the Board) of PIMCO Municipal Advantage Fund Inc. (MAF or the Fund) of proxies to
be voted at the Annual Meeting of Stockholders of the Fund and any adjournment or postponement
thereof (the Meeting). The Meeting will be held at the offices of Allianz Global Investors Fund
Management LLC (AGIFM or the Manager), at 1345 Avenue of the Americas, between West
54
th
and West 55
th
Streets, 49
th
Floor, New York, New York 10105,
on Tuesday, February 26, 2009 at 9:30 A.M., Eastern Time.
The Notice of Annual Meeting of Stockholders (the Notice), this Proxy Statement and the
enclosed proxy cards are first being sent to Stockholders on or about January ___, 2009.
The Board of the Fund has fixed the close of business on December 29, 2008 as the record date
(the Record Date) for the determination of Stockholders of the Fund entitled to notice of, and to
vote at, the Meeting, and any adjournment or postponement thereof. Stockholders of the Fund on the Record Date will be entitled to one vote per share on each
matter to which they are entitled to vote and that is to be voted on by Stockholders of the Fund,
and a fractional vote with respect to fractional shares, with no cumulative voting rights in the
election of Directors, with respect to each matter on which they are entitled to vote. The
following table sets forth the number of shares of common stock (Common Shares) and shares of
preferred stock (Preferred Shares and, together with the Common Shares, the Shares) issued and
outstanding of the Fund at the close of business on the Record Date:
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Outstanding
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Outstanding
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Common Shares
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Preferred Shares
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7,258,006
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1,100
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The classes of stock listed in the table above are the only classes of stock currently
authorized by the Fund.
At the Meeting, Preferred Stockholders will have equal voting rights (
i.e.
, one vote per
Share) with the Funds Common Stockholders on both Proposals. As shown in the below table, the
Preferred Stockholders will vote together with Common Stockholders as a single class on both the
re-election of R. Peter Sullivan III and the election of Diana L. Taylor as Directors, as described
under Proposal I in this
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Proxy Statement and on the proposed Liquidation, as described under Proposal II
in this proxy statement. As described in this Proxy Statement, the Board has determined that the
liquidation and dissolution of the Fund is in the best interests of the Fund and its stockholders.
Summary of Proposals
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Common
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Preferred
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Proposal
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Stockholders
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Stockholders
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Proposal I. Election of Directors
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Independent Directors/ Nominees
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Re-election of R. Peter Sullivan III
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Election of Diana L. Taylor
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Proposal II. Liquidation and
Dissolution of the Fund
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*
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Independent Directors or Independent Nominees are those Directors or nominees who are not
interested persons, as defined in the Investment Company Act of 1940, as amended (the 1940
Act), of the Fund.
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You may vote by mailing the enclosed proxy card.
Alternatively, you may vote your shares by telephone, the internet or by mail. Instructions regarding all three methods of voting accompany your proxy card.
Shares represented by duly executed and
timely delivered proxies will be voted as instructed on the proxy. If your proxy card is properly executed
and no choice is indicated for the Proposals listed in the attached Notice, your proxy will be
voted in favor of the election of all nominees named in Proposal I and in favor of the liquidation
and dissolution of the Fund described in Proposal II. At any time before it has been voted, your
proxy may be revoked in one of the following ways: (i) by delivering a signed, written letter of
revocation to the Secretary of the appropriate Fund at 1345 Avenue of the Americas, New York, New
York 10105, (ii) by properly executing and delivering a later-dated proxy, or (iii) by attending
the Meeting, requesting return of any previously delivered proxy and voting in person. If any
proposals other than the Proposals set forth herein properly come before the Meeting, Shares
represented by the proxies will be voted on all such proposals in the discretion of the person, or
persons, voting the proxies.
The principal executive offices of the Fund are located at 1345 Avenue of the Americas, New
York, New York 10105. AGIFM serves as the investment manager of the Fund and has retained its
affiliate, Pacific Investment Management Company LLC (PIMCO or the Sub-Adviser), to serve as
the Funds sub-adviser. Additional information regarding the Manager and PIMCO may be found under
Additional Information Investment Manager and Sub-Adviser below.
The solicitation will be primarily by mail and the cost of soliciting proxies will be borne by
the Fund. Certain officers of the Fund and certain officers and employees of the Manager or its
affiliates (none of whom will receive additional compensation therefor) may solicit proxies by
telephone, mail, e-mail and personal interviews. The Board has approved hiring Broadridge
Financial Solutions, Inc. to aid in the solicitation of instructions for registered and nominee
accounts. The anticipated expenses of processing, mailing and solicitation of proxies are
expected to be approximately $8,500. Any out-of pocket expenses incurred in connection with the
solicitation will be borne by the Fund.
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PROPOSAL I: ELECTION OF DIRECTORS
In accordance with the Funds Articles and Restatement (the Charter), the Directors have
been divided into the following three classes (each a Class): Class I, the term of which will
expire at the Funds 2010 annual meeting of stockholders; Class II, the term of which will expire
at the Funds 2011 annual meeting of stockholders; and Class III, the term of which will expire at
the Meeting. At each annual meeting of stockholders, successors to the Class of Directors whose
term expires at that annual meeting shall be elected for a three-year term. Accordingly, at the
upcoming Meeting, Stockholders will vote to elect Class III Directors, whose terms expire at the
Meeting, for an approximate three-year term expiring at the 2012 annual meeting. Currently, R.
Peter Sullivan is the Class III Director on the Funds Board.
In May 2008, the Funds Board approved an increase in the size of the Board from seven to
eight members, and Diana L. Taylor was appointed to fill a Class II vacancy created by such action,
such appointment effective June 2008. In September 2008, an additional vacancy arose resulting from the death of John J. Dalessaudro II, who formally served as a Class III Director. Accordingly, Stockholders will be asked to approve the
election of Ms. Taylor as a Class II Director at the upcoming Meeting.
The Nominating Committee has recommended to the Funds Board that Mr. Sullivan be nominated
for re-election as a Class III Director and Ms. Taylor be nominated for election as a Class II
Director at the Meeting, in each case, to be voted on by the Common Stockholders and Preferred
Stockholders voting together as a single class. Consistent with the Funds Charter, if elected,
the nominees shall hold office for terms coinciding with the Classes of Directors to which they
have been designated. Therefore, if elected at the Meeting, Mr. Sullivan will serve a term
consistent with the Class III Directors, which will expire at the Funds 2012 annual meeting. If
elected at the Meeting, Ms. Taylor will serve a term consistent with the Class II Directors, which
will expire at the Funds 2011 annual meeting.
At any annual meeting of Stockholders, any Director elected to fill a vacancy that has arisen
since the preceding annual meeting of stockholders (whether or not such vacancy has been filled by
election of a new Director by the Board) shall hold office for a term that coincides with the
remaining term of the Class of Directors to which such office was previously assigned, if such
vacancy arose other than by an increase in the number of Directors, and until his or her successor
shall be elected and shall qualify. In the event such vacancy arose due to an increase in the
number of Directors, any Director so elected to fill such vacancy at an annual meeting shall hold
office for a term which coincides with that of the Class of Director to which such office has been
apportioned and until his or her successor shall be elected and shall qualify.
The following table summarizes the nominees who will stand for election at the Meeting, the
respective Classes of Directors to which they have been designated and the expiration of their
respective terms if elected:
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Director/Nominee
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Class
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Expiration of Term if Elected
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R. Peter Sullivan III
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Class III
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2012 Annual Meeting
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Diana L. Taylor
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Class II
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2011 Annual Meeting
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A Director elected at an annual meeting shall hold office until the annual meeting for the
year in which his or her term expires and until his or her successor shall be elected and shall
qualify, subject, however, to prior death, resignation, retirement, disqualification or removal
from office.
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5
Under this classified Board structure, generally only those Directors in a single Class may be
replaced in any one year, and it would require a minimum of two years to change a majority of the
Board under normal circumstances. This structure, which may be regarded as an anti-takeover
provision, may make it more difficult for the Funds Stockholders to change the majority of
Directors of the Fund and, thus, promotes the continuity of management.
Unless authority is withheld, it is the intention of the persons named in the enclosed proxy
for the Fund to vote each proxy for the persons listed above. Each of the nominees has indicated
he or she will serve if elected, but if he or she should be unable to serve, the proxy holders may
vote in favor of such substitute nominee as the Board may designate (or, alternatively, the Board
may determine to leave a vacancy).
Information Regarding Directors and Nominees.
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Number of
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Portfolios in
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Fund
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Other
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Complex
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Directorships
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Name,
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Position(s)
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Term of Office
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Overseen by
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Held by
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Address*
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Held with
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and Length of
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Principal Occupation(s)
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Director/
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Director/
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and Date of Birth
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the Fund
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Time Served
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During the Past 5 Years
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Nominee
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Nominee
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Independent Directors/Nominees
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Paul Belica
09/27/1921
Class II
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Director
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Since 2003
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Retired. Formerly
Director, Student Loan
Finance Corp.,
Education Loans, Inc.,
Goal Funding, Inc.,
Goal Funding II, Inc.
and Surety Loan Fund,
Inc. Formerly, Manager
of Stratigos Fund LLC,
Whistler Fund LLC,
Xanthus Fund LLC &
Wynstone Fund LLC.
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35
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None
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Robert E. Connor
09/17/1934
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Director
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Since 2000
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Retired. Formerly,
Senior Vice President,
Corporate Office, Smith
Barney Inc.
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None
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Class I
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Hans W. Kertess
07/12/1939
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Director,
Chairman of
the Board
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Since February
2006, Chairman
since December
2006
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President, H. Kertess
& Co., a financial
advisory company.
Formerly, Managing
Director, Royal Bank
of Canada Capital
Markets.
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None
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Class I
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William B. Ogden,
IV
01/11/1945
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Director
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Since September
2006
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Asset Management
Industry Consultant.
Formerly, Managing
Director, Investment
Banking Division of
Citigroup Global
Markets Inc.
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None
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Class I
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R. Peter Sullivan
III
09/04/1941
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Nominee,
Director
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Since February
2006
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Retired. Formerly,
Managing Partner, Bear
Wagner Specialists
LLC, specialist firm
on the New York Stock
Exchange.
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None
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Class III
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Diana L. Taylor
02/16/1955
Class II
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Nominee, Director
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Since June 2008
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Managing Director,
Wolfensohn & Co,
2007-present.
Formerly, Superintendent of
Banks, State of New
York, 2003-2007
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31
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Brookfield
Properties
Corporation
and Sothebys
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6
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Number of
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Portfolios in
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Fund
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Other
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Complex
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Directorships
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Name,
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Position(s)
|
|
Term of Office
|
|
|
|
Overseen by
|
|
Held by
|
Address*
|
|
Held with
|
|
and Length of
|
|
Principal Occupation(s)
|
|
Director/
|
|
Director/
|
and Date of Birth
|
|
the Fund
|
|
Time Served
|
|
During the Past 5 Years
|
|
Nominee
|
|
Nominee
|
Interested Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John C. Maney **
08/03/1959
Class II
|
|
Director
|
|
Since December
2006
|
|
Management Board of
Allianz Global
Investors Fund
Management LLC;
Management Board and
Managing Director of
Allianz Global
Investors of America
L.P. since January
2005 and also Chief
Operating Officer of
Allianz Global
Investors of America
L.P. since November
2006. Formerly,
Executive Vice
President and Chief
Financial Officer of
Apria Healthcare
Group, Inc.
