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April 30, 2012
VIA EDGAR
Deborah D. Skeens
Division of Investment Management
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
| Re: | PIMCO Equity Series VIT (the “Registrant”) |
File Nos. 333-164078, 811-22376 |
Dear Ms. Skeens:
In a March 22, 2012 telephone conversation with me, you communicated the Securities and Exchange Commission (“SEC”) staff’s (the “Staff”) comments on Post-Effective Amendment No. 3 (“PEA 3”) to the Registrant’s registration statement under the Securities Act of 1933, as amended, and Amendment No. 5 to the Registrant’s registration statement under the Investment Company Act of 1940, as amended (the “1940 Act”), as filed on February 17, 2012. A summary of the Staff’s comments, along with the Registrant’s responses, is set forth below. Undefined capitalized terms used below have the same meaning as given in PEA 3.
Prospectuses
Comment 1: With regard to the Portfolio’s investments in derivatives, review the Principal Investment Strategies and Principal Risks sections to ensure these sections are not overly generic. Also, review each section to confirm that it describes the actual derivatives used and corresponding risks. Refer to the observations made in the Letter to Karrie McMillan, Investment Company Institute, from Barry D. Miller, Associate Director, Division of Investment Management, SEC (July 30, 2010) (the “Derivatives Letter”). In your response, confirm that each derivative instrument described in these sections is consistent with the investment strategies of the Portfolio.
Response: The Registrant has reviewed the Derivatives Letter and confirms that, in the Registrant’s opinion, the Portfolio’s derivatives disclosure is consistent with the observations made therein and with the investment strategies of the Portfolio.
US Austin Boston Charlotte Hartford Los Angeles New York Orange County Philadelphia Princeton San Francisco Silicon Valley Washington DC EUROPE Brussels Dublin Frankfurt London Luxembourg Moscow Munich Paris ASIA Beijing Hong Kong
| Deborah D. Skeens April 30, 2012 Page 2 |
To the extent the Portfolio uses derivatives as part of itsprincipal investment strategies, or such use subjects the Portfolio to aprincipal risk, the Registrant believes both the Principal Investment Strategies and Principal Risks sections (i) adequately discuss such derivatives, (ii) do not include extraneous discussion of derivatives that are not part of the Portfolio’sprincipal investment strategies or risks, and (iii) adequately address the purposes for the use of such derivatives.
The Portfolio provides a summary of the types of derivatives used within its Principal Investment Strategies section. The disclosure provided in this section is only a summary and is limited to the securities and instruments used in furtherance of the Portfolio’sprincipal investment strategies. The Portfolio may use a variety of different derivative instruments from time to time for a variety of different purposes, including, but not limited to, risk management and in furtherance of the Portfolio’s investment strategies, both principal and secondary. It would be impossible to identify each type of derivative instrument that may be used, and the various purposes for such use given a continually changing investment landscape, within the confines of a summary ofprincipal investment strategies. The Description of Principal Risks section following the Portfolio Summary is more detailed, but is inherently limited to a discussion of derivatives in the context of what factors constitute aprincipal risk to the Portfolio.
Although the Registrant does not believe it appropriate to include a full description of each type of derivative used and the purposes thereof within the Portfolio Summary, the Registrant notes that more complete disclosure is found elsewhere in the registration statement. For example, the Description of Principal Risks section of the prospectus provides a more complete description of the principal risks of derivatives exposure. Still more detailed disclosure regarding derivatives, and their risks, is found in both the Characteristics and Risks of Securities and Investment Techniques section of the prospectus and the Investment Objectives and Policies section of the SAI. The Registrant believes that this presentation of derivatives disclosure throughout the registration statement – beginning with a summary in the Portfolio Summary and providing successively more detail in each of three separate sections of the prospectus and SAI that follow – is an appropriate presentation of the types of derivatives used, the purposes thereof and the attendant risks.
Comment 2: Certain information, particularly fees and expenses of the Portfolio and certain exhibits, is missing. Please confirm that missing information will be provided in a post-effective amendment.
Response: Confirmed. Missing information will be provided in a post-effective amendment.
| Deborah D. Skeens April 30, 2012 Page 3 |
Comment 3: Delete all fee table footnotes relating to short sale expenses as such footnotes are neither permitted nor required by Item 3 of Form N-1A. In lieu of these footnotes, consider including a sub-caption relating to short sale expenses within the Other Expenses caption of the fee table.
