<PAGE>
As filed with the Securities and Exchange Commission on May 17, 2000
Registration No. 33-13954
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [_]
Post-Effective Amendment No. [_]
(Check appropriate box or boxes)
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Pacific Select Fund
(Exact Name of Registrant as Specified in Charter)
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700 Newport Center Drive, P.O. Box 7500, Newport Beach, CA 92660
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (949) 219-6767
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Robin S. Yonis
Assistant Vice President and Investment Counsel of
Pacific Life Insurance Company
700 Newport Center Drive
Newport Beach, CA 92660
(Name and Address of Agent for Service)
Copies to:
Jeffrey S. Puretz, Esq.
Dechert Price & Rhoads
1775 Eye Street, N.W.
Washington, D.C. 20006-2401
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Approximate Date of Proposed Public Offering:
As soon as practicable after this Registration statement becomes effective.
It is proposed that this filing will become effective on June 16, 2000,
pursuant to Rule 488 under the Securities Act of 1933.
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No filing fee is required because an indefinite number of shares have
previously been registered pursuant to Rule 24f-2 under the Investment Company
Act of 1940, as amended.
<PAGE>
PACIFIC SELECT FUND
700 Newport Center Drive
Post Office Box 7500
Newport Beach, California 92660
June , 2000
Dear Variable Contract Owner:
We are pleased to enclose a Notice for a Special Meeting of Shareholders of
the Bond and Income Portfolio of Pacific Select Fund (Fund). The meeting is
scheduled to be held at the office of Pacific Life Insurance Company (Pacific
Life), located at 700 Newport Center Drive, Newport Beach, California 92660, at
2:00 p.m., Pacific Time, on August 23, 2000.
The purpose of the meeting is to seek your approval of a reorganization
(Reorganization) of the Bond and Income Portfolio into the Managed Bond
Portfolio which is another mutual fund portfolio of the Fund. If approved by
shareholders, you would become a shareholder of the Managed Bond Portfolio on
the date that the Reorganization occurs. The Managed Bond Portfolio, which is
managed by Pacific Investment Management Company (PIMCO), has investment
objectives and policies that are similar in many respects to those of the Bond
and Income Portfolio. The Reorganization is expected to result in expenses that
are somewhat lower for shareholders of the Bond and Income Portfolio.
The accompanying Proxy Statement/Prospectus describes the proposed
Reorganization and compares the policies and expenses of the portfolios for
your evaluation.
The Board of Trustees unanimously approved this proposal and recommended
shareholders vote FOR the Reorganization proposal.
Please take the time to read the Proxy Statement/Prospectus and cast your
vote. We appreciate your participation and prompt response in this matter and
thank you for your continued support.
Sincerely,
/s/ THOMAS C. SUTTON
Thomas C. Sutton
Chairman of the Board
<PAGE>
PACIFIC SELECT FUND
700 Newport Center Drive
Post Office Box 7500
Newport Beach, California 92660
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Notice of Special Meeting of Shareholders of
Bond and Income Portfolio
August 23, 2000
----------------
To the Shareholders of the Bond and Income Portfolio:
A Special Meeting of Shareholders of the Bond and Income Portfolio of the
Pacific Select Fund is scheduled for August 23, 2000, at 2:00 p.m., Pacific
time, at 700 Newport Center Drive, Newport Beach, California 92660 for the
following purposes:
1. To approve a Plan of Reorganization providing for the acquisition of all
of the assets and liabilities of the Bond and Income Portfolio by the
Managed Bond Portfolio; and
2. To transact such other business as may properly come before the Special
Meeting of Shareholders or any adjournment thereof.
The Board of Trustees has fixed the close of business on May 18, 2000, as
the record date for determining shareholders entitled to notice of, and to vote
at, the meeting, and any adjournment thereof. Your attention is called to the
accompanying Proxy Statement/Prospectus.
You are cordially invited to attend the meeting. Shareholders who do not
expect to attend the meeting are requested to complete, sign, and return the
enclosed proxy promptly or vote electronically at https://vote.proxy-
direct.com, or vote telephonically by calling 1-800-597-7836. The enclosed
proxy is being solicited by the Board of Trustees of the Fund.
Please respond--your vote is important. Whether or not you plan to attend
the meeting, please vote either electronically, telephonically or by mailing
the voting instruction. If you vote by mail, only voting instructions received
at the address shown on the enclosed postage paid envelope will be counted.
By Order of the Board of Trustees
_____________________________
Audrey L. Milfs
Secretary
June , 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
INTRODUCTION.............................................................. 1
SUMMARY................................................................... 2
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES AND FEES AND EXPENSES
OF THE PORTFOLIOS........................................................ 3
Comparison of Portfolio Characteristics................................. 4
Relative Performance.................................................... 6
Comparison of Risks Involved in Investing in the Portfolios............. 6
Growth in Assets........................................................ 7
Comparison of Securities and Investment Techniques...................... 7
COMPARISON OF FEES AND EXPENSES........................................... 9
Operating Expenses...................................................... 9
Expense Limitation Arrangement.......................................... 9
Expense Table........................................................... 9
Annual Portfolio Operating Expenses..................................... 10
ADDITIONAL INFORMATION ABOUT MANAGED BOND PORTFOLIO....................... 10
INFORMATION ABOUT THE REORGANIZATION...................................... 14
ADDITIONAL INFORMATION ABOUT THE PORTFOLIOS............................... 16
GENERAL INFORMATION ABOUT THE PROXY STATEMENT............................. 16
APPENDIX A: PLAN OF REORGANIZATION........................................ A-1
APPENDIX B: ADDITIONAL INFORMATION REGARDING THE MANAGED BOND PORTFOLIO... B-1
APPENDIX C: SUMMARY DESCRIPTION OF BOND RATINGS........................... C-1
APPENDIX D: PACIFIC SELECT FUND PORTFOLIOS................................ D-1
</TABLE>
<PAGE>
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PROXY STATEMENT/PROSPECTUS
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SPECIAL MEETING OF SHAREHOLDERS SCHEDULED FOR
August 23, 2000
Bond and Income Portfolio
a portfolio of Pacific Select Fund (the "Fund")
Relating to the Reorganization into
Managed Bond Portfolio
a portfolio of the Fund
----------------
INTRODUCTION
----------------
This Proxy Statement/Prospectus provides you with information about a
proposed transaction. This transaction involves the transfer of all the assets
and liabilities of the Bond and Income Portfolio to the Managed Bond Portfolio
in exchange for shares of the Managed Bond Portfolio (Reorganization). The Bond
and Income Portfolio would then distribute to its shareholders their prorata
portion of the shares of Managed Bond Portfolio it receives in the
Reorganization. The result would be a liquidation of the Bond and Income
Portfolio. Each shareholder would receive shares of the Managed Bond Portfolio
having an aggregate value equal to the aggregate value of the shares the
shareholder held of the Bond and Income Portfolio, as of the close of business
on the business day before the closing of the Reorganization. You are being
asked to vote on the Plan of Reorganization through which these transactions
would be accomplished.
Because you, as an owner of a variable annuity or life insurance policy
(Contract Owner or Variable Contract Owner) with an interest in the Bond and
Income Portfolio, are being asked to approve a transaction that will result in
your having an interest in the Managed Bond Portfolio, this Proxy Statement
also serves as a Prospectus for the Managed Bond Portfolio.
This Proxy Statement/Prospectus, which you should retain for future
reference, contains important information about the Managed Bond Portfolio that
you should know before investing, including a discussion of the investment
objectives, policies, restrictions and risks of each of the Portfolios. For
more detailed information, see the Statement of Additional Information (SAI)
for the Fund dated May 1, 2000. The Fund also provides periodic reports to its
shareholders which highlight certain important information about the Fund,
including investment results and financial information. The SAI, and the annual
report for the Fund dated December 31, 1999, may be obtained without charge by
calling (800) 722-2333 for variable annuity contract owners and 1-800-800-7681
for variable life insurance policy owners.
You may also obtain proxy materials, reports and other information filed by
the Fund from the Securities and Exchange Commission's (SEC) Public Reference
Room (1-800-SEC-0330) or from the SEC's internet website at www.sec.gov.
The Securities and Exchange Commission has not approved or disapproved these
Securities, or determined that this Prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
<PAGE>
SUMMARY
You should read this entire Proxy Statement/Prospectus carefully. For
additional information, you should consult the Fund Prospectus and the Plan of
Reorganization which is attached hereto as Appendix A.
The Proposed Reorganization. On April 26, 2000, the Board of Trustees of the
Fund approved a Plan of Reorganization (Reorganization Plan). Subject to
shareholder approval, the Reorganization Plan provides for:
. the transfer of all of the assets of the Bond and Income Portfolio to
the Managed Bond Portfolio, in exchange for shares of the Managed Bond
Portfolio;
. the assumption by the Managed Bond Portfolio of all of the liabilities
of the Bond and Income Portfolio; and
. the distribution of the Managed Bond Portfolio shares to the
shareholders of the Bond and Income Portfolio in complete liquidation of
the Bond and Income Portfolio.
The Reorganization is expected to be effective at the close of business on
September , 2000, or on a later date as the parties may agree (Closing). As a
result of the Reorganization, each shareholder of the Bond and Income Portfolio
would become a shareholder of the Managed Bond Portfolio. Each shareholder
would hold, immediately after the Closing, shares of the Managed Bond Portfolio
having an aggregate value equal to the aggregate value of the shares of the
Bond and Income Portfolio held by that shareholder as of the close of business
on the Closing Date.
The Reorganization is intended to eliminate the Bond and Income Portfolio,
which has not enjoyed the growth in assets that other portfolios of the Fund
have realized, presumably because it has a relatively long duration for a fund
that invests principally in investment-grade fixed income securities. The
Reorganization is expected to lower expenses for shareholders of the Bond and
Income Portfolio to some degree, since they would invest in a Portfolio that
has a lower ratio of expenses to average net asset value per share by 0.01%.
The Reorganization would eliminate duplication of costs and other
inefficiencies arising from having two similar portfolios within the same fund
group.
Approval of the Reorganization Plan requires the affirmative vote of a
majority of the outstanding shares of the Bond and Income Portfolio.
After careful consideration, the Board of Trustees of the Fund unanimously
approved the proposed Reorganization. The Board recommends that you vote FOR
the proposed reorganization.
Information comparing the Portfolios follows. A few important points to note
are:
. The Bond and Income Portfolio and the Managed Bond Portfolio
(collectively, Portfolios) have investment objectives and policies that
are similar in many respects. Each Portfolio normally seeks its
objective by investing primarily in debt securities.
