Prepared by R.R. Donnelley Financial -- PIMCO Variable Insurance Trust

Share Class

Institutional

Administrative

497 1 d497.htm PIMCO VARIABLE INSURANCE TRUST Prepared by R.R. Donnelley Financial -- PIMCO Variable Insurance Trust

PIMCO Funds Prospectus

PIMCO

Variable

Insurance

Trust

May 1, 2002

Share Classes

^Ins^{Institutional}

^Adm^{Administrative}


SHORT DURATION BOND PORTFOLIOS
Money Market Portfolio Short-Term Portfolio Low Duration Portfolio

INTERMEDIATE DURATION BOND PORTFOLIOS
Real Return Portfolio Total Return Portfolio Total Return Portfolio II High Yield Portfolio

LONG DURATION BOND PORTFOLIOS
Long-Term U.S. Government Portfolio

INTERNATIONAL BOND PORTFOLIOS
Global Bond Portfolio Foreign Bond Portfolio Emerging Markets Bond Portfolio

STOCK AND BOND PORTFOLIOS
Strategic Balanced Portfolio

STOCK PORTFOLIOS
StocksPLUS Growth and Income Portfolio
This cover is not part of the Prospectus

Prospectus

PIMCO Variable Insurance Trust

Shares Classes Institutional and Administrative

This Prospectus describes 13 separate investment portfolios (the “Portfolios”), offered by the PIMCO Variable Insurance Trust (the “Trust”). The Portfolios provide access to the professional investment management services offered by Pacific Investment Management Company LLC (“PIMCO”). The investments made by the Portfolios at any given time are not expected to be the same as those made by other mutual funds for which PIMCO acts as investment adviser, including mutual funds with investment objectives and strategies similar to those of the Portfolios. Accordingly, the performance of the Portfolios can be expected to vary from that of the other mutual funds.

This Prospectus explains what you should know about the Portfolios before you invest. Please read it carefully.

Shares of the Portfolios currently are sold to segregated asset accounts (“Separate Accounts”) of insurance companies that fund variable annuity contracts and variable life insurance policies (“Variable Contracts”). Assets in the Separate Account are invested in shares of the Portfolios in accordance with allocation instructions received from owners of the Variable Contracts (“Variable Contract Owners”). Variable Contract Owners do not deal directly with the Portfolios to purchase or redeem shares. The allocation rights of Variable Contract Owners are described in the accompanying Separate Account prospectus. Shares of the Portfolios also may be sold to qualified pension and retirement plans outside of the separate account context.

This Prospectus should be read in conjunction with the prospectus of the Separate Account. Both prospectuses should be read carefully and retained for future reference.

The Securities and Exchange Commission has not approved or disapproved these securities, or determined if this Prospectus is truthful or complete. Any representation to the contrary is a criminal offense.


1		PIMCO Variable Insurance Trust

Table of Contents

Summary Information		3
Portfolio Summaries		5
Money Market Portfolio		5
Short-Term Portfolio		7
Low Duration Portfolio		9
Real Return Portfolio		11
Total Return Portfolio		13
Total Return Portfolio II		15
High Yield Portfolio		17
Long-Term U.S. Government Portfolio		19
Global Bond Portfolio		21
Foreign Bond Portfolio		23
Emerging Markets Bond Portfolio		25
Strategic Balanced Portfolio		27
StocksPLUS Growth and Income Portfolio		29
Summary of Principal Risks		31
Management of the Portfolios		34
Investment Options		36
Purchases and Redemptions		37
How Portfolio Shares are Priced		38
Tax Consequences		39
Characteristics and Risks of Securities and Investment Techniques		39
Financial Highlights		49
Appendix A—Description of Securities Ratings		A-1


Prospectus		2

Summary Information

The table below compares certain investment characteristics of the Portfolios. Other important characteristics are described in the individual Portfolio Summaries beginning on page 5. Following the table are certain key concepts which are used throughout the Prospectus.

		Main Investments	Duration	Credit Quality(1)	Non-U.S. Dollar Denominated Securities(2)

Short Duration Bond Portfolios	Money Market	Money market instruments	£ 90 days dollar- weighted average maturity	Min 95% Aaa or Prime 1; £ 5% Aa or Prime 2	0%

	Short-Term	Money market instruments and short maturity fixed income securities	0-1 year	B to Aaa; max 10% below Baa	0-5%(3)

	Low Duration	Short maturity fixed income securities	1-3 years	B to Aaa; max 10% below Baa	0-20%(3)

Intermediate Duration Bond Portfolio	Real Return	Inflation-indexed fixed income securities	+/- 2 years of its Index	B to Aaa; max 10% below Baa	0-20%(3)

	Total Return	Intermediate maturity fixed income securities	3-6 years	B to Aaa; max 10% below Baa	0-20%(3)

	Total Return II	Intermediate maturity fixed income securities with quality and non-U.S. issuer restrictions	3-6 years	Baa to Aaa	0%

	High Yield	Higher yielding fixed income securities	2-6 years	B to Aaa; min 80% below Baa	0-15%(4)

Long Duration Bond Portfolios	Long-Term U.S. Government	Long-term maturity fixed income securities	³ 8 years	A to Aaa	0%

International Bond Portfolios	Global Bond	U.S. and non-U.S. intermediate maturity fixed income securities	3-7 years	B to Aaa; max 10% below Baa	25-75%(5)

	Foreign Bond	Intermediate maturity hedged non-U.S. fixed income securities	3-7 years	B to Aaa; max 10% below Baa	³ 85%(5)

	Emerging Markets Bond	Emerging market fixed income securities	0-8 years	Max 15% below B	³ 80%(5)

Stock and Bond Portfolios	Strategic Balanced	45-75% in the StocksPLUS Growth and Income Portfolio; 25-55% in the Total Return Portfolio	0-6 years(6)	B to Aaa; max 10% below Baa(6)	0-20%(3)(6)

Stock Portfolios	Stocks PLUS Growth and Income	S&P 500 stock index derivatives backed by a portfolio of short-term fixed-income securities	0-1 year	B to Aaa; max 10% below Baa	0-20%(3)

(1)

As rated by Moody’s Investors Service, Inc. (“Moody’s”), or equivalently rated by Standard & Poor’s Ratings Services (“S&P”), or if unrated, determined by PIMCO to be of comparable quality.

(2)

Each Portfolio (except the Total Return II and Long-Term U.S. Government Portfolios) may invest beyond this limit in U.S. dollar-denominated securities.

(3)

The percentage limitation relates to non-U.S. dollar-denominated securities.

(4)

The percentage limitation relates to euro-denominated securities.

(5)

The percentage limitation relates to securities of foreign issuers denominated in any currency.

(6)

The Portfolio does not invest in securities directly, but in other PIMCO Portfolios with these characteristics.


3		PIMCO Variable Insurance Trust

Summary Information (continued)

Fixed Income Instruments

The “Fixed Income Portfolios” are the Money Market, Short-Term, Low Duration, Real Return, Total Return, Total Return II, High Yield, Long-Term U.S. Government, Global Bond, Foreign Bond and Emerging Markets Bond Portfolios. Each of the Fixed Income Portfolios differs from the others primarily in the length of the Portfolio’s duration or the proportion of its investments in certain types of fixed income securities. “Fixed Income Instruments,” as used in this Prospectus, includes:

• securities issued or guaranteed by the U.S. Government, its agencies or government-sponsored enterprises (“U.S. Government Securities”);

• corporate debt securities of U.S. and non-U.S. issuers, including convertible securities and corporate commercial paper;

• mortgage-backed and other asset-backed securities;

• inflation-indexed bonds issued both by governments and corporations;

• structured notes, including hybrid or “indexed” securities, event-linked bonds and loan participations;

• delayed funding loans and revolving credit facilities;

• bank certificates of deposit, fixed time deposits and bankers’ acceptances;

• repurchase agreements and reverse repurchase agreements;

• debt securities issued by states or local governments and their agencies, authorities and other government-sponsored enterprises;

• obligations of non-U.S. governments or their subdivisions, agencies and government-sponsored
enterprises; and

• obligations of international agencies or supranational entities.

Duration

Duration is a measure of the expected life of a fixed income security that is used to determine the sensitivity of a security’s price to changes in interest rates. The longer a security’s duration, the more sensitive it will be to changes in interest rates. Similarly, a Portfolio with a longer average portfolio duration will be more sensitive to changes in interest rates than a Portfolio with a shorter average portfolio duration.

Credit Ratings

In this Prospectus, references are made to credit ratings of debt securities which measure an issuer’s expected ability to pay principal and interest on time. Credit ratings are determined by rating organizations, such as S&P or Moody’s. The following terms are generally used to describe the credit quality of debt securities depending on the security’s credit rating or, if unrated, credit quality as determined by PIMCO:

• high quality

• investment grade

• below investment grade (“high yield securities” or “junk bonds”)

For a further description of credit ratings, see “Appendix A—Description of Securities Ratings.”

Portfolio Descriptions, Performance and Fees

The Portfolios provide a broad range of investment choices. The following summaries identify each Portfolio’s investment objective, principal investments and strategies, principal risks, performance information and fees and expenses. A more detailed “Summary of Principal Risks” describing principal risks of investing in the Portfolios begins after the Portfolio Summaries. Investors should be aware that the investments made by a Portfolio and the results achieved by a Portfolio at any given time are not expected to be the same as those made by other mutual funds for which PIMCO acts as investment adviser, including mutual funds with names, investment objectives and policies similar to the Portfolios.

It is possible to lose money on investments in the Portfolios.

An investment in a Portfolio is not a deposit of a bank and is not guaranteed or insured by the Federal Deposit Insurance Corporation or any other government agency.


Prospectus		4

PIMCO Money Market Portfolio

Principal

Investments and

Strategies

Investment Objective

Seeks maximum current income, consistent with preservation of capital and daily liquidity

Portfolio Focus

Money market instruments

Average Portfolio Maturity

£ 90 days dollar-weighted

average maturity

Credit Quality

Minimum 95% rated Aaa or Prime 1;

£ 5% Aa or Prime 2

Dividend Frequency

Declared daily and distributed monthly

The Portfolio seeks to achieve its investment objective by investing at least 95% of its total assets in a diversified portfolio of money market securities that are in the highest rating category for short-term obligations. The Portfolio also may invest up to 5% of its total assets in money market securities that are in the second-highest rating category for short-term obligations. The Portfolio may only invest in U.S. dollar-denominated securities that mature in 397 days or fewer from the date of purchase. The dollar-weighted average portfolio maturity of the Portfolio may not exceed 90 days. The Portfolio attempts to maintain a stable net asset value of $1.00 per share, although there is no assurance that it will be successful in doing so.

The Portfolio may invest in the following: obligations of the U.S. Government (including its agencies and government-sponsored enterprises); short-term corporate debt securities of domestic and foreign corporations; obligations of domestic and foreign commercial banks, savings banks, and savings and loan associations; and commercial paper. The Portfolio may invest more than 25% of its total assets in securities or obligations issued by U.S. banks. The Portfolio may lend its portfolio securities to brokers, dealers and other financial institutions in order to earn income.

The Portfolio’s investments will comply with applicable rules governing the quality, maturity and diversification of securities held by money market funds.

Principal Risks

An investment in the Portfolio is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Portfolio seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Portfolio. Among the principal risks of investing in the Portfolio, which could adversely affect its net asset value, yield and total return, are:

• Interest Rate Risk

• Credit Risk

• Management Risk

• Market Risk

• Issuer Risk

Please see “Summary of Principal Risks” following the Portfolio Summaries for a description of these and other risks of investing in the Portfolio.

Performance Information


5		PIMCO Variable Insurance Trust

PIMCO Money Market Portfolio (continued)

Calendar Year Total Returns — Administrative Class





	Highest and Lowest Quarter Returns
	(for periods shown in the bar chart)

	Highest (4th Qtr. ’00)	1.60%

	Lowest (4th Qtr. ’01)	0.56%
Calendar Year End (through 12/31)

Average Annual Total Returns (for periods ended 12/31/01)

	1 Year	Since Inception (4/10/00)(2)

Institutional Class	3.99%	5.00%

Salomon Smith Barney 3-Month U.S. Treasury Bill Index(1)	4.09%	4.95%


	1 Year	Since Inception (9/30/99)

Administrative Class	3.83%	4.95%

Salomon Smith Barney 3-Month U.S. Treasury Bill Index(1)	4.09%	5.02%

(1)

The Salomon 3-Month Treasury Bill Index is an unmanaged index representing monthly return equivalents of yield averages of the last 3 month Treasury Bill issues. It is not possible to invest directly in the index.

(2)

The Institutional Class shares commenced operations on 4/10/00. Index comparisons began on 3/31/00.

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold Institutional Class or Administrative Class shares of the Portfolio and do not reflect Variable Contract fees and expenses:

Shareholder Fees (fees paid directly from your investment)

None

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets)

Share Class	Advisory Fees	Service Fees	Other Expenses	Total Annual Portfolio Operating Expenses	Expense Reduction(3)	Net Portfolio Operating Expenses

Institutional	0.15%	None	0.20%(1)	0.35%	0.00%	0.35%

Administrative	0.15%	0.15%	0.21%(2)	0.51%	(0.01%)	0.50%

(1) “Other Expenses” reflect a 0.20% administrative fee. (2) “Other Expenses” reflect a 0.20% administrative fee and 0.01% representing the class’ pro rata Trustees’ fees. (3) PIMCO has contractually agreed to reduce total annual portfolio operating expenses for the Institutional and Administrative Class shares to the extent they would exceed, due to the payment of organizational expenses and Trustees’ fees, 0.35% and 0.50%, respectively, of average daily net assets. Under the Expense Limitation Agreement, PIMCO may recoup these waivers and reimbursements in future periods, not exceeding three years, provided total expenses, including such recoupment, do not exceed the annual expense limit. Examples. The Examples are intended to help you compare the cost of investing in Institutional Class or Administrative Class shares of the Portfolio with the costs of investing in other mutual funds. The Examples assume that you invest $10,000 in the noted class of shares for the time periods indicated, and then redeem all your shares at the end of those periods. The Examples also assume that your investment has a 5% return each year, the reinvestment of all dividends and distributions, and that the Portfolio’s operating expenses remain the same. Although your actual costs may be higher or lower, the Examples show what your costs would be based on these assumptions.
Share Class	Year 1	Year 3	Year 5	Year 10

Institutional	$36	$113	$197	$443

Administrative	51	163	284	640


Prospectus		6

PIMCO Short-Term Portfolio

Principal

Investments and Strategies

Investment Objective

Seeks maximum current income, consistent with preservation of

capital and daily liquidity

Portfolio Focus

Money market instruments and

short maturity fixed income

securities

Average Portfolio Duration

0-1 year

Credit Quality

B to Aaa; maximum 10% below Baa

Dividend Frequency

Declared daily and distributed monthly

The Portfolio seeks to achieve its investment objective by investing under normal circumstances at least 65% of its assets in a diversified portfolio of Fixed Income Instruments of varying maturities. The average portfolio duration of this Portfolio will vary based on PIMCO’s forecast for interest rates and will normally not exceed one year. For point of reference, the dollar-weighted average portfolio maturity of this Portfolio is normally not expected to exceed three years.

The Portfolio invests primarily in investment grade debt securities, but may invest up to 10% of its assets in high yield securities (“junk bonds”) rated B or higher by Moody’s or S&P, or, if unrated, determined by PIMCO to be of comparable quality. The Portfolio may invest up to 5% of its assets in securities denominated in foreign currencies, and may invest beyond this limit in U.S. dollar-denominated securities of foreign issuers. The Portfolio will normally hedge at least 75% of its exposure to foreign currency to reduce the risk of loss due to fluctuations in currency exchange rates.

Principal Risks

Among the principal risks of investing in the Portfolio, which could adversely affect its net asset value, yield and total return, are:

• Interest Rate Risk

• Credit Risk

• Market Risk

• Issuer Risk

• Derivatives Risk

• Mortgage Risk

• Leveraging Risk

• Management Risk

Please see “Summary of Principal Risks” following the Portfolio Summaries for a description of these and other risks of investing in the Portfolio.

Performance Information


7		PIMCO Variable Insurance Trust

PIMCO Short-Term Portfolio (continued)

Calendar Year Total Returns — Administrative Class



	Highest and Lowest Quarter Returns
	(for periods shown in the bar chart)

	Highest (3rd Qtr. ’01)	2.37%

	Lowest (2nd Qtr. ’01)	0.93%
Calendar Year End (through 12/31)

Average Annual Total Returns (for periods ended 12/31/01)

	1 Year	Since Inception (4/28/00)(2)

Institutional Class	6.59%	6.73%

Salomon Smith Barney 3-Month U.S. Treasury Bill Index(1)	4.09%	4.91%


	1 Year	Since Inception (9/30/99)

Administrative Class	6.45%	6.31%

Salomon Smith Barney 3-Month U.S. Treasury Bill Index(1)	4.09%	5.02%

(1)

(2)

The Institutional Class shares commenced operations on 4/28/00. Index comparisons began on 4/30/00.

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold Institutional Class or Administrative Class shares of the Portfolio and do not reflect Variable Contract fees and expenses:

Shareholder Fees (fees paid directly from your investment)

None

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets)

Share Class	Advisory Fees	Service Fees	Other Expenses	Total Annual Portfolio Operating Expenses	Expense Reduction(3)	Net Portfolio Operating Expenses

Institutional	0.25%	None	0.23%(1)	0.48%	(0.01%)	0.47%(4)

Administrative	0.25%	0.15%	0.22%(2)	0.62%	(0.01%)	0.61%(5)

(1) “Other Expenses” reflect a 0.20% administrative fee, 0.01% representing the class’ pro rata Trustees’ fees, and 0.02% interest expense. Interest expense is generally incurred as a result of investment management activities. (2) “Other Expenses” reflect a 0.20% administrative fee, 0.01% representing the class’ pro rata Trustees’ fees, and 0.01% interest expense. Interest expense is generally incurred as a result of investment management activities. (3) PIMCO has contractually agreed to reduce total annual portfolio operating expenses for the Institutional and Administrative Class shares to the extent they would exceed, due to the payment of organizational expenses and Trustees’ fees, 0.45% and 0.60%, respectively, of average daily net assets. Under the Expense Limitation Agreement, PIMCO may recoup these waivers and reimbursements in future periods, not exceeding three years, provided total expenses, including such recoupment, do not exceed the annual expense limit. (4) Ratio of net expenses to average net assets excluding interest expense is 0.45%. (5) Ratio of net expenses to average net assets excluding interest expense is 0.60%. Examples. The Examples are intended to help you compare the cost of investing in Institutional Class or Administrative Class shares of the Portfolio with the costs of investing in other mutual funds. The Examples assume that you invest $10,000 in the noted class of shares for the time periods indicated, and then redeem all your shares at the end of those periods. The Examples also assume that your investment has a 5% return each year, the reinvestment of all dividends and distributions, and that the Portfolio’s operating expenses remain the same. lthough your actual costs may be higher or lower, the Examples show what your costs would be based on these assumptions.

Share Class	Year 1	Year 3	Year 5	Year 10

Institutional	$48	$153	$268	$603

Administrative	62	198	345	773


Prospectus		8

PIMCO Low Duration Portfolio

Principal

Investments and Strategies

Investment Objective

Seeks maximum total return, consistent with preservation of

capital and prudent investment management

Portfolio Focus

Short maturity fixed income

securities

Average Portfolio Duration

1-3 years

Credit Quality

B to Aaa; maximum 10% below Baa

Dividend Frequency

Declared daily and distributed monthly

The Portfolio invests primarily in investment grade debt securities, but may invest up to 10% of its assets in high yield securities (“junk bonds”) rated B or higher by Moody’s or S&P, or, if unrated, determined by PIMCO to be of comparable quality. The Portfolio may invest up to 20% of its assets in securities denominated in foreign currencies, and may invest beyond this limit in U.S. dollar-denominated securities of foreign issuers. The Portfolio will normally hedge at least 75% of its exposure to foreign currency to reduce the risk of loss due to fluctuations in currency exchange rates.

The Portfolio may invest all of its assets in derivative instruments, such as options, futures contracts or swap agreements, or in mortgage- or asset-backed securities. The Portfolio may lend its portfolio securities to brokers, dealers and other financial institutions to earn income. The Portfolio may, without limitation, seek to obtain market exposure to the securities in which it primarily invests by entering into a series of purchase and sale contracts or by using other investment techniques (such as buy backs or dollar rolls). The “total return” sought by the Portfolio consists of income earned on the Portfolio’s investments, plus capital appreciation, if any, which generally arises from decreases in interest rates or improving credit fundamentals for a particular sector or security.

Principal Risks

Among the principal risks of investing in the Portfolio, which could adversely affect its net asset value, yield and total return, are:

• Interest Rate Risk

• Credit Risk

• Market Risk

• Issuer Risk

• Derivatives Risk

• Liquidity Risk

• Mortgage Risk

• Foreign Investment Risk

• Currency Risk

• Leveraging Risk

• Management Risk

Please see “Summary of Principal Risks” following the Portfolio Summaries for a description of these and other risks of investing in the Portfolio.

Performance Information


9		PIMCO Variable Insurance Trust

PIMCO Low Duration Portfolio (continued)

Calendar Year Total Returns — Administrative Class


	Highest and Lowest Quarter Returns
	(for periods shown in the bar chart)

	Highest (3rd Qtr. ’01)	4.23%

	Lowest (4th Qtr. ’01)	-0.44%
Calendar Year End (through 12/31)

Average Annual Total Returns (for periods ended 12/31/01)

	1 Year	Since Inception (4/10/00)(3)

Institutional Class	7.77%	8.09%

Merrill Lynch 1-3 Year Treasury Index(1)	8.30%	8.58%


	1 Year	Since Inception (2/16/99)(2)

Administrative Class	7.61%	6.10%

Merrill Lynch 1-3 Year Treasury Index(1)	8.30%	6.84%

(1)

The Merrill Lynch 1-3 Year Treasury Index is an unmanaged index of U.S. Treasury obligations having maturities from one to 2.99 years. It is not possible to invest directly in the index.

(2)

The Administrative Class shares commenced operations on 2/16/99. Index comparisons began on 2/28/99.

(3)

The Institutional Class shares commenced operations on 4/10/00. Index comparisons began on 3/31/00.

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold Institutional Class or Administrative Class shares of the Portfolio and do not reflect Variable Contract fees and expenses:

Shareholder Fees (fees paid directly from your investment)

None

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets)

Share Class	Advisory Fees	Service Fees	Other Expenses	Total Annual Portfolio Operating Expenses	Expense Reduction(3)	Net Portfolio Operating Expenses

Institutional	0.25%	None	0.30%(1)	0.55%	0.00%	0.55%(4)

Administrative	0.25%	0.15%	0.30%(2)	0.70%	(0.01%)	0.69%(5)

(1) “Other Expenses” reflect a 0.25% administrative fee and 0.05% interest expense. Interest expense is generally incurred as a result of investment management activities. (2) “Other Expenses” reflect a 0.25% administrative fee, 0.01% representing the class’ pro rata Trustees’ fees, and 0.04% interest expense. Interest expense is generally incurred as a result of investment management activities. (3) PIMCO has contractually agreed to reduce total annual portfolio operating expenses for the Institutional and Administrative Class shares to the extent they would exceed, due to the payment of organizational expenses and Trustees’ fees, 0.50% and 0.65%, respectively, of average daily net assets. Under the Expense Limitation Agreement, PIMCO may recoup these waivers and reimbursements in future periods, not exceeding three years, provided total expenses, including such recoupment, do not exceed the annual expense limit. (4) Ratio of net expenses to average net assets excluding interest expense is 0.50%. (5) Ratio of net expenses to average net assets excluding interest expense is 0.65%.
Examples. The Examples are intended to help you compare the cost of investing in Institutional Class or Administrative Class shares of the Portfolio with the costs of investing in other mutual funds. The Examples assume that you invest $10,000 in the noted class of shares for the time periods indicated, and then redeem all your shares at the end of those periods. The Examples also assume that your investment has a 5% return each year, the reinvestment of all dividends and distributions, and that the Portfolio’s operating expenses remain the same. Although your actual costs may be higher or lower, the Examples show what your costs would be based on these assumptions.

Share Class	Year 1	Year 3	Year 5	Year 10

Institutional	$56	$176	$307	$689

Administrative	70	223	389	870


Prospectus		10

PIMCO Real Return Portfolio

Principal

Investments and Strategies

Investment Objective

Seeks maximum real return,

consistent with preservation of

real capital and prudent

investment management

Portfolio Focus

Inflation indexed fixed income

securities

Average Portfolio Duration

± 2 years of its Index

Credit Quality

B to Aaa; maximum 10% below Baa

Dividend Frequency

Declared daily and distributed monthly

The Portfolio seeks its investment objective by investing under normal circumstances at least 65% of its assets in inflation-indexed bonds of varying maturities issued by the U.S. and non-U.S. governments, their agencies or government-sponsored enterprises and corporations. Inflation-indexed bonds are fixed income securities that are structured to provide protection against inflation. The value of the bond’s principal or the interest income paid on the bond is adjusted to track changes in an official inflation measure. The U.S. Treasury uses the Consumer Price Index for Urban Consumers as the inflation measure. Inflation-indexed bonds issued by a foreign government are generally adjusted to reflect a comparable inflation index, calculated by that government. “Real return” equals total return less the estimated cost of inflation, which is typically measured by the change in an official inflation measure. The average portfolio duration of this Portfolio normally varies within two years (plus or minus) of the duration of the Lehman Global Real: U.S. TIPS Index, which as of February 15, 2002 was 6.1 years.

The Portfolio invests primarily in investment grade securities, but may invest up to 10% of its assets in high yield securities (“junk bonds”) rated B or higher by Moody’s or S&P, or, if unrated, determined by PIMCO to be of comparable quality. The Portfolio also may invest up to 20% of its assets in securities denominated in foreign currencies, and may invest beyond this limit in U.S. dollar denominated securities of foreign issuers. The Portfolio will normally hedge at least 75% of its exposure to foreign currency to reduce the risk of loss due to fluctuations in currency exchange rates. The Portfolio is non-diversified, which means that it may concentrate its assets in a smaller number of issuers than a diversified Portfolio.

Principal Risks

Among the principal risks of investing in the Portfolio, which could adversely affect its net asset value, yield and total return, are:

• Interest Rate Risk

• Credit Risk

• Market Risk

• Issuer Risk

• Derivatives Risk

• Liquidity Risk

• Issuer Non-Diversification Risk

• Mortgage Risk

• Foreign Investment Risk

• Currency Risk

• Leveraging Risk

• Management Risk

Please see “Summary of Principal Risks” following the Portfolio Summaries for a description of these and other risks of investing in the Portfolio.

Performance Information


11		PIMCO Variable Insurance Trust

PIMCO Real Return Portfolio (continued)

Calendar Year Total Returns — Administrative Class



	Highest and Lowest Quarter Returns
	(for periods shown in the bar chart)

	Highest (1st Qtr. ’01)	5.20%

	Lowest (4th Qtr. ’01)	-1.21%
Calendar Year End (through 12/31)

Average Annual Total Returns (for periods ended 12/31/01)

	1 Year	Since Inception (4/10/00)(2)

Institutional Class	9.79%	10.81%

Lehman Global Real: U.S. TIPS Index(1)	7.90%	9.40%


	1 Year	Since Inception (9/30/99)

Administrative Class	9.63%	10.43%

Lehman Global Real: U.S. TIPS Index(1)	7.90%	9.27%

(1)

The Lehman Global Real: U.S. TIPS Index is an unmanaged index consisting of the U.S. Treasury Inflation Protected Securities market. It is not possible to invest directly in the index.

(2)

The Institutional Class shares commenced operations on 4/10/00. Index comparisons began on 3/31/00.

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold Institutional Class or Administrative Class shares of the Portfolio and do not reflect Variable Contract fees and expenses:

Shareholder Fees (fees paid directly from your investment)

None

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets)

Share Class	Advisory Fees	Service Fees	Other Expenses	Total Annual Portfolio Operating Expenses	Expense Reduction(3)	Net Portfolio Operating Expenses

Institutional	0.25%	None	0.25%(1)	0.50%	0.00%	0.50%

Administrative	0.25%	0.15%	0.27%(2)	0.67%	(0.01%)	0.66%(4)

(1) “Other Expenses” reflect a 0.25% administrative fee. (2) “Other Expenses” reflect a 0.25% administrative fee, 0.01% representing the class’ pro rata Trustees’ fees, and 0.01% interest expense. Interest expense is generally incurred as a result of investment management activities. (3) PIMCO has contractually agreed to reduce total annual portfolio operating expenses for the Institutional and Administrative Class shares to the extent they would exceed, due to the payment of organizational expenses and Trustees’ fees, 0.50% and 0.65%, respectively, of average daily net assets. Under the Expense Limitation Agreement, PIMCO may recoup these waivers and reimbursements in future periods, not exceeding three years, provided total expenses, including such recoupment, do not exceed the annual expense limit. (4) Ratio of net expenses to average net assets excluding interest expense is 0.65%.
Examples. The Examples are intended to help you compare the cost of investing in Institutional Class or Administrative Class shares of the Portfolio with the costs of investing in other mutual funds. The Examples assume that you invest $10,000 in the noted class of shares for the time periods indicated, and then redeem all your shares at the end of those periods. The Examples also assume that your investment has a 5% return each year, the reinvestment of all dividends and distributions, and that the Portfolio’s operating expenses remain the same. Although your actual costs may be higher or lower, the Examples show what your costs would be based on these assumptions.

Share Class	Year 1	Year 3	Year 5	Year 10

Institutional	$51	$160	$280	$628

Administrative	67	213	372	834


Prospectus		12

PIMCO Total Return Portfolio

Principal

Investments and Strategies

Investment Objective

Seeks maximum total return, consistent with preservation of

capital and prudent investment management

Portfolio Focus

Intermediate maturity fixed

income securities

Average Portfolio Duration

3-6 years

Credit Quality

B to Aaa; maximum 10% below Baa

Dividend Frequency

Declared daily and distributed monthly

The Portfolio invests primarily in investment grade debt securities, but may invest up to 10% of its assets in high yield securities (“junk bonds”) rated B or higher by Moody’s or S&P or, if unrated, determined by PIMCO to be of comparable quality. The Portfolio may invest up to 20% of its assets in securities denominated in foreign currencies, and may invest beyond this limit in U.S. dollar-denominated securities of foreign issuers. The Portfolio will normally hedge at least 75% of its exposure to foreign currency to reduce the risk of loss due to fluctuations in currency exchange rates.

Principal Risks

Among the principal risks of investing in the Portfolio, which could adversely affect its net asset value, yield and total return, are:

• Interest Rate Risk

• Credit Risk

• Market Risk

• Issuer Risk

• Derivatives Risk

• Liquidity Risk

• Mortgage Risk

• Foreign Investment Risk

• Currency Risk

• Leveraging Risk

• Management Risk

Please see “Summary of Principal Risks” following the Portfolio Summaries for a description of these and other risks of investing in the Portfolio.

Performance Information


13		PIMCO Variable Insurance Trust

PIMCO Total Return Portfolio (continued)

Calendar Year Total Returns — Administrative Class



	Highest and Lowest Quarter Returns
	(for periods shown in the bar chart)

	Highest (3rd Qtr. ‘98)	5.43%

	Lowest (2nd Qtr. ‘99)	-0.94%
Calendar Year End (through 12/31)

Average Annual Total Returns (for periods ended 12/31/01)

	1 Year	Since Inception (4/10/00)(2)

Institutional Class	8.53%	9.54%

Lehman Aggregate Bond Index(1)	8.44%	10.14%


	1 Year	Since Inception (12/31/97)

Administrative Class	8.37%	6.55%

Lehman Aggregate Bond Index(1)	8.44%	6.88%

(1)

The Lehman Brothers Aggregate Bond Index is an unmanaged index of investment grade, U.S. dollar-denominated fixed income securities of domestic issuers having a maturity greater than one year. It is not possible to invest directly in the index.

(2)

The Institutional Class shares commenced operations on 4/10/00. Index comparisons began on 3/31/00.

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold Institutional Class or Administrative Class shares of the Portfolio and do not reflect Variable Contract fees and expenses:

Shareholder Fees (fees paid directly from your investment)

None

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets)

Share Class	Advisory Fees	Service Fees	Other Expenses	Total Annual Portfolio Operating Expenses	Expense Reduction(3)	Net Portfolio Operating Expenses

Institutional	0.25%	None	0.25%(1)	0.50%	0.00%	0.50%

Administrative	0.25%	0.15%	0.26%(2)	0.66%	(0.01%)	0.65%

(1)

“Other Expenses” reflect a 0.25% administrative fee.

(2)

“Other Expenses” reflect a 0.25% administrative fee and 0.01% representing the class’ pro rata Trustees’ fees.

(3)

PIMCO has contractually agreed to reduce total annual portfolio operating expenses for the Institutional and Administrative Class shares to the extent they would exceed, due to the payment of organizational expenses and Trustees’ fees, 0.50% and 0.65%, respectively, of average daily net assets. Under the Expense Limitation Agreement, PIMCO may recoup these waivers and reimbursements in future periods, not exceeding three years, provided total expenses, including such recoupment, do not exceed the annual expense limit.

Examples. The Examples are intended to help you compare the cost of investing in Institutional Class or Administrative Class shares of the Portfolio with the costs of investing in other mutual funds. The Examples assume that you invest $10,000 in the noted class of shares for the time periods indicated, and then redeem all your shares at the end of those periods. The Examples also assume that your investment has a 5% return each year, the reinvestment of all dividends and distributions, and that the Portfolio’s operating expenses remain the same. Although your actual costs may be higher or lower, the Examples show what your costs would be based on these assumptions.

Share Class	Year 1	Year 3	Year 5	Year 10

Institutional	$51	$160	$280	$628

Administrative	66	210	367	822


Prospectus		14

PIMCO Total Return Portfolio II

Principal

Investments and Strategies

Investment Objective

Seeks maximum total return, consistent with preservation of

capital and prudent investment management

Portfolio Focus

Intermediate maturity fixed income securities

Average Portfolio Duration

3-6 years

Credit Quality

Baa to Aaa

Dividend Frequency

Declared daily and distributed monthly

The Portfolio seeks to achieve its investment objective by investing under normal circumstances at least 65% of its assets in a diversified portfolio of Fixed Income Instruments of varying maturities. The average portfolio duration of this Portfolio normally varies within a three- to six-year time frame based on PIMCO’s forecast for interest rates. The Portfolio may invest only in investment grade U.S. dollar denominated securities of U.S. issuers that are rated at least Baa by Moody’s or BBB by S&P, or, if unrated, determined by PIMCO to be of comparable quality.

Principal Risks

Among the principal risks of investing in the Portfolio, which could adversely affect its net asset value, yield and total return, are:

• Interest Rate Risk

• Credit Risk

• Market Risk

• Issuer Risk

• Derivatives Risk

• Mortgage Risk

• Leveraging Risk

• Liquidity Risk

• Management Risk

Please see “Summary of Principal Risks” following the Portfolio Summaries for a description of these and other risks of investing in the Portfolio.

Performance Information


15		PIMCO Variable Insurance Trust

PIMCO Total Return Portfolio II (continued)

Calendar Year Total Returns — Administrative Class



	Highest and Lowest Quarter Returns
	(for periods shown in the bar chart)

	Highest (3rd Qtr. ‘01)	6.87%

	Lowest (4th Qtr. ‘01)	-0.49%
Calendar Year End (through 12/31)

Average Annual Total Returns (for periods ended 12/31/01)

	1 Year	Since Inception (4/10/00)(2)

Institutional Class	9.88%	10.08%

Lehman Brothers Aggregate Bond Index(1)	8.44%	10.14%


	1 Year	Since Inception (5/28/99)

Administrative Class	9.72%	8.60%

Lehman Brothers Aggregate Bond Index(1)	8.44%	7.76%

(1)

(2)

The Institutional Class shares commenced operations on 4/10/00. Index comparisons began on 3/31/00.

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold Institutional Class or Administrative Class shares of the Portfolio and do not reflect Variable Contract fees and expenses:

Shareholder Fees (fees paid directly from your investment)

None

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets)

Share Class	Advisory Fees	Service Fees	Other Expenses(1)	Total Annual Portfolio Operating Expenses	Expense Reduction(2)	Net Portfolio Operating Expenses

Institutional	0.25%	None	0.26%	0.51%	(0.01%)	0.50%

Administrative	0.25%	0.15%	0.26%	0.66%	(0.01%)	0.65%

(1) “Other Expenses” reflect a 0.25% administrative fee and 0.01% representing the class’ pro rata Trustees’ fees. (2) PIMCO has contractually agreed to reduce total annual portfolio operating expenses for the Institutional and Administrative Class shares to the extent they would exceed, due to the payment of organizational expenses and Trustees’ fees, 0.50% and 0.65%, respectively, of average daily net assets. Under the Expense Limitation Agreement, PIMCO may recoup these waivers and reimbursements in future periods, not exceeding three years, provided total expenses, including such recoupment, do not exceed the annual expense limit. Examples. The Examples are intended to help you compare the cost of investing in Institutional Class or Administrative Class shares of the Portfolio with the costs of investing in other mutual funds. The Examples assume that you invest $10,000 in the noted class of shares for the time periods indicated, and then redeem all your shares at the end of those periods. The Examples also assume that your investment has a 5% return each year, the reinvestment of all dividends and distributions, and that the Portfolio’s operating expenses remain the same. Although your actual costs may be higher or lower, the Examples show what your costs would be based on these assumptions.

Share Class	Year 1	Year 3	Year 5	Year 10

Institutional	$51	$163	$284	$640

Administrative	66	210	367	822


Prospectus		16

PIMCO High Yield Portfolio

Principal

Investments and Strategies

Investment Objective

Seeks maximum total return, consistent with preservation of capital and prudent investment management

Portfolio Focus

Higher yielding fixed income securities

Average Portfolio Duration

2-6 years

Credit Quality

B to Aaa; minimum 80% below Baa

Dividend Frequency

Declared daily and distributed monthly

The Portfolio seeks to achieve its investment objective by investing under normal circumstances at least 80% of its assets in a diversified portfolio of high yield securities (“junk bonds”) rated below investment grade but rated at least B by Moody’s or S&P, or, if unrated, determined by PIMCO to be of comparable quality. The remainder of the Portfolio’s assets may be invested in investment grade Fixed Income Instruments. The average portfolio duration of this Portfolio normally varies within a two- to six-year time frame based on PIMCO’s forecast for interest rates. The Portfolio may invest up to 15% of its assets in euro-denominated securities and may invest without limit in U.S. dollar-denominated securities of foreign issuers. The Portfolio normally will hedge at least 75% of its exposure to the euro to reduce the risk of loss due to fluctuations in currency exchange rates.

The Portfolio may invest up to 25% of its assets in derivative instruments, such as options, futures contracts or swap agreements. The Portfolio may invest all of its assets in mortgage- or asset-backed securities. The Portfolio may lend its portfolio securities to brokers, dealers, and other financial institutions to earn income. The Portfolio may, without limitation, seek to obtain market exposure to the securities in which it primarily invests by entering into a series of purchase and sale contracts or by using other investment techniques (such as buy backs or dollar rolls). The “total return” sought by the Portfolio consists of income earned on the Portfolio’s investments, plus capital appreciation, if any, which generally arises from decreases in interest rates or improving credit fundamentals for a particular sector or security.

Principal Risks

Among the principal risks of investing in the Portfolio, which could adversely affect its net asset value, yield and total return, are:

• Interest Rate Risk

• Credit Risk

• High Yield Risk

• Market Risk

• Issuer Risk

• Liquidity Risk

• Derivatives Risk

• Mortgage Risk

• Foreign Investment Risk

• Currency Risk

• Leveraging Risk

• Management Risk

Please see “Summary of Principal Risks” following the Portfolio Summaries for a description of these and other risks of investing in the Portfolio.

Performance Information

The top of the next page shows summary performance information for the Portfolio in a bar chart and an Average Annual Total Returns table. The information provides some indication of the risks of investing in the Portfolio by showing changes in its performance from year to year and by showing how the Portfolio’s average annual returns compare with the returns of a broad-based securities market index. The bar chart and the information to its right show performance of the Portfolio’s Administrative Class Shares. The bar chart and table do not reflect Variable Contract fees and expenses. If they did, performance would have been lower. No performance information has been provided for Institutional Class shares because they were not offered prior to the date of this Prospectus. For the same periods, Institutional Class shares would have had higher annual returns than Administrative Class shares, even though they are invested in the same portfolio of securities, because Institutional Class shares pay lower total annual operating expenses. Past performance is no guarantee of future results.


17		PIMCO Variable Insurance Trust

PIMCO High Yield Portfolio (continued)

Calendar Year Total Returns — Administrative Class



	Highest and Lowest Quarter Returns
	(for periods shown in the bar chart)

	Highest (4th Qtr. ‘01)	4.77%

	Lowest (1st Qtr. ‘00)	-2.67%
Calendar Year End (through 12/31)

Average Annual Total Returns (for periods ended 12/31/01)

	1 Year	Portfolio Inception (04/30/98)

Administrative Class	2.35%	1.70%

Lehman Brothers BB U.S. High Yield Index(1)	10.16%	5.11%

Merrill Lynch U.S. High Yield BB-B Rated Index(2)	5.46%	1.23%

(1)

The Lehman Brothers BB U.S. High Yield Index, the Portfolio’s former benchmark index, is an unmanaged index comprised of various fixed income securities rated BB. It is not possible to invest directly in the Index.

(2)

The Merrill Lynch U.S. High Yield BB-B Rated Index, the Portfolio’s current benchmark index, is an unmanaged index of bonds rated BB and B by Moody’s or S&P. The Portfolio changed its benchmark index because the Merrill Lynch U.S. High Yield BB-B Rated Index more closely reflects the universe of securities in which the Portfolio invests. It is not possible to invest directly in the index.

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold Institutional Class or Administrative Class shares of the Portfolio and do not reflect Variable Contract fees and expenses:

Shareholder Fees (fees paid directly from your investment)

None

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets)

Share Class	Advisory Fees	Service Fees	Other Expenses	Total Annual Portfolio Operating Expenses	Expense Reduction(3)	Net Portfolio Operating Expenses

Institutional	0.25%	None	0.36%(1)	0.61%	(0.01%)	0.60%

Administrative	0.25%	0.15%	0.36%(2)	0.76%	(0.01%)	0.75%

(1) “Other Expenses” reflect a 0.35% administrative fee and 0.01% representing the class’ pro rata Trustees’ fees. (2) “Other Expenses” reflect a 0.35% administrative fee and 0.01% representing the class’ pro rata Trustees’ fees. (3) PIMCO has contractually agreed to reduce total annual portfolio operating expenses for the Institutional and Administrative Class shares to the extent they would exceed, due to the payment of organizational expenses and Trustees’ fees, 0.60% and 0.75%, respectively, of average daily net assets. Under the Expense Limitation Agreement, PIMCO may recoup these waivers and reimbursements in future periods, not exceeding three years, provided total expenses, including such recoupment, do not exceed the annual expense limit. Examples. The Examples are intended to help you compare the cost of investing in Institutional Class or Administrative Class shares of the Portfolio with the costs of investing in other mutual funds. The Examples assume that you invest $10,000 in the noted class of shares for the time periods indicated, and then redeem all your shares at the end of those periods. The Examples also assume that your investment has a 5% return each year, the reinvestment of all dividends and distributions, and that the Portfolio’s operating expenses remain the same. Although your actual costs may be higher or lower, the Examples show what your costs would be based on these assumptions.

Share Class	Year 1	Year 3	Year 5	Year 10

Institutional	$61	$194	$339	$761

Administrative	77	242	421	941


Prospectus		18

PIMCO Long-Term U.S. Government Portfolio

Principal

Investments and

Strategies

Investment Objective

Seeks maximum total return, consistent with preservation of capital and prudent investment management

Portfolio Focus

Long-term maturity fixed income securities

Average Portfolio Duration

³ 8 years

Credit Quality

A to Aaa

Dividend Frequency

Declared daily and distributed monthly

The Portfolio seeks to achieve its investment objective by investing under normal circumstances at least 80% of its assets in a diversified portfolio of fixed income securities that are issued or guaranteed by the U.S. Government, its agencies or government-sponsored enterprises (“U.S. Government Securities”). Assets not invested in U.S. Government Securities may be invested in other types of Fixed Income Instruments. The Portfolio also may obtain exposure to U.S. Government Securities through the use of futures contracts (including related options) with respect to such securities, and options on such securities, when PIMCO deems it appropriate to do so. While PIMCO may invest in derivatives at any time it deems appropriate, it will generally do so when it believes that U.S. Government Securities are overvalued relative to derivative instruments. This Portfolio will normally have a minimum average portfolio duration of eight years. For point of reference, the dollar-weighted average portfolio maturity of the Portfolio is normally expected to be more than ten years.

The Portfolio’s investments in Fixed Income Instruments are limited to those of investment grade U.S. dollar-denominated securities of U.S. issuers that are rated at least A by Moody’s or S&P, or, if unrated, determined by PIMCO to be of comparable quality. In addition, the Portfolio may only invest up to 10% of its assets in securities rated A by Moody’s or S&P, and may only invest up to 25% of its assets in securities rated Aa by Moody’s or AA by S&P.

The Portfolio may invest all of its assets in derivative instruments, such as options, futures contracts or swap agreements, or in mortgage-backed securities. The Portfolio may lend its portfolio securities to brokers, dealers and other financial institutions to earn income. The Portfolio may, without limitation, seek to obtain market exposure to the securities in which it primarily invests by entering into a series of purchase and sale contracts or by using other investment techniques (such as buy backs or dollar rolls). The “total return” sought by the Portfolio consists of income earned on the Portfolio’s investments, plus capital appreciation, if any, which generally arises from decreases in interest rates or improving credit fundamentals for a particular sector or security.

Principal Risks

Among the principal risks of investing in the Portfolio, which could adversely affect its net asset value, yield and total return, are:

• Interest Rate Risk

• Credit Risk

• Market Risk

• Issuer Risk

• Derivatives Risk

• Mortgage Risk

• Leveraging Risk

• Management Risk

Please see “Summary of Principal Risks” following the Portfolio Summaries for a description of these and other risks of investing in the Portfolio.

Performance Information


19		PIMCO Variable Insurance Trust

PIMCO Long-Term U.S. Government Portfolio (continued)

Calendar Year Total Returns — Administrative Class


	Highest and Lowest Quarter Returns
	(for periods shown in the bar chart)

	Highest (4th Qtr. ’00)		8.27%

	Lowest (2nd Qtr. ’01)	-	1.87%
Calendar Year End (through 12/31)

Average Annual Total Returns (for periods ended 12/31/01)

	1 Year	Since Inception (4/10/00)(2)

Institutional Class	6.03%	10.08%

Lehman Brothers Long-Term Treasury Index(1)	4.22%	8.84%


	1 Year	Since Inception (4/30/99)

Administrative Class	5.86%	8.00%

Lehman Brothers Long-Term Treasury Index(1)	4.22%	6.85%

(1)

The Lehman Long-Term Treasury Index is an unmanaged index of U.S. Treasury issues with maturities greater than 10 years. It is not possible to invest directly in the index.

(2)

The Institutional Class shares commenced operations on 4/10/00. Index comparisons began on 3/31/00.

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold Institutional Class or Administrative Class shares of the Portfolio and do not reflect Variable Contract fees and expenses:

Shareholder Fees (fees paid directly from your investment)

None

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets)

Share Class	Advisory Fees	Service Fees	Other Expenses	Total Annual Portfolio Operating Expenses	Expense Reduction(3)	Net Portfolio Operating Expenses

Institutional	0.25%	None	0.25%(1)	0.50%	0.00%	0.50%

Administrative	0.25%	0.15%	0.26%(2)	0.66%	(0.01%)	0.65%

(1) “Other Expenses” reflect a 0.25% administrative fee. (2) “Other Expenses” reflect a 0.25% administrative fee and 0.01% representing the class’ pro rata Trustees' fees. (3) PIMCO has contractually agreed to reduce total annual portfolio operating expenses for the Institutional and Administrative Class shares to the extent they would exceed, due to the payment of organizational expenses and Trustees’ fees, 0.50% and 0.65%, respectively, of average daily net assets. Under the Expense Limitation Agreement, PIMCO may recoup these waivers and reimbursements in future periods, not exceeding three years, provided total expenses, including such recoupment, do not exceed the annual expense limit. Examples. The Examples are intended to help you compare the cost of investing in Institutional Class or Administrative Class shares of the Portfolio with the costs of investing in other mutual funds. The Examples assume that you invest $10,000 in the noted class of shares for the time periods indicated, and then redeem all your shares at the end of those periods. The Examples also assume that your investment has a 5% return each year, the reinvestment of all dividends and distributions, and that the Portfolio’s operating expenses remain the same. Although your actual costs may be higher or lower, the Examples show what your costs would be based on these assumptions.


Share Class	Year 1	Year 3	Year 5	Year 10

Institutional	$51	$160	$280	$628

Administrative	66	210	367	822


Prospectus		20

PIMCO Global Bond Portfolio

Principal

Investments and Strategies

Investment Objective

Seeks maximum total return, consistent with preservation of

capital and prudent investment management

Portfolio Focus

U.S. and non-U.S. intermediate maturity fixed income securities

Average Portfolio Duration

3-7 years

Credit Quality

B to Aaa; maximum 10% below Baa

Dividend Frequency

Declared daily and distributed monthly

The Portfolio seeks to achieve its investment objective by investing under normal circumstances at least 80% of its assets in Fixed Income Instruments of issuers located in at least three countries (one of which may be the United States), which may be represented by futures contracts (including related options) with respect to such securities, and options on such securities. The Portfolio invests primarily in securities of issuers located in economically developed countries. Securities may be denominated in major foreign currencies, baskets of foreign currencies (such as the euro), or the U.S. dollar.

PIMCO selects the Portfolio’s foreign country and currency compositions based on an evaluation of various factors, including, but not limited to, relative interest rates, exchange rates, monetary and fiscal policies, trade and current account balances. Investments in the securities of issuers located outside the United States will normally vary between 25% and 75% of the Portfolio’s assets. The average portfolio duration of this Portfolio normally varies within a three- to seven-year time frame. The Portfolio invests primarily in investment grade debt securities, but may invest up to 10% of its assets in high yield securities (“junk bonds”) rated B or higher by Moody’s or S&P, or, if unrated, determined by PIMCO to be of comparable quality. The Portfolio is non-diversified, which means that it may concentrate its assets in a smaller number of issuers than a diversified Portfolio.

Principal Risks

Among the principal risks of investing in the Portfolio, which could adversely affect its net asset value, yield and total return, are:

• Interest Rate Risk

• Credit Risk

• Market Risk

• Issuer Risk

• Foreign Investment Risk

• Currency Risk

• Issuer Non-Diversification Risk

• Liquidity Risk

• Mortgage Risk

• Derivatives Risk

• Leveraging Risk

• Management Risk

Please see “Summary of Principal Risks” following the Portfolio Summaries for a description of these and other risks of investing in the Portfolio.

Performance Information

The Portfolio does not have a full calendar year of performance. Thus, no bar chart or annual returns table is included for this portfolio.


21		PIMCO Variable Insurance Trust

PIMCO Global Bond Portfolio (continued)

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold Institutional Class or Administrative Class shares of the Portfolio and do not reflect Variable Contract fees and expenses:

Shareholder Fees (fees paid directly from your investment)

None

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets)

Share Class	Advisory Fees	Service Fees	Other Expenses(1)	Total Annual Portfolio Operating Expenses	Expense Reduction(2)	Net Portfolio Operating Expenses

Institutional	0.25%	None	0.78%	1.03%	(0.28%)	0.75%

Administrative	0.25%	0.15%	0.78%	1.18%	(0.28%)	0.90%

(1) “Other Expenses”, which are based on estimated amounts for the initial fiscal year of the Portfolio, reflect a 0.50% administrative fee and 0.28% representing the class’ estimated organizational expenses and pro rata Trustees’ fees. (2) PIMCO has contractually agreed to reduce total annual portfolio operating expenses for the Institutional and Administrative Class shares to the extent they would exceed, due to the payment of organizational expenses and Trustees’ fees, 0.75% and 0.90%, respectively, of average daily net assets. Under the Expense Limitation Agreement, PIMCO may recoup these waivers and reimbursements in future periods, not exceeding three years, provided total expenses, including such recoupment, do not exceed the annual expense limit. Examples. The Examples are intended to help you compare the cost of investing in Institutional Class or Administrative Class shares of the Portfolio with the costs of investing in other mutual funds. The Examples assume that you invest $10,000 in the noted class of shares for the time periods indicated, and then redeem all your shares at the end of those periods. The Examples also assume that your investment has a 5% return each year, the reinvestment of all dividends and distributions, and that the Portfolio’s operating expenses remain the same. Although your actual costs may be higher or lower, the Examples show what your costs would be based on these assumptions.
Share Class			Year 1		Year 3

Institutional			$77		$300

Administrative			92		347


Prospectus		22

PIMCO Foreign Bond Portfolio

Principal

Investments and

Strategies

Investment Objective

Seeks maximum total return, consistent with preservation of

capital and prudent investment management

Portfolio Focus

Intermediate maturity hedged non-U.S. fixed income securities

Average Portfolio Duration

3-7 years

Credit Quality

B to Aaa; maximum 10% below Baa

Dividend Frequency

Declared daily and distributed monthly

The Portfolio seeks to achieve its investment objective by investing under normal circumstances at least 80% of its assets in Fixed Income Instruments of issuers located outside the United States, representing at least three foreign countries, which may be represented by futures contracts (including related options) with respect to such securities, and options on such securities. Such securities normally are denominated in major foreign currencies or baskets of foreign currencies (such as the euro). The Portfolio will normally hedge at least 75% of its exposure to foreign currency to reduce the risk of loss due to fluctuations in currency exchange rates.

PIMCO selects the Portfolio’s foreign country and currency compositions based on an evaluation of various factors, including, but not limited to, relative interest rates, exchange rates, monetary and fiscal policies, trade and current account balances. The average portfolio duration of this Portfolio normally varies within a three- to seven-year time frame. The Portfolio invests primarily in investment grade debt securities, but may invest up to 10% of its assets in high yield securities (“junk bonds”) rated B or higher by Moody’s or S&P, or, if unrated, determined by PIMCO to be of comparable quality. The Portfolio is non-diversified, which means that it may concentrate its assets in a smaller number of issuers than a diversified Portfolio.

Principal Risks

Among the principal risks of investing in the Portfolio, which could adversely affect its net asset value, yield and total return, are:

• Interest Rate Risk

• Credit Risk

• Market Risk

• Issuer Risk

• Foreign Investment Risk

• Currency Risk

• Issuer Non-Diversification Risk

• Liquidity Risk

• Mortgage Risk

• Derivatives Risk

• Leveraging Risk

• Management Risk

Please see “Summary of Principal Risks” following the Portfolio Summaries for a description of these and other risks of investing in the Portfolio.

Performance Information


23		PIMCO Variable Insurance Trust

PIMCO Foreign Bond Portfolio (continued)

Calendar Year Total Returns — Administrative Class



	Highest and Lowest Quarter Returns
	(for periods shown in the bar chart)

	Highest (4th Qtr. ‘00)	3.66%

	Lowest (2nd Qtr. ‘01)	0.25%
Calendar Year End (through 12/31)

Average Annual Total Returns (for periods ended 12/31/01)

	1 Year	Since Inception (4/10/00)(3)

Institutional Class	7.75%	8.11%

J.P. Morgan Non-U.S. Index (Hedged)(1)	6.05%	7.67%


	1 Year	Since Inception (2/16/99)(2)

Administrative Class	7.59%	5.20%

J.P. Morgan Non-U.S. Index (Hedged)(1)	6.05%	6.18%

(1)

The J.P. Morgan Non-U.S. Index (Hedged) is an unmanaged index representative of the total return performance in U.S. dollars of major non-U.S. bond markets. It is not possible to invest directly in the index.

(2)

The Administrative Class shares commenced operations on 2/16/99. Index comparisons began on 2/28/99.

(3)

The Institutional Class shares commenced operations on 4/10/00. Index comparisons began on 3/31/00.

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold Institutional Class or Administrative Class shares of the Portfolio and do not reflect Variable Contract fees and expenses:

Shareholder Fees (fees paid directly from your investment)

None

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets)

Share Class	Advisory Fees	Service Fees	Other Expenses	Total Annual Portfolio Operating Expenses	Expense Reduction(3)	Net Portfolio Operating Expenses

Institutional	0.25%	None	0.50%(1)	0.75%	0.00%	0.75%

Administrative	0.25%	0.15%	0.51%(2)	0.91%	(0.01%)	0.90%

(1) “Other Expenses” reflect a 0.50% administrative fee. (2) “Other Expenses” reflect a 0.50% administrative fee and 0.01% representing the class’ pro rata Trustees’ fees. (3) PIMCO has contractually agreed to reduce total portfolio operating expenses for the Institutional and Administrative Class shares to the extent they would exceed, due to the payment of organizational expenses and Trustees’ fees, 0.75% and 0.90%, respectively, of average daily net assets. Under the Expense Limitation Agreement, PIMCO may recoup these waivers and reimbursements in future periods, not exceeding three years, provided total expenses, including such recoupment, do not exceed the annual expense limit. Examples. The Examples are intended to help you compare the cost of investing in Institutional Class or Administrative Class shares of the Portfolio with the costs of investing in other mutual funds. The Examples assume that you invest $10,000 in the noted class of shares for the time periods indicated, and then redeem all your shares at the end of those periods. The Examples also assume that your investment has a 5% return each year, the reinvestment of all dividends and distributions, and that the Portfolio’s operating expenses remain the same. Although your actual costs may be higher or lower, the Examples show what your costs would be based on these assumptions.
Share Class	Year 1	Year 3	Year 5	Year 10

Institutional	$77	$240	$417	$ 930

Administrative	92	289	503	1,119


Prospectus		24

PIMCO Emerging Markets Bond Portfolio

Principal

Investments and Strategies

Investment Objective

Seeks maximum total return, consistent with preservation of

capital and prudent investment management

Portfolio Focus

Emerging market fixed income securities

Average Portfolio Duration

0-8 years

Credit Quality

Maximum 15% below B

Dividend Frequency

Declared daily and distributed monthly

The Portfolio seeks to achieve its investment objective by investing under normal circumstances at least 80% of its assets in Fixed Income Instruments of issuers that economically are tied to countries with emerging securities markets. Such securities may be denominated in non-U.S. currencies and the U.S. dollar. A security is economically tied to an emerging market country if it is principally traded on the country’s securities markets, or the issuer is organized or principally operates in the country, derives a majority of its income from its operations within the country or has a majority of its assets in the country. The average portfolio duration of this Portfolio varies based on PIMCO’s forecast for interest rates and, under normal market conditions, is not expected to exceed eight years.

PIMCO has broad discretion to identify and invest in countries that it considers to qualify as emerging securities markets. However, PIMCO generally considers an emerging securities market to be one located in any country that is defined as an emerging or developing economy by the World Bank or its related organizations, or the United Nations or its authorities. The Portfolio emphasizes countries with relatively low gross national product per capita and with the potential for rapid economic growth. PIMCO will select the Portfolio’s country and currency composition based on its evaluation of relative interest rates, inflation rates, exchange rates, monetary and fiscal policies, trade and current account balances, and any other specific factors PIMCO believes to be relevant. The Portfolio likely will concentrate its investments in Asia, Africa, the Middle East, Latin America and the developing countries of Europe. The Portfolio may invest in securities whose return is based on the return of an emerging securities market, such as a derivative instrument, rather than investing directly in securities of issuers from emerging markets.

The Portfolio may invest substantially all of its assets in high yield securities (“junk bonds”) subject to a maximum of 15% of its assets in securities rated below B by Moody’s or S&P, or, if unrated, determined by PIMCO to be of comparable quality. The Portfolio is non-diversified, which means that it may concentrate its assets in a smaller number of issuers than a diversified Portfolio.

Principal Risks

Among the principal risks of investing in the Portfolio, which could adversely affect its net asset value, yield and total return, are:

• Interest Rate Risk

• Credit Risk

• High Yield Risk

• Market Risk

• Issuer Risk

• Emerging Markets Risk

• Foreign Investment Risk

• Currency Risk

• Issuer Non-Diversification Risk

• Liquidity Risk

• Derivatives Risk

• Leveraging Risk

• Management Risk

Please see “Summary of Principal Risks” following the Portfolio Summaries for a description of these and other risks of investing in the Portfolio.

Performance Information

Performance information for this Portfolio is not provided because this Portfolio has not commenced operations as of the date of this Prospectus.


25		PIMCO Variable Insurance Trust

PIMCO Emerging Markets Bond Portfolio (continued)

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold Institutional Class or Administrative Class shares of the Portfolio and do not reflect Variable Contract fees and expenses:

Shareholder Fees (fees paid directly from your investment)

None

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets)

Share Class	Advisory Fees	Service Fees	Other Expenses(1)	Total Annual Portfolio Operating Expenses	Expense Reduction(2)	Net Portfolio Operating Expenses

Institutional	0.45%	None	0.68%	1.13%	(0.28%)	0.85%

Administrative	0.45%	0.15%	0.68%	1.28%	(0.28%)	1.00%

(1) “Other Expenses,” which are based on estimated amounts for the initial fiscal year of the Portfolio, reflect a 0.40% administrative fee and 0.28% representing the class’ estimated organizational expenses and pro rata Trustees’ fees. (2) PIMCO has contractually agreed to reduce total annual portfolio operating expenses for the Institutional and Administrative Class shares to the extent they would exceed, due to the payment of organizational expenses and Trustees’ fees, 0.85% and 1.00%, respectively, of average daily net assets. Under the Expense Limitation Agreement, PIMCO may recoup these waivers and reimbursements in future periods, not exceeding three years, provided total expenses, including such recoupment, do not exceed the annual expense limit. Examples. The Examples are intended to help you compare the cost of investing in Institutional Class or Administrative Class shares of the Portfolio with the costs of investing in other mutual funds. The Examples assume that you invest $10,000 in the noted class of shares for the time periods indicated, and then redeem all your shares at the end of those periods. The Examples also assume that your investment has a 5% return each year, the reinvestment of all dividends and distributions, and that the Portfolio’s operating expenses remain the same. Although your actual costs may be higher or lower, the Examples show what your costs would be based on these assumptions.

Share Class	Year 1	Year 3

Institutional	$ 87	$331

Administrative	102	378


Prospectus		26

PIMCO Strategic Balanced Portfolio

Principal

Investments and Strategies

Investment Objective

Seeks maximum total return, consistent with preservation of

capital and prudent investment management

Portfolio Focus

45-75% StocksPLUS Growth and Income Portfolio;

25-55% Total Return

Portfolio

Average Portfolio Duration

0-6 years

Credit Quality

B to Aaa; maximum 10% below Baa

Dividend Frequency

Declared and distributed quarterly

The Portfolio seeks to achieve its investment objective by normally investing between 45% and 75% of its assets in the StocksPLUS Growth and Income Portfolio and between 25% and 55% of its assets in the Total Return Portfolio (collectively, the “Underlying Portfolios”). The Portfolio invests all of its assets in shares of the Underlying Portfolios and does not invest directly in stocks or bonds of other issuers.

The StocksPLUS Growth and Income Portfolio seeks to exceed the total return of the S&P 500 by investing under normal circumstances substantially all of its assets in S&P 500 derivatives, backed by a portfolio of Fixed Income Instruments. The Total Return Portfolio seeks to achieve its investment objective by investing at least 65% of its assets in a diversified portfolio of Fixed Income Securities of various maturities. Please see the Fund Summaries of the Underlying Portfolios in this prospectus for information on their investment styles and primary investments.

PIMCO determines how the Portfolio will allocate and reallocate its assets between the Underlying Portfolios according to the Portfolio’s equity/fixed income allocation targets and ranges. PIMCO does not allocate the Portfolio’s assets according to a predetermined blend of shares of the Underlying Portfolios. Instead, PIMCO will determine the mix of Underlying Portfolios appropriate for the Portfolio based on methodology, developed by PIMCO, that forecasts stages in the business cycle and considers the risk and reward potential of equity and fixed income investments within specific phases of the business cycle.

The Portfolio is a “fund of funds,” which is a term used to describe mutual funds that pursue their investment objectives by investing in other mutual funds. The cost of investing in the Portfolio will generally be higher than the cost of investing in a mutual fund that invests directly in individual stocks and bonds. By investing in the Portfolio, an investor will indirectly bear fees and expenses charged by the Underlying Portfolios in addition to the Portfolio’s direct fees and expenses. In addition, the use of a fund of funds structure could affect the timing, amount and character of distributions to shareholders and may therefore increase the amount of taxes payable by shareholders. In addition to the StocksPLUS Growth and Income and Total Return Portfolios, the Portfolio may in the future invest in additional funds in the PIMCO Funds family at the discretion of PIMCO and without shareholder approval.

Principal Risks

Among the principal risks of investing in the Portfolio, which could adversely affect the net asset value, yield and total return of the Portfolio, are:

• Allocation Risk

• Underlying Portfolio Risk

Among the principal risks of investing in the Underlying Portfolios, and consequently the Portfolio, which could adversely affect the net asset value, yield and total return of the Portfolio, are:

• Market Risk

• Issuer Risk

• Interest Rate Risk

• Credit Risk

• Derivatives Risk

• Liquidity Risk

• Foreign Investment Risk

• Currency Risk

• Mortgage Risk

• Leveraging Risk

• Management Risk

Please see “Summary of Principal Risks” following the Portfolio Summaries for a description of these and other risks associated with the Underlying Funds and investment in the Portfolio.


27		PIMCO Variable Insurance Trust

PIMCO Strategic Balanced Portfolio (continued)

Performance Information

Performance information for this Portfolio is not provided because this Portfolio has not commenced operations as of the date of this Prospectus.

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold Institutional Class or Administrative Class shares of the Portfolio and do not reflect Variable Contract fees and expenses:

Shareholder Fees (fees paid directly from your investment)

None

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets)

Share Class	Advisory Fees	Service Fees	Other Expenses(1)	Underlying Portfolio Expenses	Total Annual Portfolio Operating Expenses	Expense Reduction(2)	Net Portfolio Operating Expenses

Institutional	None	None	0.38%	0.50%	0.88%	(0.28%)	0.60%

Administrative	None	0.15%	0.38%	0.50%	1.03%	(0.28%)	0.75%

(1) “Other Expenses,” which are based on estimated amounts for the initial fiscal year of the Portfolio, reflect a 0.10% administrative fee and 0.28% representing the class’ estimated organizational expenses and pro rata Trustees’ fees. (2) PIMCO has contractually agreed to reduce total annual portfolio operating expenses for the Institutional and Administrative Class shares to the extent they would exceed, due to the payment of organizational expenses and Trustees’ fees, 0.60% and 0.75%, respectively, of average daily net assets. Under the Expense Limitation Agreement, PIMCO may recoup these waivers and reimbursements in future periods, not exceeding three years, provided total expenses, including such recoupment, do not exceed the annual expense limit. Examples. The Examples are intended to help you compare the cost of investing in Institutional Class or Administrative Class shares of the Portfolio with the costs of investing in other mutual funds. The Examples assume that you invest $10,000 in the noted class of shares for the time periods indicated, and then redeem all your shares at the end of those periods. The Examples also assume that your investment has a 5% return each year, the reinvestment of all dividends and distributions, and that the Portfolio’s operating expenses remain the same. Although your actual costs may be higher or lower, the Examples show what your costs would be based on these assumptions.


Prospectus		28

PIMCO StocksPLUS Growth and Income Portfolio

Principal

Investments and Strategies

Investment Objective

Seeks total return which exceeds

that of the S&P 500

Portfolio Focus

S&P 500 stock index derivatives backed by a portfolio of short-term fixed income securities

Average Portfolio Duration

0-1 year

Credit Quality

B to Aaa; maximum 10% below Baa

Dividend Frequency

Declared and distributed quarterly

The Portfolio seeks to exceed the total return of the S&P 500 by investing under normal circumstances substantially all of its assets in S&P 500 derivatives, backed by a portfolio of Fixed Income Instruments. The Portfolio may invest in common stocks, options, futures, options on futures and swaps. The Portfolio uses S&P 500 derivatives in addition to or in place of S&P 500 stocks to attempt to equal or exceed the performance of the S&P 500. The value of S&P 500 derivatives closely track changes in the value of the index. However, S&P 500 derivatives may be purchased with a fraction of the assets that would be needed to purchase the equity securities directly, so that the remainder of the assets may be invested in Fixed Income Instruments. PIMCO actively manages the fixed income assets held by the Portfolio with a view toward enhancing the Portfolio’s total return, subject to an overall portfolio duration which is normally not expected to exceed one year.

The S&P 500 is composed of 500 selected common stocks that represent approximately two-thirds of the total market value of all U.S. common stocks. The Portfolio is neither sponsored by nor affiliated with S&P. The Portfolio seeks to remain invested in S&P 500 derivatives or S&P 500 stocks even when the S&P 500 is declining.

Though the Portfolio does not normally invest directly in S&P 500 securities, when S&P 500 derivatives appear to be overvalued relative to the S&P 500, the Portfolio may invest all of its assets in a “basket” of S&P 500 stocks. Individual stocks are selected based on an analysis of the historical correlation between the return of every S&P 500 stock and the return on the S&P 500 itself. PIMCO may employ fundamental analysis of factors such as earnings and earnings growth, price to earnings ratio, dividend growth, and cash flows to choose among stocks that satisfy the correlation tests. Stocks chosen for the Portfolio are not limited to those with any particular weighting in the S&P 500. The Portfolio may also invest in exchange traded funds based on the S&P 500, such as Standard & Poor’s Depositary Receipt.

Assets not invested in equity securities or derivatives may be invested in Fixed Income Instruments. The Portfolio may invest up to 10% of its assets in high yield securities (“junk bonds”) rated B or higher by Moody’s or S&P, or, if unrated, determined by PIMCO to be of comparable quality. The Portfolio may invest up to 20% of its assets in securities denominated in foreign currencies and may invest beyond this limit in U.S. dollar denominated securities of foreign issuers. The Portfolio will normally hedge at least 75% of its exposure to foreign currency to reduce the risk of loss due to fluctuations in currency exchange rates. In addition, the Portfolio may lend its portfolio securities to brokers, dealers and other financial institutions to earn income.

Principal Risks

Under certain conditions, generally in a market where the value of both S&P 500 derivatives and fixed income securities are declining, the Portfolio may experience greater losses than would be the case if it invested directly in a portfolio of S&P 500 stocks. Among the principal risks of investing in the Portfolio, which could adversely affect its net asset value, yield and total return, are:

• Market Risk

• Issuer Risk

• Derivatives Risk

• Credit Risk

• Interest Rate Risk

• Liquidity Risk

• Foreign Investment Risk

• Currency Risk

• Mortgage Risk

• Leveraging Risk

• Management Risk

Please see “Summary of Principal Risks” following the Portfolio Summaries for a description of these and other risks of investing in the Portfolio.

Performance Information


29		PIMCO Variable Insurance Trust

PIMCO StocksPLUS Growth and Income Portfolio (continued)

Calendar Year Total Returns — Administrative Class



	Highest and Lowest Quarter Returns
	(for periods shown in the bar chart)

	Highest (4th Qtr. ‘98)	21.95%

	Lowest (3rd Qtr. ‘01)	-13.96%
Calendar Year End (through 12/31)

Average Annual Total Returns (for periods ended 12/31/01)

	1 Year	Since Inception (4/28/00)(2)

Institutional Class	-11.28%	-11.36%

S&P 500 Index(1)	-11.88%	-12.03%

	1 Year	Since Inception (12/31/97)

Administrative Class	-11.43%	5.73%

S&P 500 Index(1)	-11.88%	5.66%

(1)

The Standard & Poor’s 500 Composite Stock Price Index is an unmanaged index of common stocks. It is not possible to invest directly in the index.

(2)

The Institutional Class shares commenced operations on 4/28/00. Index comparisons began on 4/30/00.

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold Institutional Class or Administrative Class shares of the Portfolio and do not reflect Variable Contract fees and expenses:

Shareholder Fees (fees paid directly from your investment)

None

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets)

Share Class	Advisory Fees	Service Fees	Other Expenses	Total Annual Portfolio Operating Expenses	Expense Reduction(3)	Net Portfolio Operating Expenses

Institutional	0.40%	None	0.13%(1)	0.53%	(0.01%)	0.52%(4)

Administrative	0.40%	0.15%	0.12%(2)	0.67%	0.00%	0.67%(5)

(1) “Other Expenses” reflect a 0.10% administrative fee, 0.01% representing the class’ pro rata Trustees’ fees and 0.02% interest expense. Interest expense is generally incurred as a result of investment management activities.

(2) “Other Expenses” reflect a 0.10% administrative fee and 0.02% interest expense. Interest expense is generally incurred as a result of investment management activities.

(3) PIMCO has contractually agreed to reduce total annual portfolio operating expenses for the Institutional and Administrative Class shares to the extent they would exceed, due to the payment of organizational expenses and Trustees’ fees, 0.50% and 0.65%, respectively, of average daily net assets. Under the Expense Limitation Agreement, PIMCO may recoup these waivers and reimbursements in future periods, not exceeding three years, provided total expenses, including such recoupment, do not exceed the annual expense limit.

(4) Ratio of net expenses to average net assets excluding interest expense is 0.50%.

(5) Ratio of net expenses to average net assets excluding interest expense is 0.65%.

Share Class	Year 1	Year 3	Year 5	Year 10

Institutional	$53	$167	$291	$653

Administrative	68	214	373	835


Prospectus		30

Summary of Principal Risks

The value of your investment in a Portfolio changes with the values of that Portfolio’s investments. Many factors can affect those values. The factors that are most likely to have a material effect on a particular Portfolio’s portfolio as a whole are called “principal risks.” The principal risks of each Portfolio are identified in the Portfolio Summaries and are described in this section. Each Portfolio may be subject to additional principal risks and risks other than those described below because the types of investments made by a Portfolio can change over time. Securities and investment techniques mentioned in this summary and described in greater detail under “Characteristics and Risks of Securities and Investment Techniques” appear in bold type. That section and “Investment Objectives and Policies” in the Statement of Additional Information also include more information about the Portfolio, their investments and the related risks. There is no guarantee that a Portfolio will be able to achieve its investment objective.

Interest Rate Risk

As interest rates rise, the value of fixed income securities held by a Portfolio are likely to decrease. Securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations.

Credit Risk

A Portfolio could lose money if the issuer or guarantor of a fixed income security, or the counterparty to a derivatives contract, repurchase agreement or a loan of portfolio securities, is unable or unwilling to make timely principal and/or interest payments, or to otherwise honor its obligations. Securities are subject to varying degrees of credit risk, which are often reflected in credit ratings. Municipal bonds are subject to the risk that litigation, legislation or other political events, local business or economic conditions, or the bankruptcy of the issuer could have a significant effect on an issuer’s ability to make payments of principal and/or interest.

High Yield Risk

Portfolios that invest in high yield securities and unrated securities of similar credit quality (commonly known as “junk bonds”) may be subject to greater levels of interest rate, credit and liquidity risk than Portfolios that do not invest in such securities. High yield securities are considered predominately speculative with respect to the issuer’s continuing ability to make principal and interest payments. An economic downturn or period of rising interest rates could adversely affect the market for high yield securities and reduce a Portfolio’s ability to sell its high yield securities (liquidity risk). If the issuer of a security is in default with respect to interest or principal payments, a Portfolio may lose its entire investment.

Market Risk

The market price of securities owned by a Portfolio may go up or down, sometimes rapidly or unpredictably. Securities may decline in value due to factors affecting securities markets generally or particular industries represented in the securities markets. The value of a security may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. They may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities generally have greater price volatility than fixed income securities.

Issuer Risk

The value of a security may decline for a number of reasons which directly relate to the issuer, such as management performance, financial leverage and reduced demand for the issuer’s goods or services.

Liquidity Risk

Liquidity risk exists when particular investments are difficult to purchase or sell. A Portfolio’s investments in illiquid securities may reduce the returns of the Portfolio because it may be unable to sell the illiquid securities at an advantageous time or price. Portfolios with principal investment strategies that involve foreign securities, derivatives or securities with substantial market and/or credit risk tend to have the greatest exposure to liquidity risk.


31		PIMCO Variable Insurance Trust

Derivatives Risk

Derivatives are financial contracts whose value depends on, or is derived from, the value of an underlying asset, reference rate or index. The various derivative instruments that the Portfolios may use are referenced under “Characteristics and Risks of Securities and Investment Techniques—Derivatives” in this Prospectus and described in more detail under “Investment Objectives and Policies” in the Statement of Additional Information. The Portfolios typically use derivatives as a substitute for taking a position in the underlying asset and/or part of a strategy designed to reduce exposure to other risks, such as interest rate or currency risk. The Portfolios may also use derivatives for leverage, in which case their use would involve leveraging risk. A Portfolio’s use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. Derivatives are subject to a number of risks described elsewhere in this section, such as liquidity risk, interest rate risk, market risk, credit risk and management risk. They also involve the risk of mispricing or improper valuation and the risk that changes in the value of the derivative may not correlate perfectly with the underlying asset, rate or index. A Portfolio investing in a derivative instrument could lose more than the principal amount invested. Also, suitable derivative transactions may not be available in all circumstances and there can be no assurance that a Portfolio will engage in these transactions to reduce exposure to other risks when that would be beneficial.

Mortgage Risk

A Portfolio that purchases mortgage-related securities is subject to certain additional risks. Rising interest rates tend to extend the duration of mortgage-related securities, making them more sensitive to changes in interest rates. As a result, in a period of rising interest rates, a Portfolio that holds mortgage-related securities may exhibit additional volatility. This is known as extension risk. In addition, mortgage-related securities are subject to prepayment risk. When interest rates decline, borrowers may pay off their mortgages sooner than expected. This can reduce the returns of a Portfolio because the Portfolio will have to reinvest that money at the lower prevailing interest rates.

Foreign (Non-U.S.) Investment Risk

A Portfolio that invests in foreign securities may experience more rapid and extreme changes in value than a Portfolio that invests exclusively in securities of U.S. companies. The securities markets of many foreign countries are relatively small, with a limited number of companies representing a small number of industries. Additionally, issuers of foreign securities are usually not subject to the same degree of regulation as U.S. issuers. Reporting, accounting and auditing standards of foreign countries differ, in some cases significantly, from U.S. standards. Also, nationalization, expropriation or confiscatory taxation, currency blockage, political changes or diplomatic developments could adversely affect a Portfolio’s investments in a foreign country. In the event of nationalization, expropriation or other confiscation, a Portfolio could lose its entire investment in foreign securities. Adverse conditions in a certain region can adversely affect securities of other countries whose economies appear to be unrelated. To the extent that a Portfolio invests a significant portion of its assets in a concentrated geographic area like Eastern Europe or Asia, the Portfolio will generally have more exposure to regional economic risks associated with foreign investments.

Emerging Markets Risk

Foreign investment risk may be particularly high to the extent that a Portfolio invests in emerging market securities of issuers based in countries with developing economies. These securities may present market, credit, currency, liquidity, legal, political and other risks different from, or greater than, the risks of investing in developed foreign countries.

Currency Risk

Portfolios that invest directly in foreign currencies or in securities that trade in, and receive revenues in, foreign (non-U.S.) currencies are subject to the risk that those currencies will decline in value relative to the U.S. dollar, or, in the case of hedging positions, that the U.S. dollar will decline in value relative to the currency being hedged.

Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the U.S. or abroad. As a result, a Portfolio’s investments in foreign currency-denominated securities may reduce the returns of a Portfolio.


Prospectus		32

Issuer Non-Diversification Risk

Focusing investments in a small number of issuers, industries or foreign currencies increases risk. Portfolios that are “non-diversified” may invest a greater percentage of their assets in the securities of a single issuer (such as bonds issued by a particular state) than Portfolios that are “diversified.” Portfolios that invest in a relatively small number of issuers are more susceptible to risks associated with a single economic, political or regulatory occurrence than a more diversified portfolio might be. Some of those issuers also may present substantial credit or other risks. Similarly, a Portfolio may be more sensitive to adverse economic, business or political developments if it invests a substantial portion of its assets in the bonds of similar projects or from issuers in the same state.

Leveraging Risk

Certain transactions may give rise to a form of leverage. Such transactions may include, among others, reverse repurchase agreements, loans of portfolios securities, and the use of when-issued, delayed delivery or forward commitment transactions. The use of derivatives may also create leveraging risk. To mitigate leveraging risk, PIMCO will segregate liquid assets or otherwise cover the transactions that may give rise to such risk. The use of leverage may cause a Portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet segregation requirements. Leverage, including borrowing, may cause a Portfolio to be more volatile than if the Portfolio had not been leveraged. This is because leverage tends to exaggerate the effect of any increase or decrease in the value of a Portfolio’s portfolio securities.

Management Risk

Each Portfolio is subject to management risk because it is an actively managed investment portfolio. PIMCO and each individual portfolio manager will apply investment techniques and risk analyses in making investment decisions for the Portfolio, but there can be no guarantee that these will produce the desired results.

Allocation Risk

The Strategic Balanced Portfolio’s investment performance depends upon how its assets are allocated and reallocated between the Underlying Portfolios according to the Portfolio’s equity/fixed income allocation targets and ranges. A principal risk of investing in the Portfolio is that PIMCO will make less than optimal or poor asset allocation decisions. PIMCO attempts to identify allocations for the Underlying Portfolios that will provide consistent, quality performance for the Portfolio, but there is no guarantee that PIMCO’s allocation techniques will produce the desired results. It is possible that PIMCO will focus on an Underlying Portfolio that performs poorly or underperforms other Portfolios under various market conditions. You could lose money on your investment in the Portfolio as a result of these allocation decisions.

Underlying Portfolio Risks

Because the Strategic Balanced Portfolio invests all of its assets in Underlying Portfolios, the risks associated with investing in the Portfolio are closely related to the risks associated with the securities and other investments held by the Underlying Portfolios. The ability of the Portfolio to achieve its investment objective will depend upon the ability of the Underlying Portfolios to achieve their objectives. There can be no assurance that the investment objective of any Underlying Portfolio will be achieved.

The Strategic Balanced Portfolio’s net asset value will fluctuate in response to changes in the net asset values of the Underlying Portfolios in which it invests. The extent to which the investment performance and risks associated with the Portfolio correlate to those of a particular Underlying Portfolio will depend upon the extent to which the Portfolio’s assets are allocated from time to time for investment in the Underlying Portfolio, which will vary. The Portfolio’s investment in a particular Underlying Portfolio normally will exceed 25% of its assets. Because the Portfolio invests a significant portion of its assets in each Underlying Portfolio, it will be particularly sensitive to the risks associated with each of the Underlying Portfolios.


33		PIMCO Variable Insurance Trust

Management of the Portfolios

Investment Adviser and Administrator

PIMCO serves as investment adviser and the administrator (serving in its capacity as administrator, the “Administrator”) for the Portfolios. Subject to the supervision of the Board of Trustees, PIMCO is responsible for managing the investment activities of the Portfolios and the Portfolios’ business affairs and other administrative matters.

PIMCO’s address is 840 Newport Center Drive, Suite 300, Newport Beach, California 92660. Organized in 1971, PIMCO provides investment management and advisory services to private accounts of institutional and individual clients and to mutual funds. As of December 31, 2001, PIMCO had approximately $241.3 billion in assets under management.

Advisory Fees

Each Portfolio, except for the Strategic Balanced Portfolio, pays PIMCO fees in return for providing investment advisory services. For the fiscal year ended December 31, 2001, the Portfolios paid monthly advisory fees to PIMCO at the following annual rates (stated as a percentage of the average daily net assets of each Portfolio taken separately):

Portfolio		Advisory Fees

Money Market Portfolio		0.15%
StocksPLUS Growth and Income Portfolio		0.40%
Emerging Markets Bond Portfolio		0.45%
All other Portfolios		0.25%

Administrative Fees

Each Portfolio pays for the administrative services it requires under a fee structure which is essentially fixed. Shareholders of each class of each Portfolio pay an administrative fee to PIMCO, computed as a percentage of the Portfolio’s assets attributable in the aggregate to that class of shares. PIMCO, in turn, provides or procures administrative services for shareholders and also bears the costs of various third-party services required by the Portfolios, including audit, custodial, portfolio accounting, legal, transfer agency and printing costs.

For the fiscal year ended December 31, 2001, each Portfolio, except for the Strategic Balanced Portfolio, paid PIMCO monthly administrative fees at the following annual rates:

Portfolio		Administrative Fees

StocksPLUS Growth and Income Portfolio		0.10%
Money Market and Short-Term Portfolios		0.20%
High Yield Portfolio		0.35%
Emerging Markets Bond Portfolio		0.40%
Global Bond and Foreign Bond Portfolios		0.50%
All other Portfolios		0.25%

PIMCO may use its assets and resources, including its profits from advisory or administrative fees paid by a Portfolio, to pay insurance companies for services rendered to current and prospective owners of Variable Contracts, including the provision of support services such as providing information about the Trust and the Portfolios, the delivery of Trust documents, and other services. Any such payments are made by PIMCO and not by the Trust and PIMCO does not receive any separate fees for such expenses.

PIMCO has contractually agreed to reduce total annual portfolio operating expenses for the Institutional and Administrative Class shares to the extent that they would exceed, due to the payment of organizational expenses and Trustees’ fees, the total portfolio operating expenses specified for that Portfolio in the table identifying the Portfolio’s annual portfolio operating expenses in its Portfolio Summary. For certain Portfolios, PIMCO currently recoups these waivers and reimbursements, not exceeding three years, provided that total expenses, including such recoupment, do not exceed the annual expense limit.

Strategic Balanced Portfolio Fees

The Strategic Balanced Portfolio does not pay any fees to PIMCO under the Trust’s investment advisory agreement in return for the advisory and asset allocation services provided by PIMCO. The Portfolio does, however, indirectly pay its proportionate share of the advisory fees paid to PIMCO by the Underlying Portfolios in which the Portfolio invests.


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The Portfolio pays administrative fees to PIMCO at an annual rate of 0.10% based on the average daily net assets attributable in the aggregate to the Portfolio’s Institutional Class and Administrative Class shares. The Portfolio also indirectly pays its proportionate share of the administrative fees charged by PIMCO to the Underlying Portfolios in which the Portfolio invests.

The expenses associated with investing in a “fund of funds,” such as the Portfolio, are generally higher than those for mutual funds that do not invest primarily in other mutual funds. This is because shareholders in a “fund of funds” indirectly pay a portion of the fees and expense charged at the underlying fund level.

The Strategic Balanced Portfolio is structured in the following ways to lessen the impact of expenses incurred at the Underlying Portfolio level:

• The Portfolio does not pay any fees for assets allocation or advisory services under the Trust’s investment advisory agreement.

• The Portfolio invests in Institutional Class shares of the Underlying Portfolios, which are not subject to any sales charges or 12b-1 fees.

PIMCO has broad discretion to allocate and reallocate the Portfolio’s assets among the Underlying Portfolios consistent with the Portfolio’s investment objective and policies and asset allocation targets and ranges. Although PIMCO does not charge an investment advisory fee for its asset allocation services, PIMCO indirectly receives fees (including investment advisory and administrative fees) from the Underlying Portfolios in which the Portfolio invests. In this regard, PIMCO has a financial incentive to invest the Portfolio’s assets in Underlying Portfolios with higher fees than other Portfolios, even if it believes that alternate investments would better serve the Portfolio’s investment program. PIMCO is legally obligated to disregard that incentive in making asset allocation decisions for the Portfolio. The Trustees and officers of the Trust may also have conflicting interests in fulfilling their fiduciary duties to both the Portfolio and the Underlying Portfolios of the Trust.

Individual Portfolio Managers

The table below provides information about the individual portfolio managers responsible for management of the Trust’s Portfolios, including their occupations for the past five years.

Portfolio	Portfolio Manager	Since	Recent Professional Experience

Money Market Short-Term	Paul A. McCulley	9/99* 9/99*	Managing Director, PIMCO. He has managed fixed income assets since joining PIMCO in 1999. Prior to joining PIMCO, Mr. McCulley was associated with Warburg Dillon Read as a Managing Director from 1992-1999 and Head of Economic and Strategy Research for the Americas from 1995-1999, where he managed macro research world-wide.

Low Duration Total Return Total Return II Strategic Balanced StocksPLUS Growth and Income	William H. Gross	2/99* 12/97* 5/99* ** 12/97*	Managing Director, Chief Investment Officer and a founding partner of PIMCO. He leads a team which manages the Strategic Balanced and StocksPLUS Growth and Income Portfolio.

Real Return	John B. Brynjolfsson	9/99*	Executive Vice President, PIMCO. He joined PIMCO as a Portfolio Manager in 1989, and has managed fixed income accounts for various institutional clients and funds since that time.

High Yield	Benjamin L. Trosky	5/01	Managing Director, PIMCO. He joined PIMCO as a Portfolio Manager in 1990, and has managed fixed income accounts for various institutional clients and funds since that time.

	Raymond G. Kennedy	4/02	Managing Director, PIMCO. He joined PIMCO as a Portfolio Manager in 1996. Prior to that, he was associated with the Prudential Insurance Company of America as a private placement asset manager.

Long-Term U.S. Government	James M. Keller	4/00	Executive Vice President, PIMCO. He joined PIMCO as a Portfolio Manager in 1996, and has managed fixed income accounts for various institutional clients since that time.

Foreign Bond Global Bond	Michael R. Asay	11/00 **	Senior Vice President, PIMCO. He joined PIMCO in 1998. Prior to joining PIMCO, he was a Vice President and Director of Market Research for Goldman Sachs and Company from 1986-1997, where he developed fixed income trading strategies and quantitative analytics for Asian and European markets.

Emerging Markets Bond	Mohamed A. El-Erian	**	Managing Director, PIMCO. He joined PIMCO as a Portfolio Manager in 1999. Prior to joining PIMCO, he was a Managing Director from 1998-1999 for Salomon Smith Barney/Citibank, where he was head of emerging markets research. Prior to that he was associated with the International Monetary Fund as a Deputy Director and Advisor from 1983-1998.

* Since inception of the Portfolio.

** Portfolio has not commenced operation as of the date of this Prospectus.


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Distributor

The Trust’s Distributor is PIMCO Funds Distributors LLC, an indirect subsidiary of Allianz Dresdner Asset Management of America L.P. The Distributor, located at 2187 Atlantic Street, Stamford CT 06902, is a broker-dealer registered with the Securities and Exchange Commission.

Investment Options—

Institutional Class and Administrative Class Shares

The Trust offers investors Institutional Class and Administrative Class shares of the Portfolios in this Prospectus. The Trust does not charge any sales charges (loads) or other fees in connection with purchases or sales (redemptions) of Institutional Class or Administrative Class shares. Administrative Class shares are subject to a higher level of operating expenses than Institutional Class shares due to an additional service fee paid by Administrative Class shares as described below. Therefore, Institutional Class shares will generally pay higher dividends and have a more favorable investment return than Administrative Class shares.

• Service Fees—Administrative Class Shares. The Trust has adopted an Administrative Services Plan (the “Plan”) for the Administrative Class shares of each Portfolio. The Plan allows a Portfolio to use its Administrative Class assets to reimburse financial intermediaries that provide services relating to Administrative Class shares. The services that will be provided under the Plan include, among other things, teleservicing support in connection with Portfolios; recordkeeping services; provision of support services, including providing information about the Trust and its Portfolios and answering questions concerning the Trust and its Portfolios, including questions respecting investors’ interests in one or more Portfolios; provision and administration of insurance features for the benefit of investors in connection with the Portfolios; receiving, aggregating and forwarding purchase and redemption orders; processing dividend payments; issuing investor reports and transaction confirmations; providing subaccounting services; general account administration activities; and providing such similar services as the Trust may reasonably request to the extent the service provider is permitted to do so under applicable statutes, rules or regulation. The Plan also permits reimbursement for services in connection with the administration of plans or programs that use Administrative Class shares of the Portfolios as their funding medium and for related expenses.

The Plan permits a Portfolio to make total reimbursements at an annual rate of 0.15% of the Portfolio’s average daily net assets attributable to its Administrative Class shares. Because these fees are paid out of a Portfolio’s Administrative Class assets on an ongoing basis, over time they will increase the cost of an investment in Administrative Class shares and may cost an investor more than sales charges.

