PIMCO EQUITY SERIES VIT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT
COMPANIES
Investment Company Act file number:
811-22376
PIMCO Equity Series VIT
(Exact name of registrant as specified in charter)
650 Newport Center Drive, Newport Beach, CA 92660
(Address of principal
executive offices)
Trent W. Walker
Treasurer and Principal Financial Officer
PIMCO Equity Series VIT
650 Newport Center Drive
Newport Beach, CA 92660
(Name and address of agent for service)
Copies to:
Brendan C. Fox
Dechert LLP
1900 K Street, N.W.
Washington, D.C. 20006
Registrants telephone number, including area code: (888) 877-4626
Date of fiscal year end: December 31
Date of reporting period: June 30, 2014
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be
transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure
review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and
the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (OMB) control
number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The
OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
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Item 1. |
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Reports to Stockholders. |
The following is a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Investment Company Act
of 1940, as amended (the 1940 Act) (17 CFR 270.30e-1).
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PIMCO Equity Series VITInstitutional Class |
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PIMCO Equity Series VITAdvisor Class |
Your Global Investment Authority
PIMCO Equity Series VIT®
Semiannual Report
June 30, 2014
PIMCO EqS Pathfinder
Portfolio®
Share Class
Table of Contents
This material is authorized for use only when
preceded or accompanied by the current PIMCO Equity Series VIT (the Trust) prospectus for the Portfolio. The variable product prospectus may be obtained by contacting your Investment Consultant.
Chairmans Letter
Dear Shareholder,
Please find enclosed the Semiannual Report for the PIMCO Equity Series VIT
covering the six-month reporting period ended June 30, 2014. On the following pages are specific details about the investment performance of the Portfolio and a discussion of the factors that influenced performance during the reporting period.
In addition, the letter from the portfolio manager provides a further review of such factors as well as an overview of the Portfolios investment strategy.
In contrast to the market reaction during the summer of 2013 in which the
Federal Reserves (Fed) new taper talk caused significant market turmoil, over the past six months, investor risk appetite returned on better clarity regarding central bank policy and an easing of global geopolitical
risks towards the latter part of the period.
The outlook for the
U.S. economy improved on steady though historically slow employment growth and renewed business investment activity during the reporting period. However, while the Fed noted in its June 2014 meeting that the U.S. economy had rebounded,
the central bank reiterated its view that the economy still had some distance to go to meet its employment and specific inflation targets. Investors became more comfortable with the idea that the Fed would keep its policy rate lower than historical
norms during a recovery.
This sentiment was reinforced by a series
of actions announced by the European Central Bank (ECB) on June 5, 2014. ECB President Mario Draghi lowered the ECBs benchmark rate by 10 basis points, reduced its deposit rate into unprecedented negative territory to help
mitigate potential deflationary forces (making the ECB the first major central bank to do so), opened a new liquidity channel to help encourage bank lending, and mentioned plans to begin a future quantitative easing asset purchase program. These
measures reflected the ECBs decision to attempt to tackle the threat of deflation in the Eurozone amid slower-than-historical and expected economic growth.
Within Asia, Japan raised its consumption tax, leading to a decline in
household spending and retail sales. China, also facing a more challenging growth outlook, launched a mini-stimulus program and continued to finely tune its monetary policies amid lingering concerns regarding shadow banking-related defaults.
Highlights of the financial markets during our six-month reporting
period include:
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Developed market equities posted positive returns as investors embraced higher-risk assets due to better clarity on central bank policy and an easing of
geopolitical tensions towards the end of the reporting period. U.S. equities, as measured by the S&P 500 Index, returned 7.14%. Global equities, as represented by the MSCI All Country World Index Net USD and MSCI World Index, returned 6.18% for
both indices. EM equities, as represented by the MSCI Emerging Markets Index (Net Dividends in USD), returned 6.14%. |
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U.S. Treasuries, as represented by the Barclays U.S. Treasury Index, returned 2.72% over the reporting period. The U.S. Treasury yield curve flattened as
the Fed signaled that it was in no hurry to start raising interest rates. As a result, investors continued pricing in low policy rates and lower long-term yields. The benchmark ten-year U.S. Treasury note yielded 2.53% at the end of the reporting
period, as compared to 3.03% on December 31, 2013. The Barclays U.S. Aggregate Index, a widely used index of U.S. investment-grade bonds, returned 3.93% for the period. |
Thank you again for the trust you have placed in us. We value your commitment and will continue to work diligently to meet your
broad investment needs.
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Sincerely,
Brent R. Harris
Chairman of the Board, PIMCO Equity Series VIT
July 24, 2014 |
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SEMIANNUAL REPORT |
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JUNE 30, 2014 |
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1 |
Important Information About the Portfolio
PIMCO Equity Series VIT (the Trust) is an open-end management investment company currently consisting of one investment portfolio, the PIMCO EqS Pathfinder Portfolio® (the Portfolio). The Portfolio is only available as a funding vehicle under variable life insurance policies or
variable annuity contracts issued by insurance companies (Variable Contracts). Individuals may not purchase shares of the Portfolio directly. Shares of the Portfolio also may be sold to qualified pension and retirement plans outside of
the separate account context.
The Portfolio seeks
capital appreciation by investing under normal circumstances in equity securities, including common and preferred stock (and securities convertible into, or that PIMCO expects to be exchanged for, common or preferred stock), of issuers that PIMCO
believes are undervalued. The Portfolios bottom-up value investment style attempts to identify securities that are undervalued by the market in comparison to PIMCOs own determination of the
companys value, taking into account criteria such as asset value, book value and cash flow and earnings estimates.
As of the date of this report, interest rates in the U.S. are at or near historically low levels. As such, funds investing in fixed income
securities may currently face an increased exposure to the risks associated with a rising interest rate environment. This is especially true since the Federal Reserve Board has begun tapering its quantitative easing program. Further, while the U.S.
bond market has steadily grown over the past three decades, dealer inventories of corporate bonds have remained relatively stagnant. As a result, there has been a significant reduction in the ability of dealers to make markets. All
of the factors mentioned above, individually or collectively, could lead to increased volatility and/or lower liquidity in the fixed income markets, which could result in losses to the Portfolio. If the performance of the Portfolio were to be
negatively impacted by rising interest rates, the Portfolio could face increased redemptions by its shareholders, which could further reduce the value of the Portfolio.
The Portfolio may be subject to various risks as described in
the Portfolios prospectus. Some of these risks may include, but are not limited to, the following: equity risk, value investing risk, foreign (non-U.S.) investment risk, emerging markets risk, market risk, issuer risk, interest rate risk,
credit risk, high yield and distressed company risk, currency risk, liquidity risk, leveraging risk, management risk, operational risk, small-cap and mid-cap company
risk, arbitrage risk, derivatives risk, short sale risk, commodity risk, tax risk and subsidiary risk. A complete description of these risks and other risks is contained in the Portfolios prospectus. The Portfolio may use derivative
instruments for hedging purposes or as part of an investment strategy. Use of these instruments may involve certain costs and risks such as liquidity risk, interest rate risk, market risk, credit risk, management risk, leverage risk, mispricing or
improper valuation risk and the risk
that the Portfolio could not close out a position when it would be most advantageous to do so. Certain derivative transactions may have a leveraging effect on the Portfolio. For example, a small
investment in a derivative instrument may have a significant impact on the Portfolios exposure to interest rates, currency exchange rates or other investments. As a result, a relatively small price movement in a derivative instrument may cause
an immediate and substantial loss or gain, which translates into heightened volatility for the Portfolio. The Portfolio may engage in such transactions regardless of whether the Portfolio owns the asset, instrument or components of the index
underlying the derivative instrument. The Portfolio may invest a significant portion of its assets in these types of instruments. If it does, the Portfolios investment exposure could far exceed the value of its portfolio securities and its
investment performance could be primarily dependent upon securities it does not own. The Portfolios investment in non-U.S. securities may entail risk due to non-U.S. economic and political developments; this risk may be increased when
investing in emerging markets. For example, if the Portfolio invests in emerging market debt, it may face increased exposure to interest rate, liquidity, volatility, and redemption risk due to the specific economic, political, geographical, or legal
background of the foreign issuer.
High-yield bonds
typically have a lower credit rating than other bonds. Lower-rated bonds generally involve a greater risk to principal than higher-rated bonds. Further, markets for lower-rated bonds are typically less liquid than for higher-rated bonds, and public
information is usually less abundant in such markets. Thus, high yield investments increase the chance that the Portfolio will lose money. The credit quality of a particular security or group of securities does not ensure the stability or safety of
the overall portfolio. Mortgage- and Asset-Backed Securities represent ownership interests in pools of mortgages or other assets such as consumer loans or receivables. As a general matter, Mortgage- and Asset-Backed Securities are
subject to interest rate risk, extension risk, prepayment risk, and credit risk. These risks largely stem from the fact that returns on Mortgage- and Asset-Backed Securities depend on the ability of the underlying assets to generate cash flow.
On the Portfolio Summary page in this Shareholder
Report, the Average Annual Total Return table and Cumulative Returns chart measure performance assuming that any dividend and capital gain distributions were reinvested. The Portfolio measures its performance against a broad-based securities market
index (benchmark index).
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. It is possible to lose money on investments in the Portfolio.
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2 |
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PIMCO EQUITY SERIES VIT |
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PIMCO has adopted written proxy voting policies and procedures (Proxy Policy) as
required by Rule 206(4)-6 under the Investment Advisers Act of 1940, as amended. The Proxy Policy has been adopted by the Trust as the policies and procedures that PIMCO will use when voting proxies on behalf
of the Portfolio. A description of the policies and procedures that PIMCO uses to vote proxies relating to portfolio securities of the Portfolio, and information about how the Portfolio voted proxies relating to portfolio securities held during the
most recent twelve-month period ended June 30, are available without charge, upon request, by calling the Trust at (888) 87-PIMCO, on the Portfolios website at http://pvit.pimco-funds.com, and on the Securities and Exchange Commissions
(SEC) website at http://www.sec.gov.
The
Portfolio files a complete schedule of the Portfolios holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. A copy of the Portfolios Form N-Q is available on the SECs website at http://www.sec.gov and may be reviewed and copied at the SECs Public Reference Room in Washington, D.C. The Portfolios Form
N-Q will also be available without charge, upon request, by calling the Trust at (888) 87-PIMCO and on the Portfolios website at http://pvit.pimco-funds.com. Information on the operation of the Public
Reference Room may be obtained by calling 1-800-SEC-0330.
PIMCO Equity Series VIT is distributed by PIMCO Investments LLC,
1633 Broadway, New York, New York 10019.
The
following disclosure provides important information regarding the Portfolios Expense Example (Example or Expense Example), which appears in this Shareholder Report. Please refer to this information when reviewing the
Expense Example for the Portfolio.
Expense Example
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including management fees,
distribution and/or service (12b-1) fees (Advisor Class only), and other Portfolio expenses. The Example is intended to help you understand your ongoing costs (in dollars) of investing in the Portfolio and to
compare these costs with the ongoing costs of investing in other mutual funds. The Expense Example does not reflect any fees or other expenses imposed by the Variable Contracts. If it did, the expenses reflected in the
Expense Example would be higher. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period, from January 1, 2014 to June 30, 2014.
Actual Expenses
The information in the table under the heading Actual provides information about actual account values and actual expenses. You
may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 =
$8.60), then multiply the result by the number in the appropriate column for your share class, in the row entitled Expenses Paid During Period to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The information in the table under the heading Hypothetical (5% return before expenses) provides information about hypothetical
account values and hypothetical expenses based on the Portfolios actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolios actual return. The hypothetical account values and expenses
may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other portfolios. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports of the other portfolios.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the information under the heading
Hypothetical (5% return before expenses) is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different portfolios. In addition, if these transactional costs were included, your
costs would have been higher.
Expense ratios may
vary from period to period because of various factors such as an increase in expenses that are not covered by the management fees, such as fees and expenses of the independent trustees and their counsel, extraordinary expenses and interest expense.
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SEMIANNUAL REPORT |
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JUNE 30, 2014 |
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Insights from the Portfolio Manager PIMCO EqS Pathfinder Portfolio®
Dear Shareholder,
It is a pleasure to be speaking with you. On behalf of the Pathfinder team, I thank you for
your investment in the PIMCO EqS® Pathfinder Portfolio (the
Portfolio). Our commitment continues to be to seek an attractive absolute return that beats the market over a full market cycle and to do so with less volatility than the overall market. We have organized our thoughts below to provide
you with a review of the equity market over the reporting period, the Portfolio itself, and our outlook for the second half of 2014.
The First Half of 2014 in Review
Global equity markets performed well over the six-month reporting period ending June 30, 2014, as measured by the MSCI World Index,
which returned 6.18%. The returns from the largest developed markets in the world, the U.S. and Europe, were also positive. In contrast, the Japanese NIKKEI 225 (NIKKEI) posted negative returns. Over the first half of 2014, the
Portfolios Institutional Class shares returned 8.81%, which was slightly ahead of the MSCI World Index.
The U.S. equity market shrugged off early concerns about tighter monetary policy, as economic conditions improved, and the Federal Reserve signaled its commitment to hold rates low for an
extended period. In the U.S., interest rates declined in the first half of 2014 and the ten-year U.S. Treasury yield was 2.53% at June 30, 2014. Attractive valuations and the prospect of modest economic improvement, in our view, helped European
equities as did the impact of positive and accommodative comments from the European Central Bank (ECB). Japanese markets, however, had a more volatile ride, with the NIKKEI declining in 2014 as investors questioned the sustainability of
Abenomics and whether the third arrow of structural reforms could be enacted.
Pathfinder Portfolio
The Portfolio began the reporting period fully invested with a diversified portfolio of undervalued equities, along with a few merger arbitrage and special situation investments. However, in
early 2014 a number of our undervalued equities began to approach our targets of intrinsic value and we began to exit those positions. Among the positions we exited were Intel, 3M, Nestle, Deere, Suez and Veolia Environnement, White Mountains
Insurance Group, and General Dynamics. At the same time, we also found attractive investments in marine liquefied petroleum gas carrier operators, BW LPG and Avance Gas, cleaning services company, Spotless Group, Japanese cosmetics firm, Shiseido,
and a number of merger arbitrage situations. Some of our notable performers in the portfolio over the first half of the year were Marine Harvest, Lorillard, and Logitech International.
Marine Harvest, the worlds largest salmon farmer with an estimated market share in excess of 20%, is a good
example of a long-held position which we believed was being overlooked by investors. Salmon prices recovered strongly in 2013 due to low supply, and today, with limited
supply growth this year and into 2015, we continue to have a strong outlook for salmon prices. Improving salmon prices also enabled the company to announce earnings which were considerably above
the consensus analyst estimate.
Shares of
Lorillard, the third-largest seller of cigarettes in the U.S., jumped this spring on speculation that Reynolds American Inc. might bid for the company. The combination of the two firms could potentially create the second largest cigarette producer,
which would then be able to more effectively compete with its largest U.S. competitor, Altria, in our view. Although a merger between the two companies would be subject to Federal Trade Commission (FTC) scrutiny, shrinking industry
sales, and likely asset disposals to appease regulators, might help to secure FTC approval, in our view.
Logitech sells computer peripheral products such as computer mice, keyboards, audio and gaming devices. With 70% of its sales coming from PC peripherals, Logitech has recently benefited
from less pressure in its core PC segment. The turnaround plan implemented by the new management team is producing new and successful products such as the iPhone game controller, along with better sales and profit growth.
We also had a few stocks in the Portfolio which did not perform
as we expected such as Lancashire, FANUC, and Barclays.
Lancashire shares retreated in spring 2014 due to concerns about a recent acquisition and insurance policy rates. Additionally, the company announced the planned departure of its CEO,
which did little to help assuage investor concerns. Lancashire is a high quality specialty insurance company, built on the idea that superior management and underwriting can deliver outstanding returns to investors, which maintains very low
risk in its investments consistent with a mandate for capital preservation. We continue to hold this company because we believe it is a quality company and it has a current dividend yield of approximately 7.75%.
Barclays, the U.K.s second-largest bank measured by
assets, declined over the period due to legal concerns following reports the company would face new lawsuits from the New York Attorney Generals office regarding the firms marketing materials and the use of its dark pools by high
frequency traders.
FANUC is a Japanese based factory
automation systems (robotics) company. We first entered the position in February 2012, as we believed investors were significantly undervaluing a top factory automation company, which had enormous secular and cyclical growth opportunities ahead and
an excess amount of cash on its balance sheet. FANUC shares had appreciated nicely over our total ownership time period; however, the companys share price retreated slightly in early 2014 as the company reported a sales and operating profit
decline. With the position close to our target of intrinsic value, but with greater downside potential now, we decided to exit the position.
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PIMCO EQUITY SERIES VIT |
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Outlook
Global equity markets have had a very strong past four years and the first six months of 2014 have been no exception, helped in part by the
encouraging action and comments by the worlds developed market central banks, the U.S. Federal Reserve, the ECB and the Bank of Japan. Now some investors are postulating that market valuation is full, or is fairly
valued. Although that may or may not be true for equity markets in general, it is not the market, per se, that catches our interest, it is the individual businesses in which we invest. We invest in companies only when it is appropriate to do
so, and only when they meet our investment criteria. Having the patience to wait for an investment opportunity to present itself is the mark of a patient and disciplined investor.
We also believe the market should to continue to evidence some
volatility and we anticipate this volatility will provide opportunity. We also believe that other opportunities will arise as corporations announce restructurings, such as announcements regarding a new CEO or head of sales, or a capital
restructuring, which may include an initial public offering, a spin-off, or a merger or acquisition. These situations attract our interest as they reflect companies involved in the process of change, and that change may also provide an investment
opportunity.
These are also potential investment
opportunities which occur in all markets, regardless of valuation or sentiment.
Earlier this year, my former co-portfolio manager, Chuck Lahr, resigned from the firm to spend time with his family. We have worked with Chuck for over 7 years now, we miss him, and we also
wish him all the best as he spends time with his young and growing family.
To close our letter, I repeat my thanks for investing with us in the PIMCO EqS® Pathfinder Portfolio. We continue to ply our craft and we maintain our value-driven discipline, seeking the twin goals of
capital appreciation and downside risk mitigation in our efforts to provide you with risk-adjusted returns. We are privileged to have the opportunity to manage your capital and we look forward to the challenges and the opportunities in the months
and years ahead.
Sincerely,
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Anne Gudefin, CFA
Portfolio Manager |
Top 10
Holdings1
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Marine Harvest ASA |
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3.3% |
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Imperial Tobacco Group PLC |
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3.3% |
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Reckitt Benckiser Group PLC |
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3.1% |
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British American Tobacco PLC |
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3.0% |
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Lorillard, Inc. |
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2.9% |
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Microsoft Corp. |
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2.7% |
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Danone S.A. |
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2.7% |
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AIA Group Ltd. |
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2.6% |
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Berkshire Hathaway, Inc. B |
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2.5% |
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bpost S.A. |
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2.3% |
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Geographic Breakdown1
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United States |
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30.5% |
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United Kingdom |
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15.2% |
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France |
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8.1% |
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Norway |
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5.8% |
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Bermuda |
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4.8% |
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Netherlands |
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4.6% |
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Hong Kong |
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4.5% |
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Japan |
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3.7% |
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Switzerland |
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3.6% |
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Belgium |
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2.3% |
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Singapore |
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2.3% |
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Germany |
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2.2% |
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Denmark |
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1.9% |
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Sweden |
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1.9% |
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Other |
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2.4% |
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Sector Breakdown1
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Consumer Staples |
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31.2% |
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Financials |
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18.9% |
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Energy |
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12.8% |
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Industrials |
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11.8% |
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Information Technology |
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8.3% |
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Health Care |
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5.9% |
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Consumer Discretionary |
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4.6% |
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Other |
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0.3% |
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% of Investments, at value as of 06/30/14. Top Holdings, Geographic and Sector Breakdown solely reflect long positions. Securities sold
short, financial derivative instruments and short-term instruments are not taken into consideration. |
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SEMIANNUAL REPORT |
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JUNE 30, 2014 |
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PIMCO EqS Pathfinder Portfolio®
Cumulative Returns Through June 30, 2014
$10,000 invested at the end of the month when the Portfolios Advisor Class commenced operations.
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Average Annual Total Return for the period ended June 30, 2014 |
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6 Months* |
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1 Year |
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Class Inception (04/14/2010) |
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PIMCO EqS Pathfinder Portfolio® Advisor Class |
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8.81% |
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24.46% |
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8.29% |
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MSCI World Index± |
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6.18% |
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24.05% |
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10.83% |
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All Portfolio returns are net
of fees and expenses.
* Cumulative return.
Performance quoted represents past performance.
Past performance is not a guarantee or a reliable indicator of future results. Current performance may be lower or higher than performance shown. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or
less than original cost when redeemed. The Portfolios performance does not reflect the deduction of additional charges and expenses imposed in connection with investing in Variable Contracts, which will reduce returns. For performance current
to the most recent month-end, visit http://pvit.pimco-funds.com. The Portfolios total annual operating expense ratio as stated in the Portfolios current prospectus, as supplemented to date, is 1.38% for Advisor Class shares.
± The MSCI World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. The
MSCI World Index consists of 24 developed market country indices. It is not possible to invest directly in an unmanaged index.
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Expense Example |
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Actual |
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Hypothetical |
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(5% return before expenses) |
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Beginning Account Value (01/01/14) |
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1,000.00 |
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1,000.00 |
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Ending Account Value (06/30/14) |
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$ |
1,088.10 |
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$ |
1,018.74 |
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Expenses Paid During
Period |
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$ |
6.32 |
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$ |
6.11 |
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Net Annualized Expense Ratio |
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1.22 |
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1.22 |
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Expenses Paid During Period are equal to the net annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 181/365 (to
reflect the one-half year period). Overall fees and expenses of investing in the Portfolio will be higher because the example does not reflect variable contract fees and expenses.
The Net Annualized Expense Ratio is reflective of any applicable waivers related to contractual agreements for contractual fee waivers or voluntary fee waivers. Details regarding fee waivers can be found in Note 9 in the Notes to Financial
Statements.
Please refer to the Important
Information Section for an explanation of the information presented in the above Expense Example.
Portfolio Insights
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The PIMCO EqS Pathfinder Portfolio®
seeks capital appreciation by investing under normal circumstances in equity securities, including common and preferred stock (and securities convertible into, or that PIMCO expects to be exchanged for, common or preferred stock), of issuers that
PIMCO believes are undervalued. The Portfolios bottom-up value investment style attempts to identify securities that are undervalued by the market in comparison to PIMCOs own determination of the companys value, taking into account
criteria such as asset value, book value, cash flow and earnings estimates. |
» |
|
The Portfolios Institutional Class shares returned 8.94% after fees, and the Portfolios benchmark index, the MSCI World Index, returned 6.18%
during the reporting period. |
» |
|
Security selection in both the consumer staples sector and the industrials sector were the most significant contributors to returns during the reporting
period. In addition, strong security selection and underweights to both the consumer discretionary and energy sectors contributed to performance. |
» |
|
The Portfolios security selection in the information technology sector, a lighter weight to the health care sector and a slight holding of cash
detracted modestly from returns. |
» |
|
The Funds holdings in Marine Harvest, Lorillard, and Imperial Tobacco added to performance as prices on these securities appreciated during the
reporting period. |
» |
|
The Funds holdings in Lancashire Holdings, Carrefour, and FANUC detracted from returns as prices on these securities declined during the reporting
period. |
» |
|
At the end of the reporting period, the Portfolio held approximately 92% in equities we believe are undervalued, approximately 5% (on the long side only)
in merger arbitrage investments, and held the balance of the portfolio in cash and currency hedges. |
|
|
|
|
|
|
|
6 |
|
PIMCO EQUITY SERIES VIT |
|
|
|
|
Financial Highlights
PIMCO EqS Pathfinder Portfolio®
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Per Share Data for the Year or Period Ended: |
|
06/30/2014+ |
|
|
12/31/2013 |
|
|
12/31/2012 |
|
|
12/31/2011 |
|
|
04/14/2010-12/31/2010 |
|
|
|
|
|
|
|
Advisor Class |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value beginning of year or period |
|
$ |
12.48 |
|
|
$ |
10.69 |
|
|
$ |
9.82 |
|
|
$ |
10.31 |
|
|
$ |