. The Managed Bond Portfolio normally maintains a shorter average duration
than the Bond and Income Portfolio. Funds with longer durations tend to
be more sensitive to changes in interest rates, making them more
volatile than funds with shorter durations.
. The proposed Reorganization is expected to result in a reduction in
total operating expenses for shareholders of the Bond and Income
Portfolio by approximately 0.01%.
2
<PAGE>
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
AND FEES AND EXPENSES OF THE PORTFOLIOS
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Managed Bond Bond and Income
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Investment . To maximize total return . To provide total return and
Goal consistent with prudent income consistent with
investment management. prudent investment
management.
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Primary . Invests principally in . Normally invests at least
Investment medium to high-quality 80% of its assets in a wide
Strategies investment grade fixed range of investment grade
income securities. debt securities.
. Uses "duration . Emphasizes long-term bonds.
management," and decides
the proportion of . Uses "duration management,"
securities that should and chooses investments
have short, intermediate that have short,
and long durations and intermediate and long
maturities. durations and maturities.
. May invest in U.S. . May invest in U.S.
Government securities and Government securities and
options and futures on options and futures on U.S.
U.S. Government Government securities,
securities, corporate corporate bonds, municipal
bonds, and mortgage- securities, and convertible
related securities, securities, and mortgage-
including stripped related securities,
mortgage related including up to 10% in
securities. stripped mortgage related
securities.
. May invest in fixed income
securities issued by . May invest in fixed income
foreign companies and securities issued by
governments, including foreign companies and
governments in emerging governments, including
market countries, which governments in emerging
may be denominated in U.S. market countries, which may
dollars or foreign be denominated in U.S.
currencies, although not dollars or foreign
more than 20% of assets currencies, although not
may be in investments more than 10% of assets may
denominated in foreign be in investments
currencies. denominated in foreign
currencies.
. Frequently uses options,
futures and forward . May use options, futures
contracts and other and other hedging
techniques as a substitute techniques to try to offset
for securities, to try to the effects of changes in
increase returns, or hedge interest rates and currency
against changes in exchange rates.
interest or currency
rates.
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Ratings . Normally at least 90% of . Normally at least 80% of
its assets in investment its assets in investment
grade securities--rated grade securities--rated Baa
Baa or better by Moody's or better by Moody's, or
Investment Services, Inc. BBB or better by S&P, or,
(Moody's), or BBB or if not rated, of comparable
better by Standard & quality.
Poor's Ratings Service
(S&P), or, if not rated, . Up to 20% of its assets may
of comparable quality. be in lower-rated high-
yield securities (junk
. Up to 10% of its assets bonds), 15% of which may be
may be in lower-rated in issuers located in
high-yield debt securities emerging market countries.
(junk bonds), but rated B
or higher by Moody's or
S&P, or if not rated, of
comparable quality.
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Duration . Usually an average . Usually within one-half
duration of three to seven year of the duration of the
years, varying within this Lehman Brothers
range based on outlook of Government/Corporate Long-
the Portfolio Manager on Term Bond Index. The index
the economy and interest had an average duration of
rates. 9.87 years on December 31,
1999.
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Portfolio . Pacific Investment . Goldman Sachs Asset
Manager Management Company (PIMCO) Management
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Management . 0.60% . 0.60%
Fees (For
the year
ended
12/31/99)*
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Other . 0.05% . 0.06%
Expenses
(For the
year ended
12/31/99)*
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Total . 0.65% . 0.66%
Portfolio
Operating
Expenses
(For the
year ended
12/31/99)*
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* Expressed as a percentage of average daily net assets. For further
information on fees and expenses, see "Comparison of Fees and Expenses."
3
<PAGE>
Following the Reorganization and in the ordinary course of managing a
portfolio, certain of the holdings of the Bond and Income Portfolio to be
transferred to the Managed Bond Portfolio in connection with the Reorganization
may be sold. Such sales may result in increased transactional costs for the
Managed Bond Portfolio.
Comparison of Portfolio Characteristics
The following table is intended to help you understand the differences
between the two Portfolios. It compares certain characteristics of the
Portfolios as of December 31, 1999:
<TABLE>
<CAPTION>
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Managed Bond Portfolio Bond and Income Portfolio
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<S> <C> <C>
Net Assets $1,090,978,097 $198,637,232
Number of Holdings 213 166
Average Duration 5.3 Years 10.1 Years
Average Credit Quality AA AA-
Portfolio Turnover Rate
(12 months ended
12/31/99) 374.7% 82.6%
As a percentage of net
assets:
Mortgages and Asset-
Backed Securities 49% 22%
Corporate Bonds and
Notes 58% 61%
U.S. Treasury/Agency 8% 15%
Cash and Cash Equivalents 15% 1%
Other Assets and
Liabilities(1) (30%) 1%
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Top 5 Industries
(as a % of net assets) Personal Credit Institutions 7.4% National Commercial Banks 9.3%
Commercial Banks 5.4% Personal Credit Institutions 5.6%
Security Broker/Dealers 5.4% Mortgage Bankers 5.1%
Mortgage Bankers 5.3% Telephone Communications 4.3%
Cable & Other Pay Television Electric Services 3.8%
Services 3.5%
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Top 10 Holdings(2)
(as a % of net assets) Worldcom Inc. 2.3% American Business Financial Service 2.9%
Conseco Financial Securitization AMR Corp. 2.4%
Corp. Inc. 2.1% Onyx Acceptance Owner Trust 2.1%
GE Capital Mortgage Services Inc. 2.0% CitiCorp Mortgage Securities 1.8%
CIT Group Inc. 1.9% ContiMortgage Home Equity
MLCC Mortgage Investments 1.8% Loan Trust 1.4%
Bear Stearns Companies Inc. 1.6% GE Capital Mortgage Services Inc. 1.3%
Popular North America Inc. 1.5% BankAmerica Corp. 1.3%
Household Financial Corp. 1.4% First Union Lehman Brothers 1.2%
GMAC 1.4% MBNA Corp. 1.2%
Chase Mortgage Financial Trust 1.4% Green Tree Financial 1.2%
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</TABLE>
(1) Consists primarily of amounts owed for securities purchased pending
settlement.
(2) Excluding short-term and U.S. Government Agency.
4
<PAGE>
The following table is also intended to help you understand the differences
between the two Portfolios in terms of the credit risk they assume. The table
compares the credit rating of the securities held by the Portfolios. Generally,
the lower the rating the greater the credit risk presented by an instrument.
Normally, lower rated securities pay higher rates of interest. The percentage
of each Portfolio's assets invested in securities with the following ratings as
of December 31, 1999 and June 30, 1999 were as follows:
<TABLE>
<CAPTION>
Managed Bond Bond and Income
Portfolio Portfolio
---------------- ----------------
S&P Rating or Equivalent* 12/31/99 6/30/99 12/31/99 6/30/99
- ------------------------- -------- ------- -------- -------
<S> <C> <C> <C> <C>
AAA/A-1+..................................... 41% 58% 41% 45%
AA........................................... 1% 2% 7% 7%
A/A-1........................................ 33% 16% 20% 16%
BBB/A-2, A-3................................. 17% 8% 20% 19%
BB........................................... 8% 0% 7% 8%
B and lower.................................. 0% 0% 5% 5%
</TABLE>
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* Deemed by the portfolio manager to be equivalent to the same rating. For a
discussion of the S&P and Moody's ratings, see Appendix C.
5
<PAGE>
Relative Performance
The following table shows, for a ten-year period through 1999, the annual
total return for (a) the Managed Bond Portfolio, (b) the Bond and Income
Portfolio, (c) the Lehman Brothers Government/Corporate Bond Index, and (d) the
Lehman Brothers Long-Term Government/Corporate Bond Index. The indices have
inherent performance advantages over the Portfolios, since the indices have no
cash in their portfolios and incur no transaction or operating expenses. Total
return is calculated assuming reinvestment of all dividends and capital gain
distributions at net asset value.
<TABLE>
<CAPTION>
Lehman Brothers
Long-Term
Lehman Brothers Government/
Calendar Managed Bond and Government/Corporate Corporate
Year/Period Ended Bond Income(/3/) Bond Index(/1/) Bond Index(/2/)
- ----------------- ------- ----------- -------------------- ---------------
<S> <C> <C> <C> <C>
12/31/90 8.52% 3.27% 8.29% 6.42%
12/31/91 17.03% 24.32% 16.13% 19.53%
12/31/92 8.68% 8.09% 7.58% 8.53%
12/31/93 11.63% 19.39% 11.03% 16.17%
12/31/94 (4.36%) (8.36%) (3.51%) (7.09%)
12/31/95 19.04% 33.71% 19.24% 30.90%
12/31/96 4.25% (0.80%) 2.91% 0.13%
12/31/97 9.92% 16.32% 9.76% 14.52%
12/31/98 9.20% 8.97% 9.47% 11.76%
12/31/99 (1.91%) (7.34%) (2.15%) (7.64%)
</TABLE>
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(1) The Lehman Brothers Government/Corporate Bond Index is an unmanaged index
generally representative of the performance of government and corporate
bonds with maturities of up to ten years.
(2) The Lehman Brothers Long-Term Government/Corporate Bond Index is an
unmanaged index generally representative of the performance of government
and corporate bonds with maturities of ten years or greater.
(3) Goldman Sachs Asset Management began managing the Bond and Income Portfolio
on May 1, 1998. Some investment policies changed at that time, although the
Portfolio also emphasized long-term bonds prior to that date. Another firm
managed the Portfolio before that date. Performance of the Bond and Income
Portfolio before 1995 is based on the performance of a predecessor
portfolio of the Pacific Corinthian Variable Fund, which Pacific Select
Fund acquired on December 31, 1994.
Comparison of Risks Involved in Investing in the Portfolios
Because the Portfolios share similar investment objectives and policies, the
risks of an investment in the Portfolios are similar. The principal risk of
investment in either Portfolio is fluctuation in the net asset value of the
Portfolio's shares. Market conditions, changes in interest rates, financial
conditions of issuers represented in the portfolio, and other factors affect
such fluctuations.
