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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: 811-22375
PIMCO Equity Series
(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
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
Registrant’s telephone number, including area code: (888) 877-4626
Date of fiscal year end: June 30
Date of reporting period: December 31, 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. 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).
• | PIMCO Equity Series—Institutional, P, Administrative, D, A, C and R Classes |
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Your Global Investment Authority
PIMCO Equity Series®
Semiannual Report
December 31, 2014
PIMCO Balanced Income Fund
PIMCO Dividend and Income Builder Fund
PIMCO Emerging Multi-Asset Fund
PIMCO EqS® Emerging Markets Fund
PIMCO EqS® Long/Short Fund
PIMCO Global Dividend Fund
PIMCO International Dividend Fund
PIMCO U.S. Dividend Fund
PIMCO EqS Pathfinder Fund®
Share Classes
n | Institutional |
n | P |
n | Administrative |
n | D |
n | A |
n | C |
n | R |
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Fund | Insights from the Portfolio Managers | Fund Summary | Schedule of Investments | |||||||||
PIMCO Balanced Income Fund | 6 | 8 | 54 | |||||||||
PIMCO Dividend and Income Builder Fund | 9 | 12 | 62 | |||||||||
PIMCO Emerging Multi-Asset Fund | 13 | 15 | 70 | |||||||||
PIMCO EqS® Emerging Markets Fund | 16 | 18 | 76 | |||||||||
PIMCO EqS® Long/Short Fund | 19 | 21 | 83 | |||||||||
PIMCO Global Dividend Fund* | 22 | 24 | 87 | |||||||||
PIMCO International Dividend Fund | 25 | 26 | 91 | |||||||||
PIMCO U.S. Dividend Fund | 27 | 27 | 94 | |||||||||
PIMCO EqS Pathfinder Fund® | 28 | 31 | 96 |
* | Prior to December 31, 2014, the Fund’s name was PIMCO EqS® Dividend Fund. |
This material is authorized for use only when preceded or accompanied by the current PIMCO Equity Series prospectus.
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Dear Shareholder,
Please find enclosed the Semiannual Report for the PIMCO Equity Series covering the six-month reporting period ended December 31, 2014. On the following pages are specific details about the investment performance of each fund and a discussion of the factors that influenced performance during the reporting period. In addition, the letters from the portfolio managers provide a further review of such factors as well as an overview of each fund’s investment strategy.
As previously announced on September 26, 2014, William “Bill” Gross, PIMCO’s Chief Investment Officer and co-founder, resigned from the firm. PIMCO subsequently elected Daniel Ivascyn to serve as Group Chief Investment Officer (“Group CIO”). In addition, PIMCO appointed Andrew Balls, CIO Global Fixed Income; Mark Kiesel, CIO Global Credit; Virginie Maisonneuve, CIO Global Equities; Scott Mather, CIO U.S. Core Strategies; and Mihir Worah, CIO Real Return and Asset Allocation. On November 3, 2014, PIMCO also announced that Marc Seidner would return to the firm effective November 12, 2014 in a new role as CIO Non-traditional Strategies and Head of Portfolio Management in the New York office.
Under this leadership structure, Mr. Balls and Mr. Worah have additional managerial responsibility for PIMCO’s Portfolio Management group and trade floor activities globally. Mr. Balls will oversee Portfolio Management in Europe and Asia-Pacific, and Mr. Worah will oversee Portfolio Management in the U.S. Douglas Hodge, PIMCO’s Chief Executive Officer, and Jay Jacobs, PIMCO’s President, continue to serve as the firm’s senior executive leadership team, spearheading PIMCO’s business strategy, client service and the firm’s operations.
These appointments are a further evolution of the structure that PIMCO established early in 2014, reflecting our belief that the best approach for PIMCO’s clients and our firm is an investment leadership team of seasoned, highly skilled investors overseeing all areas of PIMCO’s investment activities.
During his 43 years at PIMCO, Mr. Gross made great contributions to building the firm and delivering value to PIMCO’s clients. Over this period PIMCO developed into a global asset manager, expanding beyond core fixed income, and now encompasses nearly 2,500 employees across 13 offices, including over 250 portfolio managers. Mr. Gross was also responsible for starting PIMCO’s robust investment process, with a focus on long-term macroeconomic views and bottom-up security selection—a process that is well institutionalized and will continue into PIMCO’s future.
Highlights of the financial markets during our six-month reporting period include:
n | Developed market equities posted mixed returns as global growth divergence was evidenced in the last part of the reporting period. Additionally, the sharp decline in oil prices led to heightened market volatility. Growth in the U.S., for example, exceeded investor expectations and outpaced its peers in the developed world, especially Japan and Europe, which both continued to struggle. U.S. equities, as measured by the S&P 500 Index, returned 6.12%. Developed market equities outside the U.S., as represented by the MSCI EAFE Net Dividend Index (USD Unhedged), declined 9.24% over the reporting period. |
n | After a strong first half of the year, emerging market equities, as represented by the MSCI Emerging Markets Index (Net Dividends in USD), declined 7.84% over the reporting period due to headwinds from a strengthening U.S. dollar, falling commodity prices and concerns over slower Chinese economic growth. Russia was the worst performing country, as the Russian ruble plummeted nearly 50% versus the U.S. dollar, which included a one-day 40% sell-off following an interest rate hike to 17% by Russia’s central bank. Asia had some of the best performing equity markets in the emerging world, partially aided by lower oil prices as many Asian countries are net importers of fuel. |
n | U.S. Treasuries, as represented by the Barclays U.S. Treasury Index, returned 2.28% for the reporting period, as intermediate and longer maturity yields declined and the front-end of the U.S. Treasury yield curve was modestly weaker in anticipation of monetary tightening sometime in 2015. The benchmark ten-year U.S. Treasury note |
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yielded 2.17% at the end of the reporting period, down from 2.53% on June 30, 2014. The Barclays U.S. Aggregate Index, a widely used index of U.S. investment-grade bonds, returned 1.96% for the reporting period. |
All of our active equity strategies have high-conviction portfolios driven by bottom-up fundamental research. Each strategy is managed by experienced equity investors who benefit from PIMCO’s global investment resources and macroeconomic insights. We believe the long-term potential of equities to grow earnings and dividends is an important component of an investor’s overall portfolio.
If you have any questions regarding the PIMCO Equity Series, please contact your account manager or financial adviser, or call one of our shareholder associates at 888.87.PIMCO (888.877.4626). We also invite you to visit our website at www.pimco.com/investments to learn more about our views and global thought leadership.
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.
Sincerely,
Brent R. Harris Chairman of the Board, PIMCO Equity Series
January 23, 2015 |
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Important Information About the Funds
We believe that equity funds have an important role to play in a well diversified investment portfolio. It is important to note, however, that equity funds are subject to notable risks. Among other things, equity and equity-related securities may decline in value due to both real and perceived general market, economic, and industry conditions.
As of the date of this report, interest rates in the U.S. are at or near historically low levels. As such, funds that invest in fixed income securities may currently face an increased exposure to the risks associated with a rising interest rate environment. This is especially true as the Fed ended its quantitative easing program in October 2014. 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 a Fund. If the performance of a Fund were to be negatively impacted by rising interest rates, the Fund could face increased redemptions by its shareholders, which could further reduce the value of the Fund.
The Funds may be subject to various risks as described in the Funds’ prospectus. Some of these risks may include, but are not limited to, the following: Acquired Fund risk, allocation risk, equity risk, dividend-oriented stocks risk, value investing risk, foreign (non-U.S.) investment risk, emerging markets risk, market risk, issuer risk, interest rate risk, call risk, credit risk, high yield and distressed company risk, cash holdings risk, currency risk, real estate risk, liquidity risk, leveraging risk, management risk, small-cap and mid-cap company risk, arbitrage risk, derivatives risk, mortgage-related and other asset-backed securities risk, short sale risk, convertible securities risk, commodity risk, tax risk, subsidiary risk, and issuer non-diversification risk. A complete description of these risks and other risks is contained in the Funds’ prospectus. The Funds 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 Funds could not close out a position when it would be most advantageous to do so. Certain derivative transactions may have a leveraging effect on a Fund. For example, a small investment in a derivative instrument may have a significant impact on a Fund’s 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 in the Funds. A Fund may engage in such transactions regardless of whether the Fund owns the asset, instrument or components of the
index underlying the derivative instrument. A Fund may invest a significant portion of its assets in these types of instruments. If it does, the Fund’s 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. Investing in foreign (non-U.S.) securities may entail risk due to foreign (non-U.S.) economic and political developments; this risk may be increased when investing in emerging markets.
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 Fund 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.
The geographical classification of foreign (non-U.S.) securities in this report are classified by the country of incorporation of a holding. In certain instances, a security’s country of incorporation may be different from its country of economic exposure.
The Funds (or Acquired Funds) 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, as well as the risk that economic sanctions may be imposed by the United States and/or other countries. Such sanctions—which may impact companies in many sectors, including energy, financial services and defense, among others—may negatively impact a Fund’s performance and/or ability to achieve its investment objective. For example, certain transactions may be prohibited and/or existing investments may become illiquid (e.g., in the event that transacting in certain existing investments is prohibited), which could cause a Fund to sell other portfolio holdings at a disadvantageous time or price in order to meet shareholder redemptions.
On each individual Fund 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. Class A shares are subject to an initial sales charge. A Contingent Deferred Sales Charge (“CDSC”) may be imposed in certain circumstances on Class A shares that are purchased
4 | PIMCO EQUITY SERIES |
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without an initial sales charge and then redeemed during the first 18 months after purchase. The Cumulative Returns chart reflects only Institutional Class performance. Performance for Class P, Administrative Class, Class D, Class A, Class C and Class R shares are typically lower than Institutional Class performance due to the lower expenses paid by Institutional Class shares. Performance shown is net of fees and expenses. A Fund’s total annual operating expense ratios on each individual Fund summary page are as of the currently effective prospectus, as supplemented to date. The Cumulative Returns chart assumes the initial investment of $1,000,000 was made at the end of
the month that the Institutional Class of the relevant Fund commenced operations. The minimum initial investment amount for Institutional Class, Class P and Administrative Class shares is $1,000,000. The minimum initial investment amount for Class A, Class C and Class D shares is $1,000. There is no minimum initial investment for Class R shares. Each Fund measures its performance against a broad-based securities market index (“benchmark index”). The benchmark index does not take into account fees, expenses, or taxes. A Fund’s past performance, before and after taxes, is not necessarily an indication of how the Fund will perform in the future.
The following table discloses the inception dates of each Fund and its respective share classes:
Fund Name | Fund Inception | Institutional Class | Class P | Administrative Class | Class D | Class A | Class C | Class R | ||||||||||||||||||||||||||
PIMCO Balanced Income Fund | 03/31/14 | 03/31/14 | 03/31/14 | — | 03/31/14 | 03/31/14 | 03/31/14 | — | ||||||||||||||||||||||||||
PIMCO Dividend and Income Builder Fund | 12/14/11 | 12/14/11 | 12/14/11 | — | 12/14/11 | 12/14/11 | 12/14/11 | 12/14/11 | ||||||||||||||||||||||||||
PIMCO Emerging Multi-Asset Fund | 04/12/11 | 04/12/11 | 04/12/11 | 04/19/11 | 04/12/11 | 04/12/11 | 04/12/11 | 04/12/11 | ||||||||||||||||||||||||||
PIMCO EqS® Emerging Markets Fund | 03/22/11 | 03/22/11 | 03/22/11 | 04/19/11 | 03/22/11 | 03/22/11 | 03/22/11 | 03/22/11 | ||||||||||||||||||||||||||
PIMCO EqS® Long/Short Fund | 04/20/12 | 04/20/12 | 04/30/12 | — | 04/30/12 | 04/30/12 | 04/30/12 | — | ||||||||||||||||||||||||||
PIMCO Global Dividend Fund | 12/14/11 | 12/14/11 | 12/14/11 | — | 12/14/11 | 12/14/11 | 12/14/11 | 12/14/11 | ||||||||||||||||||||||||||
PIMCO International Dividend Fund | 12/15/14 | 12/15/14 | 12/15/14 | — | 12/15/14 | 12/15/14 | 12/15/14 | — | ||||||||||||||||||||||||||
PIMCO U.S. Dividend Fund | 12/15/14 | 12/15/14 | 12/15/14 | — | 12/15/14 | 12/15/14 | 12/15/14 | — | ||||||||||||||||||||||||||
PIMCO EqS Pathfinder Fund® | 04/14/10 | 04/14/10 | 04/14/10 | — | 04/14/10 | 04/14/10 | 04/14/10 | 04/14/10 |
For periods prior to the inception date of the Class P, Administrative Class, Class D, Class A, Class C and Class R shares (if applicable), performance information shown is based on the performance of the Fund’s Institutional Class shares. The prior Institutional Class performance has been adjusted to reflect the distribution and/or service fees and other expenses paid by the Class P, Administrative Class, Class D, Class A, Class C and Class R shares, respectively.
An investment in a Fund is not a bank deposit and is not guaranteed or insured by the Federal Deposit Insurance Corporation (“FDIC”) or any other government agency. It is possible to lose money on investments in a Fund.
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 PIMCO Equity Series as the policies and procedures that PIMCO will use when voting proxies on behalf of a Fund. A description of the
policies and procedures that PIMCO uses to vote proxies relating to portfolio securities of a Fund, and information about how the Fund voted proxies relating to portfolio securities held during the most recent twelve-month period ended June 30th, are available without charge, upon request, by calling the Trust at (888) 87-PIMCO, on the Fund’s website at http://www.pimco.com/investments, and on the Securities and Exchange Commission’s (“SEC”) website at http://www.sec.gov.
PIMCO Equity Series files a complete schedule of each Fund’s portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. A copy of a Fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. A Fund’s Form N-Q will also be available without charge, upon request, by calling the Trust at (888) 87-PIMCO and on the Fund’s website at http://www.pimco.com/investments. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
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Insights from the Portfolio Managers PIMCO Balanced Income Fund
Dear Shareholder,
We appreciate your investment in the PIMCO Balanced Income Fund (the “Fund”). In the following letter, please find a discussion of the recent market environment and a review of portfolio performance.
Market Overview
During the six-month reporting period ended December 31, 2014, the MSCI All Country World Index (the “Index”), which tracks the performance of global equities, declined 1.90%. Performance was strongest in the healthcare, information technology and consumer discretionary sectors. Energy, materials and telecommunications were the poorest performing sectors.
Global equities fell in the third quarter of 2014 and managed to post a slight gain in the fourth quarter of the year, as market volatility increased in the latter half of the year, particularly in the commodity and currency markets. U.S. equities, as represented by the S&P 500 Index, outperformed the Index, led by U.S. dollar strength and improving economic data. Second and third quarter GDP were revised upward to 4.6% and 5.0%, respectively. Although the Federal Reserve (“Fed”) ended its bond buying program in October 2014, the Fed indicated that it remains committed to an accommodative monetary policy. Across the Atlantic, Europe was one of the worst performing regions as deflationary concerns weighed on equity markets. Despite lowering benchmark interest and deposit rates and launching its asset-backed securities purchase program, the European Central Bank (“ECB”) continued to face public pressure for bolder action to revive the Eurozone economy.
After a strong first half of the year, stocks in emerging markets, as represented by the MSCI Emerging Markets Index, declined 7.84% due to headwinds from a strengthening U.S. dollar, falling commodity prices and concerns over a China slowdown. Russia was the worst performing country as the Russian ruble plummeted nearly 50% versus the U.S. dollar, which included a one-day 40% sell-off following an interest rate hike to 17% by Russia’s central bank. Asia had some of the best performing equity markets in the emerging world, partially aided by lower oil prices as many countries are net importers of fuel. Both Indonesia and India surged on the hopes of structural reform following national elections earlier in the year, while mainland Chinese equities received a boost from a surprise interest rate cut, bets on additional government stimulus and signs of reform for state-owned enterprises.
Fund Review
We seek to provide an attractive current yield and long-term capital appreciation. During the reporting period, the Fund paid ordinary quarterly dividends of 17 cents per share and a one-time supplemental
dividend of 2 cents per share on its Institutional Class shares. The dividend per share was slightly lower for the other share classes to account for varying class-specific expenses.
The six-month total return for the Fund’s Institutional Class shares was -0.54% net of fees, and underperformed its blended secondary index (a blend of 50% MSCI All Country World Index / 50% Barclays Global Aggregate USD Hedged Index), which returned 0.72%. Security selection in the utilities and healthcare sectors detracted from relative performance. The Fund’s fixed income allocation underperformed as the continued decline in oil prices triggered broader market volatility, particularly in high yield credit and emerging market assets. Underweight exposure to the long-end of the U.S. Treasury yield curve detracted from performance as longer term U.S. Treasury yields declined over the reporting period.
At the security level, the Fund’s position in Target Corporation was the largest contributor to relative performance. This big-box retailer overcame a data breach and poor performance in its Canadian operations to post upside surprises in sales and earnings per share (“EPS”) in the third quarter of 2014. Target Corporation posted better-than-expected same store sales growth, driven by strong online sales and its first positive news since the data breach occurred. Additionally, the company has received praise from industry analysts for leadership changes made to the executive team.
The Fund’s holding of Navient Corporation was another top contributor to performance. This U.S. servicer for the Department of Education and private student loans announced that it had acquired an $8.4 billion portfolio from Wells Fargo in the fourth quarter of the year. The transaction is expected to support earnings and we believe it may compel other banks to explore selling similar non-core student loans portfolios, for which Navient is one of a few qualified buyers.
The largest detractor from performance for the reporting period was the Fund’s holding of Prosafe, the operator of accommodation vessels for the offshore oil industry, as its third quarter earnings were disappointing. Prosafe lowered its dividend to strengthen its balance sheet and maintain optionality to add assets if they become available at attractive prices in the weak part of the cycle. While the upside for Prosafe remains material over the long-term, cyclical headwinds remain in the form of much lower oil prices, industry overcapacity and spending cuts from major oil companies.
The Fund’s holding of Companhia de Saneamento Basico do Estado de Sao Paulo (Sabesp), the water and waste water company in Sao Paulo, Brazil, underperformed as the combination of poor rainfall and excess heat has resulted in the worst drought in Brazil’s history. Though Sabesp remains highly dependent on rainfall, management remains focused on controlling capital spending as it awaits regulatory approval
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for tariff increases. We believe Sabesp is an attractively valued infrastructure asset at a challenging point in the hydrologic cycle.
Conclusion
Over the reporting period, we added slightly to “Consistent Earners” (i.e., stable, blue chip companies) and trimmed our allocation to “Basic Value” (i.e., more cyclical companies) and “Emerging Franchises” (i.e., secular growth companies). We also increased our allocations to developed markets, specifically the U.K. and Japan, and to the utilities and materials sectors. The largest decrease to our allocations over the reporting period was to the energy sector.
Going forward, we maintain our long-term view that dividend-paying equities have the potential to be an attractive long-term investment solution, especially given a secular outlook for lower returns across asset classes. As always, however, we continue to emphasize valuation in a market that has recently been characterized by overreactions to both positive and negative news.
Thank you for your investment in the Fund.
Sincerely,
Brad Kinkelaar | Matt Burdett | |
Portfolio Manager | Portfolio Manager | |
Dan Ivascyn | Alfred Murata | |
Group CIO, Portfolio Manager | Portfolio Manager |
Top 10 Holdings1
Vodafone Group PLC | 2.2% | |||||
Target Corp. | 2.0% | |||||
Lloyds Banking Group PLC | 1.9% | |||||
Intesa Sanpaolo SpA | 1.9% | |||||
Cisco Systems, Inc. | 1.8% | |||||
Imperial Tobacco Group PLC | �� | 1.6% | ||||
Colony Financial, Inc. | 1.5% | |||||
Kohl’s Corp. | 1.5% | |||||
QUALCOMM, Inc. | 1.4% | |||||
PG&E Corp. | 1.4% |
Geographic Breakdown1
United States | 53.4% | |||||
United Kingdom | 8.5% | |||||
France | 4.1% | |||||
Brazil | 3.0% | |||||
Italy | 2.5% | |||||
Japan | 2.3% | |||||
Hong Kong | 1.6% | |||||
Other | 11.8% |
Sector Breakdown1
Financials | 16.5% | |||||
Industrials | 12.2% | |||||
Consumer Discretionary | 7.8% | |||||
Asset-Backed Securities | 7.1% | |||||
Information Technology | 6.5% | |||||
Utilities | 6.2% | |||||
Mortgage-Backed Securities | 5.7% | |||||
Health Care | 4.9% | |||||
Telecommunication Services | 4.6% | |||||
Consumer Staples | 4.5% | |||||
Bank Loan Obligations | 2.8% | |||||
Energy | 2.7% | |||||
Materials | 2.1% | |||||
Sovereign Issues | 1.9% | |||||
Banking & Finance | 1.7% |
1 | % of Investments, at value as of 12/31/2014. 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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Institutional Class - PBITX | Class A - PBIAX | |
Class P - PBIEX | Class C - PBICX | |
Class D - PBIDX |
Cumulative Returns Through December 31, 2014
Cumulative Total Return for the period ended December 31, 2014 | ||||||||||
6 Months* | Fund Inception (03/31/2014) | |||||||||
PIMCO Balanced Income Fund Institutional Class | -0.54% | 2.65% | ||||||||
PIMCO Balanced Income Fund Class P | -0.59% | 2.57% | ||||||||
PIMCO Balanced Income Fund Class D | -0.71% | 2.48% | ||||||||
PIMCO Balanced Income Fund Class A | -0.71% | 2.48% | ||||||||
PIMCO Balanced Income Fund Class A (adjusted) | -6.20% | -3.14% | ||||||||
PIMCO Balanced Income Fund Class C | -1.09% | 1.90% | ||||||||
PIMCO Balanced Income Fund Class C (adjusted) | -2.07% | 0.90% | ||||||||
MSCI All Country World Index Net USD± | -1.90% | 3.04% | ||||||||
50% MSCI All Country World Index/50% Barclays Global Aggregate USD Hedged±± | 0.72% | 4.26% |
All Fund returns are net of fees and expenses.
* Cumulative Return.
± The MSCI All Country World Index Net USD is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The Index consists of 46 country indices comprising 24 developed and 21 emerging market country indices. It is not possible to invest directly in an unmanaged index.
±± The benchmark is a blend of 50% MSCI All Country World Index/50% Barclays Global Aggregate USD Hedged. The MSCI All Country World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The Index consists of 46 country indices comprising 23 developed and 23 emerging market country indices. Barclays Global Aggregate (USD Hedged) Index provides a broad-based measure of the global investment-grade fixed income markets. The three major components of this index are the U.S. Aggregate, the Pan-European Aggregate, and the Asian-Pacific Aggregate Indices. The index also includes Eurodollar and Euro-Yen corporate bonds, Canadian Government securities, and USD investment grade 144A securities. It is not possible to invest directly in an unmanaged index.
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. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The adjusted returns take into account the maximum sales charge of 5.50% on Class A shares and 1.00% CDSC on Class C shares. The Fund’s total annual operating expense ratio as stated in the Fund’s current prospectus, as supplemented to date, is 0.95% for the Institutional Class shares, 1.05% for the Class P shares, 1.30% for the Class D shares, 1.30% for the Class A shares, 2.05% for the Class C shares and 1.55% for the Class R shares. Details regarding any Fund’s operating expenses can be found in the Fund’s prospectus. For performance current to the most recent month-end, visit www.pimco.com/investments.
Portfolio Insights
» | The PIMCO Balanced Income Fund seeks to maximize current income while providing long-term capital appreciation by investing under normal circumstances in a diversified portfolio of income-producing equity and fixed income securities, each of which may be represented by forwards or derivatives such as options, futures contracts, or swap agreements. The Fund will typically invest at least 25% of its net assets in equity and equity related securities and at least 25% of its net assets in fixed income securities. The Fund’s investments in equity and equity-related securities include common and preferred stock (and securities convertible into, or that PIMCO expects to be exchanged for, common or preferred stock), as well as securities issued by real estate investment trusts, master limited partnerships and other equity trusts and depositary receipts. |
» | The Fund commenced operations on March 31, 2014. |
» | The Fund’s Institutional Class shares returned -0.54% after fees, outperforming the MSCI All Country World Index, which returned -1.90%. The Fund underperformed against the blended benchmark (50% MSCI All Country World Index / 50% Barclays Global Aggregate USD Hedged), which returned 0.72%. |
» | During the reporting period, the Fund paid ordinary quarterly dividends of 17 cents per share and a one-time supplemental dividend of 2 cents per share on its Institutional Class shares. The dividend per share was slightly lower for the other share classes to account for varying class specific expenses. |
» | From a sector perspective, stock selection in the Consumer Discretionary, Materials and Telecommunication sectors contributed the most to relative performance over the reporting period. An underweight to Materials (portfolio average weight of 2.5% vs. benchmark average weight of 5.8%) was additive to performance. Exposure to the Utilities, Healthcare and Consumer Staples sectors detracted the most from performance due to security selection. |
» | From a country perspective, stock selection within the United States and United Kingdom was the largest contributor to relative performance. Security selection within and an overweight to both Brazil and Norway detracted the most from performance. |
» | Over the reporting period, the top three equity contributors were: Target Corporation, Navient Corporation and Kohl’s Corporation. The top three equity detractors were: Prosafe, Cia de Saneamento Basico do Estado de SP and Arteris. |
» | The Fund’s fixed income allocation underperformed its fixed income benchmark, Barclays Global Aggregate USD Hedged, as holdings of Russian quasi-sovereign corporate debt detracted from performance due to falling oil prices. Additionally, exposure to high yield credit and Brazilian inflation-linked debt detracted from performance. |
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Insights from the Portfolio Managers PIMCO Dividend and Income Builder Fund
Dear Shareholder,
We appreciate your investment in the PIMCO Dividend and Income Builder Fund (the “Fund”). In the following letter, please find a discussion of the recent market environment and a review of portfolio performance.
Market Overview
During the six-month reporting period ended December 31, 2014, the MSCI All Country World Index (the “Index”), which tracks the performance of global equities, declined 1.90%. Performance was strongest in the healthcare, information technology and consumer discretionary sectors. Energy, materials and telecommunications were the poorest performing sectors.
Global equities fell in the third quarter of 2014 and managed to post a slight gain in the fourth quarter of the year, as market volatility increased in the latter half of the year, particularly in the commodity and currency markets. U.S. equities, as represented by the S&P 500 Index, outperformed the Index, led by U.S. dollar strength and improving economic data. Second and third quarter GDP were revised upward to 4.6% and 5.0%, respectively. Although the Federal Reserve (“Fed”) ended its bond buying program in October 2014, the Fed indicated that it remains committed to an accommodative monetary policy. Across the Atlantic, Europe was one of the worst performing regions as deflationary concerns weighed on equity markets. Despite lowering benchmark interest and deposit rates and launching its asset-backed securities purchase program, the European Central Bank (“ECB”) continued to face public pressure for bolder action to revive the Eurozone economy.
After a strong first half of the year, stocks in emerging markets, as represented by the MSCI Emerging Markets Index, declined 7.84% due to headwinds from a strengthening U.S. dollar, falling commodity prices and concerns over a China slowdown. Russia was the worst performing country, as the Russian ruble plummeted nearly 50% versus the U.S. dollar, which included a one-day 40% sell-off following an interest rate hike to 17% by Russia’s central bank. Asia had some of the best performing equity markets in the emerging world, partially aided by lower oil prices as many countries are net importers of fuel. Both Indonesia and India surged on the hopes of structural reform following national elections earlier in the year, while mainland Chinese equities received a boost from a surprise interest rate cut, bets on additional government stimulus and signs of reform for state-owned enterprises.
Fund Review
We seek to provide an attractive current yield, a growing stream of income per share over time, and long-term capital appreciation.
During the six-month reporting period ended December 31, 2014, the Fund paid ordinary quarterly dividends of $0.20 per share on its Institutional Class shares. The dividend per share was slightly lower for the other share classes to account for varying class-specific expenses.
The six-month total return for the Fund’s Institutional Class shares was -1.89% net of fees and outperformed its blended secondary index (a blend of 75% MSCI All Country World Index/25% Barclays Global Aggregate USD Unhedged), which returned -2.46%. Security selection in both the consumer discretionary and telecommunications sectors contributed to relative performance. The Fund’s fixed income allocation outperformed, as holdings of securitized debt, primarily in mortgage-backed securities, provided income and positive returns. Underweight allocations to the Japanese yen and the euro were additive to performance as these currencies depreciated against the U.S. dollar. Individual holdings were the primary detractors from performance.
At the security level, the Fund’s position in Target Corporation was the largest contributor to relative performance. This big-box retailer overcame a data breach and poor performance in its Canadian operations to post upside surprises in sales and earnings per share (“EPS”) in the third quarter of the 2014. Target Corporation posted better-than-expected same store sales growth, driven by strong online sales and its first positive news since the data breach occurred. Additionally, the company has received praise from industry analysts for leadership changes made to the executive team.
The Fund’s holding of Navient Corporation was another top contributor to performance. This U.S. servicer for the Department of Education and private student loans announced that it had acquired an $8.4 billion portfolio from Wells Fargo in the fourth quarter of the year. The transaction is expected to support earnings and we believe it may compel other banks to explore selling similar non-core student loans portfolios, for which Navient is one of a few qualified buyers.
The largest detractor from performance for the reporting period was the Fund’s holding of Prosafe, the operator of accommodation vessels for the offshore oil industry, as its third quarter earnings were disappointing. Prosafe lowered its dividend to strengthen its balance sheet and maintain optionality to add assets if they become available at attractive prices in the weak part of the cycle. While the upside for Prosafe remains material over the long-term, cyclical headwinds remain in the form of much lower oil prices, industry overcapacity and spending cuts from major oil companies.
The Fund’s holding of Companhia de Saneamento Basico do Estado de Sao Paulo (Sabesp), the water and waste water company in Sao Paulo, Brazil, underperformed as the combination of poor rainfall and excess heat has resulted in the worst drought in Brazil’s history. Though
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Insights from the Portfolio Managers PIMCO Dividend and Income Builder Fund (Cont.)
Sabesp remains highly dependent on rainfall, management remains focused on controlling capital spending as it awaits regulatory approval for tariff increases. We believe Sabesp is an attractively valued infrastructure asset at a challenging point in the hydrologic cycle.
Conclusion
Over the reporting period, we added slightly to “Consistent Earners” (i.e., stable, blue chip companies) and trimmed our allocation to “Emerging Franchises” (i.e., secular growth companies), while “Basic Value” (i.e., more cyclical companies) was unchanged. We also increased our allocations to developed markets, specifically the U.K. and Japan, and to the utilities and materials sectors. The largest decrease over the reporting period was to the energy sector.
Going forward, we maintain our long-term view that dividend-paying equities have the potential to be an attractive long-term investment solution, especially given a secular outlook for lower returns across asset classes. As always, however, we continue to emphasize valuation in a market that has recently been characterized by overreactions to both positive and negative news.
Thank you for your investment in the Fund.
Sincerely,
Brad Kinkelaar | Matt Burdett | |
Portfolio Manager | Portfolio Manager | |
Dan Ivascyn | Alfred Murata | |
Group CIO, Portfolio Manager | Portfolio Manager |
Top 10 Holdings1
Vodafone Group PLC | 3.1% | |||||
Target Corp. | 2.8% | |||||
Cisco Systems, Inc. | 2.8% | |||||
Intesa Sanpaolo SpA | 2.7% | |||||
Lloyds Banking Group PLC | 2.6% | |||||
Colony Financial, Inc. | 2.5% | |||||
Imperial Tobacco Group PLC | 2.4% | |||||
PG&E Corp. | 2.2% | |||||
Kohl’s Corp. | 2.2% | |||||
QUALCOMM, Inc. | 2.2% |
Geographic Breakdown1
United States | 53.1% | |||||
United Kingdom | 12.7% | |||||
France | 5.9% | |||||
Italy | 3.6% | |||||
Japan | 3.3% | |||||
Hong Kong | 2.3% | |||||
Israel | 1.9% | |||||
Switzerland | 1.7% | |||||
Luxembourg | 1.7% | |||||
Bermuda | 1.6% | |||||
Brazil | 1.5% | |||||
Netherlands | 1.4% | |||||
Spain | 1.4% | |||||
Taiwan | 1.1% | |||||
Singapore | 1.1% | |||||
Australia | 0.9% | |||||
China | 0.9% | |||||
Turkey | 0.9% | |||||
Cyprus | 0.5% | |||||
South Africa | 0.4% | |||||
Ireland | 0.2% |
Sector Breakdown1
Financials | 25.4% | |||||
Consumer Discretionary | 11.9% | |||||
Information Technology | 10.4% | |||||
Utilities | 9.2% | |||||
Industrials | 8.7% |
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Sector Breakdown1 (Cont.)
Health Care | 7.2% | |||||
Consumer Staples | 6.7% | |||||
Telecommunication Services | 6.2% | |||||
Energy | 3.7% | |||||
Materials | 3.2% | |||||
Mortgage-Backed Securities | 2.8% | |||||
Asset-Backed Securities | 1.8% |
1 | % of Investments, at value as of 12/31/2014. 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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PIMCO Dividend and Income Builder Fund
Institutional Class - PQIIX | Class A - PQIZX | |
Class P - PQIPX | Class C - PQICX | |
Class D - PQIDX | Class R - PQIBX |
Cumulative Returns Through December 31, 2014
Average Annual Total Return for the period ended December 31, 2014 | ||||||||||||||
6 Months* | 1 Year | Fund Inception (12/14/11) | ||||||||||||
PIMCO Dividend and Income Builder Fund Institutional Class | -1.89% | 3.73% | 12.19% | |||||||||||
PIMCO Dividend and Income Builder Fund Class P | -2.01% | 3.50% | 12.09% | |||||||||||
PIMCO Dividend and Income Builder Fund Class D | -2.14% | 3.25% | 11.80% | |||||||||||
PIMCO Dividend and Income Builder Fund Class A | -2.14% | 3.25% | 11.80% | |||||||||||
PIMCO Dividend and Income Builder Fund Class A (adjusted) | -7.50% | -2.45% | 9.75% | |||||||||||
PIMCO Dividend and Income Builder Fund Class C | -2.52% | 2.57% | 10.96% | |||||||||||
PIMCO Dividend and Income Builder Fund Class C (adjusted) | -3.46% | 1.59% | 10.96% | |||||||||||
PIMCO Dividend and Income Builder Fund Class R | -2.19% | 3.08% | 11.57% | |||||||||||
MSCI All Country World Index Net USD± | -1.90% | 4.16% | 15.17% | |||||||||||
75% MSCI All Country World Index Net USD/25% Barclays Global Aggregate USD Unhedged±± | -2.46% | 3.30% | 11.57% |
All Fund returns are net of fees and expenses.
* Cumulative return.
± The MSCI All Country World Index Net USD is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The Index consists of 46 country indices comprising 24 developed and 21 emerging market country indices. It is not possible to invest directly in an unmanaged index.
±± The benchmark is a blend of 75% MSCI All Country World Index Net USD/25% Barclays Global Aggregate USD Unhedged. The MSCI All Country World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The Index consists of 46 country indices comprising 23 developed and 23 emerging market country indices. Barclays Global Aggregate (USD Unhedged) Index provides a broad-based measure of the global investment-grade fixed income markets. The three major components of this index are the U.S. Aggregate, the Pan-European Aggregate, and the Asian-Pacific Aggregate Indices. The index also includes Eurodollar and Euro-Yen corporate bonds, Canadian Government securities, and USD investment grade 144A securities. It is not possible to invest directly in an unmanaged index.
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. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The adjusted returns take into account the maximum sales charge of 5.50% on Class A shares and 1.00% CDSC on Class C shares. The Fund’s total annual operating expense ratio as stated in the Fund’s current prospectus, as supplemented to date, is 1.22% for the Institutional Class shares, 1.32% for the Class P shares, 1.57% for the Class D shares, 1.57% for the Class A shares, 2.32% for the Class C shares and 1.82% for the Class R shares. Details regarding any Fund’s operating expenses can be found in the Fund’s prospectus. For performance current to the most recent month-end, visit www.pimco.com/investments.
Portfolio Insights
» | The PIMCO Dividend and Income Builder Fund seeks to provide current income that exceeds the average yield on global stocks, and to provide a growing stream of income per share over time, with a secondary objective to seek to provide long-term capital appreciation, by investing under normal circumstances at least 80% of its assets in a diversified portfolio of income-producing investments, and will typically invest at least 50% of its assets in equity and equity-related securities. The Fund’s investments in equity and equity-related securities include common and preferred stock (and securities convertible into, or that PIMCO expects to be exchanged for, common or preferred stock), as well as securities issued by real estate investment trusts, master limited partnerships and other equity trusts and depositary receipts. |
» | The Fund’s Institutional Class shares returned -1.89% after fees, slightly outperforming both its benchmarks, the MSCI All Country World Index, which returned -1.90%, and the blended benchmark (75% MSCI All Country World Index / 25% Barclays Global Aggregate USD Unhedged), which returned -2.46%. |
» | During the reporting period, the Fund paid ordinary quarterly dividends of $0.20 per share over the reporting period, $0.11 per share in the fourth quarter and $0.09 in the third quarter. The dividend per share was slightly lower for the other share classes to account for varying class specific expenses. |
» | From a sector perspective, stock selection in the Consumer Discretionary, Telecommunication and Materials sectors contributed the most to relative performance over the reporting period. An underweight to Materials (portfolio average weight of 2.5% vs. benchmark average weight of 5.8%) was additive to performance. Security selection in the Utilities, Healthcare and Energy detracted the most from performance. An underweight to Energy (portfolio average weight of 8.0% vs. benchmark average weight of 9.2%) mitigated losses from falling energy prices. |
» | From a country perspective, stock selection within the United States and United Kingdom was the largest contributor to relative performance. Security selection within and an overweight to both Brazil and Norway detracted the most from performance. |
» | Over the reporting period, the top three equity contributors were: Target Corporation, Navient Corporation and Cisco Systems. The top three equity detractors were: Prosafe, LinnCo and Cia de Saneamento Basico do Estado de SP. |
» | The Fund’s fixed income allocation outperformed its fixed income benchmark, Barclays Global Aggregate USD Unhedged, driven mainly by security selection within non-Agency mortgage-backed securities. Select currency underweights, primarily in the Japanese yen and euro, added to performance. |
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Insights from the Portfolio Managers PIMCO Emerging Multi-Asset Fund
Dear Shareholder,
We appreciate your investment in the PIMCO Emerging Multi-Asset Fund (the “Fund”). Below is our semiannual update that includes a discussion of our investment outlook with a focus on emerging markets (“EM”) as well as an update on the portfolio over the six-month reporting period ended December 31, 2014.
U.S. Dollar Strength and Commodity Drawdown Impact Emerging Markets Assets
After a strong first half of 2014, EM assets declined during the latter half of the year as global growth and inflation expectations were marked down and oil prices collapsed, acutely pressuring exporters of the commodity. Local currency assets in particular sold-off as the U.S. dollar strengthened against nearly all global currencies amid continued signals of economic and policy divergence. Weakness in the Chinese economy, a revival of geopolitical tensions, and idiosyncratic market events and stresses heightened volatility and further weighed on EM assets.
EM equities (as represented by the MSCI Emerging Markets Index) returned -7.84% over the reporting period, trailing its developed market (“DM”) counterpart (the MSCI World Index) by over 8 percentage points. From a corporate perspective, the environment for earnings remained diverse, as some companies struggled to retain the growth momentum seen in the immediate post-crisis period, while others performed well. The Fund remains overweight to equities as improvements in earnings expectations and the prospect for returns on equity improvement, particularly for oil importers in light of commodity weakness, may be especially favorable for equities relative to other portions of the EM capital structure. This is more so for Asia relative to other EM regions. Additionally, we believe valuations remain attractive for the asset class as a whole.
EM external sovereign debt (as represented by the JPMorgan Emerging Markets Bond Index (EMBI) Global) returned -3.27% over the reporting period. Index losses were driven by widening spreads over U.S. Treasuries, which more than offset a fall in U.S. Treasury yields. Spreads rose 119 basis points over the reporting period, with the high yield subset of the index—propelled by declines in Venezuela and Ukraine—accounting for the majority of the change. The Fund maintains an underweight allocation to external sovereign debt, but maintains a tactical allocation to external corporate debt. We believe non-sovereign issues may offer compelling relative value and attractive spreads versus their sovereign issuer counterparts that have similar creditworthiness, given their often demonstrated access to their respective sovereign balance sheets.
EM local debt (as represented by the JPMorgan Government Bond Index-Emerging Markets Global Diversified Index) returned -11.05% over the reporting period. Currency weakness weighed on index returns as a resurgent U.S. dollar appreciated versus nearly all global currencies. Positive performance contributions from carry, or the rate of interest earned by holding the respective securities, and falling yields, could not offset currency losses. The portfolio maintains its flat position to local currency debt, expecting policy differentiation across EM given divergent initial conditions and reactions to potential Federal Reserve (“Fed”) interest rate hikes and lower inflation prints due to the downdraft in oil prices. In aggregate, the Fund is cautious on EM currencies amid renewed U.S. dollar strength and a propensity for EM central banks to allow for currency weakness to protect exports.
Electoral Calendar Impacts Emerging Markets Assets and Differentiation to Remain Dominant Theme for Emerging Markets Investing Amid Choppier Technicals
Over the cyclical horizon, divergent initial conditions across EM related to economic and social structure, growth and inflation trajectories, issuer balance sheet strength, and fiscal and monetary policies, will drive country and corporate performance differentials, in our view. We believe projected economic and policy decoupling across DM will reinforce this trend due to trade, capital flow, and financial market linkages between EM and DM.
We believe EM fundamentals broadly remain intact, and market-friendly election results in 2014 across a host of EM countries give newly elected politicians a solid mandate for structural reforms over the coming year. It is also critical to recognize that the impact of lower commodity prices across EM is highly differentiated. In aggregate, EM is a net importer of energy and consumers are likely to benefit both from the positive terms-of-trade shock and the disinflationary impulse imparted by cheaper oil. However, energy-sector economies are seeing lower export receipts and may be facing weaker fiscal positions.
Key EM risks include credit events as a result of the collapse in oil prices, geopolitical surprises, unanticipated DM interest rate volatility, and a sharper-than-expected slowdown in China. Market technicals are choppier with volatility likely to remain elevated and retail flows likely to remain a headwind. In light of the recent EM market sell-off, we believe valuations across EM are attractive but divergent economic and policy outlooks throughout the complex underscore the need to be diligent and discerning in scouring relative value opportunities around the globe.
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 13 |
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Insights from the Portfolio Managers PIMCO Emerging Multi-Asset Fund (Cont.)
Sincerely,
Michael Gomez | Curtis Mewbourne | |
Portfolio Manager, Emerging Markets Debt | Portfolio Manager, Generalist |
Top Holdings1
PIMCO EqS® Emerging Markets Fund | 50.7% | |||||
PIMCO Emerging Local Bond Fund | 23.9% | |||||
PIMCO Emerging Markets Bond Fund | 12.2% | |||||
PIMCO Emerging Markets Corporate Bond Fund | 7.6% | |||||
U.S. Treasury Notes | 3.8% |
1 | % of Investments, at value as of 12/31/2014. Top Ten Holdings solely reflect long positions. Securities sold short, derivatives, and short-term instruments are not taken into consideration. |
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PIMCO Emerging Multi-Asset Fund
Institutional Class - PEAWX | Class A - PEAAX | |
Class P - PEAQX | Class C - PEACX | |
Administrative Class - PEAMX | Class R - PEARX | |
Class D - PEAEX |
Cumulative Returns Through December 31, 2014
Average Annual Total Return for the period ended December 31, 2014 | ||||||||||||||
6 Months* | 1 Year | Fund Inception (04/12/11) | ||||||||||||
PIMCO Emerging Multi-Asset Fund Institutional Class | -7.40% | -2.92% | -3.15% | |||||||||||
PIMCO Emerging Multi-Asset Fund Class P | -7.38% | -3.00% | -3.24% | |||||||||||
PIMCO Emerging Multi-Asset Fund Administrative Class | -7.45% | -3.28% | -3.43% | |||||||||||
PIMCO Emerging Multi-Asset Fund Class D | -7.55% | -3.29% | -3.47% | |||||||||||
PIMCO Emerging Multi-Asset Fund Class A | -7.46% | -3.18% | -3.46% | |||||||||||
PIMCO Emerging Multi-Asset Fund Class A (adjusted) | -12.55% | -8.50% | -4.91% | |||||||||||
PIMCO Emerging Multi-Asset Fund Class C | -7.86% | -3.98% | -4.17% | |||||||||||
PIMCO Emerging Multi-Asset Fund Class C (adjusted) | -8.74% | -4.90% | -4.17% | |||||||||||
PIMCO Emerging Multi-Asset Fund Class R | -7.66% | -3.59% | -3.71% | |||||||||||
MSCI Emerging Markets Index (Net Dividends in USD)± | -7.84% | -2.19% | -2.95% | |||||||||||
50% MSCI Emerging Markets Index (Net Dividends in USD), 25% JPMorgan Emerging Markets Bond Index (EMBI) Global, 25% JPMorgan Government Bond Index-Emerging Markets Global Diversified Index (Unhedged)±± | -7.50% | -1.15% | -0.24% |
All Fund returns are net of fees and expenses.
* Cumulative Return
± The MSCI Emerging Markets Index (Net Dividends in USD) Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. It is not possible to invest directly in the index.
±± The benchmark is a blend of 50% MSCI Emerging Markets Index (Net Dividends in USD), 25% JPMorgan Emerging Markets Bond Index (EMBI) Global, 25% JPMorgan Government Bond Index-Emerging Markets Global Diversified Index (Unhedged). MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. JPMorgan Emerging Markets Bond Index (EMBI) Global tracks total returns for United States Dollar denominated debt instruments issued by emerging market sovereign and quasi-sovereign entities: Brady bonds, loans, Eurobonds and local market instruments. JPMorgan Government Bond Index-Emerging Markets Global Diversified Index (Unhedged) is a comprehensive global local emerging markets index, and consists of regularly traded, liquid fixed-rate, domestic currency government bonds to which international investors can gain exposure. It is not possible to invest directly in an unmanaged index.
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. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The adjusted returns take into account the maximum sales charge of 5.50% on Class A shares and 1.00% CDSC on Class C shares. The Fund’s total annual operating expense ratio as stated in the Fund’s current prospectus, as supplemented to date, is 2.43% for the Institutional Class shares, 2.53% for the Class P shares, 2.68% for the Administrative Class shares, 2.78% for the Class D shares, 2.78% for the Class A shares, 3.53% for the Class C shares, and 3.03% for the Class R shares. Details regarding any Fund’s operating expenses can be found in the Fund’s prospectus. For performance current to the most recent month-end, visit www.pimco.com/investments.
Portfolio Insights
» | The PIMCO Emerging Multi-Asset Fund seeks maximum total return, consistent with prudent investment management, by investing under normal circumstances at least 80% of its assets in investments economically tied to emerging market countries. The Fund will typically invest 20% to 80% of its total assets in equity-related instruments (including investments in common stock, preferred stock, and equity-related Underlying PIMCO Funds or Acquired Funds). The Fund is designed to provide concurrent exposure to a broad spectrum of emerging market asset classes, such as equity, fixed income and currencies, and other investments, including commodities. |
» | The Fund’s Institutional Class shares returned -7.40% after fees, while the Fund’s primary benchmark index, the MSCI Emerging Markets Index (Net Dividends in USD) returned -7.84%. The Fund’s secondary benchmark index, a blended index consisting of 50% MSCI Emerging Markets Index (Net Dividends in USD)/25% JPMorgan Government Bond Index-Emerging Markets Global Diversified Index (Unhedged)/25% JPMorgan Emerging Markets Bond Index (EMBI) Global), returned -7.50% during the reporting period. |
» | Exposure to the PIMCO EqS® Emerging Markets Fund contributed to relative performance as this Underlying PIMCO Fund outperformed its respective primary benchmark, the MSCI Emerging Markets Index, over the reporting period. |
» | A tactical asset allocation to emerging markets external corporate debt via the PIMCO Emerging Markets Corporate Bond Fund contributed to relative performance as this Underlying PIMCO Fund outperformed the Fund’s secondary benchmark index during the reporting period. |
» | Exposure to the PIMCO Emerging Markets Bond Fund detracted from relative performance as this Underlying PIMCO Fund underperformed its respective primary benchmark, the JPMorgan Emerging Markets Bond Index (EMBI) Global, over the reporting period. |
» | Exposure to the PIMCO Emerging Markets Corporate Bond Fund detracted from relative performance as this Underlying PIMCO Fund underperformed its respective primary benchmark, the JPMorgan CEMBI Diversified, over the reporting period. |
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Insights from the Portfolio Managers PIMCO EqS® Emerging Markets Fund
Dear Shareholder,
We appreciate your investment in the PIMCO EqS® Emerging Markets Fund (the “Fund”). In the following letter, please find a discussion of the recent market environment and a review of portfolio performance.
Market Overview
The six-month reporting period ending December 31, 2014 was a period marked by increased volatility for global equity markets as declining oil prices, U.S. dollar strength and uncertainty over the global economic outlook weighed on investor sentiment. With these dynamics at play, emerging market (“EM”) equities underperformed relative to developed markets (“DM”), as the MSCI Emerging Markets Index (Net Dividends in USD) returned -7.84%, versus a return of -1.17% for the MSCI World Index. While DM equities were able to end the year in positive territory, EM equities suffered their second straight year of negative performance.
EM equities’ performance was negatively influenced by a lack of visibility on the impact of important global economic factors, such as weak commodity prices, uncertainty over a U.S. exit from quantitative easing (“QE”), and the outlook for slowing global growth, particularly in Europe and Japan. From a corporate perspective, the environment for earnings remained diverse, as some companies struggled to retain the growth momentum seen in the immediate post-crisis period, while others performed well. Over capacity in certain areas, combined with a slowdown in nominal GDP growth in major EM economies, nevertheless remained a long-term drag on earnings recovery.
The best performing sectors overall for the reporting period were healthcare, financials and telecoms, while the worst performing sectors were energy and materials, which were particularly affected by lower oil prices and tension between Russia and Ukraine. As winners and losers emerged from the oil price decline, country performance was also dispersed, with Russia performing worst as the Russian ruble declined significantly versus the U.S. dollar. Asia, on the other hand, where many nations are net importers of oil, had some of the best performing equity markets. Among these, China led the way, benefiting from its oil importing status, its currency being closely pegged to a strengthening U.S. dollar and a surprise interest rate cut from China’s central bank.
Fund Review
Over the six-month reporting period, the Fund’s Institutional Class shares returned -5.86% net of fees, versus a return of -7.84% for its benchmark, the MSCI Emerging Markets Index (Net Dividends in USD). The Fund’s holdings in technology, consumer discretionary and financials were the main sources of outperformance during the period, while positions in energy and telecoms detracted from performance.
Within technology, performance was significantly aided by the Fund’s participation in the Alibaba IPO, which saw a 38% increase in price on the first day of trading. Although we reduced our initial allocation, we maintain a position in the company, which we view as well placed to capitalize on the growth of e-commerce in China.
Outside of Alibaba, the Fund saw strong performance among its financial and consumer discretionary holdings. Within financials, China Construction Bank and China Pacific Insurance benefited directly from a cut in Chinese interest rates, which improved earnings prospects, and indirectly from declining oil prices and U.S. dollar strengthening, which helped Chinese assets in general. Within the consumer sectors in China, Kweichou Moutai, a maker of high-end spirits, and Great Wall Motor, an auto manufacturer, were among the strongest performers, benefiting from an improved cyclical outlook and bets on additional government stimulus. Outside of China, Indian financials also performed well.
Consistent with the decline in oil prices, energy holdings weighed on the Fund’s performance over the reporting period. In practice, however, this was a story of two halves, with key portfolio changes occurring at the end of August. Prior to these changes, the Fund held an overweight to Russian energy. However, as tensions between the Ukraine and Russia increased during the summer, we reduced exposure to firms that we felt were vulnerable to additional sanctions. This exposure reduction meant exiting a position in Bashneft, an integrated Russian oil company that was our top detractor from performance over the reporting period. With additional sales of energy stocks in the fourth quarter, including SPT Energy, a Chinese oil services provider, the Fund’s underweight to energy was positive for relative performance from September onwards, despite detracting over the reporting period as a whole.
Outside of energy, holdings in the telecoms sector, where we began the period under exposed to China Mobile, weighed on returns, as did a position in Greek bank Eurobank. Despite shares trading at a large discount to book value, Eurobank came under selling pressure due to renewed concerns of a Greek exit from the Eurozone. Europe remains an area of geopolitical and economic uncertainty, and Eurobank aside, the Fund is underweight the emerging European region.
Conclusion
Overall, the last six months saw a period of volatility in EM equity markets with wide country and sector dispersion sparked by the declining price of oil. In light of growing political and economic challenges, and the prospect of long-term lower oil prices, we made a number of changes to portfolio positioning, including reducing Russian, energy, and materials exposure and increasing positions in technology, an area that we believe can still provide attractive earnings growth.
16 | PIMCO EQUITY SERIES |
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With headwinds to EM performance remaining, we believe it is critical to focus on individual stock selection within all these sectors. We continue to seek firms with sustainable long-term earnings growth, trading at reasonable valuations, and which exhibit quality characteristics of high margins and returns on equity. While acknowledging there may be periods where our investment style will be out of favor, and we may lag broader EM equity markets, we believe that over the long-term our investment approach can be an attractive solution for investors seeking diversified EM equity exposure.
We thank you for your continued investment in the Fund and look forward to serving your investment needs.
Sincerely,
Virginie Maisonneuve CIO Global Equities Portfolio Manager |
Top 10 Holdings1
Samsung Electronics Co. Ltd. | 3.6% | |||||
Industrial & Commercial Bank of China Ltd. ‘H’ | 2.9% | |||||
Taiwan Semiconductor Manufacturing Co. Ltd. ADR | 2.8% | |||||
Kia Motors Corp. | 2.6% | |||||
MediaTek, Inc. | 2.4% | |||||
Housing Development Finance Corp. Ltd. | 2.4% | |||||
AIA Group Ltd. | 2.3% | |||||
Tata Motors Ltd. | 2.3% | |||||
China Mobile Ltd. | 2.2% | |||||
Itau Unibanco Holding S.A.—ADR | 2.2% |
Geographic Breakdown1
China | 16.1% | |||||
India | 10.6% | |||||
Taiwan | 9.3% | |||||
Brazil | 8.9% | |||||
South Korea | 8.8% | |||||
Hong Kong | 6.4% | |||||
Peru | 3.8% | |||||
Japan | 3.6% | |||||
South Africa | 3.6% | |||||
Mexico | 2.2% | |||||
Cambodia | 1.7% | |||||
Israel | 1.6% | |||||
United States | 1.5% | |||||
France | 1.3% | |||||
Thailand | 1.3% | |||||
Indonesia | 1.3% | |||||
Norway | 1.2% | |||||
Greece | 0.9% | |||||
Australia | 0.9% | |||||
Russia | 0.8% | |||||
Poland | 0.8% | |||||
Macau | 0.7% | |||||
Turkey | 0.6% | |||||
Bermuda | 0.2% |
Sector Breakdown1
Financials | 28.0% | |||||
Information Technology | 21.3% | |||||
Consumer Discretionary | 14.8% | |||||
Consumer Staples | 7.0% | |||||
Telecommunication Services | 4.6% | |||||
Energy | 4.1% | |||||
Industrials | 3.7% | |||||
Materials | 3.5% | |||||
Health Care | 1.1% |
1 | % of Investments, at value as of 12/31/2014. 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. |
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 17 |
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PIMCO EqS® Emerging Markets Fund
Institutional Class - PEQWX | Class A - PEQAX | |
Class P - PEQQX | Class C - PEQEX | |
Administrative Class - PEQTX | Class R - PEQHX | |
Class D - PEQDX |
Cumulative Returns Through December 31, 2014
Average Annual Total Return for the period ended December 31, 2014 | ||||||||||||||
6 Months* | 1 Year | Fund Inception (03/22/11) | ||||||||||||
PIMCO EqS® Emerging Markets Fund Institutional Class | -5.86% | -3.18% | -3.81% | |||||||||||
PIMCO EqS® Emerging Markets Fund Class P | -5.88% | -3.41% | -3.89% | |||||||||||
PIMCO EqS® Emerging Markets Fund Administrative Class | -5.89% | -3.31% | -4.04% | |||||||||||
PIMCO EqS® Emerging Markets Fund Class D | -5.92% | -3.55% | -4.14% | |||||||||||
PIMCO EqS® Emerging Markets Fund Class A | -6.03% | -3.55% | -4.18% | |||||||||||
PIMCO EqS® Emerging Markets Fund Class A (adjusted) | -11.18% | -8.87% | -5.60% | |||||||||||
PIMCO EqS® Emerging Markets Fund Class C | -6.37% | -4.19% | -4.85% | |||||||||||
PIMCO EqS® Emerging Markets Fund Class C (adjusted) | -7.31% | -5.15% | -4.85% | |||||||||||
PIMCO EqS® Emerging Markets Fund Class R | -6.17% | -3.79% | -4.39% | |||||||||||
MSCI Emerging Markets Index (Net Dividends in USD)± | -7.84% | -2.19% | -1.58% |
All Fund returns are net of fees and expenses.
* Cumulative return.
± The MSCI Emerging Markets Index (Net Dividends in USD) Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. It is not possible to invest directly in the index.
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. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The adjusted returns take into account the maximum sales charge of 5.50% on Class A shares and 1.00% CDSC on Class C shares. The Fund’s total annual operating expense ratio as stated in the Fund’s current prospectus, as supplemented to date, is 1.45% for the Institutional Class shares, 1.55% for the Class P shares, 1.70% for the Administrative Class shares, 1.80% for the Class D shares, 1.80% for the Class A shares, 2.55% for the Class C shares and 2.05% for the Class R shares. Details regarding any Fund’s operating expenses can be found in the Fund’s prospectus. For performance current to the most recent month-end, visit www.pimco.com/investments.
Portfolio Insights
» | The PIMCO EqS® Emerging Markets Fund seeks capital appreciation by investing under normal circumstances at least 80% of its assets in a diversified portfolio of investments economically tied to emerging market countries. The Fund will invest a substantial portion of its assets in equity and equity-related securities, including common and preferred stock (and securities convertible into, or that PIMCO expects to be exchanged for, common or preferred stock). The Fund may also invest in fixed income securities, including debt securities issued by both corporate and government issuers. The Fund may invest in commodity related instruments, including exchange-traded funds, futures and other investment companies. The Fund may also invest in derivative instruments, such as options, futures contracts or swap agreements. |
» | The Fund’s Institutional Class shares returned -5.86% after fees, and the Fund’s benchmark index, the MSCI Emerging Markets Index (Net Dividends in USD), returned -7.84% during the reporting period. The Fund outperformed its benchmark by 1.98% after fees. |
» | From a sector perspective, stock selection in the Information Technology, Consumer Discretionary and Financials sectors contributed the most to relative performance over the reporting period. Security selection in the Telecom and Energy sectors detracted the most from performance. |
» | From a country perspective, stock selection within and an overweight to China was the largest contributor to relative performance, followed by India. Security selection within and an overweight to Greece detracted from performance. Stock selection within Russia detracted the most from performance; however, losses were mitigated through reducing our exposure to Russia from 10.33% at the beginning of the reporting period to 1.34% by the end of the reporting period. |
» | Over the reporting period, the top three contributors to performance were: Alibaba Group, China Construction Bank and Kweichow Moutai. The top three detractors from performance were Bashneft, Eurobank Ergasias and SPT Energy Group. |
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Insights from the Portfolio Managers PIMCO EqS® Long/Short Fund
Dear Shareholder,
We appreciate your investment in the PIMCO EqS® Long/Short Fund (the “Fund”). In the following letter, please find a discussion of the recent market environment and a review of recent portfolio performance.
Market Overview
U.S. equities began the six-month reporting period moving sideways following the strong advance that occurred during the second quarter of the year. The market experienced a brief pullback during July and August as geopolitical tensions rose in the Middle East and Eastern Europe. An improving economic outlook for the U.S. fueled a rebound in U.S. equities as second quarter GDP was revised upwards, the dollar strengthened to a four-year high and unemployment fell beneath 6% for the first time since the recession.
Following this recovery, equities experienced a sharp decline driven by concerns of slowing European growth, the Ebola virus and potential economic weakness in the U.S. related to declining oil prices. This near-correction pullback was offset by strong third quarter earnings results, an announcement by the Bank of Japan to expand and accelerate its asset purchase program, an increase in U.S. consumer spending and a third quarter GDP revision upwards to 3.9% (from 3.5%), pushing the S&P 500 Index to new all-time highs.
An OPEC announcement in November, stating oil production quotas would not be cut in order to cease the rapid decline in oil prices, pushed the commodity to its lowest levels since mid-2009. This placed downward pressure on stocks before positive performance offset the decline by year-end.
Fund Review
Over the six-month reporting period, the Fund’s Institutional Class shares returned -1.38% net of fees, underperforming its benchmark, the 3-Month USD LIBOR Index, by -1.50% on an after fees basis. This relative underperformance can be attributed to stock selection, primarily on the long side of the portfolio.
The Fund’s top holding, American Realty Capital Properties, a real-estate investment trust (“REIT”) focused on high credit quality commercial real estate, detracted from performance during the period. At the time of the Fund’s purchase, we viewed the company as an opportunity to gain direct exposure to prime commercial real estate anchored by secure, nationally branded tenants. The stock traded at a significant discount relative to its peers and offered an attractive dividend yield. At the end of October, the company announced that accounting errors were made in the first and second quarters of 2014. This announcement drove the price of the stock down significantly.
Consequently, our initial investment thesis was impaired; and as a result, we closed our position on November 6, 2014.
The Fund’s investment in Walgreens also detracted from performance over the reporting period. We believed this leading U.S. drugstore chain operator possessed ample room to improve its operations and profitability given its acquisition of United Kingdom drug wholesaler and drugstore operator Alliance Boots. Early in the reporting period, the company announced it would not be pursuing a tax inversion. This announcement, along with a reduction in forward earnings guidance, related to pharmaceutical margin pressure, caused the stock price to materially decline. Another notable detractor was American Airlines, which encountered downward pressure in association with global fears over the Ebola virus. We felt our investment theses on these two names had deteriorated and have since exited the positions.
On the positive side, records and information management services provider Iron Mountain was the top contributor to performance. Shares of the recently converted REIT advanced as the company continued to appreciate towards a valuation more in-line with its non-traditional REIT peers. The company also experienced a positive catalyst as it was added to the MSCI United States REIT Index in November 2014. We continue to hold Iron Mountain as the stock trades at a discount to its non-traditional REIT peers, as well as other self-storage companies. Another top contributor was Dollar Tree. The discount variety store chain operator is working toward acquiring Family Dollar Store. This acquisition has been met with investor skepticism; however, we initiated our position believing that as the market realizes the merits of the acquisition, increased earnings and synergies produced through the deal would unlock the hidden value of the stock. Also, recently lower commodity prices have strengthened the consumer, which we believe will drive continued positive performance in the stock.
In addition, our short book contributed to performance, in aggregate, despite the strong equity market rally. Our approach to shorting is to generate alpha as opposed to simply hedging market risk. In the midst of the significant decline in oil prices during the last six months of the year, we were able to open multiple short positions on energy-related names. These positions drove positive performance in the Fund. As the decline in oil extends, we will continue to hold these positions while monitoring the situation closely.
Conclusion
Equity market performance has been strong despite various geopolitical and economic concerns. As U.S. economic growth continues to improve, albeit slowly, we believe that the New Neutral low rate environment will be supportive for stocks as companies can take advantage of inexpensive financing. Access to cheap financing is
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 19 |
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Insights from the Portfolio Managers PIMCO EqS® Long/Short Fund (Cont.)
particularly helpful to companies with attractive prospects in a slow-growth world. In this low real rate environment, current valuation levels suggest equities are poised to deliver more modest returns, but returns that are still attractive relative to other asset classes.
Again, we thank you for your continued investment in the Fund and look forward to serving your investment needs.
Sincerely,
Geoffrey Johnson, CFA
Portfolio Manager
Top 10 Holdings1
DST Systems, Inc. | 5.3% | |||||
Comcast Corp. ‘A’ | 4.3% | |||||
Sealed Air Corp. | 4.1% | |||||
Cardinal Health, Inc. | 3.9% | |||||
Foot Locker, Inc. | 3.7% | |||||
Time Warner, Inc. | 3.7% | |||||
HealthSouth Corp. | 3.7% | |||||
DaVita HealthCare Partners, Inc. | 3.6% | |||||
Dollar Tree, Inc. | 3.5% | |||||
Iron Mountain, Inc. | 3.3% |
Sector Breakdown2
Consumer Discretionary | 25.7% | |||||
Health Care | 16.1% | |||||
Information Technology | 15.7% | |||||
Industrials | 8.9% | |||||
Materials | 4.4% | |||||
Others | 4.3% |
1 | % of Investments, at value as of 12/31/2014. Top Ten Holdings solely reflect long positions. Securities sold short, derivatives, and short-term instruments are not taken into consideration. |
2 | % of net exposure (Investments, at value less Securities Sold Short) as of 12/31/2014. Financial derivative instruments and short-term instruments are not taken into consideration. |
20 | PIMCO EQUITY SERIES |
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Institutional Class - PMHIX | Class A - PMHAX | |
Class P - PMHBX | Class C - PMHCX | |
Class D - PMHDX |
Cumulative Returns Through December 31, 2014
Average Annual Total Return for the period ended December 31, 2014* | ||||||||||||||||||||||
6 Months** | 1 Year | 5 Year | 10 Year | Fund Inception (01/01/03) | ||||||||||||||||||
PIMCO EqS® Long/Short Fund Institutional Class | -1.38% | -1.55% | 5.90% | 10.14% | 12.72% | |||||||||||||||||
PIMCO EqS® Long/Short Fund Class P | -1.39% | -1.64% | 5.82% | 10.04% | 12.61% | |||||||||||||||||
PIMCO EqS® Long/Short Fund Class D | -1.56% | -1.89% | 5.52% | 9.75% | 12.32% | |||||||||||||||||
PIMCO EqS® Long/Short Fund Class A | -1.56% | -1.89% | 5.52% | 9.75% | 12.32% | |||||||||||||||||
PIMCO EqS® Long/Short Fund Class A (adjusted) | -6.99% | -7.28% | 4.33% | 9.13% | 11.79% | |||||||||||||||||
PIMCO EqS® Long/Short Fund Class C | -1.93% | -2.68% | 4.73% | 8.93% | 11.48% | |||||||||||||||||
PIMCO EqS® Long/Short Fund Class C (adjusted) | -2.90% | -3.65% | 4.73% | 8.93% | 11.48% | |||||||||||||||||
3 Month USD LIBOR Index± | 0.12% | 0.24% | 0.33% | 1.99% | 1.88% |
All Fund returns are net of fees and expenses.
** Cumulative return.
± The 3 Month USD LIBOR (London Interbank Offered Rate) Index is an average interest rate, determined by the British Bankers Association, that banks charge one another for the use of short-term money (3 months) in England’s Eurodollar market. It is not possible to invest directly in an unmanaged index.
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. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The adjusted returns take into account the maximum sales charge of 5.50% on Class A shares and 1.00% CDSC on Class C shares. The Fund’s total annual operating expense ratio as stated in the Fund’s current prospectus, as supplemented to date, is 2.03% for the Institutional Class shares, 2.13% for the Class P shares, 2.38% for the Class D shares, 2.38% for the Class A shares, and 3.13% for the Class C shares. Details regarding any Fund’s operating expenses can be found in the Fund’s prospectus. For performance current to the most recent month-end, visit www.pimco.com/investments.
* For periods prior to April 20, 2012, the Fund’s performance reflects the performance when the Fund was a partnership, net of actual fees and expenses charged to individual partnership accounts in the aggregate. If the performance had been restated to reflect the applicable fees and expenses of each share class, the performance may have been higher or lower. The Fund began operations as a partnership on January 1, 2003 and, on April 20, 2012, was reorganized into a newly-formed fund that was registered as an investment company under the Investment Company Act of 1940. Prior to the reorganization, the Fund had an investment objective, investment strategies, investment guidelines, and restrictions that were substantially similar to those currently applicable to the Fund; however, the Fund was not registered as an investment company under the Investment Company Act of 1940 and was not subject to its requirements or requirements imposed by the Internal Revenue Code of 1986 which, if applicable, may have adversely affected its performance. The performance of Class P, D, A and C shares for the period from April 20, 2012 to April 30, 2012 is based on the performance of the Institutional Class shares of the Fund. The performance of each class of shares will differ as a result of the different levels of fees and expenses applicable to each class of shares.
Portfolio Insights
» | The PIMCO EqS® Long/Short Fund seeks long-term capital appreciation by investing under normal circumstances in long and short positions of equity and equity-related securities, including common and preferred stock (and securities convertible into, or that PIMCO expects to be exchanged for, common or preferred stock), utilizing a fundamental investing style that integrates bottom-up and top-down research. The Fund will normally invest a substantial portion of its assets in equity and equity-related securities. The Fund may also invest in fixed income securities of varying maturities, cash and cash equivalents. |
» | The Fund’s Institutional Class shares returned -1.38% after fees, and the Fund’s benchmark index, the 3-Month USD LIBOR Index, returned 0.12% during the reporting period. |
» | The Fund’s long, high concentration position in American Realty Capital Properties detracted the most from absolute returns as the security suffered a large loss during the reporting period. |
» | Although developed market equities generally rose over the reporting period, security selection within the Fund’s short equity positions, in aggregate, benefited performance as these securities posted negative returns over the reporting period. |
» | Over the reporting period, the Fund increased its long equity positions to 72% and ended the reporting period at 6% net short equity exposure, raising the overall net equity exposure to 66% of net assets. |
» | The Fund’s cash and currency positions in aggregate contributed to performance. |
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 21 |
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Insights from the Portfolio Managers PIMCO Global Dividend Fund
Dear Shareholder,
We appreciate your investment in the PIMCO Global Dividend Fund (the “Fund”). In the following letter, please find a discussion of the recent market environment and a review of portfolio performance.
Market Overview
During the six-month reporting period ended December 31, 2014, the MSCI All Country World Index (the “Index”), which tracks the performance of global equities, declined 1.90%. Performance was strongest in the healthcare, information technology and consumer discretionary sectors. Energy, materials and telecommunications were the poorest performing sectors.
Global equities fell in the third quarter of 2014 and managed to eke out a slight gain in the fourth quarter of the year, as market volatility increased in the latter half of the year, particularly in the commodity and currency markets. U.S. equities, as represented by the S&P 500 Index, outperformed the Index, led by U.S. dollar strength and improving economic data. Second and third quarter GDP were revised upward to 4.6% and 5.0%, respectively. Although the Federal Reserve (“Fed”) ended its bond buying program in October 2014, the Fed indicated that it remains committed to an accommodative monetary policy. Across the Atlantic, Europe was one of the worst performing regions as deflationary concerns weighed on equity markets. Despite lowering benchmark interest and deposit rates and launching its asset-backed securities purchase program, the European Central Bank (“ECB”) continued to face public pressure for bolder action to revive the Eurozone economy.
After a strong first half of the year, stocks in emerging markets (as represented by the MSCI Emerging Markets Index) declined 7.84% due to headwinds from a strengthening U.S. dollar, falling commodity prices and concerns over a China economic slowdown. Russia was the worst performing country, as the Russian ruble plummeted nearly 50% versus the U.S. dollar, which included a one-day 40% sell-off following an interest rate hike to 17% by Russia’s central bank. Asia had some of the best performing equity markets in the emerging world, partially aided by lower oil prices as many countries are net importers of fuel. Both Indonesia and India surged on the hopes of structural reform following national elections earlier in the year, while mainland Chinese equities received a boost from a surprise interest rate cut, bets on additional government stimulus and signs of reform for state-owned enterprises.
Fund Review
We seek to provide an attractive current yield and long-term capital appreciation. During the six-month reporting period ended December 31, 2014, the Fund paid ordinary quarterly dividends of
$0.20 per share on its Institutional Class shares. The dividend per share was slightly lower for the other share classes to account for varying class-specific expenses.
The six-month total return for the Fund’s Institutional Class shares was -2.53% net of fees and underperformed the Index, which returned -1.90%. Though security selection in the energy and utilities sectors detracted from relative performance, an underweight to energy and security selection in consumer discretionary sectors mitigated losses.
At the security level, the Fund’s position in Target Corporation was the largest contributor to relative performance. This big-box retailer overcame a data breach and poor performance in its Canadian operations to post upside surprises in sales and earnings per share (“EPS”) in the third quarter of 2014. Target Corporation posted better-than-expected same store sales growth, driven by strong online sales and its first positive news since the data breach occurred. Additionally, the company has received praise from industry analysts for leadership changes made to the executive team.
The Fund’s holding of Navient Corporation was another top contributor to performance. This U.S. servicer for the Department of Education and private student loans announced that it had acquired an $8.4 billion portfolio from Wells Fargo in the fourth quarter of the year. The transaction is expected to support earnings and we believe it may compel other banks to explore selling similar non-core student loans portfolios, for which Navient is one of a few qualified buyers.
The largest detractor from performance for the reporting period was the Fund’s holding of Prosafe, the operator of accommodation vessels for the offshore oil industry, as its third quarter earnings were disappointing. Prosafe lowered its dividend to strengthen its balance sheet and maintain optionality to add assets if they become available at attractive prices in the weak part of the cycle. While the upside for Prosafe remains material over the long-term, cyclical headwinds remain in the form of much lower oil prices, industry overcapacity and spending cuts from major oil companies.
LinnCo LLC (“Linn”), the owner of Linn Energy LLC (one of the largest independent oil and natural gas development companies in the U.S.), underperformed as oil and gas producers were negatively impacted by falling oil and natural gas prices. Despite having hedges in their portfolio to partially mitigate price volatility in crude oil and natural gas, it became apparent that Linn could not support their generous dividend and long-term business growth with the funds available at prevailing oil prices. Given these developments, we exited the position and reinvested the liquidity into securities with more attractive risk-reward opportunities. After our sale, Linn ultimately reduced its dividend distribution by 57% and its 2015 capital equipment expenditures (“capex”) by 53%.
22 | PIMCO EQUITY SERIES |
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Conclusion
Over the reporting period, we added slightly to “Consistent Earners” (i.e., stable, blue chip companies) and “Basic Value” (i.e., more cyclical companies) and trimmed our allocation to “Emerging Franchises” (i.e., secular growth companies). We also increased our allocations to developed markets, specifically the U.K. and Japan, and to the utilities and materials sectors. The largest decrease over the reporting period was to the energy sector.
Going forward, we maintain our long-term view that dividend-paying equities have the potential to be an attractive long-term investment solution, especially given a secular outlook for lower returns across asset classes. As always, however, we continue to emphasize valuation in a market that has recently been characterized by overreactions to both positive and negative news.
Thank you for your investment in the Fund.
Sincerely,
Brad Kinkelaar Portfolio Manager | Austin Graff Portfolio Manager |
Top 10 Holdings1
Intesa Sanpaolo SpA | 3.5% | |||||
Vodafone Group PLC | 3.1% | |||||
Target Corp. | 3.1% | |||||
Lloyds Banking Group PLC | 3.1% | |||||
PG&E Corp. | 3.0% | |||||
Imperial Tobacco Group PLC | 2.6% | |||||
Colony Financial, Inc. | 2.6% | |||||
QUALCOMM, Inc. | 2.3% | |||||
Nippon Telegraph & Telephone Corp. | 2.3% | |||||
Suez Environnement Co. | 2.2% |
Geographic Breakdown1
United States | 48.8% | |||||
United Kingdom | 13.9% | |||||
France | 7.1% | |||||
Italy | 4.5% | |||||
Japan | 4.4% | |||||
Hong Kong | 4.0% | |||||
Brazil | 2.8% | |||||
Bermuda | 2.0% | |||||
Switzerland | 1.9% | |||||
Netherlands | 1.7% | |||||
Spain | 1.6% | |||||
Taiwan | 1.3% | |||||
Turkey | 1.1% | |||||
Singapore | 1.0% | |||||
China | 1.0% | |||||
Australia | 1.0% | |||||
Luxembourg | 0.8% | |||||
Cyprus | 0.6% | |||||
South Africa | 0.5% |
Sector Breakdown1
Financials | 26.5% | |||||
Consumer Discretionary | 12.9% | |||||
Information Technology | 11.7% | |||||
Utilities | 10.6% | |||||
Industrials | 8.4% | |||||
Telecommunication Services | 7.4% | |||||
Consumer Staples | 7.2% | |||||
Materials | 5.9% | |||||
Energy | 4.9% | |||||
Health Care | 4.5% |
1 | % of Investments, at value as of 12/31/2014. 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. |
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 23 |
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Institutional Class - PQDIX | Class A - PQDAX | |
Class P - PQDPX | Class C - PQDCX | |
Class D - PQDDX | Class R - PQDRX |
Cumulative Returns Through December 31, 2014
Average Annual Total Return for the period ended December 31, 2014 | ||||||||||||||
6 Months* | 1 Year | Fund Inception (12/14/11) | ||||||||||||
PIMCO Global Dividend Fund Institutional Class | -2.53% | 3.35% | 12.77% | |||||||||||
PIMCO Global Dividend Fund Class P | -2.66% | 3.20% | 12.67% | |||||||||||
PIMCO Global Dividend Fund Class D | -2.72% | 2.94% | 12.41% | |||||||||||
PIMCO Global Dividend Fund Class A | -2.79% | 2.94% | 12.41% | |||||||||||
PIMCO Global Dividend Fund Class A (adjusted) | -8.14% | -2.72% | 10.34% | |||||||||||
PIMCO Global Dividend Fund Class C | -3.13% | 2.16% | 11.52% | |||||||||||
PIMCO Global Dividend Fund Class C (adjusted) | -3.70% | 1.57% | 11.52% | |||||||||||
PIMCO Global Dividend Fund Class R | -2.93% | 2.68% | 12.12% | |||||||||||
MSCI All Country World Index Net USD± | -1.90% | 4.16% | 15.17% |
All Fund returns are net of fees and expenses.
* Cumulative return.
± The MSCI All Country World Index Net USD is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The Index consists of 46 country indices comprising 23 developed and 23 emerging market country indices. It is not possible to invest directly in an unmanaged index.
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. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The adjusted returns take into account the maximum sales charge of 5.50% on Class A shares and 1.00% CDSC on Class C shares. The Fund’s total annual operating expense ratio as stated in the Fund’s current prospectus, as supplemented to date, is 1.25% for the Institutional Class shares, 1.35% for the Class P shares, 1.60% for the Class D shares, 1.60% for the Class A shares, 2.35% for the Class C shares and 1.85% for the Class R shares. Details regarding any Fund’s operating expenses can be found in the Fund’s prospectus. For performance current to the most recent month-end, visit www.pimco.com/investments.
Portfolio Insights
» | The PIMCO Global Dividend Fund seeks to provide current income that exceeds the average yield on global stocks, and as a secondary objective, seeks to provide long-term capital appreciation, by investing under normal circumstances at least 75% of its assets in equity and equity-related securities, including common and preferred stock (and securities convertible into, or that PIMCO expects to be exchanged for, common or preferred stock), as well as securities issued by real estate investment trusts, master limited partnerships and other equity trusts and depositary receipts. |
» | The Fund’s Institutional Class shares returned -2.53% after fees, underperforming its benchmark, the MSCI All Country World Index, which returned -1.90%. |
» | During the reporting period, the Fund paid ordinary quarterly dividends of $0.20 per share over the reporting period, $0.11 per share in the fourth quarter and $0.09 in the third quarter. The dividend per share was slightly lower for the other share classes to account for varying class specific expenses. |
» | From a sector perspective, stock selection in the Consumer Discretionary, Financials and Materials sectors contributed the most to relative performance over the reporting period. An underweight to Materials (portfolio average weight of 2.8% vs. benchmark average weight of 5.8%) was additive to performance. Security selection in the Utilities, Energy and Healthcare sectors detracted the most from performance. An underweight to Energy (portfolio average weight of 8.4% vs. benchmark average weight of 9.2%) mitigated losses from falling energy prices. |
» | From a country perspective, stock selection within the United States and United Kingdom was the largest contributor to relative performance. Security selection within and an overweight to both Brazil and Norway detracted the most from performance. |
» | Over the reporting period, the top three equity contributors were: Target Corporation, Navient Corporation and Cisco Systems. The top three equity detractors were: Prosafe, LinnCo and Cia de Saneamento Basico do Estado de SP. |
24 | PIMCO EQUITY SERIES |
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PIMCO International Dividend Fund
Institutional Class - PVIIX | Class A - PVIAX | |
Class P - PVIPX | Class C - PVICX | |
Class D - PVIDX |
A line graph is not included since the Fund has less than six months of performance.
Cumulative Total Return for the period ended December 31, 2014 | ||||
Fund Inception (12/15/14) | ||||
PIMCO International Dividend Fund Institutional Class | 1.58 | % | ||
PIMCO International Dividend Fund Class P | 1.58 | % | ||
PIMCO International Dividend Fund Class D | 1.56 | % | ||
PIMCO International Dividend Fund Class A | 1.56 | % | ||
PIMCO International Dividend Fund Class A (Adjusted) | -4.00 | % | ||
PIMCO International Dividend Fund Class C | 1.53 | % | ||
PIMCO International Dividend Fund Class C (Adjusted) | 0.53 | % | ||
MSCI All Country World ex-US Index± | 3.23 | % |
All Fund returns are net of fees and expenses.
± The MSCI All Country World ex-US Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The Index consists of 45 country indices comprising 22 developed and 23 emerging market country indices. It is not possible to invest directly in an unmanaged index.
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. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The adjusted returns take into account the maximum sales charge of 5.50% on Class A shares and 1.00% CDSC on Class C shares. The Fund’s total annual operating expense ratio as stated in the Fund’s current prospectus, as supplemented to date, is 1.06% for the Institutional Class shares, 1.16% for the Class P shares, 1.41% for the Class D shares, 1.41% for the Class A shares and 2.16% for the Class C shares. Details regarding any Fund’s operating expenses can be found in the Fund’s prospectus. For performance current to the most recent month-end, visit www.pimco.com/investments.
Geographic Breakdown1
United Kingdom | 19.8% | |||||
France | 9.1% | |||||
United States | 8.4% | |||||
Japan | 8.2% | |||||
Australia | 6.5% | |||||
Hong Kong | 5.8% | |||||
Italy | 5.2% | |||||
Netherlands | 4.9% | |||||
Brazil | 4.5% | |||||
China | 3.7% | |||||
South Africa | 3.1% | |||||
Bermuda | 2.1% | |||||
Luxembourg | 2.0% | |||||
Israel | 2.0% | |||||
Singapore | 2.0% | |||||
Switzerland | 2.0% | |||||
Taiwan | 2.0% | |||||
Germany | 1.9% | |||||
Spain | 1.5% | |||||
Turkey | 1.5% | |||||
Cyprus | 0.6% |
Portfolio Insights
» | The PIMCO International Dividend Fund seeks to provide current income that exceeds the average yield on international stocks while providing long-term capital appreciation, by investing in an international-focused diversified portfolio of dividend-paying stocks that have an attractive yield, a growing dividend, and long-term capital appreciation. The Fund will invest primarily in equity and equity-related securities that are economically tied to developed and emerging markets outside the United States, including common and preferred stock (and securities convertible into, or that PIMCO expects to be exchanged for, common or preferred stock), as well as securities issued by real estate investment trusts, master limited partnerships and other equity trusts and depositary receipts. |
» | The Fund commenced operations on December 15, 2014. |
» | Since inception of the Fund through the end of the reporting period, the Fund’s Institutional Class shares returned 1.58% after fees, underperforming its benchmark index, the MSCI All Country World ex-US Index, which returned 3.23%. |
» | Over the reporting period, the top three equity contributors to performance were the Fund’s holdings of Golar LNG Partners, ICAP and Regus. The top three equity detractors from performance were the Fund’s holdings of Roche Holding, Nippon Telegraph and Telephone and Li & Fung Limited. |
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 25 |
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PIMCO International Dividend Fund (Cont.)
Sector Breakdown1
Financials | 22.6% | |||||
Industrials | 14.4% | |||||
Consumer Discretionary | 11.3% | |||||
Telecommunication Services | 11.2% | |||||
Consumer Staples | 9.1% | |||||
Utilities | 8.2% | |||||
Health Care | 7.5% | |||||
Information Technology | 6.0% | |||||
Energy | 4.6% | |||||
Materials | 1.9% |
1 | % of Investments, at value as of 12/31/2014. Geographic and Sector Breakdown solely reflect long positions. Securities sold short, financial derivative instruments and short-term instruments are not taken into consideration. |
26 | PIMCO EQUITY SERIES |
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Institutional Class - PVDIX | Class A - PVDAX | |
Class P - PVDPX | Class C - PVDCX | |
Class D - PVDDX |
A line graph is not included since the Fund has less than six months of performance.
Cumulative Total Return for the period ended December 31, 2014 | ||||
Fund Inception (12/15/14) | ||||
PIMCO U.S. Dividend Fund Institutional Class | 4.21 | % | ||
PIMCO U.S. Dividend Fund Class P | 4.20 | % | ||
PIMCO U.S. Dividend Fund Class D | 4.19 | % | ||
PIMCO U.S. Dividend Fund Class A | 4.19 | % | ||
PIMCO U.S. Dividend Fund Class A (Adjusted) | -1.52 | % | ||
PIMCO U.S. Dividend Fund Class C | 4.16 | % | ||
PIMCO U.S. Dividend Fund Class C (Adjusted) | 3.16 | % | ||
S&P 500 Index± | 3.56 | % |
All Fund returns are net of fees and expenses.
± S&P 500 Index is an unmanaged market index generally considered representative of the stock market as a whole. The Index focuses on the large-cap segment of the U.S. equities market. It is not possible to invest directly in an unmanaged index.
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. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The adjusted returns take into account the maximum sales charge of 5.50% on Class A shares and 1.00% CDSC on Class C shares. The Fund’s total annual operating expense ratio as stated in the Fund’s current prospectus, as supplemented to date, 0.97% for the Institutional Class shares, 1.07% for the Class P shares, 1.32% for the Class D shares, 1.32% for the Class A shares and 2.07% for the Class C Shares. Details regarding any Fund’s operating expenses can be found in the Fund’s prospectus. For performance current to the most recent month-end, visit www.pimco.com/investments.
Geographic Breakdown1
United States | 91.3% | |||||
Bermuda | 3.2% | |||||
Taiwan | 1.9% | |||||
Luxembourg | 1.5% | |||||
Switzerland | 1.4% |
Sector Breakdown1
Financials | 23.0% | |||||
Information Technology | 17.1% | |||||
Consumer Discretionary | 13.6% | |||||
Industrials | 11.8% | |||||
Materials | 11.3% | |||||
Utilities | 8.0% | |||||
Health Care | 6.7% | |||||
Energy | 4.8% | |||||
Consumer Staples | 3.1% |
1 | % of Investments, at value as of 12/31/2014. Geographic and Sector Breakdown solely reflect long positions. Securities sold short, financial derivative instruments and short-term instruments are not taken into consideration. |
Portfolio Insights
» | The PIMCO U.S. Dividend Fund seeks to provide current income that exceeds the average yield on U.S. stocks, while providing long-term capital appreciation by investing in a U.S.-focused diversified portfolio of dividend-paying stocks that have an attractive yield, a growing dividend, and long-term capital appreciation. The Fund will invest primarily in equity and equity-related securities that are economically tied to the United States, including common and preferred stock (and securities convertible into, or that PIMCO expects to be exchanged for, common or preferred stock), as well as securities issued by real estate investment trusts, master limited partnerships and other equity trusts and depositary receipts. |
» | The Fund commenced operations on December 15, 2014. |
» | Since inception of the Fund through the end of the reporting period, the Fund’s Institutional Class shares returned 4.21% after fees, outperforming its benchmark index, the S&P 500 Index, which returned 3.56%. |
» | Over the reporting period, the top three equity contributions to performance were the Fund’s holdings of Golar LNG Partners, General Motors and Corning Incorporated. The top three equity detractors from performance were the Fund’s holdings of One Gas, Roche Holding and Radiant Opto-Electronics Corp. |
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 27 |
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Insights from the Portfolio Managers PIMCO EqS Pathfinder Fund®
Dear Shareholder,
It is our pleasure to be speaking with you as we finish the second half of 2014, and we thank you for your investment in the PIMCO EqS Pathfinder Fund® (the “Fund”). 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 past six months, the Fund itself, and our outlook for 2015.
The Last Six Months in Review
The MSCI World Index retreated over the course of the second half of the year due to concerns about: (1) the end of quantitative easing (“QE”) by the U.S. Federal Reserve (“Fed”); (2) slowing global growth, particularly in Europe and China; and (3) the dramatic decline in the price of oil as supply growth, largely due to shale fracking in the U.S., overwhelmed global demand. Although most of the rest of the world is still mired in an anemic, post-financial crisis economic recovery, the economy accelerated in the U.S., corporate earnings advanced and the U.S. equity market rallied. As if on cue, the Fed is slowly beginning to reign in its loose monetary policy, and announced in October that it stopped its bond purchasing program and may be ready to raise interest rates some time in 2015. By contrast, Europe’s economic recovery is faltering; and European Central Bank (“ECB”) president Mario Draghi is contemplating additional stimulus measures. In addition, China’s economy is slowing; and its leaders are also beginning to openly express concern about economic growth.
The price of oil declined significantly from its high in late June, mainly due to increasing supply from shale fracking in the U.S., amid concern that slowing global growth may create a softening in demand. The steep decline in the price of oil also created a sell-off in all energy-related securities, with the energy sector ending the second half of 2014 as the bottom performing sector.
Largely due to its energy-related holdings, the Fund lagged the MSCI World Index. The Fund’s Institutional Class shares declined 7.18% after fees, while the MSCI World Index declined 1.17% over the reporting period.
Pathfinder Fund
We took profits in the second half of 2014 in Japanese holding Komatsu, European companies Rhoen Klinikum and BP, and U.S.-based company 3M. In addition, one of our fish farmers, Cermaq, was taken over by Mitsubishi at a substantial profit. We also took advantage of price volatility to initiate positions in: media providers Comcast and Tribune; Norwegian global oil services company Akastor; toy manufacturer Mattel; commercial printer RR Donnelly; network
product manufacturer Belden; and electronics equipment, motion picture/music production, and financial services company Sony. In addition, the Fund invested in Imperial Tobacco’s IPO of its Mediterranean tobacco distribution company, Logista, when the company issued shares in mid-summer. Some of the Fund’s notable performers in the portfolio in the second half of the year included Marine Harvest, Bpost and Microsoft.
Shares of Marine Harvest, the Norwegian fish farmer, rose in price as the company reported strong third quarter revenues and earnings that exceeded its preliminary earnings report. Many analysts raised their price forecasts for the fourth quarter of 2014 through 2016 based upon anticipated modest supply growth and strong demand growth from all regions. Although global supply is estimated to increase 3% next year, per analyst reports, in our view the two most important salmon producers, Norway and Chile, cannot increase their production in the next couple of years. In addition, we believe demand is set to expand by as much as 7%, as consumers seek relatively low cost proteins rich in Omega-3 fatty acids, which may help to lower cholesterol levels.
Bpost shares rose as the company announced third quarter earnings that exceeded analysts’ estimates along with a better than expected mail volume. Bpost also just recently paid a very attractive dividend that equated to an approximate 5.7% dividend yield.
Microsoft shares rose steadily throughout the second half of the year as the decline in business and consumer PC shipments appears to have leveled off, in our view, and healthy enterprise spending, increased momentum in cloud offerings, and the new management team’s cost controls are now all expected to drive improved margins. The company continues to generate a very high level of free cash flow, has nearly $8.00 per share in net cash, and recently increased its dividend by over 10%.
We also had a few stocks in the portfolio that did not perform as we expected and North Atlantic Drilling (“NADL”), Seadrill and Genworth were three of those holdings.
The share prices for both NADL and Seadrill dropped substantially over the course of the second half of the year due to concerns regarding: (1) the supply of oil rigs scheduled to come to market in 2015; (2) the potential pressure on day-rates, given the recent decline in the price of oil; (3) the implications for NADL’s agreement with Russia’s Rosneft, following sanctions from the U.S. that targeted Russia’s energy sector; and (4) the resignation of Tor Olav Troim, a strategic planning executive under billionaire founder and owner, John Fredriksen.
In our view, investors did not distinguish in the selling of shares between the companies that provide older 70’s and 80’s vintage rigs,
28 | PIMCO EQUITY SERIES |
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which are soon to be obsolete, and companies such as Seadrill, which provide new rigs with the most up-to-date technology and environmental protections. We continue to find great value in the shares, as does John Fredriksen, who disclosed that one of his holding companies, Hemen Holdings, had increased its stake in Seadrill by 2 million shares during the share price decline. We continue to hold our shares in both companies and view the energy sector in general as being very undervalued today for those investors with a long-term investment horizon.
The share price of Genworth Financial declined over the course of the second half of the year as it reported disappointing earnings and record losses in the third quarter of 2014 due to the performance of its long-term care and life divisions. Investors are also concerned that the ongoing review of long-term care margins may result in future charges to build reserves. Although we believe there is good value in the business (largely reflecting their global mortgage insurance operations) and the shares, we no longer have the same confidence in management’s ability to deliver on its promise of turning around the long-term care division. Consequently, we have substantially reduced our holding in the shares of Genworth Financial.
Looking Forward
As we approach 2015, we are excited by the opportunities that the more volatile equity markets are providing us. We invest in individual businesses, when we believe it is appropriate to do so, and only when they meet our investment criteria. That is our discipline. We are continuing to find a number of new attractive investments, as noted in the first paragraph of the portfolio section of this letter, in U.S.-based global media companies, U.S.- and Japan-based consumer discretionary firms, and beaten-down and out-of-favor energy-related businesses. With exceptionally low interest rates, high corporate cash balances, and willing capital markets, we also expect that mergers and reorganizations will continue at a healthy pace in the coming year.
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,
Anne Gudefin, CFA Portfolio Manager |
Top 10 Holdings1
Marine Harvest ASA | 3.7% | |||||
Microsoft Corp. | 3.4% | |||||
Lorillard, Inc. | 3.3% | |||||
Berkshire Hathaway, Inc. ‘B’ | 3.3% | |||||
Reckitt Benckiser Group PLC | 3.2% | |||||
British American Tobacco PLC | 3.2% | |||||
Imperial Tobacco Group PLC | 3.1% | |||||
AIA Group Ltd. | 3.1% | |||||
bpost S.A. | 2.6% | |||||
Reynolds American, Inc. | 2.2% |
Geographic Breakdown1
United States | 38.7% | |||||
United Kingdom | 11.6% | |||||
France | 6.2% | |||||
Norway | 5.3% | |||||
Hong Kong | 5.0% | |||||
Netherlands | 4.6% | |||||
Switzerland | 3.8% | |||||
Japan | 3.8% | |||||
Singapore | 3.3% | |||||
Belgium | 2.6% | |||||
Sweden | 2.0% | |||||
Denmark | 1.6% | |||||
Faroe Islands | 0.9% | |||||
Australia | 0.9% | |||||
South Korea | 0.8% | |||||
Bermuda | 0.8% | |||||
Canada | 0.7% | |||||
Spain | 0.5% |
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 29 |
Table of Contents
Insights from the Portfolio Managers PIMCO EqS Pathfinder Fund® (Cont.)
Sector Breakdown1
Consumer Staples | 29.1% | |||||
Financials | 17.7% | |||||
Industrials | 13.2% | |||||
Information Technology | 11.6% | |||||
Consumer Discretionary | 9.7% | |||||
Energy | 7.2% | |||||
Health Care | 4.5% | |||||
Materials | 0.2% |
1 | % of Investments, at value as of 12/31/2014. 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. |
30 | PIMCO EQUITY SERIES |
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Institutional Class - PTHWX | Class A - PATHX | |
Class P - PTHPX | Class C - PTHCX | |
Class D - PTHDX | Class R - PTHRX | |
Cumulative Returns Through December 31, 2014
Average Annual Total Return for the period ended December 31, 2014 | ||||||||||||||
6 Months* | 1 Year | Fund Inception (04/14/10) | ||||||||||||
PIMCO EqS Pathfinder Fund® Institutional Class | -7.18% | 1.04% | 6.00% | |||||||||||
PIMCO EqS Pathfinder Fund® Class P | -7.20% | 0.96% | 5.89% | |||||||||||
PIMCO EqS Pathfinder Fund® Class D | -7.38% | 0.73% | 5.61% | |||||||||||
PIMCO EqS Pathfinder Fund® Class A | -7.33% | 0.68% | 5.62% | |||||||||||
PIMCO EqS Pathfinder Fund® Class A (adjusted) | -12.42% | -4.86% | 4.36% | |||||||||||
PIMCO EqS Pathfinder Fund® Class C | -7.70% | -0.05% | 4.87% | |||||||||||
PIMCO EqS Pathfinder Fund® Class C (adjusted) | -8.40% | -0.81% | 4.87% | |||||||||||
PIMCO EqS Pathfinder Fund® Class R | -7.46% | 0.47% | 5.31% | |||||||||||
MSCI World Index± | -1.17% | 4.94% | 9.35% |
All Fund returns are net of fees and expenses.
* Cumulative return.
± 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 23 developed market country indices. It is not possible to invest directly in an unmanaged index.
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. Returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The adjusted returns take into account the maximum sales charge of 5.50% on Class A shares and 1.00% CDSC on Class C shares. The Fund’s total annual operating expense ratio as stated in the Fund’s current prospectus, as supplemented to date, is 1.05% for the Institutional Class shares, 1.15% for the Class P shares, 1.40% for the Class D shares, 1.40% for the Class A shares, 2.15% for the Class C shares and 1.65% for the Class R shares. Details regarding any Fund’s operating expenses can be found in the Fund’s prospectus. For performance current to the most recent month-end, visit www.pimco.com/investments.
Portfolio Insights
» | The PIMCO EqS Pathfinder Fund® 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 Fund’s bottom-up value investment style attempts to identify securities that are undervalued by the market in comparison to PIMCO’s own determination of the company’s value, taking into account criteria such as asset value, book value, cash flow and earnings estimates. |
» | The Fund’s Institutional Class shares returned -7.18% after fees, and the Fund’s benchmark index, the MSCI World Index, returned -1.17% during the reporting period. |
» | Security selection in the Energy, Healthcare, and Information Technology sectors detracted from performance over the reporting period. The Fund’s underweight to the Materials sector along with an overweight to the Consumer Staples sector benefited returns. In addition, a modest holding of cash and cash-related securities also contributed to returns. |
» | Holdings in Marine Harvest, Bpost and Berkshire Hathaway contributed to performance as prices on these securities appreciated during the reporting period. |
» | Holdings in North Atlantic Drilling, Seadrill, and Genworth Financial detracted from returns as prices on these securities declined during the reporting period. |
» | At the end of the reporting period, the Fund held approximately 91% in equities we believe are undervalued, approximately 6% (on the long side only) in merger arbitrage investments, and held the balance of the portfolio in cash and currency hedges. |
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 31 |
Table of Contents
Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and exchange fees and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. The Example is intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period indicated, which for all Funds and share classes is from July 1, 2014 to December 31, 2014 unless noted otherwise in the table and footnotes below.
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 column 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 a Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s 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 a Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) on purchase payments and exchange fees. 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 funds. 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.
