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 811-10385
Pacific Life Funds
(Exact name of registrant as specified in charter)
700 Newport Center Drive, P.O. Box 7500
Newport Beach, CA 92660
(Address of principal executive offices) (Zip code)
Robin S. Yonis
Vice President and General Counsel of Pacific Life Funds
700 Newport Center Drive, P.O. Box 9000
Newport Beach, CA 92660
(Name and address of agent for service)
Copies to:
Anthony H. Zacharski, Esq.
Dechert LLP
90 State House Square
Hartford, CT 06103
Registrant’s telephone number, including area code: 949-219-6767
Date of fiscal year end: March 31
Date of reporting period: March 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, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
The following is a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Act (17 CFR 270 30e-1).
ANNUAL REPORT
AS OF MARCH 31, 2014
TABLE OF CONTENTS | ||
A-1 | ||
A-2 | ||
B-1 | ||
C-1 | ||
C-3 | ||
C-5 | ||
C-9 | ||
D-1 | ||
E-1 | ||
F-1 | ||
F-2 | ||
F-4 | ||
Approval of Investment Advisory Agreement and Fund Management Agreements | F-7 | |
F-18 |
We are pleased to share with you the Pacific Life Funds (Trust) Annual Report dated March 31, 2014. The Trust is comprised of 33 funds, 11 of which are included in this report (each individually, a “fund” and collectively, the “funds”) and are available for direct investment. Pacific Life Fund Advisors LLC (PLFA), as adviser to the funds, manages the PL Portfolio Optimization Conservative, PL Portfolio Optimization Moderate-Conservative, PL Portfolio Optimization Moderate, PL Portfolio Optimization Moderate-Aggressive and PL Portfolio Optimization Aggressive Funds (PL Portfolio Optimization Funds). Each of the PL Portfolio Optimization Funds is an asset allocation “fund of funds” and invests in certain other funds (PL Underlying Funds) of the Trust. PLFA supervises the management of the PL Underlying Funds which are only available for investment by the PL Portfolio Optimization Funds and are included in a separate Annual Report. Please see “Where to Go for More Information” for instructions on how to obtain the PL Underlying Funds’ Annual Report. PLFA also does business under the name “Pacific Asset Management” and manages the PL Short Duration Income, PL Income, PL Strategic Income, PL Floating Rate Income, PL Limited Duration High Income, and PL High Income Funds under that name. The PL Money Market Fund was liquidated effective March 31, 2014. The funds and the fund managers as of March 31, 2014 are listed below:
Fund Manager | Fund | Page Number | ||
PL Portfolio Optimization Conservative | A-5 | |||
PL Portfolio Optimization Moderate-Conservative | A-7 | |||
Pacific Life Fund Advisors LLC (PLFA) | PL Portfolio Optimization Moderate | A-9 | ||
PL Portfolio Optimization Moderate-Aggressive | A-11 | |||
PL Portfolio Optimization Aggressive | A-13 | |||
Pacific Asset Management | PL Short Duration Income | A-14 | ||
PL Income | A-15 | |||
PL Strategic Income | A-16 | |||
PL Floating Rate Income | A-17 | |||
PL Limited Duration High Income | A-18 | |||
PL High Income | A-19 |
We appreciate your confidence in the Trust and look forward to serving your financial needs in the years to come.
Sincerely,
James T. Morris | Mary Ann Brown | |
Chairman of the Board | Chief Executive Officer | |
Pacific Life Funds | Pacific Life Funds |
A-1
PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION
This Annual Report is provided for the general information of investors with beneficial interests in the Trust. This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current Trust Prospectus, as supplemented, which contains information about the Trust and each of its funds, including their investment objectives, risks, charges and expenses. You should read the Prospectus carefully before investing. There is no assurance that a fund will achieve its investment objective. Each fund is subject to market risk. The net asset value of a fund changes as the value of its assets go up or down. The value of a fund’s shares will fluctuate, and when redeemed, may be worth more or less than their original cost. The total return for each fund includes reinvestment of all dividends and capital gain distributions, if any, and does not include deductions of any applicable sales charges. Past performance is not predictive of future performance. Performance figures for each class reflect the deduction of any applicable maximum front-end sales charge at the time of investment and reflect any applicable contingent deferred sales charge that would be deducted upon redemption at the end of the period presented unless otherwise noted.
This report shows you the performance of the funds compared to benchmark indices. Index performance is provided for illustrative and comparative purposes only and does not predict or depict the performance of the funds. Indices are unmanaged, do not incur transaction costs and cannot be purchased directly by investors. Index returns include reinvested dividends.
The composite benchmarks for the PL Portfolio Optimization Funds are composed using three to four broad-based indices. The percentage amounts of each broad-based index within each composite benchmark are based on each fund’s target asset class allocations in effect during the reporting period. The percentages attributed to a broad-based index within a composite benchmark will change if a fund’s target asset class allocations change.
PLFA has written the general market conditions commentary which expresses PLFA’s opinions and views on how the market generally performed for the year ended March 31, 2014. All views are subject to change at any time based upon market or other conditions, and the Trust, its adviser and the fund managers disclaim any responsibility to update such views. Any references to “we”, “I”, or “ours” are references to the adviser or fund manager.
The adviser and fund managers may include statements that constitute “forward-looking statements” under the United States (U.S.) securities laws. Forward-looking statements include information concerning possible or assumed future results of the Trust’s investment operations, asset levels, earnings, expenses, industry or market conditions, regulatory developments and other aspects of the Trust’s operations or general economic conditions. In addition, when used in this report, predictive verbs such as “believes”, “expects”, “anticipates”, “intends”, “plans”, “estimates”, “projects” and future or conditional verbs such as “will”, “may”, “could”, “should”, and “would”, or any other statement that necessarily depends on future events, are intended to identify forward-looking statements. Forward-looking statements are not guarantees of performance or economic results. They involve risks, uncertainties and assumptions. Although such statements are based on expectations that the adviser or fund manager believes to be reasonable, actual results may differ materially from expectations. Investors must not rely on any forward-looking statements.
In connection with any forward-looking statements and any investment in the Trust, investors should carefully consider the investment objectives, policies and risks described in the Trust’ s current Prospectus, as supplemented, and Statement of Additional Information, as supplemented, as filed with the Securities and Exchange Commission (SEC), which may be obtained from the SEC’s website at www.sec.gov.
Market Conditions (for the year ended March 31, 2014)
Executive Summary
Over the reporting period, financial markets displayed considerable divergence as U.S. equities surged ahead of most markets around the globe. The U.S. equity markets fared relatively well for most of the reporting period—charging to record highs—despite government disorders (e.g. government shutdown) and the Federal Reserve (Fed) tapering its bond purchasing program. The momentum in the U.S. equity market was supported by solid corporate earnings as well as positive economic activity over the reporting period.
Compared to the rest of the world, the U.S. generally exhibited more appealing economic conditions. Over the reporting period, U.S. business activity from both the manufacturing and services sectors expanded at decent levels as indicated by the Institute for Supply Management (ISM) Report on Business. The unemployment rate also continued to fall, hitting its lowest level since the 2008 financial crisis, and wage growth showed modest acceleration over the reporting period after several years of continued deceleration. Additionally, the housing sector experienced some recovery with rising home sales and accelerating prices through most of the reporting period. These factors helped lift consumer confidence and market sentiments. These positive indications also gave enough reason for the Fed to initiate tapering its quantitative easing (QE) efforts, despite an unusually harsh winter that dampened economic activity.
Non-U.S. developed nations also showed some progress over the reporting period. However, this recovery was fragmented throughout various regions. In the eurozone, Germany continued to anchor the recovery while Italy and Spain had been struggling to turn the corner. In Asia, the Japanese economy expanded in the earlier parts of the reporting period, which was boosted by its monetary and fiscal stimulus efforts. However, Japanese stocks pulled back in the first quarter of 2014 as concerns of the anticipated consumption tax reversed momentum. While the broad emerging market economies outpaced those of developed markets in terms of economic growth, equity and bond markets in emerging regions lagged behind those of developed economies. The Fed tapering pushed interest rates higher which caused financial constraints on several key emerging nations as they experienced large capital outflows. Countries that were affected the most include those with large current account deficits (i.e. net borrowers) and vulnerability to tightening external financing conditions. They include countries like Brazil, Turkey and India.
Overall, the global economy maintained a steady but slow recovery throughout the reporting period. Various risks continued to linger and influenced markets to varying degrees. The following sections highlight how specific market segments responded to the events that unfolded over the reporting period.
See explanation of symbol and benchmark definitions on page A-20 |
A-2
PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
Fixed Income
Concerns over the Fed’s tapering plan caused long-term interest rates to rise, which had a negative impact on the broad fixed income market over the reporting period. Yields have an inverse relationship with bond prices, so rising rates generally have a downward pressure on prices. The 10-year Treasury yield was as low as 1.66% in early May 2013 but climbed higher to 2.72% by the end of the reporting period. Over the reporting period, the broad fixed income market (as measured by the Barclays U.S. Aggregate Bond Index) fell 0.10%. Long-term Treasury bonds and fixed income securities with long duration (i.e. a higher sensitivity to interest rate movements) were particularly impacted more than others. The Barclays U.S. Treasury Inflation Protected Securities (TIPS) Index, which tends to have a relatively higher duration, slid 6.49% over the reporting period. On the other hand, short-term bonds that have lower duration experienced less drag from the rising rate environment and posted small gains.
On top of interest rates, bond values are affected by the perception of their credit risk, which is reflected in their yield spreads. Spreads also have an inverse relationship with bond prices. Similar to the equity market, risk appetite was also evident in the bond market, resulting in tightening spreads for high yield bonds and bank loans. While the emerging markets debt market struggled earlier in the reporting period, it recovered modestly in the first quarter of 2014 as the J.P. Morgan Emerging Markets Bond Index (EMBI) Global Diversified Index gained 0.56% over the reporting period.
Domestic Equity
2013 marked the fifth, consecutive, positive calendar year performance for the broad U.S. equity market as the S&P 500 Index leaped 21.86% over the reporting period. With respect to market capitalization, small-capitalization stocks outpaced large-capitalization companies. In terms of style, growth styles outperformed those of value for the reporting period. Cyclical sectors (e.g. industrials and information technology) generally outpaced those in the defensive sectors (e.g. utilities and consumer staples). High dividend-paying sectors that typically include utilities stocks had lost momentum in 2012 and continued to lag behind over the reporting period. Real estate investment trusts (REITs), which tend to be associated with relatively high dividend-payouts, delivered only moderate returns compared to the broad equity market after outperforming it every calendar year from 2009 to 2012. The Financial Times Stock Exchange National Association of Real Estate Investment Trusts (FTSE NAREIT) Equity REITs Index returned 4.16% for the reporting period. Hotel-related REITs performed relatively strong, whereas the health care-related sector experienced losses.
International Equity
The foreign equity market was mixed over the reporting period as developed markets posted solid results while emerging markets faced headwinds. The Morgan Stanley Capital International Europe, Australasia, and Far East (MSCI EAFE) Index (Net) and the MSCI Emerging Markets Index (Net) returned 17.56% and -1.43%, respectively. In the international, developed equity market, smaller-capitalization stocks outperformed their larger counterparts while value outperformed growth styles. With the eurozone showing signs of recovery, its respective equity markets generally performed well over the reporting period. Japan, which represents over 20% of the MSCI EAFE Index (Net), gave up its prior gains in the first quarter of 2014, causing it to lag behind the broad index. Emerging markets faced several challenges over the reporting period, starting with the initial news of the Fed’s tapering. The outflow of capital placed downward pressure on both debt and equity markets. Furthermore, the Russian stock market experienced relatively large losses in the first quarter of 2014, which were sparked by the crisis in Ukraine. Additionally, China began to curb new credit to slow down the excessive lending that had led to a heated property market. These efforts sought to ease real estate and infrastructure investments, causing a strain on commodity producers that export to China.
Commodities
Commodity prices were mixed over the reporting period. Energy prices edged out modest gains, while agriculture had modest losses and metals experienced a relatively large drop over the reporting period. Energy prices were relatively range-bound with no significant disruptions to supply and/or major changes in demand. Many agricultural prices fell sharply in 2013 but recovered much of the losses in the first quarter of 2014 with the harsh weather restricting supply and boosting prices. Over the past several years, metal prices have been largely determined by demand from China and India. With India curbing gold imports to address its ballooning current account deficit, precious metals prices experienced some downward pressure over the reporting period. The low inflationary environment and expectations of the Fed reversing its monetary easing (which could result in the appreciation of the U.S. dollar) also contributed to deflating precious metals prices.
Concluding Remarks
U.S. equities rallied with strong momentum during the reporting period. A rapidly rising market combined with low volatility can at times lead to complacency in the marketplace. Valuation levels of the S&P 500 Index have steadily risen over the past few years to around their five-year highs. In the past, valuations have been above current levels such as during the “Tech Boom” years, but those conditions are typically associated with strong economic growth and euphoric consumerism. The International Monetary Fund (IMF) projects the U.S. to grow 2.8% in 2014 (IMF—World Economic Outlook Update—January 2014) (“IMF Update”), which would represent a slower pace than that of the late-1990’s when U.S. gross domestic product (GDP) steadily grew at an approximate annual rate of 5%. Economic conditions have improved in the U.S., but the Fed continues to play a large role in supporting the economy. Furthermore, the unemployment rate figures could appear misleading given that some of the drop stemmed from people leaving the labor force rather than quality job growth.
The eurozone and other developed regions appear to be showing signs of recovery, but the process could likely take years before they are able to self-support economic growth without various stimulus packages. Emerging countries continue to deal with various challenges and opportunities. Several key elections in countries such as Brazil, India and Turkey throughout 2014 could help bring some stability to those countries. As for China, it is expected to continue setting the pace in 2014 with the IMF Update projecting a 7.5% growth for the year. While the economic expansion in China appears to be decelerating, the country’s regulators are focusing on maintaining growth at a more manageable range. Additionally, Chinese officials have been discussing a shift toward consumer spending to help drive future
See explanation of symbol and benchmark definitions on page A-20 |
A-3
PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
economic growth. Although a rebalancing China that places more emphasis on consumption and less on infrastructure spending may hurt certain countries, the transition could also help those that export consumer goods to China. More than ever, investors may begin to emphasize individualization of emerging countries. In the past, emerging market countries as a group shared many weaknesses that linked them together, especially in times of global stress. While some of these vulnerabilities have not disappeared, not all of these emerging countries share the same issues to the same degree. Many of these countries can be differentiated by authoritative tendencies, economic policies, debt levels, consumer behavior, and growth drivers, among others. While there are certain emerging countries that face some key hurdles, there are also those with a more positive outlook.
Overall, economic conditions may be improving, especially in the U.S. However, uncertainty and risks still remain. The Fed’s removal of its monetary stimulus could affect markets in various ways. While it could signal that the Fed has higher confidence in the economy, a premature withdrawal could reverse the recovery. This may prevent the equity market from rallying to excessive valuation levels. Interest rates may also rise, which would be a headwind for bonds with long duration. Given the various challenges and uncertainty throughout the globe, some volatility could return to the marketplace in 2014 after being relatively suppressed throughout 2013. In our opinion, this validates the importance of proper asset allocation to navigate through various market conditions.
Performance of the PL Portfolio Optimization Funds
Since the performance of each PL Portfolio Optimization Fund is a composite of the performance of each of the PL Underlying Funds in which each invests (which may include bonds, domestic and/or international equities), there is no one, broad-based industry index to use as a comparison to a PL Portfolio Optimization Fund’s performance. Therefore, we at PLFA have provided information regarding three to four broad-based indices to use as a comparison to each fund’s performance.
In addition, to assist in performance comparisons, composite benchmarks were constructed for each PL Portfolio Optimization Fund; each composite benchmark is comprised of the three to four broad-based indices shown below. The composite benchmarks were constructed with allocations to each asset class that correspond to the target allocations for the PL Portfolio Optimization Funds. However, the actual allocation of any PL Portfolio Optimization Fund will naturally vary from these targets as a result of market performance over time. The one-year performance for these broad-based indices is shown in the following table.
Broad Based Indices | One Year (as of 3-31-14) | |||
S&P 500 Index (U.S. Stocks) | 21.86% | |||
Morgan Stanley Capital International (MSCI) EAFE Index (Net) (International Stocks) | 17.56% | |||
Barclays U.S. Aggregate Bond Index (Fixed Income) | (0.10% | ) | ||
BofA Merrill Lynch U.S. 3-Month T-Bill Index (Cash) | 0.07% |
See explanation of symbol and benchmark definitions on page A-20 |
A-4
PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
PL Portfolio Optimization Conservative Fund (managed by Pacific Life Fund Advisors LLC)
Q. How did the fund perform for the year ended March 31, 2014?
A. For the year ended March 31, 2014, the PL Portfolio Optimization Conservative Fund’s Class A (without sales charge) returned 1.78%, compared to a -0.10% return for its benchmarks, the Barclays U.S. Aggregate Bond Index, a 21.86% return for the S&P 500 Index, a 17.56% return for the MSCI EAFE Index (Net), and a 3.90% return for the PL Portfolio Optimization Conservative Composite Benchmark.
The following graph compares the performance of a hypothetical $10,000 investment in Class A shares of the fund to its benchmarks for the ten-year periods ended March 31, 2014. For comparison purposes, the performance of Class B and C shares for the ten-year periods ended March 31, 2014 and Class R and Advisor Class shares for the periods from inception through March 31, 2014 are also shown in the table below. Performance data for Class B, C, R and Advisor Class shares will vary due to differences in fees and sales charges. The fund’s performance reflects reinvestments of all dividends and capital gains distributions, if any.
Performance Comparison
Average Annual Total Returns for the Periods Ended March 31, 2014
1 Year | 5 Years | 10 Years | ||||||||||
Fund's Class A without sales charge | 1.78% | 8.28% | 4.61% | |||||||||
Fund's Class A with maximum sales charge | (3.79% | ) | 7.07% | 4.02% | ||||||||
Fund's Class B without sales charge | 1.06% | 7.56% | 4.08% | |||||||||
Fund's Class B with maximum sales charge | (3.88% | ) | 7.26% | 4.08% | ||||||||
Fund's Class C without sales charge | 1.04% | 7.57% | 3.94% | |||||||||
Fund's Class C with maximum sales charge | 0.05% | 7.57% | 3.94% | |||||||||
Barclays U.S. Aggregate Bond Index | (0.10% | ) | 4.80% | 4.46% | ||||||||
S&P 500 Index | 21.86% | 21.16% | 7.42% | |||||||||
MSCI EAFE Index (Net) | 17.56% | 16.02% | 6.53% | |||||||||
PL Portfolio Optimization Conservative | 3.90% | 7.54% | 4.99% | |||||||||
1 Year | 5 Years | Since | ||||||||||
Fund’s Class R without sales charge | 1.52% | 8.04% | 4.76% | |||||||||
Barclays U.S. Aggregate Bond Index | (0.10% | ) | 4.80% | 4.85% | ||||||||
S&P 500 Index | 21.86% | 21.16% | 7.34% | |||||||||
MSCI EAFE Index (Net) | 17.56% | 16.02% | 4.86% | |||||||||
PL Portfolio Optimization Conservative | 3.90% | 7.54% | 5.19% |
Average Annual Total Returns for the Periods Ended March 31, 2014
1 Year | Since Inception (12/31/12) | |||||||||
Fund’s Advisor Class without sales charge | 1.87% | 3.16% | ||||||||
Barclays U.S. Aggregate Bond Index | (0.10% | ) | (0.17% | ) | ||||||
S&P 500 Index | 21.86% | 26.97% | ||||||||
MSCI EAFE Index (Net) | 17.56% | 18.47% | ||||||||
PL Portfolio Optimization Conservative Composite Benchmark | 3.90% | 4.54% |
Performance data shown represents past performance. Investment return and principal value will fluctuate so that shares of the fund when redeemed may be worth more or less than their original cost. Past performance is not predictive of future performance. The table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares. |
See explanation of symbol and benchmark definitions on page A-20 |
A-5
PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
Q. Discuss both positive and negative factors that materially affected the fund’s performance during the year, including relevant market conditions, investment strategies and techniques, and particular sectors or securities.
A. For the reporting period, the fund’s Class A underperformed the PL Portfolio Optimization Conservative Composite Benchmark. The PL Portfolio Optimization Conservative Fund was primarily comprised of various fixed income strategies, with a small allocation to equity and alternative funds, during the reporting period. Fixed income investments included underlying funds comprised of intermediate-term bonds, short duration securities, inflation-protected bonds, emerging markets bonds, and floating rate loans. The equity segment mainly encompassed domestic and foreign large-capitalization funds. Alternatives included two absolute return strategies and a precious metals fund.
From the broad asset class return perspective, the fund’s domestic equity segment fared better than the international equity and fixed income groups. Over the reporting period, alternatives generally held back returns while domestic equities contributed to the performance of the fund.
With interest rates rising, long duration fixed income funds generally struggled. Among the underlying fixed income holdings of the fund, the PL Inflation Managed Fund represented the largest detractor from fund performance. TIPS, which tend to have a higher duration than the broad fixed income benchmark (Barclays U.S. Aggregate Bond Index), took a hit from rising rates in a very low inflationary environment. On the other hand, short duration strategies that included the PL Floating Rate Loan Fund dodged effects from rising rates and managed to deliver gains from the compression in credit spreads. Spreads tightened over the reporting period as sentiments generally improved in the U.S. While credit spreads generally contracted in the U.S., those of emerging markets bonds generally widened over the reporting periods, causing the PL Emerging Markets Debt Fund to detract from fund performance.
The fund’s domestic equities benefited from the positive momentum in the broad, U.S. equities market. The PL Mid-Cap Equity Fund delivered strong returns that stemmed from solid stock selection, which contributed to the fund’s performance. While the fund’s international large-capitalization strategies experienced double-digit returns, the PL International Large-Cap Fund underperformed the broad, foreign equities benchmark, the Morgan Stanley Capital International (MSCI) Europe, Australasia, Far East (EAFE) Index (Net).
The underlying alternative funds, which generally have a low correlation to the broad equity and fixed income markets, dragged down overall performance of the fund as U.S. equities rallied in a relatively narrow market. Over the reporting period, the PL Precious Metals Fund’s performance tumbled as gold prices experienced their worst calendar year in three decades. Gold prices fell in conjunction with the market’s expectation of the Fed unwinding its quantitative easing (QE) programs as well as the general rise in the U.S. dollar during the reporting period.
See explanation of symbol and benchmark definitions on page A-20 |
A-6
PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
PL Portfolio Optimization Moderate-Conservative Fund (managed by Pacific Life Fund Advisors LLC)
Q. How did the fund perform for the year ended March 31, 2014?
A. For the year ended March 31, 2014, the PL Portfolio Optimization Moderate-Conservative Fund’s Class A (without sales charge) returned 5.08%, compared to a -0.10% return for its benchmarks, the Barclays U.S. Aggregate Bond Index, a 21.86% return for the S&P 500 Index, a 17.56% return for the MSCI EAFE Index (Net), and a 7.97% return for the PL Portfolio Optimization Moderate-Conservative Composite Benchmark.
The following graph compares the performance of a hypothetical $10,000 investment in Class A shares of the fund to its benchmarks for the ten-year periods ended March 31, 2014. For comparison purposes, the performance of Class B and C shares for the ten-year periods ended March 31, 2014 and Class R and Advisor Class shares for the periods from inception through March 31, 2014 are also shown in the table below. Performance data for Class B, C, R and Advisor Class shares will vary due to differences in fees and sales charges. The fund’s performance reflects reinvestments of all dividends and capital gains distributions, if any.
Performance Comparison
Average Annual Total Returns for the Periods Ended March 31, 2014
1 Year | 5 Years | 10 Years | ||||||||||
Fund’s Class A without sales charge | 5.08% | 10.90% | 5.19% | |||||||||
Fund’s Class A with maximum sales charge | (0.67% | ) | 9.64% | 4.59% | ||||||||
Fund’s Class B without sales charge | 4.47% | 10.17% | 4.64% | |||||||||
Fund’s Class B with maximum sales charge | (0.53% | ) | 9.89% | 4.64% | ||||||||
Fund’s Class C without sales charge | 4.41% | 10.16% | 4.51% | |||||||||
Fund’s Class C with maximum sales charge | 3.41% | 10.16% | 4.51% | |||||||||
Barclays U.S. Aggregate Bond Index | (0.10% | ) | 4.80% | 4.46% | ||||||||
S&P 500 Index | 21.86% | 21.16% | 7.42% | |||||||||
MSCI EAFE Index (Net) | 17.56% | 16.02% | 6.53% | |||||||||
PL Portfolio Optimization Moderate-Conservative Composite Benchmark | 7.97% | 10.67% | 5.73% | |||||||||
1 Year | 5 Years | Since Inception (9/30/05) | ||||||||||
Fund’s Class R without sales charge | 4.91% | 10.64% | 5.08% | |||||||||
Barclays U.S. Aggregate Bond Index | (0.10% | ) | 4.80% | 4.85% | ||||||||
S&P 500 Index | 21.86% | 21.16% | 7.34% | |||||||||
MSCI EAFE Index (Net) | 17.56% | 16.02% | 4.86% | |||||||||
PL Portfolio Optimization Moderate-Conservative Composite Benchmark | 7.97% | 10.67% | 5.76% |
Average Annual Total Returns for the Periods Ended March 31, 2014
1 Year | Since Inception (12/31/12) | |||||||||
Fund’s Advisor Class without sales charge | 5.32% | 7.22% | ||||||||
Barclays U.S. Aggregate Bond Index | (0.10% | ) | (0.17% | ) | ||||||
S&P 500 Index | 21.86% | 26.97% | ||||||||
MSCI EAFE Index (Net) | 17.56% | 18.47% | ||||||||
PL Portfolio Optimization Moderate-Conservative Composite Benchmark | 7.97% | 9.39% |
Performance data shown represents past performance. Investment return and principal value will fluctuate so that shares of the fund when redeemed may be worth more or less than their original cost. Past performance is not predictive of future performance. The table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares. |
See explanation of symbol and benchmark definitions on page A-20 |
A-7
PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
Q. Discuss both positive and negative factors that materially affected the fund’s performance during the year, including relevant market conditions, investment strategies and techniques, and particular sectors or securities.
A. For the reporting period, the fund’s Class A underperformed the PL Portfolio Optimization Moderate-Conservative Composite Benchmark. The PL Portfolio Optimization Moderate-Conservative Fund had a diversified allocation mix that was modestly tilted to fixed income during the reporting period. Fixed income investments included underlying funds that consisted of intermediate-term bonds as well as short duration securities, inflation-protected bonds, emerging markets bonds, and floating rate loans. The equity exposure was diversified across style (growth/value), market capitalization and region (including an allocation to foreign small-capitalization and emerging markets strategies). Alternatives included two absolute return strategies and a precious metals fund.
From the broad, asset class return perspective, the fund’s domestic equity segment fared better than the international equity and fixed income groups. Over the reporting period, alternatives generally held back returns while domestic equities rallied in the narrowly driven market.
With interest rates rising, long duration fixed income funds generally struggled. Among the underlying fixed income holdings of the fund, the PL Inflation Managed Fund represented the largest detractor from fund performance. TIPS, which tend to have a higher duration than the broad fixed income benchmark (Barclays U.S. Aggregate Bond Index), took a hit from rising rates in a very low inflationary environment. On the other hand, short duration strategies that included the PL Floating Rate Loan Fund dodged effects from rising rates and managed to deliver gains from the compression in credit spreads. Spreads tightened over the reporting period as sentiments generally improved in the U.S. While credit spreads generally contracted in the U.S., those of emerging markets bonds generally widened over the reporting periods, causing the PL Emerging Markets Debt Fund to detract from fund performance.
The fund’s domestic equities benefited from the positive momentum in the broad U.S. equities market. The PL Mid-Cap Equity Fund delivered strong returns that stemmed from solid stock selection, which contributed to the fund’s performance. PL Comstock and PL Large-Cap Growth Funds also contributed to performance. While the fund’s international large-capitalization strategies experienced double-digit returns, the PL International Large-Cap Fund underperformed the broad foreign equities benchmark (MSCI EAFE Index (Net)). Unlike foreign developed equities, the emerging markets equities broadly experienced losses over the reporting period. Although the PL Emerging Markets Fund lagged developed equities, it experienced positive returns and outperformed its respective emerging markets benchmark (MSCI Emerging Markets Index (Net)) by nearly 8% during the reporting period.
The alternative funds, which generally have a low correlation to the broad equity and fixed income markets, dragged down overall fund performance as U.S. equities rallied in a relatively narrow market. Over the reporting period, the PL Precious Metals Fund’s performance tumbled as gold prices experienced their worst year in three decades. Gold prices fell in conjunction with the market’s expectation of the Fed unwinding its quantitative easing (QE) programs as well as the general rise in the U.S. dollar during the reporting period.
See explanation of symbol and benchmark definitions on page A-20 |
A-8
PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
PL Portfolio Optimization Moderate Fund (managed by Pacific Life Fund Advisors LLC)
Q. How did the fund perform for the year ended March 31, 2014?
A. For the year ended March 31, 2014, the PL Portfolio Optimization Moderate Fund’s Class A (without sales charge) returned 8.51%, compared to a 21.86% return for its benchmarks, the S&P 500 Index, a -0.10% return for the Barclays U.S. Aggregate Bond Index, a 17.56% return for the MSCI EAFE Index (Net), and a 12.15% return for the PL Portfolio Optimization Moderate Composite Benchmark.
The following graph compares the performance of a hypothetical $10,000 investment in Class A shares of the fund to its benchmarks for the ten-year periods ended March 31, 2014. For comparison purposes, the performance of Class B and C shares for the ten-year periods ended March 31, 2014 and Class R and Advisor Class shares for the periods from inception through March 31, 2014 are also shown in the table below. Performance data for Class B, C, R and Advisor Class shares will vary due to differences in fees and sales charges. The fund’s performance reflects reinvestments of all dividends and capital gains distributions, if any.
Performance Comparison
Average Annual Total Returns for the Periods Ended March 31, 2014
1 Year | 5 Years | 10 Years | ||||||||||
Fund’s Class A without sales charge | 8.51% | 13.92% | 6.03% | |||||||||
Fund’s Class A with maximum sales charge | 2.55% | 12.64% | 5.43% | |||||||||
Fund’s Class B without sales charge | 7.90% | 13.18% | 5.50% | |||||||||
Fund’s Class B with maximum sales charge | 2.90% | 12.94% | 5.50% | |||||||||
Fund’s Class C without sales charge | 7.89% | 13.21% | 5.35% | |||||||||
Fund’s Class C with maximum sales charge | 6.89% | 13.21% | 5.35% | |||||||||
S&P 500 Index | 21.86% | 21.16% | 7.42% | |||||||||
Barclays U.S. Aggregate Bond Index | (0.10% | ) | 4.80% | 4.46% | ||||||||
MSCI EAFE Index (Net) | 17.56% | 16.02% | 6.53% | |||||||||
PL Portfolio Optimization Moderate | 12.15% | 13.81% | 6.37% | |||||||||
1 Year | 5 Years | Since Inception (9/30/05) | ||||||||||
Fund’s Class R without sales charge | 8.33% | 13.68% | 5.66% | |||||||||
S&P 500 Index | 21.86% | 21.16% | 7.34% | |||||||||
Barclays U.S. Aggregate Bond Index | (0.10% | ) | 4.80% | 4.85% | ||||||||
MSCI EAFE Index (Net) | 17.56% | 16.02% | 4.86% | |||||||||
PL Portfolio Optimization Moderate | 12.15% | 13.81% | 6.26% |
Average Annual Total Returns for the Periods Ended March 31, 2014
1 Year | Since Inception (12/31/12) | |||||||||
Fund’s Advisor Class without sales charge | 8.73% | 11.39% | ||||||||
S&P 500 Index | 21.86% | 26.97% | ||||||||
Barclays U.S. Aggregate Bond Index | (0.10% | ) | (0.17% | ) | ||||||
MSCI EAFE Index (Net) | 17.56% | 18.47% | ||||||||
PL Portfolio Optimization Moderate | 12.15% | 14.41% |
Performance data shown represents past performance. Investment return and principal value will fluctuate so that shares of the fund when redeemed may be worth more or less than their original cost. Past performance is not predictive of future performance. The table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares. |
See explanation of symbol and benchmark definitions on page A-20 |
A-9
PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
Q. Discuss both positive and negative factors that materially affected the fund’s performance during the year, including relevant market conditions, investment strategies and techniques, and particular sectors or securities.
A. For the reporting period, the fund’s Class A underperformed the PL Portfolio Optimization Moderate Composite Benchmark. The PL Portfolio Optimization Moderate Fund maintained a mix of equity and fixed income funds. The equity exposure was diversified across style (growth/value), market capitalization and region (including allocations to foreign small capitalization and emerging markets stocks). The fund also maintained exposure to select sectors such as publicly traded REITs. Fixed income investments included intermediate-term bonds, short duration securities, inflation-protected bonds, emerging markets bonds, and floating rate loans. Alternatives included two absolute return strategies and a precious metals fund.
From the broad asset class return perspective, the fund’s domestic equity segment fared better than the international equity and fixed income groups. Over the reporting period, alternatives generally held back returns while domestic equities rallied in the narrowly driven market.
The fund’s domestic equities benefited from the positive momentum in the broad U.S. equities market. The PL Mid-Cap Equity Fund delivered strong returns that stemmed from solid stock selection. The PL Comstock Fund also contributed to the fund’s performance. However, the PL Real Estate Fund lost steam over the reporting period after several consecutive years of outperforming the S&P 500 Index from 2009 to 2012. While the fund’s international large-capitalization strategies experienced double-digit returns, the PL International Large-Cap Fund underperformed the broad foreign equities benchmark (MSCI EAFE Index (Net)). Unlike foreign developed equities, the emerging markets equities broadly experienced losses over the reporting period. Although the PL Emerging Markets Fund lagged developed equities, it experienced positive returns and outperformed its respective emerging markets benchmark (MSCI Emerging Markets Index (Net)) by nearly 8% during the reporting period.
With interest rates rising, long duration fixed income funds generally struggled. Among the underlying fixed income holdings of the fund, the PL Inflation Managed Fund represented the largest detractor. TIPS, which tend to have a higher duration than the broad fixed income benchmark (Barclays U.S. Aggregate Bond Index), took a hit from rising rates in a very low inflationary environment. On the other hand, short duration strategies that includes the PL Floating Rate Loan Fund dodged effects from rising rates and managed to deliver gains from the compression in credit spreads. Spreads tightened over the reporting period as sentiments generally improved in the U.S. While credit spreads generally contracted in the U.S., those of emerging markets bonds generally widened over the reporting periods, causing the PL Emerging Markets Debt Fund to detract from performance.
The alternative funds, which generally have a low correlation to the broad equity and fixed income markets, dragged down overall fund performance as U.S. equities rallied in a relatively narrow market. Over the reporting period, the PL Precious Metals Fund’s performance tumbled as gold prices experienced the worst year in three decades. Gold prices fell in conjunction with the market’s expectation of the Fed slowing and eventually unwinding its quantitative easing (QE) programs as well as the rise in the U.S. dollar during the reporting period.
See explanation of symbol and benchmark definitions on page A-20 |
A-10
PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
PL Portfolio Optimization Moderate-Aggressive Fund (managed by Pacific Life Fund Advisors LLC)
Q. How did the fund perform for the year ended March 31, 2014?
A. For the year ended March 31, 2014, the PL Portfolio Optimization Moderate-Aggressive Fund’s Class A (without sales charge) returned 12.01%, compared to a 21.86% return for its benchmarks, the S&P 500 Index, a -0.10% return for the Barclays U.S. Aggregate Bond Index, a 17.56% return for the MSCI EAFE Index (Net), and a 16.44% return for the PL Portfolio Optimization Moderate-Aggressive Composite Benchmark.
The following graph compares the performance of a hypothetical $10,000 investment in Class A shares of the fund to its benchmarks for the ten-year periods ended March 31, 2014. For comparison purposes, the performance of Class B and C shares for the ten-year periods ended March 31, 2014 and Class R and Advisor Class shares for the periods from inception through March 31, 2014 are also shown in the table below. Performance data for Class B, C, R and Advisor Class shares will vary due to differences in fees and sales charges. The fund’s performance reflects reinvestments of all dividends and capital gains distributions, if any.
Performance Comparison
Average Annual Total Returns for the Periods Ended March 31, 2014
1 Year | 5 Years | 10 Years | ||||||||||
Fund’s Class A without sales charge | 12.01% | 16.52% | 6.25% | |||||||||
Fund’s Class A with maximum sales charge | 5.82% | 15.20% | 5.65% | |||||||||
Fund’s Class B without sales charge | 11.25% | 15.85% | 5.72% | |||||||||
Fund’s Class B with maximum sales charge | 6.25% | 15.63% | 5.72% | |||||||||
Fund’s Class C without sales charge | 11.33% | 15.91% | 5.58% | |||||||||
Fund’s Class C with maximum sales charge | 10.33% | 15.91% | 5.58% | |||||||||
S&P 500 Index | 21.86% | 21.16% | 7.42% | |||||||||
Barclays U.S. Aggregate Bond Index | (0.10% | ) | 4.80% | 4.46% | ||||||||
MSCI EAFE Index (Net) | 17.56% | 16.02% | 6.53% | |||||||||
PL Portfolio Optimization Moderate-Aggressive Composite Benchmark | 16.44% | 16.86% | 6.83% | |||||||||
1 Year | 5 Years | Since Inception (9/30/05) | ||||||||||
Fund’s Class R without sales charge | 11.67% | 16.26% | 5.68% | |||||||||
S&P 500 Index | 21.86% | 21.16% | 7.34% | |||||||||
Barclays U.S. Aggregate Bond Index | (0.10% | ) | 4.80% | 4.85% | ||||||||
MSCI EAFE Index (Net) | 17.56% | 16.02% | 4.86% | |||||||||
PL Portfolio Optimization Moderate-Aggressive Composite Benchmark | 16.44% | 16.86% | 6.55% |
Average Annual Total Returns for the Periods Ended March 31, 2014
1 Year | Since Inception (12/31/12) | |||||||||
Fund’s Advisor Class without sales charge | 12.21% | 15.52% | ||||||||
S&P 500 Index | 21.86% | 26.97% | ||||||||
Barclays U.S. Aggregate Bond Index | (0.10% | ) | (0.17% | ) | ||||||
MSCI EAFE Index (Net) | 17.56% | 18.47% | ||||||||
PL Portfolio Optimization Moderate-Aggressive Composite Benchmark | 16.44% | 19.60% |
Performance data shown represents past performance. Investment return and principal value will fluctuate so that shares of the fund when redeemed may be worth more or less than their original cost. Past performance is not predictive of future performance. The table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares. |
See explanation of symbol and benchmark definitions on page A-20 |
A-11
PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
Q. Discuss both positive and negative factors that materially affected the fund’s performance during the year, including relevant market conditions, investment strategies and techniques, and particular sectors or securities.
A. For reporting period, the fund’s Class A underperformed the PL Portfolio Optimization Moderate-Aggressive Composite Benchmark. The PL Portfolio Optimization Moderate-Aggressive Fund had a diversified allocation mix that was overweight in equity. The equity exposure was diversified across style (growth/value), market capitalization and region (which include allocations to foreign small capitalization and emerging markets stocks). The fund also maintained exposure to select sectors such as publicly traded REITs. Fixed income investments included intermediate-term bonds as well as specific strategies such as short duration, inflation-protected bonds and emerging markets bonds. Alternatives included two absolute return strategies and a precious metals fund.
From the broad asset class return perspective, the fund’s domestic equity segment fared better than the international equity and fixed income groups. Over the reporting period, alternatives generally held back returns while domestic equities rallied in the narrowly driven market.
The fund’s domestic equities benefited from the positive momentum in the broad, U.S. equities market. The PL Mid-Cap Equity Fund delivered strong returns that stemmed from solid stock selection. Large-cap strategies such as PL Comstock, PL Large-Cap Growth and PL Main Street Core Funds also contributed to performance. However, the PL Real Estate Fund lost steam over the reporting period after several consecutive years of outperforming the S&P 500 Index from 2009 to 2012. While the fund’s international large-capitalization strategies experienced double-digit returns, the PL International Large-Cap Fund underperformed the broad foreign equities benchmark (MSCI EAFE Index (Net)). Unlike foreign developed equities, the emerging markets equities broadly experienced losses over the reporting period. Although the PL Emerging Markets Fund lagged developed equities, it experienced positive returns and outperformed its respective emerging markets benchmark (MSCI Emerging Markets Index (Net)) by nearly 8% during the reporting period.
With interest rates rising, long duration funds generally struggled. Among the fixed income options, the PL Inflation Managed Fund faced challenges over the reporting period. TIPS, which tend to have a higher duration than the broad fixed income benchmark (Barclays U.S. Aggregate Bond Index), took a hit from rising rates in a very low inflationary environment. On the other hand, the PL Short Duration Bond Fund dodged effects from rising rates and managed to deliver slight gains. While credit spreads generally contracted in the U.S., those of emerging markets bonds generally widened over the reporting period, causing the PL Emerging Markets Debt Fund to detract from performance.
The alternative funds, which generally have a low correlation to the broad equity and fixed income markets, dragged down overall fund performance as U.S. equities rallied in a relatively narrow market. Over the reporting period, the PL Precious Metals Fund’s performance tumbled as gold prices experienced the worst year in three decades. Gold prices fell in conjunction with the market’s expectation of the Fed unwinding its quantitative easing (QE) programs as well as the rise in the U.S. dollar during the reporting period.
See explanation of symbol and benchmark definitions on page A-20 |
A-12
PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
PL Portfolio Optimization Aggressive Fund (managed by Pacific Life Fund Advisors LLC)
Q. How did the fund perform for the year ended March 31, 2014?
A. For the year ended March 31, 2014, the PL Portfolio Optimization Aggressive Fund’s Class A (without sales charge) returned 13.70%, compared to a 21.86% return for its benchmarks, the S&P 500 Index, a 17.56% return for the MSCI EAFE Index (Net), a -0.10% return for the Barclays U.S. Aggregate Bond Index, and a 18.53% return for the PL Portfolio Optimization Aggressive Composite Benchmark.
The following graph compares the performance of a hypothetical $10,000 investment in Class A shares of the fund to its benchmarks for the ten-year periods ended March 31, 2014. For comparison purposes, the performance of Class B and C shares for the ten-year periods ended March 31, 2014 and Class R and Advisor Class shares for the periods from inception through March 31, 2014 are also shown in the table below. Performance data for Class B, C, R and Advisor Class shares will vary due to differences in fees and sales charges. The fund’s performance reflects reinvestments of all dividends and capital gains distributions, if any.
Performance Comparison
Average Annual Total Returns for the Periods Ended March 31, 2014
1 Year | 5 Years | 10 Years | ||||||||||
Fund’s Class A without sales charge | 13.70% | 18.01% | 6.20% | |||||||||
Fund’s Class A with maximum sales charge | 7.41% | 16.69% | 5.60% | |||||||||
Fund’s Class B without sales charge | 13.13% | 17.56% | 5.68% | |||||||||
Fund’s Class B with maximum sales charge | 8.13% | 17.35% | 5.68% | |||||||||
Fund’s Class C without sales charge | 13.12% | 17.55% | 5.57% | |||||||||
Fund’s Class C with maximum sales charge | 12.12% | 17.55% | 5.57% | |||||||||
S&P 500 Index | 21.86% | 21.16% | 7.42% | |||||||||
MSCI EAFE Index (Net) | 17.56% | 16.02% | 6.53% | |||||||||
Barclays U.S. Aggregate Bond Index | (0.10% | ) | 4.80% | 4.46% | ||||||||
PL Portfolio Optimization Aggressive Composite Benchmark | 18.53% | 18.66% | 6.79% | |||||||||
1 Year | 5 Years | Since Inception (9/30/05) | ||||||||||
Fund’s Class R without sales charge | 13.45% | 17.82% | 5.39% | |||||||||
S&P 500 Index | 21.86% | 21.16% | 7.34% | |||||||||
MSCI EAFE Index (Net) | 17.56% | 16.02% | 4.86% | |||||||||
Barclays U.S. Aggregate Bond Index | (0.10% | ) | 4.80% | 4.85% | ||||||||
PL Portfolio Optimization Aggressive Composite Benchmark | 18.53% | 18.66% | 6.33% |
Average Annual Total Returns for the Periods Ended March 31, 2014
1 Year | Since Inception (12/31/12) | |||||||||
Fund’s Advisor Class without sales charge | 13.84% | 17.60% | ||||||||
S&P 500 Index | 21.86% | 26.97% | ||||||||
MSCI EAFE Index (Net) | 17.56% | 18.47% | ||||||||
Barclays U.S. Aggregate Bond Index | (0.10% | ) | (0.17% | ) | ||||||
PL Portfolio Optimization Aggressive Composite Benchmark | 18.53% | 22.05% |
Performance data shown represents past performance. Investment return and principal value will fluctuate so that shares of the fund when redeemed may be worth more or less than their original cost. Past performance is not predictive of future performance. The table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares. |
See explanation of symbol and benchmark definitions on page A-20 |
A-13
PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
Q. Discuss both positive and negative factors that materially affected the fund’s performance during the year, including relevant market conditions, investment strategies and techniques, and particular sectors or securities.
A. For the reporting period, the fund’s Class A underperformed the PL Portfolio Optimization Aggressive Composite Benchmark. The PL Portfolio Optimization Aggressive Fund allocates, primarily, to domestic and international equity funds which are diversified across style (growth/value), market capitalization and region (which include allocations to foreign small-capitalization and emerging markets stocks). The fund also maintains exposure to select sectors such as publicly traded REITs as well as a small allocation to intermediate-term fixed income securities. Alternatives include two absolute return strategies and a precious metals fund.
From the broad asset class return perspective, the fund’s domestic equity segment fared better than the international equity and fixed income groups. Over the reporting period, alternatives generally held back returns while domestic equities rallied in the narrowly driven market.
The fund’s domestic equities benefited from the positive momentum in the broad, U.S. equities market. The PL Mid-Cap Equity Fund delivered strong returns that stemmed from solid stock selection. Large-capitalization strategies such as PL Comstock, PL Large-Cap Growth and PL Main Street Core Funds also contributed to performance. However, the PL Real Estate Fund lost steam over the reporting period after several consecutive years of outperforming the S&P 500 Index from 2009 to 2012. While the fund’s international large-capitalization strategies experienced double-digit returns, the PL International Large-Cap Fund underperformed the broad foreign equities benchmark (MSCI EAFE Index (Net)). Unlike foreign developed equities, the emerging markets equities broadly experienced losses over the reporting period. Although the PL Emerging Markets Fund lagged developed equities, it experienced positive returns and outperformed its respective emerging markets benchmark (MSCI Emerging Markets Index (Net)) by nearly 8% during the reporting period.
The alternative funds, which generally have a low correlation to the broad equity and fixed income markets, dragged down overall fund performance as U.S. equities rallied in a relatively narrow market. Over the reporting period, the PL Precious Metals Fund’s performance tumbled as gold prices experienced its worst year in three decades. Gold prices fell in conjunction with the market’s expectation of the Fed unwinding its quantitative easing (QE) programs as well as the rise in the U.S. dollar during the reporting period.
The PL Managed Bond Fund, which represents the only dedicated fixed income option in the fund, underperformed the broad fixed income benchmark (Barclays U.S. Aggregate Bond Index).
PL Short Duration Income Fund (managed by Pacific Asset Management)
Q. How did the fund perform for the year ended March 31, 2014?
A. For the year ended March 31, 2014, the PL Short Duration Income Fund’s Class I (without sales charge) returned 2.20%, compared to a 0.68% return for its benchmark, the Barclays 1-3 Year U.S. Government/Credit Bond Index.
The following graph compares the performance of a hypothetical $10,000 investment in Class I shares of the fund to its benchmark for the periods from inception through March 31, 2014. For comparison purposes, the performance of Class A, C and Advisor Class shares for the periods from inception through March 31, 2014 are also shown in the table below. Performance data for Class A, C and Advisor Class shares will vary due to differences in fees and sales charges. The fund’s performance reflects reinvestments of all dividends and capital gains distributions, if any.
Performance Comparison
Average Annual Total Returns for the Periods Ended March 31, 2014
1 Year | Since Inception (12/19/11) | |||||||
Fund’s Class I without sales charge | 2.20% | 4.56% | ||||||
Barclays 1-3 Year U.S. Government/Credit Bond Index | 0.68% | 0.95% | ||||||
1 Year | Since Inception (6/29/12) | |||||||
Fund’s Class A without sales charge | 2.00% | 3.86% | ||||||
Fund’s Class A with maximum sales charge | (1.02% | ) | 2.05% | |||||
Fund’s Class C without sales charge | 1.28% | 3.15% | ||||||
Fund’s Class C with maximum sales charge | 0.28% | 3.15% | ||||||
Fund’s Advisor Class without sales charge | 2.25% | 4.04% | ||||||
Barclays 1-3 Year U.S. Government/Credit Bond Index | 0.68% | 0.89% |
Performance data shown represents past performance. Investment return and principal value will fluctuate so that shares of the fund when redeemed may be worth more or less than their original cost. Past performance is not predictive of future performance. The table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares. |
Q. Discuss both positive and negative factors that materially affected the fund’s performance during the year, including relevant market conditions, investment strategies and techniques, and particular sectors or securities.
A. For the reporting period, the fund’s Class I outperformed the benchmark. We at Pacific Asset Management manage the strategy focusing on short maturity investment grade corporate bonds. The Fund maintains a flexibility to incorporate floating rate loans and high yield bonds. The fund outperformed its benchmark primarily due to the fund’s focus on corporate debt securities, which outperformed U.S. Government bonds during the reporting period. The fund’s allocation to high yield and floating rate loans was a benefit to performance as credit risk sensitive securities
See explanation of symbol and benchmark definitions on page A-20 |
A-14
PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
outperformed. The fund benefited from the allocation during the reporting period to floating rate loans, which proved to be well insulated during the period of rising rates seen in the early half of the reporting period. The fund’s underweight to banking, particularly European banks, was a detractor to performance. The duration of the fund was generally in line with the benchmark and neutral to performance.
PL Income Fund (managed by Pacific Asset Management)
Q. How did the fund perform for the year ended March 31, 2014?
A. For the year ended March 31, 2014, the PL Income Fund’s Class I (without sales charge) returned 2.53%, compared to a -0.10% return for its benchmark, the Barclays U.S. Aggregate Bond Index.
The following graph compares the performance of a hypothetical $10,000 investment in Class I shares of the fund to its benchmark for the periods from inception through March 31, 2014. For comparison purposes, the performance of Class A, C and Advisor Class shares for the periods from inception through March 31, 2014 are also shown in the table below. Performance data for Class A, C and Advisor Class shares will vary due to differences in fees and sales charges. The fund’s performance reflects reinvestments of all dividends and capital gains distributions, if any.
Performance Comparison
Average Annual Total Returns for the Periods Ended March 31, 2014
1 Year | Since Inception (12/31/10) | |||||||
Fund’s Class A without sales charge | 2.27% | 6.35% | ||||||
Fund’s Class A with maximum sales charge | (2.04% | ) | 4.95% | |||||
Fund’s Class I without sales charge | 2.53% | 6.56% | ||||||
Barclays U.S. Aggregate Bond Index | (0.10% | ) | 3.59% | |||||
1 Year | Since Inception (6/30/11) | |||||||
Fund’s Class C without sales charge | 1.41% | 4.93% | ||||||
Fund’s Class C with maximum sales charge | 0.43% | 4.93% | ||||||
Barclays U.S. Aggregate Bond Index | (0.10% | ) | 3.24% | |||||
1 Year | Since Inception (6/29/12) | |||||||
Fund’s Advisor Class without sales charge | 2.53% | 4.84% | ||||||
Barclays U.S. Aggregate Bond Index | (0.10% | ) | 0.90% |
Performance data shown represents past performance. Investment return and principal value will fluctuate so that shares of the fund when redeemed may be worth more or less than their original cost. Past performance is not predictive of future performance. The table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares. |
Q. Discuss both positive and negative factors that materially affected the fund’s performance during the year, including relevant market conditions, investment strategies and techniques, and particular sectors or securities.
A. For the reporting period, the fund’s Class I outperformed the benchmark. We at Pacific Asset Management manage the fund as an investment grade corporate bond fund that may invest up to 40% in non-investment grade securities. For the reporting period the fund outperformed the benchmark primarily due to the fund’s structural focus on investment grade corporate debt versus other areas of the bond market, notably U.S. Government bonds. The fund’s overweight to corporate bonds was a benefit to performance due to the substantial move higher in Treasury yields impacting, to a greater degree, U.S. Government bonds versus more credit sensitive sectors during the reporting period.
Allocation among investment grade securities, high yield securities and bank loan instruments was also a benefit to performance. The fund held a relatively consistent mix of investment grade securities and averaged 32% in high yield and bank loan instruments during the reporting period. The allocation to high yield and bank loan instruments was a benefit to performance, as those sectors outperformed over the reporting period due to their lower interest rate sensitivity and higher income levels. The fund’s duration was below benchmark for the reporting period, a benefit to relative performance. The fund’s underweight to European banks and financials was a detractor from performance.
See explanation of symbol and benchmark definitions on page A-20 |
A-15
PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
PL Strategic Income Fund (managed by Pacific Asset Management)
Q. How did the fund perform for the year ended March 31, 2014?
A. For the year ended March 31, 2014, the PL Strategic Income Fund’s Class I (without sales charge) returned 7.51%, compared to a -0.10% return for its benchmark, the Barclays U.S. Aggregate Bond Index.
The following graph compares the performance of a hypothetical $10,000 investment in Class I shares of the fund to its benchmark for the periods from inception through March 31, 2014. For comparison purposes, the performance of Class A, C and Advisor Class shares for the periods from inception through March 31, 2014 are also shown in the table below. Performance data for Class A, C and Advisor Class shares will vary due to differences in fees and sales charges. The fund’s performance reflects reinvestments of all dividends and capital gains distributions, if any.
Performance Comparison
Average Annual Total Returns for the Periods Ended March 31, 2014
1 Year | Since Inception (12/19/11) | |||||||
Fund’s Class I without sales charge | 7.51% | 12.62% | ||||||
Barclays U.S Aggregate Bond Index | (0.10% | ) | 1.72% | |||||
1 Year | Since Inception (6/29/12) | |||||||
Fund’s Class A without sales charge | 7.25% | 11.64% | ||||||
Fund’s Class A with maximum sales charge | 2.68% | 8.89% | ||||||
Fund’s Class C without sales charge | 6.51% | 10.86% | ||||||
Fund’s Class C with maximum sales charge | 5.51% | 10.86% | ||||||
Fund’s Advisor Class without sales charge | 7.42% | 11.84% | ||||||
Barclays U.S Aggregate Bond Index | (0.10% | ) | 0.90% |
Performance data shown represents past performance. Investment return and principal value will fluctuate so that shares of the fund when redeemed may be worth more or less than their original cost. Past performance is not predictive of future performance. The table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares. |
Q. Discuss both positive and negative factors that materially affected the fund’s performance during the year, including relevant market conditions, investment strategies and techniques, and particular sectors or securities.
A. For the reporting period, the fund’s Class I outperformed the benchmark. We at Pacific Asset Management manage the fund as a non-investment grade credit focused strategy, with the flexibility to invest across various asset classes, including high yield bonds, bank loans, and investment grade corporate bonds. For the reporting period the fund outperformed the benchmark primarily due to the fund’s structural focus on corporate debt securities versus other areas of the bond market, notably U.S. Government bonds.
Asset allocation benefited performance as the fund’s core allocation to high yield bonds was the primary driver of returns during the reporting period. The substantial move higher in Treasury yields seen during the reporting period led to the underperformance of U.S. Government related sectors relative to more credit sensitive asset classes. High yield bonds outperformed all other major fixed income sectors during the reporting period, due to less interest rate sensitivity and higher income advantages which benefited performance. The fund’s underweight to European banks and financials was a detractor from performance.
See explanation of symbol and benchmark definitions on page A-20 |
A-16
PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
PL Floating Rate Income Fund (managed by Pacific Asset Management)
Q. How did the fund perform for the year ended March 31, 2014?
A. For the year ended March 31, 2014, the PL Floating Rate Income Fund’s Class I (without sales charge) returned 4.65%, compared to a 5.04% return for its benchmark, the Credit Suisse Leveraged Loan Index.
The following graph compares the performance of a hypothetical $10,000 investment in Class I shares of the fund to its benchmark for the periods from inception through March 31, 2014. For comparison purposes, the performance of Class A, C, P and Advisor Class shares for the periods from inception through March 31, 2014 are also shown in the table below. Performance data for Class A, C, P and Advisor Class shares will vary due to differences in fees and sales charges. The fund’s performance reflects reinvestments of all dividends and capital gains distributions, if any.
Performance Comparison
Average Annual Total Returns for the Periods Ended March 31, 2014
1 Year | Since | |||||||
Fund’s Class I without sales charge | 4.65% | 6.64% | ||||||
Credit Suisse Leveraged Loan Index | 5.04% | 5.66% | ||||||
1 Year | Since Inception (12/30/11) ~ | |||||||
Fund’s Class A without sales charge | 4.30% | 7.77% | ||||||
Fund’s Class A with maximum sales charge | 1.20% | 6.34% | ||||||
Fund’s Class C without sales charge | 3.57% | 7.03% | ||||||
Fund’s Class C with maximum sales charge | 2.57% | 7.03% | ||||||
Credit Suisse Leveraged Loan Index | 5.04% | 9.51% | ||||||
1 Year | Since Inception (6/29/12) ~ | |||||||
Fund’s Advisor Class without sales charge | 4.54% | 7.23% | ||||||
Credit Suisse Leveraged Loan Index | 5.04% | 7.01% | ||||||
1 Year | Since Inception (12/31/12) | |||||||
Fund’s Class P without sales charge | 4.53% | 5.89% | ||||||
Credit Suisse Leveraged Loan Index | 5.04% | 5.98% |
Performance data shown represents past performance. Investment return and principal value will fluctuate so that shares of the fund when redeemed may be worth more or less than their original cost. Past performance is not predictive of future performance. The table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares. |
Q. Discuss both positive and negative factors that materially affected the fund’s performance during the year, including relevant market conditions, investment strategies and techniques, and particular sectors or securities.
A. For the reporting period, the fund’s Class I underperformed the benchmark. We at Pacific Asset Management manage the strategy focusing on non-investment grade floating rate securities. We manage the strategy in a selective approach, focused on the larger issuers. The fund underperformed the benchmark due to the focus on the larger issuers within the floating rate loan universe. For the reporting period, floating rate loans with greater degrees of credit risk outperformed. CCC and below securities benefited from the positive risk-taking environment and reduction in macro and fiscal uncertainties. CCC-rated floating rate loans returned 9.13% versus BB-rated floating rate loans returning 3.37%. For the reporting period, smaller issues also outperformed, negatively impacting the fund’s relative performance. Issue sizes less than $300 million returned 7.69% versus issue sizes greater than $300 million returning 4.60%. With the fund’s focus on the larger issuers, the outperformance of lower-quality and smaller issues detracted from the fund’s relative performance. The fund’s underweight to non-rated securities also detracted from performance.
See explanation of symbol and benchmark definitions on page A-20 |
A-17
PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
PL Limited Duration High Income Fund (managed by Pacific Asset Management)
Q. How did the fund perform for the period ended March 31, 2014?
A. The fund commenced operations on July 31, 2013. For the period from inception through March 31, 2014, the PL Limited Duration High Income Fund’s Class I (without sales charge) returned 4.87%, compared to a 6.02% return for its benchmark, the Barclays U.S. High Yield 1–5 Year Index.
The following graph compares the performance of a hypothetical $10,000 investment in Class I shares of the fund to its benchmark for the period from inception through March 31, 2014. For comparison purposes, the performance of Class A, C and Advisor Class shares for the period from inception through March 31, 2014 are also shown in the table below. Performance data for Class A, C and Advisor Class shares will vary due to differences in fees and sales charges. The fund’s performance reflects reinvestments of all dividends and capital gains distributions, if any.
Performance Comparison
Total Returns for the Period from Inception through March 31, 2014
Since Inception (7/31/13) | ||||
Fund’s Class I without sales charge | 4.87% | |||
Fund’s Class A without sales charge | 4.85% | |||
Fund’s Class A with maximum sales charge | 1.70% | |||
Fund’s Class C without sales charge | 4.28% | |||
Fund’s Class C with maximum sales charge | 3.28% | |||
Fund’s Advisor Class without sales charge | 4.89% | |||
Barclays U.S. High Yield 1-5 Year Index | 6.02% |
Performance data shown represents past performance. Investment return and principal value will fluctuate so that shares of the fund when redeemed may be worth more or less than their original cost. Past performance is not predictive of future performance. The table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares. |
Q. Discuss both positive and negative factors that materially affected the fund’s performance during the period, including relevant market conditions, investment strategies and techniques, and particular sectors or securities.
A. For the period from inception through March 31, 2014, the fund’s Class I underperformed the benchmark. We at Pacific Asset Management manage the strategy by focusing on non-investment grade high yield bonds and floating rate loans. The fund is designed to provide a flexible approach to investing in non-investment grade credit focused sectors. For the period, the fund underperformed the benchmark primarily due to floating rate loan allocation.
The fund’s benchmark solely focuses on high yield bonds. In periods when high yield bonds outperform floating rate loans, the strategy will underperform the benchmark. With the strategy’s assets generally split between high yield and floating rate loans, the floating rate loan allocation was a detractor from performance. The fund’s overweight to high coupon bonds was a benefit to performance. The fund’s underweight to duration relative to the benchmark was also a benefit to performance. The fund’s underweight to banking, particularly European Banks, was also a detractor from performance.
See explanation of symbol and benchmark definitions on page A-20 |
A-18
PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
PL High Income Fund (managed by Pacific Asset Management)
Q. How did the fund perform for the year ended March 31, 2014?
A. For the year ended March 31, 2014, the PL High Income Fund’s Class I (without sales charge) returned 7.72%, compared to a 7.53% return for its benchmark, the Barclays U.S. High-Yield 2% Issuer Capped Bond Index.
The following graph compares the performance of a hypothetical $10,000 investment in Class I shares of the fund to its benchmark for the periods from inception through March 31, 2014. For comparison purposes, the performance of Class A, C and Advisor Class shares for the periods from inception through March 31, 2014 are also shown in the table below. Performance data for Class A, C and Advisor Class shares will vary due to differences in fees and sales charges. The fund’s performance reflects reinvestments of all dividends and capital gains distributions, if any.
Performance Comparison
Average Annual Total Returns for the Periods Ended March 31, 2014
1 Year | Since Inception (12/19/11) | |||||||
Fund’s Class I without sales charge | 7.72% | 13.03% | ||||||
Barclays U.S. High-Yield 2% Issuer Capped Bond Index | 7.53% | 11.97% |
1 Year | Since Inception (6/29/12) | |||||||
Fund’s Class A without sales charge | 7.50% | 11.49% | ||||||
Fund’s Class A with maximum sales charge | 2.89% | 8.76% | ||||||
Fund’s Class C without sales charge | 6.65% | 10.71% | ||||||
Fund’s Class C with maximum sales charge | 5.65% | 10.71% | ||||||
Fund’s Advisor Class without sales charge | 7.67% | 11.74% | ||||||
Barclays U.S. High-Yield 2% Issuer Capped Bond Index | 7.53% | 10.69% |
Performance data shown represents past performance. Investment return and principal value will fluctuate so that shares of the fund when redeemed may be worth more or less than their original cost. Past performance is not predictive of future performance. The table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or redemption of fund shares. |
Q. Discuss both positive and negative factors that materially affected the fund’s performance during the year, including relevant market conditions, investment strategies and techniques, and particular sectors or securities.
A. For the reporting period, the fund’s Class I outperformed the benchmark. We at Pacific Asset Management manage the strategy focusing on non-investment grade securities, primarily high yield bonds. For the reporting period, the fund benefited from the overweight to B- versus BB- rated bonds. For the reporting period, BB- rated bonds returned 6.24% versus B-rated bonds returning 7.26%. The fund also benefited from security selection in CCC-rated gaming, packaging, and media/telecom companies. The fund also benefited from overweights to metals and mining industries while the overweight to property and casualty (P&C) insurance industry detracted from performance. The fund duration positioning through the reporting period was neutral to performance.
See explanation of symbol and benchmark definitions on page A-20 |
A-19
PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
Explanation of Symbol for Trust Performance Discussion
~ | Due to data limitation, the benchmark since inception return reflects the commencement period from the first calendar day of the month subsequent to the fund commenced its operations. |
Benchmark Definitions
Barclays 1-3 Year U.S. Government/Credit Bond Index measures performance of U.S. dollar-denominated U.S. Treasuries, government-related, and investment grade U.S. corporate securities with maturities of one to three years.
Barclays U.S. Aggregate Bond Index provides a measure of the performance of the U.S. investment grade bonds market, which includes investment grade U.S. government bonds, investment grade corporate bonds, mortgage pass-through securities and asset-backed securities that are publicly offered for sale in the United States. The securities in the Index must have at least 1 year remaining to maturity. In addition, the securities must be denominated in U.S. dollars and must be fixed rate, non-convertible, and taxable.
Barclays U.S. High Yield 1-5 Year Index measures the market of U.S. dollar-denominated, non-investment-grade, fixed-rate, taxable corporate bonds with maturities of one to five years.
Barclays U.S. High-Yield 2% Issuer Capped Bond Index is an index that is an issuer-constrained version for the U.S. Corporate High-Yield Index that coves the U.S. dollar-denominated, non-investment grade fixed-rate taxable corporate bond market and limits issuer exposures to a maximum of 2% and redistributes the excess market value index-wide on a pro-rata basis. The total return is equal to the change in price plus the coupon return.
Barclays U.S. Treasury Inflation Protected Securities (TIPS) Index is an index of all outstanding treasury inflation protected securities issued by the U.S. government. The total return is equal to the change in price plus the coupon return.
BofA Merrill Lynch U.S. 3-Month Treasury Bill (T-Bill) Index is an index comprised of a single Treasury bill issue purchased at the beginning of the month and held for a full month, then sold and rolled into a newly selected Treasury bill issue. Results include the reinvestment of all distributions.
Credit Suisse Leveraged Loan Index tracks the investable market of the U.S. dollar-denominated leveraged loan market. It consists of issues rated “5B” or lower, meaning that the highest rated issues included in this index are Moody’s/S&P ratings of Baa1/BB+ or Ba1/BBB+. All loans are funded term loans with a tenor of at least one year and are made by issuers domiciled in developed countries.
FTSE National Association of Real Estate Investment Trusts (NAREIT) Equity Real Estate Investment Trusts (REITs) Index is one index of a series of indices represented in the FTSE NAREIT U.S. Real Estate Index Series and represents tax-qualified REITs listed on the New York Stock Exchange (NYSE), American Stock Exchange and National Association of Securities Dealers Automated Quotations (NASDAQ). Results include reinvested dividends.
J.P. Morgan Emerging Markets Bond Index (EMBI) Global Diversified Index tracks total returns of U.S. dollar-denominated debt instruments issued by emerging market sovereign and quasi-sovereign entities.
Morgan Stanley Capital International (MSCI) Europe, Australasia and Far East (EAFE) Index (Net) is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US & Canada. As of November 27, 2013, the MSCI EAFE Index (Net) consists of the following 21 developed market country indices: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom. The dividend is reinvested after deduction of withholding tax, applying the rate to non-resident individuals who do not benefit from double taxation treaties.
MSCI Emerging Markets Index (Net) is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. As of November 27, 2013, the MSCI Emerging Markets Index (Net) consists of the following 21 emerging market country indices: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey. The dividend is reinvested after deduction of withholding tax, applying the rate to non-resident individuals who do not benefit from double taxation treaties.
PL Portfolio Optimization Conservative Composite Benchmark is 15% S&P 500; 73% Barclays U.S. Aggregate Bond; 5% MSCI EAFE (Net), and 7% BofA Merrill Lynch U.S. 3-Month Treasury Bill Indices as of March 31, 2014.
PL Portfolio Optimization Moderate-Conservative Composite Benchmark is 30% S&P 500; 55% Barclays U.S. Aggregate Bond; 10% MSCI EAFE (Net), and 5% BofA Merrill Lynch U.S. 3-Month Treasury Bill Indices as of March 31, 2014.
PL Portfolio Optimization Moderate Composite Benchmark is 45% S&P 500; 38% Barclays U.S. Aggregate Bond; 15% MSCI EAFE (Net), and 2% BofA Merrill Lynch U.S. 3-Month Treasury Bill Indices as of March 31, 2014.
PL Portfolio Optimization Moderate-Aggressive Composite Benchmark is 60% S&P 500; 20% Barclays U.S. Aggregate Bond; and 20% MSCI EAFE (Net) Indices as of March 31, 2014.
PL Portfolio Optimization Aggressive Composite Benchmark is 65% S&P 500; 10% Barclays U.S. Aggregate Bond; and 25% MSCI EAFE (Net) Indices as of March 31, 2014.
S&P 500 Index is a capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
A-20
PACIFIC LIFE FUNDS
PL PORTFOLIO OPTIMIZATION MODERATE-CONSERVATIVE FUND
Schedule of Investments
March 31, 2014
| Value | |||||||
AFFILIATED MUTUAL FUNDS - 100.4% | ||||||||
PL Floating Rate Loan Fund ‘P’ | 2,840,102 | $28,543,030 | ||||||
PL Inflation Managed Fund ‘P’ | 4,612,548 | 40,774,922 | ||||||
PL Managed Bond Fund ‘P’ | 13,999,541 | 150,635,060 | ||||||
PL Short Duration Bond Fund ‘P’ | 6,481,443 | 65,138,502 | ||||||
PL Emerging Markets Debt Fund ‘P’ | 2,719,214 | 26,376,381 | ||||||
PL Comstock Fund ‘P’ | 1,157,060 | 20,375,831 | ||||||
PL Growth Fund ‘P’ | 265,433 | 4,599,951 | ||||||
PL Large-Cap Growth Fund ‘P’ | 1,034,490 | 10,634,553 | ||||||
PL Large-Cap Value Fund ‘P’ | 1,437,024 | 24,012,664 | ||||||
PL Main Street Core Fund ‘P’ | 544,523 | 8,086,162 | ||||||
PL Mid-Cap Equity Fund ‘P’ | 664,797 | 8,535,989 | ||||||
PL Mid-Cap Growth Fund ‘P’ | 605,996 | 4,950,986 | ||||||
PL International Large-Cap Fund ‘P’ | 611,218 | 11,283,090 | ||||||
PL International Value Fund ‘P’ | 665,712 | 6,876,810 | ||||||
PL Currency Strategies Fund ‘P’ | 1,218,975 | 11,470,557 | ||||||
PL Global Absolute Return Fund ‘P’ | 2,582,539 | 25,024,799 | ||||||
PL Precious Metals Fund ‘P’ | 568,896 | 3,254,088 | ||||||
|
| |||||||
Total Affiliated Mutual Funds | 450,573,375 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 100.4% | 450,573,375 | |||||||
OTHER ASSETS & LIABILITIES, NET - (0.4%) | (1,742,581 | ) | ||||||
|
| |||||||
NET ASSETS - 100.0% | $448,830,794 | |||||||
|
|
Notes to Schedule of Investments
(a) | As of March 31, 2014, the fund was diversified as a percentage of net assets as follows: |
Affiliated Fixed Income Funds | 75.0% | |||
Affiliated Equity Funds | 25.4% | |||
|
| |||
100.4% | ||||
Other Assets & Liabilities, Net | (0.4% | ) | ||
|
| |||
100.0% | ||||
|
|
| Value | |||||||
AFFILIATED MUTUAL FUNDS - 100.0% | ||||||||
PL Floating Rate Loan Fund ‘P’ | 3,429,256 | $34,464,021 | ||||||
PL Inflation Managed Fund ‘P’ | 4,804,843 | 42,474,816 | ||||||
PL Managed Bond Fund ‘P’ | 10,940,183 | 117,716,374 | ||||||
PL Short Duration Bond Fund ‘P’ | 5,934,751 | 59,644,245 | ||||||
PL Emerging Markets Debt Fund ‘P’ | 2,565,864 | 24,888,885 | ||||||
PL Comstock Fund ‘P’ | 2,031,753 | 35,779,162 | ||||||
PL Growth Fund ‘P’ | 674,074 | 11,681,696 | ||||||
PL Large-Cap Growth Fund ‘P’ | 2,064,961 | 21,227,796 | ||||||
PL Large-Cap Value Fund ‘P’ | 2,810,741 | 46,967,490 | ||||||
PL Main Street Core Fund ‘P’ | 2,045,509 | 30,375,809 | ||||||
PL Mid-Cap Equity Fund ‘P’ | 972,595 | 12,488,118 | ||||||
PL Mid-Cap Growth Fund ‘P’ | 895,609 | 7,317,129 | ||||||
PL Small-Cap Growth Fund ‘P’ | 496,019 | 7,708,132 | ||||||
PL Small-Cap Value Fund ‘P’ | 432,217 | 5,856,536 | ||||||
PL Emerging Markets Fund ‘P’ | 700,657 | 10,334,687 | ||||||
PL International Large-Cap Fund ‘P’ | 1,252,796 | 23,126,609 | ||||||
PL International Value Fund ‘P’ | 1,617,863 | 16,712,529 | ||||||
PL Currency Strategies Fund ‘P’ | 1,552,414 | 14,608,220 | ||||||
PL Global Absolute Return Fund ‘P’ | 3,294,918 | 31,927,755 | ||||||
PL Precious Metals Fund ‘P’ | 1,820,146 | 10,411,233 | ||||||
|
| |||||||
Total Affiliated Mutual Funds | 565,711,242 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 100.0% | 565,711,242 | |||||||
OTHER ASSETS & LIABILITIES, NET - (0.0%) | (190,462 | ) | ||||||
|
| |||||||
NET ASSETS - 100.0% | $565,520,780 | |||||||
|
|
Notes to Schedule of Investments
(a) | As of March 31, 2014, the fund was diversified as a percentage of net assets as follows: |
Affiliated Fixed Income Funds | 55.0% | |||
Affiliated Equity Funds | 45.0% | |||
|
| |||
100.0% | ||||
Other Assets & Liabilities, Net | (0.0% | ) | ||
|
| |||
100.0% | ||||
|
|
(b) | The funds’ investments are affiliated mutual funds (See Note 6C in Notes to Financial Statements). |
(c) | Fair Value Measurements |
The following is a summary of the funds’ investments as categorized under the three-tier hierarchy of inputs used in valuing the funds’ assets and liabilities (See Note 3D in Notes to Financial Statements) as of March 31, 2014:
Total Value at March 31, 2014 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||||
PL Portfolio Optimization Conservative Fund | ||||||||||||||||||
Assets | Affiliated Mutual Funds | $450,573,375 | $450,573,375 | $— | $— | |||||||||||||
|
|
|
|
|
|
|
| |||||||||||
PL Portfolio Optimization Moderate-Conservative Fund | ||||||||||||||||||
Assets | Affiliated Mutual Funds | $565,711,242 | $565,711,242 | $— | $— | |||||||||||||
|
|
|
|
|
|
|
|
See Notes to Financial Statements | See explanation of symbols and terms, if any, on page B-31 |
B-1
PACIFIC LIFE FUNDS
PL PORTFOLIO OPTIMIZATION MODERATE FUND
Schedule of Investments
March 31, 2014
PACIFIC LIFE FUNDS
PL PORTFOLIO OPTIMIZATION MODERATE-AGGRESSIVE FUND
Schedule of Investments
March 31, 2014
| Value | |||||||
AFFILIATED MUTUAL FUNDS - 100.1% | ||||||||
PL Floating Rate Loan Fund ‘P’ | 5,985,360 | $60,152,863 | ||||||
PL Inflation Managed Fund ‘P’ | 8,300,429 | 73,375,793 | ||||||
PL Managed Bond Fund ‘P’ | 20,625,688 | 221,932,405 | ||||||
PL Short Duration Bond Fund ‘P’ | 9,019,295 | 90,643,911 | ||||||
PL Emerging Markets Debt Fund ‘P’ | 6,135,270 | 59,512,117 | ||||||
PL Comstock Fund ‘P’ | 7,236,596 | 127,436,455 | ||||||
PL Growth Fund ‘P’ | 2,510,391 | 43,505,083 | ||||||
PL Large-Cap Growth Fund ‘P’ | 6,573,604 | 67,576,645 | ||||||
PL Large-Cap Value Fund ‘P’ | 9,355,874 | 156,336,657 | ||||||
PL Main Street Core Fund ‘P’ | 6,746,024 | 100,178,462 | ||||||
PL Mid-Cap Equity Fund ‘P’ | 4,987,988 | 64,045,760 | ||||||
PL Mid-Cap Growth Fund ‘P’ | 4,466,123 | 36,488,229 | ||||||
PL Small-Cap Growth Fund ‘P’ | 1,193,225 | 18,542,720 | ||||||
PL Small-Cap Value Fund ‘P’ | 3,978,518 | 53,908,924 | ||||||
PL Real Estate Fund ‘P’ | 2,137,191 | 30,326,737 | ||||||
PL Emerging Markets Fund ‘P’ | 4,130,703 | 60,927,866 | ||||||
PL International Large-Cap Fund ‘P’ | 5,223,471 | 96,425,278 | ||||||
PL International Value Fund ‘P’ | 6,566,378 | 67,830,686 | ||||||
PL Currency Strategies Fund ‘P’ | 5,954,180 | 56,028,832 | ||||||
PL Global Absolute Return Fund ‘P’ | 7,786,481 | 75,451,004 | ||||||
PL Precious Metals Fund ‘P’ | 5,230,837 | 29,920,389 | ||||||
|
| |||||||
Total Affiliated Mutual Funds | 1,590,546,816 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 100.1% | 1,590,546,816 | |||||||
OTHER ASSETS & LIABILITIES, NET - (0.1%) | (1,546,423 | ) | ||||||
|
| |||||||
NET ASSETS - 100.0% | $1,589,000,393 | |||||||
|
|
Notes to Schedule of Investments
(a) | As of March 31, 2014, the fund was diversified as a percentage of net assets as follows: |
Affiliated Equity Funds | 63.5% | |||
Affiliated Fixed Income Funds | 36.6% | |||
|
| |||
100.1% | ||||
Other Assets & Liabilities, Net | (0.1% | ) | ||
|
| |||
100.0% | ||||
|
|
| Value | |||||||
AFFILIATED MUTUAL FUNDS - 100.0% | ||||||||
PL Inflation Managed Fund ‘P’ | 3,289,670 | $29,080,686 | ||||||
PL Managed Bond Fund ‘P’ | 7,617,433 | 81,963,576 | ||||||
PL Short Duration Bond Fund ‘P’ | 1,379,026 | 13,859,207 | ||||||
PL Emerging Markets Debt Fund ‘P’ | 2,016,683 | 19,561,822 | ||||||
PL Comstock Fund ‘P’ | 5,496,490 | 96,793,197 | ||||||
PL Growth Fund ‘P’ | 1,718,160 | 29,775,712 | ||||||
PL Large-Cap Growth Fund ‘P’ | 5,400,159 | 55,513,637 | ||||||
PL Large-Cap Value Fund ‘P’ | 7,114,515 | 118,883,548 | ||||||
PL Main Street Core Fund ‘P’ | 6,141,867 | 91,206,723 | ||||||
PL Mid-Cap Equity Fund ‘P’ | 5,126,832 | 65,828,519 | ||||||
PL Mid-Cap Growth Fund ‘P’ | 3,732,843 | 30,497,324 | ||||||
PL Small-Cap Growth Fund ‘P’ | 1,346,445 | 20,923,750 | ||||||
PL Small-Cap Value Fund ‘P’ | 4,683,370 | 63,459,665 | ||||||
PL Real Estate Fund ‘P’ | 2,193,476 | 31,125,430 | ||||||
PL Emerging Markets Fund ‘P’ | 4,145,215 | 61,141,922 | ||||||
PL International Large-Cap Fund ‘P’ | 4,483,579 | 82,766,866 | ||||||
PL International Value Fund ‘P’ | 6,344,958 | 65,543,418 | ||||||
PL Currency Strategies Fund ‘P’ | 3,983,953 | 37,488,997 | ||||||
PL Global Absolute Return Fund ‘P’ | 5,234,973 | 50,726,886 | ||||||
PL Precious Metals Fund ‘P’ | 5,156,854 | 29,497,205 | ||||||
|
| |||||||
Total Affiliated Mutual Funds | 1,075,638,090 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 100.0% | 1,075,638,090 | |||||||
OTHER ASSETS & LIABILITIES, NET - (0.0%) | (8,021 | ) | ||||||
|
| |||||||
NET ASSETS - 100.0% | $1,075,630,069 | |||||||
|
|
Notes to Schedule of Investments
(a) | As of March 31, 2014, the fund was diversified as a percentage of net assets as follows: |
Affiliated Equity Funds | 81.9% | |||
Affiliated Fixed Income Funds | 18.1% | |||
|
| |||
100.0% | ||||
Other Assets & Liabilities, Net | (0.0% | ) | ||
|
| |||
100.0% | ||||
|
|
(b) | The funds’ investments are affiliated mutual funds (See Note 6C in Notes to Financial Statements). |
(c) | Fair Value Measurements |
The following is a summary of the funds’ investments as categorized under the three-tier hierarchy of inputs used in valuing the funds’ assets and liabilities (See Note 3D in Notes to Financial Statements) as of March 31, 2014:
Total Value at March 31, 2014 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||||
PL Portfolio Optimization Moderate Fund | ||||||||||||||||||
Assets | Affiliated Mutual Funds | $1,590,546,816 | $1,590,546,816 | $— | $— | |||||||||||||
|
|
|
|
|
|
|
| |||||||||||
PL Portfolio Optimization Moderate-Aggressive Fund | ||||||||||||||||||
Assets | Affiliated Mutual Funds | $1,075,638,090 | | $1,075,638,090 | | $— | $— | |||||||||||
|
|
|
|
|
|
|
|
See Notes to Financial Statements | See explanation of symbols and terms, if any, on page B-31 |
B-2
PACIFIC LIFE FUNDS
PL PORTFOLIO OPTIMIZATION AGGRESSIVE FUND
Schedule of Investments
March 31, 2014
| Value | |||||||
AFFILIATED MUTUAL FUNDS - 100.1% | ||||||||
PL Managed Bond Fund ‘P’ | 697,276 | $7,502,689 | ||||||
PL Comstock Fund ‘P’ | 1,602,390 | 28,218,083 | ||||||
PL Growth Fund ‘P’ | 676,591 | 11,725,315 | ||||||
PL Large-Cap Growth Fund ‘P’ | 1,718,248 | 17,663,593 | ||||||
PL Large-Cap Value Fund ‘P’ | 2,040,295 | 34,093,324 | ||||||
PL Main Street Core Fund ‘P’ | 1,863,357 | 27,670,854 | ||||||
PL Mid-Cap Equity Fund ‘P’ | 1,596,348 | 20,497,114 | ||||||
PL Mid-Cap Growth Fund ‘P’ | 1,409,348 | 11,514,373 | ||||||
PL Small-Cap Growth Fund ‘P’ | 820,021 | 12,743,130 | ||||||
PL Small-Cap Value Fund ‘P’ | 1,806,821 | 24,482,429 | ||||||
PL Real Estate Fund ‘P’ | 861,610 | 12,226,245 | ||||||
PL Emerging Markets Fund ‘P’ | 1,407,145 | 20,755,394 | ||||||
PL International Large-Cap Fund ‘P’ | 1,460,332 | 26,957,722 | ||||||
PL International Value Fund ‘P’ | 1,899,844 | 19,625,384 | ||||||
PL Currency Strategies Fund ‘P’ | 1,162,228 | 10,936,568 | ||||||
PL Global Absolute Return Fund ‘P’ | 1,520,209 | 14,730,829 | ||||||
PL Precious Metals Fund ‘P’ | 1,963,060 | 11,228,703 | ||||||
|
| |||||||
Total Affiliated Mutual Funds | 312,571,749 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 100.1% | 312,571,749 | |||||||
OTHER ASSETS & LIABILITIES, NET - (0.1%) | (250,741 | ) | ||||||
|
| |||||||
NET ASSETS - 100.0% | $312,321,008 | |||||||
|
|
Notes to Schedule of Investments
(a) | As of March 31, 2014, the fund was diversified as a percentage of net assets as follows: |
Affiliated Equity Funds | 93.0% | |||
Affiliated Fixed Income Funds | 7.1% | |||
|
| |||
100.1% | ||||
Other Assets & Liabilities, Net | (0.1% | ) | ||
|
| |||
100.0% | ||||
|
|
(b) | The fund’s investments are affiliated mutual funds (See Note 6C in Notes to Financial Statements). |
(c) | Fair Value Measurements |
The following is a summary of the fund’s investments as categorized under the three-tier hierarchy of inputs used in valuing the fund’s assets and liabilities (See Note 3D in Notes to Financial Statements) as of March 31, 2014:
Total Value at March 31, 2014 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||||
Assets | Affiliated Mutual Funds | $312,571,749 | $312,571,749 | $— | $— | |||||||||||||
|
|
|
|
|
|
|
|
See Notes to Financial Statements | See explanation of symbols and terms, if any, on page B-31 |
B-3
PACIFIC LIFE FUNDS
PL SHORT DURATION INCOME FUND
Schedule of Investments
March 31, 2014
Principal | Value | |||||||
CORPORATE BONDS & NOTES - 77.5% | ||||||||
Consumer Discretionary - 11.3% | ||||||||
Chrysler Group LLC | $500,000 | $568,125 | ||||||
DIRECTV Holdings LLC | 1,000,000 | 1,039,741 | ||||||
DISH DBS Corp | ||||||||
4.250% due 04/01/18 | 250,000 | 261,562 | ||||||
4.625% due 07/15/17 | 200,000 | 213,500 | ||||||
General Motors Co | 1,250,000 | 1,279,688 | ||||||
GLP Capital LP | 750,000 | 771,563 | ||||||
Kia Motors Corp (South Korea) | 1,000,000 | 1,041,301 | ||||||
Lennar Corp | ||||||||
4.125% due 12/01/18 | 750,000 | 768,750 | ||||||
4.500% due 06/15/19 | 500,000 | 510,000 | ||||||
NBCUniversal Enterprise Inc | 1,500,000 | 1,510,301 | ||||||
Toll Brothers Finance Corp | 850,000 | 873,375 | ||||||
Viacom Inc | 750,000 | 777,829 | ||||||
Virgin Media Secured Finance PLC | 250,000 | 259,375 | ||||||
Wyndham Worldwide Corp | 750,000 | 754,644 | ||||||
|
| |||||||
10,629,754 | ||||||||
|
| |||||||
Consumer Staples - 0.8% | ||||||||
Smithfield Foods Inc | 250,000 | 260,313 | ||||||
Wm Wrigley Jr Co | 500,000 | 502,114 | ||||||
|
| |||||||
762,427 | ||||||||
|
| |||||||
Energy - 8.7% | ||||||||
Devon Energy Corp | 500,000 | 500,380 | ||||||
EOG Resources Inc | 1,000,000 | 997,780 | ||||||
Harvest Operations Corp (Canada) | 500,000 | 495,793 | ||||||
Kinder Morgan Energy Partners LP | 1,000,000 | 999,983 | ||||||
Korea National Oil Corp (South Korea) | 500,000 | 522,360 | ||||||
Nabors Industries Inc | 750,000 | 767,809 | ||||||
Petrobras Global Finance BV (Netherlands) | 1,000,000 | 947,832 | ||||||
Petroleos Mexicanos (Mexico) | 1,000,000 | 1,026,500 | ||||||
Pioneer Natural Resources Co | 350,000 | 386,310 | ||||||
Spectra Energy Partners LP | 500,000 | 510,361 | ||||||
Transocean Inc (Cayman) | 500,000 | 503,738 | ||||||
Whiting Petroleum Corp | 500,000 | 531,250 | ||||||
|
| |||||||
8,190,096 | ||||||||
|
|
Principal | Value | |||||||
Financials - 33.4% | ||||||||
American International Group Inc | $1,000,000 | $1,020,473 | ||||||
American Tower Corp | 1,000,000 | 1,026,183 | ||||||
ARC Properties Operating Partnership LP | 1,000,000 | 1,001,132 | ||||||
Bank of America Corp | 500,000 | 500,122 | ||||||
Bank of America NA | 1,000,000 | 1,101,367 | ||||||
Berkshire Hathaway Finance Corp | 1,000,000 | 1,007,097 | ||||||
Berkshire Hathaway Inc | 500,000 | 498,325 | ||||||
Capital One Bank USA NA | 1,000,000 | 994,055 | ||||||
Capital One Financial Corp | 750,000 | 761,494 | ||||||
Citigroup Inc | 1,500,000 | 1,497,628 | ||||||
Commonwealth Bank of Australia (Australia) | 250,000 | 253,717 | ||||||
Daimler Finance North America LLC | 1,000,000 | 1,008,397 | ||||||
Export-Import Bank of Korea (South Korea) | ||||||||
0.992% due 01/14/17 § | 500,000 | 503,094 | ||||||
1.250% due 11/20/15 | 500,000 | 504,269 | ||||||
Fifth Third Bank | 500,000 | 501,922 | ||||||
Ford Motor Credit Co LLC | 2,000,000 | 2,002,432 | ||||||
General Electric Capital Corp | 1,000,000 | 1,010,442 | ||||||
Hyundai Capital America | 500,000 | 497,804 | ||||||
Hyundai Capital Services Inc (South Korea) | 1,000,000 | 1,001,887 | ||||||
ING US Inc | 1,000,000 | 1,025,798 | ||||||
JPMorgan Chase & Co | 1,500,000 | 1,506,817 | ||||||
Macquarie Bank Ltd (Australia) | 500,000 | 498,901 | ||||||
Metropolitan Life Global Funding I | 750,000 | 731,634 | ||||||
Morgan Stanley | ||||||||
1.750% due 02/25/16 | 1,000,000 | 1,013,449 | ||||||
2.125% due 04/25/18 | 500,000 | 499,515 | ||||||
Nissan Motor Acceptance Corp | 1,000,000 | 1,002,463 | ||||||
PNC Bank NA | 1,000,000 | 1,007,599 | ||||||
Royal Bank of Canada (Canada) | 1,000,000 | 1,000,892 | ||||||
The Bank of New York Mellon Corp | 1,000,000 | 995,472 | ||||||
The Goldman Sachs Group Inc | 1,500,000 | 1,515,180 | ||||||
The Huntington National Bank | ||||||||
1.300% due 11/20/16 | 1,000,000 | 1,003,843 | ||||||
1.350% due 08/02/16 | 500,000 | 502,754 | ||||||
The Korea Development Bank (South Korea) | 500,000 | 499,946 | ||||||
Union Bank NA | 1,000,000 | 1,014,650 | ||||||
Ventas Realty LP | 1,000,000 | 1,009,481 | ||||||
|
| |||||||
31,520,234 | ||||||||
|
|
See Notes to Financial Statements | See explanation of symbols and terms, if any, on page B-31 |
B-4
PACIFIC LIFE FUNDS
PL SHORT DURATION INCOME FUND
Schedule of Investments (Continued)
March 31, 2014
Principal | Value | |||||||
Health Care - 2.0% | ||||||||
Mylan Inc | $1,000,000 | $1,014,650 | ||||||
Quest Diagnostics Inc | 500,000 | 499,994 | ||||||
Valeant Pharmaceuticals International Inc (Canada) | 350,000 | 386,750 | ||||||
|
| |||||||
1,901,394 | ||||||||
|
| |||||||
Industrials - 8.4% | ||||||||
Air Lease Corp | 1,500,000 | 1,528,125 | ||||||
British Airways Pass Through Trust ‘B’ | 950,000 | 1,008,805 | ||||||
Delta Air Lines Pass-Through Trust ‘A’ | 929,930 | 1,000,883 | ||||||
ERAC USA Finance LLC | 750,000 | 754,192 | ||||||
GATX Corp | 500,000 | 495,393 | ||||||
International Lease Finance Corp | 500,000 | 510,938 | ||||||
Owens Corning | 500,000 | 620,256 | ||||||
Penske Truck Leasing Co LP | 1,000,000 | 1,025,542 | ||||||
United Airlines Pass Through Trust ‘B’ | 750,000 | 757,500 | ||||||
United Continental Holdings Inc | 250,000 | 270,313 | ||||||
|
| |||||||
7,971,947 | ||||||||
|
| |||||||
Information Technology - 1.6% | ||||||||
Amphenol Corp | 500,000 | 498,865 | ||||||
Arrow Electronics Inc | 1,000,000 | 1,012,166 | ||||||
|
| |||||||
1,511,031 | ||||||||
|
| |||||||
Materials - 4.5% | ||||||||
Alphabet Holding Co Inc | 200,000 | 207,000 | ||||||
ArcelorMittal (Luxembourg) | 750,000 | 825,000 | ||||||
Cliffs Natural Resources Inc | 500,000 | 503,124 | ||||||
FMG Resources Property Ltd (Australia) | 500,000 | 527,813 | ||||||
Freeport-McMoRan Copper & Gold Inc | 1,000,000 | 1,005,987 | ||||||
Glencore Funding LLC | 1,000,000 | 966,999 | ||||||
INEOS Group Holdings SA (Luxembourg) | 200,000 | 208,250 | ||||||
|
| |||||||
4,244,173 | ||||||||
|
| |||||||
Telecommunication Services - 4.1% | ||||||||
America Movil SAB de CV (Mexico) | 1,000,000 | 1,011,756 | ||||||
AT&T Inc | 500,000 | 500,567 | ||||||
Intelsat Jackson Holdings SA (Luxembourg) | 250,000 | 272,188 | ||||||
Orange SA (France) | 500,000 | 507,030 | ||||||
Verizon Communications Inc | ||||||||
1.984% due 09/14/18 § | 1,000,000 | 1,051,315 | ||||||
2.500% due 09/15/16 | 500,000 | 518,092 | ||||||
|
| |||||||
3,860,948 | ||||||||
|
|
Principal | Value | |||||||
Utilities - 2.7% | ||||||||
Duke Energy Corp | $1,000,000 | $1,003,150 | ||||||
PG&E Corp | 500,000 | 497,468 | ||||||
The Dayton Power & Light Co | 1,000,000 | 1,015,004 | ||||||
2,515,622 | ||||||||
|
| |||||||
Total Corporate Bonds & Notes | 73,107,626 | |||||||
|
| |||||||
SENIOR LOAN NOTES - 16.9% | ||||||||
Consumer Discretionary - 4.1% | ||||||||
Hilton Worldwide | 457,895 | 459,268 | ||||||
Las Vegas Sands LLC Term B | 500,000 | 499,804 | ||||||
3.250% due 12/19/20 § | 498,750 | 498,555 | ||||||
Leonardo Acquisition Corp (First Lien) | 500,000 | 501,562 | ||||||
Seminole Tribe of Florida | 930,000 | 929,128 | ||||||
Tribune Co | 997,500 | 998,996 | ||||||
|
| |||||||
3,887,313 | ||||||||
|
| |||||||
Consumer Staples - 0.2% | ||||||||
Reynolds Group Holdings | 246,881 | 248,096 | ||||||
|
| |||||||
Energy - 1.1% | ||||||||
Chesapeake Energy Corp | 500,000 | 512,031 | ||||||
Seadrill Operating LP | 498,750 | 498,171 | ||||||
|
| |||||||
1,010,202 | ||||||||
|
| |||||||
Financials - 0.6% | ||||||||
PFS Holding Corp (First Lien) | 500,000 | 502,812 | ||||||
Stockbridge/SBE Holdings LLC Tranche B | 65,000 | 71,825 | ||||||
|
| |||||||
574,637 | ||||||||
|
| |||||||
Health Care - 2.8% | ||||||||
Fresenius US Finance I Inc Tranche B | 995,000 | 994,223 | ||||||
Pharmedium Healthcare Corp (First Lien) | 750,000 | 752,344 | ||||||
Valeant Pharmaceuticals International Inc | ||||||||
Series C-2 Tranche B | ||||||||
3.750% due 12/11/19 § | 246,250 | 247,481 | ||||||
Series E-1 Tranche B | ||||||||
3.750% due 08/05/20 § | 689,678 | 693,807 | ||||||
|
| |||||||
2,687,855 | ||||||||
|
| |||||||
Industrials - 3.7% | ||||||||
Accudyne Industries LLC | 483,302 | 483,831 | ||||||
CSC Holdings LLC Term B | 992,500 | 982,497 | ||||||
Flying Fortress Inc | 208,333 | 208,203 | ||||||
Husky Injection Molding Systems Ltd | 750,000 | 753,281 | ||||||
MRC Global | 398,000 | 403,579 |
See Notes to Financial Statements | See explanation of symbols and terms, if any, on page B-31 |
B-5
PACIFIC LIFE FUNDS
PL SHORT DURATION INCOME FUND
Schedule of Investments (Continued)
March 31, 2014
Principal | Value | |||||||
Sensata Technologies BV Term B | $497,500 | $499,941 | ||||||
WESCO Distribution Inc Tranche B-1 | 125,134 | 125,901 | ||||||
|
| |||||||
3,457,233 | ||||||||
|
| |||||||
Information Technology - 1.4% | ||||||||
Activision Blizzard Inc | 847,500 | 848,689 | ||||||
Infor (US) Inc Tranche B-5 | 497,364 | 496,618 | ||||||
|
| |||||||
1,345,307 | ||||||||
|
| |||||||
Materials - 2.2% | ||||||||
FMG Resources Property Ltd | 1,488,772 | 1,502,031 | ||||||
NewPage Corp Term B | 300,000 | 303,562 | ||||||
Tronox Inc Term B | 248,125 | 249,969 | ||||||
|
| |||||||
2,055,562 | ||||||||
|
| |||||||
Telecommunication Services - 0.8% | ||||||||
Windstream Corp Tranche B-5 | 739,391 | 740,661 | ||||||
|
| |||||||
Total Senior Loan Notes | 16,006,866 | |||||||
|
| |||||||
MORTGAGE-BACKED SECURITIES - 0.3% | ||||||||
Collateralized Mortgage Obligations - Commercial - 0.3% |
| |||||||
Hilton USA Trust | 250,000 | 250,670 | ||||||
|
| |||||||
Total Mortgage-Backed Securities | 250,670 | |||||||
|
| |||||||
U.S. TREASURY OBLIGATIONS - 0.7% | ||||||||
U.S. Treasury Notes - 0.7% | ||||||||
0.250% due 02/28/15 | 500,000 | 500,557 | ||||||
0.875% due 11/30/16 | 175,000 | 175,636 | ||||||
|
| |||||||
Total U.S. Treasury Obligations | 676,193 | |||||||
|
|
| Value | |||||||
SHORT-TERM INVESTMENT - 3.7% | ||||||||
Money Market Fund - 3.7% | ||||||||
BlackRock Liquidity Funds Treasury | 3,488,825 | $3,488,825 | ||||||
|
| |||||||
Total Short-Term Investment | 3,488,825 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 99.1% | 93,530,180 | |||||||
OTHER ASSETS & LIABILITIES, Net - 0.9% | 824,510 | |||||||
|
| |||||||
NET ASSETS - 100.0% | $94,354,690 | |||||||
|
|
Notes to Schedule of Investments
(a) | As of March 31, 2014, the fund was diversified as a percentage of net assets as follows: |
Corporate Bonds & Notes | 77.5% | |||
Senior Loan Notes | 16.9% | |||
Short-Term Investment | 3.7% | |||
Others (each less than 3.0%) | 1.0% | |||
|
| |||
99.1% | ||||
Other Assets & Liabilities, Net | 0.9% | |||
|
| |||
100.0% | ||||
|
|
(b) | As of March 31, 2014, the fund’s Standard & Poor’s quality ratings as a percentage of total fixed income investments were as follows (Unaudited): |
AA / U.S. Government and Agency Issues | 5.8% | |||
A | 22.7% | |||
BBB | 50.7% | |||
BB | 14.1% | |||
B | 6.7% | |||
|
| |||
100.0% | ||||
|
|
(c) | Fair Value Measurements |
The following is a summary of the fund’s investments as categorized under the three-tier hierarchy of inputs used in valuing the fund’s assets and liabilities (See Note 3D in Notes to Financial Statements) as of March 31, 2014:
Total Value at March 31, 2014 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||||
Assets | Corporate Bonds & Notes | $73,107,626 | $— | $73,107,626 | $— | |||||||||||||
Senior Loan Notes | 16,006,866 | — | 16,006,866 | — | ||||||||||||||
Mortgage-Backed Securities | 250,670 | — | 250,670 | — | ||||||||||||||
U.S. Treasury Obligations | 676,193 | — | 676,193 | — | ||||||||||||||
Short-Term Investment | 3,488,825 | 3,488,825 | — | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total | $93,530,180 | $3,488,825 | $90,041,355 | $— | ||||||||||||||
|
|
|
|
|
|
|
|
B-6
See Notes to Financial Statements | See explanation of symbols and terms, if any, on page B-31 |
PACIFIC LIFE FUNDS
PL SHORT DURATION INCOME FUND
Schedule of Investments (Continued)
March 31, 2014
The following is a reconciliation of investments for significant unobservable inputs (Level 3) used in valuing the fund’s assets and liabilities (See Note 3D in Notes to Financial Statements) for the year ended March 31, 2014:
Corporate Bonds & Notes | ||||
Value, Beginning of Year | $811,875 | |||
Purchases | 274,375 | |||
Sales (Includes Paydowns) | (70,070 | ) | ||
Accrued Discounts (Premiums) | (7,739 | ) | ||
Net Realized Gains (Losses) | — | |||
Change in Net Unrealized Depreciation | (7,558 | ) | ||
Transfers In | — | |||
Transfers Out | (1,000,883 | ) | ||
|
| |||
Value, End of Year | $— | |||
|
| |||
Change in Net Unrealized Appreciation (Depreciation) on Level 3 Investments Held at the End of Year, if Applicable | $— | |||
|
|
The significant unobservable inputs were provided by a vendor-priced single broker quote.
During the year ended March 31, 2014, an investment with a value of $1,000,883 was transferred from Level 3 to Level 2 due to the pricing vendor using evaluated pricing of the investment based on significant market observable inputs versus the use of a vendor-priced single broker quote.
See Notes to Financial Statements | See explanation of symbols and terms, if any, on page B-31 |
B-7
PACIFIC LIFE FUNDS
PL INCOME FUND
Schedule of Investments
March 31, 2014
Principal Amount | Value | |||||||
CORPORATE BONDS & NOTES - 64.0% | ||||||||
Consumer Discretionary - 9.5% | ||||||||
Cedar Fair LP | $3,000,000 | $3,052,500 | ||||||
DIRECTV Holdings LLC | 2,000,000 | 2,045,422 | ||||||
Ford Motor Co | 1,500,000 | 1,456,127 | ||||||
General Motors Co | 1,150,000 | 1,250,625 | ||||||
GLP Capital LP | 2,750,000 | 2,829,062 | ||||||
Kia Motors Corp (South Korea) | 1,500,000 | 1,561,952 | ||||||
Lennar Corp | 3,000,000 | 3,060,000 | ||||||
MDC Holdings Inc | 2,500,000 | 2,212,500 | ||||||
MGM Resorts International | 3,500,000 | 3,889,375 | ||||||
PNK Finance Corp | 1,500,000 | 1,567,500 | ||||||
Six Flags Entertainment Corp | 3,500,000 | 3,535,000 | ||||||
Standard Pacific Corp | 2,500,000 | 2,675,000 | ||||||
Toll Brothers Finance Corp | 2,500,000 | 2,418,750 | ||||||
Virgin Media Secured Finance PLC (United Kingdom) | 3,500,000 | 3,631,250 | ||||||
Wyndham Worldwide Corp | 4,000,000 | 4,081,976 | ||||||
|
| |||||||
39,267,039 | ||||||||
|
| |||||||
Consumer Staples - 0.8% | ||||||||
Reynolds Group Issuer Inc | 3,000,000 | 3,157,500 | ||||||
|
| |||||||
Energy - 8.2% | ||||||||
Cimarex Energy Co | 2,500,000 | 2,725,000 | ||||||
DCP Midstream Operating LP | 3,500,000 | 3,426,651 | ||||||
Kinder Morgan Energy Partners LP | 1,500,000 | 1,496,523 | ||||||
Kinder Morgan Inc | 1,000,000 | 1,006,519 | ||||||
Korea National Oil Corp (South Korea) | 3,000,000 | 3,134,157 | ||||||
Origin Energy Finance Ltd (Australia) | 1,800,000 | 1,834,695 | ||||||
Petrobras Global Finance BV (Netherlands) | 3,000,000 | 2,752,929 | ||||||
Petrobras International Finance Co (Cayman) | 3,000,000 | 3,049,275 | ||||||
Petroleos Mexicanos (Mexico) | 2,000,000 | 2,070,000 | ||||||
Sabine Pass Liquefaction LLC | 2,250,000 | 2,331,563 | ||||||
Samson Investment Co | 2,000,000 | 2,190,000 | ||||||
The Williams Cos Inc | 5,000,000 | 4,546,340 | ||||||
Transocean Inc (Cayman) | 3,500,000 | 3,526,163 | ||||||
|
| |||||||
34,089,815 | ||||||||
|
|
Principal Amount | Value | |||||||
Financials - 18.2% | ||||||||
American Tower Corp REIT | $2,000,000 | $2,087,360 | ||||||
ARC Properties Operating Partnership LP REIT | 2,000,000 | 1,993,702 | ||||||
Bank of America Corp | 2,500,000 | 2,500,607 | ||||||
Bank of America NA | 7,200,000 | 7,929,842 | ||||||
Carlyle Holdings Finance LLC | 3,000,000 | 3,000,414 | ||||||
CBL & Associates LP REIT | 3,000,000 | 3,093,132 | ||||||
Columbia Property Trust Operating Partnership LP REIT | 750,000 | 788,719 | ||||||
Duke Realty LP REIT | 5,250,000 | 5,355,058 | ||||||
Export-Import Bank of Korea (South Korea) | 2,000,000 | 2,017,074 | ||||||
Ford Motor Credit Co LLC | 5,000,000 | 5,162,375 | ||||||
General Electric Capital Corp | 3,000,000 | 3,031,326 | ||||||
Genworth Holdings Inc | 3,600,000 | 3,782,614 | ||||||
Health Care REIT Inc | 3,000,000 | 2,951,181 | ||||||
Host Hotels & Resorts LP REIT | 1,750,000 | 1,698,337 | ||||||
Kilroy Realty LP REIT | 5,000,000 | 4,883,720 | ||||||
Liberty Mutual Group Inc | 4,500,000 | 4,825,359 | ||||||
Morgan Stanley | 2,000,000 | 2,062,706 | ||||||
Neuberger Berman Group LLC | 1,000,000 | 1,055,000 | ||||||
Piedmont Operating Partnership LP REIT | 3,100,000 | 3,100,465 | ||||||
Prudential Financial Inc | 3,000,000 | 2,992,500 | ||||||
Raymond James Financial Inc | 3,500,000 | 3,808,970 | ||||||
Vornado Realty LP REIT | 2,500,000 | 2,666,065 | ||||||
Voya Financial Inc | 2,000,000 | 2,051,596 | ||||||
WEA Finance LLC | 2,500,000 | 2,501,363 | ||||||
|
| |||||||
75,339,485 | ||||||||
|
| |||||||
Health Care - 0.8% | ||||||||
CHS/Community Health Systems Inc | 200,000 | 210,000 | ||||||
HCA Inc | 2,000,000 | 2,245,000 | ||||||
McKesson Corp | 1,500,000 | 1,489,834 | ||||||
|
| |||||||
3,944,834 | ||||||||
|
| |||||||
Industrials - 11.9% | ||||||||
Air Canada Pass Through Trust ‘A’ (Canada) | 2,500,000 | 2,506,250 | ||||||
Air Lease Corp | ||||||||
3.375% due 01/15/19 | 2,500,000 | 2,546,875 | ||||||
3.875% due 04/01/21 | 2,500,000 | 2,512,500 |
See Notes to Financial Statements | See explanation of symbols and terms, if any, on page B-31 |
B-8
PACIFIC LIFE FUNDS
PL INCOME FUND
Schedule of Investments (Continued)
March 31, 2014
Principal Amount | Value | |||||||
British Airways Pass Through Trust ‘A’ (United Kingdom) | $2,999,643 | $3,136,726 | ||||||
British Airways Pass Through Trust ‘B’ (United Kingdom) | 3,200,000 | 3,398,080 | ||||||
Continental Airlines Pass Through Trust ‘A’ | 3,500,000 | 3,491,250 | ||||||
Delta Air Lines Pass-Through Trust ‘A’ | ||||||||
4.750% due 11/07/21 | 6,509,507 | 7,006,183 | ||||||
4.950% due 11/23/20 | 1,122,690 | 1,223,732 | ||||||
Hawaiian Airlines Pass Through Certificates ‘A’ | 2,000,000 | 1,936,250 | ||||||
International Lease Finance Corp | 1,000,000 | 1,167,500 | ||||||
Owens Corning | 3,500,000 | 3,477,751 | ||||||
Penske Truck Leasing Co LP | 3,500,000 | 3,538,861 | ||||||
The ADT Corp | 2,000,000 | 2,057,500 | ||||||
United Airlines Pass Through Trust ‘B’ | 3,050,000 | 3,080,500 | ||||||
US Airways Pass Through Trust ‘A’ | 4,733,698 | 4,934,880 | ||||||
Virgin Australia Trust (Australia) | 3,000,000 | 3,158,400 | ||||||
|
| |||||||
49,173,238 | ||||||||
|
| |||||||
Materials - 9.6% | ||||||||
Alphabet Holding Co Inc | 2,200,000 | 2,277,000 | ||||||
ArcelorMittal (Luxembourg) | 2,500,000 | 2,678,125 | ||||||
Barrick Gold Corp (Canada) | 3,000,000 | 2,870,742 | ||||||
Domtar Corp | 2,000,000 | 1,992,084 | ||||||
Freeport-McMoran Copper & Gold Inc | 5,500,000 | 5,262,191 | ||||||
Glencore Funding LLC | ||||||||
2.500% due 01/15/19 ~ | 1,000,000 | 966,999 | ||||||
4.125% due 05/30/23 ~ | 6,000,000 | 5,742,054 | ||||||
Packaging Corp of America | 2,000,000 | 2,074,456 | ||||||
Reliance Steel & Aluminum Co | 4,850,000 | 4,865,088 | ||||||
Samarco Mineracao SA (Brazil) | 3,000,000 | 3,026,250 | ||||||
Sealed Air Corp | 2,000,000 | 2,312,500 | ||||||
Southern Copper Corp | 2,000,000 | 1,722,312 | ||||||
Tronox Finance LLC | 2,000,000 | 2,065,000 | ||||||
Vale SA (Brazil) | 2,000,000 | 1,880,828 | ||||||
|
| |||||||
39,735,629 | ||||||||
|
| |||||||
Telecommunication Services - 3.5% | ||||||||
CC Holdings GS V LLC | 3,350,000 | 3,265,376 | ||||||
Hughes Satellite Systems Corp | 2,500,000 | 2,756,250 | ||||||
Qwest Corp | 2,650,000 | 2,963,813 | ||||||
T-Mobile USA Inc | 250,000 | 270,000 | ||||||
Verizon Communications Inc | 5,000,000 | 5,482,680 | ||||||
|
| |||||||
14,738,119 | ||||||||
|
|
Principal Amount | Value | |||||||
Utilities - 1.5% | ||||||||
Jersey Central Power & Light Co | $3,000,000 | $3,114,552 | ||||||
NRG Energy Inc | 3,000,000 | 3,127,500 | ||||||
|
| |||||||
6,242,052 | ||||||||
|
| |||||||
Total Corporate Bonds & Notes | 265,687,711 | |||||||
|
| |||||||
SENIOR LOAN NOTES - 21.7% | ||||||||
Consumer Discretionary - 5.7% | ||||||||
Caesars Entertainment Resort Properties LLC Term B | 2,992,500 | 3,034,895 | ||||||
ClubCorp Club Operation Inc | 1,421,014 | 1,426,342 | ||||||
Hilton Worldwide Finance LLC | 1,000,000 | 1,003,000 | ||||||
Term B | ||||||||
3.500% due 10/25/20 § | 1,907,895 | 1,913,618 | ||||||
Las Vegas Sands LLC Term B | 1,000,000 | 999,609 | ||||||
3.250% due 12/19/20 § | 2,992,500 | 2,991,330 | ||||||
Leonardo Acquisition Corp (1st Lien) | 1,500,000 | 1,504,687 | ||||||
Seminole Tribe of Florida | 4,336,788 | 4,332,724 | ||||||
Spin Holdco Inc (1st Lien) | 1,500,000 | 1,502,062 | ||||||
The Goodyear Tire & Rubber Co (2nd Lien) | 2,000,000 | 2,011,226 | ||||||
Tribune Co | 3,092,250 | 3,096,888 | ||||||
|
| |||||||
23,816,381 | ||||||||
|
| |||||||
Consumer Staples - 2.0% | ||||||||
Albertson’s LLC Term B-2 | 1,968,483 | 1,985,707 | ||||||
BJ’s Wholesale Club Inc (1st Lien) | 2,962,631 | 2,977,622 | ||||||
Smart & Final Inc (1st Lien) | 1,989,941 | 1,995,746 | ||||||
Sprouts Farmers Markets Holdings LLC | 1,348,929 | 1,351,037 | ||||||
|
| |||||||
8,310,112 | ||||||||
|
| |||||||
Energy - 0.9% | ||||||||
Moxie Patriot LLC Term B-1 | 1,000,000 | 1,026,875 | ||||||
Samson Investment Co Tranche A (2nd Lien) | 2,500,000 | 2,525,937 | ||||||
|
| |||||||
3,552,812 | ||||||||
|
| |||||||
Financials - 2.6% | ||||||||
Amwins Group (1st Lien) | 2,984,909 | 3,011,027 | ||||||
First Data Corp Term B | 2,500,000 | 2,509,635 | ||||||
HUB International Ltd Term B | 1,990,000 | 1,998,706 | ||||||
Realogy Corp Term B | 1,485,028 | 1,494,310 | ||||||
Stockbridge/SBE Holdings LLC Tranche B | 1,450,000 | 1,602,250 | ||||||
|
| |||||||
10,615,928 | ||||||||
|
|
See Notes to Financial Statements | See explanation of symbols and terms, if any, on page B-31 |
B-9
PACIFIC LIFE FUNDS
PL INCOME FUND
Schedule of Investments (Continued)
March 31, 2014
Principal Amount | Value | |||||||
Health Care - 2.5% | ||||||||
CHS/Community Health Systems Inc Term D | $997,500 | $1,007,160 | ||||||
Fresenius US Finance I Inc Tranche B | 4,477,500 | 4,474,003 | ||||||
Salix Pharmaceuticals Ltd | 1,431,875 | 1,446,642 | ||||||
Valeant Pharmaceutical International | 3,447,500 | 3,464,737 | ||||||
|
| |||||||
10,392,542 | ||||||||
|
| |||||||
Industrials - 3.7% | ||||||||
AlixPartners LLP Term B-2 (1st Lien) | 1,955,299 | 1,966,501 | ||||||
CSC Holdings LLC Term B | 4,466,250 | 4,421,239 | ||||||
MRC Global | 995,000 | 1,008,948 | ||||||
Rexnord LLC Term B | 2,985,000 | 2,993,853 | ||||||
Sensata Technologies BV Term B | 1,990,000 | 1,999,765 | ||||||
Tomkins Air (1st Lien) | 2,962,613 | 2,975,574 | ||||||
|
| |||||||
15,365,880 | ||||||||
|
| |||||||
Information Technology - 1.2% | ||||||||
Activision Blizzard Inc | 2,542,500 | 2,546,067 | ||||||
BMC Software Finance Inc | 1,496,250 | 1,499,706 | ||||||
Excelitas Technologies Corp Term B | 984,447 | 990,600 | ||||||
|
| |||||||
5,036,373 | ||||||||
|
| |||||||
Materials - 1.8% | ||||||||
FMG Resources Property Ltd | 1,000,000 | 1,008,906 | ||||||
4.250% due 06/30/19 § | 4,955,100 | 4,999,230 | ||||||
Polymer Group Inc | 1,496,250 | 1,509,342 | ||||||
|
| |||||||
7,517,478 | ||||||||
|
| |||||||
Telecommunication Services - 1.2% | ||||||||
Level 3 Financing Inc | ||||||||
Tranche B | ||||||||
4.000% due 01/15/20 § | 2,500,000 | 2,507,812 | ||||||
Tranche B-III | ||||||||
4.000% due 08/01/19 § | 2,500,000 | 2,508,332 | ||||||
|
| |||||||
5,016,144 | ||||||||
|
| |||||||
Utilities - 0.1% | ||||||||
Raven Power Finance LLC | 498,750 | 505,296 | ||||||
|
| |||||||
Total Senior Loan Notes | 90,128,946 | |||||||
|
| |||||||
MORTGAGE-BACKED SECURITIES - 0.4% | ||||||||
Collateralized Mortgage Obligation - Commercial - 0.4% |
| |||||||
Hilton USA Trust | 1,500,000 | 1,504,839 | ||||||
|
| |||||||
Total Mortgage-Backed Securities | 1,504,839 | |||||||
|
|
Principal Amount | Value | |||||||
U.S. GOVERNMENT AGENCY ISSUES - 1.0% |
| |||||||
Fannie Mae | $4,000,000 | $4,044,684 | ||||||
|
| |||||||
Total U.S. Government Agency Issues | 4,044,684 | |||||||
|
| |||||||
U.S. TREASURY OBLIGATIONS - 7.3% | ||||||||
U.S. Treasury Bonds - 0.9% | ||||||||
3.125% due 02/15/43 | 4,000,000 | 3,681,876 | ||||||
|
| |||||||
U.S. Treasury Notes - 6.4% | ||||||||
0.250% due 02/28/15 | 5,000,000 | 5,005,565 | ||||||
0.375% due 04/15/15 | 5,000,000 | 5,012,110 | ||||||
0.375% due 06/30/15 | 5,000,000 | 5,013,475 | ||||||
0.625% due 10/15/16 | 2,000,000 | 1,997,110 | ||||||
0.625% due 02/15/17 | 3,000,000 | 2,981,367 | ||||||
0.750% due 03/15/17 | 3,000,000 | 2,989,335 | ||||||
1.375% due 07/31/18 | 2,500,000 | 2,485,938 | ||||||
1.375% due 09/30/18 | 1,000,000 | 991,445 | ||||||
|
| |||||||
26,476,345 | ||||||||
|
| |||||||
Total U.S. Treasury Obligations | 30,158,221 | |||||||
|
| |||||||
FOREIGN GOVERNMENT BONDS & NOTES - 3.3% |
| |||||||
Foreign Government Issues - 3.3% | ||||||||
Chile Government International Bond (Chile) | 4,000,000 | 3,680,000 | ||||||
Mexico Government International Bond (Mexico) | ||||||||
3.500% due 01/21/21 | 1,000,000 | 1,015,000 | ||||||
3.625% due 03/15/22 | 2,000,000 | 2,007,000 | ||||||
Province of Ontario (Canada) | 3,000,000 | 2,912,019 | ||||||
Republic of Korea (South Korea) | 4,000,000 | 4,210,000 | ||||||
|
| |||||||
13,824,019 | ||||||||
|
| |||||||
Total Foreign Government Bonds & Notes | 13,824,019 | |||||||
|
| |||||||
Shares | ||||||||
SHORT-TERM INVESTMENT - 1.9% | ||||||||
Money Market Fund - 1.9% | ||||||||
BlackRock Liquidity Funds Treasury | 7,791,290 | 7,791,290 | ||||||
|
| |||||||
Total Short-Term Investment | 7,791,290 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 99.6% | 413,139,710 | |||||||
OTHER ASSETS & LIABILITIES, NET - 0.4% | 1,568,869 | |||||||
|
| |||||||
NET ASSETS - 100.0% | $414,708,579 | |||||||
|
|
See Notes to Financial Statements | See explanation of symbols and terms, if any, on page B-31 |
B-10
PACIFIC LIFE FUNDS
PL INCOME FUND
Schedule of Investments (Continued)
March 31, 2014
Notes to Schedule of Investments
(a) | As of March 31, 2014, the fund was diversified as a percentage of net assets as follows: |
Corporate Bonds & Notes | 64.0% | |||
Senior Loan Notes | 21.7% | |||
U.S. Treasury Obligations | 7.3% | |||
Foreign Government Bonds & Notes | 3.3% | |||
Others (each less than 3.0%) | 3.3% | |||
|
| |||
99.6% | ||||
Other Assets & Liabilities, Net | 0.4% | |||
|
| |||
100.0% | ||||
|
|
(b) | As of March 31, 2014, the fund’s Standard & Poor’s quality ratings as a percentage of total fixed income investments were as follows (Unaudited): |
AA / U.S. Government and Agency Issues | 10.8% | |||
A | 12.2% | |||
BBB | 43.5% | |||
BB | 18.6% | |||
B | 12.9% | |||
CCC | 0.5% | |||
Not Rated | 1.5% | |||
|
| |||
100.0% | ||||
|
|
(c) | Fair Value Measurements |
The following is a summary of the fund’s investments as categorized under the three-tier hierarchy of inputs used in valuing the fund’s assets and liabilities (See Note 3D in Notes to Financial Statements) as of March 31, 2014:
Total Value at March 31, 2014 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||||
Assets | Corporate Bonds & Notes | $265,687,711 | $— | $265,687,711 | $— | |||||||||||||
Senior Loan Notes | 90,128,946 | — | 90,128,946 | — | ||||||||||||||
Mortgage-Backed Securities | 1,504,839 | — | 1,504,839 | — | ||||||||||||||
U.S. Government Agency Issues | 4,044,684 | — | 4,044,684 | — | ||||||||||||||
U.S. Treasury Obligations | 30,158,221 | — | 30,158,221 | — | ||||||||||||||
Foreign Government Bonds & Notes | 13,824,019 | — | 13,824,019 | — | ||||||||||||||
Short-Term Investment | 7,791,290 | 7,791,290 | — | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total | $413,139,710 | $7,791,290 | $405,348,420 | $— | ||||||||||||||
|
|
|
|
|
|
|
|
The following is a reconciliation of investments for significant unobservable inputs (Level 3) used in valuing the fund’s assets and liabilities (See Note 3D in Notes to Financial Statements) for the year ended March 31, 2014:
Corporate Bonds & Notes | ||||
Value, Beginning of Year | $15,838,938 | |||
Purchases | 784,688 | |||
Sales (Includes Paydowns) | (4,539,156 | ) | ||
Accrued Discounts (Premiums) | (40,964 | ) | ||
Net Realized Gains | 127,930 | |||
Change in Net Unrealized Depreciation | (230,373 | ) | ||
Transfers In | — | |||
Transfers Out | (11,941,063 | ) | ||
|
| |||
Value, End of Year | $— | |||
|
| |||
Change in Net Unrealized Appreciation (Depreciation) on Level 3 Investments Held at the End of Year, if Applicable | $— | |||
|
|
The significant unobservable inputs were provided by a vendor-priced single broker quote.
During the year ended March 31, 2014, investments with a total aggregate value of $11,941,063 were transferred from Level 3 to Level 2 due to the pricing vendor using evaluated pricing of the investments based on significant market observable inputs versus the use of a vendor-priced single broker quote.
See Notes to Financial Statements | See explanation of symbols and terms, if any, on page B-31 |
B-11
PACIFIC LIFE FUNDS
PL STRATEGIC INCOME FUND
Schedule of Investments
March 31, 2014
Shares | Value | |||||||
CONVERTIBLE PREFERRED STOCKS - 0.2% | ||||||||
Energy - 0.2% | ||||||||
Halcon Resources Corp 5.750% * | 200 | $160,203 | ||||||
|
| |||||||
Total Convertible Preferred Stocks | 160,203 | |||||||
|
| |||||||
COMMON STOCKS - 2.9% | ||||||||
Consumer Discretionary - 1.1% | ||||||||
Cedar Fair LP | 2,500 | 127,325 | ||||||
Ford Motor Co | 6,380 | 99,528 | ||||||
L Brands Inc | 1,900 | 107,863 | ||||||
Las Vegas Sands Corp | 1,550 | 125,209 | ||||||
Lennar Corp ‘A’ | 2,825 | 111,927 | ||||||
MGM Resorts International * | 3,850 | 99,561 | ||||||
Standard Pacific Corp | 11,500 | 95,565 | ||||||
|
| |||||||
766,978 | ||||||||
|
| |||||||
Energy - 0.2% | ||||||||
Concho Resources Inc * | 975 | 119,438 | ||||||
Halcon Resources Corp * | 1,993 | 8,629 | ||||||
|
| |||||||
128,067 | ||||||||
|
| |||||||
Health Care - 0.1% | ||||||||
HCA Holdings Inc * | 1,875 | 98,438 | ||||||
|
| |||||||
Industrials - 0.5% | ||||||||
Ply Gem Holdings Inc | 7,000 | 88,410 | ||||||
The ADT Corp | 3,410 | 102,130 | ||||||
The Boeing Co | 725 | 90,980 | ||||||
United Rentals Inc * | 1,175 | 111,555 | ||||||
|
| |||||||
393,075 | ||||||||
|
| |||||||
Information Technology - 0.3% | ||||||||
CDW Corp | 4,350 | 119,364 | ||||||
CommScope Holding Co Inc * | 3,500 | 86,380 | ||||||
|
| |||||||
205,744 | ||||||||
|
| |||||||
Materials - 0.4% | ||||||||
Freeport-McMoRan Copper & Gold Inc | 3,100 | 102,517 | ||||||
Louisiana-Pacific Corp * | 5,800 | 97,846 | ||||||
Rock-Tenn Co | 1,150 | 121,406 | ||||||
|
| |||||||
321,769 | ||||||||
|
| |||||||
Telecommunication Services - 0.1% | ||||||||
Intelsat SA (Luxembourg) * | 4,680 | 87,610 | ||||||
|
| |||||||
Utilities - 0.2% | ||||||||
NRG Energy Inc | 3,500 | 111,300 | ||||||
|
| |||||||
Total Common Stocks | 2,112,981 | |||||||
|
| |||||||
Principal Amount | ||||||||
CORPORATE BONDS & NOTES - 71.8% | ||||||||
Consumer Discretionary - 10.6% | ||||||||
Advance Auto Parts Inc | $500,000 | 513,218 | ||||||
Beazer Homes USA Inc | ||||||||
7.250% due 02/01/23 | 400,000 | 420,000 | ||||||
7.500% due 09/15/21 | 150,000 | 162,000 | ||||||
9.125% due 06/15/18 | 250,000 | 265,313 |
Principal Amount | Value | |||||||
Boyd Gaming Corp | $350,000 | $388,938 | ||||||
Caesars Entertainment Operating Co Inc | ||||||||
9.000% due 02/15/20 | 100,000 | 90,250 | ||||||
11.250% due 06/01/17 | 100,000 | 96,500 | ||||||
Caesars Entertainment Resort Properties LLC | ||||||||
8.000% due 10/01/20 ~ | 100,000 | 105,750 | ||||||
11.000% due 10/01/21 ~ | 100,000 | 105,500 | ||||||
CEC Entertainment Inc | 500,000 | 520,000 | ||||||
Cedar Fair LP | 300,000 | 305,250 | ||||||
GLP Capital LP | 200,000 | 205,750 | ||||||
Greektown Holdings LLC | 250,000 | 259,375 | ||||||
Hilton Worldwide Finance LLC | 250,000 | 261,719 | ||||||
Icahn Enterprises LP | 200,000 | 203,500 | ||||||
Jo-Ann Stores Holdings Inc | 200,000 | 209,500 | ||||||
Jo-Ann Stores Inc | 300,000 | 312,750 | ||||||
Landry’s Holdings II Inc | 250,000 | 268,750 | ||||||
Landry’s Inc | 100,000 | 110,625 | ||||||
Lennar Corp | 450,000 | 459,000 | ||||||
MGM Resorts International | 350,000 | 388,935 | ||||||
Neiman Marcus Group LLC | ||||||||
8.000% due 10/15/21 ~ | 50,000 | 55,188 | ||||||
8.750% PIK due 10/15/21 ~ | 400,000 | 444,000 | ||||||
NPC International Inc | 400,000 | 459,000 | ||||||
Penn National Gaming Inc | 300,000 | 295,500 | ||||||
ServiceMaster Co | 400,000 | 436,000 | ||||||
Wyndham Worldwide Corp | 350,000 | 343,589 | ||||||
|
| |||||||
7,685,900 | ||||||||
|
| |||||||
Consumer Staples - 2.3% | ||||||||
Beverages & More Inc | 350,000 | 365,313 | ||||||
JBS Investments GmbH (Austria) | 200,000 | 211,750 | ||||||
JBS USA LLC | 250,000 | 266,875 | ||||||
Reynolds Group Issuer Inc | 200,000 | 224,500 | ||||||
Roundy’s Supermarkets Inc | 350,000 | 374,500 | ||||||
Smithfield Foods Inc | 200,000 | 208,000 | ||||||
|
| |||||||
1,650,938 | ||||||||
|
| |||||||
Energy - 12.1% | ||||||||
Arch Coal Inc | 200,000 | 154,500 | ||||||
Atlas Pipeline Partners LP | 200,000 | 214,000 | ||||||
Basic Energy Services Inc | 400,000 | 431,500 | ||||||
Calumet Specialty Products Partners LP | 300,000 | 303,000 |
See Notes to Financial Statements | See explanation of symbols and terms, if any, on page B-31 |
B-12
PACIFIC LIFE FUNDS
PL STRATEGIC INCOME FUND
Schedule of Investments (Continued)
March 31, 2014
Principal Amount | Value | |||||||
Chaparral Energy Inc | $350,000 | $386,750 | ||||||
Crestwood Midstream Partners LP | 250,000 | 262,500 | ||||||
EV Energy Partners LP | 325,000 | 338,000 | ||||||
Halcon Resources Corp | ||||||||
8.875% due 05/15/21 | 350,000 | 364,875 | ||||||
9.750% due 07/15/20 | 50,000 | 54,125 | ||||||
Hercules Offshore Inc | ||||||||
6.750% due 04/01/22 ~ | 150,000 | 145,688 | ||||||
7.500% due 10/01/21 ~ | 250,000 | 253,750 | ||||||
Hiland Partners LP | 300,000 | 327,750 | ||||||
Kinder Morgan Inc | 300,000 | 301,956 | ||||||
Linn Energy LLC | ||||||||
7.000% due 11/01/19 ~ | 400,000 | 419,000 | ||||||
7.750% due 02/01/21 | 250,000 | 270,000 | ||||||
MEG Energy Corp (Canada) | ||||||||
6.375% due 01/30/23 ~ | 100,000 | 104,000 | ||||||
6.500% due 03/15/21 ~ | 150,000 | 158,625 | ||||||
Northern Blizzard Resources Inc | 250,000 | 257,813 | ||||||
Petrobras Global Finance BV (Netherlands) | 500,000 | 502,520 | ||||||
Petroleos Mexicanos (Mexico) | 400,000 | 414,000 | ||||||
Pioneer Energy Services Corp | 200,000 | 204,000 | ||||||
Regency Energy Partners LP | ||||||||
5.750% due 09/01/20 | 250,000 | 261,250 | ||||||
5.875% due 03/01/22 | 50,000 | 52,000 | ||||||
Samson Investment Co | 350,000 | 383,250 | ||||||
SandRidge Energy Inc | 350,000 | 375,375 | ||||||
Seadrill Ltd (Bermuda) | 300,000 | 314,250 | ||||||
Tervita Corp (Canada) | ||||||||
8.000% due 11/15/18 ~ | 150,000 | 152,250 | ||||||
10.875% due 02/15/18 ~ | 250,000 | 252,188 | ||||||
The Williams Cos Inc | 500,000 | 454,634 | ||||||
Transocean Inc (Cayman) | ||||||||
3.800% due 10/15/22 | 400,000 | 383,140 | ||||||
6.375% due 12/15/21 | 250,000 | 281,454 | ||||||
|
| |||||||
8,778,143 | ||||||||
|
| |||||||
Financials - 10.4% | ||||||||
Carlyle Holdings Finance LLC | 250,000 | 250,035 | ||||||
CBL & Associates LP REIT | 400,000 | 412,418 | ||||||
DDR Corp REIT | 500,000 | 497,248 | ||||||
Duke Realty LP REIT | ||||||||
3.875% due 02/15/21 | 500,000 | 501,761 | ||||||
4.375% due 06/15/22 | 250,000 | 255,003 | ||||||
DuPont Fabros Technology LP REIT | 250,000 | 265,625 | ||||||
First Data Corp | ||||||||
6.750% due 11/01/20 ~ | 100,000 | 108,000 | ||||||
7.375% due 06/15/19 ~ | 100,000 | 107,750 | ||||||
10.625% due 06/15/21 | 100,000 | 113,000 | ||||||
Genworth Holdings Inc | 300,000 | 315,218 | ||||||
Health Care REIT Inc | 350,000 | 344,304 |
Principal Amount | Value | |||||||
Hockey Merger Sub 2 Inc | $300,000 | $321,750 | ||||||
Host Hotels & Resorts LP REIT | 250,000 | 242,620 | ||||||
Jefferies Finance LLC | 200,000 | 202,500 | ||||||
Kilroy Realty LP REIT | 250,000 | 244,186 | ||||||
Liberty Mutual Group Inc | ||||||||
4.250% due 06/15/23 ~ | 350,000 | 355,918 | ||||||
4.950% due 05/01/22 ~ | 250,000 | 268,076 | ||||||
Mid-America Apartments LP REIT | 300,000 | 303,270 | ||||||
Nuveen Investments Inc | 450,000 | 478,125 | ||||||
Piedmont Operating Partnership LP REIT | 400,000 | 400,060 | ||||||
Prudential Financial Inc | 300,000 | 299,250 | ||||||
Raymond James Financial Inc | 350,000 | 380,897 | ||||||
RHP Hotel Properties LP REIT | 250,000 | 253,125 | ||||||
The Howard Hughes Corp | 250,000 | 271,250 | ||||||
Vornado Realty LP REIT | 350,000 | 373,249 | ||||||
|
| |||||||
7,564,638 | ||||||||
|
| |||||||
Health Care - 5.3% | ||||||||
Aviv Healthcare Properties LP | 200,000 | 208,500 | ||||||
Capsugel SA (Luxembourg) | 300,000 | 309,563 | ||||||
CHS/Community Health Systems Inc | 400,000 | 420,000 | ||||||
DJO Finance LLC | 500,000 | 528,750 | ||||||
Jaguar Holding Co I | 200,000 | 211,250 | ||||||
JLL/Delta Dutch Newco BV (Netherlands) | 350,000 | 361,813 | ||||||
MPH Acquisition Holdings LLC | 250,000 | 257,188 | ||||||
Prospect Medical Holdings Inc | 250,000 | 275,000 | ||||||
Quest Diagnostics Inc | 500,000 | 498,066 | ||||||
Tenet Healthcare Corp | ||||||||
6.000% due 10/01/20 ~ | 50,000 | 53,592 | ||||||
8.000% due 08/01/20 | 50,000 | 54,750 | ||||||
8.125% due 04/01/22 | 400,000 | 448,000 | ||||||
Valeant Pharmaceuticals International | 200,000 | 217,000 | ||||||
|
| |||||||
3,843,472 | ||||||||
|
| |||||||
Industrials - 9.1% | ||||||||
ADS Waste Holdings Inc | 350,000 | 382,375 | ||||||
Ahern Rentals Inc | 200,000 | 222,250 | ||||||
Air Canada Pass-Through Trust ‘B’ (Canada) | 250,000 | 253,750 | ||||||
Air Lease Corp | ||||||||
3.875% due 04/01/21 | 250,000 | 251,250 | ||||||
4.750% due 03/01/20 | 800,000 | 852,000 | ||||||
American Airlines Pass-Through Trust ‘B’ | 194,142 | 199,966 | ||||||
British Airways Pass Through Trust ‘B’ | 550,000 | 584,045 |
See Notes to Financial Statements | See explanation of symbols and terms, if any, on page B-31 |
B-13
PACIFIC LIFE FUNDS
PL STRATEGIC INCOME FUND
Schedule of Investments (Continued)
March 31, 2014
Principal Amount | Value | |||||||
CPG Merger Sub LLC | $200,000 | $216,000 | ||||||
International Lease Finance Corp | ||||||||
6.250% due 05/15/19 | 450,000 | 498,375 | ||||||
7.125% due 09/01/18 ~ | 250,000 | 291,875 | ||||||
Modular Space Corp | 250,000 | 260,625 | ||||||
Nortek Inc | 195,000 | 218,888 | ||||||
Owens Corning | 700,000 | 868,358 | ||||||
Roofing Supply Group LLC | 250,000 | 281,875 | ||||||
The ADT Corp | 300,000 | 308,625 | ||||||
TMS International Corp | 250,000 | 270,000 | ||||||
United Airlines Pass Through Trust ‘B’ | ||||||||
4.750% due 10/11/23 | 150,000 | 151,500 | ||||||
5.375% due 02/15/23 | 200,000 | 204,760 | ||||||
US Airways Pass Through Trust ‘B’ | 250,000 | 252,200 | ||||||
|
| |||||||
6,568,717 | ||||||||
|
| |||||||
Information Technology - 1.5% | ||||||||
Advanced Micro Devices Inc | 350,000 | 352,188 | ||||||
Blackboard Inc | 325,000 | 342,063 | ||||||
BMC Software Inc | 100,000 | 104,000 | ||||||
Entegris Inc | 250,000 | 256,250 | ||||||
|
| |||||||
1,054,501 | ||||||||
|
| |||||||
Materials - 13.1% | ||||||||
AK Steel Corp | 400,000 | 405,000 | ||||||
ArcelorMittal (Luxembourg) | ||||||||
6.000% due 03/01/21 | 300,000 | 321,375 | ||||||
7.250% due 03/01/41 | 350,000 | 352,625 | ||||||
7.500% due 10/15/39 | 250,000 | 259,688 | ||||||
Ardagh Packaging Finance PLC (Ireland) | ||||||||
6.250% due 01/31/19 ~ | 250,000 | 261,875 | ||||||
6.750% due 01/31/21 ~ | 250,000 | 261,875 | ||||||
7.000% due 11/15/20 ~ | 79,412 | 83,978 | ||||||
Barrick Gold Corp (Canada) | 450,000 | 430,611 | ||||||
Beverage Packaging Holdings Luxembourg II SA (Luxembourg) | 600,000 | 622,500 | ||||||
BOE Intermediate Holding Corp | 411,375 | 448,656 | ||||||
BOE Merger Corp | 200,000 | 213,000 | ||||||
Celulosa Arauco y Constitucion SA (Chile) | 250,000 | 252,483 | ||||||
Exopack Holdings SA (Luxembourg) | 250,000 | 266,250 | ||||||
FMG Resources Property Ltd (Australia) | 250,000 | 270,313 | ||||||
Freeport-McMoran Copper & Gold Inc | 250,000 | 239,191 | ||||||
Glencore Funding LLC | 500,000 | 478,505 | ||||||
Hexion U.S. Finance Corp | 250,000 | 260,000 | ||||||
INEOS Group Holdings SA (Luxembourg) | 250,000 | 255,938 | ||||||
Mustang Merger Corp | 250,000 | 275,000 |
Principal Amount | Value | |||||||
New Gold Inc (Canada) | $300,000 | $306,000 | �� | |||||
Reliance Steel & Aluminum Co | 750,000 | 752,333 | ||||||
Samarco Mineracao SA (Brazil) | 250,000 | 252,188 | ||||||
Sappi Papier Holding GmbH (Austria) | 200,000 | 223,500 | ||||||
8.375% due 06/15/19 ~ | 350,000 | 390,250 | ||||||
TPC Group Inc | 350,000 | 385,438 | ||||||
Tronox Finance LLC | 300,000 | 309,750 | ||||||
Vale Overseas Ltd (Cayman) | 250,000 | 249,487 | ||||||
Wise Metals Group LLC | 250,000 | 269,375 | ||||||
Xstrata Finance Canada Ltd (Canada) | 400,000 | 390,795 | ||||||
|
| |||||||
9,487,979 | ||||||||
|
| |||||||
Telecommunication Services - 6.3% | ||||||||
Digicel Ltd (Bermuda) | 300,000 | 307,500 | ||||||
Intelsat Jackson Holdings SA (Luxembourg) | 250,000 | 261,250 | ||||||
7.750% due 06/01/21 | 600,000 | 633,750 | ||||||
Level 3 Financing Inc | 350,000 | 381,063 | ||||||
Qwest Corp | 600,000 | 671,052 | ||||||
Sprint Communications Inc | 100,000 | 115,750 | ||||||
Sprint Corp | 600,000 | 656,250 | ||||||
T-Mobile USA Inc | ||||||||
6.250% due 04/01/21 | 100,000 | 106,125 | ||||||
6.633% due 04/28/21 | 300,000 | 323,625 | ||||||
Verizon Communications Inc | ||||||||
3.450% due 03/15/21 | 500,000 | 507,777 | ||||||
5.150% due 09/15/23 | 500,000 | 548,268 | ||||||
|
| |||||||
4,512,410 | ||||||||
|
| |||||||
Utilities - 1.1% | ||||||||
Calpine Corp | ||||||||
6.000% due 01/15/22 ~ | 50,000 | 52,750 | ||||||
7.875% due 01/15/23 ~ | 212,000 | 238,500 | ||||||
Jersey Central Power & Light Co | 250,000 | 259,546 | ||||||
NRG Energy Inc | ||||||||
6.250% due 07/15/22 ~ | 100,000 | 103,250 | ||||||
6.625% due 03/15/23 | 150,000 | 156,375 | ||||||
|
| |||||||
810,421 | ||||||||
|
| |||||||
Total Corporate Bonds & Notes | 51,957,119 | |||||||
|
| |||||||
SENIOR LOAN NOTES - 19.7% | ||||||||
Consumer Discretionary - 7.0% | ||||||||
Brickman Group Holdings Inc (2nd Lien) | ||||||||
due 12/17/21 µ | 250,000 | 256,000 | ||||||
7.500%due 12/17/21 § | 250,000 | 256,000 | ||||||
CEC Entertainment Inc | 250,000 | 248,698 | ||||||
Charter Communications Term B | 500,000 | 496,500 | ||||||
Chrysler Group Term B | 500,000 | 498,527 |
See Notes to Financial Statements | See explanation of symbols and terms, if any, on page B-31 |
B-14
PACIFIC LIFE FUNDS
PL STRATEGIC INCOME FUND
Schedule of Investments (Continued)
March 31, 2014
Principal Amount | Value | |||||||
Hilton Worldwide Finance LLC | $250,000 | $250,750 | ||||||
IMG Worldwide Inc | 250,000 | 249,063 | ||||||
Las Vegas Sands LLC Term B | 498,750 | 498,555 | ||||||
MGM Resorts International Term B | 250,000 | 249,948 | ||||||
Phillips Pet Food & Supplies (1st Lien) | 250,000 | 251,406 | ||||||
Seminole Tribe of Florida | 481,865 | 481,414 | ||||||
Spin Holdco Inc (1st Lien) | 500,000 | 500,688 | ||||||
Tribune Co | 500,000 | 500,750 | ||||||
4.000% due 12/27/20 § | 349,125 | 349,649 | ||||||
|
| |||||||
5,087,948 | ||||||||
|
| |||||||
Consumer Staples - 1.3% | ||||||||
Albertson’s LLC Term B-2 | 347,379 | 350,419 | ||||||
BJ’s Wholesale Club Inc (2nd Lien) | 250,000 | 256,615 | ||||||
Reddy Ice Corp Term B (1st Lien) | 346,500 | 344,768 | ||||||
|
| |||||||
951,802 | ||||||||
|
| |||||||
Energy - 0.7% | ||||||||
HGIM Corp Term B | 248,750 | 249,683 | ||||||
Samson Investment Co Tranche 1 (2nd Lien) | 250,000 | 252,594 | ||||||
|
| |||||||
502,277 | ||||||||
|
| |||||||
Financials - 1.0% | ||||||||
ROC Finance LLC Term B | 498,747 | 488,149 | ||||||
Stockbridge/SBE Holdings LLC Tranche B | 175,000 | 193,375 | ||||||
|
| |||||||
681,524 | ||||||||
|
| |||||||
Health Care - 2.1% | ||||||||
CHS/Community Health Systems Inc Term D | 399,000 | 402,864 | ||||||
Iasis Healthcare LLC Term B-2 | 345,625 | 347,407 | ||||||
Jll Delta Dutch BV | 250,000 | 249,115 | ||||||
Pharmedium Healthcare Co (1st Lien) | 500,000 | 501,563 | ||||||
|
| |||||||
1,500,949 | ||||||||
|
| |||||||
Industrials - 3.9% | ||||||||
Apex Tool Group LLC | 247,500 | 245,644 | ||||||
CSC Holdings LLC Term B | 497,494 | 492,480 | ||||||
Gypsum Management & Supply Inc | 500,000 | 500,000 | ||||||
Husky Injection Molding Systems Ltd | 500,000 | 502,188 | ||||||
MRC Global | 348,250 | 353,132 | ||||||
Sensata Technologies BV Term B | 497,500 | 499,941 | ||||||
Spirit AeroSystems Inc | 250,000 | 249,740 | ||||||
|
| |||||||
2,843,125 | ||||||||
|
|
Principal Amount | Value | |||||||
Information Technology - 0.9% | ||||||||
Activision Blizzard Inc | $423,750 | $424,345 | ||||||
BMC Software Finance Inc | 249,375 | 249,931 | ||||||
|
| |||||||
674,276 | ||||||||
|
| |||||||
Materials - 2.4% | ||||||||
FMG Resources Property Ltd | ||||||||
due 06/28/19 µ | 250,000 | 252,227 | ||||||
4.250% due 06/30/19 § | 497,500 | 501,931 | ||||||
Ranpak Corp (2nd Lien) | 250,000 | 257,500 | ||||||
Tronox Inc Term B (Netherlands) | 248,125 | 249,969 | ||||||
Univar Inc Term B | 500,000 | 499,286 | ||||||
|
| |||||||
1,760,913 | ||||||||
|
| |||||||
Telecommunication Services - 0.4% | ||||||||
Windstream Corp Tranche B-4 | 246,875 | 246,926 | ||||||
|
| |||||||
Total Senior Loan Notes | 14,249,740 | |||||||
|
| |||||||
MORTGAGE-BACKED SECURITIES - 0.4% | ||||||||
Collateralized Mortgage Obligations - Commercial - 0.4% |
| |||||||
Hilton USA Trust | 250,000 | 250,807 | ||||||
|
| |||||||
Total Mortgage-Backed Securities | 250,807 | |||||||
|
| |||||||
Shares | ||||||||
SHORT-TERM INVESTMENT - 11.1% | ||||||||
Money Market Fund - 11.1% | ||||||||
BlackRock Liquidity Funds Treasury | 8,042,425 | 8,042,425 | ||||||
|
| |||||||
Total Short-Term Investment | 8,042,425 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 106.1% | 76,773,275 | |||||||
OTHER ASSETS & LIABILITIES, NET - (6.1%) | (4,437,688 | ) | ||||||
|
| |||||||
NET ASSETS - 100.0% | $72,335,587 | |||||||
|
|
Notes to Schedule of Investments
(a) | As of March 31, 2014, the fund was diversified as a percentage of net assets as follows: |
Corporate Bonds & Notes | 71.8% | |||
Senior Loan Notes | 19.7% | |||
Short-Term Investment | 11.1% | |||
Others (each less than 3.0%) | 3.5% | |||
|
| |||
106.1% | ||||
Other Assets & Liabilities, Net | (6.1% | ) | ||
|
| |||
100.0% | ||||
|
|
See Notes to Financial Statements | See explanation of symbols and terms, if any, on page B-31 |
B-15
PACIFIC LIFE FUNDS
PL STRATEGIC INCOME FUND
Schedule of Investments (Continued)
March 31, 2014
(b) | As of March 31, 2014, the fund’s Standard & Poor’s quality ratings as a percentage of total fixed income investments were as follows (Unaudited): |
A | 0.8% | |||
BBB | 29.9% | |||
BB | 20.7% | |||
B | 26.4% | |||
CCC | 19.8% | |||
Not Rated | 2.4% | |||
|
| |||
100.0% | ||||
|
|
(c) | Fair Value Measurements |
The following is a summary of the fund’s investments as categorized under the three-tier hierarchy of inputs used in valuing the fund’s assets and liabilities (See Note 3D in Notes to Financial Statements) as of March 31, 2014:
Total Value at March 31, 2014 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||||
Assets | Convertible Preferred Stocks (1) | $160,203 | $160,203 | $— | $— | |||||||||||||
Common Stocks (1) | 2,112,981 | 2,112,981 | — | — | ||||||||||||||
Corporate Bonds & Notes | 51,957,119 | — | 51,957,119 | — | ||||||||||||||
Senior Loan Notes | 14,249,740 | — | 14,249,740 | — | ||||||||||||||
Mortgage-Backed Securities | 250,807 | — | 250,807 | — | ||||||||||||||
Short-Term Investment | 8,042,425 | 8,042,425 | — | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total | $76,773,275 | $10,315,609 | $66,457,666 | $— | ||||||||||||||
|
|
|
|
|
|
|
|
The following is a reconciliation of investments for significant unobservable inputs (Level 3) used in valuing the fund’s assets and liabilities (See Note 3D in Notes to Financial Statements) for the year ended March 31, 2014:
Corporate Bonds & Notes | ||||
Value, Beginning of Year | $950,219 | |||
Purchases | — | |||
Sales (Includes Paydowns) | (745,046 | ) | ||
Accrued Discounts (Premiums) | (534 | ) | ||
Net Realized Gains | 21,806 | |||
Change in Net Unrealized Depreciation | (26,479 | ) | ||
Transfers In | — | |||
Transfers Out | (199,966 | ) | ||
|
| |||
Value, End of Year | $— | |||
|
| |||
Change in Net Unrealized Appreciation (Depreciation) on | $— | |||
|
|
The significant unobservable inputs were provided by a vendor-priced single broker quote.
During the year ended March 31, 2014, an investment with a value of $199,966 was transferred from Level 3 to Level 2 due to the pricing vendor using evaluated pricing of the investments based on significant market observable inputs versus the use of a vendor-priced single broker quote.
