EXHIBIT (d)(2)
FORM OF
FUND MANAGEMENT AGREEMENT
This Portfolio Management Agreement (this "Agreement") is entered into as of
_________, 2001 by and among Pacific Life Insurance Company, a California
corporation ("Investment Manager"), Janus Capital Corporation, a Colorado
corporation ("Portfolio Manager"), and Pacific Funds, a Delaware
Business Trust ("Pacific Funds").
WHEREAS, Investment Manager has entered into an Advisory Agreement dated
________________ (the "Advisory Agreement") with Pacific Funds to act as
investment adviser and manager to the XX Xxxxx Strategic Value Fund and XX Xxxxx
Growth LT Fund, each a series of Pacific Funds (the "Fund");
WHEREAS, the Advisory Agreement provides that Investment Manager may engage a
portfolio manager to furnish investment information and advice to assist
Investment Manager in carrying out its responsibilities under the Advisory
Agreement;
WHEREAS, Investment Manager and the Trustees of Pacific Funds desire to retain
Portfolio Manager to render investment adviser services to Investment Manager in
the manner and on the terms set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, Investment Manager and Portfolio Manager agree as
follows:
1. APPOINTMENT. Pacific Funds and Investment Manager hereby appoint Janus
Capital Corporation to act as Portfolio Manager to the Fund for the periods and
on the terms set forth in this Agreement. Portfolio Manager accepts such
appointment and agrees to furnish the services herein set forth for the
compensation herein provided. In the event Investment Manager wishes to retain
Portfolio Manager to render investment advisory services to one or more funds
other than the Fund, Investment Manager shall notify Portfolio Manager in
writing. If Portfolio Manager is willing to render such services, it shall
notify Pacific Funds and Investment Manager in writing, whereupon such funds
shall become a Fund hereunder, and be subject to this Agreement.
1. PORTFOLIO SERVICES.
(a) Portfolio Manager shall, subject to the supervision of Investment Manager,
manage the investment and reinvestment of the assets of the Fund. Portfolio
Manager is authorized, in its discretion and without prior consultation
with Investment Manager, to buy, sell, lend, and otherwise trade in any
stocks, bonds, and other securities and investment instruments on behalf of
the Fund, and so long as consistent with the foregoing, without regard to
the length of time the securities have been held and the resulting rate of
portfolio turnover or any tax considerations. Subject to the investment
objectives, policies, and restrictions concerning the Fund set forth in
Pacific Funds' declaration of trust and in its registration statements
under the Investment Company Act of 1940 (the "1940 Act"), the majority or
the whole of the Fund may be invested in such proportions of stocks, bonds,
other securities or investment instruments, or cash as Portfolio Manager
shall
determine. Notwithstanding any other provision of this Agreement, it is
understood and agreed that Pacific Funds shall at all times retain the
ultimate responsibility for and control of all functions performed pursuant
to the Agreement and reserves the right to direct, approve, or disapprove
any action hereunder taken on its behalf by the Portfolio Manager.
Portfolio Manager is responsible for compliance with the provisions of
Section 817(h) of the Internal Revenue Code of 1986, as amended, applicable
to the Fund.
(b) Portfolio Manager shall furnish Investment Manager monthly, quarterly, and
annual reports concerning transactions and performance of the Fund in such
form as may be mutually agreed upon, and agrees to review the Fund and
discuss the management of it. Portfolio Manager shall permit the financial
statements, books and records with respect to the Fund to be inspected and
audited by the Investment Manager at all reasonable times during normal
business hours. Portfolio Manager shall also provide Investment Manager and
Pacific Funds with such other information and reports as may reasonably be
requested by Investment Manager and Pacific Funds from time to time.
(c) Portfolio Manager shall provide to Investment Manager a copy of Portfolio
Manager's Form ADV as filed with the Securities and Exchange Commission and
a list of persons who Portfolio Manager wishes to have authorized to give
written and/or oral instructions to Custodians of Pacific Funds assets for
the Fund.
(d) Portfolio Manager will, in connection with the purchase and sale of
securities for the Fund, together with Investment Manager, arrange for the
transmission to the custodian, and the recordkeeping agent for Pacific
Funds on a daily basis, such confirmation, 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 Fund, as may be reasonably necessary to enable the custodian and
recordkeeping agent to perform its administrative and recordkeeping
responsibilities with respect to the Fund, 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 Pacific Funds' custodian, recordkeeping agent, [and, if required
by the Investment Manager].