(1998-2001).
|
|
|
68
|
|
|
None
|
|
|
|
*
|
|
Unless otherwise indicated, the business address of the persons listed above is c/o Allianz
Global Investors Fund Management LLC, 1345 Avenue of the Americas, New York, New York 10105.
|
|
**
|
|
Mr. Maney is an interested person of the Fund due to his affiliation with Allianz Global
Investors of America L.P. In addition to Mr. Maneys positions set forth in the table above, he
holds the following positions with affiliated persons: Management Board, Managing Director and
Chief Operating Officer of Allianz Global Investors of America L.P., Allianz Global Investors of
America LLC and Allianz-Pac Life Partners LLC; Member Board of Directors and Chief Operating
Officer of Allianz Global Investors of America Holdings Inc. and Oppenheimer Group, Inc.; Managing
Director and Chief Operating Officer of Allianz Global Investors NY Holdings LLC; Management Board
and Managing Director of Allianz Global Investors U.S. Holding LLC; Managing Director and Chief
Financial Officer of Allianz Hedge Fund Partners Holding L.P.; Managing Director and Chief
Operating Officer of Allianz Global Investors U.S. Retail LLC; Member Board of Directors and
Managing Director of Allianz Global Investors Advertising Agency Inc.; Compensation Committee of
NFJ Investment Group LLC; Management Board of Allianz Global Investors Fund Management LLC, Allianz
Global Investors Managed Partners LLC, Nicholas-Applegate Holdings LLC and OpCap Advisors LLC;
Member Board of Directors of PIMCO Global Advisors (Resources) Limited; and Executive Vice
President of PIMCO Japan Ltd.
|
7
The following table states the dollar range of equity securities beneficially owned as of December
29, 2008 by each Director and nominee of the Fund and, on an aggregate basis, of any registered
investment companies overseen by the Director or nominee in the family of investment companies,
including the Fund.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate Dollar Range of Equity Securities in All
|
Name of
|
|
Dollar Range of Equity
|
|
Registered Investment Companies Overseen by
|
Director/Nominee
|
|
Securities in the Fund*
|
|
Director/Nominee in the Family of Investment Companies*
|
Independent Directors/Nominees
|
|
|
|
|
|
|
|
|
Paul Belica
|
|
None.
|
|
None.
|
Robert E. Connor
|
|
None.
|
|
None.
|
Hans W. Kertess
|
|
None.
|
|
None.
|
William B. Ogden, IV
|
|
None.
|
|
None.
|
R. Peter Sullivan III
|
|
None.
|
|
$
|
10,001 - $50,000
|
|
Diana L. Taylor
|
|
None.
|
|
None.
|
|
|
|
|
|
|
|
|
|
Interested Director
|
|
|
|
|
|
|
|
|
John C. Maney
|
|
None.
|
|
Over $100,000
|
|
|
|
*
|
|
Securities are valued as of December 29, 2008.
|
As of December 29, 2008, the Directors and nominees and the officers of the Fund as a group
and individually beneficially owned less than one percent (1%) of the Funds outstanding Shares.
To the knowledge of the Fund, as of December 29, 2008, Directors and nominees who are
Independent Directors or Independent Nominees and their immediate family members did not own
securities of an investment adviser or principal underwriter of the Fund or a person (other than a
registered investment company) directly or indirectly controlling, controlled by, or under common
control with an investment adviser or principal underwriter of the Fund.
According to Schedule 13D filings made with the Securities and Exchange Commission, the following
investors own 5% or more of the Funds outstanding Common Shares as of January 7, 2009:
Bulldog Investors General Partnership and Phillip Goldstein 8.52%
Karpus Management, Inc. d/b/a Karpus Investment Management 15.59%
Compensation.
The Fund, PIMCO Corporate Income Fund, PIMCO Corporate Opportunity Fund, PIMCO
Municipal Income Fund, PIMCO California Municipal Income Fund, PIMCO New York Municipal Income
Fund, PIMCO Municipal Income Fund II, PIMCO California Municipal Income Fund II, PIMCO New York
Municipal Income Fund II, PIMCO Municipal Income Fund III, PIMCO California Municipal Income Fund
III, PIMCO New York Municipal Income Fund III, Nicholas-Applegate Convertible & Income Fund,
Nicholas-Applegate Convertible & Income Fund II, PIMCO High Income Fund, PIMCO Floating Rate Income
Fund, PIMCO Floating Rate Strategy Fund, NFJ Dividend, Interest & Premium Strategy Fund,
Nicholas-Applegate International & Premium Strategy Fund, PIMCO Global StocksPLUS & Income Fund,
Nicholas-Applegate Equity & Convertible Income Fund, Nicholas-Applegate Global Equity & Convertible
Income Fund, PIMCO Income Opportunity Fund, PCM Fund, Inc. and PIMCO Strategic Global Government
8
Fund Inc. (collectively, the AGIFM Closed-End Funds) are expected to hold joint meetings of their
Boards of Directors/Trustees whenever possible. Each Director, other than any Director who is a
director, officer, partner or employee of the Manager or the Sub-Adviser or any entity controlling,
controlled by or under common control with the Manager or the Sub-Adviser, receives compensation
for his or her attendance at meetings and for his or her service on
Board committees. [Directors
receive compensation equal to (i) $1,750 for each quarterly meeting for the first four meetings in
each year, (ii) $5,000 for each additional meeting in such year if the meeting is attended in
person and (iii) $1,000 per meeting attended telephonically. Directors are also reimbursed for
meeting-related expenses. The Independent Chairman of the Board receives an additional $2,500 per
year. In addition, each Director who serves as a member of an Audit Oversight Committee will
receive $1,000 for any results meeting or fund-specific meeting of the Audit Oversight Committee
and $5,000 for any audit scope meeting. The Audit Oversight Committee Chairman annually receives
an additional $500.] Each Directors compensation and other costs of joint meetings with other
closed-end funds managed by AGIFM will be allocated pro rata among the Fund and such other funds
for which the Director serves as a board member based on each funds relative net assets, including
assets attributable to any preferred shares issued by a fund.
The Fund does not provide any pension or other retirement benefits to current Directors.
The following table provides information concerning the compensation paid to the Directors and
nominees for the fiscal year ended October 31, 2008. For the calendar year ended December 31,
2008, the Directors received the compensation set forth in the table below for serving as
trustees/directors of the Fund and other funds in the same Fund Complex as the Fund. Each
officer and each Director who is a director, officer, partner, member or employee of the Manager or
the Sub-Adviser, or of any entity controlling, controlled by or under common control with the
Manager or the Sub-Adviser, including any Interested Director, serves without any compensation from
the Fund.
Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Compensation from the Fund
|
|
|
Aggregate Compensation from
|
|
and Fund Complex Paid to Directors
|
|
|
the Fund for the Fiscal Year Ended
|
|
for the Calendar Year Ended
|
Name of Director/Nominees
|
|
October 31, 2008
|
|
December 31, 2008*
|
Independent Directors/Nominees
|
|
|
|
|
|
|
|
|
Paul Belica
|
|
$
|
3,195
|
|
|
$
|
|
|
Robert E. Connor
|
|
$
|
2,675
|
|
|
$
|
|
|
John J. Dalessandro II
|
|
$
|
2,675
|
|
|
$
|
|
|
Hans W. Kertess
|
|
$
|
5,195
|
|
|
$
|
|
|
William B. Ogden, IV
|
|
$
|
2,695
|
|
|
$
|
|
|
R. Peter Sullivan III
|
|
$
|
2695
|
|
|
$
|
|
|
Diana L. Taylor
|
|
$
|
840
|
|
|
$
|
|
|
|
Interested Director
|
|
|
|
|
|
|
|
|
John C. Maney
|
|
$
|
0
|
|
|
$
|
0
|
|
9
|
|
|
*
|
|
In addition to the Fund and other AGIFM Closed-End Funds, during the Funds
most recently completed fiscal year, all of the Directors served as Directors of two
open-end investment companies (each consisting of separate investment portfolios) advised
by the Manager, except for Diana L. Taylor who served as a Director to one such open-end
company. The other AGIFM closed-end and these open-end investment companies are
considered to be in the same Fund Complex as the Fund.
|
The Fund has no employees. The Funds officers and Mr. Maney are compensated by the Manager,
the Sub-Adviser or one of their affiliates.
Board Committees and Meetings.
Audit Oversight Committee
. The Board of the Fund has established an Audit Oversight Committee
in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the
Exchange Act). The Funds Audit Oversight Committee currently consists of Messrs. Belica,
Connor, Kertess, Ogden and Sullivan and Ms. Taylor, each of whom is an Independent Director. Mr.
Belica is the Chairman of the Funds Audit Oversight Committee. The Funds Audit Oversight
Committee provides oversight with respect to the internal and external accounting and auditing
procedures of the Fund and, among other things, determines the selection of the independent
registered public accounting firm for the Fund and considers the scope of the audit, approves all
audit and permitted non-audit services proposed to be performed by those auditors on behalf of the
Fund, and approves services to be performed by the auditors for certain affiliates, including the
Manager, the Sub-Adviser and entities in a control relationship with the Manager or the Sub-Adviser
that provide services to the Fund where the engagement relates directly to the operations and
financial reporting of the Fund. The Committee considers the possible effect of those services on
the independence of the Funds independent registered public accounting firm.
Each member of the Funds Audit Oversight Committee is independent, as independence for
audit committee members is defined in the currently applicable listing standards of the New York
Stock Exchange, on which the Common Shares of the Fund are listed.
The Board of the Fund has adopted a written charter for its Audit Oversight Committee. A copy
of the written charter for the Fund, as amended through June 10, 2008 is attached to this Proxy
Statement as
Exhibit A
. A report of the Audit Oversight Committee of the Fund, dated
December 22, 2008, is attached to this Proxy Statement as
Exhibit B
.
Nominating Committee
. The Board of the Fund has a Nominating Committee composed solely of
Independent Directors, currently consisting of Messrs. Belica, Connor, Kertess, Ogden, and Sullivan
and Ms. Taylor. The Nominating Committee is responsible for reviewing and recommending qualified
candidates to the Board in the event that a position is vacated or created or when Directors are to
be nominated for election by Stockholders. The Nominating Committee of the Fund has adopted a
charter, which is posted on the following website:
http://www.allianzinvestors.com/closedendfunds/literature
.
Each member of the Nominating Committee is independent, as independence for nominating
committee members is defined in the currently applicable listing standards of the New York Stock
Exchange, on which the Common Shares of the Fund are listed.
10
Qualifications, Evaluation and Identification of Director Nominees.
The Nominating Committee
of the Fund requires that Director candidates have a college degree or equivalent business
experience. When evaluating candidates, the Funds Nominating Committee may take into account a
wide variety of factors including, but not limited to: (i) availability and commitment of a
candidate to attend meetings and perform his or her responsibilities on the Board, (ii) relevant
industry and related experience, (iii) educational background, (iv) financial expertise, (v) an
assessment of the candidates ability, judgment and expertise and (vi) overall Board composition.
The process of identifying nominees involves the consideration of candidates recommended by one or
more of the following sources: (i) the Funds current Directors, (ii) the Funds officers, (iii)
the Funds Stockholders and (iv) any other source the Committee deems to be appropriate. The
Nominating Committee of the Fund may, but is not required to, retain a third party search firm at
the Funds expense to identify potential candidates.
Consideration of Candidates Recommended by Stockholders
. The Nominating Committee of the Fund
will review and consider nominees recommended by Stockholders to serve as Directors, provided that
the recommending Stockholder follows the Procedures for Stockholders to Submit Nominee Candidates
for the Allianz Global Investors Fund Management Sponsored Closed-End Funds, which are set forth
as Appendix B to the Funds Nominating Committee Charter. Among other requirements, these
procedures provide that the recommending Stockholder must submit any recommendation in writing to
the Fund, to the attention of the Funds Secretary, at the address of the principal executive
offices of the Fund and that such submission must be received at such offices not less than 45 days
nor more than 75 days prior to the date of the Board or stockholder meeting at which the nominee
would be elected. Any recommendation must include certain biographical and other information
regarding the candidate and the recommending Stockholder, and must include a written and signed
consent of the candidate to be named as a nominee and to serve as a Director if elected. The
foregoing description of the requirements is only a summary. Please refer to Appendix B to the
Nominating Committee Charter, which is available at
http://www.allianzinvestors.com/closedendfunds/literature
, for details.