(1) | For equity investments categorized in a single level, refer to the schedule of investments for further industry breakout. |
See Notes to Financial Statements | See explanation of symbols and terms, if any, on page B-31 |
B-16
PACIFIC LIFE FUNDS
PL FLOATING RATE INCOME FUND
Schedule of Investments
March 31, 2014
Principal Amount | Value | |||||||
CORPORATE BONDS & NOTES - 1.9% | ||||||||
Consumer Staples - 0.5% | ||||||||
Reynolds Group Issuer Inc | ||||||||
5.750% due 10/15/20 | $3,750,000 | $3,946,875 | ||||||
9.000% due 04/15/19 | 1,000,000 | 1,075,000 | ||||||
9.875% due 08/15/19 | 500,000 | 561,250 | ||||||
|
| |||||||
5,583,125 | ||||||||
|
| |||||||
Financials - 0.4% | ||||||||
First Data Corp | 3,500,000 | 3,780,000 | ||||||
|
| |||||||
Industrials - 0.3% | ||||||||
US Airways Pass Through Trust ‘B’ | 3,000,000 | 3,026,400 | ||||||
|
| |||||||
Materials - 0.3% | ||||||||
Hexion U.S. Finance Corp | 3,000,000 | 3,120,000 | ||||||
|
| |||||||
Telecommunication Services - 0.4% | ||||||||
Intelsat Luxembourg SA (Luxembourg) | ||||||||
7.750% due 06/01/21 | 3,000,000 | 3,168,750 | ||||||
8.125% due 06/01/23 | 1,000,000 | 1,063,750 | ||||||
|
| |||||||
4,232,500 | ||||||||
|
| |||||||
Total Corporate Bonds & Notes | 19,742,025 | |||||||
|
| |||||||
SENIOR LOAN NOTES - 95.5% | ||||||||
Consumer Discretionary - 26.8% | ||||||||
99 Cents Only Stores Tranche B-2 | 11,947,481 | 12,057,936 | ||||||
Advantage Sales & Marketing Inc | ||||||||
(1st Lien) | ||||||||
4.250% due 12/18/17 § | 3,019,573 | 3,036,558 | ||||||
(2nd Lien) | ||||||||
8.250% due 06/17/18 § | 1,100,000 | 1,119,250 | ||||||
Affinia Group Inc Tranche B-2 | 2,977,500 | 2,989,559 | ||||||
Audio Visual Services Group Inc (1st Lien) | 5,750,000 | 5,793,125 | ||||||
Brickman Group Holdings Inc (2nd Lien) | 250,000 | 256,000 | ||||||
7.500% due 12/17/21 § | 8,083,333 | 8,277,333 | ||||||
Burlington Coat Factory Warehouse Corp | 5,250,064 | 5,282,058 | ||||||
Caesars Entertainment Resort Properties LLC | 16,957,500 | 17,197,737 | ||||||
CCC Holdings Inc | 9,661,539 | 9,679,577 | ||||||
CEC Entertainment Inc Term B | 15,375,000 | 15,294,927 | ||||||
CityCenter Holdings LLC Term B (1st Lien) | 1,496,250 | 1,510,433 | ||||||
Clear Channel Communications Inc, | ||||||||
due 01/30/19 µ | 2,500,000 | 2,452,032 | ||||||
6.903% due 01/30/19 § | 5,686,491 | 5,577,384 | ||||||
Cooper-Standard Automotive Inc | 3,000,000 | 3,009,390 |
Principal Amount | Value | |||||||
Golden Nugget Inc | ||||||||
5.500% due 11/05/19 § | $8,029,875 | $8,225,603 | ||||||
5.500% due 11/21/19 § | 3,441,375 | 3,525,259 | ||||||
Great Wolf Resorts Inc Term B | 4,714,375 | 4,737,947 | ||||||
Hilton Worldwide Inc | 9,921,053 | 9,950,816 | ||||||
Hudson’s Bay Co Term B (1st Lien) | 5,087,500 | 5,166,041 | ||||||
IMG Worldwide Inc | 7,250,000 | 7,222,813 | ||||||
(2nd Lien) due 03/21/22 µ | 2,250,000 | 2,272,500 | ||||||
Jo-Ann Stores Inc Term B | 5,984,925 | 5,988,593 | ||||||
La Quinta International Holding LLC | 2,250,000 | 2,253,868 | ||||||
Leonardo Acquisition Corp (1st Lien) | 14,750,000 | 14,796,094 | ||||||
Leslie’s Poolmart Inc Tranche B | 11,130,934 | 11,196,328 | ||||||
Mitchell International Inc | ||||||||
4.500% due 10/12/20 § | 997,500 | 1,002,238 | ||||||
(2nd Lien) | ||||||||
8.500% due 10/11/21 § | 4,750,000 | 4,824,813 | ||||||
NEP/NCP Holdco Inc (1st Lien) | 3,000,000 | 3,016,251 | ||||||
4.250% due 01/22/20 § | 500,000 | 502,708 | ||||||
Nine West Holdings | 4,500,000 | 4,530,938 | ||||||
due 03/31/22 µ | 3,000,000 | 3,037,500 | ||||||
NPC International Inc | 1,673,820 | 1,685,328 | ||||||
Oceania Cruises Inc Term B-1 | 11,731,847 | 11,849,165 | ||||||
Pacific Industrial Services Finco Property Ltd | 3,184,000 | 3,233,750 | ||||||
PFS Holding Corp | ||||||||
(1st Lien) | ||||||||
4.500% due 01/31/21 § | 3,750,000 | 3,771,094 | ||||||
(2nd Lien) | ||||||||
8.250% due 01/31/22 § | 1,500,000 | 1,513,125 | ||||||
Playa Resorts Holding BV (Netherlands) | 8,711,237 | 8,765,683 | ||||||
RE/MAX LLC | 6,699,375 | 6,709,759 | ||||||
Spin Holdco Inc (1st Lien) | ||||||||
due 11/14/19 µ | 1,000,000 | 1,001,375 | ||||||
4.250% due 11/14/19 § | 11,711,897 | 11,728,001 | ||||||
The Neiman Marcus Group Inc | 16,961,250 | 17,047,379 | ||||||
Tribune Co | 15,561,000 | 15,584,341 | ||||||
Tropicana Entertainment (1st Lien) | 7,976,833 | 8,014,228 | ||||||
Valleycrest Cos LLC | 1,985,000 | 2,004,850 | ||||||
Yonkers Racing Corp | ||||||||
(1st Lien) | ||||||||
4.250% due 08/20/19 § | 3,990,000 | 3,985,012 | ||||||
(2nd Lien) | ||||||||
8.750% due 08/20/20 § | 500,000 | 497,500 | ||||||
|
| |||||||
283,174,199 | ||||||||
|
| |||||||
Consumer Staples - 9.0% | ||||||||
Albertson’s LLC Term B-2 | 7,437,277 | 7,502,353 | ||||||
Arden Group Term B | 5,250,000 | 5,250,000 |
See Notes to Financial Statements | See explanation of symbols and terms, if any, on page B-31 |
B-17
PACIFIC LIFE FUNDS
PL FLOATING RATE INCOME FUND
Schedule of Investments (Continued)
March 31, 2014
Principal Amount | Value | |||||||
Arysta LifeScience Corp (2nd Lien) | $3,500,000 | $3,583,125 | ||||||
Arysta LifeScience SPC LLC (1st Lien) | 1,000,000 | 1,005,000 | ||||||
4.500% due 05/29/20 § | 6,699,372 | 6,732,869 | ||||||
Atrium Innovation Inc | ||||||||
(2nd Lien) due 07/29/21 µ | 2,000,000 | 2,033,750 | ||||||
7.750% due 08/13/21 § | 1,000,000 | 1,016,875 | ||||||
Tranche B-1 (1st Lien) | ||||||||
4.250% due 02/15/21 § | 1,000,000 | 998,438 | ||||||
BJ’s Wholesale Club Inc | ||||||||
(1st Lien) | ||||||||
4.500% due 09/26/19 § | 1,980,059 | 1,990,078 | ||||||
(2nd Lien) | ||||||||
8.500% due 03/26/20 § | 8,450,000 | 8,673,570 | ||||||
HJ Heinz Co Term B-2 | 4,466,250 | 4,496,679 | ||||||
Performance Food Group Inc | 4,962,500 | 5,046,242 | ||||||
Reddy Ice Corp Term B (1st Lien) | 7,658,521 | 7,620,228 | ||||||
Reynolds Group Holdings | 6,196,969 | 6,227,470 | ||||||
Rite Aid Corp | ||||||||
Tranche 1 (2nd Lien) | ||||||||
5.750% due 08/21/20 § | 4,310,930 | 4,419,781 | ||||||
Tranche 2 | ||||||||
4.875% due 06/21/21 § | 5,750,000 | 5,845,835 | ||||||
Smart & Final Inc (1st Lien) | ||||||||
4.750% due 11/15/19 § | 7,694,823 | 7,717,268 | ||||||
Sprouts Farmers Markets Inc | 1,537,444 | 1,539,847 | ||||||
4.000% due 04/23/20 § | 6,593,074 | 6,603,379 | ||||||
US Foods Inc | 6,947,500 | 6,994,396 | ||||||
|
| |||||||
95,297,183 | ||||||||
|
| |||||||
Energy - 5.9% | ||||||||
Chesapeake Energy Corp | 7,000,000 | 7,168,441 | ||||||
Crestwood Holdings LLC Term B-1 | 6,419,939 | 6,544,326 | ||||||
HGIM Corp Term B | 15,683,719 | 15,742,533 | ||||||
Moxie Liberty LLC Term B-1 | ||||||||
7.500% due 08/21/20 § | 2,250,000 | 2,311,875 | ||||||
Moxie Patriot LLC Term B-1 | ||||||||
6.750% due 12/19/20 § | 1,500,000 | 1,540,312 | ||||||
Pacific Drilling SA | 6,451,250 | 6,485,925 | ||||||
Samson Investment Co Tranche 1 (2nd Lien) | 16,850,882 | 17,025,710 | ||||||
Seadrill Ltd (Bermuda) | 5,236,875 | 5,230,795 | ||||||
|
| |||||||
62,049,917 | ||||||||
|
| |||||||
Financials - 7.8% | ||||||||
Amwins Group (1st Lien) | ||||||||
5.000% due 09/06/19 § | 9,913,607 | 10,000,352 | ||||||
Assured Partners | ||||||||
(1st Lien) due 03/31/21 µ | 2,250,000 | 2,238,750 | ||||||
(2nd Lien) due 03/31/22 µ | 750,000 | 742,500 | ||||||
Capital Automotive LP | ||||||||
(2nd Lien) | ||||||||
6.000% due 04/30/20 § | 1,000,000 | 1,033,125 | ||||||
Tranche B-1 | ||||||||
4.000% due 04/10/19 § | 6,434,510 | 6,466,682 |
Principal Amount | Value | |||||||
Duff & Phelps Corp | ||||||||
4.500% due 04/23/20 § | $5,964,971 | $5,997,594 | ||||||
First Data Corp Term B | 1,000,000 | 1,003,854 | ||||||
HUB International Limited Term B | 13,930,000 | 13,990,944 | ||||||
Realogy Group | ||||||||
4.409% due 10/10/16 § | 44,744 | 44,772 | ||||||
Term B | ||||||||
3.750% due 03/05/20 § | 7,425,141 | 7,471,548 | ||||||
ROC Finance LLC Term B | 4,477,500 | 4,382,353 | ||||||
SAM Finance Lux SARL | 7,730,625 | 7,749,952 | ||||||
Stockbridge/SBE Holdings LLC Tranche B | 2,000,000 | 2,210,000 | ||||||
Trans Union LLC | 3,250,000 | 3,259,142 | ||||||
USI Inc | 15,234,620 | 15,310,793 | ||||||
|
| |||||||
81,902,361 | ||||||||
|
| |||||||
Health Care - 5.0% | ||||||||
Accellent Medical Device | ||||||||
(1st Lien) | ||||||||
4.500% due 03/12/21 § | 3,500,000 | 3,500,000 | ||||||
(2nd Lien) due 02/24/21 µ | 1,500,000 | 1,503,750 | ||||||
CHS/Community Health Systems Inc | ||||||||
Term D | ||||||||
4.250% due 01/27/21 § | 7,730,625 | 7,805,488 | ||||||
Term E | ||||||||
3.469% due 01/25/17 § | 2,244,375 | 2,262,779 | ||||||
Iasis Healthcare LLC Term B-2 | 5,356,234 | 5,383,851 | ||||||
JLL/Delta Dutch Newco BV | 5,000,000 | 4,982,290 | ||||||
Medpace Inc | 1,500,000 | 1,507,500 | ||||||
MultiPlan Inc | 3,000,000 | 3,002,343 | ||||||
Par Pharmaceutical Cos Inc Term B-2 | 10,144,668 | 10,173,620 | ||||||
Pharmedium Healthcare Corp | ||||||||
(1st Lien) due 01/22/21 µ | 295,872 | 296,796 | ||||||
4.250% due 01/28/21 § | 1,000,000 | 1,003,125 | ||||||
(2nd Lien) | ||||||||
7.750% due 01/28/22 § | 2,000,000 | 2,030,000 | ||||||
Phibro Animal Health Corp | 750,000 | 750,469 | ||||||
Quintiles Transnational Corp Term B-3 | 5,320,405 | 5,330,381 | ||||||
Valeant Pharmaceuticals International Inc | 2,801,011 | 2,817,784 | ||||||
|
| |||||||
52,350,176 | ||||||||
|
| |||||||
Industrials - 22.8% | ||||||||
Accudyne Industries LLC | 4,837,868 | 4,843,160 | ||||||
Air Distribution Technologies Inc (1st Lien) | 7,332,534 | 7,364,614 | ||||||
Alixpartners LLP | ||||||||
(2nd Lien) | ||||||||
9.000% due 07/10/21 § | 5,800,000 | 5,939,565 | ||||||
Term B-2 (1st Lien) | ||||||||
4.000% due 07/10/20 § | 4,677,072 | 4,703,866 |
See Notes to Financial Statements | See explanation of symbols and terms, if any, on page B-31 |
B-18
PACIFIC LIFE FUNDS
PL FLOATING RATE INCOME FUND
Schedule of Investments (Continued)
March 31, 2014
Principal Amount | Value | |||||||
Allflex Holdings III Inc | ||||||||
(1st Lien) | ||||||||
4.250% due 07/17/20 § | $6,716,250 | $6,747,736 | ||||||
(2nd Lien) | ||||||||
8.000% due 07/19/21 § | 4,155,000 | 4,223,819 | ||||||
Alliance Laundry Systems LLC (1st Lien) | 2,248,402 | 2,258,706 | ||||||
Allied Security Holdings LLC | ||||||||
(1st Lien) | ||||||||
4.250% due 02/12/21 § | 3,321,429 | 3,315,892 | ||||||
(2nd Lien) | ||||||||
8.000% due 08/13/21 § | 5,626,712 | 5,654,846 | ||||||
Alpha Topco Limited Facility B | 13,025,648 | 13,161,714 | ||||||
Apex Tool Group LLC | 5,692,500 | 5,649,806 | ||||||
Atkore International | ||||||||
(1st Lien) due 03/26/21 µ | 3,000,000 | 3,000,939 | ||||||
(2nd Lien) due 03/26/21 µ | 2,000,000 | 2,020,000 | ||||||
Bombardier Recreational Products Inc Term B | 5,000,000 | 5,010,415 | ||||||
CAMP Systems | ||||||||
(1st Lien) | ||||||||
4.750% due 05/31/19 § | 4,987,403 | 5,049,745 | ||||||
(2nd Lien) | ||||||||
8.250% due 11/29/19 § | 500,000 | 510,937 | ||||||
Capital Safety North America Holdings Inc | ||||||||
(1st Lien) due 03/26/21 µ | 5,250,000 | 5,250,000 | ||||||
(2nd Lien) due 03/25/22 µ | 3,000,000 | 3,032,499 | ||||||
Ceridian Corp | 7,264,828 | 7,308,417 | ||||||
CPG International Inc | 4,726,250 | 4,743,973 | ||||||
CPI International Acquisition Inc | 2,000,000 | 2,015,000 | ||||||
Crosby US Acquisition Corp | ||||||||
(1st Lien) | ||||||||
4.000% due 11/23/20 § | 8,728,125 | 8,717,215 | ||||||
(2nd Lien) | ||||||||
7.000% due 11/22/21 § | 4,000,000 | 4,045,000 | ||||||
Delos Finance SARL | 3,000,000 | 3,005,892 | ||||||
Gypsum Management & Supply | ||||||||
(1st Lien) due 03/27/21 µ | 7,750,000 | 7,750,000 | ||||||
(2nd Lien) due 03/27/21 µ | 3,500,000 | 3,517,500 | ||||||
Husky Injection Molding Systems Ltd | 3,750,000 | 3,766,406 | ||||||
LM US Member LLC | ||||||||
4.750% due 10/25/19 § | 973,498 | 979,176 | ||||||
(1st Lien) | ||||||||
4.750% due 10/25/19 § | 14,429,937 | 14,514,107 | ||||||
Maxim Crane Works LP (2nd Lien) | 7,250,000 | 7,449,375 | ||||||
MRC Global | 9,800,750 | 9,938,137 | ||||||
North American Lifting | ||||||||
(1st Lien) | ||||||||
5.500% due 11/27/20 § | 6,783,000 | 6,855,069 | ||||||
(2nd Lien) | ||||||||
10.000% due 11/26/21 § | 2,000,000 | 2,015,000 | ||||||
Osmose Holdings Inc | 2,224,406 | 2,241,089 | ||||||
Ply Gem Industries Inc | 10,875,000 | 10,902,187 |
Principal Amount | Value | |||||||
Rexnord LLC Term B | $8,955,000 | $8,981,561 | ||||||
Roofing Supply Group LLC | 2,969,887 | 2,980,560 | ||||||
Sedgwick CMS Holdings | ||||||||
(1st Lien) | ||||||||
3.750% due 03/01/21 § | 4,500,000 | 4,460,625 | ||||||
(2nd Lien) due 02/11/22 µ | 3,000,000 | 2,994,375 | ||||||
6.750% due 02/28/22 § | 1,500,000 | 1,497,188 | ||||||
SRS Distribution Inc | 4,468,737 | 4,489,218 | ||||||
Tomkins PLC (2nd Lien) | 3,570,000 | 3,628,012 | ||||||
Transdigm Inc Term C | 11,413,317 | 11,434,717 | ||||||
WTG Holdings III Corp | ||||||||
(1st Lien) | ||||||||
4.750% due 01/15/21 § | 10,915,303 | 10,990,346 | ||||||
(2nd Lien) due 12/10/21 µ | 1,500,000 | 1,522,500 | ||||||
8.500% due 01/15/22 § | 250,000 | 253,750 | ||||||
|
| |||||||
240,734,654 | ||||||||
|
| |||||||
Information Technology - 4.8% | ||||||||
Applied Systems Inc | ||||||||
(1st Lien) | ||||||||
4.250% due 01/25/21 § | 498,750 | 501,867 | ||||||
(2nd Lien) | ||||||||
7.500% due 01/24/22 § | 8,620,000 | 8,779,470 | ||||||
BMC Software Finance Inc | 7,231,875 | 7,248,581 | ||||||
Excelitas Technologies Corp Term B | 5,069,902 | 5,101,589 | ||||||
Flexera Software LLC | 1,000,000 | 995,000 | ||||||
(2nd Lien) due 04/02/21 µ | 250,000 | 248,750 | ||||||
Infor US Inc Tranche B-5 | 11,826,510 | 11,808,771 | ||||||
Kronos Inc | ||||||||
4.750% due 02/18/20 § | 4,500,000 | 4,543,596 | ||||||
(1st Lien) due 10/30/19 µ | 800,000 | 807,875 | ||||||
Kronos Worldwide Inc | ||||||||
4.500% due 10/30/19 § | 3,554,483 | 3,589,474 | ||||||
Moneygram International Inc | 4,455,000 | 4,471,706 | ||||||
STG-Fairway Acquisitions Inc (1st Lien) | 2,974,985 | 2,991,720 | ||||||
|
| |||||||
51,088,399 | ||||||||
|
| |||||||
Materials - 8.3% | ||||||||
Ardagh Holdings USA Inc | ||||||||
4.250% due 12/17/19 § | 5,486,250 | 5,514,822 | ||||||
Term B due 12/17/19 µ | 1,500,000 | 1,505,157 | ||||||
Berry Plastic Corp Term E | 6,500,000 | 6,492,382 | ||||||
Chromaflo Technologies Corp Term B | ||||||||
(1st Lien) | ||||||||
4.500% due 12/02/19 § | 2,244,375 | 2,255,597 | ||||||
(2nd Lien) | ||||||||
8.250% due 06/02/20 § | 1,500,000 | 1,515,000 | ||||||
FMG Resources Property Ltd (Australia), | 1,000,000 | 1,008,906 | ||||||
4.250% due 06/30/19 § | 17,353,841 | 17,508,394 | ||||||
NewPage Corp Term B | 7,500,000 | 7,589,062 |
See Notes to Financial Statements | See explanation of symbols and terms, if any, on page B-31 |
B-19
PACIFIC LIFE FUNDS
PL FLOATING RATE INCOME FUND
Schedule of Investments (Continued)
March 31, 2014
Principal Amount | Value | |||||||
Nexeo Solutions LLC Term B-3 | $7,605,938 | $7,624,952 | ||||||
Quikrete Holdings Inc | ||||||||
(1st Lien) | ||||||||
4.000% due 09/28/20 § | 5,472,500 | 5,492,338 | ||||||
(2nd Lien) | ||||||||
7.000% due 03/26/21 § | 4,250,000 | 4,366,850 | ||||||
Ranpak Corp | ||||||||
(1st Lien) | ||||||||
4.500% due 04/23/19 § | 1,432,231 | 1,443,868 | ||||||
(2nd Lien) | ||||||||
8.500% due 04/23/20 § | 3,153,118 | 3,247,712 | ||||||
Tronox Inc Term B (Netherlands) | 4,962,500 | 4,999,376 | ||||||
Univar Inc Term B | 750,000 | 748,928 | ||||||
5.000% due 06/30/17 § | 15,954,698 | 15,931,898 | ||||||
|
| |||||||
87,245,242 | ||||||||
|
| |||||||
Telecommunication Services - 3.7% | ||||||||
Intelsat Jackson Holdings SA Term B-2 | 8,005,406 | 8,035,387 | ||||||
Level 3 Financing Inc | ||||||||
Tranche B | ||||||||
3.500% due 03/06/21 § | 2,625,000 | 2,630,155 | ||||||
4.000% due 01/15/20 § | 11,300,000 | 11,335,313 | ||||||
Tranche B-III | ||||||||
4.000% due 08/01/19 § | 2,500,000 | 2,508,332 | ||||||
LTS Buyer LLC Term B (1st Lien) | 3,590,955 | 3,593,199 | ||||||
Zayo Group LLC | ||||||||
4.000% due 07/02/19 § | 2,864,863 | 2,870,532 | ||||||
4.000% due 11/20/20 § | 7,780,595 | 7,795,993 | ||||||
|
| |||||||
38,768,911 | ||||||||
|
| |||||||
Utilities - 1.4% | ||||||||
Dynegy Inc Tranche B-2 | 4,179,952 | 4,201,600 | ||||||
La Frontera | 3,260,707 | 3,268,451 | ||||||
Panda Temple Power II LLC | 1,000,000 | 1,032,500 | ||||||
Power Borrower LLC | ||||||||
(1st Lien) | ||||||||
3.679% due 05/06/20 § | 259,728 | 259,079 | ||||||
4.250% due 05/06/20 § | 4,852,222 | 4,840,092 | ||||||
(2nd Lien) | ||||||||
8.250% due 11/06/20 § | 1,500,000 | 1,488,750 | ||||||
|
| |||||||
15,090,472 | ||||||||
|
| |||||||
Total Senior Loan Notes | 1,007,701,514 | |||||||
|
|
Shares | Value | |||||||
SHORT-TERM INVESTMENT - 3.4% | ||||||||
Money Market Fund - 3.4% | ||||||||
BlackRock Liquidity Funds Treasury | 36,283,913 | $36,283,913 | ||||||
|
| |||||||
Total Short-Term Investment | 36,283,913 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 100.8% | 1,063,727,452 | |||||||
OTHER ASSETS & LIABILITIES, NET - (0.8%) |
| (8,509,108 | ) | |||||
|
| |||||||
NET ASSETS - 100.0% | $1,055,218,344 | |||||||
|
|
Notes to Schedule of Investments
(a) | As of March 31, 2014, the fund was diversified as a percentage of net assets as follows: |
Consumer Discretionary | 26.8% | |||
Industrials | 23.1% | |||
Consumer Staples | 9.5% | |||
Materials | 8.6% | |||
Financials | 8.2% | |||
Energy | 5.9% | |||
Health Care | 5.0% | |||
Information Technology | 4.8% | |||
Telecommunication Services | 4.1% | |||
Short-Term Investment | 3.4% | |||
Others (each less than 3.0%) | 1.4% | |||
|
| |||
100.8% | ||||
Other Assets & Liabilities, Net | (0.8% | ) | ||
|
| |||
100.0% | ||||
|
|
(b) | As of March 31, 2014, the fund’s Standard & Poor’s quality ratings as a percentage of total fixed income investments were as follows (Unaudited): |
BBB | 2.8% | |||
BB | 20.6% | |||
B | 65.4% | |||
CCC | 8.5% | |||
Not Rated | 2.7% | |||
|
| |||
100.0% | ||||
|
|
(c) | Pursuant to the terms of the following senior loan agreements, the fund had unfunded loan commitments of $3,655,570 or 0.3% of net assets as of March 31, 2014, which could be extended at the option of the borrower: |
Borrower | Unfunded Loan Commitment | Value | Unrealized Appreciation (Depreciation) | |||||||||
Allied Security Holdings LLC | $1,172,679 | $1,176,607 | $3,928 | |||||||||
Allied Security Holdings LLC | 2,137,500 | 2,133,904 | (3,596 | ) | ||||||||
Power Buyer LLC | 345,391 | 344,408 | (983 | ) | ||||||||
|
|
|
|
|
| |||||||
$3,655,570 | $3,654,919 | ($651 | ) | |||||||||
|
|
|
|
|
|
See Notes to Financial Statements | See explanation of symbols and terms, if any, on page B-31 |
B-20
PACIFIC LIFE FUNDS
PL FLOATING RATE INCOME FUND
Schedule of Investments (Continued)
March 31, 2014
(d) | Fair Value Measurements |
The following is a summary of the fund’s investments as categorized under the three-tier hierarchy of inputs used in valuing the fund’s assets and liabilities (See Note 3D in Notes to Financial Statements) as of March 31, 2014:
Total Value at March 31, 2014 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||||
Assets | Corporate Bonds & Notes | $19,742,025 | $— | $19,742,025 | $— | |||||||||||||
Senior Loan Notes | 1,007,701,514 | — | 1,007,701,514 | — | ||||||||||||||
Short-Term Investment | 36,283,913 | 36,283,913 | — | — | ||||||||||||||
Unfunded Loan Commitment | 3,928 | — | 3,928 | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Assets | 1,063,731,380 | 36,283,913 | 1,027,447,467 | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Liabilities | Unfunded Loan Commitments | (4,579 | ) | — | (4,579 | ) | — | |||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Liabilities | (4,579 | ) | — | (4,579 | ) | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total | $1,063,726,801 | $36,283,913 | $1,027,442,888 | $— | ||||||||||||||
|
|
|
|
|
|
|
|
See Notes to Financial Statements | See explanation of symbols and terms, if any, on page B-31 |
B-21
PACIFIC LIFE FUNDS
PL LIMITED DURATION HIGH INCOME FUND
Schedule of Investments
March 31, 2014
Principal | | |||||||
CORPORATE BONDS & NOTES - 48.9% | ||||||||
Consumer Discretionary - 10.8% | ||||||||
Beazer Homes USA Inc | $200,000 | $212,250 | ||||||
Boyd Gaming Corp | 223,000 | 247,808 | ||||||
Cablevision Systems Corp | 150,000 | 178,500 | ||||||
Cequel Communications Holdings I LLC | 400,000 | 420,000 | ||||||
Chrysler Group LLC | 250,000 | 284,062 | ||||||
Clear Channel Communications Inc | 400,000 | 402,000 | ||||||
Jo-Ann Stores Holdings Inc | 200,000 | 209,500 | ||||||
Landry’s Inc | 150,000 | 165,937 | ||||||
Lennar Corp | 300,000 | 306,000 | ||||||
MGM Resorts International | 200,000 | 222,250 | ||||||
Michaels FinCo Holdings LLC | 200,000 | 207,000 | ||||||
NCL Corp Ltd (Bermuda) | 150,000 | 156,374 | ||||||
NPC International Inc | 350,000 | 401,625 | ||||||
Standard Pacific Corp | 200,000 | 214,000 | ||||||
The Ryland Group Inc | 150,000 | 163,874 | ||||||
|
| |||||||
3,791,180 | ||||||||
|
| |||||||
Consumer Staples - 1.9% | ||||||||
Reynolds Group Issuer Inc | ||||||||
8.250% due 02/15/21 | 250,000 | 274,062 | ||||||
9.875% due 08/15/19 | 200,000 | 224,500 | ||||||
Spectrum Brands Inc | 150,000 | 162,937 | ||||||
|
| |||||||
661,499 | ||||||||
|
| |||||||
Energy - 7.0% | ||||||||
Basic Energy Services Inc | 280,000 | 302,050 | ||||||
Chaparral Energy Inc | 300,000 | 331,500 | ||||||
Chesapeake Energy Corp | 150,000 | 169,124 | ||||||
EP Energy LLC | 150,000 | 162,750 | ||||||
Halcon Resources Corp | 200,000 | 216,500 | ||||||
Regency Energy Partners LP | 150,000 | 161,624 | ||||||
Samson Investment Co | 150,000 | 164,250 | ||||||
SandRidge Energy Inc | 300,000 | 321,750 | ||||||
Seadrill Ltd (Bermuda) | 200,000 | 209,500 | ||||||
Tervita Corp (Canada) | 250,000 | 253,750 | ||||||
Whiting Petroleum Corp | 150,000 | 159,374 | ||||||
|
| |||||||
2,452,172 | ||||||||
|
|
Principal | | |||||||
Financials - 2.4% | ||||||||
E*Trade Financial Corp | $200,000 | $218,500 | ||||||
First Data Corp | 150,000 | 162,000 | ||||||
Jefferies Finance LLC | 200,000 | 211,000 | ||||||
Nuveen Investments Inc | 250,000 | 265,624 | ||||||
|
| |||||||
857,124 | ||||||||
|
| |||||||
Health Care - 6.2% | ||||||||
Biomet Inc | 150,000 | 162,300 | ||||||
CHS/Community Health Systems Inc | 250,000 | 271,562 | ||||||
DaVita Health Care Partners Inc | 150,000 | 160,500 | ||||||
DJO Finance LLC | 150,000 | 158,624 | ||||||
HCA Holdings Inc | 150,000 | 160,950 | ||||||
HCA Inc | 400,000 | 402,500 | ||||||
JLL/Delta Dutch Newco BV (Netherlands) | 150,000 | 155,062 | ||||||
Tenet Healthcare Corp | ||||||||
5.000% due 03/01/19 ~ | 500,000 | 500,624 | ||||||
8.000% due 08/01/20 | 200,000 | 219,000 | ||||||
|
| |||||||
2,191,122 | ||||||||
|
| |||||||
Industrials - 5.3% | ||||||||
Ahern Rentals Inc | 150,000 | 166,688 | ||||||
Air Lease Corp | 200,000 | 213,000 | ||||||
HD Supply Inc | 300,000 | 357,750 | ||||||
International Lease Finance Corp | 150,000 | 166,125 | ||||||
Roofing Supply Group LLC | 150,000 | 169,125 | ||||||
The Hertz Corp | 300,000 | 321,376 | ||||||
TransDigm Inc | 150,000 | 161,625 | ||||||
United Airlines Pass-Through Trust ‘B’ | 150,000 | 153,570 | ||||||
United Rentals North America Inc | 150,000 | 166,313 | ||||||
|
| |||||||
1,875,572 | ||||||||
|
| |||||||
Information Technology - 2.5% | ||||||||
Advanced Micro Devices Inc | 250,000 | 251,563 | ||||||
Blackboard Inc | 200,000 | 210,500 | ||||||
BMC Software Inc | 100,000 | 104,000 | ||||||
CDW LLC | 150,000 | 165,000 | ||||||
NXP BV (Netherlands) | 150,000 | 151,500 | ||||||
|
| |||||||
882,563 | ||||||||
|
|
See Notes to Financial Statements | See explanation of symbols and terms, if any, on page B-31 |
B-22
PACIFIC LIFE FUNDS
PL LIMITED DURATION HIGH INCOME FUND
Schedule of Investments (Continued)
March 31, 2014
Principal | | |||||||
Materials - 6.5% | ||||||||
AK Steel Corp | $250,000 | $250,625 | ||||||
Alphabet Holding Co Inc | 200,000 | 207,000 | ||||||
ArcelorMittal (Luxembourg) | 150,000 | 190,688 | ||||||
Ardagh Packaging Finance PLC (Ireland) | ||||||||
6.250% due 01/31/19 ~ | 200,000 | 209,500 | ||||||
9.125% due 10/15/20 ~ | 200,000 | 224,000 | ||||||
BOE Intermediate Holding Corp | 331,825 | 361,897 | ||||||
FMG Resources Property Ltd | 200,000 | 211,125 | ||||||
Hexion US Finance Corp | 150,000 | 156,000 | ||||||
Novelis Inc (Canada) | 250,000 | 280,625 | ||||||
Tronox Finance LLC | 200,000 | 206,500 | ||||||
|
| |||||||
2,297,960 | ||||||||
|
| |||||||
Telecommunication Services - 4.7% | ||||||||
CenturyLink Inc | 150,000 | 158,438 | ||||||
Hughes Satellite Systems Corp | 150,000 | 169,875 | ||||||
Intelsat Luxembourg SA (Luxembourg) | 200,000 | 211,250 | ||||||
Level 3 Financing Inc | 300,000 | 326,625 | ||||||
Sprint Communications Inc | 150,000 | 183,750 | ||||||
T-Mobile USA Inc | ||||||||
6.250% due 04/01/21 | 150,000 | 159,188 | ||||||
6.464% due 04/28/19 | 150,000 | 160,875 | ||||||
WaveDivision Escrow LLC | 250,000 | 270,000 | ||||||
|
| |||||||
1,640,001 | ||||||||
|
| |||||||
Utilities - 1.6% | ||||||||
AES Corp | 150,000 | 171,750 | ||||||
GenOn Energy Inc | 150,000 | 153,750 | ||||||
NRG Energy Inc | 200,000 | 225,500 | ||||||
|
| |||||||
551,000 | ||||||||
|
| |||||||
Total Corporate Bonds & Notes | 17,200,193 | |||||||
|
| |||||||
SENIOR LOAN NOTES - 49.3% | ||||||||
Consumer Discretionary - 16.4% | ||||||||
Boyd Gaming Corp Term B | 248,750 | 249,310 | ||||||
Brickman Group Ltd LLC (2nd Lien) | 300,000 | 307,200 | ||||||
Caesars Resort Properties LLC Term B | 249,375 | 252,908 | ||||||
CCC Holdings Inc | 248,116 | 248,579 | ||||||
CEC Entertainment Inc Term B | 500,000 | 497,396 | ||||||
Hilton Worldwide Inc | 228,947 | 229,634 | ||||||
IMG Worldwide Inc | 500,000 | 498,125 |
Principal | | |||||||
Leonardo Acquisition Corp (1st Lien) | $500,000 | $501,563 | ||||||
Leslie’s Poolmart Inc Tranche B | 249,367 | 250,832 | ||||||
National Vision Inc (1st Lien) | 500,000 | 499,688 | ||||||
Oceania Cruises Inc Term B-1 | 186,564 | 188,429 | ||||||
Pacific Industrial Services Finco Property Ltd Term B | 298,500 | 303,164 | ||||||
Pinnacle Entertainment Inc Tranche B-2 | 248,125 | 249,172 | ||||||
Playa Resorts Holdings BV | 248,750 | 250,305 | ||||||
The Neiman Marcus Group Inc | 498,750 | 501,283 | ||||||
Tribune Co | 249,375 | 249,749 | ||||||
Tropicana Entertainment (1st Lien) | 248,750 | 249,916 | ||||||
Yonkers Racing Corp (1st Lien) | 249,375 | 249,063 | ||||||
|
| |||||||
5,776,316 | ||||||||
|
| |||||||
Consumer Staples - 4.9% | ||||||||
Albertson’s LLC Term B-2 | 248,750 | 250,927 | ||||||
BJ’s Wholesale Club Inc (2nd Lien) | 250,000 | 256,615 | ||||||
Performance Food Group Inc | 248,125 | 252,312 | ||||||
Reddy Ice Corp Term B (1st Lien) | 248,120 | 246,880 | ||||||
Rite Aid Corp Tranche 2 | 250,000 | 254,167 | ||||||
Sprouts Farmers Markets Holdings LLC | 218,576 | 218,918 | ||||||
US Foods Inc | 248,125 | 249,800 | ||||||
|
| |||||||
1,729,619 | ||||||||
|
| |||||||
Energy - 4.3% | ||||||||
Crestwood Holdings LLC Term B-1 | 245,369 | 250,123 | ||||||
HGIM Corp Term B | 248,750 | 249,683 | ||||||
Pacific Drilling SA | 248,125 | 249,459 | ||||||
Samson Investment Co Tranche 1 (2nd Lien) | 250,000 | 252,594 | ||||||
Seadrill Operating LP | 498,750 | 498,171 | ||||||
|
| |||||||
1,500,030 | ||||||||
|
| |||||||
Financials - 3.7% | ||||||||
Amwins Group (1st Lien) | 248,117 | 250,288 | ||||||
HUB International Ltd Term B | 248,750 | 249,838 | ||||||
RE/MAX LLC | 248,125 | 248,510 | ||||||
SAM Finance Lux SARL | 249,375 | 249,998 | ||||||
USI Inc | 298,500 | 299,993 | ||||||
|
| |||||||
1,298,627 | ||||||||
|
| |||||||
Health Care - 2.4% | ||||||||
Biomet Inc Term B-2 | 248,125 | 248,728 | ||||||
CHS/Community Health Systems Inc Term D | 99,750 | 100,716 |
See Notes to Financial Statements | See explanation of symbols and terms, if any, on page B-31 |
B-23
PACIFIC LIFE FUNDS
PL LIMITED DURATION HIGH INCOME FUND
Schedule of Investments (Continued)
March 31, 2014
Principal | | |||||||
JLL/Delta Dutch Newco BV | $250,000 | $249,115 | ||||||
Quintiles Transnational Corp Tem B-3 | 250,000 | 250,469 | ||||||
|
| |||||||
849,028 | ||||||||
|
| |||||||
Industrials - 9.1% | ||||||||
Accudyne Industries LLC | 242,865 | 243,131 | ||||||
AlixPartners LLP | 246,875 | 248,289 | ||||||
(2nd Lien) 9.000% due 07/10/21 § | 200,000 | 204,813 | ||||||
Alpha Topco Facility B | 248,120 | 250,712 | ||||||
Bombardier Recreational Products Inc Term B | 250,000 | 250,521 | ||||||
Crosby US Acquisition Corp (1st Lien) | 249,375 | 249,063 | ||||||
Ceridian Corp | 242,161 | 243,614 | ||||||
CPG International Inc | 248,750 | 249,683 | ||||||
Delos Finance SARL | 400,000 | 400,786 | ||||||
North American Lifting (1st Lien) | 299,250 | 302,430 | ||||||
Rexnord LLC/RBS Global Inc Term B | 248,750 | 249,488 | ||||||
WTG Holdings III Corp (1st Lien) | 299,250 | 301,307 | ||||||
|
| |||||||
3,193,837 | ||||||||
|
| |||||||
Information Technology - 1.4% | ||||||||
BMC Software Finance Inc | 249,375 | 249,951 | ||||||
Infor (US) Inc Tranche B-3 | 245,933 | 245,472 | ||||||
|
| |||||||
495,423 | ||||||||
|
| |||||||
Materials - 3.7% | ||||||||
FMG Resources Property Ltd (Australia) | 500,000 | 504,453 | ||||||
New Page Corp Term B | 300,000 | 303,563 | ||||||
Quikrete Holdings Inc | ||||||||
(1st Lien) 4.000% due 09/28/20 § | 248,750 | 249,652 | ||||||
(2nd Lien) 7.000% due 03/26/21 § | 250,000 | 256,874 | ||||||
|
| |||||||
1,314,542 | ||||||||
|
| |||||||
Telecommunication Services - 2.7% | ||||||||
LTS Buyer LLC Term B (1st Lien) | 398,995 | 399,244 | ||||||
Wave Division Holdings LLC | 250,000 | 250,519 | ||||||
Zayo Group LLC | 298,483 | 299,073 | ||||||
|
| |||||||
948,836 | ||||||||
|
|
Utilities - 0.7% | ||||||||
Dynegy Inc Tranche B-2 | 248,125 | 249,411 | ||||||
|
| |||||||
Total Senior Loan Notes | 17,355,669 | |||||||
|
|
Shares | Value | |||||||
SHORT-TERM INVESTMENT - 2.4% | ||||||||
Money Market Fund - 2.4% | ||||||||
BlackRock Liquidity Funds Treasury | 865,066 | $865,066 | ||||||
|
| |||||||
Total Short-Term Investment | 865,066 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 100.6% | 35,420,928 | |||||||
OTHER ASSETS & LIABILITIES, NET - (0.6%) | (214,408 | ) | ||||||
|
| |||||||
NET ASSETS - 100.0% | $35,206,520 | |||||||
|
|
Notes to Schedule of Investments
(a) | As of March 31, 2014, the fund was diversified as a percentage of net assets as follows: |
Consumer Discretionary | 27.2% | |||
Industrials | 14.4% | |||
Energy | 11.3% | |||
Materials | 10.2% | |||
Health Care | 8.6% | |||
Telecommunication Services | 7.4% | |||
Consumer Staples | 6.8% | |||
Financials | 6.1% | |||
Information Technology | 3.9% | |||
Others (each less than 3.0%) | 4.7% | |||
|
| |||
100.6% | ||||
Other Assets & Liabilities, Net | (0.6% | ) | ||
|
| |||
100.0% | ||||
|
|
(b) | As of March 31, 2014, the fund’s Standard & Poor’s quality ratings as a percentage of total fixed income investments were as follows (Unaudited): |
BBB | 3.7% | |||
BB | 23.7% | |||
B | 49.9% | |||
CCC | 19.9% | |||
Not Rated | 2.8% | |||
|
| |||
100.0% | ||||
|
|
See Notes to Financial Statements | See explanation of symbols and terms, if any, on page B-31 |
B-24
PACIFIC LIFE FUNDS
PL LIMITED DURATION HIGH INCOME FUND
Schedule of Investments (Continued)
March 31, 2014
(c) | Fair Value Measurements |
The following is a summary of the fund’s investments as categorized under the three-tier hierarchy of inputs used in valuing the fund’s assets and liabilities (See Note 3D in Notes to Financial Statements) as of March 31, 2014:
Total Value at March 31, 2014 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||||
Assets | Corporate Bonds & Notes | $17,200,193 | $— | $17,200,193 | $— | |||||||||||||
Senior Loan Notes | 17,355,669 | — | 17,355,669 | — | ||||||||||||||
Short-Term Investment | 865,066 | 865,066 | — | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total | $35,420,928 | $865,066 | $34,555,862 | $— | ||||||||||||||
|
|
|
|
|
|
|
|
See Notes to Financial Statements | See explanation of symbols and terms, if any, on page B-31 |
B-25
PACIFIC LIFE FUNDS
PL HIGH INCOME FUND
Schedule of Investments
March 31, 2014
Shares | | |||||||
COMMON STOCKS - 2.1% | ||||||||
Consumer Discretionary - 0.6% | ||||||||
Cedar Fair LP | 370 | $18,844 | ||||||
Ford Motor Co | 950 | 14,820 | ||||||
L Brands Inc | 400 | 22,708 | ||||||
Las Vegas Sands Corp | 460 | 37,159 | ||||||
Lennar Corp ‘A’ | 460 | 18,225 | ||||||
MGM Resorts International * | 1,030 | 26,636 | ||||||
Standard Pacific Corp * | 1,940 | 16,121 | ||||||
|
| |||||||
154,513 | ||||||||
|
| |||||||
Energy - 0.1% | ||||||||
Concho Resources Inc * | 190 | 23,275 | ||||||
|
| |||||||
Health Care - 0.1% | ||||||||
HCA Holdings Inc * | 450 | 23,625 | ||||||
|
| |||||||
Industrials - 0.4% | ||||||||
Ply Gem Holdings Inc * | 830 | 10,483 | ||||||
The ADT Corp | 1,300 | 38,935 | ||||||
United Rentals Inc * | 500 | 47,470 | ||||||
|
| |||||||
96,888 | ||||||||
|
| |||||||
Information Technology - 0.5% | ||||||||
CommScope Holding Co Inc * | 5,000 | 123,400 | ||||||
|
| |||||||
Materials - 0.2% | ||||||||
Freeport-McMoRan Copper & Gold Inc | 870 | 28,771 | ||||||
Louisiana-Pacific Corp * | 1,050 | 17,713 | ||||||
|
| |||||||
46,484 | ||||||||
|
| |||||||
Telecommunication Services - 0.1% | ||||||||
Intelsat SA (Luxembourg) * | 570 | 10,670 | ||||||
|
| |||||||
Utilities - 0.1% | ||||||||
NRG Energy Inc | 650 | 20,670 | ||||||
|
| |||||||
Total Common Stocks | 499,525 | |||||||
|
| |||||||
EXCHANGE-TRADED FUND - 4.0% | ||||||||
PowerShares Senior Loan Portfolio | 39,010 | 967,838 | ||||||
|
| |||||||
Total Exchange-Traded Fund | 967,838 | |||||||
|
| |||||||
Principal | ||||||||
CORPORATE BONDS & NOTES - 83.5% | ||||||||
Consumer Discretionary - 18.5% | ||||||||
99 Cents Only Stores | $100,000 | 114,250 | ||||||
Beazer Homes USA Inc | ||||||||
7.250% due 02/01/23 | 100,000 | 105,000 | ||||||
7.500% due 09/15/21 | 100,000 | 108,000 | ||||||
9.125% due 06/15/18 | 75,000 | 79,594 | ||||||
Boyd Gaming Corp | 125,000 | 138,906 | ||||||
Cablevision Systems Corp | 150,000 | 178,500 |
Principal | | |||||||
Caesars Entertainment Operating Co Inc | ||||||||
9.000% due 02/15/20 | $100,000 | $90,250 | ||||||
10.000% due 12/15/18 | 25,000 | 11,062 | ||||||
11.250% due 06/01/17 | 50,000 | 48,250 | ||||||
Caesars Entertainment Resort Properties LLC | ||||||||
8.000% due 10/01/20 ~ | 50,000 | 52,875 | ||||||
11.000% due 10/01/21 ~ | 150,000 | 158,250 | ||||||
CCO Holdings LLC | 150,000 | 149,625 | ||||||
CEC Entertainment Inc | 175,000 | 182,000 | ||||||
Cedar Fair LP | 125,000 | 127,187 | ||||||
Cequel Communications Holdings I LLC | ||||||||
5.125% due 12/15/21 ~ | 50,000 | 49,750 | ||||||
6.375% due 09/15/20 ~ | 125,000 | 131,250 | ||||||
Clear Channel Communications Inc | ||||||||
5.500% due 12/15/16 | 100,000 | 96,000 | ||||||
11.250% due 03/01/21 | 50,000 | 55,875 | ||||||
Clear Channel Worldwide Holdings Inc | ||||||||
6.500% due 11/15/22 | 73,000 | 78,384 | ||||||
7.625% due 03/15/20 | 75,000 | 81,375 | ||||||
Dana Holding Corp | ||||||||
6.500% due 02/15/19 | 50,000 | 53,625 | ||||||
6.750% due 02/15/21 | 100,000 | 109,250 | ||||||
DISH DBS Corp | ||||||||
5.125% due 05/01/20 | 50,000 | 52,250 | ||||||
6.750% due 06/01/21 | 50,000 | 56,125 | ||||||
Greektown Holdings LLC | 125,000 | 129,687 | ||||||
Hilton Worldwide Finance LLC | 100,000 | 104,688 | ||||||
Icahn Enterprises LP | 75,000 | 76,313 | ||||||
Jo-Ann Stores Holdings Inc | 125,000 | 130,937 | ||||||
Jo-Ann Stores Inc | 125,000 | 130,312 | ||||||
Landry’s Holdings II Inc | 150,000 | 161,250 | ||||||
Landry’s Inc | 50,000 | 55,312 | ||||||
MGM Resorts International | 100,000 | 111,125 | ||||||
Michaels FinCo Holdings LLC | 100,000 | 103,500 | ||||||
Michaels Stores Inc | 25,000 | 25,344 | ||||||
Modular Space Corp | 100,000 | 104,250 | ||||||
Neiman Marcus Group Ltd LLC | ||||||||
8.000% due 10/15/21 ~ | 25,000 | 27,594 | ||||||
8.750% PIK due 10/15/21 ~ | 100,000 | 111,000 | ||||||
NPC International Inc | 150,000 | 172,125 | ||||||
Penn National Gaming Inc | 125,000 | 123,125 | ||||||
ServiceMaster Co | 100,000 | 109,000 | ||||||
Sinclair Television Group Inc | ||||||||
5.375% due 04/01/21 | 50,000 | 49,875 | ||||||
6.375% due 11/01/21 | 50,000 | 52,250 | ||||||
Standard Pacific Corp | 200,000 | 214,000 | ||||||
The Ryland Group Inc | 100,000 | 99,750 | ||||||
Wolverine World Wide Inc | 75,000 | 81,375 | ||||||
|
| |||||||
4,480,445 | ||||||||
|
|
See Notes to Financial Statements | See explanation of symbols and terms, if any, on page B-31 |
B-26
PACIFIC LIFE FUNDS
PL HIGH INCOME FUND
Schedule of Investments (Continued)
March 31, 2014
Principal | | |||||||
Consumer Staples - 4.0% | ||||||||
Beverages & More Inc | $75,000 | $78,281 | ||||||
JBS USA LLC | ||||||||
7.250% due 06/01/21 ~ | 100,000 | 106,750 | ||||||
8.250% due 02/01/20 ~ | 50,000 | 55,000 | ||||||
Reynolds Group Issuer Inc | ||||||||
8.250% due 02/15/21 | 100,000 | 109,625 | ||||||
9.000% due 04/15/19 | 200,000 | 215,000 | ||||||
9.875% due 08/15/19 | 75,000 | 84,187 | ||||||
Rite Aid Corp | ||||||||
6.750% due 06/15/21 | 50,000 | 54,375 | ||||||
9.250% due 03/15/20 | 50,000 | 57,187 | ||||||
Roundy’s Supermarkets Inc | 100,000 | 107,000 | ||||||
Smithfield Foods Inc | ||||||||
5.875% due 08/01/21 ~ | 50,000 | 52,000 | ||||||
6.625% due 08/15/22 | 50,000 | 54,250 | ||||||
|
| |||||||
973,655 | ||||||||
|
| |||||||
Energy - 15.0% | ||||||||
Alpha Natural Resources Inc | 100,000 | 77,250 | ||||||
Arch Coal Inc | ||||||||
7.250% due 10/01/20 | 50,000 | 38,625 | ||||||
7.250% due 06/15/21 | 50,000 | 38,000 | ||||||
Atlas Pipeline Partners LP | ||||||||
5.875% due 08/01/23 | 50,000 | 49,625 | ||||||
6.625% due 10/01/20 | 50,000 | 53,500 | ||||||
Basic Energy Services Inc | 125,000 | 134,844 | ||||||
Berry Petroleum Co | 50,000 | 53,000 | ||||||
Calumet Specialty Products Partners LP | 100,000 | 101,000 | ||||||
Chaparral Energy Inc | 150,000 | 165,750 | ||||||
Chesapeake Energy Corp | 100,000 | 109,500 | ||||||
Crestwood Midstream Partners LP | 125,000 | 131,250 | ||||||
EV Energy Partners LP | 100,000 | 104,000 | ||||||
Halcon Resources Corp | ||||||||
8.875% due 05/15/21 | 125,000 | 130,313 | ||||||
9.750% due 07/15/20 ~ | 50,000 | 54,000 | ||||||
Hercules Offshore Inc | ||||||||
6.750% due 04/01/22 ~ | 50,000 | 48,563 | ||||||
7.500% due 10/01/21 ~ | 100,000 | 101,500 | ||||||
Hiland Partners LP | 175,000 | 191,187 | ||||||
Hilcorp Energy I LP | 100,000 | 110,000 | ||||||
Kinder Morgan Inc | 100,000 | 100,652 | ||||||
Kodiak Oil & Gas Corp (Canada) | 75,000 | 77,344 | ||||||
Linn Energy LLC | 100,000 | 108,000 | ||||||
MEG Energy Corp (Canada) | ||||||||
6.375% due 01/30/23 ~ | 50,000 | 52,000 | ||||||
6.500% due 03/15/21 ~ | 50,000 | 52,875 | ||||||
Northern Blizzard Resources Inc (Canada) | 100,000 | 103,125 | ||||||
Pacific Drilling SA (Luxembourg) | 100,000 | 99,750 | ||||||
Pioneer Energy Services Corp | 75,000 | 76,500 | ||||||
QEP Resources Inc | 100,000 | 110,500 |
Principal | | |||||||
Regency Energy Partners LP | $150,000 | $156,750 | ||||||
Sabine Pass Liquefaction LLC | 100,000 | 103,625 | ||||||
Samson Investment Co | 100,000 | 109,500 | ||||||
Sanchez Energy Corp | 125,000 | 134,063 | ||||||
SandRidge Energy Inc | 150,000 | 160,875 | ||||||
Seadrill Ltd (Bermuda) | 200,000 | 209,500 | ||||||
SESI LLC | ||||||||
6.375% due 05/01/19 | 50,000 | 53,500 | ||||||
7.125% due 12/15/21 | 50,000 | 56,000 | ||||||
Tervita Corp (Canada) | ||||||||
8.000% due 11/15/18 ~ | 75,000 | 76,125 | ||||||
10.875% due 02/15/18 ~ | 25,000 | 25,219 | ||||||
WPX Energy Inc | 75,000 | 77,250 | ||||||
|
| |||||||
3,635,060 | ||||||||
|
| |||||||
Financials - 6.7% | ||||||||
Ally Financial Inc | 100,000 | 106,125 | ||||||
CIT Group Inc | 75,000 | 80,906 | ||||||
DuPont Fabros Technology LP | 100,000 | 106,250 | ||||||
E*TRADE Financial Corp | 75,000 | 81,937 | ||||||
First Data Corp | ||||||||
6.750% due 11/01/20 ~ | 75,000 | 81,000 | ||||||
10.625% due 06/15/21 | 50,000 | 56,500 | ||||||
12.625% due 01/15/21 | 125,000 | 149,375 | ||||||
Hockey Merger Sub 2 Inc | 100,000 | 107,250 | ||||||
Jefferies Finance LLC | 200,000 | 211,000 | ||||||
Nuveen Investments Inc | ||||||||
9.125% due 10/15/17 ~ | 75,000 | 79,687 | ||||||
9.500% due 10/15/20 ~ | 75,000 | 80,250 | ||||||
RHP Hotel Properties LP | 100,000 | 101,250 | ||||||
ROC Finance LLC | 75,000 | 79,500 | ||||||
SLM Corp | 75,000 | 76,515 | ||||||
The Howard Hughes Corp | 200,000 | 217,000 | ||||||
|
| |||||||
1,614,545 | ||||||||
|
| |||||||
Health Care - 8.2% | ||||||||
Aviv Healthcare Properties LP | 75,000 | 78,188 | ||||||
Biomet Inc | ||||||||
6.500% due 08/01/20 | 75,000 | 81,150 | ||||||
6.500% due 10/01/20 | 50,000 | 53,375 | ||||||
Capsugel SA (Luxembourg) | 75,000 | 77,391 | ||||||
CHS/Community Health Systems Inc | ||||||||
6.875% due 02/01/22 ~ | 225,000 | 236,250 | ||||||
8.000% due 11/15/19 | 50,000 | 55,187 | ||||||
DaVita Health Care Partners Inc | 75,000 | 80,250 | ||||||
DJO Finance LLC | 100,000 | 105,750 | ||||||
Endo Finance Co | 75,000 | 77,063 | ||||||
Fresenius Medical Care US Finance II Inc | 100,000 | 106,750 |
See Notes to Financial Statements | See explanation of symbols and terms, if any, on page B-31 |
B-27
PACIFIC LIFE FUNDS
PL HIGH INCOME FUND
Schedule of Investments (Continued)
March 31, 2014
Principal | | |||||||
HCA Holdings Inc | $150,000 | $160,950 | ||||||
HCA Inc | 50,000 | 54,375 | ||||||
Jaguar Holding Co I | 100,000 | 105,625 | ||||||
JLL Delta Dutch Newco BV | 100,000 | 103,375 | ||||||
MPH Acquisition Holdings LLC | 75,000 | 77,156 | ||||||
Prospect Medical Holdings Inc | 75,000 | 82,500 | ||||||
Tenet Healthcare Corp | ||||||||
4.750% due 06/01/20 | 50,000 | 50,625 | ||||||
6.000% due 10/01/20 ~ | 50,000 | 53,594 | ||||||
8.000% due 08/01/20 | 100,000 | 109,500 | ||||||
8.125% due 04/01/22 | 100,000 | 112,000 | ||||||
Valeant Pharmaceuticals International | 125,000 | 135,625 | ||||||
|
| |||||||
1,996,679 | ||||||||
|
| |||||||
Industrials - 9.5% | ||||||||
ADS Waste Holdings Inc | 75,000 | 81,937 | ||||||
Ahern Rentals Inc | 75,000 | 83,344 | ||||||
Air Canada Pass-Through Trust ‘B’ (Canada) | 100,000 | 101,500 | ||||||
Allegion US Holding Co Inc | 100,000 | 105,750 | ||||||
BC Mountain LLC | 75,000 | 74,625 | ||||||
Bombardier Inc (Canada) | 75,000 | 76,125 | ||||||
British Airways Pass Through Trust ‘B’ (United Kingdom) | 50,000 | 53,095 | ||||||
CPG Merger Sub LLC | 50,000 | 54,000 | ||||||
HD Supply Inc | ||||||||
8.125% due 04/15/19 | 50,000 | 56,000 | ||||||
11.500% due 07/15/20 | 100,000 | 119,250 | ||||||
International Lease Finance Corp | 150,000 | 166,125 | ||||||
Masco Corp | 75,000 | 84,151 | ||||||
Nortek Inc | 95,000 | 106,638 | ||||||
Roofing Supply Group LLC | 125,000 | 140,937 | ||||||
The ADT Corp | 150,000 | 154,313 | ||||||
The Hertz Corp | 100,000 | 107,125 | ||||||
TMS International Corp | 125,000 | 135,000 | ||||||
TransDigm Inc | ||||||||
5.500% due 10/15/20 | 75,000 | 76,687 | ||||||
7.750% due 12/15/18 | 50,000 | 53,875 | ||||||
United Airlines Pass Through Trust ‘B’ | ||||||||
4.750% due 04/11/22 | 75,000 | 75,750 | ||||||
5.375% due 02/15/23 | 50,000 | 51,190 | ||||||
United Rentals North America Inc | 150,000 | 168,938 | ||||||
US Airways Pass Through Trust ‘B’ | 50,000 | 50,440 | ||||||
USG Corp | 75,000 | 79,969 | ||||||
Virgin Australia Trust ‘B’ (Australia) | 50,000 | 51,875 | ||||||
|
| |||||||
2,308,639 | ||||||||
|
|
Principal | | |||||||
Information Technology - 2.7% | ||||||||
Advanced Micro Devices Inc | $100,000 | $100,625 | ||||||
Blackboard Inc | 125,000 | 131,562 | ||||||
BMC Software Finance Inc | 50,000 | 52,875 | ||||||
BMC Software Inc | 75,000 | 78,000 | ||||||
Entegris Inc | 75,000 | 76,875 | ||||||
Equinix Inc | ||||||||
4.875% due 04/01/20 | 100,000 | 102,750 | ||||||
5.375% due 04/01/23 | 25,000 | 25,625 | ||||||
Freescale Semiconductor Inc | ||||||||
5.000% due 05/15/21 ~ | 50,000 | 51,250 | ||||||
8.050% due 02/01/20 | 32,000 | 35,320 | ||||||
|
| |||||||
654,882 | ||||||||
|
| |||||||
Materials - 9.7% | ||||||||
AK Steel Corp | 125,000 | 126,563 | ||||||
Alphabet Holding Co Inc | 100,000 | 103,500 | ||||||
APERAM (Luxembourg) | 175,000 | 184,625 | ||||||
ArcelorMittal (Luxembourg) | ||||||||
6.000% due 03/01/21 | 200,000 | 214,250 | ||||||
7.250% due 03/01/41 | 50,000 | 50,375 | ||||||
Ardagh Packaging Finance PLC (Ireland) | ||||||||
6.250% due 01/31/19 ~ | 200,000 | 209,500 | ||||||
7.000% due 11/15/20 ~ | 8,824 | 9,331 | ||||||
Beverage Packaging Holdings Luxembourg II SA (Luxembourg) | 75,000 | 77,813 | ||||||
BOE Intermediate Holding Corp | 152,275 | 166,075 | ||||||
BOE Merger Corp | 50,000 | 53,250 | ||||||
FMG Resources Property Ltd (Australia) | 75,000 | 82,781 | ||||||
Hexion U.S. Finance Corp | ||||||||
6.625% due 04/15/20 | 50,000 | 52,000 | ||||||
9.000% due 11/15/20 | 100,000 | 99,500 | ||||||
Louisiana-Pacific Corp | 50,000 | 55,625 | ||||||
Mustang Merger Corp | 50,000 | 55,000 | ||||||
New Gold Inc (Canada) | 100,000 | 102,000 | ||||||
Novelis Inc (Canada) | 100,000 | 112,250 | ||||||
Sappi Papier Holding GmbH (Austria) | 125,000 | 139,375 | ||||||
Sealed Air Corp | 100,000 | 115,625 | ||||||
TPC Group Inc | 100,000 | 110,125 | ||||||
Tronox Finance LLC | 100,000 | 103,250 | ||||||
Wise Metals Group LLC | 125,000 | 134,687 | ||||||
|
| |||||||
2,357,500 | ||||||||
|
| |||||||
Telecommunication Services - 7.1% | ||||||||
CenturyLink Inc | 100,000 | 105,625 | ||||||
Digicel Ltd (Bermuda) | 150,000 | 156,750 |
See Notes to Financial Statements | See explanation of symbols and terms, if any, on page B-31 |
B-28
PACIFIC LIFE FUNDS
PL HIGH INCOME FUND
Schedule of Investments (Continued)
March 31, 2014
Principal | | |||||||
Hughes Satellite Systems Corp | $100,000 | $113,250 | ||||||
Intelsat Jackson Holdings SA (Luxembourg) | 100,000 | 104,500 | ||||||
Intelsat Luxembourg SA (Luxembourg) | 300,000 | 316,875 | ||||||
Level 3 Financing Inc | ||||||||
6.125% due 01/15/21 ~ | 25,000 | 26,437 | ||||||
7.000% due 06/01/20 | 100,000 | 108,875 | ||||||
Sprint Communications Inc | ||||||||
7.000% due 03/01/20 ~ | 250,000 | 289,375 | ||||||
9.000% due 11/15/18 ~ | 100,000 | 122,500 | ||||||
9.125% due 03/01/17 | 50,000 | 59,375 | ||||||
Sprint Corp | 150,000 | 164,063 | ||||||
T-Mobile USA Inc | ||||||||
6.250% due 04/01/21 | 50,000 | 53,063 | ||||||
6.633% due 04/28/21 | 100,000 | 107,875 | ||||||
|
| |||||||
1,728,563 | ||||||||
|
| |||||||
Utilities - 2.1% | ||||||||
Calpine Corp | ||||||||
6.000% due 01/15/22 ~ | 50,000 | 52,750 | ||||||
7.500% due 02/15/21 ~ | 80,000 | 87,800 | ||||||
Energy Future Intermediate Holding Co LLC | 100,000 | 105,875 | ||||||
GenOn Energy Inc | 125,000 | 128,125 | ||||||
NRG Energy Inc | 125,000 | 129,063 | ||||||
|
| |||||||
503,613 | ||||||||
|
| |||||||
Total Corporate Bonds & Notes | 20,253,581 | |||||||
|
| |||||||
SENIOR LOAN NOTES - 4.1% | ||||||||
Consumer Discretionary - 4.1% | ||||||||
Charter Communications Operating, LLC | 250,000 | 248,250 | ||||||
Chrysler Group LLC Tranche B | 250,000 | 249,264 | ||||||
Hilton Worldwide Finance LLC | 250,000 | 250,750 | ||||||
MGM Resorts International Term B | 250,000 | 249,948 | ||||||
|
| |||||||
998,212 | ||||||||
|
| |||||||
Total Senior Loan Notes | 998,212 | |||||||
|
|
Shares | | |||||||
SHORT-TERM INVESTMENT - 9.0% | ||||||||
Money Market Fund - 9.0% | ||||||||
BlackRock Liquidity Funds Treasury | 2,172,362 | $2,172,362 | ||||||
|
| |||||||
Total Short-Term Investment | 2,172,362 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 102.7% | 24,891,518 | |||||||
OTHER ASSETS & LIABILITIES, NET - (2.7%) | (647,885 | ) | ||||||
|
| |||||||
NET ASSETS - 100.0% | $24,243,633 | |||||||
|
|
Notes to Schedule of Investments
(a) | As of March 31, 2014, the fund was diversified as a percentage of net assets as follows: |
Consumer Discretionary | 23.2% | |||
Energy | 15.1% | |||
Industrials | 9.9% | |||
Materials | 9.9% | |||
Short-Term Investment | 9.0% | |||
Health Care | 8.3% | |||
Telecommunication Services | 7.2% | |||
Financials | 6.7% | |||
Consumer Staples | 4.0% | |||
Exchange-Traded Fund | 4.0% | |||
Information Technology | 3.2% | |||
Others (each less than 3.0%) | 2.2% | |||
|
| |||
102.7% | ||||
Other Assets & Liabilities, Net | (2.7% | ) | ||
|
| |||
100.0% | ||||
|
|
(b) | As of March 31, 2014, the fund’s Standard & Poor’s quality ratings as a percentage of total fixed income investments were as follows (Unaudited): |
BBB | 2.7% | |||
BB | 30.7% | |||
B | 38.3% | |||
CCC | 26.3% | |||
Not Rated | 2.0% | |||
|
| |||
100% | ||||
|
|
(c) | Fair Value Measurements |
The following is a summary of the fund’s investments as categorized under the three-tier hierarchy of inputs used in valuing the fund’s assets and liabilities (See Note 3D in Notes to Financial Statements) as of March 31, 2014:
Total Value at March 31, 2014 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||||
Assets | Common Stocks (1) | $499,525 | $499,525 | $— | $— | |||||||||||||
Exchange-Traded Fund | 967,838 | 967,838 | — | — | ||||||||||||||
Corporate Bonds & Notes | 20,253,581 | — | 20,253,581 | — | ||||||||||||||
Senior Loan Notes | 998,212 | — | 998,212 | — | ||||||||||||||
Short-Term Investment | 2,172,362 | 2,172,362 | — | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total | $24,891,518 | $3,639,725 | $21,251,793 | $— | ||||||||||||||
|
|
|
|
|
|
|
|
See Notes to Financial Statements | See explanation of symbols and terms, if any, on page B-31 |
B-29
PACIFIC LIFE FUNDS
PL HIGH INCOME FUND
Schedule of Investments (Continued)
March 31, 2014
The following is a reconciliation of investments for significant unobservable inputs (Level 3) used in valuing the fund’s assets and liabilities (See Note 3D in Notes to Financial Statements) for the year ended March 31, 2014:
Corporate Bonds & Notes | ||||
Value, Beginning of Year | $161,508 | |||
Purchases | — | |||
Sales (Includes Paydowns) | (160,905 | ) | ||
Accrued Discounts (Premiums) | 15 | |||
Net Realized Gains | 14,644 | |||
Change in Net Unrealized Depreciation | (15,262 | ) | ||
Transfers In | — | |||
Transfers Out | — | |||
|
| |||
Value, End of Year | $— | |||
|
| |||
Change in Net Unrealized Appreciation (Depreciation) on Level 3 Investments Held at the End of Year, if Applicable | $— | |||
|
|
The significant unobservable inputs were provided by a vendor-priced single broker quote.
(1) For equity investments categorized in a single level, refer to the schedule of investments for further industry breakout.
See Notes to Financial Statements | See explanation of symbols and terms, if any, on page B-31 |
B-30
PACIFIC LIFE FUNDS
Schedule of Investments (Continued)
Explanation of Symbols and Terms
March 31, 2014
Explanation of Symbols: | ||
* | Non-income producing investments. | |
" | Pass-through securities backed by a pool of mortgages or other loans on which principal payments are periodically made. Therefore, the effective maturity is shorter than the stated maturity. | |
~ | Securities are not registered under the Securities Act of 1933 (1933 Act). These securities are either (1) exempt from registration pursuant to Rule 144A under the 1933 Act and may only be sold to “qualified institutional buyers”, or (2) the securities comply with Regulation S rules governing offers and sales made outside the United States without registration under the 1933 Act and contain certain restrictions as to public resale. | |
§ | Variable rate investments. The rate shown is based on the latest available information as of March 31, 2014. For senior loan notes, the rate shown may represent a weighted average interest rate. | |
µ | Unsettled position. Contract rates do not take effect until settlement date. | |
Other Abbreviations: | ||
PIK | Payment-In-Kind | |
REIT | Real Estate Investment Trust |
Notes:
The countries listed in the Schedules of Investments are based on country of incorporation.
The descriptions and Standard and Poor’s quality ratings of the companies shown in the Schedules of Investments were obtained from published reports or other sources believed to be reliable, and are not audited by the Independent Registered Public Accounting Firm.
See Notes to Financial Statements |
B-31
PACIFIC LIFE FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
March 31, 2014
PL Portfolio Optimization | ||||||||||||||||||||||||
Conservative Fund | Moderate- Conservative Fund | Moderate Fund | Moderate- Aggressive Fund | Aggressive Fund | ||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Investments in affiliated mutual funds, at cost | $418,995,176 | $501,484,015 | $1,340,785,727 | $853,654,519 | $228,785,264 | |||||||||||||||||||
Investments in affiliated mutual funds, at value | $450,573,375 | $565,711,242 | $1,590,546,816 | $1,075,638,090 | $312,571,749 | |||||||||||||||||||
Receivables: | ||||||||||||||||||||||||
Fund shares sold | 641,726 | 1,344,452 | 4,775,361 | 2,460,204 | 533,149 | |||||||||||||||||||
Securities sold | 177,038 | — | — | — | — | |||||||||||||||||||
Due from adviser | 39,210 | �� | 49,305 | 124,203 | 84,544 | 30,229 | ||||||||||||||||||
Prepaid expenses and other assets | 22,799 | 25,460 | 36,287 | 31,607 | 22,796 | |||||||||||||||||||
Total Assets | 451,454,148 | 567,130,459 | 1,595,482,667 | 1,078,214,445 | 313,157,923 | |||||||||||||||||||
LIABILITIES | ||||||||||||||||||||||||
Payables: | ||||||||||||||||||||||||
Fund shares redeemed | 2,317,142 | 1,133,194 | 3,421,043 | 1,050,323 | 482,791 | |||||||||||||||||||
Securities purchased | — | 110,738 | 2,057,185 | 854,083 | 156,551 | |||||||||||||||||||
Accrued advisory fees | 76,832 | 95,915 | 268,371 | 181,656 | 52,975 | |||||||||||||||||||
Accrued administration fees | 57,624 | 71,936 | 201,278 | 136,242 | 39,731 | |||||||||||||||||||
Accrued support service expenses | 12,462 | 14,242 | 38,810 | 26,134 | 7,643 | |||||||||||||||||||
Accrued transfer agency out-of-pocket expenses | 26,706 | 31,411 | 84,929 | 58,357 | 16,947 | |||||||||||||||||||
Accrued legal, audit and tax service fees | 47,652 | 54,460 | 148,403 | 99,934 | 29,227 | |||||||||||||||||||
Accrued trustees’ fees and expenses and deferred compensation | 1,954 | 1,900 | 4,684 | 3,044 | 812 | |||||||||||||||||||
Accrued distribution and/or service fees | 48,542 | 57,702 | 153,666 | 104,712 | 30,085 | |||||||||||||||||||
Accrued other | 34,440 | 38,181 | 103,905 | 69,891 | 20,153 | |||||||||||||||||||
Total Liabilities | 2,623,354 | 1,609,679 | 6,482,274 | 2,584,376 | 836,915 | |||||||||||||||||||
NET ASSETS | $448,830,794 | $565,520,780 | $1,589,000,393 | $1,075,630,069 | $312,321,008 | |||||||||||||||||||
NET ASSETS CONSIST OF: | ||||||||||||||||||||||||
Paid-in capital | $418,571,701 | $501,229,158 | $1,333,981,128 | $873,244,060 | $255,892,412 | |||||||||||||||||||
Undistributed/accumulated net investment income (loss) | (757,446 | ) | (1,349,043 | ) | 337,930 | 755,470 | 1,417,095 | |||||||||||||||||
Undistributed/accumulated net realized gain (loss) | (561,660 | ) | 1,413,438 | 4,920,246 | (20,353,032 | ) | (28,774,984 | ) | ||||||||||||||||
Net unrealized appreciation on investments | 31,578,199 | 64,227,227 | 249,761,089 | 221,983,571 | 83,786,485 | |||||||||||||||||||
NET ASSETS | $448,830,794 | $565,520,780 | $1,589,000,393 | $1,075,630,069 | $312,321,008 | |||||||||||||||||||
Class A Shares: | ||||||||||||||||||||||||
Net Assets | $190,491,646 | $274,898,606 | $814,706,787 | $555,319,197 | $161,858,036 | |||||||||||||||||||
Shares of beneficial interest outstanding | 16,874,999 | 22,018,370 | 58,264,115 | 37,674,579 | 10,630,093 | |||||||||||||||||||
Net Asset Value per share* | $11.29 | $12.48 | $13.98 | $14.74 | $15.23 | |||||||||||||||||||
Sales Charge (1) | 0.66 | 0.73 | 0.81 | 0.86 | 0.89 | |||||||||||||||||||
Maximum offering price per share | $11.95 | $13.21 | $14.79 | $15.60 | $16.12 | |||||||||||||||||||
Class B Shares: | ||||||||||||||||||||||||
Net Assets | $39,159,951 | $52,285,353 | $156,450,452 | $119,505,969 | $37,704,374 | |||||||||||||||||||
Shares of beneficial interest outstanding | 3,515,767 | 4,230,565 | 11,264,334 | 8,174,707 | 2,523,128 | |||||||||||||||||||
Net Asset Value per share* | $11.14 | $12.36 | $13.89 | $14.62 | $14.94 | |||||||||||||||||||
Class C Shares: | ||||||||||||||||||||||||
Net Assets | $204,180,190 | $228,444,625 | $566,257,003 | $375,368,305 | $101,887,834 | |||||||||||||||||||
Shares of beneficial interest outstanding | 18,339,511 | 18,490,428 | 40,826,793 | 25,733,388 | 6,823,138 | |||||||||||||||||||
Net Asset Value per share* | $11.13 | $12.35 | $13.87 | $14.59 | $14.93 | |||||||||||||||||||
Class R Shares: | ||||||||||||||||||||||||
Net Assets | $11,132,249 | $6,999,888 | $31,641,169 | $20,325,611 | $8,151,446 | |||||||||||||||||||
Shares of beneficial interest outstanding | 990,502 | 562,564 | 2,266,688 | 1,380,476 | 538,190 | |||||||||||||||||||
Net Asset Value per share | $11.24 | $12.44 | $13.96 | $14.72 | $15.15 | |||||||||||||||||||
Advisor Class: | ||||||||||||||||||||||||
Net Assets | $3,866,758 | $2,892,308 | $19,944,982 | $5,110,987 | $2,719,318 | |||||||||||||||||||
Shares of beneficial interest outstanding | 342,427 | 231,529 | 1,426,272 | 346,592 | 178,493 | |||||||||||||||||||
Net Asset Value per share | $11.29 | $12.49 | $13.98 | $14.75 | $15.23 |
* | Redemption price per share is equal to the Net Asset Value per share less any applicable contingent deferred sales charge. |
(1) | The Class A shares of the PL Portfolio Optimization Funds are subject to a maximum 5.50% front-end sales charge. |
See Notes to Financial Statements
C-1
PACIFIC LIFE FUNDS
STATEMENTS OF ASSETS AND LIABILITIES (Continued)
March 31, 2014
PL Short Duration Income Fund | PL Income Fund | PL Strategic Income Fund | PL Floating Rate Income Fund | PL Limited Duration High Income Fund | PL High Income Fund | |||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||
Investments, at cost | $92,840,786 | $409,555,897 | $75,151,772 | $1,059,118,623 | $34,931,899 | $24,045,047 | ||||||||||||||||||||||
Investments, at value | $93,530,180 | $413,139,710 | $76,773,275 | $1,063,727,452 | $35,420,928 | $24,891,518 | ||||||||||||||||||||||
Foreign currency held, at value (1) | — | — | 6,026 | — | — | 753 | ||||||||||||||||||||||
Receivables: | ||||||||||||||||||||||||||||
Dividends and interest | 411,578 | 3,341,931 | 887,350 | 2,984,671 | 353,944 | 389,257 | ||||||||||||||||||||||
Fund shares sold | 1,686,225 | 1,840,281 | 810,648 | 6,991,349 | 148,672 | 183,979 | ||||||||||||||||||||||
Securities sold | 1,006,110 | 10,387,887 | 392,189 | 86,824,917 | 1,075,270 | 50,161 | ||||||||||||||||||||||
Due from adviser | 22,808 | 86,980 | 21,783 | 242,603 | — | 3,435 | ||||||||||||||||||||||
Prepaid expenses and other assets | 15,020 | 18,657 | 12,900 | 24,480 | 19,899 | 12,757 | ||||||||||||||||||||||
Total Assets | 96,671,921 | 428,815,446 | 78,904,171 | 1,160,795,472 | 37,018,713 | 25,531,860 | ||||||||||||||||||||||
LIABILITIES | ||||||||||||||||||||||||||||
Payables: | ||||||||||||||||||||||||||||
Fund shares redeemed | 470,497 | 1,982,986 | 131,886 | 3,155,160 | 4,053 | 26,839 | ||||||||||||||||||||||
Securities purchased | 1,753,750 | 11,587,500 | 6,349,520 | 100,855,727 | 1,749,375 | 1,226,386 | ||||||||||||||||||||||
Income distributions | 7,927 | 94,746 | 6,588 | 457,160 | 1,995 | 1,421 | ||||||||||||||||||||||
Accrued advisory fees | 30,721 | 174,307 | 34,358 | 571,240 | 18,598 | 11,750 | ||||||||||||||||||||||
Accrued administration fees | 22,933 | 104,433 | 17,006 | 251,586 | 6,033 | 4,669 | ||||||||||||||||||||||
Accrued support service expenses | 1,899 | 11,750 | 1,234 | 21,886 | 688 | 475 | ||||||||||||||||||||||
Accrued custodian fees and expenses | 1,378 | 7,377 | 1,073 | 16,915 | 1,487 | 217 | ||||||||||||||||||||||
Accrued transfer agency out-of-pocket expenses | 3,557 | 26,493 | 3,358 | 46,386 | 1,011 | 926 | ||||||||||||||||||||||
Accrued legal, audit and tax service fees | 7,261 | 44,929 | 4,719 | 83,687 | 2,632 | 1,816 | ||||||||||||||||||||||
Accrued trustees’ fees and expenses and deferred compensation | 10 | 22 | 5 | 118 | 5 | 2 | ||||||||||||||||||||||
Accrued distribution and/or service fees | 6,311 | 29,359 | 5,334 | 50,615 | 740 | 1,118 | ||||||||||||||||||||||
Accrued other | 10,987 | 42,965 | 13,503 | 65,997 | 25,576 | 12,608 | ||||||||||||||||||||||
Unfunded loan commitment depreciation | — | — | — | 651 | — | — | ||||||||||||||||||||||
Total Liabilities | 2,317,231 | 14,106,867 | 6,568,584 | 105,577,128 | 1,812,193 | 1,288,227 | ||||||||||||||||||||||
NET ASSETS | $94,354,690 | $414,708,579 | $72,335,587 | $1,055,218,344 | $35,206,520 | $24,243,633 | ||||||||||||||||||||||
NET ASSETS CONSIST OF: | ||||||||||||||||||||||||||||
Paid-in capital | $93,458,902 | $413,836,923 | $70,094,196 | $1,048,002,540 | $34,611,189 | $23,261,624 | ||||||||||||||||||||||
Undistributed net investment income | 9,096 | 83,405 | 12,900 | 277,766 | 23,752 | 8,678 | ||||||||||||||||||||||
Undistributed/accumulated net realized gain (loss) | 197,298 | (2,795,562 | ) | 607,602 | 2,329,860 | 82,550 | 126,895 | |||||||||||||||||||||
Net unrealized appreciation on investments | 689,394 | 3,583,813 | 1,620,889 | 4,608,178 | 489,029 | 846,436 | ||||||||||||||||||||||
NET ASSETS | $94,354,690 | $414,708,579 | $72,335,587 | $1,055,218,344 | $35,206,520 | $24,243,633 | ||||||||||||||||||||||
Class A Shares: | ||||||||||||||||||||||||||||
Net Assets | $60,012,128 | $221,086,461 | $37,896,399 | $375,847,691 | $8,676,718 | $6,441,128 | ||||||||||||||||||||||
Shares of beneficial interest outstanding | 5,735,535 | 20,734,328 | 3,383,173 | 35,750,226 | 849,066 | 574,086 | ||||||||||||||||||||||
Net Asset Value per share* | $10.46 | $10.66 | $11.20 | $10.51 | $10.22 | $11.22 | ||||||||||||||||||||||
Sales Charge (2) | 0.32 | 0.47 | 0.50 | 0.33 | 0.32 | 0.50 | ||||||||||||||||||||||
Maximum offering price per share | $10.78 | $11.13 | $11.70 | $10.84 | $10.54 | $11.72 | ||||||||||||||||||||||
Class C Shares: | ||||||||||||||||||||||||||||
Net Assets | $23,769,132 | $122,946,264 | $23,451,153 | $214,364,717 | $2,442,101 | $5,244,899 | ||||||||||||||||||||||
Shares of beneficial interest outstanding | 2,275,442 | 11,528,144 | 2,096,562 | 20,420,616 | 239,413 | 467,861 | ||||||||||||||||||||||
Net Asset Value per share* | $10.45 | $10.66 | $11.19 | $10.50 | $10.20 | $11.21 | ||||||||||||||||||||||
Class I Shares: | ||||||||||||||||||||||||||||
Net Assets | $978,522 | $1,186,746 | $1,685,614 | $96,635,108 | $22,227,293 | $9,493,468 | ||||||||||||||||||||||
Shares of beneficial interest outstanding | 93,639 | 111,192 | 151,225 | 9,177,449 | 2,175,520 | 852,404 | ||||||||||||||||||||||
Net Asset Value per share | $10.45 | $10.67 | $11.15 | $10.53 | $10.22 | $11.14 | ||||||||||||||||||||||
Class P Shares: | ||||||||||||||||||||||||||||
Net Assets | $249,179 | |||||||||||||||||||||||||||
Shares of beneficial interest outstanding | 23,676 | |||||||||||||||||||||||||||
Net Asset Value Per Share | $10.52 | |||||||||||||||||||||||||||
Advisor Class: | ||||||||||||||||||||||||||||
Net Assets | $9,594,908 | $69,489,108 | $9,302,421 | $368,121,649 | $1,860,408 | $3,064,138 | ||||||||||||||||||||||
Shares of beneficial interest outstanding | 916,898 | 6,503,996 | 830,274 | 34,916,294 | 182,194 | 272,914 | ||||||||||||||||||||||
Net Asset Value per share | $10.46 | $10.68 | $11.20 | $10.54 | $10.21 | $11.23 |
* | Redemption price per share is equal to the Net Asset Value per share less any applicable contingent deferred sales charge. |
(1) | The cost of foreign currency for the PL Strategic Income and PL High Income Funds was $6,639 and $788, respectively. |
(2) | Class A shares of the PL Short Duration Income, PL Floating Rate Income and PL Limited Duration High Income Funds are subject to a maximum 3.00% front-end sales charge. Class A shares of the PL Income, PL Strategic Income and PL High Income Funds are subject to a maximum 4.25% front-end sales charge. |
See Notes to Financial Statements
C-2
PACIFIC LIFE FUNDS
FOR THE YEAR ENDED MARCH 31, 2014
| PL Portfolio Optimization | |||||||||||||||||||||||
Conservative Fund | Moderate- Conservative Fund | Moderate Fund | Moderate- Aggressive Fund | Aggressive Fund | ||||||||||||||||||||
INVESTMENT INCOME | ||||||||||||||||||||||||
Dividends from affiliated mutual fund investments | $7,385,359 | $8,035,635 | $20,741,156 | $12,181,592 | $3,331,938 | |||||||||||||||||||
Dividends from mutual fund investments | 288 | 1,785 | 2,030 | 12,120 | 963 | |||||||||||||||||||
Total Investment Income | 7,385,647 | 8,037,420 | 20,743,186 | 12,193,712 | 3,332,901 | |||||||||||||||||||
EXPENSES | ||||||||||||||||||||||||
Advisory fees | 982,792 | 1,077,594 | 2,877,222 | 1,931,714 | 565,508 | |||||||||||||||||||
Administration fees | 737,094 | 808,196 | 2,157,917 | 1,448,785 | 424,131 | |||||||||||||||||||
Support services expenses | 88,624 | 91,182 | 236,435 | 158,784 | 46,466 | |||||||||||||||||||
Custodian fees and expenses | 85 | 85 | 85 | 85 | 85 | |||||||||||||||||||
Shareholder report expenses | 68,156 | 70,152 | 176,440 | 120,611 | 38,670 | |||||||||||||||||||
Distribution and/or service fees (1) | ||||||||||||||||||||||||
Class A | 543,778 | 664,339 | 1,855,342 | 1,240,984 | 367,534 | |||||||||||||||||||
Class B | 411,996 | 511,859 | 1,466,603 | 1,124,977 | 353,098 | |||||||||||||||||||
Class C | 2,187,644 | 2,136,145 | 5,090,063 | 3,336,140 | 909,102 | |||||||||||||||||||
Class R | 57,186 | 33,954 | 150,524 | 98,498 | 38,743 | |||||||||||||||||||
Transfer agency out-of-pocket expenses | 120,677 | 131,987 | 352,199 | 241,229 | 66,502 | |||||||||||||||||||
Registration fees | 101,117 | 100,372 | 169,585 | 130,914 | 84,192 | |||||||||||||||||||
Legal, audit and tax service fees | 67,241 | 74,458 | 199,715 | 134,298 | 39,284 | |||||||||||||||||||
Trustees’ fees and expenses | 17,601 | 18,410 | 48,037 | 32,221 | 9,406 | |||||||||||||||||||
Other | 23,228 | 23,683 | 59,476 | 41,032 | 13,440 | |||||||||||||||||||
Total Expenses | 5,407,219 | 5,742,416 | 14,839,643 | 10,040,272 | 2,956,161 | |||||||||||||||||||
Adviser Expense Reimbursement (2) | (485,486 | ) | (509,594 | ) | (1,236,620 | ) | (857,348 | ) | (297,159 | ) | ||||||||||||||
Net Expenses | 4,921,733 | 5,232,822 | 13,603,023 | 9,182,924 | 2,659,002 | |||||||||||||||||||
NET INVESTMENT INCOME | 2,463,914 | 2,804,598 | 7,140,163 | 3,010,788 | 673,899 | |||||||||||||||||||
NET REALIZED AND UNREALIZED GAIN (LOSS) | ||||||||||||||||||||||||
Net Realized Gain (Loss) On: | ||||||||||||||||||||||||
Investment security transactions in affiliated mutual funds | 277,506 | 369,025 | 124,497 | 332,406 | 858,549 | |||||||||||||||||||
Investment security transactions | 18 | 19 | 49 | 33 | 10 | |||||||||||||||||||
Capital gain distributions from affiliated mutual fund investments | 6,267,037 | 9,272,734 | 32,405,264 | 27,075,356 | 9,251,747 | |||||||||||||||||||
Net Realized Gain | 6,544,561 | 9,641,778 | 32,529,810 | 27,407,795 | 10,110,306 | |||||||||||||||||||
Change In Net Unrealized Appreciation (Depreciation) On: | ||||||||||||||||||||||||
Investment securities in affiliated mutual funds | (2,987,428 | ) | 13,147,640 | 75,023,699 | 75,931,305 | 24,646,040 | ||||||||||||||||||
Change in Net Unrealized Appreciation (Depreciation) | (2,987,428 | ) | 13,147,640 | 75,023,699 | 75,931,305 | 24,646,040 | ||||||||||||||||||
NET GAIN | 3,557,133 | 22,789,418 | 107,553,509 | 103,339,100 | 34,756,346 | |||||||||||||||||||
NET INCREASE IN NET ASSETS | $6,021,047 | $25,594,016 | $114,693,672 | $106,349,888 | $35,430,245 |
(1) | The Advisor Class shares are not subject to distribution and service fees (see Notes 1 and 5 in the Notes to Financial Statements). |
(2) | See Note 6B in Notes to Financial Statements. |
See Notes to Financial Statements
C-3
PACIFIC LIFE FUNDS
STATEMENTS OF OPERATIONS (Continued)
FOR THE YEAR ENDED MARCH 31, 2014
PL Short Duration Income Fund | PL Income Fund | PL Strategic Income Fund | PL Floating Rate Income Fund | PL Limited Duration High Income Fund (1) | PL High Income Fund | |||||||||||||||||||||||
INVESTMENT INCOME | ||||||||||||||||||||||||||||
Dividends, net of foreign taxes withheld | $494 | $2,953 | $40,082 | $91,260 | $228 | $28,422 | ||||||||||||||||||||||
Interest, net of foreign taxes withheld | 1,682,773 | 19,730,776 | 2,672,602 | 33,323,873 | 918,833 | 1,071,962 | ||||||||||||||||||||||
Other | 3,256 | — | 22 | 38,512 | — | 2,000 | ||||||||||||||||||||||
Total Investment Income | 1,686,523 | 19,733,729 | 2,712,706 | 33,453,645 | 919,061 | 1,102,384 | ||||||||||||||||||||||
EXPENSES | ||||||||||||||||||||||||||||
Advisory fees | 266,501 | 2,508,471 | 301,884 | 4,426,160 | 119,037 | 108,796 | ||||||||||||||||||||||
Administration fees | 196,689 | 1,503,041 | 143,614 | 1,980,488 | 33,325 | 40,828 | ||||||||||||||||||||||
Support services expenses | 8,776 | 98,407 | 7,868 | 73,001 | 1,707 | 2,850 | ||||||||||||||||||||||
Custodian fees and expenses | 3,765 | 18,599 | 2,425 | 36,215 | 2,327 | 820 | ||||||||||||||||||||||
Shareholder report expenses | 8,083 | 72,436 | 7,411 | 60,321 | 1,629 | 3,698 | ||||||||||||||||||||||
Distribution and/or service fees (2) | ||||||||||||||||||||||||||||
Class A | 100,497 | 696,389 | 68,374 | 711,790 | 6,811 | 12,400 | ||||||||||||||||||||||
Class C | 185,568 | 1,397,259 | 143,868 | 1,519,606 | 5,520 | 35,854 | ||||||||||||||||||||||
Transfer agency out-of-pocket expenses | 12,774 | 135,129 | 16,189 | 157,243 | 1,883 | 3,396 | ||||||||||||||||||||||
Registration fees | 66,170 | 120,212 | 69,847 | 188,867 | 549 | 50,301 | ||||||||||||||||||||||
Legal, audit and tax service fees | 9,297 | 67,442 | 6,594 | 98,628 | 2,977 | 2,484 | ||||||||||||||||||||||
Trustees’ fees and expenses | 1,803 | 18,283 | 1,531 | 16,166 | 421 | 556 | ||||||||||||||||||||||
Offering expenses | — | — | — | — | 61,187 | — | ||||||||||||||||||||||
Other | 17,925 | 45,271 | 27,146 | 52,963 | 12,980 | 30,119 | ||||||||||||||||||||||
Total Expenses | 877,848 | 6,680,939 | 796,751 | 9,321,448 | 250,353 | 292,102 | ||||||||||||||||||||||
Advisory Fee Waiver (3) | — | — | — | — | (3,663 | ) | — | |||||||||||||||||||||
Adviser Expense Reimbursement (4) | (192,031 | ) | (1,326,276 | ) | (181,996 | ) | (1,642,470 | ) | (82,357 | ) | (98,786 | ) | ||||||||||||||||
Net Expenses | 685,817 | 5,354,663 | 614,755 | 7,678,978 | 164,333 | 193,316 | ||||||||||||||||||||||
NET INVESTMENT INCOME | 1,000,706 | 14,379,066 | 2,097,951 | 25,774,667 | 754,728 | 909,068 | ||||||||||||||||||||||
NET REALIZED AND UNREALIZED GAIN (LOSS) | ||||||||||||||||||||||||||||
Net Realized Gain (Loss) On: | ||||||||||||||||||||||||||||
Investment security transactions | 256,313 | (2,687,733 | ) | 1,167,960 | 2,616,647 | 102,649 | 232,591 | |||||||||||||||||||||
Net Realized Gain (Loss) | 256,313 | (2,687,733 | ) | 1,167,960 | 2,616,647 | 102,649 | 232,591 | |||||||||||||||||||||
Change In Net Unrealized Appreciation (Depreciation) On: | ||||||||||||||||||||||||||||
Investment securities | 155,859 | (6,584,699 | ) | 188,898 | 1,321,808 | 489,029 | 217,605 | |||||||||||||||||||||
Unfunded loan commitments | — | — | — | (651 | ) | — | — | |||||||||||||||||||||
Foreign currencies | — | — | (532 | ) | — | — | (66 | ) | ||||||||||||||||||||
Change in Net Unrealized Appreciation (Depreciation) | 155,859 | (6,584,699 | ) | 188,366 | 1,321,157 | 489,029 | 217,539 | |||||||||||||||||||||
NET GAIN (LOSS) | 412,172 | (9,272,432 | ) | 1,356,326 | 3,937,804 | 591,678 | 450,130 | |||||||||||||||||||||
NET INCREASE IN NET ASSETS | $1,412,878 | $5,106,634 | $3,454,277 | $29,712,471 | $1,346,406 | $1,359,198 | ||||||||||||||||||||||
Foreign taxes withheld on dividends and interest | $— | $— | $142 | $— | $— | $10 |
(1) | Operations commenced on July 31, 2013. |
(2) | Class I, Class P and Advisor Class shares are not subject to distribution and service fees (see Notes 1 and 5 in Notes to Financial Statements). |
(3) | See Note 5 in Notes to Financial Statements. |
(4) | See Note 6B in Notes to Financial Statements. |
See Notes to Financial Statements
C-4
PACIFIC LIFE FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
PL Portfolio Optimization Conservative Fund | PL Portfolio Optimization Moderate-Conservative Fund | PL Portfolio Optimization Moderate Fund | ||||||||||||||||||||||||||
Year Ended March 31, 2014 | Year Ended March 31, 2013 | Year Ended March 31, 2014 | Year Ended March 31, 2013 | Year Ended March 31, 2014 | Year Ended March 31, 2013 | |||||||||||||||||||||||
OPERATIONS | ||||||||||||||||||||||||||||
Net investment income | $2,463,914 | $7,265,917 | $2,804,598 | $5,196,339 | $7,140,163 | $9,475,147 | ||||||||||||||||||||||
Net realized gain | 6,544,561 | 12,903,068 | 9,641,778 | 9,791,165 | 32,529,810 | 18,784,514 | ||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | (2,987,428 | ) | 7,744,436 | 13,147,640 | 15,270,220 | 75,023,699 | 62,333,092 | |||||||||||||||||||||
Net Increase in Net Assets | 6,021,047 | 27,913,421 | 25,594,016 | 30,257,724 | 114,693,672 | 90,592,753 | ||||||||||||||||||||||
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS | ||||||||||||||||||||||||||||
Net investment income | ||||||||||||||||||||||||||||
Class A | (2,821,820 | ) | (6,866,244 | ) | (3,999,190 | ) | (5,343,531 | ) | (10,766,370 | ) | (10,031,160 | ) | ||||||||||||||||
Class B | (335,519 | ) | (979,829 | ) | (489,170 | ) | (813,926 | ) | (1,031,195 | ) | (1,273,955 | ) | ||||||||||||||||
Class C | (1,696,575 | ) | (5,195,691 | ) | (2,137,597 | ) | (3,133,431 | ) | (3,965,320 | ) | (4,109,216 | ) | ||||||||||||||||
Class R | (132,566 | ) | (309,315 | ) | (90,263 | ) | (133,452 | ) | (338,045 | ) | (358,782 | ) | ||||||||||||||||
Advisor Class | (41,725 | ) | — | (27,190 | ) | — | (225,940 | ) | — | |||||||||||||||||||
Net realized gains | ||||||||||||||||||||||||||||
Class A | (2,841,954 | ) | (975,567 | ) | (1,059,221 | ) | — | — | — | |||||||||||||||||||
Class B | (567,167 | ) | (168,822 | ) | (204,669 | ) | — | — | — | |||||||||||||||||||
Class C | (2,969,193 | ) | (881,825 | ) | (871,913 | ) | — | — | — | |||||||||||||||||||
Class R | (152,847 | ) | (47,188 | ) | (26,951 | ) | — | — | — | |||||||||||||||||||
Advisor Class | (35,601 | ) | — | (5,813 | ) | — | — | — | ||||||||||||||||||||
Net Decrease from Dividends and | (11,594,967 | ) | (15,424,481 | ) | (8,911,977 | ) | (9,424,340 | ) | (16,326,870 | ) | (15,773,113 | ) | ||||||||||||||||
CAPITAL SHARE TRANSACTIONS | ||||||||||||||||||||||||||||
Proceeds from sale of shares | ||||||||||||||||||||||||||||
Class A | 56,099,357 | 107,943,161 | 84,205,586 | 93,384,527 | 230,306,253 | 202,865,923 | ||||||||||||||||||||||
Class B | 6,725,512 | 12,505,939 | 9,180,820 | 12,613,199 | 27,723,360 | 28,937,285 | ||||||||||||||||||||||
Class C | 61,470,324 | 90,923,111 | 69,603,848 | 68,944,959 | 166,802,069 | 114,905,237 | ||||||||||||||||||||||
Class R | 2,805,147 | 5,039,462 | 2,226,939 | 1,983,464 | 8,823,907 | 12,475,430 | ||||||||||||||||||||||
Advisor Class | 4,309,203 | 1,363,246 | 2,821,072 | 876,491 | 18,550,650 | 3,384,697 | ||||||||||||||||||||||
Dividends and distribution reinvestments | ||||||||||||||||||||||||||||
Class A | 5,121,877 | 6,823,998 | 4,784,115 | 4,916,243 | 10,353,302 | 9,561,378 | ||||||||||||||||||||||
Class B | 817,013 | 1,024,939 | 659,049 | 757,288 | 992,538 | 1,219,636 | ||||||||||||||||||||||
Class C | 4,318,768 | 5,415,640 | 2,816,292 | 2,864,308 | 3,718,287 | 3,786,971 | ||||||||||||||||||||||
Class R | 285,413 | 356,503 | 117,214 | 133,452 | 337,635 | 357,758 | ||||||||||||||||||||||
Advisor Class | 62,286 | — | 27,852 | — | 194,129 | — | ||||||||||||||||||||||
Cost of shares repurchased | ||||||||||||||||||||||||||||
Class A | (99,110,423 | ) | (73,161,140 | ) | (69,175,234 | ) | (50,735,951 | ) | (130,906,364 | ) | (114,813,077 | ) | ||||||||||||||||
Class B | (9,861,099 | ) | (5,699,887 | ) | (8,452,444 | ) | (6,952,917 | ) | (18,763,657 | ) | (17,515,390 | ) | ||||||||||||||||
Class C | (79,650,854 | ) | (39,366,794 | ) | (46,521,305 | ) | (28,604,386 | ) | (84,984,280 | ) | (65,771,079 | ) | ||||||||||||||||
Class R | (4,193,617 | ) | (3,906,311 | ) | (2,035,531 | ) | (2,221,581 | ) | (9,294,082 | ) | (8,134,764 | ) | ||||||||||||||||
Advisor Class | (1,849,334 | ) | (55 | ) | (884,737 | ) | — | (2,832,202 | ) | — | ||||||||||||||||||
Net Increase (Decrease) in Net Assets from | (52,650,427 | ) | 109,261,812 | 49,373,536 | 97,959,096 | 221,021,545 | 171,260,005 | |||||||||||||||||||||
NET INCREASE (DECREASE) IN NET ASSETS | (58,224,347 | ) | 121,750,752 | 66,055,575 | 118,792,480 | 319,388,347 | 246,079,645 | |||||||||||||||||||||
NET ASSETS | ||||||||||||||||||||||||||||
Beginning of Year | 507,055,141 | 385,304,389 | 499,465,205 | 380,672,725 | 1,269,612,046 | 1,023,532,401 | ||||||||||||||||||||||
End of Year | $448,830,794 | $507,055,141 | $565,520,780 | $499,465,205 | $1,589,000,393 | $1,269,612,046 | ||||||||||||||||||||||
Undistributed/Accumulated Net Investment Income (Loss) | ($757,446 | ) | ($1,085 | ) | ($1,349,043 | ) | ($31,405 | ) | $337,930 | $1,106,974 |
See Notes to Financial Statements
C-5
PACIFIC LIFE FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
PL Portfolio Optimization Moderate-Aggressive Fund | PL Portfolio Optimization Aggressive Fund | |||||||||||||||||||
Year Ended March 31, 2014 | Year Ended March 31, 2013 | Year Ended March 31, 2014 | Year Ended March 31, 2013 | |||||||||||||||||
OPERATIONS | ||||||||||||||||||||
Net investment income | $3,010,788 | $3,587,839 | $673,899 | $537,206 | ||||||||||||||||
Net realized gain | 27,407,795 | 8,544,620 | 10,110,306 | 2,705,253 | ||||||||||||||||
Change in net unrealized appreciation | 75,931,305 | 52,807,520 | 24,646,040 | 15,639,878 | ||||||||||||||||
Net Increase in Net Assets | 106,349,888 | 64,939,979 | 35,430,245 | 18,882,337 | ||||||||||||||||
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS | ||||||||||||||||||||
Net investment income | ||||||||||||||||||||
Class A | (6,852,993 | ) | (4,411,653 | ) | (1,222,515 | ) | (920,030 | ) | ||||||||||||
Class B | (705,770 | ) | (403,481 | ) | (38,870 | ) | (8,876 | ) | ||||||||||||
Class C | (2,318,010 | ) | (1,123,731 | ) | (159,249 | ) | (38,173 | ) | ||||||||||||
Class R | (215,223 | ) | (141,142 | ) | (47,300 | ) | (32,924 | ) | ||||||||||||
Advisor Class | (63,384 | ) | — | (23,745 | ) | — | ||||||||||||||
Net realized gains | ||||||||||||||||||||
Class A | — | — | — | — | ||||||||||||||||
Class B | — | — | — | — | ||||||||||||||||
Class C | — | — | — | — | ||||||||||||||||
Class R | — | — | — | — | ||||||||||||||||
Advisor Class | — | — | — | — | ||||||||||||||||
Net Decrease from Dividends and | (10,155,380 | ) | (6,080,007 | ) | (1,491,679 | ) | (1,000,003 | ) | ||||||||||||
CAPITAL SHARE TRANSACTIONS | ||||||||||||||||||||
Proceeds from sale of shares | ||||||||||||||||||||
Class A | 142,919,612 | 105,360,707 | 37,868,091 | 31,112,894 | ||||||||||||||||
Class B | 17,876,001 | 16,703,733 | 5,257,576 | 4,168,688 | ||||||||||||||||
Class C | 95,240,806 | 59,537,333 | 28,881,008 | 17,338,489 | ||||||||||||||||
Class R | 5,451,413 | 6,712,096 | 2,126,736 | 2,402,818 | ||||||||||||||||
Advisor Class | 3,519,711 | 2,461,098 | 2,403,459 | 218,532 | ||||||||||||||||
Dividends and distribution reinvestments | ||||||||||||||||||||
Class A | 6,645,318 | 4,251,446 | 1,189,737 | 886,650 | ||||||||||||||||
Class B | 677,807 | 389,965 | 37,645 | 8,599 | ||||||||||||||||
Class C | 2,196,647 | 1,055,840 | 151,641 | 35,307 | ||||||||||||||||
Class R | 215,223 | 140,878 | 47,300 | 32,924 | ||||||||||||||||
Advisor Class | 50,235 | — | 9,062 | — | ||||||||||||||||
Cost of shares repurchased | ||||||||||||||||||||
Class A | (79,611,259 | ) | (68,791,354 | ) | (28,010,608 | ) | (30,471,856 | ) | ||||||||||||
Class B | (16,085,991 | ) | (14,658,748 | ) | (4,908,415 | ) | (5,479,851 | ) | ||||||||||||
Class C | (50,975,201 | ) | (42,516,841 | ) | (19,891,624 | ) | (17,905,394 | ) | ||||||||||||
Class R | (5,149,547 | ) | (4,951,355 | ) | (2,171,356 | ) | (2,365,955 | ) | ||||||||||||
Advisor Class | (1,276,510 | ) | — | (113,114 | ) | — | ||||||||||||||
Net Increase (Decrease) in Net Assets from | 121,694,265 | 65,694,798 | 22,877,138 | (18,155 | ) | |||||||||||||||
NET INCREASE IN NET ASSETS | 217,888,773 | 124,554,770 | 56,815,704 | 17,864,179 | ||||||||||||||||
NET ASSETS | ||||||||||||||||||||
Beginning of Year | 857,741,296 | 733,186,526 | 255,505,304 | 237,641,125 | ||||||||||||||||
End of Year | $1,075,630,069 | $857,741,296 | $312,321,008 | $255,505,304 | ||||||||||||||||
Undistributed Net Investment Income | $755,470 | $1,256,615 | $1,417,095 | $108,580 |
See Notes to Financial Statements
C-6
PACIFIC LIFE FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
PL Short Duration Income Fund | PL Income Fund | PL Strategic Income Fund | ||||||||||||||||||||||||||
Year Ended March 31, 2014 | Year Ended March 31, 2013 | Year Ended March 31, 2014 | Year Ended March 31, 2013 | Year Ended March 31, 2014 | Year Ended March 31, 2013 | |||||||||||||||||||||||
OPERATIONS | ||||||||||||||||||||||||||||
Net investment income | $1,000,706 | $457,155 | $14,379,066 | $12,407,322 | $2,097,951 | $1,320,514 | ||||||||||||||||||||||
Net realized gain (loss) | 256,313 | 313,926 | (2,687,733 | ) | 16,442,913 | 1,167,960 | 1,637,946 | |||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | 155,859 | 398,995 | (6,584,699 | ) | 6,339,135 | 188,366 | 1,086,514 | |||||||||||||||||||||
Net Increase in Net Assets | 1,412,878 | 1,170,076 | 5,106,634 | 35,189,370 | 3,454,277 | 4,044,974 | ||||||||||||||||||||||
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS | ||||||||||||||||||||||||||||
Net investment income | ||||||||||||||||||||||||||||
Class A | (684,938 | ) | (105,796 | ) | (8,489,456 | ) | (9,199,985 | ) | (1,207,790 | ) | (256,720 | ) | ||||||||||||||||
Class C | (178,171 | ) | (39,542 | ) | (3,262,361 | ) | (2,518,096 | ) | (536,688 | ) | (94,548 | ) | ||||||||||||||||
Class I | (30,286 | ) | (285,926 | ) | (44,760 | ) | (48,871 | ) | (191,586 | ) | (962,751 | ) | ||||||||||||||||
Advisor Class | (113,349 | ) | (25,265 | ) | (2,717,868 | ) | (469,805 | ) | (178,520 | ) | (19,981 | ) | ||||||||||||||||
Net realized gains | ||||||||||||||||||||||||||||
Class A | (151,735 | ) | (43,053 | ) | (3,751,195 | ) | (8,848,617 | ) | (889,933 | ) | (230,684 | ) | ||||||||||||||||
Class C | (68,653 | ) | (39,621 | ) | (1,925,110 | ) | (3,399,639 | ) | (453,293 | ) | (114,979 | ) | ||||||||||||||||
Class I | (2,555 | ) | (86,775 | ) | (17,465 | ) | (41,790 | ) | (29,936 | ) | (573,860 | ) | ||||||||||||||||
Advisor Class | (18,328 | ) | (18,351 | ) | (1,139,508 | ) | (513,462 | ) | (120,178 | ) | (17,232 | ) | ||||||||||||||||
Net Decrease from Dividends and | (1,248,015 | ) | (644,329 | ) | (21,347,723 | ) | (25,040,265 | ) | (3,607,924 | ) | (2,270,755 | ) | ||||||||||||||||
CAPITAL SHARE TRANSACTIONS | ||||||||||||||||||||||||||||
Proceeds from sale of shares | ||||||||||||||||||||||||||||
Class A | 60,289,931 | 25,242,662 | 83,208,862 | 265,671,625 | 30,152,055 | 21,885,984 | ||||||||||||||||||||||
Class C | 19,934,678 | 10,802,733 | 30,713,477 | 96,463,160 | 17,364,212 | 8,573,364 | ||||||||||||||||||||||
Class I | 722,595 | 277,900 | 81,865 | 747,113 | 1,056,697 | 1,544,246 | ||||||||||||||||||||||
Advisor Class | 8,970,832 | 4,103,874 | 40,811,461 | 94,493,687 | 8,662,380 | 1,532,710 | ||||||||||||||||||||||
Dividends and distribution reinvestments | ||||||||||||||||||||||||||||
Class A | 700,454 | 120,623 | 10,479,851 | 13,900,718 | 1,908,436 | 455,409 | ||||||||||||||||||||||
Class C | 222,558 | 60,412 | 4,431,014 | 4,945,701 | 899,882 | 185,360 | ||||||||||||||||||||||
Class I | 32,841 | 372,696 | 40,842 | 69,602 | 211,631 | 1,521,257 | ||||||||||||||||||||||
Advisor Class | 109,388 | 39,437 | 2,984,004 | 857,150 | 254,303 | 31,591 | ||||||||||||||||||||||
Cost of shares repurchased | ||||||||||||||||||||||||||||
Class A | (23,652,874 | ) | (2,876,027 | ) | (197,526,408 | ) | (201,102,389 | ) | (14,992,646 | ) | (1,598,140 | ) | ||||||||||||||||
Class C | (6,726,584 | ) | (592,240 | ) | (68,363,424 | ) | (20,073,793 | ) | (2,796,525 | ) | (927,797 | ) | ||||||||||||||||
Class I | (13,090,925 | ) | — | (677,903 | ) | (354,320 | ) | (21,610,465 | ) | (183,792 | ) | |||||||||||||||||
Advisor Class | (2,647,261 | ) | (1,004,847 | ) | (65,453,132 | ) | (1,088,570 | ) | (1,205,737 | ) | (5,262 | ) | ||||||||||||||||
Net Increase (Decrease) in Net Assets from | 44,865,633 | 36,547,223 | (159,269,491 | ) | 254,529,684 | 19,904,223 | 33,014,930 | |||||||||||||||||||||
NET INCREASE (DECREASE) IN NET ASSETS | 45,030,496 | 37,072,970 | (175,510,580 | ) | 264,678,789 | 19,750,576 | 34,789,149 | |||||||||||||||||||||
NET ASSETS | ||||||||||||||||||||||||||||
Beginning of Year | 49,324,194 | 12,251,224 | 590,219,159 | 325,540,370 | 52,585,011 | 17,795,862 | ||||||||||||||||||||||
End of Year | $94,354,690 | $49,324,194 | $414,708,579 | $590,219,159 | $72,335,587 | $52,585,011 | ||||||||||||||||||||||
Undistributed Net Investment Income | $9,096 | $15,134 | $83,405 | $219,811 | $12,900 | $34,596 |
See Notes to Financial Statements
C-7
PACIFIC LIFE FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
PL Floating Rate Income Fund | PL Limited Duration High Income Fund (1) | PL High Income Fund | ||||||||||||||||||||||
Year Ended March 31, 2014 | Year Ended March 31, 2013 | Period Ended March 31, 2014 | Year Ended March 31, 2014 | Year Ended March 31, 2013 | ||||||||||||||||||||
OPERATIONS | ||||||||||||||||||||||||
Net investment income | $25,774,667 | $4,565,626 | $754,728 | $909,068 | $587,847 | |||||||||||||||||||
Net realized gain | 2,616,647 | 2,210,370 | 102,649 | 232,591 | 401,592 | |||||||||||||||||||
Change in net unrealized appreciation | 1,321,157 | 2,842,575 | 489,029 | 217,539 | 357,715 | |||||||||||||||||||
Net Increase in Net Assets | 29,712,471 | 9,618,571 | 1,346,406 | 1,359,198 | 1,347,154 | |||||||||||||||||||
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS | ||||||||||||||||||||||||
Net investment income | ||||||||||||||||||||||||
Class A | (10,667,801 | ) | (2,050,935 | ) | (121,106 | ) | (250,119 | ) | (74,859 | ) | ||||||||||||||
Class C | (4,611,876 | ) | (848,981 | ) | (22,580 | ) | (155,578 | ) | (37,167 | ) | ||||||||||||||
Class I | (1,835,602 | ) | (1,249,900 | ) | (563,742 | ) | (470,338 | ) | (495,793 | ) | ||||||||||||||
Class P | (2,898 | ) | (123 | ) | — | — | — | |||||||||||||||||
Advisor Class | (8,489,969 | ) | (325,153 | ) | (30,089 | ) | (32,777 | ) | (3,547 | ) | ||||||||||||||
Net realized gains | ||||||||||||||||||||||||
Class A | (545,857 | ) | (598,819 | ) | (2,486 | ) | (92,025 | ) | (51,882 | ) | ||||||||||||||
Class C | (286,495 | ) | (295,573 | ) | (566 | ) | (67,572 | ) | (30,651 | ) | ||||||||||||||
Class I | (79,308 | ) | (84,833 | ) | (16,212 | ) | (163,127 | ) | (206,640 | ) | ||||||||||||||
Class P | (16 | ) | — | — | — | — | ||||||||||||||||||
Advisor Class | (422,461 | ) | (127,065 | ) | (835 | ) | (6,092 | ) | (1,098 | ) | ||||||||||||||
Net Decrease from Dividends and | (26,942,283 | ) | (5,581,382 | ) | (757,616 | ) | (1,237,628 | ) | (901,637 | ) | ||||||||||||||
CAPITAL SHARE TRANSACTIONS | ||||||||||||||||||||||||
Proceeds from sale of shares | ||||||||||||||||||||||||
Class A | 331,268,389 | 120,227,225 | 9,423,359 | 4,221,962 | 3,832,157 | |||||||||||||||||||
Class C | 173,621,430 | 59,364,754 | 2,466,423 | 3,477,530 | 2,970,629 | |||||||||||||||||||
Class I | 87,451,805 | 4,750,535 | 21,183,762 | 28,526 | 199,429 | |||||||||||||||||||
Class P | 252,683 | 14,291 | — | — | — | |||||||||||||||||||
Advisor Class | 377,225,355 | 41,065,562 | 2,023,583 | 3,093,923 | 280,533 | |||||||||||||||||||
Dividends and distribution reinvestments | ||||||||||||||||||||||||
Class A | 9,791,691 | 2,110,981 | 112,297 | 313,467 | 116,387 | |||||||||||||||||||
Class C | 4,090,137 | 788,075 | 20,564 | 199,720 | 56,881 | |||||||||||||||||||
Class I | 1,717,126 | 1,210,163 | 579,954 | 633,465 | 702,433 | |||||||||||||||||||
Class P | 2,914 | 123 | — | — | — | |||||||||||||||||||
Advisor Class | 6,522,226 | 273,104 | 29,698 | 32,514 | 4,088 | |||||||||||||||||||
Cost of shares repurchased | ||||||||||||||||||||||||
Class A | (91,687,943 | ) | (11,094,224 | ) | (947,758 | ) | (1,621,656 | ) | (490,218 | ) | ||||||||||||||
Class C | (27,061,176 | ) | (1,319,775 | ) | (60,304 | ) | (657,069 | ) | (844,981 | ) | ||||||||||||||
Class I | (3,370,949 | ) | (38,351,412 | ) | — | (27,933 | ) | (1,000 | ) | |||||||||||||||
Class P | (21,132 | ) | (350 | ) | — | — | — | |||||||||||||||||
| Advisor Class | (51,794,600 | ) | (5,913,249 | ) | (213,848 | ) | (361,997 | ) | (5,627 | ) | |||||||||||||
Net Increase in Net Assets from | 818,007,956 | 173,125,803 | 34,617,730 | 9,332,452 | 6,820,711 | |||||||||||||||||||
NET INCREASE IN NET ASSETS | 820,778,144 | 177,162,992 | 35,206,520 | 9,454,022 | 7,266,228 | |||||||||||||||||||
NET ASSETS | ||||||||||||||||||||||||
Beginning of Year or Period | 234,440,200 | 57,277,208 | — | 14,789,611 | 7,523,383 | |||||||||||||||||||
End of Year or Period | $1,055,218,344 | $234,440,200 | $35,206,520 | $24,243,633 | $14,789,611 | |||||||||||||||||||
Undistributed Net Investment Income | $277,766 | $113,212 | $23,752 | $8,678 | $9,171 |
(1) | Operations commenced on July 31, 2013. |
See Notes to Financial Statements
C-8
PACIFIC LIFE FUNDS
Selected per share, ratios and supplemental data for each year or period ended March 31, were as follows:
|
| Selected Per Share Data |
| Ratios to Average Net Assets | Supplemental Data | |||||||||||||||||||||||||||||||||||||||||||||||
Investment Operations | Distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year or Period Ended | Net Asset Value, Beginning of Year or Period | Net Investment Income (Loss) (1) | Net Realized and Unrealized Gain | Total | Net Investment Income | Capital Gains | Total | Net Asset Value, End of Year or Period | Expenses Before Reductions (2) | Expenses After Reductions (2), (3) | Net Investment Income (Loss) (2) | Total Returns (4) | Net Assets, End of Year or Period (in thousands) | Portfolio Turnover Rates | ||||||||||||||||||||||||||||||||||||||
PL Portfolio Optimization Conservative Fund |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
Class A |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $11.40 | $0.10 | $0.10 | $0.20 | ($0.15 | ) | ($0.16 | ) | ($0.31 | ) | $11.29 | 0.70% | 0.60% | 0.90% | 1.78 | % | $190,492 | 11 | % | |||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 11.07 | 0.23 | 0.49 | 0.72 | (0.34 | ) | (0.05 | ) | (0.39 | ) | 11.40 | 0.71% | 0.60% | 2.01% | 6.57 | % | 230,646 | 27 | % | |||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 10.87 | 0.22 | 0.29 | 0.51 | (0.28 | ) | (0.03 | ) | (0.31 | ) | 11.07 | 0.73% | 0.60% | 1.99% | 4.80 | % | 182,912 | 10 | % | |||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 10.41 | 0.15 | 0.63 | 0.78 | (0.32 | ) | — | (0.32 | ) | 10.87 | 0.78% | 0.53% | 1.43% | 7.60 | % | 130,249 | 18 | % | ||||||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 8.84 | 0.32 | 1.59 | 1.91 | (0.31 | ) | (0.03 | ) | (0.34 | ) | 10.41 | 0.95% | 0.20% | 3.20% | 21.67 | % | 68,938 | 21 | % | |||||||||||||||||||||||||||||||||
Class B |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $11.27 | $0.02 | $0.10 | $0.12 | ($0.09 | ) | ($0.16 | ) | ($0.25 | ) | $11.14 | 1.45% | 1.35% | 0.15% | 1.06 | % | $39,160 | 11 | % | |||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 10.96 | 0.14 | 0.50 | 0.64 | (0.28 | ) | | (0.05 | ) | (0.33 | ) | 11.27 | 1.46% | 1.35% | 1.27% | 5.89 | % | 41,999 | 27 | % | ||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 10.78 | 0.13 | 0.29 | 0.42 | (0.21 | ) | (0.03 | ) | (0.24 | ) | 10.96 | 1.48% | 1.35% | 1.24% | 4.02 | % | 33,122 | 10 | % | |||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 10.34 | 0.07 | 0.63 | 0.70 | (0.26 | ) | — | (0.26 | ) | 10.78 | 1.53% | 1.27% | 0.68% | 6.80 | % | 22,282 | 18 | % | ||||||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 8.77 | 0.24 | 1.60 | 1.84 | (0.24 | ) | (0.03 | ) | (0.27 | ) | 10.34 | 1.70% | 0.95% | 2.45% | 21.07 | % | 13,336 | 21 | % | |||||||||||||||||||||||||||||||||
Class C |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $11.26 | $0.02 | $0.10 | $0.12 | ($0.09 | ) | ($0.16 | ) | ($0.25 | ) | $11.13 | 1.45% | 1.35% | 0.15% | 1.04 | % | $204,180 | 11 | % | |||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 10.96 | 0.14 | 0.49 | 0.63 | (0.28 | ) | (0.05 | ) | (0.33 | ) | 11.26 | 1.46% | 1.35% | 1.22% | 5.84 | % | 220,688 | 27 | % | |||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 10.77 | 0.13 | 0.30 | 0.43 | (0.21 | ) | (0.03 | ) | (0.24 | ) | 10.96 | 1.48% | 1.35% | 1.24% | 4.08 | % | 158,748 | 10 | % | |||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 10.33 | 0.07 | 0.63 | 0.70 | (0.26 | ) | — | (0.26 | ) | 10.77 | 1.53% | 1.27% | 0.68% | 6.81 | % | 117,458 | 18 | % | ||||||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 8.76 | 0.24 | 1.61 | 1.85 | (0.25 | ) | (0.03 | ) | (0.28 | ) | 10.33 | 1.70% | 0.95% | 2.45% | 21.14 | % | 67,620 | 21 | % | |||||||||||||||||||||||||||||||||
Class R |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $11.36 | $0.07 | $0.10 | $0.17 | ($0.13 | ) | ($0.16 | ) | ($0.29 | ) | $11.24 | 0.95% | 0.85% | 0.65% | 1.52 | % | $11,132 | 11 | % | |||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 11.03 | 0.20 | 0.50 | 0.70 | (0.32 | ) | (0.05 | ) | (0.37 | ) | 11.36 | 0.96% | 0.85% | 1.79% | 6.38 | % | 12,357 | 27 | % | |||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 10.83 | 0.19 | 0.29 | 0.48 | (0.25 | ) | (0.03 | ) | (0.28 | ) | 11.03 | 0.98% | 0.85% | 1.74% | 4.58 | % | 10,522 | 10 | % | |||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 10.38 | 0.13 | 0.61 | 0.74 | (0.29 | ) | — | (0.29 | ) | 10.83 | 1.03% | 0.75% | 1.20% | 7.25 | % | 8,881 | 18 | % | ||||||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 8.81 | 0.29 | 1.60 | 1.89 | (0.29 | ) | (0.03 | ) | (0.32 | ) | 10.38 | 1.20% | 0.45% | 2.95% | 21.53 | % | 7,972 | 21 | % | |||||||||||||||||||||||||||||||||
Advisor Class |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $11.41 | $0.12 | $0.09 | $0.21 | ($0.17 | ) | ($0.16 | ) | ($0.33 | ) | $11.29 | 0.45% | 0.40% | 1.10% | 1.87 | % | $3,867 | 11 | % | |||||||||||||||||||||||||||||||||
12/31/2012 - 3/31/2013 | 11.18 | (0.01 | ) | 0.24 | 0.23 | — | — | — | 11.41 | 0.48% | 0.40% | (0.40%) | 2.06 | % | 1,366 | 27 | % | |||||||||||||||||||||||||||||||||||
PL Portfolio Optimization Moderate-Conservative Fund |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
Class A |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $12.10 | $0.11 | $0.50 | $0.61 | ($0.18 | ) | ($0.05 | ) | ($0.23 | ) | $12.48 | 0.69% | 0.60% | 0.89% | 5.08 | % | $274,899 | 5 | % | |||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 11.56 | 0.18 | 0.64 | 0.82 | (0.28 | ) | — | (0.28 | ) | 12.10 | 0.71% | 0.60% | 1.58% | 7.22 | % | 246,609 | 24 | % | ||||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 11.25 | 0.18 | 0.35 | 0.53 | (0.22 | ) | — | (0.22 | ) | 11.56 | 0.73% | 0.60% | 1.62% | 4.87 | % | 188,660 | 10 | % | ||||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 10.54 | 0.12 | 0.87 | 0.99 | (0.28 | ) | — | (0.28 | ) | 11.25 | 0.78% | 0.52% | 1.16% | 9.53 | % | 132,919 | 10 | % | ||||||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 8.36 | 0.26 | 2.19 | 2.45 | (0.27 | ) | — | (0.27 | ) | 10.54 | 0.95% | 0.20% | 2.58% | 29.60 | % | 78,160 | 10 | % | ||||||||||||||||||||||||||||||||||
Class B |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $11.99 | $0.02 | $0.51 | $0.53 | ($0.11 | ) | ($0.05 | ) | ($0.16 | ) | $12.36 | 1.44% | 1.35% | 0.14% | 4.47 | % | $52,285 | 5 | % | |||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 11.46 | 0.10 | 0.63 | 0.73 | (0.20 | ) | — | (0.20 | ) | 11.99 | 1.46% | 1.35% | 0.85% | 6.46 | % | 49,372 | 24 | % | ||||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 11.17 | 0.10 | 0.35 | 0.45 | (0.16 | ) | — | (0.16 | ) | 11.46 | 1.48% | 1.35% | 0.87% | 4.07 | % | 40,812 | 10 | % | ||||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 10.47 | 0.04 | 0.87 | 0.91 | (0.21 | ) | — | (0.21 | ) | 11.17 | 1.53% | 1.27% | 0.41% | 8.78 | % | 28,411 | 10 | % | ||||||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 8.30 | 0.18 | 2.20 | 2.38 | (0.21 | ) | — | (0.21 | ) | 10.47 | 1.70% | 0.95% | 1.83% | 28.87 | % | 19,202 | 10 | % | ||||||||||||||||||||||||||||||||||
Class C |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $11.99 | $0.02 | $0.51 | $0.53 | ($0.12 | ) | ($0.05 | ) | ($0.17 | ) | $12.35 | 1.44% | 1.35% | 0.14% | 4.41 | % | $228,445 | 5 | % | |||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 11.47 | 0.09 | 0.64 | 0.73 | (0.21 | ) | — | (0.21 | ) | 11.99 | 1.46% | 1.35% | 0.81% | 6.41 | % | 196,123 | 24 | % | ||||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 11.16 | 0.10 | 0.36 | 0.46 | (0.15 | ) | — | (0.15 | ) | 11.47 | 1.48% | 1.35% | 0.87% | 4.20 | % | 144,900 | 10 | % | ||||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 10.47 | 0.04 | 0.86 | 0.90 | (0.21 | ) | — | (0.21 | ) | 11.16 | 1.53% | 1.27% | 0.41% | 8.71 | % | 107,411 | 10 | % | ||||||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 8.30 | 0.18 | 2.20 | 2.38 | (0.21 | ) | — | (0.21 | ) | 10.47 | 1.70% | 0.95% | 1.83% | 28.87 | % | 65,086 | 10 | % | ||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $12.06 | $0.08 | $0.51 | $0.59 | ($0.16 | ) | ($0.05 | ) | ($0.21 | ) | $12.44 | 0.94% | 0.85% | 0.64% | 4.91 | % | $7,000 | 5 | % | |||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 11.52 | 0.16 | 0.63 | 0.79 | (0.25 | ) | — | (0.25 | ) | 12.06 | 0.96% | 0.85% | 1.39% | 6.92 | % | 6,482 | 24 | % | ||||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 11.22 | 0.15 | 0.35 | 0.50 | (0.20 | ) | — | (0.20 | ) | 11.52 | 0.98% | 0.85% | 1.37% | 4.53 | % | 6,301 | 10 | % | ||||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 10.51 | 0.10 | 0.86 | 0.96 | (0.25 | ) | — | (0.25 | ) | 11.22 | 1.03% | 0.76% | 0.91% | 9.32 | % | 15,236 | 10 | % | ||||||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 8.34 | 0.23 | 2.20 | 2.43 | (0.26 | ) | — | (0.26 | ) | 10.51 | 1.20% | 0.45% | 2.33% | 29.32 | % | 10,478 | 10 | % | ||||||||||||||||||||||||||||||||||
Advisor Class |
| |||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $12.10 | $0.13 | $0.51 | $0.64 | ($0.20 | ) | ($0.05 | ) | ($0.25 | ) | $12.49 | 0.44% | 0.40% | 1.09% | 5.32 | % | $2,892 | 5 | % | |||||||||||||||||||||||||||||||||
12/31/2012 - 3/31/2013 | 11.68 | (0.01 | ) | 0.43 | 0.42 | — | — | — | 12.10 | 0.46% | 0.40% | (0.40%) | 3.60 | % | 880 | 24 | % |
See Notes to Financial Statements | See explanation of references on C-13 |
C-9
PACIFIC LIFE FUNDS
FINANCIAL HIGHLIGHTS (Continued)
Selected per share, ratios and supplemental data for each year or period ended March 31, were as follows:
|
| Selected Per Share Data |
| Ratios to Average Net Assets | Supplemental Data | |||||||||||||||||||||||||||||||||||||||||||||
Investment Operations | Distributions | |||||||||||||||||||||||||||||||||||||||||||||||||
For the Year or Period Ended | Net Asset Value, Beginning of Year or Period | Net Investment Income (Loss) (1) | Net Realized and Unrealized Gain | Total | Net Investment Income | Capital Gains | Total | Net Asset Value, End of Year or Period | Expenses Before Reductions (2) | Expenses After Reductions (2), (3) | Net Investment Income (Loss) (2) | Total Returns (4) | Net Assets, End of Year or Period (in thousands) | Portfolio Turnover Rates | ||||||||||||||||||||||||||||||||||||
PL Portfolio Optimization Moderate Fund |
| |||||||||||||||||||||||||||||||||||||||||||||||||
Class A |
| |||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $13.06 | $0.11 | $1.00 | $1.11 | ($0.19 | ) | $— | ($0.19 | ) | $13.98 | 0.69% | 0.60% | 0.84% | 8.51 | % | $814,707 | 1 | % | ||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 12.26 | 0.15 | 0.86 | 1.01 | (0.21 | ) | — | (0.21 | ) | 13.06 | 0.70% | 0.60% | 1.20% | 8.36 | % | 654,158 | 25 | % | ||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 11.88 | 0.14 | 0.42 | 0.56 | (0.18 | ) | — | (0.18 | ) | 12.26 | 0.72% | 0.60% | 1.18% | 4.82 | % | 517,945 | 7 | % | ||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 10.81 | 0.10 | 1.19 | 1.29 | (0.22 | ) | — | (0.22 | ) | 11.88 | 0.77% | 0.52% | 0.91% | 12.10 | % | 384,999 | 9 | % | ||||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 7.96 | 0.20 | 2.87 | 3.07 | (0.22 | ) | — | (0.22 | ) | 10.81 | 0.92% | 0.20% | 1.99% | 38.85 | % | 247,213 | 9 | % | ||||||||||||||||||||||||||||||||
Class B |
| |||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $12.96 | $0.01 | $1.01 | $1.02 | ($0.09 | ) | $— | ($0.09 | ) | $13.89 | 1.44% | 1.35% | 0.09% | 7.90 | % | $156,450 | 1 | % | ||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 12.18 | 0.06 | 0.85 | 0.91 | (0.13 | ) | — | (0.13 | ) | 12.96 | 1.45% | 1.35% | 0.47% | 7.49 | % | 136,411 | 25 | % | ||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 11.80 | 0.05 | 0.43 | 0.48 | (0.10 | ) | — | (0.10 | ) | 12.18 | 1.47% | 1.35% | 0.43% | 4.13 | % | 115,513 | 7 | % | ||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 10.74 | 0.02 | 1.18 | 1.20 | (0.14 | ) | — | (0.14 | ) | 11.80 | 1.52% | 1.26% | 0.17% | 11.33 | % | 92,064 | 9 | % | ||||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 7.90 | 0.12 | 2.87 | 2.99 | (0.15 | ) | — | (0.15 | ) | 10.74 | 1.67% | 0.95% | 1.24% | 38.14 | % | 65,336 | 9 | % | ||||||||||||||||||||||||||||||||
Class C |
| |||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $12.95 | $0.01 | $1.01 | $1.02 | ($0.10 | ) | $— | ($0.10 | ) | $13.87 | 1.44% | 1.35% | 0.09% | 7.89 | % | $566,257 | 1 | % | ||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 12.17 | 0.06 | 0.85 | 0.91 | (0.13 | ) | — | (0.13 | ) | 12.95 | 1.45% | 1.35% | 0.46% | 7.50 | % | 445,932 | 25 | % | ||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 11.78 | 0.05 | 0.43 | 0.48 | (0.09 | ) | — | (0.09 | ) | 12.17 | 1.47% | 1.35% | 0.43% | 4.18 | % | 366,753 | 7 | % | ||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 10.73 | 0.02 | 1.17 | 1.19 | (0.14 | ) | — | (0.14 | ) | 11.78 | 1.52% | 1.26% | 0.17% | 11.26 | % | 308,449 | 9 | % | ||||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 7.88 | 0.12 | 2.88 | 3.00 | (0.15 | ) | — | (0.15 | ) | 10.73 | 1.67% | 0.95% | 1.24% | 38.36 | % | 210,889 | 9 | % | ||||||||||||||||||||||||||||||||
Class R |
| |||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $13.03 | $0.08 | $1.00 | $1.08 | ($0.15 | ) | $— | ($0.15 | ) | $13.96 | 0.94% | 0.85% | 0.59% | 8.33 | % | $31,641 | 1 | % | ||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 12.24 | 0.11 | 0.86 | 0.97 | (0.18 | ) | — | (0.18 | ) | 13.03 | 0.95% | 0.85% | 0.93% | 8.02 | % | 29,715 | 25 | % | ||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 11.84 | 0.11 | 0.43 | 0.54 | (0.14 | ) | — | (0.14 | ) | 12.24 | 0.97% | 0.85% | 0.93% | 4.67 | % | 23,321 | 7 | % | ||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 10.77 | 0.07 | 1.18 | 1.25 | (0.18 | ) | — | (0.18 | ) | 11.84 | 1.02% | 0.75% | 0.68% | 11.82 | % | 23,658 | 9 | % | ||||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 7.93 | 0.17 | 2.87 | 3.04 | (0.20 | ) | — | (0.20 | ) | 10.77 | 1.17% | 0.45% | 1.74% | 38.61 | % | 24,232 | 9 | % | ||||||||||||||||||||||||||||||||
Advisor Class |
| |||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $13.06 | $0.14 | $1.00 | $1.14 | ($0.22 | ) | $— | ($0.22 | ) | $13.98 | 0.44% | 0.40% | 1.04% | 8.73 | % | $19,945 | 1 | % | ||||||||||||||||||||||||||||||||
12/31/2012 - 3/31/2013 | 12.41 | (0.01 | ) | 0.66 | 0.65 | — | — | — | 13.06 | 0.45% | 0.40% | (0.40%) | 5.24 | % | 3,396 | 25 | % | |||||||||||||||||||||||||||||||||
PL Portfolio Optimization Moderate-Aggressive Fund |
| |||||||||||||||||||||||||||||||||||||||||||||||||
Class A |
| |||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $13.33 | $0.09 | $1.51 | $1.60 | ($0.19 | ) | $— | ($0.19 | ) | $14.74 | 0.69% | 0.60% | 0.66% | 12.01 | % | $555,319 | 1 | % | ||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 12.41 | 0.10 | 0.96 | 1.06 | (0.14 | ) | — | (0.14 | ) | 13.33 | 0.71% | 0.60% | 0.83% | 8.62 | % | 436,055 | 25 | % | ||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 12.05 | 0.10 | 0.38 | 0.48 | (0.12 | ) | — | (0.12 | ) | 12.41 | 0.72% | 0.60% | 0.82% | 4.13 | % | 365,426 | 8 | % | ||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 10.68 | 0.07 | 1.44 | 1.51 | (0.14 | ) | — | (0.14 | ) | 12.05 | 0.77% | 0.51% | 0.62% | 14.36 | % | 301,232 | 13 | % | ||||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 7.31 | 0.13 | 3.38 | 3.51 | (0.14 | ) | — | (0.14 | ) | 10.68 | 0.92% | 0.20% | 1.33% | 48.26 | % | 225,236 | 14 | % | ||||||||||||||||||||||||||||||||
Class B |
| |||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $13.22 | ($0.01 | ) | $1.50 | $1.49 | ($0.09 | ) | $— | ($0.09 | ) | $14.62 | 1.44% | 1.35% | (0.09%) | 11.25 | % | $119,506 | 1 | % | |||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 12.30 | 0.01 | 0.96 | 0.97 | (0.05 | ) | — | (0.05 | ) | 13.22 | 1.46% | 1.35% | 0.09% | 7.92 | % | 105,757 | 25 | % | ||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 11.93 | 0.01 | 0.40 | 0.41 | (0.04 | ) | — | (0.04 | ) | 12.30 | 1.47% | 1.35% | 0.07% | 3.50 | % | 95,937 | 8 | % | ||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 10.57 | (0.01 | ) | 1.43 | 1.42 | (0.06 | ) | — | (0.06 | ) | 11.93 | 1.52% | 1.26% | (0.13%) | 13.59 | % | 83,812 | 13 | % | |||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 7.21 | 0.05 | 3.38 | 3.43 | (0.07 | ) | — | (0.07 | ) | 10.57 | 1.67% | 0.95% | 0.58% | 47.84 | % | 68,751 | 14 | % | ||||||||||||||||||||||||||||||||
Class C |
| |||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $13.19 | ($0.01 | ) | $1.50 | $1.49 | ($0.09 | ) | $— | ($0.09 | ) | $14.59 | 1.44% | 1.35% | (0.09%) | 11.33 | % | $375,368 | 1 | % | |||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 12.27 | 0.01 | 0.96 | 0.97 | (0.05 | ) | — | (0.05 | ) | 13.19 | 1.46% | 1.35% | 0.09% | 7.95 | % | 295,615 | 25 | % | ||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 11.91 | 0.01 | 0.39 | 0.40 | (0.04 | ) | — | (0.04 | ) | 12.27 | 1.47% | 1.35% | 0.07% | 3.39 | % | 257,114 | 8 | % | ||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 10.55 | (0.01 | ) | 1.43 | 1.42 | (0.06 | ) | — | (0.06 | ) | 11.91 | 1.52% | 1.26% | (0.13%) | 13.64 | % | 230,964 | 13 | % | |||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 7.18 | 0.05 | 3.39 | 3.44 | (0.07 | ) | — | (0.07 | ) | 10.55 | 1.67% | 0.95% | 0.58% | 48.18 | % | 189,917 | 14 | % | ||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $13.32 | $0.06 | $1.49 | $1.55 | ($0.15 | ) | $— | ($0.15 | ) | $14.72 | 0.94% | 0.85% | 0.41% | 11.67 | % | $20,326 | 1 | % | ||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 12.40 | 0.07 | 0.96 | 1.03 | (0.11 | ) | — | (0.11 | ) | 13.32 | 0.96% | 0.85% | 0.55% | 8.38 | % | 17,844 | 25 | % | ||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 12.03 | 0.07 | 0.40 | 0.47 | (0.10 | ) | — | (0.10 | ) | 12.40 | 0.97% | 0.85% | 0.57% | 3.97 | % | 14,710 | 8 | % | ||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 10.67 | 0.04 | 1.44 | 1.48 | (0.12 | ) | — | (0.12 | ) | 12.03 | 1.02% | 0.76% | 0.37% | 14.00 | % | 17,265 | 13 | % | ||||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 7.30 | 0.10 | 3.39 | 3.49 | (0.12 | ) | — | (0.12 | ) | 10.67 | 1.17% | 0.45% | 1.08% | 48.07 | % | 12,211 | 14 | % | ||||||||||||||||||||||||||||||||
Advisor Class |
| |||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $13.34 | $0.12 | $1.51 | $1.63 | ($0.22 | ) | $— | ($0.22 | ) | $14.75 | 0.44% | 0.40% | 0.86% | 12.21 | % | $5,111 | 1 | % | ||||||||||||||||||||||||||||||||
12/31/2012 - 3/31/2013 | 12.50 | (0.01 | ) | 0.85 | 0.84 | — | — | — | 13.34 | 0.45% | 0.40% | (0.40%) | 6.72 | % | 2,470 | 25 | % |
See Notes to Financial Statements | See explanation of references on C-13 |
C-10
PACIFIC LIFE FUNDS
FINANCIAL HIGHLIGHTS (Continued)
Selected per share, ratios and supplemental data for each year or period ended March 31, were as follows:
|
| Selected Per Share Data |
| Ratios to Average Net Assets | Supplemental Data | |||||||||||||||||||||||||||||||||||||||||||||
Investment Operations | Distributions | |||||||||||||||||||||||||||||||||||||||||||||||||
For the Year or Period Ended | Net Asset Value, Beginning of Year or Period | Net Investment Income (Loss) (1) | Net Realized and Unrealized Gain (Loss) | Total | Net Investment Income | Capital Gains | Total | Net Asset Value, End of Year or Period | Expenses Before Reductions (2) | Expenses After Reductions (2), (3) | Net Investment Income (Loss) (2) | Total Returns (4) | Net Assets, End of Year or Period (in thousands) | Portfolio Turnover Rates | ||||||||||||||||||||||||||||||||||||
PL Portfolio Optimization Aggressive Fund |
| |||||||||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $13.50 | $0.08 | $1.77 | $1.85 | ($0.12 | ) | $— | ($0.12 | ) | $15.23 | 0.71% | 0.60% | 0.58% | 13.70 | % | $161,858 | 5 | % | ||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 12.56 | 0.07 | 0.96 | 1.03 | (0.09 | ) | — | (0.09 | ) | 13.50 | 0.73% | 0.60% | 0.57% | 8.30 | % | 133,265 | 30 | % | ||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 12.29 | 0.06 | 0.27 | 0.33 | (0.06 | ) | — | (0.06 | ) | 12.56 | 0.74% | 0.60% | 0.52% | 2.73 | % | 122,397 | 13 | % | ||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 10.66 | 0.05 | 1.65 | 1.70 | (0.07 | ) | — | (0.07 | ) | 12.29 | 0.80% | 0.51% | 0.44% | 16.11 | % | 114,246 | 26 | % | ||||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 6.92 | 0.09 | 3.75 | 3.84 | (0.10 | ) | — | (0.10 | ) | 10.66 | 0.94% | 0.20% | 0.94% | 55.84 | % | 98,669 | 26 | % | ||||||||||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $13.22 | ($0.02 | ) | $1.76 | $1.74 | ($0.02 | ) | $— | ($0.02 | ) | $14.94 | 1.46% | 1.35% | (0.17%) | 13.13 | % | $37,704 | 5 | % | |||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 12.28 | (0.02 | ) | 0.96 | 0.94 | (0.00 | )(5) | — | (0.00 | )(5) | 13.22 | 1.48% | 1.35% | (0.17%) | 7.69 | % | 33,013 | 30 | % | |||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 12.03 | (0.03 | ) | 0.28 | 0.25 | — | — | — | 12.28 | 1.49% | 1.35% | (0.23%) | 2.08 | % | 31,969 | 13 | % | |||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 10.46 | (0.03 | ) | 1.65 | 1.62 | (0.05 | ) | — | (0.05 | ) | 12.03 | 1.55% | 1.25% | (0.31%) | 15.62 | % | 30,693 | 26 | % | |||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 6.72 | 0.02 | 3.75 | 3.77 | (0.03 | ) | — | (0.03 | ) | 10.46 | 1.69% | 0.95% | 0.19% | 56.15 | % | 28,776 | 26 | % | ||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $13.22 | ($0.02 | ) | $1.75 | $1.73 | ($0.02 | ) | $— | ($0.02 | ) | $14.93 | 1.46% | 1.35% | (0.17%) | 13.12 | % | $101,888 | 5 | % | |||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 12.28 | (0.02 | ) | 0.97 | 0.95 | (0.01 | ) | — | (0.01 | ) | 13.22 | 1.48% | 1.35% | (0.18%) | 7.71 | % | 81,754 | 30 | % | |||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 12.03 | (0.03 | ) | 0.28 | 0.25 | — | — | — | 12.28 | 1.49% | 1.35% | (0.23%) | 2.08 | % | 76,613 | 13 | % | |||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 10.46 | (0.03 | ) | 1.65 | 1.62 | (0.05 | ) | — | (0.05 | ) | 12.03 | 1.55% | 1.25% | (0.31%) | 15.61 | % | 75,607 | 26 | % | |||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 6.71 | 0.02 | 3.75 | 3.77 | (0.02 | ) | — | (0.02 | ) | 10.46 | 1.69% | 0.95% | 0.19% | 56.11 | % | 68,230 | 26 | % | ||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $13.43 | $0.05 | $1.75 | $1.80 | ($0.08 | ) | $— | ($0.08 | ) | $15.15 | 0.96% | 0.85% | 0.33% | 13.45 | % | $8,151 | 5 | % | ||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 12.48 | 0.04 | 0.97 | 1.01 | (0.06 | ) | — | (0.06 | ) | 13.43 | 0.98% | 0.85% | 0.33% | 8.17 | % | 7,251 | 30 | % | ||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 12.22 | 0.03 | 0.26 | 0.29 | (0.03 | ) | — | (0.03 | ) | 12.48 | 0.99% | 0.85% | 0.27% | 2.43 | % | 6,662 | 13 | % | ||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 10.61 | 0.02 | 1.65 | 1.67 | (0.06 | ) | — | (0.06 | ) | 12.22 | 1.05% | 0.76% | 0.19% | 16.02 | % | 5,553 | 26 | % | ||||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 6.88 | 0.06 | 3.76 | 3.82 | (0.09 | ) | — | (0.09 | ) | 10.61 | 1.19% | 0.45% | 0.69% | 55.70 | % | 4,448 | 26 | % | ||||||||||||||||||||||||||||||||
Advisor Class | ||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $13.51 | $0.11 | $1.76 | $1.87 | ($0.15 | ) | $— | ($0.15 | ) | $15.23 | 0.46% | 0.40% | 0.78% | 13.84 | % | $2,719 | 5 | % | ||||||||||||||||||||||||||||||||
12/31/2012 - 3/31/2013 | 12.56 | (0.01 | ) | 0.96 | 0.95 | — | — | — | 13.51 | 0.48% | 0.40% | (0.40%) | 7.56 | % | 222 | 30 | % | |||||||||||||||||||||||||||||||||
PL Short Duration Income Fund |
| |||||||||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $10.46 | $0.17 | $0.04 | $0.21 | ($0.18 | ) | ($0.03 | ) | ($0.21 | ) | $10.46 | 1.14% | 0.85% | 1.68% | 2.00 | % | $60,012 | 98 | % | |||||||||||||||||||||||||||||||
6/29/2012 - 3/31/2013 | 10.20 | 0.16 | 0.32 | 0.48 | (0.15 | ) | (0.07 | ) | (0.22 | ) | 10.46 | 1.24% | 0.85% | 2.02% | 4.78 | % | 22,589 | 146 | % | |||||||||||||||||||||||||||||||
Class C |
| |||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $10.45 | $0.10 | $0.03 | $0.13 | ($0.10 | ) | ($0.03 | ) | ($0.13 | ) | $10.45 | 1.89% | 1.60% | 0.93% | 1.28 | % | $23,769 | 98 | % | |||||||||||||||||||||||||||||||
6/29/2012 - 3/31/2013 | 10.20 | 0.10 | 0.33 | 0.43 | (0.11 | ) | (0.07 | ) | (0.18 | ) | 10.45 | 1.99% | 1.60% | 1.27% | 4.28 | % | 10,307 | 146 | % | |||||||||||||||||||||||||||||||
Class I |
| |||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $10.45 | $0.21 | $0.02 | $0.23 | ($0.20 | ) | ($0.03 | ) | ($0.23 | ) | $10.45 | 0.74% | 0.60% | 1.93% | 2.20 | % | $979 | 98 | % | |||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 10.14 | 0.23 | 0.38 | 0.61 | (0.23 | ) | (0.07 | ) | (0.30 | ) | 10.45 | 1.08% | 0.60% | 2.27% | 6.10 | % | 13,280 | 146 | % | |||||||||||||||||||||||||||||||
12/19/2011 - 3/31/2012 | 10.00 | 0.06 | 0.15 | 0.21 | (0.07 | ) | — | (0.07 | ) | 10.14 | 2.04% | 0.60% | 2.06% | 2.10 | % | 12,251 | 73 | % | ||||||||||||||||||||||||||||||||
Advisor Class |
| |||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $10.46 | $0.20 | $0.03 | $0.23 | ($0.20 | ) | ($0.03 | ) | ($0.23 | ) | $10.46 | 0.89% | 0.60% | 1.93% | 2.25 | % | $9,595 | 98 | % | |||||||||||||||||||||||||||||||
6/29/2012 - 3/31/2013 | 10.20 | 0.18 | 0.31 | 0.49 | (0.16 | ) | (0.07 | ) | (0.23 | ) | 10.46 | 0.99% | 0.60% | 2.27% | 4.85 | % | 3,148 | 146 | % | |||||||||||||||||||||||||||||||
PL Income Fund |
| |||||||||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $10.92 | $0.32 | ($0.09 | ) | $0.23 | ($0.33 | ) | ($0.16 | ) | ($0.49 | ) | $10.66 | 1.16% | 0.90% | 3.03% | 2.27 | % | $221,086 | 120 | % | ||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 10.61 | 0.30 | 0.55 | 0.85 | (0.29 | ) | (0.25 | ) | (0.54 | ) | 10.92 | 1.17% | 0.90% | 2.76% | 8.13 | % | 333,987 | 171 | % | |||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 10.16 | 0.30 | 0.48 | 0.78 | (0.30 | ) | (0.03 | ) | (0.33 | ) | 10.61 | 1.35% | 0.90% | 2.94% | 7.79 | % | 247,522 | 199 | % | |||||||||||||||||||||||||||||||
12/31/2010 - 3/31/2011 | 10.00 | 0.09 | 0.16 | 0.25 | (0.09 | ) | — | (0.09 | ) | 10.16 | 1.77% | 0.90% | 3.62% | 2.46 | % | 5,300 | 142 | % | ||||||||||||||||||||||||||||||||
Class C |
| |||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $10.93 | $0.24 | ($0.10 | ) | $0.14 | ($0.25 | ) | ($0.16 | ) | ($0.41 | ) | $10.66 | 1.91% | 1.65% | 2.28% | 1.41 | % | $122,946 | 120 | % | ||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 10.62 | 0.22 | 0.55 | 0.77 | (0.21 | ) | (0.25 | ) | (0.46 | ) | 10.93 | 1.92% | 1.65% | 2.01% | 7.37 | % | 160,472 | 171 | % | |||||||||||||||||||||||||||||||
6/30/2011 - 3/31/2012 | 10.32 | 0.17 | 0.33 | 0.50 | (0.17 | ) | (0.03 | ) | (0.20 | ) | 10.62 | 2.07% | 1.65% | 2.17% | 4.89 | % | 76,726 | 199 | % | |||||||||||||||||||||||||||||||
Class I |
| |||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $10.93 | $0.35 | ($0.09 | ) | $0.26 | ($0.36 | ) | ($0.16 | ) | ($0.52 | ) | $10.67 | 0.76% | 0.65% | 3.28% | 2.53 | % | $1,187 | 120 | % | ||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 10.62 | 0.33 | 0.55 | 0.88 | (0.32 | ) | (0.25 | ) | (0.57 | ) | 10.93 | 0.77% | 0.65% | 3.01% | 8.39 | % | 1,794 | 171 | % | |||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 10.16 | 0.36 | 0.44 | 0.80 | (0.31 | ) | (0.03 | ) | (0.34 | ) | 10.62 | 0.95% | 0.65% | 3.42% | 7.95 | % | 1,292 | 199 | % | |||||||||||||||||||||||||||||||
12/31/2010 - 3/31/2011 | 10.00 | 0.10 | 0.15 | 0.25 | (0.09 | ) | — | (0.09 | ) | 10.16 | 1.37% | 0.65% | 3.87% | 2.48 | % | 51,231 | 142 | % | ||||||||||||||||||||||||||||||||
Advisor Class |
| |||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $10.95 | $0.35 | ($0.10 | ) | $0.25 | ($0.36 | ) | ($0.16 | ) | ($0.52 | ) | $10.68 | 0.91% | 0.65% | 3.28% | 2.53 | % | $69,489 | 120 | % | ||||||||||||||||||||||||||||||
6/29/2012 - 3/31/2013 | 10.79 | 0.24 | 0.41 | 0.65 | (0.24 | ) | (0.25 | ) | (0.49 | ) | 10.95 | 0.94% | 0.67% | 2.99% | 5.97 | % | 93,966 | 171 | % |
See Notes to Financial Statements | See explanation of references on C-13 |
C-11
PACIFIC LIFE FUNDS
FINANCIAL HIGHLIGHTS (Continued)
Selected per share, ratios and supplemental data for each year or period ended March 31, were as follows:
|
| Selected Per Share Data |
| Ratios to Average Net Assets | Supplemental Data | |||||||||||||||||||||||||||||||||||||||||||||
Investment Operations | Distributions | |||||||||||||||||||||||||||||||||||||||||||||||||
For the Year or Period Ended | Net Asset Value, Beginning of Year or Period | Net Investment Income (1) | Net Realized and Unrealized Gain | Total | Net Investment Income | Capital Gains | Total | Net Asset Value, End of Year or Period | Expenses Before Reductions (2) | Expenses After Reductions (2), (3) | Net Investment Income (2) | Total Returns (4) | Net Assets, End of Year or Period (in thousands) | Portfolio Turnover Rates | ||||||||||||||||||||||||||||||||||||
PL Strategic Income Fund |
| |||||||||||||||||||||||||||||||||||||||||||||||||
Class A |
| |||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $11.23 | $0.48 | $0.30 | $0.78 | ($0.49) | ($0.32) | ($0.81) | $11.20 | 1.43% | 1.05% | 4.34% | 7.25 | % | $37,896 | 190 | % | ||||||||||||||||||||||||||||||||||
6/29/2012 - 3/31/2013 | 10.53 | 0.38 | 0.98 | 1.36 | (0.36) | (0.30) | (0.66) | 11.23 | 1.47% | 1.05% | 4.55% | 13.12 | % | 20,963 | 353 | % | ||||||||||||||||||||||||||||||||||
Class C |
| |||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $11.22 | $0.40 | $0.30 | $0.70 | ($0.41) | ($0.32) | ($0.73) | $11.19 | 2.18% | 1.80% | 3.59% | 6.51 | % | $23,451 | 190 | % | ||||||||||||||||||||||||||||||||||
6/29/2012 - 3/31/2013 | 10.53 | 0.32 | 0.98 | 1.30 | (0.31) | (0.30) | (0.61) | 11.22 | 2.22% | 1.80% | 3.80% | 12.52 | % | 7,948 | 353 | % | ||||||||||||||||||||||||||||||||||
Class I |
| |||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $11.18 | $0.52 | $0.28 | $0.80 | ($0.51) | ($0.32) | ($0.83) | $11.15 | 1.03% | 0.80% | 4.59% | 7.51 | % | $1,686 | 190 | % | ||||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 10.40 | 0.52 | 1.09 | 1.61 | (0.53) | (0.30) | (0.83) | 11.18 | 1.22% | 0.80% | 4.80% | 15.94 | % | 22,099 | 353 | % | ||||||||||||||||||||||||||||||||||
12/19/2011 - 3/31/2012 | 10.00 | 0.14 | 0.38 | 0.52 | (0.12) | — | (0.12) | 10.40 | 1.78% | 0.80% | 4.84% | 5.22 | % | 17,796 | 156 | % | ||||||||||||||||||||||||||||||||||
Advisor Class |
| |||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $11.24 | $0.51 | $0.29 | $0.80 | ($0.52) | ($0.32) | ($0.84) | $11.20 | 1.18% | 0.80% | 4.59% | 7.42 | % | $9,302 | 190 | % | ||||||||||||||||||||||||||||||||||
6/29/2012 - 3/31/2013 | 10.53 | 0.40 | 0.97 | 1.37 | (0.36) | (0.30) | (0.66) | 11.24 | 1.24% | 0.82% | 4.78% | 13.31 | % | 1,575 | 353 | % | ||||||||||||||||||||||||||||||||||
PL Floating Rate Income Fund |
| |||||||||||||||||||||||||||||||||||||||||||||||||
Class A |
| |||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $10.46 | $0.40 | $0.04 | $0.44 | ($0.37) | ($0.02) | ($0.39) | $10.51 | 1.30% | 1.05% | 3.86% | 4.30 | % | $375,848 | 123 | % | ||||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 10.07 | 0.46 | 0.46 | 0.92 | (0.43) | (0.10) | (0.53) | 10.46 | 1.43% | 1.05% | 4.46% | 9.36 | % | 125,007 | 186 | % | ||||||||||||||||||||||||||||||||||
12/30/2011 - 3/31/2012 | 9.81 | 0.13 | 0.24 | 0.37 | (0.11) | — | (0.11) | 10.07 | 1.55% | 1.05% | 5.33% | 3.79 | % | 12,071 | 139 | % | ||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $10.45 | $0.33 | $0.04 | $0.37 | ($0.30) | ($0.02) | ($0.32) | $10.50 | 2.05% | 1.80% | 3.11% | 3.57 | % | $214,365 | 123 | % | ||||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 10.07 | 0.38 | 0.46 | 0.84 | (0.36) | (0.10) | (0.46) | 10.45 | 2.18% | 1.80% | 3.71% | 8.56 | % | 63,045 | 186 | % | ||||||||||||||||||||||||||||||||||
12/30/2011 - 3/31/2012 | 9.81 | 0.11 | 0.25 | 0.36 | (0.10) | — | (0.10) | 10.07 | 2.30% | 1.80% | 4.61% | 3.68 | % | 3,372 | 139 | % | ||||||||||||||||||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $10.47 | $0.43 | $0.05 | $0.48 | ($0.40) | ($0.02) | ($0.42) | $10.53 | 0.90% | 0.80% | 4.11% | 4.65 | % | $96,635 | 123 | % | ||||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 10.08 | 0.48 | 0.46 | 0.94 | (0.45) | (0.10) | (0.55) | 10.47 | 1.03% | 0.80% | 4.71% | 9.56 | % | 10,726 | 186 | % | ||||||||||||||||||||||||||||||||||
6/30/2011 - 3/31/2012 | 10.00 | 0.34 | 0.06 | 0.40 | (0.32) | — | (0.32) | 10.08 | 1.24% | 0.80% | 4.60% | 4.11 | % | 41,834 | 139 | % | ||||||||||||||||||||||||||||||||||
Class P | ||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $10.47 | $0.43 | $0.04 | $0.47 | ($0.40) | ($0.02) | ($0.42) | $10.52 | 0.90% | 0.80% | 4.11% | 4.53 | % | $249 | 123 | % | ||||||||||||||||||||||||||||||||||
12/31/2012 - 3/31/2013 | 10.29 | 0.12 | 0.16 | 0.28 | (0.10) | — | (0.10) | 10.47 | 0.99% | 0.80% | 4.70% | 2.74 | % | 14 | 186 | % | ||||||||||||||||||||||||||||||||||
Advisor Class |
| |||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $10.49 | $0.43 | $0.04 | $0.47 | ($0.40) | ($0.02) | ($0.42) | $10.54 | 1.05% | 0.80% | 4.11% | 4.54 | % | $368,122 | 123 | % | ||||||||||||||||||||||||||||||||||
6/29/2012 - 3/31/2013 | 10.12 | 0.36 | 0.45 | 0.81 | (0.34) | (0.10) | (0.44) | 10.49 | 1.15% | 0.80% | 4.70% | 8.13 | % | 35,648 | 186 | % | ||||||||||||||||||||||||||||||||||
PL Limited Duration High Income Fund (6) |
| |||||||||||||||||||||||||||||||||||||||||||||||||
Class A |
| |||||||||||||||||||||||||||||||||||||||||||||||||
7/31/2013 - 3/31/2014 | $10.00 | $0.26 | $0.22 | $0.48 | ($0.25) | ($0.01) | ($0.26) | $10.22 | 1.67% | 1.08% | 3.94% | 4.85 | % | $8,677 | 53% | |||||||||||||||||||||||||||||||||||
Class C |
| |||||||||||||||||||||||||||||||||||||||||||||||||
7/31/2013 - 3/31/2014 | $10.00 | $0.21 | $0.22 | $0.43 | ($0.22) | ($0.01) | ($0.23) | $10.20 | 2.42% | 1.83% | 3.19% | 4.28 | % | $2,442 | 53% | |||||||||||||||||||||||||||||||||||
Class I |
| |||||||||||||||||||||||||||||||||||||||||||||||||
7/31/2013 - 3/31/2014 | $10.00 | $0.28 | $0.21 | $0.49 | ($0.26) | ($0.01) | ($0.27) | $10.22 | 1.27% | 0.83% | 4.19% | 4.87 | % | $22,227 | 53% | |||||||||||||||||||||||||||||||||||
Advisor Class |
| |||||||||||||||||||||||||||||||||||||||||||||||||
7/31/2013 - 3/31/2014 | $10.00 | $0.28 | $0.21 | $0.49 | ($0.27) | ($0.01) | ($0.28) | $10.21 | 1.42% | 0.83% | 4.19% | 4.89 | % | $1,860 | 53% |
See Notes to Financial Statements | See explanation of references on C-13 |
C-12
PACIFIC LIFE FUNDS
FINANCIAL HIGHLIGHTS (Continued)
Selected per share, ratios and supplemental data for each year or period ended March 31, were as follows:
|
| Selected Per Share Data |
| Ratios to Average Net Assets | Supplemental Data | |||||||||||||||||||||||||||||||||||||||||||||
Investment Operations | Distributions | |||||||||||||||||||||||||||||||||||||||||||||||||
For the Year or Period Ended | Net Asset Value, Beginning of Year or Period | Net Investment Income (1) | Net Realized and Unrealized Gain | Total | Net Investment Income | Capital Gains | Total | Net Asset Value, End of Year or Period | Expenses Before Reductions (2) | Expenses After Reductions (2), (3) | Net Investment Income (2) | Total Returns (4) | Net Assets, End of Year or Period (in thousands) | Portfolio Turnover Rates | ||||||||||||||||||||||||||||||||||||
PL High Income Fund |
| |||||||||||||||||||||||||||||||||||||||||||||||||
Class A |
| |||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $11.16 | $0.56 | $0.25 | $0.81 | ($0.55 | ) | ($0.20 | ) | ($0.75 | ) | $11.22 | 1.67% | 1.05% | 5.03% | 7.50 | % | $6,441 | 99 | % | |||||||||||||||||||||||||||||||
6/29/2012 - 3/31/2013 | 10.57 | 0.46 | 0.84 | 1.30 | (0.44 | ) | (0.27 | ) | (0.71 | ) | 11.16 | 1.87% | 1.05% | 5.57% | 12.59 | % | 3,497 | 154 | % | |||||||||||||||||||||||||||||||
Class C |
| |||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $11.16 | $0.47 | $0.25 | $0.72 | ($0.47 | ) | ($0.20 | ) | ($0.67 | ) | $11.21 | 2.42% | 1.80% | 4.28% | 6.65 | % | $5,245 | 99 | % | |||||||||||||||||||||||||||||||
6/29/2012 - 3/31/2013 | 10.57 | 0.40 | 0.85 | 1.25 | (0.39 | ) | (0.27 | ) | (0.66 | ) | 11.16 | 2.62% | 1.80% | 4.82% | 12.11 | % | 2,203 | 154 | % | |||||||||||||||||||||||||||||||
Class I |
| |||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $11.09 | $0.58 | $0.24 | $0.82 | ($0.57 | ) | ($0.20 | ) | ($0.77 | ) | $11.14 | 1.27% | 0.80% | 5.28% | 7.72 | % | $9,493 | 99 | % | |||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 10.58 | 0.63 | 0.82 | 1.45 | (0.67 | ) | (0.27 | ) | (0.94 | ) | 11.09 | 1.78% | 0.80% | 5.82% | 14.21 | % | 8,810 | 154 | % | |||||||||||||||||||||||||||||||
12/19/2011 - 3/31/2012 | 10.00 | 0.20 | 0.55 | 0.75 | (0.17 | ) | — | (0.17 | ) | 10.58 | 2.82% | 0.80% | 6.73% | 7.50 | % | 7,523 | 93 | % | ||||||||||||||||||||||||||||||||
Advisor Class |
| |||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $11.18 | $0.58 | $0.24 | $0.82 | ($0.57 | ) | ($0.20 | ) | ($0.77 | ) | $11.23 | 1.42% | 0.80% | 5.28% | 7.67 | % | $3,064 | 99 | % | |||||||||||||||||||||||||||||||
6/29/2012 - 3/31/2013 | 10.57 | 0.48 | 0.85 | 1.33 | (0.45 | ) | (0.27 | ) | (0.72 | ) | 11.18 | 1.63% | 0.81% | 5.81% | 12.87 | % | 279 | 154 | % |
(1) | Net investment income (loss) per share has been calculated using the average shares method. |
(2) | The ratios are annualized for periods of less than one full year. |
(3) | The ratios of expenses after expense reductions to average net assets are after any advisory fee waivers and adviser expense reimbursements, as discussed in Notes 5 and 6B in Notes to Financial Statements. The expense ratios for all the PL Portfolio Optimization Funds do not include fees and expenses of the underlying funds (see Note 1 in Notes to Financial Statements) in which the PL Portfolio Optimization Funds invest. |
(4) | The total returns include reinvestment of all dividends and capital gains distributions, if any, and do not include deductions of any applicable sales charges. Total returns are not annualized for periods less than one full year. |
(5) | Amount represents less than $0.005 per share. |
(6) | All share classes of the PL Limited Duration High Income Fund commenced operations on July 31, 2013. |
See Notes to Financial Statements |
C-13
PACIFIC LIFE FUNDS
1. ORGANIZATION
Pacific Life Funds (the “Trust”) is a Delaware statutory trust, which was formed on May 21, 2001, and is registered under the Investment Company Act of 1940 (“1940 Act”), as amended, as an open-end management investment company. Pacific Life Fund Advisors LLC (“PLFA” or “Adviser”) serves as investment adviser to the Trust. As of March 31, 2014, the Trust was comprised of thirty-three separate funds, eleven of which are presented in these financial statements (each individually, a “Fund”, and collectively the “Funds”): PL Portfolio Optimization Conservative Fund, PL Portfolio Optimization Moderate-Conservative Fund, PL Portfolio Optimization Moderate Fund, PL Portfolio Optimization Moderate-Aggressive Fund, PL Portfolio Optimization Aggressive Fund (collectively, the “Portfolio Optimization Funds”); and the PL Short Duration Income Fund, PL Income Fund, PL Strategic Income Fund, PL Floating Rate Income Fund, PL Limited Duration High Income Fund and PL High Income Fund.
The Portfolio Optimization Funds offer Class A, Class B, Class C, Class R and Advisor Class shares. Each class is distinguished by its applicable sales charges and level of distribution and/or service fees (see Note 5) and in general: (i) Class A shares are subject to a maximum 5.50% front-end sales charge; (ii) Class B shares are subject to a maximum 5.00% contingent deferred sales charge (“CDSC”); (iii) Class C shares are subject to a maximum 1.00% CDSC; and (iv) Class R shares and Advisor Class shares are sold at net asset value (“NAV”) without a sales charge. The sales charge for Class A shares is reduced for purchases of $50,000 or more and may be waived in certain circumstances. There is no sales charge for Class A shares for purchases of $1 million or more, although there is a CDSC of 1.00% on redemptions of such Class A shares within one year of purchase, which may be waived in certain circumstances.
The PL Short Duration Income Fund, PL Income Fund, PL Strategic Income Fund, PL Floating Rate Income Fund, PL Limited Duration High Income Fund and PL High Income Fund offer Class A, Class C, Class I and Advisor Class shares. Additionally, the PL Floating Rate Income Fund offers Class P shares. Each class is distinguished by its applicable sales charges and level of distribution and/or service fees (see Note 5) and in general: (i) Class A shares of the PL Short Duration Income, PL Floating Rate Income and PL Limited Duration High Income Funds are subject to a maximum 3.00% front-end sales charge, and Class A shares of the PL Income, PL Strategic Income and PL High Income Funds are subject to a maximum 4.25% front-end sales charge; (ii) Class C shares are subject to a maximum 1.00% CDSC; and (iii) Class I, Class P and Advisor Class shares are sold at NAV without a sales charge. The sales charge for Class A shares is reduced for purchases of $100,000 or more and may be waived in certain circumstances. There is no sales charge for Class A shares for purchases of $500,000 or more, although there is a CDSC of 1.00% of such Class A shares within one year of purchase, which may be waived in certain circumstances.
The Trust’s distributor receives all net commissions (front-end sales charges and CDSCs) from the sales of all applicable share classes (see Note 5).
The Portfolio Optimization Funds invest their assets in Class P shares of other funds of the Trust (collectively, the “PL Underlying Funds”).
There is a separate annual report containing the financial statements for the PL Underlying Funds, which is available without charge. For information on how to obtain the annual report for the PL Underlying Funds, see the Where to Go for More Information section of this report on page F-18.
2. SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for investment companies. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the Trust in the preparation of the financial statements.
A. INVESTMENT TRANSACTIONS AND INCOME
Investment transactions are recorded on a trade date basis. Securities purchased or sold on a when-issued or delayed-delivery basis as well as certain loan transactions and mortgage securities (such as Government National Mortgage Association (“GNMA”) securities) may be settled a month or more after the trade date. Dividend income is recorded on the ex-dividend date, except certain dividends from foreign securities, which are recorded as soon as a Fund is informed of the ex-dividend date or upon receipt of the dividend. A Fund’s estimated components of distributions received from real estate investment trusts may be considered income, return of capital distributions or capital gain distributions. Return of capital distributions are recorded as a reduction of cost of the related investments. Interest income, adjusted for amortization of premium and accretion of discount, is recorded daily on an accrual basis. Investment income is recorded net of foreign taxes withheld, if any. A Fund may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. A Fund will accrue such taxes and reclaims as applicable, based upon the current interpretation of tax rules and regulations that exist in the markets in which a Fund invests. Facility fees and other fees (such as origination fees) received from senior loans purchased (see Note 4) by a Fund are amortized over the expected term of each applicable senior loan. Commitment fees received by a Fund relating to unfunded senior loan commitments are amortized to income over the period of the commitment. Consent fees, which are compensation for agreeing to changes in the terms of debt instruments, are recorded as interest income when received. Realized gains and losses from investment transactions are recorded on the basis of identified cost, which is also used for Federal income tax purposes. Gains and losses realized on principal paydowns from mortgage-backed and asset-backed securities are recorded as interest income.
B. DISTRIBUTIONS TO SHAREHOLDERS
For the Portfolio Optimization Funds, dividends on net investment income, if any, are generally declared and paid annually. For the PL Short Duration Income Fund, PL Income Fund, PL Strategic Income Fund, PL Floating Rate Income Fund, PL Limited Duration High Income Fund and PL High Income Fund, dividends, if any, are generally declared and paid monthly. Dividends may be declared more or less frequently if advantageous to the specific Fund and its shareholders.
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All realized capital gains are distributed at least annually for each Fund. Dividends and distributions paid to shareholders are recorded on the ex-dividend date.
C. FOREIGN CURRENCY TRANSLATION
The Trust’s accounting records are maintained in U.S. dollars. The market value of investments and other assets and liabilities, denominated in non-U.S. currencies, are translated into U.S. dollars based on the applicable exchange rates at the end of each business day. Purchases and sales of investments and income and expenses, denominated in foreign currencies, are translated into U.S. dollars at the exchange rates in effect on the transaction date.
None of the Funds separately report the effect of changes in foreign exchange rates from changes in market prices of investments held. Such changes are included with the net realized gain or loss and change in net unrealized appreciation or depreciation on investments. Other foreign currency transactions resulting in realized and unrealized gain or loss, if any, are reported separately as net realized gain or loss on foreign currency transactions and change in net unrealized appreciation or depreciation on foreign currencies.
D. ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES
Income, non-class specific expenses, and realized and unrealized gains and losses are allocated on a daily basis to each class of shares based upon the relative portion of net assets of each class. Certain Trust expenses directly attributable to a particular Fund are charged to that Fund (such as Fund-specific transactional fees, proxies, liquidations, litigation, and organizational/start-up costs) and class-specific fees and expenses are charged directly to the respective share class within each Fund. Generally, other Trust expenses are allocated proportionately among all the Funds in relation to the net assets of each Fund.
E. OFFERING COSTS
A new Fund bears all costs (or the applicable pro-rata share if there is more than one new Fund) associated with the offering expenses of the Fund including legal, printing and support services (see Notes 5 and 6A). All such costs are amortized as an expense of the new Fund on a straight-line basis over twelve months from commencement of operations.
3. VALUATION AND FAIR VALUE MEASUREMENTS
A. VALUATION POLICY
The Trust’s Board of Trustees (the “Board”) has adopted a policy (“Valuation Policy”) for determining the value of the Trust’s investments each business day. Under the Valuation Policy, the Board has delegated certain functions to the Trustee Valuation Committee (“TVC”) and the Valuation Oversight Committee (“VOC”) or its delegate to determine the fair value of certain investments. Each valuation committee that values each Fund’s investments, which includes using third party pricing services and/or approved alternate valuation methodologies, does so in accordance with the Valuation Policy. Notes 3B and 3C below describe in greater detail the methodologies used to value each Fund’s investments.
B. NET ASSET VALUE
Each Fund of the Trust is divided into shares and share classes. The price per share of each class of a Fund’s shares is called the NAV. The NAV forms the basis for all transactions involving buying, selling, exchanging or reinvesting shares. Each Fund’s NAV is calculated by taking the total value of a Fund’s assets, subtracting a Fund’s liabilities, and dividing by the total number of shares outstanding.
Each Fund’s NAV is calculated once per day, every day the New York Stock Exchange (“NYSE”) is open, including days when foreign markets and/or bond markets are closed. For purposes of calculating the NAV, the value of investments held by each Fund is generally determined as of the time of the close of the NYSE, which is usually 4:00 p.m. Eastern Time. Information that becomes known to the Trust or its agents after the close of the NYSE on a particular day will not normally be used to retroactively adjust the price of an investment for that same business day.
Each Fund’s NAV will not be calculated on days when the NYSE is closed. There may be a delay in calculating the NAV if: (i) the NYSE is closed on a day other than a regular holiday or weekend, (ii) trading on the NYSE is restricted, (iii) an emergency exists (as determined by the Securities and Exchange Commission (“SEC”)), making the sale of investments or determinations of NAV not practicable, or (iv) the SEC permits a delay for the protection of shareholders.
Certain Funds may hold investments that are primarily listed on foreign exchanges. Because those investments trade on weekends and other days when the Funds do not calculate their NAVs, the value of those investments may change on days when a shareholder will not be able to purchase or redeem Fund shares.
C. INVESTMENT VALUATION
The value of each security or other investment is the amount which a Fund might reasonably expect to receive for the investment upon its current sale in the ordinary course of business. For purposes of calculating the NAV, the value of investments held by each Fund is based primarily on pricing data obtained from various sources approved by the Board.
Portfolio Optimization Funds
The investments of each Portfolio Optimization Fund consist of Class P shares of the applicable PL Underlying Funds they hold, which are valued at their respective NAVs.
Money Market Instruments and Short-Term Investments
Money market instruments and short-term investments maturing within 60 days are valued at amortized cost in accordance with the 1940 Act. Amortized cost involves valuing an investment at cost on the date of acquisition and thereafter assuming a constant accretion of a discount or
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amortization of a premium to maturity, regardless of the impact of fluctuating interest rates on the market value of the instrument. While this method provides consistency in valuation (and may only be used if it approximates market value), it may result in periods during which the value, as determined by amortized cost, is higher or lower than the price that would be received if the Fund sold the investment. Fund investments in other mutual funds for temporary cash management purposes are valued at their respective NAVs.
Domestic Equity Investments
For domestic equity investments (including exchange-traded funds), the Trust uses the last reported sale price or official closing price from an exchange as of the time of the NYSE close and do not normally take into account trading, clearances or settlements that take place after the NYSE close. Investments, for which no sales are reported, are generally valued at the mean between the most recent bid and ask prices obtained from approved pricing services, established market makers, or from broker-dealers.
Domestic and Foreign Debt Investments
Debt investments are generally valued using the mean between bid and ask prices provided by approved pricing and quotation services, which are based upon evaluated prices determined from various observable market and other factors. Certain debt investments are valued using benchmark, matrix, or other pricing methodologies approved pursuant to the Valuation Policy.
Investment Values Determined by a Valuation Committee
The Valuation Policy includes methodologies approved for valuing investments in circumstances where market quotations are not readily available. In such circumstances, the Valuation Policy provides that the value of such investments may be determined in accordance with Board approved formulas and methodologies (“Alternate Valuation Methodologies”). Under the Valuation Policy these Alternate Valuation Methodologies may include, among others, the use of broker quotes, the use of purchase prices for initial public offerings, and benchmark and matrix pricing. In the event market quotations or Alternate Valuation Methodologies are not readily available or are determined to be unreliable, the value of the investments will be determined in good faith by the TVC, or determined by the VOC or its delegate pursuant to the Valuation Policy and then subsequently submitted for approval or ratification to either the TVC or the Board. Valuations determined by the TVC or the VOC or its delegate may require subjective inputs about the value of such investments. While these valuations are intended to estimate the value a Fund might reasonably expect to receive upon the current sale of the investments in the ordinary course of business, such values may differ from the value that a Fund would actually realize if the investments were sold or values that would be obtained if a different valuation methodology had been used.
Market quotations are considered not readily available if: (i) the market quotations received are deemed unreliable or inaccurate, (ii) approved pricing services do not provide a valuation for a particular investment, or (iii) material events occur after the close of the principal market for a particular investment but prior to the close of the NYSE.
D. FAIR VALUE MEASUREMENTS AND DISCLOSURES
The Trust characterizes its investments as Level 1, Level 2 or Level 3 based upon the various inputs or methodologies used to value the investments. Under the Valuation Policy, the VOC determines the level in which each Fund’s investments are characterized. The VOC includes investment, legal and compliance members of the Trust’s Adviser, accounting members of the Trust’s Administrator, and the Trust’s Chief Compliance Officer (“CCO”). The three-tier hierarchy of inputs is summarized in the three broad levels listed below:
• Level 1 - | Quoted prices (unadjusted) in active markets for identical investments |
• Level 2 - | Significant observable market-based inputs, other than Level 1 quoted prices, or unobservable inputs that are corroborated by market data |
• Level 3 - | Significant unobservable inputs that are not corroborated by observable market data |
The VOC reviews the Valuation Policy periodically (at least annually) to determine the appropriateness of the pricing methodologies used to value each Fund’s investments. The VOC also periodically evaluates how the Trust’s investments are characterized within the three-tier hierarchy and the appropriateness of third party pricing sources. The VOC also periodically (at least annually) conducts back testing of the value of various Level 2 and Level 3 investments to evaluate the effectiveness of the pricing methodologies including the unobservable inputs used to value those investments. Such back-testing includes comparing Level 2 and Level 3 investment values to subsequently available exchange- traded prices, transaction prices, and/or observable vendor prices. All changes to the Valuation Policy are reported to the Board on a quarterly basis with material changes, as determined by the Trust’s CCO, requiring approval by the Board.
The inputs or methodologies used for characterizing each Fund’s investments within the three-tier hierarchy are not necessarily an indication of the relative risks associated with investing in those investments. For example, money market instruments are valued using amortized cost in accordance with the rules under the 1940 Act. Generally, amortized cost approximates the current fair value of an investment, but since the value is not obtained from a quoted price in an active market, such investments are reflected as Level 2. For fair valuations using significant unobservable inputs, the Trust presents a reconciliation of the beginning to ending balances for reported market values that presents changes attributable to total realized and unrealized gains or losses, purchase and sales, and transfers in and out of Level 3 during the period. Transfers in and out between levels are based on values at the end of the period. The Trust also discloses the amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. A reconciliation of Level 3 investments is presented only when a Fund had an amount of Level 3 investments at the beginning and/or end of the reporting period that was meaningful in relation to its net assets. The amounts and reasons for all transfers in and out of each level within the three-tier hierarchy are disclosed only when a Fund had an amount of total transfers during the reporting period that was meaningful in relation to its net assets as of the end of the reporting period. A summary of each Fund’s investments as of March 31, 2014 as categorized under the three-tier hierarchy of inputs, and the reconciliation of Level 3 investments and information on transfers in and out of each level, if applicable, can be found in the Notes to Schedule of Investments section of each Fund’s Schedule of Investments.
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The following is a description of valuation inputs and techniques that the Trust currently utilizes to fair value each major category of assets and liabilities:
Equity Securities (Common and Preferred Stock) and Mutual Funds
Equity securities (foreign or domestic) that are actively traded on a securities exchange are fair valued based on quoted prices from the applicable exchange, and to the extent valuation adjustments are not applied to these securities, they are categorized as Level 1. Equity securities traded on inactive markets and certain foreign equity securities are fair valued using significant other observable inputs which include broker-dealer quotes, recently executed transactions adjusted for changes in the benchmark index, or evaluated price quotes received from pricing vendors that take into account the integrity of the market sector and issuer, the individual characteristics of the security, and information received from broker-dealers and other market sources pertaining to the issuer or security. To the extent that these inputs are observable and timely, the fair values of these securities would be categorized as Level 2; otherwise the fair values would be categorized as Level 3.
Investments in registered mutual funds, including affiliated mutual funds, are valued at their respective NAV and are categorized as Level 1.
U.S. Treasury Obligations
U.S. Treasuries are fair valued based on pricing models that evaluate the mean between the most recently published bid and ask price from market data sources. The models also take into consideration data received from active market makers and inter-dealer brokers and yield curves. Yield curves change daily in response to market conditions and are generally obtained from the new issue market and broker-dealer sources. To the extent that these inputs are observable and timely, the fair values of U.S. Treasury obligations would be categorized as Level 2; otherwise the fair values would be categorized as Level 3.
Mortgage-Backed Securities and Asset-Backed Securities
Mortgage-backed securities, including government sponsored enterprises, are fair valued using pricing models based on inputs that include issuer type, coupon, and cash flows, mortgage prepayment projection tables and adjustable rate mortgage evaluations that incorporate index data, periodic and life caps, the next coupon reset date, and the convertibility of the bond. To the extent that these inputs are observable and timely, the fair values of mortgage-backed securities would be categorized as Level 2; otherwise the fair value would be categorized as Level 3.
Asset-backed securities and collateralized mortgage obligations are fair valued using pricing models based on a security’s average life volatility. The models also take into account tranche characteristics such as coupon average life, collateral types, ratings, the issuer and tranche type, underlying collateral and performance of the collateral, and discount margin for certain floating rate issues. To the extent that these inputs are observable and timely, the fair values of asset-backed securities and collateralized mortgage obligations would be categorized as Level 2; otherwise the fair values would be categorized as Level 3.
Foreign Government Bonds and Notes
Foreign government bonds and notes are fair valued based on discounted cash flow models that incorporate option adjusted spreads along with benchmark curves and credit spreads. In addition, international bond markets are monitored daily for information pertaining to the issuer and/or the specific issue. To the extent that these inputs are observable and timely, the fair values of foreign government bonds and notes would be categorized as Level 2; otherwise the fair values would be categorized as Level 3.
Corporate Bonds and Notes and U.S. Government Agency Issues
Corporate bonds held by a Fund are generally comprised of two main categories: investment grade bonds and high yield bonds. Investment grade bonds are reported at fair value using various inputs and techniques, which include broker-dealer quotations, live trading levels, recently executed transactions in securities of the issuer or comparable issuers, issuer credit information and option-adjusted spread models where applicable. Fair values for high yield bonds are based primarily on broker-dealer quotations from relevant market makers and recently executed transactions in securities of the issuer or comparable issuers. The broker-dealer quotations received are supported by credit analysis of the issuer that takes into consideration credit quality assessments, daily trading activity, and the activity of the underlying equities, listed bonds and sector-specific trends. To the extent that these inputs are observable and timely, the fair values of corporate bonds would be categorized as Level 2; otherwise the fair values would be categorized as Level 3.
U.S. Government Agency Issues are reported at fair value using various inputs and techniques, which include broker-dealer quotations, live trading levels, recently executed transactions in securities of the issuer, issuer credit information, and option-adjusted spread models where applicable. To the extent that these inputs are observable and timely, the fair values of U.S. Government Agency Issues would be categorized as Level 2; otherwise the fair values would be categorized as Level 3.
Senior Loan Notes
Floating rate senior loans (“Senior Loans”) are fair valued based on a quoted price received from a single broker-dealer or an average of quoted prices received from multiple broker-dealers or valued relative to other benchmark securities when broker-dealer quotes are unavailable. To the extent that these inputs are observable, the fair values of Senior Loans would be categorized as Level 2; otherwise the fair values would be categorized as Level 3.
Short-Term Investments
Short-term investments maturing within 60 days are valued using amortized cost, which is used if it approximates market value, and are categorized as Level 2.
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4. INVESTMENTS AND RISKS
General Investment Risks
An investment in each Fund represents an indirect investment in the assets owned by that Fund. As with any mutual fund, the value of the assets owned by each Fund may move up or down, and as a result, an investment in a Fund at any point in time may be worth more or less than the original amount invested. Events in the financial markets have the potential to cause increased volatility and uncertainty, which may impact the value of each Fund’s investments. Due to interdependencies between markets, events in one market may adversely impact other markets or issuers in unforeseen ways. As a result, the value of each Fund’s investments may be adversely affected by events in the markets, either directly or indirectly, and each Fund is exposed to potential decreases in the value of those investments. In addition, traditionally liquid investments may experience periods of diminished liquidity. Governmental and regulatory responses to market events may impair the Adviser’s ability to pursue certain investment techniques or strategies and may have unexpected consequences on particular markets, strategies, or investments. Future events may impact a Fund in unforeseen ways, leading a Fund to alter its existing strategies or, potentially, to liquidate and close.
Fund of Funds Investments
The Portfolio Optimization Funds are exposed to the same risks as the PL Underlying Funds in direct proportion to the allocation of assets among those funds. The annual report for the PL Underlying Funds contains information about the risks associated with investing in the PL Underlying Funds. Allocations among the PL Underlying Funds are determined using an asset allocation process, which seeks to optimize returns by allocating among different asset classes given various levels of risk tolerance. The allocations of the Portfolio Optimization Funds may not effectively decrease risk or increase returns for investors, and the selection and weighting of allocations to asset classes and/or PL Underlying Funds may cause them to underperform other mutual funds with a similar investment objective. Although the Portfolio Optimization Funds seek to provide diversification across major asset classes, they may invest a significant portion of their assets in any one or several PL Underlying Funds (See Note 6C).
Equity Investments
The price of equity investments change in response to many factors, including a company’s historical and prospective earnings, cash flows, the value of its assets, investor perceptions and many of the factors discussed in General Investment Risks above.
Debt Investments
Debt investments are affected primarily by the financial condition of the companies or other entities that have issued them and by changes in interest rates, although the factors noted above may also have a significant impact on debt investments. There is a risk that an issuer of a Fund’s debt investments may not be able to meet its financial obligations (e.g., may not be able to make principal and/or interest payments when they are due or otherwise default on other financial terms) and/or go bankrupt. Securities such as high-yield/high-risk bonds, e.g., bonds with low credit ratings by Moody’s (Ba or lower) or Standard & Poor’s (BB and lower) or if unrated are of comparable quality as determined by the manager, are especially subject to credit risk during periods of economic uncertainty or during economic downturns and are more likely to default on their interest and/or principal payments than higher rated securities. Debt investments may be affected by changes in interest rates. Debt investments with longer durations tend to be more sensitive to changes in interest rates, making them more volatile than debt investments with shorter durations or floating or adjustable interest rates. The value of debt investments may fall when interest rates rise. Given the historically low interest rate environment in the U.S., risks associated with rising interest rates are heightened. Certain monetary policies enacted by the Federal Reserve (“Fed”) can have a significant impact on the financial markets and the Trust. The Fed’s tapering of its monetary stimulus quantitative easing (“QE”) program, by gradually winding down its bond purchases, may result in periods of dramatic market volatility and may negatively impact the value of debt securities. Additionally, new regulations applicable to and changing business practices of broker-dealers that make markets in debt investments may result in those broker-dealers restricting their market making activities for certain debt investments, which may reduce the liquidity and increase the volatility of such debt investments.
Certain asset-backed instruments, such as collateralized debt obligations, collateralized mortgage obligations and other mortgage-related securities, structured investment vehicles and other debt investments may have exposure to subprime loans or subprime mortgages, which are loans to persons with lower credit ratings. These instruments may present credit risk that is not transparent and that is greater than indicated by their ratings. The value of these instruments may be more acutely affected by downturns in the credit markets or the real estate market than certain other investments, and it may be difficult to value these instruments because of a thin secondary market.
Foreign Investments
There are certain additional risks involved in investing in foreign securities that are generally not inherent in investments in domestic securities. These risks may involve foreign currency fluctuations, adverse political, social and economic developments and the possible imposition of currency exchange blockages or other foreign governmental laws or restrictions. In addition, the securities of some foreign companies and securities markets are less liquid and at times more volatile than securities of comparable U.S. companies and U.S. securities markets. The markets in emerging markets countries can be extremely volatile.
Senior Loan Participations and Assignments
Certain Funds may invest in Senior Loans of domestic or foreign corporations, partnerships and other entities (“Borrowers”), the interest rates of which float or adjust periodically based upon a specified adjustment schedule, benchmark indicator, or prevailing interest rates. Senior Loans generally pay interest at rates which are periodically redetermined by reference to a base lending rate plus a premium. These base lending rates generally include prime rates of one or more major U.S. banks, London Interbank Offered Rates (“LIBOR”) or certificates of deposit rates. Senior Loans often require prepayments from excess cash flow or permit the Borrower to repay at its election. The degree to which Borrowers repay cannot be predicted with accuracy. As a result, the actual maturity may be substantially less than the stated maturities. Senior Loans are
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exempt from registration under the Securities Act of 1933, may contain certain restrictions on resale, and cannot be sold publicly. A Fund’s investments in Senior Loans may be in the form of participations in loans or assignments of all or a portion of loans from third parties.
When a Fund purchases assignments, it acquires all the rights and obligations under the loan agreement of the assigning lender. Assignments may, however, be arranged through private negotiations between potential assignees and potential assignors, and the rights and obligations acquired by the purchaser of an assignment may differ from, and be more limited than those held by the assigning lender.
When a Fund purchases a participation of a Senior Loan interest, the Fund typically enters into a contractual agreement with the lender or other third party selling the participation. A participation interest in Senior Loans includes the right to receive payments of principal, interest and any fees to which it is entitled from the lender and only upon receipt by the lender of payments from the Borrower, but not from the Borrower directly. When investing in a participation interest, if a Borrower is unable to meet its obligations under a loan agreement, a Fund generally has no right to enforce compliance with the terms of the loan agreement. As a result, the Fund assumes the credit risk of the Borrower, the selling participant, and any other persons that are interpositioned between the Fund and the Borrower. If the lead lender in a typical lending syndicate becomes insolvent, enters Federal Deposit Insurance Corporation (“FDIC”) receivership or, if not FDIC insured, enters into bankruptcy, the Fund may incur certain costs and delays in receiving payment or may suffer a loss of principal and/or interest. As of March 31, 2014, no participation interest in Senior Loans was held by any of the Funds presented in these financial statements.
U.S. Government Agencies or Government-Sponsored Enterprises
Certain Funds may invest in 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. The U.S. Government does not guarantee the NAV of each Fund’s shares. Some U.S. Government securities, such as Treasury Bills, Treasury Notes, Treasury 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 Bank, are supported by the right of the issuer to borrow from the U.S. Department of the Treasury (the “U.S. Treasury”); 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. Securities not backed by the full faith and credit of the U.S. Government may be subject to a greater risk of default. U.S. Government securities may include zero coupon securities, which do not distribute interest on a current basis and tend to be subject to greater risk than interest-paying securities of similar maturities.
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, the common stock of which is owned entirely by private stockholders. 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.
5. INVESTMENT ADVISORY, ADMINISTRATION AND SHAREHOLDER SERVICES, SUPPORT SERVICES AND DISTRIBUTION AGREEMENTS
Pursuant to an Investment Advisory Agreement, PLFA, a wholly-owned subsidiary of Pacific Life Insurance Company (“Pacific Life”), serves as Adviser to the Trust. PLFA manages the Portfolio Optimization Funds. PLFA also manages the PL Short Duration Income Fund, PL Income Fund, PL Strategic Income Fund, PL Floating Rate Income Fund, PL Limited Duration High Income Fund and PL High Income Fund under the name Pacific Asset Management. PLFA receives advisory fees from each Fund based on the following advisory fee rates, which are based on an annual percentage of average daily net assets of each Fund:
PL Portfolio Optimization Conservative | 0.20% | PL Portfolio Optimization Aggressive | 0.20% | PL Floating Rate Income | 0.65% | |||||
PL Portfolio Optimization Moderate-Conservative | 0.20% | PL Short Duration Income | 0.40% | PL Limited Duration High Income (1) | 0.65% | |||||
PL Portfolio Optimization Moderate | 0.20% | PL Income | 0.50% | PL High Income | 0.60% | |||||
PL Portfolio Optimization Moderate-Aggressive | 0.20% | PL Strategic Income | 0.60% |
(1) | PLFA agreed to waive 0.02% of its advisory fee through July 31, 2014 for the PL Limited Duration High Income Fund. The agreement will terminate if the investment advisory agreement is terminated or upon approval by the Board. There is no guarantee that PLFA will continue such waivers after that date. |
Pursuant to an Administration and Shareholder Services Agreement (the “Administration Agreement”), Pacific Life serves as administrator (the “Administrator”) to the Trust. During the reporting period, the Trust paid the Administrator an administration fee at an annual rate of 0.15% for each class of the Portfolio Optimization Funds (which invest in the PL Underlying Funds that also have an administration fee at an annual rate of 0.15%), for Class I shares of the PL Short Duration Income Fund, PL Income Fund, PL Strategic Income Fund, PL Floating Rate Income Fund, PL Limited Duration High Income Fund and PL High Income Fund and for Class P shares of the PL Floating Rate Income Fund. The Trust also compensated the Administrator at an annual rate of 0.30% for Class A, Class C and Advisor Class shares of the PL Short Duration
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PACIFIC LIFE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
Income Fund, PL Income Fund, PL Strategic Income Fund, PL Floating Rate Income Fund, PL Limited Duration High Income Fund and PL High Income Fund. The administration fee is for procuring or providing administrative, transfer agency, and shareholder services. In addition, Pacific Life and PLFA provide support services to the Trust that are outside the scope of the Administrator’s and Adviser’s responsibilities under the Administration Agreement and Investment Advisory Agreement. Under the Support Services Agreement, the Trust compensated Pacific Life and PLFA for their expenses in providing support services to the Trust in connection with various matters, some of which include the time spent by legal, accounting, and compliance personnel of Pacific Life and PLFA (including individuals who may be officers or Trustees of the Trust), to attend meetings of the Board and to provide assistance with the coordination and supervision in connection with the services procured for the Trust under the Administration Agreement. Support services do not include services for which PLFA is responsible pursuant to the Investment Advisory Agreement. The Trust reimbursed Pacific Life and PLFA for these support services on an approximate cost basis.
