<PAGE>
P I M C O
PIMCO VARIABLE INSURANCE TRUST
------------------
SEMI-ANNUAL REPORT
June 30, 1998
<PAGE>
Chairman's Letter
Dear PIMCO Variable Insurance Trust Shareholder:
We are pleased to present you with our first semi-annual report for
PIMCO Variable Insurance Trust. During its inaugural six months of
operations, the Trust has accumulated more than $27 million in
total assets spread across three active series.
Both the stock and bond markets posted strong returns for the six-
month period ended June 30, 1998. The stock market, as measured by
the Standard & Poor's 500 Index of stocks, rose 17.71%, and the
overall bond market, as measured by the Lehman Aggregate Bond
Index, posted a solid 3.93% return.
Investors have enjoyed a continuation of the bull market in stocks
that began nearly eight years ago. Since October 1990, the stock
market has more than tripled in value, with only one 10%
correction. That setback occurred last October, as the financial
upheaval in Asia began to unfold. However, as individual investors
viewed this market decline as a buying opportunity, stock prices
rebounded sharply during the first quarter of 1998. To a great
extent, stocks experienced a "cooling off" period during the second
quarter, as performance was mixed.
Turning to the bond market, the Asian crisis has been largely
beneficial for U.S. bonds. Due to uncertainty regarding events in
Asia, many domestic and foreign investors flocked to the relative
security of high-quality U.S. fixed income securities. As a result,
over the past year the yield on 30-year Treasuries fell from 6.6%
to 5.6%. This led to good gains in the prices of bonds.
On the following pages you will find a more complete review of the
bond market and more specific details about the composition and
total return investment performance of each Portfolio.
We are pleased to welcome you as shareholders of the PIMCO Variable
Insurance Trust. We appreciate the trust you have placed in us, and
we will work hard to meet your investment needs.
Sincerely,
/s/ Brent Harris
Brent Harris
Chairman
August 14, 1998
1
<PAGE>
PVIT Total Return Bond Portfolio
- --------------------------------------------------------------------------------
FUND CHARACTERISTICS
- --------------------------------------------------------------------------------
Objective:
Maximum total return, consistent with preservation of capital and prudent
investment management
Portfolio:
Primarily intermediate-term investment grade bonds
Duration:
4.6 years
Total Net Assets:
$3 million
- --------------------------------------------------------------------------------
PORTFOLIO CHARACTERISTICS
- --------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
Country Allocation: *
Mortgage-Backed Securities 42.3%
Short-Term Instruments 40.3%
Corporate Bonds and Notes 13.1%
Sovereign Issues 4.3%
[PIE CHART APPEARS HERE]
Quality Breakdown: *
AAA 82%
AA 4%
A 5%
BB 9%
* % of Total Investments as of June 30, 1998
Past performance is not an indication of future results. The PVIT Total Return
Bond Portfolio was opened on December 31, 1997. The total return performance of
the PVIT Total Return Bond Portfolio since inception was 3.02%.
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
o The Total Return Bond Portfolio's total return investment performance for the
six months since inception on December 31, 1997 through June 30, 1998 was
3.02%, compared to the 3.93% return of the benchmark Lehman Brothers Aggregate
Bond Index.
o The duration target of the Portfolio was longer than the benchmark. This added
to the return as yields fell across the maturity spectrum.
o Investors sought out high-quality securities because of concerns over economic
turmoil in Asia. This "flight to quality" enhanced performance as the
Portfolio was overweight in U.S. Treasuries.
o The absence of corporate securities in the Portfolio detracted from returns as
the corporate sector held up well despite mounting earnings concerns and
modestly outperformed the benchmark Index on a duration adjusted basis.
o While the Portfolio was underweight in mortgage securities for the period,
small positions added in May detracted from performance.
o A small allocation to U.S. dollar-denominated emerging markets was added in
April. However, this investment hindered returns as the Asian crisis
resurfaced.
2
<PAGE>
PVIT High Yield Bond Portfolio
- --------------------------------------------------------------------------------
FUND CHARACTERISTICS
- --------------------------------------------------------------------------------
Objective:
Maximum total return, consistent with preservation of capital and prudent
investment management
Portfolio:
Primarily high yield bonds
Duration:
4.4 years
Total Net Assets:
$16 million
- --------------------------------------------------------------------------------
PORTFOLIO CHARACTERISTICS
- --------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
Country Allocation: *
Corporate Bonds and Notes 85.7%
Short-Term Instruments 7.5%
Preferred Stock 5.3%
Sovereign Issues 1.2%
U.S. Treasury Obligations 0.3%
[PIE CHART APPEARS HERE]
Quality Breakdown: *
BBB 1%
BB 49%
B 50%
* % of Total Investments as of June 30, 1998
Past performance is not an indication of future results. The PVIT High Yield
Portfolio was opened on April 30, 1997. The total return performance of the
PVIT High Yield Portfolio since inception was 1.01%.
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
o The total return investment performance of the High Yield Bond Portfolio was
1.01% for the two months from inception on April 30, 1998 to June 30, 1998.