• Arrangements with Service Agents. Institutional Class and Administrative Class shares of the Portfolios may be offered through certain brokers and financial intermediaries (“service agents”) that have established a shareholder servicing relationship with the Trust on behalf of their customers. The Trust pays no compensation to such entities other than Plan fees paid with respect to Administrative Class shares. Service agents may impose additional or different conditions than the Trust on purchases, redemptions or exchanges of Portfolio shares by their customers. Service agents may also independently establish and charge their customers transaction fees, account fees and other amounts in connection with purchases and sales of Portfolio shares in addition to any fees charged by the Trust. These additional fees may vary over time and would increase the cost of the customer’s investment and lower investment returns. Each service agent is responsible for transmitting to its customers a schedule of any such fees and information regarding any additional or different conditions regarding purchases, redemptions and exchanges. Shareholders who are customers of service agents should consult their service agents for information regarding these fees and conditions.


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Purchases and Redemptions

Purchasing Shares

Investors do not deal directly with the Portfolios to purchase and redeem shares. Please refer to the prospectus for the Separate Account for information on the allocation of premiums and on transfers of accumulated value among sub-accounts of the Separate Account that invest in the Portfolio.

As of the date of this Prospectus, shares of the Portfolios are offered for purchase by Separate Accounts to serve as an investment medium for Variable Contracts issued by life insurance companies, and to qualified pension and retirement plans outside of the separate account context. Shares of each Portfolio are purchased at the net asset value (“NAV”) per share after receipt of a purchase order.

While the Portfolios currently do not foresee any disadvantages to Variable Contract Owners if the Portfolios serve as an investment medium for both variable annuity contracts and variable life insurance policies, due to differences in tax treatment or other considerations, it is theoretically possible that the interest of owners of annuity contracts and insurance policies for which the Portfolios served as an investment medium might at some time be in conflict. However, the Trust’s Board of Trustees and each insurance company with a separate account allocating assets to the Portfolios are required to monitor events to identify any material conflicts between variable annuity contract owners and variable life insurance policy owners, and would have to determine what action, if any, should be taken in the event of such a conflict. If such a conflict occurred, an insurance company participating in the Portfolios might be required to redeem the investment of one or more of its separate accounts from the Portfolios, which might force the Portfolios to sell securities at disadvantageous prices.

The Trust and its distributor each reserves the right, in its sole discretion, to suspend the offering of shares of the Portfolios or to reject any purchase order, in whole or in part, or to redeem shares, in whole or in part, when, in the judgment of management, such suspension or rejection is in the best interests of the Trust. The sale of shares will be suspended when trading on the New York Stock Exchange is restricted or during an emergency which makes it impracticable for the Portfolios to dispose of their securities or to determine fairly the value of their net assets, or during any other period as permitted by the SEC for the protection of investors. In the event that a Portfolio ceases offering its shares, any investments allocated to the Portfolio will, subject to any necessary regulatory approvals, be invested in another Portfolio.

Redeeming Shares

Shares may be redeemed without charge on any day that the net asset value is calculated. All redemption orders are effected at the net asset value per share next determined after a redemption request is received. Payment for shares redeemed normally will be made within seven days.

Redemptions of Portfolio shares may be suspended when trading on the New York Stock Exchange is restricted or during an emergency which makes it impractical for the Portfolios to dispose of their securities or to determine fairly the value of their net assets, or during any other period as permitted by the Securities and Exchange Commission for the protection of investors. Under these and other unusual circumstances, the Trust may suspend redemption or postpone payment for more than seven days, as permitted by law. In consideration of the best interests of the remaining shareholders, the Trust reserves the right to pay redemption proceeds in whole or in part by a distribution in kind of securities held by a Portfolio in lieu of cash. It is highly unlikely that shares would ever be redeemed in kind. If shares are redeemed in kind, however, the redeeming shareholder should expect to incur transaction costs upon the disposition of the securities received in the distribution.


37		PIMCO Variable Insurance Trust

How Portfolio Shares Are Priced

The NAV of a Portfolio’s Institutional and Administrative Class shares is determined by dividing the total value of a Portfolio’s investments and other assets attributable to that class, less any liabilities, by the total number of shares outstanding of that class.

Except for the Money Market Portfolio, for purposes of calculating NAV, portfolio securities and other assets for which market quotes are available are stated at market value. Market value is generally determined on the basis of last reported sales prices, or if no sales are reported, based on quotes obtained from a quotation reporting system, established market makers, or pricing services. Certain securities or investments for which daily market quotations are not readily available may be valued, pursuant to guidelines established by the Board of Trustees, with reference to other securities or indices. Short-term investments having a maturity of 60 days or less are generally valued at amortized cost. Exchange traded options, futures and options on futures are valued at the settlement price determined by the exchange. Other securities for which market quotes are not readily available are valued at fair value as determined in good faith by the Board of Trustees or persons acting at their direction.

The Money Market Portfolio’s securities are valued using the amortized cost method of valuation, which involves valuing a security at cost on the date of acquisition and thereafter assuming a constant accretion of a discount or amortization of a premium to maturity, regardless of the impact of fluctuating interest rates on the market value of the instrument. While this method provides certainty in valuation, it may result in periods during which value, as determined by amortized cost, is higher or lower than the price the Portfolio would receive if it sold the instrument.

Investments initially valued in currencies other than the U.S. dollar are converted to U.S. dollars using exchange rates obtained from pricing services. As a result, the NAV of a Portfolio’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of securities traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the New York Stock Exchange is closed and an investor is not able to purchase, redeem or exchange shares.

Portfolio shares are valued at the close of regular trading (normally 4:00 p.m., Eastern time) (the “NYSE Close”) on each day that the New York Stock Exchange is open. For purposes of calculating the NAV, the Portfolios normally use pricing data for domestic equity securities received shortly after the NYSE Close and do not normally take into account trading, clearances or settlements that take place after the NYSE Close. Domestic fixed income and foreign securities are normally priced using data reflecting the earlier closing of the principal markets for those securities. Information that becomes known to the Portfolios or its agents after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the price of a security or the NAV determined earlier that day.

In unusual circumstances, instead of valuing securities in the usual manner, the Portfolios may value securities at fair value or estimate their value as determined in good faith by the Board of Trustees, generally based upon recommendations provided by PIMCO. Fair valuation may also be used if extraordinary events occur after the close of the relevant market but prior to the NYSE Close.

Under certain circumstances, the per share NAV of the Administrative Class shares of the Portfolios may be lower than the per share NAV of the Institutional Class shares as a result of the daily expense accruals of the service fees paid by Administrative Class shares. Generally, for a Portfolio that pays income dividends, those dividends are expected to differ over time by approximately the amount of the expense accrual differential between the two classes.


Prospectus		38

Tax Consequences

Each Portfolio intends to qualify as a regulated investment company annually and to elect to be treated as a regulated investment company for federal income tax purposes. As such, a Portfolio generally will not pay federal income tax on the income and gains it pays as dividends to its shareholders. In order to avoid a 4% federal excise tax, each Portfolio intends to distribute each year substantially all of its net income and gains.

Each Portfolio intends to diversify its investments in a manner intended to comply with tax requirements generally applicable to mutual funds. In addition, each Portfolio will diversify its investments so that on the last day of each quarter of a calendar year, no more than 55% of the value of its total assets is represented by any one investment, no more than 70% is represented by any two investments, no more than 80% is represented by any three investments, and no more than 90% is represented by any four investments. For this purpose, securities of a single issuer are treated as one investment and each U.S. Government agency or instrumentality is treated as a separate issuer. Any security issued, guaranteed, or insured (to the extent so guaranteed or insured) by the U.S. Government or any agency or instrumentality of the U.S. Government is treated as a security issued by the U.S. Government or its agency or instrumentality, whichever is applicable.

If a Portfolio fails to meet the diversification requirement under Section 817(h), income with respect to Variable Contracts invested in the Portfolio at any time during the calendar quarter in which the failure occurred could become currently taxable to the owners of the Variable Contracts and income for prior periods with respect to such contracts also could be taxable, most likely in the year of the failure to achieve the required diversification. Other adverse tax consequences could also ensue.

Please refer to the prospectus for the Separate Account and Variable Contract for information regarding the federal income tax treatment of distributions to the Separate Account. See “Additional Information—Additional Tax Information” in the Portfolios’ Statement of Additional Information for more information on taxes.

Characteristics and Risks of

Securities and Investment Techniques

This section provides additional information about some of the principal investments and related risks of the Portfolios described under the “Portfolio Summaries” above. It also describes characteristics and risks of additional securities and investment techniques that may be used by the Portfolios from time to time. Most of these securities and investment techniques are discretionary, which means that PIMCO can decide whether to use them or not. This Prospectus does not attempt to disclose all of the various types of securities and investment techniques that may be used by the Portfolios. As with any mutual fund, investors in the Portfolios rely on the professional investment judgment and skill of PIMCO and the individual portfolio managers. Please see “Investment Objectives and Policies” in the Statement of Additional Information for more detailed information about the securities and investment techniques described in this section and about other strategies and techniques that may be used by the Portfolios.

The Strategic Balanced Portfolio invests its assets in shares of the Underlying Portfolios, and as such does not invest directly in the securities described below. The Underlying Portfolios, however, may invest in such securities. Because the value of an investment in the Strategic Balanced Portfolio is directly related to the investment performance of the Underlying Portfolios in which it invests, the risks of investing in the Strategic Balanced Portfolio are closely related to the risks associated with the Underlying Portfolios and their investments in the securities described below.

Securities Selection

Most of the Portfolios in this prospectus seek maximum total return. The total return sought by a Portfolio consists of both income earned on a Portfolio’s investments and capital appreciation, if any, arising from


39		PIMCO Variable Insurance Trust

increases in the market value of a Portfolio’s holdings. Capital appreciation of fixed income securities generally results from decreases in market interest rates or improving credit fundamentals for a particular market sector or security.

In selecting securities for a Portfolio, PIMCO develops an outlook for interest rates, foreign currency exchange rates and the economy; analyzes credit and call risks, and uses other security selection techniques. The proportion of a Portfolio’s assets committed to investment in securities with particular characteristics (such as quality, sector, interest rate or maturity) varies based on PIMCO’s outlook for the U.S. and foreign economies, the financial markets and other factors.

PIMCO attempts to identify areas of the bond market that are undervalued relative to the rest of the market. PIMCO identifies these areas by grouping bonds into the following sectors: money markets, governments, corporates, mortgages, asset-backed and international. Sophisticated proprietary software then assists in evaluating sectors and pricing specific securities. Once investment opportunities are identified, PIMCO will shift assets among sectors depending upon changes in relative valuations and credit spreads. There is no guarantee that PIMCO’s security selection techniques will produce the desired results.

With respect to the Strategic Balanced Portfolio, PIMCO will purchase shares of the StocksPLUS Growth and Income and Total Return Portfolios according to the Strategic Balanced Portfolio’s equity/fixed income allocation ranges. PIMCO does not purchase shares of the Underlying Portfolios according to any predetermined formula, but rather decides how to allocate the Portfolio’s investments based upon PIMCO’s methodology for forecasting stages in the business cycle, and the potential risk and reward of equity and fixed income investments at specific stages of the business cycle. In addition to purchasing shares of the StocksPLUS Growth and Income and Total Return Portfolios, PIMCO may in the future invest in additional funds in the PIMCO fund family without shareholder approval.

U.S. Government Securities

U.S. Government securities are obligations of and, in certain cases, guaranteed by, the U.S. Government, its agencies or government-sponsored enterprises. U.S. Government Securities are subject to market and interest rate risk, and may be subject to varying degrees of credit risk. U.S. Government securities may include zero coupon securities, which do not distribute interest on a current basis and tend to be subject to greater market risk than interest-paying securities of similar maturities.

Municipal bonds are generally issued by states and local governments and their agencies, authorities and other instrumentalities. Municipal bonds are subject to interest rate, credit and market risk. The ability of an issuer to make payments could be affected by litigation, legislation or other political events or the bankruptcy of the issuer. Lower rated municipal bonds are subject to greater credit and market risk than higher quality municipal bonds. The types of municipal bonds in which the Portfolios may invest include municipal lease obligations. The Portfolios may also invest in securities issued by entities whose underlying assets are municipal bonds.

The Portfolios may invest, without limitation, in residual interest bonds, which are created by depositing municipal securities in a trust and dividing the income stream of an underlying municipal bond in two parts, one, a variable rate security and the other, a residual interest bond. The interest rate for the variable rate security is determined by an index or an auction process held approximately every 7 to 35 days, while the residual interest bond holder receives the balance of the income from the underlying municipal bond less an auction fee. The market prices of residual interest bonds may be highly sensitive to changes in market rates and may decrease significantly when market rates increase.

Mortgage-Related and Other Asset-Backed Securities

Each Portfolio (except the Money Market Portfolio) may invest all of its assets in mortgage- and asset-backed securities. Mortgage-related securities include mortgage pass-through securities, collateralized mortgage obligations (“CMOs”), commercial mortgage-backed securities, mortgage dollar rolls, CMO residuals, stripped mortgage-backed securities (“SMBSs”) and other securities that directly or indirectly represent a participation in, or are secured by and payable from, mortgage loans on real property.


Prospectus		40

The value of some mortgage- or asset-backed securities may be particularly sensitive to changes in prevailing interest rates. Early repayment of principal on some mortgage-related securities may expose a Portfolio to a lower rate of return upon reinvestment of principal. When interest rates rise, the value of a mortgage-related security generally will decline; however, when interest rates are declining, the value of mortgage-related securities with prepayment features may not increase as much as other fixed income securities. The rate of prepayments on underlying mortgages will affect the price and volatility of a mortgage-related security, and may shorten or extend the effective maturity of the security beyond what was anticipated at the time of purchase. If unanticipated rates of prepayment on underlying mortgages increase the effective maturity of a mortgage-related security, the volatility of the security can be expected to increase. The value of these securities may fluctuate in response to the market’s perception of the creditworthiness of the issuers. Additionally, although mortgages and mortgage-related securities are generally supported by some form of government or private guarantee and/or insurance, there is no assurance that private guarantors or insurers will meet their obligations.

One type of SMBS has one class receiving all of the interest from the mortgage assets (the interest-only, or “IO” class), while the other class will receive all of the principal (the principal-only, or “PO” class). The yield to maturity on an IO class is extremely sensitive to the rate of principal payments (including prepayments) on the underlying mortgage assets, and a rapid rate of principal payments may have a material adverse effect on a Portfolio’s yield to maturity from these securities. A Portfolio may not invest more than 5% of its net assets in any combination of IO, PO, or inverse floater securities. The Portfolios may invest in other asset-backed securities that have been offered to investors.

Loan Participations and Assignments

Certain Portfolios may invest in fixed- and floating-rate loans, which investments generally will be in the form of loan participations and assignments of portions of such loans. Participations and assignments involve special types of risk, including credit risk, interest rate risk, liquidity risk, and the risks of being a lender. If a Portfolio purchases a participation, it may only be able to enforce its rights through the lender, and may assume the credit risk of the lender in addition to the borrower.

Corporate Debt Securities

Corporate debt securities are subject to the risk of the issuer’s inability to meet principal and interest payments on the obligation and may also be subject to price volatility due to such factors as interest rate sensitivity, market perception of the credit-worthiness of the issuer and general market liquidity. When interest rates rise, the value of corporate debt securities can be expected to decline. Debt securities with longer maturities tend to be more sensitive to interest rate movements than those with shorter maturities.

High Yield Securities

Securities rated lower than Baa by Moody’s or lower than BBB by S&P are sometimes referred to as “high yield” or “junk” bonds. Investing in high yield securities involves special risks in addition to the risks associated with investments in higher-rated fixed income securities. While offering a greater potential opportunity for capital appreciation and higher yields, high yield securities typically entail greater potential price volatility and may be less liquid than higher-rated securities. High yield securities may be regarded as predominately speculative with respect to the issuer’s continuing ability to meet principal and interest payments. They may also be more susceptible to real or perceived adverse economic and competitive industry conditions than higher-rated securities. The Emerging Markets Bond Portfolio may invest in securities that are in default with respect to the payment of interest or repayment of principal, or presenting an imminent risk of default with respect to such payments. Issuers of securities in default may fail to resume principal or interest payments, in which case the Portfolio may lose its entire investment.


41		PIMCO Variable Insurance Trust

changes in credit ratings and an issuer’s current financial condition may be better or worse than a rating indicates. A Portfolio will not necessarily sell a security when its rating is reduced below its rating at the time of purchase. PIMCO does not rely solely on credit ratings, and develops its own analysis of issuer credit quality.

A Portfolio may purchase unrated securities (which are not rated by a rating agency) if its portfolio manager determines that the security is of comparable quality to a rated security that the Portfolio may purchase. Unrated securities may be less liquid than comparable rated securities and involve the risk that the portfolio manager may not accurately evaluate the security’s comparative credit rating. Analysis of the creditworthiness of issuers of high yield securities may be more complex than for issuers of higher-quality fixed income securities. To the extent that a Portfolio invests in high yield and/or unrated securities, the Portfolio’s success in achieving its investment objective may depend more heavily on the portfolio manager’s creditworthiness analysis than if the Portfolio invested exclusively in higher-quality and rated securities.

Variable and Floating Rate Securities

Variable and floating rate securities provide for a periodic adjustment in the interest rate paid on the obligations. Each Portfolio may invest in floating rate debt instruments (“floaters”) and (except for the Money Market Portfolio) engage in credit spread trades. While floaters provide a certain degree of protection against rises in interest rates, a Portfolio will participate in any declines in interest rates as well. Each Portfolio (except the Money Market Portfolio) may also invest in inverse floating rate debt instruments (“inverse floaters”). An inverse floater may exhibit greater price volatility than a fixed rate obligation of similar credit quality. A Portfolio may not invest more than 5% of its assets in any combination of inverse floater, interest only, or principal only securities.

Inflation-Indexed Bonds

Inflation-indexed bonds are fixed income securities whose principal value is periodically adjusted according to the rate of inflation. If the index measuring inflation falls, the principal value of inflation-indexed bonds will be adjusted downward, and consequently the interest payable on these securities (calculated with respect to a smaller principal amount) will be reduced. Repayment of the original bond principal upon maturity (as adjusted for inflation) is guaranteed in the case of U.S. Treasury inflation-indexed bonds. For bonds that do not provide a similar guarantee, the adjusted principal value of the bond repaid at maturity may be less than the original principal.

The value of inflation-indexed bonds is expected to change in response to changes in real interest rates. Real interest rates are tied to the relationship between nominal interest rates and the rate of inflation. If nominal interest rates increase at a faster rate than inflation, real interest rates may rise, leading to a decrease in value of inflation-indexed bonds. Short-term increases in inflation may lead to a decline in value. Any increase in the principal amount of an inflation-indexed bond will be considered taxable ordinary income, even though investors do not receive their principal until maturity.

Event-Linked Bonds

Each Portfolio (except the Money Market Portfolio) may invest in “event-linked bonds,” which are fixed income securities for which the return of principal and payment of interest is contingent on the non-occurrence of a specific “trigger” event, such as a hurricane, earthquake or other physical or weather-related phenomenon. Some event-linked bonds are commonly referred to as “catastrophe bonds.” If a trigger event occurs, a Portfolio may lose a portion or all of its principal invested in the bond. Event-linked bonds often provide for an extension of maturity to process and audit loss claims where a trigger event has, or possibly has, occurred. Event-linked bonds may also expose the Portfolio to certain unanticipated risks including but not limited to issuer (credit) default, adverse regulatory or jurisdictional interpretation, and adverse tax consequences. Event-linked bonds may also be subject to liquidity risk.

Convertible and Equity Securities

Each Portfolio may invest in convertible securities. Convertible securities are generally preferred stocks and other securities, including fixed income securities and warrants, that are convertible into or exercisable for common stock at a stated price or rate. The price of a convertible security will normally vary in some proportion


Prospectus		42

to changes in the price of the underlying common stock because of this conversion or exercise feature. However, the value of a convertible security may not increase or decrease as rapidly as the underlying common stock. A convertible security will normally also provide income and is subject to interest rate risk. Convertible securities may be lower-rated securities subject to greater levels of credit risk. A Portfolio may be forced to convert a security before it would otherwise choose, which may have an adverse effect on the Portfolio’s ability to achieve its investment objective.

While the Fixed Income Portfolios intend to invest primarily in fixed income securities, each may invest in convertible securities or equity securities. While some countries or companies may be regarded as favorable investments, pure fixed income opportunities may be unattractive or limited due to insufficient supply, or legal or technical restrictions. In such cases, a Portfolio may consider convertible securities or equity securities to gain exposure to such investments.

Equity securities generally have greater price volatility than fixed income securities. The market price of equity securities owned by a Portfolio may go up or down, sometimes rapidly or unpredictably. Equity securities may decline in value due to factors affecting equity securities markets generally or particular industries represented in those markets. The value of an equity security may also decline for a number of reasons which directly relate to the issuer, such as management performance, financial leverage and reduced demand for the issuer’s goods or services.

Foreign (Non-U.S.) Securities

Investing in the securities of issuers in any foreign country involves special risks and considerations not typically associated with investing in U.S. companies. Shareholders should consider carefully the substantial risks involved for Portfolios that invest in securities issued by foreign companies and governments of foreign countries. These risks include: differences in accounting, auditing and financial reporting standards; generally higher commission rates on foreign portfolio transactions; the possibility of nationalization, expropriation or confiscatory taxation; adverse changes in investment or exchange control regulations; and political instability. Individual foreign economies may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross domestic product, rates of inflation, capital reinvestment, resources, self-sufficiency and balance of payments position. The securities markets, values of securities, yields and risks associated with foreign securities markets may change independently of each other. Also, foreign securities and dividends and interest payable on those securities may be subject to foreign taxes, including taxes withheld from payments on those securities. Foreign securities often trade with less frequency and volume than domestic securities and therefore may exhibit greater price volatility. Investments in foreign securities may also involve higher custodial costs than domestic investments and additional transaction costs with respect to foreign currency conversions. Changes in foreign exchange rates also will affect the value of securities denominated or quoted in foreign currencies.

Certain Portfolios also may invest in sovereign debt issued by governments, their agencies or instrumentalities, or other government-related entities. Holders of sovereign debt may be requested to participate in the rescheduling of such debt and to extend further loans to governmental entities. In addition, there is no bankruptcy proceeding by which defaulted sovereign debt may be collected.

• Emerging Market Securities. The Emerging Markets Bond Portfolio invests primarily in securities of issuers based in countries with developing (or “emerging market”) economies, while the Short-Term and Low Duration Portfolios may invest up to 5% of their assets in such securities and each remaining Portfolio that may invest in foreign securities may invest up to 10% of its assets in such securities. Investing in emerging market securities imposes risks different from, or greater than, risks of investing in domestic securities or in foreign, developed countries. These risks include: smaller market capitalization of securities markets, which may suffer periods of relative illiquidity; significant price volatility; restrictions on foreign investment; possible repatriation of investment income and capital. In addition, foreign investors may be required to register the proceeds of sales; future economic or political crises could lead to price controls, forced mergers, expropriation or confiscatory


43		PIMCO Variable Insurance Trust

taxation, seizure, nationalization, or creation of government monopolies. The currencies of emerging market countries may experience significant declines against the U.S. dollar, and devaluation may occur subsequent to investments in these currencies by a Portfolio. Inflation and rapid fluctuations in inflation rates have had, and may continue to have, negative effects on the economies and securities markets of certain emerging market countries.

Additional risks of emerging markets securities may include: greater social, economic and political uncertainty and instability; more substantial governmental involvement in the economy; less governmental supervision and regulation; unavailability of currency hedging techniques; companies that are newly organized and small; differences in auditing and financial reporting standards, which may result in unavailability of material information about issuers; and less developed legal systems. In addition, emerging securities markets may have different clearance and settlement procedures, which may be unable to keep pace with the volume of securities transactions or otherwise make it difficult to engage in such transactions. Settlement problems may cause a Portfolio to miss attractive investment opportunities, hold a portion of its assets in cash pending investment, or be delayed in disposing of a portfolio security. Such a delay could result in possible liability to a purchaser of the security.

Each Portfolio (except the Total Return II and Long-Term U.S. Government Portfolios) may invest in Brady Bonds, which are securities created through the exchange of existing commercial bank loans to sovereign entities for new obligations in connection with a debt restructuring. Investments in Brady Bonds may be viewed as speculative. Brady Bonds acquired by a Portfolio may be subject to restructuring arrangements or to requests for new credit, which may cause the Portfolio to suffer a loss of interest or principal on any of its holdings.

Foreign (Non-U.S.) Currencies

A Portfolio that invests directly in foreign currencies or in securities that trade in, or receive revenues in, foreign currencies will be subject to currency risk. Foreign currency exchange rates may fluctuate significantly over short periods of time. They generally are determined by supply and demand in the foreign exchange markets and the relative merits of investments in different countries, actual or perceived changes in interest rates and other complex factors. Currency exchange rates also can be affected unpredictably by intervention (or the failure to intervene) by U.S. or foreign governments or central banks, or by currency controls or political developments. For example, uncertainty surrounds the introduction of the euro (a common currency unit for the European Union) and the effect it may have on the value of European currencies as well as securities denominated in local European currencies. These and other currencies in which the Portfolios’ assets are denominated may be devalued against the U.S. dollar, resulting in a loss to the Portfolios.

• Foreign Currency Transactions. Portfolios that invest in securities denominated in foreign currencies may enter into forward foreign currency exchange contracts and invest in foreign currency futures contracts and options on foreign currencies and futures. A forward foreign currency exchange contract, which involves an obligation to purchase or sell a specific currency at a future date at a price set at the time of the contract, reduces a Portfolio’s exposure to changes in the value of the currency it will deliver and increases its exposure to changes in the value of the currency it will receive for the duration of the contract. The effect on the value of a Portfolio is similar to selling securities denominated in one currency and purchasing securities denominated in another currency. A contract to sell foreign currency would limit any potential gain which might be realized if the value of the hedged currency increases. A Portfolio may enter into these contracts to hedge against foreign exchange risk, to increase exposure to a foreign currency or to shift exposure to foreign currency fluctuations from one currency to another. Suitable hedging transactions may not be available in all circumstances and there can be no assurance that a Portfolio will engage in such transactions at any given time or from time to time. Also, such transactions may not be successful and may eliminate any chance for a Portfolio to benefit from favorable fluctuations in relevant foreign currencies. A Portfolio may use one currency (or a basket of currencies) to hedge against adverse changes in the value of another currency (or a basket of currencies) when exchange rates


Prospectus		44

between the two currencies are positively correlated. The Portfolio will segregate assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees to cover its obligations under forward foreign currency exchange contracts entered into for non-hedging purposes.

Repurchase Agreements

Each Portfolio may enter into repurchase agreements, in which the Portfolio purchases a security from a bank or broker-dealer and agrees to repurchase the security at the Portfolio’s cost plus interest within a specified time. If the party agreeing to repurchase should default, the Portfolio will seek to sell the securities which it holds. This could involve procedural costs or delays in addition to a loss on the securities if their value should fall below their repurchase price. Repurchase agreements maturing in more than seven days are considered illiquid securities.

Reverse Repurchase Agreements, Dollar Rolls and Other Borrowings

Each Portfolio may enter into reverse repurchase agreements and dollar rolls, subject to the Portfolio’s limitations on borrowings. A reverse repurchase agreement or dollar roll involves the sale of a security by a Portfolio and its agreement to repurchase the instrument at a specified time and price, and may be considered a form of borrowing for some purposes. A Portfolio will segregate assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees to cover its obligations under reverse repurchase agreements, dollar rolls, and other borrowings. Reverse repurchase agreements, dollar rolls and other forms of borrowings may create leveraging risk for a Portfolio.

Each Portfolio may borrow money to the extent permitted under the Investment Company Act of 1940 (“1940 Act”), as amended. This means that, in general, a Portfolio may borrow money from banks for any purpose on a secured basis in an amount up to ¹/3 of the Portfolio’s total assets. A Portfolio may also borrow money for temporary administrative purposes on an unsecured basis in an amount not to exceed 5% of the Portfolio’s total assets.

Derivatives

Each Portfolio (except the Money Market Portfolio) may, but is not required to, use derivative instruments for risk management purposes or as part of its investment strategies. Generally, derivatives are financial contracts whose value depends upon, or is derived from, the value of an underlying asset, reference rate or index, and may relate to stocks, bonds, interest rates, currencies or currency exchange rates, commodities, and related indexes. Examples of derivative instruments include options contracts, futures contracts, options on futures contracts and swap agreements. Each Portfolio may invest all of its assets in derivative instruments, subject to the Portfolio’s objective and policies. A portfolio manager may decide not to employ any of these strategies and there is no assurance that any derivatives strategy used by a Portfolio will succeed. A description of these and other derivative instruments that the Portfolios may use are described under “Investment Objectives and Policies” in the Statement of Additional Information.

A Portfolio’s use of derivative instruments involves risks different from, or greater than, the risks associated with investing directly in securities and other more traditional investments. A description of various risks associated with particular derivative instruments is included in “Investment Objectives and Policies” in the Statement of Additional Information. The following provides a more general discussion of important risk factors relating to all derivative instruments that may be used by the Portfolios.

Management Risk. Derivative products are highly specialized instruments that require investment techniques and risk analyses different from those associated with stocks and bonds. The use of a derivative requires an understanding not only of the underlying instrument but also of the derivative itself, without the benefit of observing the performance of the derivative under all possible market conditions.

Credit Risk. The use of a derivative instrument involves the risk that a loss may be sustained as a result of the failure of another party to the contract (usually referred to as a “counterparty”) to make required payments or otherwise comply with the contract’s terms.


45		PIMCO Variable Insurance Trust

Liquidity Risk. Liquidity risk exists when a particular derivative instrument is difficult to purchase or sell. If a derivative transaction is particularly large or if the relevant market is illiquid (as is the case with many privately negotiated derivatives), it may not be possible to initiate a transaction or liquidate a position at an advantageous time or price.

Leverage Risk. Because many derivatives have a leverage component, adverse changes in the value or level of the underlying asset, reference rate or index can result in a loss substantially greater than the amount invested in the derivative itself. Certain derivatives have the potential for unlimited loss, regardless of the size of the initial investment. When a Portfolio uses derivatives for leverage, investments in that Portfolio will tend to be more volatile, resulting in larger gains or losses in response to market changes. To limit leverage risk, each Portfolio will segregate assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees (or, as permitted by applicable regulation, enter into certain offsetting positions) to cover its obligations under derivative instruments.

Lack of Availability. Because the markets for certain derivative instruments (including markets located in foreign countries) are relatively new and still developing, suitable derivatives transactions may not be available in all circumstances for risk management or other purposes. There is no assurance that a Portfolio will engage in derivatives transactions at any time or from time to time. A Portfolio’s ability to use derivatives may also be limited by certain regulatory and tax considerations.

Market and Other Risks. Like most other investments, derivative instruments are subject to the risk that the market value of the instrument will change in a way detrimental to a Portfolio’s interest. If a portfolio manager incorrectly forecasts the values of securities, currencies or interest rates or other economic factors in using derivatives for a Portfolio, the Portfolio might have been in a better position if it had not entered into the transaction at all. While some strategies involving derivative instruments can reduce the risk of loss, they can also reduce the opportunity for gain or even result in losses by offsetting favorable price movements in other Portfolio investments. A Portfolio may also have to buy or sell a security at a disadvantageous time or price because the Portfolio is legally required to maintain offsetting positions or asset coverage in connection with certain derivatives transactions.

Other risks in using derivatives include the risk of mispricing or improper valuation of derivatives and the inability of derivatives to correlate perfectly with underlying assets, rates and indexes. Many derivatives, in particular privately negotiated derivatives, are complex and often valued subjectively. Improper valuations can result in increased cash payment requirements to counterparties or a loss of value to a Portfolio. Also, the value of derivatives may not correlate perfectly, or at all, with the value of the assets, reference rates or indexes they are designed to closely track. In addition, a Portfolio’s use of derivatives may cause the Portfolio to realize higher amounts of short-term capital gains (generally taxed at ordinary income tax rates) than if the Portfolio had not used such instruments.

Delayed Funding Loans and Revolving Credit Facilities

The Portfolios may also enter into, or acquire participations in, delayed funding loans and revolving credit facilities, in which a lender agrees to make loans up to a maximum amount upon demand by the borrower during a specified term. These commitments may have the effect of requiring a Portfolio to increase its investment in a company at a time when it might not otherwise decide to do so (including at a time when the company’s financial condition makes it unlikely that such amounts will be repaid). To the extent that a Portfolio is committed to advance additional funds, it will segregate assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees in an amount sufficient to meet such commitments. Delayed funding loans and revolving credit facilities are subject to credit, interest rate and liquidity risk and the risks of being a lender.


Prospectus		46

When-Issued, Delayed Delivery and Forward Commitment Transactions

Each Portfolio may purchase securities which it is eligible to purchase on a when-issued basis, may purchase and sell such securities for delayed delivery and may make contracts to purchase such securities for a fixed price at a future date beyond normal settlement time (forward commitments). When-issued transactions, delayed delivery purchases and forward commitments involve a risk of loss if the value of the securities declines prior to the settlement date. This risk is in addition to the risk that the Portfolio’s other assets will decline in value. Therefore, these transactions may result in a form of leverage and increase a Portfolio’s overall investment exposure. Typically, no income accrues on securities a Portfolio has committed to purchase prior to the time delivery of the securities is made, although a Portfolio may earn income on securities it has segregated to cover these positions.

Investment in Other Investment Companies

Each Portfolio may invest up to 10% of its assets in securities of other investment companies, such as closed-end management investment companies, or in pooled accounts or other investment vehicles which invest in foreign markets. As a shareholder of any investment company, a Portfolio may indirectly bear service and other fees which are in addition to the fees the Portfolio pays its service providers.

Subject to the restrictions and limitations of the 1940 Act, each Portfolio may, in the future, elect to pursue its investment objective by investing in one or more underlying investment vehicles or companies that have substantially similar investment objectives, policies and limitations as the Portfolio.

Short Sales

Each Portfolio may make short sales as part of its overall portfolio management strategies or to offset a potential decline in value of a security. A short sale involves the sale of a security that is borrowed from a broker or other

institution to complete the sale. Short sales expose a Portfolio to the risk that it will be required to acquire, convert or exchange securities to replace the borrowed securities (also known as “covering” the short position) at a time when the securities sold short have appreciated in value, thus resulting in a loss to the Portfolio. A Portfolio making a short sale must segregate assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees or otherwise cover its position in a permissible manner.

Illiquid Securities

Each Portfolio may invest up to 15% (10% in the case of the Money Market Portfolio) of its net assets in illiquid securities. Certain illiquid securities may require pricing at fair value as determined in good faith under the supervision of the Board of Trustees. A portfolio manager may be subject to significant delays in disposing of illiquid securities, and transactions in illiquid securities may entail registration expenses and other transaction costs that are higher than those for transactions in liquid securities. The term “illiquid securities” for this purpose means securities that cannot be disposed of within seven days in the ordinary course of business at approximately the amount at which a Portfolio has valued the securities. Restricted securities, i.e., securities subject to legal or contractual restrictions on resale, may be illiquid. However, some restricted securities (such as securities issued pursuant to Rule 144A under the Securities Act of 1933 and certain commercial paper) may be treated as liquid, although they may be less liquid than registered securities traded on established secondary markets.

Loans of Portfolio Securities

For the purpose of achieving income, each Portfolio may lend its portfolio securities to brokers, dealers, and other financial institutions provided a number of conditions are satisfied, including that the loan is fully collateralized. Please see “Investment Objectives and Policies” in the Statement of Additional Information for details. When a Portfolio lends portfolio securities, its investment performance will continue to reflect changes in the value of the securities loaned, and the Portfolio will also receive a fee or interest on the collateral. Securities lending involves the risk of loss of rights in the collateral or delay in recovery of the collateral if the borrower fails to return the security loaned or becomes insolvent. A Portfolio may pay lending fees to a party arranging the loan.


47		PIMCO Variable Insurance Trust

Portfolio Turnover

The length of time a Portfolio has held a particular security is not generally a consideration in investment decisions. A change in the securities held by a Portfolio is known as “portfolio turnover.” Each Portfolio may engage in frequent and active trading of portfolio securities to achieve its investment objective, particularly during periods of volatile market movements. High portfolio turnover (e.g., over 100%) involves correspondingly greater expenses to a Portfolio, including brokerage commissions or dealer mark-ups and other transaction costs on the sale of securities and reinvestments in other securities. The trading costs associated with portfolio turnover may adversely effect the Portfolio’s performance.

Temporary Defensive Positions

For temporary or defensive purposes, the Portfolios may invest without limit in U.S. debt securities, including taxable securities and short-term money market securities, when PIMCO deems it appropriate to do so. When a Portfolio engages in such strategies, it may not achieve its investment objective.

Changes in Investment Objectives and Policies

The investment objective of each Portfolio is fundamental and may not be changed without shareholder approval. Unless otherwise stated, all other investment policies of the Portfolios may be changed by the Board of Trustees without shareholder approval.

Percentage Investment Limitations

Unless otherwise stated, all percentage limitations on Portfolio investments listed in this Prospectus will apply at the time of investment. A Portfolio would not violate these limitations unless an excess or deficiency occurs or exists immediately after and as a result of an investment.

Other Investments and Techniques

The Portfolios may invest in other types of securities and use a variety of investment techniques and strategies which are not described in this Prospectus. These securities and techniques may subject the Portfolios to additional risks. Please see the Statement of Additional Information for additional information about the securities and investment techniques described in this Prospectus and about additional securities and techniques that may be used by the Portfolios.


Prospectus		48

Financial Highlights

The financial highlights table is intended to help a shareholder understand the Portfolio’s financial performance for the period of operations. Certain information reflects financial results for a single Portfolio share. The total returns in the table represent the rate that an investor would have earned or lost on an investment in a particular class of shares of a Portfolio (assuming reinvestment of all dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP, the Portfolio’s independent auditors. Their report, along with full financial statements, appears in the Trust’s Annual Report, which is available upon request.

Year or Period Ended	Net Asset Value Beginning of Period		Net Investment Income(b)		Net Realized and Unrealized Gain (Loss) on Investments(b)			Total Income (Loss) from Investment Operations			Dividends from Net Investment Income			Distributions from Net Realized Capital Gains

Money Market
Administrative Class
12/31/2001	$	1.00	$	0.04	$	0.00		$	0.04		$	(0.04	)	$	0.00
12/31/2000		1.00		0.06		0.00			0.06			(0.06	)		0.00
12/31/1999(a)		1.00		0.01		0.00			0.01			(0.01	)		0.00
Institutional Class
12/31/2001		1.00		0.04		0.00			0.04			(0.04	)		0.00
12/31/2000(e)		1.00		0.04		0.00			0.04			(0.04	)		0.00
Short-Term
Administrative Class
12/31/2001	$	10.01	$	0.48	$	0.15		$	0.63		$	(0.52	)	$	(0.04	)
12/31/2000		10.00		0.53		0.09			0.62			(0.61	)		0.00
12/31/1999(a)		10.00		0.13		0.00			0.13			(0.13	)		0.00
Institutional Class
12/31/2001		10.01		0.53		0.12			0.65			(0.54	)		(0.04	)
12/31/2000(f)		10.00		0.45		0.01			0.46			(0.45	)		0.00
Low Duration
Administrative Class
12/31/2001	$	9.82	$	0.52	$	0.21		$	0.73		$	(0.54	)	$	(0.06	)
12/31/2000		9.74		0.59		0.11			0.70			(0.62	)		0.00
12/31/1999(c)		10.00		0.50		(0.25	)		0.25			(0.51	)		0.00
Institutional Class
12/31/2001		9.82		0.60		0.15			0.75			(0.56	)		(0.06	)
12/31/2000(e)		9.70		0.46		0.12			0.58			(0.46	)		0.00
Real Return
Administrative Class
12/31/2001	$	10.34	$	0.61	$	0.38		$	0.99		$	(0.63	)	$	(0.14	)
12/31/2000		9.80		0.64		0.69			1.33			(0.79	)		0.00
12/31/1999(a)		10.00		0.20		(0.20	)		0.00			(0.20	)		0.00
Institutional Class
12/31/2001		10.34		0.57		0.43			1.00			(0.64	)		(0.14	)
12/31/2000(e)		10.11		0.62		0.23			0.85			(0.62	)		0.00
Total Return
Administrative Class
12/31/2001	$	9.77	$	0.45	$	0.35		$	0.80		$	(0.49	)	$	(0.19	)
12/31/2000		9.45		0.62		0.30			0.92			(0.60	)		0.00
12/31/1999		10.09		0.58		(0.64	)		(0.06	)		(0.58	)		0.00
12/31/1998(d)		10.00		0.56		0.28			0.84			(0.56	)		(0.19	)
Institutional Class
12/31/2001		9.77		0.50		0.31			0.81			(0.50	)		(0.19	)
12/31/2000(e)		9.50		0.45		0.27			0.72			(0.45	)		0.00

(a)

Commenced operations on September 30, 1999.

(b)

Per share amounts based on average number of shares outstanding during the period.

(c)

Commenced operations on February 16, 1999.

(d)

Commenced operations on December 31, 1997.

(e)

Commenced operations on April 10, 2000.

(f)

Commenced operations on April 28, 2000.


49		PIMCO Variable Insurance Trust

Tax Basis Return of Capital	Total Distributions		Net Asset Value End of Period		Total Return		Net Assets End of Period (000’s)		Ratio of Expenses to Average Net Assets		Ratio of Net Investment Income to Average Net Assets		Portfolio Turnover Rate




$0.00	$	(0.04)	$	1.00	3.83	%	$	12,860	0.50	% (m)	3.37	%	N/A
0.00		(0.06)		1.00	6.01	%		4,334	0.50	%	5.88	%	N/A
0.00		(0.01)		1.00	1.30	%		3,605	0.50	%*(g)	5.14	%*	N/A

0.00		(0.04)		1.00	3.99	%		11	0.35	%	4.59	%	N/A
0.00		(0.04)		1.00	4.60	%		80	0.35	%*	6.02	%*	N/A


$0.00	$	(0.56)	$	10.08	6.45	%	$	1,683	0.61	% (n)(o)	4.74	%	94	%
0.00		(0.61)		10.01	6.42	%		37	0.60	%	5.27	%	281	%
0.00		(0.13)		10.00	1.32	%		3,040	0.60	%*(h)	5.17	%*	N/A

0.00		(0.58)		10.08	6.59	%		4,093	0.47	% (p)(q)	5.30	%	94	%
0.00		(0.45)		10.01	4.64	%		3,388	0.45	%*	6.56	%*	281	%


$0.00	$	(0.60)	$	9.95	7.61	%	$	5,175	0.69	% (r)(s)	5.18	%	661	%
0.00		(0.62)		9.82	7.41	%		742	0.65	%	6.07	%	165	%
0.00		(0.51)		9.74	2.56	%		5,149	0.65	%*(i)	5.74	%*	11	%

0.00		(0.62)		9.95	7.77	%		468	0.55	% (t)	5.99	%	661	%
0.00		(0.46)		9.82	6.13	%		5,430	0.50	%*	6.49	%*	165	%


$0.00	$	(0.77)	$	10.56	9.63	%	$	7,406	0.66	% (r)(u)	5.63	%	58	%
0.00		(0.79)		10.34	14.11	%		448	0.65	%	6.69	%	18	%
0.00		(0.20)		9.80	(0.03)	%		3,000	0.65	%*(j)	7.72	%*	23	%

0.00		(0.78)		10.56	9.79	%		14	0.50	%	5.32	%	58	%
0.00		(0.62)		10.34	8.73	%		3,294	0.50	%*	8.41	%*	18	%


$0.00	$	(0.68)	$	9.89	8.37	%	$	332,823	0.65	% (v)	4.55	%	217	%
0.00		(0.60)		9.77	10.15	%		55,533	0.65	% (l)	6.46	%	415	%
0.00		(0.58)		9.45	(0.58)	%		3,877	0.65	% (k)	5.96	%	102	%
0.00		(0.75)		10.09	8.61	%		3,259	0.65	%	5.55	%	139	%

0.00		(0.69)		9.89	8.53	%		35,231	0.50	%	5.00	%	217	%
0.00		(0.45)		9.77	7.82	%		625	0.50	%*	6.48	%*	415	%

Annualized.

(g)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 1.27%* for the period ended December 31, 1999.

(h)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 1.42%* for the period ended December 31, 1999.

(i)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.78%* for the period ended December 31, 1999.

(j)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.92%* for the period ended December 31, 1999.

(k)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.69% for the period ended December 31, 1999.

(l)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.66% for the period ended December 31, 2000.

(m)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.51% for the period ended December 31, 2001.

(n)

Ratio of net expenses to average net assets excluding interest expense is 0.60%.

(o)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.62% for the period ended December 31, 2001.

(p)

Ratio of net expenses to average net assets excluding interest expense is 0.45%.

(q)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.46% for the period ended December 31, 2001.

(r)

Ratio of net expenses to average net assets excluding interest expense is 0.65%.

(s)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.70% for the period ended December 31, 2001.

(t)

Ratio of net expenses to average net assets excluding interest expense is 0.50%.

(u)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.67% for the period ended December 31, 2001.

(v)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.66% for the period ended December 31, 2001.


Prospectus		50

Year or Period Ended	Net Asset Value Beginning of Period	Net Investment Income(b)	Net Realized and Unrealized Gain (Loss) on Investments(b)		Total Income (Loss) from Investment Operations		Dividends from Net Investment Income		Distributions from Net Realized Capital Gains


Total Return II
Administrative Class
12/31/2001	$10.24	$0.48	$0.49		$0.97		$(0.48	)	$(0.61	)
12/31/2000	9.82	0.63	0.44		1.07		(0.65	)	0.00
12/31/1999(g)	10.00	0.32	(0.18	)	0.14		(0.32	)	0.00
Institutional Class
12/31/2001	10.24	0.50	0.49		0.99		(0.50	)	(0.61	)
12/31/2000(e)	10.02	0.50	0.22		0.72		(0.50	)	0.00
High Yield
Administrative Class
12/31/2001	$ 8.33	$0.64	$(0.45	)	$0.19		$(0.64	)	$0.00
12/31/2000	9.18	0.77	(0.85	)	(0.08	)	(0.77	)	0.00
12/31/1999	9.67	0.77	(0.49	)	0.28		(0.77	)	0.00
12/31/1998(h)	10.00	0.51	(0.34	)	0.17		(0.50	)	0.00
Long-Term U.S. Government
Administrative Class
12/31/2001	$10.56	$0.51	$0.09		$0.60		$(0.52	)	$(0.37	)
12/31/2000	9.22	0.56	1.34		1.90		(0.56	)	0.00
12/31/1999(a)	10.00	0.36	(0.78	)	(0.42	)	(0.36	)	0.00
Institutional Class
12/31/2001	10.56	0.54	0.08		0.62		(0.54	)	(0.37	)
12/31/2000(e)	9.90	0.43	0.66		1.09		(0.43	)	0.00
Foreign Bond
Administrative Class
12/31/2001	$ 9.40	$0.40	$0.30		$0.70		$(0.41	)	$0.00
12/31/2000	9.42	0.51	0.25		0.76		(0.52	)	(0.26	)
12/31/1999(c)	10.00	0.41	(0.49	)	(0.08	)	(0.41	)	(0.09	)
Institutional Class
12/31/2001	9.40	0.44	0.28		0.72		(0.43	)	0.00
12/31/2000(e)	9.48	0.39	0.18		0.57		(0.39	)	(0.26	)
StocksPLUS Growth and Income
Administrative Class
12/31/2001	$11.05	$0.46	$(1.74	)	$(1.28	)	$(0.42	)	$0.00
12/31/2000	13.56	0.76	(1.98	)	(1.22	)	(0.75	)	(0.54	)
12/31/1999	12.58	0.76	1.65		2.41		(0.61	)	(0.82	)
12/31/1998(d)	10.00	0.30	2.68		2.98		(0.29	)	(0.11	)
Institutional Class
12/31/2001	11.05	0.45	(1.71	)	(1.26	)	(0.43	)	0.00
12/31/2000(f)	13.21	0.49	(1.48	)	(0.99	)	(0.63	)	(0.54	)

(a)

Commenced operations on April 30, 1999.

(b)

Per share amounts based on average number of shares outstanding during the period.

(c)

Commenced operations on February 16, 1999.

(d)

Commenced operations on December 31, 1997.

(e)

Commenced operations on April 10, 2000.

(f)

Commenced operations on April 28, 2000.

(g)

Commenced operations on May 28, 1999.

(h)

Commenced operations on April 30, 1998.


51		PIMCO Variable Insurance Trust

Tax Basis Return of Capital	Total Distributions			Net Asset Value End of Period		Total Return		Net Assets End of Period (000’s)		Ratio of Expenses to Average Net Assets		Ratio of Net Investment Income to Average Net Assets		Portfolio Turnover Rate




$0.00	$	(1.09	)	$	10.12	9.72	%	$	2,403	0.65	% (m)	4.56	%	606	%
0.00		(0.65	)		10.24	11.30	%		2,203	0.65	%	6.34	%	937	%
0.00		(0.32	)		9.82	1.41	%		5,128	0.65	%*(s)	5.38	%*	378	%

0.00		(1.11	)		10.12	9.88	%		3,845	0.50	% (t)	4.71	%	606	%
0.00		(0.50	)		10.24	7.41	%		3,499	0.50	%*	6.90	%*	937	%


$0.00	$	(0.64	)	$	7.88	2.35	%	$	264,718	0.75	% (u)	7.88	%	129	%
0.00		(0.77	)		8.33	(0.86	)%		169,557	0.75	%	8.81	%	59	%
0.00		(0.77	)		9.18	3.01	%		151,020	0.75	% (v)	8.25	%	13	%
0.00		(0.50	)		9.67	1.80	%		49,761	0.75	%*	7.90	%*	13	%


$0.00	$	(0.89	)	$	10.27	5.86	%	$	33,013	0.65	% (m)	4.75	%	457	%
0.00		(0.56	)		10.56	21.24	%		9,625	0.65	%	5.70	%	533	%
0.00		(0.36	)		9.22	(4.28	)%		7,173	0.65	%*(j)	5.55	%*	294	%

0.00		(0.91	)		10.27	6.03	%		11	0.50	%	5.05	%	457	%
0.00		(0.43	)		10.56	11.32	%		10	0.50	%*	5.97	%*	533	%


$0.00	$	(0.41	)	$	9.69	7.59	%	$	4,856	0.90	% (n)	4.17	%	285	%
0.00		(0.78	)		9.40	8.36	%		924	0.90	%	5.38	%	306	%
0.00		(0.50	)		9.42	(0.78	)%		5,215	1.10	%*(k)(l)	4.83	%*	285	%

0.00		(0.43	)		9.69	7.75	%		935	0.75	%	4.56	%	285	%
0.00		(0.65	)		9.40	6.18	%		5,185	0.74	%*	5.58	%*	306	%


$0.00	$	(0.42	)	$	9.35	(11.43	)%	$	259,926	0.67	% (o)(p)	4.60	%	547	%
0.00		(1.29	)		11.05	(9.50	)%		272,751	0.65	% (i)	5.86	%	350	%
0.00		(1.43	)		13.56	19.85	%		230,412	0.65	%	5.69	%	34	%
0.00		(0.40	)		12.58	30.11	%		58,264	0.65	%	5.30	%	61	%

0.00		(0.43	)		9.36	(11.28	)%		187	0.52	% (q)(r)	4.60	%	547	%
0.00		(1.17	)		11.05	(7.91	)%		63	0.50	%*	5.79	%*	350	%

* Annualized.

(i)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.66% for the period ended December 31, 2000.

(j)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.71%* for the period ended December 31, 1999.

(k)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 1.25%* for the period ended December 31, 1999.

(l)

Ratio of net expenses to average net assets excluding interest expense is 0.90%.

(m)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.66% for the period ended December 31, 2001.

(n)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.91% for the period ended December 31, 2001.

(o)

Ratio of net expenses to average net assets excluding interest expense is 0.65%.

(p)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.67% for the period ended December 31, 2001.

(q)

Ratio of net expenses to average net assets excluding interest expense is 0.50%.

(r)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.53% for the period ended December 31, 2001.

(s)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.78%* for the period ended December 31, 1999.

(t)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.51% for the period ended December 31, 2001.

(u)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.76% for the period ended December 31, 2001.

(v)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.76% for the period ended December 31, 1999.


Prospectus		52

Other Information

Performance Information of Similar Funds

The following table provides information concerning the historical total return performance of the Institutional Class shares of certain series of PIMCO Funds: Pacific Investment Management Series (“PIMS”). Each PIMS series has investment objectives, policies and strategies substantially similar to those of its respective PIMCO Variable Insurance Trust (“PVIT”) Portfolio and is currently managed by the same portfolio manager (except the Global Bond Portfolio). While the investment objectives and policies of each PIMS series and its respective PVIT Portfolio are similar, they are not identical and the performance of the PIMS series and the PVIT Portfolio will vary. The data is provided to illustrate the past performance of PIMCO in managing a substantially similar investment portfolio and does not represent the past performance of any of the PVIT Portfolios or the future performance of any PVIT Portfolio or its portfolio manager. Consequently, potential investors should not consider this performance data as an indication of the future performance of any PVIT Portfolio or of its portfolio manager.

The performance data shown below reflects the operating expenses of the Institutional Class of each PIMS series. The operating expenses for the Institutional Class of the PIMS Global Bond Fund is lower than the operating expenses for the Institutional Class of the corresponding PVIT Portfolio. Furthermore, the operating expenses of the Institutional Class of each PIMS series in the table are lower than the operating expenses of each Administrative Class of the corresponding PVIT Portfolio. As such, performance would have been lower for those series and classes if the PVIT Portfolios’ expenses were used. In addition, the PIMS series, unlike the Portfolios, are not sold to Separate Accounts to fund Variable Contracts. As a result, the performance results presented below do not take into account charges or deductions against a Separate Account or Variable Contract for cost of insurance charges, premium loads, administrative fees, maintenance fees, premium taxes, mortality and expense risk charges, or other charges that may be incurred under a Variable Contract for which the Portfolio serves as an underlying investment vehicle. By contrast, Variable Contract Owners with contract value allocated to the Portfolios will be subject to charges and expenses relating to the Variable Contracts and Separate Accounts.

Each PIMS series’ performance data shown below is calculated in accordance with standards prescribed by the SEC for the calculation of average annual total return information. The investment results of the PIMS series presented below are unaudited and are not intended to predict or suggest results that might be experienced by the PIMS series or the Portfolios. Share prices and investment returns will fluctuate reflecting market conditions, as well as changes in company-specific fundamentals of portfolio securities. The performance data for the benchmark indices identified below does not reflect the fees or expenses of the PIMS series or the Portfolios.


53		PIMCO Variable Insurance Trust

Average Annual Total Return for Similar Series of PIMS Institutional Class

and for Benchmark Indices for Periods Ended December 31, 2001

1 Year

3 Years

5 Years

Since Inception

Inception Date

PIMCO Global Bond Fund¹

2.48

-0.50

1.89

5.28

11/23/93

J.P. Morgan Global (Unhedged)

-0.80

-1.23

2.42

PIMCO Emerging Markets Bond Fund²

28.17

22.97

N/A

11.13

7/31/97

J.P. Morgan Emerging Markets

-0.77

13.08

N/A

PIMCO Strategic Balanced Fund³

-2.80

2.14

9.63

10.64

6/28/96

S & P 500 Index

-11.88

-1.03

10.70

As of November 2000, the Global Bond Fund is managed by a different portfolio manager.

Prior to August 1999, the Emerging Markets Bond Fund was managed by a different portfolio manager.

Prior to January 1998, the Strategic Balanced Fund was managed by a different portfolio manager.


Prospectus		54

Appendix A

Description of Securities Ratings

A Portfolio’s investments may range in quality from securities rated in the lowest category in which the Portfolio is permitted to invest to securities rated in the highest category (as rated by Moody’s or S&P or, if unrated, determined by PIMCO to be of comparable quality). The percentage of a Portfolio’s assets invested in securities in a particular rating category will vary. Following is a description of Moody’s and S&P’s ratings applicable to fixed income securities.

High Quality Debt Securities are those rated in one of the two lightest rating categories (the highest category for commercial pages) or, if unrated, deemed comparable by PIMCO.

Investment Grade Debt Securities are those rated in one of the four highest rating categories, or if unrated deemed comparable by PIMCO.

Below Investment Grade High Yield Securities (“Junk Bonds”) are those rated lower than Baa by Moody’s or BBB by S&P and comparable securities. They are deemed predominantly speculative with respect to the issuer’s ability to repay principal and interest.

Following is a description of Moody’s and S&P’s rating categories applicable to fixed income securities.

Moody's Investors Service, Inc.

Corporate and Municipal Bond Ratings

Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as “gilt edge.” Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.

Aa: Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high-grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present that make the long-term risks appear somewhat larger than with Aaa securities.

A: Bonds which are rated A possess many favorable investment attributes and are to be considered as upper-medium-grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present that suggest a susceptibility to impairment sometime in the future.

Baa: Bonds which are rated Baa are considered as medium-grade obligations (i.e., they are neither highly protected nor poorly secured). Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well.

Ba: Bonds which are rated Ba are judged to have speculative elements; their future cannot be considered as well-assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class.

B: Bonds which are rated B generally lack characteristics of a desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small.


Prospectus		A-		1

Caa: Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.

Ca: Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.

C: Bonds which are rated C are the lowest rated class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.

Moody’s applies numerical modifiers, 1, 2, and 3 in each generic rating classified from Aa through B in its corporate bond rating system. The modifier 1 indicates that the security ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the issue ranks in the lower end of its generic rating category.

Corporate Short-Term Debt Ratings

Moody’s short-term debt ratings are opinions of the ability of issuers to repay punctually senior debt obligations which have an original maturity not exceeding one year. Obligations relying upon support mechanisms such as letters of credit and bonds of indemnity are excluded unless explicitly rated.

Moody’s employs the following three designations, all judged to be investment grade, to indicate the relative repayment ability of rated issuers:

PRIME-1: Issuers rated Prime-1 (or supporting institutions) have a superior ability for repayment of senior short-term debt obligations. Prime-1 repayment ability will often be evidenced by many of the following characteristics: leading market positions in well-established industries; high rates of return on funds employed; conservative capitalization structure with moderate reliance on debt and ample asset protection; broad margins in earnings coverage of fixed financial charges and high internal cash generation; and well-established access to a range of financial markets and assured sources of alternate liquidity.

PRIME-2: Issuers rated Prime-2 (or supporting institutions) have a strong ability for repayment of senior short-term debt obligations. This will normally be evidenced by many of the characteristics cited above but to a lesser degree. Earnings trends and coverage ratios, while sound, may be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained.

PRIME-3: Issuers rated Prime-3 (or supporting institutions) have an acceptable ability for repayment of senior short-term obligations. The effect of industry characteristics and market compositions may be more pronounced. Variability in earnings and profitability may result in changes in the level of debt protection measurements and may require relatively high financial leverage. Adequate alternate liquidity is maintained.

NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime rating categories.

Standard & Poor's Ratings Services

Corporate and Municipal Bond Ratings

Investment Grade

AAA: Debt rated AAA has the highest rating assigned by Standard & Poor’s. Capacity to pay interest and repay principal is extremely strong.

AA: Debt rated AA has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree.

A: Debt rated A has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories.


A-2		PIMCO Variable Insurance Trust

BBB: Debt rated BBB is regarded as having an adequate capacity to pay interest and repay principal. Whereas it normally exhibits adequate protection parameters, adverse economic conditions, or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than in higher-rated categories.

Speculative Grade

Debt rated BB, B, CCC, CC, and C is regarded as having predominantly speculative characteristics with respect to capacity to pay interest and repay principal. BB indicates the least degree of speculation and C the highest. While such debt will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major exposures to adverse conditions.

BB: Debt rated BB has less near-term vulnerability to default than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to inadequate capacity to meet timely interest and principal payments. The BB rating category also is used for debt subordinated to senior debt that is assigned an actual or implied BBB- rating.

B: Debt rated B has a greater vulnerability to default but currently has the capacity to meet interest payments and principal repayments. Adverse business, financial, or economic conditions will likely impair capacity or willingness to pay interest and repay principal. The B rating category also is used for debt subordinated to senior debt that is assigned an actual or implied BB or BB- rating.

CCC: Debt rated CCC has a currently identifiable vulnerability to default and is dependent upon favorable business, financial, and economic conditions to meet timely payment of interest and repayment of principal. In the event of adverse business, financial or economic conditions, it is not likely to have the capacity to pay interest and repay principal. The CCC rating category also is used for debt subordinated to senior debt that is assigned an actual or implied B or B- rating.

CC: The rating CC is typically applied to debt subordinated to senior debt that is assigned an actual or implied CCC rating.

C: The rating C is typically applied to debt subordinated to senior debt that is assigned an actual or implied CCC-debt rating. The C rating may be used to cover a situation where a bankruptcy petition has been filed, but debt service payments are continued.

CI: The rating CI is reserved for income bonds on which no interest is being paid.

D: Debt rated D is in payment default. The D rating category is used when interest payments or principal payments are not made on the date due even if the applicable grace period has not expired, unless S&P believes that such payments will be made during such grace period. The D rating will also be used upon the filing of a bankruptcy petition if debt service payments are jeopardized.

Plus (+) or Minus (-): The ratings from AA to CCC may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.

Provisional ratings: The letter “p” indicates that the rating is provisional. A provisional rating assumes the successful completion of the project being financed by the debt being rated and indicates that payment of debt service requirements is largely or entirely dependent upon the successful and timely completion of the project. This rating, however, while addressing credit quality after completion of the project, makes no comment on the likelihood of, or the risk of default upon failure of, such completion. The investor should exercise his own judgment with respect to such likelihood and risk.


Prospectus		A-		3

obligations are: securities whose principal or interest return is indexed to equities, commodities, or currencies; certain swaps and options; and interest only and principal only mortgage securities.

The absence of an “r” symbol should not be taken as an indication that an obligation will exhibit no volatility or variability in total return.

N.R.: Not rated.

Debt obligations of issuers outside the United States and its territories are rated on the same basis as domestic corporate and municipal issues. The ratings measure the creditworthiness of the obligor but do not take into account currency exchange and related uncertainties.

Commercial Paper Rating Definitions

Commercial Paper Rating DefinitionsA Standard & Poor’s commercial paper rating is a current assessment of the likelihood of timely payment of debt having an original maturity of no more than 365 days. Ratings are graded into several categories, ranging from A for the highest quality obligations to D for the lowest. These categories are as follows:

A-1: This highest category indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus sign (+) designation.

A-2: Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1.

A-3: Issues carrying this designation have adequate capacity for timely payment. They are, however, more vulnerable to the adverse effects of changes in circumstances than obligations carrying the higher designations.

B: Issues rated B are regarded as having only speculative capacity for timely payment.

C: This rating is assigned to short-term debt obligations with a doubtful capacity for payment.

D: Debt rated D is in payment default. The D rating category is used when interest payments or principal payments are not made on the date due, even if the applicable grace period has not expired, unless S&P believes that such payments will be made during such grace period.

A commercial paper rating is not a recommendation to purchase, sell or hold a security inasmuch as it does not comment as to market price or suitability for a particular investor. The ratings are based on current information furnished to Standard & Poor’s by the issuer or obtained from other sources it considers reliable. Standard & Poor’s does not perform an audit in connection with any rating and may, on occasion, rely on unaudited financial information. The ratings may be changed, suspended, or withdrawn as a result of changes in or unavailability of such information.


A-4		PIMCO Variable Insurance Trust

PIMCO Variable Insurance Trust

INVESTMENT ADVISER AND ADMINISTRATOR

PIMCO, 840 Newport Center Drive, Suite 300, Newport Beach, CA 92660

CUSTODIAN

State Street Bank & Trust Co., 801 Pennsylvania, Kansas City, MO 64105

TRANSFER AGENT

National Financial Data Services, 330 W. 9th Street, 4th Floor, Kansas City, MO 64105

INDEPENDENT ACCOUNTANTS

PricewaterhouseCoopers LLP, 1055 Broadway, Kansas City, MO 64105

LEGAL COUNSEL

Dechert Price & Rhoads, 1775 Eye Street N.W., Washington, D.C. 20006

The Trust’s Statement of Additional Information (“SAI”) and annual and semi-annual reports to shareholders include additional information about the Portfolios. The SAI and the financial statements included in the

Portfolios’ most recent annual

report to shareholders are incor-

porated by reference into this

Prospectus, which means they are

part of this Prospectus for legal

purposes. The Portfolios’ annual

report discusses the market condi-

tions and investment strategies

that significantly affected each

Portfolio’s performance during its last fiscal year.

You may get free copies of any of these materials, request other information about a Portfolio, or make shareholder inquiries by calling the Trust at 1-800-927-4648 or by writing to:

PIMCO Variable Insurance Trust

840 Newport Center Drive

Suite 300

Newport Beach, CA 92660

You may review and copy informa-

tion about the Trust, including its SAI, at the Securities and Exchange Commission’s public reference room in Washington, D.C. You may call the Commission

at 1-202-942-8090 for information about the operation of the public reference room. You may also access reports and other informa- tion about the Trust on the Commission’s Web site at www.sec.gov. You may get copies of this information, with payment of a duplication fee, by writing the Public Reference Section of the Commission, Washington, D.C.

20549-0102, or by e-mailing your request to publicinfo@sec.gov. Reference the Trust’s Investment Company Act file number in your correspondence.

Investment Company Act file no. 811-8399

PIMCO Funds

840 Newport Center Drive

Suite 300

Newport Beach, CA 92660

		PIMCO Funds Prospectus

PIMCO Variable Insurance Trust May 1, 2002 Share Class ^Ins^{Institutional}		SHORT DURATION BOND PORTFOLIO Short-Term Portfolio




		This cover is not part of the Prospectus

Prospectus

PIMCO Variable Insurance Trust

May 1, 2002

Share Class

Institutional

This Prospectus describes the Short-Term Portfolio (the “Portfolio”), which is a separate investment portfolio offered by the PIMCO Variable Insurance Trust (the “Trust”). The Portfolio provides access to the professional investment management services offered by Pacific Investment Management Company LLC (“PIMCO”). The investments made by the Portfolio at any given time are not expected to be the same as those made by other mutual funds for which PIMCO acts as investment adviser, including mutual funds with investment objectives and strategies similar to those of the Portfolio. Accordingly, the performance of the Portfolio can be expected to vary from that of the other mutual funds.

This Prospectus explains what you should know about the Portfolio before you invest. Please read it carefully.

Shares of the Portfolio currently are sold to segregated asset accounts (“Separate Accounts”) of insurance companies that fund variable annuity contracts and variable life insurance policies (“Variable Contracts”). Assets in the Separate Account are invested in shares of the Portfolio in accordance with allocation instructions received from owners of the Variable Contracts (“Variable Contract Owners”). Variable Contract Owners do not deal directly with the Portfolio to purchase or redeem shares. The allocation rights of Variable Contract Owners are described in the accompanying Separate Account prospectus. Shares of the Portfolio also may be sold to qualified pension and retirement plans outside of the separate account context.

This Prospectus should be read in conjunction with the prospectus of the Separate Account. Both prospectuses should be read carefully and retained for future reference.


Prospectus		1

Table of Contents

Summary Information		3
Portfolio Summary		4
Short-Term Portfolio		4
Summary of Principal Risks		6
Management of the Portfolio		7
Investment Options		8
Purchases and Redemptions		8
How Portfolio Shares are Priced		9
Tax Consequences		10
Characteristics and Risks of Securities and Investment Techniques		11
Financial Highlights		20
Appendix A—Description of Securities Ratings		A-1


2		PIMCO Variable Insurance Trust

Summary Information

The table below compares certain investment characteristics of the Portfolio. Other important characteristics are described in the individual Portfolio Summary beginning on page 4. Following the table are certain key concepts which are used throughout the Prospectus.


		Main Investments	Duration	Credit Quality(1)	Non-U.S. Dollar Denominated Securities(2)



Short Duration Bond Portfolio	Short-Term	Money market instruments and short maturity fixed income securities	0-1 year	B to Aaa; max 10% below Baa	0-5%

(1)

As rated by Moody’s Investors Service, Inc., or equivalently rated by Standard & Poor’s Ratings Services, or if unrated, determined by PIMCO to be of comparable quality.

(2)

The Portfolio may invest beyond this limit in U.S. dollar denominated securities. The percentage limitation relates to non-U.S. dollar-denominated securities.

Fixed Income Instruments

“Fixed Income Instruments,” as used in this Prospectus, includes:

•

securities issued or guaranteed by the U.S. Government, its agencies or government-sponsored enterprises (“U.S. Government Securities”);

•

corporate debt securities of U.S. and non-U.S. issuers, including convertible securities and corporate commercial paper;

•

mortgage-backed and other asset-backed securities;

•

inflation-indexed bonds issued both by governments and corporations;

•

structured notes, including hybrid or “indexed” securities, event-linked bonds and loan participations;

•

delayed funding loans and revolving credit facilities;

•

bank certificates of deposit, fixed time deposits and bankers’ acceptances;

•

repurchase agreements and reverse repurchase agreements;

•

debt securities issued by states or local governments and their agencies, authorities and other government-sponsored enterprises;

•

obligations of non-U.S. governments or their subdivisions, agencies and government-sponsored enterprises; and

•

obligations of international agencies or supranational entities.

Duration

Duration is a measure of the expected life of a fixed income security that is used to determine the sensitivity of a security’s price to changes in interest rates. The longer a security’s duration, the more sensitive it will be to changes in interest rates. Similarly, a portfolio with a longer average portfolio duration will be more sensitive to changes in interest rates than a portfolio with a shorter average portfolio duration.Credit

Credit Ratings

In this Prospectus, references are made to credit ratings of debt securities which measure an issuer’s expected ability to pay principal and interest on time. Credit ratings are determined by rating organizations, such as Standard & Poor’s Rating Service (“S&P”) or Moody’s Investors Service, Inc. (“Moody’s”). The following terms are generally used to describe the credit quality of debt securities depending on the security’s credit rating or, if unrated, credit quality as determined by PIMCO:

•

high quality

•

investment grade

•

below investment grade (“high yield securities” or “junk bonds”)

For a further description of credit ratings, see “Appendix A—Description of Securities Ratings.”

Portfolio Descriptions, Performance and Fees

The following summary identifies the Portfolio’s investment objective, principal investments and strategies, principal risks, performance information and fees and expenses. A more detailed “Summary of Principal Risks” describing principal risks of investing in the Portfolio begins after the Portfolio Summary. Investors should be aware that the investments made by the Portfolio and the results achieved by the Portfolio at any given time are not expected to be the same as those made by other mutual funds for which PIMCO acts as investment adviser, including mutual funds with names, investment objectives and policies similar to the Portfolio.

It is possible to lose money on investments in the Portfolio.

An investment in the Portfolio is not a deposit of a bank and is not guaranteed or insured by the Federal Deposit Insurance Corporation or any other government agency.


		Prospectus		3

PIMCO Short-Term Portfolio

Principal

Investments

and Strategies

Investment Objective

Seeks maximum current income, consistent with preservation of capital and daily liquidity

Portfolio Focus

Money market instruments and

short maturity fixed income

securities

Average Portfolio Duration

0-1 year

Credit Quality

B to Aaa; maximum 10% below Baa

Dividend Frequency

Declared daily and distributed monthly

Principal Risks

Among the principal risks of investing in the Portfolio, which could adversely affect its net asset value, yield and total return, are:

• Interest Rate Risk

• Credit Risk

• Market Risk

• Issuer Risk

• Derivatives Risk

• Mortgage Risk

• Leveraging Risk

• Management Risk

Please see “Summary of Principal Risks” following the Portfolio Summary for a description of these and other risks of investing in the Portfolio.

Performance Information


4		PIMCO Variable Insurance Trust

PIMCO Short-Term Portfolio (continued)

Calendar Year Total Returns — Administrative Class



	Highest and Lowest Quarter Returns
	(for periods shown in the bar chart)

	Highest (3rd Qtr. ’01)	2.37%

	Lowest (2nd Qtr. ’01)	0.93%
Calendar Year End (through 12/31)

Average Annual Total Returns (for periods ended 12/31/01)

	1 Year	Since Inception (4/28/00)(2)

Institutional Class	6.59%	6.73%

Salomon Smith Barney 3-Month U.S. Treasury Bill Index(1)	4.09%	4.91%

(1)

(2)

The Institutional Class shares commenced on 4/28/00. Index comparisons began on 4/30/00.

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold Institutional Class shares of the Portfolio and do not reflect Variable Contract fees and expenses:

Shareholder Fees (fees paid directly from your investment)

None

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets)

Share Class

Advisory
Fees

Service
Fees

Other
Expenses(1)

Total Annual
Portfolio Operating
Expenses

Expense

Reduction(2)

Net Portfolio

Operating Expenses(3)

Institutional

0.25%

None

0.23%

0.48%

(0.01%)

0.47%

(1) “Other Expenses” reflect a 0.20% administrative fee, 0.01% representing the class’ pro rata Trustees’ fees, and 0.02% interest expense. Interest expense is generally incurred as a result of investment management activities.

(2) PIMCO has contractually agreed to reduce total annual portfolio operating expenses for the Institutional Class shares to the extent they would exceed, due to the payment of organizational expenses and Trustees’ fees, 0.45% of average daily net assets. Under the Expense Limitation Agreement, PIMCO may recoup these waivers and reimbursements in future periods, not exceeding three years, provided total expenses, including such recoupment, do not exceed the annual expense limit.

(3) Ratio of net expenses to average net assets excluding interest expense is 0.45%.

Examples. The Examples are intended to help you compare the cost of investing in Institutional Class shares of the Portfolio with the costs of investing in other mutual funds. The Examples assume that you invest $10,000 in the noted class of shares for the time periods indicated, and then redeem all your shares at the end of those periods. The Examples also assume that your investment has a 5% return each year, the reinvestment of all dividends and distributions, and that the Portfolio’s operating expenses remain the same. Although your actual costs may be higher or lower, the Examples show what your costs would be based on these assumptions.

Share Class	Year 1	Year 3	Year 5	Year 10

Institutional	$48	$153	$268	$603


Prospectus		5

Summary of Principal Risks

The value of your investment in the Portfolio changes with the values of the Portfolio’s investments. Many factors can affect those values. The factors that are most likely to have a material effect on the Portfolio’s portfolio as a whole are called “principal risks.” The principal risks of the Portfolio are identified in the Portfolio Summary and are described in this section. The Portfolio may be subject to additional principal risks and risks other than those described below because the types of investments made by the Portfolio can change over time. Securities and investment techniques mentioned in this summary and described in greater detail under “Characteristics and Risks of Securities and Investment Techniques” appear in bold type. That section and “Investment Objectives and Policies” in the Statement of Additional Information also include more information about the Portfolio, its investments and the related risks. There is no guarantee that the Portfolio will be able to achieve its investment objective.

Interest Rate Risk

As interest rates rise, the value of fixed income securities held by the Portfolio are likely to decrease. Securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations.

Credit Risk

The Portfolio could lose money if the issuer or guarantor of a fixed income security, or the counterparty to a derivatives contract, repurchase agreement or a loan of portfolio securities, is unable or unwilling to make timely principal and/or interest payments, or to otherwise honor its obligations. Securities are subject to varying degrees of credit risk, which are often reflected in credit ratings. Municipal bonds are subject to the risk that litigation, legislation or other political events, local business or economic conditions, or the bankruptcy of the issuer could have a significant effect on an issuer’s ability to make payments of principal and/or interest.

Market Risk

The market price of securities owned by the Portfolio may go up or down, sometimes rapidly or unpredictably. Securities may decline in value due to factors affecting securities markets generally or particular industries represented in the securities markets. The value of a security may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. They may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities generally have greater price volatility than fixed income securities.

Issuer Risk

Derivatives Risk

Derivatives are financial contracts whose value depends on, or is derived from, the value of an underlying asset, reference rate or index. The various derivative instruments that the Portfolio may use are referenced under “Characteristics and Risks of Securities and Investment Techniques—Derivatives” in this Prospectus and described in more detail under “Investment Objectives and Policies” in the Statement of Additional Information. The Portfolio typically uses derivatives as a substitute for taking a position in the underlying asset and/or part of a strategy designed to reduce exposure to other risks, such as interest rate or currency risk. The Portfolio may also use derivatives for leverage, in which case their use would involve leveraging risk. The Portfolio’s use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. Derivatives are subject to a number of risks described elsewhere in this section, such as liquidity risk, interest rate risk, market risk, credit risk and management risk. They also involve the risk of mispricing or improper valuation and the risk that changes in the value of the derivative may not correlate perfectly with the underlying asset, rate or index.


6		PIMCO Variable Insurance Trust

The Portfolio investing in a derivative instrument could lose more than the principal amount invested. Also, suitable derivative transactions may not be available in all circumstances and there can be no assurance that the Portfolio will engage in these transactions to reduce exposure to other risks when that would be beneficial.

Mortgage Risk

When the Portfolio purchases mortgage-related securities it is subject to certain additional risks. Rising interest rates tend to extend the duration of mortgage-related securities, making them more sensitive to changes in interest rates. As a result, in a period of rising interest rates, if the Portfolio holds mortgage-related securities it may exhibit additional volatility. This is known as extension risk. In addition, mortgage-related securities are subject to prepayment risk. When interest rates decline, borrowers may pay off their mortgages sooner than expected. This can reduce the returns of the Portfolio because the Portfolio will have to reinvest that money at the lower prevailing interest rates.

Leveraging Risk

Certain transactions may give rise to a form of leverage. Such transactions may include, among others, reverse repurchase agreements, loans of portfolios securities, and the use of when-issued, delayed delivery or forward commitment transactions. The use of derivatives may also create leveraging risk. To mitigate leveraging risk, PIMCO will segregate liquid assets or otherwise cover the transactions that may give rise to such risk. The use of leverage may cause the Portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet segregation requirements. Leverage, including borrowing, may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. This is because leverage tends to exaggerate the effect of any increase or decrease in the value of the Portfolio’s portfolio securities.

Management Risk

The Portfolio is subject to management risk because it is an actively managed investment portfolio. PIMCO and the portfolio manager will apply investment techniques and risk analyses in making investment decisions for the Portfolio, but there can be no guarantee that these will produce the desired results.

Management of the Portfolio

Investment Adviser and Administrator

PIMCO serves as investment adviser and the administrator (serving in its capacity as administrator, the “Administrator”) for the Portfolio. Subject to the supervision of the Board of Trustees, PIMCO is responsible for managing the investment activities of the Portfolio and the Portfolio’s business affairs and other administrative matters.

Advisory Fee

The Portfolio pays PIMCO fees in return for providing investment advisory services. For the fiscal year ended December 31, 2001, the Portfolio paid monthly advisory fees to PIMCO at the annual rate (stated as a percentage of the average daily net assets of the Portfolio) of 0.25%.

Administrative Fee

The Portfolio pays for the administrative services it requires under a fee structure which is essentially fixed. Shareholders of the Portfolio pay an administrative fee to PIMCO, computed as a percentage of the Portfolio’s assets attributable in the aggregate to that class of shares. PIMCO, in turn, provides or procures administrative services for shareholders and also bears the costs of various third-party services required by the Portfolios, including audit, custodial, portfolio accounting, legal, transfer agency and printing costs.

For the fiscal year ended December 31, 2001, the Portfolio paid PIMCO monthly administrative fees at the annual rate of 0.20%.


Prospectus		7

Contracts, including the provision of support services such as providing information about the Trust and the Portfolio, the delivery of Trust documents, and other services. Any such payments are made by PIMCO and not by the Trust and PIMCO does not receive any separate fees for such expenses.

PIMCO has contractually agreed to reduce total annual portfolio operating expenses for the Institutional Class shares to the extent that they would exceed, due to the payment of organizational expenses and Trustees’ fees, the total portfolio operating expenses specified for the Portfolio in the table identifying the Portfolio’s annual portfolio operating expenses in its Portfolio Summary. PIMCO may recoup these waivers and reimbursements, for a period not to exceed three years, provided that total expenses, including such recoupment, do not exceed the annual expense limit.

Individual Portfolio Manager

The table below provides information about the portfolio manager responsible for management of the Portfolio, including his occupation for the past five years.

Portfolio Manager	Since		Recent Professional Experience

Paul A. McCulley	9/99	*	Managing Director, PIMCO. He has managed fixed income assets since joining PIMCO in 1999. Prior to joining PIMCO, Mr. McCulley was associated with Warburg Dillon Read as a Managing Director from 1992-1999 and Head of Economic and Strategy Research for the Americas from 1995-1999, where he managed macro research world-wide.

Since inception of the Portfolio.

Distributor

Investment Options—

Institutional Class Shares

The Trust offers investors Institutional Class and Administrative Class shares of the Portfolio. The Trust does not charge any sales charges (loads) or other fees in connection with purchases or sales (redemptions) of Portfolio shares.

• Arrangements with Service Agents. Institutional Class shares of the Portfolio may be offered through certain brokers and financial intermediaries (“service agents”) that have established a shareholder servicing relationship with the Trust on behalf of their customers. Service agents may impose additional or different conditions than the Trust on purchases, redemptions or exchanges of Portfolio shares by their customers. Service agents may also independently establish and charge their customers transaction fees, account fees and other amounts in connection with purchases and sales of Portfolio shares in addition to any fees charged by the Trust. These additional fees may vary over time and would increase the cost of the customer’s investment and lower investment returns. Each service agent is responsible for transmitting to its customers a schedule of any such fees and information regarding any additional or different conditions regarding purchases, redemptions and exchanges. Shareholders who are customers of service agents should consult their service agents for information regarding these fees and conditions.

Purchases and Redemptions

Purchasing Shares

Investors do not deal directly with the Portfolio to purchase and redeem shares. Please refer to the prospectus for the Separate Account for information on the allocation of premiums and on transfers of accumulated value among sub-accounts of the Separate Account that invest in the Portfolio.


8		PIMCO Variable Insurance Trust

As of the date of this Prospectus, shares of the Portfolio are offered for purchase by Separate Accounts to serve as an investment medium for Variable Contracts issued by life insurance companies, and to qualified pension and retirement plans outside of the separate account context. Shares of the Portfolio are purchased at the net asset value (“NAV”) per share after receipt of a purchase order.

While the Portfolio currently does not foresee any disadvantages to Variable Contract Owners if the Portfolio serves as an investment medium for both variable annuity contracts and variable life insurance policies, due to differences in tax treatment or other considerations, it is theoretically possible that the interest of owners of annuity contracts and insurance policies for which the Portfolio serves as an investment medium might at some time be in conflict. However, the Trust’s Board of Trustees and each insurance company with a separate account allocating assets to the Portfolio are required to monitor events to identify any material conflicts between variable annuity contract owners and variable life insurance policy owners, and would have to determine what action, if any, should be taken in the event of such a conflict. If such a conflict occurred, an insurance company participating in the Portfolio might be required to redeem the investment of one or more of its separate accounts from the Portfolio, which might force the Portfolio to sell securities at disadvantageous prices.

The Trust and its distributor each reserves the right, in its sole discretion, to suspend the offering of shares of the Portfolio or to reject any purchase order, in whole or in part, or to redeem shares, in whole or in part, when, in the judgment of management, such suspension or rejection is in the best interests of the Trust. The sale of shares will be suspended when trading on the New York Stock Exchange is restricted or during an emergency which makes it impracticable for the Portfolio to dispose of its securities or to determine fairly the value of its net assets, or during any other period as permitted by the SEC for the protection of investors. In the event that the Portfolio ceases offering its shares, any investments allocated to the Portfolio will, subject to any necessary regulatory approvals, be invested in another portfolio of the Trust.

Redeeming Shares

Redemptions of Portfolio shares may be suspended when trading on the New York Stock Exchange is restricted or during an emergency which makes it impractical for the Portfolio to dispose of its securities or to determine fairly the value of its net assets, or during any other period as permitted by the Securities and Exchange Commission for the protection of investors. Under these and other unusual circumstances, the Trust may suspend redemption or postpone payment for more than seven days, as permitted by law. In consideration of the best interests of the remaining shareholders, the Trust reserves the right to pay redemption proceeds in whole or in part by a distribution in kind of securities held by the Portfolio in lieu of cash. It is highly unlikely that shares would ever be redeemed in kind. If shares are redeemed in kind, however, the redeeming shareholder should expect to incur transaction costs upon the disposition of the securities received in the distribution.

How Portfolio Shares Are Priced

The NAV of the Portfolio’s Institutional Class shares is determined by dividing the total value of the Portfolio’s investments and other assets attributable to that class, less any liabilities, by the total number of shares outstanding of that class.


Prospectus		9

may be valued, pursuant to guidelines established by the Board of Trustees, with reference to other securities or indices. Short-term investments having a maturity of 60 days or less are generally valued at amortized cost. Exchange traded options, futures and options on futures are valued at the settlement price determined by the exchange. Other securities for which market quotes are not readily available are valued at fair value as determined in good faith by the Board of Trustees or persons acting at their direction.

Investments initially valued in currencies other than the U.S. dollar are converted to U.S. dollars using exchange rates obtained from pricing services. As a result, the NAV of the Portfolio’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of securities traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the New York Stock Exchange is closed and an investor is not able to purchase, redeem or exchange shares.

Portfolio shares are valued at the close of regular trading (normally 4:00 p.m., Eastern time) (the “NYSE Close”) on each day that the New York Stock Exchange is open. For purposes of calculating the NAV, the Portfolio normally uses pricing data for domestic equity securities received shortly after the NYSE Close and do not normally take into account trading, clearances or settlements that take place after the NYSE Close. Domestic fixed income and foreign securities are normally priced using data reflecting the earlier closing of the principal markets for those securities. Information that becomes known to the Portfolio or its agents after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the price of a security or the NAV determined earlier that day.

In unusual circumstances, instead of valuing securities in the usual manner, the Portfolio may value securities at fair value or estimate their value as determined in good faith by the Board of Trustees, generally based upon recommendations provided by PIMCO. Fair valuation may also be used if extraordinary events occur after the close of the relevant market but prior to the NYSE Close.

Tax Consequences

The Portfolio intends to qualify as a regulated investment company annually and to elect to be treated as a regulated investment company for federal income tax purposes. As such, the Portfolio generally will not pay federal income tax on the income and gains it pays as dividends to its shareholders. In order to avoid a 4% federal excise tax, the Portfolio intends to distribute each year substantially all of its net income and gains.

The Portfolio intends to diversify its investments in a manner intended to comply with tax requirements generally applicable to mutual funds. In addition, the Portfolio will diversify its investments so that on the last day of each quarter of a calendar year, no more than 55% of the value of its total assets is represented by any one investment, no more than 70% is represented by any two investments, no more than 80% is represented by any three investments, and no more than 90% is represented by any four investments. For this purpose, securities of a single issuer are treated as one investment and each U.S. Government agency or instrumentality is treated as a separate issuer. Any security issued, guaranteed, or insured (to the extent so guaranteed or insured) by the U.S. Government or any agency or instrumentality of the U.S. Government is treated as a security issued by the U.S. Government or its agency or instrumentality, whichever is applicable.

If the Portfolio fails to meet the diversification requirement under Section 817(h), income with respect to Variable Contracts invested in the Portfolio at any time during the calendar quarter in which the failure occurred could become currently taxable to the owners of the Variable Contracts and income for prior periods with respect to such contracts also could be taxable, most likely in the year of the failure to achieve the required diversification. Other adverse tax consequences could also ensue.

Please refer to the prospectus for the Separate Account and Variable Contract for information regarding the federal income tax treatment of distributions to the Separate Account. See “Additional Information—Additional Tax Information” in the Portfolio’s Statement of Additional Information for more information on taxes.


10		PIMCO Variable Insurance Trust

Characteristics and Risks of Securities and Investment Techniques

This section provides additional information about some of the principal investments and related risks of the Portfolio described under the “Portfolio Summary” above. It also describes characteristics and risks of additional securities and investment techniques that may be used by the Portfolio from time to time. Most of these securities and investment techniques are discretionary, which means that PIMCO can decide whether to use them or not. This Prospectus does not attempt to disclose all of the various types of securities and investment techniques that may be used by the Portfolio. As with any mutual fund, investors in the Portfolio rely on the professional investment judgment and skill of PIMCO and the individual portfolio manager. Please see “Investment Objectives and Policies” in the Statement of Additional Information for more detailed information about the securities and investment techniques described in this section and about other strategies and techniques that may be used by the Portfolio.

Securities Selection

The total return sought by the Portfolio consists of both income earned on the Portfolio’s investments and capital appreciation, if any, arising from increases in the market value of the Portfolio’s holdings. Capital appreciation of fixed income securities generally results from decreases in market interest rates or improving credit fundamentals for a particular market sector or security.

In selecting securities for the Portfolio, PIMCO develops an outlook for interest rates, foreign currency exchange rates and the economy; analyzes credit and call risks, and uses other security selection techniques. The proportion of the Portfolio’s assets committed to investment in securities with particular characteristics (such as quality, sector, interest rate or maturity) varies based on PIMCO’s outlook for the U.S. and foreign economies, the financial markets and other factors.

U.S. Government Securities

Municipal Bonds

Municipal bonds are generally issued by states and local governments and their agencies, authorities and other instrumentalities. Municipal bonds are subject to interest rate, credit and market risk. The ability of an issuer to make payments could be affected by litigation, legislation or other political events or the bankruptcy of the issuer. Lower rated municipal bonds are subject to greater credit and market risk than higher quality municipal bonds. The types of municipal bonds in which the Portfolio may invest include municipal lease obligations. The Portfolio may also invest in securities issued by entities whose underlying assets are municipal bonds.


Prospectus		11

interest bond holder receives the balance of the income from the underlying municipal bond less an auction fee. The market prices of residual interest bonds may be highly sensitive to changes in market rates and may decrease significantly when market rates increase.

Mortgage-Related and Other Asset-Backed Securities

The Portfolio may invest all of its assets in mortgage- and asset-backed securities. Mortgage-related securities include mortgage pass-through securities, collateralized mortgage obligations (“CMOs”), commercial mortgage-backed securities, mortgage dollar rolls, CMO residuals, stripped mortgage-backed securities (“SMBSs”) and other securities that directly or indirectly represent a participation in, or are secured by and payable from, mortgage loans on real property.

The value of some mortgage- or asset-backed securities may be particularly sensitive to changes in prevailing interest rates. Early repayment of principal on some mortgage-related securities may expose the Portfolio to a lower rate of return upon reinvestment of principal. When interest rates rise, the value of a mortgage-related security generally will decline; however, when interest rates are declining, the value of mortgage-related securities with prepayment features may not increase as much as other fixed income securities. The rate of prepayments on underlying mortgages will affect the price and volatility of a mortgage-related security, and may shorten or extend the effective maturity of the security beyond what was anticipated at the time of purchase. If unanticipated rates of prepayment on underlying mortgages increase the effective maturity of a mortgage-related security, the volatility of the security can be expected to increase. The value of these securities may fluctuate in response to the market’s perception of the creditworthiness of the issuers. Additionally, although mortgages and mortgage-related securities are generally supported by some form of government or private guarantee and/or insurance, there is no assurance that private guarantors or insurers will meet their obligations.

One type of SMBS has one class receiving all of the interest from the mortgage assets (the interest-only, or “IO” class), while the other class will receive all of the principal (the principal-only, or “PO” class). The yield to maturity on an IO class is extremely sensitive to the rate of principal payments (including prepayments) on the underlying mortgage assets, and a rapid rate of principal payments may have a material adverse effect on the Portfolio’s yield to maturity from these securities. The Portfolio may not invest more than 5% of its net assets in any combination of IO, PO, or inverse floater securities. The Portfolio may invest in other asset-backed securities that have been offered to investors.

Loan Participations and Assignments

The Portfolio may invest in fixed- and floating-rate loans, which investments generally will be in the form of loan participations and assignments of portions of such loans. Participations and assignments involve special types of risk, including credit risk, interest rate risk, liquidity risk, and the risks of being a lender. If the Portfolio purchases a participation, it may only be able to enforce its rights through the lender, and may assume the credit risk of the lender in addition to the borrower.