Actual | Hypothetical (5% return before expenses) | |||||||||||||||||||||||||||||||||
Beginning Account Value (07/01/14) | Ending Account Value (12/31/14) | Expenses Paid During Period* | Beginning Account Value (07/01/14) | Ending Account Value (12/31/14) | Expenses Paid During Period* | Net Annualized Expense Ratio** | ||||||||||||||||||||||||||||
PIMCO Balanced Income Fund | ||||||||||||||||||||||||||||||||||
Institutional Class | $ | 1,000.00 | $ | 994.60 | $ | 3.79 | $ | 1,000.00 | $ | 1,021.54 | $ | 3.84 | 0.75 | % | ||||||||||||||||||||
Class P | 1,000.00 | 994.10 | 4.30 | 1,000.00 | 1,021.03 | 4.35 | 0.85 | |||||||||||||||||||||||||||
Class D | 1,000.00 | 992.90 | 5.56 | 1,000.00 | 1,019.77 | 5.63 | 1.10 | |||||||||||||||||||||||||||
Class A | 1,000.00 | 992.90 | 5.56 | 1,000.00 | 1,019.77 | 5.63 | 1.10 | |||||||||||||||||||||||||||
Class C | 1,000.00 | 989.10 | 9.33 | 1,000.00 | 1,015.97 | 9.45 | 1.85 | |||||||||||||||||||||||||||
PIMCO Dividend and Income Builder Fund | ||||||||||||||||||||||||||||||||||
Institutional Class | $ | 1,000.00 | $ | 981.10 | $ | 4.17 | $ | 1,000.00 | $ | 1,021.14 | $ | 4.25 | 0.83 | % | ||||||||||||||||||||
Class P | 1,000.00 | 979.90 | 4.67 | 1,000.00 | 1,020.63 | 4.76 | 0.93 | |||||||||||||||||||||||||||
Class D | 1,000.00 | 978.60 | 5.92 | 1,000.00 | 1,019.36 | 6.04 | 1.18 | |||||||||||||||||||||||||||
Class A | 1,000.00 | 978.60 | 5.92 | 1,000.00 | 1,019.36 | 6.04 | 1.18 | |||||||||||||||||||||||||||
Class C | 1,000.00 | 974.80 | 9.66 | 1,000.00 | 1,015.56 | 9.86 | 1.93 | |||||||||||||||||||||||||||
Class R | 1,000.00 | 978.10 | 7.17 | 1,000.00 | 1,018.09 | 7.31 | 1.43 | |||||||||||||||||||||||||||
PIMCO Emerging Multi-Asset Fund | ||||||||||||||||||||||||||||||||||
Institutional Class | $ | 1,000.00 | $ | 926.00 | $ | 1.37 | $ | 1,000.00 | $ | 1,023.92 | $ | 1.44 | 0.28 | % | ||||||||||||||||||||
Class P | 1,000.00 | 926.20 | 1.86 | 1,000.00 | 1,023.42 | 1.95 | 0.38 | |||||||||||||||||||||||||||
Administrative Class | 1,000.00 | 925.50 | 2.59 | 1,000.00 | 1,022.66 | 2.72 | 0.53 | |||||||||||||||||||||||||||
Class D | 1,000.00 | 924.50 | 3.07 | 1,000.00 | 1,022.15 | 3.23 | 0.63 | |||||||||||||||||||||||||||
Class A | 1,000.00 | 925.40 | 3.07 | 1,000.00 | 1,022.15 | 3.23 | 0.63 | |||||||||||||||||||||||||||
Class C | 1,000.00 | 921.40 | 6.72 | 1,000.00 | 1,018.35 | 7.06 | 1.38 | |||||||||||||||||||||||||||
Class R | 1,000.00 | 923.40 | 4.29 | 1,000.00 | 1,020.88 | 4.51 | 0.88 |
32 | PIMCO EQUITY SERIES |
Table of Contents
(Unaudited)
Actual | Hypothetical (5% return before expenses) | |||||||||||||||||||||||||||||||||
Beginning Account Value (07/01/14) | Ending Account Value (12/31/14) | Expenses Paid During Period* | Beginning Account Value (07/01/14) | Ending Account Value (12/31/14) | Expenses Paid During Period* | Net Annualized Expense Ratio** | ||||||||||||||||||||||||||||
PIMCO Global Dividend Fund | ||||||||||||||||||||||||||||||||||
Institutional Class | $ | 1,000.00 | $ | 974.70 | $ | 4.15 | $ | 1,000.00 | $ | 1,021.14 | $ | 4.25 | 0.83 | % | ||||||||||||||||||||
Class P | 1,000.00 | 973.40 | 4.65 | 1,000.00 | 1,020.63 | 4.76 | 0.93 | |||||||||||||||||||||||||||
Class D | 1,000.00 | 972.80 | 5.90 | 1,000.00 | 1,019.36 | 6.04 | 1.18 | |||||||||||||||||||||||||||
Class A | 1,000.00 | 972.10 | 5.90 | 1,000.00 | 1,019.36 | 6.04 | 1.18 | |||||||||||||||||||||||||||
Class C | 1,000.00 | 968.70 | 9.63 | 1,000.00 | 1,015.56 | 9.86 | 1.93 | |||||||||||||||||||||||||||
Class R | 1,000.00 | 970.70 | 7.14 | 1,000.00 | 1,018.09 | 7.31 | 1.43 | |||||||||||||||||||||||||||
PIMCO EqS® Emerging Markets Fund | ||||||||||||||||||||||||||||||||||
Institutional Class | $ | 1,000.00 | $ | 941.40 | $ | 6.20 | $ | 1,000.00 | $ | 1,018.96 | $ | 6.45 | 1.26 | % | ||||||||||||||||||||
Class P | 1,000.00 | 941.20 | 6.69 | 1,000.00 | 1,018.45 | 6.96 | 1.36 | |||||||||||||||||||||||||||
Administrative Class | 1,000.00 | 941.10 | 7.43 | 1,000.00 | 1,017.69 | 7.72 | 1.51 | |||||||||||||||||||||||||||
Class D | 1,000.00 | 940.80 | 7.92 | 1,000.00 | 1,017.18 | 8.23 | 1.61 | |||||||||||||||||||||||||||
Class A | 1,000.00 | 939.70 | 7.91 | 1,000.00 | 1,017.18 | 8.23 | 1.61 | |||||||||||||||||||||||||||
Class C | 1,000.00 | 936.30 | 11.58 | 1,000.00 | 1,013.38 | 12.04 | 2.36 | |||||||||||||||||||||||||||
Class R | 1,000.00 | 938.30 | 9.14 | 1,000.00 | 1,015.92 | 9.50 | 1.86 | |||||||||||||||||||||||||||
PIMCO EqS® Long/Short Fund | ||||||||||||||||||||||||||||||||||
Institutional Class | $ | 1,000.00 | $ | 986.20 | $ | 8.86 | $ | 1,000.00 | $ | 1,016.42 | $ | 8.99 | 1.76 | % | ||||||||||||||||||||
Class P | 1,000.00 | 986.10 | 9.36 | 1,000.00 | 1,015.92 | 9.50 | 1.86 | |||||||||||||||||||||||||||
Class D | 1,000.00 | 984.40 | 10.61 | 1,000.00 | 1,014.65 | 10.77 | 2.11 | |||||||||||||||||||||||||||
Class A | 1,000.00 | 984.40 | 10.61 | 1,000.00 | 1,014.65 | 10.77 | 2.11 | |||||||||||||||||||||||||||
Class C | 1,000.00 | 980.70 | 14.41 | 1,000.00 | 1,010.80 | 14.63 | 2.87 | |||||||||||||||||||||||||||
PIMCO International Dividend Fund(a) | ||||||||||||||||||||||||||||||||||
Institutional Class | $ | 1,000.00 | $ | 1,015.80 | $ | 0.39 | $ | 1,000.00 | $ | 1,021.14 | $ | 4.25 | 0.83 | % | ||||||||||||||||||||
Class P | 1,000.00 | 1,015.80 | 0.44 | 1,000.00 | 1,020.63 | 4.76 | 0.93 | |||||||||||||||||||||||||||
Class D | 1,000.00 | 1,015.60 | 0.55 | 1,000.00 | 1,019.36 | 6.04 | 1.18 | |||||||||||||||||||||||||||
Class A | 1,000.00 | 1,015.60 | 0.55 | 1,000.00 | 1,019.36 | 6.04 | 1.18 | |||||||||||||||||||||||||||
Class C | 1,000.00 | 1,015.30 | 0.91 | 1,000.00 | 1,015.56 | 9.86 | 1.93 | |||||||||||||||||||||||||||
PIMCO U.S. Dividend Fund(a) | ||||||||||||||||||||||||||||||||||
Institutional Class | $ | 1,000.00 | $ | 1,042.10 | $ | 0.35 | $ | 1,000.00 | $ | 1,021.59 | $ | 3.79 | 0.74 | % | ||||||||||||||||||||
Class P | 1,000.00 | 1,042.00 | 0.40 | 1,000.00 | 1,021.08 | 4.30 | 0.84 | |||||||||||||||||||||||||||
Class D | 1,000.00 | 1,041.90 | 0.52 | 1,000.00 | 1,019.82 | 5.58 | 1.09 | |||||||||||||||||||||||||||
Class A | 1,000.00 | 1,041.90 | 0.52 | 1,000.00 | 1,019.82 | 5.58 | 1.09 | |||||||||||||||||||||||||||
Class C | 1,000.00 | 1,041.60 | 0.87 | 1,000.00 | 1,016.02 | 9.40 | 1.84 | |||||||||||||||||||||||||||
PIMCO EqS Pathfinder Fund® | ||||||||||||||||||||||||||||||||||
Institutional Class | $ | 1,000.00 | $ | 928.20 | $ | 4.40 | $ | 1,000.00 | $ | 1,020.78 | $ | 4.61 | 0.90 | % | ||||||||||||||||||||
Class P | 1,000.00 | 928.00 | 4.89 | 1,000.00 | 1,020.27 | 5.12 | 1.00 | |||||||||||||||||||||||||||
Class D | 1,000.00 | 926.20 | 6.10 | 1,000.00 | 1,019.01 | 6.40 | 1.25 | |||||||||||||||||||||||||||
Class A | 1,000.00 | 926.70 | 6.10 | 1,000.00 | 1,019.01 | 6.40 | 1.25 | |||||||||||||||||||||||||||
Class C | 1,000.00 | 923.00 | 9.75 | 1,000.00 | 1,015.21 | 10.21 | 2.00 | |||||||||||||||||||||||||||
Class R | 1,000.00 | 925.40 | 7.32 | 1,000.00 | 1,017.74 | 7.67 | 1.50 |
* 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 the number of days in the period/365 (to reflect the one-half year period).
** 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.
(a) The Beginning Account Value is reflective as of 12/15/14 for Actual expense. Expenses paid in the Actual expense section are equal to the Net Annualized Expense Ratio for the Class, multiplied by the average account value over the period, multiplied by 17/365 for the Class shares of the PIMCO International Dividend Fund and PIMCO U.S. Dividend Fund (to reflect the period since the inception date of 12/15/14). Hypothetical expenses reflect an amount as if the Class had been operational for the entire fiscal year.
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 33 |
Table of Contents
Selected Per Share Data for the Year or Period Ended: | Net Asset Value | Net Investment Income (Loss) (a) | Net Realized/ Unrealized Gain (Loss) | Net Increase (Decrease) from Investment Operations | Dividends from Net Investment Income | Distributions from Net Realized Capital Gains | Total Distributions | |||||||||||||||||||||
PIMCO Balanced Income Fund | ||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | $ | 10.24 | $ | 0.15 | $ | (0.20 | ) | $ | (0.05 | ) | $ | (0.19 | ) | $ | (0.01 | ) | $ | (0.20 | ) | |||||||||
03/31/2014 - 06/30/2014 | 10.00 | 0.08 | 0.24 | 0.32 | (0.08 | ) | 0.00 | (0.08 | ) | |||||||||||||||||||
Class P | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | 10.24 | 0.16 | (0.22 | ) | (0.06 | ) | (0.18 | ) | (0.01 | ) | (0.19 | ) | ||||||||||||||||
03/31/2014 - 06/30/2014 | 10.00 | 0.08 | 0.24 | 0.32 | (0.08 | ) | 0.00 | (0.08 | ) | |||||||||||||||||||
Class D | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | 10.25 | 0.13 | (0.20 | ) | (0.07 | ) | (0.17 | ) | (0.01 | ) | (0.18 | ) | ||||||||||||||||
03/31/2014 - 06/30/2014 | 10.00 | 0.08 | 0.24 | 0.32 | (0.07 | ) | 0.00 | (0.07 | ) | |||||||||||||||||||
Class A | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | 10.25 | 0.14 | (0.21 | ) | (0.07 | ) | (0.17 | ) | (0.01 | ) | (0.18 | ) | ||||||||||||||||
03/31/2014 - 06/30/2014 | 10.00 | 0.08 | 0.24 | 0.32 | (0.07 | ) | 0.00 | (0.07 | ) | |||||||||||||||||||
Class C | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | 10.25 | 0.10 | (0.21 | ) | (0.11 | ) | (0.13 | ) | (0.01 | ) | (0.14 | ) | ||||||||||||||||
03/31/2014 - 06/30/2014 | 10.00 | 0.07 | 0.23 | 0.30 | (0.05 | ) | 0.00 | (0.05 | ) | |||||||||||||||||||
PIMCO Dividend and Income Builder Fund | ||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | $ | 13.12 | $ | 0.18 | $ | (0.43 | ) | $ | (0.25 | ) | $ | (0.20 | ) | $ | (0.34 | ) | $ | (0.54 | ) | |||||||||
06/30/2014 | 11.60 | 0.44 | 1.54 | 1.98 | (0.46 | ) | 0.00 | (0.46 | ) | |||||||||||||||||||
06/30/2013 | 10.47 | 0.54 | 1.03 | 1.57 | (0.42 | ) | (0.02 | ) | (0.44 | ) | ||||||||||||||||||
12/14/2011 - 06/30/2012 | 10.00 | 0.25 | 0.47 | 0.72 | (0.25 | ) | 0.00 | (0.25 | ) | |||||||||||||||||||
Class P | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | 13.13 | 0.17 | (0.44 | ) | (0.27 | ) | (0.19 | ) | (0.34 | ) | (0.53 | ) | ||||||||||||||||
06/30/2014 | 11.62 | 0.44 | 1.52 | 1.96 | (0.45 | ) | 0.00 | (0.45 | ) | |||||||||||||||||||
06/30/2013 | 10.48 | 0.54 | 1.03 | 1.57 | (0.41 | ) | (0.02 | ) | (0.43 | ) | ||||||||||||||||||
12/14/2011 - 06/30/2012 | 10.00 | 0.30 | 0.42 | 0.72 | (0.24 | ) | 0.00 | (0.24 | ) | |||||||||||||||||||
Class D | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | 13.12 | 0.16 | (0.44 | ) | (0.28 | ) | (0.18 | ) | (0.34 | ) | (0.52 | ) | ||||||||||||||||
06/30/2014 | 11.61 | 0.40 | 1.53 | 1.93 | (0.42 | ) | 0.00 | (0.42 | ) | |||||||||||||||||||
06/30/2013 | 10.47 | 0.46 | 1.09 | 1.55 | (0.39 | ) | (0.02 | ) | (0.41 | ) | ||||||||||||||||||
12/14/2011 - 06/30/2012 | 10.00 | 0.26 | 0.44 | 0.70 | (0.23 | ) | 0.00 | (0.23 | ) | |||||||||||||||||||
Class A | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | 13.12 | 0.15 | (0.43 | ) | (0.28 | ) | (0.18 | ) | (0.34 | ) | (0.52 | ) | ||||||||||||||||
06/30/2014 | 11.61 | 0.42 | 1.51 | 1.93 | (0.42 | ) | 0.00 | (0.42 | ) | |||||||||||||||||||
06/30/2013 | 10.47 | 0.48 | 1.07 | 1.55 | (0.39 | ) | (0.02 | ) | (0.41 | ) | ||||||||||||||||||
12/14/2011 - 06/30/2012 | 10.00 | 0.26 | 0.44 | 0.70 | (0.23 | ) | 0.00 | (0.23 | ) | |||||||||||||||||||
Class C | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | 13.10 | 0.11 | (0.44 | ) | (0.33 | ) | (0.13 | ) | (0.34 | ) | (0.47 | ) | ||||||||||||||||
06/30/2014 | 11.59 | 0.33 | 1.51 | 1.84 | (0.33 | ) | 0.00 | (0.33 | ) | |||||||||||||||||||
06/30/2013 | 10.46 | 0.40 | 1.06 | 1.46 | (0.31 | ) | (0.02 | ) | (0.33 | ) | ||||||||||||||||||
12/14/2011 - 06/30/2012 | 10.00 | 0.24 | 0.41 | 0.65 | (0.19 | ) | 0.00 | (0.19 | ) | |||||||||||||||||||
Class R | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | 13.12 | 0.14 | (0.43 | ) | (0.29 | ) | (0.16 | ) | (0.34 | ) | (0.50 | ) | ||||||||||||||||
06/30/2014 | 11.61 | 0.38 | 1.52 | 1.90 | (0.39 | ) | 0.00 | (0.39 | ) | |||||||||||||||||||
06/30/2013 | 10.47 | 0.36 | 1.16 | 1.52 | (0.36 | ) | (0.02 | ) | (0.38 | ) | ||||||||||||||||||
12/14/2011 - 06/30/2012 | 10.00 | 0.25 | 0.43 | 0.68 | (0.21 | ) | 0.00 | (0.21 | ) | |||||||||||||||||||
PIMCO Emerging Multi-Asset Fund | ||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | $ | 9.11 | $ | 0.10 | $ | (0.77 | ) | $ | (0.67 | ) | $ | (0.38 | ) | $ | 0.00 | $ | (0.38 | ) | ||||||||||
06/30/2014 | 8.60 | 0.18 | 0.48 | 0.66 | (0.15 | ) | 0.00 | (0.15 | ) | |||||||||||||||||||
06/30/2013 | 8.71 | 0.24 | (0.08 | ) | 0.16 | (0.27 | ) | 0.00 | (0.27 | ) | ||||||||||||||||||
06/30/2012 | 9.89 | 0.14 | (1.27 | ) | (1.13 | ) | (0.05 | ) | 0.00 | (0.05 | ) | |||||||||||||||||
04/12/2011 - 06/30/2011 | 10.00 | 0.02 | (0.13 | ) | (0.11 | ) | 0.00 | 0.00 | 0.00 |
Please see footnotes on page 42.
34 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
Net Asset Value End of Year or Period | Total Return | Net Assets End of Year or Period (000s) | Ratio of Expenses to Average Net Assets | Ratio of Expenses to Average Net Assets Excluding Waivers | Ratio of Expenses to Average Net Assets Excluding Interest Expense | Ratio of Expenses to Average Net Assets Excluding Interest Expense and Waivers | Ratio of Net Investment Income (Loss) to Average Net Assets | Portfolio Turnover Rate | ||||||||||||||||||||||||||
$ | 9.99 | (0.54 | )% | $ | 6,683 | 0.75 | %* | 0.91 | %* | 0.75 | %* | 0.91 | %* | 2.93 | %* | 25 | % | |||||||||||||||||
10.24 | 3.20 | 6,284 | 0.75 | * | 4.52 | * | 0.75 | * | 4.52 | * | 3.20 | * | 6 | |||||||||||||||||||||
9.99 | (0.59 | ) | 124 | 0.85 | * | 1.01 | * | 0.85 | * | 1.01 | * | 3.11 | * | 25 | ||||||||||||||||||||
10.24 | 3.18 | 11 | 0.85 | * | 4.62 | * | 0.85 | * | 4.62 | * | 3.03 | * | 6 | |||||||||||||||||||||
10.00 | (0.71 | ) | 216 | 1.10 | * | 1.26 | * | 1.10 | * | 1.26 | * | 2.53 | * | 25 | ||||||||||||||||||||
10.25 | 3.21 | 45 | 1.10 | * | 4.87 | * | 1.10 | * | 4.87 | * | 3.11 | * | 6 | |||||||||||||||||||||
10.00 | (0.71 | ) | 1,683 | 1.10 | * | 1.26 | * | 1.10 | * | 1.26 | * | 2.76 | * | 25 | ||||||||||||||||||||
10.25 | 3.21 | 319 | 1.10 | * | 4.87 | * | 1.10 | * | 4.87 | * | 3.14 | * | 6 | |||||||||||||||||||||
10.00 | (1.09 | ) | 2,724 | 1.85 | * | 2.01 | * | 1.85 | * | 2.01 | * | 1.97 | * | 25 | ||||||||||||||||||||
10.25 | 3.03 | 461 | 1.85 | * | 5.62 | * | 1.85 | * | 5.62 | * | 2.87 | * | 6 | |||||||||||||||||||||
$ | 12.33 | (1.89 | )% | $ | 64,443 | 0.83 | %* | 1.00 | %* | 0.83 | %* | 1.00 | %* | 2.77 | %* | 36 | % | |||||||||||||||||
13.12 | 17.23 | 90,408 | 0.84 | 1.00 | 0.84 | 1.00 | 3.56 | 79 | ||||||||||||||||||||||||||
11.60 | 15.17 | 69,203 | 0.83 | 1.00 | 0.83 | 1.00 | 4.66 | 75 | ||||||||||||||||||||||||||
10.47 | 7.17 | 11,170 | 0.83 | * | 1.57 | * | 0.83 | * | 1.57 | * | 4.35 | * | 28 | |||||||||||||||||||||
12.33 | (2.01 | ) | 166,200 | 0.93 | * | 1.10 | * | 0.93 | * | 1.10 | * | 2.65 | * | 36 | ||||||||||||||||||||
13.13 | 17.05 | 158,122 | 0.94 | 1.10 | 0.94 | 1.10 | 3.53 | 79 | ||||||||||||||||||||||||||
11.62 | 15.15 | 85,724 | 0.93 | 1.10 | 0.93 | 1.10 | 4.62 | 75 | ||||||||||||||||||||||||||
10.48 | 7.21 | 8,207 | 0.93 | * | 2.47 | * | 0.93 | * | 2.47 | * | 5.28 | * | 28 | |||||||||||||||||||||
12.32 | (2.14 | ) | 27,154 | 1.18 | * | 1.35 | * | 1.18 | * | 1.35 | * | 2.41 | * | 36 | ||||||||||||||||||||
13.12 | 16.78 | 32,523 | 1.19 | 1.35 | 1.19 | 1.35 | 3.19 | 79 | ||||||||||||||||||||||||||
11.61 | 14.91 | 23,204 | 1.18 | 1.35 | 1.18 | 1.35 | 4.00 | 75 | ||||||||||||||||||||||||||
10.47 | 6.98 | 2,306 | 1.18 | * | 2.26 | * | 1.18 | * | 2.26 | * | 4.52 | * | 28 | |||||||||||||||||||||
12.32 | (2.14 | ) | 275,659 | 1.18 | * | 1.35 | * | 1.18 | * | 1.35 | * | 2.40 | * | 36 | ||||||||||||||||||||
13.12 | 16.78 | 320,719 | 1.19 | 1.35 | 1.19 | 1.35 | 3.34 | 79 | ||||||||||||||||||||||||||
11.61 | 14.91 | 117,579 | 1.18 | 1.35 | 1.18 | 1.35 | 4.18 | 75 | ||||||||||||||||||||||||||
10.47 | 6.98 | 13,314 | 1.18 | * | 2.43 | * | 1.18 | * | 2.43 | * | 4.62 | * | 28 | |||||||||||||||||||||
12.30 | (2.52 | ) | 327,560 | 1.93 | * | 2.10 | * | 1.93 | * | 2.10 | * | 1.65 | * | 36 | ||||||||||||||||||||
13.10 | 15.97 | 353,287 | 1.94 | 2.10 | 1.94 | 2.10 | 2.67 | 79 | ||||||||||||||||||||||||||
11.59 | 14.08 | 86,879 | 1.93 | 2.10 | 1.93 | 2.10 | 3.42 | 75 | ||||||||||||||||||||||||||
10.46 | 6.46 | 8,000 | 1.93 | * | 3.46 | * | 1.93 | * | 3.46 | * | 4.27 | * | 28 | |||||||||||||||||||||
12.33 | (2.19 | ) | 385 | 1.43 | * | 1.60 | * | 1.43 | * | 1.60 | * | 2.17 | * | 36 | ||||||||||||||||||||
13.12 | 16.50 | 459 | 1.44 | 1.60 | 1.44 | 1.60 | 3.03 | 79 | ||||||||||||||||||||||||||
11.61 | 14.66 | 217 | 1.43 | 1.60 | 1.43 | 1.60 | 3.24 | 75 | ||||||||||||||||||||||||||
10.47 | 6.84 | 415 | 1.43 | * | 2.32 | * | 1.43 | * | 2.32 | * | 4.30 | * | 28 | |||||||||||||||||||||
$ | 8.06 | (7.40 | )% | $ | 17,956 | 0.28 | %* | 1.35 | %* | 0.28 | %* | 1.35 | %* | 2.13 | %* | 7 | % | |||||||||||||||||
9.11 | 7.73 | 20,927 | 0.28 | 1.36 | 0.28 | 1.36 | 2.11 | 20 | ||||||||||||||||||||||||||
8.60 | 1.60 | 36,051 | 0.35 | 1.36 | 0.35 | 1.36 | 2.62 | 53 | ||||||||||||||||||||||||||
8.71 | (11.45 | ) | 29,987 | 0.53 | 1.38 | 0.53 | 1.38 | 1.62 | 41 | |||||||||||||||||||||||||
9.89 | (1.10 | ) | 9,755 | 0.53 | * | 6.96 | * | 0.53 | * | 6.96 | * | 1.13 | * | 0 |
Please see footnotes on page 42.
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 35 |
Table of Contents
Financial Highlights (Cont.)
Selected Per Share Data for the Year or Period Ended: | Net Asset Value | Net Investment Income (Loss) (a) | Net Realized/ Unrealized Gain (Loss) | Net Increase (Decrease) from Investment Operations | Dividends from Net Investment Income | Distributions from Net Realized Capital Gains | Total Distributions | |||||||||||||||||||||
PIMCO Emerging Multi-Asset Fund (Cont.) | ||||||||||||||||||||||||||||
Class P | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | $ | 9.08 | $ | 0.09 | $ | (0.76 | ) | $ | (0.67 | ) | $ | (0.37 | ) | $ | 0.00 | $ | (0.37 | ) | ||||||||||
06/30/2014 | 8.58 | 0.17 | 0.48 | 0.65 | (0.15 | ) | 0.00 | (0.15 | ) | |||||||||||||||||||
06/30/2013 | 8.69 | 0.24 | (0.09 | ) | 0.15 | (0.26 | ) | 0.00 | (0.26 | ) | ||||||||||||||||||
06/30/2012 | 9.90 | 0.15 | (1.31 | ) | (1.16 | ) | (0.05 | ) | 0.00 | (0.05 | ) | |||||||||||||||||
04/12/2011 - 06/30/2011 | 10.00 | 0.02 | (0.12 | ) | (0.10 | ) | 0.00 | 0.00 | 0.00 | |||||||||||||||||||
Administrative Class | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | 9.03 | 0.08 | (0.75 | ) | (0.67 | ) | (0.36 | ) | 0.00 | (0.36 | ) | |||||||||||||||||
06/30/2014 | 8.55 | 0.19 | 0.43 | 0.62 | (0.14 | ) | 0.00 | (0.14 | ) | |||||||||||||||||||
06/30/2013 | 8.69 | 0.15 | (0.01 | ) | 0.14 | (0.28 | ) | 0.00 | (0.28 | ) | ||||||||||||||||||
06/30/2012 | 9.89 | 0.12 | (1.28 | ) | (1.16 | ) | (0.04 | ) | 0.00 | (0.04 | ) | |||||||||||||||||
04/19/2011 - 06/30/2011 | 10.02 | 0.02 | (0.15 | ) | (0.13 | ) | 0.00 | 0.00 | 0.00 | |||||||||||||||||||
Class D | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | 9.07 | 0.08 | (0.76 | ) | (0.68 | ) | (0.35 | ) | 0.00 | (0.35 | ) | |||||||||||||||||
06/30/2014 | 8.57 | 0.15 | 0.48 | 0.63 | (0.13 | ) | 0.00 | (0.13 | ) | |||||||||||||||||||
06/30/2013 | 8.70 | 0.20 | (0.08 | ) | 0.12 | (0.25 | ) | 0.00 | (0.25 | ) | ||||||||||||||||||
06/30/2012 | 9.89 | 0.11 | (1.27 | ) | (1.16 | ) | (0.03 | ) | 0.00 | (0.03 | ) | |||||||||||||||||
04/12/2011 - 06/30/2011 | 10.00 | 0.02 | (0.13 | ) | (0.11 | ) | 0.00 | 0.00 | 0.00 | |||||||||||||||||||
Class A | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | 9.04 | 0.08 | (0.75 | ) | (0.67 | ) | (0.36 | ) | 0.00 | (0.36 | ) | |||||||||||||||||
06/30/2014 | 8.54 | 0.15 | 0.48 | 0.63 | (0.13 | ) | 0.00 | (0.13 | ) | |||||||||||||||||||
06/30/2013 | 8.68 | 0.23 | (0.12 | ) | 0.11 | (0.25 | ) | 0.00 | (0.25 | ) | ||||||||||||||||||
06/30/2012 | 9.88 | 0.12 | (1.28 | ) | (1.16 | ) | (0.04 | ) | 0.00 | (0.04 | ) | |||||||||||||||||
04/12/2011 - 06/30/2011 | 10.00 | 0.02 | (0.14 | ) | (0.12 | ) | 0.00 | 0.00 | 0.00 | |||||||||||||||||||
Class C | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | 8.91 | 0.04 | (0.74 | ) | (0.70 | ) | (0.32 | ) | 0.00 | (0.32 | ) | |||||||||||||||||
06/30/2014 | 8.46 | 0.08 | 0.47 | 0.55 | (0.10 | ) | 0.00 | (0.10 | ) | |||||||||||||||||||
06/30/2013 | 8.62 | 0.15 | (0.09 | ) | 0.06 | (0.22 | ) | 0.00 | (0.22 | ) | ||||||||||||||||||
06/30/2012 | 9.88 | 0.05 | (1.29 | ) | (1.24 | ) | (0.02 | ) | 0.00 | (0.02 | ) | |||||||||||||||||
04/12/2011 - 06/30/2011 | 10.00 | 0.00 | ^ | (0.12 | ) | (0.12 | ) | 0.00 | 0.00 | 0.00 | ||||||||||||||||||
Class R | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | 8.99 | 0.07 | (0.76 | ) | (0.69 | ) | (0.35 | ) | 0.00 | (0.35 | ) | |||||||||||||||||
06/30/2014 | 8.51 | 0.14 | 0.46 | 0.60 | (0.12 | ) | 0.00 | (0.12 | ) | |||||||||||||||||||
06/30/2013 | 8.68 | 0.23 | (0.13 | ) | 0.10 | (0.27 | ) | 0.00 | (0.27 | ) | ||||||||||||||||||
06/30/2012 | 9.88 | 0.09 | (1.27 | ) | (1.18 | ) | (0.02 | ) | 0.00 | (0.02 | ) | |||||||||||||||||
04/12/2011 - 06/30/2011 | 10.00 | 0.01 | (0.13 | ) | (0.12 | ) | 0.00 | 0.00 | 0.00 | |||||||||||||||||||
PIMCO Global Dividend Fund | ||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | $ | 12.81 | $ | 0.15 | $ | (0.49 | ) | $ | (0.34 | ) | $ | (0.20 | ) | $ | (5.03 | ) | $ | (5.23 | ) | |||||||||
06/30/2014 | 11.87 | 0.39 | 1.65 | 2.04 | (0.48 | ) | (0.62 | ) | (1.10 | ) | ||||||||||||||||||
06/30/2013 | 10.47 | 0.43 | 1.37 | 1.80 | (0.37 | ) | (0.03 | ) | (0.40 | ) | ||||||||||||||||||
12/14/2011 - 06/30/2012 | 10.00 | 0.28 | 0.42 | 0.70 | (0.23 | ) | 0.00 | (0.23 | ) | |||||||||||||||||||
Class P | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | 12.82 | 0.13 | (0.49 | ) | (0.36 | ) | (0.19 | ) | (5.03 | ) | (5.22 | ) | ||||||||||||||||
06/30/2014 | 11.88 | 0.42 | 1.61 | 2.03 | (0.47 | ) | (0.62 | ) | (1.09 | ) | ||||||||||||||||||
06/30/2013 | 10.48 | 0.47 | 1.32 | 1.79 | (0.36 | ) | (0.03 | ) | (0.39 | ) | ||||||||||||||||||
12/14/2011 - 06/30/2012 | 10.00 | 0.29 | 0.41 | 0.70 | (0.22 | ) | 0.00 | (0.22 | ) | |||||||||||||||||||
Class D | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | 12.81 | 0.12 | (0.48 | ) | (0.36 | ) | (0.18 | ) | (5.03 | ) | (5.21 | ) | ||||||||||||||||
06/30/2014 | 11.87 | 0.39 | 1.61 | 2.00 | (0.44 | ) | (0.62 | ) | (1.06 | ) | ||||||||||||||||||
06/30/2013 | 10.48 | 0.40 | 1.36 | 1.76 | (0.34 | ) | (0.03 | ) | (0.37 | ) | ||||||||||||||||||
12/14/2011 - 06/30/2012 | 10.00 | 0.30 | 0.39 | 0.69 | (0.21 | ) | 0.00 | (0.21 | ) | |||||||||||||||||||
Class A | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | 12.82 | 0.12 | (0.49 | ) | (0.37 | ) | (0.18 | ) | (5.03 | ) | (5.21 | ) | ||||||||||||||||
06/30/2014 | 11.88 | 0.39 | 1.61 | 2.00 | (0.44 | ) | (0.62 | ) | (1.06 | ) | ||||||||||||||||||
06/30/2013 | 10.48 | 0.42 | 1.35 | 1.77 | (0.34 | ) | (0.03 | ) | (0.37 | ) | ||||||||||||||||||
12/14/2011 - 06/30/2012 | 10.00 | 0.27 | 0.42 | 0.69 | (0.21 | ) | 0.00 | (0.21 | ) |
Please see footnotes on page 42.
36 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
Net Asset Value End of Year or Period | Total Return | Net Assets End of Year or Period (000s) | Ratio of Expenses to Average Net Assets | Ratio of Expenses to Average Net Assets Excluding Waivers | Ratio of Expenses to Average Net Assets Excluding Interest Expense | Ratio of Expenses to Average Net Assets Excluding Interest Expense and Waivers | Ratio of Net Investment Income (Loss) to Average Net Assets | Portfolio Turnover Rate | ||||||||||||||||||||||||||
$ | 8.04 | (7.38 | )% | $ | 1,310 | 0.38 | %* | 1.45 | %* | 0.38 | %* | 1.45 | %* | 2.05 | %* | 7 | % | |||||||||||||||||
9.08 | 7.61 | 1,580 | 0.38 | 1.46 | 0.38 | 1.46 | 1.92 | 20 | ||||||||||||||||||||||||||
8.58 | 1.53 | 1,998 | 0.45 | 1.46 | 0.45 | 1.46 | 2.62 | 53 | ||||||||||||||||||||||||||
8.69 | (11.69 | ) | 2,019 | 0.63 | 1.48 | 0.63 | 1.48 | 1.71 | 41 | |||||||||||||||||||||||||
9.90 | (1.00 | ) | 74 | 0.63 | * | 17.34 | * | 0.63 | * | 17.34 | * | 0.96 | * | 0 | ||||||||||||||||||||
8.00 | (7.45 | ) | 11 | 0.53 | * | 1.60 | * | 0.53 | * | 1.60 | * | 1.81 | * | 7 | ||||||||||||||||||||
9.03 | 7.31 | 23 | 0.53 | 1.61 | 0.53 | 1.61 | 2.13 | 20 | ||||||||||||||||||||||||||
8.55 | 1.35 | 2,051 | 0.60 | 1.61 | 0.60 | 1.61 | 1.60 | 53 | ||||||||||||||||||||||||||
8.69 | (11.75 | ) | 28 | 0.78 | 1.63 | 0.78 | 1.63 | 1.36 | 41 | |||||||||||||||||||||||||
9.89 | (1.30 | ) | 10 | 0.78 | * | 6.47 | * | 0.78 | * | 6.47 | * | 0.88 | * | 0 | ||||||||||||||||||||
8.04 | (7.55 | ) | 966 | 0.63 | * | 1.70 | * | 0.63 | * | 1.70 | * | 1.69 | * | 7 | ||||||||||||||||||||
9.07 | 7.46 | 2,466 | 0.63 | 1.71 | 0.63 | 1.71 | 1.78 | 20 | ||||||||||||||||||||||||||
8.57 | 1.17 | 5,669 | 0.70 | 1.71 | 0.70 | 1.71 | 2.23 | 53 | ||||||||||||||||||||||||||
8.70 | (11.77 | ) | 4,912 | 0.88 | 1.73 | 0.88 | 1.73 | 1.20 | 41 | |||||||||||||||||||||||||
9.89 | (1.10 | ) | 2,745 | 0.88 | * | 8.20 | * | 0.88 | * | 8.20 | * | 0.81 | * | 0 | ||||||||||||||||||||
8.01 | (7.46 | ) | 5,045 | 0.63 | * | 1.70 | * | 0.63 | * | 1.70 | * | 1.74 | * | 7 | ||||||||||||||||||||
9.04 | 7.49 | 7,874 | 0.63 | 1.71 | 0.63 | 1.71 | 1.70 | 20 | ||||||||||||||||||||||||||
8.54 | 1.12 | 12,333 | 0.70 | 1.71 | 0.70 | 1.71 | 2.46 | 53 | ||||||||||||||||||||||||||
8.68 | (11.72 | ) | 10,147 | 0.88 | 1.73 | 0.88 | 1.73 | 1.32 | 41 | |||||||||||||||||||||||||
9.88 | (1.20 | ) | 1,801 | 0.88 | * | 9.28 | * | 0.88 | * | 9.28 | * | 0.82 | * | 0 | ||||||||||||||||||||
7.89 | (7.86 | ) | 2,713 | 1.38 | * | 2.45 | * | 1.38 | * | 2.45 | * | 1.01 | * | 7 | ||||||||||||||||||||
8.91 | 6.56 | 3,799 | 1.38 | 2.46 | 1.38 | 2.46 | 0.96 | 20 | ||||||||||||||||||||||||||
8.46 | 0.56 | 5,101 | 1.45 | 2.46 | 1.45 | 2.46 | 1.68 | 53 | ||||||||||||||||||||||||||
8.62 | (12.51 | ) | 3,868 | 1.63 | 2.48 | 1.63 | 2.48 | 0.57 | 41 | |||||||||||||||||||||||||
9.88 | (1.20 | ) | 649 | 1.63 | * | 9.73 | * | 1.63 | * | 9.73 | * | 0.08 | * | 0 | ||||||||||||||||||||
7.95 | (7.66 | ) | 9 | 0.88 | * | 1.95 | * | 0.88 | * | 1.95 | * | 1.54 | * | 7 | ||||||||||||||||||||
8.99 | 7.17 | 9 | 0.88 | 1.96 | 0.88 | 1.96 | 1.61 | 20 | ||||||||||||||||||||||||||
8.51 | 0.96 | 30 | 0.95 | 1.96 | 0.95 | 1.96 | 2.47 | 53 | ||||||||||||||||||||||||||
8.68 | (11.98 | ) | 9 | 1.13 | 1.98 | 1.13 | 1.98 | 0.99 | 41 | |||||||||||||||||||||||||
9.88 | (1.20 | ) | 10 | 1.13 | * | 6.40 | * | 1.13 | * | 6.40 | * | 0.50 | * | 0 | ||||||||||||||||||||
$ | 7.24 | (2.53 | )% | $ | 55,091 | 0.83 | %* | 0.99 | %* | 0.83 | %* | 0.99 | %* | 2.52 | %* | 42 | % | |||||||||||||||||
12.81 | 17.91 | 302,088 | 0.84 | 1.00 | 0.84 | 1.00 | 3.20 | 95 | ||||||||||||||||||||||||||
11.87 | 17.32 | 579,198 | 0.83 | 1.00 | 0.83 | 1.00 | 3.74 | 108 | ||||||||||||||||||||||||||
10.47 | 6.95 | 315,513 | 0.83 | * | 1.20 | * | 0.83 | * | 1.20 | * | 4.98 | * | 21 | |||||||||||||||||||||
7.24 | (2.66 | ) | 4,034 | 0.93 | * | 1.09 | * | 0.93 | * | 1.09 | * | 2.26 | * | 42 | ||||||||||||||||||||
12.82 | 17.84 | 3,652 | 0.94 | 1.10 | 0.94 | 1.10 | 3.38 | 95 | ||||||||||||||||||||||||||
11.88 | 17.21 | 1,435 | 0.93 | 1.10 | 0.93 | 1.10 | 3.98 | 108 | ||||||||||||||||||||||||||
10.48 | 7.00 | 71 | 0.93 | * | 1.33 | * | 0.93 | * | 1.33 | * | 5.11 | * | 21 | |||||||||||||||||||||
7.24 | (2.72 | ) | 2,675 | 1.18 | * | 1.34 | * | 1.18 | * | 1.34 | * | 2.00 | * | 42 | ||||||||||||||||||||
12.81 | 17.57 | 7,709 | 1.19 | 1.35 | 1.19 | 1.35 | 3.17 | 95 | ||||||||||||||||||||||||||
11.87 | 16.85 | 7,801 | 1.18 | 1.35 | 1.18 | 1.35 | 3.41 | 108 | ||||||||||||||||||||||||||
10.48 | 6.86 | 1,251 | 1.18 | * | 1.67 | * | 1.18 | * | 1.67 | * | 5.25 | * | 21 | |||||||||||||||||||||
7.24 | (2.79 | ) | 40,346 | 1.18 | * | 1.34 | * | 1.18 | * | 1.34 | * | 2.01 | * | 42 | ||||||||||||||||||||
12.82 | 17.56 | 59,540 | 1.19 | 1.35 | 1.19 | 1.35 | 3.14 | 95 | ||||||||||||||||||||||||||
11.88 | 16.95 | 27,729 | 1.18 | 1.35 | 1.18 | 1.35 | 3.63 | 108 | ||||||||||||||||||||||||||
10.48 | 6.86 | 2,529 | 1.18 | * | 1.51 | * | 1.18 | * | 1.51 | * | 4.74 | * | 21 |
Please see footnotes on page 42.
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 37 |
Table of Contents
Financial Highlights (Cont.)
Selected Per Share Data for the Year or Period Ended: | Net Asset Value | Net Investment Income (Loss) (a) | Net Realized/ Unrealized Gain (Loss) | Net Increase (Decrease) from Investment Operations | Dividends from Net Investment Income | Distributions from Net Realized Capital Gains | Total Distributions | |||||||||||||||||||||
PIMCO Global Dividend Fund (Cont.) | ||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | $ | 12.77 | $ | 0.07 | $ | (0.48 | ) | $ | (0.41 | ) | $ | (0.13 | ) | $ | (5.03 | ) | $ | (5.16 | ) | |||||||||
06/30/2014 | 11.84 | 0.30 | 1.60 | 1.90 | (0.35 | ) | (0.62 | ) | (0.97 | ) | ||||||||||||||||||
06/30/2013 | 10.45 | 0.36 | 1.32 | 1.68 | (0.26 | ) | (0.03 | ) | (0.29 | ) | ||||||||||||||||||
12/14/2011 - 06/30/2012 | 10.00 | 0.23 | 0.39 | 0.62 | (0.17 | ) | 0.00 | (0.17 | ) | |||||||||||||||||||
Class R | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | 12.81 | 0.10 | (0.49 | ) | (0.39 | ) | (0.16 | ) | (5.03 | ) | (5.19 | ) | ||||||||||||||||
06/30/2014 | 11.87 | 0.38 | 1.59 | 1.97 | (0.41 | ) | (0.62 | ) | (1.03 | ) | ||||||||||||||||||
06/30/2013 | 10.47 | 0.36 | 1.38 | 1.74 | (0.31 | ) | (0.03 | ) | (0.34 | ) | ||||||||||||||||||
12/14/2011 - 06/30/2012 | 10.00 | 0.18 | 0.48 | 0.66 | (0.19 | ) | 0.00 | (0.19 | ) | |||||||||||||||||||
PIMCO EqS® Emerging Markets Fund | ||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | $ | 9.05 | $ | 0.04 | $ | (0.57 | ) | $ | (0.53 | ) | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||||||||
06/30/2014 | 8.26 | 0.04 | 0.75 | 0.79 | 0.00 | 0.00 | 0.00 | |||||||||||||||||||||
06/30/2013 | 7.97 | 0.13 | 0.25 | 0.38 | (0.09 | ) | 0.00 | (0.09 | ) | |||||||||||||||||||
06/30/2012 | 10.19 | 0.08 | (2.27 | ) | (2.19 | ) | (0.02 | ) | (0.01 | ) | (0.03 | ) | ||||||||||||||||
03/22/2011 - 06/30/2011 | 10.00 | 0.05 | 0.14 | 0.19 | 0.00 | 0.00 | 0.00 | |||||||||||||||||||||
Class P | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | 9.02 | 0.02 | (0.55 | ) | (0.53 | ) | 0.00 | 0.00 | 0.00 | |||||||||||||||||||
06/30/2014 | 8.24 | (0.00 | )^ | 0.78 | 0.78 | 0.00 | 0.00 | 0.00 | ||||||||||||||||||||
06/30/2013 | 7.97 | 0.33 | 0.03 | 0.36 | (0.09 | ) | 0.00 | (0.09 | ) | |||||||||||||||||||
06/30/2012 | 10.19 | 0.06 | (2.25 | ) | (2.19 | ) | (0.02 | ) | (0.01 | ) | (0.03 | ) | ||||||||||||||||
03/22/2011 - 06/30/2011 | 10.00 | 0.04 | 0.15 | 0.19 | 0.00 | 0.00 | 0.00 | |||||||||||||||||||||
Administrative Class | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | 9.00 | 0.03 | (0.56 | ) | (0.53 | ) | 0.00 | 0.00 | 0.00 | |||||||||||||||||||
06/30/2014 | 8.23 | (0.02 | ) | 0.79 | 0.77 | 0.00 | 0.00 | 0.00 | ||||||||||||||||||||
06/30/2013 | 7.96 | 0.11 | 0.24 | 0.35 | (0.08 | ) | 0.00 | (0.08 | ) | |||||||||||||||||||
06/30/2012 | 10.18 | 0.06 | (2.27 | ) | (2.21 | ) | (0.00 | )^ | (0.01 | ) | (0.01 | ) | ||||||||||||||||
04/19/2011 - 06/30/2011 | 10.51 | 0.04 | (0.37 | ) | (0.33 | ) | 0.00 | 0.00 | 0.00 | |||||||||||||||||||
Class D | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | 8.95 | 0.03 | (0.56 | ) | (0.53 | ) | 0.00 | 0.00 | 0.00 | |||||||||||||||||||
06/30/2014 | 8.20 | 0.03 | 0.72 | 0.75 | 0.00 | 0.00 | 0.00 | |||||||||||||||||||||
06/30/2013 | 7.93 | 0.09 | 0.26 | 0.35 | (0.08 | ) | 0.00 | (0.08 | ) | |||||||||||||||||||
06/30/2012 | 10.18 | 0.00 | ^ | (2.22 | ) | (2.22 | ) | (0.02 | ) | (0.01 | ) | (0.03 | ) | |||||||||||||||
03/22/2011 - 06/30/2011 | 10.00 | 0.06 | 0.12 | 0.18 | 0.00 | 0.00 | 0.00 | |||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | 8.96 | 0.03 | (0.57 | ) | (0.54 | ) | 0.00 | 0.00 | 0.00 | |||||||||||||||||||
06/30/2014 | 8.20 | 0.05 | 0.71 | 0.76 | 0.00 | 0.00 | 0.00 | |||||||||||||||||||||
06/30/2013 | 7.94 | 0.13 | 0.21 | 0.34 | (0.08 | ) | 0.00 | (0.08 | ) | |||||||||||||||||||
06/30/2012 | 10.18 | 0.08 | (2.31 | ) | (2.23 | ) | (0.00 | )^ | (0.01 | ) | (0.01 | ) | ||||||||||||||||
03/22/2011 - 06/30/2011 | 10.00 | 0.05 | 0.13 | 0.18 | 0.00 | 0.00 | 0.00 | |||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | 8.79 | (0.01 | ) | (0.55 | ) | (0.56 | ) | 0.00 | 0.00 | 0.00 | ||||||||||||||||||
06/30/2014 | 8.11 | (0.01 | ) | 0.69 | 0.68 | 0.00 | 0.00 | 0.00 | ||||||||||||||||||||
06/30/2013 | 7.88 | 0.07 | 0.21 | 0.28 | (0.05 | ) | 0.00 | (0.05 | ) | |||||||||||||||||||
06/30/2012 | 10.17 | 0.01 | (2.29 | ) | (2.28 | ) | (0.00 | )^ | (0.01 | ) | (0.01 | ) | ||||||||||||||||
03/22/2011 - 06/30/2011 | 10.00 | 0.03 | 0.14 | 0.17 | 0.00 | 0.00 | 0.00 | |||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | 8.92 | 0.01 | (0.56 | ) | (0.55 | ) | 0.00 | 0.00 | 0.00 | |||||||||||||||||||
06/30/2014 | 8.19 | (0.02 | ) | 0.75 | 0.73 | 0.00 | 0.00 | 0.00 | ||||||||||||||||||||
06/30/2013 | 7.93 | 0.08 | 0.24 | 0.32 | (0.06 | ) | 0.00 | (0.06 | ) | |||||||||||||||||||
06/30/2012 | 10.18 | 0.01 | (2.25 | ) | (2.24 | ) | (0.00 | )^ | (0.01 | ) | (0.01 | ) | ||||||||||||||||
03/22/2011 - 06/30/2011 | 10.00 | 0.06 | 0.12 | 0.18 | 0.00 | 0.00 | 0.00 |
Please see footnotes on page 42.
38 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
Net Asset Value End of Year or Period | Total Return | Net Assets End of Year or Period (000s) | Ratio of Expenses to Average Net Assets | Ratio of Expenses to Average Net Assets Excluding Waivers | Ratio of Expenses to Average Net Assets Excluding Interest Expense | Ratio of Expenses to Average Net Assets Excluding Interest Expense and Waivers | Ratio of Net Investment Income (Loss) to Average Net Assets | Portfolio Turnover Rate | ||||||||||||||||||||||||||
$ | 7.20 | (3.13 | )% | $ | 29,361 | 1.93 | %* | 2.09 | %* | 1.93 | %* | 2.09 | %* | 1.28 | %* | 42 | % | |||||||||||||||||
12.77 | 16.69 | 39,359 | 1.94 | 2.10 | 1.94 | 2.10 | 2.45 | 95 | ||||||||||||||||||||||||||
11.84 | 16.14 | 14,150 | 1.93 | 2.10 | 1.93 | 2.10 | 3.05 | 108 | ||||||||||||||||||||||||||
10.45 | 6.19 | 1,275 | 1.93 | * | 2.26 | * | 1.93 | * | 2.26 | * | 4.11 | * | 21 | |||||||||||||||||||||
7.23 | (2.93 | ) | 127 | 1.43 | * | 1.59 | * | 1.43 | * | 1.59 | * | 1.76 | * | 42 | ||||||||||||||||||||
12.81 | 17.29 | 192 | 1.44 | 1.60 | 1.44 | 1.60 | 3.08 | 95 | ||||||||||||||||||||||||||
11.87 | 16.71 | 100 | 1.43 | 1.60 | 1.43 | 1.60 | 3.05 | 108 | ||||||||||||||||||||||||||
10.47 | 6.63 | 11 | 1.43 | * | 1.67 | * | 1.43 | * | 1.67 | * | 3.24 | * | 21 | |||||||||||||||||||||
$ | 8.52 | (5.86 | )% | $ | 98,189 | 1.26 | %* | 1.47 | %* | 1.25 | %* | 1.46 | %* | 0.93 | %* | 47 | % | |||||||||||||||||
9.05 | 9.56 | 108,018 | 1.26 | 1.46 | 1.26 | 1.46 | 0.50 | 77 | ||||||||||||||||||||||||||
8.26 | 4.68 | 496,172 | 1.26 | 1.46 | 1.26 | 1.46 | 1.46 | 85 | ||||||||||||||||||||||||||
7.97 | (21.51 | ) | 514,884 | 1.25 | 1.46 | 1.25 | 1.45 | 0.94 | 92 | |||||||||||||||||||||||||
10.19 | 1.90 | 353,099 | 1.25 | * | 1.62 | * | 1.25 | * | 1.62 | * | 1.77 | * | 41 | |||||||||||||||||||||
8.49 | (5.88 | ) | 151 | 1.36 | * | 1.57 | * | 1.35 | * | 1.56 | * | 0.52 | * | 47 | ||||||||||||||||||||
9.02 | 9.47 | 70 | 1.36 | 1.56 | 1.36 | 1.56 | (0.00 | )† | 77 | |||||||||||||||||||||||||
8.24 | 4.46 | 7,615 | 1.36 | 1.56 | 1.36 | 1.56 | 3.81 | 85 | ||||||||||||||||||||||||||
7.97 | (21.52 | ) | 63 | 1.35 | 1.56 | 1.35 | 1.55 | 0.68 | 92 | |||||||||||||||||||||||||
10.19 | 1.90 | 37 | 1.35 | * | 1.94 | * | 1.35 | * | 1.94 | * | 1.42 | * | 41 | |||||||||||||||||||||
8.47 | (5.89 | ) | 3 | 1.51 | * | 1.72 | * | 1.50 | * | 1.71 | * | 0.73 | * | 47 | ||||||||||||||||||||
9.00 | 9.36 | 3 | 1.51 | 1.71 | 1.51 | 1.71 | (0.20 | ) | 77 | |||||||||||||||||||||||||
8.23 | 4.36 | 42 | 1.51 | 1.71 | 1.51 | 1.71 | 1.32 | 85 | ||||||||||||||||||||||||||
7.96 | (21.72 | ) | 34 | 1.50 | 1.72 | 1.50 | 1.72 | 0.74 | 92 | |||||||||||||||||||||||||
10.18 | (3.14 | ) | 10 | 1.50 | * | 1.90 | * | 1.50 | * | 1.90 | * | 1.72 | * | 41 | ||||||||||||||||||||
8.42 | (5.92 | ) | 752 | 1.61 | * | 1.82 | * | 1.60 | * | 1.81 | * | 0.60 | * | 47 | ||||||||||||||||||||
8.95 | 9.15 | 827 | 1.61 | 1.81 | 1.61 | 1.81 | 0.32 | 77 | ||||||||||||||||||||||||||
8.20 | 4.31 | 1,097 | 1.61 | 1.81 | 1.61 | 1.81 | 0.99 | 85 | ||||||||||||||||||||||||||
7.93 | (21.83 | ) | 989 | 1.60 | 1.82 | 1.60 | 1.81 | (0.02 | ) | 92 | ||||||||||||||||||||||||
10.18 | 1.80 | 1,080 | 1.60 | * | 2.11 | * | 1.60 | * | 2.11 | * | 1.98 | * | 41 | |||||||||||||||||||||
8.42 | (6.03 | ) | 4,704 | 1.61 | * | 1.82 | * | 1.60 | * | 1.81 | * | 0.65 | * | 47 | ||||||||||||||||||||
8.96 | 9.27 | 6,393 | 1.61 | 1.81 | 1.61 | 1.81 | 0.61 | 77 | ||||||||||||||||||||||||||
8.20 | 4.23 | 4,324 | 1.61 | 1.81 | 1.61 | 1.81 | 1.51 | 85 | ||||||||||||||||||||||||||
7.94 | (21.89 | ) | 2,469 | 1.60 | 1.81 | 1.60 | 1.80 | 0.90 | 92 | |||||||||||||||||||||||||
10.18 | 1.80 | 764 | 1.60 | * | 2.02 | * | 1.60 | * | 2.02 | * | 1.89 | * | 41 | |||||||||||||||||||||
8.23 | (6.37 | ) | 1,733 | 2.36 | * | 2.57 | * | 2.35 | * | 2.56 | * | (0.16 | )* | 47 | ||||||||||||||||||||
8.79 | 8.38 | 2,028 | 2.36 | 2.56 | 2.36 | 2.56 | (0.12 | ) | 77 | |||||||||||||||||||||||||
8.11 | 3.54 | 1,371 | 2.36 | 2.56 | 2.36 | 2.56 | 0.83 | 85 | ||||||||||||||||||||||||||
7.88 | (22.43 | ) | 675 | 2.35 | 2.57 | 2.35 | 2.56 | 0.12 | 92 | |||||||||||||||||||||||||
10.17 | 1.70 | 98 | 2.35 | * | 2.80 | * | 2.35 | * | 2.80 | * | 0.98 | * | 41 | |||||||||||||||||||||
8.37 | (6.17 | ) | 10 | 1.86 | * | 2.07 | * | 1.85 | * | 2.06 | * | 0.29 | * | 47 | ||||||||||||||||||||
8.92 | 8.91 | 10 | 1.86 | 2.06 | 1.86 | 2.06 | (0.20 | ) | 77 | |||||||||||||||||||||||||
8.19 | 4.04 | 25 | 1.86 | 2.06 | 1.86 | 2.06 | 0.92 | 85 | ||||||||||||||||||||||||||
7.93 | (22.01 | ) | 24 | 1.85 | 2.07 | 1.85 | 2.06 | 0.06 | 92 | |||||||||||||||||||||||||
10.18 | 1.80 | 39 | 1.85 | * | 2.34 | * | 1.85 | * | 2.34 | * | 1.97 | * | 41 |
Please see footnotes on page 42.
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 39 |
Table of Contents
Financial Highlights (Cont.)
Selected Per Share Data for the Year or Period Ended: | Net Asset Value | Net Investment Income (Loss) (a) | Net Realized/ Unrealized Gain (Loss) | Net Increase (Decrease) from Investment Operations | Dividends from Net Investment Income | Distributions from Net Realized Capital Gains | Total Distributions | |||||||||||||||||||||
PIMCO EqS® Long/Short Fund | ||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | $ | 11.92 | $ | 0.07 | $ | (0.24 | ) | $ | (0.17 | ) | $ | 0.00 | $ | (0.05 | ) | $ | (0.05 | ) | ||||||||||
06/30/2014 | 11.09 | (0.10 | ) | 1.60 | 1.50 | (0.06 | ) | (0.61 | ) | (0.67 | ) | |||||||||||||||||
06/30/2013 | 9.71 | 0.15 | 1.27 | 1.42 | (0.04 | ) | 0.00 | (0.04 | ) | |||||||||||||||||||
04/20/2012 - 06/30/2012 | 10.00 | (0.02 | ) | (0.27 | ) | (0.29 | ) | 0.00 | 0.00 | 0.00 | ||||||||||||||||||
Class P | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | 11.88 | 0.06 | (0.23 | ) | (0.17 | ) | 0.00 | (0.05 | ) | (0.05 | ) | |||||||||||||||||
06/30/2014 | 11.08 | (0.08 | ) | 1.56 | 1.48 | (0.07 | ) | (0.61 | ) | (0.68 | ) | |||||||||||||||||
06/30/2013 | 9.70 | (0.05 | ) | 1.47 | 1.42 | (0.04 | ) | 0.00 | (0.04 | ) | ||||||||||||||||||
04/30/2012 - 06/30/2012 | 10.00 | (0.02 | ) | (0.28 | ) | (0.30 | ) | 0.00 | 0.00 | 0.00 | ||||||||||||||||||
Class D | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | 11.84 | 0.04 | (0.23 | ) | (0.19 | ) | 0.00 | (0.05 | ) | (0.05 | ) | |||||||||||||||||
06/30/2014 | 11.06 | (0.12 | ) | 1.57 | 1.45 | (0.06 | ) | (0.61 | ) | (0.67 | ) | |||||||||||||||||
06/30/2013 | 9.70 | (0.10 | ) | 1.48 | 1.38 | (0.02 | ) | 0.00 | (0.02 | ) | ||||||||||||||||||
04/30/2012 - 06/30/2012 | 10.00 | (0.03 | ) | (0.27 | ) | (0.30 | ) | 0.00 | 0.00 | 0.00 | ||||||||||||||||||
Class A | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | 11.83 | 0.04 | (0.23 | ) | (0.19 | ) | 0.00 | (0.05 | ) | (0.05 | ) | |||||||||||||||||
06/30/2014 | 11.05 | (0.12 | ) | 1.57 | 1.45 | (0.06 | ) | (0.61 | ) | (0.67 | ) | |||||||||||||||||
06/30/2013 | 9.70 | 0.00 | ^ | 1.38 | 1.38 | (0.03 | ) | 0.00 | (0.03 | ) | ||||||||||||||||||
04/30/2012 - 06/30/2012 | 10.00 | (0.03 | ) | (0.27 | ) | (0.30 | ) | 0.00 | 0.00 | 0.00 | ||||||||||||||||||
Class C | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | 11.67 | (0.00 | )^ | (0.23 | ) | (0.23 | ) | 0.00 | (0.05 | ) | (0.05 | ) | ||||||||||||||||
06/30/2014 | 10.98 | (0.20 | ) | 1.55 | 1.35 | (0.05 | ) | (0.61 | ) | (0.66 | ) | |||||||||||||||||
06/30/2013 | 9.69 | 0.01 | 1.29 | 1.30 | (0.01 | ) | 0.00 | (0.01 | ) | |||||||||||||||||||
04/30/2012 - 06/30/2012 | 10.00 | (0.04 | ) | (0.27 | ) | (0.31 | ) | 0.00 | 0.00 | 0.00 | ||||||||||||||||||
PIMCO International Dividend Fund | ||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||
12/15/2014 - 12/31/2014+ | $ | 10.00 | $ | 0.00 | ^ | $ | 0.16 | $ | 0.16 | $ | (0.01 | ) | $ | 0.00 | $ | (0.01 | ) | |||||||||||
Class P | ||||||||||||||||||||||||||||
12/15/2014 - 12/31/2014+ | 10.00 | 0.00 | ^ | 0.16 | 0.16 | (0.01 | ) | 0.00 | (0.01 | ) | ||||||||||||||||||
Class D | ||||||||||||||||||||||||||||
12/15/2014 - 12/31/2014+ | 10.00 | 0.00 | ^ | 0.16 | 0.16 | (0.01 | ) | 0.00 | (0.01 | ) | ||||||||||||||||||
Class A | ||||||||||||||||||||||||||||
12/15/2014 - 12/31/2014+ | 10.00 | 0.00 | ^ | 0.16 | 0.16 | (0.01 | ) | 0.00 | (0.01 | ) | ||||||||||||||||||
Class C | ||||||||||||||||||||||||||||
12/15/2014 - 12/31/2014+ | 10.00 | (0.00 | )^ | 0.15 | 0.15 | (0.00 | )^ | 0.00 | (0.00 | )^ | ||||||||||||||||||
PIMCO U.S. Dividend Fund | ||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||
12/15/2014 - 12/31/2014+ | $ | 10.00 | $ | 0.02 | $ | 0.40 | $ | 0.42 | $ | (0.02 | ) | $ | 0.00 | $ | (0.02 | ) | ||||||||||||
Class P | ||||||||||||||||||||||||||||
12/15/2014 - 12/31/2014+ | 10.00 | 0.02 | 0.40 | 0.42 | (0.02 | ) | 0.00 | (0.02 | ) | |||||||||||||||||||
Class D | ||||||||||||||||||||||||||||
12/15/2014 - 12/31/2014+ | 10.00 | 0.02 | 0.40 | 0.42 | (0.02 | ) | 0.00 | (0.02 | ) | |||||||||||||||||||
Class A | ||||||||||||||||||||||||||||
12/15/2014 - 12/31/2014+ | 10.00 | 0.02 | 0.40 | 0.42 | (0.02 | ) | 0.00 | (0.02 | ) | |||||||||||||||||||
Class C | ||||||||||||||||||||||||||||
12/15/2014 - 12/31/2014+ | 10.00 | 0.01 | 0.41 | 0.42 | (0.02 | ) | 0.00 | (0.02 | ) | |||||||||||||||||||
PIMCO EqS Pathfinder Fund® (Consolidated) | ||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | $ | 13.03 | $ | 0.09 | $ | (1.04 | ) | $ | (0.95 | ) | $ | (0.23 | ) | $ | (2.60 | ) | $ | (2.83 | ) | |||||||||
06/30/2014 | 10.82 | 0.23 | 2.39 | 2.62 | (0.18 | ) | (0.23 | ) | (0.41 | ) | ||||||||||||||||||
06/30/2013 | 10.11 | 0.25 | 0.77 | 1.02 | (0.31 | ) | 0.00 | (0.31 | ) | |||||||||||||||||||
06/30/2012 | 10.65 | 0.18 | (0.62 | ) | (0.44 | ) | (0.07 | ) | (0.03 | ) | (0.10 | ) | ||||||||||||||||
06/30/2011 | 9.23 | 0.19 | 1.34 | 1.53 | (0.09 | ) | (0.02 | ) | (0.11 | ) | ||||||||||||||||||
04/14/2010 - 06/30/2010 | 10.00 | 0.07 | (0.84 | ) | (0.77 | ) | 0.00 | 0.00 | 0.00 |
Please see footnotes on page 42.
40 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
Net Asset Value End of Year or Period | Total Return | Net Assets End of Year or Period (000s) | Ratio of Expenses to Average Net Assets | Ratio of Expenses to Average Net Assets Excluding Waivers | Ratio of Expenses to Average Net Assets Excluding Interest Expense | Ratio of Expenses to Average Net Assets Excluding Interest Expense and Waivers | Ratio of Net Investment Income (Loss) to Average Net Assets | Portfolio Turnover Rate | ||||||||||||||||||||||||||
$ | 11.70 | (1.38 | )% | $ | 406,087 | 1.76 | %* | 1.77 | %* | 1.49 | %* | 1.50 | %* | 1.12 | %* | 167 | % | |||||||||||||||||
11.92 | 13.59 | 545,346 | 2.02 | 2.04 | 1.48 | 1.50 | (0.82 | ) | 522 | |||||||||||||||||||||||||
11.09 | 14.66 | 329,610 | 2.65 | 2.75 | 1.40 | 1.50 | 1.45 | 528 | ||||||||||||||||||||||||||
9.71 | (2.90 | ) | 212,229 | 1.52 | * | 2.41 | * | 1.40 | * | 2.29 | * | (1.30 | )* | 113 | ||||||||||||||||||||
11.66 | (1.39 | ) | 234,509 | 1.86 | * | 1.87 | * | 1.59 | * | 1.60 | * | 1.05 | * | 167 | ||||||||||||||||||||
11.88 | 13.40 | 277,661 | 2.00 | 2.02 | 1.58 | 1.60 | (0.71 | ) | 522 | |||||||||||||||||||||||||
11.08 | 14.77 | 15,664 | 3.94 | 4.04 | 1.50 | 1.60 | (0.48 | ) | 528 | |||||||||||||||||||||||||
9.70 | (3.00 | ) | 10 | 1.62 | * | 2.40 | * | 1.50 | * | 2.28 | * | (1.34 | )* | 113 | ||||||||||||||||||||
11.60 | (1.56 | ) | 50,553 | 2.11 | * | 2.12 | * | 1.84 | * | 1.85 | * | 0.67 | * | 167 | ||||||||||||||||||||
11.84 | 13.13 | 77,934 | 2.31 | 2.33 | 1.83 | 1.85 | (1.01 | ) | 522 | |||||||||||||||||||||||||
11.06 | 14.31 | 12,421 | 3.95 | 4.05 | 1.75 | 1.85 | (0.97 | ) | 528 | |||||||||||||||||||||||||
9.70 | (3.00 | ) | 111 | 1.87 | * | 3.97 | * | 1.77 | * | 3.87 | * | (1.72 | )* | 113 | ||||||||||||||||||||
11.59 | (1.56 | ) | 198,674 | 2.11 | * | 2.12 | * | 1.84 | * | 1.85 | * | 0.67 | * | 167 | ||||||||||||||||||||
11.83 | 13.17 | 382,160 | 2.27 | 2.29 | 1.83 | 1.85 | (0.98 | ) | 522 | |||||||||||||||||||||||||
11.05 | 14.27 | 24,759 | 3.62 | 3.72 | 1.75 | 1.85 | (0.03 | ) | 528 | |||||||||||||||||||||||||
9.70 | (3.00 | ) | 1,219 | 1.87 | * | 3.17 | * | 1.74 | * | 3.04 | * | (1.70 | )* | 113 | ||||||||||||||||||||
11.39 | (1.93 | ) | 158,341 | 2.87 | * | 2.88 | * | 2.59 | * | 2.60 | * | (0.03 | )* | 167 | ||||||||||||||||||||
11.67 | 12.26 | 214,485 | 3.00 | 3.02 | 2.58 | 2.60 | (1.71 | ) | 522 | |||||||||||||||||||||||||
10.98 | 13.41 | 9,530 | 4.04 | 4.14 | 2.50 | 2.60 | 0.13 | 528 | ||||||||||||||||||||||||||
9.69 | (3.10 | ) | 53 | 2.62 | * | 4.50 | * | 2.52 | * | 4.40 | * | (2.46 | )* | 113 | ||||||||||||||||||||
$ | 10.15 | 1.58 | % | $ | 3,048 | 0.83 | %* | 1.06 | %* | 0.83 | %* | 1.06 | %* | 0.75 | %* | 1 | % | |||||||||||||||||
10.15 | 1.58 | 10 | 0.93 | * | 1.16 | * | 0.93 | * | 1.16 | * | 0.66 | * | 1 | |||||||||||||||||||||
10.15 | 1.56 | 10 | 1.18 | * | 1.41 | * | 1.18 | * | 1.41 | * | 0.41 | * | 1 | |||||||||||||||||||||
10.15 | 1.56 | 10 | 1.18 | * | 1.41 | * | 1.18 | * | 1.41 | * | 0.41 | * | 1 | |||||||||||||||||||||
10.15 | 1.53 | 10 | 1.93 | * | 2.16 | * | 1.93 | * | 2.16 | * | (0.34 | )* | 1 | |||||||||||||||||||||
$ | 10.40 | 4.21 | % | $ | 3,130 | 0.74 | %* | 0.97 | %* | 0.74 | %* | 0.97 | %* | 3.66 | %* | 0 | % | |||||||||||||||||
10.40 | 4.20 | 10 | 0.84 | * | 1.07 | * | 0.84 | * | 1.07 | * | 3.57 | * | 0 | |||||||||||||||||||||
10.40 | 4.19 | 10 | 1.09 | * | 1.32 | * | 1.09 | * | 1.32 | * | 3.33 | * | 0 | |||||||||||||||||||||
10.40 | 4.19 | 10 | 1.09 | * | 1.32 | * | 1.09 | * | 1.32 | * | 3.33 | * | 0 | |||||||||||||||||||||
10.40 | 4.16 | 10 | 1.84 | * | 2.07 | * | 1.84 | * | 2.07 | * | 2.59 | * | 0 | |||||||||||||||||||||
$ | 9.25 | (7.18 | )% | $ | 844,734 | 0.90 | %* | 1.06 | %* | 0.89 | %* | 1.05 | %* | 1.40 | %* | 21 | % | |||||||||||||||||
13.03 | 24.62 | 1,255,320 | 0.89 | 1.06 | 0.89 | 1.06 | 1.96 | 61 | ||||||||||||||||||||||||||
10.82 | 10.19 | 1,691,850 | 0.90 | 1.10 | 0.89 | 1.09 | 2.38 | 29 | ||||||||||||||||||||||||||
10.11 | (4.09 | ) | 1,930,637 | 0.92 | 1.09 | 0.90 | 1.07 | 1.80 | 32 | |||||||||||||||||||||||||
10.65 | 16.68 | 1,338,509 | 0.92 | 1.10 | 0.89 | 1.07 | 1.87 | 35 | ||||||||||||||||||||||||||
9.23 | (7.70 | ) | 542,879 | 0.98 | * | 1.21 | * | 0.89 | * | 1.12 | * | 3.53 | * | 4 |
Please see footnotes on page 42.
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 41 |
Table of Contents
Financial Highlights (Cont.)