Pursuant to a Distribution Agreement, Pacific Select Distributors, Inc. (the “Distributor”), a wholly-owned subsidiary of Pacific Life, serves as distributor of the Trust’s shares. Under the Distribution Agreement, the Distributor bears all expenses of providing services, including costs of sales presentations, mailings, advertisements, and other marketing efforts by the Distributor in connection with the distribution or sale of the Trust’s shares and makes distribution and/or service payments to selling groups in connection with the sale of certain of the Trust’s shares and subsequent servicing needs of shareholders provided by selling groups. The Distributor received distribution and service fees pursuant to class- specific distribution and service plans, each adopted in accordance with Rule 12b-1 (12b-1) under the 1940 Act (together the “12b-1 Plans”) for Class B, C and R shares. The Distributor also received service fees pursuant to a non-12b-1 Class A Service Plan (“Class A Plan”). Under the 12b-1 Plans, each Fund paid to the Distributor both distribution and service fees at an annual rate expressed as a percentage of average daily net assets. The distribution fee was 0.75% for Class B and C shares and 0.25% for R shares.
The service fee was 0.25% for Class B, C, and R shares. Under the Class A Plan, each Fund paid the Distributor service fees at an annual rate of 0.25% of the average daily net assets attributable to the applicable share class. There are no distribution and service fees for Class I, Class P, and Advisor Class shares. The distribution and service fees were accrued daily. For the year ended March 31, 2014, the Distributor, acting as underwriter, received net commissions (front-end sales charges) of $20,632,272 from the sale of Class A shares and received $986,025 in CDSC from redemptions of Class A, B and C shares.
6. TRANSACTIONS WITH AFFILIATES
A. ADVISORY FEES, ADMINISTRATION FEES, DISTRIBUTION AND/OR SERVICE FEES AND EXPENSES FOR SUPPORT SERVICES
The Adviser, the Distributor and Pacific Life are related parties. The advisory fees earned by the Adviser, the administration fees earned by Pacific Life, the distribution and/or service fees earned by the Distributor, including any fee waivers, and expenses for support services recovered by PLFA and Pacific Life (see Note 5) from each Fund presented in these financial statements for the year ended March 31, 2014 are presented in the Statements of Operations. The amounts of each of these fees that remained payable as of March 31, 2014 are presented in the Statements of Assets and Liabilities.
B. EXPENSE LIMITATION AGREEMENTS
To help limit the Trust’s expenses, PLFA has entered into expense limitation agreements with the Trust and has agreed to reimburse each Fund for certain operating expenses that exceed an annual rate based on a percentage of a Fund’s average daily net assets. These operating expenses include, but are not limited to: administration fees; organizational expenses; custody expenses; expenses for audit, tax and certain legal services; preparation, printing, filing and distribution to existing shareholders of proxies, prospectuses and shareholder reports and other regulatory documents, as applicable; independent trustees’ fees; and establishing, overseeing and administering the Trust’s compliance program. These operating expenses do not include: investment advisory fees; distribution and/or service fees; dividends on securities sold short; acquired fund fees and expenses; interest; taxes (including foreign taxes on dividends, interest or gains); brokerage commissions and other transactional expenses and extraordinary expenses such as litigation expenses and other expenses not incurred in the ordinary course of each Fund’s business. The expense caps for each Fund and share class presented in these financial statements are as follows:
Fund | Class | Expense Cap | ||
PL Portfolio Optimization Funds | A, B, C and R | 0.15% through 7/31/2015 and 0.30% thereafter through 7/31/2023 | ||
Advisor Class | 0.20% through 3/31/2014, 0.15% from 4/1/2014 through 7/31/2015, 0.20% from 8/1/2015 through 12/31/2015, and 0.30% thereafter through 7/31/2023. | |||
PL Short Duration Income PL Strategic Income PL Limited Duration High Income PL High Income | A, C and Advisor Class | 0.20% through 7/31/2016 | ||
I | 0.20% through 7/31/2014 and 0.15% thereafter through 7/31/2016 | |||
PL Income | A, C and Advisor Class | 0.15% through 7/31/2014 and 0.20% thereafter through 7/31/2016 | ||
I | 0.15% through 7/31/2016 | |||
PL Floating Rate Income | A, C and Advisor Class | 0.15% through 12/31/2014 and 0.20% thereafter through 7/31/2016 | ||
I | 0.15% through 7/31/2016 |
There is no guarantee that PLFA will continue to reimburse expenses upon the expiration of the applicable expense caps.
Any expense reimbursements are subject to recoupment by PLFA for a period of time as permitted under regulatory and accounting guidance (currently 3 years from the end of the fiscal year in which the reimbursement or reduction took place) to the extent such expenses fall below the current expense cap in future years. Any amounts repaid to PLFA will have the effect of increasing such expenses of the Fund, but not above the expense cap. There was no recoupment of expense reimbursement by PLFA from any Funds presented in these financial statements during the year ended March 31, 2014.
D-7
PACIFIC LIFE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
The Adviser expense reimbursement and the advisory fee waiver, if any, of each of the applicable Funds presented in these financial statements for the year ended March 31, 2014 are presented in the Statements of Operations. Any amounts that remained due from the Adviser as of March 31, 2014 are presented in the Statements of Assets and Liabilities.
The cumulative reimbursement and fee reduction amounts, if any, as of March 31, 2014 that are subject to recoupment by PLFA from each Fund presented in these financial statements are as follows:
Fund | 3/31/2015 | 3/31/2016 | 3/31/2017 | |||||||||
PL Portfolio Optimization Conservative | $406,199 | $504,164 | $485,486 | |||||||||
PL Portfolio Optimization Moderate-Conservative | 416,693 | 475,646 | 509,594 | |||||||||
PL Portfolio Optimization Moderate | 1,027,703 | 1,124,770 | 1,236,620 | |||||||||
PL Portfolio Optimization Moderate-Aggressive | 807,014 | 814,333 | 857,348 | |||||||||
PL Portfolio Optimization Aggressive | 316,090 | 306,272 | 297,159 | |||||||||
PL Short Duration Income | 42,485 | 97,734 | 192,031 | |||||||||
PL Income | 651,413 | 1,323,370 | 1,326,276 | |||||||||
PL Strategic Income | 45,025 | 118,217 | 181,996 | |||||||||
PL Floating Rate Income | 123,956 | 347,661 | 1,642,470 | |||||||||
PL Limited Duration High Income | 82,357 | |||||||||||
PL High Income | 42,254 | 97,325 | 98,786 | |||||||||
|
|
|
|
|
| |||||||
Total | $3,878,832 | $5,209,492 | $6,910,126 | |||||||||
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|
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C. INVESTMENTS IN AFFILIATED FUNDS
As of March 31, 2014, each of the Portfolio Optimization Funds (aggregate of all share classes) owned Class P shares in each of the applicable affiliated PL Underlying Funds. A summary of holdings and transactions with affiliated mutual fund investments as of and for the year ended March 31, 2014 is as follows:
Fund/Underlying Fund | Beginning Value as of April 1, 2013 | Purchase Cost (1) | Distributions Received and Reinvested (2) | Sales Proceeds | Net Realized Gain (Loss) (3) | Change in Unrealized Appreciation (Depreciation) | As of March 31, 2014 | |||||||||||||||||||||||||
Ending Value | Shares Balance | |||||||||||||||||||||||||||||||
PL Portfolio Optimization Conservative Fund | ||||||||||||||||||||||||||||||||
PL Floating Rate Loan | $31,638,296 | $2,743,541 | $1,127,322 | $6,878,544 | $402,348 | ($489,933 | ) | $28,543,030 | 2,840,102 | |||||||||||||||||||||||
PL Inflation Managed | 50,605,909 | 4,061,123 | 183,399 | 10,026,740 | (644,459 | ) | (3,404,310 | ) | 40,774,922 | 4,612,548 | ||||||||||||||||||||||
PL Managed Bond | 175,736,920 | 12,233,708 | 2,310,290 | 34,833,896 | (279,119 | ) | (4,532,843 | ) | 150,635,060 | 13,999,541 | ||||||||||||||||||||||
PL Short Duration Bond | 76,380,934 | 5,025,806 | 916,500 | 16,678,076 | (96,496 | ) | (410,166 | ) | 65,138,502 | 6,481,443 | ||||||||||||||||||||||
PL Emerging Markets Debt | 24,377,439 | 9,400,521 | 878,662 | 6,481,037 | (62,711 | ) | (1,736,493 | ) | 26,376,381 | 2,719,214 | ||||||||||||||||||||||
PL Comstock | 22,273,929 | — | 181,406 | 6,490,001 | 1,642,660 | 2,767,837 | 20,375,831 | 1,157,060 | ||||||||||||||||||||||||
PL Growth | 3,683,177 | 1,291,856 | 28,136 | 1,333,502 | 93,615 | 836,669 | 4,599,951 | 265,433 | ||||||||||||||||||||||||
PL Large-Cap Growth | 10,331,969 | — | 19,371 | 2,001,165 | 2,483,818 | (199,440 | ) | 10,634,553 | 1,034,490 | |||||||||||||||||||||||
PL Large-Cap Value | 23,435,269 | — | 350,038 | 4,086,013 | 906,951 | 3,406,419 | 24,012,664 | 1,437,024 | ||||||||||||||||||||||||
PL Main Street Core | 7,484,816 | — | 75,378 | 1,021,504 | 176,049 | 1,371,423 | 8,086,162 | 544,523 | ||||||||||||||||||||||||
PL Mid-Cap Equity | 8,030,780 | — | 43,624 | 1,500,873 | 922,048 | 1,040,410 | 8,535,989 | 664,797 | ||||||||||||||||||||||||
PL Mid-Cap Growth | 4,775,798 | — | 9,096 | 895,975 | 1,246,952 | (184,885 | ) | 4,950,986 | 605,996 | |||||||||||||||||||||||
PL International Large-Cap | 11,810,003 | — | 133,910 | 2,001,164 | 230,344 | 1,109,997 | 11,283,090 | 611,218 | ||||||||||||||||||||||||
PL International Value | 7,184,079 | — | 170,372 | 1,417,188 | 173,611 | 765,936 | 6,876,810 | 665,712 | ||||||||||||||||||||||||
PL Currency Strategies | 15,070,002 | 97,066 | 400,400 | 3,001,745 | 85,820 | (1,180,986 | ) | 11,470,557 | 1,218,975 | |||||||||||||||||||||||
PL Global Absolute Return | 29,776,965 | 2,156,301 | 538,073 | 6,003,491 | (122,175 | ) | (1,320,874 | ) | 25,024,799 | 2,582,539 | ||||||||||||||||||||||
PL Precious Metals | 4,374,793 | 1,301,397 | 19,382 | 1,000,582 | (614,713 | ) | (826,189 | ) | 3,254,088 | 568,896 | ||||||||||||||||||||||
$506,971,078 | $38,311,319 | $7,385,359 | $105,651,496 | $6,544,543 | ($2,987,428 | ) | $450,573,375 | |||||||||||||||||||||||||
PL Portfolio Optimization Moderate-Conservative Fund | ||||||||||||||||||||||||||||||||
PL Floating Rate Loan | $30,042,421 | $4,777,444 | $1,262,048 | $1,444,698 | $439,234 | ($612,428 | ) | $34,464,021 | 3,429,256 | |||||||||||||||||||||||
PL Inflation Managed | 42,225,492 | 5,161,601 | 177,188 | 1,805,372 | 370,938 | (3,655,031 | ) | 42,474,816 | 4,804,843 | |||||||||||||||||||||||
PL Managed Bond | 112,115,054 | 11,898,385 | 1,691,090 | 4,917,716 | 426,783 | (3,497,222 | ) | 117,716,374 | 10,940,183 | |||||||||||||||||||||||
PL Short Duration Bond | 55,378,880 | 6,391,123 | 782,161 | 2,503,465 | (19,457 | ) | (384,997 | ) | 59,644,245 | 5,934,751 | ||||||||||||||||||||||
PL Emerging Markets Debt | 15,708,340 | 10,690,711 | 746,482 | 1,025,879 | 119,481 | (1,350,250 | ) | 24,888,885 | 2,565,864 | |||||||||||||||||||||||
PL Comstock | 31,182,878 | — | 306,606 | 2,455,264 | 497,642 | 6,247,300 | 35,779,162 | 2,031,753 | ||||||||||||||||||||||||
PL Growth | 4,850,711 | 5,610,249 | 64,234 | 475,146 | 10,386 | 1,621,262 | 11,681,696 | 674,074 | ||||||||||||||||||||||||
PL Large-Cap Growth | 17,760,751 | — | 36,840 | 674,834 | 4,259,976 | (154,937 | ) | 21,227,796 | 2,064,961 | |||||||||||||||||||||||
PL Large-Cap Value | 40,645,763 | — | 655,202 | 2,178,071 | 338,428 | 7,506,168 | 46,967,490 | 2,810,741 | ||||||||||||||||||||||||
PL Main Street Core | 25,721,046 | — | 275,204 | 1,124,725 | 168,125 | 5,336,159 | 30,375,809 | 2,045,509 | ||||||||||||||||||||||||
PL Mid-Cap Equity | 10,236,612 | — | 60,980 | 449,890 | 960,012 | 1,680,404 | 12,488,118 | 972,595 | ||||||||||||||||||||||||
PL Mid-Cap Growth | 5,029,999 | 1,341,523 | 12,582 | 308,345 | 1,579,217 | (337,847 | ) | 7,317,129 | 895,609 | |||||||||||||||||||||||
PL Small-Cap Growth | 6,641,374 | — | 12,741 | 242,388 | 211,167 | 1,085,238 | 7,708,132 | 496,019 | ||||||||||||||||||||||||
PL Small-Cap Value | 5,161,697 | — | 71,915 | 224,945 | 278,369 | 569,500 | 5,856,536 | 432,217 | ||||||||||||||||||||||||
PL Emerging Markets | 8,386,215 | 1,740,798 | 64,422 | 438,261 | 195,604 | 385,909 | 10,334,687 | 700,657 | ||||||||||||||||||||||||
PL International Large-Cap | 21,248,467 | — | 262,486 | 899,780 | 59,593 | 2,455,843 | 23,126,609 | 1,252,796 | ||||||||||||||||||||||||
PL International Value | 14,988,467 | — | 391,342 | 669,019 | 46,721 | 1,955,018 | 16,712,529 | 1,617,863 | ||||||||||||||||||||||||
PL Currency Strategies | 13,957,046 | 2,263,663 | 469,209 | 674,834 | (24,331 | ) | (1,382,533 | ) | 14,608,220 | 1,552,414 | ||||||||||||||||||||||
PL Global Absolute Return | 28,943,076 | 5,196,929 | | 635,330 | | 1,349,669 | (23,008 | ) | (1,474,903 | ) | 31,927,755 | 3,294,918 | ||||||||||||||||||||
PL Precious Metals | 9,109,580 | 4,792,103 | 57,573 | 449,889 | (253,121 | ) | (2,845,013 | ) | 10,411,233 | 1,820,146 | ||||||||||||||||||||||
$499,333,869 | $59,864,529 | $8,035,635 | $24,312,190 | $9,641,759 | $13,147,640 | $565,711,242 |
D-8
PACIFIC LIFE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
Fund/Underlying Fund | Beginning Value as of April 1, 2013 | Purchase Cost (1) | Distributions Received and Reinvested (2) | Sales Proceeds | Net Realized Gain (Loss) (3) | Change in Unrealized Appreciation (Depreciation) | As of March 31, 2014 | |||||||||||||||||||||||||
Ending Value | Shares Balance | |||||||||||||||||||||||||||||||
PL Portfolio Optimization Moderate Fund | ||||||||||||||||||||||||||||||||
PL Floating Rate Loan | $48,547,581 | $10,184,961 | $2,123,290 | $380,198 | $766,580 | ($1,089,351 | ) | $60,152,863 | 5,985,360 | |||||||||||||||||||||||
PL Inflation Managed | 53,879,071 | 23,776,343 | 285,662 | 456,759 | 941,998 | (5,050,522 | ) | 73,375,793 | 8,300,429 | |||||||||||||||||||||||
PL Managed Bond | 196,611,792 | 29,067,826 | 3,114,325 | 1,401,753 | 1,048,453 | (6,508,238 | ) | 221,932,405 | 20,625,688 | |||||||||||||||||||||||
PL Short Duration Bond | 77,977,740 | 12,683,447 | 1,143,053 | 575,341 | (6,193 | ) | (578,795 | ) | 90,643,911 | 9,019,295 | ||||||||||||||||||||||
PL Emerging Markets Debt | 35,715,604 | 25,300,874 | 1,718,884 | 363,390 | 453,301 | (3,313,156 | ) | 59,512,117 | 6,135,270 | |||||||||||||||||||||||
PL Comstock | 104,788,044 | — | 1,084,070 | 1,678,024 | 279,768 | 22,962,597 | 127,436,455 | 7,236,596 | ||||||||||||||||||||||||
PL Growth | 18,415,744 | 18,906,939 | 244,382 | 259,936 | 486 | 6,197,468 | 43,505,083 | 2,510,391 | ||||||||||||||||||||||||
PL Large-Cap Growth | 55,005,359 | — | 116,481 | 380,198 | 13,205,972 | (370,969 | ) | 67,576,645 | 6,573,604 | |||||||||||||||||||||||
PL Large-Cap Value | 129,541,349 | — | 2,163,706 | 872,256 | 75,814 | 25,428,044 | 156,336,657 | 9,355,874 | ||||||||||||||||||||||||
PL Main Street Core | 82,050,485 | — | 899,736 | 570,299 | 49,645 | 17,748,895 | 100,178,462 | 6,746,024 | ||||||||||||||||||||||||
PL Mid-Cap Equity | 50,787,357 | — | 310,036 | 334,355 | 4,525,966 | 8,756,756 | 64,045,760 | 4,987,988 | ||||||||||||||||||||||||
PL Mid-Cap Growth | 19,272,907 | 12,194,850 | 59,754 | 220,816 | 7,339,071 | (2,157,537 | ) | 36,488,229 | 4,466,123 | |||||||||||||||||||||||
PL Small-Cap Growth | 15,550,433 | — | 30,456 | 98,411 | 429,295 | 2,630,947 | 18,542,720 | 1,193,225 | ||||||||||||||||||||||||
PL Small-Cap Value | 45,932,777 | — | 656,037 | 332,673 | 2,348,882 | 5,303,901 | 53,908,924 | 3,978,518 | ||||||||||||||||||||||||
PL Real Estate | 25,165,012 | 3,716,173 | 457,855 | 190,099 | (5,358 | ) | 1,183,154 | 30,326,737 | 2,137,191 | |||||||||||||||||||||||
PL Emerging Markets | 47,141,348 | 10,493,349 | 364,111 | 378,517 | 1,125,604 | 2,181,971 | 60,927,866 | 4,130,703 | ||||||||||||||||||||||||
PL International Large-Cap | 77,889,808 | 7,857,423 | 1,084,372 | 575,341 | (123 | ) | 10,169,139 | 96,425,278 | 5,223,471 | |||||||||||||||||||||||
PL International Value | 53,701,195 | 5,189,016 | 1,572,869 | 386,922 | 5,916 | 7,748,612 | 67,830,686 | 6,566,378 | ||||||||||||||||||||||||
PL Currency Strategies | 47,980,363 | 11,968,614 | 1,707,897 | 380,200 | (24,161 | ) | (5,223,681 | ) | 56,028,832 | 5,954,180 | ||||||||||||||||||||||
PL Global Absolute Return | 60,455,859 | 17,216,185 | 1,443,426 | 475,248 | 72,746 | (3,261,964 | ) | 75,451,004 | 7,786,481 | |||||||||||||||||||||||
PL Precious Metals | 22,066,620 | 15,720,588 | 160,754 | 190,100 | (103,901 | ) | (7,733,572 | ) | 29,920,389 | 5,230,837 | ||||||||||||||||||||||
$1,268,476,448 | $204,276,588 | $20,741,156 | $10,500,836 | $32,529,761 | $75,023,699 | $1,590,546,816 | ||||||||||||||||||||||||||
PL Portfolio Optimization Moderate-Aggressive Fund | ||||||||||||||||||||||||||||||||
PL Inflation Managed | $17,650,585 | $12,911,551 | $109,593 | $251,121 | $356,474 | ($1,696,396 | ) | $29,080,686 | 3,289,670 | |||||||||||||||||||||||
PL Managed Bond | 73,616,782 | 9,929,621 | 1,144,156 | 713,652 | 387,470 | (2,400,801 | ) | 81,963,576 | 7,617,433 | |||||||||||||||||||||||
PL Short Duration Bond | 13,864,997 | — | 182,519 | 93,705 | (249 | ) | (94,355 | ) | 13,859,207 | 1,379,026 | ||||||||||||||||||||||
PL Emerging Markets Debt | 10,077,020 | 9,921,782 | 543,045 | 167,014 | 136,097 | (949,108 | ) | 19,561,822 | 2,016,683 | |||||||||||||||||||||||
PL Comstock | 79,092,093 | — | 822,778 | 707,653 | 98,032 | 17,487,947 | 96,793,197 | 5,496,490 | ||||||||||||||||||||||||
PL Growth | 16,776,930 | 8,318,149 | 169,882 | 248,721 | (387 | ) | 4,759,859 | 29,775,712 | 1,718,160 | |||||||||||||||||||||||
PL Large-Cap Growth | 45,304,606 | — | 95,617 | 442,133 | 10,861,180 | (305,633 | ) | 55,513,637 | 5,400,159 | |||||||||||||||||||||||
PL Large-Cap Value | 99,860,840 | — | 1,643,954 | 2,144,082 | 384,212 | 19,138,624 | 118,883,548 | 7,114,515 | ||||||||||||||||||||||||
PL Main Street Core | 74,411,470 | 489,902 | 818,446 | 710,052 | 35,812 | 16,161,145 | 91,206,723 | 6,141,867 | ||||||||||||||||||||||||
PL Mid-Cap Equity | 52,364,418 | — | 318,495 | 526,241 | 4,680,091 | 8,991,756 | 65,828,519 | 5,126,832 | ||||||||||||||||||||||||
PL Mid-Cap Growth | 22,705,243 | 2,646,803 | 50,923 | 257,120 | 6,358,836 | (1,007,361 | ) | 30,497,324 | 3,732,843 | |||||||||||||||||||||||
PL Small-Cap Growth | 17,604,103 | — | 34,354 | 175,414 | 502,529 | 2,958,178 | 20,923,750 | 1,346,445 | ||||||||||||||||||||||||
PL Small-Cap Value | 53,365,960 | 968,641 | 759,613 | 526,239 | 2,756,566 | 6,135,124 | 63,459,665 | 4,683,370 | ||||||||||||||||||||||||
PL Real Estate | 24,649,968 | 4,965,474 | 473,078 | 261,920 | (3,449 | ) | 1,302,279 | 31,125,430 | 2,193,476 | |||||||||||||||||||||||
PL Emerging Markets | 40,779,470 | 17,522,797 | 354,802 | 514,241 | 1,070,380 | 1,928,714 | 61,141,922 | 4,145,215 | ||||||||||||||||||||||||
PL International Large-Cap | 66,933,840 | 7,119,940 | 898,702 | 701,653 | 14,126 | 8,501,911 | 82,766,866 | 4,483,579 | ||||||||||||||||||||||||
PL International Value | 53,975,286 | 3,016,743 | 1,518,751 | 532,240 | (98,537 | ) | 7,663,415 | 65,543,418 | 6,344,958 | |||||||||||||||||||||||
PL Currency Strategies | 32,025,945 | 8,140,086 | 1,124,555 | 350,827 | (18,341 | ) | (3,432,421 | ) | 37,488,997 | 3,983,953 | ||||||||||||||||||||||
PL Global Absolute Return | 40,692,054 | 11,607,340 | 963,972 | 438,533 | 42,512 | (2,140,459 | ) | 50,726,886 | 5,234,973 | |||||||||||||||||||||||
PL Precious Metals | 21,797,835 | 15,034,838 | 154,357 | 263,120 | (155,592 | ) | (7,071,113 | ) | 29,497,205 | 5,156,854 | ||||||||||||||||||||||
$857,549,445 | $112,593,667 | $12,181,592 | $10,025,681 | $27,407,762 | $75,931,305 | $1,075,638,090 | ||||||||||||||||||||||||||
PL Portfolio Optimization Aggressive Fund | ||||||||||||||||||||||||||||||||
PL Managed Bond | $7,265,825 | $652,388 | $108,643 | $325,851 | $30,475 | ($228,791 | ) | $7,502,689 | 697,276 | |||||||||||||||||||||||
PL Comstock | 24,300,862 | — | 242,232 | 1,586,344 | 262,652 | 4,998,681 | 28,218,083 | 1,602,390 | ||||||||||||||||||||||||
PL Growth | 4,898,798 | 5,538,052 | 67,033 | 438,897 | 18,117 | 1,642,212 | 11,725,315 | 676,591 | ||||||||||||||||||||||||
PL Large-Cap Growth | 13,941,188 | 1,187,091 | 30,775 | 791,349 | 3,461,068 | (165,180 | ) | 17,663,593 | 1,718,248 | |||||||||||||||||||||||
PL Large-Cap Value | 30,598,605 | — | 476,319 | 2,759,149 | 445,796 | 5,331,753 | 34,093,324 | 2,040,295 | ||||||||||||||||||||||||
PL Main Street Core | 22,805,365 | 954,817 | 247,692 | 1,221,604 | 106,268 | 4,778,316 | 27,670,854 | 1,863,357 | ||||||||||||||||||||||||
PL Mid-Cap Equity | 16,955,924 | — | 100,269 | 886,112 | 1,549,286 | 2,777,747 | 20,497,114 | 1,596,348 | ||||||||||||||||||||||||
PL Mid-Cap Growth | 9,754,522 | — | 20,085 | 477,136 | 2,618,514 | (401,612 | ) | 11,514,373 | 1,409,348 | |||||||||||||||||||||||
PL Small-Cap Growth | 11,095,542 | — | 21,108 | 514,376 | 399,864 | 1,740,992 | 12,743,130 | 820,021 | ||||||||||||||||||||||||
PL Small-Cap Value | 21,171,150 | 656,321 | 292,914 | 1,090,599 | 1,181,644 | 2,270,999 | 24,482,429 | 1,806,821 | ||||||||||||||||||||||||
PL Real Estate | 10,305,879 | 1,795,278 | 187,764 | 545,299 | 17,177 | 465,446 | 12,226,245 | 861,610 | ||||||||||||||||||||||||
PL Emerging Markets | 14,488,493 | 6,074,944 | 120,621 | 901,072 | 331,063 | 641,345 | 20,755,394 | 1,407,145 | ||||||||||||||||||||||||
PL International Large-Cap | 21,096,788 | 4,113,417 | 292,696 | 1,200,322 | (4,348 | ) | 2,659,491 | 26,957,722 | 1,460,332 | |||||||||||||||||||||||
PL International Value | 16,664,995 | 1,133,833 | 448,770 | 896,752 | 9,825 | 2,264,713 | 19,625,384 | 1,899,844 | ||||||||||||||||||||||||
PL Currency Strategies | 9,573,494 | 2,577,732 | 332,919 | 545,300 | (8,602 | ) | (993,675 | ) | 10,936,568 | 1,162,228 | ||||||||||||||||||||||
PL Global Absolute Return | 12,114,457 | 3,624,810 | 282,238 | 681,624 | (5,323 | ) | (603,729 | ) | 14,730,829 | 1,520,209 | ||||||||||||||||||||||
PL Precious Metals | 8,593,879 | 5,956,112 | 59,860 | 545,300 | (303,180 | ) | (2,532,668 | ) | 11,228,703 | 1,963,060 | ||||||||||||||||||||||
$255,625,766 | $34,264,795 | $3,331,938 | $15,407,086 | $10,110,296 | $24,646,040 | $312,571,749 |
(1) | Purchase cost excludes distributions received and reinvested, if any. |
(2) | Distributions received include net investment income distributions from the PL Underlying Funds, if any. |
(3) | Net realized gain (loss) includes capital gains distributions from the PL Underlying Funds, if any. |
D-9
PACIFIC LIFE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
As of March 31, 2014, Pacific Life owned the following percentages of the total shares outstanding (aggregate of all share classes) of each of the following Funds:
Fund | Ownership Percentage | |||
PL Limited Duration High Income | 62.50% | |||
PL High Income | 38.34% |
D. INDEPENDENT TRUSTEES
The Trust pays each independent trustee of the Board retainer fees and specified amounts for various Board and committee services and for chairing those committees. The fees and expenses of the independent trustees of the Board are presented in the Statements of Operations.
Each independent trustee of the Board is eligible to participate in the Trust’s Deferred Compensation Plan (the “Plan”). The Plan allows each independent trustee to voluntarily defer receipt of all or a percentage of fees, which otherwise would be payable for services performed. Amounts in the deferral account are obligations of each Fund at the time of such deferral and are payable in accordance with the Plan. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of certain Funds. An independent trustee who defers compensation has the option to select credit rate options that track the performance, at NAV without a sales load, of Class A shares of the Portfolio Optimization Funds, PL Diversified Alternatives Fund, PL Short Duration Income Fund, PL Income Fund, PL Strategic Income Fund, PL Floating Rate Income Fund, PL Limited Duration High Income and/or PL High Income Fund, and/or Class P shares of the corresponding PL Underlying Funds. The obligation of each Fund under the Plan (the “DCP Liability”) is recorded as a liability (accrued trustees’ fees and expenses and deferred compensation). Accordingly, the market value appreciation or depreciation on a Fund’s DCP Liability account will cause the expenses of that Fund to increase or decrease due to market fluctuation. The change in net unrealized appreciation or depreciation on a Fund’s DCP Liability account is recorded as an increase or decrease to expenses (trustees’ fees and expenses). For the year ended March 31, 2014, such expenses were increased by $5,485 for all applicable Funds presented in these financial statements as a result of the market value appreciation on such accounts. As of March 31, 2014, the total amount in the DCP Liability accounts was $12,418 for all applicable Funds presented in these financial statements.
E. OFFICERS OF THE TRUST
None of the officers of the Trust received compensation from the Trust.
F. INDEMNIFICATIONS
Under the Trust’s organizational documents, its officers and trustees are indemnified against certain liabilities arising out of performance of their duties to the Trust. In addition, the Trust entered into an agreement with each of the trustees which provides that the Trust will indemnify and hold harmless each trustee against any expenses actually and reasonably incurred by any trustee in any proceeding arising out of or in connection with the trustee’s services to the Trust, to the fullest extent permitted by the Trust’s Declaration of Trust and By-Laws, the general trust law of the State of Delaware, the Securities Act of 1933, and the 1940 Act, each as now or hereinafter in force. In the normal course of business, the Trust enters into contracts with service providers and others that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements and agreements is dependent on future claims that may be made against the Trust and/or the trustees and, therefore, cannot be estimated; however, based on experience, the risk of loss from such claims is considered remote.
7. UNFUNDED SENIOR LOAN COMMITMENTS
Unfunded loan commitments on senior loan participations and assignments (Note 4), if any, are marked to market daily and valued according to the Trust’s valuation policies and procedures. Any outstanding unfunded loan commitments are presented in the Notes to Schedules of Investments section of each applicable Fund’s Schedule of Investments. Any applicable net unrealized appreciation or depreciation at the end of the reporting period is recorded as an asset (unfunded loan commitment appreciation) or a liability (unfunded loan commitment depreciation) and any change in net unrealized appreciation or depreciation for the reporting period is recorded as a change in net unrealized appreciation or depreciation on unfunded loan commitment. As of March 31, 2014, the PL Floating Rate Income Fund had unfunded loan commitments of $3,655,570 (see details in the Notes to Schedule of Investments).
8. PURCHASES AND SALES OF INVESTMENTS
The cost of purchases and proceeds from sales of investments (excluding short-term investments) for the year ended March 31, 2014, are summarized in the following table:
U.S. Government Securities | Other Securities | |||||||||||||||
Fund | Purchases | Sales | Purchases | Sales | ||||||||||||
PL Portfolio Optimization Conservative | $— | $— | $51,963,715 | $105,651,496 | ||||||||||||
PL Portfolio Optimization Moderate-Conservative | — | — | 77,172,898 | 24,312,190 | ||||||||||||
PL Portfolio Optimization Moderate | — | — | 257,423,008 | 10,500,836 | ||||||||||||
PL Portfolio Optimization Moderate-Aggressive | — | — | 151,850,615 | 10,025,681 | ||||||||||||
PL Portfolio Optimization Aggressive | — | — | 46,848,480 | 15,407,086 | ||||||||||||
PL Short Duration Income | 996,133 | 1,049,141 | 104,512,336 | 62,298,283 | ||||||||||||
PL Income | 31,015,449 | 20,656,328 | 554,548,153 | 718,707,144 | ||||||||||||
PL Strategic Income | — | — | 110,345,444 | 94,656,405 | ||||||||||||
PL Floating Rate Income | — | — | 1,634,722,969 | 837,612,044 | ||||||||||||
PL Limited Duration High Income | — | — | 47,098,310 | 13,062,432 | ||||||||||||
PL High Income | — | — | 25,356,170 | 17,212,533 |
D-10
PACIFIC LIFE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
9. FEDERAL INCOME TAX INFORMATION
Each Fund intends to qualify each year as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code (the “Code”). A Fund that qualifies as a RIC does not have to pay income tax as long as it distributes sufficient taxable income and net capital gains. Each Fund declared and paid sufficient dividends on net investment income and capital gains distributions during the year or period ended March 31, 2014, to qualify as a RIC and is not required to pay Federal income tax under the Code. Accordingly, no provision for Federal income taxes is required in the financial statements. Required distributions are based on net investment income and net realized gains determined in accordance with income tax regulations, which may differ from U.S. GAAP for financial reporting purposes. These differences are primarily due to differing treatments for short-term capital gain distributions received, late year ordinary and post-October capital losses, capital loss carryforwards, and losses deferred due to wash sales. Permanent book and tax differences relating to shareholder distributions will result in reclassifications of capital accounts. In addition, the year in which amounts are distributed may differ from the year in which the net investment income is earned and the net gains are realized by each Fund.
The following table shows the accumulated capital losses and components of distributable earnings on a tax basis, and late year ordinary losses and post-October capital losses deferred, if any, for tax purposes as of March 31, 2014:
Distributable Earnings | Late-Year Ordinary and Post-October Losses Deferral | |||||||||||||||||||||||||||||
Fund | Accumulated Capital Losses | Undistributed Ordinary Income | Undistributed Long-Term Capital Gains | Late-Year Ordinary Losses | Short-Term Capital Losses | Long-Term Capital Losses | Total | |||||||||||||||||||||||
PL Portfolio Optimization Conservative | $— | $— | $4,111,288 | $755,588 | $— | $— | $755,588 | |||||||||||||||||||||||
PL Portfolio Optimization Moderate-Conservative | — | — | 6,846,501 | 1,347,248 | — | — | 1,347,248 | |||||||||||||||||||||||
PL Portfolio Optimization Moderate | — | 342,325 | 17,188,697 | — | — | — | — | |||||||||||||||||||||||
PL Portfolio Optimization Moderate-Aggressive | (5,747,574 | ) | 758,317 | — | — | — | — | — | ||||||||||||||||||||||
PL Portfolio Optimization Aggressive | (16,342,075 | ) | 1,417,848 | — | — | — | — | — | ||||||||||||||||||||||
PL Short Duration Income | — | 121,634 | 93,591 | — | — | — | — | |||||||||||||||||||||||
PL Income | (2,795,442 | ) | 178,151 | — | — | — | — | — | ||||||||||||||||||||||
PL Strategic Income | — | 434,743 | 187,673 | — | — | — | — | |||||||||||||||||||||||
PL Floating Rate Income | — | 2,826,606 | 257,129 | — | — | — | — | |||||||||||||||||||||||
PL Limited Duration High Income | — | 108,301 | — | — | — | — | — | |||||||||||||||||||||||
PL High Income | — | 72,960 | 63,044 | — | — | — | — |
Accumulated capital losses represent net capital loss carryovers as of March 31, 2014 that may be available to offset future realized capital gains and thereby reduce future capital gains distributions. The following table shows the expiration dates and the amounts of capital loss carryover, if any, by each of the applicable Funds as of March 31, 2014 and capital loss carryover from prior years utilized during the year ended March 31, 2014:
Unlimited Period of Net | Accumulated Capital Loss Carryover | Capital Loss Carryover Utilized during the Year Ended March 31, 2014 | ||||||||||||||||||||||||
Net Capital Loss Carryover Expiring In | Capital Loss Carryover | |||||||||||||||||||||||||
Fund | 2018 | 2019 | Short-Term | Long-Term | ||||||||||||||||||||||
PL Portfolio Optimization Moderate | $— | $— | $— | $— | $— | $7,260,600 | ||||||||||||||||||||
PL Portfolio Optimization Moderate-Aggressive | (1,638,469 | ) | (4,109,105 | ) | — | — | (5,747,574 | ) | 21,084,796 | |||||||||||||||||
PL Portfolio Optimization Aggressive | (13,311,679 | ) | (3,030,396 | ) | — | — | (16,342,075 | ) | 8,335,846 | |||||||||||||||||
PL Income | — | — | (2,795,442 | ) | — | (2,795,442 | ) | — |
The aggregate Federal tax cost of investments and the composition of unrealized appreciation and depreciation on investments as of March 31, 2014, were as follows:
Gross | Gross | Net | ||||||||||||||
Fund | Total Cost of Investments on Tax Basis (1) | Unrealized Appreciation on Investments | Unrealized Depreciation on Investments | Unrealized Appreciation | ||||||||||||
PL Portfolio Optimization Conservative | $423,668,124 | $40,369,377 | ($13,464,126 | ) | $26,905,251 | |||||||||||
PL Portfolio Optimization Moderate-Conservative | 506,917,078 | 76,212,210 | (17,418,046 | ) | 58,794,164 | |||||||||||
PL Portfolio Optimization Moderate | 1,353,054,178 | 275,104,286 | (37,611,648 | ) | 237,492,638 | |||||||||||
PL Portfolio Optimization Moderate-Aggressive | 868,259,977 | 238,990,419 | (31,612,306 | ) | 207,378,113 | |||||||||||
PL Portfolio Optimization Aggressive | 241,218,173 | 89,040,593 | (17,687,017 | ) | 71,353,576 | |||||||||||
PL Short Duration Income | 92,841,690 | 836,850 | (148,360 | ) | 688,490 | |||||||||||
PL Income | 409,556,017 | 6,240,518 | (2,656,825 | ) | 3,583,693 | |||||||||||
PL Strategic Income | 75,147,098 | 1,892,605 | (266,428 | ) | 1,626,177 | |||||||||||
PL Floating Rate Income | 1,059,137,572 | 5,613,711 | (1,023,831 | ) | 4,589,880 | |||||||||||
PL Limited Duration High Income | 34,931,903 | 525,414 | (36,389 | ) | 489,025 | |||||||||||
PL High Income | 24,044,057 | 915,919 | (68,458 | ) | 847,461 |
(1) | The difference between the total cost of investments on tax basis and the total investments, at cost, as presented in the Statements of Assets and Liabilities is primarily due to wash sale loss deferrals. |
D-11
PACIFIC LIFE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
Each Fund recognizes the financial statement effects of a tax position taken or expected to be taken in a tax return when it is more likely than not, based on the technical merits, that the position will be sustained upon examination by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax liability for unrecognized tax benefits with a corresponding income tax expense. Management has analyzed all open tax years, as defined by the statute of limitations, for all major jurisdictions and has determined that no provision for income tax is required in the financial statements. Each Fund remains subject to examination by Federal and State tax authorities for the returns filed for tax years ended after March 31, 2010.
10. TAX CHARACTER OF DISTRIBUTIONS
The tax character of income and capital gains distributions to shareholders during the years or periods ended March 31, 2014 and 2013, were as follows:
For the Year or Period Ended March 31, 2014 | For the Year or Period Ended March 31, 2013 | |||||||||||||||||||||||||
Fund | Ordinary Income | Long-Term Capital Gains | Total Distributions | Ordinary Income | Long-Term Capital Gains | Total Distributions | ||||||||||||||||||||
PL Portfolio Optimization Conservative | $5,460,595 | $6,134,372 | $11,594,967 | $13,483,260 | $1,941,221 | $15,424,481 | ||||||||||||||||||||
PL Portfolio Optimization Moderate-Conservative | 6,743,410 | 2,168,567 | 8,911,977 | 9,424,340 | — | 9,424,340 | ||||||||||||||||||||
PL Portfolio Optimization Moderate | 16,326,870 | — | 16,326,870 | 15,773,113 | — | 15,773,113 | ||||||||||||||||||||
PL Portfolio Optimization Moderate-Aggressive | 10,155,380 | — | 10,155,380 | 6,080,007 | — | 6,080,007 | ||||||||||||||||||||
PL Portfolio Optimization Aggressive | 1,491,679 | — | 1,491,679 | 1,000,003 | — | 1,000,003 | ||||||||||||||||||||
PL Short Duration Income | 1,139,922 | 106,700 | 1,246,622 | 644,329 | — | 644,329 | ||||||||||||||||||||
PL Income | 19,930,857 | 1,554,717 | 21,485,574 | 24,411,888 | 628,377 | 25,040,265 | ||||||||||||||||||||
PL Strategic Income | 3,181,001 | 431,207 | 3,612,208 | 2,270,755 | — | 2,270,755 | ||||||||||||||||||||
PL Floating Rate Income | 26,416,987 | 203,021 | 26,620,008 | 5,581,382 | — | 5,581,382 | ||||||||||||||||||||
PL Limited Duration High Income | 755,621 | — | 755,621 | |||||||||||||||||||||||
PL High Income | 1,087,466 | 151,149 | 1,238,615 | 901,637 | — | 901,637 |
11. RECLASSIFICATION OF ACCOUNTS
During the year ended March 31, 2014, reclassifications as shown in the following table have been made in each Fund’s capital accounts to report these balances on a tax basis, excluding certain temporary differences. Additional adjustments may be required in subsequent reporting periods. These reclassifications, which have no impact on the NAV of the Funds, are primarily attributable to non-deductible expenses, redesignation of dividends paid and short term capital gains received under Federal tax rules versus U.S. GAAP. The calculation of net investment income per share in the financial highlights excludes these adjustments.
Fund | Paid-In Capital | Undistributed/ Accumulated Net Investment Income (Loss) | Undistributed/ Gain (Loss) | |||||||||
PL Portfolio Optimization Conservative | $— | $1,807,930 | ($1,807,930 | ) | ||||||||
PL Portfolio Optimization Moderate-Conservative | — | 2,621,174 | (2,621,174 | ) | ||||||||
PL Portfolio Optimization Moderate | — | 8,417,663 | (8,417,663 | ) | ||||||||
PL Portfolio Optimization Moderate-Aggressive | — | 6,643,447 | (6,643,447 | ) | ||||||||
PL Portfolio Optimization Aggressive | — | 2,126,295 | (2,126,295 | ) | ||||||||
PL Income | — | (1,027 | ) | 1,027 | ||||||||
PL Strategic Income | — | (5,063 | ) | 5,063 | ||||||||
PL Floating Rate Income | — | (1,967 | ) | 1,967 | ||||||||
PL Limited Duration High Income | (6,541 | ) | 6,541 | — | ||||||||
PL High Income | — | (749 | ) | 749 |
D-12
PACIFIC LIFE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
12. SHARES OF BENEFICIAL INTEREST
Each Fund is authorized to issue an unlimited number of shares of beneficial interest with no par value. Changes in shares of beneficial interest of each Fund for the years or periods ended March 31, 2014 and 2013 were as follows:
PL Portfolio Optimization Conservative Fund (1) | PL Portfolio Optimization Moderate-Conservative Fund (1) | PL Portfolio Optimization Moderate Fund (1) | PL Portfolio Optimization Moderate-Aggressive Fund (1) | |||||||||||||||||||||||||||||||||||
Year Ended 3/31/2014 | Year or Period Ended 3/31/2013 | Year Ended 3/31/2014 | Year or Period Ended 3/31/2013 | Year Ended 3/31/2014 | Year or Period Ended 3/31/2013 | Year Ended 3/31/2014 | Year or Period Ended 3/31/2013 | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||
Shares sold | 4,942,877 | 9,555,985 | 6,879,857 | 7,963,161 | 17,055,382 | 16,343,831 | 10,167,433 | 8,430,453 | ||||||||||||||||||||||||||||||
Dividends and distribution reinvested | 454,671 | 610,375 | 385,490 | 420,884 | 745,915 | 770,456 | 454,847 | 340,116 | ||||||||||||||||||||||||||||||
Shares repurchased | (8,753,448 | ) | (6,465,096 | ) | (5,631,263 | ) | (4,318,443 | ) | (9,643,856 | ) | (9,237,993 | ) | (5,647,809 | ) | (5,509,217 | ) | ||||||||||||||||||||||
Net increase (decrease) | (3,355,900 | ) | 3,701,264 | 1,634,084 | 4,065,602 | 8,157,441 | 7,876,294 | 4,974,471 | 3,261,352 | |||||||||||||||||||||||||||||
Beginning shares outstanding | 20,230,899 | 16,529,635 | 20,384,286 | 16,318,684 | 50,106,674 | 42,230,380 | 32,700,108 | 29,438,756 | ||||||||||||||||||||||||||||||
Ending shares outstanding | 16,874,999 | 20,230,899 | 22,018,370 | 20,384,286 | 58,264,115 | 50,106,674 | 37,674,579 | 32,700,108 | ||||||||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||
Shares sold | 600,047 | 1,120,671 | 756,807 | 1,090,064 | 2,072,525 | 2,362,221 | 1,283,068 | 1,361,711 | ||||||||||||||||||||||||||||||
Dividends and distribution reinvested | 73,528 | 92,587 | 53,633 | 65,283 | 71,875 | 98,836 | 46,681 | 31,423 | ||||||||||||||||||||||||||||||
Shares repurchased | (883,916 | ) | (509,261 | ) | (695,998 | ) | (599,280 | ) | (1,401,567 | ) | (1,424,938 | ) | (1,157,375 | ) | (1,193,147 | ) | ||||||||||||||||||||||
Net increase (decrease) | (210,341 | ) | 703,997 | 114,442 | 556,067 | 742,833 | 1,036,119 | 172,374 | 199,987 | |||||||||||||||||||||||||||||
Beginning shares outstanding | 3,726,108 | 3,022,111 | 4,116,123 | 3,560,056 | 10,521,501 | 9,485,382 | 8,002,333 | 7,802,346 | ||||||||||||||||||||||||||||||
Ending shares outstanding | 3,515,767 | 3,726,108 | 4,230,565 | 4,116,123 | 11,264,334 | 10,521,501 | 8,174,707 | 8,002,333 | ||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||
Shares sold | 5,496,261 | 8,139,305 | 5,730,743 | 5,923,824 | 12,449,379 | 9,333,385 | 6,832,110 | 4,830,609 | ||||||||||||||||||||||||||||||
Dividends and distribution reinvested | 388,883 | 489,660 | 229,207 | 246,945 | 269,646 | 307,135 | 151,707 | 85,286 | ||||||||||||||||||||||||||||||
Shares repurchased | (7,137,458 | ) | (3,525,119 | ) | (3,821,553 | ) | (2,454,247 | ) | (6,319,924 | ) | (5,356,599 | ) | (3,660,260 | ) | (3,457,043 | ) | ||||||||||||||||||||||
Net increase (decrease) | (1,252,314 | ) | 5,103,846 | 2,138,397 | 3,716,522 | 6,399,101 | 4,283,921 | 3,323,557 | 1,458,852 | |||||||||||||||||||||||||||||
Beginning shares outstanding | 19,591,825 | 14,487,979 | 16,352,031 | 12,635,509 | 34,427,692 | 30,143,771 | 22,409,831 | 20,950,979 | ||||||||||||||||||||||||||||||
Ending shares outstanding | 18,339,511 | 19,591,825 | 18,490,428 | 16,352,031 | 40,826,793 | 34,427,692 | 25,733,388 | 22,409,831 | ||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||
Shares sold | 247,915 | 448,640 | 180,943 | 169,324 | 654,585 | 1,002,477 | 389,822 | 537,806 | ||||||||||||||||||||||||||||||
Dividends and distribution reinvested | 25,454 | 32,002 | 9,476 | 11,455 | 24,360 | 28,875 | 14,741 | 11,279 | ||||||||||||||||||||||||||||||
Shares repurchased | (370,686 | ) | (346,805 | ) | (165,137 | ) | (190,444 | ) | (692,933 | ) | (656,319 | ) | (363,968 | ) | (395,743 | ) | ||||||||||||||||||||||
Net increase (decrease) | (97,317 | ) | 133,837 | 25,282 | (9,665 | ) | (13,988 | ) | 375,033 | 40,595 | 153,342 | |||||||||||||||||||||||||||
Beginning shares outstanding | 1,087,819 | 953,982 | 537,282 | 546,947 | 2,280,676 | 1,905,643 | 1,339,881 | 1,186,539 | ||||||||||||||||||||||||||||||
Ending shares outstanding | 990,502 | 1,087,819 | 562,564 | 537,282 | 2,266,688 | 2,280,676 | 1,380,476 | 1,339,881 | ||||||||||||||||||||||||||||||
Advisor Class | ||||||||||||||||||||||||||||||||||||||
Shares sold | 380,137 | 119,752 | 228,282 | 72,694 | 1,358,108 | 260,077 | 247,651 | 185,157 | ||||||||||||||||||||||||||||||
Dividends and distribution reinvested | 5,529 | — | 2,244 | — | 13,996 | — | 3,438 | — | ||||||||||||||||||||||||||||||
Shares repurchased | (162,986 | ) | (5 | ) | (71,691 | ) | — | (205,909 | ) | — | (89,654 | ) | — | |||||||||||||||||||||||||
Net increase | 222,680 | 119,747 | 158,835 | 72,694 | 1,166,195 | 260,077 | 161,435 | 185,157 | ||||||||||||||||||||||||||||||
Beginning shares outstanding | 119,747 | — | 72,694 | — | 260,077 | — | 185,157 | — | ||||||||||||||||||||||||||||||
Ending shares outstanding | 342,427 | 119,747 | 231,529 | 72,694 | 1,426,272 | 260,077 | 346,592 | 185,157 |
D-13
PACIFIC LIFE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
PL Portfolio Optimization Aggressive Fund (1) | PL Short Duration Income Fund (2) | PL Income Fund (3) | PL Strategic Income Fund (2) | |||||||||||||||||||||||||||||||||||
Year Ended 3/31/2014 | Year or Period Ended 3/31/2013 | Year Ended 3/31/2014 | Year or Period Ended 3/31/2013 | Year Ended 3/31/2014 | Year or Period Ended 3/31/2013 | Year Ended 3/31/2014 | Year or Period Ended 3/31/2013 | |||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||
Shares sold | 2,624,015 | 2,482,556 | 5,786,475 | 2,423,165 | 7,742,757 | 24,375,409 | 2,697,775 | 1,968,516 | ||||||||||||||||||||||||||||||
Dividends and distribution reinvested | 78,895 | 70,593 | 67,184 | 11,585 | 988,608 | 1,274,846 | 172,744 | 41,118 | ||||||||||||||||||||||||||||||
Shares repurchased | (1,941,985 | ) | (2,429,225 | ) | (2,277,091 | ) | (275,783 | ) | (18,571,752 | ) | (18,412,186 | ) | (1,353,615 | ) | (143,365 | ) | ||||||||||||||||||||||
Net increase (decrease) | 760,925 | 123,924 | 3,576,568 | 2,158,967 | (9,840,387 | ) | 7,238,069 | 1,516,904 | 1,866,269 | |||||||||||||||||||||||||||||
Beginning shares outstanding | 9,869,168 | 9,745,244 | 2,158,967 | — | 30,574,715 | 23,336,646 | 1,866,269 | — | ||||||||||||||||||||||||||||||
Ending shares outstanding | 10,630,093 | 9,869,168 | 5,735,535 | 2,158,967 | 20,734,328 | 30,574,715 | 3,383,173 | 1,866,269 | ||||||||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||
Shares sold | 372,637 | 342,244 | ||||||||||||||||||||||||||||||||||||
Dividends and distribution reinvested | 2,540 | 698 | ||||||||||||||||||||||||||||||||||||
Shares repurchased | (348,813 | ) | (449,859 | ) | ||||||||||||||||||||||||||||||||||
Net increase (decrease) | 26,364 | (106,917 | ) | |||||||||||||||||||||||||||||||||||
Beginning shares outstanding | 2,496,764 | 2,603,681 | ||||||||||||||||||||||||||||||||||||
Ending shares outstanding | 2,523,128 | 2,496,764 | ||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||
Shares sold | 2,046,521 | 1,425,644 | 1,914,770 | 1,037,630 | 2,860,533 | 8,841,353 | 1,559,053 | 774,544 | ||||||||||||||||||||||||||||||
Dividends and distribution reinvested | 10,244 | 2,871 | 21,400 | 5,815 | 418,451 | 453,539 | 81,611 | 16,763 | ||||||||||||||||||||||||||||||
Shares repurchased | (1,417,993 | ) | (1,484,191 | ) | (647,286 | ) | (56,887 | ) | (6,439,014 | ) | (1,834,101 | ) | (252,338 | ) | (83,071 | ) | ||||||||||||||||||||||
Net increase (decrease) | 638,772 | (55,676 | ) | 1,288,884 | 986,558 | (3,160,030 | ) | 7,460,791 | 1,388,326 | 708,236 | ||||||||||||||||||||||||||||
Beginning shares outstanding | 6,184,366 | 6,240,042 | 986,558 | — | 14,688,174 | 7,227,383 | 708,236 | — | ||||||||||||||||||||||||||||||
Ending shares outstanding | 6,823,138 | 6,184,366 | 2,275,442 | 986,558 | 11,528,144 | 14,688,174 | 2,096,562 | 708,236 | ||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||
Shares sold | 148,506 | 193,028 | ||||||||||||||||||||||||||||||||||||
Dividends and distribution reinvested | 3,151 | 2,638 | ||||||||||||||||||||||||||||||||||||
Shares repurchased | (153,544 | ) | (189,303 | ) | ||||||||||||||||||||||||||||||||||
Net increase (decrease) | (1,887 | ) | 6,363 | |||||||||||||||||||||||||||||||||||
Beginning shares outstanding | 540,077 | 533,714 | ||||||||||||||||||||||||||||||||||||
Ending shares outstanding | 538,190 | 540,077 | ||||||||||||||||||||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||||||||||
Shares sold | �� | 69,394 | 27,031 | 7,553 | 68,421 | 95,502 | 142,908 | |||||||||||||||||||||||||||||||
Dividends and distribution reinvested | 3,152 | 36,099 | 3,838 | 6,379 | 19,010 | 139,813 | ||||||||||||||||||||||||||||||||
Shares repurchased | (1,250,216 | ) | — | (64,268 | ) | (32,427 | ) | (1,940,671 | ) | (16,558 | ) | |||||||||||||||||||||||||||
Net increase (decrease) | (1,177,670 | ) | 63,130 | (52,877 | ) | 42,373 | (1,826,159 | ) | 266,163 | |||||||||||||||||||||||||||||
Beginning shares outstanding | 1,271,309 | 1,208,179 | 164,069 | 121,696 | 1,977,384 | 1,711,221 | ||||||||||||||||||||||||||||||||
Ending shares outstanding | 93,639 | 1,271,309 | 111,192 | 164,069 | 151,225 | 1,977,384 | ||||||||||||||||||||||||||||||||
Advisor Class | ||||||||||||||||||||||||||||||||||||||
Shares sold | 169,158 | 16,463 | 859,736 | 393,447 | 3,789,797 | 8,605,542 | 776,150 | 137,777 | ||||||||||||||||||||||||||||||
Dividends and distribution reinvested | 601 | — | 10,497 | 3,791 | 280,917 | 78,443 | 23,008 | 2,852 | ||||||||||||||||||||||||||||||
Shares repurchased | (7,729 | ) | — | (254,264 | ) | (96,309 | ) | (6,151,943 | ) | (98,760 | ) | (109,035 | ) | (478 | ) | |||||||||||||||||||||||
Net increase (decrease) | 162,030 | 16,463 | 615,969 | 300,929 | (2,081,229 | ) | 8,585,225 | 690,123 | 140,151 | |||||||||||||||||||||||||||||
Beginning shares outstanding | 16,463 | — | 300,929 | — | 8,585,225 | — | 140,151 | — | ||||||||||||||||||||||||||||||
Ending shares outstanding | 178,493 | 16,463 | 916,898 | 300,929 | 6,503,996 | 8,585,225 | 830,274 | 140,151 |
D-14
PACIFIC LIFE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
PL Floating Rate Income Fund (4) | PL Limited Duration High Income Fund (5) | PL High Income Fund (2) | ||||||||||||||||||||||||||||
Year Ended 3/31/2014 | Year or Period Ended 3/31/2013 | Period Ended 3/31/2014 | Year Ended 3/31/2014 | Year or Period Ended 3/31/2013 | ||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||
Shares sold | 31,588,833 | 11,622,923 | 930,896 | 379,146 | 346,748 | |||||||||||||||||||||||||
Dividends and distribution reinvested | 933,803 | 204,727 | 11,050 | 28,309 | 10,556 | |||||||||||||||||||||||||
Shares repurchased | (8,726,398 | ) | (1,072,728 | ) | (92,880 | ) | (146,646 | ) | (44,027 | ) | ||||||||||||||||||||
Net increase | 23,796,238 | 10,754,922 | 849,066 | 260,809 | 313,277 | |||||||||||||||||||||||||
Beginning shares outstanding | 11,953,988 | 1,199,066 | — | 313,277 | — | |||||||||||||||||||||||||
Ending shares outstanding | 35,750,226 | 11,953,988 | 849,066 | 574,086 | 313,277 | |||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||
Shares sold | 16,574,203 | 5,751,227 | 243,306 | 311,844 | 268,167 | |||||||||||||||||||||||||
Dividends and distribution reinvested | 390,478 | 76,451 | 2,026 | 18,049 | 5,164 | |||||||||||||||||||||||||
Shares repurchased | (2,579,027 | ) | (127,622 | ) | (5,919 | ) | (59,549 | ) | (75,814 | ) | ||||||||||||||||||||
Net increase | 14,385,654 | 5,700,056 | 239,413 | 270,344 | 197,517 | |||||||||||||||||||||||||
Beginning shares outstanding | 6,034,962 | 334,906 | — | 197,517 | — | |||||||||||||||||||||||||
Ending shares outstanding | 20,420,616 | 6,034,962 | 239,413 | 467,861 | 197,517 | |||||||||||||||||||||||||
Class I | ||||||||||||||||||||||||||||||
Shares sold | 8,310,603 | 460,598 | 2,118,229 | 2,602 | 18,696 | |||||||||||||||||||||||||
Dividends and distribution reinvested | 163,281 | 118,470 | 57,291 | 57,640 | 64,838 | |||||||||||||||||||||||||
Shares repurchased | (320,615 | ) | (3,706,713 | ) | — | (2,538 | ) | (90 | ) | |||||||||||||||||||||
Net increase (decrease) | 8,153,269 | (3,127,645 | ) | 2,175,520 | 57,704 | 83,444 | ||||||||||||||||||||||||
Beginning shares outstanding | 1,024,180 | 4,151,825 | — | 794,700 | 711,256 | |||||||||||||||||||||||||
Ending shares outstanding | 9,177,449 | 1,024,180 | 2,175,520 | 852,404 | 794,700 | |||||||||||||||||||||||||
Class P | ||||||||||||||||||||||||||||||
Shares sold | 24,043 | 1,385 | ||||||||||||||||||||||||||||
Dividends and distribution reinvested | 277 | 12 | ||||||||||||||||||||||||||||
Shares repurchased | (2,007 | ) | (34 | ) | ||||||||||||||||||||||||||
Net increase | 22,313 | 1,363 | ||||||||||||||||||||||||||||
Beginning shares outstanding | 1,363 | — | ||||||||||||||||||||||||||||
Ending shares outstanding | 23,676 | 1,363 | ||||||||||||||||||||||||||||
Advisor Class | ||||||||||||||||||||||||||||||
Shares sold | 35,812,859 | 3,941,559 | 200,332 | 277,344 | 25,118 | |||||||||||||||||||||||||
Dividends and distribution reinvested | 620,036 | 26,303 | 2,926 | 2,914 | 369 | |||||||||||||||||||||||||
Shares repurchased | (4,916,250 | ) | (568,213 | ) | (21,064 | ) | (32,328 | ) | (503 | ) | ||||||||||||||||||||
Net increase | 31,516,645 | 3,399,649 | 182,194 | 247,930 | 24,984 | |||||||||||||||||||||||||
Beginning shares outstanding | 3,399,649 | — | — | 24,984 | — | |||||||||||||||||||||||||
Ending shares outstanding | 34,916,294 | 3,399,649 | 182,194 | 272,914 | 24,984 |
(1) | Advisor Class shares of the PL Portfolio Optimization Funds commenced operations on December 31, 2012. |
(2) | Class A, Class C and Advisor Class shares of the PL Short Duration Income, PL Strategic Income and PL High Income Funds commenced operations on June 29, 2012. |
(3) | Advisor Class shares of the PL Income Fund commenced operations on June 29, 2012. |
(4) | Advisor Class shares of the PL Floating Rate Income Fund commenced operations on June 29, 2012 and Class P shares commenced operations on December 31, 2012. |
(5) | PL Limited Duration High Income Fund commenced operations on July 31, 2013. |
D-15
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To The Board of Trustees and Shareholders of
Pacific Life Funds
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of PL Portfolio Optimization Conservative Fund, PL Portfolio Optimization Moderate-Conservative Fund, PL Portfolio Optimization Moderate Fund, PL Portfolio Optimization Moderate-Aggressive Fund, PL Portfolio Optimization Aggressive Fund, PL Short Duration Income Fund, PL Income Fund, PL Strategic Income Fund, PL Floating Rate Income Fund, PL Limited Duration High Income Fund and PL High Income Fund (collectively the “Funds”) (eleven of thirty-three funds comprising Pacific Life Funds) as of March 31, 2014, and the related statements of operations for the year then ended (as to the PL Limited Duration High Income Fund, for the period from July 31, 2013 (commencement of operations) through March 31, 2014), the statements of changes in net assets for each of the two years in the period then ended (as to the PL Limited Duration High Income Fund, for the period from July 31, 2013 (commencement of operations) through March 31, 2014), and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of investments owned as of March 31, 2014, by correspondence with the custodian, agent banks, transfer agent, and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective Funds as of March 31, 2014, and the results of their operations, the changes in their net assets, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.
Philadelphia, Pennsylvania
May 28, 2014
E-1
PACIFIC LIFE FUNDS
(Unaudited)
For corporate shareholders, the percentage of investment income (dividend income and short-term gains, if any) for each of the Funds that qualify for the dividends-received deductions for the year ended March 31, 2014 is as follows:
Fund | Percentage | |||
PL Portfolio Optimization Conservative | 14.99% | |||
PL Portfolio Optimization Moderate-Conservative | 24.45% | |||
PL Portfolio Optimization Moderate | 38.83% | |||
PL Portfolio Optimization Moderate-Aggressive | 57.00% | |||
PL Portfolio Optimization Aggressive | 61.75% | |||
PL Strategic Income | 0.73% | |||
PL High Income | 0.24% |
For the year ended March 31, 2014, certain dividends paid by the Funds may be subject to a maximum tax rate of 15%, as provided by the Jobs and Growth Tax Relief Reconciliation Act of 2003. Of the distributions made by the following Funds, the corresponding percentages represent the amount of each distribution which may qualify for the 15% dividend income tax rate.
Fund | Percentage | |||
PL Portfolio Optimization Conservative | 21.75% | |||
PL Portfolio Optimization Moderate-Conservative | 36.96% | |||
PL Portfolio Optimization Moderate | 60.97% | |||
PL Portfolio Optimization Moderate-Aggressive | 87.70% | |||
PL Portfolio Optimization Aggressive | 94.90% | |||
PL Strategic Income | 0.84% | |||
PL High Income | 0.31% |
Shareholders should not use the above tax information to prepare their tax returns. The information will be included with your Form 1099 DIV which will be sent to you separately in January 2015.
The following Funds designated the listed amounts as long-term capital gains distributions during the year ended March 31, 2014. Distributable long-term gains are based on net realized long-term gains determined on a tax basis and may differ from such amounts for financial reporting purposes.
Fund | Amount | |||
PL Portfolio Optimization Conservative | $6,134,372 | |||
PL Portfolio Optimization Moderate-Conservative | 7,822,815 | |||
PL Portfolio Optimization Moderate | 17,188,967 | |||
PL Short Duration Income | 151,913 | |||
PL Income | 1,554,717 | |||
PL Strategic Income | 468,746 | |||
PL Floating Rate Income | 354,982 | |||
PL High Income | 151,149 |
F-1
PACIFIC LIFE FUNDS
(Unaudited)
We believe it is important for you to understand the impact of fees and expenses regarding your investment. All mutual funds have operating expenses. As a shareholder of a mutual fund, you incur two types of costs: (1) transactions costs such as initial sales charges (loads) on purchase payments and/or contingent deferred sales charges on redemptions; and (2) ongoing costs, which include advisory fees, administration fees, distribution and/or service fees, and other fund expenses. The following example is intended to help you understand your ongoing costs (in dollars) of investing in each fund and to compare these costs with those of other mutual funds. The example is based on an investment of $1,000.00 made at the beginning of the period and held for the entire six-month period from October 1, 2013 to March 31, 2014.
ACTUAL EXPENSES
The first section of the table for each fund entitled “Actual Fund Return”, provides information about actual account values and actual expenses based on each fund’s actual performance and each fund’s actual expenses, after any applicable fee waivers and expense reimbursements (See Note 6B in Notes to Financial Statements). The “Ending Account Value at 03/31/14” column shown is derived from the fund’s actual performance; the “Annualized Expense Ratio” column shows the fund’s actual annualized expense ratio; and the “Expenses Paid During the Period 10/01/13-03/31/14” column shows the dollar amount that would have been paid by you. All the information illustrated in the following table is based on the past six-month period from October 1, 2013 to March 31, 2014.
You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, for each fund in your account, simply divide that fund’s value by $1,000.00 (for example, an $8,600.00 fund value divided by $1,000.00 = 8.6), then multiply the result by the number given for your fund(s) in the “Expenses Paid During the Period 10/01/13-03/31/14.”
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second section of the table for each fund, entitled “Hypothetical”, provides information about hypothetical account values and hypothetical expenses based on a 5% per year hypothetical rate of return and actual fund’s expenses, after any applicable fee waivers and expense reimbursements (See Note 6B in Notes to Financial Statements). It assumes that the fund had an annual 5% rate of return before expenses, but that the expense ratio is unchanged. The hypothetical account values and expenses may not be used to estimate the actual ending account values or expenses you paid for the period.
You may use the hypothetical example information to compare the ongoing costs of investing in the fund compared to other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other mutual 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 initial sales charges (loads) or contingent deferred sales charges. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different mutual funds. In addition, if these other costs were included, your costs would have been higher.
Beginning Account Value at 10/01/13 | Ending Account Value at 03/31/14 | Annualized Expense Ratio | Expenses 10/01/13 - | |||||||||||||
PL Portfolio Optimization Conservative Fund (2) | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class A | $1,000.00 | $1,023.20 | 0.60% | $3.03 | ||||||||||||
Class B | 1,000.00 | 1,019.60 | 1.35% | 6.80 | ||||||||||||
Class C | 1,000.00 | 1,019.40 | 1.35% | 6.80 | ||||||||||||
Class R | 1,000.00 | 1,022.40 | 0.85% | 4.29 | ||||||||||||
Advisor Class | 1,000.00 | 1,024.10 | 0.40% | 2.02 | ||||||||||||
Hypothetical |
| |||||||||||||||
Class A | $1,000.00 | $1,021.94 | 0.60% | $3.02 | ||||||||||||
Class B | 1,000.00 | 1,018.20 | 1.35% | 6.79 | ||||||||||||
Class C | 1,000.00 | 1,018.20 | 1.35% | 6.79 | ||||||||||||
Class R | 1,000.00 | 1,020.69 | 0.85% | 4.28 | ||||||||||||
Advisor Class | 1,000.00 | 1,022.94 | 0.40% | 2.02 | ||||||||||||
PL Portfolio Optimization Moderate-Conservative Fund (2) | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class A | $1,000.00 | $1,036.20 | 0.60% | $3.05 | ||||||||||||
Class B | 1,000.00 | 1,033.50 | 1.35% | 6.84 | ||||||||||||
Class C | 1,000.00 | 1,032.90 | 1.35% | 6.84 | ||||||||||||
Class R | 1,000.00 | 1,035.30 | 0.85% | 4.31 | ||||||||||||
Advisor Class | 1,000.00 | 1,037.80 | 0.40% | 2.03 | ||||||||||||
Hypothetical |
| |||||||||||||||
Class A | $1,000.00 | $1,021.94 | 0.60% | $3.02 | ||||||||||||
Class B | 1,000.00 | 1,018.20 | 1.35% | 6.79 | ||||||||||||
Class C | 1,000.00 | 1,018.20 | 1.35% | 6.79 | ||||||||||||
Class R | 1,000.00 | 1,020.69 | 0.85% | 4.28 | ||||||||||||
Advisor Class | 1,000.00 | 1,022.94 | 0.40% | 2.02 | ||||||||||||
PL Portfolio Optimization Moderate Fund (2) | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class A | $1,000.00 | $1,049.80 | 0.60% | $3.07 | ||||||||||||
Class B | 1,000.00 | 1,046.70 | 1.35% | 6.89 | ||||||||||||
Class C | 1,000.00 | 1,046.50 | 1.35% | 6.89 | ||||||||||||
Class R | 1,000.00 | 1,048.70 | 0.85% | 4.34 | ||||||||||||
Advisor Class | 1,000.00 | 1,051.10 | 0.40% | 2.05 | ||||||||||||
Hypothetical |
| |||||||||||||||
Class A | $1,000.00 | $1,021.94 | 0.60% | $3.02 | ||||||||||||
Class B | 1,000.00 | 1,018.20 | 1.35% | 6.79 | ||||||||||||
Class C | 1,000.00 | 1,018.20 | 1.35% | 6.79 | ||||||||||||
Class R | 1,000.00 | 1,020.69 | 0.85% | 4.28 | ||||||||||||
Advisor Class | 1,000.00 | 1,022.94 | 0.40% | 2.02 |
See explanation of references on page F-3
F-2
PACIFIC LIFE FUNDS
DISCLOSURE OF FUND EXPENSES (Continued)
(Unaudited)
Beginning Account Value at 10/01/13 | Ending Account Value at 03/31/14 | Annualized Expense Ratio | Expenses 10/01/13 - | |||||||||||||
PL Portfolio Optimization Moderate-Aggressive Fund (2) | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class A | $1,000.00 | $1,062.70 | 0.60% | $3.09 | ||||||||||||
Class B | 1,000.00 | 1,059.60 | 1.35% | 6.93 | ||||||||||||
Class C | 1,000.00 | 1,059.50 | 1.35% | 6.93 | ||||||||||||
Class R | 1,000.00 | 1,061.00 | 0.85% | 4.37 | ||||||||||||
Advisor Class | 1,000.00 | 1,063.90 | 0.40% | 2.06 | ||||||||||||
Hypothetical |
| |||||||||||||||
Class A | $1,000.00 | $1,021.94 | 0.60% | $3.02 | ||||||||||||
Class B | 1,000.00 | 1,018.20 | 1.35% | 6.79 | ||||||||||||
Class C | 1,000.00 | 1,018.20 | 1.35% | 6.79 | ||||||||||||
Class R | 1,000.00 | 1,020.69 | 0.85% | 4.28 | ||||||||||||
Advisor Class | 1,000.00 | 1,022.94 | 0.40% | 2.02 | ||||||||||||
PL Portfolio Optimization Aggressive Fund (2) | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class A | $1,000.00 | $1,068.10 | 0.60% | $3.09 | ||||||||||||
Class B | 1,000.00 | 1,065.20 | 1.35% | 6.95 | ||||||||||||
Class C | 1,000.00 | 1,065.90 | 1.35% | 6.95 | ||||||||||||
Class R | 1,000.00 | 1,067.70 | 0.85% | 4.38 | ||||||||||||
Advisor Class | 1,000.00 | 1,068.80 | 0.40% | 2.06 | ||||||||||||
Hypothetical |
| |||||||||||||||
Class A | $1,000.00 | $1,021.94 | 0.60% | $3.02 | ||||||||||||
Class B | 1,000.00 | 1,018.20 | 1.35% | 6.79 | ||||||||||||
Class C | 1,000.00 | 1,018.20 | 1.35% | 6.79 | ||||||||||||
Class R | 1,000.00 | 1,020.69 | 0.85% | 4.28 | ||||||||||||
Advisor Class | 1,000.00 | 1,022.94 | 0.40% | 2.02 | ||||||||||||
PL Short Duration Income Fund | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class A | $1,000.00 | $1,019.10 | 0.85% | $4.28 | ||||||||||||
Class C | 1,000.00 | 1,016.30 | 1.60% | 8.04 | ||||||||||||
Class I | 1,000.00 | 1,020.30 | 0.60% | 3.02 | ||||||||||||
Advisor Class | 1,000.00 | 1,020.30 | 0.60% | 3.02 | ||||||||||||
Hypothetical |
| |||||||||||||||
Class A | $1,000.00 | $1,020.69 | 0.85% | $4.28 | ||||||||||||
Class C | 1,000.00 | 1,016.95 | 1.60% | 8.05 | ||||||||||||
Class I | 1,000.00 | 1,021.94 | 0.60% | 3.02 | ||||||||||||
Advisor Class | 1,000.00 | 1,021.94 | 0.60% | 3.02 | ||||||||||||
PL Income Fund | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class A | $1,000.00 | $1,041.60 | 0.90% | $4.58 | ||||||||||||
Class C | 1,000.00 | 1,037.70 | 1.65% | 8.38 | ||||||||||||
Class I | 1,000.00 | 1,042.90 | 0.65% | 3.31 | ||||||||||||
Advisor Class | 1,000.00 | 1,042.80 | 0.65% | 3.31 | ||||||||||||
Hypothetical |
| |||||||||||||||
Class A | $1,000.00 | $1,020.44 | 0.90% | $4.53 | ||||||||||||
Class C | 1,000.00 | 1,016.70 | 1.65% | 8.30 | ||||||||||||
Class I | 1,000.00 | 1,021.69 | 0.65% | 3.28 | ||||||||||||
Advisor Class | 1,000.00 | 1,021.69 | 0.65% | 3.28 |
Beginning Account Value at 10/01/13 | Ending Account Value at 03/31/14 | Annualized Expense Ratio | Expenses 10/01/13 - | |||||||||||||
PL Strategic Income Fund | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class A | $1,000.00 | $1,066.70 | 1.05% | $5.41 | ||||||||||||
Class C | 1,000.00 | 1,063.00 | 1.80% | 9.26 | ||||||||||||
Class I | 1,000.00 | 1,068.40 | 0.80% | 4.13 | ||||||||||||
Advisor Class | 1,000.00 | 1,068.00 | 0.80% | 4.12 | ||||||||||||
Hypothetical |
| |||||||||||||||
Class A | $1,000.00 | $1,019.70 | 1.05% | $5.29 | ||||||||||||
Class C | 1,000.00 | 1,015.96 | 1.80% | 9.05 | ||||||||||||
Class I | 1,000.00 | 1,020.94 | 0.80% | 4.03 | ||||||||||||
Advisor Class | 1,000.00 | 1,020.94 | 0.80% | 4.03 | ||||||||||||
PL Floating Rate Income Fund | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class A | $1,000.00 | $1,029.40 | 1.05% | $5.31 | ||||||||||||
Class C | 1,000.00 | 1,025.70 | 1.80% | 9.09 | ||||||||||||
Class I | 1,000.00 | 1,030.70 | 0.80% | 4.05 | ||||||||||||
Class P | 1,000.00 | 1,030.70 | 0.80% | 4.05 | ||||||||||||
Advisor Class | 1,000.00 | 1,030.60 | 0.80% | 4.05 | ||||||||||||
Hypothetical |
| |||||||||||||||
Class A | $1,000.00 | $1,019.70 | 1.05% | $5.29 | ||||||||||||
Class C | 1,000.00 | 1,015.96 | 1.80% | 9.05 | ||||||||||||
Class I | 1,000.00 | 1,020.94 | 0.80% | 4.03 | ||||||||||||
Class P | �� | 1,000.00 | 1,020.94 | 0.80% | 4.03 | |||||||||||
Advisor Class | 1,000.00 | 1,020.94 | 0.80% | 4.03 | ||||||||||||
PL Limited Duration High Income Fund | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class A | $1,000.00 | $1,045.70 | 1.08% | $5.51 | ||||||||||||
Class C | 1,000.00 | 1,041.60 | 1.83% | 9.31 | ||||||||||||
Class I | 1,000.00 | 1,046.90 | 0.83% | 4.24 | ||||||||||||
Advisor Class | 1,000.00 | 1,047.00 | 0.83% | 4.24 | ||||||||||||
Hypothetical |
| |||||||||||||||
Class A | $1,000.00 | $1,019.55 | 1.08% | $5.44 | ||||||||||||
Class C | 1,000.00 | 1,015.81 | 1.83% | 9.20 | ||||||||||||
Class I | 1,000.00 | 1,020.79 | 0.83% | 4.18 | ||||||||||||
Advisor Class | 1,000.00 | 1,020.79 | 0.83% | 4.18 | ||||||||||||
PL High Income Fund | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class A | $1,000.00 | $1,069.90 | 1.05% | $5.42 | ||||||||||||
Class C | 1,000.00 | 1,066.10 | 1.80% | 9.27 | ||||||||||||
Class I | 1,000.00 | 1,071.80 | 0.80% | 4.13 | ||||||||||||
Advisor Class | 1,000.00 | 1,071.20 | 0.80% | 4.13 | ||||||||||||
Hypothetical |
| |||||||||||||||
Class A | $1,000.00 | $1,019.70 | 1.05% | $5.29 | ||||||||||||
Class C | 1,000.00 | 1,015.96 | 1.80% | 9.05 | ||||||||||||
Class I | 1,000.00 | 1,020.94 | 0.80% | 4.03 | ||||||||||||
Advisor Class | 1,000.00 | 1,020.94 | 0.80% | 4.03 |
(1) | Expenses paid during the period are equal to the fund's annualized expense ratio (shown in table above), multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year or applicable period, then divided by 365 days. |
(2) | The annualized expense ratios for the Portfolio Optimization Funds do not include fees and expenses of the PL Underlying Funds (see Note 1 in Notes to Financial Statements) in which the Portfolio Optimization Funds invest. |
F-3
PACIFIC LIFE FUNDS
TRUSTEES AND OFFICERS INFORMATION
(Unaudited)
The business and affairs of the Pacific Life Funds (the “Trust”) are managed under the direction of the Board of Trustees under the Pacific Life Funds’ Declaration of Trust. Information pertaining to the trustees and officers of the Trust is set forth below, effective April 1, 2014. Trustees who are not deemed to be “interested persons” of the Trust, as defined in the 1940 Act, are referred to as “Independent Trustees.” Certain trustees and officers are deemed to be “interested persons” of the Trust and thus are referred to as “Interested Persons”, because of their positions with Pacific Life Insurance Company (“Pacific Life”) and Pacific Life Fund Advisors LLC, a wholly-owned subsidiary of Pacific Life. The Trust’s Statement of Additional Information includes additional information about the trustees. For information on availability of the Trust’s Statement of Additional Information, refer to the WHERE TO GO FOR MORE INFORMATION section of this report.
The address of each trustee and officer is c/o Pacific Life Funds, 700 Newport Center Drive, Newport Beach, CA 92660.
Name and Age | Position(s) with the Fund and Length of Time Served* | Current Directorship(s) Held and Principal Occupation(s) (and certain additional occupation information) During Past 5 years | Number of Portfolios in Fund Complex Overseen** | |||
INDEPENDENT TRUSTEES | ||||||
Frederick L. Blackmon Year of birth 1952 | Trustee since 9/13/05 | Trustee (1/05 to present) of Pacific Select Fund; Director (2005 to present) of Trustmark Mutual Holding Company; Former Executive Vice President and Chief Financial Officer (1995 to 2003) of Zurich Life; Former Executive Vice President and Chief Financial Officer (1989 to 1995) of Alexander Hamilton Life Insurance Company (subsidiary of Household International); Member of Board of Trustees (2010 to present) of Cranbrook Educational Community; Former Member of Board of Governors (1994 to 1999) of Cranbrook Schools; and Former Member of Board of Regents (1993 to 1996) Eastern Michigan University. | 91 | |||
Gale K. Caruso Year of birth 1957 | Trustee since 1/01/06 | Trustee (1/06 to present) of Pacific Select Fund; Former Member of the Board of Directors (2005 to 2009) of LandAmerica Financial Group, Inc.; Former President and Chief Executive Officer (1999 to 2003) of Zurich Life; Former Chairman, President and Chief Executive Officer of Scudder Canada Investor Services, Ltd. and Managing Director of Scudder Kemper Investments; Former Member of the Advisory Council of the Trust for Public Land in Maine; Former Member of the Board of Directors of Make-A-Wish of Maine; and Former Member of the Board of Directors of the Illinois Life Insurance Council. | 91 | |||
Lucie H. Moore Year of birth 1956 | Trustee since 6/13/01 | Trustee (10/98 to present) of Pacific Select Fund; Former Partner (1984 to 1994) with Gibson, Dunn & Crutcher (Law); Former Member of the Board of Trustees (2007 to 2011) of Sage Hill School; Former Member (2000 to 2009) of the Board of Trustees of The Pegasus School; Former Member of the Board of Directors (2005 to 2010) of HomeWord; and Former Member of the Advisory Board (1993 to 2004) of Court Appointed Special Advocates (CASA) of Orange County. | 91 | |||
Nooruddin (Rudy) S. Veerjee Year of birth 1958 | Trustee since 9/13/05 | Trustee (1/05 to present) of Pacific Select Fund; Former President (1997 to 2000) of Transamerica Insurance and Investment Group; Former President (1994 to 1997) of Transamerica Asset Management; Former Chairman and Chief Executive Officer (1995 to 2000) of Transamerica Premier Funds (Mutual Fund); and Former Director (1994 to 2000) of various Transamerica Life Companies. | 91 | |||
G. Thomas Willis Year of birth 1942 | Trustee since 2/24/04 | Trustee (11/03 to present) of Pacific Select Fund; Certified Public Accountant in California (1967 to present); Former Partner (Audit) (1976 to 2002) of PricewaterhouseCoopers LLP (Accounting and Auditing). | 91 |
F-4
PACIFIC LIFE FUNDS
TRUSTEES AND OFFICERS INFORMATION (Continued)
(Unaudited)
Name and Age | Position(s) with the Fund and Length of Time Served* | Current Directorship(s) Held and Principal Occupation(s) (and certain additional occupation information) During Past 5 years | Number of Portfolios in Fund Complex Overseen** | |||
INTERESTED PERSONS | ||||||
James T. Morris Year of birth 1960 | Chairman of the Board and Trustee since 1/11/07, (Chief Executive Officer 1/11/07 to 12/31/09) | Director (4/07 to present), Chairman (5/08 to present), Chief Executive Officer (4/07 to present) and President (4/07 to 3/12) of Pacific Mutual Holding Company and Pacific LifeCorp; Director (4/07 to present), Chairman (5/08 to present), Chief Executive Officer (4/07 to present) and President (4/07 to 3/12) of Pacific Life; Chief Executive Officer (5/07 to present) and President (5/07 to 3/12) of Pacific Life Fund Advisors LLC; and Chairman of the Board and Trustee (1/07 to present) and Chief Executive Officer (1/07 to 12/09) of Pacific Select Fund. | 91 | |||
Mary Ann Brown Year of birth 1951 | Chief Executive Officer since 1/01/10, (President 1/11/07 to 12/31/09) | Executive Vice President (4/10 to present) and Senior Vice President (5/06 to 3/10) of Pacific LifeCorp; Executive Vice President (4/10 to present) and Senior Vice President (3/05 to 3/10) of Pacific Life; Executive Vice President (4/10 to present) and Senior Vice President (5/07 to 3/10) of Pacific Life Fund Advisors LLC; and Chief Executive Officer (1/10 to present) and President (1/07 to 12/09) of Pacific Select Fund. | 91 | |||
Robin S. Yonis Year of birth 1954 | Vice President and General Counsel since 6/13/01 | Vice President, Fund Advisor General Counsel, and Assistant Secretary (5/07 to present) of Pacific Life Fund Advisors LLC; and Vice President and General Counsel (4/05 to present) of Pacific Select Fund. | 91 | |||
Brian D. Klemens Year of birth 1956 | Vice President and Treasurer since 6/13/01 | Vice President and Controller (10/07 to present) of Pacific Mutual Holding Company and Pacific LifeCorp; Vice President and Controller (10/07 to present) of Pacific Life; Vice President and Controller (10/07 to present) of Pacific Life Fund Advisors LLC; Vice President (5/00 to present) and Controller (10/07 to present) of Pacific Select Distributors, Inc.; and Vice President and Treasurer (4/96 to present) of Pacific Select Fund. | 91 | |||
Sharon E. Pacheco Year of birth 1957 | Vice President and Chief Compliance Officer since 6/04/04 | Vice President and Chief Compliance Officer (11/03 to present) of Pacific Mutual Holding Company and Pacific LifeCorp; Vice President (2/00 to present) and Chief Compliance Officer (1/03 to present) of Pacific Life; Vice President and Chief Compliance Officer (5/07 to present) of Pacific Life Fund Advisors LLC; and Vice President and Chief Compliance Officer (6/04 to present) of Pacific Select Fund. | 91 | |||
Eddie Tung Year of birth 1957 | Vice President and Assistant Treasurer since 11/14/05 | Assistant Vice President (4/03 to present) of Pacific Life; Assistant Vice President (5/07 to present) of Pacific Life Fund Advisors LLC; and Assistant Vice President and Assistant Treasurer (11/05 to present) of Pacific Select Fund. | 91 | |||
Howard T. Hirakawa Year of birth 1962 | Vice President since 6/20/06 | Senior Vice President (4/14 to present), Vice President (5/07 to 3/14) of Pacific Life Fund Advisors LLC; and Vice President (6/06 to present) of Pacific Select Fund. | 91 | |||
Jane M. Guon Year of birth 1964 | Vice President and Secretary since 1/01/11 | Vice President and Secretary (1/11 to present), Assistant Vice President (4/06 to 12/10) and Assistant Secretary (6/98 to 12/10) of Pacific Mutual Holding Company and Pacific LifeCorp; Director, Vice President, and Secretary (1/11 to present), Assistant Vice President (4/06 to 12/10) and Assistant Secretary (2/95 to 12/10) of Pacific Life; Vice President and Secretary (1/11 to present) and Assistant Vice President and Assistant Secretary (05/07 to 12/10) of Pacific Life Fund Advisors LLC; Vice President and Secretary (1/11 to present), Assistant Vice President (5/06 to 12/10) and Assistant Secretary (5/99 to 12/10) of Pacific Select Distributors, Inc.; and Vice President and Secretary (1/11 to present) of Pacific Select Fund. | 91 |
F-5
PACIFIC LIFE FUNDS
TRUSTEES AND OFFICERS INFORMATION (Continued)
(Unaudited)
Name and Age | Position(s) with the Fund and Length of Time Served* | Current Directorship(s) Held and Principal Occupation(s) (and certain additional occupation information) During Past 5 years | Number of Portfolios in Fund Complex Overseen** | |||
INTERESTED PERSONS (Continued) | ||||||
Laurene E. MacElwee Year of birth 1966 | Vice President since 4/04/05 and Assistant Secretary since 6/13/01 | Vice President (4/11 to present), Assistant Secretary (5/07 to present) and Assistant Vice President (5/07 to 3/11) of Pacific Life Fund Advisors LLC; and Vice President (12/11 to present), Assistant Secretary (4/05 to present) and Assistant Vice President (4/05 to 12/11) of Pacific Select Fund. | 91 | |||
Carleton J. Muench Year of birth 1973 | Vice President since 11/30/06 | Vice President (4/14 to present), Assistant Vice President (5/07 to 3/14) of Pacific Life Fund Advisors LLC; and Assistant Vice President (11/06 to present) of Pacific Select Fund. | 91 | |||
Kevin W. Steiner Year of birth 1975 | Vice President since 1/01/13 | Assistant Vice President (4/12 to present), Mutual Funds Compliance Director (4/08 to 3/12) and Mutual Funds Compliance Manager (10/06 to 3/08) of Pacific Life Fund Advisors LLC; and Assistant Vice President (1/13 to present) of Pacific Select Fund. | 91 | |||
Audrey L. Cheng Year of birth 1975 | Vice President since 12/11/13 | Assistant Vice President (9/11 to present) of Pacific Life; Vice President and Attorney (6/08 to 8/11) of Pacific Investment Management Company LLC (“PIMCO”); and Assistant Vice President (12/13 to present) of Pacific Select Funds. | 91 |
* | A trustee serves until he or she resigns, retires, or his or her successor is elected and qualified. |
** | As of March 31, 2014, the “Fund Complex” consisted of Pacific Select Fund (58 portfolios) and Pacific Life Funds (33 funds). |
F-6
PACIFIC LIFE FUNDS
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
AND FUND MANAGEMENT AGREEMENTS
(Unaudited)
I. Introduction and Background
The Board of Trustees (the “Trustees” or “Board”) of Pacific Life Funds (the “Trust”) oversees the management of each of the separate funds of the Trust (each a “Fund” and collectively, the “Funds”) and, as required by Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), initially approves, and determines annually whether to renew the investment advisory agreement (the “Advisory Agreement”) with Pacific Life Fund Advisors LLC (“PLFA”) and each fund management agreement (the “Fund Management Agreements,” together with the Advisory Agreement, the “Agreements”) with the various sub-advisers (“Fund Managers”). PLFA serves as the investment adviser for all of the Funds and directly manages the PL Short Duration, PL Income, PL Strategic Income, PL Floating Rate Income, PL Limited Duration High Income, and PL High Income Funds (the “PAM Managed Funds”) under the name Pacific Asset Management (“PAM”) and the PL Portfolio Optimization Conservative, PL Portfolio Optimization Moderate-Conservative, PL Portfolio Optimization Moderate, PL Portfolio Optimization Moderate-Aggressive, and PL Portfolio Optimization Aggressive Funds (the “Asset Allocation Funds,” and together with the PAM Managed Funds, the “Directly Managed Funds”). For all other Funds (other than the PL Diversified Alternatives Fund, which is a new fund and is discussed in a separate Annual Report dated March 31, 2014), PLFA has retained other firms to serve as Fund Managers under PLFA’s supervision. The Board, including all of the Trustees who are not “interested persons,” as that term is defined in the 1940 Act (“Independent Trustees”), last renewed the Agreements at an in-person meeting of the Trustees held on December 11, 2013.1
At this meeting and other meetings, the Board considered information (both written and oral) provided to assist it in its review of the Agreements and made assessments with respect to each Agreement. The Board requested, received and reviewed written materials from PLFA and each Fund Manager that were submitted in response to requests from the Independent Trustees and supporting materials relating to those questions and responses. In addition, the Board received in-person presentations about the Funds throughout the year, and the Independent Trustees were advised by independent legal counsel with respect to these and other relevant matters. The Board reviewed a variety of factors and considered a significant amount of information, including information received on an ongoing basis at Board and committee meetings, including reports on Fund performance, expenses, fee comparisons, investment advisory, compliance, and other services provided to the Funds by PLFA and the Fund Managers. The Board also reviewed financial and profitability information regarding PLFA and the Fund Managers and information regarding the organization and operations of each entity, such as their compliance monitoring, portfolio trading and brokerage practices and the personnel providing investment management and administrative services to each Fund. The Board reviewed data provided by PLFA that was gathered from various independent providers of investment company data to provide the Board with information concerning the Funds’ investment performance, management fees and expense information. Additionally, the Independent Trustees retained an independent consultant (“Independent Consultant”) to assist the Trustees with certain of their analyses and to provide other relevant information. In connection with the analysis, the Independent Consultant utilized and provided the Independent Trustees with data obtained from independent service providers as well as from other sources.
The Trustees’ determinations were made on the basis of each Trustee’s business judgment after consideration of all the information presented. In reviewing the materials presented and in considering the information in the management presentations, the Trustees did not identify any single issue or particular information that, in isolation, would be a controlling factor in making a final decision regarding the proposed renewals. 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. The following summary describes the most important, but not all, of the factors considered by the Trustees in approving the renewals, and in the case of the Independent Trustees, certain factors were considered in light of the legal advice furnished to them by independent legal counsel and information from the Independent Consultant that they had retained. This discussion is not intended to be all-inclusive.
II. Annual Consideration and Approval of Investment Advisory and Fund Management Agreements
In evaluating the Advisory Agreement and each Fund Management Agreement, the Board, including all the Independent Trustees, considered the following factors, among others:
1. Nature, Extent and Quality of Services
PLFA. The Trustees considered the depth and quality of PLFA’s investment management process, including its monitoring and oversight of the Fund Managers and PAM, and the benefits to shareholders of retaining PLFA and continuing the Advisory Agreement in light of the nature, extent, and quality of the services that have been provided by PLFA, including PAM. The Trustees considered the overall financial strength and stability of PLFA and its ability to provide a high level and quality of services to the Funds. They also considered PLFA’s responsiveness to questions or concerns raised by the Trustees, including PLFA’s willingness to consider and implement investment and operational changes designed to improve investment results and improve the services provided to the Funds and their shareholders.
The Trustees noted that PLFA makes officers and employees of PLFA available to the Board for consultation and discussion regarding the investment management services provided to the Funds. The Trustees considered the experience, capability and integrity of PLFA’s senior management and other personnel and the low turnover rates of its key personnel. The Trustees noted that the investment, legal, compliance and accounting professionals of PLFA and its affiliates have access to and utilize a variety of resources and systems relating to investment management, compliance, trading, performance and risk analysis, security valuation and fund accounting. The Trustees further considered PLFA’s continuing need and ability to attract and retain qualified personnel and to maintain and enhance its resources and systems to provide appropriate investment management, compliance and monitoring services for the Funds.
1 | At the December 11th meeting, the Board did not consider the continuance of the Advisory Agreement relating to the PL Limited Duration High Income Fund, as that agreement was not up for renewal at that time. |
F-7
PACIFIC LIFE FUNDS
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
AND FUND MANAGEMENT AGREEMENTS (Continued)
(Unaudited)
Directly Managed Funds – The Trustees considered the services provided by PLFA, including PAM, in rendering investment management services to each Directly Managed Fund. The Trustees considered that PLFA, including PAM, is responsible for identifying investments for each Directly Managed Fund and determining when to purchase, retain, or sell securities, cash and/or other investments for each Directly Managed Fund. The Trustees also considered that PLFA, including PAM, is responsible for the valuation of portfolio securities and evaluating and voting proxies for portfolio holdings of the Directly Managed Funds. With respect to the Asset Allocation Funds, the Trustees also considered, among other things, PLFA’s experience, resources and expertise in analyzing the composition of the various Underlying Funds that serve as investment options for the Asset Allocation Funds and in developing asset allocation models appropriate to each Asset Allocation Fund’s investment objectives and risk profile. The Trustees considered, in this regard, the tools and resources used by PLFA in constructing the asset allocation models, including the role and costs of consultants engaged by PLFA for assistance in the construction of these models. With respect to the PAM Managed Funds, the Trustees also considered the investment oversight and monitoring of PAM discussed below under “Sub-Advised Funds.”
The Trustees considered PLFA’s policies, procedures and systems to ensure compliance with applicable laws and regulations with respect to the Directly Managed Funds, and its attention to matters that may involve conflicts of interest between itself and a Fund. In this regard, the Trustees reviewed information throughout the year on PLFA’s compliance policies and procedures, its compliance history, and reports from the Trust’s Chief Compliance Officer (“CCO”) on compliance by PLFA with applicable laws and regulations. The Trustees also reviewed information on any responses by PLFA to regulatory and compliance developments throughout the year. The Trustees further noted the compliance monitoring conducted by PLFA and PAM on an ongoing basis and also noted the development of procedures and systems necessary to maintain compliance with applicable laws and regulations as well as the resources that PLFA dedicates to these programs. The Trustees considered that the CCO has in place a systematic process for periodically reviewing PLFA’s written compliance policies and procedures, including the assessment of PLFA’s compliance program as required under Rule 38a-1 of the 1940 Act and PLFA’s code of ethics. The Trustees also considered that PLFA continues to cooperate with the CCO in reviewing its compliance operations.
Sub-Advised Funds – The Trustees considered PLFA’s responsibilities in rendering services to the Sub-Advised Funds and the fact that PLFA monitors and evaluates the performance of the Fund Managers in comparison to each Fund’s investment objective as well as to appropriate benchmark indices and peer funds. The Trustees also considered that PLFA monitors the Sub-Advised Funds for adherence to the investment objectives and policies of each Fund. The Trustees noted that PLFA provides the Board with periodic and special reports related to such performance and investment monitoring and evaluation. The Trustees also considered PLFA’s role in analyzing and recommending for consideration by the Board, the termination of a Fund Management Agreement with a Fund Manager and the replacement of a Fund Manager.
The Trustees considered the high quality of the products and services provided by PLFA to the Funds, including risk analysis, preparation of periodic performance and other reports, and coordination and oversight of other service providers to the Trust. The Trustees also noted that PLFA regularly informs the Trustees about matters relevant to the Trust and its shareholders, including relationships with financial intermediaries.
The Trustees considered the depth and quality of PLFA’s monitoring and oversight of the Fund Managers and PAM. The Board noted that PLFA monitors numerous investment, performance, and risk metrics for the Funds. The Trustees considered PLFA’s continued investment in, and development of, its research and analytical capabilities, including investments in personnel and enhanced analytical tools for assessing Fund performance and the performance of the Fund Managers, including analytical tools relating to risk analysis, Fund performance attribution and reporting on such matters to the Trustees. The Trustees noted that PLFA uses these tools to analyze a Fund’s performance and risk profile and identify Funds that are underperforming. The Board considered that PLFA also conducts various analyses to try to assess the sources of and reasons for underperformance. The Trustees noted that PLFA has developed, and continues to enhance, processes to oversee and monitor the performance of Fund Managers, including the use of analytical methods to review Fund performance and execution of investment strategies. The Board noted that PLFA provides the Board with analysis of this data over rolling periods to assist the Board in identifying trends in Fund performance and other areas, and periodically provides the Trustees with information on economic and market trends to provide a context for assessing recent performance. The Trustees also noted that PLFA has developed effective methods for monitoring investment style consistency by Fund Managers and for analyzing the use of derivatives by Fund Managers. With respect to the PAM Managed Funds, the Board considered that PLFA provides oversight, diligence and reporting with regard to its PAM unit that is similar to the process it employs with regard to the Fund Managers. In making their assessments, the Trustees considered that PLFA has historically exercised diligence in monitoring the performance of the Fund Managers and PAM, and has recommended and taken measures to attempt to remedy relative underperformance by a Fund when PLFA and the Trustees believed it to be appropriate. The Trustees also considered the significant work performed by PLFA in conducting searches for new Fund Managers to replace existing Fund Managers where appropriate or to manage new Funds in the Trust.
The Board also noted that PLFA conducts periodic due diligence on Fund Managers involving onsite visits, in-person meetings and telephonic meetings to gather information that PLFA uses to gain an in-depth understanding of a Fund Manager’s investment process and to seek to identify issues that may be relevant to a Fund Manager’s services to a Fund or a Fund’s performance, including, but not limited to, the financial strength of a Fund Manager, significant staffing changes that could affect a Fund, material changes in a Fund Manager’s assets under management, compliance and regulatory concerns, best execution review and portfolio security valuation support.
The Trustees considered the time and attention paid by PLFA to matters involving the valuation of Fund securities. The Trustees considered that PLFA has established a Valuation Oversight Committee that is responsible for, among other things, researching and evaluating information concerning securities that are not actively or publicly traded, valuing securities subject to a trading halt or for which a market quotation is not readily available, the valuation of equity securities traded on foreign exchanges, oversight of and due diligence on pricing vendors and the development of alternate valuation methodologies.
F-8
PACIFIC LIFE FUNDS
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
AND FUND MANAGEMENT AGREEMENTS (Continued)
(Unaudited)
The Trustees considered PLFA’s oversight, review and analysis of trade execution reports and trends in trade execution for the Funds. The Trustees noted that PLFA oversees a third-party transaction cost analysis consultant that provides statistical analysis on Fund trading and that PLFA presents information about Fund trading costs to the Board annually. The Board also noted that PLFA conducts regular review and analysis of each Fund Manager’s use of soft dollars and presents information about Fund Managers’ use of soft dollars to the Board annually.
The Trustees also considered PLFA’s implementation of transition management programs when handling significant changes in the Funds, such as cash movements between the Funds arising from reallocations by funds of funds and the transition of a Fund from one Fund Manager to another, including steps taken by PLFA to reduce transaction costs associated with a Fund transition. The Trustees considered that PLFA coordinates the onboarding process for new Fund Managers and oversees the establishment of necessary accounts and documentation for the Fund Managers to begin managing Fund assets.
In addition to the services described above, the Trustees also considered the compliance monitoring that PLFA and its affiliates conduct on the Fund Managers and the commitment of PLFA and its affiliates to those programs and PLFA’s efforts to keep the Trustees informed about the compliance programs of Fund Managers. In this regard, the Trustees reviewed information and reports from the Trust’s CCO on compliance by the Fund Managers with applicable laws and regulations. The Trustees considered that the CCO has in place a systematic process for periodically reviewing each Fund Manager’s written compliance policies and procedures, including the assessment of each Fund Manager’s compliance program as required under Rule 38a-1 of the 1940 Act and each Fund Manager’s code of ethics. The Trustees also considered that each Fund Manager continues to cooperate with the CCO in reviewing its compliance operations.
Fund Managers. The Trustees considered the benefits to shareholders of retaining each Fund Manager and continuing the Fund Management Agreements particularly in light of the nature, extent, and quality of the services that have been provided by the Fund Managers. The Trustees considered the services provided by each Fund Manager in rendering investment management services to a Sub-Advised Fund. The Trustees considered that each Fund Manager is responsible for identifying investments for a Sub-Advised Fund and determining when to purchase, retain, or sell securities, cash and/or other investments for a Sub-Advised Fund. The Trustees also considered that each Fund Manager is responsible for evaluating and voting proxies for fund holdings of a Sub-Advised Fund. The Trustees considered the quality of the portfolio management services which have benefited and should continue to benefit the Sub-Advised Funds and their shareholders, the organizational depth and resources of the Fund Managers, including the background and experience of each of the Fund Manager’s management, and the expertise of each Fund Manager’s portfolio management team, as well as the investment methodology used by the Fund Manager.
The Board concluded that it was satisfied with the nature, extent and quality of the investment management services provided by PLFA and the Fund Managers.
2. Investment Results
The Trustees considered the investment results of each Fund in light of its objective, strategies and market conditions. The Trustees compared each Fund’s total returns with the total returns of each Fund’s primary benchmark index and the total returns of appropriate peer funds. The peer funds for each Fund were selected by an Independent Consultant using data from Morningstar (each a “Selected Performance Peer Group”), and the Trustees reviewed a description of the Independent Consultant’s methodology for selecting the peer funds in each Selected Performance Peer Group. The information provided to the Trustees included each Fund’s performance record for the one-, three-, five- and ten-year or since inception periods ended September 30, 2013, as available, compared to the applicable primary benchmark and Selected Performance Peer Group.
The Trustees considered the performance of each Fund on a case-by-case basis and noted that some Funds had outperformed their Selected Performance Peer Group over certain periods and/or exceeded the return of their respective primary benchmark while others underperformed their Selected Performance Peer Group over certain periods and/or trailed the return of their respective primary benchmark. In considering each Fund’s investment results, the Board placed greater emphasis on each Fund’s long-term performance track record rather than shorter-term performance. The Board also took into account that each Fund’s track record is measured as of a specific date, and that track records can vary as of different measurement dates. Therefore, in reviewing Funds that are currently underperforming as of September 30, 2013, the Trustees also considered the broader perspective of the Fund’s performance over varying time periods, the market conditions experienced during the periods under review, as well as the outlook for the Funds going forward in light of expected future market conditions. The Trustees discussed with PLFA the fact that certain periods of underperformance may be transitory while other periods of underperformance may be reflective of broader issues that may warrant consideration of corrective action. The Trustees discussed these Funds with representatives of PLFA, including an assessment of the approach used by the Fund Managers, and the approach used by PLFA and PAM with respect to the Directly Managed Funds, as well as the oversight and monitoring by PLFA as the investment adviser, to gain an understanding of underperformance and to assess whether any actions would be appropriate. In addition, the Board considered any specific actions that PLFA, PAM or a Fund Manager have taken, or agreed to take, to enhance the investment performance of a Fund, and the results of those actions. In reviewing the performance of each Fund, the Board took into account, among other things, each Fund’s performance track record. A summary of each Fund’s track record is provided below.
PL Main Street Core Fund
The Fund: (1) underperformed its Selected Performance Peer Group median for the one-year period and outperformed for the three- and five-year periods; (2) underperformed its primary benchmark for the one-, three-, and five-year periods; and (3) is ranked in the fourth quintile of its Selected Performance Peer Group for the one-year period and the second quintile for the three- and five-year periods.
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PL Large-Cap Growth Fund
The Fund: (1) outperformed its Selected Performance Peer Group median for the one-, three-, and five-year periods and underperformed for the ten-year period; (2) outperformed its primary benchmark for the one- and three-year periods and underperformed for the five- and ten-year periods; and (3) is ranked in the second quintile of its Selected Performance Peer Group for the one- and five-year periods, the first quintile for the three-year period and the fifth quintile for the ten-year period. In evaluating the performance of the Fund, the Board considered that the prior Fund Manager had been replaced and the current Fund Manager has managed the Portfolio since 2013, and, therefore, the Fund Management Agreement was not up for renewal at this time.
PL Growth Fund
The Fund: (1) outperformed its Selected Performance Peer Group median for the one-year period and underperformed for the three-, five-, and ten-year periods; (2) outperformed its primary benchmark for the one-year period and underperformed for the three-, five- and ten-year periods; and (3) is ranked in the second quintile of its Selected Performance Peer Group for the one-year period, the fifth quintile for the three-year period and the fourth quintile for the five- and ten-year periods. In evaluating the performance of the Fund, the Board considered that the prior Fund Manager had been replaced and the current Fund Manager has managed the Fund since 2013, and, therefore, the Fund Management Agreement was not up for renewal at this time.
PL Comstock Fund
The Fund: (1) outperformed its Selected Performance Peer Group median for the one-, three-, and five-year periods and underperformed for the ten-year period; (2) outperformed its primary benchmark for the one- and five-year periods and underperformed for the three- and ten-year periods; and (3) is ranked in the first quintile of its Selected Performance Peer Group for the one-year period, the second quintile for the three- and five-year periods and the fourth quintile for the ten-year period. With regard to the approval of the Fund Management Agreement, the Board considered that the current Fund Manager has managed the Fund since 2003.
PL Large-Cap Value Fund
The Fund: (1) underperformed its Selected Performance Peer Group median for the one- and ten-year periods and outperformed for the three- and five-year periods; (2) underperformed its primary benchmark for the one- and ten-year periods and outperformed for the three- and five-year periods; and (3) is ranked in the fourth quintile of its Selected Performance Peer Group for the one- and ten-year periods, the first quintile for the three-year period and the third quintile for the five-year period.
PL Small-Cap Value Fund
The Fund: (1) underperformed its Selected Performance Peer Group median for the one-, three-, and five-year periods; (2) underperformed its primary benchmark for the one- and three-year periods and outperformed for the five-year period; and (3) is ranked in the fourth quintile of its Selected Performance Peer Group for the one- and three-year periods and the third quintile for the five-year period. In evaluating the performance of the Fund, the Trustees considered that the Fund had competitive long-term performance, but, with respect to the Fund’s underperformance over shorter-term periods, considered that PLFA had advised that it was evaluating whether future remedial actions were necessary or appropriate.
PL Small-Cap Growth Fund
The Fund: (1) underperformed its Selected Performance Peer Group median for the one-, three-, and ten-year periods and outperformed for the five-year period; (2) underperformed its primary benchmark for the one-, three-, and ten-year periods and outperformed for the five-year period; and (3) is ranked in the fourth quintile of its Selected Performance Peer Group for the one-year period, the fifth quintile for the three-and ten-year periods and the third quintile for the five-year period. In evaluating the performance of the Fund, the Trustees considered that the Board had approved a change in Fund Manager for the Fund effective May 1, 2014.
PL Mid-Cap Growth Fund
The Fund: (1) outperformed its Selected Performance Peer Group median for the one-, five-, and ten-year periods and underperformed for the three-year period; (2) outperformed its primary benchmark for the one-, five-, and ten-year periods and underperformed for the three-year period; and (3) is ranked in the first quintile of its Selected Performance Peer Group for the one-, five- and ten-year periods and the fifth quintile for the three-year period. In evaluating the performance of the Fund, the Board considered that the prior Fund Manager had been replaced and the current Fund Manager has managed the Fund since 2013, and, therefore, the Fund Management Agreement is not up for renewal at this time.
PL Mid-Cap Equity Fund
The Fund: (1) underperformed its Selected Performance Peer Group median for the one-, three-, and five-year periods; (2) underperformed its primary benchmark for the one-, three-, and five-year periods; and (3) is ranked in the fourth quintile of its Selected Performance Peer Group for the one- and five-year periods and the fifth quintile for the three-year period. In evaluating the performance of the Fund, the Board considered that prior Fund Manager had been replaced and the current Fund Manager has managed the Fund since 2013, and, therefore, the Fund Management Agreement is not up for renewal at this time.
PL Real Estate Fund
The Fund: (1) underperformed its Selected Performance Peer Group median for the one- and three-year periods and outperformed for the five-year period; (2) underperformed its primary benchmark for the one-, three-, and five-year periods; and (3) is ranked in the fourth quintile of its Selected Performance Peer Group for the one- and three-year periods and the third quintile for the five-year period. In evaluating the
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(Unaudited)
performance of the Fund, the Trustees considered that despite the Fund’s comparative ranking against the Selected Performance Peer Group, the difference in absolute returns of the Fund from the median of the Selected Performance Peer Group was not large. The Trustees considered that PLFA had advised that it was evaluating whether future remedial actions were necessary or appropriate.
PL Emerging Markets Debt Fund
The Fund: (1) outperformed its Selected Performance Peer Group median for the one-year period; (2) outperformed its primary benchmark for the one-year period; and (3) is ranked in the third quintile of its Selected Performance Peer Group for the one-year period.
PL Emerging Markets Fund
The Fund: (1) outperformed its Selected Performance Peer Group median for the one-, three-, and five-year periods; (2) outperformed its primary benchmark for the one-, three-, and five-year periods; and (3) is ranked in the first quintile of its Selected Performance Peer Group for the one-, three-, and five-year periods.
PL International Large-Cap Fund
The Fund: (1) outperformed its Selected Performance Peer Group median for the one-, three-, five- and ten-year periods; (2) underperformed its primary benchmark for the one-year period and outperformed for the three-, five- and ten-year periods; and (3) is ranked in the first quintile of its Selected Performance Peer Group for the one-year period and the second quintile for the three, five-, and ten-year periods. With regard to the approval of the Fund Management Agreement, the Board considered that the current Fund Manager has managed the Fund since 2004.
PL International Value Fund
The Fund: (1) outperformed its Selected Performance Peer Group median for the one- and three-year periods and underperformed for the five- and ten-year periods; (2) outperformed its primary benchmark for the one-year period and underperformed for the three-, five-, and ten-year periods; and (3) is ranked in the second quintile of its Selected Performance Peer Group for the one-year period, the third quintile for the three-year period and the fifth quintile for the five- and ten-year periods. With regard to the approval of the Fund Management Agreement, the Board considered that the current Fund Manager has managed the Fund since 2011.
PL Floating Rate Income Fund
The Fund: (1) outperformed its Selected Performance Peer Group median for the one-year period; (2) outperformed its primary benchmark for the one-year period; and (3) is ranked in the first quintile of its Selected Performance Peer Group for the one-year period.
PL Floating Rate Loan Fund
The Fund: (1) underperformed its Selected Performance Peer Group median for the one-, three-, and five-year periods; (2) underperformed its primary benchmark for the one-, three- and five-year periods; and (3) is ranked in the third quintile of its Selected Performance Peer Group for the one-year period and the fourth quintile for the three- and five-year periods. With regard to the approval of the Fund Management Agreement, the Board considered that the current Fund Manager has managed the Fund since 2010.
PL High Income Fund
The Fund: (1) outperformed its Selected Performance Peer Group median for the one-year period; (2) outperformed its primary benchmark for the one-year period; and (3) is ranked in the second quintile of its Selected Performance Peer Group for the one-year period.
PL Income Fund
The Fund: (1) outperformed its Selected Performance Peer Group median for the one-year period; (2) outperformed its primary benchmark for the one-year period; and (3) is ranked in the first quintile of its Selected Performance Peer Group for the one-year period.
PL Inflation Managed Fund
The Fund: (1) underperformed its Selected Performance Peer Group median for the one-year period and outperformed for the three-, five- and ten-year periods; (2) underperformed its primary benchmark for the one-, three-, and ten-year periods and outperformed for the five-year period; and (3) is ranked in the fourth quintile of its Selected Performance Peer Group for the one-year period, the first quintile for the three- and five-year periods and the second quintile for the ten-year period.
PL Managed Bond Fund
The Fund: (1) outperformed its Selected Performance Peer Group median for the one-, five-, and ten-year periods and underperformed for the three-year period; (2) outperformed its primary benchmark for the one-, five-, and ten-year periods and underperformed for the three-year period; and (3) is ranked in the second quintile of its Selected Performance Peer Group for the one-year period, the fourth quintile for the three-year period and the first quintile for the five- and ten-year periods.
PL Money Market Fund
The Trustees considering that during the one- and three-year periods the Fund has been subject to fee and expense waivers intended to prevent the Fund’s earnings from falling below the level of the Fund’s expenses (to prevent a negative yield) and the performance rankings are not meaningful over these periods. The Fund: (1) underperformed its Selected Performance Peer Group median for the one-, three-, five-, and ten-year periods; and (2) is ranked in the fifth quintile of its Selected Performance Peer Group for the one-, three-, and ten-year periods and the third quintile for the five-year period.
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AND FUND MANAGEMENT AGREEMENTS (Continued)
(Unaudited)
PL Short Duration Bond Fund
The Fund: (1) underperformed its Selected Performance Peer Group median for the one-, three-, and five-year periods; (2) underperformed its primary benchmark for the one- and five-year periods and outperformed for the three-year period; and (3) is ranked in the third quintile of its Selected Performance Peer Group for the one-year period, the fourth quintile for the three-year period and the fifth quintile for the five-year period. With regard to the approval of the Fund Management Agreement, the Board considered that the current Fund Manager has managed the Fund since 2011.
PL Short Duration Income Fund
The Fund: (1) outperformed its Selected Performance Peer Group median for the one-year period; (2) outperformed its primary benchmark for the one-year period; and (3) is ranked in the first quintile of its Selected Performance Peer Group for the one-year period.
PL Strategic Income Fund
The Fund: (1) outperformed its Selected Performance Peer Group median for the one-year period; (2) outperformed its primary benchmark for the one-year period; and (3) is ranked in the first quintile of its Selected Performance Peer Group for the one-year period.
PL Portfolio Optimization Aggressive Fund
The Fund: (1) underperformed its Selected Performance Peer Group for the one- and five-year periods and outperformed for the three year period; (2) underperformed its primary benchmark for the one-, three-, and five-year periods; and (3) is ranked in the third quintile of its Selected Performance Peer Group for the one-, three-, and five-year periods.
PL Portfolio Optimization Conservative Fund
The Fund: (1) underperformed its Selected Performance Peer Group median for the one-, three-, and five-year periods; (2) underperformed its primary benchmark for the one- and three-year periods and outperformed for the five-year period; and (3) is ranked in the fourth quintile of its Selected Performance Peer Group for the one- and three-year periods and the third quintile for the five-year period.
PL Portfolio Optimization Moderate-Aggressive Fund
The Fund: (1) underperformed its Selected Performance Peer Group median for the one- and three-year periods and outperformed for the five-year period; (2) underperformed its primary benchmark for the one-, three-, and five-year periods; and (3) is ranked in the fourth quintile of its Selected Performance Peer Group for the one- and three-year periods and the third quintile for the five-year period.
PL Portfolio Optimization Moderate-Conservative Fund
The Fund: (1) outperformed its Selected Performance Peer Group median for the one-, three, and five-year periods; (2) underperformed its primary benchmark for the one- and three-year periods and outperformed for the five-year period; and (3) is ranked in the second quintile of its Selected Performance Peer Group for the one-, three-, and five-year periods.
PL Portfolio Optimization Moderate Fund
The Fund: (1) underperformed its Selected Performance Peer Group median for the one- and three-year periods and outperformed for the five-year period; (2) underperformed its primary benchmark for the one- and three-year periods and outperformed for the five-year period; and (3) is ranked in the fourth quintile of its Selected Performance Peer Group for the one- and three-year periods and the third quintile for the five-year period.
The Trustees reviewed the monitoring of each Fund Managers’ investment results by PLFA, including PLFA’s historical practice of recommending to the Trustees the use of a new manager if performance lagged and could not be improved within a reasonable timeframe, and reviewed the monitoring of the PAM unit’s investment results by PLFA. Generally, the Trustees noted that there continues to be a strong record of well-managed Funds that work well in the Asset Allocation Funds and that the Asset Allocation Funds provide a range of professionally managed asset allocation investment options. The Trustees also noted that the Portfolios continue to deliver the investment style as disclosed to shareholders. The Trustees also noted the use by investors of the Asset Allocation Funds and the benefits the Asset Allocation Funds provide for shareholders generally.
The Board concluded that PLFA continues to have a strong record of effectively managing a multi-manager fund group and asset allocation funds designed to give shareholders a reasonable array of choices through which to implement their investment programs. The Board further concluded that PLFA was implementing each Fund’s investment objective either directly or through the selection of Fund Managers and that PLFA’s record in managing each Fund indicates that its continued management as well as the continuation of the respective Fund Management Agreements will benefit each Fund and its shareholders.
3. Advisory Fees and Total Expense Ratios
The Trustees requested, received and reviewed information from PLFA relating to the advisory fees and the sub-advisory fees, including the portion of the advisory fees paid to each Fund Manager as compared to the portion retained by PLFA. The Trustees considered the nature and quality of the services provided by PLFA in their review of the portion of the advisory fees retained by PLFA, and also considered the nature and quality of services provided by each Fund Manager with respect to the sub-advisory fees paid to such Fund Manager. The Independent Trustees also requested and reviewed information from the Independent Consultant along with the Independent Consultant’s analysis of advisory fees, sub-advisory fees and certain combined expenses, excluding any applicable service or distribution fees that were selected by the Independent Consultant for purposes of the peer group expense comparisons (“Operating Expenses”). The Trustees reviewed the advisory
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fees, sub-advisory fees and Operating Expenses of each Fund and compared such amounts with the average fee and expense levels of applicable peer funds identified by the Independent Consultant (each a “Selected Expense Peer Group”). The Trustees reviewed a description of the Independent Consultant’s methodology for selecting peer funds in each Selected Expense Peer Group and the fact that the Selected Expense Peer Groups were constructed using a universe of funds that included both sub-advised and directly managed funds. With respect to the PL Portfolio Optimization Funds, the Trustees also compared the net expense ratio with the average net expense ratio of funds in the Morningstar Category that PLFA determined to be similar to the relevant PL Portfolio Optimization Fund (“Comparable Peer Fund Average”). A summary of some of the comparative fee and expense information considered by the Trustees for each Fund is provided below.
PL Main Street Core Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group.
PL Large-Cap Growth Fund
The Trustees considered that (a) the advisory fee for the Fund is in line with the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group. The Trustees noted that PLFA currently has contractually agreed to waive 0.045% of its advisory fee.
PL Growth Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group.
PL Comstock Fund
The Trustees considered that (a) the advisory fee for the Fund is in line with the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the second quintile of its Selected Expense Peer Group.
PL Large-Cap Value Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the second quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group.
PL Small-Cap Value Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the second quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group.
PL Small-Cap Growth Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group.
PL Mid-Cap Growth Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group.
PL Mid-Cap Equity Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group.
PL Real Estate Fund
The Trustees considered that (a) the advisory fee for the Fund is greater than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less
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than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the second quintile of its Selected Expense Peer Group.
PL Emerging Markets Debt Fund
The Trustees considered that (a) the advisory fee for the Fund is in line with the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the second quintile of its Selected Expense Peer Group.
PL Emerging Markets Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the second quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group.
PL International Large-Cap Fund
The Trustees considered that (a) the advisory fee for the Fund is in line with the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group.
PL International Value Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group.
PL Floating Rate Income Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the second quintile of its Selected Expense Peer Group.
PL Floating Rate Loan Fund
The Trustees considered that (a) the advisory fee for the Fund is greater than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the fifth quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the second quintile of its Selected Expense Peer Group. The Trustees noted that PLFA currently has contractually agreed to waive 0.10% of its advisory fee.
PL High Income Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group.
PL Income Fund
The Trustees considered that (a) the advisory fee for the Fund is in line with the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group.
PL Inflation Managed Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the second quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are in line with the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group.
PL Managed Bond Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the second quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the second quintile of its Selected Expense Peer Group.
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APPROVAL OF INVESTMENT ADVISORY AGREEMENT
AND FUND MANAGEMENT AGREEMENTS (Continued)
(Unaudited)
PL Money Market Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the second quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group.
PL Short Duration Bond Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the second quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are greater than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group.
PL Short Duration Income Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are greater than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the fourth quintile of its Selected Expense Peer Group.
PL Strategic Income Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the second quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the second quintile of its Selected Expense Peer Group.
PL Portfolio Optimization Aggressive Fund
The Trustees considered that (a) the advisory fee for the Fund is greater than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group; (b) the Operating Expenses for the Fund are greater than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the fourth quintile of its Selected Expense Peer Group; and (c) the net expense ratio was lower than the Comparable Peer Fund Average.
PL Portfolio Optimization Conservative Fund
The Trustees considered that (a) the advisory fee for the Fund is greater than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group; (b) the Operating Expenses for the Fund are greater than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the fourth quintile of its Selected Expense Peer Group; and (c) the net expense ratio was lower than the Comparable Peer Fund Average.
PL Portfolio Optimization Moderate-Aggressive Fund
The Trustees considered that (a) the advisory fee for the Fund is greater than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group; (b) the Operating Expenses for the Fund are greater than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the fourth quintile of its Selected Expense Peer Group; and (c) the net expense ratio was lower than the Comparable Peer Fund Average.
PL Portfolio Optimization Moderate-Conservative Fund
The Trustees considered that (a) the advisory fee for the Fund is greater than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group; (b) the Operating Expenses for the Fund are greater than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the fourth quintile of its Selected Expense Peer Group; and (c) the net expense ratio was lower than the Comparable Peer Fund Average.
PL Portfolio Optimization Moderate Fund
The Trustees considered that (a) the advisory fee for the Fund is greater than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group; (b) the Operating Expenses for the Fund are greater than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the fourth quintile of its Selected Expense Peer Group; and (c) the net expense ratio was lower than the Comparable Peer Fund Average.
During their review, the Trustees noted that all of the Funds were subject to contractual expense limitations on certain operating expenses agreed to by PLFA.
The Trustees also considered information from the Fund Managers regarding the comparative sub-advisory fees charged under other investment advisory contracts for similarly managed accounts, such as contracts of each Fund Manager with other similarly managed registered investment companies or other types of clients. The Trustees noted that in many cases there were differences in the level of services provided to the Funds by the Fund Managers and that the level of services provided by these Fund Managers on these other accounts were due to the different nature of the accounts or because there were other reasons to support the difference in fees, such as an affiliation between the Fund Manager and the account. These differences often explained variations in fee schedules. The Trustees were mindful that, with regard to the Sub-Advised Funds, the fee rates were the result of arms’-length negotiations between PLFA and the Fund Managers, and that any sub-advisory fees are paid by PLFA and are not paid directly by a Fund.
F-15
PACIFIC LIFE FUNDS
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
AND FUND MANAGEMENT AGREEMENTS (Continued)
(Unaudited)
The Board concluded that the advisory fees, sub-advisory fees and total expenses of each Fund were fair and reasonable.
4. Costs, Level of Profits and Economies of Scale
The Trustees reviewed information provided by PLFA and the Fund Managers regarding PLFA’s costs of sponsoring the Funds and information regarding the profitability of PLFA and the Fund Managers.
PLFA and the Fund Managers’ Costs and Profitability. The Trustees noted that, based on the data available, PLFA appears to be providing products that are competitively priced with other funds, especially multi-manager and asset allocation funds. The Trustees noted PLFA’s willingness to sponsor new funds that PLFA believed would benefit the Asset Allocation Funds, despite the potential subsidies required by PLFA during a new fund’s start-up phase. The Trustees also noted that the analysis of the Trust’s profitability to PLFA supported a conclusion that PLFA’s costs and profitability are reasonable, whether considered inclusive or exclusive of distribution costs.
The Trustees also reviewed information provided regarding the structure and manner in which PLFA’s and the Fund Managers’ investment professionals were compensated and their respective views of the relationship of such compensation to the attraction and retention of quality personnel. The Trustees considered PLFA’s willingness to invest in technology, infrastructure and staff to reinforce and offer new services and to accommodate changing regulatory requirements.
With respect to the Fund Managers, the Trustees noted that it was difficult in many cases to accurately determine or evaluate the profitability of the Fund Management Agreements to the Fund Managers because of, among other things, the differences in the types of information provided by the Fund Managers, the fact that many Fund Managers manage substantial assets other than the Funds and, further, that any such assessment would involve assumptions regarding the Fund Managers’ expense allocation policies, capital structure, cost of capital, business mix and other factors.
Accordingly, in the case of the Fund Managers, the Trustees focused greater consideration on the data described above in light of the arms’-length nature of the relationship (for the Sub-Advised Funds) between PLFA and such Fund Managers with respect to the negotiation of fund sub-advisory fees and the fact that such fees are paid by PLFA.
Economies of Scale. The Trustees noted and considered the extent to which economies of scale are increasingly realized as each Fund grows and whether advisory fee levels reflect economies of scale if the Funds grow in size. The Trustees noted the Funds do not currently produce significant economies of scale. The Trustees noted, however, PLFA’s commitment to competitive total expenses of the Funds through expense limitation agreements, its and its affiliates’ consistent reinvestment in the business in the form of improvements in technology, product innovations and customer service. The Trustees considered information relating to economies of scale provided by PLFA, and PLFA’s general willingness to discuss and evaluate the topic of economies of scale with the Trustees.
With respect to the Asset Allocation Funds, the Trustees noted that the advisory fee was set at an amount that takes into account the size of the Funds. The Independent Trustees considered that PLFA seeks to price Funds to scale from inception. The Trustees also considered PLFA’s willingness to reduce its own fees through certain advisory fee waivers and expense limitation agreements, whereby PLFA will reimburse the Funds for certain expenses that exceed stated expense caps.
The Trustees noted that PLFA and its affiliates had consistently reinvested in the business in the form of improvements in technology, product innovations, personnel and resources. The Trustees additionally noted that economies of scale were difficult to measure with precision particularly on a Fund by Fund basis. This analysis is complicated by the additional services and content provided by PLFA and its affiliates through reinvestment in the business, as discussed above. The Trustees considered that the Funds are well managed, and provide shareholders with sophisticated asset allocation investment options at reasonable fee levels. The Board noted that PLFA had taken steps to ensure that shareholders benefit by negotiating favorable terms with service providers, and to provide certain support services to the Funds on an approximate cost basis as opposed to an asset-based charge.
The Board determined that PLFA and its affiliates are sharing economies of scale given its commitment to competitive total expenses of the Funds, and the consistent reinvestment in the business in the form of improvements in technology and other resources and investments in personnel. The Board concluded that the Funds’ cost structures were reasonable and that overall profitability appeared reasonable at the current time. The Board further concluded that PLFA was sharing economies of scale with each Fund and its shareholders to their benefit.
5. Ancillary Benefits
The Trustees requested and received from PLFA and the Fund Managers information concerning other benefits received by PLFA, Pacific Life, the Fund Managers, and their affiliates as a result of their respective relationship with the Funds, including various service arrangements with PLFA affiliates and reimbursement at an approximate cost basis for support services in the case of PLFA, as well as commissions paid to broker-dealers affiliated with certain Fund Managers and the use of soft-dollars by certain of the Fund Managers. The Trustees also considered ancillary benefits received by Pacific Life and its affiliates from the Funds. The Trustees considered information concerning other significant economic relations between the Fund Managers and their affiliates and with PLFA and its affiliates and noted PLFA’s processes and procedures to identify and disclose such relationships to the Board. The Trustees also considered PLFA’s and each Fund Manager’s strong practices and procedures with regard to managing conflicts of interest and ensuring that such conflicts do not prevent PLFA or the Fund Managers from acting in the best interests of the Funds and their shareholders.
The Board concluded that such benefits were consistent with those generally derived by investment advisers to mutual funds or were otherwise not unusual.
F-16
PACIFIC LIFE FUNDS
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
AND FUND MANAGEMENT AGREEMENTS (Continued)
(Unaudited)
6. Conclusion
Based on their review, including their consideration of each of the factors referred to above, and assisted by the advice of the Independent Consultant and independent counsel to the Independent Trustees, the Board, including the Independent Trustees, concluded that the Advisory Agreement and each applicable Fund Management Agreement are fair and reasonable with respect to each Fund and its shareholders, and that the renewal of the Advisory Agreement and each applicable Fund Management Agreement would be in the best interests of the Funds and their shareholders. The Board did not indicate that any single factor was determinative of its decision to approve the Advisory Agreement and each applicable Fund Management Agreement, but indicated that the Board based its determination on the total mix of information available to it.
F-17
PACIFIC LIFE FUNDS
WHERE TO GO FOR MORE INFORMATION
(Unaudited)
Availability of Quarterly Holdings
The Trust files Form N-Q (complete schedules of fund holdings) with the Securities and Exchange Commission (the “SEC”) for the first and third quarters of each fiscal year not later than 60 days after the close of the applicable quarter end. The Trust’s Form N-Q, (when required) is filed pursuant to applicable regulations and is available after filing (i) on the SEC’s Website at http://www.sec.gov; (ii) for review and copying at the SEC’s Public Reference Room in Washington, D.C. (information on the operations of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330); and (iii) on the Trust’s Webpage at http://www.pacificlife.com/pacificlifefunds.htm. The SEC may charge you a fee for this information.
Availability of Proxy Voting Record
By August 31 of each year, the Trust files information regarding how the Trust’s fund managers voted proxies relating to fund securities during the most recent twelve-month period ended June 30. Such information is available after filing on the Trust’s’ Website and on the SEC’s Website noted below.
Information Relating to Investments Held by the Trust
For complete descriptions of the various securities and other instruments held by the Trust and their risks, please see the Trust’s prospectus and Statement of Additional Information (“SAI”). For a description of bond ratings, please see the Trust’s SAI. The prospectus and SAI are available as noted below.
Availability of Proxy Voting Policies
A description of the Proxy Voting Policies and Procedures that the Trust uses to determine how to vote proxies relating to fund securities is described in the Trust’s SAI.
How to obtain Information
The Trust’s prospectus, SAI (including Proxy Voting Policies) and the PL Underlying Funds’ annual and semi-annual reports are available:
• | On the Trust’s Website at http://www.pacificlife.com/pacificlifefunds.htm |
• | On the SEC’s Website at http://www.sec.gov |
• | Upon request by calling, without charge, 1-800-722-2333, 7 a.m. through 5 p.m. Pacific Time |
F-18
PL Underlying Funds and PL Diversified Alternatives Fund
Annual Report
As of March 31, 2014
PACIFIC LIFE FUNDS
ANNUAL REPORT
AS OF MARCH 31, 2014
A-1 | ||
B-1 | ||
Financial Statements: | ||
C-1 | ||
C-5 | ||
C-9 | ||
C-14 | ||
D-1 | ||
E-1 | ||
F-1 | ||
F-2 | ||
F-4 | ||
Approval of Investment Advisory Agreement and Fund Management Agreements | F-7 | |
F-24 |
PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION
Fund Manager | PL Underlying Fund | Page Number | ||
Eaton Vance Investment Managers (Eaton Vance) | PL Floating Rate Loan | A-4 | ||
Pacific Investment Management Company LLC (PIMCO) | PL Inflation Managed | A-5 | ||
Pacific Investment Management Company LLC (PIMCO) | PL Managed Bond | A-6 | ||
T. Rowe Price Associates, Inc. (T. Rowe Price) | PL Short Duration Bond | A-7 | ||
Ashmore Investment Management Limited (Ashmore) | PL Emerging Markets Debt | A-8 | ||
Invesco Advisers, Inc. (Invesco) | PL Comstock | A-9 | ||
MFS Investment Management (MFS) | PL Growth (formerly called PL Growth LT) | A-10 | ||
BlackRock Investment Management, LLC (BlackRock) | PL Large-Cap Growth | A-11 | ||
ClearBridge Investments, LLC (ClearBridge) | PL Large-Cap Value | A-12 | ||
OppenheimerFunds, Inc. (Oppenheimer) | PL Main Street® Core | A-13 | ||
Scout Investments, Inc. (Scout) | PL Mid-Cap Equity | A-15 | ||
Ivy Investment Management Company (Ivy) | PL Mid-Cap Growth | A-16 | ||
Fred Alger Management, Inc. (Alger) | PL Small-Cap Growth | A-17 | ||
NFJ Investment Group LLC (NFJ) | PL Small-Cap Value | A-18 | ||
Morgan Stanley Investment Management Inc. (Morgan Stanley) | PL Real Estate | A-19 | ||
OppenheimerFunds, Inc. (Oppenheimer) | PL Emerging Markets | A-20 | ||
MFS Investment Management (MFS) | PL International Large-Cap | A-21 | ||
J.P. Morgan Investment Management Inc. (JPMorgan) | PL International Value | A-22 | ||
UBS Global Asset Management (Americas) Inc. (UBS) | PL Currency Strategies | A-23 | ||
Eaton Vance Investment Managers (Eaton Vance) | PL Global Absolute Return | A-24 | ||
Wells Capital Management Incorporated (Wells Capital) | PL Precious Metals | A-25 | ||
Fund Manager | PL Fund of Funds | |||
Pacific Life Fund Advisors LLC (PLFA) | PL Diversified Alternatives1 | A-26 |
1 | The PL Diversified Alternatives Fund commenced operations on December 31, 2013, and although the fund is effective, it is not currently offering shares to investors and is not available for sale at this time. Presently, only Pacific Life Fund Advisors LLC (PLFA) and certain of its affiliates can invest in the PL Diversified Alternatives Fund. |
A-1
PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
This Annual Report is provided for the general information of investors with beneficial interests in Pacific Life Funds (the “Trust”). This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current Trust Prospectus, as supplemented, which contains information about the Trust and each of its funds, including their investment objectives, risks, charges and expenses. You should read the Prospectus carefully before investing. There is no assurance that a fund will achieve its investment objective. Each fund is subject to market risk. The net asset value of a fund changes as the value of its assets go up or down. The value of a fund’s shares will fluctuate, and when redeemed, may be worth more or less than original cost. The total return for each fund includes reinvestment of all dividends and capital gain distributions, if any, and does not include deductions of any applicable sales charges. Past performance is not predictive of future performance. Performance figures for each class reflect the deduction of any applicable maximum front-end sales charge at the time of investment and reflect any applicable contingent deferred sales charge that would be deducted upon redemption at the end of the period presented unless otherwise noted.
This report shows you the performance of the funds compared to benchmark indices. Index performance is provided for illustrative and comparative purposes only and does not predict or depict the performance of the funds. Indices are unmanaged, do not incur transaction costs and cannot be purchased directly by investors. Index returns include reinvested dividends.
PLFA supervises the management of all of the funds above, subject to the review of the Trust’s Board, and also does business under the name Pacific Asset Management. PLFA has written the general market conditions commentary which expresses PLFA’s opinions and views on how the market generally performed for the year ended March 31, 2014. All views are subject to change at any time based upon market or other conditions, and the Trust, its adviser and the fund managers disclaim any responsibility to update such views. Any references to “we”, “I”, or “ours” are references to the adviser or fund manager.
The adviser and fund managers may include statements that constitute “forward-looking statements” under the United States (U.S.) securities laws. Forward-looking statements include information concerning possible or assumed future results of the Trust’s investment operations, asset levels, earnings, expenses, industry or market conditions, regulatory developments and other aspects of the Trust’s operations or general economic conditions. In addition, when used in this report, predictive verbs such as “believes”, “expects”, “anticipates”, “intends”, “plans”, “estimates”, “projects” and future or conditional verbs such as “will”, “may”, “could”, “should” and “would” or any other statement that necessarily depends on future events, are intended to identify forward-looking statements. Forward-looking statements are not guarantees of performance or economic results. They involve risks, uncertainties and assumptions. Although such statements are based on expectations that the adviser or fund manager believes to be reasonable, actual results may differ materially from expectations. Investors must not rely on any forward-looking statements.
In connection with any forward-looking statements and any investment in the Trust, investors should carefully consider the investment objectives, policies and risks described in the Trust’s current Prospectus, as supplemented, and Statement of Additional Information, as supplemented, as filed with the Securities and Exchange Commission (SEC), which may be obtained from the SEC’s website at www.sec.gov.
Market Conditions (for the year ended March 31, 2014)
Executive Summary
Over the reporting period, financial markets displayed considerable divergence as U.S. equities surged ahead of most markets around the globe. The U.S. equity markets fared relatively well for most of the reporting period—charging to record highs—despite government disorders (e.g. government shutdown) and the Federal Reserve (Fed) tapering its bond purchasing program. The momentum in the U.S. equity market was supported by solid corporate earnings as well as positive economic activity over the reporting period.
Compared to the rest of the world, the U.S. generally exhibited more appealing economic conditions. Over the reporting period, U.S. business activity from both the manufacturing and services sectors expanded at decent levels as indicated by the Institute for Supply Management (ISM) Report on Business. The unemployment rate also continued to fall, hitting its lowest level since the 2008 financial crisis, and wage growth showed modest acceleration over the reporting period after several years of continued deceleration. Additionally, the housing sector experienced some recovery with rising home sales and accelerating prices through most of the reporting period. These factors helped lift consumer confidence and market sentiments. These positive indications also gave enough reason for the Fed to initiate tapering its quantitative easing (QE) efforts, despite an unusually harsh winter that dampened economic activity.
Non-U.S. developed nations also showed some progress over the reporting period. However, this recovery was fragmented throughout various regions. In the eurozone, Germany continued to anchor the recovery while Italy and Spain had been struggling to turn the corner. In Asia, the Japanese economy expanded in the earlier parts of the reporting period, which was boosted by its monetary and fiscal stimulus efforts. However, Japanese stocks pulled back in the first quarter of 2014 as concerns of the anticipated consumption tax reversed momentum. While the broad emerging market economies outpaced those of developed markets in terms of economic growth, equity and bond markets in emerging regions lagged behind those of developed economies. The Fed tapering pushed interest rates higher which caused financial constraints on several key emerging nations as they experienced large capital outflows. Countries that were affected the most include those with large current account deficits (i.e. net borrowers) and vulnerability to tightening external financing conditions. They include countries like Brazil, Turkey and India.
Overall, the global economy maintained a steady but slow recovery throughout the reporting period. Various risks continued to linger and influenced markets to varying degrees. The following sections highlight how specific market segments responded to the events that unfolded over the reporting period.
Fixed Income
Concerns over the Fed’s tapering plan caused long-term interest rates to rise, which had a negative impact on the broad fixed income market over the reporting period. Yields have an inverse relationship with bond prices, so rising rates generally have a downward pressure on prices. The 10-year Treasury yield was as low as 1.66% in early May 2013 but climbed higher to 2.72% by the end of the reporting period. Over the reporting period, the broad fixed income market (as measured by the Barclays U.S. Aggregate Bond Index) fell 0.10%.
See benchmark definitions on page A-27 and A-28 |
A-2
PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
Long-term Treasury bonds and fixed income securities with long duration (i.e. a higher sensitivity to interest rate movements) were particularly impacted more than others. The Barclays U.S. Treasury Inflation Protected Securities (TIPS) Index, which tends to have a relatively higher duration, slid 6.49% over the reporting period. On the other hand, short-term bonds that have lower duration experienced less drag from the rising rate environment and posted small gains.
On top of interest rates, bond values are affected by the perception of their credit risk, which is reflected in their yield spreads. Spreads also have an inverse relationship with bond prices. Similar to the equity market, risk appetite was also evident in the bond market, resulting in tightening spreads for high yield bonds and bank loans. While the emerging markets debt market struggled earlier in the reporting period, it recovered modestly in the first quarter of 2014 as the J.P. Morgan Emerging Markets Bond Index (EMBI) Global Diversified Index gained 0.56% over the reporting period.
Domestic Equity
2013 marked the fifth consecutive positive calendar year performance for the broad U.S. equity market as the S&P 500 Index leaped 21.86% over the reporting period. With respect to market capitalization, small-capitalization stocks outpaced large-capitalization companies. In terms of style, growth styles outperformed those of value for the reporting period. Cyclical sectors (e.g. industrials and information technology) generally outpaced those in the defensive sectors (e.g. utilities and consumer staples). High dividend-paying sectors that typically include utilities stocks had lost momentum in 2012 and continued to lag behind over the reporting period. Real estate investment trusts (REITs), which tend to be associated with relatively high dividend-payouts, delivered only moderate returns compared to the broad equity market after outperforming it every calendar year from 2009 to 2012. The Financial Times Stock Exchange National Association of Real Estate Investment Trusts (FTSE NAREIT) Equity REITs Index returned 4.16% for the reporting period. Hotel-related REITs performed relatively strong, whereas the health care-related sector experienced losses.
International Equity
The foreign equity market was mixed over the reporting period as developed markets posted solid results while emerging markets faced headwinds. The Morgan Stanley Capital International Europe, Australasia, and Far East (MSCI EAFE) Index (Net) and the MSCI Emerging Markets Index (Net) returned 17.56% and -1.43%, respectively. In the international, developed equity market, smaller-capitalization stocks outperformed their larger counterparts while value outperformed growth styles. With the eurozone showing signs of recovery, its respective equity markets generally performed well over the reporting period. Japan, which represents over 20% of the MSCI EAFE Index (Net), gave up its prior gains in the first quarter of 2014, causing it to lag behind the broad index. Emerging markets faced several challenges over the reporting period, starting with the initial news of the Fed’s tapering. The outflow of capital placed downward pressure on both debt and equity markets. Furthermore, the Russian stock market experienced relatively large losses in the first quarter of 2014, which were sparked by the crisis in Ukraine. Additionally, China began to curb new credit to slow down the excessive lending that had led to a heated property market. These efforts sought to ease real estate and infrastructure investments, causing a strain on commodity producers that export to China.
Commodities
Commodity prices were mixed over the reporting period. Energy prices edged out modest gains, while agriculture had modest losses and metals experienced a relatively large drop over the reporting period. Energy prices were relatively range-bound with no significant disruptions to supply and/or major changes in demand. Many agricultural prices fell sharply in 2013 but recovered much of the losses in the first quarter of 2014 with the harsh weather restricting supply and boosting prices. Over the past several years, metal prices have been largely determined by demand from China and India. With India curbing gold imports to address its ballooning current account deficit, precious metals prices experienced some downward pressure over the reporting period. The low inflationary environment and expectations of the Fed reversing its monetary easing (which could result in the appreciation of the U.S. dollar) also contributed to deflating precious metals prices.
Concluding Remarks
U.S. equities rallied with strong momentum during the reporting period. A rapidly rising market combined with low volatility can at times lead to complacency in the marketplace. Valuation levels of the S&P 500 Index have steadily risen over the past few years to around their five-year highs. In the past, valuations have been above current levels such as during the “Tech Boom” years, but those conditions are typically associated with strong economic growth and euphoric consumerism. The International Monetary Fund (IMF) projects the U.S. to grow 2.8% in 2014 (IMF—World Economic Outlook Update—January 2014) (“IMF Update”), which would represent a slower pace than that of the late-1990’s when U.S. gross domestic product (GDP) steadily grew at an approximate annual rate of 5%. Economic conditions have improved in the U.S., but the Fed continues to play a large role in supporting the economy. Furthermore, the unemployment rate figures could appear misleading given that some of the drop stemmed from people leaving the labor force rather than quality job growth.
The eurozone and other developed regions appear to be showing signs of recovery, but the process could likely take years before they are able to self-support economic growth without various stimulus packages. Emerging countries continue to deal with various challenges and opportunities. Several key elections in countries such as Brazil, India and Turkey throughout 2014 could help bring some stability to those countries. As for China, it is expected to continue setting the pace in 2014 with the IMF Update projecting a 7.5% growth for the year. While the economic expansion in China appears to be decelerating, the country’s regulators are focusing on maintaining growth at a more manageable range. Additionally, Chinese officials have been discussing a shift toward consumer spending to help drive future economic growth. Although a rebalancing China that places more emphasis on consumption and less on infrastructure spending may hurt certain countries, the transition could also help those that export consumer goods to China. More than ever, investors may begin to emphasize individualization of emerging countries. In the past, emerging market countries as a group shared many weaknesses that linked them together, especially in times of global stress. While some of these vulnerabilities have not disappeared, not all of these emerging countries share the same issues to the same degree. Many of these countries can be differentiated by authoritative tendencies, economic policies, debt levels, consumer behavior, and growth drivers, among others. While there are certain emerging countries that face some key hurdles, there are also those with a more positive outlook.
See benchmark definitions on page A-27 and A-28 |
A-3
PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
Overall, economic conditions may be improving, especially in the U.S. However, uncertainty and risks still remain. The Fed’s removal of its monetary stimulus could affect markets in various ways. While it could signal that the Fed has higher confidence in the economy, a premature withdrawal could reverse the recovery. This may prevent the equity market from rallying to excessive valuation levels. Interest rates may also rise, which would be a headwind for bonds with long duration. Given the various challenges and uncertainty throughout the globe, some volatility could return to the marketplace in 2014 after being relatively suppressed throughout 2013. In our opinion, this validates the importance of proper asset allocation to navigate through various market conditions.
PL Floating Rate Loan Fund (managed by Eaton Vance Investment Managers)
Q. How did the fund perform for the year ended March 31, 2014?
A. For the year ended March 31, 2014, the PL Floating Rate Loan Fund’s Class P returned 3.39%, compared to a 4.35% return for its benchmark, the S&P/LSTA Leveraged Loan Index.
The following graph compares the performance of a hypothetical $10,000 investment in Class P shares of the fund to its benchmark for the periods from inception through March 31, 2014. The fund’s performance reflects reinvestments of all dividends and capital gains distributions, if any.
Performance Comparison
Average Annual Total Returns for the Periods Ended March 31, 2014 (1) | ||||||||||||
1 Year | 5 Years | Since Inception (6/30/08) | ||||||||||
Fund’s Class P | 3.39% | 8.83% | 4.77% | |||||||||
S&P/LSTA Leveraged Loan Index | 4.35% | 12.52% | 6.28% |
(1) | Eaton Vance Investment Managers (“Eaton Vance”) began managing the fund on August 1, 2013. Eaton Vance Management, an affiliate of Eaton Vance, managed the fund from July 1, 2010 to July 31, 2013. Another firm managed the fund before July 1, 2010, and some investment policies changed at that time. |
Performance data shown represents past performance. Investment return and principal value will fluctuate so that shares of the fund when redeemed may be worth more or less than their original cost. Past performance is not predictive of future performance. |
Q. Discuss both positive and negative factors that materially affected the fund’s performance during the year, including relevant market conditions, investment strategies and techniques, and particular sectors or securities.
A. For the reporting period, the fund’s Class P underperformed the benchmark. Relative to the benchmark, the fund maintains a greater focus on higher-quality loans. Loan prices for the higher-quality BB- and B-rated segments ended the reporting period to where they began a year earlier, near par, reflecting little room for appreciation. Prices of the more distressed segments of the market, on the other hand, advanced, as strong investor inflows into the bank loan space helped to drive CCC-rated loans higher from $83.50 to $87.38. In this environment, CCC-rated loans outperformed BB- and B-rated loans by a wide margin, 8.86% vs. 3.00% and 4.63%, respectively. The fund’s “up-in-quality” bias relative to the benchmark, specifically a consistent overweight to higher-quality BB-rated loans and an underweight exposure to the more speculative CCC-rated loans, was a headwind to its relative performance during the reporting period. While higher risk can be rewarded over short periods, such as during the market environment over the last couple of years, it is our experience that a higher-quality stance can result in better risk-adjusted results over time. We at Eaton Vance believe the optimal risk/return profile can be achieved predominately through interest income realized through investments of higher-quality loans, rather than focusing largely on capital gains associated with distressed loans.
The fund employs a rigorous, bottom-up credit research process where loan selection drives its performance. With that said, breaking down performance results by industry, performance across every loan industry group was positive over the reporting period. Underweight exposures to publishing and lodging & casinos were a drag on the fund’s relative performance, with the industries advancing 8.37% and 4.99%, respectively. Contributing to relative fund performance was an overweight exposure to the electronics/electrical industry, which returned 4.64% and an underweight exposure to aerospace & defense, which lagged the benchmark, posting a 3.65% return.
The cornerstones of the strategy’s investment philosophy are intense, internal credit research and broad diversification. The fund held 308 issuer positions across 32 industries as of March 31, 2014. As of the end of the reporting period, the fund maintained an overweight position in BB-rated loans and minimal exposure to the more distressed loan categories rated below B. The fund’s higher-quality positioning was also exhibited in its average loan price of $99.97 vs. a $98.64 as of March 31, 2014. Given the floating-rate nature of the asset class, the fund is exposed to minimal interest rate risk as the loans in the fund reset their coupons every 57 days on average as of March 31, 2014, resulting in a fund duration of roughly 0.16 years.
See benchmark definitions on page A-27 and A-28 |
A-4
PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
PL Inflation Managed Fund (managed by Pacific Investment Management Company LLC)
Q. How did the fund perform for the year ended March 31, 2014?
A. For the year ended March 31, 2014, the PL Inflation Managed Fund’s Class P returned -7.40%, compared to a -6.49% return for its benchmark, the Barclays U.S. TIPS Index.
The following graph compares the performance of a hypothetical $10,000 investment in Class P shares of the fund to its benchmark for the ten-year periods ended March 31, 2014. The fund’s performance reflects reinvestments of all dividends and capital gains distributions, if any.
Performance Comparison
Average Annual Total Returns for the Periods Ended March 31, 2014 | ||||||||||||
1 Year | 5 Years | 10 Years | ||||||||||
Fund’s Class P | (7.40% | ) | 5.52% | 4.32% | ||||||||
Barclays U.S. TIPS Index | (6.49% | ) | 4.91% | 4.52% |
Performance data shown represents past performance. Investment return and principal value will fluctuate so that shares of the fund when redeemed may be worth more or less than their original cost. Past performance is not predictive of future performance. |
Q. Discuss both positive and negative factors that materially affected the fund’s performance during the year, including relevant market conditions, investment strategies and techniques, and particular sectors or securities.
A. For the reporting period, the fund’s Class P underperformed the benchmark. Investment strategies were implemented by investing in bonds and derivative instruments. Tactical interest rate positioning in TIPS, through the use of cash bonds and interest rate swaps, was positive for the fund performance as real yields rose during the reporting period. Tactical use of pay-fixed interest rate swaps on the long end of the U.S. nominal yield curve during the second half of the reporting period partially offset the positive TIPS positioning, as rates fell on longer-dated nominal Treasuries. Modest positioning in investment grade corporate securities during the year was positive for fund returns, as spreads narrowed and the sector outperformed like-duration Treasuries. An allocation to non-Agency mortgage backed securities (MBS) was positive for fund performance as the sector continued to benefit from the ongoing housing recovery. Exposure to non-U.S. developed inflation-linked bonds, particularly Canada and Australia, detracted from fund performance as real yields rose in both countries during the reporting period. The fund’s exposure to emerging market local debt, partially achieved through zero coupon swaps, detracted from fund performance as rates rose due to central bank rate hikes and inflation concerns.
We at PIMCO have become modestly more optimistic about the outlook for global growth, expecting 2.5-3.0% next year, based on internal research. Many of the challenges faced during the 2013 reporting period have faded, yielding a brighter outlook for global growth. While headwinds have abated, unwinding unprecedented monetary policies could prove challenging. In the U.S. we expect growth to accelerate due to a diminishing drag from fiscal policy, steady improvements in employment, and higher asset valuations that encourage consumer spending through the “wealth effect.” While we believe inflation will increase in 2014 relative to 2013, we still foresee subdued inflation in the shorter-term. In Europe, we expect a more tempered pace of growth with risks in both directions. In Japan, we expect continued growth as the aggressive policies of Abenomics (a Japanese economic policy program initiated by Shinzo Abe, the current Prime Minister of Japan, designed to stimulate economic growth in Japan) drives the economy. However, growth in Japan will be challenged by fading consumer spending that was pulled forward in anticipation of the consumption tax increase. The growth trajectory for emerging markets (EM) will be shaped by developed market growth as well as central bank policies. While collectively we expect modest growth in EM, there will be large dispersion across countries given differentiation in trade, commodity dependence and policy frameworks.
With regard to fund strategy, we will target a neutral position to U.S. real duration position relative to the benchmark, while continuing to emphasize positions that stand to gain if market expectations for interest rate increases are not met. We plan to concentrate on the belly of the real yield curve where we see superior opportunities for roll-down, a form of return that is realized as a bond approaches maturity, assuming an upward sloping yield curve. We will remain underweight the long end of the real yield curve as longer maturities may not adequately compensate investors for price volatility as the Fed unwinds its quantitative easing (QE) program. We plan to hold allocations to German and Italian inflation-linked bonds (ILBs) given attractive real yields, modest-to-low inflation expectations, and expected policy support. We expect to tactically pay French inflation given perceived rich valuations for inflation-hedging instruments. In addition, we may hold New Zealand ILBs that offer attractive real yields. Lastly, we believe Brazil is a high-quality emerging economy with steep yield curves and high real interest rates offering potential return through carry, which is the rate of interest earned by holding the respective securities and roll-down.
See benchmark definitions on page A-27 and A-28 |
A-5
PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
PL Managed Bond Fund (managed by Pacific Investment Management Company LLC)
Q. How did the fund perform for the year ended March 31, 2014?
A. For the year ended March 31, 2014, the PL Managed Bond Fund’s Class P returned -1.22%, compared to a -0.10% return for its benchmark, the Barclays U.S. Aggregate Bond Index.
The following graph compares the performance of a hypothetical $10,000 investment in Class P shares of the fund to its benchmark for the ten-year periods ended March 31, 2014. The fund’s performance reflects reinvestments of all dividends and capital gains distributions, if any.
Performance Comparison
Average Annual Total Returns for the Periods Ended March 31, 2014 | ||||||||||||
1 Year | 5 Years | 10 Years | ||||||||||
Fund’s Class P | (1.22% | ) | 6.73% | 5.14% | ||||||||
Barclays U.S Aggregate Bond Index | (0.10% | ) | 4.80% | 4.46% |
Performance data shown represents past performance. Investment return and principal value will fluctuate so that shares of the fund when redeemed may be worth more or less than their original cost. Past performance is not predictive of future performance. |
Q. Discuss both positive and negative factors that materially affected the fund’s performance during the year, including relevant market conditions, investment strategies and techniques, and particular sectors or securities.
A. For the reporting period, the fund’s Class P underperformed the benchmark. Investment strategies were implemented by investing in bonds and derivative instruments. Tactical U.S. interest rate positioning with a focus on the front-end and intermediate portions of the yield curve, implemented through the use of cash bonds and tactical use of interest rate swaps, detracted from fund performance as these rates rose during the reporting period and underperformed longer-dated maturities. An underweight to investment grade corporate securities during the year was negative for the fund’s relative returns, as spreads narrowed and the sector outperformed like-duration Treasuries. An allocation to non-Agency MBS was positive for fund performance as the sector continued to benefit from the ongoing housing recovery.
Beyond core sectors, exposure to high yield financial bonds added to performance as high yield bonds posted strong positive returns during the reporting period. Non-U.S. developed country exposure in Canada detracted from returns as rates rose along the Canadian yield curve. However, duration exposure in Italy and Spain more than offset this negative impact as rates fell in both countries. Exposure to TIPS was negative for fund returns relative to nominal Treasuries as breakeven inflation levels (the difference between nominal and real yields) narrowed during the reporting period.
We at PIMCO have become modestly more optimistic about the outlook for global growth, expecting 2.5-3.0% next year, based on internal research. Many of the challenges faced during the 2013 reporting period have faded, yielding a brighter outlook for global growth. While headwinds have abated, unwinding unprecedented monetary policies could prove challenging. In the U.S. we expect growth to accelerate due to a diminishing drag from fiscal policy, steady improvements in employment, and higher asset valuations that encourage consumer spending through the “wealth effect.” In Europe, we expect a more tempered pace of growth with risks in both directions. In Japan, we expect continued growth as the aggressive policies of Abenomics (a Japanese economic policy program initiated by Shinzo Abe, the current Prime Minister of Japan, designed to stimulate economic growth in Japan) drive the economy. However, growth in Japan will be challenged by fading consumer spending that was pulled forward in anticipation of the consumption tax increase. The growth trajectory for emerging markets (EM) will be shaped by developed market growth as well as central bank policies. While collectively we expect modest growth in EM, there will be large dispersion across countries given differentiation in trade, commodity dependence and policy frameworks.
With regard to fund strategy, we look to target an underweight to benchmark-level duration, maintaining an overweight position to short-to-intermediate maturities with an underweight to longer-maturity securities. We will focus TIPS exposure on the intermediate segment of the real yield curve as we believe inflation protection is attractively priced at these maturities. We will gradually add exposure to short-dated credit while focusing on issuers within housing, finance, and energy. Within Agency MBS, we plan to maintain an underweight amid current valuations and focus on security selection to capitalize on relative value opportunities within the coupon stack. We continue to hold non-Agency MBS positions which offer attractive value to other spread sectors. Within non-U.S. developed, our exposures will focus on Italy and Spain. In EM, we will focus on Mexico and Brazil which have stronger fundamentals and high real interest rates. We plan to retain exposure to high-quality municipal bonds that offer attractive yields. Finally, we plan to maintain an overall neutral currency stance as long as central bank actions continue to drive high levels of volatility. However, we will maintain a modest short to the Japanese yen and a long position in the Mexican peso.
See benchmark definitions on page A-27 and A-28 |
A-6
PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
PL Short Duration Bond Fund (managed by T. Rowe Price Associates, Inc.)
Q. How did the fund perform for the year ended March 31, 2014?
A. For the year ended March 31, 2014, the PL Short Duration Bond Fund’s Class P returned 0.64%, compared to a 0.68% return for its benchmark, the Barclays 1-3 Year U.S. Government/Credit Bond Index.
The following graph compares the performance of a hypothetical $10,000 investment in Class P shares of the fund to its benchmark for the ten-year periods ended March 31, 2014. The fund’s performance reflects reinvestments of all dividends and capital gains distributions, if any.
Performance Comparison
Average Annual Total Returns for the Periods Ended March 31, 2014 (1) | ||||||||||||
1 Year | 5 Years | 10 Years | ||||||||||
Fund’s Class P | 0.64% | 2.18% | 2.27% | |||||||||
Barclays 1-3 Year U.S. Government/Credit Bond Index | 0.68% | 1.95% | 2.81% |
(1) | T. Rowe Price Associates, Inc. began managing the fund on July 1, 2011, and some investment policies changed at that time. Another firm managed the fund before that date. |
Performance data shown represents past performance. Investment return and principal value will fluctuate so that shares of the fund when redeemed may be worth more or less than their original cost. Past performance is not predictive of future performance. |
Q. Discuss both positive and negative factors that materially affected the fund’s performance during the year, including relevant market conditions, investment strategies and techniques, and particular sectors or securities.
A. For the reporting period, the fund’s Class P underperformed the benchmark. Yield curve positioning was the main detractor from relative performance. However, an overweight allocation to short-dated, investment-grade corporate debt; out-of-benchmark exposure to MBS and high yield corporate bonds; and a significant underweight allocation to U.S. Treasury securities relative to the benchmark benefited the fund’s relative returns. T. Rowe Price focuses on high-quality, investment grade securities and expects to track duration of the benchmark (plus or minus a half-year).
Positioning on the yield curve was a meaningful detractor from the fund’s relative performance. Beginning in May 2013, intermediate- and long-term Treasury rates began to increase and generally continued to do so throughout the period amid better U.S. economic data and speculation about, and the eventual announcement of the Fed’s tapering. The fund holds exposure to longer, out-of-benchmark maturities, and these longer-term holdings weighed on performance. However, the yield advantage from these securities aided the fund.
During the reporting period, solid demand from duration-minded investors looking for incremental yield provided a strong bid for the front part of the high-grade corporate curve, even in the face of heavy supply. As a result, the fund’s significant overweight to corporates provided the most meaningful contribution to its relative results.
Following a market-wide rate correction starting in the middle of 2013, Treasury rates beyond the ultra-short part of the curve climbed significantly over the reporting period ended March 31, 2014. Yield increases were especially concentrated for intermediate maturities, and the curve meaningfully steepened during the year. Given this jump in Treasury yields, along with the sector’s underperformance relative to spread sectors in the short-term benchmark, the underweight to Treasuries was a meaningful contributor to fund performance.
Although MBS posted weaker performance than other spread sectors in the fourth quarter of the reporting period, the fund’s out-of-benchmark exposure to the sector provided a significant contribution to its relative results for the year. The fund’s holdings, in particular, benefited due to the structures that were held. The fund’s positioning in higher-coupon/short-duration mortgage securities fared well and outperformed the lower end of the coupon stack, which was negatively affected by the Fed’s large-scale asset purchase activities and tapering discussions. In addition, the fund held a modest allocation to non-Agency MBS, which also performed significantly well over the reporting period.
The fund’s allocation to high yield corporates also materially helped performance. Just as heightened investor appetite for incremental yield boosted investment-grade corporates, this environment was even more helpful for lower-rated securities. Investors have become increasingly willing to reach further down in the quality spectrum to gain access to short-duration paper with more compelling yields, particularly given the low default environment for high yield issuers.
Credit selection had an overall neutral effect on the fund’s relative performance. Our selection in BBB-rated corporates weighed on results. However, exposure to several A-rated names, banks in particular, helped to counter the impact of the selection within the BBB quality segment. The government-related sector also boosted returns through select non-benchmark positions in quasi-sovereign entities.
See benchmark definitions on page A-27 and A-28 |
A-7
PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
Despite having tactical exposure to longer-maturity bonds, the fund had a generally shorter duration position in aggregate over the course of the reporting period. While exposure to longer-dated securities detracted as rates rose, the fund’s shorter duration relative to the benchmark helped to partially offset that detraction.
As of the end of the reporting period, the fund held interest rate futures, which generated a net derivative exposure equivalent to approximately 0.7% of net assets. Interest rate futures were held during the entire period and decreased fund duration in all periods held except during June 2013 when these instruments increased fund duration. Currency forwards were held from March through May 2013 and August through October 2013. Currency forwards decreased fund currency exposure in all months held except during October 2013 when the currency forward positions were offsetting and did not increase or decrease fund currency exposure. The estimated return impact from employing derivatives was -6 basis points (bps) for the reporting period.
PL Emerging Markets Debt Fund (managed by Ashmore Investment Management, Limited)
Q. How did the fund perform for the year ended March 31, 2014?
A. For the year ended March 31, 2014, the PL Emerging Markets Debt Fund’s Class P returned -3.92%, compared to a 0.56% return for its benchmark, the J.P. Morgan Emerging Markets Bond Index (EMBI) Global Diversified Index.
The following graph compares the performance of a hypothetical $10,000 investment in Class P shares of the fund to its benchmark for the periods from inception through March 31, 2014. The fund’s performance reflects reinvestments of all dividends and capital gains distributions, if any.
Performance Comparison
Average Annual Total Returns for the Periods Ended March 31, 2014 | ||||||||
1 Year | Since Inception (6/29/12) | |||||||
Fund’s Class P | (3.92% | ) | 2.26% | |||||
J.P. Morgan EMBI Global Diversified Index | 0.56% | 4.36% |
Performance data shown represents past performance. Investment return and principal value will fluctuate so that shares of the fund when redeemed may be worth more or less than their original cost. Past performance is not predictive of future performance. |
Q. Discuss both positive and negative factors that materially affected the fund’s performance during the year, including relevant market
conditions, investment strategies and techniques, and particular sectors or securities.
A. For the reporting period, the fund’s Class P underperformed the benchmark. We at Ashmore tactically manage exposure to sovereign external debt, local currency sovereign debt and corporate debt. The fund invests its assets in debt instruments that are economically tied to emerging market countries, which are issued by governments (sovereigns), government-guaranteed or majority government-owned entities (quasi-sovereigns), government agencies and corporate issuers, and may be denominated in any currency, including the local currency of the issuer.
Over the course of the reporting period, the fund’s allocation to external debt decreased, and its exposure to corporate debt and local currency debt increased. The fund experienced a challenging period in the second quarter of 2013, when sovereign external debt assets sold off amidst talks of U.S. tapering. Thereafter, external debt securities realized positive performance for the third and fourth quarters of 2013. The fund’s allocation to corporate debt was a source of value versus the benchmark over the entire reporting period as a whole.
The largest country detractors from fund performance over the reporting period were Mexico, Brazil, Russia, Indonesia, and Turkey. Security selection in Mexico, Indonesia, and Turkey were negative relative to the fund’s benchmark. The fund’s overweight position in Brazilian bonds negatively impacted fund performance as the removal of the 6%—Tax on Financial Operations (IOF) resulted in a large sell-off of offshore bonds. Most emerging market currencies lost value against the U.S. dollar during the reporting period as a result of a combination of poor overall risk appetite, weaker commodities and outflows from emerging market equities. Specifically, the Indian rupee declined during two consecutive quarters of 2013 before recovering in the fourth quarter. Also, both the Brazilian Real and Turkish Lira declined as well before recovering.
The largest country contributors to fund performance over the reporting period were Argentina, Poland, Hungary, United Arab Emirates, and India. Sovereign debt in Argentina performed strongly during the fourth quarter of 2013 on the back of the expected political reform.
See benchmark definitions on page A-27 and A-28 |
A-8
PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
PL Comstock Fund (managed by Invesco Advisers, Inc.)
Q. How did the fund perform for the year ended March 31, 2014?
A. For the year ended March 31, 2014, the PL Comstock Fund’s Class P returned 23.36%, compared to a 21.57% return for its benchmark, the Russell 1000 Value Index.
The following graph compares the performance of a hypothetical $10,000 investment in Class P shares of the fund to its benchmark for the ten-year periods ended March 31, 2014. The fund’s performance reflects reinvestments of all dividends and capital gains distributions, if any.
Performance Comparison
Average Annual Total Returns for the Periods Ended March 31, 2014 (1) | ||||||||||||
1 Year | 5 Years | 10 Years | ||||||||||
Fund’s Class P | 23.36% | 21.76% | 6.54% | |||||||||
Russell 1000 Value Index | 21.57% | 21.75% | 7.58% |
(1) | Invesco Advisers, Inc. began managing the fund on June 1, 2010. Another firm managed the fund before that date. |
Performance data shown represents past performance. Investment return and principal value will fluctuate so that shares of the fund when redeemed may be worth more or less than their original cost. Past performance is not predictive of future performance. |
Q. Discuss both positive and negative factors that materially affected the fund’s performance during the year, including relevant market conditions, investment strategies and techniques, and particular sectors or securities.
A. For the reporting period, the fund’s Class P outperformed the benchmark. Our investment philosophy appreciates that, as financial markets tend to focus on short-term factors, stock prices often fail to reflect the intrinsic value of companies. We at Invesco believe that longer-term investors can take advantage of pricing anomalies in financial markets by purchasing stocks of companies that are currently underpriced. The fund aims to exploit these market inefficiencies by investing in companies that appear undervalued relative to the market in general. Ultimately, we believe that the market will recognize the value in these companies and will sell them as their stock price begins to reflect their intrinsic value.
The fund’s investable universe includes all equities with a market capitalization greater than $5 billion. We filter for companies with sufficient liquidity and then on valuation metrics depending upon the growth or cyclical nature of their business. The result of this filtering process is a pool of highly liquid securities that we believe are statistically inexpensive relative to the broader market. The investment team employs truly active management, by staying benchmark agnostic; fund construction and risk mitigation is based solely on bottom-up stock selection, as opposed to utilizing macro or top-down factors.
On the positive side of sector performance, strong stock selection assisted with performance and was a large contributor to fund performance. One of the largest relative contributors within the energy sector was not owning Exxon Mobil Corp., as the company performed poorly on a relative basis. Also, Halliburton Co. helped contribute to performance, assisted by stock buy-backs and announcement of a 39% increase in dividends earlier in the year. Strong stock selection within financials, mainly having no exposure to REITs, was also a large contributor to the fund’s relative performance. Stocks like Morgan Stanley contributed to fund performance, as the firm delivered positive earnings surprises for consecutive quarters. An overweight position and performance of select stocks in the consumer discretionary sector were large contributors to fund performance, mainly within media. Holdings such as Viacom, Inc. and Time Warner Cable, Inc. contributed the most to fund performance within this industry. Viacom had a strong run in 2013, and reported a large increase in profits from the film unit later in the reporting period. Favorable stock selection in the consumer staples sector also helped fund performance. Being underweight household and personal products company, The Procter & Gamble Co., and having exposure to food company, Tyson Foods, Inc., both boosted performance for the fund during the reporting period. Tyson produced outsized performance during the reporting period.
Stock selection and an underweight in telecommunication services also contributed, mainly from a material underweight in AT&T, Inc., followed by contributions from Vodafone Group P.L.C. A material underweight to utilities enhanced the fund’s relative performance, as this was the second worst-performing sector in the benchmark. Favorable stock selection and an overweight in the information technology sector boosted performance, as well, with Microsoft Corp., Yahoo!, Inc. and Hewlett-Packard Co. as the clear contributors to the fund’s performance. Both Yahoo! and Hewlett-Packard posted strong returns for the reporting period. Since Marissa Mayer became CEO of Yahoo!, they acquired more than a dozen technology companies to increase market presence. Stock selection and an overweight position in the health care sector, specifically in pharmaceuticals and service providers, assisted fund performance as well. Bristol-Myers
See benchmark definitions on page A-27 and A-28 |
A-9
PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
Squibb Co., a large pharmaceuticals provider, outperformed during the reporting period, helped by improving earnings and important new clinical data for immune-oncology and diabetes treatments. Health care services provider Cardinal Health, Inc. outperformed both the benchmark and sector. Strong stock selection in the materials sector also enhanced relative fund performance. Notably, having no exposure to miners boosted fund performance, as margins and earnings were negatively affected by gold and other metals experiencing steep declines during the 2013 year.
On the negative side, cash acted as a detractor to relative performance. Although the cash position averaged under 4% for the reporting period, cash utilized for investment opportunities and allowances for redemptions from the fund detracted from its performance in such a strong equity market. We used currency forward contracts during the reporting period for the purpose of hedging currency exposure of non-U.S. based companies held in the fund, which had a negative impact on the fund’s performance relative to the benchmark. An underweight to industrials was also a slight detractor from relative performance, offsetting strong stock selection within the sector, as the sector was the second best performer for the reporting period.
PL Growth Fund (formerly called Growth LT Fund/managed by MFS Investment Management)
Q. How did the fund perform for the year ended March 31, 2014?
A. For the year ended March 31, 2014, the PL Growth Fund’s Class P returned 25.15% compared to a 23.22% return for its benchmark, the Russell 1000 Growth Index.
The following graph compares the performance of a hypothetical $10,000 investment in Class P shares of the fund to its benchmark for the ten-year periods ended March 31, 2014. The fund’s performance reflects reinvestments of all dividends and capital gains distributions, if any.
Performance Comparison
Average Annual Total Returns for the Periods Ended March 31, 2014 (1) | ||||||||||||
1 Year | 5 Years | 10 Years | ||||||||||
Fund’s Class P | 25.15% | 18.46% | 6.28% | |||||||||
Russell 1000 Growth Index | 23.22% | 21.68% | 7.86% |
(1) | MFS Investment Management began managing the fund on May 1, 2013, and some investment policies changed at that time. Another firm managed the fund before that date. |
Performance data shown represents past performance. Investment return and principal value will fluctuate so that shares of the fund when redeemed may be worth more or less than their original cost. Past performance is not predictive of future performance. |
Q. Discuss both positive and negative factors that materially affected the fund’s performance during the year, including relevant market conditions, investment strategies and techniques, and particular sectors or securities.
A. MFS assumed management of the fund on May 1, 2013. For the reporting period, the fund’s Class P outperformed the benchmark. The MFS investment team’s growth strategy for the fund focuses on companies it believes to have above-average earnings growth potential compared to other companies. Stock selection and an overweight position in the health care sector contributed positively to the fund’s performance relative to the benchmark as the sector outperformed. Owning shares of life sciences supply company Thermo Fisher Scientific, Inc. and pharmaceutical company Valeant Pharmaceuticals International, Inc., both of which were not benchmark constituents, strengthened the fund’s relative returns as both stocks significantly outperformed the benchmark. An overweight position in biopharmaceutical company Alexion Pharmaceuticals, Inc. also contributed to the fund’s performance.
Stock selection in the leisure sector was another positive contributing factor to fund relative results. Here, an overweight position in casino resorts operator Wynn Resorts Ltd. bolstered its relative returns as the stock posted strong results over the reporting period.