10.00 |
|
Net investment income
(a) |
|
|
0.15 |
|
|
|
0.24 |
|
|
|
0.18 |
|
|
|
0.08 |
|
|
|
0.08 |
|
Net realized/unrealized gain (loss) |
|
|
0.95 |
|
|
|
1.81 |
|
|
|
0.78 |
|
|
|
(0.57 |
) |
|
|
0.23 |
|
Total income (loss) from investment operations |
|
|
1.10 |
|
|
|
2.05 |
|
|
|
0.96 |
|
|
|
(0.49 |
) |
|
|
0.31 |
|
Dividends from net investment income |
|
|
0.00 |
|
|
|
(0.26 |
) |
|
|
(0.09 |
) |
|
|
0.00 |
|
|
|
0.00 |
|
Total distributions |
|
|
0.00 |
|
|
|
(0.26 |
) |
|
|
(0.09 |
) |
|
|
0.00 |
|
|
|
0.00 |
|
Net asset value end of year or period |
|
$ |
13.58 |
|
|
$ |
12.48 |
|
|
$ |
10.69 |
|
|
$ |
9.82 |
|
|
$ |
10.31 |
|
Total return |
|
|
8.81 |
% |
|
|
19.19 |
% |
|
|
9.77 |
% |
|
|
(4.72 |
)% |
|
|
3.10 |
% |
Net assets end of year or period (000s) |
|
$ |
449,973 |
|
|
$ |
449,196 |
|
|
$ |
413,524 |
|
|
$ |
387,651 |
|
|
$ |
2,498 |
|
Ratio of expenses to average net assets |
|
|
1.22 |
%* |
|
|
1.23 |
% |
|
|
1.24 |
% |
|
|
1.23 |
% |
|
|
1.24 |
%* |
Ratio of expenses to average net assets excluding waivers |
|
|
1.35 |
%* |
|
|
1.40 |
% |
|
|
1.40 |
% |
|
|
1.43 |
% |
|
|
7.02 |
%* |
Ratio of expenses to average net assets excluding interest expense and dividends on short
sales |
|
|
1.22 |
%* |
|
|
1.22 |
% |
|
|
1.22 |
% |
|
|
1.22 |
% |
|
|
1.22 |
%* |
Ratio of expenses to average net assets excluding interest expense, dividends on short sales
and waivers |
|
|
1.35 |
%* |
|
|
1.39 |
% |
|
|
1.38 |
% |
|
|
1.42 |
% |
|
|
7.00 |
%* |
Ratio of net investment income to average net assets |
|
|
2.43 |
%* |
|
|
2.05 |
% |
|
|
1.77 |
% |
|
|
0.83 |
% |
|
|
1.10 |
%* |
Portfolio turnover rate |
|
|
15 |
%** |
|
|
29 |
%** |
|
|
26 |
%** |
|
|
238 |
%** |
|
|
25 |
%** |
** |
The ratio excludes PIMCO Short-Term Floating NAV Portfolio. |
(a) |
Per share amounts based on average number of shares outstanding during the year or period. |
|
|
|
|
|
|
|
See Accompanying Notes |
|
SEMIANNUAL REPORT |
|
JUNE 30, 2014 |
|
7 |
Consolidated Statement of Assets and Liabilities PIMCO EqS Pathfinder Portfolio®
(Unaudited)
|
|
|
|
|
(Amounts in thousands, except per share amounts) |
|
June 30, 2014 |
|
|
|
Assets: |
|
|
|
|
Investments, at value |
|
|
|
|
Investments in securities |
|
$ |
477,533 |
|
Investments in Affiliates |
|
|
31,834 |
|
Financial Derivative Instruments |
|
|
|
|
Over the counter |
|
|
3,291 |
|
Cash |
|
|
463 |
|
Deposits with counterparty |
|
|
3,724 |
|
Foreign currency, at value |
|
|
1,038 |
|
Receivable for investments sold |
|
|
784 |
|
Interest and dividends receivable |
|
|
582 |
|
Dividends receivable from Affiliates |
|
|
6 |
|
|
|
|
519,255 |
|
|
|
Liabilities: |
|
|
|
|
Borrowings & Other Financing Transactions |
|
|
|
|
Payable for short sales |
|
$ |
4,122 |
|
Financial Derivative Instruments |
|
|
|
|
Over the counter |
|
|
1,761 |
|
Payable for investments purchased |
|
|
1,658 |
|
Payable for investments in Affiliates purchased |
|
|
6 |
|
Deposits from counterparty |
|
|
1,690 |
|
Payable for Portfolio shares redeemed |
|
|
474 |
|
Accrued investment advisory fees |
|
|
251 |
|
Accrued supervisory and administrative fees |
|
|
142 |
|
Accrued distribution fees |
|
|
90 |
|
Reimbursement to PIMCO |
|
|
25 |
|
Other liabilities |
|
|
16 |
|
|
|
|
10,235 |
|
|
|
Net Assets |
|
$ |
509,020 |
|
|
|
Net Assets Consist of: |
|
|
|
|
Paid in capital |
|
$ |
347,595 |
|
Undistributed net investment income |
|
|
8,310 |
|
Accumulated undistributed net realized gain |
|
|
23,821 |
|
Net unrealized appreciation |
|
|
129,294 |
|
|
|
$ |
509,020 |
|
|
|
Net Assets: |
|
|
|
|
Institutional Class |
|
$ |
59,047 |
|
Advisor Class |
|
|
449,973 |
|
|
|
Shares Issued and Outstanding: |
|
|
|
|
Institutional Class |
|
|
4,326 |
|
Advisor Class |
|
|
33,130 |
|
|
|
Net Asset Value and Redemption Price Per Share Outstanding: |
|
|
|
|
Institutional Class |
|
$ |
13.65 |
|
Advisor Class |
|
|
13.58 |
|
|
|
Cost of Investments in Securities |
|
$ |
349,433 |
|
Cost of Investments in Affiliates |
|
$ |
31,832 |
|
Cost of Foreign Currency Held |
|
$ |
1,007 |
|
Proceeds Received on Short Sales |
|
$ |
3,736 |
|
|
|
|
|
|
|
|
|
|
8 |
|
PIMCO EQUITY SERIES VIT |
|
|
|
|
See Accompanying Notes |
|
Consolidated Statement of Operations PIMCO EqS Pathfinder Portfolio®
(Unaudited)
|
|
|
|
|
(Amounts in thousands) |
|
Six Months Ended June 30, 2014 |
|
|
|
Investment Income: |
|
|
|
|
Dividends, net of foreign taxes* |
|
$ |
9,001 |
|
Dividends from Investments in Affiliates |
|
|
14 |
|
Total Income |
|
|
9,015 |
|
|
|
Expenses: |
|
|
|
|
Investment advisory fees |
|
|
1,838 |
|
Supervisory and administrative fees |
|
|
858 |
|
Distribution and/or servicing fees - Advisor Class |
|
|
543 |
|
Dividends on short sales |
|
|
12 |
|
Trustee fees |
|
|
10 |
|
Interest expense |
|
|
2 |
|
Miscellaneous expense |
|
|
12 |
|
Total Expenses |
|
|
3,275 |
|
Waiver and/or Reimbursement by PIMCO |
|
|
(329 |
) |
Net Expenses |
|
|
2,946 |
|
|
|
Net Investment Income |
|
|
6,069 |
|
|
|
Net Realized Gain (Loss): |
|
|
|
|
Investments in securities |
|
|
20,054 |
|
Exchange-traded or centrally cleared financial derivative instruments |
|
|
176 |
|
Over the counter financial derivative instruments |
|
|
(3,527 |
) |
Foreign currency |
|
|
312 |
|
Net Realized Gain |
|
|
17,015 |
|
|
|
Net Change in Unrealized Appreciation (Depreciation): |
|
|
|
|
Investments in securities |
|
|
15,506 |
|
Investments in Affiliates |
|
|
2 |
|
Over the counter financial derivative instruments |
|
|
3,843 |
|
Short sales |
|
|
(386 |
) |
Foreign currency assets and liabilities |
|
|
27 |
|
Net Change in Unrealized Appreciation |
|
|
18,992 |
|
Net Gain |
|
|
36,007 |
|
|
|
Net Increase in Net Assets Resulting from Operations |
|
$ |
42,076 |
|
|
|
* Foreign tax withholdings - Dividends |
|
$ |
716 |
|
|
|
|
|
|
|
|
See Accompanying Notes |
|
SEMIANNUAL REPORT |
|
JUNE 30, 2014 |
|
9 |
Consolidated Statements of Changes in Net Assets PIMCO EqS Pathfinder Portfolio®
(Unaudited)
|
|
|
|
|
|
|
|
|
(Amounts in thousands) |
|
Six Months Ended June 30, 2014 (Unaudited) |
|
|
Year Ended December 31, 2013 |
|
|
|
|
Increase in Net Assets from: |
|
|
|
|
|
|
|
|
|
|
|
Operations: |
|
|
|
|
|
|
|
|
Net investment income |
|
$ |
6,069 |
|
|
$ |
10,152 |
|
Net realized gain |
|
|
17,015 |
|
|
|
10,577 |
|
Net change in unrealized appreciation |
|
|
18,992 |
|
|
|
65,099 |
|
Net increase resulting from operations |
|
|
42,076 |
|
|
|
85,828 |
|
|
|
|
Distributions to Shareholders: |
|
|
|
|
|
|
|
|
From net investment income |
|
|
|
|
|
|
|
|
Institutional Class |
|
|
0 |
|
|
|
(1,309 |
) |
Advisor Class |
|
|
0 |
|
|
|
(9,191 |
) |
|
|
|
Total Distributions |
|
|
0 |
|
|
|
(10,500 |
) |
|
|
|
Portfolio Share Transactions: |
|
|
|
|
|
|
|
|
Net (decrease) resulting from Portfolio share transactions** |
|
|
(40,020 |
) |
|
|
(40,628 |
) |
|
|
|
Total Increase in Net Assets |
|
|
2,056 |
|
|
|
34,700 |
|
|
|
|
Net Assets: |
|
|
|
|
|
|
|
|
Beginning of year or period |
|
|
506,964 |
|
|
|
472,264 |
|
End of year or period* |
|
$ |
509,020 |
|
|
$ |
506,964 |
|
|
|
|
* Including undistributed net investment income of: |
|
$ |
8,310 |
|
|
$ |
2,241 |
|
** |
See Note 13 in the Notes to Financial Statements. |
|
|
|
|
|
|
|
|
|
10 |
|
PIMCO EQUITY SERIES VIT |
|
|
|
|
See Accompanying Notes |
|
Consolidated Schedule of Investments PIMCO EqS Pathfinder Portfolio®
June 30, 2014 (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHARES |
|
|
|
|
MARKET VALUE (000S) |
|
INVESTMENTS IN SECURITIES 93.8% |
|
|
|
COMMON STOCKS 92.8% |
|
|
|
AUSTRALIA 0.7% |
|
|
|
INDUSTRIALS 0.7% |
|
Spotless Group Holdings Ltd. (a) |
|
|
|
|
2,430,650 |
|
|
$ |
|
|
3,782 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Australia |
|
|
|
|
|
|
|
|
|
|
3,782 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BELGIUM 2.3% |
|
|
|
INDUSTRIALS 2.3% |
|
bpost S.A. |
|
|
|
|
470,864 |
|
|
|
|
|
11,896 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Belgium |
|
|
|
|
|
|
|
|
|
|
11,896 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BERMUDA 4.8% |
|
|
|
ENERGY 4.8% |
|
Avance Gas Holding Ltd. |
|
|
|
|
224,786 |
|
|
|
|
|
5,753 |
|
North Atlantic Drilling Ltd. |
|
|
|
|
661,306 |
|
|
|
|
|
7,023 |
|
Seadrill Ltd. |
|
|
|
|
298,072 |
|
|
|
|
|
11,813 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,589 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Bermuda |
|
|
|
|
|
|
|
|
|
|
24,589 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CANADA 0.7% |
|
|
|
ENERGY 0.7% |
|
Cameco Corp. |
|
|
|
|
180,036 |
|
|
|
|
|
3,530 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Canada |
|
|
|
|
|
|
|
|
|
|
3,530 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DENMARK 1.9% |
|
|
|
CONSUMER STAPLES 1.9% |
|
Carlsberg A/S B |
|
|
|
|
90,598 |
|
|
|
|
|
9,758 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Denmark |
|
|
|
|
|
|
|
|
|
|
9,758 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FAROE ISLANDS 0.7% |
|
|
|
CONSUMER STAPLES 0.7% |
|
Bakkafrost P/F |
|
|
|
|
175,099 |
|
|
|
|
|
3,410 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Faroe Islands |
|
|
|
|
|
|
|
|
|
|
3,410 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FRANCE 8.0% |
|
|
|
CONSUMER DISCRETIONARY 2.5% |
|
Eutelsat Communications S.A. |
|
|
|
|
232,864 |
|
|
|
|
|
8,092 |
|
JCDecaux S.A. |
|
|
|
|
129,343 |
|
|
|
|
|
4,831 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,923 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSUMER STAPLES 4.7% |
|
Carrefour S.A. |
|
|
|
|
284,014 |
|
|
|
|
|
10,473 |
|
Danone S.A. |
|
|
|
|
180,551 |
|
|
|
|
|
13,425 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,898 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ENERGY 0.8% |
|
Total S.A. |
|
|
|
|
52,611 |
|
|
|
|
|
3,806 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total France |
|
|
|
|
|
|
|
|
|
|
40,627 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GERMANY 2.1% |
|
|
|
HEALTH CARE 2.1% |
|
Rhoen Klinikum AG |
|
|
|
|
332,158 |
|
|
|
|
|
10,967 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Germany |
|
|
|
|
|
|
|
|
|
|
10,967 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHARES |
|
|
|
|
MARKET VALUE (000S) |
|
HONG KONG 4.5% |
|
|
|
CONSUMER DISCRETIONARY 0.7% |
|
Television Broadcasts Ltd. |
|
|
|
|
510,400 |
|
|
$ |
|
|
3,312 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIALS 3.3% |
|
AIA Group Ltd. |
|
|
|
|
2,617,900 |
|
|
|
|
|
13,171 |
|
First Pacific Co. Ltd. |
|
|
|
|
3,169,750 |
|
|
|
|
|
3,563 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,734 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INDUSTRIALS 0.5% |
|
Jardine Matheson Holdings Ltd. |
|
|
|
|
25,500 |
|
|
|
|
|
1,513 |
|
Jardine Strategic Holdings Ltd. |
|
|
|
|
33,700 |
|
|
|
|
|
1,205 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,718 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Hong Kong |
|
|
|
|
|
|
|
|
|
|
22,764 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
JAPAN 3.7% |
|
|
|
CONSUMER DISCRETIONARY 0.5% |
|
Toyota Motor Corp. |
|
|
|
|
44,000 |
|
|
|
|
|
2,634 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSUMER STAPLES 1.2% |
|
Kao Corp. |
|
|
|
|
90,900 |
|
|
|
|
|
3,580 |
|
Shiseido Co. Ltd. |
|
|
|
|
123,500 |
|
|
|
|
|
2,252 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,832 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INDUSTRIALS 0.6% |
|
Komatsu Ltd. |
|
|
|
|
125,500 |
|
|
|
|
|
2,913 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INFORMATION TECHNOLOGY 1.4% |
|
Nintendo Co. Ltd. |
|
|
|
|
36,117 |
|
|
|
|
|
4,337 |
|
Tokyo Electron Ltd. - ADR |
|
|
|
|
171,670 |
|
|
|
|
|
2,934 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,271 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Japan |
|
|
|
|
|
|
|
|
|
|
18,650 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NETHERLANDS 4.6% |
|
|
|
CONSUMER STAPLES 1.7% |
|
Corbion NV |
|
|
|
|
411,222 |
|
|
|
|
|
8,666 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIALS 2.1% |
|
ING Groep NV - Dutch Certificate (a) |
|
|
|
|
753,791 |
|
|
|
|
|
10,578 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INFORMATION TECHNOLOGY 0.8% |
|
Gemalto NV |
|
|
|
|
38,602 |
|
|
|
|
|
4,001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Netherlands |
|
|
|
|
|
|
|
|
|
|
23,245 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NORWAY 5.8% |
|
|
|
CONSUMER STAPLES 4.2% |
|
Cermaq ASA |
|
|
|
|
351,092 |
|
|
|
|
|
4,837 |
|
Marine Harvest ASA |
|
|
|
|
1,233,005 |
|
|
|
|
|
16,825 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,662 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ENERGY 1.6% |
|
BW LPG Ltd. |
|
|
|
|
553,309 |
|
|
|
|
|
8,109 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Norway |
|
|
|
|
|
|
|
|
|
|
29,771 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHARES |
|
|
|
|
MARKET VALUE (000S) |
|
SINGAPORE 2.3% |
|
|
|
INDUSTRIALS 2.3% |
|
ComfortDelGro Corp. Ltd. |
|
|
|
|
3,712,000 |
|
|
$ |
|
|
7,444 |
|
Keppel Corp. Ltd. |
|
|
|
|
484,700 |
|
|
|
|
|
4,196 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,640 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Singapore |
|
|
|
|
|
|
|
|
|
|
11,640 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOUTH KOREA 0.3% |
|
|
|
CONSUMER DISCRETIONARY 0.3% |
|
GS Home Shopping, Inc. |
|
|
|
|
6,988 |
|
|
|
|
|
1,666 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total South Korea |
|
|
|
|
|
|
|
|
|
|
1,666 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SWEDEN 1.9% |
|
|
|
INDUSTRIALS 1.9% |
|
Loomis AB B |
|
|
|
|
312,308 |
|
|
|
|
|
9,594 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Sweden |
|
|
|
|
|
|
|
|
|
|
9,594 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SWITZERLAND 3.6% |
|
|
|
FINANCIALS 0.9% |
|
Swiss Re AG |
|
|
|
|
51,952 |
|
|
|
|
|
4,620 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HEALTH CARE 1.4% |
|
Roche Holding AG |
|
|
|
|
24,649 |
|
|
|
|
|
7,344 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INFORMATION TECHNOLOGY 1.3% |
|
Logitech International S.A. |
|
|
|
|
487,539 |
|
|
|
|
|
6,336 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Switzerland |
|
|
|
|
|
|
|
|
|
|
18,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNITED KINGDOM 15.2% |
|
|
|
CONSUMER STAPLES 9.4% |
|
British American Tobacco PLC |
|
|
|
|
258,368 |
|
|
|
|
|
15,373 |
|
Imperial Tobacco Group PLC |
|
|
|
|
372,250 |
|
|
|
|
|
16,747 |
|
Reckitt Benckiser Group PLC |
|
|
|
|
178,495 |
|
|
|
|
|
15,564 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,684 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ENERGY 2.7% |
|
BP PLC |
|
|
|
|
1,070,258 |
|
|
|
|
|
9,424 |
|
Ensco PLC A |
|
|
|
|
77,266 |
|
|
|
|
|
4,294 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,718 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIALS 3.1% |
|
Barclays PLC |
|
|
|
|
1,283,380 |
|
|
|
|
|
4,675 |
|
Lancashire Holdings Ltd. |
|
|
|
|
697,792 |
|
|
|
|
|
7,810 |
|
Prudential PLC |
|
|
|
|
148,242 |
|
|
|
|
|
3,397 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,882 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total United Kingdom |
|
|
|
|
|
|
|
|
|
|
77,284 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNITED STATES 29.7% |
|
|
|
CONSUMER DISCRETIONARY 0.5% |
|
Time Warner Cable, Inc. |
|
|
|
|
17,531 |
|
|
|
|
|
2,582 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSUMER STAPLES 7.5% |
|
Altria Group, Inc. |
|
|
|
|
187,482 |
|
|
|
|
|
7,863 |
|
Lorillard, Inc. |
|
|
|
|
244,460 |
|
|
|
|
|
14,905 |
|
Philip Morris International, Inc. |
|
|
|
|
59,751 |
|
|
|
|
|
5,038 |
|
|
|
|
|
|
|
|
See Accompanying Notes |
|
SEMIANNUAL REPORT |
|
JUNE 30, 2014 |
|
11 |
Consolidated Schedule of Investments PIMCO
EqS Pathfinder Portfolio® (Cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHARES |
|
|
|
|
MARKET VALUE (000S) |
|
Reynolds American, Inc. |
|
|
|
|
114,152 |
|
|
$ |
|
|
6,889 |
|
Wal-Mart Stores, Inc. |
|
|
|
|
46,749 |
|
|
|
|
|
3,509 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,204 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ENERGY 2.3% |
|
Halliburton Co. |
|
|
|
|
80,069 |
|
|
|
|
|
5,686 |
|
National Oilwell Varco, Inc. |
|
|
|
|
71,826 |
|
|
|
|
|
5,915 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,601 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIALS 8.6% |
|
Alleghany Corp. (a) |
|
|
|
|
13,543 |
|
|
|
|
|
5,934 |
|
Berkshire Hathaway, Inc. B (a) |
|
|
|
|
100,636 |
|
|
|
|
|
12,737 |
|
Genworth Financial, Inc. A (a)(c) |
|
|
502,082 |
|
|
|
|
|
8,736 |
|
Navient Corp. |
|
|
|
|
256,693 |
|
|
|
|
|
4,546 |
|
PHH Corp. (a) |
|
|
|
|
134,193 |
|
|
|
|
|
3,084 |
|
SLM Corp. |
|
|
|
|
256,693 |
|
|
|
|
|
2,133 |
|
ViewPoint Financial Group, Inc. |
|
|
|
|
243,009 |
|
|
|
|
|
6,539 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,709 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HEALTH CARE 2.2% |
|
Allergan, Inc. |
|
|
|
|
15,493 |
|
|
|
|
|
2,622 |
|
Merck & Co., Inc. |
|
|
|
|
70,596 |
|
|
|
|
|
4,084 |
|
Pfizer, Inc. |
|
|
|
|
152,138 |
|
|
|
|
|
4,515 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,221 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INDUSTRIALS 3.5% |
|
3M Co. |
|
|
|
|
37,590 |
|
|
|
|
|
5,384 |
|
Brinks Co. |
|
|
|
|
258,386 |
|
|
|
|
|
7,292 |
|
NOW, Inc. (a) |
|
|
|
|
137,247 |
|
|
|
|
|
4,970 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,646 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHARES |
|
|
|
|
MARKET VALUE (000S) |
|
INFORMATION TECHNOLOGY 4.8% |
|
International Business Machines Corp. |
|
|
|
|
40,593 |
|
|
$ |
|
|
7,358 |
|
Microsoft Corp. (c) |
|
|
|
|
330,063 |
|
|
|
|
|
13,764 |
|
Oracle Corp. |
|
|
|
|
89,083 |
|
|
|
|
|
3,610 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,732 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MATERIALS 0.3% |
|
Rentech, Inc. (a) |
|
|
|
|
515,516 |
|
|
|
|
|
1,335 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total United States |
|
|
|
|
|
151,030 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Common Stocks (Cost $345,726) |
|
|
|
|
|
472,503 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REAL ESTATE INVESTMENT TRUSTS 0.9% |
|
|
|
SINGAPORE 0.0% |
|
|
|
FINANCIALS 0.0% |
|
Keppel REIT Management Ltd. |
|
|
|
|
125,236 |
|
|
|
|
|
129 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Singapore |
|
|
|
|
|
129 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNITED STATES 0.9% |
|
|
|
FINANCIALS 0.9% |
|
NorthStar Realty Finance Corp. |
|
|
|
|
249,669 |
|
|
|
|
|
4,339 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total United States |
|
|
|
|
|
4,339 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Real Estate Investment Trusts (Cost $2,594) |
|
|
4,468 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHARES |
|
|
|
|
MARKET VALUE (000S) |
|
RIGHTS 0.1% |
|
|
|
FRANCE 0.1% |
|
|
|
HEALTH CARE 0.1% |
|
Sanofi - Exp. 12/31/2020 |
|
|
|
|
1,123,923 |
|
|
$ |
|
|
562 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Rights (Cost $1,113) |
|
|
562 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments in Securities (Cost $349,433) |
|
|
477,533 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTMENTS IN AFFILIATES 6.3% |
|
|
|
SHORT-TERM INSTRUMENTS 6.3% |
|
|
|
CENTRAL FUNDS USED FOR CASH MANAGEMENT PURPOSES 6.3% |
|
PIMCO Short-Term Floating NAV Portfolio |
|
|
|
|
3,181,441 |
|
|
|
|
|
31,834 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Short-Term Instruments (Cost $31,832) |
|
|
31,834 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments in Affiliates (Cost $31,832) |
|
|
31,834 |
|
|
|
Total Investments 100.1% (Cost $381,265) |
|
|
$ |
|
|
509,367 |
|
|
|
Securities Sold Short (b) (0.8%)
(Proceeds $3,736) |
|
|
(4,122 |
) |
|
|
Financial Derivative Instruments (d) 0.3%
(Cost or Premiums, net $0) |
|
|
1,530 |
|
|
|
Other Assets and Liabilities, net 0.4% |
|
|
2,245 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Assets 100.0% |
|
|
$ |
|
|
509,020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO CONSOLIDATED SCHEDULE OF INVESTMENTS (AMOUNTS IN THOUSANDS*, EXCEPT NUMBER OF
CONTRACTS AND SHARES):
* |
A zero balance may reflect actual amounts rounding to less than one thousand. |
(a) |
Security did not produce income within the last twelve months. |
BORROWINGS AND OTHER FINANCING TRANSACTIONS
(b) SECURITIES SOLD SHORT:
(c) |
Securities with an aggregate market value of $6,780 and cash of $3,724 have been pledged as collateral as of June 30, 2014 for equity short sales
and equity options as governed by prime brokerage agreements and agreements governing listed equity option transactions. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Counterparty |
|
Description |
|
Shares |
|
|
Proceeds |
|
|
Payable for Short Sales |
|
|
|
Common Stocks |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health Care |
|
|
|
|
|
|
|
|
|
|
|
|
GSC |
|
Valeant Pharmaceuticals International, Inc. |
|
|
7,747 |
|
|
$ |
(982 |
) |
|
$ |
(977 |
) |
|
|
Information Technology |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Applied Materials, Inc. |
|
|
139,487 |
|
|
|
(2,754 |
) |
|
|
(3,145 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Short Sales |
|
|
|
|
|
$ |
(3,736 |
) |
|
$ |
(4,122 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 |
|
PIMCO EQUITY SERIES VIT |
|
|
|
|
See Accompanying Notes |
|
June 30, 2014 (Unaudited)
BORROWINGS AND OTHER FINANCING
TRANSACTIONS SUMMARY
The following is a summary by
counterparty of the market value of Borrowings and Other Financing Transactions and collateral (received)/pledged as of June 30, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Counterparty |
|
Repurchase Agreement Proceeds to be Received |
|
|
Payable for Reverse Repurchase Agreements |
|
|
Payable for Sale-Buyback Transactions |
|
|
Payable for Short Sales |
|
|
Total Borrowings and Other Financing Transactions |
|
|
Collateral (Received)/Pledged |
|
|
Net Exposure
(1) |
|
Prime Brokerage Agreement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GSC |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
(4,122 |
) |
|
$ |
(4,122 |
) |
|
$ |
9,354 |
|
|
$ |
5,232 |
|
MSC |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1,150 |
|
|
|
1,150 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Borrowings and Other Financing Transactions |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
(4,122 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Net Exposure represents the net receivable/(payable) that would be due from/to the counterparty in the event of default. Exposure from
borrowings and other financing transactions can only be netted across transactions governed under the same master agreement with the same legal entity. The Portfolio and Subsidiary are recognized as two separate legal entities. As such, exposure
cannot be netted. See Note 7, Principal Risks, in the Notes to Financial Statements for more information regarding master netting arrangements. |
(d) FINANCIAL DERIVATIVE INSTRUMENTS: OVER THE
COUNTER
FORWARD FOREIGN CURRENCY CONTRACTS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Counterparty |
|
Settlement Month |
|
|
Currency to be Delivered |
|
|
Currency to be Received |
|
|
Unrealized Appreciation/ (Depreciation) |
|
|
|
|
|
Asset |
|
|
Liability |
|
BOA |
|
|
07/2014 |
|
|
|
DKK |
|
|
|
36,522 |
|
|
$ |
|
|
|
|
6,654 |
|
|
$ |
0 |
|
|
$ |
(54 |
) |
|
|
|
07/2014 |
|
|
$ |
|
|
|
|
27,234 |
|
|
|
GBP |
|
|
|
16,044 |
|
|
|
224 |
|
|
|
0 |
|
|
|
|
08/2014 |
|
|
|
GBP |
|
|
|
16,044 |
|
|
$ |
|
|
|
|
27,227 |
|
|
|
0 |
|
|
|
(224 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BPS |
|
|
07/2014 |
|
|
|
AUD |
|
|
|
1,691 |
|
|
|
|
|
|
|
1,562 |
|
|
|
0 |
|
|
|
(32 |
) |
|
|
|
07/2014 |
|
|
|
CHF |
|
|
|
559 |
|
|
|
|
|
|
|
624 |
|
|
|
0 |
|
|
|
(6 |
) |
|
|
|
07/2014 |
|
|
|
EUR |
|
|
|
2,315 |
|
|
|
|
|
|
|
3,158 |
|
|
|
0 |
|
|
|
(12 |
) |
|
|
|
07/2014 |
|
|
|
GBP |
|
|
|
16,044 |
|
|
|
|
|
|
|
27,016 |
|
|
|
0 |
|
|
|
(442 |
) |
|
|
|
07/2014 |
|
|
|
NOK |
|
|
|
256,838 |
|
|
|
|
|
|
|
43,075 |
|
|
|
1,202 |
|
|
|
0 |
|
|
|
|
07/2014 |
|
|
$ |
|
|
|
|
1,035 |
|
|
|
NOK |
|
|
|
6,250 |
|
|
|
1 |
|
|
|
(17 |
) |
|
|
|
08/2014 |
|
|
|
|
|
|
|
624 |
|
|
|
CHF |
|
|
|
559 |
|
|
|
6 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BRC |
|
|
07/2014 |
|
|
|
KRW |
|
|
|
1,628,784 |
|
|
$ |
|
|
|
|
1,499 |
|
|
|
0 |
|
|
|
(110 |
) |
|
|
|
07/2014 |
|
|
$ |
|
|
|
|
2,169 |
|
|
|
JPY |
|
|
|
222,200 |
|
|
|
25 |
|
|
|
0 |
|
|
|
|
08/2014 |
|
|
|
NOK |
|
|
|
91,731 |
|
|
$ |
|
|
|
|
14,932 |
|
|
|
0 |
|
|
|
(4 |
) |
|
|
|
09/2014 |
|
|
|
SGD |
|
|
|
9,670 |
|
|
|
|
|
|
|
7,684 |
|
|
|
0 |
|
|
|
(71 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CBK |
|
|
07/2014 |
|
|
$ |
|
|
|
|
624 |
|
|
|
CHF |
|
|
|
559 |
|
|
|
6 |
|
|
|
0 |
|
|
|
|
07/2014 |
|
|
|
|
|
|
|
6,685 |
|
|
|
DKK |
|
|
|
36,522 |
|
|
|
22 |
|
|
|
0 |
|
|
|
|
07/2014 |
|
|
|
|
|
|
|
517 |
|
|
|
EUR |
|
|
|
382 |
|
|
|
6 |
|
|
|
0 |
|
|
|
|
08/2014 |
|
|
|
DKK |
|
|
|
36,522 |
|
|
$ |
|
|
|
|
6,687 |
|
|
|
0 |
|
|
|
(22 |
) |
|
|
|
08/2014 |
|
|
|
GBP |
|
|
|
374 |
|
|
|
|
|
|
|
637 |
|
|
|
0 |
|
|
|
(3 |
) |
|
|
|
08/2014 |
|
|
|
NOK |
|
|
|
91,731 |
|
|
|
|
|
|
|
14,941 |
|
|
|
5 |
|
|
|
0 |
|
|
|
|
08/2014 |
|
|
|
SEK |
|
|
|
16,332 |
|
|
|
|
|
|
|
2,428 |
|
|
|
0 |
|
|
|
(15 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DUB |
|
|
07/2014 |
|
|
$ |
|
|
|
|
20,753 |
|
|
|
CAD |
|
|
|
22,608 |
|
|
|
434 |
|
|
|
0 |
|
|
|
|
07/2014 |
|
|
|
|
|
|
|
24,632 |
|
|
|
EUR |
|
|
|
18,123 |
|
|
|
185 |
|
|
|
0 |
|
|
|
|
08/2014 |
|
|
|
EUR |
|
|
|
17,599 |
|
|
$ |
|
|
|
|
23,922 |
|
|
|
0 |
|
|
|
(180 |
) |
|
|
|
09/2014 |
|
|
$ |
|
|
|
|
961 |
|
|
|
ILS |
|
|
|
3,340 |
|
|
|
13 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FBF |
|
|
07/2014 |
|
|
|
|
|
|
|
526 |
|
|
|
EUR |
|
|
|
386 |
|
|
|
3 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GLM |
|
|
07/2014 |
|
|
|
EUR |
|
|
|
18,584 |
|
|
$ |
|
|
|
|
25,452 |
|
|
|
5 |
|
|
|
0 |
|
|
|
|
07/2014 |
|
|
$ |
|
|
|
|
854 |
|
|
|
EUR |
|
|
|
626 |
|
|
|
3 |
|
|
|
0 |
|
|
|
|
07/2014 |
|
|
|
|
|
|
|
892 |
|
|
|
JPY |
|
|
|
90,900 |
|
|
|
5 |
|
|
|
0 |
|
|
|
|
09/2014 |
|
|
|
SGD |
|
|
|
1,138 |
|
|
$ |
|
|
|
|
910 |
|
|
|
0 |
|
|
|
(3 |
) |
|
|
|
10/2014 |
|
|
$ |
|
|
|
|
2,083 |
|
|
|
ZAR |
|
|
|
22,887 |
|
|
|
31 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
JPM |
|
|
07/2014 |
|
|
|
JPY |
|
|
|
2,360,409 |
|
|
$ |
|
|
|
|
23,242 |
|
|
|
0 |
|
|
|
(58 |
) |
|
|
|
07/2014 |
|
|
|
NOK |
|
|
|
24,610 |
|
|
|
|
|
|
|
4,099 |
|
|
|
87 |
|
|
|
0 |
|
|
|
|
07/2014 |
|
|
$ |
|
|
|
|
1,870 |
|
|
|
EUR |
|
|
|
1,382 |
|
|
|
22 |
|
|
|
0 |
|
|
|
|
07/2014 |
|
|
|
|
|
|
|
18,895 |
|
|
|
JPY |
|
|
|
1,924,604 |
|
|
|
103 |
|
|
|
0 |
|
|
|
|
08/2014 |
|
|
|
|
|
|
|
23,247 |
|
|
|
|
|
|
|
2,360,409 |
|
|
|
59 |
|
|
|
0 |
|
|
|
|
10/2014 |
|
|
|
ZAR |
|
|
|
22,925 |
|
|
$ |
|
|
|
|
2,089 |
|
|
|
0 |
|
|
|
(29 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MSC |
|
|
07/2014 |
|
|
|
CAD |
|
|
|
22,608 |
|
|
|
|
|
|
|
21,143 |
|
|
|
0 |
|
|
|
(45 |
) |
|
|
|
07/2014 |
|
|
|
HKD |
|
|
|
8,619 |
|
|
|
|
|
|
|
1,112 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
07/2014 |
|
|
|
SEK |
|
|
|
16,332 |
|
|
|
|
|
|
|
2,457 |
|
|
|
13 |
|
|
|
0 |
|
|
|
|
07/2014 |
|
|
$ |
|
|
|
|
1,203 |
|
|
|
JPY |
|
|
|
122,705 |
|
|
|
8 |
|
|
|
0 |
|
|
|
|
08/2014 |
|
|
|
|
|
|
|
21,124 |
|
|
|
CAD |
|
|
|
22,608 |
|
|
|
46 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RBC |
|
|
07/2014 |
|
|
|
AUD |
|
|
|
2,180 |
|
|
$ |
|
|
|
|
2,006 |
|
|
|
0 |
|
|
|
(50 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Accompanying Notes |
|
SEMIANNUAL REPORT |
|
JUNE 30, 2014 |
|
13 |
Consolidated Schedule of Investments PIMCO
EqS Pathfinder Portfolio® (Cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Counterparty |
|
Settlement Month |
|
|
Currency to be Delivered |
|
|
Currency to be Received |
|
|
Unrealized Appreciation/ (Depreciation) |
|
|
|
|
|
Asset |
|
|
Liability |
|
SOG |
|
|
07/2014 |
|
|
|
AUD |
|
|
|
13,037 |
|
|
$ |
|
|
|
|
12,292 |
|
|
$ |
0 |
|
|
$ |
(2 |
) |
|
|
|
07/2014 |
|
|
$ |
|
|
|
|
15,614 |
|
|
|
AUD |
|
|
|
16,908 |
|
|
|
330 |
|
|
|
0 |
|
|
|
|
08/2014 |
|
|
|
|
|
|
|
12,262 |
|
|
|
|
|
|
|
13,037 |
|
|
|
2 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UAG |
|
|
07/2014 |
|
|
|
HKD |
|
|
|
100,249 |
|
|
$ |
|
|
|
|
12,916 |
|
|
|
0 |
|
|
|
(15 |
) |
|
|
|
08/2014 |
|
|
|
NOK |
|
|
|
91,731 |
|
|
|
|
|
|
|
14,939 |
|
|
|
2 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Forward Foreign Currency Contracts |
|
|
|
|
|
|
|
|
|
|
$ |
2,848 |
|
|
$ |
(1,394 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WRITTEN OPTIONS:
AS OF JUNE 30, 2014 THERE WERE NO OPEN
WRITTEN OPTIONS. TRANSACTIONS IN WRITTEN CALL AND PUT OPTIONS FOR THE PERIOD ENDED JUNE 30, 2014:
|
|
|
|
|
|
|
|
|
|
|
# of Contracts |
|
|
Premiums |
|
Balance at Beginning of Period |
|
|
0 |
|
|
$ |
0 |
|
Sales |
|
|
2,182 |
|
|
|
(284 |
) |
Closing Buys |
|
|
(2,182 |
) |
|
|
284 |
|
Expirations |
|
|
0 |
|
|
|
0 |
|
Exercised |
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
Balance at End of Period |
|
|
0 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
SWAP AGREEMENTS:
TOTAL RETURN SWAPS ON SECURITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Counterparty |
|
Pay/Receive (1) |
|
Underlying Reference |
|
# of Shares |
|
|
Financing Rate |
|
Maturity Date |
|
|
Notional Amount |
|
|
Unrealized Appreciation/ (Depreciation) |
|
|
Swap Agreements, at Value |
|
|
|
|
|
|
|
|
|
Asset |
|
|
Liability |
|
BOA |
|
Pay |
|
Rentech Nitrogen Partners LP |
|
|
9,630 |
|
|
1-Month USD-LIBOR less a specified spread |
|
|
08/15/2014 |
|
|
|
$ |
|
|
|
154 |
|
|
$ |
(9 |
) |
|
$ |
0 |
|
|
$ |
(9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CBK |
|
Pay |
|
Liberty Global PLC A |
|
|
12,451 |
|
|
1-Month EUR-EURIBOR less a specified spread |
|
|
02/09/2015 |
|
|
|
EUR |
|
|
|
392 |
|
|
|
(14 |
) |
|
|
0 |
|
|
|
(14 |
) |
|
|
Pay |
|
Liberty Global PLC C |
|
|
30,718 |
|
|
1-Month EUR-EURIBOR less a specified spread |
|
|
02/09/2015 |
|
|
|
|
|
|
|
938 |
|
|
|
(14 |
) |
|
|
0 |
|
|
|
(14 |
) |
|
|
Receive |
|
Ziggo NV |
|
|
54,559 |
|
|
1-Month EUR-EURIBOR plus a specified spread |
|
|
02/09/2015 |
|
|
|
|
|
|
|
1,827 |
|
|
|
20 |
|
|
|
20 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GST |
|
Receive |
|
AstraZeneca PLC |
|
|
40,323 |
|
|
1-Month USD-LIBOR plus a specified spread |
|
|
04/30/2015 |
|
|
|
GBP |
|
|
|
1,757 |
|
|
|
(8 |
) |
|
|
0 |
|
|
|
(8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
JPM |
|
Pay |
|
Expedia, Inc. |
|
|
20,742 |
|
|
1-Month USD-LIBOR less a specified spread |
|
|
04/29/2015 |
|
|
|
$ |
|
|
|
1,551 |
|
|
|
(83 |
) |
|
|
0 |
|
|
|
(83 |
) |
|
|
Receive |
|
Liberty Ventures A |
|
|
68,076 |
|
|
1-Month USD-LIBOR plus a specified spread |
|
|
04/29/2015 |
|
|
|
|
|
|
|
4,703 |
|
|
|
321 |
|
|
|
321 |
|
|
|
0 |
|
|
|
Pay |
|
TripAdvisor, Inc. |
|
|
27,843 |
|
|
1-Month USD-LIBOR less a specified spread |
|
|
04/29/2015 |
|
|
|
|
|
|
|
2,896 |
|
|
|
(130 |
) |
|
|
0 |
|
|
|
(130 |
) |
|
|
Receive |
|
Covidien PLC |
|
|
29,396 |
|
|
1-Month USD-LIBOR plus a specified spread |
|
|
06/16/2015 |
|
|
|
|
|
|
|
2,548 |
|
|
|
102 |
|
|
|
102 |
|
|
|
0 |
|
|
|
Pay |
|
Medtronic, Inc. |
|
|
28,103 |
|
|
1-Month USD-LIBOR less a specified spread |
|
|
06/16/2015 |
|
|
|
|
|
|
|
1,683 |
|
|
|
(109 |
) |
|
|
0 |
|
|
|
(109 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
76 |
|
|
$ |
443 |
|
|
$ |
(367 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Swap Agreements |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
76 |
|
|
$ |
443 |
|
|
$ |
(367 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Receive represents that the Portfolio receives payments for any positive return on the underlying reference. The Portfolio makes payments
for any negative return on such underlying reference. Pay represents that the Portfolio receives payments for any negative return on the underlying reference. The Portfolio makes payments for any positive return on such underlying reference.
|
|
|
|
|
|
|
|
|
|
14 |
|
PIMCO EQUITY SERIES VIT |
|
|
|
|
See Accompanying Notes |
|
June
30, 2014 (Unaudited)
FINANCIAL DERIVATIVE INSTRUMENTS: OVER THE COUNTER SUMMARY
The following is a summary by counterparty of the market value of OTC
financial derivative instruments and collateral (received) as of June 30, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Derivative Assets |
|
|
|
|
Financial Derivative Liabilities |
|
|
|
|
|
|
|
|
|
|
Counterparty |
|
Forward Foreign Currency Contracts |
|
|
Purchased Options |
|
|
Swap Agreements |
|
|
Total Over the Counter |
|
|
|
|
Forward Foreign Currency Contracts |
|
|
Written Options |
|
|
Swap Agreements |
|
|
Total Over the Counter |
|
|
Net Market Value of OTC Derivatives |
|
|
Collateral (Received) |
|
|
Net Exposure
(2) |
|
BOA |
|
$ |
224 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
224 |
|
|
|
|
$ |
(278 |
) |
|
$ |
0 |
|
|
$ |
(9 |
) |
|
$ |
(287 |
) |
|
$ |
(63 |
) |
|
$ |
0 |
|
|
$ |
(63 |
) |
BPS |
|
|
1,209 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1,209 |
|
|
|
|
|
(509 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
(509 |
) |
|
|
700 |
|
|
|
(810 |
) |
|
|
(110 |
) |
BRC |
|
|
25 |
|
|
|
0 |
|
|
|
0 |
|
|
|
25 |
|
|
|
|
|
(185 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
(185 |
) |
|
|
(160 |
) |
|
|
0 |
|
|
|
(160 |
) |
CBK |
|
|
39 |
|
|
|
0 |
|
|
|
20 |
|
|
|
59 |
|
|
|
|
|
(40 |
) |
|
|
0 |
|
|
|
(28 |
) |
|
|
(68 |
) |
|
|
(9 |
) |
|
|
0 |
|
|
|
(9 |
) |
DUB |
|
|
632 |
|
|
|
0 |
|
|
|
0 |
|
|
|
632 |
|
|
|
|
|
(180 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
(180 |
) |
|
|
452 |
|
|
|
(310 |
) |
|
|
142 |
|
FBF |
|
|
3 |
|
|
|
0 |
|
|
|
0 |
|
|
|
3 |
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
3 |
|
|
|
0 |
|
|
|
3 |
|
GLM |
|
|
44 |
|
|
|
0 |
|
|
|
0 |
|
|
|
44 |
|
|
|
|
|
(3 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
(3 |
) |
|
|
41 |
|
|
|
(270 |
) |
|
|
(229 |
) |
GST |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
(8 |
) |
|
|
(8 |
) |
|
|
(8 |
) |
|
|
0 |
|
|
|
(8 |
) |
JPM |
|
|
271 |
|
|
|
0 |
|
|
|
423 |
|
|
|
694 |
|
|
|
|
|
(87 |
) |
|
|
0 |
|
|
|
(322 |
) |
|
|
(409 |
) |
|
|
285 |
|
|
|
0 |
|
|
|
285 |
|
MSC |
|
|
67 |
|
|
|
0 |
|
|
|
0 |
|
|
|
67 |
|
|
|
|
|
(45 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
(45 |
) |
|
|
22 |
|
|
|
0 |
|
|
|
22 |
|
RBC |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
(50 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
(50 |
) |
|
|
(50 |
) |
|
|
0 |
|
|
|
(50 |
) |
SOG |
|
|
332 |
|
|
|
0 |
|
|
|
0 |
|
|
|
332 |
|
|
|
|
|
(2 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
(2 |
) |
|
|
330 |
|
|
|
(300 |
) |
|
|
30 |
|
UAG |
|
|
2 |
|
|
|
0 |
|
|
|
0 |
|
|
|
2 |
|
|
|
|
|
(15 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
(15 |
) |
|
|
(13 |
) |
|
|
0 |
|
|
|
(13 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Over the Counter |
|
$ |
2,848 |
|
|
$ |
0 |
|
|
$ |
443 |
|
|
$ |
3,291 |
|
|
|
|
$ |
(1,394 |
) |
|
$ |
0 |
|
|
$ |
(367 |
) |
|
$ |
(1,761 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) |
Net Exposure represents the net receivable/(payable) that would be due from/to the counterparty in the event of default . Exposure from
OTC derivatives can only be netted across transactions governed under the same master agreement with the same legal entity. The Portfolio and Subsidiary are recognized as two separate legal entities. As such, exposure cannot be netted. See note 7,
Principal Risks, in the Notes to Financial Statements for more information regarding master netting agreements. |
FAIR VALUE OF FINANCIAL DERIVATIVE INSTRUMENTS
The following is a summary of the fair valuation of the Portfolios
derivative instruments categorized by risk exposure. See Note 7, Principal Risks, in the Notes to Financial Statements on risks of the Portfolio.