The Portfolio slightly under-performed the 1.26% return of its benchmark, the
Lehman BB Intermediate Bond Index.
o High yield bond spreads widened during the second quarter after narrowing
slightly in the first quarter as the Asian crisis, lower earnings expectations
and heavy new issuance combined to weaken demand for high yield bonds. The
Portfolio held negligible Asian corporate debt and securities of U.S.
corporations heavily influenced by the Asian economy.
o Lower-rated credits (B and below) underperformed better-quality securities
(BB and above) as investors demonstrated a preference for the greater safety
of higher quality bonds. Consistent with this theme, more aggressively
structured bonds lost ground as investors showed a renewed unwillingness to
forego cash-coupons and subordinate their security interest. Our preference
for issues senior in the capital structure and for collateralized issues
helped returns, while an allocation to credits rated single B hurt performance
relative to the benchmark.
o Retailing was one of the best-performing industries as a strong U.S. dollar
continued to lower purchase costs. Transportation-related companies also
posted strong gains due to falling oil prices and robust travel demand.
3
<PAGE>
PVIT StocksPLUS Growth and Income Portfolio
- --------------------------------------------------------------------------------
FUND CHARACTERISTICS
- --------------------------------------------------------------------------------
Objective:
Total return which exceeds that of the S&P 500 Index
Portfolio:
Primarily S&P 500 Index futures and short-term bonds
Duration:
0.5 years
Total Net Assets:
$8 million
- --------------------------------------------------------------------------------
PORTFOLIO CHARACTERISTICS
- --------------------------------------------------------------------------------
[PIE CHART APPEARS HERE]
Country Allocation: *
Short-Term Instruments 79.6%
Mortgage-Backed Securities 12.4%
Corporate Bonds and Notes 8.0%
[PIE CHART APPEARS HERE]
Quality Breakdown: *
AAA 94%
A 3%
BBB 3%
* % of Total Investments as of June 30, 1998
Past performance is not an indication of future results. The PVIT StocksPLUS
Growth and Income Portfolio was opened on December 31, 1997. The total return
performance of the PVIT StocksPLUS Growth and Income Portfolio since inception
was 17.01%.
- --------------------------------------------------------------------------------
PORTFOLIO INSIGHTS
- --------------------------------------------------------------------------------
o The StocksPLUS Growth and Income Portfolio's total return for the six months
from inception on December 31, 1997 to June 30, 1998 was 17.01%, compared to
17.71% for the benchmark S&P 500 Index.
o "StocksPLUS" is an enhanced index approach to equity investing in which PIMCO
purchases S&P 500 Index futures and swaps contracts and actively manages the
cash that backs these contracts. The Portfolio's futures position seeks to
track the return of the S&P 500 Index, and the Manager expects a performance
advantage from active short-duration bond management.
o Performance benefited from declining rates as Portfolio duration was held
above the six-month neutral point. Lower coupon, fixed-rate mortgages boosted
returns overall as intermediate rates remained relatively stable, and
adjustable-rate mortgages were neutral for performance as increasing
prepayments moderated the yield advantage. Returns on investment-grade
corporate holdings were subdued as yield premiums on intermediate-term bonds
widened slightly. Yields on lower-rated corporate bonds widened due to
scrutiny of future corporate earnings. While developed non-U.S. markets
trailed the U.S. overall, positions in non-U.S. real return bonds performed
well.
4
<PAGE>
Financial Highlights
(Unaudited)
<TABLE>
<CAPTION>
Total Return High Yield StocksPLUS Growth
Selected Per Share Data for the Period Ended: June 30, 1998 Bond Portfolio (a) Bond Portfolio (b) and Income Portfolio (c)
---------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value beginning of period $ 10.00 $ 10.00 $ 10.00
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income 0.25 0.12 0.15
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) 0.05 (0.02) 1.55
- ------------------------------------------------------------------------------------------------------------------------------------
Total income from investment operations 0.30 0.10 1.70
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (0.25) (0.12) (0.10)
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized capital gains 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (0.25) (0.12) (0.10)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value end of period $ 10.05 $ 9.98 $ 11.60
- ------------------------------------------------------------------------------------------------------------------------------------
Total return (%) 3.02 1.01 17.01
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets end of period (000's) $ 3,090 $ 15,980 $ 8,070
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (%) 0.78* 1.08* 0.66*
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets (%) 5.02* 7.13* 5.09*
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (%) 0.00 7.40 45.51
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized
(a) The Trust's inception date is December 22, 1997, however, since the
Portfolio did not have any investment activity or incur expenses prior to
the date of initial public offering, the per share information is for a
capital share outstanding for the period from December 31, 1997 (initial
public offering) through June 30, 1998.
(b) Commenced operations on April 30, 1998.
(c) Commenced operations on December 31, 1997.
