Exhibit (d)(9)
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this 5th day of May, 2000 among Pacific Life Insurance Company,
a California Company ("Pacific Life"), Pacific Investment Management Company,
LLC ("PIMCO"), a Delaware limited liability company, and Pacific Select Fund, a
Massachusetts Business Trust (the "Fund").
WHEREAS, Pacific Select Fund is registered under the Investment Company Act
of 1940, as amended (the "1940 Act"), as an open-end, diversified management
investment company and is authorized to issue separate series, each of which
will offer a separate class of shares of beneficial interest, each series having
its own investment objective, policies and limitations;
WHEREAS, the Fund currently offers multiple series, two of which are
designated as the Managed Bond and Government Securities Portfolios, such
Portfolios together with any other Portfolios subsequently established by the
Fund, with respect to which the Fund and Adviser desire to retain the Portfolio
Manager to render investment advisory services hereunder, and with respect to
which the Portfolio Manager is willing to do so, being herein collectively
referred to also as the "Portfolios"; and
WHEREAS, the Fund has retained Pacific Life to render investment management
and administrative services to the Portfolios;
WHEREAS, Pacific Life represents and warrants that it is a duly registered
investment adviser under the Investment Advisers Act of 1940 ("Advisers Act"),
as amended;
WHEREAS, PIMCO represents and warrants that it is a duly registered investment
adviser under the Advisers Act, as amended; and
WHEREAS, Pacific Life and the Fund desire to retain PIMCO to furnish portfolio
management services to the Managed Bond Portfolio and Government Securities
Portfolio in connection with Pacific Life's investment management activities on
behalf of the Portfolios, and PIMCO is willing to furnish such services to
Pacific Life and the Fund;
NOW THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed between Pacific Life, PIMCO and the Fund as follows:
1. Appointment. Pacific Life and the Fund hereby appoint PIMCO to act as
Portfolio Manager to the Managed Bond Portfolio and Government Securities
Portfolio, (the "Portfolios"), for the periods and on the terms set forth in
this Agreement. PIMCO accepts such appointment and agrees to furnish the
services herein set forth, for the compensation herein provided.
In the event the Fund designates one or more classes other than the Portfolios
with respect to which Pacific Life and the Fund desire to retain PIMCO to render
portfolio management services hereunder, they shall notify PIMCO in writing. If
PIMCO is willing to render such services, it shall notify Pacific Life and the
Fund in writing, whereupon such class shall become a Portfolio hereunder, and be
subject to this Agreement.
2. Portfolio Manager Duties. Subject to the supervision of the Fund's Board
of Trustees and Pacific Life, the Portfolio Manager will provide a continuous
investment program for the Portfolios and determine the composition of the
assets of the Portfolios, including determination of the purchase, retention, or
sale of the securities, cash, and other investments, including futures contracts
and options thereon, for the Portfolios. The Portfolio Manager will provide
investment research and analysis, which may consist of computerized investment
methodology, and will conduct a continuous program of evaluation, investment,
sales, and reinvestment of the Portfolio's assets by determining the securities
and other investments that shall be purchased, entered into, sold, closed, or
exchanged for
the Portfolios, when these transactions should be executed, and what portion of
the assets of the Portfolios should be held in the various securities and other
investments in which it may invest, and the Portfolio Manager is hereby
authorized to execute and perform such services on behalf of the Portfolios. To
the extent permitted by the investment policies of the Portfolios, the Portfolio
Manager shall make decisions for the Portfolios as to foreign currency matters
and make determinations as to the retention or disposition of foreign currencies
or securities or other instruments denominated in foreign currencies, or
derivative instruments based upon foreign currencies, including forward foreign
currency contracts and options and futures on foreign currencies and shall
execute and perform the same on behalf of the Portfolios. The Portfolio Manager
is authorized to exercise tender offers, exchange offers and to vote proxies on
behalf of the Fund, each as the Portfolio Manager determines is in the best
interest of the Fund. In performing these duties, the Portfolio Manager:
(a) Will (1) manage the Portfolios in a manner that complies with
requirements imposed upon regulated investment companies under Subchapter M of
the Internal Revenue Code and (2) manage the Portfolios so as to ensure
compliance by the Portfolios with the diversification requirements of Section
817(h) of the Internal Revenue Code and Regulations issued thereunder. Pacific
Life will notify the Portfolio Manager of any amendments to the Section 817(h)
of the Internal Revenue Code and Regulations issued thereunder. In managing the
Portfolios in accordance with these requirements, the Portfolio Manager shall be
entitled to receive and act upon advice of counsel to the Fund, counsel to
Pacific Life, or counsel to the Portfolio Manager that is also acceptable to
Pacific Life.