Elsewhere, the fund’s avoidance of diversified technology products and services company International Business Machines Corp., beverage manufacturer Coca-Cola Enterprises, Inc., telecommunication services provider Verizon Communications, Inc. and fast-food giant McDonald’s Corp. also benefited fund relative performance. An overweight position in online travel company priceline.com, Inc. and an underweight position in tobacco company Philip Morris International, Inc. were also among the fund’s top relative contributors.
Stock selection in the energy sector, particularly the fund’s overweight position in oil and gas exploration & production company Anadarko Petroleum Corp., which was removed from the benchmark after its reconstitution at the end of June 2013, held back fund relative returns. Stock selection in the autos & housing sectors also weakened relative fund performance. There were no individual stocks within these sectors that were among the fund’s top relative detractors.
See benchmark definitions on page A-27 and A-28 |
A-10
PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
Elsewhere, overweight positions in broadcast and communication tower management firm American Tower Corp. REIT, access infrastructure products manufacturer Citrix Systems, Inc., health care-information technology company Catamaran Corp., beauty products maker The Estee Lauder Cos., Inc., online auctioneer eBay, Inc., and global media company Discovery Communications, Inc. detracted from the fund’s relative performance. Not owning shares of strong-performing software giant Microsoft Corp. and defense contractor Lockheed Martin Corp. also hurt the fund’s performance.
The fund’s cash and/or cash equivalents position during the reporting period was another detractor from relative performance. The fund strives to be fully invested and generally holds cash to buy new holdings and to provide liquidity. In a period when equity markets rose, as measured by the fund’s benchmark, holding cash hurt performance versus the benchmark, which has no cash position.
PL Large-Cap Growth Fund (managed by BlackRock Investment Management, LLC)
Q. How did the fund perform for the year ended March 31, 2014?
A. For the year ended March 31, 2014, the PL Large-Cap Growth Fund’s Class P returned 23.58%, compared to a 23.22% return for its benchmark, the Russell 1000 Growth Index.
The following graph compares the performance of a hypothetical $10,000 investment in Class P shares of the fund to its benchmark for the ten-year periods ended March 31, 2014. The fund’s performance reflects reinvestments of all dividends and capital gains distributions, if any.
Performance Comparison
Average Annual Total Returns for the Periods Ended March 31, 2014 (1) | ||||||||||||
1 Year | 5 Years | 10 Years | ||||||||||
Fund’s Class P | 23.58% | 20.74% | 4.25% | |||||||||
Russell 1000 Growth Index | 23.22% | 21.68% | 7.86% |
(1) | BlackRock Investment Management, LLC began managing the fund on May 1, 2013, and some investment policies changed at that time. Other firms managed the fund before that date. |
Performance data shown represents past performance. Investment return and principal value will fluctuate so that shares of the fund when redeemed may be worth more or less than their original cost. Past performance is not predictive of future performance. |
Q. Discuss both positive and negative factors that materially affected the fund’s performance during the year, including relevant market conditions, investment strategies and techniques, and particular sectors or securities.
A. For the reporting period, the fund’s Class P outperformed the benchmark. BlackRock assumed management of the fund on May 1, 2013. BlackRock managed the fund on an interim basis from January 1, 2013 through April 30, 2013 during which time the fund manager’s goal was to attempt to replicate the total return of the benchmark. Beginning May 1, 2013, BlackRock began actively managing the fund using its large-cap growth strategy. At the sector level, an underweight position in consumer staples was the largest contributor to fund performance, as the sector significantly lagged the benchmark for the reporting period. Within the sector, the largest contributor to performance was a lack of exposure to tobacco companies and a substantial underweight to beverages.
Consumer discretionary stock selection and an overweight position to that sector also contributed to performance, with strength most notable in the hotels, restaurants & leisure and internet & catalog retail segments. Shares of casino operator Melco Crown Entertainment Ltd. posted strong gains benefiting fund performance amid expanding growth in the mass market in China, where the company picked up share. Peer Wynn Resorts Ltd. also surged as the Macau gaming market continued to grow at close to 20%, and third-party data suggested the company’s casinos began to gain market share. Within internet & catalog retail, Amazon.com, Inc.’s stock rose over 35% during the reporting period buoyed by growing market appreciation for Amazon Web Services’ (AWS) significant potential to take share in cloud computing. AWS continues to expand its value proposition by both increasing the product offering and lowering prices. Online travel retailer priceline.com, Inc. also added value to fund performance, benefiting from robust global demand and the continued shift of bookings to online and mobile channels.
The telecommunication services and information technology sectors further contributed to fund performance. Lack of exposure to Verizon Communications, Inc. was the greatest contributor to fund performance within telecommunication service.
In the information technology sector, the position in data analytics software maker Splunk, Inc. was the largest contributor to fund performance. Underexposure to poor-performing International Business Machines Corp. (IBM) also contributed to its performance. The structural shift towards new technology architectures is impacting legacy technology vendors such as IBM and the company missed its earnings forecast for the first time since 2005.
See benchmark definitions on page A-27 and A-28 |
A-11
PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
Detracting from fund performance at the sector level was energy, where holdings Laredo Petroleum, Inc. and FMC Technologies, Inc. traded lower on declining commodity prices.
Positioning within the health care sector also detracted from fund performance with pharmacy benefits manager Catamaran Corp. accounting for a large portion of the disappointment. Catamaran stock first lost ground in May 2013 following a modest revenue miss and uncertainty over its contract renewal with key customer Cigna Corp. (an agreement that was later signed). Shares subsequently rallied, hitting a 52-week high, but declined again in the third quarter of 2013 amid uncertainty over the impact of some larger employers unexpectedly shifting their employees to private health insurance exchanges. We at BlackRock exited the position during the reporting period.
While the overall information technology sector was a source of outperformance during the reporting period, select positions detracted. Underexposure to Microsoft Corp. had the greatest negative impact within the sector as the company’s stock rose nearly 30%. We underweighted the shares due to concerns around the company’s shrinking consumer PC and devices business. Other information technology detractors included Salesforce.com, Inc., LinkedIn Corp. and Equinix, Inc. Additionally, the more recent reversal in sector leadership had a negative impact on fund performance as investors took profits in last year’s winners (a number of which the fund holds), particularly in the technology and biotechnology segments, and previous laggards such as utilities outperformed.
Despite some mixed economic data in the first quarter of the reporting period, the larger trend for the U.S. remains one of gradual improvement and, in our view, should support economic and corporate earnings growth in 2014. Recent manufacturing and labor reports affirm that expectation and view. Historically, acceleration within the U.S. economy tends to be positive for growth stocks, as we saw in the second half of 2013. This bodes particularly well for companies with best-in-class business models, persistent advantages and long runways of untapped growth opportunities—precisely the businesses in which the fund invests. Notwithstanding the current volatility, we remain optimistic about the long-term outlook of the portfolio’s holdings coupled with the innovation and strong execution of the management teams.
Looking ahead, we believe the equity market will remain strong, but have a heightened focus on risk control as the world is less certain today than it was at the end of 2013. Incremental volatility, as seen recently, should yield attractive investment opportunities for businesses where the magnitude and duration of highly sustainable growth can be underestimated by the market. The more cautious backdrop should be a particular boon for active managers like us who take a longer-term view of our holdings. At present, we continue to find reasonable valuations for great companies with strong earnings potential, large addressable markets and dominant market positions that we believe can thrive irrespective of macro forces. Best-in-class business models continue to take share globally, and selective opportunities in the “Superior, Durable and Periodic Growth” areas remain. Amid the latest market choppiness, we are reviewing opportunities to both add to favorite fund holdings on weakness and acquire new names where valuation cases have considerably improved.
The fund continues to maintain a diversified mix of Durable and Superior Growth holdings, supplemented by a small number of Periodic Growth names. At the end of the reporting period, the fund’s largest overweight relative to the benchmark remained consumer discretionary driven by our favorable view on companies that continue to take share in the expanding growth of consumer wealth globally and, in particular, the rise of e-commerce. The most notable underweight continued to be consumer staples.
PL Large-Cap Value Fund (managed by ClearBridge Advisors, LLC)
Q. How did the fund perform for the year ended March 31, 2014?
A. For the year ended March 31, 2014, the PL Large-Cap Value Fund’s Class P returned 21.41%, compared to a 21.57% return for its benchmark, the Russell 1000 Value Index.
The following graph compares the performance of a hypothetical $10,000 investment in Class P shares of the fund to its benchmark for the ten-year periods ended March 31, 2014. The fund’s performance reflects reinvestments of all dividends and capital gains distributions, if any.
Performance Comparison
Average Annual Total Returns for the Periods Ended March 31, 2014 (1) | ||||||||||||
1 Year | 5 Years | 10 Years | ||||||||||
Fund’s Class P | 21.41% | 19.72% | 6.57% | |||||||||
Russell 1000 Value Index | 21.57% | 21.75% | 7.58% |
(1) | ClearBridge Advisors, LLC assumed management of the fund on October 1, 2006. Salomon Brothers Asset Management Inc. an affiliate of ClearBridge, managed the fund before that date. |
Performance data shown represents past performance. Investment return and principal value will fluctuate so that shares of the fund when redeemed may be worth more or less than their original cost. Past performance is not predictive of future performance. |
See benchmark definitions on page A-27 and A-28 |
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PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
Q. Discuss both positive and negative factors that materially affected the fund’s performance during the year, including relevant market conditions, investment strategies and techniques, and particular sectors or securities.
A. For the reporting period, the fund’s Class P underperformed the benchmark. The ClearBridge large-capitalization value team utilizes an interactive, research-driven approach to identify companies with strong business franchises and attractive valuations. We look for companies with proven business models and sustainable competitive advantages capable of generating superior returns over time across a range of potential scenarios. We place a heavy emphasis on higher certainty of near- and medium-term cash flows, while discounting earnings from emerging business models or products. We consider valuations relative to normalized earnings power.
On an absolute basis, the fund had positive returns in all ten economic sectors in which it was invested during the reporting period. The greatest contributions to the fund’s performance return came from the financials, consumer discretionary and health care sectors. Relative to the benchmark, the fund’s overall sector allocation and security selection contributed to its performance for the reporting period. Underweight positions in the utilities and energy sectors positively impacted its relative performance for the reporting period. Furthermore, security selection within the financials and utilities sectors added to the fund’s relative performance. In terms of individual holdings, the leading contributors to fund performance included positions in DISH Network Corp., Wells Fargo & Co., JPMorgan Chase & Co., CVS Caremark Corp. and Time Warner Cable, Inc.
An underweight position in the health care sector and an overweight in the consumer staples sector detracted from relative fund performance for the reporting period. Additionally, security selection within information technology and industrials detracted from the fund’s performance. On an individual holding basis, the leading detractors from fund performance included positions in Philip Morris International, Inc., International Business Machines Corp., Twenty-First Century Fox, Inc., Target Corp. and Transocean Ltd.
During the reporting period, we opportunistically added to the fund’s existing holdings and established new fund positions in American Tower Corp. REIT, Citigroup, Inc., EMC Corp., Martin Marietta Materials, Inc., Nuance Communications, Inc., Twenty-First Century Fox, Inc. and Vodafone Group P.L.C. We also sold the fund’s full positions in Apache Corp., AT&T, Inc., CenturyLink, Inc., McDonald’s Corp., Transocean Ltd. and Twenty-First Century Fox, Inc. The proceeds were reinvested in areas where we believe there to be better risk-adjusted return opportunities.
We maintain our steadfast approach to manage the fund in a way that generates competitive risk- adjusted returns across a wide range of potential scenarios. Furthermore, we remain disciplined in our quest for high-quality durable cash flow- generative franchises that we feel comfortable owning for years to come.
PL Main Street Core Fund (managed by OppenheimerFunds, Inc.)
Q. How did the fund perform for the year ended March 31, 2014?
A. For the year ended March 31, 2014, the PL Main Street Core Fund’s Class P returned 22.84%, compared to a 21.86% return for its benchmark, the S&P 500 Index.
The following graph compares the performance of a hypothetical $10,000 investment in Class P shares of the fund to its benchmark for the periods from inception through March 31, 2014. The fund’s performance reflects reinvestments of all dividends and capital gains distributions, if any.
Performance Comparison
Average Annual Total Returns for the Periods Ended March 31, 2014 | ||||||||||||
1 Year | 5 Years | Since Inception (9/30/05) | ||||||||||
Fund’s Class P | 22.84% | 20.57% | 6.45% | |||||||||
S&P 500 Index | 21.86% | 21.16% | 7.34% |
Performance data shown represents past performance. Investment return and principal value will fluctuate so that shares of the fund when redeemed may be worth more or less than their original cost. Past performance is not predictive of future performance. |
Q. Discuss both positive and negative factors that materially affected the fund’s performance during the year, including relevant market conditions, investment strategies and techniques, and particular sectors or securities.
A. For the reporting period, the fund’s Class P outperformed the benchmark primarily due to stronger relative stock selection in financials, stronger relative stock selection and an overweight position in health care, and an underweight position in utilities. The most material underperforming sectors for the fund were consumer staples and industrials due to weaker relative stock selection.
See benchmark definitions on page A-27 and A-28 |
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PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
During the reporting period, the top contributors to fund performance included Actavis P.L.C. (health care), JPMorgan Chase & Co. (financials), Facebook, Inc. (information technology), McGraw Hill Financial, Inc. (financials) and Apple, Inc. (information technology). Actavis develops and markets branded generic and over-the-counter products worldwide. After its management provided guidance for 2014, analysts raised earnings estimates and increased price targets—helping to propel the stock higher. We at Oppenheimer believe increased generic drug demand, combined with both revenue synergies and cost savings from the recent merger with Warner Chilcott P.L.C. have the potential to continue fueling above-average growth. Actavis also pre-announced their quarterly earnings in January 2013, stating that they would be above the range that they had forecasted which helped drive the stock higher. In the closing months of the reporting period, Actavis also announced plans to acquire Forest Laboratories, Inc.
JPMorgan Chase benefited fund performance as the ongoing, albeit modest, improvement in the economy—largely driven by the continued health of the housing sector, which led to lower foreclosures, increased credit quality, and rising demand for mortgages. Facebook’s stock rallied over the first half of the reporting period as its mobile business grew, helping to answer concerns over its ability to deliver advertising via mobile devices. McGraw Hill’s stock price primarily benefited from an expanding price-to-earnings multiple. Investors’ perceptions of the company’s financial risk—stemming from a plethora of legal cases related to allegations of misleading debt ratings prior to the financial crisis—began to subside with the announced settlement of a lawsuit led by Abu Dhabi Commercial Bank and King County in Washington State. Additionally, with the recent sale of its slower growing education business, we believe that the company’s expanded multiple now reflects the faster growth, higher cash generation, and more profitable remaining businesses, primarily in information services. Apple’s stock rallied over the reporting period due to the roll-out of the new iPad and continued growth of iPhone 5S sales. Additionally, the long-awaited deal to sell iPhones through China Mobile was announced.
The most significant detractors from performance included International Business Machines Corp. (IBM) (information technology), Philip Morris International, Inc. (consumer staples), The ADT Corp. (industrials), General Electric Co. (industrials) and Reckitt Benckiser Group P.L.C. (consumer staples). IBM reported disappointing revenues and earnings over the second half of 2013, due in part to delayed signings of new software and hardware bookings, and surprising weakness in revenue growth from emerging markets, particularly China. We exited our position. Cigarette company Philip Morris declined due in part to unfavorable currency impacts. The majority of the firm’s revenue is denominated in foreign currencies, so the strengthening of the U.S. dollar during the reporting period had a negative impact on the bottom line and fund performance. ADT provides products and services used for fire protection, access control, alarm monitoring, medical alert system monitoring, video surveillance, and intrusion detection. Shares of ADT declined, detracting from fund performance during the reporting period; we exited our position. General Electric’s fourth quarter of 2013 results were disappointing, partially due to restructuring disruptions and a wind blade quality problem. Consequently, full-year operating margins fell short of expectations—sending the stock lower as a result. Reckitt Benckiser is a manufacturer and marketer of branded products in household, health and personal care, which experienced declines over the first half of the reporting period. We exited our position during the reporting period.
At the end of the reporting period, the fund had its largest relative overweight positions in health care, industrials and financials, and was underweight all other sectors of the benchmark. Our approach remains consistent. We aim to construct an “all weather” fund by targeting companies we believe have sustainable competitive advantages; skilled management with a proven track record of executing effectively; and financial resources to generate improving profitability, gain market share, and/or return significant capital to shareholders. During times of volatile or slow economic growth such companies frequently widen their lead over weaker competitors. We seek to invest in companies, characterized by these qualities, at compelling valuations and believe this disciplined approach is essential in seeking to generate superior long-term performance.
See benchmark definitions on page A-27 and A-28 |
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PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
PL Mid-Cap Equity Fund (managed by Scout Investments, Inc.)
Q. How did the fund perform for the year ended March 31, 2014?
A. For the year ended March 31, 2014, the PL Mid-Cap Equity Fund’s Class P returned 26.82%, compared to a 23.51% return for its benchmark, the Russell Midcap Index.
The following graph compares the performance of a hypothetical $10,000 investment in Class P shares of the fund to its benchmark for the periods from inception through March 31, 2014. The fund’s performance reflects reinvestments of all dividends and capital gains distributions, if any.
Performance Comparison
Average Annual Total Returns for the Periods Ended March 31, 2014 (1) | ||||||||||||
1 Year | 5 Years | Since Inception (12/31/04) | ||||||||||
Fund’s Class P | 26.82% | 21.80% | 6.42% | |||||||||
Russell Midcap Index | 23.51% | 25.55% | 9.31% |
(1) | Scout Investments, Inc. began managing the fund on January 1, 2013, and some investment policies changed at that time. Another firm managed the fund before that date. |
Performance data shown represents past performance. Investment return and principal value will fluctuate so that shares of the fund when redeemed may be worth more or less than their original cost. Past performance is not predictive of future performance. |
Q. Discuss both positive and negative factors that materially affected the fund’s performance during the year, including relevant market conditions, investment strategies and techniques, and particular sectors or securities.
A. For the reporting period, the fund’s Class P outperformed the benchmark. The fund’s strategy uses a combination of top-down and bottom-up analysis to select mid-capitalization stocks with four general characteristics: the quality of a company; an undervalued company relative to intrinsic value; having one or more catalysts to unlock value; and no excessive risk factors. We at Scout maintain a top-down process that relies on over 150 economic and sentiment indicators that we evaluate weekly searching for sectors and industries that may be experiencing tailwinds or headwinds to help guide fund construction.
Stock selection provided the fund’s outperformance of the benchmark for the reporting period, while sector allocation was a negative. Sector allocation was hurt by substantial cash drag during the year. While we strive to keep the cash balance low, our average during the reporting period created a substantial negative impact in a strong bull market. The fund’s overweight in the energy sector hurt fund performance, although the specific stocks within that sector did very well. An underweight in the utilities sector benefited the fund’s relative performance return, as that was the worst performing sector.
Stock selection was particularly strong within financials. The fund had a large exposure to several asset-sensitive financials, such as insurance companies Lincoln National Corp., The Hartford Financial Services Group, Inc., and Principal Financial Group, Inc.; and regional banks such as KeyCorp and Comerica, Inc. Thematically, we liked the insurance companies’ area of the market because they were generally levered to an improving domestic economy and had attractively priced assets, in several cases trading below tangible book value. Each also had company-specific drivers that we believed would help them outperform peers. The aforementioned insurance industry companies sold off modestly as the calendar year shifted to 2014 as returns of the equity markets flattened out and long-term interest rates trended lower, but the full year gains remained strong.
Outside of financials, Gulfport Energy Corp. was another strong contributor to the fund’s performance. Gulfport is an energy exploration and production company with acreage in the Utica Shale in Ohio, an emerging natural gas field. Gulfport shares appreciated as its well results produced strong production and rates of return. Gulfport‘s total cost to produce natural gas should be much lower than the current relatively low spot price. Going forward, Gulfport should benefit from increased production, reduced infrastructure bottlenecks, and decreased time to drill wells.
Another strong performer to the fund’s performance was TripAdvisor, Inc., the provider of online reviews for hotels and restaurants. During the reporting period, investors had been concerned that TripAdvisor’s transition to a metasearch model would hamper revenue growth, but underlying metrics continue to suggest that those fears were misplaced. Metasearch improves the user experience of the site, since it allows the consumer to price-shop and easily book a room. We believe any revenue headwinds from this business model transition to continue to abate in the second half of 2014, and we believe the long-term growth potential from this change is good.
Detracting from performance were Mortgage REITs, specifically CYS Investments, Inc. REIT, Hatteras Financial Corp. REIT, and American Capital Agency Corp. REIT. As levered bond funds, these holdings did poorly as interest rates started to rise. We felt they were
See benchmark definitions on page A-27 and A-28 |
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PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
attractive holdings because of valuations below tangible book value and their ability to hedge changes in book value. Unfortunately, those hedges were not as effective as we had expected, and the stocks declined, detracting from fund performance, as book values responded inversely to interest rates. As the 10-year Treasury yield began moving back down entering 2014, American Capital Agency’s stock performance improved. We added to the fund’s biotechnology exposure in early 2014 which proved to be poorly timed. Our fundamental analysis of the currently approved and late-stage pipeline drugs for Pharmacyclics, Inc. and Isis Pharmaceutical, Inc.’s gave us confidence to buy the stocks, but biotechs and other high growth industries went quickly out of favor despite little change in company-specific fundamentals causing a negative impact on fund performance.
As we enter a new fiscal year, we continue to be moderately bullish, believing that the economy can maintain its measured growth. We believe that the slow tapering of the Fed’s quantitative easing (QE) program will not derail economic growth. The passage of a compromise budget bill in December has given us hope for smoother sailing in Washington relative to the experience of the past few years. We are watching the implementation of the Affordable Care Act, and the impacts it may have on both the health care and consumer sectors. We are tracking developments in Russia and Ukraine, but we think the situation is unlikely to spark a more significant geopolitical event or economic slowdown. China is always closely watched, and we expect growth to continue to moderate, although any major economic disruptions are not anticipated. The fund continues to be constructed with an eye towards company- and industry-specific drivers rather than large sector positions. We especially like companies that are able to execute accretive mergers, introduce new growth initiatives, and implement cost-cutting programs. At the industry level, we are focusing on those industries that are reaping the benefits of consolidation with strong pricing power.
PL Mid-Cap Growth Fund (managed by Ivy Investment Management Company)
Q. How did the fund perform for the year ended March 31, 2014?
A. For the year ended March 31, 2014, the PL Mid-Cap Growth Fund’s Class P returned 23.39%, compared to a 24.22% return for its benchmark, the Russell Midcap Growth Index.
The following graph compares the performance of a hypothetical $10,000 investment in Class P shares of the fund to its benchmark for the ten-year periods ended March 31, 2014. The fund’s performance reflects reinvestments of all dividends and capital gains distributions, if any.
Performance Comparison
Average Annual Total Returns for the Periods Ended March 31, 2014 (1) | ||||||||||||
1 Year | 5 Years | 10 Years | ||||||||||
Fund’s Class P | 23.39% | 23.18% | 10.16% | |||||||||
Russell Midcap Growth Index | 24.22% | 24.73% | 9.47% |
(1) | Ivy Investment Management Company began managing the fund on November 1, 2013, and some investment policies changed at that time. Other firms managed the fund before that date. |
Performance data shown represents past performance. Investment return and principal value will fluctuate so that shares of the fund when redeemed may be worth more or less than their original cost. Past performance is not predictive of future performance. |
Q. Discuss both positive and negative factors that materially affected the fund’s performance during the year, including relevant market conditions, investment strategies and techniques, and particular sectors or securities.
A. From April 1, 2013 through October 31, 2013, the fund was managed by another firm. During the seven-month period that the fund was managed by a prior firm, the fund’s Class P underperformed the benchmark. Ivy Investment Management Company assumed management of the fund on November 1, 2013. During the five-month period ending March 31, 2014, the fund’s Class P underperformed the benchmark. The fund manager primarily emphasizes a bottom-up approach and may look at a number of factors in its consideration of a company, such as new or innovative products or services; adaptive or creative management; strong financial and operational capabilities to sustain growth; stable and consistent revenue, earnings and cash flow; market potential and profit potential. Consistent with the strategy’s philosophy and process, the fund’s performance was driven by individual stock selection as opposed to sector bets (overweighting/underweighting the benchmark).
A large majority of the relative underperformance for the reporting period was a result of factors affecting individual stock selections. More specifically, Polypore International, Inc. and Expeditors International of Washington, Inc. underperformed within industrials while Ulta Salon Cosmetics & Fragrance, Inc., and LKQ Corp. underperformed within consumer discretionary. Expeditors lagged primarily due to a disappointing earnings announcement that occurred in late February 2014.
See benchmark definitions on page A-27 and A-28 |
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PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
There were areas of the fund where stock selections helped, such as financials led by Signature Bank and Northern Trust Corp. Both helped the fund outperform the benchmark in this category. Signature Bank was propelled by continued strong loan growth and the outlook for higher interest rates.
Stocks F5 Networks, Inc. and Trimble Navigation Ltd. helped the fund outperform the benchmark for the reporting period within information technology. F5 Networks reported improved results during the fourth quarter of the reporting period, showing improvements versus the trend line. An overweighting in this category also helped relative performance.
PL Small-Cap Growth Fund (managed by Fred Alger Management, Inc.)
Q. How did the fund perform for the year ended March 31, 2014?
A. For the year ended March 31, 2014, the PL Small-Cap Growth Fund’s Class P returned 19.90%, compared to a 27.19% return for its benchmark, the Russell 2000 Growth Index.
The following graph compares the performance of a hypothetical $10,000 investment in Class P shares of the fund to its benchmark for the ten-year periods ended March 31, 2014. The fund’s performance reflects reinvestments of all dividends and capital gains distributions, if any.
Performance Comparison
Average Annual Total Returns for the Periods Ended March 31, 2014 (1) | ||||||||||||
1 Year | 5 Years | 10 Years | ||||||||||
Fund’s Class P | 19.90% | 22.07% | 6.75% | |||||||||
Russell 2000 Growth Index | 27.19% | 25.24% | 8.87% |
(1) | Fred Alger Management, Inc. began managing the fund on July 1, 2007, and some investment policies changed at that time. Other firms managed the fund before that date. |
Performance data shown represents past performance. Investment return and principal value will fluctuate so that shares of the fund when redeemed may be worth more or less than their original cost. Past performance is not predictive of future performance. |
Q. Discuss both positive and negative factors that materially affected the fund’s performance during the year, including relevant market conditions, investment strategies and techniques, and particular sectors or securities.
A. For the reporting period, the fund’s Class P underperformed the benchmark. During the reporting period, the largest sector weightings in the fund were in the information technology and health care sectors. The largest sector overweight for the year was in consumer discretionary while the largest sector underweight was in health care. Favorable stock selection in the materials and industrials sectors was the most important contributor to fund performance. Information technology, health care and financials sectors detracted from the fund’s performance.
Insulet Corp. and Intercept Pharmaceuticals, Inc. were among the top contributors to the fund’s absolute performance. Insulet provides a disposable patch for diabetics to use for taking insulin. During the first quarter of 2014, the company announced strong unit sales growth, which we at Alger believed was a result of its product being highly effective at a time when new cases of diabetes were and are rapidly growing. The company is also planning to launch a new generation of its existing product. Intercept Pharmaceuticals is a biotechnology company that is developing treatments for a variety of liver disorders, also contributed to fund performance. Early in 2014, it announced favorable data from a trial of its treatment for non-alcoholic related steatohepatitis, which is a major type of liver cirrhosis in the U.S. Another contributor during the reporting period was Acuity Brands, Inc. The company designs, produces, and distributes outdoor lighting fixtures. Greater-than-anticipated adoption of LED lighting helped the company generate strong sales while cost controls helped drive incremental improvements in operating margins.
Cyan, Inc. and Ruckus Wireless, Inc. were among the top detractors to the fund’s absolute performance. Cyan is an integrated system and software company that provides mesh-based flexible wireless solutions for utility metering and lighting control. The shares detracted from fund performance because the company issued disappointing guidance due to sagging demand from an important customer and soft international growth. Disappointing results in China and a slower-than-anticipated increase in product orders, meanwhile, weakened the performance of Ruckus stock. The company provides technology for WIFI networks, including access points. Also detracting from fund performance was Tetra Tech, Inc. and Radware Ltd. Tetra Tech performs consulting, engineering and project management for water, alternative energy, and environmental initiatives. Tetra stock performed poorly after the company lowered its guidance, explaining that it was experiencing disappointing results in Canada because of budget deficits and weak spending. Radware also performed poorly during the reporting period. The company develops integrated networking solutions that allow enterprise and carrier customers to deliver
See benchmark definitions on page A-27 and A-28 |
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PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
applications between data centers and remote locations. It announced disappointing business results due to weak spending by existing customers and potential customers in Europe and China.
Alger’s investment philosophy and process remains unchanged: a research intensive, bottom-up, fundamental approach focused on discovering the fastest growing companies undergoing “Positive Dynamic Change”. Our experienced research team continues to identify many small capitalization companies undergoing “Positive Dynamic Change” where our forward looking assessment of their fundamentals exceeded Wall Street’s consensus. We believe our philosophy of “Investing in Positive Dynamic Change” has never been more appropriate than today. While change is almost always unsettling for some investors, we believe that it generates opportunities to buy strong companies with superior potential for growth that are trading at attractive valuations. We continue to believe that research is the cornerstone of fund management, regardless of economic conditions, and that our proven and disciplined process for identifying companies experiencing “Positive Dynamic Change” will continue to produce superior long-term results.
PL Small-Cap Value Fund (managed by NFJ Investment Group LLC)
Q. How did the fund perform for the year ended March 31, 2014?
A. For the year ended March 31, 2014, the PL Small-Cap Value Fund’s Class P returned 18.13%, compared to a 22.65% return for its benchmark, the Russell 2000 Value Index.
The following graph compares the performance of a hypothetical $10,000 investment in Class P shares of the fund to its benchmark for the periods from inception through March 31, 2014. The fund’s performance reflects reinvestments of all dividends and capital gains distributions, if any.
Performance Comparison
Average Annual Total Returns for the Periods Ended March 31, 2014 | ||||||||||||
1 Year | 5 Years | Since Inception (6/29/07) | ||||||||||
Fund’s Class P | 18.13% | 22.54% | 6.76% | |||||||||
Russell 2000 Value Index | 22.65% | 23.33% | 5.29% |
Performance data shown represents past performance. Investment return and principal value will fluctuate so that shares of the fund when redeemed may be worth more or less than their original cost. Past performance is not predictive of future performance. |
Q. Discuss both positive and negative factors that materially affected the fund’s performance during the year, including relevant market conditions, investment strategies and techniques, and particular sectors or securities.
A. For the reporting period, the fund’s Class P underperformed the benchmark. We at NFJ focus on investing in undervalued companies relative to the market across a broad range of industry groups. We normally invest significantly in securities of companies that the fund managers expect will generate income (for example, by paying dividends).
Selection in materials was beneficial to the fund’s performance, largely due to strength from Methanex Corp., a world leader in the supply, distribution and marketing of methanol, and global specialty chemicals and performance materials company Cabot Corp. Methanex grew fourth quarter 2013 profits and revenues year-over-year, boosted by higher methanol pricing and healthy demand. First quarter 2014 results for Cabot included double-digit year-over-year volume growth from its “Reinforcement Materials and Performance Materials” segments.
Selection in consumer discretionary detracted from fund performance during the reporting period, in part due to casino game maker International Game Technology. The company announced the reduction of 7% of its workforce and lowered its adjusted earnings forecast for the full year 2014. A second detractor from fund performance was The Buckle, Inc. (apparel retailer of brands including Diesel and Guess) which recently reported fiscal fourth quarter 2013 profits that declined 3.4%, with results negatively impacted by a dip in same-store sales, though online sales showed slight improvement.
An underweight in financials contributed to the fund’s absolute returns. After telecommunication services, utilities and materials, financials posted the fourth-weakest returns in benchmark during the reporting period.
An underweight in the information technology sector, the second strongest sector within the benchmark during the reporting period, detracted from the fund’s returns.
See benchmark definitions on page A-27 and A-28 |
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PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
PL Real Estate Fund (managed by Morgan Stanley Investment Management Inc.)
Q. How did the fund perform for the year ended March 31, 2014?
A. For the year ended March 31, 2014, the PL Real Estate Fund’s Class P returned 5.61%, compared to a 21.86% return for its benchmarks, the broad-based S&P 500 Index and a 4.16% return for the FTSE NAREIT Equity REITs Index.
The following graph compares the performance of a hypothetical $10,000 investment in Class P shares of the fund to its benchmarks for the periods from inception through March 31, 2014. The fund’s performance reflects reinvestments of all dividends and capital gains distributions, if any.
Performance Comparison
Average Annual Total Returns for the Periods Ended March 31, 2014 (1) | ||||||||||||
1 Year | 5 Years | Since Inception (12/31/04) | ||||||||||
Fund’s Class P | 5.61% | 26.86% | 6.85% | |||||||||
S&P 500 Index | 21.86% | 21.16% | 7.04% | |||||||||
FTSE NAREIT Equity REITs Index | 4.16% | 28.20% | 7.04% |
(1) | Morgan Stanley Investment Inc. manages the fund and formerly did business in certain instances under the name Van Kampen, and managed the PL Real Estate Fund under the Van Kampen name from fund’s inception until May 31, 2010. |
Performance data shown represents past performance. Investment return and principal value will fluctuate so that shares of the fund when redeemed may be worth more or less than their original cost. Past performance is not predictive of future performance. |
Q. Discuss both positive and negative factors that materially affected the fund’s performance during the year, including relevant market conditions, investment strategies and techniques, and particular sectors or securities.
A. For the reporting period, the fund’s Class P underperformed the broad-based S&P 500 Index and outperformed the sector-specific, FTSE NAREIT Equity REITs (FTSE NAREIT) Index. Both bottom-up stock selection and top-down sector allocation contributed to relative performance. From a bottom-up perspective, the fund achieved favorable relative stock selection in the mall, diversified, net lease, hotel, and central business district (CBD) office sectors, positively impacting fund performance. This was partially offset by stock selection in the health care and suburban office sectors, which detracted from fund performance. From a top-down perspective, the underweight to the health care sector, and the overweight to the CBD office, hotel, and apartment sectors contributed to the fund’s relative performance. This was partially offset by relative losses from the underweight to the storage sector, detracting from the fund’s performance.
REITs significantly trailed the broader equity markets, as measured by the S&P 500 Index during the first three quarters of the reporting period as investors generally remained cautious towards the REIT sector likely due to concerns about higher interest rates negatively impacting real estate asset values. However, REITs significantly outperformed the S&P 500 Index in the first quarter of 2014, reversing the trend from earlier in the period.
We, the fund managers at Morgan Stanley, have maintained our core investment philosophy as a real estate value investor. This results in the ownership of stocks whose share prices provide real estate exposure at the best valuation relative to their underlying asset values. Our company-specific research leads us to an overweighting in the fund to a group of companies that are focused in the ownership of high-quality malls, apartments, upscale hotels, CBD office assets, and a number of out-of-favor companies, and an underweighting to companies concentrated in the ownership of net lease, health care, suburban office, shopping center, specialty office, and industrial assets.
See benchmark definitions on page A-27 and A-28 |
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PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
PL Emerging Markets Fund (managed by OppenheimerFunds, Inc.)
Q. How did the fund perform for the year ended March 31, 2014?
A. For the year ended March 31, 2014, the PL Emerging Markets Fund’s Class P returned 6.43%, compared to a -1.43% return for its benchmark, the MSCI Emerging Markets Index (Net).
The following graph compares the performance of a hypothetical $10,000 investment in Class P shares of the fund to its benchmark for the periods from inception through March 31, 2014. The fund’s performance reflects reinvestments of all dividends and capital gains distributions, if any.
Performance Comparison
Average Annual Total Returns for the Periods Ended March 31, 2014 | ||||||||||||
1 Year | 5 Years | Since Inception (9/30/05) | ||||||||||
Fund’s Class P | 6.43% | 19.61% | 10.25% | |||||||||
MSCI Emerging Markets Index (Net) | (1.43% | ) | 14.48% | 7.36% |
Performance data shown represents past performance. Investment return and principal value will fluctuate so that shares of the fund when redeemed may be worth more or less than their original cost. Past performance is not predictive of future performance. |
Q. Discuss both positive and negative factors that materially affected the fund’s performance during the year, including relevant market conditions, investment strategies and techniques, and particular sectors or securities.
A. For the reporting period, the fund’s Class P outperformed the benchmark primarily in information technology due to stronger relative stock selection and in consumer discretionary as a result of an overweight position and stronger relative stock selection. The most material detractors from fund performance were an overweight position in consumer staples and weaker relative stock selection in financials. On a country basis, relative to the benchmark, the fund’s strongest performers included stock selection in China and Russia, along with stock selection and an underweight position in Brazil. Detractors from fund performance included weaker relative stock selection and an underweight position in Taiwan, an underweight position in South Africa, and an overweight position in the U.K.
During the reporting period, the top individual contributors to fund performance included information technology stocks Baidu, Inc. (China), Tencent Holdings Ltd. (China) and NAVER Corp. (South Korea), consumer discretionary stocks Ctrip.com International Ltd. (China) and New Oriental Education & Technology Group, Inc. (China). Baidu is the leading internet search provider in China. The company continued to perform well during the reporting period as concerns about monetizing mobile faded. Tencent Holdings, a Chinese internet social networking company, has an online community nearly the size of Facebook, Inc.’s. Users can access Tencent offerings through desktop and mobile devices. This platform, with its extensive size and ease of access, enables Tencent to offer an increasing number of services. The company monetizes some of the services by selling accompanying ad space and by offering subscription services to users. The value inherent in Tencent’s network with its commanding market position is becoming clearer. NAVER is a Korean internet services company that was created when NHN Corp. spun-off its entertainment division (NHN Entertainment Corp.) and renamed its remaining internet search engine NAVER. NAVER provides internet search and online games, and the subsidiary NHN Entertainment offers the fast-growing “Line” messaging service and Japanese language versions of the online games. NAVER performed well during the reporting period and benefited from an increased number of subscribers. Ctrip.com International Ltd. is an online trip aggregator that produced positive fund performance results, which might have been an indication that competitive pressures in the sector were easing in China after several quarters of discount pricing and coupon issuance. New Oriental is a provider of private educational services in China. Shares of New Oriental rallied during the reporting period, and the company released strong financial results over the fourth quarter of 2013.
The most significant detractors from fund performance during the reporting period included Cencosud S.A. (consumer staples) (Chile), Tullow Oil P.L.C. (energy) (U.K.), Haci Omer Sabanci Holding A.S. (financials) (Turkey), Hang Lung Properties Ltd. (Financials) (Hong Kong) and Prada S.P.A. (consumer discretionary) (Italy). Cencosud, based in Chile, is Latin America’s third, largest retailer. Shares of Cencosud fell after Argentina, which accounts for a large portion of the company’s sales, devalued its currency. Tullow Oil is an Irish company listed in the U.K. that operates entirely in Africa and Latin America. The firm focuses on exploration, subsequently de-risking assets by bringing capital-providing partners into the production phase. The company has had a few recent exploration bumps but has a well above-average record of success. Haci Omer Sabanci Holding is the holding company of Sabanci Group, an industrial and financial conglomerate in Turkey. The company experienced volatility during the reporting period due in part to a weak Turkish lira. Hang Lung Properties develops and owns office space, shopping malls, apartment buildings, parking garages and other properties in Hong Kong and China. The company reported a decline in profit in 2013 as sales of investment properties fell. Prada is the luxury designer of leather
See benchmark definitions on page A-27 and A-28 |
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PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
goods, handbags, clothing, and more. Prada’s stock experienced declines towards the end of the reporting period after reporting weakening sales growth and softening demand in Europe and Asia.
At the end of the reporting period, the fund had its most significant overweight positions relative to the benchmark in the consumer staples, consumer discretionary and health care sectors and was underweight all other sectors of the benchmark. On a country basis, the fund had its largest overweight positions in the U.K., India, Hong Kong, Italy and France, and its most significant underweights in South Korea, Taiwan and South Africa.
Emerging markets are heterogeneous as they vary greatly from each other in their relative dependence on exports, on commodity versus manufacturing or service exports, on their integration with global capital markets and their dependence on foreign capital flows, on the exchangeability of their currencies, and so on. Furthermore, within each of the emerging market economies, as within each of the developed ones, companies vary greatly. We at Oppenheimer believe in active management—by which we mean fundamental, bottom up, long-term stock picking—as the right approach to equity investing in all markets. We continue to seek businesses that we believe have strong and sustainable competitive advantage due to dominant positioning and high-entry barriers, low financial and operating leverage and capable managements.
PL International Large-Cap Fund (managed by MFS Investment Management)
Q. How did the fund perform for the year ended March 31, 2014?
A. For the year ended March 31, 2014, the PL International Large-Cap Fund’s Class P returned 13.28%, compared to a 17.56% return for its benchmark, the MSCI EAFE Index (Net).
The following graph compares the performance of a hypothetical $10,000 investment in Class P shares of the fund to its benchmark for the ten-year periods ended March 31, 2014. The fund’s performance reflects reinvestments of all dividends and capital gains distributions, if any.
Performance Comparison
Average Annual Total Returns for the Periods Ended March 31, 2014 | ||||||||||||
1 Year | 5 Years | 10 Years | ||||||||||
Fund’s Class P | 13.28% | 16.51% | 7.61% | |||||||||
MSCI EAFE Index (Net) | 17.56% | 16.02% | 6.53% |
Performance data shown represents past performance. Investment return and principal value will fluctuate so that shares of the fund when redeemed may be worth more or less than their original cost. Past performance is not predictive of future performance. |
Q. Discuss both positive and negative factors that materially affected the fund’s performance during the year, including relevant market conditions, investment strategies and techniques, and particular sectors or securities.
A. For the reporting period, the fund’s Class P underperformed the benchmark. The MFS fund management team focuses on high-quality companies with sustainable above-average growth and returns, whose prospects are not reflected in their valuation.
Stock selection in the financial services sector was a primary detractor from the fund’s relative performance. This was mainly due to the fund’s overweight position in banking group Standard Chartered P.L.C. (U.K.), which significantly underperformed during the reporting period. An overweight position in financial services firm HSBC Holdings P.L.C. (U.K.) and owning shares of investment holding company Itau Unibanco Holding S.A. (Brazil), which was not a benchmark constituent, also weakened relative performance.
Stock selection and an overweight position in the consumer staples sector was also a negative factor to the fund’s performance led by the fund’s overweight positions in brewer Heineken N.V. (Netherlands) and wine and alcohol beverage producer Pernod Ricard S.A. (France). An underweight allocation to the utilities & communications sector, the strongest-performing sector in the benchmark over the reporting period, held back the fund’s relative returns. There were no individual securities within this sector that were among the fund’s top relative fund detractors.
Elsewhere, the fund’s overweight position in auto manufacturer Honda Motor Co. Ltd. (Japan) and not holding shares of strong-performing auto maker Daimler A.G. (Germany) detracted from its relative results. An overweight position in specialty chemicals manufacturer Shin-Etsu Chemical Co. Ltd. (Japan) and owning shares of microchip and electronics manufacturer Samsung Electronics Co. Ltd. (South Korea), which was not a benchmark constituent, also hampered fund relative performance as both stocks turned in weak performance relative to the benchmark.
See benchmark definitions on page A-27 and A-28 |
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PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
The fund’s cash and/or cash equivalents position during the reporting period was another detractor from its relative performance. The fund strives to be fully invested and generally holds cash to buy new holdings and to provide liquidity. In a period when equity markets rose, as measured by the fund’s benchmark, holding cash hurt performance versus the benchmark, which has no cash position.
Stock selection in both the special products & services and health care sectors bolstered fund relative returns. Within special products & services, an overweight position in human resources and employment services provider Randstad Holding N.V. (Netherlands) and holdings of Hays P.L.C. (U.K.), another recruitment agency which was not a benchmark constituent, contributed to the fund’s relative performance as both stocks significantly outperformed the benchmark. Travel services provider Amadeus IT Holding S.A. (Spain) also benefited the fund’s relative results. Within health care, holdings of pharmaceutical company Valeant Pharmaceuticals International, Inc. (Canada), which was not a benchmark constituent, and an overweight position in health care products maker Bayer A.G. (Germany) added to the fund’s relative value as both stocks significantly outperformed the broad market as defined by the fund’s benchmark.
Elsewhere, overweight positions in financial services firm ING Groep N.V. (Netherlands), optical glasses and eyeglasses maker Hoya Corp. (Japan), wiring devices and cable systems manufacturer Legrand S.A. (France) and advertising and marketing firm WPP P.L.C. (U.K.) benefited fund relative returns. Owning shares of automotive parts manufacturer Delphi Automotive P.L.C. (U.K.), which was not a benchmark constituent, also boosted its relative performance.
During the reporting period, the fund’s currency exposure, resulting primarily from differences between the fund and the benchmark’s exposures to holdings of securities denominated in foreign currencies, was another contributor to fund relative performance. All of our investment decisions are driven by the fundamentals of each individual opportunity and as such, it is common for our funds to have different currency exposure than the benchmark.
PL International Value Fund (managed by J.P. Morgan Investment Management Inc.)
Q. How did the fund perform for the year ended March 31, 2014?
A. For the year ended March 31, 2014, the PL International Value Fund’s Class P returned 16.15%, compared to a 17.56% return for its benchmark, the MSCI EAFE Index (Net).
The following graph compares the performance of a hypothetical $10,000 investment in Class P shares of the fund to its benchmark for the ten-year periods ended March 31, 2014. The fund’s performance reflects reinvestments of all dividends and capital gains distributions, if any.
Performance Comparison
Average Annual Total Returns for the Periods Ended March 31, 2014 (1) | ||||||||||||
1 Year | 5 Years | 10 Years | ||||||||||
Fund’s Class P | 16.15% | 13.71% | 3.09% | |||||||||
MSCI EAFE Index (Net) | 17.56% | 16.02% | 6.53% |
(1) | J.P. Morgan Investment Management, Inc. began managing the fund on January 1, 2011, and some investment policies changed at that time. Another firm managed the fund before that date. |
Performance data shown represents past performance. Investment return and principal value will fluctuate so that shares of the fund when redeemed may be worth more or less than their original cost. Past performance is not predictive of future performance. |
Q. Discuss both positive and negative factors that materially affected the fund’s performance during the year, including relevant market conditions, investment strategies and techniques, and particular sectors or securities.
A. For the reporting period, the fund’s Class P underperformed the benchmark. We at JPMorgan seek to add value to clients’ funds by capitalizing on mis-valuations that arise within and across the world’s equity markets. We do this by investing in undervalued securities, as identified by in-house valuation tools and research analysts. Our process is dominated by bottom-up stock selection. Our transparent and uniform investment philosophy drives all in-house research efforts and all investment decisions.
Stock selection in technology-hardware and energy had negative impacts on the fund’s excess returns. Stock selection in basic industries and insurance added value to the fund’s performance during the reporting period. Regionally, stock selection in Japan and an allocation to emerging markets detracted from fund performance. Stock selection in Continental Europe, along with an underweight allocation in the Pacific Rim, contributed to the fund’s performance.
At the stock level, Electrolux A.B., the Swedish maker of home appliances, had a difficult period as the company reported fourth quarter 2013 sales and earnings that fell short of Wall Street estimates and detracted from the fund’s performance. Earnings fell year-over-year in the fourth quarter 2013, dragged down by lackluster European demand and unfavorable currency movements, which undermined the
See benchmark definitions on page A-27 and A-28 |
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PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
value of sales to Latin America and Asia Pacific. The company stated that during the reporting period, it was starting to see positive developments in Europe as the region emerged from recession. Meanwhile, driven by the continued recovery in U.S. housing, sales in North America continued to grow, even as the company itself cut costs and relocated production to lower-cost countries. The stock continues to look attractively valued.
On the upside, Cie de St-Gobain, the French building materials company, was a strong performer, benefiting fund performance. Recurring net income fell in 2013 (roughly in line with Wall Street estimates), but management was projecting a rebound for 2014 on the back of better demand and lower costs. During the reporting period, Cie de St-Gobain had begun reducing costs and selling units in order to compensate for a slump in European auto and construction activity. But now Europe is showing signs of recovering (although modestly) even as capacity reductions are alleviating pricing pressures.
PL Currency Strategies Fund (managed by UBS Global Asset Management (Americas) Inc.)
Q. How did the fund perform for the year ended March 31, 2014?
A. For the year ended March 31, 2014, the PL Currency Strategies Fund’s Class P returned -5.98%, compared to a 0.03% return for its benchmark, the Citigroup 1-Month U.S. T-Bill Index.
The following graph compares the performance of a hypothetical $10,000 investment in Class P shares of the fund to its benchmark for the periods from inception through March 31, 2014. The fund’s performance reflects reinvestments of all dividends and capital gains distributions, if any.
Performance Comparison
Average Annual Total Returns for the Periods Ended March 31, 2014 | ||||||||
1 Year | Since Inception (12/7/12) | |||||||
Fund’s Class P | (5.98% | ) | (2.27% | ) | ||||
Citigroup 1-Month U.S. T-Bill Index | 0.03% | 0.04% |
Performance data shown represents past performance. Investment return and principal value will fluctuate so that shares of the fund when redeemed may be worth more or less than their original cost. Past performance is not predictive of future performance. |
Q. Discuss both positive and negative factors that materially affected the fund’s performance during the year, including relevant market conditions, investment strategies and techniques, and particular sectors or securities.
A. For the reporting period, the fund’s Class P underperformed the benchmark. For the reporting period, derivatives, including non-deliverable forwards, had a negative impact on the fund’s performance. We at UBS retain high conviction in our positions against commodity-backed currencies where we see overvaluations and vulnerability to weaker commodity prices. Over the reporting period, commodity prices broadly fell, causing the Australian dollar, and Canadian dollar short positions to positively impact the fund’s performance. These short commodity currency positions were partially offset by long exposures to the commodity-backed Norwegian krone and South African rand, which negatively impacted fund performance.
We remain positive toward the U.S. dollar and believe that it will likely be supported by a strengthening domestic economy and continued tapering. The fund’s largest underweights remain in the New Zealand dollar and the Swiss franc. The New Zealand dollar has decoupled from the Australian dollar. The market is pricing-in a number of rate hikes by the Reserve Bank of New Zealand; however, we do not believe these are sufficient to justify the current level of the exchange rate. Further to this, New Zealand’s elevated terms of trade are likely to deteriorate as emerging market growth slows. Regarding our Swiss franc position, we anticipate flows into the Swiss franc to reverse as Swiss investors return to purchasing foreign assets as the eurozone continues to show signs of stabilization and as Swiss banks reduce the repatriation of assets, now that balance sheets are stronger. Additionally, we believe that the Swiss National Bank (SNB) will continue to maintain its lower limit (floor) of 1.20 for the Euro/Swiss Franc (EURCHF) exchange rate thus limiting the potential downside for this trade. The SNB intervenes in the currency market to ensure that the EURCHF remains above the 1.20 level. The fund’s short positions in both the New Zealand dollar and Swiss franc had a negative impact on its performance during the reporting period.
In emerging markets, the fund has selective, long positions in currencies, such as the Mexican peso, Polish zloty and Philippine peso. The fund was “risk on” emerging market (EM) currencies for most of the year which benefited the fund’s performance overall. However, recent stress in EM currencies caused us to review our EM positioning and assess whether anything had fundamentally changed to warrant adjusting the currency fund. We reviewed the real exchange rate (RER) history of EM currencies in proportion to their index weighting in the Morgan Stanley Capital International Emerging Markets (MSCI EM) Index (Net) and the J.P. Morgan EMBI Global
See benchmark definitions on page A-27 and A-28 |
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PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
Diversified Index and found that the recent move in EM currencies has not made them particularly cheap on these metrics, so there could be a further sell off. That being said, there are some areas where we believe valuations are still strong.
The fund’s long Mexican peso position, which is attractive on a valuation basis and has an attractive level of inflation-adjusted interest rates relative to other currencies, was the primary contributor to the fund’s performance of the emerging market allocations. The long position in the Philippine peso was the major detractor from the fund’s performance within the emerging market allocations. A short position in the Chilean peso during the year was also a strong contributor to performance.
PL Global Absolute Return Fund (managed by Eaton Vance Management)
Q. How did the fund perform for the year ended March 31, 2014?
A. For the year ended March 31, 2014, the PL Global Absolute Return Fund’s Class P returned -2.80%, compared to a 0.07% return for its benchmark, the BofA Merrill Lynch U.S. 3-Month T-Bill Index.
The following graph compares the performance of a hypothetical $10,000 investment in Class P shares of the fund to its benchmark for the periods from inception through March 31, 2014. The fund’s performance reflects reinvestments of all dividends and capital gains distributions, if any.
Performance Comparison
Average Annual Total Returns for the Periods Ended March 31, 2014 (1) | ||||||||
1 Year | Since Inception (12/7/12) | |||||||
Fund’s Class P | (2.80% | ) | (0.68% | ) | ||||
BofA Merrill Lynch U.S. 3-Month T-Bill Index | 0.07% | 0.08% |
(1) | Eaton Vance Investment Managers (“Eaton Vance”) assumed management of the fund on August 1, 2013. Eaton Vance Management, an affiliate of Eaton Vance, managed the fund from the fund’s inception to July 31, 2013. |
Performance data shown represents past performance. Investment return and principal value will fluctuate so that shares of the fund when redeemed may be worth more or less than their original cost. Past performance is not predictive of future performance. |
Q. Discuss both positive and negative factors that materially affected the fund’s performance during the year, including relevant market conditions, investment strategies and techniques, and particular sectors or securities.
A. For the reporting period, the fund’s Class P underperformed the benchmark. The fund invests in securities, derivatives and other instruments to establish long and short investment exposures around the world, typically seeking to establish such investment exposures to individual countries based on Eaton Vance’s view of the investment merits of a country. The fund normally invests in multiple countries and may have significant exposure to foreign currencies.
Performance results were mixed across the various global regions, with exposures in Western Europe, Asia, and the Dollar Bloc, which includes Australia, New Zealand and Canada, detracting most from relative performance. Contributing to relative performance results were the fund’s exposures in Eastern Europe and Sub-Saharan Africa, while results in Latin America and the Middle East and North Africa (MENA) were relatively flat.
In Western Europe, the fund’s short position in Spanish credit spreads implemented through credit default swaps negatively impacted returns as did a short position in the British pound expressed through options. Within Asia, long currency positions in the Indian rupee and Philippine peso weighed on performance. Elsewhere in Asia, the fund generated positive returns with gains on a short position in the Japanese yen as well as long positions in the Sri Lankan rupee and the Chinese yuan. In the Dollar Bloc, a long duration position in New Zealand, implemented as a hedge for long positions in emerging Asia, detracted from returns.
In Central and Eastern Europe, losses on a long currency position in Kazakhstan and a long position in the Czech koruna were more than offset by gains on a long currency position in the Serbian dinar versus the euro and long credit exposure in Slovenia. In Sub-Saharan Africa, a short position in the South African rand and a long position in the Nigerian naira were top contributors.
In Latin America, gains on a long interest rate position in Brazil and tactical, long and short positions in Venezuelan credit were offset by losses on a long Mexican peso and Uruguayan peso positions. In the MENA, a gain on a long currency positions in Israel was more than offset by losses on short credit positions in Lebanon and Qatar.
See benchmark definitions on page A-27 and A-28 |
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PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
PL Precious Metals Fund (managed by Wells Capital Management Incorporated)
Q. How did the fund perform for the year ended March 31, 2014?
A. For the year ended March 31, 2014, the PL Precious Metals Fund’s Class P returned -29.98%, compared to a 21.86% return for its benchmarks, the S&P 500 Index and a -36.14% return for the FTSE Gold Mines Index.
The following graph compares the performance of a hypothetical $10,000 investment in Class P shares of the fund to its benchmarks for the periods from inception through March 31, 2014. The fund’s performance reflects reinvestments of all dividends and capital gains distributions, if any.
Performance Comparison
Average Annual Total Returns for the Periods Ended March 31, 2014 | ||||||||
1 Year | Since Inception (12/7/12) | |||||||
Fund’s Class P | (29.98% | ) | (34.35% | ) | ||||
S&P 500 Index | 21.86% | 26.46% | ||||||
FTSE Gold Mines Index | (36.14% | ) | (37.35% | ) |
Performance data shown represents past performance. Investment return and principal value will fluctuate so that shares of the fund when redeemed may be worth more or less than their original cost. Past performance is not predictive of future performance. |
Q. Discuss both positive and negative factors that materially affected the fund’s performance during the year, including relevant market conditions, investment strategies and techniques, and particular sectors or securities.
A. For the reporting period, the fund’s Class P underperformed the broad-based S&P 500 Index and outperformed the sector-specific FTSE Gold Mines Index. The Wells Capital fund management team invests in equity companies involved in the exploration, development, mining, processing, or dealing of gold, precious metals, and minerals, which tend to have relatively high correlation to underlying commodity prices and relatively low correlation to the prices of other stocks and bonds. The team takes a disciplined approach to risk management through top-down analysis and bottom-up stock selection, while diversifying across market capitalizations, production profiles, and geographies, and focuses on a long-term investment horizon, looking for companies that have lower-than-average cost structures, are well managed, and are likely to improve their relative values over time.
The negative performance seen in both the fund and the FTSE Gold Mines Index was primarily the result of a 20% drop in the price of gold during the reporting period. Gold prices fell by 17% in early April 2013 when the Fed suggested that the tapering of quantitative easing (QE) was likely to begin before year end. After bottoming in late June 2013, the price of gold traded within a $250 per ounce range over the next nine months ending the reporting period 20% lower. Gold, which is seen as a store of value and appreciates on a weaker dollar or higher inflation expectations, declined in relation to improvement of the U.S. dollar and removal of inflationary fears associated with QE.
The fund benefited from its holdings in cash. The fund held approximately 9.50% of assets in cash on average throughout the reporting period, which outperformed precious metals equity holdings of the FTSE Gold Mines Index and added to the fund’s relative performance. Franco-Nevada Corp. and Royal Gold, Inc., which together comprised on average nearly 8% of the fund throughout the reporting period, were important contributors to its performance. Both Franco-Nevada and Royal Gold enhanced the fund’s performance from their collection of royalties in politically stable geographies, strong management teams and cash rich balance sheets.
In addition, silver development company Tahoe Resources, Inc. and gold producer Osisko Mining Corp. were both strong performers during the reporting period. Tahoe outperformed on news that it had received the final mining permit for its Escobal mine in Guatemala along with the company’s declaration of commercial production early in 2014. Osisko Mining shares rose as operations at its Malartic Mine continued to improve during the second half of 2013 and on news of a hostile takeover offer from Goldcorp, Inc. in January 2014.
Detour Goldcorp was the one of the most significant detractors from fund performance during the reporting period after the company announced during the second quarter of 2013 that additional capital would be required to finish commissioning of its Detour Lake gold mine. This also caused the company to cut production guidance for 2013. Perseus Mining Ltd. was also a detractor during the reporting period. The stock’s decline reflected the market’s disappointment in a revised mine plan that failed to deliver the expected benefits of lower costs and higher margins.
Underperformance relative to the S&P 500 Index was the result of the fund’s concentration in gold equities, most of which (with one exception—Newmont Mining Corp.) are not in the S&P 500 Index. As mentioned above, gold prices dropped during the reporting period, pressuring profits of gold companies lower and causing gold equities to decline. In contrast, the S&P 500 Index rose as stronger economic growth in the U.S. and rising corporate profits provided the catalyst to move stocks higher in 2013.
See benchmark definitions on page A-27 and A-28 |
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PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
Relative to the S&P 500 Index, Newcrest Mining Ltd. was the most significant detractor to the fund’s relative performance during the reporting period. Newcrest Mining underperformed as declining profitability, high capital expenditures and rising debt levels caused investors to question the company’s ability to meet its debt obligations. Newmont Mining also detracted from relative performance during the year. The stock dropped as falling gold prices caused a contraction in margins and drop in profits.
PL Diversified Alternatives Fund (managed by Pacific Life Fund Advisors LLC)
Q. How did the fund perform for the period ended March 31, 2014?
A. The fund commenced operations on December 31, 2013. For the period from inception through March 31, 2014, the PL Diversified Alternatives Fund’s Class A (without sales charge) returned -0.10% compared to a 0.04% return for its benchmark, the Citigroup 1-Month U.S. T-Bill Index.
The following graph compares the performance of a hypothetical $10,000 investment in Class A shares of the fund to its benchmark for the period from inception through March 31, 2014. For comparison purposes, the performance of Class C and Advisor Class shares for the period from inception through March 31, 2014 are also shown in the table below. Performance data for Class C and Advisor Class shares will vary due to differences in fees and sales charges. The fund’s performance reflects reinvestments of all dividends and capital gains distributions, if any.
Performance Comparison
Total Returns for the Period from Inception Through March 31, 2014 | ||||
Since Inception (12/31/13) | ||||
Fund’s Class A without sales charge | (0.10% | ) | ||
Fund’s Class A with maximum sales charge | (5.58% | ) | ||
Fund’s Class C without sales charge | (0.30% | ) | ||
Fund’s Class C with maximum sales charge | (1.30% | ) | ||
Fund’s Advisor Class without sales charge | (0.10% | ) | ||
Citigroup 1-Month U.S. T-Bill Index | 0.04% |
Performance data shown represents past performance. Investment return and principal value will fluctuate so that shares of the fund when redeemed may be worth more or less than their original cost. Past performance is not predictive of future performance. |
Q. Discuss both positive and negative factors that materially affected the fund’s performance during the period, including relevant market conditions, investment strategies and techniques, and particular sectors or securities.
A. The PL Diversified Alternatives Fund commenced operations on December 31, 2013. For the three-month period from inception through March 31, 2014, the fund’s Class A underperformed the Citigroup 1-Month U.S. T-Bill Index. The PL Diversified Alternatives Fund is primarily comprised of various non-traditional asset classes and investment strategies. Allocations during the period included precious metals equities, currencies, and global absolute return strategies. The fund also invested in inflation-protected bonds, floating rate loan, real estate, emerging markets equity and emerging markets debt strategies.
The fund’s allocation to PL Real Estate and PL Precious Metal Funds were among the top contributors to fund performance. REITs bounced back as dividend yielding securities performed relatively well over the three-month period. The PL Precious Metals Fund invests primarily in gold mining stocks, which tends to be sensitive to movements in gold prices. For the first quarter 2014, gold prices rebounded after plunging in 2013. On the other hand, the PL Currency Strategies Fund detracted from the fund’s performance, as its short position in the New Zealand dollar declined over the three-month period. The PL Emerging Markets Fund also detracted from performance over the three-month period.
See benchmark definitions on page A-27 and A-28 |
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PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
Benchmark Definitions
Barclays 1-3 Year U.S. Government/Credit Bond Index measures performance of U.S. dollar-denominated U.S. Treasuries, government-related, and investment grade U.S. corporate securities with maturities of one to three years.
Barclays U.S. Aggregate Bond Index provides a measure of the performance of the U.S. investment grade bonds market, which includes investment grade U.S. government bonds, investment grade corporate bonds, mortgage pass-through securities and asset-backed securities that are publicly offered for sale in the United States. The securities in the Index must have at least 1 year remaining to maturity. In addition, the securities must be denominated in U.S. dollars and must be fixed rate, non-convertible, and taxable.
Barclays U.S. Treasury Inflation Protected Securities (TIPS) Index is an index of all outstanding treasury inflation protected securities issued by the U.S. government. The total return is equal to the change in price plus the coupon return.
BofA Merrill Lynch U.S. 3-Month Treasury Bill (T-Bill) Index is an index comprised of a single Treasury bill issue purchased at the beginning of the month and held for a full month, then sold and rolled into a newly selected Treasury bill issue. Results include the reinvestment of all distributions.
Citigroup 1-Month U.S. Treasury Bill (T-Bill) Index is a market-value-weighted index of public obligations of the U.S. Treasury with maturities of one month.
FTSE Gold Mines Index represents an accurate reflection and comprehensive coverage of the global gold markets. The index includes all gold mining companies that have a sustainable and attributable gold production of at least 300,000 ounces a year and that derive 51% or more of their revenue from mined gold.
FTSE National Association of Real Estate Investment Trusts (NAREIT) Equity Real Estate Investment Trusts (REITs) Index is one index of a series of indices represented in the FTSE NAREIT U.S. Real Estate Index Series and represents tax-qualified REITs listed on the New York Stock Exchange (NYSE), American Stock Exchange and National Association of Securities Dealers Automated Quotations (NASDAQ). Results include reinvested dividends.
J.P. Morgan Emerging Markets Bond Index (EMBI) Global Diversified Index tracks total returns of U.S. dollar-denominated debt instruments issued by emerging market sovereign and quasi-sovereign entities.
Morgan Stanley Capital International (MSCI) Europe, Australasia and Far East (EAFE) Index (Net) is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. & Canada. As of November 27, 2013, the MSCI EAFE Index (Net) consists of the following 21 developed market country indices: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the U.K. The dividend is reinvested after deduction of withholding tax, applying the rate to non-resident individuals who do not benefit from double taxation treaties.
MSCI Emerging Markets Index (Net) is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. As of November 27, 2013, the MSCI Emerging Markets Index (Net) consists of the following 21 emerging market country indices: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey. The dividend is reinvested after deduction of withholding tax, applying the rate to non-resident individuals who do not benefit from double taxation treaties.
Russell 1000 Growth Index measures the performance of the large-cap growth segment of the U.S. equity universe. It includes those Russell 1000 Index companies with higher price-to-book ratios and higher forecasted growth values. The Russell 1000 Growth Index is constructed to provide a comprehensive and unbiased barometer for the large-cap growth segment. The Index is completely reconstituted annually to ensure new and growing equities are included and that the represented companies continue to reflect growth characteristics. Results include reinvested dividends.
Russell 1000 Value Index measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 Index companies with lower price-to-book ratios and lower expected growth values. The Russell 1000 Value Index is constructed to provide a comprehensive and unbiased barometer for the large-cap value segment. The Index is completely reconstituted annually to ensure new and growing equities are included and that the represented companies continue to reflect value characteristics. Results include reinvested dividends.
Russell 2000 Growth Index measures the performance of the small-cap growth segment of the U.S. equity universe. It includes those Russell 2000 Index companies with higher price-to-value ratios and higher forecasted growth values. The Russell 2000 Growth Index is constructed to provide a comprehensive and unbiased barometer for the small-cap growth segment. The Index is completely reconstituted annually to ensure larger stocks do not distort the performance and characteristics of the true small-cap opportunity set and that the represented companies continue to reflect growth characteristics. Results include reinvested dividends.
Russell 2000 Value Index measures the performance of the small-cap value segment of the U.S. equity universe. It includes those Russell 2000 Index companies with lower price-to-book ratios and lower forecasted growth values. The Russell 2000 Value Index is constructed to provide a comprehensive and unbiased barometer for the small-cap value segment. The Index is completely reconstituted annually to ensure larger stocks do not distort the performance and characteristics of the true small-cap opportunity set and that the represented companies continue to reflect value characteristics. Results include reinvested dividends.
Russell Midcap Growth Index measures the performance of the mid-cap growth segment of the U.S. equity universe. It includes Russell Midcap Index companies with higher price-to-book ratios and higher forecasted growth values. The Russell Midcap Growth Index is constructed to provide a comprehensive and unbiased barometer of the mid-cap growth market. The Index is completely reconstituted annually to ensure larger stocks do not distort the performance and characteristics of the true mid-cap growth market. Results include reinvested dividends.
A-27
PACIFIC LIFE FUNDS PERFORMANCE DISCUSSION (Continued)
Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe. The Russell Midcap is a subset of the Russell 1000 Index. It includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership. The Russell Midcap represents approximately 31% of the total market capitalization of the Russell 1000 companies. The Russell Midcap Index is constructed to provide a comprehensive and unbiased barometer for the mid-cap segment. The Index is completely reconstituted annually to ensure larger stocks do not distort the performance and characteristics of the true mid-cap opportunity set. Results include reinvested dividends.
S&P 500 Index is a capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
S&P/LSTA Leveraged Loan Index is a daily total return index that uses Loan Syndications & Trading Association/Loan Pricing Corp. (LSTA/LPC) mark-to-market pricing to calculate market value change. On a real-time basis, the leveraged loan index (LLI) tracks the current outstanding balance and spread over London Interbank Offered Rate (LIBOR) for fully funded term loans. The facilities included in the LLI represent a broad cross section of leveraged loans syndicated in the U.S., including dollar-denominated loans to overseas issuers.
A-28
PACIFIC LIFE FUNDS
PL FLOATING RATE LOAN FUND
March 31, 2014
Principal |
| |||||||
SENIOR LOAN NOTES - 95.5% |
| |||||||
Consumer Discretionary - 30.2% | ||||||||
99 Cents Only Stores Tranche B-2 | $999,890 | $1,009,134 | ||||||
Acosta Inc Term B | 597,500 | 601,888 | ||||||
Advantage Sales & Marketing Inc (1st Lien) | 829,665 | 834,332 | ||||||
Affinia Group Inc Tranche B-2 | 278,142 | 279,268 | ||||||
Allison Transmission Inc Term B-3 | 590,344 | 591,820 | ||||||
AMC Entertainment Inc | 247,500 | 247,913 | ||||||
Answer Corp (1st Lien) | 98,750 | 98,256 | ||||||
Ascend Learning LLC (1st Lien) | 174,563 | 177,181 | ||||||
ASP HHI Acquisition Co Inc | 891,751 | 898,811 | ||||||
Asurion LLC | 125,000 | 129,349 | ||||||
Tranche B-1 | 1,043,760 | 1,047,602 | ||||||
Audio Visual Services Group Inc (1st Lien) | 50,000 | 50,375 | ||||||
Aufinco Property Ltd Term B | 49,625 | 49,703 | ||||||
Bally Technologies Term B | 174,125 | 175,158 | ||||||
Bass Pro Group LLC | 298,470 | 299,993 | ||||||
Brickman Group Ltd LLC (1st Lien) | 99,750 | 100,088 | ||||||
Burger King Corp Tranche B | 221,625 | 223,131 | ||||||
Caesars Entertainment Operating Co Inc | 229,033 | 216,579 | ||||||
CEC Entertainment Inc Term B | 100,000 | 99,479 | ||||||
Cequel Communications LLC Term B | 539,000 | 540,009 | ||||||
Charter Communications Operating LLC | 173,688 | 172,472 | ||||||
Term F | 236,286 | 234,632 | ||||||
Chrysler Group LLC | 616,829 | 617,985 | ||||||
Tranche B | 275,000 | 274,190 | ||||||
CityCenter Holdings LLC Term B (1st Lien) | 99,750 | 100,696 | ||||||
Clear Channel Communications Inc | 6,401 | 6,331 | ||||||
Tranche D | 367,529 | 360,477 | ||||||
Tranche E | 118,204 | 118,277 | ||||||
Crown Media Holdings Inc Term B | 381,221 | 382,174 | ||||||
Cumulus Media Holdings Inc | 573,314 | 578,568 |
Principal |
| |||||||
David’s Bridal Inc | $74,063 | $74,421 | ||||||
Education Management LLC | 489,171 | 430,470 | ||||||
Tranche C-3 | 293,502 | 285,725 | ||||||
Entravision Communications Corp | 96,833 | 95,784 | ||||||
Equinox Holdings Inc (1st Lien) | 247,500 | 249,047 | ||||||
Extreme Reach Inc (1st Lien) | 100,000 | 101,500 | ||||||
Federal-Mogul Corp | 549,240 | 547,696 | ||||||
Tranche C | 322,364 | 321,458 | ||||||
Fender Musical Instruments Corp | 44,625 | 44,917 | ||||||
General Nutrition Centers Inc Tranche B | 1,121,497 | 1,118,512 | ||||||
Genpact Ltd | 172,819 | 173,639 | ||||||
Getty Images Inc | 567,813 | 545,988 | ||||||
Go Daddy Operating Co LLC Tranche B-3 | 513,231 | 515,541 | ||||||
Gray Television Inc | 71,622 | 72,123 | ||||||
Harbor Freight Tools USA Inc | 149,250 | 150,952 | ||||||
Hilton Worldwide | 744,079 | 746,311 | ||||||
Hudson’s Bay Co Term B (1st Lien) | 439,375 | 446,158 | ||||||
Information Resources Inc | 99,500 | 100,122 | ||||||
Interactive Data Corp Term B | 476,768 | 477,542 | ||||||
ION Media Networks | 199,500 | 201,994 | ||||||
J Crew Group Inc Term B | 400,000 | 399,688 | ||||||
Jo-Ann Stores Inc Term B | 966,680 | 967,272 | ||||||
Kasima LLC | 125,000 | 124,922 | ||||||
La Quinta Intermediate Holdings LLC | 150,000 | 150,258 | ||||||
Landry’s Inc | 445,133 | 448,527 | ||||||
Language Line LLC Tranche B | 580,756 | 580,756 | ||||||
Las Vegas Sands LLC Term B | 249,375 | 249,277 | ||||||
Laureate Education Inc | 1,098,836 | 1,088,192 | ||||||
MCC Iowa LLC Tranche H | 99,250 | 98,692 | ||||||
McGraw Hill Global Education Holdings LLC | 84,717 | 85,418 | ||||||
Media General Inc Term B | 144,068 | 145,508 | ||||||
MGM Resorts International Term B | 296,250 | 296,188 | ||||||
Michaels Stores Inc Term B | 322,563 | 323,455 |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-1
PACIFIC LIFE FUNDS
PL FLOATING RATE LOAN FUND
Schedule of Investments (Continued)
March 31, 2014
Principal |
| |||||||
Nine Entertainment Group Ltd Term B | $99,000 | $98,629 | ||||||
Ollie’s Holdings Inc | 246,876 | 248,728 | ||||||
OSI Restaurant Partners LLC | 869,856 | 869,584 | ||||||
Pacific Industrial Services Finco Property Ltd | 149,250 | 151,582 | ||||||
Party City Holdings Term B | 395,567 | 396,603 | ||||||
Petco Animal Supplies Inc | 483,750 | 485,640 | ||||||
Pilot Travel Centers LLC Tranche B | 406,639 | 409,093 | ||||||
4.250% due 08/07/19 § | 147,750 | 148,720 | ||||||
Pinnacle Entertainment Inc Tranche B-2 | 124,063 | 124,586 | ||||||
Renaissance Learning Inc (1st Lien) | 99,500 | 100,039 | ||||||
Rentpath Inc Term B | 124,063 | 121,966 | ||||||
Sabre Holdings Term B | 148,125 | 148,356 | ||||||
Scientific Games International Inc | 473,813 | 475,046 | ||||||
Seaworld Parks & Entertainment Inc Term B-2 | 583,802 | 576,066 | ||||||
Serta Simmons Holdings LLC Term B | 393,920 | 395,853 | ||||||
Six Flags Theme Parks Inc Term B | 501,375 | 504,271 | ||||||
Spin Holdco Inc (1st Lien) | 149,251 | 149,456 | ||||||
Springer Science Business Media Two GmbH | 149,250 | 149,623 | ||||||
SRAM LLC Term B | 214,883 | 214,211 | ||||||
Standard Aero Ltd Term B-2 | 38,189 | 38,825 | ||||||
SurveyMonkey.com LLC | 247,500 | 248,422 | ||||||
Tempur-Pedic International Inc Term B | 186,883 | 186,899 | ||||||
The Goodyear Tire & Rubber Co (2nd Lien) | 925,000 | 930,192 | ||||||
The Neiman Marcus Group Inc | 548,625 | 551,411 | ||||||
The Servicemaster Co Tranche C | 370,313 | 371,238 | ||||||
Tower Automotive Holdings USA LLC | 549,626 | 549,626 | ||||||
Town Sports International LLC | 149,625 | 148,222 | ||||||
Toys ‘R’ US Property Company I LLC | 498,750 | 479,423 | ||||||
TWCC Holding Corp | 712,010 | 700,440 | ||||||
(2nd Lien) | 100,000 | 97,500 | ||||||
Univision Communications (1st Lien) | 870,622 | 871,439 | ||||||
Veyance Technologies Inc | 297,000 | 299,894 | ||||||
Virgin Media Investment Holdings Ltd Facility B | 725,000 | 724,184 | ||||||
Visant Corp Tranche B | 496,586 | 493,689 |
Principal |
| |||||||
VWR Funding Inc | $599,583 | $601,956 | ||||||
Weight Watchers International Inc Tranche B-2 | 767,250 | 597,016 | ||||||
Wendy’s International Inc Term B | 678,760 | 678,154 | ||||||
WMG Acquisition Corp Tranche B | 124,375 | 123,967 | ||||||
WNA Holdings Inc | 32,161 | 32,242 | ||||||
4.552% due 06/07/20 § | 467,467 | 468,636 | ||||||
|
| |||||||
37,135,351 | ||||||||
|
| |||||||
Consumer Staples - 8.4% | ||||||||
AdvancePierre Foods Inc (1st Lien) | 148,125 | 148,818 | ||||||
Albertson’s LLC | 45,047 | 45,362 | ||||||
Term B-2 | 79,266 | 79,960 | ||||||
Arysta LifeScience SPC LLC (1st Lien) 4.500% due 05/29/20 § | 322,562 | 324,175 | ||||||
Blue Buffalo Co Ltd Term B-3 | 566,415 | 572,433 | ||||||
Clearwater Seafoods LP Term B | 446,625 | 449,603 | ||||||
CSM Bakery Supplies LLC (1st Lien) | 124,375 | 125,269 | ||||||
Darling International Inc Term B | 100,000 | 100,218 | ||||||
Del Monte Foods | 311,051 | 309,642 | ||||||
(1st Lien) | 100,000 | 100,100 | ||||||
Diamond Foods Inc Term B | 500,000 | 502,288 | ||||||
Dole Food Co Inc Tranche B | 872,813 | 877,831 | ||||||
H. J. Heinz Company Term B-2 | 1,290,250 | 1,299,040 | ||||||
JBS USA LLC | 861,507 | 864,177 | ||||||
3.750% due 09/18/20 § | 199,000 | 198,781 | ||||||
NBTY Inc Term B-2 | 325,000 | 326,341 | ||||||
Pinnacle Foods Finance LLC Tranche G | 470,250 | 468,696 | ||||||
Revlon Consumer Products Corp | 149,625 | 150,093 | ||||||
Reynolds Group Holdings | 987,525 | 992,386 | ||||||
Rite Aid Corp Tranche 7 | 248,125 | 248,203 | ||||||
Spectrum Brands Inc Term C | 124,375 | 124,763 | ||||||
Supervalu Inc | 712,247 | 714,306 | ||||||
The Sun Products Corp Tranche B | 272,250 | 260,226 | ||||||
US Foods Inc | 1,066,938 | 1,074,139 | ||||||
|
| |||||||
10,356,850 | ||||||||
|
| |||||||
Energy - 3.5% | ||||||||
Alpha Natural Resources Inc Term B | 74,250 | 72,327 | ||||||
Arch Coal Inc | 393,191 | 388,399 |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-2
PACIFIC LIFE FUNDS
PL FLOATING RATE LOAN FUND
Schedule of Investments (Continued)
March 31, 2014
Principal |
| |||||||
Bronco Midstream Funding LLC | $217,257 | $218,615 | ||||||
Chesapeake Finance 2 Ltd Tranche B | 50,000 | 50,250 | ||||||
CITGO Petroleum Corp Term B | 120,536 | 121,590 | ||||||
Energy Transfer Equity LP | 150,000 | 149,864 | ||||||
Fieldwood Energy LLC | 124,438 | 124,826 | ||||||
MEG Energy Corp Term B | 765,218 | 770,001 | ||||||
Murray Energy Corp | 175,000 | 176,812 | ||||||
Obsidian Natural Gas Trust | 457,403 | 463,121 | ||||||
Ruby Western Pipeline Holdings LLC | 45,874 | 45,888 | ||||||
Samson Investment Co Tranche 1 (2nd Lien) | 100,000 | 101,038 | ||||||
Seadrill Partners | 374,063 | 373,628 | ||||||
Sheridan Investment Partners II LP | 11,651 | 11,749 | ||||||
4.250% due 12/16/20 § | 4,345 | 4,382 | ||||||
Term A-2 | 83,754 | 84,461 | ||||||
Sheridan Investment Partners I LLC Tranche B-2 | 241,667 | 243,253 | ||||||
Sheridan Production Partners I-A Tranche B-2 | 32,023 | 32,233 | ||||||
Sheridan Production Partners I-M Tranche B-2 | 19,560 | 19,688 | ||||||
Tallgrass Operations LLC | 697,223 | 704,195 | ||||||
Tervita Corp | 198,000 | 197,093 | ||||||
|
| |||||||
4,353,413 | ||||||||
|
| |||||||
Financials - 6.9% | ||||||||
Alliant Holdings I LLC | 243,940 | 245,233 | ||||||
Altisource Solutions SARL Term B | 200,000 | 200,875 | ||||||
4.500% due 12/09/20 § | 49,501 | 49,717 | ||||||
American Capital Ltd Term B | 112,500 | 112,897 | ||||||
Amwins Group (1st Lien) | 123,625 | 124,707 | ||||||
Armor Holding II LLC (1st Lien) | 97,147 | 97,713 | ||||||
Cetera Financial Group Inc | 98,750 | 99,738 | ||||||
Citco Funding LLC | 535,630 | 537,974 | ||||||
Clipper Acquisitions Corp Term B | 692,505 | 688,610 | ||||||
CNO Financial Group Inc Tranche B-2 | 115,900 | 116,334 | ||||||
Crown Castle Operating Company Tranche B-2 | 223,688 | 223,255 | ||||||
Cunningham Lindsey US Inc (1st Lien) | 296,250 | 298,102 | ||||||
First Data Corp | 523,620 | 525,629 | ||||||
Term B | 200,000 | 200,771 | ||||||
Grosvenor Capital Management Holdings LP | 149,625 | 149,251 |
Principal |
| |||||||
Guggenheim Partners Investment Management Holdings LLC | $99,500 | $100,215 | ||||||
Harbourvest Partners LP | 380,399 | 378,497 | ||||||
Home Loan Servicing Solutions Ltd | 148,875 | 149,292 | ||||||
HUB International Ltd Term B | 298,500 | 299,806 | ||||||
ION Trading Technologies SARL (1st Lien) | 46,875 | 47,124 | ||||||
LPL Holdings Inc | 62,500 | 62,715 | ||||||
Tranche B | 393,030 | 392,969 | ||||||
MCS AMS Sub-Holdings LLC | 75,000 | 73,125 | ||||||
Nuveen Investments Inc Tranche B (1st Lien) | 883,260 | 886,987 | ||||||
Ocwen Loan Servicing LLC | 148,500 | 149,365 | ||||||
RCS Capital Corporation 1st Lien | 150,000 | 151,078 | ||||||
Realogy Corp Term B | 997,500 | 1,003,734 | ||||||
Serpering Investments | 120,181 | 119,214 | ||||||
Term B-2 | 77,447 | 76,824 | ||||||
Term B-3 | 127,372 | 126,347 | ||||||
Shield Finance Co SARL Term B | 100,000 | 100,750 | ||||||
Starwood Property Trust Inc | 99,498 | 99,269 | ||||||
Trans Union LLC | 24,871 | 24,957 | ||||||
USI Inc | 271,573 | 272,931 | ||||||
Walker & Dunlop Inc | 74,813 | 75,935 | ||||||
Walter Investment Management Corp Tranche B | 281,952 | 280,763 | ||||||
|
| |||||||
8,542,703 | ||||||||
|
| |||||||
Health Care - 13.1% | ||||||||
Alere Inc Term B | 780,000 | 785,850 | ||||||
Alliance HealthCare Services Inc | 99,250 | 99,390 | ||||||
Amneal Pharmaceuticals Term B | 74,625 | 75,278 | ||||||
Ardent Medical Services Inc (1st Lien) | 692,487 | 695,950 | ||||||
Aveta Inc MSO | 54,396 | 54,600 | ||||||
Biomet Inc Term B-2 | 1,259,764 | 1,262,826 | ||||||
CHS/Community Health Systems Inc | 1,485,252 | 1,499,635 | ||||||
Term E | 173,645 | 175,069 | ||||||
DaVita Inc Tranche B-2 | 370,313 | 373,024 | ||||||
DJO Finance LLC Term B | 356,977 | 358,874 | ||||||
Envision Healthcare Corp | 452,502 | 453,562 |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-3
PACIFIC LIFE FUNDS
PL FLOATING RATE LOAN FUND
Schedule of Investments (Continued)
March 31, 2014
Principal |
| |||||||
Gentiva Health Services Inc Term B | $174,563 | $173,108 | ||||||
Grifols Worldwide Operations Ltd Tranche B | 625,000 | 625,391 | ||||||
HCA Inc Tranche B-4 | 653,640 | 654,457 | ||||||
Hologic Inc Tranche B | 179,967 | 179,854 | ||||||
Ikaria Acquisitions (1st Lien) | 100,000 | 100,913 | ||||||
IMS Health Inc Term B | 555,351 | 555,091 | ||||||
InVentiv Health Inc | 263,957 | 264,836 | ||||||
JLL/Delta Dutch Newco BV | 125,000 | 124,557 | ||||||
Kinetic Concepts Term E-1 | 764,161 | 767,365 | ||||||
Mallinckrodt International Finance SA Term B | 200,000 | 200,359 | ||||||
MedAssets Inc Term B | 45,313 | 45,548 | ||||||
MMM Holdings Inc | 74,819 | 75,380 | ||||||
National Mentor Holdings Tranche B | 50,000 | 50,427 | ||||||
Onex Carestream Finance LP (1st Lien) | 303,416 | 306,884 | ||||||
Par Pharmaceutical Companies Inc Term B-2 | 222,882 | 223,518 | ||||||
Pharmaceutical Product Development Inc | 987,500 | 991,615 | ||||||
PRA Holdings Tranche B-1 | 149,250 | 149,362 | ||||||
Quintiles Transnational Corp Term B-3 | 1,402,898 | 1,405,528 | ||||||
Radnet Management Inc Tranche B | 197,501 | 197,347 | ||||||
Sage Products Inc (1st Lien) | 208,026 | 208,980 | ||||||
Salix Pharmaceuticals Ltd | 98,750 | 99,768 | ||||||
Steward Health Care System LLC | 498,744 | 498,432 | ||||||
TriZetto Group Inc | 488,693 | 487,960 | ||||||
Truven Health Analytics Inc Term B | 197,008 | 195,530 | ||||||
Universal Health Services Inc Tranche B-1 | 368,682 | 371,157 | ||||||
Valeant Pharmaceuticals International Inc (Canada) | 295,500 | 296,978 | ||||||
Series D-2 Tranche B | 491,269 | 493,725 | ||||||
Series E Tranche B | 574,731 | 578,173 | ||||||
|
| |||||||
16,156,301 | ||||||||
|
| |||||||
Industrials - 9.7% | ||||||||
Accudyne Industries LLC | 724,953 | 725,746 | ||||||
ADS Waste Holdings Tranche B-2 | 222,188 | 222,170 | ||||||
Allflex Holdings III Inc (1st Lien) | 74,625 | 74,975 | ||||||
Alpha Topco Ltd Facility B | 393,284 | 397,393 |
Principal |
| |||||||
American Builders & Contractors Supply Co Inc | $124,375 | $124,336 | ||||||
Ameriforge Group Inc (1st Lien) | 123,815 | 124,744 | ||||||
Apex Tool Group LLC | 439,779 | 436,481 | ||||||
Atlantic Aviation FBO Inc | 74,500 | 74,500 | ||||||
Term B | 25,000 | 25,000 | ||||||
BakerCorp International Inc Term B | 495,009 | 496,453 | ||||||
Bombardier Recreational Products Inc Term B | 396,000 | 396,825 | ||||||
Ceridian Corp | 145,297 | 146,168 | ||||||
CSC Holdings LLC Term B | 347,375 | 343,874 | ||||||
DAE Aviation Holdings Inc Tranche B-1 | 84,240 | 85,644 | ||||||
Delos Finance SARL | 325,000 | 325,638 | ||||||
Flying Fortress Inc | 354,167 | 353,945 | ||||||
Gardner Denver Inc | 199,000 | 199,162 | ||||||
Generac Power Systems Inc Term B | 199,000 | 199,498 | ||||||
Grede LLC Term B | 466,449 | 468,781 | ||||||
Husky Injection Molding Systems Ltd | 446,719 | 448,673 | ||||||
IG Investments Holdings LLC Tranche B (1st Lien) | ||||||||
5.250% due 10/31/19 § | 148,561 | 149,860 | ||||||
John Maneely Co | 977,364 | 987,138 | ||||||
KAR Auction Services Inc Tranche B-2 | 310,880 | 310,488 | ||||||
Merrill Communications LLC | 23,391 | 23,595 | ||||||
Metaldyne Corp LLC | 717,548 | 721,360 | ||||||
Milacron LLC Term B | 544,500 | 545,861 | ||||||
Monitronics International Inc Term B | 172,133 | 172,510 | ||||||
Pelican Products Inc (1st Lien) | 245,625 | 247,467 | ||||||
Rexnord LLC Term B | 572,125 | 573,822 | ||||||
Schaeffler AG Facility C (Germany) | 100,000 | 100,598 | ||||||
Sequa Corp | 197,500 | 193,673 | ||||||
Southwire LLC Term B | 50,000 | 49,996 | ||||||
Stena International | 225,000 | 224,859 | ||||||
SumTotal Systems LLC (1st Lien) | 140,017 | 139,492 | ||||||
Swift Transportation Co LLC | 331,505 | 333,784 | ||||||
Tranche B-2 | 163,205 | 164,918 |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-4
PACIFIC LIFE FUNDS
PL FLOATING RATE LOAN FUND
Schedule of Investments (Continued)
March 31, 2014
Principal |
| |||||||
Tank Holding Corp Term 1 | $132,507 | $132,640 | ||||||
The Hertz Corp Tranche B-1 | 222,188 | 222,813 | ||||||
Transdigm Inc Term C | 173,681 | 174,007 | ||||||
U.S. Security Associates Holdings Inc Term B | 488,725 | 493,002 | ||||||
VAT Lux III SARL | 50,000 | 50,469 | ||||||
West Corporation Term B-10 | 220,320 | 219,373 | ||||||
|
| |||||||
11,901,731 | ||||||||
|
| |||||||
Information Technology - 10.7% | ||||||||
Activision Blizzard Inc | 360,188 | 360,693 | ||||||
Aeroflex Inc Tranche B-1 | 220,615 | 222,931 | ||||||
Applied Systems (1st Lien) | 124,688 | 125,467 | ||||||
ARRIS Group Inc Term B | 525,616 | 523,973 | ||||||
AVAST Software | 125,000 | 124,792 | ||||||
CDW Corp | 247,501 | 245,737 | ||||||
Commscope Inc Tranche 4 | 149,250 | 150,136 | ||||||
CompuCom Systems Inc | 322,563 | 322,428 | ||||||
Dell Inc | 1,122,188 | 1,116,015 | ||||||
Dell International | 195,000 | 194,634 | ||||||
Eagle Parent Inc Term B | 456,843 | 458,842 | ||||||
EIG Investors Corp (1st Lien) | 296,634 | 299,137 | ||||||
Emdeon Business Services LLC | 566,569 | 567,690 | ||||||
Entegris (1st Lien) | 75,000 | 75,000 | ||||||
Excelitas Tech Corp Term B | 492,223 | 495,300 | ||||||
Expert Global Solutions Inc Term B (1st Lien) | 263,902 | 258,294 | ||||||
Freescale Semiconductor Inc Tranche B-4 | 321,928 | 323,370 | ||||||
GXS Group Inc | 124,688 | 125,064 | ||||||
Infor (US) Inc Term B-5 | 1,218,610 | 1,216,782 | ||||||
Kronos Inc | 50,000 | 50,492 | ||||||
(1st Lien) | 245,958 | 248,379 | ||||||
Micro Holding LP | 123,750 | 124,601 | ||||||
Moneygram International | 498,741 | 500,611 | ||||||
Novell Inc (1st Lien) | 366,421 | 369,627 | ||||||
NXP BV Tranche D | 248,750 | 248,284 | ||||||
Opal Acquisition Inc (1st Lien) | 224,438 | 225,595 |
Principal |
| |||||||
Rocket Software Inc | $488,758 | $489,980 | ||||||
Rovi Solutions Corp Tranche B-3 | 87,834 | 87,887 | ||||||
RP Crown Parent LLC (1st Lien) | 842,944 | 841,758 | ||||||
SCS Holdings I Inc | 407,292 | 414,419 | ||||||
Smart Technologies ULC Term B | 24,063 | 25,506 | ||||||
Sophia LP Term B-1 | 138,895 | 139,199 | ||||||
Spansion LLC | 123,354 | 123,817 | ||||||
SSI Investments II Ltd | 443,836 | 445,870 | ||||||
SunGard Data Systems Inc | 100,092 | 100,570 | ||||||
Tranche E | 610,184 | 612,472 | ||||||
Vertafore Inc | 486,976 | 489,563 | ||||||
Wall Street Systems Delaware Inc (1st Lien) | 148,125 | 149,236 | ||||||
Web.com Group Inc Term B | 244,481 | 247,537 | ||||||
|
| |||||||
13,141,688 | ||||||||
|
| |||||||
Materials - 7.7% | ||||||||
Axalta Coating Systems Dutch | 347,375 | 348,306 | ||||||
AZ Chem US Inc | 99,480 | 100,444 | ||||||
Berry Plastics Corp | 746,241 | 744,042 | ||||||
Term E | 100,000 | 99,883 | ||||||
BWAY Holding Co | 320,938 | 323,194 | ||||||
Essar Steel Algoma Inc (Canada) | 242,500 | 243,447 | ||||||
Fairmount Minerals Ltd Tranche B-2 | 248,750 | 250,056 | ||||||
FMG Resources Property Ltd (Australia) | 763,911 | 770,715 | ||||||
Huntsman International LLC | 250,000 | 251,031 | ||||||
Ineos US Finance LLC Term B | 1,055,907 | 1,052,167 | ||||||
MacDermid Inc Tranche B (1st Lien) | 99,250 | 99,726 | ||||||
Neenah Foundry Co | 68,348 | 68,348 | ||||||
Noranda Aluminum Term B | 122,500 | 117,549 | ||||||
Novelis Inc | 967,524 | 969,217 | ||||||
Oxea SARL Tranche B-2 (1st Lien) | 74,813 | 75,187 | ||||||
PQ Corp | 148,125 | 148,526 | ||||||
Quikrete Holdings Inc (1st Lien) | 124,375 | 124,826 | ||||||
Sensata Technologies BV Term B | 118,801 | 119,384 | ||||||
Tricorbraun Inc | 479,114 | 481,360 |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-5
PACIFIC LIFE FUNDS
PL FLOATING RATE LOAN FUND
Schedule of Investments (Continued)
March 31, 2014
Principal |
| |||||||
Tronox Inc Term B (Netherlands) | $1,215,813 | $1,224,847 | ||||||
Unifrax Holding Co | 493,263 | 496,467 | ||||||
United Central Industrial Supply Co LLC (1st Lien) | 148,125 | 146,459 | ||||||
Univar Inc Term B | 474,190 | 473,512 | ||||||
Walter Energy Inc Term B | 707,503 | 685,570 | ||||||
|
| |||||||
9,414,263 | ||||||||
|
| |||||||
Telecommunication Services - 3.4% | ||||||||
Cellular South Inc Term B | 49,500 | 49,438 | ||||||
Intelsat Jackson Holdings SA Term B-2 | 975,000 | 978,651 | ||||||
SBA Finance Communications Corp | 100,000 | 99,813 | ||||||
Tranche B-1 | 100,000 | 99,813 | ||||||
Syniverse Holdings Inc Tranche B | 121,190 | 121,544 | ||||||
Term B | 239,957 | 240,556 | ||||||
Telesat Canada (Canada) Term B-2 | 515,852 | 516,658 | ||||||
TNS Inc (1st Lien) | 47,222 | 47,596 | ||||||
UPC Financing Partnership Facility AH | 1,000,000 | 999,375 | ||||||
Windstream Corp Tranche B-5 | 992,475 | 994,181 | ||||||
|
| |||||||
4,147,625 | ||||||||
|
| |||||||
Utilities - 1.9% | ||||||||
Calpine Construction Finance Co LP Term B-1 | 148,875 | 146,615 | ||||||
Calpine Corp | 1,018,500 | 1,023,381 | ||||||
Term B-2 | 97,250 | 97,716 | ||||||
Dynegy Inc Tranche B-2 | 122,154 | 122,786 | ||||||
EFS Cogen Holdings I LLC Term B | 72,008 | 72,480 | ||||||
EquiPower Resources Holdings LLC Term C | 274,625 | 276,628 | ||||||
LSP Madison Funding LLC | 135,667 | 136,175 |
Principal |
| |||||||
Raven Power Finance LLC | $199,500 | $202,118 | ||||||
The AES Corp | 301,646 | 303,238 | ||||||
|
| |||||||
2,381,137 | ||||||||
|
| |||||||
Total Senior Loan Notes | 117,531,062 | |||||||
|
| |||||||
Shares | ||||||||
SHORT-TERM INVESTMENT - 5.6% | ||||||||
Money Market Fund - 5.6% | ||||||||
BlackRock Liquidity Funds Treasury | 6,950,119 | 6,950,119 | ||||||
|
| |||||||
Total Short-Term Investment | 6,950,119 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 101.1% | 124,481,181 | |||||||
OTHER ASSETS & LIABILITIES, NET - (1.1%) | (1,365,250 | ) | ||||||
|
| |||||||
NET ASSETS - 100.0% | $123,115,931 | |||||||
|
|
Notes to Schedule of Investments
(a) | As of March 31, 2014, the fund was diversified as a percentage of net assets as follows: |
Consumer Discretionary | 30.2% | |||
Health Care | 13.1% | |||
Information Technology | 10.7% | |||
Industrials | 9.7% | |||
Consumer Staples | 8.4% | |||
Materials | 7.7% | |||
Financials | 6.9% | |||
Short-Term Investment | 5.6% | |||
Energy | 3.5% | |||
Telecommunication Services | 3.4% | |||
Others (each less than 3.0%) | 1.9% | |||
|
| |||
101.1% | ||||
Other Assets & Liabilities, Net | (1.1% | ) | ||
|
| |||
100.0% | ||||
|
|
(b) | As of March 31, 2014, the fund’s Standard & Poor’s quality ratings as a percentage of total fixed income investments were are follows (Unaudited): |
BBB | 5.6% | |||
BB | 44.1% | |||
B | 46.5% | |||
CCC | 1.2% | |||
Not Rated | 2.6% | |||
|
| |||
100.0% | ||||
|
|
(c) | Fair Value Measurements |
The following is a summary of the fund’s investments as categorized under the three-tier hierarchy of inputs used in valuing the fund’s assets and liabilities (See Note 3D in Notes to Financial Statements) as of March 31, 2014:
Total Value at March 31, 2014 | Level 1 Quoted Price | Level 2 Significant | Level 3 Significant | |||||||||||||||
Assets | Senior Loan Notes | $117,531,062 | $— | $117,531,062 | $— | |||||||||||||
Short-Term Investment | 6,950,119 | 6,950,119 | — | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total | $124,481,181 | $6,950,119 | $117,531,062 | $— | ||||||||||||||
|
|
|
|
|
|
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-6
PACIFIC LIFE FUNDS
PL INFLATION MANAGED FUND
Schedule of Investments
March 31, 2014
Principal | Value | |||||||
CORPORATE BONDS & NOTES - 0.8% | ||||||||
Financials - 0.6% | ||||||||
Credit Agricole Home Loan SFH (France) | $400,000 | $400,799 | ||||||
Intesa Sanpaolo SPA (Italy) | 100,000 | 102,433 | ||||||
LBG Capital No.2 PLC (United Kingdom) | GBP 190,000 | 461,831 | ||||||
|
| |||||||
965,063 | ||||||||
|
| |||||||
Industrials - 0.2% | ||||||||
International Lease Finance Corp | ||||||||
6.500% due 09/01/14 ~ | $100,000 | 102,500 | ||||||
6.750% due 09/01/16 ~ | 100,000 | 111,750 | ||||||
7.125% due 09/01/18 ~ | 200,000 | 233,500 | ||||||
|
| |||||||
447,750 | ||||||||
|
| |||||||
Total Corporate Bonds & Notes |
| 1,412,813 | ||||||
|
| |||||||
MORTGAGE-BACKED SECURITIES - 1.5% | ||||||||
Collateralized Mortgage Obligations - Commercial - 0.2% |
| |||||||
JP Morgan Chase Commercial Mortgage Securities Trust | 110,000 | 120,237 | ||||||
Morgan Stanley Capital I Trust | 98,477 | 109,923 | ||||||
Silenus European Loan Conduit Ltd (Ireland) | EUR 138,112 | 187,893 | ||||||
|
| |||||||
418,053 | ||||||||
|
| |||||||
Collateralized Mortgage Obligations - Residential - 1.3% |
| |||||||
Bear Stearns Adjustable Rate Mortgage Trust | ||||||||
2.210% due 08/25/35 " § | $16,689 | 17,006 | ||||||
2.533% due 03/25/35 " § | 14,757 | 14,989 | ||||||
2.560% due 03/25/35 " § | 58,529 | 59,504 | ||||||
Citigroup Mortgage Loan Trust Inc | ||||||||
2.200% due 09/25/35 " § | 27,189 | 27,195 | ||||||
2.290% due 09/25/35 " § | 22,517 | 22,357 | ||||||
Countrywide Home Loan Mortgage Pass-Through Trust | 54,699 | 52,644 | ||||||
Fannie Mae | ||||||||
0.504% due 07/25/37 " § | 201,383 | 201,269 | ||||||
0.534% due 07/25/37 " § | 184,030 | 184,298 | ||||||
0.594% due 05/25/36 " § | 172,206 | 172,822 | ||||||
0.599% due 02/25/37 " § | 42,324 | 42,355 | ||||||
0.834% due 02/25/41 " § | 334,065 | 336,621 | ||||||
GSR Mortgage Loan Trust | 49,017 | 49,623 | ||||||
JP Morgan Mortgage Trust | 133,945 | 135,786 | ||||||
Merrill Lynch Mortgage Investors Trust | 144,625 | 150,543 | ||||||
New York Mortgage Trust | 474,914 | 428,242 | ||||||
Reperforming Loan REMIC Trust | 18,680 | 16,876 | ||||||
Residential Accredit Loans Inc | 130,853 | 58,830 | ||||||
Structured Asset Mortgage Investments II Trust | 114,186 | 83,686 | ||||||
Wells Fargo Mortgage Backed Securities Trust | 322,433 | 325,979 | ||||||
|
| |||||||
2,380,625 | ||||||||
|
| |||||||
Total Mortgage-Backed Securities |
| 2,798,678 | ||||||
|
|
Principal | Value | |||||||
ASSET-BACKED SECURITIES - 1.9% | ||||||||
Ares VIR Ltd CLO (Cayman) | $47,602 | $47,466 | ||||||
Freddie Mac Structured | 1,919 | 1,792 | ||||||
Hillmark Funding CDO (Cayman) | 1,058,152 | 1,032,193 | ||||||
Park Place Securities Inc | 125,411 | 125,473 | ||||||
SLM Student Loan Trust | ||||||||
0.564% due 12/15/23 " § | EUR 1,401,582 | 1,907,060 | ||||||
0.574% due 09/15/21 " § ~ | 264,634 | 366,580 | ||||||
Wood Street II BV CLO (Netherlands) | 99,728 | 135,291 | ||||||
|
| |||||||
Total Asset-Backed Securities |
| 3,615,855 | ||||||
|
| |||||||
U.S. TREASURY OBLIGATIONS - 92.7% | ||||||||
U.S. Treasury Inflation Protected Securities - 92.5% |
| |||||||
0.125% due 04/15/16 ^ | $741,727 | 762,327 | ||||||
0.125% due 04/15/17 ^ | 1,853,550 | 1,907,346 | ||||||
0.125% due 04/15/18 ^ | 7,905,438 | 8,082,717 | ||||||
0.125% due 01/15/22 ^ | 15,655,556 | 15,351,008 | ||||||
0.125% due 07/15/22 ^ | 15,662,878 | 15,352,675 | ||||||
0.125% due 01/15/23 ^ | 9,322,176 | 9,026,486 | ||||||
0.375% due 07/15/23 ^ | �� | 23,718,708 | 23,475,046 | |||||
0.500% due 04/15/15 ^ | 4,424,966 | 4,517,961 | ||||||
0.625% due 07/15/21 ^ | 14,787,653 | 15,239,948 | ||||||
0.625% due 01/15/24 ^ | 2,305,497 | 2,314,862 | ||||||
0.625% due 02/15/43 ^ | 3,051,900 | 2,560,257 | ||||||
1.125% due 01/15/21 ^ | 213,838 | 227,153 | ||||||
1.250% due 07/15/20 ^ | 13,084,012 | 14,112,337 | ||||||
1.375% due 02/15/44 ^ | 3,010,680 | 3,078,186 | ||||||
1.625% due 01/15/15 ^ | 15,200,522 | 15,590,489 | ||||||
1.750% due 01/15/28 ^ | 5,135,578 | 5,694,873 | ||||||
1.875% due 07/15/15 ^ | 841,715 | 883,078 | ||||||
2.000% due 07/15/14 ^ | 2,109,377 | 2,144,808 | ||||||
2.000% due 01/15/16 ^ | 5,541,777 | 5,881,316 | ||||||
2.375% due 01/15/25 ^ | 124,081 | 146,270 | ||||||
2.375% due 01/15/27 ^ | 231,958 | 275,613 | ||||||
2.500% due 01/15/29 ^ | 6,100,472 | 7,413,977 | ||||||
2.625% due 07/15/17 ^ | 2,369,850 | 2,655,528 | ||||||
3.375% due 04/15/32 ^ | 197,652 | 273,416 | ||||||
3.875% due 04/15/29 ^ | 10,599,339 | 14,975,710 | ||||||
|
| |||||||
171,943,387 | ||||||||
|
| |||||||
U.S. Treasury Notes - 0.2% | ||||||||
0.750% due 06/15/14 ‡ | 299,000 | 299,438 | ||||||
|
| |||||||
Total U.S. Treasury Obligations |
| 172,242,825 | ||||||
|
| |||||||
FOREIGN GOVERNMENT BONDS & NOTES - 9.4% |
| |||||||
Australia Government (Australia) | AUD 2,100,000 | 2,105,784 | ||||||
Bundesrepublik Deutschland Bundesobligation Inflation Linked (Germany) | EUR 5,150,880 | 7,485,668 | ||||||
Italy Buoni Poliennali Del Tesoro (Italy) | ||||||||
1.700% due 09/15/18 ^ | 599,976 | 862,991 | ||||||
2.100% due 09/15/17 ^ | 459,832 | 670,930 | ||||||
2.100% due 09/15/21 ^ | 214,326 | 305,632 | ||||||
3.100% due 09/15/26 ^ | 104,897 | 157,104 |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-7
PACIFIC LIFE FUNDS
PL INFLATION MANAGED FUND
Schedule of Investments (Continued)
March 31, 2014
Principal | Value | |||||||
4.750% due 09/15/16 | EUR 100,000 | $150,271 | ||||||
5.250% due 08/01/17 | 200,000 | 310,285 | ||||||
Mexican Bonos de Proteccion al Ahorro (Mexico) | MXN 3,700,000 | 284,075 | ||||||
New South Wales Treasury Corp (Australia) | ||||||||
2.500% due 11/20/35 ^ | AUD 200,000 | 218,886 | ||||||
2.750% due 11/20/25 ^ | 900,000 | 1,063,653 | ||||||
New Zealand Government (New Zealand) | NZD 600,000 | 496,464 | ||||||
Slovenia Government (Slovenia) | EUR 300,000 | 449,526 | ||||||
Spain Government (Spain) | 1,400,000 | 2,021,491 | ||||||
United Kingdom Gilt (United Kingdom) | GBP 100,000 | 156,146 | ||||||
United Kingdom Gilt Inflation Linked (United Kingdom) | 100,000 | 564,201 | ||||||
Xunta de Galicia (Spain) | EUR 100,000 | 159,743 | ||||||
|
| |||||||
Total Foreign Government Bonds & Notes |
| 17,462,850 | ||||||
|
| |||||||
PURCHASED OPTIONS - 0.0% | ||||||||
(See Note (g) in Notes to Schedule of Investments) |
| 207 | ||||||
|
| |||||||
SHORT-TERM INVESTMENTS - 4.2% | ||||||||
U. S. Government Agency Issues - 2.1% |
| |||||||
Federal Home Loan Bank | ||||||||
0.080% due 09/17/14 | $100,000 | 99,981 | ||||||
0.090% due 09/15/14 | 400,000 | 399,926 | ||||||
0.097% due 09/19/14 | 2,500,000 | 2,499,525 | ||||||
0.100% due 10/24/14 | 800,000 | 799,771 | ||||||
|
| |||||||
3,799,203 | ||||||||
|
| |||||||
U.S. Treasury Bills - 1.6% | ||||||||
0.078% due 08/21/14 ‡ | 153,000 | 152,968 | ||||||
0.105% due 02/05/15 ‡ | 2,900,000 | 2,897,439 | ||||||
|
| |||||||
3,050,407 | ||||||||
|
| |||||||
| ||||||||
Money Market Fund - 0.5% | ||||||||
BlackRock Liquidity Funds Treasury Trust Fund Portfolio | 1,007,302 | 1,007,302 | ||||||
|
| |||||||
Total Short-Term Investments |
| 7,856,912 | ||||||
|
| |||||||
TOTAL INVESTMENTS - 110.5% |
| 205,390,140 | ||||||
OTHER ASSETS & LIABILITIES, NET - (10.5%) |
| (19,625,622 | ) | |||||
|
| |||||||
NET ASSETS - 100.0% |
| $185,764,518 | ||||||
|
|
Notes to Schedule of Investments
(a) | As of March 31, 2014, the fund was diversified as a percentage of net assets as follows: |
U.S. Treasury Obligations | 92.7% | |||
Foreign Government Bonds & Notes | 9.4% | |||
Short-Term Investments | 4.2% | |||
Others (each less than 3.0%) | 4.2% | |||
|
| |||
110.5% | ||||
Other Assets & Liabilities, Net | (10.5% | ) | ||
|
| |||
100.0% | ||||
|
|
(b) | As of March 31, 2014, the fund’s Standard & Poor’s quality ratings as a percentage of total fixed income investments were as follows (Unaudited): |
AAA | 6.1% | |||
A-1 (Short-Term debt only) | 3.3% | |||
AA / U.S. Government and Agency Issues | 86.5% | |||
A | 0.6% | |||
BBB | 2.8% | |||
B | 0.2% | |||
CCC | 0.1% | |||
Not Rated | 0.4% | |||
|
| |||
100.0% | ||||
|
|
(c) | Short-term investments reflect either the stated coupon rate or the annualized effective yield on the date of purchase for discounted investments. |
(d) | The average amount of borrowings by the fund on sale-buyback financing transactions (See Note 4 in Notes to Financial Statements) outstanding during the year ended March 31, 2014 was $10,435,705 at a weighted average interest rate of 0.125%. |
(e) | Open futures contracts outstanding as of March 31, 2014 were as follows: |
Long Futures Outstanding | Number of Contracts | Unrealized Depreciation | ||||||
Eurodollar (12/15) | 73 | ($2,077 | ) | |||||
Eurodollar (06/16) | 5 | (3,497 | ) | |||||
U.S. Treasury 5-Year Notes (06/14) | 106 | (97,009 | ) | |||||
|
| |||||||
Total Futures Contracts | ($102,583 | ) | ||||||
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-8
PACIFIC LIFE FUNDS
PL INFLATION MANAGED FUND
Schedule of Investments (Continued)
March 31, 2014
(f) | Forward foreign currency contracts outstanding as of March 31, 2014 were as follows: |
Currency Purchased | Currency Sold | Expiration | Counterparty | Unrealized Appreciation (Depreciation) | ||||||||||||||||
AUD | 4,044,000 | USD | 3,730,222 | 04/14 | JPM | $20,196 | ||||||||||||||
BRL | 314,129 | USD | 133,190 | 04/14 | MSC | 5,181 | ||||||||||||||
BRL | 2,652,966 | USD | 1,106,392 | 04/14 | UBS | 62,221 | ||||||||||||||
BRL | 1,395,774 | USD | 583,933 | 05/14 | UBS | 25,609 | ||||||||||||||
EUR | 12,785,000 | USD | 17,613,895 | 04/14 | RBS | (626 | ) | |||||||||||||
EUR | 1,719,000 | USD | 2,367,221 | 05/14 | BRC | 802 | ||||||||||||||
MXN | 10,595,000 | USD | 801,225 | 05/14 | CIT | 7,531 | ||||||||||||||
USD | 3,636,656 | AUD | 4,044,000 | 04/14 | ANZ | (113,248 | ) | |||||||||||||
USD | 3,722,551 | AUD | 4,044,000 | 05/14 | JPM | (19,634 | ) | |||||||||||||
USD | 665,250 | BRL | 1,571,321 | 04/14 | BRC | (26,906 | ) | |||||||||||||
USD | 588,438 | BRL | 1,395,774 | 04/14 | UBS | (26,391 | ) | |||||||||||||
USD | 94,592 | CAD | 105,000 | 06/14 | CIT | (205 | ) | |||||||||||||
USD | 10,490,269 | EUR | 7,621,000 | 04/14 | BRC | (8,810 | ) | |||||||||||||
USD | 5,159,021 | EUR | 3,715,000 | 04/14 | GSC | 41,047 | ||||||||||||||
USD | 2,012,250 | EUR | 1,449,000 | 04/14 | HSB | 16,033 | ||||||||||||||
USD | 17,612,988 | EUR | 12,785,000 | 05/14 | RBS | 903 | ||||||||||||||
USD | 111,462 | GBP | 67,000 | 06/14 | DUB | (175 | ) | |||||||||||||
USD | 1,092,436 | GBP | 652,000 | 06/14 | GSC | 6,056 | ||||||||||||||
USD | 79,430 | JPY | 8,100,000 | 05/14 | CIT | 935 | ||||||||||||||
USD | 709,598 | MXN | 9,460,000 | 05/14 | CIT | (12,520 | ) | |||||||||||||
USD | 471,011 | NZD | 565,000 | 04/14 | HSB | (19,245 | ) | |||||||||||||
USD | 488,456 | NZD | 565,000 | 05/14 | DUB | — | ||||||||||||||
|
| |||||||||||||||||||
Total Forward Foreign Currency Contracts | ($41,246 | ) | ||||||||||||||||||
|
|
(g) | Purchased options outstanding as of March 31, 2014 were as follows: |
Interest Rate Swaptions
Description | Pay/Receive Floating Rate Based on 3-Month USD-LIBOR | Exercise Rate | Expiration Date | Counter- party | Notional Amount | Cost | Value | |||||||||||||||||
Put - OTC 30-Year Interest Rate Swap | Receive | 3.875% | 04/14/14 | DUB | $1,700,000 | $86,445 | $207 | |||||||||||||||||
|
|
|
| |||||||||||||||||||||
Total Purchased Options | $86,445 | $207 | ||||||||||||||||||||||
|
|
|
|
(h) | Transactions in written options for the year ended March 31, 2014 were as follows: |
Number of Contracts | Notional Amount in EUR | Notional Amount in $ | Premium | |||||||||||||
Outstanding, March 31, 2013 | 4 | 6,100,000 | 29,100,000 | $210,065 | ||||||||||||
Call Options Written | 38 | 11,400,000 | 88,750,000 | 169,693 | ||||||||||||
Put Options Written | 22 | 15,600,000 | 126,985,000 | 333,972 | ||||||||||||
Call Options Closed | (7 | ) | — | — | (2,181 | ) | ||||||||||
Put Options Closed | (5 | ) | — | (4,300,000 | ) | (30,828 | ) | |||||||||
Call Options Expired | (9 | ) | (2,000,000 | ) | (101,400,000 | ) | (126,695 | ) | ||||||||
Put Options Expired | (19 | ) | (26,900,000 | ) | (105,600,000 | ) | (318,340 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Outstanding, March 31, 2014 | 24 | 4,200,000 | 33,535,000 | $235,686 | ||||||||||||
|
|
|
|
|
|
|
|
(i) | Premiums received and value of written options outstanding as of March 31, 2014 were as follows: |
Credit Default Swaptions on Credit Indices – Sell Protection (1)
Description | Exercise Rate | Expiration Date | Counter- party | Notional Amount (2) | Premium | Value (3) | ||||||||||||||
Put - OTC iTraxx Europe 20 5Y Index | 0.900% | 06/18/14 | CIT | EUR 1,500,000 | $4,416 | ($854 | ) | |||||||||||||
Put - OTC iTraxx Europe 20 5Y Index | 0.900% | 06/18/14 | DUB | 300,000 | 1,003 | (171 | ) | |||||||||||||
Put - OTC iTraxx Europe 20 5Y Index | 0.900% | 06/18/14 | GSC | 800,000 | 2,150 | (455 | ) | |||||||||||||
Put - OTC iTraxx Europe 20 5Y Index | 0.900% | 06/18/14 | JPM | 600,000 | 1,545 | (341 | ) | |||||||||||||
Put - OTC iTraxx Europe 20 5Y Index | 0.900% | 06/18/14 | MSC | 300,000 | 960 | (171 | ) | |||||||||||||
Put - OTC iTraxx Europe 20 5Y Index | 1.000% | 06/18/14 | GSC | 100,000 | 269 | (69 | ) | |||||||||||||
Put - OTC iTraxx Europe 20 5Y Index | 1.100% | 09/17/14 | GSC | 200,000 | 701 | (287 | ) | |||||||||||||
Put - OTC iTraxx Europe 20 5Y Index | 1.100% | 09/17/14 | JPM | 400,000 | 1,474 | (575 | ) | |||||||||||||
|
|
|
| |||||||||||||||||
$12,518 | ($2,923 | ) | ||||||||||||||||||
|
|
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-9
PACIFIC LIFE FUNDS
PL INFLATION MANAGED FUND
Schedule of Investments (Continued)
March 31, 2014
(1) | If the fund is a seller of protection and a credit event occurs, as defined under the terms of that particular swaption agreement, the fund will either (i) pay to the buyer of protection an amount equal to the notional amount of the swaption and take delivery of the referenced obligation or underlying investments comprising the referenced index or (ii) pay a net settlement amount in the form of cash or investments equal to the notional amount of the swaption less the recovery value of the referenced obligation or underlying investments comprising the referenced index. The fund is only obligated if the swaption is exercised. |
(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 swaption agreement. |
(3) | The quoted market prices and resulting values for credit default swaption 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 had the notional amount of the swaption agreement been closed/sold as of year end. Increasing values, in absolute terms when compared to the notional amount of the swaption, represent a deterioration of the referenced entity’s credit soundness and a greater likelihood of risk of default or other credit event occurring as defined under the terms of the agreement. |
Foreign Currency Options
Description | Exercise Price | Expiration Date | Counter- party | Notional Amount | Premium | Value | ||||||||||||||||||
Call - OTC BRL versus USD | BRL 2.52 | 06/11/14 | BRC | $2,661,000 | $26,876 | ($10,016 | ) | |||||||||||||||||
Call - OTC INR versus USD | INR 64.70 | 06/12/14 | UBS | 1,711,000 | 15,519 | (8,765 | ) | |||||||||||||||||
Call - OTC INR versus USD | 64.90 | 06/19/14 | BRC | 413,000 | 3,780 | (2,328 | ) | |||||||||||||||||
Call - OTC INR versus USD | 64.90 | 06/19/14 | HSB | 503,000 | 4,778 | (2,834 | ) | |||||||||||||||||
Call - OTC INR versus USD | 64.00 | 06/26/14 | HSB | 424,200 | 4,072 | (3,580 | ) | |||||||||||||||||
Call - OTC INR versus USD | 64.00 | 06/26/14 | UBS | 237,800 | 2,192 | (2,007 | ) | |||||||||||||||||
|
|
|
| |||||||||||||||||||||
57,217 | (29,530 | ) | ||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
Put - OTC JPY versus USD | JPY 100.00 | 06/05/14 | CIT | 685,000 | 4,628 | (3,294 | ) | |||||||||||||||||
|
|
|
| |||||||||||||||||||||
$61,845 | ($32,824 | ) | ||||||||||||||||||||||
|
|
|
|
Inflation Floor/Cap Options
Description | Strike Index | Exercise Index | Expiration Date | Counter- party | Notional Amount | Premium | Value | |||||||||||||||||
Floor - OTC U.S. CPI Urban Consumers NSA | 0.00 | Maximum of [(1+0.00%)10 | 04/07/20 | CIT | $2,000,000 | $17,720 | ($1,853 | ) | ||||||||||||||||
Floor - OTC U.S. CPI Urban Consumers NSA | 0.00 | Maximum of [(1+0.00%)10 | 09/29/20 | CIT | 300,000 | 3,870 | (268 | ) | ||||||||||||||||
Floor - OTC U.S. CPI Urban Consumers NSA | 0.00 | Maximum of [(1+0.00%)10 | 10/13/20 | DUB | 700,000 | 6,860 | (564 | ) | ||||||||||||||||
|
|
|
| |||||||||||||||||||||
$28,450 | ($2,685 | ) | ||||||||||||||||||||||
|
|
|
|
Interest Rate Swaptions
Description | Pay/Receive Based on | Exercise Rate | Expiration Date | Counter- Party | Notional Amount | Premium | Value | |||||||||||||||||
Put - OTC 5-Year Interest Rate Swap | Pay | 2.850% | 04/14/14 | DUB | $7,000,000 | $84,000 | ($1 | ) | ||||||||||||||||
Put - OTC 2-Year Interest Rate Swap | Pay | 2.000% | 03/16/15 | GSC | 16,900,000 | 34,082 | (46,020 | ) | ||||||||||||||||
|
|
|
| |||||||||||||||||||||
$118,082 | ($46,021 | ) | ||||||||||||||||||||||
|
|
|
|
Options on Futures Contracts
Description | Exercise Price | Expiration Date | Exchange | Number of Contracts | Premium | Value | ||||||||||||||||
Call - U.S. Treasury 5-Year Futures (06/14) | $120.00 | 05/23/14 | CME | 24 | $14,791 | ($4,313 | ) | |||||||||||||||
|
|
|
| |||||||||||||||||||
Total Written Options | $235,686 | ($88,766 | ) | |||||||||||||||||||
|
|
|
|
(j) | Swap agreements outstanding as of March 31, 2014 were as follows: |
Credit Default Swaps on Corporate and Sovereign Issues – Sell Protection (1)
Referenced Obligation | Fixed Deal Receive Rate | | Expiration Date | | Counter- party | Implied Credit Spread at 03/31/14 (2) | | Notional Amount (3) | | Value | | Upfront Premiums Paid (Received) | | | Unrealized Appreciation | | ||||||||||
Italy Government | 1.000% | 03/20/19 | DUB | 1.283% | $1,900,000 | ($24,651 | ) | ($33,172 | ) | $8,521 | ||||||||||||||||
Russian Government | 1.000% | 03/20/19 | HSB | 2.107% | 100,000 | (5,068 | ) | (8,422 | ) | 3,354 | ||||||||||||||||
Spain Government | 1.000% | 03/20/19 | HSB | 1.002% | 200,000 | 48 | (1,509 | ) | 1,557 | |||||||||||||||||
Brazilian Government | 1.000% | 03/20/19 | MSC | 1.627% | 1,500,000 | (43,825 | ) | (76,076 | ) | 32,251 | ||||||||||||||||
Spain Government | 1.000% | 03/20/19 | MSC | 1.002% | 400,000 | 95 | (2,456 | ) | 2,551 | |||||||||||||||||
HSBC Bank PLC | 1.000% | 06/20/19 | JPM | 0.692% | 1,300,000 | 20,481 | 16,141 | 4,340 | ||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
($52,920 | ) | ($105,494 | ) | $52,574 | ||||||||||||||||||||||
|
|
|
|
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-10
PACIFIC LIFE FUNDS
PL INFLATION MANAGED FUND
Schedule of Investments (Continued)
March 31, 2014
Credit Default Swaps on Credit Indices – Sell Protection (1)
Referenced Obligation | Fixed Deal Receive Rate | Expiration Date | Exchange | Notional Amount (3) | Value (4) | Upfront Premiums Paid (Received) | Unrealized Appreciation | |||||||||||||||||||
iTraxx Europe 21 5Y | 1.000% | 06/20/19 | ICE | EUR 650,000 | $11,002 | $8,507 | $2,495 | |||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
($41,918 | ) | ($96,987 | ) | $55,069 | ||||||||||||||||||||||
|
|
|
|
|
|
(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 of underlying investments comprising the referenced index or (ii) pay a net settlement amount in the form of cash or investments equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying comprising the referenced index. |
(2) | An implied credit spread is the spread in yield between a U.S. Treasury security and the referenced obligation or underlying investment that are identical in all respects except for the quality rating. Implied credit spreads, represented in absolute terms, utilized in determining the value of credit default swap agreements on corporate and sovereign issues of an emerging country as of year end serve as an indicator of the current status of the payment/performance risk and represent the likelihood of 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, in comparison to narrower credit spreads, represent a deterioration of the referenced entity’s credit soundness and a greater likelihood of risk of default or other credit event occurring as defined under the terms of the agreement. A credit spread identified as “Defaulted” indicates a credit event has occurred for the referenced entity or obligation. |
(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 quoted market 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 had the notional amount of the swap agreement been closed/sold as of year end. Increasing 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 of risk of default or other credit event occurring as defined under the terms of the agreement. |
Interest Rate Swaps
Floating Rate Index | Counterparty/ Exchange | Pay/Receive Floating Rate | Fixed Rate | Expiration Date | Notional Amount | Value | Upfront Premiums Paid (Received) | Unrealized Appreciation (Depreciation) | ||||||||||||||||||||
BRL - CDI Compounded | JPM | Pay | 7.900% | 01/02/15 | BRL 100,000 | ($1,159 | ) | ($357 | ) | ($802 | ) | |||||||||||||||||
BRL - CDI Compounded | UBS | Pay | 10.410% | 01/02/15 | 700,000 | (347 | ) | 415 | (762 | ) | ||||||||||||||||||
U.S. CPI Urban Consumers NSA | DUB | Receive | 1.800% | 01/17/16 | $3,400,000 | (483 | ) | (220 | ) | (263 | ) | |||||||||||||||||
BRL - CDI Compounded | UBS | Pay | 8.150% | 01/02/17 | BRL 3,700,000 | (139,940 | ) | — | (139,940 | ) | ||||||||||||||||||
BRL - CDI Compounded | MSC | Pay | 8.220% | 01/02/17 | 4,700,000 | (173,310 | ) | (249 | ) | (173,061 | ) | |||||||||||||||||
BRL - CDI Compounded | GSC | Pay | 8.300% | 01/02/17 | 3,000,000 | (106,103 | ) | 3,861 | (109,964 | ) | ||||||||||||||||||
BRL - CDI Compounded | BRC | Pay | 10.910% | 01/02/17 | 200,000 | (1,634 | ) | 243 | (1,877 | ) | ||||||||||||||||||
BRL - CDI Compounded | DUB | Pay | 10.910% | 01/02/17 | 2,300,000 | (18,794 | ) | (1,301 | ) | (17,493 | ) | |||||||||||||||||
BRL - CDI Compounded | GSC | Pay | 10.910% | 01/02/17 | 3,700,000 | (30,235 | ) | (517 | ) | (29,718 | ) | |||||||||||||||||
BRL - CDI Compounded | MSC | Pay | 10.910% | 01/02/17 | 200,000 | (1,634 | ) | (93 | ) | (1,541 | ) | |||||||||||||||||
BRL - CDI Compounded | UBS | Pay | 10.910% | 01/02/17 | 3,500,000 | (28,600 | ) | 4,190 | (32,790 | ) | ||||||||||||||||||
U.S. CPI Urban Consumers NSA | DUB | Receive | 1.935% | 01/20/17 | $1,300,000 | (1,789 | ) | — | (1,789 | ) | ||||||||||||||||||
U.S. CPI Urban Consumers NSA | GSC | Receive | 2.415% | 02/12/17 | 600,000 | (16,481 | ) | — | (16,481 | ) | ||||||||||||||||||
U.S. CPI Urban Consumers NSA | CIT | Receive | 2.250% | 07/15/17 | 4,100,000 | (109,135 | ) | 984 | (110,119 | ) | ||||||||||||||||||
U.S. CPI Urban Consumers NSA | DUB | Receive | 2.250% | 07/15/17 | 3,800,000 | (101,150 | ) | 3,520 | (104,670 | ) | ||||||||||||||||||
U.S. CPI Urban Consumers NSA | RBS | Receive | 2.250% | 07/15/17 | 2,600,000 | (69,207 | ) | (2,517 | ) | (66,690 | ) | |||||||||||||||||
U.S. CPI Urban Consumers NSA | BRC | Receive | 2.085% | 10/11/17 | 8,700,000 | (71,284 | ) | — | (71,284 | ) | ||||||||||||||||||
U.S. CPI Urban Consumers NSA | UBS | Receive | 2.215% | 01/17/19 | 800,000 | (5,183 | ) | — | (5,183 | ) | ||||||||||||||||||
6-Month AUD Bank Bill | BRC | Pay | 4.000% | 06/18/19 | AUD 300,000 | — | 308 | (308 | ) | |||||||||||||||||||
6-Month AUD Bank Bill | DUB | Pay | 4.000% | 06/18/19 | 400,000 | — | 489 | (489 | ) | |||||||||||||||||||
France CPI Excluding Tobacco | CIT | Receive | 2.150% | 04/01/21 | EUR 100,000 | 8,697 | 1,560 | 7,137 | ||||||||||||||||||||
France CPI Excluding Tobacco | DUB | Receive | 2.150% | 04/01/21 | 400,000 | 34,788 | 7,362 | 27,426 | ||||||||||||||||||||
France CPI Excluding Tobacco | GSC | Receive | 2.150% | 04/01/21 | 600,000 | 52,182 | 4,446 | 47,736 | ||||||||||||||||||||
France CPI Excluding Tobacco | MSC | Receive | 2.150% | 04/01/21 | 900,000 | 78,272 | (3,280 | ) | 81,552 | |||||||||||||||||||
France CPI Excluding Tobacco | BRC | Receive | 1.950% | 07/25/21 | 1,400,000 | 77,363 | (9,502 | ) | 86,865 | |||||||||||||||||||
France CPI Excluding Tobacco | DUB | Receive | 1.950% | 07/25/21 | 1,500,000 | 82,889 | 3,802 | 79,087 | ||||||||||||||||||||
U.S. CPI Urban Consumers NSA | DUB | Receive | 2.500% | 07/15/22 | $2,000,000 | (62,789 | ) | 29,720 | (92,509 | ) | ||||||||||||||||||
France CPI Excluding Tobacco | DUB | Receive | 1.950% | 07/25/23 | EUR 300,000 | 13,099 | 2,951 | 10,148 | ||||||||||||||||||||
France CPI Excluding Tobacco | MSC | | Receive | | 1.950% | 07/25/23 | 300,000 | 13,100 | 3,320 | 9,780 | ||||||||||||||||||
France CPI Excluding Tobacco | RBS | Receive | 1.950% | 07/25/23 | 100,000 | 4,367 | 1,019 | 3,348 | ||||||||||||||||||||
6-Month JPY LIBOR | CME | Receive | 1.000% | 09/18/23 | JPY 330,000,000 | (68,713 | ) | (25,260 | ) | (43,453 | ) | |||||||||||||||||
France CPI Excluding Tobacco | CIT | Receive | 2.108% | 10/08/23 | EUR 400,000 | 25,269 | 5,151 | 20,118 | ||||||||||||||||||||
France CPI Excluding Tobacco | DUB | Receive | 2.108% | 10/08/23 | 500,000 | 31,586 | 6,287 | 25,299 | ||||||||||||||||||||
6-Month EUR LIBOR | CME | Receive | 2.000% | 01/29/24 | 2,000,000 | (67,342 | ) | — | (67,342 | ) | ||||||||||||||||||
3-Month USD LIBOR | CME | Receive | 2.750% | 06/19/43 | $3,900,000 | 566,208 | 714,754 | (148,546 | ) | |||||||||||||||||||
3-Month USD LIBOR | CME | Receive | 3.500% | 12/18/43 | 800,000 | (873 | ) | 30,358 | (31,231 | ) | ||||||||||||||||||
6-Month EUR LIBOR | CME | Receive | 2.750% | 09/17/44 | EUR 1,100,000 | (82,386 | ) | (57,746 | ) | (24,640 | ) | |||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||
($170,751 | ) | $723,698 | ($894,449 | ) | ||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||
Total Swap Agreements | ($212,669 | ) | $626,711 | ($839,380 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-11
PACIFIC LIFE FUNDS
PL INFLATION MANAGED FUND
Schedule of Investments (Continued)
March 31, 2014
(k) | As of March 31, 2014, investments with a total aggregate value of $523,343 were fully or partially segregated with the broker(s)/custodian as collateral for open futures contracts, forward foreign currency contracts, option contracts and swap contracts. |
(l) | Fair Value Measurements |
The following is a summary of the fund’s investments as categorized under the three-tier hierarchy of inputs used in valuing the fund’s assets and liabilities (See Note 3D in Notes to Financial Statements) as of March 31, 2014:
| Total Value at March 31, 2014 | | | Level 1 Quoted Price | | | Level 2 Significant Observable Inputs | | | Level 3 Significant Unobservable Inputs | | |||||||
Assets | Corporate Bonds & Notes | $1,412,813 | $— | $1,412,813 | $— | |||||||||||||
Mortgage-Backed Securities | 2,798,678 | — | 2,798,678 | — | ||||||||||||||
Asset-Backed Securities | 3,615,855 | — | 3,615,855 | — | ||||||||||||||
U.S. Treasury Obligations | 172,242,825 | — | 172,242,825 | — | ||||||||||||||
Foreign Government Bonds & Notes | 17,462,850 | — | 17,462,850 | — | ||||||||||||||
Short-Term Investments | 7,856,912 | 1,007,302 | 6,849,610 | — | ||||||||||||||
Derivatives: | ||||||||||||||||||
Credit Contracts | ||||||||||||||||||
Swaps | 31,626 | — | 31,626 | — | ||||||||||||||
Foreign Currency Contracts | ||||||||||||||||||
Forward Foreign Currency Contracts | 186,514 | — | 186,514 | — | ||||||||||||||
Interest Rate Contracts | ||||||||||||||||||
Purchased Options | 207 | — | 207 | — | ||||||||||||||
Swaps | 987,820 | — | 987,820 | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Interest Rate Contracts | 988,027 | — | 988,027 | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Assets - Derivatives | 1,206,167 | — | 1,206,167 | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Assets | 206,596,100 | 1,007,302 | 205,588,798 | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Liabilities | Derivatives: | |||||||||||||||||
Credit Contracts | ||||||||||||||||||
Written Options | (2,923 | ) | — | (2,923 | ) | — | �� | |||||||||||
Swaps | (73,544 | ) | — | (73,544 | ) | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Credit Contracts | (76,467 | ) | — | (76,467 | ) | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Foreign Currency Contracts | ||||||||||||||||||
Written Options | (32,824 | ) | — | (32,824 | ) | — | ||||||||||||
Forward Foreign Currency Contracts | (227,760 | ) | — | (227,760 | ) | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Foreign Currency Contracts | (260,584 | ) | — | (260,584 | ) | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Interest Rate Contracts | ||||||||||||||||||
Futures | (102,583 | ) | (102,583 | ) | — | — | ||||||||||||
Written Options | (53,019 | ) | (4,313 | ) | (46,021 | ) | (2,685 | ) | ||||||||||
Swaps | (1,158,571 | ) | — | (1,158,571 | ) | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Interest Rate Contracts | (1,314,173 | ) | (106,896 | ) | (1,204,592 | ) | (2,685 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Liabilities - Derivatives | (1,651,224 | ) | (106,896 | ) | (1,541,643 | ) | (2,685 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Liabilities | (1,651,224 | ) | (106,896 | ) | (1,541,643 | ) | (2,685 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total | $204,944,876 | $900,406 | $204,047,155 | ($2,685 | ) | |||||||||||||
|
|
|
|
|
|
|
|
Certain of the fund’s liabilities are held at carrying amount, which approximates fair value for financial statement purposes. As of March 31, 2014, such liabilities are categorized within the three-tier hierarchy of inputs as follows:
Total Value at March 31, 2014 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||||
Liabilities | Sale-Buyback Financing Transactions | ($20,568,887 | ) | $— | ($20,568,887 | ) | $— | |||||||||||
|
|
|
|
|
|
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-12
PACIFIC LIFE FUNDS
PL MANAGED BOND FUND
Schedule of Investments
March 31, 2014
Principal | | |||||||
CORPORATE BONDS & NOTES - 13.1% | ||||||||
Consumer Discretionary - 0.1% | ||||||||
General Motors Co-Escrow Receipts | EUR 200,000 | $— | ||||||
Viacom Inc | $800,000 | 805,011 | ||||||
|
| |||||||
805,011 | ||||||||
|
| |||||||
Consumer Staples - 0.1% | ||||||||
Reynolds American Inc | 200,000 | 230,789 | ||||||
|
| |||||||
Energy - 1.1% | ||||||||
Colorado Interstate Gas Co LLC | 200,000 | 219,805 | ||||||
Petrobras International Finance Co (Cayman) | 400,000 | 428,816 | ||||||
Shell International Finance BV (Netherlands) | ||||||||
0.307% due 11/10/15 § | 1,200,000 | 1,200,874 | ||||||
0.446% due 11/15/16 § | 1,000,000 | 1,001,700 | ||||||
Statoil ASA (Norway) | 3,200,000 | 3,222,528 | ||||||
Woodside Finance Ltd (Australia) | 100,000 | 102,299 | ||||||
|
| |||||||
6,176,022 | ||||||||
|
| |||||||
Financials - 10.5% | ||||||||
Ally Financial Inc | ||||||||
2.750% due 01/30/17 | 1,000,000 | 1,012,500 | ||||||
3.635% due 06/20/14 § | 4,600,000 | 4,639,100 | ||||||
4.625% due 06/26/15 | 300,000 | 311,399 | ||||||
8.300% due 02/12/15 | 600,000 | 635,625 | ||||||
American International Group Inc | ||||||||
5.450% due 05/18/17 | 100,000 | 111,693 | ||||||
6.250% due 03/15/87 | 1,000,000 | 1,055,000 | ||||||
Banco Nacional de Desenvolvimento | EUR 100,000 | 145,894 | ||||||
Banco Santander Brasil SA (Brazil) | $300,000 | 312,375 | ||||||
Banco Santander Chile (Chile) | 1,000,000 | 992,500 | ||||||
Bank of America Corp | 4,800,000 | 4,981,306 | ||||||
Bank of Montreal (Canada) | 100,000 | 102,981 | ||||||
Banque PSA Finance SA (France) | 600,000 | 600,750 | ||||||
BBVA Bancomer SA (Mexico) | 3,800,000 | 4,127,750 | ||||||
CIT Group Inc | 100,000 | 100,000 | ||||||
Citigroup Inc | ||||||||
0.516% due 11/05/14 § | 485,000 | 485,202 | ||||||
2.250% due 08/07/15 | 700,000 | 713,059 | ||||||
4.587% due 12/15/15 | 2,300,000 | 2,440,659 | ||||||
5.500% due 10/15/14 | 1,200,000 | 1,231,814 | ||||||
Credit Agricole Home Loan SFH (France) | 1,400,000 | 1,402,797 | ||||||
Credit Suisse NY (Switzerland) | ||||||||
0.465% due 03/17/15 § | 400,000 | 400,016 | ||||||
0.644% due 12/07/15 § | 2,100,000 | 2,103,704 | ||||||
Daimler Finance North America LLC | 2,000,000 | 2,007,740 | ||||||
Dexia Credit Local SA (France) | 800,000 | 800,256 |
Principal | | |||||||
Ford Motor Credit Co LLC | ||||||||
3.875% due 01/15/15 | $1,692,000 | $1,732,786 | ||||||
3.984% due 06/15/16 | 100,000 | 106,023 | ||||||
4.207% due 04/15/16 | 400,000 | 424,162 | ||||||
7.000% due 04/15/15 | 500,000 | 532,025 | ||||||
8.700% due 10/01/14 | 200,000 | 208,167 | ||||||
HBOS PLC (United Kingdom) | 8,100,000 | 8,016,975 | ||||||
ICICI Bank Ltd (India) | ||||||||
4.750% due 11/25/16 ~ | 1,700,000 | 1,798,770 | ||||||
5.500% due 03/25/15 ~ | 600,000 | 621,181 | ||||||
JPMorgan Chase & Co | 300,000 | 307,622 | ||||||
Lloyds Bank PLC (United Kingdom) | 1,000,000 | 1,370,912 | ||||||
National Australia Bank Ltd (Australia) | 1,400,000 | 1,400,218 | ||||||
Nordea Eiendomskreditt AS (Norway) | 900,000 | 900,050 | ||||||
RCI Banque SA (France) | 1,300,000 | 1,300,419 | ||||||
Santander Issuances SAU (Spain) | GBP 3,000,000 | 5,139,806 | ||||||
SLM Corp | ||||||||
2.253% due 10/01/14 § ^ | $100,000 | 98,923 | ||||||
6.250% due 01/25/16 | 100,000 | 107,875 | ||||||
SSIF Nevada LP | 3,300,000 | 3,300,686 | ||||||
State Bank of India (India) | 1,000,000 | 1,035,857 | ||||||
Stone Street Trust | 700,000 | 753,510 | ||||||
Volkswagen International Finance NV (Netherlands) | 995,000 | 995,000 | ||||||
|
| |||||||
60,865,087 | ||||||||
|
| |||||||
Health Care - 0.2% | ||||||||
AbbVie Inc | 1,200,000 | 1,212,317 | ||||||
|
| |||||||
Industrials - 0.0% | ||||||||
International Lease Finance Corp | 100,000 | 107,813 | ||||||
|
| |||||||
Materials - 0.3% | ||||||||
CSN Islands XI Corp (Cayman) | 700,000 | 735,000 | ||||||
Gerdau Holdings Inc | 300,000 | 334,500 | ||||||
GTL Trade Finance Inc (United Kingdom) | 600,000 | 680,250 | ||||||
|
| |||||||
1,749,750 | ||||||||
|
| |||||||
Telecommunication Services - 0.7% | ||||||||