Selected Per Share Data for the Year or Period Ended: | Net Asset Value | Net Investment Income (Loss) (a) | Net Realized/ Unrealized Gain (Loss) | Net Increase (Decrease) from Investment Operations | Dividends from Net Investment Income | Distributions from Net Realized Capital Gains | Total Distributions | |||||||||||||||||||||
PIMCO EqS Pathfinder Fund® (Consolidated) (Cont.) | ||||||||||||||||||||||||||||
Class P | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | $ | 12.99 | $ | 0.08 | $ | (1.03 | ) | $ | (0.95 | ) | $ | (0.23 | ) | $ | (2.60 | ) | $ | (2.83 | ) | |||||||||
06/30/2014 | 10.80 | 0.21 | 2.38 | 2.59 | (0.17 | ) | (0.23 | ) | (0.40 | ) | ||||||||||||||||||
06/30/2013 | 10.09 | 0.25 | 0.76 | 1.01 | (0.30 | ) | 0.00 | (0.30 | ) | |||||||||||||||||||
06/30/2012 | 10.64 | 0.17 | (0.63 | ) | (0.46 | ) | (0.06 | ) | (0.03 | ) | (0.09 | ) | ||||||||||||||||
06/30/2011 | 9.23 | 0.18 | 1.34 | 1.52 | (0.09 | ) | (0.02 | ) | (0.11 | ) | ||||||||||||||||||
04/14/2010 - 06/30/2010 | 10.00 | 0.07 | (0.84 | ) | (0.77 | ) | 0.00 | 0.00 | 0.00 | |||||||||||||||||||
Class D | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | 12.91 | 0.06 | (1.03 | ) | (0.97 | ) | (0.21 | ) | (2.60 | ) | (2.81 | ) | ||||||||||||||||
06/30/2014 | 10.74 | 0.20 | 2.35 | 2.55 | (0.15 | ) | (0.23 | ) | (0.38 | ) | ||||||||||||||||||
06/30/2013 | 10.05 | 0.21 | 0.77 | 0.98 | (0.29 | ) | 0.00 | (0.29 | ) | |||||||||||||||||||
06/30/2012 | 10.61 | 0.13 | (0.61 | ) | (0.48 | ) | (0.05 | ) | (0.03 | ) | (0.08 | ) | ||||||||||||||||
06/30/2011 | 9.21 | 0.16 | 1.34 | 1.50 | (0.08 | ) | (0.02 | ) | (0.10 | ) | ||||||||||||||||||
04/14/2010 - 06/30/2010 | 10.00 | 0.06 | (0.85 | ) | (0.79 | ) | 0.00 | 0.00 | 0.00 | |||||||||||||||||||
Class A | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | 12.95 | 0.07 | (1.04 | ) | (0.97 | ) | (0.21 | ) | (2.60 | ) | (2.81 | ) | ||||||||||||||||
06/30/2014 | 10.78 | 0.21 | 2.35 | 2.56 | (0.16 | ) | (0.23 | ) | (0.39 | ) | ||||||||||||||||||
06/30/2013 | 10.08 | 0.22 | 0.76 | 0.98 | (0.28 | ) | 0.00 | (0.28 | ) | |||||||||||||||||||
06/30/2012 | 10.64 | 0.14 | (0.62 | ) | (0.48 | ) | (0.05 | ) | (0.03 | ) | (0.08 | ) | ||||||||||||||||
06/30/2011 | 9.22 | 0.17 | 1.33 | 1.50 | (0.06 | ) | (0.02 | ) | (0.08 | ) | ||||||||||||||||||
04/14/2010 - 06/30/2010 | 10.00 | 0.07 | (0.85 | ) | (0.78 | ) | 0.00 | 0.00 | 0.00 | |||||||||||||||||||
Class C | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | 12.68 | 0.02 | (1.01 | ) | (0.99 | ) | (0.18 | ) | (2.60 | ) | (2.78 | ) | ||||||||||||||||
06/30/2014 | 10.60 | 0.13 | 2.30 | 2.43 | (0.12 | ) | (0.23 | ) | (0.35 | ) | ||||||||||||||||||
06/30/2013 | 9.96 | 0.13 | 0.75 | 0.88 | (0.24 | ) | 0.00 | (0.24 | ) | |||||||||||||||||||
06/30/2012 | 10.55 | 0.06 | (0.61 | ) | (0.55 | ) | (0.01 | ) | (0.03 | ) | (0.04 | ) | ||||||||||||||||
06/30/2011 | 9.21 | 0.11 | 1.31 | 1.42 | (0.06 | ) | (0.02 | ) | (0.08 | ) | ||||||||||||||||||
04/14/2010 - 06/30/2010 | 10.00 | 0.05 | (0.84 | ) | (0.79 | ) | 0.00 | 0.00 | 0.00 | |||||||||||||||||||
Class R | ||||||||||||||||||||||||||||
07/01/2014 - 12/31/2014+ | 12.79 | 0.05 | (1.02 | ) | (0.97 | ) | (0.21 | ) | (2.60 | ) | (2.81 | ) | ||||||||||||||||
06/30/2014 | 10.66 | 0.24 | 2.26 | 2.50 | (0.14 | ) | (0.23 | ) | (0.37 | ) | ||||||||||||||||||
06/30/2013 | 10.00 | 0.20 | 0.74 | 0.94 | (0.28 | ) | 0.00 | (0.28 | ) | |||||||||||||||||||
06/30/2012 | 10.59 | 0.07 | (0.59 | ) | (0.52 | ) | (0.04 | ) | (0.03 | ) | (0.07 | ) | ||||||||||||||||
06/30/2011 | 9.21 | 0.12 | 1.35 | 1.47 | (0.07 | ) | (0.02 | ) | (0.09 | ) | ||||||||||||||||||
04/14/2010 - 06/30/2010 | 10.00 | 0.06 | (0.85 | ) | (0.79 | ) | 0.00 | 0.00 | 0.00 |
+ | Unaudited |
* | Annualized |
^ | Reflects an amount rounding to less than one cent. |
† | Reflects an amount rounding to less than 0.005%. |
(a) | Per share amounts based on average number of shares outstanding during the year or period. |
42 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
Net Asset Value End of Year or Period | Total Return | Net Assets End of Year or Period (000s) | Ratio of Expenses to Average Net Assets | Ratio of Expenses to Average Net Assets Excluding Waivers | Ratio of Expenses to Average Net Assets Excluding Interest Expense | Ratio of Expenses to Average Net Assets Excluding Interest Expense and Waivers | Ratio of Net Investment Income (Loss) to Average Net Assets | Portfolio Turnover Rate | ||||||||||||||||||||||||||
$ | 9.21 | (7.20 | )% | $ | 23,786 | 1.00 | %* | 1.16 | %* | 0.99 | %* | 1.15 | %* | 1.35 | %* | 21 | % | |||||||||||||||||
12.99 | 24.40 | 31,119 | 0.99 | 1.16 | 0.99 | 1.16 | 1.76 | 61 | ||||||||||||||||||||||||||
10.80 | 10.12 | 62,479 | 1.00 | 1.20 | 0.99 | 1.19 | 2.34 | 29 | ||||||||||||||||||||||||||
10.09 | (4.23 | ) | 67,977 | 1.02 | 1.19 | 1.00 | 1.17 | 1.70 | 32 | |||||||||||||||||||||||||
10.64 | 16.55 | 45,785 | 1.02 | 1.20 | 0.99 | 1.17 | 1.72 | 35 | ||||||||||||||||||||||||||
9.23 | (7.70 | ) | 970 | 1.08 | * | 1.31 | * | 0.99 | * | 1.22 | * | 3.36 | * | 4 | ||||||||||||||||||||
9.13 | (7.38 | ) | 10,140 | 1.25 | * | 1.41 | * | 1.24 | * | 1.40 | * | 1.06 | * | 21 | ||||||||||||||||||||
12.91 | 24.20 | 14,013 | 1.24 | 1.41 | 1.24 | 1.41 | 1.67 | 61 | ||||||||||||||||||||||||||
10.74 | 9.89 | 17,730 | 1.25 | 1.45 | 1.24 | 1.44 | 2.01 | 29 | ||||||||||||||||||||||||||
10.05 | (4.52 | ) | 18,469 | 1.27 | 1.45 | 1.26 | 1.42 | 1.33 | 32 | |||||||||||||||||||||||||
10.61 | 16.39 | 24,352 | 1.27 | 1.45 | 1.24 | 1.42 | 1.55 | 35 | ||||||||||||||||||||||||||
9.21 | (7.90 | ) | 7,084 | 1.33 | * | 1.56 | * | 1.24 | * | 1.47 | * | 3.13 | * | 4 | ||||||||||||||||||||
9.17 | (7.33 | ) | 63,032 | 1.25 | * | 1.41 | * | 1.25 | * | 1.40 | * | 1.07 | * | 21 | ||||||||||||||||||||
12.95 | 24.12 | 82,689 | 1.24 | 1.41 | 1.24 | 1.41 | 1.80 | 61 | ||||||||||||||||||||||||||
10.78 | 9.88 | 59,746 | 1.25 | 1.45 | 1.24 | 1.44 | 2.04 | 29 | ||||||||||||||||||||||||||
10.08 | (4.50 | ) | 69,910 | 1.27 | 1.43 | 1.26 | 1.42 | 1.37 | 32 | |||||||||||||||||||||||||
10.64 | 16.30 | 89,571 | 1.27 | 1.45 | 1.24 | 1.42 | 1.64 | 35 | ||||||||||||||||||||||||||
9.22 | (7.80 | ) | 15,436 | 1.33 | * | 1.56 | * | 1.24 | * | 1.47 | * | 3.28 | * | 4 | ||||||||||||||||||||
8.91 | (7.70 | ) | 49,134 | 2.00 | * | 2.16 | * | 1.99 | * | 2.15 | * | 0.32 | * | 21 | ||||||||||||||||||||
12.68 | 23.33 | 60,184 | 1.99 | 2.16 | 1.99 | 2.16 | 1.10 | 61 | ||||||||||||||||||||||||||
10.60 | 8.95 | 35,754 | 2.00 | 2.20 | 1.99 | 2.19 | 1.24 | 29 | ||||||||||||||||||||||||||
9.96 | (5.15 | ) | 47,006 | 2.02 | 2.21 | 2.00 | 2.17 | 0.65 | 32 | |||||||||||||||||||||||||
10.55 | 15.50 | 50,672 | 2.02 | 2.20 | 1.99 | 2.17 | 1.04 | 35 | ||||||||||||||||||||||||||
9.21 | (7.90 | ) | 6,668 | 2.08 | * | 2.31 | * | 1.99 | * | 2.22 | * | 2.43 | * | 4 | ||||||||||||||||||||
9.01 | (7.46 | ) | 75 | 1.50 | * | 1.66 | * | 1.49 | * | 1.65 | * | 0.85 | * | 21 | ||||||||||||||||||||
12.79 | 23.91 | 65 | 1.49 | 1.66 | 1.49 | 1.66 | 1.98 | 61 | ||||||||||||||||||||||||||
10.66 | 9.48 | 15 | 1.50 | 1.70 | 1.49 | 1.69 | 1.92 | 29 | ||||||||||||||||||||||||||
10.00 | (4.86 | ) | 11 | 1.52 | 1.67 | 1.51 | 1.66 | 0.71 | 32 | |||||||||||||||||||||||||
10.59 | 16.02 | 102 | 1.52 | 1.70 | 1.49 | 1.67 | 1.21 | 35 | ||||||||||||||||||||||||||
9.21 | (7.90 | ) | 9 | 1.58 | * | 1.81 | * | 1.49 | * | 1.72 | * | 2.91 | * | 4 |
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 43 |
Table of Contents
Statements of Assets and Liabilities
(Amounts in thousands†, except per share amounts) | PIMCO Balanced Income Fund | PIMCO Dividend and Income Builder Fund | PIMCO Emerging Multi-Asset Fund | PIMCO Global Dividend Fund | PIMCO EqS® Emerging Markets Fund | PIMCO EqS® Long/Short Fund | PIMCO International Dividend Fund | PIMCO U.S. Dividend Fund | ||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Investments, at value | ||||||||||||||||||||||||||||||||
Investments in securities* | $ | 9,371 | $ | 848,014 | $ | 1,409 | $ | 130,683 | $ | 92,955 | $ | 802,874 | $ | 3,012 | $ | 3,096 | ||||||||||||||||
Investments in Affiliates | 1,381 | 10,288 | 27,698 | 32 | 11,231 | 291,011 | 100 | 20 | ||||||||||||||||||||||||
Financial Derivative Instruments | ||||||||||||||||||||||||||||||||
Exchange-traded or centrally cleared | 2 | 27 | 0 | 0 | 1 | 0 | 0 | 0 | ||||||||||||||||||||||||
Over the counter | 44 | 1,673 | 164 | 467 | 2,479 | 270 | 29 | 0 | ||||||||||||||||||||||||
Cash | 328 | 1 | 98 | 0 | 1 | 1 | 14 | 48 | ||||||||||||||||||||||||
Deposits with counterparty | 34 | 196 | 21 | 0 | 219 | 49,125 | 0 | 0 | ||||||||||||||||||||||||
Foreign currency, at value | 25 | 1,520 | 29 | 58 | 378 | 615 | 3 | 2 | ||||||||||||||||||||||||
Receivable for investments sold | 18 | 742 | 1 | 2,622 | 91 | 12,845 | 0 | 0 | ||||||||||||||||||||||||
Receivable for Fund shares sold | 364 | 3,046 | 1 | 1,404 | 977 | 980 | 0 | 0 | ||||||||||||||||||||||||
Interest and dividends receivable | 40 | 3,034 | 1 | 1,049 | 56 | 753 | 1 | 5 | ||||||||||||||||||||||||
Dividends receivable from Affiliates | 10 | 42 | 72 | 2 | 65 | 2,046 | 1 | 1 | ||||||||||||||||||||||||
Reimbursement receivable from PIMCO | 0 | 77 | 14 | 116 | 115 | 119 | 0 | 0 | ||||||||||||||||||||||||
11,617 | 868,660 | 29,508 | 136,433 | 108,568 | 1,160,639 | 3,160 | 3,172 | |||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||
Borrowings & Other Financing Transactions | ||||||||||||||||||||||||||||||||
Payable for sale-buyback transactions | $ | 0 | $ | 0 | $ | 1,110 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||
Payable for short sales | 0 | 0 | 0 | 0 | 0 | 60,046 | 0 | 0 | ||||||||||||||||||||||||
Financial Derivative Instruments | ||||||||||||||||||||||||||||||||
Exchange-traded or centrally cleared | 0 | 6 | 2 | 0 | 14 | 0 | 0 | 0 | ||||||||||||||||||||||||
Over the counter | 116 | 511 | 192 | 153 | 1,747 | 103 | 24 | 0 | ||||||||||||||||||||||||
Payable for investments purchased | 45 | 0 | 0 | 0 | 0 | 18,507 | 46 | 0 | ||||||||||||||||||||||||
Payable for investments in Affiliates purchased | 10 | 42 | 72 | 2 | 65 | 2,046 | 1 | 1 | ||||||||||||||||||||||||
Deposits from counterparty | 0 | 1,260 | 0 | 0 | 960 | 290 | 0 | 0 | ||||||||||||||||||||||||
Payable for Fund shares redeemed | 5 | 2,720 | 96 | 2,268 | 0 | 29,561 | 0 | 0 | ||||||||||||||||||||||||
Dividends payable | 1 | 1,558 | 0 | 6 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
Overdraft due to custodian | 0 | 0 | 0 | 2,103 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
Accrued investment advisory fees | 4 | 399 | 0 | 63 | 74 | 995 | 1 | 1 | ||||||||||||||||||||||||
Accrued supervisory and administrative fees | 3 | 295 | 8 | 43 | 42 | 491 | 0 | 0 | ||||||||||||||||||||||||
Accrued distribution fees | 1 | 220 | 2 | 21 | 1 | 119 | 0 | 0 | ||||||||||||||||||||||||
Accrued servicing fees | 1 | 132 | 2 | 16 | 2 | 80 | 0 | 0 | ||||||||||||||||||||||||
Other liabilities | 1 | 116 | 14 | 124 | 121 | 237 | 0 | 0 | ||||||||||||||||||||||||
187 | 7,259 | 1,498 | 4,799 | 3,026 | 112,475 | 72 | 2 | |||||||||||||||||||||||||
Net Assets | $ | 11,430 | $ | 861,401 | $ | 28,010 | $ | 131,634 | $ | 105,542 | $ | 1,048,164 | $ | 3,088 | $ | 3,170 | ||||||||||||||||
Net Assets Consist of: | ||||||||||||||||||||||||||||||||
Paid in capital | $ | 11,538 | $ | 825,614 | $ | 36,319 | $ | 118,981 | $ | 148,935 | $ | 1,039,035 | $ | 3,042 | $ | 3,049 | ||||||||||||||||
(Overdistributed) net investment income | (34 | ) | (1,157 | ) | (345 | ) | (915 | ) | (2,975 | ) | (310 | ) | (1 | ) | (1 | ) | ||||||||||||||||
Accumulated undistributed net realized gain (loss) | (32 | ) | (324 | ) | (4,479 | ) | 3,663 | (37,025 | ) | (79,087 | ) | (13 | ) | (2 | ) | |||||||||||||||||
Net unrealized appreciation (depreciation) | (42 | ) | 37,268 | (3,485 | ) | 9,905 | (3,393 | ) | 88,526 | 60 | 124 | |||||||||||||||||||||
$ | 11,430 | $ | 861,401 | $ | 28,010 | $ | 131,634 | $ | 105,542 | $ | 1,048,164 | $ | 3,088 | $ | 3,170 | |||||||||||||||||
Cost of Investments in Securities | $ | 9,434 | $ | 812,001 | $ | 1,389 | $ | 121,026 | $ | 97,127 | $ | 714,116 | $ | 2,957 | $ | 2,972 | ||||||||||||||||
Cost of Investments in Affiliates | $ | 1,387 | $ | 10,291 | $ | 31,178 | $ | 32 | $ | 11,294 | $ | 293,086 | $ | 100 | $ | 20 | ||||||||||||||||
Cost of Foreign Currency Held | $ | 25 | $ | 1,533 | $ | 30 | $ | 60 | $ | 389 | $ | 635 | $ | 3 | $ | 2 | ||||||||||||||||
Proceeds Received on Short Sales | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 61,683 | $ | 0 | $ | 0 | ||||||||||||||||
Cost or Premiums of Financial Derivative Instruments, net | $ | (91 | ) | $ | 37 | $ | (6 | ) | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||
* Includes repurchase agreements of: | $ | 0 | $ | 995 | $ | 298 | $ | 0 | $ | 168 | $ | 596 | $ | 0 | $ | 0 |
† | A zero balance may reflect actual amounts rounding to less than one thousand. |
44 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 2014 (Unaudited)
(Amounts in thousands†, except per share amounts) | PIMCO Balanced Income Fund | PIMCO Dividend and Income Builder Fund | PIMCO Emerging Multi-Asset Fund | PIMCO Global Dividend Fund | PIMCO EqS® Emerging Markets Fund | PIMCO EqS® Long/Short Fund | PIMCO International Dividend Fund | PIMCO U.S. Dividend Fund | ||||||||||||||||||||||||
Net Assets: | ||||||||||||||||||||||||||||||||
Institutional Class | $ | 6,683 | $ | 64,443 | $ | 17,956 | $ | 55,091 | $ | 98,189 | $ | 406,087 | $ | 3,048 | $ | 3,130 | ||||||||||||||||
Class P | 124 | 166,200 | 1,310 | 4,034 | 151 | 234,509 | 10 | 10 | ||||||||||||||||||||||||
Administrative Class | NA | NA | 11 | NA | 3 | NA | NA | NA | ||||||||||||||||||||||||
Class D | 216 | 27,154 | 966 | 2,675 | 752 | 50,553 | 10 | 10 | ||||||||||||||||||||||||
Class A | 1,683 | 275,659 | 5,045 | 40,346 | 4,704 | 198,674 | 10 | 10 | ||||||||||||||||||||||||
Class C | 2,724 | 327,560 | 2,713 | 29,361 | 1,733 | 158,341 | 10 | 10 | ||||||||||||||||||||||||
Class R | NA | 385 | 9 | 127 | 10 | NA | NA | NA | ||||||||||||||||||||||||
Shares Issued and Outstanding: | ||||||||||||||||||||||||||||||||
Institutional Class | 669 | 5,228 | 2,227 | 7,612 | 11,527 | 34,722 | 300 | 301 | ||||||||||||||||||||||||
Class P | 12 | 13,476 | 163 | 557 | 18 | 20,122 | 1 | 1 | ||||||||||||||||||||||||
Administrative Class | NA | NA | 1 | NA | 0 | NA | NA | NA | ||||||||||||||||||||||||
Class D | 22 | 2,203 | 120 | 370 | 89 | 4,359 | 1 | 1 | ||||||||||||||||||||||||
Class A | 168 | 22,366 | 630 | 5,571 | 559 | 17,146 | 1 | 1 | ||||||||||||||||||||||||
Class C | 273 | 26,625 | 344 | 4,078 | 211 | 13,901 | 1 | 1 | ||||||||||||||||||||||||
Class R | NA | 31 | 1 | 18 | 1 | NA | NA | NA | ||||||||||||||||||||||||
Net Asset Value and Redemption Price^ Per Share Outstanding: | ||||||||||||||||||||||||||||||||
Institutional Class | $ | 9.99 | $ | 12.33 | $ | 8.06 | $ | 7.24 | $ | 8.52 | $ | 11.70 | $ | 10.15 | $ | 10.40 | ||||||||||||||||
Class P | 9.99 | 12.33 | 8.04 | 7.24 | 8.49 | 11.66 | 10.15 | 10.40 | ||||||||||||||||||||||||
Administrative Class | NA | NA | 8.00 | NA | 8.47 | NA | NA | NA | ||||||||||||||||||||||||
Class D | 10.00 | 12.32 | 8.04 | 7.24 | 8.42 | 11.60 | 10.15 | 10.40 | ||||||||||||||||||||||||
Class A | 10.00 | 12.32 | 8.01 | 7.24 | 8.42 | 11.59 | 10.15 | 10.40 | ||||||||||||||||||||||||
Class C | 10.00 | 12.30 | 7.89 | 7.20 | 8.23 | 11.39 | 10.15 | 10.40 | ||||||||||||||||||||||||
Class R | NA | 12.33 | 7.95 | 7.23 | 8.37 | NA | NA | NA |
^ | With respect to the A and C Classes, the redemption price varies by the length of time the shares are held. |
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 45 |
Table of Contents
Consolidated Statement of Assets and Liabilities
(Amounts in thousands, except per share amounts) | PIMCO EqS Pathfinder Fund® | |||
Assets: | ||||
Investments, at value | ||||
Investments in securities* | $ | 946,371 | ||
Investments in Affiliates | 61,102 | |||
Financial Derivative Instruments | ||||
Over the counter | 18,970 | |||
Cash | 10 | |||
Deposits with counterparty | 17,021 | |||
Foreign currency, at value | 440 | |||
Receivable for Fund shares sold | 1,637 | |||
Interest and dividends receivable | 2,471 | |||
Dividends receivable from Affiliates | 998 | |||
Reimbursement receivable from PIMCO | 299 | |||
1,049,319 | ||||
Liabilities: | ||||
Borrowings & Other Financing Transactions | ||||
Payable for short sales | $ | 18,670 | ||
Financial Derivative Instruments | ||||
Exchange-traded or centrally cleared | 296 | |||
Over the counter | 9,452 | |||
Payable for investments in Affiliates purchased | 998 | |||
Deposits from counterparty | 12,744 | |||
Payable for Fund shares redeemed | 14,746 | |||
Accrued investment advisory fees | 588 | |||
Accrued supervisory and administrative fees | 313 | |||
Accrued distribution fees | 36 | |||
Accrued servicing fees | 25 | |||
Other liabilities | 550 | |||
58,418 | ||||
Net Assets | $ | 990,901 | ||
Net Assets Consist of: | ||||
Paid in capital | $ | 917,041 | ||
(Overdistributed) net investment income | (20,992 | ) | ||
Accumulated undistributed net realized gain | 19,151 | |||
Net unrealized appreciation | 75,701 | |||
$ | 990,901 | |||
Cost of Investments in Securities | $ | 878,972 | ||
Cost of Investments in Affiliates | $ | 61,420 | ||
Cost of Foreign Currency Held | $ | 441 | ||
Proceeds Received on Short Sales | $ | 17,327 | ||
Cost or Premiums of Financial Derivative Instruments, net | $ | (790 | ) | |
* Includes repurchase agreements of: | $ | 992 |
46 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 2014 (Unaudited)
(Amounts in thousands, except per share amounts) | PIMCO EqS Pathfinder Fund® | |||
Net Assets: | ||||
Institutional Class | $ | 844,734 | ||
Class P | 23,786 | |||
Class D | 10,140 | |||
Class A | 63,032 | |||
Class C | 49,134 | |||
Class R | 75 | |||
Shares Issued and Outstanding: | ||||
Institutional Class | 91,315 | |||
Class P | 2,584 | |||
Class D | 1,111 | |||
Class A | 6,873 | |||
Class C | 5,515 | |||
Class R | 8 | |||
Net Asset Value and Redemption Price^ Per Share Outstanding: | ||||
Institutional Class | $ | 9.25 | ||
Class P | 9.21 | |||
Class D | 9.13 | |||
Class A | 9.17 | |||
Class C | 8.91 | |||
Class R | 9.01 |
^ | With respect to the A and C Classes, the redemption price varies by the length of time the shares are held. |
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 47 |
Table of Contents
Six Months Ended December 31, 2014 (Unaudited) | ||||||||||||||||||||||||||||||||
(Amounts in thousands†) | PIMCO Balanced Income Fund | PIMCO Dividend and Income Builder Fund | PIMCO Emerging Multi-Asset Fund | PIMCO Global Dividend Fund | PIMCO EqS® Emerging Markets Fund | PIMCO EqS® Long/ Short Fund | PIMCO International Dividend Fund (1) | PIMCO U.S. Dividend Fund (1) | ||||||||||||||||||||||||
Investment Income: | ||||||||||||||||||||||||||||||||
Interest, net of foreign taxes | $ | 65 | $ | 2,087 | $ | 0 | $ | 0 | $ | 1 | $ | 29 | $ | 0 | $ | 0 | ||||||||||||||||
Dividends, net of foreign taxes* | 85 | 14,322 | 0 | 3,524 | 1,168 | 16,328 | 1 | 5 | ||||||||||||||||||||||||
Dividends from Investments in Affiliates | 11 | 50 | 412 | 5 | 79 | 2,427 | 1 | 1 | ||||||||||||||||||||||||
Total Income | 161 | 16,459 | 412 | 3,529 | 1,248 | 18,784 | 2 | 6 | ||||||||||||||||||||||||
Expenses: | ||||||||||||||||||||||||||||||||
Investment advisory fees | 26 | 3,166 | 154 | 744 | 568 | 6,832 | 1 | 1 | ||||||||||||||||||||||||
Supervisory and administrative fees | 14 | 1,797 | 84 | 374 | 260 | 3,375 | 0 | 0 | ||||||||||||||||||||||||
Distribution and/or servicing fees - Class D | 0 | 35 | 2 | 8 | 1 | 84 | 0 | 0 | ||||||||||||||||||||||||
Distribution fees - Class C | 4 | 1,286 | 13 | 136 | 7 | 727 | 0 | 0 | ||||||||||||||||||||||||
Distribution fees - Class R | 0 | 1 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
Servicing fees - Class A | 1 | 375 | 8 | 66 | 7 | 324 | 0 | 0 | ||||||||||||||||||||||||
Servicing fees - Class C | 2 | 429 | 4 | 45 | 3 | 242 | 0 | 0 | ||||||||||||||||||||||||
Servicing fees - Class R | 0 | 1 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
Dividends on short sales | 0 | 0 | 0 | 0 | 0 | 935 | 0 | 0 | ||||||||||||||||||||||||
Trustee fees | 0 | 28 | 1 | 5 | 3 | 35 | 0 | 0 | ||||||||||||||||||||||||
Interest expense | 0 | 4 | 0 | 1 | 4 | 831 | 0 | 0 | ||||||||||||||||||||||||
Miscellaneous expense | 0 | 22 | 1 | 5 | 3 | 32 | 0 | 0 | ||||||||||||||||||||||||
Total Expenses | 47 | 7,144 | 267 | 1,384 | 856 | 13,417 | 1 | 1 | ||||||||||||||||||||||||
Waiver and/or Reimbursement by PIMCO | (7 | ) | (762 | ) | (183 | ) | (177 | ) | (117 | ) | (35 | ) | 0 | 0 | ||||||||||||||||||
Net Expenses | 40 | 6,382 | 84 | 1,207 | 739 | 13,382 | 0 | 0 | ||||||||||||||||||||||||
Net Investment Income | 121 | 10,077 | 328 | 2,322 | 509 | 5,402 | 1 | 5 | ||||||||||||||||||||||||
Net Realized Gain (Loss): | ||||||||||||||||||||||||||||||||
Investments in securities | (72 | ) | 7,046 | (8 | ) | 29,387 | (925 | ) | (51,017 | ) | (1 | ) | 0 | |||||||||||||||||||
Investments in Affiliates | (5 | ) | (47 | ) | (428 | ) | (3 | ) | (3 | ) | (28 | ) | (1 | ) | (1 | ) | ||||||||||||||||
Net capital gain distributions received from Affiliate investments | 0 | 0 | 24 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
Exchange-traded or centrally cleared financial derivative instruments | 3 | 865 | (61 | ) | 0 | (890 | ) | (5,156 | ) | 0 | 0 | |||||||||||||||||||||
Over the counter financial derivative instruments | 51 | 2,906 | 178 | 1,010 | 63 | (1,177 | ) | 0 | 0 | |||||||||||||||||||||||
Short sales | 0 | 0 | 0 | 0 | 0 | 13,591 | 0 | 0 | ||||||||||||||||||||||||
Foreign currency | 0 | (581 | ) | (1 | ) | (258 | ) | (155 | ) | (107 | ) | (11 | ) | (1 | ) | |||||||||||||||||
Net Realized Gain (Loss) | (23 | ) | 10,189 | (296 | ) | 30,136 | (1,910 | ) | (43,894 | ) | (13 | ) | (2 | ) | ||||||||||||||||||
Net Change in Unrealized Appreciation (Depreciation): | ||||||||||||||||||||||||||||||||
Investments in securities | (154 | ) | (44,168 | ) | 21 | (40,585 | ) | (3,992 | ) | (1,576 | ) | 55 | 124 | |||||||||||||||||||
Investments in Affiliates | (6 | ) | (4 | ) | (2,534 | ) | 0 | (63 | ) | (2,112 | ) | 0 | 0 | |||||||||||||||||||
Exchange-traded or centrally cleared financial derivative instruments | 9 | 385 | 12 | 0 | 122 | 2,186 | 0 | 0 | ||||||||||||||||||||||||
Over the counter financial derivative instruments | 24 | 1,087 | (62 | ) | 280 | (1,241 | ) | 4,155 | 5 | 0 | ||||||||||||||||||||||
Short sales | 0 | 0 | 0 | 0 | 0 | 2,596 | 0 | 0 | ||||||||||||||||||||||||
Foreign currency assets and liabilities | (1 | ) | (78 | ) | (2 | ) | (106 | ) | (11 | ) | (26 | ) | 0 | 0 | ||||||||||||||||||
Net Change in Unrealized Appreciation (Depreciation) | (128 | ) | (42,778 | ) | (2,565 | ) | (40,411 | ) | (5,185 | ) | 5,223 | 60 | 124 | |||||||||||||||||||
Net Gain (Loss) | (151 | ) | (32,589 | ) | (2,861 | ) | (10,275 | ) | (7,095 | ) | (38,671 | ) | 47 | 122 | ||||||||||||||||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (30 | ) | $ | (22,512 | ) | $ | (2,533 | ) | $ | (7,953 | ) | $ | (6,586 | ) | $ | (33,269 | ) | $ | 48 | $ | 127 | ||||||||||
* Foreign tax withholdings - Dividends | $ | 3 | $ | 502 | $ | 0 | $ | 158 | $ | 97 | $ | 15 | $ | 0 | $ | 0 |
† | A zero balance may reflect actual amounts rounding to less than one thousand. |
(1) | Period from December 15, 2014 to December 31, 2014. |
48 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
Consolidated Statement of Operations
Six Months Ended December 31, 2014 (Unaudited) | ||||
PIMCO EqS Pathfinder Fund® | ||||
(Amounts in thousands) | ||||
Investment Income: | ||||
Dividends, net of foreign taxes* | $ | 15,051 | ||
Dividends from Investments in Affiliates | 1,160 | |||
Total Income | 16,211 | |||
Expenses: | ||||
Investment advisory fees | 5,241 | |||
Supervisory and administrative fees | 2,184 | |||
Distribution and/or servicing fees - Class D | 17 | |||
Distribution fees - Class C | 215 | |||
Servicing fees - Class A | 94 | |||
Servicing fees - Class C | 72 | |||
Dividends on short sales | 99 | |||
Trustee fees | 36 | |||
Interest expense | 19 | |||
Miscellaneous expense | 34 | |||
Total Expenses | 8,011 | |||
Waiver and/or Reimbursement by PIMCO | (1,154 | ) | ||
Net Expenses | 6,857 | |||
Net Investment Income | 9,354 | |||
Net Realized Gain (Loss): | ||||
Investments in securities | 5,897 | |||
Investments in Affiliates | (756 | ) | ||
Exchange-traded or centrally cleared financial derivative instruments | 2,940 | |||
Over the counter financial derivative instruments | 16,940 | |||
Short sales | (129 | ) | ||
Foreign currency | (3,354 | ) | ||
Net Realized Gain | 21,538 | |||
Net Change in Unrealized Appreciation (Depreciation): | ||||
Investments in securities | (140,739 | ) | ||
Investments in Affiliates | (320 | ) | ||
Over the counter financial derivative instruments | 5,371 | |||
Short sales | (36 | ) | ||
Foreign currency assets and liabilities | (444 | ) | ||
Net Change in Unrealized (Depreciation) | (136,168 | ) | ||
Net (Loss) | (114,630 | ) | ||
Net (Decrease) in Net Assets Resulting from Operations | $ | (105,276 | ) | |
* Foreign tax withholdings - Dividends | $ | 610 |
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 49 |
Table of Contents
Statements of Changes in Net Assets
PIMCO Balanced Income Fund | PIMCO Dividend and Income Builder Fund | PIMCO Emerging Multi-Asset Fund | ||||||||||||||||||||||
(Amounts in thousands†) | Six Months Ended December 31, 2014 (Unaudited) | Period from March 31, 2014 to June 30, 2014 | Six Months Ended December 31, 2014 (Unaudited) | Year Ended June 30, 2014 | Six Months Ended | Year Ended June 30, 2014 | ||||||||||||||||||
Increase (Decrease) in Net Assets from: | ||||||||||||||||||||||||
Operations: | ||||||||||||||||||||||||
Net investment income (loss) | $ | 121 | $ | 33 | $ | 10,077 | $ | 23,574 | $ | 328 | $ | 953 | ||||||||||||
Net realized gain (loss) | (23 | ) | 0 | 10,189 | 14,901 | (296 | ) | (2,408 | ) | |||||||||||||||
Net change in unrealized appreciation (depreciation) | (128 | ) | 86 | (42,778 | ) | 72,966 | (2,565 | ) | 4,212 | |||||||||||||||
Net increase (decrease) in net assets resulting from operations | (30 | ) | 119 | (22,512 | ) | 111,441 | (2,533 | ) | 2,757 | |||||||||||||||
Distributions to Shareholders: | ||||||||||||||||||||||||
From net investment income | ||||||||||||||||||||||||
Institutional Class | (120 | ) | (27 | ) | (1,169 | ) | (3,023 | ) | (825 | ) | (469 | ) | ||||||||||||
Class P | (1 | ) | (0 | ) | (2,527 | ) | (4,522 | ) | (61 | ) | (33 | ) | ||||||||||||
Administrative Class | 0 | 0 | 0 | 0 | 0 | (31 | ) | |||||||||||||||||
Class D | (3 | ) | (0 | ) | (381 | ) | (1,018 | ) | (40 | ) | (89 | ) | ||||||||||||
Class A | (15 | ) | (1 | ) | (4,086 | ) | (8,804 | ) | (217 | ) | (175 | ) | ||||||||||||
Class C | (20 | ) | (1 | ) | (3,378 | ) | (7,339 | ) | (106 | ) | (53 | ) | ||||||||||||
Class R | 0 | 0 | (5 | ) | (12 | ) | 0 | (0 | ) | |||||||||||||||
From net realized capital gains | ||||||||||||||||||||||||
Institutional Class | (6 | ) | 0 | (1,739 | ) | 0 | 0 | 0 | ||||||||||||||||
Class P | 0 | 0 | (4,480 | ) | 0 | 0 | 0 | |||||||||||||||||
Class D | 0 | 0 | (690 | ) | 0 | 0 | 0 | |||||||||||||||||
Class A | (1 | ) | 0 | (7,435 | ) | 0 | 0 | 0 | ||||||||||||||||
Class C | (2 | ) | 0 | (8,792 | ) | 0 | 0 | 0 | ||||||||||||||||
Class R | 0 | 0 | (11 | ) | 0 | 0 | 0 | |||||||||||||||||
Total Distributions | (168 | ) | (29 | ) | (34,693 | ) | (24,718 | ) | (1,249 | ) | (850 | ) | ||||||||||||
Portfolio Share Transactions: | ||||||||||||||||||||||||
Net increase (decrease) resulting from Fund share transactions** | 4,508 | 7,030 | (36,912 | ) | 485,989 | (4,886 | ) | (28,462 | ) | |||||||||||||||
Total Increase (Decrease) in Net Assets | 4,310 | 7,120 | (94,117 | ) | 572,712 | (8,668 | ) | (26,555 | ) | |||||||||||||||
Net Assets: | ||||||||||||||||||||||||
Beginning of period | 7,120 | 0 | 955,518 | 382,806 | 36,678 | 63,233 | ||||||||||||||||||
End of period* | $ | 11,430 | $ | 7,120 | $ | 861,401 | $ | 955,518 | $ | 28,010 | $ | 36,678 | ||||||||||||
* Including undistributed (overdistributed) net investment income of: | $ | (34 | ) | $ | 4 | $ | (1,157 | ) | $ | 312 | $ | (345 | ) | $ | 576 |
† | A zero balance may reflect actual amounts rounding to less than one thousand. |
** | See Note 13 in the Notes to Financial Statements. |
50 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
PIMCO Global Dividend Fund | PIMCO EqS® Emerging Markets Fund | PIMCO EqS® Long/Short Fund | PIMCO International Dividend Fund | PIMCO U.S. Dividend Fund | ||||||||||||||||||||||||||
Six Months Ended | Year Ended June 30, 2014 | Six Months Ended December 31, 2014 (Unaudited) | Year Ended June 30, 2014 | Six Months Ended December 31, 2014 (Unaudited) | Year Ended June 30, 2014 | Period from December 15, 2014 to December 31, 2014 (Unaudited) | Period from December 15, 2014 to December 31, 2014 (Unaudited) | |||||||||||||||||||||||
$ | 2,322 | $ | 18,008 | $ | 509 | $ | 1,924 | $ | 5,402 | $ | (9,695 | ) | $ | 1 | $ | 5 | ||||||||||||||
30,136 | 56,150 | (1,910 | ) | (5,047 | ) | (43,894 | ) | 11,045 | (13 | ) | (2 | ) | ||||||||||||||||||
(40,411 | ) | 17,857 | (5,185 | ) | 30,313 | 5,223 | 59,280 | 60 | 124 | |||||||||||||||||||||
| (7,953 | ) | 92,015 | (6,586 | ) | 27,190 | (33,269 | ) | 60,630 | 48 | 127 | |||||||||||||||||||
(1,826 | ) | (18,034 | ) | 0 | 0 | 0 | (2,688 | ) | (2 | ) | (6 | ) | ||||||||||||||||||
(77 | ) | (152 | ) | 0 | 0 | 0 | (663 | ) | (0 | ) | (0 | ) | ||||||||||||||||||
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||
(98 | ) | (362 | ) | 0 | 0 | 0 | (316 | ) | (0 | ) | (0 | ) | ||||||||||||||||||
(801 | ) | (1,892 | ) | 0 | 0 | 0 | (1,080 | ) | (0 | ) | (0 | ) | ||||||||||||||||||
(407 | ) | (1,007 | ) | 0 | 0 | 0 | (464 | ) | 0 | 0 | ||||||||||||||||||||
(2 | ) | (4 | ) | 0 | 0 | 0 | 0 | (0 | ) | (0 | ) | |||||||||||||||||||
(24,159 | ) | (25,541 | ) | 0 | 0 | (1,891 | ) | (23,512 | ) | 0 | 0 | |||||||||||||||||||
(1,929 | ) | (199 | ) | 0 | 0 | (1,253 | ) | (4,678 | ) | 0 | 0 | |||||||||||||||||||
(1,958 | ) | (465 | ) | 0 | 0 | (248 | ) | (2,765 | ) | 0 | 0 | |||||||||||||||||||
(18,177 | ) | (2,702 | ) | 0 | 0 | (961 | ) | (8,208 | ) | 0 | 0 | |||||||||||||||||||
(13,153 | ) | (1,844 | ) | 0 | 0 | (787 | ) | (4,823 | ) | 0 | 0 | |||||||||||||||||||
(56 | ) | (5 | ) | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
(62,643 | ) | (52,207 | ) | 0 | 0 | (5,140 | ) | (49,197 | ) | (2 | ) | (6 | ) | |||||||||||||||||
| (210,310 | ) | (257,681 | ) | (5,221 | ) | (420,487 | ) | (411,013 | ) | 1,094,169 | 3,042 | 3,049 | |||||||||||||||||
(280,906 | ) | (217,873 | ) | (11,807 | ) | (393,297 | ) | (449,422 | ) | 1,105,602 | 3,088 | 3,170 | ||||||||||||||||||
412,540 | 630,413 | 117,349 | 510,646 | 1,497,586 | 391,984 | 0 | 0 | |||||||||||||||||||||||
$ | 131,634 | $ | 412,540 | $ | 105,542 | $ | 117,349 | $ | 1,048,164 | $ | 1,497,586 | $ | 3,088 | $ | 3,170 | |||||||||||||||
$ | (915 | ) | $ | (26 | ) | $ | (2,975 | ) | $ | (3,484 | ) | $ | (310 | ) | $ | (5,712 | ) | $ | (1 | ) | $ | (1 | ) |
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 51 |
Table of Contents
Consolidated Statements of Changes in Net Assets
PIMCO EqS Pathfinder Fund® | ||||||||
(Amounts in thousands†) | Six Months Ended | Year Ended June 30, 2014 | ||||||
(Decrease) in Net Assets from: | ||||||||
Operations: | ||||||||
Net investment income | $ | 9,354 | $ | 42,503 | ||||
Net realized gain | 21,538 | 354,529 | ||||||
Net change in unrealized appreciation (depreciation) | (136,168 | ) | 38,534 | |||||
Net increase (decrease) in net assets resulting from operations | (105,276 | ) | 435,566 | |||||
Distributions to Shareholders: | ||||||||
From net investment income | ||||||||
Institutional Class | (21,280 | ) | (38,137 | ) | ||||
Class P | (578 | ) | (1,112 | ) | ||||
Class D | (231 | ) | (237 | ) | ||||
Class A | (1,450 | ) | (976 | ) | ||||
Class C | (960 | ) | (539 | ) | ||||
Class R | (2 | ) | (0 | ) | ||||
From net realized capital gains | ||||||||
Institutional Class | (220,923 | ) | (49,062 | ) | ||||
Class P | (5,546 | ) | (1,472 | ) | ||||
Class D | (2,677 | ) | (351 | ) | ||||
Class A | (14,767 | ) | (1,402 | ) | ||||
Class C | (11,693 | ) | (968 | ) | ||||
Class R | (16 | ) | (0 | ) | ||||
Total Distributions | (280,123 | ) | (94,256 | ) | ||||
Portfolio Share Transactions: | ||||||||
Net (decrease) resulting from Fund share transactions** | (67,090 | ) | (765,494 | ) | ||||
Total (Decrease) in Net Assets | (452,489 | ) | (424,184 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 1,443,390 | 1,867,574 | ||||||
End of period* | $ | 990,901 | $ | 1,443,390 | ||||
* Including (overdistributed) net investment income of: | $ | (20,992 | ) | $ | (5,845 | ) |
† | A zero balance may reflect actual amounts rounding to less than one thousand. |
** | See Note 13 in the Notes to Financial Statements. |
52 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
Six Months Ended December 31, 2014 (Unaudited) | ||||
(Amounts in thousands) | PIMCO EqS® Long/Short Fund | |||
Cash flows provided by operating activities: | ||||
Net (decrease) in net assets resulting from operations | $ | (33,269 | ) | |
Adjustments to reconcile net (decrease) in net assets from operations to net cash provided by operating activities: | ||||
Purchases of long-term securities | (2,135,655 | ) | ||
Proceeds from sales of long-term securities | 2,285,213 | |||
Proceeds from sales of short-term portfolio investments, net | 265,493 | |||
(Increase) in deposits with counterparty | (12,753 | ) | ||
Decrease in receivable for investments sold | 27,894 | |||
(Increase) in interest and dividends receivable | (2,057 | ) | ||
(Increase) in reimbursement receivable from PIMCO | (110 | ) | ||
(Increase) in exchange-traded or centrally cleared derivatives | (5,320 | ) | ||
(Increase) in over the counter derivatives | (1,177 | ) | ||
(Decrease) in payable for investments purchased | (43,473 | ) | ||
Increase in deposits from counterparty | 290 | |||
(Decrease) in accrued investment advisory fees | (250 | ) | ||
(Decrease) in accrued supervisory and administrative fees | (124 | ) | ||
(Decrease) in accrued distribution fee | (24 | ) | ||
(Decrease) in accrued servicing fee | (40 | ) | ||
Payments on short sales transactions, net | 4,779 | |||
Payments on currency transactions | (133 | ) | ||
Increase in other liabilities | 148 | |||
Net Realized (Gain) Loss | ||||
Investments in securities | 51,017 | |||
Investments in Affiliates | 28 | |||
Exchange-traded or centrally cleared financial derivative instruments | 5,156 | |||
Short sales | (13,591 | ) | ||
Over the counter financial derivative instruments | 1,177 | |||
Foreign currency | 107 | |||
Net Change in Unrealized (Appreciation) Depreciation | ||||
Investments in securities | 1,576 | |||
Investments in Affiliates | 2,112 | |||
Exchange-traded or centrally cleared financial derivative instruments | (2,186 | ) | ||
Over the counter financial derivative instruments | (4,155 | ) | ||
Short sales | (2,596 | ) | ||
Foreign currency assets and liabilities | 26 | |||
Net amortization (accretion) on investments | (29 | ) | ||
Net cash provided by operating activities | 388,074 | |||
Cash flows (used for) financing activities: | ||||
Proceeds from shares sold | 278,228 | |||
Payments on shares redeemed | (666,864 | ) | ||
Cash dividend paid* | (17 | ) | ||
Net cash (used for) financing activities | (388,653 | ) | ||
Net (Decrease) in Cash and Foreign Currency | (579 | ) | ||
Cash and Foreign Currency: | ||||
Beginning of period | 1,195 | |||
End of period | $ | 616 | ||
* Reinvestment of dividends | $ | 5,123 | ||
Supplemental disclosure of cash flow information: | ||||
Interest expense paid during the period | $ | 831 |
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 53 |
Table of Contents
Schedule of Investments PIMCO Balanced Income Fund
PRINCIPAL AMOUNT (000S) | MARKET VALUE (000S) | |||||||||||
INVESTMENTS IN SECURITIES 82.0% | ||||||||||||
ASSET-BACKED SECURITIES 6.7% | ||||||||||||
UNITED STATES 6.7% | ||||||||||||
ACE Securities Corp. |
| |||||||||||
0.325% due 08/25/2036 | $ | 55 | $ | 47 | ||||||||
AmeriCredit Automobile Receivables Trust |
| |||||||||||
0.680% due 10/11/2016 | 16 | 16 | ||||||||||
Ameriquest Mortgage Securities, Inc. Asset-Backed Pass-Through Certificates |
| |||||||||||
0.835% due 09/25/2033 | 43 | 41 | ||||||||||
3.480% due 06/25/2033 | 63 | 52 | ||||||||||
Asset-Backed Securities Corp. Home Equity Loan Trust |
| |||||||||||
0.701% due 11/15/2031 | 12 | 11 | ||||||||||
0.920% due 03/25/2035 | 40 | 38 | ||||||||||
College & University Facility Loan Trust |
| |||||||||||
4.000% due 06/01/2018 | 20 | 19 | ||||||||||
Countrywide Asset-Backed Certificates |
| |||||||||||
0.670% due 08/26/2033 | 44 | 38 | ||||||||||
1.145% due 02/25/2034 | 37 | 34 | ||||||||||
Credit-Based Asset Servicing and Securitization LLC |
| |||||||||||
0.415% due 08/25/2035 | 5 | 5 | ||||||||||
Fremont Home Loan Trust |
| |||||||||||
0.230% due 01/25/2037 | 153 | 77 | ||||||||||
0.350% due 04/25/2036 | 60 | 56 | ||||||||||
JPMorgan Mortgage Acquisition Corp. |
| |||||||||||
0.610% due 09/25/2035 | 33 | 30 | ||||||||||
Lehman ABS Mortgage Loan Trust |
| |||||||||||
0.370% due 06/25/2037 | 83 | 55 | ||||||||||
Merrill Lynch Mortgage Investors Trust |
| |||||||||||
0.360% due 04/25/2047 | 91 | 52 | ||||||||||
0.435% due 01/25/2047 | 94 | 90 | ||||||||||
Soundview Home Loan Trust |
| |||||||||||
0.250% due 06/25/2037 | 93 | 56 | ||||||||||
Structured Asset Investment Loan Trust |
| |||||||||||
0.320% due 06/25/2036 | 53 | 46 | ||||||||||
|
| |||||||||||
Total Asset-Backed Securities (Cost $745) | 763 | |||||||||||
|
| |||||||||||
BANK LOAN OBLIGATIONS 2.7% | ||||||||||||
UNITED STATES 2.7% | ||||||||||||
Advantage Sales & Marketing, Inc. |
| |||||||||||
3.250% - 4.250% due 07/25/2021 | 1 | 1 | ||||||||||
Albertson’s Holdings LLC |
| |||||||||||
4.000% due 08/25/2019 | 3 | 3 | ||||||||||
4.500% due 08/25/2021 | 6 | 6 | ||||||||||
Burger King Worldwide, Inc. |
| |||||||||||
4.500% due 12/12/2021 | 3 | 3 | ||||||||||
Charter Communications Operating LLC |
| |||||||||||
4.250% due 09/12/2021 | 3 | 3 | ||||||||||
Clear Channel Communications, Inc. |
| |||||||||||
6.919% due 01/30/2019 | 30 | 28 | ||||||||||
Davita Healthcare Partners, Inc. |
| |||||||||||
3.500% due 06/24/2021 | 30 | 30 | ||||||||||
Energy Future Intermediate Holding Co. LLC |
| |||||||||||
4.250% due 06/19/2016 | 70 | 70 | ||||||||||
Hilton Worldwide Finance LLC |
| |||||||||||
3.500% due 10/26/2020 | 44 | 44 | ||||||||||
MGM Resorts International |
| |||||||||||
3.500% due 12/20/2019 | 30 | 29 | ||||||||||
New Albertson’s, Inc. |
| |||||||||||
4.750% due 06/27/2021 | 30 | 30 | ||||||||||
Seadrill Partners Finco LLC |
| |||||||||||
4.000% due 02/21/2021 | 29 | 22 | ||||||||||
Univision Communications, Inc. |
| |||||||||||
4.000% due 03/01/2020 | 38 | 37 | ||||||||||
|
| |||||||||||
Total Bank Loan Obligations (Cost $315) | 306 | |||||||||||
|
|
SHARES | MARKET VALUE (000S) | |||||||||||
COMMON STOCKS 54.4% | ||||||||||||
AUSTRALIA 0.6% | ||||||||||||
INDUSTRIALS 0.6% | ||||||||||||
Spotless Group Holdings Ltd. (a) | 43,197 | $ | 67 | |||||||||
|
| |||||||||||
Total Australia | 67 | |||||||||||
|
| |||||||||||
BERMUDA 1.1% | ||||||||||||
ENERGY 1.1% | ||||||||||||
Golar LNG Partners LP | 4,191 | 131 | ||||||||||
|
| |||||||||||
Total Bermuda | 131 | |||||||||||
|
| |||||||||||
BRAZIL 1.0% | ||||||||||||
INDUSTRIALS 0.4% | ||||||||||||
Arteris S.A. | 11,000 | 51 | ||||||||||
|
| |||||||||||
UTILITIES 0.6% | ||||||||||||
Cia de Saneamento Basico do Estado de Sao Paulo - ADR | 5,235 | 33 | ||||||||||
Light S.A. | 5,000 | 32 | ||||||||||
|
| |||||||||||
65 | ||||||||||||
|
| |||||||||||
Total Brazil | 116 | |||||||||||
|
| |||||||||||
CHINA 0.6% | ||||||||||||
CONSUMER STAPLES 0.6% | ||||||||||||
Want Want China Holdings Ltd. | 55,000 | 72 | ||||||||||
|
| |||||||||||
Total China | 72 | |||||||||||
|
| |||||||||||
CYPRUS 0.1% | ||||||||||||
ENERGY 0.1% | ||||||||||||
ProSafe SE | 5,637 | 17 | ||||||||||
|
| |||||||||||
Total Cyprus | 17 | |||||||||||
|
| |||||||||||
FRANCE 3.9% | ||||||||||||
ENERGY 1.1% | ||||||||||||
Total S.A. | 2,324 | 119 | ||||||||||
|
| |||||||||||
FINANCIALS 0.8% | ||||||||||||
CNP Assurances | 5,191 | 92 | ||||||||||
|
| |||||||||||
UTILITIES 2.0% | ||||||||||||
Electricite de France S.A. | 3,732 | 103 | ||||||||||
Suez Environnement Co. | 7,463 | 130 | ||||||||||
|
| |||||||||||
233 | ||||||||||||
|
| |||||||||||
Total France | 444 | |||||||||||
|
| |||||||||||
HONG KONG 1.5% | ||||||||||||
INDUSTRIALS 0.3% | ||||||||||||
Yuexiu Transport Infrastructure Ltd. | 56,000 | 34 | ||||||||||
|
| |||||||||||
TELECOMMUNICATION SERVICES 1.2% | ||||||||||||
China Mobile Ltd. | 12,000 | 141 | ||||||||||
|
| |||||||||||
Total Hong Kong | 175 | |||||||||||
|
|
SHARES | MARKET VALUE (000S) | |||||||||||
ISRAEL 1.2% | ||||||||||||
HEALTH CARE 1.2% | ||||||||||||
Teva Pharmaceutical Industries Ltd. SP - ADR | 2,482 | $ | 143 | |||||||||
|
| |||||||||||
Total Israel | 143 | |||||||||||
|
| |||||||||||
ITALY 2.4% | ||||||||||||
FINANCIALS 1.8% | ||||||||||||
Intesa Sanpaolo SpA | 69,311 | 201 | ||||||||||
|
| |||||||||||
INDUSTRIALS 0.6% | ||||||||||||
Societa Iniziative Autostradali e Servizi SpA | 7,183 | 69 | ||||||||||
|
| |||||||||||
Total Italy | 270 | |||||||||||
|
| |||||||||||
JAPAN 2.1% | ||||||||||||
CONSUMER DISCRETIONARY 1.1% | ||||||||||||
Bridgestone Corp. | 3,700 | 128 | ||||||||||
|
| |||||||||||
TELECOMMUNICATION SERVICES 1.0% | ||||||||||||
Nippon Telegraph & Telephone Corp. | 2,300 | 118 | ||||||||||
|
| |||||||||||
Total Japan | 246 | |||||||||||
|
| |||||||||||
LUXEMBOURG 0.5% | ||||||||||||
INDUSTRIALS 0.5% | ||||||||||||
Regus PLC | 15,980 | 52 | ||||||||||
|
| |||||||||||
Total Luxembourg | 52 | |||||||||||
|
| |||||||||||
NETHERLANDS 0.9% | ||||||||||||
FINANCIALS 0.9% | ||||||||||||
Aegon NV | 13,756 | 103 | ||||||||||
|
| |||||||||||
Total Netherlands | 103 | |||||||||||
|
| |||||||||||
SINGAPORE 0.8% | ||||||||||||
INDUSTRIALS 0.8% | ||||||||||||
Singapore Airlines Ltd. | 10,000 | 87 | ||||||||||
|
| |||||||||||
Total Singapore | 87 | |||||||||||
|
| |||||||||||
SOUTH AFRICA 0.3% | ||||||||||||
HEALTH CARE 0.3% | ||||||||||||
Life Healthcare Group Holdings Ltd. | 9,425 | 35 | ||||||||||
|
| |||||||||||
Total South Africa | 35 | |||||||||||
|
| |||||||||||
SPAIN 0.9% | ||||||||||||
CONSUMER STAPLES 0.9% | ||||||||||||
Ebro Foods S.A. | 6,210 | 103 | ||||||||||
|
| |||||||||||
Total Spain | 103 | |||||||||||
|
| |||||||||||
SWITZERLAND 1.1% | ||||||||||||
HEALTH CARE 1.1% | ||||||||||||
Roche Holding AG | 458 | 124 | ||||||||||
|
| |||||||||||
Total Switzerland | 124 | |||||||||||
|
| |||||||||||
54 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 2014 (Unaudited)
SHARES | MARKET VALUE (000S) | |||||||||||
TAIWAN 0.8% | ||||||||||||
INFORMATION TECHNOLOGY 0.8% | ||||||||||||
Radiant Opto-Electronics Corp. | 27,000 | $ | 86 | |||||||||
|
| |||||||||||
Total Taiwan | 86 | |||||||||||
|
| |||||||||||
TURKEY 0.6% | ||||||||||||
INDUSTRIALS 0.6% | ||||||||||||
TAV Havalimanlari Holding A/S | 8,369 | 68 | ||||||||||
|
| |||||||||||
Total Turkey | 68 | |||||||||||
|
| |||||||||||
UNITED KINGDOM 7.8% | ||||||||||||
CONSUMER DISCRETIONARY 0.7% | ||||||||||||
ITV PLC | 25,555 | 85 | ||||||||||
|
| |||||||||||
CONSUMER STAPLES 1.5% | ||||||||||||
Imperial Tobacco Group PLC | 3,883 | 171 | ||||||||||
|
| |||||||||||
FINANCIALS 3.5% | ||||||||||||
ICAP PLC | 13,855 | 97 | ||||||||||
Lloyds Banking Group PLC (a) | 177,287 | 208 | ||||||||||
St James’s Place PLC | 7,601 | 96 | ||||||||||
|
| |||||||||||
401 | ||||||||||||
|
| |||||||||||
TELECOMMUNICATION SERVICES 2.1% | ||||||||||||
Vodafone Group PLC | 69,011 | 237 | ||||||||||
|
| |||||||||||
Total United Kingdom | 894 | |||||||||||
|
| |||||||||||
UNITED STATES 26.2% | ||||||||||||
CONSUMER DISCRETIONARY 5.4% | ||||||||||||
AMC Entertainment Holdings, Inc. ‘A’ | 1,288 | 34 | ||||||||||
General Motors Co. | 3,986 | 139 | ||||||||||
Kohl’s Corp. | 2,600 | 159 | ||||||||||
Regal Entertainment Group ‘A’ | 3,698 | 79 | ||||||||||
Target Corp. | 2,773 | 210 | ||||||||||
|
| |||||||||||
621 | ||||||||||||
|
| |||||||||||
CONSUMER STAPLES 1.2% | ||||||||||||
Walgreens Boots Alliance, Inc. | 1,753 | 134 | ||||||||||
|
| |||||||||||
ENERGY 0.2% | ||||||||||||
Peabody Energy Corp. | 2,984 | 23 | ||||||||||
|
| |||||||||||
FINANCIALS 6.2% | ||||||||||||
Apollo Investment Corp. | 11,698 | 87 | ||||||||||
Blackstone Group LP | 1,882 | 63 | ||||||||||
JPMorgan Chase & Co. | 2,109 | 132 | ||||||||||
KeyCorp | 6,176 | 86 | ||||||||||
Navient Corp. | 6,211 | 134 | ||||||||||
Prudential Financial, Inc. | 1,435 | 130 | ||||||||||
Solar Capital Ltd. | 4,484 | 81 | ||||||||||
|
| |||||||||||
713 | ||||||||||||
|
| |||||||||||
SHARES | MARKET VALUE (000S) | |||||||||||
HEALTH CARE 2.0% | ||||||||||||
Merck & Co., Inc. | 1,586 | $ | 90 | |||||||||
Pfizer, Inc. | 4,300 | 134 | ||||||||||
|
| |||||||||||
224 | ||||||||||||
|
| |||||||||||
INDUSTRIALS 1.3% | ||||||||||||
Nielsen NV | 1,590 | 71 | ||||||||||
Timken Co. | 1,684 | 72 | ||||||||||
|
| |||||||||||
143 | ||||||||||||
|
| |||||||||||
INFORMATION TECHNOLOGY 5.4% | ||||||||||||
Cisco Systems, Inc. | 6,915 | 193 | ||||||||||
Corning, Inc. | 4,243 | 97 | ||||||||||
QUALCOMM, Inc. | 2,102 | 156 | ||||||||||
Symantec Corp. | 3,920 | 101 | ||||||||||
Western Digital Corp. | 605 | 67 | ||||||||||
|
| |||||||||||
614 | ||||||||||||
|
| |||||||||||
MATERIALS 2.0% | ||||||||||||
International Paper Co. | 1,874 | 100 | ||||||||||
Tronox Ltd. ‘A’ | 5,507 | 132 | ||||||||||
|
| |||||||||||
232 | ||||||||||||
|
| |||||||||||
UTILITIES 2.5% | ||||||||||||
ONE Gas, Inc. | 3,259 | 134 | ||||||||||
PG&E Corp. | 2,855 | 152 | ||||||||||
|
| |||||||||||
286 | ||||||||||||
|
| |||||||||||
Total United States | 2,990 | |||||||||||
|
| |||||||||||
Total Common Stocks (Cost $6,231) | 6,223 | |||||||||||
|
| |||||||||||
PRINCIPAL AMOUNT (000S) | ||||||||||||
CORPORATE BONDS & NOTES 8.8% | ||||||||||||
BRAZIL 0.3% | ||||||||||||
UTILITIES 0.3% | ||||||||||||
Petrobras Global Finance BV |
| |||||||||||
2.603% due 03/17/2017 | $ | 19 | 18 | |||||||||
2.000% due 05/20/2016 | 19 | 18 | ||||||||||
|
| |||||||||||
36 | ||||||||||||
|
| |||||||||||
Total Brazil | 36 | |||||||||||
|
| |||||||||||
IRELAND 0.8% | ||||||||||||
BANKING & FINANCE 0.0% | ||||||||||||
AerCap Ireland Capital Ltd. |
| |||||||||||
2.750% due 05/15/2017 | 1 | 1 | ||||||||||
|
| |||||||||||
INDUSTRIALS 0.8% | ||||||||||||
Russian Railways via RZD Capital PLC |
| |||||||||||
3.374% due 05/20/2021 | EUR | 100 | 90 | |||||||||
|
| |||||||||||
Total Ireland | 91 | |||||||||||
|
| |||||||||||
LUXEMBOURG 0.3% | ||||||||||||
INDUSTRIALS 0.3% | ||||||||||||
Trinseo Materials Operating S.C.A. |
| |||||||||||
8.750% due 02/01/2019 | $ | 38 | 39 | |||||||||
|
| |||||||||||
Total Luxembourg | 39 | |||||||||||
|
|
PRINCIPAL | MARKET VALUE (000S) | |||||||||||
NORWAY 0.0% | ||||||||||||
BANKING & FINANCE 0.0% | ||||||||||||
Eksportfinans ASA |
| |||||||||||
2.000% due 09/15/2015 | $ | 2 | $ | 2 | ||||||||
|
| |||||||||||
Total Norway | 2 | |||||||||||
|
| |||||||||||
PORTUGAL 0.1% | ||||||||||||
BANKING & FINANCE 0.1% | ||||||||||||
Novo Banco S.A. |
| |||||||||||
5.000% due 04/23/2019 | EUR | 5 | 6 | |||||||||
|
| |||||||||||
Total Portugal | 6 | |||||||||||
|
| |||||||||||
UNITED KINGDOM 0.2% | ||||||||||||
INDUSTRIALS 0.2% | ||||||||||||
Unique Pub Finance Co. PLC |
| |||||||||||
5.659% due 06/30/2027 | GBP | 13 | 19 | |||||||||
|
| |||||||||||
Total United Kingdom | 19 | |||||||||||
|
| |||||||||||
UNITED STATES 7.1% | ||||||||||||
BANKING & FINANCE 1.5% | ||||||||||||
Ally Financial, Inc. |
| |||||||||||
4.625% due 06/26/2015 | $ | 15 | 15 | |||||||||
6.250% due 12/01/2017 | 30 | 33 | ||||||||||
Cantor Commercial Real Estate Co. LP |
| |||||||||||
7.750% due 02/15/2018 | 27 | 28 | ||||||||||
CIT Group, Inc. |
| |||||||||||
5.000% due 05/15/2017 | 15 | 16 | ||||||||||
General Motors Financial Co., Inc. |
| |||||||||||
2.750% due 05/15/2016 | 15 | 15 | ||||||||||
International Lease Finance Corp. |
| |||||||||||
4.875% due 04/01/2015 | 15 | 15 | ||||||||||
OneMain Financial Holdings, Inc. |
| |||||||||||
7.250% due 12/15/2021 | 38 | 39 | ||||||||||
Springleaf Finance Corp. |
| |||||||||||
5.400% due 12/01/2015 | 15 | 15 | ||||||||||
|
| |||||||||||
176 | ||||||||||||
|
| |||||||||||
INDUSTRIALS 5.2% | ||||||||||||
Alliance Data Systems Corp. |
| |||||||||||
6.375% due 04/01/2020 | 38 | 39 | ||||||||||
Caesars Entertainment Operating Co., Inc. |
| |||||||||||
8.500% due 02/15/2020 | 4 | 3 | ||||||||||
9.000% due 02/15/2020 | 8 | 6 | ||||||||||
11.250% due 06/01/2017 | 28 | 22 | ||||||||||
California Resources Corp. |
| |||||||||||
5.000% due 01/15/2020 | 14 | 12 | ||||||||||
5.500% due 09/15/2021 | 14 | 12 | ||||||||||
Chesapeake Energy Corp. |
| |||||||||||
3.481% due 04/15/2019 | 15 | 15 | ||||||||||
DISH DBS Corp. |
| |||||||||||
7.125% due 02/01/2016 | 15 | 16 | ||||||||||
5.875% due 11/15/2024 | 18 | 18 | ||||||||||
Gulfport Energy Corp. |
| |||||||||||
7.750% due 11/01/2020 | 12 | 12 | ||||||||||
HCA, Inc. |
| |||||||||||
6.375% due 01/15/2015 | 15 | 15 | ||||||||||
HD Supply, Inc. |
| |||||||||||
5.250% due 12/15/2021 | 38 | 39 | ||||||||||
iHeartCommunications, Inc. |
| |||||||||||
9.000% due 03/01/2021 | 20 | 20 | ||||||||||
IHS, Inc. |
| |||||||||||
5.000% due 11/01/2022 | 33 | 33 |
See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 55 |
Table of Contents
Schedule of Investments PIMCO Balanced Income Fund (Cont.)
PRINCIPAL | MARKET VALUE (000S) | |||||||||||
Intrepid Aviation Group Holdings LLC |
| |||||||||||
6.875% due 02/15/2019 | $ | 40 | $ | 39 | ||||||||
MGM Resorts International |
| |||||||||||
6.625% due 07/15/2015 | 15 | 15 | ||||||||||
Omnicare, Inc. |
| |||||||||||
4.750% due 12/01/2022 | 17 | 17 | ||||||||||
Peabody Energy Corp. |
| |||||||||||
7.375% due 11/01/2016 | 19 | 20 | ||||||||||
Scientific Games International, Inc. |
| |||||||||||
7.000% due 01/01/2022 | 18 | 18 | ||||||||||
Spanish Broadcasting System, Inc. |
| |||||||||||
12.500% due 04/15/2017 | 27 | 28 | ||||||||||
T-Mobile USA, Inc. |
| |||||||||||
6.000% due 03/01/2023 | 14 | 14 | ||||||||||
6.375% due 03/01/2025 | 14 | 14 | ||||||||||
Tenet Healthcare Corp. |
| |||||||||||
4.375% due 10/01/2021 | 18 | 18 | ||||||||||
Times Square Hotel Trust |
| |||||||||||
8.528% due 08/01/2026 | 14 | 19 | ||||||||||
USG Corp. |
| |||||||||||
9.750% due 01/15/2018 | 30 | 34 | ||||||||||
Westmoreland Coal Co. |
| |||||||||||
8.750% due 01/01/2022 | 38 | 37 | ||||||||||
Whiting Petroleum Corp. |
| |||||||||||
5.000% due 03/15/2019 | 30 | 28 | ||||||||||
WPX Energy, Inc. |
| |||||||||||
5.250% due 09/15/2024 | 28 | 26 | ||||||||||
|
| |||||||||||
589 | ||||||||||||
|
| |||||||||||
UTILITIES 0.4% | ||||||||||||
Dynegy Finance, Inc. |
| |||||||||||
6.750% due 11/01/2019 | 5 | 5 | ||||||||||
Illinois Power Generating Co. |
| |||||||||||
6.300% due 04/01/2020 | 30 | 25 | ||||||||||
Sprint Communications, Inc. |
| |||||||||||
9.125% due 03/01/2017 | 15 | 17 | ||||||||||
|
| |||||||||||
47 | ||||||||||||
|
| |||||||||||
Total United States | 812 | |||||||||||
|
| |||||||||||
Total Corporate Bonds & Notes (Cost $1,059) | 1,005 | |||||||||||
|
| |||||||||||
MORTGAGE-BACKED SECURITIES 5.4% | ||||||||||||
UNITED STATES 5.4% | ||||||||||||
BAMLL Re-REMIC Trust |
| |||||||||||
5.383% due 11/15/2016 | 22 | 23 |
PRINCIPAL | MARKET VALUE (000S) | |||||||||||
BCAP LLC Trust |
| |||||||||||
2.823% due 07/26/2036 | $ | 73 | $ | 74 | ||||||||
Countrywide Alternative Loan Trust |
| |||||||||||
6.000% due 08/25/2036 ^ | 54 | 49 | ||||||||||
Countrywide Home Loan Mortgage Pass-Through Trust |
| |||||||||||
5.750% due 12/25/2035 ^ | 87 | 82 | ||||||||||
5.750% due 06/25/2037 ^ | 53 | 49 | ||||||||||
Credit Suisse Mortgage Capital Certificates |
| |||||||||||
0.437% due 12/27/2035 | 58 | 55 | ||||||||||
GSR Mortgage Loan Trust |
| |||||||||||
2.607% due 03/25/2037 | 49 | 45 | ||||||||||
HarborView Mortgage Loan Trust |
| |||||||||||
0.404% due 12/19/2036 | 56 | 40 | ||||||||||
IndyMac Mortgage Loan Trust |
| |||||||||||
0.380% due 07/25/2036 | 64 | 50 | ||||||||||
Lehman XS Trust |
| |||||||||||
0.440% due 02/25/2036 | 49 | 41 | ||||||||||
Morgan Stanley Dean Witter Capital, Inc. Trust |
| |||||||||||
7.505% due 07/15/2033 | 26 | 30 | ||||||||||
Nationslink Funding Corp. Commercial Loan Pass-Through Certificates |
| |||||||||||
6.450% due 01/22/2026 | 28 | 31 | ||||||||||
Wachovia Bank Commercial Mortgage Trust |
| |||||||||||
4.982% due 02/15/2035 | 12 | 12 | ||||||||||
Washington Mutual Mortgage Pass-Through Certificates Trust |
| |||||||||||
4.712% due 09/25/2036 | 57 | 33 | ||||||||||
|
| |||||||||||
Total Mortgage-Backed Securities | 614 | |||||||||||
|
| |||||||||||
SHARES | ||||||||||||
REAL ESTATE INVESTMENT TRUSTS 2.3% | ||||||||||||
UNITED STATES 2.3% | ||||||||||||
FINANCIALS 2.3% | ||||||||||||
Colony Financial, Inc. | 6,723 | 160 | ||||||||||
Ryman Hospitality Properties, Inc. | 1,919 | 101 | ||||||||||
|
| |||||||||||
261 | ||||||||||||
|
| |||||||||||
Total Real Estate Investment Trusts (Cost $241) | 261 | |||||||||||
|
|
PRINCIPAL | MARKET VALUE (000S) | |||||||||||
SOVEREIGN ISSUES 1.7% | ||||||||||||
BRAZIL 1.5% | ||||||||||||
Brazil Notas do Tesouro Nacional |
| |||||||||||
6.000% due 05/15/2045 | BRL | 128 | $ | 47 | ||||||||
6.000% due 08/15/2050 | 173 | 64 | ||||||||||
10.000% due 01/01/2025 | 190 | 62 | ||||||||||
|
| |||||||||||
Total Brazil | 173 | |||||||||||
|
| |||||||||||
GREECE 0.1% | ||||||||||||
Republic of Greece Government Bond |
| |||||||||||
3.800% due 08/08/2017 | JPY | 1,000 | 7 | |||||||||
|
| |||||||||||
Total Greece | 7 | |||||||||||
|
| |||||||||||
RUSSIA 0.1% | ||||||||||||
Russia Government International Bond |
| |||||||||||
7.500% due 03/31/2030 | $ | 18 | 19 | |||||||||
|
| |||||||||||
Total Russia | 19 | |||||||||||
|
| |||||||||||
Total Sovereign Issues (Cost $237) | 199 | |||||||||||
|
| |||||||||||
Total Investments in Securities (Cost $9,434) | 9,371 | |||||||||||
|
| |||||||||||
SHARES | ||||||||||||
INVESTMENTS IN AFFILIATES 12.1% | ||||||||||||
SHORT-TERM INSTRUMENTS 12.1% | ||||||||||||
CENTRAL FUNDS USED FOR CASH MANAGEMENT PURPOSES 12.1% | ||||||||||||
PIMCO Short-Term Floating NAV Portfolio | 21,107 | 211 | ||||||||||
PIMCO Short-Term Floating NAV Portfolio III | 118,037 | 1,170 | ||||||||||
|
| |||||||||||
Total Short-Term Instruments (Cost $1,387) | 1,381 | |||||||||||
|
| |||||||||||
Total Investments in Affiliates (Cost $1,387) | 1,381 | |||||||||||
Total Investments 94.1% (Cost $10,821) | $ | 10,752 | ||||||||||
Financial Derivative (Cost or Premiums, net $(91)) | (70 | ) | ||||||||||
Other Assets and Liabilities, net 6.5% | 748 | |||||||||||
|
| |||||||||||
Net Assets 100.0% | $ | 11,430 | ||||||||||
|
|
NOTES TO SCHEDULE OF INVESTMENTS (AMOUNTS IN THOUSANDS*):
* | A zero balance may reflect actual amounts rounding to less than one thousand. |
^ | Security is in default. |
(a) | Security did not produce income within the last twelve months. |
(b) FINANCIAL DERIVATIVE INSTRUMENTS: EXCHANGE-TRADED OR CENTRALLY CLEARED
SWAP AGREEMENTS:
CREDIT DEFAULT SWAPS ON CREDIT INDICES - SELL PROTECTION (1)
Index/Tranches | Fixed Deal Receive Rate | Maturity Date | Notional Amount (2) | Market Value (3) | Unrealized Appreciation/ (Depreciation) | Variation Margin | ||||||||||||||||||||||
Asset | Liability | |||||||||||||||||||||||||||
CDX.HY-23 5-Year Index | 5.000% | 12/20/2019 | $ | 300 | $ | 19 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||
|
|
|
|
|
|
|
|
(1) | If the Fund is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) pay to the buyer of protection an amount equal to the notional amount of the swap and take delivery of the referenced obligation or underlying securities comprising the referenced index or (ii) pay a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying securities comprising the referenced index. |
56 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 2014 (Unaudited)
(2) | The maximum potential amount the Fund could be required to pay as a seller of credit protection or receive as a buyer of credit protection if a credit event occurs as defined under the terms of that particular swap agreement. |
(3) | The prices and resulting values for credit default swap agreements on credit indices serve as an indicator of the current status of the payment/performance risk and represent the likelihood of an expected liability (or profit) for the credit derivative should the notional amount of the swap agreement be closed/sold as of the period end. Increasing market values, in absolute terms when compared to the notional amount of the swap, represent a deterioration of the referenced indices’ credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. |
INTEREST RATE SWAPS
Pay/Receive Floating Rate | Floating Rate Index | Fixed Rate | Maturity Date | Notional Amount | Market Value | Unrealized Appreciation | Variation Margin | |||||||||||||||||||||||
Asset | Liability | |||||||||||||||||||||||||||||
Pay | 6-Month AUD-BBR-BBSW | 4.750 | % | 06/18/2024 | AUD 200 | $ | 23 | $ | 9 | $ | 2 | $ | 0 | |||||||||||||||||
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| |||||||||||||||||||||||
Total Swap Agreements |
| $ | 42 | $ | 9 | $ | 2 | $ | 0 | |||||||||||||||||||||
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FINANCIAL DERIVATIVE INSTRUMENTS: EXCHANGE-TRADED OR CENTRALLY CLEARED SUMMARY
The following is a summary of the market value and variation margin of Exchange-Traded or Centrally Cleared Financial Derivative Instruments as of December 31, 2014:
Cash of $34 has been pledged as collateral for exchange-traded and centrally cleared financial derivative instruments as of December 31, 2014. See Note 7, Principal Risks, in the Notes to Financial Statements for more information regarding master netting arrangements.
Financial Derivative Assets | Financial Derivative Liabilities | |||||||||||||||||||||||||||||||||
Market Value | Variation Margin Asset | Total | Market Value | Variation Margin Liability | Total | |||||||||||||||||||||||||||||
Purchased Options | Futures | Swap Agreements | Written Options | Futures | Swap Agreements | |||||||||||||||||||||||||||||
Total Exchange-Traded or Centrally Cleared | $ | 0 | $ | 0 | $ | 2 | $ | 2 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||||
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(c) 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 | 01/2015 | BRL | 5 | $ | 2 | $ | 0 | $ | 0 | |||||||||||||||||||
01/2015 | $ | 2 | BRL | 5 | 0 | 0 | ||||||||||||||||||||||
01/2015 | 227 | JPY | 27,233 | 0 | 0 | |||||||||||||||||||||||
02/2015 | EUR | 1 | $ | 1 | 0 | 0 | ||||||||||||||||||||||
02/2015 | JPY | 27,233 | 227 | 0 | 0 | |||||||||||||||||||||||
02/2015 | $ | 9 | EUR | 7 | 0 | 0 | ||||||||||||||||||||||
04/2015 | BRL | 5 | $ | 2 | 0 | 0 | ||||||||||||||||||||||
BPS | 01/2015 | AUD | 2 | 2 | 0 | 0 | ||||||||||||||||||||||
01/2015 | BRL | 153 | 59 | 1 | 0 | |||||||||||||||||||||||
01/2015 | $ | 58 | BRL | 153 | 0 | 0 | ||||||||||||||||||||||
CBK | 01/2015 | BRL | 343 | $ | 145 | 16 | 0 | |||||||||||||||||||||
01/2015 | JPY | 2,032 | 17 | 0 | 0 | |||||||||||||||||||||||
01/2015 | $ | 129 | BRL | 343 | 0 | 0 | ||||||||||||||||||||||
01/2015 | 218 | EUR | 178 | 0 | (3 | ) | ||||||||||||||||||||||
02/2015 | EUR | 194 | $ | 238 | 3 | 0 | ||||||||||||||||||||||
02/2015 | $ | 1 | EUR | 1 | 0 | 0 | ||||||||||||||||||||||
DUB | 01/2015 | BRL | 247 | $ | 93 | 0 | 0 | |||||||||||||||||||||
01/2015 | $ | 96 | BRL | 247 | 0 | (3 | ) | |||||||||||||||||||||
02/2015 | AUD | 2 | $ | 2 | 0 | 0 | ||||||||||||||||||||||
02/2015 | JPY | 121 | 1 | 0 | 0 | |||||||||||||||||||||||
02/2015 | $ | 8 | BRL | 21 | 0 | 0 | ||||||||||||||||||||||
07/2015 | BRL | 247 | $ | 91 | 3 | 0 | ||||||||||||||||||||||
FBF | 01/2015 | 246 | 92 | 0 | 0 | |||||||||||||||||||||||
01/2015 | JPY | 13,838 | 117 | 1 | 0 | |||||||||||||||||||||||
01/2015 | $ | 95 | BRL | 246 | 0 | (3 | ) | |||||||||||||||||||||
07/2015 | BRL | 246 | $ | 90 | 2 | 0 | ||||||||||||||||||||||
GLM | 01/2015 | AUD | 4 | 3 | 0 | 0 | ||||||||||||||||||||||
01/2015 | BRL | 13 | 5 | 0 | 0 | |||||||||||||||||||||||
01/2015 | JPY | 11,480 | 97 | 1 | 0 | |||||||||||||||||||||||
01/2015 | $ | 5 | BRL | 13 | 0 | 0 | ||||||||||||||||||||||
01/2015 | 1 | JPY | 117 | 0 | 0 | |||||||||||||||||||||||
02/2015 | EUR | 187 | $ | 233 | 7 | 0 | ||||||||||||||||||||||
02/2015 | $ | 20 | EUR | 16 | 0 | (1 | ) | |||||||||||||||||||||
07/2015 | BRL | 13 | $ | 5 | 0 | 0 | ||||||||||||||||||||||
See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 57 |
Table of Contents
Schedule of Investments PIMCO Balanced Income Fund (Cont.)
Counterparty | Settlement Month | Currency to be Delivered | Currency to be Received | Unrealized Appreciation/ (Depreciation) | ||||||||||||||||||||||||
Asset | Liability | |||||||||||||||||||||||||||
JPM | 01/2015 | BRL | 30 | $ | 12 | $ | 1 | $ | 0 | |||||||||||||||||||
01/2015 | EUR | 178 | 221 | 6 | 0 | |||||||||||||||||||||||
01/2015 | $ | 4 | AUD | 5 | 0 | 0 | ||||||||||||||||||||||
01/2015 | 12 | BRL | 30 | 0 | 0 | |||||||||||||||||||||||
01/2015 | ZAR | 180 | $ | 15 | 0 | 0 | ||||||||||||||||||||||
02/2015 | EUR | 4 | 5 | 0 | 0 | |||||||||||||||||||||||
02/2015 | $ | 9 | JPY | 1,087 | 0 | 0 | ||||||||||||||||||||||
07/2015 | BRL | 30 | $ | 11 | 1 | 0 | ||||||||||||||||||||||
MSB | 02/2015 | GBP | 14 | 22 | 0 | 0 | ||||||||||||||||||||||
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Total Forward Foreign Currency Contracts |
| $ | 42 | $ | (10 | ) | ||||||||||||||||||||||
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WRITTEN OPTIONS:
FOREIGN CURRENCY OPTIONS
Counterparty | Description | Strike Price | Expiration Date | Notional Amount | Premiums (Received) | Market Value | ||||||||||||||||
DUB | Put - OTC BRL versus JPY | JPY | 30.000 | 09/22/2016 | BRL 10 | $ | 0 | $ | 0 | |||||||||||||
JPM | Put - OTC BRL versus JPY | 30.000 | 09/22/2016 | 30 | (1 | ) | (1 | ) | ||||||||||||||
MSB | Put - OTC BRL versus JPY | 30.000 | 09/22/2016 | 20 | 0 | 0 | ||||||||||||||||
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$ | (1 | ) | $ | (1 | ) | |||||||||||||||||
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Total Written Options | $ | (1 | ) | $ | (1 | ) | ||||||||||||||||
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TRANSACTIONS IN WRITTEN CALL AND PUT OPTIONS FOR THE PERIOD ENDED DECEMBER 31, 2014:
Notional Amount | Premiums | |||||||
Balance at Beginning of Period | BRL 0 | $ | 0 | |||||
Sales | 90 | (1 | ) | |||||
Closing Buys | (30 | ) | 0 | |||||
Expirations | 0 | 0 | ||||||
Exercised | 0 | 0 | ||||||
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| |||||
Balance at End of Period | BRL 60 | $ | (1 | ) | ||||
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SWAP AGREEMENTS:
CREDIT DEFAULT SWAPS ON CORPORATE AND SOVEREIGN ISSUES - SELL PROTECTION (1)
Counterparty | Reference Entity | Fixed Deal Receive Rate | Maturity Date | Implied Credit Spread at December 31, 2014 (2) | Notional Amount (3) | Premiums Paid/(Received) | Unrealized Appreciation/ (Depreciation) | Swap Agreements, at Value | ||||||||||||||||||||||||||
Asset | Liability | |||||||||||||||||||||||||||||||||
BPS | Petrobras International Finance Co. | 1.000% | 12/20/2019 | 4.408% | $ 1 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||||||||||||||
BRC | Novo Banco S.A. | 5.000% | 12/20/2019 | 3.913% | EUR 15 | 0 | 1 | 1 | 0 | |||||||||||||||||||||||||
Petrobras International Finance Co. | 1.000% | 12/20/2019 | 4.408% | $ 2 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||
GST | Greece Government International Bond | 1.000% | 09/20/2015 | 17.097% | 3 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||
HUS | Petrobras International Finance Co. | 1.000% | 12/20/2019 | 4.408% | 23 | (2 | ) | (1 | ) | 0 | (3 | ) | ||||||||||||||||||||||
Russia Government International Bond | 1.000% | 06/20/2019 | 4.809% | 50 | (2 | ) | (5 | ) | 0 | (7 | ) | |||||||||||||||||||||||
Russia Government International Bond | 1.000% | 06/20/2024 | 4.603% | 50 | (5 | ) | (7 | ) | 0 | (12 | ) | |||||||||||||||||||||||
Russia Government International Bond | 1.000% | 09/20/2024 | 4.598% | 5 | (1 | ) | (1 | ) | 0 | (2 | ) | |||||||||||||||||||||||
JPM | Petrobras International Finance Co. | 1.000% | 12/20/2019 | 4.408% | 32 | (3 | ) | (2 | ) | 0 | (5 | ) | ||||||||||||||||||||||
MYC | Novo Banco S.A. | 5.000% | 12/20/2019 | 3.913% | EUR 20 | 0 | 1 | 1 | 0 | |||||||||||||||||||||||||
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| |||||||||||||||||||||||||||
$ | (13 | ) | $ | (14 | ) | $ | 2 | $ | (29 | ) | ||||||||||||||||||||||||
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58 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 2014 (Unaudited)
CREDIT DEFAULT SWAPS ON CREDIT INDICES - SELL PROTECTION (1)
Counterparty | Index/Tranches | Fixed Deal Receive Rate | Maturity Date | Notional Amount (3) | Premiums (Received) | Unrealized Appreciation/ (Depreciation) | Swap Agreements, at Value (4) | |||||||||||||||||||||||
Asset | Liability | |||||||||||||||||||||||||||||
BOA | ABX.HE.AAA.6-2 Index | 0.110% | 05/25/2046 | $ | 127 | $ | (25 | ) | $ | 0 | $ | 0 | $ | (25 | ) | |||||||||||||||
GST | CMBX.NA.AAA.6 Index | 0.500% | 05/11/2063 | 200 | (5 | ) | 0 | 0 | (5 | ) | ||||||||||||||||||||
CMBX.NA.AAA.7 Index | 0.500% | 01/17/2047 | 200 | (7 | ) | 1 | 0 | (6 | ) | |||||||||||||||||||||
MYC | ABX.HE.AAA.6-2 Index | 0.110% | 05/25/2046 | 203 | (40 | ) | 0 | 0 | (40 | ) | ||||||||||||||||||||
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| |||||||||||||||||||||||
$ | (77 | ) | $ | 1 | $ | 0 | $ | (76 | ) | |||||||||||||||||||||
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| |||||||||||||||||||||||
Total Swap Agreements | $ | (90 | ) | $ | (13 | ) | $ | 2 | $ | (105 | ) | |||||||||||||||||||
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(1) | If the Fund is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) pay to the buyer of protection an amount equal to the notional amount of the swap and take delivery of the referenced obligation or underlying securities comprising the referenced index or (ii) pay a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying securities comprising the referenced index. |
(2) | Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap agreements on corporate or sovereign issues as of period end serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement. Wider credit spreads represent a deterioration of the referenced entity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. |
(3) | The maximum potential amount the Fund could be required to pay as a seller of credit protection or receive as a buyer of credit protection if a credit event occurs as defined under the terms of that particular swap agreement. |
(4) | The prices and resulting values for credit default swap agreements on credit indices serve as an indicator of the current status of the payment/performance risk and represent the likelihood of an expected liability (or profit) for the credit derivative should the notional amount of the swap agreement be closed/sold as of the period end. Increasing market values, in absolute terms when compared to the notional amount of the swap, represent a deterioration of the referenced indices’ credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. |
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)/pledged as of December 31, 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)/ Pledged | Net Exposure (5) | |||||||||||||||||||||||||||||||||||
BOA | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | (25 | ) | $ | (25 | ) | $ | (25 | ) | $ | 0 | $ | (25 | ) | ||||||||||||||||||||
BPS | 1 | 0 | 0 | 1 | 0 | 0 | 0 | 0 | 1 | 0 | 1 | |||||||||||||||||||||||||||||||||||
BRC | 0 | 0 | 1 | 1 | 0 | 0 | 0 | 0 | 1 | 0 | 1 | |||||||||||||||||||||||||||||||||||
CBK | 19 | 0 | 0 | 19 | (3 | ) | 0 | 0 | (3 | ) | 16 | 0 | 16 | |||||||||||||||||||||||||||||||||
DUB | 3 | 0 | 0 | 3 | (3 | ) | 0 | 0 | (3 | ) | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||
FBF | 3 | 0 | 0 | 3 | (3 | ) | 0 | 0 | (3 | ) | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||
GLM | 8 | 0 | 0 | 8 | (1 | ) | 0 | 0 | (1 | ) | 7 | 0 | 7 | |||||||||||||||||||||||||||||||||
GST | 0 | 0 | 0 | 0 | 0 | 0 | (11 | ) | (11 | ) | (11 | ) | 0 | (11 | ) | |||||||||||||||||||||||||||||||
HUS | 0 | 0 | 0 | 0 | 0 | 0 | (24 | ) | (24 | ) | (24 | ) | 0 | (24 | ) | |||||||||||||||||||||||||||||||
JPM | 8 | 0 | 0 | 8 | 0 | (1 | ) | (5 | ) | (6 | ) | 2 | 0 | 2 | ||||||||||||||||||||||||||||||||
MYC | 0 | 0 | 1 | 1 | 0 | 0 | (40 | ) | (40 | ) | (39 | ) | 0 | (39 | ) | |||||||||||||||||||||||||||||||
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Total Over the Counter | $ | 42 | $ | 0 | $ | 2 | $ | 44 | $ | (10 | ) | $ | (1 | ) | $ | (105 | ) | $ | (116 | ) | ||||||||||||||||||||||||||
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(5) | Net Exposure represents the net receivable/(payable) that would be due from/to the counterparty in the event of default. Exposure from OTC financial derivative instruments can only be netted across transactions governed under the same master agreement with the same legal entity. See Note 7, Principal Risks, in the Notes to Financial Statements for more information regarding master netting arrangements. |
See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 59 |
Table of Contents
Schedule of Investments PIMCO Balanced Income Fund (Cont.)
FAIR VALUE OF FINANCIAL DERIVATIVE INSTRUMENTS
The following is a summary of the fair valuation of the Fund’s derivative instruments categorized by risk exposure. See Note 7, Principal Risks, in the Notes to Financial Statements on risks of the Fund.
Fair Values of Financial Derivative Instruments on the Statements of Assets and Liabilities as of December 31, 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 | ||||||||||||||||||||||||
Exchange-traded or centrally cleared | ||||||||||||||||||||||||
Swap Agreements | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 2 | $ | 2 | ||||||||||||
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| |||||||||||||
Over the counter | ||||||||||||||||||||||||
Forward Foreign Currency Contracts | $ | 0 | $ | 0 | $ | 0 | $ | 42 | $ | 0 | $ | 42 | ||||||||||||
Swap Agreements | 0 | 2 | 0 | 0 | 0 | 2 | ||||||||||||||||||
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| |||||||||||||
$ | 0 | $ | 2 | $ | 0 | $ | 42 | $ | 0 | $ | 44 | |||||||||||||
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| |||||||||||||
$ | 0 | $ | 2 | $ | 0 | $ | 42 | $ | 2 | $ | 46 | |||||||||||||
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| |||||||||||||
Financial Derivative Instruments - Liabilities | ||||||||||||||||||||||||
Over the counter | ||||||||||||||||||||||||
Forward Foreign Currency Contracts | $ | 0 | $ | 0 | $ | 0 | $ | 10 | $ | 0 | $ | 10 | ||||||||||||
Written Options | 0 | 0 | 0 | 1 | 0 | 1 | ||||||||||||||||||
Swap Agreements | 0 | 105 | 0 | 0 | 0 | 105 | ||||||||||||||||||
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| |||||||||||||
$ | 0 | $ | 105 | $ | 0 | $ | 11 | $ | 0 | $ | 116 | |||||||||||||
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The Effect of Financial Derivative Instruments on the Statements of Operations for the Period Ended December 31, 2014:
Derivatives not accounted for as hedging instruments | ||||||||||||||||||||||||
Commodity Contracts | Credit Contracts | Equity Contracts | Foreign Exchange Contracts | Interest Rate Contracts | Total | |||||||||||||||||||
Net Realized Gain on Financial Derivative Instruments |
| |||||||||||||||||||||||
Exchange-traded or centrally cleared | ||||||||||||||||||||||||
Swap Agreements | $ | 0 | $ | 2 | $ | 0 | $ | 0 | $ | 1 | $ | 3 | ||||||||||||
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| |||||||||||||
Over the counter | ||||||||||||||||||||||||
Forward Foreign Currency Contracts | $ | 0 | $ | 0 | $ | 0 | $ | 50 | $ | 0 | $ | 50 | ||||||||||||
Swap Agreements | 0 | 1 | 0 | 0 | 0 | 1 | ||||||||||||||||||
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| |||||||||||||
$ | 0 | $ | 1 | $ | 0 | $ | 50 | $ | 0 | $ | 51 | |||||||||||||
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| |||||||||||||
$ | 0 | $ | 3 | $ | 0 | $ | 50 | $ | 1 | $ | 54 | |||||||||||||
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Net Change in Unrealized Appreciation (Depreciation) on Financial Derivative Instruments |
| |||||||||||||||||||||||
Exchange-traded or centrally cleared | ||||||||||||||||||||||||
Swap Agreements | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 9 | $ | 9 | ||||||||||||
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Over the counter | ||||||||||||||||||||||||
Forward Foreign Currency Contracts | $ | 0 | $ | 0 | $ | 0 | $ | 38 | $ | 0 | $ | 38 | ||||||||||||
Swap Agreements | 0 | (14 | ) | 0 | 0 | 0 | (14 | ) | ||||||||||||||||
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| |||||||||||||
$ | 0 | $ | (14 | ) | $ | 0 | $ | 38 | $ | 0 | $ | 24 | ||||||||||||
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| |||||||||||||
$ | 0 | $ | (14 | ) | $ | 0 | $ | 38 | $ | 9 | $ | 33 | ||||||||||||
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60 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 2014 (Unaudited)
FAIR VALUE MEASUREMENTS
The following is a summary of the fair valuations according to the inputs used as of December 31, 2014 in valuing the Fund’s assets and liabilities:
Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair Value at 12/31/2014 | ||||||||||||
Investments in Securities, at Value | ||||||||||||||||
Asset-Backed Securities | ||||||||||||||||
United States | $ | 0 | $ | 744 | $ | 19 | $ | 763 | ||||||||
Bank Loan Obligations | ||||||||||||||||
United States | 0 | 306 | 0 | 306 | ||||||||||||
Common Stocks | ||||||||||||||||
Australia | ||||||||||||||||
Industrials | 0 | 67 | 0 | 67 | ||||||||||||
Bermuda | ||||||||||||||||
Energy | 131 | 0 | 0 | 131 | ||||||||||||
Brazil | ||||||||||||||||
Industrials | 51 | 0 | 0 | 51 | ||||||||||||
Utilities | 65 | 0 | 0 | 65 | ||||||||||||
China | ||||||||||||||||
Consumer Staples | 0 | 72 | 0 | 72 | ||||||||||||
Cyprus | ||||||||||||||||
Energy | 0 | 17 | 0 | 17 | ||||||||||||
France | ||||||||||||||||
Energy | 0 | 119 | 0 | 119 | ||||||||||||
Financials | 0 | 92 | 0 | 92 | ||||||||||||
Utilities | 0 | 233 | 0 | 233 | ||||||||||||
Hong Kong | ||||||||||||||||
Industrials | 0 | 34 | 0 | 34 | ||||||||||||
Telecommunication Services | 0 | 141 | 0 | 141 | ||||||||||||
Israel | ||||||||||||||||
Health Care | 143 | 0 | 0 | 143 | ||||||||||||
Italy | ||||||||||||||||
Financials | 0 | 201 | 0 | 201 | ||||||||||||
Industrials | 0 | 69 | 0 | 69 | ||||||||||||
Japan | ||||||||||||||||
Consumer Discretionary | 0 | 128 | 0 | 128 | ||||||||||||
Telecommunication Services | 0 | 118 | 0 | 118 | ||||||||||||
Luxembourg | ||||||||||||||||
Industrials | 0 | 52 | 0 | 52 | ||||||||||||
Netherlands | ||||||||||||||||
Financials | 0 | 103 | 0 | 103 | ||||||||||||
Singapore | ||||||||||||||||
Industrials | 0 | 87 | 0 | 87 | ||||||||||||
South Africa | ||||||||||||||||
Health Care | 0 | 35 | 0 | 35 | ||||||||||||
Spain | ||||||||||||||||
Consumer Staples | 0 | 103 | 0 | 103 | ||||||||||||
Switzerland | ||||||||||||||||
Health Care | 0 | 124 | 0 | 124 | ||||||||||||
Taiwan | ||||||||||||||||
Information Technology | 0 | 86 | 0 | 86 | ||||||||||||
Turkey | ||||||||||||||||
Industrials | 0 | 68 | 0 | 68 | ||||||||||||
United Kingdom | ||||||||||||||||
Consumer Discretionary | 0 | 85 | 0 | 85 | ||||||||||||
Consumer Staples | 0 | 171 | 0 | 171 | ||||||||||||
Financials | 0 | 401 | 0 | 401 | ||||||||||||
Telecommunication Services | 0 | 237 | 0 | 237 | ||||||||||||
United States | ||||||||||||||||
Consumer Discretionary | 621 | 0 | 0 | 621 | ||||||||||||
Consumer Staples | 134 | 0 | 0 | 134 | ||||||||||||
Energy | 23 | 0 | 0 | 23 |
Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair Value at 12/31/2014 | ||||||||||||
Financials | $ | 713 | $ | 0 | $ | 0 | $ | 713 | ||||||||
Health Care | 224 | 0 | 0 | 224 | ||||||||||||
Industrials | 143 | 0 | 0 | 143 | ||||||||||||
Information Technology | 614 | 0 | 0 | 614 | ||||||||||||
Materials | 232 | 0 | 0 | 232 | ||||||||||||
Utilities | 286 | 0 | 0 | 286 | ||||||||||||
Corporate Bonds & Notes | ||||||||||||||||
Brazil | ||||||||||||||||
Utilities | 0 | 36 | 0 | 36 | ||||||||||||
Ireland | ||||||||||||||||
Banking & Finance | 0 | 1 | 0 | 1 | ||||||||||||
Industrials | 0 | 90 | 0 | 90 | ||||||||||||
Luxembourg | ||||||||||||||||
Industrials | 0 | 39 | 0 | 39 | ||||||||||||
Norway | ||||||||||||||||
Banking & Finance | 0 | 2 | 0 | 2 | ||||||||||||
Portugal | ||||||||||||||||
Banking & Finance | 0 | 6 | 0 | 6 | ||||||||||||
United Kingdom | ||||||||||||||||
Industrials | 0 | 19 | 0 | 19 | ||||||||||||
United States | ||||||||||||||||
Banking & Finance | 0 | 176 | 0 | 176 | ||||||||||||
Industrials | 0 | 558 | 31 | 589 | ||||||||||||
Utilities | 0 | 47 | 0 | 47 | ||||||||||||
Mortgage-Backed Securities | ||||||||||||||||
United States | 0 | 614 | 0 | 614 | ||||||||||||
Real Estate Investment Trusts | ||||||||||||||||
United States | ||||||||||||||||
Financials | 261 | 0 | 0 | 261 | ||||||||||||
Sovereign Issues | ||||||||||||||||
Brazil | 0 | 173 | 0 | 173 | ||||||||||||
Greece | 0 | 7 | 0 | 7 | ||||||||||||
Russia | 0 | 19 | 0 | 19 | ||||||||||||
$ | 3,641 | $ | 5,680 | $ | 50 | $ | 9,371 | |||||||||
Investments in Affiliates, at Value | ||||||||||||||||
Short-Term Instruments | ||||||||||||||||
Central Funds Used for Cash Management Purposes | $ | 1,381 | $ | 0 | $ | 0 | $ | 1,381 | ||||||||
Total Investments | $ | 5,022 | $ | 5,680 | $ | 50 | $ | 10,752 | ||||||||
Financial Derivative Instruments - Assets |
| |||||||||||||||
Exchange-traded or centrally cleared | 0 | 2 | 0 | 2 | ||||||||||||
Over the counter | 0 | 44 | 0 | 44 | ||||||||||||
$ | 0 | $ | 46 | $ | 0 | $ | 46 | |||||||||
Financial Derivative Instruments - Liabilities |
| |||||||||||||||
Over the counter | $ | 0 | $ | (116 | ) | $ | 0 | $ | (116 | ) | ||||||
Totals | $ | 5,022 | $ | 5,610 | $ | 50 | $ | 10,682 |
There were no significant transfers between Level 1, 2, and 3 during the period ended December 31, 2014.
See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 61 |
Table of Contents
Schedule of Investments PIMCO Dividend and Income Builder Fund
PRINCIPAL AMOUNT (000S) | MARKET VALUE (000S) | |||||||||||
INVESTMENTS IN SECURITIES 98.4% | ||||||||||||
ASSET-BACKED SECURITIES 1.8% | ||||||||||||
UNITED STATES 1.8% | ||||||||||||
Credit Suisse First Boston Mortgage Securities Corp. |
| |||||||||||
0.775% due 01/25/2032 | $ | 116 | $ | 103 | ||||||||
EMC Mortgage Loan Trust |
| |||||||||||
1.470% due 02/25/2041 | 60 | 59 | ||||||||||
GSAMP Trust |
| |||||||||||
0.320% due 12/25/2046 | 4,966 | 2,886 | ||||||||||
HSI Asset Securitization Corp. Trust |
| |||||||||||
0.340% due 12/25/2036 | 6,275 | 3,056 | ||||||||||
JPMorgan Mortgage Acquisition Trust |
| |||||||||||
5.081% due 11/25/2036 | 200 | 200 | ||||||||||
Morgan Stanley Home Equity Loan Trust |
| |||||||||||
0.270% due 12/25/2036 | 202 | 124 | ||||||||||
Residential Asset Securities Corp. Trust |
| |||||||||||
1.040% due 01/25/2034 | 2,795 | 2,501 | ||||||||||
Structured Asset Investment Loan Trust |
| |||||||||||
0.320% due 09/25/2036 | 8,426 | 6,735 | ||||||||||
|
| |||||||||||
Total Asset-Backed Securities |
| 15,664 | ||||||||||
|
| |||||||||||
BANK LOAN OBLIGATIONS 0.3% | ||||||||||||
BRAZIL 0.0% | ||||||||||||
OGX |
| |||||||||||
8.000% due 04/11/2015 | 15 | 12 | ||||||||||
|
| |||||||||||
Total Brazil | 12 | |||||||||||
|
| |||||||||||
LUXEMBOURG 0.0% | ||||||||||||
Ortho-Clinical Diagnostics, Inc. |
| |||||||||||
4.750% due 06/30/2021 | 249 | 245 | ||||||||||
|
| |||||||||||
Total Luxembourg | 245 | |||||||||||
|
| |||||||||||
UNITED STATES 0.3% | ||||||||||||
Clear Channel Communications, Inc. |
| |||||||||||
6.919% due 01/30/2019 | 300 | 283 | ||||||||||
Energy Future Intermediate Holding Co. LLC |
| |||||||||||
4.250% due 06/19/2016 | 2,217 | 2,221 | ||||||||||
|
| |||||||||||
Total United States | 2,504 | |||||||||||
|
| |||||||||||
Total Bank Loan Obligations | 2,761 | |||||||||||
|
| |||||||||||
SHARES | ||||||||||||
COMMON STOCKS 86.4% | ||||||||||||
AUSTRALIA 0.9% | ||||||||||||
INDUSTRIALS 0.9% | ||||||||||||
Spotless Group Holdings Ltd. (b) | 5,100,423 | 7,901 | ||||||||||
|
| |||||||||||
Total Australia | 7,901 | |||||||||||
|
| |||||||||||
BERMUDA 1.6% | ||||||||||||
ENERGY 1.6% | ||||||||||||
Golar LNG Partners LP | 430,373 | 13,406 | ||||||||||
|
| |||||||||||
Total Bermuda | 13,406 | |||||||||||
|
| |||||||||||
BRAZIL 1.4% | ||||||||||||
INDUSTRIALS 0.5% | ||||||||||||
Arteris S.A. | 985,100 | 4,595 | ||||||||||
|
|
SHARES | MARKET VALUE (000S) | |||||||||||
UTILITIES 0.9% | ||||||||||||
Cia de Saneamento Basico do Estado de Sao Paulo - ADR | 594,218 | $ | 3,738 | |||||||||
Light S.A. | 563,100 | 3,605 | ||||||||||
|
| |||||||||||
7,343 | ||||||||||||
|
| |||||||||||
Total Brazil | 11,938 | |||||||||||
|
| |||||||||||
CHINA 0.9% | ||||||||||||
CONSUMER STAPLES 0.9% | ||||||||||||
Want Want China Holdings Ltd. | 6,063,000 | 7,969 | ||||||||||
|
| |||||||||||
Total China | 7,969 | |||||||||||
|
| |||||||||||
CYPRUS 0.5% | ||||||||||||
ENERGY 0.5% | ||||||||||||
ProSafe SE | 1,330,150 | 4,088 | ||||||||||
|
| |||||||||||
Total Cyprus | 4,088 | |||||||||||
|
| |||||||||||
FRANCE 5.8% | ||||||||||||
ENERGY 1.4% | ||||||||||||
Total S.A. | 228,016 | 11,682 | ||||||||||
|
| |||||||||||
FINANCIALS 1.3% | ||||||||||||
CNP Assurances | 623,764 | 11,058 | ||||||||||
|
| |||||||||||
UTILITIES 3.1% | ||||||||||||
Electricite de France S.A. | 405,365 | 11,159 | ||||||||||
Suez Environnement Co. | 919,353 | 16,018 | ||||||||||
|
| |||||||||||
27,177 | ||||||||||||
|
| |||||||||||
Total France | 49,917 | |||||||||||
|
| |||||||||||
HONG KONG 2.3% | ||||||||||||
INDUSTRIALS 0.5% | ||||||||||||
Yuexiu Transport Infrastructure Ltd. | 7,496,000 | 4,558 | ||||||||||
|
| |||||||||||
TELECOMMUNICATION SERVICES 1.8% | ||||||||||||
China Mobile Ltd. | 1,304,000 | 15,307 | ||||||||||
|
| |||||||||||
Total Hong Kong | 19,865 | |||||||||||
|
| |||||||||||
ISRAEL 1.9% | ||||||||||||
HEALTH CARE 1.9% | ||||||||||||
Teva Pharmaceutical Industries Ltd. SP - ADR | 287,257 | 16,520 | ||||||||||
|
| |||||||||||
Total Israel | 16,520 | |||||||||||
|
| |||||||||||
ITALY 3.6% | ||||||||||||
FINANCIALS 2.7% | ||||||||||||
Intesa Sanpaolo SpA | 8,027,017 | 23,286 | ||||||||||
|
| |||||||||||
INDUSTRIALS 0.9% | ||||||||||||
Societa Iniziative Autostradali e Servizi SpA | 755,603 | 7,271 | ||||||||||
|
| |||||||||||
Total Italy | 30,557 | |||||||||||
|
|
SHARES | MARKET VALUE (000S) | |||||||||||
JAPAN 3.3% | ||||||||||||
CONSUMER DISCRETIONARY 1.9% | ||||||||||||
Bridgestone Corp. | 478,700 | $ | 16,602 | |||||||||
|
| |||||||||||
TELECOMMUNICATION SERVICES 1.4% | ||||||||||||
Nippon Telegraph & Telephone Corp. | 231,100 | 11,805 | ||||||||||
|
| |||||||||||
Total Japan | 28,407 | |||||||||||
|
| |||||||||||
LUXEMBOURG 0.8% | ||||||||||||
INDUSTRIALS 0.8% | ||||||||||||
Regus PLC | 2,236,590 | 7,221 | ||||||||||
|
| |||||||||||
Total Luxembourg | 7,221 | |||||||||||
|
| |||||||||||
NETHERLANDS 1.3% | ||||||||||||
FINANCIALS 1.3% | ||||||||||||
Aegon NV | 1,468,813 | 11,040 | ||||||||||
|
| |||||||||||
Total Netherlands | 11,040 | |||||||||||
|
| |||||||||||
SINGAPORE 1.1% | ||||||||||||
INDUSTRIALS 1.1% | ||||||||||||
Singapore Airlines Ltd. | 1,097,000 | 9,580 | ||||||||||
|
| |||||||||||
Total Singapore | 9,580 | |||||||||||
|
| |||||||||||
SOUTH AFRICA 0.4% | ||||||||||||
HEALTH CARE 0.4% | ||||||||||||
Life Healthcare Group Holdings Ltd. | 946,802 | 3,498 | ||||||||||
|
| |||||||||||
Total South Africa | 3,498 | |||||||||||
|
| |||||||||||
SPAIN 1.3% | ||||||||||||
CONSUMER STAPLES 1.3% | ||||||||||||
Ebro Foods S.A. | 654,593 | 10,820 | ||||||||||
|
| |||||||||||
Total Spain | 10,820 | |||||||||||
|
| |||||||||||
SWITZERLAND 1.7% | ||||||||||||
HEALTH CARE 1.7% | ||||||||||||
Roche Holding AG | 54,277 | 14,706 | ||||||||||
|
| |||||||||||
Total Switzerland | 14,706 | |||||||||||
|
| |||||||||||
TAIWAN 1.1% | ||||||||||||
INFORMATION TECHNOLOGY 1.1% | ||||||||||||
Radiant Opto-Electronics Corp. | 3,092,590 | 9,846 | ||||||||||
|
| |||||||||||
Total Taiwan | 9,846 | |||||||||||
|
| |||||||||||
TURKEY 0.9% | ||||||||||||
INDUSTRIALS 0.9% | ||||||||||||
TAV Havalimanlari Holding A/S | 945,521 | 7,719 | ||||||||||
|
| |||||||||||
Total Turkey | 7,719 | |||||||||||
|
| |||||||||||
UNITED KINGDOM 12.2% | ||||||||||||
CONSUMER DISCRETIONARY 1.1% | ||||||||||||
ITV PLC | 2,981,832 | 9,947 | ||||||||||
|
|
62 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 2014 (Unaudited)
SHARES | MARKET VALUE (000S) | |||||||||||
CONSUMER STAPLES 2.4% | ||||||||||||
Imperial Tobacco Group PLC | 477,474 | $ | 21,018 | |||||||||
|
| |||||||||||
FINANCIALS 5.6% | ||||||||||||
ICAP PLC | 1,690,755 | 11,839 | ||||||||||
Lloyds Banking Group PLC (b) | 19,053,192 | 22,411 | ||||||||||
St James’s Place PLC | 1,089,864 | 13,742 | ||||||||||
|
| |||||||||||
47,992 | ||||||||||||
|
| |||||||||||
TELECOMMUNICATION SERVICES 3.1% | ||||||||||||
Vodafone Group PLC | 7,688,379 | 26,361 | ||||||||||
|
| |||||||||||
Total United Kingdom | 105,318 | |||||||||||
|
| |||||||||||
UNITED STATES 43.4% | ||||||||||||
CONSUMER DISCRETIONARY 8.8% | ||||||||||||
AMC Entertainment Holdings, Inc. ‘A’ | 162,344 | 4,250 | ||||||||||
General Motors Co. | 495,850 | 17,310 | ||||||||||
Kohl’s Corp. | 308,258 | 18,816 | ||||||||||
Regal Entertainment Group ‘A’ | 524,188 | 11,197 | ||||||||||
Target Corp. | 317,863 | 24,129 | ||||||||||
|
| |||||||||||
75,702 | ||||||||||||
|
| |||||||||||
CONSUMER STAPLES 2.1% | ||||||||||||
Walgreens Boots Alliance, Inc. | 234,896 | 17,899 | ||||||||||
|
| |||||||||||
ENERGY 0.2% | ||||||||||||
Peabody Energy Corp. | 278,971 | 2,159 | ||||||||||
|
| |||||||||||
FINANCIALS 10.7% | ||||||||||||
Apollo Investment Corp. | 1,184,446 | 8,789 | ||||||||||
Blackstone Group LP | 250,396 | 8,471 | ||||||||||
JPMorgan Chase & Co. | 276,648 | 17,313 | ||||||||||
KeyCorp | 739,272 | 10,276 | ||||||||||
Navient Corp. | 827,223 | 17,876 | ||||||||||
Prudential Financial, Inc. | 177,729 | 16,077 | ||||||||||
Solar Capital Ltd. | 735,210 | 13,241 | ||||||||||
|
| |||||||||||
92,043 | ||||||||||||
|
| |||||||||||
HEALTH CARE 3.1% | ||||||||||||
Merck & Co., Inc. | 205,604 | 11,677 | ||||||||||
Pfizer, Inc. | 498,786 | 15,537 | ||||||||||
|
| |||||||||||
27,214 | ||||||||||||
|
| |||||||||||
INDUSTRIALS 1.9% | ||||||||||||
Nielsen NV | 180,500 | 8,074 | ||||||||||
Timken Co. | 191,249 | 8,162 | ||||||||||
|
| |||||||||||
16,236 | ||||||||||||
|
| |||||||||||
INFORMATION TECHNOLOGY 9.2% | ||||||||||||
Cisco Systems, Inc. | 865,577 | 24,076 | ||||||||||
Corning, Inc. | 628,533 | 14,412 | ||||||||||
QUALCOMM, Inc. | 250,562 | 18,625 | ||||||||||
Symantec Corp. | 502,836 | 12,900 | ||||||||||
Western Digital Corp. | 81,094 | 8,977 | ||||||||||
|
| |||||||||||
78,990 | ||||||||||||
|
| |||||||||||
SHARES | MARKET VALUE (000S) | |||||||||||
MATERIALS 3.2% | ||||||||||||
International Paper Co. | 231,352 | $ | 12,396 | |||||||||
Tronox Ltd. ‘A’ | 621,366 | 14,838 | ||||||||||
|
| |||||||||||
27,234 | ||||||||||||
|
| |||||||||||
UTILITIES 4.2% | ||||||||||||
ONE Gas, Inc. | 411,500 | 16,962 | ||||||||||
PG&E Corp. | 360,372 | 19,186 | ||||||||||
|
| |||||||||||
36,148 | ||||||||||||
|
| |||||||||||
Total United States | 373,625 | |||||||||||
|
| |||||||||||
Total Common Stocks (Cost $711,237) | 743,941 | |||||||||||
|
| |||||||||||
PRINCIPAL AMOUNT (000S) | ||||||||||||
CORPORATE BONDS & NOTES 2.8% | ||||||||||||
AUSTRIA 0.0% | ||||||||||||
INDUSTRIALS 0.0% | ||||||||||||
OGX Austria GmbH |
| |||||||||||
8.500% due 06/01/2018 ^ | $ | 200 | 1 | |||||||||
8.375% due 04/01/2022 ^ | 200 | 3 | ||||||||||
|
| |||||||||||
4 | ||||||||||||
|
| |||||||||||
Total Austria | 4 | |||||||||||
|
| |||||||||||
BRAZIL 0.1% | ||||||||||||
BANKING & FINANCE 0.0% | ||||||||||||
Banco Votorantim S.A. |
| |||||||||||
5.250% due 02/11/2016 | 200 | 205 | ||||||||||
|
| |||||||||||
UTILITIES 0.1% | ||||||||||||
Centrais Eletricas Brasileiras S.A. |
| |||||||||||
6.875% due 07/30/2019 | 400 | 410 | ||||||||||
|
| |||||||||||
Total Brazil | 615 | |||||||||||
|
| |||||||||||
CAYMAN ISLANDS 0.0% | ||||||||||||
UTILITIES 0.0% | ||||||||||||
Odebrecht Drilling Norbe Ltd. |
| |||||||||||
6.350% due 06/30/2021 | 170 | 160 | ||||||||||
|
| |||||||||||
Total Cayman Islands | 160 | |||||||||||
|
| |||||||||||
FRANCE 0.1% | ||||||||||||
BANKING & FINANCE 0.1% | ||||||||||||
BPCE S.A. |
| |||||||||||
12.500% due 09/30/2019 (c) | 100 | 136 | ||||||||||
12.500% due 09/30/2019 (c) | EUR | 300 | 499 | |||||||||
|
| |||||||||||
635 | ||||||||||||
|
| |||||||||||
INDUSTRIALS 0.0% | ||||||||||||
Europcar Groupe S.A. |
| |||||||||||
11.500% due 05/15/2017 | 200 | 272 | ||||||||||
|
| |||||||||||
Total France | 907 | |||||||||||
|
| |||||||||||
GERMANY 0.0% | ||||||||||||
INDUSTRIALS 0.0% | ||||||||||||
KP Germany Erste GmbH |
| |||||||||||
11.625% due 07/15/2017 | 100 | 130 | ||||||||||
|
| |||||||||||
Total Germany | 130 | |||||||||||
|
|
PRINCIPAL | MARKET VALUE (000S) | |||||||||||
GUERNSEY, CHANNEL ISLANDS 0.1% | ||||||||||||
BANKING & FINANCE 0.1% | ||||||||||||
Doric Nimrod Air Finance Alpha Ltd. Pass-Through Trust |
| |||||||||||
5.125% due 11/30/2024 | $ | 350 | $ | 362 | ||||||||
|
| |||||||||||
Total Guernsey, Channel Islands | 362 | |||||||||||
|
| |||||||||||
IRELAND 0.2% | ||||||||||||
BANKING & FINANCE 0.0% | ||||||||||||
AerCap Ireland Capital Ltd. |
| |||||||||||
2.750% due 05/15/2017 | 11 | 11 | ||||||||||
Vnesheconombank Via VEB Finance PLC |
| |||||||||||
5.450% due 11/22/2017 | 100 | 88 | ||||||||||
6.902% due 07/09/2020 | 100 | 80 | ||||||||||
|
| |||||||||||
179 | ||||||||||||
|
| |||||||||||
INDUSTRIALS 0.1% | ||||||||||||
Russian Railways Via RZD Capital PLC |
| |||||||||||
5.739% due 04/03/2017 | 200 | 190 | ||||||||||
7.487% due 03/25/2031 | GBP | 300 | 408 | |||||||||
Vimpel Communications Via VIP Finance Ireland Ltd. OJSC |
| |||||||||||
6.493% due 02/02/2016 | $ | 400 | 383 | |||||||||
|
| |||||||||||
981 | ||||||||||||
|
| |||||||||||
UTILITIES 0.1% | ||||||||||||
AK Transneft OJSC Via TransCapitalInvest Ltd. |
| |||||||||||
8.700% due 08/07/2018 | 100 | 103 | ||||||||||
Novatek OAO Via Novatek Finance Ltd. |
| |||||||||||
6.604% due 02/03/2021 | 300 | 261 | ||||||||||
364 | ||||||||||||
|
| |||||||||||
Total Ireland | 1,524 | |||||||||||
|
| |||||||||||
ITALY 0.0% | ||||||||||||
UTILITIES 0.0% | ||||||||||||
Telecom Italia SpA |
| |||||||||||
6.375% due 06/24/2019 | GBP | 150 | 258 | |||||||||
|
| |||||||||||
Total Italy | 258 | |||||||||||
|
| |||||||||||
LUXEMBOURG 0.8% | ||||||||||||
BANKING & FINANCE 0.1% | ||||||||||||
Sberbank of Russia Via SB Capital S.A. |
| |||||||||||
6.125% due 02/07/2022 | $ | 1,000 | 891 | |||||||||
3.352% due 11/15/2019 | EUR | 300 | 300 | |||||||||
5.717% due 06/16/2021 | $ | 200 | 175 | |||||||||
|
| |||||||||||
1,366 | ||||||||||||
|
| |||||||||||
INDUSTRIALS 0.0% | ||||||||||||
Trinseo Materials Operating S.C.A. |
| |||||||||||
8.750% due 02/01/2019 | 26 | 27 | ||||||||||
|
| |||||||||||
UTILITIES 0.7% | ||||||||||||
Gazprom Neft OAO Via GPN Capital S.A. |
| |||||||||||
4.375% due 09/19/2022 | 300 | 221 | ||||||||||
6.000% due 11/27/2023 | 300 | 240 | ||||||||||
Gazprom OAO Via Gaz Capital S.A. |
| |||||||||||
9.250% due 04/23/2019 | 4,000 | 4,098 | ||||||||||
7.288% due 08/16/2037 | 139 | 127 | ||||||||||
8.625% due 04/28/2034 | 230 | 232 | ||||||||||
6.510% due 03/07/2022 | 900 | 810 |
See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 63 |
Table of Contents
Schedule of Investments PIMCO Dividend and Income Builder Fund (Cont.)