(e) Portfolio Manager will assist the custodian and recordkeeping agent for
Pacific Funds in determining or confirming, consistent with the procedures
and policies stated in the Registration Statement for Pacific Funds, the
value of any portfolio securities or other assets of the Fund for which the
custodian and recordkeeping agent seeks assistance from Portfolio Manager
or identifies for review by Portfolio Manager.
(f) Portfolio Manager will report regularly to Pacific Funds' Board of Trustees
on the investment program for the Fund and the issuers and securities
represented in the Fund and will furnish Pacific Funds' Board of Trustees
with respect to the Fund such periodic and special reports as the Trustees
and Investment Manager may reasonably request.
(g) Portfolio Manager will not knowingly 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,
and will keep confidential any information obtained pursuant to this
Agreement, and disclose such information only if the Board of Trustees of
Pacific Funds has authorized such disclosure, or if such disclosure is
required by applicable federal or state law or regulations or regulatory
authorities having requisite authority. Pacific Funds, the Portfolio, and
Investment Manager will not knowingly disclose or use any records or
information respecting 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
by this Agreement, if Portfolio Manager 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.
3. OBLIGATIONS OF INVESTMENT MANAGER AND THE PORTFOLIO.
(a) Investment Manager or its agent shall provide timely information to
Portfolio Manager regarding such matters as the composition of assets in
the Fund, cash requirements and cash available for investment in the Fund,
and all other information as may be reasonably necessary for Portfolio
Manager to perform its responsibilities hereunder.
(b) Investment Manager has herewith furnished Portfolio Manager a copy of the
Fund's registration statement currently in effect and agrees during the
continuance of this Agreement to furnish Portfolio Manager copies of any
amendments or supplements thereto before or at the time the amendments or
supplements become effective. Investment Manager agrees to furnish
Portfolio Manager with minutes of meetings of the Trustees of Pacific Funds
applicable to the Fund to the extent they may affect the duties of
Investment Manager, a copy of any financial statements or reports prepared
for Pacific Funds, including the Fund, by certified or independent public
accountants, and with copies of any financial statements or reports made by
the Fund to its shareholders or to any governmental body or securities
exchange, and any further materials or information which Portfolio Manager
may reasonably request to enable it to perform its functions under this
Agreement.
4. CUSTODIAN. Investment Manager shall provide Portfolio Manager with a copy
of the Fund's agreement with the Custodian (the "Custodian") designated to hold
the assets in the Fund and any modification thereto (excepting any information
concerning the calculation of fees, in particular, the "Fee Schedule") (the
"Custody Agreement") in advance. The Fund assets shall be maintained in the
custody of the Custodian identified in, and in accordance with the terms and
conditions of, the Custody Agreement. Portfolio Manager shall have no liability
for the acts or omissions of the Custodian. Any assets added to the Fund shall
be delivered directly to the Custodian.
5. PROPRIETARY RIGHTS
(a) Investment Manager agrees and acknowledges that Portfolio Manager is the
sole owner of the name and xxxx "Xxxxx" and that all use of any designation
comprised in whole or part of Janus (a "Xxxxx Xxxx") under this Agreement
shall inure to the benefit of Portfolio Manager. The use by Investment
Manager on its own behalf or on behalf of the Fund of any Xxxxx Xxxx in any
advertisement or sales literature or other materials promoting the Fund
shall be with the prior written consent of Portfolio Manager. Investment
Manager shall not, and Investment Manager shall use its best efforts to
cause the Fund not to, without the prior written consent of Portfolio
Manager, make representations regarding Portfolio Manager in any disclosure
document, advertisement or sales literature or other materials promoting
the Fund. Upon termination of this Agreement for any reason, Investment
Manager shall cease, and Investment Manager shall use its best efforts to
cause the Fund to cease, all use of any Xxxxx Xxxx(s) as soon as reasonably
practicable.
(b) Portfolio Manager agrees and acknowledges that Investment Manager is the
sole owner of the name and xxxx Pacific Life ("PL") or Pacific Funds and
that all use of any designation comprised in whole or part of PL or PS
(collectively, the "PL Xxxx") under the Agreement shall inure to the
benefit of Investment Manager. The use by Portfolio Manager on its behalf
or on behalf of the Fund of any PL Xxxx in any advertisement or sales
literature or other materials promoting the Fund shall be with the prior
written consent of Investment Manager. Portfolio Manager shall not, and
Portfolio Manager shall use its best efforts to cause the Fund not to,
without the prior written consent of Investment Manager, make
representations regarding Investment Manager in any disclosure document,
advertisement or sales literature or other materials promoting the Fund.