Verizon Communications Inc | 4,100,000 | 4,248,354 | ||||||
|
| |||||||
Utilities - 0.1% | ||||||||
Entergy Corp | 500,000 | 517,734 | ||||||
|
| |||||||
Total Corporate Bonds & Notes | 75,912,877 | |||||||
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-13
PACIFIC LIFE FUNDS
PL MANAGED BOND FUND
Schedule of Investments (Continued)
March 31, 2014
Principal | | |||||||
MORTGAGE-BACKED SECURITIES - 35.9% | ||||||||
Collateralized Mortgage Obligations - Commercial - 0.7% |
| |||||||
Bear Stearns Commercial | $200,000 | $224,745 | ||||||
Credit Suisse Commercial Mortgage Trust | 835,928 | 907,026 | ||||||
LB-UBS Commercial Mortgage Trust | 452,960 | 512,472 | ||||||
Merrill Lynch Floating Trust | 293,314 | 293,012 | ||||||
Morgan Stanley Capital I Trust | 1,472,109 | 1,599,099 | ||||||
Silenus European Loan Conduit Ltd (Ireland) | EUR 17,264 | 23,487 | ||||||
Wachovia Bank Commercial Mortgage Trust | $600,000 | 658,018 | ||||||
|
| |||||||
4,217,859 | ||||||||
|
| |||||||
Collateralized Mortgage Obligations - Residential - 2.7% |
| |||||||
Alternative Loan Trust | 346,265 | 285,616 | ||||||
Arran Residential Mortgages Funding PLC | EUR 670,214 | 935,145 | ||||||
Banc of America Funding Trust | $83,862 | 86,454 | ||||||
Banc of America Mortgage Trust | 45,170 | 46,049 | ||||||
BCAP LLC Trust | 88,915 | 83,874 | ||||||
Bear Stearns Adjustable Rate Mortgage Trust | ||||||||
2.250% due 08/25/35 " § | 39,384 | 40,103 | ||||||
2.430% due 10/25/35 " § | 285,097 | 280,785 | ||||||
2.533% due 03/25/35 " § | 65,103 | 66,127 | ||||||
2.579% due 08/25/33 " § | 106,904 | 109,660 | ||||||
2.686% due 01/25/35 " § | 1,153,769 | 1,136,558 | ||||||
Bear Stearns Alt-A Trust | ||||||||
2.601% due 11/25/36 " § | 86,422 | 60,831 | ||||||
2.674% due 05/25/35 " § | 51,153 | 49,163 | ||||||
2.676% due 09/25/35 " § | 61,541 | 54,647 | ||||||
Chase Mortgage Finance Trust | 203,212 | 186,027 | ||||||
Chevy Chase Funding LLC | 57,609 | 52,523 | ||||||
Citigroup Mortgage Loan Trust | ||||||||
2.290% due 09/25/35 " § | 45,033 | 44,713 | ||||||
2.510% due 10/25/35 " § | 84,868 | 84,088 | ||||||
Countrywide Home Loan Mortgage | 27,231 | 24,208 | ||||||
Credit Suisse First Boston Mortgage | ||||||||
0.804% due 03/25/32 " § ~ | 30,596 | 28,986 | ||||||
6.000% due 11/25/35 " W | 99,651 | 84,228 | ||||||
Downey Saving and Loan Association Mortgage Loan Trust | 256,786 | 58,374 | ||||||
Fannie Mae | ||||||||
0.354% due 10/27/37 " § | 3,400,000 | 3,391,866 | ||||||
0.464% due 04/25/37 " § | 87,087 | 86,977 | ||||||
0.604% due 09/25/35 " § | 207,428 | 208,011 | ||||||
1.625% due 11/25/23 " § | 150,015 | 155,218 | ||||||
Freddie Mac | ||||||||
1.333% due 10/25/44 " § | 38,920 | 39,276 | ||||||
1.532% due 07/25/44 " § | 202,623 | 205,276 | ||||||
8.000% due 04/15/30 " | 196,299 | 230,260 |
Principal | | |||||||
Granite Master Issuer PLC (United Kingdom) | ||||||||
0.417% due 12/20/54 " § | $323,129 | $320,447 | ||||||
0.454% due 12/20/54 " § ~ | EUR 404,266 | 553,654 | ||||||
0.514% due 12/20/54 " § ~ | 650,296 | 890,510 | ||||||
Granite Mortgages PLC (United Kingdom) | ||||||||
0.682% due 01/20/44 " § ~ | 19,802 | 27,167 | ||||||
0.900% due 01/20/44 " § ~ | GBP 20,039 | 33,309 | ||||||
0.903% due 09/20/44 " § ~ | 107,953 | 179,208 | ||||||
HarborView Mortgage Loan Trust | ||||||||
0.326% due 12/19/36 " § W | $507,239 | 344,723 | ||||||
0.346% due 01/19/38 " § | 168,367 | 142,723 | ||||||
0.376% due 05/19/35 " § | 30,859 | 27,041 | ||||||
JPMorgan Mortgage Trust | ||||||||
3.319% due 02/25/35 " § | 14,223 | 14,720 | ||||||
5.219% due 07/25/35 " § | 186,547 | 192,471 | ||||||
5.750% due 01/25/36 " W | 36,637 | 34,341 | ||||||
Mellon Residential Funding Corp Mortgage Pass-Through Trust | 7,157 | 7,038 | ||||||
Merrill Lynch Mortgage Investors Trust | ||||||||
0.364% due 02/25/36 " § | 41,617 | 38,043 | ||||||
2.145% due 11/25/35 " § | 2,738,018 | 2,702,989 | ||||||
Morgan Stanley Mortgage Loan Trust | 91,145 | 93,139 | ||||||
Reperforming Loan REMIC Trust | 93,399 | 84,378 | ||||||
Residential Accredit Loans Inc Trust | ||||||||
0.334% due 06/25/46 " § | 87,235 | 39,220 | ||||||
6.000% due 06/25/36 " W | 215,216 | 174,313 | ||||||
Residential Asset Securitization Trust | 5,355 | 5,315 | ||||||
Structured Asset Mortgage Investments II Trust | 188,392 | 141,881 | ||||||
Structured Asset Securities Corp Mortgage Pass-Through Certificates | ||||||||
2.459% due 08/25/32 " § | 43,072 | 43,266 | ||||||
2.646% due 10/28/35 " § ~ | 38,812 | 36,735 | ||||||
Washington Mutual Mortgage | ||||||||
0.464% due 01/25/45 " § | 22,962 | 22,280 | ||||||
0.474% due 01/25/45 " § | 23,089 | 21,876 | ||||||
1.533% due 08/25/42 " § | 3,865 | 3,676 | ||||||
2.034% due 02/27/34 " § | 6,111 | 6,072 | ||||||
2.284% due 09/25/46 " § | 83,387 | 79,412 | ||||||
4.686% due 02/25/37 " § | 416,584 | 388,982 | ||||||
Wells Fargo Mortgage-Backed Securities Trust | ||||||||
2.612% due 12/25/34 " § | 72,634 | 74,499 | ||||||
2.614% due 03/25/36 " § | 537,398 | 521,453 | ||||||
2.624% due 04/25/36 " § W | 63,727 | 62,000 | ||||||
|
| |||||||
15,421,924 | ||||||||
|
| |||||||
Fannie Mae - 31.4% | ||||||||
1.329% due 10/01/44 " § | 33,775 | 34,496 | ||||||
2.167% due 09/01/35 " § | 156,097 | 166,599 | ||||||
2.310% due 08/01/22 " | 500,000 | 480,768 | ||||||
2.362% due 12/01/35 " § | 21,738 | 23,037 | ||||||
2.469% due 11/01/32 " § | 117,881 | 125,186 | ||||||
2.485% due 11/01/34 " § | 113,425 | 121,034 | ||||||
3.000% due 09/01/21 - 09/01/28 " | 20,038,941 | 20,630,234 | ||||||
3.500% due 02/01/27 - 04/17/27 " | 32,229,451 | 33,791,112 | ||||||
4.000% due 08/01/18 - 04/12/42 " | 23,630,005 | 24,697,634 | ||||||
4.385% due 12/01/36 " § | 12,900 | 13,731 | ||||||
4.500% due 07/01/18 - 04/13/41 " | 41,589,196 | 44,386,257 | ||||||
5.000% due 02/01/25 - 08/01/40 " | 26,689,313 | 29,129,668 | ||||||
5.500% due 12/01/20 - 12/01/39 " | 17,499,449 | 19,315,805 | ||||||
6.000% due 09/01/22 - 05/01/41 " | 8,221,337 | 9,166,643 | ||||||
6.500% due 03/01/17 " | 14,619 | 15,465 | ||||||
|
| |||||||
182,097,669 | ||||||||
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-14
PACIFIC LIFE FUNDS
PL MANAGED BOND FUND
Schedule of Investments (Continued)
March 31, 2014
Principal | | |||||||
Freddie Mac - 0.6% | ||||||||
2.015% due 09/01/35 " § | $21,214 | $22,328 | ||||||
2.375% due 11/01/31 - 04/01/32 " § | 25,475 | 27,022 | ||||||
2.459% due 06/01/35 " § | 176,500 | 188,383 | ||||||
2.498% due 09/01/35 " § | 105,720 | 112,643 | ||||||
4.500% due 09/01/41 " | 413,279 | 441,589 | ||||||
5.500% due 03/01/23 - 05/01/40 " | 2,307,119 | 2,536,562 | ||||||
6.000% due 12/01/22 - 03/01/23 " | 59,815 | 66,311 | ||||||
|
| |||||||
3,394,838 | ||||||||
|
| |||||||
Government National Mortgage Association - 0.5% |
| |||||||
5.000% due 10/15/38 - 04/15/39 " | 2,429,692 | 2,661,451 | ||||||
|
| |||||||
Total Mortgage-Backed Securities | 207,793,741 | |||||||
|
| |||||||
ASSET-BACKED SECURITIES - 4.5% | ||||||||
Argent Securities Inc | 1,230,166 | 1,135,671 | ||||||
Asset Backed Funding Certificates Trust | 93,839 | 87,929 | ||||||
Bear Stearns Asset Backed Securities I Trust | 450,983 | 421,757 | ||||||
Bear Stearns Asset Backed Securities Trust | 125,504 | 123,069 | ||||||
CIT Mortgage Loan Trust | 2,063,339 | 2,061,773 | ||||||
Citibank Omni Master Trust | 3,200,000 | 3,231,387 | ||||||
Countrywide Asset-Backed Certificates | ||||||||
0.254% due 08/25/37 " § | 2,104,199 | 2,082,623 | ||||||
0.504% due 05/25/46 " § ~ | 2,192,016 | 2,074,796 | ||||||
FFMLT Trust | 5,200,000 | 4,727,928 | ||||||
Halcyon Structured Asset Management Ltd CLO (Cayman) | 1,479,785 | 1,469,313 | ||||||
Hillmark Funding CDO (Cayman) | 1,058,152 | 1,032,193 | ||||||
HSBC Home Equity Loan Trust | 329,325 | 323,388 | ||||||
Long Beach Mortgage Loan Trust | 18,554 | 16,933 | ||||||
Mastr Asset Backed Securities Trust | 6,200,000 | 5,578,710 | ||||||
Park Place Securities Inc | 138,718 | 136,904 | ||||||
Securitized Asset-Backed Receivables LLC Trust | 119,099 | 78,583 | ||||||
Structured Asset Investment Loan Trust | 1,200,000 | 1,057,467 | ||||||
United States Small Business Administration | 14,378 | 14,527 | ||||||
Wood Street BV CLO (Netherlands) | EUR 295,853 | 402,569 | ||||||
|
| |||||||
Total Asset-Backed Securities | 26,057,520 | |||||||
|
| |||||||
U.S. GOVERNMENT AGENCY ISSUES - 9.0% | ||||||||
Fannie Mae | ||||||||
0.875% due 08/28/17 | $4,400,000 | 4,362,442 | ||||||
0.875% due 12/20/17 | 400,000 | 393,710 | ||||||
0.875% due 02/08/18 | 1,000,000 | 979,949 | ||||||
0.875% due 05/21/18 | 200,000 | 194,822 | ||||||
1.125% due 04/27/17 | 1,800,000 | 1,810,510 | ||||||
1.250% due 01/30/17 | 4,200,000 | 4,249,841 |
Principal | | |||||||
1.875% due 09/18/18 | $100,000 | $101,117 | ||||||
5.000% due 02/13/17 | 900,000 | 1,005,200 | ||||||
5.000% due 05/11/17 | 1,800,000 | 2,019,548 | ||||||
5.375% due 06/12/17 | 3,500,000 | 3,967,121 | ||||||
Freddie Mac | ||||||||
0.875% due 03/07/18 | 300,000 | 294,195 | ||||||
1.000% due 03/08/17 | 3,000,000 | 3,009,993 | ||||||
1.000% due 06/29/17 | 13,200,000 | 13,164,835 | ||||||
1.000% due 07/28/17 | 7,300,000 | 7,274,421 | ||||||
1.000% due 09/29/17 | 6,300,000 | 6,255,869 | ||||||
1.250% due 05/12/17 | 700,000 | 706,073 | ||||||
3.750% due 03/27/19 | 1,200,000 | 1,310,795 | ||||||
5.500% due 08/23/17 | 900,000 | 1,029,756 | ||||||
|
| |||||||
Total U.S. Government Agency Issues | 52,130,197 | |||||||
|
| |||||||
U.S. TREASURY OBLIGATIONS - 41.2% | ||||||||
U.S. Treasury Inflation Protected Securities - 5.9% |
| |||||||
0.125% due 04/15/17 ^ ‡ | 926,775 | 953,673 | ||||||
0.125% due 04/15/18 ^ ‡ | 202,360 | 207,182 | ||||||
0.125% due 01/15/22 ^ | 206,674 | 202,654 | ||||||
0.125% due 07/15/22 ^ | 2,237,554 | 2,193,239 | ||||||
0.625% due 07/15/21 ^ | 4,254,693 | 4,384,827 | ||||||
1.125% due 01/15/21 ^ | 3,314,489 | 3,520,869 | ||||||
1.250% due 07/15/20 ^ | 750,722 | 809,724 | ||||||
1.375% due 01/15/20 ^ | 324,474 | 351,015 | ||||||
1.750% due 01/15/28 ^ | 3,572,576 | 3,961,651 | ||||||
2.000% due 01/15/26 ^ | 2,946,025 | 3,358,698 | ||||||
2.375% due 01/15/25 ^ | 4,839,159 | �� | 5,704,536 | |||||
2.375% due 01/15/27 ^ | 6,146,887 | 7,303,750 | ||||||
3.625% due 04/15/28 ^ | 723,035 | 983,977 | ||||||
|
| |||||||
33,935,795 | ||||||||
|
| |||||||
U.S. Treasury Notes - 35.3% | ||||||||
0.095% due 01/31/16 § ‡ | 11,600,000 | 11,593,968 | ||||||
0.500% due 07/31/17 | 900,000 | 882,985 | ||||||
0.625% due 10/15/16 | 2,400,000 | 2,396,532 | ||||||
0.625% due 11/15/16 | 3,100,000 | 3,091,887 | ||||||
0.625% due 12/15/16 | 21,600,000 | 21,521,527 | ||||||
0.625% due 02/15/17 | 11,400,000 | 11,329,195 | ||||||
0.625% due 05/31/17 | 3,100,000 | 3,064,883 | ||||||
0.625% due 08/31/17 | 900,000 | 884,988 | ||||||
0.750% due 01/15/17 | 24,000,000 | 23,970,000 | ||||||
0.750% due 03/15/17 | 15,100,000 | 15,046,320 | ||||||
0.750% due 12/31/17 | 700,000 | 686,574 | ||||||
0.750% due 02/28/18 | 6,300,000 | 6,157,513 | ||||||
0.750% due 03/31/18 | 15,600,000 | 15,219,142 | ||||||
0.875% due 09/15/16 | 1,000,000 | 1,005,742 | ||||||
0.875% due 01/31/17 | 18,800,000 | 18,827,899 | ||||||
0.875% due 02/28/17 | 2,000,000 | 2,000,782 | ||||||
0.875% due 04/30/17 | 3,800,000 | 3,792,430 | ||||||
1.000% due 03/31/17 | 400,000 | 401,109 | ||||||
1.000% due 05/31/18 | 10,000,000 | 9,820,700 | ||||||
1.250% due 11/30/18 | 7,100,000 | 6,978,526 | ||||||
1.500% due 07/31/16 | 700,000 | 714,984 | ||||||
1.500% due 08/31/18 ‡ | 11,100,000 | 11,082,218 | ||||||
1.500% due 01/31/19 | 7,900,000 | 7,833,656 | ||||||
1.500% due 02/28/19 | 10,000,000 | 9,903,910 | ||||||
1.625% due 03/31/19 | 15,900,000 | 15,824,841 | ||||||
3.000% due 02/28/17 | 200,000 | 212,305 | ||||||
3.125% due 01/31/17 | 100,000 | 106,469 | ||||||
3.250% due 03/31/17 | 500,000 | 534,922 | ||||||
|
| |||||||
204,886,007 | ||||||||
|
| |||||||
Total U.S. Treasury Obligations | 238,821,802 | |||||||
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-15
PACIFIC LIFE FUNDS
PL MANAGED BOND FUND
Schedule of Investments (Continued)
March 31, 2014
Principal | | |||||||
FOREIGN GOVERNMENT BONDS & NOTES - 8.2% |
| |||||||
Autonomous Community of Valencia Spain (Spain) | EUR 100,000 | $143,045 | ||||||
Italy Buoni Poliennali del Tesoro (Italy) | ||||||||
2.250% due 05/15/16 | 1,000,000 | 1,417,499 | ||||||
2.750% due 12/01/15 | 1,800,000 | 2,564,790 | ||||||
3.000% due 06/15/15 | 2,100,000 | 2,975,313 | ||||||
3.000% due 11/01/15 | 2,100,000 | 2,997,083 | ||||||
3.750% due 08/01/15 | 2,000,000 | 2,866,563 | ||||||
3.750% due 04/15/16 | 1,800,000 | 2,630,926 | ||||||
3.750% due 08/01/16 | 3,900,000 | 5,720,498 | ||||||
4.500% due 07/15/15 | 4,400,000 | 6,359,078 | ||||||
4.750% due 09/15/16 | 200,000 | 300,543 | ||||||
Italy Certificati di Credito del Tesoro (Italy) | ||||||||
0.942% due 12/31/15 | 300,000 | 407,658 | ||||||
1.738% due 06/30/15 | 1,700,000 | 2,322,766 | ||||||
Province of Ontario (Canada) | ||||||||
1.650% due 09/27/19 | $200,000 | 194,135 | ||||||
3.000% due 07/16/18 | 100,000 | 105,177 | ||||||
3.150% due 06/02/22 | CAD 1,600,000 | 1,460,320 | ||||||
5.500% due 06/02/18 | 100,000 | 103,052 | ||||||
Province of Quebec (Canada) | ||||||||
3.500% due 07/29/20 | $600,000 | 631,777 | ||||||
4.250% due 12/01/21 | CAD 900,000 | 886,909 | ||||||
Spain Government (Spain) | ||||||||
3.150% due 01/31/16 | EUR 2,000,000 | 2,878,378 | ||||||
3.250% due 04/30/16 | 200,000 | 289,446 | ||||||
3.300% due 07/30/16 | 4,200,000 | 6,106,933 | ||||||
3.750% due 10/31/15 | 1,600,000 | 2,310,607 | ||||||
4.000% due 07/30/15 | 1,400,000 | 2,014,162 | ||||||
|
| |||||||
Total Foreign Government Bonds & Notes | 47,686,658 | |||||||
|
| |||||||
MUNICIPAL BONDS - 2.6% | ||||||||
American Municipal Power Inc OH ‘B’ | $1,000,000 | 1,434,450 | ||||||
Buckeye Tobacco Settlement Financing | 800,000 | 646,552 | ||||||
City of North Las Vegas NV | 900,000 | 695,457 | ||||||
County of Clark Airport System Revenue NV ‘C’ | 200,000 | 263,534 | ||||||
Los Angeles Unified School District CA ‘A1’ | 400,000 | 429,296 | ||||||
New Jersey Economic Development | 4,100,000 | 3,538,382 | ||||||
North Carolina Turnpike Authority ‘B’ | 100,000 | 108,962 | ||||||
Southern California Public Power Authority | 1,600,000 | 1,801,312 | ||||||
State of California | ||||||||
7.500% due 04/01/34 | 100,000 | 134,980 | ||||||
7.600% due 11/01/40 | 1,400,000 | 1,971,606 | ||||||
Tobacco Settlement Finance Authority of WV ‘A’ | 800,000 | 636,536 | ||||||
University of Arizona | 2,700,000 | 2,979,045 | ||||||
University of California | 500,000 | 554,095 | ||||||
|
| |||||||
Total Municipal Bonds | 15,194,207 | |||||||
|
|
Principal | | |||||||
SHORT-TERM INVESTMENTS - 6.9% | ||||||||
U. S. Government Agency Issues - 5.6% | ||||||||
Fannie Mae | $10,400,000 | $10,399,563 | ||||||
Federal Home Loan Bank | 4,200,000 | 4,199,857 | ||||||
0.085% due 05/07/14 | 13,600,000 | 13,599,595 | ||||||
0.095% due 04/09/14 | 4,300,000 | 4,299,909 | ||||||
|
| |||||||
32,498,924 | ||||||||
|
| |||||||
Repurchase Agreements - 1.0% | ||||||||
Barclays PLC | 3,400,000 | 3,400,000 | ||||||
Barclays PLC | 2,200,000 | 2,200,000 | ||||||
|
| |||||||
5,600,000 | ||||||||
|
| |||||||
Shares | ||||||||
Money Market Fund - 0.3% | ||||||||
BlackRock Liquidity Funds Treasury | 2,054,821 | 2,054,821 | ||||||
|
| |||||||
Total Short-Term Investments | 40,153,745 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 121.4% | 703,750,747 | |||||||
OTHER ASSETS & LIABILITIES, NET - (21.4%) |
| (123,997,795 | ) | |||||
|
| |||||||
NET ASSETS - 100.0% | $579,752,952 | |||||||
|
|
Notes to Schedule of Investments
(a) | As of March 31, 2014, the fund was diversified as a percentage of net assets as follows: |
U.S. Treasury Obligations | 41.2% | |||
Mortgage-Backed Securities | 35.9% | |||
Corporate Bonds & Notes | 13.1% | |||
U.S. Government Agency Issues | 9.0% | |||
Foreign Government Bonds & Notes | 8.2% | |||
Short-Term Investments | 6.9% | |||
Asset-Backed Securities | 4.5% | |||
Others (each less than 3.0%) | 2.6% | |||
|
| |||
121.4% | ||||
Other Assets & Liabilities, Net | (21.4% | ) | ||
|
| |||
100.0% | ||||
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-16
PACIFIC LIFE FUNDS
PL MANAGED BOND FUND
Schedule of Investments (Continued)
March 31, 2014
(b) | As of March 31, 2014, the fund’s Standard & Poor’s quality ratings as a percentage of total fixed income investments were as follows (Unaudited): |
AAA | 0.9% | |||
A-1 (Short-Term debt only) | 5.4% | |||
AA / U.S. Government and Agency Issues | 70.4% | |||
A | 5.8% | |||
BBB | 10.7% | |||
BB | 2.0% | |||
B | 1.6% | |||
CCC | 1.2% | |||
CC | 0.1% | |||
D | 0.1% | |||
Not Rated | 1.8% | |||
|
| |||
100.0% | ||||
|
|
(c) | Investments reflect the stated coupon rate or for discounted investments or zero coupon bonds, the annualized effective yield on the date of purchase. |
(d) | Investments with a total aggregate value of $836,562 or 0.1% of the net assets were in default as of March 31, 2014. |
(e) | Open futures contracts outstanding as of March 31, 2014 were as follows: |
Long Futures Outstanding | Number of Contracts | Unrealized Appreciation (Depreciation) | ||||||
Euribor (03/15) | 16 | $2,234 | ||||||
Euribor (06/15) | 16 | 3,784 | ||||||
Euribor (09/15) | 16 | 5,403 | ||||||
Euribor (12/15) | 16 | (125 | ) | |||||
Eurodollar (03/15) | 13 | 3,716 | ||||||
Eurodollar (06/15) | 432 | (52,954 | ) | |||||
Eurodollar (09/15) | 461 | 4,914 | ||||||
Eurodollar (12/15) | 1,041 | (413,258 | ) | |||||
Eurodollar (03/16) | 314 | (167,276 | ) | |||||
Eurodollar (06/16) | 53 | (35,841 | ) | |||||
Eurodollar (09/16) | 27 | (31,120 | ) | |||||
U.S. Treasury 5-Year Notes (06/14) | 487 | (369,478 | ) | |||||
U.S. Treasury 10-Year Notes (06/14) | 89 | (38,975 | ) | |||||
|
| |||||||
Total Futures Contracts | ($1,088,976 | ) | ||||||
|
|
(f) | The average amount of borrowings by the fund on sale-buyback financing transactions (See Note 4 in Notes to Financial Statements) outstanding during the year ended March 31, 2014 was $747,023 at a weighted average interest rate of 0.042%. |
(g) | Forward foreign currency contracts outstanding as of March 31, 2014 were as follows: |
Currency Purchased | Currency Sold | Expiration | Counterparty | Unrealized Appreciation (Depreciation) | ||||||||||||||||
EUR | 34,351,000 | USD | 47,325,373 | 04/14 | RBS | ($1,682 | ) | |||||||||||||
GBP | 1,024,000 | USD | 1,698,509 | 06/14 | BRC | 7,707 | ||||||||||||||
MXN | 10,704,400 | USD | 800,000 | 05/14 | DUB | 17,108 | ||||||||||||||
MXN | 17,394,130 | USD | 1,300,000 | 05/14 | HSB | 27,760 | ||||||||||||||
USD | 2,610,740 | CAD | 2,898,000 | 06/14 | CIT | (5,792 | ) | |||||||||||||
USD | 14,936,947 | EUR | 10,857,000 | 04/14 | BRC | (20,211 | ) | |||||||||||||
USD | 16,126,701 | EUR | 11,625,000 | 04/14 | BRC | 111,507 | ||||||||||||||
USD | 126,735 | EUR | 100,000 | 04/14 | CIT | (11,030 | ) | |||||||||||||
USD | 13,423,597 | EUR | 9,681,000 | 04/14 | DUB | 86,557 | ||||||||||||||
USD | 3,038,476 | EUR | 2,188,000 | 04/14 | GSC | 24,175 | ||||||||||||||
USD | 144,210 | EUR | 105,000 | 05/14 | CIT | (434 | ) | |||||||||||||
USD | 47,322,936 | EUR | 34,351,000 | 05/14 | RBS | 2,425 | ||||||||||||||
USD | 7,119,263 | GBP | 4,249,000 | 06/14 | GSC | 39,467 | ||||||||||||||
USD | 5,156,115 | JPY | 525,800,000 | 05/14 | CIT | 60,705 | ||||||||||||||
|
| |||||||||||||||||||
Total Forward Foreign Currency Contracts |
| $338,262 | ||||||||||||||||||
|
|
(h) | Transactions in written options for the year ended March 31, 2014 were as follows: |
Notional Amount in EUR | Notional Amount in $ | Premium | ||||||||||
Outstanding, March 31, 2013 | 10,000,000 | 57,300,000 | $245,423 | |||||||||
Call Options Written | — | 156,800,000 | 349,947 | |||||||||
Put Options Written | — | 216,200,000 | 1,258,682 | |||||||||
Put Options Closed | — | (6,300,000 | ) | (31,505 | ) | |||||||
Call Options Expired | — | (117,600,000 | ) | (223,689 | ) | |||||||
Put Options Expired | (10,000,000 | ) | (192,800,000 | ) | (869,716 | ) | ||||||
|
|
|
|
|
| |||||||
Outstanding, March 31, 2014 | — | 113,600,000 | $729,142 | |||||||||
|
|
|
|
|
|
(i) | Premiums received and value of written options outstanding as of March 31, 2014 were as follows: |
Credit Default Swaptions on Credit Indices – Sell Protection (1)
Description | Exercise Rate | Expiration Date | Counter- party | Notional Amount (2) | Premium | Value (3) | ||||||||||||||||
Put - OTC CDX IG 21 5Y Index | 0.900% | 06/18/14 | CIT | $100,000 | $118 | ($28 | ) | |||||||||||||||
Put - OTC CDX IG 21 5Y Index | 0.900% | 06/18/14 | JPM | 600,000 | 735 | (168 | ) | |||||||||||||||
|
|
|
| |||||||||||||||||||
$853 | ($196 | ) | ||||||||||||||||||||
|
|
|
|
(1) | If the fund is a seller of protection and a credit event occurs, as defined under the terms of that particular swaption agreement, the fund will either (i) pay to the buyer of protection an amount equal to the notional amount of the swaption and take delivery of the referenced obligation or underlying investments comprising the referenced index or (ii) pay a net settlement amount in the form of cash or investments equal to the notional amount of the swaption less the recovery value of the referenced obligation or underlying investments comprising the referenced index. The fund is only obligated if the swaption is exercised. |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-17
PACIFIC LIFE FUNDS
PL MANAGED BOND FUND
Schedule of Investments (Continued)
March 31, 2014
(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 swaption agreement. |
(3) | The quoted market prices and resulting values for credit default swaption 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 had the notional amount of the swaption agreement been closed/sold as of year end. Increasing values, in absolute terms when compared to the notional amount of the swaption, represent a deterioration of the referenced entity’s credit soundness and a greater likelihood of risk of default or other credit event occurring as defined under the terms of the agreement. |
Inflation Floor/Cap Options
Description | Strike Index | Exercise Index | Expiration Date | Counter- party | Notional Amount | Premium | Value | |||||||||||||||||
Floor - OTC U.S. CPI Urban Consumers NSA | 0.00 | Maximum of ((1 + 0.00%)10 - Inflation Adjustment) or $0 | 03/12/20 | CIT | $1,200,000 | $10,320 | ($1,141 | ) | ||||||||||||||||
Floor - OTC U.S. CPI Urban Consumers NSA | 0.00 | Maximum of ((1 + 0.00%)10 - Inflation Adjustment) or $0 | 09/29/20 | CIT | 600,000 | 7,740 | (537 | ) | ||||||||||||||||
|
|
|
| |||||||||||||||||||||
$18,060 | ($1,678 | ) | ||||||||||||||||||||||
|
|
|
|
Interest Rate Swaptions
Description | Pay/Receive Floating Rate Based on 3-Month USD-LIBOR | Exercise Rate | Expiration Date | Counter- party | Notional Amount | Premium | Value | |||||||||||||||||||
Call - OTC 5-Year Interest Rate Swap | Receive | 1.490% | 04/28/14 | MSC | $6,700,000 | $12,060 | ($338 | ) | ||||||||||||||||||
Call - OTC 5-Year Interest Rate Swap | Receive | 1.600% | 04/28/14 | MSC | 4,900,000 | 7,350 | (1,500 | ) | ||||||||||||||||||
Call - OTC 5-Year Interest Rate Swap | Receive | 1.400% | 05/06/14 | GSC | 3,300,000 | 8,498 | (61 | ) | ||||||||||||||||||
Call - OTC 5-Year Interest Rate Swap | Receive | 1.400% | 05/06/14 | MSC | 4,300,000 | 10,535 | (80 | ) | ||||||||||||||||||
Call - OTC 5-Year Interest Rate Swap | Receive | 1.500% | 05/19/14 | MSC | 3,500,000 | 4,550 | (686 | ) | ||||||||||||||||||
Call - OTC 10-Year Interest Rate Swap | Receive | 2.640% | 06/11/14 | DUB | 4,500,000 | 15,750 | (8,606 | ) | ||||||||||||||||||
Call - OTC 10-Year Interest Rate Swap | Receive | 2.750% | 06/16/14 | MSC | 3,500,000 | 21,000 | (14,722 | ) | ||||||||||||||||||
Call - OTC 5-Year Interest Rate Swap | Receive | 1.550% | 07/28/14 | JPM | 5,100,000 | 13,133 | (4,759 | ) | ||||||||||||||||||
Call - OTC 5-Year Interest Rate Swap | Receive | 1.550% | 07/28/14 | MSC | 8,000,000 | 19,200 | (7,465 | ) | ||||||||||||||||||
Call - OTC 5-Year Interest Rate Swap | Receive | 1.550% | 07/28/14 | RBS | 2,900,000 | 8,772 | (2,706 | ) | ||||||||||||||||||
Call - OTC 5-Year Interest Rate Swap | Receive | 1.560% | 09/02/14 | JPM | 6,100,000 | 10,980 | (7,573 | ) | ||||||||||||||||||
Call - OTC 10-Year Interest Rate Swap | Receive | 2.630% | 09/02/14 | RBS | 3,000,000 | 15,000 | (11,767 | ) | ||||||||||||||||||
Call - OTC 10-Year Interest Rate Swap | Receive | 2.680% | 09/02/14 | RBS | 9,000,000 | 51,300 | (43,870 | ) | ||||||||||||||||||
|
|
|
| |||||||||||||||||||||||
198,128 | (104,133 | ) | ||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||
Put - OTC 5-Year Interest Rate Swap | Pay | 2.000% | 04/28/14 | MSC | 4,900,000 | 36,995 | (8,579 | ) | ||||||||||||||||||
Put - OTC 5-Year Interest Rate Swap | Pay | 1.900% | 05/06/14 | GSC | 3,300,000 | 28,065 | (13,693 | ) | ||||||||||||||||||
Put - OTC 5-Year Interest Rate Swap | Pay | 1.800% | 05/19/14 | MSC | 3,500,000 | 22,138 | (28,054 | ) | ||||||||||||||||||
Put - OTC 10-Year Interest Rate Swap | Pay | 3.040% | 06/11/14 | DUB | 4,500,000 | 29,250 | (29,754 | ) | ||||||||||||||||||
Put - OTC 10-Year Interest Rate Swap | Pay | 3.050% | 06/16/14 | MSC | 3,500,000 | 43,575 | (23,881 | ) | ||||||||||||||||||
Put - OTC 5-Year Interest Rate Swap | Pay | 2.400% | 07/28/14 | MSC | 8,500,000 | 53,383 | (27,241 | ) | ||||||||||||||||||
Put - OTC 5-Year Interest Rate Swap | Pay | 1.860% | 09/02/14 | JPM | 6,100,000 | 89,670 | (99,365 | ) | ||||||||||||||||||
Put - OTC 10-Year Interest Rate Swap | Pay | 3.030% | 09/02/14 | RBS | 12,000,000 | 209,025 | (194,075 | ) | ||||||||||||||||||
|
|
|
| |||||||||||||||||||||||
�� | 512,101 | (424,642 | ) | |||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||
$710,229 | ($528,775 | ) | ||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||
Total Written Options | $729,142 | ($530,649 | ) | |||||||||||||||||||||||
|
|
|
|
(j) | Swap agreements outstanding as of March 31, 2014 were as follows: |
Credit Default Swaps on Corporate and Sovereign Issues – Sell Protection (1)
Referenced Obligation | Fixed Deal Receive Rate | Expiration Date | Counter- party | Implied Credit Spread at 03/31/14 (2) | Notional Amount (3) | Value | Upfront Premiums Paid (Received) | Unrealized Appreciation | ||||||||||||||||||
MetLife Inc | 1.000% | 12/20/14 | CIT | 0.087% | $1,800,000 | $12,624 | ($43,994 | ) | $56,618 | |||||||||||||||||
Mexico Government | 1.000% | 03/20/15 | BRC | 0.219% | 400,000 | 3,193 | (9,000 | ) | 12,193 | |||||||||||||||||
Mexico Government | 1.000% | 03/20/15 | CIT | 0.219% | 400,000 | 3,193 | (9,184 | ) | 12,377 | |||||||||||||||||
Mexico Government | 1.000% | 03/20/15 | DUB | 0.219% | 200,000 | 1,597 | (4,592 | ) | 6,189 | |||||||||||||||||
Brazilian Government | 1.000% | 06/20/15 | DUB | 0.383% | 1,000,000 | 7,933 | (10,975 | ) | 18,908 | |||||||||||||||||
Brazilian Government | 1.000% | 06/20/15 | HSB | 0.383% | 1,000,000 | 7,933 | (10,975 | ) | 18,908 | |||||||||||||||||
United Kingdom Index-Linked Treasury Gilt | 1.000% | 06/20/15 | GSC | 0.031% | 1,100,000 | 13,519 | 10,164 | 3,355 | ||||||||||||||||||
Brazilian Government | 1.000% | 09/20/15 | BRC | 0.514% | 1,000,000 | 7,531 | (7,735 | ) | 15,266 | |||||||||||||||||
Mexico Government | 1.000% | 09/20/15 | BRC | 0.278% | 1,000,000 | 11,048 | (7,735 | ) | 18,783 | |||||||||||||||||
Brazilian Government | 1.000% | 09/20/15 | HSB | 0.514% | 600,000 | 4,519 | (5,961 | ) | 10,480 | |||||||||||||||||
Brazilian Government | 1.000% | 09/20/15 | UBS | 0.514% | 500,000 | 3,766 | (4,731 | ) | 8,497 |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-18
PACIFIC LIFE FUNDS
PL MANAGED BOND FUND
Schedule of Investments (Continued)
March 31, 2014
Referenced Obligation | Fixed Deal Receive Rate | Expiration Date | Counter- party | | Implied Credit Spread at 03/31/14 (2) | | | Notional Amount (3) | | Value | | Upfront Premiums Paid (Received) | | | Unrealized Appreciation | | ||||||||||
MetLife Inc | 1.000% | 12/20/15 | CIT | 0.212% | $800,000 | $11,199 | ($29,083 | ) | $40,282 | |||||||||||||||||
General Electric Capital Corp | 1.000% | 12/20/15 | MSC | 0.322% | 500,000 | 6,039 | (9,796 | ) | 15,835 | |||||||||||||||||
Brazilian Government | 1.000% | 03/20/16 | CIT | 0.676% | 2,200,000 | 14,837 | (15,567 | ) | 30,404 | |||||||||||||||||
Mexico Government | 1.000% | 03/20/16 | CIT | 0.331% | 1,100,000 | 14,951 | (8,978 | ) | 23,929 | |||||||||||||||||
Mexico Government | 1.000% | 03/20/16 | DUB | 0.331% | 700,000 | 9,514 | (5,135 | ) | 14,649 | |||||||||||||||||
Berkshire Hathaway Finance Corp | 1.000% | 06/20/16 | CIT | 0.221% | 900,000 | 15,960 | (2,156 | ) | 18,116 | |||||||||||||||||
Brazilian Government | 1.000% | 06/20/16 | CIT | 0.729% | 700,000 | 4,442 | (2,363 | ) | 6,805 | |||||||||||||||||
Brazilian Government | 1.000% | 09/20/16 | GSC | 0.853% | 200,000 | 791 | (1,217 | ) | 2,008 | |||||||||||||||||
Mexico Government | 1.000% | 09/20/16 | JPM | 0.393% | 100,000 | 1,538 | 576 | 962 | ||||||||||||||||||
Indonesia Government | 1.000% | 09/20/16 | UBS | 0.740% | 100,000 | 673 | (1,578 | ) | 2,251 | |||||||||||||||||
Indonesia Government | 1.000% | 06/20/17 | DUB | 0.975% | 200,000 | 227 | (5,884 | ) | 6,111 | |||||||||||||||||
Indonesia Government | 1.000% | 06/20/17 | UBS | 0.975% | 800,000 | 909 | (24,192 | ) | 25,101 | |||||||||||||||||
MetLife Inc | 1.000% | 03/20/19 | BRC | 0.619% | 2,700,000 | 50,328 | 30,101 | 20,227 | ||||||||||||||||||
Prudential Financial | 1.000% | 03/20/19 | BRC | 0.590% | 3,100,000 | 62,219 | 49,794 | 12,425 | ||||||||||||||||||
Brazilian Government | 1.000% | 03/20/19 | CIT | 1.627% | 12,000,000 | (350,601 | ) | (463,570 | ) | 112,969 | ||||||||||||||||
JPMorgan Chase & Co | 1.000% | 03/20/19 | DUB | 0.541% | 2,300,000 | 51,556 | 42,061 | 9,495 | ||||||||||||||||||
Mexico Government | 1.000% | 03/20/19 | DUB | 0.836% | 20,700,000 | 169,632 | 110,638 | 58,994 | ||||||||||||||||||
American International Group | 1.000% | 03/20/19 | GSC | 0.642% | 2,100,000 | 36,720 | 31,661 | 5,059 | ||||||||||||||||||
Colombia Government | 1.000% | 03/20/19 | GSC | 1.040% | 1,800,000 | (2,818 | ) | (16,452 | ) | 13,634 | ||||||||||||||||
Colombia Government | 1.000% | 03/20/19 | HSB | 1.040% | 7,700,000 | (12,055 | ) | (63,012 | ) | 50,957 | ||||||||||||||||
Mexico Government | 1.000% | 03/20/19 | HSB | 0.836% | 2,200,000 | 18,028 | 10,686 | 7,342 | ||||||||||||||||||
General Electric Capital Corp | 1.000% | 03/20/19 | JPM | 0.569% | 1,800,000 | 37,866 | 28,913 | 8,953 | ||||||||||||||||||
Mexico Government | 1.000% | 03/20/19 | JPM | 0.836% | 2,000,000 | 16,390 | 10,202 | 6,188 | ||||||||||||||||||
AT&T Inc | 1.000% | 03/20/19 | MSC | 0.631% | 2,800,000 | 50,650 | 43,594 | 7,056 | ||||||||||||||||||
Brazilian Government | 1.000% | 03/20/19 | MSC | 1.627% | 2,200,000 | (64,276 | ) | (84,988 | ) | 20,712 | ||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
$221,575 | ($480,463 | ) | $702,038 | |||||||||||||||||||||||
|
|
|
|
|
|
Credit Default Swaps on Credit Indices - Sell Protection (1)
Referenced Obligation | Fixed Deal Receive Rate | Expiration Date | Counterparty/ Exchange | Notional Amount (3) | Value (4) | Upfront Premiums Paid (Received) | Unrealized Appreciation (Depreciation) | |||||||||||||||
CDX EM 13 5Y | 5.000% | 06/20/15 | BRC | $1,700,000 | $42,828 | $99,450 | ($56,622 | ) | ||||||||||||||
CDX EM 13 5Y | 5.000% | 06/20/15 | DUB | 900,000 | 22,674 | 117,500 | (94,826 | ) | ||||||||||||||
CDX EM 13 5Y | 5.000% | 06/20/15 | HSB | 1,200,000 | 30,232 | 135,550 | (105,318 | ) | ||||||||||||||
CDX EM 13 5Y | 5.000% | 06/20/15 | MSC | 900,000 | 22,674 | 101,250 | (78,576 | ) | ||||||||||||||
CDX IG 9 10Y | 0.548% | 12/20/17 | GSC | 96,450 | 1,549 | 0.00 | 1,549 | |||||||||||||||
CDX IG 22 5Y | 1.000% | 06/20/19 | ICE | 3,900,000 | 60,651 | 57,653 | 2,998 | |||||||||||||||
iTraxx Europe 21 5Y | 1.000% | 06/20/19 | ICE | EUR 5,050,000 | 85,475 | 67,491 | 17,984 | |||||||||||||||
CDX HY 22 5Y | 5.000% | 06/20/19 | ICE | $14,400,000 | 1,087,273 | 1,012,500 | 74,773 | |||||||||||||||
|
|
|
|
|
| |||||||||||||||||
$1,353,356 | $1,591,394 | ($238,038 | ) | |||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||
$1,574,931 | $1,110,931 | $464,000 | ||||||||||||||||||||
|
|
|
|
|
|
(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 investments comprising the referenced index or (ii) pay a net settlement amount in the form of cash or investments equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying investments comprising the referenced index. |
(2) | An implied credit spread is the spread in yield between a U.S. Treasury security and the referenced obligation or underlying investment that are identical in all respects except for the quality rating. Implied credit spreads, represented in absolute terms, utilized in determining the value of credit default swap agreements on corporate and sovereign issues of an emerging country as of year end serve as an indicator of the current status of the payment/performance risk and represent the likelihood of 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, in comparison to narrower credit spreads, represent a deterioration of the referenced entity’s credit soundness and a greater likelihood of risk of default or other credit event occurring as defined under the terms of the agreement. A credit spread identified as “Defaulted” indicates a credit event has occurred for the referenced entity or obligation. |
(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 quoted market 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 had the notional amount of the swap agreement been closed/sold as of year end. Increasing 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 of risk of default or other credit event occurring as defined under the terms of the agreement. |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-19
PACIFIC LIFE FUNDS
PL MANAGED BOND FUND
Schedule of Investments (Continued)
March 31, 2014
Interest Rate Swaps
Floating Rate Index | Counterparty/ Exchange | Pay/Receive Floating Rate | Fixed Rate | Expiration Date | Notional Amount | Value | Upfront Premiums Paid (Received) | Unrealized Appreciation (Depreciation) | ||||||||||||||||||||
3-Month USD-LIBOR | CME | Pay | 1.500% | 03/18/16 | $53,300,000 | $375,692 | $410,773 | ($35,081 | ) | |||||||||||||||||||
28-Day MXN TIIE | BRC | Pay | 5.600% | 09/06/16 | MXN 1,100,000 | 2,339 | 552 | 1,787 | ||||||||||||||||||||
28-Day MXN TIIE | HSB | Pay | 5.600% | 09/06/16 | 2,100,000 | 4,465 | 820 | 3,645 | ||||||||||||||||||||
28-Day MXN TIIE | MSC | Pay | 5.600% | 09/06/16 | 1,400,000 | 2,907 | 280 | 2,627 | ||||||||||||||||||||
28-Day MXN TIIE | GSC | Pay | 8.170% | 11/04/16 | 1,200,000 | 8,349 | 1,757 | 6,592 | ||||||||||||||||||||
3-Month USD-LIBOR | CME | Pay | 1.500% | 12/16/16 | $47,200,000 | (54,861 | ) | 31,173 | (86,034 | ) | ||||||||||||||||||
28-Day MXN TIIE | BRC | Pay | 5.500% | 09/13/17 | MXN 13,000,000 | 21,460 | (10,195 | ) | 31,655 | |||||||||||||||||||
28-Day MXN TIIE | HSB | Pay | 5.500% | 09/13/17 | 5,000,000 | 8,254 | (1,920 | ) | 10,174 | |||||||||||||||||||
28-Day MXN TIIE | MSC | Pay | 5.500% | 09/13/17 | 3,000,000 | 4,952 | (1,453 | ) | 6,405 | |||||||||||||||||||
3-Month USD-LIBOR | CME | Pay | 3.000% | 09/21/17 | $85,600,000 | 522,165 | 725,093 | (202,928 | ) | |||||||||||||||||||
1-Day USD Federal Funds | CME | Pay | 1.000% | 10/15/17 | 35,300,000 | (464,886 | ) | (41,606 | ) | (423,280 | ) | |||||||||||||||||
28-Day MXN TIIE | DUB | Pay | 5.700% | 01/18/19 | MXN 10,000,000 | 9,838 | (4,167 | ) | 14,005 | |||||||||||||||||||
28-Day MXN TIIE | GSC | Pay | 5.700% | 01/18/19 | 3,000,000 | 2,804 | (871 | ) | 3,675 | |||||||||||||||||||
28-Day MXN TIIE | JPM | Pay | 5.700% | 01/18/19 | 3,000,000 | 2,952 | (1,022 | ) | 3,974 | |||||||||||||||||||
28-Day MXN TIIE | BRC | Pay | 6.000% | 09/02/22 | 27,000,000 | (50,489 | ) | (14,093 | ) | (36,396 | ) | |||||||||||||||||
6-Month JPY-LIBOR | CME | Receive | 1.000% | 09/18/23 | JPY 8,000,000 | (1,670 | ) | 433 | (2,103 | ) | ||||||||||||||||||
3-Month USD-LIBOR | CME | Receive | 2.750% | 06/19/43 | $16,000,000 | 2,311,671 | 1,026,733 | 1,284,938 | ||||||||||||||||||||
3-Month USD-LIBOR | CME | Receive | 3.500% | 12/18/43 | 16,600,000 | (28,283 | ) | 927,238 | (955,521 | ) | ||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||
$2,677,659 | $3,049,525 | ($371,866 | ) | |||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||
Total Swap Agreements | $4,252,590 | $4,160,456 | $92,134 | |||||||||||||||||||||||||
|
|
|
|
|
|
(k) | As of March 31, 2014, investments with a total aggregate value of $3,106,135 were fully or partially segregated with the broker(s)/custodian as collateral for open futures contracts, forward foreign currency contracts, option contracts, and swap contracts. |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-20
PACIFIC LIFE FUNDS
PL MANAGED BOND FUND
Schedule of Investments (Continued)
March 31, 2014
(l) | Fair Value Measurements |
The following is a summary of the fund’s investments as categorized under the three-tier hierarchy of inputs used in valuing the fund’s assets and liabilities (See Note 3D in Notes to Financial Statements) as of March 31, 2014:
Total Value at March 31, 2014 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||||
Assets | Corporate Bonds & Notes | $75,912,877 | $- | $75,912,877 | $- | |||||||||||||
Mortgage-Backed Securities | 207,793,741 | - | 207,793,741 | - | ||||||||||||||
Asset-Backed Securities | 26,057,520 | - | 26,057,520 | - | ||||||||||||||
U.S. Government Agency Issues | 52,130,197 | - | 52,130,197 | - | ||||||||||||||
U.S. Treasury Obligations | 238,821,802 | - | 238,821,802 | - | ||||||||||||||
Foreign Government Bonds & Notes | 47,686,658 | - | 47,686,658 | - | ||||||||||||||
Municipal Bonds | 15,194,207 | - | 15,194,207 | - | ||||||||||||||
Short-Term Investments | 40,153,745 | 2,054,821 | 38,098,924 | - | ||||||||||||||
Derivatives: | ||||||||||||||||||
Credit Contracts | ||||||||||||||||||
Swaps | 2,004,681 | - | 2,004,681 | - | ||||||||||||||
Foreign Currency Contracts | ||||||||||||||||||
Forward Foreign Currency Contracts | 377,411 | - | 377,411 | - | ||||||||||||||
Interest Rate Contracts | ||||||||||||||||||
Futures | 20,051 | 20,051 | - | - | ||||||||||||||
Swaps | 3,277,848 | - | 3,277,848 | - | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Interest Rate Contracts | 3,297,899 | 20,051 | 3,277,848 | - | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Assets - Derivatives | 5,679,991 | 20,051 | 5,659,940 | - | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Assets | 709,430,738 | 2,074,872 | 707,355,866 | - | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Liabilities | Derivatives: | |||||||||||||||||
Credit Contracts | ||||||||||||||||||
Written Options | (196 | ) | - | (196 | ) | - | ||||||||||||
Swaps | (429,750 | ) | - | (429,750 | ) | - | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Credit Contracts | (429,946 | ) | - | (429,946 | ) | - | ||||||||||||
Foreign Currency Contracts | ||||||||||||||||||
Forward Foreign Currency Contracts | (39,149 | ) | - | (39,149 | ) | - | ||||||||||||
Interest Rate Contracts | ||||||||||||||||||
Futures | (1,109,027 | ) | (1,109,027 | ) | - | - | ||||||||||||
Written Options | (530,453 | ) | - | (528,775 | ) | (1,678 | ) | |||||||||||
Swaps | (600,189 | ) | - | (600,189 | ) | - | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Interest Rate Contracts | (2,239,669 | ) | (1,109,027 | ) | (1,128,964 | ) | (1,678 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Liabilities - Derivatives | (2,708,764 | ) | (1,109,027 | ) | (1,598,059 | ) | (1,678 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Liabilities | (2,708,764 | ) | (1,109,027 | ) | (1,598,059 | ) | (1,678 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total | $706,721,974 | $965,845 | $705,757,807 | ($1,678 | ) | |||||||||||||
|
|
|
|
|
|
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-21
PACIFIC LIFE FUNDS
PL SHORT DURATION BOND FUND
Schedule of Investments
March 31, 2014
Principal |
| |||||||
CORPORATE BONDS & NOTES - 53.3% | ||||||||
Consumer Discretionary - 5.1% | ||||||||
AutoZone Inc | ||||||||
1.300% due 01/13/17 | $345,000 | $344,544 | ||||||
5.500% due 11/15/15 | 110,000 | 118,285 | ||||||
5.750% due 01/15/15 | 90,000 | 93,593 | ||||||
Brinker International Inc | 90,000 | 89,165 | ||||||
Carnival Corp (Panama) | 225,000 | 226,470 | ||||||
Cox Communications Inc | 161,000 | 166,443 | ||||||
DIRECTV Holdings LLC | ||||||||
1.750% due 01/15/18 | 340,000 | 335,081 | ||||||
2.400% due 03/15/17 | 835,000 | 853,964 | ||||||
3.550% due 03/15/15 | 200,000 | 205,539 | ||||||
DISH DBS Corp | 500,000 | 523,125 | ||||||
Dollar General Corp | 340,000 | 363,978 | ||||||
DR Horton Inc | 325,000 | 346,125 | ||||||
General Motors Co | 450,000 | 460,688 | ||||||
GLP Capital LP | 525,000 | 540,094 | ||||||
Hasbro Inc | 135,000 | 135,859 | ||||||
NBCUniversal Enterprise Inc | 290,000 | 291,991 | ||||||
NBCUniversal Media LLC | 560,000 | 560,000 | ||||||
Newell Rubbermaid Inc | 100,000 | 101,248 | ||||||
Omnicom Group Inc | 670,000 | 733,333 | ||||||
Pinnacle Entertainment Inc | 295,000 | 320,813 | ||||||
The Interpublic Group of Cos Inc | ||||||||
2.250% due 11/15/17 | 625,000 | 631,544 | ||||||
6.250% due 11/15/14 | 662,000 | 684,343 | ||||||
Thomson Reuters Corp (Canada) | ||||||||
0.875% due 05/23/16 | 255,000 | 254,213 | ||||||
1.300% due 02/23/17 | 200,000 | 199,162 | ||||||
Time Warner Cable Inc | ||||||||
7.500% due 04/01/14 | 375,000 | 375,000 | ||||||
8.250% due 04/01/19 | 495,000 | 617,572 | ||||||
8.750% due 02/14/19 | 495,000 | 627,000 | ||||||
Univision Communications Inc | 310,000 | 334,025 | ||||||
Viacom Inc | 105,000 | 106,316 | ||||||
Whirlpool Corp | ||||||||
1.350% due 03/01/17 | 145,000 | 144,799 | ||||||
8.600% due 05/01/14 | 435,000 | 437,680 | ||||||
WMG Acquisition Corp | 385,000 | 438,515 | ||||||
|
| |||||||
11,660,507 | ||||||||
|
| |||||||
Consumer Staples - 2.6% | ||||||||
Avon Products Inc | 195,000 | 198,262 | ||||||
BAT International Finance PLC (United Kingdom) | 710,000 | 715,781 | ||||||
Bunge Ltd Finance Corp | ||||||||
3.200% due 06/15/17 | 730,000 | 759,350 | ||||||
4.100% due 03/15/16 | 255,000 | 269,204 |
Principal |
| |||||||
Coca-Cola Amatil Ltd (Australia) | $705,000 | $715,638 | ||||||
CVS Caremark Corp | 245,000 | 246,604 | ||||||
Imperial Tobacco Finance PLC (United Kingdom) | 755,000 | 749,824 | ||||||
Kraft Foods Group Inc | 315,000 | 318,641 | ||||||
Pernod Ricard SA (France) | 510,000 | 528,967 | ||||||
Reynolds American Inc | 125,000 | 124,959 | ||||||
SABMiller Holdings Inc | 530,000 | 535,163 | ||||||
The Kroger Co | 180,000 | 180,309 | ||||||
Wm Wrigley Jr Co | ||||||||
1.400% due 10/21/16 ~ | 110,000 | 110,548 | ||||||
2.000% due 10/20/17 ~ | 525,000 | 526,818 | ||||||
|
| |||||||
5,980,068 | ||||||||
|
| |||||||
Energy - 10.8% | ||||||||
Anadarko Petroleum Corp | ||||||||
5.750% due 06/15/14 | 465,000 | 469,763 | ||||||
5.950% due 09/15/16 | 190,000 | 210,937 | ||||||
6.375% due 09/15/17 | 345,000 | 395,339 | ||||||
BG Energy Capital PLC (United Kingdom) | 755,000 | 786,631 | ||||||
Cameron International Corp | 85,000 | 84,885 | ||||||
Canadian Natural Resources Ltd (Canada) | ||||||||
1.450% due 11/14/14 | 540,000 | 543,273 | ||||||
5.700% due 05/15/17 | 455,000 | 512,545 | ||||||
Chesapeake Energy Corp | 375,000 | 379,688 | ||||||
CNOOC Finance Ltd (United Kingdom) | 208,000 | 208,059 | ||||||
Continental Resources Inc | 250,000 | 269,688 | ||||||
DCP Midstream LLC | 365,000 | 384,923 | ||||||
DCP Midstream Operating LP | ||||||||
2.500% due 12/01/17 | 625,000 | 636,004 | ||||||
2.700% due 04/01/19 | 20,000 | 19,981 | ||||||
3.250% due 10/01/15 | 210,000 | 216,670 | ||||||
Diamond Offshore Drilling Inc | 284,000 | 289,116 | ||||||
Ecopetrol SA (Colombia) | 100,000 | 106,250 | ||||||
Enbridge Energy Partners LP | 445,000 | 495,048 | ||||||
Energy Transfer Partners LP | ||||||||
5.950% due 02/01/15 | 810,000 | 844,675 | ||||||
6.700% due 07/01/18 | 195,000 | 226,752 | ||||||
8.500% due 04/15/14 | 185,000 | 185,485 | ||||||
Enlink Midstream Partners LP | 85,000 | 85,390 | ||||||
Ensco PLC (United Kingdom) | 875,000 | 912,902 | ||||||
Enterprise Products Operating LLC | ||||||||
1.250% due 08/13/15 | 370,000 | 372,594 | ||||||
5.600% due 10/15/14 | 316,000 | 324,519 | ||||||
Florida Gas Transmission Co LLC | 520,000 | 538,811 | ||||||
Gazprom OAO (Luxembourg) | 660,000 | 682,275 | ||||||
Kinder Morgan Energy Partners LP | ||||||||
3.500% due 03/01/16 | 175,000 | 182,408 | ||||||
5.125% due 11/15/14 | 285,000 | 292,832 |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-22
PACIFIC LIFE FUNDS
PL SHORT DURATION BOND FUND
Schedule of Investments (Continued)
March 31, 2014
Principal |
| |||||||
Magellan Midstream Partners LP | $225,000 | $227,143 | ||||||
Marathon Oil Corp | 740,000 | 741,724 | ||||||
Murphy Oil Corp | 840,000 | 854,790 | ||||||
Nabors Industries Inc | 150,000 | 153,562 | ||||||
Noble Holding International Ltd (Cayman) | ||||||||
2.500% due 03/15/17 | 65,000 | 66,191 | ||||||
3.050% due 03/01/16 | 415,000 | 429,051 | ||||||
3.450% due 08/01/15 | 110,000 | 113,647 | ||||||
ONEOK Partners LP | ||||||||
3.200% due 09/15/18 | 40,000 | 41,309 | ||||||
3.250% due 02/01/16 | 640,000 | 665,760 | ||||||
Origin Energy Finance Ltd (Australia) | 740,000 | 754,264 | ||||||
Petrobras Global Finance BV (Netherlands) | ||||||||
2.000% due 05/20/16 | 410,000 | 407,438 | ||||||
3.250% due 03/17/17 | 535,000 | 538,079 | ||||||
Petrohawk Energy Corp | 690,000 | 733,815 | ||||||
Petroleos Mexicanos (Mexico) | 80,000 | 82,120 | ||||||
Phillips 66 | 290,000 | 293,457 | ||||||
Pioneer Natural Resources Co | 860,000 | 949,219 | ||||||
Plains All American Pipeline LP | 1,095,000 | 1,145,417 | ||||||
Rosetta Resources Inc | 345,000 | 362,897 | ||||||
Rowan Cos Inc | 120,000 | 130,781 | ||||||
SESI LLC | 305,000 | 341,600 | ||||||
Spectra Energy Partners LP | 185,000 | 188,833 | ||||||
Talisman Energy Inc (Canada) | 455,000 | 474,313 | ||||||
Targa Resources Partners LP | 345,000 | 370,875 | ||||||
Tennessee Gas Pipeline Co LLC | 580,000 | 650,309 | ||||||
TransCanada PipeLines Ltd (Canada) | 705,000 | 710,414 | ||||||
Transocean Inc (Cayman) | ||||||||
2.500% due 10/15/17 | 785,000 | 790,868 | ||||||
4.950% due 11/15/15 | 155,000 | 164,635 | ||||||
5.050% due 12/15/16 | 130,000 | 141,503 | ||||||
Williams Partners LP | 890,000 | 914,231 | ||||||
Woodside Finance Ltd (Australia) | 705,000 | 721,207 | ||||||
|
| |||||||
24,816,895 | ||||||||
|
| |||||||
Financials - 19.5% | ||||||||
ACE INA Holdings Inc | 710,000 | 717,625 | ||||||
Aflac Inc | 75,000 | 78,166 | ||||||
AIA Group Ltd (Hong Kong) | 200,000 | 197,985 | ||||||
Ally Financial Inc | 575,000 | 582,188 | ||||||
American Express Co | 810,000 | 812,952 | ||||||
American International Group Inc | 175,000 | 179,231 |
Principal |
| |||||||
American Tower Corp REIT | $1,095,000 | $1,134,722 | ||||||
ANZ International Ltd (New Zealand) | 625,000 | 635,931 | ||||||
AXIS Specialty Finance PLC (United Kingdom) | 185,000 | 184,997 | ||||||
Bank of America Corp | ||||||||
1.054% due 03/22/16 § | 225,000 | 226,672 | ||||||
1.250% due 01/11/16 | 365,000 | 367,104 | ||||||
1.500% due 10/09/15 | 1,225,000 | 1,236,396 | ||||||
Banque Federative du Credit Mutuel SA (France) | ||||||||
1.700% due 01/20/17 ~ | 575,000 | 576,586 | ||||||
2.500% due 10/29/18 ~ | 575,000 | 575,490 | ||||||
Barclays Bank PLC (United Kingdom) | ||||||||
5.000% due 09/22/16 | 140,000 | 153,405 | ||||||
5.200% due 07/10/14 | 365,000 | 369,805 | ||||||
BB&T Corp | ||||||||
1.093% due 06/15/18 § | 325,000 | 328,710 | ||||||
5.200% due 12/23/15 | 445,000 | 477,136 | ||||||
Boston Properties LP REIT | 470,000 | 492,757 | ||||||
BPCE SA (France) | 570,000 | 573,512 | ||||||
Capital One Bank USA NA | 250,000 | 250,057 | ||||||
Capital One Financial Corp | ||||||||
2.125% due 07/15/14 | 135,000 | 135,631 | ||||||
2.150% due 03/23/15 | 660,000 | 670,115 | ||||||
7.375% due 05/23/14 | 275,000 | 277,682 | ||||||
CIT Group Inc | 230,000 | 236,900 | ||||||
Citigroup Inc | ||||||||
1.037% due 04/01/16 § | 820,000 | 826,016 | ||||||
1.250% due 01/15/16 | 720,000 | 722,902 | ||||||
1.300% due 11/15/16 | 170,000 | 170,038 | ||||||
CNH Capital LLC | 770,000 | 795,025 | ||||||
Daimler Finance North America LLC | 445,000 | 450,211 | ||||||
DNB Bank ASA (Norway) | 785,000 | 825,223 | ||||||
Fidelity National Financial Inc | 200,000 | 227,018 | ||||||
Fifth Third Bancorp | 310,000 | 325,419 | ||||||
Fifth Third Bank | 470,000 | 471,807 | ||||||
Ford Motor Credit Co LLC | ||||||||
1.700% due 05/09/16 | 295,000 | 298,472 | ||||||
2.750% due 05/15/15 | 640,000 | 653,258 | ||||||
3.000% due 06/12/17 | 610,000 | 634,168 | ||||||
General Electric Capital Corp | ||||||||
0.957% due 04/02/18 § | 925,000 | 934,659 | ||||||
2.375% due 06/30/15 | 625,000 | 639,555 | ||||||
Harley-Davidson Financial Services Inc | 445,000 | 446,591 | ||||||
HSBC Bank PLC (United Kingdom) | 555,000 | 557,383 | ||||||
HSBC USA Inc | 235,000 | 239,067 | ||||||
Hyundai Capital America | ||||||||
1.450% due 02/06/17 ~ | 790,000 | 786,531 | ||||||
1.625% due 10/02/15 ~ | 195,000 | 196,862 | ||||||
1.875% due 08/09/16 ~ | 230,000 | 232,753 | ||||||
Hyundai Capital Services Inc (South Korea) | ||||||||
3.500% due 09/13/17 ~ | 200,000 | 209,470 | ||||||
4.375% due 07/27/16 ~ | 525,000 | 560,706 | ||||||
IntercontinentalExchange Group Inc | 195,000 | 197,342 |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-23
PACIFIC LIFE FUNDS
PL SHORT DURATION BOND FUND
Schedule of Investments (Continued)
March 31, 2014
Principal |
| |||||||
JPMorgan Chase & Co | ||||||||
0.854% due 02/26/16 § | $440,000 | $442,318 | ||||||
2.000% due 08/15/17 | 1,125,000 | 1,141,593 | ||||||
KeyBank NA | 180,000 | 190,072 | ||||||
KeyCorp | 325,000 | 337,810 | ||||||
Kilroy Realty LP REIT | 405,000 | 431,268 | ||||||
Lloyds Bank PLC (United Kingdom) | 325,000 | 325,128 | ||||||
Marsh & McLennan Cos Inc | 235,000 | 238,370 | ||||||
Metropolitan Life Global Funding I | ||||||||
1.500% due 01/10/18 ~ | 365,000 | 356,062 | ||||||
1.700% due 06/29/15 ~ | 860,000 | 871,644 | ||||||
Morgan Stanley | ||||||||
1.087% due 01/24/19 § | 1,625,000 | 1,629,194 | ||||||
1.519% due 04/25/18 § | 645,000 | 658,222 | ||||||
National Bank of Canada (Canada) | 965,000 | 953,673 | ||||||
New York Life Global Funding | 580,000 | 601,566 | ||||||
Nissan Motor Acceptance Corp | 605,000 | 608,266 | ||||||
Nordea Bank AB (Sweden) | 1,160,000 | 1,159,052 | ||||||
PNC Bank NA | 400,000 | 401,266 | ||||||
Principal Financial Group Inc | 115,000 | 115,447 | ||||||
Principal Life Global Funding II | ||||||||
0.604% due 05/27/16 ~ § | 1,175,000 | 1,177,456 | ||||||
1.125% due 09/18/15 ~ | 560,000 | 563,356 | ||||||
Prudential Financial Inc | 705,000 | 720,428 | ||||||
Regions Bank | 370,000 | 437,595 | ||||||
Regions Financial Corp | ||||||||
5.750% due 06/15/15 | 200,000 | 210,990 | ||||||
7.750% due 11/10/14 | 205,000 | 213,658 | ||||||
Royal Bank of Scotland Group PLC (United Kingdom) | 415,000 | 423,978 | ||||||
Simon Property Group LP REIT | 515,000 | 525,886 | ||||||
Sumitomo Mitsui Banking Corp (Japan) | 280,000 | 280,292 | ||||||
Sumitomo Mitsui Trust Bank Ltd (Japan) | 720,000 | 710,316 | ||||||
SunTrust Banks Inc | 260,000 | 260,447 | ||||||
Swedbank AB (Sweden) | 1,065,000 | 1,055,612 | ||||||
The Bank of Tokyo-Mitsubishi UFJ Ltd (Japan) | 695,000 | 702,331 | ||||||
The Goldman Sachs Group Inc | ||||||||
1.600% due 11/23/15 | 554,000 | 560,011 | ||||||
6.250% due 09/01/17 | 1,085,000 | 1,240,213 | ||||||
Union Bank NA | 435,000 | 443,487 | ||||||
Ventas Realty LP | 200,000 | 201,896 | ||||||
Ventas Realty LP REIT | ||||||||
2.000% due 02/15/18 | 170,000 | 169,810 | ||||||
3.125% due 11/30/15 | 650,000 | 674,830 | ||||||
WEA Finance LLC REIT | 530,000 | 565,476 | ||||||
XLIT Ltd (Cayman) | 280,000 | 278,140 | ||||||
|
| |||||||
44,749,390 | ||||||||
|
|
Principal |
| |||||||
Health Care - 4.5% | ||||||||
AbbVie Inc | $670,000 | $676,026 | ||||||
Actavis Inc | 605,000 | 602,896 | ||||||
Aetna Inc | 745,000 | 744,253 | ||||||
Agilent Technologies Inc | 565,000 | 650,274 | ||||||
AmerisourceBergen Corp | 1,045,000 | 1,120,491 | ||||||
Catholic Health Initiatives | ||||||||
1.600% due 11/01/17 | 65,000 | 63,778 | ||||||
2.600% due 08/01/18 | 305,000 | 305,572 | ||||||
Celgene Corp | 115,000 | 116,131 | ||||||
Express Scripts Holding Co | ||||||||
2.750% due 11/21/14 | 490,000 | 497,206 | ||||||
3.125% due 05/15/16 | 475,000 | 495,157 | ||||||
Gilead Sciences Inc | 570,000 | 576,981 | ||||||
Humana Inc | 250,000 | 277,849 | ||||||
Life Technologies Corp | ||||||||
3.500% due 01/15/16 | 235,000 | 244,968 | ||||||
4.400% due 03/01/15 | 425,000 | 438,855 | ||||||
McKesson Corp | ||||||||
0.950% due 12/04/15 | 185,000 | 185,609 | ||||||
1.292% due 03/10/17 | 370,000 | 369,399 | ||||||
Perrigo Co PLC (Ireland) | 210,000 | 209,726 | ||||||
Thermo Fisher Scientific Inc | 370,000 | 368,071 | ||||||
UnitedHealth Group Inc | ||||||||
0.850% due 10/15/15 | 200,000 | 200,942 | ||||||
1.875% due 11/15/16 | 155,000 | 158,611 | ||||||
Warner Chilcott Co LLC | 1,090,000 | 1,164,938 | ||||||
WellPoint Inc | ||||||||
1.250% due 09/10/15 | 300,000 | 302,133 | ||||||
5.250% due 01/15/16 | 470,000 | 505,202 | ||||||
|
| |||||||
10,275,068 | ||||||||
|
| |||||||
Industrials - 3.2% | ||||||||
Aircastle Ltd (Bermuda) | 330,000 | 355,757 | ||||||
Eaton Corp | 265,000 | 264,003 | ||||||
ERAC USA Finance LLC | ||||||||
1.400% due 04/15/16 ~ | 330,000 | 331,845 | ||||||
2.750% due 03/15/17 ~ | 175,000 | 180,681 | ||||||
2.800% due 11/01/18 ~ | 50,000 | 50,971 | ||||||
5.600% due 05/01/15 ~ | 135,000 | 141,892 | ||||||
6.375% due 10/15/17 ~ | 190,000 | 218,932 | ||||||
Florida East Coast Railway Corp | 290,000 | 303,413 | ||||||
GATX Corp | ||||||||
1.250% due 03/04/17 | 220,000 | 218,943 | ||||||
2.375% due 07/30/18 | 110,000 | 109,886 | ||||||
3.500% due 07/15/16 | 360,000 | 378,914 | ||||||
Heathrow Funding Ltd (United Kingdom) | 610,000 | 617,583 | ||||||
International Lease Finance Corp | 405,000 | 410,063 | ||||||
JB Hunt Transport Services Inc | 105,000 | 104,271 | ||||||
Kansas City Southern de Mexico SA de CV (Mexico) | 250,000 | 236,249 |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-24
PACIFIC LIFE FUNDS
PL SHORT DURATION BOND FUND
Schedule of Investments (Continued)
March 31, 2014
Principal |
| |||||||
Norfolk Southern Corp | $930,000 | $1,006,642 | ||||||
Penske Truck Leasing Co LP | ||||||||
2.500% due 07/11/14 ~ | 95,000 | 95,463 | ||||||
2.500% due 03/15/16 ~ | 430,000 | 440,983 | ||||||
2.875% due 07/17/18 ~ | 150,000 | 152,578 | ||||||
3.125% due 05/11/15 ~ | 140,000 | 143,495 | ||||||
Roper Industries Inc | ||||||||
1.850% due 11/15/17 | 105,000 | 105,555 | ||||||
2.050% due 10/01/18 | 270,000 | 265,884 | ||||||
Southwest Airlines Co | ||||||||
5.250% due 10/01/14 | 315,000 | 321,981 | ||||||
5.750% due 12/15/16 | 175,000 | 194,450 | ||||||
USG Corp | 435,000 | 466,538 | ||||||
Waste Management Inc | 260,000 | 273,653 | ||||||
|
| |||||||
7,390,625 | ||||||||
|
| |||||||
Information Technology - 1.5% | ||||||||
Arrow Electronics Inc | 270,000 | 278,758 | ||||||
Broadcom Corp | 200,000 | 204,925 | ||||||
Fiserv Inc | 740,000 | 772,457 | ||||||
Hewlett-Packard Co | ||||||||
1.785% due 09/19/14 § | 175,000 | 176,163 | ||||||
2.350% due 03/15/15 | 220,000 | 223,534 | �� | |||||
2.625% due 12/09/14 | 300,000 | 304,091 | ||||||
Oracle Corp | 860,000 | 865,877 | ||||||
Xerox Corp | ||||||||
1.056% due 05/16/14 § | 400,000 | 400,330 | ||||||
2.950% due 03/15/17 | 70,000 | 72,839 | ||||||
|
| |||||||
3,298,974 | ||||||||
|
| |||||||
Materials - 1.4% | ||||||||
Ashland Inc | 525,000 | 538,125 | ||||||
Eastman Chemical Co | 230,000 | 234,586 | ||||||
Goldcorp Inc (Canada) | 230,000 | 227,629 | ||||||
International Paper Co | 295,000 | 307,969 | ||||||
Rio Tinto Finance USA PLC (United Kingdom) | 700,000 | 706,458 | ||||||
Rock-Tenn Co | 495,000 | 502,932 | ||||||
The Dow Chemical Co | 725,000 | 747,430 | ||||||
|
| |||||||
3,265,129 | ||||||||
|
| |||||||
Telecommunication Services - 2.2% | ||||||||
America Movil SAB de CV (Mexico) | ||||||||
2.375% due 09/08/16 | 275,000 | 284,350 | ||||||
3.625% due 03/30/15 | 200,000 | 206,600 | ||||||
CC Holdings GS V LLC | 1,050,000 | 1,051,185 | ||||||
Crown Castle Towers LLC | 320,000 | 327,399 | ||||||
GTP Acquisition Partners I LLC | ||||||||
2.364% due 05/15/18 ~ | 300,000 | 293,616 | ||||||
4.347% due 06/15/16 ~ | 190,000 | 201,484 | ||||||
SBA Tower Trust | ||||||||
2.240% due 04/15/18 ~ | 300,000 | 294,962 | ||||||
2.933% due 12/15/17 ~ | 920,000 | 933,807 | ||||||
3.598% due 04/15/18 ~ | 250,000 | 245,204 |
Principal |
| |||||||
UPC Holding BV (Netherlands) | $415,000 | $438,344 | ||||||
Verizon Communications Inc | 625,000 | 647,615 | ||||||
|
| |||||||
4,924,566 | ||||||||
|
| |||||||
Utilities - 2.5% | ||||||||
CMS Energy Corp | 370,000 | 387,641 | ||||||
Commonwealth Edison Co | 120,000 | 122,850 | ||||||
Dominion Resources Inc | ||||||||
1.400% due 09/15/17 | 645,000 | 636,438 | ||||||
1.950% due 08/15/16 | 165,000 | 168,223 | ||||||
DTE Energy Co | 305,000 | 307,538 | ||||||
Duke Energy Corp | ||||||||
1.625% due 08/15/17 | 220,000 | 220,693 | ||||||
2.150% due 11/15/16 | 460,000 | 472,770 | ||||||
Electricite de France (France) | 545,000 | 544,572 | ||||||
Enel Finance International NV (Netherlands) | 145,000 | 147,247 | ||||||
Georgia Power Co | 220,000 | 219,914 | ||||||
Iberdrola Finance Ltd (Ireland) | 275,000 | 278,628 | ||||||
Korea Hydro & Nuclear Power Co Ltd (South Korea) | 275,000 | 283,473 | ||||||
Mississippi Power Co | 120,000 | 123,673 | ||||||
Monongahela Power Co | 65,000 | 70,245 | ||||||
NextEra Energy Capital Holdings Inc | 185,000 | 185,915 | ||||||
Nisource Finance Corp | 525,000 | 532,124 | ||||||
PPL Capital Funding Inc | 145,000 | 142,823 | ||||||
PSEG Power LLC | 130,000 | 135,199 | ||||||
Suburban Propane Partners LP | 275,000 | 293,563 | ||||||
The Southern Co | 145,000 | 148,619 | ||||||
Wisconsin Electric Power Co | 375,000 | 375,000 | ||||||
|
| |||||||
5,797,148 | ||||||||
|
| |||||||
Total Corporate Bonds & Notes | 122,158,370 | |||||||
|
| |||||||
MORTGAGE-BACKED SECURITIES - 19.5% | ||||||||
Collateralized Mortgage Obligations - Commercial - 5.0% |
| |||||||
Banc of America Commercial Mortgage Trust | 930,000 | 1,007,042 | ||||||
Banc of America Merrill Lynch Commercial Mortgage Inc | 435,000 | 449,219 | ||||||
Bear Stearns Commercial Mortgage Securities Trust | ||||||||
4.674% due 06/11/41 " | 145,259 | 150,340 | ||||||
4.978% due 07/11/42 " § | 520,796 | 526,051 | ||||||
5.116% due 02/11/41 " § | 260,000 | 266,239 | ||||||
5.201% due 12/11/38 " | 195,000 | 212,993 | ||||||
5.540% due 07/11/16 " | 175,000 | 189,979 |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-25
PACIFIC LIFE FUNDS
PL SHORT DURATION BOND FUND
Schedule of Investments (Continued)
March 31, 2014
Principal |
| |||||||
Citigroup Commercial Mortgage Trust | ||||||||
1.102% due 09/10/18 " | $337,952 | $337,318 | ||||||
1.199% due 09/01/17 " | 245,000 | 244,317 | ||||||
5.406% due 04/15/40 " § | 15,755 | 15,746 | ||||||
Commercial Mortgage Trust | ||||||||
1.005% due 02/13/32 " ~ | 180,000 | 180,326 | ||||||
1.156% due 12/10/44 " | 51,914 | 52,102 | ||||||
1.218% due 02/10/47 " | 807,614 | 805,783 | ||||||
1.259% due 04/10/47 " | 410,000 | 408,927 | ||||||
1.298% due 03/10/47 " | 315,000 | 313,771 | ||||||
5.167% due 06/10/44 " § | 70,000 | 73,614 | ||||||
5.468% due 07/10/37 " § | 15,311 | 15,336 | ||||||
5.820% due 07/10/38 " § | 141,777 | 154,211 | ||||||
DBUBS Mortgage Trust | 84,291 | 85,382 | ||||||
GS Mortgage Securities Trust | ||||||||
1.206% due 07/10/46 " | 246,289 | 246,593 | ||||||
1.343% due 04/10/47 " | 265,000 | 264,999 | ||||||
5.553% due 04/10/38 " § | 320,000 | 341,971 | ||||||
JP Morgan Chase Commercial Mortgage Securities Trust | ||||||||
1.031% due 05/15/45 " | 42,155 | 42,300 | ||||||
4.996% due 08/15/42 " § | 400,000 | 421,008 | ||||||
5.658% due 06/12/41 " § | 194,735 | 194,989 | ||||||
LB-UBS Commercial Mortgage Trust | ||||||||
4.954% due 09/15/30 " | 51,953 | 54,056 | ||||||
5.833% due 06/15/38 " § | 898,848 | 980,263 | ||||||
Merrill Lynch Countrywide Commercial Mortgage Trust | 645,000 | 701,421 | ||||||
Morgan Stanley Bank of America Merrill Lynch Trust | ||||||||
1.250% due 02/15/47 " | 212,387 | 211,871 | ||||||
1.308% due 08/15/46 " | 502,517 | 503,788 | ||||||
1.313% due 10/15/46 " | 485,910 | 486,890 | ||||||
1.313% due 04/15/47 " | 85,000 | 84,998 | ||||||
Morgan Stanley Capital I Trust | ||||||||
5.270% due 06/13/41 " § | 365,750 | 367,940 | ||||||
5.731% due 07/12/44 " § | 303,081 | 329,226 | ||||||
WFRBS Commercial Mortgage Trust | ||||||||
1.193% due 03/15/47 " | 334,686 | 333,919 | ||||||
1.406% due 09/15/46 " | 196,010 | 197,695 | ||||||
1.607% due 06/15/44 " ~ | 144,218 | 145,411 | ||||||
|
| |||||||
11,398,034 | ||||||||
|
| |||||||
Collateralized Mortgage Obligations - Residential - 4.4% |
| |||||||
Alternative Loan Trust | 186,181 | 178,241 | ||||||
Deutsche Alt-A Securities Inc Mortgage Loan Trust | 226,442 | 203,617 | ||||||
DSLA Mortgage Loan Trust | 625,075 | 602,323 | ||||||
Fannie Mae | ||||||||
0.604% due 07/25/42 " § | 756,527 | 754,835 | ||||||
5.000% due 08/25/19 " | 233,480 | 245,899 | ||||||
Fosse Master Issuer PLC (United Kingdom) | 204,749 | 207,753 | ||||||
Freddie Mac | ||||||||
0.605% due 05/15/36 " § | 52,083 | 52,273 | ||||||
0.605% due 09/15/42 " § | 1,005,046 | 1,001,876 | ||||||
0.655% due 08/15/41 " § | 286,676 | 287,516 | ||||||
0.655% due 07/15/42 " § | 939,363 | 939,461 | ||||||
1.369% due 05/25/19 " | 783,487 | 783,478 | ||||||
1.426% due 08/25/17 " | 640,000 | 643,795 | ||||||
Government National Mortgage Association | 2,181,339 | 2,191,438 | ||||||
HarborView Mortgage Loan Trust | 138,867 | 121,683 |
Principal |
| |||||||
Holmes Master Issuer PLC (United Kingdom) | $622,974 | $630,603 | ||||||
JP Morgan Alternative Loan Trust | 101,423 | 96,000 | ||||||
Lanark Master Issuer PLC (United Kingdom) | 315,000 | 314,659 | ||||||
Silverstone Master Issuer PLC (United Kingdom) | 525,000 | 532,964 | ||||||
Structured Adjustable Rate Mortgage Loan Trust | 236,066 | 234,719 | ||||||
|
| |||||||
10,023,133 | ||||||||
|
| |||||||
Fannie Mae - 7.9% |
| |||||||
1.935% due 01/01/35 " § | 995,824 | 1,047,297 | ||||||
2.353% due 09/01/34 " § | 633,971 | 676,567 | ||||||
2.485% due 11/01/34 " § | 467,879 | 499,264 | ||||||
2.586% due 09/01/35 " § | 845,059 | 914,069 | ||||||
3.000% due 01/01/27 " | 1,341,602 | 1,379,962 | ||||||
3.500% due 12/01/25 - 01/01/27 " | 2,407,277 | 2,529,126 | ||||||
4.000% due 07/01/25 - 10/01/41 " | 3,825,024 | 4,028,321 | ||||||
4.500% due 07/01/26 - 11/01/27 " | 1,184,957 | 1,275,650 | ||||||
5.000% due 07/01/19 - 07/01/41 " | 2,037,593 | 2,206,167 | ||||||
5.500% due 01/01/35 - 12/01/39 " | 2,794,903 | 3,102,721 | ||||||
6.000% due 11/01/35 - 09/01/39 " | 333,482 | 372,233 | ||||||
|
| |||||||
18,031,377 | ||||||||
|
| |||||||
Freddie Mac - 0.8% | ||||||||
4.500% due 11/01/23 " | 1,299,787 | 1,392,031 | ||||||
5.000% due 11/01/16 - 04/01/18 " | 64,153 | 68,129 | ||||||
5.500% due 01/01/20 - 12/01/39 " | 469,272 | 515,667 | ||||||
|
| |||||||
1,975,827 | ||||||||
|
| |||||||
Government National Mortgage Association - 1.4% |
| |||||||
2.500% due 09/20/27 " | 989,377 | 1,005,950 | ||||||
3.000% due 06/20/27 - 09/20/27 " | 1,120,713 | 1,162,670 | ||||||
3.500% due 03/20/26 - 03/20/43 " | 768,978 | 793,523 | ||||||
6.000% due 07/15/36 " | 280,910 | 323,294 | ||||||
|
| |||||||
3,285,437 | ||||||||
|
| |||||||
Total Mortgage-Backed Securities | 44,713,808 | |||||||
|
| |||||||
ASSET-BACKED SECURITIES - 14.7% | ||||||||
Ally Auto Receivables Trust | ||||||||
0.750% due 02/21/17 " | 380,000 | 379,490 | ||||||
0.930% due 02/16/16 " | 73,899 | 74,061 | ||||||
3.150% due 10/15/18 " ~ | 135,000 | 139,201 | ||||||
Ally Master Owner Trust | ||||||||
0.955% due 02/15/17 " § | 725,000 | 728,130 | ||||||
1.000% due 02/15/18 " | 230,000 | 230,883 | ||||||
1.210% due 06/15/17 " | 1,060,000 | 1,068,039 | ||||||
American Express Credit Account Master Trust | ||||||||
0.325% due 04/17/17 " § | 315,000 | 315,159 | ||||||
0.990% due 03/15/18 " | 440,000 | 441,615 | ||||||
1.070% due 05/15/18 " ~ | 100,000 | 100,394 | ||||||
1.290% due 03/15/18 " ~ | 500,000 | 503,350 | ||||||
AmeriCredit Automobile Receivables Trust | ||||||||
0.620% due 06/08/17 " | 195,000 | 195,137 | ||||||
0.960% due 04/09/18 " | 90,000 | 90,368 | ||||||
1.050% due 10/11/16 " | 244,681 | 245,206 | ||||||
1.170% due 05/09/16 " | 70,239 | 70,310 | ||||||
1.190% due 05/08/18 " | 190,000 | 189,794 | ||||||
1.730% due 02/08/17 " | 200,000 | 201,842 | ||||||
2.330% due 03/08/16 " | 108,535 | 108,734 | ||||||
Bank of America Auto Trust | 327,737 | 328,283 | ||||||
BMW Vehicle Lease Trust | 440,000 | 440,394 |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-26
PACIFIC LIFE FUNDS
PL SHORT DURATION BOND FUND
Schedule of Investments (Continued)
March 31, 2014
Principal |
| |||||||
Capital Auto Receivables Asset Trust | ||||||||
0.790% due 06/20/17 " | $520,000 | $520,409 | ||||||
1.240% due 10/20/17 " | 530,000 | 533,457 | ||||||
2.220% due 01/22/19 " | 90,000 | 90,199 | ||||||
CarMax Auto Owner Trust | ||||||||
0.520% due 07/17/17 " | 430,000 | 430,361 | ||||||
0.640% due 01/16/18 " | 1,035,000 | 1,036,161 | ||||||
1.690% due 08/15/19 " | 45,000 | 44,819 | ||||||
1.930% due 11/15/19 " | 65,000 | 64,721 | ||||||
CIT Equipment Collateral | 103,235 | 103,420 | ||||||
Citigroup Mortgage Loan Trust Inc | 275,452 | 259,704 | ||||||
CNH Equipment Trust | ||||||||
0.570% due 12/15/17 " | 820,000 | 820,889 | ||||||
0.690% due 06/15/18 " | 755,000 | 756,515 | ||||||
0.910% due 08/15/16 " | 122,863 | 123,040 | ||||||
0.940% due 05/15/17 " | 58,842 | 59,017 | ||||||
CNH Wholesale Master Note Trust | 270,000 | 270,487 | ||||||
Diamond Resorts Owner Trust | 321,603 | 321,815 | ||||||
Enterprise Fleet Financing LLC | ||||||||
0.680% due 09/20/18 " ~ | 432,978 | 432,987 | ||||||
0.870% due 09/20/19 " ~ | 250,000 | 249,901 | ||||||
1.060% due 03/20/19 " ~ | 250,000 | 250,872 | ||||||
Ford Credit Auto Lease Trust | ||||||||
0.850% due 01/15/15 " | 55,070 | 55,088 | ||||||
1.100% due 12/15/15 " ~ | 100,000 | 100,498 | ||||||
1.230% due 11/15/16 " | 285,000 | 286,038 | ||||||
1.500% due 03/15/17 " ~ | 125,000 | 125,815 | ||||||
1.510% due 08/15/17 " | 195,000 | 195,650 | ||||||
Ford Credit Auto Owner Trust ‘A’ | 100,000 | 101,564 | ||||||
Ford Credit Floorplan Master Owner Trust | ||||||||
0.740% due 09/15/16 " | 555,000 | 555,896 | ||||||
0.790% due 06/15/17 " | 540,000 | 541,811 | ||||||
4.200% due 02/15/17 " ~ | 365,000 | 376,853 | ||||||
4.990% due 02/15/17 " ~ | 260,000 | 269,557 | ||||||
GE Capital Credit Card Master Note Trust | ||||||||
1.030% due 01/15/18 " | 535,000 | 537,118 | ||||||
5.750% due 03/15/18 " ~ | 235,000 | 245,129 | ||||||
GE Dealer Floorplan Master Note Trust | ||||||||
0.557% due 04/20/18 " § | 515,000 | 516,628 | ||||||
0.597% due 10/20/17 " § | 630,000 | 631,757 | ||||||
0.757% due 07/20/16 " § | 270,000 | 270,328 | ||||||
GE Equipment Midticket LLC | 410,000 | 409,346 | ||||||
GE Equipment Small Ticket LLC | 132,984 | 133,302 | ||||||
GreatAmerica Leasing Receivables | 400,000 | 399,376 | ||||||
GSAA Home Equity Trust | ||||||||
0.187% due 07/25/37 " § | 542,093 | 477,549 | ||||||
0.434% due 10/25/35 " § | 104,384 | 97,892 | ||||||
0.524% due 10/25/35 " § | 585,000 | 555,790 | ||||||
GSAA Trust | 378,041 | 359,718 | ||||||
Honda Auto Receivables Owner Trust | ||||||||
0.560% due 05/15/16 " | 936,342 | 937,556 | ||||||
0.770% due 01/15/16 " | 463,465 | 464,468 | ||||||
HSI Asset Securitization Corp Trust | 235,637 | 219,572 | ||||||
Huntington Auto Trust | ||||||||
0.810% due 09/15/16 " | 305,976 | 306,701 | ||||||
1.010% due 01/15/16 " ~ | 68,973 | 69,105 |
Principal |
| |||||||
Hyundai Auto Receivables Trust | ||||||||
0.720% due 03/15/16 " | $76,599 | $76,683 | ||||||
0.730% due 06/15/18 " | 565,000 | 565,033 | ||||||
0.750% due 09/17/18 " | 215,000 | 214,305 | ||||||
0.810% due 03/15/18 " | 840,000 | 843,646 | ||||||
3.510% due 11/15/17 " | 290,000 | 301,987 | ||||||
Mercedes-Benz Auto Lease Trust | ||||||||
0.620% due 07/15/16 " | 520,000 | 520,399 | ||||||
0.720% due 12/17/18 " | 240,000 | 240,330 | ||||||
0.880% due 11/17/14 " | 25,190 | 25,194 | ||||||
1.070% due 11/15/17 " | 180,000 | 180,032 | ||||||
Mercedes-Benz Auto Receivables Trust | 659,783 | 661,035 | ||||||
Motor PLC (United Kingdom) | ||||||||
0.654% due 02/25/21 " § ~ | 363,750 | 364,078 | ||||||
1.286% due 02/25/20 " ~ | 218,333 | 218,630 | ||||||
MVW Owner Trust | 100,543 | 101,350 | ||||||
Navistar Financial Dealer Note Master Trust | ||||||||
0.824% due 01/25/18 " § ~ | 535,000 | 535,200 | ||||||
0.834% due 09/25/18 " § ~ | 355,000 | 356,352 | ||||||
Nissan Auto Receivables Owner Trust | ||||||||
0.460% due 10/17/16 " | 555,000 | 555,316 | ||||||
0.730% due 05/16/16 " | 359,482 | 360,125 | ||||||
Sierra Receivables Funding Co LLC | 470,000 | 469,202 | ||||||
Sierra Timeshare Receivables Funding LLC | ||||||||
1.590% due 11/20/29 " ~ | 133,744 | 134,316 | ||||||
2.200% due 05/20/21 " ~ | 260,395 | 261,607 | ||||||
SMART Trust (Australia) | ||||||||
0.840% due 10/14/15 " | 245,000 | 245,261 | ||||||
0.950% due 02/14/18 " | 550,000 | 550,254 | ||||||
0.970% due 03/14/17 " | 275,000 | 275,963 | ||||||
1.180% due 02/14/19 " | 580,000 | 576,810 | ||||||
1.590% due 10/14/16 " ~ | 605,000 | 609,307 | ||||||
Toyota Auto Receivables Owner Trust | 555,208 | 556,340 | ||||||
Volkswagen Auto Lease Trust | 150,000 | 149,896 | ||||||
Volkswagen Auto Loan Enhanced Trust | 157,000 | 157,468 | ||||||
Volvo Financial Equipment LLC | 255,000 | 254,602 | ||||||
Wells Fargo Home Equity Trust | 278,965 | 255,632 | ||||||
Wheels SPV LLC | 99,309 | 99,509 | ||||||
World Omni Auto Receivables Trust | 827,217 | 828,760 | ||||||
World Omni Master Owner Trust | 655,000 | 656,150 | ||||||
|
| |||||||
Total Asset-Backed Securities |
| 33,660,041 | ||||||
|
| |||||||
U.S. GOVERNMENT AGENCY ISSUES - 2.7% |
| |||||||
Fannie Mae | ||||||||
0.375% due 07/05/16 | 605,000 | 602,293 | ||||||
0.625% due 08/26/16 | 2,305,000 | 2,305,191 | ||||||
Federal Home Loan Bank | 440,000 | 437,980 | ||||||
Freddie Mac | 2,770,000 | 2,782,537 | ||||||
|
| |||||||
Total U.S. Government Agency Issues | 6,128,001 | |||||||
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-27
PACIFIC LIFE FUNDS
PL SHORT DURATION BOND FUND
Schedule of Investments (Continued)
March 31, 2014
Principal |
| |||||||
U.S. TREASURY OBLIGATIONS - 6.1% | ||||||||
U.S. Treasury Inflation Protected Securities - 3.4% |
| |||||||
0.500% due 04/15/15 ^ | $1,457,001 | $1,487,621 | ||||||
2.000% due 07/15/14 ^ ‡ | 6,191,022 | 6,295,012 | ||||||
|
| |||||||
7,782,633 | ||||||||
|
| |||||||
U.S. Treasury Notes - 2.7% | ||||||||
0.625% due 11/15/16 | 1,020,000 | 1,017,331 | ||||||
0.750% due 01/15/17 | 5,260,000 | 5,253,425 | ||||||
|
| |||||||
6,270,756 | ||||||||
|
| |||||||
Total U.S. Treasury Obligations | 14,053,389 | |||||||
|
| |||||||
FOREIGN GOVERNMENT BONDS & NOTES - 1.4% |
| |||||||
Hazine Mustesarligi Varlik Kiralama AS (Turkey) | 325,000 | 331,988 | ||||||
Mexican Bonos (Mexico) | MXN 36,160,000 | 2,887,380 | ||||||
|
| |||||||
Total Foreign Government Bonds & Notes | 3,219,368 | |||||||
|
| |||||||
MUNICIPAL BONDS - 0.3% | ||||||||
State Board of Administration Finance Corp FL ‘A’ | $575,000 | 582,038 | ||||||
|
| |||||||
Total Municipal Bonds | 582,038 | |||||||
|
| |||||||
| ||||||||
SHORT-TERM INVESTMENT - 1.6% | ||||||||
Money Market Fund - 1.6% | ||||||||
BlackRock Liquidity Funds Treasury | 3,662,554 | 3,662,554 | ||||||
|
| |||||||
Total Short-Term Investment | 3,662,554 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 99.6% | 228,177,569 | |||||||
OTHER ASSETS & LIABILITIES, NET - 0.4% | 1,011,127 | |||||||
|
| |||||||
NET ASSETS - 100.0% | $229,188,696 | |||||||
|
|
Notes to Schedule of Investments
(a) | As of March 31, 2014, the fund was diversified as a percentage of net assets as follows: |
Corporate Bonds & Notes | 53.3% | |||
Mortgage-Backed Securities | 19.5% | |||
Asset-Backed Securities | 14.7% | |||
U.S. Treasury Obligations | 6.1% | |||
Others (less than 3.0%) | 6.0% | |||
|
| |||
99.6% | ||||
Other Assets & Liabilities, Net | 0.4% | |||
|
| |||
100.0% | ||||
|
|
(b) | As of March 31, 2014, the fund’s Standard & Poor’s quality ratings as a percentage of total fixed income investments were as follows (Unaudited): |
AAA | 10.6% | |||
AA/U.S. Government and Agency Issues | 25.2% | |||
A | 19.9% | |||
BBB | 29.7% | |||
BB | 3.5% | |||
B | 1.1% | |||
CCC | 0.4% | |||
Not Rated | 9.6% | |||
|
| |||
100.0% | ||||
|
|
(c) | Open futures contracts outstanding as of March 31, 2014 were as follows: |
Short Futures Outstanding | Number of Contracts | Unrealized Appreciation | ||||||
U.S. Treasury 10-Year Notes (06/14) | 13 | $5,497 | ||||||
|
|
(d) | As of March 31, 2014, an investment with a value of $20,336 was fully or partially segregated with the broker(s)/custodian as collateral for open futures contracts. |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-28
PACIFIC LIFE FUNDS
PL SHORT DURATION BOND FUND
Schedule of Investments (Continued)
March 31, 2014
(e) | Fair Value Measurements |
The following is a summary of the fund’s investments as categorized under the three-tier hierarchy of inputs used in valuing the fund’s assets and liabilities (See Note 3D in Notes to Financial Statements) as of March 31, 2014:
Total Value at March 31, 2014 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||||
Assets | Corporate Bonds & Notes | $122,158,370 | $- | $122,158,370 | $- | |||||||||||||
Mortgage-Backed Securities | 44,713,808 | - | 44,713,808 | - | ||||||||||||||
Asset-Backed Securities | 33,660,041 | - | 33,660,041 | - | ||||||||||||||
U.S. Government Agency Issues | 6,128,001 | - | 6,128,001 | - | ||||||||||||||
U.S. Treasury Obligations | 14,053,389 | - | 14,053,389 | - | �� | |||||||||||||
Foreign Government Bonds & Notes | 3,219,368 | - | 3,219,368 | - | ||||||||||||||
Municipal Bonds | 582,038 | - | 582,038 | - | ||||||||||||||
Short-Term Investment | 3,662,554 | 3,662,554 | - | - | ||||||||||||||
Derivatives: | ||||||||||||||||||
Interest Rate Contracts | ||||||||||||||||||
Futures | 5,497 | 5,497 | - | - | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Assets | $228,183,066 | $3,668,051 | $224,515,015 | $- | ||||||||||||||
|
|
|
|
|
|
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-29
PACIFIC LIFE FUNDS
PL EMERGING MARKETS DEBT FUND
Schedule of Investments
March 31, 2014
Principal | Value | |||||||
CORPORATE BONDS & NOTES - 36.2% | ||||||||
Azerbaijan - 0.2% | ||||||||
State Oil Co of the Azerbaijan Republic | $200,000 | $211,500 | ||||||
|
| |||||||
Barbados - 0.2% | ||||||||
Columbus International Inc | 300,000 | 309,375 | ||||||
|
| |||||||
Bermuda - 1.9% | ||||||||
China Oriental Group Co Ltd | 200,000 | 182,750 | ||||||
Digicel Group Ltd | ||||||||
7.125% due 04/01/22 ~ | 250,000 | 252,575 | ||||||
8.250% due 09/30/20 ~ | 700,000 | 750,750 | ||||||
10.500% due 04/15/18 ~ | 750,000 | 798,750 | ||||||
Digicel Ltd | 200,000 | 209,000 | ||||||
Ooredoo International Finance Ltd | 200,000 | 249,520 | ||||||
|
| |||||||
2,443,345 | ||||||||
|
| |||||||
Brazil - 0.4% | ||||||||
Banco Santander Brasil SA | BRL 300,000 | 123,457 | ||||||
Banco Votorantim SA | 300,000 | 152,380 | ||||||
Itau Unibanco Holding SA | 238,000 | 103,319 | ||||||
Oi SA | 300,000 | 119,987 | ||||||
|
| |||||||
499,143 | ||||||||
|
| |||||||
Cayman - 7.4% | ||||||||
21Vianet Group Inc | CNY 1,000,000 | 162,294 | ||||||
Central China Real Estate Ltd | ||||||||
6.500% due 06/04/18 ~ | $300,000 | 273,710 | ||||||
8.000% due 01/28/20 ~ | 500,000 | 459,950 | ||||||
China SCE Property Holdings Ltd | ||||||||
10.500% due 01/14/16 ~ | CNY 1,000,000 | 164,177 | ||||||
11.500% due 11/14/17 ~ | $500,000 | 520,000 | ||||||
China Shanshui Cement Group Ltd | ||||||||
6.500% due 07/22/14 ~ | CNY 1,000,000 | 161,629 | ||||||
8.500% due 05/25/16 ~ | $400,000 | 410,500 | ||||||
10.500% due 04/27/17 ~ | 400,000 | 428,000 | ||||||
Comcel Trust | 200,000 | 209,531 | ||||||
Country Garden Holdings Co Ltd | ||||||||
7.500% due 01/10/23 ~ | 1,200,000 | 1,122,000 | ||||||
10.500% due 08/11/15 | 100,000 | 106,750 | ||||||
11.250% due 04/22/17 ~ | 150,000 | 158,812 | ||||||
DP World Sukuk Ltd | 400,000 | 444,520 | ||||||
Dubai DOF Sukuk Ltd | 50,000 | 59,451 | ||||||
Dubai Holding Commercial Operations MTN Ltd | GBP 850,000 | 1,498,691 | ||||||
Jafz Sukuk Ltd | $50,000 | 57,750 | ||||||
JBS Finance II Ltd | 400,000 | 432,000 | ||||||
Marfrig Overseas Ltd | 450,000 | 456,187 | ||||||
MIE Holdings Corp | 200,000 | 211,500 |
Principal | Value | |||||||
Nile Finance Ltd | $100,000 | $103,100 | ||||||
Sukuk Funding No 3 Ltd | 400,000 | 411,100 | ||||||
Sunac China Holdings Ltd | ||||||||
9.375% due 04/05/18 ~ | 300,000 | 294,750 | ||||||
12.500% due 10/16/17 ~ | 600,000 | 647,250 | ||||||
Telemovil Finance Co Ltd | 700,000 | 751,625 | ||||||
Yuzhou Properties Co Ltd | 200,000 | 187,500 | ||||||
|
| |||||||
9,732,777 | ||||||||
|
| |||||||
Chile - 0.3% | ||||||||
Banco del Estado de Chile | 120,000 | 124,710 | ||||||
Corp Nacional del Cobre de Chile | 200,000 | 203,308 | ||||||
Empresa Nacional del Petroleo | 100,000 | 106,002 | ||||||
|
| |||||||
434,020 | ||||||||
|
| |||||||
Colombia - 0.4% | ||||||||
Ecopetrol SA | 200,000 | 240,750 | ||||||
Emgesa SA ESP | COP 238,000,000 | 128,840 | ||||||
Empresas Publicas de Medellin ESP | 242,000,000 | 128,858 | ||||||
|
| |||||||
498,448 | ||||||||
|
| |||||||
Cyprus - 0.3% | ||||||||
Mriya Agro Holding PLC | $400,000 | 344,000 | ||||||
|
| |||||||
Hong Kong - 0.4% | ||||||||
China Railway Resources Huitung Ltd | 210,000 | 196,694 | ||||||
Gemdale International Holding Ltd | CNY 1,000,000 | 167,666 | ||||||
Industrial & Commercial Bank of China Asia Ltd | $100,000 | 105,684 | ||||||
|
| |||||||
470,044 | ||||||||
|
| |||||||
India - 0.1% | ||||||||
Export-Import Bank of India | 215,000 | 204,732 | ||||||
|
| |||||||
Indonesia - 0.3% | ||||||||
P.T. Pertamina Persero | 400,000 | 355,220 | ||||||
|
| |||||||
Ireland - 3.5% | ||||||||
Alfa Bank OJSC | ||||||||
7.500% due 09/26/19 ~ | 400,000 | 404,000 | ||||||
7.750% due 04/28/21 ~ | 400,000 | 411,000 | ||||||
8.625% due 04/26/16 ~ | RUB 5,000,000 | 136,522 | ||||||
Brunswick Rail Finance Ltd | $400,000 | 407,000 | ||||||
Credit Bank of Moscow | 400,000 | 388,500 | ||||||
Mobile Telesystems OJSC | 1,100,000 | 1,259,500 | ||||||
Vimpel Communications | 600,000 | 620,250 |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-30
PACIFIC LIFE FUNDS
PL EMERGING MARKETS DEBT FUND
Schedule of Investments (Continued)
March 31, 2014
Principal | Value | |||||||
Vnesheconombank | ||||||||
5.450% due 11/22/17 ~ | $150,000 | $153,555 | ||||||
5.942% due 11/21/23 ~ | 200,000 | 190,500 | ||||||
6.025% due 07/05/22 ~ | 200,000 | 196,260 | ||||||
6.800% due 11/22/25 ~ | 200,000 | 200,000 | ||||||
6.902% due 07/09/20 ~ | 200,000 | 210,740 | ||||||
|
| |||||||
4,577,827 | ||||||||
|
| |||||||
Kazakhstan - 2.8% | ||||||||
Development Bank of Kazakhstan JSC 4.125% due 12/10/22 ~ | 220,000 | 199,650 | ||||||
Halyk Savings Bank of Kazakhstan JSC 7.250% due 01/28/21 ~ | 970,000 | 1,022,380 | ||||||
Kazkommertsbank JSC | ||||||||
6.875% due 02/13/17 | EUR 400,000 | 546,930 | ||||||
7.500% due 11/29/16 ~ | $200,000 | 195,000 | ||||||
7.875% due 04/07/14 ~ | 200,000 | 199,500 | ||||||
8.000% due 11/03/15 ~ | 450,000 | 447,750 | ||||||
KazMunayGas National Co JSC | ||||||||
5.750% due 04/30/43 ~ | 350,000 | 316,313 | ||||||
7.000% due 05/05/20 ~ | 260,000 | 294,450 | ||||||
Zhaikmunai LLP | 400,000 | 417,000 | ||||||
|
| |||||||
3,638,973 | ||||||||
|
| |||||||
Luxembourg - 3.5% | ||||||||
Cosan Luxembourg SA | BRL 300,000 | 115,029 | ||||||
Gazprom Neft OAO | $200,000 | 196,750 | ||||||
Gazprom OAO | ||||||||
4.950% due 02/06/28 ~ | 100,000 | 86,250 | ||||||
8.625% due 04/28/34 ~ | 145,000 | 166,025 | ||||||
MHP SA | ||||||||
8.250% due 04/02/20 ~ | 650,000 | 568,750 | ||||||
10.250% due 04/29/15 ~ | 650,000 | 643,500 | ||||||
Minerva Luxembourg SA | ||||||||
7.750% due 01/31/23 ~ | 400,000 | 410,600 | ||||||
12.250% due 02/10/22 ~ | 300,000 | 336,000 | ||||||
Promsvyazbank OJSC | ||||||||
8.500% due 04/25/17 ~ | 600,000 | 606,750 | ||||||
10.200% due 11/06/19 ~ | 200,000 | 204,000 | ||||||
Sberbank of Russia | 150,000 | 152,156 | ||||||
TMK OAO | ||||||||
6.750% due 04/03/20 ~ | 500,000 | 440,000 | ||||||
7.750% due 01/27/18 ~ | 700,000 | 677,250 | ||||||
|
| |||||||
4,603,060 | ||||||||
|
| |||||||
Malaysia - 0.5% | ||||||||
Axiata SPV1 Labuan Ltd | 100,000 | 109,547 | ||||||
MMI International Ltd | 200,000 | 205,000 | ||||||
Petronas Capital Ltd | ||||||||
5.250% due 08/12/19 ~ | 200,000 | 225,693 | ||||||
7.875% due 05/22/22 ~ | 115,000 | 150,786 | ||||||
|
| |||||||
691,026 | ||||||||
|
| |||||||
Mexico - 1.6% | ||||||||
America Movil SAB de CV | MXN 2,900,000 | 207,999 | ||||||
Cemex SAB de CV | ||||||||
6.500% due 12/10/19 ~ | $200,000 | 213,250 | ||||||
9.000% due 01/11/18 ~ | 900,000 | 983,250 | ||||||
Petroleos Mexicanos | ||||||||
5.500% due 06/27/44 | 55,000 | 53,304 | ||||||
6.000% due 03/05/20 | 75,000 | 84,844 | ||||||
6.500% due 06/02/41 | 230,000 | 253,000 |
Principal | Value | |||||||
7.190% due 09/12/24 ~ | MXN 1,500,000 | $112,179 | ||||||
8.000% due 05/03/19 | $110,000 | 134,750 | ||||||
|
| |||||||
2,042,576 | ||||||||
|
| |||||||
Netherlands - 3.3% | ||||||||
DTEK Finance BV | 200,000 | 193,000 | ||||||
Indo Energy Finance II BV | 850,000 | 680,000 | ||||||
Kazakhstan Temir Zholy Finance BV 6.950% due 07/10/42 ~ | 100,000 | 102,250 | ||||||
Majapahit Holding BV | 100,000 | 115,250 | ||||||
Marfrig Holding Europe BV | ||||||||
8.375% due 05/09/18 ~ | 200,000 | 200,600 | ||||||
9.875% due 07/24/17 ~ | 500,000 | 524,375 | ||||||
Metinvest BV | ||||||||
8.750% due 02/14/18 ~ | 700,000 | 651,000 | ||||||
10.250% due 05/20/15 ~ | 850,000 | 839,375 | ||||||
VimpelCom Holdings BV | ||||||||
7.504% due 03/01/22 ~ | 525,000 | 537,390 | ||||||
9.000% due 02/13/18 ~ | RUB 5,000,000 | 137,235 | ||||||
VTR Finance BV | $300,000 | 312,750 | ||||||
|
| |||||||
4,293,225 | ||||||||
|
| |||||||
Nigeria - 0.6% | ||||||||
Sea Trucks Group | 800,000 | 784,000 | ||||||
|
| |||||||
Peru - 0.2% | ||||||||
Minsur SA | 200,000 | 210,475 | ||||||
|
| |||||||
Philippines - 0.2% | ||||||||
Petron Corp | PHP 5,000,000 | 113,308 | ||||||
Power Sector Assets & Liabilities Management Corp | $100,000 | 126,130 | ||||||
|
| |||||||
239,438 | ||||||||
|
| |||||||
Singapore - 0.4% | ||||||||
Olam International Ltd | SGD 250,000 | 199,532 | ||||||
Yanlord Land Group Ltd | ||||||||
9.500% due 05/04/17 ~ | $100,000 | 104,375 | ||||||
10.625% due 03/29/18 ~ | 200,000 | 214,000 | ||||||
|
| |||||||
517,907 | ||||||||
|
| |||||||
South Africa - 0.7% | ||||||||
Edcon Proprietary Ltd | ||||||||
9.500% due 03/01/18 ~ | EUR 650,000 | 877,912 | ||||||
|
| |||||||
Spain - 0.3% | ||||||||
Cemex Espana Luxembourg | ||||||||
9.250% due 05/12/20 ~ | $357,000 | 393,593 | ||||||
|
| |||||||
Sweden - 1.2% | ||||||||
Eileme 2 AB | 600,000 | 717,750 | ||||||
TVN Finance Corp III AB | EUR 600,000 | 911,362 | ||||||
|
| |||||||
1,629,112 | ||||||||
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-31
PACIFIC LIFE FUNDS
PL EMERGING MARKETS DEBT FUND
Schedule of Investments (Continued)
March 31, 2014
Principal | Value | |||||||
Turkey - 0.1% | ||||||||
Turkiye Garanti Bankasi AS | TRY 300,000 | $119,512 | ||||||
|
| |||||||
Ukraine - 0.7% | ||||||||
National JSC Naftogaz of Ukraine | $920,000 | 878,600 | ||||||
|
| |||||||
United Arab Emirates - 1.0% | ||||||||
Anka a Sukuk Ltd | AED 500,000 | 150,082 | ||||||
Dolphin Energy Ltd | $132,920 | 148,671 | ||||||
DP World Ltd | 700,000 | 760,550 | ||||||
Dubai Electricity & Water Authority | 170,000 | 205,700 | ||||||
Emirates Airline | 100,000 | 97,000 | ||||||
|
| |||||||
1,362,003 | ||||||||
|
| |||||||
United Kingdom - 3.0% | ||||||||
Afren PLC | 500,000 | 512,500 | ||||||
Arcos Dorados Holdings Inc | BRL 250,000 | 102,743 | ||||||
DTEK Finance PLC | $800,000 | 692,000 | ||||||
Oschadbank | 200,000 | 175,000 | ||||||
Sinochem Overseas Capital Co Ltd | 630,000 | 653,793 | ||||||
Trillion Chance Ltd | 400,000 | 390,000 | ||||||
Vedanta Resources PLC | ||||||||
8.250% due 06/07/21 ~ | 400,000 | 425,750 | ||||||
9.500% due 07/18/18 ~ | 450,000 | 510,750 | ||||||
Yingde Gases Investment Ltd | 500,000 | 502,500 | ||||||
|
| |||||||
3,965,036 | ||||||||
|
| |||||||
United States - 0.2% | ||||||||
Pemex Project Funding Master Trust | 240,000 | 267,300 | ||||||
|
| |||||||
Venezuela - 0.5% | ||||||||
Petroleos de Venezuela SA | ||||||||
4.900% due 10/28/14 | 552,665 | 529,177 | ||||||
5.250% due 04/12/17 ~ | 87,000 | 65,467 | ||||||
5.375% due 04/12/27 ~ | 76,000 | 40,660 | ||||||
12.750% due 02/17/22 ~ | 40,000 | 36,400 | ||||||
|
| |||||||
671,704 | ||||||||
|
| |||||||
Total Corporate Bonds & Notes |
| 47,265,883 | ||||||
|
| |||||||
CONVERTIBLE CORPORATE BONDS & NOTES - 0.1% |
| |||||||
Cayman - 0.1% | ||||||||
Chaowei Power Holdings Ltd | CNY 1,000,000 | 159,095 | ||||||
|
| |||||||
Total Convertible Corporate Bonds & Notes |
| 159,095 | ||||||
|
|
Principal | Value | |||||||
SENIOR LOAN NOTES - 1.5% | ||||||||
Dubai - 1.5% | ||||||||
Dubai World | $653,840 | $536,149 | ||||||
Term B due 09/30/18 µ | 1,711,405 | 1,403,352 | ||||||
|
| |||||||
1,939,501 | ||||||||
|
| |||||||
Total Senior Loan Notes |
| 1,939,501 | ||||||
|
| |||||||
FOREIGN GOVERNMENT BONDS & NOTES - 46.8% |
| |||||||
Argentina - 0.8% | ||||||||
Argentina Boden | 865,000 | 846,835 | ||||||
Argentine Republic Government | ||||||||
8.280% due 12/31/33 | 235,628 | 185,931 | ||||||
8.750% due 06/02/17 | 60,000 | 56,100 | ||||||
|
| |||||||
1,088,866 | ||||||||
|
| |||||||
Azerbaijan - 0.1% | ||||||||
Republic of Azerbaijan International Bond | ||||||||
4.750% due 03/18/24 ~ | 200,000 | 201,800 | ||||||
|
| |||||||
Belarus - 0.5% | ||||||||
Republic of Belarus | ||||||||
8.750% due 08/03/15 ~ | 110,000 | 111,925 | ||||||
8.950% due 01/26/18 ~ | 510,000 | 525,300 | ||||||
|
| |||||||
637,225 | ||||||||
|
| |||||||
Bolivia - 0.1% | ||||||||
Bolivian Government | 100,000 | 99,750 | ||||||
|
| |||||||
Brazil - 3.7% | ||||||||
Banco Nacional de Desenvolvimento Economico e Social | 170,000 | 192,950 | ||||||
Brazil Letras do Tesouro Nacional | ||||||||
11.457% due 01/01/16 | BRL 1,770,000 | 637,947 | ||||||
11.860% due 01/01/17 | 6,700,000 | 2,135,646 | ||||||
Brazil Notas do Tesouro Nacional ‘F’ 10.000% due 01/01/23 | 2,640,000 | 1,037,937 | ||||||
Brazilian Government | ||||||||
4.250% due 01/07/25 | $375,000 | 363,281 | ||||||
4.875% due 01/22/21 | 200,000 | 213,600 | ||||||
5.875% due 01/15/19 | 90,000 | 101,700 | ||||||
8.875% due 04/15/24 | 150,000 | 202,500 | ||||||
|
| |||||||
4,885,561 | ||||||||
|
| |||||||
Chile - 0.2% | ||||||||
Chile Government | ||||||||
3.250% due 09/14/21 | 100,000 | 100,750 | ||||||
6.000% due 01/01/20 ~ | CLP 60,000,000 | 116,068 | ||||||
|
| |||||||
216,818 | ||||||||
|
| |||||||
Colombia - 2.1% | ||||||||
Colombia Government | ||||||||
6.125% due 01/18/41 | $290,000 | 326,360 | ||||||
7.375% due 03/18/19 | 140,000 | 169,050 | ||||||
7.750% due 04/14/21 | COP 365,000,000 | 208,678 | ||||||
8.125% due 05/21/24 | $330,000 | 430,650 | ||||||
9.850% due 06/28/27 | COP 149,000,000 | 98,682 | ||||||
11.750% due 02/25/20 | $202,000 | 292,900 | ||||||
12.000% due 10/22/15 | COP 176,000,000 | 99,583 |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-32
PACIFIC LIFE FUNDS
PL EMERGING MARKETS DEBT FUND
Schedule of Investments (Continued)
March 31, 2014
Principal | Value | |||||||
Colombian TES | ||||||||
7.000% due 05/04/22 | COP 870,000,000 | $460,227 | ||||||
7.500% due 08/26/26 | 380,000,000 | 198,911 | ||||||
10.000% due 07/24/24 | 654,000,000 | 416,606 | ||||||
Empresa de Telecomunicaciones de Bogota 7.000% due 01/17/23 ~ | 144,000,000 | 66,087 | ||||||
|
| |||||||
2,767,734 | ||||||||
|
| |||||||
Costa Rica - 0.3% | ||||||||
Costa Rica Government | ||||||||
4.250% due 01/26/23 ~ | $200,000 | 186,000 | ||||||
4.375% due 04/30/25 ~ | 90,000 | 81,225 | ||||||
5.625% due 04/30/43 ~ | 90,000 | 78,525 | ||||||
|
| |||||||
345,750 | ||||||||
|
| |||||||
Croatia - 0.7% | ||||||||
Croatia Government | ||||||||
6.375% due 03/24/21 ~ | 240,000 | 259,800 | ||||||
6.625% due 07/14/20 ~ | 470,000 | 516,530 | ||||||
6.750% due 11/05/19 ~ | 100,000 | 110,625 | ||||||
|
| |||||||
886,955 | ||||||||
|
| |||||||
Dominican Republic - 0.3% | ||||||||
Dominican Republic | ||||||||
5.875% due 04/18/24 ~ | 260,000 | 255,658 | ||||||
6.600% due 01/28/24 ~ | 100,000 | 102,750 | ||||||
|
| |||||||
358,408 | ||||||||
|
| |||||||
Ecuador - 0.1% | ||||||||
Ecuador Government | 100,000 | 106,300 | ||||||
|
| |||||||
Egypt - 0.1% | ||||||||
Egypt Government | 100,000 | 103,250 | ||||||
|
| |||||||
El Salvador - 0.3% |
| |||||||
El Salvador Government | ||||||||
5.875% due 01/30/25 ~ | 85,000 | 80,325 | ||||||
7.650% due 06/15/35 ~ | 145,000 | 145,000 | ||||||
8.250% due 04/10/32 ~ | 120,000 | 128,400 | ||||||
|
| |||||||
353,725 | ||||||||
|
| |||||||
Gabon - 0.3% | ||||||||
Gabonese Republic | 400,000 | 425,000 | ||||||
|
| |||||||
Georgia - 0.2% | ||||||||
Georgia Government | 200,000 | 219,400 | ||||||
|
| |||||||
Ghana - 0.1% | ||||||||
Republic of Ghana | 130,000 | 132,437 | ||||||
|
| |||||||
Guatemala - 0.1% | ||||||||
Guatemala Government | 200,000 | 195,000 | ||||||
|
| |||||||
Hungary - 2.9% | ||||||||
Hungary Government | ||||||||
4.125% due 02/19/18 | 264,000 | 269,280 | ||||||
4.750% due 02/03/15 | 81,000 | 83,033 | ||||||
5.375% due 02/21/23 | 460,000 | 468,234 |
Principal | Value | |||||||
5.375% due 03/25/24 | $184,000 | $184,828 | ||||||
5.500% due 12/22/16 | HUF 64,690,000 | 301,098 | ||||||
5.750% due 11/22/23 | $370,000 | 383,875 | ||||||
6.000% due 11/24/23 | HUF 50,180,000 | 235,190 | ||||||
6.250% due 01/29/20 | $236,000 | 258,715 | ||||||
6.500% due 06/24/19 | HUF 20,430,000 | 98,600 | ||||||
6.750% due 11/24/17 | 115,230,000 | 557,664 | ||||||
7.000% due 06/24/22 | 77,090,000 | 383,466 | ||||||
7.625% due 03/29/41 | $276,000 | 319,470 | ||||||
7.750% due 08/24/15 | HUF 62,670,000 | 297,922 | ||||||
|
| |||||||
3,841,375 | ||||||||
|
| |||||||
Indonesia - 1.4% | ||||||||
Indonesia Government | ||||||||
5.875% due 03/13/20 ~ | $100,000 | 109,750 | ||||||
6.875% due 01/17/18 ~ | 525,000 | 599,156 | ||||||
8.500% due 10/12/35 ~ | 170,000 | 218,025 | ||||||
10.375% due 05/04/14 ~ | 60,000 | 60,675 | ||||||
Indonesia Treasury | ||||||||
5.872% due 10/09/14 | IDR 656,000,000 | 56,027 | ||||||
6.125% due 05/15/28 | 630,000,000 | 44,824 | ||||||
6.625% due 05/15/33 | 2,830,000,000 | 202,777 | ||||||
8.375% due 03/15/24 | 230,000,000 | 20,879 | ||||||
8.375% due 03/15/34 | 2,574,000,000 | 224,483 | ||||||
9.000% due 03/15/29 | 474,000,000 | 43,580 | ||||||
9.500% due 06/15/15 | 3,000,000,000 | 272,514 | ||||||
|
| |||||||
1,852,690 | ||||||||
|
| |||||||
Iraq - 0.4% | ||||||||
Republic of Iraq | $530,000 | 470,375 | ||||||
|
| |||||||
Ivory Coast - 0.9% | ||||||||
Ivory Coast Government | 1,220,000 | 1,152,900 | ||||||
|
| |||||||
Kazakhstan - 0.3% | ||||||||
Kazatomprom Natsionalnaya Atomnaya Kompaniya AO | 400,000 | 416,200 | ||||||
|
| |||||||
Latvia - 0.2% | ||||||||
Republic of Latvia | 300,000 | 289,575 | ||||||
|
| |||||||
Lebanon - 1.0% | ||||||||
Lebanon Government | ||||||||
4.100% due 06/12/15 ~ | 128,000 | 129,248 | ||||||
5.150% due 11/12/18 ~ | 150,000 | 149,325 | ||||||
5.450% due 11/28/19 ~ | 100,000 | 99,510 | ||||||
6.100% due 10/04/22 ~ | 343,000 | 339,673 | ||||||
6.375% due 03/09/20 | 229,000 | 237,015 | ||||||
6.600% due 11/27/26 ~ | 130,000 | 130,975 | ||||||
8.250% due 04/12/21 ~ | 204,000 | 230,265 | ||||||
|
| |||||||
1,316,011 | ||||||||
|
| |||||||
Lithuania - 0.6% | ||||||||
Lithuania Government | ||||||||
5.125% due 09/14/17 ~ | 200,000 | 219,236 | ||||||
6.125% due 03/09/21 ~ | 200,000 | 229,540 | ||||||
6.625% due 02/01/22 ~ | 200,000 | 236,900 | ||||||
7.375% due 02/11/20 ~ | 120,000 | 145,200 | ||||||
|
| |||||||
830,876 | ||||||||
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-33
PACIFIC LIFE FUNDS
PL EMERGING MARKETS DEBT FUND
Schedule of Investments (Continued)
March 31, 2014
Principal | Value | |||||||
Malaysia - 1.6% | ||||||||
Malaysia Government | ||||||||
3.418% due 08/15/22 | MYR 2,900,000 | $849,587 | ||||||
3.480% due 03/15/23 | 1,400,000 | 408,773 | ||||||
3.580% due 09/28/18 | 1,280,000 | 390,135 | ||||||
4.160% due 07/15/21 | 100,000 | 30,912 | ||||||
4.262% due 09/15/16 | 1,300,000 | 406,546 | ||||||
|
| |||||||
2,085,953 | ||||||||
|
| |||||||
Mexico - 2.9% | ||||||||
Mexican Bonos | ||||||||
6.500% due 06/09/22 | MXN 4,000,000 | 316,508 | ||||||
7.500% due 06/03/27 | 6,200,000 | 517,604 | ||||||
7.750% due 05/29/31 | 6,300,000 | 527,463 | ||||||
7.750% due 11/13/42 | 2,000,000 | 164,307 | ||||||
8.500% due 05/31/29 | 5,870,000 | 526,505 | ||||||
8.500% due 11/18/38 | 3,000,000 | 267,787 | ||||||
10.000% due 12/05/24 | 1,000,000 | 99,318 | ||||||
10.000% due 11/20/36 | 4,000,000 | 406,948 | ||||||
Mexico Government | ||||||||
4.750% due 03/08/44 | $170,000 | 161,883 | ||||||
5.750% due 10/12/10 | 160,000 | 158,000 | ||||||
5.950% due 03/19/19 | 130,000 | 151,450 | ||||||
6.050% due 01/11/40 | 112,000 | 127,960 | ||||||
6.750% due 09/27/34 | 250,000 | 306,250 | ||||||
|
| |||||||
3,731,983 | ||||||||
|
| |||||||
Morocco - 0.2% | ||||||||
Morocco Government | 300,000 | 292,500 | ||||||
|
| |||||||
Nigeria - 0.1% | ||||||||
Nigeria Government | NGN 10,000,000 | 65,361 | ||||||
|
| |||||||
Pakistan - 0.2% | ||||||||
Pakistan Government | $200,000 | 205,500 | ||||||
|
| |||||||
Panama - 0.4% | ||||||||
Panama Government | ||||||||
4.300% due 04/29/53 | 40,000 | 32,950 | ||||||
6.700% due 01/26/36 | 200,000 | 236,000 | ||||||
8.875% due 09/30/27 | 90,000 | 125,100 | ||||||
9.375% due 04/01/29 | 70,000 | 99,610 | ||||||
|
| |||||||
493,660 | ||||||||
|
| |||||||
Paraguay - 0.1% | ||||||||
Republic of Paraguay | 200,000 | 200,000 | ||||||
|
| |||||||
Peru - 0.8% | ||||||||
Peruvian Government | ||||||||
6.850% due 02/12/42 ~ | PEN 65,000 | 22,483 | ||||||
6.900% due 08/12/37 ~ | 217,000 | 76,491 | ||||||
6.950% due 08/12/31 ~ | 170,000 | 61,099 | ||||||
7.125% due 03/30/19 | $40,000 | 48,450 | ||||||
7.350% due 07/21/25 | 168,000 | 216,930 | ||||||
8.200% due 08/12/26 ~ | PEN 718,000 | 295,176 | ||||||
8.750% due 11/21/33 | $270,000 | 395,550 | ||||||
|
| |||||||
1,116,179 | ||||||||
|
|
Principal | Value | |||||||
Philippines - 1.3% | ||||||||
Philippine Government | ||||||||
3.900% due 11/26/22 | PHP 10,000,000 | $214,071 | ||||||
4.000% due 01/15/21 | $180,000 | 189,675 | ||||||
7.750% due 01/14/31 | 120,000 | 164,550 | ||||||
9.500% due 02/02/30 | 427,000 | 666,120 | ||||||
10.625% due 03/16/25 | 270,000 | 421,537 | ||||||
|
| |||||||
1,655,953 | ||||||||
|
| |||||||
Poland - 2.1% | ||||||||
Poland Government | ||||||||
2.750% due 08/25/23 ^ | PLN 170,764 | 58,854 | ||||||
3.000% due 08/24/16 ^ | 250,470 | 86,581 | ||||||
3.000% due 03/17/23 | $68,000 | 63,750 | ||||||
4.000% due 10/25/23 | PLN 811,000 | 263,583 | ||||||
4.750% due 04/25/17 | 131,000 | 45,177 | ||||||
5.000% due 03/23/22 | $129,000 | 141,094 | ||||||
5.750% due 10/25/21 | PLN 601,000 | 220,421 | ||||||
5.250% due 10/25/20 | 306,000 | 109,009 | ||||||
5.500% due 10/25/19 | 921,000 | 330,986 | ||||||
5.750% due 09/23/22 | 2,892,000 | 1,063,652 | ||||||
5.750% due 04/25/29 | 467,000 | 174,287 | ||||||
6.375% due 07/15/19 | $166,000 | 195,174 | ||||||
|
| |||||||
2,752,568 | ||||||||
|
| |||||||
Romania - 1.3% | ||||||||
Romania Government | ||||||||
4.375% due 08/22/23 ~ | 444,000 | 437,895 | ||||||
5.600% due 11/28/18 | RON 80,000 | 25,906 | ||||||
5.750% due 04/29/20 | 190,000 | 61,177 | ||||||
5.800% due 10/26/15 | 560,000 | 179,894 | ||||||
5.850% due 07/28/14 | 400,000 | 124,888 | ||||||
5.850% due 04/26/23 | 120,000 | 38,672 | ||||||
5.900% due 07/26/17 | 370,000 | 120,216 | ||||||
6.125% due 01/22/44 ~ | $70,000 | 74,060 | ||||||
6.750% due 02/07/22 ~ | 502,000 | 586,712 | ||||||
|
| |||||||
1,649,420 | ||||||||
|
| |||||||
Russia - 3.8% | ||||||||
Russian Federal | ||||||||
6.200% due 01/31/18 | RUB 11,552,000 | 311,370 | ||||||
6.800% due 12/11/19 | 17,284,000 | 459,609 | ||||||
6.900% due 08/03/16 | 14,586,000 | 408,484 | ||||||
7.000% due 01/25/23 | 6,992,000 | 180,046 | ||||||
7.000% due 08/16/23 | 4,404,000 | 112,525 | ||||||
7.050% due 01/19/28 | 3,118,000 | 77,533 | ||||||
7.400% due 04/19/17 | 13,846,000 | 389,509 | ||||||
7.400% due 06/14/17 | 16,940,000 | 473,407 | ||||||
7.500% due 03/15/18 | 5,316,000 | 147,728 | ||||||
7.500% due 02/27/19 | 25,988,000 | 719,038 | ||||||
7.600% due 04/14/21 | 11,862,000 | 321,822 | ||||||
7.600% due 07/20/22 | 4,033,000 | 107,359 | ||||||
8.150% due 02/03/27 | 5,700,000 | 155,310 | ||||||
Russian Foreign | ||||||||
5.875% due 09/16/43 ~ | $200,000 | 198,500 | ||||||
7.500% due 03/31/30 § ~ | 769,940 | 877,347 | ||||||
|
| |||||||
4,939,587 | ||||||||
|
| |||||||
Senegal - 0.2% | ||||||||
Senegal Government | 200,000 | 228,250 | ||||||
|
| |||||||
Serbia - 0.7% | ||||||||
Republic of Serbia | ||||||||
4.875% due 02/25/20 ~ | 200,000 | 200,500 | ||||||
5.875% due 12/03/18 ~ | 200,000 | 212,500 | ||||||
7.250% due 09/28/21 ~ | 400,000 | 449,540 | ||||||
|
| |||||||
862,540 | ||||||||
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-34
PACIFIC LIFE FUNDS
PL EMERGING MARKETS DEBT FUND
Schedule of Investments (Continued)
March 31, 2014
Principal | Value | |||||||
South Africa - 3.7% | ||||||||
South Africa Government | ||||||||
5.500% due 03/09/20 | $200,000 | $218,200 | ||||||
5.875% due 05/30/22 | 200,000 | 220,540 | ||||||
6.250% due 03/31/36 | ZAR 2,000,000 | 141,877 | ||||||
6.500% due 02/28/41 | 2,200,000 | 156,967 | ||||||
6.750% due 03/31/21 | 1,100,000 | 96,618 | ||||||
6.875% due 05/27/19 | $210,000 | 243,075 | ||||||
7.000% due 02/28/31 | ZAR 9,880,000 | 794,358 | ||||||
7.750% due 02/28/23 | 7,000,000 | 642,989 | ||||||
8.000% due 12/21/18 | 7,800,000 | 746,543 | ||||||
8.250% due 09/15/17 | 8,000,000 | 775,224 | ||||||
8.750% due 02/28/48 | 1,100,000 | 101,175 | ||||||
10.500% due 12/21/26 | 6,300,000 | 694,614 | ||||||
|
| |||||||
4,832,180 | ||||||||
|
| |||||||
Sri Lanka - 0.2% | ||||||||
Sri Lanka Government | $200,000 | 209,250 | ||||||
|
| |||||||
Thailand - 1.4% | ||||||||
Thailand Government | ||||||||
1.200% due 07/14/21 ^ ~ | THB 4,253,880 | 125,007 | ||||||
1.250% due 03/12/28 ^ ~ | 3,060,810 | 84,538 | ||||||
3.250% due 06/16/17 | 10,000,000 | 313,872 | ||||||
3.625% due 06/16/23 | 14,443,000 | 444,549 | ||||||
3.650% due 12/17/21 | 6,900,000 | 214,308 | ||||||
3.875% due 06/13/19 | 21,700,000 | 692,059 | ||||||
|
| |||||||
1,874,333 | ||||||||
|
| |||||||
Turkey - 3.6% | ||||||||
Turkey Government | ||||||||
3.000% due 02/23/22 ^ | TRY 1,775,973 | 808,845 | ||||||
4.000% due 04/01/20 ^ | 399,734 | 193,823 | ||||||
5.625% due 03/30/21 | $100,000 | 104,800 | ||||||
6.000% due 01/14/41 | 200,000 | 197,250 | ||||||
6.750% due 04/03/18 | 190,000 | 209,855 | ||||||
6.875% due 03/17/36 | 430,000 | 467,732 | ||||||
7.000% due 06/05/20 | 345,000 | 388,677 | ||||||
7.100% due 03/08/23 | TRY 500,000 | 193,368 | ||||||
7.250% due 03/05/38 | $160,000 | 181,600 | ||||||
7.375% due 02/05/25 | 125,000 | 143,687 | ||||||
7.500% due 07/14/17 | 120,000 | 135,344 | ||||||
8.000% due 02/14/34 | 160,000 | 194,400 | ||||||
8.300% due 06/20/18 | TRY 530,000 | 232,960 | ||||||
8.500% due 09/14/22 | 700,000 | 299,341 | ||||||
8.800% due 09/27/23 | 300,000 | 129,481 | ||||||
9.000% due 05/21/14 ^ | 822,040 | 388,987 | ||||||
9.500% due 01/12/22 | 300,000 | 135,650 | ||||||
10.400% due 03/27/19 | 600,000 | 282,572 | ||||||
|
| |||||||
4,688,372 | ||||||||
|
| |||||||
Ukraine - 1.1% | ||||||||
Ukraine Government | ||||||||
7.500% due 04/17/23 ~ | $600,000 | 561,000 | ||||||
7.750% due 09/23/20 ~ | 200,000 | 189,000 | ||||||
7.800% due 11/28/22 ~ | 70,000 | 65,362 | ||||||
7.950% due 06/04/14 ~ | 200,000 | 196,540 | ||||||
7.950% due 02/23/21 ~ | 200,000 | 190,000 | ||||||
9.250% due 07/24/17 ~ | 250,000 | 247,500 | ||||||
|
| |||||||
1,449,402 | ||||||||
|
| |||||||
United Arab Emirates - 0.3% | ||||||||
Emirate of Dubai Government | 325,000 | 407,550 | ||||||
|
|
Principal | Value | |||||||
Uruguay - 1.0% | ||||||||
Uruguay Government | ||||||||
3.700% due 06/26/37 ^ | UYU 1,343,227 | $56,350 | ||||||
4.125% due 11/20/45 | $167,374 | 136,234 | ||||||
4.250% due 04/05/27 ^ | UYU 6,725,901 | 309,243 | ||||||
4.375% due 12/15/28 ^ | 2,507,861 | 116,349 | ||||||
4.500% due 08/14/24 ^ | $319,235 | 328,014 | ||||||
5.000% due 09/14/18 ^ | UYU 1,072,959 | 49,826 | ||||||
7.625% due 03/21/36 | $92,000 | 118,220 | ||||||
7.875% due 01/15/33 | 168,000 | 220,920 | ||||||
|
| |||||||
1,335,156 | ||||||||
|
| |||||||
Venezuela - 1.8% | ||||||||
Venezuela Government | ||||||||
5.750% due 02/26/16 ~ | 50,000 | 43,562 | ||||||
6.000% due 12/09/20 ~ | 62,000 | 42,315 | ||||||
7.650% due 04/21/25 | 130,000 | 87,750 | ||||||
7.750% due 10/13/19 ~ | 195,000 | 149,175 | ||||||
8.250% due 10/13/24 ~ | 57,000 | 39,900 | ||||||
8.500% due 10/08/14 | 316,000 | 311,260 | ||||||
9.000% due 05/07/23 ~ | 150,000 | 112,125 | ||||||
9.250% due 09/15/27 | 85,000 | 63,750 | ||||||
9.250% due 05/07/28 ~ | 119,000 | 87,465 | ||||||
11.750% due 10/21/26 ~ | 792,100 | 679,226 | ||||||
11.950% due 08/05/31 ~ | 692,500 | 592,087 | ||||||
12.750% due 08/23/22 ~ | 207,000 | 191,475 | ||||||
|
| |||||||
2,400,090 | ||||||||
|
| |||||||
Vietnam - 0.3% | ||||||||
Vietnam Government | ||||||||
6.750% due 01/29/20 ~ | 200,000 | 225,250 | ||||||
6.875% due 01/15/16 ~ | 200,000 | 216,000 | ||||||
|
| |||||||
441,250 | ||||||||
|
| |||||||
Total Foreign Government Bonds & Notes |
| 61,111,018 | ||||||
|
| |||||||
SHORT-TERM INVESTMENTS - 14.6% | ||||||||
Foreign Government Issue - 0.1% | ||||||||
Nigeria Treasury Bills | ||||||||
14.970% due 04/10/14 | NGN 24,900,000 | 150,799 | ||||||
|
| |||||||
Shares | ||||||||
Money Market Fund - 14.5% | ||||||||
BlackRock Liquidity Funds Treasury | 18,883,230 | 18,883,230 | ||||||
|
| |||||||
Total Short-Term Investments |
| 19,034,029 | ||||||
|
| |||||||
TOTAL INVESTMENTS - 99.2% |
| 129,509,526 | ||||||
OTHER ASSETS & LIABILITIES, NET - 0.8% |
| 1,006,423 | ||||||
|
| |||||||
NET ASSETS - 100.0% |
| $130,515,949 | ||||||
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-35
PACIFIC LIFE FUNDS
PL EMERGING MARKETS DEBT FUND
Schedule of Investments (Continued)
March 31, 2014
Notes to Schedule of Investments
(a) | As of March 31, 2014, the fund was diversified as a percentage of net assets as follows: |
Foreign Government Bonds & Notes | 46.8% | |||
Corporate Bonds & Notes | 36.2% | |||
Short-Term Investments | 14.6% | |||
Others (each less than 3.0%) | 1.6% | |||
|
| |||
99.2% | ||||
Other Assets & Liabilities, Net | 0.8% | |||
|
| |||
100.0% | ||||
|
|
(b) | As of March 31, 2014, the fund’s Standard & Poor’s quality ratings as a percentage of total fixed income investments were as follows (Unaudited): |
AA | 0.4% | |||
A | 8.8% | |||
BBB | 21.0% | |||
BB | 20.1% | |||
B | 16.4% | |||
CCC | 2.1% | |||
Not Rated | 31.2% | |||
|
| |||
100.0% | ||||
|
|
(c) | Investments reflect the stated coupon rate or for discounted investments or zero coupon bonds, the annualized effective yield on the date of purchase. |
(d) | Forward foreign currency contracts outstanding as of March 31, 2014 were as follows: |
Currency Purchased | Currency Sold | Expiration | Counterparty | Unrealized Appreciation (Depreciation) | ||||||||||||||||
BRL | 1,588,060 | USD | 701,750 | 04/14 | BRC | ($2,221 | ) | |||||||||||||
BRL | 1,680,935 | USD | 742,791 | 04/14 | GSC | (2,350 | ) | |||||||||||||
BRL | 1,327,480 | USD | 550,000 | 04/14 | GSC | 34,746 | ||||||||||||||
BRL | 476,408 | USD | 199,281 | 04/14 | MER | 10,574 | ||||||||||||||
BRL | 1,746,807 | USD | 740,000 | 04/14 | MSC | 29,456 | ||||||||||||||
BRL | 281,700 | USD | 124,481 | 04/14 | UBS | (394 | ) | |||||||||||||
BRL | 279,720 | USD | 120,000 | 05/14 | BRC | 2,155 | ||||||||||||||
BRL | 1,680,935 | USD | 713,440 | 05/14 | GSC | 20,633 | ||||||||||||||
BRL | 1,444,290 | USD | 620,000 | 05/14 | SCB | 10,729 | ||||||||||||||
CLP | 22,220,000 | USD | 40,000 | 04/14 | GSC | 389 | ||||||||||||||
CLP | 52,153,875 | USD | 93,248 | 04/14 | HSB | 1,552 | ||||||||||||||
CLP | 147,298,262 | USD | 263,385 | 04/14 | SCB | 4,359 | ||||||||||||||
CNH | 5,513,200 | USD | 895,000 | 03/15 | HSB | (13,864 | ) | |||||||||||||
CNH | 5,632,467 | USD | 903,413 | 03/15 | SCB | (3,444 | ) | |||||||||||||
CNY | 12,896,845 | USD | 2,102,964 | 04/14 | HSB | (30,166 | ) | |||||||||||||
CNY | 1,049,580 | USD | 170,000 | 04/14 | MER | (1,310 | ) | |||||||||||||
COP | 138,320,000 | USD | 70,000 | 04/14 | BRC | 11 | ||||||||||||||
COP | 1,333,384,800 | USD | 660,000 | 04/14 | CSF | 15,280 | ||||||||||||||
CZK | 14,299,961 | USD | 708,994 | 04/14 | DUB | 8,762 | ||||||||||||||
CZK | 797,002 | USD | 40,000 | 04/14 | MSC | 4 | ||||||||||||||
CZK | 4,681,124 | USD | 235,412 | 05/14 | BRC | (409 | ) | |||||||||||||
EUR | 800,000 | USD | 1,082,516 | 04/14 | BRC | 19,572 | ||||||||||||||
HUF | 108,105,936 | USD | 481,127 | 04/14 | DUB | 2,619 | ||||||||||||||
HUF | 43,161,882 | USD | 190,000 | 04/14 | UBS | 3,138 | ||||||||||||||
IDR | 595,702,496 | USD | 51,900 | 04/14 | DUB | 264 | ||||||||||||||
IDR | 1,474,720,000 | USD | 130,000 | 04/14 | MER | (865 | ) | |||||||||||||
IDR | 1,949,900,000 | USD | 170,000 | 04/14 | SCB | 744 | ||||||||||||||
ILS | 691,160 | USD | 197,100 | 04/14 | DUB | 1,016 | ||||||||||||||
ILS | 876,613 | USD | 250,000 | 04/14 | MER | 1,274 | ||||||||||||||
INR | 68,686,936 | USD | 1,098,200 | 04/14 | GSC | 42,637 | ||||||||||||||
INR | 78,188,000 | USD | 1,255,387 | 04/14 | MER | 43,256 | ||||||||||||||
KRW | 874,284,000 | USD | 820,000 | 04/14 | JPM | 115 | ||||||||||||||
MXN | 2,499,326 | USD | 190,000 | 04/14 | BRC | 996 | ||||||||||||||
MXN | 14,694,219 | USD | 1,095,725 | 04/14 | CIT | 27,193 | ||||||||||||||
MXN | 10,747,716 | USD | 802,158 | 04/14 | CSF | 19,172 | ||||||||||||||
MXN | 17,557,848 | USD | 1,340,000 | 04/14 | GSC | 1,753 | ||||||||||||||
MXN | 5,234,125 | USD | 390,138 | 04/14 | JPM | 9,849 | ||||||||||||||
MXN | 9,423,363 | USD | 701,253 | 04/14 | SCB | 18,871 | ||||||||||||||
MXN | 6,475,767 | USD | 482,978 | 05/14 | CIT | 10,713 | ||||||||||||||
MXN | 10,744,222 | USD | 802,011 | 05/14 | HSB | 17,092 | ||||||||||||||
MYR | 130,820 | USD | 40,000 | 04/14 | BRC | (24 | ) | |||||||||||||
MYR | 1,322,220 | USD | 398,509 | 04/14 | BRC | 5,530 | ||||||||||||||
MYR | 197,310 | USD | 60,000 | 04/14 | GSC | 293 | ||||||||||||||
MYR | 570,000 | USD | 173,442 | 04/14 | JPM | 737 | ||||||||||||||
MYR | 329,750 | USD | 100,000 | 04/14 | MER | 764 | ||||||||||||||
MYR | 2,199,113 | USD | 668,423 | 05/14 | BRC | 2,150 | ||||||||||||||
MYR | 1,300,000 | USD | 394,621 | 06/14 | DUB | 1,008 | ||||||||||||||
MYR | 1,400,000 | USD | 424,307 | 06/14 | UBS | 1,755 | ||||||||||||||
PEN | 112,320 | USD | 39,584 | 04/14 | UBS | 205 | ||||||||||||||
PEN | 142,023 | USD | 48,497 | 11/14 | DUB | 757 | ||||||||||||||
PEN | 523,801 | USD | 179,138 | 11/14 | MER | 2,517 | ||||||||||||||
PEN | 123,981 | USD | 42,271 | 11/14 | MSC | 726 | ||||||||||||||
PHP | 36,198,825 | USD | 796,454 | 05/14 | HSB | 9,577 |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-36
PACIFIC LIFE FUNDS
PL EMERGING MARKETS DEBT FUND
Schedule of Investments (Continued)
March 31, 2014
Currency Purchased | Currency Sold | Expiration | Counterparty | Unrealized Appreciation (Depreciation) | ||||||||||||||||
PLN | 1,836,855 | USD | 593,049 | 04/14 | BRC | $13,245 | ||||||||||||||
PLN | 5,257,703 | USD | 1,728,517 | 05/14 | DUB | 3,686 | ||||||||||||||
RON | 2,445,380 | USD | 734,128 | 04/14 | DUB | 19,824 | ||||||||||||||
RUB | 12,115,900 | USD | 340,000 | 04/14 | BRC | 3,064 | ||||||||||||||
RUB | 38,053,664 | USD | 1,058,367 | 04/14 | HSB | 18,909 | ||||||||||||||
RUB | 8,604,000 | USD | 240,000 | 04/14 | JPM | 3,501 | ||||||||||||||
RUB | 6,815,300 | USD | 190,000 | 04/14 | MER | 2,880 | ||||||||||||||
RUB | 64,213,358 | USD | 1,756,457 | 05/14 | BRC | 49,508 | ||||||||||||||
RUB | 35,096,375 | USD | 955,531 | 05/14 | CSF | 31,535 | ||||||||||||||
RUB | 5,841,600 | USD | 160,000 | 05/14 | HSB | 4,292 | ||||||||||||||
SGD | 88,241 | USD | 70,000 | 04/14 | BRC | 151 | ||||||||||||||
SGD | 2,958,048 | USD | 2,334,687 | 04/14 | MER | 16,927 | ||||||||||||||
THB | 8,152,500 | USD | 250,000 | 04/14 | BRC | 977 | ||||||||||||||
THB | 11,343,939 | USD | 344,478 | 04/14 | UBS | 4,749 | ||||||||||||||
THB | 11,800,000 | USD | 363,356 | 05/14 | GSC | (592 | ) | |||||||||||||
THB | 9,500,000 | USD | 291,859 | 05/14 | MER | 197 | ||||||||||||||
THB | 29,867,371 | USD | 917,443 | 06/14 | SCB | (463 | ) | |||||||||||||
TRY | 1,494,100 | USD | 670,000 | 04/14 | HSB | 21,751 | ||||||||||||||
TRY | 1,491,052 | USD | 670,000 | 04/14 | UBS | 20,340 | ||||||||||||||
TRY | 1,384,938 | USD | 620,000 | 05/14 | CIT | 15,548 | ||||||||||||||
TRY | 762,875 | USD | 340,000 | 05/14 | HSB | 10,083 | ||||||||||||||
TWD | 2,738,700 | USD | 90,000 | 04/14 | GSC | 15 | ||||||||||||||
TWD | 28,100,000 | USD | 929,386 | 04/14 | MER | (5,804 | ) | |||||||||||||
TWD | 27,630,174 | USD | 912,339 | 04/14 | SCB | (4,198 | ) | |||||||||||||
USD | 660,124 | BRL | 1,588,060 | 04/14 | BRC | (39,406 | ) | |||||||||||||
USD | 718,963 | BRL | 1,680,935 | 04/14 | GSC | (21,477 | ) | |||||||||||||
USD | 586,602 | BRL | 1,327,480 | 04/14 | GSC | 1,856 | ||||||||||||||
USD | 210,521 | BRL | 476,408 | 04/14 | MER | 666 | ||||||||||||||
USD | 771,899 | BRL | 1,746,807 | 04/14 | MSC | 2,442 | ||||||||||||||
USD | 120,000 | BRL | 281,700 | 04/14 | UBS | (4,087 | ) | |||||||||||||
USD | 907,296 | BRL | 2,076,165 | 05/14 | CIT | 624 | ||||||||||||||
USD | 895,000 | CNH | 5,585,695 | 03/17 | HSB | 10,936 | ||||||||||||||
USD | 264,033 | CNH | 1,671,328 | 03/17 | SCB | (455 | ) | |||||||||||||
USD | 639,380 | CNH | 4,033,849 | 03/17 | SCB | 1,023 | ||||||||||||||
USD | 493,618 | COP | 995,379,862 | 04/14 | JPM | (10,483 | ) | |||||||||||||
USD | 102,470 | COP | 202,833,685 | 04/14 | MER | (253 | ) | |||||||||||||
USD | 146,853 | EUR | 107,405 | 04/14 | BRC | (1,109 | ) | |||||||||||||
USD | 3,084,099 | EUR | 2,270,240 | 04/14 | DUB | (43,407 | ) | |||||||||||||
USD | 1,448,464 | GBP | 882,133 | 04/14 | UBS | (22,015 | ) | |||||||||||||
USD | 245,407 | HUF | 55,493,374 | 05/14 | BRC | (2,524 | ) | |||||||||||||
USD | 23,450 | HUF | 5,350,662 | 05/14 | DUB | (455 | ) | |||||||||||||
USD | 50,793 | KRW | 54,150,000 | 04/14 | UBS | (2 | ) | |||||||||||||
USD | 217,666 | MXN | 2,856,736 | 04/14 | DUB | (642 | ) | |||||||||||||
USD | 344,841 | MXN | 4,587,493 | 04/14 | HSB | (5,730 | ) | |||||||||||||
USD | 219,967 | PLN | 670,760 | 05/14 | BRC | (1,001 | ) | |||||||||||||
USD | 188,303 | PLN | 571,225 | 05/14 | DUB | 101 | ||||||||||||||
USD | 71,421 | RON | 236,182 | 04/14 | BRC | (1,398 | ) | |||||||||||||
USD | 10,354 | RON | 34,235 | 04/14 | JPM | (201 | ) | |||||||||||||
USD | 378,963 | RON | 1,251,336 | 05/14 | BRC | (6,103 | ) | |||||||||||||
USD | 557,119 | RUB | 20,376,683 | 04/14 | BRC | (19,560 | ) | |||||||||||||
USD | 1,104,587 | RUB | 39,989,248 | 04/14 | CSF | (27,411 | ) | |||||||||||||
USD | 456,470 | RUB | 16,821,109 | 04/14 | HSB | (19,583 | ) | |||||||||||||
USD | 892,324 | RUB | 31,250,534 | 04/14 | HSB | 7,459 | ||||||||||||||
USD | 275,710 | RUB | 9,888,973 | 05/14 | HSB | (2,412 | ) | |||||||||||||
USD | 80,000 | SGD | 101,244 | 04/14 | MER | (488 | ) | |||||||||||||
USD | 730,000 | TRY | 1,702,360 | 04/14 | CIT | (58,173 | ) | |||||||||||||
USD | 161,063 | TRY | 374,504 | 04/14 | DUB | (12,328 | ) | |||||||||||||
USD | 234,252 | TRY | 527,792 | 04/14 | MSC | (10,110 | ) | |||||||||||||
USD | 50,000 | TRY | 108,030 | 04/14 | UBS | (17 | ) | |||||||||||||
USD | 411,385 | TRY | 894,885 | 05/14 | HSB | 722 | ||||||||||||||
USD | 355,158 | TRY | 855,303 | 08/14 | DUB | (27,391 | ) | |||||||||||||
USD | 635,108 | ZAR | 6,984,066 | 04/14 | BRC | (25,230 | ) | |||||||||||||
USD | 694,892 | ZAR | 7,638,395 | 04/14 | UBS | (27,313 | ) | |||||||||||||
ZAR | 1,196,951 | USD | 110,000 | 04/14 | DUB | 3,171 | ||||||||||||||
ZAR | 7,739,078 | USD | 715,197 | 04/14 | GSC | 16,527 | ||||||||||||||
ZAR | 644,290 | USD | 60,000 | 04/14 | UBS | 917 | ||||||||||||||
|
| |||||||||||||||||||
Total Forward Foreign Currency Contracts | $215,701 | |||||||||||||||||||
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-37
PACIFIC LIFE FUNDS
PL EMERGING MARKETS DEBT FUND
Schedule of Investments (Continued)
March 31, 2014
(e) | Swap agreements outstanding as of March 31, 2014 were as follows: |
Interest Rate Swaps
Floating Rate Index | Counter- party | Pay/Receive Floating Rate | Fixed Rate | Expiration Date | Notional Amount | Value | Upfront Premiums Paid (Received) | Unrealized Depreciation | ||||||||||||||||||||
Brazil CETIP Interbank | HSB | Pay | 10.955% | 07/01/15 | BRL 1,678,377 | ($8,802 | ) | $— | ($8,802 | ) | ||||||||||||||||||
3-Month ZAR JIBAR | BRC | Pay | 6.580% | 11/07/16 | ZAR 6,800,000 | (8,171 | ) | — | (8,171 | ) | ||||||||||||||||||
Brazil CETIP Interbank | HSB | Pay | 12.303% | 01/02/17 | BRL 3,251,816 | (51,737 | ) | — | (51,737 | ) | ||||||||||||||||||
Brazil CETIP Interbank | HSB | Pay | 12.490% | 01/02/17 | 1,587,981 | (22,255 | ) | — | (22,255 | ) | ||||||||||||||||||
3-Month ZAR JIBAR | HSB | Pay | 6.695% | 01/14/17 | ZAR 3,762,000 | (1,406 | ) | (1,406 | ) | |||||||||||||||||||
3-Month ZAR JIBAR | MSC | Pay | 6.760% | 01/17/17 | 3,800,000 | (3,031 | ) | — | (3,031 | ) | ||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||
($95,402 | ) | $— | ($95,402 | ) | ||||||||||||||||||||||||
|
|
|
|
|
|
Total Return Swaps
Receive Total Return | Counter- party | Expiration Date | Notional Amount | Value | Upfront Premiums Paid (Received) | Unrealized Appreciation (Depreciation) | ||||||||||||||||
Indonesia Treasury 12.800% due 06/15/21 | SCB | 06/15/21 | IDR 3,600,000,000 | $414,276 | $431,923 | ($17,647 | ) | |||||||||||||||
Indonesia Treasury 8.375% due 03/15/24 | SCB | 03/15/24 | 6,041,000,000 | 550,454 | 525,328 | 25,126 | ||||||||||||||||
Indonesia Treasury 11.000% due 09/15/25 | SCB | 09/15/25 | 800,000,000 | 84,550 | 96,099 | (11,549 | ) | |||||||||||||||
Indonesia Treasury 8.375% due 09/15/26 | SCB | 09/15/26 | 900,000,000 | 79,708 | 90,713 | (11,005 | ) | |||||||||||||||
Indonesia Treasury 7.000% due 05/15/27 | SCB | 05/15/27 | 1,800,000,000 | 144,396 | 162,143 | (17,747 | ) | |||||||||||||||
Indonesia Treasury 10.500% due 08/15/30 | SCB | 08/15/30 | 1,500,000,000 | 157,090 | 178,474 | (21,384 | ) | |||||||||||||||
Indonesia Treasury 6.625% due 05/15/33 | SCB | 05/15/33 | 270,000,000 | 19,937 | 22,825 | (2,888 | ) | |||||||||||||||
Indonesia Treasury 8.375% due 03/15/34 | HSB | 03/15/34 | 584,000,000 | 74,477 | 68,927 | 5,550 | ||||||||||||||||
Indonesia Treasury 8.375% due 03/15/34 | SCB | 03/15/34 | 1,279,000,000 | 88,633 | 82,025 | 6,608 | ||||||||||||||||
|
|
|
|
|
| |||||||||||||||||
$1,613,521 | $1,658,457 | ($44,936 | ) | |||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||
Total Swap Agreements | $1,518,119 | $1,658,457 | ($140,338 | ) | ||||||||||||||||||
|
|
|
|
|
|
(f) | Fair Value Measurements |
The following is a summary of the fund’s investments as categorized under the three-tier hierarchy of inputs used in valuing the fund’s assets and liabilities (See Note 3D in Notes to Financial Statements) as of March 31, 2014:
Total Value at March 31, 2014 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||||
Assets | Corporate Bonds & Notes | $47,265,883 | $— | $47,265,883 | $— | |||||||||||||
Convertible Corporate Bonds & Notes | 159,095 | — | 159,095 | — | ||||||||||||||
Senior Loan Notes | 1,939,501 | — | 1,939,501 | — | ||||||||||||||
Foreign Government Bonds & Notes | 61,111,018 | — | 61,111,018 | — | ||||||||||||||
Short-Term Investments | 19,034,029 | 18,883,230 | 150,799 | — | ||||||||||||||
Derivatives: | ||||||||||||||||||
Foreign Currency Contracts | ||||||||||||||||||
Forward Foreign Currency Contracts | 672,569 | — | 672,569 | — | ||||||||||||||
Interest Rate Contracts | ||||||||||||||||||
Swaps | 1,613,521 | — | 1,613,521 | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Assets-Derivatives | 2,286,090 | — | 2,286,090 | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Assets | 131,795,616 | 18,883,230 | 112,912,386 | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Liabilities | Derivatives: | |||||||||||||||||
Foreign Currency Contracts | ||||||||||||||||||
Forward Foreign Currency Contracts | (456,868 | ) | — | (456,868 | ) | — | ||||||||||||
Interest Rate Contracts | ||||||||||||||||||
Swaps | (95,402 | ) | — | (95,402 | ) | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Liabilities-Derivatives | (552,270 | ) | — | (552,270 | ) | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Liabilities | (552,270 | ) | — | (552,270 | ) | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total | $131,243,346 | $18,883,230 | $112,360,116 | $— | ||||||||||||||
|
|
|
|
|
|
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-38
PACIFIC LIFE FUNDS
PL COMSTOCK FUND
Schedule of Investments
March 31, 2014
| Value | |||||||
COMMON STOCKS - 96.7% | ||||||||
Consumer Discretionary - 13.5% | ||||||||
Carnival Corp (Panama) | 120,593 | $4,565,651 | ||||||
Comcast Corp ‘A’ | 85,893 | 4,296,367 | ||||||
General Motors Co | 165,419 | 5,693,721 | ||||||
Johnson Controls Inc | 67,905 | 3,213,264 | ||||||
Kohl’s Corp | 58,915 | 3,346,371 | ||||||
Newell Rubbermaid Inc | 60,714 | 1,815,349 | ||||||
Target Corp | 35,675 | 2,158,694 | ||||||
Time Warner Cable Inc | 29,229 | 4,009,634 | ||||||
Time Warner Inc | 27,129 | 1,772,338 | ||||||
Twenty-First Century Fox Inc ‘B’ | 124,246 | 3,866,536 | ||||||
Viacom Inc ‘B’ | 82,853 | 7,041,676 | ||||||
|
| |||||||
41,779,601 | ||||||||
|
| |||||||
Consumer Staples - 5.0% | ||||||||
ConAgra Foods Inc | 153,696 | 4,769,187 | ||||||
CVS Caremark Corp | 70,988 | 5,314,162 | ||||||
Mondelez International Inc ‘A’ | 75,907 | 2,622,587 | ||||||
Tyson Foods Inc ‘A’ | 3,464 | 152,451 | ||||||
Unilever NV ‘NY’ (Netherlands) | 60,836 | 2,501,576 | ||||||
|
| |||||||
15,359,963 | ||||||||
|
| |||||||
Energy - 15.9% | ||||||||
BP PLC ADR (United Kingdom) | 122,887 | 5,910,865 | ||||||
Chevron Corp | 31,548 | 3,751,373 | ||||||
Halliburton Co | 124,056 | 7,305,658 | ||||||
Murphy Oil Corp | 62,420 | 3,923,721 | ||||||
Noble Corp PLC (United Kingdom) | 33,828 | 1,107,529 | ||||||
Occidental Petroleum Corp | 36,862 | 3,512,580 | ||||||
QEP Resources Inc | 109,383 | 3,220,236 | ||||||
Royal Dutch Shell PLC ‘A’ ADR (United Kingdom) | 81,405 | 5,947,449 | ||||||
Suncor Energy Inc (Canada) | 180,299 | 6,303,253 | ||||||
Weatherford International Ltd (Switzerland) * | 473,892 | 8,226,765 | ||||||
|
| |||||||
49,209,429 | ||||||||
|
| |||||||
Financials - 24.2% | ||||||||
Aflac Inc | 28,637 | 1,805,276 | ||||||
Bank of America Corp | 326,087 | 5,608,696 | ||||||
Citigroup Inc | 255,511 | 12,162,324 | ||||||
Fifth Third Bancorp | 150,530 | 3,454,664 | ||||||
JPMorgan Chase & Co | 169,469 | 10,288,463 | ||||||
MetLife Inc | 76,926 | 4,061,693 | ||||||
Morgan Stanley | 154,298 | 4,809,469 | ||||||
State Street Corp | 33,630 | 2,338,967 | ||||||
The Allstate Corp | 103,998 | 5,884,207 | ||||||
The Bank of New York Mellon Corp | 190,875 | 6,735,979 | ||||||
The Goldman Sachs Group Inc | 17,571 | 2,879,008 | ||||||
The PNC Financial Services Group Inc | 58,506 | 5,090,022 | ||||||
The Travelers Cos Inc | 12,673 | 1,078,472 | ||||||
US Bancorp | 37,378 | 1,602,021 | ||||||
Wells Fargo & Co | 139,911 | 6,959,173 | ||||||
|
| |||||||
74,758,434 | ||||||||
|
| |||||||
Health Care - 14.8% | ||||||||
Bristol-Myers Squibb Co | 80,981 | 4,206,963 | ||||||
Cardinal Health Inc | 26,410 | 1,848,172 | ||||||
Express Scripts Holding Co * | 32,308 | 2,426,008 | ||||||
GlaxoSmithKline PLC ADR (United Kingdom) | 52,432 | 2,801,442 | ||||||
Merck & Co Inc | 124,804 | 7,085,123 | ||||||
Novartis AG (Switzerland) | 54,047 | 4,590,504 | ||||||
Pfizer Inc | 167,143 | 5,368,633 | ||||||
Roche Holding AG ADR (Switzerland) | 81,759 | 3,083,949 | ||||||
Sanofi ADR (France) | 79,941 | 4,179,315 | ||||||
UnitedHealth Group Inc | 76,804 | 6,297,160 | ||||||
WellPoint Inc | 37,884 | 3,771,352 | ||||||
|
| |||||||
45,658,621 | ||||||||
|
|
| Value | |||||||
Industrials - 6.5% | ||||||||
Emerson Electric Co | 52,907 | $ 3,534,188 | ||||||
General Electric Co | 241,044 | 6,240,629 | ||||||
Honeywell International Inc | 25,705 | 2,384,396 | ||||||
Ingersoll-Rand PLC (Ireland) | 69,915 | 4,001,935 | ||||||
Textron Inc | 97,130 | 3,816,238 | ||||||
|
| |||||||
19,977,386 | ||||||||
|
| |||||||
Information Technology - 10.1% | ||||||||
Autodesk Inc * | 36,773 | 1,808,496 | ||||||
Cisco Systems Inc | 212,195 | 4,755,290 | ||||||
Corning Inc | 173,788 | 3,618,266 | ||||||
eBay Inc * | 80,460 | 4,444,610 | ||||||
Hewlett-Packard Co | 185,503 | 6,002,877 | ||||||
Intel Corp | 111,013 | 2,865,246 | ||||||
Microsoft Corp | 139,495 | 5,717,900 | ||||||
Yahoo! Inc * | 51,965 | 1,865,544 | ||||||
|
| |||||||
31,078,229 | ||||||||
|
| |||||||
Materials - 2.2% | ||||||||
Alcoa Inc | 284,676 | 3,663,780 | ||||||
International Paper Co | 65,069 | 2,985,366 | ||||||
|
| |||||||
6,649,146 | ||||||||
|
| |||||||
Telecommunication Services - 2.0% | ||||||||
AT&T Inc | 33,174 | 1,163,412 | ||||||
Verizon Communications Inc | 67,036 | 3,188,903 | ||||||
Vivendi SA (France) | 32,559 | 908,299 | ||||||
Vodafone Group PLC ADR (United Kingdom) | 23,156 | 852,372 | ||||||
|
| |||||||
6,112,986 | ||||||||
|
| |||||||
Utilities - 2.5% | ||||||||
FirstEnergy Corp | 43,572 | 1,482,755 | ||||||
PG&E Corp | 58,134 | 2,511,389 | ||||||
PPL Corp | 111,272 | 3,687,554 | ||||||
|
| |||||||
7,681,698 | ||||||||
|
| |||||||
Total Common Stocks | 298,265,493 | |||||||
|
| |||||||
SHORT-TERM INVESTMENT - 3.4% | ||||||||
Money Market Fund - 3.4% | ||||||||
BlackRock Liquidity Funds Treasury | 10,536,193 | 10,536,193 | ||||||
|
| |||||||
Total Short-Term Investment | 10,536,193 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 100.1% | 308,801,686 | |||||||
OTHER ASSETS & LIABILITIES, NET - (0.1%) | (203,878 | ) | ||||||
|
| |||||||
NET ASSETS - 100.0% | $308,597,808 | |||||||
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-39
PACIFIC LIFE FUNDS
PL COMSTOCK FUND
Schedule of Investments (Continued)
March 31, 2014
Notes to Schedule of Investments
(a) | As of March 31, 2014, the fund was diversified as a percentage of net assets as follows: |
Financials | 24.2% | |||
Energy | 15.9% | |||
Health Care | 14.8% | |||
Consumer Discretionary | 13.5% | |||
Information Technology | 10.1% | |||
Industrials | 6.5% | |||
Consumer Staples | 5.0% | |||
Short-Term Investment | 3.4% | |||
Others (each less than 3.0%) | 6.7% | |||
|
| |||
100.1% | ||||
Other Assets & Liabilities, Net | (0.1% | ) | ||
|
| |||
100.0% | ||||
|
|
(b) | Forward foreign currency contracts outstanding as of March 31, 2014 were as follows: |
Currency Purchased | Currency Sold | Expiration | Counterparty | Unrealized Appreciation (Depreciation) | ||||||||||||||||
USD | 1,614,780 | CAD | 1,813,469 | 04/14 | BRC | ($24,568 | ) | |||||||||||||
USD | 1,645,312 | CAD | 1,847,858 | 04/14 | CIB | (25,123 | ) | |||||||||||||
USD | 1,615,016 | CAD | 1,813,469 | 04/14 | GSC | (24,332 | ) | |||||||||||||
USD | 2,155,733 | CHF | 1,905,222 | 04/14 | BRC | 137 | ||||||||||||||
USD | 2,107,940 | CHF | 1,863,025 | 04/14 | CIT | 86 | ||||||||||||||
USD | 2,107,972 | CHF | 1,863,026 | 04/14 | GSC | 117 | ||||||||||||||
USD | 2,780,390 | EUR | 2,016,567 | 04/14 | BRC | 2,434 | ||||||||||||||
USD | 2,779,836 | EUR | 2,016,566 | 04/14 | CIB | 1,879 | ||||||||||||||
USD | 2,780,645 | EUR | 2,016,566 | 04/14 | CIT | 2,688 | ||||||||||||||
USD | 2,776,892 | EUR | 2,013,986 | 04/14 | GSC | 2,489 | ||||||||||||||
USD | 1,994,326 | GBP | 1,209,646 | 04/14 | BRC | (21,913 | ) | |||||||||||||
USD | 1,994,838 | GBP | 1,209,645 | 04/14 | CIB | (21,400 | ) | |||||||||||||
USD | 1,975,695 | GBP | 1,198,149 | 04/14 | CIT | (21,381 | ) | |||||||||||||
USD | 1,994,561 | GBP | 1,209,646 | 04/14 | GSC | (21,678 | ) | |||||||||||||
|
| |||||||||||||||||||
Total Forward Foreign Currency Contracts | ($150,565 | ) | ||||||||||||||||||
|
|
(c) | Fair Value Measurements |
The following is a summary of the fund’s investments as categorized under the three-tier hierarchy of inputs used in valuing the fund’s assets and liabilities (See Note 3D in Notes to Financial Statements) as of March 31, 2014:
Total Value at March 31, 2014 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||||
Assets | Common Stocks | |||||||||||||||||
Consumer Discretionary | $41,779,601 | $41,779,601 | $— | $— | ||||||||||||||
Consumer Staples | 15,359,963 | 15,359,963 | — | — | ||||||||||||||
Energy | 49,209,429 | 49,209,429 | — | — | ||||||||||||||
Financials | 74,758,434 | �� | 74,758,434 | — | — | |||||||||||||
Health Care | 45,658,621 | 41,068,117 | 4,590,504 | — | ||||||||||||||
Industrials | 19,977,386 | 19,977,386 | — | — | ||||||||||||||
Information Technology | 31,078,229 | 31,078,229 | — | — | ||||||||||||||
Materials | 6,649,146 | 6,649,146 | — | — | ||||||||||||||
Telecommunication Services | 6,112,986 | 5,204,687 | 908,299 | — | ||||||||||||||
Utilities | 7,681,698 | 7,681,698 | — | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
298,265,493 | 292,766,690 | 5,498,803 | — | |||||||||||||||
Short-Term Investment | 10,536,193 | 10,536,193 | — | — | ||||||||||||||
Derivatives: | ||||||||||||||||||
Foreign Currency Contracts | ||||||||||||||||||
Forward Foreign Currency Contracts | 9,830 | — | 9,830 | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Assets | 308,811,516 | 303,302,883 | 5,508,633 | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Liabilities | Derivatives: | |||||||||||||||||
Foreign Currency Contracts | ||||||||||||||||||
Forward Foreign Currency Contracts | (160,395 | ) | — | (160,395 | ) | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Liabilities | (160,395 | ) | — | (160,395 | ) | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total | $308,651,121 | $303,302,883 | $5,348,238 | $— | ||||||||||||||
|
|
|
|
|
|
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-40
PACIFIC LIFE FUNDS
PL GROWTH FUND (Formerly PL Growth LT Fund)
Schedule of Investments
March 31, 2014
| Value | |||||||
COMMON STOCKS - 97.3% |
| |||||||
Consumer Discretionary - 22.8% |
| |||||||
Amazon.com Inc * | 3,678 | $1,237,720 | ||||||
AMC Networks Inc ‘A’ * | 2,170 | 158,604 | ||||||
AutoZone Inc * | 933 | 501,113 | ||||||
Comcast Corp ‘Special A’ | 28,710 | 1,399,900 | ||||||
Discovery Communications Inc ‘A’ * | 14,910 | 1,233,056 | ||||||
Las Vegas Sands Corp | 15,510 | 1,252,897 | ||||||
LVMH Moet Hennessy Louis Vuitton SA (France) | 3,530 | 642,610 | ||||||
Marriott International Inc ‘A’ | 15,740 | 881,755 | ||||||
Michael Kors Holdings Ltd (United Kingdom) * | 6,350 | 592,265 | ||||||
NIKE Inc ‘B’ | 8,730 | 644,798 | ||||||
priceline.com Inc * | 1,642 | 1,957,083 | ||||||
PVH Corp | 3,486 | 434,948 | ||||||
Ross Stores Inc | 18,690 | 1,337,270 | ||||||
Starbucks Corp | 10,180 | 747,008 | ||||||
The TJX Cos Inc | 11,610 | 704,147 | ||||||
The Walt Disney Co | 18,430 | 1,475,690 | ||||||
Tiffany & Co | 6,250 | 538,438 | ||||||
Time Warner Inc | 13,050 | 852,557 | ||||||
Tractor Supply Co | 5,390 | 380,696 | ||||||
Twenty-First Century Fox Inc ‘A’ | 50,280 | 1,607,452 | ||||||
Urban Outfitters Inc * | 2,930 | 106,857 | ||||||
VF Corp | 21,268 | 1,316,064 | ||||||
Viacom Inc ‘B’ | 8,800 | 747,912 | ||||||
Wynn Resorts Ltd | 7,706 | 1,711,888 | ||||||
Yum! Brands Inc | 8,810 | 664,186 | ||||||
|
| |||||||
23,126,914 | ||||||||
|
| |||||||
Consumer Staples - 6.3% |
| |||||||
Colgate-Palmolive Co | 10,573 | 685,871 | ||||||
Constellation Brands Inc ‘A’ * | 5,900 | 501,323 | ||||||
Costco Wholesale Corp | 7,208 | 804,989 | ||||||
CVS Caremark Corp | 11,070 | 828,700 | ||||||
Danone (France) | 5,078 | 359,185 | ||||||
Diageo PLC (United Kingdom) | 16,950 | 526,045 | ||||||
Mead Johnson Nutrition Co | 5,940 | 493,852 | ||||||
Mondelez International Inc ‘A’ | 25,690 | 887,590 | ||||||
Pernod Ricard SA (France) | 3,569 | 415,809 | ||||||
Philip Morris International Inc | 5,570 | 456,016 | ||||||
The Estee Lauder Cos Inc ‘A’ | 6,600 | 441,408 | ||||||
|
| |||||||
6,400,788 | ||||||||
|
| |||||||
Energy - 4.0% |
| |||||||
Anadarko Petroleum Corp | 7,550 | 639,938 | ||||||
Antero Resources Corp * | 2,580 | 161,508 | ||||||
Cabot Oil & Gas Corp | 13,700 | 464,156 | ||||||
Halliburton Co | 7,020 | 413,408 | ||||||
Noble Energy Inc | 10,581 | 751,674 | ||||||
Pioneer Natural Resources Co | 6,052 | 1,132,571 | ||||||
Schlumberger Ltd (Netherlands) | 5,450 | 531,375 | ||||||
|
| |||||||
4,094,630 | ||||||||
|
| |||||||
Financials - 7.5% |
| |||||||
Affiliated Managers Group Inc * | 4,372 | 874,619 | ||||||
American Express Co | 14,720 | 1,325,242 | ||||||
American Tower Corp REIT | 23,880 | 1,955,056 | ||||||
BlackRock Inc | 1,891 | 594,682 | ||||||
IntercontinentalExchange Group Inc | 8,288 | 1,639,615 | ||||||
MetLife Inc | 8,690 | 458,832 | ||||||
Morgan Stanley | 22,730 | 708,494 | ||||||
|
| |||||||
7,556,540 | ||||||||
|
| |||||||
Health Care - 17.4% |
| |||||||
Actavis PLC (Ireland) * | 7,000 | 1,440,950 | ||||||
Alexion Pharmaceuticals Inc * | 8,540 | 1,299,190 | ||||||
Biogen Idec Inc * | 6,118 | 1,871,313 | ||||||
Bristol-Myers Squibb Co | 26,600 | 1,381,870 |
| Value | |||||||
Catamaran Corp (Canada) * | 7,210 | $322,720 | ||||||
Celgene Corp * | 4,972 | 694,091 | ||||||
Cerner Corp * | 11,880 | 668,250 | ||||||
Covidien PLC (Ireland) | 17,440 | 1,284,630 | ||||||
CR Bard Inc | 1,380 | 204,212 | ||||||
Express Scripts Holding Co * | 18,980 | 1,425,208 | ||||||
Forest Laboratories Inc * | 2,170 | 200,226 | ||||||
Gilead Sciences Inc * | 15,663 | 1,109,880 | ||||||
Illumina Inc * | 3,220 | 478,685 | ||||||
Isis Pharmaceuticals Inc * | 2,530 | 109,321 | ||||||
Perrigo Co PLC (Ireland) | 5,068 | 783,817 | ||||||
Regeneron Pharmaceuticals Inc * | 2,241 | 672,927 | ||||||
The Cooper Cos Inc | 2,526 | 346,971 | ||||||
Thermo Fisher Scientific Inc | 18,640 | 2,241,274 | ||||||
Valeant Pharmaceuticals International Inc (Canada) * | 6,280 | 827,892 | ||||||
Zoetis Inc | 10,900 | 315,446 | ||||||
|
| |||||||
17,678,873 | ||||||||
|
| |||||||
Industrials - 10.5% |
| |||||||
AMETEK Inc | 20,180 | 1,039,068 | ||||||
B/E Aerospace Inc * | 5,830 | 505,986 | ||||||
Colfax Corp * | 4,760 | 339,531 | ||||||
Cummins Inc | 5,026 | 748,824 | ||||||
Danaher Corp | 26,210 | 1,965,750 | ||||||
Honeywell International Inc | 12,120 | 1,124,251 | ||||||
Joy Global Inc | 4,780 | 277,240 | ||||||
Kansas City Southern | 3,358 | 342,717 | ||||||
Precision Castparts Corp | 7,888 | 1,993,771 | ||||||
Roper Industries Inc | 6,869 | 917,080 | ||||||
Union Pacific Corp | 4,133 | 775,599 | ||||||
Verisk Analytics Inc ‘A’ * | 9,330 | 559,427 | ||||||
|
| |||||||
10,589,244 | ||||||||
|
| |||||||
Information Technology - 25.6% |
| |||||||
Altera Corp | 27,970 | 1,013,633 | ||||||
Apple Inc | 1,902 | 1,020,879 | ||||||
Autodesk Inc * | 11,820 | 581,308 | ||||||
Citrix Systems Inc * | 12,990 | 746,016 | ||||||
Cognizant Technology Solutions Corp ‘A’ * | 34,220 | 1,731,874 | ||||||
eBay Inc * | 21,770 | 1,202,575 | ||||||
EMC Corp | 70,180 | 1,923,634 | ||||||
Facebook Inc ‘A’ * | 26,490 | 1,595,758 | ||||||
FleetCor Technologies Inc * | 6,050 | 696,355 | ||||||
Google Inc ‘A’ * | 4,428 | 4,935,050 | ||||||
Linear Technology Corp | 8,800 | 428,472 | ||||||
LinkedIn Corp ‘A’ * | 3,586 | 663,195 | ||||||
MasterCard Inc ‘A’ | 25,215 | 1,883,561 | ||||||
Oracle Corp | 32,680 | 1,336,939 | ||||||
PTC Inc * | 7,560 | 267,851 | ||||||
QUALCOMM Inc | 20,880 | 1,646,597 | ||||||
Salesforce.com Inc * | 16,202 | 924,972 | ||||||
TIBCO Software Inc * | 8,850 | 179,832 | ||||||
Visa Inc ‘A’ | 11,559 | 2,495,126 | ||||||
VMware Inc ‘A’ * | 3,680 | 397,514 | ||||||
Yahoo! Inc * | 6,810 | 244,479 | ||||||
|
| |||||||
25,915,620 | ||||||||
|
| |||||||
Materials - 3.2% |
| |||||||
Airgas Inc | 5,520 | 587,935 | ||||||
Monsanto Co | 14,922 | 1,697,676 | ||||||
The Sherwin-Williams Co | 4,768 | 939,916 | ||||||
|
| |||||||
3,225,527 | ||||||||
|
| |||||||
Total Common Stocks | 98,588,136 | |||||||
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-41
PACIFIC LIFE FUNDS
PL GROWTH FUND
Schedule of Investments (Continued)
March 31, 2014
| Value | |||||||
SHORT-TERM INVESTMENT - 3.3% |
| |||||||
Money Market Fund - 3.3% |
| |||||||
BlackRock Liquidity Funds Treasury | 3,280,776 | $3,280,776 | ||||||
|
| |||||||
Total Short-Term Investment | 3,280,776 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 100.6% | 101,868,912 | |||||||
OTHER ASSETS & LIABILITIES, NET - (0.6%) | (584,265 | ) | ||||||
|
| |||||||
NET ASSETS - 100.0% | $101,284,647 | |||||||
|
|
Notes to Schedule of Investments
(a) | As of March 31, 2014, the fund was diversified as a percentage of net assets as follows: |
Information Technology | 25.6% | |||
Consumer Discretionary | 22.8% | |||
Health Care | 17.4% | |||
Industrials | 10.5% | |||
Financials | 7.5% | |||
Consumer Staples | 6.3% | |||
Energy | 4.0% | |||
Short-Term Investment | 3.3% | |||
Materials | 3.2% | |||
|
| |||
100.6% | ||||
Other Assets & Liabilities, Net | (0.6% | ) | ||
|
| |||
100.0% | ||||
|
|
(b) | Fair Value Measurements |
The following is a summary of the fund’s investments as categorized under the three-tier hierarchy of inputs used in valuing the fund’s assets and liabilities (See Note 3D in Notes to Financial Statements) as of March 31, 2014:
Total Value at March 31, 2014 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||||
Assets | Common Stocks | |||||||||||||||||
Consumer Discretionary | $23,126,914 | $22,484,304 | $642,610 | $— | ||||||||||||||
Consumer Staples | 6,400,788 | 5,099,749 | 1,301,039 | — | ||||||||||||||
Energy | 4,094,630 | 4,094,630 | — | — | ||||||||||||||
Financials | 7,556,540 | 7,556,540 | — | — | ||||||||||||||
Health Care | 17,678,873 | 17,678,873 | — | — | ||||||||||||||
Industrials | 10,589,244 | 10,589,244 | — | — | ||||||||||||||
Information Technology | 25,915,620 | 25,915,620 | — | — | ||||||||||||||
Materials | 3,225,527 | 3,225,527 | — | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
98,588,136 | 96,644,487 | 1,943,649 | — | |||||||||||||||
Short-Term Investment | 3,280,776 | 3,280,776 | — | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total | $101,868,912 | $99,925,263 | $1,943,649 | $— | ||||||||||||||
|
|
|
|
|
|
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-42
PACIFIC LIFE FUNDS
PL LARGE-CAP GROWTH FUND
Schedule of Investments
March 31, 2014
| Value | |||||||
COMMON STOCKS - 96.8% |
| |||||||
Consumer Discretionary - 28.3% |
| |||||||
Amazon.com Inc * | 16,086 | $5,413,261 | ||||||
Comcast Corp ‘A’ | 113,301 | 5,667,316 | ||||||
Delphi Automotive PLC (United Kingdom) | 38,538 | 2,615,189 | ||||||
Expedia Inc | 19,159 | 1,389,027 | ||||||
Liberty Global PLC ‘A’ (United Kingdom) * | 99,924 | 4,156,838 | ||||||
Lumber Liquidators Holdings Inc * | 9,510 | 892,038 | ||||||
NIKE Inc ‘B’ | 47,231 | 3,488,482 | ||||||
priceline.com Inc * | 4,106 | 4,893,900 | ||||||
Starbucks Corp | 55,160 | 4,047,641 | ||||||
The Walt Disney Co | 49,187 | 3,938,403 | ||||||
Time Warner Inc | 61,463 | 4,015,378 | ||||||
TripAdvisor Inc * | 13,371 | 1,211,279 | ||||||
Twenty-First Century Fox Inc ‘A’ | 97,713 | 3,123,885 | ||||||
Wynn Resorts Ltd | 17,723 | 3,937,164 | ||||||
|
| |||||||
48,789,801 | ||||||||
|
| |||||||
Consumer Staples - 2.6% |
| |||||||
Mondelez International Inc ‘A’ | 71,109 | 2,456,816 | ||||||
The Estee Lauder Cos Inc ‘A’ | 29,093 | 1,945,740 | ||||||
|
| |||||||
4,402,556 | ||||||||
|
| |||||||
Energy - 3.5% |
| |||||||
Concho Resources Inc * | 12,933 | 1,584,292 | ||||||
FMC Technologies Inc * | 54,025 | 2,824,967 | ||||||
Laredo Petroleum Inc * | 64,163 | 1,659,255 | ||||||
|
| |||||||
6,068,514 | ||||||||
|
| |||||||
Financials - 3.4% |
| |||||||
Discover Financial Services | 27,540 | 1,602,553 | ||||||
IntercontinentalExchange Group Inc | 10,593 | 2,095,613 | ||||||
Moody’s Corp | 26,894 | 2,133,232 | ||||||
|
| |||||||
5,831,398 | ||||||||
|
| |||||||
Health Care - 13.2% |
| |||||||
AbbVie Inc | 81,989 | 4,214,235 | ||||||
Allergan Inc | 14,839 | 1,841,520 | ||||||
Gilead Sciences Inc * | 70,596 | 5,002,433 | ||||||
Intuitive Surgical Inc * | 4,061 | 1,778,677 | ||||||
Regeneron Pharmaceuticals Inc * | 7,928 | 2,380,620 | ||||||
United Therapeutics Corp * | 35,088 | 3,299,325 | ||||||
Valeant Pharmaceuticals International Inc (Canada) * | 31,673 | 4,175,452 | ||||||
|
| |||||||
22,692,262 | ||||||||
|
| |||||||
Industrials - 14.5% |
| |||||||
American Airlines Group Inc * | 38,297 | 1,401,670 | ||||||
Eaton Corp PLC (Ireland) | 62,075 | 4,663,074 | ||||||
Emerson Electric Co | 35,222 | 2,352,830 | ||||||
Precision Castparts Corp | 19,326 | 4,884,840 | ||||||
Roper Industries Inc | 12,353 | 1,649,249 | ||||||
SolarCity Corp * | 13,584 | 850,630 | ||||||
Union Pacific Corp | 23,900 | 4,485,074 | ||||||
United Technologies Corp | 30,191 | 3,527,516 | ||||||
Verisk Analytics Inc ‘A’ * | 21,540 | 1,291,538 | ||||||
|
| |||||||
25,106,421 | ||||||||
|
| |||||||
Information Technology - 25.2% |
| |||||||
Alliance Data Systems Corp * | 10,323 | 2,812,501 | ||||||
AOL Inc * | 33,154 | 1,451,151 | ||||||
Autodesk Inc * | 60,029 | 2,952,226 | ||||||
eBay Inc * | 29,232 | 1,614,776 | ||||||
Facebook Inc ‘A’ * | 34,079 | 2,052,919 | ||||||
Google Inc ‘A’ * | 7,818 | 8,713,239 | ||||||
LinkedIn Corp ‘A’ * | 16,046 | 2,967,547 | ||||||
MasterCard Inc ‘A’ | 31,257 | 2,334,898 | ||||||
Qlik Technologies Inc * | 16,606 | 441,554 | ||||||
Splunk Inc * | 6,882 | 491,994 |
| Value | |||||||
Twitter Inc * | 22,269 | $1,039,294 | ||||||
Visa Inc ‘A’ | 30,905 | 6,671,153 | ||||||
VMware Inc ‘A’ * | 27,129 | 2,930,475 | ||||||
Yahoo! Inc * | 128,882 | 4,626,864 | ||||||
Yelp Inc * | 32,145 | 2,472,915 | ||||||
|
| |||||||
43,573,506 | ||||||||
|
| |||||||
Materials - 2.6% |
| |||||||
Eastman Chemical Co | 23,213 | 2,001,193 | ||||||
Monsanto Co | 22,545 | 2,564,945 | ||||||
|
| |||||||
4,566,138 | ||||||||
|
| |||||||
Telecommunication Services—3.5% |
| |||||||
SoftBank Corp (Japan) | 56,200 | 4,238,571 | ||||||
Vivendi SA (France) | 64,228 | 1,791,769 | ||||||
|
| |||||||
6,030,340 | ||||||||
|
| |||||||
Total Common Stocks | 167,060,936 | |||||||
|
| |||||||
SHORT-TERM INVESTMENT - 3.9% |
| |||||||
Money Market Fund - 3.9% |
| |||||||
BlackRock Liquidity Funds Treasury | 6,690,202 | 6,690,202 | ||||||
|
| |||||||
Total Short-Term Investment | 6,690,202 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 100.7% | 173,751,138 | |||||||
OTHER ASSETS & LIABILITIES, NET - (0.7%) | (1,137,802 | ) | ||||||
|
| |||||||
NET ASSETS - 100.0% | $172,613,336 | |||||||
|
|
Notes to Schedule of Investments
(a) | As of March 31, 2014, the fund was diversified as a percentage of net assets as follows: |
Consumer Discretionary | 28.3% | |||
Information Technology | 25.2% | |||
Industrials | 14.5% | |||
Health Care | 13.2% | |||
Short-Term Investment | 3.9% | |||
Energy | 3.5% | |||
Telecommunication Services | 3.5% | |||
Financials | 3.4% | |||
Others (each less than 3.0%) | 5.2% | |||
|
| |||
100.7% | ||||
Other Assets & Liabilities, Net | (0.7% | ) | ||
|
| |||
100.0% | ||||
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-43
PACIFIC LIFE FUNDS
PL LARGE-CAP GROWTH FUND
Schedule of Investments (Continued)
March 31, 2014
(b) | Forward foreign currency contracts outstanding as of March 31, 2014 were as follows: |
Currency Purchased | Currency Sold | Expiration | Counterparty | Unrealized Appreciation | ||||||||||||||||
USD | 3,196,049 | JPY | 326,795,368 | 05/14 | RBS | $28,895 | ||||||||||||||
|
|
(c) | Fair Value Measurements |
The following is a summary of the fund’s investments as categorized under the three-tier hierarchy of inputs used in valuing the fund’s assets and liabilities (See Note 3D in Notes to Financial Statements) as of March 31, 2014:
Total Value at March 31, 2014 | Level 1 Quoted Price | Level 2 Significant | Level 3 Significant Unobservable Inputs | |||||||||||||||
Assets | Common Stocks | |||||||||||||||||
Consumer Discretionary | $48,789,801 | $48,789,801 | $— | $— | ||||||||||||||
Consumer Staples | 4,402,556 | 4,402,556 | — | — | ||||||||||||||
Energy | 6,068,514 | 6,068,514 | — | — | ||||||||||||||
Financials | 5,831,398 | 5,831,398 | — | — | ||||||||||||||
Health Care | 22,692,262 | 22,692,262 | — | — | ||||||||||||||
Industrials | 25,106,421 | 25,106,421 | — | — | ||||||||||||||
Information Technology | 43,573,506 | 43,573,506 | — | — | ||||||||||||||
Materials | 4,566,138 | 4,566,138 | — | — | ||||||||||||||
Telecommunication Services | 6,030,340 | — | 6,030,340 | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
167,060,936 | 161,030,596 | 6,030,340 | — | |||||||||||||||
Short-Term Investment | 6,690,202 | 6,690,202 | — | — | ||||||||||||||
Derivatives: | ||||||||||||||||||
Foreign Currency Contracts | ||||||||||||||||||
Forward Foreign Currency Contracts | 28,895 | — | 28,895 | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total | $173,780,033 | $167,720,798 | $6,059,235 | $— | ||||||||||||||
|
|
|
|
|
|
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-44
PACIFIC LIFE FUNDS
PL LARGE-CAP VALUE FUND
Schedule of Investments
March 31, 2014
| Value | |||||||
COMMON STOCKS - 98.5% | ||||||||
Consumer Discretionary - 14.9% | ||||||||
DISH Network Corp ‘A’ * | 219,296 | $13,642,404 | ||||||
SES SA FDR ‘A’ (Luxembourg) | 122,777 | 4,584,243 | ||||||
Target Corp | 56,301 | 3,406,773 | ||||||
The Home Depot Inc | 89,961 | 7,118,614 | ||||||
Time Warner Cable Inc | 70,743 | 9,704,525 | ||||||
Time Warner Inc | 143,452 | 9,371,719 | ||||||
Twenty-First Century Fox Inc ‘B’ | 288,335 | 8,972,985 | ||||||
|
| |||||||
56,801,263 | ||||||||
|
| |||||||
Consumer Staples - 11.2% | ||||||||
Altria Group Inc | 100,714 | 3,769,725 | ||||||
Anheuser-Busch InBev NV ADR (Belgium) | 44,665 | 4,703,225 | ||||||
CVS Caremark Corp | 182,445 | 13,657,833 | ||||||
Kimberly-Clark Corp | 60,756 | 6,698,349 | ||||||
Lorillard Inc | 80,363 | 4,346,031 | ||||||
Philip Morris International Inc | 113,978 | 9,331,379 | ||||||
|
| |||||||
42,506,542 | ||||||||
|
| |||||||
Energy - 9.2% | ||||||||
Chevron Corp | 79,024 | 9,396,744 | ||||||
Exxon Mobil Corp | 83,700 | 8,175,816 | ||||||
Halliburton Co | 144,790 | 8,526,683 | ||||||
Royal Dutch Shell PLC ‘A’ ADR (United Kingdom) | 65,865 | 4,812,097 | ||||||
Suncor Energy Inc (Canada) | 115,133 | 4,025,050 | ||||||
|
| |||||||
34,936,390 | ||||||||
|
| |||||||
Financials - 27.0% | ||||||||
American Express Co | 106,972 | 9,630,689 | ||||||
American Tower Corp REIT | 59,126 | 4,840,646 | ||||||
Capital One Financial Corp | 66,031 | 5,094,952 | ||||||
Citigroup Inc | 93,029 | 4,428,180 | ||||||
JPMorgan Chase & Co | 254,770 | 15,467,087 | ||||||
Loews Corp | 94,530 | 4,164,046 | ||||||
Marsh & McLennan Cos Inc | 118,689 | 5,851,368 | ||||||
MetLife Inc | 95,451 | 5,039,813 | ||||||
State Street Corp | 105,263 | 7,321,042 | ||||||
The Bank of New York Mellon Corp | 128,387 | 4,530,777 | ||||||
The Progressive Corp | 95,911 | 2,322,964 | ||||||
The Travelers Cos Inc | 79,643 | 6,777,619 | ||||||
US Bancorp | 263,092 | 11,276,123 | ||||||
Wells Fargo & Co | 321,066 | 15,969,823 | ||||||
|
| |||||||
102,715,129 | ||||||||
|
| |||||||
Health Care - 9.4% | ||||||||
Johnson & Johnson | 73,308 | 7,201,045 | ||||||
Merck & Co Inc | 142,662 | 8,098,922 | ||||||
Novartis AG ADR (Switzerland) | 52,047 | 4,425,036 | ||||||
Pfizer Inc | 144,691 | 4,647,475 | ||||||
Teva Pharmaceutical Industries Ltd ADR (Israel) | 97,217 | 5,136,946 | ||||||
WellPoint Inc | 62,947 | 6,266,374 | ||||||
|
| |||||||
35,775,798 | ||||||||
|
| |||||||
Industrials - 9.6% | ||||||||
General Electric Co | 405,603 | 10,501,062 | ||||||
Honeywell International Inc | 110,820 | 10,279,663 | ||||||
Illinois Tool Works Inc | 93,329 | 7,590,448 | ||||||
United Technologies Corp | 70,822 | 8,274,842 | ||||||
|
| |||||||
36,646,015 | ||||||||
|
| |||||||
Information Technology - 9.2% | ||||||||
EMC Corp | 143,379 | 3,930,018 | ||||||
International Business Machines Corp | 26,748 | 5,148,722 | ||||||
Microsoft Corp | 139,336 | 5,711,383 | ||||||
Motorola Solutions Inc | 71,433 | 4,592,428 | ||||||
Nuance Communications Inc * | 186,980 | 3,210,447 |
| Value | |||||||
TE Connectivity Ltd (Switzerland) | 120,878 | $7,278,064 | ||||||
Xerox Corp | 451,297 | 5,099,656 | ||||||
|
| |||||||
34,970,718 | ||||||||
|
| |||||||
Materials - 4.1% | ||||||||
Air Products & Chemicals Inc | 40,314 | 4,798,978 | ||||||
Crown Holdings Inc * | 146,188 | 6,540,451 | ||||||
Martin Marietta Materials Inc | 31,780 | 4,078,963 | ||||||
|
| |||||||
15,418,392 | ||||||||
|
| |||||||
Telecommunication Services - 2.2% | ||||||||
Verizon Communications Inc | 108,243 | 5,149,120 | ||||||
Vodafone Group PLC ADR (United Kingdom) | 84,316 | 3,103,672 | ||||||
|
| |||||||
8,252,792 | ||||||||
|
| |||||||
Utilities - 1.7% | ||||||||
