EXHIBIT 99.5(b)
Portfolio Management Agreement - Capital Guardian Trust Company
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this 12th day of November, 1987 among Pacific Mutual Life
Insurance Company, a California Company ("Pacific Mutual"), Capital Guardian
Trust Company, a California Corporation ("Capital Guardian"), 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 intends initially to offer shares in eight classes to be
designated as the Money Market Series, Managed Bond Series, High Yield Bond
Series, International Series, Government Securities Series, Growth Series,
Equity Income Series, and Multi-Strategy Series, (the "Initial Series");
WHEREAS, the Fund has retained Pacific Mutual to render investment management
and administrative services to the Initial Series;
WHEREAS, Pacific Mutual represents and warrants that it is a duly registered
investment adviser under the Investment Advisers Act of 1940 ("Advisers Act"),
as amended;
WHEREAS, Capital Guardian represents and warrants that it is a "bank" as that
term is defined in the 1940 Act and the Advisers Act; and
WHEREAS, Pacific Mutual and the Fund desire to retain Capital Guardian to
furnish portfolio management services to the Growth Series, Equity Income Series
and Multi-Strategy Series in connection with Pacific Mutual's investment
management activities on behalf of the Series, and Capital Guardian is willing
to furnish such services to Pacific Mutual and the Fund;
NOW THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed between Pacific Mutual, Capital Guardian and the Fund as
follows:
1. Appointment. Pacific Mutual and the Fund hereby appoint Capital Guardian to
act as Portfolio Manager to the Growth Series, Equity Income Series and Multi-
Strategy Series, (the "Series"), for the periods and on the terms set forth in
this Agreement. Capital Guardian 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 Series with
respect to which Pacific Mutual and the Fund desire to retain Capital Guardian
to render portfolio management services hereunder, they shall notify Capital
Guardian in writing. If Capital Guardian is willing to render such services, it
shall notify Pacific Mutual and the Fund in writing, whereupon such class shall
become a Series hereunder, and be subject to this Agreement.
2. Portfolio Management Duties. Subject to the supervision of Pacific Mutual
and the Fund's Board of Trustees, Capital Guardian will provide a continuous
investment program for the Series' portfolios, including investment research and
management with respect to all securities and investments and cash equivalents
in the portfolios. Capital Guardian will provide the services under this
Agreement in accordance with the Series' investment objectives, policies and
restrictions as stated in their registration statement filed with the Securities
and Exchange Commission ("SEC"), as amended. Capital Guardian further agrees
that it will:
(a) conform to and comply with all applicable rules and regulations of the 1940
Act, all other applicable federal and state laws and regulations and with any
applicable procedures adopted by the Fund's Board of Trustees;
(b) place orders pursuant to its investment determinations for the Series either
directly with the issuer or with any broker or dealer. In placing orders with
brokers and dealers, Capital Guardian will attempt to obtain the best net price
and the most favorable execution of its orders. Consistent with this
obligation, when the execution and price offered by two or more brokers or
dealers are comparable, Capital Guardian may, in its discretion, purchase and
sell portfolio securities to and from brokers and dealers who provide it with
research advice and other services of lawful assistance to Capital Guardian in
serving the Series as Portfolio Manager;
(c) on occasions when the Capital Guardian deems the purchase or sale of a
security to be in the best interest of the Fund as well as its other clients,
Capital Guardian may, 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 Registration Statement. In such
event, allocation of the securities so purchased or sold will be made by Capital
Guardian in the manner it considers to be the most equitable and consistent with
its fiduciary obligations to the Fund and to such other clients. Securities so
allocated shall be delivered in proportions to the consideration paid. The
expenses incurred in the transaction shall be allocated pro rata.
(d) in connection with the purchase and sale of securities of each Series,
Capital Guardian will arrange for the transmission to custodian for the Fund on
a daily basis, such confirmation, trade tickets and other documents as may be
necessary to enable them to perform their administrative responsibilities with
respect to the Series. With respect to portfolio securities to be purchased or
sold through the Depository Trust Company, Capital Guardian will arrange for the
automatic transmission of the confirmation of such trades to the Fund's
custodian.
(e) Capital Guardian will make available to Pacific Mutual and the Fund promptly
upon their request all its investment records and ledgers to assist Pacific
Mutual and the Fund in their compliance with respect to the Series' securities
transactions as required by the 1940 Act and the Investment Advisers Act of
1940, as well as other applicable laws. Capital Guardian will furnish the
Fund's Board of Trustees with respect to the Series such periodic and special
reports as Pacific Mutual and the Trustees may reasonably request. Capital
Guardian will furnish to regulatory authorities 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.