Upon termination of the Agreement for any reason, Portfolio Manager shall
cease all use of any PL Xxxx(s) as soon as reasonably practicable.
6. EXPENSES. Pacific Funds shall assume and pay all its organizational,
operational, and business expenses not specifically assumed or agreed to be paid
by Portfolio Manager pursuant hereto, including, without limitation, (a)
interest and taxes; (b) brokerage commissions and other costs in connection with
the purchase or sale of securities or other investment instruments with respect
to the Fund; and (c) custodian fees and expenses. Any reimbursement of
advisory fees required by any expense limitation provision shall be the sole
responsibility of Investment Manager. Pacific Funds, Investment Manager, and
Portfolio Manager shall not be considered as partners or participants in a joint
venture. Portfolio Manager will pay its own expenses for the services to be
provided pursuant to this Agreement to the extent not assumed by Pacific Funds
or Investment Manager above, and will not be obligated to pay any expenses of
Pacific Funds Investment Manager, or the Fund unless Portfolio Manager is
responsible for expenses incurred pursuant to Section 10 of this Agreement.
7. PURCHASE AND SALE OF ASSETS. Absent instructions from Investment Manager to
the contrary, Portfolio Manager shall place all orders for the purchase and sale
of securities for the Fund with brokers or dealers selected by Portfolio Manager
which may include brokers or dealers affiliated with Portfolio Manager. Purchase
or sell orders for the Fund may be aggregated with contemporaneous purchase or
sell orders of other clients of Portfolio Manager. Portfolio Manager shall use
its best efforts to obtain execution of Portfolio transactions at prices which
are advantageous to the Fund and at commission rates that are reasonable in
relation to the benefits received. However, Portfolio Manager may select brokers
or dealers on the basis that they provide brokerage, research, or other services
or products to the Fund and/or other accounts serviced by Portfolio Manager.
Portfolio Manager may pay a broker or dealer an amount of commission for
effecting a securities transaction in excess of the amount of commission or
dealer spread another broker or dealer would have charged for effecting that
transaction if Portfolio
Manager determines in good faith that such amount of commission was reasonable
in relation to the value of the brokerage and research products and/or services
provided by such broker or dealer. This determination, with respect to brokerage
and research services or products, may be viewed in terms of either that
particular transaction or the overall responsibilities which Portfolio Manager
and its affiliates have with respect to the portfolio and to accounts over which
they exercise investment discretion, and not all such services or products may
be used by Portfolio Manager in managing the Fund.
8. COMPENSATION OF PORTFOLIO MANAGER. Investment Manager shall pay to
Portfolio Manager a monthly fee in accordance with the fee schedule attached to
this Agreement. Monthly fees shall be calculated by Investment Manager based
upon the average daily net assets of the Fund (including cash or cash
equivalents) for the preceding month for investment advisory services rendered
during that preceding month, and shall be payable to Portfolio Manager by the
fifteenth day of the succeeding month. The fee for the first month during which
Portfolio Manager shall render investment advisory services under this Agreement
shall be based upon the number of days the account was open in that month. If
this Agreement is terminated, the fee shall be based upon the number of days the
account was open during the month in which the Agreement is terminated.
9. NON-EXCLUSIVITY. Investment Manager and the Fund agree that the services
of Portfolio Manager are not to be deemed exclusive and that Portfolio Manager
and its affiliates are free to act as investment manager and provide other
services to various investment companies and other managed accounts. Subject to
Section 17j-1 of the 1940 Act, this Agreement shall not in any way limit or
restrict Portfolio Manager or any of its directors, officers, employees, or
agents from buying, selling, or trading any securities or other investment
instruments for its or their own account or for the account of others for whom
it or they may be acting, provided that such activities will not adversely
affect or otherwise impair the performance by Portfolio Manager of its duties
and obligations under this Agreement. Investment Manager and the Fund recognize
and agree that Portfolio Manager may provide advice to or take action with
respect to other clients, which advice or action, including the timing and
nature of such action, may differ from or be identical to advice given or action
taken with respect to the Fund. Portfolio Manager shall for all purposes herein
be deemed to be an independent contractor and shall, unless otherwise provided
or authorized, have no authority to act for or represent the Fund or Investment
Manager in any way or otherwise be deemed an agent of the Fund or Investment
Manager other than in furtherance of its duties and responsibilities as set
forth in this Agreement.