(b) Shall conform with (1) the 1940 Act and all rules and regulations
thereunder, and releases and interpretations related thereto (including any no-
action letters and exemptive orders which have been granted by the SEC to the
Fund, Pacific Life or the Portfolio Manager), (2) with all other applicable
federal and state laws and regulations pertaining to investment vehicles
underlying variable annuity and/or variable life insurance contracts, provided
Pacific Life informs Portfolio Manager of applicable state insurance laws
relating to the investment and management of the Portfolios and notifies
Portfolio Manager of any changes thereto, (3) with any applicable procedures,
policies and guidelines adopted by the Fund's Board of Trustees, (4) with the
Portfolio's objectives, investment policies and investment restrictions as
stated in the Fund's Prospectus and Statement of Additional Information, and (5)
with the provisions of the Fund's Registration Statement filed on Form N-1A
under the Securities Act of 1933 (the "1933 Act") and the 1940 Act, as
supplemented or amended from time to time. Until Pacific Life delivers any
supplements or amendments to the Portfolio Manager, the Portfolio Manager shall
be fully protected in relying on the Fund's Registration Statement previously
furnished to the Portfolio Manager by Pacific Life.
(c) Will: (1) use its best efforts to identify each position in the
Portfolios that constitutes stock in a Passive Foreign Investment Company
("PFIC"), as that term is defined in Section 1296 of the Internal Revenue
Code, and (2) make such determinations and inform Pacific Life at least
annually, (or more often and by such date(s) as Pacific Life shall request), of
any stock in a PFIC.
(d) Is responsible, in connection with its responsibilities under this
Section 2, for decisions to buy and sell securities and other investments for
the Portfolios, for broker-dealer and futures commission merchant ("FCM")
selection, and for negotiation of commission rates. The Portfolio Manager's
primary consideration in effecting a security or other transaction will be to
obtain the best execution for the Portfolios, taking into account the factors
specified in the Prospectus and Statement of Additional Information for the
Fund, as they may be amended or supplemented from time to time. Subject to such
policies as the Board of Trustees may determine and consistent with Section
28(e) of the Securities Exchange Act of 1934, the Portfolio Manager shall not be
deemed to have acted unlawfully or to have breached any duty created by this
Agreement or otherwise solely by reason of its having caused the Portfolio to
pay a broker or dealer, acting as agent, for effecting a portfolio transaction
at a price in excess of the amount of commission another broker or dealer would
have charged for effecting that transaction, if the Portfolio Manager determines
in good faith that such amount of commission was reasonable in relation to the
value of the brokerage and research services provided by such broker or dealer,
viewed in terms of either that particular transaction or the Portfolio Manager's
(or its affiliates) overall responsibilities with respect to the
Portfolios and to its other clients as to which it exercises investment
discretion. To the extent consistent with these standards, and in accordance
with Section 11(a) of the Securities Exchange Act of 1934 and Rule 11a2-2(T)
thereunder, and subject to any other applicable laws and regulations including
Section 17(e) of the 1940 Act, the Portfolio Manager is further authorized to
place orders on behalf of the Portfolios through the Portfolio Manager if the
Portfolio Manager is registered as a broker or dealer with the SEC or as a FCM
with the Commodities Futures Trading Commission ("CFTC"), to any of its
affiliates that are brokers or dealers or FCMs or such other entities which
provide similar services in foreign countries, or to such brokers and dealers
that also provide research or statistical research and material, or other
services to the Portfolios or the Portfolio Manager. Such allocation shall be in
such amounts and proportions as the Portfolio Manager shall determine consistent
with the above standards, and, upon request, the Portfolio Manager will report
on said allocation to Pacific Life and Board of Trustees of the Fund, indicating
the brokers, dealers or FCMs to which such allocations have been made and the
basis therefor.