Response: To the extent the Portfolio enters into certain investments, such as short sales, the Portfolio incurs expenses, such as the expense of dividends paid on borrowed securities. Such expense (“short sale expense”) is required to be treated as an expense of the Portfolio for accounting purposes, but the amount of short sale expense, if any, will vary from year to year with the Portfolio’s use of such investments as an investment strategy.
Unlike many other fund complexes, the Portfolio has a “unified fee” structure wherein the Portfolio pays two fixed fees to PIMCO in return for required services that PIMCO provides or arranges to provide for the Portfolio. This unified fee is comprised of the investment advisory fee and supervisory and administrative fee as described in the Portfolio’s statutory prospectus and disclosed in the combined Management Fees line item of the fee table. Under the unified fee, PIMCO provides or procures advisory and supervisory and administrative services for shareholders and also bears the costs of various third-party services required by the Portfolio, including audit, custodial, portfolio accounting, legal, transfer agency and printing costs. As such, the unified fee structure is designed to be an “all-in” fee structure that pays for the fees and costs of all PIMCO and third-party provided services under more or less a fixed fee. Accordingly, the Registrant believes that investors have come to expect a total expense ratio from year to year that is generally fixed.
There are, however, certain expenses the Portfolio does bear that are not covered under the unified fee structure which may materially impact the total level of expenses that shareholders generally expect to pay under a unified fee structure. One of the few expenses not covered by the unified fee, and thus reflected in the “Other Expenses” line item of the fee table, is the Portfolio’s short sale expense incurred due to dividends paid on borrowed securities. As such short sale expense may vary, causing the Portfolio to disclose a different total expense ratio from year to year, the Registrant believes that failure to include an explanation for this variance may create investor confusion. The Registrant believes explanatory footnotes appropriately placed where they are most likely to be read by investors (i.e., immediately adjacent to the fee table and expense ratio) are helpful and informative for the average investor, not confusing or burdensome.
The Registrant notes that the SEC, in adopting the summary prospectus amendments to Form N-1A, indicated that “[t]he fee table and example are designed to help investors understand the costs of investing in a fund andcompare those costs with the costs of other funds” (emphasis
| Deborah D. Skeens April 30, 2012 Page 4 |
added).1 The SEC further stated that the “prospectus summary section is intended to provide investors with streamlined disclosure of key mutual fund information at the front of the statutory prospectus, in a standardized order thatfacilitates comparisons across funds” (emphasis added).2 The Registrant agrees. The primary goal of a statutory prospectus summary section should be to provide clear, concise information to facilitate investor comparison of the Portfolio with other mutual funds. Without the current fee table footnotes describing the Portfolio’s short sale expense due to dividends paid on borrowed securities and its effect on the Portfolio’s expense ratio, the Registrant believes the Portfolio’s fee table would not adequately facilitate an investor comparison of the Portfolio’s costs against other mutual funds’ costs as investors will not have the context in which to accurately make such a comparison. Because the Portfolio has a unique unified fee structure as described above, what comprises “Other Expenses” for the Portfolio is likely very different from what comprises “Other Expenses” for other mutual funds. Therefore, the impact of “Other Expenses” on the Portfolio’s total expense ratio from year to year as compared to other mutual funds’ expense ratios is likely to be quite different. For example, because the Portfolio does not include any routine servicing or administrative expenses under “Other Expenses,” as such expenses are covered by the unified fee, any “Other Expenses” reflect non-routine activities such as short sale expense accrued as a result of discretionary investment activities. Since the unified fee structure renders “Other Expenses” a non-routine line item for the Portfolio, investors in the Portfolio have reasonably come to expect that the total expense ratio of the Portfolio is often the unified fee plus any share class-specific fixed expenses (such as 12b-1 fees). Thus, without the footnotes to explain the non-routine instances where the Portfolio needs to disclose “Other Expenses,” investors may not understand that the Portfolio operates under a unified fee structure, as they may mistakenly assume that such “Other Expenses” are expenses that are in fact covered by the unified fee. This is particularly true under the “summary prospectus” paradigm where the statutory prospectus is not required to be sent unless the investor requests it and detailed information about the unified fee structure is only included in the statutory prospectus. Accordingly, the Registrant believes an investor could be unaware of the Portfolio’s unified fee structure unless the Portfolio includes explanatory footnotes in the summary prospectus. The Registrant believes deleting these footnotes would cause its fee tables to fall short in meeting the SEC’s objective of providing clear, concise, standardized information to facilitate cost comparisons across different mutual funds because the Registrant’s unified fee structure is unique as compared to most other mutual funds.