10. LIABILITY. Except as may otherwise be required by the 1940 Act or the
rules thereunder or other federal securities laws, Pacific Funds and Investment
Manager agree that Portfolio Manager, any affiliated person of Portfolio
Manager, and each person, if any, who, within the meaning of Section 15 of the
1933 Act, controls Portfolio Manager shall not be liable for, or subject to any
damages, expenses, or losses in connection with, any act or omission connected
with or arising out of any services rendered under this Agreement, except by
reason of willful misfeasance, bad faith, or gross negligence in the performance
of Portfolio Manager's duties, or by reason of reckless disregard of Portfolio
Manager's obligations and duties under this Agreement. Investment Manager and
the Fund shall indemnify and hold harmless Portfolio Manager, individually and
as investment
manager, from and against any and all third-party claims (including reasonable
attorneys' fees, with respect to counsel reasonably satisfactory to Investment
Manager or retained by Investment Manager for Portfolio Manager), arising from
or relating to the performance by or obligations of Portfolio Manager as
investment manager hereunder except to the extent any such claims are caused by
the gross negligence or will misconduct of Portfolio Manager. Investment Manager
acknowledges and agrees that Portfolio Manager makes no representation or
warranty, express or implied, that any level of performance or investment
results will be achieved by the Fund or that the Fund will perform comparably
with any standard or index, including other clients of Portfolio Manager,
whether public or private.
11. TERMINATION. This Agreement shall remain in full force and effect for two
years for a term ending December 31, 2002, and is renewable annually thereafter
by agreement of the parties to this Agreement and by specific approval of the
Board of Trustees of Pacific Funds or by vote of a majority of the outstanding
voting securities of the Fund. Any such renewal shall be approved by a vote of a
majority of the Trustees who are not interested persons under the 1940 Act, cast
in person at a meeting called for the purpose of voting on such renewal.
However, any approval of this Agreement by the holders of a majority of the
outstanding shares (as defined in the 0000 Xxx) of the Fund shall be effective
to continue this Agreement with respect to such Fund notwithstanding (a) that
this Agreement has not been approved by the holders of a majority of the
outstanding shares of any other portfolio or (b) that this Agreement has not
been approved by the vote of a majority of the outstanding shares of Pacific
Funds, unless such approval shall be required by any other applicable law or
otherwise. This Agreement may be terminated without penalty, forfeiture,
compulsory buyout amount, or performance of any obligation that could deter
termination at any time by either party upon 60 days written notice to the other
party, and will automatically terminate in the event of its assignment, as
defined in the 1940 Act, or upon termination of the Investment Manager's
Agreement with Pacific Funds.
12. AMENDMENT. This Agreement may be amended only if such amendment is
specifically approved by (a) the vote of a majority of the outstanding voting
securities of the Fund, if required by applicable law, and (b) the vote of a
majority of those directors of the Fund who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for the
purpose of voting on such approval.
13. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3 under
the 1940 Act, Portfolio Manager hereby agrees that all records which it
maintains for the Fund are the property of the Pacific Funds and further agrees
to surrender promptly to Pacific Funds any of such records upon Pacific Funds'
or Investment Manager's request, although Portfolio Manager may, at its own
expense, make and retain a copy of such records. Portfolio Manager further
agrees to preserve such records for the periods prescribed by Rule 31a-2 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.
14. USE OF NAME.
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(a) It is understood that the name "Pacific Life Insurance Company"
and "Pacific Life", and "Pacific Funds" and any derivative thereof or
logo associated with those names are the valuable property of the Adviser and
its affiliates. Portfolio Manager shall not use such names (or derivatives or
logos) without the prior written approval of the Adviser and only for so long as
the Adviser is an investment adviser to Pacific Funds and/or the Funds. Upon
termination of the Investment Advisory Agreement between the Fund and the
Adviser, the Portfolio Manager shall forthwith cease to use such name (or
derivative or logo).
(b) It is understood that the name "Janus Capital Corporation" or
"Janus" or any derivative thereof or logo associated with those names are the
valuable property of the Portfolio Manager and that Pacific Funds and Adviser
have the right to use such name (or derivative or logo), in Pacific Funds'
prospectus, SAI and registration statement or other filings, forms or reports
required under applicable state or federal securities, insurance, or other law,
and for so long as the Portfolio Manager is a Portfolio Manager to one or more
Funds of Pacific Funds. Neither Pacific Funds nor the Adviser shall use the
Portfolio Manager's name or logo in promotional or sales related materials
prepared by or on behalf of the Adviser or Pacific Funds, without prior review
and written approval by the Portfolio Manager. Upon termination of this
Agreement among Pacific Funds, the Adviser and the Portfolio Manager, Pacific
Funds and the Adviser shall forthwith cease to use such name (or logo).