See accompanying notes 5
<PAGE>
Statement of Assets and Liabilities
June 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Total Return High Yield StocksPLUS Growth
Amounts in thousands, except per share amounts Bond Portfolio Bond Portfolio and Income Portfolio
---------------------------------------------------------------
<S> <C> <C> <C>
Assets:
Investments, at value $ 3,061 $ 15,506 $ 7,838
- -----------------------------------------------------------------------------------------------------------------------------------
Cash 821 0 269
- -----------------------------------------------------------------------------------------------------------------------------------
Receivable for Portfolio shares sold 0 320 0
- -----------------------------------------------------------------------------------------------------------------------------------
Variation margin receivable 2 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Interest and dividends receivable 22 265 17
- -----------------------------------------------------------------------------------------------------------------------------------
Others assets 6 6 6
- -----------------------------------------------------------------------------------------------------------------------------------
3,912 16,097 8,130
===================================================================================================================================
Liabilities:
Payable for investments and foreign currency purchased $ 820 $ 108 $ 0
- -----------------------------------------------------------------------------------------------------------------------------------
Variation margin payable 0 0 57
- -----------------------------------------------------------------------------------------------------------------------------------
Accrued investment advisor's fee 1 6 2
- -----------------------------------------------------------------------------------------------------------------------------------
Accrued administrator's fee 1 3 1
- -----------------------------------------------------------------------------------------------------------------------------------
822 117 60
===================================================================================================================================
Net Assets $ 3,090 $ 15,980 $ 8,070
===================================================================================================================================
Net Assets Consist of:
Paid in capital $ 3,075 $ 15,988 $ 7,550
- -----------------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income 0 0 34
- -----------------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed net realized gain (loss) 3 (8) 348
- -----------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation 12 0 138
- -----------------------------------------------------------------------------------------------------------------------------------
$ 3,090 $ 15,980 $ 8,070
===================================================================================================================================
Shares Issued and Outstanding 308 1,602 696
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value and Redemption Price Per Share
(Net Assets Per Share Outstanding) $ 10.05 $ 9.98 $ 11.60
- -----------------------------------------------------------------------------------------------------------------------------------
Cost of Investments Owned $ 3,058 $ 15,506 $ 7,835
===================================================================================================================================
</TABLE>
6 See accompanying notes
<PAGE>
Statement of Operations
For the period ended June 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Total Return High Yield StocksPLUS Growth
Amounts in thousands Bond Portfolio Bond Portfolio and Income Portfolio
------------------------------------------------------------
Period from Period from Period from
December 31, 1997 April 30, 1998 December 31, 1997
to June 30, 1998 to June 30, 1998 to June 30, 1998
<S> <C> <C> <C>
Investment Income:
Interest $ 87 $ 165 $ 101
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends 0 8 0
- ----------------------------------------------------------------------------------------------------------------------------------
Total Income 87 173 101
==================================================================================================================================
Expenses:
Investment advisory fees 6 10 7
- ----------------------------------------------------------------------------------------------------------------------------------
Administration fees 4 5 5
- ----------------------------------------------------------------------------------------------------------------------------------
Trustees' fees 2 6 0
- ----------------------------------------------------------------------------------------------------------------------------------
Total Expenses 12 21 12
- ----------------------------------------------------------------------------------------------------------------------------------
Net Investment Income 75 152 89
==================================================================================================================================
Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) on investments (2) (8) 0
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized gain on futures contracts and written options 5 0 348
- ----------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation on investments 3 0 2
- ----------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
on futures contracts and written options 9 0 136
- ----------------------------------------------------------------------------------------------------------------------------------
Net Gain (Loss) 15 (8) 486
- ----------------------------------------------------------------------------------------------------------------------------------
Net Increase in Assets Resulting from Operations $ 90 $ 144 $ 575
==================================================================================================================================
</TABLE>
See accompanying notes 7
<PAGE>
Statement of Changes in Net Assets
(Unaudited)
<TABLE>
<CAPTION>
Total Return High Yield StocksPLUS Growth
Amounts in thousands Bond Portfolio Bond Portfolio and Income Portfolio
---------------------------------------------------------------
Period from Period from Period from
Increase (Decrease) in Net Assets from: December 31, 1997 April 30, 1998 December 31, 1997
to June 30, 1998 to June 30, 1998 to June 30, 1998
<S> <C> <C> <C>
Operations:
Net investment income $ 75 $ 152 $ 89
- --------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) 3 (8) 348
- --------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation 12 0 138
- --------------------------------------------------------------------------------------------------------------------------------
Net increase resulting from operations 90 144 575
================================================================================================================================
Distributions to Shareholders:
From net investment income (75) (152) (55)
- --------------------------------------------------------------------------------------------------------------------------------
From net realized capital gains 0 0 0
- --------------------------------------------------------------------------------------------------------------------------------
Total Distributions (75) (152) (55)
================================================================================================================================
Portfolio Share Transactions:
Receipts for shares sold 3,000 15,878 7,674
- --------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions 75 152 55
- --------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed 0 (42) (179)
- --------------------------------------------------------------------------------------------------------------------------------
Net increase resulting from Portfolio share transactions 3,075 15,988 7,550
- --------------------------------------------------------------------------------------------------------------------------------
Total Increase in Net Assets $ 3,090 $ 15,980 $ 8,070
================================================================================================================================
Net Assets:
Beginning of period 0 0 0
- --------------------------------------------------------------------------------------------------------------------------------
End of period * $ 3,090 $ 15,980 $ 8,070
- --------------------------------------------------------------------------------------------------------------------------------
* Including net undistributed investment income of: $ 0 $ 0 $ 34
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
8 See accompanying notes
<PAGE>
Schedule of Investments
Total Return Bond Portfolio
June 30, 1998 (Unaudited)
Principal
Amount Value
(000s) (000s)
- -------------------------------------------------------------------------------
CORPORATE BONDS & NOTES 13.0%
- -------------------------------------------------------------------------------
Banking & Finance 8.1%
Ford Motor Credit Corp.