Fair Values of Financial Derivative Instruments on the Consolidated Statement of Assets and Liabilities as of June 30, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives not accounted for as hedging instruments |
|
|
|
Commodity Contracts |
|
|
Credit Contracts |
|
|
Equity Contracts |
|
|
Foreign Exchange Contracts |
|
|
Interest Rate Contracts |
|
|
Total |
|
Financial Derivative Instruments - Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over the counter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward Foreign Currency Contracts |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
2,848 |
|
|
$ |
0 |
|
|
$ |
2,848 |
|
Swap Agreements |
|
|
0 |
|
|
|
0 |
|
|
|
443 |
|
|
|
0 |
|
|
|
0 |
|
|
|
443 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
443 |
|
|
$ |
2,848 |
|
|
$ |
0 |
|
|
$ |
3,291 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Derivative Instruments - Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over the counter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward Foreign Currency Contracts |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
1,394 |
|
|
$ |
0 |
|
|
$ |
1,394 |
|
Swap Agreements |
|
|
0 |
|
|
|
0 |
|
|
|
367 |
|
|
|
0 |
|
|
|
0 |
|
|
|
367 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
367 |
|
|
$ |
1,394 |
|
|
$ |
0 |
|
|
$ |
1,761 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Effect of Financial Derivative
Instruments on the Consolidated Statement of Operations for the Period Ended June 30, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives not accounted for as hedging instruments |
|
|
|
Commodity Contracts |
|
|
Credit Contracts |
|
|
Equity Contracts |
|
|
Foreign Exchange Contracts |
|
|
Interest Rate Contracts |
|
|
Total |
|
Net Realized Gain (Loss) on Financial Derivative Instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange-traded or centrally cleared |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Written Options |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
176 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
176 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over the counter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward Foreign Currency Contracts |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
(3,894 |
) |
|
$ |
0 |
|
|
$ |
(3,894 |
) |
Swap Agreements |
|
|
0 |
|
|
|
0 |
|
|
|
367 |
|
|
|
0 |
|
|
|
0 |
|
|
|
367 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
367 |
|
|
$ |
(3,894 |
) |
|
$ |
0 |
|
|
$ |
(3,527 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
543 |
|
|
$ |
(3,894 |
) |
|
$ |
0 |
|
|
$ |
(3,351 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Change in Unrealized Appreciation (Depreciation) on Financial Derivative
Instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over the counter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward Foreign Currency Contracts |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
4,240 |
|
|
$ |
0 |
|
|
$ |
4,240 |
|
Swap Agreements |
|
|
0 |
|
|
|
0 |
|
|
|
(397 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
(397 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
(397 |
) |
|
$ |
4,240 |
|
|
$ |
0 |
|
|
$ |
3,843 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Accompanying Notes |
|
SEMIANNUAL REPORT |
|
JUNE 30, 2014 |
|
15 |
Consolidated Schedule of Investments PIMCO
EqS Pathfinder Portfolio® (Cont.)
June 30, 2014 (Unaudited)
FAIR VALUE MEASUREMENTS
The following is a summary of the fair valuations according to the inputs used as of June 30, 2014 in valuing the Portfolios assets and
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Category and Subcategory |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Fair Value at 06/30/2014 |
|
Investments in Securities, at Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stocks |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Australia |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrials |
|
$ |
3,782 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
3,782 |
|
Belgium |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrials |
|
|
11,896 |
|
|
|
0 |
|
|
|
0 |
|
|
|
11,896 |
|
Bermuda |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy |
|
|
12,776 |
|
|
|
11,813 |
|
|
|
0 |
|
|
|
24,589 |
|
Canada |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy |
|
|
3,530 |
|
|
|
0 |
|
|
|
0 |
|
|
|
3,530 |
|
Denmark |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Staples |
|
|
0 |
|
|
|
9,758 |
|
|
|
0 |
|
|
|
9,758 |
|
Faroe Islands |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Staples |
|
|
0 |
|
|
|
3,410 |
|
|
|
0 |
|
|
|
3,410 |
|
France |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Discretionary |
|
|
0 |
|
|
|
12,923 |
|
|
|
0 |
|
|
|
12,923 |
|
Consumer Staples |
|
|
0 |
|
|
|
23,898 |
|
|
|
0 |
|
|
|
23,898 |
|
Energy |
|
|
0 |
|
|
|
3,806 |
|
|
|
0 |
|
|
|
3,806 |
|
Germany |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health Care |
|
|
0 |
|
|
|
10,967 |
|
|
|
0 |
|
|
|
10,967 |
|
Hong Kong |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Discretionary |
|
|
3,312 |
|
|
|
0 |
|
|
|
0 |
|
|
|
3,312 |
|
Financials |
|
|
0 |
|
|
|
16,734 |
|
|
|
0 |
|
|
|
16,734 |
|
Industrials |
|
|
0 |
|
|
|
2,718 |
|
|
|
0 |
|
|
|
2,718 |
|
Japan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Discretionary |
|
|
0 |
|
|
|
2,634 |
|
|
|
0 |
|
|
|
2,634 |
|
Consumer Staples |
|
|
0 |
|
|
|
5,832 |
|
|
|
0 |
|
|
|
5,832 |
|
Industrials |
|
|
0 |
|
|
|
2,913 |
|
|
|
0 |
|
|
|
2,913 |
|
Information Technology |
|
|
2,934 |
|
|
|
4,337 |
|
|
|
0 |
|
|
|
7,271 |
|
Netherlands |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Staples |
|
|
0 |
|
|
|
8,666 |
|
|
|
0 |
|
|
|
8,666 |
|
Financials |
|
|
0 |
|
|
|
10,578 |
|
|
|
0 |
|
|
|
10,578 |
|
Information Technology |
|
|
4,001 |
|
|
|
0 |
|
|
|
0 |
|
|
|
4,001 |
|
Norway |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Staples |
|
|
4,837 |
|
|
|
16,825 |
|
|
|
0 |
|
|
|
21,662 |
|
Energy |
|
|
0 |
|
|
|
8,109 |
|
|
|
0 |
|
|
|
8,109 |
|
Singapore |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrials |
|
|
0 |
|
|
|
11,640 |
|
|
|
0 |
|
|
|
11,640 |
|
South Korea |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Discretionary |
|
|
0 |
|
|
|
1,666 |
|
|
|
0 |
|
|
|
1,666 |
|
Sweden |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrials |
|
|
0 |
|
|
|
9,594 |
|
|
|
0 |
|
|
|
9,594 |
|
Switzerland |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financials |
|
|
0 |
|
|
|
4,620 |
|
|
|
0 |
|
|
|
4,620 |
|
Health Care |
|
|
0 |
|
|
|
7,344 |
|
|
|
0 |
|
|
|
7,344 |
|
Information Technology |
|
|
0 |
|
|
|
6,336 |
|
|
|
0 |
|
|
|
6,336 |
|
United Kingdom |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Staples |
|
|
0 |
|
|
|
47,684 |
|
|
|
0 |
|
|
|
47,684 |
|
Energy |
|
|
4,294 |
|
|
|
9,424 |
|
|
|
0 |
|
|
|
13,718 |
|
Financials |
|
|
7,810 |
|
|
|
8,072 |
|
|
|
0 |
|
|
|
15,882 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Category and Subcategory |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Fair Value at 06/30/2014 |
|
United States |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Discretionary |
|
$
|
2,582 |
|
|
$
|
0 |
|
|
$
|
0 |
|
|
$
|
2,582 |
|
Consumer Staples |
|
|
38,204 |
|
|
|
0 |
|
|
|
0 |
|
|
|
38,204 |
|
Energy |
|
|
11,601 |
|
|
|
0 |
|
|
|
0 |
|
|
|
11,601 |
|
Financials |
|
|
43,709 |
|
|
|
0 |
|
|
|
0 |
|
|
|
43,709 |
|
Health Care |
|
|
11,221 |
|
|
|
0 |
|
|
|
0 |
|
|
|
11,221 |
|
Industrials |
|
|
17,646 |
|
|
|
0 |
|
|
|
0 |
|
|
|
17,646 |
|
Information Technology |
|
|
24,732 |
|
|
|
0 |
|
|
|
0 |
|
|
|
24,732 |
|
Materials |
|
|
1,335 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1,335 |
|
Real Estate Investment Trusts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Singapore |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financials |
|
|
0 |
|
|
|
129 |
|
|
|
0 |
|
|
|
129 |
|
United States |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financials |
|
|
4,339 |
|
|
|
0 |
|
|
|
0 |
|
|
|
4,339 |
|
Rights |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
France |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health Care |
|
|
562 |
|
|
|
0 |
|
|
|
0 |
|
|
|
562 |
|
|
|
$ |
215,103 |
|
|
$ |
262,430 |
|
|
$ |
0 |
|
|
$ |
477,533 |
|
|
|
|
|
|
Investments in Affiliates, at Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-Term Instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Central Funds Used for Cash Management Purposes |
|
$ |
31,834 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
31,834 |
|
|
|
|
|
|
Total Investments |
|
$ |
246,937 |
|
|
$ |
262,430 |
|
|
$ |
0 |
|
|
$ |
509,367 |
|
|
Short Sales, at Value - Liabilities |
|
Common Stocks |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health Care |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Valeant Pharmaceuticals International, Inc. |
|
|
(977 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
(977 |
) |
Information Technology |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Applied Materials, Inc. |
|
|
(3,145 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
(3,145 |
) |
|
|
$ |
(4,122 |
) |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
(4,122 |
) |
|
Financial Derivative Instruments - Assets |
|
Over the counter |
|
$ |
0 |
|
|
$ |
3,291 |
|
|
$ |
0 |
|
|
$ |
3,291 |
|
|
Financial Derivative Instruments - Liabilities |
|
Over the counter |
|
$ |
0 |
|
|
$ |
(1,761 |
) |
|
$ |
0 |
|
|
$ |
(1,761 |
) |
|
|
|
|
|
Totals |
|
$ |
242,815 |
|
|
$ |
263,960 |
|
|
$ |
0 |
|
|
$ |
506,775 |
|
There were assets and
liabilities valued at $23,018 transferred from Level 2 to Level 1 during the period ended June 30, 2014. There were assets and liabilities valued at $27,078 transferred from Level 1 to Level 2 during the period ended June 30, 2014. There
were no significant transfers between Level 2 and 3 during the period ended June 30, 2014.
|
|
|
|
|
|
|
|
|
16 |
|
PIMCO EQUITY SERIES VIT |
|
|
|
|
See Accompanying Notes |
|
Notes to Financial Statements
June 30, 2014 (Unaudited)
1. ORGANIZATION
The PIMCO EqS Pathfinder Portfolio® (the Portfolio) is a series of the PIMCO Equity Series VIT (the Trust). The Trust is registered under
the Investment Company Act of 1940, as amended (the Act), as an open-end management investment company organized as a Delaware statutory trust on December 28, 2009. The Portfolio currently offers two classes of shares: Institutional
and Advisor. Information presented on these financial statements pertains to the Advisor Class of the Portfolio. Certain detailed financial information for the Institutional Class is provided separately and is available upon request. The Trust is
designed to be used as an investment vehicle by separate accounts of insurance companies that fund variable annuity contracts and variable life insurance policies and by qualified pension and retirement plans. Pacific Investment Management Company
LLC (PIMCO) serves as the investment adviser for the Portfolio.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Portfolio in the preparation of its financial statements in conformity with accounting principles
generally accepted in the United States of America (U.S. GAAP). The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from
those estimates.
(a) Securities Transactions and Investment Income Securities transactions are recorded as of the trade date
for financial reporting purposes. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled 15 days or more after the trade date. Realized gains and losses from securities sold are recorded on the identified cost basis.
Dividend income is recorded on the ex-dividend date, except certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Portfolio is informed of the ex-dividend date. Interest income,
adjusted for the accretion of discounts and amortization of premiums, is recorded on the accrual basis from settlement date. For convertible securities, premiums attributable to the conversion feature are not amortized. Estimated tax liabilities on
certain foreign securities are recorded on an accrual basis and are reflected as components of interest income or net change in unrealized gain/loss on investments on the Consolidated Statement of Operations, as appropriate. Tax liabilities realized
as a result of such security sales are reflected as a component of net realized gain/loss on investments on the Consolidated Statement of Operations. Paydown gains and losses on
mortgage related and other asset-backed securities are recorded as components of interest income on the Consolidated Statement of Operations. Income or short-term capital gain distributions
received from underlying funds are recorded as dividend income. Long-term capital gain distributions received from underlying funds are recorded as realized gains.
Dividends received from real estate investment trust securities
may include a return of capital invested. Such distributions reduce the cost basis of the respective securities. Return of capital distributions, if any, in excess of the cost basis of the security are recognized as capital gain.
(b) Cash and Foreign Currency The functional and reporting currency for the Portfolio is the U.S. dollar. The
market values of foreign securities, currency holdings and other assets and liabilities are translated into U.S. dollars based on the current exchange rates each business day. Purchases and sales of securities and income and expense items
denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. The Portfolio does not separately report the effects of changes in foreign exchange rates from changes in market prices on
securities held. Such changes are included in net realized and net changes in unrealized gain or loss from investments on the Consolidated Statement of Operations. The Portfolio may invest in foreign currency-denominated securities 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 a forward foreign currency contract (see financial derivative instruments). Realized foreign exchange gains or
losses arising from sales of spot foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the recorded amounts of dividends, interest, and foreign withholding
taxes and the U.S. dollar equivalent of the amounts actually received or paid are included in net realized gain or loss on foreign currency transactions on the Consolidated Statement of Operations. Net unrealized foreign exchange gains and losses
arising from changes in foreign exchange rates on foreign denominated assets and liabilities other than investments in securities held at the end of the reporting period are included in net change in unrealized appreciation or depreciation on
foreign currency assets and liabilities on the Consolidated Statement of Operations.
(c) Multiclass Operations Each class
offered by the Portfolio has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are
allocated daily to each class on the basis of relative net assets. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of the Portfolio. Class specific
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SEMIANNUAL REPORT |
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JUNE 30, 2014 |
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17 |
Notes to Financial Statements (Cont.)
expenses, where applicable, currently include supervisory and administrative and distribution and servicing fees.
(d) Dividends and Distributions to Shareholders Dividends from net investment income, if any, are declared
and distributed to shareholders annually. Net realized capital gains earned by the Portfolio, if any, will be distributed no less frequently than once each year.
Income dividends and capital gain distributions are determined
in accordance with income tax regulations which may differ from U.S. GAAP. Differences between tax regulations and U.S. GAAP may cause timing differences between income and capital gain recognition. Examples of events that give rise to timing
differences include wash sales, and capital loss carryforwards. Further, the character of investment income and capital gains may be different for certain transactions under the two methods of accounting. Examples of characterization differences
include the treatment of swaps, foreign currency transactions and investments in passive foreign investment companies. As a result, income dividends and capital gain distributions declared during a fiscal period may differ significantly from the net
investment income (loss) and realized gains (losses) reported on the Portfolios annual financial statements presented under U.S. GAAP.
Distributions classified as a tax basis return of capital, if any, are reflected on the accompanying Consolidated Statements of Changes in
Net Assets and have been recorded to paid in capital. In addition, other amounts have been reclassified between undistributed net investment income, accumulated undistributed net realized gains or losses and/or paid in capital to more appropriately
conform financial accounting to tax characterizations of dividend distributions.
(e) New Accounting Pronouncements In
June 2013, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) providing updated guidance for assessing whether an entity is an investment company and for the measurement of
noncontrolling ownership interests in other investment companies. This update is effective prospectively during interim or annual periods beginning on or after December 15, 2013. The Portfolio has adopted the ASU for the fiscal year ended December
31, 2013 as it follows the investment company reporting requirements under U.S. GAAP and did not have an impact on the Portfolios financial statements.
In June 2014, the FASB issued an ASU that expands secured borrowing accounting for certain repurchase agreements. The ASU also sets
forth additional disclosure requirements for certain transactions accounted for as sales, in order to provide financial statement users with information to compare to similar transactions accounted for as secured borrowings. The ASU is effective
prospectively during interim or annual periods beginning after December 15, 2014. At this time,
management is evaluating the implications of these changes on the financial statements.
3. INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS
(a) Investment Valuation Policies The Net Asset Value (NAV) of the Portfolios shares is valued as of the close of regular trading (normally 4:00 p.m., Eastern time) (the NYSE Close)
on each day that the New York Stock Exchange (NYSE) is open (each a Business Day). 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.
For purposes of calculating the NAV, portfolio securities and other financial derivative instruments are valued on each Business Day using valuation methods as adopted by the Board of
Trustees (the Board) of the Trust. The Board has formed a Valuation Committee whose function is to monitor the valuation of portfolio securities and other financial derivative instruments and, as required by the Trusts valuation
policies, determine in good faith the fair value of portfolio holdings after consideration of all relevant factors, including recommendations provided by the Adviser. The Board has delegated responsibility for applying the valuation methods to the
investment adviser (the Adviser). The Adviser monitors the continual appropriateness of methods applied and determines if adjustments should be made in light of market factor changes and events affecting issuers.
Where market quotes are readily available, fair market value is
generally determined on the basis of official closing prices or the 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. Where market
quotes are not readily available, portfolio securities and other financial derivative instruments are valued at fair value, as determined in good faith by the Board, its Valuation Committee, or the Adviser pursuant to instructions from the Board or
its Valuation Committee. Market quotes are considered not readily available in circumstances where there is an absence of current or reliable market-based data (e.g., trade information, bid/ask information, or broker quotes), including where events
occur after the close of the relevant market, but prior to the NYSE Close, that materially affect the values of the Portfolios securities or financial derivative instruments. In addition, market quotes are considered not readily available
when, due to extraordinary circumstances, the exchanges or markets on which securities trade do not open for trading for the entire day and no other market prices are available. The Board has delegated to the Adviser, PIMCO, the responsibility for
monitoring significant events that may materially affect the values of the Portfolios
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18 |
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PIMCO EQUITY SERIES VIT |
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June
30, 2014 (Unaudited)
securities or financial derivative instruments and for determining whether the value of the applicable securities or financial derivative instruments should be re-evaluated in light of such
significant events.
The Board has adopted methods
for valuing securities and other financial derivative instruments that may require fair valuation under particular circumstances. The Adviser monitors the continual appropriateness of fair valuation methods applied and determines if adjustments
should be made in light of market changes, events affecting the issuer, or other factors. If the Adviser determines that a fair valuation method may no longer be appropriate, another valuation method may be selected, or the Valuation Committee will
take any appropriate action in accordance with procedures set forth by the Board. The Board reviews the appropriateness of the valuation methods from time to time and these methods may be amended or supplemented from time to time by the Valuation
Committee.
In circumstances in which daily market
quotes are not readily available, investments may be valued pursuant to guidelines established by the Board. In the event that the security or asset cannot be valued pursuant to the established guidelines, the value of the security or other
financial derivative instrument will be determined in good faith by the Valuation Committee of the Board, generally based upon recommendations provided by PIMCO. These methods may require subjective determinations about the value of a security.
While the Trusts policy is intended to result in a calculation of the Portfolios NAV that fairly reflects security values as of the time of pricing, the Trust cannot guarantee that values determined by the Board or persons acting at
their direction would accurately reflect the price that the Portfolio could obtain for a security if it were to dispose of that security as of the time of pricing (for instance, in a forced or distressed sale). The prices used by a Portfolio may
differ from the value that would be realized if the securities were sold.
(b) Fair Value Hierarchy U.S. GAAP
describes fair market value as the price that the Portfolio would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. It establishes a fair value hierarchy that
prioritizes inputs to valuation methods and requires disclosure of the fair value hierarchy, separately for each major category of assets and liabilities, that segregates fair value measurements into levels (Level 1, 2, and 3). The inputs or
methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Levels 1, 2, and 3 of the fair value hierarchy are defined as follows:
n |
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Level 1Inputs using (unadjusted) quoted prices in active markets or exchanges for identical assets and liabilities.
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n |
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Level 2Significant other observable inputs, which may include, but are not limited to, quoted prices for similar assets or
liabilities in
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markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or
liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market corroborated inputs. |
n |
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Level 3Significant unobservable inputs based on the best information available in the circumstances, to the extent observable inputs
are not available, which may include assumptions made by the Board or persons acting at their direction that are used in determining the fair value of investments. |
Assets or liabilities categorized as Level 1 or 2 as of period end have been transferred between Levels 1 and 2
since the prior period due to changes in the valuation method utilized in valuing the investments. Transfers from Level 1 to Level 2 are a result of a change, in the normal course of business, from the use of an exchange traded price or a trade
price on the initial purchase date (Level 1) to valuation methods used by third-party pricing services including valuation adjustments applied to certain securities that are solely traded on a foreign exchange to account for the market movement
between the close of the foreign market and the close of the NYSE (Level 2). Transfers from Level 2 to Level 1 are a result of exchange traded products for which quoted prices from an active market were not available (Level 2) and have become
available (Level 1). In accordance with the requirements of U.S. GAAP, the amounts of transfers between Levels 1 and 2 and transfers in and out of Level 3, if any, are disclosed in the Notes to Consolidated Schedule of Investments for the Portfolio.
For fair valuations using significant unobservable
inputs, U.S. GAAP requires a reconciliation of the beginning to ending balances for reported fair values that presents changes attributable to total realized and unrealized gains or losses, purchases and sales, and transfers in or out of the Level 3
category during the period. The end of period timing recognition is used for the transfers between Levels of the Portfolios assets and liabilities. Additionally, U.S. GAAP requires quantitative information regarding the significant
unobservable inputs used in the determination of fair value of assets or liabilities categorized as Level 3 in the fair value hierarchy. In accordance with the requirements of U.S. GAAP, a fair value hierarchy, Level 3 reconciliation, and details of
significant unobservable inputs, if any, have been included in the Notes to Consolidated Schedule of Investments for the Portfolio.
(c) Valuation Techniques and the Fair Value Hierarchy Level 1 and
Level 2 trading assets and trading liabilities, at fair market value The valuation methods (or techniques) and significant inputs used in determining the
fair market values of portfolio securities
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SEMIANNUAL REPORT |
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JUNE 30, 2014 |
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19 |
Notes to Financial Statements (Cont.)
or financial derivative instruments categorized as Level 1 and Level 2 of the fair value hierarchy are as follows:
Fixed income securities including corporate, convertible and
municipal bonds and notes, U.S. government agencies, U.S. treasury obligations, sovereign issues, bank loans, convertible preferred securities and non-U.S. bonds are normally valued by pricing service
providers that use broker-dealer quotations, reported trades or valuation estimates from their internal pricing models. The service providers internal models use inputs that are observable such as issuer details, interest rates, yield curves,
prepayment speeds, credit risks/spreads, default rates and quoted prices for similar assets. Securities that use similar valuation techniques and inputs as described above are categorized as Level 2 of the fair value hierarchy.
Common stocks, exchange-traded funds, exchange-traded notes and
financial derivative instruments, such as futures contracts or options on futures that are traded on a national securities exchange, are stated at the last reported sale or settlement price on the day of valuation. To the extent these securities are
actively traded and valuation adjustments are not applied, they are categorized as Level 1 of the fair value hierarchy.
Investments initially valued in currencies other than the U.S. dollar are converted to the U.S. dollar using exchange rates obtained from
pricing service providers. As a result, the NAV of the Portfolios 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 NYSE is closed and the NAV may change on days when an investor is not able to purchase, redeem or exchange shares. Valuation adjustments may be applied to
certain securities that are solely traded on a foreign exchange to account for the market movement between the close of the foreign market and the NYSE Close. These securities are valued using pricing service providers that consider the correlation
of the trading patterns of the foreign security to the intraday trading in the U.S. markets for investments. Securities using these valuation adjustments are categorized as Level 2 of the fair value hierarchy. Preferred securities and other equities
traded on inactive markets or valued by reference to similar instruments are also categorized as Level 2 of the fair value hierarchy.
Equity-linked securities are valued by referencing the last reported sale or settlement price of the linked referenced equity on the day of
valuation. Foreign exchange adjustments are applied to the last reported price to convert the linked equitys trading currency to the contracts settling currency. These investments are categorized as Level 2 of the fair value
hierarchy.
Investments in registered open-end investment companies will be valued based upon the NAVs of
such investments and are categorized as Level 1 of the fair value hierarchy. Investments in unregistered open-end investment companies will be calculated based upon the NAVs of such investments and are considered Level 1 provided that the NAVs are
observable, calculated daily and are the value at which both purchases and sales will be conducted. Investments in privately held investment funds with significant restrictions on redemption where the inputs to the NAVs are observable will be valued
based upon the NAVs of such investments and are categorized as Level 2 of the fair value hierarchy.
Short-term investments having a maturity of 60 days or less and repurchase agreements are generally valued at amortized cost which approximates fair market value. These investments are
categorized as Level 2 of the fair value hierarchy.
Equity exchange-traded options and over the counter financial derivative instruments, such as foreign currency contracts, options contracts,
or swap agreements, derive their value from underlying asset prices, indices, reference rates, and other inputs or a combination of these factors. These contracts are normally valued by independent pricing service providers. Depending on the product
and the terms of the transaction, financial derivative instruments can be valued by a pricing service provider using a series of techniques, including simulation pricing models. The pricing models use inputs that are observed from actively quoted
markets such as issuer details, indices, spreads, interest rates, yield curves, dividends and exchange rates. Financial derivative instruments that use similar valuation techniques and inputs as described above are categorized as Level 2 of the fair
value hierarchy.
4. SECURITIES AND OTHER INVESTMENTS
(a) Investments in Affiliates
The Portfolio may invest in the PIMCO Short-Term Floating NAV Portfolio and PIMCO Short-Term Floating NAV Portfolio III (Central
Funds) to the extent permitted by the Act and rules thereunder. The Central Funds are registered investment companies created for use solely by the series of the Trust and series of the PIMCO Funds, PIMCO ETF Trust, PIMCO Equity Series, PIMCO
Variable Insurance Trust, and other series of registered investment companies advised by PIMCO, in connection with their cash management activities. The main investments of the Central Funds are money market instruments and short maturity fixed
income instruments. The Central Funds may incur expenses related to their investment activities, but do not pay Investment Advisory or Supervisory and Administrative Fees to PIMCO.
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20 |
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PIMCO EQUITY SERIES VIT |
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June
30, 2014 (Unaudited)
The Central Funds are considered to be affiliated with the Portfolio. The table below shows the Portfolios transactions in and earnings from investments in the Central Funds for the period
ended June 30, 2014 (amounts in thousands):
Investments in
PIMCO Short-Term Floating NAV Portfolio
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Fund Name |
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Market Value 12/31/2013 |
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Purchases at Cost |
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Proceeds from Sales |
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Net Realized Gain/(Loss) |
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Change in Unrealized Appreciation/ (Depreciation) |
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Market Value 06/30/2014 |
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Dividend Income |
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Net Capital Gain Distributions |
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EqS Pathfinder
Portfolio® |
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$ |
11,012 |
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$ |
92,020 |
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$ |
(71,200 |
) |
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$ |
0 |
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$ |
2 |
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$ |
31,834 |
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$ |
14 |
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$ |
0 |
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5. BORROWINGS AND OTHER FINANCING TRANSACTIONS
The following disclosures contain information on the Portfolios ability to lend or borrow cash or securities
to the extent permitted under the Act, which may be viewed as borrowing or financing transactions by the Portfolio. The location and fair value amounts of these instruments are described below. For a detailed description of credit and counterparty
risks that can be associated with borrowings and other financing transactions, please see Note 7, Principal Risks.
(a) Short Sales The Portfolio may
enter into short sales transactions. Short sales are transactions in which the Portfolio sells a security that it may not own. The Portfolio may make short sales of securities to (i) offset potential declines in long positions in similar
securities, (ii) to increase the flexibility of the Portfolio, (iii) for investment return, (iv) as part of a risk arbitrage strategy, and (v) as part of its overall portfolio management strategies involving the use of derivative
instruments. When the Portfolio engages in a short sale, it may borrow the security sold short and deliver it to the counterparty. The Portfolio will ordinarily have to pay a fee or premium to borrow a security and be obligated to repay the lender
of the security any dividend or interest that accrues on the security during the period of the loan. Securities sold in short sale transactions and the dividend or interest payable on such securities, if any, are reflected as payable for short sales
on the Consolidated Statement of Assets and Liabilities. Short sales expose the Portfolio to the risk that it will be required to cover its short position at a time when the security or other asset has appreciated in value, thus resulting in losses
to the Portfolio. A short sale is against the box if the Portfolio holds in its portfolio or has the right to acquire the security sold short at no additional cost. The Portfolio will be subject to additional risks to the extent that it
engages in short sales that are not against the box. The Portfolios loss on a short sale could theoretically be unlimited in cases where the Portfolio is unable, for whatever reason, to close out its short position.
6. FINANCIAL DERIVATIVE INSTRUMENTS
The following disclosures contain information on how and why
the Portfolio uses financial derivative instruments, the credit-risk-related contingent features in certain financial derivative instruments, and how financial derivative instruments affect the Portfolios financial position,
results of operations and cash flows. The location and fair value amounts of these instruments on the Consolidated Statement of Assets and Liabilities and the realized and changes in unrealized
gains and losses on the Consolidated Statement of Operations, each categorized by type of financial derivative contract and related risk exposure, are included in a table in the Notes to Consolidated Schedule of Investments. The financial derivative
instruments outstanding as of period end and the amounts of realized and changes in unrealized gains and losses on financial derivative instruments during the period, as disclosed in the Notes to Consolidated Schedule of Investments, serve as
indicators of the volume of financial derivative activity for the Portfolio.
