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SUPPLEMENT DATED JANUARY 1, 1997 TO
STATEMENT OF ADDITIONAL INFORMATION FOR PACIFIC SELECT FUND DATED APRIL 1, 1996
("SAI")
The first paragraph on the title page of the SAI is amended to read:
Pacific Select Fund (the "Fund") is an open-end diversified management
investment company currently offering fourteen separate investment Portfolios:
the Money Market Portfolio; the High Yield Bond Portfolio; the Managed Bond
Portfolio; the Government Securities Portfolio; the Growth Portfolio; the
Aggressive Equity Portfolio; the Growth LT Portfolio; the Equity Income
Portfolio; the Multi-Strategy Portfolio; the Equity Portfolio; the Bond and
Income Portfolio; the Equity Index Portfolio; the International Portfolio; and
the Emerging Markets Portfolio. The Fund's Adviser is Pacific Mutual Life
Insurance Company.
The following provisions under the "SECURITIES AND INVESTMENT TECHNIQUES"
section of the SAI are amended by adding the information as indicated below:
MORTGAGE-RELATED SECURITIES: The Equity Portfolio and Bond and Income Portfolio
may only invest in mortgage-related securities that are obligations of, or
guaranteed by, the U.S. Government, its agencies or instrumentalities.
BANK OBLIGATIONS: With respect to investments in any security issued by a
commercial bank or in short term debt obligations of a savings and loan
association by the Bond and Income Portfolio, the requirement for the total
assets of the commercial bank or savings and loan association is increased to at
least U.S. $2 billion.
CORPORATE DEBT SECURITIES: The Bond and Income Portfolio may invest in
corporate debt securities rated Baa (Moody's) or BBB (S&P), or, if not rated by
Moody's or S&P, of equivalent quality.
COMMERCIAL PAPER: The Equity Portfolio may invest in commercial paper (1) rated
at the time of purchase Prime-1 by Moody's or A-1 by S&P or (2) if not rated by
either Moody's or S&P, issued by a corporation having an outstanding debt issue
rated Aa or better by Moody's or AA or better by S&P.
REVERSE REPURCHASE AGREEMENTS AND OTHER BORROWINGS: The Bond and Income
Portfolio may engage in the entry into reverse repurchase agreements.
SHORT SALES AGAINST THE BOX: The Equity Portfolio may enter into short sales
"against the box." No more than 15% of the value of the Equity Portfolio's net
assets will be subject to such short sales at any time.
RESTRICTED SECURITIES (PRIVATE PLACEMENTS): The Equity and Bond and Income
Portfolios may invest in restricted securities subject to the terms of this
provision.
OPTIONS: The Equity Portfolio may write exchange-listed call options. The
Equity Portfolio may only write call options that are traded on a national
securities exchange, and it may purchase a call option on securities only to
effect a "closing purchase transaction" (i.e., the purchase of a call covering
the same underlying security and having the same exercise price and expiration
date as a call previously written by the Equity Portfolio on which it wished to
terminate its obligation).
WARRANTS: The Equity and Bond and Income Portfolios may invest in warrants;
however, not more than 10% of the market value of a Portfolio's assets (at the
time of purchase), and in the case of the Equity Portfolio --- 5%, may be
invested in warrants other than warrants acquired in units or attached to other
securities.
The "Investment Adviser" provision under the "MANAGEMENT OF THE FUND"
section of the SAI is amended by adding the following information:
An Addendum to the Advisory Contract for the Equity Portfolio and Bond and
Income Portfolio was approved by the Board of Trustees, including a majority of
the Trustees who are not parties to the Advisory Contract or interested persons
of such parties, at a meeting held on August 12, 1994, and by the sole
shareholder of those Portfolios on September 6, 1994.
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For the Bond and Income Portfolio, the Fund will pay .60% of the average
daily net assets of the Portfolio. For the Equity Portfolio, the Fund will pay
.65% of the average daily net assets of the Portfolio. Net advisory fees paid
or owed to Pacific Mutual for 1995 for the Equity and Bond and Income Portfolios
were as follows: Equity Portfolio --- $564,917, and Bond and Income Portfolio --
- - $255,233. Net advisory and administrative fees, respectively, paid by the
Equity Portfolio's predecessor --- the Equity Series of Pacific Corinthian
Variable Fund --- were $401,325 and $120,397 in 1994, and $415,347 and $124,604
in 1993. Net advisory and administrative fees, respectively, paid by the Bond
and Income Portfolio's predecessor --- the Bond and Income Series of Pacific
Corinthian Variable Fund --- were $149,270 and $55,976 in 1994, and $178,349 and
$66,881 in 1993.
