EXHIBIT 99.5(i)
Portfolio Management Agreement - Pacific Investment Management Company
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this 15th day of November 1994 among Pacific Mutual Life
Insurance Company, a California Company ("Pacific Mutual"), Pacific Investment
Management Company, ("PIMCO"), a Delaware general partnership, 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, PIMCO represents and warrants that it is a duly registered
investment adviser under the Investment Advisers Act of 1940, as amended; and
WHEREAS, Pacific Mutual and the Fund desire to retain PIMCO to furnish
portfolio management services to the Managed Bond Series and Government
Securities Series in connection with Pacific Mutual's investment management
activities on behalf of the Series, and PIMCO 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, PIMCO and the Fund as follows:
1. Appointment. Pacific Mutual and the Fund hereby appoint PIMCO to
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act as Portfolio Manager to the Managed Bond Series and Government Securities
Series, (the "Series"), 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 Series
with respect to which Pacific Mutual 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
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
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Mutual and the Fund's Board of Trustees, PIMCO 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. PIMCO will determine from time to time what securities and
other investments will be purchased, retained or sold by the Series. PIMCO will
provide the services under this Agreement in accordance with the Series'
investment objectives, policies and restrictions as stated in the Fund's
registration statement filed with the Securities and Exchange Commission
("SEC"), as amended. PIMCO further agrees that it will:
(a) conform 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. PIMCO is
authorized to select brokers and dealers and open and maintain brokerage
accounts and trading accounts for the purchasing and selling of financial
futures contracts and related options with futures commission merchants for and
on behalf of the Series in accordance with procedures established by Pacific
Mutual and approved by the Fund's Board of Trustees. In placing orders with
brokers and dealers, PIMCO 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, PIMCO 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 PIMCO in serving the Series as Portfolio
Manager;
(c) on occasions when the PIMCO deems the purchase or sale of a security
to be in the best interest of the Fund as well as its other investment advisory
clients, PIMCO 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, as well as the
expenses incurred in the transaction, will be made by PIMCO in the manner it
considers to be the most equitable and consistent with its fiduciary obligations
to the Fund and to such other clients.
(d) in connection with the purchase and sale of securities of each Series,
PIMCO 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, PIMCO will arrange for the automatic transmission
of the confirmation of such trades to the Fund's custodian.
(e) PIMCO will make available to Pacific Mutual and the Fund promptly
upon their request all of the Fund's investment records and ledgers as are
necessary 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. PIMCO 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.
PIMCO 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) PIMCO 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 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 this Agreement, 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, PIMCO 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. However, PIMCO may not retain as subadvisors any company that would
be an "investment adviser," as that term is defined in the 1940 Act, to the Fund
unless the contract with such company is approved 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, PIMCO, 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. PIMCO shall be
responsible for making inquiries and for reasonably insuring that any employee
of PIMCO, any person or firm that PIMCO has employed or with which it has
associated, or any employee thereof has not, to the best of PIMCO's knowledge,
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, PIMCO will pay all
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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 PIMCO
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a fee, payable monthly, based on the average daily net assets of the Managed
Bond Series and Government Securities Series, at the annual rate of .50% of the
average daily net assets of each Series up to $25 million, .375% of average
daily net assets of each Series on the next $25 million and .25% of each Series'
average daily net assets thereafter.
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 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. 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 Investment Advisers Act of 1940
("Advisers Act") for the period specified in the Rule.
6. Indemnification. PIMCO agrees to indemnify and hold harmless, Pacific
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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 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 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
PIMCO or any affiliated person of PIMCO; provided, however, that in no case is
PIMCO'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 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 Mutual's
responsibilities as Investment Adviser of the Fund which (1) may be based upon
any misfeasance, malfeasance, or nonfeasance 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 PIMCO or any affiliated person of PIMCO; provided however,
that in no case is the indemnity of Pacific Mutual 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
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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
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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 Series) or from engaging in other activities.
9. Duration and Termination. This Agreement shall become effective as of
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the "Closing Date" as that term is defined in the Agreement and Plan of
Consolidation for PIMCO Advisers L.P., dated July 11, 1994 (the "Effective
Date"). 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 PIMCO shall not provide any services for such Series 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
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 Series, 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 Mutual and the Fund. In the event of
termination for any reason, all records of each Series for which the Agreement
is terminated shall promptly be returned to Pacific Mutual 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,
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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
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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 (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
Series 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 Series. Upon termination of this
Agreement between the Fund (or Series), Pacific Mutual, and PIMCO, the Fund (or
Series) shall forthwith cease to use such name (or derivative or logo).
12. Miscellaneous.
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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 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: November 15, 1994 By /s/ XXXXX X. XXXXXXX
Executive Vice President
PACIFIC INVESTMENT
MANAGEMENT COMPANY
Date: November 15, 1994 By /s/ XXXXXXX X. XXXXXXXX
Managing Director
PACIFIC SELECT FUND
Date: November 15, 1994 By /s/ XXXXXX X. XXXXXX
President