(e) May from time to time seek research assistance and rely on investment
management resources available to it through its affiliated companies, but in no
case shall such reliance relieve the Portfolio Manager of any of its obligations
hereunder, nor shall the Portfolios be responsible for any additional fees or
expenses hereunder as a result.
(f) May, on occasions when the purchase or sale of a security is deemed to
be in the best interest of a Portfolio as well as any other investment advisory
clients, to the extent permitted by applicable laws and regulations, but shall
not be obligated to, aggregate the securities to be so sold or purchased with
those of its other clients where such aggregation is not inconsistent with the
policies set forth in the Fund's Registration Statement. In such event,
allocation of the securities so purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Portfolio Manager in a manner
that is fair and equitable in the judgment of the Portfolio Manager in the
exercise of its fiduciary obligations to the Fund and to such other clients.
(g) Will, in connection with the purchase and sale of securities for the
Portfolios, together with Pacific Life, arrange for the transmission to the
custodian and recordkeeping agent for the Fund, on a daily basis, such
confirmation(s), trade tickets, and other documents and information, including,
but not limited to, Cusip, Sedol, or other numbers that identify securities to
be purchased or sold on behalf of the Portfolio, as may be reasonably necessary
to enable the custodian and recordkeeping agent to perform its administrative
and recordkeeping responsibilities with respect to the Portfolios, and with
respect to portfolio securities to be purchased or sold through the Depository
Trust Company, will arrange for the automatic transmission of the confirmation
of such trades to the Fund's custodian, and recordkeeping agent, and, if
required, Pacific Life.
(h) Will assist the custodian and recordkeeping agent for the Fund in
determining or confirming, consistent with the procedures and policies stated in
the Registration Statement for the Fund, the value of any portfolio securities
or other assets of the Portfolios for which the custodian and recordkeeping
agent seeks assistance from the Portfolio Manager or identifies for review by
the Portfolio Manager.
(i) Will make available to the Fund and Pacific Life promptly upon
request, any of the Portfolio's investment records and ledgers maintained by the
Portfolio Manager (which shall not include the records and ledgers maintained by
the custodian and recordkeeping agent for the Fund), as are necessary to assist
the Fund and Pacific Life to comply with requirements of the 1940 Act and
Advisers Act, as well as other applicable laws, and will furnish to regulatory
authorities having the requisite authority any information or reports in
connection with such services which may be requested in order to ascertain
whether the operations of the Fund are being conducted in a manner consistent
with applicable laws and regulations.
(j) Will regularly report to the Fund's Board of Trustees on the
investment program for the Portfolios and the issuers and securities represented
in the Portfolios' portfolios, and will furnish the Fund's Board of Trustees
with respect to the Portfolios such periodic and special reports as the Trustees
and Pacific Life may reasonably request, including, but not limited to, the
monthly compliance checklist, monthly tax compliance worksheet, reports
regarding compliance with the Fund's procedures pursuant to Rules 17e-1, 17a-7,
10f-3 and 12d3-1 under the
1940 Act, fundamental investment restrictions, procedures for opening brokerage
accounts and commodity trading accounts, liquidity determination of securities
purchased pursuant to Rule 144A and 4(2) commercial paper, and compliance with
the Portfolio Manager's Code of Ethics, and such other procedures or
requirements that Pacific Life may request from time to time.