5.838% due 10/15/02 (c) $ 150 $ 150
Merrill Lynch & Co.
5.801% due 05/08/01 (c) 100 100
-----------
250
===========
Utilities 4.9%
California Energy
10.250% due 01/15/04 140 151
----------
Total Corporate Bonds & Notes 401
(Cost $400) ==========
- -------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES 41.9%
- -------------------------------------------------------------------------------
Federal Home Loan Mortgage Corporation 15.3%
8.500% due 08/01/24 453 473
Federal Housing Administration 26.6%
7.430% due 01/25/23 792 821
----------
Total Mortgage-Backed Securities 1,294
(COST $1,289) ==========
- -------------------------------------------------------------------------------
SOVEREIGN ISSUES 4.3%
- -------------------------------------------------------------------------------
Government of Brazil
6.875% due 01/01/01(b) 140 133
----------
Total Sovereign Issues 133
(Cost $136) ==========
- -------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 39.9%
- -------------------------------------------------------------------------------
Commercial Paper 32.2%
Abbott Laboratories
5.490% due 07/10/98 100 100
Canadian Wheat Board
5.500% due 07/15/98 100 100
Coca Cola Co.
5.490% due 09/01/98 100 99
E.I. Du Pont de Nemours
5.490% due 07/10/98 100 100
IBM Credit Corp.
5.500% due 07/29/98 100 99
Minnesota Mining & Manufacturing
5.480% due 07/17/98 100 100
Motorola, Inc.
5.490% due 07/23/98 100 99
Proctor & Gamble Co.
5.500% due 07/15/98 100 100
Shell Oil Co.
5.490% due 07/16/98 100 100
Southwestern Public Service Co.
5.510% due 07/24/98 100 100
------------
997
Repurchase Agreement 6.7% ============
State Street Bank
5.000% due 07/01/98 206 206
(Dated 06/30/98. Collateralized by
U.S. Treasury Note 6.250% 03/31/99
valued at $214,412. Repurchase
proceeds are $206,029.)
U.S. Treasury Bills (b) 1.0%
5.055% due 08/20/98 30 30
-----------
Total Short-Term Instruments 1,233
(Cost $1,233) ===========
Total Investments (a) 99.1% $ 3,061
(Cost $3,058)
Other Assets and Liabilities (Net) 0.9% 29
-----------
Net Assets 100.0% $ 3,090
===========
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1998, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 6
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (3)
-----------
Unrealized appreciation-net $ 3
===========
(b) Securities with an aggregate market value of $30 have
been segregated with the custodian to cover margin
requirements for the following open future contracts
at June 30, 1998:
Unrealized
Type Contracts Appreciation
- -----------------------------------------------------------------------------
U.S. Treasury 30 Year Bond (09/98) 8 $ 9
(c) Variable rate security. The rate listed is as of June 30, 1998.
See accompanying notes 9
<PAGE>
Schedule of Investments
High Yield Bond Portfolio
June 30, 1998 (Unaudited)
Principal
Amount Value
(000s) (000s)
- -------------------------------------------------------------------------------
CORPORATE BONDS & NOTES 83.2%
- -------------------------------------------------------------------------------
Banking & Finance 4.5%
Fuji Bank
9.870% due 12/31/49 (b) $ 100 $ 88
Helicon Group
11.000% due 11/01/03 (b) 500 538
SB Treasury Co. LLC
9.400% due 12/29/49 (b) 100 98
----------------
724
================
Industrials 67.3%
American Standard
7.375% due 02/01/08 500 491
Ameriserv Food Co.
10.125% due 07/15/07 250 260
Benedek Broadcasting Corp.
11.875% due 03/01/05 250 282
Buckeye Technologies, Inc.
8.000% due 10/15/10 450 456
Building Materials Corp.
8.625% due 12/15/06 250 258
Century Communications Corp.
8.750% due 10/01/07 400 424
Circus Circus Enterprises
6.750% due 07/15/03 100 97
Coltec Industries Rights
7.500% due 04/15/08 400 398
Columbus McKinnon
8.500% due 04/01/08 250 246
Comcast Cellular
9.500% due 05/01/07 250 262
Extendicare Health Services
9.350% due 12/15/07 350 354
Federal-Mogul Corp.