| 1 | Enhanced Disclosure and New Prospectus Delivery Option for Registered Open-End Management Investment Companies, Inv. Co. Act Rel. No. 28584, at 31 (Jan. 13, 2009) (“Summary Prospectus Adopting Release”). |
| 2 | Id. at 16-17. |
| Deborah D. Skeens April 30, 2012 Page 5 |
Thus, as General Instruction C(1)(a) to Form N-1A states that the requirements of the Form are “intended to promote effective communication between the Portfolio and prospective investors,” the Registrant believes it is “effective communication” within the meaning of the General Instruction to include a limited number of footnotes as part of the table to clearly communicate the nature and amount of the Portfolio’s short sale expense, including why such expense is incurred and that this expense may vary from year to year (i.e., that it is not a fixed fee or expense, like the other line items in the Portfolio’s fee table). The Registrant believes the failure to do so may result in investors not otherwise understanding why the Portfolio’s total expense ratio may differ, sometimes substantially, each year largely as a function of short sale expense. Moreover, the inclusion of the short sale expense footnotes, in addition to providing clarifying information to investors, does not lengthen the summary section of the statutory prospectus in any meaningful way or otherwise interfere with a concise, plain English presentation of material information to investors. To the contrary, the short sale expense footnotes provide helpful, clarifying information for investors.
Comment 4: Confirm that the Portfolio’s subsidiary’s fees and expenses are included in both the fee table and a footnote to the fee table consistent with Instruction 1(d)(i) to Item 3 of Form N-1A, which relates to master-feeder structures.
Response: The fees and expenses incurred by the Portfolio due to its investment in its Subsidiary are reflected as part of the Acquired Fund Fees and Expenses line item in the Portfolio’s fee table. Such fees and expenses are not passed through to Portfolio investors but are instead waived by PIMCO as reflected by the Expense Reimbursement line item in the Portfolio’s fee table and corresponding footnote. Instruction 1(d)(i) to Item 3 only applies to “Master-Feeder Funds” (as defined in General Instruction A to Form N-1A). The Portfolio and its Subsidiary are not Master-Feeder Funds, therefore Instruction 1(d)(i) is not applicable. See also the response to comment 7 below for more information regarding the differences between Master-Feeder Funds as compared to the Portfolio and its Subsidiary.
Comment 5: Since investing in Acquired Funds is not a principal investment strategy of the Portfolio, explain why the fee table includes Acquired Fund Fees and Expenses. Supplementally, provide the amount, stated as a percentage of the Portfolio’s assets, invested in Acquired Funds as of a recent date. Also, if the Portfolio is invested in Acquired Funds, and the Portfolio itself serves as an underlying fund option for a fund of funds, explain how this structure is consistent with Section 12 of the 1940 Act.
Response: The fees and expenses incurred by the Portfolio due to its investment in its Subsidiary are reflected as part of the Acquired Fund Fees and Expenses line item in the Portfolio’s fee
| Deborah D. Skeens April 30, 2012 Page 6 |
table.3 As of March 30, 2012, the Portfolio invested 3.31% of its total assets in Acquired Funds. The Portfolio does not operate as a “fund of fund” in reliance on Sections 12(d)(1)(F) or 12(d)(1)(G) of the 1940 Act, although the Portfolio may invest in other funds to the extent permitted generally by Sections 12(d)(1)(A) and 12(d)(1)(B) and rules thereunder.
Comment 6: Various sections of the prospectus indicate the Portfolio may invest up to 25% of its total assets in its subsidiary. In your response, provide the Portfolio’s investment in its subsidiary as of a recent date.
Response: As of March 30, 2012, the Portfolio invested 2.13% of its total assets in its Subsidiary.
Comment 7: With respect to the Portfolio’s subsidiary (i) address whether Section 15 of the 1940 Act applies to the subsidiary’s relationship with its investment adviser; (ii) address whether the subsidiary’s board of directors will comply with the requirements of Section 16 of the 1940 Act; (iii) address whether the subsidiary has the same fundamental and non-fundamental investment restrictions as the Portfolio; (iv) confirm the subsidiary has filed with the SEC a consent to service of process and also consents to the examination of its books and records by the Staff; and (v) address whether the subsidiary’s board of directors will execute the Registrant’s post-effective amendments to its registration statement that relate to the Portfolio.