PRINCIPAL | MARKET VALUE (000S) | |||||||||||
6.605% due 02/13/2018 | EUR | 50 | $ | 59 | ||||||||
5.999% due 01/23/2021 | $ | 30 | 26 | |||||||||
|
| |||||||||||
5,813 | ||||||||||||
|
| |||||||||||
Total Luxembourg | 7,206 | |||||||||||
|
| |||||||||||
MEXICO 0.0% | ||||||||||||
INDUSTRIALS 0.0% | ||||||||||||
Corp. GEO S.A.B. de C.V. |
| |||||||||||
8.875% due 03/27/2022 ^ | 300 | 18 | ||||||||||
9.250% due 06/30/2020 ^ | 100 | 6 | ||||||||||
Desarrolladora Homex S.A.B. de C.V. |
| |||||||||||
7.500% due 09/28/2015 ^ | 300 | 23 | ||||||||||
|
| |||||||||||
47 | ||||||||||||
|
| |||||||||||
Total Mexico | 47 | |||||||||||
|
| |||||||||||
NETHERLANDS 0.2% | ||||||||||||
BANKING & FINANCE 0.1% | ||||||||||||
Cooperatieve Centrale Raiffeisen-Boerenleenbank BA |
| |||||||||||
6.875% due 03/19/2020 | EUR | 400 | 576 | |||||||||
|
| |||||||||||
INDUSTRIALS 0.0% | ||||||||||||
Schaeffler Finance BV |
| |||||||||||
7.750% due 02/15/2017 | $ | 100 | 110 | |||||||||
Schaeffler Holding Finance BV (6.875% Cash or 6.875% PIK) |
| |||||||||||
6.875% due 08/15/2018 (a) | EUR | 100 | 126 | |||||||||
|
| |||||||||||
236 | ||||||||||||
|
| |||||||||||
UTILITIES 0.1% | ||||||||||||
Koninklijke KPN NV |
| |||||||||||
6.125% due 09/14/2018 (c) | 300 | 389 | ||||||||||
|
| |||||||||||
Total Netherlands | 1,201 | |||||||||||
|
| |||||||||||
SPAIN 0.0% | ||||||||||||
INDUSTRIALS 0.0% | ||||||||||||
Obrascon Huarte Lain S.A. |
| |||||||||||
8.750% due 03/15/2018 | 200 | 254 | ||||||||||
|
| |||||||||||
Total Spain | 254 | |||||||||||
|
| |||||||||||
UNITED KINGDOM 0.5% | ||||||||||||
BANKING & FINANCE 0.3% | ||||||||||||
Barclays Bank PLC |
| |||||||||||
14.000% due 06/15/2019 (c) | GBP | 300 | 616 | |||||||||
Co-operative Group Holdings Ltd. |
| |||||||||||
6.875% due 07/08/2020 | 200 | 324 | ||||||||||
LBG Capital PLC |
| |||||||||||
15.000% due 12/21/2019 | 300 | 644 | ||||||||||
Mitchells & Butlers Finance PLC |
| |||||||||||
1.010% due 12/15/2030 | 168 | 241 | ||||||||||
Royal Bank of Scotland PLC |
| |||||||||||
6.934% due 04/09/2018 | EUR | 200 | 279 | |||||||||
9.500% due 03/16/2022 | $ | 200 | 228 | |||||||||
Virgin Media Secured Finance PLC |
| |||||||||||
5.500% due 01/15/2021 | GBP | 200 | 335 | |||||||||
|
| |||||||||||
2,667 | ||||||||||||
|
| |||||||||||
INDUSTRIALS 0.2% | ||||||||||||
DFS Furniture Holdings PLC |
| |||||||||||
7.625% due 08/15/2018 | 200 | 323 |
PRINCIPAL | MARKET VALUE (000S) | |||||||||||
Enterprise Inns PLC |
| |||||||||||
6.875% due 02/15/2021 | GBP | 200 | $ | 316 | ||||||||
Marstons Issuer PLC |
| |||||||||||
5.641% due 07/15/2035 | 200 | 298 | ||||||||||
Priory Group PLC |
| |||||||||||
8.875% due 02/15/2019 | 200 | 323 | ||||||||||
Spirit Issuer PLC |
| |||||||||||
6.582% due 12/28/2027 | 200 | 326 | ||||||||||
3.260% due 12/28/2031 | 22 | 34 | ||||||||||
|
| |||||||||||
1,620 | ||||||||||||
|
| |||||||||||
UTILITIES 0.0% | ||||||||||||
SSE PLC |
| |||||||||||
5.625% due 10/01/2017 (c) | $ | 200 | 211 | |||||||||
|
| |||||||||||
Total United Kingdom | 4,498 | |||||||||||
|
| |||||||||||
UNITED STATES 0.7% | ||||||||||||
BANKING & FINANCE 0.1% | ||||||||||||
Cantor Fitzgerald LP |
| |||||||||||
7.875% due 10/15/2019 | 300 | 329 | ||||||||||
International Lease Finance Corp. |
| |||||||||||
7.125% due 09/01/2018 | 325 | 365 | ||||||||||
|
| |||||||||||
694 | ||||||||||||
|
| |||||||||||
INDUSTRIALS 0.6% | ||||||||||||
Altria Group, Inc. |
| |||||||||||
10.200% due 02/06/2039 | 65 | 113 | ||||||||||
Caesars Entertainment Operating Co., Inc. |
| |||||||||||
8.500% due 02/15/2020 | 291 | 225 | ||||||||||
9.000% due 02/15/2020 | 244 | 187 | ||||||||||
CVS Pass-Through Trust |
| |||||||||||
8.353% due 07/10/2031 | 89 | 121 | ||||||||||
Delta Air Lines Pass-Through Trust |
| |||||||||||
4.750% due 11/07/2021 | 86 | 92 | ||||||||||
First Data Corp. |
| |||||||||||
7.375% due 06/15/2019 | 200 | 211 | ||||||||||
iHeartCommunications, Inc. |
| |||||||||||
9.000% due 03/01/2021 | 3 | 3 | ||||||||||
Peabody Energy Corp. |
| |||||||||||
7.375% due 11/01/2016 | 3,813 | 3,937 | ||||||||||
Reynolds Group Issuer, Inc. |
| |||||||||||
8.500% due 05/15/2018 | 100 | 102 | ||||||||||
Rockies Express Pipeline LLC |
| |||||||||||
5.625% due 04/15/2020 | 74 | 73 | ||||||||||
U.S. Airways Pass-Through Trust |
| |||||||||||
5.900% due 04/01/2026 | 89 | 100 | ||||||||||
Vector Group Ltd. |
| |||||||||||
7.750% due 02/15/2021 | 300 | 317 | ||||||||||
|
| |||||||||||
5,481 | ||||||||||||
|
| |||||||||||
UTILITIES 0.0% | ||||||||||||
NGPL PipeCo LLC |
| |||||||||||
9.625% due 06/01/2019 | 150 | 151 | ||||||||||
|
| |||||||||||
Total United States | 6,326 | |||||||||||
|
| |||||||||||
VENEZUELA 0.1% | ||||||||||||
INDUSTRIALS 0.1% | ||||||||||||
Petroleos de Venezuela S.A. |
| |||||||||||
8.500% due 11/02/2017 | 600 | 345 | ||||||||||
|
| |||||||||||
Total Venezuela | 345 | |||||||||||
|
| |||||||||||
PRINCIPAL | MARKET VALUE (000S) | |||||||||||
VIRGIN ISLANDS (BRITISH) 0.0% | ||||||||||||
INDUSTRIALS 0.0% | ||||||||||||
Gold Fields Orogen Holding BVI Ltd. |
| |||||||||||
4.875% due 10/07/2020 | $ | 400 | $ | 338 | ||||||||
|
| |||||||||||
Total Virgin Islands (British) | 338 | |||||||||||
|
| |||||||||||
Total Corporate Bonds & Notes (Cost $25,691) | 24,175 | |||||||||||
|
| |||||||||||
MORTGAGE-BACKED SECURITIES 2.8% | ||||||||||||
UNITED STATES 2.8% | ||||||||||||
American Home Mortgage Assets Trust |
| |||||||||||
6.250% due 06/25/2037 | 172 | 118 | ||||||||||
Banc of America Alternative Loan Trust |
| |||||||||||
6.000% due 04/25/2036 ^ | 96 | 83 | ||||||||||
6.000% due 06/25/2046 ^ | 118 | 94 | ||||||||||
6.000% due 07/25/2046 ^ | 193 | 160 | ||||||||||
Banc of America Funding Trust |
| |||||||||||
5.293% due 05/20/2036 | 47 | 45 | ||||||||||
6.000% due 08/25/2037 ^ | 224 | 198 | ||||||||||
Banc of America Mortgage Trust |
| |||||||||||
5.424% due 11/20/2046 ^ | 27 | 23 | ||||||||||
6.000% due 10/25/2036 ^ | 57 | 49 | ||||||||||
Bear Stearns ALT-A Trust |
| |||||||||||
2.799% due 05/25/2036 ^ | 219 | 154 | ||||||||||
5.065% due 09/25/2035 ^ | 146 | 116 | ||||||||||
Bear Stearns Mortgage Funding Trust |
| |||||||||||
7.000% due 08/25/2036 | 267 | 249 | ||||||||||
Chase Mortgage Finance Trust |
| |||||||||||
2.515% due 09/25/2036 | 110 | 94 | ||||||||||
Citigroup Mortgage Loan Trust, Inc. |
| |||||||||||
2.730% due 07/25/2046 ^ | 26 | 23 | ||||||||||
CitiMortgage Alternative Loan Trust |
| |||||||||||
6.000% due 01/25/2037 ^ | 147 | 127 | ||||||||||
Countrywide Alternative Loan Resecuritization Trust |
| |||||||||||
6.000% due 05/25/2036 ^ | 49 | 43 | ||||||||||
Countrywide Alternative Loan Trust |
| |||||||||||
0.870% due 10/25/2037 ^ | 7,414 | 3,744 | ||||||||||
6.000% due 05/25/2036 ^ | 249 | 209 | ||||||||||
6.000% due 05/25/2036 | 2,966 | 2,575 | ||||||||||
6.000% due 06/25/2036 ^ | 269 | 236 | ||||||||||
6.000% due 02/25/2037 ^ | 228 | 183 | ||||||||||
6.000% due 03/25/2037 ^ | 77 | 63 | ||||||||||
6.000% due 05/25/2037 ^ | 23 | 19 | ||||||||||
6.000% due 06/25/2037 ^ | 769 | 661 | ||||||||||
6.250% due 12/25/2036 ^ | 47 | 40 | ||||||||||
6.500% due 12/25/2036 ^ | 2,300 | 1,914 | ||||||||||
6.500% due 11/25/2037 ^ | 79 | 67 | ||||||||||
Countrywide Home Loan Mortgage Pass-Through Trust |
| |||||||||||
0.670% due 07/25/2037 ^ | 49 | 36 | ||||||||||
2.527% due 09/25/2037 ^ | 139 | 121 | ||||||||||
Credit Suisse First Boston Mortgage Securities Corp. |
| |||||||||||
6.000% due 11/25/2035 ^ | 27 | 20 | ||||||||||
6.000% due 01/25/2036 | 82 | 65 | ||||||||||
Credit Suisse Mortgage Capital Certificates |
| |||||||||||
2.594% due 12/29/2037 | 219 | 117 | ||||||||||
Credit Suisse Mortgage Capital Mortgage-Backed Trust |
| |||||||||||
5.000% due 03/25/2037 ^ | 6 | 6 | ||||||||||
6.500% due 10/25/2021 | 149 | 131 | ||||||||||
6.750% due 08/25/2036 ^ | 34 | 27 | ||||||||||
Deutsche ALT-A Securities, Inc. |
| |||||||||||
0.370% due 02/25/2047 | 33 | 27 | ||||||||||
First Horizon Alternative Mortgage Securities Trust |
| |||||||||||
2.316% due 06/25/2036 | 814 | 635 | ||||||||||
HarborView Mortgage Loan Trust |
| |||||||||||
0.505% due 06/20/2035 | 8 | 7 | ||||||||||
4.595% due 06/19/2036 ^ | 33 | 24 |
64 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 2014 (Unaudited)
PRINCIPAL | MARKET VALUE (000S) | |||||||||||
HSI Asset Loan Obligation Trust |
| |||||||||||
6.000% due 06/25/2037 | $ | 28 | $ | 25 | ||||||||
IndyMac Mortgage Loan Trust |
| |||||||||||
2.261% due 06/25/2037 | 264 | 156 | ||||||||||
2.835% due 05/25/2037 | 184 | 130 | ||||||||||
4.523% due 08/25/2035 | 123 | 102 | ||||||||||
4.523% due 08/25/2035 ^ | 246 | 203 | ||||||||||
JPMorgan Alternative Loan Trust |
| |||||||||||
5.683% due 05/26/2037 | 146 | 132 | ||||||||||
JPMorgan Mortgage Trust |
| |||||||||||
6.500% due 07/25/2036 | 129 | 109 | ||||||||||
Merrill Lynch Mortgage Investors Trust |
| |||||||||||
2.475% due 02/25/2036 | 17 | 16 | ||||||||||
3.094% due 03/25/2036 ^ | 26 | 18 | ||||||||||
Morgan Stanley Mortgage Loan Trust |
| |||||||||||
2.496% due 06/25/2037 | 794 | 539 | ||||||||||
6.000% due 10/25/2037 ^ | 2,830 | 2,303 | ||||||||||
RBSSP Resecuritization Trust |
| |||||||||||
7.843% due 06/26/2037 | 223 | 130 | ||||||||||
Residential Accredit Loans, Inc. Trust |
| |||||||||||
0.570% due 10/25/2045 | 185 | 145 | ||||||||||
5.500% due 03/25/2037 | 951 | 747 | ||||||||||
6.000% due 08/25/2036 | 175 | 141 | ||||||||||
6.000% due 08/25/2036 ^ | 150 | 121 | ||||||||||
6.250% due 03/25/2037 ^ | 73 | 60 | ||||||||||
Residential Funding Mortgage Securities, Inc. Trust |
| |||||||||||
6.000% due 10/25/2036 | 21 | 19 | ||||||||||
Structured Adjustable Rate Mortgage Loan Trust |
| |||||||||||
2.538% due 10/25/2036 | 4,433 | 3,332 | ||||||||||
Wachovia Bank Commercial Mortgage Trust |
| |||||||||||
4.982% due 02/15/2035 | 546 | 546 | ||||||||||
Wells Fargo Alternative Loan Trust |
| |||||||||||
2.590% due 07/25/2037 | 2,884 | 2,442 | ||||||||||
6.250% due 11/25/2037 ^ | 386 | 370 | ||||||||||
|
| |||||||||||
Total Mortgage-Backed Securities (Cost $23,460) | 24,289 | |||||||||||
|
| |||||||||||
MUNICIPAL BONDS & NOTES 0.1% | ||||||||||||
MICHIGAN 0.0% | ||||||||||||
Michigan Tobacco Settlement Finance Authority Revenue Bonds, Series 2006 |
| |||||||||||
7.309% due 06/01/2034 | 230 | 199 | ||||||||||
|
| |||||||||||
Total Michigan | 199 | |||||||||||
|
| |||||||||||
VIRGINIA 0.0% | ||||||||||||
Tobacco Settlement Financing Corp., Virginia Revenue Bonds, Series 2007 |
| |||||||||||
6.706% due 06/01/2046 | 385 | 290 | ||||||||||
|
| |||||||||||
Total Virginia | 290 | |||||||||||
|
| |||||||||||
PRINCIPAL | MARKET VALUE (000S) | |||||||||||
WEST VIRGINIA 0.1% | ||||||||||||
Tobacco Settlement Finance Authority, West Virginia Revenue Bonds, Series 2007 |
| |||||||||||
7.467% due 06/01/2047 | $ | 375 | $ | 323 | ||||||||
|
| |||||||||||
Total West Virginia | 323 | |||||||||||
|
| |||||||||||
Total Municipal Bonds & Notes (Cost $799) | 812 | |||||||||||
|
| |||||||||||
SHARES | ||||||||||||
PREFERRED STOCKS 0.0% | ||||||||||||
UNITED STATES 0.0% | ||||||||||||
UTILITIES 0.0% | ||||||||||||
DTE Energy Co. |
| |||||||||||
5.250% due 12/01/2062 | 5,150 | 127 | ||||||||||
|
| |||||||||||
Total Preferred Stocks (Cost $106) | 127 | |||||||||||
|
| |||||||||||
REAL ESTATE INVESTMENT TRUSTS 3.8% | ||||||||||||
UNITED STATES 3.8% | ||||||||||||
FINANCIALS 3.8% | ||||||||||||
Colony Financial, Inc. | 888,654 | 21,168 | ||||||||||
Ryman Hospitality Properties, Inc. | 220,878 | 11,649 | ||||||||||
|
| |||||||||||
32,817 | ||||||||||||
|
| |||||||||||
Total Real Estate Investment Trusts (Cost $29,200) | 32,817 | |||||||||||
|
| |||||||||||
PRINCIPAL AMOUNT (000S) | ||||||||||||
SOVEREIGN ISSUES 0.3% | ||||||||||||
BRAZIL 0.1% | ||||||||||||
Brazil Notas do Tesouro Nacional |
| |||||||||||
6.000% due 05/15/2045 | BRL | 1,253 | 462 | |||||||||
6.000% due 08/15/2050 | 649 | 239 | ||||||||||
|
| |||||||||||
Total Brazil | 701 | |||||||||||
|
| |||||||||||
GREECE 0.0% | ||||||||||||
Republic of Greece Government Bond |
| |||||||||||
3.800% due 08/08/2017 | JPY | 29,000 | 198 | |||||||||
4.500% due 07/03/2017 | 10,000 | 67 | ||||||||||
|
| |||||||||||
Total Greece | 265 | |||||||||||
|
| |||||||||||
RUSSIA 0.1% | ||||||||||||
Russia Government International Bond |
| |||||||||||
5.625% due 04/04/2042 | $ | 200 | 168 | |||||||||
5.875% due 09/16/2043 | 200 | 174 | ||||||||||
7.500% due 03/31/2030 | 30 | 31 | ||||||||||
|
| |||||||||||
Total Russia | 373 | |||||||||||
|
|
PRINCIPAL | MARKET VALUE (000S) | |||||||||||
SPAIN 0.1% | ||||||||||||
Autonomous Community of Catalonia |
| |||||||||||
3.875% due 04/07/2015 | EUR | 100 | $ | 122 | ||||||||
4.750% due 06/04/2018 | 300 | 392 | ||||||||||
Autonomous Community of Madrid |
| |||||||||||
5.750% due 02/01/2018 | 100 | 139 | ||||||||||
Autonomous Community of Valencia |
| |||||||||||
3.250% due 07/06/2015 | 50 | 61 | ||||||||||
4.375% due 07/16/2015 | 200 | 247 | ||||||||||
|
| |||||||||||
Total Spain | 961 | |||||||||||
|
| |||||||||||
VENEZUELA 0.0% | ||||||||||||
Venezuela Government International Bond |
| |||||||||||
7.650% due 04/21/2025 | $ | 100 | 43 | |||||||||
7.750% due 10/13/2019 | 200 | 90 | ||||||||||
|
| |||||||||||
Total Venezuela | 133 | |||||||||||
|
| |||||||||||
Total Sovereign Issues (Cost $2,883) | 2,433 | |||||||||||
|
| |||||||||||
SHORT-TERM INSTRUMENTS 0.1% | ||||||||||||
REPURCHASE AGREEMENTS (d) 0.1% | ||||||||||||
995 | ||||||||||||
|
| |||||||||||
Total Short-Term Instruments (Cost $995) | 995 | |||||||||||
|
| |||||||||||
Total Investments in Securities (Cost $812,001) | 848,014 | |||||||||||
|
| |||||||||||
SHARES | ||||||||||||
INVESTMENTS IN AFFILIATES 1.2% | ||||||||||||
SHORT-TERM INSTRUMENTS 1.2% | ||||||||||||
CENTRAL FUNDS USED FOR CASH MANAGEMENT PURPOSES 1.2% | ||||||||||||
PIMCO Short-Term Floating NAV Portfolio | 2,590 | 26 | ||||||||||
PIMCO Short-Term Floating NAV Portfolio III | 1,035,371 | 10,262 | ||||||||||
|
| |||||||||||
Total Short-Term Instruments (Cost $10,291) | 10,288 | |||||||||||
|
| |||||||||||
Total Investments in Affiliates (Cost $10,291) | 10,288 | |||||||||||
|
| |||||||||||
Total Investments 99.6% (Cost $822,292) | $ | 858,302 | ||||||||||
Financial Derivative (Cost or Premiums, net $37) | 1,183 | |||||||||||
Other Assets and Liabilities, net 0.3% | 1,916 | |||||||||||
|
| |||||||||||
Net Assets 100.0% | $ | 861,401 | ||||||||||
|
|
NOTES TO 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. |
^ | Security is in default. |
(a) | Payment in-kind bond security. |
(b) | Security did not produce income within the last twelve months. |
(c) | Perpetual maturity; date shown, if applicable, represents next contractual call date. |
See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 65 |
Table of Contents
Schedule of Investments PIMCO Dividend and Income Builder Fund (Cont.)
BORROWINGS AND OTHER FINANCING TRANSACTIONS
(d) REPURCHASE AGREEMENTS:
Counterparty | Lending Rate | Settlement Date | Maturity Date | Principal Amount | Collateralized By | Collateral Received, at Value | Repurchase Agreements, at Value | Repurchase Agreement Proceeds to be Received (1) | ||||||||||||||||||||
SSB | 0.000% | 12/31/2014 | 01/02/2015 | $ | 995 | Fannie Mae 2.260% due 10/17/2022 | $ | (1,018 | ) | $ | 995 | $ | 995 | |||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||
Total Repurchase Agreements |
| $ | (1,018 | ) | $ | 995 | $ | 995 | ||||||||||||||||||||
|
|
|
|
|
|
(1) | Includes accrued interest. |
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) as of December 31, 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) | Net Exposure (2) | |||||||||||||||||||||
Global/Master Repurchase Agreement | ||||||||||||||||||||||||||||
SSB | $ | 995 | $ | 0 | $ | 0 | $ | 0 | $ | 995 | $ | (1,018 | ) | $ | (23 | ) | ||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||
Total Borrowings and Other Financing Transactions | $ | 995 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||||||
|
|
|
|
|
|
(2) | 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. See Note 7, Principal Risks, in the Notes to Financial Statements for more information regarding master netting arrangements. |
(e) FINANCIAL DERIVATIVE INSTRUMENTS: EXCHANGE-TRADED OR CENTRALLY CLEARED
FUTURES CONTRACTS:
Description | Type | Expiration Month | # of Contracts | Unrealized Appreciation | Variation Margin | |||||||||||||||||
Asset | Liability | |||||||||||||||||||||
British pound currency March Futures | Short | 03/2015 | 45 | $ | 34 | $ | 0 | $ | (6 | ) | ||||||||||||
Euro currency March Futures | Short | 03/2015 | 39 | 167 | 27 | 0 | ||||||||||||||||
Mexican Peso currency March Futures | Short | 03/2015 | 11 | 9 | 0 | 0 | ||||||||||||||||
|
|
|
|
|
| |||||||||||||||||
Total Futures Contracts | $ | 210 | $ | 27 | $ | (6 | ) | |||||||||||||||
|
|
|
|
|
|
FINANCIAL DERIVATIVE INSTRUMENTS: EXCHANGE-TRADED OR CENTRALLY CLEARED SUMMARY
The following is a summary of the market value and variation margin of Exchange-Traded or Centrally Cleared Financial Derivative Instruments as of December 31, 2014:
Cash of $195 has been pledged as collateral for exchange-traded and centrally cleared financial derivative instruments as of December 31, 2014. See Note 7, Principal Risks, in the Notes to Financial Statements for more information regarding master netting arrangements.
Financial Derivative Assets | Financial Derivative Liabilities | |||||||||||||||||||||||||||||||||
Market Value | Variation Margin Asset | Total | Market Value | Variation Margin Liability | Total | |||||||||||||||||||||||||||||
Purchased Options | Futures | Swap Agreements | Written Options | Futures | Swap Agreements | |||||||||||||||||||||||||||||
Total Exchange-Traded or Centrally Cleared | $ | 0 | $ | 27 | $ | 0 | $ | 27 | $ | 0 | $ (6) | $ | 0 | $ (6) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(f) FINANCIAL DERIVATIVE INSTRUMENTS: OVER THE COUNTER
FORWARD FOREIGN CURRENCY CONTRACTS:
Counterparty | Settlement Month | Currency to | Currency to | Unrealized Appreciation/ (Depreciation) | ||||||||||||||||||||||||
Asset | Liability | |||||||||||||||||||||||||||
BOA | 01/2015 | $ | 13,316 | JPY | 1,596,931 | $ | 16 | $ | 0 | |||||||||||||||||||
02/2015 | JPY | 1,596,931 | $ | 13,319 | 0 | (17 | ) | |||||||||||||||||||||
CBK | 01/2015 | $ | 38,790 | EUR | 31,650 | 0 | (492 | ) | ||||||||||||||||||||
02/2015 | EUR | 31,650 | $ | 38,801 | 491 | 0 | ||||||||||||||||||||||
GLM | 01/2015 | JPY | 1,596,931 | 13,492 | 160 | 0 | ||||||||||||||||||||||
JPM | 01/2015 | EUR | 31,650 | 39,251 | 953 | 0 | ||||||||||||||||||||||
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|
|
| |||||||||||||||||||||||||
Total Forward Foreign Currency Contracts |
| $ | 1,620 | $ | (509 | ) | ||||||||||||||||||||||
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|
|
|
66 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 2014 (Unaudited)
SWAP AGREEMENTS:
CREDIT DEFAULT SWAPS ON SOVEREIGN ISSUES - SELL PROTECTION (1)
Counterparty | Reference Entity | Fixed Deal | Maturity | Implied Credit Spread at December 31, 2014 (2) | Notional | Premiums | Unrealized | Swap Agreements, at Value | ||||||||||||||||||||||||||
Asset | Liability | |||||||||||||||||||||||||||||||||
HUS | Russia Government International Bond | 1.000% | 09/20/2024 | 4.598% | $ 8 | $ | (1 | ) | $ | (1 | ) | $ | 0 | $ | (2 | ) | ||||||||||||||||||
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(1) | If the Fund is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) pay to the buyer of protection an amount equal to the notional amount of the swap and take delivery of the referenced obligation or underlying securities comprising the referenced index or (ii) pay a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying securities comprising the referenced index. |
(2) | Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap agreements on sovereign issues as of period end serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement. Wider credit spreads represent a deterioration of the referenced entity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. |
(3) | The maximum potential amount the Fund could be required to pay as a seller of credit protection or receive as a buyer of credit protection if a credit event occurs as defined under the terms of that particular swap agreement. |
TOTAL RETURN SWAPS ON CONVERTIBLE SECURITIES
Counterparty | Pay/Receive | Underlying Reference | # of Shares | Financing Rate | Maturity Date | Notional Amount | Premiums Paid | Unrealized Appreciation | Swap Agreements, at Value | |||||||||||||||||||||||||
Asset | Liability | |||||||||||||||||||||||||||||||||
DUB | Receive | OGX Petroleo e Gas Participaceos S.A. | 50 | Not Applicable, Fully Funded | 02/11/2015 | $ | 21 | $ | 21 | $ | 14 | $ | 35 | $ | 0 | |||||||||||||||||||
Receive | OGX Petroleo e Gas Participaceos S.A. | 40 | Not Applicable, Fully Funded | 04/11/2015 | 17 | 17 | 1 | 18 | 0 | |||||||||||||||||||||||||
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$ | 38 | $ | 15 | $ | 53 | $ | 0 | |||||||||||||||||||||||||||
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Total Swap Agreements | $ | 37 | $ | 14 | $ | 53 | $ | (2 | ) | |||||||||||||||||||||||||
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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 December 31, 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 (4) | |||||||||||||||||||||||||||||||||||
BOA | $ | 16 | $ | 0 | $ | 0 | $ | 16 | $ | (17 | ) | $ | 0 | $ | 0 | $ | (17 | ) | $ | (1 | ) | $ | 0 | $ | (1 | ) | ||||||||||||||||||||
CBK | 491 | 0 | 0 | 491 | (492 | ) | 0 | 0 | (492 | ) | (1 | ) | 0 | (1 | ) | |||||||||||||||||||||||||||||||
DUB | 0 | 0 | 53 | 53 | 0 | 0 | 0 | 0 | 53 | 0 | 53 | |||||||||||||||||||||||||||||||||||
GLM | 160 | 0 | 0 | 160 | 0 | 0 | 0 | 0 | 160 | (260 | ) | (100 | ) | |||||||||||||||||||||||||||||||||
HUS | 0 | 0 | 0 | 0 | 0 | 0 | (2 | ) | (2 | ) | (2 | ) | (290 | ) | (292 | ) | ||||||||||||||||||||||||||||||
JPM | 953 | 0 | 0 | 953 | 0 | 0 | 0 | 0 | 953 | (710 | ) | 243 | ||||||||||||||||||||||||||||||||||
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Total Over the Counter | $ | 1,620 | $ | 0 | $ | 53 | $ | 1,673 | $ | (509 | ) | $ | 0 | $ | (2 | ) | $ | (511 | ) | |||||||||||||||||||||||||||
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(4) | Net Exposure represents the net receivable/(payable) that would be due from/to the counterparty in the event of default. Exposure from OTC financial derivative instruments can only be netted across transactions governed under the same master agreement with the same legal entity. See Note 7, Principal Risks, in the Notes to Financial Statements for more information regarding master netting arrangements. |
FAIR VALUE OF FINANCIAL DERIVATIVE INSTRUMENTS
The following is a summary of the fair valuation of the Fund’s derivative instruments categorized by risk exposure. See Note 7, Principal Risks, in the Notes to Financial Statements on risks of the Fund.
Fair Values of Financial Derivative Instruments on the Statements of Assets and Liabilities as of December 31, 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 | ||||||||||||||||||||||||
Exchange-traded or centrally cleared | ||||||||||||||||||||||||
Futures | $ | 0 | $ | 0 | $ | 0 | $ | 27 | $ | 0 | $ | 27 | ||||||||||||
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Over the counter | ||||||||||||||||||||||||
Forward Foreign Currency Contracts | $ | 0 | $ | 0 | $ | 0 | $ | 1,620 | $ | 0 | $ | 1,620 | ||||||||||||
Swap Agreements | 0 | 0 | 53 | 0 | 0 | 53 | ||||||||||||||||||
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$ | 0 | $ | 0 | $ | 53 | $ | 1,620 | $ | 0 | $ | 1,673 | |||||||||||||
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$ | 0 | $ | 0 | $ | 53 | $ | 1,647 | $ | 0 | $ | 1,700 | |||||||||||||
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See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 67 |
Table of Contents
Schedule of Investments PIMCO Dividend and Income Builder Fund (Cont.)
Derivatives not accounted for as hedging instruments | ||||||||||||||||||||||||
Commodity Contracts | Credit Contracts | Equity Contracts | Foreign Exchange Contracts | Interest Rate Contracts | Total | |||||||||||||||||||
Financial Derivative Instruments - Liabilities | ||||||||||||||||||||||||
Exchange-traded or centrally cleared | ||||||||||||||||||||||||
Futures | $ | 0 | $ | 0 | $ | 0 | $ | 6 | $ | 0 | $ | 6 | ||||||||||||
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Over the counter | ||||||||||||||||||||||||
Forward Foreign Currency Contracts | $ | 0 | $ | 0 | $ | 0 | $ | 509 | $ | 0 | $ | 509 | ||||||||||||
Swap Agreements | 0 | 2 | 0 | 0 | 0 | 2 | ||||||||||||||||||
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$ | 0 | $ | 2 | $ | 0 | $ | 509 | $ | 0 | $ | 511 | |||||||||||||
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$ | 0 | $ | 2 | $ | 0 | $ | 515 | $ | 0 | $ | 517 | |||||||||||||
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The Effect of Financial Derivative Instruments on the Statements of Operations for the Period Ended December 31, 2014:
Derivatives not accounted for as hedging instruments | ||||||||||||||||||||||||
Commodity Contracts | Credit Contracts | Equity Contracts | Foreign Exchange Contracts | Interest Rate Contracts | Total | |||||||||||||||||||
Net Realized Gain on Financial Derivative Instruments | ||||||||||||||||||||||||
Exchange-traded or centrally cleared | ||||||||||||||||||||||||
Futures | $ | 0 | $ | 0 | $ | 0 | $ | 865 | $ | 0 | $ | 865 | ||||||||||||
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Over the counter | ||||||||||||||||||||||||
Forward Foreign Currency Contracts | $ | 0 | $ | 0 | $ | 0 | $ | 2,906 | $ | 0 | $ | 2,906 | ||||||||||||
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$ | 0 | $ | 0 | $ | 0 | $ | 3,771 | $ | 0 | $ | 3,771 | |||||||||||||
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Net Change in Unrealized Appreciation (Depreciation) on Financial Derivative Instruments |
| |||||||||||||||||||||||
Exchange-traded or centrally cleared | ||||||||||||||||||||||||
Futures | $ | 0 | $ | 0 | $ | 0 | $ | 385 | $ | 0 | $ | 385 | ||||||||||||
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Over the counter | ||||||||||||||||||||||||
Forward Foreign Currency Contracts | $ | 0 | $ | 0 | $ | 0 | $ | 1,084 | $ | 0 | $ | 1,084 | ||||||||||||
Swap Agreements | 0 | (12 | ) | 15 | 0 | 0 | 3 | |||||||||||||||||
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$ | 0 | $ | (12 | ) | $ | 15 | $ | 1,084 | $ | 0 | $ | 1,087 | ||||||||||||
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$ | 0 | $ | (12 | ) | $ | 15 | $ | 1,469 | $ | 0 | $ | 1,472 | ||||||||||||
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FAIR VALUE MEASUREMENTS
The following is a summary of the fair valuations according to the inputs used as of December 31, 2014 in valuing the Fund’s assets and liabilities:
Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair Value at 12/31/2014 | ||||||||||||
Investments in Securities, at Value |
| |||||||||||||||
Asset-Backed Securities | ||||||||||||||||
United States | $ | 0 | $ | 15,664 | $ | 0 | $ | 15,664 | ||||||||
Bank Loan Obligations | ||||||||||||||||
Brazil | 0 | 0 | 12 | 12 | ||||||||||||
Luxembourg | 0 | 245 | 0 | 245 | ||||||||||||
United States | 0 | 2,504 | 0 | 2,504 | ||||||||||||
Common Stocks | ||||||||||||||||
Australia | ||||||||||||||||
Industrials | 0 | 7,901 | 0 | 7,901 | ||||||||||||
Bermuda | ||||||||||||||||
Energy | 13,406 | 0 | 0 | 13,406 | ||||||||||||
Brazil | ||||||||||||||||
Industrials | 4,595 | 0 | 0 | 4,595 | ||||||||||||
Utilities | 7,343 | 0 | 0 | 7,343 | ||||||||||||
China | ||||||||||||||||
Consumer Staples | 0 | 7,969 | 0 | 7,969 | ||||||||||||
Cyprus | ||||||||||||||||
Energy | 0 | 4,088 | 0 | 4,088 | ||||||||||||
France | ||||||||||||||||
Energy | 0 | 11,682 | 0 | 11,682 | ||||||||||||
Financials | 0 | 11,058 | 0 | 11,058 | ||||||||||||
Utilities | 0 | 27,177 | 0 | 27,177 | ||||||||||||
Hong Kong | ||||||||||||||||
Industrials | 0 | 4,558 | 0 | 4,558 | ||||||||||||
Telecommunication Services | 0 | 15,307 | 0 | 15,307 |
Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair Value at 12/31/2014 | ||||||||||||
Israel | ||||||||||||||||
Health Care | $ | 16,520 | $ | 0 | $ | 0 | $ | 16,520 | ||||||||
Italy | ||||||||||||||||
Financials | 0 | 23,286 | 0 | 23,286 | ||||||||||||
Industrials | 0 | 7,271 | 0 | 7,271 | ||||||||||||
Japan | ||||||||||||||||
Consumer Discretionary | 0 | 16,602 | 0 | 16,602 | ||||||||||||
Telecommunication Services | 0 | 11,805 | 0 | 11,805 | ||||||||||||
Luxembourg | ||||||||||||||||
Industrials | 0 | 7,221 | 0 | 7,221 | ||||||||||||
Netherlands | ||||||||||||||||
Financials | 0 | 11,040 | 0 | 11,040 | ||||||||||||
Singapore | ||||||||||||||||
Industrials | 0 | 9,580 | 0 | 9,580 | ||||||||||||
South Africa | ||||||||||||||||
Health Care | 0 | 3,498 | 0 | 3,498 | ||||||||||||
Spain | ||||||||||||||||
Consumer Staples | 0 | 10,820 | 0 | 10,820 | ||||||||||||
Switzerland | ||||||||||||||||
Health Care | 0 | 14,706 | 0 | 14,706 | ||||||||||||
Taiwan | ||||||||||||||||
Information Technology | 0 | 9,846 | 0 | 9,846 | ||||||||||||
Turkey | ||||||||||||||||
Industrials | 0 | 7,719 | 0 | 7,719 |
68 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 2014 (Unaudited)
Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair Value at 12/31/2014 | ||||||||||||
United Kingdom | ||||||||||||||||
Consumer Discretionary | $ | 0 | $ | 9,947 | $ | 0 | $ | 9,947 | ||||||||
Consumer Staples | 0 | 21,018 | 0 | 21,018 | ||||||||||||
Financials | 0 | 47,992 | 0 | 47,992 | ||||||||||||
Telecommunication Services | 0 | 26,361 | 0 | 26,361 | ||||||||||||
United States | ||||||||||||||||
Consumer Discretionary | 75,702 | 0 | 0 | 75,702 | ||||||||||||
Consumer Staples | 17,899 | 0 | 0 | 17,899 | ||||||||||||
Energy | 2,159 | 0 | 0 | 2,159 | ||||||||||||
Financials | 92,043 | 0 | 0 | 92,043 | ||||||||||||
Health Care | 27,214 | 0 | 0 | 27,214 | ||||||||||||
Industrials | 16,236 | 0 | 0 | 16,236 | ||||||||||||
Information Technology | 78,990 | 0 | 0 | 78,990 | ||||||||||||
Materials | 27,234 | 0 | 0 | 27,234 | ||||||||||||
Utilities | 36,148 | 0 | 0 | 36,148 | ||||||||||||
Corporate Bonds & Notes | ||||||||||||||||
Austria | ||||||||||||||||
Industrials | 0 | 4 | 0 | 4 | ||||||||||||
Brazil | ||||||||||||||||
Banking & Finance | 0 | 205 | 0 | 205 | ||||||||||||
Utilities | 0 | 410 | 0 | 410 | ||||||||||||
Cayman Islands | ||||||||||||||||
Utilities | 0 | 160 | 0 | 160 | ||||||||||||
France | ||||||||||||||||
Banking & Finance | 0 | 635 | 0 | 635 | ||||||||||||
Industrials | 0 | 272 | 0 | 272 | ||||||||||||
Germany | ||||||||||||||||
Industrials | 0 | 130 | 0 | 130 | ||||||||||||
Guernsey, Channel Islands | ||||||||||||||||
Banking & Finance | 0 | 362 | 0 | 362 | ||||||||||||
Ireland | ||||||||||||||||
Banking & Finance | 0 | 179 | 0 | 179 | ||||||||||||
Industrials | 0 | 981 | 0 | 981 | ||||||||||||
Utilities | 0 | 364 | 0 | 364 | ||||||||||||
Italy | ||||||||||||||||
Utilities | 0 | 258 | 0 | 258 | ||||||||||||
Luxembourg | ||||||||||||||||
Banking & Finance | 0 | 1,366 | 0 | 1,366 | ||||||||||||
Industrials | 0 | 27 | 0 | 27 | ||||||||||||
Utilities | 0 | 5,813 | 0 | 5,813 | ||||||||||||
Mexico | ||||||||||||||||
Industrials | 0 | 47 | 0 | 47 | ||||||||||||
Netherlands | ||||||||||||||||
Banking & Finance | 0 | 576 | 0 | 576 | ||||||||||||
Industrials | 0 | 236 | 0 | 236 | ||||||||||||
Utilities | 0 | 389 | 0 | 389 | ||||||||||||
Spain | ||||||||||||||||
Industrials | 0 | 254 | 0 | 254 | ||||||||||||
United Kingdom | ||||||||||||||||
Banking & Finance | 0 | 2,667 | 0 | 2,667 | ||||||||||||
Industrials | 0 | 1,620 | 0 | 1,620 | ||||||||||||
Utilities | 0 | 211 | 0 | 211 |
Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair Value at 12/31/2014 | ||||||||||||
United States | ||||||||||||||||
Banking & Finance | $ | 0 | $ | 694 | $ | 0 | $ | 694 | ||||||||
Industrials | 0 | 4,878 | 603 | 5,481 | ||||||||||||
Utilities | 0 | 151 | 0 | 151 | ||||||||||||
Venezuela | ||||||||||||||||
Industrials | 0 | 345 | 0 | 345 | ||||||||||||
Virgin Islands (British) | ||||||||||||||||
Industrials | 0 | 338 | 0 | 338 | ||||||||||||
Mortgage-Backed Securities | ||||||||||||||||
United States | 0 | 24,289 | 0 | 24,289 | ||||||||||||
Municipal Bonds & Notes | ||||||||||||||||
Michigan | 0 | 199 | 0 | 199 | ||||||||||||
Virginia | 0 | 290 | 0 | 290 | ||||||||||||
West Virginia | 0 | 323 | 0 | 323 | ||||||||||||
Preferred Stocks | ||||||||||||||||
United States | ||||||||||||||||
Utilities | 0 | 127 | 0 | 127 | ||||||||||||
Real Estate Investment Trusts | ||||||||||||||||
United States | ||||||||||||||||
Financials | 32,817 | 0 | 0 | 32,817 | ||||||||||||
Sovereign Issues | ||||||||||||||||
Brazil | 0 | 701 | 0 | 701 | ||||||||||||
Greece | 0 | 265 | 0 | 265 | ||||||||||||
Russia | 0 | 373 | 0 | 373 | ||||||||||||
Spain | 0 | 961 | 0 | 961 | ||||||||||||
Venezuela | 0 | 133 | 0 | 133 | ||||||||||||
Short-Term Instruments | ||||||||||||||||
Repurchase Agreements | 0 | 995 | 0 | 995 | ||||||||||||
$ | 448,306 | $ | 399,093 | $ | 615 | $ | 848,014 | |||||||||
Investments in Affiliates, at Value | ||||||||||||||||
Short-Term Instruments | ||||||||||||||||
Central Funds Used for Cash Management Purposes | $ | 10,288 | $ | 0 | $ | 0 | $ | 10,288 | ||||||||
Total Investments | $ | 458,594 | $ | 399,093 | $ | 615 | $ | 858,302 | ||||||||
Financial Derivative Instruments - Assets |
| |||||||||||||||
Exchange-traded or centrally cleared | 27 | 0 | 0 | 27 | ||||||||||||
Over the counter | 0 | 1,620 | 53 | 1,673 | ||||||||||||
$ | 27 | $ | 1,620 | $ | 53 | $ | 1,700 | |||||||||
Financial Derivative Instruments - Liabilities |
| |||||||||||||||
Exchange-traded or centrally cleared | (6 | ) | 0 | 0 | (6 | ) | ||||||||||
Over the counter | 0 | (511 | ) | 0 | (511 | ) | ||||||||||
$ | (6 | ) | $ | (511 | ) | $ | 0 | $ | (517 | ) | ||||||
Totals | $ | 458,615 | $ | 400,202 | $ | 668 | $ | 859,485 |
There were no significant transfers between Level 1, 2, and 3 during the period ended December 31, 2014.
See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 69 |
Table of Contents
Consolidated Schedule of Investments PIMCO Emerging Multi-Asset Fund
PRINCIPAL AMOUNT (000S) | MARKET VALUE (000S) | |||||||||||
INVESTMENTS IN SECURITIES 5.0% | ||||||||||||
U.S. TREASURY OBLIGATIONS 4.0% | ||||||||||||
U.S. Treasury Notes |
| |||||||||||
2.125% due 12/31/2021 (c) | $ | 1,100 | $ | 1,111 | ||||||||
|
| |||||||||||
Total U.S. Treasury Obligations (Cost $1,091) | 1,111 | |||||||||||
|
| |||||||||||
SHORT-TERM INSTRUMENTS 1.0% | ||||||||||||
REPURCHASE AGREEMENTS (b) 1.0% | ||||||||||||
298 | ||||||||||||
|
| |||||||||||
Total Short-Term Instruments (Cost $298) | 298 | |||||||||||
|
| |||||||||||
Total Investments in Securities (Cost $1,389) | 1,409 | |||||||||||
|
| |||||||||||
SHARES | ||||||||||||
INVESTMENTS IN AFFILIATES 98.9% | ||||||||||||
MUTUAL FUNDS (a) 98.1% | ||||||||||||
PIMCO Emerging Local Bond Fund | 835,101 | 6,948 | ||||||||||
PIMCO Emerging Markets Bond Fund | 349,108 | 3,540 | ||||||||||
PIMCO Emerging Markets Corporate Bond Fund | 209,976 | 2,226 |
SHARES | MARKET VALUE (000S) | |||||||||||
PIMCO EqS® Emerging Markets Fund | 1,733,754 | $ | 14,772 | |||||||||
|
| |||||||||||
Total Mutual Funds (Cost $30,965) | 27,486 | |||||||||||
|
| |||||||||||
SHORT-TERM INSTRUMENTS 0.8% | ||||||||||||
CENTRAL FUNDS USED FOR CASH MANAGEMENT PURPOSES 0.8% | ||||||||||||
PIMCO Short-Term Floating NAV Portfolio | 1,243 | 12 | ||||||||||
PIMCO Short-Term Floating NAV Portfolio III | 20,185 | 200 | ||||||||||
|
| |||||||||||
Total Short-Term Instruments (Cost $213) | 212 | |||||||||||
|
| |||||||||||
Total Investments in Affiliates (Cost $31,178) | 27,698 | |||||||||||
Total Investments 103.9% (Cost $32,567) | $ | 29,107 | ||||||||||
Financial Derivative Instruments (d)(e) (0.1%) (Cost or Premiums, net $(6)) | (30 | ) | ||||||||||
Other Assets and Liabilities, net (3.8%) | (1,067 | ) | ||||||||||
|
| |||||||||||
Net Assets 100.0% | $ | 28,010 | ||||||||||
|
|
NOTES TO SCHEDULE OF INVESTMENTS (AMOUNTS IN THOUSANDS*, EXCEPT NUMBER OF CONTRACTS, SHARES, AND UNITS):
* | A zero balance may reflect actual amounts rounding to less than one thousand. |
(a) | Institutional Class Shares of each Fund. |
BORROWINGS AND OTHER FINANCING TRANSACTIONS
(b) REPURCHASE AGREEMENTS:
Counterparty | Lending Rate | Settlement Date | Maturity Date | Principal Amount | Collateralized By | Collateral Received, at Value | Repurchase Agreements, at Value | Repurchase Agreement Proceeds to be Received (1) | ||||||||||||||||||||
SSB | 0.000% | 12/31/2014 | 01/02/2015 | $ | 298 | Fannie Mae 2.260% due 10/17/2022 | $ | (307 | ) | $ | 298 | $ | 298 | |||||||||||||||
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|
|
|
|
| |||||||||||||||||||||||
Total Repurchase Agreements |
| $ | (307 | ) | $ | 298 | $ | 298 | ||||||||||||||||||||
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|
|
(1) | Includes accrued interest. |
SALE-BUYBACK TRANSACTIONS:
Counterparty | Borrowing Rate | Borrowing Date | Maturity Date | Amount Borrowed (2) | Payable for Sale-Buyback Transactions | |||||||||||||||
GSC | 0.320 | % | 12/31/2014 | 01/07/2015 | $ | (1,110 | ) | $ | (1,110 | ) | ||||||||||
|
| |||||||||||||||||||
Total Sale-Buyback Transactions |
| $ | (1,110 | ) | ||||||||||||||||
|
|
(2) | As of December 31, 2014, there were no open reverse repurchase agreements. The average amount of borrowings outstanding during the period ended December 31, 2014 was $6 at a weighted average interest rate of 0.320%. |
70 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 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 December 31, 2014:
(c) | Securities with an aggregate market value of $1,111 have been pledged as collateral under the terms of the following master agreements as of December 31, 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 (3) | |||||||||||||||||||||
Global/Master Repurchase Agreement | ||||||||||||||||||||||||||||
SSB | $ | 298 | $ | 0 | $ | 0 | $ | 0 | $ | 298 | $ | (307 | ) | $ | (9 | ) | ||||||||||||
Master Securities Forward Transaction Agreement | ||||||||||||||||||||||||||||
GSC | 0 | 0 | (1,110 | ) | 0 | (1,110 | ) | 1,111 | 1 | |||||||||||||||||||
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| |||||||||||||||||||||
Total Borrowings and Other Financing Transactions | $ | 298 | $ | 0 | $ | (1,110 | ) | $ | 0 | |||||||||||||||||||
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|
(3) | 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. See Note 7, Principal Risks, in the Notes to Financial Statements for more information regarding master netting arrangements. |
(d) FINANCIAL DERIVATIVE INSTRUMENTS: EXCHANGE-TRADED OR CENTRALLY CLEARED
FUTURES CONTRACTS:
Description | Type | Expiration Month | # of Contracts | Unrealized Appreciation/ (Depreciation) | Variation Margin | |||||||||||||||||
Asset | Liability | |||||||||||||||||||||
E-mini S&P 500 Index March Futures | Long | 03/2015 | 2 | $ | (2 | ) | $ | 0 | $ | (2 | ) | |||||||||||
Mini MSCI Emerging Markets Index March Futures | Long | 03/2015 | 3 | 1 | 0 | 0 | ||||||||||||||||
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| |||||||||||||||||
Total Futures Contracts | $ | (1 | ) | $ | 0 | $ | (2 | ) | ||||||||||||||
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FINANCIAL DERIVATIVE INSTRUMENTS: EXCHANGE-TRADED OR CENTRALLY CLEARED SUMMARY
The following is a summary of the market value and variation margin of Exchange-Traded or Centrally Cleared Financial Derivative Instruments as of December 31, 2014:
Cash of $22 has been pledged as collateral for exchange-traded and centrally cleared financial derivative instruments as of December 31, 2014.
Financial Derivative Assets | Financial Derivative Liabilities | |||||||||||||||||||||||||||||||||
Market Value | Variation Margin Asset | Total | Market Value | Variation Margin Liability | Total | |||||||||||||||||||||||||||||
Purchased Options | Futures | Swap Agreements | Written Options | Futures | Swap Agreements | |||||||||||||||||||||||||||||
Total Exchange-Traded or Centrally Cleared | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | (2 | ) | $ | 0 | $ | (2 | ) | ||||||||||||||||
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|
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|
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|
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|
|
(e) FINANCIAL DERIVATIVE INSTRUMENTS: OVER THE COUNTER
FORWARD FOREIGN CURRENCY CONTRACTS:
Counterparty | Settlement | Currency to | Currency to | Unrealized Appreciation/ (Depreciation) | ||||||||||||||||||||||||
Asset | Liability | |||||||||||||||||||||||||||
BOA | 01/2015 | $ | 161 | JPY | 19,327 | $ | 0 | $ | 0 | |||||||||||||||||||
02/2015 | HKD | 822 | $ | 106 | 0 | 0 | ||||||||||||||||||||||
02/2015 | JPY | 19,327 | 161 | 0 | 0 | |||||||||||||||||||||||
02/2015 | THB | 10,889 | 333 | 3 | 0 | |||||||||||||||||||||||
02/2015 | $ | 60 | HKD | 465 | 0 | 0 | ||||||||||||||||||||||
BPS | 01/2015 | BRL | 722 | $ | 278 | 6 | 0 | |||||||||||||||||||||
01/2015 | ILS | 233 | 60 | 0 | 0 | |||||||||||||||||||||||
01/2015 | $ | 272 | BRL | 722 | 0 | 0 | ||||||||||||||||||||||
06/2015 | COP | 36,844 | $ | 16 | 1 | 0 | ||||||||||||||||||||||
BRC | 01/2015 | CZK | 11,327 | 519 | 24 | 0 | ||||||||||||||||||||||
01/2015 | RUB | 6,123 | 116 | 15 | 0 | |||||||||||||||||||||||
02/2015 | MYR | 970 | 288 | 13 | 0 | |||||||||||||||||||||||
02/2015 | TWD | 7,358 | 242 | 9 | 0 | |||||||||||||||||||||||
02/2015 | $ | 228 | INR | 14,341 | 0 | (3 | ) | |||||||||||||||||||||
See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 71 |
Table of Contents
Consolidated Schedule of Investments PIMCO Emerging Multi-Asset Fund (Cont.)
Counterparty | Settlement | Currency to | Currency to | Unrealized Appreciation/ (Depreciation) | ||||||||||||||||||||||||
Asset | Liability | |||||||||||||||||||||||||||
CBK | 01/2015 | RUB | 492 | $ | 7 | $ | 0 | $ | (1 | ) | ||||||||||||||||||
01/2015 | $ | 139 | TRY | 325 | 0 | (1 | ) | |||||||||||||||||||||
01/2015 | 10 | ZAR | 114 | 0 | 0 | |||||||||||||||||||||||
02/2015 | HKD | 2,684 | $ | 346 | 0 | 0 | ||||||||||||||||||||||
02/2015 | $ | 7 | RUB | 492 | 1 | 0 | ||||||||||||||||||||||
DUB | 01/2015 | BRL | 722 | $ | 272 | 0 | 0 | |||||||||||||||||||||
01/2015 | $ | 281 | BRL | 722 | 0 | (9 | ) | |||||||||||||||||||||
01/2015 | 110 | IDR | 1,362,312 | 0 | (1 | ) | ||||||||||||||||||||||
02/2015 | 60 | PHP | 2,706 | 0 | 0 | |||||||||||||||||||||||
07/2015 | BRL | 722 | $ | 266 | 8 | 0 | ||||||||||||||||||||||
FBF | 01/2015 | HUF | 115,943 | 477 | 34 | 0 | ||||||||||||||||||||||
01/2015 | JPY | 19,327 | 163 | 2 | 0 | |||||||||||||||||||||||
02/2015 | GBP | 16 | 25 | 0 | 0 | |||||||||||||||||||||||
02/2015 | KRW | 82,434 | 74 | 0 | (1 | ) | ||||||||||||||||||||||
GLM | 01/2015 | ZAR | 1,128 | 102 | 5 | 0 | ||||||||||||||||||||||
02/2015 | KRW | 70,052 | 65 | 1 | 0 | |||||||||||||||||||||||
02/2015 | $ | 67 | EUR | 53 | 0 | (2 | ) | |||||||||||||||||||||
HUS | 01/2015 | CLP | 38,048 | $ | 65 | 3 | 0 | |||||||||||||||||||||
01/2015 | $ | 177 | RUB | 9,498 | 0 | (21 | ) | |||||||||||||||||||||
01/2015 | ZAR | 344 | $ | 30 | 1 | 0 | ||||||||||||||||||||||
JPM | 01/2015 | RUB | 312 | 5 | 0 | (1 | ) | |||||||||||||||||||||
02/2015 | HKD | 28 | 4 | 0 | 0 | |||||||||||||||||||||||
02/2015 | INR | 18,049 | 281 | 0 | (2 | ) | ||||||||||||||||||||||
02/2015 | KRW | 334,937 | 307 | 6 | (5 | ) | ||||||||||||||||||||||
02/2015 | MYR | 1,190 | 338 | 0 | 0 | |||||||||||||||||||||||
02/2015 | $ | 194 | MXN | 2,749 | 0 | (8 | ) | |||||||||||||||||||||
02/2015 | 292 | MYR | 960 | 0 | (19 | ) | ||||||||||||||||||||||
02/2015 | 57 | RUB | 3,242 | 1 | (3 | ) | ||||||||||||||||||||||
04/2015 | PEN | 1,694 | $ | 567 | 9 | 0 | ||||||||||||||||||||||
RBC | 02/2015 | MXN | 1,185 | 90 | 9 | 0 | ||||||||||||||||||||||
02/2015 | $ | 312 | MXN | 4,407 | 0 | (13 | ) | |||||||||||||||||||||
SOG | 01/2015 | 282 | PLN | 948 | 0 | (15 | ) | |||||||||||||||||||||
02/2015 | HKD | 1,582 | $ | 204 | 0 | 0 | ||||||||||||||||||||||
UAG | 02/2015 | CNY | 5,113 | 828 | 0 | (2 | ) | |||||||||||||||||||||
02/2015 | $ | 70 | MYR | 233 | 0 | (4 | ) | |||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Total Forward Foreign Currency Contracts |
| $ | 151 | $ | (111 | ) | ||||||||||||||||||||||
|
|
|
|
PURCHASED OPTIONS:
OPTIONS ON INDICES
Counterparty | Description | Strike Value | Expiration Date | Notional Amount | Cost | Market Value | ||||||||||||||||||
FBF | Call - OTC EURO STOXX 50 Index | 3,600.000 | 12/20/2019 | EUR 0 | $ | 14 | $ | 12 | ||||||||||||||||
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|
|
| |||||||||||||||||||||
Total Purchased Options |
| $ | 14 | $ | 12 | |||||||||||||||||||
|
|
|
|
WRITTEN OPTIONS:
OPTIONS ON INDICES
Counterparty | Description | Strike Value | Expiration Date | Notional Amount | Premiums (Received) | Market Value | ||||||||||||||||||
FBF | Put - OTC EURO STOXX 50 Index | 2,300.000 | 12/20/2019 | EUR 0 | $ | (14 | ) | $ | (14 | ) | ||||||||||||||
|
|
|
|
OPTIONS ON SECURITIES
Counterparty | Description | Strike Price (1) | Expiration Date | Notional Amount | Premiums (Received) | Market Value | ||||||||||||||||||||
BPS | Put - OTC BNP Paribas Equity Index | $ | — | 02/05/2015 | $ | 800 | $ | (1 | ) | $ | (1 | ) | ||||||||||||||
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|
|
| |||||||||||||||||||||||
Total Written Options |
| $ | (15 | ) | $ | (15 | ) | |||||||||||||||||||
|
|
|
|
(1) | Strike Price determined when exercised based on predetermined terms. |
72 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 2014 (Unaudited)
TRANSACTIONS IN WRITTEN CALL AND PUT OPTIONS FOR THE PERIOD ENDED DECEMBER 31, 2014:
# of Contracts | Notional Amount | Premiums | ||||||||||
Balance at Beginning of Period | 2,230 | $ | 0 | $ | (73 | ) | ||||||
Sales | 0 | 800 | (26 | ) | ||||||||
Closing Buys | 0 | 0 | 11 | |||||||||
Expirations | (2,230 | ) | 0 | 73 | ||||||||
Exercised | 0 | 0 | 0 | |||||||||
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| |||||||
Balance at End of Period | 0 | $ | 800 | $ | (15 | ) | ||||||
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|
|
SWAP AGREEMENTS:
CREDIT DEFAULT SWAPS ON SOVEREIGN ISSUES - SELL PROTECTION (2)
Counterparty | Reference Entity | Fixed Deal Receive Rate | Maturity Date | Implied Credit Spread at December 31, 2014 (3) | Notional Amount (4) | Premiums (Received) | Unrealized Appreciation/ (Depreciation) | Swap Agreements, at Value | ||||||||||||||||||||||||||
Asset | Liability | |||||||||||||||||||||||||||||||||
FBF | Russia Government International Bond | 1.000% | 09/20/2015 | 5.125% | $ 600 | $ | 0 | $ | (17 | ) | $ | 0 | $ | (17 | ) | |||||||||||||||||||
RYL | China Government International Bond | 1.000% | 12/20/2016 | 0.310% | 100 | (5 | ) | 6 | 1 | 0 | ||||||||||||||||||||||||
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|
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|
|
|
|
| |||||||||||||||||||||||||||
$ | (5 | ) | $ | (11 | ) | $ | 1 | $ | (17 | ) | ||||||||||||||||||||||||
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|
|
(2) | If the Fund is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) pay to the buyer of protection an amount equal to the notional amount of the swap and take delivery of the referenced obligation or underlying securities comprising the referenced index or (ii) pay a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying securities comprising the referenced index. |
(3) | Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap agreements on sovereign issues as of period end serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement. Wider credit spreads represent a deterioration of the referenced entity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. |
(4) | The maximum potential amount the Fund could be required to pay as a seller of credit protection or receive as a buyer of credit protection if a credit event occurs as defined under the terms of that particular swap agreement. |
TOTAL RETURN SWAPS ON INDICES
Counterparty | Pay/Receive (5) | Underlying Reference | # of Units | Financing Rate | Maturity Date | Notional Amount | Unrealized (Depreciation) | Swap Agreements, at Value | ||||||||||||||||||||||||||
Asset | Liability | |||||||||||||||||||||||||||||||||
BOA | Receive | KOSPI 200 Index | 1,500,000 | 3-Month USD-LIBOR plus a specified spread | 03/13/2015 | KRW | 375,000 | $ | (8 | ) | $ | 0 | $ | (8 | ) | |||||||||||||||||||
|
|
|
|
|
|
TOTAL RETURN SWAPS ON EXCHANGE-TRADED FUNDS
Counterparty | Pay/Receive (5) | Underlying Reference | # of Shares | Financing Rate | Maturity Date | Notional | Premiums Paid/ (Received) | Unrealized (Depreciation) | Swap Agreements, at Value | |||||||||||||||||||||||
Asset | Liability | |||||||||||||||||||||||||||||||
BPS | Receive | iShares MSCI Emerging Markets ETF | 23,890 | 3-Month USD-LIBOR less a specified spread | 08/14/2015 | $ 979 | $ | (41 | ) | $ | 0 | $ | (41 | ) | ||||||||||||||||||
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|
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| |||||||||||||||||||||||||||
Total Swap Agreements | $ | (5 | ) | $ | (60 | ) | $ | 1 | $ | (66 | ) | |||||||||||||||||||||
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|
|
(5) | Receive represents that the Fund receives payments for any positive return on the underlying reference. The Fund makes payments for any negative return on such underlying reference. Pay represents that the Fund receives payments for any negative return on the underlying reference. The Fund makes payments for any positive return on such underlying reference. |
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)/pledged as of December 31, 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)/ Pledged | Net Exposure (6) | |||||||||||||||||||||||||||||||||||
BOA | $ | 3 | $ | 0 | $ | 0 | $ | 3 | $ | (0 | ) | $ | 0 | $ | (8 | ) | $ | (8 | ) | $ | (5 | ) | $ | 0 | $ | (5 | ) | |||||||||||||||||||
BPS | 7 | 0 | 0 | 7 | (0 | ) | (1 | ) | (41 | ) | (42 | ) | (35 | ) | 0 | (35 | ) | |||||||||||||||||||||||||||||
BRC | 61 | 0 | 0 | 61 | (3 | ) | 0 | 0 | (3 | ) | 58 | 0 | 58 | |||||||||||||||||||||||||||||||||
CBK | 1 | 0 | 0 | 1 | (2 | ) | 0 | 0 | (2 | ) | (1 | ) | 0 | (1 | ) | |||||||||||||||||||||||||||||||
DUB | 8 | 0 | 0 | 8 | (10 | ) | 0 | 0 | (10 | ) | (2 | ) | 0 | (2 | ) | |||||||||||||||||||||||||||||||
FBF | 36 | 12 | 0 | 48 | (1 | ) | (14 | ) | (17 | ) | (32 | ) | 16 | 0 | 16 | |||||||||||||||||||||||||||||||
GLM | 6 | 0 | 0 | 6 | (2 | ) | 0 | 0 | (2 | ) | 4 | 0 | 4 | |||||||||||||||||||||||||||||||||
HUS | 4 | 0 | 0 | 4 | (21 | ) | 0 | 0 | (21 | ) | (17 | ) | 0 | (17 | ) |
See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 73 |
Table of Contents
Consolidated Schedule of Investments PIMCO Emerging Multi-Asset Fund (Cont.)
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)/ Pledged | Net Exposure (6) | |||||||||||||||||||||||||||||||||||
JPM | $ | 16 | $ | 0 | $ | 0 | $ | 16 | $ | (38 | ) | $ | 0 | $ | 0 | $ | (38 | ) | $ | (22 | ) | $ | 0 | $ | (22 | ) | ||||||||||||||||||||
RBC | 9 | 0 | 0 | 9 | (13 | ) | 0 | 0 | (13 | ) | (4 | ) | 0 | (4 | ) | |||||||||||||||||||||||||||||||
RYL | 0 | 0 | 1 | 1 | 0 | 0 | 0 | 0 | 1 | 0 | 1 | |||||||||||||||||||||||||||||||||||
SOG | 0 | 0 | 0 | 0 | (15 | ) | 0 | 0 | (15 | ) | (15 | ) | 0 | (15 | ) | |||||||||||||||||||||||||||||||
UAG | 0 | 0 | 0 | 0 | (6 | ) | 0 | 0 | (6 | ) | (6 | ) | 0 | (6 | ) | |||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||
Total Over the Counter | $ | 151 | $ | 12 | $ | 1 | $ | 164 | $ | (111 | ) | $ | (15 | ) | $ | (66 | ) | $ | (192 | ) | ||||||||||||||||||||||||||
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|
(6) | Net Exposure represents the net receivable/(payable) that would be due from/to the counterparty in the event of default. Exposure from OTC financial derivative instruments can only be netted across transactions governed under the same master agreement with the same legal entity. See Note 7, Principal Risks, in the Notes to Financial Statements for more information regarding master netting arrangements. |
FAIR VALUE OF FINANCIAL DERIVATIVE INSTRUMENTS
The following is a summary of the fair valuation of the Fund’s derivative instruments categorized by risk exposure. See Note 7, Principal Risks, in the Notes to Financial Statements on risks of the Fund.
Fair Values of Financial Derivative Instruments on the Statements of Assets and Liabilities as of December 31, 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 | $ | 151 | $ | 0 | $ | 151 | ||||||||||||
Purchased Options | 0 | 0 | 12 | 0 | 0 | 12 | ||||||||||||||||||
Swap Agreements | 0 | 1 | 0 | 0 | 0 | 1 | ||||||||||||||||||
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|
|
|
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|
|
| |||||||||||||
$ | 0 | $ | 1 | $ | 12 | $ | 151 | $ | 0 | $ | 164 | |||||||||||||
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|
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|
| |||||||||||||
Financial Derivative Instruments - Liabilities | ||||||||||||||||||||||||
Exchange-traded or centrally cleared | ||||||||||||||||||||||||
Futures | $ | 0 | $ | 0 | $ | 2 | $ | 0 | $ | 0 | $ | 2 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Over the counter | ||||||||||||||||||||||||
Forward Foreign Currency Contracts | $ | 0 | $ | 0 | $ | 0 | $ | 111 | $ | 0 | $ | 111 | ||||||||||||
Written Options | 0 | 0 | 15 | 0 | 0 | 15 | ||||||||||||||||||
Swap Agreements | 0 | 17 | 49 | 0 | 0 | 66 | ||||||||||||||||||
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|
|
|
|
|
|
|
|
|
| |||||||||||||
$ | 0 | $ | 17 | $ | 64 | $ | 111 | $ | 0 | $ | 192 | |||||||||||||
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|
|
|
|
|
|
|
|
|
| |||||||||||||
$ | 0 | $ | 17 | $ | 66 | $ | 111 | $ | 0 | $ | 194 | |||||||||||||
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|
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|
|
|
|
The Effect of Financial Derivative Instruments on the Statements of Operations for the Period Ended December 31, 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 | ||||||||||||||||||||||||
Purchased Options | $ | 0 | $ | 0 | $ | (129 | ) | $ | 0 | $ | 0 | $ | (129 | ) | ||||||||||
Written Options | 0 | 0 | 73 | 0 | 0 | 73 | ||||||||||||||||||
Futures | 0 | 0 | (9 | ) | 0 | 4 | (5 | ) | ||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
| |||||||||||||
$ | 0 | $ | 0 | $ | (65 | ) | $ | 0 | $ | 4 | $ | (61 | ) | |||||||||||
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|
|
|
|
|
|
|
|
|
| |||||||||||||
Over the counter | ||||||||||||||||||||||||
Forward Foreign Currency Contracts | $ | 0 | $ | 0 | $ | 0 | $ | 171 | $ | 0 | $ | 171 | ||||||||||||
Purchased Options | 0 | 0 | (5 | ) | 0 | 0 | (5 | ) | ||||||||||||||||
Swap Agreements | 0 | 7 | 5 | 0 | 0 | 12 | ||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
| |||||||||||||
$ | 0 | $ | 7 | $ | 0 | $ | 171 | $ | 0 | $ | 178 | |||||||||||||
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|
|
|
|
|
|
|
|
|
| |||||||||||||
$ | 0 | $ | 7 | $ | (65 | ) | $ | 171 | $ | 4 | $ | 117 | ||||||||||||
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|
|
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|
|
74 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 2014 (Unaudited)
Derivatives not accounted for as hedging instruments | ||||||||||||||||||||||||
Commodity Contracts | Credit Contracts | Equity Contracts | Foreign Exchange Contracts | Interest Rate Contracts | Total | |||||||||||||||||||
Net Change in Unrealized Appreciation (Depreciation) on Financial Derivative Instruments |
| |||||||||||||||||||||||
Exchange-traded or centrally cleared | ||||||||||||||||||||||||
Purchased Options | $ | 0 | $ | 0 | $ | 44 | $ | 0 | $ | 0 | $ | 44 | ||||||||||||
Written Options | 0 | 0 | (24 | ) | 0 | 0 | (24 | ) | ||||||||||||||||
Futures | 0 | 0 | (1 | ) | 0 | (7 | ) | (8 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
$ | 0 | $ | 0 | $ | 19 | $ | 0 | $ | (7 | ) | $ | 12 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Over the counter | ||||||||||||||||||||||||
Forward Foreign Currency Contracts | $ | 0 | $ | 0 | $ | 0 | $ | 39 | $ | 0 | $ | 39 | ||||||||||||
Purchased Options | 0 | 0 | (2 | ) | 0 | 0 | (2 | ) | ||||||||||||||||
Swap Agreements | 0 | (21 | ) | (78 | ) | 0 | 0 | (99 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
$ | 0 | $ | (21 | ) | $ | (80 | ) | $ | 39 | $ | 0 | $ | (62 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
$ | 0 | $ | (21 | ) | $ | (61 | ) | $ | 39 | $ | (7 | ) | $ | (50 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
FAIR VALUE MEASUREMENTS
The following is a summary of the fair valuations according to the inputs used as of December 31, 2014 in valuing the Fund’s assets and liabilities:
Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair Value at 12/31/2014 | ||||||||||||
Investments in Securities, at Value | ||||||||||||||||
U.S. Treasury Obligations | ||||||||||||||||
United States | $ | 0 | $ | 1,111 | $ | 0 | $ | 1,111 | ||||||||
Short-Term Instruments | ||||||||||||||||
Repurchase Agreements | 0 | 298 | 0 | 298 | ||||||||||||
$ | 0 | $ | 1,409 | $ | 0 | $ | 1,409 | |||||||||
Investments in Affiliates, at Value | ||||||||||||||||
Mutual Funds | ||||||||||||||||
United States | 27,486 | 0 | 0 | 27,486 | ||||||||||||
Short-Term Instruments | ||||||||||||||||
Central Funds Used for Cash Management Purposes | 212 | 0 | 0 | 212 | ||||||||||||
$ | 27,698 | $ | 0 | $ | 0 | $ | 27,698 | |||||||||
Total Investments | $ | 27,698 | $ | 1,409 | $ | 0 | $ | 29,107 |
Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair Value at 12/31/2014 | ||||||||||||
Financial Derivative Instruments - Assets |
| |||||||||||||||
Over the counter | $ | 0 | $ | 164 | $ | 0 | $ | 164 | ||||||||
Financial Derivative Instruments - Liabilities |
| |||||||||||||||
Exchange-traded or centrally cleared | (2 | ) | 0 | 0 | (2 | ) | ||||||||||
Over the counter | 0 | (191 | ) | (1 | ) | (192 | ) | |||||||||
$ | (2 | ) | $ | (191 | ) | $ | (1 | ) | $ | (194 | ) | |||||
Totals | $ | 27,696 | $ | 1,382 | $ | (1 | ) | $ | 29,077 |
There were no significant transfers between Level 1, 2, and 3 during the period ended December 31, 2014.
See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 75 |
Table of Contents
Schedule of Investments PIMCO EqS® Emerging Markets Fund
SHARES | MARKET VALUE (000S) | |||||||||||
INVESTMENTS IN SECURITIES 88.1% | ||||||||||||
COMMON STOCKS 84.9% | ||||||||||||
AUSTRALIA 0.9% | ||||||||||||
MATERIALS 0.9% | ||||||||||||
Iluka Resources Ltd. | 200,648 | $ | 964 | |||||||||
|
| |||||||||||
Total Australia | 964 | |||||||||||
|
| |||||||||||
BERMUDA 0.2% | ||||||||||||
ENERGY 0.2% | ||||||||||||
Seadrill Ltd. | 20,758 | 240 | ||||||||||
|
| |||||||||||
Total Bermuda | 240 | |||||||||||
|
| |||||||||||
BRAZIL 7.7% | ||||||||||||
CONSUMER DISCRETIONARY 1.1% | ||||||||||||
Kroton Educacional S.A. | 194,960 | 1,137 | ||||||||||
|
| |||||||||||
CONSUMER STAPLES 1.3% | ||||||||||||
AMBEV S.A. - ADR | 217,472 | 1,353 | ||||||||||
|
| |||||||||||
FINANCIALS 4.2% | ||||||||||||
CETIP S.A. - Mercados Organizados | 103,217 | 1,250 | ||||||||||
Itau Unibanco Holding | 178,392 | 2,321 | ||||||||||
Multiplan Empreendimentos Imobiliarios S.A. | 46,100 | 823 | ||||||||||
|
| |||||||||||
4,394 | ||||||||||||
|
| |||||||||||
INDUSTRIALS 1.1% | ||||||||||||
CCR S.A. | 207,400 | 1,202 | ||||||||||
|
| |||||||||||
Total Brazil | 8,086 | |||||||||||
|
| |||||||||||
CAMBODIA 1.6% | ||||||||||||
CONSUMER DISCRETIONARY 1.6% | ||||||||||||
NagaCorp Ltd. | 2,126,000 | 1,732 | ||||||||||
|
| |||||||||||
Total Cambodia | 1,732 | |||||||||||
|
| |||||||||||
CHINA 15.9% | ||||||||||||
CONSUMER DISCRETIONARY 1.6% | ||||||||||||
Great Wall Motor Co. Ltd. | 297,000 | 1,686 | ||||||||||
|
| |||||||||||
CONSUMER STAPLES 1.1% | ||||||||||||
Want Want China Holdings Ltd. | 842,000 | 1,107 | ||||||||||
|
| |||||||||||
ENERGY 2.5% | ||||||||||||
China Petroleum & Chemical Corp. ‘H’ | 2,258,000 | 1,828 | ||||||||||
China Shenhua Energy Co. Ltd. ‘H’ | 277,000 | 816 | ||||||||||
|
| |||||||||||
2,644 | ||||||||||||
|
| |||||||||||
FINANCIALS 6.7% | ||||||||||||
China Construction Bank Corp. ‘H’ | 2,266,000 | 1,845 | ||||||||||
China Pacific Insurance Group Co. Ltd. ‘H’ | 453,400 | 2,267 | ||||||||||
Industrial & Commercial Bank of China Ltd. ‘H’ | 4,121,000 | 3,009 | ||||||||||
|
| |||||||||||
7,121 | ||||||||||||
|
|
SHARES | MARKET VALUE (000S) | |||||||||||
INFORMATION TECHNOLOGY 4.0% | ||||||||||||
Alibaba Group Holding Ltd. ADR (a) | 7,280 | $ | 756 | |||||||||
Baidu, Inc. SP - ADR (a) | 5,789 | 1,320 | ||||||||||
Tencent Holdings Ltd. | 144,600 | 2,092 | ||||||||||
|
| |||||||||||
4,168 | ||||||||||||
|
| |||||||||||
Total China | 16,726 | |||||||||||
|
| |||||||||||
FRANCE 1.3% | ||||||||||||
ENERGY 1.3% | ||||||||||||
Total S.A. | 26,994 | 1,383 | ||||||||||
|
| |||||||||||
Total France | 1,383 | |||||||||||
|
| |||||||||||
GREECE 0.9% | ||||||||||||
FINANCIALS 0.9% | ||||||||||||
Eurobank Ergasias S.A. (a) | 4,399,635 | 983 | ||||||||||
|
| |||||||||||
Total Greece | 983 | |||||||||||
|
| |||||||||||
HONG KONG 6.3% | ||||||||||||
FINANCIALS 3.5% | ||||||||||||
AIA Group Ltd. | 444,384 | 2,442 | ||||||||||
China Overseas Land & Investment Ltd. | 398,000 | 1,180 | ||||||||||
|
| |||||||||||
3,622 | ||||||||||||
|
| |||||||||||
INFORMATION TECHNOLOGY 0.6% | ||||||||||||
China High Precision Automation Group Ltd. | 8,446,000 | 664 | ||||||||||
|
| |||||||||||
TELECOMMUNICATION SERVICES 2.2% | ||||||||||||
China Mobile Ltd. | 200,500 | 2,354 | ||||||||||
|
| |||||||||||
Total Hong Kong | 6,640 | |||||||||||
|
| |||||||||||
INDIA 10.4% | ||||||||||||
CONSUMER DISCRETIONARY 3.3% | ||||||||||||
Bajaj Auto Ltd. | 28,664 | 1,101 | ||||||||||
Tata Motors Ltd. | 301,436 | 2,357 | ||||||||||
|
| |||||||||||
3,458 | ||||||||||||
|
| |||||||||||
CONSUMER STAPLES 0.5% | ||||||||||||
ITC Ltd. | 92,391 | 538 | ||||||||||
|
| |||||||||||
FINANCIALS 4.5% | ||||||||||||
Axis Bank Ltd. | 285,454 | 2,257 | ||||||||||
Housing Development Finance Corp. Ltd. | 138,181 | 2,471 | ||||||||||
|
| |||||||||||
4,728 | ||||||||||||
|
| |||||||||||
HEALTH CARE 1.1% | ||||||||||||
Lupin Ltd. | 52,579 | 1,189 | ||||||||||
|
| |||||||||||
INFORMATION TECHNOLOGY 1.0% | ||||||||||||
HCL Technologies Ltd. | 43,858 | 1,113 | ||||||||||
|
| |||||||||||
Total India | 11,026 | |||||||||||
|
| |||||||||||
SHARES | MARKET VALUE (000S) | |||||||||||
INDONESIA 1.2% | ||||||||||||
CONSUMER DISCRETIONARY 1.2% | ||||||||||||
Matahari Department Store Tbk PT | 1,081,200 | $ | 1,303 | |||||||||
|
| |||||||||||
Total Indonesia | 1,303 | |||||||||||
|
| |||||||||||
ISRAEL 1.5% | ||||||||||||
INFORMATION TECHNOLOGY 1.5% | ||||||||||||
Check Point Software Technologies Ltd. (a) | 20,648 | 1,622 | ||||||||||
|
| |||||||||||
Total Israel | 1,622 | |||||||||||
|
| |||||||||||
JAPAN 3.6% | ||||||||||||
INDUSTRIALS 2.5% | ||||||||||||
Mitsubishi Electric Corp. | 102,000 | 1,212 | ||||||||||
NSK Ltd. | 123,000 | 1,452 | ||||||||||
|
| |||||||||||
2,664 | ||||||||||||
|
| |||||||||||
INFORMATION TECHNOLOGY 1.1% | ||||||||||||
Omron Corp. | 24,800 | 1,109 | ||||||||||
|
| |||||||||||
Total Japan | 3,773 | |||||||||||
|
| |||||||||||
MACAU 0.7% | ||||||||||||
CONSUMER DISCRETIONARY 0.7% | ||||||||||||
Sands China Ltd. | 158,400 | 772 | ||||||||||
|
| |||||||||||
Total Macau | 772 | |||||||||||
|
| |||||||||||
MEXICO 2.2% | ||||||||||||
FINANCIALS 2.2% | ||||||||||||
Bolsa Mexicana de Valores S.A.B. de C.V. | 747,000 | 1,353 | ||||||||||
Grupo Financiero Banorte S.A.B. de C.V. | 175,600 | 970 | ||||||||||
|
| |||||||||||
2,323 | ||||||||||||
|
| |||||||||||
Total Mexico | 2,323 | |||||||||||
|
| |||||||||||
NORWAY 1.2% | ||||||||||||
CONSUMER STAPLES 1.2% | ||||||||||||
Marine Harvest ASA | 92,392 | 1,269 | ||||||||||
|
| |||||||||||
Total Norway | 1,269 | |||||||||||
|
| |||||||||||
PERU 3.8% | �� | |||||||||||
FINANCIALS 2.1% | ||||||||||||
Credicorp Ltd. | 13,573 | 2,174 | ||||||||||
|
| |||||||||||
MATERIALS 1.7% | ||||||||||||
Cementos Pacasmayo | 208,724 | 1,820 | ||||||||||
|
| |||||||||||
Total Peru | 3,994 | |||||||||||
|
| |||||||||||
POLAND 0.8% | ||||||||||||
FINANCIALS 0.8% | ||||||||||||
Powszechna Kasa Oszczednosci Bank Polski S.A. | 83,763 | 841 | ||||||||||
|
| |||||||||||
Total Poland | 841 | |||||||||||
|
| |||||||||||
76 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 2014 (Unaudited)
SHARES | MARKET VALUE (000S) | |||||||||||
RUSSIA 0.8% | ||||||||||||
CONSUMER STAPLES 0.8% | ||||||||||||
Magnit PJSC | 18,717 | $ | 850 | |||||||||
|
| |||||||||||
Total Russia | 850 | |||||||||||
|
| |||||||||||
SOUTH AFRICA 3.6% | ||||||||||||
CONSUMER DISCRETIONARY 1.3% | ||||||||||||
Naspers Ltd. ‘N’ | 10,775 | 1,394 | ||||||||||
|
| |||||||||||
FINANCIALS 0.6% | ||||||||||||
FirstRand Ltd. | 150,490 | 654 | ||||||||||
|
| |||||||||||
TELECOMMUNICATION SERVICES 1.7% | ||||||||||||
MTN Group Ltd. | 90,448 | 1,721 | ||||||||||
|
| |||||||||||
Total South Africa | 3,769 | |||||||||||
|
| |||||||||||
SOUTH KOREA 8.7% | ||||||||||||
CONSUMER DISCRETIONARY 2.6% | ||||||||||||
Kia Motors Corp. | 57,224 | 2,719 | ||||||||||
|
| |||||||||||
CONSUMER STAPLES 1.0% | ||||||||||||
Amorepacific Corp. | 518 | 1,046 | ||||||||||
|
| |||||||||||
INFORMATION TECHNOLOGY 3.5% | ||||||||||||
Samsung Electronics Co. Ltd. | 3,102 | 3,729 | ||||||||||
|
| |||||||||||
MATERIALS 0.9% | ||||||||||||
POSCO Processing & Service Co. Ltd. | 3,707 | 934 | ||||||||||
|
| |||||||||||
TELECOMMUNICATION SERVICES 0.7% | ||||||||||||
SK Telecom Co. Ltd. | 2,950 | 721 | ||||||||||
|
| |||||||||||
Total South Korea | 9,149 | |||||||||||
|
| |||||||||||
TAIWAN 9.2% | ||||||||||||
INFORMATION TECHNOLOGY 9.2% | ||||||||||||
Chicony Electronics Co. Ltd. | 628,158 | 1,749 | ||||||||||
Hon Hai Precision Industry Co. Ltd. | 352,040 | 972 |
SHARES | MARKET VALUE (000S) | |||||||||||
MediaTek, Inc. | 171,000 | $ | 2,486 | |||||||||
Taiwan Semiconductor Manufacturing Co. Ltd. | 369,000 | 1,626 | ||||||||||
Taiwan Semiconductor Manufacturing Co. Ltd. ADR | 129,713 | 2,903 | ||||||||||
|
| |||||||||||
9,736 | ||||||||||||
|
| |||||||||||
Total Taiwan | 9,736 | |||||||||||
|
| |||||||||||
THAILAND 1.3% | ||||||||||||
FINANCIALS 1.3% | ||||||||||||
Kasikornbank PCL - NVDR | 193,600 | 1,339 | ||||||||||
|
| |||||||||||
Total Thailand | 1,339 | |||||||||||
|
| |||||||||||
TURKEY 0.6% | ||||||||||||
FINANCIALS 0.6% | ||||||||||||
Turkiye Garanti Bankasi A/S | 144,523 | 581 | ||||||||||
|
| |||||||||||
Total Turkey | 581 | |||||||||||
|
| |||||||||||
UNITED STATES 0.5% | ||||||||||||
CONSUMER DISCRETIONARY 0.5% | ||||||||||||
Samsonite International S.A. | 174,600 | 517 | ||||||||||
|
| |||||||||||
Total United States | 517 | |||||||||||
|
| |||||||||||
Total Common Stocks (Cost $93,848) |
| 89,618 | ||||||||||
|
| |||||||||||
PREFERRED STOCKS 1.1% | ||||||||||||
BRAZIL 1.1% | ||||||||||||
CONSUMER STAPLES 1.1% | ||||||||||||
Cia Brasileira de Distribuicao | 30,642 | 1,137 | ||||||||||
|
| |||||||||||
Total Preferred Stocks (Cost $1,359) |
| 1,137 | ||||||||||
|
| |||||||||||
WARRANTS 1.0% | ||||||||||||
UNITED STATES 1.0% | ||||||||||||
CONSUMER DISCRETIONARY 0.6% | ||||||||||||
Kweichow Moutai Co. Ltd. - Exp. 01/15/2016 | 11,679 | 357 | ||||||||||
Qingdao Haier Co. Ltd. - 01/15/2016 | 100,020 | 299 | ||||||||||
|
| |||||||||||
656 | ||||||||||||
|
|
SHARES | MARKET VALUE (000S) | |||||||||||
FINANCIALS 0.4% | ||||||||||||
China Construction Bank Corp. - Exp. 01/15/2016 | 399,767 | $ | 433 | |||||||||
|
| |||||||||||
Total Warrants (Cost $809) |
| 1,089 | ||||||||||
|
| |||||||||||
SHORT-TERM INSTRUMENTS 1.1% | ||||||||||||
REPURCHASE AGREEMENTS (b) 0.2% | ||||||||||||
168 | ||||||||||||
|
| |||||||||||
PRINCIPAL AMOUNT (000S) | ||||||||||||
U.S. TREASURY BILLS 0.9% | ||||||||||||
0.023% due 04/23/2015 (e) | $ | 943 | 943 | |||||||||
|
| |||||||||||
Total Short-Term Instruments (Cost $1,111) | 1,111 | |||||||||||
|
| |||||||||||
Total Investments in Securities (Cost $97,127) | 92,955 | |||||||||||
|
| |||||||||||
SHARES | ||||||||||||
INVESTMENTS IN AFFILIATES 10.6% | ||||||||||||
SHORT-TERM INSTRUMENTS 10.6% | ||||||||||||
CENTRAL FUNDS USED FOR CASH MANAGEMENT PURPOSES 10.6% | ||||||||||||
PIMCO Short-Term Floating NAV Portfolio | 12,976 | 130 | ||||||||||
PIMCO Short-Term Floating NAV Portfolio III | 1,120,012 | 11,101 | ||||||||||
|
| |||||||||||
Total Short-Term Instruments (Cost $11,294) | 11,231 | |||||||||||
|
| |||||||||||
Total Investments in Affiliates (Cost $11,294) | 11,231 | |||||||||||
Total Investments 98.7% (Cost $108,421) | $ | 104,186 | ||||||||||
Financial Derivative (Cost or Premiums, net $0) | 719 | |||||||||||
Other Assets and Liabilities, net 0.6% | 637 | |||||||||||
|
| |||||||||||
Net Assets 100.0% | $ | 105,542 | ||||||||||
|
|
NOTES TO SCHEDULE OF INVESTMENTS (AMOUNTS IN THOUSANDS*, EXCEPT NUMBER OF CONTRACTS, SHARES, AND UNITS):
* | 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) REPURCHASE AGREEMENTS:
Counterparty | Lending Rate | Settlement Date | Maturity Date | Principal Amount | Collateralized By | Collateral Received, at Value | Repurchase Agreements, at Value | Repurchase Agreement Proceeds to be Received (1) | ||||||||||||||||||||
SSB | 0.000% | 12/31/2014 | 01/02/2015 | $ | 168 | Fannie Mae 2.260% due 10/17/2022 | $ | (175 | ) | $ | 168 | $ | 168 | |||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||
Total Repurchase Agreements | $ | (175 | ) | $ | 168 | $ | 168 | |||||||||||||||||||||
|
|
|
|
|
|
(1) | Includes accrued interest. |
See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 77 |
Table of Contents
Schedule of Investments PIMCO EqS® Emerging Markets Fund (Cont.)
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) as of December 31, 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) | Net Exposure (2) | |||||||||||||||||||||
Global/Master Repurchase Agreement | ||||||||||||||||||||||||||||
SSB | $ | 168 | $ | 0 | $ | 0 | $ | 0 | $ | 168 | $ | (175 | ) | $ | (7 | ) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total Borrowings and Other Financing Transactions | $ | 168 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
(2) | 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. See Note 7, Principal Risks, in the Notes to Financial Statements for more information regarding master netting arrangements. |
(c) FINANCIAL DERIVATIVE INSTRUMENTS: EXCHANGE-TRADED OR CENTRALLY CLEARED
FUTURES CONTRACTS:
Description | Type | Expiration Month | # of Contracts | Unrealized Appreciation | Variation Margin | |||||||||||||||||
Asset | Liability | |||||||||||||||||||||
MEXBOL Index March Futures | Long | 03/2015 | 81 | $ | 107 | $ | 0 | $ | (14 | ) | ||||||||||||
Mini MSCI Emerging Markets Index March Futures | Long | 03/2015 | 12 | 15 | 1 | 0 | ||||||||||||||||
|
|
|
|
|
| |||||||||||||||||
Total Futures Contracts | $ | 122 | $ | 1 | $ | (14 | ) | |||||||||||||||
|
|
|
|
|
|
FINANCIAL DERIVATIVE INSTRUMENTS: EXCHANGE-TRADED OR CENTRALLY CLEARED SUMMARY
The following is a summary of the market value and variation margin of Exchange-Traded or Centrally Cleared Financial Derivative Instruments as of December 31, 2014:
Cash of $219 has been pledged as collateral for exchange-traded and centrally cleared financial derivative instruments as of December 31, 2014. See Note 7, Principal Risks, in the Notes to Financial Statements for more information regarding master netting arrangements.
Financial Derivative Assets | Financial Derivative Liabilities | |||||||||||||||||||||||||||||||||
Market Value | Variation Margin Asset | Total | Market Value | Variation Margin Liability | Total | |||||||||||||||||||||||||||||
Purchased Options | Futures | Swap Agreements | Written Options | Futures | Swap Agreements | |||||||||||||||||||||||||||||
Total Exchange-Traded or Centrally Cleared | $ | 0 | $ | 1 | $ | 0 | $ | 1 | $ | 0 | $ (14) | $ | 0 | $ (14) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 | 01/2015 | BRL | 198 | $ | 75 | $ | 0 | $ | 0 | |||||||||||||||||||
01/2015 | $ | 76 | BRL | 198 | 0 | (1 | ) | |||||||||||||||||||||
01/2015 | 1,379 | RUB | 71,813 | 0 | (194 | ) | ||||||||||||||||||||||
02/2015 | EUR | 409 | $ | 510 | 14 | 0 | ||||||||||||||||||||||
02/2015 | MXN | 4,606 | 338 | 27 | 0 | |||||||||||||||||||||||
03/2015 | $ | 2,159 | MXN | 30,853 | 0 | (78 | ) | |||||||||||||||||||||
04/2015 | BRL | 198 | $ | 74 | 1 | 0 | ||||||||||||||||||||||
BPS | 01/2015 | 2,876 | 1,107 | 25 | 0 | |||||||||||||||||||||||
01/2015 | ILS | 4,033 | 1,040 | 6 | 0 | |||||||||||||||||||||||
01/2015 | $ | 1,083 | BRL | 2,876 | 0 | (1 | ) | |||||||||||||||||||||
02/2015 | INR | 13,285 | $ | 213 | 5 | 0 | ||||||||||||||||||||||
02/2015 | MXN | 28,025 | 2,113 | 217 | 0 | |||||||||||||||||||||||
06/2015 | $ | 994 | COP | 2,288,599 | 0 | (41 | ) | |||||||||||||||||||||
BRC | 01/2015 | TRY | 754 | $ | 331 | 10 | 0 | |||||||||||||||||||||
01/2015 | $ | 274 | CZK | 5,968 | 0 | (13 | ) | |||||||||||||||||||||
01/2015 | 93 | PLN | 310 | 0 | (5 | ) | ||||||||||||||||||||||
01/2015 | ZAR | 7,429 | $ | 642 | 2 | 0 | ||||||||||||||||||||||
02/2015 | MXN | 8,154 | 595 | 44 | 0 | |||||||||||||||||||||||
02/2015 | THB | 9,008 | 272 | 0 | (1 | ) | ||||||||||||||||||||||
02/2015 | TWD | 15,784 | 519 | 20 | 0 | |||||||||||||||||||||||
02/2015 | $ | 119 | HKD | 923 | 0 | 0 | ||||||||||||||||||||||
02/2015 | 527 | INR | 32,990 | 0 | (10 | ) | ||||||||||||||||||||||
02/2015 | 343 | MXN | 4,654 | 0 | (28 | ) | ||||||||||||||||||||||
78 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 2014 (Unaudited)
Counterparty | Settlement Month | Currency to be Delivered | Currency to be Received | Unrealized Appreciation/ (Depreciation) | ||||||||||||||||||||||||
Asset | Liability | |||||||||||||||||||||||||||
CBK | 01/2015 | AUD | 1,670 | $ | 1,429 | $ | 65 | $ | 0 | |||||||||||||||||||
01/2015 | INR | 93,704 | 1,502 | 23 | 0 | |||||||||||||||||||||||
01/2015 | $ | 93 | PLN | 310 | 0 | (5 | ) | |||||||||||||||||||||
02/2015 | EUR | 2,040 | $ | 2,562 | 91 | 0 | ||||||||||||||||||||||
02/2015 | GBP | 339 | 532 | 4 | 0 | |||||||||||||||||||||||
02/2015 | INR | 59,271 | 948 | 19 | 0 | |||||||||||||||||||||||
03/2015 | $ | 836 | MXN | 12,013 | 0 | (25 | ) | |||||||||||||||||||||
DUB | 01/2015 | BRL | 2,876 | $ | 1,083 | 1 | 0 | |||||||||||||||||||||
01/2015 | TRY | 499 | 221 | 9 | 0 | |||||||||||||||||||||||
01/2015 | $ | 1,118 | BRL | 2,876 | 0 | (36 | ) | |||||||||||||||||||||
01/2015 | 951 | IDR | 11,793,638 | 0 | (5 | ) | ||||||||||||||||||||||
01/2015 | 5,353 | ZAR | 60,004 | 0 | (186 | ) | ||||||||||||||||||||||
07/2015 | BRL | 2,876 | $ | 1,060 | 31 | 0 | ||||||||||||||||||||||
FBF | 02/2015 | INR | 26,813 | 429 | 9 | 0 | ||||||||||||||||||||||
02/2015 | $ | 462 | KRW | 489,812 | 0 | (15 | ) | |||||||||||||||||||||
GLM | 01/2015 | BRL | 198 | $ | 76 | 1 | 0 | |||||||||||||||||||||
01/2015 | $ | 75 | BRL | 198 | 0 | 0 | ||||||||||||||||||||||
01/2015 | 243 | PLN | 819 | 0 | (12 | ) | ||||||||||||||||||||||
02/2015 | NOK | 4,481 | $ | 659 | 58 | 0 | ||||||||||||||||||||||
02/2015 | $ | 39 | MYR | 128 | 0 | (3 | ) | |||||||||||||||||||||
HUS | 01/2015 | RUB | 77,371 | $ | 1,233 | 0 | (43 | ) | ||||||||||||||||||||
01/2015 | $ | 1,703 | CLP | 992,180 | 0 | (70 | ) | |||||||||||||||||||||
01/2015 | 1,763 | TRY | 4,093 | 0 | (22 | ) | ||||||||||||||||||||||
02/2015 | NOK | 13,525 | $ | 1,989 | 177 | 0 | ||||||||||||||||||||||
02/2015 | $ | 882 | THB | 28,924 | 0 | (5 | ) | |||||||||||||||||||||
JPM | 01/2015 | 837 | ILS | 3,310 | 11 | 0 | ||||||||||||||||||||||
01/2015 | 127 | INR | 7,917 | 0 | (2 | ) | ||||||||||||||||||||||
01/2015 | 93 | PLN | 310 | 0 | (5 | ) | ||||||||||||||||||||||
01/2015 | 83 | RUB | 5,557 | 9 | 0 | |||||||||||||||||||||||
02/2015 | HKD | 114 | $ | 15 | 0 | 0 | ||||||||||||||||||||||
02/2015 | INR | 54,424 | 871 | 18 | 0 | |||||||||||||||||||||||
02/2015 | MXN | 3,511 | 248 | 11 | 0 | |||||||||||||||||||||||
02/2015 | $ | 353 | HKD | 2,735 | 0 | 0 | ||||||||||||||||||||||
02/2015 | 8,101 | KRW | 8,582,666 | 0 | (275 | ) | ||||||||||||||||||||||
02/2015 | 1,212 | MXN | 17,207 | 0 | (48 | ) | ||||||||||||||||||||||
MSB | 02/2015 | JPY | 455,371 | $ | 3,907 | 105 | 0 | |||||||||||||||||||||
02/2015 | $ | 539 | GBP | 344 | 0 | (3 | ) | |||||||||||||||||||||
02/2015 | 1,084 | MXN | 15,329 | 0 | (47 | ) | ||||||||||||||||||||||
02/2015 | 644 | NOK | 4,525 | 0 | (38 | ) | ||||||||||||||||||||||
02/2015 | 164 | THB | 5,424 | 1 | 0 | |||||||||||||||||||||||
RBC | 02/2015 | MXN | 43,450 | $ | 3,268 | 329 | 0 | |||||||||||||||||||||
02/2015 | $ | 1,382 | MXN | 19,562 | 0 | (58 | ) | |||||||||||||||||||||
SCX | 01/2015 | 521 | IDR | 6,414,501 | 0 | (6 | ) | |||||||||||||||||||||
02/2015 | 1,084 | MXN | 15,329 | 0 | (47 | ) | ||||||||||||||||||||||
SOG | 01/2015 | INR | 4,844 | $ | 78 | 2 | 0 | |||||||||||||||||||||
01/2015 | $ | 337 | PLN | 1,133 | 0 | (18 | ) | |||||||||||||||||||||
03/2015 | 1,077 | MXN | 15,311 | 0 | (44 | ) | ||||||||||||||||||||||
UAG | 02/2015 | INR | 14,616 | $ | 234 | 5 | 0 | |||||||||||||||||||||
02/2015 | MXN | 1,393 | 102 | 8 | 0 | |||||||||||||||||||||||
02/2015 | $ | 640 | BRL | 1,688 | 0 | (10 | ) | |||||||||||||||||||||
02/2015 | 263 | KRW | 281,031 | 0 | (7 | ) | ||||||||||||||||||||||
02/2015 | 4,070 | MYR | 13,372 | 0 | (270 | ) | ||||||||||||||||||||||
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Total Forward Foreign Currency Contracts |
| $ | 1,358 | $ | (1,677 | ) | ||||||||||||||||||||||
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SWAP AGREEMENTS:
TOTAL RETURN SWAPS ON INDICES
Counterparty | Pay/Receive (1) | Underlying Reference | # of Units | Financing Rate | Maturity Date | Notional Amount | Unrealized Appreciation/ (Depreciation) | Swap Agreements, at Value | ||||||||||||||||||||||||||
Asset | Liability | |||||||||||||||||||||||||||||||||
BOA | Receive | KOSPI 200 Index | 9,500,000 | 3-Month USD-LIBOR plus a specified spread | 03/13/2015 | KRW | 2,394,238 | $ | (70 | ) | $ | 0 | $ | (70 | ) | |||||||||||||||||||
GST | Receive | Euro STOXX 600 Oil & Gas Price Index | 2,612 | 1-Month USD-LIBOR plus a specified spread | 11/23/2015 | EUR | 687 | 67 | 67 | 0 | ||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||
$ | (3 | ) | $ | 67 | $ | (70 | ) | |||||||||||||||||||||||||||
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See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 79 |
Table of Contents
Schedule of Investments PIMCO EqS® Emerging Markets Fund (Cont.)
TOTAL RETURN SWAPS ON SECURITIES
Counterparty | Pay/Receive (1) | Underlying Reference | # of Shares | Financing Rate | Maturity Date | Notional Amount | Unrealized Appreciation | Swap Agreements, at Value | ||||||||||||||||||||||
Asset | Liability | |||||||||||||||||||||||||||||
BOA | Receive | Alrosa AO | 534,723 | 1-Month USD-LIBOR plus a specified spread | 05/12/2015 | $ | 451 | $ | 92 | $ | 92 | $ | 0 | |||||||||||||||||
SOG | Receive | China Construction Bank Corp. | 1,082,435 | 1-Month USD-LIBOR plus a specified spread | 07/30/2015 | 726 | 433 | 433 | 0 | |||||||||||||||||||||
Receive | Kweichow Moutai Co. Ltd. | 52,964 | 1-Month USD-LIBOR plus a specified spread | 07/30/2015 | 1,221 | 379 | 379 | 0 | ||||||||||||||||||||||
Receive | Qingdao Haier Co., Ltd. | 207,700 | 1-Month USD-LIBOR plus a specified spread | 11/30/2015 | 557 | 60 | 60 | 0 | ||||||||||||||||||||||
Receive | Fuyao Group Glass Industry Co., Ltd. | 262,400 | 1-Month USD-LIBOR plus a specified spread | 12/29/2015 | 851 | 90 | 90 | 0 | ||||||||||||||||||||||
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| |||||||||||||||||||||||||
$ | 1,054 | $ | 1,054 | $ | 0 | |||||||||||||||||||||||||
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Total Swap Agreements | $ | 1,051 | $ | 1,121 | $ | (70 | ) | |||||||||||||||||||||||
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(1) | Receive represents that the Fund receives payments for any positive return on the underlying reference. The Fund makes payments for any negative return on such underlying reference. Pay represents that the Fund receives payments for any negative return on the underlying reference. The Fund makes payments for any positive return on such underlying reference. |
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)/pledged as of December 31, 2014:
(e) | Securities with an aggregate market value of $943 have been pledged as collateral for financial derivative instruments as governed by International Swaps and Derivatives Association, Inc. master agreements as of December 31, 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)/ Pledged | Net Exposure(2) | |||||||||||||||||||||||||||||||||||
BOA | $ | 42 | $ | 0 | $ | 92 | $ | 134 | $ | (273 | ) | $ | 0 | $ | (70 | ) | $ | (343 | ) | $ | (209 | ) | $ | 81 | $ | (128 | ) | |||||||||||||||||||
BPS | 253 | 0 | 0 | 253 | (42 | ) | 0 | 0 | (42 | ) | 211 | 0 | 211 | |||||||||||||||||||||||||||||||||
BRC | 76 | 0 | 0 | 76 | (57 | ) | 0 | 0 | (57 | ) | 19 | 0 | 19 | |||||||||||||||||||||||||||||||||
CBK | 202 | 0 | 0 | 202 | (30 | ) | 0 | 0 | (30 | ) | 172 | 0 | 172 | |||||||||||||||||||||||||||||||||
DUB | 41 | 0 | 0 | 41 | (227 | ) | 0 | 0 | (227 | ) | (186 | ) | 261 | 75 | ||||||||||||||||||||||||||||||||
FBF | 9 | 0 | 0 | 9 | (15 | ) | 0 | 0 | (15 | ) | (6 | ) | 0 | (6 | ) | |||||||||||||||||||||||||||||||
GLM | 59 | 0 | 0 | 59 | (15 | ) | 0 | 0 | (15 | ) | 44 | (30 | ) | 14 | ||||||||||||||||||||||||||||||||
GST | 0 | 0 | 67 | 67 | 0 | 0 | 0 | 0 | 67 | 0 | 67 | |||||||||||||||||||||||||||||||||||
HUS | 177 | 0 | 0 | 177 | (140 | ) | 0 | 0 | (140 | ) | 37 | 0 | 37 | |||||||||||||||||||||||||||||||||
JPM | 49 | 0 | 0 | 49 | (330 | ) | 0 | 0 | (330 | ) | (281 | ) | 310 | 29 | ||||||||||||||||||||||||||||||||
MSB | 106 | 0 | 0 | 106 | (88 | ) | 0 | 0 | (88 | ) | 18 | 0 | 18 | |||||||||||||||||||||||||||||||||
RBC | 329 | 0 | 0 | 329 | (58 | ) | 0 | 0 | (58 | ) | 271 | (280 | ) | (9 | ) | |||||||||||||||||||||||||||||||
SCX | 0 | 0 | 0 | 0 | (53 | ) | 0 | 0 | (53 | ) | (53 | ) | 0 | (53 | ) | |||||||||||||||||||||||||||||||
SOG | 2 | 0 | 962 | 964 | (62 | ) | 0 | 0 | (62 | ) | 902 | (650 | ) | 252 | ||||||||||||||||||||||||||||||||
UAG | 13 | 0 | 0 | 13 | (287 | ) | 0 | 0 | (287 | ) | (274 | ) | 291 | 17 | ||||||||||||||||||||||||||||||||
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Total Over the Counter | $ | 1,358 | $ | 0 | $ | 1,121 | $ | 2,479 | $ | (1,677 | ) | $ | 0 | $ | (70 | ) | $ | (1,747 | ) | |||||||||||||||||||||||||||
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(2) | Net Exposure represents the net receivable/(payable) that would be due from/to the counterparty in the event of default. Exposure from OTC financial derivative instruments can only be netted across transactions governed under the same master agreement with the same legal entity. See Note 7, Principal Risks, in the Notes to Financial Statements for more information regarding master netting arrangements. |
80 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 2014 (Unaudited)
FAIR VALUE OF FINANCIAL DERIVATIVE INSTRUMENTS
The following is a summary of the fair valuation of the Fund’s derivative instruments categorized by risk exposure. See Note 7, Principal Risks, in the Notes to Financial Statements on risks of the Fund.