7.500% due 07/01/04 150 151
7.750% due 07/01/06 150 151
Fisher Scientific
9.000% due 02/01/08 375 374
Globalstar LP
11.375% due 02/15/04 250 244
Goss Graphic Systems, Inc.
12.000% due 10/15/06 200 213
Intermedia Communications, Inc.
0.000% due 05/15/06 (c) 400 330
ISP Holdings, Inc.
9.750% due 02/15/02 500 528
J.Q. Hammons Hotels
8.875% due 02/15/04 250 253
Jones Intercable, Inc.
8.875% due 04/01/07 250 269
Les, Inc.
9.250% due 06/01/08 250 254
Level 3 Communications, Inc.
9.125% due 05/01/08 500 489
Lin Television Corp.
8.375% due 03/01/08 250 256
Metronet Communications Corp.
0.000% due 06/15/08 (c) 250 156
MJD Communications, Inc.
9.500% due 05/01/08 200 205
Optel, Inc.
11.500% due 07/01/08 100 100
Orion Network Systems, Inc.
0.000% due 01/15/07 (c) 400 306
P&L Coal Holdings
8.875% due 05/15/08 400 414
Pool Energy Services
8.625% due 04/01/08 250 245
Regal Cinemas, Inc.
9.500% due 06/01/08 50 51
Renaissance Media Group
0.000% due 04/15/08 (c) 100 62
Revlon Consumer Products
8.125% due 02/01/06 350 350
Sun Healthcare Group, Inc.
9.375% due 05/01/08 250 253
Supercanal Holdings
11.500% due 05/15/05 100 97
Synthetic Industries, Inc.
9.250% due 02/15/07 250 260
Telewest Communications
9.625% due 10/01/06 400 423
TFM SA de CV
11.750% due 06/15/09 (c) 200 125
US Air, Inc.
9.330% due 01/01/06 153 166
Ziff-Davis, Inc.
8.500% due 05/01/08 500 508
--------------
10,761
==============
Utilities 11.4%
Calpine Corp.
10.500% due 05/15/06 175 192
7.875% due 04/01/08 200 201
CMS Energy
8.125% due 05/15/02 500 514
Flag Limited
8.250% due 01/30/08 550 556
Niagara Mohawk Power
7.750% due 10/01/08 250 257
Rural Cellular Corp.
9.625% due 05/15/08 100 101
--------------
1,821
--------------
Total Corporate Bonds & Notes 13,306
(Cost $13,293) ==============
- ------------------------------
U.S. TREASURY OBLIGATIONS 0.3%
- ------------------------------
U.S. Treasury Strips 0.3%
0.000% due 08/15/26 200 41
--------------
Total U.S. Treasury Obligations 41
(Cost $39) ==============
- -------------------------------
SOVEREIGN ISSUES 1.1%
- -------------------------------
Republic of Korea
8.875% due 04/15/08 200 182
--------------
Total Sovereign Issues 182
(Cost $185) ==============
- -------------------------------
PREFERRED STOCK 5.1%
- -------------------------------
Shares
CSC Holdings, Inc. 2,569 296
Fresenius Medical Care 500 521
--------------
Total Preferred Stock 817
(Cost $829) ==============
- --------------------------------
SHORT-TERM INSTRUMENTS 7.3%
- --------------------------------
Principal
Amount
(000s)
Commercial Paper 5.0%
Abbott Laboratories
5.510% due 07/16/98 $ 200 200
General Electric Capital Corp.
5.500% due 07/29/98 100 99
New Center Asset Trust
5.540% due 08/26/98 300 297
Proctor & Gamble Co.
5.510% due 08/07/98 200 199
--------------
795
==============
Repurchase Agreement 2.3%
State Street Bank
5.000% due 07/01/98 365 365
(Dated 06/30/98. Collateralized by --------------
U.S. Treasury Bond 8.375% 08/15/08
valued at $374,969. Repurchase
proceeds are $365,051.)
Total Short-Term Instruments $ 1,160
==============
(Cost $1,160)
10 See accompanying notes
<PAGE>
Value
(000s)
- --------------------------------------------------------------------------------
Total Investments (a) 97.0% $ 15,506
(Cost $15,506)
Other Assets and Liabilities (Net) 3.0% 474
--------------------
Net Assets 100.0% $ 15,980
====================
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1998, the net unrealized appreciation
(depreciation) of investments based on cost for federal
income tax purposes was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 86
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. (86)
--------------------
Unrealized appreciation-net $ 0
====================
(b) Variable rate security. The rate listed is as of June 30, 1998.
(c) Security becomes interest bearing at a future date.