(a) Forward Foreign Currency
Contracts The Portfolio may enter into forward foreign currency contracts in connection with settling planned purchases or sales of securities, to hedge the currency
exposure associated with some or all of the Portfolios securities or as a part of an investment strategy. A forward foreign currency contract is an agreement between two parties to buy and sell a currency at a set price on a future date. The
market value of a forward foreign currency contract fluctuates with changes in foreign currency exchange rates. Forward foreign currency contracts are marked to market daily and the change in value is recorded by the Portfolio as an unrealized gain
or loss. Realized gains or losses equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed are recorded upon delivery or receipt of the currency. These contracts may involve market
risk in excess of the unrealized gain or loss reflected on the Consolidated Statement of Assets and Liabilities. In addition, the Portfolio could be exposed to risk if the counterparties are unable to meet the terms of the contracts or if the value
of the currency changes unfavorably to the U.S. dollar. In connection with these contracts, cash or securities may be identified as collateral in accordance with the terms of the respective contracts.
(b) Options Contracts The Portfolio may write call and put options on securities and financial derivative
instruments they own or in which they may invest. Writing put options tends to increase the Portfolios exposure to the underlying instrument. Writing call options tends to decrease the Portfolios exposure to the underlying instrument.
When the Portfolio writes a call or put, an amount equal to the premium received is recorded as a liability and subsequently marked to market to reflect the current value of the option written. These liabilities are
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SEMIANNUAL REPORT |
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JUNE 30, 2014 |
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21 |
Notes to Financial Statements (Cont.)
included on the Statements of Assets and Liabilities. Premiums received from writing options which expire are treated as realized gains. Premiums received from writing options which are exercised
or closed are added to the proceeds or offset against amounts paid on the underlying futures, swap, security or currency transaction to determine the realized gain or loss. Certain options may be written with premiums to be determined on a future
date. The premiums for these options are based upon implied volatility parameters at specified terms. The Portfolio as a writer of an option has no control over whether the underlying instrument may be sold (call) or purchased (put) and as a result
bears the market risk of an unfavorable change in the price of the instrument underlying the written option. There is the risk a Fund may not be able to enter into a closing transaction because of an illiquid market.
The Portfolio may also purchase put and call options. Purchasing
call options tends to increase a Funds exposure to the underlying instrument. Purchasing put options tends to decrease the Portfolios exposure to the underlying instrument. The Portfolio pays a premium which is included as an asset on
the Statement of Assets and Liabilities and subsequently marked to market to reflect the current value of the option. Premiums paid for purchasing options which expire are treated as realized losses. Certain options may be purchased with premiums to
be determined on a future date. The premiums for these options are based upon implied volatility parameters at specified terms. The risk associated with purchasing put and call options is limited to the premium paid. Premiums paid for purchasing
options which are exercised or closed are added to the amounts paid or offset against the proceeds on the underlying investment transaction to determine the realized gain or loss when the underlying transaction is executed.
(c) Swap Agreements The Portfolio may invest in swap agreements. Swap agreements are bilaterally negotiated
agreements between the Portfolio and a counterparty to exchange or swap investment cash flows, assets, foreign currencies or market-linked returns at specified, future intervals. Swap agreements are privately negotiated in the over the counter
market (OTC swaps) or may be executed in a multilateral or other trade facility platform, such as a registered exchange (centrally cleared swaps). The Portfolio may enter into asset, credit default, cross-currency, interest
rate, total return, variance and other forms of swap agreements to manage its exposure to credit, currency, interest rate, commodity, equity and inflation risk. In connection with these agreements, securities or cash may be identified as collateral
or margin in accordance with the terms of the respective swap agreements to provide assets of value and recourse in the event of default or bankruptcy/insolvency.
Swaps are marked to market daily based upon values from
third-party vendors, which may include a registered exchange, or quotations from market makers to the extent available. In the event that market quotes
are not readily available and the swap cannot be valued pursuant to one of the valuation methods, the value of the swap will be determined in good faith by the Valuation Committee of the Board of
Trustees, generally based upon recommendations provided by PIMCO. Changes in market value, if any, are reflected as a component of net change in unrealized appreciation/(depreciation) on the Consolidated Statement of Operations. Daily changes in
valuation of centrally cleared swaps, if any, are recorded as a receivable or payable for the change in value as appropriate (variation margin) on the Consolidated Statement of Assets and Liabilities. OTC swap payments received or paid
at the beginning of the measurement period are included on the Consolidated Statement of Assets and Liabilities and represent premiums paid or received upon entering into the swap agreement to compensate for differences between the stated terms of
the swap agreement and prevailing market conditions (credit spreads, currency exchange rates, interest rates, and other relevant factors). Upfront premiums received (paid) are initially recorded as liabilities (assets) and subsequently marked to
market to reflect the current value of the swap. These upfront premiums are recorded as realized gains or losses on the Consolidated Statement of Operations upon termination or maturity of the swap. A liquidation payment received or made at the
termination of the swap is recorded as realized gain or loss on the Consolidated Statement of Operations. Net periodic payments received or paid by the Portfolio are included as part of realized gains or losses on the Consolidated Statement of
Operations.
Entering into these agreements involves,
to varying degrees, elements of interest, credit, market and documentation risk in excess of the amounts recognized on the Consolidated Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for
these agreements, that the counterparty to the agreements may default on its obligation to perform or disagree as to the meaning of contractual terms in the agreements and that there may be unfavorable changes in interest rates.
The Portfolios maximum risk of loss from counterparty
credit risk is the discounted net value of the cash flows to be received from the counterparty over the contracts remaining life, to the extent that amount is positive. The risk is mitigated by having a master netting arrangement between the
Portfolio and the counterparty and by the posting of collateral to the Portfolio to cover the Portfolios exposure to the counterparty.
Total Return Swap Agreements The Portfolio may enter into total return swap agreements to gain or mitigate exposure to the underlying reference. Total return swap agreements involve commitments where single
or multiple cash flows are exchanged based on the price of an underlying reference asset and on a fixed or variable interest rate. Total return swap agreements may involve commitments to pay interest in
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22 |
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PIMCO EQUITY SERIES VIT |
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June
30, 2014 (Unaudited)
exchange for a market-linked return. One counterparty pays out the total return of a specific reference asset, which may include an underlying equity, index, or bond, and in return receives a
fixed or variable rate. At the maturity date, a net cash flow is exchanged where the total return is equivalent to the return of the underlying reference less a financing rate, if any. As a receiver, the Portfolio would receive payments based on any
positive total return and would owe payments in the event of a negative total return. As the payer, the Portfolio would owe payments on any net positive total return, and would receive payment in the event of a negative total return.
7. PRINCIPAL RISKS
In the normal course of business the Portfolio trades financial instruments and enters into financial transactions
where risk of potential loss exists due to such things as changes in the market (market risk) or failure or inability of the other party to a transaction to perform (credit and counterparty risk). See below for a detailed description of select
principal risks. For a more comprehensive list of potential risks the Portfolio may be subject to, please see the Important Information About the Portfolio.
Market Risks The Portfolios investments in financial derivatives and other financial instruments expose
the Portfolio to various risks such as, but not limited to, equity, interest rate, foreign currency and commodity risks.
The market values of equities, such as common stocks and preferred securities or equity related investments such as futures and options, have
historically risen and fallen in periodic cycles and 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. Different types of equity securities may react differently to these developments. Equity securities and equity related investments generally have greater market price volatility than fixed income
securities.
Interest rate risk is the risk that
fixed income securities will decline in value because of an increase in interest rates. As nominal interest rates rise, the value of certain fixed income securities held by the Portfolio is likely to decrease. A nominal interest rate can be
described as the sum of a real interest rate and an expected inflation rate. Interest rate changes can be sudden and unpredictable, and the Portfolio may lose money if these changes are not anticipated by Portfolio management. The Portfolio may not
be able to hedge against changes in interest rates or may choose not to do so for cost or other reasons. In addition, any hedges may not work as intended. Fixed income securities with
longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations. Duration is useful primarily as a measure of the
sensitivity of a securitys market price to interest rate (i.e., yield) movements. A wide variety of factors can cause interest rates to rise (e.g., central bank monetary policies, inflation rates, general economic conditions, etc.). At
present, the U.S. is experiencing historically low interest rates. This, combined with recent economic recovery and the Federal Reserve Boards tapering of its quantitative easing program, could potentially increase the probability of an upward
interest rate environment in the near future. Further, while U.S. bond markets have steadily grown over the past three decades, dealer market making ability has remained relatively stagnant. Given the importance of intermediary
market making in creating a robust and active market, fixed income securities may face increased volatility and liquidity risks. All of these factors, collectively and/or individually, could cause the Portfolio to lose value. If the
Portfolio lost enough value, the Portfolio could face increased redemptions by shareholders, which could further impair its performance.
The Portfolio may invest in securities and instruments that are economically tied to Russia. Investments in Russia are subject to political,
economic, legal, market and currency risks. The risks include uncertain political and economic policies, short-term market volatility, poor accounting standards, corruption and crime, an inadequate regulatory system, and unpredictable taxation.
Investments in Russia are particularly subject to the risk that economic sanctions may be imposed by the United States and/or other countries. Such sanctionswhich may impact companies in many sectors, including energy, financial services and
defense, among othersmay negatively impact the Portfolios performance and/or ability to achieve its investment objective.
If the Portfolio invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in
financial derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Portfolio, or, in the case of hedging positions, that the
Portfolios base currency 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 United
States or abroad. As a result, the Portfolios investments in foreign currency denominated securities may reduce the Portfolios returns.
The Portfolios investments in commodity-linked financial derivative instruments may subject the Portfolio to greater market price
volatility
|
|
|
|
|
|
|
|
|
SEMIANNUAL REPORT |
|
JUNE 30, 2014 |
|
23 |
Notes to Financial Statements (Cont.)
than investments in traditional securities. The value of commodity-linked financial derivative instruments may be affected by changes in overall market movements, commodity index volatility,
changes in interest rates, or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments.
Credit and Counterparty Risks The Portfolio will be exposed to credit risk to parties with whom it trades and
will also bear the risk of settlement default. The Portfolio minimizes concentrations of credit risk by undertaking transactions with a large number of customers and counterparties on recognized and reputable exchanges. The Portfolio could lose
money if the issuer or guarantor of a fixed income security, or the counterparty to a financial 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.
Similar to credit risk, the Portfolio may be exposed to counterparty risk, or the risk that an institution or other entity with which the
Portfolio has unsettled or open transactions will default. Financial assets, which potentially expose the Portfolio to counterparty risk, consist principally of cash due from counterparties and investments. PIMCO, as the investment adviser,
minimizes counterparty risks to the Portfolio by performing extensive reviews of each counterparty and obtaining approval from the PIMCO Counterparty Risk Committee prior to entering into transactions with a third-party. Furthermore, to the extent
that unpaid amounts owed to the Portfolio exceed a predetermined threshold agreed to with the counterparty, such counterparty shall advance collateral to the Portfolio in the form of cash or cash equivalents equal in value to the unpaid amount owed
to the Portfolio. The Portfolio may invest such collateral in securities or other instruments and will typically pay interest to the counterparty on the collateral received. If the unpaid amount owed to the Portfolio subsequently decreases, the
Portfolio would be required to return to the counterparty all or a portion of the collateral previously advanced to the Portfolio.
All transactions in listed securities are settled/paid for upon delivery using approved counterparties. The risk of default is considered
minimal, as delivery of securities sold is only made once the Portfolio has received payment. Payment is made on a purchase once the securities have been delivered by the counterparty. The trade will fail if either party fails to meet its
obligation.
Master Netting Arrangements The Portfolio is subject to various netting arrangements with select
counterparties (Master Agreements). Master Agreements govern the terms of certain
transactions, and reduce the counterparty risk associated with relevant transactions by specifying credit protection mechanisms and providing standardization that improves legal certainty. Since
different types of transactions have different mechanics and are sometimes traded out of different legal entities of a particular counterparty organization, each type of transaction may be covered by a different Master Agreement, resulting in the
need for multiple agreements with a single counterparty. As the Master Agreements are specific to unique operations of different asset types, they allow the Portfolio to close out and net its total exposure to a counterparty in the event of a
default with respect to all the transactions governed under a single agreement with a counterparty.
Master Agreements can also help limit counterparty risk by specifying collateral posting arrangements at pre-arranged exposure levels. Under the Master Agreements, collateral is routinely
transferred if the total net exposure to certain transactions (net of existing collateral already in place) governed under the relevant Master Agreement with a counterparty in a given account exceeds a specified threshold, which typically ranges
from zero to $250,000 depending on the counterparty and the type of Master Agreement. United States Treasury Bills and U.S. dollar cash are generally the preferred forms of collateral, although other forms of AAA rated paper or sovereign securities
may be used. Securities and cash pledged as collateral are reflected as assets in the Consolidated Statement of Assets and Liabilities as either a component of Investments at value (securities) or Deposits due from Counterparties (cash). Cash
collateral received is not typically held in a segregated account and as such is reflected as a liability in the Consolidated Statement of Assets and Liabilities as Deposits due to Counterparties. The market value of any securities received as
collateral is not reflected as a component of net asset value. The Portfolios overall exposure to counterparty risk can change substantially within a short period, as it is affected by each transaction subject to the relevant Master Agreement.
Master Repurchase Agreements and Global Master
Repurchase Agreements (individually and collectively Master Repo Agreements) govern repurchase, reverse repurchase, and sale-buyback transactions between the Portfolio and select counterparties. Master Repo Agreements maintain provisions
for, among other things, initiation, income payments, events of default, and maintenance of collateral. The market value of transactions under the Master Repo Agreement, collateral pledged or received, and the net exposure by counterparty as of
period end are disclosed in the Notes to Consolidated Schedule of Investments.
Master Securities Forward Transaction Agreements (Master Forward Agreements) govern the considerations and factors surrounding the settlement of certain forward settling
transactions, such as To-Be-Announced securities, delayed-delivery or sale-buyback
|
|
|
|
|
|
|
24 |
|
PIMCO EQUITY SERIES VIT |
|
|
|
|
June
30, 2014 (Unaudited)
transactions by and between the Portfolio and select counterparties. The Master Forward Agreements maintain provisions for, among other things, initiation and confirmation, payment and transfer,
events of default, termination, and maintenance of collateral. The market value of forward settling transactions, collateral pledged or received, and the net exposure by counterparty as of period end is disclosed in the Notes to Consolidated
Schedule of Investments.
Customer Account Agreements
and related addendums govern cleared derivatives transactions such as futures, options on futures, and cleared OTC derivatives. Cleared derivative transactions require posting of initial margin as determined by each relevant clearing agency which is
segregated at a broker account registered with the Commodity Futures Trading Commission (CFTC), or the applicable regulator. In the US, counterparty risk is significantly reduced as creditors of the futures broker do not have claim to Portfolio
assets in the segregated account. Additionally, portability of exposure in the event of default further reduces risk to the Portfolio. Variation margin, or changes in market value, are exchanged daily, but may not be netted between futures and
cleared OTC derivatives. The market value or accumulated unrealized appreciation or depreciation, initial margin posted, and any unsettled variation margin as of period end is disclosed in the Notes to Consolidated Schedule of Investments.
Prime Broker Arrangements may be entered into to
facilitate execution and/or clearing of listed equity option transactions or short sales of equity securities between the Portfolio and selected counterparties. The arrangements provide guidelines surrounding the rights, obligations, and other
events, including, but not limited to, margin, execution, and settlement. These agreements maintain provisions for, among other things, payments, maintenance of collateral, events of default, and termination. Margin and other assets delivered as
collateral are typically in the possession of the prime broker and would offset any obligations due to the prime broker. The market values of listed options and securities sold short and related collateral are disclosed in the Notes to Consolidated
Schedule of Investments.
International Swaps and
Derivatives Association, Inc. Master Agreements and Credit Support Annexes (ISDA Master Agreements) govern OTC financial derivative transactions entered into by the Portfolio and select counterparties. ISDA Master Agreements maintain
provisions for general obligations, representations, agreements, collateral and events of default or termination. Events of termination include conditions that may entitle counterparties to elect to terminate early and cause settlement of all
outstanding transactions under the applicable ISDA Master Agreement. Any election to terminate early could be material to the financial statements. In limited circumstances, the ISDA Master Agreement may contain additional provisions that add
counterparty protection beyond coverage of existing daily exposure if
the counterparty has a decline in credit quality below a predefined level. These amounts, if any, may be segregated with a third-party custodian. The market value of OTC financial derivative
instruments, collateral received or pledged, and net exposure by counterparty as of period end are disclosed in the Notes to Consolidated Schedule of Investments.
8. BASIS FOR CONSOLIDATION OF THE PIMCO EqS PATHFINDER PORTFOLIO®
PIMCO Cayman Commodity Portfolio III, Ltd. (the Commodity
Subsidiary), a Cayman Islands exempted company, was incorporated as a wholly owned subsidiary acting as an investment vehicle for the Portfolio in order to effect certain investments for the Portfolio consistent with the Portfolios
investment objectives and policies as specified in its prospectus and statement of additional information. The Portfolios investment portfolio has been consolidated and includes the portfolio holdings of the Portfolio and the Commodity
Subsidiary. The consolidated financial statements include the accounts of the Portfolio and the Commodity Subsidiary. All inter-company transactions and balances have been eliminated. A subscription agreement was entered into between the Portfolio
and the Commodity Subsidiary, comprising the entire issued share capital of the Commodity Subsidiary, with the intent that the Portfolio will remain the sole shareholder and retain all rights. Under the Memorandum and Articles of Association, shares
issued by the Commodity Subsidiary confer upon a shareholder the right to receive notice of, to attend and to vote at general meetings of the Commodity Subsidiary and shall confer upon the shareholder rights in a winding-up or repayment of capital
and the right to participate in the profits or assets of the Commodity Subsidiary. See the table below for details regarding the structure, incorporation and relationship as of period end of the Commodity Subsidiary to the Portfolio (amounts in
thousands).
|
|
|
|
|
|
|
Date of Incorporation |
|
|
|
|
06/06/2011 |
|
Subscription Agreement |
|
|
|
|
06/20/2011 |
|
|
|
|
Portfolio Net Assets |
|
|
|
$ |
509,020 |
|
Subsidiary % of Portfolio Net Assets |
|
|
|
|
0.0% |
|
|
|
|
Subsidiary Financial Statement Information |
|
|
|
|
|
|
Total assets |
|
|
|
$ |
10 |
|
Total liabilities |
|
|
|
|
0 |
|
Net assets |
|
|
|
|
10 |
|
Total income |
|
|
|
|
0 |
|
Net investment income (loss) |
|
|
|
|
0 |
|
Net realized gain (loss) |
|
|
|
|
0 |
|
Net change in unrealized appreciation (depreciation) |
|
|
|
|
0 |
|
Increase (decrease) in net assets resulting from operations |
|
|
|
$ |
0 |
|
9. FEES AND EXPENSES
(a) Investment Advisory Fee PIMCO is a majority-owned subsidiary of Allianz Asset Management of America L.P.
(Allianz Asset Management) and serves as the Adviser to the Trust, pursuant to an
|
|
|
|
|
|
|
|
|
SEMIANNUAL REPORT |
|
JUNE 30, 2014 |
|
25 |
Notes to Financial Statements (Cont.)
investment advisory contract. The Adviser receives a monthly fee from the Portfolio at an annual rate based on average daily net assets (the Investment Advisory Fee). The Investment
Advisory Fee for all classes is charged at an annual rate of 0.75%.
(b) Supervisory and Administrative
Fee PIMCO serves as administrator (the Administrator) and provides supervisory and administrative services to the Trust for which it receives a monthly
supervisory and administrative fee based on each share classs average daily net assets (the Supervisory and Administrative Fee). As the Administrator, PIMCO bears the costs of various third-party services, including audit,
custodial, portfolio accounting, legal, transfer agency and printing costs. The Supervisory and Administrative Fee for all classes is charged at the annual rate of 0.35%.
(c) Distribution and Servicing Fees PIMCO Investments LLC (PI), a wholly-owned subsidiary of
PIMCO, serves as the distributor (Distributor) of the Trusts shares. The Trust has adopted a Distribution and Servicing Plan with respect to the Advisor Class shares of the Portfolio pursuant to Rule 12b-1 under the Act (the
Distribution and Servicing Plan). The Plan allows the Portfolio to compensate the Distributor for providing or procuring through financial intermediaries distribution, administration, recordkeeping, shareholder and/or related services
with respect to Advisor Class shares. The Distribution and Servicing Plan permits the Portfolio to make total payments at an annual rate of up to 0.25% of its average daily net assets attributable to its Advisor Class shares.
(d) Portfolio Expenses The Trust is responsible for the following expenses: (i) salaries and other
compensation of any of the Trusts 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) the costs of borrowing money, including interest expense and bank overdraft charges; (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 expense, including costs of litigation and indemnification expenses; (vii) organization expenses and (viii) any expenses allocated or allocable to a
specific class of shares (class-specific expenses). The ratio of expenses to average net assets per share class, as disclosed on the Financial Highlights, may differ from the annual portfolio operating expenses per share class as
disclosed in the Prospectus for the reasons set forth above.
Each Trustee, other than those affiliated with PIMCO or its affiliates, receives an annual retainer of $10,000, plus $1,500 for each Board of Trustees meeting attended in person, $250 ($375
in the case of the audit committee chair with respect to audit committee meetings) for each committee meeting attended and $375 for each Board of Trustees
meeting attended telephonically, plus reimbursement of related expenses. In addition, the audit committee chair receives an additional annual retainer of $2,000 and each other committee chair
receives an additional annual retainer of $250. These expenses are allocated on a pro-rata basis to the various portfolios of the Trust according to their respective net assets. The Trust pays no compensation directly to any Trustee or any other
officer who is affiliated with the Administrator, all of whom receive remuneration for their services to the Trust from the Administrator or its affiliates.
(e) Expense Limitation PIMCO has contractually agreed, through May 1, 2015, to reduce total annual operating expenses for each of the Portfolios separate classes of shares, by reducing the
Portfolios Supervisory and Administrative fee or reimbursing the Portfolio, to the extent that organizational expenses and pro rata Trustees fees attributable to a class of shares of the Portfolio exceed 0.0049% of the Portfolios
average net assets attributable to separate classes of shares. This Expense Limitation Agreement renews annually for a full year unless terminated by PIMCO upon at least 30 days prior notice to the end of the contract term.
PIMCO has contractually agreed, through May 1, 2015, to
reduce its advisory fee by 0.13% of the average daily net assets of the Portfolio. Under the Fee Limitation Agreement, PIMCO is entitled to reimbursement by the Portfolio of any portion of the Supervisory and Administrative Fee and/or Investment
Advisory Fee waived, reduced or reimbursed pursuant to the Fee Limitation Agreement (the Reimbursement Amount) during the previous three years, provided that such amount paid to PIMCO will not: 1) together with any recoupment of
organizational expenses and pro rata Trustees fees pursuant to the Expense Limitation Agreement, exceed the Expense Limit; 2) exceed the total Reimbursement Amount; or 3) include any amounts previously reimbursed to PIMCO. This Fee Limitation
Agreement renews annually unless terminated by PIMCO upon at least 30 days prior notice to the end of the contract term.
PIMCO had also contractually agreed, through September 16, 2013, to reduce total annual operating expenses for the Portfolios
Institutional Class and Advisor Class shares, by reducing the Portfolios Investment Advisory or Supervisory and Administrative Fees or reimbursing the Portfolio to the extent that total annual portfolio operating expenses net of acquired fund
fees and expenses, after taking into account other applicable fee waivers and reimbursements exceed 1.00% and 1.25% of the Portfolios average net assets attributable to the Institutional Class and Advisor Class shares, respectively. PIMCO may
recoup these waivers and reimbursements for a period not exceeding three years, provided that total expenses, including such recoupment, do not exceed the annual expense limit. As of June 30, 2014, the remaining recoverable amount to PIMCO was
$173,902.
|
|
|
|
|
|
|
26 |
|
PIMCO EQUITY SERIES VIT |
|
|
|
|
June
30, 2014 (Unaudited)
(f) Acquired Fund Fees
and Expenses The Commodity Subsidiary has entered into a separate contract with PIMCO for the management of the Commodity Subsidiarys portfolio pursuant to which
the Commodity Subsidiary pays PIMCO a management fee and administrative services fee at the annual rates of 0.49% and 0.20%, respectively, of its net assets. PIMCO has contractually agreed to waive the Investment Advisory Fee and the Supervisory and
Administrative Fee it receives from the Portfolio in an amount equal to the management fee and administrative services fee, respectively, paid to PIMCO by the Commodity Subsidiary. This waiver may not be terminated by PIMCO and will remain in effect
for as long as PIMCOs contract with the Commodity Subsidiary is in place. The waiver is reflected in the Consolidated Statement of Operations as a component of Waiver and/or Reimbursement by PIMCO. For the period ended June 30, 2014, the
amount was $32.
10. RELATED PARTY TRANSACTIONS
The Adviser, Administrator, and Distributor are related
parties. Fees payable to these parties are disclosed in Note 9 and the accrued related party fee amounts are disclosed on the Consolidated Statement of Assets and Liabilities.
11. GUARANTEES AND INDEMNIFICATIONS
Under the Trusts organizational documents, each Trustee,
officer, employee or other agent of the Trust (including the Trusts investment manager) is indemnified, to the extent permitted by the Act, against certain liabilities that may arise out of performance of their duties to the Portfolio.
Additionally, in the normal course of business, the
Portfolio enters into contracts that contain a variety of indemnification clauses. The Portfolios maximum exposure under these arrangements is unknown as this would involve future claims
that may be made against the Portfolio that have not yet occurred. However, the Portfolio has not had prior claims or losses pursuant to these contracts.
12. PURCHASES AND SALES OF SECURITIES
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 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. Such sales
may also result in realization of taxable capital gains, including short-term capital gains (which are generally taxed at ordinary income tax rates). The trading costs and tax effects associated with portfolio turnover may adversely affect the
Portfolios performance. The portfolio turnover rates are reported in the Financial Highlights.
Purchases and sales of securities (excluding short-term investments) for the period ended June 30, 2014, were as follows (amounts in thousands):
|
|
|
|
|
|
|
Purchases |
|
|
Sales |
|
$ |
71,702 |
|
|
$ |
126,307 |
|
13. SHARES OF BENEFICIAL INTEREST
The Portfolio may issue an unlimited number of
shares of beneficial interest with a $0.001 par value. Changes in shares of beneficial interest were as follows (shares and amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended 06/30/2014 |
|
|
|
|
Year Ended 12/31/2013 |
|
|
|
|
|
Shares |
|
|
Amount |
|
|
|
|
Shares |
|
|
Amount |
|
|
|
|
|
|
|
|
Receipts for shares sold |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Institutional Class |
|
|
|
|
10 |
|
|
$ |
128 |
|
|
|
|
|
18 |
|
|
$ |
209 |
|
Advisor Class |
|
|
|
|
342 |
|
|
|
4,322 |
|
|
|
|
|
2,353 |
|
|
|
27,305 |
|
Issued as reinvestment of distributions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Institutional Class |
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
105 |
|
|
|
1,309 |
|
Advisor Class |
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
741 |
|
|
|
9,191 |
|
Cost of shares redeemed |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Institutional Class |
|
|
|
|
(295 |
) |
|
|
(3,764 |
) |
|
|
|
|
(990 |
) |
|
|
(11,450 |
) |
Advisor Class |
|
|
|
|
(3,201 |
) |
|
|
(40,706 |
) |
|
|
|
|
(5,800 |
) |
|
|
(67,192 |
) |
Net increase (decrease) resulting from Portfolio share transactions |
|
|
|
|
(3,144 |
) |
|
$ |
(40,020 |
) |
|
|
|
|
(3,573 |
) |
|
$ |
(40,628 |
) |
As of June 30, 2014, one
shareholder owned 94% of the total Portfolios outstanding shares, and the shareholder is a related party of the Portfolio. Related parties may include, but are not limited to, the investment manager and its affiliates, affiliated broker
dealers, fund of funds and directors or employees of the Trust or Adviser.
|
|
|
|
|
|
|
|
|
SEMIANNUAL REPORT |
|
JUNE 30, 2014 |
|
27 |
Notes to Financial Statements (Cont.)
June 30, 2014 (Unaudited)
14. REGULATORY AND LITIGATION
MATTERS
The Trust is not engaged in any material
litigation or arbitration proceedings and is not aware of any material litigation or claim pending or threatened by or against it.
15. FEDERAL INCOME TAX MATTERS
The Portfolio intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (the Code) and
distribute all of its taxable income and net realized gains, if applicable, to shareholders. Accordingly, no provision for Federal income taxes has been made.
In accordance with provisions set forth under U.S. GAAP, the Adviser has reviewed the Portfolios tax positions for all open tax years.
As of June 30, 2014, the Portfolio has recorded no liability for net unrecognized tax benefits relating to uncertain income tax positions it has taken or expects to take in future tax returns.
The Portfolio files U.S. tax returns. While the statute of
limitations remains open to examine the Portfolios U.S. tax returns filed for the fiscal years ending in 2010-2012, no examinations are in progress or
anticipated at this time. The Portfolio is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the
next twelve months.
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). Please refer to the prospectus for the
Separate Account and Variable Contract for information regarding Federal income tax treatment of distributions to the Separate Account.
As of June 30, 2014, the aggregate cost and the net unrealized appreciation/(depreciation) of investments for federal income tax
purposes are as follows (amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal Tax Cost |
|
|
Aggregate Gross Unrealized Appreciation |
|
|
Aggregate Gross Unrealized (Depreciation) |
|
|
Net Unrealized Appreciation
(1) |
|
$ |
381,500 |
|
|
$ |
131,052 |
|
|
$ |
(3,185 |
) |
|
$ |
127,867 |
|
(1) |
Primary differences, if any, between book and tax net unrealized appreciation/(depreciation) are attributable to wash sale loss deferrals
for federal income tax purposes. |
|
|
|
|
|
|
|
28 |
|
PIMCO EQUITY SERIES VIT |
|
|
|
|
Glossary: (abbreviations that may
be used in the preceding statements)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Counterparty Abbreviations: |
|
|
|
|
|
|
|
|
BOA |
|
Bank of America N.A. |
|
FBF |
|
Credit Suisse International |
|
MSC |
|
Morgan Stanley & Co., Inc. |
BPS |
|
BNP Paribas S.A. |
|
GLM |
|
Goldman Sachs Bank USA |
|
RBC |
|
Royal Bank of Canada |
BRC |
|
Barclays Bank PLC |
|
GSC |
|
Goldman Sachs & Co. |
|
SOG |
|
Societe Generale |
CBK |
|
Citibank N.A. |
|
GST |
|
Goldman Sachs International |
|
UAG |
|
UBS AG Stamford |
DUB |
|
Deutsche Bank AG |
|
JPM |
|
JPMorgan Chase Bank N.A. |
|
|
|
|
|
|
|
|
|
Currency Abbreviations: |
|
|
|
|
|
|
|
|
AUD |
|
Australian Dollar |
|
GBP |
|
British Pound |
|
NOK |
|
Norwegian Krone |
CAD |
|
Canadian Dollar |
|
HKD |
|
Hong Kong Dollar |
|
SEK |
|
Swedish Krona |
CHF |
|
Swiss Franc |
|
ILS |
|
Israeli Shekel |
|
SGD |
|
Singapore Dollar |
DKK |
|
Danish Krone |
|
JPY |
|
Japanese Yen |
|
USD (or $) |
|
United States Dollar |
EUR |
|
Euro |
|
KRW |
|
South Korean Won |
|
ZAR |
|
South African Rand |
|
|
|
|
|
Other Abbreviations: |
|
|
|
|
|
|
|
|
ADR |
|
American Depositary Receipt |
|
LIBOR |
|
London Interbank Offered Rate |
|
REIT |
|
Real Estate Investment Trust |
EURIBOR |
|
Euro Interbank Offered Rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEMIANNUAL REPORT |
|
JUNE 30, 2014 |
|
29 |
General Information
Investment Adviser and Administrator
Pacific Investment Management Company LLC
650 Newport Center Drive
Newport Beach, CA 92660
Distributor
PIMCO Investments LLC
1633 Broadway
New
York, NY 10019
Custodian
State Street Bank and Trust Company
801 Pennsylvania
Kansas City, MO 64105
Transfer Agent
Boston Financial Data Services
330 W. 9th Street, 5th Floor
Kansas City, MO 64105
Legal Counsel
Dechert LLP
1900 K
Street, N.W.
Washington, D.C. 20006
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
1100 Walnut Street, Suite 1300
Kansas City, MO 64106
This report is submitted for the general information of the shareholders of the PIMCO Equity Series VIT.
pvit.pimco-funds.com
EVIT01SAR_063014
Your Global Investment Authority
PIMCO Equity Series VIT®
Semiannual Report
June 30, 2014
PIMCO EqS Pathfinder
Portfolio®
Share Class
Table of Contents
This material is authorized for use only when
preceded or accompanied by the current PIMCO Equity Series VIT (the Trust) prospectus for the Portfolio. The variable product prospectus may be obtained by contacting your Investment Consultant.
Chairmans Letter
Dear Shareholder,
Please find enclosed the Semiannual Report for the PIMCO Equity Series VIT
covering the six-month reporting period ended June 30, 2014. On the following pages are specific details about the investment performance of the Portfolio and a discussion of the factors that influenced performance during the reporting period.
In addition, the letter from the portfolio manager provides a further review of such factors as well as an overview of the Portfolios investment strategy.
In contrast to the market reaction during the summer of 2013 in which the
Federal Reserves (Fed) new taper talk caused significant market turmoil, over the past six months, investor risk appetite returned on better clarity regarding central bank policy and an easing of global geopolitical
risks towards the latter part of the period.