One of the primary risks facing each Portfolio is interest rate risk. The
value of each Portfolio's investments may fluctuate with changes in interest
rates. Generally, when interest rates rise, the value of debt securities fall,
and when interest rates fall, the value of debt securities increase. Generally,
longer duration bonds, which are normally emphasized by the Bond and Income
Portfolio, tend to increase in value more than short and medium term bonds when
interest rates go down, and tend to decrease in value more than short and
medium term bonds when interest rates go up. For example, in 1995, a year in
which interest rates went down, the total return of the Bond and Income
Portfolio increased by 33.71%; the total return of the Managed Bond Portfolio
increased by 19.04%. In contrast, in 1999, a year in which interest rates went
up, the total return of the Bond and Income Portfolio decreased by (7.34%) and
the total return of the Managed Bond Portfolio decreased by (1.91%).
Each Portfolio is also subject to credit risk. An issuer of a security held
by a Portfolio may become bankrupt or become unable to meet a financial
obligation, thereby decreasing the value of the security and the Portfolio's
assets. Risk of default or bankruptcy may be greater in periods of economic
uncertainty or recession.
6
<PAGE>
High yield securities are regarded as predominantly speculative with respect to
the issuing company's continuing ability to meet principal and interest
payments, and generally present a greater risk of default on payment of
principal and interest by the issuer than higher rated securities. Both
Portfolios are subject to credit risk; however, the longer average duration of
the Bond and Income Portfolio means that that Portfolio is subject to the
credit risk presented by a single issuer or security for a longer period of
time.
Certain risks associated with an investment in the Managed Bond Portfolio
are summarized below in "Comparison of Securities and Investment Techniques."
Growth in Assets
The Bond and Income Portfolio has not experienced the growth in assets that
other Portfolios of the Fund have realized. Shown below is a chart that
compares the growth in the net assets of the Managed Bond Portfolio to the Bond
and Income Portfolio.
Year by year net assets (as of December 31 each year)
(in thousands)/1/
<TABLE>
<CAPTION>
Managed Bond Bond and Income
<S> <C> <C>
1999 $1,090,978 $198,637
1998 765,989 184,538
1997 468,575 112,507
1996 260,270 81,810
1995 126,992 56,853
1994 53,219 34,078
1993 43,116 43,223
1992 26,406 42,731
1991 16,645 59,323
1990 12,412 107,921
</TABLE>
- --------
/1/The Fund acquired the Bond and Income Portfolio on December 31, 1994.
Information about the Bond and Income Portfolio before 1995 is based on the
performance of a predecessor portfolio of the Pacific Corinthian Variable
Fund, which the Fund acquired at that time.
Comparison of Securities and Investment Techniques
The following is a summary of the types of securities in which the
Portfolios may invest and strategies the Portfolios may employ in pursuit of
their investment objectives. As with any security, an investment in a
Portfolio's shares involves certain risks, including loss of principal. The
Portfolios are subject to varying degrees of financial, market and credit risk.
Investment-Grade Securities. Each Portfolio invests primarily in investment-
grade securities that are rated Baa or better by Moody's, or BBB or better by
S&P, or, if not rated by Moody's or S&P, of equivalent quality (investment
grade securities). Investment grade securities are considered medium-grade
obligations with adequate asset coverage, and normally are protected by
satisfactory earnings. Investment grade securities provide less potential
credit risk and price volatility than debt securities rated below Baa by
Moody's or BBB by S&P, but are considered to lack outstanding investment
characteristics by Moody's and to have speculative characteristics.
High-Yield Securities. The Managed Bond Portfolio may invest up to 10% of
its assets and the Bond and Income Portfolio may invest up to 20% of its assets
in high-yield/high-risk debt securities, which are securities rated lower than
Baa by Moody's or BBB by S&P, or if not rated by Moody's or S&P, of equivalent
quality. High-yield securities (also known as junk bonds) generally provide
greater income and increased opportunity for capital appreciation than higher
quality debt securities, but they also typically entail greater potential
credit risk and price volatility.
7
<PAGE>
High-yield securities are not considered to be investment grade, and are
regarded as predominantly speculative with respect to the issuing company's
continuing ability to meet principal and interest payments. The prices of high-
yield securities tend to be more sensitive to adverse economic downturns or
individual corporate developments than higher-rated investments.
High-yield bonds may be less liquid than higher grade bonds. Less liquidity
could adversely affect the price at which a Portfolio could sell a high-yield
security, and could adversely affect the daily net asset value of a Portfolio's
shares. At times of less liquidity, it may be more difficult to value high-
yield securities.
Corporate Debt Securities. Both Portfolios may invest in corporate debt
securities. Corporate debt securities include corporate bonds, debentures,
notes and other similar corporate debt instruments, including convertible
securities. The market value of a corporate debt security will generally
increase when interest rates decline, and decrease when interest rates rise.
There is also the risk that the issuer of a debt security will be unable to pay
interest or principal at the time called for by the instrument.
Foreign Securities. Both of the Portfolios may invest in securities of
foreign corporations and governments, some of which may be issued by
governments in emerging market countries. The Managed Bond Portfolio may not
invest more than 20% of its assets, measured at the time of investment, in
foreign investments denominated in foreign currencies, and the Bond and Income
Portfolio may not invest more than 10% of its assets in foreign investments
denominated in foreign currencies.
Foreign investments may be riskier than U.S. investments for many reasons,
including changes in currency exchange rates, unstable political and economic
conditions, a lack of adequate company information, differences in the way
securities markets operate, less secure foreign banks or securities
depositories than those in the U.S., and foreign controls on investment.
Compared to developed foreign markets, emerging market countries (such as
many in Latin America, Asia, Middle East, Eastern Europe and Africa) often have
smaller market capitalizations and are generally subject to greater price
volatility, may have a higher degree of political and economic instability, and
have less governmental regulation of the financial industry and markets, and
companies are not subject to as extensive and frequent accounting, financial
and other reporting requirements.
Investment in securities of Eastern European countries, including in
particular, Russia, and other emerging market countries, also involve risk of
loss resulting from problems in share registration and custody.
Mortgage-Related Securities. Both Portfolios may invest in mortgage-related
securities. The Bond and Income Portfolio may not invest more than 10% of its
assets in stripped mortgage-related securities; the Managed Bond Portfolio has
no such limit.
Investments in mortgage-related securities involve certain risks. Like other
fixed income securities, when interest rates rise, the value of a mortgage-
backed security generally will decline, and may decline more rapidly as the
underlying mortgages are less likely to be prepaid; however, when interest
rates are declining, the value of mortgage-backed securities with prepayment
features may not increase as much as other fixed income securities. The
mortgage loans underlying a mortgage-backed security will be subject to normal
principal amortization, and may be prepaid prior to maturity due to the sale of
the underlying property, the refinancing of the loan or foreclosure. The rate
of prepayments on underlying mortgages will affect the price and volatility of
a mortgage-related security, and may have the effect of shortening or extending
the effective maturity of the security beyond what was anticipated at the time
of the purchase. Unanticipated rates of prepayment on underlying mortgages can
be expected to increase the volatility of such securities. In addition, the
value of these securities may fluctuate in response to the market's perception
of the creditworthiness of the issuers of mortgage-related securities owned by
a Portfolio.
Restricted and Illiquid Securities. Each Portfolio may invest up to 15% of
its net assets in illiquid securities, but has no percentage limit on
restricted securities that are liquid. Generally, a security is considered
illiquid if it cannot be disposed of within seven days at approximately the
value at which it is carried.
8
<PAGE>
Illiquidity might prevent the sale of the security at a time when the adviser
might wish to sell, and these securities could have the effect of decreasing
the overall level of a Portfolio's liquidity. Further, the lack of an
established secondary market may make it more difficult to value illiquid
securities.
Restricted securities, including private placements, are subject to legal or
contractual restrictions on resale. They can be eligible for purchase without
registration with the SEC by certain institutional investors known as
"qualified institutional buyers." For both Portfolios, restricted securities
could be treated as liquid. Restricted securities that are treated as liquid
could be less liquid than registered securities traded on established secondary
markets.
Use of Derivatives. Generally, derivatives are financial instruments whose
performance is derived, at least in part, from the performance of an underlying
asset or assets. The Managed Bond Portfolio may use options, futures contracts
and forward contracts and other techniques to try to increase returns or as
hedging techniques. The Bond and Income Portfolio may invest in options,
futures contracts and use other hedging techniques when necessary to try to
offset the effects of changes in interest rates and currency exchange rates.
A risk of using financial futures contracts for hedging purposes is that the
adviser might imperfectly judge the market's direction, so that the hedge might
not correlate to the market's movements and may be ineffective. Furthermore, if
a Portfolio buys a futures contract to gain exposure to securities, the
Portfolio is exposed to the risk of change in the value of the underlying
securities and the futures contract.
Borrowing. Both the Managed Bond Portfolio and Bond and Income Portfolio may
borrow money for temporary administrative or emergency purposes. Total
borrowings by either Portfolio may not exceed one-third of the Portfolio's
total assets. Borrowing may exaggerate the effect of any increase or decrease
in the value of Portfolio securities or the net asset value (NAV) of a
Portfolio, and money borrowed will be subject to interest costs.
COMPARISON OF FEES AND EXPENSES
The following describes and compares the fees and expenses that shareholders
pay in connection with investment in the Portfolios. For further information on
the fees and expenses of the Managed Bond Portfolio, see "Appendix B--
Additional Information Regarding Managed Bond Portfolio."
Operating Expenses
The expense ratio for 1999 for the Managed Bond Portfolio was 0.65%, which
was slightly lower than the expense ratio of 0.66% for the Bond and Income
Portfolio.
Combining the Portfolios may lower operating expenses to a level less than
the operating expenses of either Portfolio prior to the Reorganization,
although this is speculative and it is expected that expenses of the Managed
Bond Portfolio would decline by less than 0.01%. For more information, see the
estimated pro forma expenses in the table "Annual Portfolio Operating
Expenses."
Expense Limitation Arrangement
Pacific Life has agreed to waive all or part of its investment advisory fees
or otherwise reimburse each Portfolio for expenses (not including advisory
fees, additional costs associated with foreign investing and extraordinary
expenses) that exceed 0.25% of the Portfolios' average daily net assets.
Pacific Life does this voluntarily and does not guarantee that it will continue
to do so after December 31, 2001. There were no reimbursements or waivers for
either Portfolio for the year ending December 31, 1999.
Expense Table
The current expenses of each Portfolio and estimated pro forma expenses
giving effect to the proposed Reorganization are shown in the table below.
Expenses for the Portfolios are based upon the operating expenses incurred for
the year ending December 31, 1999. Pro forma fees show estimated fees of the
Managed Bond
9
<PAGE>
Portfolio after giving effect to the proposed Reorganization. The table does
not reflect expenses or charges which are, or may be, imposed under your
variable annuity contract or variable life insurance policy (collectively,
Variable Contracts). Pro forma numbers are estimated in good faith and are
hypothetical.