See accompanying notes 11
<PAGE>
Schedule of Investments
StocksPLUS Growth and Income Portfolio
June 30, 1998 (Unaudited)
Principal
Amount Value
(000s) (000s)
- --------------------------------------------------------------------------------
CORPORATE BONDS & NOTES 7.8%
- --------------------------------------------------------------------------------
Banking & Finance 3.7%
American General Finance
6.050% due 07/02/01 $ 300 $ 300
Industrials 4.1%
Champion International Corp.
9.700% due 05/01/01 300 327
------------
Total Corporate Bonds & Notes 627
(Cost $627) ============
- --------------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES 12.0%
- --------------------------------------------------------------------------------
Federal National Mortgage Association 12.0%
6.176% due 08/01/31 (c) 96 97
6.207% due 08/01/29 (c) 351 354
6.468% due 12/01/28 (c) 512 519
------------
Total Mortgage-Backed Securities 970
(Cost $967) ============
- --------------------------------------------------------------------------------
SHORT-TERM INSTRUMENTS 77.3%
- --------------------------------------------------------------------------------
Commercial Paper 69.1%
Abbott Laboratories
5.490% due 07/10/98 200 200
American Express Credit
5.520% due 08/12/98 200 199
Ameritech Corp.
5.490% due 07/14/98 200 200
Caisse d'Amortissement
5.520% due 08/03/98 200 199
Campbell Soup Co.
5.540% due 07/28/98 300 298
Canadian Wheat Board
5.480% due 08/11/98 100 99
Coca Cola Co.
5.480% due 07/02/98 100 100
5.490% due 07/09/98 100 100
Electricite de France
5.480% due 07/15/98 100 100
Export Development Corp.
5.520% due 07/27/98 300 299
Federal Home Loan Mortgage Corp.
5.440% due 07/06/98 200 200
5.480% due 07/27/98 1,100 1,096
Ford Motor Credit Corp.
5.490% due 07/15/98 100 100
General Electric Capital Corp.
5.510% due 07/24/98 100 100
5.500% due 07/29/98 100 100
General Motors Acceptance Corp.
5.520% due 07/29/98 100 100
IBM Credit Corp.
5.500% due 07/15/98 100 100
5.540% due 07/23/98 200 199
Kellog Co.
5.520% due 07/24/98 300 299
KFW International Finance, Inc.
5.500% due 07/01/98 100 100
Minnesota Mining & Manufacturing
5.480% due 07/17/98 100 100
Motorola, Inc.
5.500% due 09/18/98 100 99
National Rural Utilities Cooperative
5.510% due 08/17/98 100 99
5.530% due 09/02/98 200 198
Pitney Bowes Credit Corp.
5.520% due 07/22/98 300 299
Shell Oil Co.
5.490% due 07/16/98 100 99
5.740% due 07/17/98 100 99
Southwestern Public Service Co.
5.500% due 07/10/98 100 99
Washington Post
5.530% due 08/12/98 300 298
------------
5,578
============
================================================================================
Repurchase Agreement 4.4%
State Street Bank
5.000% due 07/01/98 $ 356 $ 356
(Dated 06/30/98. Collateralized by ------------
U.S. Treasury Note 5.625% 12/31/99
valued at $365,285. Repurchase
proceeds are $356,049.)
U.S. Treasury Bills (b)(d) 3.8%
4.989% due 08/20/98-10/01/98 310 307
------------
Total Short-Term Instruments 6,241
(Cost $6,241) ============
Total Investments (a) 97.1% $ 7,388
(Cost $7,835)
Other Assets and Liabilities (Net) 2.9% 232
------------
Net Assets 100.0% $ 8,070
============
Notes to Schedule of Investments (amounts in thousands):
(a) At June 30, 1998, the net unrealized appreciation (depreciation) of
investments based on cost for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value over
tax cost. $ 3
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax cost
over value. 0
------------
Unrealized appreciation-net $ 3
------------
(b) Securities with an aggregate market value of $307 have been segregated with
the custodian to cover margin requirements for the following open future
contracts at June 30, 1998:
Unrealized
Appreciation/
Type Contracts (Depreciation)
- --------------------------------------------------------------------------------
S&P 500 Index (09/98) 26 $ 137
Mini S&P 500 Index (09/98) 3 (1)
------------
$ 136
============
(c) Variable rate security. The rate listed is as of June 30, 1998.
(d) Securities are grouped by coupon and represent a range of maturities.
12 See accompanying notes
<PAGE>
Notes to Financial Statements
June 30, 1998 (Unaudited)
1. Organization
The PIMCO Variable Insurance Trust (the "Trust") is an open-end investment
company organized as a Delaware business trust on October 3, 1997. The Trust is
designed to be used as an investment vehicle by Separate Accounts of insurance
companies that fund variable annuity contracts and variable life insurance
policies and by qualified pension and retirement plans. The Trust consist of ten
separate portfolios: Money Market, Short-Term Bond, Low Duration Bond, Total
Return Bond, High Yield Bond, Global Bond, Foreign Bond, Emerging Markets Bond,
StocksPLUS Growth and Income and Strategic Balanced Portfolios. As of June 30,
1998 only the Total Return Bond, High Yield Bond and StocksPLUS Growth and
Income Portfolios had commenced operations.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Trust in preparation of its financial statements. These policies
are in conformity with generally accepted accounting principles. The preparation
of financial statements in accordance with generally accepted accounting
principles requires management to make estimates and assumptions that affect the
reported amounts and disclosures in the financial statements. Actual results
could differ from those estimates.