Corporate Debt Securities

High Yield Securities

Securities rated lower than Baa by Moody’s Investors Service, Inc. (“Moody’s”) or lower than BBB by Standard & Poor’s Ratings Services (“S&P”) are sometimes referred to as “high yield” or “junk” bonds. Investing in high yield securities involves special risks in addition to the risks associated with investments in higher-rated fixed income securities. While offering a greater potential opportunity for capital appreciation and higher yields, high yield securities typically entail greater potential price volatility and may be less liquid than higher-rated securities. High yield securities may be regarded as predominately speculative with respect to the issuer’s


12		PIMCO Variable Insurance Trust

continuing ability to meet principal and interest payments. They may also be more susceptible to real or perceived adverse economic and competitive industry conditions than higher-rated securities.

Credit Ratings and Unrated Securities. Rating agencies are private services that provide ratings of the credit quality of fixed income securities, including convertible securities. Appendix A to this Prospectus describes the various ratings assigned to fixed income securities by Moody’s and S&P. Ratings assigned by a rating agency are not absolute standards of credit quality and do not evaluate market risks. Rating agencies may fail to make timely changes in credit ratings and an issuer’s current financial condition may be better or worse than a rating indicates. The Portfolio will not necessarily sell a security when its rating is reduced below its rating at the time of purchase. PIMCO does not rely solely on credit ratings, and develops its own analysis of issuer credit quality.

The Portfolio may purchase unrated securities (which are not rated by a rating agency) if its portfolio manager determines that the security is of comparable quality to a rated security that the Portfolio may purchase. Unrated securities may be less liquid than comparable rated securities and involve the risk that the portfolio manager may not accurately evaluate the security’s comparative credit rating. Analysis of the creditworthiness of issuers of high yield securities may be more complex than for issuers of higher-quality fixed income securities. To the extent that the Portfolio invests in high yield and/or unrated securities, the Portfolio’s success in achieving its investment objective may depend more heavily on the portfolio manager’s creditworthiness analysis than if the Portfolio invested exclusively in higher-quality and rated securities.

Variable and Floating Rate Securities

Variable and floating rate securities provide for a periodic adjustment in the interest rate paid on the obligations. The Portfolio may invest in floating rate debt instruments (“floaters”) and engage in credit spread trades. While floaters provide a certain degree of protection against rises in interest rates, the Portfolio will participate in any declines in interest rates as well. The Portfolio may also invest in inverse floating rate debt instruments (“inverse floaters”). An inverse floater may exhibit greater price volatility than a fixed rate obligation of similar credit quality. The Portfolio may not invest more than 5% of its assets in any combination of inverse floater, interest only, or principal only securities.

Inflation-Indexed Bonds

Event-Linked Bonds

The Portfolio may invest in “event-linked bonds,” which are fixed income securities for which the return of principal and payment of interest is contingent on the non-occurrence of a specific “trigger” event, such as a hurricane, earthquake or other physical or weather-related phenomenon. Some event-linked bonds are commonly referred to as “catastrophe bonds.” If a trigger event occurs, the Portfolio may lose a portion or all of its principal invested in the bond. Event-linked bonds often provide for an extension of maturity to process and audit loss claims where a trigger event has, or possibly has, occurred. Event-linked bonds may also expose the Portfolio to certain unanticipated risks including but not limited to issuer (credit) default, adverse regulatory or jurisdictional interpretation, and adverse tax consequences. Event-linked bonds may also be subject to liquidity risk.


Prospectus		13

Convertible and Equity Securities

The Portfolio may invest in convertible securities. Convertible securities are generally preferred stocks and other securities, including fixed income securities and warrants, that are convertible into or exercisable for common stock at a stated price or rate. The price of a convertible security will normally vary in some proportion to changes in the price of the underlying common stock because of this conversion or exercise feature. However, the value of a convertible security may not increase or decrease as rapidly as the underlying common stock. A convertible security will normally also provide income and is subject to interest rate risk. Convertible securities may be lower-rated securities subject to greater levels of credit risk. The Portfolio may be forced to convert a security before it would otherwise choose, which may have an adverse effect on the Portfolio’s ability to achieve its investment objective.

While the Portfolio intends to invest primarily in fixed income securities, it may invest in convertible securities or equity securities. While some countries or companies may be regarded as favorable investments, pure fixed income opportunities may be unattractive or limited due to insufficient supply, or legal or technical restrictions. In such cases, the Portfolio may consider convertible securities or equity securities to gain exposure to such investments.

Equity securities generally have greater price volatility than fixed income securities. The market price of equity securities owned by the Portfolio may go up or down, sometimes rapidly or unpredictably. Equity securities may decline in value due to factors affecting equity securities markets generally or particular industries represented in those markets. The value of an equity security may also decline for a number of reasons which directly relate to the issuer, such as management performance, financial leverage and reduced demand for the issuer’s goods or services.

Foreign (Non-U.S.) Securities

Investing in the securities of issuers in any foreign country involves special risks and considerations not typically associated with investing in U.S. companies. Shareholders should consider carefully the substantial risks involved for Portfolio investments in securities issued by foreign companies and governments of foreign countries. These risks include: differences in accounting, auditing and financial reporting standards; generally higher commission rates on foreign portfolio transactions; the possibility of nationalization, expropriation or confiscatory taxation; adverse changes in investment or exchange control regulations; and political instability. Individual foreign economies may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross domestic product, rates of inflation, capital reinvestment, resources, self-sufficiency and balance of payments position. The securities markets, values of securities, yields and risks associated with foreign securities markets may change independently of each other. Also, foreign securities and dividends and interest payable on those securities may be subject to foreign taxes, including taxes withheld from payments on those securities. Foreign securities often trade with less frequency and volume than domestic securities and therefore may exhibit greater price volatility. Investments in foreign securities may also involve higher custodial costs than domestic investments and additional transaction costs with respect to foreign currency conversions. Changes in foreign exchange rates also will affect the value of securities denominated or quoted in foreign currencies.

The Portfolio also may invest in sovereign debt issued by governments, their agencies or instrumentalities, or other government-related entities. Holders of sovereign debt may be requested to participate in the rescheduling of such debt and to extend further loans to governmental entities. In addition, there is no bankruptcy proceeding by which defaulted sovereign debt may be collected.


14		PIMCO Variable Insurance Trust

economic or political crises could lead to price controls, forced mergers, expropriation or confiscatory taxation, seizure, nationalization, or creation of government monopolies. The currencies of emerging market countries may experience significant declines against the U.S. dollar, and devaluation may occur subsequent to investments in these currencies by the Portfolio. Inflation and rapid fluctuations in inflation rates have had, and may continue to have, negative effects on the economies and securities markets of certain emerging market countries.

Additional risks of emerging markets securities may include: greater social, economic and political uncertainty and instability; more substantial governmental involvement in the economy; less governmental supervision and regulation; unavailability of currency hedging techniques; companies that are newly organized and small; differences in auditing and financial reporting standards, which may result in unavailability of material information about issuers; and less developed legal systems. In addition, emerging securities markets may have different clearance and settlement procedures, which may be unable to keep pace with the volume of securities transactions or otherwise make it difficult to engage in such transactions. Settlement problems may cause the Portfolio to miss attractive investment opportunities, hold a portion of its assets in cash pending investment, or be delayed in disposing of a portfolio security. Such a delay could result in possible liability to a purchaser of the security.

The Portfolio may invest in Brady Bonds, which are securities created through the exchange of existing commercial bank loans to sovereign entities for new obligations in connection with a debt restructuring. Investments in Brady Bonds may be viewed as speculative. Brady Bonds acquired by the Portfolio may be subject to restructuring arrangements or to requests for new credit, which may cause the Portfolio to suffer a loss of interest or principal on any of its holdings.

Foreign (Non-U.S.) Currencies

Portfolio investments in foreign currencies or in securities that trade in, or receive revenues in, foreign currencies will be subject to currency risk. Foreign currency exchange rates may fluctuate significantly over short periods of time. They generally are determined by supply and demand in the foreign exchange markets and the relative merits of investments in different countries, actual or perceived changes in interest rates and other complex factors. Currency exchange rates also can be affected unpredictably by intervention (or the failure to intervene) by U.S. or foreign governments or central banks, or by currency controls or political developments. For example, uncertainty surrounds the introduction of the euro (a common currency unit for the European Union) and the effect it may have on the value of European currencies as well as securities denominated in local European currencies. These and other currencies in which the Portfolio’s assets are denominated may be devalued against the U.S. dollar, resulting in a loss to the Portfolio.

• Foreign Currency Transactions. If the Portfolio invests in securities denominated in foreign currencies it may enter into forward foreign currency exchange contracts and invest in foreign currency futures contracts and options on foreign currencies and futures. A forward foreign currency exchange contract, which involves an obligation to purchase or sell a specific currency at a future date at a price set at the time of the contract, reduces the Portfolio’s exposure to changes in the value of the currency it will deliver and increases its exposure to changes in the value of the currency it will receive for the duration of the contract. The effect on the value of the Portfolio is similar to selling securities denominated in one currency and purchasing securities denominated in another currency. A contract to sell foreign currency would limit any potential gain which might be realized if the value of the hedged currency increases. The Portfolio may enter into these contracts to hedge against foreign exchange risk, to increase exposure to a foreign currency or to shift exposure to foreign currency fluctuations from one currency to another. Suitable hedging transactions may not be available in all circumstances and there can be no assurance that the Portfolio will engage in such transactions at any given time or from time to time. Also, such transactions may not be successful and may eliminate any chance for the Portfolio to benefit from favorable fluctuations in relevant foreign currencies. The Portfolio may use one currency (or a basket of


Prospectus		15

currencies) to hedge against adverse changes in the value of another currency (or a basket of currencies) when exchange rates between the two currencies are positively correlated. The Portfolio will segregate assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees to cover its obligations under forward foreign currency exchange contracts entered into for non-hedging purposes.

Repurchase Agreements

The Portfolio may enter into repurchase agreements, in which the Portfolio purchases a security from a bank or broker-dealer and agrees to repurchase the security at the Portfolio’s cost plus interest within a specified time. If the party agreeing to repurchase should default, the Portfolio will seek to sell the securities which it holds. This could involve procedural costs or delays in addition to a loss on the securities if their value should fall below their repurchase price. Repurchase agreements maturing in more than seven days are considered illiquid securities.

Reverse Repurchase Agreements, Dollar Rolls and Other Borrowings

The Portfolio may enter into reverse repurchase agreements and dollar rolls, subject to the Portfolio’s limitations on borrowings. A reverse repurchase agreement or dollar roll involves the sale of a security by the Portfolio and its agreement to repurchase the instrument at a specified time and price, and may be considered a form of borrowing for some purposes. The Portfolio will segregate assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees to cover its obligations under reverse repurchase agreements, dollar rolls, and other borrowings. Reverse repurchase agreements, dollar rolls and other forms of borrowings may create leveraging risk for the Portfolio.

The Portfolio may borrow money to the extent permitted under the Investment Company Act of 1940 (“1940 Act”), as amended. This means that, in general, the Portfolio may borrow money from banks for any purpose on a secured basis in an amount up to ¹/3 of the Portfolio’s total assets. The Portfolio may also borrow money for temporary administrative purposes on an unsecured basis in an amount not to exceed 5% of the Portfolio’s total assets.

Derivatives

The Portfolio may, but is not required to, use derivative instruments for risk management purposes or as part of its investment strategies. Generally, derivatives are financial contracts whose value depends upon, or is derived from, the value of an underlying asset, reference rate or index, and may relate to stocks, bonds, interest rates, currencies or currency exchange rates, commodities, and related indexes. Examples of derivative instruments include options contracts, futures contracts, options on futures contracts and swap agreements. The Portfolio may invest all of its assets in derivative instruments, subject to the Portfolio’s objective and policies. The portfolio manager may decide not to employ any of these strategies and there is no assurance that any derivatives strategy used by the Portfolio will succeed. A description of these and other derivative instruments that the Portfolio may use are described under “Investment Objectives and Policies” in the Statement of Additional Information.

The Portfolio’s use of derivative instruments involves risks different from, or greater than, the risks associated with investing directly in securities and other more traditional investments. A description of various risks associated with particular derivative instruments is included in “Investment Objectives and Policies” in the Statement of Additional Information. The following provides a more general discussion of important risk factors relating to all derivative instruments that may be used by the Portfolio.


16		PIMCO Variable Insurance Trust

Leverage Risk. Because many derivatives have a leverage component, adverse changes in the value or level of the underlying asset, reference rate or index can result in a loss substantially greater than the amount invested in the derivative itself. Certain derivatives have the potential for unlimited loss, regardless of the size of the initial investment. When the Portfolio uses derivatives for leverage, investments in the Portfolio will tend to be more volatile, resulting in larger gains or losses in response to market changes. To limit leverage risk, the Portfolio will segregate assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees (or, as permitted by applicable regulation, enter into certain offsetting positions) to cover its obligations under derivative instruments.

Lack of Availability. Because the markets for certain derivative instruments (including markets located in foreign countries) are relatively new and still developing, suitable derivatives transactions may not be available in all circumstances for risk management or other purposes. There is no assurance that the Portfolio will engage in derivatives transactions at any time or from time to time. The Portfolio’s ability to use derivatives may also be limited by certain regulatory and tax considerations.

Market and Other Risks. Like most other investments, derivative instruments are subject to the risk that the market value of the instrument will change in a way detrimental to the Portfolio’s interest. If the portfolio manager incorrectly forecasts the values of securities, currencies or interest rates or other economic factors in using derivatives for the Portfolio, the Portfolio might have been in a better position if it had not entered into the transaction at all. While some strategies involving derivative instruments can reduce the risk of loss, they can also reduce the opportunity for gain or even result in losses by offsetting favorable price movements in other Portfolio investments. The Portfolio may also have to buy or sell a security at a disadvantageous time or price because the Portfolio is legally required to maintain offsetting positions or asset coverage in connection with certain derivatives transactions.

Other risks in using derivatives include the risk of mispricing or improper valuation of derivatives and the inability of derivatives to correlate perfectly with underlying assets, rates and indexes. Many derivatives, in particular privately negotiated derivatives, are complex and often valued subjectively. Improper valuations can result in increased cash payment requirements to counterparties or a loss of value to the Portfolio. Also, the value of derivatives may not correlate perfectly, or at all, with the value of the assets, reference rates or indexes they are designed to closely track. In addition, the Portfolio’s use of derivatives may cause the Portfolio to realize higher amounts of short-term capital gains (generally taxed at ordinary income tax rates) than if the Portfolio had not used such instruments.

Delayed Funding Loans and Revolving Credit Facilities

The Portfolio may also enter into, or acquire participations in, delayed funding loans and revolving credit facilities, in which a lender agrees to make loans up to a maximum amount upon demand by the borrower during a specified term. These commitments may have the effect of requiring the Portfolio to increase its investment in a company at a time when it might not otherwise decide to do so (including at a time when the company’s financial condition makes it unlikely that such amounts will be repaid). To the extent that the Portfolio is committed to advance additional funds, it will segregate assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees in an amount sufficient to meet such commitments. Delayed funding loans and revolving credit facilities are subject to credit, interest rate and liquidity risk and the risks of being a lender.


Prospectus		17

When-Issued, Delayed Delivery and Forward Commitment Transactions

The Portfolio may purchase securities which it is eligible to purchase on a when-issued basis, may purchase and sell such securities for delayed delivery and may make contracts to purchase such securities for a fixed price at a future date beyond normal settlement time (forward commitments). When-issued transactions, delayed delivery purchases and forward commitments involve a risk of loss if the value of the securities declines prior to the settlement date. This risk is in addition to the risk that the Portfolio’s other assets will decline in value. Therefore, these transactions may result in a form of leverage and increase the Portfolio’s overall investment exposure. Typically, no income accrues on securities the Portfolio has committed to purchase prior to the time delivery of the securities is made, although the Portfolio may earn income on securities it has segregated to cover these positions.

Investment in Other Investment Companies

The Portfolio may invest up to 10% of its assets in securities of other investment companies, such as closed-end management investment companies, or in pooled accounts or other investment vehicles which invest in foreign markets. As a shareholder of any investment company, the Portfolio may indirectly bear service and other fees which are in addition to the fees the Portfolio pays its service providers.

Subject to the restrictions and limitations of the 1940 Act, the Portfolio may, in the future, elect to pursue its investment objective by investing in one or more underlying investment vehicles or companies that have substantially similar investment objectives, policies and limitations as the Portfolio.

Short Sales

The Portfolio may make short sales as part of its overall portfolio management strategies or to offset a potential decline in value of a security. A short sale involves the sale of a security that is borrowed from a broker or other institution to complete the sale. Short sales expose the Portfolio to the risk that it will be required to acquire, convert or exchange securities to replace the borrowed securities (also known as “covering” the short position) at a time when the securities sold short have appreciated in value, thus resulting in a loss to the Portfolio. The Portfolio making a short sale must segregate assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees or otherwise cover its position in a permissible manner.

Illiquid Securities

The Portfolio may invest up to 15% of its net assets in illiquid securities. Certain illiquid securities may require pricing at fair value as determined in good faith under the supervision of the Board of Trustees. The portfolio manager may be subject to significant delays in disposing of illiquid securities, and transactions in illiquid securities may entail registration expenses and other transaction costs that are higher than those for transactions in liquid securities. The term “illiquid securities” for this purpose means securities that cannot be disposed of within seven days in the ordinary course of business at approximately the amount at which the Portfolio has valued the securities. Restricted securities, i.e., securities subject to legal or contractual restrictions on resale, may be illiquid. However, some restricted securities (such as securities issued pursuant to Rule 144A under the Securities Act of 1933 and certain commercial paper) may be treated as liquid, although they may be less liquid than registered securities traded on established secondary markets.

Loans of Portfolio Securities

For the purpose of achieving income, the Portfolio may lend its portfolio securities to brokers, dealers, and other financial institutions provided a number of conditions are satisfied, including that the loan is fully collateralized. Please see “Investment Objectives and Policies” in the Statement of Additional Information for details. When the Portfolio lends portfolio securities, its investment performance will continue to reflect changes in the value of the securities loaned, and the Portfolio will also receive a fee or interest on the collateral. Securities lending involves the risk of loss of rights in the collateral or delay in recovery of the collateral if the borrower fails to return the security loaned or becomes insolvent. The Portfolio may pay lending fees to a party arranging the loan.


18		PIMCO Variable Insurance Trust

Portfolio Turnover

The length of time the Portfolio has held a particular security is not generally a consideration in investment decisions. A change in the securities held by the Portfolio is known as “portfolio turnover.” The Portfolio may engage in frequent and active trading of portfolio securities to achieve its investment objective, particularly during periods of volatile market movements. High portfolio turnover (e.g., over 100%) involves correspondingly greater expenses to the Portfolio, including brokerage commissions or dealer mark-ups and other transaction costs on the sale of securities and reinvestments in other securities. The trading costs associated with portfolio turnover may adversely effect the Portfolio’s performance.

Temporary Defensive Positions

For temporary or defensive purposes, the Portfolio may invest without limit in U.S. debt securities, including taxable securities and short-term money market securities, when PIMCO deems it appropriate to do so. When the Portfolio engages in such strategies, it may not achieve its investment objective.

Changes in Investment Objectives and Policies

The investment objective of the Portfolio is fundamental and may not be changed without shareholder approval. Unless otherwise stated, all other investment policies of the Portfolio may be changed by the Board of Trustees without shareholder approval.

Percentage Investment Limitations

Unless otherwise stated, all percentage limitations on Portfolio investments listed in this Prospectus will apply at the time of investment. The Portfolio would not violate these limitations unless an excess or deficiency occurs or exists immediately after and as a result of an investment.

Other Investments and Techniques

The Portfolio may invest in other types of securities and use a variety of investment techniques and strategies which are not described in this Prospectus. These securities and techniques may subject the Portfolio to additional risks. Please see the Statement of Additional Information for additional information about the securities and investment techniques described in this Prospectus and about additional securities and techniques that may be used by the Portfolio.


Prospectus		19

Financial Highlights

The financial highlights table is intended to help a shareholder understand the Portfolio’s financial performance for the period of operations. Certain information reflects financial results for a single Portfolio share. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Institutional Class of shares of the Portfolio (assuming reinvestment of all dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP, the Portfolio’s independent auditors. Their report, along with full financial statements, appears in the Trust’s Annual Report, which is available upon request.

Year or Period Ended	Net Asset Value Beginning of Period	Net Investment Income(b)	Net Realized and Unrealized Gain (Loss) on Investments(b)	Total Income (Loss) from Investment Operations	Dividends from Net Investment Income	Distributions from Net Realized Capital Gains

Short-Term
Institutional Class
12/31/2001	$10.01	$0.53	$0.12	$0.65	$(0.54)	$(0.04)
12/31/2000(a)	10.00	0.45	0.01	0.46	(0.45)	0.00

(a)

Commenced operations on April 28, 2000.

(b)

Per share amounts based on average number of shares outstanding during the period.


20		PIMCO Variable Insurance Trust

Tax Basis Return of Capital	Total Distributions	Net Asset Value End of Period	Total Return	Net Assets End of Period (000’s)	Ratio of Expenses to Average Net Assets		Ratio of Net Investment Income to Average Net Assets		Portfolio Turnover Rate


$0.00	$(0.58)	$10.08	6.59%	$4,093	0.47	% (c)(d)	5.30	%	94	%
0.00	(0.45)	10.01	4.64%	3,388	0.45	%*	6.56	%*	281	%

Annualized.

(c)

Ratio of net expenses to average net assets excluding interest expense is 0.45%.

(d)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.46% for the period ended December 31, 2001.


Prospectus		21

Appendix A

Description of Securities Ratings

The Portfolio’s investments may range in quality from securities rated in the lowest category in which the Portfolio is permitted to invest to securities rated in the highest category (as rated by Moody’s or S&P or, if unrated, determined by PIMCO to be of comparable quality). The percentage of a Portfolio’s assets invested in securities in a particular rating category will vary. Following is a description of Moody’s and S&P’s ratings applicable to fixed income securities.

High Quality Debt Securities are those rated in one of the two lightest rating categories (the hightest category for commercial pages) or, if unrated, deemed comparable by PIMCO.

Investment Grade Debt Securities are those rated in one of the four highest rating categories, or if unrated deemed comparable by PIMCO.

Following is a description of Moody’s and S&P’s rating categories applicable to fixed income securities.

Moddy's Investors Service, Inc.

Corporate and Municipal Bond Ratings


A-1		PIMCO Variable Insurance Trust

Caa: Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.

Ca: Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.

C: Bonds which are rated C are the lowest rated class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.

Corporate Short-Term Debt Ratings

Moody’s employs the following three designations, all judged to be investment grade, to indicate the relative repayment ability of rated issuers:

NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime rating categories.

Standard & Poor's Ratings Services

Corporate and Municipal Bond Ratings

Investment Grade

AAA: Debt rated AAA has the highest rating assigned by Standard & Poor’s. Capacity to pay interest and repay principal is extremely strong.

AA: Debt rated AA has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree.


Prospectus A-2

Speculative Grade

CC: The rating CC is typically applied to debt subordinated to senior debt that is assigned an actual or implied CCC rating.

CI: The rating CI is reserved for income bonds on which no interest is being paid.

Plus (+) or Minus (-): The ratings from AA to CCC may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.


A-3		PIMCO Variable Insurance Trust

obligations are: securities whose principal or interest return is indexed to equities, commodities, or currencies; certain swaps and options; and interest only and principal only mortgage securities.

The absence of an “r” symbol should not be taken as an indication that an obligation will exhibit no volatility or variability in total return.

N.R.: Not rated.

Commercial Paper Rating Definitions

A Standard & Poor’s commercial paper rating is a current assessment of the likelihood of timely payment of debt having an original maturity of no more than 365 days. Ratings are graded into several categories, ranging from A for the highest quality obligations to D for the lowest. These categories are as follows:

A-2: Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1.

B: Issues rated B are regarded as having only speculative capacity for timely payment.

C: This rating is assigned to short-term debt obligations with a doubtful capacity for payment.


Prospectus A-4

PIMCO Variable Insurance Trust		INVESTMENT ADVISER AND ADMINISTRATOR PIMCO, 840 Newport Center Drive, Suite 300, Newport Beach, CA 92660 CUSTODIAN State Street Bank & Trust Co., 801 Pennsylvania, Kansas City, MO 64105
		TRANSFER AGENT National Financial Data Services, 330 W. 9th Street, 4th Floor, Kansas City, MO 64105
		INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP, 1055 Broadway, Kansas City, MO 64105
		LEGAL COUNSEL Dechert Price & Rhoads, 1775 Eye Street N.W., Washington, D.C. 20006

The Trust’s Statement of Additional Information (“SAI”) and annual and semi-annual reports to shareholders include additional information about the Portfolio. The SAI and the financial statements included in the Portfolio’s most recent annual report to shareholders are incorporated by reference into this Prospectus, which means they are part of this Prospectus for legal purposes. The Portfolio’s annual report discusses the market conditions and investment strategies that significantly affected the Portfolio’s performance during its last fiscal year.

You may get free copies of any of these materials, request other information about the Portfolio, or make shareholder inquiries by calling the Trust at 1-800-927-4648 or by writing to:

PIMCO Variable Insurance Trust

840 Newport Center Drive

Suite 300

Newport Beach, CA 92660

You may review and copy information about the Trust, including its SAI, at the Securities and Exchange Commission’s public reference room in Washington, D.C. You may call the Commission at 1-202-942-8090 for information about the operation of the public reference room. You may also access reports and other information about the Trust on the Commission’s Web site at www.sec.gov. You may get copies of this information, with payment of a duplication fee, by writing the Public Reference Section of the Commission, Washington, D.C. 20549-0102, or by e-mailing your request to publicinfo@sec.gov. Reference the Trust’s Investment Company Act file number in your correspondence.

Investment Company Act file no. 811-8399

PIMCO Funds

840 Newport Center Drive

Suite 300

Newport Beach, CA 92660

		PIMCO Funds Prospectus

PIMCO Variable Insurance Trust May 1, 2002 Share Class ^Adm^{Administrative}		INTERMEDIATE DURATION BOND PORTFOLIO Total Return Portfolio II




		This cover is not part of the Prospectus

Prospectus

PIMCO Variable Insurance Trust

May 1, 2002

Share Class

Administrative

This Prospectus describes the Total Return Portfolio II (the “Portfolio”), which is a separate investment portfolio offered by the PIMCO Variable Insurance Trust (the “Trust”). The Portfolio provides access to the professional investment management services offered by Pacific Investment Management Company LLC (“PIMCO”). The investments made by the Portfolio at any given time are not expected to be the same as those made by other mutual funds for which PIMCO acts as investment adviser, including mutual funds with investment objectives and strategies similar to those of the Portfolio. Accordingly, the performance of the Portfolio can be expected to vary from that of the other mutual funds.

This Prospectus explains what you should know about the Portfolio before you invest. Please read it carefully.

This Prospectus should be read in conjunction with the prospectus of the Separate Account. Both prospectuses should be read carefully and retained for future reference.


Prospectus		1

Table of Contents

Summary Information		3
Portfolio Summary		4
Total Return Portfolio II		4
Summary of Principal Risks		6
Management of the Portfolio		7
Investment Options		8
Purchases and Redemptions		9
How Portfolio Shares are Priced		10
Tax Consequences		11
Characteristics and Risks of Securities and Investment Techniques		11
Financial Highlights		18
Appendix A—Description of Securities Ratings		A-1


2		PIMCO Variable Insurance Trust

Summary Information


		Main Investments	Duration	Credit Quality(1)	Non-U.S. Dollar Denominated Securities


Intermediate Duration Bond Portfolio	Total Return II	Intermediate maturity fixed income securities with quality and non-U.S. issuer restrictions	3-6 years	Baa to Aaa	0%

(1)

As rated by Moody’s Investors Service, Inc., or equivalently rated by Standard & Poor’s Ratings Services, or if unrated, determined by PIMCO to be of comparable quality.

Fixed Income Instruments

“Fixed Income Instruments,” as used in this Prospectus, includes:

•

securities issued or guaranteed by the U.S. Government, its agencies or government-sponsored enterprises (“U.S. Government Securities”);

•

corporate debt securities of U.S. and non-U.S. issuers, including convertible securities and corporate commercial paper;

•

mortgage-backed and other asset-backed securities;

•

inflation-indexed bonds issued both by governments and corporations;

•

structured notes, including hybrid or “indexed” securities, event-linked bonds and loan participations;

•

delayed funding loans and revolving credit facilities;

•

bank certificates of deposit, fixed time deposits and bankers’ acceptances;

•

repurchase agreements and reverse repurchase agreements;

•

debt securities issued by states or local governments and their agencies, authorities and other government-sponsored enterprises;

•

obligations of non-U.S. governments or their subdivisions, agencies and government-sponsored enterprises; and

•

obligations of international agencies or supranational entities.

Duration

Duration is a measure of the expected life of a fixed income security that is used to determine the sensitivity of a security’s price to changes in interest rates. The longer a security’s duration, the more sensitive it will be to changes in interest rates. Similarly, a portfolio with a longer average portfolio duration will be more sensitive to changes in interest rates than a portfolio with a shorter average portfolio duration.

Credit Ratings

In this Prospectus, references are made to credit ratings of debt securities which measure an issuer’s expected ability to pay principal and interest on time. Credit ratings are determined by rating organizations, such as Standard & Poor’s Rating Service (“S&P”) or Moody’s Investors Service, Inc. (“Moody’s”). The following terms are generally used to describe the credit quality of debt securities depending on the security’s credit rating or, if unrated, credit quality as determined by PIMCO:

•

high quality

•

investment grade

•

below investment grade (“high yield securities” or “junk bonds”)

For a further description of credit ratings, see “Appendix A—Description of Securities Ratings.”

Porfolio Descriptions, Performance and Fees

It is possible to lose money on investments in the Portfolio.

An investment in the Portfolio is not a deposit of a bank and is not guaranteed or insured by the Federal Deposit Insurance Corporation or any other government agency.


Prospectus		3

PIMCO Total Return Portfolio II

Principal

Investments and Strategies

Investment Objective

Seeks maximum total return, consistent with preservation of

capital and prudent investment management

Portfolio Focus

Intermediate maturity fixed income securities

Average Portfolio Duration

3-6 years

Credit Quality

Baa to Aaa

Dividend Frequency

Declared daily and distributed monthly

The Portfolio seeks to achieve its investment objective by investing under normal circumstances at least 65% of its assets in a diversified portfolio of Fixed Income Instruments of varying maturities. The average portfolio duration of this Portfolio normally varies within a three- to six-year time frame based on PIMCO’s forecast for interest rates. The Portfolio may invest only in investment grade U.S. dollar denominated securities of U.S. issuers that are rated at least Baa by Moody’s or BBB by S&P, or, if unrated, determined by PIMCO to be of comparable quality.

Principal Risks

Among the principal risks of investing in the Portfolio, which could adversely affect its net asset value, yield and total return, are:

• Interest Rate Risk

• Credit Risk

• Market Risk

• Issuer Risk

• Derivatives Risk

• Mortgage Risk

• Leveraging Risk

• Liquidity Risk

• Management Risk

Please see “Summary of Principal Risks” following the Portfolio Summary for a description of these and other risks of investing in the Portfolio.

Performance Information


4		PIMCO Variable Insurance Trust

PIMCO Total Return Portfolio II (continued)

Calendar Year Total Returns — Administrative Class



	Highest and Lowest Quarter Returns
	(for periods shown in the bar chart)

	Highest (3rd Qtr. ’01)	6.87%

	Lowest (4th Qtr. ’01)	-0.49%
Calendar Year End (through 12/31)

Average Annual Total Returns (for periods ended 12/31/01)

	1 Year	Since Inception (5/28/99)

Administrative Class	9.72%	8.60%

Lehman Brothers Aggregate Bond Index(1)	8.44%	7.76%

(1)

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold Administrative Class shares of the Portfolio and do not reflect Variable Contract fees and expenses:

Shareholder Fees (fees paid directly from your investment)

None

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets)

Share Class

Advisory

Fees

Service

Fees

Other

Expenses(1)

Total Annual

Portfolio Operating

Expenses

Expense

Reduction(2)

Net Portfolio Operating Expenses

Administrative

0.25%

0.15%

0.26%

0.66%

(0.01%)

0.65%

(1) “Other Expenses” reflect a 0.25% administrative fee and 0.01% representing the class’ pro rata Trustees’ fees.

(2) PIMCO has contractually agreed to reduce total annual portfolio operating expenses for the Administrative Class shares to the extent they would exceed, due to the payment of organizational expenses and Trustees’ fees, 0.65% of average daily net assets. Under the Expense Limitation Agreement, PIMCO may recoup these waivers and reimbursements in future periods, not exceeding three years, provided total expenses, including such recoupment, do not exceed the annual expense limit.

Examples. The Examples are intended to help you compare the cost of investing in Administrative Class shares of the Portfolio with the costs of investing in other mutual funds. The Examples assume that you invest $10,000 in the noted class of shares for the time periods indicated, and then redeem all your shares at the end of those periods. The Examples also assume that your investment has a 5% return each year, the reinvestment of all dividends and distributions, and that the Portfolio’s operating expenses remain the same. Although your actual costs may be higher or lower, the Examples show what your costs would be based on these assumptions.

Share Class	Year 1	Year 3	Year 5	Year 10

Administrative	$66	$210	$367	$822


Prospectus		5

Summary of Principal Risks

Interest Rate Risk

Credit Risk

Market Risk

Issuer Risk

Liquidity Risk

Liquidity risk exists when particular investments are difficult to purchase or sell. The Portfolio’s investments in illiquid securities may reduce the returns of the Portfolio because it may be unable to sell the illiquid securities at an advantageous time or price. Portfolios with principal investment strategies that involve foreign securities, derivatives or securities with substantial market and/or credit risk tend to have the greatest exposure to liquidity risk.

Derivatives Risk


6		PIMCO Variable Insurance Trust

The Portfolio’s use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. Derivatives are subject to a number of risks described elsewhere in this section, such as liquidity risk, interest rate risk, market risk, credit risk and management risk. They also involve the risk of mispricing or improper valuation and the risk that changes in the value of the derivative may not correlate perfectly with the underlying asset, rate or index. The Portfolio investing in a derivative instrument could lose more than the principal amount invested. Also, suitable derivative transactions may not be available in all circumstances and there can be no assurance that the Portfolio will engage in these transactions to reduce exposure to other risks when that would be beneficial.

Mortgage Risk

Leveraging Risk

Certain transactions may give rise to a form of leverage. Such transactions may include, among others, reverse repurchase agreements, loans of portfolios securities, and the use of when-issued, delayed delivery or forward commitment transactions. The use of derivatives may also create leveraging risk. To mitigate leveraging risk, PIMCO will segregate liquid assets or otherwise cover the transactions that may give rise to such risk. The use of leverage may cause the Portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet segregation requirements. Leverage, including borrowing, may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. This is because leverage tends to exaggerate the effect of any increase or decrease in the value of the Portfolio’s portfolio securities.

Management Risk

Management of the Portfolio

Investment Adviser and Administrator

Advisory Fee

Administrative Fee


Prospectus		7

For the fiscal year ended December 31, 2001, the Portfolio paid PIMCO monthly administrative fees at the annual rate of 0.25%.

PIMCO may use its assets and resources, including its profits from advisory or administrative fees paid by the Portfolio, to pay insurance companies for services rendered to current and prospective owners of Variable Contracts, including the provision of support services such as providing information about the Trust and the Portfolio, the delivery of Trust documents, and other services. Any such payments are made by PIMCO and not by the Trust and PIMCO does not receive any separate fees for such expenses.

PIMCO has contractually agreed to reduce total annual portfolio operating expenses for the Administrative Class shares to the extent that they would exceed, due to the payment of organizational expenses and Trustees’ fees, the total portfolio operating expenses specified for the Portfolio in the table identifying the Portfolio’s annual portfolio operating expenses in its Portfolio Summary. PIMCO may recoup these waivers and reimbursements, for a period not to exceed three years, provided that total expenses, including such recoupment, do not exceed the annual expense limit.

Individual Portfolio Manager

The table below provides information about the portfolio manager responsible for management of the Portfolio, including his occupation for the past five years.

Portfolio Manager	Since		Recent Professional Experience

William H. Gross	5/99	*	Managing Director, Chief Investment Officer and a founding partner of PIMCO.

Since inception of the Portfolio.

Investment Options—

Administrative Class Shares

• Service Fees—Administrative Class Shares. The Trust has adopted an Administrative Services Plan (the “Plan”) for the Administrative Class shares of the Portfolio. The Plan allows the Portfolio to use its Administrative Class assets to reimburse financial intermediaries that provide services relating to Administrative Class shares. The services that will be provided under the Plan include, among other things, teleservicing support in connection with the Portfolio; recordkeeping services; provision of support services, including providing information about the Trust and the Portfolio and answering questions concerning the Trust and the Portfolio, including questions respecting investors’ interests in the Portfolio; provision and administration of insurance features for the benefit of investors in connection with the Portfolio; receiving, aggregating and forwarding purchase and redemption orders; processing dividend payments; issuing investor reports and transaction confirmations; providing subaccounting services; general account administration activities; and providing such similar services as the Trust may reasonably request to the extent the service provider is permitted to do so under applicable statutes, rules or regulation. The Plan also permits reimbursement for services in connection with the administration of plans or programs that use Administrative Class shares of the Portfolio as their funding medium and for related expenses.


8		PIMCO Variable Insurance Trust

The Plan permits the Portfolio to make total reimbursements at an annual rate of 0.15% of the Portfolio’s average daily net assets attributable to its Administrative Class shares. Because these fees are paid out of a Portfolio’s Administrative Class assets on an ongoing basis, over time they will increase the cost of an investment in Administrative Class shares and may cost an investor more than sales charges.

• Arrangements with Service Agents. Administrative Class shares of the Portfolio may be offered through certain brokers and financial intermediaries (“service agents”) that have established a shareholder servicing relationship with the Trust on behalf of their customers. The Trust pays no compensation to such entities other than Plan fees paid with respect to Administrative Class shares. Service agents may impose additional or different conditions than the Trust on purchases, redemptions or exchanges of Portfolio shares by their customers. Service agents may also independently establish and charge their customers transaction fees, account fees and other amounts in connection with purchases and sales of Portfolio shares in addition to any fees charged by the Trust. These additional fees may vary over time and would increase the cost of the customer’s investment and lower investment returns. Each service agent is responsible for transmitting to its customers a schedule of any such fees and information regarding any additional or different conditions regarding purchases, redemptions and exchanges. Shareholders who are customers of service agents should consult their service agents for information regarding these fees and conditions.

Purchases and Redemptions

Purchasing Shares


Prospectus		9

Redeeming Shares

How Portfolio Shares Are Priced

The NAV of the Portfolio’s Administrative Class shares is determined by dividing the total value of the Portfolio’s investments and other assets attributable to that class, less any liabilities, by the total number of shares outstanding of that class.

For purposes of calculating NAV, portfolio securities and other assets for which market quotes are available are stated at market value. Market value is generally determined on the basis of last reported sales prices, or if no sales are reported, based on quotes obtained from a quotation reporting system, established market makers, or pricing services. Certain securities or investments for which daily market quotations are not readily available may be valued, pursuant to guidelines established by the Board of Trustees, with reference to other securities or indices. Short-term investments having a maturity of 60 days or less are generally valued at amortized cost. Exchange traded options, futures and options on futures are valued at the settlement price determined by the exchange. Other securities for which market quotes are not readily available are valued at fair value as determined in good faith by the Board of Trustees or persons acting at their direction.

Portfolio shares are valued at the close of regular trading (normally 4:00 p.m., Eastern time) (the “NYSE Close”) on each day that the New York Stock Exchange is open. For purposes of calculating the NAV, the Portfolio normally uses pricing data for domestic equity securities received shortly after the NYSE Close and do not normally take into account trading, clearances or settlements that take place after the NYSE Close. Domestic fixed income and foreign securities are normally priced using data reflecting the earlier closing of the principal markets for those securities. Information that becomes known to the Portfolio or its agents after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the price of a security or the NAV determined earlier that day.


10		PIMCO Variable Insurance Trust

Tax Consequences

Please refer to the prospectus for the Separate Account and Variable Contract for information regarding the federal income tax treatment of distributions to the Separate Account. See “Additional Information—Additional Tax Information” in the Portfolio’s Statement of Additional Information for more information on taxes.

Characteristics and Risks of

Securities and Investment Techniques

Securities Selection

The Portfolio seeks maximum total return. The total return sought by the Portfolio consists of both income earned on the Portfolio’s investments and capital appreciation, if any, arising from increases in the market value of the Portfolio’s holdings. Capital appreciation of fixed income securities generally results from decreases in market interest rates or improving credit fundamentals for a particular market sector or security.


Prospectus		11

U.S. Government Securities

Municipal Bonds

Municipal bonds are generally issued by states and local governments and their agencies, authorities and other instumentalities. Municipal bonds are subject to interest rate, credit and market risk. The ability of an issuer to make payments could be affected by litigation, legislation or other political events or the bankruptcy of the issuer. Lower rated municipal bonds are subject to greater credit and market risk than higher quality municipal bonds. The types of municipal bonds in which the Portfolio may invest include municipal lease obligations. The Portfolio may also invest in securities issued by entities whose underlying assets are municipal bonds.

The Portfolio may invest, without limitation, in residual interest bonds, which are created by depositing municipal securities in a trust and dividing the income stream of an underlying municipal bond in two parts, one, a variable rate security and the other, a residual interest bond. The interest rate for the variable rate security is determined by an index or an auction process held approximately every 7 to 35 days, while the residual interest bond holder receives the balance of the income from the underlying municipal bond less an auction fee. The market prices of residual interest bonds may be highly sensitive to changes in market rates and may decrease significantly when market rates increase.

Mortgage-Related and Other Asset-Backed Securities

The value of some mortgage- or asset-backed securities may be particularly sensitive to changes in prevailing interest rates. Early repayment of principal on some mortgage-related securities may expose the Portfolio to a lower rate of return upon reinvestment of principal. When interest rates rise, the value of a mortgage-related security generally will decline; however, when interest rates are declining, the value of mortgage-related securities with prepayment features may not increase as much as other fixed income securities. The rate of prepayments on underlying mortgages will affect the price and volatility of a mortgage-related security, and may shorten or extend the effective maturity of the security beyond what was anticipated at the time of purchase. If unanticipated rates of prepayment on underlying mortgages increase the effective maturity of a mortgage-related security, the volatility of the security can be expected to increase. The value of these securities may fluctuate in response to the market’s perception of the creditworthiness of the issuers. Additionally, although mortgages and mortgage-related securities are generally supported by some form of government or private guarantee and/or insurance, there is no assurance that private guarantors or insurers will meet their obligations.

One type of SMBS has one class receiving all of the interest from the mortgage assets (the interest-only, or “IO” class), while the other class will receive all of the principal (the principal-only, or “PO” class). The yield to maturity on an IO class is extremely sensitive to the rate of principal payments (including prepayments) on the underlying mortgage assets, and a rapid rate of principal payments may have a material adverse effect on the Portfolio’s yield to maturity from these securities. The Portfolio may not invest more than 5% of its net assets in any combination of IO, PO, or inverse floater securities.


12		PIMCO Variable Insurance Trust

Loan Participations and Assignments

The Portfolio may invest in other asset-backed securities that have been offered to investors.The Portfolio may invest in fixed- and floating-rate loans, which investments generally will be in the form of loan participations and assignments of portions of such loans. Participations and assignments involve special types of risk, including credit risk, interest rate risk, liquidity risk, and the risks of being a lender. If the Portfolio purchases a participation, it may only be able to enforce its rights through the lender, and may assume the credit risk of the lender in addition to the borrower.

Corporate Debt Securities

High Yield Securities

Credit Ratings and Unrated Securities. Rating agencies are private services that provide ratings of the credit quality of fixed income securities, including convertible securities. Appendix A to this Prospectus describes the various ratings assigned to fixed income securities by Moody’s and S&P. Ratings assigned by a rating agency are not absolute standards of credit quality and do not evaluate market risks. Rating agencies may fail to make timely changes in credit ratings and an issuer’s current financial condition may be better or worse than a rating indicates. The Portfolio will not necessarily sell a security when its rating is reduced below its rating at the time of purchase. PIMCO does not rely solely on credit ratings, and develops its own analysis of issuer credit quality.

Variable and Floating Rate Securities

Inflation-Indexed Bonds


Prospectus		13

similar guarantee, the adjusted principal value of the bond repaid at maturity may be less than the original principal.

Event-Linked Bonds

Convertible and Equity Securities

Repurchase Agreements

Reverse Repurchase Agreements, Dollar Rolls and Other Borrowings


14		PIMCO Variable Insurance Trust

agreements, dollar rolls, and other borrowings. Reverse repurchase agreements, dollar rolls and other forms of borrowings may create leveraging risk for the Portfolio.

money for temporary administrative purposes on an unsecured basis in an amount not to exceed 5% of the Portfolio’s total assets.

Derivatives

Leverage Risk. Because many derivatives have a leverage component, adverse changes in the value or level of the underlying asset, reference rate or index can result in a loss substantially greater than the amount invested in the derivative itself. Certain derivatives have the potential for unlimited loss, regardless of the size of the initial investment. When the Portfolio uses derivatives for leverage, investments in the Portfolio will tend to be more volatile, resulting in larger gains or losses in response to market changes. To limit leverage risk, the Portfolio will segregate assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees (or, as permitted by applicable regulation, enter into certain offsetting positions) to cover its obligations under derivative instruments.


Prospectus		15

in derivatives transactions at any time or from time to time. The Portfolio’s ability to use derivatives may also be limited by certain regulatory and tax considerations.

using derivatives for the Portfolio, the Portfolio might have been in a better position if it had not entered into the transaction at all. While some strategies involving derivative instruments can reduce the risk of loss, they can also reduce the opportunity for gain or even result in losses by offsetting favorable price movements in other Portfolio investments. The Portfolio may also have to buy or sell a security at a disadvantageous time or price because the Portfolio is legally required to maintain offsetting positions or asset coverage in connection with certain derivatives transactions.

Other risks in using derivatives include the risk of mispricing or improper valuation of derivatives and the inability of derivatives to correlate perfectly with underlying assets, rates and indexes. Many derivatives, in particular privately negotiated derivatives, are complex and often valued subjectively. Improper valuations can result in increased cash payment requirements to counterparties or a loss of value to the Portfolio. Also, the value of derivatives may not correlate perfectly, or at all, with the value of the assets, reference rates or indexes they are designed to closely track. In addition, the Portfolio’s use of derivatives may cause the Portfolio to realize higher amounts of short-term capital gains (generally taxed at ordinary income tax rates) than if the Portfolio had not used such instruments.

Delayed Funding Loans and Revolving Credit Facilities

When-Issued, Delayed Delivery and Forward Commitment Transactions

Investment in Other Investment Companies


16		PIMCO Variable Insurance Trust

Short Sales

Illiquid Securities

Loans of Portfolio Securities

Portfolio Turnover

The length of time the Portfolio has held a particular security is not generally a consideration in investment decisions. A change in the securities held by the Portfolio is known as “portfolio turnover.” The Portfolio may engage in frequent and active trading of portfolio securities to achieve its investment objective, particularly during periods of volatile market movements. High portfolio turnover (e.g., over 100%) involves correspondingly greater expenses to the Portfolio, including brokerage commissions or dealer mark-ups and other transaction costs on the sale of securities and reinvestments in other securities. The trading costs associated with portfolio turnover may adversely effect the Portfolio’s performance.

Temporary Defensive Positions

Changes in Investment Objectives and Policies

Percentage Investment Limitations

Other Investments and Techniques


Prospectus		17

Financial Highlights

The financial highlights table is intended to help a shareholder understand the Portfolio’s financial performance for the period of operations. Certain information reflects financial results for a single Portfolio share. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Administrative Class of shares of the Portfolio (assuming reinvestment of all dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP, the Portfolio’s independent auditors. Their report, along with full financial statements, appears in the Trust’s Annual Report, which is available upon request.

Year or Period Ended	Net Asset Value Beginning of Period	Net Investment Income(b)	Net Realized and Unrealized Gain (Loss) on Investments(b)		Total Income (Loss) from Investment Operations	Dividends from Net Investment Income		Distributions from Net Realized Capital Gains

Total Return II
Administrative Class
12/31/2001	$10.24	$0.48	$0.49		$0.97	$(0.48	)	$(0.61	)
12/31/2000	9.82	0.63	0.44		1.07	(0.65	)	0.00
12/31/1999(a)	10.00	0.32	(0.18	)	0.14	(0.32	)	0.00

(a)

Commenced operations on May 28, 1999.

(b)

Per share amounts based on average number of shares outstanding during the period.


18		PIMCO Variable Insurance Trust

Tax Basis Return of Capital	Total Distributions	Net Asset Value End of Period	Total Return	Net Assets End of Period (000’s)	Ratio of Expenses to Average Net Assets	Ratio of Net Investment Income to Average Net Assets	Portfolio Turnover Rate



$0.00	$(1.09)	$10.12	9.72%	$2,403	0.65% (c)	4.56%	606%
0.00	(0.65)	10.24	11.30%	2,203	6.34%	6.34%	937%
0.00	(0.32)	9.82	1.41%	5,128	0.65%*(d)	5.38%*	378%

Annualized.

(c)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.66% for the period ended December 31, 2001.

(d)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.78% * for the period ended December 31,1999.


Prospectus		19

Appendix A

Description of Securities Ratings

High Quality Debt Securities are those rated in one of the two highest rating categories (the highest category for commercial pages) or, if unrated, deemed comparable by PIMCO.

Investment Grade Debt Securities are those rated in one of the four highest rating categories, or if unrated deemed comparable by PIMCO.

Following is a description of Moody’s and S&P’s rating categories applicable to fixed income securities.

Moody's Investors Service, Inc.

Corporate and Municipal Bond Ratings


A-1 PIMCO Variable Insurance Trust

Caa: Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.

Ca: Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.

C: Bonds which are rated C are the lowest rated class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.

Corporate Short-Term Debt Ratings

Moody’s employs the following three designations, all judged to be investment grade, to indicate the relative repayment ability of rated issuers:

NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime rating categories.

Standard & Poor's Ratings Services

Corporate and Municipal Bond Ratings

Investment Grade

AAA: Debt rated AAA has the highest rating assigned by Standard & Poor’s. Capacity to pay interest and repay principal is extremely strong.

AA: Debt rated AA has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree.


Prospectus A-2

Speculative Grade

CC: The rating CC is typically applied to debt subordinated to senior debt that is assigned an actual or implied CCC rating.

CI: The rating CI is reserved for income bonds on which no interest is being paid.

Plus (+) or Minus (-): The ratings from AA to CCC may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.


A-3		PIMCO Variable Insurance Trust

obligations are: securities whose principal or interest return is indexed to equities, commodities, or currencies; certain swaps and options; and interest only and principal only mortgage securities.

The absence of an “r” symbol should not be taken as an indication that an obligation will exhibit no volatility or variability in total return.

N.R.: Not rated.

Commercial Paper Rating Definitions

A-2: Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1.

B: Issues rated B are regarded as having only speculative capacity for timely payment.

C: This rating is assigned to short-term debt obligations with a doubtful capacity for payment.


Prospectus A-4

PIMCO Variable Insurance Trust		INVESTMENT ADVISER AND ADMINISTRATOR PIMCO, 840 Newport Center Drive, Suite 300, Newport Beach, CA 92660 CUSTODIAN State Street Bank & Trust Co., 801 Pennsylvania, Kansas City, MO 64105
		TRANSFER AGENT National Financial Data Services, 330 W. 9th Street, 4th Floor, Kansas City, MO 64105
		INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP, 1055 Broadway, Kansas City, MO 64105
		LEGAL COUNSEL Dechert Price & Rhoads, 1775 Eye Street N.W., Washington, D.C. 20006

You may get free copies of any of these materials, request other information about the Portfolio, or make shareholder inquiries by calling the Trust at 1-800-927-4648 or by writing to:

PIMCO Variable Insurance Trust

840 Newport Center Drive

Suite 300

Newport Beach, CA 92660

Investment Company Act file no. 811-8399

PIMCO Funds

840 Newport Center Drive

Suite 300

Newport Beach, CA 92660

		PIMCO Funds Prospectus

PIMCO Variable Insurance Trust May 1, 2002 Share Class ^Adm^{Administrative}		INTERMEDIATE DURATION BOND PORTFOLIO Real Return Portfolio




		This cover is not part of the Prospectus

Prospectus

PIMCO Variable Insurance Trust

May 1, 2002

Share Class Administrative

This Prospectus describes the Real Return Portfolio (the “Portfolio”), which is a separate investment portfolio offered by the PIMCO Variable Insurance Trust (the “Trust”). The Portfolio provides access to the professional investment management services offered by Pacific Investment Management Company LLC (“PIMCO”). The investments made by the Portfolio at any given time are not expected to be the same as those made by other mutual funds for which PIMCO acts as investment adviser, including mutual funds with investment objectives and strategies similar to those of the Portfolio. Accordingly, the performance of the Portfolio can be expected to vary from that of the other mutual funds.

This Prospectus explains what you should know about the Portfolio before you invest. Please read it carefully.

This Prospectus should be read in conjunction with the prospectus of the Separate Account. Both prospectuses should be read carefully and retained for future reference.


Prospectus		1

Table of Contents

Summary Information		3
Portfolio Summary		4
Real Return Portfolio		4
Summary of Principal Risks		6
Management of the Portfolio		8
Investment Options		9
Purchases and Redemptions		10
How Portfolio Shares are Priced		11
Tax Consequences		11
Characteristics and Risks of Securities and Investment Techniques		12
Financial Highlights		22
Appendix A—Description of Securities Ratings		A-1


2		PIMCO Variable Insurance Trust

Summary Information

		Main Investments	Duration	Credit Quality(1)	Non-U.S. Dollar Denominated Securities(2)

Intermediate Duration Bond Portfolio	Real Return	Inflation-indexed fixed income securities	+/-2 years of its Index	B to Aaa; max 10% below Baa	0-20%

(1)

As rated by Moody’s Investors Service, Inc., or equivalently rated by Standard & Poor’s Ratings Services, or if unrated, determined by PIMCO to be of comparable quality.

(2)

The Portfolio may invest beyond this limit in U.S. dollar-denominated securities. The percentage limitation relates to non-U.S. dollar-denominated securities.

Fixed Income Instruments “Fixed Income Instruments,” as used in this Prospectus, includes: • securities issued or guaranteed by the U.S. Government, its agencies or government-sponsored enterprises (“U.S. Government Securities”); • corporate debt securities of U.S. and non-U.S. issuers, including convertible securities and corporate commercial paper; • mortgage-backed and other asset-backed securities; • inflation-indexed bonds issued both by governments and corporations; • structured notes, including hybrid or “indexed” securities, event-linked bonds and loan participations; • delayed funding loans and revolving credit facilities; • bank certificates of deposit, fixed time deposits and bankers’ acceptances; • repurchase agreements and reverse repurchase agreements; • debt securities issued by states or local governments and their agencies, authorities and other government-sponsored enterprises; • obligations of non-U.S. governments or their subdivisions, agencies and government-sponsored enterprises; and • obligations of international agencies or supranational entities.
Duration Duration is a measure of the expected life of a fixed income security that is used to determine the sensitivity of a security’s price to changes in interest rates. The longer a security’s duration, the more sensitive it will be to changes in interest rates. Similarly, a portfolio with a longer average portfolio duration will be more sensitive to changes in interest rates than a portfolio with a shorter average portfolio duration.

Credit Ratings

In this Prospectus, references are made to credit ratings of debt securities which measure an issuer’s expected ability to pay principal and interest on time. Credit ratings are determined by rating organizations, such as Standard & Poor’s Rating Service (“S&P”) or Moody’s Investors Service, Inc. (“Moody’s”). The following terms are generally used to describe the credit quality of debt securities depending on the security’s credit rating or, if unrated, credit quality as determined by PIMCO:

• high quality

• investment grade

• below investment grade (“high yield securities” or “junk bonds”)

For a further description of credit ratings, see “Appendix A—Description of Securities Ratings.”

Portfolio, Descriptions, Performance and Fees

It is possible to lose money on investments in the Portfolio.

An investment in the Portfolio is not a deposit of a bank and is not guaranteed or insured by the Federal Deposit Insurance Corporation or any other government agency.


Prospectus		3

P IMCO Real Return Portfolio

Principal

Investments and Strategies

Investment Objective

Seeks maximum real return, consistent with preservation of real capital and prudent investment management

Portfolio Focus

Inflation indexed fixed income securities

Average Portfolio Duration

± 2 years of its Index

Credit Quality

B to Aaa; maximum 10% below Baa

Dividend Frequency

Declared daily and distributed monthly

The average portfolio duration of this Portfolio normally varies within two years (plus or minus) of the duration of the Lehman Global Real: U.S. TIPS Index, which as of February 15, 2002 was 6.1 years.

Principal Risks

Among the principal risks of investing in the Portfolio, which could adversely affect its net asset value, yield and total return, are:

• Interest Rate Risk

• Credit Risk

• Market Risk

• Issuer Risk

• Derivatives Risk

• Liquidity Risk

• Issuer Non-Diversification Risk

• Mortgage Risk

• Foreign Investment Risk

• Currency Risk

• Leveraging Risk

• Management Risk

Please see “Summary of Principal Risks” following the Portfolio Summary for a description of these and other risks of investing in the Portfolio.

Performance Information


4		PIMCO Variable Insurance Trust

PIMCO Real Return Portfolio (continued)

Calendar Year Total Returns — Administrative Class



	Highest and Lowest Quarter Returns
	(for periods shown in the bar chart)

	Highest (1st Qtr. ’01)	5.20%

	Lowest (4th Qtr. ’01)	-1.21%
Calendar Year End (through 12/31)

Average Annual Total Returns (for periods ended 12/31/01)

	1 Year	Since Inception (9/30/99)

Administrative Class	9.63%	10.43%

Lehman Global Real: U.S. TIPS Index(1)	7.90%	9.27%

(1)

The Lehman Global Real: U.S. TIPS Index is an unmanaged index consisting of the U.S. Treasury Inflation Protected Securities market. It is not possible to invest directly in the index.

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold Administrative Class shares of the Portfolio and do not reflect Variable Contract fees and expenses:

Shareholder Fees (fees paid directly from your investment).

None

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets)

Share Class	Advisory Fees	Service Fees	Other Expenses(1)	Total Annual Portfolio Operating Expenses	Expense Reduction (2)	Net Portfolio Operating Expenses

Administrative	0.25%	0.15%	0.27%	0.67%	(0.01%)	0.66%(3)

(1) “Other Expenses” reflect a 0.25% administrative fee, 0.01% representing the class’ pro rata Trustees’ fees, and 0.01% interest expense. Interest expense is generally incurred as a result of investment management activities. (2) PIMCO has contractually agreed to reduce total annual portfolio operating expenses for the Administrative Class shares to the extent they would exceed, due to the payment of organizational expenses and Trustees’ fees, 0.65% of average daily net assets. Under the Expense Limitation Agreement, PIMCO may recoup these waivers and reimbursements in future periods, not exceeding three years, provided total expenses, including such recoupment, do not exceed the annual expense limit. (3) Ratio of net expenses to average net assets excluding interest expense is 0.65%. Examples. The Examples are intended to help you compare the cost of investing in Administrative Class shares of the Portfolio with the costs of investing in other mutual funds. The Examples assume that you invest $10,000 in the noted class of shares for the time periods indicated, and then redeem all your shares at the end of those periods. The Examples also assume that your investment has a 5% return each year, the reinvestment of all dividends and distributions, and that the Portfolio’s operating expenses remain the same. Although your actual costs may be higher or lower, the Examples show what your costs would be based on these assumptions.

Share Class	Year 1	Year 3	Year 5	Year 10

Administrative	$67	$213	$372	$834


Prospectus		5

Summary of Principal Risks

Interest Rate Risk

Credit Risk

The Portfolio could lose money if the issuer or guarantor of a fixed income security, or the counterparty to a derivatives contract, repurchase agreement or a loan of portfolio securities, is unable or unwilling to make timely principal and/or interest payments, or to otherwise honor its obligations. Securities are subject to varying degrees of credit risk, which are often reflected in credit ratings. Municipal bonds are subject to the risk that litigation, legislation or other political events, local business or economic conditions, or the bankruptcy of the issuer could have a significant effect on an issuer’s ability to make payments of principal and/or interest.

Market Risk

Issuer Risk

Liquidity Risk

Derivatives Risk


6		PIMCO Variable Insurance Trust

Foreign (Non-U.S.) Investment Risk

The Portfolio may invest in foreign securities and may experience more rapid and extreme changes in value than a portfolio that invests exclusively in securities of U.S. companies. The securities markets of many foreign countries are relatively small, with a limited number of companies representing a small number of industries. Additionally, issuers of foreign securities are usually not subject to the same degree of regulation as U.S. issuers. Reporting, accounting and auditing standards of foreign countries differ, in some cases significantly, from U.S. standards. Also, nationalization, expropriation or confiscatory taxation, currency blockage, political changes or diplomatic developments could adversely affect the Portfolio’s investments in a foreign country. In the event of nationalization, expropriation or other confiscation, the Portfolio could lose its entire investment in foreign securities. Adverse conditions in a certain region can adversely affect securities of other countries whose economies appear to be unrelated. To the extent that the Portfolio invests a significant portion of its assets in a concentrated geographic area like Eastern Europe or Asia, the Portfolio will generally have more exposure to regional economic risks associated with foreign investments.

Currency Risk

If the Portfolio invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign (non-U.S.) currencies it is subject to the risk that those currencies will decline in value relative to the U.S. dollar, or, in the case of hedging positions, that the U.S. dollar will decline in value relative to the currency being hedged.

Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the U.S. or abroad. As a result, the Portfolio’s investments in foreign currency-denominated securities may reduce the returns of the Portfolio.

Issuer Non-Diversification Risk

Focusing investments in a small number of issuers, industries or foreign currencies increases risk. A portfolio that is “non-diversified” may invest a greater percentage of its assets in the securities of a single issuer (such as bonds issued by a particular state) than a portfolio that is “diversified.” The Portfolio invests in a relatively small number of issuers and is more susceptible to risks associated with a single economic, political or regulatory occurrence than a more diversified portfolio might be. Some of those issuers also may present substantial credit or other risks. Similarly, the Portfolio may be more sensitive to adverse economic, business or political developments if it invests a substantial portion of its assets in the bonds of similar projects or from issuers in the same state.

Mortgage Risk


Prospectus		7

Leveraging Risk

Certain transactions may give rise to a form of leverage. Such transactions may include, among others, reverse repurchase agreements, loans of portfolios securities, and the use of when-issued, delayed delivery or forward commitment transactions. The use of derivatives may also create leveraging risk. To mitigate leveraging risk, PIMCO will segregate liquid assets or otherwise cover the transactions that may give rise to such risk. The use of leverage may cause the Portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet segregation requirements. Leverage, including borrowing, may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. This is because leverage tends to exaggerate the effect of any increase or decrease in the value of the Portfolio’s portfolio securities.

Management Risk

Management of the Portfolio

Investment Adviser and Administrator

Advisory Fee

Administrative Fee

For the fiscal year ended December 31, 2001, the Portfolio paid PIMCO monthly administrative fees at the annual rate of 0.25%.


8		PIMCO Variable Insurance Trust

Individual Portfolio Manager

The table below provides information about the portfolio manager responsible for management of the Portfolio, including his occupation for the past five years.

Portfolio Manager	Since		Recent Professional Experience

John B. Brynjolfsson	9/99	*	Executive Vice President, PIMCO. He joined PIMCO as a Portfolio Manager in 1989, and has managed fixed income accounts for various institutional clients and funds since that time.

Since inception of the Portfolio.

Distributor

Investment Options—

Administrative Class Shares

• Service Fees—Administrative Class Shares. The Trust has adopted an Administrative Services Plan (the “Plan”) for the Administrative Class shares of the Portfolio. The Plan allows the Portfolio to use its Administrative Class assets to reimburse financial intermediaries that provide services relating to Administrative Class shares. The services that will be provided under the Plan include, among other things, teleservicing support in connection with the Portfolio; recordkeeping services; provision of support services, including providing information about the Trust and the Portfolio and answering questions concerning the Trust and the Portfolio, including questions respecting investors’ interests in the Portfolio; provision and administration of insurance features for the benefit of investors in connection with the Portfolio; receiving, aggregating and forwarding purchase and redemption orders; processing dividend payments; issuing investor reports and transaction confirmations; providing subaccounting services; general account administration activities; and providing such similar services as the Trust may reasonably request to the extent the service provider is permitted to do so under applicable statutes, rules or regulation. The Plan also permits reimbursement for services in connection with the administration of plans or programs that use Administrative Class shares of the Portfolio as their funding medium and for related expenses.


Prospectus		9

Purchases and Redemptions

Purchasing Shares

Redeeming Shares


10		PIMCO Variable Insurance Trust

How Portfolio Shares Are Priced

Portfolio shares are valued at the close of regular trading (normally 4:00 p.m., Eastern time) (the “NYSE Close”) on each day that the New York Stock Exchange is open. For purposes of calculating the NAV, the Portfolio normally uses pricing data for domestic equity securities received shortly after the NYSE Close and do not normally take into account trading, clearances or settlements that take place after the NYSE Close. Domestic fixed income and foreign securities are normally priced using data reflecting the earlier closing of the principal markets for those securities. Information that becomes known to the Portfolio or its agents after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the price of a security or the NAV determined earlier that day.

Tax Consequences


Prospectus		11

U.S. Government or any agency or instrumentality of the U.S. Government is treated as a security issued by the U.S. Government or its agency or instrumentality, whichever is applicable.

could become currently taxable to the owners of the Variable Contracts and income for prior periods with respect to such contracts also could be taxable, most likely in the year of the failure to achieve the required diversification. Other adverse tax consequences could also ensue.

Please refer to the prospectus for the Separate Account and Variable Contract for information regarding the federal income tax treatment of distributions to the Separate Account. See “Additional Information—Additional Tax Information” in the Portfolio’s Statement of Additional Information for more information on taxes.

Characteristics and Risks of

Securities and Investment Techniques

Securities Selection

U.S. Government Securities


12		PIMCO Variable Insurance Trust

coupon securities, which do not distribute interest on a current basis and tend to be subject to greater market risk than interest-paying securities of similar maturities.

Muncipal Bonds

bonds. The types of municipal bonds in which the Portfolio may invest include municipal lease obligations. The Portfolio may also invest in securities issued by entities whose underlying assets are municipal bonds.

Mortgage-Related and Other Asset-Backed Securities

The value of some mortgage- or asset-backed securities may be particularly sensitive to changes in prevailing interest rates. Early repayment of principal on some mortgage-related securities may expose the Portfolio to a lower rate of return upon reinvestment of principal. When interest rates rise, the value of a mortgage-related security generally will decline; however, when interest rates are declining, the value of mortgage-related securities with prepayment features may not increase as much as other fixed income securities. The rate of prepayments on underlying mortgages will affect the price and volatility of a mortgage-related security, and may shorten or extend the effective maturity of the security beyond what was anticipated at the time of purchase. If unanticipated rates of prepayment on underlying mortgages increase the effective maturity of a mortgage-related security, the volatility of the security can be expected to increase. The value of these securities may fluctuate in response to the market’s perception of the creditworthiness of the issuers. Additionally, although mortgages and mortgage-related securities are generally supported by some form of government or private guarantee and/or insurance, there is no assurance that private guarantors or insurers will meet their obligations.

One type of SMBS has one class receiving all of the interest from the mortgage assets (the interest-only, or “IO” class), while the other class will receive all of the principal (the principal-only, or “PO” class). The yield to maturity on an IO class is extremely sensitive to the rate of principal payments (including prepayments) on the underlying mortgage assets, and a rapid rate of principal payments may have a material adverse effect on the Portfolio’s yield to maturity from these securities. The Portfolio may not invest more than 5% of its net assets in any combination of IO, PO, or inverse floater securities. The Portfolio may invest in other asset-backed securities that have been offered to investors.

Loan Participations and Assignments


Prospectus		13

Corporate Debt Securities

High Yield Securities

Variable and Floating Rate Securities

Inflation-Indexed Bonds


14		PIMCO Variable Insurance Trust

inflation-indexed bonds. Short-term increases in inflation may lead to a decline in value. Any increase in the principal amount of an inflation-indexed bond will be considered taxable ordinary income, even though investors do not receive their principal until maturity.

Event-Linked Bonds

Convertible and Equity Securities

changes in the price of the underlying common stock because of this conversion or exercise feature. However, the value of a convertible security may not increase or decrease as rapidly as the underlying common stock. A convertible security will normally also provide income and is subject to interest rate risk. Convertible securities may be lower-rated securities subject to greater levels of credit risk. The Portfolio may be forced to convert a security before it would otherwise choose, which may have an adverse effect on the Portfolio’s ability to achieve its investment objective.

Foreign (Non-U.S.) Securities

Investing in the securities of issuers in any foreign country involves special risks and considerations not typically associated with investing in U.S. companies. Shareholders should consider carefully the substantial risks involved for Portfolio investments in securities issued by foreign companies and governments of foreign countries. These risks include: differences in accounting, auditing and financial reporting standards; generally higher commission rates on foreign portfolio transactions; the possibility of nationalization, expropriation or confiscatory taxation; adverse changes in investment or exchange control regulations; and political instability. Individual foreign economies may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross domestic product, rates of inflation, capital reinvestment, resources, self-sufficiency and balance of payments position. The securities markets, values of securities, yields and risks associated with foreign securities markets may change independently of each other. Also, foreign securities and dividends and interest payable on those securities may be subject to foreign taxes, including taxes withheld from payments on those securities. Foreign securities often trade with less frequency and volume than domestic securities and therefore may exhibit greater price volatility. Investments in foreign securities may also involve higher custodial costs than


Prospectus		15

domestic investments and additional transaction costs with respect to foreign currency conversions. Changes in foreign exchange rates also will affect the value of securities denominated or quoted in foreign currencies.

• Emerging Market Securities. The Portfolio may invest up to 10% of its assets in securities of issuers based in countries with developing (or “emerging market”) economies. Investing in emerging market securities imposes risks different from, or greater than, risks of investing in domestic securities or in foreign, developed countries. These risks include: smaller market capitalization of securities markets, which may suffer periods of relative illiquidity; significant price volatility; restrictions on foreign investment; possible repatriation of investment income and capital. In addition, foreign investors may be required to register the proceeds of sales; future economic or political crises could lead to price controls, forced mergers, expropriation or confiscatory taxation, seizure, nationalization, or creation of government monopolies. The currencies of emerging market countries may experience significant declines against the U.S. dollar, and devaluation may occur subsequent to investments in these currencies by the Portfolio. Inflation and rapid fluctuations in inflation rates have had, and may continue to have, negative effects on the economies and securities markets of certain emerging market countries.

Additional risks of emerging markets securities may include: greater social, economic and political uncertainty and instability; more substantial governmental involvement in the economy; less governmental supervision and regulation; unavailability of currency hedging techniques; companies that are newly organized and small; differences in auditing and financial reporting standards, which may result in unavailability of material information about issuers; and less developed legal systems. In addition, emerging securities markets may have different clearance and settlement procedures, which may be unable to keep pace with the volume of securities transactions or otherwise make it difficult to engage in such transactions. Settlement problems may cause the Portfolio to miss attractive investment opportunities, hold a portion of its assets in cash pending investment, or be delayed in disposing of a portfolio security. Such a delay could result in possible liability to a purchaser of the security.

Foreign (Non-U.S.) Currencies


16		PIMCO Variable Insurance Trust

on foreign currencies and futures. A forward foreign currency exchange contract, which involves an obligation to purchase or sell a specific currency at a future date at a price set at the time of the contract, reduces the Portfolio’s exposure to changes in the value of the currency it will deliver and increases its exposure to changes in the value of the currency it will receive for the duration of the contract. The effect on the value of the Portfolio is similar to selling securities denominated in one currency and purchasing securities denominated in another currency. A contract to sell foreign currency would limit any potential gain which might be realized if the value of the hedged currency increases. The Portfolio may enter into these contracts to hedge against foreign exchange risk, to increase exposure to a foreign currency or to shift exposure to foreign currency fluctuations from one currency to another. Suitable hedging transactions may not be available in all circumstances and there can be no assurance that the Portfolio will engage in such transactions at any given time or from time to time. Also, such transactions may not be successful and may eliminate any chance for the Portfolio to benefit from favorable fluctuations in relevant foreign currencies. The Portfolio may use one currency (or a basket of currencies) to hedge against adverse changes in the value of another currency (or a basket of currencies) when exchange rates between the two currencies are positively correlated. The Portfolio will segregate assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees to cover its obligations under forward foreign currency exchange contracts entered into for non-hedging purposes.

Repurchase Agreements

time. If the party agreeing to repurchase should default, the Portfolio will seek to sell the securities which it holds. This could involve procedural costs or delays in addition to a loss on the securities if their value should fall below their repurchase price. Repurchase agreements maturing in more than seven days are considered illiquid securities.

Reverse Repurchase Agreements, Dollar Rolls and Other Borrowings

Derivatives


Prospectus		17

associated with particular derivative instruments is included in “Investment Objectives and Policies” in the Statement of Additional Information. The following provides a more general discussion of important risk factors relating to all derivative instruments that may be used by the Portfolio.

investment. When the Portfolio uses derivatives for leverage, investments in the Portfolio will tend to be more volatile, resulting in larger gains or losses in response to market changes. To limit leverage risk, the Portfolio will segregate assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees (or, as permitted by applicable regulation, enter into certain offsetting positions) to cover its obligations under derivative instruments.

Lack of Availability. Because the markets for certain derivative instruments (including markets located in foreign countries) are relatively new and still developing, suitable derivatives transactions may not be available in all circumstances for risk management or other purposes. There is no assurance that the Portfolio will engage in derivatives transactions at any time or from time to time. The Portfolio’s ability to use derivatives may also be limited by certain regulatory and tax considerations.

Other risks in using derivatives include the risk of mispricing or improper valuation of derivatives and the inability of derivatives to correlate perfectly with underlying assets, rates and indexes. Many derivatives, in particular privately negotiated derivatives, are complex and often valued subjectively. Improper valuations can result in increased cash payment requirements to counterparties or a loss of value to the Portfolio. Also, the value of derivatives may not correlate perfectly, or at all, with the value of the assets, reference rates or indexes they are designed to closely track. In addition, the Portfolio’s use of derivatives may cause the Portfolio to realize higher amounts of short-term capital gains (generally taxed at ordinary income tax rates) than if the Portfolio had not used such instruments.


18		PIMCO Variable Insurance Trust

Delayed Funding Loans and Revolving Credit Facilities

When-Issued, Delayed Delivery and Forward Commitment Transactions

Investment in Other Investment Companies

Short Sales

Illiquid Securities


Prospectus		19

Loans of Portfolio Securities

Portfolio Turnover

The length of time the Portfolio has held a particular security is not generally a consideration in investment decisions. A change in the securities held by the Portfolio is known as “portfolio turnover.” The Portfolio may engage in frequent and active trading of portfolio securities to achieve its investment objective, particularly during periods of volatile market movements. High portfolio turnover (e.g., over 100%) involves correspondingly greater expenses to the Portfolio, including brokerage commissions or dealer mark-ups and other transaction costs on the sale of securities and reinvestments in other securities. The trading costs associated with portfolio turnover may adversely effect the Portfolio’s performance.

Temporary Defensive Positions

Changes in Investment Objectives and Policies

Percentage Investment Limitations

Other Investments and Techniques


20		PIMCO Variable Insurance Trust

(THIS PAGE INTENTIONALLY LEFT BLANK)


Prospectus		21

Financial Highlights

The financial highlights table is intended to help a shareholder understand the Portfolio’s financial performance for the period of operations. Certain information reflects financial results for a single Portfolio share. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Administrative Class of shares of the Portfolio (assuming reinvestment of all dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP, the Portfolio’s independent auditors. Their report, along with full financial statements, appears in the Trust’s Annual Report, which is available upon request.

Year or Period Ended	Net Asset Value Beginning of Period	Net Investment Income(b)	Net Realized and Unrealized Gain (Loss) on Investments(b)		Total Income (Loss) from Investment Operations	Dividends from Net Investment Income	Distributions from Net Realized Capital Gains


Real Return
Administrative Class
12/31/2001	$10.34	$0.61	$0.38		$0.99	$(0.63)	$(0.14	)
12/31/2000	9.80	0.64	0.69		1.33	(0.79)	0.00
12/31/1999(a)	10.00	0.20	(0.20	)	0.00	(0.20)	0.00

(a)

Commenced operations on September 30, 1999.

(b)

Per share amounts based on average number of shares outstanding during the period.


22		PIMCO Variable Insurance Trust

Tax Basis Return of Capital	Total Distributions		Net Asset Value End of Period		Total Return		Net Assets End of Period (000’s)		Ratio of Expenses to Average Net Assets		Ratio of Net Investment Income to Average Net Assets		Portfolio Turnover Rate

$0.00	$	(0.77)	$	10.56	9.63	%	$	7,406	0.66	% (c)(d)	5.63	%	58	%
0.00		(0.79)		10.34	14.11	%		448	0.65	%	6.69	%	18	%
0.00		(0.20)		9.80	(0.03)	%		3,000	0.65	%*(e)	7.72	%*	23	%

* Annualized.

(c)

Ratio of net expenses to average net assets excluding interest expense is 0.65%.

(d)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.67% for the period ended December 31, 2001.

(e)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.92%* for the period ended December 31, 1999.


Prospectus		23

Appendix A

Description of Securities Ratings

High Quality Debt Securities are those rated in one of the two highest rating categories (the highest category for commercial pages) or, if unrated, deemed comparable by PIMCO.

Investment Grade Debt Securities are those rated in one of the four highest rating categories, or if unrated deemed comparable by PIMCO.

Following is a description of Moody’s and S&P’s rating categories applicable to fixed income securities.

Moody's Investors Service, Inc.

Corporate and Municipal Bond Ratings


A-1		PIMCO Variable Insurance Trust

Caa: Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.

Ca: Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.

C: Bonds which are rated C are the lowest rated class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.

Corporate Short-Term Debt Ratings

Moody’s employs the following three designations, all judged to be investment grade, to indicate the relative repayment ability of rated issuers:

NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime rating categories.

Standard & Poor's Ratings Services

Corporate and Municipal Bond Ratings

Investment Grade

AAA: Debt rated AAA has the highest rating assigned by Standard & Poor’s. Capacity to pay interest and repay principal is extremely strong.

AA: Debt rated AA has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree.


Prospectus		A-		2

Speculative Grade

CC: The rating CC is typically applied to debt subordinated to senior debt that is assigned an actual or implied CCC rating.

C: The rating C is typically applied to debt subordinated to senior debt that is assigned an actual or implied CCC- debt rating. The C rating may be used to cover a situation where a bankruptcy petition has been filed, but debt service payments are continued.

CI: The rating CI is reserved for income bonds on which no interest is being paid.

Plus (+) or Minus (-): The ratings from AA to CCC may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.


A-3		PIMCO Variable Insurance Trust

obligations are: securities whose principal or interest return is indexed to equities, commodities, or currencies; certain swaps and options; and interest only and principal only mortgage securities.

The absence of an “r” symbol should not be taken as an indication that an obligation will exhibit no volatility or variability in total return.

N.R.: Not rated.

Commercial Paper Rating Definitions

A-2: Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1.

B: Issues rated B are regarded as having only speculative capacity for timely payment.

C: This rating is assigned to short-term debt obligations with a doubtful capacity for payment.


Prospectus		A-		4

PIMCO Variable Insurance Trust

INVESTMENT ADVISER AND ADMINISTRATOR

PIMCO, 840 Newport Center Drive, Suite 300, Newport Beach, CA 92660

CUSTODIAN

State Street Bank & Trust Co., 801 Pennsylvania, Kansas City, MO 64105

TRANSFER AGENT

National Financial Data Services, 330 W. 9th Street, 4th Floor, Kansas City, MO 64105

INDEPENDENT ACCOUNTANTS

PricewaterhouseCoopers LLP, 1055 Broadway, Kansas City, MO 64105

LEGAL COUNSEL

Dechert Price & Rhoads, 1775 Eye Street N.W., Washington, D.C. 20006

The Trust’s Statement of Additional Information (“SAI”) and annual and semi-annual reports to shareholders include additional information about the Portfolio. The SAI and the financial statements included in the Portfolio’s most recent annual report to shareholders are incor-porated by reference into this
Prospectus, which means they are
part of this Prospectus for legal
purposes. The Portfolio’s annual
report discusses the market condi-tions and investment strategies
that significantly affected the Portfolio’s performance during its last fiscal year.

You may get free copies of any of these materials, request other information about the Portfolio, or make shareholder inquiries by calling the Trust at 1-800-927-4648 or by writing to:

PIMCO Variable Insurance Trust

840 Newport Center Drive

Suite 300

Newport Beach, CA 92660

You may review and copy informa-tion about the Trust, including its SAI, at the Securities and Exchange Commission’s public ref- erence room in Washington, D.C. You may call the Commission at
1-202-942-8090 for information about the operation of the public reference room. You may also access reports and other informa- tion about the Trust on the Commission’s Web site at www.sec.gov. You may get copies of this information, with payment of a duplication fee, by writing the Public Reference Section of the Commission, Washington, D.C. 20549-0102, or by e-mailing your request to publicinfo@sec.gov. Reference the Trust’s Investment Company Act file number in your correspondence.

Investment Company Act file no. 811-8399

PIMCO Funds

840 Newport Center Drive

Suite 300

Newport Beach, CA 92660

		PIMCO Funds Prospectus

PIMCO Variable Insurance Trust May 1, 2002 Share Class ^Adm^{Administrative}		LONG DURATION BOND PORTFOLIO Long-Term U.S. Government Portfolio




		This cover is not part of the Prospectus

Prospectus

PIMCO Variable Insurance Trust

May 1, 2002

Share Class Administrative

This Prospectus describes the Long-Term U.S. Government Portfolio (the “Portfolio”), which is a separate investment portfolio offered by the PIMCO Variable Insurance Trust (the “Trust”). The Portfolio provides access to the professional investment management services offered by Pacific Investment Management Company LLC (“PIMCO”). The investments made by the Portfolio at any given time are not expected to be the same as those made by other mutual funds for which PIMCO acts as investment adviser, including mutual funds with investment objectives and strategies similar to those of the Portfolio. Accordingly, the performance of the Portfolio can be expected to vary from that of the other mutual funds.

This Prospectus explains what you should know about the Portfolio before you invest. Please read it carefully.

This Prospectus should be read in conjunction with the prospectus of the Separate Account. Both prospectuses should be read carefully and retained for future reference.


Prospectus		1

Table of Contents

Summary Information		3
Portfolio Summary		4
Long-Term U.S. Government Portfolio		4
Summary of Principal Risks		6
Management of the Portfolio		7
Investment Options		8
Purchases and Redemptions		9
How Portfolio Shares are Priced		10
Tax Consequences		10
Characteristics and Risks of Securities and Investment Techniques		11
Financial Highlights		18
Appendix A—Description of Securities Ratings		A-1


2		PIMCO Variable Insurance Trust

Summary Information

		Main Investments	Duration	Credit Quality(1)	Non-U.S. Dollar Denominated Securities

Long Duration Bond Portfolio	Long-Term U.S. Government	Long-term maturity fixed income securities	³ 8 years	A to Aaa	0%

(1)

As rated by Moody’s Investors Service, Inc., or equivalently rated by Standard & Poor’s Ratings Services, or if unrated, determined by PIMCO to be of comparable quality.

Fixed Income Instruments

“Fixed Income Instruments,” as used in this Prospectus, includes:

•

securities issued or guaranteed by the U.S. Government, its agencies or government-sponsored enterprises (“U.S. Government Securities”);

•

corporate debt securities of U.S. and non-U.S. issuers, including convertible securities and corporate commercial paper;

•

mortgage-backed and other asset-backed securities;

•

inflation-indexed bonds issued both by governments and corporations;

•

structured notes, including hybrid or “indexed” securities, event-linked bonds and loan participations;

•

delayed funding loans and revolving credit facilities;

•

bank certificates of deposit, fixed time deposits and bankers’ acceptances;

•

repurchase agreements and reverse repurchase agreements;

•

debt securities issued by states or local governments and their agencies, authorities and other government-sponsored enterprises;

•

obligations of non-U.S. governments or their subdivisions, agencies and government-sponsored enterprises; and

•

obligations of international agencies or supranational entities.

Duration

Duration is a measure of the expected life of a fixed income security that is used to determine the sensitivity of a security’s price to changes in interest rates. The longer a security’s duration, the more sensitive it will be to changes in interest rates. Similarly, a portfolio with a longer average portfolio duration will be more sensitive to changes in interest rates than a portfolio with a shorter average portfolio duration.

Credit Ratings

In this Prospectus, references are made to credit ratings of debt securities which measure an issuer’s expected ability to pay principal and interest on time. Credit ratings are determined by rating organizations, such as Standard & Poor’s Rating Service (“S&P”) or Moody’s Investors Service, Inc. (“Moody’s”). The following terms are generally used to describe the credit quality of debt securities depending on the security’s credit rating or, if unrated, credit quality as determined by PIMCO:

•

high quality

•

investment grade

•

below investment grade (“high yield securities” or “junk bonds”)

For a further description of credit ratings, see “Appendix A—Description of Securities Ratings.”

Portfolio Descriptions, Performance and Fees

It is possible to lose money on investments in the Portfolio.

An investment in the Portfolio is not a deposit of a bank and is not guaranteed or insured by the Federal Deposit Insurance Corporation or any other government agency.


Prospectus		3

P IMCO Long-Term U.S. Government Portfolio

Principal

Investments and Strategies

Investment Objective

Seeks maximum total return, consistent with preservation of
capital and prudent investment management

Portfolio Focus

Long-term maturity fixed
income securities

Average Portfolio Duration

³ 8 years

Credit Quality

A to Aaa

Dividend Frequency

Declared daily and distributed monthly

Principal Risks

Among the principal risks of investing in the Portfolio, which could adversely affect its net asset value, yield and total return, are:

• Interest Rate Risk

• Credit Risk

• Market Risk

• Issuer Risk

• Derivatives Risk

• Mortgage Risk

• Leveraging Risk

• Management Risk

Please see “Summary of Principal Risks” following the Portfolio Summary for a description of these and other risks of investing in the Portfolio.

Performance Information


4		PIMCO Variable Insurance Trust

PIMCO Long-Term U.S. Government Portfolio (continued)

Calendar Year Total Returns — Administrative Class



	Highest and Lowest Quarter Returns
	(for periods shown in the bar chart)

	Highest (4th Qtr. ’00)	8.27%

	Lowest (2nd Qtr. ’01)	-1.87%
Calendar Year End (through 12/31)

Average Annual Total Returns (for periods ended 12/31/01)

	1 Year	Since Inception (4/30/99)

Administrative Class	5.86%	8.00%

Lehman Brothers Long-Term Treasury Index(1)	4.22%	6.85%

(1)

The Lehman Long-Term Treasury Index is an unmanaged index of U.S. Treasury issues with maturities greater than 10 years. It is not possible to invest directly in the index.

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold Administrative Class shares of the Portfolio and do not reflect Variable Contract fees and expenses:

Shareholder Fees (fees paid directly from your investment)

None

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets)

Share Class

Advisory

Fees

Service

Fees

Other

Expenses(1)

Total Annual Portfolio Operating Expenses

Expense Reduction(2)

Net Portfolio Operating Expenses

Administrative

0.25%

0.15%

0.26%

0.66%

(0.01%)

0.65%

(1) “Other Expenses” reflect a 0.25% administrative fee and 0.01% representing the class’ pro rata Trustees’ fees.

Share Class	Year 1	Year 3	Year 5	Year 10

Administrative	$66	$210	$367	$822


Prospectus		5

Summary of Principal Risks

Interest Rate Risk

Credit Risk

Market Risk

Issuer Risk

Derivatives Risk

Derivatives are financial contracts whose value depends on, or is derived from, the value of an underlying asset, reference rate or index. The various derivative instruments that the Portfolio may use are referenced under “Characteristics and Risks of Securities and Investment Techniques—Derivatives” in this Prospectus and described in more detail under “Investment Objectives and Policies” in the Statement of Additional Information. The Portfolio typically uses derivatives as a substitute for taking a position in the underlying asset and/or part of a strategy designed to reduce exposure to other risks, such as interest rate or currency risk. The Portfolio may also use derivatives for leverage, in which case their use would involve leveraging risk. The Portfolio’s use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. Derivatives are subject to a number of risks described elsewhere in this section, such as liquidity risk, interest rate risk, market risk, credit risk and management risk. They also involve the risk of mispricing or improper valuation and the risk that changes in the value of the derivative may not correlate perfectly with the underlying asset, rate or index.


6		PIMCO Variable Insurance Trust

Mortgage Risk

Leveraging Risk

Certain transactions may give rise to a form of leverage. Such transactions may include, among others, reverse repurchase agreements, loans of portfolios securities, and the use of when-issued, delayed delivery or forward commitment transactions. The use of derivatives may also create leveraging risk. To mitigate leveraging risk, PIMCO will segregate liquid assets or otherwise cover the transactions that may give rise to such risk. The use of leverage may cause the Portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet segregation requirements. Leverage, including borrowing, may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. This is because leverage tends to exaggerate the effect of any increase or decrease in the value of the Portfolio’s portfolio securities.

Management Risk

Management of the Portfolio

Investment Adviser and Administrator

Advisory Fee

Administrative Fee

For the fiscal year ended December 31, 2001, the Portfolio paid PIMCO monthly administrative fees at the annual rate of 0.25%.


Prospectus		7

Individual Portfolio Manager

The table below provides information about the portfolio manager responsible for management of the Portfolio, including his occupation for the past five years.

Portfolio Manager	Since	Recent Professional Experience

James M. Keller	4/00	Executive Vice President, PIMCO. He joined PIMCO as a Portfolio Manager in 1996, and has managed fixed income accounts for various institutional clients since that time.

Distributor

Investment Options—

Administrative Class Shares


8		PIMCO Variable Insurance Trust

Purchases and Redemptions

Purchasing Shares

Redeeming Shares


Prospectus		9

determine fairly the value of its net assets, or during any other period as permitted by the Securities and Exchange Commission for the protection of investors. Under these and other unusual circumstances, the Trust may suspend redemption or postpone payment for more than seven days, as permitted by law. In consideration of the best interests of the remaining shareholders, the Trust reserves the right to pay redemption proceeds in whole or in part by a distribution in kind of securities held by the Portfolio in lieu of cash. It is highly unlikely that shares would ever be redeemed in kind. If shares are redeemed in kind, however, the redeeming shareholder should expect to incur transaction costs upon the disposition of the securities received in the distribution.

How Portfolio Shares Are Priced

Portfolio shares are valued at the close of regular trading (normally 4:00 p.m., Eastern time) (the “NYSE Close”) on each day that the New York Stock Exchange is open. For purposes of calculating the NAV, the Portfolio normally uses pricing data for domestic equity securities received shortly after the NYSE Close and do not normally take into account trading, clearances or settlements that take place after the NYSE Close. Domestic fixed income and foreign securities are normally priced using data reflecting the earlier closing of the principal markets for those securities. Information that becomes known to the Portfolio or its agents after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the price of a security or the NAV determined earlier that day.

Tax Consequences


10		PIMCO Variable Insurance Trust

investment, no more than 70% is represented by any two investments, no more than 80% is represented by any three investments, and no more than 90% is represented by any four investments. For this purpose, securities of a single issuer are treated as one investment and each U.S. Government agency or instrumentality is treated as a separate issuer. Any security issued, guaranteed, or insured (to the extent so guaranteed or insured) by the U.S. Government or any agency or instrumentality of the U.S. Government is treated as a security issued by the U.S. Government or its agency or instrumentality, whichever is applicable.

Please refer to the prospectus for the Separate Account and Variable Contract for information regarding the federal income tax treatment of distributions to the Separate Account. See “Additional Information—Additional Tax Information” in the Portfolio’s Statement of Additional Information for more information on taxes.

Characteristics and Risks of

Securities and Investment Techniques

Securities Selection


Prospectus		11

U.S. Government Securities

Municipal Bonds

Mortgage-Related and Other Asset-Backed Securities

The value of some mortgage- or asset-backed securities may be particularly sensitive to changes in prevailing interest rates. Early repayment of principal on some mortgage-related securities may expose the Portfolio to a lower rate of return upon reinvestment of principal. When interest rates rise, the value of a mortgage-related security generally will decline; however, when interest rates are declining, the value of mortgage-related securities with prepayment features may not increase as much as other fixed income securities. The rate of prepayments on underlying mortgages will affect the price and volatility of a mortgage-related security, and may shorten or extend the effective maturity of the security beyond what was anticipated at the time of purchase. If unanticipated rates of prepayment on underlying mortgages increase the effective maturity of a mortgage-related security, the volatility of the security can be expected to increase. The value of these securities may fluctuate in response to the market’s perception of the creditworthiness of the issuers. Additionally, although mortgages and mortgage-related securities are generally supported by some form of government or private guarantee and/or insurance, there is no assurance that private guarantors or insurers will meet their obligations.