Response: The Registrant’s responses, set forth below, are similar to the responses provided to similar comments on Post-Effective Amendment Nos. 126, 133 and 171 for PIMCO Funds, Post-Effective Amendment No. 10 for PIMCO Equity Series, and Post-Effective Amendment No. 48 for PIMCO Variable Insurance Trust, each a separate registered investment company also advised by PIMCO.4
| 3 | Such fees and expenses are not passed through to Portfolio investors but are instead waived by PIMCO as reflected by the Expense Reimbursement line item in the Portfolio’s fee table and corresponding footnote. |
| 4 | See Letter from Derek B. Newman to Brion Thompson, Division of Investment Management, U.S. Securities and Exchange Commission, Responding to Comments on PIMCO Funds Post-Effective Amendment No. 126, at comments 10-14 (July 26, 2007);see alsoLetter from Nauman S. Malik to Brion Thompson, Division of Investment Management, U.S. Securities and Exchange Commission, Responding to Comments on PIMCO Funds Post-Effective Amendment No. 133, at comment 14 (April 28, 2008); Letter from Adam T. Teufel to Brion Thompson, Division of Investment Management, U.S. Securities and Exchange Commission, Responding to Comments on PIMCO Funds Post-Effective Amendment No. 171, at comments 10-13 (May 11, 2010); Letter from Adam T. Teufel to Brick Barrientos, Division of Investment Management, U.S. Securities and Exchange Commission, Responding to Comments on PIMCO Equity Series Post-Effective Amendment No. 10, at comment 3 (Nov. 2, 2011); and Letter from Adam T. Teufel to Deborah D. Skeens, Division of Investment Management, U.S. Securities and Exchange Commission, Responding to Comments on PIMCO Variable Insurance Trust Post-Effective Amendment No. 48, at comment 10 (Jan. 10, 2012). |
| Deborah D. Skeens April 30, 2012 Page 7 |
Whether Sections 8, 15 and 16 of the 1940 Act apply to the Subsidiary
In complying with its fundamental and non-fundamental investment restrictions, the Portfolio will typically aggregate its direct investments with its Subsidiary’s investments when testing for compliance with each investment restriction of the Portfolio. However, the Subsidiary will independently segregate liquid assets or enter into offsetting positions with respect to transactions that may give rise to leveraging risk to the same extent the Portfolio segregates assets for, or offsets, similar transactions the Portfolio engages in directly. In addition, the Subsidiary has adopted many of the same fundamental and non-fundamental investment restrictions as the Portfolio. The Subsidiary is not a registered investment company under the 1940 Act, and is therefore not required to comply with the requirements of the 1940 Act applicable to registered investment companies. However, the Registrant is acutely aware of the requirements of Section 48(a) of the 1940 Act, which prohibits the Portfolio from doing indirectly “through or by means of any other person” (i.e., the Subsidiary) what it is prohibited from doing directly. As such, the Subsidiary will not engage in any activity prohibited by the 1940 Act that would cause the Portfolio to violate Section 48(a).5
Whether the Subsidiary has filed with the SEC a consent to service of process and also consents to the examination of its books and records by the Staff
As an exhibit to its next post-effective amendment, the Registrant will file a consent to service of process and examination of its books and records.6
Whether the Subsidiary will execute the Registrant’s post-effective amendments to its registration statement
| 5 | For example, if the Portfolio were to cause its Subsidiary to engage in investment activities prohibited by the Portfolio’s fundamental investment restrictions without first obtaining shareholder approval, the Portfolio would be in violation of Sections 8 and 13, by virtue of the application of Section 48(a). |
| 6 | The Subsidiary submits to jurisdiction in the United States by virtue of filing an exhibit to the Registrant’s registration statement substantively similar to Form F-X under the Securities Act that designates the Registrant its agent in the United States to accept service of process in any suit, action, or proceeding before the Commission or an appropriate court. We note that by means of a no-action letter, an offshore fund proposed to use this method to submit to jurisdiction.See Man Glenwood Lexington TEI LLC, SEC No-Action Letter (April 30, 2004). |
| Deborah D. Skeens April 30, 2012 Page 8 |
The Subsidiary is not required to execute the Registrant’s post effective amendments. The Subsidiary is not offering any securities in the United States, nor is the Subsidiary a co-issuer of the Portfolio’s securities.