(f) Capital Guardian will not disclose or use any records or information
obtained pursuant to this Agreement in any manner whatsoever except as expressly
authorized in this Agreement, and will keep confidential any information
obtained pursuant this service relationship, and disclose such information only
if the Board of Trustees of the Fund has authorized such disclosure, or if such
disclosure is expressly required by applicable federal or state regulatory
authorities.
(g) In rendering the services required under this Agreement, Capital Guardian
may, from time to time, employ or associate with itself such person or persons
as it believes necessary to assist it in carrying out its obligations under this
Agreement, subject to approval by a majority of the Fund's Board of Trustees and
a majority of Trustees who are not parties to any agreement or contract with
such person or persons and who are not "interested persons," as defined in the
1940 Act, of the Fund, Capital Guardian, or any such person or persons, and to
approval by the vote of a majority of the outstanding voting securities of the
Fund to the extent required by the 1940 Act. Capital Guardian shall be
responsible for making inquiries and for insuring that any employee of Capital
Guardian, any person or firm that Capital Guardian has employed or with which it
has associated, or any employee thereof has not, in any material connection with
the handling of Fund assets:
(a) been convicted, in the last 10 years, of any felony or misdemeanor arising
out of conduct involving embezzlement, fraudulent conversion, or
misappropriation of funds or securities, or involving violations of sections
1341, 1342, or 1343 of Xxxxx 00, Xxxxxx Xxxxxx Code; or
(b) been found by any state regulatory authority, within the last 10 years, to
have violated or to have acknowledged violation of any provision of any state
insurance law involving fraud, deceit or knowing misrepresentation; or
(c) been found by any federal or state regulatory authorities, within the last
10 years, to have violated or to have acknowledged violation of any provision of
federal or state securities laws involving fraud, deceit or knowing
misrepresentation.
3. Expenses. During the term of this Agreement, Capital Guardian 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 Mutual.
4. Compensation. For the services provided, Pacific Mutual will pay Capital
Guardian a fee, payable monthly, based on the aggregate average daily net assets
of the Growth Series, Equity Income Series and Multi-Strategy Series, at the
annual rate of .50% of the aggregate average daily net assets of each Series up
to $30 million, .40% of aggregate average daily net assets of each Series on the
next $30 million and .35% of each Series' aggregate average daily net assets
thereafter.
5. Books and Records. In compliance with the requirements of Rule 31a-3 under
the 1940 Act, Capital Guardian hereby agrees that all records which it maintains
for the Series are the property of the Fund and further agrees to surrender
promptly to the Fund any of such records upon the Fund's request. Capital
Guardian 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 Investment
Advisers Act of 1940 ("Advisers Act") for the period specified in the Rule.
6. Indemnification. Capital Guardian agrees to indemnify and hold harmless,
Pacific Mutual, any affiliated person within the meaning of Section 2(a)(3) of
the 1940 Act ("affiliated person") of Pacific Mutual 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 Mutual against any and all
losses, claims, damages, liabilities or litigation (including legal and other
expenses), to which Pacific Mutual 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 Capital Guardian's
responsibilities as Portfolio Manager of the Fund which (1) may be based upon
any wrongful act or omission by Capital Guardian, any of its employees or
representatives or any affiliate of or any person acting on behalf of Capital
Guardian, 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 Series 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 Mutual, the Fund or any affiliated
person of the Fund by Capital Guardian or any affiliated person of Capital
Guardian; provided, however, that in no case is Capital Guardian's indemnity in
favor of Pacific Mutual or any affiliated person or controlling person of
Pacific Mutual 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 Mutual agrees to indemnify and hold harmless Capital Guardian, any
affiliated person within the meaning of Section 2(a)(3) of the 1940 Act
("affiliated person") of Capital Guardian and each person, if any, who, within
the meaning of Section 15 of the 1933 Act controls ("controlling person")
Capital Guardian against any and all losses, claims, damages, liabilities or
litigation (including legal and other expenses) to which Capital Guardian 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 Mutual's responsibilities as Investment
Adviser of the Fund which (1) may be based upon any wrongful act or omission by
Pacific Mutual, any of its employees or representatives or any affiliate of or
any person acting on behalf of Pacific Mutual 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 Series
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
Mutual or any affiliated person of Pacific Mutual by Capital Guardian or any
affiliated person of Capital Guardian; provided however, that in no case is the
indemnity of Pacific Mutual in favor of Capital Guardian, or any affiliated
person or controlling person of Capital Guardian 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 not to hold Capital Guardian, any affiliated person within the
meaning of Section 2(a)(3) of the 1940 Act of Capital Guardian and each person,
if any, who, within the meaning of Section 15 of the 1933 Act controls Capital
Guardian 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 Capital
Guardian's duties or by reason of reckless disregard of Capital Guardian's
obligations and duties under this Agreement.