One type of SMBS has one class receiving all of the interest from the mortgage assets (the interest-only, or “IO” class), while the other class will receive all of the principal (the principal-only, or “PO” class). The yield to maturity on an IO class is extremely sensitive to the rate of principal payments (including prepayments) on the underlying mortgage assets, and a rapid rate of principal payments may have a material adverse effect on the Portfolio’s yield to maturity from these securities. The Portfolio may not invest more than 5% of its net assets in any combination of IO, PO, or inverse floater securities. The Portfolio may invest in other asset-backed securities that have been offered to investors.

Loan Participations and Assignments


12		PIMCO Variable Insurance Trust

purchases a participation, it may only be able to enforce its rights through the lender, and may assume the credit risk of the lender in addition to the borrower.

Corporate Debt Securities

Corporate debt securities are subject to the risk of the issuer’s inability to meet principal and interest payments on the obligation and may also be subject to price volatility due to such factors as interest rate sensitivity, market perception of the creditworthiness of the issuer and general market liquidity. When interest rates rise, the value of corporate debt securities can be expected to decline. Debt securities with longer maturities tend to be more sensitive to interest rate movements than those with shorter maturities.

High Yield Securities

Variable and Floating Rate Securities

Inflation-Indexed Bonds


Prospectus		13

Event-Linked Bonds

Convertible and Equity Securities

Repurchase Agreements

Reverse Repurchase Agreements, Dollar Rolls and Other Borrowings


14		PIMCO Variable Insurance Trust

agreements, dollar rolls, and other borrowings. Reverse repurchase agreements, dollar rolls and other forms of borrowings may create leveraging risk for the Portfolio.

money for temporary administrative purposes on an unsecured basis in an amount not to exceed 5% of the Portfolio’s total assets.

Derivatives

Leverage Risk. Because many derivatives have a leverage component, adverse changes in the value or level of the underlying asset, reference rate or index can result in a loss substantially greater than the amount invested in the derivative itself. Certain derivatives have the potential for unlimited loss, regardless of the size of the initial investment. When the Portfolio uses derivatives for leverage, investments in the Portfolio will tend to be more volatile, resulting in larger gains or losses in response to market changes. To limit leverage risk, the Portfolio will segregate assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees (or, as permitted by applicable regulation, enter into certain offsetting positions) to cover its obligations under derivative instruments.


Prospectus		15

in all circumstances for risk management or other purposes. There is no assurance that the Portfolio will engage in derivatives transactions at any time or from time to time. The Portfolio’s ability to use derivatives may also be limited by certain regulatory and tax considerations.

Other risks in using derivatives include the risk of mispricing or improper valuation of derivatives and the inability of derivatives to correlate perfectly with underlying assets, rates and indexes. Many derivatives, in particular privately negotiated derivatives, are complex and often valued subjectively. Improper valuations can result in increased cash payment requirements to counterparties or a loss of value to the Portfolio. Also, the value of derivatives may not correlate perfectly, or at all, with the value of the assets, reference rates or indexes they are designed to closely track. In addition, the Portfolio’s use of derivatives may cause the Portfolio to realize higher amounts of short-term capital gains (generally taxed at ordinary income tax rates) than if the Portfolio had not used such instruments.

Delayed Funding Loans and Revolving Credit Facilities

When-Issued, Delayed Delivery and Forward Commitment Transactions

Investment in Other Investment Companies


16		PIMCO Variable Insurance Trust

Short Sales

Illiquid Securities

Loans of Portfolio Securities

Portfolio Turnover

The length of time the Portfolio has held a particular security is not generally a consideration in investment decisions. A change in the securities held by the Portfolio is known as “portfolio turnover.” The Portfolio may engage in frequent and active trading of portfolio securities to achieve its investment objective, particularly during periods of volatile market movements. High portfolio turnover (e.g., over 100%) involves correspondingly greater expenses to the Portfolio, including brokerage commissions or dealer mark-ups and other transaction costs on the sale of securities and reinvestments in other securities. The trading costs associated with portfolio turnover may adversely effect the Portfolio’s performance.

Temporary Defensive Positions

Changes in Investment Objectives and Policies

Percentage Investment Limitations

Other Investments and Techniques


Prospectus		17

Financial Highlights

The financial highlights table is intended to help a shareholder understand the Portfolio’s financial performance for the period of operations. Certain information reflects financial results for a single Portfolio share. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Administrative Class of shares of the Portfolio (assuming reinvestment of all dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP, the Portfolio’s independent auditors. Their report, along with full financial statements, appears in the Trust’s Annual Report, which is available upon request.

Year or Period Ended	Net Asset Value Beginning of Period		Net Investment Income(b)		Net Realized and Unrealized Gain (Loss) on Investments(b)			Total Income (Loss) from Investment Operations			Dividends from Net Investment Income			Distributions from Net Realized Capital Gains


Long-Term U.S. Government
Administrative Class
12/31/2001	$	10.56	$	0.51	$	0.09		$	0.60		$	(0.52	)	$	(0.37	)
12/31/2000		9.22		0.56		1.34			1.90			(0.56	)		0.00
12/31/1999(a)		10.00		0.36		(0.78	)		(0.42	)		(0.36	)		0.00

(a)

Commenced operations on April 30, 1999.

(b)

Per share amounts based on average number of shares outstanding during the period.


18		PIMCO Variable Insurance Trust

Tax Basis Return of Capital	Total Distributions		Net Asset Value End of Period	Total Return		Net Assets End of Period (000’s)	Ratio of Expenses to Average Net Assets		Ratio of Net Investment Income to Average Net Assets		Portfolio Turnover Rate




$0.00	$(0.89	)	$10.27	5.86	%	$33,013	0.65	% (c)	4.75	%	457	%
0.00	(0.56	)	10.56	21.24	%	9,625	0.65	%	5.70	%	533	%
0.00	(0.36	)	9.22	(4.28	)%	7,173	0.65	%*(d)	5.55	%*	294	%

Annualized.

(c)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.66% for the period ended December 31, 2001.

(d)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.71%* for the period ended December 31, 1999.


Prospectus		19

Appendix A

Description of Securities Ratings

High Quality Debt Securities are those rated in one of the two highest rating categories (the highest category for commercial pages) or, if unrated, deemed comparable by PIMCO.

Investment Grade Debt Securities are those rated in one of the four highest rating categories, or if unrated deemed comparable by PIMCO.

Following is a description of Moody’s and S&P’s rating categories applicable to fixed income securities.

Moody's Investors Service, Inc.

Corporate and Municipal Bond Ratings


A-1		PIMCO Variable Insurance Trust

Caa: Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.

Ca: Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.

C: Bonds which are rated C are the lowest rated class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.

Corporate Short-Term Debt Ratings

Moody’s employs the following three designations, all judged to be investment grade, to indicate the relative repayment ability of rated issuers:

NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime rating categories.

Standard & Poor's Ratings Services

Corporate and Municipal Bond Ratings

Investment Grade

AAA: Debt rated AAA has the highest rating assigned by Standard & Poor’s. Capacity to pay interest and repay principal is extremely strong.

AA: Debt rated AA has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree.


Prospectus A-2

Speculative Grade

CC: The rating CC is typically applied to debt subordinated to senior debt that is assigned an actual or implied CCC rating.

C: The rating C is typically applied to debt subordinated to senior debt that is assigned an actual or implied CCC- debt rating. The C rating may be used to cover a situation where a bankruptcy petition has been filed, but debt service payments are continued.

CI: The rating CI is reserved for income bonds on which no interest is being paid.

Plus (+) or Minus (-): The ratings from AA to CCC may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.


A-3		PIMCO Variable Insurance Trust

obligations are: securities whose principal or interest return is indexed to equities, commodities, or currencies; certain swaps and options; and interest only and principal only mortgage securities.

The absence of an “r” symbol should not be taken as an indication that an obligation will exhibit no volatility or variability in total return.

N.R.: Not rated.

Commercial Paper Rating Definitions

A-2: Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1.

B: Issues rated B are regarded as having only speculative capacity for timely payment.

C: This rating is assigned to short-term debt obligations with a doubtful capacity for payment.


Prospectus		A-		4

PIMCO Variable Insurance Trust		INVESTMENT ADVISER AND ADMINISTRATOR PIMCO, 840 Newport Center Drive, Suite 300, Newport Beach, CA 92660 CUSTODIAN State Street Bank & Trust Co., 801 Pennsylvania, Kansas City, MO 64105
		TRANSFER AGENT National Financial Data Services, 330 W. 9th Street, 4th Floor, Kansas City, MO 64105
		INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP, 1055 Broadway, Kansas City, MO 64105
		LEGAL COUNSEL Dechert Price & Rhoads, 1775 Eye Street N.W., Washington, D.C. 20006

You may get free copies of any of these materials, request other information about the Portfolio, or make shareholder inquiries by calling the Trust at 1-800-927-4648 or by writing to:

PIMCO Variable Insurance Trust

840 Newport Center Drive

Suite 300

Newport Beach, CA 92660

You may review and copy information about the Trust, including its SAI, at the Securities and Exchange Commission’s public ref erence room in Washington, D.C. You may call the Commission at 1-202-942-8090 for information about the operation of the public reference room. You may also access reports and other information about the Trust on the Commission’s Web site at www.sec.gov. You may get copies of this information, with payment of a duplication fee, by writing the Public Reference Section of the Commission, Washington, D.C. 20549-0102, or by e-mailing your request to publicinfo@sec.gov. Reference the Trust’s Investment Company Act file number in your correspondence.

Investment Company Act file no. 811-8399

PIMCO Funds

840 Newport Center Drive

Suite 300

Newport Beach, CA 92660

		PIMCO Funds Prospectus

PIMCO Variable Insurance Trust May 1, 2002 Share Class ^Adm^{Administrative}		INTERNATIONAL BOND PORTFOLIO Foreign Bond Portfolio




		This cover is not part of the Prospectus

Prospectus

PIMCO Variable Insurance Trust

May 1, 2002

Share Class Administrative

This Prospectus describes the Foreign Bond Portfolio (the “Portfolio”), which is a separate investment portfolio offered by the PIMCO Variable Insurance Trust (the “Trust”). The Portfolio provides access to the professional investment management services offered by Pacific Investment Management Company LLC (“PIMCO”). The investments made by the Portfolio at any given time are not expected to be the same as those made by other mutual funds for which PIMCO acts as investment adviser, including mutual funds with investment objectives and strategies similar to those of the Portfolio. Accordingly, the performance of the Portfolio can be expected to vary from that of the other mutual funds.

This Prospectus explains what you should know about the Portfolio before you invest. Please read it carefully.

This Prospectus should be read in conjunction with the prospectus of the Separate Account. Both prospectuses should be read carefully and retained for future reference.


Prospectus		1

Table of Contents

Summary Information		3
Portfolio Summary		4
Foreign Bond Portfolio		4
Summary of Principal Risks		6
Management of the Portfolio		8
Investment Options		9
Purchases and Redemptions		10
How Portfolio Shares are Priced		11
Tax Consequences		11
Characteristics and Risks of Securities and Investment Techniques		12
Financial Highlights		22
Appendix A—Description of Securities Ratings		A-1


2		PIMCO Variable Insurance Trust

Summary Information


		Main Investments	Duration	Credit Quality(1)	Non-U.S. Dollar Denominated Securities(2)


International Bond Portfolio	Foreign Bond	Intermediate maturity hedged non-U.S. fixed income securities	3-7 years	B to Aaa; max 10% below Baa	³ 85%

(1)

As rated by Moody’s Investors Service, Inc., or equivalently rated by Standard & Poor’s Ratings Services, or if unrated, determined by PIMCO to be of comparable quality.

(2)

The Portfolio may invest beyond this limit in U.S. dollar-denominated securities. The percentage limitation relates to securities of foreign issuers, denominated in any currency.

Fixed Income Instruments

“Fixed Income Instruments,” as used in this Prospectus, includes:

•

securities issued or guaranteed by the U.S. Government, its agencies or government-sponsored enterprises (“U.S. Government Securities”);

•

corporate debt securities of U.S. and non-U.S. issuers, including convertible securities and corporate commercial paper;

•

mortgage-backed and other asset-backed securities;

•

inflation-indexed bonds issued both by governments and corporations;

•

structured notes, including hybrid or “indexed” securities, event-linked bonds and loan participations;

•

delayed funding loans and revolving credit facilities;

•

bank certificates of deposit, fixed time deposits and bankers’ acceptances;

•

repurchase agreements and reverse repurchase agreements;

•

debt securities issued by states or local governments and their agencies, authorities and other government-sponsored enterprises;

•

obligations of non-U.S. governments or their subdivisions, agencies and government-sponsored enterprises; and

•

obligations of international agencies or supranational entities.

Duration

Duration is a measure of the expected life of a fixed income security that is used to determine the sensitivity of a security’s price to changes in interest rates. The longer a security’s duration, the more sensitive it will be to changes in interest rates. Similarly, a portfolio with a longer average portfolio duration will be more sensitive to changes in interest rates than a portfolio with a shorter average portfolio duration.

Credit Ratings

In this Prospectus, references are made to credit ratings of debt securities which measure an issuer’s expected ability to pay principal and interest on time. Credit ratings are determined by rating organizations, such as Standard & Poor’s Rating Service (“S&P”) or Moody’s Investors Service, Inc. (“Moody’s”). The following terms are generally used to describe the credit quality of debt securities depending on the security’s credit rating or, if unrated, credit quality as determined by PIMCO:

•

high quality

•

investment grade

•

below investment grade (“high yield securities” or “junk bonds”)

For a further description of credit ratings, see “Appendix A—Description of Securities Ratings.”

Portfolio Descriptions, Performance and Fees

It is possible to lose money on investments in the Portfolio.

An investment in the Portfolio is not a deposit of a bank and is not guaranteed or insured by the Federal Deposit Insurance Corporation or any other government agency.


Prospectus		3

PIMCO Foreign Bond Portfolio

Principal Investments and Strategies

Investment Objective

Seeks maximum total return, consistent with preservation of capital and prudent investment management

Portfolio Focus

Intermediate maturity hedged non-U.S. fixed income securities

Average Portfolio Duration

3-7 years

Credit Quality

B to Aaa; maximum 10% below Baa

Dividend Frequency

Declared daily and distributed monthly

PIMCO selects the Portfolio’s foreign country and currency compositions based on an evaluation of various factors, including, but not limited to, relative interest rates, exchange rates, monetary and fiscal policies, trade and current account balances. The average portfolio duration of this Portfolio normally varies within a three- to seven-year time frame. The Portfolio invests primarily in investment grade debt securities, but may invest up to 10% of its assets in high yield securities (“junk bonds”) rated B or higher by Moody’s or S&P, or, if unrated, determined by PIMCO to be of comparable quality. The Portfolio is non-diversified, which means that it may concentrate its assets in a smaller number of issuers than a diversified Portfolio.

Principal Risks

Among the principal risks of investing in the Portfolio, which could adversely affect its net asset value, yield and total return, are:

• Interest Rate Risk

• Credit Risk

• Market Risk

• Issuer Risk

• Foreign Investment Risk

• Currency Risk

• Issuer Non-Diversification Risk

• Liquidity Risk

• Mortgage Risk

• Derivatives Risk

• Leveraging Risk

• Management Risk

Please see “Summary of Principal Risks” following the Portfolio Summary for a description of these and other risks of investing in the Portfolio.

Performance Information


4		PIMCO Variable Insurance Trust

PIMCO Foreign Bond Portfolio (continued)

Calendar Year Total Returns — Administrative Class



	Highest and Lowest Quarter Returns
	(for periods shown in the bar chart)

	Highest (4th Qtr. ’00)	3.66%

	Lowest (2nd Qtr. ’01)	0.25%
Calendar Year End (through 12/31)

Average Annual Total Returns (for periods ended 12/31/01)

	1 Year	Since Inception (2/16/99)(2)

Administrative Class	7.59%	5.20%

J.P. Morgan Non-U.S. Index (Hedged)(1)	6.05%	6.18%

(1)

(2)

The Administrative Class shares commenced operations on 2/16/99. Index comparisons began on 2/28/99.

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold Administrative Class shares of the Portfolio and do not reflect Variable Contract fees and expenses:

Shareholder Fees (fees paid directly from your investment)

None

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets)

Share Class

Advisory
Fees

Service
Fees

Other
Expenses(1)

Total Annual
Portfolio Operating
Expenses

Expense Reduction(2)

Net Portfolio Operating Expenses

Administrative

0.25%

0.15%

0.51%

0.91%

(0.01%)

0.90%

(1) “Other Expenses” reflect a 0.50% administrative fee and 0.01% representing the class’ pro rata Trustees’ fees.

(2) PIMCO has contractually agreed to reduce total annual portfolio operating expenses for the Administrative Class shares to the extent they would exceed, due to the payment of organizational expenses and Trustees’ fees, 0.90% of average daily net assets. Under the Expense Limitation Agreement, PIMCO may recoup these waivers and reimbursements in future periods, not exceeding three years, provided total expenses, including such recoupment, do not exceed the annual expense limit.

Share Class	Year 1	Year 3	Year 5	Year 10

Administrative	$92	$289	$503	$1,119


Prospectus		5

Summary of Principal Risks

Interest Rate Risk

Credit Risk

Market Risk

Issuer Risk

Liquidity Risk

Derivatives Risk


6		PIMCO Variable Insurance Trust

Foreign (Non-U.S.) Investment Risk

The Portfolio invests in foreign securities and may experience more rapid and extreme changes in value than a portfolio that invests exclusively in securities of U.S. companies. The securities markets of many foreign countries are relatively small, with a limited number of companies representing a small number of industries. Additionally, issuers of foreign securities are usually not subject to the same degree of regulation as U.S. issuers. Reporting, accounting and auditing standards of foreign countries differ, in some cases significantly, from U.S. standards. Also, nationalization, expropriation or confiscatory taxation, currency blockage, political changes or diplomatic developments could adversely affect the Portfolio’s investments in a foreign country. In the event of nationalization, expropriation or other confiscation, the Portfolio could lose its entire investment in foreign securities. Adverse conditions in a certain region can adversely affect securities of other countries whose economies appear to be unrelated. To the extent that the Portfolio invests a significant portion of its assets in a concentrated geographic area like Eastern Europe or Asia, the Portfolio will generally have more exposure to regional economic risks associated with foreign investments.

Currency Risk

Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the U.S. or abroad. As a result, the Portfolio’s investments in foreign currency-denominated securities may reduce the returns of the Portfolio.

Issuer Non-Diversification Risk

Mortgage Risk


Prospectus		7

Leveraging Risk

Certain transactions may give rise to a form of leverage. Such transactions may include, among others, reverse repurchase agreements, loans of portfolios securities, and the use of when-issued, delayed delivery or forward commitment transactions. The use of derivatives may also create leveraging risk. To mitigate leveraging risk, PIMCO will segregate liquid assets or otherwise cover the transactions that may give rise to such risk. The use of leverage may cause the Portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet segregation requirements. Leverage, including borrowing, may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. This is because leverage tends to exaggerate the effect of any increase or decrease in the value of the Portfolio’s portfolio securities.

Management Risk

Management of the Portfolio

Investment Adviser and Administrator

Advisory Fee

Administrative Fee

For the fiscal year ended December 31, 2001, the Portfolio paid PIMCO monthly administrative fees at the annual rate of 0.50%.


8		PIMCO Variable Insurance Trust

Individual Portfolio Manager

The table below provides information about the portfolio manager responsible for management of the Portfolio, including his occupation for the past five years.

Portfolio Manager	Since	Recent Professional Experience

Michael R. Asay	11/00	Senior Vice President, PIMCO. He joined PIMCO in 1998. Prior to joining PIMCO, he was a Vice President and Director of Market Research for Goldman Sachs and Company from 1986-1997, where he developed fixed income trading strategies and quantitative analytics for Asian and European markets.

Distributor

Investment Options—

Administrative Class Shares


Prospectus		9

of the customer’s investment and lower investment returns. Each service agent is responsible for transmitting to its customers a schedule of any such fees and information regarding any additional or different conditions regarding purchases, redemptions and exchanges. Shareholders who are customers of service agents should consult their service agents for information regarding these fees and conditions.

Purchases and Redemptions

Purchasing Shares

Redeeming Shares


10		PIMCO Variable Insurance Trust

How Portfolio Shares Are Priced

Portfolio shares are valued at the close of regular trading (normally 4:00 p.m., Eastern time) (the “NYSE Close”) on each day that the New York Stock Exchange is open. For purposes of calculating the NAV, the Portfolio normally uses pricing data for domestic equity securities received shortly after the NYSE Close and do not normally take into account trading, clearances or settlements that take place after the NYSE Close. Domestic fixed income and foreign securities are normally priced using data reflecting the earlier closing of the principal markets for those securities. Information that becomes known to the Portfolio or its agents after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the price of a security or the NAV determined earlier that day.

Tax Consequences


Prospectus		11

Government or any agency or instrumentality of the U.S. Government is treated as a security issued by the U.S. Government or its agency or instrumentality, whichever is applicable.

Please refer to the prospectus for the Separate Account and Variable Contract for information regarding the federal income tax treatment of distributions to the Separate Account. See “Additional Information—Additional Tax Information” in the Portfolio’s Statement of Additional Information for more information on taxes.

C haracteristics and Risks of

Securities and Investment Techniques

Securities Selection

U.S. Government Securities


12		PIMCO Variable Insurance Trust

Municipal Bonds

Mortgage-Related and Other Asset-Backed Securities

The value of some mortgage- or asset-backed securities may be particularly sensitive to changes in prevailing interest rates. Early repayment of principal on some mortgage-related securities may expose the Portfolio to a lower rate of return upon reinvestment of principal. When interest rates rise, the value of a mortgage-related security generally will decline; however, when interest rates are declining, the value of mortgage-related securities with prepayment features may not increase as much as other fixed income securities. The rate of prepayments on underlying mortgages will affect the price and volatility of a mortgage-related security, and may shorten or extend the effective maturity of the security beyond what was anticipated at the time of purchase. If unanticipated rates of prepayment on underlying mortgages increase the effective maturity of a mortgage-related security, the volatility of the security can be expected to increase. The value of these securities may fluctuate in response to the market’s perception of the creditworthiness of the issuers. Additionally, although mortgages and mortgage-related securities are generally supported by some form of government or private guarantee and/or insurance, there is no assurance that private guarantors or insurers will meet their obligations.

One type of SMBS has one class receiving all of the interest from the mortgage assets (the interest-only, or “IO” class), while the other class will receive all of the principal (the principal-only, or “PO” class). The yield to maturity on an IO class is extremely sensitive to the rate of principal payments (including prepayments) on the underlying mortgage assets, and a rapid rate of principal payments may have a material adverse effect on the Portfolio’s yield to maturity from these securities. The Portfolio may not invest more than 5% of its net assets in any combination of IO, PO, or inverse floater securities. The Portfolio may invest in other asset-backed securities that have been offered to investors.

Loan Participations and Assignments

Corporate Debt Securities


Prospectus		13

perception of the credit-worthiness of the issuer and general market liquidity. When interest rates rise, the value of corporate debt securities can be expected to decline. Debt securities with longer maturities tend to be more sensitive to interest rate movements than those with shorter maturities.

High Yield Securities

Variable and Floating Rate Securities

Inflation-Indexed Bonds


14		PIMCO Variable Insurance Trust

Event-Linked Bonds

Convertible and Equity Securities

The Portfolio may invest in convertible securities. Convertible securities are generally preferred stocks and

other securities, including fixed income securities and warrants, that are convertible into or exercisable for common stock at a stated price or rate. The price of a convertible security will normally vary in some

proportion to changes in the price of the underlying common stock because of this conversion or exercise feature. However, the value of a convertible security may not increase or decrease as rapidly as the underlying common stock. A convertible security will normally also provide income and is subject to interest rate risk. Convertible securities may be lower-rated securities subject to greater levels of credit risk. The Portfolio may be forced to convert a security before it would otherwise choose, which may have an adverse effect on the Portfolio’s ability to achieve its investment objective.

Foreign (Non-U.S.) Securities

Investing in the securities of issuers in any foreign country involves special risks and considerations not typically associated with investing in U.S. companies. Shareholders should consider carefully the substantial risks involved for Portfolio investments in securities issued by foreign companies and governments of foreign countries. These risks include: differences in accounting, auditing and financial reporting standards; generally higher commission rates on foreign portfolio transactions; the possibility of nationalization, expropriation or confiscatory taxation; adverse changes in investment or exchange control regulations; and political instability. Individual foreign economies may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross domestic product, rates of inflation, capital reinvestment, resources, self-sufficiency and balance of payments position. The securities markets, values of securities, yields and risks associated with foreign securities markets may change independently of each other. Also, foreign securities and dividends and interest payable on those securities may be subject to foreign taxes, including taxes withheld from payments on those securities. Foreign securities often trade with less frequency and volume than domestic securities and therefore


Prospectus		15

may exhibit greater price volatility. Investments in foreign securities may also involve higher custodial costs than domestic investments and additional transaction costs with respect to foreign currency conversions. Changes in foreign exchange rates also will affect the value of securities denominated or quoted in foreign currencies.

Additional risks of emerging markets securities may include: greater social, economic and political uncertainty and instability; more substantial governmental involvement in the economy; less governmental supervision and regulation; unavailability of currency hedging techniques; companies that are newly organized and small; differences in auditing and financial reporting standards, which may result in unavailability of material information about issuers; and less developed legal systems. In addition, emerging securities markets may have different clearance and settlement procedures, which may be unable to keep pace with the volume of securities transactions or otherwise make it difficult to engage in such transactions. Settlement problems may cause the Portfolio to miss attractive investment opportunities, hold a portion of its assets in cash pending investment, or be delayed in disposing of a portfolio security. Such a delay could result in possible liability to a purchaser of the security.

Foreign (Non-U.S.) Currencies


16		PIMCO Variable Insurance Trust

Repurchase Agreements

Reverse Repurchase Agreements, Dollar Rolls and Other Borrowings

Derivatives


Prospectus		17

Portfolio may use are described under “Investment Objectives and Policies” in the Statement of Additional Information.

When the Portfolio uses derivatives for leverage, investments in the Portfolio will tend to be more volatile, resulting in larger gains or losses in response to market changes. To limit leverage risk, the Portfolio will segregate assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees (or, as permitted by applicable regulation, enter into certain offsetting positions) to cover its obligations under derivative instruments.

Lack of Availability. Because the markets for certain derivative instruments (including markets located in foreign countries) are relatively new and still developing, suitable derivatives transactions may not be available in all circumstances for risk management or other purposes. There is no assurance that the Portfolio will engage in derivatives transactions at any time or from time to time. The Portfolio’s ability to use derivatives may also be limited by certain regulatory and tax considerations.


18		PIMCO Variable Insurance Trust

particular privately negotiated derivatives, are complex and often valued subjectively. Improper valuations can result in increased cash payment requirements to counterparties or a loss of value to the Portfolio. Also, the value of derivatives may not correlate perfectly, or at all, with the value of the assets, reference rates or indexes they are designed to closely track. In addition, the Portfolio’s use of derivatives may cause the Portfolio to realize higher amounts of short-term capital gains (generally taxed at ordinary income tax rates) than if the Portfolio had not used such instruments.

Delayed Funding Loans and Revolving Credit Facilities

When-Issued, Delayed Delivery and Forward Commitment Transactions

Investment in Other Investment Companies

Short Sales

Illiquid Securities


Prospectus		19

within seven days in the ordinary course of business at approximately the amount at which the Portfolio has valued the securities. Restricted securities, i.e., securities subject to legal or contractual restrictions on resale, may be illiquid. However, some restricted securities (such as securities issued pursuant to Rule 144A under the Securities Act of 1933 and certain commercial paper) may be treated as liquid, although they may be less liquid than registered securities traded on established secondary markets.

Loans of Portfolio Securities

Portfolio Turnover

The length of time the Portfolio has held a particular security is not generally a consideration in investment decisions. A change in the securities held by the Portfolio is known as “portfolio turnover.” The Portfolio may engage in frequent and active trading of portfolio securities to achieve its investment objective, particularly during periods of volatile market movements. High portfolio turnover (e.g., over 100%) involves correspondingly greater expenses to the Portfolio, including brokerage commissions or dealer mark-ups and other transaction costs on the sale of securities and reinvestments in other securities. The trading costs associated with portfolio turnover may adversely effect the Portfolio’s performance.

Temporary Defensive Positions

Changes in Investment Objectives and Policies

Percentage Investment Limitations

Other Investments and Techniques


20		PIMCO Variable Insurance Trust

(THIS PAGE INTENTIONALLY LEFT BLANK)


Prospectus		21

Financial Highlights

The financial highlights table is intended to help a shareholder understand the Portfolio’s financial performance for the period of operations. Certain information reflects financial results for a single Portfolio share. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Administrative Class of shares of the Portfolio (assuming reinvestment of all dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP, the Portfolio’s independent auditors. Their report, along with full financial statements, appears in the Trust’s Annual Report, which is available upon request.

Year or Period Ended	Net Asset Value Beginning of Period		Net Investment Income(b)		Net Realized and Unrealized Gain (Loss) on Investments(b)			Total Income (Loss) from Investment Operations			Dividends from Net Investment Income			Distributions from Net Realized Capital Gains

Foreign Bond
Administrative Class
12/31/2001	$	9.40	$	0.40	$	0.30		$	0.70		$	(0.41	)	$	0.00
12/31/2000		9.42		0.51		0.25			0.76			(0.52	)		(0.26	)
12/31/1999(a)		10.00		0.41		(0.49	)		(0.08	)		(0.41	)		(0.09	)

(a)

Commenced operations on February 16, 1999.

(b)

Per share amounts based on average number of shares outstanding during the period.


22		PIMCO Variable Insurance Trust

Tax Basis Return of Capital		Total Distributions		Net Asset Value End of Period		Total Return		Net Assets End of Period (000’s)		Ratio of Expenses to Average Net Assets		Ratio of Net Investment Income to Average Net Assets		Portfolio Turnover Rate


$	0.00	$	(0.41)	$	9.69	7.59	%	$	4,856	0.90	% (c)	4.17	%	285	%
	0.00		(0.78)		9.40	8.36	%		924	0.90	%	5.38	%	306	%
	0.00		(0.50)		9.42	(0.78)	%		5,215	1.10	%*(e)(d)	4.83	%*	285	%

Annualized.

(c)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.91% for the period ended December 31, 2001.

(d)

Ratio of net expenses to average net assets excluding interest expense is 0.90%.

(e)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 1.25%* for the period ended December 31, 1999.


Prospectus		23

Appendix A

Description of Securities Ratings

High Quality Debt Securities are those rated in one of the two highest rating categories (the highest category for commercial pages) or, if unrated, deemed comparable by PIMCO.

Investment Grade Debt Securities are those rated in one of the four highest rating categories, or if unrated deemed comparable by PIMCO.

Following is a description of Moody’s and S&P’s rating categories applicable to fixed income securities.

Moody's Investors Service, Inc.

Corporate and Municipal Bond Ratings


A-1		PIMCO Variable Insurance Trust

Caa: Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.

Ca: Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.

C: Bonds which are rated C are the lowest rated class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.

Corporate Short-Term Debt Ratings

Moody’s employs the following three designations, all judged to be investment grade, to indicate the relative repayment ability of rated issuers:

NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime rating categories.

Standard & Poor's Ratings Services

Corporate and Municipal Bond Ratings

Investment Grade

AAA: Debt rated AAA has the highest rating assigned by Standard & Poor’s. Capacity to pay interest and repay principal is extremely strong.

AA: Debt rated AA has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree.


Prospectus A-2

Speculative Grade

CC: The rating CC is typically applied to debt subordinated to senior debt that is assigned an actual or implied CCC rating.

CI: The rating CI is reserved for income bonds on which no interest is being paid.

Plus (+) or Minus (-): The ratings from AA to CCC may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.


A-3		PIMCO Variable Insurance Trust

obligations are: securities whose principal or interest return is indexed to equities, commodities, or currencies; certain swaps and options; and interest only and principal only mortgage securities.

The absence of an “r” symbol should not be taken as an indication that an obligation will exhibit no volatility or variability in total return.

N.R.: Not rated.

Commercial Paper Rating Definitions

A-2: Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1.

B: Issues rated B are regarded as having only speculative capacity for timely payment.

C: This rating is assigned to short-term debt obligations with a doubtful capacity for payment.


Prospectus A-4

PIMCO Variable Insurance Trust		INVESTMENT ADVISER AND ADMINISTRATOR PIMCO, 840 Newport Center Drive, Suite 300, Newport Beach, CA 92660 CUSTODIAN State Street Bank & Trust Co., 801 Pennsylvania, Kansas City, MO 64105
		TRANSFER AGENT National Financial Data Services, 330 W. 9th Street, 4th Floor, Kansas City, MO 64105
		INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP, 1055 Broadway, Kansas City, MO 64105
		LEGAL COUNSEL Dechert Price & Rhoads, 1775 Eye Street N.W., Washington, D.C. 20006

You may get free copies of any of these materials, request other information about the Portfolio, or make shareholder inquiries by calling the Trust at 1-800-927-4648 or by writing to:

PIMCO Variable Insurance Trust

840 Newport Center Drive

Suite 300

Newport Beach, CA 92660

Investment Company Act file no. 811-8399

PIMCO Funds

840 Newport Center Drive

Suite 300

Newport Beach, CA 92660

		PIMCO Funds Prospectus

PIMCO Variable Insurance Trust May 1, 2002 Share Class ^Adm^{Administrative}		SHORT DURATION BOND PORTFOLIO Short-Term Portfolio




		This cover is not part of the Prospectus

Prospectus

PIMCO Variable

Insurance Trust

May 1, 2002

Share Class

Administrative

This Prospectus explains what you should know about the Portfolio before you invest. Please read it carefully.

This Prospectus should be read in conjunction with the prospectus of the Separate Account. Both prospectuses should be read carefully and retained for future reference.


Prospectus		1

Table of Contents

Summary Information		3
Portfolio Summary		4
Short-Term Portfolio		4
Summary of Principal Risks		6
Management of the Portfolio		7
Investment Options		8
Purchases and Redemptions		9
How Portfolio Shares are Priced		10
Tax Consequences		10
Characteristics and Risks of Securities and Investment Techniques		11
Financial Highlights		20
Appendix A—Description of Securities Ratings		A-1


2		PIMCO Variable Insurance Trust

Summary Information


		Main Investments	Duration	Credit Quality(1)	Non-U.S. Dollar Denominated Securities(2)


Short Duration Bond Portfolio	Short-Term	Money market instruments and short maturity fixed income securities	0-1 year	B to Aaa; max 10% below Baa	0-5%

(1)

As rated by Moody’s Investors Service, Inc., or equivalently rated by Standard & Poor’s Ratings Services, or if unrated, determined by PIMCO to be of comparable quality.

(2)

The Portfolio may invest beyond this limit in U.S. dollar denominated securities. The percentage limitation relates to non-U.S. dollar-denominated securities.

Fixed Income Instruments

“Fixed Income Instruments,” as used in this Prospectus, includes:

• securities issued or guaranteed by the U.S. Government, its agencies or government-sponsored enterprises (“U.S. Government Securities”);

• corporate debt securities of U.S. and non-U.S. issuers, including convertible securities and corporate commercial paper;

• mortgage-backed and other asset-backed securities;

• inflation-indexed bonds issued both by governments and corporations;

• structured notes, including hybrid or “indexed” securities, event-linked bonds and loan participations;

• delayed funding loans and revolving credit facilities;

• bank certificates of deposit, fixed time deposits and bankers’ acceptances;

• repurchase agreements and reverse repurchase agreements;

• debt securities issued by states or local governments and their agencies, authorities and other government-sponsored enterprises;

• obligations of non-U.S. governments or their subdivisions, agencies and government-sponsored enterprises; and

• obligations of international agencies or supranational entities.

Duration

Duration is a measure of the expected life of a fixed income security that is used to determine the sensitivity of a security’s price to changes in interest rates. The longer a security’s duration, the more sensitive it will be to changes in interest rates. Similarly, a portfolio with a longer average portfolio duration will be more sensitive to changes in interest rates than a portfolio with a shorter average portfolio duration.

Credit Ratings

In this Prospectus, references are made to credit ratings of debt securities which measure an issuer’s expected ability to pay principal and interest on time. Credit ratings are determined by rating organizations, such as Standard & Poor’s Rating Service (“S&P”) or Moody’s Investors Service, Inc. (“Moody’s”). The following terms are generally used to describe the credit quality of debt securities depending on the security’s credit rating or, if unrated, credit quality as determined by PIMCO:

• high quality

• investment grade

• below investment grade (“high yield securities” or “junk bonds”)

For a further description of credit ratings, see “Appendix A—Description of Securities Ratings.”

Portfolio Descriptions, Performance and Fees

It is possible to lose money on investments in the Portfolio.

An investment in the Portfolio is not a deposit of a bank and is not guaranteed or insured by the Federal Deposit Insurance Corporation or any other government agency.


Prospectus		3

PIMC O Short-Term Portfolio

Principal
Investments and Strategies

Investment Objective

Seeks maximum current income, consistent with preservation of
capital and daily liquidity

Portfolio Focus

Money market instruments and
short maturity fixed income
securities

Average Portfolio Duration

0-1 year

Credit Quality

B to Aaa; maximum 10% below Baa

Dividend Frequency

Declared daily and distributed monthly

Principal Risks

Among the principal risks of investing in the Portfolio, which could adversely affect its net asset value, yield and total return, are:

• Interest Rate Risk

• Credit Risk

• Market Risk

• Issuer Risk

• Derivatives Risk

• Mortgage Risk

• Leveraging Risk

• Management Risk

Please see “Summary of Principal Risks” following the Portfolio Summary for a description of these and other risks of investing in the Portfolio.

Performance Information


4		PIMCO Variable Insurance Trust

PIMCO Short-Term Portfolio (continued)

Calendar Year Total Returns — Administrative Class



	Highest and Lowest Quarter Returns
	(for periods shown in the bar chart)

	Highest (3rd Qtr. ’01)	2.37%

	Lowest (2nd Qtr. ’01)	0.93%
Calendar Year End (through 12/31)

Average Annual Total Returns (for periods ended 12/31/01)

	1 Year	Since Inception (9/30/99)

Administrative Class	6.45%	6.31%

Salomon Smith Barney 3-Month U.S. Treasury Bill Index(1)	4.09%	5.02%

(1)

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold Administrative Class shares of the Portfolio and do not reflect Variable Contract fees and expenses:

Shareholder Fees (fees paid directly from your investment)

None

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets)

Share Class	Advisory Fees	Service Fees	Other Expenses(1)	Total Annual Portfolio Operating Expenses	Expense Reduction (2)	Net Portfolio Operating Expenses (3)

Administrative	0.25%	0.15%	0.22%	0.62%	(0.01%)	0.61%


(1) “Other Expenses” reflect a 0.20% administrative fee, 0.01% representing the class’ pro rata Trustees’ fees, and 0.01% interest expense. Interest expense is generally incurred as a result of investment management activities. (2) PIMCO has contractually agreed to reduce total annual portfolio operating expenses for the Administrative shares to the extent they would exceed, due to the payment of organizational expenses and Trustees’ fees, 0.60% of average daily net assets. Under the Expense Limitation Agreement, PIMCO may recoup these waivers and reimbursements in future periods, not exceeding three years, provided total expenses, including such recoupment, do not exceed the annual expense limit. (3) Ratio of net expenses to average net assets excluding interest expense is 0.60%.


Examples. The Examples are intended to help you compare the cost of investing in Administrative Class shares of the Portfolio with the costs of investing in other mutual funds. The Examples assume that you invest $10,000 in the noted class of shares for the time periods indicated, and then redeem all your shares at the end of those periods. The Examples also assume that your investment has a 5% return each year, the reinvestment of all dividends and distributions, and that the Portfolio’s operating expenses remain the same. Although your actual costs may be higher or lower, the Examples show what your costs would be based on these assumptions.
Share Class	Year 1	Year 3	Year 5	Year 10

Administrative	$62	$198	$345	$773


Prospectus		5

Summary of Principal Risks

Interest Rate Risk

Credit Risk

Market Risk

Issuer Risk

Derivatives Risk

Derivatives are financial contracts whose value depends on, or is derived from, the value of an underlying asset, reference rate or index. The various derivative instruments that the Portfolio may use are referenced under “Characteristics and Risks of Securities and Investment Techniques—Derivatives” in this Prospectus and described in more detail under “Investment Objectives and Policies” in the Statement of Additional Information. The Portfolio typically uses derivatives as a substitute for taking a position in the underlying asset and/or part of a strategy designed to reduce exposure to other risks, such as interest rate or currency risk. The Portfolio may also use derivatives for leverage, in which case their use would involve leveraging risk. The Portfolio’s use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. Derivatives are subject to a number of risks described elsewhere in this section, such as liquidity risk, interest rate risk, market risk, credit risk and management risk. They also involve the risk of mispricing or improper valuation and the risk that changes in the value of the derivative may not correlate perfectly with the underlying asset, rate or index.


6		PIMCO Variable Insurance Trust

Mortgage Risk

Leveraging Risk

Certain transactions may give rise to a form of leverage. Such transactions may include, among others, reverse repurchase agreements, loans of portfolios securities, and the use of when-issued, delayed delivery or forward commitment transactions. The use of derivatives may also create leveraging risk. To mitigate leveraging risk, PIMCO will segregate liquid assets or otherwise cover the transactions that may give rise to such risk. The use of leverage may cause the Portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet segregation requirements. Leverage, including borrowing, may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. This is because leverage tends to exaggerate the effect of any increase or decrease in the value of the Portfolio’s portfolio securities.

Management Risk

Management of the Portfolio

Investment Adviser and Administrator

Advisory Fee

The Portfolio pays PIMCO fees in return for providing investment advisory services. For the fiscal year ended December 31, 2001, the Portfolio paid monthly advisory fees to PIMCO at the annual rate (stated as a percentage of the average daily net assets of the Portfolio) of 0.25%. Administrative Fee
The Portfolio pays for the administrative services it requires under a fee structure which is essentially fixed. Shareholders of the Portfolio pay an administrative fee to PIMCO, computed as a percentage of the Portfolio’s assets attributable in the aggregate to that class of shares. PIMCO, in turn, provides or procures administrative services for shareholders and also bears the costs of various third-party services required by the Portfolios, including audit, custodial, portfolio accounting, legal, transfer agency and printing costs.

For the fiscal year ended December 31, 2001, the Portfolio paid PIMCO monthly administrative fees at the annual rate of 0.20%.


Prospectus		7

Individual Portfolio Manager

The table below provides information about the portfolio manager responsible for management of the Portfolio, including his occupation for the past five years.

Portfolio Manager	Since		Recent Professional Experience

Paul A. McCulley	9/99	*	Managing Director, PIMCO. He has managed fixed income assets since joining PIMCO in 1999. Prior to joining PIMCO, Mr. McCulley was associated with Warburg Dillon Read as a Managing Director from 1992-1999 and Head of Economic and Strategy Research for the Americas from 1995-1999, where he managed macro research world-wide.

Since inception of the Portfolio.

Distributor

Investment Options—

Administrative Class Shares


8		PIMCO Variable Insurance Trust

Purchases and Redemptions

Purchasing Shares

Redeeming Shares


Prospectus		9

How Portfolio Shares Are Priced

Portfolio shares are valued at the close of regular trading (normally 4:00 p.m., Eastern time) (the “NYSE Close”) on each day that the New York Stock Exchange is open. For purposes of calculating the NAV, the Portfolio normally uses pricing data for domestic equity securities received shortly after the NYSE Close and do not normally take into account trading, clearances or settlements that take place after the NYSE Close. Domestic fixed income and foreign securities are normally priced using data reflecting the earlier closing of the principal markets for those securities. Information that becomes known to the Portfolio or its agents after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the price of a security or the NAV determined earlier that day.

Tax Consequences


10		PIMCO Variable Insurance Trust

federal income tax on the income and gains it pays as dividends to its shareholders. In order to avoid a 4% federal excise tax, the Portfolio intends to distribute each year substantially all of its net income and gains.

Please refer to the prospectus for the Separate Account and Variable Contract for information regarding the federal income tax treatment of distributions to the Separate Account. See “Additional Information—Additional Tax Information” in the Portfolio’s Statement of Additional Information for more information on taxes.

Characteristics and Risks of

Securities and Investment Techniques

Securities Selection


Prospectus		11

corporates, mortgages, asset-backed and international. Sophisticated proprietary software then assists in evaluating sectors and pricing specific securities. Once investment opportunities are identified, PIMCO will shift assets among sectors depending upon changes in relative valuations and credit spreads. There is no guarantee that PIMCO’s security selection techniques will produce the desired results.

U.S. Government Securities

Muncipal Bonds

Mortgage-Related and Other Asset-Backed Securities

The value of some mortgage- or asset-backed securities may be particularly sensitive to changes in prevailing interest rates. Early repayment of principal on some mortgage-related securities may expose the Portfolio to a lower rate of return upon reinvestment of principal. When interest rates rise, the value of a mortgage-related security generally will decline; however, when interest rates are declining, the value of mortgage-related securities with prepayment features may not increase as much as other fixed income securities. The rate of prepayments on underlying mortgages will affect the price and volatility of a mortgage-related security, and may shorten or extend the effective maturity of the security beyond what was anticipated at the time of purchase. If unanticipated rates of prepayment on underlying mortgages increase the effective maturity of a mortgage-related security, the volatility of the security can be expected to increase. The value of these securities may fluctuate in response to the market’s perception of the creditworthiness of the issuers. Additionally, although mortgages and mortgage-related securities are generally supported by some form of government or private guarantee and/or insurance, there is no assurance that private guarantors or insurers will meet their obligations.

One type of SMBS has one class receiving all of the interest from the mortgage assets (the interest-only, or “IO” class), while the other class will receive all of the principal (the principal-only, or “PO” class). The yield to maturity on an IO class is extremely sensitive to the rate of principal payments (including prepayments) on the underlying mortgage assets, and a rapid rate of principal payments may have a material adverse effect on the Portfolio’s yield to maturity from these securities. The Portfolio may not invest more than 5% of its net assets in


12		PIMCO Variable Insurance Trust

any combination of IO, PO, or inverse floater securities. The Portfolio may invest in other asset-backed securities that have been offered to investors.

Loan Participations and Assignments

Corporate Debt Securities

Corporate debt securities are subject to the risk of the issuer’s inability to meet principal and interest payments on the obligation and may also be subject to price volatility due to such factors as interest rate sensitivity, market perception of the creditworthiness of the issuer and general market liquidity. When interest rates rise, the value of corporate debt securities can be expected to decline. Debt securities with longer maturities tend to be more sensitive to interest rate movements than those with shorter maturities.

High Yield Securities

Variable and Floating Rate Securities

Inflation-Indexed Bonds


Prospectus		13

adjusted downward, and consequently the interest payable on these securities (calculated with respect to a smaller principal amount) will be reduced. Repayment of the original bond principal upon maturity (as adjusted for inflation) is guaranteed in the case of U.S. Treasury inflation-indexed bonds. For bonds that do not provide a similar guarantee, the adjusted principal value of the bond repaid at maturity may be less than the original principal.

Event-Linked Bonds

hurricane, earthquake or other physical or weather-related phenomenon. Some event-linked bonds are

commonly referred to as “catastrophe bonds.” If a trigger event occurs, the Portfolio may lose a portion or all of its principal invested in the bond. Event-linked bonds often provide for an extension of maturity to process and audit loss claims where a trigger event has, or possibly has, occurred. Event-linked bonds may also expose the Portfolio to certain unanticipated risks including but not limited to issuer (credit) default, adverse regulatory or jurisdictional interpretation, and adverse tax consequences. Event-linked bonds may also be subject to liquidity risk.

Convertible and Equity Securities

Foreign (Non-U.S.) Securities


14		PIMCO Variable Insurance Trust

confiscatory taxation; adverse changes in investment or exchange control regulations; and political instability. Individual foreign economies may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross domestic product, rates of inflation, capital reinvestment, resources, self-sufficiency and balance of payments position. The securities markets, values of securities, yields and risks associated with foreign securities markets may change independently of each other. Also, foreign securities and dividends and interest payable on those securities may be subject to foreign taxes, including taxes withheld from payments on those securities. Foreign securities often trade with less frequency and volume than domestic securities and therefore may exhibit greater price volatility. Investments in foreign securities may also involve higher custodial costs than domestic investments and additional transaction costs with respect to foreign currency conversions. Changes in foreign exchange rates also will affect the value of securities denominated or quoted in foreign currencies.

• Emerging Market Securities. The Portfolio may invest up to 5% of its assets in securities of issuers based in countries with developing (or “emerging market”) economies. Investing in emerging market securities imposes risks different from, or greater than, risks of investing in domestic securities or in foreign, developed countries. These risks include: smaller market capitalization of securities markets, which may suffer periods of relative illiquidity; significant price volatility; restrictions on foreign investment; possible repatriation of investment income and capital. In addition, foreign investors may be required to register the proceeds of sales; future economic or political crises could lead to price controls, forced mergers, expropriation or confiscatory taxation, seizure, nationalization, or creation of government monopolies. The currencies of emerging market countries may experience significant declines against the U.S. dollar, and devaluation may occur subsequent to investments in these currencies by the Portfolio. Inflation and rapid fluctuations in inflation rates have had, and may continue to have, negative effects on the economies and securities markets of certain emerging market countries.

Additional risks of emerging markets securities may include: greater social, economic and political uncertainty and instability; more substantial governmental involvement in the economy; less governmental supervision and regulation; unavailability of currency hedging techniques; companies that are newly organized and small; differences in auditing and financial reporting standards, which may result in unavailability of material information about issuers; and less developed legal systems. In addition, emerging securities markets may have different clearance and settlement procedures, which may be unable to keep pace with the volume of securities transactions or otherwise make it difficult to engage in such transactions. Settlement problems may cause the Portfolio to miss attractive investment opportunities, hold a portion of its assets in cash pending investment, or be delayed in disposing of a portfolio security. Such a delay could result in possible liability to a purchaser of the security.

Foreign (Non-U.S.) Currencies


Prospectus		15

complex factors. Currency exchange rates also can be affected unpredictably by intervention (or the failure to intervene) by U.S. or foreign governments or central banks, or by currency controls or political developments. For example, uncertainty surrounds the introduction of the euro (a common currency unit for the European Union) and the effect it may have on the value of European currencies as well as securities denominated in local European currencies. These and other currencies in which the Portfolio’s assets are denominated may be devalued against the U.S. dollar, resulting in a loss to the Portfolio.

Repurchase Agreements

Reverse Repurchase Agreements, Dollar Rolls and Other Borrowings

Derivatives


16		PIMCO Variable Insurance Trust

or currency exchange rates, commodities, and related indexes. Examples of derivative instruments include options contracts, futures contracts, options on futures contracts and swap agreements. The Portfolio may invest all of its assets in derivative instruments, subject to the Portfolio’s objective and policies. The portfolio manager may decide not to employ any of these strategies and there is no assurance that any derivatives strategy used by the Portfolio will succeed. A description of these and other derivative instruments that the Portfolio may use are described under “Investment Objectives and Policies” in the Statement of Additional Information.

Leverage Risk. Because many derivatives have a leverage component, adverse changes in the value or level of the underlying asset, reference rate or index can result in a loss substantially greater than the amount invested in the derivative itself. Certain derivatives have the potential for unlimited loss, regardless of the size of the initial investment. When the Portfolio uses derivatives for leverage, investments in the Portfolio will tend to be more volatile, resulting in larger gains or losses in response to market changes. To limit leverage risk, the Portfolio will segregate assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees (or, as permitted by applicable regulation, enter into certain offsetting positions) to cover its obligations under derivative instruments.

Lack of Availability. Because the markets for certain derivative instruments (including markets located in foreign countries) are relatively new and still developing, suitable derivatives transactions may not be available in all circumstances for risk management or other purposes. There is no assurance that the Portfolio will engage in derivatives transactions at any time or from time to time. The Portfolio’s ability to use derivatives may also be limited by certain regulatory and tax considerations.


Prospectus		17

Other risks in using derivatives include the risk of mispricing or improper valuation of derivatives and the inability of derivatives to correlate perfectly with underlying assets, rates and indexes. Many derivatives, in particular privately negotiated derivatives, are complex and often valued subjectively. Improper valuations can result in increased cash payment requirements to counterparties or a loss of value to the Portfolio. Also, the value of derivatives may not correlate perfectly, or at all, with the value of the assets, reference rates or indexes they are designed to closely track. In addition, the Portfolio’s use of derivatives may cause the Portfolio to realize higher amounts of short-term capital gains (generally taxed at ordinary income tax rates) than if the Portfolio had not used such instruments.

Delayed Funding Loans and Revolving Credit Facilities

When-Issued, Delayed Delivery and Forward Commitment Transactions

Investment in Other Investment Companies

Short Sales

Illiquid Securities


18		PIMCO Variable Insurance Trust

in liquid securities. The term “illiquid securities” for this purpose means securities that cannot be disposed of within seven days in the ordinary course of business at approximately the amount at which the Portfolio has valued the securities. Restricted securities, i.e., securities subject to legal or contractual restrictions on resale, may be illiquid. However, some restricted securities (such as securities issued pursuant to Rule 144A under the Securities Act of 1933 and certain commercial paper) may be treated as liquid, although they may be less liquid than registered securities traded on established secondary markets.

Loans of Portfolio Securities

Portfolio Turnover

The length of time the Portfolio has held a particular security is not generally a consideration in investment decisions. A change in the securities held by the Portfolio is known as “portfolio turnover.” The Portfolio may engage in frequent and active trading of portfolio securities to achieve its investment objective, particularly during periods of volatile market movements. High portfolio turnover (e.g., over 100%) involves correspondingly greater expenses to the Portfolio, including brokerage commissions or dealer mark-ups and other transaction costs on the sale of securities and reinvestments in other securities. The trading costs associated with portfolio turnover may adversely effect the Portfolio’s performance.

Temporary Defensive Positions

Changes in Investment Objectives and Policies

Percentage Investment Limitations

Other Investments and Techniques


Prospectus		19

Financial Highlights

The financial highlights table is intended to help a shareholder understand the Portfolio’s financial performance for the period of operations. Certain information reflects financial results for a single Portfolio share. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Administrative Class of shares of the Portfolio (assuming reinvestment of all dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP, the Portfolio’s independent auditors. Their report, along with full financial statements, appears in the Trust’s Annual Report, which is available upon request.

Year or Period Ended	Net Asset Value Beginning of Period	Net Investment Income(b)	Net Realized and Unrealized Gain (Loss) on Investments(b)	Total Income (Loss) from Investment Operations	Dividends from Net Investment Income	Distributions from Net Realized Capital Gains


Short-Term
Administrative Class
12/31/2001	$10.01	$0.48	$0.15	$0.63	$(0.52)	$(0.04	)
12/31/2000	10.00	0.53	0.09	0.62	(0.61)	0.00
12/31/1999(a)	10.00	0.13	0.00	0.13	(0.13)	0.00

(a)

Commenced operations on September 30, 1999.

(b)

Per share amounts based on average number of shares outstanding during the period.


20		PIMCO Variable Insurance Trust

Tax Basis Return of Capital	Total Distributions			Net Asset Value End of Period		Total Return		Net Assets End of Period (000’s)		Ratio of Expenses to Average Net Assets		Ratio of Net Investment Income to Average Net Assets		Portfolio Turnover Rate




$0.00	$	(0.56	)	$	10.08	6.45	%	$	1,683	0.61	% (c)(d)	4.74	%	94	%
0.00		(0.61	)		10.01	6.42	%		37	0.60	%	5.27	%	281	%
0.00		(0.13	)		10.00	1.32	%		3,040	0.60	%*(e)	5.17	%*	N/A

* Annualized.

(c)

Ratio of net expenses to average net assets excluding interest expense is 0.60%.

(d)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.62% for the period ended December 31, 2001.

(e)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 1.42%* for the period ended December 31, 1999.


Prospectus		21

Appendix A

Description of Securities Ratings

High Quality Debt Securities are those rated in one of the two highest rating categories (the highest category for commercial pages) or, if unrated, deemed comparable by PIMCO.

Investment Grade Debt Securities are those rated in one of the four highest rating categories, or if unrated deemed comparable by PIMCO.

Following is a description of Moody’s and S&P’s rating categories applicable to fixed income securities.

Moody's Investors Service, Inc.

Corporate and Municipal Bond Ratings


A-1		PIMCO Variable Insurance Trust

Caa: Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.

Ca: Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.

C: Bonds which are rated C are the lowest rated class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.

Corporate Short-Term Debt Ratings

Moody’s employs the following three designations, all judged to be investment grade, to indicate the relative repayment ability of rated issuers:

NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime rating categories

Standard & Poor's Ratings Services

Corporate and Municipal Bond Ratings

Investment Grade

AAA: Debt rated AAA has the highest rating assigned by Standard & Poor’s. Capacity to pay interest and repay principal is extremely strong.

AA: Debt rated AA has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree.


Prospectus		A-		2

Speculative Grade

CC: The rating CC is typically applied to debt subordinated to senior debt that is assigned an actual or implied CCC rating.

C: The rating C is typically applied to debt subordinated to senior debt that is assigned an actual or implied CCC- debt rating. The C rating may be used to cover a situation where a bankruptcy petition has been filed, but debt service payments are continued.

CI: The rating CI is reserved for income bonds on which no interest is being paid.

Plus (+) or Minus (-): The ratings from AA to CCC may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.


A-3		PIMCO Variable Insurance Trust

obligations are: securities whose principal or interest return is indexed to equities, commodities, or currencies; certain swaps and options; and interest only and principal only mortgage securities.

The absence of an “r” symbol should not be taken as an indication that an obligation will exhibit no volatility or variability in total return.

N.R.: Not rated.

Commercial Paper Rating Definitions

A-2: Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1.

B: Issues rated B are regarded as having only speculative capacity for timely payment.

C: This rating is assigned to short-term debt obligations with a doubtful capacity for payment.


Prospectus		A-		4

PIMCO Variable Insurance Trust

INVESTMENT ADVISER AND ADMINISTRATOR

PIMCO, 840 Newport Center Drive, Suite 300, Newport Beach, CA 92660

CUSTODIAN

State Street Bank & Trust Co., 801 Pennsylvania, Kansas City, MO 64105

TRANSFER AGENT

National Financial Data Services, 330 W. 9th Street, 4th Floor, Kansas City, MO 64105

INDEPENDENT ACCOUNTANTS

PricewaterhouseCoopers LLP, 1055 Broadway, Kansas City, MO 64105

LEGAL COUNSEL

Dechert Price & Rhoads, 1775 Eye Street N.W., Washington, D.C. 20006

The Trust’s Statement of Additional Information (“SAI”) and annual and semi-annual reports to shareholders include additional information about the Portfolio. The SAI and the financial statements included in the Portfolio’s most recent annual report to shareholders are incorporated by reference into this Prospectus, which means they are part of this Prospectus for legal purposes. The Portfolio’s annual report discusses the market conditions and investment strategies that significantly affected each Portfolio’s performance during its last fiscal year.

You may get free copies of any of these materials, request other information about the Portfolio, or make shareholder inquiries by calling the Trust at 1-800-927-4648 or by writing to:

PIMCO Variable Insurance Trust

840 Newport Center Drive

Suite 300

Newport Beach, CA 92660

You may review and copy information about the Trust, including its SAI, at the Securities and Exchange Commission’s public reference room in Washington, D.C. You may call the Commission at

1-202-942-8090 for information about the operation of the public reference room. You may also access reports and other information about the Trust on the Commission’s Web site at www.sec.gov. You may get copies of this information, with payment of a duplication fee, by writing the Public Reference Section of the Commission, Washington, D.C. 20549-0102, or by e-mailing your request to publicinfo@sec.gov. Reference the Trust’s Investment Company Act file number in your correspondence.

Investment Company Act file no. 811-8399

PIMCO Funds

840 Newport Center Drive

Suite 300

Newport Beach, CA 92660

		PIMCO Funds Prospectus

PIMCO Variable Insurance Trust May 1, 2002 Share Class ^Adm^{Administrative}		INTERMEDIATE DURATION BOND PORTFOLIO High Yield Portfolio




		This cover is not part of the Prospectus

Prospectus

PIMCO Variable Insurance Trust

May 1, 2002

Share Class

Administrative

This Prospectus describes the High Yield Portfolio (the “Portfolio”), which is a separate investment portfolio offered by the PIMCO Variable Insurance Trust (the “Trust”). The Portfolio provides access to the professional investment management services offered by Pacific Investment Management Company LLC (“PIMCO”). The investments made by the Portfolio at any given time are not expected to be the same as those made by other mutual funds for which PIMCO acts as investment adviser, including mutual funds with investment objectives and strategies similar to those of the Portfolio. Accordingly, the performance of the Portfolio can be expected to vary from that of the other mutual funds.

This Prospectus explains what you should know about the Portfolio before you invest. Please read it carefully.

This Prospectus should be read in conjunction with the prospectus of the Separate Account. Both prospectuses should be read carefully and retained for future reference.


Prospectus		1

Table of Contents

Summary Information		3
Portfolio Summary		4
High Yield Portfolio		4
Summary of Principal Risks		6
Management of the Portfolio		8
Investment Options		9
Purchases and Redemptions		10
How Portfolio Shares are Priced		11
Tax Consequences		11
Characteristics and Risks of Securities and Investment Techniques		12
Financial Highlights		22
Appendix A—Description of Securities Ratings		A-1


2		PIMCO Variable Insurance Trust

Summary Information


		Main Investments	Duration	Credit Quality(1)	Non-U.S. Dollar Denominated Securities(2)


Intermediate Duration Bond Portfolio	High Yield	Higher yielding fixed income securities	2-6 years	B to Aaa; min 80% below Baa	0-15%

(1)

As rated by Moody’s Investors Service, Inc., or equivalently rated by Standard & Poor’s Ratings Services, or if unrated, determined by PIMCO to be of comparable quality.

(2)

The Portfolio may invest beyond this limit in U.S. dollar denominated securities. The percentage limitation relates to Euro dollar-denominated securities.

Fixed Income Instruments

“Fixed Income Instruments,” as used in this Prospectus, includes:

•

securities issued or guaranteed by the U.S. Government, its agencies or government-sponsored enterprises (“U.S. Government Securities”);

•

corporate debt securities of U.S. and non-U.S. issuers, including convertible securities and corporate commercial paper;

•

mortgage-backed and other asset-backed securities;

•

inflation-indexed bonds issued both by governments and corporations;

•

structured notes, including hybrid or “indexed” securities, event-linked bonds and loan participations;

•

delayed funding loans and revolving credit facilities;

•

bank certificates of deposit, fixed time deposits and bankers’ acceptances;

•

repurchase agreements and reverse repurchase agreements;

•

debt securities issued by states or local governments and their agencies, authorities and other government-sponsored enterprises;

•

obligations of non-U.S. governments or their subdivisions, agencies and government-sponsored enterprises; and

•

obligations of international agencies or supranational entities.

Duration

Duration is a measure of the expected life of a fixed income security that is used to determine the sensitivity of a security’s price to changes in interest rates. The longer a security’s duration, the more sensitive it will be to changes in interest rates. Similarly, a portfolio with a longer average portfolio duration will be more sensitive to changes in interest rates than a portfolio with a shorter average portfolio duration.

Credit Ratings

In this Prospectus, references are made to credit ratings of debt securities which measure an issuer’s expected ability to pay principal and interest on time. Credit ratings are determined by rating organizations, such as Standard & Poor’s Rating Service (“S&P”) or Moody’s Investors Service, Inc. (“Moody’s”). The following terms are generally used to describe the credit quality of debt securities depending on the security’s credit rating or, if unrated, credit quality as determined by PIMCO:

•

high quality

•

investment grade

•

below investment grade (“high yield securities” or “junk bonds”)

For a further description of credit ratings, see “Appendix A—Description of Securities Ratings.”

Portfolio Descriptions, Performance and Fees

It is possible to lose money on investments in the Portfolio.

An investment in the Portfolio is not a deposit of a bank and is not guaranteed or insured by the Federal Deposit Insurance Corporation or any other government agency.


		Prospectus		3

PIMCO High Yield Portfolio

Principal

Investments and Strategies

Investment Objective

Seeks maximum total return, consistent with preservation of capital and prudent investment management

Portfolio Focus

Higher yielding fixed income securities

Average Portfolio Duration

2-6 years

Credit Quality

B to Aaa; minimum 80% below Baa

Dividend Frequency

Declared daily and distributed monthly

Principal Risks

Among the principal risks of investing in the Portfolio, which could adversely affect its net asset value, yield and total return, are:

• Interest Rate Risk

• Credit Risk

• High Yield Risk

• Market Risk

• Issuer Risk

• Liquidity Risk

• Derivatives Risk

• Mortgage Risk

• Foreign Investment Risk

• Currency Risk

• Leveraging Risk

• Management Risk

Please see “Summary of Principal Risks” following the Portfolio Summary for a description of these and other risks of investing in the Portfolio.

Performance Information


4		PIMCO Variable Insurance Trust

PIMCO High Yield Portfolio (continued)

Calendar Year Total Returns — Administrative Class



	Highest and Lowest Quarter Returns
	(for periods shown in the bar chart)

	Highest (4th Qtr.’01)	4.77%

	Lowest (1st Qtr.’00)	-2.67%
Calendar Year End (through 12/31)

Average Annual Total Returns (for periods ended 12/31/01)

	1 Year	Portfolio Inception (04/30/98)

Administrative Class	2.35%	1.70%

Lehman Brothers BB U.S. High Yield Index(1)	10.16%	5.11%

Merrill Lynch U.S. High Yield BB-B Rated Index(2)	5.46%	1.23%

(1)

(2)

The Merrill Lynch U.S. High Yield BB-B Rated Index, the Porfolio’s current benchmark index, is an unmanaged index of bonds rated BB and B by Moody’s or S&P. The Portfolio changed its benchmark index because the Merrill Lynch U.S. High Yield BB-B Rated Index more closely reflects the universe of securities in which the Portfolio invests. It is not possible to invest directly in the index.

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold Administrative Class shares of the Portfolio and do not reflect Variable Contract fees and expenses:

Shareholder Fees (fees paid directly from your investment)

None

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets)

Share Class	Advisory Fees	Service Fees	Other Expenses(1)	Total Annual Portfolio Operating Expenses	Expense Reduction(2)	Net Portfolio Operating Expenses

Administrative	0.25%	0.15%	0.36%	0.76%	(0.01%)	0.75%

(1) “Other Expenses” reflect a 0.35% administrative fee and 0.01% representing the class’ pro rata Trustees’ fees. (2) PIMCO has contractually agreed to reduce total annual portfolio operating expenses for the Administrative Class shares to the extent they would exceed, due to the payment of organizational expenses and Trustees’ fees, 0.75% of average daily net assets. Under the Expense Limitation Agreement, PIMCO may recoup these waivers and reimbursements in future periods, not exceeding three years, provided total expenses, including such recoupment, do not exceed the annual expense limit. Examples. The Examples are intended to help you compare the cost of investing in Administrative Class shares of the Portfolio with the costs of investing in other mutual funds. The Examples assume that you invest $10,000 in the noted class of shares for the time periods indicated, and then redeem all your shares at the end of those periods. The Examples also assume that your investment has a 5% return each year, the reinvestment of all dividends and distributions, and that the Portfolio’s operating expenses remain the same. Although your actual costs may be higher or lower, the Examples show what your costs would be based on these assumptions.

Share Class	Year 1	Year 3	Year 5	Year 10

Administrative	$77	$242	$421	$941


Prospectus		5

Summary of Principal Risks

Interest Rate Risk

Credit Risk

High Yield Risk

The Portfolio invests in high yield securities and unrated securities of similar credit quality (commonly known as “junk bonds”) and may be subject to greater levels of interest rate, credit and liquidity risk than portfolios that do not invest in such securities. High yield securities are considered predominately speculative with respect to the issuer’s continuing ability to make principal and interest payments. An economic downturn or period of rising interest rates could adversely affect the market for high yield securities and reduces the Portfolio’s ability to sell its high yield securities (liquidity risk). If the issuer of a security is in default with respect to interest or principal payments, a Portfolio may lose its entire investment.

Market Risk

Issuer Risk

Liquidity Risk


6		PIMCO Variable Insurance Trust

Derivatives Risk

Derivatives are financial contracts whose value depends on, or is derived from, the value of an underlying asset, reference rate or index. The various derivative instruments that the Portfolio may use are referenced under “Characteristics and Risks of Securities and Investment Techniques—Derivatives” in this Prospectus and described in more detail under “Investment Objectives and Policies” in the Statement of Additional Information. The Portfolio typically uses derivatives as a substitute for taking a position in the underlying asset and/or part of a strategy designed to reduce exposure to other risks, such as interest rate or currency risk. The Portfolio may also use derivatives for leverage, in which case their use would involve leveraging risk. The Portfolio’s use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. Derivatives are subject to a number of risks described elsewhere in this section, such as liquidity risk, interest rate risk, market risk, credit risk and management risk. They also involve the risk of mispricing or improper valuation and the risk that changes in the value of the derivative may not correlate perfectly with the underlying asset, rate or index. The Portfolio investing in a derivative instrument could lose more than the principal amount invested. Also, suitable derivative transactions may not be available in all circumstances and there can be no assurance that the Portfolio will engage in these transactions to reduce exposure to other risks when that would be beneficial.

Foreign (Non-U.S.) Investment Risk

Currency Risk

Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the U.S. or abroad. As a result, the Portfolio’s investments in foreign currency-denominated securities may reduce the returns of the Portfolio.

Mortgage Risk


Prospectus		7

Leveraging Risk

PIMCO will segregate liquid assets or otherwise cover the transactions that may give rise to such risk. The use of leverage may cause the Portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet segregation requirements. Leverage, including borrowing, may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. This is because leverage tends to exaggerate the effect of any increase or decrease in the value of the Portfolio’s portfolio securities.

Management Risk

Management of the Portfolio

Investment Adviser and Administrator

Advisory Fee

Administrative Fee

For the fiscal year ended December 31, 2001, the Portfolio paid PIMCO monthly administrative fees at the annual rate of 0.35%.


8		PIMCO Variable Insurance Trust

Individual Portfolio Manager

The table below provides information about the portfolio manager responsible for management of the Portfolio, including his occupation for the past five years.

Portfolio Manager	Since	Recent Professional Experience


Benjamin L. Trosky	5/01	Managing Director, PIMCO. He joined PIMCO as a Portfolio Manager in 1990. and has managed fixed income accounts for various institutional clients and funds since that time.

Raymond G. Kennedy	4/02	Managing Director, PIMCO. He joined PIMCO as a Portfolio Manager in 1996. Prior to that, he was associated with the Prudential Insurance Company of America as a private placement asset manager.

Distributor

Investment Options—

Administrative Class Shares


Prospectus		9

its customers a schedule of any such fees and information regarding any additional or different conditions regarding purchases, redemptions and exchanges. Shareholders who are customers of service agents should consult their service agents for information regarding these fees and conditions.

Purchases and Redemptions

Purchasing Shares

Redeeming Shares


10		PIMCO Variable Insurance Trust

How Portfolio Shares Are Priced

Portfolio shares are valued at the close of regular trading (normally 4:00 p.m., Eastern time) (the “NYSE Close”) on each day that the New York Stock Exchange is open. For purposes of calculating the NAV, the Portfolio normally uses pricing data for domestic equity securities received shortly after the NYSE Close and do not normally take into account trading, clearances or settlements that take place after the NYSE Close. Domestic fixed income and foreign securities are normally priced using data reflecting the earlier closing of the principal markets for those securities. Information that becomes known to the Portfolio or its agents after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the price of a security or the NAV determined earlier that day.

Tax Consequences


Prospectus		11

separate issuer. Any security issued, guaranteed, or insured (to the extent so guaranteed or insured) by the U.S. Government or any agency or instrumentality of the U.S. Government is treated as a security issued by the U.S. Government or its agency or instrumentality, whichever is applicable.

Please refer to the prospectus for the Separate Account and Variable Contract for information regarding the federal income tax treatment of distributions to the Separate Account. See “Additional Information—Additional Tax Information” in the Portfolio’s Statement of Additional Information for more information on taxes.

Characteristics and Risks of

Securities and Investment Techniques

Securities Selection

U.S. Government Securities


12		PIMCO Variable Insurance Trust

rate risk, and may be subject to varying degrees of credit risk. U.S. Government securities may include zero coupon securities, which do not distribute interest on a current basis and tend to be subject to greater market risk than interest-paying securities of similar maturities.

Municipal Bonds

Mortgage-Related and Other Asset-Backed Securities

The value of some mortgage- or asset-backed securities may be particularly sensitive to changes in prevailing interest rates. Early repayment of principal on some mortgage-related securities may expose the Portfolio to a lower rate of return upon reinvestment of principal. When interest rates rise, the value of a mortgage-related security generally will decline; however, when interest rates are declining, the value of mortgage-related securities with prepayment features may not increase as much as other fixed income securities. The rate of prepayments on underlying mortgages will affect the price and volatility of a mortgage-related security, and may shorten or extend the effective maturity of the security beyond what was anticipated at the time of purchase. If unanticipated rates of prepayment on underlying mortgages increase the effective maturity of a mortgage-related security, the volatility of the security can be expected to increase. The value of these securities may fluctuate in response to the market’s perception of the creditworthiness of the issuers. Additionally, although mortgages and mortgage-related securities are generally supported by some form of government or private guarantee and/or insurance, there is no assurance that private guarantors or insurers will meet their obligations.

One type of SMBS has one class receiving all of the interest from the mortgage assets (the interest-only, or “IO” class), while the other class will receive all of the principal (the principal-only, or “PO” class). The yield to maturity on an IO class is extremely sensitive to the rate of principal payments (including prepayments) on the underlying mortgage assets, and a rapid rate of principal payments may have a material adverse effect on the Portfolio’s yield to maturity from these securities. The Portfolio may not invest more than 5% of its net assets in any combination of IO, PO, or inverse floater securities. The Portfolio may invest in other asset-backed securities that have been offered to investors.

Loan Participations and Assignments


Prospectus		13

Corporate Debt Securities

High Yield Securities

timely changes in credit ratings and an issuer’s current financial condition may be better or worse than a rating indicates. The Portfolio will not necessarily sell a security when its rating is reduced below its rating at the time of purchase. PIMCO does not rely solely on credit ratings, and develops its own analysis of issuer credit quality.

Variable and Floating Rate Securities

Inflation-Indexed Bonds


14		PIMCO Variable Insurance Trust

Event-Linked Bonds

Convertible and Equity Securities

Foreign (Non-U.S.) Securities

Investing in the securities of issuers in any foreign country involves special risks and considerations not typically associated with investing in U.S. companies. Shareholders should consider carefully the substantial risks involved for Portfolio investments in securities issued by foreign companies and governments of foreign countries. These risks include: differences in accounting, auditing and financial reporting standards; generally higher commission rates on foreign portfolio transactions; the possibility of nationalization, expropriation or confiscatory taxation; adverse changes in investment or exchange control regulations; and political instability. Individual foreign economies may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross domestic product, rates of inflation, capital reinvestment, resources, self-sufficiency and balance of payments position. The securities markets, values of securities, yields and risks associated with foreign securities markets may change independently of each other. Also, foreign securities and dividends and interest payable on those securities may be subject to foreign taxes, including taxes withheld from payments on those securities. Foreign securities often trade with less frequency and volume than domestic securities and


Prospectus		15

therefore may exhibit greater price volatility. Investments in foreign securities may also involve higher custodial costs than domestic investments and additional transaction costs with respect to foreign currency conversions. Changes in foreign exchange rates also will affect the value of securities denominated or quoted in foreign currencies.

Additional risks of emerging markets securities may include: greater social, economic and political uncertainty and instability; more substantial governmental involvement in the economy; less governmental supervision and regulation; unavailability of currency hedging techniques; companies that are newly organized and small; differences in auditing and financial reporting standards, which may result in unavailability of material information about issuers; and less developed legal systems. In addition, emerging securities markets may have different clearance and settlement procedures, which may be unable to keep pace with the volume of securities transactions or otherwise make it difficult to engage in such transactions. Settlement problems may cause the Portfolio to miss attractive investment opportunities, hold a portion of its assets in cash pending investment, or be delayed in disposing of a portfolio security. Such a delay could result in possible liability to a purchaser of the security.

Foreign (Non-U.S.) Currencies


16		PIMCO Variable Insurance Trust

Repurchase Agreements

Reverse Repurchase Agreements, Dollar Rolls and Other Borrowings

Derivatives


Prospectus		17

strategy used by the Portfolio will succeed. A description of these and other derivative instruments that the Portfolio may use are described under “Investment Objectives and Policies” in the Statement of Additional Information.

Leverage Risk. Because many derivatives have a leverage component, adverse changes in the value or level of the underlying asset, reference rate or index can result in a loss substantially greater than the amount invested in the derivative itself. Certain derivatives have the potential for unlimited loss, regardless of the size of the initial investment. When the Portfolio uses derivatives for leverage, investments in the Portfolio will tend to be more volatile, resulting in larger gains or losses in response to market changes. To limit leverage risk, the Portfolio will segregate assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees (or, as permitted by applicable regulation, enter into certain offsetting positions) to cover its obligations under derivative instruments.

Lack of Availability. Because the markets for certain derivative instruments (including markets located in foreign countries) are relatively new and still developing, suitable derivatives transactions may not be available in all circumstances for risk management or other purposes. There is no assurance that the Portfolio will engage in derivatives transactions at any time or from time to time. The Portfolio’s ability to use derivatives may also be limited by certain regulatory and tax considerations.


18		PIMCO Variable Insurance Trust

result in increased cash payment requirements to counterparties or a loss of value to the Portfolio. Also, the value of derivatives may not correlate perfectly, or at all, with the value of the assets, reference rates or indexes they are designed to closely track. In addition, the Portfolio’s use of derivatives may cause the Portfolio to realize higher amounts of short-term capital gains (generally taxed at ordinary income tax rates) than if the Portfolio had not used such instruments.

Delayed Funding Loans and Revolving Credit Facilities

When-Issued, Delayed Delivery and Forward Commitment Transactions

Investment in Other Investment Companies

Short Sales

Illiquid Securities


Prospectus		19

valued the securities. Restricted securities, i.e., securities subject to legal or contractual restrictions on resale, may be illiquid. However, some restricted securities (such as securities issued pursuant to Rule 144A under the Securities Act of 1933 and certain commercial paper) may be treated as liquid, although they may be less liquid than registered securities traded on established secondary markets.

Loans of Portfolio Securities

Portfolio Turnover

The length of time the Portfolio has held a particular security is not generally a consideration in investment decisions. A change in the securities held by the Portfolio is known as “portfolio turnover.” The Portfolio may engage in frequent and active trading of portfolio securities to achieve its investment objective, particularly during periods of volatile market movements. High portfolio turnover (e.g., over 100%) involves correspondingly greater expenses to the Portfolio, including brokerage commissions or dealer mark-ups and other transaction costs on the sale of securities and reinvestments in other securities. The trading costs associated with portfolio turnover may adversely effect the Portfolio’s performance.

Temporary Defensive Positions

Changes in Investment Objectives and Policies

Percentage Investment Limitations

Other Investments and Techniques


20		PIMCO Variable Insurance Trust

(THIS PAGE INTENTIONALLY LEFT BLANK)


Prospectus		21

Financial Highlights

The financial highlights table is intended to help a shareholder understand the Portfolio’s financial performance for the period of operations. Certain information reflects financial results for a single Portfolio share. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Administrative Class of shares of the Portfolio (assuming reinvestment of all dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP, the Portfolio’s independent auditors. Their report, along with full financial statements, appears in the Trust’s Annual Report, which is available upon request.

Year or Period Ended	Net Asset Value Beginning of Period	Net Investment Income(b)	Net Realized and Unrealized Gain (Loss) on Investments(b)	Total Income (Loss) from Investment Operations	Dividends from Net Investment Income	Distributions from Net Realized Capital Gains


High Yield
Administrative Class
12/31/2001	$ 8.33	$0.64	$(0.45)	$0.19	$(0.64)	$0.00
12/31/2000	9.18	0.77	(0.85)	(0.08)	(0.77)	0.00
12/31/1999	9.67	0.77	(0.49)	0.28	(0.77)	0.00
12/31/1998(a)	10.00	0.51	(0.34)	0.17	(0.50)	0.00

(a)

Commenced operations on April 30, 1998.


22		PIMCO Variable Insurance Trust

Tax Basis Return of Capital	Total Distributions	Net Asset Value End of Period	Total Return	Net Assets End of Period (000’s)	Ratio of Expenses to Average Net Assets	Ratio of Net Investment Income to Average Net Assets	Portfolio Turnover Rate


$0.00	$(0.64)	$7.88	2.35%	$264,718	0.75%(b)	7.88%	129%
0.00	(0.77)	8.33	(0.86)%	169,557	0.75%	8.81%	59%
0.00	(0.77)	9.18	3.01%	151,020	0.75%	8.25%	13%
0.00	(0.50)	9.67	1.80%	49,761	0.75%*	7.90%*	13%

Annualized.

(b)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.76% for the period ended December 31, 2001.


Prospectus		23

Appendix A

Description of Securities Ratings

High Quality Debt Securities are those rated in one of the two highest rating categories (the highest category for commercial pages) or, if unrated, deemed comparable by PIMCO.

Investment Grade Debt Securities are those rated in one of the four highest rating categories, or if unrated deemed comparable by PIMCO.

Following is a description of Moody’s and S&P’s rating categories applicable to fixed income securities.

Moody's Investors Service, Inc.

Corporate and Municipal Bond Ratings

Caa: Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.


A-1		PIMCO Variable Insurance Trust

Ca: Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.

C: Bonds which are rated C are the lowest rated class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.

Corporate Short-Term Debt Ratings

Moody’s employs the following three designations, all judged to be investment grade, to indicate the relative repayment ability of rated issuers:

NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime rating categories.

Standard & Poor's Ratings Services

Corporate and Municipal Bond Ratings

Investment Grade

AAA: Debt rated AAA has the highest rating assigned by Standard & Poor’s. Capacity to pay interest and repay principal is extremely strong.

AA: Debt rated AA has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree.

Prospectus A-2

Speculative Grade

CC: The rating CC is typically applied to debt subordinated to senior debt that is assigned an actual or implied CCC rating.

C: The rating C is typically applied to debt subordinated to senior debt that is assigned an actual or implied CCC- debt rating. The C rating may be used to cover a situation where a bankruptcy petition has been filed, but debt service payments are continued.

CI: The rating CI is reserved for income bonds on which no interest is being paid.

Plus (+) or Minus (-): The ratings from AA to CCC may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.

obligations are: securities whose principal or interest return is indexed to equities, commodities, or currencies; certain swaps and options; and interest only and principal only mortgage securities.

The absence of an “r” symbol should not be taken as an indication that an obligation will exhibit no volatility or variability in total return.


A-3		PIMCO Variable Insurance Trust

N.R.: Not rated.

Commercial Paper Rating Definitions

A-2: Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1.

B: Issues rated B are regarded as having only speculative capacity for timely payment.

C: This rating is assigned to short-term debt obligations with a doubtful capacity for payment.


Prospectus A-4

PIMCO Variable Insurance Trust

INVESTMENT ADVISER AND ADMINISTRATOR

PIMCO, 840 Newport Center Drive, Suite 300, Newport Beach, CA 92660

CUSTODIAN

State Street Bank & Trust Co., 801 Pennsylvania, Kansas City, MO 64105

TRANSFER AGENT

National Financial Data Services, 330 W. 9th Street, 4th Floor, Kansas City, MO 64105

INDEPENDENT ACCOUNTANTS

PricewaterhouseCoopers LLP, 1055 Broadway, Kansas City MO 64105

LEGAL COUNSEL

Dechert Price & Rhoads, 1775 Eye Street N.W., Washington, D.C. 20006

You may get free copies of any of these materials, request other information about the Portfolio, or make shareholder inquiries by calling the Trust at 1-800-927-4648 or by writing to:

PIMCO Variable Insurance Trust

840 Newport Center Drive

Suite 300

Newport Beach, CA 92660

You may review and copy informa-

tion about the Trust, including its SAI, at the Securities and Exchange Commission’s public reference room in Washington, D.C. You may call the Commission at 1-202-942-8090 for information about the operation of the public reference room. You may also access reports and other information about the Trust on the Commission’s Web site at www.sec.gov. You may get copies of this information, with payment of a duplication fee, by writing the Public Reference Section of the Commission, Washington, D.C. 20549-0102, or by e-mailing your request to publicinfo@sec.gov. Reference the Trust’s Investment Company Act file number in your correspondence.

Investment Company Act file no. 811-8399

PIMCO Funds

840 Newport Center Drive

Suite 300

Newport Beach, CA 92660

		PIMCO Funds Prospectus

PIMCO Variable Insurance Trust May 1, 2002 Share Class ^Adm^{Administrative}		SHORT DURATION BOND PORTFOLIO Low Duration Portfolio




		This cover is not part of the Prospectus

Prospectus

PIMCO Variable Insurance Trust

May 1, 2002

Share Class Administrative

This Prospectus describes the Low Duration Portfolio (the “Portfolio”), which is a separate investment portfolio offered by the PIMCO Variable Insurance Trust (the “Trust”). The Portfolio provides access to the professional investment management services offered by Pacific Investment Management Company LLC (“PIMCO”). The investments made by the Portfolio at any given time are not expected to be the same as those made by other mutual funds for which PIMCO acts as investment adviser, including mutual funds with investment objectives and strategies similar to those of the Portfolio. Accordingly, the performance of the Portfolio can be expected to vary from that of the other mutual funds.

This Prospectus explains what you should know about the Portfolio before you invest. Please read it carefully

This Prospectus should be read in conjunction with the prospectus of the Separate Account. Both prospectuses should be read carefully and retained for future reference.


Prospectus		1

Table of Contents

Summary Information		3
Portfolio Summary		4
Low Duration Portfolio		4
Summary of Principal Risks		6
Management of the Portfolio		8
Investment Options		9
Purchases and Redemptions		9
How Portfolio Shares are Priced		10
Tax Consequences		11
Characteristics and Risks of Securities and Investment Techniques		12
Financial Highlights		22
Appendix A—Description of Securities Ratings		A-1


2		PIMCO Variable Insurance Trust

Summary Information

Main Investments

Duration

Credit Quality(1)

Non-U.S. Dollar Denominated Securities(2)

Short Duration
Bond Portfolio

Low Duration

Short maturity fixed income securities

1-3 years

B to Aaa;
max 10% below Baa

0-20%

(1)

As rated by Moody’s Investors Service, Inc., or equivalently rated by Standard & Poor’s Ratings Services, or if unrated, determined by PIMCO to be of comparable quality.

(2)

The Portfolio may invest beyond this limit in U.S. dollar-denominated securities. The percentage limitation relates to non-U.S. dollar-denominated securities.

Fixed Income Instruments

“Fixed Income Instruments,” as used in this Prospectus, includes:

•

securities issued or guaranteed by the U.S. Government, its agencies or government-sponsored enterprises (“U.S. Government Securities”);

•

corporate debt securities of U.S. and non-U.S. issuers, including convertible securities and corporate commercial paper;

•

mortgage-backed and other asset-backed securities;

•

inflation-indexed bonds issued both by governments and corporations;

•

structured notes, including hybrid or “indexed” securities, event-linked bonds and loan participations;

•

delayed funding loans and revolving credit facilities;

•

bank certificates of deposit, fixed time deposits and bankers’ acceptances;

•

repurchase agreements and reverse repurchase agreements;

•

debt securities issued by states or local governments and their agencies, authorities and other government-sponsored enterprises;

•

obligations of non-U.S. governments or their subdivisions, agencies and government-sponsored enterprises; and

•

obligations of international agencies or supranational entities.

Duration

Duration is a measure of the expected life of a fixed income security that is used to determine the sensitivity of a security’s price to changes in interest rates. The longer a security’s duration, the more sensitive it will be to changes in interest rates. Similarly, a portfolio with a longer average portfolio duration will be more sensitive to changes in interest rates than a portfolio with a shorter average portfolio duration

Credit Ratings

In this Prospectus, references are made to credit ratings of debt securities which measure an issuer’s expected ability to pay principal and interest on time. Credit ratings are determined by rating organizations, such as Standard & Poor’s Rating Service (“S&P”) or Moody’s Investors Service, Inc. (“Moody’s”). The following terms are generally used to describe the credit quality of debt securities depending on the security’s credit rating or, if unrated, credit quality as determined by PIMCO:

•

high quality

•

investment grade

•

below investment grade (“high yield securities” or “junk bonds”)

For a further description of credit ratings, see “Appendix A—Description of Securities Ratings.”

Portfolio Descriptions, Performance and Fees

It is possible to lose money on investments in the Portfolio.

An investment in the Portfolio is not a deposit of a bank and is not guaranteed or insured by the Federal Deposit Insurance Corporation or any other government agency.


Prospectus		3

PIMCO Low Duration Portfolio

Principal Investments and Strategies

Investment Objective

Seeks maximum total return, consistent with preservation of capital and prudent investment management

Portfolio Focus

Short maturity fixed income

securities

Average Portfolio Duration

1-3 years

Credit Quality

B to Aaa; maximum 10% below Baa

Dividend Frequency

Declared daily and distributed monthly

The Portfolio invests primarily in investment grade debt securities, but may invest up to 10% of its assets in high yield securities (“junk bonds”) rated B or higher by Moody’s or S&P, or, if unrated, determined by PIMCO to be of comparable quality. The Portfolio may invest up to 20% of its assets in securities denominated in foreign currencies, and may invest beyond this limit in U.S. dollar-denominated securities of foreign issuers. The Portfolio will normally hedge at least 75% of its exposure to foreign currency to reduce the risk of loss due to fluctuations in currency exchange rates.

Principal Risks

Among the principal risks of investing in the Portfolio, which could adversely affect its net asset value, yield and total return, are:

• Interest Rate Risk

• Credit Risk

• Market Risk

• Issuer Risk

• Derivatives Risk

• Liquidity Risk

• Mortgage Risk

• Foreign Investment Risk

• Currency Risk

• Leveraging Risk

• Management Risk

Please see “Summary of Principal Risks” following the Portfolio Summary for a description of these and other risks of investing in the Portfolio.

Performance Information


4		PIMCO Variable Insurance Trust

PIMCO Low Duration Portfolio (continued)

Calendar Year Total Returns — Administrative Class



	Highest and Lowest Quarter Returns
	(for periods shown in the bar chart)

	Highest (3rd Qtr. ’01)	4.23%

	Lowest (4th Qtr. ’01)	-0.44%
Calendar Year End (through 12/31)

Average Annual Total Returns (for periods ended 12/31/01)

	1 Year	Since Inception (2/16/99)(2)

Administrative Class	7.61%	6.10%

Merrill Lynch 1-3 Year Treasury Index(1)	8.30%	6.84%

(1)

The Merrill Lynch 1-3 Year Treasury Index is an unmanaged index of U.S. Treasury obligations having maturities from one to 2.99 years. It is not possible to invest directly in the index.

(2)

The Administrative Class shares commenced operations on 2/16/99. Index comparisons began on 2/28/99.

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold Administrative Class shares of the Portfolio and do not reflect Variable Contract fees and expenses:

Shareholder Fees (fees paid directly from your investment)

None

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets)

Share Class	Advisory Fees	Service Fees	Other Expenses(1)	Total Annual Portfolio Operating Expenses	Expense Reduction(2)	Net Portfolio Operating Expenses(3)

Administrative	0.25%	0.15%	0.30%	0.70%	(0.01%)	0.69%

(1) “Other Expenses” reflect a 0.25% administrative fee, 0.01% representing the class’ pro rata Trustees’ fees, and 0.04% interest expense. Interest expense is generally incurred as a result of investment management activities. (2) PIMCO has contractually agreed to reduce total annual portfolio operating expenses for the Administrative Class shares to the extent they would exceed, due to the payment of organizational expenses and Trustees’ fees, 0.65% of average daily net assets. Under the Expense Limitation Agreement, PIMCO may recoup these waivers and reimbursements in future periods, not exceeding three years, provided total expenses, including such recoupment, do not exceed the annual expense limit. (3) Ratio of net expenses to average net assets excluding interest expense is 0.65%. Examples. The Examples are intended to help you compare the cost of investing in Administrative Class shares of the Portfolio with the costs of investing in other mutual funds. The Examples assume that you invest $10,000 in the noted class of shares for the time periods indicated, and then redeem all your shares at the end of those periods. The Examples also assume that your investment has a 5% return each year, the reinvestment of all dividends and distributions, and that the Portfolio’s operating expenses remain the same. Although your actual costs may be higher or lower, the Examples show what your costs would be based on these assumptions.