Fair Values of Financial Derivative Instruments on the Statements of Assets and Liabilities as of December 31, 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 | ||||||||||||||||||||||||
Exchange-traded or centrally cleared | ||||||||||||||||||||||||
Futures | $ | 0 | $ | 0 | $ | 1 | $ | 0 | $ | 0 | $ | 1 | ||||||||||||
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Over the counter | ||||||||||||||||||||||||
Forward Foreign Currency Contracts | $ | 0 | $ | 0 | $ | 0 | $ | 1,358 | $ | 0 | $ | 1,358 | ||||||||||||
Swap Agreements | 0 | 0 | 1,121 | 0 | 0 | 1,121 | ||||||||||||||||||
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$ | 0 | $ | 0 | $ | 1,121 | $ | 1,358 | $ | 0 | $ | 2,479 | |||||||||||||
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$ | 0 | $ | 0 | $ | 1,122 | $ | 1,358 | $ | 0 | $ | 2,480 | |||||||||||||
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Financial Derivative Instruments - Liabilities | ||||||||||||||||||||||||
Exchange-traded or centrally cleared | ||||||||||||||||||||||||
Futures | $ | 0 | $ | 0 | $ | 14 | $ | 0 | $ | 0 | $ | 14 | ||||||||||||
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Over the counter | ||||||||||||||||||||||||
Forward Foreign Currency Contracts | $ | 0 | $ | 0 | $ | 0 | $ | 1,677 | $ | 0 | $ | 1,677 | ||||||||||||
Swap Agreements | 0 | 0 | 70 | 0 | 0 | 70 | ||||||||||||||||||
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$ | 0 | $ | 0 | $ | 70 | $ | 1,677 | $ | 0 | $ | 1,747 | |||||||||||||
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$ | 0 | $ | 0 | $ | 84 | $ | 1,677 | $ | 0 | $ | 1,761 | |||||||||||||
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The Effect of Financial Derivative Instruments on the Statements of Operations for the Period Ended December 31, 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 | ||||||||||||||||||||||||
Futures | $ | 0 | $ | 0 | $ | (890 | ) | $ | 0 | $ | 0 | $ | (890 | ) | ||||||||||
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Over the counter | ||||||||||||||||||||||||
Forward Foreign Currency Contracts | $ | 0 | $ | 0 | $ | 0 | $ | 2,358 | $ | 0 | $ | 2,358 | ||||||||||||
Swap Agreements | 0 | 0 | (2,295 | ) | 0 | 0 | (2,295 | ) | ||||||||||||||||
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$ | 0 | $ | 0 | $ | (2,295 | ) | $ | 2,358 | $ | 0 | $ | 63 | ||||||||||||
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$ | 0 | $ | 0 | $ | (3,185 | ) | $ | 2,358 | $ | 0 | $ | (827 | ) | |||||||||||
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Net Change in Unrealized Appreciation (Depreciation) on Financial Derivative Instruments |
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Exchange-traded or centrally cleared | ||||||||||||||||||||||||
Futures | $ | 0 | $ | 0 | $ | 122 | $ | 0 | $ | 0 | $ | 122 | ||||||||||||
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Over the counter | ||||||||||||||||||||||||
Forward Foreign Currency Contracts | $ | 0 | $ | 0 | $ | 0 | $ | (2,497 | ) | $ | 0 | $ | (2,497 | ) | ||||||||||
Swap Agreements | 0 | 0 | 1,256 | 0 | 0 | 1,256 | ||||||||||||||||||
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$ | 0 | $ | 0 | $ | 1,256 | $ | (2,497 | ) | $ | 0 | $ | (1,241 | ) | |||||||||||
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$ | 0 | $ | 0 | $ | 1,378 | $ | (2,497 | ) | $ | 0 | $ | (1,119 | ) | |||||||||||
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See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 81 |
Table of Contents
Schedule of Investments PIMCO EqS® Emerging Markets Fund (Cont.)
December 31, 2014 (Unaudited)
FAIR VALUE MEASUREMENTS
The following is a summary of the fair valuations according to the inputs used as of December 31, 2014 in valuing the Fund’s assets and liabilities:
Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair Value at 12/31/2014 | ||||||||||||
Investments in Securities, at Value |
| |||||||||||||||
Common Stocks | ||||||||||||||||
Australia | ||||||||||||||||
Materials | $ | 0 | $ | 964 | $ | 0 | $ | 964 | ||||||||
Bermuda | ||||||||||||||||
Energy | 0 | 240 | 0 | 240 | ||||||||||||
Brazil | ||||||||||||||||
Consumer Discretionary | 1,137 | 0 | 0 | 1,137 | ||||||||||||
Consumer Staples | 1,353 | 0 | 0 | 1,353 | ||||||||||||
Financials | 4,394 | 0 | 0 | 4,394 | ||||||||||||
Industrials | 1,202 | 0 | 0 | 1,202 | ||||||||||||
Cambodia | ||||||||||||||||
Consumer Discretionary | 0 | 1,732 | 0 | 1,732 | ||||||||||||
China | ||||||||||||||||
Consumer Discretionary | 0 | 1,686 | 0 | 1,686 | ||||||||||||
Consumer Staples | 0 | 1,107 | 0 | 1,107 | ||||||||||||
Energy | 0 | 2,644 | 0 | 2,644 | ||||||||||||
Financials | 0 | 7,121 | 0 | 7,121 | ||||||||||||
Information Technology | 2,076 | 2,092 | 0 | 4,168 | ||||||||||||
France | ||||||||||||||||
Energy | 0 | 1,383 | 0 | 1,383 | ||||||||||||
Greece | ||||||||||||||||
Financials | 0 | 983 | 0 | 983 | ||||||||||||
Hong Kong | ||||||||||||||||
Financials | 0 | 3,622 | 0 | 3,622 | ||||||||||||
Information Technology | 0 | 0 | 664 | 664 | ||||||||||||
Telecommunication Services | 0 | 2,354 | 0 | 2,354 | ||||||||||||
India | ||||||||||||||||
Consumer Discretionary | 0 | 3,458 | 0 | 3,458 | ||||||||||||
Consumer Staples | 0 | 538 | 0 | 538 | ||||||||||||
Financials | 0 | 4,728 | 0 | 4,728 | ||||||||||||
Health Care | 0 | 1,189 | 0 | 1,189 | ||||||||||||
Information Technology | 0 | 1,113 | 0 | 1,113 | ||||||||||||
Indonesia | ||||||||||||||||
Consumer Discretionary | 0 | 1,303 | 0 | 1,303 | ||||||||||||
Israel | ||||||||||||||||
Information Technology | 1,622 | 0 | 0 | 1,622 | ||||||||||||
Japan | ||||||||||||||||
Industrials | 0 | 2,664 | 0 | 2,664 | ||||||||||||
Information Technology | 0 | 1,109 | 0 | 1,109 | ||||||||||||
Macau | ||||||||||||||||
Consumer Discretionary | 0 | 772 | 0 | 772 | ||||||||||||
Mexico | ||||||||||||||||
Financials | 2,323 | 0 | 0 | 2,323 | ||||||||||||
Norway | ||||||||||||||||
Consumer Staples | 0 | 1,269 | 0 | 1,269 | ||||||||||||
Peru | ||||||||||||||||
Financials | 2,174 | 0 | 0 | 2,174 | ||||||||||||
Materials | 1,820 | 0 | 0 | 1,820 | ||||||||||||
Poland | ||||||||||||||||
Financials | 0 | 841 | 0 | 841 | ||||||||||||
Russia | ||||||||||||||||
Consumer Staples | 850 | 0 | 0 | 850 |
Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair Value at 12/31/2014 | ||||||||||||
South Africa | ||||||||||||||||
Consumer Discretionary | $ | 0 | $ | 1,394 | $ | 0 | $ | 1,394 | ||||||||
Financials | 0 | 654 | 0 | 654 | ||||||||||||
Telecommunication Services | 0 | 1,721 | 0 | 1,721 | ||||||||||||
South Korea | ||||||||||||||||
Consumer Discretionary | 0 | 2,719 | 0 | 2,719 | ||||||||||||
Consumer Staples | 0 | 1,046 | 0 | 1,046 | ||||||||||||
Information Technology | 0 | 3,729 | 0 | 3,729 | ||||||||||||
Materials | 0 | 934 | 0 | 934 | ||||||||||||
Telecommunication Services | 0 | 721 | 0 | 721 | ||||||||||||
Taiwan | ||||||||||||||||
Information Technology | 2,903 | 6,833 | 0 | 9,736 | ||||||||||||
Thailand | ||||||||||||||||
Financials | 0 | 1,339 | 0 | 1,339 | ||||||||||||
Turkey | ||||||||||||||||
Financials | 0 | 581 | 0 | 581 | ||||||||||||
United States | ||||||||||||||||
Consumer Discretionary | 0 | 517 | 0 | 517 | ||||||||||||
Preferred Stocks | ||||||||||||||||
Brazil | ||||||||||||||||
Consumer Staples | 1,137 | 0 | 0 | 1,137 | ||||||||||||
Warrants | ||||||||||||||||
United States | ||||||||||||||||
Consumer Discretionary | 656 | 0 | 0 | 656 | ||||||||||||
Financials | 433 | 0 | 0 | 433 | ||||||||||||
Short-Term Instruments | ||||||||||||||||
Repurchase Agreements | 0 | 168 | 0 | 168 | ||||||||||||
U.S. Treasury Bills | 0 | 943 | 0 | 943 | ||||||||||||
$ | 24,080 | $ | 68,211 | $ | 664 | $ | 92,955 | |||||||||
Investments in Affiliates, at Value |
| |||||||||||||||
Short-Term Instruments | ||||||||||||||||
Central Funds Used for Cash Management Purposes | $ | 11,231 | $ | 0 | $ | 0 | $ | 11,231 | ||||||||
Total Investments | $ | 35,311 | $ | 68,211 | $ | 664 | $ | 104,186 | ||||||||
Financial Derivative Instruments - Assets |
| |||||||||||||||
Exchange-traded or centrally cleared | 1 | 0 | 0 | 1 | ||||||||||||
Over the counter | 0 | 2,479 | 0 | 2,479 | ||||||||||||
$ | 1 | $ | 2,479 | $ | 0 | $ | 2,480 | |||||||||
Financial Derivative Instruments - Liabilities |
| |||||||||||||||
Exchange-traded or centrally cleared | (14 | ) | 0 | 0 | (14 | ) | ||||||||||
Over the counter | 0 | (1,747 | ) | 0 | (1,747 | ) | ||||||||||
$ | (14 | ) | $ | (1,747 | ) | $ | 0 | $ | (1,761 | ) | ||||||
Totals | $ | 35,298 | $ | 68,943 | $ | 664 | $ | 104,905 |
There were no significant transfers between Level 1, 2, and 3 during the period ended December 31, 2014.
82 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
Schedule of Investments PIMCO EqS® Long/Short Fund
December 31, 2014 (Unaudited)
PRINCIPAL AMOUNT (000S) | MARKET VALUE (000S) | |||||||||||
INVESTMENTS IN SECURITIES 76.6% | ||||||||||||
U.S. TREASURY OBLIGATIONS 0.3% | ||||||||||||
U.S. Treasury Notes |
| |||||||||||
0.250% due 05/31/2015 | $ | 3,200 | $ | 3,202 | ||||||||
|
| |||||||||||
Total U.S. Treasury Obligations |
| 3,202 | ||||||||||
|
| |||||||||||
SHARES | ||||||||||||
COMMON STOCKS 70.4% | ||||||||||||
CONSUMER DISCRETIONARY 25.4% | ||||||||||||
Comcast Corp. ‘A’ (e) | 815,000 | 47,278 | ||||||||||
Dollar Tree, Inc. (a) | 550,000 | 38,709 | ||||||||||
Foot Locker, Inc. | 730,000 | 41,011 | ||||||||||
Live Nation Entertainment, Inc. (a) | 1,290,000 | 33,682 | ||||||||||
MDC Partners, Inc. | 280,000 | 6,362 | ||||||||||
Nordstrom, Inc. | 350,000 | 27,787 | ||||||||||
Time Warner, Inc. | 475,000 | 40,574 | ||||||||||
Twenty-First Century Fox, Inc. | 800,000 | 30,724 | ||||||||||
|
| |||||||||||
266,127 | ||||||||||||
|
| |||||||||||
FINANCIALS 0.5% | ||||||||||||
Cash America International, Inc. | 243,600 | 5,510 | ||||||||||
|
| |||||||||||
HEALTH CARE 15.9% | ||||||||||||
Brookdale Senior Living, Inc. (a) | 800,000 | 29,336 | ||||||||||
Cardinal Health, Inc. | 530,000 | 42,787 | ||||||||||
Community Health Systems, Inc. (a) | 280,000 | 15,098 | ||||||||||
DaVita HealthCare Partners, Inc. (a) | 515,000 | 39,006 | ||||||||||
HealthSouth Corp. (e) | 1,039,080 | 39,963 | ||||||||||
|
| |||||||||||
166,190 | ||||||||||||
|
| |||||||||||
INDUSTRIALS 8.8% | ||||||||||||
American Airlines Group, Inc. | 420,000 | 22,525 | ||||||||||
KAR Auction Services, Inc. | 908,513 | 31,480 |
SHARES | MARKET VALUE (000S) | |||||||||||
Keysight Technologies, Inc. (a) | 980,000 | $ | 33,094 | |||||||||
Rexnord Corp. (a) | 200,000 | 5,642 | ||||||||||
|
| |||||||||||
92,741 | ||||||||||||
|
| |||||||||||
INFORMATION TECHNOLOGY 15.5% | ||||||||||||
CoreLogic, Inc. (a) | 405,000 | 12,794 | ||||||||||
DST Systems, Inc. (e) | 610,000 | 57,431 | ||||||||||
Google, Inc. ‘C’ (a) | 50,000 | 26,320 | ||||||||||
Micron Technology, Inc. (a) | 970,000 | 33,960 | ||||||||||
SK Hynix, Inc. (a) | 750,000 | 32,052 | ||||||||||
|
| |||||||||||
162,557 | ||||||||||||
|
| |||||||||||
MATERIALS 4.3% | ||||||||||||
Sealed Air Corp. | 1,060,000 | 44,976 | ||||||||||
|
| |||||||||||
Total Common Stocks (Cost $653,490) |
| 738,101 | ||||||||||
|
| |||||||||||
REAL ESTATE INVESTMENT TRUSTS 3.4% | ||||||||||||
FINANCIALS 3.4% | ||||||||||||
Iron Mountain, Inc. | 920,000 | 35,567 | ||||||||||
|
| |||||||||||
Total Real Estate Investment Trusts | 35,567 | |||||||||||
|
| |||||||||||
PRINCIPAL AMOUNT (000S) | ||||||||||||
SHORT-TERM INSTRUMENTS 2.5% | ||||||||||||
REPURCHASE AGREEMENTS (c) 0.1% | ||||||||||||
596 | ||||||||||||
|
| |||||||||||
SHORT-TERM NOTES 1.0% | ||||||||||||
Fannie Mae |
| |||||||||||
0.091% due 04/13/2015 | $ | 400 | 400 | |||||||||
Federal Home Loan Bank |
| |||||||||||
0.101% due 04/29/2015 | 1,600 | 1,600 | ||||||||||
0.114% due 05/20/2015 | 6,900 | 6,898 |
PRINCIPAL AMOUNT (000S) | MARKET VALUE (000S) | |||||||||||
Freddie Mac |
| |||||||||||
0.096% due 04/14/2015 | $ | 2,200 | $ | 2,200 | ||||||||
|
| |||||||||||
11,098 | ||||||||||||
|
| |||||||||||
U.S. TREASURY BILLS 1.4% | ||||||||||||
0.034% due 01/15/2015 - 05/07/2015 (b)(g) | 14,311 | 14,310 | ||||||||||
|
| |||||||||||
Total Short-Term Instruments (Cost $26,001) | 26,004 | |||||||||||
|
| |||||||||||
Total Investments in Securities (Cost $714,116) | 802,874 | |||||||||||
|
| |||||||||||
SHARES | ||||||||||||
INVESTMENTS IN AFFILIATES 27.8% | ||||||||||||
SHORT-TERM INSTRUMENTS 27.8% | ||||||||||||
CENTRAL FUNDS USED FOR CASH MANAGEMENT PURPOSES 27.8% | ||||||||||||
PIMCO Short-Term Floating NAV Portfolio | 2,199,339 | 21,969 | ||||||||||
PIMCO Short-Term Floating NAV Portfolio III | 27,143,032 | 269,042 | ||||||||||
|
| |||||||||||
Total Short-Term Instruments (Cost $293,086) | 291,011 | |||||||||||
|
| |||||||||||
Total Investments in Affiliates (Cost $293,086) | 291,011 | |||||||||||
Total Investments 104.4% (Cost $1,007,202) | $ | 1,093,885 | ||||||||||
Securities Sold Short (d) (5.7%) (Proceeds, $61,683) | (60,046 | ) | ||||||||||
Financial Derivative Instruments (e)(f) 0.0% (Cost or Premiums, net $0) | 167 | |||||||||||
Other Assets and Liabilities, net (1.3%) | 14,158 | |||||||||||
|
| |||||||||||
Net Assets 100.0% | $ | 1,048,164 | ||||||||||
|
|
NOTES TO 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. |
(b) | Coupon represents a weighted average yield to maturity. |
BORROWINGS AND OTHER FINANCING TRANSACTIONS
(c) REPURCHASE AGREEMENTS:
Counterparty | Lending Rate | Settlement Date | Maturity Date | Principal Amount | Collateralized By | Collateral Received, at Value | Repurchase Agreements, at Value | Repurchase Agreement Proceeds to be Received (1) | ||||||||||||||||||||
SSB | 0.000% | 12/31/2014 | 01/02/2015 | $ | 596 | Fannie Mae 2.260% due 10/17/2022 | $ | (609 | ) | $ | 596 | $ | 596 | |||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||
Total Repurchase Agreements |
| $ | (609 | ) | $ | 596 | $ | 596 | ||||||||||||||||||||
|
|
|
|
|
|
(1) | Includes accrued interest. |
See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 83 |
Table of Contents
Schedule of Investments PIMCO EqS® Long/Short Fund (Cont.)
(d) SHORT SALES:
(e) | Securities with an aggregate market value of $49,394 and cash of $55,067 have been pledged as collateral as of December 31, 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 (2) | ||||||||||
Common Stocks | ||||||||||||||
Consumer Discretionary | ||||||||||||||
SNI | Omnicom Group, Inc. | 95,000 | $ | (7,340 | ) | $ | (7,408 | ) | ||||||
JPM | Omnicom Group, Inc. | 25,000 | (1,946 | ) | (1,949 | ) | ||||||||
Sonic Corp. | 125,000 | (3,341 | ) | (3,404 | ) | |||||||||
FOB | zulily, Inc. ‘A’ | 60,000 | (2,058 | ) | (1,404 | ) | ||||||||
Energy | ||||||||||||||
JPM | Basic Energy Services, Inc. | 101,662 | (811 | ) | (713 | ) | ||||||||
CARBO Ceramics, Inc. | 220,000 | (9,450 | ) | (8,810 | ) | |||||||||
RJA | CARBO Ceramics, Inc. | 75,000 | (2,590 | ) | (3,003 | ) | ||||||||
SNF | CARBO Ceramics, Inc. | 15,000 | (694 | ) | (601 | ) | ||||||||
GSC | Core Laboratories NV | 50,000 | (5,942 | ) | (6,017 | ) | ||||||||
RBC | Core Laboratories NV | 50,000 | (5,677 | ) | (6,017 | ) | ||||||||
JPM | Core Laboratories NV | 25,000 | (3,096 | ) | (3,009 | ) | ||||||||
SBI | Transocean Ltd. | 200,000 | (3,760 | ) | (3,666 | ) | ||||||||
Industrials | ||||||||||||||
Cliffs Natural Resources, Inc. | 200,000 | (1,722 | ) | (1,428 | ) | |||||||||
GSC | Cliffs Natural Resources, Inc. | 150,000 | (1,509 | ) | (1,071 | ) | ||||||||
SNF | Cliffs Natural Resources, Inc. | 50,000 | (516 | ) | (357 | ) | ||||||||
Information Technology | ||||||||||||||
FOB | Zillow, Inc. ‘A’ | 19,678 | (2,533 | ) | (2,084 | ) | ||||||||
Utilities | ||||||||||||||
Dynegy, Inc. | 200,000 | (5,798 | ) | (6,070 | ) | |||||||||
DEU | Dynegy, Inc. | 98,693 | (2,862 | ) | (2,995 | ) | ||||||||
GSC | Dynegy, Inc. | 1,307 | (38 | ) | (40 | ) | ||||||||
|
|
|
| |||||||||||
Total Short Sales | $ | (61,683 | ) | $ | (60,046 | ) | ||||||||
|
|
|
|
(2) | Payable for short sales includes $60 of dividends payable. |
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 December 31, 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 (3) | |||||||||||||||||||||
Global/Master Repurchase Agreement | ||||||||||||||||||||||||||||
SSB | $ | 596 | $ | 0 | $ | 0 | $ | 0 | $ | 596 | $ | (609 | ) | $ | (13 | ) | ||||||||||||
Prime Brokerage Agreement | ||||||||||||||||||||||||||||
DEU | 0 | 0 | 0 | (2,995 | ) | (2,995 | ) | 0 | (2,995 | ) | ||||||||||||||||||
FOB | 0 | 0 | 0 | (9,558 | ) | (9,558 | ) | 21,033 | 11,475 | |||||||||||||||||||
GSC | 0 | 0 | 0 | (7,128 | ) | (7,128 | ) | 82,643 | 75,515 | |||||||||||||||||||
JPM | 0 | 0 | 0 | (17,885 | ) | (17,885 | ) | 0 | (17,885 | ) | ||||||||||||||||||
MRJ | 0 | 0 | 0 | 0 | 0 | 671 | 671 | |||||||||||||||||||||
MSC | 0 | 0 | 0 | 0 | 0 | 70 | 70 | |||||||||||||||||||||
RBC | 0 | 0 | 0 | (6,017 | ) | (6,017 | ) | 0 | (6,017 | ) | ||||||||||||||||||
RJA | 0 | 0 | 0 | (3,003 | ) | (3,003 | ) | 0 | (3,003 | ) | ||||||||||||||||||
SBI | 0 | 0 | 0 | (5,094 | ) | (5,094 | ) | 0 | (5,094 | ) | ||||||||||||||||||
SNF | 0 | 0 | 0 | (958 | ) | (958 | ) | 0 | (958 | ) | ||||||||||||||||||
SNI | 0 | 0 | 0 | (7,408 | ) | (7,408 | ) | 0 | (7,408 | ) | ||||||||||||||||||
UBS | 0 | 0 | 0 | 0 | 0 | 43 | 43 | |||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total Borrowings and Other Financing Transactions | $ | 596 | $ | 0 | $ | 0 | $ (60,046) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
(3) | 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. See Note 7, Principal Risks, in the Notes to Financial Statements for more information regarding master netting arrangements. |
84 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 2014 (Unaudited)
(f) FINANCIAL DERIVATIVE INSTRUMENTS: OVER THE COUNTER
FORWARD FOREIGN CURRENCY CONTRACTS:
Counterparty | Settlement Month | Currency to | Currency to | Unrealized Appreciation/ (Depreciation) | ||||||||||||||||||||||||
Asset | Liability | |||||||||||||||||||||||||||
CBK | 02/2015 | KRW | 19,945,064 | $ | 18,248 | $ | 59 | $ | 0 | |||||||||||||||||||
DUB | 02/2015 | $ | 6,606 | KRW | 7,284,700 | 37 | 0 | |||||||||||||||||||||
FBF | 02/2015 | KRW | 23,694,460 | $ | 21,782 | 174 | 0 | |||||||||||||||||||||
GLM | 02/2015 | $ | 256 | KRW | 269,414 | 0 | (11 | ) | ||||||||||||||||||||
HUS | 02/2015 | KRW | 10,684,764 | $ | 9,652 | 0 | (92 | ) | ||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Total Forward Foreign Currency Contracts |
| $ | 270 | $ | (103 | ) | ||||||||||||||||||||||
|
|
|
|
WRITTEN OPTIONS:
AS OF DECEMBER 31, 2014 THERE WERE NO OPEN WRITTEN OPTIONS. TRANSACTIONS IN WRITTEN CALL AND PUT OPTIONS FOR THE PERIOD ENDED DECEMBER 31, 2014:
# of Contracts | Premiums | |||||||
Balance at Beginning of Period | 4,000 | $ | (1,008 | ) | ||||
Sales | 0 | 0 | ||||||
Closing Buys | (4,000 | ) | 1,008 | |||||
Expirations | 0 | 0 | ||||||
Exercised | 0 | 0 | ||||||
|
|
|
| |||||
Balance at End of Period | 0 | $ | 0 | |||||
|
|
|
|
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)/pledged as of December 31, 2014:
(g) | Securities with an aggregate market value of $11 have been pledged as collateral for financial derivative instruments as governed by International Swaps and Derivatives Association, Inc. master agreements as of December 31, 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)/ Pledged | Net Exposure (1) | |||||||||||||||||||||||||||||||||||
CBK | $ | 59 | $ | 0 | $ | 0 | $ | 59 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 59 | $ | 0 | $ | 59 | ||||||||||||||||||||||||
DUB | 37 | 0 | 0 | 37 | 0 | 0 | 0 | 0 | 37 | 0 | 37 | |||||||||||||||||||||||||||||||||||
FBF | 174 | 0 | 0 | 174 | 0 | 0 | 0 | 0 | 174 | (290 | ) | (116 | ) | |||||||||||||||||||||||||||||||||
GLM | 0 | 0 | 0 | 0 | (11 | ) | 0 | 0 | (11 | ) | (11 | ) | 11 | 0 | ||||||||||||||||||||||||||||||||
HUS | 0 | 0 | 0 | 0 | (92 | ) | 0 | 0 | (92 | ) | (92 | ) | 0 | (92 | ) | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Total Over the Counter | $ | 270 | $ | 0 | $ | 0 | $ | 270 | $ | (103 | ) | $ | 0 | $ | 0 | $ | (103 | ) | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Net Exposure represents the net receivable/(payable) that would be due from/to the counterparty in the event of default. Exposure from OTC financial derivative instruments can only be netted across transactions governed under the same master agreement with the same legal entity. See Note 7, Principal Risks, in the Notes to Financial Statements for more information regarding master netting arrangements. |
FAIR VALUE OF FINANCIAL DERIVATIVE INSTRUMENTS
The following is a summary of the fair valuation of the Fund’s derivative instruments categorized by risk exposure. See Note 7, Principal Risks, in the Notes to Financial Statements on risks of the Fund.
Fair Values of Financial Derivative Instruments on the Statements of Assets and Liabilities as of December 31, 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 | $ | 270 | $ | 0 | $ | 270 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Financial Derivative Instruments - Liabilities | ||||||||||||||||||||||||
Over the counter | ||||||||||||||||||||||||
Forward Foreign Currency Contracts | $ | 0 | $ | 0 | $ | 0 | $ | 103 | $ | 0 | $ | 103 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 85 |
Table of Contents
Schedule of Investments PIMCO EqS® Long/Short Fund (Cont.)
December 31, 2014 (Unaudited)
The Effect of Financial Derivative Instruments on the Statements of Operations for the Period Ended December 31, 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 | ||||||||||||||||||||||||
Purchased Options | $ | 0 | $ | 0 | $ | (2,145 | ) | $ | 0 | $ | 0 | $ | (2,145 | ) | ||||||||||
Written Options | 0 | 0 | 1,008 | 0 | 0 | 1,008 | ||||||||||||||||||
Futures | 0 | 0 | (4,019 | ) | 0 | 0 | (4,019 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
$ | 0 | $ | 0 | $ | (5,156 | ) | $ | 0 | $ | 0 | $ | (5,156 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Over the counter | ||||||||||||||||||||||||
Forward Foreign Currency Contracts | $ | 0 | $ | 0 | $ | 0 | $ | (1,471 | ) | $ | 0 | $ | (1,471 | ) | ||||||||||
Swap Agreements | 0 | 0 | 294 | 0 | 0 | 294 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
$ | 0 | $ | 0 | $ | 294 | $ | (1,471 | ) | $ | 0 | $ | (1,177 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
$ | 0 | $ | 0 | $ | (4,862 | ) | $ | (1,471 | ) | $ | 0 | $ | (6,333 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net Change in Unrealized Appreciation on Financial Derivative Instruments |
| |||||||||||||||||||||||
Exchange-traded or centrally cleared | ||||||||||||||||||||||||
Purchased Options | $ | 0 | $ | 0 | $ | 574 | $ | 0 | $ | 0 | $ | 574 | ||||||||||||
Written Options | 0 | 0 | 1,612 | 0 | 0 | 1,612 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
$ | 0 | $ | 0 | $ | 2,186 | $ | 0 | $ | 0 | $ | 2,186 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Over the counter | ||||||||||||||||||||||||
Forward Foreign Currency Contracts | $ | 0 | $ | 0 | $ | 0 | $ | 4,155 | $ | 0 | $ | 4,155 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
$ | 0 | $ | 0 | $ | 2,186 | $ | 4,155 | $ | 0 | $ | 6,341 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
FAIR VALUE MEASUREMENTS
The following is a summary of the fair valuations according to the inputs used as of December 31, 2014 in valuing the Fund’s assets and liabilities:
Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair Value at 12/31/2014 | ||||||||||||
Investments in Securities, at Value | ||||||||||||||||
U.S. Treasury Obligations | ||||||||||||||||
U.S. Treasury Notes | $ | 0 | $ | 3,202 | $ | 0 | $ | 3,202 | ||||||||
Common Stocks | ||||||||||||||||
Consumer Discretionary | 266,127 | 0 | 0 | 266,127 | ||||||||||||
Financials | 5,510 | 0 | 0 | 5,510 | ||||||||||||
Health Care | 166,190 | 0 | 0 | 166,190 | ||||||||||||
Industrials | 92,741 | 0 | 0 | 92,741 | ||||||||||||
Information Technology | 130,505 | 32,052 | 0 | 162,557 | ||||||||||||
Materials | 44,976 | 0 | 0 | 44,976 | ||||||||||||
Real Estate Investment Trusts | ||||||||||||||||
Financials | 35,567 | 0 | 0 | 35,567 | ||||||||||||
Short-Term Instruments | ||||||||||||||||
Repurchase Agreements | 0 | 596 | 0 | 596 | ||||||||||||
Short-Term Notes | 0 | 11,098 | 0 | 11,098 | ||||||||||||
U.S. Treasury Bills | 0 | 14,310 | 0 | 14,310 | ||||||||||||
$ | 741,616 | $ | 61,258 | $ | 0 | $ | 802,874 | |||||||||
Investments in Affiliates, at Value | ||||||||||||||||
Short-Term Instruments | ||||||||||||||||
Central Funds Used for Cash Management Purposes | $ | 291,011 | $ | 0 | $ | 0 | $ | 291,011 | ||||||||
Total Investments | $ | 1,032,627 | $ | 61,258 | $ | 0 | $ | 1,093,885 |
Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair Value at 12/31/2014 | ||||||||||||
Short Sales, at Value - Liabilities | ||||||||||||||||
Common Stocks | ||||||||||||||||
Consumer Discretionary | $ | (14,165 | ) | $ | 0 | $ | 0 | $ | (14,165 | ) | ||||||
Energy | (31,836 | ) | 0 | 0 | (31,836 | ) | ||||||||||
Industrials | (2,856 | ) | 0 | 0 | (2,856 | ) | ||||||||||
Information Technology | (2,084 | ) | 0 | 0 | (2,084 | ) | ||||||||||
Utilities | (9,105 | ) | 0 | 0 | (9,105 | ) | ||||||||||
$ | (60,046 | ) | $ | 0 | $ | 0 | $ | (60,046 | ) | |||||||
Financial Derivative Instruments - Assets |
| |||||||||||||||
Over the counter | $ | 0 | $ | 270 | $ | 0 | $ | 270 | ||||||||
Financial Derivative Instruments - Liabilities |
| |||||||||||||||
Over the counter | $ | 0 | $ | (103 | ) | $ | 0 | $ | (103 | ) | ||||||
Totals | $ | 972,581 | $ | 61,425 | $ | 0 | $ | 1,034,006 |
There were no significant transfers between Level 1, 2, and 3 during the period ended December 31, 2014.
86 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
Schedule of Investments PIMCO Global Dividend Fund
December 31, 2014 (Unaudited)
SHARES | MARKET VALUE (000S) | |||||||||||
INVESTMENTS IN SECURITIES 99.3% | ||||||||||||
COMMON STOCKS 95.3% | ||||||||||||
AUSTRALIA 1.0% | ||||||||||||
INDUSTRIALS 1.0% | ||||||||||||
Spotless Group Holdings Ltd. (a) | 841,933 | $ | 1,304 | |||||||||
|
| |||||||||||
Total Australia | 1,304 | |||||||||||
|
| |||||||||||
BERMUDA 2.0% | ||||||||||||
ENERGY 2.0% | ||||||||||||
Golar LNG Partners LP | 84,900 | 2,645 | ||||||||||
|
| |||||||||||
Total Bermuda | 2,645 | |||||||||||
|
| |||||||||||
BRAZIL 2.8% | ||||||||||||
INDUSTRIALS 0.9% | ||||||||||||
Arteris S.A. | 250,800 | 1,170 | ||||||||||
|
| |||||||||||
UTILITIES 1.9% | ||||||||||||
Cia de Saneamento Basico do Estado de Sao Paulo - ADR | 209,211 | 1,316 | ||||||||||
Light S.A. | 190,000 | 1,216 | ||||||||||
|
| |||||||||||
2,532 | ||||||||||||
|
| |||||||||||
Total Brazil | 3,702 | |||||||||||
|
| |||||||||||
CHINA 1.0% | ||||||||||||
CONSUMER STAPLES 1.0% | ||||||||||||
Want Want China Holdings Ltd. | 1,025,000 | 1,347 | ||||||||||
|
| |||||||||||
Total China | 1,347 | |||||||||||
|
| |||||||||||
CYPRUS 0.6% | ||||||||||||
ENERGY 0.6% | ||||||||||||
ProSafe SE | 244,659 | 752 | ||||||||||
|
| |||||||||||
Total Cyprus | 752 | |||||||||||
|
| |||||||||||
FRANCE 7.0% | ||||||||||||
ENERGY 1.8% | ||||||||||||
Total S.A. | 45,703 | 2,342 | ||||||||||
|
| |||||||||||
FINANCIALS 1.5% | ||||||||||||
CNP Assurances | 114,114 | 2,023 | ||||||||||
|
| |||||||||||
UTILITIES 3.7% | ||||||||||||
Electricite de France S.A. | 73,696 | 2,029 | ||||||||||
Suez Environnement Co. | 163,097 | 2,841 | ||||||||||
|
| |||||||||||
4,870 | ||||||||||||
|
| |||||||||||
Total France | 9,235 | |||||||||||
|
| |||||||||||
HONG KONG 4.0% | ||||||||||||
CONSUMER DISCRETIONARY 1.4% | ||||||||||||
Li & Fung Ltd. | 2,016,000 | 1,888 | ||||||||||
|
| |||||||||||
INDUSTRIALS 0.5% | ||||||||||||
Yuexiu Transport Infrastructure Ltd. | 1,168,000 | 710 | ||||||||||
|
| |||||||||||
SHARES | MARKET VALUE (000S) | |||||||||||
TELECOMMUNICATION SERVICES 2.1% | ||||||||||||
China Mobile Ltd. | 229,000 | $ | 2,688 | |||||||||
|
| |||||||||||
Total Hong Kong | 5,286 | |||||||||||
|
| |||||||||||
ITALY 4.5% | ||||||||||||
FINANCIALS 3.5% | ||||||||||||
Intesa Sanpaolo SpA | 1,571,087 | 4,557 | ||||||||||
|
| |||||||||||
INDUSTRIALS 1.0% | ||||||||||||
Societa Iniziative Autostradali e Servizi SpA | 142,246 | 1,369 | ||||||||||
|
| |||||||||||
Total Italy | 5,926 | |||||||||||
|
| |||||||||||
JAPAN 4.3% | ||||||||||||
CONSUMER DISCRETIONARY 2.1% | ||||||||||||
Bridgestone Corp. | 78,200 | 2,712 | ||||||||||
|
| |||||||||||
TELECOMMUNICATION SERVICES 2.2% | ||||||||||||
Nippon Telegraph & Telephone Corp. | 58,200 | 2,973 | ||||||||||
|
| |||||||||||
Total Japan | 5,685 | |||||||||||
|
| |||||||||||
LUXEMBOURG 0.8% | ||||||||||||
INDUSTRIALS 0.8% | ||||||||||||
Regus PLC | 322,274 | 1,041 | ||||||||||
|
| |||||||||||
Total Luxembourg | 1,041 | |||||||||||
|
| |||||||||||
NETHERLANDS 1.7% | ||||||||||||
FINANCIALS 1.7% | ||||||||||||
Aegon NV | 292,939 | 2,202 | ||||||||||
|
| |||||||||||
Total Netherlands | 2,202 | |||||||||||
|
| |||||||||||
SINGAPORE 1.0% | ||||||||||||
INDUSTRIALS 1.0% | ||||||||||||
Singapore Airlines Ltd. | 156,000 | 1,362 | ||||||||||
|
| |||||||||||
Total Singapore | 1,362 | |||||||||||
|
| |||||||||||
SOUTH AFRICA 0.5% | ||||||||||||
HEALTH CARE 0.5% | ||||||||||||
Life Healthcare Group Holdings Ltd. | 181,684 | 671 | ||||||||||
|
| |||||||||||
Total South Africa | 671 | |||||||||||
|
| |||||||||||
SPAIN 1.5% | ||||||||||||
CONSUMER STAPLES 1.5% | ||||||||||||
Ebro Foods S.A. | 122,524 | 2,025 | ||||||||||
|
| |||||||||||
Total Spain | 2,025 | |||||||||||
|
| |||||||||||
SWITZERLAND 1.9% | ||||||||||||
HEALTH CARE 1.9% | ||||||||||||
Roche Holding AG | 9,204 | 2,494 | ||||||||||
|
| |||||||||||
Total Switzerland | 2,494 | |||||||||||
|
| |||||||||||
SHARES | MARKET VALUE (000S) | |||||||||||
TAIWAN 1.3% | ||||||||||||
INFORMATION TECHNOLOGY 1.3% | ||||||||||||
Radiant Opto-Electronics Corp. | 515,360 | $ | 1,641 | |||||||||
|
| |||||||||||
Total Taiwan | 1,641 | |||||||||||
|
| |||||||||||
TURKEY 1.1% | ||||||||||||
INDUSTRIALS 1.1% | ||||||||||||
TAV Havalimanlari Holding A/S | 171,996 | 1,404 | ||||||||||
|
| |||||||||||
Total Turkey | 1,404 | |||||||||||
|
| |||||||||||
UNITED KINGDOM 13.9% | ||||||||||||
CONSUMER DISCRETIONARY 2.1% | ||||||||||||
ITV PLC | 818,390 | 2,730 | ||||||||||
|
| |||||||||||
CONSUMER STAPLES 2.6% | ||||||||||||
Imperial Tobacco Group PLC | 77,336 | 3,404 | ||||||||||
|
| |||||||||||
FINANCIALS 6.1% | ||||||||||||
ICAP PLC | 281,796 | 1,973 | ||||||||||
Lloyds Banking Group PLC (a) | 3,400,208 | 4,000 | ||||||||||
St James’s Place PLC | 162,442 | 2,048 | ||||||||||
|
| |||||||||||
8,021 | ||||||||||||
|
| |||||||||||
TELECOMMUNICATION SERVICES 3.1% | ||||||||||||
Vodafone Group PLC | 1,187,274 | 4,071 | ||||||||||
|
| |||||||||||
Total United Kingdom | 18,226 | |||||||||||
|
| |||||||||||
UNITED STATES 44.4% | ||||||||||||
CONSUMER DISCRETIONARY 7.2% | ||||||||||||
AMC Entertainment Holdings, Inc. ‘A’ | 25,540 | 669 | ||||||||||
General Motors Co. | 61,653 | 2,152 | ||||||||||
Kohl’s Corp. | 43,034 | 2,627 | ||||||||||
Target Corp. | 53,144 | 4,034 | ||||||||||
|
| |||||||||||
9,482 | ||||||||||||
|
| |||||||||||
CONSUMER STAPLES 2.1% | ||||||||||||
Walgreens Boots Alliance, Inc. | 35,363 | 2,695 | ||||||||||
|
| |||||||||||
ENERGY 0.5% | ||||||||||||
Peabody Energy Corp. | 77,966 | 603 | ||||||||||
|
| |||||||||||
FINANCIALS 9.5% | ||||||||||||
Blackstone Group LP | 78,934 | 2,670 | ||||||||||
JPMorgan Chase & Co. | 41,857 | 2,619 | ||||||||||
KeyCorp | 141,273 | 1,964 | ||||||||||
Navient Corp. | 123,121 | 2,661 | ||||||||||
Prudential Financial, Inc. | 28,937 | 2,618 | ||||||||||
|
| |||||||||||
12,532 | ||||||||||||
|
| |||||||||||
HEALTH CARE 2.0% | ||||||||||||
Pfizer, Inc. | 86,201 | 2,685 | ||||||||||
|
| |||||||||||
See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 87 |
Table of Contents
Schedule of Investments PIMCO Global Dividend Fund (Cont.)
SHARES | MARKET VALUE (000S) | |||||||||||
INDUSTRIALS 2.0% | ||||||||||||
Timken Co. | 61,067 | $ | 2,606 | |||||||||
|
| |||||||||||
INFORMATION TECHNOLOGY 10.4% | ||||||||||||
Cisco Systems, Inc. | 96,340 | 2,680 | ||||||||||
Corning, Inc. | 115,361 | 2,645 | ||||||||||
QUALCOMM, Inc. | 41,037 | 3,050 | ||||||||||
Symantec Corp. | 101,319 | 2,600 | ||||||||||
Western Digital Corp. | 24,221 | 2,681 | ||||||||||
|
| |||||||||||
13,656 | ||||||||||||
|
| |||||||||||
MATERIALS 5.8% | ||||||||||||
International Paper Co. | 42,646 | 2,285 | ||||||||||
Steel Dynamics, Inc. | 134,338 | 2,652 | ||||||||||
Tronox Ltd. ‘A’ | 114,645 | 2,738 | ||||||||||
|
| |||||||||||
7,675 | ||||||||||||
|
| |||||||||||
UTILITIES 4.9% | ||||||||||||
ONE Gas, Inc. | 63,283 | 2,609 |
SHARES | MARKET VALUE (000S) | |||||||||||
PG&E Corp. | 73,000 | $ | 3,886 | |||||||||
|
| |||||||||||
6,495 | ||||||||||||
|
| |||||||||||
Total United States | 58,429 | |||||||||||
|
| |||||||||||
Total Common Stocks (Cost $116,420) |
| 125,377 | ||||||||||
|
| |||||||||||
REAL ESTATE INVESTMENT TRUSTS 4.0% | ||||||||||||
UNITED STATES 4.0% | ||||||||||||
FINANCIALS 4.0% | ||||||||||||
Colony Financial, Inc. | 141,100 | 3,361 | ||||||||||
Ryman Hospitality Properties, Inc. | 36,880 | 1,945 | ||||||||||
|
| |||||||||||
5,306 | ||||||||||||
|
| |||||||||||
Total Real Estate Investment Trusts | 5,306 | |||||||||||
|
| |||||||||||
Total Investments in Securities (Cost $121,026) | 130,683 | |||||||||||
|
|
SHARES | MARKET VALUE (000S) | |||||||||||
INVESTMENTS IN AFFILIATES 0.0% | ||||||||||||
SHORT-TERM INSTRUMENTS 0.0% | ||||||||||||
CENTRAL FUNDS USED FOR CASH MANAGEMENT PURPOSES 0.0% | ||||||||||||
PIMCO Short-Term | 1,352 | $ | 13 | |||||||||
PIMCO Short-Term | 1,881 | 19 | ||||||||||
|
| |||||||||||
Total Short-Term Instruments (Cost $32) | 32 | |||||||||||
|
| |||||||||||
Total Investments in Affiliates (Cost $32) | 32 | |||||||||||
Total Investments 99.3% (Cost $121,058) | $ | 130,715 | ||||||||||
Financial Derivative (Cost or Premiums, net $0) | 314 | |||||||||||
Other Assets and Liabilities, net 0.5% | 605 | |||||||||||
|
| |||||||||||
Net Assets 100.0% | $ | 131,634 | ||||||||||
|
|
NOTES TO SCHEDULE OF INVESTMENTS (AMOUNTS IN THOUSANDS*):
* | A zero balance may reflect actual amounts rounding to less than one thousand. |
(a) | Security did not produce income within the last twelve months. |
(b) FINANCIAL DERIVATIVE INSTRUMENTS: OVER THE COUNTER
FORWARD FOREIGN CURRENCY CONTRACTS:
Counterparty | Settlement Month | Currency to | Currency to | Unrealized Appreciation/ (Depreciation) | ||||||||||||||||||||||||
Asset | Liability | |||||||||||||||||||||||||||
BOA | 01/2015 | $ | 2,953 | JPY | 354,128 | $ | 4 | $ | 0 | |||||||||||||||||||
02/2015 | JPY | 354,128 | $ | 2,954 | 0 | (4 | ) | |||||||||||||||||||||
CBK | 01/2015 | $ | 11,484 | EUR | 9,370 | 0 | (145 | ) | ||||||||||||||||||||
02/2015 | EUR | 9,370 | $ | 11,487 | 145 | 0 | ||||||||||||||||||||||
GLM | 01/2015 | JPY | 354,128 | 2,992 | 36 | 0 | ||||||||||||||||||||||
HUS | 01/2015 | $ | 98 | SGD | 126 | 0 | (4 | ) | ||||||||||||||||||||
JPM | 01/2015 | EUR | 9,370 | $ | 11,620 | 282 | 0 | |||||||||||||||||||||
02/2015 | $ | 75 | HKD | 582 | 0 | 0 | ||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Total Forward Foreign Currency Contracts |
| $ | 467 | $ | (153 | ) | ||||||||||||||||||||||
|
|
|
|
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)/pledged as of December 31, 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)/ Pledged | Net Exposure (1) | |||||||||||||||||||||||||||||||||||
BOA | $ | 4 | $ | 0 | $ | 0 | $ | 4 | $ | (4 | ) | $ | 0 | $ | 0 | $ | (4 | ) | $ | (0 | ) | $ | 0 | $ | (0 | ) | ||||||||||||||||||||
CBK | 145 | 0 | 0 | 145 | (145 | ) | 0 | 0 | (145 | ) | (0 | ) | 0 | (0 | ) | |||||||||||||||||||||||||||||||
GLM | 36 | 0 | 0 | 36 | 0 | 0 | 0 | 0 | 36 | 0 | 36 | |||||||||||||||||||||||||||||||||||
HUS | 0 | 0 | 0 | 0 | (4 | ) | 0 | 0 | (4 | ) | (4 | ) | 0 | (4 | ) | |||||||||||||||||||||||||||||||
JPM | 282 | 0 | 0 | 282 | (0 | ) | 0 | 0 | 0 | 282 | 0 | 282 | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Total Over the Counter | $ | 467 | $ | 0 | $ | 0 | $ | 467 | $(153) | $ | 0 | $ | 0 | $(153) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
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|
|
|
|
|
(1) | Net Exposure represents the net receivable/(payable) that would be due from/to the counterparty in the event of default. Exposure from OTC financial derivative instruments can only be netted across transactions governed under the same master agreement with the same legal entity. See Note 7, Principal Risks, in the Notes to Financial Statements for more information regarding master netting arrangements. |
88 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 2014 (Unaudited)
FAIR VALUE OF FINANCIAL DERIVATIVE INSTRUMENTS
The following is a summary of the fair valuation of the Fund’s derivative instruments categorized by risk exposure. See Note 7, Principal Risks, in the Notes to Financial Statements on risks of the Fund.
Fair Values of Financial Derivative Instruments on the Statements of Assets and Liabilities as of December 31, 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 | $ | 467 | $ | 0 | $ | 467 | ||||||||||||
|
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|
|
|
|
|
|
|
|
|
| |||||||||||||
Financial Derivative Instruments - Liabilities | ||||||||||||||||||||||||
Over the counter | ||||||||||||||||||||||||
Forward Foreign Currency Contracts | $ | 0 | $ | 0 | $ | 0 | $ | 153 | $ | 0 | $ | 153 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
The Effect of Financial Derivative Instruments on the Statements of Operations for the Period Ended December 31, 2014:
Derivatives not accounted for as hedging instruments | ||||||||||||||||||||||||
Commodity Contracts | Credit Contracts | Equity Contracts | Foreign Exchange Contracts | Interest Rate Contracts | Total | |||||||||||||||||||
Net Realized Gain on Financial Derivative Instruments | ||||||||||||||||||||||||
Over the counter | ||||||||||||||||||||||||
Forward Foreign Currency Contracts | $ | 0 | $ | 0 | $ | 0 | $ | 1,010 | $ | 0 | $ | 1,010 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net Change in Unrealized Appreciation on Financial Derivative Instruments |
| |||||||||||||||||||||||
Over the counter | ||||||||||||||||||||||||
Forward Foreign Currency Contracts | $ | 0 | $ | 0 | $ | 0 | $ | 280 | $ | 0 | $ | 280 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
FAIR VALUE MEASUREMENTS
The following is a summary of the fair valuations according to the inputs used as of December 31, 2014 in valuing the Fund’s assets and liabilities:
Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair Value at 12/31/2014 | ||||||||||||
Investments in Securities, at Value | ||||||||||||||||
Common Stocks | ||||||||||||||||
Australia | ||||||||||||||||
Industrials | $ | 0 | $ | 1,304 | $ | 0 | $ | 1,304 | ||||||||
Bermuda | ||||||||||||||||
Energy | 2,645 | 0 | 0 | 2,645 | ||||||||||||
Brazil | ||||||||||||||||
Industrials | 1,170 | 0 | 0 | 1,170 | ||||||||||||
Utilities | 2,532 | 0 | 0 | 2,532 | ||||||||||||
China | ||||||||||||||||
Consumer Staples | 0 | 1,347 | 0 | 1,347 | ||||||||||||
Cyprus | ||||||||||||||||
Energy | 0 | 752 | 0 | 752 | ||||||||||||
France | ||||||||||||||||
Energy | 0 | 2,342 | 0 | 2,342 | ||||||||||||
Financials | 0 | 2,023 | 0 | 2,023 | ||||||||||||
Utilities | 0 | 4,870 | 0 | 4,870 | ||||||||||||
Hong Kong | ||||||||||||||||
Consumer Discretionary | 1,888 | 0 | 0 | 1,888 | ||||||||||||
Industrials | 0 | 710 | 0 | 710 | ||||||||||||
Telecommunication Services | 0 | 2,688 | 0 | 2,688 | ||||||||||||
Italy | ||||||||||||||||
Financials | 0 | 4,557 | 0 | 4,557 | ||||||||||||
Industrials | 0 | 1,369 | 0 | 1,369 | ||||||||||||
Japan | ||||||||||||||||
Consumer Discretionary | 0 | 2,712 | 0 | 2,712 | ||||||||||||
Telecommunication Services | 0 | 2,973 | 0 | 2,973 | ||||||||||||
Luxembourg | ||||||||||||||||
Industrials | 0 | 1,041 | 0 | 1,041 | ||||||||||||
Netherlands | ||||||||||||||||
Financials | 0 | 2,202 | 0 | 2,202 |
Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair Value at 12/31/2014 | ||||||||||||
Singapore | ||||||||||||||||
Industrials | $ | 0 | $ | 1,362 | $ | 0 | $ | 1,362 | ||||||||
South Africa | ||||||||||||||||
Health Care | 0 | 671 | 0 | 671 | ||||||||||||
Spain | ||||||||||||||||
Consumer Staples | 0 | 2,025 | 0 | 2,025 | ||||||||||||
Switzerland | ||||||||||||||||
Health Care | 0 | 2,494 | 0 | 2,494 | ||||||||||||
Taiwan | ||||||||||||||||
Information Technology | 0 | 1,641 | 0 | 1,641 | ||||||||||||
Turkey | ||||||||||||||||
Industrials | 0 | 1,404 | 0 | 1,404 | ||||||||||||
United Kingdom | ||||||||||||||||
Consumer Discretionary | 0 | 2,730 | 0 | 2,730 | ||||||||||||
Consumer Staples | 0 | 3,404 | 0 | 3,404 | ||||||||||||
Financials | 0 | 8,021 | 0 | 8,021 | ||||||||||||
Telecommunication Services | 0 | 4,071 | 0 | 4,071 | ||||||||||||
United States | ||||||||||||||||
Consumer Discretionary | 9,482 | 0 | 0 | 9,482 | ||||||||||||
Consumer Staples | 2,695 | 0 | 0 | 2,695 | ||||||||||||
Energy | 603 | 0 | 0 | 603 | ||||||||||||
Financials | 12,532 | 0 | 0 | 12,532 | ||||||||||||
Health Care | 2,685 | 0 | 0 | 2,685 | ||||||||||||
Industrials | 2,606 | 0 | 0 | 2,606 | ||||||||||||
Information Technology | 13,656 | 0 | 0 | 13,656 | ||||||||||||
Materials | 7,675 | 0 | 0 | 7,675 | ||||||||||||
Utilities | 6,495 | 0 | 0 | 6,495 | ||||||||||||
Real Estate Investment Trusts | ||||||||||||||||
United States | ||||||||||||||||
Financials | 5,306 | 0 | 0 | 5,306 | ||||||||||||
$ | 71,970 | $ | 58,713 | $ | 0 | $ | 130,683 |
See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 89 |
Table of Contents
Schedule of Investments PIMCO Global Dividend Fund (Cont.)
December 31, 2014 (Unaudited)
Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair Value at 12/31/2014 | ||||||||||||
Investments in Affiliates, at Value |
| |||||||||||||||
Short-Term Instruments | ||||||||||||||||
Central Funds Used for Cash Management Purposes | $ | 32 | $ | 0 | $ | 0 | $ | 32 | ||||||||
Total Investments | $ | 72,002 | $ | 58,713 | $ | 0 | $ | 130,715 |
Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair Value at 12/31/2014 | ||||||||||||
Financial Derivative Instruments - Assets |
| |||||||||||||||
Over the counter | $ | 0 | $ | 467 | $ | 0 | $ | 467 | ||||||||
Financial Derivative Instruments - Liabilities |
| |||||||||||||||
Over the counter | $ | 0 | $ | (153 | ) | $ | 0 | $ | (153 | ) | ||||||
Totals | $ | 72,002 | $ | 59,027 | $ | 0 | $ | 131,029 |
There were no significant transfers between Level 1, 2, and 3 during the period ended December 31, 2014.
90 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
Schedule of Investments PIMCO International Dividend Fund
December 31, 2014 (Unaudited)
SHARES | MARKET VALUE (000S) | |||||||||||
INVESTMENTS IN SECURITIES 97.5% | ||||||||||||
COMMON STOCKS 97.5% | ||||||||||||
AUSTRALIA 6.5% | ||||||||||||
CONSUMER STAPLES 2.1% | ||||||||||||
Coca-Cola Amatil Ltd. | 8,528 | $ | 64 | |||||||||
|
| |||||||||||
INDUSTRIALS 2.5% | ||||||||||||
Spotless Group Holdings Ltd. (a) | 49,815 | 77 | ||||||||||
|
| |||||||||||
MATERIALS 1.9% | ||||||||||||
Iluka Resources Ltd. | 12,432 | 60 | ||||||||||
|
| |||||||||||
Total Australia | 201 | |||||||||||
|
| |||||||||||
BERMUDA 2.1% | ||||||||||||
ENERGY 2.1% | ||||||||||||
Golar LNG Partners LP | 2,083 | 65 | ||||||||||
|
| |||||||||||
Total Bermuda | 65 | |||||||||||
|
| |||||||||||
BRAZIL 4.5% | ||||||||||||
INDUSTRIALS 1.6% | ||||||||||||
Arteris S.A. | 10,300 | 48 | ||||||||||
|
| |||||||||||
UTILITIES 2.9% | ||||||||||||
Cia de Saneamento Basico do Estado de Sao Paulo - ADR | 7,386 | 46 | ||||||||||
Light S.A. | 7,000 | 45 | ||||||||||
|
| |||||||||||
91 | ||||||||||||
|
| |||||||||||
Total Brazil | 139 | |||||||||||
|
| |||||||||||
CHINA 3.8% | ||||||||||||
CONSUMER DISCRETIONARY 1.7% | ||||||||||||
Great Wall Motor Co. Ltd. | 9,000 | 51 | ||||||||||
|
| |||||||||||
CONSUMER STAPLES 2.1% | ||||||||||||
Want Want China Holdings Ltd. | 49,000 | 65 | ||||||||||
|
| |||||||||||
Total China | 116 | |||||||||||
|
| |||||||||||
CYPRUS 0.6% | ||||||||||||
ENERGY 0.6% | ||||||||||||
ProSafe SE | 5,841 | 18 | ||||||||||
|
| |||||||||||
Total Cyprus | 18 | |||||||||||
|
| |||||||||||
FRANCE 9.2% | ||||||||||||
ENERGY 1.9% | ||||||||||||
Total S.A. | 1,146 | 59 | ||||||||||
|
| |||||||||||
FINANCIALS 2.0% | ||||||||||||
CNP Assurances | 3,490 | 62 | ||||||||||
|
| |||||||||||
UTILITIES 5.3% | ||||||||||||
Electricite de France S.A. | 2,206 | 61 | ||||||||||
Suez Environnement Co. | 5,925 | 103 | ||||||||||
|
| |||||||||||
164 | ||||||||||||
|
| |||||||||||
Total France | 285 | |||||||||||
|
|
SHARES | MARKET VALUE (000S) | |||||||||||
GERMANY 1.9% | ||||||||||||
CONSUMER DISCRETIONARY 1.9% | ||||||||||||
ProSiebenSat.1 Media AG | 1,443 | $ | 60 | |||||||||
|
| |||||||||||
Total Germany | 60 | |||||||||||
|
| |||||||||||
HONG KONG 5.8% | ||||||||||||
CONSUMER DISCRETIONARY 2.4% | ||||||||||||
Li & Fung Ltd. | 80,000 | 75 | ||||||||||
|
| |||||||||||
INDUSTRIALS 0.9% | ||||||||||||
Yuexiu Transport Infrastructure Ltd. | 48,000 | 29 | ||||||||||
|
| |||||||||||
TELECOMMUNICATION SERVICES 2.5% | ||||||||||||
China Mobile Ltd. | 6,500 | 76 | ||||||||||
|
| |||||||||||
Total Hong Kong | 180 | |||||||||||
|
| |||||||||||
ISRAEL 2.0% | ||||||||||||
HEALTH CARE 2.0% | ||||||||||||
Teva Pharmaceutical Industries Ltd. SP - ADR | 1,069 | 62 | ||||||||||
|
| |||||||||||
Total Israel | 62 | |||||||||||
|
| |||||||||||
ITALY 5.2% | ||||||||||||
FINANCIALS 3.8% | ||||||||||||
Intesa Sanpaolo SpA | 40,464 | 117 | ||||||||||
|
| |||||||||||
INDUSTRIALS 1.4% | ||||||||||||
Societa Iniziative Autostradali e Servizi SpA | 4,664 | 45 | ||||||||||
|
| |||||||||||
Total Italy | 162 | |||||||||||
|
| |||||||||||
JAPAN 8.3% | ||||||||||||
CONSUMER DISCRETIONARY 3.4% | ||||||||||||
Bridgestone Corp. | 3,000 | 104 | ||||||||||
|
| |||||||||||
FINANCIALS 1.4% | ||||||||||||
MS&AD Insurance Group Holdings, Inc. | 1,900 | 45 | ||||||||||
|
| |||||||||||
TELECOMMUNICATION SERVICES 3.5% | ||||||||||||
Nippon Telegraph & Telephone Corp. | 2,100 | 107 | ||||||||||
|
| |||||||||||
Total Japan | 256 | |||||||||||
|
| |||||||||||
LUXEMBOURG 2.1% | ||||||||||||
INDUSTRIALS 2.1% | ||||||||||||
Regus PLC | 19,848 | 64 | ||||||||||
|
| |||||||||||
Total Luxembourg | 64 | |||||||||||
|
| |||||||||||
NETHERLANDS 5.0% | ||||||||||||
FINANCIALS 5.0% | ||||||||||||
Aegon NV | 5,974 | 45 | ||||||||||
Euronext NV (a) | 2,028 | 65 | ||||||||||
NN Group NV (a) | 1,474 | 44 | ||||||||||
|
| |||||||||||
154 | ||||||||||||
|
| |||||||||||
Total Netherlands | 154 | |||||||||||
|
|
SHARES | MARKET VALUE (000S) | |||||||||||
SINGAPORE 2.0% | ||||||||||||
INDUSTRIALS 2.0% | ||||||||||||
Singapore Airlines Ltd. | 7,000 | $ | 61 | |||||||||
|
| |||||||||||
Total Singapore | 61 | |||||||||||
|
| |||||||||||
SOUTH AFRICA 3.1% | ||||||||||||
HEALTH CARE 1.6% | ||||||||||||
Life Healthcare Group Holdings Ltd. | 13,164 | 49 | ||||||||||
|
| |||||||||||
TELECOMMUNICATION SERVICES 1.5% | ||||||||||||
MTN Group Ltd. | 2,528 | 48 | ||||||||||
|
| |||||||||||
Total South Africa | 97 | |||||||||||
|
| |||||||||||
SPAIN 1.5% | ||||||||||||
CONSUMER STAPLES 1.5% | ||||||||||||
Ebro Foods S.A. | 2,756 | 46 | ||||||||||
|
| |||||||||||
Total Spain | 46 | |||||||||||
|
| |||||||||||
SWITZERLAND 2.0% | ||||||||||||
HEALTH CARE 2.0% | ||||||||||||
Roche Holding AG | 224 | 61 | ||||||||||
|
| |||||||||||
Total Switzerland | 61 | |||||||||||
|
| |||||||||||
TAIWAN 2.0% | ||||||||||||
INFORMATION TECHNOLOGY 2.0% | ||||||||||||
Radiant Opto-Electronics Corp. | 19,000 | 61 | ||||||||||
|
| |||||||||||
Total Taiwan | 61 | |||||||||||
|
| |||||||||||
TURKEY 1.5% | ||||||||||||
INDUSTRIALS 1.5% | ||||||||||||
TAV Havalimanlari Holding A/S | 5,690 | 46 | ||||||||||
|
| |||||||||||
Total Turkey | 46 | |||||||||||
|
| |||||||||||
UNITED KINGDOM 19.9% | ||||||||||||
CONSUMER DISCRETIONARY 2.0% | ||||||||||||
ITV PLC | 18,571 | 62 | ||||||||||
|
| |||||||||||
CONSUMER STAPLES 3.5% | ||||||||||||
Imperial Tobacco Group PLC | 2,427 | 107 | ||||||||||
|
| |||||||||||
FINANCIALS 10.6% | ||||||||||||
HSBC Holdings PLC | 8,292 | 78 | ||||||||||
ICAP PLC | 9,210 | 65 | ||||||||||
Lloyds Banking Group PLC (a) | 104,881 | 123 | ||||||||||
St James’s Place PLC | 4,802 | 61 | ||||||||||
|
| |||||||||||
327 | ||||||||||||
|
| |||||||||||
TELECOMMUNICATION SERVICES 3.8% | ||||||||||||
Vodafone Group PLC | 34,703 | 119 | ||||||||||
|
| |||||||||||
Total United Kingdom | 615 | |||||||||||
|
| |||||||||||
UNITED STATES 8.5% | ||||||||||||
HEALTH CARE 1.9% | ||||||||||||
Pfizer, Inc. | 1,921 | 60 | ||||||||||
|
|
See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 91 |
Table of Contents
Schedule of Investments PIMCO International Dividend Fund (Cont.)
SHARES | MARKET VALUE (000S) | |||||||||||
INDUSTRIALS 2.5% | ||||||||||||
Nielsen NV | 1,745 | $ | 78 | |||||||||
|
| |||||||||||
INFORMATION TECHNOLOGY 4.1% | ||||||||||||
Cisco Systems, Inc. | 2,252 | 62 | ||||||||||
QUALCOMM, Inc. | 844 | 63 | ||||||||||
|
| |||||||||||
125 | ||||||||||||
|
| |||||||||||
Total United States | 263 | |||||||||||
|
| |||||||||||
Total Common Stocks (Cost $2,957) | 3,012 | |||||||||||
|
| |||||||||||
Total Investments in Securities (Cost $2,957) | 3,012 | |||||||||||
|
| |||||||||||
SHARES | MARKET VALUE (000S) | |||||||||||
INVESTMENTS IN AFFILIATES 3.3% | ||||||||||||
SHORT-TERM INSTRUMENTS 3.3% | ||||||||||||
CENTRAL FUNDS USED FOR CASH MANAGEMENT PURPOSES 3.3% | ||||||||||||
PIMCO Short-Term Floating NAV Portfolio III | 10,084 | $ | 100 | |||||||||
|
| |||||||||||
Total Short-Term Instruments (Cost $100) | 100 | |||||||||||
|
| |||||||||||
Total Investments in Affiliates (Cost $100) | 100 | |||||||||||
|
|
MARKET VALUE (000S) | ||||||||||
Total Investments 100.8% (Cost $3,057) | $ | 3,112 | ||||||||
Financial Derivative (Cost or Premiums, net $0) | 5 | |||||||||
Other Assets and Liabilities, net (1.0%) | (29 | ) | ||||||||
|
| |||||||||
Net Assets 100.0% | $ | 3,088 | ||||||||
|
|
NOTES TO SCHEDULE OF INVESTMENTS (AMOUNTS IN THOUSANDS*):
* | A zero balance may reflect actual amounts rounding to less than one thousand. |
(a) | Security did not produce income within the last twelve months. |
(b) FINANCIAL DERIVATIVE INSTRUMENTS: OVER THE COUNTER
FORWARD FOREIGN CURRENCY CONTRACTS:
Counterparty | Settlement | Currency to | Currency to | Unrealized Appreciation/ (Depreciation) | ||||||||||||||||||||||||
Asset | Liability | |||||||||||||||||||||||||||
BOA | 02/2015 | EUR | 513 | $ | 643 | $ | 22 | $ | 0 | |||||||||||||||||||
02/2015 | GBP | 411 | 647 | 7 | 0 | |||||||||||||||||||||||
02/2015 | $ | 640 | EUR | 513 | 0 | (19 | ) | |||||||||||||||||||||
02/2015 | 645 | GBP | 411 | 0 | (5 | ) | ||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Total Forward Foreign Currency Contracts |
| $ | 29 | $ | (24 | ) | ||||||||||||||||||||||
|
|
|
|
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)/pledged as of December 31, 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)/ Pledged | Net Exposure (1) | |||||||||||||||||||||||||||||||||||
BOA | $ | 29 | $ | 0 | $ | 0 | $ | 29 | $ | (24 | ) | $ | 0 | $ | 0 | $ | (24 | ) | $ | 5 | $ | 0 | $ | 5 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Net Exposure represents the net receivable/(payable) that would be due from/to the counterparty in the event of default. Exposure from OTC financial derivative instruments can only be netted across transactions governed under the same master agreement with the same legal entity. See Note 7, Principal Risks, in the Notes to Financial Statements for more information regarding master netting arrangements. |
FAIR VALUE OF FINANCIAL DERIVATIVE INSTRUMENTS
The following is a summary of the fair valuation of the Fund’s derivative instruments categorized by risk exposure. See Note 7, Principal Risks, in the Notes to Financial Statements on risks of the Fund.
Fair Values of Financial Derivative Instruments on the Statements of Assets and Liabilities as of December 31, 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 | $ | 29 | $ | 0 | $ | 29 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Financial Derivative Instruments - Liabilities | ||||||||||||||||||||||||
Over the counter | ||||||||||||||||||||||||
Forward Foreign Currency Contracts | $ | 0 | $ | 0 | $ | 0 | $ | 24 | $ | 0 | $ | 24 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
92 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 2014 (Unaudited)
The Effect of Financial Derivative Instruments on the Statements of Operations for the Period Ended December 31, 2014:
Derivatives not accounted for as hedging instruments | ||||||||||||||||||||||||
Commodity Contracts | Credit Contracts | Equity Contracts | Foreign Exchange Contracts | Interest Rate Contracts | Total | |||||||||||||||||||
Net Change in Unrealized Appreciation on Financial Derivative Instruments |
| |||||||||||||||||||||||
Over the counter | ||||||||||||||||||||||||
Forward Foreign Currency Contracts | $ | 0 | $ | 0 | $ | 0 | $ | 5 | $ | 0 | $ | 5 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
FAIR VALUE MEASUREMENTS
The following is a summary of the fair valuations according to the inputs used as of December 31, 2014 in valuing the Fund’s assets and liabilities:
Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair Value at 12/31/2014 | ||||||||||||
Investments in Securities, at Value |
| |||||||||||||||
Common Stocks | ||||||||||||||||
Australia | ||||||||||||||||
Consumer Staples | $ | 0 | $ | 64 | $ | 0 | $ | 64 | ||||||||
Industrials | 0 | 77 | 0 | 77 | ||||||||||||
Materials | 0 | 60 | 0 | 60 | ||||||||||||
Bermuda | ||||||||||||||||
Energy | 65 | 0 | 0 | 65 | ||||||||||||
Brazil | ||||||||||||||||
Industrials | 48 | 0 | 0 | 48 | ||||||||||||
Utilities | 91 | 0 | 0 | 91 | ||||||||||||
China | ||||||||||||||||
Consumer Discretionary | 0 | 51 | 0 | 51 | ||||||||||||
Consumer Staples | 0 | 65 | 0 | 65 | ||||||||||||
Cyprus | ||||||||||||||||
Energy | 0 | 18 | 0 | 18 | ||||||||||||
France | ||||||||||||||||
Energy | 0 | 59 | 0 | 59 | ||||||||||||
Financials | 0 | 62 | 0 | 62 | ||||||||||||
Utilities | 0 | 164 | 0 | 164 | ||||||||||||
Germany | ||||||||||||||||
Consumer Discretionary | 0 | 60 | 0 | 60 | ||||||||||||
Hong Kong | ||||||||||||||||
Consumer Discretionary | 75 | 0 | 0 | 75 | ||||||||||||
Industrials | 0 | 29 | 0 | 29 | ||||||||||||
Telecommunication Services | 0 | 76 | 0 | 76 | ||||||||||||
Israel | ||||||||||||||||
Health Care | 62 | 0 | 0 | 62 | ||||||||||||
Italy | ||||||||||||||||
Financials | 0 | 117 | 0 | 117 | ||||||||||||
Industrials | 0 | 45 | 0 | 45 | ||||||||||||
Japan | ||||||||||||||||
Consumer Discretionary | 0 | 104 | 0 | 104 | ||||||||||||
Financials | 0 | 45 | 0 | 45 | ||||||||||||
Telecommunication Services | 0 | 107 | 0 | 107 | ||||||||||||
Luxembourg | ||||||||||||||||
Industrials | 0 | 64 | 0 | 64 | ||||||||||||
Netherlands | ||||||||||||||||
Financials | 0 | 154 | 0 | 154 | ||||||||||||
Singapore | ||||||||||||||||
Industrials | 0 | 61 | 0 | 61 |
Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair Value at 12/31/2014 | ||||||||||||
South Africa | ||||||||||||||||
Health Care | $ | 0 | $ | 49 | $ | 0 | $ | 49 | ||||||||
Telecommunication Services | 0 | 48 | 0 | 48 | ||||||||||||
Spain | ||||||||||||||||
Consumer Staples | 0 | 46 | 0 | 46 | ||||||||||||
Switzerland | ||||||||||||||||
Health Care | 0 | 61 | 0 | 61 | ||||||||||||
Taiwan | ||||||||||||||||
Information Technology | 0 | 61 | 0 | 61 | ||||||||||||
Turkey | ||||||||||||||||
Industrials | 0 | 46 | 0 | 46 | ||||||||||||
United Kingdom | ||||||||||||||||
Consumer Discretionary | 0 | 62 | 0 | 62 | ||||||||||||
Consumer Staples | 0 | 107 | 0 | 107 | ||||||||||||
Financials | 0 | 327 | 0 | 327 | ||||||||||||
Telecommunication Services | 0 | 119 | 0 | 119 | ||||||||||||
United States | ||||||||||||||||
Health Care | 60 | 0 | 0 | 60 | ||||||||||||
Industrials | 78 | 0 | 0 | 78 | ||||||||||||
Information Technology | 125 | 0 | 0 | 125 | ||||||||||||
$ | 604 | $ | 2,408 | $ | 0 | $ | 3,012 | |||||||||
Investments in Affiliates, at Value |
| |||||||||||||||
Short-Term Instruments | ||||||||||||||||
Central Funds Used for Cash Management Purposes | $ | 100 | $ | 0 | $ | 0 | $ | 100 | ||||||||
Total Investments | $ | 704 | $ | 2,408 | $ | 0 | $ | 3,112 | ||||||||
Financial Derivative Instruments - Assets |
| |||||||||||||||
Over the counter | $ | 0 | $ | 29 | $ | 0 | $ | 29 | ||||||||
Financial Derivative Instruments - Liabilities |
| |||||||||||||||
Over the counter | $ | 0 | $ | (24 | ) | $ | 0 | $ | (24 | ) | ||||||
Totals | $ | 704 | $ | 2,413 | $ | 0 | $ | 3,117 |
There were no significant transfers between Level 1, 2, and 3 during the period ended December 31, 2014.
See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 93 |
Table of Contents
Schedule of Investments PIMCO U.S. Dividend Fund
SHARES | MARKET VALUE (000S) | |||||||||||
INVESTMENTS IN SECURITIES 97.7% | ||||||||||||
COMMON STOCKS 90.9% | ||||||||||||
BERMUDA 3.2% | ||||||||||||
ENERGY 3.2% | ||||||||||||
Golar LNG Partners LP | 3,240 | $ | 101 | |||||||||
|
| |||||||||||
Total Bermuda | 101 | |||||||||||
|
| |||||||||||
LUXEMBOURG 1.5% | ||||||||||||
INDUSTRIALS 1.5% | ||||||||||||
Regus PLC | 14,886 | 48 | ||||||||||
|
| |||||||||||
Total Luxembourg | 48 | |||||||||||
|
| |||||||||||
SWITZERLAND 1.3% | ||||||||||||
HEALTH CARE 1.3% | ||||||||||||
Roche Holding AG | 158 | 43 | ||||||||||
|
| |||||||||||
Total Switzerland | 43 | |||||||||||
|
| |||||||||||
TAIWAN 1.9% | ||||||||||||
INFORMATION TECHNOLOGY 1.9% | ||||||||||||
Radiant Opto-Electronics Corp. | 19,000 | 60 | ||||||||||
|
| |||||||||||
Total Taiwan | 60 | |||||||||||
|
| |||||||||||
UNITED STATES 83.0% | ||||||||||||
CONSUMER DISCRETIONARY 13.4% | ||||||||||||
General Motors Co. | 2,980 | 104 | ||||||||||
Kohl’s Corp. | 1,602 | 98 | ||||||||||
Regal Entertainment Group ‘A’ | 4,564 | 98 | ||||||||||
Target Corp. | 1,653 | 125 | ||||||||||
|
| |||||||||||
425 | ||||||||||||
|
| |||||||||||
CONSUMER STAPLES 3.0% | ||||||||||||
Walgreens Boots Alliance, Inc. | 1,249 | 95 | ||||||||||
|
| |||||||||||
ENERGY 1.5% | ||||||||||||
Peabody Energy Corp. | 6,153 | 48 | ||||||||||
|
|
SHARES | MARKET VALUE (000S) | |||||||||||
FINANCIALS 15.9% | ||||||||||||
Blackstone Group LP | 3,668 | $ | 124 | |||||||||
JPMorgan Chase & Co. | 1,534 | 96 | ||||||||||
KeyCorp | 6,740 | 94 | ||||||||||
Navient Corp. | 4,376 | 94 | ||||||||||
Prudential Financial, Inc. | 1,046 | 95 | ||||||||||
|
| |||||||||||
503 | ||||||||||||
|
| |||||||||||
HEALTH CARE 5.2% | ||||||||||||
Merck & Co., Inc. | 768 | 43 | ||||||||||
Pfizer, Inc. | 3,944 | 123 | ||||||||||
|
| |||||||||||
166 | ||||||||||||
|
| |||||||||||
INDUSTRIALS 10.1% | ||||||||||||
Nielsen NV | 2,823 | 126 | ||||||||||
RR Donnelley & Sons Co. | 5,757 | 97 | ||||||||||
Timken Co. | 2,244 | 96 | ||||||||||
|
| |||||||||||
319 | ||||||||||||
|
| |||||||||||
INFORMATION TECHNOLOGY 15.0% | ||||||||||||
Cisco Systems, Inc. | 3,379 | 94 | ||||||||||
Corning, Inc. | 4,303 | 99 | ||||||||||
QUALCOMM, Inc. | 1,266 | 94 | ||||||||||
Symantec Corp. | 3,667 | 94 | ||||||||||
Western Digital Corp. | 844 | 93 | ||||||||||
|
| |||||||||||
474 | ||||||||||||
|
| |||||||||||
MATERIALS 11.1% | ||||||||||||
Dow Chemical Co. | 2,431 | 111 | ||||||||||
International Paper Co. | 1,442 | 77 | ||||||||||
Steel Dynamics, Inc. | 3,280 | 65 | ||||||||||
Tronox Ltd. ‘A’ | 4,117 | 98 | ||||||||||
|
| |||||||||||
351 | ||||||||||||
|
|
SHARES | MARKET VALUE (000S) | |||||||||||
UTILITIES 7.8% | ||||||||||||
ONE Gas, Inc. | 2,992 | $ | 124 | |||||||||
PG&E Corp. | 2,354 | 125 | ||||||||||
|
| |||||||||||
249 | ||||||||||||
|
| |||||||||||
Total United States | 2,630 | |||||||||||
|
| |||||||||||
Total Common Stocks | 2,882 | |||||||||||
|
| |||||||||||
REAL ESTATE INVESTMENT TRUSTS 6.8% | ||||||||||||
UNITED STATES 6.8% | ||||||||||||
FINANCIALS 6.8% | ||||||||||||
Colony Financial, Inc. | 5,161 | 123 | ||||||||||
Ryman Hospitality Properties, Inc. | 1,716 | 91 | ||||||||||
|
| |||||||||||
214 | ||||||||||||
|
| |||||||||||
Total Real Estate Investment Trusts | 214 | |||||||||||
|
| |||||||||||
Total Investments in Securities (Cost $2,972) | 3,096 | |||||||||||
|
| |||||||||||
INVESTMENTS IN AFFILIATES 0.6% | ||||||||||||
SHORT-TERM INSTRUMENTS 0.6% | ||||||||||||
CENTRAL FUNDS USED FOR CASH MANAGEMENT PURPOSES 0.6% | ||||||||||||
PIMCO Short-Term | 2,010 | 20 | ||||||||||
|
| |||||||||||
Total Short-Term Instruments (Cost $20) | 20 | |||||||||||
|
| |||||||||||
Total Investments in Affiliates (Cost $20) | 20 | |||||||||||
Total Investments 98.3% (Cost $2,992) | $ | 3,116 | ||||||||||
Other Assets and Liabilities, net 1.7% | 54 | |||||||||||
|
| |||||||||||
Net Assets 100.0% | $ | 3,170 | ||||||||||
|
|
94 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 2014 (Unaudited)
FAIR VALUE MEASUREMENTS
The following is a summary of the fair valuations according to the inputs used as of December 31, 2014 in valuing the Fund’s assets and liabilities:
Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair Value at 12/31/2014 | ||||||||||||
Investments in Securities, at Value | ||||||||||||||||
Common Stocks | ||||||||||||||||
Bermuda | ||||||||||||||||
Energy | $ | 101 | $ | 0 | $ | 0 | $ | 101 | ||||||||
Luxembourg | ||||||||||||||||
Industrials | 0 | 48 | 0 | 48 | ||||||||||||
Switzerland | ||||||||||||||||
Health Care | 0 | 43 | 0 | 43 | ||||||||||||
Taiwan | ||||||||||||||||
Information Technology | 0 | 60 | 0 | 60 | ||||||||||||
United States | ||||||||||||||||
Consumer Discretionary | 425 | 0 | 0 | 425 | ||||||||||||
Consumer Staples | 95 | 0 | 0 | 95 | ||||||||||||
Energy | 48 | 0 | 0 | 48 | ||||||||||||
Financials | 503 | 0 | 0 | 503 | ||||||||||||
Health Care | 166 | 0 | 0 | 166 |
Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair Value at 12/31/2014 | ||||||||||||
Industrials | $ | 319 | $ | 0 | $ | 0 | $ | 319 | ||||||||
Information Technology | 474 | 0 | 0 | 474 | ||||||||||||
Materials | 351 | 0 | 0 | 351 | ||||||||||||
Utilities | 249 | 0 | 0 | 249 | ||||||||||||
Real Estate Investment Trusts | ||||||||||||||||
United States | ||||||||||||||||
Financials | 214 | 0 | 0 | 214 | ||||||||||||
$ | 2,945 | $ | 151 | $ | 0 | $ | 3,096 | |||||||||
Investments in Affiliates, at Value | ||||||||||||||||
Short-Term Instruments | ||||||||||||||||
Central Funds Used for Cash Management Purposes | $ | 20 | $ | 0 | $ | 0 | $ | 20 | ||||||||
Total Investments | $ | 2,965 | $ | 151 | $ | 0 | $ | 3,116 |
There were no significant transfers between Level 1, 2, and 3 during the period ended December 31, 2014.
See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 95 |
Table of Contents
Consolidated Schedule of Investments PIMCO EqS Pathfinder Fund®
SHARES | MARKET VALUE (000S) | |||||||||||
INVESTMENTS IN SECURITIES 95.5% | ||||||||||||
COMMON STOCKS 93.9% | ||||||||||||
AUSTRALIA 0.9% | ||||||||||||
INDUSTRIALS 0.9% | ||||||||||||
Spotless Group Holdings Ltd. (a) | 5,747,080 | $ | 8,902 | |||||||||
|
| |||||||||||
Total Australia | 8,902 | |||||||||||
|
| |||||||||||
BELGIUM 2.7% | ||||||||||||
INDUSTRIALS 2.7% | ||||||||||||
bpost S.A. | 1,060,349 | 26,637 | ||||||||||
|
| |||||||||||
Total Belgium | 26,637 | |||||||||||
|
| |||||||||||
BERMUDA 0.8% | ||||||||||||
ENERGY 0.8% | ||||||||||||
Seadrill Ltd. | 694,226 | 8,032 | ||||||||||
|
| |||||||||||
Total Bermuda | 8,032 | |||||||||||
|
| |||||||||||
CANADA 0.7% | ||||||||||||
ENERGY 0.7% | ||||||||||||
Cameco Corp. | 424,174 | 6,961 | ||||||||||
|
| |||||||||||
Total Canada | 6,961 | |||||||||||
|
| |||||||||||
DENMARK 1.6% | ||||||||||||
CONSUMER STAPLES 1.6% | ||||||||||||
Carlsberg A/S ‘B’ | 210,242 | 16,147 | ||||||||||
|
| |||||||||||
Total Denmark | 16,147 | |||||||||||
|
| |||||||||||
FAROE ISLANDS 0.9% | ||||||||||||
CONSUMER STAPLES 0.9% | ||||||||||||
Bakkafrost P/F | 404,726 | 9,093 | ||||||||||
|
| |||||||||||
Total Faroe Islands | 9,093 | |||||||||||
|
| |||||||||||
FRANCE 6.0% | ||||||||||||
CONSUMER DISCRETIONARY 2.9% | ||||||||||||
Eutelsat Communications S.A. | 498,818 | 16,132 | ||||||||||
JCDecaux S.A. | 364,820 | 12,561 | ||||||||||
|
| |||||||||||
28,693 | ||||||||||||
|
| |||||||||||
CONSUMER STAPLES 2.4% | ||||||||||||
Carrefour S.A. | 202,818 | 6,172 | ||||||||||
Danone S.A. | 264,253 | 17,276 | ||||||||||
|
| |||||||||||
23,448 | ||||||||||||
|
| |||||||||||
ENERGY 0.7% | ||||||||||||
Bourbon S.A. | 296,823 | 6,896 | ||||||||||
|
| |||||||||||
Total France | 59,037 | |||||||||||
|
| |||||||||||
HONG KONG 5.1% | ||||||||||||
CONSUMER DISCRETIONARY 0.7% | ||||||||||||
Television Broadcasts Ltd. | 1,124,100 | 6,538 | ||||||||||
|
| |||||||||||
FINANCIALS 3.7% | ||||||||||||
AIA Group Ltd. | 5,588,900 | 30,718 | ||||||||||
First Pacific Co. Ltd. | 6,480,500 | 6,391 | ||||||||||
|
| |||||||||||
37,109 | ||||||||||||
|
|
SHARES | MARKET VALUE (000S) | |||||||||||
INDUSTRIALS 0.7% | ||||||||||||
Jardine Matheson Holdings Ltd. | 60,500 | $ | 3,676 | |||||||||
Jardine Strategic Holdings Ltd. | 81,000 | 2,755 | ||||||||||
|
| |||||||||||
6,431 | ||||||||||||
|
| |||||||||||
Total Hong Kong | 50,078 | |||||||||||
|
| |||||||||||
JAPAN 3.9% | ||||||||||||
CONSUMER DISCRETIONARY 0.7% | ||||||||||||
Sony Corp. | 323,500 | 6,602 | ||||||||||
|
| |||||||||||
CONSUMER STAPLES 1.2% | ||||||||||||
Kao Corp. | 197,800 | 7,800 | ||||||||||
Shiseido Co. Ltd. | 263,600 | 3,697 | ||||||||||
|
| |||||||||||
11,497 | ||||||||||||
|
| |||||||||||
INFORMATION TECHNOLOGY 2.0% | ||||||||||||
Nintendo Co. Ltd. | 90,842 | 9,480 | ||||||||||
Tokyo Electron Ltd. - ADR | 550,297 | 10,500 | ||||||||||
|
| |||||||||||
19,980 | ||||||||||||
|
| |||||||||||
Total Japan | 38,079 | |||||||||||
|
| |||||||||||
NETHERLANDS 4.7% | ||||||||||||
CONSUMER STAPLES 1.6% | ||||||||||||
Corbion NV | 934,294 | 15,516 | ||||||||||
|
| |||||||||||
FINANCIALS 2.1% | ||||||||||||
ING Groep NV - Dutch Certificate (a) | 1,640,192 | 21,191 | ||||||||||
|
| |||||||||||
INFORMATION TECHNOLOGY 1.0% | ||||||||||||
Gemalto NV | 119,449 | 9,818 | ||||||||||
|
| |||||||||||
Total Netherlands | 46,525 | |||||||||||
|
| |||||||||||
NORWAY 5.4% | ||||||||||||
CONSUMER STAPLES 3.7% | ||||||||||||
Marine Harvest ASA | 2,705,186 | 37,143 | ||||||||||
|
| |||||||||||
ENERGY 1.7% | ||||||||||||
Akastor ASA | 1,904,501 | 5,489 | ||||||||||
Avance Gas Holding Ltd. | 543,889 | 7,443 | ||||||||||
North Atlantic Drilling Ltd. | 2,329,311 | 3,797 | ||||||||||
|
| |||||||||||
16,729 | ||||||||||||
|
| |||||||||||
Total Norway | 53,872 | |||||||||||
|
| |||||||||||
SINGAPORE 3.3% | ||||||||||||
ENERGY 0.9% | ||||||||||||
BW LPG Ltd. | 1,233,063 | 8,588 | ||||||||||
|
| |||||||||||
INDUSTRIALS 2.4% | ||||||||||||
ComfortDelGro Corp. Ltd. | 8,784,000 | 17,189 | ||||||||||
Keppel Corp. Ltd. | 1,047,300 | 6,981 | ||||||||||
|
| |||||||||||
24,170 | ||||||||||||
|
| |||||||||||
Total Singapore | 32,758 | |||||||||||
|
| |||||||||||
SHARES | MARKET VALUE (000S) | |||||||||||
SOUTH KOREA 0.8% | ||||||||||||
CONSUMER DISCRETIONARY 0.8% | ||||||||||||
GS Home Shopping, Inc. | 41,810 | $ | 8,347 | |||||||||
|
| |||||||||||
Total South Korea | 8,347 | |||||||||||
|
| |||||||||||
SPAIN 0.5% | ||||||||||||
INDUSTRIALS 0.5% | ||||||||||||
Cia de Distribucion Integral Logista Holdings S.A.U. (a) | 211,973 | 4,648 | ||||||||||
|
| |||||||||||
Total Spain | 4,648 | |||||||||||
|
| |||||||||||
SWEDEN 2.0% | ||||||||||||
INDUSTRIALS 2.0% | ||||||||||||
Loomis AB ‘B’ | 698,834 | 20,188 | ||||||||||
|
| |||||||||||
Total Sweden | 20,188 | |||||||||||
|
| |||||||||||
SWITZERLAND 3.9% | ||||||||||||
FINANCIALS 0.9% | ||||||||||||
Swiss Re AG | 100,736 | 8,439 | ||||||||||
|
| |||||||||||
HEALTH CARE 1.5% | ||||||||||||
Roche Holding AG | 55,161 | 14,945 | ||||||||||
|
| |||||||||||
INFORMATION TECHNOLOGY 1.5% | ||||||||||||
Logitech International S.A. | 1,126,609 | 15,265 | ||||||||||
|
| |||||||||||
Total Switzerland | 38,649 | |||||||||||
|
| |||||||||||
UNITED KINGDOM 11.8% | ||||||||||||
CONSUMER DISCRETIONARY 0.3% | ||||||||||||
William Hill PLC | 497,472 | 2,796 | ||||||||||
|
| |||||||||||
CONSUMER STAPLES 9.5% | ||||||||||||
British American Tobacco PLC | 577,264 | 31,282 | ||||||||||
Imperial Tobacco Group PLC | 707,826 | 31,158 | ||||||||||
Reckitt Benckiser Group PLC | 395,927 | 32,068 | ||||||||||
|
| |||||||||||
94,508 | ||||||||||||
|
| |||||||||||
FINANCIALS 1.9% | ||||||||||||
Barclays PLC | 2,931,133 | 11,019 | ||||||||||
Prudential PLC | 330,251 | 7,635 | ||||||||||
|
| |||||||||||
18,654 | ||||||||||||
|
| |||||||||||
HEALTH CARE 0.1% | ||||||||||||
Indivior PLC (a) | 395,927 | 922 | ||||||||||
|
| |||||||||||
Total United Kingdom | 116,880 | |||||||||||
|
| |||||||||||
UNITED STATES 38.9% | ||||||||||||
CONSUMER DISCRETIONARY 4.6% | ||||||||||||
Comcast Corp. ‘A’ | 360,318 | 20,902 | ||||||||||
Mattel, Inc. | 342,026 | 10,584 | ||||||||||
Time Warner Cable, Inc. | 22 | 3 | ||||||||||
Tribune Media Co. ‘A’ (a) | 228,971 | 13,686 | ||||||||||
|
| |||||||||||
45,175 | ||||||||||||
|
| |||||||||||
96 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 2014 (Unaudited)
SHARES | MARKET VALUE (000S) | |||||||||||
CONSUMER STAPLES 8.6% | ||||||||||||
Altria Group, Inc. | 405,361 | $ | 19,972 | |||||||||
Lorillard, Inc. | 522,919 | 32,913 | ||||||||||
Philip Morris International, Inc. | 129,730 | 10,566 | ||||||||||
Reynolds American, Inc. | 342,962 | 22,042 | ||||||||||
|
| |||||||||||
85,493 | ||||||||||||
|
| |||||||||||
ENERGY 2.5% | ||||||||||||
Dresser-Rand Group, Inc. (a) | 71,593 | 5,856 | ||||||||||
Halliburton Co. | 192,057 | 7,554 | ||||||||||
National Oilwell Varco, Inc. | 174,484 | 11,434 | ||||||||||
|
| |||||||||||
24,844 | ||||||||||||
|
| |||||||||||
FINANCIALS 8.9% | ||||||||||||
Alleghany Corp. (a) | 29,450 | 13,650 | ||||||||||
Berkshire Hathaway, Inc. ‘B’ (a) | 214,747 | 32,244 | ||||||||||
Genworth Financial, Inc. ‘A’ (a) | 595,767 | 5,064 | ||||||||||
LegacyTexas Financial Group, Inc. (a) | 511,045 | 12,188 | ||||||||||
Navient Corp. | 560,540 | 12,113 | ||||||||||
PHH Corp. (a) | 282,993 | 6,781 | ||||||||||
SLM Corp. | 543,812 | 5,542 | ||||||||||
|
| |||||||||||
87,582 | ||||||||||||
|
| |||||||||||
HEALTH CARE 2.6% | ||||||||||||
Allergan, Inc. | 36,061 | 7,666 | ||||||||||
Merck & Co., Inc. | 158,084 | 8,978 | ||||||||||
Pfizer, Inc. | 292,863 | 9,123 | ||||||||||
|
| |||||||||||
25,767 | ||||||||||||
|
| |||||||||||
INDUSTRIALS 4.3% | ||||||||||||
Brink’s Co. | 648,368 | 15,827 | ||||||||||
NOW, Inc. (a) | 810,263 | 20,848 | ||||||||||
RR Donnelley & Sons Co. | 334,567 | 5,622 | ||||||||||
|
| |||||||||||
42,297 | ||||||||||||
|
|
SHARES | MARKET VALUE (000S) | |||||||||||
INFORMATION TECHNOLOGY 7.2% | ||||||||||||
Belden, Inc. | 61,733 | $ | 4,865 | |||||||||
International Business Machines Corp. | 90,120 | 14,459 | ||||||||||
Microsoft Corp. (d) | 740,078 | 34,377 | ||||||||||
Oracle Corp. | 188,328 | 8,469 | ||||||||||
Yahoo!, Inc. (a) | 186,558 | 9,423 | ||||||||||
|
| |||||||||||
71,593 | ||||||||||||
|
| |||||||||||
MATERIALS 0.2% | ||||||||||||
Rentech, Inc. (a) | 1,843,981 | 2,323 | ||||||||||
|
| |||||||||||
Total United States | 385,074 | |||||||||||
|
| |||||||||||
Total Common Stocks (Cost $861,923) | 929,907 | |||||||||||
|
| |||||||||||
REAL ESTATE INVESTMENT TRUSTS 0.5% | ||||||||||||
SINGAPORE 0.0% | ||||||||||||
FINANCIALS 0.0% | ||||||||||||
Keppel REIT | 478,884 | 440 | ||||||||||
|
| |||||||||||
Total Singapore | 440 | |||||||||||
|
| |||||||||||
UNITED STATES 0.5% | ||||||||||||
FINANCIALS 0.5% | ||||||||||||
NorthStar Realty Finance Corp. | 274,763 | 4,830 | ||||||||||
|
| |||||||||||
Total United States | 4,830 | |||||||||||
|
| |||||||||||
Total Real Estate Investment Trusts | 5,270 | |||||||||||
|
| |||||||||||
RIGHTS 0.3% | ||||||||||||
FRANCE 0.3% | ||||||||||||
HEALTH CARE 0.3% | ||||||||||||
Sanofi - Exp. 12/31/2020 | 4,078,469 | 3,222 | ||||||||||
|
| |||||||||||
Total Rights (Cost $6,154) | 3,222 | |||||||||||
|
|
PRINCIPAL AMOUNT (000S) | MARKET VALUE (000S) | |||||||||||
SHORT-TERM INSTRUMENTS 0.8% | ||||||||||||
REPURCHASE AGREEMENTS (c) 0.1% |
| |||||||||||
$ | 992 | |||||||||||
|
| |||||||||||
U.S. TREASURY BILLS 0.7% | ||||||||||||
0.065% due 04/30/2015 - 05/28/2015 (b)(f) | $ | 6,981 | 6,980 | |||||||||
|
| |||||||||||
Total Short-Term Instruments (Cost $7,972) | 7,972 | |||||||||||
|
| |||||||||||
Total Investments in Securities (Cost $878,972) | 946,371 | |||||||||||
|
| |||||||||||
SHARES | ||||||||||||
INVESTMENTS IN AFFILIATES 6.2% | ||||||||||||
SHORT-TERM INSTRUMENTS 6.2% | ||||||||||||
CENTRAL FUNDS USED FOR CASH MANAGEMENT PURPOSES 6.2% | ||||||||||||
PIMCO Short-Term Floating NAV Portfolio | 1,707 | 17 | ||||||||||
PIMCO Short-Term Floating NAV Portfolio III | 6,162,707 | 61,085 | ||||||||||
|
| |||||||||||
Total Short-Term Instruments (Cost $61,420) | 61,102 | |||||||||||
|
| |||||||||||
Total Investments in Affiliates (Cost $61,420) | 61,102 | |||||||||||
Total Investments 101.7% (Cost $940,392) | $ | 1,007,473 | ||||||||||
Securities Sold Short (1.9%) (Proceeds $17,327) | (18,670 | ) | ||||||||||
Financial Derivative Instruments (e) 0.9% (Cost or Premiums, net $(790)) | 9,222 | |||||||||||
Other Assets and Liabilities, net (0.7%) | (7,124 | ) | ||||||||||
|
| |||||||||||
Net Assets 100.0% | $ | 990,901 | ||||||||||
|
|
NOTES TO CONSOLIDATED SCHEDULE OF INVESTMENTS (AMOUNTS IN THOUSANDS*, EXCEPT NUMBER OF SHARES):
* | A zero balance may reflect actual amounts rounding to less than one thousand. |
† | All or a portion of this security is owned by PIMCO Cayman Commodity Fund VI, Ltd., which is a 100% owned subsidiary of the Fund. |
(a) | Security did not produce income within the last twelve months. |
(b) | Coupon represents a weighted average yield to maturity. |
BORROWINGS AND OTHER FINANCING TRANSACTIONS
(c) REPURCHASE AGREEMENTS:
Counterparty | Lending Rate | Settlement Date | Maturity Date | Principal Amount | Collateralized By | Collateral Received, at Value | Repurchase Agreements, at Value | Repurchase Agreement Proceeds to be Received (1) | ||||||||||||||||||||
SSB | 0.000% | 12/31/2014 | 01/02/2015 | $ | 992 | Fannie Mae 2.260% due 10/17/2022 | $ | (1,013 | ) | $ | 992 | $ | 992 | |||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||
Total Repurchase Agreements | $ | (1,013 | ) | $ | 992 | $ | 992 | |||||||||||||||||||||
|
|
|
|
|
|
(1) | Includes accrued interest. |
See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 97 |
Table of Contents
Consolidated Schedule of Investments PIMCO EqS Pathfinder Fund® (Cont.)