Sempra Energy | 68,258 | 6,604,644 | ||||||
|
| |||||||
Total Common Stocks | 374,627,683 | |||||||
|
| |||||||
SHORT-TERM INVESTMENT - 1.6% | ||||||||
Money Market Fund - 1.6% | ||||||||
BlackRock Liquidity Funds Treasury | 6,292,383 | 6,292,383 | ||||||
|
| |||||||
Total Short-Term Investment |
| 6,292,383 | ||||||
|
| |||||||
TOTAL INVESTMENTS - 100.1% | 380,920,066 | |||||||
OTHER ASSETS & LIABILITIES, NET - (0.1%) | (547,656 | ) | ||||||
|
| |||||||
NET ASSETS - 100.0% | $380,372,410 | |||||||
|
|
Notes to Schedule of Investments
(a) | As of March 31, 2014, the fund was diversified as a percentage of net assets as follows: |
Financials | 27.0% | |||
Consumer Discretionary | 14.9% | |||
Consumer Staples | 11.2% | |||
Industrials | 9.6% | |||
Health Care | 9.4% | |||
Information Technology | 9.2% | |||
Energy | 9.2% | |||
Materials | 4.1% | |||
Others (each less than 3.0%) | 5.5% | |||
|
| |||
100.1% | ||||
Other Assets & Liabilities, Net | (0.1% | ) | ||
|
| |||
100.0% | ||||
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-45
PACIFIC LIFE FUNDS
PL LARGE-CAP VALUE FUND
Schedule of Investments (Continued)
March 31, 2014
(b) | Fair Value Measurements |
The following is a summary of the fund’s investments as categorized under the three-tier hierarchy of inputs used in valuing the fund’s assets and liabilities (See Note 3D in Notes to Financial Statements) as of March 31, 2014:
Total Value at March 31, 2014 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||||
Assets | Common Stocks | |||||||||||||||||
Consumer Discretionary | $56,801,263 | $52,217,020 | $4,584,243 | $— | ||||||||||||||
Consumer Staples | 42,506,542 | 42,506,542 | — | — | ||||||||||||||
Energy | 34,936,390 | 34,936,390 | — | — | ||||||||||||||
Financials | 102,715,129 | 102,715,129 | — | — | ||||||||||||||
Health Care | 35,775,798 | 35,775,798 | — | — | ||||||||||||||
Industrials | 36,646,015 | 36,646,015 | — | — | ||||||||||||||
Information Technology | 34,970,718 | 34,970,718 | — | — | ||||||||||||||
Materials | 15,418,392 | 15,418,392 | — | — | ||||||||||||||
Telecommunication Services | 8,252,792 | 8,252,792 | — | — | ||||||||||||||
Utilities | 6,604,644 | 6,604,644 | — | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
374,627,683 | 370,043,440 | 4,584,243 | — | |||||||||||||||
Short-Term Investment | 6,292,383 | 6,292,383 | — | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total | $380,920,066 | $376,335,823 | $4,584,243 | $— | ||||||||||||||
|
|
|
|
|
|
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-46
PACIFIC LIFE FUNDS
PL MAIN STREET® CORE FUND
Schedule of Investments
March 31, 2014
| Value | |||||||
PREFERRED STOCKS - 0.4% | ||||||||
Consumer Staples - 0.4% |
| |||||||
Henkel AG & Co KGaA (Germany) | 8,901 | $957,988 | ||||||
|
| |||||||
Total Preferred Stocks | 957,988 | |||||||
|
| |||||||
COMMON STOCKS - 98.2% | ||||||||
Consumer Discretionary - 8.4% | ||||||||
AutoZone Inc * | 13,340 | 7,164,914 | ||||||
Comcast Corp ‘A’ | 98,080 | 4,905,961 | ||||||
Delphi Automotive PLC (United Kingdom) | 58,240 | 3,952,166 | ||||||
PVH Corp | 13,110 | 1,635,735 | ||||||
The TJX Cos Inc | 31,880 | 1,933,522 | ||||||
Twenty-First Century Fox Inc ‘A’ | 61,850 | 1,977,345 | ||||||
|
| |||||||
21,569,643 | ||||||||
|
| |||||||
Consumer Staples - 7.7% | ||||||||
Diageo PLC (United Kingdom) | 41,140 | 1,276,784 | ||||||
Henkel AG & Co KGaA (Germany) | 36,102 | 3,629,023 | ||||||
Mondelez International Inc ‘A’ | 204,390 | 7,061,675 | ||||||
Philip Morris International Inc | 96,185 | 7,874,666 | ||||||
|
| |||||||
19,842,148 | ||||||||
|
| |||||||
Energy - 9.6% | ||||||||
Chevron Corp | 77,094 | 9,167,247 | ||||||
National Oilwell Varco Inc | 107,800 | 8,394,386 | ||||||
Noble Energy Inc | 101,616 | 7,218,801 | ||||||
|
| |||||||
24,780,434 | ||||||||
|
| |||||||
Financials - 19.6% | ||||||||
American International Group Inc | 118,530 | 5,927,685 | ||||||
CIT Group Inc | 119,640 | 5,864,753 | ||||||
Citigroup Inc | 124,657 | 5,933,673 | ||||||
CME Group Inc ‘A’ | 72,370 | 5,356,104 | ||||||
Digital Realty Trust Inc REIT | 31,330 | 1,662,996 | ||||||
Discover Financial Services | 120,247 | 6,997,173 | ||||||
JPMorgan Chase & Co | 144,500 | 8,772,595 | ||||||
Lincoln National Corp | 36,110 | 1,829,694 | ||||||
Marsh & McLennan Cos Inc | 65,560 | 3,232,108 | ||||||
McGraw Hill Financial Inc | 63,608 | 4,853,290 | ||||||
|
| |||||||
50,430,071 | ||||||||
|
| |||||||
Health Care - 19.1% | ||||||||
AbbVie Inc | 53,020 | 2,725,228 | ||||||
Actavis PLC (Ireland) * | 27,640 | 5,689,694 | ||||||
Allergan Inc | 34,910 | 4,332,331 | ||||||
Covidien PLC (Ireland) | 73,280 | 5,397,805 | ||||||
Express Scripts Holding Co * | 99,419 | 7,465,373 | ||||||
Gilead Sciences Inc * | 71,540 | 5,069,324 | ||||||
Intuitive Surgical Inc * | 9,500 | 4,160,905 | ||||||
Pfizer Inc | 216,113 | 6,941,550 | ||||||
UnitedHealth Group Inc | 48,670 | 3,990,453 | ||||||
Zoetis Inc | 121,400 | 3,513,316 | ||||||
|
| |||||||
49,285,979 | ||||||||
|
| |||||||
Industrials - 11.5% | ||||||||
Canadian National Railway Co (Canada) | 98,960 | 5,563,531 | ||||||
CSX Corp | 32,610 | 944,712 | ||||||
Deere & Co | 78,920 | 7,165,936 | ||||||
General Electric Co | 315,170 | 8,159,751 | ||||||
L-3 Communications Holdings Inc | 4,820 | 569,483 | ||||||
Tyco International Ltd (Switzerland) | 169,385 | 7,181,924 | ||||||
|
| |||||||
29,585,337 | ||||||||
|
|
| Value | |||||||
Information Technology - 16.7% | ||||||||
Amdocs Ltd (United Kingdom) | 69,180 | $3,214,103 | ||||||
Apple Inc | 18,982 | 10,188,399 | ||||||
Applied Materials Inc | 52,080 | 1,063,473 | ||||||
Corning Inc | 82,630 | 1,720,356 | ||||||
eBay Inc * | 109,800 | 6,065,352 | ||||||
Facebook Inc ‘A’ * | 41,550 | 2,502,972 | ||||||
Google Inc ‘A’ * | 9,056 | 10,093,003 | ||||||
MasterCard Inc ‘A’ | 33,580 | 2,508,426 | ||||||
Western Digital Corp | 62,790 | 5,765,378 | ||||||
|
| |||||||
43,121,462 | ||||||||
|
| |||||||
Materials - 2.6% | ||||||||
Air Products & Chemicals Inc | 10,760 | 1,280,870 | ||||||
PPG Industries Inc | 3,000 | 580,380 | ||||||
Vulcan Materials Co | 70,770 | 4,702,667 | ||||||
|
| |||||||
6,563,917 | ||||||||
|
| |||||||
Telecommunication Services - 1.7% | ||||||||
Verizon Communications Inc | 91,850 | 4,369,305 | ||||||
|
| |||||||
Utilities - 1.3% | ||||||||
Exelon Corp | 101,910 | 3,420,100 | ||||||
|
| |||||||
Total Common Stocks | 252,968,396 | |||||||
|
| |||||||
SHORT-TERM INVESTMENT - 0.6% | ||||||||
Money Market Fund - 0.6% | ||||||||
BlackRock Liquidity Funds Treasury | 1,496,820 | 1,496,820 | ||||||
|
| |||||||
Total Short-Term Investment | 1,496,820 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 99.2% | 255,423,204 | |||||||
OTHER ASSETS & LIABILITIES, NET - 0.8% | 2,151,798 | |||||||
|
| |||||||
NET ASSETS - 100.0% | $257,575,002 | |||||||
|
|
Notes to Schedule of Investments
(a) | As of March 31, 2014, the fund was diversified as a percentage of net assets as follows: |
Financials | 19.6% | |||
Health Care | 19.1% | |||
Information Technology | 16.7% | |||
Industrials | 11.5% | |||
Energy | 9.6% | |||
Consumer Discretionary | 8.4% | |||
Consumer Staples | 8.1% | |||
Others (each less than 3.0%) | 6.2% | |||
|
| |||
99.2% | ||||
Other Assets & Liabilities, Net | 0.8% | |||
|
| |||
100.0% | ||||
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-47
PACIFIC LIFE FUNDS
PL MAIN STREET CORE FUND
Schedule of Investments (Continued)
March 31, 2014
(b) | Fair Value Measurements |
The following is a summary of the fund’s investments as categorized under the three-tier hierarchy of inputs used in valuing the fund’s assets and liabilities (See Note 3D in Notes to Financial Statements) as of March 31, 2014:
Total Value at March 31, 2014 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||||
Assets | Preferred Stocks (1) | $957,988 | $— | $957,988 | $— | |||||||||||||
Common Stocks | ||||||||||||||||||
Consumer Discretionary | 21,569,643 | 21,569,643 | — | — | ||||||||||||||
Consumer Staples | 19,842,148 | 14,936,341 | 4,905,807 | — | ||||||||||||||
Energy | 24,780,434 | 24,780,434 | — | — | ||||||||||||||
Financials | 50,430,071 | 50,430,071 | — | — | ||||||||||||||
Health Care | 49,285,979 | 49,285,979 | — | — | ||||||||||||||
Industrials | 29,585,337 | 29,585,337 | — | — | ||||||||||||||
Information Technology | 43,121,462 | 43,121,462 | — | — | ||||||||||||||
Materials | 6,563,917 | 6,563,917 | — | — | ||||||||||||||
Telecommunication Services | 4,369,305 | 4,369,305 | — | — | ||||||||||||||
Utilities | 3,420,100 | 3,420,100 | — | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
252,968,396 | 248,062,589 | 4,905,807 | — | |||||||||||||||
Short-Term Investment | 1,496,820 | 1,496,820 | — | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total | $255,423,204 | $249,559,409 | $5,863,795 | $— | ||||||||||||||
|
|
|
|
|
|
|
|
(1) | For equity investments categorized in a single level, refer to the schedule of investments for further industry breakout. |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-48
PACIFIC LIFE FUNDS
PL MID-CAP EQUITY FUND
Schedule of Investments
March 31, 2014
| Value | |||||||
COMMON STOCKS - 98.0% |
| |||||||
Consumer Discretionary - 17.8% |
| |||||||
Advance Auto Parts Inc | 10,241 | $1,295,487 | ||||||
AMC Networks Inc ‘A’ * | 23,030 | 1,683,263 | ||||||
AutoZone Inc * | 1,037 | 556,973 | ||||||
Cabela’s Inc * | 23,244 | 1,522,714 | ||||||
Chipotle Mexican Grill Inc * | 1,453 | 825,377 | ||||||
Discovery Communications Inc ‘C’ * | 7,344 | 565,929 | ||||||
Dollar Tree Inc * | 13,082 | 682,619 | ||||||
DR Horton Inc | 52,207 | 1,130,282 | ||||||
Expedia Inc | 14,441 | 1,046,973 | ||||||
Harley-Davidson Inc | 17,407 | 1,159,480 | ||||||
HomeAway Inc * | 31,862 | 1,200,242 | ||||||
Kate Spade & Co * | 41,990 | 1,557,409 | ||||||
Life Time Fitness Inc * | 28,285 | 1,360,509 | ||||||
Lululemon Athletica Inc * | 16,611 | 873,572 | ||||||
Michael Kors Holdings Ltd (United Kingdom) * | 7,463 | 696,074 | ||||||
Nordstrom Inc | 3,908 | 244,055 | ||||||
O’Reilly Automotive Inc * | 5,511 | 817,777 | ||||||
Panera Bread Co ‘A’ * | 4,853 | 856,409 | ||||||
Polaris Industries Inc | 11,276 | 1,575,370 | ||||||
priceline.com Inc * | 1,629 | 1,941,589 | ||||||
Thor Industries Inc | 2,052 | 125,295 | ||||||
TripAdvisor Inc * | 45,874 | 4,155,726 | ||||||
TRW Automotive Holdings Corp * | 56,278 | 4,593,410 | ||||||
|
| |||||||
30,466,534 | ||||||||
|
| |||||||
Consumer Staples - 4.9% |
| |||||||
Casey’s General Stores Inc | 16,931 | 1,144,366 | ||||||
Hormel Foods Corp | 14,938 | 735,995 | ||||||
Monster Beverage Corp * | 16,356 | 1,135,924 | ||||||
Sprouts Farmers Market Inc * | 21,873 | 788,084 | ||||||
Tyson Foods Inc ‘A’ | 105,600 | 4,647,456 | ||||||
|
| |||||||
8,451,825 | ||||||||
|
| |||||||
Energy - 11.7% |
| |||||||
Antero Resources Corp * | 43,149 | 2,701,127 | ||||||
Cabot Oil & Gas Corp | 71,014 | 2,405,954 | ||||||
Diamondback Energy Inc * | 13,180 | 887,146 | ||||||
Gulfport Energy Corp * | 136,514 | 9,717,066 | ||||||
Patterson-UTI Energy Inc | 44,699 | 1,416,064 | ||||||
Tesoro Corp | 23,115 | 1,169,388 | ||||||
Western Refining Inc | 43,867 | 1,693,266 | ||||||
|
| |||||||
19,990,011 | ||||||||
|
| |||||||
Financials - 13.2% |
| |||||||
American Capital Agency Corp REIT | 39,876 | 856,935 | ||||||
Comerica Inc | 64,691 | 3,350,994 | ||||||
E*Trade Financial Corp * | 35,800 | 824,116 | ||||||
Genworth Financial Inc ‘A’ * | 83,003 | 1,471,643 | ||||||
KeyCorp | 367,972 | 5,239,921 | ||||||
Lincoln National Corp | 48,532 | 2,459,116 | ||||||
Principal Financial Group Inc | 42,073 | 1,934,937 | ||||||
Signature Bank * | 26,271 | 3,299,375 | ||||||
The Hartford Financial Services Group Inc | 91,998 | 3,244,769 | ||||||
|
| |||||||
22,681,806 | ||||||||
|
| |||||||
Health Care - 8.7% |
| |||||||
Acorda Therapeutics Inc * | 22,841 | 865,902 | ||||||
Catamaran Corp (Canada) * | 19,824 | 887,322 | ||||||
DaVita HealthCare Partners Inc * | 36,953 | 2,544,214 | ||||||
HMS Holdings Corp * | 32,148 | 612,419 | ||||||
Isis Pharmaceuticals Inc * | 32,910 | 1,422,041 | ||||||
Perrigo Co PLC (Ireland) | 34,039 | 5,264,472 | ||||||
Pharmacyclics Inc * | 10,070 | 1,009,215 |
| Value | |||||||
Universal Health Services Inc ‘B’ | 6,039 | $495,621 | ||||||
Zimmer Holdings Inc | 18,300 | 1,730,814 | ||||||
|
| |||||||
14,832,020 | ||||||||
|
| |||||||
Industrials - 13.4% |
| |||||||
AGCO Corp | 67,737 | 3,736,373 | ||||||
Chart Industries Inc * | 10,330 | 821,752 | ||||||
Exelis Inc | 93,007 | 1,768,063 | ||||||
Fluor Corp | 6,846 | 532,140 | ||||||
Generac Holdings Inc | 40,900 | 2,411,873 | ||||||
Jacobs Engineering Group Inc * | 12,365 | 785,178 | ||||||
JetBlue Airways Corp * | 188,408 | 1,637,265 | ||||||
Manpowergroup Inc | 17,391 | 1,370,933 | ||||||
Owens Corning | 18,555 | 801,019 | ||||||
Southwest Airlines Co | 67,268 | 1,588,197 | ||||||
Textron Inc | 55,917 | 2,196,979 | ||||||
Towers Watson & Co ‘A’ | 11,882 | 1,355,142 | ||||||
Trinity Industries Inc | 26,938 | 1,941,422 | ||||||
United Rentals Inc * | 21,816 | 2,071,211 | ||||||
|
| |||||||
23,017,547 | ||||||||
|
| |||||||
Information Technology - 16.3% |
| |||||||
Arrow Electronics Inc * | 25,050 | 1,486,968 | ||||||
Avago Technologies Ltd (Singapore) | 47,501 | 3,059,539 | ||||||
Avnet Inc | 66,675 | 3,102,388 | ||||||
Computer Sciences Corp | 72,684 | 4,420,641 | ||||||
CoStar Group Inc * | 4,254 | 794,392 | ||||||
Cree Inc * | 13,628 | 770,800 | ||||||
DST Systems Inc | 7,218 | 684,194 | ||||||
FEI Co | 4,270 | 439,895 | ||||||
IAC/InterActiveCorp | 24,576 | 1,754,481 | ||||||
iGATE Corp * | 61,367 | 1,935,515 | ||||||
JDS Uniphase Corp * | 81,199 | 1,136,786 | ||||||
Lam Research Corp * | 6,530 | 359,150 | ||||||
MICROS Systems Inc * | 11,978 | 633,996 | ||||||
Palo Alto Networks Inc * | 9,782 | 671,045 | ||||||
Seagate Technology PLC (Ireland) | 31,266 | 1,755,899 | ||||||
Skyworks Solutions Inc * | 48,272 | 1,811,165 | ||||||
Yelp Inc * | 41,322 | 3,178,901 | ||||||
|
| |||||||
27,995,755 | ||||||||
|
| |||||||
Materials - 8.1% |
| |||||||
Agnico Eagle Mines Ltd (Canada) | 44,909 | 1,358,497 | ||||||
CF Industries Holdings Inc | 3,392 | 884,091 | ||||||
Compass Minerals International Inc | 36,411 | 3,004,636 | ||||||
Eagle Materials Inc | 12,892 | 1,143,005 | ||||||
KapStone Paper & Packaging Corp * | 47,464 | 1,368,862 | ||||||
Louisiana-Pacific Corp * | 77,350 | 1,304,895 | ||||||
Rockwood Holdings Inc | 17,475 | 1,300,140 | ||||||
US Silica Holdings Inc | 67,745 | 2,585,827 | ||||||
Westlake Chemical Corp | 14,704 | 973,111 | ||||||
|
| |||||||
13,923,064 | ||||||||
|
| |||||||
Utilities - 3.9% |
| |||||||
Atmos Energy Corp | 55,365 | 2,609,352 | ||||||
DTE Energy Co | 16,958 | 1,259,810 | ||||||
Questar Corp | 114,678 | 2,727,043 | ||||||
|
| |||||||
6,596,205 | ||||||||
|
| |||||||
Total Common Stocks | 167,954,767 | |||||||
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-49
PACIFIC LIFE FUNDS
PL MID-CAP EQUITY FUND
Schedule of Investments (Continued)
March 31, 2014
| Value | |||||||
SHORT-TERM INVESTMENT - 1.8% |
| |||||||
Money Market Fund - 1.8% |
| |||||||
BlackRock Liquidity Funds Treasury | 3,026,882 | $3,026,882 | ||||||
|
| |||||||
Total Short-Term Investment | 3,026,882 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 99.8% | 170,981,649 | |||||||
OTHER ASSETS & LIABILITIES, NET - 0.2% | 375,249 | |||||||
|
| |||||||
NET ASSETS - 100.0% | $171,356,898 | |||||||
|
|
Notes to Schedule of Investments
(a) | As of March 31, 2014, the fund was diversified as a percentage of net assets as follows: |
Consumer Discretionary | 17.8% | |||
Information Technology | 16.3% | |||
Industrials | 13.4% | |||
Financials | 13.2% | |||
Energy | 11.7% | |||
Health Care | 8.7% | |||
Materials | 8.1% | |||
Consumer Staples | 4.9% | |||
Utilities | 3.9% | |||
Others (each less than 3.0%) | 1.8% | |||
|
| |||
99.8% | ||||
Other Assets & Liabilities, Net | 0.2% | |||
|
| |||
100.0% | ||||
|
|
(b) | Fair Value Measurements |
The following is a summary of the fund’s investments as categorized under the three-tier hierarchy of inputs used in valuing the fund’s assets and liabilities (See Note 3D in Notes to Financial Statements) as of March 31, 2014:
Total Value at March 31, 2014 | Level 1 Quoted Price | Level 2 Significant | Level 3 Significant Unobservable Inputs | |||||||||||||||
Assets | Common Stocks (1) | $167,954,767 | $167,954,767 | $— | $— | |||||||||||||
Short-Term Investment | 3,026,882 | 3,026,882 | — | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total | $170,981,649 | $170,981,649 | $— | $— | ||||||||||||||
|
|
|
|
|
|
|
|
(1) | For equity investments categorized in a single level, refer to the schedule of investments for further industry breakout. |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-50
PACIFIC LIFE FUNDS
PL MID-CAP GROWTH FUND
Schedule of Investments
March 31, 2014
| Value | |||||||
COMMON STOCKS - 98.6% | ||||||||
Consumer Discretionary - 26.0% | ||||||||
Allison Transmission Holdings Inc | 32,683 | $978,529 | ||||||
Burberry Group PLC (United Kingdom) | 39,700 | 925,285 | ||||||
CarMax Inc * | 35,130 | 1,644,084 | ||||||
Carter’s Inc | 17,550 | 1,362,758 | ||||||
DSW Inc ‘A’ | 24,290 | 871,039 | ||||||
Dunkin’ Brands Group Inc | 37,550 | 1,884,259 | ||||||
Fossil Group Inc * | 6,570 | 766,128 | ||||||
Gentex Corp | 46,910 | 1,479,072 | ||||||
HomeAway Inc * | 16,147 | 608,257 | ||||||
L Brands Inc | 17,940 | 1,018,454 | ||||||
LKQ Corp * | 71,310 | 1,879,019 | ||||||
Mattel Inc | 37,870 | 1,518,966 | ||||||
Nordstrom Inc | 16,010 | 999,825 | ||||||
Norwegian Cruise Line Holdings Ltd (Bermuda) * | 40,194 | 1,297,060 | ||||||
Panera Bread Co ‘A’ * | 6,610 | 1,166,467 | ||||||
Ross Stores Inc | 18,780 | 1,343,709 | ||||||
Tiffany & Co | 9,770 | 841,686 | ||||||
Ulta Salon Cosmetics & Fragrance Inc * | 16,370 | 1,595,748 | ||||||
Urban Outfitters Inc * | 39,920 | 1,455,882 | ||||||
|
| |||||||
23,636,227 | ||||||||
|
| |||||||
Consumer Staples - 5.9% | ||||||||
Brown-Forman Corp ‘B’ | 11,470 | 1,028,744 | ||||||
Coty Inc ‘A’ | 53,540 | 802,029 | ||||||
Mead Johnson Nutrition Co | 22,260 | 1,850,696 | ||||||
The Hain Celestial Group Inc * | 17,851 | 1,632,831 | ||||||
|
| |||||||
5,314,300 | ||||||||
|
| |||||||
Energy - 5.7% | ||||||||
Cabot Oil & Gas Corp | 29,850 | 1,011,318 | ||||||
Continental Resources Inc * | 12,300 | 1,528,521 | ||||||
Dril-Quip Inc * | 10,070 | 1,128,847 | ||||||
Southwestern Energy Co * | 32,380 | 1,489,804 | ||||||
|
| |||||||
5,158,490 | ||||||||
|
| |||||||
Financials - 8.7% | ||||||||
First Republic Bank | 35,510 | 1,917,185 | ||||||
Northern Trust Corp | 36,620 | 2,400,807 | ||||||
Oaktree Capital Group LLC | 12,201 | 709,610 | ||||||
Signature Bank * | 16,000 | 2,009,440 | ||||||
UMB Financial Corp | 13,522 | 874,873 | ||||||
|
| |||||||
7,911,915 | ||||||||
|
| |||||||
Health Care - 16.1% | ||||||||
Acadia Healthcare Co Inc * | 17,120 | 772,454 | ||||||
ACADIA Pharmaceuticals Inc * | 9,850 | 239,651 | ||||||
Align Technology Inc * | 18,070 | 935,845 | ||||||
Alkermes PLC (Ireland) * | 13,630 | 600,947 | ||||||
BioMarin Pharmaceutical Inc * | 10,620 | 724,390 | ||||||
DENTSPLY International Inc | 28,620 | 1,317,665 | ||||||
Henry Schein Inc * | 11,520 | 1,375,142 | ||||||
Hologic Inc * | 61,224 | 1,316,316 | ||||||
Humana Inc | 8,980 | 1,012,226 | ||||||
Intuitive Surgical Inc * | 3,450 | 1,511,066 | ||||||
Medivation Inc * | 12,657 | 814,731 | ||||||
Premier Inc ‘A’ * | 19,016 | 626,577 | ||||||
Varian Medical Systems Inc * | 24,242 | 2,036,086 | ||||||
Zimmer Holdings Inc | 13,870 | 1,311,825 | ||||||
|
| |||||||
14,594,921 | ||||||||
|
| |||||||
Industrials - 16.5% | ||||||||
Expeditors International of Washington Inc | 46,530 | 1,843,984 | ||||||
Fastenal Co | 43,220 | 2,131,610 | ||||||
Flowserve Corp | 23,050 | 1,805,737 | ||||||
Fortune Brands Home & Security Inc | 38,411 | 1,616,335 | ||||||
Graco Inc | 4,903 | 366,450 |
| Value | |||||||
IDEX Corp | 18,841 | $1,373,320 | ||||||
Jacobs Engineering Group Inc * | 16,740 | 1,062,990 | ||||||
Joy Global Inc | 21,010 | 1,218,580 | ||||||
Polypore International Inc * | 32,528 | 1,112,783 | ||||||
Stericycle Inc * | 9,743 | 1,107,000 | ||||||
Verisk Analytics Inc ‘A’ * | 23,060 | 1,382,678 | ||||||
|
| |||||||
15,021,467 | ||||||||
|
| |||||||
Information Technology - 18.6% | ||||||||
ANSYS Inc * | 14,520 | 1,118,330 | ||||||
Aruba Networks Inc * | 49,780 | 933,375 | ||||||
Electronic Arts Inc | 56,900 | 1,650,669 | ||||||
F5 Networks Inc * | 14,083 | 1,501,670 | ||||||
FLIR Systems Inc | 22,270 | 801,720 | ||||||
Fusion-io Inc * | 87,490 | 920,395 | ||||||
Microchip Technology Inc | 46,650 | 2,228,004 | ||||||
OpenTable Inc * | 10,310 | 793,148 | ||||||
ServiceNow Inc * | 15,640 | 937,149 | ||||||
Solera Holdings Inc | 18,997 | 1,203,270 | ||||||
Teradata Corp * | 32,160 | 1,581,950 | ||||||
Vantiv Inc ‘A’ * | 48,420 | 1,463,252 | ||||||
WebMD Health Corp * | 22,271 | 922,019 | ||||||
Zillow Inc ‘A’ * | 9,420 | 829,902 | ||||||
|
| |||||||
16,884,853 | ||||||||
|
| |||||||
Materials - 1.1% | ||||||||
The Scotts Miracle-Gro Co ‘A’ | 16,113 | 987,405 | ||||||
|
| |||||||
Total Common Stocks | 89,509,578 | |||||||
|
| |||||||
PURCHASED OPTIONS - 0.0% | ||||||||
(See Note (b) in Notes to Schedule of Investments) |
| 18,000 | ||||||
|
| |||||||
SHORT-TERM INVESTMENT - 1.9% | ||||||||
Money Market Fund - 1.9% | ||||||||
BlackRock Liquidity Funds Treasury | 1,727,850 | 1,727,850 | ||||||
|
| |||||||
Total Short-Term Investment |
| 1,727,850 | ||||||
|
| |||||||
TOTAL INVESTMENTS - 100.5% | 91,255,428 | |||||||
OTHER ASSETS & LIABILITIES, NET - (0.5%) | (451,707 | ) | ||||||
|
| |||||||
NET ASSETS - 100.0% | $90,803,721 | |||||||
|
|
Notes to Schedule of Investments
(a) | As of March 31, 2014, the fund was diversified as a percentage of net assets as follows: |
Consumer Discretionary | 26.0% | |||
Information Technology | 18.6% | |||
Industrials | 16.5% | |||
Health Care | 16.1% | |||
Financials | 8.7% | |||
Consumer Staples | 5.9% | |||
Energy | 5.7% | |||
Others (each less than 3.0%) | 3.0% | |||
|
| |||
100.5% | ||||
Other Assets & Liabilities, Net | (0.5% | ) | ||
|
| |||
100.0% | ||||
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-51
PACIFIC LIFE FUNDS
PL MID-CAP GROWTH FUND
Schedule of Investments (Continued)
March 31, 2014
(b) | Purchased options outstanding as of March 31, 2014 were as follows: |
Options on Securities
Description | Strike Price | Expiration Date | Counter- party | Number of Contracts | Cost | Value | ||||||||||||||||
Call - OTC Salix Pharmaceuticals Ltd | $110.00 | 05/16/14 | MSC | 45 | $18,000 | $18,000 | ||||||||||||||||
|
|
|
| |||||||||||||||||||
Total Purchased Options | $18,000 | $18,000 | ||||||||||||||||||||
|
|
|
|
(c) | Transactions in written options for the year ended March 31, 2014 were as follows: |
Number of Contracts | Premium | |||||||
Outstanding, March 31, 2013 | — | $— | ||||||
Call Options Written | 482 | 62,497 | ||||||
Put Options Written | 494 | 36,808 | ||||||
Call Options Closed | (75 | ) | (13,824 | ) | ||||
Expired Call Options | (362 | ) | (43,498 | ) | ||||
Expired Put Options | (378 | ) | (11,163 | ) | ||||
|
|
|
| |||||
Outstanding, March 31, 2014 | 161 | $30,820 | ||||||
|
|
|
|
(d) | Premium received and value of written options outstanding as of March 31, 2014 were as follows: |
Options on Securities
Description | Strike Price | Expiration Date | Counter- party/ Exchange | Number of Contracts | Premium | Value | ||||||||||||||||
Call - OTC Salix Pharmaceuticals Ltd | $125.00 | 05/16/14 | MSC | 45 | $5,175 | ($4,163 | ) | |||||||||||||||
|
|
|
| |||||||||||||||||||
Put - Alkermes PLC | 42.00 | 04/18/14 | CME | 32 | 4,375 | (3,120 | ) | |||||||||||||||
Put - OTC Alkermes PLC | 42.00 | 04/18/14 | MSC | 39 | 5,070 | (3,803 | ) | |||||||||||||||
Put - OTC Salix Pharmaceuticals Ltd | 95.00 | 05/16/14 | MSC | 45 | 16,200 | (14,625 | ) | |||||||||||||||
|
|
|
| |||||||||||||||||||
25,645 | (21,548 | ) | ||||||||||||||||||||
|
|
|
| |||||||||||||||||||
Total Written Options | $30,820 | ($25,711 | ) | |||||||||||||||||||
|
|
|
|
(e) | Fair Value Measurements |
The following is a summary of the fund’s investments as categorized under the three-tier hierarchy of inputs used in valuing the fund’s assets and liabilities (See Note 3D in Notes to Financial Statements) as of March 31, 2014:
Total Value at March 31, 2014 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||||
Assets | Common Stocks | |||||||||||||||||
Consumer Discretionary | $23,636,227 | $22,710,942 | $925,285 | $— | ||||||||||||||
Consumer Staples | 5,314,300 | 5,314,300 | — | — | ||||||||||||||
Energy | 5,158,490 | 5,158,490 | — | — | ||||||||||||||
Financials | 7,911,915 | 7,911,915 | — | — | ||||||||||||||
Health Care | 14,594,921 | 14,594,921 | — | — | ||||||||||||||
Industrials | 15,021,467 | 15,021,467 | — | — | ||||||||||||||
Information Technology | 16,884,853 | 16,884,853 | — | — | ||||||||||||||
Materials | 987,405 | 987,405 | — | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
89,509,578 | 88,584,293 | 925,285 | — | |||||||||||||||
Short-Term Investment | 1,727,850 | 1,727,850 | — | — | ||||||||||||||
Derivatives: | ||||||||||||||||||
Equity Contracts | ||||||||||||||||||
Purchased Options | 18,000 | — | 18,000 | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Assets | 91,255,428 | 90,312,143 | 943,285 | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Liabilities | Derivatives: | |||||||||||||||||
Equity Contracts | ||||||||||||||||||
Written Options | (25,711 | ) | — | (25,711 | ) | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Liabilities | (25,711 | ) | — | (25,711 | ) | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total | $91,229,717 | $90,312,143 | $917,574 | $— | ||||||||||||||
|
|
|
|
|
|
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-52
PACIFIC LIFE FUNDS
PL SMALL-CAP GROWTH FUND
Schedule of Investments
March 31, 2014
| Value | |||||||
WARRANTS - 0.0% |
| |||||||
Health Care - 0.0% |
| |||||||
Neuralstem Inc Strike @ $3.64 | 15,525 | $8,539 | ||||||
|
| |||||||
Total Warrants | 8,539 | |||||||
|
| |||||||
COMMON STOCKS - 96.7% |
| |||||||
Consumer Discretionary - 16.1% | ||||||||
American Axle & Manufacturing Holdings Inc * | 24,150 | 447,257 | ||||||
ANN Inc * | 11,000 | 456,280 | ||||||
Brunswick Corp | 12,350 | 559,331 | ||||||
Cumulus Media Inc ‘A’ * | 76,600 | 529,305 | ||||||
DSW Inc ‘A’ | 14,150 | 507,418 | ||||||
Fiesta Restaurant Group Inc * | 10,800 | 492,371 | ||||||
Five Below Inc * | 8,900 | 378,071 | ||||||
G-III Apparel Group Ltd * | 6,700 | 479,587 | ||||||
Grand Canyon Education Inc * | 14,452 | 674,907 | ||||||
Kate Spade & Co * | 16,100 | 597,148 | ||||||
Life Time Fitness Inc * | 5,420 | 260,701 | ||||||
LifeLock Inc * | 9,200 | 157,411 | ||||||
Lions Gate Entertainment Corp (Canada) | 16,400 | 438,371 | ||||||
Lumber Liquidators Holdings Inc * | 2,900 | 272,020 | ||||||
Papa John’s International Inc | 11,800 | 614,897 | ||||||
Pier 1 Imports Inc | 19,500 | 368,160 | ||||||
Six Flags Entertainment Corp | 16,250 | 652,437 | ||||||
Sotheby’s | 8,250 | 359,287 | ||||||
Taylor Morrison Home Corp ‘A’ * | 16,250 | 381,874 | ||||||
Tenneco Inc * | 5,350 | 310,674 | ||||||
The Children’s Place Retail Stores Inc | 2,640 | 131,497 | ||||||
Tupperware Brands Corp | 6,425 | 538,157 | ||||||
|
| |||||||
9,607,161 | ||||||||
|
| |||||||
Consumer Staples - 3.4% | ||||||||
B&G Foods Inc | 16,850 | 507,353 | ||||||
Rite Aid Corp * | 67,850 | 425,420 | ||||||
The Hain Celestial Group Inc * | 6,785 | 620,623 | ||||||
United Natural Foods Inc * | 6,900 | 489,348 | ||||||
|
| |||||||
2,042,744 | ||||||||
|
| |||||||
Energy - 4.9% | ||||||||
Approach Resources Inc * | 17,700 | 370,107 | ||||||
Bristow Group Inc | 5,250 | 396,480 | ||||||
Hornbeck Offshore Services Inc * | 7,450 | 311,485 | ||||||
Kodiak Oil & Gas Corp (Canada) * | 28,400 | 344,776 | ||||||
Northern Oil & Gas Inc * | 45,897 | 671,014 | ||||||
PDC Energy Inc * | 4,900 | 305,074 | ||||||
Rosetta Resources Inc * | 10,800 | 503,064 | ||||||
|
| |||||||
2,902,000 | ||||||||
|
| |||||||
Financials - 6.2% | ||||||||
DuPont Fabros Technology Inc REIT | 21,100 | 507,877 | ||||||
eHealth Inc * | 7,250 | 368,300 | ||||||
Financial Engines Inc | 7,800 | 396,084 | ||||||
Fortress Investment Group LLC ‘A’ | 39,700 | 293,780 | ||||||
Jones Lang LaSalle Inc | 2,550 | 302,175 | ||||||
MGIC Investment Corp * | 44,100 | 375,732 | ||||||
Portfolio Recovery Associates Inc * | 6,500 | 376,090 | ||||||
Sovran Self Storage Inc REIT | 7,000 | 514,150 | ||||||
ViewPoint Financial Group Inc | 11,050 | 318,793 | ||||||
WisdomTree Investments Inc * | 21,100 | 276,832 | ||||||
|
| |||||||
3,729,813 | ||||||||
|
|
| Value | |||||||
Health Care - 20.5% | ||||||||
Acadia Healthcare Co Inc * | 9,850 | $444,432 | ||||||
ACADIA Pharmaceuticals Inc * | 10,300 | 250,599 | ||||||
AcelRx Pharmaceuticals Inc * | 15,650 | 187,957 | ||||||
Aegerion Pharmaceuticals Inc * | 3,550 | 163,726 | ||||||
Align Technology Inc * | 11,400 | 590,406 | ||||||
Alnylam Pharmaceuticals Inc * | 2,250 | 151,065 | ||||||
athenahealth Inc * | 3,100 | 496,744 | ||||||
Auxilium Pharmaceuticals Inc * | 12,153 | 330,319 | ||||||
Bluebird Bio Inc * | 6,300 | 143,262 | ||||||
Celldex Therapeutics Inc * | 11,200 | 197,904 | ||||||
Cepheid Inc * | 10,250 | 528,695 | ||||||
Charles River Laboratories International Inc * | 10,850 | 654,689 | ||||||
Cubist Pharmaceuticals Inc * | 6,900 | 504,735 | ||||||
Endologix Inc * | 23,450 | 301,802 | ||||||
Foundation Medicine Inc * | 5,350 | 173,180 | ||||||
HealthSouth Corp | 19,400 | 697,042 | ||||||
HMS Holdings Corp * | 19,824 | 377,647 | ||||||
Horizon Pharma Inc * | 19,400 | 293,328 | ||||||
ICON PLC (Ireland) * | 11,550 | 549,203 | ||||||
Insulet Corp * | 14,070 | 667,199 | ||||||
Intercept Pharmaceuticals Inc * | 1,000 | 329,790 | ||||||
Ironwood Pharmaceuticals Inc ‘A’ * | 24,350 | 299,992 | ||||||
Isis Pharmaceuticals Inc * | 5,950 | 257,100 | ||||||
Molina Healthcare Inc * | 12,400 | 465,744 | ||||||
Neuralstem Inc * | 31,050 | 130,100 | ||||||
Neurocrine Biosciences Inc * | 12,700 | 204,470 | ||||||
Orexigen Therapeutics Inc * | 42,500 | 276,250 | ||||||
Portola Pharmaceuticals Inc * | 10,450 | 270,655 | ||||||
Puma Biotechnology Inc * | 2,100 | 218,694 | ||||||
Questcor Pharmaceuticals Inc | 5,350 | 347,376 | ||||||
Synageva BioPharma Corp * | 3,250 | 269,653 | ||||||
Team Health Holdings Inc * | 10,350 | 463,163 | ||||||
TearLab Corp * | 13,550 | 91,598 | ||||||
Thoratec Corp * | 9,670 | 346,283 | ||||||
Wright Medical Group Inc * | 19,950 | 619,847 | ||||||
|
| |||||||
12,294,649 | ||||||||
|
| |||||||
Industrials - 15.7% | ||||||||
Actuant Corp ‘A’ | 16,145 | 551,352 | ||||||
Acuity Brands Inc | 3,950 | 523,652 | ||||||
AO Smith Corp | 10,050 | 462,501 | ||||||
Beacon Roofing Supply Inc * | 13,500 | 521,910 | ||||||
Esterline Technologies Corp * | 2,980 | 317,489 | ||||||
H&E Equipment Services Inc * | 6,600 | 266,970 | ||||||
Hexcel Corp * | 14,250 | 620,445 | ||||||
Hub Group Inc ‘A’ * | 15,250 | 609,848 | ||||||
NCI Building Systems Inc * | 28,500 | 497,610 | ||||||
On Assignment Inc * | 19,500 | 752,505 | ||||||
Primoris Services Corp | 9,900 | 296,802 | ||||||
RBC Bearings Inc * | 6,515 | 415,006 | ||||||
Rexnord Corp * | 12,650 | 366,597 | ||||||
Spirit Airlines Inc * | 9,750 | 579,150 | ||||||
Swift Transportation Co * | 22,653 | 560,662 | ||||||
The Advisory Board Co * | 8,250 | 530,063 | ||||||
The ExOne Co * | 9,150 | 327,845 | ||||||
The Middleby Corp * | 1,750 | 462,368 | ||||||
WageWorks Inc * | 2,850 | 159,914 | ||||||
Watts Water Technologies Inc ‘A’ | 10,050 | 589,835 | ||||||
|
| |||||||
9,412,524 | ||||||||
|
| |||||||
Information Technology - 23.9% | ||||||||
Applied Micro Circuits Corp * | 24,350 | 241,065 | ||||||
Applied Optoelectronics Inc * | 5,850 | 144,320 | ||||||
ARRIS Group Inc * | 21,698 | 611,450 | ||||||
Aspen Technology Inc * | 14,250 | 603,630 | ||||||
Belden Inc | 5,450 | 379,320 | ||||||
Care.com Inc * | 7,800 | 129,090 | ||||||
Ciena Corp * | 13,150 | 299,031 |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-53
PACIFIC LIFE FUNDS
PL SMALL-CAP GROWTH FUND
Schedule of Investments (Continued)
March 31, 2014
| Value | |||||||
Cognex Corp * | 8,764 | $296,749 | ||||||
CommVault Systems Inc * | 5,950 | 386,453 | ||||||
Control4 Corp * | 9,050 | 191,951 | ||||||
Cornerstone OnDemand Inc * | 10,600 | 507,422 | ||||||
CoStar Group Inc * | 2,750 | 513,535 | ||||||
Cypress Semiconductor Corp * | 38,850 | 398,990 | ||||||
Dealertrack Technologies Inc * | 11,600 | 570,604 | ||||||
Demandware Inc * | 8,350 | 534,901 | ||||||
FEI Co | 4,600 | 473,892 | ||||||
Finisar Corp * | 14,350 | 380,419 | ||||||
FleetMatics Group PLC (Ireland) * | 12,100 | 404,745 | ||||||
Intersil Corp ‘A’ | 24,450 | 315,894 | ||||||
InterXion Holding NV (Netherlands) * | 13,500 | 323,730 | ||||||
MAXIMUS Inc | 13,800 | 619,068 | ||||||
Microsemi Corp * | 25,450 | 637,014 | ||||||
OpenTable Inc * | 6,050 | 465,427 | ||||||
OSI Systems Inc * | 7,800 | 466,908 | ||||||
Proofpoint Inc * | 9,900 | 367,092 | ||||||
Semtech Corp * | 14,900 | 377,566 | ||||||
SPS Commerce Inc * | 7,250 | 445,513 | ||||||
SunEdison Inc * | 30,800 | 580,272 | ||||||
Synchronoss Technologies Inc * | 15,200 | 521,208 | ||||||
Textura Corp * | 13,350 | 336,554 | ||||||
The Ultimate Software Group Inc * | 2,800 | 383,600 | ||||||
Trulia Inc * | 14,050 | 466,460 | ||||||
VistaPrint NV (Netherlands) * | 9,300 | 457,746 | ||||||
WEX Inc * | 5,115 | 486,181 | ||||||
|
| |||||||
14,317,800 | ||||||||
|
| |||||||
Materials - 5.3% | ||||||||
Calgon Carbon Corp * | 27,200 | 593,776 | ||||||
Chemtura Corp * | 21,200 | 536,148 | ||||||
Cytec Industries Inc | 4,800 | 468,528 | ||||||
Eagle Materials Inc | 6,300 | 558,558 | ||||||
Louisiana-Pacific Corp * | 26,850 | 452,960 | ||||||
PolyOne Corp | 15,925 | 583,811 | ||||||
|
| |||||||
3,193,781 | ||||||||
|
|
| Value | |||||||
Telecommunication Services - 0.7% | ||||||||
Cogent Communications Group Inc | 12,250 | $435,243 | ||||||
|
| |||||||
Total Common Stocks | 57,935,715 | |||||||
|
| |||||||
SHORT-TERM INVESTMENT - 3.1% |
| |||||||
Money Market Fund - 3.1% | ||||||||
BlackRock Liquidity Funds Treasury | 1,880,869 | 1,880,869 | ||||||
|
| |||||||
Total Short-Term Investment | 1,880,869 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 99.8% | 59,825,123 | |||||||
OTHER ASSETS & LIABILITIES, NET - 0.2% |
| 96,210 | ||||||
|
| |||||||
NET ASSETS - 100.0% |
| $59,921,333 | ||||||
|
|
Notes to Schedule of Investments
(a) | As of March 31, 2014, the fund was diversified as a percentage of net assets as follows: |
Information Technology | 23.9% | |||
Health Care | 20.5% | |||
Consumer Discretionary | 16.1% | |||
Industrials | 15.7% | |||
Financials | 6.2% | |||
Materials | 5.3% | |||
Energy | 4.9% | |||
Consumer Staples | 3.4% | |||
Short-Term Investment | 3.1% | |||
Others (each less than 3.0%) | 0.7% | |||
|
| |||
99.8% | ||||
Other Assets & Liabilities, Net | 0.2% | |||
|
| |||
100.0% | ||||
|
|
(b) | Fair Value Measurements |
The following is a summary of the fund’s investments as categorized under the three-tier hierarchy of inputs used in valuing the fund’s assets and liabilities (See Note 3D in Notes to Financial Statements) as of March 31, 2014:
Total Value at March 31, 2014 | Level 1 Quoted Price | Level 2 Observable Input | Level 3 Significant | |||||||||||||||
Assets | Warrants (1) | $8,539 | $— | $8,539 | $— | |||||||||||||
Common Stocks (1) | 57,935,715 | 57,935,715 | — | — | ||||||||||||||
Short-Term Investment | 1,880,869 | 1,880,869 | — | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total | $59,825,123 | $59,816,584 | $8,539 | $— | ||||||||||||||
|
|
|
|
|
|
|
|
(1) | For equity investments categorized in a single level, refer to the schedule of investments for further industry breakout. |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-54
PACIFIC LIFE FUNDS
PL SMALL-CAP VALUE FUND
Schedule of Investments
March 31, 2014
| Value | |||||||
COMMON STOCKS - 94.0% | ||||||||
Consumer Discretionary - 7.5% | ||||||||
Arctic Cat Inc | 18,500 | $884,116 | ||||||
Cinemark Holdings Inc | 52,200 | 1,514,323 | ||||||
Cracker Barrel Old Country Store Inc | 15,114 | 1,469,685 | ||||||
Group 1 Automotive Inc | 19,000 | 1,247,540 | ||||||
Hillenbrand Inc | 24,419 | 789,466 | ||||||
International Game Technology | 84,437 | 1,187,184 | ||||||
Meredith Corp | 5,690 | 264,187 | ||||||
PetMed Express Inc | 19,238 | 257,982 | ||||||
Sonic Automotive Inc ‘A’ | 18,500 | 415,880 | ||||||
Sturm Ruger & Co Inc | 24,588 | 1,470,362 | ||||||
The Buckle Inc | 33,435 | 1,531,323 | ||||||
|
| |||||||
11,032,048 | ||||||||
|
| |||||||
Consumer Staples - 5.6% | ||||||||
Cal-Maine Foods Inc | 19,400 | 1,217,932 | ||||||
Casey’s General Stores Inc | 12,191 | 823,990 | ||||||
Ingredion Inc | 24,500 | 1,667,960 | ||||||
Sanderson Farms Inc | 14,900 | 1,169,501 | ||||||
The Andersons Inc | 28,213 | 1,671,338 | ||||||
Universal Corp | 25,500 | 1,425,195 | ||||||
Weis Markets Inc | 7,400 | 364,450 | ||||||
|
| |||||||
8,340,366 | ||||||||
|
| |||||||
Energy - 13.7% | ||||||||
Alliance Resource Partners LP | 10,800 | 908,712 | ||||||
Boardwalk Pipeline Partners LP | 112,800 | 1,512,648 | ||||||
Bristow Group Inc | 25,800 | 1,948,416 | ||||||
Cimarex Energy Co | 8,700 | 1,036,257 | ||||||
CVR Energy Inc | 32,300 | 1,364,675 | ||||||
Delek US Holdings Inc | 10,300 | 299,112 | ||||||
Emerge Energy Services LP | 9,710 | 604,156 | ||||||
Ensign Energy Services Inc (Canada) | 34,840 | 514,958 | ||||||
Golar LNG Partners LP | 15,749 | 470,895 | ||||||
Gulfmark Offshore Inc ‘A’ | 6,300 | 283,122 | ||||||
LinnCo LLC | 43,996 | 1,190,092 | ||||||
Precision Drilling Corp (Canada) | 169,200 | 2,025,324 | ||||||
SandRidge Permian Trust | 37,586 | 451,784 | ||||||
ShawCor Ltd (Canada) | 28,760 | 1,199,309 | ||||||
Ship Finance International Ltd (Bermuda) | 69,457 | 1,248,142 | ||||||
Tidewater Inc | 30,000 | 1,458,600 | ||||||
Western Refining Inc | 43,660 | 1,685,276 | ||||||
World Fuel Services Corp | 46,639 | 2,056,780 | ||||||
|
| |||||||
20,258,258 | ||||||||
|
| |||||||
Financials - 19.0% | ||||||||
Allied World Assurance Co Holdings AG (Switzerland) | 14,259 | 1,471,386 | ||||||
Altisource Residential Corp REIT | 49,701 | 1,568,564 | ||||||
American Financial Group Inc | 25,000 | 1,442,750 | ||||||
Associated Estates Realty Corp REIT | 38,394 | 650,394 | ||||||
Blackstone Mortgage Trust Inc ‘A’ REIT | 27,500 | 790,625 | ||||||
Canadian Western Bank (Canada) | 29,500 | 992,940 | ||||||
Cash America International Inc | 30,706 | 1,188,936 | ||||||
Community Trust Bancorp Inc | 5,100 | 211,548 | ||||||
First American Financial Corp | 54,700 | 1,452,285 | ||||||
First Interstate Bancsystem Inc | 7,024 | 198,217 | ||||||
First Merchants Corp | 15,442 | 334,165 | ||||||
First Niagara Financial Group Inc | 144,000 | 1,360,800 | ||||||
FirstMerit Corp | 69,822 | 1,454,392 | ||||||
Franklin Street Properties Corp REIT | 53,500 | 674,100 | ||||||
Fulton Financial Corp | 72,168 | 907,873 | ||||||
Home Loan Servicing Solutions Ltd (Cayman) | 59,200 | 1,278,720 | ||||||
International Bancshares Corp | 3,995 | 100,195 | ||||||
Montpelier Re Holdings Ltd (Bermuda) | 25,509 | 759,148 | ||||||
Old National Bancorp | 61,200 | 912,492 | ||||||
Omega Healthcare Investors Inc REIT | 37,400 | 1,253,648 |
| Value | |||||||
Protective Life Corp | 34,116 | $1,794,160 | ||||||
Retail Properties of America Inc ‘A’ REIT | 68,344 | 925,378 | ||||||
Starwood Property Trust Inc REIT | 48,500 | 1,144,115 | ||||||
Starwood Waypoint Residential Trust REIT * | 9,700 | 279,263 | ||||||
Susquehanna Bancshares Inc | 105,700 | 1,203,923 | ||||||
Symetra Financial Corp | 31,577 | 625,856 | ||||||
Trustmark Corp | 37,558 | 952,095 | ||||||
Universal Insurance Holdings Inc | 27,700 | 351,790 | ||||||
Washington Federal Inc | 54,831 | 1,277,562 | ||||||
Webster Financial Corp | 6,669 | 207,139 | ||||||
WesBanco Inc | 8,729 | 277,844 | ||||||
|
| |||||||
28,042,303 | ||||||||
|
| |||||||
Health Care - 6.2% | ||||||||
PerkinElmer Inc | 42,650 | 1,921,809 | ||||||
Select Medical Holdings Corp | 84,120 | 1,047,294 | ||||||
STERIS Corp | 39,053 | 1,864,781 | ||||||
Teleflex Inc | 18,500 | 1,983,940 | ||||||
The Cooper Cos Inc | 14,800 | 2,032,928 | ||||||
The Ensign Group Inc | 9,128 | 398,346 | ||||||
|
| |||||||
9,249,098 | ||||||||
|
| |||||||
Industrials - 18.4% | ||||||||
AAR Corp | 27,100 | 703,245 | ||||||
Alliant Techsystems Inc | 14,600 | 2,075,390 | ||||||
Applied Industrial Technologies Inc | 12,600 | 607,824 | ||||||
AZZ Inc | 12,000 | 536,160 | ||||||
Crane Co | 28,400 | 2,020,660 | ||||||
Cubic Corp | 10,200 | 520,914 | ||||||
Curtiss-Wright Corp | 10,500 | 667,170 | ||||||
Elbit Systems Ltd (Israel) | 6,900 | 421,514 | ||||||
Ennis Inc | 14,300 | 236,951 | ||||||
GATX Corp | 22,545 | 1,530,355 | ||||||
ITT Corp | 42,023 | 1,796,903 | ||||||
KBR Inc | 35,100 | 936,468 | ||||||
Kennametal Inc | 38,500 | 1,705,550 | ||||||
Standex International Corp | 6,667 | 357,218 | ||||||
TAL International Group Inc * | 25,700 | 1,101,759 | ||||||
Textainer Group Holdings Ltd (Bermuda) | 19,149 | 732,832 | ||||||
The Babcock & Wilcox Co | 48,219 | 1,600,871 | ||||||
The Brink’s Co | 36,600 | 1,044,930 | ||||||
Trinity Industries Inc | 28,317 | 2,040,806 | ||||||
Triumph Group Inc | 25,400 | 1,640,332 | ||||||
UniFirst Corp | 8,500 | 934,490 | ||||||
United Stationers Inc | 15,795 | 648,701 | ||||||
Valmont Industries Inc | 13,100 | 1,949,804 | ||||||
West Corp | 14,014 | 335,355 | ||||||
Westjet Airlines Ltd (Canada) | 44,882 | 985,333 | ||||||
|
| |||||||
27,131,535 | ||||||||
|
| |||||||
Information Technology - 6.4% | ||||||||
AVX Corp | 25,800 | 340,044 | ||||||
Belden Inc | 28,500 | 1,983,600 | ||||||
Booz Allen Hamilton Holding Corp | 21,100 | 464,200 | ||||||
Broadridge Financial Solutions Inc | 39,841 | 1,479,695 | ||||||
CSG Systems International Inc | 23,100 | 601,524 | ||||||
Fair Isaac Corp | 11,992 | 663,397 | ||||||
j2 Global Inc | 26,927 | 1,347,696 | ||||||
Jabil Circuit Inc | 60,100 | 1,081,800 | ||||||
Mentor Graphics Corp | 69,202 | 1,523,828 | ||||||
|
| |||||||
9,485,784 | ||||||||
|
| |||||||
Materials - 14.1% | ||||||||
A Schulman Inc | 24,400 | 884,744 | ||||||
American Vanguard Corp | 16,166 | 349,994 | ||||||
Cabot Corp | 31,700 | 1,872,202 | ||||||
Commercial Metals Co | 95,240 | 1,798,131 | ||||||
HudBay Minerals Inc (Canada) | 118,038 | 921,454 | ||||||
Innophos Holdings Inc | 22,278 | 1,263,163 | ||||||
Methanex Corp (Canada) | 30,100 | 1,924,594 |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-55
PACIFIC LIFE FUNDS
PL SMALL-CAP VALUE FUND
Schedule of Investments (Continued)
March 31, 2014
| Value | |||||||
Neenah Paper Inc | 17,000 | $879,240 | ||||||
Olin Corp | 67,500 | 1,863,675 | ||||||
PetroLogistics LP | 25,948 | 322,793 | ||||||
Rentech Nitrogen Partners LP | 22,576 | 420,139 | ||||||
Rock-Tenn Co ‘A’ | 10,800 | 1,140,156 | ||||||
Royal Gold Inc | 26,530 | 1,661,309 | ||||||
Schweitzer-Mauduit International Inc | 16,744 | 713,127 | ||||||
Silgan Holdings Inc | 21,538 | 1,066,562 | ||||||
Sonoco Products Co | 33,470 | 1,372,939 | ||||||
Steel Dynamics Inc | 92,500 | 1,645,575 | ||||||
Stepan Co | 10,527 | 679,623 | ||||||
|
| |||||||
20,779,420 | ||||||||
|
| |||||||
Utilities - 3.1% | ||||||||
El Paso Electric Co | 23,340 | 833,938 | ||||||
Great Plains Energy Inc | 57,100 | 1,543,984 | ||||||
IDACORP Inc | 14,689 | 814,799 | ||||||
UGI Corp | 29,500 | 1,345,495 | ||||||
|
| |||||||
4,538,216 | ||||||||
|
| |||||||
Total Common Stocks | 138,857,028 | |||||||
|
| |||||||
SHORT-TERM INVESTMENT - 5.9% | ||||||||
Money Market Fund - 5.9% | ||||||||
BlackRock Liquidity Funds Treasury | 8,687,381 | 8,687,381 | ||||||
|
| |||||||
Total Short-Term Investment | 8,687,381 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 99.9% | 147,544,409 | |||||||
OTHER ASSETS & LIABILITIES, NET - 0.1% | 157,848 | |||||||
|
| |||||||
NET ASSETS - 100.0% | $147,702,257 | |||||||
|
|
Notes to Schedule of Investments
(a) | As of March 31, 2014, the fund was diversified as a percentage of net assets as follows: |
Financials | 19.0% | |||
Industrials | 18.4% | |||
Materials | 14.1% | |||
Energy | 13.7% | |||
Consumer Discretionary | 7.5% | |||
Information Technology | 6.4% | |||
Health Care | 6.2% | |||
Short-Term Investment | 5.9% | |||
Consumer Staples | 5.6% | |||
Utilities | 3.1% | |||
|
| |||
99.9% | ||||
Other Assets & Liabilities, Net | 0.1% | |||
|
| |||
100.0% | ||||
|
|
(b) | Fair Value Measurements |
The following is a summary of the fund’s investments as categorized under the three-tier hierarchy of inputs used in valuing the fund’s assets and liabilities (See Note 3D in Notes to Financial Statements) as of March 31, 2014:
Total Value at March 31, 2014 | Level 1 Quoted Price | Level 2 Significant | Level 3 Significant | |||||||||||||||
Assets | Common Stocks (1) | $138,857,028 | $138,857,028 | $— | $— | |||||||||||||
Short-Term Investment | 8,687,381 | 8,687,381 | — | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total | $147,544,409 | $147,544,409 | $— | $— | ||||||||||||||
|
|
|
|
|
|
|
|
(1) | For equity investments categorized in a single level, refer to the schedule of investments for further industry breakout. |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-56
PACIFIC LIFE FUNDS
PL REAL ESTATE FUND
Schedule of Investments
March 31, 2014
| Value | |||||||
COMMON STOCKS - 96.1% | ||||||||
Consumer Discretionary - 1.9% | ||||||||
Starwood Hotels & Resorts Worldwide Inc | 18,020 | $1,434,392 | ||||||
|
| |||||||
Financials - 94.2% | ||||||||
Acadia Realty Trust REIT | 10,133 | 267,308 | ||||||
Alexandria Real Estate Equities Inc REIT | 9,210 | 668,278 | ||||||
Apartment Investment & Management Co ‘A’ REIT | 706 | 21,335 | ||||||
Ashford Hospitality Prime Inc REIT | 1,216 | 18,386 | ||||||
Ashford Hospitality Trust Inc REIT | 30,743 | 346,474 | ||||||
AvalonBay Communities Inc REIT | 31,669 | 4,158,773 | ||||||
Boston Properties Inc REIT | 22,369 | 2,561,922 | ||||||
BRE Properties Inc REIT | 9,681 | 607,773 | ||||||
Brookfield Property Partners LP (Bermuda) | 14,366 | 268,644 | ||||||
Camden Property Trust REIT | 26,683 | 1,796,833 | ||||||
Cousins Properties Inc REIT | 42,338 | 485,617 | ||||||
DCT Industrial Trust Inc REIT | 68,810 | 542,223 | ||||||
DDR Corp REIT | 3,450 | 56,856 | ||||||
Duke Realty Corp REIT | 56,350 | 951,188 | ||||||
Equity Lifestyle Properties Inc REIT | 26,378 | 1,072,266 | ||||||
Equity Residential REIT | 106,628 | 6,183,358 | ||||||
Essex Property Trust Inc REIT | 2,051 | 348,772 | ||||||
Federal Realty Investment Trust REIT | 6,408 | 735,126 | ||||||
Forest City Enterprises Inc ‘A’ * | 48,191 | 920,448 | ||||||
General Growth Properties Inc REIT | 135,101 | 2,972,222 | ||||||
HCP Inc REIT | 42,312 | 1,641,282 | ||||||
Health Care REIT Inc | 6,850 | 408,260 | ||||||
Healthcare Realty Trust Inc REIT | 28,969 | 699,601 | ||||||
Host Hotels & Resorts Inc REIT | 307,142 | 6,216,554 | ||||||
Hudson Pacific Properties Inc REIT | 24,333 | 561,362 | ||||||
Lexington Realty Trust REIT | 2,730 | 29,784 | ||||||
Liberty Property Trust REIT | 5,740 | 212,150 | ||||||
Mack-Cali Realty Corp REIT | 47,475 | 987,005 | ||||||
Mid-America Apartment Communities Inc REIT | 6,110 | 417,130 | ||||||
National Retail Properties Inc REIT | 26,580 | 912,226 | ||||||
Plum Creek Timber Co Inc REIT | 2,389 | 100,434 | ||||||
Prologis Inc REIT | 49,242 | 2,010,551 | ||||||
PS Business Parks Inc REIT | 3,621 | 302,788 | ||||||
Public Storage REIT | 21,637 | 3,645,618 | ||||||
Realty Income Corp REIT | 7,180 | 293,375 | ||||||
Regency Centers Corp REIT | 51,976 | 2,653,895 | ||||||
Rexford Industrial Realty Inc REIT | 6,000 | 85,080 | ||||||
Senior Housing Properties Trust REIT | 91,041 | 2,045,691 | ||||||
Simon Property Group Inc REIT | 64,740 | 10,617,360 |
| Value | |||||||
Sovran Self Storage Inc REIT | 1,562 | $114,729 | ||||||
Summit Hotel Properties Inc REIT | 781 | 7,248 | ||||||
Tanger Factory Outlet Centers Inc REIT | 17,221 | 602,735 | ||||||
Taubman Centers Inc REIT | 11,928 | 844,383 | ||||||
The Macerich Co REIT | 37,912 | 2,363,055 | ||||||
Ventas Inc REIT | 29,580 | 1,791,661 | ||||||
Vornado Realty Trust REIT | 49,986 | 4,926,620 | ||||||
Winthrop Realty Trust REIT | 3,651 | 42,315 | ||||||
|
| |||||||
69,516,694 | ||||||||
|
| |||||||
Total Common Stocks | 70,951,086 | |||||||
|
| |||||||
SHORT-TERM INVESTMENT - 3.7% | ||||||||
Money Market Fund - 3.7% | ||||||||
BlackRock Liquidity Funds Treasury | 2,701,008 | 2,701,008 | ||||||
|
| |||||||
Total Short-Term Investment | 2,701,008 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 99.8% | 73,652,094 | |||||||
OTHER ASSETS & LIABILITIES, NET - 0.2% | 175,472 | |||||||
|
| |||||||
NET ASSETS - 100.0% | $73,827,566 | |||||||
|
|
Notes to Schedule of Investments
(a) | As of March 31, 2014, the fund was diversified by property sector as a percentage of net assets as follows: |
Retail | 29.0% | |||
Specialized | 23.0% | |||
Residential | 19.8% | |||
Diversified | 8.1% | |||
Office | 7.8% | |||
Industrial | 3.6% | |||
Others (each less than 3.0%) | 4.8% | |||
|
| |||
96.1% | ||||
Short-Term Investment | 3.7% | |||
Other Assets & Liabilities, Net | 0.2% | |||
|
| |||
100.0% | ||||
|
|
(b) | Fair Value Measurements |
The following is a summary of the fund’s investments as categorized under the three-tier hierarchy of inputs used in valuing the fund’s assets and liabilities (See Note 3D in Notes to Financial Statements) as of March 31, 2014:
Total Value at March 31, 2014 | Level 1 Quoted Price | Level 2 Significant | Level 3 Significant | |||||||||||||||
Assets | Common Stocks (1) | $70,951,086 | $70,951,086 | $— | $— | |||||||||||||
Short-Term Investment | 2,701,008 | 2,701,008 | — | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total | $73,652,094 | $73,652,094 | $— | $— | ||||||||||||||
|
|
|
|
|
|
|
|
(1) | For equity investments categorized in a single level, refer to the schedule of investments for further industry breakout. |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-57
PACIFIC LIFE FUNDS
PL EMERGING MARKETS FUND
Schedule of Investments
March 31, 2014
| Value | |||||||
WARRANTS - 0.1% |
| |||||||
Malaysia - 0.1% | ||||||||
Genting Bhd Strike @ MYR 7.96 | 137,750 | $122,332 | ||||||
|
| |||||||
Total Warrants | 122,332 | |||||||
|
| |||||||
PREFERRED STOCKS - 5.5% |
| |||||||
Brazil - 4.2% | ||||||||
Banco Bradesco SA ADR | 85,910 | 1,174,390 | ||||||
Lojas Americanas SA | 278,246 | 2,049,136 | ||||||
Petroleo Brasileiro SA ADR | 229,300 | 3,180,391 | ||||||
Telefonica Brasil SA | 200 | 4,227 | ||||||
|
| |||||||
6,408,144 | ||||||||
|
| |||||||
Colombia - 1.2% | ||||||||
Banco Davivienda SA | 49,527 | 639,953 | ||||||
Bancolombia SA | 8,655 | 120,436 | ||||||
Bancolombia SA ADR | 14,080 | 795,238 | ||||||
Cementos Argos SA | 69,302 | 352,846 | ||||||
|
| |||||||
1,908,473 | ||||||||
|
| |||||||
India - 0.1% | ||||||||
Zee Entertainment Enterprises Ltd | 7,089,243 | 83,092 | ||||||
|
| |||||||
Total Preferred Stocks | 8,399,709 | |||||||
|
| |||||||
COMMON STOCKS - 88.1% |
| |||||||
Bermuda - 0.9% | ||||||||
Jardine Strategic Holdings Ltd | 37,008 | 1,333,415 | ||||||
|
| |||||||
Brazil - 8.5% | ||||||||
AMBEV SA ADR | 64,140 | 475,277 | ||||||
B2W Cia Digital * | 43,881 | 531,252 | ||||||
BM&FBovespa SA | 555,616 | 2,757,266 | ||||||
Cyrela Brazil Realty SA Empreendimentos e Participacoes | 46,300 | 280,575 | ||||||
Diagnosticos da America SA | 103,600 | 698,581 | ||||||
Embraer SA ADR | 36,820 | 1,306,742 | ||||||
Estacio Participacoes SA | 152,600 | 1,540,123 | ||||||
Kroton Educacional SA | 68,488 | 1,486,875 | ||||||
Localiza Rent a Car SA | 3,100 | 45,004 | ||||||
Multiplan Empreendimentos Imobiliarios SA | 3,800 | 81,024 | ||||||
Natura Cosmeticos SA | 103,100 | 1,726,209 | ||||||
Sul America SA | 106,135 | 703,982 | ||||||
Telefonica Brasil SA ADR | 63,130 | 1,340,881 | ||||||
|
| |||||||
12,973,791 | ||||||||
|
| |||||||
Cayman - 13.1% | ||||||||
Baidu Inc ADR * | 42,750 | 6,514,245 | ||||||
Ctrip.com International Ltd ADR * | 13,110 | 661,006 | ||||||
Eurasia Drilling Co Ltd GDR (LI) ~ | 20,710 | 530,797 | ||||||
Home Inns & Hotels Management Inc ADR * | 21,000 | 678,090 | ||||||
Mindray Medical International Ltd ADR | 17,340 | 561,122 | ||||||
New Oriental Education & Technology Group Inc ADR | 64,310 | 1,887,499 | ||||||
SOHO China Ltd | 1,051,500 | 864,897 | ||||||
Tencent Holdings Ltd | 56,800 | 3,954,757 | ||||||
Tingyi Cayman Islands Holding Corp | 834,000 | 2,396,488 | ||||||
Want Want China Holdings Ltd | 915,000 | 1,366,864 | ||||||
Youku Tudou Inc ADR * | 24,410 | 684,456 | ||||||
|
| |||||||
20,100,221 | ||||||||
|
|
| Value | |||||||
Chile - 1.0% | ||||||||
Cencosud SA | 474,603 | $1,574,293 | ||||||
|
| |||||||
China - 1.8% | ||||||||
China Life Insurance Co Ltd ‘H’ | 3,000 | 8,499 | ||||||
China Oilfield Services Ltd ‘H’ | 180,000 | 424,808 | ||||||
Shandong Weigao Group Medical Polymer Co Ltd ‘H’ | 669,000 | 764,968 | ||||||
Sinopharm Group Co Ltd ‘H’ | 358,600 | 989,312 | ||||||
Tsingtao Brewery Co Ltd ‘H’ | 78,000 | 572,477 | ||||||
|
| |||||||
2,760,064 | ||||||||
|
| |||||||
Colombia - 0.9% | ||||||||
Almacenes Exito SA | 47,140 | 709,512 | ||||||
Almacenes Exito SA GDR ~ | 43,200 | 646,553 | ||||||
|
| |||||||
1,356,065 | ||||||||
|
| |||||||
Denmark - 1.9% | ||||||||
Carlsberg AS ‘B’ | 28,614 | 2,851,410 | ||||||
|
| |||||||
Egypt - 0.5% | ||||||||
Commercial International Bank Egypt SAE | 155,450 | 809,052 | ||||||
|
| |||||||
France - 2.4% | ||||||||
LVMH Moet Hennessy Louis Vuitton SA | 8,450 | 1,538,263 | ||||||
Pernod Ricard SA | 17,870 | 2,081,960 | ||||||
|
| |||||||
3,620,223 | ||||||||
|
| |||||||
Hong Kong - 4.5% | ||||||||
AIA Group Ltd | 299,400 | 1,422,494 | ||||||
CNOOC Ltd | 1,006,000 | 1,520,706 | ||||||
Hang Lung Group Ltd | 151,000 | 762,254 | ||||||
Hang Lung Properties Ltd | 779,000 | 2,241,566 | ||||||
Hong Kong Exchanges & Clearing Ltd | 63,178 | 958,447 | ||||||
|
| |||||||
6,905,467 | ||||||||
|
| |||||||
India - 11.9% | ||||||||
Ambuja Cements Ltd | 232,081 | 789,229 | ||||||
Apollo Hospitals Enterprise Ltd | 44,824 | 688,798 | ||||||
Asian Paints Ltd | 85,340 | 784,151 | ||||||
Cipla Ltd | 118,168 | 758,529 | ||||||
Colgate-Palmolive India Ltd | 28,256 | 649,664 | ||||||
DLF Ltd | 214,835 | 637,264 | ||||||
Hindustan Unilever Ltd | 28,946 | 293,413 | ||||||
Housing Development Finance Corp | 250,254 | 3,701,214 | ||||||
ICICI Bank Ltd ADR | 55,790 | 2,443,602 | ||||||
Infosys Ltd | 55,462 | 3,051,528 | ||||||
Marico Kaya Enterprises Ltd * + | 1,992 | 127 | ||||||
Marico Ltd | 100,581 | 352,360 | ||||||
Tata Consultancy Services Ltd | 38,062 | 1,359,146 | ||||||
Ultratech Cement Ltd | 37,244 | 1,367,122 | ||||||
Zee Entertainment Enterprises Ltd | 316,042 | 1,435,245 | ||||||
|
| |||||||
18,311,392 | ||||||||
|
| |||||||
Indonesia - 2.8% | ||||||||
P.T. Astra International Tbk | 3,754,500 | 2,458,203 | ||||||
P.T. Indocement Tunggal Prakarsa Tbk | 353,000 | 734,007 | ||||||
P.T. Semen Indonesia Persero Tbk | 549,000 | 770,799 | ||||||
P.T. Unilever Indonesia Tbk | 121,500 | 315,250 | ||||||
|
| |||||||
4,278,259 | ||||||||
|
| |||||||
Italy - 2.0% | ||||||||
Prada SPA | 370,600 | 2,900,202 | ||||||
Salvatore Ferragamo SPA | 7,203 | 212,029 | ||||||
|
| |||||||
3,112,231 | ||||||||
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-58
PACIFIC LIFE FUNDS
PL EMERGING MARKETS FUND
Schedule of Investments (Continued)
March 31, 2014
| Value | |||||||
Luxembourg - 1.5% | ||||||||
Tenaris SA ADR | 50,650 | $2,241,263 | ||||||
|
| |||||||
Malaysia - 1.2% | ||||||||
Genting Bhd | 604,000 | 1,849,263 | ||||||
|
| |||||||
Mexico - 5.1% | ||||||||
America Movil SAB de CV ‘L’ ADR | 106,150 | 2,110,262 | ||||||
Fomento Economico Mexicano SAB de CV | 202,881 | 1,892,137 | ||||||
Grupo Aeroportuario del Sureste SAB de CV ‘B’ | 6,709 | 82,406 | ||||||
Grupo Financiero Banorte SAB de CV ‘O’ | 124,972 | 845,144 | ||||||
Grupo Financiero Inbursa SAB de CV ‘O’ | 319,398 | 825,192 | ||||||
Grupo Televisa SAB ADR | 61,070 | 2,033,020 | ||||||
|
| |||||||
7,788,161 | ||||||||
|
| |||||||
Netherlands - 2.3% | ||||||||
Yandex NV ‘A’ * | 115,820 | 3,496,606 | ||||||
|
| |||||||
Nigeria - 0.9% | ||||||||
Guaranty Trust Bank PLC | 1,845,063 | 285,060 | ||||||
Nigerian Breweries PLC | 693,206 | 650,912 | ||||||
Zenith Bank PLC | 3,178,886 | 385,203 | ||||||
|
| |||||||
1,321,175 | ||||||||
|
| |||||||
Panama - 0.2% | ||||||||
InRetail Peru Corp * | 17,400 | 245,340 | ||||||
|
| |||||||
Philippines - 1.8% | ||||||||
International Container Terminal Services Inc | 58,510 | 140,987 | ||||||
Jollibee Foods Corp | 197,560 | 754,191 | ||||||
SM Investments Corp | 65,365 | 1,029,312 | ||||||
SM Prime Holdings Inc | 2,811,070 | 916,668 | ||||||
|
| |||||||
2,841,158 | ||||||||
|
| |||||||
Russia - 5.0% | ||||||||
Alrosa AO | 684,056 | 703,475 | ||||||
Magnit OJSC (RTS) * | 14,512 | 3,352,027 | ||||||
NOVATEK OAO GDR (LI) ~ | 32,200 | 3,554,751 | ||||||
|
| |||||||
7,610,253 | ||||||||
|
| |||||||
Singapore - 0.1% | ||||||||
CapitaMalls Asia Ltd | 125,000 | 177,761 | ||||||
|
| |||||||
South Africa - 1.4% | ||||||||
MTN Group Ltd | 80,958 | 1,670,891 | ||||||
Naspers Ltd ‘N’ | 4,367 | 475,819 | ||||||
|
| |||||||
2,146,710 | ||||||||
|
| |||||||
South Korea - 1.4% | ||||||||
NAVER Corp | 2,141 | 1,558,677 | ||||||
Shinsegae Co Ltd | 2,617 | 566,166 | ||||||
|
| |||||||
2,124,843 | ||||||||
|
| |||||||
Switzerland - 1.1% | ||||||||
Cie Financiere Richemont SA ‘A’ | 17,812 | 1,705,535 | ||||||
|
| |||||||
Taiwan - 2.1% | ||||||||
Taiwan Semiconductor Manufacturing Co Ltd | 835,995 | 3,266,535 | ||||||
|
| |||||||
Thailand - 1.0% | ||||||||
Airports of Thailand PCL | 29,800 | 178,212 | ||||||
Bangkok Dusit Medical Services PCL | 2,800 | 11,480 | ||||||
CP ALL PCL | 1,040,500 | 1,395,245 | ||||||
|
| |||||||
1,584,937 | ||||||||
|
|
| Value | |||||||
Turkey - 3.0% | ||||||||
Anadolu Efes Biracilik Ve Malt Sanayii AS | 78,362 | $869,242 | ||||||
BIM Birlesik Magazalar AS | 33,238 | 748,227 | ||||||
Haci Omer Sabanci Holding AS | 391,174 | 1,517,098 | ||||||
Turkiye Garanti Bankasi AS | 312,746 | 1,068,490 | ||||||
Ulker Biskuvi Sanayi AS | 53,003 | 372,475 | ||||||
|
| |||||||
4,575,532 | ||||||||
|
| |||||||
United Arab Emirates - 0.9% | ||||||||
DP World Ltd | 12,901 | 230,928 | ||||||
DP World Ltd (LI) | 65,554 | 1,185,002 | ||||||
|
| |||||||
1,415,930 | ||||||||
|
| |||||||
United Kingdom - 6.2% | ||||||||
Diageo PLC | 38,747 | 1,202,517 | ||||||
Genel Energy PLC * | 40,270 | 660,004 | ||||||
Glencore Xstrata PLC | 510,840 | 2,634,792 | ||||||
Old Mutual PLC | 339,323 | 1,142,329 | ||||||
SABMiller PLC | 34,260 | 1,720,646 | ||||||
Tullow Oil PLC | 178,440 | 2,229,182 | ||||||
|
| |||||||
9,589,470 | ||||||||
|
| |||||||
United States - 0.7% | ||||||||
MercadoLibre Inc | 11,960 | 1,137,516 | ||||||
|
| |||||||
Total Common Stocks | 135,103,871 | |||||||
|
| |||||||
SHORT-TERM INVESTMENT - 6.0% | ||||||||
Money Market Fund - 6.0% | ||||||||
BlackRock Liquidity Funds Treasury | 9,302,714 | 9,302,714 | ||||||
|
| |||||||
Total Short-Term Investment | 9,302,714 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 99.7% | 152,928,626 | |||||||
OTHER ASSETS & LIABILITIES, NET - 0.3% | 403,994 | |||||||
|
| |||||||
NET ASSETS - 100.0% | $153,332,620 | |||||||
|
|
Notes to Schedule of Investments
(a) | As of March 31, 2014, the fund was diversified as a percentage of net assets as follows: |
Consumer Staples | 18.6% | |||
Financials | 17.8% | |||
Consumer Discretionary | 16.5% | |||
Information Technology | 16.3% | |||
Energy | 9.0% | |||
Short-Term Investment | 6.0% | |||
Materials | 5.7% | |||
Industrials | 3.6% | |||
Telecommunication Services | 3.3% | |||
Others (each less than 3.0%) | 2.9% | |||
|
| |||
99.7% | ||||
Other Assets & Liabilities, Net | 0.3% | |||
|
| |||
100.0% | ||||
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-59
PACIFIC LIFE FUNDS
PL EMERGING MARKETS FUND
Schedule of Investments (Continued)
March 31, 2014
(b) | As of March 31, 2014, the fund was diversified by country of incorporation as a percentage of net assets as follows: |
Cayman | 13.1% | |||
Brazil | 12.7% | |||
India | 12.0% | |||
United States | 6.7% | |||
United Kingdom | 6.2% | |||
Mexico | 5.1% | |||
Russia | 5.0% | |||
Hong Kong | 4.5% | |||
Turkey | 3.0% | |||
Others (each less than 3.0%) | 31.4% | |||
|
| |||
99.7% | ||||
Other Assets & Liabilities, Net | 0.3% | |||
|
| |||
100.0% | ||||
|
|
(c) | An investment with a value of $127 or less than 0.1% of the fund’s net assets was valued by the Trustee Valuation Committee or determined by a valuation committee established under the Valuation Policy and then subsequently submitted for approval or ratification to either the Trustee Valuation Committee, or to the Board. |
(d) | Fair Value Measurements |
The following is a summary of the fund’s investments as categorized under the three-tier hierarchy of inputs used in valuing the fund’s assets and liabilities (See Note 3D in Notes to Financial Statements) as of March 31, 2014:
Total Value at March 31, 2014 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||||
Assets | Warrants (1) | $122,332 | $122,332 | $— | $— | |||||||||||||
Preferred Stocks (1) | 8,399,709 | 8,399,709 | — | — | �� | |||||||||||||
Common Stocks | ||||||||||||||||||
Bermuda | 1,333,415 | — | 1,333,415 | — | ||||||||||||||
Brazil | 12,973,791 | 12,973,791 | — | — | ||||||||||||||
Cayman | 20,100,221 | 12,382,112 | 7,718,109 | — | ||||||||||||||
Chile | 1,574,293 | 1,574,293 | — | — | ||||||||||||||
China | 2,760,064 | — | 2,760,064 | — | ||||||||||||||
Colombia | 1,356,065 | 709,512 | 646,553 | — | ||||||||||||||
Denmark | 2,851,410 | — | 2,851,410 | — | ||||||||||||||
Egypt | 809,052 | — | 809,052 | — | ||||||||||||||
France | 3,620,223 | — | 3,620,223 | — | ||||||||||||||
Hong Kong | 6,905,467 | — | 6,905,467 | — | ||||||||||||||
India | 18,311,392 | 2,443,602 | 15,867,663 | 127 | ||||||||||||||
Indonesia | 4,278,259 | — | 4,278,259 | — | ||||||||||||||
Italy | 3,112,231 | 2,900,202 | 212,029 | — | ||||||||||||||
Luxembourg | 2,241,263 | 2,241,263 | — | — | ||||||||||||||
Malaysia | 1,849,263 | — | 1,849,263 | — | ||||||||||||||
Mexico | 7,788,161 | 7,788,161 | — | — | ||||||||||||||
Netherlands | 3,496,606 | 3,496,606 | — | — | ||||||||||||||
Nigeria | 1,321,175 | 1,321,175 | — | — | ||||||||||||||
Panama | 245,340 | 245,340 | — | — | ||||||||||||||
Philippines | 2,841,158 | — | 2,841,158 | — | ||||||||||||||
Russia | 7,610,253 | — | 7,610,253 | — | ||||||||||||||
Singapore | 177,761 | — | 177,761 | — | ||||||||||||||
South Africa | 2,146,710 | — | 2,146,710 | — | ||||||||||||||
South Korea | 2,124,843 | — | 2,124,843 | — | ||||||||||||||
Switzerland | 1,705,535 | — | 1,705,535 | — | ||||||||||||||
Taiwan | 3,266,535 | — | 3,266,535 | — | ||||||||||||||
Thailand | 1,584,937 | — | 1,584,937 | — | ||||||||||||||
Turkey | 4,575,532 | — | 4,575,532 | — | ||||||||||||||
United Arab Emirates | 1,415,930 | 230,928 | 1,185,002 | — | ||||||||||||||
United Kingdom | 9,589,470 | — | 9,589,470 | — | ||||||||||||||
United States | 1,137,516 | 1,137,516 | — | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
135,103,871 | 49,444,501 | 85,659,243 | 127 | |||||||||||||||
Short-Term Investment | 9,302,714 | 9,302,714 | — | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total | $152,928,626 | $67,269,256 | $85,659,243 | $127 | ||||||||||||||
|
|
|
|
|
|
|
|
During the year ended March 31, 2014, an investment with a value of $1,185,002 was transferred from Level 1 to Level 2 due to valuation adjustments made to exchange-traded prices, as a result of market movements following the close of local trading. Also during the same period, investments with a total aggregate value of $8,608,030 were transferred from Level 2 to Level 1 due to the removal of valuation adjustments made to exchange-traded prices as a result of market movements following the close of local trading.
(1) | For equity investments categorized in a single level, refer to the schedule of investments for further geographical region breakout. |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-60
PACIFIC LIFE FUNDS
PL INTERNATIONAL LARGE-CAP FUND
Schedule of Investments
March 31, 2014
| Value | |||||||
PREFERRED STOCKS - 0.9% |
| |||||||
Brazil - 0.9% | ||||||||
Itau Unibanco Holding SA ADR | 138,756 | $2,061,914 | ||||||
|
| |||||||
Total Preferred Stocks | 2,061,914 | |||||||
|
| |||||||
COMMON STOCKS - 98.0% | ||||||||
Bermuda - 1.4% | ||||||||
Li & Fung Ltd | 2,358,400 | 3,496,268 | ||||||
|
| |||||||
Brazil - 0.5% | ||||||||
BM&FBovespa SA | 267,437 | 1,327,166 | ||||||
|
| |||||||
Canada - 4.3% | ||||||||
Canadian National Railway Co | 97,290 | 5,469,644 | ||||||
Loblaw Cos Ltd | 10,380 | 439,425 | ||||||
Shoppers Drug Mart Corp | 24,970 | 1,373,971 | ||||||
Valeant Pharmaceuticals International Inc * | 22,840 | 3,010,997 | ||||||
|
| |||||||
10,294,037 | ||||||||
|
| |||||||
France - 13.2% | ||||||||
Air Liquide SA | 36,352 | 4,930,827 | ||||||
Danone SA | 66,993 | 4,738,651 | ||||||
Dassault Systemes | 10,718 | 1,256,295 | ||||||
GDF Suez | 86,683 | 2,375,301 | ||||||
Legrand SA | 47,824 | 2,974,032 | ||||||
LVMH Moet Hennessy Louis Vuitton SA | 27,200 | 4,951,567 | ||||||
Pernod Ricard SA | 41,256 | 4,806,566 | ||||||
Schneider Electric SA | 63,324 | 5,629,937 | ||||||
|
| |||||||
31,663,176 | ||||||||
|
| |||||||
Germany - 11.9% | ||||||||
Bayer AG | 74,522 | 10,078,163 | ||||||
Beiersdorf AG | 39,113 | 3,814,528 | ||||||
Linde AG | 26,978 | 5,400,117 | ||||||
Merck KGaA | 23,891 | 4,022,835 | ||||||
MTU Aero Engines AG | 9,830 | 914,280 | ||||||
SAP AG | 53,343 | 4,317,805 | ||||||
|
| |||||||
28,547,728 | ||||||||
|
| |||||||
Hong Kong - 1.8% | ||||||||
AIA Group Ltd | 752,000 | 3,572,865 | ||||||
China Unicom Hong Kong Ltd | 556,000 | 730,901 | ||||||
|
| |||||||
4,303,766 | ||||||||
|
| |||||||
India - 1.1% | ||||||||
ICICI Bank Ltd ADR | 60,612 | 2,654,806 | ||||||
|
| |||||||
Israel - 0.4% | ||||||||
Check Point Software Technologies Ltd * | 15,762 | 1,065,984 | ||||||
|
| |||||||
Italy - 0.6% | ||||||||
Saipem SPA | 56,404 | 1,378,134 | ||||||
|
| |||||||
Japan - 12.4% | ||||||||
Denso Corp | 102,600 | 4,912,084 | ||||||
FANUC Corp | 14,300 | 2,517,839 | ||||||
Honda Motor Co Ltd | 144,800 | 5,091,301 | ||||||
Hoya Corp | 133,800 | 4,183,271 | ||||||
Inpex Corp | 245,900 | 3,184,653 |
| Value | |||||||
Japan Tobacco Inc | 74,500 | $2,336,043 | ||||||
Kyocera Corp | 46,200 | 2,079,823 | ||||||
Lawson Inc | 16,000 | 1,130,960 | ||||||
Rinnai Corp | 800 | 70,164 | ||||||
Shin-Etsu Chemical Co Ltd | 52,000 | 2,967,800 | ||||||
Terumo Corp | 66,200 | 1,443,223 | ||||||
|
| |||||||
29,917,161 | ||||||||
|
| |||||||
Netherlands - 8.2% | ||||||||
Akzo Nobel NV | 51,174 | 4,192,941 | ||||||
Heineken NV | 75,575 | 5,266,364 | ||||||
ING Groep NV CVA * | 375,462 | 5,336,318 | ||||||
Randstad Holding NV | 82,483 | 4,840,503 | ||||||
|
| |||||||
19,636,126 | ||||||||
|
| |||||||
Russia - 0.4% | ||||||||
Sberbank of Russia ADR | 91,486 | 859,419 | ||||||
|
| |||||||
Singapore - 1.8% | ||||||||
DBS Group Holdings Ltd | 260,000 | 3,347,361 | ||||||
Singapore Telecommunications Ltd | 344,380 | 1,001,355 | ||||||
|
| |||||||
4,348,716 | ||||||||
|
| |||||||
South Korea - 0.9% | ||||||||
Samsung Electronics Co Ltd | 1,778 | 2,248,403 | ||||||
|
| |||||||
Spain - 2.0% | ||||||||
Amadeus IT Holding SA ‘A’ | 83,057 | 3,453,691 | ||||||
Banco Santander SA | 133,781 | 1,277,513 | ||||||
|
| |||||||
4,731,204 | ||||||||
|
| |||||||
Sweden - 1.1% | ||||||||
Hennes & Mauritz AB ‘B’ | 62,324 | 2,656,075 | ||||||
|
| |||||||
Switzerland - 11.1% | ||||||||
Julius Baer Group Ltd | 73,292 | 3,257,791 | ||||||
Kuehne + Nagel International AG | 11,307 | 1,584,030 | ||||||
Nestle SA | 113,279 | 8,535,443 | ||||||
Roche Holding AG | 15,383 | 4,623,923 | ||||||
Sonova Holding AG | 14,549 | 2,128,517 | ||||||
Swiss Re AG | 17,043 | 1,581,377 | ||||||
UBS AG (XVTX) | 238,965 | 4,933,666 | ||||||
|
| |||||||
26,644,747 | ||||||||
|
| |||||||
Taiwan - 2.6% | ||||||||
Hon Hai Precision Industry Co Ltd | 733,088 | 2,078,679 | ||||||
Taiwan Semiconductor Manufacturing Co Ltd ADR | 213,928 | 4,282,839 | ||||||
|
| |||||||
6,361,518 | ||||||||
|
| |||||||
Thailand - 0.2% | ||||||||
Kasikornbank PCL | 99,700 | 570,215 | ||||||
|
| |||||||
United Kingdom - 20.3% | ||||||||
Barclays PLC | 670,425 | 2,614,209 | ||||||
BG Group PLC | 194,997 | 3,636,927 | ||||||
Compass Group PLC | 413,443 | 6,319,668 | ||||||
Delphi Automotive PLC | 30,628 | 2,078,416 | ||||||
Diageo PLC | 135,709 | 4,211,742 | ||||||
Hays PLC | 496,952 | 1,204,154 | ||||||
HSBC Holdings PLC (LI) | 632,856 | 6,407,714 | ||||||
Reckitt Benckiser Group PLC | 51,740 | 4,216,462 | ||||||
Rio Tinto PLC | 81,257 | 4,531,410 | ||||||
Smiths Group PLC | 128,596 | 2,730,122 | ||||||
Standard Chartered PLC | 235,047 | 4,916,026 | ||||||
WPP PLC | 283,892 | 5,872,799 | ||||||
|
| |||||||
48,739,649 | ||||||||
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-61
PACIFIC LIFE FUNDS
PL INTERNATIONAL LARGE-CAP FUND
Schedule of Investments (Continued)
March 31, 2014
| Value | |||||||
United States - 1.8% | ||||||||
NCR Corp * | 34,710 | $1,268,651 | ||||||
Yum! Brands Inc | 41,340 | 3,116,623 | ||||||
|
| |||||||
4,385,274 | ||||||||
|
| |||||||
Total Common Stocks | 235,829,572 | |||||||
|
| |||||||
SHORT-TERM INVESTMENT - 0.5% | ||||||||
Money Market Fund - 0.5% | ||||||||
BlackRock Liquidity Funds Treasury | 1,138,434 | 1,138,434 | ||||||
|
| |||||||
Total Short-Term Investment | 1,138,434 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 99.4% |
| 239,029,920 | ||||||
OTHER ASSETS & LIABILITIES, NET - 0.6% |
| 1,492,228 | ||||||
|
| |||||||
NET ASSETS - 100.0% |
| $240,522,148 | ||||||
|
|
Notes to Schedule of Investments
(a) | As of March 31, 2014, the fund was diversified as a percentage of net assets as follows: |
Financials | 18.6% | |||
Consumer Staples | 17.0% | |||
Consumer Discretionary | 16.0% | |||
Industrials | 11.6% | |||
Information Technology | 10.9% | |||
Health Care | 10.5% | |||
Materials | 9.2% | |||
Energy | 3.4% | |||
Others (each less than 3.0%) | 2.2% | |||
|
| |||
99.4% | ||||
Other Assets & Liabilities, Net | 0.6% | |||
|
| |||
100.0% | ||||
|
|
(b) | As of March 31, 2014, the fund was diversified by country of incorporation as a percentage of net assets as follows: |
United Kingdom | 20.3% | |||
France | 13.2% | |||
Japan | 12.4% | |||
Germany | 11.9% | |||
Switzerland | 11.1% | |||
Netherlands | 8.2% | |||
Canada | 4.3% | |||
Others (each less than 3.0%) | 18.0% | |||
|
| |||
99.4% | ||||
Other Assets & Liabilities, Net | 0.6% | |||
|
| |||
100.0% | ||||
|
|
(c) | Fair Value Measurements |
The following is a summary of the fund’s investments as categorized under the three-tier hierarchy of inputs used in valuing the fund’s assets and liabilities (See Note 3D in Notes to Financial Statements) as of March 31, 2014:
Total Value at March 31, 2014 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||||
Assets | Preferred Stocks (1) | $2,061,914 | $2,061,914 | $— | $— | |||||||||||||
Common Stocks | ||||||||||||||||||
Bermuda | 3,496,268 | — | 3,496,268 | — | ||||||||||||||
Brazil | 1,327,166 | 1,327,166 | — | — | ||||||||||||||
Canada | 10,294,037 | 10,294,037 | — | — | ||||||||||||||
France | 31,663,176 | — | 31,663,176 | — | ||||||||||||||
Germany | 28,547,728 | — | 28,547,728 | — | ||||||||||||||
Hong Kong | 4,303,766 | — | 4,303,766 | — | ||||||||||||||
India | 2,654,806 | 2,654,806 | — | — | ||||||||||||||
Israel | 1,065,984 | 1,065,984 | — | — | ||||||||||||||
Italy | 1,378,134 | — | 1,378,134 | — | ||||||||||||||
Japan | 29,917,161 | — | 29,917,161 | — | ||||||||||||||
Netherlands | 19,636,126 | — | 19,636,126 | — | ||||||||||||||
Russia | 859,419 | 859,419 | — | — | ||||||||||||||
Singapore | 4,348,716 | — | 4,348,716 | — | ||||||||||||||
South Korea | 2,248,403 | — | 2,248,403 | — | ||||||||||||||
Spain | 4,731,204 | — | 4,731,204 | — | ||||||||||||||
Sweden | 2,656,075 | — | 2,656,075 | — | ||||||||||||||
Switzerland | 26,644,747 | — | 26,644,747 | — | ||||||||||||||
Taiwan | 6,361,518 | 4,282,839 | 2,078,679 | — | ||||||||||||||
Thailand | 570,215 | — | 570,215 | — | ||||||||||||||
United Kingdom | 48,739,649 | 2,078,416 | 46,661,233 | — | ||||||||||||||
United States | 4,385,274 | 4,385,274 | — | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
235,829,572 | 26,947,941 | 208,881,631 | — | |||||||||||||||
Short-Term Investment | 1,138,434 | 1,138,434 | — | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total | $239,029,920 | $30,148,289 | $208,881,631 | $— | ||||||||||||||
|
|
|
|
|
|
|
|
(1) | For equity investments categorized in a single level, refer to the schedule of investments for further geographical region breakout. |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-62
PACIFIC LIFE FUNDS
PL INTERNATIONAL VALUE FUND
Schedule of Investments
March 31, 2014
| Value | |||||||
PREFERRED STOCKS - 1.2% |
| |||||||
Germany - 1.2% |
| |||||||
Volkswagen AG | 8,623 | $2,234,188 | ||||||
|
| |||||||
Total Preferred Stocks | 2,234,188 | |||||||
|
| |||||||
COMMON STOCKS - 96.7% |
| |||||||
Australia - 1.9% |
| |||||||
Australia & New Zealand Banking Group Ltd | 76,373 | 2,347,191 | ||||||
Goodman Group REIT | 213,102 | 935,213 | ||||||
|
| |||||||
3,282,404 | ||||||||
|
| |||||||
Belgium - 1.3% |
| |||||||
Solvay SA | 15,075 | 2,369,450 | ||||||
|
| |||||||
Canada - 0.4% |
| |||||||
First Quantum Minerals Ltd | 43,122 | 796,909 | ||||||
|
| |||||||
China - 0.5% |
| |||||||
China Construction Bank Corp ‘H’ | 1,307,000 | 915,694 | ||||||
|
| |||||||
Denmark - 1.0% |
| |||||||
Danske Bank AS | 63,167 | 1,761,406 | ||||||
|
| |||||||
Finland - 1.2% |
| |||||||
UPM-Kymmene OYJ | 123,453 | 2,114,072 | ||||||
|
| |||||||
France - 15.1% |
| |||||||
AXA SA | 115,601 | 3,009,880 | ||||||
BNP Paribas SA | 58,028 | 4,485,955 | ||||||
Bouygues SA | 27,041 | 1,130,195 | ||||||
Cie de St-Gobain | 56,036 | 3,392,610 | ||||||
Electricite de France | 30,538 | 1,209,362 | ||||||
GDF Suez | 117,636 | 3,223,480 | ||||||
Lafarge SA | 29,188 | 2,287,915 | ||||||
Publicis Groupe SA | 22,399 | 2,025,865 | ||||||
Schneider Electric SA | 29,064 | 2,583,989 | ||||||
Sodexo | 20,906 | 2,194,776 | ||||||
Suez Environnement Co | 51,358 | 1,043,419 | ||||||
|
| |||||||
26,587,446 | ||||||||
|
| |||||||
Germany - 10.4% |
| |||||||
Allianz SE | 8,151 | 1,377,520 | ||||||
BASF SE | 30,957 | 3,440,476 | ||||||
Bayer AG | 28,944 | 3,914,312 | ||||||
Commerzbank AG * | 87,104 | 1,602,575 | ||||||
Daimler AG | 41,886 | 3,958,458 | ||||||
Deutsche Telekom AG | 193,839 | 3,135,298 | ||||||
Metro AG | 21,136 | 863,548 | ||||||
|
| |||||||
18,292,187 | ||||||||
|
| |||||||
Hong Kong - 2.9% |
| |||||||
China Overseas Land & Investment Ltd | 568,000 | 1,473,557 | ||||||
Hutchison Whampoa Ltd | 193,000 | 2,562,190 | ||||||
Wharf Holdings Ltd | 165,000 | 1,056,346 | ||||||
|
| |||||||
5,092,093 | ||||||||
|
|
| Value | |||||||
India - 0.8% |
| |||||||
ICICI Bank Ltd ADR | 32,001 | $1,401,644 | ||||||
|
| |||||||
Ireland - 0.6% |
| |||||||
Ryanair Holdings PLC ADR * | 18,930 | 1,113,273 | ||||||
|
| |||||||
Italy - 3.7% |
| |||||||
Assicurazioni Generali SPA | 54,027 | 1,205,648 | ||||||
Enel SPA | 411,454 | 2,331,430 | ||||||
Eni SPA | 118,204 | 2,968,431 | ||||||
|
| |||||||
6,505,509 | ||||||||
|
| |||||||
Japan - 20.5% |
| |||||||
Bridgestone Corp | 42,400 | 1,501,558 | ||||||
Daiwa House Industry Co Ltd | 94,000 | 1,591,402 | ||||||
East Japan Railway Co | 25,500 | 1,877,427 | ||||||
Hitachi Ltd | 445,000 | 3,278,090 | ||||||
Honda Motor Co Ltd | 72,700 | 2,556,199 | ||||||
Japan Tobacco Inc | 81,400 | 2,552,402 | ||||||
Kawasaki Heavy Industries Ltd | 370,000 | 1,360,355 | ||||||
KDDI Corp | 39,900 | 2,321,900 | ||||||
Mitsubishi UFJ Financial Group Inc | 762,500 | 4,182,823 | ||||||
Nomura Holdings Inc | 225,000 | 1,440,853 | ||||||
ORIX Corp | 114,800 | 1,612,384 | ||||||
Ricoh Co Ltd | 129,200 | 1,496,926 | ||||||
Seven & I Holdings Co Ltd | 60,000 | 2,288,469 | ||||||
Sumitomo Electric Industries Ltd | 97,100 | 1,442,592 | ||||||
Sumitomo Mitsui Financial Group Inc | 63,300 | 2,698,256 | ||||||
Toyota Motor Corp | 37,000 | 2,082,314 | ||||||
Yamato Holdings Co Ltd | 90,900 | 1,957,028 | ||||||
|
| |||||||
36,240,978 | ||||||||
|
| |||||||
Netherlands - 3.6% |
| |||||||
Airbus Group NV | 27,340 | 1,960,678 | ||||||
ING Groep NV CVA * | 146,918 | 2,088,097 | ||||||
Koninklijke KPN NV * | 650,246 | 2,300,976 | ||||||
|
| |||||||
6,349,751 | ||||||||
|
| |||||||
Norway - 0.9% |
| |||||||
Statoil ASA | 53,538 | 1,512,178 | ||||||
|
| |||||||
South Korea - 0.9% |
| |||||||
Samsung Electronics Co Ltd | 1,306 | 1,651,527 | ||||||
|
| |||||||
Spain - 1.8% |
| |||||||
CaixaBank SA | 217,803 | 1,403,040 | ||||||
Repsol SA | 68,043 | 1,738,736 | ||||||
|
| |||||||
3,141,776 | ||||||||
|
| |||||||
Sweden - 1.2% |
| |||||||
Electrolux AB ‘B’ | 55,947 | 1,221,002 | ||||||
Nordea Bank AB | 63,014 | 894,942 | ||||||
|
| |||||||
2,115,944 | ||||||||
|
| |||||||
Switzerland - 5.8% |
| |||||||
Novartis AG | 47,461 | 4,031,119 | ||||||
Roche Holding AG | 9,609 | 2,888,336 | ||||||
Swiss Re AG | 14,845 | 1,377,430 | ||||||
UBS AG | 89,989 | 1,857,911 | ||||||
|
| |||||||
10,154,796 | ||||||||
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-63
PACIFIC LIFE FUNDS
PL INTERNATIONAL VALUE FUND
Schedule of Investments (Continued)
March 31, 2014
| Value | |||||||
United Kingdom - 22.2% |
| |||||||
AstraZeneca PLC | 40,212 | $2,605,440 | ||||||
Aviva PLC | 165,387 | 1,317,238 | ||||||
Barclays PLC | 491,516 | 1,916,583 | ||||||
BG Group PLC | 151,598 | 2,827,484 | ||||||
BP PLC | 321,490 | 2,574,578 | ||||||
HSBC Holdings PLC | 534,799 | 5,414,879 | ||||||
InterContinental Hotels Group PLC | 54,629 | 1,758,292 | ||||||
Kingfisher PLC | 231,397 | 1,628,986 | ||||||
Prudential PLC | 135,749 | 2,875,578 | ||||||
Rio Tinto PLC | 65,578 | 3,657,049 | ||||||
Royal Dutch Shell PLC ‘A’ | 123,873 | 4,558,932 | ||||||
SABMiller PLC | 39,776 | 1,997,676 | ||||||
Tullow Oil PLC | 62,603 | 782,075 | ||||||
Vodafone Group PLC | 1,131,075 | 4,164,090 | ||||||
Wolseley PLC | 20,876 | 1,201,453 | ||||||
|
| |||||||
39,280,333 | ||||||||
|
| |||||||
Total Common Stocks | 170,679,370 | |||||||
|
| |||||||
SHORT-TERM INVESTMENT - 1.9% |
| |||||||
Money Market Fund - 1.9% |
| |||||||
BlackRock Liquidity Funds Treasury | 3,338,185 | 3,338,185 | ||||||
|
| |||||||
Total Short-Term Investment | 3,338,185 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 99.8% | 176,251,743 | |||||||
OTHER ASSETS & LIABILITIES, NET - 0.2% | 289,128 | |||||||
|
| |||||||
NET ASSETS - 100.0% | $176,540,871 | |||||||
|
|
Notes to Schedule of Investments
(a) | As of March 31, 2014, the fund was diversified as a percentage of net assets as |
follows: |
Financials | 29.6% | |||
Consumer Discretionary | 12.0% | |||
Industrials | 11.7% | |||
Energy | 9.6% | |||
Materials | 8.3% | |||
Health Care | 7.6% | |||
Telecommunication Services | 6.8% | |||
Utilities | 4.4% | |||
Consumer Staples | 4.3% | |||
Information Technology | 3.6% | |||
Others (each less than 3.0%) | 1.9% | |||
|
| |||
99.8% | ||||
Other Assets & Liabilities, Net | 0.2% | |||
|
| |||
100.0% | ||||
|
|
(b) | As of March 31, 2014, the fund was diversified by country of incorporation as a percentage of net assets as follows: |
United Kingdom | 22.2% | |||
Japan | 20.5% | |||
France | 15.1% | |||
Germany | 11.6% | |||
Switzerland | 5.8% | |||
Italy | 3.7% | |||
Netherlands | 3.6% | |||
Others (each less than 3.0%) | 17.3% | |||
|
| |||
99.8% | ||||
Other Assets & Liabilities, Net | 0.2% | |||
|
| |||
100.0% | ||||
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-64
PACIFIC LIFE FUNDS
PL INTERNATIONAL VALUE FUND
Schedule of Investments (Continued)
March 31, 2014
(c) | Forward foreign currency contracts outstanding as of March 31, 2014 were as follows: |
Currency Purchased | Currency Sold | Expiration | Counterparty | Unrealized Appreciation (Depreciation) | ||||||||||||||||
AUD | 494,930 | EUR | 322,801 | 05/14 | CSF | $13,190 | ||||||||||||||
AUD | 833,490 | USD | 726,404 | 05/14 | MER | 44,664 | ||||||||||||||
AUD | 10,183,639 | USD | 8,867,282 | 05/14 | WBC | 553,672 | ||||||||||||||
CHF | 6,282,806 | USD | 6,959,854 | 05/14 | BRC | 149,072 | ||||||||||||||
CHF | 510,255 | USD | 575,072 | 05/14 | SSB | 2,277 | ||||||||||||||
EUR | 326,452 | GBP | 268,216 | 05/14 | GSC | 2,668 | ||||||||||||||
EUR | 249,230 | GBP | 206,580 | 05/14 | WBC | (979 | ) | |||||||||||||
EUR | 937,331 | USD | 1,288,905 | 05/14 | HSB | 2,315 | ||||||||||||||
EUR | 1,037,909 | USD | 1,404,142 | 05/14 | MER | 25,630 | ||||||||||||||
GBP | 268,578 | EUR | 326,094 | 05/14 | CIT | (1,572 | ) | |||||||||||||
GBP | 426,047 | USD | 695,164 | 05/14 | CIT | 14,929 | ||||||||||||||
GBP | 1,177,737 | USD | 1,959,169 | 05/14 | MSC | 3,766 | ||||||||||||||
GBP | 417,159 | USD | 686,182 | 05/14 | WBC | 9,096 | ||||||||||||||
HKD | 2,936,566 | USD | 378,443 | 05/14 | CIT | 202 | ||||||||||||||
HKD | 6,349,425 | USD | 817,827 | 05/14 | HSB | 876 | ||||||||||||||
HKD | 4,956,496 | USD | 639,068 | 05/14 | MER | 30 | ||||||||||||||
JPY | 60,545,821 | USD | 598,258 | 05/14 | CIT | (11,541 | ) | |||||||||||||
JPY | 40,633,786 | USD | 400,213 | 05/14 | HSB | (6,453 | ) | |||||||||||||
JPY | 58,724,275 | USD | 573,631 | 05/14 | UBS | (4,565 | ) | |||||||||||||
NOK | 3,128,284 | EUR | 374,040 | 05/14 | GSC | 6,454 | ||||||||||||||
NOK | 2,371,946 | USD | 392,747 | 05/14 | HSB | 2,829 | ||||||||||||||
NOK | 3,171,928 | USD | 503,446 | 05/14 | SSB | 25,546 | ||||||||||||||
SEK | 13,827,792 | USD | 2,146,719 | 05/14 | HSB | (11,476 | ) | |||||||||||||
SEK | 2,332,837 | USD | 356,563 | 05/14 | SGN | 3,666 | ||||||||||||||
SEK | 3,043,590 | USD | 477,046 | 05/14 | WBC | (7,065 | ) | |||||||||||||
SEK | 1,448,885 | USD | 221,582 | 05/14 | WBC | 2,150 | ||||||||||||||
SGD | 3,408,646 | USD | 2,671,793 | 05/14 | TDB | 38,048 | ||||||||||||||
USD | 533,836 | CAD | 598,244 | 05/14 | SSB | (6,859 | ) | |||||||||||||
USD | 367,342 | CHF | 329,226 | 05/14 | BRC | (5,174 | ) | |||||||||||||
USD | 556,819 | CHF | 487,131 | 05/14 | HSB | 5,635 | ||||||||||||||
USD | 707,726 | CHF | 639,227 | 05/14 | MER | (15,552 | ) | |||||||||||||
USD | 8,411,054 | EUR | 6,205,160 | 05/14 | BRC | (136,870 | ) | |||||||||||||
USD | 970,822 | EUR | 699,526 | 05/14 | BRC | 7,191 | ||||||||||||||
USD | 740,203 | EUR | 541,202 | 05/14 | CIT | (5,331 | ) | |||||||||||||
USD | 1,361,177 | EUR | 980,855 | 05/14 | GSC | 9,999 | ||||||||||||||
USD | 626,445 | EUR | 451,503 | 05/14 | HSB | 4,476 | ||||||||||||||
USD | 482,280 | EUR | 354,570 | 05/14 | MER | (6,158 | ) | |||||||||||||
USD | 370,042 | EUR | 265,134 | 05/14 | RBC | 4,807 | ||||||||||||||
USD | 587,590 | EUR | 434,793 | 05/14 | RBS | (11,360 | ) | |||||||||||||
USD | 760,627 | EUR | 563,252 | 05/14 | SGN | (15,280 | ) | |||||||||||||
USD | 363,466 | EUR | 264,359 | 05/14 | WBC | (688 | ) | |||||||||||||
USD | 427,266 | GBP | 256,905 | 05/14 | GSC | (917 | ) | |||||||||||||
USD | 1,110,454 | GBP | 670,158 | 05/14 | HSB | (6,498 | ) | |||||||||||||
USD | 628,299 | GBP | 384,134 | 05/14 | SGN | (11,938 | ) | |||||||||||||
USD | 410,134 | GBP | 248,477 | 05/14 | SSB | (4,003 | ) | |||||||||||||
USD | 3,060,892 | GBP | 1,862,033 | 05/14 | WBC | (42,558 | ) | |||||||||||||
USD | 416,852 | GBP | 249,177 | 05/14 | WBC | 1,549 | ||||||||||||||
USD | 2,937,596 | HKD | 22,803,127 | 05/14 | WBC | (2,670 | ) | |||||||||||||
USD | 2,227,729 | JPY | 227,708,010 | 05/14 | HSB | 21,132 | ||||||||||||||
USD | 449,386 | JPY | 46,024,159 | 05/14 | MER | 3,391 | ||||||||||||||
USD | 783,055 | JPY | 79,900,588 | 05/14 | SSB | 8,781 | ||||||||||||||
USD | 412,403 | JPY | 42,287,589 | 05/14 | UBS | 2,616 | ||||||||||||||
USD | 642,952 | NOK | 3,871,751 | 05/14 | BRC | (2,751 | ) | |||||||||||||
USD | 532,266 | NOK | 3,199,015 | 05/14 | CIT | (1,245 | ) | |||||||||||||
USD | 285,414 | NOK | 1,792,668 | 05/14 | WBC | (13,555 | ) | |||||||||||||
|
| |||||||||||||||||||
Total Forward Foreign Currency Contracts | $637,599 | |||||||||||||||||||
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-65
PACIFIC LIFE FUNDS
PL INTERNATIONAL VALUE FUND
Schedule of Investments (Continued)
March 31, 2014
(d) | Fair Value Measurements |
The following is a summary of the fund’s investments as categorized under the three-tier hierarchy of inputs used in valuing the fund’s assets and liabilities (See Note 3D in Notes to Financial Statements) as of March 31, 2014:
Total Value at March 31, 2014 | Level 1 Quoted Price | Level 2 Significant Observable Input | Level 3 Significant Unobservable Input | |||||||||||||||
Assets | Preferred Stocks (1) | $2,234,188 | $— | $2,234,188 | $— | |||||||||||||
Common Stocks | ||||||||||||||||||
Australia | 3,282,404 | — | 3,282,404 | — | ||||||||||||||
Belgium | 2,369,450 | — | 2,369,450 | — | ||||||||||||||
Canada | 796,909 | | 796,909 | | | — | | — | ||||||||||
China | 915,694 | — | 915,694 | — | ||||||||||||||
Denmark | 1,761,406 | — | 1,761,406 | — | ||||||||||||||
Finland | 2,114,072 | — | 2,114,072 | — | ||||||||||||||
France | 26,587,446 | — | 26,587,446 | — | ||||||||||||||
Germany | 18,292,187 | — | 18,292,187 | — | ||||||||||||||
Hong Kong | 5,092,093 | — | 5,092,093 | — | ||||||||||||||
India | 1,401,644 | 1,401,644 | — | — | ||||||||||||||
Ireland | 1,113,273 | 1,113,273 | — | — | ||||||||||||||
Italy | 6,505,509 | — | 6,505,509 | — | ||||||||||||||
Japan | 36,240,978 | — | 36,240,978 | — | ||||||||||||||
Netherlands | 6,349,751 | — | 6,349,751 | — | ||||||||||||||
Norway | 1,512,178 | — | 1,512,178 | — | ||||||||||||||
South Korea | 1,651,527 | — | 1,651,527 | — | ||||||||||||||
Spain | 3,141,776 | — | 3,141,776 | — | ||||||||||||||
Sweden | 2,115,944 | — | 2,115,944 | — | ||||||||||||||
Switzerland | 10,154,796 | — | 10,154,796 | — | ||||||||||||||
United Kingdom | 39,280,333 | — | 39,280,333 | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
170,679,370 | 3,311,826 | 167,367,544 | — | |||||||||||||||
Short-Term Investment | 3,338,185 | 3,338,185 | — | — | ||||||||||||||
Derivatives: | ||||||||||||||||||
Foreign Currency Contracts | ||||||||||||||||||
Forward Foreign Currency Contracts | 970,657 | — | 970,657 | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Assets | 177,222,400 | 6,650,011 | 170,572,389 | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Liabilities | Derivatives: | |||||||||||||||||
Foreign Currency Contracts | ||||||||||||||||||
Forward Foreign Currency Contracts | (333,058 | ) | — | (333,058 | ) | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Liabilities | (333,058 | ) | — | (333,058 | ) | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total | $176,889,342 | $6,650,011 | $170,239,331 | $— | ||||||||||||||
|
|
|
|
|
|
|
|
(1) | For equity investments categorized in a single level, refer to the schedule of investments for further geographical region breakout. |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-66
PACIFIC LIFE FUNDS
PL CURRENCY STRATEGIES FUND
Schedule of Investments
March 31, 2014
Principal | Value | |||||||
U.S. TREASURY OBLIGATIONS - 12.6% | ||||||||
U.S. Treasury Notes - 12.6% | ||||||||
0.375% due 03/15/15 ‡ | $16,500,000 | $16,537,703 | ||||||
|
| |||||||
Total U.S. Treasury Obligations | 16,537,703 | |||||||
|
| |||||||
FOREIGN GOVERNMENT BONDS & NOTES - 47.7% |
| |||||||
Canada - 12.5% |
| |||||||
Canadian Government | CAD 18,060,000 | 16,352,509 | ||||||
|
| |||||||
France - 10.4% | ||||||||
French Treasury | EUR 9,810,000 | 13,624,300 | ||||||
|
| |||||||
Germany - 12.2% | ||||||||
Bundesobligation | 11,650,000 | 16,056,399 | ||||||
|
| |||||||
United Kingdom - 12.6% | ||||||||
United Kingdom Gilt | GBP 9,730,000 | 16,525,882 | ||||||
|
| |||||||
Total Foreign Government Bonds & Notes | 62,559,090 | |||||||
|
| |||||||
| Value | |||||||
SHORT-TERM INVESTMENT - 41.8% |
| |||||||
Money Market Fund - 41.8% | ||||||||
BlackRock Liquidity Funds Treasury | 54,696,929 | $54,696,929 | ||||||
|
| |||||||
Total Short-Term Investment | 54,696,929 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 102.1% | 133,793,722 | |||||||
OTHER ASSETS & LIABILITIES, NET - (2.1%) |
| (2,770,607 | ) | |||||
|
| |||||||
NET ASSETS - 100.0% | $131,023,115 | |||||||
|
|
Notes to Schedule of Investments
(a) | As of March 31, 2014, the fund was diversified as a percentage of net assets as follows: |
Foreign Government Bonds & Notes | 47.7% | |||
Short-Term Investment | 41.8% | |||
U.S. Treasury Obligations | 12.6% | |||
|
| |||
102.1% | ||||
Other Assets & Liabilities, Net | (2.1% | ) | ||
|
| |||
100.0% | ||||
|
|
(b) | As of March 31, 2014, an investment with a value of $4,441,520 was fully or partially segregated with the broker(s)/custodian as collateral for forward foreign currency contracts. |
(c) | Forward foreign currency contracts outstanding as of March 31, 2014 were as follows: |
Currency Purchased | Currency Sold | Expiration | Counterparty | Unrealized Appreciation (Depreciation) | ||||||||||||||||
AUD | 1,075,000 | USD | 977,713 | 04/14 | GSC | $18,563 | ||||||||||||||
CHF | 860,000 | USD | 983,678 | 04/14 | GSC | (10,804 | ) | |||||||||||||
CHF | 930,000 | USD | 1,059,648 | 04/14 | RBS | (7,586 | ) | |||||||||||||
JPY | 2,030,548,020 | USD | 19,775,000 | 04/14 | CSF | (100,930 | ) | |||||||||||||
JPY | 2,004,900,000 | USD | 19,798,920 | 04/14 | MSC | (373,354 | ) | |||||||||||||
MXN | 258,710,000 | USD | 19,413,928 | 04/14 | CSF | 386,949 | ||||||||||||||
NZD | 3,800,000 | USD | 3,258,444 | 04/14 | BRC | 36,687 | ||||||||||||||
NZD | 2,175,000 | USD | 1,835,970 | 04/14 | JPM | 50,059 | ||||||||||||||
PHP | 1,803,400,000 | USD | 40,281,438 | 04/14 | GSC | (77,230 | ) | |||||||||||||
PLN | 64,395,000 | USD | 21,086,152 | 04/14 | RBS | 196,189 | ||||||||||||||
USD | 20,173,177 | AUD | 22,650,000 | 04/14 | BRC | (818,116 | ) | |||||||||||||
USD | 19,775,000 | AUD | 22,135,855 | 04/14 | CSF | (739,800 | ) | |||||||||||||
USD | 36,936,606 | CAD | 40,960,000 | 04/14 | RBS | (105,957 | ) | |||||||||||||
USD | 61,112,355 | CHF | 53,765,000 | 04/14 | MSC | 290,754 | ||||||||||||||
USD | 11,245,758 | EUR | 8,155,000 | 04/14 | RBS | 11,218 | ||||||||||||||
USD | 15,678,165 | GBP | 9,370,000 | 04/14 | RBS | 58,200 | ||||||||||||||
USD | 100,288,576 | NZD | 120,240,000 | 04/14 | JPM | (3,976,313 | ) | |||||||||||||
USD | 987,082 | PLN | 3,005,000 | 04/14 | RBS | (6,060 | ) | |||||||||||||
|
| |||||||||||||||||||
Total Forward Foreign Currency Contracts | ($5,167,531 | ) | ||||||||||||||||||
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-67
PACIFIC LIFE FUNDS
PL CURRENCY STRATEGIES FUND
Schedule of Investments (Continued)
March 31, 2014
(d) | Fair Value Measurements |
The following is a summary of the fund’s investments as categorized under the three-tier hierarchy of inputs used in valuing the fund’s assets and liabilities (See Note 3D in Notes to Financial Statements) as of March 31, 2014:
Total Value at March 31, 2014 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||||
Assets | U.S. Treasury Obligations | $16,537,703 | $— | $16,537,703 | $— | |||||||||||||
Foreign Government Bonds & Notes | 62,559,090 | — | 62,559,090 | — | ||||||||||||||
Short-Term Investment | 54,696,929 | 54,696,929 | — | — | ||||||||||||||
Derivatives: | ||||||||||||||||||
Foreign Currency Contracts | ||||||||||||||||||
Forward Foreign Currency Contracts | 1,048,619 | — | 1,048,619 | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Assets | 134,842,341 | 54,696,929 | 80,145,412 | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Liabilities | Derivatives: | |||||||||||||||||
Foreign Currency Contracts | ||||||||||||||||||
Forward Foreign Currency Contracts | (6,216,150 | ) | — | (6,216,150 | ) | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Liabilities | (6,216,150 | ) | — | (6,216,150 | ) | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total | $128,626,191 | $54,696,929 | $73,929,262 | $— | ||||||||||||||
|
|
|
|
|
|
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-68
PACIFIC LIFE FUNDS
PL GLOBAL ABSOLUTE RETURN FUND
Schedule of Investments
March 31, 2014
Shares | | |||||||
COMMON STOCKS - 0.6% | ||||||||
Germany - 0.4% | ||||||||
Deutsche Euroshop AG | 8,676 | $394,881 | ||||||
Deutsche Wohnen AG | 19,511 | 418,545 | ||||||
|
| |||||||
813,426 | ||||||||
|
| |||||||
Luxembourg - 0.2% | ||||||||
GAGFAH SA * | 25,705 | 390,586 | ||||||
|
| |||||||
Total Common Stocks | 1,204,012 | |||||||
|
| |||||||
Principal | ||||||||
MORTGAGE-BACKED SECURITIES - 1.6% |
| |||||||
United States - 1.6% | ||||||||
Fannie Mae (IO) | ||||||||
5.000% due 12/25/42 " | $2,481,642 | 474,830 | ||||||
5.996% due 01/25/43 " § | 5,589,995 | 1,066,702 | ||||||
6.046% due 03/25/33 " § | 1,389,173 | 277,556 | ||||||
6.096% due 07/25/42 " § | 2,339,586 | 406,878 | ||||||
6.286% due 11/25/37 " § | 3,954,099 | 600,040 | ||||||
Freddie Mac (IO) | ||||||||
3.000% due 01/15/43 " | 2,801,069 | 339,654 | ||||||
|
| |||||||
3,165,660 | ||||||||
|
| |||||||
Total Mortgage-Backed Securities | 3,165,660 | |||||||
|
| |||||||
FOREIGN GOVERNMENT BONDS & NOTES - 48.9% |
| |||||||
Albania - 0.4% | ||||||||
Albania Government | EUR 490,000 | 706,476 | ||||||
|
| |||||||
Australia - 1.9% | ||||||||
Australia Government | ||||||||
1.250% due 02/21/22 ^ ~ | AUD 1,254,604 | 1,202,567 | ||||||
5.750% due 07/15/22 | 2,395,000 | 2,507,576 | ||||||
|
| |||||||
3,710,143 | ||||||||
|
| |||||||
Barbados - 0.1% | ||||||||
Barbados Government | $300,000 | 225,900 | ||||||
|
| |||||||
Bermuda - 1.4% | ||||||||
Bermuda Government | 2,738,000 | 2,793,842 | ||||||
|
| |||||||
Brazil - 0.1% | ||||||||
Brazil Notas do Tesouro Nacional ‘F’ | BRL 406,000 | 155,368 | ||||||
|
| |||||||
Dominican Republic - 0.4% | ||||||||
Dominican Republic | ||||||||
14.500% due 02/10/23 ~ | DOP 6,200,000 | 147,355 | ||||||
18.500% due 02/04/28 ~ | 25,500,000 | 700,039 | ||||||
|
| |||||||
847,394 | ||||||||
|
| |||||||
Ecuador - 0.3% | ||||||||
Ecuador Government | $643,000 | 683,509 | ||||||
|
|
Principal | Value | |||||||
Fiji - 0.9% | ||||||||
Republic of The Fiji Islands | $1,740,000 | $1,846,271 | ||||||
|
| |||||||
Indonesia - 1.4% | ||||||||
Indonesia Treasury | IDR 29,579,000,000 | 2,685,153 | ||||||
|
| |||||||
Ivory Coast - 1.0% | ||||||||
Ivory Coast Government | $2,000,000 | 1,890,000 | ||||||
|
| |||||||
Jordan - 1.3% | ||||||||
Jordan Government | ||||||||
3.875% due 11/12/15 ~ | 800,000 | 801,000 | ||||||
6.925% due 06/04/14 + | JOD 400,000 | 568,423 | ||||||
7.078% due 07/18/14 + | 700,000 | 999,503 | ||||||
7.950% due 02/05/15 + | 100,000 | 146,475 | ||||||
|
| |||||||
2,515,401 | ||||||||
|
| |||||||
Latvia - 0.1% | ||||||||
Republic of Latvia | EUR 143,000 | 200,945 | ||||||
|
| |||||||
Lebanon - 3.1% | ||||||||
Lebanon Government | ||||||||
4.100% due 06/12/15 ~ | $400,000 | 403,901 | ||||||
8.500% due 01/19/16 ~ | 3,345,000 | 3,612,266 | ||||||
Lebanon Treasury | ||||||||
7.540% due 01/15/15 | LBP 1,109,500,000 | 751,237 | ||||||
8.380% due 08/28/14 | 1,479,450,000 | 998,378 | ||||||
9.000% due 07/17/14 | 486,590,000 | 327,888 | ||||||
|
| |||||||
6,093,670 | ||||||||
|
| |||||||
New Zealand - 2.9% | ||||||||
New Zealand Government | ||||||||
2.000% due 09/20/25 ^ | NZD 3,068,400 | 2,538,916 | ||||||
3.000% due 09/20/30 ^ | 1,120,028 | 973,088 | ||||||
5.500% due 04/15/23 | 2,518,000 | 2,331,845 | ||||||
|
| |||||||
5,843,849 | ||||||||
|
| |||||||
Paraguay - 0.2% | ||||||||
Republic of Paraguay | $376,000 | 376,000 | ||||||
|
| |||||||
Philippines - 1.1% | ||||||||
Philippine Government | PHP 85,990,000 | 2,107,333 | ||||||
|
| |||||||
Romania - 0.7% | ||||||||
Romanian Government | ||||||||
4.875% due 11/07/19 ~ | EUR 350,000 | 525,287 | ||||||
5.250% due 06/17/16 ~ | 625,000 | 925,064 | ||||||
|
| |||||||
1,450,351 | ||||||||
|
| |||||||
Russia - 2.2% | ||||||||
Russian Foreign | $4,300,000 | 4,391,375 | ||||||
|
| |||||||
Rwanda - 0.6% | ||||||||
Rwanda International Government | ||||||||
6.625% due 05/02/23 ~ | 1,295,000 | 1,282,050 | ||||||
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-69
PACIFIC LIFE FUNDS
PL GLOBAL ABSOLUTE RETURN FUND
Schedule of Investments (Continued)
March 31, 2014
Principal | Value | |||||||
Serbia - 5.0% | ||||||||
Serbia Treasury | ||||||||
10.000% due 01/10/15 | RSD 604,100,000 | $7,311,506 | ||||||
10.000% due 04/25/16 | 76,100,000 | 908,083 | ||||||
10.000% due 04/01/17 | 48,000,000 | 569,320 | ||||||
10.000% due 01/24/18 | 103,830,000 | 1,199,232 | ||||||
|
| |||||||
9,988,141 | ||||||||
|
| |||||||
Slovenia - 6.8% | ||||||||
Slovenia Government | ||||||||
4.125% due 01/26/20 ~ | EUR 320,000 | 476,348 | ||||||
4.375% due 01/18/21 ~ | 1,818,000 | 2,735,954 | ||||||
4.625% due 09/09/24 ~ | 1,055,000 | 1,579,731 | ||||||
5.125% due 03/30/26 ~ | 2,210,000 | 3,406,628 | ||||||
5.500% due 10/26/22 ~ | $1,665,000 | 1,781,550 | ||||||
5.850% due 05/10/23 ~ | 3,270,000 | 3,580,650 | ||||||
|
| |||||||
13,560,861 | ||||||||
|
| |||||||
Sri Lanka - 5.0% | ||||||||
Sri Lanka Government | ||||||||
5.650% due 01/15/19 | LKR 99,200,000 | 658,761 | ||||||
5.875% due 07/25/22 ~ | $3,376,000 | 3,426,640 | ||||||
6.250% due 10/04/20 ~ | 896,000 | 947,520 | ||||||
6.250% due 07/27/21 ~ | 750,000 | 784,688 | ||||||
7.400% due 01/22/15 ~ | 967,000 | 1,008,098 | ||||||
7.500% due 08/15/18 | LKR 134,190,000 | 971,997 | ||||||
8.500% due 11/01/15 | 35,710,000 | 277,623 | ||||||
8.500% due 04/01/18 | 10,150,000 | 76,665 | ||||||
8.500% due 07/15/18 | 113,540,000 | 852,076 | ||||||
9.000% due 10/01/14 | 20,590,000 | 159,230 | ||||||
9.000% due 05/01/21 | 9,160,000 | 66,478 | ||||||
11.750% due 04/01/14 | 37,500,000 | 286,979 | ||||||
11.750% due 03/15/15 | 37,500,000 | 299,086 | ||||||
|
| |||||||
9,815,841 | ||||||||
|
| |||||||
Tanzania - 2.0% | ||||||||
Tanzania Government | $3,655,000 | 3,888,006 | ||||||
|
| |||||||
Turkey - 4.1% | ||||||||
Turkey Government | ||||||||
3.000% due 07/21/21 ^ | TRY 2,228,234 | 1,018,987 | ||||||
3.000% due 02/23/22 ^ | 1,218,805 | 555,090 | ||||||
4.000% due 04/01/20 ^ | 10,719,526 | 5,197,695 | ||||||
6.043% due 04/09/14 | 909,776 | 424,678 | ||||||
6.500% due 01/07/15 | 2,090,000 | 947,469 | ||||||
|
| |||||||
8,143,919 | ||||||||
|
| |||||||
Uganda - 0.9% | ||||||||
Republic of Uganda | ||||||||
14.125% due 12/01/16 | UGX 2,267,400,000 | 901,921 | ||||||
14.625% due 11/01/18 | 2,358,500,000 | 954,170 | ||||||
|
| |||||||
1,856,091 | ||||||||
|
| |||||||
Uruguay - 1.6% | ||||||||
Uruguay Notas del Tesoro | ||||||||
2.250% due 08/23/17 ^ | UYU 14,371,609 | 584,590 | ||||||
2.750% due 06/16/16 ^ | 13,839,851 | 573,303 | ||||||
4.250% due 01/05/17 ^ | 16,688,150 | 725,533 | ||||||
Uruguay Treasury | ||||||||
14.500% due 11/26/15 | 4,580,000 | 160,388 | ||||||
14.560% due 08/29/14 | 8,220,000 | 341,193 | ||||||
15.000% due 08/20/15 | 4,300,000 | 155,835 | ||||||
15.000% due 10/08/15 | 14,620,000 | 520,758 | ||||||
15.200% due 02/20/15 | 4,300,000 | 167,615 | ||||||
|
| |||||||
3,229,215 | ||||||||
|
|
Principal | Value | |||||||
Venezuela - 3.1% | ||||||||
Venezuela Government | ||||||||
5.750% due 02/26/16 ~ | $1,360,000 | $1,184,900 | ||||||
7.000% due 03/31/38 ~ | 390,500 | 240,158 | ||||||
7.650% due 04/21/25 | 1,354,000 | 913,950 | ||||||
8.500% due 10/08/14 | 3,833,000 | 3,775,505 | ||||||
|
| |||||||
6,114,513 | ||||||||
|
| |||||||
Zambia - 0.3% | ||||||||
Zambia Government | 637,000 | 547,024 | ||||||
|
| |||||||
Total Foreign Government Bonds & Notes | 96,948,641 | |||||||
|
| |||||||
PURCHASED OPTIONS - 0.2% | ||||||||
(See Note (g) in Notes to Schedule of Investments) |
| 483,575 | ||||||
|
| |||||||
SHORT-TERM INVESTMENTS - 50.3% | ||||||||
Foreign Government Issues - 28.2% | ||||||||
Croatia Treasury Bills (Croatia) | EUR 2,866,000 | 3,908,340 | ||||||
Kenya Treasury Bills (Kenya) | ||||||||
8.610% due 03/16/15 | KES 203,700,000 | 2,141,396 | ||||||
9.158% due 11/24/14 | 110,600,000 | 1,199,467 | ||||||
10.000% due 05/05/14 | 121,500,000 | 1,395,112 | ||||||
10.300% due 04/21/14 | 130,400,000 | 1,502,512 | ||||||
Lebanon Treasury Bills (Lebanon) | ||||||||
4.340% due 05/01/14 | LBP 1,412,000,000 | 936,206 | ||||||
4.830% due 07/17/14 | 761,800,000 | 500,304 | ||||||
4.871% due 06/19/14 | 462,610,000 | 304,928 | ||||||
4.930% due 07/31/14 | 1,998,430,000 | 1,309,833 | ||||||
4.930% due 08/14/14 | 2,890,000,000 | 1,890,297 | ||||||
5.180% due 01/22/15 | 1,196,535,000 | 763,888 | ||||||
5.182% due 06/12/14 | 1,493,040,000 | 984,963 | ||||||
5.267% due 10/16/14 | 513,000,000 | 332,305 | ||||||
5.290% due 07/24/14 | 584,480,000 | 383,472 | ||||||
5.300% due 07/10/14 | 403,220,000 | 265,068 | ||||||
5.300% due 02/05/15 | 2,941,190,000 | 1,873,683 | ||||||
5.300% due 02/19/15 | 2,983,330,000 | 1,896,415 | ||||||
5.315% due 12/25/14 | 2,087,070,000 | 1,338,084 | ||||||
Mexico Cetes (Mexico) | ||||||||
3.600% due 08/21/14 | MXN 48,415,000 | 3,659,670 | ||||||
3.746% due 06/26/14 | 7,341,600 | 557,966 | ||||||
4.059% due 04/03/14 | 54,494,000 | 4,173,609 | ||||||
Monetary Authority of Singapore (Singapore) | SGD 140,000 | 111,236 | ||||||
Philippine Treasury Bills (Philippines) | ||||||||
0.091% due 04/10/14 | PHP 75,790,000 | 1,689,389 | ||||||
0.192% due 10/08/14 | 216,560,000 | 4,782,440 | ||||||
1.140% due 01/07/15 | 14,910,000 | 327,454 | ||||||
Republic of Zambia Treasury Bills (Zambia) | ||||||||
13.146% due 09/08/14 | ZMW 175,000 | 26,919 | ||||||
13.438% due 09/22/14 | 2,660,000 | 402,049 | ||||||
Serbia Treasury Bills (Serbia) | ||||||||
8.140% due 01/29/15 | RSD 527,000,000 | 5,855,557 | ||||||
8.660% due 02/26/15 | 121,110,000 | 1,335,868 | ||||||
8.940% due 03/12/15 | 27,970,000 | 308,332 | ||||||
10.030% due 04/03/14 | 36,510,000 | 435,458 | ||||||
Sri Lanka Treasury Bills (Sri Lanka) | ||||||||
7.020% due 12/26/14 | LKR 308,200,000 | 2,244,606 | ||||||
7.020% due 03/06/15 | 30,950,000 | 222,406 | ||||||
7.040% due 02/27/15 | 87,550,000 | 630,005 | ||||||
7.060% due 03/13/15 | 50,280,000 | 360,806 | ||||||
7.060% due 03/27/15 | 83,130,000 | 594,830 |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-70
PACIFIC LIFE FUNDS
PL GLOBAL ABSOLUTE RETURN FUND
Schedule of Investments (Continued)
March 31, 2014
Principal | Value | |||||||
7.070% due 02/13/15 | LKR 24,500,000 | $176,774 | ||||||
7.100% due 02/20/15 | 29,770,000 | 214,510 | ||||||
7.320% due 12/19/14 | 80,010,000 | 583,458 | ||||||
9.460% due 10/31/14 | 76,620,000 | 563,807 | ||||||
10.679% due 06/27/14 | 80,470,000 | 606,143 | ||||||
10.810% due 06/20/14 | 89,960,000 | 678,509 | ||||||
10.880% due 06/06/14 | 164,800,000 | 1,246,205 | ||||||
11.231% due 05/02/14 | 40,320,000 | 306,849 | ||||||
11.231% due 05/09/14 | 39,470,000 | 300,001 | ||||||
11.281% due 04/18/14 | 39,500,000 | 301,366 | ||||||
11.381% due 04/04/14 | 38,630,000 | 295,462 | ||||||
Uruguay Letras de Regulacion Monetaria En UI (Uruguay) | UYU 1,000,000 | 34,438 | ||||||
|
| |||||||
55,952,395 | ||||||||
|
| |||||||
Shares | ||||||||
Money Market Fund - 10.4% | ||||||||
BlackRock Liquidity Funds Treasury | 20,485,203 | 20,485,203 | ||||||
|
| |||||||
Principal | ||||||||
U.S. Treasury Bills - 6.3% | ||||||||
0.024% due 04/03/14 ‡ | $10,000,000 | 9,999,986 | ||||||
0.035% due 05/22/14 ‡ | 2,500,000 | 2,499,881 | ||||||
|
| |||||||
12,499,867 | ||||||||
|
| |||||||
Repurchase Agreements - 5.4% | ||||||||
Barclays PLC | 160,423 | 160,423 | ||||||
Barclays PLC | 253,750 | 253,750 | ||||||
Barclays PLC | 1,067,950 | 1,067,950 | ||||||
Barclays PLC | 656,075 | 656,075 | ||||||
Barclays PLC | 532,650 | 532,650 | ||||||
Barclays PLC | 532,650 | 532,650 |
Principal | Value | |||||||
Barclays PLC | $655,260 | $655,260 | ||||||
Barclays PLC | 171,375 | 171,375 | ||||||
Barclays PLC | 171,375 | 171,375 | ||||||
Nomura Securities | 527,618 | 527,618 | ||||||
Nomura Securities | 182,488 | 182,488 | ||||||
Nomura Securities | 2,316,184 | 2,316,184 | ||||||
Nomura Securities | 2,319,228 | 2,319,228 | ||||||
Nomura Securities | EUR 859,336 | 1,183,870 | ||||||
|
| |||||||
10,730,896 | ||||||||
|
| |||||||
Total Short-Term Investments | 99,668,361 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 101.6% | 201,470,249 | |||||||
SECURITIES SOLD SHORT - (3.3%) |
| |||||||
(See Note (d) in Notes to Schedule of Investments) (Proceeds $6,218,610) |
| (6,456,073 | ) | |||||
OTHER ASSETS & LIABILITIES, NET - 1.7% |
| 3,345,619 | ||||||
|
| |||||||
NET ASSETS - 100.0% | $198,359,795 | |||||||
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-71
PACIFIC LIFE FUNDS
PL GLOBAL ABSOLUTE RETURN FUND
Schedule of Investments (Continued)
March 31, 2014
Notes to Schedule of Investments
(a) | As of March 31, 2014, the fund was diversified as a percentage of net assets as follows: |
Short-Term Investments | 50.3% | |||
Foreign Government Bonds & Notes | 48.9% | |||
Others (each less than 3.0%) | 2.4% | |||
|
| |||
101.6% | ||||
Securities Sold Short | (3.3% | ) | ||
Other Assets & Liabilities, Net | 1.7% | |||
|
| |||
100.0% | ||||
|
|
(b) | Investments reflect the stated coupon rate or for discounted investments or zero coupon bonds, the annualized effective yield on the date of purchase. |
(c) | Investments with a total aggregate value of $1,714,401 or 0.9% of the fund’s net assets were valued by the Trustee Valuation Committee or determined by a valuation committee established under the Valuation Policy and then subsequently submitted for approval or ratification to either the Trustee Valuation Committee, or to the Board. |
(d) | Securities sold short outstanding as of March 31, 2014 were as follows: |
Description | Principal Amount | Value | ||||||
Foreign Government Bonds & Notes – (3.3%) |
| |||||||
Brazil Government | BRL 364,000 | ($151,199 | ) | |||||
Qatar Government | $150,000 | (170,625 | ) | |||||
6.550% due 04/09/19 | 1,889,000 | (2,264,533 | ) | |||||
Republic of Ghana | 1,047,000 | (965,857 | ) | |||||
SoQ Sukuk A QSC | 1,712,000 | (1,716,109 | ) | |||||
Spain Government | EUR 730,000 | (1,187,750 | ) | |||||
|
| |||||||
Total Securities Sold Short | ($6,456,073 | ) | ||||||
|
|
(e) | Open futures contracts outstanding as of March 31, 2014 were as follows: |
Long Futures Outstanding | Number of Contracts | Unrealized Appreciation (Depreciation) | ||||||
Eris 10-Year Deliverable Interest Rate Swap (06/14) | 41 | $22,814 | ||||||
Nikkei 225 Index (06/14) | 27 | (70,899 | ) | |||||
SGX CNX Nifty (04/14) | 94 | 18,424 | ||||||
|
| |||||||
(29,661 | ) | |||||||
|
|
Short Futures Outstanding | ||||||||
Euro-Bobl 5-Year Notes (06/14) | 57 | (4,022 | ) | |||||
Euro-Bund 10-Year Notes (06/14) | 33 | (30,054 | ) | |||||
Euro-Schatz 10-Year Notes (06/14) | 6 | 693 | ||||||
Japanese Government 10-Year Bonds (06/14) | 16 | 31,177 | ||||||
United Kingdom Long Gilt (06/14) | 24 | (14,434 | ) | |||||
U.S. 2-Year Deliverable Interest Rate Swap (06/14) | 34 | 1,589 | ||||||
U.S. 5-Year Deliverable Interest Rate Swap (06/14) | 202 | 56,138 | ||||||
U.S. 10-Year Deliverable Interest Rate Swap (06/14) | 79 | (41,836 | ) | |||||
|
| |||||||
(749 | ) | |||||||
|
| |||||||
Total Futures Contracts | ($30,410 | ) | ||||||
|
|
(f) | Forward foreign currency contracts outstanding as of March 31, 2014 were as follows: |
Currency Purchased | Currency Sold | Expiration | Counterparty | Unrealized Appreciation (Depreciation) | ||||||||||||||||
ARS | 24,000,000 | USD | 2,073,071 | 02/15 | CIT | $123,343 | ||||||||||||||
AUD | 351,611 | USD | 319,544 | 04/14 | CIT | 6,206 | ||||||||||||||
AUD | 1,446,389 | USD | 1,313,893 | 04/14 | GSC | 26,115 | ||||||||||||||
BRL | 4,731,000 | USD | 1,975,778 | 05/14 | SCB | 90,274 | ||||||||||||||
CLP | 2,023,586,000 | USD | 3,592,377 | 05/14 | CIT | 83,996 | ||||||||||||||
COP | 3,004,842,000 | USD | 1,548,967 | 04/14 | MSC | (27,193 | ) | |||||||||||||
EUR | 1,773,155 | HRK | 13,612,100 | 04/14 | CIT | (9,918 | ) | |||||||||||||
EUR | 5,644,900 | HUF | 1,698,211,766 | 04/14 | JPM | 170,403 | ||||||||||||||
EUR | 2,819,269 | SEK | 24,873,000 | 04/14 | MSC | 25,477 | ||||||||||||||
EUR | 414,517 | USD | 575,204 | 04/14 | GSC | (4,173 | ) | |||||||||||||
HRK | 13,612,100 | EUR | 1,777,176 | 04/14 | CIT | 4,379 | ||||||||||||||
IDR | 17,576,531,000 | USD | 1,484,630 | 06/14 | SCB | 44,757 | ||||||||||||||
IDR | 7,321,125,600 | USD | 641,079 | 07/14 | GSC | (9,858 | ) | |||||||||||||
IDR | 7,309,169,000 | USD | 646,829 | 07/14 | SCB | (16,519 | ) | |||||||||||||
IDR | 16,970,712,000 | USD | 1,457,339 | 08/14 | JPM | (2,102 | ) | |||||||||||||
IDR | 8,284,509,791 | USD | 714,011 | 08/14 | SCB | (3,615 | ) | |||||||||||||
IDR | 5,808,846,000 | USD | 468,078 | 11/14 | CIT | 21,900 | ||||||||||||||
ILS | 3,191,000 | EUR | 660,430 | 06/14 | JPM | 4,671 | ||||||||||||||
ILS | 22,792,000 | USD | 6,519,264 | 04/14 | SCB | 14,323 | ||||||||||||||
INR | 165,625,000 | USD | 2,686,136 | 04/14 | JPM | 79,620 | ||||||||||||||
INR | 76,456,000 | USD | 1,213,655 | 05/14 | GSC | 47,683 | ||||||||||||||
INR | 130,661,000 | USD | 2,069,385 | 05/14 | JPM | 86,203 | ||||||||||||||
INR | 160,984,000 | USD | 2,558,683 | 05/14 | SCB | 97,162 | ||||||||||||||
JPY | 197,189,000 | USD | 1,949,382 | 05/14 | SCB | (38,529 | ) |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-72
PACIFIC LIFE FUNDS
PL GLOBAL ABSOLUTE RETURN FUND
Schedule of Investments (Continued)
March 31, 2014
Currency Purchased | Currency Sold | Expiration | Counterparty | Unrealized Appreciation (Depreciation) | ||||||||||||||||
KES | 74,760,000 | USD | 832,216 | 04/14 | SCB | $31,486 | ||||||||||||||
KZT | 42,000,000 | USD | 263,323 | 04/14 | CIT | (34,116 | ) | |||||||||||||
KZT | 107,500,000 | USD | 674,404 | 04/14 | JPM | (88,615 | ) | |||||||||||||
KZT | 71,821,000 | USD | 434,620 | 10/14 | CIT | (59,624 | ) | |||||||||||||
KZT | 71,000,000 | USD | 430,433 | 10/14 | HSB | (60,491 | ) | |||||||||||||
KZT | 49,000,000 | USD | 297,420 | 10/14 | JPM | (41,896 | ) | |||||||||||||
KZT | 87,400,000 | USD | 531,307 | 11/14 | CIT | (76,760 | ) | |||||||||||||
KZT | 275,000,000 | USD | 1,692,308 | 11/14 | JPM | (266,807 | ) | |||||||||||||
MXN | 96,179,000 | USD | 7,211,699 | 05/14 | CIT | 125,995 | ||||||||||||||
PEN | 4,127,000 | USD | 1,456,760 | 04/14 | JPM | 5,212 | ||||||||||||||
PEN | 10,166,000 | USD | 3,549,581 | 04/14 | SCB | 51,680 | ||||||||||||||
PHP | 43,464,000 | USD | 963,704 | 05/14 | CIT | 4,628 | ||||||||||||||
PLN | 7,708,000 | EUR | 1,847,732 | 04/14 | CIT | 879 | ||||||||||||||
PLN | 33,659,000 | EUR | 8,059,719 | 04/14 | JPM | 16,082 | ||||||||||||||
PLN | 5,850,000 | EUR | 1,372,176 | 06/14 | SCB | 34,751 | ||||||||||||||
RON | 5,103,661 | EUR | 1,116,555 | 03/15 | CIT | (667 | ) | |||||||||||||
RON | 25,592,326 | EUR | 5,584,703 | 03/15 | CIT | 13,296 | ||||||||||||||
RON | 1,979,791 | EUR | 429,782 | 03/15 | JPM | 4,353 | ||||||||||||||
RON | 5,237,771 | EUR | 1,139,100 | 03/15 | SCB | 8,678 | ||||||||||||||
RON | 6,772,695 | USD | 2,093,620 | 04/14 | SCB | (3,129 | ) | |||||||||||||
RON | 1,111,808 | USD | 337,147 | 04/14 | SCB | 6,029 | ||||||||||||||
RUB | 204,250,963 | USD | 6,121,713 | 05/14 | CIT | (360,500 | ) | |||||||||||||
RUB | 130,446,944 | USD | 3,922,190 | 05/14 | SCB | (246,752 | ) | |||||||||||||
SEK | 24,873,000 | EUR | 2,834,982 | 04/14 | GSC | (63,767 | ) | |||||||||||||
SGD | 2,633,000 | EUR | 1,519,235 | 06/14 | SCB | 491 | ||||||||||||||
SGD | 8,253,000 | USD | 6,525,968 | 04/14 | GSC | 35,051 | ||||||||||||||
SGD | 4,564,000 | USD | 3,598,262 | 05/14 | SCB | 30,082 | ||||||||||||||
TRY | 6,507,600 | USD | 2,884,894 | 10/14 | HSB | — | ||||||||||||||
UGX | 938,510,000 | USD | 343,148 | 01/15 | CIT | (1,820 | ) | |||||||||||||
UGX | 4,342,096,000 | USD | 1,590,511 | 01/15 | SCB | (11,328 | ) | |||||||||||||
USD | 7,236,611 | AUD | 8,010,587 | 04/14 | GSC | (185,481 | ) | |||||||||||||
USD | 4,888,297 | AUD | 5,377,000 | 04/14 | HSB | (93,580 | ) | |||||||||||||
USD | 1,896,116 | BRL | 4,731,000 | 05/14 | CIT | (169,935 | ) | |||||||||||||
USD | 3,847,293 | CAD | 4,285,000 | 04/14 | CIT | (26,279 | ) | |||||||||||||
USD | 3,860,413 | CAD | 4,285,000 | 04/14 | GSC | (13,160 | ) | |||||||||||||
USD | 3,854,413 | CAD | 4,317,000 | 04/14 | HSB | (48,087 | ) | |||||||||||||
USD | 9,972,354 | CHF | 8,994,216 | 05/14 | GSC | (204,418 | ) | |||||||||||||
USD | 3,611,612 | CLP | 2,023,586,000 | 05/14 | MSC | (64,761 | ) | |||||||||||||
USD | 1,481,751 | COP | 3,004,842,000 | 04/14 | JPM | (40,024 | ) | |||||||||||||
USD | 2,656,983 | EUR | 1,939,829 | 04/14 | GSC | (15,393 | ) | |||||||||||||
USD | 4,393,380 | EUR | 3,231,000 | 04/14 | JPM | (57,729 | ) | |||||||||||||
USD | 4,892,790 | EUR | 3,574,382 | 05/14 | GSC | (31,037 | ) | |||||||||||||
USD | 16,661,626 | EUR | 12,252,000 | 05/14 | SCB | (215,942 | ) | |||||||||||||
USD | 531,436 | EUR | 386,073 | 06/14 | GSC | (377 | ) | |||||||||||||
USD | 3,901,840 | EUR | 2,827,000 | 06/14 | GSC | 7,702 | ||||||||||||||
USD | 618,109 | EUR | 448,000 | 06/14 | JPM | 989 | ||||||||||||||
USD | 7,359,497 | EUR | 5,351,591 | 06/14 | SCB | (12,323 | ) | |||||||||||||
USD | 817,494 | EUR | 589,000 | 06/14 | SCB | 6,146 | ||||||||||||||
USD | 88,204 | IDR | 1,074,324,000 | 06/14 | SCB | (5,034 | ) | |||||||||||||
USD | 992,523 | INR | 59,998,000 | 05/14 | SCB | 2,702 | ||||||||||||||
USD | 18,702,506 | JPY | 1,905,956,253 | 05/14 | GSC | 231,922 | ||||||||||||||
USD | 664,784 | LKR | 87,323,724 | 04/14 | SCB | (2,195 | ) | |||||||||||||
USD | 1,920,233 | NGN | 321,639,000 | 04/14 | JPM | (27,894 | ) | |||||||||||||
USD | 5,194,820 | NZD | 6,267,730 | 04/14 | GSC | (231,245 | ) | |||||||||||||
USD | 1,663,521 | PHP | 75,790,000 | 04/14 | GSC | (26,108 | ) | |||||||||||||
USD | 2,245,899 | PHP | 101,874,000 | 05/14 | GSC | (23,744 | ) | |||||||||||||
USD | 2,398,693 | RON | 7,884,503 | 04/14 | SCB | (34,975 | ) | |||||||||||||
USD | 7,648,263 | RUB | 258,909,000 | 05/14 | HSB | 345,335 | ||||||||||||||
USD | 656,298 | RUB | 22,208,853 | 05/14 | JPM | 31,296 | ||||||||||||||
USD | 1,183,418 | RUB | 40,064,623 | 05/14 | MSC | 55,920 | ||||||||||||||
USD | 401,170 | RUB | 13,515,431 | 05/14 | SCB | 19,947 | ||||||||||||||
USD | 701,899 | SGD | 888,000 | 06/14 | SCB | (4,062 | ) | |||||||||||||
USD | 1,757,429 | THB | 57,960,000 | 04/14 | GSC | (27,992 | ) | |||||||||||||
USD | 431,898 | THB | 13,946,000 | 04/14 | SCB | 2,206 | ||||||||||||||
USD | 3,459,919 | THB | 115,025,000 | 05/14 | GSC | (80,183 | ) | |||||||||||||
USD | 918,258 | THB | 29,949,000 | 06/14 | CIT | (1,427 | ) | |||||||||||||
USD | 1,068,231 | THB | 34,835,000 | 06/14 | GSC | (1,496 | ) | |||||||||||||
USD | 720,462 | TRY | 1,596,543 | 04/14 | HSB | (24,053 | ) | |||||||||||||
USD | 795,227 | TRY | 1,796,576 | 06/14 | HSB | (22,241 | ) |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-73
PACIFIC LIFE FUNDS
PL GLOBAL ABSOLUTE RETURN FUND
Schedule of Investments (Continued)
March 31, 2014
Currency Purchased | Currency Sold | Expiration | Counterparty | Unrealized Appreciation (Depreciation) | ||||||||||||||||
USD | 353,077 | TRY | 797,424 | 06/14 | SCB | ($9,762 | ) | |||||||||||||
USD | 1,833,755 | ZAR | 20,121,792 | 04/14 | SCB | (75,165 | ) | |||||||||||||
USD | 435,008 | ZMW | 2,597,000 | 09/14 | CIT | 40,629 | ||||||||||||||
USD | 26,756 | ZMW | 160,000 | 09/14 | SCB | 2,345 | ||||||||||||||
UYU | 9,215,000 | USD | 390,797 | 12/14 | CIT | (21,756 | ) | |||||||||||||
UYU | 26,860,000 | USD | 1,122,206 | 01/15 | CIT | (54,216 | ) | |||||||||||||
UYU | 36,121,000 | USD | 1,472,327 | 02/15 | CIT | (50,867 | ) | |||||||||||||
UYU | 16,465,000 | USD | 671,017 | 03/15 | CIT | (32,221 | ) | |||||||||||||
UYU | 14,000,000 | USD | 552,923 | 04/15 | CIT | (16,020 | ) | |||||||||||||
|
| |||||||||||||||||||
Total Forward Foreign Currency Contracts | ($1,337,017 | ) | ||||||||||||||||||
|
|
(g) | Purchased options outstanding as of March 31, 2014 were as follows: |
Foreign Currency Options
Description | Exercise Price | Expiration Date | Counter- party | Notional Amount | Cost | Value | ||||||||||||||||
Put - OTC CNH versus USD | CNH 6.25 | 04/04/14 | GSC | CNH 22,150,000 | $7,761 | $914 | ||||||||||||||||
Put - OTC CNY versus USD | CNY 6.25 | 04/07/14 | SCB | CNY 22,150,000 | 7,230 | 71 | ||||||||||||||||
Put - OTC CNY versus USD | 6.35 | 09/30/14 | GSC | 11,673,000 | 10,386 | 5,397 | ||||||||||||||||
Put - OTC CNY versus USD | 6.35 | 09/30/14 | JPM | 10,827,000 | 9,591 | 5,006 | ||||||||||||||||
Put - OTC CNH versus USD | CNH 6.35 | 10/06/14 | SCB | CNH 22,500,000 | 22,105 | 15,998 | ||||||||||||||||
Put - OTC CNH versus USD | 6.20 | 03/05/15 | SCB | 35,882,000 | 62,420 | 86,551 | ||||||||||||||||
Put - OTC CNH versus USD | 6.20 | 03/06/15 | SCB | 59,846,000 | 97,073 | 144,605 | ||||||||||||||||
Put - OTC CAD versus USD | CAD 1.11 | 03/30/15 | HSB | CAD 3,476,000 | 97,464 | 97,908 | ||||||||||||||||
Put - OTC CAD versus USD | 1.11 | 03/30/15 | SCB | 1,019,000 | 29,113 | 29,245 | ||||||||||||||||
Put - OTC CAD versus USD | 1.13 | 03/30/15 | CIT | 2,282,000 | 48,515 | 48,940 | ||||||||||||||||
Put - OTC CAD versus USD | 1.13 | 03/30/15 | GSC | 2,315,000 | 48,516 | 48,940 | ||||||||||||||||
|
|
|
| |||||||||||||||||||
Total Purchased Options | $440,174 | $483,575 | ||||||||||||||||||||
|
|
|
|
(h) | Transactions in written options for the year ended March 31, 2014 were as follows: |
Notional Amount in $ | Premium | |||||||
Outstanding, March 31, 2013 | — | $— | ||||||
Call Options Written | 10,791,867 | 196,345 | ||||||
|
|
|
| |||||
Outstanding, March 31, 2014 | 10,791,867 | $196,345 | ||||||
|
|
|
|
(i) | Premiums received and value of written options outstanding as of March 31, 2014 were as follows: |
Foreign Currency Options
Description | Exercise Price | Expiration Date | Counter- party | Notional Amount | Premium | Value | ||||||||||||||||
Call - OTC INR versus USD | INR 65.00 | 06/09/14 | GSC | $1,800,000 | $33,570 | ($6,878 | ) | |||||||||||||||
Call - OTC INR versus USD | 65.00 | 06/09/14 | JPM | 1,832,000 | 32,610 | (7,000 | ) | |||||||||||||||
Call - OTC INR versus USD | 67.00 | 06/16/14 | JPM | 3,591,000 | 70,922 | (8,072 | ) | |||||||||||||||
Call - OTC INR versus USD | 70.00 | 06/19/14 | JPM | 3,568,867 | 59,243 | (3,630 | ) | |||||||||||||||
|
|
|
| |||||||||||||||||||
Total Written Options | $196,345 | ($25,580 | ) | |||||||||||||||||||
|
|
|
|
(j) | Swap agreements outstanding as of March 31, 2014 were as follows: |
Credit Default Swaps on Corporate and Sovereign Issues – Buy Protection (1)
Referenced Obligation | Fixed Deal Rate | Expiration Date | Counter- party | Implied Credit Spread at 03/31/14 (3) | Notional Amount (4) | Value | Upfront Premiums Paid (Received) | Unrealized Appreciation (Depreciation) | ||||||||||||||||||||||
Croatia Government | 1.000% | 12/20/16 | MSC | 2.201% | $198,000 | $6,245 | $10,567 | ($4,322 | ) | |||||||||||||||||||||
China Government | 1.000% | 12/20/17 | JPM | 0.616% | 3,100,000 | (44,728 | ) | (59,131 | ) | 14,403 | ||||||||||||||||||||
Croatia Government | 1.000% | 03/20/18 | CIT | 2.647% | 1,200,000 | 73,464 | 83,000 | (9,536 | ) | |||||||||||||||||||||
Thailand Government | 1.000% | 03/20/18 | CIT | 0.968% | 3,300,000 | (5,130 | ) | (16,419 | ) | 11,289 | ||||||||||||||||||||
Croatia Government | 1.000% | 03/20/18 | HSB | 2.647% | 313,000 | 19,162 | 29,014 | (9,852 | ) | |||||||||||||||||||||
Banque Centrale de Tunisie SA | 1.000% | 03/20/18 | JPM | 3.378% | 375,000 | 32,562 | 40,581 | (8,019 | ) | |||||||||||||||||||||
China Government | 1.000% | 03/20/18 | JPM | 0.666% | 1,100,000 | (14,694 | ) | (17,333 | ) | 2,639 | ||||||||||||||||||||
Croatia Government | 1.000% | 03/20/18 | MSC | 2.647% | 2,262,000 | 138,480 | 194,313 | (55,833 | ) | |||||||||||||||||||||
Lebanon Government | 5.000% | 03/20/18 | JPM | 3.312% | 689,000 | (43,995 | ) | (29,026 | ) | (14,969 | ) |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-74
PACIFIC LIFE FUNDS
PL GLOBAL ABSOLUTE RETURN FUND
Schedule of Investments (Continued)
March 31, 2014
Referenced Obligation | Fixed Deal Rate | Expiration Date | Counter- party | Implied Credit Spread at 03/31/14 (3) | Notional Amount (4) | Value | Upfront Premiums Paid (Received) | Unrealized Appreciation (Depreciation) | ||||||||||||||||||||||
Colombia Government | 1.000% | 06/20/18 | CIT | 0.885% | $460,000 | ($2,338 | ) | ($695 | ) | ($1,643 | ) | |||||||||||||||||||
Croatia Government | 1.000% | 06/20/18 | CIT | 2.713% | 800,000 | 53,755 | 76,719 | (22,964 | ) | |||||||||||||||||||||
Lebanon Government | 1.000% | 06/20/18 | GSC | 3.391% | 5,166,000 | 477,796 | 715,241 | (237,445 | ) | |||||||||||||||||||||
Russian Foreign | 1.000% | 06/20/18 | JPM | 1.944% | 1,290,000 | 48,318 | 21,470 | 26,848 | ||||||||||||||||||||||
Croatia Government | 1.000% | 06/20/18 | MSC | 2.713% | 921,000 | 61,886 | 92,071 | (30,185 | ) | |||||||||||||||||||||
Bulgaria Government | 1.000% | 12/20/18 | GSC | 1.167% | 1,000,000 | 7,256 | 11,641 | (4,385 | ) | |||||||||||||||||||||
Qatar Government | 1.000% | 12/20/18 | JPM | 0.575% | 1,838,000 | (36,589 | ) | (31,386 | ) | (5,203 | ) | |||||||||||||||||||
Lebanon Government | 5.000% | 12/20/18 | GSC | 3.582% | 663,000 | (41,178 | ) | (39,103 | ) | (2,075 | ) | |||||||||||||||||||
Qatar Government | 1.000% | 03/20/19 | GSC | 0.612% | 490,000 | (9,284 | ) | (8,762 | ) | (522 | ) | |||||||||||||||||||
Qatar Government | 1.000% | 03/20/19 | JPM | 0.612% | 160,000 | (3,094 | ) | (2,920 | ) | (174 | ) | |||||||||||||||||||
BCP Finance Bank Ltd | 5.000% | 03/20/19 | GSC | 3.307% | EUR 1,015,000 | (110,154 | ) | (63,658 | ) | (46,496 | ) | |||||||||||||||||||
Banco Espirito Santo SA | 5.000% | 03/20/19 | GSC | 2.993% | 983,000 | (127,660 | ) | (91,578 | ) | (36,082 | ) | |||||||||||||||||||
Colombia Government | 1.000% | 12/20/22 | CIT | 1.481% | $3,938,000 | 142,947 | 135,022 | 7,925 | ||||||||||||||||||||||
Russian Foreign | 1.000% | 12/20/22 | GSC | 2.554% | 5,240,000 | 583,777 | 413,671 | 170,106 | ||||||||||||||||||||||
Mexico Government | 1.000% | 12/20/22 | HSB | 1.289% | 3,624,000 | 79,502 | 121,152 | (41,650 | ) | |||||||||||||||||||||
South Africa Government | 1.000% | 12/20/22 | HSB | 2.393% | 12,560,000 | 1,271,086 | 1,080,969 | 190,117 | ||||||||||||||||||||||
South Africa Government | 1.000% | 12/20/22 | HSB | 1.516% | 10,000,000 | 1,012,011 | 904,847 | 107,164 | ||||||||||||||||||||||
Spain Government | 1.000% | 12/20/22 | HSB | 1.469% | 5,250,000 | 183,147 | 974,920 | (791,773 | ) | |||||||||||||||||||||
Mexico Government | 1.000% | 06/20/23 | CIT | 1.319% | 461,000 | 11,664 | 15,032 | (3,368 | ) | |||||||||||||||||||||
Qatar Government | 1.000% | 12/20/23 | GSC | 1.003% | 874,000 | (86 | ) | 284 | (370 | ) | ||||||||||||||||||||
Brazil Government | 1.000% | 03/20/24 | GSC | 2.209% | 4,231,000 | 413,282 | 561,774 | (148,492 | ) | |||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||
$4,177,410 | $5,122,277 | ($944,867 | ) | |||||||||||||||||||||||||||
|
|
|
|
|
|
Credit Default Swaps on Sovereign Issues – Sell Protection (2)
Referenced Obligation | Fixed Deal Rate | Expiration Date | Counter- party | Implied Credit Spread at 03/31/14 (3) | Notional Amount (4) | Value | Upfront Premiums Paid (Received) | Unrealized Appreciation (Depreciation) | ||||||||||||||||||||||
South Africa Government | 1.000% | 12/20/17 | HSB | 2.393% | $22,560,000 | ($412,999 | ) | ($463,220 | ) | $50,221 | ||||||||||||||||||||
Turkey Government | 1.000% | 12/20/22 | GSC | 2.551% | 2,367,000 | (263,663 | ) | (156,301 | ) | (107,362 | ) | |||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||
($676,662 | ) | ($619,521 | ) | ($57,141 | ) | |||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||
$3,500,748 | $4,502,756 | ($1,002,008 | ) | |||||||||||||||||||||||||||
|
|
|
|
|
|
(1) | If the fund is a buyer of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the 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 or underlying investments comprising the referenced index or (ii) receive a net settlement amount in the form of cash or investments equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying investments comprising the referenced index. |
(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 investments comprising the referenced index or (ii) pay a net settlement amount in the form of cash or investments equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying investments comprising the referenced index. |
(3) | An implied credit spread is the spread in yield between a U.S. Treasury security and the referenced obligation or underlying investment that are identical in all respects except for the quality rating. Implied credit spreads, represented in absolute terms, utilized in determining the value of credit default swap agreements on corporate and sovereign issues of an emerging country as of year end serve as an indicator of the current status of the payment/performance risk and represent the likelihood of 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, in comparison to narrower credit spreads, represent a deterioration of the referenced entity’s credit soundness and a greater likelihood of risk of default or other credit event occurring as defined under the terms of the agreement. A credit spread identified as “Defaulted” indicates a credit event has occurred for the referenced entity or obligation. |
(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. |
Cross Currency Swaps
Notional Amount Currency Received | Notional Amount on Floating Rate Currency Delivered | Pay/Receive Floating Rate | Counter- party | Fixed Rate | Expiration Date | Value | Upfront Premiums Paid (Received) | Unrealized Appreciation | ||||||||||||||||||||||
TRY 11,627,055 | $6,521,062 | Receive | MSC | 5.370% | 04/01/20 | $1,922,591 | $— | $1,922,591 | ||||||||||||||||||||||
2,145,966 | 1,120,609 | Receive | JPM | 7.860% | 07/21/21 | 177,890 | — | 177,890 | ||||||||||||||||||||||
1,169,919 | 611,243 | Receive | HSB | 7.850% | 02/23/22 | 126,693 | — | 126,693 | ||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||
$2,227,174 | $— | $2,227,174 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-75
PACIFIC LIFE FUNDS
PL GLOBAL ABSOLUTE RETURN FUND
Schedule of Investments (Continued)
March 31, 2014
Interest Rate Swaps
Floating Rate Index | Counterparty/ Exchange | Pay/Receive Floating Rate | Fixed Rate | Expiration Date | Notional Amount | Value | Upfront Premiums Paid (Received) | Unrealized Appreciation (Depreciation) | ||||||||||||||||||||
3-Month MYR KLIBOR | GSC | Pay | 3.465% | 01/13/16 | MYR 16,501,000 | ($11,200 | ) | $— | ($11,200 | ) | ||||||||||||||||||
3-Month MYR KLIBOR | CIT | Pay | 3.505% | 01/15/16 | 16,500,000 | (6,806 | ) | — | (6,806 | ) | ||||||||||||||||||
3-Month MYR KLIBOR | CIT | Pay | 3.600% | 02/25/16 | 5,582,000 | (1,022 | ) | — | (1,022 | ) | ||||||||||||||||||
3-Month MYR KLIBOR | JPM | Pay | 3.600% | 02/25/16 | 5,418,000 | (992 | ) | — | (992 | ) | ||||||||||||||||||
3-Month MYR KLIBOR | JPM | Pay | 3.600% | 02/26/16 | 22,001,000 | (4,245 | ) | — | (4,245 | ) | ||||||||||||||||||
3-Month NZD Bank Bills | JPM | Pay | 4.695% | 10/08/16 | NZD 9,000,000 | (6,061 | ) | — | (6,061 | ) | ||||||||||||||||||
3-Month NZD Bank Bills | LCH | Pay | 4.711% | 10/08/16 | 12,000,000 | (4,608 | ) | — | (4,608 | ) | ||||||||||||||||||
3-Month NZD Bank Bills | LCH | Pay | 4.740% | 10/10/16 | 9,500,000 | (1,648 | ) | — | (1,648 | ) | ||||||||||||||||||
3-Month NZD Bank Bills | LCH | Pay | 4.764% | 10/10/16 | 13,000,000 | 224 | — | 224 | ||||||||||||||||||||
3-Month NZD Bank Bills | LCH | Pay | 4.213% | 10/23/17 | 583,000 | 3,349 | — | 3,349 | ||||||||||||||||||||
3-Month NZD Bank Bills | LCH | Pay | 4.203% | 10/24/17 | 1,000,000 | 5,415 | 4 | 5,411 | ||||||||||||||||||||
3-Month NZD Bank Bills | LCH | Pay | 4.150% | 10/25/17 | 1,000,000 | 3,640 | 4 | 3,636 | ||||||||||||||||||||
3-Month NZD Bank Bills | LCH | Pay | 4.036% | 10/30/17 | 2,000,000 | (369 | ) | — | (369 | ) | ||||||||||||||||||
3-Month NZD Bank Bills | LCH | Pay | 4.035% | 10/31/17 | 1,417,000 | (21,606 | ) | 5 | (21,611 | ) | ||||||||||||||||||
6-Month PLN-WIBOR | HSB | Receive | 3.356% | 12/12/17 | PLN 6,880,000 | (3,363 | ) | — | (3,363 | ) | ||||||||||||||||||
6-Month PLN-WIBOR | HSB | Pay | 3.430% | 12/12/17 | 60,000,000 | 84,239 | — | 84,239 | ||||||||||||||||||||
6-Month PLN-WIBOR | HSB | Receive | 3.620% | 12/12/17 | 13,000,000 | (49,100 | ) | — | (49,100 | ) | ||||||||||||||||||
3-Month Chile Bank Bills | CIT | Pay | 2.010% | 05/20/18 | CLP 5,556,830,000 | 612,414 | — | 612,414 | ||||||||||||||||||||
3-Month Chile Bank Bills | CIT | Receive | 4.700% | 05/20/18 | 5,556,830,000 | (313,527 | ) | — | (313,527 | ) | ||||||||||||||||||
6-Month HUF BUBOR | LCH | Receive | 4.566% | 11/14/18 | HUF 288,000,000 | (24,140 | ) | — | (24,140 | ) | ||||||||||||||||||
6-Month HUF BUBOR | LCH | Receive | 3.778% | 11/15/18 | 483,000,000 | 16,215 | — | 16,215 | ||||||||||||||||||||
6-Month HUF BUBOR | LCH | Receive | 4.433% | 11/15/18 | 369,000,000 | (1,630 | ) | — | (1,630 | ) | ||||||||||||||||||
6-Month GBP LIBOR | LCH | Receive | 2.000% | 02/20/19 | GBP 2,440,000 | (3,605 | ) | — | (3,605 | ) | ||||||||||||||||||
Brazil CETIP Interbank | MSC | Pay | 12.920% | 01/04/21 | BRL 7,423,470 | 58,406 | — | 58,406 | ||||||||||||||||||||
Brazil CETIP Interbank | GSC | Pay | 13.070% | 01/04/21 | 2,297,000 | 32,024 | — | 32,024 | ||||||||||||||||||||
Brazil CETIP Interbank | CIT | Pay | 13.160% | 01/04/21 | 12,280,000 | 200,415 | — | 200,415 | ||||||||||||||||||||
Brazil CETIP Interbank | GSC | Pay | 13.050% | 01/02/23 | 5,627,000 | 71,509 | — | 71,509 | ||||||||||||||||||||
3-Month NZD Bank Bills | JPM | Pay | 4.060% | 06/04/23 | NZD 810,000 | (40,615 | ) | — | (40,615 | ) | ||||||||||||||||||
6-Month AUD Bank Bills | LCH | Pay | 4.310% | 07/04/23 | AUD 749,000 | 1,249 | — | 1,249 | ||||||||||||||||||||
6-Month AUD Bank Bills | LCH | Pay | 4.510% | 08/26/23 | 3,104,000 | 41,646 | — | 41,646 | ||||||||||||||||||||
3-Month MYR KLIBOR | GSC | Receive | 4.525% | 01/13/24 | MYR 4,021,000 | 7,346 | — | 7,346 | ||||||||||||||||||||
3-Month MYR KLIBOR | CIT | Receive | 4.575% | 01/15/24 | 4,021,000 | 2,165 | — | 2,165 | ||||||||||||||||||||
3-Month MYR KLIBOR | JPM | Receive | 4.560% | 02/25/24 | 1,331,000 | 2,197 | — | 2,197 | ||||||||||||||||||||
3-Month MYR KLIBOR | CIT | Receive | 4.568% | 02/25/24 | 1,349,000 | 1,975 | — | 1,975 | ||||||||||||||||||||
3-Month MYR KLIBOR | JPM | Receive | 4.565% | 02/26/24 | 5,361,000 | 8,281 | — | 8,281 | ||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||
$658,172 | $13 | $658,159 | ||||||||||||||||||||||||||
|
|
|
|
|
|
Total Return Swaps
Receive Total Return | Pay | Counter- party | Expiration Date | Notional Amount | Value | Upfront Premiums Paid (Received) | Unrealized Appreciation (Depreciation) | |||||||||||||||||
Interest from Guatemala Bills | 3-Month USD-LIBOR + 50 bps | CIT | 06/03/14 | GTQ 4,865,000 | $28,196 | $— | $28,196 | |||||||||||||||||
Interest from Guatemala Bills | 3-Month USD-LIBOR + 50 bps | CIT | 06/09/14 | 2,400,000 | 8,715 | — | 8,715 | |||||||||||||||||
Number of Contracts | ||||||||||||||||||||||||
Positive Return on KOSPI 200 Index | Negative Return on KOSPI 200 Index | CIT | 06/12/14 | 31 | 1,032 | — | 1,032 | |||||||||||||||||
Negative return on WIG 20 Index | Positive return on WIG 20 Index | JPM | 06/20/14 | 239 | (50,986 | ) | — | (50,986 | ) | |||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
($13,043 | ) | $— | ($13,043 | ) | ||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
Total Swap Agreements | $6,373,051 | $4,502,769 | $1,870,282 | |||||||||||||||||||||
|
|
|
|
|
|
(k) | As of March 31, 2014, investments with a total aggregate value of $1,812,974 were fully or partially segregated with the broker(s)/custodian as collateral for open futures contracts, forward foreign currency contracts, option contracts and swap contracts. |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-76
PACIFIC LIFE FUNDS
PL GLOBAL ABSOLUTE RETURN FUND
Schedule of Investments (Continued)
March 31, 2014
(l) | Fair Value Measurements |
The following is a summary of the fund’s investments as categorized under the three-tier hierarchy of inputs used in valuing the fund’s assets and liabilities (See Note 3D in Notes to Financial Statements) as of March 31, 2014:
Total Value at March 31, 2014 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||||
Assets | Common Stocks (1) | $1,204,012 | $— | $1,204,012 | $— | |||||||||||||
Mortgage-Backed Securities | 3,165,660 | — | 3,165,660 | — | ||||||||||||||
Foreign Government Bonds & Notes | 96,948,641 | — | 96,948,641 | — | ||||||||||||||
Short-Term Investments | 99,668,361 | 20,485,203 | 79,183,158 | — | ||||||||||||||
Derivatives: | ||||||||||||||||||
Credit Contracts | ||||||||||||||||||
Swaps | 4,616,340 | — | 4,616,340 | — | ||||||||||||||
Equity Contracts | �� | |||||||||||||||||
Futures | 18,424 | 18,424 | — | — | ||||||||||||||
Swaps | 1,032 | — | 1,032 | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Equity Contracts | 19,456 | 18,424 | 1,032 | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Foreign Currency Contracts | ||||||||||||||||||
Forward Foreign Currency Contracts | 2,042,344 | — | 2,042,344 | — | ||||||||||||||
Purchased Options | 483,575 | — | 483,575 | — | ||||||||||||||
Swaps | 2,227,174 | — | 2,227,174 | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Foreign Currency Contracts | 4,753,093 | — | 4,753,093 | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Interest Rate Contracts | ||||||||||||||||||
Futures | 112,411 | 112,411 | — | — | ||||||||||||||
Swaps | 1,189,620 | — | 1,152,709 | 36,911 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Interest Rate Contracts | 1,302,031 | 112,411 | 1,152,709 | 36,911 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Assets - Derivatives | 10,690,920 | 130,835 | 10,523,174 | 36,911 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Assets | 211,677,594 | 20,616,038 | 191,024,645 | 36,911 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Liabilities | Securities Sold Short: | |||||||||||||||||
Foreign Government Bonds & Notes | (6,456,073 | ) | — | (6,456,073 | ) | — | ||||||||||||
Derivatives: | ||||||||||||||||||
Credit Contracts | ||||||||||||||||||
Swaps | (1,115,592 | ) | — | (1,115,592 | ) | — | ||||||||||||
Equity Contracts | ||||||||||||||||||
Futures | (70,899 | ) | (70,899 | ) | — | — | ||||||||||||
Swaps | (50,986 | ) | — | (50,986 | ) | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Equity Contracts | (121,885 | ) | (70,899 | ) | (50,986 | ) | — | |||||||||||
|
|
|
|
|
|
|
| |||||||||||
Foreign Currency Contracts | ||||||||||||||||||
Forward Foreign Currency Contracts | (3,379,361 | ) | — | (3,379,361 | ) | — | ||||||||||||
Written Options | (25,580 | ) | — | (25,580 | ) | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Foreign Currency Contracts | (3,404,941 | ) | — | (3,404,941 | ) | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Interest Rate Contracts | ||||||||||||||||||
Futures | (90,346 | ) | (90,346 | ) | — | — | ||||||||||||
Swaps | (494,537 | ) | — | (494,537 | ) | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Interest Rate Contracts | (584,883 | ) | (90,346 | ) | (494,537 | ) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Liabilities - Derivatives | (5,227,301 | ) | (161,245 | ) | (5,066,056 | ) | — | |||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total Liabilities | (11,683,374 | ) | (161,245 | ) | (11,522,129 | ) | — | |||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total | $199,994,220 | $20,454,793 | $179,502,516 | $36,911 | ||||||||||||||
|
|
|
|
|
|
|
|
(1) | For equity investments categorized in a single level, refer to the schedule of investments for further geographical region breakout. |
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-77
PACIFIC LIFE FUNDS
PL PRECIOUS METALS FUND
Schedule of Investments
March 31, 2014
| Value | |||||||
COMMON STOCKS - 95.3% |
| |||||||
Australia - 3.8% | ||||||||
Newcrest Mining Ltd * | 207,190 | $1,904,536 | ||||||
Regis Resources Ltd | 480,745 | 1,012,498 | ||||||
Troy Resources Ltd * | 314,434 | 306,728 | ||||||
|
| |||||||
3,223,762 | ||||||||
|
| |||||||
Bermuda - 0.8% | ||||||||
Continental Gold Ltd * | 190,150 | 657,054 | ||||||
|
| |||||||
Canada - 66.9% | ||||||||
Agnico Eagle Mines Ltd | 147,780 | 4,470,345 | ||||||
Alamos Gold Inc | 255,583 | 2,309,610 | ||||||
Aureus Mining Inc * | 495,931 | 260,416 | ||||||
AuRico Gold Inc | 240,000 | 1,046,404 | ||||||
B2Gold Corp * | 990,000 | 2,686,567 | ||||||
Barrick Gold Corp | 147,643 | 2,632,475 | ||||||
Centerra Gold Inc | 240,938 | 1,122,416 | ||||||
Detour Gold Corp * | 139,451 | 1,207,188 | ||||||
Eldorado Gold Corp | 720,601 | 4,008,771 | ||||||
First Quantum Minerals Ltd | 24,489 | 452,565 | ||||||
Franco-Nevada Corp | 85,553 | 3,931,336 | ||||||
Goldcorp Inc | 337,804 | 8,269,442 | ||||||
IAMGOLD Corp | 75,437 | 265,445 | ||||||
Kinross Gold Corp | 865,932 | 3,579,655 | ||||||
MAG Silver Corp * | 87,430 | 606,593 | ||||||
New Gold Inc * | 290,557 | 1,437,672 | ||||||
Osisko Mining Corp * | 634,767 | 3,950,427 | ||||||
Platinum Group Metals Ltd * | 674,000 | 676,744 | ||||||
Primero Mining Corp * | 103,521 | 750,071 | ||||||
Rio Alto Mining Ltd * | 90,710 | 177,235 | ||||||
SEMAFO Inc | 370,249 | 1,306,170 | ||||||
Silver Wheaton Corp | 129,754 | 2,945,416 | ||||||
Tahoe Resources Inc * | 161,459 | 3,413,204 | ||||||
Torex Gold Resources Inc * | 620,392 | 600,470 | ||||||
Yamana Gold Inc | 495,495 | 4,338,663 | ||||||
|
| |||||||
56,445,300 | ||||||||
|
| |||||||
Peru - 0.5% | ||||||||
Cia de Minas Buenaventura SA ADR | 31,754 | 399,148 | ||||||
|
| |||||||
South Africa - 1.3% | ||||||||
AngloGold Ashanti Ltd ADR | 41,457 | 708,086 | ||||||
Impala Platinum Holdings Ltd | 36,972 | 420,901 | ||||||
|
| |||||||
1,128,987 | ||||||||
|
| |||||||
United Kingdom - 14.8% | ||||||||
Fresnillo PLC | 236,285 | 3,371,113 | ||||||
Hochschild Mining PLC | 102,124 | 288,067 | ||||||
Randgold Resources Ltd ADR | 118,085 | 8,856,375 | ||||||
|
| |||||||
12,515,555 | ||||||||
|
| |||||||
United States - 7.2% | ||||||||
Newmont Mining Corp | 60,921 | 1,427,988 | ||||||
Royal Gold Inc | 73,917 | 4,628,682 | ||||||
|
| |||||||
6,056,670 | ||||||||
|
| |||||||
Total Common Stocks | 80,426,476 | |||||||
|
|
| Value | |||||||
SHORT-TERM INVESTMENT - 4.4% |
| |||||||
Money Market Fund - 4.4% | ||||||||
BlackRock Liquidity Funds Treasury | 3,698,469 | $3,698,469 | ||||||
|
| |||||||
Total Short-Term Investment | 3,698,469 | |||||||
|
| |||||||
TOTAL INVESTMENTS - 99.7% | 84,124,945 | |||||||
OTHER ASSETS & LIABILITIES, NET - 0.3% |
| 277,300 | ||||||
|
| |||||||
NET ASSETS - 100.0% |
| $84,402,245 | ||||||
|
|
Notes to Schedule of Investments
(a) | As of March 31, 2014, the fund was diversified by precious metals sector as a percentage of net assets as follows: |
Gold | 80.0% | |||
Silver | 8.5% | |||
Precious Metals | 4.9% | |||
Others (each less than 3.0%) | 1.9% | |||
|
| |||
95.3% | ||||
Short-Term Investment | 4.4% | |||
Other Assets & Liabilities, Net | 0.3% | |||
|
| |||
100.0% | ||||
|
|
(b) | As of March 31, 2014, the fund was diversified by country of incorporation as a percentage of net assets as follows: |
Canada | 66.9% | |||
United Kingdom | 14.8% | |||
United States | 11.6% | |||
Australia | 3.8% | |||
Others (each less than 3.0%) | 2.6% | |||
|
| |||
99.7% | ||||
Other Assets & Liabilities, Net | 0.3% | |||
|
| |||
100.0% | ||||
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-78
PACIFIC LIFE FUNDS
PL PRECIOUS METALS FUND
Schedule of Investments (Continued)
March 31, 2014
(c) | Fair Value Measurements |
The following is a summary of the fund’s investments as categorized under the three-tier hierarchy of inputs used in valuing the fund’s assets and liabilities (See Note 3D in Notes to Financial Statements) as of March 31, 2014:
Total Value at March 31, 2014 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||||
Assets | Common Stocks | |||||||||||||||||
Australia | $3,223,762 | $— | $3,223,762 | $— | ||||||||||||||
Bermuda | 657,054 | 657,054 | — | — | ||||||||||||||
Canada | 56,445,300 | 56,184,884 | 260,416 | — | ||||||||||||||
Peru | 399,148 | 399,148 | — | — | ||||||||||||||
South Africa | 1,128,987 | 708,086 | 420,901 | — | ||||||||||||||
United Kingdom | 12,515,555 | 8,856,375 | 3,659,180 | — | ||||||||||||||
United States | 6,056,670 | 6,056,670 | — | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
80,426,476 | 72,862,217 | 7,564,259 | — | |||||||||||||||
Short-Term Investment | 3,698,469 | 3,698,469 | — | — | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||||
Total | $84,124,945 | $76,560,686 | $7,564,259 | $— | ||||||||||||||
|
|
|
|
|
|
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-79
PACIFIC LIFE FUNDS
PL DIVERSIFIED ALTERNATIVES FUND
Schedule of Investments
March 31, 2014
| Value | |||||||
AFFILIATED MUTUAL FUNDS - 98.7% | ||||||||
PL Floating Rate Income Fund ‘P’ | 23,676 | $249,066 | ||||||
PL Inflation Managed Fund ‘P’ | 11,340 | 100,246 | ||||||
PL Emerging Markets Debt Fund ‘P’ | 25,731 | 249,595 | ||||||
PL Real Estate Fund ‘P’ | 11,344 | 160,966 | ||||||
PL Emerging Markets Fund ‘P’ | 9,855 | 145,367 | ||||||
PL Currency Strategies Fund ‘P’ | 48,831 | 459,503 | ||||||
PL Global Absolute Return Fund ‘P’ | 51,093 | 495,091 | ||||||
PL Precious Metals Fund ‘P’ | 19,490 | 111,484 | ||||||
|
| |||||||
Total Affiliated Mutual Funds |
| 1,971,318 | ||||||
|
| |||||||
TOTAL INVESTMENTS - 98.7% |
| 1,971,318 | ||||||
OTHER ASSETS & LIABILITIES, NET - 1.3% |
| 26,714 | ||||||
|
| |||||||
NET ASSETS - 100.0% |
| $1,998,032 | ||||||
|
|
Notes to Schedule of Investments
(a) | As of March 31, 2014, the fund was diversified as a percentage of net assets as follows: |
Affiliated Fixed Income Funds | 54.8% | |||
Affiliated Equity Funds | 43.9% | |||
|
| |||
98.7% | ||||
Other Assets & Liabilities, Net | 1.3% | |||
|
| |||
100.0% | ||||
|
|
(b) | The fund’s investments are affiliated mutual funds (See Note 7C in Notes to Financial Statements). |
(c) | Fair Value Measurements |
The following is a summary of the fund’s investments as categorized under the three-tier hierarchy of inputs used in valuing the fund’s assets and liabilities (See Note 3D in Notes to Financial Statements) as of March 31, 2014:
Total Value at March 31, 2014 | Level 1 Quoted Price | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |||||||||||||||
Assets | Affiliated Mutual Funds | $1,971,318 | $1,971,318 | $— | $— | |||||||||||||
|
|
|
|
|
|
|
|
See Notes to Financial Statements | See explanation of references, symbols and terms, if any, on page B-81 |
B-80
PACIFIC LIFE FUNDS
Schedule of Investments (Continued)
Explanation of Symbols and Terms
March 31, 2014
Explanation of Symbols: | ||
* | Non-income producing investments. | |
" | Pass-through securities backed by a pool of mortgages or other loans on which principal payments are periodically made. Therefore, the effective maturity is shorter than the stated maturity. | |
^ | Investments with their principal amount adjusted for inflation. | |
§ | Variable rate investments. The rate shown is based on the latest available information as of March 31, 2014. For Senior Loan Notes, the rate shown may represent a weighted average interest rate. | |
W | Investments were in default as of March 31, 2014. | |
± | The security is a perpetual bond and has no definite maturity date. | |
µ | Unsettled position. Contract rates do not take effect until settlement date. | |
~ | Securities are not registered under the Securities Act of 1933 (1933 Act). These securities are either (1) exempt from registration pursuant to Rule 144A of the 1933 Act and may only be sold to “qualified institutional buyers”, or (2) the securities comply with Regulation S rules governing offers and sales made outside the United States without registration under the 1933 Act and contain certain restrictions as to public resale. | |
‡ | Investments were fully or partially segregated with the broker(s)/custodian as collateral for securities sold short, futures contracts, options contracts, swap contracts and/or forward foreign currency contracts, if any, as of March 31, 2014. | |
+ | The values of these investments were determined by the Trustee Valuation Committee or determined by a valuation committee established under the Valuation Policy and then subsequently submitted for approval or ratification to either the Trustee Valuation Committee, or to the Board. Each determination was made in good faith in accordance with the procedures established by the Board and the provisions of the Investment Company Act of 1940 (See Note 3C in Notes to Financial Statements). | |
Counterparty & Exchange Abbreviations: | ||
ANZ | Australia and New Zealand Banking Group | |
BRC | Barclays | |
CIB | Canadian Imperial Bank of Commerce | |
CIT | Citigroup | |
CME | Chicago Mercantile Exchange | |
CSF | Credit Suisse | |
DUB | Deutsche Bank | |
GSC | Goldman Sachs | |
HSB | HSBC | |
ICE | Intercontinental Exchange Inc | |
JPM | JPMorgan Chase | |
LCH | London Clearing House | |
MER | Merrill Lynch | |
MSC | Morgan Stanley | |
RBC | Royal Bank of Canada | |
RBS | Royal Bank of Scotland | |
SCB | Standard Chartered Bank | |
SGN | Societe Generale | |
SSB | State Street Bank | |
TDB | Toronto Dominion Bank | |
UBS | UBS | |
WBC | Westpac Banking Group |
Notes:
The countries listed in the Schedules of Investments are based on country of incorporation.