Share Class	Year 1	Year 3	Year 5	Year 10

Administrative	$70	$223	$389	$870


Prospectus		5

Summary of Principal Risks

Interest Rate Risk

Credit Risk

Market Risk

Issuer Risk

Liquidity Risk

Derivatives Risk


6		PIMCO Variable Insurance Trust

Foreign (Non-U.S.) Investment Risk

Currency Risk

Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the U.S. or abroad. As a result, the Portfolio’s investments in foreign currency-denominated securities may reduce the returns of the Portfolio.

Mortgage Risk

Leveraging Risk

Certain transactions may give rise to a form of leverage. Such transactions may include, among others, reverse repurchase agreements, loans of portfolios securities, and the use of when-issued, delayed delivery or forward commitment transactions. The use of derivatives may also create leveraging risk. To mitigate leveraging risk, PIMCO will segregate liquid assets or otherwise cover the transactions that may give rise to such risk. The use of leverage may cause the Portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet segregation requirements. Leverage, including borrowing, may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. This is because leverage tends to exaggerate the effect of any increase or decrease in the value of the Portfolio’s portfolio securities.


Prospectus		7

Management Risk

Management of the Portfolio

Investment Adviser and Administrator

Advisory Fee

Administrative Fee

For the fiscal year ended December 31, 2001, the Portfolio paid PIMCO monthly administrative fees at the annual rate of 0.25%.

Individual Portfolio Manager

The table below provides information about the portfolio manager responsible for management of the Portfolio, including his occupation for the past five years.

Portfolio Manager	Since		Recent Professional Experience

William H. Gross	2/99	*	Managing Director, Chief Investment Officer and a founding partner of PIMCO.

Since inception of the Portfolio.

Distributor


8		PIMCO Variable Insurance Trust

Investment Options—

Administrative Class Shares

Purchases and Redemptions

Purchasing Shares


Prospectus		9

Redeeming Shares

How Portfolio Shares Are Priced


10		PIMCO Variable Insurance Trust

Portfolio shares are valued at the close of regular trading (normally 4:00 p.m., Eastern time) (the “NYSE Close”) on each day that the New York Stock Exchange is open. For purposes of calculating the NAV, the Portfolio normally uses pricing data for domestic equity securities received shortly after the NYSE Close and do not normally take into account trading, clearances or settlements that take place after the NYSE Close. Domestic fixed income and foreign securities are normally priced using data reflecting the earlier closing of the principal markets for those securities. Information that becomes known to the Portfolio or its agents after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the price of a security or the NAV determined earlier that day.

Tax Consequences


Prospectus		11

Please refer to the prospectus for the Separate Account and Variable Contract for information regarding the federal income tax treatment of distributions to the Separate Account. See “Additional Information—Additional Tax Information” in the Portfolio’s Statement of Additional Information for more information on taxes.

Characteristics and Risks of

Securities and Investment Techniques

Securities Selection

U.S. Government Securities

Municipal Bonds

Municipal bonds are generally issued by states and local governments and their agencies, authorities and other instrumentalities. Municipal bonds are subject to interest rate, credit and market risk. The ability of an issuer to make payments could be affected by litigation, legislation or other political events or the bankruptcy of the issuer. Lower rated municipal bonds are subject to greater credit and market risk than higher quality municipal bonds. The types of municipal bonds in which the Portfolio may invest include municipal lease obligations. The Portfolio may also invest in securities issued by entities whose underlying assets are municipal bonds.


12		PIMCO Variable Insurance Trust

Mortgage-Related and Other Asset-Backed Securities

The value of some mortgage- or asset-backed securities may be particularly sensitive to changes in prevailing interest rates. Early repayment of principal on some mortgage-related securities may expose the Portfolio to a lower rate of return upon reinvestment of principal. When interest rates rise, the value of a mortgage-related security generally will decline; however, when interest rates are declining, the value of mortgage-related securities with prepayment features may not increase as much as other fixed income securities. The rate of prepayments on underlying mortgages will affect the price and volatility of a mortgage-related security, and may shorten or extend the effective maturity of the security beyond what was anticipated at the time of purchase. If unanticipated rates of prepayment on underlying mortgages increase the effective maturity of a mortgage-related security, the volatility of the security can be expected to increase. The value of these securities may fluctuate in response to the market’s perception of the creditworthiness of the issuers. Additionally, although mortgages and mortgage-related securities are generally supported by some form of government or private guarantee and/or insurance, there is no assurance that private guarantors or insurers will meet their obligations.

One type of SMBS has one class receiving all of the interest from the mortgage assets (the interest-only, or “IO” class), while the other class will receive all of the principal (the principal-only, or “PO” class). The yield to maturity on an IO class is extremely sensitive to the rate of principal payments (including prepayments) on the underlying mortgage assets, and a rapid rate of principal payments may have a material adverse effect on the Portfolio’s yield to maturity from these securities. The Portfolio may not invest more than 5% of its net assets in any combination of IO, PO, or inverse floater securities. The Portfolio may invest in other asset-backed securities that have been offered to investors.

Loan Participations and Assignments

Corporate Debt Securities

High Yield Securities


Prospectus		13

income securities. While offering a greater potential opportunity for capital appreciation and higher yields, high yield securities typically entail greater potential price volatility and may be less liquid than higher-rated securities. High yield securities may be regarded as predominately speculative with respect to the issuer’s continuing ability to meet principal and interest payments. They may also be more susceptible to real or perceived adverse economic and competitive industry conditions than higher-rated securities.

Variable and Floating Rate Securities

Inflation-Indexed Bonds

Event-Linked Bonds


14		PIMCO Variable Insurance Trust

“catastrophe bonds.” If a trigger event occurs, the Portfolio may lose a portion or all of its principal invested in the bond. Event-linked bonds often provide for an extension of maturity to process and audit loss claims where a trigger event has, or possibly has, occurred. Event-linked bonds may also expose the Portfolio to certain unanticipated risks including but not limited to issuer (credit) default, adverse regulatory or jurisdictional interpretation, and adverse tax consequences. Event-linked bonds may also be subject to liquidity risk.

Convertible and Equity Securities

Foreign (Non-U.S.) Securities

Investing in the securities of issuers in any foreign country involves special risks and considerations not typically associated with investing in U.S. companies. Shareholders should consider carefully the substantial risks involved for Portfolio investments in securities issued by foreign companies and governments of foreign countries. These risks include: differences in accounting, auditing and financial reporting standards; generally higher commission rates on foreign portfolio transactions; the possibility of nationalization, expropriation or confiscatory taxation; adverse changes in investment or exchange control regulations; and political instability. Individual foreign economies may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross domestic product, rates of inflation, capital reinvestment, resources, self-sufficiency and balance of payments position. The securities markets, values of securities, yields and risks associated with foreign securities markets may change independently of each other. Also, foreign securities and dividends and interest payable on those securities may be subject to foreign taxes, including taxes withheld from payments on those securities. Foreign securities often trade with less frequency and volume than domestic securities and therefore may exhibit greater price volatility. Investments in foreign securities may also involve higher custodial costs than domestic investments and additional transaction costs with respect to foreign currency conversions. Changes in foreign exchange rates also will affect the value of securities denominated or quoted in foreign currencies.


Prospectus		15

significant price volatility; restrictions on foreign investment; possible repatriation of investment income and capital. In addition, foreign investors may be required to register the proceeds of sales; future economic or political crises could lead to price controls, forced mergers, expropriation or confiscatory taxation, seizure, nationalization, or creation of government monopolies. The currencies of emerging market countries may experience significant declines against the U.S. dollar, and devaluation may occur subsequent to investments in these currencies by the Portfolio. Inflation and rapid fluctuations in inflation rates have had, and may continue to have, negative effects on the economies and securities markets of certain emerging market countries.

Additional risks of emerging markets securities may include: greater social, economic and political uncertainty and instability; more substantial governmental involvement in the economy; less governmental supervision and regulation; unavailability of currency hedging techniques; companies that are newly organized and small; differences in auditing and financial reporting standards, which may result in unavailability of material information about issuers; and less developed legal systems. In addition, emerging securities markets may have different clearance and settlement procedures, which may be unable to keep pace with the volume of securities transactions or otherwise make it difficult to engage in such transactions. Settlement problems may cause the Portfolio to miss attractive investment opportunities, hold a portion of its assets in cash pending investment, or be delayed in disposing of a portfolio security. Such a delay could result in possible liability to a purchaser of the security.

Investments in Brady Bonds may be viewed as speculative. Brady Bonds acquired by the Portfolio may be subject to restructuring arrangements or to requests for new credit, which may cause the Portfolio to suffer a loss of interest or principal on any of its holdings.

Foreign (Non-U.S.) Currencies


16		PIMCO Variable Insurance Trust

fluctuations in relevant foreign currencies. The Portfolio may use one currency (or a basket of currencies) to hedge against adverse changes in the value of another currency (or a basket of currencies) when exchange rates between the two currencies are positively correlated. The Portfolio will segregate assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees to cover its obligations under forward foreign currency exchange contracts entered into for non-hedging purposes.

Repurchase Agreements

Reverse Repurchase Agreements, Dollar Rolls and Other Borrowings

money for temporary administrative purposes on an unsecured basis in an amount not to exceed 5% of the Portfolio’s total assets.

Derivatives


Prospectus		17

Leverage Risk. Because many derivatives have a leverage component, adverse changes in the value or level of the underlying asset, reference rate or index can result in a loss substantially greater than the amount invested in the derivative itself. Certain derivatives have the potential for unlimited loss, regardless of the size of the initial investment. When the Portfolio uses derivatives for leverage, investments in the Portfolio will tend to be more volatile, resulting in larger gains or losses in response to market changes. To limit leverage risk, the Portfolio will segregate assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees (or, as permitted by applicable regulation, enter into certain offsetting positions) to cover its obligations under derivative instruments.

Lack of Availability. Because the markets for certain derivative instruments (including markets located in foreign countries) are relatively new and still developing, suitable derivatives transactions may not be available in all circumstances for risk management or other purposes. There is no assurance that the Portfolio will engage in derivatives transactions at any time or from time to time. The Portfolio’s ability to use derivatives may also be limited by certain regulatory and tax considerations.

Other risks in using derivatives include the risk of mispricing or improper valuation of derivatives and the inability of derivatives to correlate perfectly with underlying assets, rates and indexes. Many derivatives, in particular privately negotiated derivatives, are complex and often valued subjectively. Improper valuations can result in increased cash payment requirements to counterparties or a loss of value to the Portfolio. Also, the value of derivatives may not correlate perfectly, or at all, with the value of the assets, reference rates or indexes they are designed to closely track. In addition, the Portfolio’s use of derivatives may cause the Portfolio to realize higher amounts of short-term capital gains (generally taxed at ordinary income tax rates) than if the Portfolio had not used such instruments.

Delayed Funding Loans and Revolving Credit Facilities


18		PIMCO Variable Insurance Trust

When-Issued, Delayed Delivery and Forward Commitment Transactions

Investment in Other Investment Companies

Short Sales

Illiquid Securities

Loans of Portfolio Securities

Portfolio Turnover


Prospectus		19

during periods of volatile market movements. High portfolio turnover (e.g., over 100%) involves correspondingly greater expenses to the Portfolio, including brokerage commissions or dealer mark-ups and other transaction costs on the sale of securities and reinvestments in other securities. The trading costs associated with portfolio turnover may adversely effect the Portfolio’s performance.

Temporary Defensive Positions

Changes in Investment Objectives and Policies

Percentage Investment Limitations

Other Investments and Techniques


20		PIMCO Variable Insurance Trust

(THIS PAGE INTENTIONALLY LEFT BLANK)


Prospectus		21

Financial Highlights

The financial highlights table is intended to help a shareholder understand the Portfolio’s financial performance for the period of operations. Certain information reflects financial results for a single Portfolio share. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Administrative Class of shares of the Portfolio (assuming reinvestment of all dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP, the Portfolio’s independent auditors. Their report, along with full financial statements, appears in the Trust’s Annual Report, which is available upon request.

Year or Period Ended	Net Asset Value Beginning of Period	Net Investment Income(b)	Net Realized and Unrealized Gain (Loss) on Investments(b)		Total Income (Loss) from Investment Operations	Dividends from Net Investment Income		Distributions from Net Realized Capital Gains

Low Duration
Administrative Class
12/31/2001	$9.82	$0.52	$0.21		$0.73	$(0.54	)	$(0.06	)
12/31/2000	9.74	0.59	0.11		0.70	(0.62	)	0.00
12/31/1999(a)	10.00	0.50	(0.25	)	0.25	(0.51	)	0.00

(a)

Commenced operations on February 16, 1999.

(b)

Per share amounts based on average number of shares outstanding during the period.


22		PIMCO Variable Insurance Trust

Tax Basis Return of Capital	Total Distributions	Net Asset Value End of Period	Total Return	Net Assets End of Period (000’s)	Ratio of Expenses to Average Net Assets	Ratio of Net Investment Income to Average Net Assets		Portfolio Turnover Rate




$0.00	$(0.60)	$9.95	7.61%	$5,175	0.69% (c)(d)	5.18%		661%
0.00	(0.62)	9.82	7.41%	742	0.65%	6.07%		165%
0.00	(0.51)	9.74	2.56%	5,149	0.65%*(e)	5.74%	*	11%

Annualized.

(c)

Ratio of net expenses to average net assets excluding interest expense is 0.65%.

(d)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.70% for the period ended December 31, 2001.

(e)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.78%* for the period ended December 31, 1999.


Prospectus		23

Appendix A

Description of Securities Ratings

High Quality Debt Securities are those rated in one of the two highest rating categories (the highest category for commercial pages) or, if unrated, deemed comparable by PIMCO.

Investment Grade Debt Securities are those rated in one of the four highest rating categories, or if unrated deemed comparable by PIMCO.

Following is a description of Moody’s and S&P’s rating categories applicable to fixed income securities.

Moody's Investors Service, Inc.

Corporate and Municipal Bond Ratings


A-1		PIMCO Variable Insurance Trust

Caa: Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.

Ca: Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.

C: Bonds which are rated C are the lowest rated class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.

Corporate Short-Term Debt Ratings

Moody’s employs the following three designations, all judged to be investment grade, to indicate the relative repayment ability of rated issuers:

NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime rating categories.

Standard & Poor's Ratings Services

Corporate and Municipal Bond Ratings

Investment Grade

AAA: Debt rated AAA has the highest rating assigned by Standard & Poor’s. Capacity to pay interest and repay principal is extremely strong.

AA: Debt rated AA has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree.


Prospectus A-2

Speculative Grade

CC: The rating CC is typically applied to debt subordinated to senior debt that is assigned an actual or implied CCC rating.

C: The rating C is typically applied to debt subordinated to senior debt that is assigned an actual or implied CCC- debt rating. The C rating may be used to cover a situation where a bankruptcy petition has been filed, but debt service payments are continued.

CI: The rating CI is reserved for income bonds on which no interest is being paid.

Plus (+) or Minus (-): The ratings from AA to CCC may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.


A-3		PIMCO Variable Insurance Trust

obligations are: securities whose principal or interest return is indexed to equities, commodities, or currencies; certain swaps and options; and interest only and principal only mortgage securities.

The absence of an “r” symbol should not be taken as an indication that an obligation will exhibit no volatility or variability in total return.

N.R.: Not rated.

Commercial Paper Rating Definitions

A-2: Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1.

B: Issues rated B are regarded as having only speculative capacity for timely payment.

C: This rating is assigned to short-term debt obligations with a doubtful capacity for payment.


Prospectus A-4

PIMCO Variable Insurance Trust		INVESTMENT ADVISER AND ADMINISTRATOR PIMCO, 840 Newport Center Drive, Suite 300, Newport Beach, CA 92660 CUSTODIAN State Street Bank & Trust Co., 801 Pennsylvania, Kansas City, MO 64105
		TRANSFER AGENT National Financial Data Services, 330 W. 9th Street, 4th Floor, Kansas City, MO 64105
		INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP, 1055 Broadway, Kansas City, MO 64105
		LEGAL COUNSEL Dechert Price & Rhoads, 1775 Eye Street N.W., Washington, D.C. 20006

You may get free copies of any of these materials, request other information about the Portfolio, or make shareholder inquiries by calling the Trust at 1-800-927-4648 or by writing to:

PIMCO Variable Insurance Trust

840 Newport Center Drive

Suite 300

Newport Beach, CA 92660

Investment Company Act file no. 811-8399

PIMCO Funds

840 Newport Center Drive

Suite 300

Newport Beach, CA 92660

		PIMCO Funds Prospectus

PIMCO Variable Insurance Trust May 1, 2002 Share Class ^Adm^{Administrative}		SHORT DURATION BOND PORTFOLIO Money Market Portfolio




		This cover is not part of the Prospectus

Prospectus

PIMCO Variable Insurance Trust

May 1, 2002

Share Class

Administrative

This Prospectus describes the Money Market Portfolio (the “Portfolio”), which is a separate investment portfolio offered by the PIMCO Variable Insurance Trust (the “Trust”). The Portfolio provides access to the professional investment management services offered by Pacific Investment Management Company LLC (“PIMCO”). The investments made by the Portfolio at any given time are not expected to be the same as those made by other mutual funds for which PIMCO acts as investment adviser, including mutual funds with investment objectives and strategies similar to those of the Portfolio. Accordingly, the performance of the Portfolio can be expected to vary from that of the other mutual funds.

This Prospectus explains what you should know about the Portfolio before you invest. Please read it carefully.

This Prospectus should be read in conjunction with the prospectus of the Separate Account. Both prospectuses should be read carefully and retained for future reference.


Prospectus		1

Table of Contents

Summary Information		3
Portfolio Summary		4
Money Market Portfolio		4
Summary of Principal Risks		6
Management of the Portfolio		6
Investment Options		7
Purchases and Redemptions		8
How Portfolio Shares are Priced		9
Tax Consequences		10
Characteristics and Risks of Securities and Investment Techniques		10
Financial Highlights		16
Appendix A—Description of Securities Ratings		A-1


2		PIMCO Variable Insurance Trust

Summary Information

		Main Investments	Duration	Credit Quality(1)	Non-U.S. Dollar Denominated Securities(2)


Short Duration Bond Portfolio	Money Market	Money market instruments	£ 90 days dollar- weighted average maturity	Min 95% Aaa or Prime 1; £ 5% Aa or Prime 2	0%

(1)

As rated by Moody’s Investors Service, Inc., or equivalently rated by Standard & Poor’s Ratings Services, or if unrated, determined by PIMCO to be of comparable quality.

(2)

The Portfolio may invest beyond this limit in U.S. dollar denominated securities.

Fixed Income Instruments

“Fixed Income Instruments,” as used in this Prospectus, includes:

•

securities issued or guaranteed by the U.S. Government, its agencies or government-sponsored enterprises (“U.S. Government Securities”);

•

corporate debt securities of U.S. and non-U.S. issuers, including corporate commercial paper;

•

mortgage-backed securities;

•

inflation-indexed bonds issued both by governments and corporations;

•

structured notes, including hybrid or “indexed” securities;

•

delayed funding loans and revolving credit facilities;

•

bank certificates of deposit, fixed time deposits and bankers’ acceptances;

•

repurchase agreements;

•

debt securities issued by states or local governments and their agencies, authorities and other government-sponsored enterprises;

•

obligations of non-U.S. governments or their subdivisions, agencies and government-sponsored enterprises; and

•

obligations of international agencies or supranational entities.

Duration

Duration is a measure of the expected life of a fixed income security that is used to determine the sensitivity of a security’s price to changes in interest rates. The longer a security’s duration, the more sensitive it will be to changes in interest rates. Similarly, a portfolio with a longer average portfolio duration will be more sensitive to changes in interest rates than a portfolio with a shorter average portfolio duration.

Credit Ratings

In this Prospectus, references are made to credit ratings of debt securities which measure an issuer’s expected ability to pay principal and interest on time. Credit ratings are determined by rating organizations, such as Standard & Poor’s Rating Service (“S&P”) or Moody’s Investors Service, Inc. (“Moody’s”). The following terms are generally used to describe the credit quality of debt securities depending on the security’s credit rating or, if unrated, credit quality as determined by PIMCO:

•

high quality

•

investment grade

•

below investment grade (“high yield securities” or “junk bonds”)

For a further description of credit ratings, see “Appendix A—Description of Securities Ratings.”

Portfolio Descriptions, Performance and Fees

It is possible to lose money on investments in the Portfolio.

An investment in the Portfolio is not a deposit of a bank and is not guaranteed or insured by the Federal Deposit Insurance Corporation or any other government agency.


Prospectus		3

PIMCO Money Market Portfolio


Principal Investments and Strategies		Investment Objective Seeks maximum current income, consistent with preservation of capital and daily liquidity		Portfolio Focus Money market instruments Average Portfolio Maturity £ 90 days dollar-weighted average maturity		Credit Quality Minimum 95% rated Aaa or Prime 1; £ 5% Aa or Prime 2 Dividend Frequency Declared daily and distributed monthly

The Portfolio’s investments will comply with applicable rules governing the quality, maturity and diversification of securities held by money market funds.

Principal Risks

• Interest Rate Risk

• Credit Risk

• Management Risk

• Market Risk

• Issuer Risk

Please see “Summary of Principal Risks” following the Portfolio Summary for a description of these and other risks of investing in the Portfolio.

Performance Information


4		PIMCO Variable Insurance Trust

PIMCO Money Market Portfolio (continued)

Calendar Year Total Returns — Administrative Class



	Highest and Lowest Quarter Returns
	(for periods shown in the bar chart)

	Highest (4th Qtr. ‘00)	1.60%

	Lowest (4th Qtr. ‘01)	0.56%
Calendar Year End (through 12/31)

Average Annual Total Returns (for periods ended 12/31/01)

	1 Year	Since Inception (9/30/99)

Administrative Class	3.83%	4.95%

Salomon Smith Barney 3-Month U.S. Treasury Bill Index(1)	4.09%	5.02%

(1)

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold Administrative Class shares of the Portfolio and do not reflect Variable Contract fees and expenses:

Shareholder Fees (fees paid directly from your investment)

None

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets)

Share Class

Advisory

Fee

Service

Fees

Other

Expenses(1)

Total Annual

Portfolio Operating

Expenses

Expense Reduction(2)

Net Portfolio Operating Expenses

Administrative

0.15%

0.21%

0.51%

(0.01%)

0.50%

(1) “Other Expenses” reflect a 0.20% administrative fee and 0.01% representing the class’ pro rata Trustees’ fees.

(2) PIMCO has contractually agreed to reduce total annual portfolio operating expenses for the Administrative Class shares to the extent they would exceed, due to the payment of organizational expenses and Trustees’ fees, 0.50% of average daily net assets. Under the Expense Limitation Agreement, PIMCO may recoup these waivers and reimbursements in future periods, not exceeding three years, provided total expenses, including such recoupment, do not exceed the annual expense limit.

Share Class	Year 1	Year 3	Year 5	Year 10

Administrative	$51	$163	$284	$640


Prospectus		5

Summary of Principal Risks

Interest Rate Risk

Credit Risk

Market Risk

Issuer Risk

Management Risk

Management of the Portfolio

Investment Adviser and Administrator


6		PIMCO Variable Insurance Trust

individual clients and to mutual funds. As of December 31, 2001, PIMCO had approximately $241.3 billion in assets under management.

Advisory Fee

Administrative Fee

For the fiscal year ended December 31, 2001, the Portfolio paid PIMCO monthly administrative fees at the annual rate of 0.20%.

Individual Portfolio Manager

The table below provides information about the portfolio manager responsible for management of the Portfolio, including his occupation for the past five years.

Portfolio Manager	Since	Recent Professional Experience

Paul A. McCulley	9/99*	Managing Director, PIMCO. He has managed fixed income assets since joining PIMCO in 1999. Prior to joining PIMCO, Mr. McCulley was associated with Warburg Dillon Read as a Managing Director from 1992-1999 and Head of Economic and Strategy Research for the Americas from 1995-1999, where he managed macro research world-wide.

Since inception of the Portfolio.

Distributor

Investment Options—

Administrative Class Shares


Prospectus		7

Class shares. The services that will be provided under the Plan include, among other things, teleservicing support in connection with the Portfolio; recordkeeping services; provision of support services, including providing information about the Trust and the Portfolio and answering questions concerning the Trust and the Portfolio, including questions respecting investors’ interests in the Portfolio; provision and administration of insurance features for the benefit of investors in connection with the Portfolio; receiving, aggregating and forwarding purchase and redemption orders; processing dividend payments; issuing investor reports and transaction confirmations; providing subaccounting services; general account administration activities; and providing such similar services as the Trust may reasonably request to the extent the service provider is permitted to do so under applicable statutes, rules or regulation. The Plan also permits reimbursement for services in connection with the administration of plans or programs that use Administrative Class shares of the Portfolio as their funding medium and for related expenses.

Purchases and Redemptions

Purchasing Shares


8		PIMCO Variable Insurance Trust

to determine what action, if any, should be taken in the event of such a conflict. If such a conflict occurred, an insurance company participating in the Portfolio might be required to redeem the investment of one or more of its separate accounts from the Portfolio, which might force the Portfolio to sell securities at disadvantageous prices.

Redeeming Shares

How Portfolio Shares Are Priced

The Portfolio’s securities are valued using the amortized cost method of valuation, which involves valuing a security at cost on the date of acquisition and thereafter assuming a constant accretion of a discount or amortization of a premium to maturity, regardless of the impact of fluctuating interest rates on the market value of the instrument. While this method provides certainty in valuation, it may result in periods during which value, as determined by amortized cost, is higher or lower than the price the Portfolio would receive if it sold the instrument.

Portfolio shares are valued at the close of regular trading (normally 4:00 p.m., Eastern time) (the “NYSE Close”) on each day that the New York Stock Exchange is open. For purposes of calculating the NAV, the Portfolio normally uses pricing data for domestic equity securities received shortly after the NYSE Close and do not normally take into account trading, clearances or settlements that take place after the NYSE Close. Domestic fixed income and foreign securities are normally priced using data reflecting the earlier closing of the principal markets for those securities. Information that becomes known to the Portfolio or its agents after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the price of a security or the NAV determined earlier that day.


Prospectus		9

Tax Consequences

Please refer to the prospectus for the Separate Account and Variable Contract for information regarding the federal income tax treatment of distributions to the Separate Account. See “Additional Information—Additional Tax Information” in the Portfolio’s Statement of Additional Information for more information on taxes.

Characteristics and Risks of

Securities and Investment Techniques

Securities Selection


10		PIMCO Variable Insurance Trust

proportion of the Portfolio’s assets committed to investment in securities with particular characteristics (such as quality, sector, interest rate or maturity) varies based on PIMCO’s outlook for the U.S. and foreign economies, the financial markets and other factors.

PIMCO attempts to identify areas of the bond market that are undervalued relative to the rest of the market. PIMCO identifies these areas by grouping bonds into the following sectors: money markets, governments, corporates, mortgages and international. Sophisticated proprietary software then assists in evaluating sectors and pricing specific securities. Once investment opportunities are identified, PIMCO will shift assets among sectors depending upon changes in relative valuations and credit spreads. There is no guarantee that PIMCO’s security selection techniques will produce the desired results.

U.S. Government Securities

Municipal Bonds

Mortgage-Related Securities

The Portfolio may invest its assets in mortgage-backed securities. Mortgage-related securities include mortgage pass-through securities, collateralized mortgage obligations (“CMOs”), commercial mortgage-backed securities, mortgage dollar rolls, CMO residuals, stripped mortgage-backed securities (“SMBSs”) and other securities that directly or indirectly represent a participation in, or are secured by and payable from, mortgage loans on real property.

The value of some mortgage-backed securities may be particularly sensitive to changes in prevailing interest rates. Early repayment of principal on some mortgage-related securities may expose the Portfolio to a lower rate of return upon reinvestment of principal. When interest rates rise, the value of a mortgage-related security generally will decline; however, when interest rates are declining, the value of mortgage-related securities with prepayment features may not increase as much as other fixed income securities. The rate of prepayments on underlying mortgages will affect the price and volatility of a mortgage-related security, and may shorten or extend the effective maturity of the security beyond what was anticipated at the time of purchase. If unanticipated rates of prepayment on underlying mortgages increase the effective maturity of a mortgage-related security, the volatility of the security can be expected to increase. The value of these securities may fluctuate in response to the market’s perception of the creditworthiness of the issuers. Additionally, although mortgages and mortgage-related securities are generally supported by some form of government or private guarantee and/or insurance, there is no assurance that private guarantors or insurers will meet their obligations.


Prospectus		11

Corporate Debt Securities

Variable and Floating Rate Securities

Inflation-Indexed Bonds

Foreign (Non-U.S.) Securities

Investing in the securities of issuers in any foreign country involves special risks and considerations not typically associated with investing in U.S. companies. Shareholders should consider carefully the substantial risks involved for Portfolio investments in securities issued by foreign companies and governments of foreign countries. These risks include: differences in accounting, auditing and financial reporting standards; generally higher commission rates on foreign portfolio transactions; the possibility of nationalization, expropriation or confiscatory taxation; adverse changes in investment or exchange control regulations; and political instability. Individual foreign economies may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross domestic product, rates of inflation, capital reinvestment, resources, self-sufficiency and balance of payments position. The securities markets, values of securities, yields and risks associated with foreign securities markets may change independently of each other. Also, foreign securities and dividends and interest payable on those securities may be subject to foreign taxes, including taxes withheld from payments on those securities. Foreign securities often trade with less frequency and volume than domestic securities and therefore may exhibit greater price volatility. Investments in foreign securities may also involve higher custodial costs than domestic investments and additional transaction costs with respect to foreign currency conversions.

Repurchase Agreements


12		PIMCO Variable Insurance Trust

could involve procedural costs or delays in addition to a loss on the securities if their value should fall below their repurchase price. Repurchase agreements maturing in more than seven days are considered illiquid securities.

Borrowing

Delayed Funding Loans and Revolving Credit Facilities

When-Issued, Delayed Delivery and Forward Commitment Transactions

Investment in Other Investment Companies

Illiquid Securities

The Portfolio may invest up to 10% of its net assets in illiquid securities. Certain illiquid securities may require pricing at fair value as determined in good faith under the supervision of the Board of Trustees. The portfolio manager may be subject to significant delays in disposing of illiquid securities, and transactions in illiquid securities may entail registration expenses and other transaction costs that are higher than those for transactions in liquid securities. The term “illiquid securities” for this purpose means securities that cannot be disposed of within seven days in the ordinary course of business at approximately the amount at which the Portfolio has valued the securities. Restricted securities, i.e., securities subject to legal or contractual restrictions on resale, may be illiquid. However, some restricted securities (such as securities issued pursuant to Rule 144A under the Securities Act of 1933 and certain commercial paper) may be treated as liquid, although they may be less liquid than registered securities traded on established secondary markets.


Prospectus		13

Loans of Portfolio Securities

Portfolio Turnover

The length of time the Portfolio has held a particular security is not generally a consideration in investment decisions. A change in the securities held by the Portfolio is known as “portfolio turnover.” The Portfolio may engage in frequent and active trading of portfolio securities to achieve its investment objective, particularly during periods of volatile market movements. High portfolio turnover (e.g., over 100%) involves correspondingly greater expenses to the Portfolio, including brokerage commissions or dealer mark-ups and other transaction costs on the sale of securities and reinvestments in other securities. The trading costs associated with portfolio turnover may adversely effect the Portfolio’s performance.

Changes in Investment Objectives and Policies

Percentage Investment Limitations

Other Investments and Techniques


14		PIMCO Variable Insurance Trust

(THIS PAGE INTENTIONALLY LEFT BLANK)


Prospectus		15

Financial Highlights

The financial highlights table is intended to help a shareholder understand the Portfolio’s financial performance for the period of operations. Certain information reflects financial results for a single Portfolio share. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Administrative Class of shares of the Portfolio (assuming reinvestment of all dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP, the Portfolio’s independent auditors. Their report, along with full financial statements, appears in the Trust’s Annual Report, which is available upon request.

Year or Period Ended	Net Asset Value Beginning of Period	Net Investment Income(b)	Net Realized and Unrealized Gain (Loss) on Investments(b)	Total Income (Loss) from Investment Operations	Dividends from Net Investment Income	Distributions from Net Realized Capital Gains


Money Market
Administrative Class
12/31/2001	$1.00	$0.04	$0.00	$0.04	$(0.04)	$0.00
12/31/2000	1.00	0.06	0.00	0.06	(0.06)	0.00
12/31/1999(a)	1.00	0.01	0.00	0.01	(0.01)	0.00

(a)

Commenced operations on September 30, 1999.

(b)

Per share amounts based on average number of shares outstanding during the period.


16		PIMCO Variable Insurance Trust

Tax Basis Return of Capital	Total Distributions	Net Asset Value End of Period	Total Return	Net Assets End of Period (000’s)	Ratio of Expenses to Average Net Assets		Ratio of Net Investment Income to Average Net Assets		Portfolio Turnover Rate



$0.00	$(0.04)	$1.00	3.83%	$12,860	0.50	% (c)	3.37	%	N/A
0.00	(0.06)	1.00	6.01%	4,334	0.50	%	5.88	%	N/A
0.00	(0.01)	1.00	1.30%	3,605	0.50	%*(d)	5.14	%*	N/A

Annualized.

(c)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.51% for the period ended December 31, 2001.

(d)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 1.27%* for the period ended December 31, 1999.


Prospectus		17

Appendix A

Description of Securities Ratings

High Quality Debt Securities are those rated in one of the two highest rating categories (the highest category for commercial pages) or, if unrated, deemed comparable by PIMCO.

Investment Grade Debt Securities are those rated in one of the four highest rating categories, or if unrated deemed comparable by PIMCO.

Following is a description of Moody’s and S&P’s rating categories applicable to fixed income securities.

Moody's Investors Service, Inc.

Corporate and Municipal Bond Ratings


A-1		PIMCO Variable Insurance Trust

Caa: Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.

Ca: Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.

C: Bonds which are rated C are the lowest rated class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.

Corporate Short-Term Debt Ratings

Moody’s employs the following three designations, all judged to be investment grade, to indicate the relative repayment ability of rated issuers:

NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime rating categories.

Standard & Poor's Ratings Services

Corporate and Municipal Bond Ratings

Investment Grade

AAA: Debt rated AAA has the highest rating assigned by Standard & Poor’s. Capacity to pay interest and repay principal is extremely strong.

AA: Debt rated AA has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree.

Prospectus A-2

Speculative Grade

CC: The rating CC is typically applied to debt subordinated to senior debt that is assigned an actual or implied CCC rating.

C: The rating C is typically applied to debt subordinated to senior debt that is assigned an actual or implied CCC- debt rating. The C rating may be used to cover a situation where a bankruptcy petition has been filed, but debt service payments are continued.

CI: The rating CI is reserved for income bonds on which no interest is being paid.

Plus (+) or Minus (-): The ratings from AA to CCC may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.


A-3		PIMCO Variable Insurance Trust

obligations are: securities whose principal or interest return is indexed to equities, commodities, or currencies; certain swaps and options; and interest only and principal only mortgage securities.

The absence of an “r” symbol should not be taken as an indication that an obligation will exhibit no volatility or variability in total return.

N.R.: Not rated.

Commercial Paper Rating Definitions

A-2: Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1.

B: Issues rated B are regarded as having only speculative capacity for timely payment.

C: This rating is assigned to short-term debt obligations with a doubtful capacity for payment.


Prospectus		A-		4

PIMCO Variable Insurance Trust

INVESTMENT ADVISER AND ADMINISTRATOR

PIMCO, 840 Newport Center Drive, Suite 300, Newport Beach, CA 92660

CUSTODIAN

State Street Bank & Trust Co., 801 Pennsylvania, Kansas City, MO 64105

TRANSFER AGENT

National Financial Data Services, 330 W. 9th Street, 4th Floor, Kansas City, MO 64105

INDEPENDENT ACCOUNTANTS

PricewaterhouseCoopers LLP, 1055 Broadway, Kansas City, MO 64105

LEGAL COUNSEL

Dechert Price & Rhoads, 1775 Eye Street N.W., Washington, D.C. 20006

You may get free copies of any of these materials, request other information about the Portfolio, or make shareholder inquiries by calling the Trust at 1-800-927-4648 or by writing to:

PIMCO Variable Insurance Trust

840 Newport Center Drive

Suite 300

Newport Beach, CA 92660

Reference the Trust’s Investment Company Act file number in your correspondence.

Investment Company Act file no. 811-8399

PIMCO Funds

840 Newport Center Drive

Suite 300

Newport Beach, CA 92660

		PIMCO Funds Prospectus

PIMCO Variable Insurance Trust May 1, 2002 Share Class ^Ins^{Institutional}		STOCK PORTFOLIO StocksPLUS Growth and Income Portfolio




		This cover is not part of the Prospectus

Prospectus

PIMCO Variable Insurance Trust

May 1, 2002

Share Class Institutional

This Prospectus describes the StocksPLUS Growth and Income Portfolio (the “Portfolio”), which is a separate investment portfolio offered by the PIMCO Variable Insurance Trust (the “Trust”). The Portfolio provides access to the professional investment management services offered by Pacific Investment Management Company LLC (“PIMCO”). The investments made by the Portfolio at any given time are not expected to be the same as those made by other mutual funds for which PIMCO acts as investment adviser, including mutual funds with investment objectives and strategies similar to those of the Portfolio. Accordingly, the performance of the Portfolio can be expected to vary from that of the other mutual funds.

This Prospectus explains what you should know about the Portfolio before you invest. Please read it carefully.

This Prospectus should be read in conjunction with the prospectus of the Separate Account. Both prospectuses should be read carefully and retained for future reference.


Prospectus		1

Table of Contents

Summary Information		3
Portfolio Summary		4
StocksPLUS Growth and Income Portfolio		4
Summary of Principal Risks		6
Management of the Portfolio		8
Investment Options		9
Purchases and Redemptions		9
How Portfolio Shares are Priced		10
Tax Consequences		11
Characteristics and Risks of Securities and Investment Techniques		11
Financial Highlights		20
Appendix A—Description of Securities Ratings		A-1


2		PIMCO Variable Insurance Trust

Summary Information


		Main Investments	Duration	Credit Quality(1)	Non-U.S. Dollar Denominated Securities(2)


Stock Portfolio	StocksPLUS Growth and Income	S&P 500 stock index derivatives backed by a portfolio of short-term fixed-income securities	0-1 year	B to Aaa; max 10% below Baa	0-20%

(1)

As rated by Moody’s Investors Service, Inc., or equivalently rated by Standard & Poor’s Ratings Services, or if unrated, determined by PIMCO to be of comparable quality.

(2)

The Portfolio may invest beyond this limit in U.S. dollar-denominated securities. The percentage limitation relates to non-U.S. dollar-denominated securities.

Fixed Income Instruments

“Fixed Income Instruments,” as used in this Prospectus, includes:

•

securities issued or guaranteed by the U.S. Government, its agencies or government-sponsored enterprises (“U.S. Government Securities”);

•

corporate debt securities of U.S. and non-U.S. issuers, including convertible securities and corporate commercial paper;

•

mortgage-backed and other asset-backed securities;

•

inflation-indexed bonds issued both by governments and corporations;

•

structured notes, including hybrid or “indexed” securities, event-linked bonds and loan participations;

•

delayed funding loans and revolving credit facilities;

•

bank certificates of deposit, fixed time deposits and bankers’ acceptances;

•

repurchase agreements and reverse repurchase agreements;

•

debt securities issued by states or local governments and their agencies, authorities and other government-sponsored enterprises;

•

obligations of non-U.S. governments or their subdivisions, agencies and government-sponsored

enterprises;

and

•

obligations of international agencies or supranational entities.

Duration

Duration is a measure of the expected life of a fixed income security that is used to determine the sensitivity of a security’s price to changes in interest rates. The longer a security’s duration, the more sensitive it will be to changes in interest rates. Similarly, a portfolio with a longer average portfolio duration will be more sensitive to changes in interest rates than a portfolio with a shorter average portfolio duration.

Credit Ratings

In this Prospectus, references are made to credit ratings of debt securities which measure an issuer’s expected ability to pay principal and interest on time. Credit ratings are determined by rating organizations, such as Standard & Poor’s Rating Service (“S&P”) or Moody’s Investors Service, Inc. (“Moody’s”). The following terms are generally used to describe the credit quality of debt securities depending on the security’s credit rating or, if unrated, credit quality as determined by PIMCO:

•

high quality

•

investment grade

•

below investment grade (“high yield securities” or “junk bonds”)

For a further description of credit ratings, see “Appendix A—Description of Securities Ratings.”

Portfolio Descriptions, Performance and Fees

It is possible to lose money on investments in the Portfolio.

An investment in the Portfolio is not a deposit of a bank and is not guaranteed or insured by the Federal Deposit Insurance Corporation or any other government agency.


Prospectus		3

PIMCO StocksPLUS Growth and Income Portfolio

Principal

Investments

and Strategies

Investment Objective

Seeks total return which exceeds that of the S&P 500

Portfolio Focus

S&P 500 stock index derivatives backed by a portfolio of short-term fixed income securities

Average Portfolio Duration

0-1 Year

Credit Quality

B to Aaa; maximum 10% below Baa

Dividend Frequency

Declared and distributed quarterly

Principal Risks

• Market Risk

• Issuer Risk

• Derivatives Risk

• Credit Risk

• Interest Rate Risk

• Liquidity Risk

• Foreign Investment Risk

• Currency Risk

• Mortgage Risk

• Leveraging Risk

• Management Risk

Please see “Summary of Principal Risks” following the Portfolio Summary for a description of these and other risks of investing in the Portfolio.

Performance Information


4		PIMCO Variable Insurance Trust

PIMCO StocksPLUS Growth and Income Portfolio (continued)

Calendar Year Total Returns — Administrative Class



	Highest and Lowest Quarter Returns
	(for periods shown in the bar chart)

	Highest (4th Qtr. ’98)	21.95%

	Lowest (3rd Qtr. ’01)	-13.96%
Calendar Year End (through 12/31)

Average Annual Total Returns (for periods ended 12/31/01)

	1 Year	Since Inception (4/28/00)(2)

Institutional Class	-11.28%	-11.36%

S&P 500 Index(1)	-11.88%	-12.03%

(1)

The Standard & Poor’s 500 Composite Stock Price Index is an unmanaged index of common stocks. It is not possible to invest directly in the index.

(2)

The Institutional Class shares commenced operations on 4/28/00. Index comparisons began on 4/30/00.

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold Institutional Class shares of the Portfolio and do not reflect Variable Contract fees and expenses:

Shareholder Fees (fees paid directly from your investment)

None

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets)

Share Class

Advisory

Fees

Service

Fees

Other

Expenses(1)

Total Annual

Portfolio Operating

Expenses

Expense Reduction(2)

Net Portfolio Operating Expenses(3)

Institutional

0.40%

None

0.13%

0.53%

(0.01%)

0.52%

(2) PIMCO has contractually agreed to reduce total annual portfolio operating expenses for the Institutional Class shares to the extent they would exceed, due to the payment of organizational expenses and Trustees’ fees, 0.50% of average daily net assets. Under the Expense Limitation Agreement, PIMCO may recoup these waivers and reimbursements in future periods, not exceeding three years, provided total expenses, including such recoupment, do not exceed the annual expense limit.

(3) Ratio of net expenses to average net assets excluding interest expense is 0.50%

Share Class	Year 1	Year 3	Year 5	Year 10

Institutional	$53	$167	$291	$653


Prospectus		5

Summary of Principal Risks

Interest Rate Risk

Credit Risk

Market Risk

Issuer Risk

Liquidity Risk

Derivatives Risk


6		PIMCO Variable Insurance Trust

Foreign (Non-U.S.) Investment Risk

Currency Risk

Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the U.S. or abroad. As a result, the Portfolio’s investments in foreign currency-denominated securities may reduce the returns of the Portfolio.

Mortgage Risk

Leveraging Risk

Certain transactions may give rise to a form of leverage. Such transactions may include, among others, reverse repurchase agreements, loans of portfolios securities, and the use of when-issued, delayed delivery or forward commitment transactions. The use of derivatives may also create leveraging risk. To mitigate leveraging risk, PIMCO will segregate liquid assets or otherwise cover the transactions that may give rise to such risk. The use of leverage may cause the Portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet segregation requirements. Leverage, including borrowing, may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. This is because leverage tends to exaggerate the effect of any increase or decrease in the value of the Portfolio’s portfolio securities.


Prospectus		7

Management Risk

Management of the Portfolio

Investment Adviser and Administrator

Advisory Fee

Administrative Fee

For the fiscal year ended December 31, 2001, the Portfolio paid PIMCO monthly administrative fees at the annual rate of 0.10%.

Individual Portfolio Manager

The table below provides information about the portfolio manager responsible for management of the Portfolio, including his occupation for the past five years.

Portfolio Manager	Since		Recent Professional Experience

William H. Gross	12/97	*	Managing Director, Chief Investment Officer and a founding partner of PIMCO.

Since Inception of the Portfolio.

Distributor


8		PIMCO Variable Insurance Trust

Investment Options—

Institutional Class Shares

Purchases and Redemptions

Purchasing Shares


Prospectus		9

Portfolio ceases offering its shares, any investments allocated to the Portfolio will, subject to any necessary regulatory approvals, be invested in another portfolio of the Trust.

Redeeming Shares

How Portfolio Shares Are Priced

Portfolio shares are valued at the close of regular trading (normally 4:00 p.m., Eastern time) (the “NYSE Close”) on each day that the New York Stock Exchange is open. For purposes of calculating the NAV, the Portfolio normally uses pricing data for domestic equity securities received shortly after the NYSE Close and do not normally take into account trading, clearances or settlements that take place after the NYSE Close. Domestic fixed income and foreign securities are normally priced using data reflecting the earlier closing of the principal markets for those securities. Information that becomes known to the Portfolio or its agents after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the price of a security or the NAV determined earlier that day.


10		PIMCO Variable Insurance Trust

recommendations provided by PIMCO. Fair valuation may also be used if extraordinary events occur after the close of the relevant market but prior to the NYSE Close.

Tax Consequences

Please refer to the prospectus for the Separate Account and Variable Contract for information regarding the federal income tax treatment of distributions to the Separate Account. See “Additional Information—Additional Tax Information” in the Portfolio’s Statement of Additional Information for more information on taxes.

Characteristics and Risks of

Securities and Investment Techniques

Securities Selection


Prospectus		11

U.S. Government Securities

Municipal Bonds

Mortgage-Related and Other Asset-Backed Securities

The value of some mortgage- or asset-backed securities may be particularly sensitive to changes in prevailing interest rates. Early repayment of principal on some mortgage-related securities may expose the Portfolio to a lower rate of return upon reinvestment of principal. When interest rates rise, the value of a mortgage-related security generally will decline; however, when interest rates are declining, the value of mortgage-related securities with prepayment features may not increase as much as other fixed income securities. The rate of prepayments on underlying mortgages will affect the price and volatility of a mortgage-related security, and may shorten or extend the effective maturity of the security beyond what was anticipated at the time of purchase. If unanticipated rates of prepayment on underlying mortgages increase the effective maturity of a mortgage-related security, the volatility of the security can be expected to increase. The value of these securities may fluctuate in response to the market’s perception of the creditworthiness of the issuers. Additionally, although mortgages and


12		PIMCO Variable Insurance Trust

mortgage-related securities are generally supported by some form of government or private guarantee and/or insurance, there is no assurance that private guarantors or insurers will meet their obligations.

One type of SMBS has one class receiving all of the interest from the mortgage assets (the interest-only, or “IO” class), while the other class will receive all of the principal (the principal-only, or “PO” class). The yield to maturity on an IO class is extremely sensitive to the rate of principal payments (including prepayments) on the underlying mortgage assets, and a rapid rate of principal payments may have a material adverse effect on the Portfolio’s yield to maturity from these securities. The Portfolio may not invest more than 5% of its net assets in any combination of IO, PO, or inverse floater securities. The Portfolio may invest in other asset-backed securities that have been offered to investors.

Loan Participations and Assignments

Corporate Debt Securities

High Yield Securities

Variable and Floating Rate Securities


Prospectus		13

declines in interest rates as well. The Portfolio may also invest in inverse floating rate debt instruments (“inverse floaters”). An inverse floater may exhibit greater price volatility than a fixed rate obligation of similar credit quality. The Portfolio may not invest more than 5% of its assets in any combination of inverse floater, interest only, or principal only securities.

Inflation-Indexed Bonds

Event-Linked Bonds

Convertible and Equity Securities


14		PIMCO Variable Insurance Trust

directly relate to the issuer, such as management performance, financial leverage and reduced demand for the issuer’s goods or services.

Foreign (Non-U.S.) Securities

Investing in the securities of issuers in any foreign country involves special risks and considerations not typically associated with investing in U.S. companies. Shareholders should consider carefully the substantial risks involved for Portfolio investments in securities issued by foreign companies and governments of foreign countries. These risks include: differences in accounting, auditing and financial reporting standards; generally higher commission rates on foreign portfolio transactions; the possibility of nationalization, expropriation or confiscatory taxation; adverse changes in investment or exchange control regulations; and political instability. Individual foreign economies may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross domestic product, rates of inflation, capital reinvestment, resources, self-sufficiency and balance of payments position. The securities markets, values of securities, yields and risks associated with foreign securities markets may change independently of each other. Also, foreign securities and dividends and interest payable on those securities may be subject to foreign taxes, including taxes withheld from payments on those securities. Foreign securities often trade with less frequency and volume than domestic securities and therefore may exhibit greater price volatility. Investments in foreign securities may also involve higher custodial costs than domestic investments and additional transaction costs with respect to foreign currency conversions. Changes in foreign exchange rates also will affect the value of securities denominated or quoted in foreign currencies.

Additional risks of emerging markets securities may include: greater social, economic and political uncertainty and instability; more substantial governmental involvement in the economy; less governmental supervision and regulation; unavailability of currency hedging techniques; companies that are newly organized and small; differences in auditing and financial reporting standards, which may result in unavailability of material information about issuers; and less developed legal systems. In addition, emerging securities markets may have different clearance and settlement procedures, which may be unable to keep pace with the volume of securities transactions or otherwise make it difficult to engage in such transactions. Settlement problems may cause the Portfolio to miss attractive investment opportunities, hold a portion of its assets in cash pending investment, or be delayed in disposing of a portfolio security. Such a delay could result in possible liability to a purchaser of the security.


Prospectus		15

Foreign (Non-U.S.) Currencies

Repurchase Agreements

Reverse Repurchase Agreements, Dollar Rolls and Other Borrowings


16		PIMCO Variable Insurance Trust

Derivatives

Leverage Risk. Because many derivatives have a leverage component, adverse changes in the value or level of the underlying asset, reference rate or index can result in a loss substantially greater than the amount invested in the derivative itself. Certain derivatives have the potential for unlimited loss, regardless of the size of the initial investment. When the Portfolio uses derivatives for leverage, investments in the Portfolio will tend to be more volatile, resulting in larger gains or losses in response to market changes. To limit leverage risk, the Portfolio will segregate assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees (or, as permitted by applicable regulation, enter into certain offsetting positions) to cover its obligations under derivative instruments.

Lack of Availability. Because the markets for certain derivative instruments (including markets located in foreign countries) are relatively new and still developing, suitable derivatives transactions may not be available in all circumstances for risk management or other purposes. There is no assurance that the Portfolio will engage in derivatives transactions at any time or from time to time. The Portfolio’s ability to use derivatives may also be limited by certain regulatory and tax considerations.


Prospectus		17

Other risks in using derivatives include the risk of mispricing or improper valuation of derivatives and the inability of derivatives to correlate perfectly with underlying assets, rates and indexes. Many derivatives, in particular privately negotiated derivatives, are complex and often valued subjectively. Improper valuations can result in increased cash payment requirements to counterparties or a loss of value to the Portfolio. Also, the value of derivatives may not correlate perfectly, or at all, with the value of the assets, reference rates or indexes they are designed to closely track. In addition, the Portfolio’s use of derivatives may cause the Portfolio to realize higher amounts of short-term capital gains (generally taxed at ordinary income tax rates) than if the Portfolio had not used such instruments.

Delayed Funding Loans and Revolving Credit Facilities

When-Issued, Delayed Delivery and Forward Commitment Transactions

Investment in Other Investment Companies

Short Sales


18		PIMCO Variable Insurance Trust

institution to complete the sale. Short sales expose the Portfolio to the risk that it will be required to acquire, convert or exchange securities to replace the borrowed securities (also known as “covering” the short position) at a time when the securities sold short have appreciated in value, thus resulting in a loss to the Portfolio. The Portfolio making a short sale must segregate assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees or otherwise cover its position in a permissible manner.

Illiquid Securities

Loans of Portfolio Securities

Portfolio Turnover

The length of time the Portfolio has held a particular security is not generally a consideration in investment decisions. A change in the securities held by the Portfolio is known as “portfolio turnover.” The Portfolio may engage in frequent and active trading of portfolio securities to achieve its investment objective, particularly during periods of volatile market movements. High portfolio turnover (e.g., over 100%) involves correspondingly greater expenses to the Portfolio, including brokerage commissions or dealer mark-ups and other transaction costs on the sale of securities and reinvestments in other securities. The trading costs associated with portfolio turnover may adversely effect the Portfolio’s performance.

Temporary Defensive Positions

Changes in Investment Objectives and Policies

Percentage Investment Limitations

Other Investments and Techniques


Prospectus		19

Financial Highlights

The financial highlights table is intended to help a shareholder understand the Portfolio’s financial performance for the period of operations. Certain information reflects financial results for a single Portfolio share. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Institutional Class of shares of the Portfolio (assuming reinvestment of all dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP, the Portfolio’s independent auditors. Their report, along with full financial statements, appears in the Trust’s Annual Report, which is available upon request.

Year or Period Ended	Net Asset Value Beginning of Period		Net Investment Income(b)		Net Realized and Unrealized Gain (Loss) on Investments(b)			Total Income (Loss) from Investment Operations			Dividends from Net Investment Income			Distributions from Net Realized Capital Gains

StocksPLUS Growth and Income
Institutional Class
12/31/2001	$	11.05	$	0.45	$	(1.71	)	$	(1.26	)	$	(0.43	)	$	0.00
12/31/2000(a)		13.21		0.49		(1.48	)		(0.99	)		(0.63	)		(0.54	)

(a)

Commenced operations on April 28, 2000.

(b)

Per share amounts based on average number of shares outstanding during the period.


20		PIMCO Variable Insurance Trust

Tax Basis Return of Capital	Total Distributions	Net Asset Value End of Period	Total Return	Net Assets End of Period (000’s)	Ratio of Expenses to Average Net Assets	Ratio of Net Investment Income to Average Net Assets	Portfolio Turnover Rate



$0.00	$(0.43)	$ 9.36	(11.28)%	$187	0.52%(c)(d)	4.60%	547%
0.00	(1.17)	11.05	(7.91)%	63	0.50%*	5.79%*	350%

Annualized.

(c)

Ratio of net expenses to average net assets excluding interest expense is 0.50%.

(d)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.53% for the period ended December 31, 2001.


Prospectus		21

Appendix A

Description of Securities Ratings

High Quality Debt Securities are those rated in one of the two lightest rating categories (the hightest category for commercial pages) or, if unrated, deemed comparable by PIMCO.

Investment Grade Debt Securities are those rated in one of the four highest rating categories, or if unrated deemed comparable by PIMCO.

Following is a description of Moody’s and S&P’s rating categories applicable to fixed income securities.

Moody's Investors Service, Inc.

Corporate and Municipal Bond Ratings


A-1		PIMCO Variable Insurance Trust

Caa: Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.

Ca: Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.

C: Bonds which are rated C are the lowest rated class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.

Corporate Short-Term Debt Ratings

Moody’s employs the following three designations, all judged to be investment grade, to indicate the relative repayment ability of rated issuers:

NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime rating categories.

Standard & Poor's Ratings Services

Corporate and Municipal Bond Ratings

Investment Grade

AAA: Debt rated AAA has the highest rating assigned by Standard & Poor’s. Capacity to pay interest and repay principal is extremely strong.

AA: Debt rated AA has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree.


Prospectus A-2

Speculative Grade

CC: The rating CC is typically applied to debt subordinated to senior debt that is assigned an actual or implied CCC rating.

C: The rating C is typically applied to debt subordinated to senior debt that is assigned an actual or implied CCC- debt rating. The C rating may be used to cover a situation where a bankruptcy petition has been filed, but debt service payments are continued.

CI: The rating CI is reserved for income bonds on which no interest is being paid.

Plus (+) or Minus (-): The ratings from AA to CCC may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.


A-3		PIMCO Variable Insurance Trust

obligations are: securities whose principal or interest return is indexed to equities, commodities, or currencies; certain swaps and options; and interest only and principal only mortgage securities.

The absence of an “r” symbol should not be taken as an indication that an obligation will exhibit no volatility or variability in total return.

N.R.: Not rated.

Commercial Paper Rating Definitions

A-2: Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1.

B: Issues rated B are regarded as having only speculative capacity for timely payment.

C: This rating is assigned to short-term debt obligations with a doubtful capacity for payment.


Prospectus A-4

PIMCO Variable Insurance Trust		INVESTMENT ADVISER AND ADMINISTRATOR PIMCO, 840 Newport Center Drive, Suite 300, Newport Beach, CA 92660 CUSTODIAN State Street Bank & Trust Co., 801 Pennsylvania, Kansas City, MO 64105
		TRANSFER AGENT National Financial Data Services, 330 W. 9th Street, 4th Floor, Kansas City, MO 64105
		INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP, 1055 Broadway, Kansas City, MO 64105
		LEGAL COUNSEL Dechert Price & Rhoads, 1775 Eye Street N.W., Washington, D.C. 20006

You may get free copies of any of these materials, request other information about the Portfolio, or make shareholder inquiries by calling the Trust at 1-800-927-4648 or by writing to:

PIMCO Variable Insurance Trust

840 Newport Center Drive

Suite 300

Newport Beach, CA 92660

Reference the Trust’s Investment Company Act file number in your correspondence.

Investment Company Act file no. 811-8399

PIMCO Funds

840 Newport Center Drive

Suite 300

Newport Beach, CA 92660

		PIMCO Funds Prospectus

PIMCO Variable Insurance Trust May 1, 2002 Share Class ^Adm^{Administrative}		STOCK PORTFOLIO StocksPLUS Growth and Income Portfolio




		This cover is not part of the Prospectus

Prospectus

PIMCO Variable

Insurance Trust

May 1, 2002

Share Class

Administrative

This Prospectus explains what you should know about the Portfolio before you invest. Please read it carefully.

This Prospectus should be read in conjunction with the prospectus of the Separate Account. Both prospectuses should be read carefully and retained for future reference.

Prospectus 1

Table of Contents

Summary Information		3
Portfolio Summary		4
StocksPLUS Growth and Income Portfolio		4
Summary of Principal Risks		6
Management of the Portfolio		8
Investment Options		9
Purchases and Redemptions		9
How Portfolio Shares are Priced		10
Tax Consequences		11
Characteristics and Risks of Securities and Investment Techniques		12
Financial Highlights		22
Appendix A—Description of Securities Ratings		A-1


2		PIMCO Variable Insurance Trust

Summary Information


		Main Investments	Duration	Credit Quality(1)	Non-U.S. Dollar Denominated Securities(2)



Stock Portfolio	StocksPLUS Growth and Income	S&P 500 stock index derivatives backed by a portfolio of short-term fixed-income securities	0-1 year	B to Aaa; max 10% below Baa	0-20%

(1)

As rated by Moody’s Investors Service, Inc., or equivalently rated by Standard & Poor’s Ratings Services, or if unrated, determined by PIMCO to be of comparable quality.

(2)

The Portfolio may invest beyond this limit in U.S. dollar-denominated securities. The percentage limitation relates to non-U.S. dollar-denominated securities.

Fixed Income Instruments

“Fixed Income Instruments,” as used in this Prospectus, includes:

•

securities issued or guaranteed by the U.S. Government, its agencies or government-sponsored enterprises (“U.S. Government Securities”);

•

corporate debt securities of U.S. and non-U.S. issuers, including convertible securities and corporate commercial paper;

•

mortgage-backed and other asset-backed securities;

•

inflation-indexed bonds issued both by governments and corporations;

•

structured notes, including hybrid or “indexed” securities, event-linked bonds and loan participations;

•

delayed funding loans and revolving credit facilities;

•

bank certificates of deposit, fixed time deposits and bankers’ acceptances;

•

repurchase agreements and reverse repurchase agreements;

•

debt securities issued by states or local governments and their agencies, authorities and other government-sponsored enterprises;

•

obligations of non-U.S. governments or their subdivisions, agencies and government-sponsored

enterprises;

and

•

obligations of international agencies or supranational entities.

Duration

Duration is a measure of the expected life of a fixed income security that is used to determine the sensitivity of a security’s price to changes in interest rates. The longer a security’s duration, the more sensitive it will be to changes in interest rates. Similarly, a portfolio with a longer average portfolio duration will be more sensitive to changes in interest rates than a portfolio with a shorter average portfolio duration.

Credit Ratings

In this Prospectus, references are made to credit ratings of debt securities which measure an issuer’s expected ability to pay principal and interest on time. Credit ratings are determined by rating organizations, such as Standard & Poor’s Rating Service (“S&P”) or Moody’s Investors Service, Inc. (“Moody’s”). The following terms are generally used to describe the credit quality of debt securities depending on the security’s credit rating or, if unrated, credit quality as determined by PIMCO:

•

high quality

•

investment grade

•

below investment grade (“high yield securities” or “junk bonds”)

For a further description of credit ratings, see “Appendix A—Description of Securities Ratings.”

Portfolio Descriptions, Performance and Fees

It is possible to lose money on investments in the Portfolio.

An investment in the Portfolio is not a deposit of a bank and is not guaranteed or insured by the Federal Deposit Insurance Corporation or any other government agency.


Prospectus		3

P IMCO StocksPLUS Growth and Income Portfolio


Principal Investments and Strategies		Investment Objective Seeks total return which exceeds that of the S&P 500		Portfolio Focus S&P 500 stock index derivatives backed by a portfolio of short-term fixed income securities Average Portfolio Duration 0-1 year		Credit Quality B to Aaa; maximum 10% below Baa Dividend Frequency Declared and distributed quarterly

Principal Risks

• Market Risk

• Issuer Risk

• Derivatives Risk

• Credit Risk

• Interest Rate Risk

• Liquidity Risk

• Foreign Investment Risk

• Currency Risk

• Mortgage Risk

• Leveraging Risk

• Management Risk

Please see “Summary of Principal Risks” following the Portfolio Summary for a description of these and other risks of investing in the Portfolio.

Performance Information

The top of the next page shows summary performance information for the Portfolio in a bar chart and an Average Annual Total Returns tabel. The information provides some indication of the risks of investing in the Portfolio by showing changes in its performance for year to year and by showing how the Portfolio’s average annual returns compare with the returns of a broad-based securities market index. The bar chart and the information to its right show performance of the Portfolio’s Administrative Class Shares. The bar chart and table do not reflect Variable Contract fees and expenses. If they did, performance would have been lower. Past performance is no guarantee of future results.


4		PIMCO Variable Insurance Trust

PIMCO StocksPLUS Growth and Income Portfolio (continued)

Calendar Year Total Returns — Administrative Class



	Highest and Lowest Quarter Returns
	(for periods shown in the bar chart)

	Highest (4th Qtr. ’98)	21.95%

	Lowest (3rd Qtr. ’01)	-13.96%
Calendar Year End (through 12/31)

Average Annual Total Returns (for periods ended 12/31/01)

	1 Year	Since Inception (12/31/97)

Administrative Class	-11.43%	5.73%

S&P 500 Index(1)	-11.88%	5.66%

(1)

The Standard & Poor’s 500 Composite Stock Price Index is an unmanaged index of common stocks. It is not possible to invest directly in the index.

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold Administrative Class shares of the Portfolio and do not reflect Variable Contract fees and expenses:

Shareholder Fees (fees paid directly from your investment)

None

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets)

Share Class	Advisory Fees	Service Fees	Other Expenses(1)	Total Annual Portfolio Operating Expenses(2)

Administrative	0.40%	0.15%	0.12%	0.67%

(1)

“Other Expenses” reflect a 0.10% administrative fee and 0.02% interest expense. Interest expense is generally incurred as a result of investment management activities.

(2)

Ratio of net expenses to average net assets excluding interest expense is 0.65%.

Share Class	Year 1	Year 3	Year 5	Year 10

Administrative	$68	$214	$373	$835


Prospectus		5

Summary of Principal Risks

Interest Rate Risk

Credit Risk

Market Risk

Issuer Risk

Liquidity Risk

Derivatives Risk


6		PIMCO Variable Insurance Trust

Foreign (Non-U.S.) Investment Risk

The Portfolio may invest in foreign securities and may experience more rapid and extreme changes in value than a portfolio that invests exclusively in securities of U.S. companies. The securities markets of many foreign countries are relatively small, with a limited number of companies representing a small number of industries. Additionally, issuers of foreign securities are usually not subject to the same degree of regulation as U.S. issuers. Reporting, accounting and auditing standards of foreign countries differ, in some cases significantly, from U.S. standards. Also, nationalization, expropriation or confiscatory taxation, currency blockage, political changes or diplomatic developments could adversely affect the Portfolio’s investments in a foreign country. In the event of nationalization, expropriation or other confiscation, the Portfolio could lose its entire investment in foreign securities. Adverse conditions in a certain region can adversely affect securities of other countries whose economies appear to be unrelated. To the extent that the Portfolio invests a significant portion of its assets in a concentrated geographic area like Eastern Europe or Asia, the Portfolio will generally have more exposure to regional economic risks associated with foreign investments.

Currency Risk

Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the U.S. or abroad. As a result, the Portfolio’s investments in foreign currency-denominated securities may reduce the returns of the Portfolio.

Mortgage Risk

Leveraging Risk

Certain transactions may give rise to a form of leverage. Such transactions may include, among others, reverse repurchase agreements, loans of portfolios securities, and the use of when-issued, delayed delivery or forward commitment transactions. The use of derivatives may also create leveraging risk. To mitigate leveraging risk, PIMCO will segregate liquid assets or otherwise cover the transactions that may give rise to such risk. The use of leverage may cause the Portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet segregation requirements. Leverage, including borrowing, may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. This is because leverage tends to exaggerate the effect of any increase or decrease in the value of the Portfolio’s portfolio securities.


Prospectus		7

Management Risk

Management of the Portfolio

Investment Adviser and Administrator

Advisory Fee

Administrative Fee

For the fiscal year ended December 31, 2001, the Portfolio paid PIMCO monthly administrative fees at the annual rate of 0.10%.

Individual Portfolio Manager

The table below provides information about the portfolio manager responsible for management of the Portfolio, including his occupation for the past five years.

Portfolio Manager	Since		Recent Professional Experience

William H. Gross	12/97	*	Managing Director, Chief Investment Officer and a founding partner of PIMCO.

Since inception of the Portfolio.

Distributor


8		PIMCO Variable Insurance Trust

Investment Options—

Administrative Class Shares

Purchases and Redemptions

Purchasing Shares


Prospectus		9

Redeeming Shares

How Portfolio Shares Are Priced


10		PIMCO Variable Insurance Trust

indices. Short-term investments having a maturity of 60 days or less are generally valued at amortized cost. Exchange traded options, futures and options on futures are valued at the settlement price determined by the exchange. Other securities for which market quotes are not readily available are valued at fair value as determined in good faith by the Board of Trustees or persons acting at their direction.

Portfolio shares are valued at the close of regular trading (normally 4:00 p.m., Eastern time) (the “NYSE Close”) on each day that the New York Stock Exchange is open. For purposes of calculating the NAV, the Portfolio normally uses pricing data for domestic equity securities received shortly after the NYSE Close and do not normally take into account trading, clearances or settlements that take place after the NYSE Close. Domestic fixed income and foreign securities are normally priced using data reflecting the earlier closing of the principal markets for those securities. Information that becomes known to the Portfolio or its agents after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the price of a security or the NAV determined earlier that day.

Tax Consequences

Please refer to the prospectus for the Separate Account and Variable Contract for information regarding the federal income tax treatment of distributions to the Separate Account. See “Additional Information—Additional Tax Information” in the Portfolio’s Statement of Additional Information for more information on taxes.


Prospectus		11

Characteristics and Risks of

Securities and Investment Techniques

Securities Selection

U.S. Government Securities

Municipal Bonds

Mortgage-Related and Other Asset-Backed Securities


12		PIMCO Variable Insurance Trust

Mortgage-Related and Other Asset-Backed Securities

The value of some mortgage- or asset-backed securities may be particularly sensitive to changes in prevailing interest rates. Early repayment of principal on some mortgage-related securities may expose the Portfolio to a lower rate of return upon reinvestment of principal. When interest rates rise, the value of a mortgage-related security generally will decline; however, when interest rates are declining, the value of mortgage-related securities with prepayment features may not increase as much as other fixed income securities. The rate of prepayments on underlying mortgages will affect the price and volatility of a mortgage-related security, and may shorten or extend the effective maturity of the security beyond what was anticipated at the time of purchase. If unanticipated rates of prepayment on underlying mortgages increase the effective maturity of a mortgage-related security, the volatility of the security can be expected to increase. The value of these securities may fluctuate in response to the market’s perception of the creditworthiness of the issuers. Additionally, although mortgages and mortgage-related securities are generally supported by some form of government or private guarantee and/or insurance, there is no assurance that private guarantors or insurers will meet their obligations.

One type of SMBS has one class receiving all of the interest from the mortgage assets (the interest-only, or “IO” class), while the other class will receive all of the principal (the principal-only, or “PO” class). The yield to maturity on an IO class is extremely sensitive to the rate of principal payments (including prepayments) on the underlying mortgage assets, and a rapid rate of principal payments may have a material adverse effect on the Portfolio’s yield to maturity from these securities. The Portfolio may not invest more than 5% of its net assets in any combination of IO, PO, or inverse floater securities. The Portfolio may invest in other asset-backed securities that have been offered to investors.

Loan Participations and Assignments

Corporate Debt Securities

High Yield Securities


Prospectus		13

various ratings assigned to fixed income securities by Moody’s and S&P. Ratings assigned by a rating agency are not absolute standards of credit quality and do not evaluate market risks. Rating agencies may fail to make timely changes in credit ratings and an issuer’s current financial condition may be better or worse than a rating indicates. The Portfolio will not necessarily sell a security when its rating is reduced below its rating at the time of purchase. PIMCO does not rely solely on credit ratings, and develops its own analysis of issuer credit quality.

Variable and Floating Rate Securities

Inflation-Indexed Bonds

Event-Linked Bonds

Convertible and Equity Securities


14		PIMCO Variable Insurance Trust

restrictions. In such cases, the Portfolio may consider convertible securities or equity securities to gain exposure to such investments.

Foreign (Non-U.S.) Securities

Investing in the securities of issuers in any foreign country involves special risks and considerations not typically associated with investing in U.S. companies. Shareholders should consider carefully the substantial risks involved for Portfolio investments in securities issued by foreign companies and governments of foreign countries. These risks include: differences in accounting, auditing and financial reporting standards; generally higher commission rates on foreign portfolio transactions; the possibility of nationalization, expropriation or confiscatory taxation; adverse changes in investment or exchange control regulations; and political instability. Individual foreign economies may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross domestic product, rates of inflation, capital reinvestment, resources, self-sufficiency and balance of payments position. The securities markets, values of securities, yields and risks associated with foreign securities markets may change independently of each other. Also, foreign securities and dividends and interest payable on those securities may be subject to foreign taxes, including taxes withheld from payments on those securities. Foreign securities often trade with less frequency and volume than domestic securities and therefore may exhibit greater price volatility. Investments in foreign securities may also involve higher custodial costs than domestic investments and additional transaction costs with respect to foreign currency conversions. Changes in foreign exchange rates also will affect the value of securities denominated or quoted in foreign currencies.


Prospectus		15

declines against the U.S. dollar, and devaluation may occur subsequent to investments in these currencies by the Portfolio. Inflation and rapid fluctuations in inflation rates have had, and may continue to have, negative effects on the economies and securities markets of certain emerging market countries.

Additional risks of emerging markets securities may include: greater social, economic and political uncertainty and instability; more substantial governmental involvement in the economy; less governmental supervision and regulation; unavailability of currency hedging techniques; companies that are newly organized and small; differences in auditing and financial reporting standards, which may result in unavailability of material information about issuers; and less developed legal systems. In addition, emerging securities markets may have different clearance and settlement procedures, which may be unable to keep pace with the volume of securities transactions or otherwise make it difficult to engage in such transactions. Settlement problems may cause the Portfolio to miss attractive investment opportunities, hold a portion of its assets in cash pending investment, or be delayed in disposing of a portfolio security. Such a delay could result in possible liability to a purchaser of the security.

Foreign (Non-U.S.) Currencies


16		PIMCO Variable Insurance Trust

Repurchase Agreements

Reverse Repurchase Agreements, Dollar Rolls and Other Borrowings

Derivatives


Prospectus		17

Leverage Risk. Because many derivatives have a leverage component, adverse changes in the value or level of the underlying asset, reference rate or index can result in a loss substantially greater than the amount invested in the derivative itself. Certain derivatives have the potential for unlimited loss, regardless of the size of the initial investment. When the Portfolio uses derivatives for leverage, investments in the Portfolio will tend to be more volatile, resulting in larger gains or losses in response to market changes. To limit leverage risk, the Portfolio will segregate assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees (or, as permitted by applicable regulation, enter into certain offsetting positions) to cover its obligations under derivative instruments.

Lack of Availability. Because the markets for certain derivative instruments (including markets located in foreign countries) are relatively new and still developing, suitable derivatives transactions may not be available in all circumstances for risk management or other purposes. There is no assurance that the Portfolio will engage in derivatives transactions at any time or from time to time. The Portfolio’s ability to use derivatives may also be limited by certain regulatory and tax considerations.

Other risks in using derivatives include the risk of mispricing or improper valuation of derivatives and the inability of derivatives to correlate perfectly with underlying assets, rates and indexes. Many derivatives, in particular privately negotiated derivatives, are complex and often valued subjectively. Improper valuations can result in increased cash payment requirements to counterparties or a loss of value to the Portfolio. Also, the value of derivatives may not correlate perfectly, or at all, with the value of the assets, reference rates or indexes they are designed to closely track. In addition, the Portfolio’s use of derivatives may cause the Portfolio to realize higher amounts of short-term capital gains (generally taxed at ordinary income tax rates) than if the Portfolio had not used such instruments.

Delayed Funding Loans and Revolving Credit Facilities

When-Issued, Delayed Delivery and Forward Commitment Transactions


18		PIMCO Variable Insurance Trust

Therefore, these transactions may result in a form of leverage and increase the Portfolio’s overall investment exposure. Typically, no income accrues on securities the Portfolio has committed to purchase prior to the time delivery of the securities is made, although the Portfolio may earn income on securities it has segregated to cover these positions.

Investment in Other Investment Companies

Short Sales

The Portfolio making a short sale must segregate assets determined to be liquid by PIMCO in accordance with Illiquid Securitiesprocedures established by the Board of Trustees or otherwise cover its position in a permissible manner.

Illiquid Securities

Loans of Portfolio Securities

Portfolio Turnover

The length of time the Portfolio has held a particular security is not generally a consideration in investment decisions. A change in the securities held by the Portfolio is known as “portfolio turnover.” The Portfolio may engage in frequent and active trading of portfolio securities to achieve its investment objective, particularly during periods of volatile market movements. High portfolio turnover (e.g., over 100%) involves correspondingly greater expenses to the Portfolio, including brokerage commissions or dealer mark-ups and other transaction costs on the sale of securities and reinvestments in other securities. The trading costs associated with portfolio turnover may adversely effect the Portfolio’s performance.


Prospectus		19

Temporary Defensive Positions

Changes in Investment Objectives and Policies

Percentage Investment Limitations

Other Investments and Techniques


20		PIMCO Variable Insurance Trust

[THIS PAGE INTENTIONALLY LEFT BLANK]


Prospectus		21

Financial Highlights

The financial highlights table is intended to help a shareholder understand the Portfolio’s financial performance for the period of operations. Certain information reflects financial results for a single Portfolio share. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Administrative Class of shares of the Portfolio (assuming reinvestment of all dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP, the Portfolio’s independent auditors. Their report, along with full financial statements, appears in the Trust’s Annual Report, which is available upon request.

Year or Period Ended	Net Asset Value Beginning of Period	Net Investment Income(b)	Net Realized and Unrealized Gain (Loss) on Investments(b)		Total Income (Loss) from Investment Operations		Dividends from Net Investment Income		Distributions from Net Realized Capital Gains

StocksPLUS Growth and Income
Administrative Class
12/31/2001	$11.05	$0.46	$(1.74	)	$(1.28	)	$(0.42	)	$0.00
12/31/2000	13.56	0.76	(1.98	)	(1.22	)	(0.75	)	(0.54	)
12/31/1999	12.58	0.76	1.65		2.41		(0.61	)	(0.82	)
12/31/1998(a)	10.00	0.30	2.68		2.98		(0.29	)	(0.11	)

(a)

Commenced operations on December 31, 1997.

(b)

Per share amounts based on average number of shares outstanding during the period.


22		PIMCO Variable Insurance Trust

Tax Basis Return of Capital	Total Distributions	Net Asset Value End of Period	Total Return	Net Assets End of Period (000’s)	Ratio of Expenses to Average Net Assets	Ratio of Net Investment Income to Average Net Assets	Portfolio Turnover Rate



$0.00	$(0.42)	$ 9.35	(11.43)%	$259,926	0.67%(c)(d)	4.60%	547%
0.00	(1.29)	11.05	(9.50)%	272,751	0.65%(e)	5.86%	350%
0.00	(1.43)	13.56	19.85%	230,412	0.65%	5.69%	34%
0.00	(0.40)	12.58	30.11%	58,264	0.65%	5.30%	61%

(c)

Ratio of net expenses to average net assets excluding interest expense is 0.65%.

(d)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.67% for the period ended December 31, 2001.

(e)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.66% for the period ended December 31, 2000.


Prospectus		23

Appendix A

Description of Securities Ratings

High Quality Debt Securities are those rated in one of the two highest rating categories (the highest category for commercial pages) or, if unrated, deemed comparable by PIMCO.

Investment Grade Debt Securities are those rated in one of the four highest rating categories, or if unrated deemed comparable by PIMCO.

Following is a description of Moody’s and S&P’s rating categories applicable to fixed income securities.

Moody's Investors Service, Inc.

Corporate and Municipal Bond Ratings

Caa: Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.


Prospectus A-1

Ca: Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.

C: Bonds which are rated C are the lowest rated class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.

Corporate Short-Term Debt Ratings

Moody’s employs the following three designations, all judged to be investment grade, to indicate the relative repayment ability of rated issuers:

NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime rating categories.

Standard & Poor's Ratings Services

Corporate and Municipal Bond Ratings

Investment Grade

AAA: Debt rated AAA has the highest rating assigned by Standard & Poor’s. Capacity to pay interest and repay principal is extremely strong.

AA: Debt rated AA has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree.


A-2		PIMCO Variable Insurance Trust

Speculative Grade

CC: The rating CC is typically applied to debt subordinated to senior debt that is assigned an actual or implied CCC rating.

C: The rating C is typically applied to debt subordinated to senior debt that is assigned an actual or implied CCC- debt rating. The C rating may be used to cover a situation where a bankruptcy petition has been filed, but debt service payments are continued.

CI: The rating CI is reserved for income bonds on which no interest is being paid.

Plus (+) or Minus (-): The ratings from AA to CCC may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.

r: The “r” is attached to highlight derivative, hybrid, and certain other obligations that S&P believes may experience high volatility or high variability in expected returns due to non-credit risks. Examples of such obligations are: securities whose principal or interest return is indexed to equities, commodities, or currencies; certain swaps and options; and interest only and principal only mortgage securities.

The absence of an “r” symbol should not be taken as an indication that an obligation will exhibit no volatility or variability in total return.


Prospectus A-3

N.R.: Not rated.

Commercial Paper Rating Definitions

A-2: Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1.

B: Issues rated B are regarded as having only speculative capacity for timely payment.

C: This rating is assigned to short-term debt obligations with a doubtful capacity for payment.


A-4		PIMCO Variable Insurance Trust

PIMCO Variable Insurance Trust

INVESTMENT ADVISER AND ADMINISTRATOR

PIMCO, 840 Newport Center Drive, Suite 300, Newport Beach, CA 92660

CUSTODIAN

State Street Bank & Trust Co., 801 Pennsylvania, Kansas City, MO 64105

TRANSFER AGENT

National Financial Data Services, 330 W. 9th Street, 4th Floor, Kansas City, MO 64105

INDEPENDENT ACCOUNTANTS

PricewaterhouseCoopers LLP, 1055 Broadway, Kansas City, MO 64105

LEGAL COUNSEL

Dechert Price & Rhoads, 1775 Eye Street N.W., Washington, D.C. 20006

You may get free copies of any of these materials, request other information about the Portfolio, or make shareholder inquiries by calling the Trust at 1-800-927-4648 or by writing to:

PIMCO Variable Insurance Trust

840 Newport Center Drive

Suite 300

Newport Beach, CA 92660

You may review and copy

information about the Trust, including its SAI, at the Securities Exchange Commission’s public reference room in Washington, D.C. You may call the Commission at 1-202-942-8090 for information about the operation of the public reference room. You may also access reports and other information about the Trust on the Commission’s Web site at www.sec.gov. You may get copies of this information, with payment of a duplication fee, by writing the Public Reference Section of the Commission, Washington, D.C. 20549-0102, or by e-mailing your request to publicinfo@sec.gov. Reference the Trust’s Investment Company Act file number in your correspondence.

Investment Company Act file no. 811-8399

PIMCO Funds

840 Newport Center Drive

Suite 300

Newport Beach, CA 92660

		PIMCO Funds Prospectus

PIMCO Variable Insurance Trust May 1, 2002 Share Class ^Ins^{Institutional}		INTERMEDIATE DURATION BOND PORTFOLIO Total Return Portfolio




		This cover is not part of the Prospectus

Prospectus

PIMCO Variable Insurance Trust

May 1, 2002

Share Class Institutional

This Prospectus describes the Total Return Portfolio (the “Portfolio”), which is a separate investment portfolio offered by the PIMCO Variable Insurance Trust (the “Trust”). The Portfolio provides access to the professional investment management services offered by Pacific Investment Management Company LLC (“PIMCO”). The investments made by the Portfolio at any given time are not expected to be the same as those made by other mutual funds for which PIMCO acts as investment adviser, including mutual funds with investment objectives and strategies similar to those of the Portfolio. Accordingly, the performance of the Portfolio can be expected to vary from that of the other mutual funds.

This Prospectus explains what you should know about the Portfolio before you invest. Please read it carefully.

This Prospectus should be read in conjunction with the prospectus of the Separate Account. Both prospectuses should be read carefully and retained for future reference.


Prospectus		1

Table of Contents

Summary Information		3
Portfolio Summary		4
Total Return Portfolio		4
Summary of Principal Risks		6
Management of the Portfolio		8
Investment Options		9
Purchases and Redemptions		9
How Portfolio Shares are Priced		10
Tax Consequences		11
Characteristics and Risks of Securities and Investment Techniques		11
Financial Highlights		20
Appendix A—Description of Securities Ratings		A-1


2		PIMCO Variable Insurance Trust

Summary Information

		Main Investments	Duration	Credit Quality(1)	Non-U.S. Dollar Denominated Securities(2)


Intermediate Duration Bond Portfolio	Total Return	Intermediate maturity fixed income securities	3-6 years	B to Aaa; max 10% below Baa	0-20%

(1)

As rated by Moody’s Investors Service, Inc., or equivalently rated by Standard & Poor’s Ratings Services, or if unrated, determined by PIMCO to be of comparable quality.

(2)

The Portfolio may invest beyond this limit in U.S. dollar-denominated securities. The percentage limitation relates to non-U.S. dollar-denominated securities.

Fixed Income Instruments

“Fixed Income Instruments,” as used in this Prospectus, includes:

•

securities issued or guaranteed by the U.S. Government, its agencies or government-sponsored enterprises (“U.S. Government Securities”);

•

corporate debt securities of U.S. and non-U.S. issuers, including convertible securities and corporate commercial paper;

•

mortgage-backed and other asset-backed securities;

•

inflation-indexed bonds issued both by governments and corporations;

•

structured notes, including hybrid or “indexed” securities, event-linked bonds and loan participations;

•

delayed funding loans and revolving credit facilities;

•

bank certificates of deposit, fixed time deposits and bankers’ acceptances;

•

repurchase agreements and reverse repurchase agreements;

•

debt securities issued by states or local governments and their agencies, authorities and other government-sponsored enterprises;

•

obligations of non-U.S. governments or their subdivisions, agencies and government-sponsored enterprises; and

•

obligations of international agencies or supranational entities.

Duration

Duration is a measure of the expected life of a fixed income security that is used to determine the sensitivity of a security’s price to changes in interest rates. The longer a security’s duration, the more sensitive it will be to changes in interest rates. Similarly, a portfolio with a longer average portfolio duration will be more sensitive to changes in interest rates than a portfolio with a shorter average portfolio duration.

Credit Ratings

In this Prospectus, references are made to credit ratings of debt securities which measure an issuer’s expected ability to pay principal and interest on time. Credit ratings are determined by rating organizations, such as Standard & Poor’s Rating Service (“S&P”) or Moody’s Investors Service, Inc. (“Moody’s”). The following terms are generally used to describe the credit quality of debt securities depending on the security’s credit rating or, if unrated, credit quality as determined by PIMCO:

•

high quality

•

investment grade

•

below investment grade (“high yield securities” or “junk bonds”)

For a further description of credit ratings, see “Appendix A—Description of Securities Ratings.”

Portfolio Descriptions, Performance and Fees

It is possible to lose money on investments in the Portfolio.

An investment in the Portfolio is not a deposit of a bank and is not guaranteed or insured by the Federal Deposit Insurance Corporation or any other government agency.


Prospectus		3

P IMCO Total Return Portfolio

Principal

Investments

and Strategies

Investment Objective

Seeks maximum total return,

consistent with preservation of

capital and prudent investment management

Portfolio Focus

Intermediate maturity fixed

income securities

Average Portfolio Duration

3-6 years

Credit Quality

B to Aaa; maximum 10% below Baa

Dividend Frequency

Declared daily and distributed monthly

The Portfolio invests primarily in investment grade debt securities, but may invest up to 10% of its assets in high yield securities (“junk bonds”) rated B or higher by Moody’s or S&P or, if unrated, determined by PIMCO to be of comparable quality. The Portfolio may invest up to 20% of its assets in securities denominated in foreign currencies, and may invest beyond this limit in U.S. dollar-denominated securities of foreign issuers. The Portfolio will normally hedge at least 75% of its exposure to foreign currency to reduce the risk of loss due to fluctuations in currency exchange rates.

Principal Risks

Among the principal risks of investing in the Portfolio, which could adversely affect its net asset value, yield and total return, are:

• Interest Rate Risk

• Credit Risk

• Market Risk

• Issuer Risk

• Derivatives Risk

• Liquidity Risk

• Mortgage Risk

• Foreign Investment Risk

• Currency Risk

• Leveraging Risk

• Management Risk

Please see “Summary of Principal Risks” following the Portfolio Summary for a description of these and other risks of investing in the Portfolio.

Performance Information


4		PIMCO Variable Insurance Trust

PIMCO Total Return Portfolio (continued)

Calendar Year Total Returns — Administrative Class


	Highest and Lowest Quarter Returns
	(for periods shown in the bar chart)

	Highest (3rd Qtr. ’98)	5.43%

	Lowest (2nd Qtr. ’99)	-0.94%

Calendar Year End (through 12/31)

Average Annual Total Returns (for periods ended 12/31/01)

	1 Year	Since Inception (4/10/00)(2)

Institutional Class	8.53%	9.54%

Lehman Aggregate Bond Index(1)	8.44%	10.14%

(1)

(2)

The Institutional Class shares commenced operations on 4/10/00. Index comparisons began on 3/31/00.

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold Institutional Class shares of the Portfolio and do not reflect Variable Contract fees and expenses:

Shareholder Fees (fees paid directly from your investment)

None

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets)

Share Class	Advisory Fees	Service Fees	Other Expenses(1)	Total Annual Portfolio Operating Expenses

Institutional	0.25%	None	0.25%	0.50%


(1) “Other Expenses” reflect a 0.25% administrative fee.

Examples. The Examples are intended to help you compare the cost of investing in Institutional Class shares of the Portfolio with the costs of investing in other mutual funds. The Examples assume that you invest $10,000 in the noted class of shares for the time periods indicated, and then redeem all your shares at the end of those periods. The Examples also assume that your investment has a 5% return each year, the reinvestment of all dividends and distributions, and that the Portfolio’s operating expenses remain the same. Although your actual costs may be higher or lower, the Examples show what your costs would be based on these assumptions.
Share Class	Year 1	Year 3	Year 5	Year 10

Institutional	$51	$160	$280	$628


Prospectus		5

Summary of Principal Risks

Interest Rate Risk

Credit Risk

Market Risk

Issuer Risk

Liquidity Risk

Derivatives Risk


6		PIMCO Variable Insurance Trust

associated with investing directly in securities and other traditional investments. Derivatives are subject to a number of risks described elsewhere in this section, such as liquidity risk, interest rate risk, market risk, credit risk and management risk. They also involve the risk of mispricing or improper valuation and the risk that changes in the value of the derivative may not correlate perfectly with the underlying asset, rate or index. The Portfolio investing in a derivative instrument could lose more than the principal amount invested. Also, suitable derivative transactions may not be available in all circumstances and there can be no assurance that the Portfolio will engage in these transactions to reduce exposure to other risks when that would be beneficial.

Foreign (Non-U.S.) Investment Risk

Currency Risk

Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the U.S. or abroad. As a result, the Portfolio’s investments in foreign currency-denominated securities may reduce the returns of the Portfolio.

Mortgage Risk

Leveraging Risk

Certain transactions may give rise to a form of leverage. Such transactions may include, among others, reverse repurchase agreements, loans of portfolios securities, and the use of when-issued, delayed delivery or forward commitment transactions. The use of derivatives may also create leveraging risk. To mitigate leveraging risk, PIMCO will segregate liquid assets or otherwise cover the transactions that may give rise to such risk. The use of leverage may cause the Portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet segregation requirements. Leverage, including borrowing, may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. This is because leverage tends to exaggerate the effect of any increase or decrease in the value of the Portfolio’s portfolio securities.


Prospectus		7

Management Risk

Management of the Portfolio

Investment Adviser and Administrator

Advisory Fee

Administrative Fee

For the fiscal year ended December 31, 2001, the Portfolio paid PIMCO monthly administrative fees at the annual rate of 0.25%.

Individual Portfolio Manager

The table below provides information about the portfolio manager responsible for management of the Portfolio, including his occupation for the past five years.

Portfolio Manager	Since	Recent Professional Experience

William H. Gross	12/97*	Managing Director, Chief Investment Officer and a founding partner of PIMCO.

Since inception of the Portfolio.

Distributor


8		PIMCO Variable Insurance Trust

Investment Options—

Institutional Class Shares

Purchases and Redemptions

Purchasing Shares


Prospectus		9

Portfolio ceases offering its shares, any investments allocated to the Portfolio will, subject to any necessary regulatory approvals, be invested in another portfolio of the Trust.

Redeeming Shares

How Portfolio Shares Are Priced

Portfolio shares are valued at the close of regular trading (normally 4:00 p.m., Eastern time) (the “NYSE Close”) on each day that the New York Stock Exchange is open. For purposes of calculating the NAV, the Portfolio normally uses pricing data for domestic equity securities received shortly after the NYSE Close and do not normally take into account trading, clearances or settlements that take place after the NYSE Close. Domestic fixed income and foreign securities are normally priced using data reflecting the earlier closing of the principal markets for those securities. Information that becomes known to the Portfolio or its agents after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the price of a security or the NAV determined earlier that day.