Security Valuation. Portfolio securities and other financial instruments for
which market quotations are readily available are stated at market value. Market
value is determined on the basis of last reported sales prices, or if no sales
are reported, as is the case for most securities traded over-the-counter, the
mean between representative bid and asked quotations obtained from a quotation
reporting system or from established market makers. Short-term investments
having a maturity of 60 days or less are valued at amortized cost, which
approximates market value. Certain fixed income securities for which daily
market quotations are not readily available may be valued, pursuant to
guidelines established by the Board of Trustees, with reference to fixed income
securities whose prices are more readily obtainable.
Securities Transactions and Investment Income. Securities transactions are
recorded as of the trade date. Securities purchased or sold on a when-issued or
delayed delivery basis may be settled a month 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,
are recorded as soon as the Portfolio is informed of the ex-dividend date.
Interest income, adjusted for the accretion of discounts and amortization of
premiums, is recorded on the accrual basis.
Foreign Currency. Foreign currencies, investments, and other assets and
liabilities are translated into U.S. dollars at the exchange rates prevailing at
the end of the period. Fluctuations in the value of these assets and liabilities
resulting from changes in exchange rates are recorded as unrealized foreign
currency gains (losses). Realized gains (losses) and unrealized appreciation
(depreciation) on investment securities and income and expenses are translated
on the respective dates of such transactions. The effect of changes in foreign
currency exchange rates on investments in securities are not segregated in the
Statement of Operations from the effects of changes in market prices of those
securities, but are included with the net realized and unrealized gain or loss
on investment securities.
13
<PAGE>
Notes to Financial Statements (Cont.)
June 30, 1998 (Unaudited)
Dividends and Distributions to Shareholders. Dividends from net investment
income, if any, of each Portfolio, except the StocksPLUS Growth and Income
Portfolio are declared on each day the Trust is open for business and are
distributed to shareholders monthly. Dividends from net investment income, if
any, of the StocksPLUS Growth and Income Portfolio is declared and distributed
to shareholders quarterly. All dividends are reinvested in additional shares of
the related Portfolios. Net realized capital gains earned by a Portfolio, if
any, will be distributed no less frequently than once each year.
Income dividends and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for such
items as wash sales, foreign currency transactions, net operating losses and
capital loss carryforwards.
Certain amounts have been reclassified between undistributed net investment
income, accumulatedundistributed net realized gains or losses and paid in
capital to more appropriately conform financial accounting to tax
characterizations of dividend distributions.
Federal Income Taxes. Each Portfolio intends to qualify as a regulated
investment company 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.
Futures and Options. Certain Portfolios are authorized to enter into futures
contracts and options. A Portfolio may use futures contracts to manage its
exposure to the markets or to movements in interest rates and currency values.
The primary risks associated with the use of futures contracts and options are
imperfect correlation between the change in market value of the securities held
by a Portfolio and the prices of futures contracts and options, the possibility
of an illiquid market, and the inability of the counterparty to meet the terms
of the contract. Futures contracts and purchased options are valued based upon
their quoted daily settlement prices. The premium received for a written option
is recorded as an asset with an equal liability which is marked to market based
on the option's quoted daily settlement price. Fluctuations in the value of such
instruments are recorded as unrealized appreciation (depreciation) until
terminated, at which time realized gains and losses are recognized.
Repurchase Agreements. Each Portfolio may engage in repurchase transactions.
Under the terms of a typical repurchase agreement, the Portfolio takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and the Portfolio to resell, the obligation at an
agreed-upon price and time. The market value of the collateral must be equal at
all times to the total amount of the repurchase obligations, including interest.
Generally, in the event of counterparty default, the Portfolio has the right to
use the collateral to offset losses incurred.
3. Fees, Expenses, and Related Party Transactions
Investment Advisory Fee. Pacific Investment Management Company ("PIMCO") is a
wholly owned subsidiary partnership of PIMCO Advisors L.P. which serves as
investment adviser (the "Adviser") to the Trust, pursuant to an investment
advisory contract. The Advisory Fee is charged at an annual rate of 0.40% for
the Total Return Bond and StocksPLUS Growth and Income Portfolios; and 0.50% for
the High Yield Bond Portfolio.
Administration Fee. PIMCO serves as administrator (the "Administrator"), and
provides administrative services to the Trust for which it receives from each
Portfolio a monthly administrative fee based on average daily net assets. The
Administration Fee is charged at the annual rate of 0.25% for the Total Return
Bond, High Yield Bond and StocksPLUS Growth and Income Portfolios.