SECURITIES SOLD SHORT:
Short Sales:
Counterparty | Description | Shares | Proceeds | Payable for Short Sales | ||||||||||
Common Stocks | ||||||||||||||
China | ||||||||||||||
Information Technology | ||||||||||||||
GSC | Alibaba Group Holding Ltd. ADR | 72,422 | $ | (8,399 | ) | $ | (7,528 | ) | ||||||
United States | ||||||||||||||
Information Technology | ||||||||||||||
Applied Materials, Inc. | 447,116 | (8,928 | ) | (11,142 | ) | |||||||||
|
| |||||||||||||
Total Short Sales | $ | (17,327 | ) | $ | (18,670 | ) | ||||||||
|
|
(d) | Securities with an aggregate market value of $18,116 and cash of $16,982 have been pledged as collateral as of December 31, 2014 for equity short sales and equity options as governed by prime brokerage agreements and agreements governing listed equity option transactions. |
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 December 31, 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 (2) | |||||||||||||||||||||
Global/Master Repurchase Agreement | ||||||||||||||||||||||||||||
SSB | $ | 992 | $ | 0 | $ | 0 | $ | 0 | $ | 992 | $ | (1,013 | ) | $ | (21 | ) | ||||||||||||
Prime Brokerage Agreement | ||||||||||||||||||||||||||||
GSC | $ | 0 | $ | 0 | $ | 0 | $ | (18,670 | ) | $ | (18,670 | ) | $ | 35,098 | $ | 16,428 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total Borrowings and Other Financing Transactions | $ | 992 | $ | 0 | $ | 0 | $ | (18,670 | ) | |||||||||||||||||||
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(2) | 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 Fund 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. |
FINANCIAL DERIVATIVE INSTRUMENTS: EXCHANGE-TRADED OR CENTRALLY CLEARED SUMMARY
The following is a summary of the market value and variation margin of Exchange-Traded or Centrally Cleared Financial Derivative Instruments as of December 31, 2014:
(e) | Securities with an aggregate market value of $1,167 have been pledged as collateral for exchange-traded and centrally cleared financial derivative instruments as of December 31, 2014. |
Financial Derivative Assets | Financial Derivative Liabilities | |||||||||||||||||||||||||||||||||
Market Value | Variation Margin Asset | Total | Market Value | Variation Margin Liability (1) | Total | |||||||||||||||||||||||||||||
Purchased Options | Futures | Swap Agreements | Written Options | Futures | Swap Agreements | |||||||||||||||||||||||||||||
Total Exchange-Traded or Centrally Cleared | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | (296 | ) | $ | 0 | $ | (296 | ) | ||||||||||||||||
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(1) | Unsettled variation margin liability of $(296) for closed futures is outstanding at period end. |
(f) FINANCIAL DERIVATIVE INSTRUMENTS: OVER THE COUNTER
FORWARD FOREIGN CURRENCY CONTRACTS:
Counterparty | Settlement | Currency to | Currency to | Unrealized Appreciation/ (Depreciation) | ||||||||||||||||||||||||
Asset | Liability | |||||||||||||||||||||||||||
BOA | 01/2015 | EUR | 18,361 | $ | 22,666 | $ | 448 | $ | 0 | |||||||||||||||||||
01/2015 | GBP | 7,324 | 11,506 | 91 | 0 | |||||||||||||||||||||||
01/2015 | JPY | 3,273,904 | 27,299 | 0 | (33 | ) | ||||||||||||||||||||||
01/2015 | $ | 9,643 | DKK | 58,834 | 0 | (83 | ) | |||||||||||||||||||||
01/2015 | 9,525 | EUR | 7,662 | 0 | (254 | ) | ||||||||||||||||||||||
01/2015 | 29,707 | GBP | 19,007 | 0 | (82 | ) |
98 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 2014 (Unaudited)
Counterparty | Settlement | Currency to | Currency to | Unrealized Appreciation/ (Depreciation) | ||||||||||||||||||||||||
Asset | Liability | |||||||||||||||||||||||||||
01/2015 | $ | 3,573 | SGD | 4,695 | $ | 0 | $ | (30 | ) | |||||||||||||||||||
02/2015 | AUD | 1,021 | $ | 830 | 0 | (2 | ) | |||||||||||||||||||||
02/2015 | CAD | 1,867 | 1,604 | 0 | (2 | ) | ||||||||||||||||||||||
02/2015 | CHF | 3,186 | 3,228 | 22 | 0 | |||||||||||||||||||||||
02/2015 | DKK | 58,834 | 9,646 | 83 | 0 | |||||||||||||||||||||||
02/2015 | GBP | 20,041 | 31,286 | 71 | (15 | ) | ||||||||||||||||||||||
02/2015 | HKD | 20,185 | 2,603 | 0 | 0 | |||||||||||||||||||||||
02/2015 | $ | 27,305 | JPY | 3,273,904 | 34 | 0 | ||||||||||||||||||||||
BPS | 01/2015 | DKK | 28,376 | $ | 4,759 | 148 | 0 | |||||||||||||||||||||
01/2015 | EUR | 22,829 | 28,534 | 910 | 0 | |||||||||||||||||||||||
01/2015 | GBP | 155 | 243 | 1 | 0 | |||||||||||||||||||||||
01/2015 | $ | 1,698 | DKK | 10,205 | 0 | (40 | ) | |||||||||||||||||||||
01/2015 | 11,923 | EUR | 9,558 | 0 | (357 | ) | ||||||||||||||||||||||
01/2015 | 3,025 | ILS | 11,726 | 0 | (18 | ) | ||||||||||||||||||||||
01/2015 | 592 | NOK | 4,360 | 0 | (7 | ) | ||||||||||||||||||||||
02/2015 | NOK | 356,136 | $ | 47,893 | 150 | 0 | ||||||||||||||||||||||
02/2015 | $ | 9,800 | HKD | 75,976 | 0 | (3 | ) | |||||||||||||||||||||
BRC | 01/2015 | GBP | 2,347 | $ | 3,679 | 21 | 0 | |||||||||||||||||||||
01/2015 | SEK | 17,323 | 2,228 | 6 | 0 | |||||||||||||||||||||||
01/2015 | $ | 4,175 | NOK | 29,957 | 0 | (156 | ) | |||||||||||||||||||||
01/2015 | 3,786 | SGD | 4,966 | 0 | (39 | ) | ||||||||||||||||||||||
CBK | 01/2015 | NOK | 14,070 | $ | 2,064 | 176 | 0 | |||||||||||||||||||||
01/2015 | SEK | 20,532 | 2,770 | 137 | 0 | |||||||||||||||||||||||
01/2015 | $ | 19,143 | CAD | 21,578 | 0 | (571 | ) | |||||||||||||||||||||
01/2015 | 66,858 | EUR | 54,285 | 0 | (1,170 | ) | ||||||||||||||||||||||
01/2015 | 3,086 | SEK | 23,250 | 0 | (104 | ) | ||||||||||||||||||||||
02/2015 | EUR | 34,166 | $ | 41,885 | 530 | 0 | ||||||||||||||||||||||
02/2015 | JPY | �� | 267,151 | 2,215 | 0 | (16 | ) | |||||||||||||||||||||
02/2015 | $ | 1,508 | CHF | 1,464 | 0 | (35 | ) | |||||||||||||||||||||
DUB | 01/2015 | JPY | 2,997,555 | $ | 25,432 | 406 | 0 | |||||||||||||||||||||
01/2015 | SEK | 20,532 | 2,770 | 136 | 0 | |||||||||||||||||||||||
01/2015 | $ | 2,695 | DKK | 16,090 | 0 | (81 | ) | |||||||||||||||||||||
01/2015 | 33,584 | GBP | 21,445 | 18 | (177 | ) | ||||||||||||||||||||||
02/2015 | CHF | 593 | $ | 611 | 14 | 0 | ||||||||||||||||||||||
02/2015 | GBP | 3,487 | 5,416 | 0 | (18 | ) | ||||||||||||||||||||||
FBF | 01/2015 | DKK | 28,376 | 4,759 | 148 | 0 | ||||||||||||||||||||||
01/2015 | GBP | 28,091 | 44,097 | 315 | 0 | |||||||||||||||||||||||
01/2015 | $ | 69,417 | JPY | 8,214,485 | 0 | (837 | ) | |||||||||||||||||||||
GLM | 01/2015 | AUD | 10,808 | $ | 8,984 | 160 | 0 | |||||||||||||||||||||
01/2015 | CAD | 15,838 | 13,799 | 169 | (2 | ) | ||||||||||||||||||||||
01/2015 | EUR | 10,396 | 12,876 | 297 | 0 | |||||||||||||||||||||||
01/2015 | GBP | 2,189 | 3,421 | 9 | 0 | |||||||||||||||||||||||
01/2015 | JPY | 2,067,788 | 17,432 | 197 | (28 | ) | ||||||||||||||||||||||
01/2015 | NOK | 361,359 | 52,977 | 4,492 | 0 | |||||||||||||||||||||||
01/2015 | SEK | 15,683 | 2,085 | 73 | 0 | |||||||||||||||||||||||
01/2015 | $ | 5,623 | EUR | 4,615 | 0 | (39 | ) | |||||||||||||||||||||
01/2015 | 9,271 | GBP | 5,918 | 0 | (47 | ) | ||||||||||||||||||||||
01/2015 | 2,393 | JPY | 283,800 | 0 | (24 | ) | ||||||||||||||||||||||
01/2015 | 10,267 | NOK | 72,374 | 0 | (556 | ) | ||||||||||||||||||||||
02/2015 | AUD | 14,324 | $ | 11,657 | 0 | (12 | ) | |||||||||||||||||||||
02/2015 | CHF | 4,337 | 4,495 | 131 | 0 | |||||||||||||||||||||||
02/2015 | EUR | 6,167 | 7,515 | 50 | 0 | |||||||||||||||||||||||
02/2015 | GBP | 989 | 1,534 | 0 | (7 | ) | ||||||||||||||||||||||
02/2015 | JPY | 253,109 | 2,099 | 0 | (15 | ) | ||||||||||||||||||||||
02/2015 | KRW | 2,118,798 | 1,998 | 66 | 0 | |||||||||||||||||||||||
02/2015 | $ | 9,439 | CNY | 58,210 | 11 | 0 | ||||||||||||||||||||||
02/2015 | 1,546 | KRW | 1,699,587 | 4 | 0 | |||||||||||||||||||||||
HUS | 01/2015 | GBP | 1,980 | $ | 3,116 | 30 | 0 | |||||||||||||||||||||
01/2015 | SGD | 33,245 | 26,055 | 975 | 0 | |||||||||||||||||||||||
01/2015 | $ | 29,496 | AUD | 34,484 | 0 | (1,344 | ) | |||||||||||||||||||||
01/2015 | 19,140 | CAD | 21,578 | 0 | (568 | ) | ||||||||||||||||||||||
01/2015 | 2,117 | GBP | 1,352 | 0 | (10 | ) | ||||||||||||||||||||||
02/2015 | CNY | 11,599 | $ | 1,887 | 4 | 0 | ||||||||||||||||||||||
02/2015 | HKD | 20,800 | 2,683 | 1 | 0 | |||||||||||||||||||||||
02/2015 | $ | 4,252 | CHF | 4,098 | 0 | (129 | ) | |||||||||||||||||||||
JPM | 01/2015 | CAD | 48,897 | $ | 42,065 | 0 | (20 | ) | ||||||||||||||||||||
01/2015 | EUR | 26,733 | 33,153 | 805 | 0 | |||||||||||||||||||||||
01/2015 | GBP | 5,637 | 8,821 | 36 | 0 | |||||||||||||||||||||||
01/2015 | JPY | 370,139 | 3,135 | 45 | 0 | |||||||||||||||||||||||
01/2015 | NOK | 31,491 | 4,266 | 41 | 0 | |||||||||||||||||||||||
01/2015 | $ | 1,306 | EUR | 1,053 | 0 | (32 | ) | |||||||||||||||||||||
01/2015 | 1,786 | JPY | 211,100 | 0 | (23 | ) |
See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 99 |
Table of Contents
Consolidated Schedule of Investments PIMCO EqS Pathfinder Fund® (Cont.)
Counterparty | Settlement | Currency to | Currency to | Unrealized Appreciation/ (Depreciation) | ||||||||||||||||||||||||
Asset | Liability | |||||||||||||||||||||||||||
02/2015 | CHF | 5,364 | $ | 5,490 | $ | 92 | $ | 0 | ||||||||||||||||||||
02/2015 | EUR | 3,320 | 4,046 | 28 | 0 | |||||||||||||||||||||||
02/2015 | HKD | 311,025 | 40,114 | 7 | 0 | |||||||||||||||||||||||
02/2015 | KRW | 10,318,490 | 9,756 | 346 | 0 | |||||||||||||||||||||||
02/2015 | $ | 42,039 | CAD | 48,897 | 19 | 0 | ||||||||||||||||||||||
02/2015 | 4,501 | CHF | 4,356 | 0 | (117 | ) | ||||||||||||||||||||||
02/2015 | 1,268 | EUR | 1,037 | 0 | (13 | ) | ||||||||||||||||||||||
MSB | 01/2015 | NOK | 11,730 | $ | 1,695 | 121 | 0 | |||||||||||||||||||||
01/2015 | $ | 667 | NOK | 4,715 | 0 | (34 | ) | |||||||||||||||||||||
RBC | 01/2015 | DKK | 28,377 | $ | 4,759 | 148 | 0 | |||||||||||||||||||||
01/2015 | $ | 19,141 | CAD | 21,579 | 0 | (568 | ) | |||||||||||||||||||||
01/2015 | 1,430 | EUR | 1,146 | 0 | (44 | ) | ||||||||||||||||||||||
SOG | 01/2015 | PLN | 2,574 | $ | 766 | 40 | 0 | |||||||||||||||||||||
01/2015 | $ | 1,785 | SEK | 13,455 | 0 | (59 | ) | |||||||||||||||||||||
UAG | 01/2015 | AUD | 26,111 | $ | 21,352 | 36 | 0 | |||||||||||||||||||||
01/2015 | NOK | 361,359 | 52,973 | 4,488 | 0 | |||||||||||||||||||||||
01/2015 | SEK | 20,532 | 2,770 | 136 | 0 | |||||||||||||||||||||||
01/2015 | $ | 2,000 | AUD | 2,435 | 0 | (12 | ) | |||||||||||||||||||||
01/2015 | 16,191 | NOK | 117,935 | 0 | (367 | ) | ||||||||||||||||||||||
02/2015 | NOK | 194,533 | $ | 26,094 | 14 | 0 | ||||||||||||||||||||||
02/2015 | SEK | 57,897 | 7,469 | 41 | 0 | |||||||||||||||||||||||
02/2015 | $ | 21,307 | AUD | 26,111 | 0 | (35 | ) | |||||||||||||||||||||
02/2015 | 4,666 | HKD | 36,171 | 0 | (2 | ) | ||||||||||||||||||||||
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Total Forward Foreign Currency Contracts |
| $ | 16,977 | $ | (8,237 | ) | ||||||||||||||||||||||
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WRITTEN OPTIONS:
OPTIONS ON SECURITIES
Counterparty | Description | Strike Price | Expiration Date | Notional Amount | Premiums (Received) | Market Value | ||||||||||||||||||||
GST | Call - OTC International Business Machines Corp. | $ | 155.000 | 07/17/2015 | $ | 3,606 | $ | (343 | ) | $ | (406 | ) | ||||||||||||||
Call - OTC International Business Machines Corp. | 155.000 | 01/15/2016 | 3,606 | (447 | ) | (507 | ) | |||||||||||||||||||
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Total Written Options |
| $ | (790 | ) | $ | (913 | ) | |||||||||||||||||||
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TRANSACTIONS IN WRITTEN CALL AND PUT OPTIONS FOR THE PERIOD ENDED DECEMBER 31, 2014:
# of Contracts | Notional Amount | Premiums | ||||||||||
Balance at Beginning of Period | 0 | $ | 0 | $ | 0 | |||||||
Sales | 423 | 7,212 | (875 | ) | ||||||||
Closing Buys | 0 | 0 | 0 | |||||||||
Expirations | 0 | 0 | 0 | |||||||||
Exercised | (423 | ) | 0 | 85 | ||||||||
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Balance at End of Period | 0 | $ | 7,212 | $ | (790 | ) | ||||||
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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 | Receive | Lancashire Holdings Ltd. | 1,541,993 | 1-Month USD-LIBOR plus a specified spread | 10/23/2015 | GBP | 7,802 | $ | 1,294 | $ | 1,294 | $ | 0 | |||||||||||||||||||||
Pay | Rentech Nitrogen Partners LP | 24,547 | 1-Month USD-LIBOR less a specified spread | 08/14/2015 | $ | 221 | (37 | ) | 0 | (37 | ) | |||||||||||||||||||||||
JPM | Receive | Liberty TripAdvisor Holdings, Inc. | 183,515 | 1-Month USD-LIBOR plus a specified spread | 04/29/2015 | 4,634 | 302 | 302 | 0 | |||||||||||||||||||||||||
Pay | TripAdvisor, Inc. | 75,895 | 1-Month USD-LIBOR less a specified spread | 04/29/2015 | 5,479 | (188 | ) | 0 | (188 | ) | ||||||||||||||||||||||||
Receive | Covidien PLC | 153,806 | 1-Month USD-LIBOR plus a specified spread | 06/16/2015 | 15,387 | 397 | 397 | 0 | ||||||||||||||||||||||||||
Pay | Medtronic, Inc. | 147,039 | 1-Month USD-LIBOR less a specified spread | 06/16/2015 | 10,585 | (77 | ) | 0 | (77 | ) | ||||||||||||||||||||||||
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Total Swap Agreements | $ | 1,691 | $ | 1,993 | $ | (302 | ) | |||||||||||||||||||||||||||
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(1) | Receive represents that the Fund receives payments for any positive return on the underlying reference. The Fund makes payments for any negative return on such underlying reference. Pay represents that the Fund receives payments for any negative return on the underlying reference. The Fund makes payments for any positive return on such underlying reference. |
100 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 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)/pledged as of December 31, 2014:
(g) | Securities with an aggregate market value of $3,541 have been pledged as collateral for financial derivative instruments as governed by International Swaps and Derivatives Association, Inc. master agreements as of December 31, 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)/ Pledged | Net Exposure(2) | |||||||||||||||||||||||||||||||||||
BOA | $ | 749 | $ | 0 | $ | 1,294 | $ | 2,043 | $ | (501 | ) | $ | 0 | $ | (37 | ) | $ | (538 | ) | $ | 1,505 | $ | (1,574 | ) | $ | (69 | ) | |||||||||||||||||||
BPS | 1,209 | 0 | 0 | 1,209 | (425 | ) | 0 | 0 | (425 | ) | 784 | (370 | ) | 414 | ||||||||||||||||||||||||||||||||
BRC | 27 | 0 | 0 | 27 | (195 | ) | 0 | 0 | (195 | ) | (168 | ) | 0 | (168 | ) | |||||||||||||||||||||||||||||||
CBK | 843 | 0 | 0 | 843 | (1,896 | ) | 0 | 0 | (1,896 | ) | (1,053 | ) | 913 | (140 | ) | |||||||||||||||||||||||||||||||
DUB | 574 | 0 | 0 | 574 | (276 | ) | 0 | 0 | (276 | ) | 298 | (320 | ) | (22 | ) | |||||||||||||||||||||||||||||||
FBF | 463 | 0 | 0 | 463 | (837 | ) | 0 | 0 | (837 | ) | (374 | ) | 182 | (192 | ) | |||||||||||||||||||||||||||||||
GLM | 5,659 | 0 | 0 | 5,659 | (730 | ) | 0 | 0 | (730 | ) | 4,929 | (4,610 | ) | 319 | ||||||||||||||||||||||||||||||||
GST | 0 | 0 | 0 | 0 | 0 | (913 | ) | 0 | (913 | ) | (913 | ) | 871 | (42 | ) | |||||||||||||||||||||||||||||||
HUS | 1,010 | 0 | 0 | 1,010 | (2,051 | ) | 0 | 0 | (2,051 | ) | (1,041 | ) | 1,004 | (37 | ) | |||||||||||||||||||||||||||||||
JPM | 1,419 | 0 | 699 | 2,118 | (205 | ) | 0 | (265 | ) | (470 | ) | 1,648 | (1,350 | ) | 298 | |||||||||||||||||||||||||||||||
MSB | 121 | 0 | 0 | 121 | (34 | ) | 0 | 0 | (34 | ) | 87 | (30 | ) | 57 | ||||||||||||||||||||||||||||||||
RBC | 148 | 0 | 0 | 148 | (612 | ) | 0 | 0 | (612 | ) | (464 | ) | 572 | 108 | ||||||||||||||||||||||||||||||||
SOG | 40 | 0 | 0 | 40 | (59 | ) | 0 | 0 | (59 | ) | (19 | ) | 0 | (19 | ) | |||||||||||||||||||||||||||||||
UAG | 4,715 | 0 | 0 | 4,715 | (416 | ) | 0 | 0 | (416 | ) | 4,299 | (4,130 | ) | 169 | ||||||||||||||||||||||||||||||||
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Total Over the Counter | $ | 16,977 | $ | 0 | $ | 1,993 | $ | 18,970 | $ | (8,237 | ) | $ | (913 | ) | $ | (302 | ) | $ | (9,452 | ) | ||||||||||||||||||||||||||
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(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 Fund 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 Fund’s derivative instruments categorized by risk exposure. See Note 7, Principal Risks, in the Notes to Financial Statements on risks of the Fund.
Fair Values of Financial Derivative Instruments on the Consolidated Statements of Assets and Liabilities as of December 31, 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 | $ | 16,977 | $ | 0 | $ | 16,977 | ||||||||||||
Swap Agreements | 0 | 0 | 1,993 | 0 | 0 | 1,993 | ||||||||||||||||||
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$ | 0 | $ | 0 | $ | 1,993 | $ | 16,977 | $ | 0 | $ | 18,970 | |||||||||||||
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Financial Derivative Instruments - Liabilities | ||||||||||||||||||||||||
Exchange-traded or centrally cleared | ||||||||||||||||||||||||
Futures | $ | 0 | $ | 0 | $ | 296 | $ | 0 | $ | 0 | $ | 296 | ||||||||||||
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Over the counter | ||||||||||||||||||||||||
Forward Foreign Currency Contracts | $ | 0 | $ | 0 | $ | 0 | $ | 8,237 | $ | 0 | $ | 8,237 | ||||||||||||
Written Options | 0 | 0 | 913 | 0 | 0 | 913 | ||||||||||||||||||
Swap Agreements | 0 | 0 | 302 | 0 | 0 | 302 | ||||||||||||||||||
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$ | 0 | $ | 0 | $ | 1,215 | $ | 8,237 | $ | 0 | $ | 9,452 | |||||||||||||
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$ | 0 | $ | 0 | $ | 1,511 | $ | 8,237 | $ | 0 | $ | 9,748 | |||||||||||||
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See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 101 |
Table of Contents
Consolidated Schedule of Investments PIMCO EqS Pathfinder Fund® (Cont.)
The Effect of Financial Derivative Instruments on the Consolidated Statements of Operations for the Period Ended December 31, 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 | ||||||||||||||||||||||||
Purchased Options | $ | 0 | $ | 0 | $ | (69 | ) | $ | 0 | $ | 0 | $ | (69 | ) | ||||||||||
Futures | 0 | 0 | 3,009 | 0 | 0 | 3,009 | ||||||||||||||||||
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$ | 0 | $ | 0 | $ | 2,940 | $ | 0 | $ | 0 | $ | 2,940 | |||||||||||||
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| |||||||||||||
Over the counter | ||||||||||||||||||||||||
Forward Foreign Currency Contracts | $ | 0 | $ | 0 | $ | 0 | $ | 17,328 | $ | 0 | $ | 17,328 | ||||||||||||
Swap Agreements | 0 | 0 | (388 | ) | 0 | 0 | (388 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
$ | 0 | $ | 0 | $ | (388 | ) | $ | 17,328 | $ | 0 | $ | 16,940 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
$ | 0 | $ | 0 | $ | 2,552 | $ | 17,328 | $ | 0 | $ | 19,880 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net Change in Unrealized Appreciation (Depreciation) on Financial Derivative Instruments |
| |||||||||||||||||||||||
Over the counter | ||||||||||||||||||||||||
Forward Foreign Currency Contracts | $ | 0 | $ | 0 | $ | 0 | $ | 4,220 | $ | 0 | $ | 4,220 | ||||||||||||
Written Options | 0 | 0 | (123 | ) | 0 | 0 | (123 | ) | ||||||||||||||||
Swap Agreements | 0 | 0 | 1,274 | 0 | 0 | 1,274 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
$ | 0 | $ | 0 | $ | 1,151 | $ | 4,220 | $ | 0 | $ | 5,371 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
FAIR VALUE MEASUREMENTS
The following is a summary of the fair valuations according to the inputs used as of December 31, 2014 in valuing the Fund’s assets and liabilities:
Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair Value at 12/31/2014 | ||||||||||||
Investments in Securities, at Value |
| |||||||||||||||
Common Stocks | ||||||||||||||||
Australia | ||||||||||||||||
Industrials | $ | 0 | $ | 8,902 | $ | 0 | $ | 8,902 | ||||||||
Belgium | ||||||||||||||||
Industrials | 0 | 26,637 | 0 | 26,637 | ||||||||||||
Bermuda | ||||||||||||||||
Energy | 0 | 8,032 | 0 | 8,032 | ||||||||||||
Canada | ||||||||||||||||
Energy | 6,961 | 0 | 0 | 6,961 | ||||||||||||
Denmark | ||||||||||||||||
Consumer Staples | 0 | 16,147 | 0 | 16,147 | ||||||||||||
Faroe Islands | ||||||||||||||||
Consumer Staples | 0 | 9,093 | 0 | 9,093 | ||||||||||||
France | ||||||||||||||||
Consumer Discretionary | 0 | 28,693 | 0 | 28,693 | ||||||||||||
Consumer Staples | 0 | 23,448 | 0 | 23,448 | ||||||||||||
Energy | 6,896 | 0 | 0 | 6,896 | ||||||||||||
Hong Kong | ||||||||||||||||
Consumer Discretionary | 6,538 | 0 | 0 | 6,538 | ||||||||||||
Financials | 0 | 37,109 | 0 | 37,109 | ||||||||||||
Industrials | 0 | 6,431 | 0 | 6,431 | ||||||||||||
Japan | ||||||||||||||||
Consumer Discretionary | 0 | 6,602 | 0 | 6,602 | ||||||||||||
Consumer Staples | 0 | 11,497 | 0 | 11,497 | ||||||||||||
Information Technology | 10,500 | 9,480 | 0 | 19,980 | ||||||||||||
Netherlands | ||||||||||||||||
Consumer Staples | 0 | 15,516 | 0 | 15,516 | ||||||||||||
Financials | 0 | 21,191 | 0 | 21,191 | ||||||||||||
Information Technology | 9,818 | 0 | 0 | 9,818 | ||||||||||||
Norway | ||||||||||||||||
Consumer Staples | 0 | 37,143 | 0 | 37,143 | ||||||||||||
Energy | 11,240 | 5,489 | 0 | 16,729 | ||||||||||||
Singapore | ||||||||||||||||
Energy | 0 | 8,588 | 0 | 8,588 | ||||||||||||
Industrials | 0 | 24,170 | 0 | 24,170 | ||||||||||||
South Korea | ||||||||||||||||
Consumer Discretionary | 0 | 8,347 | 0 | 8,347 | ||||||||||||
Spain | ||||||||||||||||
Industrials | 4,648 | 0 | 0 | 4,648 |
Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair Value at 12/31/2014 | ||||||||||||
Sweden | ||||||||||||||||
Industrials | $ | 0 | $ | 20,188 | $ | 0 | $ | 20,188 | ||||||||
Switzerland | ||||||||||||||||
Financials | 0 | 8,439 | 0 | 8,439 | ||||||||||||
Health Care | 0 | 14,945 | 0 | 14,945 | ||||||||||||
Information Technology | 0 | 15,265 | 0 | 15,265 | ||||||||||||
United Kingdom | ||||||||||||||||
Consumer Discretionary | 0 | 2,796 | 0 | 2,796 | ||||||||||||
Consumer Staples | 0 | 94,508 | 0 | 94,508 | ||||||||||||
Financials | 11,019 | 7,635 | 0 | 18,654 | ||||||||||||
Health Care | 922 | 0 | 0 | 922 | ||||||||||||
United States | ||||||||||||||||
Consumer Discretionary | 45,175 | 0 | 0 | 45,175 | ||||||||||||
Consumer Staples | 85,493 | 0 | 0 | 85,493 | ||||||||||||
Energy | 24,844 | 0 | 0 | 24,844 | ||||||||||||
Financials | 87,582 | 0 | 0 | 87,582 | ||||||||||||
Health Care | 25,767 | 0 | 0 | 25,767 | ||||||||||||
Industrials | 42,297 | 0 | 0 | 42,297 | ||||||||||||
Information Technology | 71,593 | 0 | 0 | 71,593 | ||||||||||||
Materials | 2,323 | 0 | 0 | 2,323 | ||||||||||||
Real Estate Investment Trusts | ||||||||||||||||
Singapore | ||||||||||||||||
Financials | 0 | 440 | 0 | 440 | ||||||||||||
United States | ||||||||||||||||
Financials | 4,830 | 0 | 0 | 4,830 | ||||||||||||
Rights | ||||||||||||||||
France | ||||||||||||||||
Health Care | 3,222 | 0 | 0 | 3,222 | ||||||||||||
Short-Term Instruments | ||||||||||||||||
Repurchase Agreements | 0 | 992 | 0 | 992 | ||||||||||||
U.S. Treasury Bills | 0 | 6,980 | 0 | 6,980 | ||||||||||||
$ | 461,668 | $ | 484,703 | $ | 0 | $ | 946,371 | |||||||||
Investments in Affiliates, at Value |
| |||||||||||||||
Short-Term Instruments | ||||||||||||||||
Central Funds Used for Cash Management Purposes | $ | 61,102 | $ | 0 | $ | 0 | $ | 61,102 | ||||||||
Total Investments | $ | 522,770 | $ | 484,703 | $ | 0 | $ | 1,007,473 |
102 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 2014 (Unaudited)
Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair Value at 12/31/2014 | ||||||||||||
Short Sales, at Value - Liabilities |
| |||||||||||||||
Common Stocks | ||||||||||||||||
China | ||||||||||||||||
Information Technology | $ | (7,528 | ) | $ | 0 | $ | 0 | $ | (7,528 | ) | ||||||
United States | ||||||||||||||||
Information Technology | (11,142 | ) | 0 | 0 | (11,142 | ) | ||||||||||
$ | (18,670 | ) | $ | 0 | $ | 0 | $ | (18,670 | ) | |||||||
Financial Derivative Instruments - Assets |
| |||||||||||||||
Over the counter | $ | 0 | $ | 18,970 | $ | 0 | $ | 18,970 |
Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair Value at 12/31/2014 | ||||||||||||
Financial Derivative Instruments - Liabilities |
| |||||||||||||||
Over the counter | $ | (0 | ) | $ | (9,452 | ) | $ | 0 | $ | (9,452 | ) | |||||
Totals | $ | 504,100 | $ | 494,221 | $ | 0 | $ | 998,321 |
There were no significant transfers between Level 1, 2, and 3 during the period ended December 31, 2014.
See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 103 |
Table of Contents
1. ORGANIZATION
PIMCO Equity Series (the “Trust”) was established as a Delaware statutory trust on December 28, 2009. The Trust is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company. Information presented in these financial statements pertains to the Institutional Class, Class P, Administrative Class, Class D, Class A, Class C and Class R shares of the funds (each a “Fund” and collectively the “Funds”) offered by the Trust. Pacific Investment Management Company LLC (“PIMCO”) serves as the investment adviser (the “Adviser”) for the Funds.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Trust in the preparation of its financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Each Fund is treated as an investment company under the reporting requirements of 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 Fund 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 Statements 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 Statements 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.
Debt obligations may be placed on non-accrual status and related interest income may be reduced by ceasing current accruals and writing off interest receivable when the collection of all or a portion of interest has become doubtful based on consistently applied procedures. A debt obligation is removed from non-accrual status when the issuer resumes interest payments or when collectability of interest is probable.
(b) Cash and Foreign Currency The functional and reporting currency for the Funds 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, if any, are translated into U.S. dollars at the exchange rate in effect on the transaction date. The Funds do 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 Statements of Operations. The Funds 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 Statements 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 Statements of Operations.
(c) Multiclass Operations Each class offered by the Trust 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 Fund. Class specific 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, of each Fund, except the PIMCO Balanced Income Fund, PIMCO Dividend and Income Builder Fund and
104 | PIMCO EQUITY SERIES |
Table of Contents
December 31, 2014 (Unaudited)
PIMCO Global Dividend Fund, are declared and distributed to shareholders annually. Dividends from net investment income, if any, of the PIMCO Balanced Income Fund, PIMCO Dividend and Income Builder Fund and PIMCO Global Dividend Fund are declared daily and distributed to shareholders quarterly. Net realized capital gains earned by each Fund, 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, straddles 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 paydowns on mortgage-backed securities, 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 each Fund’s annual financial statements presented under U.S. GAAP.
Distributions classified as a tax basis return of capital, if any, are reflected on the accompanying 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) Statement of Cash Flows U.S. GAAP requires entities providing financial statements that report both financial position and results of operations to also provide a statement of cash flows for each period for which results of operations are provided, but exempts investment companies meeting certain conditions. One of the conditions is that substantially all of the enterprise’s investments were carried at fair value during the period and classified as Level 1 or Level 2 in the fair value hierarchy in accordance with the requirements of U.S. GAAP. Another condition is that the enterprise had little or no debt, based on the average debt outstanding during the period, in relation to average total assets. Funds with certain degrees of borrowing activity, typically through the use of reverse repurchase agreements, sale-buyback transactions, short sale transactions, have been determined to be at a level requiring a Statement of Cash Flows. Statements of Cash Flows, as applicable, have been prepared using the indirect method which requires net change in net assets resulting from operations to be adjusted to reconcile to net cash flows from operating activities.
(f) 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 became effective for interim or annual periods beginning on or after December 15, 2013. The Funds have adopted the ASU as they follow the investment company reporting requirements under U.S. GAAP and its implementation did not have an impact on the Funds’ 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 for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. 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 a Fund’s 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 a Fund 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 Trust’s 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 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
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 105 |
Table of Contents
Notes to Financial Statements (Cont.)
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 a Fund’s 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 the responsibility for monitoring significant events that may materially affect the values of a Fund’s 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 Trust’s policy is intended to result in a calculation of a Fund’s 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 a Fund 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 Fund 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 a Fund 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 | Level 1—Inputs using (unadjusted) quoted prices in active markets or exchanges for identical assets and liabilities. |
n | Level 2—Significant other observable inputs, which may include, but are not limited to, quoted prices for similar assets or liabilities in 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 3—Significant 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. |
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 material, are disclosed in the Notes to Schedule of Investments for each respective Fund.
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 a Fund’s 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, and if material, a Level 3 reconciliation and details of significant unobservable inputs, have been included in the Notes to Schedule of Investments for each respective Fund.
106 | PIMCO EQUITY SERIES |
Table of Contents
December 31, 2014 (Unaudited)
(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 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.
Fixed income securities purchased on a delayed-delivery basis or as a repurchase commitment in a sale-buyback transaction are marked to market daily until settlement at the forward settlement date and are categorized as Level 2 of the fair value hierarchy.
Mortgage-related and asset-backed securities are usually issued as separate tranches, or classes, of securities within each deal. These securities are also normally valued by pricing service providers that use broker-dealer quotations or valuation estimates from their internal pricing models. The pricing models for these securities usually consider tranche-level attributes, current market data, estimated cash flows and market-based yield spreads for each tranche, and incorporate deal collateral performance, as available. Mortgage-related and asset-backed 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 a Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of securities traded in markets outside the United States or denominated in currencies other than the U.S. dollar may be affected significantly on a day that the NYSE is closed. 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 equity’s trading currency to the contract’s 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 quoted prices, issuer details, indices, bid/ask spreads, interest rates, implied volatilities, 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.
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 107 |
Table of Contents
Notes to Financial Statements (Cont.)
Centrally cleared swaps listed or traded on a multilateral or trade facility platform, such as a registered exchange, are valued at the daily settlement price determined by the respective exchange. For centrally cleared credit default swaps the clearing facility requires its members to provide actionable price levels across complete term structures. These levels along with external third-party prices are used to produce daily settlement prices. These securities are categorized as Level 2 of the fair value hierarchy. Centrally cleared interest rate swaps are valued using a pricing model that references the underlying rates including the overnight index swap rate and London Interbank Offered Rate (“LIBOR”) forward rate to produce the daily settlement price. These securities are categorized as Level 2 of the fair value hierarchy.
Level 3 trading assets and trading liabilities, at fair value When a fair valuation method is applied by PIMCO that uses significant unobservable inputs, securities will be priced by a method that the Board or persons acting at their direction believe reflects fair value and are categorized as Level 3 of the fair value hierarchy. The valuation techniques and significant inputs used in determining the fair values of portfolio assets and liabilities categorized as Level 3 of the fair value hierarchy are as follows:
Benchmark pricing procedures set the base price of a fixed income security and subsequently adjust the price proportionally to market value changes of a pre-determined security deemed to be comparable in duration, generally a U.S. Treasury or sovereign note based on country of issuance. The base price may be a broker-dealer quote, transaction price, or an internal value as derived by analysis of market data. The base price of the security may be reset on a periodic basis based on the availability of market data and procedures approved by the Valuation Committee. Significant changes in the unobservable inputs of the benchmark pricing process (the base price) would result in direct and proportional changes in the fair value of the security. These securities are categorized as Level 3 of the fair value hierarchy. The validity of the fair value is reviewed by PIMCO on a periodic basis and may be amended as the availability of market data indicates a material change.
If third-party evaluated vendor pricing is not available or not deemed to be indicative of fair value, the Adviser may elect to obtain indicative market quotations (“broker quotes”) directly from the broker-dealer or passed through from a third-party vendor. In the event that fair value is based upon a single sourced broker quote, these securities are categorized as Level 3 of the fair value hierarchy. Broker quotes are typically received from established market participants. Although independently received, the Adviser does not have the transparency to view the underlying inputs which support the market quotation. Significant changes in the broker quote would have direct and proportional changes in the fair value of the security.
4. SECURITIES AND OTHER INVESTMENTS
(a) Investments in Securities
Loan Participations, Assignments and Originations Certain Funds may invest in direct debt instruments which are interests in amounts owed to lenders or lending syndicates by corporate, governmental, or other borrowers. A Fund’s investments in loans may be in the form of participations in loans or assignments of all or a portion of loans from third parties or investments in or originations of loans by a Fund or Funds. A loan is often administered by a bank or other financial institution (the “lender”) that acts as agent for all holders. The agent administers the terms of the loan, as specified in the loan agreement. A Fund may invest in multiple series or tranches of a loan, which may have varying terms and carry different associated risks. When a Fund purchases assignments from lenders it acquires direct rights against the borrower of the loan. These loans may include participations in bridge loans, which are loans taken out by borrowers for a short period (typically less than one year) pending arrangement of more permanent financing through, for example, the issuance of bonds, frequently high yield bonds issued for the purpose of acquisitions.
The types of loans and related investments in which the Funds may invest include, among others, senior loans, subordinated loans (including second lien loans, B-Notes and mezzanine loans), whole loans, commercial real estate and other commercial loans and structured loans. The Funds may originate loans or acquire direct interests in loans through primary loan distributions and/or in private transactions. In the case of subordinated loans, there may be significant indebtedness ranking ahead of the borrower’s obligation to the holder of such a loan, including in the event of the borrower’s insolvency. Mezzanine loans are typically secured by a pledge of an equity interest in the mortgage borrower that owns the real estate rather than an interest in a mortgage.
Investments in loans may include unfunded loan commitments, which are contractual obligations for funding. Unfunded loan commitments may include revolving credit facilities, which may obligate a Fund to supply additional cash to the borrower on demand. Unfunded loan commitments represent a future obligation in full, even though a percentage of the committed amount may not be utilized by the borrower. When investing in a loan participation, a Fund has the right to receive payments of principal, interest and any fees to which it is entitled only from the lender selling the loan agreement and only upon receipt of payments by the lender from the borrower. A Fund may receive a commitment fee based on the undrawn portion of the underlying line of credit portion of a loan. In certain circumstances, a Fund may receive a penalty fee upon the prepayment of a loan by a borrower. Fees earned or paid are recorded as a component of interest income or interest expense, respectively, on the Statements of Operations. As of December 31, 2014, the Funds had no unfunded loan commitments outstanding.
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Mortgage-Related and Other Asset-Backed Securities Certain Funds may invest in mortgage-related and other asset-backed securities that directly or indirectly represent a participation in, or are secured by and payable from, loans on real property. Mortgage-related securities are created from pools of residential or commercial mortgage loans, including mortgage loans made by savings and loan institutions, mortgage bankers, commercial banks and others. These securities provide a monthly payment which consists of both interest and principal. Interest may be determined by fixed or adjustable rates. The rate of prepayments on underlying mortgages will affect the price and volatility of a mortgage-related security, and may have the effect of shortening or extending the effective duration of the security relative to what was anticipated at the time of purchase. The timely payment of principal and interest of certain mortgage-related securities is guaranteed with the full faith and credit of the U.S. Government. Pools created and guaranteed by non-governmental issuers, including government-sponsored corporations, may be supported by various forms of insurance or guarantees, but there can be no assurance that private insurers or guarantors can meet their obligations under the insurance policies or guarantee arrangements. Many of the risks of investing in mortgage-related securities secured by commercial mortgage loans reflect the effects of local and other economic conditions on real estate markets, the ability of tenants to make lease payments, and the ability of a property to attract and retain tenants. These securities may be less liquid and may exhibit greater price volatility than other types of mortgage-related or other asset-backed securities. Other asset-backed securities are created from many types of assets, including auto loans, credit card receivables, home equity loans, and student loans.
Collateralized Mortgage Obligations (“CMOs”) are debt obligations of a legal entity that are collateralized by whole mortgage loans or private mortgage bonds and divided into classes. CMOs are structured into multiple classes, often referred to as “tranches,” with each class bearing a different stated maturity and entitled to a different schedule for payments of principal and interest, including prepayments. CMOs may be less liquid and may exhibit greater price volatility than other types of mortgage-related or asset-backed securities.
Payment In-Kind Securities Certain Funds may invest in payment in-kind securities (“PIKs”). PIKs may give the issuer the option at each interest payment date of making interest payments in either cash or additional debt securities. Those additional debt securities usually have the same terms, including maturity dates and interest rates, and associated risks as the original bonds. The daily market quotations of the original bonds may include the accrued interest (referred to as a dirty price) and require a pro rata adjustment from the unrealized appreciation or depreciation on investments to interest receivable on the Statements of Assets and Liabilities.
U.S. Government Agencies or Government-Sponsored Enterprises Certain Funds may invest in securities of U.S. Government agencies or government-sponsored enterprises. U.S. Government securities are obligations of and, in certain cases, guaranteed by, the U.S. Government, its agencies or instrumentalities. Some U.S. Government securities, such as Treasury bills, notes and bonds, and securities guaranteed by the Government National Mortgage Association (“GNMA” or “Ginnie Mae”), are supported by the full faith and credit of the U.S. Government; others, such as those of the Federal Home Loan Banks, are supported by the right of the issuer to borrow from the U.S. Department of the Treasury (the “U.S. Treasury”); and others, such as those of the Federal National Mortgage Association (“FNMA” or “Fannie Mae”), are supported by the discretionary authority of the U.S. Government to purchase the agency’s obligations. U.S. Government securities may include zero coupon securities. Zero coupon securities do not distribute interest on a current basis and tend to be subject to a greater risk than interest paying securities.
Government-related guarantors (i.e., not backed by the full faith and credit of the U.S. Government) include FNMA and the Federal Home Loan Mortgage Corporation (“FHLMC” or “Freddie Mac”). FNMA is a government-sponsored corporation. FNMA purchases conventional (i.e., not insured or guaranteed by any government agency) residential mortgages from a list of approved seller/servicers which include state and federally chartered savings and loan associations, mutual savings banks, commercial banks and credit unions and mortgage bankers. Pass-through securities issued by FNMA are guaranteed as to timely payment of principal and interest by FNMA, but are not backed by the full faith and credit of the U.S. Government. FHLMC issues Participation Certificates (“PCs”), which are pass-through securities, each representing an undivided interest in a pool of residential mortgages. FHLMC guarantees the timely payment of interest and ultimate collection of principal, but PCs are not backed by the full faith and credit of the U.S. Government.
(b) Investments in Affiliates
The PIMCO Emerging Multi-Asset Fund may invest assets in Institutional Class or Class M shares of the Trust and funds of PIMCO Funds, except funds of funds, (“Underlying PIMCO Funds”) and may also invest in other affiliated funds, including funds of PIMCO ETF Trust, and unaffiliated funds, which may or may not be registered under the 1940 Act (collectively, “Acquired Funds”). The Underlying PIMCO Funds are considered to be affiliated with the PIMCO Emerging Multi-Asset Fund. The table below shows the transactions in and earnings from investments in these affiliated Funds for the period ended December 31, 2014 (amounts in thousands†):
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PIMCO Emerging Multi-Asset Fund
Underlying PIMCO Funds | Market Value 06/30/2014 | Purchases at Cost | Proceeds from Sales | Net Realized Gain/(Loss) | Change in Unrealized Appreciation/ (Depreciation) | Market Value 12/31/2014 | Dividend Income | Realized Net Capital Gain Distributions | ||||||||||||||||||||||||||
PIMCO Emerging Local Bond Fund | $ | 9,092 | $ | 319 | $ | (1,235 | ) | $ | (255 | ) | $ | (973 | ) | $ | 6,948 | $ | 210 | $ | 0 | |||||||||||||||
PIMCO Emerging Markets Bond Fund | 5,207 | 229 | (1,426 | ) | (150 | ) | (320 | ) | 3,540 | 138 | 24 | |||||||||||||||||||||||
PIMCO Emerging Markets Corporate Bond Fund | 2,517 | 472 | (512 | ) | (6 | ) | (245 | ) | 2,226 | 61 | 0 | |||||||||||||||||||||||
PIMCO EqS® Emerging Markets Fund | 19,050 | 249 | (3,517 | ) | (14 | ) | (996 | ) | 14,772 | 0 | 0 | |||||||||||||||||||||||
PIMCO Short-Term Floating NAV Portfolio | 512 | 2,601 | (3,101 | ) | 0 | 0 | 12 | 0 | 0 | |||||||||||||||||||||||||
PIMCO Short-Term Floating NAV Portfolio III | 0 | 1,903 | (1,700 | ) | (3 | ) | 0 | 200 | 3 | 0 | ||||||||||||||||||||||||
Totals | $ | 36,378 | $ | 5,773 | $ | (11,491 | ) | $ | (428 | ) | $ | (2,534 | ) | $ | 27,698 | $ | 412 | $ | 24 |
† | A zero balance may reflect actual amounts rounding to less than one thousand. |
Each Fund 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 Equity Series VIT, 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 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. The Central Funds are considered to be affiliated with the Funds. The table below shows the Fund’s transactions in and earnings from investments in the Central Funds for the period ended December 31, 2014 (amounts in thousands†):
Investments in PIMCO Short-Term Floating NAV Portfolio
Fund Name | Market Value 06/30/2014 | Purchases at Cost | Proceeds from Sales | Net Realized Gain/(Loss) | Change in Unrealized Appreciation/ (Depreciation) | Market Value 12/31/2014 | Dividend Income | Realized Net Capital Gain Distributions | ||||||||||||||||||||||||||
PIMCO Balanced Income Fund | $ | 980 | $ | 1,601 | $ | (2,370 | ) | $ | 0 | $ | 0 | $ | 211 | $ | 1 | $ | 0 | |||||||||||||||||
PIMCO Dividend and Income Builder Fund | 19,329 | 88,906 | (108,210 | ) | 1 | 0 | 26 | 7 | 0 | |||||||||||||||||||||||||
PIMCO EqS® Emerging Markets Fund | 519 | 27,214 | (27,600 | ) | (3 | ) | 0 | 130 | 14 | 0 | ||||||||||||||||||||||||
PIMCO EqS® Long/Short Fund | 402,024 | 156,942 | (536,900 | ) | (23 | ) | (74 | ) | 21,969 | 342 | 0 | |||||||||||||||||||||||
PIMCO Global Dividend Fund | 3,054 | 92,403 | (95,444 | ) | 0 | 0 | 13 | 2 | 0 | |||||||||||||||||||||||||
PIMCO EqS Pathfinder Fund® | 133,858 | 86,913 | (220,740 | ) | (12 | ) | (2 | ) | 17 | 113 | 0 |
Investments in PIMCO Short-Term Floating NAV Portfolio III
Fund Name | Market Value 06/30/2014 | Purchases at Cost | Proceeds from Sales | Net Realized Gain/(Loss) | Change in Unrealized Appreciation/ (Depreciation) | Market Value 12/31/2014 | Dividend Income | Realized Net Capital Gain Distributions | ||||||||||||||||||||||||||
PIMCO Balanced Income Fund | $ | 0 | $ | 3,211 | $ | (2,030 | ) | $ | (5 | ) | $ | (6 | ) | $ | 1,170 | $ | 10 | $ | 0 | |||||||||||||||
PIMCO Dividend and Income Builder Fund | 0 | 73,144 | (62,830 | ) | (48 | ) | (4 | ) | 10,262 | 43 | 0 | |||||||||||||||||||||||
PIMCO EqS® Emerging Markets Fund | 0 | 11,164 | 0 | 0 | (63 | ) | 11,101 | 64 | 0 | |||||||||||||||||||||||||
PIMCO EqS® Long/Short Fund | 0 | 271,985 | (900 | ) | (5 | ) | (2,038 | ) | 269,042 | 2,085 | 0 | |||||||||||||||||||||||
PIMCO Global Dividend Fund | 0 | 16,902 | (16,880 | ) | (3 | ) | 0 | 19 | 3 | 0 | ||||||||||||||||||||||||
PIMCO International Dividend Fund | 0 | 701 | (600 | ) | (1 | ) | 0 | 100 | 1 | 0 | ||||||||||||||||||||||||
PIMCO U.S. Dividend Fund | 0 | 701 | (680 | ) | (1 | ) | 0 | 20 | 1 | 0 | ||||||||||||||||||||||||
PIMCO EqS Pathfinder Fund® | 0 | 293,847 | (231,700 | ) | (744 | ) | (318 | ) | 61,085 | 1,047 | 0 |
† | A zero balance may reflect actual amounts rounding to less than one thousand. |
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5. BORROWINGS AND OTHER FINANCING TRANSACTIONS
The following disclosures contain information on a Fund’s 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 a Fund. 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) Repurchase Agreements Certain Funds may engage in repurchase agreements. Under the terms of a typical repurchase agreement, a Fund takes possession of an underlying debt obligation (collateral) subject to an obligation of the seller to repurchase, and a Fund to resell, the obligation at an agreed-upon price and time. The underlying securities for all repurchase agreements are held in safekeeping at the Fund’s custodian or designated subcustodians under tri-party repurchase agreements. The market value of the collateral must be equal to or exceed the total amount of the repurchase obligations, including interest. Repurchase agreements, including accrued interest, are included on the Statements of Assets and Liabilities. Interest earned is recorded as a component of interest income on the Statements of Operations. In periods of increased demand for collateral, a Fund may pay a fee for receipt of collateral, which may result in interest expense to the Fund.
(b) Sale-Buybacks Certain Funds may enter into financing transactions referred to as ‘sale-buybacks’. A sale-buyback transaction consists of a sale of a security by a Fund to a financial institution, the counterparty, with a simultaneous agreement to repurchase the same or substantially the same security at an agreed-upon price and date. A Fund is not entitled to receive principal and interest payments, if any, made on the security sold to the counterparty during the term of the agreement. The agreed-upon proceeds for securities to be repurchased by a Fund are reflected as a liability on the Statements of Assets and Liabilities. A Fund will recognize net income represented by the price differential between the price received for the transferred security and the agreed-upon repurchase price. This is commonly referred to as the ‘price drop’. A price drop consists of (i) the foregone interest and inflationary income adjustments, if any, a Fund would have otherwise received had the security not been sold and (ii) the negotiated financing terms between a Fund and counterparty. Foregone interest and inflationary income adjustments, if any, are recorded as components of interest income on the Statements of Operations. Interest payments based upon negotiated financing terms made by a Fund to counterparties are recorded as a component of interest expense on the Statements of Operations. In periods of increased demand for the security, a Fund may receive a fee for use of the security by the counterparty, which may
result in interest income to the Fund. A Fund will segregate assets determined to be liquid by PIMCO or will otherwise cover its obligations under sale-buyback transactions.
(c) Short Sales Certain Funds may enter into short sales transactions. Short sales are transactions in which a Fund sells a security that it may not own. A Fund may make short sales of securities to (i) offset potential declines in long positions in similar securities, (ii) to increase the flexibility of the Fund, (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 a Fund engages in a short sale, it may borrow the security sold short and deliver it to the counterparty. A Fund 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 Statements of Assets and Liabilities. Short sales expose a Fund 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 Fund. A short sale is “against the box” if a Fund holds in its portfolio or has the right to acquire the security sold short at no additional cost. A Fund will be subject to additional risks to the extent that it engages in short sales that are not “against the box.” A Fund’s loss on a short sale could theoretically be unlimited in cases where the Fund 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 Funds use financial derivative instruments, the credit-risk-related contingent features in certain financial derivative instruments, and how financial derivative instruments affect the Funds’ financial position, results of operations and cash flows. The location and fair value amounts of these instruments on the Statements of Assets and Liabilities and the realized and changes in unrealized gains and losses on the Statements of Operations, each categorized by type of financial derivative contract and related risk exposure, are included in a table in the Notes to Schedules 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 Schedules of Investments, serve as indicators of the volume of financial derivative activity for the Funds.
(a) Forward Foreign Currency Contracts Certain Funds 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 a Fund’s securities or as a part of an
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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 a Fund 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 Statements of Assets and Liabilities. In addition, a Fund 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) Futures Contracts Certain Funds may enter into futures contracts. A Fund may use futures contracts to manage its exposure to the securities markets or to movements in interest rates and currency values. The primary risks associated with the use of futures contracts are the imperfect correlation between the change in market value of the securities held by a Fund and the prices of futures contracts and the possibility of an illiquid market. Futures contracts are valued based upon their quoted daily settlement prices. Upon entering into a futures contract, a Fund is required to deposit with its futures broker an amount of cash, U.S. Government and Agency Obligations, or select sovereign debt, in accordance with the initial margin requirements of the broker or exchange. Futures contracts are marked to market daily and an appropriate payable or receivable for the change in value (“variation margin”) is recorded by the Fund. Gains or losses are recognized but not considered realized until the contracts expire or are closed. Futures contracts involve, to varying degrees, risk of loss in excess of variation margin disclosed within exchange traded or centrally cleared financial derivative instruments on the Statements of Assets and Liabilities.
(c) Options Contracts Certain Funds 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 a Fund’s exposure to the underlying instrument. Writing call options tends to decrease a Fund’s exposure to the underlying instrument. When a Fund 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 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. A Fund 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.
Certain Funds may also purchase put and call options. Purchasing call options tends to increase a Fund’s exposure to the underlying instrument. Purchasing put options tends to decrease a Fund’s exposure to the underlying instrument. A Fund 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.
Foreign Currency Options Certain Funds may write or purchase foreign currency options. Purchasing foreign currency options gives a Fund the right, but not the obligation to buy or sell the currency and will specify the amount of currency and a rate of exchange that may be exercised by a specified date. These options may be used as a short or long hedge against possible variations in foreign exchange rates or to gain exposure to foreign currencies.
Options on Indices Certain Funds may write or purchase options on indices (“Index Option”). An Index Option uses a specified index as the underlying instrument for the option contract. A Fund may write or purchase options to enhance returns or to hedge an existing position or future investment. The exercise for an Index Option will not include physical delivery of the underlier but will result in a cash transfer of the amount of the difference between the settlement price of the underlier and the strike price.
Options on Securities Certain Funds may write or purchase options on securities. An option uses a specified security as the underlying instrument for the option contract. A Fund may write or purchase options to enhance returns or to hedge an existing position or future investment.
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(d) Swap Agreements Certain Funds may invest in swap agreements. Swap agreements are bilaterally negotiated agreements between a Fund 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”). A Fund 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, 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 Statements 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 Statements of Assets and Liabilities. OTC swap payments received or paid at the beginning of the measurement period are included on the Statements 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 Statements 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 Statements of Operations. Net periodic payments received or paid by a Fund are included as part of realized gains or losses on the Statements 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 Statements 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.
A Fund’s 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 contract’s remaining life, to the extent that amount is positive. The risk is mitigated by having a master netting arrangement between a Fund and the counterparty and by the posting of collateral to a Fund to cover a Fund’s exposure to the counterparty.
Credit Default Swap Agreements Credit default swap agreements involve one party making a stream of payments (referred to as the buyer of protection) to another party (the seller of protection) in exchange for the right to receive a specified return in the event of a default or other credit event for the referenced entity, obligation or index. As a seller of protection on credit default swap agreements, a Fund will generally receive from the buyer of protection a fixed rate of income throughout the term of the swap provided that there is no credit event. As the seller, a Fund would effectively add leverage to its portfolio because, in addition to its total net assets, a Fund would be subject to investment exposure on the notional amount of the swap.
If a Fund is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, a Fund will either (i) pay to the buyer of protection an amount equal to the notional amount of the swap and take delivery of the referenced obligation, other deliverable obligations or underlying securities comprising the referenced index or (ii) pay a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying securities comprising the referenced index. If a Fund is a buyer of protection and a credit event occurs, as defined under the terms of that particular swap agreement, a Fund will either (i) receive from the seller of protection an amount equal to the notional amount of the swap and deliver the referenced obligation, other deliverable obligations or underlying securities comprising the referenced index or (ii) receive a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying securities comprising the referenced index. Recovery values are estimated by market makers considering either industry standard recovery rates or entity specific factors and considerations until a credit event occurs. If a credit event has occurred, the recovery value is determined by a facilitated auction whereby a minimum number of allowable broker bids, together with a specified valuation method, are used to calculate the settlement value.
Credit default swap agreements on corporate or sovereign issues involve one party making a stream of payments to another party in exchange for the right to receive a specified return in the event of a
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default or other credit event. If a credit event occurs and cash settlement is not elected, a variety of other deliverable obligations may be delivered in lieu of the specific referenced obligation. The ability to deliver other obligations may result in a cheapest-to-deliver option (the buyer of protection’s right to choose the deliverable obligation with the lowest value following a credit event). A Fund may use credit default swaps on corporate or sovereign issues to provide a measure of protection against defaults of the issuers (i.e., to reduce risk where a Fund owns or has exposure to the referenced obligation) or to take an active long or short position with respect to the likelihood of a particular issuer’s default.
Credit default swap agreements on credit indices involve one party making a stream of payments to another party in exchange for the right to receive a specified return in the event of a write-down, principal shortfall, interest shortfall or default of all or part of the referenced entities comprising the credit index. A credit index is a basket of credit instruments or exposures designed to be representative of some part of the credit market as a whole. These indices are made up of reference credits that are judged by a poll of dealers to be the most liquid entities in the credit default swap market based on the sector of the index. Components of the indices may include, but are not limited to, investment grade securities, high yield securities, asset-backed securities, emerging markets, and/or various credit ratings within each sector. Credit indices are traded using credit default swaps with standardized terms including a fixed spread and standard maturity dates. An index credit default swap references all the names in the index, and if there is a default, the credit event is settled based on that name’s weight in the index. The composition of the indices changes periodically, usually every six months, and for most indices, each name has an equal weight in the index. A Fund may use credit default swaps on credit indices to hedge a portfolio of credit default swaps or bonds, which is less expensive than it would be to buy many credit default swaps to achieve a similar effect. Credit default swaps on indices are instruments for protecting investors owning bonds against default, and traders use them to speculate on changes in credit quality.
Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap agreements on corporate or sovereign issues as of period end are disclosed in the Notes to Schedules of Investments. They serve as an indicator of the current status of payment/performance risk and represent the likelihood or risk of default for the reference entity. The implied credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement. Wider credit spreads represent a deterioration of the referenced entity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of
the agreement. For credit default swap agreements on asset-backed securities and credit indices, the quoted market prices and resulting values serve as the indicator of the current status of the payment/performance risk. Increasing market values, in absolute terms when compared to the notional amount of the swap, represent a deterioration of the referenced entity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement.
The maximum potential amount of future payments (undiscounted) that a Fund as a seller of protection could be required to make under a credit default swap agreement equals the notional amount of the agreement. Notional amounts of each individual credit default swap agreement outstanding as of period end for which a Fund is the seller of protection are disclosed in the Notes to Schedules of Investments. These potential amounts would be partially offset by any recovery values of the respective referenced obligations, upfront payments received upon entering into the agreement, or net amounts received from the settlement of buy protection credit default swap agreements entered into by a Fund for the same referenced entity or entities.
Interest Rate Swap Agreements Certain Funds are subject to interest rate risk exposure in the normal course of pursuing their investment objectives. Because a Fund holds fixed rate bonds, the value of these bonds may decrease if interest rates rise. To help hedge against this risk and to maintain its ability to generate income at prevailing market rates, a Fund may enter into interest rate swap agreements. Interest rate swap agreements involve the exchange by a Fund with another party for their respective commitment to pay or receive interest on the notional amount of principal. Certain forms of interest rate swap agreements may include: (i) interest rate caps, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates exceed a specified rate, or “cap”, (ii) interest rate floors, under which, in return for a premium, one party agrees to make payments to the other to the extent that interest rates fall below a specified rate, or “floor”, (iii) interest rate collars, under which a party sells a cap and purchases a floor or vice versa in an attempt to protect itself against interest rate movements exceeding given minimum or maximum levels, (iv) callable interest rate swaps, under which the buyer pays an upfront fee in consideration for the right to early terminate the swap transaction in whole, at zero cost and at a predetermined date and time prior to the maturity date, (v) spreadlocks, which allow the interest rate swap users to lock in the forward differential (or spread) between the interest rate swap rate and a specified benchmark, or (vi) basis swaps, under which two parties can exchange variable interest rates based on different segments of money markets.
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Total Return Swap Agreements Certain Funds 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 and on a fixed or variable interest rate. Total return swap agreements may involve commitments to pay interest in 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, a Fund would receive payments based on any positive total return and would owe payments in the event of a negative total return. As the payer, a Fund would owe payments on any net positive total return, and would receive payments in the event of a negative total return.
7. PRINCIPAL RISKS
In the normal course of business, the Funds (or Acquired Funds) trade financial instruments and enter 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 Funds may be subject to, please see the Important Information About the Funds.
Investments in Mutual Funds To the extent that certain Funds invest substantially all of their respective assets in Acquired Funds, the risks associated with investing in these Funds will be closely related to the risks associated with the securities and other investments held by the Acquired Funds. The ability of the Funds to achieve their respective investment objectives may depend upon the ability of the Acquired Funds to achieve their respective investment objectives. There can be no assurance that the investment objective of any Acquired Fund will be achieved. The net asset value of each Fund will fluctuate in response to changes in the respective net asset values of the Acquired Funds in which it invests. The extent to which the investment performance and risks associated with the Funds correlate to those of a particular Acquired Fund will depend upon the extent to which the assets of the Funds are allocated from time to time for investment in the Acquired Funds, which will vary.
Investing in Acquired Funds involves certain additional expenses and tax results that would not be present in a direct investment in the Acquired Funds.
Market Risks A Fund’s (or Acquired Fund’s) investments in financial derivatives and other financial instruments expose the Fund 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 a Fund (or Acquired Fund) 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 a Fund may lose money if these changes are not anticipated by Fund management. A Fund 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 security’s 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). At present, the U.S. is experiencing historically low interest rates. This, combined with recent economic recovery and the end of the Fed’s quantitative easing program in October 2014, may 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 a Fund to lose value. If a Fund lost enough value, the Fund could face increased redemptions by shareholders, which could further impair its performance.
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Certain Funds (or certain Acquired Funds) 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 sanctions—which may impact companies in many sectors, including energy, financial services and defense, among others—may negatively impact a Fund’s performance and/or ability to achieve its investment objective. The Russian securities market is characterized by limited volume of trading, resulting in difficulty in obtaining accurate prices and trading. The Russian securities market, as compared to U.S. markets, has significant price volatility, less liquidity, a smaller market capitalization and a smaller number of traded securities. There may be little publicly available information about issuers. Settlement, clearing and registration of securities transactions are subject to risks because of registration systems that may not be subject to effective government supervision. This may result in significant delays or problems in registering the transfer of securities. Russian securities laws may not recognize foreign nominee accounts held with a custodian bank, and therefore the custodian may be considered the ultimate owner of securities they hold for their clients. Ownership of securities issued by Russian companies is recorded by companies themselves and by registrars instead of through a central registration system. It is possible that the ownership rights of certain Funds could be lost through fraud or negligence. While applicable Russian regulations impose liability on registrars for losses resulting from their errors, it may be difficult for certain Funds to enforce any rights it may have against the registrar or issuer of the securities in the event of loss of share registration. Adverse currency exchange rates are a risk and there may be a lack of available currency hedging instruments. Investments in Russia may be subject to the risk of nationalization or expropriation of assets. Oil, natural gas, metals, and timber account for a significant portion of Russia’s exports, leaving the country vulnerable to swings in world prices.
If a Fund (or Acquired Fund) invests directly in foreign (non-U.S.) currencies or in securities that trade in, and receive revenues in, foreign (non-U.S.) currencies, or in financial derivatives that provide exposure to foreign (non-U.S.) currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund (or Acquired Fund), or, in the case of hedging positions, that the Fund’s (or Acquired Fund’s) 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, a Fund’s (or Acquired Fund’s) investments in foreign currency-denominated securities may reduce the returns of the Fund (or Acquired Fund).
A Fund’s (or Acquired Fund’s) investments in commodity-linked financial derivative instruments may subject the Fund to greater market price volatility 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 A Fund (or Acquired Fund) will be exposed to credit risk to parties with whom it trades and will also bear the risk of settlement default. A Fund (or Acquired Fund) minimizes concentrations of credit risk by undertaking transactions with a large number of customers and counterparties on recognized and reputable exchanges. A Fund (or Acquired Fund) 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, a Fund (or Acquired Fund) may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund (or Acquired Fund) has unsettled or open transactions will default. Financial assets, which potentially expose a Fund to counterparty risk, consist principally of cash due from counterparties and investments. PIMCO, as the Adviser, minimizes counterparty risks to the Funds 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 a Fund (or Acquired Fund) exceed a predetermined threshold agreed to with the counterparty, such counterparty shall advance collateral to the Fund (or Acquired Fund) in the form of cash or cash equivalents equal in value to the unpaid amount owed to the Fund (or Acquired Fund). A Fund (or Acquired Fund) 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 a Fund (or Acquired Fund) subsequently decreases, the Fund (or Acquired Fund) would be required to return to the counterparty all or a portion of the collateral previously advanced to the Fund (or Acquired Fund).
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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 a Fund 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 A Fund may be 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 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 a Fund 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 Statements 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 Statements 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. A Fund’s 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 a Fund 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 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 transactions by and between a Fund 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 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 U.S., counterparty risk is significantly reduced as creditors of the futures broker do not have claim to Fund assets in the segregated account. Additionally, portability of exposure in the event of default further reduces risk to the Funds. 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 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 a Fund 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 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 a Fund and select counterparties. ISDA Master Agreements maintain provisions for general obligations, representations, agreements, collateral and events
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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 Schedule of Investments.
8. BASIS FOR CONSOLIDATION
PIMCO Cayman Commodity Fund VI, Ltd. ( a “Commodity Subsidiary”), Cayman Islands exempted company, was incorporated as a wholly owned subsidiary acting as an investment vehicle for the PIMCO EqS Pathfinder Fund® (“Consolidated Fund”) in order to effect certain investments for the Consolidated Fund consistent with the Consolidated Fund’s investment objectives and policies as specified in their respective prospectus and statement of additional information. The Consolidated Fund’s investment portfolio has been consolidated and includes the portfolio holdings of the Consolidated Fund and the Commodity Subsidiary. The consolidated financial statements include the accounts of the Consolidated Fund and its Commodity Subsidiary. All inter-company transactions and balances have been eliminated. A subscription agreement was entered into between the Consolidated Fund and its Commodity Subsidiary, comprising the entire issued share capital of the Commodity Subsidiary, with the intent that the Consolidated Fund will remain the sole shareholder and retain all rights. Under the Memorandum and Articles of Association of the Commodity Subsidiary, 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 Consolidated Fund (amounts in thousands†).
PIMCO EqS Pathfinder Fund® | ||||||
PIMCO Cayman Commodity Fund VI, Ltd. | ||||||
Date of Incorporation | 06/06/2011 | |||||
Subscription Agreement | 06/20/2011 | |||||
Fund Net Assets | $ | 990,901 | ||||
Subsidiary % of Fund Net Assets | 0.0% | |||||
Subsidiary Financial Statement Information | ||||||
Total assets | $ | 0 | ||||
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 |
† | A zero balance may reflect actual amounts rounding to less than one thousand. |
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 investment advisory contract. The Adviser receives a monthly fee from each Fund 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 as noted in the table below.
(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 class’s 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.
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The Investment Advisory and Supervisory and Administrative Fees for all classes are charged at an annual rate as noted in the following table:
Investment Advisory Fee | Supervisory and Administrative Fee | |||||||||||||||||||||||||||
Fund Name | All Classes | Institutional Class | Class P | Administrative Class | Class D | A, C and R Classes | ||||||||||||||||||||||
PIMCO Balanced Income Fund | 0.60% | 0.30% | 0.40% | N/A | 0.40% | 0.40% | ||||||||||||||||||||||
PIMCO Dividend and Income Builder Fund | 0.69% | 0.30% | 0.40% | N/A | 0.40% | 0.40% | ||||||||||||||||||||||
PIMCO Emerging Multi-Asset Fund | 0.90% | 0.45% | 0.55% | 0.45% | 0.55% | 0.55% | ||||||||||||||||||||||
PIMCO EqS® Emerging Markets Fund | 1.00% | 0.45% | 0.55% | 0.45% | 0.55% | 0.55% | ||||||||||||||||||||||
PIMCO EqS® Long/Short Fund | 1.04% | 0.45% | 0.55% | N/A | 0.55% | 0.55% | ||||||||||||||||||||||
PIMCO Global Dividend Fund | 0.69% | 0.30% | 0.40% | N/A | 0.40% | 0.40% | ||||||||||||||||||||||
PIMCO International Dividend Fund | 0.69% | 0.30% | 0.40% | N/A | 0.40% | 0.40% | ||||||||||||||||||||||
PIMCO U.S. Dividend Fund | 0.60% | 0.30% | 0.40% | N/A | 0.40% | 0.40% | ||||||||||||||||||||||
PIMCO EqS Pathfinder Fund® | 0.75% | 0.30% | 0.40% | N/A | 0.40% | 0.40% |
(c) Distribution and Servicing Fees PIMCO Investments LLC (“PI”), a wholly-owned subsidiary of PIMCO, serves as the distributor (“Distributor”) of the Trust’s shares.
The Trust has adopted separate Distribution and Servicing Plans with respect to the Class A, Class C and Class R shares of the Trust pursuant to Rule 12b-1 under the Act. In connection with the distribution of Class C and Class R shares of the Trust, the Distributor receives distribution fees from the Trust of up to 0.75% for Class C shares and 0.25% for Class R shares, and in connection with personal services rendered to Class A, Class C and Class R shareholders and the maintenance of such shareholder accounts, the Distributor receives servicing fees from the Trust of up to 0.25% for each of Class A, Class C and Class R shares (percentages reflect annual rates of the average daily net assets attributable to the applicable class).
The Trust has adopted a Distribution and Servicing Plan with respect to the Class D shares of each Fund pursuant to Rule 12b-1 under the Act (the “Class D Plan”). Under the terms of the Class D Plan, a Fund is permitted to compensate the Distributor out of the assets attributable to the Class D shares of the Fund, in an amount up to 0.25% on an annual basis of the average daily net assets of the Fund’s Class D shares for providing, or procuring through financial intermediaries, distribution, shareholder services, and/or maintenance of shareholder accounts with respect to Class D shareholders of the Fund, some of which may be deemed to be primarily intended to result in the sale of Class D shares.
The Trust has adopted a Distribution and Servicing Plan with respect to the Administrative Class shares of each Fund pursuant to Rule 12b-1 under the Act (the “Administrative Class Plan”). Under the terms of the Administrative Class Plan, a Fund may compensate the Distributor for providing, or procuring through financial intermediaries, distribution, administrative, recordkeeping, shareholder and/or related services with respect to Administrative Class shares. The Administrative Class Plan
permits a Fund to make total payments at an annual rate of up to 0.25% of the average daily net assets attributable to the Administrative Class shares.
The Trust paid distribution and servicing fees at effective rates as set forth in the following table (calculated as a percentage of each Fund’s average daily net assets attributable to each class):
Distribution Fee | Servicing Fee | |||||||||
Administrative Class | — | 0.25% | ||||||||
Class D | — | 0.25% | ||||||||
Class A | — | 0.25% | ||||||||
Class C | 0.75% | 0.25% | ||||||||
Class R | 0.25% | 0.25% |
The Distributor also received the proceeds of the initial sales charges paid by the shareholders upon the purchase of Class A shares and the contingent deferred sales charges paid by the shareholders upon certain redemptions of Class A and Class C Class shares. For the period ended December 31, 2014, the Distributor received $208,916 representing commissions (sales charges) and contingent deferred sales charges from the Trust.
(d) Fund Expenses PIMCO provides or procures supervisory and administrative services for shareholders and also bears the costs of various third-party services required by the Funds, including audit, custodial, portfolio accounting, legal, transfer agency and printing costs. The Trust is responsible for the following expenses: (i) salaries and other compensation of any of the Trust’s executive officers and employees who are not officers, directors, stockholders or employees of PIMCO or its subsidiaries or affiliates; (ii) taxes and governmental fees; (iii) brokerage fees and commissions and other portfolio transaction expenses; (iv) costs of borrowing money, including interest expense; (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
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expenses allocated or allocable to a specific class of shares, which include service fees payable with respect to the Administrative Class Shares, and may include certain other expenses as permitted by the Trust’s Multi-Class Plan adopted pursuant to Rule 18f-3 under the Act and subject to review and approval by the Trustees. The ratio of expenses to average net assets per share class, as disclosed on the Financial Highlights, may differ from the annual fund operating expenses per share class as disclosed in the Prospectus for the reasons set forth above.
Each unaffiliated Trustee receives an annual retainer of $60,000, plus $4,750 for each Board of Trustees meeting attended in person, $375 ($750 in the case of the audit committee chair with respect to audit committee meetings) for each committee meeting attended and $750 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 $7,500 and each other committee chair receives an additional annual retainer of $750.
These expenses are allocated on a pro rata basis to each Fund of the Trust according to its 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 agreed to waive a portion of the Funds’ Supervisory and Administrative Fees in each Fund’s first fiscal year, to the extent that the payment of each Fund’s pro rata share of organizational expenses and Trustee Fees cause the actual expense ratio to rise above the rates disclosed in the then-current prospectus plus 0.0049% (calculated as a percentage of each Fund’s average daily net assets attributable to each class).
PIMCO has contractually agreed to waive a portion of the Investment Advisory Fee as set forth in the following table (calculated as a percentage of each Fund’s average daily net assets).
Fund Name | Fee Waiver | Date | ||||||||
PIMCO Balanced Income Fund | 0.15% | 10/31/2015 | ||||||||
PIMCO Dividend and Income Builder Fund | 0.16% | 10/31/2015 | ||||||||
PIMCO EqS® Emerging Markets Fund | 0.20% | 10/31/2015 | ||||||||
PIMCO Global Dividend Fund | 0.16% | 10/31/2015 | ||||||||
PIMCO International Dividend Fund | 0.16% | 10/31/2016 | ||||||||
PIMCO U.S. Dividend Fund | 0.16% | 10/31/2016 | ||||||||
PIMCO EqS Pathfinder Fund® | 0.16% | 10/31/2015 |
Under the Fee Limitation Agreement, PIMCO is entitled to reimbursement by each Fund 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. The Fee Limitation Agreement will automatically renew for one-year terms unless PIMCO provides written notice to the Trust at least 30 days prior to the end of the then current term.
PIMCO may be reimbursed for these waived amounts in future periods, not to exceed thirty-six months after the waiver. Expenses that have been waived may still be reimbursed by the Administrator, to the extent the Fund’s annualized total portfolio operating expenses plus the amount reimbursed does not exceed the operating expense limitation. The recoverable amounts to PIMCO at December 31, 2014, were as follows (amounts in thousands†):
Fund Name | Recoverable Amounts | |||||
PIMCO Balanced Income Fund | $ | 150 | ||||
PIMCO Dividend and Income Builder Fund | 148 | |||||
PIMCO Emerging Multi-Asset Fund | 14 | |||||
PIMCO EqS® Emerging Markets Fund | 115 | |||||
PIMCO EqS® Long/Short Fund | 291 | |||||
PIMCO Global Dividend Fund | 177 | |||||
PIMCO International Dividend Fund | 0 | |||||
PIMCO U.S. Dividend Fund | 0 | |||||
PIMCO EqS Pathfinder Fund® | 299 |
† | A zero balance may reflect actual amounts rounding to less than one thousand. |
(f) Acquired Fund Fees and Expenses The Underlying PIMCO Fund expenses for the PIMCO Emerging Multi-Asset Fund are based upon an allocation of the PIMCO Emerging Multi-Asset Fund’s assets among the Underlying PIMCO Funds and upon the total annual operating expenses of the Institutional Class shares of these Underlying PIMCO Funds. Underlying PIMCO Fund expenses will vary with changes in the expenses of the Underlying PIMCO Funds, as well as the allocation of the PIMCO Emerging Multi-Asset Fund’s assets.
PIMCO has contractually agreed, through October 31, 2015, to waive, first, the Investment Advisory Fee and, second, to the extent necessary, the Supervisory and Administrative Fee it receives from the PIMCO Emerging Multi-Asset Fund in an amount equal to the expenses attributable to Investment Advisory and Supervisory and Administrative Fees of Underlying PIMCO Funds indirectly incurred by the Fund in connection with the Fund’s investments in Underlying PIMCO Funds, to the extent the Investment Advisory Fee and Supervisory and Administrative Fees taken together are greater than or equal to the Investment Advisory Fees and Supervisory and Administrative Fees of the Underlying PIMCO Funds. This agreement renews annually for a full
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December 31, 2014 (Unaudited)
year unless terminated by PIMCO upon at least 30 days’ notice prior to the end of the contract term. The waivers are reflected in the Statements of Operations as a component of Waiver and/or Reimbursement by PIMCO. For the period ended December 31, 2014, the amount was $182,097.
The Commodity Subsidiary has entered into a separate contract with PIMCO for the management of the Commodity Subsidiary’s portfolio pursuant to which the Commodity Subsidiary pays PIMCO a management fee and administrative services fee at the annual rate of 0.49% of its net assets. PIMCO has contractually agreed to waive the Investment Advisory Fee and Supervisory and Administrative Fees it receives from the Commodity Subsidiary 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 PIMCO’s contract with the Commodity Subsidiary is in place. The waiver is reflected in the Consolidated Statements of Operations as a component of Waiver and/or Reimbursement by PIMCO. During the period ended December 31, 2014 the amount was $33.
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 Statements of Assets and Liabilities.
Certain Funds are permitted to purchase or sell securities from or to certain related affiliated funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Funds from or to another fund or portfolio that are, or could be, considered an affiliate by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers complies with Rule 17a-7 of the Act. Further, as defined under the procedures, each transaction is effected at the
current market price. During the period ended December 31, 2014, the Funds below engaged in purchases and sales of securities pursuant to Rule 17a-7 of the Act (amounts in thousands†):
Fund Name | Purchases | Sales | ||||||||
PIMCO Dividend and Income Builder Fund | $ | 5,455 | $ | 6,549 |
† | A zero balance may reflect actual amounts rounding to less than one thousand. |
11. GUARANTEES AND INDEMNIFICATIONS
Under the Trust’s organizational documents, each Trustee or officer of the Trust is indemnified and each employee or other agent of the Trust (including the Trust’s investment manager) may be indemnified, to the extent permitted by the Act, against certain liabilities that may arise out of performance of their duties to the Funds. Additionally, in the normal course of business, the Funds enter into contracts that contain a variety of indemnification clauses. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, the Funds have not had prior claims or losses pursuant to these contracts.
12. PURCHASES AND SALES OF SECURITIES
The length of time a Fund has held a particular security is not generally a consideration in investment decisions. A change in the securities held by a Fund is known as “portfolio turnover.” Each Fund 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 a Fund, 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 a Fund’s performance. The portfolio turnover rates are reported in the Financial Highlights.
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 121 |
Table of Contents
Notes to Financial Statements (Cont.)
Purchases and sales of securities (excluding short-term investments) for the period ended December 31, 2014, were as follows (amounts in thousands†):
U.S. Government/Agency | All Other | |||||||||||||||||
Fund Name | Purchases | Sales | Purchases | Sales | ||||||||||||||
PIMCO Balanced Income Fund | $ | 0 | $ | 0 | $ | 5,677 | $ | 1,853 | ||||||||||
PIMCO Dividend and Income Builder Fund | 0 | 0 | 319,856 | 367,855 | ||||||||||||||
PIMCO Emerging Multi-Asset Fund | 1,100 | 0 | 1,284 | 6,685 | ||||||||||||||
PIMCO Global Dividend Fund | 0 | 0 | 96,380 | 362,749 | ||||||||||||||
PIMCO EqS® Emerging Markets Fund | 0 | 0 | 46,089 | 54,305 | ||||||||||||||
PIMCO EqS® Long/Short Fund | 0 | 0 | 2,135,654 | 2,284,341 | ||||||||||||||
PIMCO International Dividend Fund | 0 | 0 | 2,983 | 25 | ||||||||||||||
PIMCO U.S. Dividend Fund | 0 | 0 | 2,972 | 0 | ||||||||||||||
PIMCO EqS Pathfinder Fund® | 0 | 0 | 254,495 | 486,657 |
† | A zero balance may reflect actual amounts rounding to less than one thousand. |
13. SHARES OF BENEFICIAL INTEREST
The Trust may issue an unlimited number of shares of beneficial interest with a $0.0001 par value. Changes in shares of beneficial interest were as follows (shares and amounts in thousands†):
PIMCO Balanced Income Fund (1) | PIMCO Dividend and Income Builder Fund | PIMCO Emerging Multi-Asset Fund | ||||||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended 12/31/2014 | Period from 03/31/2014 to 06/30/2014 | Six Months Ended 12/31/2014 | Year Ended 06/30/2014 | Six Months Ended 12/31/2014 | Year Ended 06/30/2014 | |||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||
Receipts for shares sold | ||||||||||||||||||||||||||||||||||||||||||||||||||
Institutional Class | 99 | $ | 1,006 | 612 | $ | 6,184 | 284 | $ | 3,640 | 4,189 | $ | 51,343 | 70 | $ | 642 | 395 | $ | 3,452 | ||||||||||||||||||||||||||||||||
Class P | 12 | 125 | 1 | 11 | 2,795 | 35,850 | 7,009 | 86,769 | 60 | 541 | 79 | 685 | ||||||||||||||||||||||||||||||||||||||
Administrative Class | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | (1 | ) | 0 | 13 | 107 | |||||||||||||||||||||||||||||||||||||
Class D | 22 | 213 | 5 | 49 | 454 | 5,728 | 1,576 | 19,423 | 9 | 81 | 175 | 1,521 | ||||||||||||||||||||||||||||||||||||||
Class A | 166 | 1,677 | 31 | 316 | 3,323 | 42,078 | 20,666 | 252,920 | 73 | 630 | 378 | 3,256 | ||||||||||||||||||||||||||||||||||||||
Class C | 249 | 2,497 | 45 | 456 | 3,083 | 38,932 | 24,024 | 292,937 | 23 | 190 | 121 | 1,041 | ||||||||||||||||||||||||||||||||||||||
Class R | 0 | 0 | 0 | 0 | 1 | 13 | 18 | 214 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||
Issued as reinvestment of distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||
Institutional Class | 13 | 126 | 3 | 27 | 235 | 2,898 | 236 | 2,997 | 102 | 825 | 54 | 469 | ||||||||||||||||||||||||||||||||||||||
Class P | 0 | 1 | 0 | 0 | 270 | 3,328 | 155 | 1,980 | 8 | 61 | 4 | 33 | ||||||||||||||||||||||||||||||||||||||
Administrative Class | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 4 | 31 | ||||||||||||||||||||||||||||||||||||||
Class D | 0 | 3 | 0 | 0 | 86 | 1,056 | 79 | 1,000 | 5 | 40 | 10 | 89 | ||||||||||||||||||||||||||||||||||||||
Class A | 2 | 16 | 0 | 1 | 789 | 9,731 | 579 | 7,382 | 27 | 217 | 20 | 175 | ||||||||||||||||||||||||||||||||||||||
Class C | 2 | 20 | 0 | 1 | 757 | 9,315 | 424 | 5,424 | 13 | 106 | 6 | 53 | ||||||||||||||||||||||||||||||||||||||
Class R | 0 | 0 | 0 | 0 | 1 | 16 | 1 | 12 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||
Cost of shares redeemed | ||||||||||||||||||||||||||||||||||||||||||||||||||
Institutional Class | (57 | ) | (576 | ) | (1 | ) | (6 | ) | (2,181 | ) | (27,609 | ) | (3,499 | ) | (43,248 | ) | (243 | ) | (2,068 | ) | (2,346 | ) | (20,139 | ) | ||||||||||||||||||||||||||
Class P | (1 | ) | (12 | ) | 0 | 0 | (1,632 | ) | (20,553 | ) | (2,501 | ) | (31,140 | ) | (79 | ) | (667 | ) | (142 | ) | (1,224 | ) | ||||||||||||||||||||||||||||
Administrative Class | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | (1 | ) | (10 | ) | (254 | ) | (2,122 | ) | ||||||||||||||||||||||||||||||||||
Class D | (4 | ) | (41 | ) | (1 | ) | (5 | ) | (816 | ) | (10,322 | ) | (1,175 | ) | (14,640 | ) | (166 | ) | (1,482 | ) | (574 | ) | (4,944 | ) | ||||||||||||||||||||||||||
Class A | (31 | ) | (310 | ) | 0 | (4 | ) | (6,192 | ) | (78,343 | ) | (6,929 | ) | (85,647 | ) | (341 | ) | (2,978 | ) | (970 | ) | (8,347 | ) | |||||||||||||||||||||||||||
Class C | (23 | ) | (237 | ) | 0 | 0 | (4,191 | ) | (52,594 | ) | (4,970 | ) | (61,707 | ) | (118 | ) | (1,014 | ) | (304 | ) | (2,577 | ) | ||||||||||||||||||||||||||||
Class R | 0 | 0 | 0 | 0 | (6 | ) | (76 | ) | (3 | ) | (30 | ) | 0 | 0 | (3 | ) | (21 | ) | ||||||||||||||||||||||||||||||||
Net increase (decrease) resulting from Fund share transactions | 449 | $ | 4,508 | 695 | $ | 7,030 | (2,940 | ) | $ | (36,912 | ) | 39,879 | $ | 485,989 | (559 | ) | $ | (4,886 | ) | (3,334 | ) | $ | (28,462 | ) | ||||||||||||||||||||||||||
122 | PIMCO EQUITY SERIES |
Table of Contents
December 31, 2014 (Unaudited)
PIMCO EqS® Emerging Markets Fund (2) | PIMCO EqS® Long/Short Fund (3) | |||||||||||||||||||||||||||||||||
Six Months Ended 12/31/2014 | Year Ended 06/30/2014 | Six Months Ended 12/31/2014 | Year Ended 06/30/2014 | |||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||
Receipts for shares sold | ||||||||||||||||||||||||||||||||||
Institutional Class | 394 | $ | 3,470 | 13,465 | $ | 112,700 | 2,125 | $ | 24,716 | 25,485 | $ | 307,495 | ||||||||||||||||||||||
Class P | 28 | 259 | 299 | 2,635 | 14,980 | 175,890 | 28,084 | 337,222 | ||||||||||||||||||||||||||
Administrative Class | 0 | 0 | 0 | 2 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||
Class D | 21 | 176 | 250 | 2,104 | 1,952 | 22,565 | 14,367 | 171,591 | ||||||||||||||||||||||||||
Class A | 53 | 472 | 410 | 3,496 | 2,563 | 29,781 | 39,367 | 468,634 | ||||||||||||||||||||||||||
Class C | 19 | 165 | 161 | 1,368 | 2,057 | 23,600 | 20,087 | 237,386 | ||||||||||||||||||||||||||
Class R | 0 | 1 | 0 | 1 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||
Issued as reinvestment of distributions | ||||||||||||||||||||||||||||||||||
Institutional Class | 0 | 0 | 0 | 0 | 163 | 1,887 | 2,198 | 26,087 | ||||||||||||||||||||||||||
Class P | 0 | 0 | 0 | 0 | 108 | 1,248 | 449 | 5,314 | ||||||||||||||||||||||||||
Administrative Class | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||
Class D | 0 | 0 | 0 | 0 | 22 | 247 | 261 | 3,080 | ||||||||||||||||||||||||||
Class A | 0 | 0 | 0 | 0 | 83 | 957 | 779 | 9,186 | ||||||||||||||||||||||||||
Class C | 0 | 0 | 0 | 0 | 70 | 784 | 452 | 5,276 | ||||||||||||||||||||||||||
Class R | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||
Cost of shares redeemed | ||||||||||||||||||||||||||||||||||
Institutional Class | (807 | ) | (7,266 | ) | (61,620 | ) | (527,651 | ) | (13,330 | ) | (152,271 | ) | (11,631 | ) | (138,097 | ) | ||||||||||||||||||
Class P | (18 | ) | (155 | ) | (1,215 | ) | (9,891 | ) | (18,337 | ) | (211,087 | ) | (6,576 | ) | (77,557 | ) | ||||||||||||||||||
Administrative Class | 0 | 0 | (5 | ) | (42 | ) | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
Class D | (24 | ) | (201 | ) | (292 | ) | (2,491 | ) | (4,199 | ) | (48,129 | ) | (9,167 | ) | (107,763 | ) | ||||||||||||||||||
Class A | (208 | ) | (1,810 | ) | (223 | ) | (1,892 | ) | (17,812 | ) | (206,685 | ) | (10,075 | ) | (118,408 | ) | ||||||||||||||||||
Class C | (39 | ) | (332 | ) | (99 | ) | (810 | ) | (6,602 | ) | (74,516 | ) | (3,031 | ) | (35,277 | ) | ||||||||||||||||||
Class R | 0 | 0 | (2 | ) | (16 | ) | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
Net increase (decrease) resulting from Fund share transactions | (581 | ) | $ | (5,221 | ) | (48,871 | ) | $ | (420,487 | ) | (36,157 | ) | $ | (411,013 | ) | 91,049 | $ | 1,094,169 | ||||||||||||||||
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 123 |
Table of Contents
Notes to Financial Statements (Cont.)
PIMCO Global Dividend Fund (4) | PIMCO International Dividend Fund (5) | PIMCO U.S. Dividend Fund (6) | PIMCO EqS Pathfinder Fund® (7) | |||||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended 12/31/2014 | Year Ended 06/30/2014 | Period from 12/15/2014 to 12/31/2014 | Period from 12/15/2014 to 12/31/2014 | Six Months Ended 12/31/2014 | Year Ended 06/30/2014 | |||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||
Receipts for shares sold | ||||||||||||||||||||||||||||||||||||||||||||||||||
Institutional Class | 607 | $ | 6,708 | 3,183 | $ | 38,926 | 300 | $ | 3,000 | 300 | $ | 3,003 | 7,042 | $ | 88,971 | 75,318 | $ | 884,620 | ||||||||||||||||||||||||||||||||
Class P | 229 | 2,558 | 476 | 5,837 | 1 | 10 | 1 | 10 | 552 | 6,500 | 2,101 | 24,607 | ||||||||||||||||||||||||||||||||||||||
Administrative Class | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||
Class D | 55 | 536 | 346 | 4,217 | 1 | 10 | 1 | 10 | 175 | 2,104 | 390 | 4,500 | ||||||||||||||||||||||||||||||||||||||
Class A | 809 | 8,473 | 4,048 | 49,865 | 1 | 10 | 1 | 10 | 595 | 6,910 | 2,414 | 28,403 | ||||||||||||||||||||||||||||||||||||||
Class C | 393 | 4,093 | 3,424 | 41,893 | 1 | 10 | 1 | 10 | 517 | 5,833 | 2,336 | 26,962 | ||||||||||||||||||||||||||||||||||||||
Class R | 1 | 7 | 5 | 72 | 0 | 0 | 0 | 0 | 1 | 16 | 4 | 43 | ||||||||||||||||||||||||||||||||||||||
Issued as reinvestment of distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||
Institutional Class | 3,404 | 25,128 | 3,588 | 43,261 | 0 | 2 | 1 | 6 | 25,442 | 239,042 | 7,387 | 86,726 | ||||||||||||||||||||||||||||||||||||||
Class P | 275 | 2,006 | 29 | 350 | 0 | 0 | 0 | 0 | 518 | 4,842 | 205 | 2,400 | ||||||||||||||||||||||||||||||||||||||
Administrative Class | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||
Class D | 281 | 2,056 | 68 | 827 | 0 | 0 | 0 | 0 | 313 | 2,901 | 50 | 587 | ||||||||||||||||||||||||||||||||||||||
Class A | 2,590 | 18,916 | 378 | 4,569 | 0 | 0 | 0 | 0 | 1,611 | 14,979 | 189 | 2,209 | ||||||||||||||||||||||||||||||||||||||
Class C | 1,860 | 13,474 | 234 | 2,814 | 0 | 0 | 0 | 0 | 1,261 | 11,362 | 116 | 1,324 | ||||||||||||||||||||||||||||||||||||||
Class R | 8 | 58 | 1 | 9 | 0 | 0 | 0 | 0 | 2 | 18 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||
Cost of shares redeemed | ||||||||||||||||||||||||||||||||||||||||||||||||||
Institutional Class | (19,978 | ) | (248,118 | ) | (32,005 | ) | (393,029 | ) | 0 | 0 | 0 | 0 | (37,499 | ) | (404,680 | ) | (142,724 | ) | (1,714,685 | ) | ||||||||||||||||||||||||||||||
Class P | (232 | ) | (2,046 | ) | (341 | ) | (4,165 | ) | 0 | 0 | 0 | 0 | (882 | ) | (10,429 | ) | (5,697 | ) | (68,114 | ) | ||||||||||||||||||||||||||||||
Administrative Class | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||
Class D | (568 | ) | (5,368 | ) | (469 | ) | (5,867 | ) | 0 | 0 | 0 | 0 | (463 | ) | (4,996 | ) | (1,005 | ) | (11,718 | ) | ||||||||||||||||||||||||||||||
Class A | (2,473 | ) | (25,966 | ) | (2,116 | ) | (25,890 | ) | 0 | 0 | 0 | 0 | (1,717 | ) | (19,494 | ) | (1,763 | ) | (20,894 | ) | ||||||||||||||||||||||||||||||
Class C | (1,257 | ) | (12,759 | ) | (1,771 | ) | (21,370 | ) | 0 | 0 | 0 | 0 | (1,010 | ) | (10,969 | ) | (1,076 | ) | (12,464 | ) | ||||||||||||||||||||||||||||||
Class R | (6 | ) | (66 | ) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||
Net increase (decrease) resulting from Fund share transactions | (14,002 | ) | $ | (210,310 | ) | (20,922 | ) | $ | (257,681 | ) | 304 | $ | 3,042 | 305 | $ | 3,049 | (3,542 | ) | $ | (67,090 | ) | (61,755 | ) | $ | (765,494 | ) | ||||||||||||||||||||||||
(1) | As of December 31, 2014, one shareholder owned 10% or more of the total Fund’s outstanding shares comprising 27% of the Fund, and the shareholder is a related party of the Fund.* |
(2) | As of December 31, 2014, four shareholders each owned 10% or more of the total Fund’s outstanding shares comprising 66% of the Fund, and each of the four shareholders are related parties of the Fund.* |
(3) | As of December 31, 2014, two shareholders each owned 10% or more of the total Fund’s outstanding shares comprising 26% of the Fund, and each the two shareholders are related parties of the Fund.* |
(4) | As of December 31, 2014, one shareholder owned 10% or more of the total Fund’s outstanding shares comprising 23% of the Fund, and the shareholder is a related party of the Fund.* |
(5) | As of December 31, 2014, one shareholder owned 10% or more of the total Fund’s outstanding shares comprising 99% of the Fund, and the shareholder is a related party of the Fund.* |
(6) | As of December 31, 2014, one shareholder owned 10% or more of the total Fund’s outstanding shares comprising 99% of the Fund, and the shareholder is a related party of the Fund.* |
(7) | As of December 31, 2014, two shareholders each owned 10% or more of the total Fund’s outstanding shares comprising 61% of the Fund, and each of the two shareholders are related parties of the Fund.* |
* | 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. |
† | A zero balance may reflect actual amounts rounding to less than one thousand. |
124 | PIMCO EQUITY SERIES |
Table of Contents
December 31, 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 against it.
15. FEDERAL INCOME TAX MATTERS
Each Fund 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 Funds’ tax positions for all open tax years. As of December 31, 2014, the Funds have recorded no liability for net unrecognized tax benefits relating to uncertain income tax positions they have taken or expect to take in future tax returns.
The Funds file U.S. tax returns. While the statute of limitations remains open to examine the Funds’ U.S. tax returns filed for the fiscal years from 2011-2013, no examinations are in progress or anticipated at this time. The Funds are 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.
The Consolidated Funds may gain exposure to the commodities markets primarily through index-linked notes, and may invest in other commodity-linked derivative investments, including commodity swap agreements, options, futures contracts, options on futures contracts and foreign funds investing in similar commodity-lined derivatives.
One of the requirements for favorable tax treatment as a regulated investment company under the Code is that a Fund must derive at least
90% of its gross income from certain qualifying sources of income. The IRS has issued a revenue ruling which holds that income derived from commodity index-linked swaps is not qualifying income under Subchapter M of the Code. The IRS has also issued private letter rulings in which the IRS specifically concluded that income from certain commodity index-linked notes is qualifying income. The IRS has also issued private rulings in which the IRS specifically concluded that income derived from investment in a subsidiary, which invests primarily in commodity-linked swaps, will also be qualifying income. Based on the reasoning in such rulings, each Fund will continue to seek to gain exposure to the commodity markets primarily through investments in commodity-linked notes and through any investments in its Subsidiary.
It should be noted, however, that the IRS currently has suspended the issuance of such rulings pending further review. There can be no assurance that the IRS will not change its position that income derived from commodity-linked notes and wholly-owned subsidiaries is qualifying income. Furthermore, the tax treatment of commodity-linked notes, other commodity-linked derivatives, and a Fund’s investments in its Subsidiary may otherwise be adversely affected by future legislation, Treasury Regulations and/or guidance issued by the IRS. Such developments could affect the character, timing and/or amount of the Fund’s taxable income or any distributions made by the Fund or result in the inability of the Fund to operate as described in its Prospectus.