The outlook for the
U.S. economy improved on steady though historically slow employment growth and renewed business investment activity during the reporting period. However, while the Fed noted in its June 2014 meeting that the U.S. economy had rebounded,
the central bank reiterated its view that the economy still had some distance to go to meet its employment and specific inflation targets. Investors became more comfortable with the idea that the Fed would keep its policy rate lower than historical
norms during a recovery.
This sentiment was reinforced by a series
of actions announced by the European Central Bank (ECB) on June 5, 2014. ECB President Mario Draghi lowered the ECBs benchmark rate by 10 basis points, reduced its deposit rate into unprecedented negative territory to help
mitigate potential deflationary forces (making the ECB the first major central bank to do so), opened a new liquidity channel to help encourage bank lending, and mentioned plans to begin a future quantitative easing asset purchase program. These
measures reflected the ECBs decision to attempt to tackle the threat of deflation in the Eurozone amid slower-than-historical and expected economic growth.
Within Asia, Japan raised its consumption tax, leading to a decline in
household spending and retail sales. China, also facing a more challenging growth outlook, launched a mini-stimulus program and continued to finely tune its monetary policies amid lingering concerns regarding shadow banking-related defaults.
Highlights of the financial markets during our six-month reporting
period include:
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Developed market equities posted positive returns as investors embraced higher-risk assets due to better clarity on central bank policy and an easing of
geopolitical tensions towards the end of the reporting period. U.S. equities, as measured by the S&P 500 Index, returned 7.14%. Global equities, as represented by the MSCI All Country World Index Net USD and MSCI World Index, returned 6.18% for
both indices. EM equities, as represented by the MSCI Emerging Markets Index (Net Dividends in USD), returned 6.14%. |
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U.S. Treasuries, as represented by the Barclays U.S. Treasury Index, returned 2.72% over the reporting period. The U.S. Treasury yield curve flattened as
the Fed signaled that it was in no hurry to start raising interest rates. As a result, investors continued pricing in low policy rates and lower long-term yields. The benchmark ten-year U.S. Treasury note yielded 2.53% at the end of the reporting
period, as compared to 3.03% on December 31, 2013. The Barclays U.S. Aggregate Index, a widely used index of U.S. investment-grade bonds, returned 3.93% for the period. |
Thank you again for the trust you have placed in us. We value your commitment and will continue to work diligently to meet your
broad investment needs.
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Sincerely,
Brent R. Harris
Chairman of the Board, PIMCO Equity Series VIT
July 24, 2014 |
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SEMIANNUAL REPORT |
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JUNE 30, 2014 |
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Important Information About the Portfolio
PIMCO Equity Series VIT (the Trust) is an open-end management investment company currently consisting of one investment portfolio, the PIMCO EqS Pathfinder Portfolio® (the Portfolio). The Portfolio is only available as a funding vehicle under variable life insurance policies or
variable annuity contracts issued by insurance companies (Variable Contracts). Individuals may not purchase shares of the Portfolio directly. Shares of the Portfolio also may be sold to qualified pension and retirement plans outside of
the separate account context.
The Portfolio seeks
capital appreciation by investing under normal circumstances in equity securities, including common and preferred stock (and securities convertible into, or that PIMCO expects to be exchanged for, common or preferred stock), of issuers that PIMCO
believes are undervalued. The Portfolios bottom-up value investment style attempts to identify securities that are undervalued by the market in comparison to PIMCOs own determination of the
companys value, taking into account criteria such as asset value, book value and cash flow and earnings estimates.
As of the date of this report, interest rates in the U.S. are at or near historically low levels. As such, funds investing in fixed income
securities may currently face an increased exposure to the risks associated with a rising interest rate environment. This is especially true since the Federal Reserve Board has begun tapering its quantitative easing program. Further, while the U.S.
bond market has steadily grown over the past three decades, dealer inventories of corporate bonds have remained relatively stagnant. As a result, there has been a significant reduction in the ability of dealers to make markets. All
of the factors mentioned above, individually or collectively, could lead to increased volatility and/or lower liquidity in the fixed income markets, which could result in losses to the Portfolio. If the performance of the Portfolio were to be
negatively impacted by rising interest rates, the Portfolio could face increased redemptions by its shareholders, which could further reduce the value of the Portfolio.
The Portfolio may be subject to various risks as described in
the Portfolios prospectus. Some of these risks may include, but are not limited to, the following: equity risk, value investing risk, foreign (non-U.S.) investment risk, emerging markets risk, market risk, issuer risk, interest rate risk,
credit risk, high yield and distressed company risk, currency risk, liquidity risk, leveraging risk, management risk, operational risk, small-cap and mid-cap company
risk, arbitrage risk, derivatives risk, short sale risk, commodity risk, tax risk and subsidiary risk. A complete description of these risks and other risks is contained in the Portfolios prospectus. The Portfolio may use derivative
instruments for hedging purposes or as part of an investment strategy. Use of these instruments may involve certain costs and risks such as liquidity risk, interest rate risk, market risk, credit risk, management risk, leverage risk, mispricing or
improper valuation risk and the risk
that the Portfolio could not close out a position when it would be most advantageous to do so. Certain derivative transactions may have a leveraging effect on the Portfolio. For example, a small
investment in a derivative instrument may have a significant impact on the Portfolios exposure to interest rates, currency exchange rates or other investments. As a result, a relatively small price movement in a derivative instrument may cause
an immediate and substantial loss or gain, which translates into heightened volatility for the Portfolio. The Portfolio may engage in such transactions regardless of whether the Portfolio owns the asset, instrument or components of the index
underlying the derivative instrument. The Portfolio may invest a significant portion of its assets in these types of instruments. If it does, the Portfolios investment exposure could far exceed the value of its portfolio securities and its
investment performance could be primarily dependent upon securities it does not own. The Portfolios investment in non-U.S. securities may entail risk due to non-U.S. economic and political developments; this risk may be increased when
investing in emerging markets. For example, if the Portfolio invests in emerging market debt, it may face increased exposure to interest rate, liquidity, volatility, and redemption risk due to the specific economic, political, geographical, or legal
background of the foreign issuer.
High-yield bonds
typically have a lower credit rating than other bonds. Lower-rated bonds generally involve a greater risk to principal than higher-rated bonds. Further, markets for lower-rated bonds are typically less liquid than for higher-rated bonds, and public
information is usually less abundant in such markets. Thus, high yield investments increase the chance that the Portfolio will lose money. The credit quality of a particular security or group of securities does not ensure the stability or safety of
the overall portfolio. Mortgage- and Asset-Backed Securities represent ownership interests in pools of mortgages or other assets such as consumer loans or receivables. As a general matter, Mortgage- and Asset-Backed Securities are
subject to interest rate risk, extension risk, prepayment risk, and credit risk. These risks largely stem from the fact that returns on Mortgage- and Asset-Backed Securities depend on the ability of the underlying assets to generate cash flow.
On the Portfolio Summary page in this Shareholder
Report, the Average Annual Total Return table and Cumulative Returns chart measure performance assuming that any dividend and capital gain distributions were reinvested. The Portfolio measures its performance against a broad-based securities market
index (benchmark index).
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. It is possible to lose money on investments in the Portfolio.
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2 |
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PIMCO EQUITY SERIES VIT |
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PIMCO has adopted written proxy voting policies and procedures (Proxy Policy) as
required by Rule 206(4)-6 under the Investment Advisers Act of 1940, as amended. The Proxy Policy has been adopted by the Trust as the policies and procedures that PIMCO will use when voting proxies on behalf
of the Portfolio. A description of the policies and procedures that PIMCO uses to vote proxies relating to portfolio securities of the Portfolio, and information about how the Portfolio voted proxies relating to portfolio securities held during the
most recent twelve-month period ended June 30, are available without charge, upon request, by calling the Trust at (888) 87-PIMCO, on the Portfolios website at http://pvit.pimco-funds.com, and on the Securities and Exchange Commissions
(SEC) website at http://www.sec.gov.
The
Portfolio files a complete schedule of the Portfolios holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. A copy of the Portfolios Form N-Q is available on the SECs website at http://www.sec.gov and may be reviewed and copied at the SECs Public Reference Room in Washington, D.C. The Portfolios Form
N-Q will also be available without charge, upon request, by calling the Trust at (888) 87-PIMCO and on the Portfolios website at http://pvit.pimco-funds.com. Information on the operation of the Public
Reference Room may be obtained by calling 1-800-SEC-0330.
PIMCO Equity Series VIT is distributed by PIMCO Investments LLC,
1633 Broadway, New York, New York 10019.
The
following disclosure provides important information regarding the Portfolios Expense Example (Example or Expense Example), which appears in this Shareholder Report. Please refer to this information when reviewing the
Expense Example for the Portfolio.
Expense Example
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including management fees,
distribution and/or service (12b-1) fees (Advisor Class only), and other Portfolio expenses. The Example is intended to help you understand your ongoing costs (in dollars) of investing in the Portfolio and to
compare these costs with the ongoing costs of investing in other mutual funds. The Expense Example does not reflect any fees or other expenses imposed by the Variable Contracts. If it did, the expenses reflected in the
Expense Example would be higher. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period, from January 1, 2014 to June 30, 2014.
Actual Expenses
The information in the table under the heading Actual provides information about actual account values and actual expenses. You
may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 =
$8.60), then multiply the result by the number in the appropriate column for your share class, in the row entitled Expenses Paid During Period to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The information in the table under the heading Hypothetical (5% return before expenses) provides information about hypothetical
account values and hypothetical expenses based on the Portfolios actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolios actual return. The hypothetical account values and expenses
may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Portfolio and other portfolios. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports of the other portfolios.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the information under the heading
Hypothetical (5% return before expenses) is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different portfolios. In addition, if these transactional costs were included, your
costs would have been higher.
Expense ratios may
vary from period to period because of various factors such as an increase in expenses that are not covered by the management fees, such as fees and expenses of the independent trustees and their counsel, extraordinary expenses and interest expense.
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SEMIANNUAL REPORT |
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JUNE 30, 2014 |
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Insights from the Portfolio Manager PIMCO EqS Pathfinder Portfolio®
Dear Shareholder,
It is a pleasure to be speaking with you. On behalf of the Pathfinder team, I thank you for
your investment in the PIMCO EqS® Pathfinder Portfolio (the
Portfolio). Our commitment continues to be to seek an attractive absolute return that beats the market over a full market cycle and to do so with less volatility than the overall market. We have organized our thoughts below to provide
you with a review of the equity market over the reporting period, the Portfolio itself, and our outlook for the second half of 2014.
The First Half of 2014 in Review
Global equity markets performed well over the six-month reporting period ending June 30, 2014, as measured by the MSCI World Index,
which returned 6.18%. The returns from the largest developed markets in the world, the U.S. and Europe, were also positive. In contrast, the Japanese NIKKEI 225 (NIKKEI) posted negative returns. Over the first half of 2014, the
Portfolios Institutional Class shares returned 8.81%, which was slightly ahead of the MSCI World Index.
The U.S. equity market shrugged off early concerns about tighter monetary policy, as economic conditions improved, and the Federal Reserve signaled its commitment to hold rates low for an
extended period. In the U.S., interest rates declined in the first half of 2014 and the ten-year U.S. Treasury yield was 2.53% at June 30, 2014. Attractive valuations and the prospect of modest economic improvement, in our view, helped European
equities as did the impact of positive and accommodative comments from the European Central Bank (ECB). Japanese markets, however, had a more volatile ride, with the NIKKEI declining in 2014 as investors questioned the sustainability of
Abenomics and whether the third arrow of structural reforms could be enacted.
Pathfinder Portfolio
The Portfolio began the reporting period fully invested with a diversified portfolio of undervalued equities, along with a few merger arbitrage and special situation investments. However, in
early 2014 a number of our undervalued equities began to approach our targets of intrinsic value and we began to exit those positions. Among the positions we exited were Intel, 3M, Nestle, Deere, Suez and Veolia Environnement, White Mountains
Insurance Group, and General Dynamics. At the same time, we also found attractive investments in marine liquefied petroleum gas carrier operators, BW LPG and Avance Gas, cleaning services company, Spotless Group, Japanese cosmetics firm, Shiseido,
and a number of merger arbitrage situations. Some of our notable performers in the portfolio over the first half of the year were Marine Harvest, Lorillard, and Logitech International.
Marine Harvest, the worlds largest salmon farmer with an estimated market share in excess of 20%, is a good
example of a long-held position which we believed was being overlooked by investors. Salmon prices recovered strongly in 2013 due to low supply, and today, with limited
supply growth this year and into 2015, we continue to have a strong outlook for salmon prices. Improving salmon prices also enabled the company to announce earnings which were considerably above
the consensus analyst estimate.
Shares of
Lorillard, the third-largest seller of cigarettes in the U.S., jumped this spring on speculation that Reynolds American Inc. might bid for the company. The combination of the two firms could potentially create the second largest cigarette producer,
which would then be able to more effectively compete with its largest U.S. competitor, Altria, in our view. Although a merger between the two companies would be subject to Federal Trade Commission (FTC) scrutiny, shrinking industry
sales, and likely asset disposals to appease regulators, might help to secure FTC approval, in our view.
Logitech sells computer peripheral products such as computer mice, keyboards, audio and gaming devices. With 70% of its sales coming from PC peripherals, Logitech has recently benefited
from less pressure in its core PC segment. The turnaround plan implemented by the new management team is producing new and successful products such as the iPhone game controller, along with better sales and profit growth.
We also had a few stocks in the Portfolio which did not perform
as we expected such as Lancashire, FANUC, and Barclays.
Lancashire shares retreated in spring 2014 due to concerns about a recent acquisition and insurance policy rates. Additionally, the company announced the planned departure of its CEO,
which did little to help assuage investor concerns. Lancashire is a high quality specialty insurance company, built on the idea that superior management and underwriting can deliver outstanding returns to investors, which maintains very low
risk in its investments consistent with a mandate for capital preservation. We continue to hold this company because we believe it is a quality company and it has a current dividend yield of approximately 7.75%.
Barclays, the U.K.s second-largest bank measured by
assets, declined over the period due to legal concerns following reports the company would face new lawsuits from the New York Attorney Generals office regarding the firms marketing materials and the use of its dark pools by high
frequency traders.
FANUC is a Japanese based factory
automation systems (robotics) company. We first entered the position in February 2012, as we believed investors were significantly undervaluing a top factory automation company, which had enormous secular and cyclical growth opportunities ahead and
an excess amount of cash on its balance sheet. FANUC shares had appreciated nicely over our total ownership time period; however, the companys share price retreated slightly in early 2014 as the company reported a sales and operating profit
decline. With the position close to our target of intrinsic value, but with greater downside potential now, we decided to exit the position.
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PIMCO EQUITY SERIES VIT |
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Outlook
Global equity markets have had a very strong past four years and the first six months of 2014 have been no exception, helped in part by the
encouraging action and comments by the worlds developed market central banks, the U.S. Federal Reserve, the ECB and the Bank of Japan. Now some investors are postulating that market valuation is full, or is fairly
valued. Although that may or may not be true for equity markets in general, it is not the market, per se, that catches our interest, it is the individual businesses in which we invest. We invest in companies only when it is appropriate to do
so, and only when they meet our investment criteria. Having the patience to wait for an investment opportunity to present itself is the mark of a patient and disciplined investor.
We also believe the market should to continue to evidence some
volatility and we anticipate this volatility will provide opportunity. We also believe that other opportunities will arise as corporations announce restructurings, such as announcements regarding a new CEO or head of sales, or a capital
restructuring, which may include an initial public offering, a spin-off, or a merger or acquisition. These situations attract our interest as they reflect companies involved in the process of change, and that change may also provide an investment
opportunity.
These are also potential investment
opportunities which occur in all markets, regardless of valuation or sentiment.
Earlier this year, my former co-portfolio manager, Chuck Lahr, resigned from the firm to spend time with his family. We have worked with Chuck for over 7 years now, we miss him, and we also
wish him all the best as he spends time with his young and growing family.
To close our letter, I repeat my thanks for investing with us in the PIMCO EqS® Pathfinder Portfolio. We continue to ply our craft and we maintain our value-driven discipline, seeking the twin goals of
capital appreciation and downside risk mitigation in our efforts to provide you with risk-adjusted returns. We are privileged to have the opportunity to manage your capital and we look forward to the challenges and the opportunities in the months
and years ahead.
Sincerely,
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Anne Gudefin, CFA
Portfolio Manager |
Top 10
Holdings1
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Marine Harvest ASA |
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3.3% |
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Imperial Tobacco Group PLC |
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3.3% |
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Reckitt Benckiser Group PLC |
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3.1% |
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British American Tobacco PLC |
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3.0% |
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Lorillard, Inc. |
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2.9% |
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Microsoft Corp. |
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2.7% |
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Danone S.A. |
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2.7% |
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AIA Group Ltd. |
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2.6% |
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Berkshire Hathaway, Inc. B |
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2.5% |
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bpost S.A. |
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2.3% |
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Geographic Breakdown1
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United States |
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30.5% |
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United Kingdom |
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15.2% |
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France |
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8.1% |
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Norway |
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5.8% |
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Bermuda |
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4.8% |
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Netherlands |
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4.6% |
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Hong Kong |
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4.5% |
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Japan |
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3.7% |
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Switzerland |
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3.6% |
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Belgium |
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2.3% |
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Singapore |
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2.3% |
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Germany |
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2.2% |
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Denmark |
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1.9% |
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Sweden |
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1.9% |
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Other |
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2.4% |
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Sector Breakdown1
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Consumer Staples |
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31.2% |
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Financials |
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18.9% |
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Energy |
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12.8% |
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Industrials |
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11.8% |
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Information Technology |
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8.3% |
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Health Care |
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5.9% |
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Consumer Discretionary |
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4.6% |
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Other |
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0.3% |
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% of Investments, at value as of 06/30/14. Top Holdings, Geographic and Sector Breakdown solely reflect long positions. Securities sold
short, financial derivative instruments and short-term instruments are not taken into consideration. |
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SEMIANNUAL REPORT |
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JUNE 30, 2014 |
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PIMCO EqS Pathfinder Portfolio®
Cumulative Returns Through June 30, 2014
$10,000 invested at the end of the month when the Portfolios Institutional Class commenced
operations.
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Average Annual Total Return for the period ended June 30, 2014 |
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6 Months* |
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1 Year |
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Class Inception (04/14/2010) |
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PIMCO EqS Pathfinder Portfolio® Institutional Class |
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8.94% |
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24.81% |
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8.56% |
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MSCI World Index± |
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6.18% |
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24.05% |
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10.83% |
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All Portfolio returns are net
of fees and expenses.
* Cumulative return.
Performance quoted represents past performance.
Past performance is not a guarantee or a reliable indicator of future results. Current performance may be lower or higher than performance shown. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or
less than original cost when redeemed. The Portfolios performance does not reflect the deduction of additional charges and expenses imposed in connection with investing in Variable Contracts, which will reduce returns. For performance current
to the most recent month-end, visit http://pvit.pimco-funds.com. The Portfolios total annual operating expense ratio as stated in the Portfolios current prospectus, as supplemented to date, is 1.13% for Institutional Class shares.
± The MSCI World Index is a free
float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. The MSCI World Index consists of 24 developed market country indices. It is not possible to invest directly in an
unmanaged index.
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Expense Example |
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Actual |
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Hypothetical |
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(5% return before expenses) |
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Beginning Account Value (01/01/14) |
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$ |
1,000.00 |
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$ |
1,000.00 |
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Ending Account Value (06/30/14) |
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$ |
1,089.40 |
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$ |
1,019.98 |
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Expenses Paid During Period |
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$ |
5.03 |
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$ |
4.86 |
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Net Annualized Expense Ratio |
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0.97 |
% |
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0.97 |
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Expenses Paid During Period are equal to the net annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 181/365 (to
reflect the one-half year period). Overall fees and expenses of investing in the Portfolio will be higher because the example does not reflect variable contract fees and expenses.
The Net Annualized Expense Ratio is reflective of any applicable waivers related to contractual agreements for contractual fee waivers or voluntary fee waivers. Details regarding fee waivers can be found in Note 9 in the Notes to Financial
Statements.
Please refer to the Important
Information Section for an explanation of the information presented in the above Expense Example.
Portfolio Insights
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The PIMCO EqS Pathfinder Portfolio®
seeks capital appreciation by investing under normal circumstances in equity securities, including common and preferred stock (and securities convertible into, or that PIMCO expects to be exchanged for, common or preferred stock), of issuers that
PIMCO believes are undervalued. The Portfolios bottom-up value investment style attempts to identify securities that are undervalued by the market in comparison to PIMCOs own determination of the companys value, taking into account
criteria such as asset value, book value, cash flow and earnings estimates. |
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The Portfolios Institutional Class shares returned 8.94% after fees, and the Portfolios benchmark index, the MSCI World Index, returned 6.18%
during the reporting period. |
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Security selection in both the consumer staples sector and the industrials sector were the most significant contributors to returns during the reporting
period. In addition, strong security selection and underweights to both the consumer discretionary and energy sectors contributed to performance. |
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The Portfolios security selection in the information technology sector, a lighter weight to the health care sector and a slight holding of cash
detracted modestly from returns. |
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The Funds holdings in Marine Harvest, Lorillard, and Imperial Tobacco added to performance as prices on these securities appreciated during the
reporting period. |
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The Funds holdings in Lancashire Holdings, Carrefour, and FANUC detracted from returns as prices on these securities declined during the reporting
period. |
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At the end of the reporting period, the Portfolio held approximately 92% in equities we believe are undervalued, approximately 5% (on the long side only)
in merger arbitrage investments, and held the balance of the portfolio in cash and currency hedges. |
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6 |
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PIMCO EQUITY SERIES VIT |
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Financial Highlights
PIMCO EqS Pathfinder Portfolio®
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Selected Per Share Data for the Year or Period Ended: |
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06/30/2014+ |
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12/31/2013 |
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12/31/2012 |
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12/31/2011 |
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04/14/2010-12/31/2010 |
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Institutional Class |
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Net asset value beginning of year or period |
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$ |
12.53 |
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$ |
10.72 |
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$ |
9.85 |
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$ |
10.33 |
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$ |
10.00 |
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Net investment
income (a) |
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0.17 |
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0.27 |
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|
0.21 |
|
|
|
0.11 |
|
|
|
0.12 |
|
Net realized/unrealized gain (loss) |
|
|
0.95 |
|
|
|
1.83 |
|
|
|
0.77 |
|
|
|
(0.58 |
) |
|
|
0.21 |
|
Total income (loss) from investment operations |
|
|
1.12 |
|
|
|
2.10 |
|
|
|
0.98 |
|
|
|
(0.47 |
) |
|
|
0.33 |
|
Dividends from net investment income |
|
|
0.00 |
|
|
|
(0.29 |
) |
|
|
(0.11 |
) |
|
|
(0.01 |
) |
|
|
0.00 |
|
Total distributions |
|
|
0.00 |
|
|
|
(0.29 |
) |
|
|
(0.11 |
) |
|
|
(0.01 |
) |
|
|
0.00 |
|
Net asset value end of year or period |
|
$ |
13.65 |
|
|
$ |
12.53 |
|
|
$ |
10.72 |
|
|
$ |
9.85 |
|
|
$ |
10.33 |
|
Total return |
|
|
8.94 |
% |
|
|
19.60 |
% |
|
|
9.98 |
% |
|
|
(4.54 |
)% |
|
|
3.30 |
% |
Net assets end of year or period (000s) |
|