(k) Will not disclose or use any records or information obtained pursuant
to this Agreement (excluding investment research and investment advice) in any
manner whatsoever except as expressly authorized in this Agreement or in the
ordinary course of business in connection with placing orders for the purchase
and sale of securities or obtaining investment licenses in various countries or
the opening of custody accounts and dealing with settlement agents in various
countries, and will keep confidential any information obtained pursuant to the
Agreement, and disclose such information only if the Board of Trustees of the
Fund has authorized such disclosure, or if such disclosure is required by
applicable federal or state law or regulations or regulatory authorities having
the requisite authority. The Fund and Pacific Life will not disclose or use any
records or information respecting the Portfolio Manager obtained pursuant to
this Agreement in any manner whatsoever except as expressly authorized in this
Agreement, and will keep confidential any information obtained pursuant to this
Agreement, and disclose such information only as expressly authorized in this
Agreement, if the Board of Trustees of the Fund has authorized such disclosure,
or if such disclosure is required by applicable federal or state law or
regulations or regulatory authorities having the requisite authority.
(l) Shall not permit any employee of the Portfolio Manager to have any
material connection with the handling of the Portfolios if such employee has:
(i) been convicted, in the last ten (10) years, of any felony or
misdemeanor involving the purchase or sale of any security or arising out of
such person's conduct as an underwriter, broker, dealer, investment adviser,
municipal securities dealer, government securities broker, government securities
dealer, transfer agent, or entity or person required to be registered under the
Commodity Exchange Act, or as an affiliated person, salesman, or employee of any
investment company, bank, insurance company, or entity or person required to be
registered under the Commodity Exchange Act; or
(ii) been permanently or temporarily enjoined by reason of any
misconduct, by order, judgment, or decree of any court of competent jurisdiction
from acting as an underwriter, broker, dealer, investment adviser, municipal
securities dealer, government securities broker, government securities dealer,
transfer agent, or entity or person required to be registered under the
Commodity Exchange Act, or as an affiliated person, salesman or employee of any
investment company, bank, insurance company, or entity or person required to be
registered under the Commodity Exchange Act, or from engaging in or continuing
any conduct or practice in connection with any such activity or in connection
with the purchase or sale of any security.
(m) Shall provide to Pacific Life a copy of the Portfolio Manager's Form
ADV as filed with the Securities and Exchange Commission and a list of persons
who the Portfolio Manager wishes to have authorized to give written and/or oral
instructions to Custodians of Fund assets for the Portfolios.
3. Expenses. During the term of this Agreement, PIMCO will pay all expenses
incurred by it, its staff and their activities, in connection with its portfolio
management under this Agreement. This does not include costs payable by the
Fund, the Custodian or Pacific Life.
4. Compensation. For the services provided and the expenses borne by the
Portfolio Manager pursuant to this Agreement, Pacific Life will pay to the
Portfolio Manager a fee based on the aggregate average daily net assets of the
Managed Bond Portfolio and the Government Securities Portfolio, at an annual
rate equal to .50% of the Portfolio's aggregate average daily net assets on the
first $25 million, .375% of the Portfolios' aggregate average daily net assets
on the next $25 million, and .25% of the Portfolios' aggregate average daily net
assets in excess of $50 million. This fee shall be computed and accrued daily
and payable monthly.
5. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, PIMCO hereby agrees that all records which it maintains for
the Portfolios are the property of the Fund and further agrees to surrender
promptly to the Fund any of such records upon the Fund's request. PIMCO further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
the records required to be maintained by Rule 31a-1 under the 1940 Act and to
preserve the records required by Rule 204-2 under the Advisers Act for the
period specified in the Rule.