The descriptions and Standard and Poor’s quality ratings of the companies and credit spreads, if any, shown in the Schedules of Investments were obtained from published reports or other sources believed to be reliable, and are not audited by the Independent Registered Public Accounting Firm.
Currency Abbreviations: | ||
AED | United Arab Emirates Dirham | |
ARS | Argentine Peso | |
AUD | Australian Dollar | |
BRL | Brazilian Real | |
CAD | Canadian Dollar | |
CHF | Swiss Franc | |
CLP | Chilean Peso | |
CNH | Renminbi Offshore (Hong Kong) | |
CNY | Chinese Renminbi | |
COP | Colombian Peso | |
CZK | Czech Koruna | |
DOP | Dominican Peso | |
EUR | Euro | |
GBP | British Pound | |
GTQ | Guatemalan Quetzal | |
HKD | Hong Kong Dollar | |
HRK | Croatian Kuna | |
HUF | Hungarian Forint | |
IDR | Indonesian Rupiah | |
ILS | Israeli Shekel | |
INR | Indian Rupee | |
JOD | Jordanian Dinar | |
JPY | Japanese Yen | |
KES | Kenyan Shilling | |
KRW | Korean Won | |
KZT | Kazakhstani Tenge | |
LBP | Lebanese Pound | |
LKR | Sri Lankan Rupee | |
MXN | Mexican Peso | |
MYR | Malaysian Ringgit | |
NGN | Nigerian Naira | |
NOK | Norwegian Krone | |
NZD | New Zealand Dollar | |
PEN | Peruvian Nuevo Sol | |
PHP | Philippine Peso | |
PLN | Polish Zloty | |
RON | Romanian Leu | |
RSD | Serbian Dinar | |
RUB | Russian Ruble | |
SEK | Swedish Krona | |
SGD | Singapore Dollar | |
THB | Thai Baht | |
TRY | Turkish Lira | |
TWD | Taiwan Dollar | |
UGX | Ugandan Shilling | |
USD | United States Dollar | |
UYU | Uruguayan Peso | |
ZAR | South African Rand | |
ZMW | Zambian Kwacha | |
Index Abbreviations: | ||
CDX EM | Credit Derivatives Index - Emerging Markets | |
CDX HY | Credit Derivatives Index - High Yield | |
CDX IG | Credit Derivatives Index - Investment Grade | |
iTraxx Europe | International Index - Europe Main | |
Other Abbreviations: | ||
ADR | American Depositary Receipt | |
BUBOR | Budapest Interbank Offered Rate | |
GDR | Global Depositary Receipt | |
IO | Interest Only | |
JIBAR | Johannesburg Interbank Agreed Rate | |
KLIBOR | Kuala Lumpur Interbank Offered Rate | |
LIBOR | London Interbank Offered Rate | |
‘NY’ | New York Shares | |
OTC | Over the Counter | |
REIT | Real Estate Investment Trust | |
WIBOR | Warsaw Interbank Offered Rate |
See Notes to Financial Statements |
B-81
PACIFIC LIFE FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 31, 2014
PL Floating Rate Loan Fund | PL Inflation Managed Fund | PL Managed Bond Fund | PL Short Duration Bond Fund | PL Emerging Markets Debt Fund | PL Comstock Fund | |||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||
Investments and repurchase agreements, at cost | $124,493,830 | $208,767,227 | $700,399,763 | $227,239,614 | $130,500,745 | $199,501,211 | ||||||||||||||||||||||
Investments, at value | $124,481,181 | $205,390,140 | $698,150,747 | $228,177,569 | $129,509,526 | $308,801,686 | ||||||||||||||||||||||
Repurchase agreements, at value | — | — | 5,600,000 | — | — | — | ||||||||||||||||||||||
Cash (1) | — | 624,000 | 4,127,000 | — | — | — | ||||||||||||||||||||||
Foreign currency held, at value (2) | — | 184,866 | 469,240 | — | 387,229 | — | ||||||||||||||||||||||
Receivables: | ||||||||||||||||||||||||||||
Dividends and interest | 386,115 | 577,055 | 2,184,996 | 1,295,864 | 1,897,532 | 509,757 | ||||||||||||||||||||||
Fund shares sold | 195,619 | 401,560 | 496,157 | 259,560 | 347,099 | — | ||||||||||||||||||||||
Securities sold | 252,311 | — | 20,745,184 | — | 234,415 | 194,601 | ||||||||||||||||||||||
Variation margin | — | 52,921 | 452,695 | 813 | — | — | ||||||||||||||||||||||
Foreign tax reclaim | — | — | — | — | — | 49,026 | ||||||||||||||||||||||
Due from adviser | 15,794 | 10,519 | 22,126 | 12,669 | — | 15,921 | ||||||||||||||||||||||
Forward foreign currency contracts appreciation | — | 186,514 | 377,411 | — | 672,569 | 9,830 | ||||||||||||||||||||||
Prepaid expenses and other assets | 1,598 | 2,322 | 7,823 | 3,052 | 11,165 | 3,970 | ||||||||||||||||||||||
Swap contracts, at value | — | 442,236 | 839,602 | — | 1,613,521 | — | ||||||||||||||||||||||
Total Assets | 125,332,618 | 207,872,133 | 733,472,981 | 229,749,527 | 134,673,056 | 309,584,791 | ||||||||||||||||||||||
LIABILITIES | ||||||||||||||||||||||||||||
Payables: | ||||||||||||||||||||||||||||
Fund shares redeemed | 12,393 | 17,704 | 61,078 | 24,785 | 12,393 | 5,311 | ||||||||||||||||||||||
Securities purchased | 2,063,625 | — | 151,418,474 | 350,176 | 3,440,882 | 518,569 | ||||||||||||||||||||||
Sale-buyback financing transactions | — | 20,568,887 | — | — | — | — | ||||||||||||||||||||||
Due to brokers (3) | — | 50,000 | 745,000 | — | — | — | ||||||||||||||||||||||
Accrued advisory fees | 67,445 | 62,589 | 197,115 | 77,634 | 84,298 | 190,361 | ||||||||||||||||||||||
Accrued administration fees | 15,564 | 23,471 | 73,918 | 29,113 | 16,108 | 38,849 | ||||||||||||||||||||||
Accrued support service expenses | 3,086 | 4,486 | 15,097 | 5,887 | 3,038 | 7,667 | ||||||||||||||||||||||
Accrued custodian fees and expenses | 8,324 | 6,428 | 15,024 | 3,291 | 26,942 | 5,078 | ||||||||||||||||||||||
Accrued transfer agency out-of-pocket expenses | 4,413 | 6,318 | 21,771 | 8,584 | 4,144 | 10,908 | ||||||||||||||||||||||
Accrued legal, audit and tax service fees | 11,800 | 17,155 | 57,727 | 22,510 | 11,618 | 29,317 | ||||||||||||||||||||||
Accrued trustees’ fees and expenses and deferred compensation | 392 | 1,824 | 8,421 | 981 | 13 | 2,847 | ||||||||||||||||||||||
Accrued other | 29,645 | 19,426 | 56,367 | 37,870 | 5,401 | 17,681 | ||||||||||||||||||||||
Forward foreign currency contracts depreciation | — | 227,760 | 39,149 | — | 456,868 | 160,395 | ||||||||||||||||||||||
Outstanding options written, at value (premiums received $235,686 and $729,142) | — | 88,766 | 530,649 | — | — | — | ||||||||||||||||||||||
Swap contracts, at value | — | 1,012,801 | 480,239 | — | 95,402 | — | ||||||||||||||||||||||
Total Liabilities | 2,216,687 | 22,107,615 | 153,720,029 | 560,831 | 4,157,107 | 986,983 | ||||||||||||||||||||||
NET ASSETS | $123,115,931 | $185,764,518 | $579,752,952 | $229,188,696 | $130,515,949 | $308,597,808 | ||||||||||||||||||||||
NET ASSETS CONSIST OF: | ||||||||||||||||||||||||||||
Paid-in capital | $122,038,695 | $196,194,564 | $577,123,265 | $228,789,255 | $134,066,603 | $205,893,656 | ||||||||||||||||||||||
Undistributed/accumulated net investment income (loss) | 1,074,359 | (966,992 | ) | 659,846 | 649,544 | 999,908 | 1,535,528 | |||||||||||||||||||||
Undistributed/accumulated net realized gain (loss) | 15,526 | (5,252,511 | ) | (926,514 | ) | (1,194,612 | ) | (3,637,882 | ) | (7,982,483 | ) | |||||||||||||||||
Net unrealized appreciation (depreciation) on investments | (12,649 | ) | (4,210,543 | ) | 2,896,355 | 944,509 | (912,680 | ) | 109,151,107 | |||||||||||||||||||
NET ASSETS | $123,115,931 | $185,764,518 | $579,752,952 | $229,188,696 | $130,515,949 | $308,597,808 | ||||||||||||||||||||||
Class P Shares: | ||||||||||||||||||||||||||||
Shares of beneficial interest outstanding | 12,254,718 | 21,018,831 | 53,880,121 | 22,814,514 | 13,462,763 | 17,524,289 | ||||||||||||||||||||||
Net Asset Value Per Share | $10.05 | $8.84 | $10.76 | $10.05 | $9.69 | $17.61 |
(1) | Includes cash collateral segregated for certain derivative instruments (see Notes to Schedule of Investments) in the PL Inflation Managed and PL Managed Bond Funds of $624,000 and $4,127,000, respectively. |
(2) | The cost of foreign currency for the PL Inflation Managed, PL Managed Bond and PL Emerging Markets Debt Funds was $182,744, $467,654 and $386,681, respectively. |
(3) | The PL Inflation Managed and PL Managed Bond Funds received cash collateral to mitigate risk of loss to certain counterparties, which will be repaid based on master netting arrangements between the Funds and the counterparties. The Funds invest such cash collateral in investments securities (See Note 5 in Notes to Financial Statements). |
See Notes to Financial Statements
C-1
PACIFIC LIFE FUNDS
STATEMENTS OF ASSETS AND LIABILITIES (Continued)
MARCH 31, 2014
PL Growth Fund | PL Large-Cap Growth Fund | PL Large-Cap Value Fund | PL Main Street Core Fund | PL Mid-Cap Equity Fund | PL Mid-Cap Growth Fund | |||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||
Investments, at cost | $82,722,064 | $143,058,232 | $241,061,273 | $189,391,362 | $140,273,741 | $85,758,759 | ||||||||||||||||||||||
Investments, at value | $101,868,912 | $173,751,138 | $380,920,066 | $255,423,204 | $170,981,649 | $91,255,428 | ||||||||||||||||||||||
Cash | — | — | — | — | — | 141,120 | ||||||||||||||||||||||
Foreign currency held, at value (1) | — | 66 | — | — | — | — | ||||||||||||||||||||||
Receivables: | ||||||||||||||||||||||||||||
Dividends and interest | 52,055 | 91,424 | 762,721 | 298,577 | 120,558 | 38,995 | ||||||||||||||||||||||
Fund shares sold | 19,413 | — | — | 10,331 | — | 49,007 | ||||||||||||||||||||||
Securities sold | — | 3,458,542 | 713,689 | 3,302,191 | 4,606,163 | 240,956 | ||||||||||||||||||||||
Foreign tax reclaim | 1,826 | 585 | 52,521 | 6,996 | — | 3,804 | ||||||||||||||||||||||
Due from adviser | — | — | 19,446 | 15,771 | 5,609 | — | ||||||||||||||||||||||
Forward foreign currency contracts appreciation | — | 28,895 | — | — | — | — | ||||||||||||||||||||||
Prepaid expenses and other assets | 1,199 | 2,247 | 4,878 | 3,292 | 2,150 | 1,116 | ||||||||||||||||||||||
Total Assets | 101,943,405 | 177,332,897 | 382,473,321 | 259,060,362 | 175,716,129 | 91,730,426 | ||||||||||||||||||||||
LIABILITIES | ||||||||||||||||||||||||||||
Payables: | ||||||||||||||||||||||||||||
Fund shares redeemed | 2,656 | 3,541 | 7,082 | 1,770 | 2,656 | 1,770 | ||||||||||||||||||||||
Securities purchased | 559,682 | 4,538,656 | 1,751,380 | 1,292,153 | 4,199,712 | 801,980 | ||||||||||||||||||||||
Accrued advisory fees | 48,208 | 107,047 | 206,774 | 98,335 | 95,348 | 50,280 | ||||||||||||||||||||||
Accrued administration fees | 13,148 | 22,776 | 47,717 | 32,778 | 22,003 | 11,603 | ||||||||||||||||||||||
Accrued support service expenses | 2,326 | 4,344 | 9,424 | 6,362 | 4,154 | 2,160 | ||||||||||||||||||||||
Accrued custodian fees and expenses | 1,856 | 2,597 | 4,108 | 5,616 | 1,747 | 1,354 | ||||||||||||||||||||||
Accrued transfer agency out-of-pocket expenses | 2,998 | 6,089 | 13,350 | 8,963 | 5,879 | 2,959 | ||||||||||||||||||||||
Accrued legal, audit and tax service fees | 8,895 | 16,610 | 36,034 | 24,326 | 15,884 | 8,259 | ||||||||||||||||||||||
Accrued trustees’ fees and expenses and deferred compensation | 2,500 | 6,254 | 4,671 | 853 | 547 | 2,634 | ||||||||||||||||||||||
Accrued other | 16,489 | 11,647 | 20,371 | 14,204 | 11,301 | 17,995 | ||||||||||||||||||||||
Outstanding options written, at value (premiums received $30,820) | — | — | — | — | — | 25,711 | ||||||||||||||||||||||
Total Liabilities | 658,758 | 4,719,561 | 2,100,911 | 1,485,360 | 4,359,231 | 926,705 | ||||||||||||||||||||||
NET ASSETS | $101,284,647 | $172,613,336 | $380,372,410 | $257,575,002 | $171,356,898 | $90,803,721 | ||||||||||||||||||||||
NET ASSETS CONSIST OF: | ||||||||||||||||||||||||||||
Paid-in capital | $82,403,019 | $133,926,161 | $233,575,625 | $174,836,430 | $128,298,801 | $82,208,947 | ||||||||||||||||||||||
Undistributed/accumulated net investment income (loss) | 141,842 | (35,116 | ) | 4,219,659 | 530,986 | (516 | ) | 30,482 | ||||||||||||||||||||
Undistributed/accumulated net realized gain (loss) | (407,178 | ) | 8,000,594 | 2,718,333 | 16,175,210 | 12,350,705 | 3,062,383 | |||||||||||||||||||||
Net unrealized appreciation on investments and assets and liabilities in foreign currencies | 19,146,964 | 30,721,697 | 139,858,793 | 66,032,376 | 30,707,908 | 5,501,909 | ||||||||||||||||||||||
NET ASSETS | $101,284,647 | $172,613,336 | $380,372,410 | $257,575,002 | $171,356,898 | $90,803,721 | ||||||||||||||||||||||
Class P Shares: | ||||||||||||||||||||||||||||
Shares of beneficial interest outstanding | 5,844,648 | 16,791,462 | 22,758,449 | 17,341,280 | 13,348,559 | 11,109,920 | ||||||||||||||||||||||
Net Asset Value Per Share | $17.33 | $10.28 | $16.71 | $14.85 | $12.84 | $8.17 |
(1) | The cost of foreign currency for the PL Large-Cap Growth Fund was $66. |
See Notes to Financial Statements
C-2
PACIFIC LIFE FUNDS
STATEMENTS OF ASSETS AND LIABILITIES (Continued)
MARCH 31, 2014
PL Small-Cap Growth Fund | PL Small-Cap Value Fund | PL Real Estate Fund | PL Emerging Markets Fund | PL International Large-Cap Fund | PL International Value Fund | |||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||
Investments, at cost | $46,540,451 | $112,025,433 | $50,394,755 | $126,319,357 | $164,349,565 | $147,053,773 | ||||||||||||||||||||||
Investments, at value | $59,825,123 | $147,544,409 | $73,652,094 | $152,928,626 | $239,029,920 | $176,251,743 | ||||||||||||||||||||||
Foreign currency held, at value (1) | — | 4,864 | — | 465,458 | 42,518 | 351,131 | ||||||||||||||||||||||
Receivables: | ||||||||||||||||||||||||||||
Dividends and interest | 22,651 | 150,489 | 200,565 | 219,258 | 753,874 | 672,090 | ||||||||||||||||||||||
Fund shares sold | — | 64,415 | 8,872 | 379,385 | 115,373 | 11,055 | ||||||||||||||||||||||
Securities sold | 1,065,864 | 229,392 | 468,330 | 432,353 | 992,521 | — | ||||||||||||||||||||||
Foreign tax reclaim | — | — | — | 9,361 | 325,604 | 181,761 | ||||||||||||||||||||||
Due from adviser | — | 7,842 | — | 1,345 | — | — | ||||||||||||||||||||||
Forward foreign currency contracts appreciation | — | — | — | — | — | 970,657 | ||||||||||||||||||||||
Prepaid expenses and other assets | 787 | 1,893 | 836 | 6,004 | 5,466 | 6,580 | ||||||||||||||||||||||
Total Assets | 60,914,425 | 148,003,304 | 74,330,697 | 154,441,790 | 241,265,276 | 178,445,017 | ||||||||||||||||||||||
LIABILITIES | ||||||||||||||||||||||||||||
Payables: | ||||||||||||||||||||||||||||
Fund shares redeemed | — | — | — | — | 3,541 | 2,660 | ||||||||||||||||||||||
Securities purchased | 933,417 | 152,593 | 421,947 | 745,407 | 443,376 | 1,377,581 | ||||||||||||||||||||||
Accrued advisory fees | 31,390 | 93,390 | 55,771 | 99,651 | 170,640 | 96,552 | ||||||||||||||||||||||
Accrued administration fees | 7,848 | 18,678 | 9,295 | 18,685 | 30,113 | 22,281 | ||||||||||||||||||||||
Accrued support service expenses | 1,519 | 3,656 | 1,614 | 3,727 | 6,077 | 4,581 | ||||||||||||||||||||||
Accrued custodian fees and expenses | 648 | 2,514 | 709 | 112,365 | 29,752 | 26,433 | ||||||||||||||||||||||
Accrued transfer agency out-of-pocket expenses | 2,108 | 5,185 | 2,285 | 5,120 | 8,505 | 6,423 | ||||||||||||||||||||||
Accrued legal, audit and tax service fees | 5,809 | 13,978 | 6,172 | 14,250 | 23,236 | 17,518 | ||||||||||||||||||||||
Accrued trustees’ fees and expenses and deferred compensation | 1,645 | 206 | 199 | 433 | 2,159 | 3,093 | ||||||||||||||||||||||
Accrued foreign capital gains tax | — | — | — | 92,148 | — | — | ||||||||||||||||||||||
Accrued other | 8,708 | 10,847 | 5,139 | 17,384 | 25,729 | 13,966 | ||||||||||||||||||||||
Forward foreign currency contracts depreciation | — | — | — | — | — | 333,058 | ||||||||||||||||||||||
Total Liabilities | 993,092 | 301,047 | 503,131 | 1,109,170 | 743,128 | 1,904,146 | ||||||||||||||||||||||
NET ASSETS | $59,921,333 | $147,702,257 | $73,827,566 | $153,332,620 | $240,522,148 | $176,540,871 | ||||||||||||||||||||||
NET ASSETS CONSIST OF: | ||||||||||||||||||||||||||||
Paid-in capital | $43,139,031 | $104,860,707 | $57,738,407 | $126,561,753 | $176,569,784 | $192,503,678 | ||||||||||||||||||||||
Undistributed/accumulated net investment income (loss) | 5,115 | 1,310,047 | 64,702 | (538,825 | ) | 1,259,430 | 2,216,343 | |||||||||||||||||||||
Undistributed/accumulated net realized gain (loss) | 3,492,514 | 6,012,444 | (7,232,882 | ) | 779,863 | (11,999,391 | ) | (48,014,175 | ) | |||||||||||||||||||
Net unrealized appreciation on investments and assets and liabilities in foreign currencies | 13,284,673 | 35,519,059 | 23,257,339 | 26,529,829 | 74,692,325 | 29,835,025 | ||||||||||||||||||||||
NET ASSETS | $59,921,333 | $147,702,257 | $73,827,566 | $153,332,620 | $240,522,148 | $176,540,871 | ||||||||||||||||||||||
Class P Shares: | ||||||||||||||||||||||||||||
Shares of beneficial interest outstanding | 3,855,710 | 10,900,927 | 5,203,621 | 10,393,575 | 13,031,396 | 17,094,756 | ||||||||||||||||||||||
Net Asset Value Per Share | $15.54 | $13.55 | $14.19 | $14.75 | $18.46 | $10.33 |
(1) | The cost of foreign currency for PL Small-Cap Value, PL Emerging Markets, PL International Large-Cap and PL International Value Funds was $4,821, $455,381, $42,800 and $353,484 respectively. |
See Notes to Financial Statements
C-3
PACIFIC LIFE FUNDS
STATEMENTS OF ASSETS AND LIABILITIES (Continued)
MARCH 31, 2014
PL Currency Strategies Fund | PL Global Absolute Return Fund | PL Precious Metals Fund | PL Diversified Alternatives Fund | |||||||||||||||||
ASSETS | ||||||||||||||||||||
Investments and repurchase agreements, at cost | $132,075,805 | $201,687,182 | $108,122,423 | $1,972,751 | ||||||||||||||||
Investments, at value | $133,793,722 | $190,739,353 | $84,124,945 | $1,971,318 | ||||||||||||||||
Repurchase agreements, at value | — | 10,730,896 | — | — | ||||||||||||||||
Cash (1) | 120,000 | 168,894 | — | — | ||||||||||||||||
Foreign currency held, at value (2) | 6,749 | 4,274,802 | 219,069 | — | ||||||||||||||||
Receivables: | ||||||||||||||||||||
Dividends and interest | 741,444 | 1,684,943 | 72,954 | — | ||||||||||||||||
Fund shares sold | 425,476 | 395,235 | — | — | ||||||||||||||||
Securities sold | 1,747,537 | — | — | — | ||||||||||||||||
Variation margin | — | 709,563 | — | — | ||||||||||||||||
Foreign tax reclaim | — | 3,172 | 77,967 | — | ||||||||||||||||
Due from adviser | 1,092 | 111,157 | — | 12,535 | ||||||||||||||||
Forward foreign currency contracts appreciation | 1,048,619 | 2,042,344 | — | — | ||||||||||||||||
Prepaid expenses and other assets | 1,770 | 2,484 | 2,819 | 15,127 | ||||||||||||||||
Swap contracts, at value | — | 7,962,428 | — | — | ||||||||||||||||
Total Assets | 137,886,409 | 218,825,271 | 84,497,754 | 1,998,980 | ||||||||||||||||
LIABILITIES | ||||||||||||||||||||
Payables: | ||||||||||||||||||||
Fund shares redeemed | 5,311 | 10,623 | 1,770 | — | ||||||||||||||||
Securities purchased | — | 6,019,877 | — | — | ||||||||||||||||
Securities sold short, at value (proceeds $6,218,610) | — | 6,456,073 | — | — | ||||||||||||||||
Due to brokers (3) | 520,000 | 2,520,000 | — | — | ||||||||||||||||
Accrued advisory fees | 72,694 | 132,416 | 53,131 | 341 | ||||||||||||||||
Accrued administration fees | 16,775 | 24,828 | 11,720 | 256 | ||||||||||||||||
Accrued support service expenses | 3,418 | 4,795 | 1,875 | 47 | ||||||||||||||||
Accrued custodian fees and expenses | 5,308 | 146,220 | 6,380 | — | ||||||||||||||||
Accrued transfer agency out-of-pocket expenses | 4,924 | 6,875 | 2,645 | 52 | ||||||||||||||||
Accrued legal, audit and tax service fees | 13,070 | 18,334 | 7,171 | 181 | ||||||||||||||||
Accrued trustees’ fees and expenses and deferred compensation | 10 | 14 | 6 | — | ||||||||||||||||
Accrued distribution and/or service fees | — | — | — | 2 | ||||||||||||||||
Accrued interest | — | 96,840 | — | — | ||||||||||||||||
Accrued other | 5,634 | 20,131 | 10,811 | 69 | ||||||||||||||||
Forward foreign currency contracts depreciation | 6,216,150 | 3,379,361 | — | — | ||||||||||||||||
Outstanding options written, at value (premiums received $196,345) | — | 25,580 | — | — | ||||||||||||||||
Swap contracts, at value | — | 1,603,509 | — | — | ||||||||||||||||
Total Liabilities | 6,863,294 | 20,465,476 | 95,509 | 948 | ||||||||||||||||
NET ASSETS | $131,023,115 | $198,359,795 | $84,402,245 | $1,998,032 | ||||||||||||||||
NET ASSETS CONSIST OF: | ||||||||||||||||||||
Paid-in capital | $139,266,972 | $200,517,872 | $119,134,220 | $1,998,786 | ||||||||||||||||
Undistributed/accumulated net investment income (loss) | (4,802,949 | ) | (1,487,328 | ) | (186,874 | ) | 723 | |||||||||||||
Accumulated net realized loss | (3,848 | ) | (924,650 | ) | (10,547,565 | ) | (44 | ) | ||||||||||||
Net unrealized appreciation (depreciation) on investments | (3,437,060 | ) | 253,901 | (23,997,536 | ) | (1,433 | ) | |||||||||||||
NET ASSETS | $131,023,115 | $198,359,795 | $84,402,245 | $1,998,032 | ||||||||||||||||
Class A Shares: | ||||||||||||||||||||
Net Assets | $9,985 | |||||||||||||||||||
Shares of beneficial interest outstanding | 1,000 | |||||||||||||||||||
Net Asset Value per share* | $9.99 | |||||||||||||||||||
Sales Charge - Maximum 5.50% | 0.58 | |||||||||||||||||||
Maximum offering price per share | $10.57 | |||||||||||||||||||
Class C Shares: | ||||||||||||||||||||
Net Assets | $9,966 | |||||||||||||||||||
Shares of beneficial interest outstanding | 1,000 | |||||||||||||||||||
Net Asset Value per share* | $9.97 | |||||||||||||||||||
Advisor Class: | ||||||||||||||||||||
Net Assets | $1,978,081 | |||||||||||||||||||
Shares of beneficial interest outstanding | 198,000 | |||||||||||||||||||
Net Asset Value per share | $9.99 | |||||||||||||||||||
Class P Shares: | ||||||||||||||||||||
Net Assets | $131,023,115 | $198,359,795 | $84,402,245 | |||||||||||||||||
Shares of beneficial interest outstanding | 13,920,582 | 20,470,213 | 14,759,284 | |||||||||||||||||
Net Asset Value per share | $9.41 | $9.69 | $5.72 |
* | Redemption price per share is equal to the Net Asset Value per share less any applicable contingent deferred sales charge. |
(1) | Includes cash collateral segregated for certain derivatives (see Notes to Schedule of Investments) in the PL Currency Strategies and PL Global Absolute Return Funds of $120,000 and $168,894, respectively. |
(2) | The cost of foreign currency for the PL Currency Strategies, PL Global Absolute Return and PL Precious Metals Funds was $6,758, $4,254,995 and $217,015, respectively. |
(3) | The PL Currency Strategies and PL Global Absolute Return Funds received cash collateral to mitigate risk of loss to certain counterparties, which will be repaid based on master netting arrangements between the Funds and the counterparties. The Funds invest such cash collateral in investment securities (See Note 5 in Notes to Financial Statements). |
See Notes to Financial Statements
C-4
PACIFIC LIFE FUNDS
FOR THE YEAR ENDED MARCH 31, 2014
PL Floating Rate Loan Fund | PL Inflation Managed Fund | PL Managed Fund | PL Short Duration Bond Fund | PL Emerging Markets Debt Fund | PL Comstock Fund | |||||||||||||||||||||||
INVESTMENT INCOME | ||||||||||||||||||||||||||||
Dividends, net of foreign taxes withheld | $932 | $94 | $3,155 | $1,061 | $— | $6,909,752 | ||||||||||||||||||||||
Interest, net of foreign taxes withheld | 5,330,170 | 2,345,450 | 9,957,484 | 3,621,929 | 6,037,162 | — | ||||||||||||||||||||||
Other | 26,243 | — | — | — | — | — | ||||||||||||||||||||||
Total Investment Income | 5,357,345 | 2,345,544 | 9,960,639 | 3,622,990 | 6,037,162 | 6,909,752 | ||||||||||||||||||||||
EXPENSES | ||||||||||||||||||||||||||||
Advisory fees | 887,303 | 676,019 | 2,335,443 | 922,828 | 839,437 | 2,145,177 | ||||||||||||||||||||||
Administration fees | 177,460 | 253,507 | 875,791 | 346,060 | 160,402 | 429,036 | ||||||||||||||||||||||
Support services expenses | 20,017 | 29,114 | 102,646 | 40,970 | 16,425 | 48,613 | ||||||||||||||||||||||
Custodian fees and expenses | 21,023 | 14,474 | 34,547 | 8,161 | 63,637 | 9,858 | ||||||||||||||||||||||
Shareholder report expenses | 7,680 | 11,749 | 38,322 | 15,024 | 6,000 | 18,134 | ||||||||||||||||||||||
Transfer agency out-of-pocket expenses | 13,366 | 19,328 | 68,068 | 27,097 | 11,212 | 32,487 | ||||||||||||||||||||||
Registration fees | 2,722 | 4,303 | 13,550 | 5,287 | 2,539 | 6,820 | ||||||||||||||||||||||
Legal, audit and tax service fees | 16,232 | 23,446 | 80,294 | 31,673 | 15,581 | 40,160 | ||||||||||||||||||||||
Trustees’ fees and expenses | 4,039 | 5,787 | 20,526 | 8,214 | 3,206 | 9,871 | ||||||||||||||||||||||
Interest expense | — | 12,423 | 4,040 | — | — | — | ||||||||||||||||||||||
Other | 60,832 | 39,223 | 116,704 | 77,837 | 17,990 | 22,251 | ||||||||||||||||||||||
Total Expenses | 1,210,674 | 1,089,373 | 3,689,931 | 1,483,151 | 1,136,429 | 2,762,407 | ||||||||||||||||||||||
Advisory Fee Waiver (1) | (118,307 | ) | — | — | — | — | (42,904 | ) | ||||||||||||||||||||
Adviser Expense Reimbursement (2) | (145,911 | ) | (147,422 | ) | (474,658 | ) | (214,263 | ) | (136,611 | ) | (188,193 | ) | ||||||||||||||||
Net Expenses | 946,456 | 941,951 | 3,215,273 | 1,268,888 | 999,818 | 2,531,310 | ||||||||||||||||||||||
NET INVESTMENT INCOME | 4,410,889 | 1,403,593 | 6,745,366 | 2,354,102 | 5,037,344 | 4,378,442 | ||||||||||||||||||||||
NET REALIZED AND UNREALIZED GAIN (LOSS) | ||||||||||||||||||||||||||||
Net Realized Gain (Loss) On: | ||||||||||||||||||||||||||||
Investment security transactions | 1,130,734 | (946,046 | ) | 392,907 | 75,457 | (3,698,865 | ) | 13,313,198 | ||||||||||||||||||||
Closed short positions | — | 2,102 | (19,562 | ) | — | 1,000 | — | |||||||||||||||||||||
Futures contracts and swap transactions | — | (424,119 | ) | 1,104,861 | (168,360 | ) | (60,749 | ) | — | |||||||||||||||||||
Written option transactions | — | 405,436 | 1,038,941 | — | — | — | ||||||||||||||||||||||
Foreign currency transactions | — | (749,755 | ) | (1,972,670 | ) | (29,695 | ) | (963,961 | ) | (1,797,647 | ) | |||||||||||||||||
Net Realized Gain (Loss) | 1,130,734 | (1,712,382 | ) | 544,477 | (122,598 | ) | (4,722,575 | ) | 11,515,551 | |||||||||||||||||||
Change In Net Unrealized Appreciation (Depreciation) On: | ||||||||||||||||||||||||||||
Investment securities | (1,632,529 | ) | (10,665,501 | ) | (12,864,973 | ) | (919,179 | ) | (3,206,576 | ) | 44,052,240 | |||||||||||||||||
Futures contracts and swaps | — | (887,559 | ) | (1,390,742 | ) | 19,196 | (123,803 | ) | — | |||||||||||||||||||
Written options | — | (2,402 | ) | 75,043 | — | — | — | |||||||||||||||||||||
Foreign currencies | — | (110,810 | ) | (230,545 | ) | 6,689 | 166,549 | (102,525 | ) | |||||||||||||||||||
Change in Net Unrealized Appreciation (Depreciation) | (1,632,529 | ) | (11,666,272 | ) | (14,411,217 | ) | (893,294 | ) | (3,163,830 | ) | 43,949,715 | |||||||||||||||||
NET GAIN (LOSS) | (501,795 | ) | (13,378,654 | ) | (13,866,740 | ) | (1,015,892 | ) | (7,886,405 | ) | 55,465,266 | |||||||||||||||||
NET INCREASE (DECREASE) IN NET ASSETS | $3,909,094 | ($11,975,061 | ) | ($7,121,374 | ) | $1,338,210 | ($2,849,061 | ) | $59,843,708 | |||||||||||||||||||
Foreign taxes withheld on dividends and interest | $— | $6,411 | $— | $— | $56,438 | $173,958 |
(1) | See Note 6 in Notes to Financial Statements. |
(2) | See Note 7B in Notes to Financial Statements. |
See Notes to Financial Statements
C-5
PACIFIC LIFE FUNDS
STATEMENTS OF OPERATIONS (Continued)
FOR THE YEAR ENDED MARCH 31, 2014
PL Growth Fund | PL Large-Cap Fund | PL Large-Cap Fund | PL Main Street Fund | PL Mid-Cap Fund | PL Mid-Cap Growth Fund | |||||||||||||||||||||||
INVESTMENT INCOME | ||||||||||||||||||||||||||||
Dividends, net of foreign taxes withheld | $667,375 | $1,241,413 | $11,014,574 | $3,749,582 | $1,792,618 | $565,738 | ||||||||||||||||||||||
Interest, net of foreign taxes withheld | 1,603 | — | — | — | — | — | ||||||||||||||||||||||
Total Investment Income | 668,978 | 1,241,413 | 11,014,574 | 3,749,582 | 1,792,618 | 565,738 | ||||||||||||||||||||||
EXPENSES | ||||||||||||||||||||||||||||
Advisory fees | 407,744 | 1,203,745 | 2,283,883 | 1,060,763 | 1,006,822 | 534,526 | ||||||||||||||||||||||
Administration fees | 111,203 | 240,749 | 527,050 | 353,588 | 232,344 | 114,541 | ||||||||||||||||||||||
Support services expenses | 9,593 | 26,129 | 59,514 | 39,427 | 25,850 | 11,852 | ||||||||||||||||||||||
Custodian fees and expenses | 8,679 | 1,397 | 10,363 | 12,767 | 1,341 | 10,228 | ||||||||||||||||||||||
Shareholder report expenses | 7,095 | 13,646 | 22,263 | 15,011 | 10,095 | 5,448 | ||||||||||||||||||||||
Transfer agency out-of-pocket expenses | 6,835 | 17,600 | 39,802 | 26,427 | 17,325 | 8,075 | ||||||||||||||||||||||
Registration fees | 2,204 | 3,900 | 8,407 | 5,756 | 3,806 | 2,031 | ||||||||||||||||||||||
Legal, audit and tax service fees | 10,819 | 22,297 | 49,075 | 32,665 | 21,626 | 10,811 | ||||||||||||||||||||||
Trustees’ fees and expenses | 2,043 | 5,312 | 12,024 | 7,918 | 5,252 | 2,431 | ||||||||||||||||||||||
Other | 18,849 | 18,464 | 24,550 | 19,005 | 15,742 | 9,366 | ||||||||||||||||||||||
Total Expenses | 585,064 | 1,553,239 | 3,036,931 | 1,573,327 | 1,340,203 | 709,309 | ||||||||||||||||||||||
Advisory Fee Waiver (1) | — | (99,096 | ) | — | — | — | (17,933 | ) | ||||||||||||||||||||
Adviser Expense Reimbursement (2) | (66,117 | ) | (108,743 | ) | (225,998 | ) | (158,976 | ) | (101,037 | ) | (60,241 | ) | ||||||||||||||||
Net Expenses | 518,947 | 1,345,400 | 2,810,933 | 1,414,351 | 1,239,166 | 631,135 | ||||||||||||||||||||||
NET INVESTMENT INCOME (LOSS) | 150,031 | (103,987 | ) | 8,203,641 | 2,335,231 | 553,452 | (65,397 | ) | ||||||||||||||||||||
NET REALIZED AND UNREALIZED GAIN (LOSS) | ||||||||||||||||||||||||||||
Net Realized Gain (Loss) On: | ||||||||||||||||||||||||||||
Investment security transactions | 8,264,020 | 24,258,044 | 15,302,827 | 32,442,649 | 16,313,197 | 22,654,365 | ||||||||||||||||||||||
Futures contracts | — | 57,756 | — | — | — | — | ||||||||||||||||||||||
Written option transactions | — | — | — | — | — | (127,439 | ) | |||||||||||||||||||||
Foreign currency transactions | (17,080 | ) | (87,773 | ) | (1,742 | ) | 2,838 | — | (26,092 | ) | ||||||||||||||||||
Net Realized Gain | 8,246,940 | 24,228,027 | 15,301,085 | 32,445,487 | 16,313,197 | 22,500,834 | ||||||||||||||||||||||
Change In Net Unrealized Appreciation (Depreciation) On: | ||||||||||||||||||||||||||||
Investment securities | 7,357,919 | 9,200,921 | 44,822,644 | 13,568,907 | 19,772,101 | (7,218,010 | ) | |||||||||||||||||||||
Futures contracts | — | (35,842 | ) | — | — | — | — | |||||||||||||||||||||
Written options | — | — | — | — | — | 5,109 | ||||||||||||||||||||||
Foreign currencies | 9,758 | 28,791 | — | 534 | — | 547 | ||||||||||||||||||||||
Change in Net Unrealized Appreciation (Depreciation) | 7,367,677 | 9,193,870 | 44,822,644 | 13,569,441 | 19,772,101 | (7,212,354 | ) | |||||||||||||||||||||
NET GAIN | 15,614,617 | 33,421,897 | 60,123,729 | 46,014,928 | 36,085,298 | 15,288,480 | ||||||||||||||||||||||
NET INCREASE IN NET ASSETS | $15,764,648 | $33,317,910 | $68,327,370 | $48,350,159 | $36,638,750 | $15,223,083 | ||||||||||||||||||||||
Foreign taxes withheld on dividends and interest | $5,075 | $3,334 | $184,503 | $49,838 | $5,541 | $13,514 |
(1) | See Note 6 in Notes to Financial Statements. |
(2) | See Note 7B in Notes to Financial Statements. |
See Notes to Financial Statements
C-6
PACIFIC LIFE FUNDS
STATEMENTS OF OPERATIONS (Continued)
FOR THE YEAR ENDED MARCH 31, 2014
PL Small-Cap Fund | PL Small-Cap Fund | PL Real Estate Fund | PL Emerging Fund | PL International Fund | PL International Fund | |||||||||||||||||||||||
INVESTMENT INCOME | ||||||||||||||||||||||||||||
Dividends, net of foreign taxes withheld | $266,392 | $3,286,089 | $1,649,448 | $2,037,923 | $4,971,453 | $7,870,252 | ||||||||||||||||||||||
Interest, net of foreign taxes withheld | — | — | — | — | 3,282 | 47 | ||||||||||||||||||||||
Total Investment Income | 266,392 | $3,286,089 | 1,649,448 | 2,037,923 | 4,974,735 | 7,870,299 | ||||||||||||||||||||||
EXPENSES | ||||||||||||||||||||||||||||
Advisory fees | 338,542 | 1,017,016 | 577,409 | 1,056,584 | 1,897,924 | 1,090,745 | ||||||||||||||||||||||
Administration fees | 84,635 | 203,403 | 96,235 | 198,109 | 334,928 | 251,710 | ||||||||||||||||||||||
Support services expenses | 9,204 | 22,892 | 10,598 | 21,092 | 36,933 | 27,630 | ||||||||||||||||||||||
Custodian fees and expenses | 2,411 | 7,950 | 1,950 | 308,205 | 69,040 | 60,621 | ||||||||||||||||||||||
Shareholder report expenses | 3,341 | 8,511 | 3,918 | 7,887 | 14,003 | 10,355 | ||||||||||||||||||||||
Transfer agency out-of-pocket expenses | 6,210 | 15,385 | 7,059 | 14,337 | 24,757 | 18,574 | ||||||||||||||||||||||
Registration fees | 1,395 | 3,180 | 1,501 | 3,264 | 5,476 | 4,200 | ||||||||||||||||||||||
Legal, audit and tax service fees | 7,848 | 19,065 | 8,497 | 18,798 | 31,233 | 23,517 | ||||||||||||||||||||||
Trustees’ fees and expenses | 1,860 | 4,654 | 2,110 | 4,304 | 7,468 | 5,609 | ||||||||||||||||||||||
Other | 13,359 | 17,505 | 7,253 | 47,188 | 36,898 | 30,134 | ||||||||||||||||||||||
Total Expenses | 468,805 | 1,319,561 | 716,530 | 1,679,768 | 2,458,660 | 1,523,095 | ||||||||||||||||||||||
Adviser Expense Reimbursement (1) | (45,628 | ) | (99,142 | ) | (42,886 | ) | (425,076 | ) | (225,808 | ) | (180,640 | ) | ||||||||||||||||
Net Expenses | 423,177 | 1,220,419 | 673,644 | 1,254,692 | 2,232,852 | 1,342,455 | ||||||||||||||||||||||
NET INVESTMENT INCOME (LOSS) | (156,785 | ) | 2,065,670 | 975,804 | 783,231 | 2,741,883 | 6,527,844 | |||||||||||||||||||||
NET REALIZED AND UNREALIZED GAIN (LOSS) | ||||||||||||||||||||||||||||
Net Realized Gain (Loss) On: | ||||||||||||||||||||||||||||
Investment security transactions | 7,918,947 | 13,054,651 | 1,621,422 | 4,580,018 | 3,571,373 | 9,554,644 | ||||||||||||||||||||||
Futures contracts | — | — | — | — | — | 182,247 | ||||||||||||||||||||||
Foreign currency transactions | — | (5,742 | ) | — | (75,706 | ) | (14,704 | ) | (1,008,768 | ) | ||||||||||||||||||
Net Realized Gain | 7,918,947 | 13,048,909 | 1,621,422 | 4,504,312 | 3,556,669 | 8,728,123 | ||||||||||||||||||||||
Change In Net Unrealized Appreciation (Depreciation) On: | ||||||||||||||||||||||||||||
Investment securities (2) | 2,291,721 | 7,490,499 | 1,468,596 | 3,462,989 | 21,532,092 | 9,056,128 | ||||||||||||||||||||||
Foreign currencies | — | (110 | ) | — | 24,400 | 16,110 | 241,652 | |||||||||||||||||||||
Change in Net Unrealized Appreciation | 2,291,721 | 7,490,389 | 1,468,596 | 3,487,389 | 21,548,202 | 9,297,780 | ||||||||||||||||||||||
NET GAIN | 10,210,668 | 20,539,298 | 3,090,018 | 7,991,701 | 25,104,871 | 18,025,903 | ||||||||||||||||||||||
NET INCREASE IN NET ASSETS | $10,053,883 | $22,604,968 | $4,065,822 | $8,774,932 | $27,846,754 | $24,553,747 | ||||||||||||||||||||||
Foreign taxes withheld on dividends and interest | $240 | $20,304 | $2,421 | $160,358 | $561,790 | $669,112 |
(1) | See Note 7B in Notes to Financial Statements. |
(2) | Change in net unrealized appreciation (depreciation) on investment securities for the PL Emerging Markets Fund was net of increase in deferred foreign capital gains tax of $25,575. |
See Notes to Financial Statements
C-7
PACIFIC LIFE FUNDS
STATEMENTS OF OPERATIONS (Continued)
FOR THE YEAR OR PERIOD ENDED MARCH 31, 2014
PL Currency Strategies Fund | PL Global Absolute Fund | PL Precious Fund | PL Diversified Alternatives Fund (1) | |||||||||||||||||
INVESTMENT INCOME | ||||||||||||||||||||
Dividends, net of foreign taxes withheld | $3,117 | $— | $897,389 | $2,538 | ||||||||||||||||
Interest, net of foreign taxes withheld | 219,607 | 8,889,301 | 64 | — | ||||||||||||||||
Total Investment Income | 222,724 | 8,889,301 | 897,453 | 2,538 | ||||||||||||||||
EXPENSES | ||||||||||||||||||||
Advisory fees | 845,236 | 1,473,709 | 571,793 | 1,000 | ||||||||||||||||
Administration fees | 195,054 | 276,321 | 114,359 | 750 | ||||||||||||||||
Support services expenses | 22,067 | 30,562 | 11,331 | 47 | ||||||||||||||||
Custodian fees and expenses | 12,748 | 253,225 | 17,887 | — | ||||||||||||||||
Shareholder report expenses | 7,876 | 11,257 | 4,118 | 28 | ||||||||||||||||
Distribution and/or service fees | ||||||||||||||||||||
Class A | — | — | — | 6 | ||||||||||||||||
Class C | — | — | — | 25 | ||||||||||||||||
Transfer agency out-of-pocket expenses | 15,123 | 20,977 | 7,827 | 52 | ||||||||||||||||
Registration fees | 2,871 | 4,046 | 1,592 | 38 | ||||||||||||||||
Legal, audit and tax service fees | 18,658 | 25,747 | 10,166 | 182 | ||||||||||||||||
Trustees’ fees and expenses | 4,307 | 5,957 | 2,211 | 15 | ||||||||||||||||
Offering expenses | 25,228 | 33,076 | 6,628 | 13,401 | ||||||||||||||||
Interest expense | — | 336,378 | — | — | ||||||||||||||||
Other | 6,128 | 26,636 | 10,094 | 20 | ||||||||||||||||
Total Expenses | 1,155,296 | 2,497,891 | 758,006 | 15,564 | ||||||||||||||||
Advisory Fee Waiver (2) | — | — | (53,367 | ) | — | |||||||||||||||
Adviser Expense Reimbursement (3) | (49,987 | ) | (319,375 | ) | (33,735 | ) | (12,535 | ) | ||||||||||||
Net Expenses | 1,105,309 | 2,178,516 | 670,904 | 3,029 | ||||||||||||||||
NET INVESTMENT INCOME (LOSS) | (882,585 | ) | 6,710,785 | 226,549 | (491 | ) | ||||||||||||||
NET REALIZED AND UNREALIZED GAIN (LOSS) | ||||||||||||||||||||
Net Realized Gain (Loss) On: | ||||||||||||||||||||
Investment security transactions | (3,848 | ) | (177,427 | ) | (10,440,682 | ) | (44 | ) | ||||||||||||
Closed short positions | — | (13,657 | ) | — | — | |||||||||||||||
Futures contracts and swap transactions | — | (3,724,981 | ) | — | — | |||||||||||||||
Foreign currency transactions | (5,193,328 | ) | (6,819,045 | ) | (18,291 | ) | — | |||||||||||||
Net Realized Loss | (5,197,176 | ) | (10,735,110 | ) | (10,458,973 | ) | (44 | ) | ||||||||||||
Change In Net Unrealized Appreciation (Depreciation) On: | ||||||||||||||||||||
Investment securities | 1,877,011 | 1,013,457 | (11,762,709 | ) | (1,433 | ) | ||||||||||||||
Short positions | — | (529,078 | ) | — | — | |||||||||||||||
Futures contracts and swaps | — | 1,796,931 | — | — | ||||||||||||||||
Written options | — | 170,765 | — | — | ||||||||||||||||
Foreign currencies | (3,984,096 | ) | (3,316,130 | ) | (185 | ) | — | |||||||||||||
Change in Net Unrealized Depreciation | (2,107,085 | ) | (864,055 | ) | (11,762,894 | ) | (1,433 | ) | ||||||||||||
NET LOSS | (7,304,261 | ) | (11,599,165 | ) | (22,221,867 | ) | (1,477 | ) | ||||||||||||
NET DECREASE IN NET ASSETS | ($8,186,846 | ) | ($4,888,380 | ) | ($21,995,318 | ) | ($1,968 | ) | ||||||||||||
Foreign taxes withheld on dividends and interest | $4,960 | $81,274 | $127,346 | $— |
(1) | Operations commenced on December 31, 2013. |
(2) | See Note 6 in Notes to Financial Statements. |
(3) | See Note 7B in Notes to Financial Statements. |
See Notes to Financial Statements
C-8
PACIFIC LIFE FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 2014 | Year Ended March 31, 2013 | Year Ended March 31, 2014 | Year/Period Ended March 31, 2013 | Year Ended March 31, 2014 | Year Ended March 31, 2013 | |||||||||||||||||||||||||||
PL Floating Rate Loan Fund | PL Inflation Managed Fund | PL Managed Bond Fund | ||||||||||||||||||||||||||||||
OPERATIONS | ||||||||||||||||||||||||||||||||
Net investment income | $4,410,889 | $4,673,447 | $1,403,593 | $3,945,781 | $6,745,366 | $9,497,588 | ||||||||||||||||||||||||||
Net realized gain (loss) | 1,130,734 | 844,658 | (1,712,382 | ) | 14,093,538 | 544,477 | 15,381,646 | |||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | (1,632,529 | ) | 745,495 | (11,666,272 | ) | (1,318,475 | ) | (14,411,217 | ) | 10,869,646 | ||||||||||||||||||||||
Net Increase (Decrease) in Net Assets | 3,909,094 | 6,263,600 | (11,975,061 | ) | 16,720,844 | (7,121,374 | ) | 35,748,880 | ||||||||||||||||||||||||
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS | ||||||||||||||||||||||||||||||||
Net investment income - Class P | (4,512,660 | ) | (4,684,073 | ) | (755,842 | ) | (6,518,650 | ) | (8,368,504 | ) | (16,389,453 | ) | ||||||||||||||||||||
Net realized gains - Class P | (1,669,705 | ) | (282,067 | ) | (2,707,398 | ) | (16,271,162 | ) | (2,998,837 | ) | (7,038,055 | ) | ||||||||||||||||||||
Net Decrease from Dividends and | (6,182,365 | ) | (4,966,140 | ) | (3,463,240 | ) | (22,789,812 | ) | (11,367,341 | ) | (23,427,508 | ) | ||||||||||||||||||||
CAPITAL SHARE TRANSACTIONS | ||||||||||||||||||||||||||||||||
Proceeds from sale of shares - Class P | 17,705,946 | 19,616,078 | 46,018,666 | 52,603,023 | 63,781,929 | 129,140,864 | ||||||||||||||||||||||||||
Dividends and distribution reinvestments - Class P | 6,182,365 | 4,966,140 | 3,463,240 | 22,789,812 | 11,367,341 | 23,427,508 | ||||||||||||||||||||||||||
Cost of shares repurchased - Class P | (8,703,442 | ) | (27,763,381 | ) | (12,560,393 | ) | (192,998,689 | ) | (42,192,868 | ) | (85,819,252 | ) | ||||||||||||||||||||
Net Increase (Decrease) in Net Assets from | 15,184,869 | (3,181,163 | ) | 36,921,513 | (117,605,854 | ) | 32,956,402 | 66,749,120 | ||||||||||||||||||||||||
NET INCREASE (DECREASE) IN NET ASSETS | 12,911,598 | (1,883,703 | ) | 21,483,212 | (123,674,822 | ) | 14,467,687 | 79,070,492 | ||||||||||||||||||||||||
NET ASSETS | ||||||||||||||||||||||||||||||||
Beginning of Year | 110,204,333 | 112,088,036 | 164,281,306 | 287,956,128 | 565,285,265 | 486,214,773 | ||||||||||||||||||||||||||
End of Year | $123,115,931 | $110,204,333 | $185,764,518 | $164,281,306 | $579,752,952 | $565,285,265 | ||||||||||||||||||||||||||
Undistributed/Accumulated Net Investment Income (Loss) | $1,074,359 | $1,187,713 | ($966,992 | ) | ($1,022,547 | ) | $659,846 | $2,331,238 | ||||||||||||||||||||||||
PL Short Duration Bond Fund | PL Emerging Markets Debt Fund (1) | PL Comstock Fund | ||||||||||||||||||||||||||||||
OPERATIONS | ||||||||||||||||||||||||||||||||
Net investment income | $2,354,102 | $2,230,746 | $5,037,344 | $2,930,648 | $4,378,442 | $3,652,061 | ||||||||||||||||||||||||||
Net realized gain (loss) | (122,598 | ) | 546,811 | (4,722,575 | ) | 1,366,807 | 11,515,551 | 6,029,582 | ||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | (893,294 | ) | 1,051,807 | (3,163,830 | ) | 2,251,150 | 43,949,715 | 31,546,960 | ||||||||||||||||||||||||
Net Increase (Decrease) in Net Assets | 1,338,210 | 3,829,364 | (2,849,061 | ) | 6,548,605 | 59,843,708 | 41,228,603 | |||||||||||||||||||||||||
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS | ||||||||||||||||||||||||||||||||
Net investment income - Class P | (3,024,235 | ) | (2,806,146 | ) | (3,887,073 | ) | (2,042,727 | ) | (2,637,092 | ) | (2,925,820 | ) | ||||||||||||||||||||
Net realized gains - Class P | — | (46,248 | ) | (1,122,666 | ) | (197,732 | ) | — | — | |||||||||||||||||||||||
Net Decrease from Dividends and | (3,024,235 | ) | (2,852,394 | ) | (5,009,739 | ) | (2,240,459 | ) | (2,637,092 | ) | (2,925,820 | ) | ||||||||||||||||||||
CAPITAL SHARE TRANSACTIONS | ||||||||||||||||||||||||||||||||
Proceeds from sale of shares - Class P | 24,100,375 | 96,093,274 | 55,566,570 | 90,381,544 | — | 61,091,927 | ||||||||||||||||||||||||||
Dividends and distribution reinvestments - Class P | 3,024,235 | 2,852,394 | 5,009,739 | 2,240,459 | 2,637,092 | 2,925,820 | ||||||||||||||||||||||||||
Cost of shares repurchased - Class P | (19,850,587 | ) | (31,689,788 | ) | (8,047,397 | ) | (11,084,312 | ) | (12,917,286 | ) | (47,978,778 | ) | ||||||||||||||||||||
Net Increase (Decrease) in Net Assets from | 7,274,023 | 67,255,880 | 52,528,912 | 81,537,691 | (10,280,194 | ) | 16,038,969 | |||||||||||||||||||||||||
NET INCREASE IN NET ASSETS | 5,587,998 | 68,232,850 | 44,670,112 | 85,845,837 | 46,926,422 | 54,341,752 | ||||||||||||||||||||||||||
NET ASSETS | ||||||||||||||||||||||||||||||||
Beginning of Year or Period | 223,600,698 | 155,367,848 | 85,845,837 | — | 261,671,386 | 207,329,634 | ||||||||||||||||||||||||||
End of Year or Period | $229,188,696 | $223,600,698 | $130,515,949 | $85,845,837 | $308,597,808 | $261,671,386 | ||||||||||||||||||||||||||
Undistributed Net Investment Income | $649,544 | $634,635 | $999,908 | $944,026 | $1,535,528 | $1,591,825 |
(1) | Operations commenced on June 29, 2012. |
See Notes to Financial Statements
C-9
PACIFIC LIFE FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
Year Ended March 31, 2014 | Year Ended March 31, 2013 | Year Ended March 31, 2014 | Year Ended March 31, 2013 | Year Ended March 31, 2014 | Year Ended March 31, 2013 | |||||||||||||||||||||||||||
PL Growth Fund | PL Large-Cap Growth Fund | PL Large-Cap Value Fund | ||||||||||||||||||||||||||||||
OPERATIONS | ||||||||||||||||||||||||||||||||
Net investment income (loss) | $150,031 | $368,112 | ($103,987 | ) | $397,964 | $8,203,641 | $5,418,754 | |||||||||||||||||||||||||
Net realized gain | 8,246,940 | 12,373,601 | 24,228,027 | 24,700,102 | 15,301,085 | 5,134,314 | ||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | 7,367,677 | (13,358,157 | ) | 9,193,870 | (14,847,702 | ) | 44,822,644 | 35,708,225 | ||||||||||||||||||||||||
Net Increase (Decrease) in Net Assets | 15,764,648 | (616,444 | ) | 33,317,910 | 10,250,364 | 68,327,370 | 46,261,293 | |||||||||||||||||||||||||
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS | ||||||||||||||||||||||||||||||||
Net investment income - Class P | (573,668 | ) | (549,887 | ) | (299,083 | ) | — | (5,289,219 | ) | (5,290,356 | ) | |||||||||||||||||||||
Net realized gains - Class P | — | — | (33,866,205 | ) | (7,584,966 | ) | — | — | ||||||||||||||||||||||||
Net Decrease from Dividends and | (573,668 | ) | (549,887 | ) | (34,165,288 | ) | (7,584,966 | ) | (5,289,219 | ) | (5,290,356 | ) | ||||||||||||||||||||
CAPITAL SHARE TRANSACTIONS | ||||||||||||||||||||||||||||||||
Proceeds from sale of shares - Class P | 39,665,244 | 14,624,438 | 1,187,092 | 24,025,886 | — | 76,584,620 | ||||||||||||||||||||||||||
Dividends and distribution reinvestments - Class P | 573,668 | 549,887 | 34,165,288 | 7,584,966 | 5,289,219 | 5,290,356 | ||||||||||||||||||||||||||
Cost of shares repurchased - Class P | (2,756,202 | ) | (73,736,695 | ) | (4,289,678 | ) | (21,100,445 | ) | (12,039,570 | ) | (61,678,368 | ) | ||||||||||||||||||||
Net Increase (Decrease) in Net Assets from | 37,482,710 | (58,562,370 | ) | 31,062,702 | 10,510,407 | (6,750,351 | ) | 20,196,608 | ||||||||||||||||||||||||
NET INCREASE (DECREASE) IN NET ASSETS | 52,673,690 | (59,728,701 | ) | 30,215,324 | 13,175,805 | 56,287,800 | 61,167,545 | |||||||||||||||||||||||||
NET ASSETS | ||||||||||||||||||||||||||||||||
Beginning of Year | 48,610,957 | 108,339,658 | 142,398,012 | 129,222,207 | 324,084,610 | 262,917,065 | ||||||||||||||||||||||||||
End of Year | $101,284,647 | $48,610,957 | $172,613,336 | $142,398,012 | $380,372,410 | $324,084,610 | ||||||||||||||||||||||||||
Undistributed/Accumulated Net Investment Income (Loss) | $141,842 | $583,521 | ($35,116 | ) | $291,556 | $4,219,659 | $1,306,979 | |||||||||||||||||||||||||
PL Main Street Core Fund | PL Mid-Cap Equity Fund | PL Mid-Cap Growth Fund | ||||||||||||||||||||||||||||||
OPERATIONS | ||||||||||||||||||||||||||||||||
Net investment income (loss) | $2,335,231 | $2,428,242 | $553,452 | $894,785 | ($65,397 | ) | $369,291 | |||||||||||||||||||||||||
Net realized gain | 32,445,487 | 11,694,036 | 16,313,197 | 16,576,332 | 22,500,834 | 856,767 | ||||||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | 13,569,441 | 5,836,651 | 19,772,101 | (10,408,293 | ) | (7,212,354 | ) | (2,169,682 | ) | |||||||||||||||||||||||
Net Increase (Decrease) in Net Assets | 48,350,159 | 19,958,929 | 36,638,750 | 7,062,824 | 15,223,083 | (943,624 | ) | |||||||||||||||||||||||||
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS | ||||||||||||||||||||||||||||||||
Net investment income - Class P | (2,316,456 | ) | (2,671,391 | ) | (833,404 | ) | (821,347 | ) | (152,439 | ) | (175,658 | ) | ||||||||||||||||||||
Net realized gains - Class P | — | — | (12,097,077 | ) | — | (19,078,154 | ) | (1,858,301 | ) | |||||||||||||||||||||||
Net Decrease from Dividends and | (2,316,456 | ) | (2,671,391 | ) | (12,930,481 | ) | (821,347 | ) | (19,230,593 | ) | (2,033,959 | ) | ||||||||||||||||||||
CAPITAL SHARE TRANSACTIONS | ||||||||||||||||||||||||||||||||
Proceeds from sale of shares - Class P | 1,444,719 | 37,024,387 | — | 20,531,766 | 16,183,178 | 19,652,232 | ||||||||||||||||||||||||||
Dividends and distribution reinvestments - Class P | 2,316,456 | 2,671,391 | 12,930,481 | 821,347 | 19,230,593 | 2,033,959 | ||||||||||||||||||||||||||
Cost of shares repurchased - Class P | (4,648,182 | ) | (38,092,744 | ) | (3,697,469 | ) | (54,347,302 | ) | (2,159,393 | ) | (30,738,180 | ) | ||||||||||||||||||||
Net Increase (Decrease) in Net Assets from | (887,007 | ) | 1,603,034 | 9,233,012 | (32,994,189 | ) | 33,254,378 | (9,051,989 | ) | |||||||||||||||||||||||
NET INCREASE (DECREASE) IN NET ASSETS | 45,146,696 | 18,890,572 | 32,941,281 | (26,752,712 | ) | 29,246,868 | (12,029,572 | ) | ||||||||||||||||||||||||
NET ASSETS | ||||||||||||||||||||||||||||||||
Beginning of Year | 212,428,306 | 193,537,734 | 138,415,617 | 165,168,329 | 61,556,853 | 73,586,425 | ||||||||||||||||||||||||||
End of Year | $257,575,002 | $212,428,306 | $171,356,898 | $138,415,617 | $90,803,721 | $61,556,853 | ||||||||||||||||||||||||||
Undistributed/Accumulated Net Investment Income (Loss) | $530,986 | $510,062 | ($516 | ) | $261,091 | $30,482 | $92,010 |
See Notes to Financial Statements
C-10
PACIFIC LIFE FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
Year Ended March 31, 2014 | Year Ended March 31, 2013 | Year Ended March 31, 2014 | Year Ended March 31, 2013 | Year Ended March 31, 2014 | Year Ended March 31, 2013 | |||||||||||||||||||||||||||
PL Small-Cap Growth Fund | PL Small-Cap Value Fund | PL Real Estate Fund | ||||||||||||||||||||||||||||||
OPERATIONS | ||||||||||||||||||||||||||||||||
Net investment income (loss) | ($156,785 | ) | $91,168 | $2,065,670 | $2,177,458 | $975,804 | $737,699 | |||||||||||||||||||||||||
Net realized gain | 7,918,947 | 3,143,110 | 13,048,909 | 5,575,545 | 1,621,422 | 1,860,532 | ||||||||||||||||||||||||||
Change in net unrealized appreciation | 2,291,721 | 2,601,887 | 7,490,389 | 11,150,447 | 1,468,596 | 2,801,030 | ||||||||||||||||||||||||||
Net Increase in Net Assets | 10,053,883 | 5,836,165 | 22,604,968 | 18,903,450 | 4,065,822 | 5,399,261 | ||||||||||||||||||||||||||
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS | ||||||||||||||||||||||||||||||||
Net investment income - Class P | (98,659 | ) | — | (1,780,478 | ) | (1,785,180 | ) | (1,118,697 | ) | (725,336 | ) | |||||||||||||||||||||
Net realized gains - Class P | (1,357,600 | ) | — | (6,305,462 | ) | — | — | — | ||||||||||||||||||||||||
Net Decrease from Dividends and | (1,456,259 | ) | — | (8,085,940 | ) | (1,785,180 | ) | (1,118,697 | ) | (725,336 | ) | |||||||||||||||||||||
CAPITAL SHARE TRANSACTIONS | ||||||||||||||||||||||||||||||||
Proceeds from sale of shares - Class P | — | 11,986,420 | 1,624,962 | 23,891,241 | 10,629,608 | 4,275,582 | ||||||||||||||||||||||||||
Dividends and distribution reinvestments - Class P | 1,456,259 | — | 8,085,940 | 1,785,180 | 1,118,697 | 725,336 | ||||||||||||||||||||||||||
Cost of shares repurchased - Class P | (1,030,591 | ) | (3,294,395 | ) | (2,174,457 | ) | (3,299,732 | ) | (1,006,216 | ) | (2,215,456 | ) | ||||||||||||||||||||
Net Increase in Net Assets from | 425,668 | 8,692,025 | 7,536,445 | 22,376,689 | 10,742,089 | 2,785,462 | ||||||||||||||||||||||||||
NET INCREASE IN NET ASSETS | 9,023,292 | 14,528,190 | 22,055,473 | 39,494,959 | 13,689,214 | 7,459,387 | ||||||||||||||||||||||||||
NET ASSETS | ||||||||||||||||||||||||||||||||
Beginning of Year | 50,898,041 | 36,369,851 | 125,646,784 | 86,151,825 | 60,138,352 | 52,678,965 | ||||||||||||||||||||||||||
End of Year | $59,921,333 | $50,898,041 | $147,702,257 | $125,646,784 | $73,827,566 | $60,138,352 | ||||||||||||||||||||||||||
Undistributed Net Investment Income | $5,115 | $87,425 | $1,310,047 | $621,521 | $64,702 | $207,595 | ||||||||||||||||||||||||||
PL Emerging Markets Fund | PL International Large-Cap Fund | PL International Value Fund | ||||||||||||||||||||||||||||||
OPERATIONS | ||||||||||||||||||||||||||||||||
Net investment income | $783,231 | $621,434 | $2,741,883 | $3,156,336 | $6,527,844 | $3,177,579 | ||||||||||||||||||||||||||
Net realized gain (loss) | 4,504,312 | 1,620,320 | 3,556,669 | 3,039,669 | 8,728,123 | (1,855,843 | ) | |||||||||||||||||||||||||
Change in net unrealized appreciation | 3,487,389 | 4,867,393 | 21,548,202 | 16,358,283 | 9,297,780 | 13,477,145 | ||||||||||||||||||||||||||
Net Increase in Net Assets | 8,774,932 | 7,109,147 | 27,846,754 | 22,554,288 | 24,553,747 | 14,798,881 | ||||||||||||||||||||||||||
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS | ||||||||||||||||||||||||||||||||
Net investment income - Class P | (903,956 | ) | (667,612 | ) | (2,672,165 | ) | (3,215,843 | ) | (4,102,104 | ) | (3,493,667 | ) | ||||||||||||||||||||
Net realized gains - Class P | (2,799,145 | ) | — | — | — | — | — | |||||||||||||||||||||||||
Net Decrease from Dividends and | (3,703,101 | ) | (667,612 | ) | (2,672,165 | ) | (3,215,843 | ) | (4,102,104 | ) | (3,493,667 | ) | ||||||||||||||||||||
CAPITAL SHARE TRANSACTIONS | ||||||||||||||||||||||||||||||||
Proceeds from sale of shares - Class P | 35,981,890 | 22,556,840 | 19,090,781 | 22,507,884 | 9,339,592 | 47,205,389 | ||||||||||||||||||||||||||
Dividends and distribution reinvestments - Class P | 3,703,101 | 667,612 | 2,672,165 | 3,215,843 | 4,102,104 | 3,493,667 | ||||||||||||||||||||||||||
Cost of shares repurchased - Class P | (2,234,325 | ) | (4,339,098 | ) | (5,378,260 | ) | (50,043,057 | ) | (3,902,120 | ) | (26,573,122 | ) | ||||||||||||||||||||
Net Increase (Decrease) in Net Assets from | 37,450,666 | 18,885,354 | 16,384,686 | (24,319,330 | ) | 9,539,576 | 24,125,934 | |||||||||||||||||||||||||
NET INCREASE (DECREASE) IN NET ASSETS | 42,522,497 | 25,326,889 | 41,559,275 | (4,980,885 | ) | 29,991,219 | 35,431,148 | |||||||||||||||||||||||||
NET ASSETS | ||||||||||||||||||||||||||||||||
Beginning of Year | 110,810,123 | 85,483,234 | 198,962,873 | 203,943,758 | 146,549,652 | 111,118,504 | ||||||||||||||||||||||||||
End of Year | $153,332,620 | $110,810,123 | $240,522,148 | $198,962,873 | $176,540,871 | $146,549,652 | ||||||||||||||||||||||||||
Undistributed/Accumulated Net Investment Income (Loss) | ($538,825 | ) | ($277,253 | ) | $1,259,430 | $1,204,416 | $2,216,343 | $570,294 |
See Notes to Financial Statements
C-11
PACIFIC LIFE FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
Year Ended March 31, 2014 | Period Ended March 31, 2013 | Year Ended March 31, 2014 | Period Ended March 31, 2013 | Year Ended March 31, 2014 | Period Ended March 31, 2013 | |||||||||||||||||||||||||||
PL Currency Strategies Fund (1) | PL Global Absolute Return Fund (1) | PL Precious Metals Fund (1) | ||||||||||||||||||||||||||||||
OPERATIONS | ||||||||||||||||||||||||||||||||
Net investment income (loss) | ($882,585 | ) | ($248,279 | ) | $6,710,785 | $1,146,442 | $226,549 | $61,704 | ||||||||||||||||||||||||
Net realized gain (loss) | (5,197,176 | ) | 5,245,339 | (10,735,110 | ) | 895,245 | (10,458,973 | ) | (111,302 | ) | ||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) | (2,107,085 | ) | (1,329,975 | ) | (864,055 | ) | 1,117,956 | (11,762,894 | ) | (12,234,642 | ) | |||||||||||||||||||||
Net Increase (Decrease) in Net Assets | (8,186,846 | ) | 3,667,085 | (4,888,380 | ) | 3,159,643 | (21,995,318 | ) | (12,284,240 | ) | ||||||||||||||||||||||
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS | ||||||||||||||||||||||||||||||||
Net investment income - Class P | (4,034,980 | ) | — | (3,863,039 | ) | (101,328 | ) | (451,925 | ) | (9,365 | ) | |||||||||||||||||||||
Net realized gains - Class P | — | — | (269,888 | ) | — | — | — | |||||||||||||||||||||||||
Net Decrease from Dividends and | (4,034,980 | ) | — | (4,132,927 | ) | (101,328 | ) | (451,925 | ) | (9,365 | ) | |||||||||||||||||||||
CAPITAL SHARE TRANSACTIONS | ||||||||||||||||||||||||||||||||
Proceeds from sale of shares - Class P | 25,560,571 | 115,338,018 | 40,317,659 | 169,320,302 | 42,913,086 | 78,481,614 | ||||||||||||||||||||||||||
Dividends and distribution reinvestments - Class P | 4,034,980 | — | 4,132,927 | 101,328 | 451,925 | 9,365 | ||||||||||||||||||||||||||
Cost of shares repurchased - Class P | (4,993,288 | ) | (362,425 | ) | (8,994,814 | ) | (554,615 | ) | (2,466,278 | ) | (246,619 | ) | ||||||||||||||||||||
Net Increase in Net Assets from | 24,602,263 | 114,975,593 | 35,455,772 | 168,867,015 | 40,898,733 | 78,244,360 | ||||||||||||||||||||||||||
NET INCREASE IN NET ASSETS | 12,380,437 | 118,642,678 | 26,434,465 | 171,925,330 | 18,451,490 | 65,950,755 | ||||||||||||||||||||||||||
NET ASSETS | ||||||||||||||||||||||||||||||||
Beginning of Year or Period | 118,642,678 | — | 171,925,330 | — | 65,950,755 | — | ||||||||||||||||||||||||||
End of Year or Period | $131,023,115 | $118,642,678 | $198,359,795 | $171,925,330 | $84,402,245 | $65,950,755 | ||||||||||||||||||||||||||
Undistributed/Accumulated Net Investment Income (Loss) | ($4,802,949 | ) | $4,997,060 | ($1,487,328 | ) | $1,744,989 | ($186,874 | ) | $51,396 |
(1) | Operations commenced on December 7, 2012. |
See Notes to Financial Statements
C-12
PACIFIC LIFE FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
Period Ended March 31, 2014 | ||||||||
PL Diversified Alternatives Fund (1) | ||||||||
OPERATIONS | ||||||||
Net investment loss | ($491 | ) | ||||||
Net realized loss | (44 | ) | ||||||
Change in net unrealized depreciation | (1,433 | ) | ||||||
Net Decrease in Net Assets | (1,968 | ) | ||||||
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS | ||||||||
Net Investment Income | ||||||||
Class A | — | |||||||
Class C | — | |||||||
Advisor Class | — | |||||||
Net realized gains | ||||||||
Class A | — | |||||||
Class C | — | |||||||
Advisor Class | — | |||||||
Net Decrease from Dividends and | — | |||||||
CAPITAL SHARE TRANSACTIONS | ||||||||
Proceeds from sale of shares | ||||||||
Class A | 10,000 | |||||||
Class C | 10,000 | |||||||
Advisor Class | 1,980,000 | |||||||
Dividends and distributions reinvestments | ||||||||
Class A | — | |||||||
Class C | — | |||||||
Advisor Class | — | |||||||
Cost of shares repurchased | ||||||||
Class A | — | |||||||
Class C | — | |||||||
Advisor Class | — | |||||||
Net Increase in Net Assets from | 2,000,000 | |||||||
NET INCREASE IN NET ASSETS | 1,998,032 | |||||||
NET ASSETS | ||||||||
Beginning of Period | — | |||||||
End of Period | $1,998,032 | |||||||
Undistributed Net Investment Income | $723 |
(1) | Operations commenced on December 31, 2013. |
See Notes to Financial Statements
C-13
PACIFIC LIFE FUNDS
Selected per share, ratios and supplemental data for each year or period ended March 31, were as follows:
| Selected Per Share Data |
| Ratios to Average Net Assets | Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Operations | Distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year or Period Ended | Net Asset Value, Beginning of Year or Period | Net Investment Income (Loss) (2) | Net Realized and Unrealized Gain (Loss) | Total | Net Investment Income | Capital Gains | Total | Net Asset Value, End of Year or Period | Expenses Before Reductions (3) | Expenses After Reductions (3), (4) | Net Investment Income (Loss) (3) | Total Returns (5) | Net Assets, End of Year or Period (in thousands) | Portfolio Turnover Rates | ||||||||||||||||||||||||||||||||||||||||||
PL Floating Rate Loan Fund |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $10.24 | $0.38 | ($0.04 | ) | $0.34 | ($0.38 | ) | ($0.15 | ) | ($0.53 | ) | $10.05 | 1.02% | 0.80% | 3.73 | % | 3.39 | % | $123,116 | 73 | % | |||||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 10.10 | 0.46 | 0.18 | 0.64 | (0.47 | ) | (0.03 | ) | (0.50 | ) | 10.24 | 1.03% | 0.80% | 4.45% | 6.40 | % | 110,204 | 94 | % | |||||||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 10.12 | 0.43 | (0.06 | ) | 0.37 | (0.39 | ) | — | (0.39 | ) | 10.10 | 1.04% | 0.80% | 4.33% | 3.80 | % | 112,088 | 45 | % | |||||||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 9.88 | 0.34 | 0.19 | 0.53 | (0.29 | ) | — | (0.29 | ) | 10.12 | 1.22% | 0.90% | 4.29% | 5.51 | % | 86,066 | 92 | % | ||||||||||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 8.18 | 0.45 | 1.70 | 2.15 | (0.45 | ) | — | (0.45 | ) | 9.88 | 1.54% | 1.30% | 4.78% | 26.70 | % | 53,122 | 118 | % | ||||||||||||||||||||||||||||||||||||||
PL Inflation Managed Fund |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $9.73 | $0.07 | ($0.78 | ) | ($0.71 | ) | ($0.04 | ) | ($0.14 | ) | ($0.18 | ) | $8.84 | 0.64% | 0.56% | 0.83 | % | (7.40 | %) | $185,765 | 36 | % | ||||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 10.79 | 0.21 | 0.52 | 0.73 | (0.51 | ) | (1.28 | ) | (1.79 | ) | 9.73 | 0.69% | 0.58% | 1.95% | 6.79 | % | 164,281 | 111 | % | |||||||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 10.53 | 0.31 | 0.85 | 1.16 | (0.40 | ) | (0.50 | ) | (0.90 | ) | 10.79 | 0.67% | 0.56% | 2.83% | 11.11 | % | 287,956 | 372 | % | |||||||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 10.10 | 0.24 | 0.61 | 0.85 | (0.21 | ) | (0.21 | ) | (0.42 | ) | 10.53 | 0.82% | 0.64% | 2.31% | 8.56 | % | 229,356 | 323 | % | |||||||||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 9.59 | 0.29 | 0.62 | 0.91 | (0.40 | ) | — | (0.40 | ) | 10.10 | 1.21% | 0.95% | 2.90% | 9.68 | % | 149,453 | 300 | % | ||||||||||||||||||||||||||||||||||||||
PL Managed Bond Fund |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $11.11 | $0.13 | ($0.27 | ) | ($0.14 | ) | ($0.15 | ) | ($0.06 | ) | ($0.21 | ) | $10.76 | 0.63% | 0.55% | 1.16 | % | (1.22 | %) | $579,753 | 530 | % | ||||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 10.86 | 0.20 | 0.55 | 0.75 | (0.35 | ) | (0.15 | ) | (0.50 | ) | 11.11 | 0.66% | 0.56% | 1.75% | 6.85 | % | 565,285 | 495 | % | |||||||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 10.75 | 0.25 | 0.15 | 0.40 | (0.29 | ) | — | (0.29 | ) | 10.86 | 0.67% | 0.55% | 2.33% | 4.02 | % | 486,215 | 519 | % | ||||||||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 10.75 | 0.24 | 0.43 | 0.67 | (0.30 | ) | (0.37 | ) | (0.67 | ) | 10.75 | 0.82% | 0.63% | 2.16% | 6.31 | % | 378,982 | 502 | % | |||||||||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 9.70 | 0.30 | 1.48 | 1.78 | (0.50 | ) | (0.23 | ) | (0.73 | ) | 10.75 | 1.22% | 0.95% | 2.86% | 18.68 | % | 235,957 | 352 | % | |||||||||||||||||||||||||||||||||||||
PL Short Duration Bond Fund |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $10.12 | $0.10 | ($0.04 | ) | $0.06 | ($0.13 | ) | $— | ($0.13 | ) | $10.05 | 0.64% | 0.55% | 1.02% | 0.64 | % | $229,189 | 43 | % | |||||||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 10.07 | 0.11 | 0.08 | 0.19 | (0.14 | ) | (0.00 | )(6) | (0.14 | ) | 10.12 | 0.65% | 0.55% | 1.08% | 1.86 | % | 223,601 | 63 | % | |||||||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 10.04 | 0.11 | 0.05 | 0.16 | (0.12 | ) | (0.01 | ) | (0.13 | ) | 10.07 | 0.68% | 0.55% | 1.14% | 1.62 | % | 155,368 | 150 | % | |||||||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 10.00 | 0.10 | 0.06 | 0.16 | (0.08 | ) | (0.04 | ) | (0.12 | ) | 10.04 | 0.81% | 0.64% | 1.00% | 1.57 | % | 121,133 | 196 | % | |||||||||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 9.69 | 0.18 | 0.33 | 0.51 | (0.20 | ) | — | (0.20 | ) | 10.00 | 1.22% | 0.95% | 1.84% | 5.27 | % | 75,674 | 167 | % | ||||||||||||||||||||||||||||||||||||||
PL Emerging Markets Debt Fund |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $10.53 | $0.47 | ($0.90 | ) | ($0.43 | ) | ($0.32 | ) | ($0.09 | ) | ($0.41 | ) | $9.69 | 1.06% | 0.94% | 4.71% | (3.92%) | $130,516 | 116 | % | ||||||||||||||||||||||||||||||||||||
6/29/2012 - 3/31/2013 | 10.00 | 0.37 | 0.46 | 0.83 | (0.27 | ) | (0.03 | ) | (0.30 | ) | 10.53 | 1.17% | 0.94% | 4.67% | 8.24 | % | 85,846 | 61 | % | |||||||||||||||||||||||||||||||||||||
PL Comstock Fund |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $14.40 | $0.25 | $3.11 | $3.36 | ($0.15 | ) | $— | ($0.15 | ) | $17.61 | 0.97% | 0.89% | 1.53 | % | 23.36 | % | $308,598 | 14 | % | |||||||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 12.47 | 0.19 | 1.91 | 2.10 | (0.17 | ) | — | (0.17 | ) | 14.40 | 0.97% | 0.89% | 1.51% | 16.96 | % | 261,671 | 35 | % | ||||||||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 12.13 | 0.17 | 0.32 | 0.49 | (0.15 | ) | — | (0.15 | ) | 12.47 | 0.99% | 0.89% | 1.47% | 4.22 | % | 207,330 | 24 | % | ||||||||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 10.69 | 0.13 | 1.41 | 1.54 | (0.10 | ) | — | (0.10 | ) | 12.13 | 1.13% | 0.99% | 1.16% | 14.55 | % | 166,465 | 31 | % | ||||||||||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 6.95 | 0.09 | 3.74 | 3.83 | (0.09 | ) | — | (0.09 | ) | 10.69 | 1.51% | 1.30% | 0.93% | 55.34 | % | 128,169 | 28 | % | ||||||||||||||||||||||||||||||||||||||
PL Growth Fund |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $13.93 | $0.03 | $3.47 | $3.50 | ($0.10 | ) | $— | ($0.10 | ) | $17.33 | 0.79% | 0.70% | 0.20 | % | 25.15 | % | $101,285 | 76 | % | |||||||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 13.12 | 0.08 | 0.90 | 0.98 | (0.17 | ) | — | (0.17 | ) | 13.93 | 0.86% | 0.70% | 0.63% | 7.53 | % | 48,611 | 72 | % | ||||||||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 12.42 | 0.06 | 0.71 | 0.77 | (0.07 | ) | — | (0.07 | ) | 13.12 | 0.85% | 0.70% | 0.54% | 6.26 | % | 108,340 | 84 | % | ||||||||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 11.21 | 0.07 | 1.14 | 1.21 | — | — | — | 12.42 | 0.95% | 0.79% | 0.58% | 10.79 | % | 115,576 | 83 | % | ||||||||||||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 7.74 | 0.02 | 3.60 | 3.62 | (0.15 | ) | — | (0.15 | ) | 11.21 | 1.37% | 1.10% | 0.19% | 47.26 | % | 89,219 | 60 | % | ||||||||||||||||||||||||||||||||||||||
PL Large-Cap Growth Fund |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $10.40 | ($0.01 | ) | $2.41 | $2.40 | ($0.02 | ) | ($2.50 | ) | ($2.52 | ) | $10.28 | 0.97% | 0.84% | (0.06 | %) | 23.58 | % | $172,613 | 163 | % | |||||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 10.30 | 0.03 | 0.70 | 0.73 | — | (0.63 | ) | (0.63 | ) | 10.40 | 0.99% | 0.81% | 0.31% | 7.66 | % | 142,398 | 131 | % | ||||||||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 9.23 | (0.02 | ) | 1.25 | 1.23 | — | (0.16 | ) | (0.16 | ) | 10.30 | 1.00% | 0.88% | (0.26%) | 13.65 | % | 129,222 | 76 | % | |||||||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 7.71 | (0.01 | ) | 1.53 | 1.52 | — | — | — | 9.23 | 1.12% | 0.95% | (0.11%) | 19.72 | % | 99,101 | 102 | % | |||||||||||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 5.44 | (0.03 | ) | 2.30 | 2.27 | — | — | — | 7.71 | 1.59% | 1.28% | (0.38%) | 41.73 | % | 61,106 | 116 | % | |||||||||||||||||||||||||||||||||||||||
PL Large-Cap Value Fund |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $13.96 | $0.36 | $2.62 | $2.98 | ($0.23 | ) | $— | ($0.23 | ) | $16.71 | 0.86% | 0.80% | 2.33% | 21.41 | % | $380,372 | 13 | % | ||||||||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 12.31 | 0.23 | 1.66 | 1.89 | (0.24 | ) | — | (0.24 | ) | 13.96 | 0.87% | 0.80% | 1.80% | 15.54 | % | 324,085 | 26 | % | ||||||||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 11.59 | 0.22 | 0.71 | 0.93 | (0.21 | ) | — | (0.21 | ) | 12.31 | 0.89% | 0.80% | 1.96% | 8.21 | % | 262,917 | 20 | % | ||||||||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 10.42 | 0.16 | 1.15 | 1.31 | (0.14 | ) | — | (0.14 | ) | 11.59 | 1.01% | 0.89% | 1.56% | 12.69 | % | 228,436 | 19 | % | ||||||||||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 7.35 | 0.14 | 3.07 | 3.21 | (0.14 | ) | — | (0.14 | ) | 10.42 | 1.38% | 1.20% | 1.52% | 43.79 | % | 162,312 | 16 | % | ||||||||||||||||||||||||||||||||||||||
PL Main Street Core Fund |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $12.20 | $0.13 | $2.65 | $2.78 | ($0.13 | ) | $— | ($0.13 | ) | $14.85 | 0.67% | 0.60% | 0.99% | 22.84 | % | $257,575 | 66 | % | ||||||||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 11.26 | 0.14 | 0.96 | 1.10 | (0.16 | ) | — | (0.16 | ) | 12.20 | 0.68% | 0.60% | 1.21% | 9.93 | % | 212,428 | 60 | % | ||||||||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 10.13 | 0.10 | 1.11 | 1.21 | (0.08 | ) | — | (0.08 | ) | 11.26 | 0.70% | 0.60% | 1.00% | 12.12 | % | 193,538 | 48 | % | ||||||||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 9.00 | 0.09 | 1.10 | 1.19 | (0.06 | ) | — | (0.06 | ) | 10.13 | 0.83% | 0.70% | 0.93% | 13.28 | % | 157,890 | 58 | % | ||||||||||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 6.11 | 0.07 | 2.89 | 2.96 | (0.07 | ) | — | (0.07 | ) | 9.00 | 1.23% | 1.00% | 0.89% | 48.57 | % | 146,028 | 130 | % |
See Notes to Financial Statements | See explanation of symbols and terms, if any, on page C-16 |
C-14
PACIFIC LIFE FUNDS
FINANCIAL HIGHLIGHTS (1) (Continued)
Selected per share, ratios and supplemental data for each year or period ended March 31, were as follows:
| Selected Per Share Data |
| Ratios to Average Net Assets | Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Operations | Distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year or Period Ended | Net Asset Value, Beginning of Year or Period | Net Investment Income (Loss) (2) | Net Realized and Unrealized Gain (Loss) | Total | Net Investment Income | Capital Gains | Total | Net Asset Value, End of Year or Period | Expenses Before Reductions (3) | Expenses After Reductions (3), (4) | Net Investment Income (Loss) (3) | Total Returns (5) | Net Assets, End of Year or Period (in thousands) | Portfolio Turnover Rates | ||||||||||||||||||||||||||||||||||||||||
PL Mid-Cap Equity Fund |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $11.00 | $0.04 | $2.84 | $2.88 | ($0.06 | ) | ($0.98 | ) | ($1.04 | ) | $12.84 | 0.87% | 0.80% | 0.36% | 26.82 | % | $171,357 | 114 | % | |||||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 10.29 | 0.06 | 0.72 | 0.78 | (0.07 | ) | — | (0.07 | ) | 11.00 | 0.90% | 0.80% | 0.65% | 7.63 | % | 138,416 | 191 | % | ||||||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 10.46 | 0.05 | (0.18 | ) | (0.13 | ) | (0.04 | ) | — | (0.04 | ) | 10.29 | 0.89% | 0.80% | 0.51% | (1.17 | %) | 165,168 | 102 | % | ||||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 8.66 | 0.08 | 1.79 | 1.87 | (0.07 | ) | — | (0.07 | ) | 10.46 | 1.02% | 0.89% | 0.87% | 21.70 | % | 135,755 | 87 | % | ||||||||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 5.33 | 0.03 | 3.34 | 3.37 | (0.04 | ) | — | (0.04 | ) | 8.66 | 1.41% | 1.20% | 0.44% | 63.29 | % | 101,650 | 74 | % | ||||||||||||||||||||||||||||||||||||
PL Mid-Cap Growth Fund |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $8.58 | ($0.01 | ) | $1.93 | $1.92 | ($0.01 | ) | ($2.32 | ) | ($2.33 | ) | $8.17 | 0.93% | 0.83% | (0.09%) | 23.39 | % | $90,804 | 135 | % | ||||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 8.87 | 0.05 | (0.03 | ) | 0.02 | (0.02 | ) | (0.29 | ) | (0.31 | ) | 8.58 | 1.00% | 0.85% | 0.60% | 0.61 | % | 61,557 | 48 | % | ||||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 10.28 | (0.02 | ) | (0.28 | ) | (0.30 | ) | (0.05 | ) | (1.06 | ) | (1.11 | ) | 8.87 | 0.98% | 0.85% | (0.21%) | (1.08 | %) | 73,586 | 27 | % | ||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 8.41 | 0.02 | 2.83 | 2.85 | (0.02 | ) | (0.96 | ) | (0.98 | ) | 10.28 | 1.17% | 0.95% | 0.24% | 35.16 | % | 64,476 | 44 | % | |||||||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 4.98 | (0.03 | ) | 3.56 | 3.53 | — | (0.10 | ) | (0.10 | ) | 8.41 | 1.53% | 1.25% | (0.42%) | 70.89 | % | 54,994 | 32 | % | |||||||||||||||||||||||||||||||||||
PL Small-Cap Growth Fund |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $13.29 | ($0.04 | ) | $2.67 | $2.63 | ($0.02 | ) | ($0.36 | ) | ($0.38 | ) | $15.54 | 0.83% | 0.75% | (0.28%) | 19.90 | % | $59,921 | 84 | % | ||||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 11.86 | 0.03 | 1.40 | 1.43 | — | — | — | 13.29 | 0.90% | 0.75% | 0.21% | 12.06 | % | 50,898 | 92 | % | ||||||||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 11.90 | (0.03 | ) | (0.01 | ) | (0.04 | ) | — | — | — | 11.86 | 0.93% | 0.75% | (0.31%) | (0.34 | %) | 36,370 | 67 | % | |||||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 9.41 | (0.06 | ) | 2.55 | 2.49 | — | — | — | 11.90 | 1.11% | 0.84% | (0.63%) | 26.46 | % | 32,355 | 86 | % | |||||||||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 5.88 | (0.06 | ) | 3.59 | 3.53 | — | — | — | 9.41 | 1.56% | 1.15% | (0.81%) | 60.03 | % | 25,691 | 88 | % | |||||||||||||||||||||||||||||||||||||
PL Small-Cap Value Fund |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $12.15 | $0.20 | $1.98 | $2.18 | ($0.16 | ) | ($0.62 | ) | ($0.78 | ) | $13.55 | 0.97% | 0.90% | 1.52% | 18.13 | % | $147,702 | 41 | % | |||||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 10.58 | 0.22 | 1.52 | 1.74 | (0.17 | ) | — | (0.17 | ) | 12.15 | 1.00% | 0.90% | 2.08% | 16.72 | % | 125,647 | 38 | % | ||||||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 10.60 | 0.16 | (0.05 | ) | 0.11 | (0.13 | ) | — | (0.13 | ) | 10.58 | 1.02% | 0.90% | 1.59% | 1.19 | % | 86,152 | 21 | % | |||||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 8.57 | 0.16 | 1.98 | 2.14 | (0.11 | ) | — | (0.11 | ) | 10.60 | 1.13% | 0.97% | 1.71% | 25.11 | % | 76,247 | 31 | % | ||||||||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 5.49 | 0.13 | 3.06 | 3.19 | (0.11 | ) | — | (0.11 | ) | 8.57 | 1.58% | 1.30% | 1.82% | 58.28 | % | 38,173 | 32 | % | ||||||||||||||||||||||||||||||||||||
PL Real Estate Fund |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $13.67 | $0.21 | $0.54 | $0.75 | ($0.23 | ) | $— | ($0.23 | ) | $14.19 | 1.12% | 1.05% | 1.52% | 5.61 | % | $73,828 | 18 | % | ||||||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 12.59 | 0.17 | 1.08 | 1.25 | (0.17 | ) | — | (0.17 | ) | 13.67 | 1.16% | 1.05% | 1.35% | 9.98 | % | 60,138 | 23 | % | ||||||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 11.46 | 0.13 | 1.08 | 1.21 | (0.08 | ) | — | (0.08 | ) | 12.59 | 1.18% | 1.05% | 1.13% | 10.62 | % | 52,679 | 24 | % | ||||||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 9.24 | 0.08 | 2.23 | 2.31 | (0.09 | ) | — | (0.09 | ) | 11.46 | 1.34% | 1.14% | 0.77% | 25.16 | % | 41,860 | 32 | % | ||||||||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 4.60 | 0.12 | 4.64 | 4.76 | (0.12 | ) | — | (0.12 | ) | 9.24 | 1.76% | 1.45% | 1.68% | 104.32 | % | 36,352 | 27 | % | ||||||||||||||||||||||||||||||||||||
PL Emerging Markets Fund |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $14.22 | $0.09 | $0.83 | $0.92 | ($0.10 | ) | ($0.29 | ) | ($0.39 | ) | $14.75 | 1.27% | 0.95% | 0.59% | 6.43 | % | $153,333 | 31 | % | |||||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 13.55 | 0.08 | 0.68 | 0.76 | (0.09 | ) | — | (0.09 | ) | 14.22 | 1.36% | 0.95% | 0.62% | 5.60 | % | 110,810 | 40 | % | ||||||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 14.68 | 0.14 | (0.95 | ) | (0.81 | ) | (0.07 | ) | (0.25 | ) | (0.32 | ) | 13.55 | 1.49% | 0.95% | 1.09% | (5.15 | %) | 85,483 | 30 | % | |||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 12.19 | 0.11 | 2.64 | 2.75 | (0.26 | ) | — | (0.26 | ) | 14.68 | 1.56% | 1.04% | 0.80% | 22.53 | % | 64,270 | 46 | % | ||||||||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 6.54 | 0.06 | 5.66 | 5.72 | (0.07 | ) | — | (0.07 | ) | 12.19 | 2.15% | 1.35% | 0.57% | 87.45 | % | 47,714 | 55 | % | ||||||||||||||||||||||||||||||||||||
PL International Large-Cap Fund |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $16.48 | $0.22 | $1.97 | $2.19 | ($0.21 | ) | $— | ($0.21 | ) | $18.46 | 1.10% | 1.00% | 1.23% | 13.28 | % | $240,522 | 14 | % | ||||||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 15.12 | 0.23 | 1.40 | 1.63 | (0.27 | ) | — | (0.27 | ) | 16.48 | 1.13% | 1.00% | 1.55% | 10.88 | % | 198,963 | 28 | % | ||||||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 15.37 | 0.22 | (0.30 | ) | (0.08 | ) | (0.17 | ) | — | (0.17 | ) | 15.12 | 1.17% | 1.00% | 1.52% | (0.32 | %) | 203,944 | 24 | % | ||||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 13.83 | 0.16 | 1.52 | 1.68 | (0.14 | ) | — | (0.14 | ) | 15.37 | 1.30% | 1.09% | 1.16% | 12.36 | % | 138,033 | 34 | % | ||||||||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 9.17 | 0.16 | 4.64 | 4.80 | (0.14 | ) | — | (0.14 | ) | 13.83 | 1.72% | 1.40% | 1.26% | 52.64 | % | 108,002 | 25 | % | ||||||||||||||||||||||||||||||||||||
PL International Value Fund |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $9.10 | $0.39 | $1.08 | $1.47 | ($0.24 | ) | $— | ($0.24 | ) | $10.33 | 0.91% | 0.80% | 3.89% | 16.15 | % | $176,541 | 54 | % | ||||||||||||||||||||||||||||||||||||
4/1/2012 - 3/31/2013 | 8.62 | 0.20 | 0.51 | 0.71 | (0.23 | ) | — | (0.23 | ) | 9.10 | 0.94% | 0.80% | 2.30% | 8.26 | % | 146,550 | 66 | % | ||||||||||||||||||||||||||||||||||||
4/1/2011 - 3/31/2012 | 9.51 | 0.26 | (0.89 | ) | (0.63 | ) | (0.26 | ) | — | (0.26 | ) | 8.62 | 1.02% | 0.80% | 3.06% | (6.20 | %) | 111,119 | 63 | % | ||||||||||||||||||||||||||||||||||
4/1/2010 - 3/31/2011 | 9.19 | 0.18 | 0.35 | 0.53 | (0.21 | ) | — | (0.21 | ) | 9.51 | 1.14% | 0.90% | 2.01% | 5.99 | % | 90,242 | 150 | % | ||||||||||||||||||||||||||||||||||||
4/1/2009 - 3/31/2010 | 6.14 | 0.19 | 3.00 | 3.19 | (0.14 | ) | — | (0.14 | ) | 9.19 | 1.56% | 1.20% | 2.28% | 52.10 | % | 86,284 | 60 | % | ||||||||||||||||||||||||||||||||||||
PL Currency Strategies Fund |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $10.32 | ($0.07 | ) | ($0.52 | ) | ($0.59 | ) | ($0.32 | ) | $— | ($0.32 | ) | $9.41 | 0.89% | 0.85% | (0.68%) | (5.98 | %) | $131,023 | 49 | % | |||||||||||||||||||||||||||||||||
12/7/2012 - 3/31/2013 | 10.00 | (0.02 | ) | 0.34 | 0.32 | — | — | — | 10.32 | 0.94% | 0.85% | (0.69%) | 3.20 | % | 118,643 | 49 | % | |||||||||||||||||||||||||||||||||||||
PL Global Absolute Return Fund |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $10.19 | $0.36 | ($0.65 | ) | ($0.29 | ) | ($0.20 | ) | ($0.01 | ) | ($0.21 | ) | $9.69 | 1.36% | 1.18% | 3.64% | (2.80 | %) | $198,360 | 115 | % | |||||||||||||||||||||||||||||||||
12/7/2012 - 3/31/2013 | 10.00 | 0.07 | 0.13 | 0.20 | (0.01 | ) | — | (0.01 | ) | 10.19 | 1.20% | 1.06% | 2.25% | 1.96 | % | 171,925 | 38 | % |
See Notes to Financial Statements | See explanation of symbols and terms, if any, on page C-16 |
C-15
PACIFIC LIFE FUNDS
FINANCIAL HIGHLIGHTS (1) (Continued)
Selected per share, ratios and supplemental data for each year or period ended March 31, were as follows:
| Selected Per Share Data |
| Ratios to Average Net Assets | Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Operations | Distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Year or Period Ended | Net Asset Value, Beginning of Year or Period | Net Investment Income (Loss) (2) | Net Realized and Unrealized Gain (Loss) | Total | Net Investment Income | Capital Gains | Total | Net Asset Value, End of Year or Period | Expenses Before Reductions (3) | Expenses After Reductions (3), (4) | Net Investment Income (Loss) (3) | Total Returns (5) | Net Assets, End of Year or Period (in thousands) | Portfolio Turnover Rates | ||||||||||||||||||||||||||||||||||||||||||
PL Precious Metals Fund |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
4/1/2013 - 3/31/2014 | $8.22 | $0.02 | ($2.49 | ) | ($2.47 | ) | ($0.03 | ) | $— | ($0.03 | ) | $5.72 | 0.99% | 0.88% | 0.30% | (29.98 | %) | $84,402 | 12 | % | ||||||||||||||||||||||||||||||||||||
12/7/2012 - 3/31/2013 | 10.00 | 0.01 | (1.79 | ) | (1.78 | ) | (0.00 | )(6) | — | (0.00 | )(6) | 8.22 | 1.12% | 0.88% | 0.31% | (17.79 | %) | 65,951 | 3 | % | ||||||||||||||||||||||||||||||||||||
PL Diversified Alternatives Fund (7) |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class A |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
12/31/2013 - 3/31/2014 | $10.00 | ($0.01 | ) | ($0.00 | )(6) | ($0.01 | ) | $— | $— | $— | $9.99 | 3.36% | 0.85% | (0.34%) | (0.10%) | $10 | 1 | % | ||||||||||||||||||||||||||||||||||||||
Class C |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
12/31/2013 - 3/31/2014 | $10.00 | ($0.03 | ) | ($0.00 | )(6) | ($0.03 | ) | $— | $— | $— | $9.97 | 4.11% | 1.60% | (1.09%) | (0.30%) | $10 | 1 | % | ||||||||||||||||||||||||||||||||||||||
Advisor Class |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
12/31/2013 - 3/31/2014 | $10.00 | ($0.00 | )(6) | ($0.01 | ) | ($0.01 | ) | $— | $— | $— | $9.99 | 3.11% | 0.60% | (0.09%) | (0.10%) | $1,978 | 1 | % |
(1) | All the funds presented in these financial statements, except for the PL Diversified Alternatives Fund, currently offer Class P shares only. Effective July 2, 2010, all Class A shares of these funds were converted to Class P shares. Performance information prior to the conversion for these funds pertains to Class A shares and reflects the fees and expenses associated with that share class. |
(2) | Net investment income (loss) per share has been calculated using the average shares method. |
(3) | The ratios are annualized for periods of less than one full year. |
(4) | The ratios of expenses after expense reductions to average net assets are after any advisory fee waivers and adviser expense reimbursements as discussed in Note 6 and Note 7B, respectively, in Notes to the Financial Statements. |
(5) | The total returns include reinvestment of all dividends and capital gains distributions, if any, and do not include deductions of any applicable sales charges. Total returns are not annualized for periods less than one full year. |
(6) | Amount represents less than $0.005 per share. |
(7) | PL Diversified Alternatives Fund commenced operations on December 31, 2013. |
See Notes to Financial Statements |
C-16
PACIFIC LIFE FUNDS
1. ORGANIZATION
The Pacific Life Funds (the “Trust”) is a Delaware statutory trust, which was formed on May 21, 2001, and is registered under the Investment Company Act of 1940 (“1940 Act”), as amended, as an open-end, management investment company. Pacific Life Fund Advisors LLC (“PLFA” or “Adviser”) serves as investment advisor to the Trust. As of March 31, 2014, the Trust was comprised of thirty-three separate funds, twenty-two of which are presented in these financial statements (each individually, a “Fund”, and collectively the “Funds”): PL Floating Rate Loan Fund, PL Inflation Managed Fund, PL Managed Bond Fund, PL Short Duration Bond Fund, PL Emerging Markets Debt Fund, PL Comstock Fund, PL Growth Fund (formerly PL Growth LT Fund), PL Large-Cap Growth Fund, PL Large-Cap Value Fund, PL Main Street® Core Fund (Main Street is a registered trademark of OppenheimerFunds, Inc.), PL Mid-Cap Equity Fund, PL Mid-Cap Growth Fund, PL Small-Cap Growth Fund, PL Small-Cap Value Fund, PL Real Estate Fund, PL Emerging Markets Fund, PL International Large-Cap Fund, PL International Value Fund, PL Currency Strategies Fund, PL Global Absolute Return Fund, and PL Precious Metals Fund (collectively the “PL Underlying Funds”); and the PL Diversified Alternatives Fund.
The PL Underlying Funds offer Class P shares only, which are sold at Net Asset Value (“NAV”). The PL Floating Rate Income Fund also offers Class P shares, which are sold at NAV. Presently, only the PL Portfolio Optimization Conservative Fund, PL Portfolio Optimization Moderate-Conservative Fund, PL Portfolio Optimization Moderate Fund, PL Portfolio Optimization Moderate-Aggressive Fund, and PL Portfolio Optimization Aggressive Fund (collectively, the “Portfolio Optimization Funds”), the PL Diversified Alternatives Fund, the Adviser and certain of its affiliates can invest in Class P shares of the PL Underlying Funds and PL Floating Rate Income Fund.
The PL Diversified Alternatives Fund commenced operations on December 31, 2013. The PL Diversified Alternatives Fund invests in certain PL Underlying Funds and Class P shares of the PL Floating Rate Income Fund. Although the Fund is effective, it is not currently offering shares to investors and is not available for sale at this time. Presently, only the Adviser and certain of its affiliates can invest in the PL Diversified Alternatives Fund. The PL Diversified Alternatives Fund offers Class A, Class C and Advisor shares. Each class is distinguished by its applicable sales charges and distribution and/or service fees and in general: (i) Class A shares are subject to a maximum 5.50% front-end sales charge; (ii) Class C shares are subject to a maximum 1.00% Contingent Deferred Sales Charge (“CDSC”); and (iii) Advisor Class shares are sold at NAV without a sales charge or CDSC. The sales charge for Class A shares is reduced for purchases of $50,000 or more and may be waived in certain circumstances. There is no sales charge for Class A shares for purchases of $1 million or more, although there is a CDSC of 1.00% on redemptions of such Class A shares within one year of purchase, which may be waived in certain circumstances.
There is a separate annual report containing the financial statements for the Portfolio Optimization Funds and the PL Floating Rate Income Fund, which is available without charge. For information on how to obtain the annual report for the Portfolio Optimization Funds and the PL Floating Rate Income Fund, see the Where to Go for More Information section of this report on page F-24.
2. SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for investment companies. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the Trust in the preparation of the financial statements.
The Trust has implemented the disclosure requirements pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Update No. 2011-11, Disclosures about Offsetting Assets and Liabilities. In Note 5 the Trust provides information about instruments and transactions eligible for offset such as instruments and transactions subject to an agreement similar to a master netting arrangement. In addition, the Trust discloses collateral received and posted in connection with master netting agreements or similar arrangements
A. INVESTMENT TRANSACTIONS AND INCOME
Investment transactions are recorded on a trade date basis. Securities purchased or sold on a when-issued or delayed-delivery basis as well as certain loan transactions and mortgage securities (such as Government National Mortgage Association (“GNMA”) securities) may be settled a month or more after the trade date. Dividend income is recorded on the ex-dividend date, except certain dividends from foreign securities, which are recorded as soon as a Fund is informed of the ex-dividend date or upon receipt of the dividend. A Fund's estimated components of distributions received from real estate investment trusts may be considered income, return of capital distributions or capital gain distributions. Return of capital distributions are recorded as a reduction of cost of the related investments. Interest income, adjusted for amortization of premium and accretion of discount, is recorded daily on an accrual basis. Investment income is recorded net of foreign taxes withheld, if any. A Fund may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. A Fund will accrue such taxes and reclaims as applicable, based upon the current interpretation of tax rules and regulations that exist in the markets in which a Fund invests. Facility fees and other fees (such as origination fees) received from senior loans purchased (see Note 4) by a Fund are amortized over the expected term of each applicable senior loan. Commitment fees received by a Fund relating to unfunded senior loan commitments are amortized to income over the period of the commitment. Consent fees, which are compensation for agreeing to changes in the terms of debt instruments, are recorded as interest income when received. Realized gains and losses from investment transactions are recorded on the basis of identified cost, which is also used for Federal income tax purposes. Gains and losses realized on principal paydowns from mortgage-backed and asset-backed securities are recorded as interest income.
B. DISTRIBUTIONS TO SHAREHOLDERS
Each Fund presented in these financial statements distributes all of its net investment income and realized capital gains, if any, to shareholders at least annually, although distributions could occur more if advantageous to the applicable Fund and its shareholders. Dividends and distributions paid to shareholders are recorded on the ex-dividend date.
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NOTES TO FINANCIAL STATEMENTS (Continued)
C. FOREIGN CURRENCY TRANSLATION
The Trust’s accounting records are maintained in U.S. dollars. The market value of investments and other assets and liabilities, denominated in non-U.S. currencies, are translated into U.S. dollars based on the applicable exchange rates at the end of each business day. Purchases and sales of investments and income and expenses, denominated in foreign currencies, are translated into U.S. dollars at the exchange rates in effect on the transaction date.
None of the Funds separately report the effect of changes in foreign exchange rates from changes in market prices of investments held. Such changes are included with the net realized gain or loss and change in net unrealized appreciation or depreciation on investments. Other foreign currency transactions resulting in realized and unrealized gain or loss, if any, are reported separately as net realized gain or loss on foreign currency transactions and change in net unrealized appreciation or depreciation on foreign currencies.
D. ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES
Certain Trust expenses directly attributable to a particular Fund are charged to that Fund (such as Fund-specific transactional fees, proxies, liquidations, litigation, and organizational/start-up costs). Generally, other Trust expenses are allocated proportionately among all the Funds in relation to the net assets of each Fund. For the PL Diversified Alternatives Fund, income, non-class specific expenses, and realized and unrealized gains and losses are allocated on a daily basis to each class of shares based upon the relative portion of net assets of each class.
E. OFFERING COSTS
A new Fund bears all costs (or the applicable pro-rata share if there is more than one new Fund) associated with the offering expenses of the Fund including legal, printing and support services (see Notes 6 and 7A). All such costs are amortized as an expense of the new Fund on a straight-line basis over twelve months from commencement of operations.
3. VALUATION AND FAIR VALUE MEASUREMENTS
A. VALUATION POLICY
The Trust’s Board of Trustees (the “Board”) has adopted a policy (“Valuation Policy”) for determining the value of the Trust’s investments each business day. Under the Valuation Policy, the Board has delegated certain functions to the Trustee Valuation Committee (“TVC”) and the Valuation Oversight Committee (“VOC”) or its delegate to determine the fair value of certain investments. Each valuation committee that values each Fund’s investments, which includes using third party pricing services and/or approved alternate valuation methodologies, does so in accordance with the Valuation Policy. Notes 3B and 3C below describe in greater detail the methodologies used to value each Fund’s investments.
B. NET ASSET VALUE
Each Fund of the Trust is divided into shares and share classes, if applicable. The price per share of each class of a Fund’s shares is called the NAV. The NAV forms the basis for all transactions involving buying, selling, exchanging or reinvesting shares. Each Fund’s NAV is calculated by taking the total value of a Fund’s assets, subtracting a Fund’s liabilities, and dividing by the total number of shares outstanding.
Each Fund’s NAV is calculated once per day, every day the New York Stock Exchange (“NYSE”) is open, including days when foreign markets and/or bond markets are closed. For purposes of calculating the NAV, the value of investments held by each Fund is generally determined as of the time of the close of the NYSE, which is usually 4:00 p.m. Eastern Time. Information that becomes known to the Trust or its agents after the close of the NYSE on a particular day will not normally be used to retroactively adjust the price of an investment for that same business day.
Each Fund’s NAV will not be calculated on days when the NYSE is closed. There may be a delay in calculating the NAV if: (i) the NYSE is closed on a day other than a regular holiday or weekend, (ii) trading on the NYSE is restricted, (iii) an emergency exists (as determined by the Securities and Exchange Commission (“SEC”)), making the sale of investments or determinations of NAV not practicable, or (iv) the SEC permits a delay for the protection of shareholders.
Certain Funds may hold investments that are primarily listed on foreign exchanges. Because those investments trade on weekends and other days when the Funds do not calculate their NAVs, the value of those investments may change on days when a shareholder will not be able to purchase or redeem shares of those Funds.
C. INVESTMENT VALUATION
The value of each security or other investment is the amount which a Fund might reasonably expect to receive for the investment upon its current sale in the ordinary course of business. For purposes of calculating the NAV, the value of investments held by each Fund is based primarily on pricing data obtained from various sources approved by the Board.
PL Diversified Alternatives Fund
The investments of the PL Diversified Alternatives Fund consist of Class P shares of the PL Floating Rate Income Fund and certain PL Underlying Funds, which are valued at their respective NAVs at the time of computation.
Money Market Instruments and Short-Term Investments
Money market instruments and short-term investments maturing within 60 days are valued at amortized cost in accordance with the 1940 Act. Amortized cost involves valuing an investment at cost on the date of acquisition and thereafter assuming a constant accretion of a discount or amortization of a premium to maturity, regardless of the impact of fluctuating interest rates on the market value of the instrument. While this method provides consistency in valuation (and may only be used if it approximates market value), it may result in periods during which the value, as determined by amortized cost, is higher or lower than the price that would be received if the Fund sold the investment. Fund investments in other mutual funds for temporary cash management purposes are valued at their respective NAVs.
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NOTES TO FINANCIAL STATEMENTS (Continued)
Domestic Equity Investments
For domestic equity investments (including exchange-traded funds), the Trust uses the last reported sale price or official closing price from an exchange as of the time of the NYSE close and do not normally take into account trading, clearances or settlements that take place after the NYSE close. Investments, for which no sales are reported, are generally valued at the mean between the most recent bid and ask prices obtained from approved pricing services, established market makers, or from broker-dealers.
Foreign Equity Investments
For foreign equity investments, the Trust generally uses the last reported sale price or official closing price from the principal foreign exchanges, which may be earlier than the NYSE close. The Trust then may adjust for market events occurring between the close of certain foreign exchanges and the NYSE close. The Trust has retained an independent statistical service approved by the Board to assist in determining the value of certain foreign equity investments. This service utilizes proprietary computer models based on historical performance of markets and other considerations to determine adjustments for market events. Quotations of foreign investments in foreign currencies and those valued using forward currency rates are converted into U.S. dollar equivalents using a foreign exchange quotation from an approved source.
Exchange Traded Futures, Options and Swaps
Exchange traded futures, options and swaps are generally valued using the settlement price determined by the relevant exchange. Exchange traded futures, options and swaps for which no settlement price is reported, are generally valued at the mean between the most recent bid and ask prices obtained from approved pricing services, established market makers, or from broker-dealers.
Over-the-Counter (“OTC”) Investments and Certain Equity Investments
OTC investments (including swaps and options), are generally valued by approved pricing services that use evaluated prices from various observable market and other factors. Certain OTC swap contracts are valued using reference instruments and industry pricing models pursuant to the Valuation Policy. Forward foreign currency contracts are generally valued using the mean between broker-dealer bid and ask quotations, and foreign currency exchange rates gathered from leading market makers.
Domestic and Foreign Debt Investments
Debt investments are generally valued using the mean between bid and ask prices provided by approved pricing and quotation services, which are based upon evaluated prices determined from various observable market and other factors. Certain debt investments are valued by using benchmark, matrix, or other pricing methodologies approved pursuant to the Valuation Policy.
Investment Values Determined by a Valuation Committee
The Valuation Policy includes methodologies approved for valuing investments in circumstances where market quotations are not readily available. In such circumstances, the Valuation Policy provides that the value of such investments may be determined in accordance with Board approved formulas and methodologies (“Alternate Valuation Methodologies”). Under the Valuation Policy these Alternate Valuation Methodologies may include, among others, the use of broker quotes, the use of purchase prices for initial public offerings, and benchmark and matrix pricing. In the event market quotations or Alternate Valuation Methodologies are not readily available or are determined to be unreliable, the value of the investments will be determined in good faith by the TVC, or determined by the VOC or its delegate pursuant to the Valuation Policy and then subsequently submitted for approval or ratification to either the TVC or the Board. Valuations determined by the TVC or the VOC or its delegate may require subjective inputs about the value of such investments. While these valuations are intended to estimate the value a Fund might reasonably expect to receive upon the current sale of the investments in the ordinary course of business, such values may differ from the value that a Fund would actually realize if the investments were sold or values that would be obtained if a different valuation methodology had been used.
Market quotations are considered not readily available if: (i) the market quotations received are deemed unreliable or inaccurate, (ii) approved pricing services do not provide a valuation for a particular investment, or (iii) material events occur after the close of the principal market for a particular investment but prior to the close of the NYSE.
D. FAIR VALUE MEASUREMENTS AND DISCLOSURES
The Trust characterizes its investments as Level 1, Level 2 or Level 3 based upon the various inputs or methodologies used to value the investments. Under the Valuation Policy, the VOC determines the level in which each Fund’s investments are characterized. The VOC includes investment, legal and compliance members of the Trust’s Adviser, accounting members of the Trust’s Administrator (see Note 6), and the Trust’s Chief Compliance Officer (“CCO”). The three-tier hierarchy of inputs is summarized in the three broad levels listed below:
• Level 1 - | Quoted prices (unadjusted) in active markets for identical investments |
• Level 2 - | Significant observable market-based inputs, other than Level 1 quoted prices, or unobservable inputs that are corroborated by market data |
• Level 3 - | Significant unobservable inputs that are not corroborated by observable market data |
The VOC reviews the Valuation Policy periodically (at least annually) to determine the appropriateness of the pricing methodologies used to value each Fund’s investments. The VOC also periodically evaluates how the Trust’s investments are characterized within the three-tier hierarchy and the appropriateness of third party pricing sources. The VOC also periodically (at least annually) conducts back testing of the value of various Level 2 and Level 3 investments to evaluate the effectiveness of the pricing methodologies including the unobservable inputs used to value those investments. Such back-testing includes comparing Level 2 and Level 3 investment values to subsequently available exchange- traded prices, transaction prices, and/or observable vendor prices. All changes to the Valuation Policy are reported to the Board on a quarterly basis with material changes, as determined by the Trust’s CCO, requiring approval by the Board.
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PACIFIC LIFE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
The inputs or methodologies used for characterizing each Fund’s investments within the three-tier hierarchy are not necessarily an indication of the relative risks associated with investing in those investments. For example, money market instruments are valued using amortized cost in accordance with the rules under the 1940 Act. Generally, amortized cost approximates the current fair value of an investment, but since the value is not obtained from a quoted price in an active market, such investments are reflected as Level 2. Foreign investments that are valued with the assistance of a statistical research service approved by the Board, and based on significant observable inputs (as described in Note 3C) are reflected as Level 2. For fair valuations using significant unobservable inputs, the Trust presents a reconciliation of the beginning to ending balances for reported market values that presents changes attributable to total realized and unrealized gains or losses, purchase and sales, and transfers in and out of Level 3 during the period. Transfers in and out between levels are based on values at the end of the period. The Trust also discloses the amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. A reconciliation of Level 3 investments is presented only when a Fund had an amount of Level 3 investments at the beginning and/or end of the reporting period that was meaningful in relation to its net assets. The amounts and reasons for all transfers in and out of each level within the three-tier hierarchy are disclosed only when a Fund had an amount of total transfers during the reporting period that was meaningful in relation to its net assets as of the end of the reporting period. A summary of each Fund’s investments as of March 31, 2014 as categorized under the three-tier hierarchy of inputs, and the reconciliation of Level 3 investments and information on transfers in and out of each level, if applicable, can be found in the Notes to Schedule of Investments section of each Fund’s Schedule of Investments.
The following is a description of valuation inputs and techniques that the Trust currently utilizes to fair value each major category of assets and liabilities.
Equity Securities (Common and Preferred Stock) and Mutual Funds
Equity securities (foreign or domestic) that are actively traded on a securities exchange are fair valued based on quoted prices from the applicable exchange, and to the extent valuation adjustments are not applied to these securities, they are categorized as Level 1. Equity securities traded on inactive markets and certain foreign equity securities are fair valued using significant other observable inputs which include broker-dealer quotes, recently executed transactions adjusted for changes in the benchmark index, or evaluated price quotes received from pricing vendors that take into account the integrity of the market sector and issuer, the individual characteristics of the security, and information received from broker-dealers and other market sources pertaining to the issuer or security. To the extent that these inputs are observable and timely, the fair values of these securities would be categorized as Level 2; otherwise the fair values would be categorized as Level 3.
Investments in registered mutual funds, including affiliated mutual funds, are valued at their respective NAV and are categorized as Level 1.
U.S. Treasury Obligations
U.S. Treasuries are fair valued based on pricing models that evaluate the mean between the most recently published bid and ask price from market data sources. The models also take into consideration data received from active market makers and inter-dealer brokers and yield curves. Yield curves change daily in response to market conditions and are generally obtained from the new issue market and broker-dealer sources. To the extent that these inputs are observable and timely, the fair values of U.S. Treasury obligations would be categorized as Level 2; otherwise the fair values would be categorized as Level 3.
Mortgage-Backed Securities and Asset-Backed Securities
Mortgage-backed securities, including government sponsored enterprises, are fair valued using pricing models based on inputs that include issuer type, coupon, and cash flows, mortgage prepayment projection tables and adjustable rate mortgage evaluations that incorporate index data, periodic and life caps, the next coupon reset date, and the convertibility of the bond. To the extent that these inputs are observable and timely, the fair values of mortgage-backed securities would be categorized as Level 2; otherwise the fair value would be categorized as Level 3.
Asset-backed securities and collateralized mortgage obligations are fair valued using pricing models based on a security’s average life volatility. The models also take into account tranche characteristics such as coupon average life, collateral types, ratings, the issuer and tranche type, underlying collateral and performance of the collateral, and discount margin for certain floating rate issues. To the extent that these inputs are observable and timely, the fair values of asset-backed securities and collateralized mortgage obligations would be categorized as Level 2; otherwise the fair values would be categorized as Level 3.
Municipal Bonds
Municipal bonds are fair valued based on pricing models that take into account, among other factors, information received from market makers and broker-dealers, current trades, bid lists, offerings, market movements, the callability of the bond, state of issuance, benchmark yield curves, and bond insurance. To the extent that these inputs are observable and timely, the fair values of municipal bonds would be categorized as Level 2; otherwise the fair values would be categorized as Level 3.
Foreign Government Bonds and Notes
Foreign government bonds and notes are fair valued based on discounted cash flow models that incorporate option adjusted spreads along with benchmark curves and credit spreads. In addition, international bond markets are monitored daily for information pertaining to the issuer and/or the specific issue. To the extent that these inputs are observable and timely, the fair values of foreign government bonds and notes would be categorized as Level 2; otherwise the fair values would be categorized as Level 3.
Corporate Bonds and Notes and U.S. Government Agency Issues
Corporate bonds held by a Fund are generally comprised of two main categories: investment grade bonds and high yield bonds. Investment grade bonds are reported at fair value using various inputs and techniques, which include broker-dealer quotations, live trading levels, recently executed transactions in securities of the issuer or comparable issuers, issuer credit information, and option-adjusted spread models where applicable. Fair values for high yield bonds are based primarily on broker-dealer quotations from relevant market makers and recently executed
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PACIFIC LIFE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
transactions in securities of the issuer or comparable issuers. The broker-dealer quotations received are supported by credit analysis of the issuer that takes into consideration credit quality assessments, daily trading activity, and the activity of the underlying equities, listed bonds and sector-specific trends. To the extent that these inputs are observable and timely, the fair values of corporate bonds would be categorized as Level 2; otherwise the fair values would be categorized as Level 3.
U.S. Government Agency Issues are reported at fair value using various inputs and techniques, which include broker-dealer quotations, live trading levels, recently executed transactions in securities of the issuer, issuer credit information, and option-adjusted spread models where applicable. To the extent that these inputs are observable and timely, the fair values of U.S. Government Agency Issues would be categorized as Level 2; otherwise the fair values would be categorized as Level 3.
Futures Contracts
Futures contracts and options on futures contracts are traded on commodity exchanges and are fair valued based on quoted prices from the applicable exchange, and to the extent valuation adjustments are not applied to futures contracts, they are categorized as Level 1. To the extent that valuation adjustments are observable and timely, the fair values of futures contracts would be categorized as Level 2; otherwise the fair values would be categorized as Level 3.
Option Contracts
Exchange listed option contracts are traded on securities exchanges and are fair valued based on quoted prices from the applicable exchange, and to the extent valuation adjustments are not applied to exchange listed option contracts, they are categorized as Level 1. If valuation adjustments are applied and such adjustments are observable and timely, the fair values of exchange listed option contracts would be categorized as Level 2; otherwise the fair values would be categorized as Level 3. OTC option contracts are fair valued based on either broker-dealer quotations or pricing models that incorporate various inputs such as interest rates, credit spreads, currency exchange rates and volatility measurements for in-the-money, at-the-money, and out-of-the-money contracts based on a given strike price. To the extent that these inputs are observable and timely, the fair values of OTC option contracts would be categorized as Level 2; otherwise the fair values would be categorized as Level 3.
Forward Foreign Currency Contracts
Forward foreign currency contracts are fair valued using various inputs and techniques, which include broker-dealer quotations and foreign currency exchange rates gathered from leading market makers. To the extent that these inputs are observable and timely, the fair values of forward foreign currency contracts would be categorized as Level 2; otherwise the fair values would be categorized as Level 3.
Swaps
Interest Rate Swaps – Interest rate swaps that are actively traded and cleared on a securities exchange or swap execution facility are fair valued based on quoted prices from the applicable exchange, and are categorized as Level 2. Interest rate swaps traded over-the-counter are fair valued using pricing models that are based on real-time snap shots of relevant interest rate curves that are built using the most actively traded securities for a given maturity. The pricing models also incorporate cash and money market rates. In addition, market data pertaining to interest rate swaps are monitored regularly to ensure that interest rates are properly depicting the current market rate. To the extent that these inputs are observable and timely, the fair values of interest rate swaps would be categorized as Level 2; otherwise the fair values would be categorized as Level 3.
Credit Default Swaps – Credit default swaps that are actively traded and cleared on a securities exchange or swap execution facility are fair valued based on quoted prices from the applicable exchange, and are categorized as Level 2. Credit default swaps traded over-the-counter are fair valued using pricing models that take into account, among other factors, information received from market makers and broker-dealers, default probabilities from index specific credit spread curves, recovery rates, and cash flows. To the extent that these inputs are observable and timely, the fair values of credit default swaps would be categorized as Level 2; otherwise the fair values would be categorized as Level 3.
Total Return Swaps – Total return swaps that are actively traded and cleared on a securities exchange or swap execution facility are fair valued based on quoted prices from the applicable exchange, and are categorized as Level 2. Total Return swaps traded over-the-counter are fair valued using pricing models that take into account among other factors, index spread curves, nominal values, modified duration values and cash flows. To the extent that these inputs are observable and timely, the fair values of total return swaps would be categorized as Level 2; otherwise the fair values would be categorized as Level 3.
Senior Loan Notes
Floating rate senior loans (“Senior Loans”) are fair valued based on a quoted price received from a single broker-dealer or an average of quoted prices received from multiple broker-dealers or valued relative to other benchmark securities when broker-dealer quotes are unavailable. To the extent that these inputs are observable, the fair values of Senior Loans would be categorized as Level 2; otherwise the fair values would be categorized as Level 3.
Short-Term Investments
Short-term investments maturing within 60 days are valued using amortized cost, which is used if it approximates market value, and are categorized as Level 2.
Credit-Oriented Investments
For non-publicly traded instruments that represent debt to the Trust, the carrying amount approximates fair value due to the relatively short-term maturity of these financial instruments. The Trust may use market transactions for identical or similar instruments or a market yield approach, which utilizes expected future cash flows that are discounted using estimated current market rates. Discounted cash flow calculations
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PACIFIC LIFE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
may be adjusted to reflect current market conditions and/or the perceived credit risk of each Fund as applicable. Consideration may also include an evaluation of collateral. To the extent that these inputs are observable and timely, the fair values for credit-oriented investments are categorized as Level 2; otherwise the fair values would be categorized as Level 3.
4. INVESTMENTS AND RISKS
General Investment Risks
An investment in each Fund represents an indirect investment in the assets owned by that Fund. As with any mutual fund, the value of the assets owned by each Fund may move up or down, and as a result, an investment in a Fund at any point in time may be worth more or less than the original amount invested. Events in the financial markets have the potential to cause increased volatility and uncertainty, which may impact the value of each Fund’s investments. Due to interdependencies between markets, events in one market may adversely impact other markets or issuers in unforeseen ways. As a result, the value of each Fund’s investments may be adversely affected by events in the markets, either directly or indirectly, and each Fund is exposed to potential decreases in the value of those investments. In addition, traditionally liquid investments may experience periods of diminished liquidity. Governmental and regulatory responses to market events may impair either the Adviser’s or a sub-adviser’s ability to pursue certain investment techniques or strategies and may have unexpected consequences on particular markets, strategies, or investments. Future events may impact a Fund in unforeseen ways, leading a Fund to alter its existing strategies or, potentially, to liquidate and close.
Fund of Funds Investments
The PL Diversified Alternatives Fund is a fund of funds and therefore is exposed to the same risks as the PL Underlying Funds and PL Floating Rate Income Fund (Class P shares) in direct proportion to the allocation of assets among those funds. This annual report contains information about the risks associated with investing in the PL Underlying Funds. The risks associated with investing in the PL Floating Rate Income Fund are not included in this report. See the Where to Go for More Information section of this report on page F-24 for information on the annual report for the PL Floating Rate Income Fund. Allocations among the PL Underlying Funds and PL Floating Rate Income Fund are determined using an asset allocation process, which seeks to provide performance that has a low to moderate correlation with the performance of traditional equity and fixed income asset classes over long-term periods. The allocations of the PL Diversified Alternatives Fund may not effectively decrease risk or increase returns for investors, and the selection and weighting of allocations to asset classes and/or PL Underlying Funds and PL Floating Rate Income Fund may cause them to underperform other mutual funds with a similar investment objective. The PL Diversified Alternatives Fund may invest a significant portion of its assets in any one or several PL Underlying Funds and PL Floating Rate Income Fund (See Note 7C).
Equity Investments
The price of equity investments change in response to many factors, including a company’s historical and prospective earnings, cash flows, the value of its assets, investor perceptions and many of the factors discussed in General Investment Risks above.
Debt Investments
Debt investments are affected primarily by the financial condition of the companies or other entities that have issued them and by changes in interest rates, although the factors noted above may also have a significant impact on debt investments. There is a risk that an issuer of a Fund’s debt investments may not be able to meet its financial obligations (e.g., may not be able to make principal and/or interest payments when they are due or otherwise default on other financial terms) and/or go bankrupt. Securities such as high-yield/high-risk bonds, e.g., bonds with low credit ratings by Moody’s (Ba or lower) or Standard & Poor’s (BB and lower) or if unrated are of comparable quality as determined by the manager, are especially subject to credit risk during periods of economic uncertainty or during economic downturns and are more likely to default on their interest and/or principal payments than higher rated securities. Debt investments may be affected by changes in interest rates. Debt investments with longer durations tend to be more sensitive to changes in interest rates, making them more volatile than debt investments with shorter durations or floating or adjustable interest rates. The value of debt investments may fall when interest rates rise. Given the historically low interest rate environment in the U.S., risks associated with rising interest rates are heightened. Certain monetary policies enacted by the Federal Reserve (“Fed”) can have a significant impact on the financial markets and the Trust. The Fed’s tapering of its monetary stimulus quantitative easing (“QE”) program, by gradually winding down its bond purchases, may result in periods of dramatic market volatility and may negatively impact the value of debt securities. Additionally, new regulations applicable to and changing business practices of broker-dealers that make markets in debt investments may result in those broker-dealers restricting their market making activities for certain debt investments, which may reduce the liquidity and increase the volatility of such debt investments.
Certain asset-backed instruments, such as collateralized debt obligations, collateralized mortgage obligations and other mortgage-related securities, structured investment vehicles and other debt investments may have exposure to subprime loans or subprime mortgages, which are loans to persons with lower credit ratings. These instruments may present credit risk that is not transparent and that is greater than indicated by their ratings. The value of these instruments may be more acutely affected by downturns in the credit markets or the real estate market than certain other investments, and it may be difficult to value these instruments because of a thin secondary market.
Foreign Investments
There are certain additional risks involved in investing in foreign securities that are generally not inherent in investments in domestic securities. These risks may involve foreign currency fluctuations, adverse political, social and economic developments and the possible imposition of currency exchange blockages or other foreign governmental laws or restrictions. In addition, the securities of some foreign companies and securities markets are less liquid and at times more volatile than securities of comparable U.S. companies and U.S. securities markets. The markets in emerging markets countries can be extremely volatile.
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PACIFIC LIFE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
Senior Loan Participations and Assignments
Certain Funds may invest in Senior Loans of domestic or foreign corporations, partnerships and other entities (“Borrowers”), the interest rates of which float or adjust periodically based upon a specified adjustment schedule, benchmark indicator, or prevailing interest rates. Senior Loans generally pay interest at rates which are periodically redetermined by reference to a base lending rate plus a premium. These base lending rates generally include prime rates of one or more major U.S. banks, London Interbank Offered Rates (“LIBOR”) or certificates of deposit rates. Senior Loans often require prepayments from excess cash flow or permit the Borrower to repay at its election. The degree to which Borrowers repay cannot be predicted with accuracy. As a result, the actual maturity may be substantially less than the stated maturities. Senior Loans are exempt from registration under the Securities Act of 1933, may contain certain restrictions on resale, and cannot be sold publicly. A Fund’s investments in Senior Loans may be in the form of participations in loans or assignments of all or a portion of loans from third parties.
When a Fund purchases assignments, it acquires all the rights and obligations under the loan agreement of the assigning lender. Assignments may, however, be arranged through private negotiations between potential assignees and potential assignors, and the rights and obligations acquired by the purchaser of an assignment may differ from, and be more limited than those held by the assigning lender.
When a Fund purchases a participation of a Senior Loan interest, the Fund typically enters into a contractual agreement with the lender or other third party selling the participation. A participation interest in Senior Loans includes the right to receive payments of principal, interest and any fees to which it is entitled from the lender and only upon receipt by the lender of payments from the Borrower, but not from the Borrower directly. When investing in a participation interest, if a Borrower is unable to meet its obligations under a loan agreement, a Fund generally has no right to enforce compliance with the terms of the loan agreement. As a result, the Fund assumes the credit risk of the Borrower, the selling participant, and any other persons that are interpositioned between the Fund and the Borrower. If the lead lender in a typical lending syndicate becomes insolvent, enters Federal Deposit Insurance Corporation (“FDIC”) receivership or, if not FDIC insured, enters into bankruptcy, the Fund may incur certain costs and delays in receiving payment or may suffer a loss of principal and/or interest. As of March 31, 2014, no participation interest in Senior Loans was held by any of the Funds presented in these financial statements.
Inflation-Indexed Bonds
Certain Funds may invest in inflation-indexed bonds. Inflation-indexed bonds are debt securities whose principal value is periodically adjusted to the rate of inflation. The interest rate on these bonds is generally fixed at issuance at a rate lower than typical bonds. Over the life of an inflation-indexed bond, however, interest will be paid based on a principal value, which is adjusted for inflation. Any increase or decrease in the principal amount of an inflation-indexed bond will result in an adjustment to interest income.
Mortgage-Related and Other Asset-Backed Securities
Certain Funds may invest in mortgage-related and other asset-backed securities. These securities include mortgage pass-through securities, collateralized mortgage obligations (“CMOs”), collateralized loan obligations (“CLOs”), mortgage dollar rolls, CMO residuals, stripped mortgage-backed securities (“SMBS”), and other securities that directly or indirectly represent a participation in, or are secured by and payable from, mortgage loans secured by real property. Mortgage-related and other asset-backed securities are debt securities issued by a corporation, trust or custodian, or by a U.S. Government agency or instrumentality, that are collateralized by a pool of mortgages, mortgage pass-through securities, U.S. Government securities or other assets. The value of some mortgage-related and asset-backed securities may be particularly sensitive to changes in prevailing interest rates. Early repayment of principal on some mortgage-related securities may expose the Trust to a lower rate of return upon reinvestment of principal. The value of these securities may fluctuate in response to the market’s perception of the creditworthiness of the issuers. Additionally, although mortgage and mortgage-related securities are generally supported by some form of government or private guarantee and/or insurance, there is no assurance that private guarantors or issuers will meet their obligations.
SMBS represent a participation in, or are secured by and payable from, mortgage loans on real property, and may be structured in classes with rights to receive varying proportions of principal and interest. SMBS include interest-only securities (“IOs”), which receive all of the interest, and principal-only securities (“POs”), which receive the entire principal. The cash flows and yields on IOs are extremely sensitive to the rate of principal payments (including prepayments) on the underlying mortgage loans. If the underlying mortgages experience higher than anticipated prepayments, an investor in IOs of SMBS may fail to recoup fully its initial investment, even if the IOs are highly rated or are derived from securities guaranteed by the U.S. Government. Unlike other debt and other mortgage-backed securities, the market value of IOs tends to move in the same direction as interest rates. As prepayments on the underlying mortgages of POs increase, the yields on POs increase. Payments received from IOs are recorded as interest income. Because principal will not be received at the maturity of an IO, adjustments are made to the book value of the security on the coupon date until maturity. These adjustments are included in interest income. Payments received from POs are treated as reductions to the cost and par value of the securities. Any excess principal paydown gains or losses associated with the payments received are recorded as interest income.
U.S. Government Agencies or Government-Sponsored Enterprises
Certain Funds may invest in 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. The U.S. Government does not guarantee the NAV of each Fund’s shares. Some U.S. Government securities, such as Treasury Bills, Treasury Notes, Treasury Bonds, and securities guaranteed by 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 Bank, are supported by the right of the issuer to borrow from the U.S. Department of the Treasury (the “U.S. Treasury”); 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. Securities not backed by the full faith and credit of the U.S. Government may be subject to a greater risk of default. U.S. Government securities may include zero coupon securities, which do not distribute interest on a current basis and tend to be subject to greater risk than interest-paying securities of similar maturities.
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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, the common stock of which is owned entirely by private stockholders. 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.
When-Issued Securities
Certain Funds may purchase and sell securities on a when-issued basis. These transactions are made conditionally because a security, although authorized, has not yet been issued in the market. A commitment by a Fund is made regarding these transactions to purchase or sell securities for a predetermined price or yield, with payment and delivery taking place beyond the customary settlement period. A Fund may sell when-issued securities before they are delivered, which may result in a capital gain or loss. Risk may arise upon entering these contracts from the potential inability of a counterparty to meet the terms of their contracts, or if the issuer does not issue the securities due to political, economic, or other factors.
Delayed-Delivery Transactions
Certain Funds may purchase or sell securities on a delayed-delivery basis. Payment and delivery may take place after the customary settlement period for that security. The price or yield of the underlying securities is fixed at the time the transaction is negotiated. When delayed- delivery purchases are outstanding, a Fund will set aside, and maintain until the settlement date in a segregated account, liquid assets in an amount sufficient to meet the purchase price. When purchasing a security on a delayed-delivery basis, a Fund assumes the rights and risks of ownership of the security, including the risk of price and yield fluctuations, and takes such fluctuations into account when determining its NAV. A Fund may dispose of or renegotiate a delayed-delivery transaction after it is entered into, and may sell delayed-delivery securities before they are delivered, which may result in a capital gain or loss. When a Fund has sold a security on a delayed-delivery basis, the Fund does not participate in future gains and losses with respect to the security.
Short Sales
Certain Funds may enter into short sales. A short sale is a transaction in which a Fund sells securities it does not own. A Fund’s use of short sales involves the risk that the price of the security in the open market may be higher when purchased to close out the Fund’s short position, resulting in a loss to the Fund. Such a loss is theoretically unlimited because there is no limit on the potential increase in the price of a security or guarantee as to the price at which the manager would be able to purchase the security in the open market.
When a Fund sells securities short, it must borrow those securities to make delivery to the buyer. The Fund incurs an expense for such borrowing. The Fund may be required to pledge a portion of its assets to the broker as collateral for the borrowed securities. The Fund may not be able to purchase a security that it needs to deliver to close out a short position at an acceptable price. This may result in losses and/or require the Fund to sell long positions before the manager had intended. A Fund may not be able to successfully implement its short sale strategy, which may limit its ability to achieve its investment goal, due to limited availability of desired or eligible securities, the cost of borrowing securities, regulatory changes limiting or barring short sales, or for other reasons. Securities sold in short sale transactions and the interest and dividends payable on such securities, if any, are recorded as a liability.
The use of proceeds received from selling short to purchase additional securities (long positions), results in leverage which may increase a Fund’s exposure to long positions. Leverage could magnify gains and losses and, therefore, increases a Fund’s volatility.
Repurchase Agreements
Certain Funds may enter into repurchase agreements with institutions that the Adviser or sub-adviser has determined are creditworthy. Under the terms of a typical repurchase agreement, a Fund takes possession of an underlying security (collateral) subject to an obligation of the seller to repurchase, and a Fund to resell, the security at an agreed upon price and time. Repurchase agreements permit a Fund to maintain liquidity and potentially earn income over periods of time that may be as short as overnight. The collateral for all repurchase agreements are held in safekeeping for the benefit of the Funds at the Trust’s custodian, or broker-dealer, or a designated sub-custodian under a tri-party repurchase agreement. All repurchase agreements entered into by a Fund are collateralized with cash or securities of a type that a Fund is permitted to hold. The collateral is evaluated daily to ensure its market value equals or exceeds the current market value of the repurchase agreements, including accrued interest, except in the case of a repurchase agreement entered into for the purposes of selling a security short, where the value of the collateral delivered to a Fund must equal or exceed 95% of the value of the repurchase price during the term of the repurchase agreement. The terms of a repurchase agreement entered into for the purposes of selling a security short may provide that the cash purchase price paid by a Fund is more than the value of the collateral received that it is obligated to return to the counterparty under the repurchase agreement. Since in such a transaction, a Fund normally will have used the collateral received to settle the short sale, a Fund will segregate liquid assets equal to the marked to market value of the collateral received that it is obligated to return to the counterparty under the repurchase agreement.
In the event of default on the obligation to repurchase a security held by a Fund as collateral, the Fund has the right to liquidate the security and apply the proceeds to the counterparty’s obligations to a Fund under the repurchase agreement. Upon an event of default under the repurchase agreement, if the seller defaults and the value of the collateral declines or if the seller enters an insolvency proceeding, realization of the collateral by the Fund may be delayed, limited or wholly denied.
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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 1940 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 (see Note 5).
Reverse Repurchase Agreements – Certain Funds may enter into reverse repurchase agreements. In a reverse repurchase agreement, a Fund sells to a financial institution a security that it holds with an agreement to repurchase the same security at the agreed-upon price and date. Securities sold under reverse repurchase agreements are recorded as a liability. Interest payments made are recorded as a component of interest expense. 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 reverse repurchase agreement involves the risk that the market value of the security sold by a Fund may decline below the repurchase price of the security. A Fund will segregate assets determined to be liquid by the fund manager or otherwise cover its obligations under reverse repurchase agreements.
Sale-Buybacks Financing Transactions – Certain Funds may enter into 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. Such transactions are recorded as secured borrowings. 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 recorded as a liability. 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. Interest payments based upon negotiated financing terms made by the Fund to counterparties are recorded as a component of interest expense. 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 a Fund. A Fund will segregate assets determined to be liquid or otherwise cover its obligations under sale-buyback transactions.
Segregation and Collateral
If a Fund engages in certain transactions such as derivative investments or repurchase agreements, it may require collateral in the form of cash or investments to be held in segregated accounts at the Trust’s custodian, with an exchange or clearing member firm, or segregated on the Trust’s books and records maintained by the custodian and/or the fund manager. In each instance that segregation of collateral is required, it is done so in accordance with the 1940 Act and/or any interpretive guidance issued by the SEC. There is a possibility that a Fund could experience a delay in selling investments that are segregated as collateral.
5. DERIVATIVE INVESTMENTS AND RISKS, AND ENFORCEABLE MASTER NETTING ARRANGEMENTS
A. PRINCIPAL MARKET RISKS MANAGED BY INVESTING IN DERIVATIVES
Derivative instruments are investments whose values are tied to the value of an underlying security or asset, a group of assets, interest rates, exchange rates, currency or an index. Certain Funds are permitted to invest in derivative instruments, including, but not limited to, futures contracts, option contracts, forward foreign currency contracts and swap agreements. Derivatives may have little or no initial cash investment value relative to their market value exposure and therefore can produce significant gains or losses in excess of their cost. This is sometimes referred to as leverage. Leverage can magnify a Fund’s gains and losses and therefore increase its volatility. A Fund’s investments in derivatives may increase, decrease or change the level or types of exposure to certain risk factors. The primary risks a Fund may attempt to manage through investing in derivative instruments include, but are not limited to, interest rate, foreign investments and currency, price volatility, and credit (including counterparty) risks.
Interest rate risk – A Fund may be exposed to interest rate risk through investments in debt securities. Interest rate risk is the risk that debt securities will decline in value as a result of changes in interest rates. For example, the value of bonds, fixed rate loans and short-term money market instruments may decline in value when interest rates rise. In a low interest rate environment, the risks associated with rising interest rates are heightened. Debt securities with longer durations tend to be more sensitive to changes in interest rates, making them more volatile than debt securities with shorter durations or money market instruments. Therefore, duration is a potentially useful tool to measure the sensitivity of a debt security’s yield (market price to interest rate movement). To manage these risks, certain Funds may invest in derivative instruments tied to interest rates.
Foreign investments and currency risk – A Fund may be exposed to foreign investments and/or currency risk through direct investment in securities or through options, futures or currency transactions. The prices of foreign securities that are denominated in foreign currencies are affected by the value of the U.S. dollar. With respect to securities denominated in foreign currencies, in general, as the value of the U.S. dollar rises, the U.S. dollar price of a foreign security will fall. As the value of the U.S. dollar falls, the U.S. dollar value of the foreign security will rise. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons. Foreign investments may be riskier than U.S. investments for many reasons, including changes in currency exchange rates, unstable political and economic conditions, a lack of adequate and timely company information, differences in the way securities markets operate, relatively lower market liquidity, less stringent financial reporting and accounting guidance and controls, less secure foreign banks or securities depositories than those in the U.S., foreign taxation issues and foreign controls on investments. As a result, a Fund’s investments in foreign currency-denominated securities and other foreign investments may reduce the returns of the Fund. To manage these risks, certain Funds may invest in derivative instruments tied to foreign investments and/or currencies.
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Price volatility risk – Derivatives tied to equity and debt securities are exposed to potential price volatility. Debt securities are affected by many factors, including prevailing interest rates, market conditions and market liquidity. Volatility of below investment grade debt securities (including loans) may be relatively greater than for investment grade debt securities. Equity securities tend to go up or down in value, sometimes rapidly and unpredictably. The prices of equity securities change in response to many factors, including a company’s historical and prospective earnings, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. Due to the complexities of markets, events in one market or sector may adversely impact other markets or sectors.
To manage these risks, certain Funds may invest in various derivative instruments. Derivative instruments may be used to manage a Fund’s exposure to price volatility risk but may also be subject to greater price volatility than investments in traditional securities. The value of commodity-linked 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 risk – Credit risk is the risk that a debt security’s issuer (or borrower or counterparty) will be unable or unwilling to meet its financial obligations (e.g., may not be able to make principal and/or interest payments when they are due or otherwise default on other financial terms) and/or may go bankrupt. This is also sometimes described as counterparty risk. A Fund may lose money if the issuer or guarantor of debt security, or counterparty of a derivative contract, repurchase or reverse repurchase agreement, or a loan of Fund securities, is unable or unwilling to make timely principal and/or interest payments, or to otherwise honor its obligations. A Fund may attempt to minimize concentrations of credit risk by undertaking transactions with a large number of borrowers or counterparties on recognized and reputable exchanges. A Fund’s investments in debt investments may range in quality from those rated in the lowest category in which it is permitted to invest to those rated in the highest category by a rating agency, or if unrated, determined by the manager to be of comparable quality.
Similar to credit risk, a Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which a Fund has unsettled or open transactions will default. Financial assets of counterparties, which potentially expose a Fund to counterparty risk, consist mainly of cash due from counterparties and investments. Certain managers may attempt to minimize credit risks to a Fund by performing extensive reviews of each counterparty, entering into transactions with counterparties that the manager believes to be creditworthy at the time of the transaction and requiring the posting of collateral in applicable transactions. To manage these risks, certain Funds may invest in derivative instruments tied to a security issuers’ financial strength.
A Fund’s transactions in listed securities are settled/paid for upon delivery with their counterparties. Therefore, the risk of counterparty default for listed securities 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 obligations.
Master Agreements and Netting Arrangements – Certain Funds are parties to various agreements, including but not limited to International Swaps and Derivatives Association Agreements and related Credit Support Annex, Master Repurchase Agreements, and Master Securities Forward Transactions Agreements (collectively “Master Agreements”), which govern the terms of certain transactions with select counterparties. These Master Agreements generally include provisions for general obligations, representations, agreements, collateral and certain events of default or termination. These Master Agreements also include provisions for netting arrangements that help reduce credit and counterparty risk associated with relevant transactions. The netting arrangements are generally tied to credit related events that if triggered, would cause an event of default or termination giving a Fund or counterparty the right to terminate early and cause settlement, on a net basis, of all transactions under the applicable Master Agreement. In the event of an early termination as a result of an event of default under the Master Agreement, the total value exposure of all transactions will be offset against collateral exchanged to date, which would result in a net receivable or payable that would be due from or to the counterparty. Credit related events include, but are not limited to, bankruptcy, failure to make timely payments, restructuring, obligation acceleration, obligation default, a material decline in net assets, decline in credit rating or repudiation/moratorium. Any election made by a counterparty to early terminate the transactions under a Master Agreement could have a material adverse impact on a Fund’s financial statements. A Fund’s overall exposure to credit risk, subject to netting arrangements, can change substantially within a short period, as it is affected by each transaction subject to the arrangement.
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 under the relevant Master Agreement with a counterparty in a given Fund exceeds a specified threshold, net of collateral already in place, which typically ranges from $0 to $250,000 depending on the counterparty and the type of Master Agreement. Collateral under the Master Agreements is usually in the form of cash or U.S. Treasury Bills but could include other types of securities. The value of all derivative transactions outstanding under a Master Agreement is calculated daily to determine the amount of collateral to be received or pledged by the counterparty. Posting of collateral for OTC derivative transactions are covered under tri-party collateral agreements between the Trust, the Trust’s Custodian and each counterparty. Collateral for centrally cleared derivatives transactions are posted with the applicable derivatives clearing organization.
B. DERIVATIVE INVESTMENTS AND ENFORCEABLE MASTER NETTING ARRANGEMENTS
In addition to managing the market risks described above, certain Funds, if permitted by their investment objectives, may also invest in derivatives for purposes of hedging, duration management, to gain exposure to specific investment opportunities, as a substitute for securities, to enhance returns, or to otherwise help achieve a Fund’s investment goal. Each derivative instrument and the reasons a Fund invested in derivatives during the reporting period are discussed in further detail below.
Futures Contracts – A futures contract is a commitment to buy or sell a specific amount of a financial instrument or commodity at a negotiated price on a specified future date. Futures contracts are subject to the possibility of illiquid markets, and the possibility of an imperfect correlation between the value of the instruments and the underlying securities. Initial margin deposits are made upon entering into futures contracts and can be funded with either cash or securities. During the period a futures contract is open, changes in the value of the contract are recognized as
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unrealized appreciation or depreciation by marking-to-market on a daily basis to reflect the market value of the contract at the end of each day’s trading. Variation margin receivables or payables represent the difference between the change in unrealized appreciation and depreciation on the open contracts and the cash deposits made on the margin accounts. When the contract is closed, a Fund records a realized gain or loss equal to the difference between the proceeds from (or cost of) the closing transaction and the Fund’s cost of the contract. Futures contracts are valued at the settlement price established each day by the board of trade or exchange on which they are traded.
During the reporting period, the Funds entered into futures contracts for the following reasons: The PL Inflation Managed and PL Managed Bond Funds used futures contracts to manage interest rate exposure, as a substitute for cash bond exposure, and for purposes of liquidity. The PL Short Duration Bond Fund entered into U.S. Treasury futures to hedge interest rate exposure and to manage duration. The PL Emerging Markets Debt Fund entered into futures contracts to manage duration and to hedge against U.S. dollar denominated bonds. The PL Large-Cap Growth Fund entered into futures contracts to hedge exposure to foreign currency exchange rate risk and to increase returns. The PL International Value Fund entered into futures contracts to for risk management purposes to manage currency deviations relative to the benchmark. The PL Global Absolute Return Fund entered into futures contracts to manage duration and interest rate risk, to maintain full exposure to the equities market, to manage exposure to various securities markets, to provide daily liquidity for the Fund’s inflows and outflows, and as a part of the Fund’s investment strategy.
Option Contracts – An option contract is a commitment that gives the purchaser of the contract the right, but not the obligation, to buy or sell an underlying asset at a specific price on or before a specified future date. On the other hand, the writer of an option contract is obligated, upon the exercise of the option, to buy or sell an underlying asset at a specific price on or before a specified future date. A swaption is an option contract granting the owner the right to enter into an underlying swap. Inflation-capped options are options on U.S. inflation rates at a stated strike price. The seller of an inflation-capped option receives an upfront premium and in return the buyer receives the right to receive a payment at the expiration of the option if the cumulative annualized inflation rate over the life of the option is above (for caps) or below (for floors) the stated strike price. The purpose of inflation-capped options is to protect the buyer from inflation erosion above a certain rate on a given notional exposure. A floor can be used to give downside protection to investments in inflation-linked products below a certain rate on a given notional exposure. Writing put options or purchasing call options tends to increase a Fund’s exposure to the underlying instrument. Writing call options or purchasing put options tends to decrease a Fund’s exposure to the underlying instrument. When a Fund writes or purchases a call, put, or inflation-capped option, an amount equal to the premium received or paid by the Fund is recorded as a liability or an investment, respectively, and subsequently adjusted to the current market value, based on the quoted daily settlement price of the option written or purchased. Certain options may be written or purchased with premiums to be determined on a future date. The premiums for these options are based upon implied volatility parameters at specified terms. Premiums received or paid from writing or purchasing options, which expire unexercised, are treated by a Fund on the expiration date as realized gains or losses. The difference between the premium and the amount paid or received on a closing purchase or sale transaction, including brokerage commissions, is also treated as a realized gain or loss. If an option is exercised, the premium paid or realized is added to the cost of the purchase or proceeds from the sale in determining whether the Fund has realized a gain or loss on investment transactions. A Fund, as a writer of an option, may have 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 underlying written option. In addition, an illiquid market may make it difficult for a Fund to close out an option contract.
The maximum risk of loss associated with writing put options is limited to the exercised fair value of the option contract. The maximum risk of loss associated with writing call options is potentially unlimited. Listed option contracts present minimal counterparty credit risk since they are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange-traded options, guarantees the options against default. A Fund’s maximum risk of loss from counterparty credit risk related to OTC option contracts is limited to the premium paid.
During the reporting period, the Funds entered into option contracts for the following reasons: The PL Inflation Managed and PL Managed Bond Funds purchased and/or wrote options and swaptions on futures, currencies and swaps, as a means of capitalizing on anticipated changes in market volatility and to generate income. Both Funds also utilized inflation floors to hedge duration. The PL Emerging Markets Debt Fund entered into option contracts for purposes of hedging and as a part of the Fund’s investment strategy. The PL Growth Fund invested in option contracts for purposes of risk management and as a part of the Fund’s investment strategy. The PL Mid-Cap Growth Fund purchased or wrote options to establish or increase exposure to an underlying security, as a substitute for securities, and in connection with settling planned sales of securities. The PL Global Absolute Return Fund purchased or wrote options for purposes of risk management and as a part of the Fund’s investment strategy.
Forward Foreign Currency Contracts – A forward foreign currency contract (“Forward Contract”) is a commitment to buy or sell a specific amount of a foreign currency at a negotiated price on a specified future date. Forward Contracts can help a Fund manage the risk of changes in currency exchange rates. These contracts are marked-to-market daily at the applicable forward currency translation rates. A Fund records realized gains or losses at the time the Forward Contract is closed. A Forward Contract is extinguished through a closing transaction or upon delivery of the currency or entering an offsetting contract. A Fund’s maximum risk of loss from counterparty credit risk related to Forward Contracts is the fair value of the contract. The risk may be mitigated to some extent if a master netting arrangement between a Fund and the counterparty is in place and to the extent a Fund obtains collateral to cover the Fund’s exposure to the counterparty.
During the reporting period, the Funds entered into Forward Contracts for the following reasons: The PL Inflation Managed and PL Managed Bond Funds entered into Forward 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 part of each Funds’ investment strategy. The PL Short Duration Bond and PL Growth Funds entered into Forward Contracts for hedging purposes to help protect the Fund’s returns against adverse currency movements. The PL Emerging Markets Debt Fund entered into Forward Contracts to help protect the Fund’s returns against adverse currency movements, to gain market exposure, and as part of the Fund’s investment strategy. The PL Comstock Fund entered into Forward Contracts for risk management purposes to mitigate currency risk and isolate securities selection as the primary driver of performance. The PL Large-Cap
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Growth Fund entered into Forward Contracts to hedge against a specific security, or to establish or hedge exposure away from foreign currencies. The PL International Value Fund entered into Forward Contracts for risk management purposes to manage currency deviations relative to the benchmark. The PL Currency Strategies Fund purchased or sold non-deliverable Forward Contracts to gain or increase exposure to various currencies (both long and short positions) for hedging purposes to protect the Fund’s returns against adverse currency movements and as a part of the Fund’s investment strategy. The PL Global Absolute Return Fund entered into Forward Contracts to hedge against currency exposure associated with the Fund’s investments, to shift foreign currency exposure back to U.S. dollars, to shift investment exposure from one currency to another, to increase returns, and as a substitute for securities.
Swap Agreements – Swap agreements are bilaterally negotiated agreements between the Funds and their counterparties to exchange cash flows, assets, foreign currencies or market-linked returns at specified intervals. Swap agreements are privately negotiated in the OTC market or may be executed in a multilateral or other execution facility platform, such as a registered commodities exchange (“centrally cleared swaps”). In connection with these agreements, securities may be identified as collateral 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 received from third party vendors or quotations from market makers. Market values greater than zero are recorded as an asset and market values less than zero are recorded as a liability. The change in value of swaps, including accruals of periodic amounts of interest to be paid or received on swaps, is recorded as unrealized appreciation or depreciation. Daily changes in valuation of centrally cleared swaps, if any, are recorded as variation margin receivable or payable. OTC swap payments received or made at the beginning of the measurement period are recorded as an asset or liability and represent payments made 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). These upfront payments are recorded as realized gain or loss when the swap is closed. A liquidation payment received or made at the termination of the swap is recorded as realized gain or loss. Net periodic payments received by a Fund are recorded as realized gain.
Interest Rate Swaps – Interest rate swap agreements involve the exchange by a Fund with another party of their respective commitments to pay or receive interest with respect to 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 counterparty may terminate the swap transaction in whole at zero cost by 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 money markets.
Certain Funds hold fixed rate bonds whose value may decrease if interest rates rise. To help hedge against this risk and to maintain the ability to generate income at prevailing market rates, certain Funds enter into interest rate swap agreements.
A Fund investing in interest rate swaps is subject to the risk that there is no liquid market for these agreements, that the counterparties may default on their obligations to perform or disagree as to the meaning of the contractual terms in the agreements, or that there may be unfavorable changes in interest rates. A Fund’s maximum risk of loss from counterparty credit risk related to interest rate swaps is the discounted net value of the cash flows to be received from/paid to the counterparty over the contract’s remaining life, to the extent that the amount is positive. The risk may be mitigated to some extent if a master netting arrangement between a Fund and the counterparty is in place and to the extent a Fund obtains collateral to cover the Fund’s exposure to the counterparty.
Cross-currency swaps are interest rate swaps in which interest cash flows are exchanged between two parties based on the notional amounts of two different currencies. The notional amounts are typically determined based on the spot exchange rates at the inception of the trade. Cross-currency swaps also involve the exchange of the notional amounts at the start of the contract at the current spot rate with an agreement to re-exchange such amounts at a later date at either the same exchange rate, a specified rate or the then current spot rate. The entire principal value of a cross-currency swap is subject to the risk that the counterparty to the swap will default on its contractual delivery obligations.
During the reporting period, the Funds entered into interest rate swaps for the following reasons: The PL Inflation Managed and PL Managed Bond Funds entered into interest rate swaps to manage nominal or real interest rate risk in various global markets, and as a substitute for cash bond exposure. The PL Emerging Markets Debt Fund entered into interest rate swaps for purposes of risk management, to gain exposure to the various markets, and as part of the Fund’s investment strategy. The PL Global Absolute Return Fund entered into interest rate swaps to manage interest rate risk, to gain or mitigate exposure to various currencies and securities markets, and to increase returns.
Credit Default Swaps – 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, a Fund generally receives an upfront payment or a fixed rate of income throughout the term of the swap provided there is no credit event. As the seller, a Fund would effectively add leverage to its Fund because, in addition to its total net assets, a Fund would be subject to investment exposure on the notional amount of the swap.
A Fund investing in credit default swaps is subject to the risk that there is no liquid market for these agreements, that the counterparties may default on their obligations to perform or disagree as to the meaning of the contractual terms in the agreements, or that there may be unfavorable changes in interest rates.
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
D-12
PACIFIC LIFE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
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 assumed 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 issues, sovereign issues of an emerging country or U.S. Treasury obligation 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 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 issues, sovereign issues of an emerging country or U.S. Treasury obligation 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 asset-backed securities 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 default or other credit event. Unlike credit default swaps on corporate and sovereign issues of an emerging country, deliverable obligations in most instances would be limited to the specific referenced obligation as performance for asset-backed securities can vary across deals. Prepayments, principal paydowns, and other writedowns or loss events on the underlying mortgage loans will reduce the outstanding principal balance of the referenced obligation. These reductions may be temporary or permanent as defined under the terms of the swap agreement and the notional amount for the swap agreement will be adjusted by corresponding amounts. A Fund may use credit default swaps on asset-backed securities to provide a measure of protection against defaults of the referenced obligation or to take an active long or short position with respect to the likelihood of a particular referenced obligation’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. Credit default swap agreements on indices are benchmarks for protecting investors owning bonds against default. A credit index is a list of 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 Fund of credit default swaps or bonds with a credit default swap on indices which is less expensive than it would be to buy many credit default swaps to achieve a similar effect.