$ |
59,047 |
|
|
$ |
57,768 |
|
|
$ |
58,740 |
|
|
$ |
66,439 |
|
|
$ |
3,276 |
|
Ratio of expenses to average net assets |
|
|
0.97 |
%* |
|
|
0.98 |
% |
|
|
0.99 |
% |
|
|
0.98 |
% |
|
|
1.01 |
%* |
Ratio of expenses to average net assets excluding waivers |
|
|
1.10 |
%* |
|
|
1.15 |
% |
|
|
1.15 |
% |
|
|
1.18 |
% |
|
|
3.72 |
%* |
Ratio of expenses to average net assets excluding interest expense and dividends on short
sales |
|
|
0.97 |
%* |
|
|
0.97 |
% |
|
|
0.97 |
% |
|
|
0.97 |
% |
|
|
0.97 |
%* |
Ratio of expenses to average net assets excluding interest expense, dividends on short sales
and waivers |
|
|
1.10 |
%* |
|
|
1.14 |
% |
|
|
1.13 |
% |
|
|
1.17 |
% |
|
|
3.68 |
%* |
Ratio of net investment income to average net assets |
|
|
2.68 |
%* |
|
|
2.29 |
% |
|
|
2.02 |
% |
|
|
1.14 |
% |
|
|
1.69 |
%* |
Portfolio turnover rate |
|
|
15 |
%** |
|
|
29 |
%** |
|
|
26 |
%** |
|
|
238 |
%** |
|
|
25 |
%** |
** |
The ratio excludes PIMCO Short-Term Floating NAV Portfolio. |
(a) |
Per share amounts based on average number of shares outstanding during the year or period. |
|
|
|
|
|
|
|
See Accompanying Notes |
|
SEMIANNUAL REPORT |
|
JUNE 30, 2014 |
|
7 |
Consolidated Statement of Assets and Liabilities PIMCO EqS Pathfinder Portfolio®
(Unaudited)
|
|
|
|
|
(Amounts in thousands, except per share amounts) |
|
June 30, 2014 |
|
|
|
Assets: |
|
|
|
|
Investments, at value |
|
|
|
|
Investments in securities |
|
$ |
477,533 |
|
Investments in Affiliates |
|
|
31,834 |
|
Financial Derivative Instruments |
|
|
|
|
Over the counter |
|
|
3,291 |
|
Cash |
|
|
463 |
|
Deposits with counterparty |
|
|
3,724 |
|
Foreign currency, at value |
|
|
1,038 |
|
Receivable for investments sold |
|
|
784 |
|
Interest and dividends receivable |
|
|
582 |
|
Dividends receivable from Affiliates |
|
|
6 |
|
|
|
|
519,255 |
|
|
|
Liabilities: |
|
|
|
|
Borrowings & Other Financing Transactions |
|
|
|
|
Payable for short sales |
|
$ |
4,122 |
|
Financial Derivative Instruments |
|
|
|
|
Over the counter |
|
|
1,761 |
|
Payable for investments purchased |
|
|
1,658 |
|
Payable for investments in Affiliates purchased |
|
|
6 |
|
Deposits from counterparty |
|
|
1,690 |
|
Payable for Portfolio shares redeemed |
|
|
474 |
|
Accrued investment advisory fees |
|
|
251 |
|
Accrued supervisory and administrative fees |
|
|
142 |
|
Accrued distribution fees |
|
|
90 |
|
Reimbursement to PIMCO |
|
|
25 |
|
Other liabilities |
|
|
16 |
|
|
|
|
10,235 |
|
|
|
Net Assets |
|
$ |
509,020 |
|
|
|
Net Assets Consist of: |
|
|
|
|
Paid in capital |
|
$ |
347,595 |
|
Undistributed net investment income |
|
|
8,310 |
|
Accumulated undistributed net realized gain |
|
|
23,821 |
|
Net unrealized appreciation |
|
|
129,294 |
|
|
|
$ |
509,020 |
|
|
|
Net Assets: |
|
|
|
|
Institutional Class |
|
$ |
59,047 |
|
Advisor Class |
|
|
449,973 |
|
|
|
Shares Issued and Outstanding: |
|
|
|
|
Institutional Class |
|
|
4,326 |
|
Advisor Class |
|
|
33,130 |
|
|
|
Net Asset Value and Redemption Price Per Share Outstanding: |
|
|
|
|
Institutional Class |
|
$ |
13.65 |
|
Advisor Class |
|
|
13.58 |
|
|
|
Cost of Investments in Securities |
|
$ |
349,433 |
|
Cost of Investments in Affiliates |
|
$ |
31,832 |
|
Cost of Foreign Currency Held |
|
$ |
1,007 |
|
Proceeds Received on Short Sales |
|
$ |
3,736 |
|
|
|
|
|
|
|
|
|
|
8 |
|
PIMCO EQUITY SERIES VIT |
|
|
|
|
See Accompanying Notes |
|
Consolidated Statement of Operations PIMCO EqS Pathfinder Portfolio®
(Unaudited)
|
|
|
|
|
(Amounts in thousands) |
|
Six Months Ended June 30, 2014 |
|
|
|
Investment Income: |
|
|
|
|
Dividends, net of foreign taxes* |
|
$ |
9,001 |
|
Dividends from Investments in Affiliates |
|
|
14 |
|
Total Income |
|
|
9,015 |
|
|
|
Expenses: |
|
|
|
|
Investment advisory fees |
|
|
1,838 |
|
Supervisory and administrative fees |
|
|
858 |
|
Distribution and/or servicing fees - Advisor Class |
|
|
543 |
|
Dividends on short sales |
|
|
12 |
|
Trustee fees |
|
|
10 |
|
Interest expense |
|
|
2 |
|
Miscellaneous expense |
|
|
12 |
|
Total Expenses |
|
|
3,275 |
|
Waiver and/or Reimbursement by PIMCO |
|
|
(329 |
) |
Net Expenses |
|
|
2,946 |
|
|
|
Net Investment Income |
|
|
6,069 |
|
|
|
Net Realized Gain (Loss): |
|
|
|
|
Investments in securities |
|
|
20,054 |
|
Exchange-traded or centrally cleared financial derivative instruments |
|
|
176 |
|
Over the counter financial derivative instruments |
|
|
(3,527 |
) |
Foreign currency |
|
|
312 |
|
Net Realized Gain |
|
|
17,015 |
|
|
|
Net Change in Unrealized Appreciation (Depreciation): |
|
|
|
|
Investments in securities |
|
|
15,506 |
|
Investments in Affiliates |
|
|
2 |
|
Over the counter financial derivative instruments |
|
|
3,843 |
|
Short sales |
|
|
(386 |
) |
Foreign currency assets and liabilities |
|
|
27 |
|
Net Change in Unrealized Appreciation |
|
|
18,992 |
|
Net Gain |
|
|
36,007 |
|
|
|
Net Increase in Net Assets Resulting from Operations |
|
$ |
42,076 |
|
|
|
* Foreign tax withholdings - Dividends |
|
$ |
716 |
|
|
|
|
|
|
|
|
See Accompanying Notes |
|
SEMIANNUAL REPORT |
|
JUNE 30, 2014 |
|
9 |
Consolidated Statements of Changes in Net Assets PIMCO EqS Pathfinder Portfolio®
(Unaudited)
|
|
|
|
|
|
|
|
|
(Amounts in thousands) |
|
Six Months Ended June 30, 2014 (Unaudited) |
|
|
Year Ended December 31, 2013 |
|
|
|
|
Increase in Net Assets from: |
|
|
|
|
|
|
|
|
|
|
|
Operations: |
|
|
|
|
|
|
|
|
Net investment income |
|
$ |
6,069 |
|
|
$ |
10,152 |
|
Net realized gain |
|
|
17,015 |
|
|
|
10,577 |
|
Net change in unrealized appreciation |
|
|
18,992 |
|
|
|
65,099 |
|
Net increase resulting from operations |
|
|
42,076 |
|
|
|
85,828 |
|
|
|
|
Distributions to Shareholders: |
|
|
|
|
|
|
|
|
From net investment income |
|
|
|
|
|
|
|
|
Institutional Class |
|
|
0 |
|
|
|
(1,309 |
) |
Advisor Class |
|
|
0 |
|
|
|
(9,191 |
) |
|
|
|
Total Distributions |
|
|
0 |
|
|
|
(10,500 |
) |
|
|
|
Portfolio Share Transactions: |
|
|
|
|
|
|
|
|
Net (decrease) resulting from Portfolio share transactions** |
|
|
(40,020 |
) |
|
|
(40,628 |
) |
|
|
|
Total Increase in Net Assets |
|
|
2,056 |
|
|
|
34,700 |
|
|
|
|
Net Assets: |
|
|
|
|
|
|
|
|
Beginning of year or period |
|
|
506,964 |
|
|
|
472,264 |
|
End of year or period* |
|
$ |
509,020 |
|
|
$ |
506,964 |
|
|
|
|
* Including undistributed net investment income of: |
|
$ |
8,310 |
|
|
$ |
2,241 |
|
** |
See Note 13 in the Notes to Financial Statements. |
|
|
|
|
|
|
|
|
|
10 |
|
PIMCO EQUITY SERIES VIT |
|
|
|
|
See Accompanying Notes |
|
Consolidated Schedule of Investments PIMCO EqS Pathfinder Portfolio®
June 30, 2014 (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHARES |
|
|
|
|
MARKET VALUE (000S) |
|
INVESTMENTS IN SECURITIES 93.8% |
|
|
|
COMMON STOCKS 92.8% |
|
|
|
AUSTRALIA 0.7% |
|
|
|
INDUSTRIALS 0.7% |
|
Spotless Group Holdings Ltd. (a) |
|
|
|
|
2,430,650 |
|
|
$ |
|
|
3,782 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Australia |
|
|
|
|
|
|
|
|
|
|
3,782 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BELGIUM 2.3% |
|
|
|
INDUSTRIALS 2.3% |
|
bpost S.A. |
|
|
|
|
470,864 |
|
|
|
|
|
11,896 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Belgium |
|
|
|
|
|
|
|
|
|
|
11,896 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BERMUDA 4.8% |
|
|
|
ENERGY 4.8% |
|
Avance Gas Holding Ltd. |
|
|
|
|
224,786 |
|
|
|
|
|
5,753 |
|
North Atlantic Drilling Ltd. |
|
|
|
|
661,306 |
|
|
|
|
|
7,023 |
|
Seadrill Ltd. |
|
|
|
|
298,072 |
|
|
|
|
|
11,813 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,589 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Bermuda |
|
|
|
|
|
|
|
|
|
|
24,589 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CANADA 0.7% |
|
|
|
ENERGY 0.7% |
|
Cameco Corp. |
|
|
|
|
180,036 |
|
|
|
|
|
3,530 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Canada |
|
|
|
|
|
|
|
|
|
|
3,530 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DENMARK 1.9% |
|
|
|
CONSUMER STAPLES 1.9% |
|
Carlsberg A/S B |
|
|
|
|
90,598 |
|
|
|
|
|
9,758 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Denmark |
|
|
|
|
|
|
|
|
|
|
9,758 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FAROE ISLANDS 0.7% |
|
|
|
CONSUMER STAPLES 0.7% |
|
Bakkafrost P/F |
|
|
|
|
175,099 |
|
|
|
|
|
3,410 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Faroe Islands |
|
|
|
|
|
|
|
|
|
|
3,410 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FRANCE 8.0% |
|
|
|
CONSUMER DISCRETIONARY 2.5% |
|
Eutelsat Communications S.A. |
|
|
|
|
232,864 |
|
|
|
|
|
8,092 |
|
JCDecaux S.A. |
|
|
|
|
129,343 |
|
|
|
|
|
4,831 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,923 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSUMER STAPLES 4.7% |
|
Carrefour S.A. |
|
|
|
|
284,014 |
|
|
|
|
|
10,473 |
|
Danone S.A. |
|
|
|
|
180,551 |
|
|
|
|
|
13,425 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,898 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ENERGY 0.8% |
|
Total S.A. |
|
|
|
|
52,611 |
|
|
|
|
|
3,806 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total France |
|
|
|
|
|
|
|
|
|
|
40,627 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GERMANY 2.1% |
|
|
|
HEALTH CARE 2.1% |
|
Rhoen Klinikum AG |
|
|
|
|
332,158 |
|
|
|
|
|
10,967 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Germany |
|
|
|
|
|
|
|
|
|
|
10,967 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHARES |
|
|
|
|
MARKET VALUE (000S) |
|
HONG KONG 4.5% |
|
|
|
CONSUMER DISCRETIONARY 0.7% |
|
Television Broadcasts Ltd. |
|
|
|
|
510,400 |
|
|
$ |
|
|
3,312 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIALS 3.3% |
|
AIA Group Ltd. |
|
|
|
|
2,617,900 |
|
|
|
|
|
13,171 |
|
First Pacific Co. Ltd. |
|
|
|
|
3,169,750 |
|
|
|
|
|
3,563 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,734 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INDUSTRIALS 0.5% |
|
Jardine Matheson Holdings Ltd. |
|
|
|
|
25,500 |
|
|
|
|
|
1,513 |
|
Jardine Strategic Holdings Ltd. |
|
|
|
|
33,700 |
|
|
|
|
|
1,205 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,718 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Hong Kong |
|
|
|
|
|
|
|
|
|
|
22,764 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
JAPAN 3.7% |
|
|
|
CONSUMER DISCRETIONARY 0.5% |
|
Toyota Motor Corp. |
|
|
|
|
44,000 |
|
|
|
|
|
2,634 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSUMER STAPLES 1.2% |
|
Kao Corp. |
|
|
|
|
90,900 |
|
|
|
|
|
3,580 |
|
Shiseido Co. Ltd. |
|
|
|
|
123,500 |
|
|
|
|
|
2,252 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,832 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INDUSTRIALS 0.6% |
|
Komatsu Ltd. |
|
|
|
|
125,500 |
|
|
|
|
|
2,913 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INFORMATION TECHNOLOGY 1.4% |
|
Nintendo Co. Ltd. |
|
|
|
|
36,117 |
|
|
|
|
|
4,337 |
|
Tokyo Electron Ltd. - ADR |
|
|
|
|
171,670 |
|
|
|
|
|
2,934 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,271 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Japan |
|
|
|
|
|
|
|
|
|
|
18,650 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NETHERLANDS 4.6% |
|
|
|
CONSUMER STAPLES 1.7% |
|
Corbion NV |
|
|
|
|
411,222 |
|
|
|
|
|
8,666 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIALS 2.1% |
|
ING Groep NV - Dutch Certificate (a) |
|
|
|
|
753,791 |
|
|
|
|
|
10,578 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INFORMATION TECHNOLOGY 0.8% |
|
Gemalto NV |
|
|
|
|
38,602 |
|
|
|
|
|
4,001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Netherlands |
|
|
|
|
|
|
|
|
|
|
23,245 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NORWAY 5.8% |
|
|
|
CONSUMER STAPLES 4.2% |
|
Cermaq ASA |
|
|
|
|
351,092 |
|
|
|
|
|
4,837 |
|
Marine Harvest ASA |
|
|
|
|
1,233,005 |
|
|
|
|
|
16,825 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,662 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ENERGY 1.6% |
|
BW LPG Ltd. |
|
|
|
|
553,309 |
|
|
|
|
|
8,109 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Norway |
|
|
|
|
|
|
|
|
|
|
29,771 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHARES |
|
|
|
|
MARKET VALUE (000S) |
|
SINGAPORE 2.3% |
|
|
|
INDUSTRIALS 2.3% |
|
ComfortDelGro Corp. Ltd. |
|
|
|
|
3,712,000 |
|
|
$ |
|
|
7,444 |
|
Keppel Corp. Ltd. |
|
|
|
|
484,700 |
|
|
|
|
|
4,196 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,640 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Singapore |
|
|
|
|
|
|
|
|
|
|
11,640 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOUTH KOREA 0.3% |
|
|
|
CONSUMER DISCRETIONARY 0.3% |
|
GS Home Shopping, Inc. |
|
|
|
|
6,988 |
|
|
|
|
|
1,666 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total South Korea |
|
|
|
|
|
|
|
|
|
|
1,666 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SWEDEN 1.9% |
|
|
|
INDUSTRIALS 1.9% |
|
Loomis AB B |
|
|
|
|
312,308 |
|
|
|
|
|
9,594 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Sweden |
|
|
|
|
|
|
|
|
|
|
9,594 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SWITZERLAND 3.6% |
|
|
|
FINANCIALS 0.9% |
|
Swiss Re AG |
|
|
|
|
51,952 |
|
|
|
|
|
4,620 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HEALTH CARE 1.4% |
|
Roche Holding AG |
|
|
|
|
24,649 |
|
|
|
|
|
7,344 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INFORMATION TECHNOLOGY 1.3% |
|
Logitech International S.A. |
|
|
|
|
487,539 |
|
|
|
|
|
6,336 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Switzerland |
|
|
|
|
|
|
|
|
|
|
18,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNITED KINGDOM 15.2% |
|
|
|
CONSUMER STAPLES 9.4% |
|
British American Tobacco PLC |
|
|
|
|
258,368 |
|
|
|
|
|
15,373 |
|
Imperial Tobacco Group PLC |
|
|
|
|
372,250 |
|
|
|
|
|
16,747 |
|
Reckitt Benckiser Group PLC |
|
|
|
|
178,495 |
|
|
|
|
|
15,564 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,684 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ENERGY 2.7% |
|
BP PLC |
|
|
|
|
1,070,258 |
|
|
|
|
|
9,424 |
|
Ensco PLC A |
|
|
|
|
77,266 |
|
|
|
|
|
4,294 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,718 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIALS 3.1% |
|
Barclays PLC |
|
|
|
|
1,283,380 |
|
|
|
|
|
4,675 |
|
Lancashire Holdings Ltd. |
|
|
|
|
697,792 |
|
|
|
|
|
7,810 |
|
Prudential PLC |
|
|
|
|
148,242 |
|
|
|
|
|
3,397 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,882 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total United Kingdom |
|
|
|
|
|
|
|
|
|
|
77,284 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNITED STATES 29.7% |
|
|
|
CONSUMER DISCRETIONARY 0.5% |
|
Time Warner Cable, Inc. |
|
|
|
|
17,531 |
|
|
|
|
|
2,582 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSUMER STAPLES 7.5% |
|
Altria Group, Inc. |
|
|
|
|
187,482 |
|
|
|
|
|
7,863 |
|
Lorillard, Inc. |
|
|
|
|
244,460 |
|
|
|
|
|
14,905 |
|
Philip Morris International, Inc. |
|
|
|
|
59,751 |
|
|
|
|
|
5,038 |
|
|
|
|
|
|
|
|
See Accompanying Notes |
|
SEMIANNUAL REPORT |
|
JUNE 30, 2014 |
|
11 |
Consolidated Schedule of Investments PIMCO
EqS Pathfinder Portfolio® (Cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHARES |
|
|
|
|
MARKET VALUE (000S) |
|
Reynolds American, Inc. |
|
|
|
|
114,152 |
|
|
$ |
|
|
6,889 |
|
Wal-Mart Stores, Inc. |
|
|
|
|
46,749 |
|
|
|
|
|
3,509 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,204 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ENERGY 2.3% |
|
Halliburton Co. |
|
|
|
|
80,069 |
|
|
|
|
|
5,686 |
|
National Oilwell Varco, Inc. |
|
|
|
|
71,826 |
|
|
|
|
|
5,915 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,601 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIALS 8.6% |
|
Alleghany Corp. (a) |
|
|
|
|
13,543 |
|
|
|
|
|
5,934 |
|
Berkshire Hathaway, Inc. B (a) |
|
|
|
|
100,636 |
|
|
|
|
|
12,737 |
|
Genworth Financial, Inc. A (a)(c) |
|
|
502,082 |
|
|
|
|
|
8,736 |
|
Navient Corp. |
|
|
|
|
256,693 |
|
|
|
|
|
4,546 |
|
PHH Corp. (a) |
|
|
|
|
134,193 |
|
|
|
|
|
3,084 |
|
SLM Corp. |
|
|
|
|
256,693 |
|
|
|
|
|
2,133 |
|
ViewPoint Financial Group, Inc. |
|
|
|
|
243,009 |
|
|
|
|
|
6,539 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,709 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HEALTH CARE 2.2% |
|
Allergan, Inc. |
|
|
|
|
15,493 |
|
|
|
|
|
2,622 |
|
Merck & Co., Inc. |
|
|
|
|
70,596 |
|
|
|
|
|
4,084 |
|
Pfizer, Inc. |
|
|
|
|
152,138 |
|
|
|
|
|
4,515 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,221 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INDUSTRIALS 3.5% |
|
3M Co. |
|
|
|
|
37,590 |
|
|
|
|
|
5,384 |
|
Brinks Co. |
|
|
|
|
258,386 |
|
|
|
|
|
7,292 |
|
NOW, Inc. (a) |
|
|
|
|
137,247 |
|
|
|
|
|
4,970 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,646 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHARES |
|
|
|
|
MARKET VALUE (000S) |
|
INFORMATION TECHNOLOGY 4.8% |
|
International Business Machines Corp. |
|
|
|
|
40,593 |
|
|
$ |
|
|
7,358 |
|
Microsoft Corp. (c) |
|
|
|
|
330,063 |
|
|
|
|
|
13,764 |
|
Oracle Corp. |
|
|
|
|
89,083 |
|
|
|
|
|
3,610 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,732 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MATERIALS 0.3% |
|
Rentech, Inc. (a) |
|
|
|
|
515,516 |
|
|
|
|
|
1,335 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total United States |
|
|
|
|
|
151,030 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Common Stocks (Cost $345,726) |
|
|
|
|
|
472,503 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REAL ESTATE INVESTMENT TRUSTS 0.9% |
|
|
|
SINGAPORE 0.0% |
|
|
|
FINANCIALS 0.0% |
|
Keppel REIT Management Ltd. |
|
|
|
|
125,236 |
|
|
|
|
|
129 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Singapore |
|
|
|
|
|
129 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNITED STATES 0.9% |
|
|
|
FINANCIALS 0.9% |
|
NorthStar Realty Finance Corp. |
|
|
|
|
249,669 |
|
|
|
|
|
4,339 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total United States |
|
|
|
|
|
4,339 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Real Estate Investment Trusts (Cost $2,594) |
|
|
4,468 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHARES |
|
|
|
|
MARKET VALUE (000S) |
|
RIGHTS 0.1% |
|
|
|
FRANCE 0.1% |
|
|
|
HEALTH CARE 0.1% |
|
Sanofi - Exp. 12/31/2020 |
|
|
|
|
1,123,923 |
|
|
$ |
|
|
562 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Rights (Cost $1,113) |
|
|
562 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments in Securities (Cost $349,433) |
|
|
477,533 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTMENTS IN AFFILIATES 6.3% |
|
|
|
SHORT-TERM INSTRUMENTS 6.3% |
|
|
|
CENTRAL FUNDS USED FOR CASH MANAGEMENT PURPOSES 6.3% |
|
PIMCO Short-Term Floating NAV Portfolio |
|
|
|
|
3,181,441 |
|
|
|
|
|
31,834 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Short-Term Instruments (Cost $31,832) |
|
|
31,834 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments in Affiliates (Cost $31,832) |
|
|
31,834 |
|
|
|
Total Investments 100.1% (Cost $381,265) |
|
|
$ |
|
|
509,367 |
|
|
|
Securities Sold Short (b) (0.8%)
(Proceeds $3,736) |
|
|
(4,122 |
) |
|
|
Financial Derivative Instruments (d) 0.3%
(Cost or Premiums, net $0) |
|
|
1,530 |
|
|
|
Other Assets and Liabilities, net 0.4% |
|
|
2,245 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Assets 100.0% |
|
|
$ |
|
|
509,020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO CONSOLIDATED SCHEDULE OF INVESTMENTS (AMOUNTS IN THOUSANDS*, EXCEPT NUMBER OF
CONTRACTS AND SHARES):
* |
A zero balance may reflect actual amounts rounding to less than one thousand. |
(a) |
Security did not produce income within the last twelve months. |
BORROWINGS AND OTHER FINANCING TRANSACTIONS
(b) SECURITIES SOLD SHORT:
(c) |
Securities with an aggregate market value of $6,780 and cash of $3,724 have been pledged as collateral as of June 30, 2014 for equity short sales
and equity options as governed by prime brokerage agreements and agreements governing listed equity option transactions. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Counterparty |
|
Description |
|
Shares |
|
|
Proceeds |
|
|
Payable for Short Sales |
|
|
|
Common Stocks |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health Care |
|
|
|
|
|
|
|
|
|
|
|
|
GSC |
|
Valeant Pharmaceuticals International, Inc. |
|
|
7,747 |
|
|
$ |
(982 |
) |
|
$ |
(977 |
) |
|
|
Information Technology |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Applied Materials, Inc. |
|
|
139,487 |
|
|
|
(2,754 |
) |
|
|
(3,145 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Short Sales |
|
|
|
|
|
$ |
(3,736 |
) |
|
$ |
(4,122 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 |
|
PIMCO EQUITY SERIES VIT |
|
|
|
|
See Accompanying Notes |
|
June 30, 2014 (Unaudited)
BORROWINGS AND OTHER FINANCING
TRANSACTIONS SUMMARY
The following is a summary by
counterparty of the market value of Borrowings and Other Financing Transactions and collateral (received)/pledged as of June 30, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Counterparty |
|
Repurchase Agreement Proceeds to be Received |
|
|
Payable for Reverse Repurchase Agreements |
|
|
Payable for Sale-Buyback Transactions |
|
|
Payable for Short Sales |
|
|
Total Borrowings and Other Financing Transactions |
|
|
Collateral (Received)/Pledged |
|
|
Net Exposure
(1) |
|
Prime Brokerage Agreement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GSC |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
(4,122 |
) |
|
$ |
(4,122 |
) |
|
$ |
9,354 |
|
|
$ |
5,232 |
|
MSC |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1,150 |
|
|
|
1,150 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Borrowings and Other Financing Transactions |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
(4,122 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Net Exposure represents the net receivable/(payable) that would be due from/to the counterparty in the event of default. Exposure from
borrowings and other financing transactions can only be netted across transactions governed under the same master agreement with the same legal entity. The Portfolio and Subsidiary are recognized as two separate legal entities. As such, exposure
cannot be netted. See Note 7, Principal Risks, in the Notes to Financial Statements for more information regarding master netting arrangements. |
(d) FINANCIAL DERIVATIVE INSTRUMENTS: OVER THE
COUNTER
FORWARD FOREIGN CURRENCY CONTRACTS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Counterparty |
|
Settlement Month |
|
|
Currency to be Delivered |
|
|
Currency to be Received |
|
|
Unrealized Appreciation/ (Depreciation) |
|
|
|
|
|
Asset |
|
|
Liability |
|
BOA |
|
|
07/2014 |
|
|
|
DKK |
|
|
|
36,522 |
|
|
$ |
|
|
|
|
6,654 |
|
|
$ |
0 |
|
|
$ |
(54 |
) |
|
|
|
07/2014 |
|
|
$ |
|
|
|
|
27,234 |
|
|
|
GBP |
|
|
|
16,044 |
|
|
|
224 |
|
|
|
0 |
|
|
|
|
08/2014 |
|
|
|
GBP |
|
|
|
16,044 |
|
|
$ |
|
|
|
|
27,227 |
|
|
|
0 |
|
|
|
(224 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BPS |
|
|
07/2014 |
|
|
|
AUD |
|
|
|
1,691 |
|
|
|
|
|
|
|
1,562 |
|
|
|
0 |
|
|
|
(32 |
) |
|
|
|
07/2014 |
|
|
|
CHF |
|
|
|
559 |
|
|
|
|
|
|
|
624 |
|
|
|
0 |
|
|
|
(6 |
) |
|
|
|
07/2014 |
|
|
|
EUR |
|
|
|
2,315 |
|
|
|
|
|
|
|
3,158 |
|
|
|
0 |
|
|
|
(12 |
) |
|
|
|
07/2014 |
|
|
|
GBP |
|
|
|
16,044 |
|
|
|
|
|
|
|
27,016 |
|
|
|
0 |
|
|
|
(442 |
) |
|
|
|
07/2014 |
|
|
|
NOK |
|
|
|
256,838 |
|
|
|
|
|
|
|
43,075 |
|
|
|
1,202 |
|
|
|
0 |
|
|
|
|
07/2014 |
|
|
$ |
|
|
|
|
1,035 |
|
|
|
NOK |
|
|
|
6,250 |
|
|
|
1 |
|
|
|
(17 |
) |
|
|
|
08/2014 |
|
|
|
|
|
|
|
624 |
|
|
|
CHF |
|
|
|
559 |
|
|
|
6 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BRC |
|
|
07/2014 |
|
|
|
KRW |
|
|
|
1,628,784 |
|
|
$ |
|
|
|
|
1,499 |
|
|
|
0 |
|
|
|
(110 |
) |
|
|
|
07/2014 |
|
|
$ |
|
|
|
|
2,169 |
|
|
|
JPY |
|
|
|
222,200 |
|
|
|
25 |
|
|
|
0 |
|
|
|
|
08/2014 |
|
|
|
NOK |
|
|
|
91,731 |
|
|
$ |
|
|
|
|
14,932 |
|
|
|
0 |
|
|
|
(4 |
) |
|
|
|
09/2014 |
|
|
|
SGD |
|
|
|
9,670 |
|
|
|
|
|
|
|
7,684 |
|
|
|
0 |
|
|
|
(71 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CBK |
|
|
07/2014 |
|
|
$ |
|
|
|
|
624 |
|
|
|
CHF |
|
|
|
559 |
|
|
|
6 |
|
|
|
0 |
|
|
|
|
07/2014 |
|
|
|
|
|
|
|
6,685 |
|
|
|
DKK |
|
|
|
36,522 |
|
|
|
22 |
|
|
|
0 |
|
|
|
|
07/2014 |
|
|
|
|
|
|
|
517 |
|
|
|
EUR |
|
|
|
382 |
|
|
|
6 |
|
|
|
0 |
|
|
|
|
08/2014 |
|
|
|
DKK |
|
|
|
36,522 |
|
|
$ |
|
|
|
|
6,687 |
|
|
|
0 |
|
|
|
(22 |
) |
|
|
|
08/2014 |
|
|
|
GBP |
|
|
|
374 |
|
|
|
|
|
|
|
637 |
|
|
|
0 |
|
|
|
(3 |
) |
|
|
|
08/2014 |
|
|
|
NOK |
|
|
|
91,731 |
|
|
|
|
|
|
|
14,941 |
|
|
|
5 |
|
|
|
0 |
|
|
|
|
08/2014 |
|
|
|
SEK |
|
|
|
16,332 |
|
|
|
|
|
|
|
2,428 |
|
|
|
0 |
|
|
|
(15 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DUB |
|
|
07/2014 |
|
|
$ |
|
|
|
|
20,753 |
|
|
|
CAD |
|
|
|
22,608 |
|
|
|
434 |
|
|
|
0 |
|
|
|
|
07/2014 |
|
|
|
|
|
|
|
24,632 |
|
|
|
EUR |
|
|
|
18,123 |
|
|
|
185 |
|
|
|
0 |
|
|
|
|
08/2014 |
|
|
|
EUR |
|
|
|
17,599 |
|
|
$ |
|
|
|
|
23,922 |
|
|
|
0 |
|
|
|
(180 |
) |
|
|
|
09/2014 |
|
|
$ |
|
|
|
|
961 |
|
|
|
ILS |
|
|
|
3,340 |
|
|
|
13 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FBF |
|
|
07/2014 |
|
|
|
|
|
|
|
526 |
|
|
|
EUR |
|
|
|
386 |
|
|
|
3 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GLM |
|
|
07/2014 |
|
|
|
EUR |
|
|
|
18,584 |
|
|
$ |
|
|
|
|
25,452 |
|
|
|
5 |
|
|
|
0 |
|
|
|
|
07/2014 |
|
|
$ |
|
|
|
|
854 |
|
|
|
EUR |
|
|
|
626 |
|
|
|
3 |
|
|
|
0 |
|
|
|
|
07/2014 |
|
|
|
|
|
|
|
892 |
|
|
|
JPY |
|
|
|
90,900 |
|
|
|
5 |
|
|
|
0 |
|
|
|
|
09/2014 |
|
|
|
SGD |
|
|
|
1,138 |
|
|
$ |
|
|
|
|
910 |
|
|
|
0 |
|
|
|
(3 |
) |
|
|
|
10/2014 |
|
|
$ |
|
|
|
|
2,083 |
|
|
|
ZAR |
|
|
|
22,887 |
|
|
|
31 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
JPM |
|
|
07/2014 |
|
|
|
JPY |
|
|
|
2,360,409 |
|
|
$ |
|
|
|
|
23,242 |
|
|
|
0 |
|
|
|
(58 |
) |
|
|
|
07/2014 |
|
|
|
NOK |
|
|
|
24,610 |
|
|
|
|
|
|
|
4,099 |
|
|
|
87 |
|
|
|
0 |
|
|
|
|
07/2014 |
|
|
$ |
|
|
|
|
1,870 |
|
|
|
EUR |
|
|
|
1,382 |
|
|
|
22 |
|
|
|
0 |
|
|
|
|
07/2014 |
|
|
|
|
|
|
|
18,895 |
|
|
|
JPY |
|
|
|
1,924,604 |
|
|
|
103 |
|
|
|
0 |
|
|
|
|
08/2014 |
|
|
|
|
|
|
|
23,247 |
|
|
|
|
|
|
|
2,360,409 |
|
|
|
59 |
|
|
|
0 |
|
|
|
|
10/2014 |
|
|
|
ZAR |
|
|
|
22,925 |
|
|
$ |
|
|
|
|
2,089 |
|
|
|
0 |
|
|
|
(29 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MSC |
|
|
07/2014 |
|
|
|
CAD |
|
|
|
22,608 |
|
|
|
|
|
|
|
21,143 |
|
|
|
0 |
|
|
|
(45 |
) |
|
|
|
07/2014 |
|
|
|
HKD |
|
|
|
8,619 |
|
|
|
|
|
|
|
1,112 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
07/2014 |
|
|
|
SEK |
|
|
|
16,332 |
|
|
|
|
|
|
|
2,457 |
|
|
|
13 |
|
|
|
0 |
|
|
|
|
07/2014 |
|
|
$ |
|
|
|
|
1,203 |
|
|
|
JPY |
|
|
|
122,705 |
|
|
|
8 |
|
|
|
0 |
|
|
|
|
08/2014 |
|
|
|
|
|
|
|
21,124 |
|
|
|
CAD |
|
|
|
22,608 |
|
|
|
46 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RBC |
|
|
07/2014 |
|
|
|
AUD |
|
|
|
2,180 |
|
|
$ |
|
|
|
|
2,006 |
|
|
|
0 |
|
|
|
(50 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Accompanying Notes |
|
SEMIANNUAL REPORT |
|
JUNE 30, 2014 |
|
13 |
Consolidated Schedule of Investments PIMCO
EqS Pathfinder Portfolio® (Cont.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Counterparty |
|
Settlement Month |
|
|
Currency to be Delivered |
|
|
Currency to be Received |
|
|
Unrealized Appreciation/ (Depreciation) |
|
|
|
|
|
Asset |
|
|
Liability |
|
SOG |
|
|
07/2014 |
|
|
|
AUD |
|
|
|
13,037 |
|
|
$ |
|
|
|
|
12,292 |
|
|
$ |
0 |
|
|
$ |
(2 |
) |
|
|
|
07/2014 |
|
|
$ |
|
|
|
|
15,614 |
|
|
|
AUD |
|
|
|
16,908 |
|
|
|
330 |
|
|
|
0 |
|
|
|
|
08/2014 |
|
|
|
|
|
|
|
12,262 |
|
|
|
|
|
|
|
13,037 |
|
|
|
2 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UAG |
|
|
07/2014 |
|
|
|
HKD |
|
|
|
100,249 |
|
|
$ |
|
|
|
|
12,916 |
|
|
|
0 |
|
|
|
(15 |
) |
|
|
|
08/2014 |
|
|
|
NOK |
|
|
|
91,731 |
|
|
|
|
|
|
|
14,939 |
|
|
|
2 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Forward Foreign Currency Contracts |
|
|
|
|
|
|
|
|
|
|
$ |
2,848 |
|
|
$ |
(1,394 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WRITTEN OPTIONS:
AS OF JUNE 30, 2014 THERE WERE NO OPEN
WRITTEN OPTIONS. TRANSACTIONS IN WRITTEN CALL AND PUT OPTIONS FOR THE PERIOD ENDED JUNE 30, 2014:
|
|
|
|
|
|
|
|
|
|
|
# of Contracts |
|
|
Premiums |
|
Balance at Beginning of Period |
|
|
0 |
|
|
$ |
0 |
|
Sales |
|
|
2,182 |
|
|
|
(284 |
) |
Closing Buys |
|
|
(2,182 |
) |
|
|
284 |
|
Expirations |
|
|
0 |
|
|
|
0 |
|
Exercised |
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
Balance at End of Period |
|
|
0 |
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
SWAP AGREEMENTS:
TOTAL RETURN SWAPS ON SECURITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Counterparty |
|
Pay/Receive (1) |
|
Underlying Reference |
|
# of Shares |
|
|
Financing Rate |
|
Maturity Date |
|
|
Notional Amount |
|
|
Unrealized Appreciation/ (Depreciation) |
|
|
Swap Agreements, at Value |
|
|
|
|
|
|
|
|
|
Asset |
|
|
Liability |
|
BOA |
|
Pay |
|
Rentech Nitrogen Partners LP |
|
|
9,630 |
|
|
1-Month USD-LIBOR less a specified spread |
|
|
08/15/2014 |
|
|
|
$ |
|
|
|
154 |
|
|
$ |
(9 |
) |
|
$ |
0 |
|
|
$ |
(9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CBK |
|
Pay |
|
Liberty Global PLC A |
|
|
12,451 |
|
|
1-Month EUR-EURIBOR less a specified spread |
|
|
02/09/2015 |
|
|
|
EUR |
|
|
|
392 |
|
|
|
(14 |
) |
|
|
0 |
|
|
|
(14 |
) |
|
|
Pay |
|
Liberty Global PLC C |
|
|
30,718 |
|
|
1-Month EUR-EURIBOR less a specified spread |
|
|
02/09/2015 |
|
|
|
|
|
|
|
938 |
|
|
|
(14 |
) |
|
|
0 |
|
|
|
(14 |
) |
|
|
Receive |
|
Ziggo NV |
|
|
54,559 |
|
|
1-Month EUR-EURIBOR plus a specified spread |
|
|
02/09/2015 |
|
|
|
|
|
|
|
1,827 |
|
|
|
20 |
|
|
|
20 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GST |
|
Receive |
|
AstraZeneca PLC |
|
|
40,323 |
|
|
1-Month USD-LIBOR plus a specified spread |
|
|
04/30/2015 |
|
|
|
GBP |
|
|
|
1,757 |
|
|
|
(8 |
) |
|
|
0 |
|
|
|
(8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
JPM |
|
Pay |
|
Expedia, Inc. |
|
|
20,742 |
|
|
1-Month USD-LIBOR less a specified spread |
|
|
04/29/2015 |
|
|
|
$ |
|
|
|
1,551 |
|
|
|
(83 |
) |
|
|
0 |
|
|
|
(83 |
) |
|
|
Receive |
|
Liberty Ventures A |
|
|
68,076 |
|
|
1-Month USD-LIBOR plus a specified spread |
|
|
04/29/2015 |
|
|
|
|
|
|
|
4,703 |
|
|
|
321 |
|
|
|
321 |
|
|
|
0 |
|
|
|
Pay |
|
TripAdvisor, Inc. |
|
|
27,843 |
|
|
1-Month USD-LIBOR less a specified spread |
|
|
04/29/2015 |
|
|
|
|
|
|
|
2,896 |
|
|
|
(130 |
) |
|
|
0 |
|
|
|
(130 |
) |
|
|
Receive |
|
Covidien PLC |
|
|
29,396 |
|
|
1-Month USD-LIBOR plus a specified spread |
|
|
06/16/2015 |
|
|
|
|
|
|
|
2,548 |
|
|
|
102 |
|
|
|
102 |
|
|
|
0 |
|
|
|
Pay |
|
Medtronic, Inc. |
|
|
28,103 |
|
|
1-Month USD-LIBOR less a specified spread |
|
|
06/16/2015 |
|
|
|
|
|
|
|
1,683 |
|
|
|
(109 |
) |
|
|
0 |
|
|
|
(109 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
76 |
|
|
$ |
443 |
|
|
$ |
(367 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Swap Agreements |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
76 |
|
|
$ |
443 |
|
|
$ |
(367 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Receive represents that the Portfolio receives payments for any positive return on the underlying reference. The Portfolio makes payments
for any negative return on such underlying reference. Pay represents that the Portfolio receives payments for any negative return on the underlying reference. The Portfolio makes payments for any positive return on such underlying reference.
|
|
|
|
|
|
|
|
|
|
14 |
|
PIMCO EQUITY SERIES VIT |
|
|
|
|
See Accompanying Notes |
|
June
30, 2014 (Unaudited)
FINANCIAL DERIVATIVE INSTRUMENTS: OVER THE COUNTER SUMMARY
The following is a summary by counterparty of the market value of OTC
financial derivative instruments and collateral (received) as of June 30, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Derivative Assets |
|
|
|
|
Financial Derivative Liabilities |
|
|
|
|
|
|
|
|
|
|
Counterparty |
|
Forward Foreign Currency Contracts |
|
|
Purchased Options |
|
|
Swap Agreements |
|
|
Total Over the Counter |
|
|
|
|
Forward Foreign Currency Contracts |
|
|
Written Options |
|
|
Swap Agreements |
|
|
Total Over the Counter |
|
|
Net Market Value of OTC Derivatives |
|
|
Collateral (Received) |
|
|
Net Exposure
(2) |
|
BOA |
|
$ |
224 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
224 |
|
|
|
|
$ |
(278 |
) |
|
$ |
0 |
|
|
$ |
(9 |
) |
|
$ |
(287 |
) |
|
$ |
(63 |
) |
|
$ |
0 |
|
|
$ |
(63 |
) |
BPS |
|
|
1,209 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1,209 |
|
|
|
|
|
(509 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
(509 |
) |
|
|
700 |
|
|
|
(810 |
) |
|
|
(110 |
) |
BRC |
|
|
25 |
|
|
|
0 |
|
|
|
0 |
|
|
|
25 |
|
|
|
|
|
(185 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
(185 |
) |
|
|
(160 |
) |
|
|
0 |
|
|
|
(160 |
) |
CBK |
|
|
39 |
|
|
|
0 |
|
|
|
20 |
|
|
|
59 |
|
|
|
|
|
(40 |
) |
|
|
0 |
|
|
|
(28 |
) |
|
|
(68 |
) |
|
|
(9 |
) |
|
|
0 |
|
|
|
(9 |
) |
DUB |
|
|
632 |
|
|
|
0 |
|
|
|
0 |
|
|
|
632 |
|
|
|
|
|
(180 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
(180 |
) |
|
|
452 |
|
|
|
(310 |
) |
|
|
142 |
|
FBF |
|
|
3 |
|
|
|
0 |
|
|
|
0 |
|
|
|
3 |
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
3 |
|
|
|
0 |
|
|
|
3 |
|
GLM |
|
|
44 |
|
|
|
0 |
|
|
|
0 |
|
|
|
44 |
|
|
|
|
|
(3 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
(3 |
) |
|
|
41 |
|
|
|
(270 |
) |
|
|
(229 |
) |
GST |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
0 |
|
|
|
0 |
|
|
|
(8 |
) |
|
|
(8 |
) |
|
|
(8 |
) |
|
|
0 |
|
|
|
(8 |
) |
JPM |
|
|
271 |
|
|
|
0 |
|
|
|
423 |
|
|
|
694 |
|
|
|
|
|
(87 |
) |
|
|
0 |
|
|
|
(322 |
) |
|
|
(409 |
) |
|
|
285 |
|
|
|
0 |
|
|
|
285 |
|
MSC |
|
|
67 |
|
|
|
0 |
|
|
|
0 |
|
|
|
67 |
|
|
|
|
|
(45 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
(45 |
) |
|
|
22 |
|
|
|
0 |
|
|
|
22 |
|
RBC |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
(50 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
(50 |
) |
|
|
(50 |
) |
|
|
0 |
|
|
|
(50 |
) |
SOG |
|
|
332 |
|
|
|
0 |
|
|
|
0 |
|
|
|
332 |
|
|
|
|
|
(2 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
(2 |
) |
|
|
330 |
|
|
|
(300 |
) |
|
|
30 |
|
UAG |
|
|
2 |
|
|
|
0 |
|
|
|
0 |
|
|
|
2 |
|
|
|
|
|
(15 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
(15 |
) |
|
|
(13 |
) |
|
|
0 |
|
|
|
(13 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Over the Counter |
|
$ |
2,848 |
|
|
$ |
0 |
|
|
$ |
443 |
|
|
$ |
3,291 |
|
|
|
|
$ |
(1,394 |
) |
|
$ |
0 |
|
|
$ |
(367 |
) |
|
$ |
(1,761 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) |
Net Exposure represents the net receivable/(payable) that would be due from/to the counterparty in the event of default . Exposure from
OTC derivatives can only be netted across transactions governed under the same master agreement with the same legal entity. The Portfolio and Subsidiary are recognized as two separate legal entities. As such, exposure cannot be netted. See note 7,
Principal Risks, in the Notes to Financial Statements for more information regarding master netting agreements. |
FAIR VALUE OF FINANCIAL DERIVATIVE INSTRUMENTS
The following is a summary of the fair valuation of the Portfolios
derivative instruments categorized by risk exposure. See Note 7, Principal Risks, in the Notes to Financial Statements on risks of the Portfolio.