6. Indemnification. PIMCO agrees to indemnify and hold harmless, Pacific
Life, any affiliated person within the meaning of Section 2(a)(3) of the 1940
Act ("affiliated person") of Pacific Life and each person, if any who, within
the meaning of Section 15 of the Securities Act of 1933 (the "1933 Act"),
controls ("controlling person") Pacific Life against any and all losses,
claims, damages, liabilities or litigation (including legal and other expenses),
to which Pacific Life or such affiliated person or controlling person may become
subject under the 1933 Act, 1940 Act, the Advisers Act, under any other statute,
at common law or otherwise, arising out of PIMCO's responsibilities as Portfolio
Manager of the Fund which (1) may be based upon any misfeasance, malfeasance, or
nonfeasance by PIMCO, any of its employees or representatives or any affiliate
of or any person acting on behalf of PIMCO, or (2) may be based upon any untrue
statement or alleged untrue statement of a material fact contained in a
registration statement or prospectus covering the shares of the Fund or any
Portfolios or any amendment thereof or any supplement thereto or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, if such a statement
or omission was made in reliance upon written information furnished to Pacific
Life, the Fund or any affiliated person of the Fund by PIMCO or any affiliated
person of PIMCO; provided, however, that in no case is PIMCO's indemnity in
favor of Pacific Life or any affiliated person or controlling person of Pacific
Life deemed to protect such person against any liability to which any such
person would otherwise be subject by reason of willful misfeasance, bad faith or
gross negligence in the performance of his duties or by reason of his reckless
disregard of obligation and duties under this Agreement.
Pacific Life agrees to indemnify and hold harmless PIMCO, any affiliated
person within the meaning of Section 2(a)(3) of the 1940 Act ("affiliated
person") of PIMCO and each person, if any, who, within the meaning of Section
15 of the 1933 Act controls ("controlling person") PIMCO against any and all
losses, claims, damages, liabilities or litigation (including legal and other
expenses) to which PIMCO or such affiliated person or controlling person may
become subject under the 1933 Act, the 1940 Act, the Advisers Act, under any
other statute, at common law or otherwise, arising out of Pacific Life's
responsibilities as Investment Adviser of the Fund which (1) may be based upon
any misfeasance, malfeasance, or nonfeasance by Pacific Life, any of its
employees or representatives or any affiliate of or any person acting on behalf
of Pacific Life or (2) may be based upon any untrue statement or alleged untrue
statement of a material fact contained in a registration statement or prospectus
covering shares of the Fund or any Portfolios or any amendment thereof or any
supplement thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading unless such statement or omission was made in reliance
upon written information furnished to Pacific Life or any affiliated person of
Pacific Life by PIMCO or any affiliated person of PIMCO; provided however, that
in no case is the indemnity of Pacific Life in favor of PIMCO, or any affiliated
person or controlling person of PIMCO deemed to protect such person against any
liability to which any such person would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of his
duties or by reason of his reckless disregard of obligations and duties under
this Agreement.
Except as may otherwise be required by the 1940 Act or the rules thereunder,
the Fund agrees that PIMCO, any affiliated person within the meaning of Section
2(a)(3) of the 1940 Act of PIMCO and each person, if any, who, within the
meaning of Section 15 of the 1933 Act controls PIMCO shall not be liable, or
subject to any damages, expenses or losses, in connection with any act or
omission connected with or arising out of any investment advisory services
rendered under this Agreement, except by reason of willful misfeasance, bad
faith or gross negligence in the performance of PIMCO's duties or by reason of
reckless disregard of PIMCO's obligations and duties under this Agreement.
7. Control. Notwithstanding any other provision of the Agreement, it is
understood and agreed that the Fund shall at all times retain the ultimate
responsibility for and control of all functions performed pursuant to this
Agreement and reserve the right to direct, approve or disapprove any action
hereunder taken on its behalf by PIMCO.
8. Services Not Exclusive. It is understood that the services of PIMCO are
not exclusive, and nothing in this Agreement shall prevent PIMCO from providing
similar services to other clients, including investment companies (whether or
not their investment objectives and policies are similar to those of the
Portfolios) or from engaging in other activities.