10		PIMCO Variable Insurance Trust

Tax Consequences

Please refer to the prospectus for the Separate Account and Variable Contract for information regarding the federal income tax treatment of distributions to the Separate Account. See “Additional Information—Additional Tax Information” in the Portfolio’s Statement of Additional Information for more information on taxes.

Characteristics and Risks of

Securities and Investment Techniques

Securities Selection


Prospectus		11

of the Portfolio’s holdings. Capital appreciation of fixed income securities generally results from decreases in market interest rates or improving credit fundamentals for a particular market sector or security.

The proportion of the Portfolio’s assets committed to investment in securities with particular characteristics (such as quality, sector, interest rate or maturity) varies based on PIMCO’s outlook for the U.S. and foreign economies, the financial markets and other factors.

U.S. Government Securities

Municipal Bonds

Mortgage-Related and Other Asset-Backed Securities


12		PIMCO Variable Insurance Trust

unanticipated rates of prepayment on underlying mortgages increase the effective maturity of a mortgage-related security, the volatility of the security can be expected to increase. The value of these securities may fluctuate in response to the market’s perception of the creditworthiness of the issuers. Additionally, although mortgages and mortgage-related securities are generally supported by some form of government or private guarantee and/or insurance, there is no assurance that private guarantors or insurers will meet their obligations.

One type of SMBS has one class receiving all of the interest from the mortgage assets (the interest-only, or “IO” class), while the other class will receive all of the principal (the principal-only, or “PO” class). The yield to maturity on an IO class is extremely sensitive to the rate of principal payments (including prepayments) on the underlying mortgage assets, and a rapid rate of principal payments may have a material adverse effect on the Portfolio’s yield to maturity from these securities. The Portfolio may not invest more than 5% of its net assets in any combination of IO, PO, or inverse floater securities. The Portfolio may invest in other asset-backed securities that have been offered to investors.

Loan Participations and Assignments

Corporate Debt Securities

High Yield Securities


Prospectus		13

Variable and Floating Rate Securities

Inflation-Indexed Bonds

Event-Linked Bonds

Convertible and Equity Securities


14		PIMCO Variable Insurance Trust

represented in those markets. The value of an equity security may also decline for a number of reasons which directly relate to the issuer, such as management performance, financial leverage and reduced demand for the issuer’s goods or services.

Foreign (Non-U.S.) Securities

Investing in the securities of issuers in any foreign country involves special risks and considerations not typically associated with investing in U.S. companies. Shareholders should consider carefully the substantial risks involved for Portfolio investments in securities issued by foreign companies and governments of foreign countries. These risks include: differences in accounting, auditing and financial reporting standards; generally higher commission rates on foreign portfolio transactions; the possibility of nationalization, expropriation or confiscatory taxation; adverse changes in investment or exchange control regulations; and political instability. Individual foreign economies may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross domestic product, rates of inflation, capital reinvestment, resources, self-sufficiency and balance of payments position. The securities markets, values of securities, yields and risks associated with foreign securities markets may change independently of each other. Also, foreign securities and dividends and interest payable on those securities may be subject to foreign taxes, including taxes withheld from payments on those securities. Foreign securities often trade with less frequency and volume than domestic securities and therefore may exhibit greater price volatility. Investments in foreign securities may also involve higher custodial costs than domestic investments and additional transaction costs with respect to foreign currency conversions. Changes in foreign exchange rates also will affect the value of securities denominated or quoted in foreign currencies.

Additional risks of emerging markets securities may include: greater social, economic and political uncertainty and instability; more substantial governmental involvement in the economy; less governmental supervision and regulation; unavailability of currency hedging techniques; companies that are newly organized and small; differences in auditing and financial reporting standards, which may result in unavailability of material information about issuers; and less developed legal systems. In addition, emerging securities markets may have different clearance and settlement procedures, which may be unable to keep pace with the volume of securities transactions or otherwise make it difficult to engage in such transactions. Settlement problems may cause the Portfolio to miss attractive investment opportunities, hold a portion of its assets in cash pending investment, or be delayed in disposing of a portfolio security. Such a delay could result in possible liability to a purchaser of the security.


Prospectus		15

Foreign (Non-U.S.) Currencies

Repurchase Agreements

Reverse Repurchase Agreements, Dollar Rolls and Other Borrowings


16		PIMCO Variable Insurance Trust

Derivatives

Leverage Risk. Because many derivatives have a leverage component, adverse changes in the value or level of the underlying asset, reference rate or index can result in a loss substantially greater than the amount invested in the derivative itself. Certain derivatives have the potential for unlimited loss, regardless of the size of the initial investment. When the Portfolio uses derivatives for leverage, investments in the Portfolio will tend to be more volatile, resulting in larger gains or losses in response to market changes. To limit leverage risk, the Portfolio will segregate assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees (or, as permitted by applicable regulation, enter into certain offsetting positions) to cover its obligations under derivative instruments.

Lack of Availability. Because the markets for certain derivative instruments (including markets located in foreign countries) are relatively new and still developing, suitable derivatives transactions may not be available in all circumstances for risk management or other purposes. There is no assurance that the Portfolio will engage in derivatives transactions at any time or from time to time. The Portfolio’s ability to use derivatives may also be limited by certain regulatory and tax considerations.


Prospectus		17

Other risks in using derivatives include the risk of mispricing or improper valuation of derivatives and the inability of derivatives to correlate perfectly with underlying assets, rates and indexes. Many derivatives, in particular privately negotiated derivatives, are complex and often valued subjectively. Improper valuations can result in increased cash payment requirements to counterparties or a loss of value to the Portfolio. Also, the value of derivatives may not correlate perfectly, or at all, with the value of the assets, reference rates or indexes they are designed to closely track. In addition, the Portfolio’s use of derivatives may cause the Portfolio to realize higher amounts of short-term capital gains (generally taxed at ordinary income tax rates) than if the Portfolio had not used such instruments.

Delayed Funding Loans and Revolving Credit Facilities

When-Issued, Delayed Delivery and Forward Commitment Transactions

Investment in Other Investment Companies

Short Sales


18		PIMCO Variable Insurance Trust

a time when the securities sold short have appreciated in value, thus resulting in a loss to the Portfolio. The Portfolio making a short sale must segregate assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees or otherwise cover its position in a permissible manner.

Illiquid Securities

Loans of Portfolio Securities

Portfolio Turnover

The length of time the Portfolio has held a particular security is not generally a consideration in investment decisions. A change in the securities held by the Portfolio is known as “portfolio turnover.” The Portfolio may engage in frequent and active trading of portfolio securities to achieve its investment objective, particularly during periods of volatile market movements. High portfolio turnover (e.g., over 100%) involves correspondingly greater expenses to the Portfolio, including brokerage commissions or dealer mark-ups and other transaction costs on the sale of securities and reinvestments in other securities. The trading costs associated with portfolio turnover may adversely effect the Portfolio’s performance.

Temporary Defensive Positions

Changes in Investment Objectives and Policies

Percentage Investment Limitations

Other Investments and Techniques


Prospectus		19

Financial Highlights

The financial highlights table is intended to help a shareholder understand the Portfolio’s financial performance for the period of operations. Certain information reflects financial results for a single Portfolio share. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Institutional Class of shares of the Portfolio (assuming reinvestment of all dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP, the Portfolio’s independent auditors. Their report, along with full financial statements, appears in the Trust’s Annual Report, which is available upon request.

Year or Period Ended	Net Asset Value Beginning of Period	Net Investment Income(b)	Net Realized and Unrealized Gain (Loss) on Investments(b)	Total Income (Loss) from Investment Operations	Dividends from Net Investment Income	Distributions from Net Realized Capital Gains

Total Return
Institutional Class
12/31/2001	$9.77	$0.50	$0.31	$0.81	$(0.50)	$(0.19)
12/31/2000(a)	9.50	0.45	0.27	0.72	(0.45)	0.00

(a)

Commenced operations on April 10, 2000.

(b)

Per share amounts based on average number of shares outstanding during the period.


20		PIMCO Variable Insurance Trust

Tax Basis Return of Capital	Total Distributions	Net Asset Value End of Period	Total Return	Net Assets End of Period (000’s)	Ratio of Expenses to Average Net Assets	Ratio of Net Investment Income to Average Net Assets	Portfolio Turnover Rate




$0.00	$(0.69)	$9.89	8.53%	$35,231	0.50%	5.00%	217%
0.00	(0.45)	9.77	7.82%	625	0.50%*	6.48%*	415%

Annualized.


Prospectus		21

Appendix A

Description of Securities Ratings

High Quality Debt Securities are those rated in one of the two highest rating categories (the highest category for commercial pages) or, if unrated, deemed comparable by PIMCO.

Investment Grade Debt Securities are those rated in one of the four highest rating categories, or if unrated deemed comparable by PIMCO.

Following is a description of Moody’s and S&P’s rating categories applicable to fixed income securities.

Moody's Investors Service, Inc.

Corporate and Municipal Bond Ratings


A-1		PIMCO Variable Insurance Trust

Caa: Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.

Ca: Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.

C: Bonds which are rated C are the lowest rated class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.

Corporate Short-Term Debt Ratings

Moody’s employs the following three designations, all judged to be investment grade, to indicate the relative repayment ability of rated issuers:

NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime rating categories.

Standard & Poor's Ratings Services

Corporate and Municipal Bond Ratings

Investment Grade

AAA: Debt rated AAA has the highest rating assigned by Standard & Poor’s. Capacity to pay interest and repay principal is extremely strong.

AA: Debt rated AA has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree.


		Prospectus A-2

Speculative Grade

CC: The rating CC is typically applied to debt subordinated to senior debt that is assigned an actual or implied CCC rating.

C: The rating C is typically applied to debt subordinated to senior debt that is assigned an actual or implied CCC- debt rating. The C rating may be used to cover a situation where a bankruptcy petition has been filed, but debt service payments are continued.

CI: The rating CI is reserved for income bonds on which no interest is being paid.

Plus (+) or Minus (-): The ratings from AA to CCC may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.


A-3		PIMCO Variable Insurance Trust

obligations are: securities whose principal or interest return is indexed to equities, commodities, or currencies; certain swaps and options; and interest only and principal only mortgage securities.

The absence of an “r” symbol should not be taken as an indication that an obligation will exhibit no volatility or variability in total return.

N.R.: Not rated.

Commercial Paper Rating Definitions

A-2: Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1.

B: Issues rated B are regarded as having only speculative capacity for timely payment.

C: This rating is assigned to short-term debt obligations with a doubtful capacity for payment.


		Prospectus A-4

PIMCO Variable Insurance Trust		INVESTMENT ADVISER AND ADMINISTRATOR PIMCO, 840 Newport Center Drive, Suite 300, Newport Beach, CA 92660 CUSTODIAN State Street Bank & Trust Co., 801 Pennsylvania, Kansas City, MO 64105
		TRANSFER AGENT National Financial Data Services, 330 W. 9th Street, 4th Floor, Kansas City, MO 64105
		INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP, 1055 Broadway, Kansas City, MO 64105
		LEGAL COUNSEL Dechert Price & Rhoads, 1775 Eye Street N.W., Washington, D.C. 20006

You may get free copies of any of these materials, request other information about the Portfolio, or make shareholder inquiries by calling the Trust at 1-800-927-4648 or by writing to:

PIMCO Variable Insurance Trust

840 Newport Center Drive

Suite 300

Newport Beach, CA 92660

Investment Company Act file no. 811-8399

PIMCO Funds

840 Newport Center Drive

Suite 300

Newport Beach, CA 92660

		PIMCO Funds Prospectus

PIMCO Variable Insurance Trust May 1, 2002 Share Class ^Adm^{Administrative}		INTERMEDIATE DURATION BOND PORTFOLIO Total Return Portfolio




		This cover is not part of the Prospectus

Prospectus

PIMCO Variable

Insurance Trust

May 1, 2002

Share Class

Administrative

This Prospectus explains what you should know about the Portfolio before you invest. Please read it carefully.

This Prospectus should be read in conjunction with the prospectus of the Separate Account. Both prospectuses should be read carefully and retained for future reference.


PIMCO Variable Insurance Trust		1

Table of Contents

Summary Information		3
Portfolio Summary		4
Total Return Portfolio		4
Summary of Principal Risks		6
Management of the Portfolio		8
Investment Options		9
Purchases and Redemptions		9
How Portfolio Shares are Priced		10
Tax Consequences		11
Characteristics and Risks of Securities and Investment Techniques		12
Financial Highlights		22
Appendix A—Description of Securities Ratings		A-1


2		PIMCO Variable Insurance Trust

Summary Information


		Main Investments	Duration	Credit Quality(1)	Non-U.S. Dollar Denominated Securities(2)


Intermediate Duration Bond Portfolio	Total Return	Intermediate maturity fixed income securities	3-6 years	B to Aaa; max 10% below Baa	0-20%

(1)

As rated by Moody’s Investors Service, Inc., or equivalently rated by Standard & Poor’s Ratings Services, or if unrated, determined by PIMCO to be of comparable quality.

(2)

The Portfolio may invest beyond this limit in U.S. dollar-denominated securities. The percentage limitation relates to non-U.S. dollar-denominated securities.

Fixed Income Instruments

“Fixed Income Instruments,” as used in this Prospectus, includes:

•

securities issued or guaranteed by the U.S. Government, its agencies or government-sponsored enterprises (“U.S. Government Securities”);

•

corporate debt securities of U.S. and non-U.S. issuers, including convertible securities and corporate commercial paper;

•

mortgage-backed and other asset-backed securities;

•

inflation-indexed bonds issued both by governments and corporations;

•

structured notes, including hybrid or “indexed” securities, event-linked bonds and loan participations;

•

delayed funding loans and revolving credit facilities;

•

bank certificates of deposit, fixed time deposits and bankers’ acceptances;

•

repurchase agreements and reverse repurchase agreements;

•

debt securities issued by states or local governments and their agencies, authorities and other government-sponsored enterprises;

•

obligations of non-U.S. governments or their subdivisions, agencies and government-sponsored

enterprises;

and

•

obligations of international agencies or supranational entities.

Duration

Duration is a measure of the expected life of a fixed income security that is used to determine the sensitivity of a security’s price to changes in interest rates. The longer a security’s duration, the more sensitive it will be to changes in interest rates. Similarly, a portfolio with a longer average portfolio duration will be more sensitive to changes in interest rates than a portfolio with a shorter average portfolio duration.

Credit Ratings

In this Prospectus, references are made to credit ratings of debt securities which measure an issuer’s expected ability to pay principal and interest on time. Credit ratings are determined by rating organizations, such as Standard & Poor’s Rating Service (“S&P”) or Moody’s Investors Service, Inc. (“Moody’s”). The following terms are generally used to describe the credit quality of debt securities depending on the security’s credit rating or, if unrated, credit quality as determined by PIMCO:

•

high quality

•

investment grade

•

below investment grade (“high yield securities” or “junk bonds”)

For a further description of credit ratings, see “Appendix A—Description of Securities Ratings.”

Portfolio Descriptions, Performance and Fees

It is possible to lose money on investments in the Portfolio.

An investment in the Portfolio is not a deposit of a bank and is not guaranteed or insured by the Federal Deposit Insurance Corporation or any other government agency.


		Prospectus		3

PI MCO Total Return Portfolio

Principal

Investments

and Strategies

Investment Objective

Seeks maximum total return, consistent with preservation of capital and prudent investment management

Portfolio Focus

Intermediate maturity fixed income securities

Average Portfolio Duration

3-6 years

Credit Quality

B to Aaa; maximum 10% below Baa

Dividend Frequency

Declared daily and distributed monthly

The Portfolio invests primarily in investment grade debt securities, but may invest up to 10% of its assets in high yield securities (“junk bonds”) rated B or higher by Moody’s or S&P or, if unrated, determined by PIMCO to be of comparable quality. The Portfolio may invest up to 20% of its assets in securities denominated in foreign currencies, and may invest beyond this limit in U.S. dollar-denominated securities of foreign issuers. The Portfolio will normally hedge at least 75% of its exposure to foreign currency to reduce the risk of loss due to fluctuations in currency exchange rates.

Principal Risks

Among the principal risks of investing in the Portfolio, which could adversely affect its net asset value, yield and total return, are:

• Interest Rate Risk

• Credit Risk

• Market Risk

• Issuer Risk

• Derivatives Risk

• Liquidity Risk

• Mortgage Risk

• Foreign Investment Risk

• Currency Risk

• Leveraging Risk

• Management Risk

Please see “Summary of Principal Risks” following the Portfolio Summary for a description of these and other risks of investing in the Portfolio.

Performance Information


4		PIMCO Variable Insurance Trust

PIMCO Total Return Portfolio (continued)

Calendar Year Total Returns — Administrative Class


	Highest and Lowest Quarter Returns
	(for periods shown in the bar chart)

	Highest (3rd Qtr. ’98)	5.43%

	Lowest (2nd Qtr. ’99)	-0.94%

Calendar Year End (through 12/31)

Average Annual Total Returns (for periods ended 12/31/01)

	1 Year	Since Inception (12/31/97)

Administrative Class	8.37%	6.55%

Lehman Aggregate Bond Index(1)	8.44%	6.88%

(1)

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold Administrative Class shares of the Portfolio and do not reflect Variable Contract fees and expenses:

Shareholder Fees (fees paid directly from your investment)

None

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets)

Share Class

Advisory

Fees

Service

Fees

Other

Expenses(1)

Total Annual Portfolio Operating Expenses

Expense Reduction(2)

Net Portfolio Operating Expenses

Administrative

0.25%

0.15%

0.26%

0.66%

(0.01%)

0.65%

(1) Other Expenses” reflect a 0.25% administrative fee and 0.01% representing the class’ pro rata Trustees’ fees.

Share Class	Year 1	Year 3	Year 5	Year 10

Administrative	$66	$210	$367	$822


Prospectus		5

Summary of Principal Risks

Interest Rate Risk

Credit Risk

Market Risk

Issuer Risk

Liquidity Risk

Derivatives Risk


6		PIMCO Variable Insurance Trust

Portfolio’s use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. Derivatives are subject to a number of risks described elsewhere in this section, such as liquidity risk, interest rate risk, market risk, credit risk and management risk. They also involve the risk of mispricing or improper valuation and the risk that changes in the value of the derivative may not correlate perfectly with the underlying asset, rate or index. The Portfolio investing in a derivative instrument could lose more than the principal amount invested. Also, suitable derivative transactions may not be available in all circumstances and there can be no assurance that the Portfolio will engage in these transactions to reduce exposure to other risks when that would be beneficial.

Foreign (Non-U.S.) Investment Risk

Currency Risk

Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the U.S. or abroad. As a result, the Portfolio’s investments in foreign currency-denominated securities may reduce the returns of the Portfolio.

Mortgage Risk

Leveraging Risk

Certain transactions may give rise to a form of leverage. Such transactions may include, among others, reverse repurchase agreements, loans of portfolios securities, and the use of when-issued, delayed delivery or forward commitment transactions. The use of derivatives may also create leveraging risk. To mitigate leveraging risk, PIMCO will segregate liquid assets or otherwise cover the transactions that may give rise to such risk. The use of leverage may cause the Portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet segregation requirements. Leverage, including borrowing, may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. This is because leverage tends to exaggerate the effect of any increase or decrease in the value of the Portfolio’s portfolio securities.


Prospectus		7

Management Risk

Management of the Portfolio

Investment Adviser and Administrator

Advisory Fee

Administrative Fee

For the fiscal year ended December 31, 2001, the Portfolio paid PIMCO monthly administrative fees at the annual rate of 0.25%.

Individual Portfolio Manager

The table below provides information about the portfolio manager responsible for management of the Portfolio, including his occupation for the past five years.

Portfolio Manager	Since		Recent Professional Experience

William H. Gross	12/97	*	Managing Director, Chief Investment Officer and a founding partner of PIMCO.

Since inception of the Portfolio.

Distributor


8		PIMCO Variable Insurance Trust

Investment Options—

Administrative Class Shares

Purchases and Redemptions

Purchasing Shares


Prospectus		9

Redeeming Shares

How Portfolio Shares Are Priced


10		PIMCO Variable Insurance Trust

Portfolio shares are valued at the close of regular trading (normally 4:00 p.m., Eastern time) (the “NYSE Close”) on each day that the New York Stock Exchange is open. For purposes of calculating the NAV, the Portfolio normally uses pricing data for domestic equity securities received shortly after the NYSE Close and do not normally take into account trading, clearances or settlements that take place after the NYSE Close. Domestic fixed income and foreign securities are normally priced using data reflecting the earlier closing of the principal markets for those securities. Information that becomes known to the Portfolio or its agents after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the price of a security or the NAV determined earlier that day.

Tax Consequences

Please refer to the prospectus for the Separate Account and Variable Contract for information regarding the federal income tax treatment of distributions to the Separate Account. See “Additional Information—Additional Tax Information” in the Portfolio’s Statement of Additional Information for more information on taxes.


Prospectus		11

Characteristics and Risks of

Securities and Investment Techniques

Securities Selection

U.S. Government Securities

Municipal Bonds


12		PIMCO Variable Insurance Trust

Mortgage-Related and Other Asset-Backed Securities

The value of some mortgage- or asset-backed securities may be particularly sensitive to changes in prevailing interest rates. Early repayment of principal on some mortgage-related securities may expose the Portfolio to a lower rate of return upon reinvestment of principal. When interest rates rise, the value of a mortgage-related security generally will decline; however, when interest rates are declining, the value of mortgage-related securities with prepayment features may not increase as much as other fixed income securities. The rate of prepayments on underlying mortgages will affect the price and volatility of a mortgage-related security, and may shorten or extend the effective maturity of the security beyond what was anticipated at the time of purchase. If unanticipated rates of prepayment on underlying mortgages increase the effective maturity of a mortgage-related security, the volatility of the security can be expected to increase. The value of these securities may fluctuate in response to the market’s perception of the creditworthiness of the issuers. Additionally, although mortgages and mortgage-related securities are generally supported by some form of government or private guarantee and/or insurance, there is no assurance that private guarantors or insurers will meet their obligations.

One type of SMBS has one class receiving all of the interest from the mortgage assets (the interest-only, or “IO” class), while the other class will receive all of the principal (the principal-only, or “PO” class). The yield to maturity on an IO class is extremely sensitive to the rate of principal payments (including prepayments) on the underlying mortgage assets, and a rapid rate of principal payments may have a material adverse effect on the Portfolio’s yield to maturity from these securities. The Portfolio may not invest more than 5% of its net assets in any combination of IO, PO, or inverse floater securities. The Portfolio may invest in other asset-backed securities that have been offered to investors.

Loan Participations and Assignments

Corporate Debt Securities

High Yield Securities


Prospectus		13

Variable and Floating Rate Securities

Inflation-Indexed Bonds

Event-Linked Bonds


14		PIMCO Variable Insurance Trust

Convertible and Equity Securities

Foreign (Non-U.S.) Securities

Investing in the securities of issuers in any foreign country involves special risks and considerations not typically associated with investing in U.S. companies. Shareholders should consider carefully the substantial risks involved for Portfolio investments in securities issued by foreign companies and governments of foreign countries. These risks include: differences in accounting, auditing and financial reporting standards; generally higher commission rates on foreign portfolio transactions; the possibility of nationalization, expropriation or confiscatory taxation; adverse changes in investment or exchange control regulations; and political instability. Individual foreign economies may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross domestic product, rates of inflation, capital reinvestment, resources, self-sufficiency and balance of payments position. The securities markets, values of securities, yields and risks associated with foreign securities markets may change independently of each other. Also, foreign securities and dividends and interest payable on those securities may be subject to foreign taxes, including taxes withheld from payments on those securities. Foreign securities often trade with less frequency and volume than domestic securities and therefore may exhibit greater price volatility. Investments in foreign securities may also involve higher custodial costs than domestic investments and additional transaction costs with respect to foreign currency conversions. Changes in foreign exchange rates also will affect the value of securities denominated or quoted in foreign currencies.


Prospectus		15

income and capital. In addition, foreign investors may be required to register the proceeds of sales; future economic or political crises could lead to price controls, forced mergers, expropriation or confiscatory taxation, seizure, nationalization, or creation of government monopolies. The currencies of emerging market countries may experience significant declines against the U.S. dollar, and devaluation may occur subsequent to investments in these currencies by the Portfolio. Inflation and rapid fluctuations in inflation rates have had, and may continue to have, negative effects on the economies and securities markets of certain emerging market countries.

Additional risks of emerging markets securities may include: greater social, economic and political uncertainty and instability; more substantial governmental involvement in the economy; less governmental supervision and regulation; unavailability of currency hedging techniques; companies that are newly organized and small; differences in auditing and financial reporting standards, which may result in unavailability of material information about issuers; and less developed legal systems. In addition, emerging securities markets may have different clearance and settlement procedures, which may be unable to keep pace with the volume of securities transactions or otherwise make it difficult to engage in such transactions. Settlement problems may cause the Portfolio to miss attractive investment opportunities, hold a portion of its assets in cash pending investment, or be delayed in disposing of a portfolio security. Such a delay could result in possible liability to a purchaser of the security.

Foreign (Non-U.S.) Currencies


16		PIMCO Variable Insurance Trust

relevant foreign currencies. The Portfolio may use one currency (or a basket of currencies) to hedge against adverse changes in the value of another currency (or a basket of currencies) when exchange rates between the two currencies are positively correlated. The Portfolio will segregate assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees to cover its obligations under forward foreign currency exchange contracts entered into for non-hedging purposes.

Repurchase Agreements

Reverse Repurchase Agreements, Dollar Rolls and Other Borrowings

Derivatives


Prospectus		17

Leverage Risk. Because many derivatives have a leverage component, adverse changes in the value or level of the underlying asset, reference rate or index can result in a loss substantially greater than the amount invested in the derivative itself. Certain derivatives have the potential for unlimited loss, regardless of the size of the initial investment. When the Portfolio uses derivatives for leverage, investments in the Portfolio will tend to be more volatile, resulting in larger gains or losses in response to market changes. To limit leverage risk, the Portfolio will segregate assets determined to be liquid by PIMCO in accordance with procedures established by the Board of Trustees (or, as permitted by applicable regulation, enter into certain offsetting positions) to cover its obligations under derivative instruments.

Lack of Availability. Because the markets for certain derivative instruments (including markets located in foreign countries) are relatively new and still developing, suitable derivatives transactions may not be available in all circumstances for risk management or other purposes. There is no assurance that the Portfolio will engage in derivatives transactions at any time or from time to time. The Portfolio’s ability to use derivatives may also be limited by certain regulatory and tax considerations.

manager incorrectly forecasts the values of securities, currencies or interest rates or other economic factors in using derivatives for the Portfolio, the Portfolio might have been in a better position if it had not entered into the transaction at all. While some strategies involving derivative instruments can reduce the risk of loss, they can also reduce the opportunity for gain or even result in losses by offsetting favorable price movements in other Portfolio investments. The Portfolio may also have to buy or sell a security at a disadvantageous time or price because the Portfolio is legally required to maintain offsetting positions or asset coverage in connection with certain derivatives transactions.

Other risks in using derivatives include the risk of mispricing or improper valuation of derivatives and the inability of derivatives to correlate perfectly with underlying assets, rates and indexes. Many derivatives, in particular privately negotiated derivatives, are complex and often valued subjectively. Improper valuations can result in increased cash payment requirements to counterparties or a loss of value to the Portfolio. Also, the value of derivatives may not correlate perfectly, or at all, with the value of the assets, reference rates or indexes they are designed to closely track. In addition, the Portfolio’s use of derivatives may cause the Portfolio to realize higher amounts of short-term capital gains (generally taxed at ordinary income tax rates) than if the Portfolio had not used such instruments.

Delayed Funding Loans and Revolving Credit Facilities


18		PIMCO Variable Insurance Trust

Delayed funding loans and revolving credit facilities are subject to credit, interest rate and liquidity risk and the risks of being a lender.

When-Issued, Delayed Delivery and Forward Commitment Transactions

Investment in Other Investment Companies

Short Sales

Illiquid Securities

Loans of Portfolio Securities


Prospectus		19

Portfolio Turnover

The length of time the Portfolio has held a particular security is not generally a consideration in investment decisions. A change in the securities held by the Portfolio is known as “portfolio turnover.” The Portfolio may engage in frequent and active trading of portfolio securities to achieve its investment objective, particularly during periods of volatile market movements. High portfolio turnover (e.g., over 100%) involves correspondingly greater expenses to the Portfolio, including brokerage commissions or dealer mark-ups and other transaction costs on the sale of securities and reinvestments in other securities. The trading costs associated with portfolio turnover may adversely effect the Portfolio’s performance.

Temporary Defensive Positions

Changes in Investment Objectives and Policies

Percentage Investment Limitations

Other Investments and Techniques


20		PIMCO Variable Insurance Trust

(THIS PAGE INTENTIONALLY LEFT BLANK)


Prospectus		21

Financial Highlights

The financial highlights table is intended to help a shareholder understand the Portfolio’s financial performance for the period of operations. Certain information reflects financial results for a single Portfolio share. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Administrative Class of shares of the Portfolio (assuming reinvestment of all dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP, the Portfolio’s independent auditors. Their report, along with full financial statements, appears in the Trust’s Annual Report, which is available upon request.

Year or Period Ended	Net Asset Value Beginning of Period	Net Investment Income(b)	Net Realized and Unrealized Gain (Loss) on Investments(b)		Total Income (Loss) from Investment Operations		Dividends from Net Investment Income		Distributions from Net Realized Capital Gains

Total Return
Administrative Class
12/31/2001	$ 9.77	$0.45	$0.35		$0.80		$(0.49	)	$(0.19	)
12/31/2000	9.45	0.62	0.30		0.92		(0.60	)	0.00
12/31/1999	10.09	0.58	(0.64	)	(0.06	)	(0.58	)	0.00
12/31/1998(a)	10.00	0.56	0.28		0.84		(0.56	)	(0.19	)

(a)

Commenced operations on December 31, 1997.

(b)

Per share amounts based on average number of shares outstanding during the period.


22		PIMCO Variable Insurance Trust

Tax Basis Return of Capital	Total Distributions	Net Asset Value End of Period	Total Return	Net Assets End of Period (000’s)	Ratio of Expenses to Average Net Assets	Ratio of Net Investment Income to Average Net Assets	Portfolio Turnover Rate


$0.00	$(0.68)	$ 9.89	8.37%	$332,823	0.65%(c)	4.55%	217%
0.00	(0.60)	9.77	10.15%	55,533	0.65%(d)	6.46%	415%
0.00	(0.58)	9.45	(0.58)%	3,877	0.65%(e)	5.96%	102%
0.00	(0.75)	10.09	8.61%	3,259	0.65%	5.55%	139%

Annualized.

(c)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.66% for the period ended December 31, 2001.

(d)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.66% for the period ended December 31, 2000.

(e)

If the investment manager had not reimbursed expenses, the ratio of operating expenses to average net assets would have been 0.69% for the period ended December 31, 1999.


Prospectus		23

Appendix A

Description of Securities Ratings

High Quality Debt Securities are those rated in one of the two highest rating categories (the highest category for commercial pages) or, if unrated, deemed comparable by PIMCO.

Investment Grade Debt Securities are those rated in one of the four highest rating categories, or if unrated deemed comparable by PIMCO.

Following is a description of Moody’s and S&P’s rating categories applicable to fixed income securities.

Moody's Investors Service, Inc.

Corporate and Municipal Bond Ratings


A-1		PIMCO Variable Insurance Trust

Caa: Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.

Ca: Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.

C: Bonds which are rated C are the lowest rated class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.

Corporate Short-Term Debt Ratings

Moody’s employs the following three designations, all judged to be investment grade, to indicate the relative repayment ability of rated issuers:

NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime rating categories.

Standard & Poor's Ratings Services

Corporate and Municipal Bond Ratings

Investment Grade

AAA: Debt rated AAA has the highest rating assigned by Standard & Poor’s. Capacity to pay interest and repay principal is extremely strong.

AA: Debt rated AA has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree.


Prospectus A-2

Speculative Grade

CC: The rating CC is typically applied to debt subordinated to senior debt that is assigned an actual or implied CCC rating.

C: The rating C is typically applied to debt subordinated to senior debt that is assigned an actual or implied CCC- debt rating. The C rating may be used to cover a situation where a bankruptcy petition has been filed, but debt service payments are continued.

CI: The rating CI is reserved for income bonds on which no interest is being paid.

Plus (+) or Minus (-): The ratings from AA to CCC may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.


A-3		PIMCO Variable Insurance Trust

obligations are: securities whose principal or interest return is indexed to equities, commodities, or currencies; certain swaps and options; and interest only and principal only mortgage securities.

The absence of an “r” symbol should not be taken as an indication that an obligation will exhibit no volatility or variability in total return.

N.R.: Not rated.

Commercial Paper Rating Definitions

A-2: Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1.

B: Issues rated B are regarded as having only speculative capacity for timely payment.

C: This rating is assigned to short-term debt obligations with a doubtful capacity for payment.


Prospectus		A-		4

PIMCO Variable Insurance Trust

INVESTMENT ADVISER AND ADMINISTRATOR

PIMCO, 840 Newport Center Drive, Suite 300, Newport Beach, CA 92660

CUSTODIAN

State Street Bank & Trust Co., 801 Pennsylvania, Kansas City, MO 64105

TRANSFER AGENT

National Financial Data Services, 330 W. 9th Street, 4th Floor, Kansas City, MO 64105

INDEPENDENT ACCOUNTANTS

PricewaterhouseCoopers LLP, 1055 Broadway, Kansas City, MO 64105

LEGAL COUNSEL

Dechert Price & Rhoads, 1775 Eye Street N.W., Washington, D.C. 20006

You may get free copies of any of these materials, request other information about the Portfolio, or make shareholder inquiries by calling the Trust at 1-800-927-4648 or by writing to:

PIMCO Variable Insurance Trust

840 Newport Center Drive

Suite 300

Newport Beach, CA 92660

Investment Company Act file no. 811-8399

PIMCO Funds

840 Newport Center Drive

Suite 300

Newport Beach, CA 92660

		PIMCO Funds Prospectus

PIMCO Variable Insurance Trust May 1, 2002 Share Class ^Adm^{Administrative}		INTERNATIONAL BOND PORTFOLIO Global Bond Portfolio




		This cover is not part of the Prospectus

Prospectus

PIMCO Variable Insurance Trust

May 1, 2002

Share Class Administrative

This Prospectus describes the Global Bond Portfolio (the “Portfolio”), which is a separate investment portfolio offered by the PIMCO Variable Insurance Trust (the “Trust”). The Portfolio provides access to the professional investment management services offered by Pacific Investment Management Company LLC (“PIMCO”). The investments made by the Portfolio at any given time are not expected to be the same as those made by other mutual funds for which PIMCO acts as investment adviser, including mutual funds with investment objectives and strategies similar to those of the Portfolio. Accordingly, the performance of the Portfolio can be expected to vary from that of the other mutual funds.

This Prospectus explains what you should know about the Portfolio before you invest. Please read it carefully.

This Prospectus should be read in conjunction with the prospectus of the Separate Account. Both prospectuses should be read carefully and retained for future reference.


Prospectus		1

Table of Contents

Summary Information		3
Portfolio Summary		4
Global Bond Portfolio		4
Summary of Principal Risks		6
Management of the Portfolio		8
Investment Options		9
Purchases and Redemptions		10
How Portfolio Shares are Priced		11
Tax Consequences		11
Characteristics and Risks of Securities and Investment Techniques		12
Appendix A—Description of Securities Ratings		A-1


2		PIMCO Variable Insurance Trust

Summary Information


		Main Investments	Duration	Credit Quality(1)	Non-U.S. Dollar Denominated Securities(2)


International Bond Portfolio	Global Bond	U.S. and non-U.S. intermediate maturity, fixed income securities	3-7 years	B to Aaa; max 10% below Baa	25-75%

(1)

As rated by Moody’s Investors Service, Inc., or equivalently rated by Standard & Poor’s Ratings Services, or if unrated, determined by PIMCO to be of comparable quality.

(2)

The Portfolio may invest beyond this limit in U.S. dollar-denominated securities. The percentage limitation relates to securities of foreign issuers, denominated in any currency.

Fixed Income Instruments

“Fixed Income Instruments,” as used in this Prospectus, includes:

•

securities issued or guaranteed by the U.S. Government, its agencies or government-sponsored enterprises (“U.S. Government Securities”);

•

corporate debt securities of U.S. and non-U.S. issuers, including convertible securities and corporate commercial paper;

•

mortgage-backed and other asset-backed securities;

•

inflation-indexed bonds issued both by governments and corporations;

•

structured notes, including hybrid or “indexed” securities, event-linked bonds and loan participations;

•

delayed funding loans and revolving credit facilities;

•

bank certificates of deposit, fixed time deposits and bankers’ acceptances;

•

repurchase agreements and reverse repurchase agreements;

•

debt securities issued by states or local governments and their agencies, authorities and other government-sponsored enterprises;

•

obligations of non-U.S. governments or their subdivisions, agencies and government-sponsored enterprises; and

•

obligations of international agencies or supranational entities.

Duration

Duration is a measure of the expected life of a fixed income security that is used to determine the sensitivity of a security’s price to changes in interest rates. The longer a security’s duration, the more sensitive it will be to changes in interest rates. Similarly, a portfolio with a longer average portfolio duration will be more sensitive to changes in interest rates than a portfolio with a shorter average portfolio duration.

Credit Ratings

In this Prospectus, references are made to credit ratings of debt securities which measure an issuer’s expected ability to pay principal and interest on time. Credit ratings are determined by rating organizations, such as Standard & Poor’s Rating Service (“S&P”) or Moody’s Investors Service, Inc. (“Moody’s”). The following terms are generally used to describe the credit quality of debt securities depending on the security’s credit rating or, if unrated, credit quality as determined by PIMCO:

•

high quality

•

investment grade

•

below investment grade (“high yield securities” or “junk bonds”)

For a further description of credit ratings, see “Appendix A—Description of Securities Ratings.”

Portfolio Descriptions, Performance and Fees

It is possible to lose money on investments in the Portfolio.

An investment in the Portfolio is not a deposit of a bank and is not guaranteed or insured by the Federal Deposit Insurance Corporation or any other government agency.


Prospectus		3

PIMCO Global Bond Portfolio

Principal

Investments and Strategies

Investment Objective

Seeks maximum total return, consistent with preservation of

capital and prudent investment management

Portfolio Focus

U.S. and non-U.S. intermediate maturity fixed income securities

Average Portfolio Duration

3-7 years

Credit Quality

B to Aaa; maximum 10% below Baa

Dividend Frequency

Declared daily and distributed monthly

Principal Risks

Among the principal risks of investing in the Portfolio, which could adversely affect its net asset value, yield and total return, are:

• Interest Rate Risk

• Credit Risk

• Market Risk

• Issuer Risk

• Foreign Investment Risk

• Currency Risk

• Issuer Non-Diversification Risk

• Liquidity Risk

• Mortgage Risk

• Derivatives Risk

• Leveraging Risk

• Management Risk

Please see “Summary of Principal Risks” following the Portfolio Summaries for a description of these and other risks of investing in the Portfolio.

Performance Information

The Portfolio does not have a full calendar year of performance. Thus, no bar chart or annual returns table is included for the Portfolio.


4		PIMCO Variable Insurance Trust

PIMCO Global Bond Portfolio (continued)

Fees and Expenses of the Portfolio

These tables describe the fees and expenses you may pay if you buy and hold Administrative Class shares of the Portfolio and do not reflect Variable Contract fees and expenses:

Shareholder Fees (fees paid directly from your investment)

None

Annual Portfolio Operating Expenses (expenses that are deducted from Portfolio assets)

Share Class

Advisory Fees

Service Fees

Other Expenses(1)

Total Annual Portfolio Operating Expenses

Expense Reduction(2)

Net Portfolio Operating Expenses

Administrative

0.25%

0.15%

0.78%

1.18%

(0.28%)

0.90%

(1) “Other Expenses”, which are based on estimated amounts for the initial fiscal year of the Portfolio, reflect a 0.50% administrative fee and 0.28% representing the class’ estimated organizational expenses and pro rata Trustees’ fees.

(2) PIMCO has contractually agreed to reduce total annual portfolio operating expenses for the Administrative Class shares to the extent they would exceed, due to the payment of organizational expenses and Trustees’ fees, 0.90% of average daily net assets. Under the Expense Limitation Agreement, PIMCO may recoup these waivers and reimbursements in future periods, not exceeding three years, provided total expenses, including such recoupment, do not exceed the annual expense limit.

Share Class

Year 1

Year 3

Administrative

347


Prospectus		5

Summary of Principal Risks

Interest Rate Risk

Credit Risk

Market Risk

Issuer Risk

Liquidity Risk

Derivatives Risk


6		PIMCO Variable Insurance Trust

Foreign (Non-U.S.) Investment Risk

Currency Risk

Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the U.S. or abroad. As a result, the Portfolio’s investments in foreign currency-denominated securities may reduce the returns of the Portfolio.

Issuer Non-Diversification Risk

Mortgage Risk


Prospectus		7

Leveraging Risk

Certain transactions may give rise to a form of leverage. Such transactions may include, among others, reverse repurchase agreements, loans of portfolios securities, and the use of when-issued, delayed delivery or forward commitment transactions. The use of derivatives may also create leveraging risk. To mitigate leveraging risk, PIMCO will segregate liquid assets or otherwise cover the transactions that may give rise to such risk. The use of leverage may cause the Portfolio to liquidate portfolio positions when it may not be advantageous to do so to satisfy its obligations or to meet segregation requirements. Leverage, including borrowing, may cause the Portfolio to be more volatile than if the Portfolio had not been leveraged. This is because leverage tends to exaggerate the effect of any increase or decrease in the value of the Portfolio’s portfolio securities.

Management Risk

Management of the Portfolio

Investment Adviser and Administrator

Advisory Fee

The Portfolio pays PIMCO fees in return for providing investment advisory services. The Portfolio pays monthly advisory fees to PIMCO at the annual rate (stated as a percentage of the average daily net assets of the Portfolio) of 0.25%.

Administrative Fee

The Portfolio pays PIMCO monthly administrative fees at the annual rate of 0.50%.


8		PIMCO Variable Insurance Trust

Individual Portfolio Manager

The table below provides information about the portfolio manager responsible for management of the Portfolio, including his occupation for the past five years.

Portfolio Manager	Since	Recent Professional Experience

Michael R. Asay	1/02*	Senior Vice President, PIMCO. He joined PIMCO in 1998. Prior to joining PIMCO, he was a Vice President and Director of Market Research for Goldman Sachs and Company from 1986-1997, where he developed fixed income trading strategies and quantitative analytics for Asian and European markets.

*Since

inception of the Portofolio.

Distributor

Investment Options—

Administrative Class Shares


Prospectus		9

and lower investment returns. Each service agent is responsible for transmitting to its customers a schedule of any such fees and information regarding any additional or different conditions regarding purchases, redemptions and exchanges. Shareholders who are customers of service agents should consult their service agents for information regarding these fees and conditions.

Purchases and Redemptions

Purchasing Shares

Redeeming Shares


10		PIMCO Variable Insurance Trust

How Portfolio Shares Are Priced

Portfolio shares are valued at the close of regular trading (normally 4:00 p.m., Eastern time) (the “NYSE Close”) on each day that the New York Stock Exchange is open. For purposes of calculating the NAV, the Portfolio normally uses pricing data for domestic equity securities received shortly after the NYSE Close and do not normally take into account trading, clearances or settlements that take place after the NYSE Close. Domestic fixed income and foreign securities are normally priced using data reflecting the earlier closing of the principal markets for those securities. Information that becomes known to the Portfolio or its agents after the NAV has been calculated on a particular day will not generally be used to retroactively adjust the price of a security or the NAV determined earlier that day.

Tax Consequences


Prospectus		11

Government or any agency or instrumentality of the U.S. Government is treated as a security issued by the U.S. Government or its agency or instrumentality, whichever is applicable.

Please refer to the prospectus for the Separate Account and Variable Contract for information regarding the federal income tax treatment of distributions to the Separate Account. See “Additional Information—Additional Tax Information” in the Portfolio’s Statement of Additional Information for more information on taxes.

Characteristics and Risks of

Securities and Investment Techniques

Securities Selection

U.S. Government Securities


12		PIMCO Variable Insurance Trust

Municipal Bonds

Mortgage-Related and Other Asset-Backed Securities

The value of some mortgage- or asset-backed securities may be particularly sensitive to changes in prevailing interest rates. Early repayment of principal on some mortgage-related securities may expose the Portfolio to a lower rate of return upon reinvestment of principal. When interest rates rise, the value of a mortgage-related security generally will decline; however, when interest rates are declining, the value of mortgage-related securities with prepayment features may not increase as much as other fixed income securities. The rate of prepayments on underlying mortgages will affect the price and volatility of a mortgage-related security, and may shorten or extend the effective maturity of the security beyond what was anticipated at the time of purchase. If unanticipated rates of prepayment on underlying mortgages increase the effective maturity of a mortgage-related security, the volatility of the security can be expected to increase. The value of these securities may fluctuate in response to the market’s perception of the creditworthiness of the issuers. Additionally, although mortgages and mortgage-related securities are generally supported by some form of government or private guarantee and/or insurance, there is no assurance that private guarantors or insurers will meet their obligations.

One type of SMBS has one class receiving all of the interest from the mortgage assets (the interest-only, or “IO” class), while the other class will receive all of the principal (the principal-only, or “PO” class). The yield to maturity on an IO class is extremely sensitive to the rate of principal payments (including prepayments) on the underlying mortgage assets, and a rapid rate of principal payments may have a material adverse effect on the Portfolio’s yield to maturity from these securities. The Portfolio may not invest more than 5% of its net assets in any combination of IO, PO, or inverse floater securities. The Portfolio may invest in other asset-backed securities that have been offered to investors.

Loan Participations and Assignments

Corporate Debt Securities


Prospectus		13

High Yield Securities

Variable and Floating Rate Securities

Inflation-Indexed Bonds


14		PIMCO Variable Insurance Trust

Event-Linked Bonds

Convertible and Equity Securities

The Portfolio may invest in convertible securities. Convertible securities are generally preferred stocks and

Foreign (Non-U.S.) Securities

Investing in the securities of issuers in any foreign country involves special risks and considerations not typically associated with investing in U.S. companies. Shareholders should consider carefully the substantial risks involved for Portfolio investments in securities issued by foreign companies and governments of foreign countries. These risks include: differences in accounting, auditing and financial reporting standards; generally higher commission rates on foreign portfolio transactions; the possibility of nationalization, expropriation or confiscatory taxation; adverse changes in investment or exchange control regulations; and political instability. Individual foreign economies may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross domestic product, rates of inflation, capital reinvestment, resources, self-sufficiency and balance of payments position. The securities markets, values of securities, yields and risks associated with foreign securities markets may change independently of each other. Also, foreign securities and dividends and interest payable on those securities may be subject to foreign taxes, including taxes withheld from payments on those securities. Foreign securities often trade with less frequency and volume than domestic securities and therefore


Prospectus		15

Additional risks of emerging markets securities may include: greater social, economic and political uncertainty and instability; more substantial governmental involvement in the economy; less governmental supervision and regulation; unavailability of currency hedging techniques; companies that are newly organized and small; differences in auditing and financial reporting standards, which may result in unavailability of material information about issuers; and less developed legal systems. In addition, emerging securities markets may have different clearance and settlement procedures, which may be unable to keep pace with the volume of securities transactions or otherwise make it difficult to engage in such transactions. Settlement problems may cause the Portfolio to miss attractive investment opportunities, hold a portion of its assets in cash pending investment, or be delayed in disposing of a portfolio security. Such a delay could result in possible liability to a purchaser of the security.

Foreign (Non-U.S.) Currencies


16		PIMCO Variable Insurance Trust

Repurchase Agreements

Reverse Repurchase Agreements, Dollar Rolls and Other Borrowings

Derivatives


Prospectus		17

Portfolio may use are described under “Investment Objectives and Policies” in the Statement of Additional Information.

Lack of Availability. Because the markets for certain derivative instruments (including markets located in foreign countries) are relatively new and still developing, suitable derivatives transactions may not be available in all circumstances for risk management or other purposes. There is no assurance that the Portfolio will engage in derivatives transactions at any time or from time to time. The Portfolio’s ability to use derivatives may also be limited by certain regulatory and tax considerations.


18		PIMCO Variable Insurance Trust

Delayed Funding Loans and Revolving Credit Facilities

When-Issued, Delayed Delivery and Forward Commitment Transactions

Investment in Other Investment Companies

Short Sales

Illiquid Securities


Prospectus		19

Loans of Portfolio Securities

Portfolio Turnover

The length of time the Portfolio has held a particular security is not generally a consideration in investment decisions. A change in the securities held by the Portfolio is known as “portfolio turnover.” The Portfolio may engage in frequent and active trading of portfolio securities to achieve its investment objective, particularly during periods of volatile market movements. High portfolio turnover (e.g., over 100%) involves correspondingly greater expenses to the Portfolio, including brokerage commissions or dealer mark-ups and other transaction costs on the sale of securities and reinvestments in other securities. The trading costs associated with portfolio turnover may adversely effect the Portfolio’s performance.

Temporary Defensive Positions

Changes in Investment Objectives and Policies

Percentage Investment Limitations

Other Investments and Techniques


20		PIMCO Variable Insurance Trust

Appendix A

Description of Securities Ratings

High Quality Debt Securities are those rated in one of the two highest rating categories (the highest category for commercial pages) or, if unrated, deemed comparable by PIMCO.

Investment Grade Debt Securities are those rated in one of the four highest rating categories, or if unrated deemed comparable by PIMCO.

Following is a description of Moody’s and S&P’s rating categories applicable to fixed income securities.

Moody's Investors Service, Inc.

Corporate and Municipal Bond Ratings


A-1		PIMCO Variable Insurance Trust

Caa: Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest.

Ca: Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings.

C: Bonds which are rated C are the lowest rated class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing.

Corporate Short-Term Debt Ratings

Moody’s employs the following three designations, all judged to be investment grade, to indicate the relative repayment ability of rated issuers:

NOT PRIME: Issuers rated Not Prime do not fall within any of the Prime rating categories.

Standard & Poor's Ratings Services

Corporate and Municipal Bond Ratings

Investment Grade

AAA: Debt rated AAA has the highest rating assigned by Standard & Poor’s. Capacity to pay interest and repay principal is extremely strong.

AA: Debt rated AA has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in small degree.


Prospectus A-2

Speculative Grade

CC: The rating CC is typically applied to debt subordinated to senior debt that is assigned an actual or implied CCC rating.

CI: The rating CI is reserved for income bonds on which no interest is being paid.

Plus (+) or Minus (-): The ratings from AA to CCC may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories.


A-3		PIMCO Variable Insurance Trust

obligations are: securities whose principal or interest return is indexed to equities, commodities, or currencies; certain swaps and options; and interest only and principal only mortgage securities.

The absence of an “r” symbol should not be taken as an indication that an obligation will exhibit no volatility or variability in total return.

N.R.: Not rated.

Commercial Paper Rating Definitions

A-2: Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1.

B: Issues rated B are regarded as having only speculative capacity for timely payment.

C: This rating is assigned to short-term debt obligations with a doubtful capacity for payment.


Prospectus A-4

PIMCO Variable Insurance Trust		INVESTMENT ADVISER AND ADMINISTRATOR PIMCO, 840 Newport Center Drive, Suite 300, Newport Beach, CA 92660 CUSTODIAN State Street Bank & Trust Co., 801 Pennsylvania, Kansas City, MO 64105
		TRANSFER AGENT National Financial Data Services, 330 W. 9th Street, 4th Floor, Kansas City, MO 64105
		INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP, 1055 Broadway, Kansas City, MO 64105
		LEGAL COUNSEL Dechert Price & Rhoads, 1775 Eye Street N.W., Washington, D.C. 20006

You may get free copies of any of these materials, request other information about the Portfolio, or make shareholder inquiries by calling the Trust at 1-800-927-4648 or by writing to:

PIMCO Variable Insurance Trust

840 Newport Center Drive

Suite 300

Newport Beach, CA 92660

Investment Company Act file no. 811-8399

PIMCO Funds

840 Newport Center Drive

Suite 300

Newport Beach, CA 92660


                         PIMCO Variable Insurance Trust

                       Statement of Additional Information

     PIMCO Variable Insurance Trust (the "Trust") is an open-end management
investment company ("mutual fund") currently consisting of thirteen separate
investment portfolios (the "Portfolios"): the PIMCO Money Market Portfolio; the
PIMCO Short-Term Portfolio; the PIMCO Low Duration Portfolio; the PIMCO Real
Return Portfolio; the PIMCO High Yield Portfolio; the PIMCO Total Return
Portfolio; the PIMCO Total Return Portfolio II; the PIMCO Long-Term U.S.
Government Portfolio; the PIMCO Global Bond Portfolio; the PIMCO Foreign Bond
Portfolio; the PIMCO Emerging Markets Bond Portfolio (together, the "Fixed
Income Portfolios"); the PIMCO Strategic Balanced Portfolio; and the PIMCO
StocksPLUS Growth and Income Portfolio.

     Pacific Investment Management Company LLC ("PIMCO" or the "Adviser"), 840
Newport Center Drive, Suite 300, Newport Beach, California 92660, is investment
adviser to the Portfolios.

     Shares of the Portfolios are currently sold to segregated asset accounts
("Separate Accounts") of insurance companies to serve as an investment medium
for variable annuity contracts and variable life insurance policies ("Variable
Contracts"). The Separate Accounts invest in shares of the Portfolios in
accordance with allocation instructions received from owners of the Variable
Contracts ("Variable Contract Owners"). Shares of the Portfolios also may be
sold to qualified pension and retirement plans outside the separate account
context.

     This Statement of Additional Information is not a Prospectus, and should be
used in conjunction with a Prospectus for the Trust. The Portfolios' shares are
offered through a Prospectus dated May 1, 2002 (the "Prospectus"). A copy of the
Prospectus may be obtained free of charge at the address and telephone number
listed below.

          PIMCO Variable Insurance Trust
          840 Newport Center Drive, Suite 300
          Newport Beach, California 92660
          Telephone: (800)927-4648

     The Trust's most recent Annual Report to shareholders, and the financial
statements appearing in the Annual Report, are incorporated by reference into
this Statement of Additional Information. A copy of the Annual Report may be
obtained free of charge at the address and telephone number listed above.

May 1, 2002


                                TABLE OF CONTENTS

                                                                            Page

DESCRIPTION OF THE TRUST......................................................2

INVESTMENT OBJECTIVES AND POLICIES............................................2

   U.S.Government Securities..................................................2
   Municipal Bonds............................................................2
   Mortgage-Related and Other Asset-Backed Securities.........................4
   Loan Participations........................................................9
   Corporate Debt Securities.................................................10
   High Yield Securities ("Junk Bonds")......................................11
   Variable and Floating Rate Securities.....................................11
   Inflation-Indexed Bonds...................................................12
   Event-Linked Bonds........................................................13
   Convertible Securities....................................................13
   Warrants to Purchase Securities...........................................14
   Foreign Securities........................................................14
   Foreign Currency Transactions.............................................17
   Foreign Currency Exchange-Related Securities..............................18
   Borrowing.................................................................19
   Derivative Instruments....................................................21
   Hybrid Instruments........................................................29
   Delayed Funding Loans and Revolving Credit Facilities.....................29
   When-Issued, Delayed Delivery, and Forward Commitment Transactions........30
   Short Sales...............................................................30
   Illiquid Securities.......................................................31
   Loans of Portfolio Securities.............................................31
   Participation on Creditors Committees.....................................31
   Bank Obligations..........................................................32

INVESTMENT RESTRICTIONS......................................................32

   Fundamental Investment Restrictions.......................................32
   Non-Fundamental Investment Restrictions...................................33

MANAGEMENT OF THE TRUST......................................................35

   Trustees and Officers.....................................................35
   Compensation Table........................................................42
   Control Persons and Principal Holders of Securities.......................43
   Investment Adviser........................................................47
   Advisory Agreement........................................................48
   Code of Ethics............................................................49
   Administrator.............................................................50

DISTRIBUTION OF TRUST SHARES.................................................52

   Distributor and Multi-Class Plan..........................................52
   Administrative Services Plan for Administrative Class Shares..............52
   Purchases and Redemptions.................................................54


PORTFOLIO TRANSACTIONS AND BROKERAGE.........................................54

   Investment Decisions......................................................54
   Brokerage and Research Services...........................................55
   Portfolio Turnover........................................................56

NET ASSET VALUE..............................................................56

TAXATION.....................................................................59

   Distributions.............................................................60
   Sales of Shares...........................................................61
   Options, Futures and Forward Contracts, and Swap Agreements...............61
   Short Sales...............................................................62
   Passive Foreign Investment Companies......................................62
   Foreign Currency Transactions.............................................63
   Foreign Taxation..........................................................63
   Original Issue Discount...................................................63
   Inflation-Indexed Bonds...................................................64
   Other Taxation............................................................64

OTHER INFORMATION............................................................65

   Capitalization............................................................65
   Performance Information...................................................65
   Voting Rights.............................................................74
   Custodian.................................................................74
   Independent Accountants...................................................74
   Counsel...................................................................75
   Registration Statement....................................................75
   Financial Statements......................................................75

                            DESCRIPTION OF THE TRUST

     The Trust is a Delaware business trust established under a Trust Instrument
dated October 3, 1997. The Trust is an open-end management investment company
composed of separate portfolios, each of which is treated as a separate
portfolio. Each Portfolio (except the Real Return, Global Bond, Foreign Bond,
and Emerging Markets Bond Portfolios) is diversified, which means that, with
respect to 75% of its total assets, the Portfolio will not invest more than 5%
of its assets in the securities of any single issuer.

                       INVESTMENT OBJECTIVES AND POLICIES

     The investment objectives and general investment policies of each Portfolio
are described in the Prospectus. Additional information concerning the
characteristics of certain of the Portfolios' investments is set forth below.
The Strategic Balanced Portfolio invests all of its assets in the StocksPLUS
Growth and Income and Total Return Portfolios. These Portfolios are referred to
in this Statement of Additional Information as "Underlying Portfolios." By
investing in Underlying Portfolios, the Strategic Balanced Portfolio may have an
indirect investment interest in some or all of the securities and instruments
described below depending upon how its assets are allocated between the
Underlying Portfolios.

U.S. Government Securities

     U.S. Government securities are obligations of and, in certain cases,
guaranteed by, the U.S. Government, its agencies or instrumentalities. The U.S.
Government does not guarantee the net asset value of the Portfolios' shares.
Some U.S. Government securities, such as Treasury bills, notes and bonds, and
securities guaranteed by the Government National Mortgage Association ("GNMA"),
are supported by the full faith and credit of the United States; others, such as
those of the Federal Home Loan Banks, are supported by the right of the issuer
to borrow from the U.S. Treasury; others, such as those of the Federal National
Mortgage Association ("FNMA"), are supported by the discretionary authority of
the U.S. Government to purchase the agency's obligations; and still others, such
as those of the Student Loan Marketing Association, are supported only by the
credit of the instrumentality. U.S. Government securities may include zero
coupon securities, which do not distribute interest on a current basis and tend
to be subject to greater market risk than interest-paying securities of similar
maturities.

Municipal Bonds

     Each Portfolio may invest in securities issued by states, municipalities
and other political subdivisions, agencies, authorities and instrumentalities of
states and multi-state agencies or authorities. The ability of a Portfolio to
invest in securities other than Municipal Bonds is limited by a requirement of
the Internal Revenue Code that at least 50% of the Portfolio's total assets be
invested in Municipal Bonds at the end of each calendar quarter. See "Taxation."

     Municipal Bonds share the attributes of debt/fixed income securities in
general, but are generally issued by states, municipalities and other political
subdivisions, agencies, authorities and instrumentalities of states and
multi-state agencies or authorities.

     The Portfolios may invest in municipal lease obligations. A lease is not a
full faith and credit obligation of the issuer and is usually backed only by the
borrowing government's unsecured pledge to make annual appropriations for lease
payments. There have been challenges to the legality of lease financing in
numerous states, and, from time to time, certain municipalities have considered
not appropriating money for lease payments. In deciding whether to purchase a
lease obligation, the Portfolios will assess the financial condition of the
borrower, the merits of the project, the level of public support for the
project, and the legislative history of lease financing in the state. These
securities may be less readily marketable than other municipals. A Portfolio may
also purchase unrated lease obligations if

                                        2


determined by PIMCO to be of comparable quality to rated securities in which the
Portfolio is permitted to invest.

     The Portfolios may seek to enhance their yield through the purchase of
private placements. These securities are sold through private negotiations,
usually to institutions or mutual Portfolios, and may have resale restrictions.
Their yields are usually higher than comparable public securities to compensate
the investor for their limited marketability. A Portfolio may not invest more
than 15% (10% in the case of the Money Market Portfolio) of its net assets in
illiquid securities, including unmarketable private placements.

     Some longer-term Municipal Bonds give the investor the right to "put" or
sell the security at par (face value) within a specified number of days
following the investor's request - usually one to seven days. This demand
feature enhances a security's liquidity by shortening its effective maturity and
enables it to trade at a price equal to or very close to par. If a demand
feature terminates prior to being exercised, a Portfolio would hold the
longer-term security, which could experience substantially more volatility.

     The Portfolios may invest in municipal warrants, which are essentially call
options on Municipal Bonds. In exchange for a premium, they give the purchaser
the right, but not the obligation, to purchase a Municipal Bond in the future. A
Portfolio might purchase a warrant to lock in forward supply in an environment
where the current issuance of bonds is sharply reduced. Like options, warrants
may expire worthless and they may have reduced liquidity. A Portfolio will not
invest more than 5% of its net assets in municipal warrants.

     The Portfolios may invest in Municipal Bonds with credit enhancements such
as letters of credit, municipal bond insurance and Standby Bond Purchase
Agreements ("SBPAs"). Letters of credit that are issued by a third party,
usually a bank, to enhance liquidity and ensure repayment of principal and any
accrued interest if the underlying Municipal Bond should default. Municipal bond
insurance, which is usually purchased by the bond issuer from a private,
nongovernmental insurance company, provides an unconditional and irrevocable
guarantee that the insured bond's principal and interest will be paid when due.
Insurance does not guarantee the price of the bond or the share price of any
Portfolio. The credit rating of an insured bond reflects the credit rating of
the insurer, based on its claims-paying ability. The obligation of a municipal
bond insurance company to pay a claim extends over the life of each insured
bond. Although defaults on insured Municipal Bonds have been low to date and
municipal bond insurers have met their claims, there is no assurance this will
continue. A higher-than-expected default rate could strain the insurer's loss
reserves and adversely affect its ability to pay claims to bondholders. The
number of municipal bond insurers is relatively small, and not all of them have
the highest rating. An SBPA is a liquidity facility provided to pay the purchase
price of bonds that cannot be re-marketed. The obligation of the liquidity
provider (usually a bank) is only to advance Portfolios to purchase tendered
bonds that cannot be remarketed and does not cover principal or interest under
any other circumstances. The liquidity provider's obligations under the SBPA are
usually subject to numerous conditions, including the continued creditworthiness
of the underlying borrower.

     The Portfolios may invest, without limitation, in Residual Interest Bonds,
which are created by dividing the income stream provided by an underlying bond
to create two securities, one short term and one long term. The interest rate on
the short-term component is reset by an index or auction process normally every
seven to 35 days. After income is paid on the short-term securities at current
rates, the residual income goes to the long-term securities. Therefore, rising
short-term interest rates result in lower income for the longer-term portion,
and vice versa. The longer-term bonds can be very volatile and may be less
liquid than other Municipal Bonds of comparable maturity.

     The Portfolios also may invest in participation interests. Participation
interests are various types of securities created by converting fixed rate bonds
into short-term, variable rate certificates. These securities have been
developed in the secondary market to meet the demand for short-term, tax-exempt
securities. The Portfolios will invest only in securities deemed tax-exempt by a
nationally recognized

                                        3


bond counsel, but there is no guarantee the interest will be exempt because the
IRS has not issued a definitive ruling on the matter.

     Municipal Bonds are subject to credit and market risk. Generally, prices of
higher quality issues tend to fluctuate less with changes in market interest
rates than prices of lower quality issues and prices of longer maturity issues
tend to fluctuate more than prices of shorter maturity issues.

     The Portfolios may purchase and sell portfolio investments to take
advantage of changes or anticipated changes in yield relationships, markets or
economic conditions. The Portfolios may also sell Municipal Bonds due to changes
in PIMCO's evaluation of the issuer or cash needs resulting from redemption
requests for Portfolio shares. The secondary market for Municipal Bonds
typically has been less liquid than that for taxable debt/fixed income
securities, and this may affect the Portfolio's ability to sell particular
Municipal Bonds at then-current market prices, especially in periods when other
investors are attempting to sell the same securities.

     Prices and yields on Municipal Bonds are dependent on a variety of factors,
including general money-market conditions, the financial condition of the
issuer, general conditions of the Municipal Bond market, the size of a
particular offering, the maturity of the obligation and the rating of the issue.
A number of these factors, including the ratings of particular issues, are
subject to change from time to time. Information about the financial condition
of an issuer of Municipal Bonds may not be as extensive as that which is made
available by corporations whose securities are publicly traded.

     Obligations of issuers of Municipal Bonds are subject to the provisions of
bankruptcy, insolvency and other laws, such as the Federal Bankruptcy Reform Act
of 1978, affecting the rights and remedies of creditors. Congress or state
legislatures may seek to extend the time for payment of principal or interest,
or both, or to impose other constraints upon enforcement of such obligations.
There is also the possibility that as a result of litigation or other
conditions, the power or ability of issuers to meet their obligations for the
payment of interest and principal on their Municipal Bonds may be materially
affected or their obligations may be found to be invalid or unenforceable. Such
litigation or conditions may from time to time have the effect of introducing
uncertainties in the market for Municipal Bonds or certain segments thereof, or
of materially affecting the credit risk with respect to particular bonds.
Adverse economic, business, legal or political developments might affect all or
a substantial portion of a Portfolio's Municipal Bonds in the same manner.

     Each Portfolio may purchase custodial receipts representing the right to
receive either the principal amount or the periodic interest payments or both
with respect to specific underlying Municipal Bonds. In a typical custodial
receipt arrangement, an issuer or third party owner of Municipal Bonds deposits
the bonds with a custodian in exchange for two classes of custodial receipts.
The two classes have different characteristics, but, in each case, payments on
the two classes are based on payments received on the underlying Municipal
Bonds. In no event will the aggregate interest paid with respect to the two
classes exceed the interest paid by the underlying Municipal Bond. Custodial
receipts are sold in private placements. The value of a custodial receipt may
fluctuate more than the value of a Municipal Bond of comparable quality and
maturity.

Mortgage-Related and Other Asset-Backed Securities

     Mortgage-related securities are interests in pools of residential or
commercial mortgage loans, including mortgage loans made by savings and loan
institutions, mortgage bankers, commercial banks and others. Pools of mortgage
loans are assembled as securities for sale to investors by various governmental,
government-related and private organizations. See "Mortgage Pass-Through
Securities." The Portfolios may also invest in debt securities which are secured
with collateral consisting of mortgage-related securities (see "Collateralized
Mortgage Obligations"), and in other types of mortgage-related securities.

                                        4


     Mortgage Pass-Through Securities. Interests in pools of mortgage-related
securities differ from other forms of debt securities, which normally provide
for periodic payment of interest in fixed amounts with principal payments at
maturity or specified call dates. Instead, these securities provide a monthly
payment which consists of both interest and principal payments. In effect, these
payments are a "pass-through" of the monthly payments made by the individual
borrowers on their residential or commercial mortgage loans, net of any fees
paid to the issuer or guarantor of such securities. Additional payments are
caused by repayments of principal resulting from the sale of the underlying
property, refinancing or foreclosure, net of fees or costs which may be
incurred. Some mortgage-related securities (such as securities issued by GNMA)
are described as "modified pass-through." These securities entitle the holder to
receive all interest and principal payments owed on the mortgage pool, net of
certain fees, at the scheduled payment dates regardless of whether or not the
mortgagor actually makes the payment.

     The rate of prepayments on underlying mortgages will affect the price and
volatility of a mortgage-related security, and may have the effect of shortening
or extending the effective maturity of the security beyond what was anticipated
at the time of purchase. To the extent that unanticipated rates of prepayment on
underlying mortgages increase the effective maturity of a mortgage-related
security, the volatility of such security can be expected to increase.

     The principal governmental guarantor of mortgage-related securities is
GNMA. GNMA is a wholly owned United States Government corporation within the
Department of Housing and Urban Development. GNMA is authorized to guarantee,
with the full faith and credit of the United States Government, the timely
payment of principal and interest on securities issued by institutions approved
by GNMA (such as savings and loan institutions, commercial banks and mortgage
bankers) and backed by pools of mortgages insured by the Federal Housing
Administration (the "FHA"), or guaranteed by the Department of Veterans Affairs
(the "VA").

     Government-related guarantors (i.e., not backed by the full faith and
credit of the United States Government) include the FNMA and the Federal Home
Loan Mortgage Corporation ("FHLMC"). FNMA is a government-sponsored corporation
owned entirely by private stockholders. It is subject to general regulation by
the Secretary of Housing and Urban Development. FNMA purchases conventional
(i.e., not insured or guaranteed by any government agency) residential mortgages
from a list of approved seller/servicers which include state and federally
chartered savings and loan associations, mutual savings banks, commercial banks
and credit unions and mortgage bankers. Pass-through securities issued by FNMA
are guaranteed as to timely payment of principal and interest by FNMA but are
not backed by the full faith and credit of the United States Government. FHLMC
was created by Congress in 1970 for the purpose of increasing the availability
of mortgage credit for residential housing. It is a government-sponsored
corporation formerly owned by the twelve Federal Home Loan Banks and now owned
entirely by private stockholders. FHLMC issues Participation Certificates
("PCs") which represent interests in conventional mortgages from FHLMC's
national portfolio. FHLMC guarantees the timely payment of interest and ultimate
collection of principal, but PCs are not backed by the full faith and credit of
the United States Government.

     Commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers also create
pass-through pools of conventional residential mortgage loans. Such issuers may,
in addition, be the originators and/or servicers of the underlying mortgage
loans as well as the guarantors of the mortgage-related securities. Pools
created by such non-governmental issuers generally offer a higher rate of
interest than government and government-related pools because there are no
direct or indirect government or agency guarantees of payments in the former
pools. However, timely payment of interest and principal of these pools may be
supported by various forms of insurance or guarantees, including individual
loan, title, pool and hazard insurance and letters of credit. The insurance and
guarantees are issued by governmental entities, private insurers and the
mortgage poolers. Such insurance and guarantees and the creditworthiness of the
issuers thereof will be considered in determining whether a mortgage-related
security meets the Trust's investment quality standards. There can be no
assurance that the private insurers or guarantors can meet their obligations

                                        5


under the insurance policies or guarantee arrangements. The Portfolios may buy
mortgage-related securities without insurance or guarantees if, through an
examination of the loan experience and practices of the originator/servicers and
poolers, PIMCO determines that the securities meet the Trust's quality
standards. Although the market for such securities is becoming increasingly
liquid, securities issued by certain private organizations may not be readily
marketable. No Portfolio will purchase mortgage-related securities or any other
assets which in PIMCO's opinion are illiquid if, as a result, more than 15% of
the value of the Portfolio's net assets will be illiquid (10% in the case of the
Money Market Portfolio.)

     Mortgage-backed securities that are issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, are not subject to the
Portfolios' industry concentration restrictions, set forth below under
"Investment Restrictions," by virtue of the exclusion from that test available
to all U.S. Government securities. In the case of privately issued
mortgage-related securities, the Portfolios take the position that
mortgage-related securities do not represent interests in any particular
"industry" or group of industries. The assets underlying such securities may be
represented by a portfolio of first lien residential mortgages (including both
whole mortgage loans and mortgage participation interests) or portfolios of
mortgage pass-through securities issued or guaranteed by GNMA, FNMA or FHLMC.
Mortgage loans underlying a mortgage-related security may in turn be insured or
guaranteed by the FHA or the VA. In the case of private issue mortgage-related
securities whose underlying assets are neither U.S. Government securities nor
U.S. Government-insured mortgages, to the extent that real properties securing
such assets may be located in the same geographical region, the security may be
subject to a greater risk of default than other comparable securities in the
event of adverse economic, political or business developments that may affect
such region and, ultimately, the ability of residential homeowners to make
payments of principal and interest on the underlying mortgages.

     Collateralized Mortgage Obligations (CMOs). A CMO is a hybrid between a
mortgage-backed bond and a mortgage pass-through security. Interest and prepaid
principal on a CMO is paid, in most cases, monthly. CMOs may be collateralized
by whole mortgage loans, but are more typically collateralized by portfolios of
mortgage pass-through securities guaranteed by GNMA, FHLMC, or FNMA, and their
income streams.

     CMOs are structured into multiple classes, each bearing a different stated
maturity. Actual maturity and average life will depend upon the prepayment
experience of the collateral. CMOs provide for a modified form of call
protection through a de facto breakdown of the underlying pool of mortgages
according to how quickly the loans are repaid. Monthly payment of principal
received from the pool of underlying mortgages, including prepayments, is first
returned to investors holding the shortest maturity class. Investors holding the
longer maturity classes receive principal only after the first class has been
retired. An investor is partially guarded against a sooner than desired return
of principal because of the sequential payments.

     In a typical CMO transaction, a corporation ("issuer") issues multiple
series (e.g., A, B, C, Z) of CMO bonds ("Bonds"). Proceeds of the Bond offering
are used to purchase mortgages or mortgage pass-through certificates
("Collateral"). The Collateral is pledged to a third party trustee as security
for the Bonds. Principal and interest payments from the Collateral are used to
pay principal on the Bonds in the order A, B, C, Z. The Series A, B, and C Bonds
all bear current interest. Interest on the Series Z Bond is accrued and added to
principal and a like amount is paid as principal on the Series A, B, or C Bond
currently being paid off. When the Series A, B, and C Bonds are paid in full,
interest and principal on the Series Z Bond begins to be paid currently. With
some CMOs, the issuer serves as a conduit to allow loan originators (primarily
builders or savings and loan associations) to borrow against their loan
portfolios.

     FHLMC Collateralized Mortgage Obligations. FHLMC CMOs are debt obligations
of FHLMC issued in multiple classes having different maturity dates which are
secured by the pledge of a pool of conventional mortgage loans purchased by
FHLMC. Unlike FHLMC PCs, payments of principal and interest on the CMOs are made
semi-annually, as opposed to monthly. The amount of principal payable on each
semiannual payment date is determined in accordance with FHLMC's mandatory
sinking fund

                                        6


schedule, which, in turn, is equal to approximately 100% of FHA prepayment
experience applied to the mortgage collateral pool. All sinking fund payments in
the CMOs are allocated to the retirement of the individual classes of bonds in
the order of their stated maturities. Payment of principal on the mortgage loans
in the collateral pool in excess of the amount of FHLMC's minimum sinking fund
obligation for any payment date are paid to the holders of the CMOs as
additional sinking fund payments. Because of the "pass-through" nature of all
principal payments received on the collateral pool in excess of FHLMC's minimum
sinking fund requirement, the rate at which principal of the CMOs is actually
repaid is likely to be such that each class of bonds will be retired in advance
of its scheduled maturity date.

     If collection of principal (including prepayments) on the mortgage loans
during any semi-annual payment period is not sufficient to meet FHLMC's minimum
sinking fund obligation on the next sinking fund payment date, FHLMC agrees to
make up the deficiency from its general funds.

     Criteria for the mortgage loans in the pool backing the FHLMC CMOs are
identical to those of FHLMC PCs. FHLMC has the right to substitute collateral in
the event of delinquencies and/or defaults.

     Commercial Mortgage-Backed Securities include securities that reflect an
interest in, and are secured by, mortgage loans on commercial real property. The
market for commercial mortgage-backed securities developed more recently and in
terms of total outstanding principal amount of issues is relatively small
compared to the market for residential single-family mortgage-backed securities.
Many of the risks of investing in commercial mortgage-backed securities reflect
the risks of investing in the real estate securing the underlying mortgage
loans. These risks reflect the effects of local and other economic conditions on
real estate markets, the ability of tenants to make loan payments, and the
ability of a property to attract and retain tenants. Commercial mortgage-backed
securities may be less liquid and exhibit greater price volatility than other
types of mortgage- or asset-backed securities.

     Other Mortgage-Related Securities. Other mortgage-related securities
include securities other than those described above that directly or indirectly
represent a participation in, or are secured by and payable from, mortgage loans
on real property, including mortgage dollar rolls, CMO residuals or stripped
mortgage-backed securities ("SMBS"). Other mortgage-related securities may be
equity or debt securities issued by agencies or instrumentalities of the U.S.
Government or by private originators of, or investors in, mortgage loans,
including savings and loan associations, homebuilders, mortgage banks,
commercial banks, investment banks, partnerships, trusts and special purpose
entities of the foregoing.

     CMO Residuals. CMO residuals are mortgage securities issued by agencies or
instrumentalities of the U.S. Government or by private originators of, or
investors in, mortgage loans, including savings and loan associations,
homebuilders, mortgage banks, commercial banks, investment banks and special
purpose entities of the foregoing.

     The cash flow generated by the mortgage assets underlying a series of CMOs
is applied first to make required payments of principal and interest on the CMOs
and second to pay the related administrative expenses of the issuer. The
residual in a CMO structure generally represents the interest in any excess cash
flow remaining after making the foregoing payments. Each payment of such excess
cash flow to a holder of the related CMO residual represents income and/or a
return of capital. The amount of residual cash flow resulting from a CMO will
depend on, among other things, the characteristics of the mortgage assets, the
coupon rate of each class of CMO, prevailing interest rates, the amount of
administrative expenses and the prepayment experience on the mortgage assets. In
particular, the yield to maturity on CMO residuals is extremely sensitive to
prepayments on the related underlying mortgage assets, in the same manner as an
interest-only ("IO") class of stripped mortgage-backed securities. See "Stripped
Mortgage-Backed Securities." In addition, if a series of a CMO includes a class
that bears interest at an adjustable rate, the yield to maturity on the related
CMO residual will also be extremely sensitive to changes in the level of the
index upon which interest rate adjustments are based. As described below with
respect to stripped mortgage-backed securities, in certain circumstances a
Portfolio may fail to recoup fully its initial investment in a CMO residual.

                                        7


     CMO residuals are generally purchased and sold by institutional investors
through several investment banking firms acting as brokers or dealers. The CMO
residual market has only very recently developed and CMO residuals currently may
not have the liquidity of other more established securities trading in other
markets. Transactions in CMO residuals are generally completed only after
careful review of the characteristics of the securities in question. In
addition, CMO residuals may, or pursuant to an exemption therefrom, may not have
been registered under the Securities Act of 1933, as amended (the "1933 Act").
CMO residuals, whether or not registered under the 1933 Act, may be subject to
certain restrictions on transferability, and may be deemed "illiquid" and
subject to a Portfolio's limitations on investment in illiquid securities.

     Stripped Mortgage-Backed Securities. SMBS are derivative multi-class
mortgage securities. SMBS may be issued by agencies or instrumentalities of the
U.S. Government, or by private originators of, or investors in, mortgage loans,
including savings and loan associations, mortgage banks, commercial banks,
investment banks and special purpose entities of the foregoing.

     SMBS are usually structured with two classes that receive different
proportions of the interest and principal distributions on a pool of mortgage
assets. A common type of SMBS will have one class receiving some of the interest
and most of the principal from the mortgage assets, while the other class will
receive most of the interest and the remainder of the principal. In the most
extreme case, one class will receive all of the interest (the "IO" class), while
the other class will receive all of the principal (the principal-only or "PO"
class). The yield to maturity on an IO class is extremely sensitive to the rate
of principal payments (including prepayments) on the related underlying mortgage
assets, and a rapid rate of principal payments may have a material adverse
effect on a Portfolio's yield to maturity from these securities. If the
underlying mortgage assets experience greater than anticipated prepayments of
principal, a Portfolio may fail to recoup some or all of its initial investment
in these securities even if the security is in one of the highest rating
categories. The Portfolios have adopted a policy under which no Portfolio will
invest more than 5% of its net assets in any combination of IO, PO, or inverse
floater securities.

     Although SMBS are purchased and sold by institutional investors through
several investment banking firms acting as brokers or dealers, these securities
were only recently developed. As a result, established trading markets have not
yet developed and, accordingly, these securities may be deemed "illiquid" and
subject to a Portfolio's limitations on investment in illiquid securities.

     Other Asset-Backed Securities. Similarly, PIMCO expects that other
asset-backed securities (unrelated to mortgage loans) will be offered to
investors in the future. Several types of asset-backed securities have already
been offered to investors, including Certificates for Automobile Receivables(SM)
("CARS(SM)"). CARS(SM) represent undivided fractional interests in a trust whose
assets consist of a pool of motor vehicle retail installment sales contracts and
security interests in the vehicles securing the contracts. Payments of principal
and interest on CARS(SM) are passed through monthly to certificate holders, and
are guaranteed up to certain amounts and for a certain time period by a letter
of credit issued by a financial institution unaffiliated with the trustee or
originator of the trust. An investor's return on CARS(SM) may be affected by
early prepayment of principal on the underlying vehicle sales contracts. If the
letter of credit is exhausted, the trust may be prevented from realizing the
full amount due on a sales contract because of state law requirements and
restrictions relating to foreclosure sales of vehicles and the obtaining of
deficiency judgments following such sales or because of depreciation, damage or
loss of a vehicle, the application of federal and state bankruptcy and
insolvency laws, or other factors. As a result, certificate holders may
experience delays in payments or losses if the letter of credit is exhausted.

     Consistent with a Portfolio's investment objectives and policies, PIMCO
also may invest in other types of asset-backed securities.

                                        8


Loan Participations

     Each Portfolio may purchase participations in commercial loans. Such
indebtedness may be secured or unsecured. Loan participations typically
represent direct participation in a loan to a corporate borrower, and generally
are offered by banks or other financial institutions or lending syndicates. The
Portfolios may participate in such syndications, or can buy part of a loan,
becoming a part lender. When purchasing loan participations, a Portfolio assumes
the credit risk associated with the corporate borrower and may assume the credit
risk associated with an interposed bank or other financial intermediary. The
participation interests in which a Portfolio intends to invest may not be rated
by any nationally recognized rating service.

     A loan is often administered by an agent bank acting as agent for all
holders. The agent bank administers the terms of the loan, as specified in the
loan agreement. In addition, the agent bank is normally responsible for the
collection of principal and interest payments from the corporate borrower and
the apportionment of these payments to the credit of all institutions which are
parties to the loan agreement. Unless, under the terms of the loan or other
indebtedness, a Portfolio has direct recourse against the corporate borrower,
the Portfolio may have to rely on the agent bank or other financial intermediary
to apply appropriate credit remedies against a corporate borrower.

     A financial institution's employment as agent bank might be terminated in
the event that it fails to observe a requisite standard of care or becomes
insolvent. A successor agent bank would generally be appointed to replace the
terminated agent bank, and assets held by the agent bank under the loan
agreement should remain available to holders of such indebtedness. However, if
assets held by the agent bank for the benefit of a Portfolio were determined to
be subject to the claims of the agent bank's general creditors, the Portfolio
might incur certain costs and delays in realizing payment on a loan or loan
participation and could suffer a loss of principal and/or interest. In
situations involving other interposed financial institutions (e.g., an insurance
company or governmental agency) similar risks may arise.

     Purchasers of loans and other forms of direct indebtedness depend primarily
upon the creditworthiness of the corporate borrower for payment of principal and
interest. If a Portfolio does not receive scheduled interest or principal
payments on such indebtedness, the Portfolio's share price and yield could be
adversely affected. Loans that are fully secured offer a Portfolio more
protection than an unsecured loan in the event of non-payment of scheduled
interest or principal. However, there is no assurance that the liquidation of
collateral from a secured loan would satisfy the corporate borrower's
obligation, or that the collateral can be liquidated.

     The Portfolios may invest in loan participations with credit quality
comparable to that of issuers of its securities investments. Indebtedness of
companies whose creditworthiness is poor involves substantially greater risks,
and may be highly speculative. Some companies may never pay off their
indebtedness, or may pay only a small fraction of the amount owed. Consequently,
when investing in indebtedness of companies with poor credit, a Portfolio bears
a substantial risk of losing the entire amount invested.

     Each Portfolio limits the amount of its total assets that it will invest in
any one issuer or in issuers within the same industry (see "Investment
Restrictions"). For purposes of these limits, a Portfolio generally will treat
the corporate borrower as the "issuer" of indebtedness held by the Portfolio. In
the case of loan participations where a bank or other lending institution serves
as a financial intermediary between a Portfolio and the corporate borrower, if
the participation does not shift to the Portfolio the direct debtor-creditor
relationship with the corporate borrower, Securities and Exchange Commission
("SEC") interpretations require the Portfolio to treat both the lending bank or
other lending institution and the corporate borrower as "issuers" for the
purposes of determining whether the Portfolio has invested more than 5% of its
total assets in a single issuer. Treating a financial intermediary as an issuer
of indebtedness may restrict a Portfolios' ability to invest in indebtedness
related to a single financial

                                        9


intermediary, or a group of intermediaries engaged in the same industry, even if
the underlying borrowers represent many different companies and industries.

     Loans and other types of direct indebtedness may not be readily marketable
and may be subject to restrictions on resale. In some cases, negotiations
involved in disposing of indebtedness may require weeks to complete.
Consequently, some indebtedness may be difficult or impossible to dispose of
readily at what PIMCO believes to be a fair price. In addition, valuation of
illiquid indebtedness involves a greater degree of judgment in determining a
Portfolio's net asset value than if that value were based on available market
quotations, and could result in significant variations in the Portfolio's daily
share price. At the same time, some loan interests are traded among certain
financial institutions and accordingly may be deemed liquid. As the market for
different types of indebtedness develops, the liquidity of these instruments is
expected to improve. In addition, the Portfolios currently intend to treat
indebtedness for which there is no readily available market as illiquid for
purposes of the Portfolios' limitation on illiquid investments. Investments in
loan participations are considered to be debt obligations for purposes of the
Trust's investment restriction relating to the lending of funds or assets by a
Portfolio.

     Investments in loans through a direct assignment of the financial
institution's interests with respect to the loan may involve additional risks to
the Portfolios. For example, if a loan is foreclosed, a Portfolio could become
part owner of any collateral, and would bear the costs and liabilities
associated with owning and disposing of the collateral. In addition, it is
conceivable that under emerging legal theories of lender liability, a Portfolio
could be held liable as co-lender. It is unclear whether loans and other forms
of direct indebtedness offer securities law protections against fraud and
misrepresentation. In the absence of definitive regulatory guidance, the
Portfolios rely on PIMCO's research in an attempt to avoid situations where
fraud or misrepresentation could adversely affect the Portfolios.

Corporate Debt Securities

     A Portfolio's investments in U.S. dollar or foreign currency-denominated
corporate debt securities of domestic or foreign issuers are limited to
corporate debt securities (corporate bonds, debentures, notes and other similar
corporate debt instruments, including convertible securities) which meet the
minimum ratings criteria set forth for the Portfolio, or, if unrated, are in
PIMCO's opinion comparable in quality to corporate debt securities in which the
Portfolio may invest. Corporate income-producing securities may include forms of
preferred or preference stock. The rate of interest on a corporate debt security
may be fixed, floating or variable, and may vary inversely with respect to a
reference rate. The rate of return or return of principal on some debt
obligations may be linked or indexed to the level of exchange rates between the
U.S. dollar and a foreign currency or currencies. Debt securities may be
acquired with warrants attached.

     Securities rated Baa and BBB are the lowest which are considered
"investment grade" obligations. Moody's Investors Service, Inc. ("Moody's")
describes securities rated Baa as "medium-grade" obligations; they are "neither
highly protected nor poorly secured . . . [i]nterest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well." Standard & Poor's Ratings Services ("S&P")
describes securities rated BBB as "regarded as having an adequate capacity to
pay interest and repay principal . . . [w]hereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal .
.. . than in higher rated categories." For a discussion of securities rated below
investment grade, see "High Yield Securities ("Junk Bonds")" below.

                                       10


High Yield Securities ("Junk Bonds")

     Investments in securities rated below investment grade that are eligible
for purchase by certain of the Portfolios and in particular, by the High Yield,
and Emerging Markets Bond Portfolios, are described as "speculative" by both
Moody's and S&P. Investment in lower rated corporate debt securities ("high
yield securities" or "junk bonds") generally provides greater income and
increased opportunity for capital appreciation than investments in higher
quality securities, but they also typically entail greater price volatility and
principal and income risk. These high yield securities are regarded as
predominantly speculative with respect to the issuer's continuing ability to
meet principal and interest payments. Analysis of the creditworthiness of
issuers of debt securities that are high yield may be more complex than for
issuers of higher quality debt securities.

     High yield securities may be more susceptible to real or perceived adverse
economic and competitive industry conditions than investment grade securities.
The prices of high yield securities have been found to be less sensitive to
interest-rate changes than higher-rated investments, but more sensitive to
adverse economic downturns or individual corporate developments. A projection of
an economic downturn or of a period of rising interest rates, for example, could
cause a decline in high yield security prices because the advent of a recession
could lessen the ability of a highly leveraged company to make principal and
interest payments on its debt securities. If an issuer of high yield securities
defaults, in addition to risking payment of all or a portion of interest and
principal, the Portfolios investing in such securities may incur additional
expenses to seek recovery. In the case of high yield securities structured as
zero-coupon or pay-in-kind securities, their market prices are affected to a
greater extent by interest rate changes, and therefore tend to be more volatile
than securities which pay interest periodically and in cash. PIMCO seeks to
reduce these risks through diversification, credit analysis and attention to
current developments and trends in both the economy and financial markets.

     The secondary market on which high yield securities are traded may be less
liquid than the market for higher grade securities. Less liquidity in the
secondary trading market could adversely affect the price at which the
Portfolios could sell a high yield security, and could adversely affect the
daily net asset value of the shares. Adverse publicity and investor perceptions,
whether or not based on fundamental analysis, may decrease the values and
liquidity of high yield securities, especially in a thinly-traded market. When
secondary markets for high yield securities are less liquid than the market for
higher grade securities, it may be more difficult to value the securities
because such valuation may require more research, and elements of judgment may
play a greater role in the valuation because there is less reliable, objective
data available. PIMCO seeks to minimize the risks of investing in all securities
through diversification, in-depth credit analysis and attention to current
developments in interest rates and market conditions.

     The use of credit ratings as the sole method of evaluating high yield
securities can involve certain risks. For example, credit ratings evaluate the
safety of principal and interest payments, not the market value risk of high
yield securities. Also, credit rating agencies may fail to change credit ratings
in a timely fashion to reflect events since the security was last rated. PIMCO
does not rely solely on credit ratings when selecting securities for the
Portfolio, and develops its own independent analysis of issuer credit quality.
If a credit rating agency changes the rating of a portfolio security held by a
Portfolio, the Portfolio may retain the portfolio security if PIMCO deems it in
the best interest of shareholders.

Variable and Floating Rate Securities

     Variable and floating rate securities provide for a periodic adjustment in
the interest rate paid on the obligations. The terms of such obligations must
provide that interest rates are adjusted periodically based upon an interest
rate adjustment index as provided in the respective obligations. The adjustment
intervals may be regular, and range from daily up to annually, or may be event
based, such as based on a change in the prime rate. The Money Market Portfolio
may invest in a variable rate security having a

                                       11


stated maturity in excess of 397 calendar days if the interest rate will be
adjusted and the Portfolio may demand payment of principal from the issuer
within that period.

     Each of the Fixed Income Portfolios may engage in floating rate debt
instruments ("floaters") and (except for the Money Market Portfolio) credit
spread trades. The interest rate on a floater is a variable rate which is tied
to another interest rate, such as a money-market index or Treasury bill rate.
The interest rate on a floater resets periodically, typically every six months.
While, because of the interest rate reset feature, floaters provide a Portfolio
with a certain degree of protection against rises in interest rates, a Portfolio
will participate in any declines in interest rates as well. A credit spread
trade is an investment position relating to a difference in the prices or
interest rates of two securities or currencies, where the value of the
investment position is determined by movements in the difference between the
prices or interest rates, as the case may be, of the respective securities or
currencies.