An implied credit spread is the spread in yield between a U.S. Treasury security and the referenced obligation or underlying investment that are identical in all respects except for the quality rating. Wider credit spreads, 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. Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap agreements on corporate issues, sovereign issues of an emerging country or U.S. Treasury obligation issues as of period end, are disclosed in the Notes to Schedules of Investments and 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. 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.
A Fund may use pair trades of credit default swaps. Pair trades attempt to match a long position with a short position of two securities in the same market sector for hedging purposes. Pair trades of credit default swaps attempt to gain exposure to credit risk while hedging or offsetting the effects of overall market movements. For example, a Fund may purchase protection through a credit default swap referenced to the debt of an issuer, and simultaneously selling protection through a credit default swap referenced to the debt of a different issuer with the intent to realize gains from the pricing differences of the two issuers who are expected to have similar market risks.
A Fund may use spread curve trades by simultaneously purchasing and selling protection through credit default swaps referenced to the same issuer but with different maturities. Spread curves attempt to gain exposure to credit risk on a forward basis by realizing gains on the expected differences in spreads.
A Fund’s maximum risk of loss from counterparty credit risk related to credit default swaps, either as the buyer or seller of protection, is the fair value of the contract. The risk may be mitigated to some extent if a master netting arrangement between a Fund and the counterparty is in place and to the extent a Fund obtains collateral to cover the Fund’s exposure to the counterparty.
D-13
PACIFIC LIFE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
The aggregate fair value of credit default swaps in a net liability position is reflected as unrealized depreciation and is disclosed in the Notes to Schedules of Investments. The collateral posted, net of assets received as collateral, for swap contracts is also disclosed in the Notes to Schedules of Investments. 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 is an amount equal to the notional amount of the agreement. Notional amounts of all credit default swap agreements outstanding as of March 31, 2014 for which a Fund is the seller of protection are disclosed in the Notes to Schedules of Investments. These potential amounts are 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.
During the reporting period, the Funds entered into credit default swaps for the following reasons: The PL Managed Bond Fund sold credit protection through credit default swaps on credit indices to increase exposure to the credit risk of individual securities or to the broader investment grade, high yield, or emerging market sectors. The PL Inflation Managed Fund sold credit protection through credit default swaps on credit indices to increase exposure to the credit risk of individual securities or to the investment grade sector. The PL Global Absolute Return Fund entered into credit default swaps to hedge exposure to the Fund’s investments, to increase or decrease credit exposure to various indices, individual issuers and securities or groups or securities, and to increase returns.
Total Return Swaps – A Fund investing in total return swaps is subject to the risk that there is no liquid market for these agreements, that the counterparties may default on their obligations to perform or that there may be unfavorable changes in the value of the underlying index or reference instrument (generally caused by changes in interest rates or declines in credit quality). A total return swap agreement is one in which one party makes payments based on a set rate, either fixed or variable, while the other party makes payments based on the return of an underlying index or reference instrument, which includes both the income it generates and any capital gains. To the extent the total return of the index or reference instrument underlying the transaction exceeds or falls short of the offsetting interest rate obligation, a Fund will receive a payment from or make a payment to the counterparty. A Fund’s maximum risk of loss from counterparty credit risk related to total return swaps is the discounted net value of the cash flows to be received from or paid to the counterparty over the contract’s remaining life, to the extent that the amount is positive. The risk may be mitigated to some extent if a master netting arrangement between a Fund and the counterparty is in place and to the extent a Fund obtains collateral to cover a Fund’s exposure to the counterparty.
A Fund may enter into fully funded total return swaps which involves one party making an initial payment equal to the estimated value of the reference instrument. The parties to the swap then exchange respective commitments to pay or receive a net amount based on the change in the fair value of a reference instrument and a specified notional amount.
During the reporting period, the Funds entered into total return swaps for the following reasons: The PL Emerging Markets Debt Fund entered into total return swaps for purposes of risk management, to gain exposure to the various markets, and as part of the Fund’s investment strategy. The PL Global Absolute Return Fund entered into total return swaps to gain currency exposure in various markets, to increase or decrease credit exposure to various indices, individual issuers and securities or groups or securities, and to increase returns.
The following is a summary of the location of fair value amounts of derivative investments, if any, disclosed in the Trust’s Statements of Assets and Liabilities:
Location on the Statements of Assets and Liabilities | ||||||
Derivative Investments Risk Type | Asset Derivative Investments | Liability Derivative Investments | ||||
Interest rate contracts | Investments, at value | Outstanding options written, at value | ||||
Receivable: Variation margin | Payable: Variation margin | |||||
Swap contracts, at value | Swap contracts, at value | |||||
Foreign currency contracts | Investments, at value | Outstanding options written, at value | ||||
Receivable: Variation margin | Payable: Variation margin | |||||
Forward foreign currency contracts appreciation | Forward foreign currency contracts depreciation | |||||
Swap contracts, at value | Swap contracts, at value | |||||
Credit contracts | Investments, at value | Outstanding options written, at value | ||||
Swap contracts, at value | Swap contracts, at value | |||||
Equity contracts | Investments, at value | Outstanding options written, at value | ||||
Receivable: Variation margin | Payable: Variation margin |
The following is a summary of fair values of derivative investments disclosed in the Statements of Assets and Liabilities, categorized by primary risk exposure as of March 31, 2014:
Asset Derivative Investments Value | ||||||||||||||||||||
Fund | Total Value at March 31, 2014 | Credit Contracts | Equity Contracts | Foreign Currency Contracts | Interest Rate Contracts | |||||||||||||||
PL Inflation Managed | $1,206,167 | $31,626 | * | $— | $186,514 | $988,027 | * | |||||||||||||
PL Managed Bond | 5,679,991 | 2,004,681 | * | — | 377,411 | 3,297,899 | * | |||||||||||||
PL Short Duration Bond | 5,497 | — | — | — | 5,497 | * | ||||||||||||||
PL Emerging Markets Debt | 2,286,090 | — | — | 672,569 | 1,613,521 | |||||||||||||||
PL Comstock | 9,830 | — | — | 9,830 | — | |||||||||||||||
PL Large-Cap Growth | 28,895 | — | — | 28,895 | — | |||||||||||||||
PL Mid-Cap Growth | 18,000 | — | 18,000 | — | — | |||||||||||||||
PL International Value | 970,657 | — | — | 970,657 | — | |||||||||||||||
PL Currency Strategies | 1,048,619 | — | — | 1,048,619 | — | |||||||||||||||
PL Global Absolute Return | 10,690,920 | 4,616,340 | 19,456 | * | 4,753,093 | 1,302,031 | * |
D-14
PACIFIC LIFE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
Liability Derivative Investments Value | ||||||||||||||||||||
Fund | Total Value at March 31, 2014 | Credit Contracts | Equity Contracts | Foreign Currency Contracts | Interest Rate Contracts | |||||||||||||||
PL Inflation Managed | ($1,651,224 | ) | ($76,467 | ) | $— | ($260,584 | ) | ($1,314,173 | )* | |||||||||||
PL Managed Bond | (2,708,764 | ) | (429,946 | ) | — | (39,149 | ) | (2,239,669 | )* | |||||||||||
PL Emerging Markets Debt | (552,270 | ) | — | — | (456,868 | ) | (95,402 | ) | ||||||||||||
PL Comstock | (160,395 | ) | — | — | (160,395 | ) | — | |||||||||||||
PL Mid-Cap Growth | (25,711 | ) | — | (25,711 | )* | — | — | |||||||||||||
PL International Value | (333,058 | ) | — | — | (333,058 | ) | — | |||||||||||||
PL Currency Strategies | (6,216,150 | ) | — | — | (6,216,150 | ) | — | |||||||||||||
PL Global Absolute Return | (5,227,301 | ) | (1,115,592 | ) | (121,885 | )* | (3,404,941 | ) | (584,883 | )* |
* | Includes cumulative appreciation (depreciation) of futures contracts and fair value of options and centrally cleared swaps as reported in the Notes to Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities. |
The following is a summary of the location of realized gains and losses and changes in net unrealized appreciation and depreciation of derivative investments, if any, disclosed in the Trust’s Statements of Operations:
Derivative Investments Risk Type | Location of Gain (Loss) on Derivative Investments Recognized in the Statements of Operations | |||
Interest rate contracts | Net realized gain (loss) on investment security transactions | |||
Equity contracts | Net realized gain (loss) on futures contracts and swap transactions | |||
Net realized gain (loss) on written option transactions | ||||
Change in net unrealized appreciation (depreciation) on investment securities | ||||
Change in net unrealized appreciation (depreciation) on futures contracts and swaps | ||||
Change in net unrealized appreciation (depreciation) on written options | ||||
Foreign currency contracts | Net realized gain (loss) on investment security transactions | |||
Net realized gain (loss) on futures contracts and swap transactions | ||||
Net realized gain (loss) on written option transactions | ||||
Net realized gain (loss) on foreign currency transactions | ||||
Change in net unrealized appreciation (depreciation) on investment securities | ||||
Change in net unrealized appreciation (depreciation) on futures contracts and swaps | ||||
Change in net unrealized appreciation (depreciation) on written options | ||||
Change in net unrealized appreciation (depreciation) on foreign currencies | ||||
Credit contracts | Net realized gain (loss) on futures contracts and swap transactions | |||
Net realized gain (loss) on written option transactions | ||||
Change in net unrealized appreciation (depreciation) on futures contracts and swaps | ||||
Change in net unrealized appreciation (depreciation) on written options |
The following is a summary of each Fund’s realized gain and/or loss and change in net unrealized appreciation and/or depreciation on derivative investments recognized in the Statements of Operations categorized by primary risk exposure for the year ended March 31, 2014:
Realized Gain (Loss) on Derivative Investments Recognized in the Statement of Operations | ||||||||||||||||||||
Fund | Total | Credit Contracts | Equity Contracts | Foreign Currency Contracts | Interest Rate Contracts | |||||||||||||||
PL Inflation Managed | ($521,745 | ) | $2,263 | $— | ($503,062 | ) | ($20,946 | ) | ||||||||||||
PL Managed Bond | (102,953 | ) | 1,402,505 | — | (2,246,755 | ) | 741,297 | |||||||||||||
PL Short Duration Bond | (154,163 | ) | — | — | 14,197 | (168,360 | ) | |||||||||||||
PL Emerging Markets Debt | (375,608 | ) | — | — | (314,859 | ) | (60,749 | ) | ||||||||||||
PL Comstock | (1,814,800 | ) | — | — | (1,814,800 | ) | — | |||||||||||||
PL Growth | 13,093 | — | 22,787 | (9,694 | ) | — | ||||||||||||||
PL Large-Cap Growth | (29,834 | ) | — | 57,756 | (87,590 | ) | — | |||||||||||||
PL Mid-Cap Growth | (169,733 | ) | — | (169,733 | ) | — | — | |||||||||||||
PL International Value | (799,914 | ) | — | 182,247 | (982,161 | ) | — | |||||||||||||
PL Currency Strategies | (5,221,124 | ) | — | — | (5,221,124 | ) | — | |||||||||||||
PL Global Absolute Return | (9,497,839 | ) | (996,710 | ) | 143,249 | (4,777,688 | ) | (3,866,690 | ) |
Change in Net Unrealized Appreciation (Depreciation) on Derivative Investments Recognized in the Statement of Operations | ||||||||||||||||||||
Fund | Total | Credit Contracts | Equity Contracts | Foreign Currency Contracts | Interest Rate Contracts | |||||||||||||||
PL Inflation Managed | ($1,043,047 | ) | �� | $64,664 | $— | ($90,936 | ) | ($1,016,775 | ) | |||||||||||
PL Managed Bond | (1,580,105 | ) | 215,269 | — | (264,406 | ) | (1,530,968 | ) | ||||||||||||
PL Short Duration Bond | 25,069 | — | — | 5,873 | 19,196 | |||||||||||||||
PL Emerging Markets Debt | 18,457 | — | — | 142,260 | (123,803 | ) | ||||||||||||||
PL Comstock | (104,077 | ) | — | — | (104,077 | ) | — | |||||||||||||
PL Growth | 9,483 | — | — | 9,483 | — | |||||||||||||||
PL Large-Cap Growth | (6,947 | ) | — | (35,842 | ) | 28,895 | — | |||||||||||||
PL Mid-Cap Growth | 5,109 | — | 5,109 | — | — | |||||||||||||||
PL International Value | 243,641 | — | — | 243,641 | — | |||||||||||||||
PL Currency Strategies | (4,012,564 | ) | — | — | (4,012,564 | ) | — | |||||||||||||
PL Global Absolute Return | (1,158,528 | ) | (1,315,545 | ) | (201,881 | ) | (1,018,850 | ) | 1,377,748 |
D-15
PACIFIC LIFE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
For financial reporting purposes, the Trust does not offset fair value amounts recognized for derivative instruments and fair value amounts recognized for the right to reclaim cash collateral (receivables) or the obligation to return cash collateral (payables) arising from derivative instruments recognized at fair value executed with the same counterparty under a master netting arrangement. The derivative investments held as of March 31, 2014 as disclosed in the Notes to Schedules of Investments and the amounts of realized gains and losses and changes in net unrealized appreciation and depreciation on derivative investments as disclosed in the Statements of Operations serve as indicators of the volume of derivative activity for each applicable Fund for the year ended March 31, 2014.
The following is a summary of financial and derivative instruments that are subject to enforceable master netting agreements (or similar arrangements) and collateral received and pledged in connection with the master netting agreements (or similar arrangements).
Gross Amounts Presented in the Statement of Assets and Liabilities | Gross Amounts Not Offset in Statement of Assets and Liabilities | Gross Amounts Presented in the Statement of Assets and Liabilities | Gross Amounts Not Offset in Statement of Assets and Liabilities | |||||||||||||||||||||||||||||||
Description | Financial Instruments | Collateral Received | Net Amount | Financial Instruments | Collateral Pledged | Net Amount | ||||||||||||||||||||||||||||
Assets | | Liabilities | | |||||||||||||||||||||||||||||||
PL Inflation Managed | ||||||||||||||||||||||||||||||||||
Swaps | $442,236 | $418,469 | $— | $23,767 | ($1,012,801 | ) | ($418,469 | ) | ($71,490 | ) | ($522,842 | ) | ||||||||||||||||||||||
Options | 207 | 207 | — | — | (84,453 | ) | (207 | ) | (10,134 | ) | (74,112 | ) | ||||||||||||||||||||||
Foreign currency contracts | 186,514 | 71,952 | — | 114,562 | (227,760 | ) | (71,952 | ) | (18,742 | ) | (137,066 | ) | ||||||||||||||||||||||
Sale-buyback financing transactions | (20,568,887 | ) | (20,438,256 | ) | — | (130,631 | ) | |||||||||||||||||||||||||||
PL Managed Bond | ||||||||||||||||||||||||||||||||||
Swaps | 839,602 | 206,844 | 357,069 | 275,689 | (480,239 | ) | (206,844 | ) | (85,576 | ) | (187,819 | ) | ||||||||||||||||||||||
Options | — | — | — | — | (530,649 | ) | — | (166,099 | ) | (364,550 | ) | |||||||||||||||||||||||
Foreign currency contracts | 377,411 | 39,149 | 185,337 | 152,925 | (39,149 | ) | (39,149 | ) | — | — | ||||||||||||||||||||||||
PL Emerging Markets Debt | ||||||||||||||||||||||||||||||||||
Swaps | 1,613,521 | 74,477 | — | 1,539,044 | (95,402 | ) | (74,477 | ) | — | (20,925 | ) | |||||||||||||||||||||||
Foreign currency contracts | 672,569 | 385,408 | — | 287,161 | (456,868 | ) | (385,408 | ) | — | (71,460 | ) | |||||||||||||||||||||||
PL Comstock | ||||||||||||||||||||||||||||||||||
Foreign currency contracts | 9,830 | 9,830 | — | — | (160,395 | ) | (9,830 | ) | — | (150,565 | ) | |||||||||||||||||||||||
PL Large-Cap Growth | ||||||||||||||||||||||||||||||||||
Foreign currency contracts | 28,895 | — | — | 28,895 | — | — | — | — | ||||||||||||||||||||||||||
PL Mid-Cap Growth | ||||||||||||||||||||||||||||||||||
Options | 18,000 | 18,000 | — | — | (22,591 | ) | (18,000 | ) | — | (4,591 | ) | |||||||||||||||||||||||
PL International Value | ||||||||||||||||||||||||||||||||||
Foreign currency contracts | 970,657 | 291,639 | — | 679,018 | (333,058 | ) | (291,639 | ) | — | (41,419 | ) | |||||||||||||||||||||||
PL Currency Strategies | ||||||||||||||||||||||||||||||||||
Foreign currency contracts | 1,048,619 | 902,615 | 146,004 | — | (6,216,150 | ) | (902,615 | ) | (4,572,150 | ) | (741,385 | ) | ||||||||||||||||||||||
PL Global Absolute Return | ||||||||||||||||||||||||||||||||||
Swaps | �� | 7,962,428 | 1,603,509 | 4,605,751 | 1,753,168 | (1,603,509 | ) | (1,603,509 | ) | — | — | |||||||||||||||||||||||
Options | 483,575 | 11,884 | 341,645 | 130,046 | (25,580 | ) | (11,884 | ) | (1,104 | ) | (12,592 | ) | ||||||||||||||||||||||
Foreign currency contracts | 2,042,344 | 1,945,461 | 70,172 | 26,711 | (3,379,361 | ) | (1,945,461 | ) | (115,581 | ) | (1,318,319 | ) |
As of March 31, 2014, certain Funds had investments in repurchase agreements. The gross value and related collateral received for these investments are presented in each applicable Fund’s Schedule of Investments and the value of these investments is also presented in the Statements of Assets and Liabilities. The value of the related collateral held by each applicable Fund presented in these financial statements, except for the PL Global Absolute Return Fund, exceeded the value of the repurchase agreements as of March 31, 2014. For the PL Global Absolute Return Fund (see page B-71), the value of the collateral (Brazil Government) of $154,233 held by the Fund for one of the repurchase agreements (Barclays PLC), which was entered into by the Fund for the purpose of selling a security short, exceeded 95% of the value of the repurchase price of the repurchase agreement ($160,274) as of March 31, 2014. As discussed in Note 4 on page D-8, in the case of a repurchase agreement entered into by a Fund for the purposes of selling a security short, the value of the collateral delivered to a Fund must equal or exceed 95% of the value of the repurchase price during the term of the repurchase agreement.
D-16
PACIFIC LIFE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
6. INVESTMENT ADVISORY, ADMINISTRATION AND SHAREHOLDER SERVICES, SUPPORT SERVICES AND DISTRIBUTION AGREEMENTS
Pursuant to an Investment Advisory Agreement, PLFA, a wholly-owned subsidiary of Pacific Life Insurance Company (“Pacific Life”), serves as Adviser to the Trust. For the PL Underlying Funds, PLFA has retained other management firms to sub-advise each Fund, as discussed later in this section. PLFA manages the PL Diversified Alternatives Fund. PLFA receives advisory fees from each Fund based on the following advisory fee rates, which are based on an annual percentage of average daily net assets of each Fund:
PL Floating Rate Loan (1) | 0.75% | PL Large-Cap Value | 0.65% | PL International Large-Cap | 0.85% | |||||
PL Inflation Managed | 0.40% | PL Main Street Core | 0.45% | PL International Value | 0.65% | |||||
PL Managed Bond | 0.40% | PL Mid-Cap Equity | 0.65% | PL Currency Strategies | 0.65% | |||||
PL Short Duration Bond | 0.40% | PL Mid-Cap Growth (1) | 0.70% | PL Global Absolute Return | 0.80% | |||||
PL Emerging Markets Debt | 0.785% | PL Small-Cap Growth | 0.60% | PL Precious Metals (1) | 0.75% | |||||
PL Comstock (1) | 0.75% | PL Small-Cap Value | 0.75% | PL Diversified Alternatives | 0.20% | |||||
PL Growth | 0.55% | PL Real Estate | 0.90% | |||||||
PL Large-Cap Growth (1) | 0.75% | PL Emerging Markets | 0.80% |
(1) | PLFA agreed to waive 0.10%, 0.015%, 0.045% (0.275% from January 1, 2013 to April 30, 2013) and 0.07% of its advisory fee through July 31, 2014 for the PL Floating Rate Loan, PL Comstock, PL Large-Cap Growth and PL Precious Metals Funds, respectively. PLFA also agreed to waive 0.05% of its advisory fee from November 1, 2013 through July 31, 2015 for the PL Mid-Cap Growth Fund. The agreement will terminate if the investment advisory agreement is terminated or upon approval by the Board and prior written notice to the Adviser. There is no guarantee that PLFA will continue such waivers after that date. |
Pursuant to Fund Management Agreements, the Trust and PLFA engage various management firms under PLFA’s supervision for the PL Underlying Funds. As of March 31, 2014, the following firms serve as sub-advisers for their respective Fund(s): Eaton Vance Investment Managers for the PL Floating Rate Loan and PL Global Absolute Return Funds; Pacific Investment Management Company LLC for the PL Inflation Managed and PL Managed Bond Funds; T. Rowe Price Associates, Inc. for the PL Short Duration Bond Fund; Ashmore Investment Management Limited for the PL Emerging Markets Debt Fund; Invesco Advisers, Inc. for the PL Comstock Fund; MFS Investment Management for the PL Growth and PL International Large-Cap Funds; BlackRock Investment Management, LLC for the PL Large-Cap Growth Fund; ClearBridge Investments, LLC for the PL Large-Cap Value Fund; OppenheimerFunds, Inc. for the PL Main Street Core and PL Emerging Markets Funds; Scout Investments, Inc. for the PL Mid-Cap Equity Fund; Ivy Investment Management Company for the PL Mid-Cap Growth Fund; Fred Alger Management, Inc. for the PL Small-Cap Growth Fund (Lord, Abbett & Co. LLC effective May 1, 2014); NFJ Investment Group LLC for the PL Small-Cap Value Fund (AllianceBernstein L.P. effective May 1, 2014); Morgan Stanley Investment Management Inc. for the PL Real Estate Fund, J.P. Morgan Investment Management Inc. for the PL International Value Fund; UBS Global Asset Management (Americas) Inc. for the PL Currency Strategies Fund (UBS Global Asset Management (Americas) Inc. and Macro Currency Group will co-manage the PL Currency Strategies Fund effective May 1, 2014); and Wells Capital Management Incorporated for the PL Precious Metals Fund. PLFA, as Adviser to the Trust, pays the related management fees to these sub-advisers as compensation for their sub-advisory services provided to their respective Fund.
Pursuant to an Administration and Shareholder Services Agreement (the “Administration Agreement”), Pacific Life serves as administrator (the “Administrator”) to the Trust. The Trust paid the Administrator an administration fee at an annual rate of 0.15% for the PL Diversified Alternatives Fund and each of the PL Underlying Funds. The administration fee is for procuring or providing administrative, transfer agency, and shareholder services. In addition, Pacific Life and PLFA provide support services to the Trust that are outside the scope of the Administrator’s and Adviser’s responsibilities under the Administration Agreement and Investment Advisory Agreement. Under the Support Services Agreement, the Trust compensated Pacific Life and PLFA for their expenses in providing support services to the Trust in connection with various matters, some of which include the time spent by legal, accounting, and compliance personnel of Pacific Life and PLFA (including individuals who may be officers or Trustees of the Trust) to attend meetings of the Board and to provide assistance with the coordination and supervision in connection with the services procured for the Trust under the Administration Agreement. Support services do not include any services for which PLFA is responsible pursuant to the Investment Advisory Agreement. The Trust reimbursed Pacific Life and PLFA for these support services on an approximate cost basis.
Pursuant to a Distribution Agreement, Pacific Select Distributors, Inc. (the “Distributor”), a wholly-owned subsidiary of Pacific Life, serves as distributor of the Trust’s shares. Under the Distribution Agreement, the Distributor bears all expenses of providing services, including costs of sales presentations, mailings, advertisements, and other marketing efforts by the Distributor in connection with the distribution or sale of the Trust’s shares and makes distribution and/or service payments to selling groups in connection with the sale of certain of the Trust’s shares and subsequent servicing needs of shareholders provided by selling groups. The Class P shares of the PL Underlying Funds presented in these financial statements are not subject to a distribution and/or service fee. For the Diversified Alternatives Fund, the Distributor receives distribution and service fees pursuant to a class specific distribution and service plans, each adopted in accordance with Rule 12b-1 under the 1940 Act for Class C shares. The Distributor also received service fees pursuant to a 12b-1 Class A Service Plan. The distribution fee for Class C shares was 0.75% and the service fee for Class A and C shares was 0.25% of the average daily net assets attributable to the applicable share class. There were no distribution and/or service fees for Advisor Class shares of the PL Diversified Alternatives Fund.
D-17
PACIFIC LIFE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
7. TRANSACTIONS WITH AFFILIATES
A. ADVISORY FEES, ADMINISTRATION FEES, DISTRIBUTION AND/OR SERVICE FEES AND EXPENSES FOR SUPPORT SERVICES
The Adviser, the Distributor and Pacific Life are related parties. The advisory fees earned by the Adviser, including any advisory fee waiver, the administration fees earned by Pacific Life, the distribution and/or service fees earned by the Distributor, and expenses for support services recovered by PLFA and Pacific Life (see Note 6) from each Fund presented in these financial statements for the year ended March 31, 2014 are presented in the Statements of Operations. The amounts of each of these fees that remained payable as of March 31, 2014 are presented in the Statements of Assets and Liabilities.
B. EXPENSE LIMITATION AGREEMENTS
To help limit the Trust’s expenses, PLFA has entered into expense limitation agreements with the Trust and has agreed to reimburse each Fund for certain operating expenses that exceed an annual rate based on a percentage of a Fund’s average daily net assets. These operating expenses include, but are not limited to: administration fees; organizational expenses; custody expenses; expenses for audit, tax and certain legal services; preparation, printing, filing and distribution to existing shareholders of proxies, prospectuses and shareholder reports and other regulatory documents, as applicable; independent trustees’ fees; and establishing, overseeing and administering the Trust’s compliance program. These operating expenses do not include: investment advisory fees; distribution and/or service fees, if any; interest; taxes (including foreign taxes on dividends, interest or gains); brokerage commissions and other transactional expenses; dividends on securities sold short; acquired fund fees and expenses; and extraordinary expenses such as litigation expenses and other expenses not incurred in the ordinary course of each Fund’s business. The current expense cap for the PL Underlying Funds, except the PL Currency Strategies, PL Global Absolute Return and PL Precious Metals Funds, is 0.15% through July 31, 2015 and 0.30% thereafter through July 31, 2022. The current expense cap for the PL Currency Strategies, PL Global Absolute Return and PL Precious Metals Funds is 0.20% through July 31, 2014 and 0.25% thereafter through July 31, 2015. The current expense cap for the Diversified Alternatives Fund is 0.40% through December 31, 2016. There is no guarantee that PLFA will continue to cap expenses upon the expiration of the applicable expense caps.
Any expense reimbursements are subject to recoupment by PLFA for a period of time as permitted under regulatory and accounting guidance (currently 3 years from the end of the fiscal year in which the reimbursement or reduction took place), to the extent such expenses fall below the expense cap in future years. Any amounts repaid to PLFA will have the effect of increasing such expenses of the Fund, but not above the expense cap. There was no recoupment of expense reimbursement by PLFA from any Funds presented in these financial statements during the year ended March 31, 2014.
The Adviser expense reimbursement and the advisory fee waiver, if any, of each of the applicable Funds presented in these financial statements for the year ended March 31, 2014 are presented in the Statements of Operations. Any amounts that remained due from the Adviser as of March 31, 2014 are presented in the Statements of Assets and Liabilities.
The cumulative reimbursement and fee reduction amounts, if any, as of March 31, 2014 that are subject to recoupment by PLFA from each Fund presented in these financial statements are as follows:
Expiration Date | ||||||||||||
Fund | 3/31/2015 | 3/31/2016 | 3/31/2017 | |||||||||
PL Floating Rate Loan | $131,663 | $138,319 | $145,911 | |||||||||
PL Inflation Managed | 295,942 | 210,150 | 147,422 | |||||||||
PL Managed Bond | 506,074 | 511,150 | 474,658 | |||||||||
PL Short Duration Bond | 168,516 | 200,776 | 214,263 | |||||||||
PL Emerging Markets Debt | 149,277 | 136,611 | ||||||||||
PL Comstock | 167,205 | 179,416 | 188,193 | |||||||||
PL Growth | 163,768 | 95,666 | 66,117 | |||||||||
PL Large-Cap Growth | 106,391 | 120,927 | 108,743 | |||||||||
PL Large-Cap Value | 206,530 | 217,662 | 225,998 | |||||||||
PL Main Street Core | 160,866 | 167,926 | 158,976 | |||||||||
PL Mid-Cap Equity | 136,380 | 137,581 | 101,037 | |||||||||
PL Mid-Cap Growth | 83,455 | 95,060 | 60,241 | |||||||||
PL Small-Cap Growth | 59,708 | 63,952 | 45,628 | |||||||||
PL Small-Cap Value | 93,513 | 101,068 | 99,142 | |||||||||
PL Real Estate | 59,572 | 60,947 | 42,886 | |||||||||
PL Emerging Markets | 388,707 | 408,692 | 425,076 | |||||||||
PL International Large-Cap | 289,591 | 257,028 | 225,808 | |||||||||
PL International Value | 213,243 | 187,506 | 180,640 | |||||||||
PL Currency Strategies | 31,042 | 49,987 | ||||||||||
PL Global Absolute Return | 68,978 | 319,375 | ||||||||||
PL Precious Metals | 33,601 | 33,735 | ||||||||||
PL Diversified Alternatives | 12,535 | |||||||||||
|
|
|
|
|
| |||||||
Total | $3,231,124 | $3,436,724 | $3,462,982 | |||||||||
|
|
|
|
|
|
C. INVESTMENTS IN AFFILIATED FUNDS
As of March 31, 2014, the PL Diversified Alternatives Fund (aggregate of Classes A, C, and Advisor Class) owned Class P shares in the PL Floating Rate Income Fund and in certain affiliated PL Underlying Funds. A summary of transactions for the period from inception through
D-18
PACIFIC LIFE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
March 31, 2014 and total investments by the PL Diversified Alternatives Fund in the PL Floating Rate Income Fund and in certain PL Underlying Funds as of March 31, 2014 is as follows:
Beginning | Purchase | Distributions | Sales | Net Realized | Change in Unrealized Appreciation (Depreciation) | As of March 31, 2014 | ||||||||||||||||||||||||||
Fund/Underlying Fund | Ending Value | Shares Balance | ||||||||||||||||||||||||||||||
PL Diversified Alternatives Fund | ||||||||||||||||||||||||||||||||
PL Floating Rate Income | $— | $250,000 | $2,538 | $3,717 | $9 | $236 | $249,066 | 23,676 | ||||||||||||||||||||||||
PL Inflation Managed | — | 100,000 | — | 1,487 | 32 | 1,701 | 100,246 | 11,340 | ||||||||||||||||||||||||
PL Emerging Markets Debt | — | 250,000 | — | 3,718 | (32 | ) | 3,345 | 249,595 | 25,731 | |||||||||||||||||||||||
PL Real Estate | — | 150,000 | — | 2,230 | 151 | 13,045 | 160,966 | 11,344 | ||||||||||||||||||||||||
PL Emerging Markets | — | 150,000 | — | 2,231 | (135 | ) | (2,267 | ) | 145,367 | 9,855 | ||||||||||||||||||||||
PL Currency Strategies | — | 500,000 | — | 7,436 | (345 | ) | (32,716 | ) | 459,503 | 48,831 | ||||||||||||||||||||||
PL Global Absolute Return | — | 500,000 | — | 7,436 | (27 | ) | 2,554 | 495,091 | 51,093 | |||||||||||||||||||||||
PL Precious Metals | — | 100,000 | — | 1,488 | 303 | 12,669 | 111,484 | 19,490 | ||||||||||||||||||||||||
$— | $2,000,000 | $2,538 | 29,743 | ($44 | ) | ($1,433 | ) | $1,971,318 |
(1) | Purchased cost excludes distributions received and reinvested, if any. |
(2) | Distributions received include distributions from net investment income from the PL Underlying Funds and the PL Floating Rate Income Fund, if any. |
(3) | Net realized gain (loss) includes distributions from capital gains from the PL Underlying Funds and the PL Floating Rate Income Fund, if any. |
As of March 31, 2014, Pacific Life owned 100.00% of the total (aggregate of Class A, C, and Advisor Class) shares outstanding of the PL Diversified Alternatives Fund.
D. INDEPENDENT TRUSTEES
The Trust pays each independent trustee of the Board retainer fees and specified amounts for various Board and committee services and for chairing those committees. The fees and expenses of the independent trustees of the Board are presented in the Statements of Operations.
Each independent trustee of the Board is eligible to participate in the Trust’s Deferred Compensation Plan (the “Plan”). The Plan allows each independent trustee to voluntarily defer receipt of all or a percentage of fees which otherwise would be payable for services performed. Amounts in the deferral account are obligations of each Fund at the time of such deferral and are payable in accordance with the Plan. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of certain Funds. An independent trustee who defers compensation has the option to select credit rate options that track the performance, at NAV without a sales load, of Class A shares of the Portfolio Optimization Funds, PL Diversified Alternatives Fund, PL Short Duration Income Fund, PL Income Fund, PL Strategic Income Fund, PL Floating Rate Income Fund, PL Limited Duration High Income Fund and/or PL High Income Fund, and/or Class P shares of the corresponding PL Underlying Funds. The obligation of each Fund under the Plan (the “DCP Liability”) is recorded as a liability (accrued trustees’ fees and expenses and deferred compensation). Accordingly, the market value appreciation or depreciation on a Fund’s DCP Liability account will cause the expenses of that Fund to increase or decrease due to market fluctuation. The change in net unrealized appreciation or depreciation on a Fund’s DCP Liability account is recorded as an increase or decrease to expenses (trustees’ fees and expenses). For the year ended March 31, 2014, such expenses were increased by $4,733 for all applicable Funds presented in these financial statements as a result of the market value appreciation on such accounts. As of March 31, 2014, the total amount in the DCP Liability accounts was $41,588 for all applicable Funds presented in these financial statements.
E. OFFICERS OF THE TRUST
None of the officers of the Trust received compensation from the Trust.
F. INDEMNIFICATIONS
Under the Trust’s organizational documents, its officers and trustees are indemnified against certain liabilities arising out of performance of their duties to the Trust. In addition, the Trust entered into an agreement with each of the trustees which provides that the Trust will indemnify and hold harmless each trustee against any expenses actually and reasonably incurred by any trustee in any proceeding arising out of or in connection with the trustee’s services to the Trust, to the fullest extent permitted by the Trust’s Declaration of Trust and By-Laws, the general trust law of the State of Delaware, the Securities Act of 1933, and the 1940 Act, each as now or hereinafter in force. In the normal course of business, the Trust enters into contracts with service providers and others that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements and agreements is dependent on future claims that may be made against the Trust and/or the trustees and, therefore, cannot be estimated; however, based on experience, the risk of loss from such claims is considered remote.
8. UNFUNDED SENIOR LOAN COMMITMENTS
Unfunded loan commitments on senior loan participations and assignments (Note 4), if any, are marked to market daily and valued according to the Trust’s valuation policies and procedures. Any outstanding unfunded loan commitments are presented in the Notes to Schedules of Investments section of each applicable Fund’s Schedule of Investments. Any applicable net unrealized appreciation or depreciation at the end of the reporting period is recorded as an asset (unfunded loan commitment appreciation) or a liability (unfunded loan commitment depreciation) and any change in net unrealized appreciation or depreciation for the reporting period is recorded as a change in net unrealized appreciation or depreciation on unfunded loan commitment. As of March 31, 2014, no unfunded loan commitments were held by any Funds presented in these financial statements.
D-19
PACIFIC LIFE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
9. PURCHASES AND SALES OF INVESTMENTS
The cost of purchases and proceeds from sales of investments (excluding short-term investments) for the year ended March 31, 2014, are summarized in the following table:
U.S. Government Securities | Other Securities | |||||||||||||||
Fund | Purchases | Sales | Purchases | Sales | ||||||||||||
PL Floating Rate Loan | $— | $— | $97,439,005 | $84,090,629 | ||||||||||||
PL Inflation Managed | 83,981,073 | 46,042,263 | 18,622,120 | 17,229,305 | ||||||||||||
PL Managed Bond | 3,446,851,935 | 3,424,257,144 | 85,395,657 | 132,934,936 | ||||||||||||
PL Short Duration Bond | 28,405,603 | 33,289,935 | 77,284,922 | 59,580,623 | ||||||||||||
PL Emerging Markets Debt | — | — | 138,354,289 | 104,275,923 | ||||||||||||
PL Comstock | — | — | 38,468,096 | 46,040,089 | ||||||||||||
PL Growth | — | — | 91,099,122 | 54,347,726 | ||||||||||||
PL Large-Cap Growth | — | — | 256,550,994 | 262,795,932 | ||||||||||||
PL Large-Cap Value | — | — | 46,206,521 | 44,592,271 | ||||||||||||
PL Main Street Core | — | — | 152,483,980 | 152,202,614 | ||||||||||||
PL Mid-Cap Equity | — | — | 174,332,263 | 179,423,901 | ||||||||||||
PL Mid-Cap Growth | — | — | 113,536,775 | 99,917,659 | ||||||||||||
PL Small-Cap Growth | — | — | 45,375,568 | 46,352,091 | ||||||||||||
PL Small-Cap Value | — | — | 52,231,334 | 52,857,998 | ||||||||||||
PL Real Estate | — | — | 21,610,769 | 11,032,202 | ||||||||||||
PL Emerging Markets | — | — | 68,105,453 | 38,260,543 | ||||||||||||
PL International Large-Cap | — | — | 47,002,478 | 29,983,233 | ||||||||||||
PL International Value | — | — | 98,605,677 | 88,226,405 | ||||||||||||
PL Currency Strategies | 16,537,389 | — | 28,397,327 | 19,329,430 | ||||||||||||
PL Global Absolute Return | 43,068,711 | 39,890,056 | 120,127,439 | 57,158,350 | ||||||||||||
PL Precious Metals | — | — | 50,730,817 | 8,341,831 | ||||||||||||
PL Diversified Alternatives | — | — | 2,002,538 | 29,744 |
10. FEDERAL INCOME TAX INFORMATION
Each Fund intends to qualify each year as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code (the “Code”). A Fund that qualifies as a RIC does not have to pay income tax as long as it distributes sufficient taxable income and net capital gains. Each Fund declared and paid sufficient dividends on net investment income and capital gains distributions during the year or period ended March 31, 2014, to qualify as a RIC and is not required to pay Federal income tax under the Code. Accordingly, no provision for Federal income taxes is required in the financial statements. Required distributions are based on net investment income and net realized gains determined in accordance with income tax regulations, which may differ from U.S. GAAP for financial reporting purposes. These differences are primarily due to differing treatments for sale-buyback financing transactions, futures and options, swap income, paydown gain/loss, partnership income, foreign currency transactions, passive foreign investment companies, late year ordinary and post-October capital losses, capital loss carryforwards, and losses deferred due to wash sales. Permanent book and tax differences relating to shareholder distributions will result in reclassifications of capital accounts. In addition, the year in which amounts are distributed may differ from the year in which the net investment income is earned and the net gains are realized by each Fund.
The following table shows the accumulated capital losses and components of distributable earnings on a tax basis, and late year ordinary losses and post-October capital losses deferred, if any, as of March 31, 2014:
Distributable Earnings | Late Year Ordinary and Post-October Losses Deferral | |||||||||||||||||||||||||||||
Fund | Accumulated Capital Losses | Undistributed Ordinary Income | Undistributed Long-Term Capital Gains | Late-Year Ordinary Losses | Short-Term Capital | Long-Term Capital | Total | |||||||||||||||||||||||
PL Floating Rate Loan | $— | $1,074,728 | $17,082 | $— | $— | $— | $— | |||||||||||||||||||||||
PL Inflation Managed | — | — | — | 551,993 | — | 343,178 | 895,171 | |||||||||||||||||||||||
PL Managed Bond | — | 1,276,546 | — | — | — | 1,833,542 | 1,833,542 | |||||||||||||||||||||||
PL Short Duration Bond | (1,189,115 | ) | 678,788 | — | — | — | — | — | ||||||||||||||||||||||
PL Emerging Markets Debt | (3,229,151 | ) | 1,473,531 | — | — | — | — | — | ||||||||||||||||||||||
PL Comstock | (2,589,476 | ) | 1,387,754 | — | — | — | — | — | ||||||||||||||||||||||
PL Growth | (64,515 | ) | 144,321 | — | — | — | — | — | ||||||||||||||||||||||
PL Large-Cap Growth | — | 6,939,895 | 1,203,792 | — | — | — | — | |||||||||||||||||||||||
PL Large-Cap Value | — | 4,224,260 | 4,025,576 | — | — | — | — | |||||||||||||||||||||||
PL Main Street Core | — | 533,464 | 16,539,176 | — | — | — | — | |||||||||||||||||||||||
PL Mid-Cap Equity | — | 7,116,647 | 5,573,578 | — | — | — | — | |||||||||||||||||||||||
PL Mid-Cap Growth | — | 2,468,190 | 637,386 | — | — | — | — | |||||||||||||||||||||||
PL Small-Cap Growth | — | — | 3,941,812 | — | — | — | — | |||||||||||||||||||||||
PL Small-Cap Value | — | 1,352,803 | 5,868,777 | — | — | — | — | |||||||||||||||||||||||
PL Real Estate | (5,601,478 | ) | 64,888 | — | — | — | — | — | ||||||||||||||||||||||
PL Emerging Markets | — | 232,023 | 2,133,675 | — | — | — | — | |||||||||||||||||||||||
PL International Large-Cap | (8,480,971 | ) | 1,323,818 | — | — | — | — | — | ||||||||||||||||||||||
PL International Value | (46,724,813 | ) | 3,358,412 | — | — | — | — | — | ||||||||||||||||||||||
PL Currency Strategies | (3,261 | ) | — | — | 8,173,260 | 587 | — | 8,173,847 | ||||||||||||||||||||||
PL Global Absolute Return | (395,703 | ) | — | — | 119,724 | 249,059 | 260,517 | 629,300 | ||||||||||||||||||||||
PL Precious Metals | (9,007,879 | ) | — | — | 72,236 | — | — | 72,236 | ||||||||||||||||||||||
PL Diversified Alternatives | (44 | ) | 723 | — | — | — | — | — |
D-20
PACIFIC LIFE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
Accumulated capital losses represent net capital loss carryovers as of March 31, 2014 that may be available to offset future realized capital gains and thereby reduce future capital gains distributions. The following table shows the expiration dates and the amounts of capital loss carryover, if any, by each of the applicable Funds as of March 31, 2014 and capital loss carryover from prior years utilized during the year ended March 31, 2014:
Net Capital Loss Carryover Expiring In | Unlimited Period of Net Capital Loss Carryover | Accumulated | Capital Loss Carryover Utilized During the Year Ended March 31, 2014 | |||||||||||||||||||||||||||
Fund | 2017 | 2018 | 2019 | Short Term | Long Term | |||||||||||||||||||||||||
PL Short Duration Bond | $— | $— | $— | ($756,293 | ) | ($432,822 | ) | ($1,189,115 | ) | $— | ||||||||||||||||||||
PL Emerging Markets Debt | — | — | — | (2,091,586 | ) | (1,137,565 | ) | (3,229,151 | ) | — | ||||||||||||||||||||
PL Comstock | — | (2,589,476 | ) | — | — | — | (2,589,476 | ) | 12,977,911 | |||||||||||||||||||||
PL Growth | — | (64,515 | ) | — | — | — | (64,515 | ) | 8,017,738 | |||||||||||||||||||||
PL Large-Cap Value | — | — | — | — | — | — | 11,105,101 | |||||||||||||||||||||||
PL Main Street Core | — | — | — | — | — | — | 15,493,117 | |||||||||||||||||||||||
PL Small-Cap Growth | — | — | — | — | — | — | 2,656,829 | |||||||||||||||||||||||
PL Small-Cap Value | — | — | — | — | — | — | 565,420 | |||||||||||||||||||||||
PL Real Estate | — | (5,601,478 | ) | — | — | — | (5,601,478 | ) | 1,517,472 | |||||||||||||||||||||
PL International Large-Cap | — | (5,828,808 | ) | (2,652,163 | ) | — | — | (8,480,971 | ) | 2,778,892 | ||||||||||||||||||||
PL International Value | (6,971,246 | ) | (38,541,418 | ) | — | (1,212,149 | ) | — | (46,724,813 | ) | 9,493,952 | |||||||||||||||||||
PL Currency Strategies | — | — | — | (3,261 | ) | — | (3,261 | ) | — | |||||||||||||||||||||
PL Global Absolute Return | — | — | — | (116,933 | ) | (278,770 | ) | (395,703 | ) | — | ||||||||||||||||||||
PL Precious Metals | — | — | — | (6,606,106 | ) | (2,401,773 | ) | (9,007,879 | ) | — | ||||||||||||||||||||
PL Diversified Alternatives | — | — | — | (44 | ) | — | (44 | ) | — |
The aggregate Federal tax cost of investments and the composition of unrealized appreciation and depreciation on investments as of March 31, 2014, were as follows:
Fund | Total Cost of Investments on Tax Basis (1) | Gross Unrealized Appreciation on Investments | Gross Unrealized Depreciation on Investments | Net Unrealized Appreciation (Depreciation) on Investments | ||||||||||||
PL Floating Rate Loan | $124,495,386 | $497,759 | ($511,964 | ) | ($14,205 | ) | ||||||||||
PL Inflation Managed | 214,020,059 | 2,150,101 | (10,780,020 | ) | (8,629,919 | ) | ||||||||||
PL Managed Bond | 700,599,570 | 7,902,943 | (4,751,766 | ) | 3,151,177 | |||||||||||
PL Short Duration Bond | 227,267,918 | 1,733,549 | (823,898 | ) | 909,651 | |||||||||||
PL Emerging Markets Debt | 130,909,476 | 1,672,983 | (3,072,933 | ) | (1,399,950 | ) | ||||||||||
PL Comstock | 204,894,218 | 109,622,376 | (5,714,908 | ) | 103,907,468 | |||||||||||
PL Growth | 83,064,727 | 19,470,356 | (666,171 | ) | 18,804,185 | |||||||||||
PL Large-Cap Growth | 143,201,325 | 31,708,801 | (1,158,988 | ) | 30,549,813 | |||||||||||
PL Large-Cap Value | 242,368,516 | 142,359,689 | (3,808,139 | ) | 138,551,550 | |||||||||||
PL Main Street Core | 189,755,328 | 66,836,626 | (1,168,750 | ) | 65,667,876 | |||||||||||
PL Mid-Cap Equity | 140,613,261 | 32,725,421 | (2,357,033 | ) | 30,368,388 | |||||||||||
PL Mid-Cap Growth | 85,768,854 | 7,761,625 | (2,275,051 | ) | 5,486,574 | |||||||||||
PL Small-Cap Growth | 46,983,000 | 14,317,951 | (1,475,828 | ) | 12,842,123 | |||||||||||
PL Small-Cap Value | 111,924,343 | 37,017,923 | (1,397,857 | ) | 35,620,066 | |||||||||||
PL Real Estate | 52,026,159 | 23,528,587 | (1,902,652 | ) | 21,625,935 | |||||||||||
PL Emerging Markets | 128,442,135 | 30,211,080 | (5,724,589 | ) | 24,486,491 | |||||||||||
PL International Large-Cap | 167,930,572 | 76,420,531 | (5,321,183 | ) | 71,099,348 | |||||||||||
PL International Value | 148,881,032 | 32,814,473 | (5,443,762 | ) | 27,370,711 | |||||||||||
PL Currency Strategies | 132,075,805 | 1,722,228 | (4,311 | ) | 1,717,917 | |||||||||||
PL Global Absolute Return | 201,850,084 | 4,437,865 | (4,817,700 | ) | (379,835 | ) | ||||||||||
PL Precious Metals | 109,776,747 | 2,181,087 | (27,832,889 | ) | (25,651,802 | ) | ||||||||||
PL Diversified Alternatives | 1,972,751 | 33,551 | (34,984 | ) | (1,433 | ) |
(1) | The difference between the total cost of investments on tax basis and the total investments, at cost, as presented in the Statements of Assets and Liabilities is primarily due to wash sale loss deferrals, investments in passive foreign investment companies and investments in partnerships. |
Each Fund recognizes the financial statement effects of a tax position taken or expected to be taken in a tax return when it is more likely than not, based on the technical merits, that the position will be sustained upon examination by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax liability for unrecognized tax benefits with a corresponding income tax expense. Management has analyzed all open tax years, as defined by the statute of limitations, for all major jurisdictions and has determined that no provision for income tax is required in the financial statements. Each Fund remains subject to examination by Federal and State tax authorities for the returns filed for tax years ended after March 31, 2010.
D-21
PACIFIC LIFE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
11. TAX CHARACTER OF DISTRIBUTIONS
The tax character of income and capital gains distributions to shareholders during the years or periods ended March 31, 2014 and 2013, were as follows:
For the Year or Period Ended March 31, 2014 | For the Year or Period Ended March 31, 2013 | |||||||||||||||||||||||||
Funds | Ordinary Income | Long-Term Capital Gains | Total Distributions | Ordinary Income | Long-Term Capital Gains | Total Distributions | ||||||||||||||||||||
PL Floating Rate Loan | $4,669,660 | $1,512,705 | $6,182,365 | $4,747,623 | $218,517 | $4,966,140 | ||||||||||||||||||||
PL Inflation Managed | 1,675,821 | 1,787,419 | 3,463,240 | 16,375,562 | 6,414,250 | 22,789,812 | ||||||||||||||||||||
PL Managed Bond | 9,129,156 | 2,238,185 | 11,367,341 | 23,397,454 | 30,054 | 23,427,508 | ||||||||||||||||||||
PL Short Duration Bond | 3,024,235 | — | 3,024,235 | 2,806,267 | 46,127 | 2,852,394 | ||||||||||||||||||||
PL Emerging Markets Debt | 5,009,739 | — | 5,009,739 | 2,240,459 | — | 2,240,459 | ||||||||||||||||||||
PL Comstock | 2,637,092 | — | 2,637,092 | 2,925,820 | — | 2,925,820 | ||||||||||||||||||||
PL Growth | 573,668 | — | 573,668 | 549,887 | — | 549,887 | ||||||||||||||||||||
PL Large-Cap Growth | 11,277,943 | 22,887,345 | 34,165,288 | 660,404 | 6,924,562 | 7,584,966 | ||||||||||||||||||||
PL Large-Cap Value | 5,289,219 | — | 5,289,219 | 5,290,356 | — | 5,290,356 | ||||||||||||||||||||
PL Main Street Core | 2,316,456 | — | 2,316,456 | 2,671,391 | — | 2,671,391 | ||||||||||||||||||||
PL Mid-Cap Equity | 4,132,303 | 8,798,178 | 12,930,481 | 821,347 | — | 821,347 | ||||||||||||||||||||
PL Mid-Cap Growth | 4,267,256 | 14,963,337 | 19,230,593 | 175,658 | 1,858,301 | 2,033,959 | ||||||||||||||||||||
PL Small-Cap Growth | 98,333 | 1,357,926 | 1,456,259 | — | — | — | ||||||||||||||||||||
PL Small-Cap Value | 1,895,573 | 6,190,367 | 8,085,940 | 1,785,180 | — | 1,785,180 | ||||||||||||||||||||
PL Real Estate | 1,118,697 | — | 1,118,697 | 725,336 | — | 725,336 | ||||||||||||||||||||
PL Emerging Markets | 903,956 | 2,799,145 | 3,703,101 | 667,612 | — | 667,612 | ||||||||||||||||||||
PL International Large-Cap | 2,672,165 | — | 2,672,165 | 3,215,843 | — | 3,215,843 | ||||||||||||||||||||
PL International Value | 4,102,104 | — | 4,102,104 | 3,493,667 | — | 3,493,667 | ||||||||||||||||||||
PL Currency Strategies | 4,034,980 | — | 4,034,980 | — | — | — | ||||||||||||||||||||
PL Global Absolute Return | 4,132,927 | — | 4,132,927 | 101,328 | — | 101,328 | ||||||||||||||||||||
PL Precious Metals | 451,925 | — | 451,925 | 9,365 | — | 9,365 |
12. RECLASSIFICATION OF ACCOUNTS
During the year ended March 31, 2014, reclassifications as shown in the following table have been made in each Fund’s capital accounts to report these balances on a tax basis, excluding certain temporary differences, as of March 31, 2014. Additional adjustments may be required in subsequent reporting periods. These reclassifications, which have no impact on the NAV of the Funds, are primarily attributable to reclassifications of sale-buyback financing transactions, foreign currency transactions, non-deductible expenses, swap income, redesignation of dividends paid, treatment of net operating losses and capital gains under Federal tax rules versus U.S. GAAP. The calculation of net investment income per share in the financial highlights excludes these adjustments.
Fund | Paid-In Capital | Undistributed/ Income (Loss) | Undistributed/ Gain (Loss) | |||||||||
PL Floating Rate Loan | $— | ($11,583 | ) | $11,583 | ||||||||
PL Inflation Managed | 66,066 | (592,196 | ) | 526,130 | ||||||||
PL Managed Bond | 817 | (48,254 | ) | 47,437 | ||||||||
PL Short Duration Bond | — | 685,042 | (685,042 | ) | ||||||||
PL Emerging Markets Debt | — | (1,094,389 | ) | 1,094,389 | ||||||||
PL Comstock | — | (1,797,647 | ) | 1,797,647 | ||||||||
PL Growth | — | (18,042 | ) | 18,042 | ||||||||
PL Large-Cap Growth | — | 76,398 | (76,398 | ) | ||||||||
PL Large-Cap Value | — | (1,742 | ) | 1,742 | ||||||||
PL Main Street Core | — | 2,149 | (2,149 | ) | ||||||||
PL Mid-Cap Equity | — | 18,345 | (18,345 | ) | ||||||||
PL Mid-Cap Growth | — | 156,308 | (156,308 | ) | ||||||||
PL Small-Cap Growth | (168,527 | ) | 173,134 | (4,607 | ) | |||||||
PL Small-Cap Value | — | 403,334 | (403,334 | ) | ||||||||
PL Emerging Markets | — | (140,847 | ) | 140,847 | ||||||||
PL International Large-Cap | — | (14,704 | ) | 14,704 | ||||||||
PL International Value | — | (779,691 | ) | 779,691 | ||||||||
PL Currency Strategies | (310,884 | ) | (4,882,444 | ) | 5,193,328 | |||||||
PL Global Absolute Return | (3,865,149 | ) | (6,080,063 | ) | 9,945,212 | |||||||
PL Precious Metals | (5,397 | ) | (12,894 | ) | 18,291 | |||||||
PL Diversified Alternatives | (1,214 | ) | 1,214 | — |
D-22
PACIFIC LIFE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
13. SHARES OF BENEFICIAL INTEREST
Each Fund is authorized to issue an unlimited number of shares of beneficial interest with no par value. Changes in shares of beneficial interest of each Fund for the years or periods ended March 31, 2014 and 2013 were as follows:
PL Floating Rate Loan Fund | PL Inflation Managed Fund | PL Managed Bond Fund | PL Short Duration Bond Fund | |||||||||||||||||||||||||||||||||||
Year ended 3/31/2014 | Year ended 3/31/2013 | Year ended 3/31/2014 | Year ended 3/31/2013 | Year ended 3/31/2014 | Year ended 3/31/2013 | Year ended 3/31/2014 | Year ended 3/31/2013 | |||||||||||||||||||||||||||||||
Class P | ||||||||||||||||||||||||||||||||||||||
Shares sold | 1,725,341 | 1,909,740 | 5,151,327 | 4,964,939 | 5,828,905 | 11,521,367 | 2,385,913 | 9,482,046 | ||||||||||||||||||||||||||||||
Dividends and distributions reinvested | 613,198 | 495,128 | 397,051 | 2,330,247 | 1,061,403 | 2,123,981 | 302,423 | 282,695 | ||||||||||||||||||||||||||||||
Shares repurchased | (848,303 | ) | (2,740,083 | ) | (1,405,615 | ) | (17,101,423 | ) | (3,896,449 | ) | (7,517,935 | ) | (1,968,936 | ) | (3,099,568 | ) | ||||||||||||||||||||||
Net increase (decrease) | 1,490,236 | (335,215 | ) | 4,142,763 | (9,806,237 | ) | 2,993,859 | 6,127,413 | 719,400 | 6,665,173 | ||||||||||||||||||||||||||||
Beginning shares outstanding | 10,764,482 | 11,099,697 | 16,876,068 | 26,682,305 | 50,886,262 | 44,758,849 | 22,095,114 | 15,429,941 | ||||||||||||||||||||||||||||||
Ending shares outstanding | 12,254,718 | 10,764,482 | 21,018,831 | 16,876,068 | 53,880,121 | 50,886,262 | 22,814,514 | 22,095,114 | ||||||||||||||||||||||||||||||
PL Emerging Markets Debt Fund (1) | PL Comstock Fund | PL Growth Fund | PL Large-Cap Growth Fund | |||||||||||||||||||||||||||||||||||
Year ended 3/31/2014 | Period ended 3/31/2013 | Year ended 3/31/2014 | Year ended 3/31/2013 | Year ended 3/31/2014 | Year ended 3/31/2013 | Year ended 3/31/2014 | Year ended 3/31/2013 | |||||||||||||||||||||||||||||||
Class P | ||||||||||||||||||||||||||||||||||||||
Shares sold | 5,607,316 | 8,969,861 | — | 5,045,692 | 2,489,857 | 1,122,315 | 101,415 | 2,436,595 | ||||||||||||||||||||||||||||||
Dividends and distributions reinvested | 520,381 | 210,175 | 153,052 | 227,690 | 33,256 | 42,429 | 3,391,672 | 801,793 | ||||||||||||||||||||||||||||||
Shares repurchased | (820,900 | ) | (1,024,070 | ) | (798,055 | ) | (3,729,655 | ) | (169,158 | ) | (5,932,271 | ) | (388,536 | ) | (2,098,207 | ) | ||||||||||||||||||||||
Net increase (decrease) | 5,306,797 | 8,155,966 | (645,003 | ) | 1,543,727 | 2,353,955 | (4,767,527 | ) | 3,104,551 | 1,140,181 | ||||||||||||||||||||||||||||
Beginning shares outstanding | 8,155,966 | — | 18,169,292 | 16,625,565 | 3,490,693 | 8,258,220 | 13,686,911 | 12,546,730 | ||||||||||||||||||||||||||||||
Ending shares outstanding | 13,462,763 | 8,155,966 | 17,524,289 | 18,169,292 | 5,844,648 | 3,490,693 | 16,791,462 | 13,686,911 | ||||||||||||||||||||||||||||||
PL Large-Cap Value Fund | PL Main Street Core Fund | PL Mid-Cap Equity Fund | PL Mid-Cap Growth Fund | |||||||||||||||||||||||||||||||||||
Year ended 3/31/2014 | Year ended 3/31/2013 | Year ended 3/31/2014 | Year ended 3/31/2013 | Year ended 3/31/2014 | Year ended 3/31/2013 | Year ended 3/31/2014 | Year ended 3/31/2013 | |||||||||||||||||||||||||||||||
Class P | ||||||||||||||||||||||||||||||||||||||
Shares sold | — | 6,250,172 | 106,404 | 3,359,407 | — | 2,081,452 | 1,744,846 | 2,446,638 | ||||||||||||||||||||||||||||||
Dividends and distributions reinvested | 323,698 | 420,537 | 158,444 | 238,944 | 1,071,334 | 83,386 | 2,433,940 | 261,099 | ||||||||||||||||||||||||||||||
Shares repurchased | (780,279 | ) | (4,820,154 | ) | (339,403 | ) | (3,364,647 | ) | (302,329 | ) | (5,630,087 | ) | (241,182 | ) | (3,829,537 | ) | ||||||||||||||||||||||
Net increase (decrease) | (456,581 | ) | 1,850,555 | (74,555 | ) | 233,704 | 769,005 | (3,465,249 | ) | 3,937,604 | (1,121,800 | ) | ||||||||||||||||||||||||||
Beginning shares outstanding | 23,215,030 | 21,364,475 | 17,415,835 | 17,182,131 | 12,579,554 | 16,044,803 | 7,172,316 | 8,294,116 | ||||||||||||||||||||||||||||||
Ending shares outstanding | 22,758,449 | 23,215,030 | 17,341,280 | 17,415,835 | 13,348,559 | 12,579,554 | 11,109,920 | 7,172,316 | ||||||||||||||||||||||||||||||
PL Small-Cap Growth Fund | PL Small-Cap Value Fund | PL Real Estate Fund | PL Emerging Markets Fund | |||||||||||||||||||||||||||||||||||
Year ended 3/31/2014 | Year ended 3/31/2013 | Year ended 3/31/2014 | Year ended 3/31/2013 | Year ended 3/31/2014 | Year ended 3/31/2013 | Year ended 3/31/2014 | Year ended 3/31/2013 | |||||||||||||||||||||||||||||||
Class P | ||||||||||||||||||||||||||||||||||||||
Shares sold | — | 1,049,923 | 121,843 | 2,341,212 | 793,474 | 331,977 | 2,507,794 | 1,754,612 | ||||||||||||||||||||||||||||||
Dividends and distributions reinvested | 96,170 | — | 606,473 | 166,996 | 85,987 | 56,140 | 248,156 | 47,585 | ||||||||||||||||||||||||||||||
Shares repurchased | (69,764 | ) | (286,381 | ) | (167,437 | ) | (311,597 | ) | (74,154 | ) | (173,345 | ) | (153,903 | ) | (318,740 | ) | ||||||||||||||||||||||
Net increase | 26,406 | 763,542 | 560,879 | 2,196,611 | 805,307 | 214,772 | 2,602,047 | 1,483,457 | ||||||||||||||||||||||||||||||
Beginning shares outstanding | 3,829,304 | 3,065,762 | 10,340,048 | 8,143,437 | 4,398,314 | 4,183,542 | 7,791,528 | 6,308,071 | ||||||||||||||||||||||||||||||
Ending shares outstanding | 3,855,710 | 3,829,304 | 10,900,927 | 10,340,048 | 5,203,621 | 4,398,314 | 10,393,575 | 7,791,528 | ||||||||||||||||||||||||||||||
PL International Large-Cap Fund | PL International Value Fund | PL Currency Strategies Fund (2) | PL Global Absolute Return Fund (2) | |||||||||||||||||||||||||||||||||||
Year ended 3/31/2014 | Year ended 3/31/2013 | Year ended 3/31/2014 | Year ended 3/31/2013 | Year ended 3/31/2014 | Period ended 3/31/2013 | Year ended 3/31/2014 | Period ended 3/31/2013 | |||||||||||||||||||||||||||||||
Class P | ||||||||||||||||||||||||||||||||||||||
Shares sold | 1,116,678 | 1,581,107 | 991,838 | 5,850,166 | 2,512,806 | 11,530,536 | 4,082,609 | 16,924,946 | ||||||||||||||||||||||||||||||
Dividends and distributions reinvested | 143,974 | 202,254 | 389,934 | 393,875 | 397,535 | — | 427,882 | 10,153 | ||||||||||||||||||||||||||||||
Shares repurchased | (303,219 | ) | (3,195,516 | ) | (387,458 | ) | (3,035,641 | ) | (484,579 | ) | (35,716 | ) | (920,196 | ) | (55,181 | ) | ||||||||||||||||||||||
Net increase (decrease) | 957,433 | (1,412,155 | ) | 994,314 | 3,208,400 | 2,425,762 | 11,494,820 | 3,590,295 | 16,879,918 | |||||||||||||||||||||||||||||
Beginning shares outstanding | 12,073,963 | 13,486,118 | 16,100,442 | 12,892,042 | 11,494,820 | — | 16,879,918 | — | ||||||||||||||||||||||||||||||
Ending shares outstanding | 13,031,396 | 12,073,963 | 17,094,756 | 16,100,442 | 13,920,582 | 11,494,820 | 20,470,213 | 16,879,918 |
D-23
PACIFIC LIFE FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
PL Precious Metals Fund (2) | ||||||||||||||||||||||||||
Year ended 3/31/2014 | Period ended 3/31/2013 | |||||||||||||||||||||||||
Class P | ||||||||||||||||||||||||||
Shares sold | 7,061,450 | 8,049,164 | ||||||||||||||||||||||||
Dividends and distributions reinvested | 87,413 | 955 | ||||||||||||||||||||||||
Shares repurchased | (413,167 | ) | (26,531 | ) | ||||||||||||||||||||||
Net increase | 6,735,696 | 8,023,588 | ||||||||||||||||||||||||
Beginning shares outstanding | 8,023,588 | — | ||||||||||||||||||||||||
Ending shares outstanding | 14,759,284 | 8,023,588 |
PL Diversified Fund (3) | ||||
Period ended 3/31/2014 | ||||
Class A | ||||
Shares sold | 1,000 | |||
Dividends and distributions reinvested | — | |||
Shares repurchased | — | |||
Net increase | 1,000 | |||
Beginning shares outstanding | — | |||
Ending shares outstanding | 1,000 | |||
Class C | ||||
Shares sold | 1,000 | |||
Dividends and distributions reinvested | — | |||
Shares repurchased | — | |||
Net increase | 1,000 | |||
Beginning shares outstanding | — | |||
Ending shares outstanding | 1,000 | |||
Class D | ||||
Shares sold | 198,000 | |||
Dividends and distributions reinvested | — | |||
Shares repurchased | — | |||
Net increase | 198,000 | |||
Beginning shares outstanding | — | |||
Ending shares outstanding | 198,000 |
(1) | The PL Emerging Markets Debt Fund commenced operations on June 29, 2012. |
(2) | The PL Currency Strategies, PL Global Absolute and PL Precious Metals Funds commenced operations on December 7, 2012. |
(3) | The PL Diversified Alternatives Fund commenced operations on December 31, 2013. |
D-24
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To The Board of Trustees and Shareholders of
Pacific Life Funds
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of PL Floating Rate Loan Fund, PL Inflation Managed Fund, PL Managed Bond Fund, PL Short Duration Bond Fund, PL Emerging Markets Debt Fund, PL Comstock Fund, PL Growth Fund (formerly PL Growth LT Fund), PL Large-Cap Growth Fund, PL Large-Cap Value Fund, PL Main Street® Core Fund, PL Mid-Cap Equity Fund, PL Mid-Cap Growth Fund, PL Small-Cap Growth Fund, PL Small-Cap Value Fund, PL Real Estate Fund, PL Emerging Markets Fund, PL International Large-Cap Fund, PL International Value Fund, PL Currency Strategies Fund, PL Global Absolute Return Fund, PL Precious Metals Fund, and PL Diversified Alternatives Fund (collectively the “Funds”) (twenty-two of thirty-three funds comprising Pacific Life Funds) as of March 31, 2014, the related statements of operations for the year then ended (as to the PL Diversified Alternatives Fund, for the period from December 31, 2013 (commencement of operations) through March 31, 2014), the statements of changes in net assets for each of the two years in the period then ended (as to the PL Diversified Alternatives Fund, for the period from December 31, 2013 (commencement of operations) through March 31, 2014; as to the PL Emerging Markets Debt Fund, for the year ended March 31, 2014 and the period from June 29, 2012 (commencement of operations) through March 31, 2013; and as to the PL Currency Strategies Fund, PL Global Absolute Return Fund, and PL Precious Metals Fund, for the year ended March 31, 2014 and the period from December 7, 2012 (commencement of operations) through March 31, 2013), and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of investments owned as of March 31, 2014, by correspondence with the custodian, agent banks, transfer agent, and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective Funds as of March 31, 2014, and the results of their operations, the changes in their net assets, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.
Philadelphia, Pennsylvania
May 28, 2014
E-1
PACIFIC LIFE FUNDS
(Unaudited)
For corporate shareholders, the percentage of investment income (dividend income and short-term gains, if any) for each of the Funds that qualify for the dividends-received deductions for the year ended March 31, 2014 is as follows:
Fund | Percentage | |||
PL Managed Bond | 0.44% | |||
PL Comstock | 100.00% | |||
PL Growth | 100.00% | |||
PL Large-Cap Growth | 14.64% | |||
PL Large-Cap Value | 91.21% | |||
PL Main Street Core | 100.00% | |||
PL Mid-Cap Equity | 19.00% | |||
PL Mid-Cap Growth | 9.79% | |||
PL Small-Cap Growth | 100.00% | |||
PL Small-Cap Value | 90.97% | |||
PL Real Estate | 4.75% | |||
PL Emerging Markets | 0.51% | |||
PL International Large-Cap | 0.75% | |||
PL Precious Metals | 27.98% |
For the year ended March 31, 2014 certain dividends paid by the Funds may be subject to a maximum tax rate of 15% as provided by the Jobs and Growth Relief Reconciliation Act of 2003. Of the distributions made by the following Funds, the corresponding percentages represent the amount of each distribution which may qualify for the 15% dividend income tax rate.
Fund | Percentage | |||
PL Managed Bond | 0.44% | |||
PL Comstock | 100.00% | |||
PL Growth | 100.00% | |||
PL Large-Cap Growth | 15.41% | |||
PL Large-Cap Value | 100.00% | |||
PL Main Street Core | 100.00% | |||
PL Mid-Cap Equity | 19.88% | |||
PL Mid-Cap Growth | 11.68% | |||
PL Small-Cap Growth | 100.00% | |||
PL Small-Cap Value | 100.00% | |||
PL Real Estate | 6.73% | |||
PL Emerging Markets | 100.00% | |||
PL International Large-Cap | 100.00% | |||
PL International Value | 100.00% | |||
PL Global Absolute Return | 0.20% | |||
PL Precious Metals | 100.00% |
The following Funds designated the listed amounts as long-term capital gains dividends during the year ended March 31, 2014. Distributions Long-term gains are based on net realized long-term gains determined on a tax basis and may differ from such amounts for financial reporting purposes.
Fund | Amount | |||
PL Floating Rate Loan | $1,512,705 | |||
PL Inflation Managed | 1,787,419 | |||
PL Managed Bond | 2,238,185 | |||
PL Large-Cap Growth | 22,887,345 | |||
PL Large-Cap Value | 4,025,576 | |||
PL Main Street Core | 16,539,176 | |||
PL Mid-Cap Equity | 8,798,178 | |||
PL Mid-Cap Growth | 15,398,871 | |||
PL Small-Cap Growth | 5,299,738 | |||
PL Small-Cap Value | 12,059,144 | |||
PL Emerging Markets | 4,215,847 |
F-1
PACIFIC LIFE FUNDS
(Unaudited)
We believe it is important for you to understand the impact of fees and expenses regarding your investment. All mutual funds have operating expenses. As a shareholder of a mutual fund, you incur two types of costs: (1) transactions costs such as initial sales charges (loads) on purchase payments and/or contingent deferred sales charges on redemptions (applicable to the PL Alternative Strategies Fund only); and (2) ongoing costs, which include advisory fees, administration fees and other fund expenses. The following example is intended to help you understand your ongoing costs (in dollars) of investing in each fund and to compare these costs with those of other mutual funds. The example is based on an investment of $1,000.00 made at the beginning of the period and held for the entire six-month period from October 1, 2013 to March 31, 2014.
ACTUAL EXPENSES
The first section of the table for each fund entitled “Actual Fund Return”, provides information about actual account values and actual expenses based on each fund’s actual performance and each fund’s actual expenses, after any applicable advisory fee waivers and adviser expense reimbursements (See Notes 6 and 7B in Notes to Financial Statements). The “Ending Account Value at 03/31/14” column shown is derived from the fund’s actual performance; the “Annualized Expense Ratio” column shows the fund’s actual annualized expense ratio; and the “Expenses Paid During the Period 10/01/13-03/31/14” column shows the dollar amount that would have been paid by you. All the information illustrated in the following table is based on the past six-month period from October 1, 2013 to March 31, 2014.
You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, for each fund in your account, simply divide that fund’s value by $1,000.00 (for example, an $8,600.00 fund value divided by $1,000.00 = 8.6), then multiply the result by the number given for your fund(s) in the “Expenses Paid During the Period 10/01/13-03/31/14.”
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second section of the table for each fund, entitled “Hypothetical”, provides information about hypothetical account values and hypothetical expenses based on a 5% per year hypothetical rate of return and actual fund’s expenses, after any applicable advisory fee waivers and adviser expense reimbursements (See Note 6 and 7B in Notes to Financial Statements). It assumes that the fund had an annual 5% rate of return before expenses, but that the expense ratio is unchanged. The hypothetical account values and expenses may not be used to estimate the actual ending account values or expenses you paid for the period.
You may use the hypothetical example information to compare the ongoing costs of investing in the fund compared to other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other mutual 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 initial sales charges (loads) or contingent deferred sales charges. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different mutual funds. In addition, if these other costs were included, your costs would have been higher.
Beginning Account Value at 10/01/13 | Ending Account Value at 03/31/14 | Annualized Expense Ratio | Expenses Paid During the Period 10/01/13 - 03/31/14 (1) | |||||||||||||
PL Floating Rate Loan Fund | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class P | $1,000.00 | $1,020.00 | 0.80% | $4.03 | ||||||||||||
Hypothetical | ||||||||||||||||
Class P | $1,000.00 | $1,020.94 | 0.80% | $4.03 | ||||||||||||
PL Inflation Managed Fund | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class P | $1,000.00 | $998.80 | 0.56% | $2.79 | ||||||||||||
Hypothetical | ||||||||||||||||
Class P | $1,000.00 | $1,022.14 | 0.56% | $2.82 | ||||||||||||
PL Managed Bond Fund | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class P | $1,000.00 | $1,008.70 | 0.55% | $2.75 | ||||||||||||
Hypothetical | ||||||||||||||||
Class P | $1,000.00 | $1,022.19 | 0.55% | $2.77 | ||||||||||||
PL Short Duration Bond Fund | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class P | $1,000.00 | $1,008.40 | 0.55% | $2.75 | ||||||||||||
Hypothetical | ||||||||||||||||
Class P | $1,000.00 | $1,022.19 | 0.55% | $2.77 | ||||||||||||
PL Emerging Markets Debt Fund | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class P | $1,000.00 | $1,019.90 | 0.94% | $4.73 | ||||||||||||
Hypothetical | ||||||||||||||||
Class P | $1,000.00 | $1,020.24 | 0.94% | $4.73 | ||||||||||||
PL Comstock Fund | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class P | $1,000.00 | $1,127.20 | 0.89% | $4.72 | ||||||||||||
Hypothetical | ||||||||||||||||
Class P | $1,000.00 | $1,020.49 | 0.89% | $4.48 | ||||||||||||
PL Growth Fund | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class P | $1,000.00 | $1,104.80 | 0.70% | $3.67 | ||||||||||||
Hypothetical | ||||||||||||||||
Class P | $1,000.00 | $1,021.44 | 0.70% | $3.53 | ||||||||||||
PL Large-Cap Growth Fund | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class P | $1,000.00 | $1,097.50 | 0.86% | $4.50 | ||||||||||||
Hypothetical | ||||||||||||||||
Class P | $1,000.00 | $1,020.64 | 0.86% | $4.33 | ||||||||||||
PL Large-Cap Value Fund | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class P | $1,000.00 | $1,123.20 | 0.80% | $4.23 | ||||||||||||
Hypothetical | ||||||||||||||||
Class P | $1,000.00 | $1,020.94 | 0.80% | $4.03 |
See explanation of references on page F-3
F-2
PACIFIC LIFE FUNDS
DISCLOSURE OF FUND EXPENSES (Continued)
(Unaudited)
Beginning Account Value at 10/01/13 | Ending Account Value at 03/31/14 | Annualized Expense Ratio | Expenses Paid During the Period 10/01/13 - 03/31/14 (1) | |||||||||||||
PL Main Street Core Fund | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class P | $1,000.00 | $1,117.60 | 0.60% | $3.17 | ||||||||||||
Hypothetical | ||||||||||||||||
Class P | $1,000.00 | $1,021.94 | 0.60% | $3.02 | ||||||||||||
PL Mid-Cap Equity Fund | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class P | $1,000.00 | $1,131.40 | 0.80% | $4.25 | ||||||||||||
Hypothetical | ||||||||||||||||
Class P | $1,000.00 | $1,020.94 | 0.80% | $4.03 | ||||||||||||
PL Mid-Cap Growth Fund | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class P | $1,000.00 | $1,056.60 | 0.81% | $4.15 | ||||||||||||
Hypothetical | ||||||||||||||||
Class P | $1,000.00 | $1,020.89 | 0.81% | $4.08 | ||||||||||||
PL Small-Cap Growth Fund | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class P | $1,000.00 | $1,048.40 | 0.75% | $3.83 | ||||||||||||
Hypothetical | ||||||||||||||||
Class P | $1,000.00 | $1,021.19 | 0.75% | $3.78 | ||||||||||||
PL Small-Cap Value Fund | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class P | $1,000.00 | $1,089.90 | 0.90% | $4.69 | ||||||||||||
Hypothetical | ||||||||||||||||
Class P | $1,000.00 | $1,020.44 | 0.90% | $4.53 | ||||||||||||
PL Real Estate Fund | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class P | $1,000.00 | $1,096.20 | 1.05% | $5.49 | ||||||||||||
Hypothetical | ||||||||||||||||
Class P | $1,000.00 | $1,019.70 | 1.05% | $5.29 | ||||||||||||
PL Emerging Markets Fund | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class P | $1,000.00 | $1,017.80 | 0.95% | $4.78 | ||||||||||||
Hypothetical | ||||||||||||||||
Class P | $1,000.00 | $1,020.19 | 0.95% | $4.78 | ||||||||||||
PL International Large-Cap Fund | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class P | $1,000.00 | $1,043.50 | 1.00% | $5.09 | ||||||||||||
Hypothetical | ||||||||||||||||
Class P | $1,000.00 | $1,019.95 | 1.00% | $5.04 | ||||||||||||
PL International Value Fund | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class P | $1,000.00 | $1,036.30 | 0.80% | $4.06 | ||||||||||||
Hypothetical | ||||||||||||||||
Class P | $1,000.00 | $1,020.94 | 0.80% | $4.03 |
Beginning Account Value at 10/01/13 | Ending Account Value at 03/31/14 | Annualized Expense Ratio | Expenses Paid During the Period 10/01/13 - 03/31/14 (1) | |||||||||||||
PL Currency Strategies Fund | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class P | $1,000.00 | $950.30 | 0.85% | $4.13 | ||||||||||||
Hypothetical | ||||||||||||||||
Class P | $1,000.00 | $1,020.69 | 0.85% | $4.28 | ||||||||||||
PL Global Absolute Return Fund | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class P | $1,000.00 | $1,017.90 | 1.16% | $5.84 | ||||||||||||
Hypothetical | ||||||||||||||||
Class P | $1,000.00 | $1,019.15 | 1.16% | $5.84 | ||||||||||||
PL Precious Metals Fund | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class P | $1,000.00 | $945.10 | 0.88% | $4.27 | ||||||||||||
Hypothetical | ||||||||||||||||
Class P | $1,000.00 | $1,020.54 | 0.88% | $4.43 | ||||||||||||
PL Diversified Alternatives Fund (2), (3) | ||||||||||||||||
Actual Fund Return |
| |||||||||||||||
Class A | $1,000.00 | $999.00 | 0.85% | $2.12 | ||||||||||||
Class C | 1,000.00 | 997.00 | 1.60% | 3.98 | ||||||||||||
Advisor Class | 1,000.00 | 999.00 | 0.60% | 1.50 | ||||||||||||
Hypothetical | ||||||||||||||||
Class A | $1,000.00 | $1,020.69 | 0.85% | $4.28 | ||||||||||||
Class C | 1,000.00 | 1,016.95 | 1.60% | 8.05 | ||||||||||||
Advisor Class | 1,000.00 | 1,021.94 | 0.60% | 3.02 |
(1) | Expenses paid during the period are equal to the fund’s annualized expense ratio (shown in table above), multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year or applicable period, then divided by 365 days. |
(2) | This Fund commenced operations on December 31, 2013. The actual fund return and expenses paid during the period for this fund was for the period December 31, 2013 to March 31, 2014, instead of the entire 6-month period. The hypothetical return and expenses paid during the period are based on the entire six-month period for comparison purposes. |
(3) | The annualized expense ratios for the PL Diversified Alternatives Fund do not include fees and expenses of the PL Underlying Funds and Class P shares of the PL Floating Rate Income Fund (see Note 1 in Notes to Financial Statements) in which the PL Diversified Alternatives Fund invests. |
F-3
PACIFIC LIFE FUNDS
TRUSTEES AND OFFICERS INFORMATION
(Unaudited)
The business and affairs of the Pacific Life Funds (the “Trust”) are managed under the direction of the Board of Trustees under the Pacific Life Funds’ Declaration of Trust. Information pertaining to the trustees and officers of the Trust is set forth below, effective April 1, 2014. Trustees who are not deemed to be “interested persons” of the Trust, as defined in the 1940 Act, are referred to as “Independent Trustees.” Certain trustees and officers are deemed to be “interested persons” of the Trust and thus are referred to as “Interested Persons”, because of their positions with Pacific Life Insurance Company (“Pacific Life”) and Pacific Life Fund Advisors LLC, a wholly-owned subsidiary of Pacific Life. The Trust’s Statement of Additional Information includes additional information about the trustees. For information on availability of the Trust’s Statement of Additional Information, refer to the WHERE TO GO FOR MORE INFORMATION section of this report.
The address of each trustee and officer is c/o Pacific Life Funds, 700 Newport Center Drive, Newport Beach, CA 92660.
Name and Age | Position(s) with the Fund and Length of Time Served* | Current Directorship(s) Held and Principal Occupation(s) (and certain additional occupation information) During Past 5 years | Number of Portfolios in Fund Complex Overseen** | |||
INDEPENDENT TRUSTEES | ||||||
Frederick L. Blackmon Year of birth 1952 | Trustee since 9/13/05 | Trustee (1/05 to present) of Pacific Select Fund; Director (2005 to present) of Trustmark Mutual Holding Company; Former Executive Vice President and Chief Financial Officer (1995 to 2003) of Zurich Life; Former Executive Vice President and Chief Financial Officer (1989 to 1995) of Alexander Hamilton Life Insurance Company (subsidiary of Household International); Member of Board of Trustees (2010 to present) of Cranbrook Educational Community; Former Member of Board of Governors (1994 to 1999) of Cranbrook Schools; and Former Member of Board of Regents (1993 to 1996) Eastern Michigan University. | 91 | |||
Gale K. Caruso Year of birth 1957 | Trustee since 1/01/06 | Trustee (1/06 to present) of Pacific Select Fund; Former Member of the Board of Directors (2005 to 2009) of LandAmerica Financial Group, Inc.; Former President and Chief Executive Officer (1999 to 2003) of Zurich Life; Former Chairman, President and Chief Executive Officer of Scudder Canada Investor Services, Ltd. and Managing Director of Scudder Kemper Investments; Former Member of the Advisory Council of the Trust for Public Land in Maine; Former Member of the Board of Directors of Make-A-Wish of Maine; and Former Member of the Board of Directors of the Illinois Life Insurance Council. | 91 | |||
Lucie H. Moore Year of birth 1956 | Trustee since 6/13/01 | Trustee (10/98 to present) of Pacific Select Fund; Former Partner (1984 to 1994) with Gibson, Dunn & Crutcher (Law); Former Member of the Board of Trustees (2007 to 2011) of Sage Hill School; Former Member (2000 to 2009) of the Board of Trustees of The Pegasus School; Former Member of the Board of Directors (2005 to 2010) of HomeWord; and Former Member of the Advisory Board (1993 to 2004) of Court Appointed Special Advocates (CASA) of Orange County. | 91 | |||
Nooruddin (Rudy) S. Veerjee Year of birth 1958 | Trustee since 9/13/05 | Trustee (1/05 to present) of Pacific Select Fund; Former President (1997 to 2000) of Transamerica Insurance and Investment Group; Former President (1994 to 1997) of Transamerica Asset Management; Former Chairman and Chief Executive Officer (1995 to 2000) of Transamerica Premier Funds (Mutual Fund); and Former Director (1994 to 2000) of various Transamerica Life Companies. | 91 | |||
G. Thomas Willis Year of birth 1942 | Trustee since 2/24/04 | Trustee (11/03 to present) of Pacific Select Fund; Certified Public Accountant in California (1967 to present); Former Partner (Audit) (1976 to 2002) of PricewaterhouseCoopers LLP (Accounting and Auditing). | 91 |
F-4
PACIFIC LIFE FUNDS
TRUSTEES AND OFFICERS INFORMATION (Continued)
(Unaudited)
Name and Age | Position(s) with the Fund and Length of Time Served* | Current Directorship(s) Held and Principal Occupation(s) (and certain additional occupation information) During Past 5 years | Number of Portfolios in Fund Complex Overseen** | |||
INTERESTED PERSONS | ||||||
James T. Morris Year of birth 1960 | Chairman of the Board and Trustee since 1/11/07, (Chief Executive Officer 1/11/07 to 12/31/09) | Director (4/07 to present), Chairman (5/08 to present), Chief Executive Officer (4/07 to present) and President (4/07 to 3/12) of Pacific Mutual Holding Company and Pacific LifeCorp; Director (4/07 to present), Chairman (5/08 to present), Chief Executive Officer (4/07 to present) and President (4/07 to 3/12) of Pacific Life; Chief Executive Officer (5/07 to present) and President (5/07 to 3/12) of Pacific Life Fund Advisors LLC; and Chairman of the Board and Trustee (1/07 to present) and Chief Executive Officer (1/07 to 12/09) of Pacific Select Fund. | 91 | |||
Mary Ann Brown Year of birth 1951 | Chief Executive Officer since 1/01/10, (President 1/11/07 to 12/31/09) | Executive Vice President (4/10 to present) and Senior Vice President (5/06 to 3/10) of Pacific LifeCorp; Executive Vice President (4/10 to present) and Senior Vice President (3/05 to 3/10) of Pacific Life; Executive Vice President (4/10 to present) and Senior Vice President (5/07 to 3/10) of Pacific Life Fund Advisors LLC; and Chief Executive Officer (1/10 to present) and President (1/07 to 12/09) of Pacific Select Fund. | 91 | |||
Robin S. Yonis Year of birth 1954 | Vice President and General Counsel since 6/13/01 | Vice President, Fund Advisor General Counsel, and Assistant Secretary (5/07 to present) of Pacific Life Fund Advisors LLC; and Vice President and General Counsel (4/05 to present) of Pacific Select Fund. | 91 | |||
Brian D. Klemens Year of birth 1956 | Vice President and Treasurer since 6/13/01 | Vice President and Controller (10/07 to present) of Pacific Mutual Holding Company and Pacific LifeCorp; Vice President and Controller (10/07 to present) of Pacific Life; Vice President and Controller (10/07 to present) of Pacific Life Fund Advisors LLC; Vice President (5/00 to present) and Controller (10/07 to present) of Pacific Select Distributors, Inc.; and Vice President and Treasurer (4/96 to present) of Pacific Select Fund. | 91 | |||
Sharon E. Pacheco Year of birth 1957 | Vice President and Chief Compliance Officer since 6/04/04 | Vice President and Chief Compliance Officer (11/03 to present) of Pacific Mutual Holding Company and Pacific LifeCorp; Vice President (2/00 to present) and Chief Compliance Officer (1/03 to present) of Pacific Life; Vice President and Chief Compliance Officer (5/07 to present) of Pacific Life Fund Advisors LLC; and Vice President and Chief Compliance Officer (6/04 to present) of Pacific Select Fund. | 91 | |||
Eddie Tung Year of birth 1957 | Vice President and Assistant Treasurer since 11/14/05 | Assistant Vice President (4/03 to present) of Pacific Life; Assistant Vice President (5/07 to present) of Pacific Life Fund Advisors LLC; and Assistant Vice President and Assistant Treasurer (11/05 to present) of Pacific Select Fund. | 91 | |||
Howard T. Hirakawa Year of birth 1962 | Vice President since 6/20/06 | Senior Vice President (4/14 to present), Vice President (5/07 to 3/14) of Pacific Life Fund Advisors LLC; and Vice President (6/06 to present) of Pacific Select Fund. | 91 | |||
Jane M. Guon Year of birth 1964 | Vice President and Secretary since 1/01/11 | Vice President and Secretary (1/11 to present), Assistant Vice President (4/06 to 12/10) and Assistant Secretary (6/98 to 12/10) of Pacific Mutual Holding Company and Pacific LifeCorp; Director, Vice President, and Secretary (1/11 to present), Assistant Vice President (4/06 to 12/10) and Assistant Secretary (2/95 to 12/10) of Pacific Life; Vice President and Secretary (1/11 to present) and Assistant Vice President and Assistant Secretary (05/07 to 12/10) of Pacific Life Fund Advisors LLC; Vice President and Secretary (1/11 to present), Assistant Vice President (5/06 to 12/10) and Assistant Secretary (5/99 to 12/10) of Pacific Select Distributors, Inc.; and Vice President and Secretary (1/11 to present) of Pacific Select Fund. | 91 |
F-5
PACIFIC LIFE FUNDS
TRUSTEES AND OFFICERS INFORMATION (Continued)
(Unaudited)
Name and Age | Position(s) with the Fund and Length of Time Served* | Current Directorship(s) Held and Principal Occupation(s) (and certain additional occupation information) During Past 5 years | Number of Portfolios in Fund Complex Overseen** | |||
INTERESTED PERSONS (Continued) | ||||||
Laurene E. MacElwee Year of birth 1966 | Vice President since 4/04/05 and Assistant Secretary since 6/13/01 | Vice President (4/11 to present), Assistant Secretary (5/07 to present) and Assistant Vice President (5/07 to 3/11) of Pacific Life Fund Advisors LLC; and Vice President (12/11 to present), Assistant Secretary (4/05 to present) and Assistant Vice President (4/05 to 12/11) of Pacific Select Fund. | 91 | |||
Carleton J. Muench Year of birth 1973 | Vice President since 11/30/06 | Vice President (4/14 to present), Assistant Vice President (5/07 to 3/14) of Pacific Life Fund Advisors LLC; and Assistant Vice President (11/06 to present) of Pacific Select Fund. | 91 | |||
Kevin W. Steiner Year of birth 1975 | Vice President since 1/01/13 | Assistant Vice President (4/12 to present), Mutual Funds Compliance Director (4/08 to 3/12) and Mutual Funds Compliance Manager (10/06 to 3/08) of Pacific Life Fund Advisors LLC; and Assistant Vice President (1/13 to present) of Pacific Select Fund. | 91 | |||
Audrey L. Cheng Year of birth 1975 | Vice President since 12/11/13 | Assistant Vice President (9/11 to present) of Pacific Life; Vice President and Attorney (6/08 to 8/11) of Pacific Investment Management Company LLC (“PIMCO”); and Assistant Vice President (12/13 to present) of Pacific Select Funds. | 91 |
* | A trustee serves until he or she resigns, retires, or his or her successor is elected and qualified. |
** | As of March 31, 2014, the “Fund Complex” consisted of Pacific Select Fund (58 portfolios) and Pacific Life Funds (33 funds). |
F-6
PACIFIC LIFE FUNDS
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
AND FUND MANAGEMENT AGREEMENTS
(Unaudited)
I. Introduction and Background
The Board of Trustees (the “Trustees” or “Board”) of Pacific Life Funds (the “Trust”) oversees the management of each of the separate funds of the Trust (each a “Fund” and collectively, the “Funds”) and, as required by Section 15(c) of the Investment Company Act of 1940, as amended (the “1940 Act”), initially approves, and determines annually whether to renew the investment advisory agreement (the “Advisory Agreement”) with Pacific Life Fund Advisors LLC (“PLFA”) and each fund management agreement (the “Fund Management Agreements,” together with the Advisory Agreement, the “Agreements”) with the various sub-advisers (“Fund Managers”). PLFA serves as the investment adviser for all of the Funds and directly manages the PL Short Duration, PL Income, PL Strategic Income, PL Floating Rate Income, PL Limited Duration High Income, and PL High Income Funds (the “PAM Managed Funds”) under the name Pacific Asset Management (“PAM”) and the PL Portfolio Optimization Conservative, PL Portfolio Optimization Moderate-Conservative, PL Portfolio Optimization Moderate, PL Portfolio Optimization Moderate-Aggressive, and PL Portfolio Optimization Aggressive Funds (the “Asset Allocation Funds,” and together with the PAM Managed Funds, the “Directly Managed Funds”). For all other Funds (other than the PL Diversified Alternatives Fund, which is a new fund and is discussed below), PLFA has retained other firms to serve as Fund Managers under PLFA’s supervision. The Board, including all of the Trustees who are not “interested persons,” as that term is defined in the 1940 Act (“Independent Trustees”), last renewed the Agreements at an in-person meeting of the Trustees held on December 11, 2013.1
At this meeting and other meetings, the Board considered information (both written and oral) provided to assist it in its review of the Agreements and made assessments with respect to each Agreement. The Board requested, received and reviewed written materials from PLFA and each Fund Manager that were submitted in response to requests from the Independent Trustees and supporting materials relating to those questions and responses. In addition, the Board received in-person presentations about the Funds throughout the year, and the Independent Trustees were advised by independent legal counsel with respect to these and other relevant matters. The Board reviewed a variety of factors and considered a significant amount of information, including information received on an ongoing basis at Board and committee meetings, including reports on Fund performance, expenses, fee comparisons, investment advisory, compliance, and other services provided to the Funds by PLFA and the Fund Managers. The Board also reviewed financial and profitability information regarding PLFA and the Fund Managers and information regarding the organization and operations of each entity, such as their compliance monitoring, portfolio trading and brokerage practices and the personnel providing investment management and administrative services to each Fund. The Board reviewed data provided by PLFA that was gathered from various independent providers of investment company data to provide the Board with information concerning the Funds’ investment performance, management fees and expense information. Additionally, the Independent Trustees retained an independent consultant (“Independent Consultant”) to assist the Trustees with certain of their analyses and to provide other relevant information. In connection with the analysis, the Independent Consultant utilized and provided the Independent Trustees with data obtained from independent service providers as well as from other sources.
The Trustees’ determinations were made on the basis of each Trustee’s business judgment after consideration of all the information presented. In reviewing the materials presented and in considering the information in the management presentations, the Trustees did not identify any single issue or particular information that, in isolation, would be a controlling factor in making a final decision regarding the proposed Agreements. 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. The following summary describes the most important, but not all, of the factors considered by the Trustees in approving the Agreements, and in the case of the Independent Trustees, certain factors were considered in light of the legal advice furnished to them by independent legal counsel and information from the Independent Consultant that they had retained. This discussion is not intended to be all-inclusive.
II. Annual Consideration and Approval of Investment Advisory and Fund Management Agreements
In evaluating the Advisory Agreement and each Fund Management Agreement, the Board, including all the Independent Trustees, considered the following factors, among others:
1. Nature, Extent and Quality of Services
PLFA. The Trustees considered the depth and quality of PLFA’s investment management process, including its monitoring and oversight of the Fund Managers and PAM, and the benefits to shareholders of retaining PLFA and continuing the Advisory Agreement in light of the nature, extent, and quality of the services that have been provided by PLFA, including PAM. The Trustees considered the overall financial strength and stability of PLFA and its ability to provide a high level and quality of services to the Funds. They also considered PLFA’s responsiveness to questions or concerns raised by the Trustees, including PLFA’s willingness to consider and implement investment and operational changes designed to improve investment results and improve the services provided to the Funds and their shareholders.
The Trustees noted that PLFA makes officers and employees of PLFA available to the Board for consultation and discussion regarding the investment management services provided to the Funds. The Trustees considered the experience, capability and integrity of PLFA’s senior management and other personnel and the low turnover rates of its key personnel. The Trustees noted that the investment, legal, compliance and accounting professionals of PLFA and its affiliates have access to and utilize a variety of resources and systems relating to investment management, compliance, trading, performance and risk analysis, security valuation and fund accounting. The Trustees further considered PLFA’s continuing need and ability to attract and retain qualified personnel and to maintain and enhance its resources and systems to provide appropriate investment management, compliance and monitoring services for the Funds.
1 | At the December 11th meeting, the Board did not consider the continuance of the Fund Management Agreements relating to the PL Large-Cap Growth, PL Mid-Cap Growth, PL Growth and PL Mid-Cap Equity Funds, as those agreements were not up for renewal at that time. At the December 11th meeting, the Board approved the continuance of the Advisory Agreement for the PL Money Market Fund. The PL Money Market Fund, a PAM Managed Fund, subsequently was liquidated on March 31, 2014. |
F-7
PACIFIC LIFE FUNDS
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
AND FUND MANAGEMENT AGREEMENTS (Continued)
(Unaudited)
Directly Managed Funds — The Trustees considered the services provided by PLFA, including PAM, in rendering investment management services to each Directly Managed Fund. The Trustees considered that PLFA, including PAM, is responsible for identifying investments for each Directly Managed Fund and determining when to purchase, retain, or sell securities, cash and/or other investments for each Directly Managed Fund. The Trustees also considered that PLFA, including PAM, is responsible for the valuation of portfolio securities and evaluating and voting proxies for portfolio holdings of the Directly Managed Funds. With respect to the Asset Allocation Funds, the Trustees also considered, among other things, PLFA’s experience, resources and expertise in analyzing the composition of the various Underlying Funds that serve as investment options for the Asset Allocation Funds and in developing asset allocation models appropriate to each Asset Allocation Fund’s investment objectives and risk profile. The Trustees considered, in this regard, the tools and resources used by PLFA in constructing the asset allocation models, including the role and costs of consultants engaged by PLFA for assistance in the construction of these models. With respect to the PAM Managed Funds, the Trustees also considered the investment oversight and monitoring of PAM discussed below under “Sub-Advised Funds.”
The Trustees considered PLFA’s policies, procedures and systems to ensure compliance with applicable laws and regulations with respect to the Directly Managed Funds, and its attention to matters that may involve conflicts of interest between itself and a Fund. In this regard, the Trustees reviewed information throughout the year on PLFA’s compliance policies and procedures, its compliance history, and reports from the Trust’s Chief Compliance Officer (“CCO”) on compliance by PLFA with applicable laws and regulations. The Trustees also reviewed information on any responses by PLFA to regulatory and compliance developments throughout the year. The Trustees further noted the compliance monitoring conducted by PLFA and PAM on an ongoing basis and also noted the development of procedures and systems necessary to maintain compliance with applicable laws and regulations as well as the resources that PLFA dedicates to these programs. The Trustees considered that the CCO has in place a systematic process for periodically reviewing PLFA’s written compliance policies and procedures, including the assessment of PLFA’s compliance program as required under Rule 38a-1 of the 1940 Act and PLFA’s code of ethics. The Trustees also considered that PLFA continues to cooperate with the CCO in reviewing its compliance operations.
Sub-Advised Funds — The Trustees considered PLFA’s responsibilities in rendering services to the Sub-Advised Funds and the fact that PLFA monitors and evaluates the performance of the Fund Managers in comparison to each Fund’s investment objective as well as to appropriate benchmark indices and peer funds. The Trustees also considered that PLFA monitors the Sub-Advised Funds for adherence to the investment objectives and policies of each Fund. The Trustees noted that PLFA provides the Board with periodic and special reports related to such performance and investment monitoring and evaluation. The Trustees also considered PLFA’s role in analyzing and recommending for consideration by the Board, the termination of a Fund Management Agreement with a Fund Manager and the replacement of a Fund Manager.
The Trustees considered the high quality of the products and services provided by PLFA to the Funds, including risk analysis, preparation of periodic performance and other reports, and coordination and oversight of other service providers to the Trust. The Trustees also noted that PLFA regularly informs the Trustees about matters relevant to the Trust and its shareholders, including relationships with financial intermediaries.
The Trustees considered the depth and quality of PLFA’s monitoring and oversight of the Fund Managers and PAM. The Board noted that PLFA monitors numerous investment, performance, and risk metrics for the Funds. The Trustees considered PLFA’s continued investment in, and development of, its research and analytical capabilities, including investments in personnel and enhanced analytical tools for assessing Fund performance and the performance of the Fund Managers, including analytical tools relating to risk analysis, Fund performance attribution and reporting on such matters to the Trustees. The Trustees noted that PLFA uses these tools to analyze a Fund’s performance and risk profile and identify Funds that are underperforming. The Board considered that PLFA also conducts various analyses to try to assess the sources of and reasons for underperformance. The Trustees noted that PLFA has developed, and continues to enhance, processes to oversee and monitor the performance of Fund Managers, including the use of analytical methods to review Fund performance and execution of investment strategies. The Board noted that PLFA provides the Board with analysis of this data over rolling periods to assist the Board in identifying trends in Fund performance and other areas, and periodically provides the Trustees with information on economic and market trends to provide a context for assessing recent performance. The Trustees also noted that PLFA has developed effective methods for monitoring investment style consistency by Fund Managers and for analyzing the use of derivatives by Fund Managers. With respect to the PAM Managed Funds, the Board considered that PLFA provides oversight, diligence and reporting with regard to its PAM unit that is similar to the process it employs with regard to the Fund Managers. In making their assessments, the Trustees considered that PLFA has historically exercised diligence in monitoring the performance of the Fund Managers and PAM, and has recommended and taken measures to attempt to remedy relative underperformance by a Fund when PLFA and the Trustees believed it to be appropriate. The Trustees also considered the significant work performed by PLFA in conducting searches for new Fund Managers to replace existing Fund Managers where appropriate or to manage new Funds in the Trust.
The Board also noted that PLFA conducts periodic due diligence on Fund Managers involving onsite visits, in-person meetings and telephonic meetings to gather information that PLFA uses to gain an in-depth understanding of a Fund Manager’s investment process and to seek to identify issues that may be relevant to a Fund Manager’s services to a Fund or a Fund’s performance, including, but not limited to, the financial strength of a Fund Manager, significant staffing changes that could affect a Fund, material changes in a Fund Manager’s assets under management, compliance and regulatory concerns, best execution review and portfolio security valuation support.
The Trustees considered the time and attention paid by PLFA to matters involving the valuation of Fund securities. The Trustees considered that PLFA has established a Valuation Oversight Committee that is responsible for, among other things, researching and evaluating information concerning securities that are not actively or publicly traded, valuing securities subject to a trading halt or for which a market quotation is not readily available, the valuation of equity securities traded on foreign exchanges, oversight of and due diligence on pricing vendors and the development of alternate valuation methodologies.
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AND FUND MANAGEMENT AGREEMENTS (Continued)
(Unaudited)
The Trustees considered PLFA’s oversight, review and analysis of trade execution reports and trends in trade execution for the Funds. The Trustees noted that PLFA oversees a third-party transaction cost analysis consultant that provides statistical analysis on Fund trading and that PLFA presents information about Fund trading costs to the Board annually. The Board also noted that PLFA conducts regular review and analysis of each Fund Manager’s use of soft dollars and presents information about Fund Managers’ use of soft dollars to the Board annually.
The Trustees also considered PLFA’s implementation of transition management programs when handling significant changes in the Funds, such as cash movements between the Funds arising from reallocations by funds of funds and the transition of a Fund from one Fund Manager to another, including steps taken by PLFA to reduce transaction costs associated with a Fund transition. The Trustees considered that PLFA coordinates the onboarding process for new Fund Managers and oversees the establishment of necessary accounts and documentation for the Fund Managers to begin managing Fund assets.
In addition to the services described above, the Trustees also considered the compliance monitoring that PLFA and its affiliates conduct on the Fund Managers and the commitment of PLFA and its affiliates to those programs and PLFA’s efforts to keep the Trustees informed about the compliance programs of Fund Managers. In this regard, the Trustees reviewed information and reports from the Trust’s CCO on compliance by the Fund Managers with applicable laws and regulations. The Trustees considered that the CCO has in place a systematic process for periodically reviewing each Fund Manager’s written compliance policies and procedures, including the assessment of each Fund Manager’s compliance program as required under Rule 38a-1 of the 1940 Act and each Fund Manager’s code of ethics. The Trustees also considered that each Fund Manager continues to cooperate with the CCO in reviewing its compliance operations.
Fund Managers. The Trustees considered the benefits to shareholders of retaining each Fund Manager and continuing the Fund Management Agreements particularly in light of the nature, extent, and quality of the services that have been provided by the Fund Managers. The Trustees considered the services provided by each Fund Manager in rendering investment management services to a Sub-Advised Fund. The Trustees considered that each Fund Manager is responsible for identifying investments for a Sub-Advised Fund and determining when to purchase, retain, or sell securities, cash and/or other investments for a Sub-Advised Fund. The Trustees also considered that each Fund Manager is responsible for evaluating and voting proxies for fund holdings of a Sub-Advised Fund. The Trustees considered the quality of the portfolio management services which have benefited and should continue to benefit the Sub-Advised Funds and their shareholders, the organizational depth and resources of the Fund Managers, including the background and experience of each of the Fund Manager’s management, and the expertise of each Fund Manager’s portfolio management team, as well as the investment methodology used by the Fund Manager.
The Board concluded that it was satisfied with the nature, extent and quality of the investment management services provided by PLFA and the Fund Managers.
2. Investment Results
The Trustees considered the investment results of each Fund in light of its objective, strategies and market conditions. The Trustees compared each Fund’s total returns with the total returns of each Fund’s primary benchmark index and the total returns of appropriate peer funds. The peer funds for each Fund were selected by an Independent Consultant using data from Morningstar (each a “Selected Performance Peer Group”), and the Trustees reviewed a description of the Independent Consultant’s methodology for selecting the peer funds in each Selected Performance Peer Group. The information provided to the Trustees included each Fund’s performance record for the one-, three-, five- and ten-year or since inception periods ended September 30, 2013, as available, compared to the applicable primary benchmark and Selected Performance Peer Group.
The Trustees considered the performance of each Fund on a case-by-case basis and noted that some Funds had outperformed their Selected Performance Peer Group over certain periods and/or exceeded the return of their respective primary benchmark while others underperformed their Selected Performance Peer Group over certain periods and/or trailed the return of their respective primary benchmark. In considering each Fund’s investment results, the Board placed greater emphasis on each Fund’s long-term performance track record rather than shorter-term performance. The Board also took into account that each Fund’s track record is measured as of a specific date, and that track records can vary as of different measurement dates. Therefore, in reviewing Funds that are currently underperforming as of September 30, 2013, the Trustees also considered the broader perspective of the Fund’s performance over varying time periods, the market conditions experienced during the periods under review, as well as the outlook for the Funds going forward in light of expected future market conditions. The Trustees discussed with PLFA the fact that certain periods of underperformance may be transitory while other periods of underperformance may be reflective of broader issues that may warrant consideration of corrective action. The Trustees discussed these Funds with representatives of PLFA, including an assessment of the approach used by the Fund Managers, and the approach used by PLFA and PAM with respect to the Directly Managed Funds, as well as the oversight and monitoring by PLFA as the investment adviser, to gain an understanding of underperformance and to assess whether any actions would be appropriate. In addition, the Board considered any specific actions that PLFA, PAM or a Fund Manager have taken, or agreed to take, to enhance the investment performance of a Fund, and the results of those actions. In reviewing the performance of each Fund, the Board took into account, among other things, each Fund’s performance track record. A summary of each Fund’s track record is provided below.
PL Main Street Core Fund
The Fund: (1) underperformed its Selected Performance Peer Group median for the one-year period and outperformed for the three- and five-year periods; (2) underperformed its primary benchmark for the one-, three-, and five-year periods; and (3) is ranked in the fourth quintile of its Selected Performance Peer Group for the one-year period and the second quintile for the three- and five-year periods.
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AND FUND MANAGEMENT AGREEMENTS (Continued)
(Unaudited)
PL Large-Cap Growth Fund
The Fund: (1) outperformed its Selected Performance Peer Group median for the one-, three-, and five-year periods and underperformed for the ten-year period; (2) outperformed its primary benchmark for the one- and three-year periods and underperformed for the five- and ten-year periods; and (3) is ranked in the second quintile of its Selected Performance Peer Group for the one- and five-year periods, the first quintile for the three-year period and the fifth quintile for the ten-year period. In evaluating the performance of the Fund, the Board considered that the prior Fund Manager had been replaced and the current Fund Manager has managed the Portfolio since 2013, and, therefore, the Fund Management Agreement was not up for renewal at this time.
PL Growth Fund
The Fund: (1) outperformed its Selected Performance Peer Group median for the one-year period and underperformed for the three-, five-, and ten-year periods; (2) outperformed its primary benchmark for the one-year period and underperformed for the three-, five- and ten-year periods; and (3) is ranked in the second quintile of its Selected Performance Peer Group for the one-year period, the fifth quintile for the three-year period and the fourth quintile for the five- and ten-year periods. In evaluating the performance of the Fund, the Board considered that the prior Fund Manager had been replaced and the current Fund Manager has managed the Fund since 2013, and, therefore, the Fund Management Agreement was not up for renewal at this time.
PL Comstock Fund
The Fund: (1) outperformed its Selected Performance Peer Group median for the one-, three-, and five-year periods and underperformed for the ten-year period; (2) outperformed its primary benchmark for the one- and five-year periods and underperformed for the three- and ten-year periods; and (3) is ranked in the first quintile of its Selected Performance Peer Group for the one-year period, the second quintile for the three- and five-year periods and the fourth quintile for the ten-year period. With regard to the approval of the Fund Management Agreement, the Board considered that the current Fund Manager has managed the Fund since 2003.
PL Large-Cap Value Fund
The Fund: (1) underperformed its Selected Performance Peer Group median for the one- and ten-year periods and outperformed for the three- and five-year periods; (2) underperformed its primary benchmark for the one- and ten-year periods and outperformed for the three- and five-year periods; and (3) is ranked in the fourth quintile of its Selected Performance Peer Group for the one- and ten-year periods, the first quintile for the three-year period and the third quintile for the five-year period.
PL Small-Cap Value Fund
The Fund: (1) underperformed its Selected Performance Peer Group median for the one-, three-, and five-year periods; (2) underperformed its primary benchmark for the one- and three-year periods and outperformed for the five-year period; and (3) is ranked in the fourth quintile of its Selected Performance Peer Group for the one- and three-year periods and the third quintile for the five-year period. In evaluating the performance of the Fund, the Trustees considered that the Fund had competitive long-term performance, but, with respect to the Fund’s underperformance over shorter-term periods, considered that PLFA had advised that it was evaluating whether future remedial actions were necessary or appropriate.
PL Small-Cap Growth Fund
The Fund: (1) underperformed its Selected Performance Peer Group median for the one-, three-, and ten-year periods and outperformed for the five-year period; (2) underperformed its primary benchmark for the one-, three-, and ten-year periods and outperformed for the five-year period; and (3) is ranked in the fourth quintile of its Selected Performance Peer Group for the one-year period, the fifth quintile for the three-and ten-year periods and the third quintile for the five-year period. In evaluating the performance of the Fund, the Trustees considered that the Board had approved a change in Fund Manager for the Fund effective May 1, 2014.
PL Mid-Cap Growth Fund
The Fund: (1) outperformed its Selected Performance Peer Group median for the one-, five-, and ten-year periods and underperformed for the three-year period; (2) outperformed its primary benchmark for the one-, five-, and ten-year periods and underperformed for the three-year period; and (3) is ranked in the first quintile of its Selected Performance Peer Group for the one-, five- and ten-year periods and the fifth quintile for the three-year period. In evaluating the performance of the Fund, the Board considered that the prior Fund Manager had been replaced and the current Fund Manager has managed the Fund since 2013, and, therefore, the Fund Management Agreement is not up for renewal at this time.
PL Mid-Cap Equity Fund
The Fund: (1) underperformed its Selected Performance Peer Group median for the one-, three-, and five-year periods; (2) underperformed its primary benchmark for the one-, three-, and five-year periods; and (3) is ranked in the fourth quintile of its Selected Performance Peer Group for the one- and five-year periods and the fifth quintile for the three-year period. In evaluating the performance of the Fund, the Board considered that prior Fund Manager had been replaced and the current Fund Manager has managed the Fund since 2013, and, therefore, the Fund Management Agreement is not up for renewal at this time.
PL Real Estate Fund
The Fund: (1) underperformed its Selected Performance Peer Group median for the one- and three-year periods and outperformed for the five-year period; (2) underperformed its primary benchmark for the one-, three-, and five-year periods; and (3) is ranked in the fourth quintile of its Selected Performance Peer Group for the one- and three-year periods and the third quintile for the five-year period. In evaluating the
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AND FUND MANAGEMENT AGREEMENTS (Continued)
(Unaudited)
performance of the Fund, the Trustees considered that despite the Fund’s comparative ranking against the Selected Performance Peer Group, the difference in absolute returns of the Fund from the median of the Selected Performance Peer Group was not large. The Trustees considered that PLFA had advised that it was evaluating whether future remedial actions were necessary or appropriate.
PL Emerging Markets Debt Fund
The Fund: (1) outperformed its Selected Performance Peer Group median for the one-year period; (2) outperformed its primary benchmark for the one-year period; and (3) is ranked in the third quintile of its Selected Performance Peer Group for the one-year period.
PL Emerging Markets Fund
The Fund: (1) outperformed its Selected Performance Peer Group median for the one-, three-, and five-year periods; (2) outperformed its primary benchmark for the one-, three-, and five-year periods; and (3) is ranked in the first quintile of its Selected Performance Peer Group for the one-, three-, and five-year periods.
PL International Large-Cap Fund
The Fund: (1) outperformed its Selected Performance Peer Group median for the one-, three-, five- and ten-year periods; (2) underperformed its primary benchmark for the one-year period and outperformed for the three-, five- and ten-year periods; and (3) is ranked in the first quintile of its Selected Performance Peer Group for the one-year period and the second quintile for the three, five-, and ten-year periods. With regard to the approval of the Fund Management Agreement, the Board considered that the current Fund Manager has managed the Fund since 2004.
PL International Value Fund
The Fund: (1) outperformed its Selected Performance Peer Group median for the one- and three-year periods and underperformed for the five- and ten-year periods; (2) outperformed its primary benchmark for the one-year period and underperformed for the three-, five-, and ten-year periods; and (3) is ranked in the second quintile of its Selected Performance Peer Group for the one-year period, the third quintile for the three-year period and the fifth quintile for the five- and ten-year periods. With regard to the approval of the Fund Management Agreement, the Board considered that the current Fund Manager has managed the Fund since 2011.
PL Floating Rate Income Fund
The Fund: (1) outperformed its Selected Performance Peer Group median for the one-year period; (2) outperformed its primary benchmark for the one-year period; and (3) is ranked in the first quintile of its Selected Performance Peer Group for the one-year period.
PL Floating Rate Loan Fund
The Fund: (1) underperformed its Selected Performance Peer Group median for the one-, three-, and five-year periods; (2) underperformed its primary benchmark for the one-, three- and five-year periods; and (3) is ranked in the third quintile of its Selected Performance Peer Group for the one-year period and the fourth quintile for the three- and five-year periods. With regard to the approval of the Fund Management Agreement, the Board considered that the current Fund Manager has managed the Fund since 2010.
PL High Income Fund
The Fund: (1) outperformed its Selected Performance Peer Group median for the one-year period; (2) outperformed its primary benchmark for the one-year period; and (3) is ranked in the second quintile of its Selected Performance Peer Group for the one-year period.
PL Income Fund
The Fund: (1) outperformed its Selected Performance Peer Group median for the one-year period; (2) outperformed its primary benchmark for the one-year period; and (3) is ranked in the first quintile of its Selected Performance Peer Group for the one-year period.
PL Inflation Managed Fund
The Fund: (1) underperformed its Selected Performance Peer Group median for the one-year period and outperformed for the three-, five- and ten-year periods; (2) underperformed its primary benchmark for the one-, three-, and ten-year periods and outperformed for the five-year period; and (3) is ranked in the fourth quintile of its Selected Performance Peer Group for the one-year period, the first quintile for the three- and five-year periods and the second quintile for the ten-year period.
PL Managed Bond Fund
The Fund: (1) outperformed its Selected Performance Peer Group median for the one-, five-, and ten-year periods and underperformed for the three-year period; (2) outperformed its primary benchmark for the one-, five-, and ten-year periods and underperformed for the three-year period; and (3) is ranked in the second quintile of its Selected Performance Peer Group for the one-year period, the fourth quintile for the three-year period and the first quintile for the five- and ten-year periods.
PL Money Market Fund
The Trustees considering that during the one- and three-year periods the Fund has been subject to fee and expense waivers intended to prevent the Fund’s earnings from falling below the level of the Fund’s expenses (to prevent a negative yield) and the performance rankings are not meaningful over these periods. The Fund: (1) underperformed its Selected Performance Peer Group median for the one-, three-, five-, and ten-year periods; and (2) is ranked in the fifth quintile of its Selected Performance Peer Group for the one-, three-, and ten-year periods and the third quintile for the five-year period.
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AND FUND MANAGEMENT AGREEMENTS (Continued)
(Unaudited)
PL Short Duration Bond Fund
The Fund: (1) underperformed its Selected Performance Peer Group median for the one-, three-, and five-year periods; (2) underperformed its primary benchmark for the one- and five-year periods and outperformed for the three-year period; and (3) is ranked in the third quintile of its Selected Performance Peer Group for the one-year period, the fourth quintile for the three-year period and the fifth quintile for the five-year period. With regard to the approval of the Fund Management Agreement, the Board considered that the current Fund Manager has managed the Fund since 2011.
PL Short Duration Income Fund
The Fund: (1) outperformed its Selected Performance Peer Group median for the one-year period; (2) outperformed its primary benchmark for the one-year period; and (3) is ranked in the first quintile of its Selected Performance Peer Group for the one-year period.
PL Strategic Income Fund
The Fund: (1) outperformed its Selected Performance Peer Group median for the one-year period; (2) outperformed its primary benchmark for the one-year period; and (3) is ranked in the first quintile of its Selected Performance Peer Group for the one-year period.
PL Portfolio Optimization Aggressive Fund
The Fund: (1) underperformed its Selected Performance Peer Group for the one- and five-year periods and outperformed for the three year period; (2) underperformed its primary benchmark for the one-, three-, and five-year periods; and (3) is ranked in the third quintile of its Selected Performance Peer Group for the one-, three-, and five-year periods.
PL Portfolio Optimization Conservative Fund
The Fund: (1) underperformed its Selected Performance Peer Group median for the one-, three-, and five-year periods; (2) underperformed its primary benchmark for the one- and three-year periods and outperformed for the five-year period; and (3) is ranked in the fourth quintile of its Selected Performance Peer Group for the one- and three-year periods and the third quintile for the five-year period.
PL Portfolio Optimization Moderate-Aggressive Fund
The Fund: (1) underperformed its Selected Performance Peer Group median for the one- and three-year periods and outperformed for the five-year period; (2) underperformed its primary benchmark for the one-, three-, and five-year periods; and (3) is ranked in the fourth quintile of its Selected Performance Peer Group for the one- and three-year periods and the third quintile for the five-year period.
PL Portfolio Optimization Moderate-Conservative Fund
The Fund: (1) outperformed its Selected Performance Peer Group median for the one-, three, and five-year periods; (2) underperformed its primary benchmark for the one- and three-year periods and outperformed for the five-year period; and (3) is ranked in the second quintile of its Selected Performance Peer Group for the one-, three-, and five-year periods.
PL Portfolio Optimization Moderate Fund
The Fund: (1) underperformed its Selected Performance Peer Group median for the one- and three-year periods and outperformed for the five-year period; (2) underperformed its primary benchmark for the one- and three-year periods and outperformed for the five-year period; and (3) is ranked in the fourth quintile of its Selected Performance Peer Group for the one- and three-year periods and the third quintile for the five-year period.
The Trustees reviewed the monitoring of each Fund Managers’ investment results by PLFA, including PLFA’s historical practice of recommending to the Trustees the use of a new manager if performance lagged and could not be improved within a reasonable timeframe, and reviewed the monitoring of the PAM unit’s investment results by PLFA. Generally, the Trustees noted that there continues to be a strong record of well-managed Funds that work well in the Asset Allocation Funds and that the Asset Allocation Funds provide a range of professionally managed asset allocation investment options. The Trustees also noted that the Portfolios continue to deliver the investment style as disclosed to shareholders. The Trustees also noted the use by investors of the Asset Allocation Funds and the benefits the Asset Allocation Funds provide for shareholders generally.
The Board concluded that PLFA continues to have a strong record of effectively managing a multi-manager fund group and asset allocation funds designed to give shareholders a reasonable array of choices through which to implement their investment programs. The Board further concluded that PLFA was implementing each Fund’s investment objective either directly or through the selection of Fund Managers and that PLFA’s record in managing each Fund indicates that its continued management as well as the continuation of the respective Fund Management Agreements will benefit each Fund and its shareholders.
3. Advisory Fees and Total Expense Ratios
The Trustees requested, received and reviewed information from PLFA relating to the advisory fees and the sub-advisory fees, including the portion of the advisory fees paid to each Fund Manager as compared to the portion retained by PLFA. The Trustees considered the nature and quality of the services provided by PLFA in their review of the portion of the advisory fees retained by PLFA, and also considered the nature and quality of services provided by each Fund Manager with respect to the sub-advisory fees paid to such Fund Manager. The Independent Trustees also requested and reviewed information from the Independent Consultant along with the Independent Consultant’s analysis of advisory fees, sub-advisory fees and certain combined expenses, excluding any applicable service or distribution fees that were selected by the Independent Consultant for purposes of the peer group expense comparisons (“Operating Expenses”). The Trustees reviewed the advisory fees, sub-advisory fees and Operating Expenses of each Fund and compared such amounts with the average fee and expense levels of
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applicable peer funds identified by the Independent Consultant (each a “Selected Expense Peer Group”). The Trustees reviewed a description of the Independent Consultant’s methodology for selecting peer funds in each Selected Expense Peer Group and the fact that the Selected Expense Peer Groups were constructed using a universe of funds that included both sub-advised and directly managed funds. With respect to the PL Portfolio Optimization Funds, the Trustees also compared the net expense ratio with the average net expense ratio of funds in the Morningstar Category that PLFA determined to be similar to the relevant PL Portfolio Optimization Fund (“Comparable Peer Fund Average”). A summary of some of the comparative fee and expense information considered by the Trustees for each Fund is provided below.
PL Main Street Core Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group.
PL Large-Cap Growth Fund
The Trustees considered that (a) the advisory fee for the Fund is in line with the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group. The Trustees noted that PLFA currently has contractually agreed to waive 0.045% of its advisory fee.
PL Growth Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group.
PL Comstock Fund
The Trustees considered that (a) the advisory fee for the Fund is in line with the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the second quintile of its Selected Expense Peer Group.
PL Large-Cap Value Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the second quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group.
PL Small-Cap Value Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the second quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group.
PL Small-Cap Growth Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group.
PL Mid-Cap Growth Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group.
PL Mid-Cap Equity Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group.
PL Real Estate Fund
The Trustees considered that (a) the advisory fee for the Fund is greater than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less
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than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the second quintile of its Selected Expense Peer Group.
PL Emerging Markets Debt Fund
The Trustees considered that (a) the advisory fee for the Fund is in line with the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the second quintile of its Selected Expense Peer Group.
PL Emerging Markets Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the second quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group.
PL International Large-Cap Fund
The Trustees considered that (a) the advisory fee for the Fund is in line with the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group.
PL International Value Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group.
PL Floating Rate Income Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the second quintile of its Selected Expense Peer Group.
PL Floating Rate Loan Fund
The Trustees considered that (a) the advisory fee for the Fund is greater than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the fifth quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the second quintile of its Selected Expense Peer Group. The Trustees noted that PLFA currently has contractually agreed to waive 0.10% of its advisory fee.
PL High Income Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group.
PL Income Fund
The Trustees considered that (a) the advisory fee for the Fund is in line with the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group.
PL Inflation Managed Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the second quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are in line with the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group.
PL Managed Bond Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the second quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the second quintile of its Selected Expense Peer Group.
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PACIFIC LIFE FUNDS
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
AND FUND MANAGEMENT AGREEMENTS (Continued)
(Unaudited)
PL Money Market Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the second quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the first quintile of its Selected Expense Peer Group.
PL Short Duration Bond Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the second quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are greater than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group.
PL Short Duration Income Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are greater than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the fourth quintile of its Selected Expense Peer Group.
PL Strategic Income Fund
The Trustees considered that (a) the advisory fee for the Fund is less than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the second quintile of its Selected Expense Peer Group; and (b) the Operating Expenses for the Fund are less than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the second quintile of its Selected Expense Peer Group.
PL Portfolio Optimization Aggressive Fund
The Trustees considered that (a) the advisory fee for the Fund is greater than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group; (b) the Operating Expenses for the Fund are greater than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the fourth quintile of its Selected Expense Peer Group; and (c) the net expense ratio was lower than the Comparable Peer Fund Average.
PL Portfolio Optimization Conservative Fund
The Trustees considered that (a) the advisory fee for the Fund is greater than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group; (b) the Operating Expenses for the Fund are greater than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the fourth quintile of its Selected Expense Peer Group; and (c) the net expense ratio was lower than the Comparable Peer Fund Average.
PL Portfolio Optimization Moderate-Aggressive Fund
The Trustees considered that (a) the advisory fee for the Fund is greater than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group; (b) the Operating Expenses for the Fund are greater than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the fourth quintile of its Selected Expense Peer Group; and (c) the net expense ratio was lower than the Comparable Peer Fund Average.
PL Portfolio Optimization Moderate-Conservative Fund
The Trustees considered that (a) the advisory fee for the Fund is greater than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group; (b) the Operating Expenses for the Fund are greater than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the fourth quintile of its Selected Expense Peer Group; and (c) the net expense ratio was lower than the Comparable Peer Fund Average.
PL Portfolio Optimization Moderate Fund
The Trustees considered that (a) the advisory fee for the Fund is greater than the median advisory fee rate of the funds in its Selected Expense Peer Group and ranked in the third quintile of its Selected Expense Peer Group; (b) the Operating Expenses for the Fund are greater than the median Operating Expenses of the funds in its Selected Expense Peer Group and ranked in the fourth quintile of its Selected Expense Peer Group; and (c) the net expense ratio was lower than the Comparable Peer Fund Average.
During their review, the Trustees noted that all of the Funds were subject to contractual expense limitations on certain operating expenses agreed to by PLFA.
The Trustees also considered information from the Fund Managers regarding the comparative sub-advisory fees charged under other investment advisory contracts for similarly managed accounts, such as contracts of each Fund Manager with other similarly managed registered investment companies or other types of clients. The Trustees noted that in many cases there were differences in the level of services provided to the Funds by the Fund Managers and that the level of services provided by these Fund Managers on these other accounts were due to the different nature of the accounts or because there were other reasons to support the difference in fees, such as an affiliation between the Fund Manager and the account. These differences often explained variations in fee schedules. The Trustees were mindful that, with regard to the
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PACIFIC LIFE FUNDS
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
AND FUND MANAGEMENT AGREEMENTS (Continued)
(Unaudited)
Sub-Advised Funds, the fee rates were the result of arms’-length negotiations between PLFA and the Fund Managers, and that any sub-advisory fees are paid by PLFA and are not paid directly by a Fund.
The Board concluded that the advisory fees, sub-advisory fees and total expenses of each Fund were fair and reasonable.
4. Costs, Level of Profits and Economies of Scale
The Trustees reviewed information provided by PLFA and the Fund Managers regarding PLFA’s costs of sponsoring the Funds and information regarding the profitability of PLFA and the Fund Managers.
PLFA and the Fund Managers’ Costs and Profitability. The Trustees noted that, based on the data available, PLFA appears to be providing products that are competitively priced with other funds, especially multi-manager and asset allocation funds. The Trustees noted PLFA’s willingness to sponsor new funds that PLFA believed would benefit the Asset Allocation Funds, despite the potential subsidies required by PLFA during a new fund’s start-up phase. The Trustees also noted that the analysis of the Trust’s profitability to PLFA supported a conclusion that PLFA’s costs and profitability are reasonable, whether considered inclusive or exclusive of distribution costs.
The Trustees also reviewed information provided regarding the structure and manner in which PLFA’s and the Fund Managers’ investment professionals were compensated and their respective views of the relationship of such compensation to the attraction and retention of quality personnel. The Trustees considered PLFA’s willingness to invest in technology, infrastructure and staff to reinforce and offer new services and to accommodate changing regulatory requirements.
With respect to the Fund Managers, the Trustees noted that it was difficult in many cases to accurately determine or evaluate the profitability of the Fund Management Agreements to the Fund Managers because of, among other things, the differences in the types of information provided by the Fund Managers, the fact that many Fund Managers manage substantial assets other than the Funds and, further, that any such assessment would involve assumptions regarding the Fund Managers’ expense allocation policies, capital structure, cost of capital, business mix and other factors.
Accordingly, in the case of the Fund Managers, the Trustees focused greater consideration on the data described above in light of the arms’-length nature of the relationship (for the Sub-Advised Funds) between PLFA and such Fund Managers with respect to the negotiation of fund sub-advisory fees and the fact that such fees are paid by PLFA.
Economies of Scale. The Trustees noted and considered the extent to which economies of scale are increasingly realized as each Fund grows and whether advisory fee levels reflect economies of scale if the Funds grow in size. The Trustees noted the Funds do not currently produce significant economies of scale. The Trustees noted, however, PLFA’s commitment to competitive total expenses of the Funds through expense limitation agreements, its and its affiliates’ consistent reinvestment in the business in the form of improvements in technology, product innovations and customer service. The Trustees considered information relating to economies of scale provided by PLFA, and PLFA’s general willingness to discuss and evaluate the topic of economies of scale with the Trustees.
With respect to the Asset Allocation Funds, the Trustees noted that the advisory fee was set at an amount that takes into account the size of the Funds. The Independent Trustees considered that PLFA seeks to price Funds to scale from inception. The Trustees also considered PLFA’s willingness to reduce its own fees through certain advisory fee waivers and expense limitation agreements, whereby PLFA will reimburse the Funds for certain expenses that exceed stated expense caps.
The Trustees noted that PLFA and its affiliates had consistently reinvested in the business in the form of improvements in technology, product innovations, personnel and resources. The Trustees additionally noted that economies of scale were difficult to measure with precision particularly on a Fund by Fund basis. This analysis is complicated by the additional services and content provided by PLFA and its affiliates through reinvestment in the business, as discussed above. The Trustees considered that the Funds are well managed, and provide shareholders with sophisticated asset allocation investment options at reasonable fee levels. The Board noted that PLFA had taken steps to ensure that shareholders benefit by negotiating favorable terms with service providers, and to provide certain support services to the Funds on an approximate cost basis as opposed to an asset-based charge.
The Board determined that PLFA and its affiliates are sharing economies of scale given its commitment to competitive total expenses of the Funds, and the consistent reinvestment in the business in the form of improvements in technology and other resources and investments in personnel. The Board concluded that the Funds’ cost structures were reasonable and that overall profitability appeared reasonable at the current time. The Board further concluded that PLFA was sharing economies of scale with each Fund and its shareholders to their benefit.
5. Ancillary Benefits
The Trustees requested and received from PLFA and the Fund Managers information concerning other benefits received by PLFA, Pacific Life, the Fund Managers, and their affiliates as a result of their respective relationship with the Funds, including various service arrangements with PLFA affiliates and reimbursement at an approximate cost basis for support services in the case of PLFA, as well as commissions paid to broker-dealers affiliated with certain Fund Managers and the use of soft-dollars by certain of the Fund Managers. The Trustees also considered ancillary benefits received by Pacific Life and its affiliates from the Funds. The Trustees considered information concerning other significant economic relations between the Fund Managers and their affiliates and with PLFA and its affiliates and noted PLFA’s processes and procedures to identify and disclose such relationships to the Board. The Trustees also considered PLFA’s and each Fund Manager’s strong practices and procedures with regard to managing conflicts of interest and ensuring that such conflicts do not prevent PLFA or the Fund Managers from acting in the best interests of the Funds and their shareholders.
The Board concluded that such benefits were consistent with those generally derived by investment advisers to mutual funds or were otherwise not unusual.
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PACIFIC LIFE FUNDS
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
AND FUND MANAGEMENT AGREEMENTS (Continued)
(Unaudited)
6. Conclusion
Based on their review, including their consideration of each of the factors referred to above, and assisted by the advice of the Independent Consultant and independent counsel to the Independent Trustees, the Board, including the Independent Trustees, concluded that the Advisory Agreement and each applicable Fund Management Agreement are fair and reasonable with respect to each Fund and its shareholders, and that the renewal of the Advisory Agreement and each applicable Fund Management Agreement would be in the best interests of the Funds and their shareholders. The Board did not indicate that any single factor was determinative of its decision to approve the Advisory Agreement and each applicable Fund Management Agreement, but indicated that the Board based its determination on the total mix of information available to it.
III. Other Advisory Agreement and Fund Management Agreement Approvals
In addition to considering the renewal of the Advisory Agreement and existing Fund Management Agreements during the period, the Board considered and approved the Advisory Agreement with respect to a new Fund and also approved changes with respect to the Fund Managers for certain Funds as discussed below. Under the 1940 Act, a change in a Fund Manager, a change in the compensation paid to a Fund Manager, or an assignment of any Fund Management Agreement requires shareholder approval of a new Fund Management Agreement. However, under an exemptive order issued to Pacific Life Insurance Company and the Trust by the Securities and Exchange Commission (“SEC”) on October 13, 1999 and relied upon by PLFA, in accordance with the terms of the exemptive order, PLFA can hire, terminate and replace, as applicable, Fund Managers and enter into new Fund Management Agreements (except, as a general matter, Fund Managers affiliated with PLFA) without shareholder approval.
PL Small-Cap Growth Fund
At an in-person meeting on March 12, 2014, based upon a recommendation from PLFA, the Board, including all of the Independent Trustees, approved, effective May 1, 2014, a new Fund Management Agreement with Lord, Abbett & Co. LLC (“Lord Abbett”) with respect to the PL Small-Cap Growth Fund (the “Lord Abbett Fund Management Agreement”) and appointed Lord Abbett as the new Fund Manager for this Fund. In connection with this matter, also at the March 14, 2014 meeting, the Board terminated the Fund Management Agreement for the Fund with the prior fund manager upon the effectiveness of the Lord Abbett Fund Management Agreement. Lord Abbett’s appointment as Fund Manager was made in accordance with the exemptive order issued by the SEC with regard to the Trust and does not require shareholder approval.
In evaluating the Lord Abbett Fund Management Agreement, the Board, including the Independent Trustees, considered the factors described below. Additionally, the Board considered the various screening processes that PLFA utilizes in reaching a recommendation for a new Fund Manager, including screening for qualified firms through the use of quantitative data and information gathered from independent third-party databases, as well as due diligence conducted by PLFA on the investment resources and personnel of a Fund Manager and an assessment of the investment strategies used by a Fund Manager. In addition, the Board reviewed the specific criteria and information evaluated by PLFA during the selection process of Lord Abbett, including another firm considered by PLFA, and PLFA’s analysis in reaching its conclusion to recommend Lord Abbett as Fund Manager for the PL Small-Cap Growth Fund. The Trustees also considered that PLFA has historically exercised diligence in monitoring the performance of the Fund Managers, and has recommended and taken measures to attempt to remedy relative underperformance by a Fund when PLFA and the Board believed appropriate.
In evaluating the Lord Abbett Fund Management Agreement, the Board, including all the Independent Trustees, considered the following factors, among others:
1. Nature, Extent and Quality of Services to be Provided
The Trustees considered the benefits to shareholders of retaining Lord Abbett as Fund Manager to the PL Small-Cap Growth Fund, particularly in light of the nature, extent, and quality of the services expected to be provided by Lord Abbett. In this regard, the Trustees considered various materials relating to the proposed Fund Manager, including copies of the proposed Lord Abbett Fund Management Agreement; copies of Lord Abbett’s Form ADV; financial information; and other information deemed relevant to the Trustees’ evaluation, including comprehensive assessments from senior management of PLFA.
The Trustees considered that under the Lord Abbett Fund Management Agreement, Lord Abbett would be responsible for providing the investment management services for the Fund’s assets, including investment research, advice and supervision, and determining which securities would be purchased or sold by the Fund. The Trustees considered the quality of the management services expected to be provided to the PL Small-Cap Growth Fund over both the short- and long-term, the organizational depth and resources of Lord Abbett, including the background and experience of Lord Abbett’s management and the expertise of the portfolio management team, as well as the investment strategies, processes and philosophy to be used with respect to the investment strategy.
In addition, the Trustees considered that the Trust’s CCO had reviewed the written compliance policies and procedures of Lord Abbett, including the assessment of its compliance program, as required under Rule 38a-1 of the 1940 Act, and its code of ethics, prior to the effectiveness of the new Lord Abbett Fund Management Agreement.
In making these assessments, the Trustees took note of the due diligence PLFA conducted with respect to Lord Abbett, and were aided by the assessment and recommendation of PLFA, the in-person presentation by Lord Abbett at a recent meeting of the Board and materials provided by Lord Abbett.
The Board concluded it was satisfied with the nature, extent and quality of the investment management services anticipated to be provided to the PL Small-Cap Growth Fund by Lord Abbett under the Lord Abbett Fund Management Agreement.
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PACIFIC LIFE FUNDS
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
AND FUND MANAGEMENT AGREEMENTS (Continued)
(Unaudited)
2. Performance
The Trustees considered PLFA’s efforts and process to search for and screen advisory firms that are qualified to manage a small-cap growth fund and PLFA’s identification of Lord Abbett to serve as Fund Manager with regard to the day-to-day investment activities of the PL Small-Cap Growth Fund. The Trustees considered factors concerning performance in connection with their consideration of this matter and in connection with approval of the related Lord Abbett Fund Management Agreement, including the factors described below.
The Trustees considered information about the historical performance of a fund managed by the same Lord Abbett portfolio management team that would manage the PL Small-Cap Growth Fund using similar investment strategies (the “Lord Abbett Comparable Performance”). The Trustees considered the Lord Abbett Comparable Performance against a pertinent benchmark and against the applicable peer group for the six-month, one-, three-, five- and ten-year periods as of June 30, 2013. The Trustees also considered the Lord Abbett Comparable Performance against a pertinent benchmark and an applicable peer group for the previous nine calendar years, and a 36-month moving average measure of risk-adjusted performance for the period from June 2009 through December 2013. The Trustees also considered information about the standard deviation and upside and downside capture ratios of the Lord Abbett Comparable Performance.
The Trustees considered additional information about the historical performance of funds and accounts managed by Lord Abbett using similar investment strategies as those proposed for the PL Small-Cap Growth Fund against a pertinent benchmark for the one-, three-, five- and ten-year and since inception periods, as applicable, as of December 31, 2013. Additionally, the Trustees considered performance information presented by PLFA for another potential manager of the Fund. In addition, the Trustees considered the need for Lord Abbett to adhere to the Fund’s general investment mandate in order to function appropriately in the PL Portfolio Optimization Funds.
The Board determined that Lord Abbett’s performance record with respect to similarly managed accounts was acceptable.
3. Advisory and Sub-Advisory Fees
The Trustees considered information regarding the comparative advisory fees charged under other investment advisory contracts of the Fund Manager with regard to other funds and accounts with substantially similar investment strategies as the PL Small-Cap Growth Fund. The Trustees also considered that the proposed sub-advisory fees payable to Lord Abbett under the Fund Management Agreement contain breakpoints and are the same as the sub-advisory fees paid to the current fund manager. The Trustees considered that the advisory fee schedule would remain unchanged from the current fee schedule for the Fund.
In comparing the proposed fees to be paid by the PL Small-Cap Growth Fund to fees charged by Lord Abbett for other similarly managed funds, the Trustees noted that there were differences in the level of services proposed to be provided to the Fund by Lord Abbett, and that Lord Abbett represented that the proposed sub-advisory fee schedule for the Fund is commensurate with the scope of the management responsibilities and services to be provided by Lord Abbett for the Fund’s investment mandate.
The Trustees noted that the fee rates were the result of arms’-length negotiations between PLFA and Lord Abbett, and that the PL Small-Cap Growth Fund’s sub-advisory fees are paid by PLFA and are not paid directly by the PL Small-Cap Growth Fund. Additionally, the Trustees considered that there are certain costs associated with a fund manager change, but that the ongoing operating expenses paid by the shareholders were not expected to materially increase as a result of this fund manager change.
The Board concluded that the compensation payable under the Lord Abbett Fund Management Agreement is fair and reasonable.
4. Costs, Level of Profits and Economies of Scale
The Trustees considered firm-wide profitability information provided by Lord Abbett, as it relates to their sub-advisory business, and noted that it was difficult to accurately determine or evaluate the projected profitability of the Lord Abbett Fund Management Agreement to Lord Abbett because it managed substantial assets and had multiple business lines and, further, that any such assessment would involve assumptions regarding its allocation policies, capital structure, cost of capital, business mix and other factors. The Trustees focused their consideration on other information provided in connection with this matter, given the arms’-length nature of the relationship between PLFA and Lord Abbett with respect to the negotiation of Fund sub-advisory fees, the fact that such fees are paid by PLFA and the fact that the projected profitability of the Lord Abbett Fund Management Agreement to Lord Abbett is an estimate because it had not yet begun to manage the Fund.
The Board concluded that the PL Small-Cap Growth Fund’s fee structure reflected in the Lord Abbett Fund Management Agreement is fair and reasonable.
5. Ancillary Benefits
The Trustees received from PLFA and Lord Abbett information concerning other benefits that may be received by Lord Abbett and its affiliates as a result of their relationship with the PL Small-Cap Growth Fund, including commissions that may be paid to broker-dealers affiliated with the Fund Manager and the anticipated use of soft-dollars by the Fund Manager. In this regard, the Trustees noted that Lord Abbett represented that it does not anticipate utilizing an affiliated broker-dealer and that it anticipates using soft-dollar credits generated by Fund commissions. The potential benefits that may be derived by Lord Abbett from its relationship with the PL Small-Cap Growth Fund could include larger assets under management and reputational benefits, which are consistent with those generally derived by sub-advisers to mutual funds. The Trustees considered potential benefits to be derived by Lord Abbett from its relationship with the PL Small-Cap Growth Fund and that such benefits were consistent with those generally derived by sub-advisers to mutual funds or were otherwise not unusual.
6. Conclusion
Based on their review, including the consideration of each of the factors referred to above, the Board found that: (i) the Lord Abbett Fund Management Agreement is in the best interests of the PL Small-Cap Growth Fund and its shareholders; and (ii) the compensation payable
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PACIFIC LIFE FUNDS
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
AND FUND MANAGEMENT AGREEMENTS (Continued)
(Unaudited)
under the Lord Abbett Fund Management Agreement is fair and reasonable. No single factor was determinative of the Board’s findings, but rather the Trustees based their determination on the total mix of information available to them.
PL Small-Cap Value Fund
At an in-person meeting on March 12, 2014, based upon a recommendation from PLFA, the Board, including all of the Independent Trustees, approved, effective May 1, 2014, a new Fund Management Agreement with AllianceBernstein L.P. (“AllianceBernstein”) with respect to the PL Small-Cap Value Fund (the “AllianceBernstein Fund Management Agreement”) and appointed AllianceBernstein as the new Fund Manager for this Fund. In connection with this matter, also at the March 14, 2014 meeting, the Board terminated the Fund Management Agreement for the Fund with the prior fund manager upon the effectiveness of the AllianceBernstein Fund Management Agreement. AllianceBernstein’s appointment as Fund Manager was made in accordance with the exemptive order issued by the SEC with regard to the Trust and does not require shareholder approval.
In evaluating the AllianceBernstein Fund Management Agreement, the Board, including the Independent Trustees, considered the factors described below. Additionally, the Board considered the various screening processes that PLFA utilizes in reaching a recommendation for a new Fund Manager, including screening for qualified firms through the use of quantitative data and information gathered from independent third-party databases, as well as due diligence conducted by PLFA on the investment resources and personnel of a Fund Manager and an assessment of the investment strategies used by a Fund Manager. In addition, the Board reviewed the specific criteria and information evaluated by PLFA during the selection process of AllianceBernstein, including another firm considered by PLFA, and PLFA’s analysis in reaching its conclusion to recommend AllianceBernstein as Fund Manager for the PL Small-Cap Value Fund. The Trustees also considered that PLFA has historically exercised diligence in monitoring the performance of the Fund Managers, and has recommended and taken measures to attempt to remedy relative underperformance by a Fund when PLFA and the Board believed appropriate.
In evaluating the AllianceBernstein Fund Management Agreement, the Board, including all the Independent Trustees, considered the following factors, among others:
1. Nature, Extent and Quality of Services to be Provided
The Trustees considered the benefits to shareholders of retaining AllianceBernstein as Fund Manager to the PL Small-Cap Value Fund, particularly in light of the nature, extent, and quality of the services expected to be provided by AllianceBernstein. In this regard, the Trustees considered various materials relating to the proposed Fund Manager, including copies of the proposed AllianceBernstein Fund Management Agreement; copies of AllianceBernstein’s Form ADV; financial information; and other information deemed relevant to the Trustees’ evaluation, including comprehensive assessments from senior management of PLFA.
The Trustees considered that under the AllianceBernstein Fund Management Agreement, AllianceBernstein would be responsible for providing the investment management services for the Fund’s assets, including investment research, advice and supervision, and determining which securities would be purchased or sold by the Fund. The Trustees considered the quality of the management services expected to be provided to the PL Small-Cap Value Fund over both the short- and long-term, the organizational depth and resources of AllianceBernstein, including the background and experience of AllianceBernstein’s management and the expertise of the portfolio management team, as well as the investment strategies, processes and philosophy to be used with respect to the investment strategy.
In addition, the Trustees considered that the Trust’s CCO had reviewed the written compliance policies and procedures of AllianceBernstein, including the assessment of its compliance program as required under Rule 38a-1 of the 1940 Act, and its code of ethics, prior to the effectiveness of the new AllianceBernstein Fund Management Agreement.
In making these assessments, the Trustees took note of the due diligence PLFA conducted with respect to AllianceBernstein, and were aided by the assessment and recommendation of PLFA and the in-person presentation and materials provided by AllianceBernstein.
The Board concluded it was satisfied with the nature, extent and quality of the investment management services anticipated to be provided to the PL Small-Cap Value Fund by AllianceBernstein under the AllianceBernstein Fund Management Agreement.
2. Performance
The Trustees considered PLFA’s efforts and process to search for and screen advisory firms that are qualified to manage a small-cap value fund and PLFA’s identification of AllianceBernstein to serve as Fund Manager with regard to the day-to-day investment activities of the PL Small-Cap Value Fund. The Trustees considered factors concerning performance in connection with their consideration of this matter and in connection with approval of the related AllianceBernstein Fund Management Agreement, including the factors described below.
The Trustees considered information about the historical performance of accounts managed by the same AllianceBernstein portfolio management team that would manage the PL Small-Cap Value Fund using similar investment strategies (the “AllianceBernstein Comparable Performance”). The Trustees considered the AllianceBernstein Comparable Performance against a pertinent benchmark and against the applicable peer group for the one-, three-, five- and seven-year periods as of December 31, 2013. The Trustees also considered the AllianceBernstein Comparable Performance against a pertinent benchmark and an applicable peer group for the previous nine calendar years, and a 36-month moving average measure of risk-adjusted performance relative to peers for the period from October 2009 through December 2013. The Trustees also considered information about the standard deviation and upside and downside capture ratios of the AllianceBernstein Comparable Performance.
The Trustees considered additional information about the historical performance of accounts managed by AllianceBernstein using similar investment strategies as those proposed for the PL Small-Cap Value Fund against a pertinent benchmark for the one-, three-, five- and ten-year and since inception periods, as applicable, as of December 31, 2013. Additionally, the Trustees considered performance information presented
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PACIFIC LIFE FUNDS
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
AND FUND MANAGEMENT AGREEMENTS (Continued)
(Unaudited)
by PLFA for another potential manager of the Fund. In addition, the Trustees considered the need for AllianceBernstein to adhere to the Fund’s general investment mandate in order to function appropriately in the PL Portfolio Optimization Funds.
The Board determined that AllianceBernstein’s performance record with respect to similarly managed accounts was acceptable.
3. Advisory and Sub-Advisory Fees
The Trustees considered information regarding the comparative advisory fees charged under other investment advisory contracts of the Fund Manager with regard to other funds and accounts with substantially similar investment strategies as the PL Small-Cap Value Fund. The Trustees also considered that the proposed sub-advisory fees payable to AllianceBernstein under the Fund Management Agreement contain a breakpoint and are the same as the sub-advisory fees paid to the current fund manager. The Trustees considered that the advisory fee schedule would remain unchanged from the current fee schedule for the Fund.
In comparing the proposed fees to be paid by the PL Small-Cap Value Fund to fees charged by AllianceBernstein for other similarly managed funds, the Trustees noted that there were differences in the nature or size of the accounts. These differences explained differences in fee schedules.
The Trustees noted that the fee rates were the result of arms’-length negotiations between PLFA and AllianceBernstein, and that the PL Small-Cap Value Fund’s sub-advisory fees are paid by PLFA and are not paid directly by the PL Small-Cap Value Fund.
Additionally, the Trustees considered that there are certain costs associated with a fund manager change, but that the ongoing operating expenses paid by the shareholders were not expected to materially increase as a result of this fund manager change.
The Board concluded that the compensation payable under the AllianceBernstein Fund Management Agreement is fair and reasonable.
4. Costs, Level of Profits and Economies of Scale
The Trustees considered firm-wide profitability information provided by AllianceBernstein, as it relates to their sub-advisory business, and noted that it was difficult to accurately determine or evaluate the projected profitability of the AllianceBernstein Fund Management Agreement to AllianceBernstein because it managed substantial assets and had multiple business lines and, further, that any such assessment would involve assumptions regarding its allocation policies, capital structure, cost of capital, business mix and other factors. The Trustees focused their consideration on other information provided in connection with this matter, given the arms’-length nature of the relationship between PLFA and AllianceBernstein with respect to the negotiation of Fund sub-advisory fees, the fact that such fees are paid by PLFA and the fact that the projected profitability of the AllianceBernstein Fund Management Agreement to AllianceBernstein is an estimate because it had not yet begun to manage the Fund.
The Board concluded that the PL Small-Cap Value Fund’s fee structure reflected in the AllianceBernstein Fund Management Agreement is fair and reasonable.
5. Ancillary Benefits
The Trustees received from PLFA and AllianceBernstein information concerning other benefits that may be received by AllianceBernstein and its affiliates as a result of their relationship with the PL Small-Cap Value Fund, including commissions that may be paid to broker-dealers affiliated with the Fund Manager and the anticipated use of soft-dollars by the Fund Manager. In this regard, the Trustees noted that AllianceBernstein represented that it anticipates utilizing affiliated broker-dealers and that it anticipates using soft dollar credits generated by Fund commissions to pay for research services. The Trustees considered potential benefits to be derived by AllianceBernstein from its relationship with the PL Small-Cap Value Fund and that such benefits were consistent with those generally derived by sub-advisers to mutual funds or were otherwise not unusual.
6. Conclusion
Based on their review, including the consideration of each of the factors referred to above, the Board found that: (i) the AllianceBernstein Fund Management Agreement is in the best interests of the PL Small-Cap Value Fund and its shareholders; and (ii) the compensation payable under the AllianceBernstein Fund Management Agreement is fair and reasonable. No single factor was determinative of the Board’s findings, but rather the Trustees based their determination on the total mix of information available to them.
PL Currency Strategies Fund
At an in-person meeting on March 12, 2014, based upon a recommendation from PLFA, the Board, including all of the Independent Trustees, approved, effective May 1, 2014, a new Fund Management Agreement with Principal Global Investors, LLC, doing business as Macro Currency Group (“Macro”) with respect to the PL Currency Strategies Fund (the “Macro Fund Management Agreement”) and appointed Macro as co-fund manager (“co-Fund Manager”) for this Fund. Macro’s appointment as co-Fund Manager and the Board’s approval of the Macro Fund Management Agreement were made in accordance with the exemptive order issued by the SEC with regard to the Trust and do not require shareholder approval.
In evaluating the Macro Fund Management Agreement, the Board, including the Independent Trustees, considered the factors described below. Additionally, the Board considered PLFA’s previous identification of Macro as a Portfolio Manager of the Currency Strategies Portfolio of Pacific Select Fund. The Board noted the due diligence conducted by PLFA on Macro and the strategy to be used for the PL Currency Strategies Fund and PLFA’s recommendation of Macro to serve as an additional Fund Manager of the Fund. The Trustees also considered that PLFA has historically exercised diligence in monitoring the performance of the Fund Managers, and has recommended and taken measures to attempt to remedy relative underperformance by a Fund when PLFA and the Board believed appropriate.
F-20
PACIFIC LIFE FUNDS
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
AND FUND MANAGEMENT AGREEMENTS (Continued)
(Unaudited)
In evaluating the Macro Fund Management Agreement, the Board, including all the Independent Trustees, considered the following factors, among others:
1. Nature, Extent and Quality of Services to be Provided
The Trustees considered the benefits to shareholders of retaining Macro as co-Fund Manager to the PL Currency Strategies Fund, particularly in light of the nature, extent, and quality of the services expected to be provided by Macro. In this regard, the Trustees considered various materials relating to the proposed co-Fund Manager, including copies of the proposed Macro Fund Management Agreement; copies of Macro’s Form ADV; financial information; and other information deemed relevant to the Trustees’ evaluation, including comprehensive assessments from senior management of PLFA.
The Trustees considered that under the Macro Fund Management Agreement, Macro would be responsible for providing the investment management services for a portion of the Fund’s assets, including investment research, advice and supervision, and determining which securities would be purchased or sold by that portion of the Fund. The Trustees considered the quality of the management services expected to be provided to the PL Currency Strategies Fund over both the short- and long-term, the organizational depth and resources of Macro, including the background and experience of Macro’s management and the expertise of the portfolio management team, as well as the investment strategies, processes and philosophy to be used with respect to the investment strategy.
In addition, the Trustees considered that the Trust’s CCO had reviewed the written compliance policies and procedures of Macro, including the assessment of its compliance program as required under Rule 38a-1 of the 1940 Act, and its code of ethics, prior to the effectiveness of the new Macro Fund Management Agreement.
In making these assessments, the Trustees took note of the due diligence PLFA conducted with respect to Macro, and were aided by the assessment and recommendation of PLFA and the telephonic presentation and materials provided by Macro.
The Board concluded it was satisfied with the nature, extent and quality of the investment management services anticipated to be provided to the PL Currency Strategies Fund by Macro under the Macro Fund Management Agreement.
2. Performance
The Trustees considered PLFA’s efforts and process to search for and screen advisory firms that are qualified to manage a currency strategy and PLFA’s identification of Macro to serve as Fund Manager with regard to a portion of the PL Currency Strategies Fund’s day-to-day investment activities. The Trustees considered factors concerning performance in connection with their consideration of this matter and in connection with approval of the related Macro Fund Management Agreement, including the factors described below.
The Trustees considered information about the historical performance of a strategy managed by the same Macro portfolio management team that would co-manage the PL Currency Strategies Fund using similar investment strategies (the “Macro Comparable Performance”). The Trustees noted that the Macro Comparable Performance reflected actual performance for the strategy since September 2011 and the periods prior to that date reflected simulated performance for a portion of the strategy. The Trustees considered the Macro Comparable Performance against a pertinent benchmark and against the applicable peer group for the one-, three- and five-year periods as of December 31, 2013. The Trustees also considered the performance of the two components of Macro’s strategy against a pertinent benchmark for five previous calendar years, and the strategy’s historical standard deviation for the three- and five-year periods as of March 31, 2013.
The Trustees considered additional information about the historical performance of funds and accounts managed by Macro using similar investment strategies as those proposed for the PL Currency Strategies Fund against a pertinent benchmark for the one-, three-, five- and ten-year and since inception periods, as applicable, as of December 31, 2013. In addition, the Trustees considered the need for Macro to adhere to the Fund’s general investment mandate in order to function appropriately in the PL Portfolio Optimization Funds.
The Board determined that Macro’s performance record with respect to similarly managed accounts was acceptable.
3. Advisory and Sub-Advisory Fees
The Trustees considered information regarding the comparative advisory fees charged under other investment advisory contracts of the Fund Manager with regard to other accounts with substantially similar investment strategies as the PL Currency Strategies Fund. The Trustees also considered that the proposed sub-advisory fees payable to Macro under the Fund Management Agreement contain a breakpoint and are the same as the sub-advisory fees paid to the current fund manager, who will serve as co-fund manager with Macro. Additionally, the Trustees considered that the advisory fee schedule would remain unchanged from the current fee schedule for the Fund.
In comparing the proposed fees to be paid by the PL Currency Strategies Fund to fees charged by Macro for other similarly managed funds, the Trustees noted that there were differences in the nature of the accounts. These differences explained differences in fee schedules.
The Trustees noted that the fee rates were the result of arms’-length negotiations between PLFA and Macro, and that the PL Currency Strategies Fund’s sub-advisory fees are paid by PLFA and are not paid directly by the PL Currency Strategies Fund.
Additionally, the Trustees considered that there are certain costs associated with adding a fund manager, but that the ongoing operating expenses paid by the shareholders were not expected to materially increase as a result of this fund manager addition.
The Board concluded that the compensation payable under the Macro Fund Management Agreement is fair and reasonable.
4. Costs, Level of Profits and Economies of Scale
The Trustees considered firm-wide profitability information provided by Macro, as it relates to their sub-advisory business, and noted that it was difficult to accurately determine or evaluate the projected profitability of the Macro Fund Management Agreement to Macro because it managed substantial assets and had multiple business lines and, further, that any such assessment would involve assumptions regarding its
F-21
PACIFIC LIFE FUNDS
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
AND FUND MANAGEMENT AGREEMENTS (Continued)
(Unaudited)
allocation policies, capital structure, cost of capital, business mix and other factors. The Trustees focused their consideration on other information provided in connection with this matter, given the arms’-length nature of the relationship between PLFA and Macro with respect to the negotiation of Fund sub-advisory fees, the fact that such fees are paid by PLFA and the fact that the projected profitability of the Macro Fund Management Agreement to Macro is an estimate because it had not yet begun to manage the Fund.
The Board concluded that the PL Currency Strategies Fund’s fee structure reflected in the Macro Fund Management Agreement is fair and reasonable.
5. Ancillary Benefits
The Trustees received from PLFA and Macro information concerning other benefits that may be received by Macro and its affiliates as a result of their relationship with the PL Currency Strategies Fund, including commissions that may be paid to broker-dealers affiliated with the Fund Manager and the anticipated use of soft-dollars by the Fund Manager. In this regard, the Trustees noted that Macro represented that it does not anticipate utilizing an affiliated broker-dealer and that it does not anticipate using soft dollar credits generated by Fund commissions to pay for research services. The Trustees considered potential benefits to be derived by Macro from its relationship with the PL Currency Strategies Fund and that such benefits were consistent with those generally derived by sub-advisers to mutual funds or were otherwise not unusual.
6. Conclusion
Based on their review, including the consideration of each of the factors referred to above, the Board found that: (i) the Macro Fund Management Agreement is in the best interests of the PL Currency Strategies Fund and its shareholders; and (ii) the compensation payable under the Macro Fund Management Agreement is fair and reasonable. No single factor was determinative of the Board’s findings, but rather the Trustees based their determination on the total mix of information available to them.
PL Diversified Alternatives Fund
At an in-person meeting on September 11, 2013, the Board, including all of the Independent Trustees, approved the establishment and designation, effective December 20, 2013, of a newly-organized Fund of the Trust, the PL Diversified Alternatives Fund. In connection with the approval of the PL Diversified Alternatives Fund, the Board also approved, effective December 20, 2013, the Advisory Agreement with PLFA with respect to the PL Diversified Alternatives Fund (the “Diversified Alternatives Advisory Agreement”).
In evaluating the Diversified Alternatives Advisory Agreement, the Board, including all the Independent Trustees, considered the following factors, among others:
1. Nature, Extent and Quality of Services to be Provided
PLFA, its personnel and its resources. The Trustees considered the depth and quality of PLFA’s investment management process, including its experience managing asset allocation funds-of-funds; the experience, capability and integrity of its senior management and other personnel; the low turnover rates of its key personnel; and the overall financial strength and stability of its organization. The Trustees considered the high quality of the products and services provided by PLFA and its affiliates, such as the many educational services and tools offered to assist intermediaries in effectively understanding and meeting shareholder needs. The Trustees also noted that PLFA regularly informs the Trustees about matters relevant to the Trust and its shareholders and investing.
The Trustees also considered that PLFA’s investment, legal, compliance and accounting professionals have access to and utilize a variety of resources and systems relating to investment management, compliance, trading, performance analysis, security valuation and portfolio accounting. The Trustees further considered PLFA’s continuing need to attract and retain qualified personnel and to maintain and enhance its resources and systems to provide the appropriate investment management, compliance and monitoring services required for the PL Diversified Alternatives Fund. The Board noted that PLFA monitors numerous investment, performance and compliance metrics for the Funds of the Trust.
The Trustees considered the benefits to shareholders of retaining PLFA to serve as the investment adviser to the PL Diversified Alternatives Fund in light of the nature, extent, and quality of services expected to be provided by PLFA. The Trustees considered that PLFA serves as adviser to the Portfolio Optimization Portfolios and the Pacific Dynamix Portfolios of Pacific Select Fund and the Portfolio Optimization Funds of the Trust, all of which are asset allocation fund-of-funds, and provides asset allocation services to other accounts. The Trustees considered PLFA’s ability to provide an appropriate level of support and resources to the PL Diversified Alternatives Fund, and that PLFA has sufficiently qualified personnel to provide the appropriate investment management, compliance and monitoring services required for the Fund. The Trustees based this review on information and materials provided to them throughout the year by PLFA. The Trustees considered PLFA’s continued development and use of analytical tools for assessing Fund performance, conducting an attribution analysis on performance and reporting on performance to the Trustees. The Trustees noted that PLFA uses these tools to monitor and identify underperformance relative to applicable benchmarks or peer groups, and then conducts various analyses to try to assess the sources of and reasons for underperformance. The Trustees noted that PLFA provides the Board with analysis of this data over rolling periods to assist the Board in identifying trends in Fund performance and other areas, and periodically provides the Trustees with information on economic and market trends to provide a context for assessing recent performance.
The Trustees also considered the background and experience of PLFA’s senior management, and the experience of and amount of attention expected to be given to the PL Diversified Alternatives Fund by PLFA’s management and staff. The Trustees also considered PLFA’s compliance operations with respect to the Trust, including the measures taken by PLFA to assist the Trust in complying with Rule 38a-1 under the 1940 Act. The Trustees further considered the monitoring and additional services that would be provided by PLFA to the Fund, including
F-22
PACIFIC LIFE FUNDS
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
AND FUND MANAGEMENT AGREEMENTS (Continued)
(Unaudited)
assistance with security valuation, risk management analysis, preparation of periodic performance and financial reports, review of trade execution and coordination of the services of other service providers to the Trust.
The Board concluded that it was satisfied with the nature, extent and quality of the investment management services to be provided by PLFA to the Fund under the Diversified Alternatives Advisory Agreement.
2. Performance
The Trustees considered PLFA’s experience managing asset allocation funds-of-funds and other accounts and its qualifications to manage the PL Diversified Alternatives Fund. Because this consideration related to a newly organized fund, no actual performance record for the Fund was available. The Trustees considered information about the hypothetical performance of the investment strategies that would be used for the proposed PL Diversified Alternatives Fund (the “Hypothetical Performance”) for the year-to-date, one-, three-, five- and ten-year periods ended June 30, 2013 and for the previous ten calendar years. The Trustees also considered the Hypothetical Performance against the applicable benchmark and peer group. Additionally, the Trustees considered the volatility profile of the Hypothetical Performance during certain periods.
The Trustees determined that PLFA’s performance record was acceptable.
3. Advisory Fees
PLFA. The Trustees requested, received and reviewed information from PLFA relating to the proposed advisory fee for the PL Diversified Alternatives Fund. The Trustees reviewed the proposed advisory fee compared with the average fees of peer funds identified by PLFA. The Trustees also noted that the Fund would be subject to a contractual expense limitation agreed to by PLFA. The Trustees considered that the proposed advisory fee was in line with similar funds based on the data presented to the Board.
The Board concluded that the compensation payable to PLFA under the Diversified Alternatives Advisory Agreement is fair and reasonable.
4. Costs, Level of Profits and Economies of Scale
Costs and Profitability. The Trustees reviewed information regarding PLFA’s projected costs of sponsoring the PL Diversified Alternatives Fund and information regarding the anticipated projected profitability of the proposed Fund to PLFA. The Trustees considered the projected cost of services to be provided and projected profits to be realized by PLFA from the relationship with the PL Diversified Alternatives Fund based on the projected assets, income and expenses of PLFA in its relationship with the Fund. The Trustees noted that this projected information contains estimates because there is no actual operating history for the PL Diversified Alternatives Fund. The Trustees also considered the overall financial soundness of PLFA.
Economies of Scale. The Trustees considered the extent to which economies of scale may be realized by the PL Diversified Alternatives Fund as assets grow. Because the Fund has no operating history and no assets, no economies of scale exist at this time with respect to the Fund. The Trustees also noted that although the advisory fee schedule for the Fund does not contain breakpoints, there would be an expense limitation agreement in place for the Fund through December 31, 2016.
The Board concluded that the Fund’s fee structure reflected in the Diversified Alternatives Advisory Agreement is fair and reasonable.
5. Ancillary Benefits
The Trustees noted that they had previously received from PLFA information concerning other benefits that may be received by PLFA and its affiliates as a result of their relationship with Funds of the Trust, including fees for administrative services and reimbursement at an approximate cost basis for certain support services. The Trustees noted that PLFA represented that it does not anticipate utilizing soft-dollar credits generated by Fund commissions or an affiliated broker-dealer. The Trustees considered potential benefits to be derived by PLFA from its relationship with the PL Diversified Alternatives Fund and that such benefits were consistent with those generally derived by investment advisers to mutual funds or were otherwise not unusual. The Trustees also considered benefits that may be derived by affiliates of PLFA, including Pacific Life.
6. Conclusion
Based on their review, including the consideration of each of the factors referred to above, the Board found that: (i) the compensation payable under the Diversified Alternatives Advisory Agreement is fair and reasonable; and (ii) the Diversified Alternatives Advisory Agreement is in the best interests of the PL Diversified Alternatives Fund and its shareholders. No single factor was determinative of the Board’s findings, but rather the Trustees based their determination on the total mix of information available to them.
F-23
PACIFIC LIFE FUNDS
WHERE TO GO FOR MORE INFORMATION
(Unaudited)
Availability of Quarterly Holdings
The Trust files Form N-Q (complete schedules of fund holdings) with the Securities and Exchange Commission (the “SEC”) for the first and third quarters of each fiscal year not later than 60 days after the close of the applicable quarter end. The Trust’s Form N-Q, (when required) is filed pursuant to applicable regulations and is available after filing (i) on the SEC’s Website at http://www.sec.gov; (ii) for review and copying at the SEC’s Public Reference Room in Washington, D.C. (information on the operations of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330); and (iii) on the Trust’s Webpage at http://www.pacificlife.com/pacificlifefunds.htm. The SEC may charge you a fee for this information.
Availability of Proxy Voting Record
By August 31 of each year, the Trust files information regarding how the Trust’s fund managers voted proxies relating to fund securities during the most recent twelve-month period ended June 30. Such information is available after filing on the Trust’s’ Website and on the SEC’s Website noted below.
Information Relating to Investments Held by the Trust
For complete descriptions of the various securities and other instruments held by the Trust and their risks, please see the Trust’s Prospectus and Statement of Additional Information (“SAI”). For a description of bond ratings, please see the Trust’s SAI. The Prospectus and SAI are available as noted below.
Availability of Proxy Voting Policies
A description of the Proxy Voting Policies and Procedures that the Trust uses to determine how to vote proxies relating to fund securities is described in the Trust’s SAI.
How to obtain Information
The Trust’s Prospectus, SAI (including Proxy Voting Policies) and the Portfolio Optimization Funds’ annual and semi-annual reports are available:
• | On the Trust’s Website at http://www.pacificlife.com/pacificlifefunds.htm |
• | On the SEC’s Website at http://www.sec.gov |
• | Upon request by calling, without charge, 1-800-722-2333, 7 a.m. through 5 p.m. Pacific Time |
F-24
Item 2. | Code of Ethics. |
As of the end of the period covered by this report, the Registrant has adopted a code of ethics that applies to the Registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. There were no substantive amendments or waivers to the Code of Ethics during the period covered by this report.
A copy of this Code of Ethics is filed as Exhibit 99 to this Form N-CSR.
Item 3. | Audit Committee Financial Expert. |
The Registrant’s Board has determined that G. Thomas Willis, a member of the Registrant’s Audit Committee, is an “audit committee financial expert” and “independent,” as such terms are defined in this Item. This designation does not increase the designee’s duties, obligations or liability as compared to his duties, obligations and liability as a member of the Audit Committee and of the Board; nor does it reduce the responsibility of the other Audit Committee members. There may be other individuals who, through education or experience, would qualify as “audit committee financial experts” if the Board had designated them as such. Most importantly, the Board believes each member of the Audit Committee contributes significantly to the effective oversight of the Registrant’s financial statements and condition. Mr. Willis is a retired partner of PricewaterhouseCoopers LLP.
Item 4. | Principal Accountant Fees and Services. |
Audit Fees
(a) | The aggregate fees billed for the fiscal years ended March 31, 2014 and 2013 for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years are $700,636 and $636,730, respectively. |
Audit-Related Fees
(b) | There were no aggregate fees billed for the fiscal years ended March 31, 2014 and 2013 for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of this Item. |
Tax Fees
(c) | The aggregate fees billed for the fiscal years ended March 31, 2014 and 2013 for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning are $132,150 and $126,250, respectively. The nature of the services comprising the fees was the review of income tax returns and excise tax. |
All Other Fees
(d) | There were no aggregate fees billed for the fiscal years ended March 31, 2014 and 2013 for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item. |
(e)(1) | The Audit Committee is required to pre-approve audit and non-audit services performed for the Registrant by the independent auditor as outlined below in order to assure that the provision of such services does not impair the auditor’s independence: |
Pre-Approval Requirements for Services to Registrant. Before the Auditor is engaged by the Registrant to render audit related or permissible non-audit services, either:
(i) The Audit Committee shall pre-approve such engagement; or
(ii) Such engagement shall be entered into pursuant to pre-approval policies and procedures established by the Audit committee. Any such policies and procedures must (1) be detailed as to the particular service and (2) not involve any delegation of the Audit Committee’s responsibilities to the Adviser. The Audit Committee may delegate to one or more of its members the authority to grant pre-approvals. The pre-approval policies and procedures shall include the requirement that the decisions of any member to whom authority is delegated under this Section shall be presented to the full Audit Committee at its next scheduled meeting.
(iii) De Minimis Exceptions to Pre-Approval Requirements. Pre-approval for a service provided to the Registrant other than audit, review or attest services is not required if: (1) the aggregate amount of all such non-audit services provided to the Registrant constitutes not more than 5 percent of the total amount of revenues paid by the Registrant to the Auditor during the fiscal year in which the non-audit services are provided; (2) such services were not recognized by the Registrant at the time of the engagement to be non-audit services; and (3) such services are promptly brought to the attention of the Audit Committee and are approved by the Audit Committee or by one or more members of the Audit Committee to whom authority to grant such approvals has been delegated by the Audit Committee.
Pre-Approval of Non-Audit Services Provided to the Adviser and Others. The Audit Committee shall pre-approve any non-audit services proposed to be provided by the Auditor to (i) the Adviser and (ii) any entity in the investment company complex (see note 4), if the nature of the services provided relate directly to the operations or financial reporting of the Registrant.
Application of De Minimis Exception: The De Minimis exceptions set forth above apply to pre-approvals under this Section as well, except that the “total amount of revenues” calculation for this Section’s services is based on the total amount of revenues paid to the Auditor by the Registrant and any other entity that has its services approved under this Section (i.e., the Adviser or any control person).
(e)(2) | No services included in (b)-(d) above were approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. |
(f) | Not applicable. |
(g) | The aggregate fees billed for the years ended March 31, 2014 and 2013 by the Registrant’s principal accountant for non-audit services rendered to the Registrant, its investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the Registrant were $226,032 and $215,666, respectively. |
(h) | The Registrant’s Audit Committee has considered whether the provision of non-audit services that were rendered to the Registrant’s investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the Registrant which were not pre-approved (not requiring pre-approval) is compatible with maintaining the principal accountant’s independence. |
Item 5. | Audit Committee of Listed registrants. |
Not applicable.
Item 6. | Investments. |
(a) | Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this form. |
(b) | Not applicable. |
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 Purchasers. |
Not applicable.
Item 10. | Submission of Matters to a Vote of Security Holders. |
There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Directors.
Item 11. | Controls and Procedures. |
(a) | The Chief Executive Officer and Treasurer have concluded that Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) and internal controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act) provide reasonable assurances that material information relating to Registrant 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 Registrant’s internal control over financial reporting 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) | Code of Ethics, subject to the disclosure of Item 2 hereof is attached hereto as Exhibit 99.CODE ETH. |
(a)(2) | Separate certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is attached hereto as Exhibit 99.CERT. |
(a)(3) | Not applicable. |
(b) | Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is attached hereto as Exhibit 99.906 CERT pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Pacific Life Funds | ||
By: | /s/ Mary Ann Brown | |
Mary Ann Brown | ||
Chief Executive Officer | ||
Date: June 6, 2014 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Mary Ann Brown | |
Mary Ann Brown | ||
Chief Executive Officer | ||
Date: June 6, 2014 | ||
By: | /s/ Brian D. Klemens | |
Brian D. Klemens | ||
Treasurer (Principal Financial and Accounting Officer) | ||
Date: June 6, 2014 |