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PBGC Selects Fixed Income Investment Manager and Custodian Bank

December 21, 1998

The Pension Benefit Guaranty Corporation (PBGC) has selected Pacific Investment Management Company (PIMCO), Newport Beach, Calif., to manage a fixed income portfolio of about $11 billion in long duration U.S. Treasury securities.

"Securing highly competent management for PBGC's funds and payments is important in maintaining the agency's financial strength," said N. Anthony Calhoun, PBGC Deputy Executive Director and ChiefFinancial Officer.

In a competitive award, PIMCO received a one-year contract, renewable annually for seven years. The long duration product recognizes the long term nature of PBGC's liabilities and partially offsets the effect of changes in interest rates on PBGC's benefit liabilities.

A leading institutional money manager, PIMCO handles accounts primarily for employee benefit plans, endowments and foundations. For PBGC, the firm has managed the fixed income asset account since 1991 and, since earlier this year, a $225 million active large capitalization portfolio.

In addition, PBGC selected State Street Bank and Trust Company, Boston, to provide custodian banking services for the agency's assets. In a competitive award, State Street received a one-year contract effective January 1, 1999 that is renewable annually for seven years. PBGC's custodian bank since 1978, State Street is a major financial services company focused primarily on institutional investors.

PBGC is a federal agency created by the Employee Retirement Income Security Act of 1974 to guarantee payment of basic pension benefits earned by workers. It covers about 42 million American workers and retirees participating in about 45,000 private-sector defined benefit pension plans. The agency receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and by investment returns.

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PBGC No. 99-09