The Nominating Committee has full discretion to reject nominees recommended by Stockholders,
and there is no assurance that any such person properly recommended and considered by the Committee
will be nominated for election to the Board of the Fund.
Valuation Committee.
The Board has a Valuation Committee currently consisting of Messrs.
Belica, Connor, Kertess, Ogden, Sullivan and Ms. Taylor. The Board has delegated to the Committee
the responsibility to determine or cause to be determined the fair value of the Funds portfolio
securities and other assets when market quotations are not readily available. The Valuation
Committee reviews and approves procedures for the fair valuation of the Funds portfolio securities
and periodically reviews information from the Manager and the Sub-Adviser regarding fair value and
liquidity determinations made pursuant to Board-approved procedures, and makes related
recommendations to the full Board and assists the full Board in resolving particular fair valuation
and other valuation matters.
Compensation Committee.
The Board of the Fund has a Compensation Committee currently
consisting of Messrs. Belica, Connor, Kertess, Ogden and Sullivan and Ms. Taylor. The Compensation
Committee meets as the Board deems necessary to review and make recommendations regarding
compensation payable to the Directors of the Fund who are not directors, officers, partners or
employees of the Manager, the Sub-Adviser or any entity controlling, controlled by or under common
control with the Manager or the Sub-Adviser.
11
Meetings.
With respect to the Fund, during the fiscal year ended October 31, 2008, the Board
of Directors held four regular meetings and seven special meetings. The Audit Oversight
Committee and the Nominating Committees each met in separate session twice, and the Valuation
Committee and the Compensation Committee did not meet in separate sessions. Each of the current
Directors attended at least 75% of the regular meetings of the Board and meetings of the committees
on which such Director served that were held during the fiscal year ended October 31, 2008, except
Ms. Taylor who was not appointed to the Board until June 10, 2008.
Stockholder Communications with the Board of Directors.
The Board of Directors of the Fund has
adopted procedures by which Fund Stockholders may send communications to the Board. Stockholders
may mail written communications to the Board to the attention of the Board of Directors, PIMCO
Municipal Advantage Fund Inc., c/o Thomas J. Fuccillo, Chief Legal Officer (CLO), Allianz Global
Investors Fund Management LLC, 1345 Avenue of the Americas, New York, New York 10105. Stockholder
communications must (i) be in writing and be signed by the Stockholder and (ii) identify the class
and number of Shares held by the Stockholder. The CLO or his designee is responsible for reviewing
properly submitted stockholder communications. The CLO shall either (i) provide a copy of each
properly submitted stockholder communication to the Board at its next regularly scheduled Board
meeting or (ii) if the CLO determines that the communication requires more immediate attention,
forward the communication to the Directors promptly after receipt. The CLO may, in good faith,
determine that a stockholder communication should not be provided to the Board because it does not
reasonably relate to the Fund or its operations, management, activities, policies, service
providers, Board, officers, stockholders or other matters relating to an investment in the Fund or
is otherwise routine or ministerial in nature. These procedures do not apply to (i) any
communication from an officer or Director of the Fund, (ii) any communication from an employee or
agent of the Fund, unless such communication is made solely in such employees or agents capacity
as a stockholder, or (iii) any stockholder proposal submitted pursuant to Rule 14a-8 under the
Exchange Act or any communication made in connection with such a proposal. The Funds Directors
are not required to attend the Funds annual stockholder meetings or to otherwise make themselves
available to stockholders for communications, other than by the aforementioned procedures.
Section 16(a) Beneficial Ownership Reporting Compliance.
The Funds Directors and certain
officers, investment advisers, certain affiliated persons of the investment advisers and persons
who own more than 10% of any class of outstanding securities of the Fund (
i.e
., the Funds Common
Shares or Preferred Shares) are required to file forms reporting their affiliation with the Fund
and reports of ownership and changes in ownership of the Funds securities with the Securities and
Exchange Commission (the SEC) and the New York Stock Exchange (the NYSE). These persons and
entities are required by SEC regulation to furnish the Fund with copies of all such forms they
file. Based solely on a review of these forms furnished to the Fund, the Fund believes that each of
the Directors and relevant officers, investment advisers and relevant affiliated persons of the
investment advisers has complied with all applicable filing requirements during the Funds fiscal
year ended October 31, 2008, except that due to administrative oversight, late Form 3 filings were
made for certain employees who are affiliated persons of the Fund, including, Mohamed El-Erian,
William C. Powers, Steven Ludwig, Thomas J. Otterbein, William H. Gross, Richard M. Weil, Brent R.
Harris, David C. Flattum, Scott Whisten, Richard J. Cochran, Barbara R. Claussen and Hans W.
Kertess in December 2008 and Curtis A. Mewborne in January 2009.
Required Vote.
The re-election of Mr. Sullivan and the election of Ms. Taylor to the Board of
Directors of the Fund will require the affirmative vote of a plurality of the votes cast of the
Common Stockholders and Preferred Stockholders (voting as a single class) at the Meeting, in person
or by proxy.
12
The Board of Directors of the Fund Unanimously Recommends That You Vote FOR Proposal I.
13
PROPOSAL II: APPROVAL OF THE LIQUIDATION
AND DISSOLUTION OF THE FUND
At a special meeting of the Board of Directors of the Fund held on December 22, 2008, the
Directors approved a proposal to liquidate and dissolve the Fund (such proposal, the Liquidation)
pursuant to a Plan of Liquidation and Dissolution (the Plan), a form of which is attached as
Exhibit [C]
. Under Maryland law and the Funds Charter, the Liquidation requires the
affirmative vote of a majority of the votes entitled to be cast of the Common Stockholders and
Preferred Stockholders, voting together as a single class. At your upcoming Meeting, you will be
asked to approve the Liquidation and Plan, which is described in more detail in this Proxy
Statement. The Directors unanimously recommend that you vote FOR this Proposal II for the reasons
discussed below.
Background
The Fund commenced operations on April 30, 1993, and is organized as a corporation under the
laws of Maryland. The Funds investment objective is to seek to provide current income exempt from
regular federal income tax while preserving capital. As of November 30, 2008, the Fund had assets
totaling $122.9 million, with approximately $67.9 million held in Common Shares and approximately $55 million held in Preferred
Shares. Over the past several months and often prior thereto, Common Shares of the Fund have
traded at a discount to their net asset value (NAV). Both in response to the persistent trading
discount and as part of its general oversight responsibilities, the Board of Directors has
continually discussed and reviewed with Fund management various possible measures to address the
discount and enhance stockholder value.
In 2007, two major Common Stockholders submitted for inclusion in the Funds 2008 annual
meeting proxy statement various proposals designed to address the Common Shares trading at a
discount to NAV. Following discussions, management and these stockholders reached an agreement
pursuant to which management recommended that the Board adopt a policy to address the trading
discount and the stockholders agreed to withdraw their proposals in connection with the 2008 annual
meeting.
Specifically, at the recommendation of management, in February 2008, the Board adopted a
discount control policy intended to reduce the discount to NAV at which the Funds Common Shares
trade (the Discount Control Policy). Under the terms of the Discount Control Policy, at the end
of each calendar quarter, commencing with the quarter ended September 30, 2008, if the Funds
Common Shares are determined to have traded at an average discount to NAV in excess of 0% over the
quarter, the Board, subject to its fiduciary obligations, shall promptly take steps necessary to
enable Common Stockholders to realize NAV for their shares.
For the quarter ended September 30, 2008, the Funds Common Shares traded at an average
discount to NAV of approximately -2.45%. In October 2008, the Board met to consider possible
actions under the Discount Control Policy. At such time, the Board determined to defer action
under the Discount Control Policy in light of unprecedented and highly volatile market conditions,
and managements recommendation that such market conditions created uncertainty as to whether it
was advisable at that time to pursue various actions that might provide liquidity to Common
Stockholders at NAV. The Board and management then continued to monitor market conditions and the
Funds holdings and to seek viable options for implementing the Discount Control Policy that would
be in the best interests of the Fund and its Stockholders.
14
At the Boards December quarterly board meeting, it was noted that for the period from
September 30, 2008 through December 9, 2008, the Funds Common Shares traded at an average discount
to NAV of approximately -5.98%.
Board Considerations in Approving the Proposed Liquidation
On December 22, 2008, the Board held a special meeting for the purpose of reviewing the Funds
trading discount and discussing appropriate steps to be taken under the Discount Control Policy. At the
special meeting, Fund management reviewed with the Board various options for the Fund and
recommended that the Board approve the Liquidation and the Plan, and submit the proposal for
approval by Stockholders.
In discussing various alternatives with the Board at the special meeting, management noted
that, for some time, it has evaluated options for the Fund to implement the Discount Control
Policy. In particular, management discussed with the Board the possibility of merging the Fund
with another closed-end investment company or with an open-end investment company. After careful
consideration, management determined not to recommend these options, taking into account, among
other factors, the costs and other challenges raised by a possible merger, and anticipated
challenges in obtaining the required stockholder approval for a merger. In addition, management
did not view conversion of the Fund to an open-end fund as an advisable approach, particularly in
view of significant redemptions that would likely occur following open-ending, which would likely
reduce the Funds asset size and increase its operating expenses significantly. Management noted
that other options for the Fund, such as limited tender offers or open-market purchases, would not
likely fully achieve the purpose of the Discount Control Policy, which is to allow Common
Stockholders to realize NAV for their Shares. Accordingly, management determined and recommended
to the Board of Directors that liquidation was the most viable option for implementing the Discount
Control Policy and allowing Common Stockholders to realize NAV for their shares.
At the December 22, 2008 special meeting, the Board of Directors also considered, among other
things:
|
|
|
the current asset levels of the Fund;
|
|
|
|
|
the history of the Funds performance, both at net asset value and at market
prices;
|
|
|
|
|
the Funds current dividend or $0.06, which was
% based on net asset value;
|
|
|
|
|
the Funds tax loss carryforwards and assumptions regarding the Funds ability to
use some or all of such carryforwards or the loss of such a benefit under the various
alternatives considered;
|
|
|
|
|
the fact that two of the Funds common stockholders, which together own
approximately 24% of the Funds outstanding Common Shares, have advocated for certain
actions intended to eliminate or reduce the discount at which the Funds Common Shares
are trading;
|
|
|
|
|
the form of the Plan and the terms and conditions of the Liquidation (described
below);
|
|
|
|
|
the costs of the Liquidation (largely those for legal, printing, audit, and proxy
solicitation expenses), as discussed under Distribution Amounts; Expenses of
Liquidation, below, are
|
15
|
|
|
estimated to be approximately in the range of $60,000 to $85,000, which will be borne
by the Fund;
|
|
|
|
|
the anticipated transaction costs associated with liquidating the Funds
portfolio securities, as discussed under Distribution Amounts; Expenses of
Liquidation, below, which will be borne by the Fund; and
|
|
|
|
|
managements view on an orderly liquidation of the Funds portfolio under current
market conditions and the time that might be involved in accomplishing such a
liquidation.
|
Following discussions with management, the Board of Directors, including all of the Directors
who are not interested persons of the Fund (as that term
is defined in the 1940 Act), with the advice and assistance of independent
counsel, determined that the proposed Liquidation is in the best interest of the Fund and its
Stockholders, approved the Liquidation and the Plan, and directed that the Plan be submitted for
the vote of the Funds Stockholders.