9. Duration and Termination. This Agreement shall become effective as of
May 5, 2000. Unless terminated as provided herein, the Agreement shall remain in
full force and effect for two years from such date and continue on an annual
basis with respect to each Portfolio unless terminated in accordance with the
following sentence; provided that such annual continuance is specifically
approved each year by (a) the vote of a majority of the entire Board of Trustees
of the Fund, or by the vote of a majority of the outstanding voting securities
of each Portfolio (as defined in the 1940 Act), and (b) the vote of a majority
of those Trustees who are not parties to this Agreement or interested persons
(as such term is defined in the 0000 Xxx) of any such party to this Agreement
cast in person at a meeting called for the purpose of voting on such approval.
In the event this Agreement is not approved in the manner described in the
preceding sentence, the paragraph numbered six (6), of this Agreement shall
remain in effect as well as any applicable provision of this paragraph numbered
nine (9) and PIMCO shall not provide any services for such Portfolios or receive
any fees on account of such Portfolios that fail to so approve of this
Agreement. Notwithstanding the foregoing, this Agreement may be terminated: (a)
by Pacific Life at any time without penalty, upon sixty (60) days' written
notice to PIMCO and the Fund (b) at any time without payment of any penalty by
the Fund, upon the vote of a majority of the Fund's Board of Trustees or a
majority of the outstanding voting securities of each Portfolio, upon sixty (60)
day's written notice to PIMCO, or (c) by PIMCO at any time without penalty by
PIMCO, upon sixty (60) day's written notice to Pacific Life and the Fund. In the
event of termination for any reason, all records of each Portfolio for which the
Agreement is terminated shall promptly be returned to Pacific Life or the Fund,
free from any claim or retention of rights by PIMCO: the Agreement shall
automatically terminate in the event of its assignment (as such term is defined
in the 1940 Act).
10. Amendments. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought and no amendment of this Agreement shall be effective
until approved by an affirmative vote of (1) the holders of a majority of the
outstanding voting securities of the Portfolios, and (2) the Trustees of the
Fund, including a majority of the Trustees of the Fund who are not interested
persons of any party to this Agreement, cast in person at a meeting called for
the purpose of voting on such approval, if such approval is required by
applicable law.
11. Use of Name. It is understood that the name Pacific Select or any
derivative thereof or logo associated with that name is the valuable property of
Pacific Life and its affiliates, and that the Fund and/or the Portfolios have
the right to use such name (or derivative or logo) only so long as Pacific Life
is Investment Manager to the Fund and/or the Portfolios. Upon termination of the
Investment Management Agreement between the Fund (or Portfolios) and Pacific
Life, the Fund (or Portfolios) shall forthwith cease to use such name (or
derivative or logo) and, in the case of the Fund, shall promptly amend its
Agreement and Declaration of Trust to change its name.
It is understood that the name (PIMCO) Pacific Investment Management Company
or any derivative thereof or logo associated with that name is the valuable
property of PIMCO and its affiliates and that the Fund and/or the Portfolios
have the right to use such name (or derivative or logo) in offering materials of
the Fund with the approval of PIMCO and for so long as PIMCO is Portfolio
Manager to the Fund and/or the Portfolios. Upon termination of
this Agreement between the Fund (or Portfolios), Pacific Life, and PIMCO, the
Fund (or Portfolios) shall forthwith cease to use such name (or derivative or
logo).
12. Miscellaneous.
a. This Agreement shall be governed by the laws of the State of
California, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act or rules or orders of the SEC
thereunder.
b. The captions of this Agreement are included for convenience only and
in no way define or limit any of the provisions hereof or otherwise affect their
construction or effect.
c. To the extent permitted under Section 9 of the Agreement, this
Agreement may not be assigned by any party without the prior written consent of
the other parties.
d. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby, and to this extent, the provisions of this
Agreement shall be deemed to be severable.
e. Nothing herein shall be construed as constituting PIMCO as an agent of
the Fund or Pacific Life.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
PACIFIC LIFE
INSURANCE COMPANY
Date: May 5, 2000 By
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PACIFIC INVESTMENT
MANAGEMENT COMPANY, LLC
Date: May 5, 2000 By
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PACIFIC SELECT FUND
Date: May 5, 2000 By
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