Annual Portfolio Operating Expenses
expenses that are deducted from Portfolio assets
shown as a ratio of expenses to average daily net assets(/1/)
<TABLE>
<CAPTION>
Management Other Total Portfolio
Fees Expenses Operating Expenses
---------- -------- ------------------
<S> <C> <C> <C>
Managed Bond Portfolio 0.60% 0.05% 0.65%
Bond and Income Portfolio 0.60% 0.06% 0.66%
Pro Forma (Combined Portfolios) 0.60% 0.05% 0.65%
</TABLE>
--------
(1) Expenses are shown for each Portfolio, and on a pro forma basis, based
upon expenses incurred by each Portfolio for the 12 months ended
December 31, 1999. These expenses do not reflect charges imposed under
the Variable Contracts whose proceeds are invested in the Fund.
Examples
The examples are intended to help you compare the cost of investing in the
Portfolios and in the combined Portfolios on a pro forma basis--assuming the
Portfolios have been combined. The examples do not reflect expenses and charges
which are, or may be, imposed under your Variable Contract. The examples assume
that a shareholder invests $10,000 in each Portfolio and in the surviving
Portfolio after the Reorganization for the time periods indicated. The examples
also assume that the investment earns a 5% return each year and that each
Portfolio's operating expenses remain the same and both interest and expenses
are credited and charged at the end of each month. The 5% return is an
assumption and is not intended to portray past or future investment results.
Based on the above assumptions, a shareholder would incur the following
expenses for each period shown. Because this is an estimate, actual expenses
may be higher or lower.
<TABLE>
<CAPTION>
Pro Forma:
Managed Bond Portfolio Bond and Income Portfolio the Portfolios Combined*
------------------------------ ----------------------------- -----------------------------
1 3 5 10 1 3 5 10 1 3 5 10
Year Years Years Years Year Years Years Years Year Years Years Years
---- ------ ------ ------ ----- ------ ------ ------ ----- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 66 $ 208 $ 362 $ 813 $ 67 $ 211 $ 368 $ 825 $ 66 $ 208 $ 362 $ 813
</TABLE>
- --------
*Estimated.
ADDITIONAL INFORMATION ABOUT MANAGED BOND PORTFOLIO
Investment Personnel
John Hague, managing director and senior member of the portfolio manager
group, joined PIMCO in 1987. He has been the portfolio manager for the Managed
Bond Portfolio since 1992. John has 18 years of investment experience,
including two years specializing in international fixed income products and
mortgage-backed securities with Salomon Brothers, Inc., and three years in
credit research with Morgan Guarantee. He has a BA in economic analysis from
Bowdoin College and an MBA in finance from Stanford University.
10
<PAGE>
Performance of the Managed Bond Portfolio
The following bar chart, graph and table provide an indication of the risks
of investing in the Managed Bond Portfolio by showing changes in that
Portfolio's annual total returns. The bar chart shows annual total returns from
year to year on a calendar basis. The graph shows the same annual total returns
shown in the bar chart, compared to the Lehman Brothers Government/Corporate
Bond Index. The table shows the Managed Bond Portfolio's average annual total
returns compared to the Lehman Brothers Government/Corporate Bond Index, for
the one, five and ten year periods ended December 31, 1999.
The bar chart and graph below and the table on the next page do not reflect
fees and expenses associated with any Variable Contract, and would be lower if
they did. Past performance is not necessarily an indication of how the
Portfolio will perform in the future. Total returns include reinvestment of
dividends and capital gain distributions, if any. All indices are unmanaged.
Source for all indices is Ibbotson EncorrAnalyzer software.
Calendar Year-by-Year Returns*
[GRAPH APPEARS HERE]
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
8.52% 17.03% 8.68% 11.63% -4.36% 19.04% 4.25% 9.92% 9.20% -1.91%
- --------
* During the periods shown in the chart, the Portfolio's best quarterly
performance was 6.50% for the quarter ended September 30, 1991, and the
Portfolio's worst quarterly performance was -2.98% for the quarter ended
March 31, 1994.
Performance Comparison
----------------------
______ Managed Bond Portfolio
------ Lehman Brothers Government/Corporate Bond Index
[PERFORMANCE GRAPH APPEARS HERE]
Lehman Brothers
Managed Bond Government/Corporate
Portfolio Bond Index
1/31/90 10,000 10,000
12/31/90 10,852 10,828
12/31/91 12,701 12,575
12/31/92 13,803 13,529
12/31/93 15,409 15,021
12/31/94 14,738 14,495
12/31/95 17,544 17,281
12/31/96 18,291 17,785
12/31/97 20,107 19,520
12/31/98 21,958 21,370
12/31/99 21,538 20,910
11
<PAGE>
The following table shows the average annual total returns of the Managed
Bond Portfolio's actual performance averaged over one, five and ten years and
expressed on an annual basis, compared to the Lehman Brothers
Government/Corporate Bond Index, an unmanaged broad-based index. The index has
inherent performance advantages over the Managed Bond Portfolio since it has
no cash in its portfolio and incurs no operating expenses. An investor cannot
invest directly in an index.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Average Annual Total Returns for the periods ending December 31, 1999
- --------------------------------------------------------------------------------
1 Year 5 Years 10 Years
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Managed Bond Portfolio (1.91%) 7.88% 7.97%
- --------------------------------------------------------------------------------
Lehman Brothers Government/Corporate
Bond Index(/1/) (2.15%) 7.60% 7.66%
- --------------------------------------------------------------------------------
(1) The Lehman Brothers Government/Corporate Bond Index is an unmanaged index
generally representative of the performance of government and corporate
bonds with maturities of up to ten years.
- --------------------------------------------------------------------------------
</TABLE>
Additional information about the Managed Bond Portfolio is included in
Appendix B to this Proxy Statement/Prospectus.
The Portfolio Manager's Discussion of the Managed Bond Portfolio
The following is PIMCO's discussion regarding the performance of the Managed
Bond Portfolio during 1999.
Q: What were some of the positive and negative factors which affected the
Portfolio's performance during the year?
A: Interest rates rose dramatically in 1999. The yield on 30-year Treasury
bonds was 5.09% at the beginning of the year and ended the year at 6.47%. The
Federal Reserve raised short-term interest rates three times during the year,
taking back all three of its moves to lower rates during the financial crisis
of 1998. Economic growth in the U.S. continued at a record pace, while
inflation remained under control.
Rising interest rates led to a difficult year in the bond market, as the
Lehman Brothers Aggregate Bond Index (Aggregate Index) returned (0.83%)* for
1999. The Lehman Brothers Government Bond Index and their Government/Corporate
Bond Index both underperformed the Aggregate Index with a return of (2.25%)*
and (2.15%)*, respectively. The government sector was hurt by the reversal of
the flight to quality of 1998, and was the worst performer in the Aggregate
Index with a (2.25%)* return, as measured by the Lehman Brothers Government
Bond Index. Investment grade corporate bonds were down (1.96%), as their
modest spread tightening was not enough to overcome the negative effects of
higher interest rates in general. Mortgages were the best performing sector in
1999 with a return of 1.86%.
High yield bonds posted positive returns in 1999 following a poor 1998.
However, credit concerns increased toward the end of 1999 as corporate default
levels were at record highs given the strong economic activity in the U.S.
Below investment grade securities, as measured by the Lehman Brothers BB
Intermediate Bond Index, posted a return, of 2.21%*. Emerging market
securities staged a significant recovery, as the JP Morgan Emerging Markets
Bond Index was up 19.52% for the year. Non-U.S. bonds outperformed the U.S.
market, with the JP Morgan Non-U.S. Government Bond Index up 2.48% for the
year. Non-U.S. bond performance was driven primarily by the strong Japanese
bond market.
Q: Can you discuss some of the types of securities/sectors which performed
well and those which reported disappointing results?
A: The Managed Bond Portfolio outperformed the Lehman Brothers
Government/Corporate Bond Index in 1999 by approximately 92 basis points in
1999. The Portfolio's above-index duration was a slight negative as interest
12
<PAGE>
rates rose. An emphasis on mortgage-backed securities helped returns as this
sector outpaced Treasuries amid increased market stability and narrower yield
premiums. Modest holdings of below-investment grade bonds and emerging market
securities benefited returns due to their rebound following the financial
crisis of 1998.
Q: What is your outlook for 2000?
A: We expect growth to slow modestly due to correction of any one of several
unsustainable economic imbalances, including the declining savings rate,
tightening labor markets and the U.S. trade deficit. While we expect inflation
to remain relatively subdued, it should nevertheless trend upward in the face
of wage pressures, higher commodity prices and increased import prices. Higher
inflation keeps interest rates near the top of the Portfolio's secular range.
We expect that the Federal Reserve will tighten at least once during the first
half of 2000 to restrain inflation.
PIMCO plans to target duration slightly below the benchmark, given
expectations for upward pressure on rates. We expect to retain our focus on
intermediate maturities because a relatively flat yield curve offers little
extra yield for extending maturities.
Yield enhancement continues to offer better opportunities for
outperformance of the Portfolio's benchmark index than interest rate
strategies in a low volatility rate environment. Therefore, we plan to
continue to write options to generate income and favor securities with
embedded option premiums, such as mortgages and other callable bonds. We plan
to overweight mortgages, which offer yield premiums well above Treasuries at a
time when refinancing risk is low because of higher rates, while retaining our
underweight of investment-grade corporate bonds, which would suffer adverse
price performance if earnings erode due to slower U.S. growth. Our strategy is
to limit holdings of below-investment grade bonds, focusing on high-quality
names amid concern about declining credit quality. In this environment, we
anticipate the Portfolio holding modest levels of top-tier emerging market
bonds, which benefit from improving growth prospects, and anticipate
developing a modest euro currency exposure based on expectations of improving
growth in Europe.
- --------
* All indices are unmanaged. Sources for indices: Ibbotson EncorrAnalyzer
software.
13
<PAGE>
INFORMATION ABOUT THE REORGANIZATION
The Reorganization Plan. The Reorganization Plan involves the transfer of
all of the assets and liabilities of the Bond and Income Portfolio to the
Managed Bond Portfolio in exchange for shares of the Managed Bond Portfolio.
The Bond and Income Portfolio would then distribute to its shareholders their
portion of the shares of the Managed Bond Portfolio it receives in the
Reorganization. The result would be a liquidation of the Bond and Income
Portfolio.