     Each of the Fixed Income Portfolios (except for the Money Market Portfolio)
may also invest in inverse floating rate debt instruments ("inverse floaters").
The interest rate on an inverse floater resets in the opposite direction from
the market rate of interest to which the inverse floater is indexed. An inverse
floating rate security may exhibit greater price volatility than a fixed rate
obligation of similar credit quality. The Portfolios have adopted a policy under
which no Portfolio will invest more than 5% of its net assets in any combination
of inverse floater, interest only ("IO"), or principal only ("PO") securities.
See "Mortgage-Related and Other Asset-Backed Securities" for a discussion of IOs
and POs.

Inflation-Indexed Bonds

     Inflation-indexed bonds are fixed income securities whose principal value
is periodically adjusted according to the rate of inflation. Two structures are
common. The U.S. Treasury and some other issuers use a structure that accrues
inflation into the principal value of the bond. Most other issuers pay out the
CPI accruals as part of a semiannual coupon.

     Inflation-indexed securities issued by the U.S. Treasury have maturities of
five, ten or thirty years, although it is possible that securities with other
maturities will be issued in the future. The U.S. Treasury securities pay
interest on a semi-annual basis, equal to a fixed percentage of the
inflation-adjusted principal amount. For example, if a Portfolio purchased an
inflation-indexed bond with a par value of $1,000 and a 3% real rate of return
coupon (payable 1.5% semi-annually), and inflation over the first six months
were 1%, the mid-year par value of the bond would be $1,010 and the first
semi-annual interest payment would be $15.15 ($1,010 times 1.5%). If inflation
during the second half of the year resulted in the whole years' inflation
equaling 3%, the end-of-year par value of the bond would be $1,030 and the
second semi- annual interest payment would be $15.45 ($1,030 times 1.5%).

     If the periodic adjustment rate measuring inflation falls, the principal
value of inflation-indexed bonds will be adjusted downward, and consequently the
interest payable on these securities (calculated with respect to a smaller
principal amount) will be reduced. Repayment of the original bond principal upon
maturity (as adjusted for inflation) is guaranteed in the case of U.S. Treasury
inflation-indexed bonds, even during a period of deflation. However, the current
market value of the bonds is not guaranteed, and will fluctuate. The Portfolios
may also invest in other inflation related bonds which may or may not provide a
similar guarantee. If a guarantee of principal is not provided, the adjusted
principal value of the bond repaid at maturity may be less than the original
principal.

     The value of inflation-indexed bonds is expected to change in response to
changes in real interest rates. Real interest rates in turn are tied to the
relationship between nominal interest rates and the rate of inflation.
Therefore, if inflation were to rise at a faster rate than nominal interest
rates, real interest rates might decline, leading to an increase in value of
inflation-indexed bonds. In contrast, if nominal interest rates increased at a
faster rate than inflation, real interest rates might rise, leading to a
decrease in value of inflation-indexed bonds.

                                       12


     While these securities are expected to be protected from long-term
inflationary trends, short-term increases in inflation may lead to a decline in
value. If interest rates rise due to reasons other than inflation (for example,
due to changes in currency exchange rates), investors in these securities may
not be protected to the extent that the increase is not reflected in the bond's
inflation measure.

     The periodic adjustment of U.S. inflation-indexed bonds is tied to the
Consumer Price Index for Urban Consumers ("CPI-U"), which is calculated monthly
by the U.S. Bureau of Labor Statistics. The CPI-U is a measurement of changes in
the cost of living, made up of components such as housing, food, transportation
and energy. Inflation-indexed bonds issued by a foreign government are generally
adjusted to reflect a comparable inflation index, calculated by that government.
There can be no assurance that the CPI-U or any foreign inflation index will
accurately measure the real rate of inflation in the prices of goods and
services. Moreover, there can be no assurance that the rate of inflation in a
foreign country will be correlated to the rate of inflation in the United
States.

     Any increase in the principal amount of an inflation-indexed bond will be
considered taxable ordinary income, even though investors do not receive their
principal until maturity.

Event-Linked Bonds

     Each of the Portfolios (except the Money Market Portfolio) may invest in
"event-linked bonds." Event-linked bonds are fixed income securities, for which
the return of principal and payment of interest is contingent on the
non-occurrence of a specific "trigger" event, such as a hurricane, earthquake.,
or other physical or weather-related phenomenon. They may be issued by
government agencies, insurance companies, reinsurers, special purpose
corporations or other on-shore or off-shore entities. If a trigger event causes
losses exceeding a specific amount in the geographic region and time period
specified in a bond, a Portfolio investing in the bond may lose a portion or all
of its principal invested in the bond. If no trigger event occurs, the Portfolio
will recover its principal plus interest. For some event-linked bonds, the
trigger event or losses may be based on company-wide losses, index-portfolio
losses, industry indices, or readings of scientific instruments rather than
specified actual losses. Often the event-linked bonds provide for extensions of
maturity that are mandatory, or optional at the discretion of the issuer, in
order to process and audit loss claims in those cases where a trigger event has,
or possibly has, occurred. In addition to the specified trigger events,
event-linked bonds may also expose the Portfolio to certain unanticipated risks
including but not limited to issuer (credit) default, adverse regulatory or
jurisdictional interpretations, and adverse tax consequences.

     Event-linked bonds are a relatively new type of financial instrument. As
such, there is no significant trading history of these securities, and there can
be no assurance that a liquid market in these instruments will develop. See
"Illiquid Securities" below. Lack of a liquid market may impose the risk of
higher transaction costs and the possibility that a Portfolio may be forced to
liquidate positions when it would not be advantageous to do so. Event-linked
bonds are typically rated, and a Portfolio will only invest in catastrophe bonds
that meet the credit quality requirements for the Portfolio.

Convertible Securities

     Each Portfolio may invest in convertible securities, which may offer higher
income than the common stocks into which they are convertible.

     A convertible debt security is a bond, debenture, note, or other security
that entitles the holder to acquire common stock or other equity securities of
the same or a different issuer. A convertible security generally entitles the
holder to receive interest paid or accrued until the convertible security
matures or is redeemed, converted or exchanged. Before conversion, convertible
securities have characteristics similar to non-convertible debt securities.
Convertible securities rank senior to common stock in a corporation's capital
structure and, therefore, generally entail less risk than the corporation's
common stock, although the

                                       13


extent to which such risk is reduced depends in large measure upon the degree to
which the convertible security sells above its value as a fixed income security.

     Because of the conversion feature, the price of the convertible security
will normally fluctuate in some proportion to changes in the price of the
underlying asset, and as such is subject to risks relating to the activities of
the issuer and/or general market and economic conditions. The income component
of a convertible security may tend to cushion the security against declines in
the price of the underlying asset. However, the income component of convertible
securities causes fluctuations based upon changes in interest rates and the
credit quality of the issuer. In addition, convertible securities are often
lower-rated securities.

     A convertible security may be subject to redemption at the option of the
issuer at a predetermined price. If a convertible security held by a Portfolio
is called for redemption, the Portfolio would be required to permit the issuer
to redeem the security and convert it to underlying common stock, or would sell
the convertible security to a third party, which may have an adverse effect on
the Portfolio's ability to achieve its investment objective. A Portfolio
generally would invest in convertible securities for their favorable price
characteristics and total return potential and would normally not exercise an
option to convert unless the security is called and conversion is forced.

Warrants to Purchase Securities

     The Portfolios may invest in or acquire warrants to purchase equity or
fixed income securities. Bonds with warrants attached to purchase equity
securities have many characteristics of convertible bonds and their prices may,
to some degree, reflect the performance of the underlying stock. Bonds also may
be issued with warrants attached to purchase additional fixed income securities
at the same coupon rate. A decline in interest rates would permit a Portfolio to
buy additional bonds at the favorable rate or to sell the warrants at a profit.
If interest rates rise, the warrants would generally expire with no value.

     A Portfolio will not invest more than 5% of its net assets, valued at the
lower of cost or market, in warrants to purchase securities. Warrants acquired
in units or attached to securities will be deemed without value for purposes of
this restriction.

Foreign Securities

     The Fixed Income Portfolios (except the Total Return II and Long-Term U.S.
Government Portfolios) and the Strategic Balanced and StocksPLUS Growth and
Income Portfolios may invest in corporate debt securities of foreign issuers
(including preferred or preference stock), certain foreign bank obligations (see
"Bank Obligations") and U.S. dollar- or foreign currency-denominated obligations
of foreign governments or their subdivisions, agencies and instrumentalities,
international agencies and supranational entities. The Money Market Portfolio
may invest in securities of foreign issuers only if they are U.S.
dollar-denominated.

     Except for the Emerging Markets Bond Portfolio, each of the Portfolios will
concentrate its investments in securities of issuers based in developed
countries. However, the Short-Term and Low Duration Portfolios may each invest
up to 5% of its assets in securities of issuers based in the emerging market
countries in which the Emerging Markets Bond Portfolio may invest, and each of
the remaining Fixed Income Portfolios that may invest in foreign securities may
invest up to 10% of its assets in such securities.

     Securities traded in certain emerging market countries, including the
emerging market countries in Eastern Europe, may be subject to risks in addition
to risks typically posed by international investing due to the inexperience of
financial intermediaries, the lack of modern technology, and the lack of a
sufficient capital base to expand business operations. A number of emerging
market countries restrict, to varying degrees, foreign investment in securities.
Repatriation of investment income, capital, and the

                                       14


proceeds of sales by foreign investors may require governmental registration
and/or approval in some emerging market countries. A number of the currencies of
emerging market countries have experienced significant declines against the U.S.
dollar in recent years, and devaluation may occur after investments in these
currencies by a Portfolio. Inflation and rapid fluctuations in inflation rates
have had, and may continue to have, negative effects on the economies and
securities markets of certain emerging market countries. Many of the emerging
securities markets are relatively small, have low trading volumes, suffer
periods of relative illiquidity, and are characterized by significant price
volatility. There is a risk in emerging market countries that a future economic
or political crisis could lead to price controls, forced mergers of companies,
expropriation or confiscatory taxation, seizure, nationalization, or creation of
government monopolies, any of which may have a detrimental effect on a
Portfolio's investment.

     Additional risks of investing in emerging market countries may include:
currency exchange rate fluctuations; greater social, economic and political
uncertainty and instability (including the risk of war); more substantial
governmental involvement in the economy; less governmental supervision and
regulation of the securities markets and participants in those markets;
unavailability of currency hedging techniques in certain emerging market
countries; the fact that companies in emerging market countries may be newly
organized and may be smaller and less seasoned companies; the difference in, or
lack of, auditing and financial reporting standards, which may result in
unavailability of material information about issuers; the risk that it may be
more difficult to obtain and/or enforce a judgment in a court outside the United
States; and significantly smaller market capitalization of securities markets.
Emerging securities markets may have different clearance and settlement
procedures, which may be unable to keep pace with the volume of securities
transactions or otherwise make it difficult to engage in such transactions.
Settlement problems may cause a Portfolio to miss attractive investment
opportunities, hold a portion of its assets in cash pending investment, or delay
in disposing of a portfolio security. Such a delay could result in possible
liability to a purchaser of the security. Any change in the leadership or
policies of Eastern European countries, or the countries that exercise a
significant influence over those countries, may halt the expansion of or reverse
the liberalization of foreign investment policies now occurring and adversely
affect existing investment opportunities. Additionally, former Communist regimes
of a number of Eastern European countries previously expropriated a large amount
of property, the claims on which have not been entirely settled. There can be no
assurance that a Portfolio's investments in Eastern Europe will not also be
expropriated, nationalized or otherwise confiscated.

     Each of the Fixed Income Portfolios (except the Total Return II and
Long-Term U.S. Government Portfolios) may invest in Brady Bonds. Brady Bonds are
securities created through the exchange of existing commercial bank loans to
sovereign entities for new obligations in connection with debt restructurings
under a debt restructuring plan introduced by former U.S. Secretary of the
Treasury, Nicholas F. Brady (the "Brady Plan"). Brady Plan debt restructurings
have been implemented in a number of countries, including: Argentina, Bolivia,
Bulgaria, Costa Rica, the Dominican Republic, Ecuador, Jordan, Mexico, Niger,
Nigeria, Panama, Peru, the Philippines, Poland, Uruguay, Venezuela, and Vietnam.
In addition, Brazil has concluded a Brady-like plan. It is expected that other
countries will undertake a Brady Plan in the future, including Panama and Peru.

     Brady Bonds may be collateralized or uncollateralized, are issued in
various currencies (primarily the U.S. dollar) and are actively traded in the
over-the-counter secondary market. Brady Bonds are not considered to be U.S.
Government securities. U.S. dollar-denominated, collateralized Brady Bonds,
which may be fixed rate par bonds or floating rate discount bonds, are generally
collateralized in full as to principal by U.S. Treasury zero coupon bonds having
the same maturity as the Brady Bonds. Interest payments on these Brady Bonds
generally are collateralized on a one-year or longer rolling-forward basis by
cash or securities in an amount that, in the case of fixed rate bonds, is equal
to at least one year of interest payments or, in the case of floating rate
bonds, initially is equal to at least one year's interest payments based on the
applicable interest rate at that time and is adjusted at regular intervals
thereafter. Certain Brady Bonds are entitled to "value recovery payments" in
certain circumstances, which in effect constitute supplemental interest payments
but generally are not collateralized. Brady Bonds are often viewed as having
three or four valuation components: (i) the collateralized repayment of
principal at final

                                       15


maturity; (ii) the collateralized interest payments; (iii) the uncollateralized
interest payments; and (iv) any uncollateralized repayment of principal at
maturity (these uncollateralized amounts constitute the "residual risk").

     Most Mexican Brady Bonds issued to date have principal repayments at final
maturity fully collateralized by U.S. Treasury zero coupon bonds (or comparable
collateral denominated in other currencies) and interest coupon payments
collateralized on an 18-month rolling-forward basis by funds held in escrow by
an agent for the bondholders. A significant portion of the Venezuelan Brady
Bonds and the Argentine Brady Bonds issued to date have principal repayments at
final maturity collateralized by U.S. Treasury zero coupon bonds (or comparable
collateral denominated in other currencies) and/or interest coupon payments
collateralized on a 14-month (for Venezuela) or 12-month (for Argentina)
rolling-forward basis by securities held by the Federal Reserve Bank of New York
as collateral agent.

     Brady Bonds involve various risk factors, including residual risk and the
history of defaults with respect to commercial bank loans by public and private
entities in countries issuing Brady Bonds. There can be no assurance that Brady
Bonds in which the Portfolios may invest will not be subject to restructuring
arrangements or to requests for new credit, which may cause the Portfolios to
suffer a loss of interest or principal on any of its holdings.

     Investment in sovereign debt can involve a high degree of risk. The
governmental entity that controls the repayment of sovereign debt may not be
able or willing to repay the principal and/or interest when due in accordance
with the terms of the debt. A governmental entity's willingness or ability to
repay principal and interest due in a timely manner may be affected by, among
other factors, its cash flow situation, the extent of its foreign reserves, the
availability of sufficient foreign exchange on the date a payment is due, the
relative size of the debt service burden to the economy as a whole, the
governmental entity's policy toward the International Monetary Fund, and the
political constraints to which a governmental entity may be subject.
Governmental entities may also depend on expected disbursements from foreign
governments, multilateral agencies and others to reduce principal and interest
arrearages on their debt. The commitment on the part of these governments,
agencies and others to make such disbursements may be conditioned on a
governmental entity's implementation of economic reforms and/or economic
performance and the timely service of such debtor's obligations. Failure to
implement such reforms, achieve such levels of economic performance or repay
principal or interest when due may result in the cancellation of such third
parties' commitments to lend funds to the governmental entity, which may further
impair such debtor's ability or willingness to service its debts in a timely
manner. Consequently, governmental entities may default on their sovereign debt.
Holders of sovereign debt (including the Portfolios) may be requested to
participate in the rescheduling of such debt and to extend further loans to
governmental entities. There is no bankruptcy proceeding by which sovereign debt
on which governmental entities have defaulted may be collected in whole or in
part.

     A Portfolio's investments in foreign currency denominated debt obligations
and hedging activities will likely produce a difference between its book income
and its taxable income. This difference may cause a portion of the Portfolio's
income distributions to constitute returns of capital for tax purposes or
require the Portfolio to make distributions exceeding book income to qualify as
a regulated investment company for federal tax purposes.

     The Emerging Markets Bond Portfolio will consider an issuer to be
economically tied to a country with an emerging securities market if (1) the
issuer is organized under the laws of, or maintains its principal place of
business in, the country, (2) its securities are principally traded in the
country's securities markets, or (3) the issuer derived at least half of its
revenues or profits from goods produced or sold, investments made, or services
performed in the country, or has at least half of its assets in that country.

                                       16


Foreign Currency Transactions

     All Portfolios that may invest in foreign currency-denominated securities
also may purchase and sell foreign currency options and foreign currency futures
contracts and related options (see "Derivative Instruments"), and may engage in
foreign currency transactions either on a spot (cash) basis at the rate
prevailing in the currency exchange market at the time or through forward
currency contracts ("forwards") with terms generally of less than one year.
Portfolios may engage in these transactions in order to protect against
uncertainty in the level of future foreign exchange rates in the purchase and
sale of securities. The Portfolios may also use foreign currency options and
foreign currency forward contracts to increase exposure to a foreign currency or
to shift exposure to foreign currency fluctuations from one country to another.

     A forward involves an obligation to purchase or sell a specific currency at
a future date, which may be any fixed number of days from the date of the
contract agreed upon by the parties, at a price set at the time of the contract.
These contracts may be bought or sold to protect a Portfolio against a possible
loss resulting from an adverse change in the relationship between foreign
currencies and the U.S. dollar or to increase exposure to a particular foreign
currency. A Portfolio may use one currency (or a basket of currencies) to hedge
against adverse changes in the value of another currency (or a basket of
currencies) when exchange rates between the two currencies are positively
correlated. Open positions in forwards used for non-hedging purposes will be
covered by the segregation with the Trust's custodian of assets determined to be
liquid by PIMCO in accordance with procedures established by the Board of
Trustees, and are marked to market daily. Although forwards are intended to
minimize the risk of loss due to a decline in the value of the hedged
currencies, at the same time, they tend to limit any potential gain which might
result should the value of such currencies increase. Forwards will be used
primarily to adjust the foreign exchange exposure of each Portfolio with a view
to protecting the outlook, and the Portfolios might be expected to enter into
such contracts under the following circumstances:

     Lock In. When PIMCO desires to lock in the U.S. dollar price on the
purchase or sale of a security denominated in a foreign currency.

     Cross Hedge. If a particular currency is expected to decrease against
another currency, a Portfolio may sell the currency expected to decrease and
purchase a currency which is expected to increase against the currency sold in
an amount approximately equal to some or all of the Portfolio's portfolio
holdings denominated in the currency sold.

     Direct Hedge. If PIMCO wants to a eliminate substantially all of the risk
of owning a particular currency, and/or if PIMCO thinks that a Portfolio can
benefit from price appreciation in a given country's bonds but does not want to
hold the currency, it may employ a direct hedge back into the U.S. dollar. In
either case, a Portfolio would enter into a forward contract to sell the
currency in which a portfolio security is denominated and purchase U.S. dollars
at an exchange rate established at the time it initiated the contract. The cost
of the direct hedge transaction may offset most, if not all, of the yield
advantage offered by the foreign security, but a Portfolio would hope to benefit
from an increase (if any) in value of the bond.

     Proxy Hedge. PIMCO might choose to use a proxy hedge, which may be less
costly than a direct hedge. In this case, a Portfolio, having purchased a
security, will sell a currency whose value is believed to be closely linked to
the currency in which the security is denominated. Interest rates prevailing in
the country whose currency was sold would be expected to be closer to those in
the U.S. and lower than those of securities denominated in the currency of the
original holding. This type of hedging entails greater risk than a direct hedge
because it is dependent on a stable relationship between the two currencies
paired as proxies and the relationships can be very unstable at times.

                                       17


     Costs of Hedging. When a Portfolio purchases a foreign bond with a higher
interest rate than is available on U.S. bonds of a similar maturity, the
additional yield on the foreign bond could be substantially reduced or lost if
the Portfolio were to enter into a direct hedge by selling the foreign currency
and purchasing the U.S. dollar. This is what is known as the "cost" of hedging.
Proxy hedging attempts to reduce this cost through an indirect hedge back to the
U.S. dollar.

     It is important to note that hedging costs are treated as capital
transactions and are not, therefore, deducted from a Portfolio's dividend
distribution and are not reflected in its yield. Instead such costs will, over
time, be reflected in a Portfolio's net asset value per share.

     Tax Consequences of Hedging. Under applicable tax law, the Portfolios may
be required to limit their gains from hedging in foreign currency forwards,
futures, and options. Although the Portfolios are expected to comply with such
limits, the extent to which these limits apply is subject to tax regulations as
yet unissued. Hedging may also result in the application of the marked-to-market
and straddle provisions of the Internal Revenue Code. Those provisions could
result in an increase (or decrease) in the amount of taxable dividends paid by
the Portfolios and could affect whether dividends paid by the Portfolios are
classified as capital gains or ordinary income.

Foreign Currency Exchange-Related Securities

     Foreign currency warrants. Foreign currency warrants such as Currency
Exchange Warrants(SM) ("CEWs(SM)") are warrants which entitle the holder to
receive from their issuer an amount of cash (generally, for warrants issued in
the United States, in U.S. dollars) which is calculated pursuant to a
predetermined formula and based on the exchange rate between a specified foreign
currency and the U.S. dollar as of the exercise date of the warrant. Foreign
currency warrants generally are exercisable upon their issuance and expire as of
a specified date and time. Foreign currency warrants have been issued in
connection with U.S. dollar-denominated debt offerings by major corporate
issuers in an attempt to reduce the foreign currency exchange risk which, from
the point of view of prospective purchasers of the securities, is inherent in
the international fixed-income marketplace. Foreign currency warrants may
attempt to reduce the foreign exchange risk assumed by purchasers of a security
by, for example, providing for a supplemental payment in the event that the U.S.
dollar depreciates against the value of a major foreign currency such as the
Japanese Yen or German Deutschmark. The formula used to determine the amount
payable upon exercise of a foreign currency warrant may make the warrant
worthless unless the applicable foreign currency exchange rate moves in a
particular direction (e.g., unless the U.S. dollar appreciates or depreciates
against the particular foreign currency to which the warrant is linked or
indexed). Foreign currency warrants are severable from the debt obligations with
which they may be offered, and may be listed on exchanges. Foreign currency
warrants may be exercisable only in certain minimum amounts, and an investor
wishing to exercise warrants who possesses less than the minimum number required
for exercise may be required either to sell the warrants or to purchase
additional warrants, thereby incurring additional transaction costs. In the case
of any exercise of warrants, there may be a time delay between the time a holder
of warrants gives instructions to exercise and the time the exchange rate
relating to exercise is determined, during which time the exchange rate could
change significantly, thereby affecting both the market and cash settlement
values of the warrants being exercised. The expiration date of the warrants may
be accelerated if the warrants should be delisted from an exchange or if their
trading should be suspended permanently, which would result in the loss of any
remaining "time value" of the warrants (i.e., the difference between the current
market value and the exercise value of the warrants), and, in the case the
warrants were "out-of-the-money," in a total loss of the purchase price of the
warrants. Warrants are generally unsecured obligations of their issuers and are
not standardized foreign currency options issued by the Options Clearing
Corporation ("OCC"). Unlike foreign currency options issued by OCC, the terms of
foreign exchange warrants generally will not be amended in the event of
governmental or regulatory actions affecting exchange rates or in the event of
the imposition of other regulatory controls affecting the international currency
markets. The initial public offering price of foreign currency warrants is
generally

                                       18


considerably in excess of the price that a commercial user of foreign currencies
might pay in the interbank market for a comparable option involving
significantly larger amounts of foreign currencies. Foreign currency warrants
are subject to significant foreign exchange risk, including risks arising from
complex political or economic factors.

     Principal exchange rate linked securities. Principal exchange rate linked
securities ("PERLs(SM)") are debt obligations the principal on which is payable
at maturity in an amount that may vary based on the exchange rate between the
U.S. dollar and a particular foreign currency at or about that time. The return
on "standard" principal exchange rate linked securities is enhanced if the
foreign currency to which the security is linked appreciates against the U.S.
dollar, and is adversely affected by increases in the foreign exchange value of
the U.S. dollar; "reverse" principal exchange rate linked securities are like
the "standard" securities, except that their return is enhanced by increases in
the value of the U.S. dollar and adversely impacted by increases in the value of
foreign currency. Interest payments on the securities are generally made in U.S.
dollars at rates that reflect the degree of foreign currency risk assumed or
given up by the purchaser of the notes (i.e., at relatively higher interest
rates if the purchaser has assumed some of the foreign exchange risk, or
relatively lower interest rates if the issuer has assumed some of the foreign
exchange risk, based on the expectations of the current market). Principal
exchange rate linked securities may in limited cases be subject to acceleration
of maturity (generally, not without the consent of the holders of the
securities), which may have an adverse impact on the value of the principal
payment to be made at maturity.

     Performance indexed paper. Performance indexed paper ("PIPs(SM)") is U.S.
dollar-denominated commercial paper the yield of which is linked to certain
foreign exchange rate movements. The yield to the investor on performance
indexed paper is established at maturity as a function of spot exchange rates
between the U.S. dollar and a designated currency as of or about that time
(generally, the index maturity two days prior to maturity). The yield to the
investor will be within a range stipulated at the time of purchase of the
obligation, generally with a guaranteed minimum rate of return that is below,
and a potential maximum rate of return that is above, market yields on U.S.
dollar-denominated commercial paper, with both the minimum and maximum rates of
return on the investment corresponding to the minimum and maximum values of the
spot exchange rate two business days prior to maturity.

Borrowing

     Each Portfolio may borrow money to the extent permitted under the
Investment Company Act of 1940 ("1940 Act"), as amended, and as interpreted,
modified or otherwise permitted by regulatory authority having jurisdiction,
from time to time. This means that, in general, a Portfolio may borrow money
from banks for any purpose on a secured basis in an amount up to 1/3 of the
Portfolio's total assets. A Portfolio may also borrow money for temporary
administrative purposes on an unsecured basis in an amount not to exceed 5% of
the Portfolio's total assets.

     Specifically, provisions of the 1940 Act require a Portfolio to maintain
continuous asset coverage (that is, total assets including borrowings, less
liabilities exclusive of borrowings) of 300% of the amount borrowed, with an
exception for borrowings not in excess of 5% of the Portfolio's total assets
made for temporary administrative purposes. Any borrowings for temporary
administrative purposes in excess of 5% of the Portfolio's total assets must
maintain continuous asset coverage. If the 300% asset coverage should decline as
a result of market fluctuations or other reasons, a Portfolio may be required to
sell some of its portfolio holdings within three days to reduce the debt and
restore the 300% asset coverage, even though it may be disadvantageous from an
investment standpoint to sell securities at that time.

     As noted below, a Portfolio also may enter into certain transactions,
including reverse repurchase agreements, mortgage dollar rolls, and
sale-buybacks, that can be viewed as constituting a form of borrowing or
financing transaction by the Portfolio. To the extent a Portfolio covers its
commitment under a reverse repurchase agreement (or economically similar
transaction) by the segregation of assets

                                       19


determined in accordance with procedures adopted by the Trustees, equal in value
to the amount of the Portfolio's commitment to repurchase, such an agreement
will not be considered a "senior security" by the Portfolio and therefore will
not be subject to the 300% asset coverage requirement otherwise applicable to
borrowings by the Portfolios. Borrowing will tend to exaggerate the effect on
net asset value of any increase or decrease in the market value of a Portfolio's
portfolio. Money borrowed will be subject to interest costs which may or may not
be recovered by appreciation of the securities purchased. A Portfolio also may
be required to maintain minimum average balances in connection with such
borrowing or to pay a commitment or other fee to maintain a line of credit;
either of these requirements would increase the cost of borrowing over the
stated interest rate.

     A Portfolio may enter into reverse repurchase agreements, mortgage dollar
rolls, and economically similar transactions. A reverse repurchase agreement
involves the sale of a portfolio-eligible security by a Portfolio, coupled with
its agreement to repurchase the instrument at a specified time and price. Under
a reverse repurchase agreement, the Portfolio continues to receive any principal
and interest payments on the underlying security during the term of the
agreement. The Portfolio typically will segregate assets determined to be liquid
by PIMCO in accordance with procedures established by the Board of Trustees,
equal (on a daily mark-to-market basis) to its obligations under reverse
repurchase agreements. However, reverse repurchase agreements involve the risk
that the market value of securities retained by the Portfolio may decline below
the repurchase price of the securities sold by the Portfolio which it is
obligated to repurchase. To the extent that positions in reverse repurchase
agreements are not covered through the segregation of liquid assets at least
equal to the amount of any forward purchase commitment, such transactions would
be subject to the Portfolios' limitations on borrowings, which would, among
other things, restrict the aggregate of such transactions (plus any other
borrowings) to 1/3 of a Portfolio's total assets.

     A "mortgage dollar roll" is similar to a reverse repurchase agreement in
certain respects. In a "dollar roll" transaction a Portfolio sells a
mortgage-related security, such as a security issued by the Government National
Mortgage Association ("GNMA"), to a dealer and simultaneously agrees to
repurchase a similar security (but not the same security) in the future at a
pre-determined price. A "dollar roll" can be viewed, like a reverse repurchase
agreement, as a collateralized borrowing in which a Portfolio pledges a
mortgage-related security to a dealer to obtain cash. Unlike in the case of
reverse repurchase agreements, the dealer with which a Portfolio enters into a
dollar roll transaction is not obligated to return the same securities as those
originally sold by the Portfolio, but only securities which are "substantially
identical." To be considered "substantially identical," the securities returned
to a Portfolio generally must: (1) be collateralized by the same types of
underlying mortgages; (2) be issued by the same agency and be part of the same
program; (3) have a similar original stated maturity; (4) have identical net
coupon rates; (5) have similar market yields (and therefore price); and (6)
satisfy "good delivery" requirements, meaning that the aggregate principal
amounts of the securities delivered and received back must be within 2.5% of the
initial amount delivered.

     A Portfolio's obligations under a dollar roll agreement must be covered by
segregated liquid assets equal in value to the securities subject to repurchase
by the Portfolio. As with reverse repurchase agreements, to the extent that
positions in dollar roll agreements are not covered by segregated liquid assets
at least equal to the amount of any forward purchase commitment, such
transactions would be subject to the Portfolios' restrictions on borrowings.
Furthermore, because dollar roll transactions may be for terms ranging between
one and six months, dollar roll transactions may be deemed "illiquid" and
subject to a Portfolio's overall limitations on investments in illiquid
securities.

     A Portfolio also may effect simultaneous purchase and sale transactions
that are known as "sale-buybacks". A sale-buyback is similar to a reverse
repurchase agreement, except that in a sale-buyback, the counterparty who
purchases the security is entitled to receive any principal or interest payments
make on the underlying security pending settlement of the Portfolio's repurchase
of the underlying security. A Portfolio's obligations under a sale-buyback
typically would be offset by liquid assets equal in value to the amount of the
Portfolio's forward commitment to repurchase the subject security.

                                       20


Derivative Instruments

     In pursuing their individual objectives the Portfolios (except the Money
Market Portfolio) may, to the extent permitted by their investment objectives
and policies, purchase and sell (write) both put options and call options on
securities, swap agreements, securities indexes, and foreign currencies, and
enter into interest rate, foreign currency and index futures contracts and
purchase and sell options on such futures contracts ("futures options") for
hedging purposes or as part of their overall investment strategies, except that
those Portfolios that may not invest in foreign currency-denominated securities
may not enter into transactions involving currency futures or options. The
Portfolios (except the Money Market and Long-Term U.S. Government Portfolios)
also may purchase and sell foreign currency options for purposes of increasing
exposure to a foreign currency or to shift exposure to foreign currency
fluctuations from one country to another. The Portfolios also may enter into
swap agreements with respect to interest rates and indexes of securities, and to
the extent it may invest in foreign currency-denominated securities, may enter
into swap agreements with respect to foreign currencies. The Portfolios may
invest in structured notes. If other types of financial instruments, including
other types of options, futures contracts, or futures options are traded in the
future, a Portfolio may also use those instruments, provided that the Trustees
determine that their use is consistent with the Portfolio's investment
objective. The value of some derivative instruments in which the Portfolios
invest may be particularly sensitive to changes in prevailing interest rates,
and, like the other investments of the Portfolios, the ability of a Portfolio to
successfully utilize these instruments may depend in part upon the ability of
PIMCO to forecast interest rates and other economic factors correctly. If PIMCO
incorrectly forecasts such factors and has taken positions in derivative
instruments contrary to prevailing market trends, the Portfolios could be
exposed to the risk of loss. The Portfolios might not employ any of the
strategies described below, and no assurance can be given that any strategy used
will succeed. If PIMCO incorrectly forecasts interest rates, market values or
other economic factors in using a derivatives strategy for a Portfolio, the
Portfolio might have been in a better position if it had not entered into the
transaction at all. Also, suitable derivative transactions may not be available
in all circumstances.

     The use of these strategies involves certain special risks, including a
possible imperfect correlation, or even no correlation, between price movements
of derivative instruments and price movements of related investments. While some
strategies involving derivative instruments can reduce the risk of loss, they
can also reduce the opportunity for gain or even result in losses by offsetting
favorable price movements in related investments or otherwise due to the
possible inability of a Portfolio to purchase or sell a portfolio security at a
time that otherwise would be favorable, or the possible need to sell a portfolio
security at a disadvantageous time because the Portfolio is required to maintain
asset coverage or offsetting positions in connection with transactions in
derivative instruments, and the possible inability of a Portfolio to close out
or to liquidate its derivatives positions. In addition, a Portfolio's use of
such instruments may cause the Portfolio to realize higher amounts of short-term
capital gains (generally taxed at ordinary income tax rates) than if it had not
used such instruments.

     Options on Securities, Swap Agreements and Indexes. A Portfolio may, to the
extent specified herein or in the Prospectus, purchase and sell both put and
call options on fixed income or other securities, swap agreements or indexes in
standardized contracts traded on foreign or domestic securities exchanges,
boards of trade, or similar entities, or quoted on NASDAQ or on an
over-the-counter market, and agreements, sometimes called cash puts, which may
accompany the purchase of a new issue of bonds from a dealer.

     An option on a security (or index) is a contract that gives the holder of
the option, in return for a premium, the right to buy from (in the case of a
call) or sell to (in the case of a put) the writer of the option the security
underlying the option (or the cash value of the index) at a specified exercise
price at any time during the term of the option. The writer of an option on a
security has the obligation upon exercise of the option to deliver the
underlying security upon payment of the exercise price or to pay the exercise
price upon delivery of the underlying security. Upon exercise, the writer of an
option on an

                                       21


index is obligated to pay the difference between the cash value of the index and
the exercise price multiplied by the specified multiplier for the index option.
(An index is designed to reflect features of a particular financial or
securities market, a specific group of financial instruments or securities, or
certain economic indicators.)

     A Portfolio will write call options and put options only if they are
"covered." In the case of a call option on a security, the option is "covered"
if the Portfolio owns the security underlying the call or has an absolute and
immediate right to acquire that security without additional cash consideration
(or, if additional cash consideration is required, cash or other assets
determined to be liquid by PIMCO in accordance with procedures established by
the Board of Trustees, in such amount are placed in a segregated account by its
custodian) upon conversion or exchange of other securities held by the
Portfolio. For a call option on an index, the option is covered if the Portfolio
maintains with its custodian assets determined to be liquid by PIMCO in
accordance with procedures established by the Board of Trustees, in an amount
equal to the contract value of the index. A call option is also covered if the
Portfolio holds a call on the same security or index as the call written where
the exercise price of the call held is (i) equal to or less than the exercise
price of the call written, or (ii) greater than the exercise price of the call
written, provided the difference is maintained by the Portfolio in segregated
assets determined to be liquid by PIMCO in accordance with procedures
established by the Board of Trustees, in a segregated account with its
custodian. A put option on a security or an index is "covered" if the Portfolio
segregates assets determined to be liquid by PIMCO in accordance with procedures
established by the Board of Trustees, equal to the exercise price in a
segregated account with its custodian. A put option is also covered if the
Portfolio holds a put on the same security or index as the put written where the
exercise price of the put held is (i) equal to or greater than the exercise
price of the put written, or (ii) less than the exercise price of the put
written, provided the difference is maintained by the Portfolio in segregated
assets determined to be liquid by PIMCO in accordance with procedures
established by the Board of Trustees, in a segregated account with its
custodian.

     If an option written by a Portfolio expires unexercised, the Portfolio
realizes a capital gain equal to the premium received at the time the option was
written. If an option purchased by a Portfolio expires unexercised, the
Portfolio realizes a capital loss equal to the premium paid. Prior to the
earlier of exercise or expiration, an exchange traded option may be closed out
by an offsetting purchase or sale of an option of the same series (type,
exchange, underlying security or index, exercise price, and expiration). There
can be no assurance, however, that a closing purchase or sale transaction can be
effected when the Portfolio desires.

     A Portfolio may sell put or call options it has previously purchased, which
could result in a net gain or loss depending on whether the amount realized on
the sale is more or less than the premium and other transaction costs paid on
the put or call option which is sold. Prior to exercise or expiration, an option
may be closed out by an offsetting purchase or sale of an option of the same
series. A Portfolio will realize a capital gain from a closing purchase
transaction if the cost of the closing option is less than the premium received
from writing the option, or, if it is more, the Portfolio will realize a capital
loss. If the premium received from a closing sale transaction is more than the
premium paid to purchase the option, the Portfolio will realize a capital gain
or, if it is less, the Portfolio will realize a capital loss. The principal
factors affecting the market value of a put or a call option include supply and
demand, interest rates, the current market price of the underlying security or
index in relation to the exercise price of the option, the volatility of the
underlying security or index, and the time remaining until the expiration date.

     The premium paid for a put or call option purchased by a Portfolio is an
asset of the Portfolio. The premium received for an option written by a
Portfolio is recorded as a deferred credit. The value of an option purchased or
written is marked to market daily and is valued at the closing price on the
exchange on which it is traded or, if not traded on an exchange or no closing
price is available, at the mean between the last bid and asked prices.

                                       22


     The Portfolios may write covered straddles consisting of a combination of a
call and a put written on the same underlying security. A straddle will be
covered when sufficient assets are deposited to meet the Portfolios' immediate
obligations. The Portfolios may use the same liquid assets to cover both the
call and put options where the exercise price of the call and put are the same,
or the exercise price of the call is higher than that of the put. In such cases,
the Portfolios will also segregate liquid assets equivalent to the amount, if
any, by which the put is "in the money."

     Risks Associated with Options on Securities and Indexes. There are several
risks associated with transactions in options on securities and on indexes. For
example, there are significant differences between the securities and options
markets that could result in an imperfect correlation between these markets,
causing a given transaction not to achieve its objectives. A decision as to
whether, when and how to use options involves the exercise of skill and
judgment, and even a well-conceived transaction may be unsuccessful to some
degree because of market behavior or unexpected events.

     During the option period, the covered call writer has, in return for the
premium on the option, given up the opportunity to profit from a price increase
in the underlying security above the exercise price, but, as long as its
obligation as a writer continues, has retained the risk of loss should the price
of the underlying security decline. The writer of an option has no control over
the time when it may be required to fulfill its obligation as a writer of the
option. Once an option writer has received an exercise notice, it cannot effect
a closing purchase transaction in order to terminate its obligation under the
option and must deliver the underlying security at the exercise price. If a put
or call option purchased by the Portfolio is not sold when it has remaining
value, and if the market price of the underlying security remains equal to or
greater than the exercise price (in the case of a put), or remains less than or
equal to the exercise price (in the case of a call), the Portfolio will lose its
entire investment in the option. Also, where a put or call option on a
particular security is purchased to hedge against price movements in a related
security, the price of the put or call option may move more or less than the
price of the related security.

     There can be no assurance that a liquid market will exist when a Portfolio
seeks to close out an option position. If a Portfolio were unable to close out
an option that it had purchased on a security, it would have to exercise the
option in order to realize any profit or the option may expire worthless. If a
Portfolio were unable to close out a covered call option that it had written on
a security, it would not be able to sell the underlying security unless the
option expired without exercise. As the writer of a covered call option, a
Portfolio forgoes, during the option's life, the opportunity to profit from
increases in the market value of the security covering the call option above the
sum of the premium and the exercise price of the call.

     If trading were suspended in an option purchased by a Portfolio, the
Portfolio would not be able to close out the option. If restrictions on exercise
were imposed, the Portfolio might be unable to exercise an option it has
purchased. Except to the extent that a call option on an index written by the
Portfolio is covered by an option on the same index purchased by the Portfolio,
movements in the index may result in a loss to the Portfolio; however, such
losses may be mitigated by changes in the value of the Portfolio's securities
during the period the option was outstanding.

     Foreign Currency Options. A Portfolio that invests in foreign currency
denominated securities may buy or sell put and call options on foreign
currencies. A Portfolio may buy or sell put and call options on foreign
currencies either on exchanges or in the over-the-counter market. A put option
on a foreign currency gives the purchaser of the option the right to sell a
foreign currency at the exercise price until the option expires. A call option
on a foreign currency gives the purchaser of the option the right to purchase
the currency at the exercise price until the option expires. Currency options
traded on U.S. or other exchanges may be subject to position limits which may
limit the ability of a Portfolio to reduce foreign currency risk using such
options. Over-the-counter options differ from traded options in that they are
two-party contracts with price and other terms negotiated between buyer and
seller, and generally do not have as much market liquidity as exchange-traded
options.

                                       23


     Futures Contracts and Options on Futures Contracts. Each of the Fixed
Income Portfolios (except the Money Market Portfolio) may invest in interest
rate futures contracts and options thereon ("futures options"), and to the
extent it may invest in foreign currency-denominated securities, may also invest
in foreign currency futures contracts and options thereon. The StocksPLUS Growth
and Income Portfolio and the Strategic Balanced Portfolio may invest in interest
rate, stock index and foreign currency futures contracts and options thereon.

     An interest rate, foreign currency or index futures contract provides for
the future sale by one party and purchase by another party of a specified
quantity of a financial instrument, foreign currency or the cash value of an
index at a specified price and time. A futures contract on an index is an
agreement pursuant to which two parties agree to take or make delivery of an
amount of cash equal to the difference between the value of the index at the
close of the last trading day of the contract and the price at which the index
contract was originally written. Although the value of an index might be a
function of the value of certain specified securities, no physical delivery of
these securities is made. A public market exists in futures contracts covering a
number of indexes as well as financial instruments and foreign currencies,
including: the S&P 500; the S&P Mid-Cap 400; the Nikkei 225; the NYSE composite;
U.S. Treasury bonds; U.S. Treasury notes; GNMA Certificates; three-month U.S.
Treasury bills; 90-day commercial paper; bank certificates of deposit;
Eurodollar certificates of deposit; the Australian dollar; the Canadian dollar;
the British pound; the Japanese yen; the Swiss franc; the Mexican peso; and
certain multinational currencies, such as the euro. It is expected that other
futures contracts will be developed and traded in the future.

     A Portfolio may purchase and write call and put futures options, as
specified for that Portfolio in the Prospectus. Futures options possess many of
the same characteristics as options on securities and indexes (discussed above).
A futures option gives the holder the right, in return for the premium paid, to
assume a long position (call) or short position (put) in a futures contract at a
specified exercise price at any time during the period of the option. Upon
exercise of a call option, the holder acquires a long position in the futures
contract and the writer is assigned the opposite short position. In the case of
a put option, the opposite is true.

     To comply with applicable rules of the Commodity Futures Trading Commission
("CFTC") under which the Trust and the Portfolios avoid being deemed a
"commodity pool" or a "commodity pool operator," each Portfolio intends
generally to limit its use of futures contracts and futures options to "bona
fide hedging" transactions, as such term is defined in applicable regulations,
interpretations and practice. For example, a Portfolio might use futures
contracts to hedge against anticipated changes in interest rates that might
adversely affect either the value of the Portfolio's securities or the price of
the securities which the Portfolio intends to purchase. A Portfolio's hedging
activities may include sales of futures contracts as an offset against the
effect of expected increases in interest rates, and purchases of futures
contracts as an offset against the effect of expected declines in interest
rates. Although other techniques could be used to reduce that Portfolio's
exposure to interest rate fluctuations, the Portfolio may be able to hedge its
exposure more effectively and perhaps at a lower cost by using futures contracts
and futures options.

     A Portfolio will only enter into futures contracts and futures options
which are standardized and traded on a U.S. or foreign exchange, board of trade,
or similar entity, or quoted on an automated quotation system.

     When a purchase or sale of a futures contract is made by a Portfolio, the
Portfolio is required to deposit with its custodian (or broker, if legally
permitted) a specified amount of assets determined to be liquid by PIMCO in
accordance with procedures established by the Board of Trustees ("initial
margin"). The margin required for a futures contract is set by the exchange on
which the contract is traded and may be modified during the term of the
contract. Margin requirements on foreign exchanges may be different than U.S.
exchanges. The initial margin is in the nature of a performance bond or good
faith deposit on the futures contract which is returned to the Portfolio upon
termination of the contract, assuming all contractual obligations have been
satisfied. Each Portfolio expects to earn interest income on its initial

                                       24


margin deposits. A futures contract held by a Portfolio is valued daily at the
official settlement price of the exchange on which it is traded. Each day the
Portfolio pays or receives cash, called "variation margin," equal to the daily
change in value of the futures contract. This process is known as "marking to
market." Variation margin does not represent a borrowing or loan by a Portfolio
but is instead a settlement between the Portfolio and the broker of the amount
one would owe the other if the futures contract expired. In computing daily net
asset value, each Portfolio will mark to market its open futures positions.

     A Portfolio is also required to deposit and maintain margin with respect to
put and call options on futures contracts written by it. Such margin deposits
will vary depending on the nature of the underlying futures contract (and the
related initial margin requirements), the current market value of the option,
and other futures positions held by the Portfolio.

     Although some futures contracts call for making or taking delivery of the
underlying securities, generally these obligations are closed out prior to
delivery by offsetting purchases or sales of matching futures contracts (same
exchange, underlying security or index, and delivery month). If an offsetting
purchase price is less than the original sale price, the Portfolio realizes a
capital gain, or if it is more, the Portfolio realizes a capital loss.
Conversely, if an offsetting sale price is more than the original purchase
price, the Portfolio realizes a capital gain, or if it is less, the Portfolio
realizes a capital loss. The transaction costs must also be included in these
calculations.

     The Portfolios may write covered straddles consisting of a call and a put
written on the same underlying futures contract. A straddle will be covered when
sufficient assets are deposited to meet the Portfolios' immediate obligations. A
Portfolio may use the same liquid assets to cover both the call and put options
where the exercise price of the call and put are the same, or the exercise price
of the call is higher than that of the put. In such cases, the Portfolios will
also segregate liquid assets equivalent to the amount, if any, by which the put
is "in the money."

     Limitations on Use of Futures and Futures Options. In general, the
Portfolios intend to enter into positions in futures contracts and related
options only for "bona fide hedging" purposes. With respect to positions in
futures and related options that do not constitute bona fide hedging positions,
a Portfolio will not enter into a futures contract or futures option contract
if, immediately thereafter, the aggregate initial margin deposits relating to
such positions plus premiums paid by it for open futures option positions, less
the amount by which any such options are "in-the-money," would exceed 5% of the
Portfolio's net assets. A call option is "in-the-money" if the value of the
futures contract that is the subject of the option exceeds the exercise price. A
put option is "in-the-money" if the exercise price exceeds the value of the
futures contract that is the subject of the option.

     When purchasing a futures contract, a Portfolio will maintain with its
custodian (and mark-to-market on a daily basis) assets determined to be liquid
by PIMCO in accordance with procedures established by the Board of Trustees,
that, when added to the amounts deposited with a futures commission merchant as
margin, are equal to the market value of the futures contract. Alternatively,
the Portfolio may "cover" its position by purchasing a put option on the same
futures contract with a strike price as high or higher than the price of the
contract held by the Portfolio.

     When selling a futures contract, a Portfolio will maintain with its
custodian (and mark-to-market on a daily basis) assets determined to be liquid
by PIMCO in accordance with procedures established by the Board of Trustees,
that are equal to the market value of the instruments underlying the contract.
Alternatively, the Portfolio may "cover" its position by owning the instruments
underlying the contract (or, in the case of an index futures contract, a
portfolio with a volatility substantially similar to that of the index on which
the futures contract is based), or by holding a call option permitting the
Portfolio to purchase the same futures contract at a price no higher than the
price of the contract written by the Portfolio (or at a higher price if the
difference is maintained in liquid assets with the Trust's custodian).

                                       25


     When selling a call option on a futures contract, a Portfolio will maintain
with its custodian (and mark-to-market on a daily basis) assets determined to be
liquid by PIMCO in accordance with procedures established by the Board of
Trustees, that, when added to the amounts deposited with a futures commission
merchant as margin, equal the total market value of the futures contract
underlying the call option. Alternatively, the Portfolio may cover its position
by entering into a long position in the same futures contract at a price no
higher than the strike price of the call option, by owning the instruments
underlying the futures contract, or by holding a separate call option permitting
the Portfolio to purchase the same futures contract at a price not higher than
the strike price of the call option sold by the Portfolio.

     When selling a put option on a futures contract, a Portfolio will maintain
with its custodian (and mark-to-market on a daily basis) assets determined to be
liquid by PIMCO in accordance with procedures established by the Board of
Trustees, that equal the purchase price of the futures contract, less any margin
on deposit. Alternatively, the Portfolio may cover the position either by
entering into a short position in the same futures contract, or by owning a
separate put option permitting it to sell the same futures contract so long as
the strike price of the purchased put option is the same or higher than the
strike price of the put option sold by the Portfolio.

     To the extent that securities with maturities greater than one year are
used to segregate assets to cover a Portfolio's obligations under futures
contracts and related options, such use will not eliminate the risk of a form of
leverage, which may tend to exaggerate the effect on net asset value of any
increase or decrease in the market value of a Portfolio's portfolio, and may
require liquidation of portfolio positions when it is not advantageous to do so.
However, any potential risk of leverage resulting from the use of securities
with maturities greater than one year may be mitigated by the overall duration
limit on a Portfolio's portfolio securities. Thus, the use of a longer-term
security may require a Portfolio to hold offsetting short-term securities to
balance the Portfolio's portfolio such that the Portfolio's duration does not
exceed the maximum permitted for the Portfolio in the Prospectus.

     The requirements for qualification as a regulated investment company also
may limit the extent to which a Portfolio may enter into futures, futures
options or forward contracts. See "Taxation."

     Risks Associated with Futures and Futures Options. There are several risks
associated with the use of futures contracts and futures options as hedging
techniques. A purchase or sale of a futures contract may result in losses in
excess of the amount invested in the futures contract. There can be no guarantee
that there will be a correlation between price movements in the hedging vehicle
and in the Portfolio securities being hedged. In addition, there are significant
differences between the securities and futures markets that could result in an
imperfect correlation between the markets, causing a given hedge not to achieve
its objectives. The degree of imperfection of correlation depends on
circumstances such as variations in speculative market demand for futures and
futures options on securities, including technical influences in futures trading
and futures options, and differences between the financial instruments being
hedged and the instruments underlying the standard contracts available for
trading in such respects as interest rate levels, maturities, and
creditworthiness of issuers. A decision as to whether, when and how to hedge
involves the exercise of skill and judgment, and even a well-conceived hedge may
be unsuccessful to some degree because of market behavior or unexpected interest
rate trends.

     Futures exchanges may limit the amount of fluctuation permitted in certain
futures contract prices during a single trading day. The daily limit establishes
the maximum amount that the price of a futures contract may vary either up or
down from the previous day's settlement price at the end of the current trading
session. Once the daily limit has been reached in a futures contract subject to
the limit, no more trades may be made on that day at a price beyond that limit.
The daily limit governs only price movements during a particular trading day and
therefore does not limit potential losses because the limit may work to prevent
the liquidation of unfavorable positions. For example, futures prices have
occasionally moved to the daily limit for several consecutive trading days with
little or no trading, thereby preventing prompt liquidation of positions and
subjecting some holders of futures contracts to substantial losses.

                                       26


     There can be no assurance that a liquid market will exist at a time when a
Portfolio seeks to close out a futures or a futures option position, and that
Portfolio would remain obligated to meet margin requirements until the position
is closed. In addition, many of the contracts discussed above are relatively new
instruments without a significant trading history. As a result, there can be no
assurance that an active secondary market will develop or continue to exist.

     Additional Risks of Options on Securities, Futures Contracts, Options on
Futures Contracts, and Forward Currency Exchange Contracts and Options Thereon.
Options on securities, futures contracts, options on futures contracts, and
options on currencies may be traded on foreign exchanges. Such transactions may
not be regulated as effectively as similar transactions in the United States;
may not involve a clearing mechanism and related guarantees, and are subject to
the risk of governmental actions affecting trading in, or the prices of, foreign
securities. The value of such positions also could be adversely affected by (i)
other complex foreign political, legal and economic factors, (ii) lesser
availability than in the United States of data on which to make trading
decisions, (iii) delays in the Trust's ability to act upon economic events
occurring in foreign markets during non-business hours in the United States,
(iv) the imposition of different exercise and settlement terms and procedures
and margin requirements than in the United States, and (v) lesser trading
volume.

     Swap Agreements. The Portfolios may enter into interest rate, index, credit
and, to the extent it may invest in foreign currency-denominated securities,
currency exchange rate swap agreements. Each Portfolio may also enter into
options on swap agreements ("swap options"). These transactions are entered into
in an attempt to obtain a particular return when it is considered desirable to
do so, possibly at a lower cost to the Portfolio than if the Portfolio had
invested directly in an instrument that yielded that desired return. Swap
agreements are two party contracts entered into primarily by institutional
investors for periods ranging from a few weeks to more than one year. In a
standard "swap" transaction, two parties agree to exchange the returns (or
differentials in rates of return) earned or realized on particular predetermined
investments or instruments, which may be adjusted for an interest factor. The
gross returns to be exchanged or "swapped" between the parties are generally
calculated with respect to a "notional amount," i.e., the return on or increase
in value of a particular dollar amount invested at a particular interest rate,
in a particular foreign currency, or in a "basket" of securities representing a
particular index. Forms of swap agreements include interest rate caps, under
which, in return for a premium, one party agrees to make payments to the other
to the extent that interest rates exceed a specified rate, or "cap"; interest
rate floors, under which, in return for a premium, one party agrees to make
payments to the other to the extent that interest rates fall below a specified
rate, or "floor"; and interest rate collars, under which a party sells a cap and
purchases a floor or vice versa in an attempt to protect itself against interest
rate movements exceeding given minimum or maximum levels. A swap option is a
contract that gives a counterparty the right (but not the obligation) to enter
into a new swap agreement or to shorten, extend, cancel or otherwise modify an
existing swap agreement, at some designated future time or specified terms. Each
Portfolio may write (sell) and purchase put and call swap options.

     Most swap agreements entered into by the Portfolios would calculate the
obligations of the parties to the agreement on a "net basis." Consequently, a
Portfolio's current obligations (or rights) under a swap agreement will
generally be equal only to the net amount to be paid or received under the
agreement based on the relative values of the positions held by each party to
the agreement (the "net amount"). A Portfolio's current obligations under a swap
agreement will be accrued daily (offset against any amounts owing to the
Portfolio) and any accrued but unpaid net amounts owed to a swap counterparty
will be covered by segregation of assets determined to be liquid by PIMCO in
accordance with procedures established by the Board of Trustees, to avoid any
potential leveraging of the Portfolio's portfolio. Obligations under swap
agreements so covered will not be construed to be "senior securities" for
purposes of the Portfolio's investment restriction concerning senior securities.
A Portfolio will not enter into a swap agreement with any single party if the
net amount owed or to be received under existing contracts with that party would
exceed 5% of the Portfolio's assets.

                                       27


     Whether a Portfolio's use of swap agreements or swap options will be
successful in furthering its investment objective of total return will depend on
PIMCO's ability to predict correctly whether certain types of investments are
likely to produce greater returns than other investments. Because they are two
party contracts and because they may have terms of greater than seven days, swap
agreements may be considered to be illiquid. Moreover, a Portfolio bears the
risk of loss of the amount expected to be received under a swap agreement in the
event of the default or bankruptcy of a swap agreement counterparty. The
Portfolios will enter into swap agreements only with counterparties that meet
certain standards of creditworthiness (generally, such counterparties would have
to be eligible counterparties under the terms of the Portfolios' repurchase
agreement guidelines). Certain restrictions imposed on the Portfolios by the
Internal Revenue Code may limit the Portfolios' ability to use swap agreements.
The swaps market is a relatively new market and is largely unregulated. It is
possible that developments in the swaps market, including potential government
regulation, could adversely affect a Portfolio's ability to terminate existing
swap agreements or to realize amounts to be received under such agreements.

     Depending on the terms of the particular option agreement, a Portfolio will
generally incur a greater degree of risk when it writes a swap option than it
will incur when it purchases a swap option. When a Portfolio purchases a swap
option, it risks losing only the amount of the premium it has paid should it
decide to let the option expire unexercised. However, when a Portfolio writes a
swap option, upon exercise of the option the Portfolio will become obligated
according to the terms of the underlying agreement.

     Certain swap agreements are exempt from most provisions of the Commodity
Exchange Act ("CEA") and, therefore, are not regulated as futures or commodity
option transactions under the CEA, pursuant to regulations approved by the CFTC
effective February 22, 1993. To qualify for this exemption, a swap agreement
must be entered into by "eligible participants," which includes the following,
provided the participants' total assets exceed established levels: a bank or
trust company, savings association or credit union, insurance company,
investment company subject to regulation under the 1940 Act, commodity pool,
corporation, partnership, proprietorship, organization, trust or other entity,
employee benefit plan, governmental entity, broker-dealer, futures commission
merchant, natural person, or regulated foreign person. To be eligible, natural
persons and most other entities must have total assets exceeding $10 million;
commodity pools and employee benefit plans must have assets exceeding $5
million. In addition, an eligible swap transaction must meet three conditions.
First, the swap agreement may not be part of a fungible class of agreements that
are standardized as to their material economic terms. Second, the
creditworthiness of parties with actual or potential obligations under the swap
agreement must be a material consideration in entering into or determining the
terms of the swap agreement, including pricing, cost or credit enhancement
terms. Third, swap agreements may not be entered into and traded on or through a
multilateral transaction execution facility.

     This exemption is not exclusive, and participants may continue to rely on
existing exclusions for swaps, such as the Policy Statement issued in July 1989
which recognized a safe harbor for swap transactions from regulation as futures
or commodity option transactions under the CEA or its regulations. The Policy
Statement applies to swap transactions settled in cash that (1) have
individually tailored terms, (2) lack exchange-style offset and the use of a
clearing organization or margin system, (3) are undertaken in conjunction with a
line of business, and (4) are not marketed to the public.

     Structured Notes. Structured notes are derivative debt securities, the
interest rate or principal of which is determined by an unrelated indicator.
Indexed securities include structured notes as well as securities other than
debt securities, the interest rate or principal of which is determined by an
unrelated indicator. Indexed securities may include a multiplier that multiplies
the indexed element by a specified factor and, therefore, the value of such
securities may be very volatile. To the extent a Portfolio invests in these
securities, however, PIMCO analyzes these securities in its overall assessment
of the effective duration of the Portfolio's portfolio in an effort to monitor
the Portfolio's interest rate risk.

                                       28


Hybrid Instruments

     A hybrid instrument can combine the characteristics of securities, futures,
and options. For example, the principal amount or interest rate of a hybrid
could be tied (positively or negatively) to the price of some commodity,
currency or securities index or another interest rate (each a "benchmark"). The
interest rate or (unlike most fixed income securities) the principal amount
payable at maturity of a hybrid security may be increased or decreased,
depending on changes in the value of the benchmark.

     Hybrids can be used as an efficient means of pursuing a variety of
investment goals, including currency hedging, duration management, and increased
total return. Hybrids may not bear interest or pay dividends. The value of a
hybrid or its interest rate may be a multiple of a benchmark and, as a result,
may be leveraged and move (up or down) more steeply and rapidly than the
benchmark. These benchmarks may be sensitive to economic and political events,
such as commodity shortages and currency devaluations, which cannot be readily
foreseen by the purchaser of a hybrid. Under certain conditions, the redemption
value of a hybrid could be zero. Thus, an investment in a hybrid may entail
significant market risks that are not associated with a similar investment in a
traditional, U.S. dollar-denominated bond that has a fixed principal amount and
pays a fixed rate or floating rate of interest. The purchase of hybrids also
exposes a Portfolio to the credit risk of the issuer of the hybrids. These risks
may cause significant fluctuations in the net asset value of the Portfolio.
Accordingly, no Portfolio will invest more than 5% of its assets in hybrid
instruments.

     Certain issuers of structured products such as hybrid instruments may be
deemed to be investment companies as defined in the 1940 Act. As a result, the
Portfolios' investments in these products will be subject to limits applicable
to investments in investment companies and may be subject to restrictions
contained in the 1940 Act.

Delayed Funding Loans and Revolving Credit Facilities

     The Fixed Income Portfolios (except the Money Market Portfolio) may enter
into, or acquire participations in, delayed funding loans and revolving credit
facilities. Delayed funding loans and revolving credit facilities are borrowing
arrangements in which the lender agrees to make loans up to a maximum amount
upon demand by the borrower during a specified term. A revolving credit facility
differs from a delayed funding loan in that as the borrower repays the loan, an
amount equal to the repayment may be borrowed again during the term of the
revolving credit facility. Delayed funding loans and revolving credit facilities
usually provide for floating or variable rates of interest. These commitments
may have the effect of requiring a Portfolio to increase its investment in a
company at a time when it might not otherwise decide to do so (including at a
time when the company's financial condition makes it unlikely that such amounts
will be repaid). To the extent that a Portfolio is committed to advance
additional funds, it will at all times segregate assets, determined to be liquid
by PIMCO in accordance with procedures established by the Board of Trustees, in
an amount sufficient to meet such commitments.

     The Fixed Income Portfolios may invest in delayed funding loans and
revolving credit facilities with credit quality comparable to that of issuers of
its securities investments. Delayed funding loans and revolving credit
facilities may be subject to restrictions on transfer, and only limited
opportunities may exist to resell such instruments. As a result, a Portfolio may
be unable to sell such investments at an opportune time or may have to resell
them at less than fair market value. The Fixed Income Portfolios currently
intend to treat delayed funding loans and revolving credit facilities for which
there is no readily available market as illiquid for purposes of the Portfolios'
limitation on illiquid investments. For a further discussion of the risks
involved in investing in loan participations and other forms of direct
indebtedness see "Loan Participations." Participation interests in revolving
credit facilities will be subject to the limitations discussed in "Loan
Participations." Delayed funding loans and revolving credit facilities are

                                       29


considered to be debt obligations for purposes of the Trust's investment
restriction relating to the lending of funds or assets by a Portfolio.

When-Issued, Delayed Delivery, and Forward Commitment Transactions

     Each of the Portfolios may purchase or sell securities on a when-issued,
delayed delivery, or forward commitment basis. When such purchases are
outstanding, the Portfolio will segregate until the settlement date assets
determined to be liquid by PIMCO in accordance with procedures established by
the Board of Trustees, in an amount sufficient to meet the purchase price.
Typically, no income accrues on securities a Portfolio has committed to purchase
prior to the time delivery of the securities is made, although a Portfolio may
earn income on securities it has segregated.

     When purchasing a security on a when-issued, delayed delivery, or forward
commitment basis, the Portfolio assumes the rights and risks of ownership of the
security, including the risk of price and yield fluctuations, and takes such
fluctuations into account when determining its net asset value. Because the
Portfolio is not required to pay for the security until the delivery date, these
risks are in addition to the risks associated with the Portfolio's other
investments. If the Portfolio remains substantially fully invested at a time
when when-issued, delayed delivery, or forward commitment purchases are
outstanding, the purchases may result in a form of leverage. When the Portfolio
has sold a security on a when-issued, delayed delivery, or forward commitment
basis, the Portfolio does not participate in future gains or losses with respect
to the security. If the other party to a transaction fails to deliver or pay for
the securities, the Portfolio could miss a favorable price or yield opportunity
or could suffer a loss. A Portfolio may dispose of or renegotiate a transaction
after it is entered into, and may sell when-issued, delayed delivery or forward
commitment securities before they are delivered, which may result in a capital
gain or loss. There is no percentage limitation on the extent to which the
Portfolios may purchase or sell securities on a when-issued, delayed delivery,
or forward commitment basis.

Short Sales

     Each of the Portfolios may make short sales of securities as part of their
overall portfolio management strategies involving the use of derivative
instruments and to offset potential declines in long positions in similar
securities. A short sale is a transaction in which a Portfolio sells a security
it does not own in anticipation that the market price of that security will
decline.

     When a Portfolio makes a short sale, it must borrow the security sold short
and deliver it to the broker-dealer through which it made the short sale as
collateral for its obligation to deliver the security upon conclusion of the
sale. The Portfolio may have to pay a fee to borrow particular securities and is
often obligated to pay over any accrued interest and dividends on such borrowed
securities.

     If the price of the security sold short increases between the time of the
short sale and the time and the Portfolio replaces the borrowed security, the
Portfolio will incur a loss; conversely, if the price declines, the Portfolio
will realize a capital gain. Any gain will be decreased, and any loss increased,
by the transaction costs described above. The successful use of short selling
may be adversely affected by imperfect correlation between movements in the
price of the security sold short and the securities being hedged.

     To the extent that a Portfolio engages in short sales, it will provide
collateral to the broker-dealer and (except in the case of short sales "against
the box") will maintain additional asset coverage in the form of assets
determined to be liquid by PIMCO in accordance with procedures established by
the Board of Trustees, in a segregated account. Each Portfolio does not intend
to enter into short sales (other than those "against the box") if immediately
after such sale the aggregate of the value of all collateral plus the amount of
the segregated assets exceeds one-third of the value of the Portfolio's net
assets. This percentage may be varied by action of the Trustees. A short sale is
"against the box" to the extent that the

                                       30


Portfolio contemporaneously owns, or has the right to obtain at no added cost,
securities identical to those sold short. The Portfolios will engage in short
selling to the extent permitted by the 1940 Act and rules and interpretations
thereunder.

Illiquid Securities

     The Portfolios may invest up to 15% of their net assets in illiquid
securities (10% in the case of the Money Market Portfolio). The term "illiquid
securities" for this purpose means securities that cannot be disposed of within
seven days in the ordinary course of business at approximately the amount at
which a Portfolio has valued the securities. Illiquid securities are considered
to include, among other things, written over-the-counter options, securities or
other liquid assets being used as cover for such options, repurchase agreements
with maturities in excess of seven days, certain loan participation interests,
fixed time deposits which are not subject to prepayment or provide for
withdrawal penalties upon prepayment (other than overnight deposits), and other
securities whose disposition is restricted under the federal securities laws
(other than securities issued pursuant to Rule 144A under the 1933 Act and
certain commercial paper that PIMCO has determined to be liquid under procedures
approved by the Board of Trustees).

     Illiquid securities may include privately placed securities, which are sold
directly to a small number of investors, usually institutions. Unlike public
offerings, such securities are not registered under the federal securities laws.
Although certain of these securities may be readily sold, others may be
illiquid, and their sale may involve substantial delays and additional costs.

Loans of Portfolio Securities

     For the purpose of achieving income, each Portfolio may lend its portfolio
securities to brokers, dealers, and other financial institutions, provided: (i)
the loan is secured continuously by collateral consisting of U.S. Government
securities, cash or cash equivalents (negotiable certificates of deposits,
bankers' acceptances or letters of credit) maintained on a daily mark-to-market
basis in an amount at least equal to the current market value of the securities
loaned; (ii) the Portfolio may at any time call the loan and obtain the return
of the securities loaned; (iii) the Portfolio will receive any interest or
dividends paid on the loaned securities; and (iv) the aggregate market value of
securities loaned will not at any time exceed 331/3% of the total assets of the
Portfolio. Each Portfolio's performance will continue to reflect the receipt of
either interest through investment of cash collateral by the Portfolio in
permissible investments, or a fee, if the collateral is U.S. Government
securities. Securities lending involves the risk of loss of rights in the
collateral or delay in recovery of the collateral should the borrower fail to
return the securities loaned or become insolvent. The Portfolios may pay lending
fees to the party arranging the loan.

Participation on Creditors Committees

     A Portfolio (in particular, the High Yield Portfolio) may from time to time
participate on committees formed by creditors to negotiate with the management
of financially troubled issuers of securities held by the Portfolio. Such
participation may subject a Portfolio to expenses such as legal fees and may
make a Portfolio an "insider" of the issuer for purposes of the federal
securities laws, and therefore may restrict such Portfolio's ability to trade in
or acquire additional positions in a particular security when it might otherwise
desire to do so. Participation by a Portfolio on such committees also may expose
the Portfolio to potential liabilities under the federal bankruptcy laws or
other laws governing the rights of creditors and debtors. A Portfolio will
participate on such committees only when PIMCO believes that such participation
is necessary or desirable to enforce the Portfolio's rights as a creditor or to
protect the value of securities held by the Portfolio.

                                       31


Bank Obligations

     Bank obligations in which the Portfolios may invest include certificates of
deposit, bankers' acceptances, and fixed time deposits. Certificates of deposit
are negotiable certificates issued against funds deposited in a commercial bank
for a definite period of time and earning a specified return. Bankers'
acceptances are negotiable drafts or bills of exchange, normally drawn by an
importer or exporter to pay for specific merchandise, which are "accepted" by a
bank, meaning, in effect, that the bank unconditionally agrees to pay the face
value of the instrument on maturity. Fixed time deposits are bank obligations
payable at a stated maturity date and bearing interest at a fixed rate. Fixed
time deposits may be withdrawn on demand by the investor, but may be subject to
early withdrawal penalties which vary depending upon market conditions and the
remaining maturity of the obligation. There are no contractual restrictions on
the right to transfer a beneficial interest in a fixed time deposit to a third
party, although there is no market for such deposits. A Portfolio will not
invest in fixed time deposits which (1) are not subject to prepayment or (2)
provide for withdrawal penalties upon prepayment (other than overnight deposits)
if, in the aggregate, more than 15% of its net assets (10% in the case of the
Money Market Portfolio) would be invested in such deposits, repurchase
agreements maturing in more than seven days and other illiquid assets.

     The Money Market, Low Duration, and Long-Term U.S. Government Portfolios
may invest in the same types of bank obligations as the other Fixed Income
Portfolios, but they must be U.S. dollar-denominated. Subject to the Trust's
limitation on concentration of no more than 25% of its assets in the securities
of issuers in a particular industry, there is no limitation on the amount of a
Portfolio's assets which may be invested in obligations of foreign banks which
meet the conditions set forth herein.

     Obligations of foreign banks involve somewhat different investment risks
than those affecting obligations of United States banks, including the
possibilities that their liquidity could be impaired because of future political
and economic developments, that their obligations may be less marketable than
comparable obligations of United States banks, that a foreign jurisdiction might
impose withholding taxes on interest income payable on those obligations, that
foreign deposits may be seized or nationalized, that foreign governmental
restrictions such as exchange controls may be adopted which might adversely
affect the payment of principal and interest on those obligations and that the
selection of those obligations may be more difficult because there may be less
publicly available information concerning foreign banks or the accounting,
auditing and financial reporting standards, practices and requirements
applicable to foreign banks may differ from those applicable to United States
banks. Foreign banks are not generally subject to examination by any U.S.
Government agency or instrumentality.

                             INVESTMENT RESTRICTIONS

Fundamental Investment Restrictions

     Each Portfolio's investment objective as set forth in the Prospectus under
the heading "Principal Investments and Strategies," for each respective
Portfolio, together with the investment restrictions set forth below, are
fundamental policies of the Portfolio and may not be changed with respect to a
Portfolio without shareholder approval by vote of a majority of the outstanding
shares of that Portfolio.

     (1) A Portfolio may not concentrate its investments in a particular
     industry, as that term is used in the Investment Company Act of 1940, as
     amended, and as interpreted, modified, or otherwise permitted by regulatory
     authority having jurisdiction, from time to time (except that the Money
     Market Portfolio may concentrate its investments in securities or
     obligations issued by U.S. banks).

     (2) A Portfolio may not, with respect to 75% of the Portfolio's total
     assets, purchase the securities of any issuer, except securities issued or
     guaranteed by the U.S. government or any of

                                       32


     its agencies or instrumentalities, if, as a result (i) more than 5% of the
     Portfolio's total assets would be invested in the securities of that
     issuer, or (ii) the Portfolio would hold more than 10% of the outstanding
     voting securities of that issuer. (This restriction is not applicable to
     the Real Return, Foreign Bond, Global Bond or the Emerging Markets Bond
     Portfolios.)

     (3) A Portfolio may not borrow money or issue any senior security, except
     as permitted under the Investment Company Act of 1940, as amended, and as
     interpreted, modified, or otherwise permitted by regulatory authority
     having jurisdiction, from time to time.

     (4) A Portfolio may not make loans, except as permitted under the
     Investment Company Act of 1940, as amended, and as interpreted, modified,
     or otherwise permitted by regulatory authority having jurisdiction, from
     time to time.

     (5) Notwithstanding any other fundamental investment policy or limitation,
     it is a fundamental policy of each Portfolio that it may pursue its
     investment objective by investing in one or more underlying investment
     companies or vehicles that have substantially similar investment
     objectives, policies and limitations as the Portfolio.

     (6) A Portfolio may not purchase or sell real estate, although it may
     purchase securities secured by real estate or interests therein, or
     securities issued by companies which invest in real estate, or interests
     therein.

     (7) A Portfolio may not purchase or sell commodities or commodities
     contracts or oil, gas or mineral programs. This restriction shall not
     prohibit a Portfolio, subject to restrictions described in the Prospectus
     and elsewhere in this Statement of Additional Information, from purchasing,
     selling or entering into futures contracts, options on futures contracts,
     foreign currency forward contracts, foreign currency options, or any
     interest rate, securities-related or foreign currency-related hedging
     instrument, including swap agreements and other derivative instruments,
     subject to compliance with any applicable provisions of the federal
     securities or commodities laws.

     (8) A Portfolio may not act as an underwriter of securities of other
     issuers, except to the extent that in connection with the disposition of
     portfolio securities, it may be deemed to be an underwriter under the
     federal securities laws.

Non-Fundamental Investment Restrictions

     Each Portfolio is also subject to the following non-fundamental
restrictions and policies (which may be changed without shareholder approval)
relating to the investment of its assets and activities. Unless otherwise
indicated, a Portfolio may not:

     (A) invest more than 15% of the net assets of the Portfolio (10% in the
case of the Money Market Portfolio) (taken at market value at the time of the
investment) in "illiquid securities," which include securities subject to legal
or contractual restrictions on resale (which may include private placements),
repurchase agreements maturing in more than seven days, certain loan
participation interests, fixed time deposits which are not subject to prepayment
or provide for withdrawal penalties upon prepayment (other than overnight
deposits), certain options traded over the counter that a Portfolio has
purchased, securities or other liquid assets being used to cover such options a
Portfolio has written, securities for which market quotations are not readily
available, or other securities which legally or in PIMCO's opinion may be deemed
illiquid (other than securities issued pursuant to Rule 144A under the
Securities Act of 1933 and certain commercial paper that PIMCO has determined to
be liquid under procedures approved by the Board of Trustees); or

                                       33


     (B) purchase securities on margin, except for use of short-term credit
necessary for clearance of purchases and sales of portfolio securities, but it
may make margin deposits in connection with covered transactions in options,
futures, options on futures and short positions.

     In addition, the Trust has adopted the following non-fundamental investment
policies that may be changed on 60 days notice to shareholders:

     (1) The High Yield Portfolio will invest, under normal circumstances, at
least 80% of its assets in high yield investments.

     (2) The Long-Term U.S. Government Portfolio will invest, under normal
circumstances, at least 80% of its assets in U.S. Government investments.

     (3) The Global Bond Portfolio will invest, under normal circumstances, at
least 80% of its assets in bond investments.

     (4) The Foreign Bond Portfolio will invest, under normal circumstances, at
least 80% of its assets in foreign bond investments.

     (5) The Emerging Markets Bond Portfolio will invest, under normal
circumstances, at least 80% of its assets in emerging market bond investments.

     For purposes of these policies, the term "assets" means net assets plus the
amount of any borrowings for investment purposes.

     The Trust has also adopted a non-fundamental policy pursuant to which each
Portfolio that may invest in securities denominated in foreign currencies,
except the Global Bond and Emerging Markets Bond Portfolios, will hedge at least
75% of its exposure to foreign currency using the techniques described in the
Prospectus and this Statement of Additional Information. There can be no
assurance that currency hedging techniques will be successful.

     Under the 1940 Act, a "senior security" does not include any promissory
note or evidence of indebtedness where such loan is for temporary purposes only
and in an amount not exceeding 5% of the value of the total assets of the issuer
at the time the loan is made. A loan is presumed to be for temporary purposes if
it is repaid within sixty days and is not extended or renewed. To the extent
that borrowings for temporary administrative purposes exceed 5% of the total
assets of a Portfolio, such excess shall be subject to the 300% asset coverage
requirement.

     To the extent a Portfolio covers its commitment under a reverse repurchase
agreement (or economically similar transaction) by the maintenance of a
segregated account consisting of assets determined to be liquid in accordance
with procedures adopted by the Trustees, equal in value to the amount of the
Portfolio's commitment to repurchase, such an agreement will not be considered a
"senior security" by the Portfolio and therefore will not be subject to the 300%
asset coverage requirement otherwise applicable to borrowings by the Portfolio.

     The Portfolios interpret their policy with respect to the purchase and sale
of commodities or commodities contracts under Fundamental Investment Restriction
No. 7 above to permit the Portfolios, subject to each Portfolio's investment
objectives and general investment policies (as stated in the prospectus and
elsewhere in this Statement of Additional information), to invest in commodity
futures contracts.

     Unless otherwise indicated, all limitations applicable to Portfolio
investments (as stated above and elsewhere in this Statement of Additional
Information) apply only at the time a transaction is entered into. Any
subsequent change in a rating assigned by any rating service to a security (or,
if unrated,

                                       34


deemed to be of comparable quality), or change in the percentage of Portfolio
assets invested in certain securities or other instruments, or change in the
average duration of a Portfolio's investment portfolio, resulting from market
fluctuations or other changes in a Portfolio's total assets will not require a
Portfolio to dispose of an investment until PIMCO determines that it is
practicable to sell or close out the investment without undue market or tax
consequences to the Portfolio. In the event that ratings services assign
different ratings to the same security, PIMCO will determine which rating it
believes best reflects the security's quality and risk at that time, which may
be the higher of the several assigned ratings.

                             MANAGEMENT OF THE TRUST

Trustees and Officers

     The business affairs of the Trust are managed under the direction of the
Trust's Board of Trustees. Subject to the provisions of the Trust's Declaration
of Trust, its By-Laws and Delaware law, the Trustees have all powers necessary
and convenient to carry out this responsibility, including the election and
removal of the Trust's officers.

     The Trustees and Executive Officers of the Trust, their ages, their
business address and a description of their principal occupations during the
past five years are listed below. Unless otherwise indicated, the address of all
persons below is 840 Newport Center Drive, Suite 300, Newport Beach, California
92660.

Management of the Trust Information

The chart below identifies the Trustees and Officers of the Trust. Each
"interested" Trustee as defined by the 1940 Act, is indicated by an asterisk
(*). Unless otherwise indicated, the address of all persons below is 840 Newport
Center Drive, Suite 300, Newport Beach, CA 92660.

Trustees of the Trust

                                                                                    Number of
                         Term of                                                    Portfolios
                         Office and                                                 in Fund
                         Length of                                                  Complex
Name, Age and Position   Time                                                       Overseen by   Other Directorships
Held with Trust          Served+      Principal Occupation(s) During Past 5 Years   Trustee       Held by Trustee
---------------------------------------------------------------------------------------------------------------------
Interested Trustees/1/

Brent R. Harris* (42)    12/1997 to   Managing Director, PIMCO; Chairman and        51             None
Chairman of the Board    Present      Trustee, PIMCO Funds: Pacific Investment
and Trustee                           Management Series; and Chairman and
                                      Director, PIMCO Commercial Mortgage
                                      Securities Trust, Inc.; and Chairman,
                                      Director, and President, PIMCO Strategic
                                      Global Government Fund, Inc.

----------
+    Trustees serve until their successors are duly elected and qualified.
/1/  Mr. Harris and Mr. Burns are "interested persons" of the Trust (as that
     term is defined in the 1940 Act) because of their affiliations with PIMCO.

                                       35


                                                                                    Number of
                         Term of                                                    Portfolios
                         Office and                                                 in Fund
                         Length of                                                  Complex
Name, Age and Position   Time                                                       Overseen by   Other Directorships
Held with Trust          Served/+/    Principal Occupation(s) During Past 5 Years   Trustee       Held by Trustee
---------------------------------------------------------------------------------------------------------------------
R. Wesley Burns* (42)    12/1997 to   Managing Director, PIMCO; Trustee and         59            None
President and Trustee    Present      President, PIMCO Funds: Pacific Investment
                                      Management Series; and Director and
                                      President, PIMCO Commercial Mortgage
                                      Securities Trust, Inc.; Director, PIMCO
                                      Funds: Global Investors Series plc and
                                      PIMCO Global Advisors (Ireland) Limited;
                                      and Senior Vice President, PIMCO Strategic
                                      Global Government Fund, Inc.  Formerly
                                      Executive Vice President, PIMCO; and
                                      Executive Vice President, PIMCO Funds:
                                      Multi-Manager Series.

Independent Trustees

Guilford C.              12/1997 to   Private Investor; Professor of Finance        50            Director, Growth Fund
Babcock (71)             Present      Emeritus, University of Southern                            of America and
Trustee                               California; Trustee, PIMCO Funds: Pacific                   Fundamental Investors
                                      Investment Management Series; and                           Fund of the Capital
                                      Director, PIMCO Commercial Mortgage                         Group; and Director,
                                      Securities Trust, Inc.                                      Good Hope Medical
                                                                                                  Foundation.

E. Philip Cannon (61)    03/2000 to   Proprietor, Cannon & Company, an affiliate    85            None
Trustee                  Present      of Inverness Management LLC, (a private
                                      equity investment firm); Trustee, PIMCO
                                      Funds: Pacific Investment Management
                                      Series; Director, PIMCO Commercial
                                      Mortgage Securities Trust, Inc.; and
                                      Trustee, PIMCO Funds: Multi-Manager
                                      Series.  Formerly, Headmaster, St. John's
                                      School, Houston, Texas.  Formerly Trustee
                                      of PIMCO Advisors Funds ("PAF") and Cash
                                      Accumulation Trust ("CAT").

                                       36


                                                                                    Number of
                         Term of                                                    Portfolios
                         Office and                                                 in Fund
                         Length of                                                  Complex
Name, Age and Position   Time                                                       Overseen by   Other Directorships
Held with Trust          Served/+/    Principal Occupation(s) During Past 5 Years   Trustee       Held by Trustee
---------------------------------------------------------------------------------------------------------------------
Vern O. Curtis (67)      12/1997 to   Private Investor; Trustee, PIMCO Funds:       50            Director, Public
Trustee                  Present      Pacific Investment Management Series; and                   Storage Business
                                      Director, PIMCO Commercial Mortgage                         Parks, Inc., (Real
                                      Securities Trust, Inc.                                      Estate Investment
                                                                                                  Trust); Director,
                                                                                                  Fresh Choice, Inc.
                                                                                                  (restaurant company).

J. Michael Hagan (62)    03/2000 to   Private Investor and Business Consultant.     50            Director, Freedom
Trustee                  Present      Trustee, PIMCO Funds: Pacific Investment                    Communications;
                                      Management Series; Director, PIMCO                          Director, Saint Gobain
                                      Commercial Mortgage Securities Trust,                       Corporation; Director,
                                      Inc.; Member of the Board of Regents,                       Ameron International;
                                      Santa Clara University, and Member of the                   Director, Remedy Temp;
                                      Board, Taller San Jose.  Formerly,                          and Trustee, South
                                      Chairman and CEO, Furon Company.                            Coast Repertory.

Thomas P. Kemp (71)      12/1997 to   Private Investor; Trustee, PIMCO Funds:       50            Chairman, OneTouch
Trustee                  Present      Pacific Investment Management Series; and                   Technologies Corp.
                                      Director, PIMCO Commercial Mortgage
                                      Securities Trust, Inc.  Formerly,
                                      Co-Chairman, U.S. Committee to Assist
                                      Russian Reform.

William J. Popejoy (64)  12/1997 to   Managing Member, Pacific Capital              50            None
Trustee                  Present      Investors; Trustee, PIMCO Funds: Pacific
                                      Investment Management Series; and
                                      Director, PIMCO Commercial Mortgage
                                      Securities Trust, Inc.  Formerly,
                                      Chairman, PacPro and Director, California
                                      State Lottery.

                                       37

Officers of the Trust

Name, Age and Position Held with Term of Office and Length of
Trust Time Served Principal Occupation(s) During Past 5 Years
------------------------------------------------------------------------------------------------------------------------
William H. Gross (58) 12/1997 to Present Managing Director, PIMCO; and Senior Vice President,
Senior Vice President PIMCO Funds: Pacific Investment Management Series.

James F. Muzzy (62) 12/1997 to Present Managing Director, PIMCO; and Vice President, PIMCO
Senior Vice President Funds: Pacific Investment Management Series.

Jeffrey M. Sargent (39) 12/1997 to Present Senior Vice President and Manager of Investment
Senior Vice President Operations Shareholder Services, PIMCO; Senior Vice
President, PIMCO Commercial Mortgage Securities Trust,
Inc. and PIMCO Funds: Pacific Investment Management
Series. Formerly, Vice President, PIMCO.

William S. Thompson, Jr. (56) 12/1997 to Present Chief Executive Officer and Managing Director, PIMCO;
Senior Vice President and Vice President, PIMCO Funds: Pacific Investment
Management Series and PIMCO Commercial Mortgage
Securities Trust, Inc.

Gregory A. Bishop (40) 12/1997 to Present Senior Vice President, PIMCO. Formerly, investment
Vice President consultant, William M. Mercer.

Steven P. Kirkbaumer (46) 10/1998 to Present Vice President, PIMCO. Formerly, associated with
Vice President Chancellor Capital Management.

Henrik P. Larsen (32) 02/1999 to Present Vice President and Manager, Fund Administration,
Vice President PIMCO; and Vice President, PIMCO Commercial Mortgage
Securities Trust, Inc. Formerly, Supervisor, PIMCO.

John P. Hardaway (44) 12/1997 to Present Senior Vice President and Manager of Investment
Treasurer Operations Accounting, PIMCO; Treasurer, PIMCO
Commercial Mortgage Securities Trust, Inc., PIMCO
Funds: Pacific Investment Management Series, and PIMCO
Funds: Multi-Manager Series. Formerly, Vice
President, PIMCO.


Name, Age and Position Held with   Term of Office and Length of
Trust                              Time Served                    Principal Occupation(s) During Past 5 Years
------------------------------------------------------------------------------------------------------------------------
Garlin G. Flynn (56)               12/1997 to Present             Specialist, PIMCO; Secretary, PIMCO Commercial
Secretary                                                         Mortgage Securities Trust, Inc.; PIMCO Funds: Pacific
                                                                  Investment Management Series; and Assistant Secretary,
                                                                  PIMCO Funds: Multi-Manager Series.  Formerly, Senior
                                                                  Portfolio Administrator, PIMCO; and Senior Mutual Fund
                                                                  Analyst, PIMCO Advisors Institutional.

Erik C. Brown (34)                 02/2001 to Present             Vice President of Tax and Financial Reporting; and
Assistant Treasurer                                               Assistant Treasurer, PIMCO Commercial Mortgage
                                                                  Securities Trust, Inc., PIMCO Funds: Pacific
                                                                  Investment Management Series, and PIMCO Funds:
                                                                  Multi-Manager Series.  Formerly, tax consultant for
                                                                  Deloitte & Touche and PricewaterhouseCoopers.

Michael J. Willemsen (42)          12/1997 to Present             Vice President, PIMCO; and Assistant Secretary, PIMCO
Assistant Secretary                                               Commercial Mortgage Securities Trust, Inc. and PIMCO
                                                                  Funds: Pacific Investment Management Series.
                                                                  Formerly, Project Lead, PIMCO.

     Listed below for each Trustee is a dollar range of securities beneficially
owned in the Trust together with the aggregate dollar range of equity securities
in all registered investment companies overseen by each Trustee that are in the
same family of investment companies as the Trust, as of December 31, 2001.

------------------------------------------------------------------------------------------------------------
                                                                        Aggregate Dollar Range of Equity
                                                                    Securities in All Portfolios Overseen by
                             Dollar Range of Equity Securities in        Trustee or Nominee in Family of
Name of Trustee or Nominee              the Portfolios                        Investment Companies
------------------------------------------------------------------------------------------------------------
Guilford C. Babcock                          None                                      -0-
------------------------------------------------------------------------------------------------------------
R. Wesley Burns                              None                                  $1-$10,000
------------------------------------------------------------------------------------------------------------
E. Philip Cannon                             None                                      -0-
------------------------------------------------------------------------------------------------------------
Vern O. Curtis                               None                                 Over $100,000
------------------------------------------------------------------------------------------------------------
J. Michael Hagan                             None                                      -0-
------------------------------------------------------------------------------------------------------------
Brent R. Harris                              None                                 Over $100,000
------------------------------------------------------------------------------------------------------------
Thomas P. Kemp                               None                                $10,001-$50,000
------------------------------------------------------------------------------------------------------------
William J. Popejoy                           None                                      -0-
------------------------------------------------------------------------------------------------------------

     No independent Trustee (or an immediate family member thereof) had any
direct or indirect interest, the value of which exceeds $60,000, in the
investment adviser, the principal underwriter of the Trust, or any entity
controlling, controlled by or under common control with the investment adviser
or the principal underwriter of the Trust (not including registered investment
companies). Set forth in the table below is information regarding each
independent Trustee's (and his or her immediate family members') share ownership
in securities of the investment adviser of the Trust, the principal underwriter
of the Trust,

                                       39


and any entity controlling, controlled by or under common control with the
investment adviser or principal underwriter of the Trust (not including
registered investment companies), as of December 31, 2001.

----------------------------------------------------------------------------------------------------
                             Name of Owners and
                              Relationships to                                Value of    Percent of
Name of Trustee or Nominee   Trustee or Nominee   Company   Title of Class   Securities     Class
----------------------------------------------------------------------------------------------------
Guilford C. Babcock                 None           None          None           None         None
----------------------------------------------------------------------------------------------------
R. Wesley Burns                     None           None          None           None         None
----------------------------------------------------------------------------------------------------
E. Philip Cannon                    None           None          None           None         None
----------------------------------------------------------------------------------------------------
Vern O. Curtis                      None           None          None           None         None
----------------------------------------------------------------------------------------------------
J. Michael Hagan                    None           None          None           None         None
----------------------------------------------------------------------------------------------------
Brent R. Harris                     None           None          None           None         None
----------------------------------------------------------------------------------------------------
Thomas P. Kemp                      None           None          None           None         None
----------------------------------------------------------------------------------------------------
William J. Popejoy                  None           None          None           None         None
----------------------------------------------------------------------------------------------------

     No independent Trustee or immediate family member has during the two most
recently completed calendar years had: (i) any material interest, direct or
indirect, in any transaction or series of similar transactions, in which the
amount involved exceeds $60,000; (ii) any securities interest in the principal
underwriter of the Trust or the investment adviser or their affiliates (other
than the Trust); or (iii) any direct or indirect relationship of any nature, in
which the amount involved exceeds $60,000, with:

..    the Portfolios;

..    an officer of the Portfolios;

..    an investment company, or person that would be an investment company but
     for the exclusions provided by sections 3(c)(1) and 3(c)(7) of the 1940
     Act, having the same investment adviser or principal underwriter as the
     Portfolios or having an investment adviser or principal underwriter that
     directly or indirectly controls, is controlled by, or is under common
     control with the investment adviser or principal underwriter of the
     Portfolios;

..    an officer or an investment company, or a person that would by an
     investment company but for the exclusions provided by sections 3(c)(1) and
     3(c)(7) of the 1940 Act, having the same investment adviser or principal
     underwriter as the Portfolios or having an investment adviser or principal
     underwriter that directly or indirectly controls, is controlled by, or is
     under common control with the investment adviser or principal underwriter
     of the Portfolios;

..    the investment adviser or principal underwriter of the Portfolios;

..    an officer of the investment adviser or principal underwriter of the
     Portfolios;

..    a person directly or indirectly controlling, controlled by, or under common
     control with the investment adviser or principal underwriter of the
     Portfolios; or

..    an officer of a person directly or indirectly controlling, controlled by,
     or under common control with the investment adviser or principal
     underwriter of the Portfolios.

