ADVISORY FEE REDUCTION AGREEMENT PACIFIC SELECT FUND
Exhibit (d)(36)
ADVISORY FEE REDUCTION AGREEMENT, effective as of May 1, 2005, by and between Pacific Life
Insurance Company (the “Adviser”) and Pacific Select Fund (the “Trust”).
WHEREAS, the Trust is a Massachusetts business trust and is registered under the Investment Company
Act of 1940, as amended (the “1940 Act”), as an open-end management investment company of the
series type; and
WHEREAS, the Trust and the Adviser have entered into an Investment Advisory Agreement dated
November 9, 1987, amended and restated on January 1, 2005 (“Advisory Contract”), pursuant to which
the Adviser provides investment advisory services to the series of the Trust identified in the
Advisory Contract (the “Series”); and
WHEREAS, for the investment management services provided by the Adviser to each Series pursuant to
the Advisory Contract, the Trust pays to the Adviser a fee equal to the amount specified in the
Advisory Contract (the “Advisory Fee”); and
WHEREAS, the Trust’s Board of Trustees and the Adviser have determined that it is appropriate and
in the best interest of the Series and their shareholders for the Adviser to share with the Series
and their shareholders potential savings that the Adviser may realize in connection with its
services under the Advisory Agreement under certain circumstances; and
WHEREAS, the Adviser and the Trust have received from the Division of Investment Management of the
Securities and Exchange Commission a no-action letter concurring with the view that the advisory
fee waiver as described in that letter would not violate Section 205(a)(1) of the Investment
Advisers Act of 1940;
NOW THEREFORE, the parties hereto agree as follows.
I.
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Advisory Fee Reduction |
A. Amount of Advisory Fee Reduction. The Adviser will waive a portion of its
Advisory Fee if the Trust’s weighted average annual total return, without reflecting fees
and expenses, for the most recently completed 10 calendar-year period ending December 31
(the “Advisory Fee Reduction Performance”) exceeds a target return of 8.00% (the “Target
Rate”). At the beginning of each calendar year this Agreement is in effect (“Waiver
Year”), the Adviser will determine the Trust’s Advisory Fee Reduction Performance, as
described below. If the Advisory Fee Reduction Performance exceeds the Target Rate, the
Advisory Fee will be waived by an amount shown on Appendix A from May 1st of the
Waiver Year through April 30th of the following year. The amount of any waiver
will apply equally to each Series, such that a waiver will reduce the Advisory Fee of each
Series by the same advisory fee reduction rate as a percentage of the average
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net assets of each Series, without regard to the level of the Advisory Fee of the Series
under the Advisory Agreement, and without regard to the size or performance of the
individual Series.
If the Advisory Fee Reduction Performance does not exceed the Target Rate as calculated at
the beginning of a Waiver Year, the Advisory Fee will not be reduced under this Agreement.
B. Calculation of Return. For purposes of this Agreement, the Advisory Fee
Reduction Performance shall be calculated as follows. The total return net of fees and
expenses (the “net return”) of each Series is calculated for each month during the relevant
10-year period using the customary methods as specified in Rule 482 under the Securities
Act of 1933 and Item 8 of Form N-1A. To this amount, adjustments are made to add the fees
and expenses paid by a Series to the monthly net return, to arrive at a monthly return
before fees and expenses (the “monthly gross return”) of each Series. The monthly gross
returns for all of the Series are averaged on an asset-weighted basis, so that the larger
Series are weighted proportionately greater, to arrive at a monthly gross return for the
Trust.
For a calendar year, the 12 monthly gross returns for the Trust are averaged on an
asset-weighted basis, so that the monthly returns are weighted on the basis of the size of
the Trust during the pertinent month and then annualized, to arrive at an annual gross
return for the Trust for a year. Next, the annual gross returns for the most recent 10
calendar-year period are averaged on an asset-weighted basis, so that the annual returns
are weighted on the basis of the size of the Trust during the pertinent year, to arrive at
a weighted average annual total return, without reflecting fees and expenses, for the most
recently completed 10 calendar-year period ending December 31.
II.
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Term and Termination of Agreement |
This Agreement shall have an initial term through April 30, 2007. This Agreement shall terminate
unless the Adviser provides written notice of the extension of this Agreement to the Trust at least
10 days prior to the end of the then-current term. In addition, this Agreement shall terminate
upon termination of the Advisory Contract, or it may be terminated by the Trust, without payment of
any penalty, upon ninety (90) days’ prior written notice to the Adviser at its principal place of
business.
III.
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Miscellaneous |
A. Captions. The captions in this Agreement are included for convenience of
reference only and in no other way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
B. Definitions. Any question of interpretation of any term or provision of this
Agreement, including but not limited to the investment advisory fee, the computations of
net asset values, and the allocation of expenses, having a
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counterpart in or otherwise derived from the terms and provisions of the Advisory Contract
or the 1940 Act, shall have the same meaning as and be resolved by reference to such
Advisory Contract or the 1940 Act.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by their respective
officers thereunto duly authorized and their respective corporate seals to be hereunto affixed, as
of the day and year first above written.
BY:
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/s/ | Xxxxxx X. Xxxxxx | ||||
| Name: Xxxxxx X. Xxxxxx | ||||||
| Title: Chairman | ||||||
PACIFIC LIFE INSURANCE COMPANY
BY:
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/s/ | Xxxxxx X. Xxxxxx | ||||
| Name: Xxxxxx X. Xxxxxx | ||||||
| Title: Chairman | ||||||
BY:
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/s/ | Xxxxxx X. Milfs | ||||
| Name: Xxxxxx X. Milfs |
||||||
| Title: Secretary | ||||||
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APPENDIX A
Advisory Fee Reduction Table
| Aggregate Annual Gross Total Return of the Trust | Advisory Fee | |||
| for a 10-Year Period: | Waiver Amount | |||
Greater than 8.00%, but less than or equal to 8.50% |
.00125 | % | ||
Greater than 8.50%, but less than or equal to 9.00% |
.0025 | % | ||
Greater than 9.00%, but less than or equal to 10.00% |
.005 | % | ||
Greater than 10.00%, but less than or equal to 11.00% |
.01 | % | ||
Greater than 11.00%, but less than or equal to 12.00% |
.0125 | % | ||
Greater than 12.00%, but less than or equal to 13.00% |
.0175 | % | ||
Greater than 13.00%, but less than or equal to 14.00% |
.0200 | % | ||
Greater than 14.00%, but less than or equal to 15.00% |
.0225 | % | ||
Greater than 15.00%, but less than or equal to 16.00% |
.0250 | % | ||
Greater than 16.00%, but less than or equal to 17.00% |
.0300 | % | ||
Greater than 17.00%, but less than or equal to 18.00% |
.0350 | % | ||
Greater than 18.00%, but less than or equal to 19.00% |
.0400 | % | ||
Greater than 19.00%, but less than or equal to 20.00% |
.0450 | % | ||
Greater than 20.00% |
.0500 | % | ||
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