After the Reorganization, each shareholder of the Bond and Income Portfolio
will own shares in the Managed Bond Portfolio having an aggregate value equal
to the aggregate value of shares in the Bond and Income Portfolio held by that
shareholder as of the close of business on the business day preceding the
Closing as that term is defined in the attached copy of the Reorganization Plan
at Appendix A. In the interest of economy and convenience, shares of the
Managed Bond Portfolio generally will not be represented by physical
certificates.
Until the Closing, shareholders of the Bond and Income Portfolio will
continue to be able to redeem their shares. Redemption requests received after
the Closing will be treated as requests received by the Managed Bond Portfolio
for the redemption of its shares received by the shareholder in the
Reorganization.
The obligations of the Portfolios under the Reorganization Plan are subject
to various conditions, including approval of the shareholders of the Bond and
Income Portfolio. The Reorganization Plan also requires that each Portfolio
take, or cause to be taken, all action, and do or cause to be done, all things
reasonably necessary, proper or advisable to consummate and make effective the
transactions contemplated by the Reorganization Plan. The Reorganization Plan,
and the transactions contemplated under it, may be terminated by resolution of
the Board of Trustees of the Fund at any time prior to the date of the Closing.
For a complete description of the terms and conditions of the Reorganization,
see a copy of the Reorganization Plan at Appendix A.
Reasons for the Reorganization. The Bond and Income Portfolio has not
attracted asset growth to the extent realized by other portfolios of the Fund.
This raised a question about whether the risk/return characteristics of the
Portfolio are the type in which investors currently have interest. This is
particularly true because other portfolios are available in the Fund that
invest primarily in fixed income securities, and because the long duration of
the Bond and Income Portfolio presents greater potential volatility than other
funds that invest in fixed-income securities with shorter duration.
The proposed Reorganization was presented to the Board of Trustees of the
Fund for consideration and approval on April 26, 2000. For the reasons
discussed below, the Trustees, including all of the Trustees who are not
"interested persons" of the Fund (as defined in the Investment Company Act of
1940), unanimously determined that the proposed Reorganization is in the best
interests of the Bond and Income Portfolio and its shareholders and that the
interests of the shareholders of the Bond and Income Portfolio will not be
diluted as a result of the proposed Reorganization.
The Reorganization will allow the Bond and Income Portfolio's shareholders
to continue to participate in a professionally-managed portfolio consisting
primarily of debt securities. As shareholders of the Managed Bond Portfolio,
these shareholders will continue to be able to exchange shares of the Managed
Bond Portfolio into shares of other portfolios offered by the Fund subject to
investment options available to them under their applicable Variable Contracts.
A list of the current portfolios offered by the Fund is attached as Appendix D.
Board Consideration. The Board of Trustees of the Fund, in recommending the
proposed transaction, considered a number of factors, including the following:
(1) the slow growth of the Bond and Income Portfolio in comparison to the
growth of other portfolios of the Fund, including the Managed Bond
Portfolio;
(2) the historical average duration of the Bond and Income Portfolio and
the risk associated with the duration, and the historical average
duration of the Managed Bond Portfolio;
14
<PAGE>
(3) expense ratios and information regarding fees and expenses of the
Managed Bond Portfolio and the Bond and Income Portfolio;
(4) the similarity of the Managed Bond Portfolio's investment objective,
policies and restrictions with those of the Bond and Income Portfolio;
(5) elimination of duplication of costs, market confusion, and
inefficiencies of having two similar portfolios;
(6) estimates that show that combining the Portfolios may lower expenses
for shareholders of the Bond and Income Portfolio;
(7) the Reorganization would not dilute the interests of the Bond and
Income Portfolio's current shareholders;
(8) the relative investment performance and risks of the Managed Bond
Portfolio as compared to the Bond and Income Portfolio;
(9) the tax-free nature of the Reorganization to the Bond and Income
Portfolio and its shareholders; and
(10) the expenses for the transaction including legal expenses, accounting
expenses, and printing, mailing and tabulation expenses to be borne by
the Portfolios are estimated to be less than 0.01% of the Portfolios'
net assets and less than $0.001 per share.
The Trustees of the Fund recommend that shareholders of the Bond and Income
Portfolio approve the Reorganization.
Tax Considerations. The Reorganization is intended to qualify for Federal
income tax purposes as a tax-free reorganization under Section 368(a)(1) of the
Internal Revenue Code of 1986, as amended (Code). Accordingly, pursuant to this
treatment, neither the Bond and Income Portfolio nor its shareholders nor the
Managed Bond Portfolio is expected to recognize any gain or loss for federal
income tax purposes from the transactions contemplated by the Reorganization
Plan, except as otherwise provided by the Code. As a condition to the Closing
of the Reorganization, the Portfolios will receive an opinion from the law firm
of Dechert Price & Rhoads to the effect that the Reorganization will qualify as
a tax-free reorganization for Federal income tax purposes. That opinion will be
based in part upon certain assumptions and upon certain representations made by
the Fund.
As of December 31, 1999, the Bond and Income Portfolio had accumulated
capital loss carryforwards in the amount of approximately $8,971,288. As of
December 31, 1999, the Managed Bond Portfolio had accumulated capital loss
carryforwards of approximately $39,104,787. After the Reorganization, the
losses of the Bond and Income Portfolio will be available to the Managed Bond
Portfolio to offset its capital gains, although the amount of these losses
which may offset the Managed Bond Portfolio's future capital gains in any given
year may be limited. The ability of Managed Bond Portfolio to absorb losses in
the future depends upon a variety of factors that cannot be known in advance,
including the existence of capital gains against which these losses may be
offset. In addition, the benefits of any of the Managed Bond Portfolio's
capital loss carryforwards currently are available only to pre-Reorganization
shareholders of that Portfolio. After the Reorganization, however, these
benefits will inure to the benefit of all post-Reorganization shareholders of
the Managed Bond Portfolio.
Expenses of the Reorganization. Pacific Life Insurance Company, Investment
Adviser to the Fund, will bear half the cost of the Reorganization. The
Portfolios will bear the other half of the expenses relating to the proposed
Reorganization, including, but not limited to, the costs of solicitation of
voting instructions and any necessary filings with the Securities and Exchange
Commission, which will be allocated ratably on the basis of their relative net
asset values immediately before Closing. The principal solicitation will be by
mail, but voting instructions also may be solicited electronically and by
telephone. Alamo Direct, 280 Oser Avenue, Hauppauge, New York 11788-3610, has
been retained to assist with voting instruction solicitation activities
(including assembly and mailing of materials to Variable Contract Owners).
15
<PAGE>
ADDITIONAL INFORMATION ABOUT THE PORTFOLIOS
Form of Organization. The Managed Bond Portfolio and the Bond Income
Portfolio are each separate series of the Fund, which is a Massachusetts
business trust. The Fund also offers other series, which are not involved in
the Reorganization. The Fund is governed by a Board of Trustees composed of
five trustees.
Distributor. Pacific Select Distributors, Inc. (formerly Pacific Mutual
Distributors, Inc.) (Distributor) whose address is 700 Newport Center Drive,
P.O. Box 9000, Newport Beach, CA 92660, is the principal distributor for the
Managed Bond Portfolio and the Bond and Income Portfolio.
Capitalization. The following table shows on an unaudited basis the
capitalization of the Managed Bond Portfolio and the Bond and Income Portfolio
as of December 31, 1999 and on a pro forma basis as of December 31, 1999 giving
effect to the Reorganization:
<TABLE>
<CAPTION>
Net Asset Value Shares
Net Assets Per Share Outstanding
-------------- --------------- -----------
<S> <C> <C> <C>
Managed Bond Portfolio $1,090,978,097 $10.33 105,646,246
Bond and Income Portfolio 198,637,232 11.11 17,884,521
Pro Forma (Combined) 1,289,615,329 10.33 124,881,533
</TABLE>
GENERAL INFORMATION ABOUT THE PROXY STATEMENT
A Contract Owner may revoke the accompanying voting instruction at any time
prior to its use by filing with the Fund a written revocation or duly executed
voting instruction bearing a later date. In addition, any Contract Owner who
attends the Special Meeting in person may vote by ballot at the Meeting,
thereby canceling any voting instruction previously given. The persons named in
the accompanying voting instruction will vote as directed by the proxy, but in
the absence of voting directions in any voting instruction that is signed and
returned, they intend to vote FOR the Reorganization proposal and may vote in
accordance with their best judgement with respect to other matters not now
known to the Board of Trustees of the Fund that may be presented at the
Meeting.
Voting Rights. Shares of the Bond and Income Portfolio entitle its holders
to one vote for each share held, and a proportionate fraction of a vote for
each fraction of a share held. Shares have noncumulative voting rights. The
Bond and Income Portfolio is not required to hold shareholder meetings
annually, although shareholder meetings may be called for purposes such as
electing Trustees, changing fundamental policies or approving an investment
advisory agreement.
At the close of business on May 18, 2000 (the Record Date) there were,
outstanding shares of the Bond and Income Portfolio. The shares of the
Portfolios are offered as an investment medium for Variable Contracts. Pacific
Life is the owner of the Bond and Income Portfolio shares underlying the
Variable Contracts, but is soliciting voting instructions from Contract Owners
having contract value invested in the Bond and Income Portfolio as to how the
shares will be voted.
As of the record date, Pacific Life owned of record 100% of the Portfolio's
shares and owned beneficially 0% of the Portfolio's shares. No Contract Owner
is entitled to give voting instructions with respect to 5% of more of the
outstanding shares of the Bond and Income Portfolio.
16
<PAGE>
Approval of the Reorganization requires the affirmative vote of a majority
of the outstanding shares of the Bond and Income Portfolio. With respect to
each Portfolio a majority of the outstanding shares means the lesser of (a) 67%
or more of the shares of that Portfolio present at the meeting if 50% or more
of the shares of the Portfolio are represented in person or by proxy; or (b)
50% or more of the shares of the Portfolio. The Portfolio must have a quorum to
conduct its business at the Special Meeting. In the absence of a quorum, a
majority of outstanding shares entitled to vote present in person or by proxy
may adjourn the meeting from time to time until a quorum is present. Shares
held by shareholders present in person or represented by proxy at the meeting
(including Pacific Life) will be counted both for the purpose of determining
the presence of a quorum and for calculating the votes cast on any proposal
before the meeting.
Shares represented by timely and properly executed voting instructions will
be voted as specified. Executed voting instructions that are unmarked will be
voted in favor of the proposals set forth in the notice.