If the Liquidation is approved by Stockholders, management, under the oversight of the
Directors and officers of the Fund, will proceed to wind up the Funds affairs as soon as
reasonably practicable thereafter in a timeframe that allows for an orderly liquidation of
portfolio holdings under then-current market conditions. The Fund cannot predict at this time how
long it will take to accomplish an orderly liquidation. See Additional Considerations below. If
the Liquidation is not approved by Stockholders, the Directors will consider whether another course
of action would benefit the Fund and its Stockholders.
Summary of the Plan
The following is only a summary and is not complete. Stockholders are urged to read the Plan,
a copy of which is attached as Exhibit C, in its entirety for more information.
Effective Date and Cessation of Business.
Pending the requisite approval by the Funds
Stockholders, the Plan shall become effective at the close of business on or about February 26,
2009 (the
Effective Date
) or in the event the Meeting is postponed or adjourned, the
Effective Date of the Plan shall be the date that Proposal II meets the required vote for approval.
At the Effective Date, the Fund shall cease its operations and thereafter shall not engage in any
business activities except for the purposes of liquidating the Fund. Following the Effective
Date (taking into account market conditions and other relevant factors), the Directors and officers
of the Fund shall proceed to wind up the affairs of the Fund; to pay or make provision for the
payment of the Funds debts and liabilities; to reduce the remaining assets of the Fund to
distributable form in cash, and to distribute the proceeds to or for the account of the
Stockholders of the Fund, as described below in Liquidating Distributions.
As noted above, in connection with the cessation of the Funds business, the Fund will liquidate
its portfolio holdings. See Distribution Amounts; Expenses of Liquidation below regarding the
costs incurred by the Fund in this regard. The Fund is unable to predict when the complete
liquidation of its portfolio holdings will be accomplished.
[Fixing of Interests and Closing of Books.
For purposes of determining the Stockholders of
the Fund entitled to receive payment of all Liquidating Distributions (as defined below), the
proportionate interests of Stockholders in the assets of the Fund shall be fixed on the
basis of their respective shareholdings at the close of business on the Effective Date, or on such
later date as may be determined by
16
the Board (the
Determination Date
). On the Determination Date, the books of the Fund
shall be closed. Thereafter, unless the books are reopened because the Plan cannot be carried into
effect under the laws of the State of Maryland or otherwise, the Common Stockholders respective
interests in the Funds assets shall not be transferable by the negotiation of share certificates
and the Funds Common Shares will cease to be traded on the New York Stock Exchange, Inc. (the
NYSE
).]
Termination of the Fund.
The Fund shall be terminated as soon as reasonably practicable after the
Effective Date and the completion of the implementation of the Plan, which date of termination of
the Fund shall be determined by the President of the Fund or other authorized officer (the
Termination Date
).
Payment of Liabilities and Expenses.
Within a reasonable period after the Effective Date, the Fund
shall determine, and there shall be paid or otherwise provided for, all charges, taxes, expenses,
liabilities and reserves, whether due or accrued or anticipated, of the Fund (collectively,
Debts
).
Liquidating Distributions.
As soon as reasonably practicable after the Determination Date and
following the payment or other provision for Debts of the Fund, the remaining assets of the Fund
shall be distributed to or for the account of the Stockholders of the Fund, at any one or more
times, and shall proceed in the order of priority provided below (each a Liquidating
Distribution): First, to the Preferred Stockholders, the amount of $50,000 per Preferred Share,
plus an amount equal to all accumulated but unpaid dividends thereon (whether or not earned or
declared) to but not including the date of such Liquidating Distribution, in same-day funds; and
second, after determination of any dividend to be paid pursuant to the Plan, all remaining amounts
to the Common Stockholders, ratably according to the number of Shares of the Fund held by such
Common Stockholders on the Determination Date. In the event the assets of the Fund available for
distribution upon liquidation to the Preferred Stockholders are insufficient to make full payments
to which such holders are entitled in accordance with the Bylaws of the Fund, payment shall be made
pro rata among all such Preferred Stockholders. It is intended that any and all amounts of a
Liquidating Distribution to Preferred Stockholders comprising a dividend shall be characterized in
a manner consistent with Revenue Ruling 89-81, 1989-1 C.B. 226.
The Liquidating Distribution to the Common Stockholders will include, if necessary, a dividend
equal to the sum of (i) the amount, if any, required to avoid the imposition of tax under section
852 of the Internal Revenue Code of 1986, as amended (the Code) on investment company taxable
income and net capital gain for each of the Funds (a) most recently completed taxable year, and
(b) the subsequent taxable period ending on the Liquidation Date and (ii) the additional amount, if
any, required to avoid the imposition of tax under section 4982 of the Code on ordinary income and
capital gain net income. The Board of Directors of the Fund hereby declares that the dividend so
paid shall be deemed for all purposes to have been conclusively declared on
the date of this Plan. It is intended that any and all amounts of a Liquidating Distribution to
Common Stockholders comprising such a dividend shall be characterized in a manner consistent with
Revenue Ruling 89-81, 1989-1 C.B. 226.
Deregistration under the 1940 Act.
As soon as practicable after the Termination
Date, the Fund shall take action to become deregistered as an investment company under the
1940 Act, and the officers of the Fund shall take such other actions as may be deemed
necessary or advisable to carry out the provisions and purposes of the Plan.
Amendment of Plan.
A majority of the Board of Directors shall have the power to authorize such
variations from or amendments of the provisions of the Plan as may be necessary or appropriate to
effect the complete liquidation and dissolution of the Fund, and the distribution of assets to
Common Stockholders in accordance with the purposes to be accomplished by the Plan.
U.S. Federal Income Tax Consequences
The following is only a general summary of the United States federal income tax consequences of the
Plan. Stockholders should consult with their own tax advisors for advice regarding the application
of current United States federal tax law to their particular situation and with respect to
potential state, local or other tax consequences of the Plan.
The Liquidating Distributions received by a Stockholder will be treated for U.S. federal income tax
purposes as full payment for the Stockholders shares. Thus, a Stockholder who is subject to U.S.
federal income tax
17
will recognize a gain or loss for tax purposes on the receipt of the Liquidating Distribution. The
Stockholders gain or loss will be a capital gain or capital loss if such Shares are held as
capital assets.
The Fund is generally required to withhold and remit to the U.S. Treasury a percentage of the
taxable liquidation proceeds paid to any Stockholder who fails to provide the Fund with a correct
taxpayer identification number, who has underreported dividend or interest income, or who fails to
certify to the Fund that he, she or it is not subject to backup withholding.
Impact of the Plan on the Funds Status under the 1940 Act
If approved by Stockholders, on the Effective Date or Determination Date, as applicable, the Fund
will cease doing business as a registered investment company and, as soon as reasonably
practicable, will apply for deregistration under the 1940 Act. It is expected that
the Securities and Exchange Commission will issue an order approving the deregistration of the Fund
if the Fund is no longer doing business as an investment company. Accordingly, the Plan provides
for the eventual cessation of the Funds activities as an investment company and the Funds
deregistration under the 1940 Act, and a vote in favor of the Plan will constitute a
vote in favor of such a course of action. Until the Funds withdrawal as an investment company
becomes effective, the Fund will continue to be subject to and will comply with the 1940
Act.
Procedure for Dissolution under Maryland Law
Pursuant to the Maryland General Corporation Law and the Funds Articles of Restatement and Bylaws,
if Stockholders approve the Plan, Articles of Dissolution stating that the dissolution has been
authorized will in due course be executed, acknowledged and filed with the State Department of
Assessments and Taxation of Maryland, and will become effective in accordance with such law. Upon
the effective date of such Articles of Dissolution, the Fund will be legally dissolved, but
thereafter the Fund will continue to exist for the purpose of paying, satisfying, and discharging
any existing debts or obligations, collecting and distributing the Funds assets, and doing all
other acts required to liquidate and wind up the Funds business and affairs, but not for the
purpose of continuing the business for which the Fund was organized. The Funds Board of Directors
shall be the trustees of its assets for purposes of liquidation after the acceptance of the
Articles of Dissolution, unless and until a court appoints a receiver. The Director-trustees will
be vested in their capacity as trustees with full title to all the assets of the Fund.
Distribution Amounts; Expenses of Liquidation
The Funds total net assets on January 14, 2009 were $125.1 million. At such date, the Fund had
7,259,106 Shares outstanding, consisting of 7,258,006 Common Shares and 1,100 Preferred Shares.
Accordingly, on January 14, 2009, the net asset value per Common Shares of the Fund was $9.66. The
amount to be distributed to Common Stockholders will be reduced by the remaining expenses of the
Fund, including the expenses associated with this proxy solicitation and those associated with the
liquidation and portfolio transaction costs, as well as costs incurred in resolving any claims that
may arise against the Fund. The Fund will bear all expenses incurred by the Fund in carrying out
the Plan. These expenses are estimated to be approximately in the range of $60,000 to $85,000.
Out-of pocket costs related to actual liquidation expenses and portfolio transaction costs may vary
from these estimates. These costs and expenses do not include the potential market impact of
liquidation of portfolio securities (including the liquidation of potentially large blocks of
portfolio securities) under current and developing market conditions. Any increase in liquidation
18
expenses and portfolio transaction costs will be funded from the cash assets of the Fund and will
reduce the amount available for distribution to Stockholders.
Additional Considerations
In addition to the other information contained in this Proxy Statement, you should consider the
following factors in determining whether or not to vote in favor of the Liquidation.
The Fund is not able to Estimate Net Proceeds to be Received by Common Stockholders
. The actual
amount to be received as a Liquidating Distribution(s) by Common Stockholders is subject to
significant uncertainties and not possible to predict at this time. The amount available for
distribution to Common Stockholders will be based, in part, on the value of the Funds assets at
the time of liquidation and then-current market conditions; the amount of the Funds actual costs,
expenses and liabilities to be paid in the future; the potential market impact of liquidation of
portfolio securities (including the liquidation of potentially large blocks of portfolio
securities) under current and developing market conditions; general business and economic
conditions; and the time required to liquidate the Funds assets, all of which can not be predicted
with any certainty at this time.
The Fund is Not Able to Predict at this Time the Length of Time it Would Take
to Complete the Liquidation
. If Stockholders approve the Plan, the
Fund will be authorized to commence the sale and liquidation of its assets and the Fund will cease
investment activity other than managing the sale of securities and the Funds cash levels. The Fund
is unable to predict when it will complete the sale of its assets or when it will make Liquidating
Distribution(s) to Stockholders under the Plan. In effecting the Liquidation, the Funds
Sub-Adviser expects to invest the cash proceeds from the sale of portfolio securities in tax-exempt
money market funds, short-term tax-exempt instruments and/or short-term taxable instruments.
However, the Fund will not be managed during the liquidation period in a manner designed to produce
investment returns analogous to that which it attempted to achieve during its investment
operations. Further, the market value of the Funds portfolio securities may decline during the
liquidation period resulting in a reduction in the amounts available for ultimate liquidation
distribution, and the length of the liquidation period can not be predicted at this time as
described above.
The Liquidity and Market Price of Fund Common Shares Could Decrease
. As the Fund sells its assets
and distributes Liquidating Distribution(s) to Stockholders, the Funds market
capitalization and float may diminish. Market interest in Fund Shares may also diminish. This
could reduce the market demand for and liquidity of Fund Common Shares, which may adversely affect
the Fund Shares market price. The Fund currently intends to maintain its listing on the NYSE
until such time as the Common Shares are no longer eligible for listing and
trading. This would further decrease the market demand for and liquidity and price of the Funds
Common Shares.