The Subsidiary is organized solely for the purpose of providing the Portfolio a non-exclusive means by which the Portfolio may advance its investment objective in compliance with an Internal Revenue Service (“IRS”) revenue ruling, which limits the Portfolio’s ability to gain exposure to the commodities markets through investments in commodity-linked swap agreements.7
Section 7(d) of the 1940 Act prohibits an investment company that is not organized or otherwise created under United States law from utilizing any means or instrumentality of interstate commerce, directly or indirectly, to offer for sale, sell or deliver after sale, in connection with a public offering, any security of which it is the issuer. The Staff has issued a number of letters granting no-action relief where U.S. registered funds sought to set up offshore subsidiaries to permit them to invest in foreign markets and/or obtain favorable tax treatment (the “Conduit Letters”).8 In each of the Conduit Letters, the subsidiaries were established in order to facilitate the fund’s investment program, and not for the purpose of creating a foreign investment vehicle to be marketed to U.S. investors. The funds were the sole beneficial owners of the offshore subsidiaries, and the funds and their managers controlled all of the subsidiaries’ investment activities. Accordingly, the concerns of Section 7(d) were not implicated. The Registrant is relying on the Conduit Letters in support of its view that the Subsidiary is not offering its securities in the United States in violation of Section 7(d).9
| 7 | The Registrant notes that the Portfolio may also enter into commodity-linked swap agreements directly, but is limited in its ability to do so by the IRS revenue ruling. Furthermore, as currently disclosed, the IRS issued private letter rulings to similar funds in which the IRS specifically concluded that income derived from a fund’s investment in its subsidiary will constitute qualifying income to the fund. |
| 8 | SeeSouth Asia Portfolio, SEC-No-Action Letter (March 12, 1997); Templeton Vietnam Opportunities Fund, Inc., SEC No-Action Letter (September 10, 1996); The Spain Fund, Inc., SEC No-Action Letter (Nov. 27, 1987); The Thai Fund, Inc., SEC No-Action Letter (Oct. 29, 1987); The Scandinavia Fund, Inc., SEC No-Action Letter (Oct. 24, 1986). |
| 9 | We believe the present situation presents less concern than situations where the Staff previously granted no-action relief because of the limited amount of the Portfolio’s assets to be invested in its Subsidiary. For instance, the Portfolio will invest a limited amount of its assets in its Subsidiary and is limited by the Internal Revenue Code diversification requirements applicable to registered investment companies (limiting a fund’s investment in its subsidiary to 25% of total assets at quarter-end). Similarly, the present situation raises less concern than in the context of hub and spoke structures (where 100% of the parent feeder fund’s assets are invested in an offshore master fund) in which the |
| Deborah D. Skeens April 30, 2012 Page 9 |
Registrant also believes that the Subsidiary is not a co-issuer of the Portfolio’s securities and is therefore not required to sign the Portfolio’s post-effective amendments. Registrant is aware that with respect to funds of funds relying on Section 12(d)(1)(E) of the 1940 Act (so-called “master-feeder” or “hub and spoke” funds) the Staff requires the acquired fund to sign the registration statement of the acquiring fund. The Staff takes this position based upon its view that the acquiring fund is a co-issuer of the acquired fund’s securities under Rule 140 under the Securities Act.