                                       40


Standing Committees

     The Trust has a standing Audit Committee that consists of all of the
independent Trustees (Messrs. Babcock, Cannon, Curtis, Hagan, Kemp and Popejoy).
The Audit Committee reviews both the audit and non-audit work of the Trust's
independent public accountant, submits a recommendation to the Board as to the
selection of an independent public accountant, and reviews generally the
maintenance of the Trust's records and the safekeeping arrangement of the
Trust's custodian. During the fiscal year ended December 31, 2001, the Audit
Committee met four times. Each member of the Audit Committee attended 100% of
such meetings during the period in which he or she was a member of the Audit
Committee.

     The Board has formed a Valuation Committee whose function is to monitor the
valuation of portfolio securities and other investments and, as required by the
Trust's valuation policies, when the Board is not in session it shall determine
the fair value of portfolio holdings after consideration of all relevant
factors, which determinations shall be reported to the full Board. The Valuation
Committee currently consists of all of the Trust's Board members. The Valuation
Committee held two meetings during the last fiscal year.

     The Trust also has a Nominating Committee, composed of independent Trustees
(Messrs. Babcock, Cannon, Curtis, Hagan, Kemp, and Popejoy), that is responsible
for the selection and nomination of candidates to serve as Trustees of the
Trust. The Nominating Committee does not currently have a policy regarding
whether it will consider nominees recommended by shareholders. During the fiscal
year ended December 31, 2001, there were no meetings of the Nominating
Committee.

                                       41


Compensation Table

For the fiscal year ending December 31, 2001, the Trust paid the following
compensation to the Trustees of the Trust:

                        Aggregate     Total Compensation from
                      Compensation    Trust and Fund Complex
 Name and Position    from Trust/1/      Paid to Trustees/2/
-------------------------------------------------------------

Guilford C. Babcock      $10,250             $ 93,750
Trustee

E. Philip Cannon         $11,625             $183,464/3/
Trustee

Vern O. Curtis           $11,599             $ 98,723
Trustee

J. Michael Hagan         $10,500             $ 95,000
Trustee

Thomas P. Kemp           $10,500             $ 95,000
Trustee

William J. Popejoy       $10,500             $ 95,000
Trustee

--------
/1/ Each Trustee, other than those affiliated with PIMCO or its affiliates will
receive an annual retainer of $4,000 plus $1,500 for each Board of Trustees
meeting attended in person and $250 for each meeting attended telephonically,
plus reimbursement of related expenses. In addition, a Trustee serving as a
Committee Chair, other than those affiliated with PIMCO or its affiliates, will
receive an additional annual retainer of $500.

/2/ Each Trustee also serves as a Director of PIMCO Commercial Mortgage
Securities Trust, Inc., a registered closed-end management investment company,
and as a Trustee of PIMCO Funds: Pacific Investment Management Series, a
registered open-end management investment company. For their services to PIMCO
Commercial Mortgage Securities Trust, Inc., each Director who is unaffiliated
with PIMCO or its affiliates receives an annual retainer of $6,000 plus $1,000
for each Board of Directors meeting attended and $500 for each Board of
Directors meeting attended telephonically, plus reimbursement of related
expenses. Each Trustee serving as a Committee Chair, other than those affiliated
with PIMCO or its affiliates, receives an annual retainer of $500. For their
services to PIMCO Funds: Pacific Investment Management Series, each Trustee
through December 31, 2000, other than those affiliated with PIMCO or its
affiliates, received an annual retainer of $60,000 plus $3,000 for each Board of
Trustees meeting attended in person and $500 for each meeting attended
telephonically, plus reimbursement of related expenses. As of January 1, 2001,
the annual retainer amount was increased to $60,000. In addition, a Trustee
serving as a Committee Chair, other than those affiliated with PIMCO or its
affiliates, receives an additional annual retainer of $1,500.

/3/ Mr. Cannon also serves as a Trustee of the PIMCO Funds: Multi-Manager
Series. For his services, Mr. Cannon receives an annual retainer of $52,000 plus
$3,000 for each Board of Trustees meeting attended in person ($1,500 for each
such meeting attended telephonically), and $1,500 for each Performance Committee
meeting attended, plus reimbursement of related expenses.

                                       42


Control Persons and Principal Holders of Securities

As of April 23, 2002, the following persons owned of record or beneficially 5%
or more of the shares of the following Portfolios:

                                                                   Percent
                                                   Shares            of
                                             Beneficially Owned   Portfolio
                                             ------------------------------
Foreign Bond Portfolio

Institutional
-------------
Pacific Investment Management Co                   1,166.680       100.00%*
800 Newport Center Dr Fl 6
Newport Beach, CA  92660

Administrative
--------------
GE Life and Annuity Assurance Co                 424,220.330        57.24%*
6610 W. Broad St
Richmond, VA  23230

Farmers New World Life Insurance                 157,315.170        21.23%
3003 77th Ave SE
Mercer Island, WA  98040

Lincoln Benefit Life                             103,989.110        14.03%
2940 S. 84th St
Lincoln, NE  685506

Kemper Investors Life Insurance Co                37,855.750         5.11%
1 Kemper Dr Bldg 3
Long Grove, IL  60049

Global Bond Portfolio

Administrative
--------------
Pacific Investment Management Co                 271,171.790        92.78%*
800 Newport Center Dr Fl 6
Newport Beach, CA  92660

High Yield Portfolio

Administrative
--------------
Golden American Life Insurance Co             36,064,715.400        87.23%*
1475 Dunwoody Drive
West Chester, PA  19380

GE Life and Annuity Assurance Co               2,383,399.770         5.76%
6610 W. Broad St
Richmond, VA  23230

                                       43


                                                                   Percent
                                                   Shares            of
                                             Beneficially Owned   Portfolio
                                             ------------------------------

Long-Term US Gov't Portfolio

Institutional
-------------
Pacific Investment Management Co                   1,073.330       100.00%*
800 Newport Center Dr Fl 6
Newport Beach, CA  92660

Administrative
--------------
GE Life and Annuity Assurance Co               3,104,316.500        75.78%*
Attn Variable Accounting
6610 W. Broad St
Richmond, VA  23230

Western-Southern Life Assurance Co               603,849.200        14.74%
Separate Account 1
Mail Station #80
400 Broadway St
Cincinnati, OH  45202

Security Equity Life Insurance                   330,025.980         8.06%
C/O Separate Account
Attn: B1-08
13045 Tesson Ferry Rd
Saint Louis, MO  63128

Low Duration Portfolio

Institutional
-------------
Pacific Investment Management Co                   1,033.060       100.00%*
800 Newport Center Dr Fl 6
Newport Beach, CA  92660

Administrative
--------------
Farmers New World Life Ins-                      367,074.490        51.31%*
3003 77th Ave SE
Mercer Island, WA  98040

MetLife Investors                                279,925.840        39.13%*
P.O. Box 295
Des Moines, IA  50301-0295

Money Market Portfolio

Institutional
-------------
Pacific Investment Management Co                  11,465.630       100.00%*
800 Newport Center Dr Fl 6
Newport Beach, CA  92660

                                       44


                                                                   Percent
                                                   Shares            of
                                             Beneficially Owned   Portfolio
                                             ------------------------------

Administrative
--------------
Lincoln Benefit Life                          19,926,878.420        99.96%*
Nebraska Service Center
2940 S. 84th St
Lincoln, NE  68506

Real Return Portfolio

Institutional
-------------
Pacific Investment Management Co                   1,317.660       100.00%*
800 Newport Center Dr Fl 6
Newport Beach, CA  92660

Administrative
--------------
American General Life Ins Co                     357,490.710        30.92%*
Platinum Investor VA
PO Box 1591
Houston, TX  77251

IL Annuity and Insurance Co                      309,299.520        26.75%*
2960 N. Meridian St
Indianapolis, IN  46208

American General Life Ins Co                     214,159.570        18.52%
Platinum Investor VUL
PO Box 1591
Houston, TX  77251

American General Life Ins Co                     100,672.160         8.71%
Platinum Investor III
PO Box 1591
Houston, TX  77251

Mony Life Insurance Company of America            88,370.240         7.64%
1740 Broadway Suite 636
New York, NY  10019-4315

Short-Term Portfolio

Institutional
-------------
PFL Life Insurance Company                       345,012.977        81.55%*
4333 Edgewood Rd NE
Cedar Rapids, IA  52499

Western Reserve Life Assurance Co                 73,133.853        17.29%
of Ohio Advantage IV
FMD Operational Accounting
4333 Edgewood Rd NE
Cedar Rapids, IA  52499

                                       45


                                                                   Percent
                                                   Shares            of
                                             Beneficially Owned   Portfolio
                                             ------------------------------

Administrative
--------------
American General Life Ins Co                     131,060.750        46.04%*
Platinum Investor VA
PO Box 1591
Houston, TX  77251

American General Life Ins Co                      76,307.620        26.80%*
Platinum Investor III
PO Box 1591
Houston, TX  77251

American General Life Ins Co                      52,599.480        18.48%*
Platinum Investor VUL
PO Box 1591
Houston, TX  77251

Total Return Portfolio

Institutional
-------------
Transamerica Life Insurance Co.                2,800,984.180        81.87%*
1150 S. Olive Street, Suite T2501
Los Angeles, CA  90015

Western Reserve Life Assurance Co                920,395.490        26.90%*
of Ohio Advantage IV
EMD Operational Accounting
4333 Edgewood Rd NE
Cedar Rapids, IA  52499

Administrative
--------------
Merrill Lynch Life Insurance Co               13,479,212.150        25.39%*
4804 Deer Lake Dr E Bldg 3 4th Fl
Jacksonville, FL  32246

Travelers Life and Annuity Company             7,198,465.330        13.56%
One Tower Square 6 MS
Hartford, CT  06183-0001

GE Life and Annuity Assurance Company          7,079,540.730        13.34%
6610 West Broad St
Richmond, VA  23230

Allianz Life Insurance Co.                     5,433,513.580        10.24%
1750 Hennepin Ave.
Minneapolis, MN  55403

Jefferson Pilot Financial Insurance Co.        4,659,117.060         8.78%
1 Granite Place IS 03
Concord, NH  03301

                                       46


                                                                   Percent
                                                   Shares            of
                                             Beneficially Owned   Portfolio
                                             ------------------------------

Travelers Insurance Company                    4,127,630.190         7.78%
One Tower Square 6 MS
Hartford, CT 06183-0001

MetLife Investors                              3,050,887.320         5.75%
PO Box 295
Des Moines, IA  50301-0295

Total Return Portfolio II

Institutional
-------------
Pacific Investment Management Co                 116,435.707       100.00%*
800 Newport Center Dr Fl 6
Newport Beach, CA  92660

Administrative
--------------
Security Equity Life Ins                         238,691.840        87.86%*
C/O Conning Asset Management
Attn: B1-08
13045 Tesson Ferry Rd
Saint Louis, MO  63128

Allmerica Financial Life Insurance Company        32,979.810        12.14%
440 Lincoln Street
Worcester, MA  01653

StocksPLUS Growth & Income Portfolio

Institutional
-------------
Western Reserve Life Assurance Co                 93,436.830       100.00%*
of Ohio Advantage IV
FMD Operational Accounting
4333 Edgewood Rd NE
Cedar Rapids IA  52499

Administrative
--------------
Golden American Life Insurance Co             25,683,405.290        90.95%*
1475 Dunwoody Drive
West Chester, PA  19380

*    Entity owned 25% or more of the outstanding shares of beneficial interest
     of the Portfolio, and therefore may be presumed to "control" the Portfolio,
     as that term is defined in the 1940 Act.

Investment Adviser

     Pacific Investment Management Company LLC ("PIMCO"), a Delaware limited
liability company, serves as investment adviser to the Portfolios pursuant to an
investment advisory contract ("Advisory Contract") between PIMCO and the Trust.
PIMCO is a subsidiary of Allianz Dresdner Asset Management of America L.P.
("ADAM of America"). ADAM of America was organized as a limited

                                       47


partnership under Delaware law in 1987. ADAM of America's sole general partner
is Allianz PacLife Partners LLC. Allianz-Paclife Partners LLC is a Delaware
limited liability company with two members, ADAM U.S. Holding LLC, a Delaware
limited liability company and Pacific Asset Management LLC, a Delaware limited
liability company. ADAM U.S. Holding LLC is a wholly-owned subsidiary of Allianz
Dresdner Asset Management of America LLC which is a wholly-owned subsidiary of
Allianz of America, Inc., which is wholly owned by Allianz AG. Pacific Asset
Management LLC is a wholly-owned subsidiary of Pacific Life Insurance Company,
which is a wholly-owned subsidiary of Pacific Mutual Holding Company.

     PIMCO is located at 840 Newport Center Drive, Suite 300, Newport Beach,
California 92660. PIMCO had approximately $241.3 billion of assets under
management as of December 31, 2001.

     Allianz AG is a European based insurance and financial services holding
company and a publicly traded German company. As of December 31, 2001, the
Allianz Group (including PIMCO) had assets under management of more than $1.02
trillion.

     Significant institutional shareholders of Allianz AG currently include
Munchener Ruckversicherungs-Gesellschaft AG ("Munich Re") and Bayerische
Hypo-und Vereinsbank AG ("HypoVereinsbank"). These entities as well as certain
broker-dealers that might be controlled by or affiliated with Allianz AG or
these entities (collectively, the "Affiliated Brokers"), may be considered to be
affiliated persons of PIMCO. Absent an SEC exemption or other relief, the Funds
generally are precluded from effecting principal transactions with the
Affiliated Brokers, and its ability to purchase securities being underwritten by
an Affiliated Broker or to utilize the Affiliated Brokers for agency
transactions is subject to restrictions. PIMCO does not believe that the
restrictions on transactions with the Affiliated Brokers described above
materially adversely affect its ability to provide services to the Funds, the
Funds' ability to take advantage of market opportunities, or the Funds' overall
performance.

Advisory Agreement

     PIMCO is responsible for making investment decisions and placing orders for
the purchase and sale of the Portfolios' investments directly with the issuers
or with brokers or dealers selected by it in its discretion. See "Portfolio
Transactions and Brokerage" below. PIMCO also furnishes to the Board of
Trustees, which has overall responsibility for the business and affairs of the
Trust, periodic reports on the investment performance of each Portfolio.

     Under the terms of the Advisory Contract, PIMCO is obligated to manage the
Portfolios in accordance with applicable laws and regulations. The investment
advisory services of PIMCO to the Trust are not exclusive under the terms of the
Advisory Contract. PIMCO is free to, and do, render investment advisory services
to others.

     PIMCO is responsible for determining how the assets of the Strategic
Balanced Portfolio are allocated and reallocated from time to time between the
Underlying Portfolios. The Portfolio does not pay any fees to PIMCO in return
for these services under the Advisory Contract. The Portfolio does, however,
indirectly pay a proportionate share of the advisory fees paid to PIMCO by the
Underlying Portfolios in which the Portfolio invests.

     Following the expiration of the two year period commencing with the
effectiveness of the Advisory Contract, it will continue in effect on a yearly
basis provided such continuance is approved annually (i) by the holders of a
majority of the outstanding voting securities of the Trust or by the Board of
Trustees and (ii) by a majority of the Independent Trustees. The Advisory
Contract may be terminated without penalty by vote of the Trustees or the
shareholders of the Trust, or by PIMCO, on 60 days' written notice by either
party to the contract and will terminate automatically if assigned.

                                       48


     Continuation of the Advisory Contract was last approved by the Board of
Trustees, including a majority of the Trustees who are not parties to the
Advisory Contract or interested persons of such parties ("Independent
Trustees"), at a meeting held on August 21, 2001. In determining whether to
continue the Advisory Contract, the Trustees considered the fees and expenses
paid by the Portfolios and by comparable funds, the costs of providing these
services, and the profitability of PIMCO's relationship with the Portfolios. The
Trustees also considered the nature and quality of services provided under the
Advisory Contract, and the investment performance of the Portfolios on an
absolute basis, and relative to the performance of comparable funds. The
Trustees also considered the terms of the Trust's Administration Agreement and
the fees paid and services provided to the Portfolios under their "unified fee"
structure. In addition, the Trustees considered the relationships among PIMCO,
Allianz AG, and their affiliates, including any collateral benefits received by
PIMCO or its affiliates due to PIMCO's relationship with the Portfolios. The
Trustees also considered PIMCO's representations concerning its staffing,
capabilities and methodologies applied in managing the Portfolios, including the
importance of retention of personnel with relevant portfolio management
experience. Upon completion of the Board's review and discussion, the Trustees
concluded that the investment advisory fees payable to PIMCO under the Advisory
Contract are fair and reasonable in light of the services provided to the
Portfolios, and approved the continuation of the Advisory Contract between the
Trust and PIMCO for one year.

     Each Portfolio, except for the Strategic Balanced Portfolio, currently pays
a monthly investment advisory fee at an annual rate based on average daily net
assets of the Portfolios as follows:

                                                                        Advisory
Portfolio                                                               Fee Rate
---------                                                               --------
Money Market Portfolio.................................................. 0.15%
StocksPLUS Growth and Income Portfolio.................................. 0.40
Emerging Markets Bond Portfolio......................................... 0.45
All other Portfolios.................................................... 0.25

     The advisory fees paid by each Portfolio that was operational during the
fiscal year ended December 31, 2001, 2000 and 1999 was as follows:

                                         Year Ended   Year Ended   Year Ended
Portfolio                                 12/31/01     12/31/00     12/31/99
---------                                ----------   ----------   ----------
Money Market Portfolio                   $    9,783   $    7,081    $  2,444
Short-Term Portfolio                     $   10,884   $    8,669    $  2,715
Low Duration Portfolio                   $   15,546   $   15,623    $ 17,747
Real Return Portfolio                    $   12,723   $    9,325    $  3,091
Total Return Portfolio II                $   14,998   $   15,233    $ 12,153
Total Return Portfolio                   $  515,574   $   49,396    $ 12,917
High Yield Portfolio                     $  572,772   $  475,974    $520,523
Long-Term U.S. Government Portfolio      $   48,294   $   23,756    $ 17,655
Foreign Bond Portfolio                   $   15,927   $   18,418    $ 26,461
StocksPLUS Growth and Income Portfolio   $1,019,741   $1,058,815    $563,001

Code of Ethics

     PIMCO is subject to the Code of Ethics with respect to investment
transactions in which PIMCO's officers, directors and certain other persons have
a beneficial interest to avoid any actual or potential conflict or abuse of
their fiduciary position. The Code of Ethics contains several restrictions and
procedures designed to eliminate conflicts of interest including: (a)
pre-clearance of non-exempt personal

                                       49


investment transactions; (b) quarterly reporting of personal securities
transactions; (c) a prohibition against personally acquiring securities in an
initial public offering, entering into uncovered short sales and writing
uncovered options; (d) a seven day "black out period" prior or subsequent to a
Portfolio transaction during which portfolio managers are prohibited from making
certain transactions in securities which are being purchased or sold by a client
of such manager; (e) a prohibition, with respect to certain investment
personnel, from profiting in the purchase and sale, or sale and purchase, of the
same (or equivalent) securities within 60 calendar days; and (f) a prohibition
against acquiring any security which is subject to firm wide or, if applicable,
a department restriction of PIMCO. The Code of Ethics provides that exemptive
relief may be given from certain of its requirements, upon application.

Administrator

     PIMCO also serves as Administrator to the Portfolios pursuant to an
administration agreement (the "Administration Agreement") with the Trust. PIMCO
provides the Portfolios with certain administrative and shareholder services
necessary for Portfolio operations and is responsible for the supervision of
other Portfolio service providers. PIMCO may in turn use the facilities or
assistance of its affiliates to provide certain services under the
Administration Agreement, on terms agreed between PIMCO and such affiliates. The
administrative services provided by PIMCO include but are not limited to: (1)
shareholder servicing functions, including preparation of reports and
communications to shareholders and other appropriate parties, (2) regulatory
compliance, such as reports and filings with the SEC and state securities
commissions, and (3) general supervision of the operations of the Portfolios,
including coordination of the services performed by the Portfolios' transfer
agent, custodian, legal counsel, independent accountants, and others. PIMCO (or
an affiliate of PIMCO) also furnishes the Portfolios with office space
facilities required for conducting the business of the Portfolios, and pays the
compensation of those officers, employees and Trustees of the Trust affiliated
with PIMCO. In addition, PIMCO, at its own expense, arranges for the provision
of legal, audit, custody, transfer agency and other services for the Portfolios,
and is responsible for the costs of registration of the Trust's shares and the
printing of prospectuses and reports for current shareholders and other
appropriate parties.

     PIMCO has contractually agreed to provide the foregoing services, and to
bear these expenses, at the following rates for each Portfolio (each expressed
as a percentage of the Portfolio's average daily net assets attributable to its
classes of shares on an annual basis):

                                                                  Administrative
Portfolio                                                           Fee Rate
---------                                                         --------------
Strategic Balanced and StocksPLUS Growth and Income Portfolios....    0.10%
Money Market and Short-Term Portfolios............................    0.20%
High Yield Portfolio..............................................    0.35%
Emerging Markets Bond Portfolio...................................    0.40%
Global Bond and Foreign Bond Portfolios...........................    0.50%
All Other Portfolios..............................................    0.25%

     Except for the expenses paid by PIMCO, the Trust bears all costs of its
operations. The Portfolios are responsible for: (i) salaries and other
compensation of any of the Trust's executive officers and employees who are not
officers, directors, stockholders, or employees of PIMCO or its subsidiaries or
affiliates; (ii) taxes and governmental fees; (iii) brokerage fees and
commissions and other portfolio transaction expenses; (iv) costs of borrowing
money, including interest expenses; (v) fees and expenses of the Trustees who
are not "interested persons" of PIMCO or the Trust, and any counsel retained
exclusively for their benefit; (vi) extraordinary expenses, including costs of
litigation and indemnification expenses; and (vii) expenses, such as
organizational expenses, which are accounted for in accordance with generally
accepted accounting principles.

                                       50


     The Administration Agreement may be terminated by the Trustees, or by a
vote of the outstanding voting securities of the Trust or Portfolio, as
applicable, at any time on 60 days' written notice. Following the expiration of
the two year period commencing with the effectiveness of the Administration
Agreement, it may be terminated by PIMCO on 60 days' written notice. Following
its initial two-year term, the agreement will continue from year to year if
approved by the Trustees, including a majority of the Trust's Independent
Trustees (as that term is defined in the 1940 Act). The Strategic Balanced
Portfolio indirectly pays a proportionate share of the administrative fees paid
to PIMCO by the Underlying Portfolios in which the Portfolio invests.

     The administrative fees paid by each Portfolio that was operational during
the fiscal year ended December 31, 2001, 2000 and 1999 was as follows:

                                         Year Ended   Year Ended   Year Ended
Portfolio                                 12/31/01     12/31/00     12/31/99
---------                                ----------   ----------   ----------
Money Market Portfolio                    $ 13,043     $  7,749     $  1,629
Short-Term Portfolio                      $  8,707     $  6,712     $  1,939
Low Duration Portfolio                    $ 15,546     $ 13,740     $ 11,902
Real Return Portfolio                     $ 12,723     $  8,221     $  1,932
Total Return Portfolio II                 $ 14,998     $ 13,358     $  7,711
Total Return Portfolio                    $515,574     $ 47,920     $  7,596
High Yield Portfolio                      $801,881     $505,476     $260,261
Long-Term U.S. Government                 $ 48,294     $ 21,015     $ 11,034
Portfolio
Foreign Bond Portfolio                    $ 31,854     $ 25,262     $ 13,231
StocksPLUS Growth and Income Portfolio    $254,935     $351,587     $351,876

     PIMCO may pay, out of its own assets and at no cost to the Portfolios,
amounts to certain financial intermediaries in connection with the provision of
administrative and/or distribution services with respect to the Portfolios. For
the fiscal year ended December 31, 2001, PIMCO paid intermediaries out of its
own assets for costs associated with theses administrative and distribution
services, approximately $972,000 on behalf of the Portfolios.

     PIMCO has entered into an expense limitation agreement with the Trust,
pursuant to which PIMCO has agreed to waive or reduce its administrative fee so
that the total annual Portfolio operating expenses of each Portfolio do not
exceed, due to organizational expenses and/or the payment of the Portfolio's pro
rata share of the Trust's Trustees' fees, the total portfolio operating expenses
specified for that Portfolio in the table identifying the Portfolio's annual
portfolio operating expenses in the Portfolio's then-current prospectus, plus
0.49 basis points. Each Portfolio will at a later date reimburse PIMCO for
administrative fees waived by PIMCO during the previous 36 months, but only if,
after such reimbursement, the Portfolio's expense ratio does not exceed the
percentage described above. The agreement has a current term through December
31, 2000, and will automatically renew for one-year terms unless PIMCO provides
written notice to the Trust at least 30 days prior to the end of the
then-current term. In addition, the agreement will terminate upon termination of
the Administration Agreement, or may be terminated by the Trust, without payment
of any penalty, upon ninety (90) days' prior written notice to PIMCO.

                                       51


                          DISTRIBUTION OF TRUST SHARES

Distributor and Multi-Class Plan

     PIMCO Funds Distributors LLC (the "Distributor") serves as the distributor
of the Trust's shares pursuant to a distribution contract ("Distribution
Contract") with the Trust which is subject to annual approval by the Board. The
Distributor is an indirect subsidiary of ADAM of America. The Distribution
Contract is terminable with respect to a Portfolio or class without penalty, at
any time, by the Portfolio or class by not more than 60 days' nor less than 30
days' written notice to the Distributor, or by the Distributor upon not more
than 60 days' nor less than 30 days' written notice to the Trust. The
Distributor is not obligated to sell any specific amount of Trust shares.

     The Distribution Contract will continue in effect with respect to each
Portfolio for successive one-year periods, provided that each such continuance
is specifically approved (i) by the vote of a majority of the Trustees who are
not interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the Distribution Contract; and (ii) by
the vote of a majority of the entire Board of Trustees cast in person at a
meeting called for that purpose. If the Distribution Contract is terminated (or
not renewed) with respect to one or more Portfolios, it may continue in effect
with respect to any Portfolio as to which it has not been terminated (or has
been renewed).

     The Trust offers two classes of shares: the Institutional Class and the
Administrative Class. The Trust has adopted an Amended and Restated Multi-Class
Plan ("Multi-Class Plan") pursuant to Rule 18f-3 under the 1940 Act. Under the
Multi-Class Plan, shares of each class of each Portfolio represent an equal pro
rata interest in such Portfolio and, generally, have identical voting, dividend,
liquidation, and other rights, preferences, powers, restrictions, limitations,
qualifications and terms and conditions, except that: (a) each class has a
different designation; (b) each class of shares bears any class-specific
expenses allocated to it; and (c) each class has exclusive voting rights on any
matter submitted to shareholders that relates solely to its distribution or
service arrangements, and each class has separate voting rights on any matter
submitted to shareholders in which the interests of one class differ from the
interests of any other class.

     Each class of shares bears any class specific expenses allocated to such
class, such as expenses related to the distribution and/or shareholder servicing
of such class. In addition, each class may, at the Trustees' discretion, also
pay a different share of other expenses, not including advisory or custodial
fees or other expenses related to the management of the Trust's assets, if these
expenses are actually incurred in a different amount by that class, or if the
class receives services of a different kind or to a different degree than the
other classes. All other expenses are allocated to each class on the basis of
the net asset value of that class in relation to the net asset value of the
particular Portfolio. In addition, each class may have a differing sales charge
structure, and differing exchange and conversion features.

Administrative Services Plan for Administrative Class Shares

     The Trust has adopted an Administrative Services Plan (the "Administrative
Plan") with respect to the Administrative Class shares of each Portfolio.

     Under the terms of the Administrative Plan, the Trust is permitted to
reimburse, out of the assets attributable to the Administrative Class shares of
each Portfolio, in an amount up to 0.15% on an annual basis of the average daily
net assets of that class, financial intermediaries that provide certain
administrative services for Administrative Class shareholders. Such services may
include, but are not limited to, the following functions: receiving, aggregating
and processing shareholder orders; furnishing shareholder sub-accounting;
providing and maintaining elective shareholder services such as check writing
and wire transfer services; providing and maintaining pre-authorized investment
plans; communicating periodically with shareholders; acting as the sole
shareholder of record and nominee for

                                       52


shareholders; maintaining accounting records for shareholders; answering
questions and handling correspondence from shareholders about their accounts;
and performing similar account administrative services.

     Fees paid pursuant to the Administrative Plan may be paid for shareholder
services and the maintenance of shareholder accounts, and therefore may
constitute "service fees" for purposes of applicable rules of the National
Association of Securities Dealers, Inc.

     The Portfolios paid fees pursuant to the Administrative Plan during the
fiscal year ended December 31, 2001 as follows:

                                         Year Ended
Portfolio                                 12/31/01
---------                                ----------
Money Market Portfolio                    $  9,815
Short-Term Portfolio                      $  1,027
Low Duration Portfolio                    $  4,222
Real Return Portfolio                     $  6,552
Total Return Portfolio II                 $  3,469
Total Return Portfolio                    $295,602
High Yield Portfolio                      $317,273
Long-Term U.S. Government                 $ 29,137
Portfolio
Foreign Bond Portfolio                    $  8,935
StocksPLUS Growth and Income Portfolio    $377,427

     Each Administrative Plan provides that it may not be amended to materially
increase the costs which Administrative Class shareholders may bear under the
Plan without the approval of a majority of the outstanding voting securities of
the Administrative Class, and by vote of a majority of both (i) the Trustees of
the Trust and (ii) those Trustees who are not "interested persons" of the Trust
(as defined in the 1940 Act) and who have no direct or indirect financial
interest in the operation of the Plan or any agreements related to it (the "Plan
Trustees"), cast in person at a meeting called for the purpose of voting on the
Plan and any related amendments.

     The Administrative Plan also provides that it may not take effect until
approved by vote of a majority of both (i) the Trustees of the Trust and (ii)
the disinterested Trustees defined above. In addition, the Administrative Plan
further provides that it shall continue in effect so long as such continuance is
specifically approved at least annually by the Trustees and the disinterested
Trustees defined above. The Administrative Plan provides that any person
authorized to direct the disposition of monies paid or payable by a class
pursuant to the Plan or any related agreement shall provide to the Trustees, and
the Board shall review at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.

     The Administrative Plan is a "reimbursement plan," which means that fees
are payable to the relevant financial intermediary only to the extent necessary
to reimburse expenses incurred pursuant to such plan. The Administrative Plan
further provides that expenses payable under the Plan may be carried forward for
reimbursement for up to twelve months beyond the date in which the expense is
incurred, subject to the limit that not more that 0.15% of the average daily net
assets of Administrative Class shares may be used in any month to pay expenses
under the Plan.

                                       53


     Institutional and Administrative Class shares of the Trust may also be
offered through certain brokers and financial intermediaries ("service agents")
that have established a shareholder servicing relationship with the Trust on
behalf of their customers. The Trust pays no compensation to such entities other
than service fees paid with respect to Administrative Class shares. Service
agents may impose additional or different conditions than the Trust on the
purchase, redemption or exchanges of Trust shares by their customers. Service
agents may also independently establish and charge their customers transaction
fees, account fees and other amounts in connection which purchases, sales and
redemption of Trust shares in addition to any fees charged by the Trust. Each
service agent is responsible for transmitting to its customers a schedule of any
such fees and information regarding any additional or different conditions
regarding purchases and redemptions. Shareholders who are customers of service
agents should consult their service agents for information regarding these fees
and conditions.

Purchases and Redemptions

     Variable Contract Owners do not deal directly with the Portfolios to
purchase, redeem, or exchange shares, and Variable Contract Owners should refer
to the prospectus for the applicable Separate Account for information on the
allocation of premiums and on transfers of accumulated value among sub-accounts
of the Separate Accounts that invest in the Portfolios.

     Shares of a Portfolio may not be offered or sold in any state unless
qualified in that jurisdiction, unless an exemption from qualification is
available.

     A shareholder may exchange Institutional and Administrative Class shares of
any Portfolio for Institutional and Administrative Class shares of any other
Portfolio of the Trust on the basis of their respective net asset values. Orders
for exchanges accepted prior to the close of regular trading on the New York
Stock Exchange (the "NYSE") on any day the Trust is open for business will be
executed at the respective net asset values determined as of the close of
business that day.

     The Trust reserves the right to suspend or postpone redemptions during any
period when: (a) trading on the NYSE is restricted, as determined by the SEC, or
the NYSE is closed for other than customary weekend and holiday closings; (b)
the SEC has by order permitted such suspension; or (c) an emergency, as
determined by the SEC, exists, making disposal of portfolio securities or
valuation of net assets of the Portfolio not reasonably practicable.

     Although the Trust will normally redeem all shares for cash, it may, in
unusual circumstances, redeem by payment in kind of securities held in the
Portfolios.

                      PORTFOLIO TRANSACTIONS AND BROKERAGE

Investment Decisions

     Investment decisions for the Trust and for the other investment advisory
clients of PIMCOs are made with a view to achieving their respective investment
objectives. Investment decisions are the product of many factors in addition to
basic suitability for the particular client involved (including the Trust).
Thus, a particular security may be bought or sold for certain clients even
though it could have been bought or sold for other clients at the same time.
Likewise, a particular security may be bought for one or more clients when one
or more clients are selling the security. In some instances, one client may sell
a particular security to another client. It also sometimes happens that two or
more clients simultaneously purchase or sell the same security, in which event
each day's transactions in such security are, insofar as possible, averaged as
to price and allocated between such clients in a manner which in PIMCO's opinion
is equitable to each and in accordance with the amount being purchased or sold
by each. There may be circumstances when purchases or sales of portfolio
securities for one or more clients will have an adverse effect on other clients.

                                       54


Brokerage and Research Services

     There is generally no stated commission in the case of fixed income
securities, which are traded in the over-the-counter markets, but the price paid
by the Trust usually includes an undisclosed dealer commission or mark-up. In
underwritten offerings, the price paid by the Trust includes a disclosed, fixed
commission or discount retained by the underwriter or dealer. Transactions on
U.S. stock exchanges and other agency transactions involve the payment by the
Trust of negotiated brokerage commissions. Such commissions vary among different
brokers. Also, a particular broker may charge different commissions according to
such factors as the difficulty and size of the transaction. Transactions in
foreign securities generally involve the payment of fixed brokerage commissions,
which are generally higher than those in the United States.

     PIMCO places all orders for the purchase and sale of portfolio securities,
options and futures contracts for the relevant Portfolio and buys and sells such
securities, options and futures for the Trust through a substantial number of
brokers and dealers. In so doing, PIMCO uses its best efforts to obtain for the
Trust the most favorable price and execution available, except to the extent it
may be permitted to pay higher brokerage commissions as described below. In
seeking the most favorable price and execution, PIMCO, having in mind the
Trust's best interests, considers all factors it deems relevant, including, by
way of illustration, price, the size of the transaction, the nature of the
market for the security, the amount of the commission, the timing of the
transaction taking into account market prices and trends, the reputation,
experience and financial stability of the broker-dealer involved and the quality
of service rendered by the broker-dealer in other transactions.

     It has for many years been a common practice in the investment advisory
business for advisers of investment companies and other institutional investors
to receive research services from broker-dealers which execute portfolio
transactions for the clients of such advisers. Consistent with this practice,
PIMCO receives research services from many broker-dealers with which PIMCO
places the Trust's portfolio transactions. These services, which in some cases
may also be purchased for cash, include such matters as general economic and
security market reviews, industry and company reviews, evaluations of securities
and recommendations as to the purchase and sale of securities. Some of these
services are of value to PIMCO in advising various of its clients (including the
Trust), although not all of these services are necessarily useful and of value
in managing the Trust. The management fee paid by the Trust is not reduced
because PIMCO receives such services.

     As permitted by Section 28(e) of the Securities Exchange Act of 1934, PIMCO
may cause the Trust to pay a broker-dealer which provides "brokerage and
research services" (as defined in the Act) to PIMCO an amount of disclosed
commission for effecting a securities transaction for the Trust in excess of the
commission which another broker-dealer would have charged for effecting that
transaction.

     Consistent with the Rules of the NASD and subject to seeking the most
favorable price and execution available and such other policies as the Trustees
may determine, PIMCO may also consider sales of shares of the Trust as a factor
in the selection of broker-dealers to execute portfolio transactions for the
Trust, which may result in the payment of an amount of disclosed commission for
effecting a securities transaction for the Trust in excess of the commission
which another broker-dealer would have charged for effecting that transaction.

     PIMCO may place orders for the purchase and sale of exchange-listed
portfolio securities with a broker-dealer that is an affiliate of PIMCO where,
in the judgment of PIMCO, such firm will be able to obtain a price and execution
at least as favorable as other qualified broker-dealers.

     Pursuant to rules of the SEC, a broker-dealer that is an affiliate of PIMCO
may receive and retain compensation for effecting portfolio transactions for a
Portfolio on a national securities exchange of which the broker-dealer is a
member if the transaction is "executed" on the floor of the exchange by

                                       55


another broker which is not an "associated person" of the affiliated
broker-dealer, and if there is in effect a written contract between PIMCO and
the Trust expressly permitting the affiliated broker-dealer to receive and
retain such compensation.

     SEC rules further require that commissions paid to such an affiliated
broker-dealer, or PIMCO by a Portfolio on exchange transactions not exceed
"usual and customary brokerage commissions." The rules define "usual and
customary" commissions to include amounts which are "reasonable and fair
compared to the commission, fee or other remuneration received or to be received
by other brokers in connection with comparable transactions involving similar
securities being purchased or sold on a securities exchange during a comparable
period of time." For fiscal year ended December 31, 2001, PIMCO paid
approximately $15,000 in commissions to affiliated broker-dealers.

Portfolio Turnover

     PIMCO manages the Portfolios without regard generally to restrictions on
portfolio turnover. See "Taxation" below. The use of certain derivative
instruments with relatively short maturities may tend to exaggerate the
portfolio turnover rate for some of the Portfolios. Trading in fixed income
securities does not generally involve the payment of brokerage commissions, but
does involve indirect transaction costs. The use of futures contracts may
involve the payment of commissions to futures commission merchants. A Portfolio
with a higher rate of portfolio turnover will generally incur higher transaction
costs. The portfolio turnover rate for each of the following Portfolios
generally is not expected to exceed the indicated rate: Short-Term Portfolio -
100%; Low Duration Portfolio - 250%; Real Return Portfolio - 1,000%; High Yield
Portfolio - 75%; Total Return Portfolio - 175%; Total Return Portfolio II -
175%; Long-Term U.S. Government Portfolio - 500%; Foreign Bond Portfolio -
1,000%; Global Bond Portfolio - 1,000%; Emerging Markets Bond Portfolio -
1,000%; Strategic Balanced Portfolio - 100%; and StocksPLUS Growth and Income
Portfolio - 100%.

     The portfolio turnover rate of a Portfolio is calculated by dividing (a)
the lesser of purchases or sales of portfolio securities for the particular
fiscal year by (b) the monthly average of the value of the portfolio securities
owned by the Portfolio during the particular fiscal year. In calculating the
rate of portfolio turnover, there is excluded from both (a) and (b) all
securities, including options, whose maturities or expiration dates at the time
of acquisition were one year or less. Proceeds from short sales and assets used
to cover short positions undertaken are included in the amounts of securities
sold and purchased, respectively, during the year.

     Because PIMCO does not expect to reallocate the Strategic Balanced
Portfolio's assets between the Underlying Portfolios on a frequent basis, the
portfolio turnover rate for the Portfolio is expected to be modest (i.e., less
than 25%) in comparison to most mutual funds. However, the Portfolio indirectly
bears the expenses associated with the portfolio turnover of the Underlying
Portfolios, which may have high (i.e., greater than 100%) portfolio turnover
rates.

                                 NET ASSET VALUE

     The net asset value of a Portfolios' Institutional and Administrative Class
shares is determined once on each day as of 4:00 p.m. Eastern time, or as of
such other time designated by the NYSE as the close of trading for that day
("closing"). Net asset value will not be determined on any day on which the NYSE
is closed. The NYSE is closed on the following holidays: New Year's Day, Martin
Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day, and Christmas Day. The net asset value of a
Portfolios' Institutional and Administrative Class shares is determined by
dividing the total value of a Portfolio's investments and other assets
attributable to that class less any liabilities, by the total number of shares
outstanding of that class.

                                       56


     In determining net asset values, the Portfolios use price data received
shortly after 4:00 p.m. Eastern time believed to reflect the current market
value of the securities held by the Portfolios as of the closing of the NYSE.
The Portfolios intend to use these prices regardless of the impact of any
post-closing adjustments to securities prices, as long as, in the view of the
Portfolios, such prices represent the current market value of the securities as
of the time selected by the Portfolios for the calculation of net asset value.
Portfolios that invest in securities traded in foreign securities markets may
trade such securities on days when the NYSE is not open, and the net asset value
of a Portfolios Institutional and Administrative Class shares may be affected
significantly on days when investors do not have access to the Portfolios.

     For all Portfolios other than the Money Market Portfolio, portfolio
securities and other assets for which market quotations are readily available
are stated at market value. Market value is determined on the basis of last
reported sales prices, or if no sales are reported, as is the case for most
securities traded over-the- counter, at the mean between representative bid and
asked quotations obtained from a quotation reporting system or from established
market makers. Fixed income securities, including those to be purchased under
firm commitment agreements (other than obligations having a maturity of 60 days
or less), are normally valued on the basis of quotations obtained from brokers
and dealers or pricing services, which take into account appropriate factors
such as institutional-sized trading in similar groups of securities, yield,
quality, coupon rate, maturity, type of issue, trading characteristics, and
other market data.

     Quotations of foreign securities in foreign currency are converted to U.S.
dollar equivalents using foreign exchange quotations received from independent
dealers. Short-term investments having a maturity of 60 days or less are valued
at amortized cost, when the Board of Trustees determines that amortized cost is
their fair value. Certain fixed income securities for which daily market
quotations are not readily available may be valued, pursuant to guidelines
established by the Board of Trustees, with reference to fixed income securities
whose prices are more readily obtainable and whose durations are comparable to
the securities being valued. Subject to the foregoing, other securities for
which market quotations are not readily available are valued at fair value as
determined in good faith by the Board of Trustees.

     The Money Market Portfolio's securities are valued using the amortized cost
method of valuation. This involves valuing a security at cost on the date of
acquisition and thereafter assuming a constant accretion of a discount or
amortization of a premium to maturity, regardless of the impact of fluctuating
interest rates on the market value of the instrument. While this method provides
certainty in valuation, it may result in periods during which value, as
determined by amortized cost, is higher or lower than the price the Portfolio
would receive if it sold the instrument. During such periods the yield to
investors in the Portfolio may differ somewhat from that obtained in a similar
investment company which uses available market quotations to value all of its
portfolio securities.

     The SEC's regulations require the Money Market Portfolio to adhere to
certain conditions. The Trustees, as part of their responsibility within the
overall duty of care owed to the shareholders, are required to establish
procedures reasonably designed, taking into account current market conditions
and the Portfolio's investment objective, to stabilize the net asset value per
share as computed for the purpose of distribution and redemption at $1.00 per
share. The Trustees' procedures include a requirement to periodically monitor,
as appropriate and at such intervals as are reasonable in light of current
market conditions, the relationship between the amortized cost value per share
and the net asset value per share based upon available indications of market
value. The Trustees will consider what steps should be taken, if any, in the
event of a difference of more than 1/2 of 1% between the two. The Trustees will
take such steps as they consider appropriate, (e.g., selling securities to
shorten the average portfolio maturity) to minimize any material dilution or
other unfair results which might arise from differences between the two. The
Portfolio also is required to maintain a dollar-weighted average portfolio
maturity of 90 days or less, to limit its investments to instruments having
remaining maturities of 397 days or less (except securities held subject to
repurchase agreements having 397 days or less maturity) and to invest only in

                                       57


securities determined by PIMCO under procedures established by the Board of
Trustees to be of high quality with minimal credit risks.

     Each Portfolio's liabilities are allocated among its classes. The total of
such liabilities allocated to a class plus that class's servicing fees and any
other expenses specially allocated to that class are then deducted from the
class's proportionate interest in the Portfolio's assets, and the resulting
amount for each class is divided by the number of shares of that class
outstanding to produce the class's "net asset value" per share. Generally, for
Portfolios that pay income dividends, those dividends are expected to differ
over time by approximately the amount of the expense accrual differential
between a particular Portfolio's classes.

                                       58


                                    TAXATION

     The following discussion is general in nature and should not be regarded as
an exhaustive presentation of all possible tax ramifications. All shareholders
should consult a qualified tax adviser regarding their investment in a
Portfolio.

     Each Portfolio intends to qualify annually and elect to be treated as a
regulated investment company under the Internal Revenue Code of 1986, as amended
(the "Code"). To qualify as a regulated investment company, each Portfolio
generally must, among other things, (a) derive in each taxable year at least 90%
of its gross income from dividends, interest, payments with respect to
securities loans, and gains from the sale or other disposition of stock,
securities or foreign currencies, or other income derived with respect to its
business of investing in such stock, securities or currencies ("Qualifying
Income Test"); (b) diversify its holdings so that, at the end of each quarter of
the taxable year, (i) at least 50% of the market value of the Portfolio's assets
is represented by cash, U.S. Government securities, the securities of other
regulated investment companies and other securities, with such other securities
of any one issuer limited for the purposes of this calculation to an amount not
greater than 5% of the value of the Portfolio's total assets and 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of the
value of its total assets is invested in the securities of any one issuer (other
than U.S. Government securities or the securities of other regulated investment
companies); and (c) distribute at least 90% of its investment company taxable
income (which includes dividends, interest and net short-term capital gains in
excess of any net long-term capital losses) each taxable year. The Treasury
Department is authorized to promulgate regulations under which gains from
foreign currencies (and options, futures, and forward contracts on foreign
currency) would constitute qualifying income for purposes of the Qualifying
Income Test only if such gains are directly relating to investing in securities.
To date, such regulations have not been issued.

     As a regulated investment company, a Portfolio generally will not be
subject to U.S. federal income tax on its investment company taxable income and
net capital gains (any net long-term capital gains in excess of the sum of net
short-term capital losses and capital loss carryovers from prior years)
designated by the Portfolio as capital gain dividends, if any, that it
distributes to shareholders on a timely basis. Each Portfolio intends to
distribute to its shareholders, at least annually, substantially all of its
investment company taxable income and any net capital gains. In addition,
amounts not distributed by a Portfolio on a timely basis in accordance with a
calendar year distribution requirement are subject to a nondeductible 4% excise
tax. To avoid the tax, a Portfolio must distribute during each calendar year an
amount equal to the sum of (1) at least 98% of its ordinary income (not taking
into account any capital gains or losses) for the calendar year, (2) at least
98% of its capital gains in excess of its capital losses (and adjusted for
certain ordinary losses) for the twelve month period ending on October 31 of the
calendar year, and (3) all ordinary income and capital gains for previous years
that were not distributed during such years. A distribution will be treated as
paid on December 31 of the calendar year if it is declared by a Portfolio in
October, November, or December of that year to shareholders of record on a date
in such a month and paid by the Portfolio during January of the following year.
Such distributions will be taxable to shareholders (other than those not subject
to federal income tax) in the calendar year in which the distributions are
declared, rather than the calendar year in which the distributions are received.
To avoid application of the excise tax, each Portfolio intends to make its
distributions in accordance with the calendar year distribution requirement.

     To comply with regulations under section 817(h) of the Code, each Portfolio
is required to diversify its investments. Generally, a Portfolio will be
required to diversify its investments so that on the last day of each quarter of
a calendar year no more than 55% of the value of its total assets is represented
by any one investment, no more than 70% is represented by any two investments,
no more than 80% is represented by any three investments, and no more than 90%
is represented by any four investments. For this purpose, securities of a given
issuer generally are treated as one investment, but each U.S. Government agency
and instrumentality is treated as a separate issuer. Any security issued,
guaranteed, or insured (to the extent so guaranteed or insured) by the U.S. or
an agency or instrumentality of the U.S.

                                       59


is treated as a security issued by the U.S. Government or its agency or
instrumentality, whichever is applicable.

     If a Portfolio failed to qualify for treatment as a regulated investment
company for any taxable year, (1) it would be taxed as an ordinary corporation
on its taxable income for that year without being able to deduct the
distributions it makes to its shareholders and (2) each insurance company
separate account invested in the Portfolio would fail to satisfy the
diversification requirements described above, with the result that the Variable
Contracts investing in the Portfolio would no longer be eligible for tax
deferral. In addition, the Portfolio could be required to recognize unrealized
gains, pay substantial taxes and interest and make substantial distributions
before requalifying for treatment as a regulated investment company.

     The Treasury Department announced that it would issue future regulations or
rulings addressing the circumstances in which a variable contract owner's
control of the investments of the separate account may cause the contract owner,
rather than the insurance company, to be treated as the owner of the assets held
by the separate account. If the contract owner is considered the owner of the
securities underlying the separate account, income and gains produced by those
securities would be included currently in the contract owner's gross income. It
is not known what standards will be set forth in the regulations or rulings.

     In the event that rules or regulations are adopted, there can be no
assurance that the Portfolios will be able to operate as currently described, or
that the Trust will not have to change one or more Portfolio's investment
objective or investment policies. While each Portfolio's investment objective is
fundamental and may be changed only by a vote of a majority of its outstanding
shares, the investment policies of a Portfolio may be modified as necessary to
prevent any such prospective rules and regulations from causing Variable
Contract Owners to be considered the owners of the shares of a Portfolio
underlying the Separate Accounts.

Distributions

     Dividends paid out of a Portfolio's investment company taxable income will
be treated as ordinary income for tax purposes in the hands of a U.S.
shareholder (such as a Separate Account). Distributions received by tax-exempt
shareholders will not be subject to federal income tax to the extent permitted
under applicable tax law.

     A portion of the dividends paid by the StocksPLUS Growth and Income
Portfolio may qualify for the deduction for dividends received by corporations.
Dividends paid by the other Portfolios generally are not expected to qualify for
the deduction for dividends received by corporations, although certain
distributions from the High Yield Portfolio may qualify. Distributions of net
capital gains, if any, designated as capital gain dividends, are taxable as
long-term capital gains, regardless of how long the shareholder has held a
Portfolio's shares and are not eligible for the dividends received deduction.
Any distributions that are not from a Portfolio's investment company taxable
income or net realized capital gains may be characterized as a return of capital
to shareholders or, in some cases, as capital gain.

     The Strategic Balanced Portfolio will not be able to offset gains realized
by one Portfolio in which the Fund invests against losses realized by another
Portfolio in which the Portfolio invests. Redemptions of shares in a Portfolio
could also result in gain and/or income to the Strategic Balanced Portfolio. The
Portfolio's use of the fund-of-funds structure could therefore affect the
amount, timing and character of distributions to shareholders, and could
increase the amount of taxes payable by shareholders.

                                       60


Sales of Shares

     Upon the disposition of shares of a Portfolio (whether by redemption, sale
or exchange), a shareholder (such as a Separate Account) will realize a gain or
loss. Such gain or loss will be capital gain or loss if the shares are capital
assets in the shareholder's hands, and will be long-term or short-term generally
depending upon the shareholder's holding period for the shares. Any loss
realized on a disposition will be disallowed to the extent the shares disposed
of are replaced within a period of 61 days beginning 30 days before and ending
30 days after the shares are disposed of. In such a case, the basis of the
shares acquired will be adjusted to reflect the disallowed loss. Any loss
realized by a shareholder on a disposition of shares held by the shareholder for
six months or less will be treated as a long-term capital loss to the extent of
any distributions of capital gain dividends received by the shareholder with
respect to such shares.

     Depending on the Strategic Balanced Portfolio's percentage ownership in an
Underlying Portfolio both before and after a redemption, the Portfolio's
redemption of shares of such Underlying Portfolio may cause the Portfolio to be
treated as not receiving capital gain income on the amount by which the
distribution exceeds the Portfolio's tax basis in the shares of the Underlying
Portfolio, but instead to be treated as receiving a dividend taxable as ordinary
income on the full amount of the distribution. This could cause shareholders of
the Strategic Balanced Portfolio to recognize higher amounts of ordinary income
than if the shareholders had held the share of the Underlying Portfolios
directly.

Options, Futures and Forward Contracts, and Swap Agreements

     Some of the options, futures contracts, forward contracts, and swap
agreements used by the Portfolios may be "section 1256 contracts." Any gains or
losses on section 1256 contracts are generally considered 60% long-term and 40%
short-term capital gains or losses ("60/40") although certain foreign currency
gains and losses from such contracts may be treated as ordinary in character.
Also, section 1256 contracts held by a Portfolio at the end of each taxable year
(and, for purposes of the 4% excise tax, on certain other dates as prescribed
under the Code) are "marked to market" with the result that unrealized gains or
losses are treated as though they were realized and the resulting gain or loss
is treated as ordinary or 60/40 gain or loss.

     Generally, the hedging transactions and certain other transactions in
options, futures and forward contracts undertaken by a Portfolio, may result in
"straddles" for U.S. federal income tax purposes. In some cases, the straddle
rules also could apply in connection with swap agreements. The straddle rules
may affect the character of gains (or losses) realized by a Portfolio. In
addition, losses realized by a Portfolio on positions that are part of a
straddle may be deferred under the straddle rules, rather than being taken into
account in calculating the taxable income for the taxable year in which such
losses are realized. Because only a few regulations implementing the straddle
rules have been promulgated, the tax consequences of transactions in options,
futures, forward contracts, and swap agreements to a Portfolio are not entirely
clear. The transactions may increase the amount of short-term capital gain
realized by a Portfolio which is taxed as ordinary income when distributed to
shareholders.

     A Portfolio may make one or more of the elections available under the Code
which are applicable to straddles. If a Portfolio makes any of the elections,
the amount, character and timing of the recognition of gains or losses from the
affected straddle positions will be determined under rules that vary according
to the election(s) made. The rules applicable under certain of the elections
operate to accelerate the recognition of gains or losses from the affected
straddle positions.

     Because application of the straddle rules may affect the character of gains
or losses, defer losses and/or accelerate the recognition of gains or losses
from the affected straddle positions, the amount which must be distributed to
shareholders, and which will be taxed to shareholders as ordinary income or
long-

                                       61


term capital gain, may be increased or decreased substantially as compared to a
portfolio that did not engage in such hedging transactions.

     Rules governing the tax aspects of swap agreements are in a developing
stage and are not entirely clear in certain respects. Accordingly, while the
Portfolios intend to account for such transactions in a manner they deem to be
appropriate, the Internal Revenue Service might not accept such treatment. If it
did not, the status of a Portfolio as a regulated investment company might be
affected. The Trust intends to monitor developments in this area. Certain
requirements that must be met under the Code in order for a Portfolio to qualify
as a regulated investment company may limit the extent to which a Portfolio will
be able to engage in swap agreements.

Short Sales

     Certain Portfolios may make short sales of securities. Short sales may
increase the amount of short-term capital gain realized by a Portfolio, which is
taxed as ordinary income when distributed to shareholders.

Passive Foreign Investment Companies

     Certain Portfolios may invest in the stock of foreign corporations which
may be classified under the Code as passive foreign investment companies
("PFICs"). In general, a foreign corporation is classified as a PFIC for a
taxable year if at least one-half of its assets constitute investment-type
assets or 75% or more of its gross income is investment-type income. If a
Portfolio receives a so-called "excess distribution" with respect to PFIC stock,
the Portfolio itself may be subject to tax on a portion of the excess
distribution, whether or not the corresponding income is distributed by the
Portfolio to stockholders. In general, under the PFIC rules, an excess
distribution is treated as having been realized ratably over the period during
which the Portfolio held the PFIC stock. A Portfolio itself will be subject to
tax on the portion, if any, of an excess distribution that is so allocated to
prior taxable years and an interest factor will be added to the tax, as if the
tax had been payable in such prior taxable years. Certain distributions from a
PFIC as well as gain from the sale of PFIC stock are treated as excess
distributions. Excess distributions are characterized as ordinary income even
though, absent application of the PFIC rules, certain excess distributions might
have been classified as capital gain.

     A Portfolio may be eligible to elect alternative tax treatment with respect
to PFIC stock. Under an election that currently is available in some
circumstances, a Portfolio generally would be required to include in its gross
income its share of the earnings of a PFIC on a current basis, regardless of
whether distributions are received from the PFIC in a given year. If this
election were made, the special rules, discussed above, relating to the taxation
of excess distributions, would not apply. In addition, another election may be
available that would involve marking to market a Portfolio's PFIC shares at the
end of each taxable year (and on certain other dates prescribed in the Code),
with the result that unrealized gains are treated as though they were realized.
If this election were made, tax at the Portfolio level under the PFIC rules
would generally be eliminated, but the Portfolio could, in limited
circumstances, incur nondeductible interest charges. A Portfolio's intention to
qualify annually as a regulated investment company may limit its elections with
respect to PFIC shares.

     Because the application of the PFIC rules may affect, among other things,
the character of gains and the amount of gain or loss and the timing of the
recognition of income with respect to PFIC shares, and may subject a Portfolio
itself to tax on certain income from PFIC shares, the amount that must be
distributed to shareholders and will be taxed to shareholders as ordinary income
or long-term capital gain may be increased or decreased substantially as
compared to a portfolio that did not invest in PFIC shares.

                                       62


Foreign Currency Transactions

     Under the Code, gains or losses attributable to fluctuations in exchange
rates which occur between the time a Portfolio accrues income or other
receivables or accrues expenses or other liabilities denominated in a foreign
currency and the time the Portfolio actually collects such receivables or pays
such liabilities generally are treated as ordinary income or loss. Similarly, on
disposition of debt securities denominated in a foreign currency and on
disposition of certain other instruments, gains or losses attributable to
fluctuations in the value of the foreign currency between the date of
acquisition of the security or contract and the date of disposition also are
treated as ordinary gain or loss. These gains and losses, referred to under the
Code as "section 988" gains or losses, may increase or decrease the amount of a
Portfolio's investment company taxable income to be distributed to its
shareholders as ordinary income.

Foreign Taxation

     Income received by the Portfolios from sources within foreign countries may
be subject to withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the U.S. may reduce or eliminate such
taxes. In addition, PIMCO intends to manage the Portfolios with the intention of
minimizing foreign taxation in cases where it is deemed prudent to do so. If
more than 50% of the value of the Foreign Bond, Global Bond or Emerging Markets
Bond Portfolios' total assets at the close of their taxable year consists of
securities of foreign corporations, such Portfolio will be eligible to elect to
"pass-through" to the Portfolio's shareholders the amount of foreign income and
similar taxes paid by the Portfolio. If this election is made, a shareholder
generally subject to tax will be required to include in gross income (in
addition to taxable dividends actually received) his pro rata share of the
foreign taxes paid by the Portfolio, and may be entitled either to deduct (as an
itemized deduction) his or her pro rata share of foreign taxes in computing his
taxable income or to use it (subject to limitations) as a foreign tax credit
against his or her U.S. federal income tax liability. No deduction for foreign
taxes may be claimed by a shareholder who does not itemize deductions. Each
shareholder will be notified within 60 days after the close of the Portfolio's
taxable year whether the foreign taxes paid by the Portfolio will "pass-through"
for that year.

     Generally, a credit for foreign taxes is subject to the limitation that it
may not exceed the shareholder's U.S. tax attributable to his or her total
foreign source taxable income. For this purpose, if the pass-through election is
made, the source of the Foreign Bond, Global Bond or Emerging Markets Bond
Portfolios' income will flow through to shareholders of the Trust. With respect
to such Portfolios, gains from the sale of securities will be treated as derived
from U.S. sources and certain currency fluctuation gains, including fluctuation
gains from foreign currency-denominated debt securities, receivables and
payables will be treated as ordinary income derived from U.S. sources. The
limitation on the foreign tax credit is applied separately to foreign source
passive income, and to certain other types of income. Shareholders may be unable
to claim a credit for the full amount of their proportionate share of the
foreign taxes paid by the Portfolio. The foreign tax credit can be used to
offset only 90% of the revised alternative minimum tax imposed on corporations
and individuals and foreign taxes generally are not deductible in computing
alternative minimum taxable income.

     Although the Strategic Balanced Portfolio may itself be entitled to a
deduction for such taxes paid by an Underlying Portfolio in which the Portfolio
invests, the Strategic Balanced Portfolio will not be able to pass any such
credit or deduction through to its own shareholders.

Original Issue Discount

     Some of the debt securities (with a fixed maturity date of more than one
year from the date of issuance) that may be acquired by a Portfolio may be
treated as debt securities that are issued originally at a discount. Generally,
the amount of the original issue discount ("OID") is treated as interest income
and

                                       63


is included in income over the term of the debt security, even though payment of
that amount is not received until a later time, usually when the debt security
matures. A portion of the OID includable in income with respect to certain
high-yield corporate debt securities may be treated as a dividend for Federal
income tax purposes.

     Some of the debt securities (with a fixed maturity date of more than one
year from the date of issuance) that may be acquired by a Portfolio in the
secondary market may be treated as having market discount. Generally, any gain
recognized on the disposition of, and any partial payment of principal on, a
debt security having market discount is treated as ordinary income to the extent
the gain, or principal payment, does not exceed the "accrued market discount" on
such debt security. Market discount generally accrues in equal daily
installments. A Portfolio may make one or more of the elections applicable to
debt securities having market discount, which could affect the character and
timing of recognition of income.

     Some debt securities (with a fixed maturity date of one year or less from
the date of issuance) that may be acquired by a Portfolio may be treated as
having acquisition discount, or OID in the case of certain types of debt
securities. Generally, the Portfolio will be required to include the acquisition
discount, or OID, in income over the term of the debt security, even though
payment of that amount is not received until a later time, usually when the debt
security matures. The Portfolio may make one or more of the elections applicable
to debt securities having acquisition discount, or OID, which could affect the
character and timing of recognition of income.

     A Portfolio generally will be required to distribute dividends to
shareholders representing discount on debt securities that is currently
includable in income, even though cash representing such income may not have
been received by the Portfolio. Cash to pay such dividends may be obtained from
sales proceeds of securities held by the Portfolio.

Inflation-Indexed Bonds

     Coupon payments received by a Portfolio from inflation-indexed bonds will
be includable in the Portfolio's gross income in the period in which they
accrue. Periodic adjustments for inflation in the principal value of these
securities also may give rise to original issue discount, which, likewise, will
be includable in the Portfolio's gross income on a current basis, regardless of
whether the Portfolio receives any cash payments. Amounts includable in a
Portfolio's gross income become subject to tax-related distribution
requirements. Accordingly, a Portfolio may be required to make annual
distributions to shareholders in excess of the cash received in a given period
from these investments. As a result, the Portfolio may be required to liquidate
certain investments at a time when it is not advantageous to do so. If the
principal value of an inflation-indexed bond is adjusted downward in any period
as a result of deflation, the reduction may be treated as a loss to the extent
the reduction exceeds coupon payments received in that period; in that case, the
amount distributable by the Portfolio may be reduced and amounts distributed
previously in the taxable year may be characterized in some circumstances as a
return of capital.

Other Taxation

     Distributions also may be subject to additional state, local and foreign
taxes, depending on each shareholder's particular situation. Under the laws of
various states, distributions of investment company taxable income generally are
taxable to shareholders even though all or a substantial portion of such
distributions may be derived from interest on certain federal obligations which,
if the interest were received directly by a resident of such state, would be
exempt from such state's income tax ("qualifying federal obligations"). However,
some states may exempt all or a portion of such distributions from income tax to
the extent the shareholder is able to establish that the distribution is derived
from qualifying federal obligations. Moreover, for state income tax purposes,
interest on some federal obligations

                                       64


generally is not exempt from taxation, whether received directly by a
shareholder or through distributions of investment company taxable income (for
example, interest on FNMA Certificates and GNMA Certificates). Each Portfolio
will provide information annually to shareholders indicating the amount and
percentage of a Portfolio's dividend distribution which is attributable to
interest on federal obligations, and will indicate to the extent possible from
what types of federal obligations such dividends are derived.

                                OTHER INFORMATION

Capitalization

     The capitalization of the Trust consists solely of an unlimited number of
shares of beneficial interest with a par value of $0.001 each. The Board of
Trustees may establish additional series (with different investment objectives
and fundamental policies) at any time in the future. Establishment and offering
of additional series will not alter the rights of the Trust's shareholders. When
issued, shares are fully paid, non-assessable, redeemable and freely
transferable. Shares do not have preemptive rights or subscription rights. In
liquidation of a Portfolio, each shareholder is entitled to receive his pro rata
share of the net assets of that Portfolio.

     Under Delaware law, shareholders are not personally liable for the
obligations of the Trust. In addition, the Trust Instrument disclaims liability
of the shareholders, Trustees or officers of the Trust for acts or obligations
of the Trust, which are binding only on the assets and property of the Trust,
and requires that notice of the disclaimer be given in each contract or
obligation entered into or executed by the Trust or the Trustees. The Trust
Instrument also provides for indemnification out of Trust property for all loss
and expense of any shareholder held personally liable for the obligations of the
Trust. However, there is no certainty that the limited liability of shareholders
of a Delaware business trust will be recognized in every state. Even in such a
circumstance, the risk of a shareholder incurring financial loss on account of
shareholder liability would be limited to circumstances in which the contractual
disclaimer against shareholder liability is inoperative or the Trust itself is
unable to meet its obligations, and thus should be considered remote.

Performance Information

     Each Portfolio may, from time to time, include information regarding its
performance in advertisements or reports to shareholders or prospective
investors. Performance information for the Portfolios will not be advertised or
included in sales literature unless accompanied by comparable performance
information for a separate account to which the Portfolios offer their shares.

     The Trust may, from time to time, include the yield and effective yield of
the Money Market Portfolio, and the yield and total return for all of the
Portfolios, computed in accordance with SEC-prescribed formulas, in
advertisements or reports to shareholders, prospective investors or other
appropriate parties. Current yield for the Money Market Portfolio will be based
on the change in the value of hypothetical investment (exclusive of capital
changes) over a particular 7-day period less a pro-rata share of Portfolio
expenses accrued over that period (the "base period"), and stated as a
percentage of the investment at the start of the base period (the "base period
return"). The base period return is then annualized by multiplying by 365/7,
with the resulting yield figure carried to at least the nearest hundredth of one
percent. "Effective yield" for the Money Market Portfolio assumes that all
dividends received during an annual period have been reinvested. Calculation of
"effective yield" begins with the same "base period return" used in the
calculation of yield, which is then annualized to reflect weekly compounding
pursuant to the following formula:

          Effective Yield = [(Base Period Return +1)/365/7/] - 1

                                       65


     Quotations of yield for the remaining Portfolios will be based on all
investment income per share (as defined by the SEC) during a particular 30-day
(or one month) period (including dividends and interest), less expenses accrued
during the period ("net investment income"), and are computed by dividing net
investment income by the maximum offering price per share on the last day of the
period, according to the following formula:

                           YIELD = 2[( a-b + 1)/6/-1]
                                       ---
                                       cd

     where a = dividends and interest earned during the period,

           b = expenses accrued for the period (net of reimbursements),

           c = the average daily number of shares outstanding during the
               period that were entitled to receive dividends, and

           d = the maximum offering price per share on the last day of the
               period.

     Quotations of average annual total return for a Portfolio will be expressed
in terms of the average annual compounded rate of return of a hypothetical
investment in the Portfolio over periods of one, five and ten years (up to the
life of the Portfolio), calculated pursuant to the following formula: P (1 +
T)/n/ = ERV (where P = a hypothetical initial payment of $1,000, T = the average
annual total return, n = the number of years, and ERV = the ending redeemable
value of a hypothetical $1,000 payment made at the beginning of the period).
Except as noted below, all total return figures reflect, to the extent
applicable, the deduction of a proportional share of Portfolio expenses on an
annual basis, and assume that all dividends and distributions are reinvested
when paid. The Portfolios also may, with respect to certain periods of less than
one year, provide total return information for that period that is unannualized.
Quotations of total return may also be shown for other periods. Any such
information would be accompanied by standardized total return information. Total
return is measured by comparing the value of an investment in the Portfolio at
the beginning of the relevant period to the redemption value of the investment
in the Portfolio at the end of the period (assuming immediate reinvestment of
any dividends or capital gains distributions at net asset value). The Portfolios
may advertise total return using alternative methods that reflect all elements
of return, but that may be adjusted to reflect the cumulative impact of
alternative fee and expense structures, such as the currently effective advisory
and administrative fees for the Portfolios.

     Current distribution information for a Portfolio will be based on
distributions for a specified period (i.e., total dividends from net investment
income), divided by Portfolio net asset value per share on the last day of the
period and annualized according to the following formula:

                        DIVIDEND YIELD = (((a/b)*365)/c)

     where a = actual dividends distributed for the calendar month in question,

           b = number of days of dividend declaration in the month in
               question, and

           c = net asset value (NAV) calculated on the last business day of the
               month in question.

     The rate of current distributions does not reflect deductions for
unrealized losses from transactions in derivative instruments such as options
and futures, which may reduce total return. Current distribution rates differ
from standardized yield rates in that they represent what a Portfolio has
declared

                                       66


and paid to shareholders as of the end of a specified period rather than the
Portfolio's actual net investment income for that same period. Distribution
rates will exclude net realized short-term capital gains. The rate of current
distributions for a Portfolio should be evaluated in light of these differences
and in light of the Portfolio's total return figures, which will always
accompany any calculation of the rate of current distributions.

     Performance information for a Portfolio may also be compared to various
unmanaged indexes, such as the Standard & Poor's 500 Composite Stock Price
Index, the Dow Jones Industrial Average, the Lehman Brothers Aggregate Bond
Index, the Lehman Brothers Mortgage-Backed Securities Index, the Merrill Lynch 1
to 3 Year Treasury Index, the Lehman Intermediate and 20+ Year Treasury Bond
Index, the Lehman BB Intermediate Corporate Index, indexes prepared by Lipper
Analytical Services, the J.P. Morgan Global Index, the J.P. Morgan Emerging
Markets Bond Index Plus, the Salomon Brothers World Government Bond Index-10 Non
U.S.-Dollar Hedged and the J.P. Morgan Government Bond Index Non U.S.-Dollar
Hedged. Unmanaged indexes (i.e., other than Lipper) generally do not reflect
deductions for administrative and management costs and expenses. PIMCO may
report to shareholders or to the public in advertisements concerning the
performance of PIMCO as adviser to clients other than the Trust, or on the
comparative performance or standing of PIMCO in relation to other money
managers. PIMCO also may provide current or prospective private account clients,
in connection with standardized performance information for the Portfolios,
performance information for the Portfolios gross of fees and expenses for the
purpose of assisting such clients in evaluating similar performance information
provided by other investment managers or institutions. Comparative information
may be compiled or provided by independent ratings services or by news
organizations. Any performance information, whether related to the Portfolios or
to PIMCO, should be considered in light of the Portfolios' investment objectives
and policies, characteristics and quality of the Portfolios, and the market
conditions during the time period indicated, and should not be considered to be
representative of what may be achieved in the future.

     Performance information for a Portfolio will not take into account charges
or deductions against a Separate Account or Variable Contract specific
deductions for cost of insurance charges, premium loads, administrative fees,
maintenance fees, premium taxes, mortality and expense risk charges, or other
charges that may be incurred under a Variable Contract for which the Portfolio
serves as an underlying investment vehicle. A Portfolio's performance should not
be compared with the performance of mutual funds that sell their shares directly
to the public since the figures provided do not reflect charges against a
Separate Account or the Variable Contracts.

                                       67


     For the one month period ended December 31, 2001, the yield of the
following Portfolios was as follows (all numbers are annualized):

                                                   SEC Yield for Period
Portfolio                                         Ended December 31, 2001
---------                                ------------------------------------------
                                         Administrative Class   Institutional Class
                                         --------------------   -------------------
Money Market Portfolio                          1.93%                  2.08%
Short-Term Portfolio                            3.73%                  3.88%
Low Duration Portfolio                          3.71%                  3.84%
Real Return Portfolio                           0.32%                  0.47%
Total Return II Portfolio                       3.20%                  3.33%
Total Return Portfolio                          3.96%                  4.14%
High Yield Portfolio                            7.91%                   N/A
Long-Term U.S. Government Portfolio             4.66%                  4.82%
Foreign Bond Portfolio                          4.27%                  4.37%
StocksPLUS Growth and Income Portfolio          2.52%                  2.67%

     The table below sets forth the average annual total return of the following
Portfolios for the periods ended December 31, 2001.

                Total Return for Periods Ended December 31, 2001

==============================================================================================
                                                                                     Inception
                                                                   Since Inception    Date of
               Portfolio                     Class        1 Year     (Annualized)      Class
----------------------------------------------------------------------------------------------
Money Market Portfolio                   Administrative     3.83%         4.95%      09/30/99
                                         Institutional      3.99%         5.00%*     04/10/00
----------------------------------------------------------------------------------------------
Short-Term Portfolio                     Administrative     6.45%         6.31%      09/30/99
                                         Institutional      6.59%         6.73%*     04/28/00
----------------------------------------------------------------------------------------------
Low Duration Portfolio                   Administrative     7.61%         6.10%      02/16/99
                                         Institutional      7.77%         8.09%*     04/10/00
----------------------------------------------------------------------------------------------
Real Return Portfolio                    Administrative     9.63%        10.43%      09/30/99
                                         Institutional      9.79%        10.81%*     04/10/00
----------------------------------------------------------------------------------------------
Total Return Portfolio                   Administrative     8.37%         6.55%      12/31/97
                                         Institutional      8.53%         9.54%*     04/10/00
----------------------------------------------------------------------------------------------
Total Return II Portfolio                Administrative     9.72%         8.60%      05/28/99
                                         Institutional      9.88%        10.08%*     04/10/00
----------------------------------------------------------------------------------------------
High Yield Portfolio                     Administrative     2.35%         1.70%      04/30/98
                                         Institutional       N/A           N/A            N/A
----------------------------------------------------------------------------------------------
Long-Term U.S. Government Portfolio      Administrative     5.86%         8.00%      04/30/99
                                         Institutional      6.03%        10.08%*     04/10/00
----------------------------------------------------------------------------------------------
Foreign Bond Portfolio                   Administrative     7.59%         5.20%      02/16/99
                                         Institutional      7.75%         8.11%*     04/10/00
----------------------------------------------------------------------------------------------
StocksPLUS Growth and Income Portfolio   Administrative   -11.43%         5.73%      12/31/97
                                         Institutional    -11.28%       -11.36%*     04/28/00
==============================================================================================

*    Cumulative.

                                       68


     For the month ended December 31, 2001, the current distribution rates
(annualized) for the following Portfolios were as follows:

=======================================================================
                                                  Distribution
                 Fund                                 Rate
-----------------------------------------------------------------------
                                         Administrative   Institutional
                                             Class            Class
-----------------------------------------------------------------------
Money Market Portfolio                        1.90%            2.05%
-----------------------------------------------------------------------
Short-Term Portfolio                          4.48%            4.63%
-----------------------------------------------------------------------
Low Duration Portfolio                        3.56%            3.71%
-----------------------------------------------------------------------
Real Return Portfolio                         0.06%            0.21%
-----------------------------------------------------------------------
Total Return Portfolio                        3.71%            3.86%
-----------------------------------------------------------------------
Total Return II Portfolio                     3.07%            3.22%
-----------------------------------------------------------------------
High Yield Portfolio                          8.01%             N/A
-----------------------------------------------------------------------
Long-Term U.S. Government Portfolio           4.78%            4.96%
-----------------------------------------------------------------------
Foreign Bond Portfolio                        3.94%            4.10%
-----------------------------------------------------------------------
StocksPLUS Growth and Income Portfolio         N/A              N/A
=======================================================================

     The Trust may also include in its advertisements or in reports to
shareholder, prospective investors or other appropriate parties performance
information regarding certain series (the "Funds") of PIMCO Funds: Pacific
Investment Management Series (the "PIMS") or PIMCO Funds: Multi-Manager Series
("MMS") which have investment objectives, policies and strategies substantially
the same as a corresponding Portfolio of the Trust. In addition, the current
portfolio manager for each Fund is the same as the current portfolio manager for
the corresponding Portfolio of the Trust (except the Global Bond Portfolio). The
methods discussed above with regard to calculating the yield, total return and
distribution rates for the Portfolios will also be used to calculate the same
information for the Funds, although performance information for the Funds will
reflect the deduction of sales loads and other charges to which the Funds are
subject.

     The following table shows which Fund of PIMS or MMS corresponds to each
Portfolio of the Trust:

Portfolio                                Fund
---------                                ----
Money Market Portfolio                   Money Market Fund
Short-Term Portfolio                     Short-Term Fund
Low Duration Portfolio                   Low Duration Fund
Real Return Portfolio                    Real Return Bond Fund
Total Return Portfolio                   Total Return Fund
Total Return Portfolio II                Total Return Fund II
High Yield Portfolio                     High Yield Fund
Long-Term U.S. Government Portfolio      Long-Term U.S. Government Bond Fund
Global Bond Portfolio                    Global Bond Fund
Foreign Bond Portfolio                   Foreign Bond Fund
Emerging Markets Bond Portfolio          Emerging Markets Bond Fund
Strategic Balanced Portfolio             Strategic Balanced Fund
StocksPLUS Growth and Income Portfolio   StocksPLUS Fund

                                       69


     The yield of the Institutional Class of the Money Market Fund for the seven
day period ended December 31, 2001 was 0.03%. The effective yield of the
Institutional Class of the Money Market Fund for the seven day period ended
December 31, 2001 was 1.76%.

     For the one month period ended December 31, 2001, the yield of the
Institutional Class of the Funds was as follows (all numbers are annualized):

                                            SEC Yield for Period
Fund                                        Ended December 31, 2001
----                             ------------------------------------------
                                        PIMS                   PIMS
                                 Institutional Class   Administrative Class
                                 -------------------   --------------------
Money Market Fund                       1.97%                  1.72%
Short-Term Fund                         3.24%                  2.99%
Low Duration Fund                       3.88%                  3.63%
Real Return Bond Fund                  -0.21%                 -0.45%
Total Return Fund                       4.66%                  4.41%
Total Return Fund II                    4.10%                  3.84%
High Yield Fund                         8.74%                  8.49%
Long-Term U.S. Government Fund          7.03%                  6.77%
Global Bond Fund                        4.81%                  4.55%
Foreign Bond Fund                       4.25%                  4.00%
Strategic Balanced Fund                 3.96%                  3.72%
StocksPLUS Fund                         2.63%                  2.43%

     The average annual total returns of the Institutional Class shares of the
corresponding Funds of PIMS and MMS are provided in the Trust's prospectus under
the caption "Performance Information of Similar Funds."

     For the month ended December 31, 2001, the current distribution rates
(annualized) for the Institutional Class shares of the following Funds were as
follows:

Fund                                         Distribution Rate
----                             ------------------------------------------
                                        PIMS                   PIMS
                                 Institutional Class   Administrative Class
                                 -------------------   --------------------
Money Market Fund                       1.94%                  1.70%
Short-Term Fund                         3.87%                  3.53%
Low Duration Fund                       4.38%                  4.13%
Real Return Bond Fund                   1.22%                  0.96%
Total Return Fund                       4.89%                  4.64%
Total Return Fund II                    4.44%                  4.19%
High Yield Fund                         8.50%                  8.25%
Long-Term U.S. Government Fund          7.10%                  6.89%
Global Bond Fund                        4.44%                  4.19%
Foreign Bond Fund                       4.54%                  4.29%
Strategic Balanced Fund                  N/A                    N/A
StocksPLUS Fund                          N/A                    N/A

                                       70


     In its advertisements and other materials, the Trust may compare the
returns over periods of time of investments in stocks, bonds and treasury bills
to each other and to the general rate of inflation. For example, the average
annual return of each during the 25 years from 1977 to 2001 was:

     *Stocks:      13.8%
      Bonds:        9.3%
      T-Bills:      6.8%
      Inflation:    4.5%

     * Returns of unmanaged indexes do not reflect past or future performance of
any of the Portfolios of PIMCO Variable Insurance Trust. Stocks are represented
by Ibbotson's Common Stocks Total Return (S&P 500 Index). Bonds are represented
by Ibbotson's Long-term Corporate Bond Total Return (Salomon Brothers long-term,
high-grade corporate bond). T-bills are represented by Ibbotson's Treasury Bill
Index and Inflation is represented by the rate of change in consumer prices.
These are all unmanaged indices, which can not be invested in directly. While
Treasury bills are insured and offer a fixed rate of return, both the principal
and yield of investment securities will fluctuate with changes in market
conditions. Source: Ibbotson, Roger G., and Rex A. Sinquefiled, Stocks, Bonds,
Bill and Inflation (SBBI), 1989, updated in Stocks, Bonds, Bills and Inflation
2002 Yearbook, Ibbotson Associates, Chicago. All rights reserved.

     The Trust may also compare the relative historic returns and range of
returns for an investment in each of common stocks, bonds and treasury bills to
a portfolio that blends all three investments. For example, over the 25 years
from 1977-2001, the average annual return of stocks comprising the Ibbotson's
Large Company Stock Total Return Index ranged from -11.9% to 37.4% while the
annual return of a hypothetical portfolio comprised 40% of such common stocks,
40% of bonds comprising the Ibbotson's Long-term Corporate bond Index and 20% of
Treasury bills comprising the Ibbotson's Treasury Bill Index (a "mixed
portfolio") would have ranged from -1.2% to 27.7% over the same period. The
average annual returns of each investment for each of the years from 1977
through 2001 is set forth in the following table.

                                       71


                                                MIXED
YEAR   STOCKS   BONDS   T-BILLS   INFLATION   PORTFOLIO
----   ------   -----   -------   ---------   ---------
1977    -7.18%   1.71%    5.12%      6.77%      -1.16%
1978     6.56%  -0.07%    7.18%      9.03%       4.03%
1979    18.44%  -4.18%   10.38%     13.31%       7.78%
1980    32.42%  -2.76%   11.24%     12.40%      14.11%
1981    -4.91%  -1.24%   14.71%      8.94%       0.48%
1982    21.41%  42.56%   10.54%      3.87%      27.70%
1983    22.51%   6.26%    8.80%      3.80%      13.27%
1984     6.27%  16.86%    9.85%      3.95%      11.22%
1985    32.16%  30.09%    7.72%      3.77%      26.44%
1986    18.47%  19.85%    6.16%      1.13%      16.56%
1987     5.23%  -0.27%    5.47%      4.41%       3.08%
1988    16.81%  10.70%    6.35%      4.42%      12.27%
1989    31.49%  16.23%    8.37%      4.65%      20.76%
1990    -3.17%   6.78%    7.81%      6.11%       3.01%
1991    30.55%  19.89%    5.60%      3.06%      21.30%
1992     7.67%   9.39%    3.51%      2.90%       7.53%
1993     9.99%  13.19%    2.90%      2.75%       9.85%
1994     1.31%  -5.76%    3.90%      2.67%      -1.00%
1995    37.43%  27.20%    5.60%      2.54%      26.97%
1996    23.07%   1.40%    5.21%      3.32%      10.83%
1997    33.36%  12.95%    5.26%      1.70%      19.58%
1998    28.58%  10.76%    4.86%      1.61%      16.71%
1999    21.04%  -7.45%    4.68%      2.68%       6.37%
2000    -9.11%  12.87%    5.89%      3.39%       2.68%
2001   -11.88%  10.65%    3.83%      1.55%       0.27%

* Returns of unmanaged indexes do not reflect past or future performance of any
of the Portfolios of PIMCO Variable Insurance Trust. Stocks are represented by
Ibbotson's Large Company Stocks Total Return (S&P 500 Index). Bonds are
represented by Ibbotson's Long-term Corporate Bond Total Return (Salomon
Brothers long-term, high-grade corporate bond). T'bills are represented by
Ibbotson's Treasury Bill Index and Inflation is represented by the rate of
change in consumer prices. These are all unmanaged indices, which can not be
invested in directly. While Treasury bills are insured and offer a fixed rate of
return, both the principal and yield of investment securities will fluctuate
with changes in market conditions. Source: Ibbotson, Roger G., and Rex A.
Sinquefiled, Stocks, Bonds, Bill and Inflation (SBBI), 1989, updated in Stocks,
Bonds, Bills and Inflation 2002 Yearbook, Ibbotson Associates, Chicago. All
rights reserved.

     The Trust may use in its advertisement and other materials examples
designed to demonstrate the effect of compounding when an investment is
maintained over several or many years. For example, the following table shows
the annual and total contributions necessary to accumulate $200,000 of savings
(assuming a fixed rate of return) over various periods of time:

           Investment      Annual          Total        Total
             Period     Contribution   Contribution     Saved
           ----------   ------------   ------------   --------
            30 Years      $ 1,979        $ 59,370     $200,000
            25 Years      $ 2,955        $ 73,875     $200,000
            20 Years      $ 4,559        $ 91,180     $200,000
            15 Years      $ 7,438        $111,570     $200,000
            10 Years      $13,529        $135,290     $200,000

                                       72


This hypothetical example assumes a fixed 7% return compounded annually and a
guaranteed return of principal. The example is intended to show the benefits of
a long-term, regular investment program, and is in no way representative of any
past or future performance of a Portfolio. There can be no guarantee that you
will be able to find an investment that would provide such a return at the times
you invest and an investor in any of the Portfolios should be aware that certain
of the Portfolios have experienced periods of negative growth in the past and
may again in the future.

     The Trust may set forth in its advertisements and other materials
information regarding the relative reliance in recent years on personal savings
for retirement income versus reliance on Social Security benefits and company
sponsored retirement plans. For example, the following table offers such
information for 1997:

                 % of Income for Individuals
              Aged 65 Years and Older in 1997*
              --------------------------------
                       Social Security
Year                   and Pension Plans                 Other
----                   -----------------                 -----
1997                          43%                         57%

     * For individuals with an annual income of at least $51,000. Other includes
personal savings, earnings and other undisclosed sources of income. Source:
Social Security Administration.

     Articles or reports which include information relating to performance,
rankings and other characteristics of the Portfolios may appear in various
national publications and services including, but not limited to: The Wall
Street Journal, Barron's, Pensions and Investments, Forbes, Smart Money, Mutual
Portfolio Magazine, The New York Times, Kiplinger's Personal Finance, Fortune,
Money Magazine, Morningstar's Mutual Portfolio Values, CDA Investment
Technologies and The Donoghue Organization. Some or all of these publications or
reports may publish their own rankings or performance reviews of mutual funds,
including the Portfolios, and may provide information relating to PIMCO,
including descriptions of assets under management and client base, and opinions
of the author(s) regarding the skills of personnel and employees of PIMCO who
have portfolio management responsibility. From time to time, the Trust may
include references to or reprints of such publications or reports in its
advertisements and other information relating to the Portfolios.

     From time to time, the Trust may set forth in its advertisements and other
materials information about the growth of a certain dollar-amount invested in
one or more of the Portfolios over a specified period of time and may use charts
and graphs to display that growth.

     From time to time, the Trust may set forth in its advertisements and other
materials the names of and additional information regarding investment analysts
employed by PIMCO who assist with portfolio management and research activities
on behalf of the Portfolios.

     Investment results of the Portfolios or the Funds will fluctuate over time,
and any presentation of the Portfolios' or the Funds' total return or yield for
any prior period should not be considered as a representation of what an
investor's total return or yield may be in any future period. The Trust's Annual
Report contains additional performance information for the Portfolios and is
available upon request, without charge, by calling (888) 746-2688.

Voting Rights

     Under the Trust Instrument, the Trust is not required to hold annual
meetings of Trust shareholders to elect Trustees or for other purposes. It is
not anticipated that the Trust will hold shareholders' meetings unless required
by law or the Trust Instrument. In this regard, the Trust will be required to
hold a meeting to elect Trustees to fill any existing vacancies on the Board if,
at any time,

                                       73


fewer than a majority of the Trustees have been elected by the shareholders of
the Trust. In addition, the Trust Instrument provides that the holders of not
less than two-thirds of the outstanding shares of the Trust may remove a person
serving as Trustee at any shareholder meeting. The Trustees are required to call
a meeting of shareholders if requested in writing to do so by the holders of not
less than ten percent of the outstanding shares of the Trust. The Trust's shares
do not have cumulative voting rights, so that a holder of more than 50% of the
outstanding shares may elect the entire Board of Trustees, in which case the
holders of the remaining shares would not be able to elect any Trustees.
Shareholders of a class of shares have different voting rights with respect to
matters that affect only that class.

     Shares entitle their holders to one vote per share (with proportionate
voting for fractional shares). As used in the Prospectus or this Statement of
Additional Information, the phrase "vote of a majority of the outstanding
shares" of a Portfolio (or the Trust) means the vote of the lesser of: (1) 67%
of the shares of the Portfolio (or the Trust) present at a meeting, if the
holders of more than 50% of the outstanding shares are present in person or by
proxy; or (2) more than 50% of the outstanding shares of the Portfolio (or the
Trust).

     To avoid potential conflicts of interests, the Strategic Balanced Portfolio
will vote shares of each Underlying Portfolio which it owns in proportion to the
votes of all other shareholders in the Underlying Portfolio.

     In accordance with current laws, it is anticipated that an insurance
company issuing a variable contract that participates in the Portfolios will
request voting instructions from variable contract owners and will vote shares
or other voting interests in the separate account in proportion to the votes
received.

Custodian

     State Street Bank and Trust Company ("State Street"), 801 Pennsylvania,
Kansas City, Missouri 64105 serves as custodian for assets of all Portfolios.
Under the custody agreement, State Street may hold the foreign securities at its
principal office at 225 Franklin Street, Boston. Massachusetts 02110, and at
State Street's branches, and subject to approval by the Board of Trustees, at a
foreign branch of a qualified U.S. bank, with an eligible foreign subcustodian,
or with an eligible foreign securities depository.

     Pursuant to rules adopted under the 1940 Act, the Trust may maintain
foreign securities and cash in the custody of certain eligible foreign banks and
securities depositories. Selection of these foreign custodial institutions is
made by the Board of Trustees following a consideration of a number of factors,
including (but not limited to) the reliability and financial stability of the
institution; the ability of the institution to perform capably custodial
services for the Trust; the reputation of the institution in its national
market; the political and economic stability of the country in which the
institution is located; and further risks of potential nationalization or
expropriation of Trust assets. The Board of Trustees reviews annually the
continuance of foreign custodial arrangements for the Trust. No assurance can be
given that the Trustees' appraisal of the risks in connection with foreign
custodial arrangements will always be correct or that expropriation,
nationalization, freezes, or confiscation of assets that would impact assets of
the Portfolios will not occur, and shareholders bear the risk of losses arising
from these or other events.

Independent Accountants

     PricewaterhouseCoopers LLP, 1055 Broadway, Kansas City, MO 64105, serves as
independent public accountants for all Portfolios. PricewaterhouseCoopers LLP
provides audit services and consultation in connection with review of SEC and
IRS filings.

                                       74


Counsel

     Dechert Price & Rhoads, 1775 Eye Street, N.W., Washington, D.C. 20006,
passes upon certain legal matters in connection with the shares offered by the
Trust, and also acts as counsel to the Trust.

Registration Statement

     This Statement of Additional Information and the Prospectus do not contain
all of the information included in the Trust's registration statement filed with
the SEC under the 1933 Act with respect to the securities offered hereby,
certain portions of which have been omitted pursuant to the rules and
regulations of the SEC. The registration statement, including the exhibits filed
therewith, may be examined at the offices of the SEC in Washington, D.C.

     Statements contained herein and in the Prospectus as to the contents of any
contract or other documents referred to are not necessarily complete, and, in
each instance, reference is made to the copy of such contract or other documents
filed as an exhibit to the registration statement, each such statement being
qualified in all respects by such reference.

Financial Statements

     Financial statements for the Trust as of December 31, 2001 for the fiscal
year then ended, including notes thereto and the report of
PricewaterhouseCoopers LLP thereon dated February 20, 2002, are incorporated by
reference from the Trust's 2001 Annual Report.

                                       75