Appraisal Rights
Stockholders will not be entitled to appraisal rights under Maryland law in connection with
the Plan.
Required Vote.
In accordance with the Funds Charter and applicable law, approval of Proposal II
will require the affirmative vote of at least a majority of the votes entitled to be cast by
holders of Common Shares and Preferred Shares of the Fund, voting together as a single class.
19
Your Board of Directors Unanimously Recommends that You Vote For the Proposed Plan of Liquidation
and Dissolution
. Unless a contrary specification is made, the accompanying proxy will be voted FOR
approval of the Plan.
20
ADDITIONAL INFORMATION
Executive and Other Officers of the Fund.
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 chosen and qualified, or in
each case until he or she sooner dies, resigns, is removed with or without cause or becomes
disqualified. Officers and employees of the Fund who are principals, officers, members or
employees of the Manager or the Sub-Adviser are not compensated by the Fund.
|
|
|
|
|
|
|
Name, Address*
|
|
Position(s) Held
|
|
Term of Office and Length
|
|
Principal Occupation(s) During
|
and Date of Birth
|
|
with Fund
|
|
of Time Served
|
|
the Past 5 Years
|
Brian S. Shlissel
11/14/1964
|
|
President & Chief Executive
Officer
|
|
Since September 2002
|
|
Executive Vice President,
Director of Fund
Administration, Allianz
Global Investors Fund
Management LLC; Director of 6
funds in the Fund Complex;
President and Chief Executive
Officer of 35 funds in the
Fund Complex; Treasurer,
Principal Financial and
Accounting Officer of 39
funds in the Fund Complex and
The Korea Fund, Inc.
|
|
|
|
|
|
|
|
Lawrence G. Altadonna
03/10/1966
|
|
Treasurer, Principal
Financial
and Accounting Officer
|
|
Since September 2002
|
|
Senior Vice President,
Allianz Global Investors Fund
Management LLC; Treasurer,
Principal Financial and
Accounting Officer of 35
funds in the Fund Complex;
Assistant Treasurer of 39
funds in the Fund Complex and
The Korea Fund, Inc.
|
|
|
|
|
|
|
|
Thomas J. Fuccillo
03/22/1968
|
|
Vice President, Secretary and
Chief Legal Officer
|
|
Since December 2004
|
|
Executive Vice President,
Senior Counsel, Allianz
Global Investors of America
L.P.; Executive Vice
President and Chief Legal
Officer, Allianz Global
Investors Fund Management LLC
and Allianz Global Investors
Solutions LLC; Vice
President, Secretary and
Chief Legal Officer of 74
funds in the Fund Complex;
Secretary and Chief Legal
Officer of The Korea Fund,
Inc.; Formerly, Vice
President and Associate
General Counsel, Neuberger
Berman, LLC (1991-2004).
|
|
|
|
|
|
|
|
Youse Guia
680 Newport Center
Drive
Suite 250
Newport Beach, CA
92660
09/03/1972
|
|
Chief Compliance Officer
|
|
Since October 2004
|
|
Senior Vice President, Group
Compliance Manager, Allianz
Global Investors of America
L.P.; Chief Compliance
Officer of 74 funds in the
Fund Complex and The Korea
Fund, Inc.; Formerly, Vice
President, Group Compliance
Manager, Allianz Global
Investors of America L.P.
(2002-2004).
|
|
|
|
|
|
|
|
Scott Whisten
03/13/1971
|
|
Assistant Treasurer
|
|
Since January 2007
|
|
Vice President, Allianz
Global Investors Fund
Management LLC; Assistant
Treasurer of 74 funds in the
Fund Complex; formerly,
Accounting Manager,
Prudential Investments
(2000-2005).
|
21
|
|
|
|
|
|
|
Name, Address*
|
|
Position(s) Held
|
|
Term of Office and Length
|
|
Principal Occupation(s) During
|
and Date of Birth
|
|
with Fund
|
|
of Time Served
|
|
the Past 5 Years
|
Richard J. Cochran
01/23/1961
|
|
Assistant Treasurer
|
|
Since May 2008
|
|
Vice President, Allianz
Global Investors Fund
Management LLC; Assistant
Treasurer of 74 funds in the
Fund Complex; formerly, Tax
manager, Teachers Insurance
Annuity Association/College
Retirement Equity Fund
(TIAA-CREF) (2002-2008).
|
|
|
|
|
|
|
|
William V. Healey
07/28/1953
|
|
Assistant Secretary
|
|
Since December 2006
|
|
Executive Vice President,
Chief Legal Officer-U.S.
Retail, Allianz Global
Investors of America L.P.;
Executive Vice President,
Chief Legal Officer and
Secretary, Allianz Global
Investors Advertising Agency
Inc., Allianz Global
Investors Managed Accounts
LLC and Allianz Global
Investors Distributors LLC;
Assistant Secretary of 74
funds in the Fund Complex.
Formerly, Vice President and
Associate General Counsel,
Prudential Insurance Company
of America; Executive Vice
President and Chief Legal
Officer, The Prudential
Investments (1998-2005).
|
|
|
|
|
|
|
|
Richard H. Kirk
04/06/1961
|
|
Assistant Secretary
|
|
Since December 2006
|
|
Senior Vice President,
Allianz Global Investors of
America L.P. (since 2004).
Senior Vice President,
Associate General Counsel,
Allianz Global Investors
Distributors LLC. Assistant
Secretary of 74 funds in the
Fund Complex; formerly, Vice
President, Counsel, The
Prudential Insurance Company
of America/American Skandia
(2002-2004).
|
|
|
|
|
|
|
|
Kathleen A. Chapman
11/11/1954
|
|
Assistant Secretary
|
|
Since December 2006
|
|
Assistant Secretary of 74
funds in the Fund Complex;
Manager IIG Advisory Law,
Morgan Stanley (2004-2005);
Paralegal, The Prudential
Insurance Company of America;
and Assistant Corporate
Secretary of affiliated
American Skandia companies
(1996-2004).
|
|
|
|
|
|
|
|
Lagan Srivastava
09/20/1977
|
|
Assistant Secretary
|
|
Since December 2006
|
|
Assistant Secretary of 74
funds in the Fund Complex and
The Korea Fund, Inc.;
formerly, Research Assistant,
Dechert LLP (2004-2005);
Research Assistant, Swidler
Berlin Shereff Friedman LLP
(2002-2004).
|
|
|
|
*
|
|
Unless otherwise noted, the address of the Funds officers is Allianz Global Investors Fund
Management LLC, 1345 Avenue of the Americas, 4
th
Floor, New York, New York 10105.
|
Investment Manager and Sub-Adviser.
The Manager, located at 1345 Avenue of the Americas, New York,
New York 10105, serves as the investment manager of the Fund. The Manager retains its affiliate,
PIMCO, as Sub-Adviser to manage the Funds investments. PIMCO is located at 800 Newport Center
Drive, Newport Beach, CA 92660. The Manager and the Sub-Adviser are each majority-owned indirect
subsidiaries of Allianz SE, a publicly traded European insurance and financial services company.
Legal Proceedings.
In June and September 2004, the Manager and certain of its affiliates
(including PEA Capital LLC (PEA), Allianz Global Investors Distributors LLC and Allianz Global
Investors of America,
22
L.P.) agreed to settle, without admitting or denying the allegations, claims brought by the SEC and
the New Jersey Attorney General alleging violations of federal and state securities laws with
respect to certain open-end funds for which the Manager serves as investment adviser. The
settlements related to an alleged market timing arrangement in certain open-end funds formerly
sub-advised by PEA. The Manager and its affiliates agreed to pay a total of $68 million to settle
the claims. In addition to monetary payments, the settling parties agreed to undertake certain
corporate governance, compliance and disclosure reforms related to market timing, and consented to
cease and desist orders and censures. Subsequent to these events, PEA deregistered as an investment
adviser and dissolved. None of the settlements alleged that any inappropriate activity took place
with respect to the Fund.
Since February 2004, the Manager, and certain of its affiliates and their employees have been
named as defendants in a number of pending lawsuits concerning market timing, which allege the
same or similar conduct underlying the regulatory settlements discussed above. The market timing
lawsuits have been consolidated in a multi-district litigation proceeding in the United States
District Court for the District of Maryland. Any potential resolution of these matters may include,
but not be limited to, judgments or settlements for damages against the Manager, or its affiliates
or related injunctions.
The Manager and the Sub-Adviser believe that these matters are not likely to have a material
adverse effect on the Fund or on their ability to perform their respective investment advisory
activities relating to the Fund.
The foregoing speaks only as of the date of this proxy statement.
Independent Registered Public Accounting Firm.
The Audit Oversight Committee of the Funds Board
unanimously selected PricewaterhouseCoopers LLP (PwC) as the independent registered public
accounting firm for the fiscal year ending October 31, 2009. PwC served as the independent
registered public accounting firm of the Fund for the last fiscal year and also serves as the
independent registered public accounting firm of various other investment companies for which the
Manager and the Sub-Adviser serve as investment adviser or sub-adviser. PwC is located at 1055
Broadway, Kansas City, MO 64105. The Fund does not know of any direct financial or material
indirect financial interest of PwC in the Fund.
A representative of PwC, if requested by any Stockholder, will be present at the Meeting via
telephone to respond to appropriate questions from Stockholders and will have an opportunity to
make a statement if he or she chooses to do so.
Pre-approval Policies and Procedures.
The Funds Audit Oversight Committee has adopted
written policies relating to the pre-approval of audit and permitted non-audit services to be
performed by the Funds independent registered public accounting firm. Under the policies, on an
annual basis, the Funds Audit Oversight Committee reviews and pre-approves proposed audit and
permitted non-audit services to be performed by the independent registered public accounting firm
on behalf of the Fund. The President of the Fund also pre-approves any permitted non-audit
services to be provided to the Fund.
In addition, the Funds Audit Oversight Committee pre-approves annually any permitted
non-audit services (including audit-related services) to be provided by the independent registered
public accounting firm to the Manager, the Sub-Adviser and any entity controlling, controlled by,
or under common control with the Manager that provides ongoing services to the Fund (together, the
Accounting Affiliates), provided, in each case, that the engagement relates directly to the
operations and financial reporting of the Fund. Although the Audit Oversight Committee does not
pre-approve all services provided by the independent registered public accounting firm to
Accounting Affiliates (for instance, if the engagement does
23
not relate directly to the operations and financial reporting of the Fund), the Committee
receives an annual report from the independent registered public accounting firm showing the
aggregate fees paid by Accounting Affiliates for such services.
The Funds Audit Oversight Committee may also from time to time pre-approve individual
non-audit services to be provided to the Fund or an Accounting Affiliate that were not pre-approved
as part of the annual process described above. The Chairman of the Funds Audit Oversight
Committee (or any other member of the Committee to whom this responsibility has been delegated) may
also pre-approve these individual non-audit services, provided that the fee for such services does
not exceed certain pre-determined dollar thresholds. Any such pre-approval by the Chairman (or by
a delegate) is reported to the full Audit Oversight Committee at its next regularly scheduled
meeting.
The pre-approval policies provide for waivers of the requirement that the Audit Oversight
Committee pre-approve permitted non-audit services provided to the Fund or its Accounting
Affiliates pursuant to de minimis exceptions described in Section 10A of the Exchange Act and
applicable regulations (referred to herein as the de minimis exception).
Audit Fees.
Audit Fees are fees related to the audit and review of the financial statements
included in annual reports and registration statements, and other services that are normally
provided in connection with statutory and regulatory filings or engagements. For the Funds last
two fiscal years, the Audit Fees billed by PwC are shown in the table below:
|
|
|
|
|
Fiscal Year Ended
|
|
Audit Fees
|
October 31, 2008
|
|
$
|
39,000
|
|
October 31, 2007
|
|
$
|
36,000
|
|
Audit-Related Fees.