Rule 140 provides in relevant part that “[a] person,the chief part of whose business consists of the purchase of the securities of one issuer, or of two or more affiliated issuers, and the sale of its own securities…is to be regarded as engaged in the distribution of the securities of such issuer within the meaning of Section 2(11) of the [Securities Act]” (emphasis supplied). Under Rule 140, the entity for whose benefit the other entity sells its stock is also deemed a “co-issuer” for purposes of Rule 140. In a typical master-feeder structure, the Staff has viewed the feeder fund as a “co-issuer” of the master fund’s shares under Rule 140 and has required that the master fund sign the feeder fund’s registration statement.10
The Subsidiary’s structure is decidedly different from the traditional master-feeder structure in that the Portfolio’s investment in its Subsidiary is a limited part of the Portfolio’s overall investment strategy. The “chief part” of the Portfolio’s business is not the purchase of the securities of its Subsidiary and the sale of its own securities. Rather, the Portfolio’s assets are typically invested outside the Subsidiary. As noted above, only a limited portion of the
Staff has also provided no-action relief under Section 7(d).SeeMan Glenwood Lexington TEI LLC, SEC No-Action Letter (April 30, 2004); Alternative Investment Partners Absolute Return Fund STS, SEC No-Action Letter (July 10, 2006). |
The Portfolio’s investment in its Subsidiary will not result in any potential abuses that Section 7(d) was designed to address. The purpose of the present structure is merely to better achieve the Portfolio’s investment objective in light of an IRS revenue ruling rather than to create a foreign investment vehicle to be marketed to U.S. investors. In addition, the concerns underlying Section 7(d) may be addressed through enforcement of the 1940 Act against the Portfolio, which is registered under the 1940 Act and subject to Section 48(a) thereunder. |
| 10 | SeeLetter from Richard Breeden to the Hon. John Dingell (April 15, 1992) (outlining the regulation of master-feeder arrangements under the 1940 Act and including a report of the Division of Investment Management, “Committee on Energy and Commerce U.S. House of Representatives, Hub and Spoke Funds: A Report Prepared by the Division of Investment Management”).See also Man Glenwood Lexington TEI LLC, SEC No-Action Letter (April 30, 2004); Alternative Investment Partners Absolute Return Fund STS, SEC No-Action Letter (July 10, 2006). |
| Deborah D. Skeens April 30, 2012 Page 10 |
Portfolio’s assets will be invested in its Subsidiary. Registrant maintains that in order to be “the chief part” of one’s business, it must be the predominant activity of the Portfolio.11 In contrast, in the master-feeder structure, a feeder fund’s sole activity is to purchase the investment securities of the master, and in turn issue its own shares. Based on this distinction, the Registrant does not believe that the Subsidiary can be deemed a “co-issuer” under Rule 140 and, thus, is not required to sign the registration statement. Should the Portfolio’s investment in its Subsidiary ever become the chief part of its business, the Subsidiary will undertake to sign the Portfolio’s registration statement as requested.
Although the Subsidiary is not required to sign the registration statement, Registrant believes that the SEC and Staff will be able to adequately supervise and assert jurisdiction over the activities of the Subsidiary if necessary for the protection of Portfolio investors. First, as noted above, the Subsidiary will not be able to engage in any activity that would cause the Portfolio to violate the 1940 Act pursuant to Section 48(a). Second, although the Subsidiary is organized in the Cayman Islands, all of its activities, including investment management, will take place in the United States. The Subsidiary’s books and records will be maintained in the United States, together with the Portfolio’s books and records, in accordance with Section 31 of the 1940 Act and the rules thereunder. Custody of the Subsidiary’s assets will be maintained in the United States with the Portfolio’s custodian in accordance with Section 17(f) and the rules thereunder. As noted above, the Subsidiary will file a consent to service of process and examination of its books and records.
Comment 8: With respect to the fee table footnotes relating to fee waivers and/or expense reimbursements, confirm that the footnotes and corresponding line items in the fee table are consistent with the requirements of Instruction 3(e) to Item 3 of Form N-1A. Specifically, only include these footnotes and corresponding line items to the extent the applicable reimbursement and waiver arrangements actually reduce Portfolio operating expenses for no less than one year from the effective date of the registration statement.
Response: To the best of the Registrant’s knowledge and belief, the Portfolio’s contractual expense reimbursement and waiver arrangements will reduce actual expenses for no less than one year from the date of the Portfolios’ registration statement.
| 11 | See e.g.,FBC Conduit Trust I, SEC No-Action Letter (October 6, 1987) (Staff interpreted the phrase “chief part” in Rule 140 in the context of a proposed offering of collateralized mortgage obligation bonds or certificates backed by private label mortgage pass-through certificates (“PCM”). The Staff determined that Rule 140 “would not be applicable if the collateral securing any series of bonds or certificates consists of 45% or less of a particular issuer’s PCM’s”).See also Merriam Webster Dictionary, defining “chief” as “of greatest importance or influence.” |
| Deborah D. Skeens April 30, 2012 Page 11 |
Comment 9: Certain fee table footnotes describe expense reimbursements and/or fee waiver arrangements. Confirm that any adjustment to the Expense Example is made only for those period(s) for which these expense reimbursement and/or fee waiver arrangements are expected to continue.