If, during a taxable year, the Subsidiary’s taxable losses (and other deductible items) exceed its income and gains, the net loss will not pass through to the Fund as a deductible amount for income tax purposes. Note that the loss from the Subsidiary’s taxable gains exceed its losses and other deductible items during a taxable year, the net gain will pass through to the Fund as income for Federal income tax purposes.
Under the Regulated Investment Company Modernization Act of 2010, a fund is permitted to carry forward any new capital losses for an unlimited period. Additionally, such capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term under previous law.
As of June 30, 2014, the following Funds had the following post-effective capital losses with no expiration:
Short-Term | Long-Term | |||||||||
PIMCO Balanced Income Fund | $ | — | $ | — | ||||||
PIMCO Dividend and Income Builder Fund | — | — | ||||||||
PIMCO Emerging Multi-Asset Fund | 313 | 2,519 | ||||||||
PIMCO EqS® Emerging Markets Fund* | 31,562 | 484 | ||||||||
PIMCO EqS® Long/Short Fund | — | — | ||||||||
PIMCO Global Dividend Fund | — | — | ||||||||
PIMCO EqS Pathfinder Fund® | — | — |
* | Portion of amount represents realized loss under IRC 382-383, which is carried forward to future years to offset future realized gain subject to certain limitations. |
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SEMIANNUAL REPORT | DECEMBER 31, 2014 | 125 |
Table of Contents
Notes to Financial Statements (Cont.)
December 31, 2014 (Unaudited)
As of December 31, 2014, the aggregate cost and the net unrealized appreciation/(depreciation) of investments for federal income tax purposes are as follows (amounts in thousands):
Fund Name | Federal Tax Cost | Aggregate Gross Unrealized Appreciation | Aggregate Gross Unrealized (Depreciation) | Net Unrealized Appreciation/ (Depreciation) (1) | ||||||||||||||
PIMCO Balanced Income Fund | $ | 10,846 | $ | 357 | $ | (451 | ) | $ | (94 | ) | ||||||||
PIMCO Dividend and Income Builder Fund | 823,094 | 77,612 | (42,404 | ) | 35,208 | |||||||||||||
PIMCO Emerging Multi-Asset Fund | 33,742 | 20 | (4,655 | ) | (4,635 | ) | ||||||||||||
PIMCO EqS® Emerging Markets Fund | 110,175 | 8,139 | (14,128 | ) | (5,989 | ) | ||||||||||||
PIMCO EqS® Long/Short Fund | 1,014,930 | 81,516 | (2,561 | ) | 78,955 | |||||||||||||
PIMCO Global Dividend Fund | 121,747 | 15,859 | (6,891 | ) | 8,968 | |||||||||||||
PIMCO International Dividend Fund | 3,057 | 80 | (25 | ) | 55 | |||||||||||||
PIMCO U.S. Dividend Fund | 2,922 | 129 | (5 | ) | 124 | |||||||||||||
PIMCO EqS Pathfinder Fund® | 943,229 | 142,393 | (78,149 | ) | 64,244 |
(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. |
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Glossary: (abbreviations that may be used in the preceding statements)
(Unaudited)
Counterparty Abbreviations: | ||||||||||
BOA | Bank of America N.A. | GLM | Goldman Sachs Bank USA | MYC | Morgan Stanley Capital Services, Inc. | |||||
BPS | BNP Paribas S.A. | GSC | Goldman Sachs & Co. | RBC | Royal Bank of Canada | |||||
BRC | Barclays Bank PLC | GST | Goldman Sachs International | RYL | Royal Bank of Scotland Group PLC | |||||
CBK | Citibank N.A. | HUS | HSBC Bank USA N.A. | SOG | Societe Generale | |||||
DUB | Deutsche Bank AG | JPM | JPMorgan Chase Bank N.A. | SSB | State Street Bank and Trust Co. | |||||
FBF | Credit Suisse International | MSB | Morgan Stanley Bank, N.A | UAG | UBS AG Stamford | |||||
FOB | Credit Suisse Securities (USA) LLC | |||||||||
Currency Abbreviations: | ||||||||||
AUD | Australian Dollar | HKD | Hong Kong Dollar | PHP | Philippine Peso | |||||
BRL | Brazilian Real | HUF | Hungarian Forint | PLN | Polish Zloty | |||||
CAD | Canadian Dollar | IDR | Indonesian Rupiah | RUB | Russian Ruble | |||||
CHF | Swiss Franc | ILS | Israeli Shekel | SEK | Swedish Krona | |||||
CLP | Chilean Peso | INR | Indian Rupee | SGD | Singapore Dollar | |||||
CNY | Chinese Renminbi (Mainland) | JPY | Japanese Yen | THB | Thai Baht | |||||
COP | Colombian Peso | KRW | South Korean Won | TRY | Turkish New Lira | |||||
CZK | Czech Koruna | MXN | Mexican Peso | TWD | Taiwanese Dollar | |||||
DKK | Danish Krone | MYR | Malaysian Ringgit | USD (or $) | United States Dollar | |||||
EUR | Euro | NOK | Norwegian Krone | ZAR | South African Rand | |||||
GBP | British Pound | PEN | Peruvian New Sol | |||||||
Exchange Abbreviations: | ||||||||||
OTC | Over the Counter | |||||||||
Index Abbreviations: | ||||||||||
ABX.HE | Asset-Backed Securities Index - Home Equity | CMBX | Commercial Mortgage-Backed Index | |||||||
CDX.HY | Credit Derivatives Index - High Yield | KOSPI | Korea Composite Stock Price Index | |||||||
Other Abbreviations: | ||||||||||
ABS | Asset-Backed Security | BBSW | Bank Bill Swap Reference Rate | PIK | Payment-in-Kind | |||||
ADR | American Depositary Receipt | LIBOR | London Interbank Offered Rate | REIT | Real Estate Investment Trust | |||||
ALT | Alternate Loan Trust | MSCI | Morgan Stanley Capital International | REMIC | Real Estate Mortgage Investment Conduit | |||||
BBR | Bank Bill Rate | NVDR | Non-Voting Depositary Receipt | SP-ADR | Sponsored American Depositary Receipt |
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Approval of Renewal of the Investment Advisory Contract and Second Amended and Restated Supervision and Administration Agreement
Approval of the Advisory Contract and Second Amended and Restated Supervision and Administration Agreement
At a meeting held on August 13, 2014, the Board of Trustees (the “Board”) of PIMCO Equity Series (the “Trust”), including all of the independent Trustees, approved the Investment Advisory Contract and Second Amended and Restated Supervision and Administration Agreement (the “Supervision and Administration Agreement” and together with the Investment Advisory Contract, the “Agreements”) with Pacific Investment Management Company LLC (“PIMCO”), on behalf of the Trust’s series (the “Funds”), for an additional one-year term through August 31, 2015.
At a meeting held on November 5, 2014, the Board, including all of the independent Trustees, approved the Investment Advisory Contract (the “New Funds’ Investment Advisory Contract”) and the Second Amended and Restated Supervision and Administration Agreement (the “New Funds’ Supervision and Administration Agreement” and together with the New Funds Investment Advisory Contract, the “New Funds’ Agreements”) with PIMCO, on behalf of PIMCO RealPath™ Blend Income Fund, PIMCO RealPath™ Blend 2020 Fund, PIMCO RealPath™ Blend 2025 Fund, PIMCO RealPath™ Blend 2030 Fund, PIMCO RealPath™ Blend 2035 Fund, PIMCO RealPath™ Blend 2040 Fund, PIMCO RealPath™ Blend 2045 Fund, PIMCO RealPath™ Blend 2050 Fund, PIMCO RealPath™ Blend 2055 Fund, PIMCO International Dividend Fund and PIMCO U.S. Dividend Fund (the “New Funds”), for an initial two-year term.
The information, material factors and conclusions that formed the basis for the Board’s approvals are described below.
1. INFORMATION RECEIVED
(a) Materials Reviewed: During the course of each year, the Trustees receive a wide variety of materials relating to the services provided by PIMCO. At each of its quarterly meetings, the Board reviews the Funds’ investment performance and a significant amount of information relating to fund operations, including the Funds’ compliance program, shareholder services, valuation, custody, distribution, and other information relating to the nature, extent and quality of services provided by PIMCO to the Trust. In considering whether to approve renewal of the Agreements, the Board also reviewed supplementary information, including, but not limited to, comparative industry data with regard to investment performance, advisory and supervisory and administrative fees and expenses, financial and profitability information regarding PIMCO, information about the personnel providing investment management services, other advisory services and supervisory and administrative services to the Funds, and information about the fees charged and services provided to other clients with similar investment mandates as the Funds (where applicable). The Board also reviewed material provided by counsel to the Trust and the
independent Trustees, which included, among other things, memoranda outlining legal duties of the Board in considering the continuation of the Agreements.
In considering whether to approve the New Funds’ Agreements, the Board reviewed materials provided by PIMCO, which included, among other things, comparative industry data with regard to expense ratios of funds with investment objectives and policies similar to those of the New Funds. The Board also reviewed material provided by counsel to the Trust and the independent Trustees, which included, among other things, a memorandum outlining legal duties of the Board. The Board also reviewed information about the personnel who would be providing investment management services, other advisory services and supervisory and administrative services to the New Funds.
(b) Review Process: In connection with the renewal of the Agreements, the Board reviewed written materials prepared by PIMCO in response to requests from counsel to the Trust. The Board also requested and received assistance and advice regarding applicable legal standards from counsel to the Trust and the independent Trustees, and reviewed comparative fee and performance data prepared at the Board’s request by Lipper, Inc. (“Lipper”), an independent provider of investment company performance and fee and expense data. The Board also heard oral presentations on matters related to the Agreements and met both as a full Board and as the independent Trustees, without management present, at the August 13, 2014 meeting. The independent Trustees also conducted a telephonic meeting with counsel to the Trust and the independent Trustees on August 5, 2014 to discuss the materials presented. In addition, the independent Trustees requested and received from PIMCO additional information including, but not limited to, information related to fund profitability and comparative performance information.
In connection with the approval of the New Funds’ Agreements, the Board reviewed written materials prepared by PIMCO, which included, among other things, comparative fee data for funds in the appropriate Lipper peer group. The Board also heard oral presentations on matters related to the New Funds’ Agreements at the November 5, 2014 meeting.
The approval determinations were made on the basis of each Trustee’s business judgment after consideration of all the information presented. Individual Trustees may have given different weights to certain factors and assigned various degrees of materiality to information received in connection with the approval process. In deciding to approve the renewal of the Agreements or to approve the New Funds’ Agreements, the Board did not identify any single factor or particular information that, in isolation, was controlling. This summary describes the most important, but not all, of the factors considered by the Board.
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(Unaudited)
2. NATURE, EXTENT AND QUALITY OF SERVICES
(a) PIMCO, its Personnel, and Resources: The Board considered the depth and quality of PIMCO’s investment management process, including: the experience, capability and integrity of its senior management and other personnel; the overall financial strength and stability of its organization; and the ability of its organizational structure to address changes in assets under management. The Board also considered the various services in addition to portfolio management that PIMCO provides under the Investment Advisory Contract. The Board noted that PIMCO makes available to its investment professionals a variety of resources and systems relating to investment management, compliance, trading, performance and portfolio accounting. The Board also noted that PIMCO hired many seasoned equity professionals at senior levels and continues to invest in its global infrastructure. The Board considered PIMCO’s commitment to investing in information technology supporting investment management and compliance, as well as PIMCO’s continuing efforts to attract and retain qualified personnel, including personnel with relevant equities experience, and to maintain and enhance its resources and systems. The Board considered PIMCO’s policies, procedures and systems to reasonably assure compliance with applicable laws and regulations and its commitment to these programs; its oversight of matters that may involve conflicts of interest between the Funds’ investments and those of other accounts; and its efforts to keep the Trustees informed about matters relevant to the Funds and their shareholders.
The Trustees considered the steps that PIMCO has taken in recent years with respect to active management of counterparty risk, such as implementing procedures requiring daily collateral adjustments and frequent communication between credit analysts and the counterparty risk committee, which oversees counterparty risk on a firm-wide basis, continually evaluating requests to add or remove approved counterparties as market needs and conditions warrant. The Trustees considered that, over the last several years, PIMCO has continued to strengthen the process it uses to assess the financial stability of broker-dealers with which the Funds do business, to manage collateral and to protect portfolios from an unforeseen deterioration in the creditworthiness of trading counterparties. The Trustees noted that, consistent with its fiduciary duty, PIMCO executes transactions through a competitive best execution process and uses counterparties that meet its stringent and monitored criteria. The Trustees also considered that PIMCO’s collateral management team utilizes the counterparty risk system to analyze portfolio level exposure and collateral being exchanged with counterparties.
The Trustees also considered new services and service enhancements that PIMCO has implemented since the Agreements were last renewed
in 2013, including, but not limited to, constructing and moving into a new global headquarters in Newport Beach in May 2014; investing significant resources into developing its global portfolio management expertise; expanding PIMCO’s technology team and investing in technology, with a focus on projects that increase capacity and investment management stability; engaging in detailed preparation efforts for the potential consequences of an unanticipated financial crisis or global liquidity vacuum; focusing on global business continuity program management; developing appropriate and scalable infrastructure to support equity trading, including PIMCO’s considerable investment in enhancing and upgrading its systems and services to allow for equity investment in various types of markets and transactions, in the U.S. and abroad, and PIMCO’s significant investments in human and technological resources in order to provide these enhanced services; investing in additional personnel with fund operations expertise, including additional accounting, financial reporting, pricing and tax resources; and continuing to develop the PIMCO Accounting Yield Application (or PAY), which provides yield and income reporting, and the rollout of the Pricing Portal, which is a web-based workflow application that will automate the daily pricing review process, improve communications among stakeholders and enhance the ability to identify pricing variance and provide feedback to pricing vendors.
Additionally, the Trustees considered the recent decline in assets for some of the Funds and the reasons for the decline. Ultimately, the Board concluded that the nature, extent and quality of services proposed to be provided by PIMCO under the Agreements and the New Funds’ Agreements are likely to benefit the Funds, the New Funds and their respective shareholders.
(b) Other Services: The Board considered PIMCO’s policies, procedures and systems to reasonably assure compliance with applicable laws and regulations and its commitment to these programs; its oversight of matters that may involve conflicts of interest with the Trust; its efforts to keep the Trustees informed about matters relevant to the Trust and its shareholders. The Board also considered the nature, extent, quality and cost of supervisory and administrative services provided by PIMCO to the Funds under the Agreements.
The Board considered the terms of the Trust’s Supervision and Administration Agreement, under which the Trust pays for the administrative services under that Agreement under what is essentially an all-in fee structure (the “unified fee”). In return, PIMCO provides or procures certain supervisory and administrative services and bears the costs of various third party services required by the Funds, including audit, custodial, portfolio accounting, legal, transfer agency and printing costs. The Board noted that the scope and complexity of the supervisory and administrative services provided by PIMCO under the
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Approval of Renewal of the Investment Advisory Contract and Second Amended and Restated Supervision and Administration Agreement (Cont.)
Supervision and Administration Agreement continue to increase. The Board considered PIMCO’s provision of these services and its supervision of the Trust’s third party service providers to assure that these service providers continue to provide a high level of service relative to alternatives in the market.
Ultimately, the Board concluded that the nature, extent and quality of the services provided by PIMCO has benefited and will likely continue to benefit the Funds and their shareholders.
With respect to the New Funds, the Board also considered the nature, extent and quality of services to be provided by PIMCO to the New Funds under the New Funds’ Agreements. The Board concluded that the nature, extent and quality of the services to be provided by PIMCO would likely benefit the New Funds and their shareholders.
3. INVESTMENT PERFORMANCE
As the New Funds had not yet commenced operations at the time the New Funds’ Agreements were considered, the Trustees did not receive or consider investment performance information.
The Board received and examined information from PIMCO concerning the Funds’ performance, as available, for the one-, two-, three-, five-, and ten-year and since inception periods ended May 31, 2014 and other performance data, as available, for the periods ended June 30, 2014 (the “PIMCO Report”) and from Lipper concerning the Funds’ performance, as available, for the periods ended May 31, 2014 (the “Lipper Report”). The Board noted that long-term performance information was not available for the PIMCO Balanced Income Fund due to its recent commencement of operations. The Board considered each Fund’s investment performance relative to its peer group and benchmark index as provided to the Board in advance of each of its quarterly meetings throughout the year, including the PIMCO Report and Lipper Report, which were provided in advance of the August 13, 2014 meeting.
The Board noted that, according to Lipper, certain Funds had underperformed in comparison to their respective peer groups or benchmark indexes, or both, over the one-year period ended May 31, 2014. The Board considered the reasons for these Funds’ underperformance in comparison to their peer groups or benchmark indexes, or both.
The Board ultimately determined within the context of all of its considerations in connection with the Agreements, that PIMCO’s performance record and process in managing the Funds indicates that its continued management is likely to benefit the Funds and their shareholders, and merits the approval of the continuation of the Agreements.
4. ADVISORY FEES, SUPERVISORY AND ADMINISTRATIVE FEES AND TOTAL EXPENSES
PIMCO reported to the Board that, in proposing fees for the Funds, it considers a number of factors, including the type and complexity of the services provided, the cost of providing services, the risk assumed by PIMCO in the development of products and the provision of services, the impact on potential returns from different levels of fees, the competitive marketplace for financial products, and the attractiveness of potential Fund returns to current and potential investors. Fees charged to or proposed for different Funds for advisory services and supervisory and administrative services may vary in light of these various factors. The Board also considered that PIMCO reviews the Funds’ fee levels and carefully considers reductions where appropriate.
The Board reviewed the advisory fees, supervisory and administrative fees and total expenses of the Funds (each as a percentage of average net assets) and compared such amounts with the average and median fee and expense levels of other similar funds. With respect to advisory fees, the Board reviewed data from Lipper that compared the average and median advisory fees of other funds in an “Expense Group” of comparable funds, as well as the universe of other similar funds. The Board compared each Fund’s total expenses to other funds in the Expense Group provided by Lipper and found each Fund’s total expenses to be reasonable in comparison to the median and mean of the Expense Group. The Board noted that PIMCO had contractually agreed, through October 31, 2014, to reduce its advisory fee by 0.16%, 0.16%, 0.20% and 0.16% of the average daily net assets of the PIMCO Dividend and Income Builder, PIMCO EqS® Emerging Markets, PIMCO Global Dividend and PIMCO EqS Pathfinder® Funds, respectively.
The Board also reviewed data comparing the Funds’ advisory fees to the standard fee rate PIMCO charges to separate accounts and as sub-adviser to other investment companies with a similar investment strategy, including differences in advisory services provided. The Trustees noted that three of the four Funds that have comparable separate account strategies have advisory fees that are lower than the fee charged to the separate account. In cases where the fees for other clients were lower than those charged to the PIMCO EqS Pathfinder Fund®, the Trustees noted that the differences in fees were attributable to various factors, including differences in the advisory and other services provided by PIMCO to the Funds, the manner in which similar portfolios may be managed, different requirements with respect to liquidity management and the implementation of other regulatory requirements, and the fact that separate accounts may have other contractual arrangements that justify different levels of fees. At the time that the Board considered the Agreements, PIMCO did not manage any separate accounts with investment strategies similar to those of the PIMCO Emerging Multi-Asset Fund and PIMCO EqS® Long/Short Fund.
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Regarding advisory fees charged by PIMCO in its capacity as sub-adviser to third-party/unaffiliated funds, the Trustees took into account that such fees may be lower than the fees charged by PIMCO to serve as adviser to the Funds for various other reasons, including, but not limited to, the fact that PIMCO may be subject to varying levels of entrepreneurial risk and regulatory requirements, differing legal liabilities per contract and diverse servicing requirements when it does not serve as the sponsor of a fund and is not principally responsible for all aspects of a fund’s investment program and operations than when PIMCO serves as investment adviser and sponsor. In considering the fees paid by the Funds, the Board also noted that retail investors in the Funds receive the benefit of PIMCO’s advisory services at the same advisory fee rates as institutional investors in the Funds.
With respect to the New Funds, the Board reviewed the proposed advisory fees, supervisory and administrative fees and estimated total expenses of each New Fund (each as a percentage of average net assets) and compared such amounts with the average and median expenses of other similar funds. With respect to the advisory fee of each New Fund, the Board reviewed data from Lipper that compared the average and median advisory fees of other funds in a “Peer Group” of comparable funds, as well as the universe of other similar funds. The Board noted that PIMCO had proposed to contractually waive 0.16% of the investment advisory fee for each of the PIMCO International Dividend Fund and PIMCO U.S. Dividend Fund, which waiver would be renewable on an annual basis. The Board also noted that, even before taking into account this waiver, the advisory fee for each of the PMCO International Dividend Fund and PIMCO U.S. Dividend Fund compared favorably to the Lipper medians for comparable funds. The Board compared the New Funds’ estimated total expenses to other funds in the Peer Group Expense Comparison provided by Lipper and found the New Funds’ estimated total expenses to be reasonable.
At the time the Board considered the New Funds’ Investment Advisory Contract, PIMCO did not manage any separate accounts with similar investment strategies to the New Funds; therefore, the Board did not consider the fees charged by PIMCO to comparable separate accounts. However, the Board did consider the fees paid by the Trust’s existing series with dividend strategies as well as the fee structure of the PIMCO RealRetirement Funds, which are existing series of PIMCO Funds, and are overseen by a different board.
The Board also considered the Funds’ supervisory and administrative fees, comparing them to similar funds in the report supplied by Lipper. The Board considered that PIMCO has provided an increasingly broad array of fund supervisory and administrative functions. The Board considered the Trust’s unified fee structure, under which the Trust pays for the supervisory and administrative services it requires for one set fee, and in return, PIMCO provides or procures supervisory and
administrative services and bears the costs of various third party services required by the Funds, including audit, custodial, portfolio accounting, legal, transfer agency and printing costs. The Board considered that many other funds pay for these services separately, and thus it is difficult to directly compare the Funds’ unified supervisory and administrative fees with the fees paid by other funds for administrative services alone. The Board considered that the unified supervisory and administrative fee leads to fund fees that are fixed, rather than variable. The Board concluded that the Funds’ supervisory and administrative fees were reasonable in relation to the value of the services provided, including the services provided to different classes of shareholders, and that the expenses assumed contractually by PIMCO under the Supervision and Administration Agreement represent, in effect, a cap on overall fund expenses which is beneficial to the Funds and their shareholders. The Board further noted that, although the unified fee structure does not have breakpoints, it implicitly reflects economies of scale by fixing the absolute level of Fund fees at competitive levels even if the Funds’ operating costs rise when assets remain flat or decrease.
In connection with the approval of the New Funds’ Supervision and Administration Agreement, the Board compared the proposed fees with those of similar funds in the report supplied by Lipper. The Board considered the Trust’s unified fee structure, under which the New Funds would pay for the supervisory and administrative services it requires for one set fee, and in return, PIMCO would provide or procure supervisory and administrative services and bear the costs of various third party services required by the New Funds, including audit, custodial, portfolio accounting, legal, transfer agency and printing costs. The Board concluded that the New Funds’ supervisory and administrative fees were reasonable in relation to the value of the services provided, including the services provided to different classes of shareholders, and that the expenses assumed contractually by PIMCO under the New Funds’ Supervision and Administration Agreement represent, in effect, a cap on overall fund expenses, which is beneficial to each New Fund and its shareholders.
The Trustees also considered the advisory fees charged to the PIMCO Emerging Multi-Asset Fund, which operates as a fund of funds (the “Fund of Funds”), and the advisory services provided in exchange for such fees. The Trustees determined that such services were in addition to the advisory services provided to the underlying series in which the Fund of Funds may invest and, therefore, such services were not duplicative of the advisory services provided to the underlying series. The Board also considered the various fee waiver agreements in place for the Fund of Funds.
Based on the information presented by PIMCO and Lipper, members of the Board then determined, in the exercise of their business judgment,
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Approval of Renewal of the Investment Advisory Contract and Second Amended and Restated Supervision and Administration Agreement (Cont.)
that the level of the advisory fees and supervisory and administrative fees charged by PIMCO under the Agreements, as well as the total expenses of each Fund, are reasonable.
With respect to the New Funds, based on information presented by PIMCO and Lipper, members of the Board then determined, in the exercise of their business judgment, that the level of the advisory and supervisory and administrative fees charged by PIMCO under the New Funds’ Agreements, as well as the total expenses of each New Fund, are reasonable.
5. ADVISER COSTS, LEVEL OF PROFITS AND ECONOMIES OF SCALE
As the New Funds are newly organized, information regarding PIMCO’s costs in providing services to the New Funds and the profitability of PIMCO’s relationship with the New Funds was not available.
The Board reviewed information regarding PIMCO’s costs of providing services to the Funds as a whole and considered that PIMCO continues to invest in the equity asset management platform and does not expect to derive any profit from the Funds during its current fiscal year. The Board noted that it had also received information regarding the structure and manner in which PIMCO’s investment professionals were compensated, and PIMCO’s view of the relationship of such compensation to the attraction and retention of quality personnel. The Board considered PIMCO’s need to invest in technology, cyber security, shareholder privacy, business continuity planning, infrastructure and staff to reinforce and offer new services and to accommodate changing regulatory requirements.
With respect to potential economies of scale, the Board noted that PIMCO shares the benefits of economies of scale with the Funds and respective shareholders in a number of ways, including through the pricing of the Funds to scale from inception, fee reductions or waivers, and the enhancement of services provided to the Funds in return for fees paid. In considering the advisory fees paid by the Funds, the Board also noted that retail investors in the Funds receive the benefit of PIMCO’s advisory services at the same advisory fee rates as institutional investors in the Funds. The Board considered that the Funds’ unified fee rates had been set competitively and/or priced to scale from inception and continued to be competitive compared with peers. The Board also considered that the unified fee is a transparent means of informing Fund shareholders of the fees associated with the Funds, and that the Funds bear certain expenses that are not covered by the advisory fee or the unified supervision and administrative fee.
With respect to the New Funds, the Board noted that each New Fund’s proposed fee rate priced the fund at scale from the outset.
The Trustees also considered that the unified fee has provided inherent economies of scale because a Fund and a New Fund maintains
competitive fixed unified fees even if the particular Fund’s assets decline and/or operating costs rise. The Trustees further considered that, in contrast, breakpoints are a proxy for charging higher fees on lower asset levels and that when a fund’s assets decline, breakpoints may reverse, which causes expense ratios to increase. The Trustees also considered that, unlike the Funds’ and New Funds’ unified fee structure, funds with “pass through” administrative fee structures may experience increased expense ratios when fixed dollar fees are charged against declining fund assets. The Trustees noted that the benefits of the unified fee may emerge in the event a particular Fund’s assets decline in the future. The Trustees also considered that the unified fee protects shareholders from a rise in operating costs that may result from, including, among other things, PIMCO’s investments in various business enhancements and infrastructure, including those described above. The Trustees noted that PIMCO’s investments in these areas are extensive.
The Board concluded that the Funds’ and New Funds’ cost structures were reasonable and that the unified fee structure inherently involves the sharing of economies of scale between PIMCO and each of the Funds and New Funds, to the benefit of their respective shareholders.
6. ANCILLARY BENEFITS
The Board considered other benefits received by PIMCO and its affiliates as a result of PIMCO’s relationship with the Trust, including possible ancillary benefits to PIMCO’s institutional investment management business due to the reputation and market penetration of the Trust. The Board also considered that affiliates of PIMCO provide distribution and shareholder services to the Funds and New Funds and their respective shareholders, for which they may be compensated through distribution and servicing fees paid pursuant to the Funds’ and New Funds’ Rule 12b-1 plans or otherwise. The Board reviewed PIMCO’s soft dollar policies and procedures, noting that while PIMCO has the authority to receive the benefit of research provided by broker-dealers executing portfolio transactions on behalf of the Funds, it has adopted a policy not to enter into contractual soft dollar arrangements.
7. CONCLUSIONS
Based on its review, including its consideration of each of the factors referred to above, the Board concluded that the nature, extent and quality of the services rendered to the Funds by PIMCO favored the renewal of the Agreements. The Board concluded that the Agreements continued to be fair and reasonable to the Funds and their shareholders, that the Funds’ shareholders received reasonable value in return for the fees paid to PIMCO by the Funds under the Agreements and that the renewal of the Agreements was in the best interests of the Funds and their shareholders.
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(Unaudited)
With respect to the New Funds, based on its review, including its consideration of each of the factors referred to above, the Board concluded that the nature, extent and quality of the services to be rendered to the New Funds by PIMCO favored approval of the New Funds’ Agreements. The Board concluded that the New Funds’ Agreements were fair and reasonable to the New Funds and their shareholders, that the New Funds’ shareholders would likely receive reasonable value in return for the fees paid to PIMCO by the New Funds under the New Funds’ Agreements, and that the approval of the New Funds’ Agreements was in the best interests of the New Funds and their shareholders.
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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
Institutional Class, Class P, Administrative Class, Class D
330 W. 9th Street, 5th Floor
Kansas City, MO 64105
Boston Financial Data Services
Class A, Class C, Class R
P.O. Box 55060
Boston, MA 02205-5060
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.
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To get future shareholder reports online and to eliminate mailings, go to:
pimco.com/edelivery
pimco.com/investments
PES4001SAR_123114
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Your Global Investment Authority
PIMCO Equity Series®
Semiannual Report
December 31, 2014
PIMCO RealPath™ Blend 2020 Fund
PIMCO RealPath™ Blend 2025 Fund
PIMCO RealPath™ Blend 2030 Fund
PIMCO RealPath™ Blend 2035 Fund
PIMCO RealPath™ Blend 2040 Fund
PIMCO RealPath™ Blend 2045 Fund
PIMCO RealPath™ Blend 2050 Fund
PIMCO RealPath™ Blend 2055 Fund
PIMCO RealPath™ Blend Income Fund
Share Classes
n | Institutional |
n | Administrative |
n | A |
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6 | ||||||
8 | ||||||
10 | ||||||
12 | ||||||
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49 | ||||||
50 |
Fund | Schedule of Investments | |||
PIMCO RealPathTM Blend 2020 Fund | 16 | |||
PIMCO RealPathTM Blend 2025 Fund | 18 | |||
PIMCO RealPathTM Blend 2030 Fund | 20 | |||
PIMCO RealPathTM Blend 2035 Fund | 22 | |||
PIMCO RealPathTM Blend 2040 Fund | 24 | |||
PIMCO RealPathTM Blend 2045 Fund | 26 | |||
PIMCO RealPathTM Blend 2050 Fund | 28 | |||
PIMCO RealPathTM Blend 2055 Fund | 30 | |||
PIMCO RealPathTM Blend Income Fund | 32 |
This material is authorized for use only when preceded or accompanied by the current PIMCO Equity Series prospectus.
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Important Information About the Funds
We believe that equity funds have an important role to play in a well diversified investment portfolio. It is important to note, however, that equity funds are subject to notable risks. Among other things, equity and equity-related securities may decline in value due to both real and perceived general market, economic, and industry conditions.
In an environment where interest rates may trend upward, rising rates would negatively impact the performance of certain funds, and fixed-income securities held by a Fund are likely to decrease in value. A number of factors can cause interest rates to rise (e.g., central bank monetary policies, inflation rates, general economic conditions, etc.). Accordingly, changes in interest rates can be sudden, and there is no guarantee that Fund management will anticipate such movement.
As of the date of this report, interest rates in the U.S. are at or near historically low levels. As such, funds that invest in fixed income securities may currently face an increased exposure to the risks associated with a rising interest rate environment. This is especially true as the Fed ended its quantitative easing program in October 2014. 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 a Fund. If the performance of a Fund were to be negatively impacted by rising interest rates, the Fund could face increased redemptions by its shareholders, which could further reduce the value of the Fund.
Individual bonds with a longer duration (a measure used to determine the sensitivity of a security’s price to changes in interest rates) tend to be more sensitive to changes in interest rates, usually making them more volatile than securities or funds with shorter durations. If the performance of a Fund were to be negatively impacted by rising interest rates, the Fund could face increased redemptions by its shareholders, which could further reduce the value of the Fund.
The Funds may be subject to various risks as described in the Funds’ prospectus. Some of these risks may include, but are not limited to, the following: Acquired Fund risk, allocation risk, equity risk, value investing risk, interest rate risk, call risk, credit risk, high yield and distressed company risk, market risk, liquidity risk, derivatives risk, commodity risk, mortgage-related and other asset-backed securities, foreign (non-U.S.) investment risk, real estate risk, emerging market risk, currency risk, leveraging risk, small-cap and mid-cap company risk, management risk, short sale risk, tax risk, subsidiary risk, arbitrage risk, and convertible securities risk. A complete description of these risks and other risks is contained in the Funds’ prospectus. The Funds 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 Funds could not close out a position when it would be most advantageous to do so. Certain derivative transactions may have a leveraging effect on a Fund. For example, a small investment in a derivative instrument may have a significant impact on a Fund’s 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 in the Fund. A Fund may engage in such transactions regardless of whether the Fund owns the asset, instrument or components of the index underlying the derivative instrument. A Fund may invest a significant portion of its assets in these types of instruments. If it does, the Fund’s 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. Investing in foreign (non-U.S.) securities may entail risk due to foreign (non-U.S.) economic and political developments; this risk may be increased when investing in emerging markets.
For example, if a Fund 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 (non-U.S.) 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 Fund 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.
The geographical classification of foreign (non-U.S.) securities in this report are classified by the country of incorporation of a holding. In certain instances, a security’s country of incorporation may be different from its country of economic exposure.
The Funds (or Acquired Funds) 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, as well as the risk
2 | PIMCO EQUITY SERIES |
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that economic sanctions may be imposed by the United States and/or other countries. Such sanctions—which may impact companies in many sectors, including energy, financial services and defense, among others—may negatively impact a Fund’s performance and/or ability to achieve its investment objective. For example, certain transactions may be prohibited and/or existing investments may become illiquid (e.g., in the event that transacting in certain existing investments is prohibited), which could cause a Fund to sell other portfolio holdings at a disadvantageous time or price in order to meet shareholder redemptions.
The PIMCO RealPathTM Blend Funds are intended for investors who prefer to have their asset allocation decisions made by professional money managers and are designed to offer individual investors comprehensive asset allocation strategies tailored to the time when they expect to retire or to begin withdrawing assets. Each PIMCO RealPathTM Blend Fund is designed for investors expecting to retire or to begin withdrawing portions of their investments around the year indicated in the Fund’s name. The retirement year included in the RealPathTM Blend Fund’s name does not necessarily represent the specific year you expect to begin withdrawing your assets. It is intended only as a general guide.
The PIMCO RealPathTM Blend Funds are designed to provide investors with a comprehensive retirement solution tailored to the time when they expect to retire and plan to start withdrawing money (the “target date”). Each PIMCO RealPathTM Blend Fund follows a target asset
allocation schedule that changes over time to help reduce portfolio risk, increasing its exposure to conservative investments as the target date approaches. The principal value of a Fund is not guaranteed at any time, including the target date. A Fund’s shareholders may experience losses, including losses near, at, or after the target year indicated in the PIMCO RealPathTM Blend Fund’s name.
The Funds’ financial statements are from inception through its fiscal year end, each being 12/31/2014. Thus, no discussion of Fund performance is included.
Class A shares are subject to an initial sales charge. A Contingent Deferred Sales Charge (“CDSC”) may be imposed in certain circumstances on Class A shares that are purchased without an initial sales charge and then redeemed during the first 18 months after purchase. The minimum initial investment amount for Institutional Class, Class P and Administrative Class shares is $1,000,000. The minimum initial investment amount for Class A, Class C and Class D shares is $1,000. There is no minimum initial investment for Class R shares. Each Fund measures its performance against a broad-based securities market index (“benchmark index”). The benchmark index does not take into account fees, expenses, or taxes. A Fund’s past performance, before and after taxes, is not necessarily an indication of how the Fund will perform in the future.
The following table discloses the inception dates of each Fund and its respective share classes:
Fund Name | Fund Inception | Institutional Class | Class P | Administrative Class | Class D | Class A | Class C | Class R | ||||||||||||||||||||||||||
PIMCO RealPathTM Blend Income Fund | 12/31/2014 | 12/31/2014 | — | 12/31/2014 | — | 12/31/2014 | — | — | ||||||||||||||||||||||||||
PIMCO RealPathTM Blend 2020 Fund | 12/31/2014 | 12/31/2014 | — | 12/31/2014 | — | 12/31/2014 | — | — | ||||||||||||||||||||||||||
PIMCO RealPathTM Blend 2025 Fund | 12/31/2014 | 12/31/2014 | — | 12/31/2014 | — | 12/31/2014 | — | — | ||||||||||||||||||||||||||
PIMCO RealPathTM Blend 2030 Fund | 12/31/2014 | 12/31/2014 | — | 12/31/2014 | — | 12/31/2014 | — | — | ||||||||||||||||||||||||||
PIMCO RealPathTM Blend 2035 Fund | 12/31/2014 | 12/31/2014 | — | 12/31/2014 | — | 12/31/2014 | — | — | ||||||||||||||||||||||||||
PIMCO RealPathTM Blend 2040 Fund | 12/31/2014 | 12/31/2014 | — | 12/31/2014 | — | 12/31/2014 | — | — | ||||||||||||||||||||||||||
PIMCO RealPathTM Blend 2045 Fund | 12/31/2014 | 12/31/2014 | — | 12/31/2014 | — | 12/31/2014 | — | — | ||||||||||||||||||||||||||
PIMCO RealPathTM Blend 2050 Fund | 12/31/2014 | 12/31/2014 | — | 12/31/2014 | — | 12/31/2014 | — | — | ||||||||||||||||||||||||||
PIMCO RealPathTM Blend 2055 Fund | 12/31/2014 | 12/31/2014 | — | 12/31/2014 | — | 12/31/2014 | — | — |
An investment in a Fund is not a bank deposit and is not guaranteed or insured by the Federal Deposit Insurance Corporation (“FDIC”) or any other government agency. It is possible to lose money on investments in a Fund.
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 PIMCO Equity Series as the policies and procedures that PIMCO will use when voting proxies on behalf of a Fund. A description of the policies and procedures that PIMCO uses to vote proxies relating to portfolio securities of a Fund, and information about how the Fund voted proxies relating to portfolio securities held during the most recent twelve-month period ended June 30th, are available without charge,
upon request, by calling the Trust at (888) 87-PIMCO, on the Fund’s website at http://www.pimco.com/investments, and on the Securities and Exchange Commission’s (“SEC”) website at http://www.sec.gov.
PIMCO Equity Series files a complete schedule of each Fund’s portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. A copy of a Fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. A Fund’s Form N-Q will also be available without charge, upon request, by calling the Trust at (888) 87-PIMCO and on the Fund’s website at http://www.pimco.com/investments. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 3 |
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Important Information About the Funds (Cont.)
PIMCO RealPath™ Blend 2020 Fund
Top 10 Holdings1
PIMCO Total Return Fund | 15.40% | |||||
Vanguard 500 Index Fund | 15.40% | |||||
PIMCO Real Return Fund | 10.30% | |||||
PIMCO Real Return Asset Fund | 10.20% | |||||
Vanguard Emerging Markets Stock Index Fund | 7.70% | |||||
PIMCO Long Duration Total Return Fund | 7.70% | |||||
Vanguard Developed Markets Index Fund | 7.70% | |||||
PIMCO Foreign Bond Fund (U.S. Dollar-Hedged) | 7.70% | |||||
PIMCO High Yield Fund | 5.10% | |||||
Vanguard REIT Index Fund | 5.10% | |||||
Other | 7.70% |
PIMCO RealPath™ Blend 2025 Fund
Top 10 Holdings1
Vanguard 500 Index Fund | 17.90% | |||||
PIMCO Real Return Asset Fund | 10.30% | |||||
Vanguard Developed Markets Index Fund | 10.30% | |||||
Vanguard Emerging Markets Stock Index Fund | 10.20% | |||||
PIMCO Real Return Fund | 7.70% | |||||
PIMCO Total Return Fund | 7.70% | |||||
Vanguard REIT Index Fund | 7.70% | |||||
PIMCO High Yield Fund | 7.70% | |||||
PIMCO Long Duration Total Return Fund | 7.70% | |||||
PIMCO Foreign Bond Fund (U.S. Dollar-Hedged) | 5.10% | |||||
Other | 7.70% |
PIMCO RealPath™ Blend 2030 Fund
Top 10 Holdings1
Vanguard 500 Index Fund | 20.50% | |||||
Vanguard Developed Markets Index Fund | 12.80% | |||||
Vanguard Emerging Markets Stock Index Fund | 12.80% | |||||
PIMCO Real Return Asset Fund | 10.30% | |||||
Vanguard REIT Index Fund | 10.20% | |||||
PIMCO High Yield Fund | 7.70% | |||||
PIMCO Long Duration Total Return Fund | 7.70% | |||||
PIMCO Emerging Local Bond Fund | 5.10% | |||||
Vanguard Small-Cap Index Fund | 5.10% | |||||
PIMCO Total Return Fund | 2.60% | |||||
Other | 5.20% |
PIMCO RealPath™ Blend 2035 Fund
Top Holdings1
Vanguard 500 Index Fund | 23.10% | |||||
Vanguard Developed Markets Index Fund | 15.40% | |||||
Vanguard Emerging Markets Stock Index Fund | 15.40% | |||||
PIMCO Real Return Asset Fund | 10.30% | |||||
Vanguard REIT Index Fund | 10.20% | |||||
PIMCO Long Duration Total Return Fund | 7.70% | |||||
Vanguard Small-Cap Index Fund | 7.70% | |||||
PIMCO Emerging Local Bond Fund | 5.10% | |||||
PIMCO High Yield Fund | 5.10% |
PIMCO RealPath™ Blend 2040 Fund
Top Holdings1
Vanguard 500 Index Fund | 25.60% | |||||
Vanguard Developed Markets Index Fund | 15.40% | |||||
Vanguard Emerging Markets Stock Index Fund | 15.40% | |||||
Vanguard REIT Index Fund | 10.30% | |||||
Vanguard Small-Cap Index Fund | 10.20% | |||||
PIMCO Real Return Asset Fund | 7.70% | |||||
PIMCO Long Duration Total Return Fund | 7.70% | |||||
PIMCO High Yield Fund | 5.10% | |||||
PIMCO Emerging Local Bond Fund | 2.60% |
PIMCO RealPath™ Blend 2045 Fund
Top Holdings1
Vanguard 500 Index Fund | 25.60% | |||||
Vanguard Developed Markets Index Fund | 17.90% | |||||
Vanguard Emerging Markets Stock Index Fund | 17.90% | |||||
Vanguard REIT Index Fund | 10.30% | |||||
Vanguard Small-Cap Index Fund | 10.30% | |||||
PIMCO Long Duration Total Return Fund | 7.70% | |||||
PIMCO Real Return Asset Fund | 5.10% | |||||
PIMCO Emerging Local Bond Fund | 2.60% | |||||
PIMCO High Yield Fund | 2.60% |
1 | % of Investments, at value as of 12/31/2014. Top Holdings solely reflect long positions. Securities sold short, financial derivative instruments and short-term instruments are not taken into consideration. |
4 | PIMCO EQUITY SERIES |
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PIMCO RealPath™ Blend 2050 Fund
Top Holdings1
Vanguard 500 Index Fund | 28.20% | |||||
Vanguard Developed Markets Index Fund | 17.90% | |||||
Vanguard Emerging Markets Stock Index Fund | 17.90% | |||||
Vanguard REIT Index Fund | 10.30% | |||||
Vanguard Small-Cap Index Fund | 10.20% | |||||
PIMCO Long Duration Total Return Fund | 7.70% | |||||
PIMCO Real Return Asset Fund | 2.60% | |||||
PIMCO Emerging Local Bond Fund | 2.60% | |||||
PIMCO High Yield Fund | 2.60% |
PIMCO RealPath Blend™ 2055 Fund
Top Holdings1
Vanguard 500 Index Fund | 28.20% | |||||
Vanguard Developed Markets Index Fund | 17.90% | |||||
Vanguard Emerging Markets Stock Index Fund | 17.90% | |||||
Vanguard REIT Index Fund | 10.30% | |||||
Vanguard Small-Cap Index Fund | 10.20% | |||||
PIMCO Long Duration Total Return Fund | 7.70% | |||||
PIMCO Real Return Asset Fund | 2.60% | |||||
PIMCO Emerging Local Bond Fund | 2.60% | |||||
PIMCO High Yield Fund | 2.60% |
PIMCO RealPath™ Blend Income Fund
Top 10 Holdings1
PIMCO Real Return Fund | 16.20% | |||||
PIMCO Total Return Fund | 16.20% | |||||
Vanguard 500 Index Fund | 13.50% | |||||
PIMCO Foreign Bond Fund (U.S. Dollar-Hedged) | 10.80% | |||||
Vanguard Developed Markets Index Fund | 8.20% | |||||
PIMCO Long Duration Total Return Fund | 8.10% | |||||
PIMCO Real Return Asset Fund | 8.10% | |||||
Vanguard Emerging Markets Stock Index Fund | 5.40% | |||||
Vanguard REIT Index Fund | 5.40% | |||||
PIMCO Emerging Local Bond Fund | 2.70% | |||||
Other | 5.40% |
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 5 |
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Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and exchange fees and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. The Example is intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period indicated, which for all Funds and share classes is from July 1, 2014 to December 31, 2014 unless noted otherwise in the table and footnotes below.
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 column 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 a Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s 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 a Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) on purchase payments and exchange fees. 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 funds. 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.
Actual | Hypothetical (5% return before expenses) | |||||||||||||||||||||||||||||||||
Beginning Account Value(a) (12/31/14) | Ending Account Value (12/31/14) | Expenses Paid During Period(b) | Beginning Account Value (07/01/14) | Ending Account Value (12/31/14) | Expenses Paid During Period | Net Annualized Expense Ratio* | ||||||||||||||||||||||||||||
PIMCO RealPathTM Blend 2020 Fund | ||||||||||||||||||||||||||||||||||
Institutional Class | $ | 1,000.00 | $ | 1,000.00 | $ | 0.15 | $ | 1,000.00 | $ | 1,025.05 | $ | 0.15 | 0.03 | % | ||||||||||||||||||||
Administrative Class | 1,000.00 | 1,000.00 | 1.41 | 1,000.00 | 1,023.79 | 1.43 | 0.28 | |||||||||||||||||||||||||||
Class A | 1,000.00 | 1,000.00 | 2.67 | 1,000.00 | 1,022.53 | 2.70 | 0.53 | |||||||||||||||||||||||||||
PIMCO RealPathTM Blend 2025 Fund | ||||||||||||||||||||||||||||||||||
Institutional Class | $ | 1,000.00 | $ | 1,000.00 | $ | 0.15 | $ | 1,000.00 | $ | 1,025.05 | $ | 0.15 | 0.03 | % | ||||||||||||||||||||
Administrative Class | 1,000.00 | 1,000.00 | 1.41 | 1,000.00 | 1,023.79 | 1.43 | 0.28 | |||||||||||||||||||||||||||
Class A | 1,000.00 | 1,000.00 | 2.67 | 1,000.00 | 1,022.53 | 2.70 | 0.53 | |||||||||||||||||||||||||||
PIMCO RealPathTM Blend 2030 Fund | ||||||||||||||||||||||||||||||||||
Institutional Class | $ | 1,000.00 | $ | 1,000.00 | $ | 0.20 | $ | 1,000.00 | $ | 1,025.00 | $ | 0.20 | 0.04 | % | ||||||||||||||||||||
Administrative Class | 1,000.00 | 1,000.00 | 1.46 | 1,000.00 | 1,023.74 | 1.48 | 0.29 | |||||||||||||||||||||||||||
Class A | 1,000.00 | 1,000.00 | 2.72 | 1,000.00 | 1,022.48 | 2.75 | 0.54 | |||||||||||||||||||||||||||
PIMCO RealPathTM Blend 2035 Fund | ||||||||||||||||||||||||||||||||||
Institutional Class | $ | 1,000.00 | $ | 1,000.00 | $ | 0.25 | $ | 1,000.00 | $ | 1,024.95 | $ | 0.26 | 0.05 | % | ||||||||||||||||||||
Administrative Class | 1,000.00 | 1,000.00 | 1.51 | 1,000.00 | 1,023.69 | 1.53 | 0.30 | |||||||||||||||||||||||||||
Class A | 1,000.00 | 1,000.00 | 2.77 | 1,000.00 | 1,022.43 | 2.80 | 0.55 |
6 | PIMCO EQUITY SERIES |
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(Unaudited)
Actual | Hypothetical (5% return before expenses) | |||||||||||||||||||||||||||||||||
Beginning Account Value(a) (12/31/14) | Ending Account Value (12/31/14) | Expenses Paid During Period(b) | Beginning Account Value (07/01/14) | Ending Account Value (12/31/14) | Expenses Paid During Period | Net Annualized Expense Ratio* | ||||||||||||||||||||||||||||
PIMCO RealPathTM Blend 2040 Fund | ||||||||||||||||||||||||||||||||||
Institutional Class | $ | 1,000.00 | $ | 1,000.00 | $ | 0.25 | $ | 1,000.00 | $ | 1,024.95 | $ | 0.26 | 0.05 | % | ||||||||||||||||||||
Administrative Class | 1,000.00 | 1,000.00 | 1.51 | 1,000.00 | 1,023.69 | 1.53 | 0.30 | |||||||||||||||||||||||||||
Class A | 1,000.00 | 1,000.00 | 2.77 | 1,000.00 | 1,022.43 | 2.80 | 0.55 | |||||||||||||||||||||||||||
PIMCO RealPathTM Blend 2045 Fund | ||||||||||||||||||||||||||||||||||
Institutional Class | $ | 1,000.00 | $ | 1,000.00 | $ | 0.25 | $ | 1,000.00 | $ | 1,024.95 | $ | 0.26 | 0.05 | % | ||||||||||||||||||||
Administrative Class | 1,000.00 | 1,000.00 | 1.51 | 1,000.00 | 1,023.69 | 1.53 | 0.30 | |||||||||||||||||||||||||||
Class A | 1,000.00 | 1,000.00 | 2.77 | 1,000.00 | 1,022.43 | 2.80 | 0.55 | |||||||||||||||||||||||||||
PIMCO RealPathTM Blend 2050 Fund | ||||||||||||||||||||||||||||||||||
Institutional Class | $ | 1,000.00 | $ | 1,000.00 | $ | 0.25 | $ | 1,000.00 | $ | 1,024.95 | $ | 0.26 | 0.05 | % | ||||||||||||||||||||
Administrative Class | 1,000.00 | 1,000.00 | 1.51 | 1,000.00 | 1,023.69 | 1.53 | 0.30 | |||||||||||||||||||||||||||
Class A | 1,000.00 | 1,000.00 | 2.77 | 1,000.00 | 1,022.43 | 2.80 | 0.55 | |||||||||||||||||||||||||||
PIMCO RealPathTM Blend 2055 Fund | ||||||||||||||||||||||||||||||||||
Institutional Class | $ | 1,000.00 | $ | 1,000.00 | $ | 0.25 | $ | 1,000.00 | $ | 1,024.95 | $ | 0.26 | 0.05 | % | ||||||||||||||||||||
Administrative Class | 1,000.00 | 1,000.00 | 1.51 | 1,000.00 | 1,023.69 | 1.53 | 0.30 | |||||||||||||||||||||||||||
Class A | 1,000.00 | 1,000.00 | 2.77 | 1,000.00 | 1,022.43 | 2.80 | 0.55 | |||||||||||||||||||||||||||
PIMCO RealPathTM Blend Income Fund | ||||||||||||||||||||||||||||||||||
Institutional Class | $ | 1,000.00 | $ | 1,000.00 | $ | 0.15 | $ | 1,000.00 | $ | 1,025.05 | $ | 0.15 | 0.03 | % | ||||||||||||||||||||
Administrative Class | 1,000.00 | 1,000.00 | 1.41 | 1,000.00 | 1,023.79 | 1.43 | 0.28 | |||||||||||||||||||||||||||
Class A | 1,000.00 | 1,000.00 | 2.67 | 1,000.00 | 1,022.53 | 2.70 | 0.53 |
* 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 8 in the Notes to Financial Statements.
(a) The Beginning Account Value is reflective as of 12/31/14 which is the Fund’s inception date.
(b) Expenses Paid in the Actual expense section are equal to the contractual expense ratio for the Class, multiplied by the average account value over the period. Actual and hypothetical expenses reflect amounts as if the Class had been operational for the entire fiscal half year.
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 7 |
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Selected Per Share Data for the Period Ended: | Net Asset Value Beginning of Period | Net Investment Income (Loss) (a) | Net Realized/ Unrealized Gain (Loss) | Net Increase | Dividends from Net Investment Income | Distributions from Net Realized Capital Gains | Tax Basis Return of Capital | Total Distributions | ||||||||||||||||||||||||
PIMCO RealPathTM Blend 2020 Fund | ||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||
12/31/2014 - 12/31/2014+ | $ | 10.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||||||||||||
Administrative Class | ||||||||||||||||||||||||||||||||
12/31/2014 - 12/31/2014+ | 10.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||
12/31/2014 - 12/31/2014+ | 10.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||||||||||
PIMCO RealPathTM Blend 2025 Fund | ||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||
12/31/2014 - 12/31/2014+ | $ | 10.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||||||||||||
Administrative Class | ||||||||||||||||||||||||||||||||
12/31/2014 - 12/31/2014+ | 10.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||
12/31/2014 - 12/31/2014+ | 10.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||||||||||
PIMCO RealPathTM Blend 2030 Fund | ||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||
12/31/2014 - 12/31/2014+ | $ | 10.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||||||||||||
Administrative Class | ||||||||||||||||||||||||||||||||
12/31/2014 - 12/31/2014+ | 10.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||
12/31/2014 - 12/31/2014+ | 10.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||||||||||
PIMCO RealPathTM Blend 2035 Fund | ||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||
12/31/2014 - 12/31/2014+ | $ | 10.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||||||||||||
Administrative Class | ||||||||||||||||||||||||||||||||
12/31/2014 - 12/31/2014+ | 10.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||
12/31/2014 - 12/31/2014+ | 10.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||||||||||
PIMCO RealPathTM Blend 2040 Fund | ||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||
12/31/2014 - 12/31/2014+ | $ | 10.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||||||||||||
Administrative Class | ||||||||||||||||||||||||||||||||
12/31/2014 - 12/31/2014+ | 10.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||
12/31/2014 - 12/31/2014+ | 10.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||||||||||
PIMCO RealPathTM Blend 2045 Fund | ||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||
12/31/2014 - 12/31/2014+ | $ | 10.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||||||||||||
Administrative Class | ||||||||||||||||||||||||||||||||
12/31/2014 - 12/31/2014+ | 10.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||
12/31/2014 - 12/31/2014+ | 10.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||||||||||
PIMCO RealPathTM Blend 2050 Fund | ||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||
12/31/2014 - 12/31/2014+ | $ | 10.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||||||||||||
Administrative Class | ||||||||||||||||||||||||||||||||
12/31/2014 - 12/31/2014+ | 10.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||
12/31/2014 - 12/31/2014+ | 10.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||||||||||
PIMCO RealPathTM Blend 2055 Fund | ||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||
12/31/2014 - 12/31/2014+ | $ | 10.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||||||||||||
Administrative Class | ||||||||||||||||||||||||||||||||
12/31/2014 - 12/31/2014+ | 10.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||
12/31/2014 - 12/31/2014+ | 10.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||||||||||
PIMCO RealPathTM Blend Income Fund | ||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||
12/31/2014 - 12/31/2014+ | $ | 10.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||||||||||||
Administrative Class | ||||||||||||||||||||||||||||||||
12/31/2014 - 12/31/2014+ | 10.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||
12/31/2014 - 12/31/2014+ | 10.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
+ | Unaudited |
(a) | Per share amounts based on average number of shares outstanding during the period. |
8 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
(Unaudited)
Net Asset Value End of Period | Total Return | Net Assets End of Period (000s) | Ratio of Net Assets | Ratio of Net Assets | Ratio of Net Assets | Ratio of Net Assets | Ratio of Net Net Assets | Portfolio Turnover Rate | ||||||||||||||||||||||||||
$ | 10.00 | 0.00 | % | $ | 3,000 | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0 | % | |||||||||||||||||
10.00 | 0.00 | 10 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0 | ||||||||||||||||||||||||||
10.00 | 0.00 | 10 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0 | ||||||||||||||||||||||||||
$ | 10.00 | 0.00 | % | $ | 3,000 | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0 | % | |||||||||||||||||
10.00 | 0.00 | 10 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0 | ||||||||||||||||||||||||||
10.00 | 0.00 | 10 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0 | ||||||||||||||||||||||||||
$ | 10.00 | 0.00 | % | $ | 3,000 | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0 | % | |||||||||||||||||
10.00 | 0.00 | 10 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0 | ||||||||||||||||||||||||||
10.00 | 0.00 | 10 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0 | ||||||||||||||||||||||||||
$ | 10.00 | 0.00 | % | $ | 3,000 | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0 | % | |||||||||||||||||
10.00 | 0.00 | 10 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0 | ||||||||||||||||||||||||||
10.00 | 0.00 | 10 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0 | ||||||||||||||||||||||||||
$ | 10.00 | 0.00 | % | $ | 3,000 | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0 | % | |||||||||||||||||
10.00 | 0.00 | 10 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0 | ||||||||||||||||||||||||||
10.00 | 0.00 | 10 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0 | ||||||||||||||||||||||||||
$ | 10.00 | 0.00 | % | $ | 3,000 | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0 | % | |||||||||||||||||
10.00 | 0.00 | 10 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0 | ||||||||||||||||||||||||||
10.00 | 0.00 | 10 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0 | ||||||||||||||||||||||||||
$ | 10.00 | 0.00 | % | $ | 3,001 | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0 | % | |||||||||||||||||
10.00 | 0.00 | 10 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0 | ||||||||||||||||||||||||||
10.00 | 0.00 | 10 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0 | ||||||||||||||||||||||||||
$ | 10.00 | 0.00 | % | $ | 3,000 | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0 | % | |||||||||||||||||
10.00 | 0.00 | 10 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0 | ||||||||||||||||||||||||||
10.00 | 0.00 | 10 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0 | ||||||||||||||||||||||||||
$ | 10.00 | 0.00 | % | $ | 3,000 | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0 | % | |||||||||||||||||
10.00 | 0.00 | 10 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0 | ||||||||||||||||||||||||||
10.00 | 0.00 | 10 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0 |
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 9 |
Table of Contents
Statements of Assets and Liabilities
(Amounts in thousands†, except per share amounts) | PIMCO RealPathTM Blend 2020 Fund | PIMCO RealPathTM Blend 2025 Fund | PIMCO RealPathTM Blend 2030 Fund | PIMCO RealPathTM Blend 2035 Fund | ||||||||||||
Assets: | ||||||||||||||||
Investments, at value | ||||||||||||||||
Investments in securities | $ | 1,208 | $ | 1,510 | $ | 1,812 | $ | 2,114 | ||||||||
Investments in Affiliates | 1,737 | 1,435 | 1,133 | 831 | ||||||||||||
Receivable for investments sold | 4 | 4 | 4 | 4 | ||||||||||||
Receivable for Fund shares sold | 3,020 | 3,020 | 3,020 | 3,020 | ||||||||||||
5,969 | 5,969 | 5,969 | 5,969 | |||||||||||||
Liabilities: | ||||||||||||||||
Financial Derivative Instruments | ||||||||||||||||
Over the counter | $ | 4 | $ | 4 | $ | 4 | $ | 4 | ||||||||
Payable for investments purchased | 1,208 | 1,510 | 1,812 | 2,114 | ||||||||||||
Payable for investments in Affiliates purchased | 1,737 | 1,435 | 1,133 | 831 | ||||||||||||
2,949 | 2,949 | 2,949 | 2,949 | |||||||||||||
Net Assets | $ | 3,020 | $ | 3,020 | $ | 3,020 | $ | 3,020 | ||||||||
Net Assets Consist of: | ||||||||||||||||
Paid in capital | $ | 3,020 | $ | 3,020 | $ | 3,020 | $ | 3,020 | ||||||||
Undistributed net investment income | 0 | 0 | 0 | 0 | ||||||||||||
Accumulated undistributed net realized gain | 4 | 4 | 4 | 4 | ||||||||||||
Net unrealized (depreciation) | (4 | ) | (4 | ) | (4 | ) | (4 | ) | ||||||||
$ | 3,020 | $ | 3,020 | $ | 3,020 | $ | 3,020 | |||||||||
Net Assets: | ||||||||||||||||
Institutional Class | $ | 3,000 | $ | 3,000 | $ | 3,000 | $ | 3,000 | ||||||||
Administrative Class | 10 | 10 | 10 | 10 | ||||||||||||
Class A | 10 | 10 | 10 | 10 | ||||||||||||
Shares Issued and Outstanding: | ||||||||||||||||
Institutional Class | 300 | 300 | 300 | 300 | ||||||||||||
Administrative Class | 1 | 1 | 1 | 1 | ||||||||||||
Class A | 1 | 1 | 1 | 1 | ||||||||||||
Net Asset Value and Redemption Price^ Per Share Outstanding: | ||||||||||||||||
Institutional Class | $ | 10.00 | $ | 10.00 | $ | 10.00 | $ | 10.00 | ||||||||
Administrative Class | 10.00 | 10.00 | 10.00 | 10.00 | ||||||||||||
Class A | 10.00 | 10.00 | 10.00 | 10.00 | ||||||||||||
Cost of Investments in securities | $ | 1,208 | $ | 1,510 | $ | 1,812 | $ | 2,114 | ||||||||
Cost of Investments in Affiliates | $ | 1,737 | $ | 1,435 | $ | 1,133 | $ | 831 |
† | A zero balance may reflect actual amounts rounding to less than one thousand. |
^ | With respect to Class A, the redemption price varies by the length of time the shares are held. |
10 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 2014 (Unaudited)
PIMCO RealPathTM Blend 2040 Fund | PIMCO RealPathTM Blend 2045 Fund | PIMCO RealPathTM Blend 2050 Fund | PIMCO RealPathTM Blend 2055 Fund | PIMCO RealPathTM Blend Income Fund | ||||||||||||||
$ | 2,265 | $ | 2,416 | $ | 2,492 | $ | 2,492 | $ | 982 | |||||||||
680 | 529 | 453 | 453 | 1,812 | ||||||||||||||
4 | 4 | 4 | 4 | 4 | ||||||||||||||
3,020 | 3,020 | 3,021 | 3,020 | 3,020 | ||||||||||||||
5,969 | 5,969 | 5,970 | 5,969 | 5,818 | ||||||||||||||
$ | 4 | $ | 4 | $ | 4 | $ | 4 | $ | 4 | |||||||||
2,265 | 2,416 | 2,492 | 2,492 | 982 | ||||||||||||||
680 | 529 | 453 | 453 | 1,812 | ||||||||||||||
2,949 | 2,949 | 2,949 | 2,949 | 2,798 | ||||||||||||||
$ | 3,020 | $ | 3,020 | $ | 3,021 | $ | 3,020 | $ | 3,020 | |||||||||
$ | 3,020 | $ | 3,020 | $ | 3,021 | $ | 3,020 | $ | 3,020 | |||||||||
0 | 0 | 0 | 0 | 0 | ||||||||||||||
4 | 4 | 4 | 4 | 4 | ||||||||||||||
(4 | ) | (4 | ) | (4 | ) | (4 | ) | (4 | ) | |||||||||
$ | 3,020 | $ | 3,020 | $ | 3,021 | $ | 3,020 | $ | 3,020 | |||||||||
$ | 3,000 | $ | 3,000 | $ | 3,001 | $ | 3,000 | $ | 3,000 | |||||||||
10 | 10 | 10 | 10 | 10 | ||||||||||||||
10 | 10 | 10 | 10 | 10 | ||||||||||||||
300 | 300 | 300 | 300 | 300 | ||||||||||||||
1 | 1 | 1 | 1 | 1 | ||||||||||||||
1 | 1 | 1 | 1 | 1 | ||||||||||||||
$ | 10.00 | $ | 10.00 | $ | 10.00 | $ | 10.00 | $ | 10.00 | |||||||||
10.00 | 10.00 | 10.00 | 10.00 | 10.00 | ||||||||||||||
10.00 | 10.00 | 10.00 | 10.00 | 10.00 | ||||||||||||||
$ | 2,265 | $ | 2,416 | $ | 2,492 | $ | 2,492 | $ | 982 | |||||||||
$ | 680 | $ | 529 | $ | 453 | $ | 453 | $ | 1,812 |
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 11 |
Table of Contents
Period Ended December 31, 2014 (Unaudited) | ||||||||||||||||
(Amounts in thousands†) | PIMCO RealPathTM Blend 2020 Fund (1) | PIMCO RealPathTM Blend 2025 Fund (1) | PIMCO RealPathTM Blend 2030 Fund (1) | PIMCO RealPathTM Blend 2035 Fund (1) | ||||||||||||
Investment Income: | ||||||||||||||||
Interest | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||
Dividends | 0 | 0 | 0 | 0 | ||||||||||||
Dividends from Investments in Affiliates | 0 | 0 | 0 | 0 | ||||||||||||
Total Income | 0 | 0 | 0 | 0 | ||||||||||||
Expenses: | ||||||||||||||||
Investment advisory fees | 0 | 0 | 0 | 0 | ||||||||||||
Supervisory and administrative fees | 0 | 0 | 0 | 0 | ||||||||||||
Distribution and/or servicing fees - Institutional Class | 0 | 0 | 0 | 0 | ||||||||||||
Distribution and/or servicing fees - Administrative Class | 0 | 0 | 0 | 0 | ||||||||||||
Distribution fees - Class A | 0 | 0 | 0 | 0 | ||||||||||||
Servicing fees - Class A | 0 | 0 | 0 | 0 | ||||||||||||
Trustee fees | 0 | 0 | 0 | 0 | ||||||||||||
Total Expenses | 0 | 0 | 0 | 0 | ||||||||||||
Net Investment Income | 0 | 0 | 0 | 0 | ||||||||||||
Net Realized Gain: | ||||||||||||||||
Investments in securities | 0 | 0 | 0 | 0 | ||||||||||||
Investments in Affiliates | 0 | 0 | 0 | 0 | ||||||||||||
Exchange-traded or centrally cleared financial derivative instruments | 0 | 0 | 0 | 0 | ||||||||||||
Over the counter financial derivative instruments | 4 | 4 | 4 | 4 | ||||||||||||
Foreign currency | 0 | 0 | 0 | 0 | ||||||||||||
Net Realized Gain | 4 | 4 | 4 | 4 | ||||||||||||
Net Change in Unrealized (Depreciation): | ||||||||||||||||
Investments in securities | 0 | 0 | 0 | 0 | ||||||||||||
Investments in Affiliates | 0 | 0 | 0 | 0 | ||||||||||||
Exchange-traded or centrally cleared financial derivative instruments | 0 | 0 | 0 | 0 | ||||||||||||
Over the counter financial derivative instruments | (4 | ) | (4 | ) | (4 | ) | (4 | ) | ||||||||
Foreign currency assets and liabilities | 0 | 0 | 0 | 0 | ||||||||||||
Net Change in Unrealized (Depreciation) | (4 | ) | (4 | ) | (4 | ) | (4 | ) | ||||||||
Net Gain | 0 | 0 | 0 | 0 | ||||||||||||
Net Increase in Net Assets Resulting from Operations | $ | 0 | $ | 0 | $ | 0 | $ | 0 |
† | A zero balance may reflect actual amounts rounding to less than one thousand. |
(1) | Inception date of the Fund was December 31, 2014. |
12 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
PIMCO 2040 Fund (1) | PIMCO RealPathTM Blend 2045 Fund (1) | PIMCO RealPathTM Blend 2050 Fund (1) | PIMCO RealPathTM Blend 2055 Fund (1) | PIMCO RealPathTM Blend Income Fund (1) | ||||||||||||||
$ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||
0 | 0 | 0 | 0 | 0 | ||||||||||||||
0 | 0 | 0 | 0 | 0 | ||||||||||||||
0 | 0 | 0 | 0 | 0 | ||||||||||||||
0 | 0 | 0 | 0 | 0 | ||||||||||||||
0 | 0 | 0 | 0 | 0 | ||||||||||||||
0 | 0 | 0 | 0 | 0 | ||||||||||||||
0 | 0 | 0 | 0 | 0 | ||||||||||||||
0 | 0 | 0 | 0 | 0 | ||||||||||||||
0 | 0 | 0 | 0 | 0 | ||||||||||||||
0 | 0 | 0 | 0 | 0 | ||||||||||||||
0 | 0 | 0 | 0 | 0 | ||||||||||||||
0 | 0 | 0 | 0 | 0 | ||||||||||||||
0 | 0 | 0 | 0 | 0 | ||||||||||||||
0 | 0 | 0 | 0 | 0 | ||||||||||||||
0 | 0 | 0 | 0 | 0 | ||||||||||||||
4 | 4 | 4 | 4 | 4 | ||||||||||||||
0 | 0 | 0 | 0 | 0 | ||||||||||||||
4 | 4 | 4 | 4 | 4 | ||||||||||||||
0 | 0 | 0 | 0 | 0 | ||||||||||||||
0 | 0 | 0 | 0 | 0 | ||||||||||||||
0 | 0 | 0 | 0 | 0 | ||||||||||||||
(4 | ) | (4 | ) | (4 | ) | (4 | ) | (4 | ) | |||||||||
0 | 0 | 0 | 0 | 0 | ||||||||||||||
(4 | ) | (4 | ) | (4 | ) | (4 | ) | (4 | ) | |||||||||
0 | 0 | 0 | 0 | 0 | ||||||||||||||
$ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 |
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 13 |
Table of Contents
Statements of Changes in Net Assets
PIMCO RealPathTM Blend 2020 Fund | PIMCO RealPathTM Blend 2025 Fund | PIMCO RealPathTM Blend 2030 Fund | PIMCO RealPathTM Blend 2035 Fund | |||||||||||||
(Amounts in thousands†) | Period from December 31, 2014 to December 31, 2014 | Period from December 31, 2014 to December 31, 2014 | Period from December 31, 2014 to December 31, 2014 | Period from December 31, 2014 to December 31, 2014 (Unaudited) | ||||||||||||
Increase in Net Assets from: | ||||||||||||||||
Operations: | ||||||||||||||||
Net Investment Income | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||
Net realized gain | 4 | 4 | 4 | 4 | ||||||||||||
Net change in unrealized (depreciation) | (4 | ) | (4 | ) | (4 | ) | (4 | ) | ||||||||
Net increase in net assets resulting from operations | 0 | 0 | 0 | 0 | ||||||||||||
Portfolio Share Transactions: | ||||||||||||||||
Net increase resulting from Fund share transactions** | 3,020 | 3,020 | 3,020 | 3,020 | ||||||||||||
Total Increase in Net Assets | 3,020 | 3,020 | 3,020 | 3,020 | ||||||||||||
Net Assets: | ||||||||||||||||
Beginning of period | 0 | 0 | 0 | 0 | ||||||||||||
End of period* | $ | 3,020 | $ | 3,020 | $ | 3,020 | $ | 3,020 | ||||||||
* Including undistributed net investment income of: | $ | 0 | $ | 0 | $ | 0 | $ | 0 |
† | A zero balance may reflect actual amounts rounding to less than one thousand. |
** | See Note 11 in the Notes to Financial Statements. |
14 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
PIMCO 2040 Fund | PIMCO RealPathTM Blend 2045 Fund | PIMCO RealPathTM Blend 2050 Fund | PIMCO RealPathTM Blend 2055 Fund | PIMCO RealPathTM Blend | ||||||||||||||
Period from December 31, 2014 to December 31, 2014 | Period from December 31, 2014 to December 31, 2014 | Period from December 31, 2014 to December 31, 2014 | Period from December 31, 2014 to December 31, 2014 | Period from December 31, 2014 to December 31, 2014 (Unaudited) | ||||||||||||||
$ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||
4 | 4 | 4 | 4 | 4 | ||||||||||||||
(4 | ) | (4 | ) | (4 | ) | (4 | ) | (4 | ) | |||||||||
0 | 0 | 0 | 0 | 0 | ||||||||||||||
3,020 | 3,020 | 3,021 | 3,020 | 3,020 | ||||||||||||||
3,020 | 3,020 | 3,021 | 3,020 | 3,020 | ||||||||||||||
0 | 0 | 0 | 0 | 0 | ||||||||||||||
$ | 3,020 | $ | 3,020 | $ | 3,021 | $ | 3,020 | $ | 3,020 | |||||||||
$ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 |
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 15 |
Table of Contents
Schedule of Investments PIMCO RealPathTM Blend 2020 Fund
SHARES | MARKET VALUE (000S) | |||||||||||
INVESTMENTS IN SECURITIES 40.0% | ||||||||||||
EXCHANGE-TRADED FUNDS 40.0% | ||||||||||||
Vanguard 500 Index Fund | 2,386 | $ | 453 | |||||||||
Vanguard Developed Markets Index Fund | 18,611 | 226 | ||||||||||
Vanguard Emerging Markets Stock Index Fund | 6,812 | 227 | ||||||||||
Vanguard REIT Index Fund | 1,315 | 151 | ||||||||||
Vanguard Small-Cap Index Fund | 2,703 | 151 | ||||||||||
|
| |||||||||||
Total Investments in Securities (Cost $1,208) | 1,208 | |||||||||||
|
|
SHARES | MARKET VALUE (000S) | |||||||||||
INVESTMENTS IN AFFILIATES 57.5% | ||||||||||||
MUTUAL FUNDS (a) 57.5% | ||||||||||||
PIMCO Emerging Local Bond Fund | 9,075 | $ | 76 | |||||||||
PIMCO Foreign Bond Fund (U.S. Dollar-Hedged) | 21,031 | 226 | ||||||||||
PIMCO High Yield Fund | 16,521 | 151 | ||||||||||
PIMCO Long Duration Total Return Fund | 18,875 | 227 | ||||||||||
PIMCO Real Return Asset Fund | 36,081 | 302 | ||||||||||
PIMCO Real Return Fund | 27,656 | 302 | ||||||||||
PIMCO Total Return Fund | 42,495 | 453 | ||||||||||
|
| |||||||||||
Total Mutual Funds (Cost $1,737) | 1,737 | |||||||||||
|
| |||||||||||
Total Investments in Affiliates (Cost $1,737) | 1,737 | |||||||||||
|
| |||||||||||
Total Investments 97.5% (Cost $2,945) | $ | 2,945 | ||||||||||
Financial Derivative | ||||||||||||
(Cost or Premiums, net $0) | (4 | ) | ||||||||||
Other Assets and Liabilities, net 2.6% | 79 | |||||||||||
|
| |||||||||||
Net Assets 100.0% | $ | 3,020 | ||||||||||
|
|
NOTES TO SCHEDULE OF INVESTMENTS (AMOUNTS IN THOUSANDS*, EXCEPT NUMBER OF UNITS):
* | A zero balance may reflect actual amounts rounding to less than one thousand. |
(a) | Institutional Class Shares of each Fund. |
(b) FINANCIAL DERIVATIVE INSTRUMENTS: OVER THE COUNTER
SWAP AGREEMENTS:
TOTAL RETURN SWAPS ON INDICES
Counterparty | Pay/Receive (1) | Underlying Reference | # of Units | Financing Rate | Maturity Date | Notional Amount | Unrealized (Depreciation) | Swap Agreements, at Value | ||||||||||||||||||||||
Asset | Liability | |||||||||||||||||||||||||||||
CBK | Receive | BCOMTR Index | 359 | 3-Month U.S. Treasury Bill rate plus a specified spread | 02/17/2015 | $ | 75 | $ | (4 | ) | $ | 0 | $ | (4 | ) | |||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||
Total Swap Agreements | $ | (4 | ) | $ | 0 | $ | (4 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
(1) | Receive represents that the Fund receives payments for any positive return on the underlying reference. The Fund makes payments for any negative return on such underlying reference. Pay represents that the Fund receives payments for any negative return on the underlying reference. The Fund makes payments for any positive return on such underlying reference. |
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)/pledged as of December 31, 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)/ Pledged | Net Exposure (2) | |||||||||||||||||||||||||||||||||||
CBK | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | (4 | ) | $ | (4 | ) | $ | (4 | ) | $ | 0 | $ | (4 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) | Net Exposure represents the net receivable/(payable) that would be due from/to the counterparty in the event of default. Exposure from OTC financial derivative instruments can only be netted across transactions governed under the same master agreement with the same legal entity. See Note 6, Principal Risks, in the Notes to Financial Statements for more information regarding master netting arrangements. |
16 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 2014 (Unaudited)
FAIR VALUE OF FINANCIAL DERIVATIVE INSTRUMENTS
The following is a summary of the fair valuation of the Fund’s derivative instruments categorized by risk exposure. See Note 6, Principal Risks, in the Notes to Financial Statements on risks of the Fund.
Fair Values of Financial Derivative Instruments on the Statements of Assets and Liabilities as of December 31, 2014:
Derivatives not accounted for as hedging instruments | ||||||||||||||||||||||||
Commodity Contracts | Credit Contracts | Equity Contracts | Foreign Exchange Contracts | Interest Rate Contracts | Total | |||||||||||||||||||
Financial Derivative Instruments - Liabilities | ||||||||||||||||||||||||
Over the counter | ||||||||||||||||||||||||
Swap Agreements | $ | 4 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 4 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
The Effect of Financial Derivative Instruments on the Statements of Operations for the Period Ended December 31, 2014:
Derivatives not accounted for as hedging instruments | ||||||||||||||||||||||||
Commodity Contracts | Credit Contracts | Equity Contracts | Foreign Exchange Contracts | Interest Rate Contracts | Total | |||||||||||||||||||
Net Realized Gain on Financial Derivative Instruments | ||||||||||||||||||||||||
Over the counter | ||||||||||||||||||||||||
Swap Agreements | $ | 4 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 4 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net Change in Unrealized (Depreciation) on Financial Derivative Instruments |
| |||||||||||||||||||||||
Over the counter | ||||||||||||||||||||||||
Swap Agreements | $ | (4 | ) | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | (4 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
FAIR VALUE MEASUREMENTS
The following is a summary of the fair valuations according to the inputs used as of December 31, 2014 in valuing the Fund’s assets and liabilities:
Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair Value at 12/31/2014 | ||||||||||||
Investments in Securities, at Value | ||||||||||||||||
Exchange-Traded Funds | $ | 1,208 | $ | 0 | $ | 0 | $ | 1,208 | ||||||||
$ | 1,208 | $ | 0 | $ | 0 | $ | 1,208 | |||||||||
Investments in Affiliates, at Value | ||||||||||||||||
Mutual Funds | $ | 1,737 | $ | 0 | $ | 0 | $ | 1,737 | ||||||||
Total Investments | $ | 2,945 | $ | 0 | $ | 0 | $ | 2,945 | ||||||||
Financial Derivative Instruments - Liabilities | ||||||||||||||||
Over the counter | $ | 0 | $ | (4 | ) | $ | 0 | $ | (4 | ) | ||||||
Totals | $ | 2,945 | $ | (4 | ) | $ | 0 | $ | 2,941 |
There were no significant transfers between Level 1, 2, and 3 during the period ended December 31, 2014.
See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 17 |
Table of Contents
Schedule of Investments PIMCO RealPath™ Blend 2025 Fund
SHARES | MARKET VALUE (000S) | |||||||||||
INVESTMENTS IN SECURITIES 50.0% | ||||||||||||
EXCHANGE-TRADED FUNDS 50.0% | ||||||||||||
Vanguard 500 Index Fund | 2,783 | $ | 528 | |||||||||
Vanguard Developed Markets Index Fund | 24,815 | 302 | ||||||||||
Vanguard Emerging Markets Stock Index Fund | 9,083 | 302 | ||||||||||
Vanguard REIT Index Fund | 1,972 | 227 | ||||||||||
Vanguard Small-Cap Index Fund | 2,703 | 151 | ||||||||||
|
| |||||||||||
Total Investments in Securities (Cost $1,510) | 1,510 | |||||||||||
|
|
SHARES | MARKET VALUE (000S) | |||||||||||
INVESTMENTS IN AFFILIATES 47.5% | ||||||||||||
MUTUAL FUNDS (a) 47.5% | ||||||||||||
PIMCO Emerging Local Bond Fund | 9,075 | $ | 76 | |||||||||
PIMCO Foreign Bond Fund | 14,020 | 151 | ||||||||||
PIMCO High Yield Fund | 24,781 | 226 | ||||||||||
PIMCO Long Duration Total Return Fund | 18,875 | 226 | ||||||||||
PIMCO Real Return Asset Fund | 36,081 | 302 | ||||||||||
PIMCO Real Return Fund | 20,742 | 227 | ||||||||||
PIMCO Total Return Fund | 21,248 | 227 | ||||||||||
|
| |||||||||||
Total Mutual Funds (Cost $1,435) | 1,435 | |||||||||||
|
| |||||||||||
Total Investments in Affiliates (Cost $1,435) | 1,435 | |||||||||||
|
| |||||||||||
Total Investments 97.5% (Cost $2,945) | $ | 2,945 | ||||||||||
Financial Derivative Instruments (b) (0.1%) (Cost or Premiums, net $0) | (4 | ) | ||||||||||
Other Assets and Liabilities, net 2.6% | 79 | |||||||||||
|
| |||||||||||
Net Assets 100.0% | $ | 3,020 | ||||||||||
|
|
NOTES TO SCHEDULE OF INVESTMENTS (AMOUNTS IN THOUSANDS*, EXCEPT NUMBER OF UNITS):
* | A zero balance may reflect actual amounts rounding to less than one thousand. |
(a) | Institutional Class Shares of each Fund. |
(b) FINANCIAL DERIVATIVE INSTRUMENTS: OVER THE COUNTER
SWAP AGREEMENTS:
TOTAL RETURN SWAPS ON INDICES
Counterparty | Pay/Receive (1) | Underlying Reference | # of Units | Financing Rate | Maturity Date | Notional Amount | Unrealized (Depreciation) | Swap Agreements, at Value | ||||||||||||||||||||||
Asset | Liability | |||||||||||||||||||||||||||||
CBK | Receive | BCOMTR Index | 359 | 3-Month U.S. Treasury Bill rate plus a specified spread | 02/17/2015 | $ | 75 | $ | (4) | $ | 0 | $ | (4) | |||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||
Total Swap Agreements |
| $ | (4) | $ | 0 | $ | (4) | |||||||||||||||||||||||
|
|
|
|
|
|
(1) | Receive represents that the Fund receives payments for any positive return on the underlying reference. The Fund makes payments for any negative return on such underlying reference. Pay represents that the Fund receives payments for any negative return on the underlying reference. The Fund makes payments for any positive return on such underlying reference. |
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)/pledged as of December 31, 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)/ Pledged | Net Exposure (2) | |||||||||||||||||||||||||||||||||||
CBK | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | (4 | ) | $ | (4 | ) | $ | (4 | ) | $ | 0 | $ | (4 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) | Net Exposure represents the net receivable/(payable) that would be due from/to the counterparty in the event of default. Exposure from OTC financial derivative instruments can only be netted across transactions governed under the same master agreement with the same legal entity. See Note 6, Principal Risks, in the Notes to Financial Statements for more information regarding master netting arrangements. |
18 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 2014 (Unaudited)
FAIR VALUE OF FINANCIAL DERIVATIVE INSTRUMENTS
The following is a summary of the fair valuation of the Fund’s derivative instruments categorized by risk exposure. See Note 6, Principal Risks, in the Notes to Financial Statements on risks of the Fund.
Fair Values of Financial Derivative Instruments on the Statements of Assets and Liabilities as of December 31, 2014:
Derivatives not accounted for as hedging instruments | ||||||||||||||||||||||||
Commodity Contracts | Credit Contracts | Equity Contracts | Foreign Exchange Contracts | Interest Rate Contracts | Total | |||||||||||||||||||
Financial Derivative Instruments - Liabilities | ||||||||||||||||||||||||
Over the counter | ||||||||||||||||||||||||
Swap Agreements | $ | 4 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 4 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
The Effect of Financial Derivative Instruments on the Statements of Operations for the Period Ended December 31, 2014:
Derivatives not accounted for as hedging instruments | ||||||||||||||||||||||||
Commodity Contracts | Credit Contracts | Equity Contracts | Foreign Exchange Contracts | Interest Rate Contracts | Total | |||||||||||||||||||
Net Realized Gain on Financial Derivative Instruments | ||||||||||||||||||||||||
Over the counter | ||||||||||||||||||||||||
Swap Agreements | $ | 4 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 4 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net Change in Unrealized (Depreciation) on Financial Derivative Instruments |
| |||||||||||||||||||||||
Over the counter | ||||||||||||||||||||||||
Swap Agreements | $ | (4 | ) | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | (4 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
FAIR VALUE MEASUREMENTS
The following is a summary of the fair valuations according to the inputs used as of December 31, 2014 in valuing the Fund’s assets and liabilities:
Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair Value at 12/31/2014 | ||||||||||||
Investments in Securities, at Value | ||||||||||||||||
Exchange-Traded Funds | $ | 1,510 | $ | 0 | $ | 0 | $ | 1,510 | ||||||||
$ | 1,510 | $ | 0 | $ | 0 | $ | 1,510 | |||||||||
Investments in Affiliates, at Value | ||||||||||||||||
Mutual Funds | 1,435 | 0 | 0 | 1,435 | ||||||||||||
Total Investments | $ | 2,945 | $ | 0 | $ | 0 | $ | 2,945 | ||||||||
Financial Derivative Instruments - Liabilities | ||||||||||||||||
Over the counter | $ | 0 | $ | (4 | ) | $ | 0 | $ | (4 | ) | ||||||
Totals | $ | 2,945 | $ | (4 | ) | $ | 0 | $ | 2,941 |
There were no significant transfers between Level 1, 2, and 3 during the period ended December 31, 2014.
See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 19 |
Table of Contents
Schedule of Investments PIMCO RealPathTM Blend 2030 Fund
SHARES | MARKET VALUE (000S) | |||||||||||
INVESTMENTS IN SECURITIES 60.0% | ||||||||||||
EXCHANGE-TRADED FUNDS 60.0% | ||||||||||||
Vanguard 500 Index Fund | 3,181 | $ | 604 | |||||||||
Vanguard Developed Markets Index Fund | 31,019 | 378 | ||||||||||
Vanguard Emerging Markets Stock Index Fund | 11,353 | 377 | ||||||||||
Vanguard REIT Index Fund | 2,630 | 302 | ||||||||||
Vanguard Small-Cap Index Fund | 2,703 | 151 | ||||||||||
|
| |||||||||||
Total Investments in Securities (Cost $1,812) | 1,812 | |||||||||||
|
|
SHARES | MARKET VALUE (000S) | |||||||||||
INVESTMENTS IN AFFILIATES 37.5% | ||||||||||||
MUTUAL FUNDS (a) 37.5% | ||||||||||||
PIMCO Emerging Local Bond Fund | 18,149 | $ | 151 | |||||||||
PIMCO Foreign Bond Fund | 7,010 | 76 | ||||||||||
PIMCO High Yield Fund | 24,781 | 226 | ||||||||||
PIMCO Long Duration Total Return Fund | 18,875 | 226 | ||||||||||
PIMCO Real Return Asset Fund | 36,081 | 302 | ||||||||||
PIMCO Real Return Fund | 6,914 | 76 | ||||||||||
PIMCO Total Return Fund | 7,083 | 76 | ||||||||||
|
| |||||||||||
Total Mutual Funds (Cost $1,133) | 1,133 | |||||||||||
|
| |||||||||||
Total Investments in Affiliates (Cost $1,133) | 1,133 | |||||||||||
|
| |||||||||||
Total Investments 97.5% (Cost $2,945) | $ | 2,945 | ||||||||||
Financial Derivative | ||||||||||||
(Cost or Premiums, net $0) | (4 | ) | ||||||||||
Other Assets and Liabilities, net 2.6% | 79 | |||||||||||
|
| |||||||||||
Net Assets 100.0% | $ | 3,020 | ||||||||||
|
|
NOTES TO SCHEDULE OF INVESTMENTS (AMOUNTS IN THOUSANDS*, EXCEPT NUMBER OF UNITS):
* | A zero balance may reflect actual amounts rounding to less than one thousand. |
(a) | Institutional Class Shares of each Fund. |
(b) FINANCIAL DERIVATIVE INSTRUMENTS: OVER THE COUNTER
SWAP AGREEMENTS:
TOTAL RETURN SWAPS ON INDICES
Counterparty | Pay/Receive (1) | Underlying Reference | # of Units | Financing Rate | Maturity Date | Notional Amount | Unrealized (Depreciation) | Swap Agreements, at Value | ||||||||||||||||||||||
Asset | Liability | |||||||||||||||||||||||||||||
CBK | Receive | BCOMTR Index | 359 | 3-Month U.S. Treasury Bill rate plus a specified spread | 02/17/2015 | $ | 75 | $ | (4) | $ | 0 | $ | (4) | |||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||
Total Swap Agreements | $ | (4) | $ | 0 | $ | (4) | ||||||||||||||||||||||||
|
|
|
|
|
|
(1) | Receive represents that the Fund receives payments for any positive return on the underlying reference. The Fund makes payments for any negative return on such underlying reference. Pay represents that the Fund receives payments for any negative return on the underlying reference. The Fund makes payments for any positive return on such underlying reference. |
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)/pledged as of December 31, 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)/ Pledged | Net Exposure (2) | |||||||||||||||||||||||||||||||||||
CBK | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | (4 | ) | $ | (4 | ) | $ | (4 | ) | $ | 0 | $ | (4 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) | Net Exposure represents the net receivable/(payable) that would be due from/to the counterparty in the event of default. Exposure from OTC financial derivative instruments can only be netted across transactions governed under the same master agreement with the same legal entity. See Note 6, Principal Risks, in the Notes to Financial Statements for more information regarding master netting arrangements. |
20 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 2014 (Unaudited)
FAIR VALUE OF FINANCIAL DERIVATIVE INSTRUMENTS
The following is a summary of the fair valuation of the Fund’s derivative instruments categorized by risk exposure. See Note 6, Principal Risks, in the Notes to Financial Statements on risks of the Fund.
Fair Values of Financial Derivative Instruments on the Statements of Assets and Liabilities as of December 31, 2014:
Derivatives not accounted for as hedging instruments | ||||||||||||||||||||||||
Commodity Contracts | Credit Contracts | Equity Contracts | Foreign Exchange Contracts | Interest Rate Contracts | Total | |||||||||||||||||||
Financial Derivative Instruments - Liabilities | ||||||||||||||||||||||||
Over the counter | ||||||||||||||||||||||||
Swap Agreements | $ | 4 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 4 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
The Effect of Financial Derivative Instruments on the Statements of Operations for the Period Ended December 31, 2014:
Derivatives not accounted for as hedging instruments | ||||||||||||||||||||||||
Commodity Contracts | Credit Contracts | Equity Contracts | Foreign Exchange Contracts | Interest Rate Contracts | Total | |||||||||||||||||||
Net Realized Gain on Financial Derivative Instruments | ||||||||||||||||||||||||
Over the counter | ||||||||||||||||||||||||
Swap Agreements | $ | 4 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 4 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net Change in Unrealized (Depreciation) on Financial Derivative Instruments |
| |||||||||||||||||||||||
Over the counter | ||||||||||||||||||||||||
Swap Agreements | $ | (4 | ) | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | (4 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
FAIR VALUE MEASUREMENTS
The following is a summary of the fair valuations according to the inputs used as of December 31, 2014 in valuing the Fund’s assets and liabilities:
Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair Value at 12/31/2014 | ||||||||||||
Investments in Securities, at Value | ||||||||||||||||
Exchange-Traded Funds | $ | 1,812 | $ | 0 | $ | 0 | $ | 1,812 | ||||||||
$ | 1,812 | $ | 0 | $ | 0 | $ | 1,812 | |||||||||
Investments in Affiliates, at Value | ||||||||||||||||
Mutual Funds | 1,133 | 0 | 0 | 1,133 | ||||||||||||
Total Investments | $ | 2,945 | $ | 0 | $ | 0 | $ | 2,945 | ||||||||
Financial Derivative Instruments - Liabilities | ||||||||||||||||
Over the counter | $ | 0 | $ | (4 | ) | $ | 0 | $ | (4 | ) | ||||||
Totals | $ | 2,945 | $ | (4 | ) | $ | 0 | $ | 2,941 |
There were no significant transfers between Level 1, 2, and 3 during the period ended December 31, 2014.
See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 21 |
Table of Contents
Schedule of Investments PIMCO RealPathTM Blend 2035 Fund
SHARES | MARKET VALUE (000S) | |||||||||||
INVESTMENTS IN SECURITIES 70.0% | ||||||||||||
EXCHANGE-TRADED FUNDS 70.0% | ||||||||||||
Vanguard 500 Index Fund | 3,578 | $ | 679 | |||||||||
Vanguard Developed Markets Index Fund | 37,223 | 453 | ||||||||||
Vanguard Emerging Markets Stock Index Fund | 13,624 | 453 | ||||||||||
Vanguard REIT Index Fund | 2,630 | 302 | ||||||||||
Vanguard Small-Cap Index Fund | 4,054 | 227 | ||||||||||
|
| |||||||||||
Total Investments in Securities (Cost $2,114) | 2,114 | |||||||||||
|
|
SHARES | MARKET VALUE (000S) | |||||||||||
INVESTMENTS IN AFFILIATES 27.5% | ||||||||||||
MUTUAL FUNDS (a) 27.5% | ||||||||||||
PIMCO Emerging Local Bond Fund | 18,149 | $ | 151 | |||||||||
PIMCO High Yield Fund | 16,521 | 151 | ||||||||||
PIMCO Long Duration Total Return Fund | 18,875 | 227 | ||||||||||
PIMCO Real Return Asset Fund | 36,081 | 302 | ||||||||||
|
| |||||||||||
Total Mutual Funds (Cost $831) | 831 | |||||||||||
|
| |||||||||||
Total Investments in Affiliates (Cost $831) | 831 | |||||||||||
|
| |||||||||||
Total Investments 97.5% (Cost $2,945) | $ | 2,945 | ||||||||||
Financial Derivative |
| |||||||||||
(Cost or Premiums, net $0) |
| (4 | ) | |||||||||
Other Assets and Liabilities, net 2.6% | 79 | |||||||||||
|
| |||||||||||
Net Assets 100.0% | $ | 3,020 | ||||||||||
|
|
NOTES TO SCHEDULE OF INVESTMENTS (AMOUNTS IN THOUSANDS*, EXCEPT NUMBER OF UNITS):
* | A zero balance may reflect actual amounts rounding to less than one thousand. |
(a) | Institutional Class Shares of each Fund. |
(b) FINANCIAL DERIVATIVE INSTRUMENTS: OVER THE COUNTER
SWAP AGREEMENTS:
TOTAL RETURN SWAPS ON INDICES
Counterparty | Pay/Receive (1) | Underlying Reference | # of Units | Financing Rate | Maturity Date | Notional Amount | Unrealized (Depreciation) | Swap Agreements, at Value | ||||||||||||||||||||||
Asset | Liability | |||||||||||||||||||||||||||||
CBK | Receive | BCOMTR Index | 359 | 3-Month U.S. Treasury Bill rate plus a specified spread | 02/17/2015 | $ | 75 | $ | (4 | ) | $ | 0 | $ | (4 | ) | |||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||
Total Swap Agreements | $ | (4 | ) | $ | 0 | $ | (4 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
(1) | Receive represents that the Fund receives payments for any positive return on the underlying reference. The Fund makes payments for any negative return on such underlying reference. Pay represents that the Fund receives payments for any negative return on the underlying reference. The Fund makes payments for any positive return on such underlying reference. |
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)/pledged as of December 31, 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)/ Pledged | Net Exposure (2) | |||||||||||||||||||||||||||||||||||
CBK | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | (4 | ) | $ | (4 | ) | $ | (4 | ) | $ | 0 | $ | (4 | ) | ||||||||||||||||||||
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(2) | Net Exposure represents the net receivable/(payable) that would be due from/to the counterparty in the event of default. Exposure from OTC financial derivative instruments can only be netted across transactions governed under the same master agreement with the same legal entity. See Note 6, Principal Risks, in the Notes to Financial Statements for more information regarding master netting arrangements. |
22 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 2014 (Unaudited)
FAIR VALUE OF FINANCIAL DERIVATIVE INSTRUMENTS
The following is a summary of the fair valuation of the Fund’s derivative instruments categorized by risk exposure. See Note 6, Principal Risks, in the Notes to Financial Statements on risks of the Fund.
Fair Values of Financial Derivative Instruments on the Statements of Assets and Liabilities as of December 31, 2014:
Derivatives not accounted for as hedging instruments | ||||||||||||||||||||||||
Commodity Contracts | Credit Contracts | Equity Contracts | Foreign Exchange Contracts | Interest Rate Contracts | Total | |||||||||||||||||||
Financial Derivative Instruments - Liabilities | ||||||||||||||||||||||||
Over the counter | ||||||||||||||||||||||||
Swap Agreements | $ | 4 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 4 | ||||||||||||
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The Effect of Financial Derivative Instruments on the Statements of Operations for the Period Ended December 31, 2014:
Derivatives not accounted for as hedging instruments | ||||||||||||||||||||||||
Commodity Contracts | Credit Contracts | Equity Contracts | Foreign Exchange Contracts | Interest Rate Contracts | Total | |||||||||||||||||||
Net Realized Gain on Financial Derivative Instruments | ||||||||||||||||||||||||
Over the counter | ||||||||||||||||||||||||
Swap Agreements | $ | 4 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 4 | ||||||||||||
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Net Change in Unrealized (Depreciation) on Financial Derivative Instruments |
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Over the counter | ||||||||||||||||||||||||
Swap Agreements | $ | (4 | ) | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | (4 | ) | ||||||||||
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FAIR VALUE OF MEASUREMENTS
The following is a summary of the fair valuations according to the inputs used as of December 31, 2014 in valuing the Fund’s assets and liabilities:
Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair Value at 12/31/2014 | ||||||||||||
Investments in Securities, at Value | ||||||||||||||||
Exchange-Traded Funds | $ | 2,114 | $ | 0 | $ | 0 | $ | 2,114 | ||||||||
$ | 2,114 | $ | 0 | $ | 0 | $ | 2,114 | |||||||||
Investments in Affiliates, at Value | ||||||||||||||||
Mutual Funds | 831 | 0 | 0 | 831 | ||||||||||||
Total Investments | $ | 2,945 | $ | 0 | $ | 0 | $ | 2,945 | ||||||||
Financial Derivative Instruments - Liabilities | ||||||||||||||||
Over the counter | $ | 0 | $ | (4 | ) | $ | 0 | $ | (4 | ) | ||||||
Totals | $ | 2,945 | $ | (4 | ) | $ | 0 | $ | 2,941 |
There were no significant transfers between Level 1, 2, and 3 during the period ended December 31, 2014.