Audit-Related Fees are fees related to assurance and related services
that are reasonably related to the performance of the audit or review of financial statements, but
not reported under Audit Fees above, and that include accounting consultations, agreed-upon
procedure reports (inclusive of annual review of basic maintenance testing associated with the
Preferred Shares), attestation reports and comfort letters. The table below shows, for the Funds
last two fiscal years, the Audit-Related Fees billed by PwC to the Fund.
|
|
|
|
|
Fiscal Year Ended
|
|
Audit-Related Fees
|
October 31, 2008
|
|
$
|
8,000
|
|
October 31, 2007
|
|
$
|
8,000
|
|
Tax Fees
.
Tax Fees are fees associated with tax compliance, tax advice and tax planning,
including services relating to the filing or amendment of federal, state or local income tax
returns, regulated investment company qualification reviews, and tax distribution and analysis
reviews. The table below shows, for the Funds last two fiscal years, the aggregate Tax Fees
billed by PwC to the Fund. During those fiscal years, there were no Tax Fees billed by PwC to the
Funds Accounting Affiliates for audit-related services related directly to the operation and
financial reporting of the Fund.
|
|
|
|
|
Fiscal Year Ended
|
|
Tax Fees
|
October 31, 2008
|
|
$
|
6,700
|
|
October 31, 2007
|
|
$
|
6,500
|
|
24
All Other Fees
.
All Other Fees are fees related to services other than those reported above
under Audit Fees, Audit-Related Fees and Tax Fees. For the Funds last two fiscal years, no
such fees were billed by PwC to the Fund or the Funds Accounting Affiliates.
During the periods indicated in the tables above, no services described under Audit-Related Fees,
Tax Fees or All Other Fees were approved pursuant to the de minimis exception.
Aggregate Non-Audit Fees
.
The aggregate non-audit fees billed by PwC, during the Funds last
two fiscal years, for services rendered to the Fund and the Funds Accounting Affiliates are shown
in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate Non-
|
|
Non-Audit Fees for
|
|
|
|
|
Audit Fees
|
|
Accounting
|
|
Aggregate
|
Fiscal Year Ended
|
|
for Fund
|
|
Affiliates
|
|
Non-Audit Fees
|
October 31, 2008
|
|
$
|
14,700
|
|
|
$
|
3,894,972
|
|
|
$
|
3,909,672
|
|
October 31, 2007
|
|
$
|
14,500
|
|
|
$
|
2,769,324
|
|
|
$
|
2,783,824
|
|
The Funds Audit Oversight Committee has determined that the provision by PwC of non-audit services
to the Funds Accounting Affiliates that were not pre-approved by the Committee were compatible
with maintaining the independence of PwC as the Funds principal auditors.
Other Business.
As of the date of this Proxy Statement, the Funds officers and the Manager know
of no business to come before the Meeting other than as set forth in the Notice. If any other
business is properly brought before the Meeting, including any adjournment thereof, the persons
named as proxies on the enclosed proxy cards will vote in their sole discretion.
Quorum, Adjournments and Methods of Tabulation.
A quorum for the Fund at the Meeting will consist
of the presence in person or by proxy of Stockholders of the Fund entitled to cast at least a
majority (greater than 50%) of the votes entitled to be cast. In the absence of a quorum at the
Meeting or, even if a quorum is present, in the event that sufficient votes in favor of the
Proposals set forth in the Notice 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 within 120 days after the Record Date, with no other notice than announcement
at the Meeting, to permit further solicitation of proxies with respect to the Proposals. In
addition, if, in the judgment of the persons named as proxies, it is advisable to defer action on a
Proposal, the persons named as proxies may propose one or more adjournments of the Meeting with
respect to the Proposal for a reasonable time. The persons named as proxies will vote in favor of
such adjournment those proxies which they are entitled to vote in favor of the Proposal. They will
vote against any such adjournment those proxies required to be voted against the Proposal. The
costs of any additional solicitation and of any adjourned session will be borne by the Fund. Any
proposals properly before the Meeting 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
Votes cast by proxy or in person at the Meeting will be counted by persons appointed by the Fund as
inspectors of election (the Inspectors) for the Meeting. For purposes of determining the presence of a quorum for
the Fund, the
25
Tellers will count the total number of votes cast for or against approval of the Proposal for
the Fund, as well as Shares represented by proxies that reflect abstentions and broker non-votes
(
i.e.
, shares held by brokers or nominees as to which instructions have not been received from the
beneficial owners or the persons entitled to vote and the broker or nominee does not have the
discretionary voting power on a particular matter).
With respect to the election of Directors (Proposal I), abstentions will not be counted as votes
cast and will have no effect on the result of the vote with respect to Proposal I, although they
will be considered present for the purpose of determining the presence of a quorum. With respect
to the vote on the proposed Liquidation (Proposal II), abstentions and broker non-votes will have
the same effect as votes against Proposal II, although they will be considered present for the
purpose of determining the presence of a quorum.
Reports to Stockholders.
The 2008 Annual Report to Stockholders for the Fund was mailed to
Stockholders on or about December 29, 2008.
Additional copies of the Annual Report may be obtained without charge from the Fund by calling 1-877-819-2224
or by writing to the Fund at 1345 Avenue of the Americas, New York, NY 10105.
Stockholder Proposals for 2010 Annual Meeting.
If Proposal II is approved, the Fund does not
expect to hold another annual meeting of Stockholders. If Proposal II is not approved, or if the
Liquidation of the Fund is not completed prior to such time, it is currently anticipated that the
Funds next annual meeting of Stockholders after the Meeting addressed in this Proxy Statement will
be held in February 2010. Proposals of Stockholders intended to be presented at that annual
meeting of the Fund must be received by the Fund no later than ___, 2009 for inclusion in
the Funds proxy statement and proxy cards relating to that meeting. The submission by a
Stockholder of a proposal for inclusion in the proxy materials does not guarantee that it will be
included. Stockholder proposals are subject to certain requirements under the federal securities
laws and must be submitted in accordance with the Funds Bylaws. Stockholders submitting any other
proposals for the Fund intended to be presented at the 2010 annual meeting (
i.e
., other than those
to be included in the Funds proxy materials) must ensure that such proposals are received by the
Fund, in good order and complying with all applicable legal requirements and requirements set forth
in the Funds Bylaws, no earlier than November ___, 2009 and no later than December ___, 2009. If
a Stockholder who wishes to present a proposal fails to notify the Fund within these dates, the
proxies solicited for the meeting will have discretionary authority to vote on the Stockholders
proposal if it is properly brought before the meeting. If a Stockholder makes a timely
notification, the proxies may still exercise discretionary voting authority under circumstances
consistent with the SECs proxy rules. Stockholder proposals should be addressed to the attention
of the Secretary of the applicable Fund, at the address of the principal executive offices of the
Fund, with a copy to David C. Sullivan, Ropes & Gray LLP, One International Place, Boston,
Massachusetts 02110-2624.
STOCKHOLDERS SHARING AN ADDRESS
The Fund is permitted to mail only one copy of this proxy statement to a household, even if
more than one person in a household is a Fund stockholder of record, unless the Fund has received
contrary instructions from one or more of the stockholders. If you need additional copies of this
proxy statement and you are a holder of record of your shares, please call 1-800-331-1710. If your
shares are held in broker street name please contact your financial service firm to obtain
additional copies of this proxy statement. If in the future you do not want the mailing of proxy
statements and information statements to be combined with those of other members of your household,
or if you have received multiple copies of this proxy statement and want
26
future mailings to be combined with those of other members of your household, please contact
the Manager in writing at Allianz Global Investors Fund Management LLC, c/o PFPC, PO Box 43027,
Providence, RI 02940, or by telephone at 1-800-331-1710, or contact your financial service firm.
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY CARDS PROMPTLY TO ENSURE THAT A QUORUM IS PRESENT AT
THE ANNUAL MEETING. A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
January
___ 2009
27
Exhibit A to Proxy Statement
Allianz Global Investors Fund Management Sponsored Closed-End Funds
Audit Oversight Committee Charter
(Adopted as of January 14, 2004,
as amended through June 10, 2008)
The Board of Trustees (each a Board) of each of the registered investment companies listed
in
Appendix A
hereto (each a Fund and, collectively, the Funds), as the same may be
periodically updated, has adopted this Charter to govern the activities of the Audit Oversight
Committee (the Committee) of the particular Board with respect to its oversight of the Fund.
This Charter applies separately to each Fund and its particular Board and Committee, and shall be
interpreted accordingly. This Charter supersedes and replaces any audit committee charter
previously adopted by the Board or a committee of the Board.
Statement of Purpose and Functions
The Committees general purpose is to oversee the Funds accounting and financial reporting
policies and practices and its internal controls, including by assisting with the Boards oversight
of the integrity of the Funds financial statements, the Funds compliance with legal and
regulatory requirements, the qualifications and independence of the Funds independent auditors,
and the performance of the Funds internal control systems and independent auditors. The
Committees purpose is also to prepare reports required by Securities and Exchange Commission rules
to be included in the Funds annual proxy statements, if any.
The Committees function is oversight. While the Committee has the responsibilities set forth
in this Charter, it is not the responsibility of the Committee to plan or conduct audits, to
prepare or determine that the Funds financial statements are complete and accurate and are in
accordance with generally accepted accounting principles, or to assure compliance with laws,
regulations or any internal rules or policies of the Fund. Fund management is responsible for Fund
accounting and the implementation and maintenance of the Funds internal control systems, and the
independent auditors are responsible for conducting a proper audit of the Funds financial
statements. Members of the Committee are not employees of the Funds and, in serving on this
Committee, are not, and do not hold themselves out to be, acting as accountants or auditors. As
such, it is not the duty or responsibility of the Committee or its members to conduct field work
or other types of auditing or accounting reviews or procedures. Each member of the Committee shall
be entitled to rely on (i) the integrity of those persons and organizations within management and
outside the Fund from which the Committee receives information and (ii) the accuracy of financial
and other information provided to the Committee by such persons or organizations absent actual
knowledge to the contrary.
Membership
The Committee shall be comprised of as many trustees as the Board shall determine, but in any
event not less than three (3) Trustees. Each member of the Committee must be a member
of the Board. The Board may remove or replace any member of the Committee at any time in its
sole discretion. One or more members of the Committee may be designated by the Board as the
Committees chairman or co-chairman, as the case may be.
Each member of the Committee may not be an interested person of the Fund, as defined in
Section 2(a)(19) of the Investment Company Act of 1940, as amended (the Investment Company Act),
and must otherwise satisfy the standards for independence of an audit committee member of an
investment company issuer as set forth in Rule 10A-3(b) (taking into account any exceptions to
those requirements set for in such rule) under the Securities Exchange Act of 1934, as amended, and
under applicable listing standards of the New York Stock Exchange (the NYSE). Each member of the
Committee must be financially literate (or must become so within a reasonable time after his or
her appointment to the Committee) and at least one member of the Committee must have accounting or
related financial management expertise, in each case as the Board interprets such qualification in
its business judgment under NYSE listing standards.
Responsibilities and Duties
The Committees policies and procedures shall remain flexible to facilitate the Committees
ability to react to changing conditions and to generally discharge its functions. The following
describe areas of attention in broad terms. The Committee shall:
1. Determine the selection, retention or termination of the Funds independent auditors based
on an evaluation of their independence and the nature and performance of the audit and any
permitted non-audit services. Decisions by the Committee concerning the selection, retention or
termination of the independent auditors shall be submitted to the Board for ratification in
accordance with the requirements of Section 32(a) of the Investment Company Act. The Funds
independent auditors must report directly to the Committee, which shall be responsible for
resolution of disagreements between management and the independent auditors relating to financial
reporting.