Pacific Life will vote shares of the Portfolio held by each of its separate
accounts that fund the Variable Contracts in accordance with instructions
received from Variable Contract Owners. Pacific Life also will vote shares of
the Portfolio held in each such separate account for which it has not received
timely instructions in the same proportion as it votes shares held by that
separate account for which it has received instructions. Pacific Life will vote
shares held by its general account in the same proportion as other votes cast
by all of its separate accounts in the aggregate. Shareholders and Variable
Contract Owners permitted to give instructions, and the number of shares for
which such instruction may be given for purposes of voting at the meeting and
any adjournment thereof, will be determined as of the Record Date.
To the knowledge of the Fund, as of May 18, 2000, no current Trustee or
officer of the Fund owned Variable Contracts providing an interest in 1% or
more of the outstanding shares of either Portfolio and the officers and
Trustees of the Fund own, as a group, less than 1% of the shares of either
Portfolio.
Other Matters to Come Before the Meeting. The Fund does not know of any
matters to be presented at the Meeting other than those described in this Proxy
Statement/Prospectus. If other business should properly come before the
Meeting, the proxyholders will vote thereon in accordance with their best
judgment.
Shareholder Proposals. The Fund is not required to hold regular annual
meetings and to minimize costs, does not intend to hold meetings of
shareholders unless so required by applicable law, regulation, regulatory
policy or if otherwise deemed advisable by its management. Therefore it is not
practicable to specify a date by which Shareholder proposals must be received
in order to be incorporated in an upcoming proxy statement for an annual
meeting.
Reports to Shareholders. A copy of the Annual Report dated December 31,
1999, regarding the Managed Bond Portfolio is available on request. Requests
for the report should be directed to Pacific Life at 700 Newport Center Drive,
Newport Beach, California 92660 or at (800) 722-2333 for variable annuity
contract owners and (800) 800-7681 for variable life insurance policy owners.
PLEASE TAKE A FEW MOMENTS TO COMPLETE YOUR VOTING INSTRUCTION. YOU MAY DO SO
EITHER ELECTRONICALLY, TELEPHONICALLY OR BY MAILING THE VOTING INSTRUCTION. IF
YOU VOTE BY MAIL, ONLY VOTING INSTRUCTIONS RECEIVED AT THE ADDRESS SHOWN ON THE
ENCLOSED POSTAGE PAID ENVELOPE WILL BE COUNTED.
Audrey L. Milfs,
Secretary
, 2000
700 Newport Center Drive
Newport Beach, California 92660
17
<PAGE>
APPENDIX A
PLAN OF REORGANIZATION
THIS PLAN OF REORGANIZATION (the "Plan") is adopted on this day of
May, 2000, by Pacific Select Fund (the "Fund"), a Massachusetts business trust,
with its principal place of business at 700 Newport Center Drive, Newport
Beach, California 92660, on behalf of the Managed Bond Portfolio (the
"Acquiring Portfolio"), a separate series of the Fund, and the Bond and Income
Portfolio (the "Acquired Portfolio"), another separate series of the Fund.
This Plan is intended to be and is adopted as a plan of reorganization and
liquidation within the meaning of Section 368(a)(1) of the United States
Internal Revenue Code of 1986, as amended (the "Code"). The reorganization (the
"Reorganization") will consist of the transfer of all of the assets of the
Acquired Portfolio to the Acquiring Portfolio in exchange solely for voting
shares of beneficial interest ($.001 par value per share) of the Acquiring
Portfolio (the "Acquiring Portfolio Shares"), the assumption by the Acquiring
Portfolio of all liabilities of the Acquired Portfolio, and the distribution of
the Acquiring Portfolio Shares to the shareholders of the Acquired Portfolio in
complete liquidation of the Acquired Portfolio as provided herein, all upon the
terms and conditions hereinafter set forth in this Plan.
WHEREAS, the Fund is an open-end, registered investment company of the
management type and the Acquired Portfolio owns securities which generally are
assets of the character in which the Acquiring Portfolio is permitted to
invest; and
WHEREAS, the Trustees of the Fund have determined that the exchange of all
of the assets of the Acquired Portfolio for Acquiring Portfolio Shares and the
assumption of all liabilities of the Acquired Portfolio by the Acquiring
Portfolio is in the best interests of the Acquiring Portfolio and its
shareholders and that the interests of the existing shareholders of the
Acquiring Portfolio would not be diluted as a result of this transaction; and
WHEREAS, the Trustees of the Fund also have determined, with respect to the
Acquired Portfolio, that the exchange of all of the assets of the Acquired
Portfolio for Acquiring Portfolio Shares and the assumption of all liabilities
of the Acquired Portfolio by the Acquiring Portfolio is in the best interests
of the Acquired Portfolio and its shareholders and that the interests of the
existing shareholders of the Acquired Portfolio would not be diluted as a
result of this transaction;
NOW, THEREFORE, the Fund, on behalf of the Acquiring Portfolio and the
Acquired Portfolio separately, hereby approves the Plan on the following terms
and conditions:
1. Transfer Of Assets Of The Acquired Portfolio To The Acquiring Portfolio In
Exchange For The Acquiring Portfolio Shares, The Assumption Of All Acquired
Portfolio Liabilities And The Liquidation Of The Acquired Portfolio
1.1 Subject to the requisite approval of the Acquired Portfolio shareholders
and the other terms and conditions herein set forth and on the basis of the
representations and warranties contained herein, the Acquired Portfolio agrees
to transfer all of the Acquired Portfolio's assets, as set forth in paragraph
1.2, to the Acquiring Portfolio, and the Acquiring Portfolio agrees in exchange
therefor: (i) to deliver to the Acquired Portfolio the number of full and
fractional Acquiring Portfolio Shares determined by dividing the value of the
Acquired Portfolio's net assets, computed in the manner and as of the time and
date set forth in paragraph 2.1, by the net asset value of one Acquiring
Portfolio Share, computed in the manner and as of the time and date set forth
in paragraph 2.2; and (ii) to assume all liabilities of the Acquired Portfolio.
Such transactions shall take place at the closing provided for in paragraph 3.1
(the "Closing").
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1.2 The assets of the Acquired Portfolio to be acquired by the Acquiring
Portfolio shall consist of all assets and property, including, without
limitation, all cash, securities, commodities and futures interests and
dividends or interests receivable that are owned by the Acquired Portfolio and
any deferred or prepaid expenses shown as an asset on the books of the Acquired
Portfolio on the closing date provided for in paragraph 3.1 (the "Closing
Date").
1.3 The Acquired Portfolio will endeavor to discharge all of its known
liabilities and obligations prior to the Closing Date. The Acquiring Portfolio
shall also assume all of the liabilities of the Acquired Portfolio, whether
accrued or contingent, known or unknown, existing at the Valuation Date. On or
as soon as practicable prior to the Closing Date, the Acquired Portfolio will
declare and pay to its shareholders of record one or more dividends and/or
other distributions so that it will have distributed all of its current and
accumulated investment company taxable income (computed without regard to any
deduction for dividends paid) and realized net capital gain, if any, for the
current taxable year through the Closing Date at or about 4:00 p.m. Eastern
Time.
1.4 Immediately after the transfer of assets provided for in paragraph 1.1,
the Acquired Portfolio will distribute to the Acquired Portfolio's shareholders
of record, determined as of the close of business on the Closing Date (the
"Acquired Portfolio Shareholders"), on a pro rata basis within that class, the
Acquiring Portfolio Shares received by the Acquired Portfolio pursuant to
paragraph 1.1, and will completely liquidate. Such distribution and liquidation
will be accomplished by the transfer of the Acquiring Portfolio Shares then
credited to the account of the Acquired Portfolio on the books of the Acquiring
Portfolio to open accounts on the share records of the Acquiring Portfolio in
the names of the Acquired Portfolio Shareholders. The aggregate net asset value
of Acquiring Portfolio Shares to be so credited to Acquired Portfolio
Shareholders shall be equal to the aggregate net asset value of the Acquired
Portfolio shares owned by such shareholders on the Closing Date. All issued and
outstanding shares of the Acquired Portfolio will simultaneously be canceled on
the books of the Acquired Portfolio, although share certificates representing
interests in shares of the Acquired Portfolio will then represent a number of
Acquiring Portfolio Shares, as determined in accordance with Section 2.3. The
Acquiring Portfolio shall not issue certificates representing the Acquiring
Portfolio Shares in connection with such exchange.
1.5 Ownership of Acquiring Portfolio Shares will be shown on the books of
the Acquiring Portfolio's transfer agent. Shares of the Acquiring Portfolio
will be issued in the manner described in the Acquiring Portfolio's then-
current prospectus and statement of additional information.
1.6 Any reporting responsibility of the Acquired Portfolio including, but
not limited to, the responsibility for filing of regulatory reports, tax
returns, or other documents with the Securities and Exchange Commission (the
"Commission"), any state securities commission, and any federal, state or local
tax authorities or any other relevant regulatory authority, is and shall remain
the responsibility of the Acquired Portfolio.
2. Valuation
2.1 The value of the Acquired Portfolio's assets to be acquired by the
Acquiring Portfolio hereunder shall be the value of such assets computed at or
about 4:00 p.m. Eastern Time on the Closing Date (such time and date being
hereinafter called the "Valuation Date"), using the valuation procedures set
forth in the Fund's then-current prospectus or statement of additional
information with respect to the Acquiring Portfolio, and valuation procedures
established by the Fund's Board of Trustees.
2.2 The net asset value of the Acquiring Portfolio Share shall be the net
asset value per share computed at or about 4:00 p.m. Eastern Time and after the
declaration of any dividends on the Valuation Date, using the valuation
procedures set forth in the Fund's then-current prospectus or statement of
additional information with respect to the Acquiring Portfolio, and valuation
procedures established by the Fund's Board of Trustees.
2.3 The number of Acquiring Portfolio Shares to be issued (including
fractional shares, if any) in exchange for the Acquired Portfolio's assets
shall be determined by dividing the value of the net assets of the
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Acquired Portfolio, determined using the same valuation procedures referred to
in paragraph 2.1, by the net asset value of an Acquiring Portfolio Share,
determined in accordance with paragraph 2.2.
2.4 All computations of value shall be made by the Acquired Portfolio's
designated recordkeeping agent.
3. Closing And Closing Date
3.1 The Closing Date shall be September , 2000, or such other date as the
parties may agree to in writing. All acts taking place at the Closing shall be
deemed to take place simultaneously as of the close of business on the Closing
Date unless otherwise agreed to by the parties. The close of business on the
Closing Date shall be at or about 4:00 p.m., Eastern Time. The Closing shall
be held at the offices of the Fund or at such other time and/or place as the
parties may agree.