The following is added to the "Portfolio Management Agreements" provision
under the "MANAGEMENT OF THE FUND" section of the SAI:
For the services provided, Pacific Mutual pays PIMCO a fee based on a
percentage of the combined average daily net assets of these two portfolios
according to the following schedule:
MANAGED BOND AND GOVERNMENT SECURITIES PORTFOLIOS
<TABLE>
<CAPTION>
Rate (%) Break Point (assets)
----------- ---------------------
<S> <C>
.50% On first $25 million
.375% On next $25 million
.25% On excess
</TABLE>
For the services provided, Pacific Mutual pays Janus a fee based on a
percentage of the average daily net assets of the Growth LT Portfolio according
to the following schedule:
GROWTH LT PORTFOLIO
<TABLE>
<CAPTION>
Rate (%) Break Point (assets)
----------- ----------------------
<S> <C>
.55% On first $100 million
.50% On next $400 million
.45% On excess
</TABLE>
For the services provided, Pacific Mutual pays J.P. Morgan Investment a fee
based on a percentage of the combined average daily net assets of these two
Portfolios according to the following schedule:
EQUITY INCOME AND MULTI-STRATEGY PORTFOLIOS
<TABLE>
<CAPTION>
Rate (%) Break Point (assets)
----------- ----------------------
<S> <C>
.45% On first $100 million
.40% On next $100 million
.35% On next $200 million
.30% On next $350 million
.20% On excess
</TABLE>
Pursuant to a Portfolio Management Agreement between the Fund, the Adviser,
and Greenwich Street Advisors Division of Smith Barney Mutual Funds Management
Inc. ("Greenwich Street Advisors"), 388 Greenwich Street, 23rd Floor, New York,
New York 10048, Greenwich Street Advisors serves as the Portfolio Manager and
provides investment advisory service to the Equity Portfolio and Bond and Income
Portfolio. For the services provided, Pacific Mutual pays a fee to Greenwich
Street Advisors based on a percentage of the combined average daily net assets
of these two Portfolios according to the following fee schedule:
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EQUITY AND BOND AND INCOME PORTFOLIOS
<TABLE>
<CAPTION>
Rate (%) Break Point (assets)
-------- ----------------------
<S> <C>
.45% On first $100 million
.40% On next $100 million
.35% On next $200 million
.30% On next $600 million
.20% On excess
</TABLE>
Greenwich Street Advisors is a division of Smith Barney Mutual Fund's
Management Inc. ("SBMFM"), a wholly-owned subsidiary of Smith Barney Holdings
Inc., which is in turn a wholly-owned subsidiary of The Travelers Inc. The
Travelers Inc. is a financial services holding company engaged, through its
subsidiaries, principally in three business segments: (1) life and property and
casualty insurance services, (2) investment services and (3) consumer finance
services.
Greenwich Street Advisors and its predecessors have been in the investment
counseling business since 1934 providing investment advice to a wide variety of
individual and institutional clients. SBMFM and its predecessors have been
providing investment advisory services to mutual funds since 1968. As of
December 31, 1995, Greenwich Street Advisors had aggregate assets under
management in excess of $53 billion and SBMFM had approximately $65.5 billion of
mutual funds under management.
Net fees paid or owed by Pacific Mutual to Greenwich Street Advisors in
1995 were $435,730 for the Equity Portfolio. Net fees paid or owed to Greenwich
Street Advisors by the Equity Portfolio's predecessor --- the Equity Series of
Pacific Corinthian Variable Fund --- were $401,325 in 1994, and $415,347 in
1993. Net fees paid or owed by Pacific Mutual to Greenwich Street Advisors in
1995 were $170,779 for the Bond and Income Portfolio. Net fees paid or owed by
Pacific Mutual to Greenwich Street Advisors by the Bond and Income Portfolio's
predecessor --- the Bond and Income Series of Pacific Corinthian Variable Fund -
- -- were $149,270 in 1994, and $178,349 in 1993. The same fee schedules were in
effect for the predecessors of the Equity Portfolio and Bond and Income
Portfolio as are currently in effect.