2. To consider the independence of the Funds independent auditors at least annually, and in
connection therewith receive on a periodic basis formal written disclosures and letters from the
independent auditors as required by the Independence Standards Board Standard (ISB) No. 1.
3. To the extent required by applicable regulations, pre-approve (i) all audit and permitted
non-audit services rendered by the independent auditors to the Fund and (ii) all non-audit services
rendered by the independent auditors to the Funds investment advisers (including sub-advisers) and
to certain of the investment advisers affiliates. The Committee may implement policies and
procedures by which such services are approved other than by the full Committee.
4. Review the fees charged by the independent auditors to the Fund, the investment advisers
and certain affiliates of the investment advisers for audit, audit-related and permitted non-audit
services.
5. If and to the extent that the Fund intends to have employees, set clear policies for the
hiring by the Fund of employees or former employees of the Funds independent auditors.
6. Obtain and review at least annually a report from the independent auditors describing (i)
the accounting firms internal quality-control procedures and (ii) any material issues raised (a)
by the accounting firms most recent internal quality-control review or peer review or (b) by any
governmental or other professional inquiry or investigation performed within the preceding five
years respecting one or more independent audits carried out by the firm, and any steps taken to
address any such issues.
7. Review with the Funds independent auditors arrangements for and the scope of the annual
audit and any special audits, including the form of any opinion proposed to be rendered to the
Board and shareholders of the Fund.
8. Meet with management and the independent auditors to review and discuss the Funds annual
audited financial statements, including a review of any specific disclosures of managements
discussion of the Funds investment performance; and, with respect to the Funds audited financial
statements, discuss with the independent auditors matters required by Statement of Accounting
Standards (SAS) No. 61 and any other matters required to be reported to the Committee under
applicable law; and provide a statement whether, based on its review of the Funds audited
financial statements, the Committee recommends to the Board that the audited financial statements
be included in the Funds Annual Report.
Meet with management to review and discuss the Funds unaudited financial statements included
in the semi-annual report, including, if any, a review of any specific disclosure of managements
discussion of the Funds investment performance.
9. Discuss with management and the independent auditors the Funds unaudited financial
statements.
10. Review with the independent auditors any audit problems or difficulties encountered in the
course of their audit work and managements responses thereto.
11. Review with management and, as applicable, with the independent auditors the Funds
accounting and financial reporting policies, practices and internal controls, managements
guidelines and policies with respect to risk assessment and risk management, including the effect
on the Fund of any recommendation of changes in accounting principles or practices by management or
the independent auditors.
12. Discuss with management any press releases discussing the Funds investment performance
and other financial information about the Fund, as well as any financial information provided by
management to analysts or rating agencies. The Committee may discharge this responsibility by
discussing the general types of information to be disclosed by the Fund and the form of
presentation (
i.e.
, a case-by-case review is not required) and need not discuss in advance each
such release of information.
13. Establish procedures for (i) the receipt, retention, and treatment of complaints received
by the Fund regarding accounting, internal accounting controls, or auditing matters; and
(ii) the confidential, anonymous submission by employees of the Fund, the Funds investment
advisers, administrator, principal underwriter (if any) or any other provider of accounting-related
services for the investment advisers of concerns regarding accounting or auditing matters.
14. Investigate or initiate the investigation of any improprieties or suspected improprieties
in the Funds accounting operations or financial reporting.
15. Review with counsel legal and regulatory matters that have a material impact on the Funds
financial and accounting reporting policies and practices or its internal controls.
16. Report to the Board on a regular basis (at least annually) on the Committees activities.
17. Perform such other functions consistent with this Charter, the Agreement and Declaration
of Trust and Bylaws applicable to the Fund, and applicable law or regulation, as the Committee or
the Board deems necessary or appropriate.
The Committee may delegate any portion of its authority and responsibilities as set forth in this
Charter to a subcommittee of one or more members of the Committee.
Meetings
At least annually, the Committee shall meet separately with the independent auditors and
separately with the representatives of Fund management responsible for the financial and accounting
operations of the Fund. The Committee shall hold other regular or special meetings as and when it
deems necessary or appropriate.
Outside Resources and Assistance from Management
The appropriate officers of the Fund shall provide or arrange to provide such information,
data and services as the Committee may request. The Committee shall have the authority to engage
at the Funds expense independent counsel and other experts and consultants whose expertise the
Committee considers necessary to carry out its responsibilities. The Fund shall provide for
appropriate funding, as determined by the Committee, for the payment of: (i) compensation of the
Funds independent auditors for the issuance of an audit report relating to the Funds financial
statements or the performance of other audit, review or attest services for the Fund; (ii)
compensation of independent legal counsel or other advisers retained by the Committee; and (iii)
ordinary administrative expenses of the Committee that are necessary or appropriate in fulfilling
its purposes or carrying out its responsibilities under this Charter.
Annual Evaluations
The Committee shall review and reassess the adequacy of this Charter at least annually and
recommend any changes to the Board. In addition, the performance of the Committee shall be
reviewed at least annually by the Board.
Adoption and Amendments
The Board shall adopt and approve this Charter and may amend the Charter at any time on the
Boards own motion.
Exhibit B to Proxy Statement
Report of Audit Oversight Committee
of the Board of Directors of
PIMCO Municipal Advantage Fund Inc. (the Fund)
Dated December 22, 2008
The Audit Oversight Committee (the Committee) oversees the Funds 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 Funds management (Management) and
independent registered public accounting firm 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 Committees and
independent accountants responsibilities, Management has advised that the Funds financial
statements for the fiscal year ended October 31, 2008 were prepared in conformity with the
generally accepted accounting principles.
The Committee has reviewed and discussed with Management and PricewaterhouseCoopers LLP
(PwC), the Funds independent registered public accounting firm, the audited financial statements
for the fiscal year ended October 31, 2008. 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 registered public accounting firms 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 auditors conclusions regarding the
reasonableness of those estimates; and 4) disagreements with Management over the application of
accounting principles and certain other matters.
With respect to the Fund, the Committee has received the written disclosure and the letter
from PwC required by Independence Standards Board Standard No. 1 (requiring auditors to make
written disclosure to and discuss with the Committee various matters relating to the auditors
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 Allianz Global Investors Fund Management LLC (AGIFM), the Funds investment
manager, Pacific Investment Management Company LLC (PIMCO), the Funds investment adviser and any
entity controlling, controlled by or under common control with AGIFM or PIMCO 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 Funds independent registered public
accounting firm, 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 October
31, 2008 be included in the Funds Annual Report to shareholders 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 Funds independent registered public accounting firm
for the fiscal year ending October 31, 2009.
Submitted by the Audit Committee of the Board of Directors:
Paul Belica
Robert E. Connor
Hans W. Kertess
William B. Ogden, IV
R. Peter Sullivan III
Diana L. Taylor
Exhibit C to Proxy Statement
Plan of Liquidation
and Dissolution
of
PIMCO Municipal Advantage Fund, Inc.
This Plan of Liquidation and Dissolution (the
Plan
) for PIMCO Municipal Advantage
Fund, Inc. (the
Fund
), a corporation organized and existing under the laws of Maryland
and registered as a closed-end management investment company under the Investment Company Act of
1940, as amended (the
Investment Company Act
), is intended to accomplish the complete
liquidation of the Funds assets and dissolution of the Fund in conformity with the provisions of
the Funds Articles of Restatement (the
Articles
) and By-Laws and Maryland law.
1. Approval of Plan and Effective Date. The Plan will be submitted to the Funds Board of
Directors on December 22, 2008 for approval by the Funds Board of Directors, including a majority
of the directors who are not interested persons (as defined in the Investment Company Act) of the
Fund, that the proposed liquidation and dissolution of the Fund is in accordance with the Plan and
that the Plan is advisable and in the best interests of the Funds stockholders. Under Maryland
law and the Funds Articles of Restatement and Bylaws, the Fund must also obtain stockholder
approval to liquidate and dissolve the Fund. Pending approval by the Funds stockholders by an
affirmative vote of a majority of the votes entitled to be cast by the common and preferred
stockholders of the Fund, voting as a single class, the Plan shall become effective at the close of
business on or about ___, 2009 (the
Effective Date
).
2. Cessation of Business. At the Effective Date, the Fund shall cease its operations and
thereafter shall not engage in any business activities except for the purposes of managing the sale
of securities and the Funds cash levels. Within a reasonable period after the Effective Date
(taking into account market conditions and other relevant factors), the directors and officers of
the Fund shall proceed to wind up the affairs of the Fund; to pay or make provision for the payment
of the Funds debts and liabilities; to reduce the remaining assets of the Fund to distributable
form in cash and to distribute the proceeds to or for the account of the stockholders of the Fund.
3. Fixing of Interests and Closing of Books. For purposes of determining the stockholders of
the Fund entitled to receive payment of all Liquidating Distributions (as defined below), the
proportionate interests of stockholders in the assets of the Fund shall be fixed on the basis of
their respective shareholdings at the close of business on the Effective Date, or on such later
date as may be determined by the Board (the
Determination Date
). On the Determination
Date, the books of the Fund shall be closed. Thereafter, unless the books are reopened because the
Plan cannot be carried into effect under the laws of the State of Maryland or otherwise, the
Stockholders respective interests in the Funds assets shall not be transferable by the
negotiation of share certificates and the Funds common shares will cease to be traded on the New
York Stock Exchange, Inc. (the
NYSE
).
4. Termination of the Fund. The Fund shall be terminated as soon as reasonably practicable
after the Effective Date and the completion of the implementation of this Plan, which date of
termination of the Fund shall be determined by the President of the Fund or other authorized
officer (the
Termination Date
).
5. Notice of Liquidation of the Fund. As soon as practicable after the Effective Date, the
Fund shall mail notice to its known creditors, if any, at their addresses as shown on the Funds
records, that this Plan has been approved by the Board of Directors and the stockholders and that
the Fund will be liquidating its assets, to the extent that such notice is required under the
Maryland General Corporation Law (the MGCL).
6. Payment of Liabilities and Expenses. Within a reasonable period after the Effective Date,
the Fund shall determine, and there shall be paid or otherwise provided for, all charges, taxes,
expenses, liabilities and reserves, whether due or accrued or anticipated, of the Fund
(collectively,
Debts
).
7. Liquidating Distributions. As soon as reasonably practicable after the Determination Date
and following the payment or other provision for Debts of the Fund, the remaining assets of the
Fund shall be distributed to or for the account of the stockholders of the Fund, at any one or more
times, and shall proceed in the order of priority provided below (each a
Liquidating
Distribution
):
1. First, to the preferred stockholders, the amount of $50,000 per preferred share,
plus an amount equal to all accumulated but unpaid dividends thereon (whether or not earned
or declared) to but not including the date of such Liquidating Distribution, in same-day
funds; and
2. Second, after determination of any dividend to be paid pursuant to paragraph 7.a. of
this Plan, all remaining amounts to the common stockholders, ratably according to the number
of shares of the Fund held by such common stockholders on the Determination Date. In the
event the assets of the Fund available for distribution upon liquidation to the preferred
stockholders are insufficient to make full payments to which such holders are entitled in
accordance with the By-Laws of the Fund, payment shall be made pro rata among all such
preferred stockholders. It is intended that any and all amounts of a Liquidating
Distribution to preferred stockholders comprising a dividend shall be characterized in a
manner consistent with Revenue Ruling 89-81, 1989-1 C.B. 226.