3.2 The Fund shall direct Investors Fiduciary Trust Company, as custodian
for the Acquired Portfolio (the "Custodian"), to deliver, at the Closing, a
certificate of an authorized officer stating that (i) the Acquired Portfolio's
portfolio securities, cash, and any other assets ("Assets") shall have been
delivered in proper form to the Acquiring Portfolio within two business days
prior to or on the Closing Date, and (ii) all necessary taxes in connection
with the delivery of the Assets, including all applicable federal and state
stock transfer stamps, if any, have been paid or provision for payment has
been made. The Acquired Portfolio's portfolio securities represented by a
certificate or other written instrument shall be presented by the Acquired
Portfolio Custodian to the custodian for the Acquiring Portfolio for
examination no later than five business days preceding the Closing Date, and
shall be transferred and delivered by the Acquired Portfolio as of the Closing
Date for the account of the Acquiring Portfolio duly endorsed in proper form
for transfer in such condition as to constitute good delivery thereof. The
Custodian shall deliver as of the Closing Date by book entry, in accordance
with the customary practices of such depositories and the Custodian, the
Acquired Portfolio's portfolio securities and instruments deposited with a
securities depository, as defined in Rule 17f-4 under the Investment Company
Act of 1940, as amended ("1940 Act"). The cash to be transferred by the
Acquired Portfolio shall be delivered by wire transfer of federal funds on the
Closing Date.
3.3 The Fund, on behalf of the Acquired Portfolio, shall direct Pacific
Life Insurance Company (the "Transfer Agent") to deliver at the Closing a
certificate of an authorized officer stating that its records contain the
names and addresses of the Acquired Portfolio shareholders and the number and
percentage ownership of outstanding shares owned by each such shareholder
immediately prior to the Closing.
3.4 In the event that on the Valuation Date (a) the New York Stock Exchange
or another primary trading market for portfolio securities of the Acquiring
Portfolio or the Acquired Portfolio shall be closed to trading or trading
thereupon shall be restricted, or (b) trading or the reporting of trading on
such Exchange or elsewhere shall be disrupted so that, in the judgment of the
Board of Trustees of the Fund, accurate appraisal of the value of the net
assets of the Acquiring Portfolio or the Acquired Portfolio is impracticable,
the Closing Date shall be postponed until the first business day after the day
when trading shall have been fully resumed and reporting shall have been
restored.
4. Representations And Warranties
4.1 The Fund, on behalf of the Acquired Portfolio, represents and warrants
to the Acquiring Portfolio as follows:
(a) The Acquired Portfolio is duly organized as a series of the Fund,
which is a business trust duly organized and validly existing under the
laws of the Commonwealth of Massachusetts, with power under the Fund's
Declaration of Trust to own all of its properties and assets and to carry
on its business as it is now being conducted;
(b) The Fund is a registered investment company classified as a
management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act, and the
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registration of its shares under the Securities Act of 1933, as amended
("1933 Act"), including the shares of the Acquired Portfolio, are in full
force and effect;
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquired
Portfolio of the transactions contemplated herein, except such as have been
obtained under the 1933 Act, the Securities Exchange Act of 1934, as
amended ("1934 Act") and the 1940 Act, and such as may be required by state
securities laws;
(d) The current prospectus and statement of additional information of
the Acquired Portfolio and each prospectus and statement of additional
information of the Acquired Portfolio used during the three years previous
to the date of this Plan conforms or conformed at the time of its use in
all material respects to the applicable requirements of the 1933 Act and
the 1940 Act, and the rules and regulations of the Commission thereunder,
and does not or did not at the time of its use include any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not materially misleading;
(e) On the Closing Date, the Acquired Portfolio will have good and
marketable title to the Acquired Portfolio's assets to be transferred to
the Acquiring Portfolio pursuant to paragraph 1.1 and full right, power,
and authority to sell, assign, transfer and deliver such assets hereunder
free of any liens or other encumbrances, and upon delivery and payment for
such assets, the Acquiring Portfolio will acquire good and marketable title
thereto, subject to no restrictions on the full transfer thereof, including
such restrictions as might arise under the 1933 Act, other than as
disclosed to the Acquiring Portfolio;
(f) The Acquired Portfolio is not engaged currently, and the execution,
delivery and performance of this Plan will not result, in (i) a material
violation of the Fund's Declaration of Trust or By-Laws or of any
agreement, indenture, instrument, contract, lease or other undertaking to
which the Acquired Portfolio is a party or by which it is bound, or (ii)
the acceleration of any obligation, or the imposition of any penalty, under
any agreement, indenture, instrument, contract, lease, judgment or decree
to which the Acquired Portfolio is a party or by which it is bound;
(g) The Acquired Portfolio has no material contracts or other
commitments (other than this Plan) that will be terminated with liability
to it prior to the Closing Date;
(h) Except as otherwise disclosed in writing to and accepted by the
Acquiring Portfolio, no litigation or administrative proceeding or
investigation of or before any court or governmental body is presently
pending or, to its knowledge, threatened against the Acquired Portfolio or
any of its properties or assets that, if adversely determined, would
materially and adversely affect its financial condition or the conduct of
its business. The Acquired Portfolio knows of no facts which might form the
basis for the institution of such proceedings and is not a party to or
subject to the provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects its business or
its ability to consummate the transactions herein contemplated;
(i) The statement of assets and liabilities, including the schedule of
investments, of the Acquired Portfolio as of December 31, 1999, and the
related statement of operations for the year then ended and the statements
of changes in net assets for each of the two years in the period then
ended, have been audited by Deloitte & Touche LLP, independent accountants,
and are in accordance with generally accepted accounting principles
("GAAP") consistently applied, and such statements (copies of which have
been furnished to the Acquiring Portfolio) present fairly, in all material
respects, the financial condition of the Acquired Portfolio as of such date
in accordance with GAAP, and there are no known contingent liabilities of
the Acquired Portfolio required to be reflected on a balance sheet
(including the notes thereto) in accordance with GAAP as of such date not
disclosed therein;
(j) Since December 31, 1999, there has not been any material adverse
change in the Acquired Portfolio's financial condition, assets, liabilities
or business, other than changes occurring in the ordinary course of
business, or any incurrence by the Acquired Portfolio of indebtedness
maturing more than one year from the date such indebtedness was incurred,
except as otherwise disclosed to and accepted by the Acquiring Portfolio.
For the purposes of this subparagraph (j), a decline in net asset value per
share of the Acquired Portfolio due to declines in market values of
securities in the Acquired Portfolio's portfolio, the
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discharge of Acquired Portfolio liabilities, or the redemption of Acquired
Portfolio Shares by shareholders of the Acquired Portfolio shall not
constitute a material adverse change;
(k) On the Closing Date, all Federal and other tax returns and reports
of the Acquired Portfolio required by law to have been filed by such date
(including any extensions) shall have been filed and are or will be correct
in all material respects, and all Federal and other taxes shown as due or
required to be shown as due on said returns and reports shall have been
paid or provision shall have been made for the payment thereof, and to the
best of the Acquired Portfolio's knowledge, no such return is currently
under audit and no assessment has been asserted with respect to such
returns;
(l) For each taxable year of its operation (including the taxable year
ending on the Closing Date), the Acquired Portfolio has met the
requirements of Subchapter M of the Code for qualification as a regulated
investment company and has elected to be treated as such, has been eligible
to and has computed its federal income tax under Section 852 of the Code,
and will have distributed all of its investment company taxable income and
net capital gain (as defined in the Code) that has accrued through the
Closing Date, and before the Closing Date will have declared dividends
sufficient to distribute all of its investment company taxable income and
net capital gain for the period ending on the Closing Date;
(m) All issued and outstanding shares of the Acquired Portfolio are, and
on the Closing Date will be, duly and validly issued and outstanding, fully
paid and non-assessable by the Fund (recognizing that, under Massachusetts
law, it is theoretically possible that shareholders of the Acquired
Portfolio could, under certain circumstances, be held personally liable for
obligations of the Acquired Portfolio) and have been offered and sold in
compliance in all material respects with applicable registration
requirements of the 1933 Act and state securities laws. All of the issued
and outstanding shares of the Acquired Portfolio will, at the time of
Closing, be held by the persons and in the amounts set forth in the records
of the Transfer Agent, on behalf of the Acquired Portfolio, as provided in
paragraph 3.3;
(n) The adoption and performance of this Plan will have been duly
authorized prior to the Closing Date by all necessary action, if any, on
the part of the Trustees of the Fund, and, subject to the approval of the
shareholders of the Acquired Portfolio, this Plan will constitute a valid
and binding obligation of the Acquired Portfolio, enforceable in accordance
with its terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting
creditors' rights and to general equity principles; and
(o) The information to be furnished by the Acquired Portfolio for use in
registration statements, proxy materials and other documents filed or to be
filed with any federal, state or local regulatory authority (including the
National Association of Securities Dealers, Inc.), which may be necessary
in connection with the transactions contemplated hereby, shall be accurate
and complete in all material respects and shall comply in all material
respects with Federal securities and other laws and regulations thereunder
applicable thereto; and
4.2 The Fund, on behalf of the Acquiring Portfolio, represents and
warrants to the Acquired Portfolio as follows:
(a) The Acquiring Portfolio is duly organized as a series of the Fund,
which is a business trust duly organized and validly existing under the
laws of the Commonwealth of Massachusetts, with power under the Fund's
Declaration of Trust to own all of its properties and assets and to carry
on its business as it is now being conducted;
(b) The Fund is a registered investment company classified as a
management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act and the registration
of its shares under the 1933 Act, including the shares of the Acquiring
Portfolio, are in full force and effect;
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquiring
Portfolio of the transactions contemplated herein, except such as have been
obtained under the 1933 Act, the 1934 Act and the 1940 Act, and such as may
be required by state securities laws;
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(d) The current prospectus and statement of additional information of
the Acquiring Portfolio and each prospectus and statement of additional
information of the Acquiring Portfolio used during the three years previous
to the date of this Plan conforms or conformed at the time of its use in
all material respects to the applicable requirements of the 1933 Act and
the 1940 Act, and the rules and regulations of the Commission thereunder,
and does not or did not at the time of its use include any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not materially misleading;
(e) On the Closing Date, the Acquiring Portfolio will have good and
marketable title to the Acquiring Portfolio's assets, free of any liens or