Response: Confirmed. The adjustments to the Expense Example have been made only for those periods for which the Portfolio’s expense reimbursements and/or fee waiver arrangements are expected to continue. In the event a contractual reimbursement or waiver arrangement is unexpectedly terminated, the Registrant will promptly supplement the prospectus to reflect the increased expenses.
Comment 10: The Portfolio Summary—Performance Information section provides certain information about the Portfolio’s benchmark index as of May 27, 2010. Update this information as of a more recent date.
Response: Comment accepted.
Comment 11: The first line item in the Average Annual Total Returns table indicates returns are provided “Before Taxes.” Delete “Before Taxes.”
Response: Comment accepted.
Part C
Comment 12: In response to Item 28(h) of Form N-1A, “forms of” a participation agreement, services agreements and selling agreements have been filed as exhibits to the registration statement. Except where otherwise permitted by Rule 483(d)(2), please file executed copies of these agreements and not “form of” agreements. Alternatively, confirm supplementally that the executed agreements are substantially identical to the form of agreements previously filed as exhibits.
Response: Due to the large number of agreements involved and consistent with past practice, the current “form of” participation agreement, services agreements and selling agreements have been filed as exhibits to the registration statement. The Registrant will make a copy of any executed participation agreement, services agreement or selling agreement available to the Staff upon request. In addition, the Registrant confirms that the executed agreements are substantially identical to the “form of” agreements previously filed as exhibits.
| Deborah D. Skeens April 30, 2012 Page 12 |
Comment 13: In response to Item 28(h), there are two references to forms of agreements for Class M shares, however, there do not appear to be any Class M shares offered by the Registrant. Please review and revise.
Response: Comment accepted. References to Class M shares have been deleted.
* * *
In addition to these comments, you requested that the Registrant make certain representations concerning PEA 3 and the responses being made to the comments received. These representations are included as an exhibit to this letter.
We believe that the foregoing has been responsive to the Staff’s comments. Please call the undersigned at (202) 261-3464 or Douglas P. Dick at (202) 261-3305 if you wish to discuss this correspondence further.
Sincerely,
/s/ Adam T. Teufel
Adam T. Teufel
| cc: | J. Stephen King, Jr., Pacific Investment Management Company LLC |
Ryan Leshaw, Pacific Investment Management Company LLC
Dino Capasso, Pacific Investment Management Company LLC
Douglas P. Dick, Dechert LLP
EXHIBIT
PIMCO Equity Series VIT
840 Newport Center Drive
Newport Beach, California 92660
Via EDGAR
April 30, 2012
Division of Investment Management
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
| Re: | PIMCO Equity Series VIT (the “Registrant”) (File Nos. 333-164078, 811-22376) |
In connection with a response being made on behalf of the Registrant to comments provided with respect to Amendment No. 5 to the Registrant’s registration statement under the Investment Company Act of 1940, as filed on February 17, 2012 (the “Registration Statement”), the Registrant hereby acknowledges that:
| • | the Registrant is responsible for the adequacy and the accuracy of the disclosure in the Registration Statement; |
| • | comments of the staff of the Securities and Exchange Commission (“SEC”) or changes to disclosure in response to SEC staff comments in the Registration Statement reviewed by the staff do not preclude the SEC from taking any action with respect to the Registration Statement; and |
| • | if an inquiry or investigation is currently pending or threatened by the SEC and if the SEC subsequently, in order to protect its investigative position, so requests, the Registrant will not assert SEC staff comments with respect to the inquiry or investigation as a defense in any proceeding initiated by the SEC under the federal securities laws of the United States. This representation should not be construed as confirming that there is or is not, in fact, any inquiry or investigation currently pending or threatened. |
We hope that the foregoing is responsive to your request. Please do not hesitate to contact Douglas P. Dick at (202) 261-3305 or Adam T. Teufel at (202) 261-3464 of Dechert LLP, outside counsel to the Registrant, if you have any questions concerning the foregoing.
Sincerely, |
/s/ Peter G. Strelow |
Peter G. Strelow |
Vice President |
| cc: | Douglas P. Dick |
Adam T. Teufel
J. Stephen King, Jr.
Ryan Leshaw
Dino Capasso