For the services provided, Pacific Mutual pays a fee to Columbus Circle
Investors based on a percentage of the Portfolio's average daily net assets
according to the following fee schedule:
AGGRESSIVE EQUITY PORTFOLIO
<TABLE>
<CAPTION>
Rate (%) Break Point (assets)
----------- ----------------------
<S> <C>
.55% On first $100 million
.50% On next $150 million
.45% On next $250 million
.40% On excess
</TABLE>
For the services provided, Pacific Mutual pays a fee to Blairlogie based on
a percentage of the Portfolio's average daily net assets according to the
following fee schedule:
EMERGING MARKETS PORTFOLIO
<TABLE>
<CAPTION>
Rate (%) Break Point (assets)
-------- ---------------------
<S> <C>
.85% On first $50 million
.75% On next $50 million
.70% On next $50 million
.65% On next $50 million
.60% On excess
</TABLE>
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The "Brokerage and Research Services" provision under the "PORTFOLIO
TRANSACTIONS AND BROKERAGE" section of the SAI is amended by adding the
following information:
Smith Barney Inc. and its affiliates may serve as the Fund's broker in
effecting portfolio transactions on a national securities exchange, and may
retain commissions, in accordance with certain regulations of the SEC. Smith
Barney Inc. may receive no more than 25% of the brokerage commission incurred
per annum by any Portfolio managed by Greenwich Street Advisors. During the
year 1995, the Equity and Bond and Income Portfolios incurred brokerage
commissions and markups on principal transactions as follows: the Equity
Portfolio --- $335,550, of which $68,472 (20.41%) was paid to Smith Barney Inc.
or its predecessors, and $22,500 (6.71%) was paid to Robinson Humphrey Co.,
Inc., affiliates of Greenwich Street Advisors, and the Bond and Income Portfolio
- --- $0. During the years 1994 and 1993, respectively, the Equity and Bond and
Income Portfolios incurred brokerage commissions as follows: the Equity
Portfolio --- $318,235, of which $53,700 (16.87%) was paid to Smith Barney Inc.
or its predecessors, and $5,100 (1.60%) was paid to Lehman Brothers Securities,
and $418,458, of which $71,472 (17.08%) was paid to Smith Barney Inc. or its
predecessors, and the Bond and Income Portfolio --- $0 and $0. Information for
the years 1994 and 1993 for the Equity Portfolio and Bond and Income Portfolio
is based on activity of the predecessor series of Pacific Corinthian Variable
Fund, the assets of which were acquired by the Fund on December 31, 1994.
The "Portfolio Turnover" provision under the "PORTFOLIO TRANSACTIONS AND
BROKERAGE" section of the SAI is amended by adding:
For the years 1995, 1994, and 1993, respectively, the portfolio turnover
rate for the Equity and Bond and Income Portfolios was as follows: Equity
Portfolio --- 226%, 179%, and 230%, and Bond and Income Portfolio --- 52%, 32%,
and 42%. Information for the years 1994 and 1993 for the Equity Portfolio and
Bond and Income Portfolio is based on activity of the predecessor series of
Pacific Corinthian Variable Fund, the assets of which were acquired by the Fund
on December 31, 1994.
The "PERFORMANCE INFORMATION" section of the SAI is amended by adding:
For the 30 day period ended December 31, 1995, the yield of the Equity and
Bond and Income Portfolios was as follows: (0.09%) for the Equity Portfolio,
and 6.69% for the Bond and Income Portfolio. For the one year period ended
December 31, 1995, the total return for the Equity and Bond and Income
Portfolios was as follows: 23.80% for the Equity Portfolio, and 33.71% for the
Bond and Income Portfolio. For the five year period ended December 31, 1995,
the average annual total return for the Equity and Bond and Income Portfolios
was as follows: 13.99% for the Equity Portfolio, and 14.47% for the Bond and
Income Portfolio. For the ten year period ended December 31, 1995, the average
annual total returns for the Equity Portfolio and Bond and Income Portfolio were
12.46% and 11.40%, respectively. Based upon the period from the commencement
of the first full year of operations of the Equity Portfolio and Bond and Income
Portfolio on January 1, 1984, the average annual total return for each of these
Portfolios was 13.74% and 13.35%, respectively.
The performance results for the Equity Portfolio and Bond and Income
Portfolio are based, in part, on the performance results of the predecessor
series of Pacific Corinthian Variable Fund, the assets of which were acquired by
the Fund on December 31, 1994.
The "Financial Statements" provision under the "OTHER INFORMATION" section
of the SAI is amended to read:
The financial statements of the Fund as of December 31, 1995, including the
notes thereto, are incorporated by reference in this Statement of Additional
Information from the Annual Report of the Fund dated as of December 31, 1995.
The financial statements have been audited by Deloitte & Touche LLP, except for
information for the Equity Portfolio and Bond and Income Portfolio for years
before 1994, which was audited by other independent public accountants.
Form No. 15-20528-00
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