Fair Values of Financial Derivative Instruments on the Consolidated Statement of Assets and Liabilities as of June 30, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives not accounted for as hedging instruments |
|
|
|
Commodity Contracts |
|
|
Credit Contracts |
|
|
Equity Contracts |
|
|
Foreign Exchange Contracts |
|
|
Interest Rate Contracts |
|
|
Total |
|
Financial Derivative Instruments - Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over the counter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward Foreign Currency Contracts |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
2,848 |
|
|
$ |
0 |
|
|
$ |
2,848 |
|
Swap Agreements |
|
|
0 |
|
|
|
0 |
|
|
|
443 |
|
|
|
0 |
|
|
|
0 |
|
|
|
443 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
443 |
|
|
$ |
2,848 |
|
|
$ |
0 |
|
|
$ |
3,291 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Derivative Instruments - Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over the counter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward Foreign Currency Contracts |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
1,394 |
|
|
$ |
0 |
|
|
$ |
1,394 |
|
Swap Agreements |
|
|
0 |
|
|
|
0 |
|
|
|
367 |
|
|
|
0 |
|
|
|
0 |
|
|
|
367 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
367 |
|
|
$ |
1,394 |
|
|
$ |
0 |
|
|
$ |
1,761 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Effect of Financial Derivative
Instruments on the Consolidated Statement of Operations for the Period Ended June 30, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives not accounted for as hedging instruments |
|
|
|
Commodity Contracts |
|
|
Credit Contracts |
|
|
Equity Contracts |
|
|
Foreign Exchange Contracts |
|
|
Interest Rate Contracts |
|
|
Total |
|
Net Realized Gain (Loss) on Financial Derivative Instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange-traded or centrally cleared |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Written Options |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
176 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
176 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over the counter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward Foreign Currency Contracts |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
(3,894 |
) |
|
$ |
0 |
|
|
$ |
(3,894 |
) |
Swap Agreements |
|
|
0 |
|
|
|
0 |
|
|
|
367 |
|
|
|
0 |
|
|
|
0 |
|
|
|
367 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
367 |
|
|
$ |
(3,894 |
) |
|
$ |
0 |
|
|
$ |
(3,527 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
543 |
|
|
$ |
(3,894 |
) |
|
$ |
0 |
|
|
$ |
(3,351 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Change in Unrealized Appreciation (Depreciation) on Financial Derivative
Instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over the counter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward Foreign Currency Contracts |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
4,240 |
|
|
$ |
0 |
|
|
$ |
4,240 |
|
Swap Agreements |
|
|
0 |
|
|
|
0 |
|
|
|
(397 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
(397 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
(397 |
) |
|
$ |
4,240 |
|
|
$ |
0 |
|
|
$ |
3,843 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Accompanying Notes |
|
SEMIANNUAL REPORT |
|
JUNE 30, 2014 |
|
15 |
Consolidated Schedule of Investments PIMCO
EqS Pathfinder Portfolio® (Cont.)
June 30, 2014 (Unaudited)
FAIR VALUE MEASUREMENTS
The following is a summary of the fair valuations according to the inputs used as of June 30, 2014 in valuing the Portfolios assets and
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Category and Subcategory |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Fair Value at 06/30/2014 |
|
Investments in Securities, at Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stocks |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Australia |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrials |
|
$ |
3,782 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
3,782 |
|
Belgium |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrials |
|
|
11,896 |
|
|
|
0 |
|
|
|
0 |
|
|
|
11,896 |
|
Bermuda |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy |
|
|
12,776 |
|
|
|
11,813 |
|
|
|
0 |
|
|
|
24,589 |
|
Canada |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy |
|
|
3,530 |
|
|
|
0 |
|
|
|
0 |
|
|
|
3,530 |
|
Denmark |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Staples |
|
|
0 |
|
|
|
9,758 |
|
|
|
0 |
|
|
|
9,758 |
|
Faroe Islands |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Staples |
|
|
0 |
|
|
|
3,410 |
|
|
|
0 |
|
|
|
3,410 |
|
France |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Discretionary |
|
|
0 |
|
|
|
12,923 |
|
|
|
0 |
|
|
|
12,923 |
|
Consumer Staples |
|
|
0 |
|
|
|
23,898 |
|
|
|
0 |
|
|
|
23,898 |
|
Energy |
|
|
0 |
|
|
|
3,806 |
|
|
|
0 |
|
|
|
3,806 |
|
Germany |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health Care |
|
|
0 |
|
|
|
10,967 |
|
|
|
0 |
|
|
|
10,967 |
|
Hong Kong |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Discretionary |
|
|
3,312 |
|
|
|
0 |
|
|
|
0 |
|
|
|
3,312 |
|
Financials |
|
|
0 |
|
|
|
16,734 |
|
|
|
0 |
|
|
|
16,734 |
|
Industrials |
|
|
0 |
|
|
|
2,718 |
|
|
|
0 |
|
|
|
2,718 |
|
Japan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Discretionary |
|
|
0 |
|
|
|
2,634 |
|
|
|
0 |
|
|
|
2,634 |
|
Consumer Staples |
|
|
0 |
|
|
|
5,832 |
|
|
|
0 |
|
|
|
5,832 |
|
Industrials |
|
|
0 |
|
|
|
2,913 |
|
|
|
0 |
|
|
|
2,913 |
|
Information Technology |
|
|
2,934 |
|
|
|
4,337 |
|
|
|
0 |
|
|
|
7,271 |
|
Netherlands |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Staples |
|
|
0 |
|
|
|
8,666 |
|
|
|
0 |
|
|
|
8,666 |
|
Financials |
|
|
0 |
|
|
|
10,578 |
|
|
|
0 |
|
|
|
10,578 |
|
Information Technology |
|
|
4,001 |
|
|
|
0 |
|
|
|
0 |
|
|
|
4,001 |
|
Norway |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Staples |
|
|
4,837 |
|
|
|
16,825 |
|
|
|
0 |
|
|
|
21,662 |
|
Energy |
|
|
0 |
|
|
|
8,109 |
|
|
|
0 |
|
|
|
8,109 |
|
Singapore |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrials |
|
|
0 |
|
|
|
11,640 |
|
|
|
0 |
|
|
|
11,640 |
|
South Korea |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Discretionary |
|
|
0 |
|
|
|
1,666 |
|
|
|
0 |
|
|
|
1,666 |
|
Sweden |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrials |
|
|
0 |
|
|
|
9,594 |
|
|
|
0 |
|
|
|
9,594 |
|
Switzerland |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financials |
|
|
0 |
|
|
|
4,620 |
|
|
|
0 |
|
|
|
4,620 |
|
Health Care |
|
|
0 |
|
|
|
7,344 |
|
|
|
0 |
|
|
|
7,344 |
|
Information Technology |
|
|
0 |
|
|
|
6,336 |
|
|
|
0 |
|
|
|
6,336 |
|
United Kingdom |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Staples |
|
|
0 |
|
|
|
47,684 |
|
|
|
0 |
|
|
|
47,684 |
|
Energy |
|
|
4,294 |
|
|
|
9,424 |
|
|
|
0 |
|
|
|
13,718 |
|
Financials |
|
|
7,810 |
|
|
|
8,072 |
|
|
|
0 |
|
|
|
15,882 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Category and Subcategory |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Fair Value at 06/30/2014 |
|
United States |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Discretionary |
|
$
|
2,582 |
|
|
$
|
0 |
|
|
$
|
0 |
|
|
$
|
2,582 |
|
Consumer Staples |
|
|
38,204 |
|
|
|
0 |
|
|
|
0 |
|
|
|
38,204 |
|
Energy |
|
|
11,601 |
|
|
|
0 |
|
|
|
0 |
|
|
|
11,601 |
|
Financials |
|
|
43,709 |
|
|
|
0 |
|
|
|
0 |
|
|
|
43,709 |
|
Health Care |
|
|
11,221 |
|
|
|
0 |
|
|
|
0 |
|
|
|
11,221 |
|
Industrials |
|
|
17,646 |
|
|
|
0 |
|
|
|
0 |
|
|
|
17,646 |
|
Information Technology |
|
|
24,732 |
|
|
|
0 |
|
|
|
0 |
|
|
|
24,732 |
|
Materials |
|
|
1,335 |
|
|
|
0 |
|
|
|
0 |
|
|
|
1,335 |
|
Real Estate Investment Trusts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Singapore |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financials |
|
|
0 |
|
|
|
129 |
|
|
|
0 |
|
|
|
129 |
|
United States |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financials |
|
|
4,339 |
|
|
|
0 |
|
|
|
0 |
|
|
|
4,339 |
|
Rights |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
France |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health Care |
|
|
562 |
|
|
|
0 |
|
|
|
0 |
|
|
|
562 |
|
|
|
$ |
215,103 |
|
|
$ |
262,430 |
|
|
$ |
0 |
|
|
$ |
477,533 |
|
|
|
|
|
|
Investments in Affiliates, at Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-Term Instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Central Funds Used for Cash Management Purposes |
|
$ |
31,834 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
31,834 |
|
|
|
|
|
|
Total Investments |
|
$ |
246,937 |
|
|
$ |
262,430 |
|
|
$ |
0 |
|
|
$ |
509,367 |
|
|
Short Sales, at Value - Liabilities |
|
Common Stocks |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health Care |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Valeant Pharmaceuticals International, Inc. |
|
|
(977 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
(977 |
) |
Information Technology |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Applied Materials, Inc. |
|
|
(3,145 |
) |
|
|
0 |
|
|
|
0 |
|
|
|
(3,145 |
) |
|
|
$ |
(4,122 |
) |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
(4,122 |
) |
|
Financial Derivative Instruments - Assets |
|
Over the counter |
|
$ |
0 |
|
|
$ |
3,291 |
|
|
$ |
0 |
|
|
$ |
3,291 |
|
|
Financial Derivative Instruments - Liabilities |
|
Over the counter |
|
$ |
0 |
|
|
$ |
(1,761 |
) |
|
$ |
0 |
|
|
$ |
(1,761 |
) |
|
|
|
|
|
Totals |
|
$ |
242,815 |
|
|
$ |
263,960 |
|
|
$ |
0 |
|
|
$ |
506,775 |
|
There were assets and
liabilities valued at $23,018 transferred from Level 2 to Level 1 during the period ended June 30, 2014. There were assets and liabilities valued at $27,078 transferred from Level 1 to Level 2 during the period ended June 30, 2014. There
were no significant transfers between Level 2 and 3 during the period ended June 30, 2014.
|
|
|
|
|
|
|
|
|
16 |
|
PIMCO EQUITY SERIES VIT |
|
|
|
|
See Accompanying Notes |
|
Notes to Financial Statements
June 30, 2014 (Unaudited)
1. ORGANIZATION
The PIMCO EqS Pathfinder Portfolio® (the Portfolio) is a series of the PIMCO Equity Series VIT (the Trust). The Trust is registered under
the Investment Company Act of 1940, as amended (the Act), as an open-end management investment company organized as a Delaware statutory trust on December 28, 2009. The Portfolio currently offers two classes of shares: Institutional
and Advisor. Information presented on these financial statements pertains to the Institutional Class of the Portfolio. Certain detailed financial information for the Advisor Class is provided separately and is available upon request. The Trust is
designed to be used as an investment vehicle by separate accounts of insurance companies that fund variable annuity contracts and variable life insurance policies and by qualified pension and retirement plans. Pacific Investment Management Company
LLC (PIMCO) serves as the investment adviser for the Portfolio.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Portfolio in the preparation of its financial statements in conformity with accounting principles
generally accepted in the United States of America (U.S. GAAP). The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from
those estimates.
(a) Securities Transactions and Investment Income Securities transactions are recorded as of the trade date
for financial reporting purposes. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled 15 days or more after the trade date. Realized gains and losses from securities sold are recorded on the identified cost basis.
Dividend income is recorded on the ex-dividend date, except certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Portfolio is informed of the ex-dividend date. Interest income,
adjusted for the accretion of discounts and amortization of premiums, is recorded on the accrual basis from settlement date. For convertible securities, premiums attributable to the conversion feature are not amortized. Estimated tax liabilities on
certain foreign securities are recorded on an accrual basis and are reflected as components of interest income or net change in unrealized gain/loss on investments on the Consolidated Statement of Operations, as appropriate. Tax liabilities realized
as a result of such security sales are reflected as a component of net realized gain/loss on investments on the Consolidated Statement of Operations. Paydown gains and losses on
mortgage related and other asset-backed securities are recorded as components of interest income on the Consolidated Statement of Operations. Income or short-term capital gain distributions
received from underlying funds are recorded as dividend income. Long-term capital gain distributions received from underlying funds are recorded as realized gains.
Dividends received from real estate investment trust securities
may include a return of capital invested. Such distributions reduce the cost basis of the respective securities. Return of capital distributions, if any, in excess of the cost basis of the security are recognized as capital gain.
(b) Cash and Foreign Currency The functional and reporting currency for the Portfolio is the U.S. dollar. The
market values of foreign securities, currency holdings and other assets and liabilities are translated into U.S. dollars based on the current exchange rates each business day. Purchases and sales of securities and income and expense items
denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. The Portfolio does not separately report the effects of changes in foreign exchange rates from changes in market prices on
securities held. Such changes are included in net realized and net changes in unrealized gain or loss from investments on the Consolidated Statement of Operations. The Portfolio may invest in foreign currency-denominated securities 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 a forward foreign currency contract (see financial derivative instruments). Realized foreign exchange gains or
losses arising from sales of spot foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the recorded amounts of dividends, interest, and foreign withholding
taxes and the U.S. dollar equivalent of the amounts actually received or paid are included in net realized gain or loss on foreign currency transactions on the Consolidated Statement of Operations. Net unrealized foreign exchange gains and losses
arising from changes in foreign exchange rates on foreign denominated assets and liabilities other than investments in securities held at the end of the reporting period are included in net change in unrealized appreciation or depreciation on
foreign currency assets and liabilities on the Consolidated Statement of Operations.
(c) Multiclass Operations Each class
offered by the Portfolio has equal rights as to assets and voting privileges (except that shareholders of a class have exclusive voting rights regarding any matter relating solely to that class of shares). Income and non-class specific expenses are
allocated daily to each class on the basis of relative net assets. Realized and unrealized capital gains and losses are allocated daily based on the relative net assets of each class of the Portfolio. Class specific
|
|
|
|
|
|
|
|
|
SEMIANNUAL REPORT |
|
JUNE 30, 2014 |
|
17 |
Notes to Financial Statements (Cont.)
expenses, where applicable, currently include supervisory and administrative and distribution and servicing fees.
(d) Dividends and Distributions to Shareholders Dividends from net investment income, if any, are declared
and distributed to shareholders annually. Net realized capital gains earned by the Portfolio, if any, will be distributed no less frequently than once each year.
Income dividends and capital gain distributions are determined
in accordance with income tax regulations which may differ from U.S. GAAP. Differences between tax regulations and U.S. GAAP may cause timing differences between income and capital gain recognition. Examples of events that give rise to timing
differences include wash sales, and capital loss carryforwards. Further, the character of investment income and capital gains may be different for certain transactions under the two methods of accounting. Examples of characterization differences
include the treatment of swaps, foreign currency transactions and investments in passive foreign investment companies. As a result, income dividends and capital gain distributions declared during a fiscal period may differ significantly from the net
investment income (loss) and realized gains (losses) reported on the Portfolios annual financial statements presented under U.S. GAAP.
Distributions classified as a tax basis return of capital, if any, are reflected on the accompanying Consolidated Statements of Changes in
Net Assets and have been recorded to paid in capital. In addition, other amounts have been reclassified between undistributed net investment income, accumulated undistributed net realized gains or losses and/or paid in capital to more appropriately
conform financial accounting to tax characterizations of dividend distributions.
(e) New Accounting Pronouncements In
June 2013, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) providing updated guidance for assessing whether an entity is an investment company and for the measurement of
noncontrolling ownership interests in other investment companies. This update is effective prospectively during interim or annual periods beginning on or after December 15, 2013. The Portfolio has adopted the ASU for the fiscal year ended December
31, 2013 as it follows the investment company reporting requirements under U.S. GAAP and did not have an impact on the Portfolios financial statements.
In June 2014, the FASB issued an ASU that expands secured borrowing accounting for certain repurchase agreements. The ASU also sets
forth additional disclosure requirements for certain transactions accounted for as sales, in order to provide financial statement users with information to compare to similar transactions accounted for as secured borrowings. The ASU is effective
prospectively during interim or annual periods beginning after December 15, 2014. At this time,
management is evaluating the implications of these changes on the financial statements.
3. INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS
(a) Investment Valuation Policies The Net Asset Value (NAV) of the Portfolios shares is valued as of the close of regular trading (normally 4:00 p.m., Eastern time) (the NYSE Close)
on each day that the New York Stock Exchange (NYSE) is open (each a Business Day). 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.
For purposes of calculating the NAV, portfolio securities and other financial derivative instruments are valued on each Business Day using valuation methods as adopted by the Board of
Trustees (the Board) of the Trust. The Board has formed a Valuation Committee whose function is to monitor the valuation of portfolio securities and other financial derivative instruments and, as required by the Trusts valuation
policies, determine in good faith the fair value of portfolio holdings after consideration of all relevant factors, including recommendations provided by the Adviser. The Board has delegated responsibility for applying the valuation methods to the
investment adviser (the Adviser). The Adviser monitors the continual appropriateness of methods applied and determines if adjustments should be made in light of market factor changes and events affecting issuers.
Where market quotes are readily available, fair market value is
generally determined on the basis of official closing prices or the 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. Where market
quotes are not readily available, portfolio securities and other financial derivative instruments are valued at fair value, as determined in good faith by the Board, its Valuation Committee, or the Adviser pursuant to instructions from the Board or
its Valuation Committee. Market quotes are considered not readily available in circumstances where there is an absence of current or reliable market-based data (e.g., trade information, bid/ask information, or broker quotes), including where events
occur after the close of the relevant market, but prior to the NYSE Close, that materially affect the values of the Portfolios securities or financial derivative instruments. In addition, market quotes are considered not readily available
when, due to extraordinary circumstances, the exchanges or markets on which securities trade do not open for trading for the entire day and no other market prices are available. The Board has delegated to the Adviser, PIMCO, the responsibility for
monitoring significant events that may materially affect the values of the Portfolios
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18 |
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PIMCO EQUITY SERIES VIT |
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June
30, 2014 (Unaudited)
securities or financial derivative instruments and for determining whether the value of the applicable securities or financial derivative instruments should be re-evaluated in light of such
significant events.
The Board has adopted methods
for valuing securities and other financial derivative instruments that may require fair valuation under particular circumstances. The Adviser monitors the continual appropriateness of fair valuation methods applied and determines if adjustments
should be made in light of market changes, events affecting the issuer, or other factors. If the Adviser determines that a fair valuation method may no longer be appropriate, another valuation method may be selected, or the Valuation Committee will
take any appropriate action in accordance with procedures set forth by the Board. The Board reviews the appropriateness of the valuation methods from time to time and these methods may be amended or supplemented from time to time by the Valuation
Committee.
In circumstances in which daily market
quotes are not readily available, investments may be valued pursuant to guidelines established by the Board. In the event that the security or asset cannot be valued pursuant to the established guidelines, the value of the security or other
financial derivative instrument will be determined in good faith by the Valuation Committee of the Board, generally based upon recommendations provided by PIMCO. These methods may require subjective determinations about the value of a security.
While the Trusts policy is intended to result in a calculation of the Portfolios NAV that fairly reflects security values as of the time of pricing, the Trust cannot guarantee that values determined by the Board or persons acting at
their direction would accurately reflect the price that the Portfolio could obtain for a security if it were to dispose of that security as of the time of pricing (for instance, in a forced or distressed sale). The prices used by a Portfolio may
differ from the value that would be realized if the securities were sold.
(b) Fair Value Hierarchy U.S. GAAP
describes fair market value as the price that the Portfolio would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. It establishes a fair value hierarchy that
prioritizes inputs to valuation methods and requires disclosure of the fair value hierarchy, separately for each major category of assets and liabilities, that segregates fair value measurements into levels (Level 1, 2, and 3). The inputs or
methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Levels 1, 2, and 3 of the fair value hierarchy are defined as follows:
n |
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Level 1Inputs using (unadjusted) quoted prices in active markets or exchanges for identical assets and liabilities.
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n |
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Level 2Significant other observable inputs, which may include, but are not limited to, quoted prices for similar assets or
liabilities in
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markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or
liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market corroborated inputs. |
n |
|
Level 3Significant unobservable inputs based on the best information available in the circumstances, to the extent observable inputs
are not available, which may include assumptions made by the Board or persons acting at their direction that are used in determining the fair value of investments. |
Assets or liabilities categorized as Level 1 or 2 as of period end have been transferred between Levels 1 and 2
since the prior period due to changes in the valuation method utilized in valuing the investments. Transfers from Level 1 to Level 2 are a result of a change, in the normal course of business, from the use of an exchange traded price or a trade
price on the initial purchase date (Level 1) to valuation methods used by third-party pricing services including valuation adjustments applied to certain securities that are solely traded on a foreign exchange to account for the market movement
between the close of the foreign market and the close of the NYSE (Level 2). Transfers from Level 2 to Level 1 are a result of exchange traded products for which quoted prices from an active market were not available (Level 2) and have become
available (Level 1). In accordance with the requirements of U.S. GAAP, the amounts of transfers between Levels 1 and 2 and transfers in and out of Level 3, if any, are disclosed in the Notes to Consolidated Schedule of Investments for the Portfolio.
For fair valuations using significant unobservable
inputs, U.S. GAAP requires a reconciliation of the beginning to ending balances for reported fair values that presents changes attributable to total realized and unrealized gains or losses, purchases and sales, and transfers in or out of the Level 3
category during the period. The end of period timing recognition is used for the transfers between Levels of the Portfolios assets and liabilities. Additionally, U.S. GAAP requires quantitative information regarding the significant
unobservable inputs used in the determination of fair value of assets or liabilities categorized as Level 3 in the fair value hierarchy. In accordance with the requirements of U.S. GAAP, a fair value hierarchy, Level 3 reconciliation, and details of
significant unobservable inputs, if any, have been included in the Notes to Consolidated Schedule of Investments for the Portfolio.
(c) Valuation Techniques and the Fair Value Hierarchy Level 1 and
Level 2 trading assets and trading liabilities, at fair market value The valuation methods (or techniques) and significant inputs used in determining the
fair market values of portfolio securities
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SEMIANNUAL REPORT |
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JUNE 30, 2014 |
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Notes to Financial Statements (Cont.)
or financial derivative instruments categorized as Level 1 and Level 2 of the fair value hierarchy are as follows:
Fixed income securities including corporate, convertible and
municipal bonds and notes, U.S. government agencies, U.S. treasury obligations, sovereign issues, bank loans, convertible preferred securities and non-U.S. bonds are normally valued by pricing service
providers that use broker-dealer quotations, reported trades or valuation estimates from their internal pricing models. The service providers internal models use inputs that are observable such as issuer details, interest rates, yield curves,
prepayment speeds, credit risks/spreads, default rates and quoted prices for similar assets. Securities that use similar valuation techniques and inputs as described above are categorized as Level 2 of the fair value hierarchy.
Common stocks, exchange-traded funds, exchange-traded notes and
financial derivative instruments, such as futures contracts or options on futures that are traded on a national securities exchange, are stated at the last reported sale or settlement price on the day of valuation. To the extent these securities are
actively traded and valuation adjustments are not applied, they are categorized as Level 1 of the fair value hierarchy.
Investments initially valued in currencies other than the U.S. dollar are converted to the U.S. dollar using exchange rates obtained from
pricing service providers. As a result, the NAV of the Portfolios 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 NYSE is closed and the NAV may change on days when an investor is not able to purchase, redeem or exchange shares. Valuation adjustments may be applied to
certain securities that are solely traded on a foreign exchange to account for the market movement between the close of the foreign market and the NYSE Close. These securities are valued using pricing service providers that consider the correlation
of the trading patterns of the foreign security to the intraday trading in the U.S. markets for investments. Securities using these valuation adjustments are categorized as Level 2 of the fair value hierarchy. Preferred securities and other equities
traded on inactive markets or valued by reference to similar instruments are also categorized as Level 2 of the fair value hierarchy.
Equity-linked securities are valued by referencing the last reported sale or settlement price of the linked referenced equity on the day of
valuation. Foreign exchange adjustments are applied to the last reported price to convert the linked equitys trading currency to the contracts settling currency. These investments are categorized as Level 2 of the fair value
hierarchy.
Investments in registered open-end investment companies will be valued based upon the NAVs of
such investments and are categorized as Level 1 of the fair value hierarchy. Investments in unregistered open-end investment companies will be calculated based upon the NAVs of such investments and are considered Level 1 provided that the NAVs are
observable, calculated daily and are the value at which both purchases and sales will be conducted. Investments in privately held investment funds with significant restrictions on redemption where the inputs to the NAVs are observable will be valued
based upon the NAVs of such investments and are categorized as Level 2 of the fair value hierarchy.
Short-term investments having a maturity of 60 days or less and repurchase agreements are generally valued at amortized cost which approximates fair market value. These investments are
categorized as Level 2 of the fair value hierarchy.
Equity exchange-traded options and over the counter financial derivative instruments, such as foreign currency contracts, options contracts,
or swap agreements, derive their value from underlying asset prices, indices, reference rates, and other inputs or a combination of these factors. These contracts are normally valued by independent pricing service providers. Depending on the product
and the terms of the transaction, financial derivative instruments can be valued by a pricing service provider using a series of techniques, including simulation pricing models. The pricing models use inputs that are observed from actively quoted
markets such as issuer details, indices, spreads, interest rates, yield curves, dividends and exchange rates. Financial derivative instruments that use similar valuation techniques and inputs as described above are categorized as Level 2 of the fair
value hierarchy.
4. SECURITIES AND OTHER INVESTMENTS
(a) Investments in Affiliates
The Portfolio may invest in the PIMCO Short-Term Floating NAV Portfolio and PIMCO Short-Term Floating NAV Portfolio III (Central
Funds) to the extent permitted by the Act and rules thereunder. The Central Funds are registered investment companies created for use solely by the series of the Trust and series of the PIMCO Funds, PIMCO ETF Trust, PIMCO Equity Series, PIMCO
Variable Insurance Trust, and other series of registered investment companies advised by PIMCO, in connection with their cash management activities. The main investments of the Central Funds are money market instruments and short maturity fixed
income instruments. The Central Funds may incur expenses related to their investment activities, but do not pay Investment Advisory or Supervisory and Administrative Fees to PIMCO.
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20 |
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PIMCO EQUITY SERIES VIT |
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|
June
30, 2014 (Unaudited)
The Central Funds are considered to be affiliated with the Portfolio. The table below shows the Portfolios transactions in and earnings from investments in the Central Funds for the period
ended June 30, 2014 (amounts in thousands):
Investments in
PIMCO Short-Term Floating NAV Portfolio
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Fund Name |
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Market Value 12/31/2013 |
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Purchases at Cost |
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Proceeds from Sales |
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Net Realized Gain/(Loss) |
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Change in Unrealized Appreciation/ (Depreciation) |
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Market Value 06/30/2014 |
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Dividend Income |
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Net Capital Gain Distributions |
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EqS Pathfinder
Portfolio® |
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$ |
11,012 |
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$ |
92,020 |
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$ |
(71,200 |
) |
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$ |
0 |
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$ |
2 |
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$ |
31,834 |
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$ |
14 |
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$ |
0 |
|
5. BORROWINGS AND OTHER FINANCING TRANSACTIONS
The following disclosures contain information on the Portfolios ability to lend or borrow cash or securities
to the extent permitted under the Act, which may be viewed as borrowing or financing transactions by the Portfolio. The location and fair value amounts of these instruments are described below. For a detailed description of credit and counterparty
risks that can be associated with borrowings and other financing transactions, please see Note 7, Principal Risks.
(a) Short Sales The Portfolio may
enter into short sales transactions. Short sales are transactions in which the Portfolio sells a security that it may not own. The Portfolio may make short sales of securities to (i) offset potential declines in long positions in similar
securities, (ii) to increase the flexibility of the Portfolio, (iii) for investment return, (iv) as part of a risk arbitrage strategy, and (v) as part of its overall portfolio management strategies involving the use of derivative
instruments. When the Portfolio engages in a short sale, it may borrow the security sold short and deliver it to the counterparty. The Portfolio will ordinarily have to pay a fee or premium to borrow a security and be obligated to repay the lender
of the security any dividend or interest that accrues on the security during the period of the loan. Securities sold in short sale transactions and the dividend or interest payable on such securities, if any, are reflected as payable for short sales
on the Consolidated Statement of Assets and Liabilities. Short sales expose the Portfolio to the risk that it will be required to cover its short position at a time when the security or other asset has appreciated in value, thus resulting in losses
to the Portfolio. A short sale is against the box if the Portfolio holds in its portfolio or has the right to acquire the security sold short at no additional cost. The Portfolio will be subject to additional risks to the extent that it
engages in short sales that are not against the box. The Portfolios loss on a short sale could theoretically be unlimited in cases where the Portfolio is unable, for whatever reason, to close out its short position.
6. FINANCIAL DERIVATIVE INSTRUMENTS
The following disclosures contain information on how and why
the Portfolio uses financial derivative instruments, the credit-risk-related contingent features in certain financial derivative instruments, and how financial derivative instruments affect the Portfolios financial position,
results of operations and cash flows. The location and fair value amounts of these instruments on the Consolidated Statement of Assets and Liabilities and the realized and changes in unrealized
gains and losses on the Consolidated Statement of Operations, each categorized by type of financial derivative contract and related risk exposure, are included in a table in the Notes to Consolidated Schedule of Investments. The financial derivative
instruments outstanding as of period end and the amounts of realized and changes in unrealized gains and losses on financial derivative instruments during the period, as disclosed in the Notes to Consolidated Schedule of Investments, serve as
indicators of the volume of financial derivative activity for the Portfolio.
(a) Forward Foreign Currency
Contracts The Portfolio may enter into forward foreign currency contracts in connection with settling planned purchases or sales of securities, to hedge the currency
exposure associated with some or all of the Portfolios securities or as a part of an investment strategy. A forward foreign currency contract is an agreement between two parties to buy and sell a currency at a set price on a future date. The
market value of a forward foreign currency contract fluctuates with changes in foreign currency exchange rates. Forward foreign currency contracts are marked to market daily and the change in value is recorded by the Portfolio as an unrealized gain
or loss. Realized gains or losses equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed are recorded upon delivery or receipt of the currency. These contracts may involve market
risk in excess of the unrealized gain or loss reflected on the Consolidated Statement of Assets and Liabilities. In addition, the Portfolio could be exposed to risk if the counterparties are unable to meet the terms of the contracts or if the value
of the currency changes unfavorably to the U.S. dollar. In connection with these contracts, cash or securities may be identified as collateral in accordance with the terms of the respective contracts.
(b) Options Contracts The Portfolio may write call and put options on securities and financial derivative
instruments they own or in which they may invest. Writing put options tends to increase the Portfolios exposure to the underlying instrument. Writing call options tends to decrease the Portfolios exposure to the underlying instrument.
When the Portfolio writes a call or put, an amount equal to the premium received is recorded as a liability and subsequently marked to market to reflect the current value of the option written. These liabilities are
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SEMIANNUAL REPORT |
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JUNE 30, 2014 |
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21 |
Notes to Financial Statements (Cont.)
included on the Statements of Assets and Liabilities. Premiums received from writing options which expire are treated as realized gains. Premiums received from writing options which are exercised
or closed are added to the proceeds or offset against amounts paid on the underlying futures, swap, security or currency transaction to determine the realized gain or loss. Certain options may be written with premiums to be determined on a future
date. The premiums for these options are based upon implied volatility parameters at specified terms. The Portfolio as a writer of an option has no control over whether the underlying instrument may be sold (call) or purchased (put) and as a result
bears the market risk of an unfavorable change in the price of the instrument underlying the written option. There is the risk a Fund may not be able to enter into a closing transaction because of an illiquid market.