15. LIMITATION AND LIABILITY. A copy of the Agreement and Declaration of
Pacific Funds for Pacific Funds is on file with the Secretary of the State of
Delaware. The obligations of this Agreement shall be binding upon the assets and
property of Pacific Funds and shall not be binding upon any Trustee, officer,
employee, agent, or shareholder, whether past, present, or future, of Pacific
Funds individually.
16. DISCLOSURE ABOUT PORTFOLIO MANAGER. Portfolio Manager has reviewed the
Registration Statement for the Fund filed with the SEC on , 2001 and represents
and warrants that, with respect to the disclosure about Portfolio Manager such
Registration Statement contains, as of the date thereof, no untrue statement of
any material fact and does not omit any statement of a material fact which was
required to be stated therein or necessary to make the statements contained
therein not misleading. Portfolio Manager further agrees to notify Investment
Adviser and Pacific Funds immediately of any material fact known to Portfolio
Manager respecting or relating to Portfolio Manager that is not contained in the
Registration Statement or prospectus for Pacific Funds, or any amendment or
supplement thereto, or of any statement contained therein that becomes untrue in
any material respect.
17. Notices
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All notices and other communications hereunder shall be in writing sent by
facsimile first, if practicable, but shall only be deemed given if delivered in
person or by messenger, cable, certified mail with return receipt, or by a
reputable overnight delivery service which provides evidence of receipt to the
parties at the following addresses (or at such other address or number for a
party as shall be specified by like notice):
A. if to the Portfolio Manager, to:
Janus Capital Corporation
000 Xxxxxxxx Xxxxxx #000
Xxxxxx, XX 00000
Facsimile transmission number:
Attention: Xxxxxx Xxxx
B. if to the Adviser, to:
Pacific Life Insurance Company
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Facsimile transmission number: 000-000-0000
Attention: Xxxxx X. Xxxxx
C. if to the Fund, to:
Pacific Funds
c/o Pacific Life Insurance Company
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Facsimile transmission number: 000-000-0000
Attention: Xxxxx X. Xxxxx
18. GENERAL
(a) Portfolio Manager may perform its services through any employee, officer,
or agent of Portfolio Manager, and Investment Manager shall not be entitled
to the advice, recommendation, or judgment of any specific person.
(b) Each party to this Agreement agrees to cooperate with each other party and
with all appropriate governmental authorities having the requisite
jurisdiction (including, but not limited to, the SEC and state insurance
authorities) in connection with any investigation or inquiry relating to
this Agreement or Pacific Funds.
(c) If any term or provision or this Agreement or the application thereof to
any person or circumstances is held to be invalid or unenforceable to any
extent, the remainder of this Agreement or the application of such
provision to other persons or circumstances shall not be affected thereby
and shall be enforced to the greatest extent permitted by law.
(d) This Agreement shall be governed by and interpreted in accordance with the
laws of the State of California exclusive of conflicts of laws, provided
that nothing herein shall be construed in a manner inconsistent with the
1940 Act, the Investment Advisers Act of 1940 or rules or orders of the SEC
thereunder. The term "affiliate" or "affiliated person" as used in this
Agreement shall mean "affiliated person" as defined in Section 2(a)(3) of
the 1940 Act.
PACIFIC LIFE INSURANCE COMPANY
Attest:________________________________ By: ___________________________________
Name: Name:
Title: Title:
JANUS CAPITAL CORPORATION
Attest:________________________________ By: ___________________________________
Name: Name:
Title: Title:
PACIFIC FUNDS
Attest:________________________________ By: ___________________________________
Name: Name:
Title: Title:
PACIFIC FUNDS
FEE SCHEDULE
Funds: XX Xxxxx Strategic Value and Growth LT
Fee: The Adviser will pay to the Fund Manager a monthly fee based on an
annual percentage of the combined average daily net assets of the PF
Strategic Value and PF Growth LT Funds and the Strategic Value, Growth LT
and Focused 30 Portfolios of the Pacific Select Fund according to the
following schedule:
.55% On first $100 million
.50% On next $400 million
.45% On excess
These fees for services shall be prorated for any portion of a year in which the
Agreement is not effective.
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