14
<PAGE>
Expenses. PIMCO pays for most of the expense of the Portfolios, including legal,
audit, custody, transfer agency and certain other services, and is responsible
for the costs of registration of the Trust's shares and the printing of
prospectuses and shareholder reports for current shareholders or other
appropriate parties. The Portfolios are responsible for bearing certain expenses
associated with their operations that are not provided or procured by PIMCO. 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.
Each unaffiliated Trustee receives an annual retainer of $4,000, plus $1,500
for each Board of Trustees meeting attended in person and $250 for each meeting
attended telephonically, plus reimbursement of related expenses. In addition, an
unaffiliated Trustee who serves as a Committee Chair receives an additional
annual retainer of $500. These expenses are allocated to the Portfolios of the
Trust according to their respective net assets.
4. Purchases and Sales of Securities
Purchases and sales of securities (excluding short-term investments) for the
period ended June 30, 1998 were as follows (amounts in thousands):
<TABLE>
<CAPTION>
U.S. Government/Agency All Other
--------------------------------------------------------------------------
Purchases Sales Purchases Sales
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total Return Bond Portfolio $ 526 $ 0 $ 1,355 $ 0
High Yield Bond Portfolio 39 0 15,176 868
StocksPLUS Growth and Income Portfolio 4,046 3,034 628 0
</TABLE>
5. Shares of Beneficial Interest
The Trust may issue an unlimited number of shares of beneficial interest with a
$.0001 par value. Changes in shares of beneficial interest were as follows
(shares and amounts in thousands):
<TABLE>
<CAPTION>
StocksPLUS Growth
Total Return Bond Portfolio High Yield Bond Portfolio and Income Portfolio
Period from December 31, 1997 Period from April 30, 1998 Period from December 31, 1997
to June 30, 1998 to June 30, 1998 to June 30, 1998
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares Amount Shares Amount Shares Amount
Receipts for shares sold 300 $ 3,000 1,591 $ 15,878 707 $ 7,674
- ----------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of distributions 8 75 15 152 5 55
- ----------------------------------------------------------------------------------------------------------------------------------
Cost of shares redeemed 0 0 (4) (42) (16) (179)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase resulting from Portfolio 308 $ 3,075 1,602 $ 15,988 696 $ 7,550
share transactions
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
The following schedule shows the number of shareholders each owning 5% or more
of a Portfolio and the total percentage of the Portfolio held by such
shareholders:
5% or Greater Shareholders
------------------------------------------------------------------------
Number % of Portfolio Held
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return Bond Portfolio 1 100%
High Yield Bond Portfolio 3 100%
StocksPLUS Growth and Income Portfolio 3 100%
</TABLE>
15
<PAGE>
[This Page Intentionally Left Blank]
<PAGE>
PIMCO VARIABLE INSURANCE TRUST
840 NEWPORT CENTER DRIVE , SUITE 300
NEWPORT BEACH , CA 92660
888.746.2688
This report is submitted for the general information of the shareholders of the
PIMCO Variable Insurance Trust. It is not authorized for distribution to
prospective investors unless accompanied or preceded by an effective prospectus
for the PIMCO Variable Insurance Trust,which contains information covering its
investment policies as well as other pertinent information.
<PAGE>
Pacific Investment Management Company is responsible for the manangement and
administration of the PIMCO Variable Insurance Trust. Founded in 1971, Pacific
Investment Management Company currently manages assets in excess of $139 billion
on behalf of mutual fund and institutional clients located around the world.
Pacific Investment Management Company is one of seven investment advisory firms
which form PIMCO Advisors Holdings L.P., the nation's fourth largest publicly
traded investment management concern with combined assets under management in
excess of $229 billion. Widely recognized for providing consistent performance
and high-quality client service, the seven affiliated firms are:
Pacific Investment Management Company/Newport Beach, California Oppenheimer
Capital/New York, New York Columbus Circle Investors/Stamford, Connecticut
Cadence Capital Management/Boston, Massachusetts NFJ Investment Group/Dallas,
Texas Parametric Portfolio Associates/Seattle, Washington Blairlogie Capital
Management/Edinburgh, Scotland
Units of PIMCO Advisors Holdings L.P. trade on the New York Stock Exchange under
the ticker symbol "PA."
Trustees and Officers
Brent R. Harris, Chairman and Trustee
R. Wesley Burns,President and Trustee
Guilford C. Babcock,Trustee
Vern O. Curtis,Trustee
Thomas P. Kemp, Sr.,Trustee
William J. Popejoy,Trustee
Garlin G. Flynn,Secretary
John P. Hardaway,Treasurer
Investment Advisor and Administrator
Pacific Investment Management Company
840 Newport Center Drive, Suite 300
Newport Beach, California 92660
Transfer Agent and Custodian
Investors Fiduciary Trust Company
801 Pennsylvania
Kansas City, Missouri 64105
Counsel
Dechert Price & Rhoads
1775 Eye Street, N.W.
Washington, D.C. 20006-2401
Independent Accountants
PricewaterhouseCoopers LLP
1055 Broadway
Kansas City, Missouri 64105