The Portfolio may also purchase put and call options. Purchasing
call options tends to increase a Funds exposure to the underlying instrument. Purchasing put options tends to decrease the Portfolios exposure to the underlying instrument. The Portfolio pays a premium which is included as an asset on
the Statement of Assets and Liabilities and subsequently marked to market to reflect the current value of the option. Premiums paid for purchasing options which expire are treated as realized losses. Certain options may be purchased with premiums to
be determined on a future date. The premiums for these options are based upon implied volatility parameters at specified terms. The risk associated with purchasing put and call options is limited to the premium paid. Premiums paid for purchasing
options which are exercised or closed are added to the amounts paid or offset against the proceeds on the underlying investment transaction to determine the realized gain or loss when the underlying transaction is executed.
(c) Swap Agreements The Portfolio may invest in swap agreements. Swap agreements are bilaterally negotiated
agreements between the Portfolio and a counterparty to exchange or swap investment cash flows, assets, foreign currencies or market-linked returns at specified, future intervals. Swap agreements are privately negotiated in the over the counter
market (OTC swaps) or may be executed in a multilateral or other trade facility platform, such as a registered exchange (centrally cleared swaps). The Portfolio may enter into asset, credit default, cross-currency, interest
rate, total return, variance and other forms of swap agreements to manage its exposure to credit, currency, interest rate, commodity, equity and inflation risk. In connection with these agreements, securities or cash may be identified as collateral
or margin in accordance with the terms of the respective swap agreements to provide assets of value and recourse in the event of default or bankruptcy/insolvency.
Swaps are marked to market daily based upon values from
third-party vendors, which may include a registered exchange, or quotations from market makers to the extent available. In the event that market quotes
are not readily available and the swap cannot be valued pursuant to one of the valuation methods, the value of the swap will be determined in good faith by the Valuation Committee of the Board of
Trustees, generally based upon recommendations provided by PIMCO. Changes in market value, if any, are reflected as a component of net change in unrealized appreciation/(depreciation) on the Consolidated Statement of Operations. Daily changes in
valuation of centrally cleared swaps, if any, are recorded as a receivable or payable for the change in value as appropriate (variation margin) on the Consolidated Statement of Assets and Liabilities. OTC swap payments received or paid
at the beginning of the measurement period are included on the Consolidated Statement of Assets and Liabilities and represent premiums paid or received upon entering into the swap agreement to compensate for differences between the stated terms of
the swap agreement and prevailing market conditions (credit spreads, currency exchange rates, interest rates, and other relevant factors). Upfront premiums received (paid) are initially recorded as liabilities (assets) and subsequently marked to
market to reflect the current value of the swap. These upfront premiums are recorded as realized gains or losses on the Consolidated Statement of Operations upon termination or maturity of the swap. A liquidation payment received or made at the
termination of the swap is recorded as realized gain or loss on the Consolidated Statement of Operations. Net periodic payments received or paid by the Portfolio are included as part of realized gains or losses on the Consolidated Statement of
Operations.
Entering into these agreements involves,
to varying degrees, elements of interest, credit, market and documentation risk in excess of the amounts recognized on the Consolidated Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for
these agreements, that the counterparty to the agreements may default on its obligation to perform or disagree as to the meaning of contractual terms in the agreements and that there may be unfavorable changes in interest rates.
The Portfolios maximum risk of loss from counterparty
credit risk is the discounted net value of the cash flows to be received from the counterparty over the contracts remaining life, to the extent that amount is positive. The risk is mitigated by having a master netting arrangement between the
Portfolio and the counterparty and by the posting of collateral to the Portfolio to cover the Portfolios exposure to the counterparty.
Total Return Swap Agreements The Portfolio may enter into total return swap agreements to gain or mitigate exposure to the underlying reference. Total return swap agreements involve commitments where single
or multiple cash flows are exchanged based on the price of an underlying reference asset and on a fixed or variable interest rate. Total return swap agreements may involve commitments to pay interest in
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22 |
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PIMCO EQUITY SERIES VIT |
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June
30, 2014 (Unaudited)
exchange for a market-linked return. One counterparty pays out the total return of a specific reference asset, which may include an underlying equity, index, or bond, and in return receives a
fixed or variable rate. At the maturity date, a net cash flow is exchanged where the total return is equivalent to the return of the underlying reference less a financing rate, if any. As a receiver, the Portfolio would receive payments based on any
positive total return and would owe payments in the event of a negative total return. As the payer, the Portfolio would owe payments on any net positive total return, and would receive payment in the event of a negative total return.
7. PRINCIPAL RISKS
In the normal course of business the Portfolio trades financial instruments and enters into financial transactions
where risk of potential loss exists due to such things as changes in the market (market risk) or failure or inability of the other party to a transaction to perform (credit and counterparty risk). See below for a detailed description of select
principal risks. For a more comprehensive list of potential risks the Portfolio may be subject to, please see the Important Information About the Portfolio.
Market Risks The Portfolios investments in financial derivatives and other financial instruments expose
the Portfolio to various risks such as, but not limited to, equity, interest rate, foreign currency and commodity risks.
The market values of equities, such as common stocks and preferred securities or equity related investments such as futures and options, have
historically risen and fallen in periodic cycles and 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. Different types of equity securities may react differently to these developments. Equity securities and equity related investments generally have greater market price volatility than fixed income
securities.
Interest rate risk is the risk that
fixed income securities will decline in value because of an increase in interest rates. As nominal interest rates rise, the value of certain fixed income securities held by the Portfolio is likely to decrease. A nominal interest rate can be
described as the sum of a real interest rate and an expected inflation rate. Interest rate changes can be sudden and unpredictable, and the Portfolio may lose money if these changes are not anticipated by Portfolio management. The Portfolio may not
be able to hedge against changes in interest rates or may choose not to do so for cost or other reasons. In addition, any hedges may not work as intended. Fixed income securities with
longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations. Duration is useful primarily as a measure of the
sensitivity of a securitys market price to interest rate (i.e., yield) movements. A wide variety of factors can cause interest rates to rise (e.g., central bank monetary policies, inflation rates, general economic conditions, etc.). At
present, the U.S. is experiencing historically low interest rates. This, combined with recent economic recovery and the Federal Reserve Boards tapering of its quantitative easing program, could potentially increase the probability of an upward
interest rate environment in the near future. Further, while U.S. bond markets have steadily grown over the past three decades, dealer market making ability has remained relatively stagnant. Given the importance of intermediary
market making in creating a robust and active market, fixed income securities may face increased volatility and liquidity risks. All of these factors, collectively and/or individually, could cause the Portfolio to lose value. If the
Portfolio lost enough value, the Portfolio could face increased redemptions by shareholders, which could further impair its performance.
The Portfolio may invest in securities and instruments that are economically tied to Russia. Investments in Russia are subject to political,
economic, legal, market and currency risks. The risks include uncertain political and economic policies, short-term market volatility, poor accounting standards, corruption and crime, an inadequate regulatory system, and unpredictable taxation.
Investments in Russia are particularly subject to the risk that economic sanctions may be imposed by the United States and/or other countries. Such sanctionswhich may impact companies in many sectors, including energy, financial services and
defense, among othersmay negatively impact the Portfolios performance and/or ability to achieve its investment objective.
If the Portfolio invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in
financial derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Portfolio, or, in the case of hedging positions, that the
Portfolios base currency 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 United
States or abroad. As a result, the Portfolios investments in foreign currency denominated securities may reduce the Portfolios returns.
The Portfolios investments in commodity-linked financial derivative instruments may subject the Portfolio to greater market price
volatility
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SEMIANNUAL REPORT |
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JUNE 30, 2014 |
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Notes to Financial Statements (Cont.)
than investments in traditional securities. The value of commodity-linked financial derivative instruments may be affected by changes in overall market movements, commodity index volatility,
changes in interest rates, or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments.
Credit and Counterparty Risks The Portfolio will be exposed to credit risk to parties with whom it trades and
will also bear the risk of settlement default. The Portfolio minimizes concentrations of credit risk by undertaking transactions with a large number of customers and counterparties on recognized and reputable exchanges. The Portfolio could lose
money if the issuer or guarantor of a fixed income security, or the counterparty to a financial 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.
Similar to credit risk, the Portfolio may be exposed to counterparty risk, or the risk that an institution or other entity with which the
Portfolio has unsettled or open transactions will default. Financial assets, which potentially expose the Portfolio to counterparty risk, consist principally of cash due from counterparties and investments. PIMCO, as the investment adviser,
minimizes counterparty risks to the Portfolio by performing extensive reviews of each counterparty and obtaining approval from the PIMCO Counterparty Risk Committee prior to entering into transactions with a third-party. Furthermore, to the extent
that unpaid amounts owed to the Portfolio exceed a predetermined threshold agreed to with the counterparty, such counterparty shall advance collateral to the Portfolio in the form of cash or cash equivalents equal in value to the unpaid amount owed
to the Portfolio. The Portfolio may invest such collateral in securities or other instruments and will typically pay interest to the counterparty on the collateral received. If the unpaid amount owed to the Portfolio subsequently decreases, the
Portfolio would be required to return to the counterparty all or a portion of the collateral previously advanced to the Portfolio.
All transactions in listed securities are settled/paid for upon delivery using approved counterparties. The risk of default is considered
minimal, as delivery of securities sold is only made once the Portfolio has received payment. Payment is made on a purchase once the securities have been delivered by the counterparty. The trade will fail if either party fails to meet its
obligation.
Master Netting Arrangements The Portfolio is subject to various netting arrangements with select
counterparties (Master Agreements). Master Agreements govern the terms of certain
transactions, and reduce the counterparty risk associated with relevant transactions by specifying credit protection mechanisms and providing standardization that improves legal certainty. Since
different types of transactions have different mechanics and are sometimes traded out of different legal entities of a particular counterparty organization, each type of transaction may be covered by a different Master Agreement, resulting in the
need for multiple agreements with a single counterparty. As the Master Agreements are specific to unique operations of different asset types, they allow the Portfolio to close out and net its total exposure to a counterparty in the event of a
default with respect to all the transactions governed under a single agreement with a counterparty.
Master Agreements can also help limit counterparty risk by specifying collateral posting arrangements at pre-arranged exposure levels. Under the Master Agreements, collateral is routinely
transferred if the total net exposure to certain transactions (net of existing collateral already in place) governed under the relevant Master Agreement with a counterparty in a given account exceeds a specified threshold, which typically ranges
from zero to $250,000 depending on the counterparty and the type of Master Agreement. United States Treasury Bills and U.S. dollar cash are generally the preferred forms of collateral, although other forms of AAA rated paper or sovereign securities
may be used. Securities and cash pledged as collateral are reflected as assets in the Consolidated Statement of Assets and Liabilities as either a component of Investments at value (securities) or Deposits due from Counterparties (cash). Cash
collateral received is not typically held in a segregated account and as such is reflected as a liability in the Consolidated Statement of Assets and Liabilities as Deposits due to Counterparties. The market value of any securities received as
collateral is not reflected as a component of net asset value. The Portfolios overall exposure to counterparty risk can change substantially within a short period, as it is affected by each transaction subject to the relevant Master Agreement.
Master Repurchase Agreements and Global Master
Repurchase Agreements (individually and collectively Master Repo Agreements) govern repurchase, reverse repurchase, and sale-buyback transactions between the Portfolio and select counterparties. Master Repo Agreements maintain provisions
for, among other things, initiation, income payments, events of default, and maintenance of collateral. The market value of transactions under the Master Repo Agreement, collateral pledged or received, and the net exposure by counterparty as of
period end are disclosed in the Notes to Consolidated Schedule of Investments.
Master Securities Forward Transaction Agreements (Master Forward Agreements) govern the considerations and factors surrounding the settlement of certain forward settling
transactions, such as To-Be-Announced securities, delayed-delivery or sale-buyback
|
|
|
|
|
|
|
24 |
|
PIMCO EQUITY SERIES VIT |
|
|
|
|
June
30, 2014 (Unaudited)
transactions by and between the Portfolio and select counterparties. The Master Forward Agreements maintain provisions for, among other things, initiation and confirmation, payment and transfer,
events of default, termination, and maintenance of collateral. The market value of forward settling transactions, collateral pledged or received, and the net exposure by counterparty as of period end is disclosed in the Notes to Consolidated
Schedule of Investments.
Customer Account Agreements
and related addendums govern cleared derivatives transactions such as futures, options on futures, and cleared OTC derivatives. Cleared derivative transactions require posting of initial margin as determined by each relevant clearing agency which is
segregated at a broker account registered with the Commodity Futures Trading Commission (CFTC), or the applicable regulator. In the US, counterparty risk is significantly reduced as creditors of the futures broker do not have claim to Portfolio
assets in the segregated account. Additionally, portability of exposure in the event of default further reduces risk to the Portfolio. Variation margin, or changes in market value, are exchanged daily, but may not be netted between futures and
cleared OTC derivatives. The market value or accumulated unrealized appreciation or depreciation, initial margin posted, and any unsettled variation margin as of period end is disclosed in the Notes to Consolidated Schedule of Investments.
Prime Broker Arrangements may be entered into to
facilitate execution and/or clearing of listed equity option transactions or short sales of equity securities between the Portfolio and selected counterparties. The arrangements provide guidelines surrounding the rights, obligations, and other
events, including, but not limited to, margin, execution, and settlement. These agreements maintain provisions for, among other things, payments, maintenance of collateral, events of default, and termination. Margin and other assets delivered as
collateral are typically in the possession of the prime broker and would offset any obligations due to the prime broker. The market values of listed options and securities sold short and related collateral are disclosed in the Notes to Consolidated
Schedule of Investments.
International Swaps and
Derivatives Association, Inc. Master Agreements and Credit Support Annexes (ISDA Master Agreements) govern OTC financial derivative transactions entered into by the Portfolio and select counterparties. ISDA Master Agreements maintain
provisions for general obligations, representations, agreements, collateral and events of default or termination. Events of termination include conditions that may entitle counterparties to elect to terminate early and cause settlement of all
outstanding transactions under the applicable ISDA Master Agreement. Any election to terminate early could be material to the financial statements. In limited circumstances, the ISDA Master Agreement may contain additional provisions that add
counterparty protection beyond coverage of existing daily exposure if
the counterparty has a decline in credit quality below a predefined level. These amounts, if any, may be segregated with a third-party custodian. The market value of OTC financial derivative
instruments, collateral received or pledged, and net exposure by counterparty as of period end are disclosed in the Notes to Consolidated Schedule of Investments.
8. BASIS FOR CONSOLIDATION OF THE PIMCO EqS PATHFINDER PORTFOLIO®
PIMCO Cayman Commodity Portfolio III, Ltd. (the Commodity
Subsidiary), a Cayman Islands exempted company, was incorporated as a wholly owned subsidiary acting as an investment vehicle for the Portfolio in order to effect certain investments for the Portfolio consistent with the Portfolios
investment objectives and policies as specified in its prospectus and statement of additional information. The Portfolios investment portfolio has been consolidated and includes the portfolio holdings of the Portfolio and the Commodity
Subsidiary. The consolidated financial statements include the accounts of the Portfolio and the Commodity Subsidiary. All inter-company transactions and balances have been eliminated. A subscription agreement was entered into between the Portfolio
and the Commodity Subsidiary, comprising the entire issued share capital of the Commodity Subsidiary, with the intent that the Portfolio will remain the sole shareholder and retain all rights. Under the Memorandum and Articles of Association, shares
issued by the Commodity Subsidiary confer upon a shareholder the right to receive notice of, to attend and to vote at general meetings of the Commodity Subsidiary and shall confer upon the shareholder rights in a winding-up or repayment of capital
and the right to participate in the profits or assets of the Commodity Subsidiary. See the table below for details regarding the structure, incorporation and relationship as of period end of the Commodity Subsidiary to the Portfolio (amounts in
thousands).
|
|
|
|
|
|
|
Date of Incorporation |
|
|
|
|
06/06/2011 |
|
Subscription Agreement |
|
|
|
|
06/20/2011 |
|
|
|
|
Portfolio Net Assets |
|
|
|
$ |
509,020 |
|
Subsidiary % of Portfolio Net Assets |
|
|
|
|
0.0% |
|
|
|
|
Subsidiary Financial Statement Information |
|
|
|
|
|
|
Total assets |
|
|
|
$ |
10 |
|
Total liabilities |
|
|
|
|
0 |
|
Net assets |
|
|
|
|
10 |
|
Total income |
|
|
|
|
0 |
|
Net investment income (loss) |
|
|
|
|
0 |
|
Net realized gain (loss) |
|
|
|
|
0 |
|
Net change in unrealized appreciation (depreciation) |
|
|
|
|
0 |
|
Increase (decrease) in net assets resulting from operations |
|
|
|
$ |
0 |
|
9. FEES AND EXPENSES
(a) Investment Advisory Fee PIMCO is a majority-owned subsidiary of Allianz Asset Management of America L.P.
(Allianz Asset Management) and serves as the Adviser to the Trust, pursuant to an
|
|
|
|
|
|
|
|
|
SEMIANNUAL REPORT |
|
JUNE 30, 2014 |
|
25 |
Notes to Financial Statements (Cont.)
investment advisory contract. The Adviser receives a monthly fee from the Portfolio at an annual rate based on average daily net assets (the Investment Advisory Fee). The Investment
Advisory Fee for all classes is charged at an annual rate of 0.75%.
(b) Supervisory and Administrative
Fee PIMCO serves as administrator (the Administrator) and provides supervisory and administrative services to the Trust for which it receives a monthly
supervisory and administrative fee based on each share classs average daily net assets (the Supervisory and Administrative Fee). As the Administrator, PIMCO bears the costs of various third-party services, including audit,
custodial, portfolio accounting, legal, transfer agency and printing costs. The Supervisory and Administrative Fee for all classes is charged at the annual rate of 0.35%.
(c) Distribution and Servicing Fees PIMCO Investments LLC (PI), a wholly-owned subsidiary of
PIMCO, serves as the distributor (Distributor) of the Trusts shares. The Trust has adopted a Distribution and Servicing Plan with respect to the Advisor Class shares of the Portfolio pursuant to Rule 12b-1 under the Act (the
Distribution and Servicing Plan). The Plan allows the Portfolio to compensate the Distributor for providing or procuring through financial intermediaries distribution, administration, recordkeeping, shareholder and/or related services
with respect to Advisor Class shares. The Distribution and Servicing Plan permits the Portfolio to make total payments at an annual rate of up to 0.25% of its average daily net assets attributable to its Advisor Class shares.
(d) Portfolio Expenses The Trust is responsible for the following expenses: (i) salaries and other
compensation of any of the Trusts 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) the costs of borrowing money, including interest expense and bank overdraft charges; (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 expense, including costs of litigation and indemnification expenses; (vii) organization expenses and (viii) any expenses allocated or allocable to a
specific class of shares (class-specific expenses). The ratio of expenses to average net assets per share class, as disclosed on the Financial Highlights, may differ from the annual portfolio operating expenses per share class as
disclosed in the Prospectus for the reasons set forth above.
Each Trustee, other than those affiliated with PIMCO or its affiliates, receives an annual retainer of $10,000, plus $1,500 for each Board of Trustees meeting attended in person, $250 ($375
in the case of the audit committee chair with respect to audit committee meetings) for each committee meeting attended and $375 for each Board of Trustees
meeting attended telephonically, plus reimbursement of related expenses. In addition, the audit committee chair receives an additional annual retainer of $2,000 and each other committee chair
receives an additional annual retainer of $250. These expenses are allocated on a pro-rata basis to the various portfolios of the Trust according to their respective net assets. The Trust pays no compensation directly to any Trustee or any other
officer who is affiliated with the Administrator, all of whom receive remuneration for their services to the Trust from the Administrator or its affiliates.
(e) Expense Limitation PIMCO has contractually agreed, through May 1, 2015, to reduce total annual operating expenses for each of the Portfolios separate classes of shares, by reducing the
Portfolios Supervisory and Administrative fee or reimbursing the Portfolio, to the extent that organizational expenses and pro rata Trustees fees attributable to a class of shares of the Portfolio exceed 0.0049% of the Portfolios
average net assets attributable to separate classes of shares. This Expense Limitation Agreement renews annually for a full year unless terminated by PIMCO upon at least 30 days prior notice to the end of the contract term.
PIMCO has contractually agreed, through May 1, 2015, to
reduce its advisory fee by 0.13% of the average daily net assets of the Portfolio. Under the Fee Limitation Agreement, PIMCO is entitled to reimbursement by the Portfolio of any portion of the Supervisory and Administrative Fee and/or Investment
Advisory Fee waived, reduced or reimbursed pursuant to the Fee Limitation Agreement (the Reimbursement Amount) during the previous three years, provided that such amount paid to PIMCO will not: 1) together with any recoupment of
organizational expenses and pro rata Trustees fees pursuant to the Expense Limitation Agreement, exceed the Expense Limit; 2) exceed the total Reimbursement Amount; or 3) include any amounts previously reimbursed to PIMCO. This Fee Limitation
Agreement renews annually unless terminated by PIMCO upon at least 30 days prior notice to the end of the contract term.
PIMCO had also contractually agreed, through September 16, 2013, to reduce total annual operating expenses for the Portfolios
Institutional Class and Advisor Class shares, by reducing the Portfolios Investment Advisory or Supervisory and Administrative Fees or reimbursing the Portfolio to the extent that total annual portfolio operating expenses net of acquired fund
fees and expenses, after taking into account other applicable fee waivers and reimbursements exceed 1.00% and 1.25% of the Portfolios average net assets attributable to the Institutional Class and Advisor Class shares, respectively. PIMCO may
recoup these waivers and reimbursements for a period not exceeding three years, provided that total expenses, including such recoupment, do not exceed the annual expense limit. As of June 30, 2014, the remaining recoverable amount to PIMCO was
$173,902.
|
|
|
|
|
|
|
26 |
|
PIMCO EQUITY SERIES VIT |
|
|
|
|
June
30, 2014 (Unaudited)
(f) Acquired Fund Fees
and Expenses The Commodity Subsidiary has entered into a separate contract with PIMCO for the management of the Commodity Subsidiarys portfolio pursuant to which
the Commodity Subsidiary pays PIMCO a management fee and administrative services fee at the annual rates of 0.49% and 0.20%, respectively, of its net assets. PIMCO has contractually agreed to waive the Investment Advisory Fee and the Supervisory and
Administrative Fee it receives from the Portfolio in an amount equal to the management fee and administrative services fee, respectively, paid to PIMCO by the Commodity Subsidiary. This waiver may not be terminated by PIMCO and will remain in effect
for as long as PIMCOs contract with the Commodity Subsidiary is in place. The waiver is reflected in the Consolidated Statement of Operations as a component of Waiver and/or Reimbursement by PIMCO. For the period ended June 30, 2014, the
amount was $32.
10. RELATED PARTY TRANSACTIONS
The Adviser, Administrator, and Distributor are related
parties. Fees payable to these parties are disclosed in Note 9 and the accrued related party fee amounts are disclosed on the Consolidated Statement of Assets and Liabilities.
11. GUARANTEES AND INDEMNIFICATIONS
Under the Trusts organizational documents, each Trustee,
officer, employee or other agent of the Trust (including the Trusts investment manager) is indemnified, to the extent permitted by the Act, against certain liabilities that may arise out of performance of their duties to the Portfolio.
Additionally, in the normal course of business, the
Portfolio enters into contracts that contain a variety of indemnification clauses. The Portfolios maximum exposure under these arrangements is unknown as this would involve future claims
that may be made against the Portfolio that have not yet occurred. However, the Portfolio has not had prior claims or losses pursuant to these contracts.
12. PURCHASES AND SALES OF SECURITIES
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 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. Such sales
may also result in realization of taxable capital gains, including short-term capital gains (which are generally taxed at ordinary income tax rates). The trading costs and tax effects associated with portfolio turnover may adversely affect the
Portfolios performance. The portfolio turnover rates are reported in the Financial Highlights.
Purchases and sales of securities (excluding short-term investments) for the period ended June 30, 2014, were as follows (amounts in thousands):
|
|
|
|
|
|
|
Purchases |
|
|
Sales |
|
$ |
71,702 |
|
|
$ |
126,307 |
|
13. SHARES OF BENEFICIAL INTEREST
The Portfolio may issue an unlimited number of
shares of beneficial interest with a $0.001 par value. Changes in shares of beneficial interest were as follows (shares and amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended 06/30/2014 |
|
|
|
|
Year Ended 12/31/2013 |
|
|
|
|
|
Shares |
|
|
Amount |
|
|
|
|
Shares |
|
|
Amount |
|
|
|
|
|
|
|
|
Receipts for shares sold |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Institutional Class |
|
|
|
|
10 |
|
|
$ |
128 |
|
|
|
|
|
18 |
|
|
$ |
209 |
|
Advisor Class |
|
|
|
|
342 |
|
|
|
4,322 |
|
|
|
|
|
2,353 |
|
|
|
27,305 |
|
Issued as reinvestment of distributions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Institutional Class |
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
105 |
|
|
|
1,309 |
|
Advisor Class |
|
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
741 |
|
|
|
9,191 |
|
Cost of shares redeemed |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Institutional Class |
|
|
|
|
(295 |
) |
|
|
(3,764 |
) |
|
|
|
|
(990 |
) |
|
|
(11,450 |
) |
Advisor Class |
|
|
|
|
(3,201 |
) |
|
|
(40,706 |
) |
|
|
|
|
(5,800 |
) |
|
|
(67,192 |
) |
Net increase (decrease) resulting from Portfolio share transactions |
|
|
|
|
(3,144 |
) |
|
$ |
(40,020 |
) |
|
|
|
|
(3,573 |
) |
|
$ |
(40,628 |
) |
As of June 30, 2014, one
shareholder owned 94% of the total Portfolios outstanding shares, and the shareholder is a related party of the Portfolio. Related parties may include, but are not limited to, the investment manager and its affiliates, affiliated broker
dealers, fund of funds and directors or employees of the Trust or Adviser.
|
|
|
|
|
|
|
|
|
SEMIANNUAL REPORT |
|
JUNE 30, 2014 |
|
27 |
Notes to Financial Statements (Cont.)
June 30, 2014 (Unaudited)
14. REGULATORY AND LITIGATION
MATTERS
The Trust is not engaged in any material
litigation or arbitration proceedings and is not aware of any material litigation or claim pending or threatened by or against it.
15. FEDERAL INCOME TAX MATTERS
The Portfolio intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code (the Code) and
distribute all of its taxable income and net realized gains, if applicable, to shareholders. Accordingly, no provision for Federal income taxes has been made.
In accordance with provisions set forth under U.S. GAAP, the Adviser has reviewed the Portfolios tax positions for all open tax years.
As of June 30, 2014, the Portfolio has recorded no liability for net unrecognized tax benefits relating to uncertain income tax positions it has taken or expects to take in future tax returns.
The Portfolio files U.S. tax returns. While the statute of
limitations remains open to examine the Portfolios U.S. tax returns filed for the fiscal years ending in 2010-2012, no examinations are in progress or
anticipated at this time. The Portfolio is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the
next twelve months.
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). Please refer to the prospectus for the
Separate Account and Variable Contract for information regarding Federal income tax treatment of distributions to the Separate Account.
As of June 30, 2014, the aggregate cost and the net unrealized appreciation/(depreciation) of investments for federal income tax
purposes are as follows (amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal Tax Cost |
|
|
Aggregate Gross Unrealized Appreciation |
|
|
Aggregate Gross Unrealized (Depreciation) |
|
|
Net Unrealized Appreciation
(1) |
|
$ |
381,500 |
|
|
$ |
131,052 |
|
|
$ |
(3,185 |
) |
|
$ |
127,867 |
|
(1) |
Primary differences, if any, between book and tax net unrealized appreciation/(depreciation) are attributable to wash sale loss deferrals
for federal income tax purposes. |
|
|
|
|
|
|
|
28 |
|
PIMCO EQUITY SERIES VIT |
|
|
|
|
Glossary: (abbreviations that may
be used in the preceding statements)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Counterparty Abbreviations: |
|
|
|
|
|
|
|
|
BOA |
|
Bank of America N.A. |
|
FBF |
|
Credit Suisse International |
|
MSC |
|
Morgan Stanley & Co., Inc. |
BPS |
|
BNP Paribas S.A. |
|
GLM |
|
Goldman Sachs Bank USA |
|
RBC |
|
Royal Bank of Canada |
BRC |
|
Barclays Bank PLC |
|
GSC |
|
Goldman Sachs & Co. |
|
SOG |
|
Societe Generale |
CBK |
|
Citibank N.A. |
|
GST |
|
Goldman Sachs International |
|
UAG |
|
UBS AG Stamford |
DUB |
|
Deutsche Bank AG |
|
JPM |
|
JPMorgan Chase Bank N.A. |
|
|
|
|
|
|
|
|
|
Currency Abbreviations: |
|
|
|
|
|
|
|
|
AUD |
|
Australian Dollar |
|
GBP |
|
British Pound |
|
NOK |
|
Norwegian Krone |
CAD |
|
Canadian Dollar |
|
HKD |
|
Hong Kong Dollar |
|
SEK |
|
Swedish Krona |
CHF |
|
Swiss Franc |
|
ILS |
|
Israeli Shekel |
|
SGD |
|
Singapore Dollar |
DKK |
|
Danish Krone |
|
JPY |
|
Japanese Yen |
|
USD (or $) |
|
United States Dollar |
EUR |
|
Euro |
|
KRW |
|
South Korean Won |
|
ZAR |
|
South African Rand |
|
|
|
|
|
Other Abbreviations: |
|
|
|
|
|
|
|
|
ADR |
|
American Depositary Receipt |
|
LIBOR |
|
London Interbank Offered Rate |
|
REIT |
|
Real Estate Investment Trust |
EURIBOR |
|
Euro Interbank Offered Rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEMIANNUAL REPORT |
|
JUNE 30, 2014 |
|
29 |
General Information
Investment Adviser and Administrator
Pacific Investment Management Company LLC
650 Newport Center Drive
Newport Beach, CA 92660
Distributor
PIMCO Investments LLC
1633 Broadway
New
York, NY 10019
Custodian
State Street Bank and Trust Company
801 Pennsylvania
Kansas City, MO 64105
Transfer Agent
Boston Financial Data Services
330 W. 9th Street, 5th Floor
Kansas City, MO 64105
Legal Counsel
Dechert LLP
1900 K
Street, N.W.
Washington, D.C. 20006
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP
1100 Walnut Street, Suite 1300
Kansas City, MO 64106
This report is submitted for the general information of the shareholders of the PIMCO Equity Series VIT.
pvit.pimco-funds.com
EVIT02SAR_063014
|
|
|
|
|
Item 2. |
|
Code of Ethics. |
|
|
|
|
The information required by this Item 2 is only required in an annual report on this Form N-CSR. |
|
|
Item 3. |
|
Audit Committee Financial Expert. |
|
|
|
|
The information required by this Item 3 is only required in an annual report on this Form N-CSR. |
|
|
Item 4. |
|
Principal Accountant Fees and Services. |
|
|
|
|
The information required by this Item 4 is only required in an annual report on this Form N-CSR. |
|
|
Item 5. |
|
Audit Committee of Listed Registrants. |
|
|
|
|
The information required by this Item 5 is only required in an annual report on this Form N-CSR. |
|
|
Item 6. |
|
Schedule of Investments. |
|
|
|
|
The Schedule of Investments is included as part of the report to shareholders under Item 1. |
|
|
|
|
|
|
|
Item 7. |
|
Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. |
|
|
|
|
Not applicable. |
|
|
Item 8. |
|
Portfolio Managers of Closed-End Management Investment Companies. |
|
|
|
|
Not applicable. |
|
|
Item 9. |
|
Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchases. |
|
|
|
|
Not applicable. |
|
|
Item 10. |
|
Submission of Matters to a Vote of Security Holders. |
|
|
|
|
Not applicable. |
|
|
Item 11. |
|
Controls and Procedures. |
|
|
|
|
|
(a) |
|
The principal executive officer and principal financial officer have concluded that the Registrants disclosure controls and procedures (as defined in Rule 30a-3(c) under
the Investment Company Act of 1940, as amended (1940 Act)) provide reasonable assurances that material information relating to the Trust is made known to them by the appropriate persons, based on their evaluation of these controls
and procedures as of a date within 90 days of the filing of this report. |
|
|
|
|
|
(b) |
|
There were no changes in the Registrants internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the second fiscal
quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrants internal control over financial reporting. |
|
|
Item 12. |
|
Exhibits. |
|
|
|
|
|
(a)(1) |
|
Exhibit 99.CODECode of Ethics is not applicable for semiannual reports. |
|
|
|
|
|
(a)(2) |
|
Exhibit 99.CERTCertifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
|
(b) |
|
Exhibit 99.906CERTCertifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
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PIMCO Equity Series VIT |
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By: |
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/s/ PETER G.
STRELOW |
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Peter G. Strelow |
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Principal Executive Officer |
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Date: August 27, 2014 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this
report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
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By: |
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/s/ PETER G.
STRELOW |
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Peter G. Strelow |
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Principal Executive Officer |
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Date: August 27, 2014 |
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By: |
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/s/ TRENT W.
WALKER |
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Trent W. Walker |
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Treasurer, Principal Financial Officer |
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Date: August 26, 2014 |