7. Control. Notwithstanding any other provision of the Agreement, it is
understood and agreed that Pacific Select 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 their behalf by Capital Guardian.
8. Services Not Exclusive. It is understood that the services of Capital
Guardian are not exclusive, and nothing in this Agreement shall prevent Capital
Guardian from providing similar services to other investment companies (whether
or not their investment objectives and policies are similar to those of the
Series) or from engaging in other activities.
9. Duration and Termination. This Agreement shall become effective on the
effective date of the Fund's Registration Statement. 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 Series
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 Series (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 Capital Guardian
shall not provide any services for the account or receive any fees on account of
such Series that fail to so approve of this Agreement. Notwithstanding the
foregoing, this Agreement may be terminated: (a) by Pacific Mutual at any time
without penalty, upon sixty (60) days' written notice to Capital Guardian 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 Series, upon sixty (60) days' written
notice to Capital Guardian, or (c) by Capital Guardian at any time without
penalty by Capital Guardian, upon sixty (60) days' written notice to Pacific
Mutual and the Fund. In the event of termination for any reason, all records
shall promptly be returned to Pacific Mutual or the Fund, free from any claim or
retention of rights by Capital Guardian: 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 (i) the holders of a majority of the outstanding voting
securities of the Series, and (ii) 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 Mutual and its affiliates, and that the Fund and/or the Series have the
right to use such name (or derivative or logo) only so long as Pacific Mutual is
Investment Manager to the Fund and/or the Series. Upon termination of the
Investment Management Agreement between the Fund (or Series) and Pacific Mutual,
the Fund (or Series) 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 Capital, Capital Guardian Trust Company or any
derivative thereof or logo associated with that name is the valuable property of
Capital Guardian and its affiliates and that the Fund and/or the Series have the
right to use such name (or derivative or logo) in offering materials of the Fund
so long as Capital Guardian is Portfolio Manager to the Fund and/or the Series.
Upon termination of the Portfolio Management Agreement between the Fund (or
Series), Pacific Mutual, and Capital Guardian, the Fund (or Series) 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 Capital Guardian as an
agent of the Fund or Pacific Mutual.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
PACIFIC MUTUAL LIFE INSURANCE COMPANY
Date: 11-20-87 By /s/ XXXXXXX X. XXXXXXXX
Executive Vice President
CAPITAL GUARDIAN TRUST COMPANY
Date: 11-20-87 By /s/ XXXXX X. XXXXXXXXXX
Executive Vice President & Treasurer
PACIFIC SELECT FUND
Date: 11-20-87 By /s/ XX XXXXXX
President
CAPITAL GUARDIAN TRUST COMPANY
000 Xxxxx Xxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000 - Telephone (000) 000-0000
- Telex 67-3320
September 24, 1993
Xx. Xxxxxx X. Xxxxxxxxxx
Senior Executive Vice President
Pacific Mutual Life Insurance Company
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Dear Xx. Xxxxxxxxxx:
This will confirm your telephone conversation with Xxxx Xxxxx as follows:
1. Capital Guardian Trust Company ("CGTC") hereby tenders its resignation
as Portfolio Manager for the Equity Income Series and the Multi-
Strategy Series of Pacific Select Fund, effective as of the close of
business on December 31, 1993.
2. CGTC will continue to serve as Portfolio Manager for the Growth Series
of Pacific Select Fund, subject to the understanding reflected in the
following paragraphs as well as, of course, the terms of the Portfolio
Management Agreement and the requirements of the Investment Company Act
of 1940 relating to termination and annual renewal of investment
advisory contracts.
3. Assets underlying variable annuity contracts may continue to be
invested in the Growth Series after December 31, 1993 only if the
contracts were entered into on or before that date. This can include
assets exchanged from other Series of Pacific Select Fund as well as
assets representing additional investments in the qualifying contracts.
4. Assets underlying variable life insurance contracts may continue to be
invested in the Growth Series, even if such contracts are entered into
after December 31, 1993.
The net effect of our understanding is that CGTC will not manage the assets
underlying any variable annuity contracts offered by Pacific Mutual Life
Insurance Company or its affiliates that are entered into after December 31,
1993.
We appreciate your cooperation and will be pleased to assist in the
transition to new Portfolio Managers for the Equity Income Series and the Multi-
Strategy Series.
Sincerely,
/s/ XXXXX X. XXXXXXXXXX
Xxxxx X. Xxxxxxxxxx
San Francisco Office: Four Xxxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx,
Xxxxxxxxxx 00000-0000 -Telephone (000) 000-0000
New York Office: 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 -
Telephone (000) 000-0000
Geneva Office: 0 Xxxxx xxx Xxxxxxx, 0000 Xxxxxx, Xxxxxxxxxxx