See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 23 |
Table of Contents
Schedule of Investments PIMCO RealPathTM Blend 2040 Fund
SHARES | MARKET VALUE (000S) | |||||||||||
\INVESTMENTS IN SECURITIES 75.0% | ||||||||||||
EXCHANGE-TRADED FUNDS 75.0% | ||||||||||||
Vanguard 500 Index Fund | 3,976 | $ | 755 | |||||||||
Vanguard Developed Markets Index Fund | 37,223 | 453 | ||||||||||
Vanguard Emerging Markets Stock Index Fund | 13,624 | 453 | ||||||||||
Vanguard REIT Index Fund | 2,630 | 302 | ||||||||||
Vanguard Small-Cap Index Fund | 5,405 | 302 | ||||||||||
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Total Investments in Securities (Cost $2,265) | 2,265 | |||||||||||
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SHARES | MARKET VALUE (000S) | |||||||||||
INVESTMENTS IN AFFILIATES 22.5% | ||||||||||||
MUTUAL FUNDS (a) 22.5% | ||||||||||||
PIMCO Emerging Local Bond Fund | 9,075 | $ | 76 | |||||||||
PIMCO High Yield Fund | 16,521 | 151 | ||||||||||
PIMCO Long Duration Total Return Fund | 18,875 | 226 | ||||||||||
PIMCO Real Return Asset Fund | 27,061 | 227 | ||||||||||
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Total Mutual Funds (Cost $680) | 680 | |||||||||||
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Total Investments in Affiliates (Cost $680) | 680 | |||||||||||
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Total Investments 97.5% (Cost $2,945) | $ | 2,945 | ||||||||||
Financial Derivative |
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(Cost or Premiums, net $0) | (4 | ) | ||||||||||
Other Assets and Liabilities, net 2.6% | 79 | |||||||||||
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Net Assets 100.0% | $ | 3,020 | ||||||||||
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NOTES TO SCHEDULE OF INVESTMENTS (AMOUNTS IN THOUSANDS*, EXCEPT NUMBER OF UNITS):
* | A zero balance may reflect actual amounts rounding to less than one thousand. |
(a) | Institutional Class Shares of each Fund. |
(b) FINANCIAL DERIVATIVE INSTRUMENTS: OVER THE COUNTER
SWAP AGREEMENTS:
TOTAL RETURN SWAPS ON INDICES
Counterparty | Pay/Receive (1) | Underlying Reference | # of Units | Financing Rate | Maturity Date | Notional Amount | Unrealized (Depreciation) | Swap Agreements, at Value | ||||||||||||||||||||||
Asset | Liability | |||||||||||||||||||||||||||||
CBK | Receive | BCOMTR Index | 359 | 3-Month U.S. Treasury Bill rate plus a specified spread | 02/17/2015 | $ | 75 | $ | (4 | ) | $ | 0 | $ | (4 | ) | |||||||||||||||
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Total Swap Agreements | $ | (4 | ) | $ | 0 | $ | (4 | ) | ||||||||||||||||||||||
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(1) | Receive represents that the Fund receives payments for any positive return on the underlying reference. The Fund makes payments for any negative return on such underlying reference. Pay represents that the Fund receives payments for any negative return on the underlying reference. The Fund makes payments for any positive return on such underlying reference. |
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)/pledged as of December 31, 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)/ Pledged | Net Exposure (2) | |||||||||||||||||||||||||||||||||||
CBK | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | (4 | ) | $ | (4 | ) | $ | (4 | ) | $ | 0 | $ | (4 | ) | ||||||||||||||||||||
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(2) | Net Exposure represents the net receivable/(payable) that would be due from/to the counterparty in the event of default. Exposure from OTC financial derivative instruments can only be netted across transactions governed under the same master agreement with the same legal entity. See Note 6, Principal Risks, in the Notes to Financial Statements for more information regarding master netting arrangements. |
FAIR VALUE OF FINANCIAL DERIVATIVE INSTRUMENTS
The following is a summary of the fair valuation of the Fund’s derivative instruments categorized by risk exposure. See Note 6, Principal Risks, in the Notes to Financial Statements on risks of the Fund.
Fair Values of Financial Derivative Instruments on the Statements of Assets and Liabilities as of December 31, 2014:
Derivatives not accounted for as hedging instruments | ||||||||||||||||||||||||
Commodity Contracts | Credit Contracts | Equity Contracts | Foreign Exchange Contracts | Interest Rate Contracts | Total | |||||||||||||||||||
Financial Derivative Instruments - Liabilities | ||||||||||||||||||||||||
Over the counter | ||||||||||||||||||||||||
Swap Agreements | $ | 4 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 4 | ||||||||||||
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24 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 2014 (Unaudited)
The Effect of Financial Derivative Instruments on the Statements of Operations for the Period Ended December 31, 2014:
Derivatives not accounted for as hedging instruments | ||||||||||||||||||||||||
Commodity Contracts | Credit Contracts | Equity Contracts | Foreign Exchange Contracts | Interest Rate Contracts | Total | |||||||||||||||||||
Net Realized Gain on Financial Derivative Instruments | ||||||||||||||||||||||||
Over the counter | ||||||||||||||||||||||||
Swap Agreements | $ | 4 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 4 | ||||||||||||
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Net Change in Unrealized (Depreciation) on Financial Derivative Instruments |
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Over the counter | ||||||||||||||||||||||||
Swap Agreements | $ | (4 | ) | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | (4 | ) | ||||||||||
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FAIR VALUE OF MEASUREMENTS
The following is a summary of the fair valuations according to the inputs used as of December 31, 2014 in valuing the Fund’s assets and liabilities:
Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair Value at 12/31/2014 | ||||||||||||
Investments in Securities, at Value | ||||||||||||||||
Exchange-Traded Funds | $ | 2,265 | $ | 0 | $ | 0 | $ | 2,265 | ||||||||
$ | 2,265 | $ | 0 | $ | 0 | $ | 2,265 | |||||||||
Investments in Affiliates, at Value | ||||||||||||||||
Mutual Funds | 680 | 0 | 0 | 680 | ||||||||||||
Total Investments | $ | 2,945 | $ | 0 | $ | 0 | $ | 2,945 | ||||||||
Financial Derivative Instruments - Liabilities | ||||||||||||||||
Over the counter | $ | 0 | $ | (4 | ) | $ | 0 | $ | (4 | ) | ||||||
Totals | $ | 2,945 | $ | (4 | ) | $ | 0 | $ | 2,941 |
There were no significant transfers between Level 1, 2, and 3 during the period ended December 31, 2014.
See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 25 |
Table of Contents
Schedule of Investments PIMCO RealPathTM Blend 2045 Fund
SHARES | MARKET VALUE (000s) | |||||||||||
INVESTMENTS IN SECURITIES 80.0% | ||||||||||||
EXCHANGE-TRADED FUNDS 80.0% | ||||||||||||
Vanguard 500 Index Fund | 3,976 | $ | 755 | |||||||||
Vanguard Developed Markets Index Fund | 43,426 | 529 | ||||||||||
Vanguard Emerging Markets Stock Index Fund | 15,895 | 528 | ||||||||||
Vanguard REIT Index Fund | 2,630 | 302 | ||||||||||
Vanguard Small-Cap Index Fund | 5,405 | 302 | ||||||||||
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Total Investments in Securities (Cost $2,416) | 2,416 | |||||||||||
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SHARES | MARKET VALUE (000s) | |||||||||||
INVESTMENTS IN AFFILIATES 17.5% | ||||||||||||
MUTUAL FUNDS (a) 17.5% | ||||||||||||
PIMCO Emerging Local Bond Fund | 9,075 | $ | 76 | |||||||||
PIMCO High Yield Fund | 8,260 | 76 | ||||||||||
PIMCO Long Duration Total Return Fund | 18,875 | 226 | ||||||||||
PIMCO Real Return Asset Fund | 18,041 | 151 | ||||||||||
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Total Mutual Funds (Cost $529) | 529 | |||||||||||
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Total Investments in Affiliates (Cost $529) | 529 | |||||||||||
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Total Investments 97.5% (Cost $2,945) | $ | 2,945 | ||||||||||
Financial Derivative Instruments (b) (0.1%) (Cost or Premiums, net $0) | (4 | ) | ||||||||||
Other Assets and Liabilities, net 2.6% | 79 | |||||||||||
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Net Assets 100.0% | $ | 3,020 | ||||||||||
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NOTES TO SCHEDULE OF INVESTMENTS (AMOUNTS IN THOUSANDS*, EXCEPT NUMBER OF UNITS):
* | A zero balance may reflect actual amounts rounding to less than one thousand. |
(a) | Institutional Class Shares of each Fund. |
(b) FINANCIAL DERIVATIVE INSTRUMENTS: OVER THE COUNTER
SWAP AGREEMENTS:
TOTAL RETURN SWAPS ON INDICES
Counterparty | Pay/Receive (1) | Underlying Reference | # of Units | Financing Rate | Maturity Date | Notional Amount | Unrealized (Depreciation) | Swap Agreements, at Value | ||||||||||||||||||||||||
Asset | Liability | |||||||||||||||||||||||||||||||
CBK | Receive | BCOMTR Index | 359 | 3-Month U.S. Treasury Bill rate plus a specified spread | 02/17/2015 | $ | 75 | $ | (4 | ) | $ | 0 | $ | (4 | ) | |||||||||||||||||
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Total Swap Agreements | $ | (4 | ) | $ | 0 | $ | (4 | ) | ||||||||||||||||||||||||
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(1) | Receive represents that the Fund receives payments for any positive return on the underlying reference. The Fund makes payments for any negative return on such underlying reference. Pay represents that the Fund receives payments for any negative return on the underlying reference. The Fund makes payments for any positive return on such underlying reference. |
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)/pledged as of December 31, 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 Counter | Net Market Value of OTC Derivatives | Collateral (Received)/ Pledged | Net Exposure (2) | |||||||||||||||||||||||||||||||||||
CBK | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | (4 | ) | $ | (4 | ) | $ | (4 | ) | $ | 0 | $ | (4 | ) | ||||||||||||||||||||
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(2) | Net Exposure represents the net receivable/(payable) that would be due from/to the counterparty in the event of default. Exposure from OTC financial derivative instruments can only be netted across transactions governed under the same master agreement with the same legal entity. See Note 6, Principal Risks, in the Notes to Financial Statements for more information regarding master netting arrangements. |
26 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 2014 (Unaudited)
FAIR VALUE OF FINANCIAL DERIVATIVE INSTRUMENTS
The following is a summary of the fair valuation of the Fund’s derivative instruments categorized by risk exposure. See Note 6, Principal Risks, in the Notes to Financial Statements on risks of the Fund.
Fair Values of Financial Derivative Instruments on the Statements of Assets and Liabilities as of December 31, 2014:
Derivatives not accounted for as hedging instruments | ||||||||||||||||||||||||
Commodity Contracts | Credit Contracts | Equity Contracts | Foreign Exchange Contracts | Interest Rate Contracts | Total | |||||||||||||||||||
Financial Derivative Instruments - Liabilities | ||||||||||||||||||||||||
Over the counter | ||||||||||||||||||||||||
Swap Agreements | $ | 4 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 4 | ||||||||||||
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The Effect of Financial Derivative Instruments on the Statements of Operations for the Period Ended December 31, 2014:
Derivatives not accounted for as hedging instruments | ||||||||||||||||||||||||
Commodity Contracts | Credit Contracts | Equity Contracts | Foreign Exchange Contracts | Interest Rate Contracts | Total | |||||||||||||||||||
Net Realized Gain on Financial Derivative Instruments | ||||||||||||||||||||||||
Over the counter | ||||||||||||||||||||||||
Swap Agreements | $ | 4 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 4 | ||||||||||||
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Net Change in Unrealized (Depreciation) on Financial Derivative Instruments |
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Over the counter | ||||||||||||||||||||||||
Swap Agreements | $ | (4 | ) | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | (4 | ) | ||||||||||
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FAIR VALUE MEASUREMENTS
The following is a summary of the fair valuations according to the inputs used as of December 31, 2014 in valuing the Fund’s assets and liabilities:
Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair Value at 12/31/2014 | ||||||||||||
Investments in Securities, at Value | ||||||||||||||||
Exchange-Traded Funds | $ | 2,416 | $ | 0 | $ | 0 | $ | 2,416 | ||||||||
$ | 2,416 | $ | 0 | $ | 0 | $ | 2,416 | |||||||||
Investments in Affiliates, at Value | ||||||||||||||||
Mutual Funds | 529 | 0 | 0 | 529 | ||||||||||||
Total Investments | $ | 2,945 | $ | 0 | $ | 0 | $ | 2,945 | ||||||||
Financial Derivative Instruments—Liabilities | ||||||||||||||||
Over the counter | $ | 0 | $ | (4 | ) | $ | 0 | $ | (4 | ) | ||||||
Totals | $ | 2,945 | $ | (4 | ) | $ | 0 | $ | 2,941 |
There were no significant transfers between Level 1, 2, and 3 during the period ended December 31, 2014.
See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 27 |
Table of Contents
Schedule of Investments PIMCO RealPathTM Blend 2050 Fund
SHARES | MARKET VALUE (000s) | |||||||||||
INVESTMENTS IN SECURITIES 82.5% | ||||||||||||
EXCHANGE-TRADED FUNDS 82.5% | ||||||||||||
Vanguard 500 Index Fund | 4,374 | $ | 831 | |||||||||
Vanguard Developed Markets Index Fund | 43,426 | 529 | ||||||||||
Vanguard Emerging Markets Stock Index Fund | 15,895 | 528 | ||||||||||
Vanguard REIT Index Fund | 2,630 | 302 | ||||||||||
Vanguard Small-Cap Index Fund | 5,405 | 302 | ||||||||||
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Total Investments in Securities (Cost $2,492) | 2,492 | |||||||||||
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SHARES | MARKET VALUE (000s) | |||||||||||
INVESTMENTS IN AFFILIATES 15.0% | ||||||||||||
MUTUAL FUNDS (a) 15.0% | ||||||||||||
PIMCO Emerging Local Bond Fund | 9,074 | $ | 75 | |||||||||
PIMCO High Yield Fund | 8,260 | 75 | ||||||||||
PIMCO Long Duration Total | 18,875 | 227 | ||||||||||
PIMCO Real Return Asset Fund | 9,020 | 76 | ||||||||||
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Total Mutual Funds (Cost $453) | 453 | |||||||||||
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Total Investments in Affiliates (Cost $453) | 453 | |||||||||||
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Total Investments 97.5% (Cost $2,945) | $ | 2,945 | ||||||||||
Financial Derivative Instruments (b) (0.1%) (Cost or Premiums, net $0) | (4 | ) | ||||||||||
Other Assets and Liabilities, net 2.6% | 80 | |||||||||||
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Net Assets 100.0% | $ | 3,021 | ||||||||||
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|
NOTES TO SCHEDULE OF INVESTMENTS (AMOUNTS IN THOUSANDS*, EXCEPT NUMBER OF UNITS):
* | A zero balance may reflect actual amounts rounding to less than one thousand. |
(a) | Institutional Class Shares of each Fund. |
(b) FINANCIAL DERIVATIVE INSTRUMENTS: OVER THE COUNTER
SWAP AGREEMENTS:
TOTAL RETURN SWAPS ON INDICES
Counterparty | Pay/Receive (1) | Underlying Reference | # of Units | Financing Rate | Maturity Date | Notional Amount | Unrealized (Depreciation) | Swap Agreements, at Value | ||||||||||||||||||||||
Asset | Liability | |||||||||||||||||||||||||||||
CBK | Receive | BCOMTR Index | 359 | 3-Month U.S. Treasury Bill rate plus a specified spread | 02/17/2015 | $ | 75 | $ | (4 | ) | $ | 0 | $ | (4 | ) | |||||||||||||||
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| |||||||||||||||||||||||||
Total Swap Agreements | $ | (4 | ) | $ | 0 | $ | (4 | ) | ||||||||||||||||||||||
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|
(1) | Receive represents that the Fund receives payments for any positive return on the underlying reference. The Fund makes payments for any negative return on such underlying reference. Pay represents that the Fund receives payments for any negative return on the underlying reference. The Fund makes payments for any positive return on such underlying reference. |
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)/pledged as of December 31, 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)/ Pledged | Net Exposure (2) | |||||||||||||||||||||||||||||||||||
CBK | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | (4 | ) | $ | (4 | ) | $ | (4 | ) | $ | 0 | $ | (4 | ) | ||||||||||||||||||||
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(2) | Net Exposure represents the net receivable/(payable) that would be due from/to the counterparty in the event of default. Exposure from OTC financial derivative instruments can only be netted across transactions governed under the same master agreement with the same legal entity. See Note 6, Principal Risks, in the Notes to Financial Statements for more information regarding master netting arrangements. |
28 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 2014 (Unaudited)
FAIR VALUE OF FINANCIAL DERIVATIVE INSTRUMENTS
The following is a summary of the fair valuation of the Fund’s derivative instruments categorized by risk exposure. See Note 6, Principal Risks, in the Notes to Financial Statements on risks of the Fund.
Fair Values of Financial Derivative Instruments on the Statements of Assets and Liabilities as of December 31, 2014:
Derivatives not accounted for as hedging instruments | ||||||||||||||||||||||||
Commodity Contracts | Credit Contracts | Equity Contracts | Foreign Exchange Contracts | Interest Rate Contracts | Total | |||||||||||||||||||
Financial Derivative Instruments - Liabilities | ||||||||||||||||||||||||
Over the counter | ||||||||||||||||||||||||
Swap Agreements | $ | 4 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 4 | ||||||||||||
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The Effect of Financial Derivative Instruments on the Statements of Operations for the Period Ended December 31, 2014:
Derivatives not accounted for as hedging instruments | ||||||||||||||||||||||||
Commodity Contracts | Credit Contracts | Equity Contracts | Foreign Exchange Contracts | Interest Rate Contracts | Total | |||||||||||||||||||
Net Realized Gain on Financial Derivative Instruments | ||||||||||||||||||||||||
Over the counter | ||||||||||||||||||||||||
Swap Agreements | $ | 4 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 4 | ||||||||||||
Net Change in Unrealized (Depreciation) on Financial Derivative Instruments |
| |||||||||||||||||||||||
Over the counter | ||||||||||||||||||||||||
Swap Agreements | $ | (4 | ) | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | (4 | ) |
FAIR VALUE MEASUREMENTS
The following is a summary of the fair valuations according to the inputs used as of December 31, 2014 in valuing the Fund’s assets and liabilities:
Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair Value at 12/31/2014 | ||||||||||||
Investments in Securities, at Value | ||||||||||||||||
Exchange-Traded Funds | $ | 2,492 | $ | 0 | $ | 0 | $ | 2,492 | ||||||||
$ | 2,492 | $ | 0 | $ | 0 | $ | 2,492 | |||||||||
Investments in Affiliates, at Value | ||||||||||||||||
Mutual Funds | 453 | 0 | 0 | 453 | ||||||||||||
Total Investments | $ | 2,945 | $ | 0 | $ | 0 | $ | 2,945 | ||||||||
Financial Derivative Instruments - Liabilities | ||||||||||||||||
Over the counter | $ | 0 | $ | (4 | ) | $ | 0 | $ | (4 | ) | ||||||
Totals | $ | 2,945 | $ | (4 | ) | $ | 0 | $ | 2,941 |
There were no significant transfers between Level 1, 2, and 3 during the period ended December 31, 2014.
See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 29 |
Table of Contents
Schedule of Investments PIMCO RealPath™ Blend 2055 Fund
SHARES | MARKET VALUE (000s) | |||||||||||
INVESTMENTS IN SECURITIES 82.5% | ||||||||||||
EXCHANGE-TRADED FUNDS 82.5% | ||||||||||||
Vanguard 500 Index Fund | 4,374 | $ | 831 | |||||||||
Vanguard Developed Markets Index Fund | 43,426 | 529 | ||||||||||
Vanguard Emerging Markets Stock Index Fund | 15,895 | 528 | ||||||||||
Vanguard REIT Index Fund | 2,630 | 302 | ||||||||||
Vanguard Small-Cap Index Fund | 5,405 | 302 | ||||||||||
|
| |||||||||||
Total Investments in Securities (Cost $2,492) |
| 2,492 | ||||||||||
|
|
SHARES | MARKET VALUE (000s) | |||||||||||
INVESTMENTS IN AFFILIATES 15.0 | ||||||||||||
MUTUAL FUNDS (a) 15.0% | ||||||||||||
PIMCO Emerging Local Bond Fund | 9,075 | $ | 75 | |||||||||
PIMCO High Yield Fund | 8,260 | 75 | ||||||||||
PIMCO Long Duration Total Return Fund | 18,875 | 227 | ||||||||||
PIMCO Real Return Asset Fund | 9,020 | 76 | ||||||||||
|
| |||||||||||
Total Mutual Funds (Cost $453) | 453 | |||||||||||
|
| |||||||||||
Total Investments in Affiliates (Cost $453) | 453 | |||||||||||
|
| |||||||||||
Total Investments 97.5% (Cost $2,945) | $ | 2,945 | ||||||||||
Financial Derivative Instruments (b) (0.1%) (Cost or Premiums, net $0) | (4 | ) | ||||||||||
Other Assets and Liabilities, net 2.6% | 79 | |||||||||||
|
| |||||||||||
Net Assets 100.0% | $ | 3,020 | ||||||||||
|
|
NOTES TO SCHEDULE OF INVESTMENTS (AMOUNTS IN THOUSANDS*, EXCEPT NUMBER OF UNITS):
* | A zero balance may reflect actual amounts rounding to less than one thousand. |
(a) | Institutional Class Shares of each Fund. |
(b) FINANCIAL DERIVATIVE INSTRUMENTS: OVER THE COUNTER
SWAP AGREEMENTS:
TOTAL RETURN SWAPS ON INDICES
Counterparty | Pay/Receive (1) | Underlying Reference | # of Units | Financing Rate | Maturity | Notional | Unrealized | Swap Agreements, at Value | ||||||||||||||||||||||
Asset | Liability | |||||||||||||||||||||||||||||
CBK | Receive | BCOMTR Index | 359 | 3-Month U.S. Treasury Bill rate plus a specified spread | 02/17/2015 | $ | 75 | $ | (4 | ) | $ | 0 | $ | (4 | ) | |||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||
Total Swap Agreements | $ | (4 | ) | $ | 0 | $ | (4 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
(1) | Receive represents that the Fund receives payments for any positive return on the underlying reference. The Fund makes payments for any negative return on such underlying reference. Pay represents that the Fund receives payments for any negative return on the underlying reference. The Fund makes payments for any positive return on such underlying reference. |
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)/pledged as of December 31, 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)/ Pledged | Net Exposure (2) | |||||||||||||||||||||||||||||||||||
CBK | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | (4 | ) | $ | (4 | ) | $ | (4 | ) | $ | 0 | $ | (4 | ) | ||||||||||||||||||||
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(2) | Net Exposure represents the net receivable/(payable) that would be due from/to the counterparty in the event of default. Exposure from OTC financial derivative instruments can only be netted across transactions governed under the same master agreement with the same legal entity. See Note 6, Principal Risks, in the Notes to Financial Statements for more information regarding master netting arrangements. |
FAIR VALUE OF FINANCIAL DERIVATIVE INSTRUMENTS
The following is a summary of the fair valuation of the Fund’s derivative instruments categorized by risk exposure. See Note 6, Principal Risks, in the Notes to Financial Statements on risks of the Fund.
Fair Values of Financial Derivative Instruments on the Statements of Assets and Liabilities as of December 31, 2014:
Derivatives not accounted for as hedging instruments | ||||||||||||||||||||||||
Commodity Contracts | Credit Contracts | Equity Contracts | Foreign Exchange Contracts | Interest Rate Contracts | Total | |||||||||||||||||||
Financial Derivative Instruments - Liabilities | ||||||||||||||||||||||||
Over the counter | ||||||||||||||||||||||||
Swap Agreements | $ | 4 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 4 | ||||||||||||
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|
|
|
|
|
|
30 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 2014 (Unaudited)
The Effect of Financial Derivative Instruments on the Statements of Operations for the Period Ended December 31, 2014:
Derivatives not accounted for as hedging instruments | ||||||||||||||||||||||||
Commodity Contracts | Credit Contracts | Equity Contracts | Foreign Exchange Contracts | Interest Rate Contracts | Total | |||||||||||||||||||
Net Realized Gain on Financial Derivative Instruments | ||||||||||||||||||||||||
Over the counter | ||||||||||||||||||||||||
Swap Agreements | $ | 4 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 4 | ||||||||||||
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|
|
|
|
|
|
|
|
|
| |||||||||||||
Net Change in Unrealized (Depreciation) on Financial Derivative Instruments | ||||||||||||||||||||||||
Over the counter | ||||||||||||||||||||||||
Swap Agreements | $ | (4 | ) | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | (4 | ) | ||||||||||
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|
|
|
|
|
|
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|
|
FAIR VALUE MEASUREMENTS
The following is a summary of the fair valuations according to the inputs used as of December 31, 2014 in valuing the Fund’s assets and liabilities:
Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair Value at 12/31/2014 | ||||||||||||
Investments in Securities, at Value | ||||||||||||||||
Exchange-Traded Funds | $ | 2,492 | $ | 0 | $ | 0 | $ | 2,492 | ||||||||
$ | 2,492 | $ | 0 | $ | 0 | $ | 2,492 | |||||||||
Investments in Affiliates, at Value | ||||||||||||||||
Mutual Funds | 453 | 0 | 0 | 453 | ||||||||||||
Total Investments | $ | 2,945 | $ | 0 | $ | 0 | $ | 2,945 | ||||||||
Financial Derivative Instruments - Liabilities | ||||||||||||||||
Over the counter | $ | 0 | $ | (4 | ) | $ | 0 | $ | (4 | ) | ||||||
Totals | $ | 2,945 | $ | (4 | ) | $ | 0 | $ | 2,941 |
There were no significant transfers between Level 1, 2, and 3 during the period ended December 31, 2014.
See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 31 |
Table of Contents
Schedule of Investments PIMCO RealPathTM Blend Income Fund
SHARES | MARKET VALUE (000s) | |||||||||||
INVESTMENTS IN SECURITIES 32.5% | ||||||||||||
EXCHANGE-TRADED FUNDS 32.5% | ||||||||||||
Vanguard 500 Index Fund | 1,988 | S | 377 | |||||||||
Vanguard Developed Markets | 18,611 | 227 | ||||||||||
Vanguard Emerging Markets Stock Index Fund | 4,541 | 151 | ||||||||||
Vanguard REIT Index Fund | 1,315 | 151 | ||||||||||
Vanguard Small-Cap Index Fund | 1,351 | 76 | ||||||||||
|
| |||||||||||
Total Investments in Securities (Cost $982) | 982 | |||||||||||
|
|
SHARES | MARKET VALUE (000s) | |||||||||||
INVESTMENTS IN AFFILIATES 60.0% | ||||||||||||
MUTUAL FUNDS (a) 60.0% | ||||||||||||
PIMCO Emerging Local Bond Fund | 9,075 | $ | 76 | |||||||||
PIMCO Foreign Bond Fund (U.S. Dollar-Hedged) | 28,041 | 302 | ||||||||||
PIMCO High Yield Fund | 8,260 | 75 | ||||||||||
PIMCO Long Duration Total | 18,875 | 227 | ||||||||||
PIMCO Real Return Asset Fund | 27,061 | 226 | ||||||||||
PIMCO Real Return Fund | 41,484 | 453 | ||||||||||
PIMCO Total Return Fund | 42,495 | 453 | ||||||||||
|
| |||||||||||
Total Mutual Funds (Cost $1,812) | 1,812 | |||||||||||
|
| |||||||||||
Total Investments in Affiliates (Cost $1,812) | 1,812 | |||||||||||
|
| |||||||||||
Total Investments 92.5% (Cost $2,794) | $ | 2,794 | ||||||||||
Financial Derivative Instruments (b) (0.1%) | ||||||||||||
(Cost or Premiums, net $0) | (4 | ) | ||||||||||
Other Assets and Liabilities, net 7.6% | 230 | |||||||||||
|
| |||||||||||
Net Assets 100.0% | $ | 3,020 | ||||||||||
|
|
NOTES TO SCHEDULE OF INVESTMENTS (AMOUNTS IN THOUSANDS*, EXCEPT NUMBER OF UNITS):
* | A zero balance may reflect actual amounts rounding to less than one thousand. |
(a) | Institutional Class Shares of each Fund. |
(b) FINANCIAL DERIVATIVE INSTRUMENTS: OVER THE COUNTER
SWAP AGREEMENTS:
TOTAL RETURN SWAPS ON INDICES
Counterparty | Pay/Receive (1) | Underlying Reference | # of Units | Financing Rate | Maturity Date | Notional Amount | Unrealized (Depreciation) | Swap Agreements, at Value | ||||||||||||||||||||||
Asset | Liability | |||||||||||||||||||||||||||||
CBK | Receive | BCOMTR Index | 359 | 3-Month U.S. Treasury Bill rate plus a specified spread | 02/17/2015 | $ | 75 | $ | (4 | ) | $ | 0 | $ | (4 | ) | |||||||||||||||
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|
|
|
|
| |||||||||||||||||||||||||
Total Swap Agreements | $ | (4 | ) | $ | 0 | $ | (4 | ) | ||||||||||||||||||||||
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|
|
|
|
|
(1) | Receive represents that the Fund receives payments for any positive return on the underlying reference. The Fund makes payments for any negative return on such underlying reference. Pay represents that the Fund receives payments for any negative return on the underlying reference. The Fund makes payments for any positive return on such underlying reference. |
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)/pledged as of December 31, 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)/ Pledged | Net Exposure (2) | |||||||||||||||||||||||||||||||||||
CBK | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | (4 | ) | $ | (4 | ) | $ | (4 | ) | $ | 0 | $ | (4 | ) | ||||||||||||||||||||
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(2) | Net Exposure represents the net receivable/(payable) that would be due from/to the counterparty in the event of default. Exposure from OTC financial derivative instruments can only be netted across transactions governed under the same master agreement with the same legal entity. See Note 6, Principal Risks, in the Notes to Financial Statements for more information regarding master netting arrangements. |
32 | PIMCO EQUITY SERIES | See Accompanying Notes |
Table of Contents
December 31, 2014 (Unaudited)
FAIR VALUE OF FINANCIAL DERIVATIVE INSTRUMENTS
The following is a summary of the fair valuation of the Fund’s derivative instruments categorized by risk exposure. See Note 6, Principal Risks, in the Notes to Financial Statements on risks of the Fund.
Fair Values of Financial Derivative Instruments on the Statements of Assets and Liabilities as of December 31, 2014:
Derivatives not accounted for as hedging instruments | ||||||||||||||||||||||||
Commodity Contracts | Credit Contracts | Equity Contracts | Foreign Exchange Contracts | Interest Rate Contracts | Total | |||||||||||||||||||
Financial Derivative Instruments - Liabilities | ||||||||||||||||||||||||
Over the counter | ||||||||||||||||||||||||
Swap Agreements | $ | 4 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 4 | ||||||||||||
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|
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|
|
The Effect of Financial Derivative Instruments on the Statements of Operations for the Period Ended December 31, 2014:
Derivatives not accounted for as hedging instruments | ||||||||||||||||||||||||
Commodity Contracts | Credit Contracts | Equity Contracts | Foreign Exchange Contracts | Interest Rate Contracts | Total | |||||||||||||||||||
Net Realized Gain on Financial Derivative Instruments | ||||||||||||||||||||||||
Over the counter | ||||||||||||||||||||||||
Swap Agreements | $ | 4 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 4 | ||||||||||||
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|
| |||||||||||||
Net Change in Unrealized (Depreciation) on Financial Derivative Instruments |
| |||||||||||||||||||||||
Over the counter | ||||||||||||||||||||||||
Swap Agreements | $ | (4 | ) | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | (4 | ) | ||||||||||
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|
|
|
|
|
|
|
|
|
|
FAIR VALUE MEASUREMENTS
The following is a summary of the fair valuations according to the inputs used as of December 31, 2014 in valuing the Fund’s assets and liabilities:
Category and Subcategory | Level 1 | Level 2 | Level 3 | Fair 12/31/2014 | ||||||||||||
Investments in Securities, at Value | ||||||||||||||||
Exchange-Traded Funds | $ | 982 | $ | 0 | $ | 0 | $ | 982 | ||||||||
$ | 982 | $ | 0 | $ | 0 | $ | 982 | |||||||||
Investments in Affiliates, at Value | ||||||||||||||||
Mutual Funds | 1,812 | 0 | 0 | 1,812 | ||||||||||||
Total Investments | $ | 2,794 | $ | 0 | $ | 0 | $ | 2,794 | ||||||||
Financial Derivative Instruments - Liabilities | ||||||||||||||||
Over the counter | $ | 0 | $ | (4 | ) | $ | 0 | $ | (4 | ) | ||||||
Totals | $ | 2,794 | $ | (4 | ) | $ | 0 | $ | 2,790 |
There were no significant transfers between Level 1, 2, and 3 during the period ended December 31, 2014.
See Accompanying Notes | SEMIANNUAL REPORT | DECEMBER 31, 2014 | 33 |
Table of Contents
1. ORGANIZATION
PIMCO Equity Series (the “Trust”) was established as a Delaware statutory trust on December 28, 2009. The Trust is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end management investment company. Information presented in these financial statements pertains to the Institutional Class, Administrative Class and Class A shares of the funds (each a “Fund” and collectively the “Funds”) offered by the Trust. Pacific Investment Management Company LLC (“PIMCO”) serves as the investment adviser (the “Adviser”) for the Funds.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently followed by the Trust in the preparation of its financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Each Fund is treated as an investment company under the reporting requirements of 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 Fund 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 Statements 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 Statements 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.
(b) Cash and Foreign Currency The functional and reporting currency for the Funds 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, if any, are translated into U.S. dollars at the exchange rate in effect on the transaction date. The Funds do 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 Statements of Operations. The Funds 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 Statements 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 Statements of Operations.
(c) Multiclass Operations Each class offered by the Trust 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 Fund. Class specific 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 quarterly. Net realized capital gains earned by each Fund, 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, straddles and capital loss carryforwards. Further, the character of investment income and capital gains may be different for certain
34 | PIMCO EQUITY SERIES |
Table of Contents
December 31, 2014 (Unaudited)
transactions under the two methods of accounting. Examples of characterization differences include the treatment of paydowns on mortgage-backed securities, 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 each Fund’s annual financial statements presented under U.S. GAAP.
Distributions classified as a tax basis return of capital, if any, are reflected on the accompanying 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 became effective for interim or annual periods beginning on or after December 15, 2013. The Funds have adopted the ASU as they follow the investment company reporting requirements under U.S. GAAP and its implementation did not have an impact on the Funds’ 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 for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. 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 a Fund’s 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 a Fund 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 Trust’s 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 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 a Fund’s 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 the responsibility for monitoring significant events that may materially affect the values of a Fund’s 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.
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 35 |
Table of Contents
Notes to Financial Statements (Cont.)
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 Trust’s policy is intended to result in a calculation of a Fund’s 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 a Fund 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 Fund 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 a Fund 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 | Level 1—Inputs using (unadjusted) quoted prices in active markets or exchanges for identical assets and liabilities. |
n | Level 2—Significant other observable inputs, which may include, but are not limited to, quoted prices for similar assets or liabilities in 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 3—Significant 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. |
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 material, are disclosed in the Notes to Schedule of Investments for each respective Fund.
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 a Fund’s 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, and if material, a Level 3 reconciliation and details of significant unobservable inputs, have been included in the Notes to Schedule of Investments for each respective Fund.
(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 or financial derivative instruments categorized as Level 1 and Level 2 of the fair value hierarchy are as follows:
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 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.
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
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simulation pricing models. The pricing models use inputs that are observed from actively quoted markets such as quoted prices, issuer details, indices, bid/ask spreads, interest rates, implied volatilities, 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.
Centrally cleared swaps listed or traded on a multilateral or trade facility platform, such as a registered exchange, are valued at the daily settlement price determined by the respective exchange. For centrally cleared credit default swaps the clearing facility requires its members to provide actionable price levels across complete term structures. These levels along with external third-party prices are used to produce daily settlement prices. These securities are categorized as Level 2 of the fair value hierarchy. Centrally cleared interest rate swaps are valued using a pricing model that references the underlying rates including the
overnight index swap rate and London Interbank Offered Rate (“LIBOR”) forward rate to produce the daily settlement price. These securities are categorized as Level 2 of the fair value hierarchy.
4. SECURITIES AND OTHER INVESTMENTS
(a) Investments in Securities
Exchange-Traded Funds Certain Funds may invest in exchange-traded funds (“ETFs”), which typically are index-based investment companies that hold substantially all of their assets in securities representing their specific index, but may also be actively-managed investment companies. Shares of ETFs trade throughout the day on an exchange and represent an investment in a portfolio of securities and other assets. As a shareholder of another investment company, the Funds would bear their pro rata portion of the other investment company’s expenses, including advisory fees, in addition to the expenses the Funds bear directly in connection with their own operations.
(b) Investments in Affiliates
The Fund seeks to achieve its investment objective by investing under normal circumstances substantially all of its assets in Institutional Class or Class M shares of any funds of the PIMCO Equity Series (the “Trust”) and PIMCO Funds, and in other affiliated funds, including funds of PIMCO ETF Trust, except funds of funds (“Underlying PIMCO Funds”), and unaffiliated funds that are registered under the Investment Company Act of 1940 (the “1940 Act”) (collectively, “Acquired Funds”). The Underlying PIMCO Funds are considered to be affiliated with the Funds. Each Fund 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 VIT, 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 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. The Central Funds are considered to be affiliated with the Funds. The tables below show the transactions in and earnings from investments in these affiliated Funds for the period ended December 31, 2014 (amounts in thousands†):
PIMCO RealPathTM Blend 2020 Fund | ||||||||||||||||||||||||||||||||||
Underlying PIMCO Funds | Market Value 06/30/2014 | Purchases at Cost | Proceeds from Sales | Net Realized Gain/(Loss) | Change in Unrealized Appreciation/ (Depreciation) | Market Value 12/31/2014 | Dividend Income | Realized Net Capital | ||||||||||||||||||||||||||
PIMCO Emerging Local Bond Fund | $ | 0 | $ | 76 | $ | 0 | $ | 0 | $ | 0 | $ | 76 | $ | 0 | $ | 0 | ||||||||||||||||||
PIMCO Foreign Bond Fund (U.S. Dollar-Hedged) | 0 | 226 | 0 | 0 | 0 | 226 | 0 | 0 | ||||||||||||||||||||||||||
PIMCO High Yield Fund | 0 | 151 | 0 | 0 | 0 | 151 | 0 | 0 | ||||||||||||||||||||||||||
PIMCO Long Duration Total Return Fund | 0 | 227 | 0 | 0 | 0 | 227 | 0 | 0 | ||||||||||||||||||||||||||
PIMCO Real Return Fund | 0 | 302 | 0 | 0 | 0 | 302 | 0 | 0 | ||||||||||||||||||||||||||
PIMCO Real Return Asset Fund | 0 | 302 | 0 | 0 | 0 | 302 | 0 | 0 | ||||||||||||||||||||||||||
PIMCO Total Return Fund | 0 | 453 | 0 | 0 | 0 | 453 | 0 | 0 | ||||||||||||||||||||||||||
Totals | $ | 0 | $ | 1,737 | $ | 0 | $ | 0 | $ | 0 | $ | 1,737 | $ | 0 | $ | 0 |
† | A zero balance may reflect actual amounts rounding to less than one thousand. |
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PIMCO RealPathTM Blend 2025 Fund | ||||||||||||||||||||||||||||||||||
Underlying PIMCO Funds | Market Value 06/30/2014 | Purchases at Cost | Proceeds from Sales | Net Realized Gain/(Loss) | Change in Unrealized Appreciation/ (Depreciation) | Market Value 12/31/2014 | Dividend Income | Realized Net Capital | ||||||||||||||||||||||||||
PIMCO Emerging Local Bond Fund | $ | 0 | $ | 76 | $ | 0 | $ | 0 | $ | 0 | $ | 76 | $ | 0 | $ | 0 | ||||||||||||||||||
PIMCO Foreign Bond Fund (U.S. Dollar-Hedged) | 0 | 151 | 0 | 0 | 0 | 151 | 0 | 0 | ||||||||||||||||||||||||||
PIMCO High Yield Fund | 0 | 226 | 0 | 0 | 0 | 226 | 0 | 0 | ||||||||||||||||||||||||||
PIMCO Long Duration Total Return Fund | 0 | 226 | 0 | 0 | 0 | 226 | 0 | 0 | ||||||||||||||||||||||||||
PIMCO Real Return Asset Fund | 0 | 302 | 0 | 0 | 0 | 302 | 0 | 0 | ||||||||||||||||||||||||||
PIMCO Real Return Fund | 0 | 227 | 0 | 0 | 0 | 227 | 0 | 0 | ||||||||||||||||||||||||||
PIMCO Total Return Fund | 0 | 227 | 0 | 0 | 0 | 227 | 0 | 0 | ||||||||||||||||||||||||||
Totals | $ | 0 | $ | 1,435 | $ | 0 | $ | 0 | $ | 0 | $ | 1,435 | $ | 0 | $ | 0 |
† | A zero balance may reflect actual amounts rounding to less than one thousand. |
PIMCO RealPathTM Blend 2030 Fund | ||||||||||||||||||||||||||||||||||
Underlying PIMCO Funds | Market Value 06/30/2014 | Purchases at Cost | Proceeds from Sales | Net Realized Gain/(Loss) | Change in Unrealized Appreciation/ (Depreciation) | Market Value 12/31/2014 | Dividend Income | Realized Net Capital | ||||||||||||||||||||||||||
PIMCO Emerging Local Bond Fund | $ | 0 | $ | 151 | $ | 0 | $ | 0 | $ | 0 | $ | 151 | $ | 0 | $ | 0 | ||||||||||||||||||
PIMCO Foreign Bond Fund (U.S. Dollar-Hedged) | 0 | 76 | 0 | 0 | 0 | 76 | 0 | 0 | ||||||||||||||||||||||||||
PIMCO High Yield Fund | 0 | 226 | 0 | 0 | 0 | 226 | 0 | 0 | ||||||||||||||||||||||||||
PIMCO Long Duration Total Return Fund | 0 | 226 | 0 | 0 | 0 | 226 | 0 | 0 | ||||||||||||||||||||||||||
PIMCO Real Return Asset Fund | 0 | 302 | 0 | 0 | 0 | 302 | 0 | 0 | ||||||||||||||||||||||||||
PIMCO Real Return Fund | 0 | 76 | 0 | 0 | 0 | 76 | 0 | 0 | ||||||||||||||||||||||||||
PIMCO Total Return Fund | 0 | 76 | 0 | 0 | 0 | 76 | 0 | 0 | ||||||||||||||||||||||||||
Totals | $ | 0 | $ | 1,133 | $ | 0 | $ | 0 | $ | 0 | $ | 1,133 | $ | 0 | $ | 0 |
† | A zero balance may reflect actual amounts rounding to less than one thousand. |
PIMCO RealPathTM Blend 2035 Fund | ||||||||||||||||||||||||||||||||||
Underlying PIMCO Funds | Market Value 06/30/2014 | Purchases at Cost | Proceeds from Sales | Net Realized Gain/(Loss) | Change in Unrealized Appreciation/ (Depreciation) | Market Value 12/31/2014 | Dividend Income | Realized Net Capital | ||||||||||||||||||||||||||
PIMCO Emerging Local Bond Fund | $ | 0 | $ | 151 | $ | 0 | $ | 0 | $ | 0 | $ | 151 | $ | 0 | $ | 0 | ||||||||||||||||||
PIMCO High Yield Fund | 0 | 151 | 0 | 0 | 0 | 151 | 0 | 0 | ||||||||||||||||||||||||||
PIMCO Long Duration Total Return Fund | 0 | 227 | 0 | 0 | 0 | 227 | 0 | 0 | ||||||||||||||||||||||||||
PIMCO Real Return Asset Fund | 0 | 302 | 0 | 0 | 0 | 302 | 0 | 0 | ||||||||||||||||||||||||||
Totals | $ | 0 | $ | 831 | $ | 0 | $ | 0 | $ | 0 | $ | 831 | $ | 0 | $ | 0 |
† | A zero balance may reflect actual amounts rounding to less than one thousand. |
PIMCO RealPathTM Blend 2040 Fund | ||||||||||||||||||||||||||||||||||
Underlying PIMCO Funds | Market Value 06/30/2014 | Purchases at Cost | Proceeds from Sales | Net Realized Gain/(Loss) | Change in Unrealized Appreciation/ (Depreciation) | Market Value 12/31/2014 | Dividend Income | Realized Net Capital | ||||||||||||||||||||||||||
PIMCO Emerging Local Bond Fund | $ | 0 | $ | 76 | $ | 0 | $ | 0 | $ | 0 | $ | 76 | $ | 0 | $ | 0 | ||||||||||||||||||
PIMCO High Yield Fund | 0 | 151 | 0 | 0 | 0 | 151 | 0 | 0 | ||||||||||||||||||||||||||
PIMCO Long Duration Total Return Fund | 0 | 226 | 0 | 0 | 0 | 226 | 0 | 0 | ||||||||||||||||||||||||||
PIMCO Real Return Asset Fund | 0 | 227 | 0 | 0 | 0 | 227 | 0 | 0 | ||||||||||||||||||||||||||
Totals | $ | 0 | $ | 680 | $ | 0 | $ | 0 | $ | 0 | $ | 680 | $ | 0 | $ | 0 |
† | A zero balance may reflect actual amounts rounding to less than one thousand. |
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PIMCO RealPathTM Blend 2045 Fund | ||||||||||||||||||||||||||||||||||
Underlying PIMCO Funds | Market Value 06/30/2014 | Purchases at Cost | Proceeds from Sales | Net Realized Gain/(Loss) | Change in Unrealized Appreciation/ (Depreciation) | Market Value 12/31/2014 | Dividend Income | Realized Net Capital | ||||||||||||||||||||||||||
PIMCO Emerging Local Bond Fund | $ | 0 | $ | 76 | $ | 0 | $ | 0 | $ | 0 | $ | 76 | $ | 0 | $ | 0 | ||||||||||||||||||
PIMCO High Yield Fund | 0 | 76 | 0 | 0 | 0 | 76 | 0 | 0 | ||||||||||||||||||||||||||
PIMCO Long Duration Total Return Fund | 0 | 226 | 0 | 0 | 0 | 226 | 0 | 0 | ||||||||||||||||||||||||||
PIMCO Real Return Asset Fund | 0 | 151 | 0 | 0 | 0 | 151 | 0 | 0 | ||||||||||||||||||||||||||
Totals | $ | 0 | $ | 529 | $ | 0 | $ | 0 | $ | 0 | $ | 529 | $ | 0 | $ | 0 |
† | A zero balance may reflect actual amounts rounding to less than one thousand. |
PIMCO RealPathTM Blend 2050 Fund | ||||||||||||||||||||||||||||||||||
Underlying PIMCO Funds | Market Value 06/30/2014 | Purchases at Cost | Proceeds from Sales | Net Realized Gain/(Loss) | Change in Unrealized Appreciation/ (Depreciation) | Market Value 12/31/2014 | Dividend Income | Realized Net Capital | ||||||||||||||||||||||||||
PIMCO Emerging Local Bond Fund | $ | 0 | $ | 75 | $ | 0 | $ | 0 | $ | 0 | $ | 75 | $ | 0 | $ | 0 | ||||||||||||||||||
PIMCO High Yield Fund | 0 | 75 | 0 | 0 | 0 | 75 | 0 | 0 | ||||||||||||||||||||||||||
PIMCO Long Duration Total Return Fund | 0 | 227 | 0 | 0 | 0 | 227 | 0 | 0 | ||||||||||||||||||||||||||
PIMCO Real Return Asset Fund | 0 | 76 | 0 | 0 | 0 | 76 | 0 | 0 | ||||||||||||||||||||||||||
Totals | $ | 0 | $ | 453 | $ | 0 | $ | 0 | $ | 0 | $ | 453 | $ | 0 | $ | 0 |
† | A zero balance may reflect actual amounts rounding to less than one thousand. |
PIMCO RealPathTM Blend 2055 Fund | ||||||||||||||||||||||||||||||||||
Underlying PIMCO Funds | Market Value 06/30/2014 | Purchases at Cost | Proceeds from Sales | Net Realized Gain/(Loss) | Change in Unrealized Appreciation/ (Depreciation) | Market Value 12/31/2014 | Dividend Income | Realized Net Capital | ||||||||||||||||||||||||||
PIMCO Emerging Local Bond Fund | $ | 0 | $ | 75 | $ | 0 | $ | 0 | $ | 0 | $ | 75 | $ | 0 | $ | 0 | ||||||||||||||||||
PIMCO High Yield Fund | 0 | 75 | 0 | 0 | 0 | 75 | 0 | 0 | ||||||||||||||||||||||||||
PIMCO Long Duration Total Return Fund | 0 | 227 | 0 | 0 | 0 | 227 | 0 | 0 | ||||||||||||||||||||||||||
PIMCO Real Return Asset Fund | 0 | 76 | 0 | 0 | 0 | 76 | 0 | 0 | ||||||||||||||||||||||||||
Totals | $ | 0 | $ | 453 | $ | 0 | $ | 0 | $ | 0 | $ | 453 | $ | 0 | $ | 0 |
† | A zero balance may reflect actual amounts rounding to less than one thousand. |
PIMCO RealPathTM Blend Income Fund | ||||||||||||||||||||||||||||||||||
Underlying PIMCO Funds | Market Value 06/30/2014 | Purchases at Cost | Proceeds from Sales | Net Realized Gain/(Loss) | Change in Unrealized Appreciation/ (Depreciation) | Market Value 12/31/2014 | Dividend Income | Realized Net Capital | ||||||||||||||||||||||||||
PIMCO Emerging Local Bond Fund | $ | 0 | $ | 76 | $ | 0 | $ | 0 | $ | 0 | $ | 76 | $ | 0 | $ | 0 | ||||||||||||||||||
PIMCO Foreign Bond Fund (U.S. Dollar-Hedged) | 0 | 302 | 0 | 0 | 0 | 302 | 0 | 0 | ||||||||||||||||||||||||||
PIMCO High Yield Fund | 0 | 75 | 0 | 0 | 0 | 75 | 0 | 0 | ||||||||||||||||||||||||||
PIMCO Long Duration Total Return Fund | 0 | 227 | 0 | 0 | 0 | 227 | 0 | 0 | ||||||||||||||||||||||||||
PIMCO Real Return Asset Fund | 0 | 226 | 0 | 0 | 0 | 226 | 0 | 0 | ||||||||||||||||||||||||||
PIMCO Real Return Fund | 0 | 453 | 0 | 0 | 0 | 453 | 0 | 0 | ||||||||||||||||||||||||||
PIMCO Total Return Fund | 0 | 453 | 0 | 0 | 0 | 453 | 0 | 0 | ||||||||||||||||||||||||||
Totals | $ | 0 | $ | 1,812 | $ | 0 | $ | 0 | $ | 0 | $ | 1,812 | $ | 0 | $ | 0 |
† | A zero balance may reflect actual amounts rounding to less than one thousand. |
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5. FINANCIAL DERIVATIVE INSTRUMENTS
The following disclosures contain information on how and why the Funds use financial derivative instruments, the credit-risk-related contingent features in certain financial derivative instruments, and how financial derivative instruments affect the Funds’ financial position, results of operations and cash flows. The location and fair value amounts of these instruments on the Statements of Assets and Liabilities and the realized and changes in unrealized gains and losses on the Statements of Operations, each categorized by type of financial derivative contract and related risk exposure, are included in a table in the Notes to Schedules 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 Schedules of Investments, serve as indicators of the volume of financial derivative activity for the Funds.
(a) Swap Agreements Certain Funds may invest in swap agreements. Swap agreements are bilaterally negotiated agreements between a Fund 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”). A Fund 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, 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 Statements 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 Statements of Assets and Liabilities. OTC swap payments received or paid at the beginning of the measurement period are included on the Statements 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 Statements 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 Statements of Operations. Net periodic payments received or paid by a Fund are included as part of realized gains or losses on the Statements 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 Statements 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.
A Fund’s 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 contract’s remaining life, to the extent that amount is positive. The risk is mitigated by having a master netting arrangement between a Fund and the counterparty and by the posting of collateral to a Fund to cover a Fund’s exposure to the counterparty.
Total Return Swap Agreements Certain Funds 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 and on a fixed or variable interest rate. Total return swap agreements may involve commitments to pay interest in 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, a Fund would receive payments based on any positive total return and would owe payments in the event of a negative total return. As the payer, a Fund would owe payments on any net positive total return, and would receive payments in the event of a negative total return.
6. PRINCIPAL RISKS
In the normal course of business, the Funds (or Acquired Funds) trade financial instruments and enter 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
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perform (credit and counterparty risk). See below for a detailed description of select principal risks. For a more comprehensive list of potential risks the Funds may be subject to, please see the Important Information About the Funds.
Investments in Mutual Funds To the extent that certain Funds invest substantially all of their respective assets in Acquired Funds, the risks associated with investing in these Funds will be closely related to the risks associated with the securities and other investments held by the Acquired Funds. The ability of the Funds to achieve their respective investment objectives may depend upon the ability of the Acquired Funds to achieve their respective investment objectives. There can be no assurance that the investment objective of any Acquired Fund will be achieved. The net asset value of each Fund will fluctuate in response to changes in the respective net asset values of the Acquired Funds in which it invests. The extent to which the investment performance and risks associated with the Funds correlate to those of a particular Acquired Fund will depend upon the extent to which the assets of the Funds are allocated from time to time for investment in the Acquired Funds, which will vary.
Investing in Acquired Funds involves certain additional expenses and tax results that would not be present in a direct investment in the Acquired Funds.
The investment performance depends upon how its assets are allocated and reallocated according to each Fund’s asset allocation targets and ranges. A principal risk of investing in each Fund is that PIMCO, as the investment adviser, will make less than optimal or poor asset allocation decisions. PIMCO attempts to identify investment allocations for the Acquired Funds that will provide consistent, quality performance for the Funds, but there is no guarantee that such allocation techniques will produce the desired results.
In the normal course of business the Acquired Funds trade financial instruments, and enter into financial transactions where risk of potential loss exists due to changes in the market (market risk), or failure or inability of the other party to a transaction to perform (credit and counterparty risk).
Market Risks A Fund’s (or Acquired Fund’s) investments in financial derivatives and other financial instruments expose the Fund 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 a Fund (or Acquired Fund) 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 a Fund may lose money if these changes are not anticipated by Fund management. A Fund 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 security’s 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). At present, the U.S. is experiencing historically low interest rates. This, combined with recent economic recovery and the end of the Fed’s quantitative easing program in October 2014, may 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 a Fund to lose value. If a Fund lost enough value, the Fund could face increased redemptions by shareholders, which could further impair its performance.
Certain Funds (or certain Acquired Funds) 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 sanctions—which may impact companies in many sectors, including
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 41 |
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energy, financial services and defense, among others—may negatively impact a Fund’s performance and/or ability to achieve its investment objective. The Russian securities market is characterized by limited volume of trading, resulting in difficulty in obtaining accurate prices and trading. The Russian securities market, as compared to U.S. markets, has significant price volatility, less liquidity, a smaller market capitalization and a smaller number of traded securities. There may be little publicly available information about issuers. Settlement, clearing and registration of securities transactions are subject to risks because of registration systems that may not be subject to effective government supervision. This may result in significant delays or problems in registering the transfer of securities. Russian securities laws may not recognize foreign nominee accounts held with a custodian bank, and therefore the custodian may be considered the ultimate owner of securities they hold for their clients. Ownership of securities issued by Russian companies is recorded by companies themselves and by registrars instead of through a central registration system. It is possible that the ownership rights of a Fund could be lost through fraud or negligence. While applicable Russian regulations impose liability on registrars for losses resulting from their errors, it may be difficult for a Fund to enforce any rights it may have against the registrar or issuer of the securities in the event of loss of share registration. Adverse currency exchange rates are a risk and there may be a lack of available currency hedging instruments. Investments in Russia may be subject to the risk of nationalization or expropriation of assets. Oil, natural gas, metals, and timber account for a significant portion of Russia’s exports, leaving the country vulnerable to swings in world prices.
If a Fund (or Acquired Fund) invests directly in foreign (non-U.S.) currencies or in securities that trade in, and receive revenues in, foreign (non-U.S.) currencies, or in financial derivatives that provide exposure to foreign (non-U.S.) currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund (or Acquired Fund), or, in the case of hedging positions, that the Fund’s (or Acquired Fund’s) 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, a Fund’s (or Acquired Fund’s) investments in foreign currency-denominated securities may reduce the returns of the Fund (or Acquired Fund).
A Fund’s (or Acquired Fund’s) investments in commodity-linked financial derivative instruments may subject the Fund to greater market price volatility 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 A Fund (or Acquired Fund) will be exposed to credit risk to parties with whom it trades and will also bear the risk of settlement default. A Fund (or Acquired Fund) minimizes concentrations of credit risk by undertaking transactions with a large number of customers and counterparties on recognized and reputable exchanges. A Fund (or Acquired Fund) 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, a Fund (or Acquired Fund) may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund (or Acquired Fund) has unsettled or open transactions will default. Financial assets, which potentially expose a Fund to counterparty risk, consist principally of cash due from counterparties and investments. PIMCO, as the Adviser, minimizes counterparty risks to the Funds 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 a Fund (or Acquired Fund) exceed a predetermined threshold agreed to with the counterparty, such counterparty shall advance collateral to the Fund (or Acquired Fund) in the form of cash or cash equivalents equal in value to the unpaid amount owed to the Fund (or Acquired Fund). A Fund (or Acquired Fund) 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 a Fund (or Acquired Fund) subsequently decreases, the Fund (or Acquired Fund) would be required to return to the counterparty all or a portion of the collateral previously advanced to the Fund (or Acquired Fund).
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 a Fund 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.
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Master Netting Arrangements A Fund may be 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 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 a Fund 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 Statements 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 Statements 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. A Fund’s 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 a Fund 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 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 transactions by and between a Fund 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 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 U.S., counterparty risk is significantly reduced as creditors of the futures broker do not have claim to Fund assets in the segregated account. Additionally, portability of exposure in the event of default further reduces risk to the Funds. 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 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 a Fund 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 Schedule of Investments.
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 43 |
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Notes to Financial Statements (Cont.)
7. 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 investment advisory contract. The Adviser receives a monthly fee from each Fund 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 as noted in the table below.
(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 class’s 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 Investment Advisory and Supervisory and Administrative Fees for all classes are charged at an annual rate as noted in the following table:
Investment Advisory Fee | Supervisory and Administrative Fee | |||||||||||||||||||
Fund Name | All Classes | Institutional Class | Administrative Class | Class A | ||||||||||||||||
PIMCO RealPathTM Blend 2020 Fund | 0.01% | 0.02% | 0.02% | 0.27% | ||||||||||||||||
PIMCO RealPathTM Blend 2025 Fund | 0.01% | 0.02% | 0.02% | 0.27% | ||||||||||||||||
PIMCO RealPathTM Blend 2030 Fund | 0.02% | 0.02% | 0.02% | 0.27% | ||||||||||||||||
PIMCO RealPathTM Blend 2035 Fund | 0.03% | 0.02% | 0.02% | 0.27% | ||||||||||||||||
PIMCO RealPathTM Blend 2040 Fund | 0.03% | 0.02% | 0.02% | 0.27% | ||||||||||||||||
PIMCO RealPathTM Blend 2045 Fund | 0.03% | 0.02% | 0.02% | 0.27% | ||||||||||||||||
PIMCO RealPathTM Blend 2050 Fund | 0.03% | 0.02% | 0.02% | 0.27% | ||||||||||||||||
PIMCO RealPathTM Blend 2055 Fund | 0.03% | 0.02% | 0.02% | 0.27% | ||||||||||||||||
PIMCO RealPathTM Blend Income Fund | 0.01% | 0.02% | 0.02% | 0.27% |
(c) Distribution and Servicing Fees PIMCO Investments LLC (“PI”), a wholly-owned subsidiary of PIMCO, serves as the distributor (“Distributor”) of the Trust’s shares.
The Trust has adopted separate Distribution and Servicing Plans with respect to the Class A, Class C and Class R shares of the Trust pursuant to Rule 12b-1 under the Act. In connection with the distribution of Class C and Class R shares of the Trust, the Distributor receives distribution fees from the Trust of up to 0.75% for Class C shares and 0.25% for Class R shares, and in connection with personal services rendered to Class A, Class C and Class R shareholders and the maintenance of such shareholder accounts, the Distributor receives servicing fees from the Trust of up to 0.25% for each of Class A, Class C and Class R shares (percentages reflect annual rates of the average daily net assets attributable to the applicable class).
The Trust has adopted a Distribution and Servicing Plan with respect to the Class D shares of each Fund pursuant to Rule 12b-1 under the Act (the “Class D Plan”). Under the terms of the Class D Plan, a Fund is permitted to compensate the Distributor out of the assets attributable to the Class D shares of the Fund, in an amount up to 0.25% on an annual basis of the average daily net assets of the Fund’s Class D shares for providing, or procuring through financial intermediaries, distribution, shareholder services, and/or maintenance of shareholder accounts with respect to Class D shareholders of the Fund, some of which may be deemed to be primarily intended to result in the sale of Class D shares.
The Trust has adopted a Distribution and Servicing Plan with respect to the Administrative Class shares of each Fund pursuant to Rule 12b-1 under the Act (the “Administrative Class Plan”). Under the terms of the Administrative Class Plan, a Fund may compensate the Distributor for providing, or procuring through financial intermediaries, distribution, administrative, recordkeeping, shareholder and/or related services with respect to Administrative Class shares. The Administrative Class Plan permits a Fund to make total payments at an annual rate of up to 0.25% of the average daily net assets attributable to the Administrative Class shares.
The Trust paid distribution and servicing fees at effective rates as set forth in the following table (calculated as a percentage of each Fund’s average daily net assets attributable to each class):
Distribution Fee | Servicing Fee | |||||||||
Administrative Class | — | 0.25% | ||||||||
Class A | — | 0.25% |
The Distributor also received the proceeds of the initial sales charges paid by the shareholders upon the purchase of Class A shares and the contingent deferred sales charges paid by the shareholders upon certain redemptions of Class A shares. For the period ended December 31, 2014, the Distributor received $208,916 representing commissions (sales charges) and contingent deferred sales charges from the Trust.
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December 31, 2014 (Unaudited)
(d) Fund Expenses PIMCO provides or procures supervisory and administrative services for shareholders and also bears the costs of various third-party services required by the Funds, including audit, custodial, portfolio accounting, legal, transfer agency and printing costs. The Trust is responsible for the following expenses: (i) salaries and other compensation of any of the Trust’s executive officers and employees who are not officers, directors, stockholders or employees of PIMCO or its subsidiaries or affiliates; (ii) taxes and governmental fees; (iii) brokerage fees and commissions and other portfolio transaction expenses; (iv) costs of borrowing money, including interest expense; (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, which include service fees payable with respect to the Administrative Class Shares, and may include certain other expenses as permitted by the Trust’s Multi-Class Plan adopted pursuant to Rule 18f-3 under the Act and subject to review and approval by the Trustees. The ratio of expenses to average net assets per share class, as disclosed on the Financial Highlights, may differ from the annual fund operating expenses per share class as disclosed in the Prospectus for the reasons set forth above.
Each unaffiliated Trustee receives an annual retainer of $60,000, plus $4,750 for each Board of Trustees meeting attended in person, $375 ($750 in the case of the audit committee chair with respect to audit committee meetings) for each committee meeting attended and $750 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 $7,500 and each other committee chair receives an additional annual retainer of $750.
These expenses are allocated on a pro rata basis to each Fund of the Trust according to its 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 agreed to waive a portion of the Funds’ Supervisory and Administrative Fees in each Fund’s first fiscal year, to the extent that the payment of each Fund’s pro rata share of organizational expenses and Trustee Fees cause the actual expense ratio to rise above the rates disclosed in the then-current prospectus plus 0.0049% (calculated as a percentage of each Fund’s average daily net assets attributable to each class).
PIMCO may be reimbursed for these waived amounts in future periods, not to exceed thirty-six months after the waiver. Expenses that have
been waived may still be reimbursed by the Administrator, to the extent the Fund’s annualized total portfolio operating expenses plus the amount reimbursed does not exceed the operating expense limitation. There were no recoverable amounts to PIMCO at December 31, 2014.
(f) Acquired Fund Fees and Expenses The Underlying PIMCO Fund expenses for the Funds are based upon an allocation of a Fund’s assets among the Underlying PIMCO Funds and upon the total annual operating expenses of the Institutional Class shares of these Underlying PIMCO Funds. Underlying PIMCO Fund expenses will vary with changes in the expenses of the Underlying PIMCO Funds, as well as the allocation of a Fund’s assets.
8. RELATED PARTY TRANSACTIONS
The Adviser, Administrator, and Distributor are related parties. Fees payable to these parties are disclosed in Note 7 and the accrued related party fee amounts are disclosed on the Statements of Assets and Liabilities.
9. GUARANTEES AND INDEMNIFICATIONS
Under the Trust’s organizational documents, each Trustee or officer of the Trust is indemnified and each employee or other agent of the Trust (including the Trust’s investment manager) may be indemnified, to the extent permitted by the Act, against certain liabilities that may arise out of performance of their duties to the Funds. Additionally, in the normal course of business, the Funds enter into contracts that contain a variety of indemnification clauses. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, the Funds have not had prior claims or losses pursuant to these contracts.
10. PURCHASES AND SALES OF SECURITIES
The length of time a Fund has held a particular security is not generally a consideration in investment decisions. A change in the securities held by a Fund is known as “portfolio turnover.” Each Fund 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 a Fund, 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 a Fund’s performance. The portfolio turnover rates are reported in the Financial Highlights.
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 45 |
Table of Contents
Notes to Financial Statements (Cont.)
Purchases and sales of securities (excluding short-term investments) for the period ended December 31, 2014, were as follows (amounts in thousands†):
U.S. Government/Agency | All Other | |||||||||||||||||
Fund Name | Purchases | Sales | Purchases | Sales | ||||||||||||||
PIMCO RealPathTM Blend 2020 Fund | $ | 0 | $ | 0 | $ | 2,945 | $ | 0 | ||||||||||
PIMCO RealPathTM Blend 2025 Fund | 0 | 0 | 2,945 | 0 | ||||||||||||||
PIMCO RealPathTM Blend 2030 Fund | 0 | 0 | 2,945 | 0 | ||||||||||||||
PIMCO RealPathTM Blend 2035 Fund | 0 | 0 | 2,945 | 0 | ||||||||||||||
PIMCO RealPathTM Blend 2040 Fund | 0 | 0 | 2,945 | 0 | ||||||||||||||
PIMCO RealPathTM Blend 2045 Fund | 0 | 0 | 2,945 | 0 | ||||||||||||||
PIMCO RealPathTM Blend 2050 Fund | 0 | 0 | 2,945 | 0 | ||||||||||||||
PIMCO RealPathTM Blend 2055 Fund | 0 | 0 | 2,945 | 0 | ||||||||||||||
PIMCO RealPathTM Blend Income Fund | 0 | 0 | 2,794 | 0 |
† | A zero balance may reflect actual amounts rounding to less than one thousand. |
11. SHARES OF BENEFICIAL INTEREST
The Trust may issue an unlimited number of shares of beneficial interest with a $0.0001 par value. Changes in shares of beneficial interest were as follows (shares and amounts in thousands†):
PIMCO 2020 Fund (1) | PIMCO 2025 Fund (2) | PIMCO 2030 Fund (3) | PIMCO 2035 Fund (4) | |||||||||||||||||||||||||||||||||||||
Period from 12/31/2014 to 12/31/2014 | Period from 12/31/2014 to 12/31/2014 | Period from 12/31/2014 to 12/31/2014 | Period from 12/31/2014 to 12/31/2014 | |||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||
Receipts for shares sold | ||||||||||||||||||||||||||||||||||||||||
Institutional Class | 300 | $ | 3,000 | 300 | $ | 3,000 | 300 | $ | 3,000 | 300 | $ | 3,000 | ||||||||||||||||||||||||||||
Administrative Class | 1 | 10 | 1 | 10 | 1 | 10 | 1 | 10 | ||||||||||||||||||||||||||||||||
Class A | 1 | 10 | 1 | 10 | 1 | 10 | 1 | 10 | ||||||||||||||||||||||||||||||||
Issued as reinvestment of distributions | ||||||||||||||||||||||||||||||||||||||||
Institutional Class | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||
Administrative Class | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||
Class A | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||
Cost of shares redeemed | ||||||||||||||||||||||||||||||||||||||||
Institutional Class | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||
Administrative Class | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||
Class A | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||
Net increase (decrease) resulting from Fund share transactions | 302 | $ | 3,020 | 302 | $ | 3,020 | 302 | $ | 3,020 | 302 | $ | 3,020 |
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December 31, 2014 (Unaudited)
PIMCO 2040 Fund (5) | PIMCO 2045 Fund (6) | PIMCO 2050 Fund (7) | PIMCO 2055 Fund (8) | PIMCO Income Fund (9) | ||||||||||||||||||||||||||||||||||||||||||||||
Period from 12/31/2014 to 12/31/2014 | Period from 12/31/2014 to 12/31/2014 | Period from 12/31/2014 to 12/31/2014 | Period from 12/31/2014 to 12/31/2014 | Period from 12/31/2014 to 12/31/2014 | ||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||
Receipts for shares sold | ||||||||||||||||||||||||||||||||||||||||||||||||||
Institutional Class | 300 | $ | 3,000 | 300 | $ | 3,000 | 300 | $ | 3,001 | 300 | $ | 3,000 | 300 | $ | 3,000 | |||||||||||||||||||||||||||||||||||
Administrative Class | 1 | 10 | 1 | 10 | 1 | 10 | 1 | 10 | 1 | 10 | ||||||||||||||||||||||||||||||||||||||||
Class A | 1 | 10 | 1 | 10 | 1 | 10 | 1 | 10 | 1 | 10 | ||||||||||||||||||||||||||||||||||||||||
Issued as reinvestment of distributions | ||||||||||||||||||||||||||||||||||||||||||||||||||
Institutional Class | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||
Administrative Class | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||
Class A | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||
Cost of shares redeemed | ||||||||||||||||||||||||||||||||||||||||||||||||||
Institutional Class | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||
Administrative Class | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||
Class A | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||||||||
Net increase (decrease) resulting from Fund share transactions | 302 | $ | 3,020 | 302 | $ | 3,020 | 302 | $ | 3,021 | 302 | $ | 3,020 | 302 | $ | 3,020 |
(1) | As of December 31, 2014, one shareholder owned 10% or more of the total Fund’s outstanding shares comprising 99% of the Fund, and the shareholder is a related party of the Fund.* |
(2) | As of December 31, 2014, one shareholder owned 10% or more of the total Fund’s outstanding shares comprising 99% of the Fund, and the shareholder is a related party of the Fund.* |
(3) | As of December 31, 2014, one shareholder owned 10% or more of the total Fund’s outstanding shares comprising 99% of the Fund, and the shareholder is a related party of the Fund.* |
(4) | As of December 31, 2014, one shareholder owned 10% or more of the total Fund’s outstanding shares comprising 99% of the Fund, and the shareholder is a related party of the Fund.* |
(5) | As of December 31, 2014, one shareholder owned 10% or more of the total Fund’s outstanding shares comprising 99% of the Fund, and the shareholder is a related party of the Fund.* |
(6) | As of December 31, 2014, one shareholder owned 10% or more of the total Fund’s outstanding shares comprising 99% of the Fund, and the shareholder is a related party of the Fund.* |
(7) | As of December 31, 2014, one shareholder owned 10% or more of the total Fund’s outstanding shares comprising 99% of the Fund, and the shareholder is a related party of the Fund.* |
(8) | As of December 31, 2014, one shareholder owned 10% or more of the total Fund’s outstanding shares comprising 99% of the Fund, and the shareholder is a related party of the Fund.* |
(9) | As of December 31, 2014, one shareholder owned 10% or more of the total Fund’s outstanding shares comprising 99% of the Fund, and the shareholder is a related party of the Fund.* |
* | 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. |
† | A zero balance may reflect actual amounts rounding to less than one thousand. |
12. 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 against it.
13. FEDERAL INCOME TAX MATTERS
Each Fund 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 Funds’ tax positions for all open tax years. As of December 31, 2014, the Funds have recorded no liability for net unrecognized tax benefits relating to uncertain income tax positions they have taken or expect to take in future tax returns.
The Funds file U.S. tax returns. While the statute of limitations remains open to examine the Funds’ U.S. tax returns filed for the fiscal years from 2011-2013, no examinations are in progress or anticipated at this time. The Funds are 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.
The Consolidated Funds may gain exposure to the commodities markets primarily through index-linked notes, and may invest in other commodity-linked derivative investments, including commodity swap agreements, options, futures contracts, options on futures contracts and foreign funds investing in similar commodity-lined derivatives.
One of the requirements for favorable tax treatment as a regulated investment company under the Code is that a Fund must derive at least 90% of its gross income from certain qualifying sources of income. The IRS has issued a revenue ruling which holds that income derived from commodity index-linked swaps is not qualifying income under Subchapter M of the Code. The IRS has also issued private letter rulings in which the IRS specifically concluded that income from certain commodity index-linked notes is qualifying income. The IRS has also issued private rulings in which the IRS specifically concluded that income derived from investment in a subsidiary, which invests primarily in commodity-linked swaps, will also be
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 47 |
Table of Contents
Notes to Financial Statements (Cont.)
December 31, 2014 (Unaudited)
qualifying income. Based on the reasoning in such rulings, each Fund will continue to seek to gain exposure to the commodity markets primarily through investments in commodity-linked notes and through any investments in its Subsidiary.
It should be noted, however, that the IRS currently has suspended the issuance of such rulings pending further review. There can be no assurance that the IRS will not change its position that income derived from commodity-linked notes and wholly-owned subsidiaries is qualifying income. Furthermore, the tax treatment of commodity-linked notes, other commodity-linked derivatives, and a Fund’s investments in its Subsidiary may otherwise be adversely affected by future legislation, Treasury Regulations and/or guidance issued by the IRS. Such developments could affect the character, timing and/or amount of the Fund’s taxable income or any distributions made by the Fund or result in the inability of the Fund to operate as described in its Prospectus.
If, during a taxable year, the Subsidiary’s taxable losses (and other deductible items) exceed its income and gains, the net loss will not pass through to the Fund as a deductible amount for income tax purposes. Note that the loss from the Subsidiary’s taxable gains exceed its losses and other deductible items during a taxable year, the net gain will pass through to the Fund as income for Federal income tax purposes.
As of December 31, 2014, the aggregate cost and the net unrealized appreciation/(depreciation) of investments for federal income tax purposes are as follows (amounts in thousands†):
Fund Name | Federal Tax Cost | Aggregate Gross Unrealized Appreciation | Aggregate Gross Unrealized (Depreciation) | Net Unrealized Appreciation/ (Depreciation) (1) | ||||||||||||||
PIMCO RealPathTM Blend 2020 Fund | $ | 2,945 | $ | 0 | $ | 0 | $ | 0 | ||||||||||
PIMCO RealPathTM Blend 2025 Fund | 2,945 | 0 | 0 | 0 | ||||||||||||||
PIMCO RealPathTM Blend 2030 Fund | 2,945 | 0 | 0 | 0 | ||||||||||||||
PIMCO RealPathTM Blend 2035 Fund | 2,945 | 0 | 0 | 0 | ||||||||||||||
PIMCO RealPathTM Blend 2040 Fund | 2,945 | 0 | 0 | 0 | ||||||||||||||
PIMCO RealPathTM Blend 2045 Fund | 2,945 | 0 | 0 | 0 | ||||||||||||||
PIMCO RealPathTM Blend 2050 Fund | 2,945 | 0 | 0 | 0 | ||||||||||||||
PIMCO RealPathTM Blend 2055 Fund | 2,945 | 0 | 0 | 0 | ||||||||||||||
PIMCO RealPathTM Blend Income Fund | 2,794 | 0 | 0 | 0 |
(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. |
† | A zero balance may reflect actual amounts rounding to less than one thousand. |
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Glossary: (abbreviations that may be used in the preceding statements)
(Unaudited)
Counterparty Abbreviations: | ||
CBK | Citibank N.A. | |
Currency Abbreviations: | ||
USD (or $) | United States Dollar | |
Index Abbreviations: | ||
BCOMTR | Bloomberg Commodity Index Total Return | |
Other Abbreviations: | ||
REIT | Real Estate Investment Trust |
SEMIANNUAL REPORT | DECEMBER 31, 2014 | 49 |
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Approval of Renewal of the Investment Advisory Contract and Second Amended and Restated Supervision and Administration Agreement
Approval of the Advisory Contract and Second Amended and Restated Supervision and Administration Agreement for PIMCO RealPathTM Blend Income Fund, PIMCO RealPathTM Blend 2020 Fund, PIMCO RealPathTM Blend 2025 Fund, PIMCO RealPathTM Blend 2030 Fund, PIMCO RealPathTM Blend 2035 Fund, PIMCO RealPathTM Blend 2040 Fund, PIMCO RealPathTM Blend 2045 Fund, PIMCO RealPathTM Blend 2050 Fund, PIMCO RealPathTM Blend 2055 Fund, PIMCO International Dividend Fund and PIMCO U.S. Dividend Fund
At a meeting held on August 13, 2014, the Board of Trustees (the “Board”) of PIMCO Equity Series (the “Trust”), including all of the independent Trustees, approved the Investment Advisory Contract and Second Amended and Restated Supervision and Administration Agreement (the “Supervision and Administration Agreement” and together with the Investment Advisory Contract, the “Agreements”) with Pacific Investment Management Company LLC (“PIMCO”), on behalf of the Trust’s series (the “Funds”), for an additional one-year term through August 31, 2015.
At a meeting held on November 5, 2014, the Board, including all of the independent Trustees, approved the Investment Advisory Contract (the “New Funds’ Investment Advisory Contract”) and the Second Amended and Restated Supervision and Administration Agreement (the “New Funds’ Supervision and Administration Agreement” and together with the New Funds Investment Advisory Contract, the “New Funds’ Agreements”) with PIMCO, on behalf of PIMCO RealPathTM Blend Income Fund, PIMCO RealPathTM Blend 2020 Fund, PIMCO RealPathTM Blend 2025 Fund, PIMCO RealPathTM Blend 2030 Fund, PIMCO RealPathTM Blend 2035 Fund, PIMCO RealPathTM Blend 2040 Fund, PIMCO RealPathTM Blend 2045 Fund, PIMCO RealPathTM Blend 2050 Fund, PIMCO RealPathTM Blend 2055 Fund, PIMCO International Dividend Fund and PIMCO U.S. Dividend Fund (the “New Funds”), for an initial two-year term.
The information, material factors and conclusions that formed the basis for the Board’s approvals are described below.
1. INFORMATION RECEIVED
(a) Materials Reviewed: During the course of each year, the Trustees receive a wide variety of materials relating to the services provided by PIMCO. At each of its quarterly meetings, the Board reviews the Funds’ investment performance and a significant amount of information relating to fund operations, including the Funds’ compliance program, shareholder services, valuation, custody, distribution, and other information relating to the nature, extent and quality of services provided by PIMCO to the Trust. In considering whether to approve renewal of the Agreements, the Board also reviewed supplementary information, including, but not limited to, comparative industry data with regard to investment performance, advisory and supervisory and administrative fees and expenses, financial and profitability information regarding PIMCO, information about the personnel providing investment management services, other advisory services and supervisory and administrative services to the Funds, and information about the fees charged and services provided to other clients with
similar investment mandates as the Funds (where applicable). The Board also reviewed material provided by counsel to the Trust and the independent Trustees, which included, among other things, memoranda outlining legal duties of the Board in considering the continuation of the Agreements.
In considering whether to approve the New Funds’ Agreements, the Board reviewed materials provided by PIMCO, which included, among other things, comparative industry data with regard to expense ratios of funds with investment objectives and policies similar to those of the New Funds. The Board also reviewed material provided by counsel to the Trust and the independent Trustees, which included, among other things, a memorandum outlining legal duties of the Board. The Board also reviewed information about the personnel who would be providing investment management services, other advisory services and supervisory and administrative services to the New Funds.
(b) Review Process: In connection with the renewal of the Agreements, the Board reviewed written materials prepared by PIMCO in response to requests from counsel to the Trust. The Board also requested and received assistance and advice regarding applicable legal standards from counsel to the Trust and the independent Trustees, and reviewed comparative fee and performance data prepared at the Board’s request by Lipper, Inc. (“Lipper”), an independent provider of investment company performance and fee and expense data. The Board also heard oral presentations on matters related to the Agreements and met both as a full Board and as the independent Trustees, without management present, at the August 13, 2014 meeting. The independent Trustees also conducted a telephonic meeting with counsel to the Trust and the independent Trustees on August 5, 2014 to discuss the materials presented. In addition, the independent Trustees requested and received from PIMCO additional information including, but not limited to, information related to fund profitability and comparative performance information.
In connection with the approval of the New Funds’ Agreements, the Board reviewed written materials prepared by PIMCO, which included, among other things, comparative fee data for funds in the appropriate Lipper peer group. The Board also heard oral presentations on matters related to the New Funds’ Agreements at the November 5, 2014 meeting.
The approval determinations were made on the basis of each Trustee’s business judgment after consideration of all the information presented. Individual Trustees may have given different weights to certain factors and assigned various degrees of materiality to information received in connection with the approval process. In deciding to approve the
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renewal of the Agreements or to approve the New Funds’ Agreements, the Board did not identify any single factor or particular information that, in isolation, was controlling. This summary describes the most important, but not all, of the factors considered by the Board.
2. NATURE, EXTENT AND QUALITY OF SERVICES
(a) PIMCO, its Personnel, and Resources: The Board considered the depth and quality of PIMCO’s investment management process, including: the experience, capability and integrity of its senior management and other personnel; the overall financial strength and stability of its organization; and the ability of its organizational structure to address changes in assets under management. The Board also considered the various services in addition to portfolio management that PIMCO provides under the Investment Advisory Contract. The Board noted that PIMCO makes available to its investment professionals a variety of resources and systems relating to investment management, compliance, trading, performance and portfolio accounting. The Board also noted that PIMCO hired many seasoned equity professionals at senior levels and continues to invest in its global infrastructure. The Board considered PIMCO’s commitment to investing in information technology supporting investment management and compliance, as well as PIMCO’s continuing efforts to attract and retain qualified personnel, including personnel with relevant equities experience, and to maintain and enhance its resources and systems. The Board considered PIMCO’s policies, procedures and systems to reasonably assure compliance with applicable laws and regulations and its commitment to these programs; its oversight of matters that may involve conflicts of interest between the Funds’ investments and those of other accounts; and its efforts to keep the Trustees informed about matters relevant to the Funds and their shareholders.
The Trustees considered the steps that PIMCO has taken in recent years with respect to active management of counterparty risk, such as implementing procedures requiring daily collateral adjustments and frequent communication between credit analysts and the counterparty risk committee, which oversees counterparty risk on a firm-wide basis, continually evaluating requests to add or remove approved counterparties as market needs and conditions warrant. The Trustees considered that, over the last several years, PIMCO has continued to strengthen the process it uses to assess the financial stability of broker-dealers with which the Funds do business, to manage collateral and to protect portfolios from an unforeseen deterioration in the creditworthiness of trading counterparties. The Trustees noted that, consistent with its fiduciary duty, PIMCO executes transactions through a competitive best execution process and uses counterparties that meet its stringent and monitored criteria. The Trustees also considered that PIMCO’s collateral management team utilizes the counterparty risk system to analyze portfolio level exposure and collateral being exchanged with counterparties.
The Trustees also considered new services and service enhancements that PIMCO has implemented since the Agreements were last renewed in 2013, including, but not limited to, constructing and moving into a new global headquarters in Newport Beach in May 2014; investing significant resources into developing its global portfolio management expertise; expanding PIMCO’s technology team and investing in technology, with a focus on projects that increase capacity and investment management stability; engaging in detailed preparation efforts for the potential consequences of an unanticipated financial crisis or global liquidity vacuum; focusing on global business continuity program management; developing appropriate and scalable infrastructure to support equity trading, including PIMCO’s considerable investment in enhancing and upgrading its systems and services to allow for equity investment in various types of markets and transactions, in the U.S. and abroad, and PIMCO’s significant investments in human and technological resources in order to provide these enhanced services; investing in additional personnel with fund operations expertise, including additional accounting, financial reporting, pricing and tax resources; and continuing to develop the PIMCO Accounting Yield Application (or PAY), which provides yield and income reporting, and the rollout of the Pricing Portal, which is a web-based workflow application that will automate the daily pricing review process, improve communications among stakeholders and enhance the ability to identify pricing variance and provide feedback to pricing vendors.
Additionally, the Trustees considered the recent decline in assets for some of the Funds and the reasons for the decline. Ultimately, the Board concluded that the nature, extent and quality of services proposed to be provided by PIMCO under the Agreements and the New Funds’ Agreements are likely to benefit the Funds, the New Funds and their respective shareholders.
(b) Other Services: The Board considered PIMCO’s policies, procedures and systems to reasonably assure compliance with applicable laws and regulations and its commitment to these programs; its oversight of matters that may involve conflicts of interest with the Trust; its efforts to keep the Trustees informed about matters relevant to the Trust and its shareholders. The Board also considered the nature, extent, quality and cost of supervisory and administrative services provided by PIMCO to the Funds under the Agreements.
The Board considered the terms of the Trust’s Supervision and Administration Agreement, under which the Trust pays for the administrative services under that Agreement under what is essentially an all-in fee structure (the “unified fee”). In return, PIMCO provides or procures certain supervisory and administrative services and bears the costs of various third party services required by the Funds, including audit, custodial, portfolio accounting, legal, transfer agency and printing costs. The Board noted that the scope and complexity of the supervisory and administrative services provided by PIMCO under the
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Approval of Renewal of the Investment Advisory Contract and Second Amended and Restated Supervision and Administration Agreement (Cont.)
Supervision and Administration Agreement continue to increase. The Board considered PIMCO’s provision of these services and its supervision of the Trust’s third party service providers to assure that these service providers continue to provide a high level of service relative to alternatives in the market.
Ultimately, the Board concluded that the nature, extent and quality of the services provided by PIMCO has benefited and will likely continue to benefit the Funds and their shareholders.
With respect to the New Funds, the Board also considered the nature, extent and quality of services to be provided by PIMCO to the New Funds under the New Funds’ Agreements. The Board concluded that the nature, extent and quality of the services to be provided by PIMCO would likely benefit the New Funds and their shareholders.
3. INVESTMENT PERFORMANCE
As the New Funds had not yet commenced operations at the time the New Funds’ Agreements were considered, the Trustees did not receive or consider investment performance information.
The Board received and examined information from PIMCO concerning the Funds’ performance, as available, for the one-, two-, three-, five-, and ten-year and since inception periods ended May 31, 2014 and other performance data, as available, for the periods ended June 30, 2014 (the “PIMCO Report”) and from Lipper concerning the Funds’ performance, as available, for the periods ended May 31, 2014 (the “Lipper Report”). The Board noted that long-term performance information was not available for the PIMCO Balanced Income Fund due to its recent commencement of operations. The Board considered each Fund’s investment performance relative to its peer group and benchmark index as provided to the Board in advance of each of its quarterly meetings throughout the year, including the PIMCO Report and Lipper Report, which were provided in advance of the August 13, 2014 meeting.
The Board noted that, according to Lipper, certain Funds had underperformed in comparison to their respective peer groups or benchmark indexes, or both, over the one-year period ended May 31, 2014. The Board considered the reasons for these Funds’ underperformance in comparison to their peer groups or benchmark indexes, or both.
The Board ultimately determined within the context of all of its considerations in connection with the Agreements, that PIMCO’s performance record and process in managing the Funds indicates that its continued management is likely to benefit the Funds and their shareholders, and merits the approval of the continuation of the Agreements.
4. ADVISORY FEES, SUPERVISORY AND ADMINISTRATIVE FEES AND TOTAL EXPENSES
PIMCO reported to the Board that, in proposing fees for the Funds, it considers a number of factors, including the type and complexity of the services provided, the cost of providing services, the risk assumed by PIMCO in the development of products and the provision of services, the impact on potential returns from different levels of fees, the competitive marketplace for financial products, and the attractiveness of potential Fund returns to current and potential investors. Fees charged to or proposed for different Funds for advisory services and supervisory and administrative services may vary in light of these various factors. The Board also considered that PIMCO reviews the Funds’ fee levels and carefully considers reductions where appropriate.
The Board reviewed the advisory fees, supervisory and administrative fees and total expenses of the Funds (each as a percentage of average net assets) and compared such amounts with the average and median fee and expense levels of other similar funds. With respect to advisory fees, the Board reviewed data from Lipper that compared the average and median advisory fees of other funds in an “Expense Group” of comparable funds, as well as the universe of other similar funds. The Board compared each Fund’s total expenses to other funds in the Expense Group provided by Lipper and found each Fund’s total expenses to be reasonable in comparison to the median and mean of the Expense Group. The Board noted that PIMCO had contractually agreed, through October 31, 2014, to reduce its advisory fee by 0.16%, 0.16%, 0.20% and 0.16% of the average daily net assets of the PIMCO Dividend and Income Builder, PIMCO EqS® Emerging Markets, PIMCO Global Dividend and PIMCO EqS Pathfinder® Funds, respectively.
The Board also reviewed data comparing the Funds’ advisory fees to the standard fee rate PIMCO charges to separate accounts and as sub-adviser to other investment companies with a similar investment strategy, including differences in advisory services provided. The Trustees noted that three of the four Funds that have comparable separate account strategies have advisory fees that are lower than the fee charged to the separate account. In cases where the fees for other clients were lower than those charged to the PIMCO EqS Pathfinder Fund®, the Trustees noted that the differences in fees were attributable to various factors, including differences in the advisory and other services provided by PIMCO to the Funds, the manner in which similar portfolios may be managed, different requirements with respect to liquidity management and the implementation of other regulatory requirements, and the fact that separate accounts may have other contractual arrangements that justify different levels of fees. At the time that the Board considered the Agreements, PIMCO did not manage any separate accounts with investment strategies similar to those of the PIMCO Emerging Multi-Asset Fund and PIMCO EqS® Long/Short Fund.
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Regarding advisory fees charged by PIMCO in its capacity as sub-adviser to third-party/unaffiliated funds, the Trustees took into account that such fees may be lower than the fees charged by PIMCO to serve as adviser to the Funds for various other reasons, including, but not limited to, the fact that PIMCO may be subject to varying levels of entrepreneurial risk and regulatory requirements, differing legal liabilities per contract and diverse servicing requirements when it does not serve as the sponsor of a fund and is not principally responsible for all aspects of a fund’s investment program and operations than when PIMCO serves as investment adviser and sponsor. In considering the fees paid by the Funds, the Board also noted that retail investors in the Funds receive the benefit of PIMCO’s advisory services at the same advisory fee rates as institutional investors in the Funds.
With respect to the New Funds, the Board reviewed the proposed advisory fees, supervisory and administrative fees and estimated total expenses of each New Fund (each as a percentage of average net assets) and compared such amounts with the average and median expenses of other similar funds. With respect to the advisory fee of each New Fund, the Board reviewed data from Lipper that compared the average and median advisory fees of other funds in a “Peer Group” of comparable funds, as well as the universe of other similar funds. The Board noted that PIMCO had proposed to contractually waive 0.16% of the investment advisory fee for each of the PIMCO International Dividend Fund and PIMCO U.S. Dividend Fund, which waiver would be renewable on an annual basis. The Board also noted that, even before taking into account this waiver, the advisory fee for each of the PMCO International Dividend Fund and PIMCO U.S. Dividend Fund compared favorably to the Lipper medians for comparable funds. The Board compared the New Funds’ estimated total expenses to other funds in the Peer Group Expense Comparison provided by Lipper and found the New Funds’ estimated total expenses to be reasonable.
At the time the Board considered the New Funds’ Investment Advisory Contract, PIMCO did not manage any separate accounts with similar investment strategies to the New Funds; therefore, the Board did not consider the fees charged by PIMCO to comparable separate accounts. However, the Board did consider the fees paid by the Trust’s existing series with dividend strategies as well as the fee structure of the PIMCO RealRetirement Funds, which are existing series of PIMCO Funds, and are overseen by a different board.
The Board also considered the Funds’ supervisory and administrative fees, comparing them to similar funds in the report supplied by Lipper. The Board considered that PIMCO has provided an increasingly broad array of fund supervisory and administrative functions. The Board considered the Trust’s unified fee structure, under which the Trust pays for the supervisory and administrative services it requires for one set fee, and in return, PIMCO provides or procures supervisory and
administrative services and bears the costs of various third party services required by the Funds, including audit, custodial, portfolio accounting, legal, transfer agency and printing costs. The Board considered that many other funds pay for these services separately, and thus it is difficult to directly compare the Funds’ unified supervisory and administrative fees with the fees paid by other funds for administrative services alone. The Board considered that the unified supervisory and administrative fee leads to fund fees that are fixed, rather than variable. The Board concluded that the Funds’ supervisory and administrative fees were reasonable in relation to the value of the services provided, including the services provided to different classes of shareholders, and that the expenses assumed contractually by PIMCO under the Supervision and Administration Agreement represent, in effect, a cap on overall fund expenses which is beneficial to the Funds and their shareholders. The Board further noted that, although the unified fee structure does not have breakpoints, it implicitly reflects economies of scale by fixing the absolute level of Fund fees at competitive levels even if the Funds’ operating costs rise when assets remain flat or decrease.
In connection with the approval of the New Funds’ Supervision and Administration Agreement, the Board compared the proposed fees with those of similar funds in the report supplied by Lipper. The Board considered the Trust’s unified fee structure, under which the New Funds would pay for the supervisory and administrative services it requires for one set fee, and in return, PIMCO would provide or procure supervisory and administrative services and bear the costs of various third party services required by the New Funds, including audit, custodial, portfolio accounting, legal, transfer agency and printing costs. The Board concluded that the New Funds’ supervisory and administrative fees were reasonable in relation to the value of the services provided, including the services provided to different classes of shareholders, and that the expenses assumed contractually by PIMCO under the New Funds’ Supervision and Administration Agreement represent, in effect, a cap on overall fund expenses, which is beneficial to each New Fund and its shareholders.
The Trustees also considered the advisory fees charged to the PIMCO Emerging Multi-Asset Fund, which operates as a fund of funds (the “Fund of Funds”), and the advisory services provided in exchange for such fees. The Trustees determined that such services were in addition to the advisory services provided to the underlying series in which the Fund of Funds may invest and, therefore, such services were not duplicative of the advisory services provided to the underlying series. The Board also considered the various fee waiver agreements in place for the Fund of Funds.
Based on the information presented by PIMCO and Lipper, members of the Board then determined, in the exercise of their business judgment, that the level of the advisory fees and supervisory and administrative
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Approval of Renewal of the Investment Advisory Contract and Second Amended and Restated Supervision and Administration Agreement (Cont.)
fees charged by PIMCO under the Agreements, as well as the total expenses of each Fund, are reasonable.
With respect to the New Funds, based on information presented by PIMCO and Lipper, members of the Board then determined, in the exercise of their business judgment, that the level of the advisory and supervisory and administrative fees charged by PIMCO under the New Funds’ Agreements, as well as the total expenses of each New Fund, are reasonable.
5. ADVISER COSTS, LEVEL OF PROFITS AND ECONOMIES OF SCALE
As the New Funds are newly organized, information regarding PIMCO’s costs in providing services to the New Funds and the profitability of PIMCO’s relationship with the New Funds was not available.
The Board reviewed information regarding PIMCO’s costs of providing services to the Funds as a whole and considered that PIMCO continues to invest in the equity asset management platform and does not expect to derive any profit from the Funds during its current fiscal year. The Board noted that it had also received information regarding the structure and manner in which PIMCO’s investment professionals were compensated, and PIMCO’s view of the relationship of such compensation to the attraction and retention of quality personnel. The Board considered PIMCO’s need to invest in technology, cyber security, shareholder privacy, business continuity planning, infrastructure and staff to reinforce and offer new services and to accommodate changing regulatory requirements.
With respect to potential economies of scale, the Board noted that PIMCO shares the benefits of economies of scale with the Funds and respective shareholders in a number of ways, including through the pricing of the Funds to scale from inception, fee reductions or waivers, and the enhancement of services provided to the Funds in return for fees paid. In considering the advisory fees paid by the Funds, the Board also noted that retail investors in the Funds receive the benefit of PIMCO’s advisory services at the same advisory fee rates as institutional investors in the Funds. The Board considered that the Funds’ unified fee rates had been set competitively and/or priced to scale from inception and continued to be competitive compared with peers. The Board also considered that the unified fee is a transparent means of informing Fund shareholders of the fees associated with the Funds, and that the Funds bear certain expenses that are not covered by the advisory fee or the unified supervision and administrative fee.
With respect to the New Funds, the Board noted that each New Fund’s proposed fee rate priced the fund at scale from the outset.
The Trustees also considered that the unified fee has provided inherent economies of scale because a Fund and a New Fund maintains competitive fixed unified fees even if the particular Fund’s assets
decline and/or operating costs rise. The Trustees further considered that, in contrast, breakpoints are a proxy for charging higher fees on lower asset levels and that when a fund’s assets decline, breakpoints may reverse, which causes expense ratios to increase. The Trustees also considered that, unlike the Funds’ and New Funds’ unified fee structure, funds with “pass through” administrative fee structures may experience increased expense ratios when fixed dollar fees are charged against declining fund assets. The Trustees noted that the benefits of the unified fee may emerge in the event a particular Fund’s assets decline in the future. The Trustees also considered that the unified fee protects shareholders from a rise in operating costs that may result from, including, among other things, PIMCO’s investments in various business enhancements and infrastructure, including those described above. The Trustees noted that PIMCO’s investments in these areas are extensive.
The Board concluded that the Funds’ and New Funds’ cost structures were reasonable and that the unified fee structure inherently involves the sharing of economies of scale between PIMCO and each of the Funds and New Funds, to the benefit of their respective shareholders.
6. ANCILLARY BENEFITS
The Board considered other benefits received by PIMCO and its affiliates as a result of PIMCO’s relationship with the Trust, including possible ancillary benefits to PIMCO’s institutional investment management business due to the reputation and market penetration of the Trust. The Board also considered that affiliates of PIMCO provide distribution and shareholder services to the Funds and New Funds and their respective shareholders, for which they may be compensated through distribution and servicing fees paid pursuant to the Funds’ and New Funds’ Rule 12b-1 plans or otherwise. The Board reviewed PIMCO’s soft dollar policies and procedures, noting that while PIMCO has the authority to receive the benefit of research provided by broker-dealers executing portfolio transactions on behalf of the Funds, it has adopted a policy not to enter into contractual soft dollar arrangements.
7. CONCLUSIONS
Based on its review, including its consideration of each of the factors referred to above, the Board concluded that the nature, extent and quality of the services rendered to the Funds by PIMCO favored the renewal of the Agreements. The Board concluded that the Agreements continued to be fair and reasonable to the Funds and their shareholders, that the Funds’ shareholders received reasonable value in return for the fees paid to PIMCO by the Funds under the Agreements and that the renewal of the Agreements was in the best interests of the Funds and their shareholders.
With respect to the New Funds, based on its review, including its consideration of each of the factors referred to above, the Board
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concluded that the nature, extent and quality of the services to be rendered to the New Funds by PIMCO favored approval of the New Funds’ Agreements. The Board concluded that the New Funds’ Agreements were fair and reasonable to the New Funds and their shareholders, that the New Funds’ shareholders would likely receive reasonable value in return for the fees paid to PIMCO by the New Funds under the New Funds’ Agreements, and that the approval of the New Funds’ Agreements was in the best interests of the New Funds and their shareholders.
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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
Institutional Class, Class P, Administrative Class, Class D
330 W. 9th Street, 5th Floor
Kansas City, MO 64105
Boston Financial Data Services
Class A, Class C, Class R
P.O. Box 55060
Boston, MA 02205-5060
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.
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To get future shareholder reports online and to eliminate mailings, go to: pimco.com/edelivery
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PES4002SAR_123114
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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. |
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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 Registrant’s 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 Registrant’s 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 Registrant’s internal control over financial reporting. | |||||
Item 12. | Exhibits. | |||||
(a)(1) | Exhibit 99.CODE—Code of Ethics is not applicable for semiannual reports. | |||||
(a)(2) | Exhibit 99.CERT—Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||
(b) | Exhibit 99.906CERT—Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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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.
PIMCO Equity Series | ||
By: | /s/ PETER G. STRELOW | |
Peter G. Strelow | ||
President, Principal Executive Officer | ||
Date: February 27, 2015 |
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.
By: | /S/ PETER G. STRELOW | |
Peter G. Strelow | ||
President, Principal Executive Officer | ||
Date: February 27, 2015 | ||
By: | /s/ TRENT W. WALKER | |
Trent W. Walker | ||
Treasurer, Principal Financial Officer | ||
Date: February 27, 2015 |