The Liquidating Distribution to common stockholders will include, if necessary, a dividend equal to
the sum of (i) the amount, if any, required to avoid the imposition of tax under section 852 of the
Internal Revenue Code of 1986, as amended (the
Code
) on investment company taxable income
and net capital gain for each of the Funds (a) most recently completed taxable year, and (b) the
subsequent taxable period ending on the Liquidation Date and (ii) the additional amount, if any,
required to avoid the imposition of tax under section 4982 of the Code on ordinary income and
capital gain net income. The Board of Directors of the Fund hereby declares that the dividend so
paid shall be deemed for all purposes to have been conclusively declared on the date of this Plan.
It is intended that any and all amounts of a Liquidating Distribution to common stockholders
comprising such a dividend shall be characterized in a manner consistent with Revenue Ruling 89-81,
1989-1 C.B. 226.
8. Deregistration under the Investment Company Act. As soon as practicable after the
Termination Date, the Fund shall take action to become deregistered as an investment company under
the Investment Company Act, and the officers of the Fund shall take such other actions as may be
deemed necessary or advisable to carry out the provisions and purposes of this Plan.
9. Dissolution under Maryland Law.
1. Within the time frame set forth above, the Fund shall cause to be filed Articles of
Dissolution with the State Department of Assessments and Taxation of Maryland, pursuant to
Sections 3-406 and 3-407 of the MGCL.
2. Not less than twenty (20) days prior to filing the Articles of Dissolution with the
State Department of Assessments and Taxation of Maryland, as set forth above, the Fund shall
mail notice that the dissolution of the Fund has been approved to all of its known
creditors, if any, and to its remaining employees, if any, pursuant to Section 3-404 of the
MGCL. It is anticipated that the Fund shall have no known creditors or employees at such
time.
3. The officers of the Fund shall, prior to filing of the formal documents necessary to
terminate the legal existence of the Fund, apply for and obtain from the State Department of
Assessments and Taxation of Maryland a list of all municipal and county tax collectors (the
Collectors
) to whom personal property taxes assessed by the Department against the
Fund are payable, and shall obtain certificates from the Comptroller of the Treasury of the
State of Maryland and from each of the Collectors to the effect that all such taxes, except
those barred by limitations, have been paid, including taxes billed for the year in which
the termination of existence is to be effective.
10. Additional Tax Matters.
1. This
Plan
is intended to, and shall, constitute a plan of liquidation
constituting the complete liquidation of the Fund, as described in Section 331, or 332, as
the case may be, and Section 562(b) of the Code.
2. Within thirty (30) days after the date of the adoption of this Plan by the Funds
stockholders, the officers of the Fund shall file a return on Form 966 with the Internal
Revenue Service, as required by Section 6043(a) of the Code, for and on behalf of the Fund.
11. Authority of Officers. The officers of the Fund shall have authority to do or authorize
any or all acts and things as provided for in this Plan and any and all such further acts and
things as they may consider necessary or advisable to carry out the purposes of this Plan,
including preparing and executing documents, information returns, tax returns, forms, and other
papers which may be necessary or appropriate to implement this Plan or which may be required by the
provisions of the Investment Company Act or any other applicable laws. Without limiting the
generality of the foregoing, the officers and directors are authorized and empowered:
1. To sell any and all property of the Fund at private or public sales (and if at
public sales, then upon such public notices as may be determined to be necessary and
appropriate), for such consideration and upon such terms as they may deem proper, and
to collect the accounts receivable or to compromise, settle or otherwise convert the same
into cash;
2. To declare to or for the accounts of the stockholders a liquidating distribution or
liquidating distributions in kind or in cash;
3. To execute for or on behalf of the Fund, in its corporate name and under its
corporate seal, such contracts of sale, deeds, assignments, bills of sale and other papers
as may be necessary, desirable or convenient in connection with the carrying out of this
Plan; and
4. To pay all costs and expenses, including debts, salaries and bonuses to directors,
officers and employees, taxes and other liabilities incurred by the Fund or by such
directors or officers in connection with the carrying out of this Plan.
12. Amendment of Plan. A majority of the Board of Directors shall have the power to authorize
such variations from or amendments of the provisions of this Plan as may be necessary or
appropriate to effect the complete liquidation and dissolution of the Fund, and the distribution of
assets to stockholders in accordance with the purposes to be accomplished by this Plan. Except as
provided in the foregoing sentence, this Plan shall be irrevocable.
PROXY
MUNICIPAL ADVANTAGE FUND INC.
COMMON SHARES
PROXY IN CONNECTION WITH THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON FEBRUARY 26, 2009
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE FUND
The undersigned holder of common shares of Municipal Advantage Fund Inc., a Maryland corporation
(the Fund), hereby appoints Lawrence G. Altadonna, Thomas J. Fuccillo and Brian S. Shlissel, or
any of them, as proxies for the undersigned, with full power of substitution in each of them, to
attend the Annual Meeting of Stockholders of the Fund (the Annual Meeting) to be held at 9:30
a.m., Eastern Time, February 26, 2009 at the offices of Allianz Global Investors Fund Management
LLC, 1345 Avenue of the Americas, between West 54th and West 55th streets, 49th Floor, New York,
New York 10105, and any postponement or adjournment thereof, to cast on behalf of the undersigned
all votes that the undersigned is entitled to cast at the Annual Meeting and otherwise to represent
the undersigned with all powers possessed by the undersigned as if personally present at such Annual
Meeting. The undersigned hereby acknowledges receipt of the Notice of Meeting and accompanying
Proxy Statement and revokes any proxy heretofore given with respect to the Annual Meeting.
IF THIS
PROXY IS PROPERLY EXECUTED, THE VOTES ENTITLED TO BE CAST BY THE
UNDERSIGNED WILL BE CAST IN THE MANNER DIRECTED ON THE REVERSE SIDE HEREOF, AND WILL BE VOTED IN
THE DISCRETION OF THE PROXY HOLDER(S) ON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL
MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF. IF THIS PROXY IS PROPERLY EXECUTED BUT NO
DIRECTION IS MADE REGARDING THE PROPOSALS FOR THE ELECTION OF DIRECTORS OR THE LIQUIDATION AND DISSOLUTION OF THE FUND INCLUDED IN THE PROXY STATEMENT, SUCH VOTES
ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST FOR EACH PROPOSAL.
Please refer to the Proxy Statement for a discussion of the Election of Directors and the proposed Liquidation and Dissolution of the Fund.
PLEASE VOTE, DATE AND SIGN ON THE REVERSE SIDE HEREOF
AND RETURN THE SIGNED PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
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HAS YOUR ADDRESS CHANGED?
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DO YOU HAVE ANY COMMENTS?
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Using a black ink pen, mark your votes with an X as shown in this example. Please do not write
outside the designated areas.
þ
ANNUAL MEETING PROXY CARD
I. Election of Directors
The Board of Directors recommends that you vote FOR the election of
the Nominees.
Nominees
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(01) R. Peter Sullivan III (Class III)
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For
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Withhold
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(02) Diana L. Taylor (Class II)
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For
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Withhold
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II. Approval of Liquidation and Dissolution
The Board of Directors recommends that you vote
FOR the proposal to liquidate and dissolve the Fund, as set forth in the Plan of Liquidation and
Dissolution adopted by the Board of Directors of the Fund:
For the Proposal
o
Against the Proposal
o
Withhold from the Proposal
o
MUNICIPAL ADVANTAGE FUND INC.
COMMON SHARES
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Please check box at right if an address change or comment
has been made on the reverse side of this card.
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Please be sure to sign and date this Proxy.
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Shareholder
signature:
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Date:
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Joint Owner
(if any) signature:
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Date:
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NOTE:
Please sign this proxy exactly as your name(s) appear(s) on the books of the Fund. Joint
owners should each sign personally. Trustees and other fiduciaries should indicate the capacity in
which they sign, and where more than one name appears, a majority must sign. If a corporation,
partnership or other entity, the signature should be that of an authorized officer who should state
his or her title.
HOW TO VOTE
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Vote In Person
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Vote By Internet
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Vote By Telephone
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PROXY
MUNICIPAL ADVANTAGE FUND INC.
PREFERRED SHARES
PROXY IN CONNECTION WITH THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON FEBRUARY 26, 2009
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE FUND
The undersigned holder of preferred shares of Municipal Advantage Fund Inc., a Maryland corporation
(the Fund), hereby appoints Lawrence G. Altadonna, Thomas J. Fuccillo and Brian S. Shlissel, or
any of them, as proxies for the undersigned, with full power of substitution in each of them, to
attend the Annual Meeting of Stockholders of the Fund (the Annual Meeting) to be held at 9:30
a.m., Eastern Time, February 26, 2009 at the offices of Allianz Global Investors Fund Management
LLC, 1345 Avenue of the Americas, between West 54th and West 55th streets, 49th Floor, New York,
New York 10105, and any postponement or adjournment thereof, to cast on behalf of the undersigned
all votes that the undersigned is entitled to cast at the Annual Meeting and otherwise to represent
the undersigned with all powers possessed by the undersigned as if personally present at such Annual
Meeting. The undersigned hereby acknowledges receipt of the Notice of Meeting and accompanying
Proxy Statement and revokes any proxy heretofore given with respect to the Annual Meeting.
IF THIS PROXY IS PROPERLY EXECUTED, THE VOTES ENTITLED TO BE CAST BY THE
UNDERSIGNED WILL BE CAST IN THE MANNER DIRECTED ON THE REVERSE SIDE HEREOF, AND
WILL BE VOTED IN THE DISCRETION OF THE PROXY HOLDER(S) ON ANY OTHER MATTERS THAT
MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENT OR POSTPONEMENT
THEREOF. IF THIS PROXY IS PROPERLY EXECUTED BUT NO DIRECTION IS MADE
REGARDING THE PROPOSALS FOR THE ELECTION OF
DIRECTORS OR THE LIQUIDATION AND DISSOLUTION OF THE FUND INCLUDED IN THE PROXY STATEMENT, SUCH VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL
BE CAST FOR EACH PROPOSAL.
Please refer to the Proxy Statement for a
discussion of the Election of Directors and the proposed Liquidation
and Dissolution of the Fund.
PLEASE VOTE, DATE AND SIGN ON THE REVERSE SIDE HEREOF
AND RETURN THE SIGNED PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
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HAS YOUR ADDRESS CHANGED?
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DO YOU HAVE ANY COMMENTS?
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Using a black ink pen, mark your votes with an X as shown in this example. Please do not write
outside the designated areas.
þ
ANNUAL MEETING PROXY CARD
I. Election of Directors
The Board of Directors recommends that you vote FOR the election of
the Nominees.
Nominees
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(01) R. Peter Sullivan III (Class III)
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For
o
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Withhold
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(02) Diana L. Taylor (Class II)
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For
o
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Withhold
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II. Approval of Liquidation and Dissolution
The Board of Directors recommends that you vote
FOR the proposal to liquidate and dissolve the Fund, as set forth in the Plan of Liquidation and
Dissolution adopted by the Board of Directors of the Fund:
For the Proposal
o
Against the Proposal
o
Withhold from the Proposal
o
MUNICIPAL ADVANTAGE FUND INC.
PREFERRED SHARES
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Please check box at right if an address change or comment
has been made on the reverse side of this card.
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Please be sure to sign and date this Proxy.
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Shareholder
signature:
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Date:
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Joint Owner
(if any) signature:
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Date:
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NOTE:
Please sign this proxy exactly as your name(s) appear(s) on the books of the Fund. Joint
owners should each sign personally. Trustees and other fiduciaries should indicate the capacity in
which they sign, and where more than one name appears, a majority must sign. If a corporation,
partnership or other entity, the signature should be that of an authorized officer who should state
his or her title.
HOW TO VOTE
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Vote In Person
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Vote By Internet
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Vote By Telephone
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