other encumbrances, except those liens or encumbrances as to which the
Acquired Portfolio has received notice and necessary documentation at or
prior to the Closing;
(f) The Acquiring Portfolio is not engaged currently, and the adoption
and performance of this Plan will not result, in (i) a material violation
of the Fund's Declaration of Trust or By-Laws or of any agreement,
indenture, instrument, contract, lease or other undertaking to which the
Acquiring Portfolio is a party or by which it is bound, or (ii) the
acceleration of any obligation, or the imposition of any penalty, under any
agreement, indenture, instrument, contract, lease, judgment or decree to
which the Acquiring Portfolio is a party or by which it is bound;
(g) Except as otherwise disclosed in writing to and accepted by the
Acquired Portfolio, no litigation or administrative proceeding or
investigation of or before any court or governmental body is presently
pending or, to its knowledge, threatened against the Acquiring Portfolio or
any of its properties or assets that, if adversely determined, would
materially and adversely affect its financial condition or the conduct of
its business. The Acquiring Portfolio knows of no facts which might form
the basis for the institution of such proceedings and is not a party to or
subject to the provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects its business or
its ability to consummate the transactions herein contemplated;
(h) The statement of assets and liabilities, including the schedule of
investments, of the Acquiring Portfolio as of December 31, 1999, and the
related statement of operations for the year then ended and the statements
of changes in net assets for each of the two years in the period then
ended, have been audited by Deloitte & Touche LLP, independent accountants,
and are in accordance with GAAP consistently applied, and such statements
(copies of which have been furnished to the Acquired Portfolio) present
fairly, in all material respects, the financial condition of the Acquiring
Portfolio as of such date in accordance with GAAP, and there are no known
contingent liabilities of the Acquiring Portfolio required to be reflected
on a balance sheet (including the notes thereto) in accordance with GAAP as
of such date not disclosed therein;
(i) Since December 31, 1999, there has not been any material adverse
change in the Acquiring Portfolio's financial condition, assets,
liabilities or business, other than changes occurring in the ordinary
course of business, or any incurrence by the Acquiring Portfolio of
indebtedness maturing more than one year from the date such indebtedness
was incurred, except as otherwise disclosed to and accepted by the Acquired
Portfolio. For purposes of this subparagraph (i), a decline in net asset
value per share of the Acquiring Portfolio due to declines in market values
of securities in the Acquiring Portfolio's portfolio, the discharge of
Acquiring Portfolio liabilities, or the redemption of Acquiring Portfolio
shares by shareholders of the Acquiring Portfolio, shall not constitute a
material adverse change;
(j) On the Closing Date, all Federal and other tax returns and reports
of the Acquiring Portfolio required by law to have been filed by such date
(including any extensions) shall have been filed and are or will be correct
in all material respects, and all Federal and other taxes shown as due or
required to be shown as due on said returns and reports shall have been
paid or provision shall have been made for the payment thereof, and to the
best of the Acquiring Portfolio's knowledge, no such return is currently
under audit and no assessment has been asserted with respect to such
returns;
(k) For each taxable year of its operation, the Acquiring Portfolio has
met the requirements of Subchapter M of the Code for qualification as a
regulated investment company and has elected to be
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treated as such, has been eligible to and has computed its federal income
tax under Section 852 of the Code, has distributed all of its investment
company taxable income and net capital gain (as defined in the Code) for
periods ending prior to the Closing Date, and will do so for the taxable
year including the Closing Date;
(l) All issued and outstanding Acquiring Portfolio Shares are, and on
the Closing Date will be, duly and validly issued and outstanding, fully
paid and non-assessable by the Fund recognizing that, under Massachusetts
law, it is theoretically possible that shareholders of the Acquired
Portfolio, could, under certain circumstances, be held personally liable
for obligations of the Acquiring Portfolio and have been offered and sold
in compliance in all material respects with applicable registration
requirements of the 1933 Act and state securities laws;
(m) The adoption and performance of this Plan will have been fully
authorized prior to the Closing Date by all necessary action, if any, on
the part of the Trustees of the Fund on behalf of the Acquiring Portfolio
and this Plan will constitute a valid and binding obligation of the
Acquiring Portfolio, enforceable in accordance with its terms, subject, as
to enforcement, to bankruptcy, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors' rights and to general equity
principles;
(n) The Acquiring Portfolio Shares to be issued and delivered to the
Acquired Portfolio, for the account of the Acquired Portfolio Shareholders,
pursuant to the terms of this Plan, will on the Closing Date have been duly
authorized and, when so issued and delivered, will be duly and validly
issued Acquiring Portfolio Shares, and will be fully paid and non-
assessable by the Fund;
(o) The information to be furnished by the Acquiring Portfolio for use
in the registration statements, proxy materials and other documents that
may be necessary in connection with the transactions contemplated hereby
shall be accurate and complete in all material respects and shall comply in
all material respects with Federal securities and other laws and
regulations applicable thereto; and
(p) That insofar as it relates to the Fund or the Acquiring Portfolio,
the Registration Statement relating to the Acquiring Portfolio shares
issuable hereunder, and the proxy materials of the Acquired Portfolio to be
included in the Registration Statement, and any amendment or supplement to
the foregoing, will, from the effective date of the Registration Statement
through the date of the meeting of shareholders of the Acquired Portfolio
contemplated therein, (i) not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which such statements were made, not misleading, provided, however,
that the representations and warranties in this subparagraph (p) shall not
apply to statements in or omissions from the Registration Statement made in
reliance upon and in conformity with information that was furnished by the
Acquired Portfolio for use therein, and (ii) comply in all material
respects with the provisions of the 1933 Act, the 1934 Act and the 1940
Act, and the rules and regulations thereunder.
5. Covenants Of The Acquiring Portfolio And The Acquired Portfolio
5.1 The Acquiring Portfolio and the Acquired Portfolio each will operate its
business in the ordinary course between the date hereof and the Closing Date,
it being understood that such ordinary course of business will include the
declaration and payment of customary dividends and distributions, and any other
distribution that may be advisable.
5.2 The Fund will call a meeting of the shareholders of the Acquired
Portfolio to consider and act upon this Plan and to take all other action
necessary to obtain approval of the transactions contemplated herein.
5.3 The Acquired Portfolio covenants that the Acquiring Portfolio Shares to
be issued hereunder are not being acquired for the purpose of making any
distribution thereof, other than in accordance with the terms of this Plan.
5.4 Subject to the provisions of this Plan, the Acquiring Portfolio and the
Acquired Portfolio will each take, or cause to be taken, all action, and do or
cause to be done, all things reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Plan.
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5.5 As soon as is reasonably practicable after the Closing, the Acquired
Portfolio will make a liquidating distribution to its shareholders consisting
of the Acquiring Portfolio Shares received at the Closing.
5.6 The Acquiring Portfolio and the Acquired Portfolio shall each use its
reasonable best efforts to fulfill or obtain the fulfillment of the conditions
precedent to effect the transactions contemplated by this Plan as promptly as
practicable.
5.7 The Acquired Portfolio covenants that it will, from time to time, as and
when reasonably requested by the Acquiring Portfolio, execute and deliver or
cause to be executed and delivered all such assignments and other instruments,
and will take or cause to be taken such further action as the Acquiring
Portfolio may reasonably deem necessary or desirable in order to vest in and
confirm the Acquiring Portfolio's title to and possession of all the assets and
otherwise to carry out the intent and purpose of this Plan.
5.8 The Acquiring Portfolio will use all reasonable efforts to obtain such
regulatory approvals and authorizations as may be necessary, including those
required by the 1933 Act and the 1940 Act, in order to continue its operations
after the Closing Date.
6. Conditions Precedent To Obligations Of The Acquired Portfolio
The obligations of the Acquired Portfolio to consummate the transactions
provided for herein shall be subject, at the Acquired Portfolio's election, to
the performance by the Acquiring Portfolio of all the obligations to be
performed by it hereunder on or before the Closing Date, and, in addition
thereto, the following further conditions:
6.1 All representations and warranties of the Acquiring Portfolio and the
Fund contained in this Plan shall be true and correct in all material respects
as of the date hereof and, except as they may be affected by the transactions
contemplated by this Plan, as of the Closing Date, with the same force and
effect as if made on and as of the Closing Date;
6.2 The Fund and the Acquiring Portfolio shall have performed all of the
covenants and complied with all of the provisions required by this Plan to be
performed or complied with by the Fund and the Acquiring Portfolio on or before
the Closing Date; and
6.3 The Acquired Portfolio and the Acquiring Portfolio shall have agreed on
the number of full and fractional Acquiring Portfolio shares to be issued in
connection with the Reorganization after such number has been calculated in
accordance with paragraph 1.1.
7. Conditions Precedent To Obligations Of The Acquiring Portfolio
The obligations of the Acquiring Portfolio to complete the transactions
provided for herein shall be subject, at the Acquiring Portfolio's election, to
the performance by the Acquired Portfolio of all of the obligations to be
performed by it hereunder on or before the Closing Date and, in addition
thereto, the following conditions:
7.1 All representations and warranties of the Acquired Portfolio and the
Fund contained in this Plan shall be true and correct in all material respects
as of the date hereof and, except as they may be affected by the transactions
contemplated by this Plan, as of the Closing Date, with the same force and
effect as if made on and as of the Closing Date;
7.2 The Fund and the Acquired Portfolio shall have performed all of the
covenants and complied with all of the provisions required by this Plan to be
performed or complied with by the Fund or the Acquired Portfolio on or before
the Closing Date;
7.3 The Acquired Portfolio and the Acquiring Portfolio shall have agreed on
the number of full and fractional Acquiring Portfolio shares to be issued in
connection with the Reorganization after such number has been calculated in
accordance with paragraph 1.1;
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7.4 The Acquired Portfolio shall have declared and paid a distribution or
distributions prior to the Closing that, together with all previous
distributions, shall have the effect of distributing to its shareholders all of
its current and accumulated investment company taxable income (computed without
regard to any deduction for dividends paid) and realized net capital gain, if
any, that has accrued through the Closing Date as of 4:00 p.m. Eastern Time.
8. Further Conditions Precedent To Obligations Of The Acquiring Portfolio And
The Acquired Portfolio
If any of the conditions set forth below do not exist on or before the
Closing Date with respect to the Acquired Portfolio or the Acquiring Portfolio,
the other party to this Plan shall, at its option, not be required to
consummate the transactions contemplated by this Plan:
8.1 The Plan and the transactions contemplated herein shall have been
approved by the requisite vote of the holders of the outstanding shares of the
Acquired Portfolio in accordance with the provisions of the Fund's Declaration
of Trust, By-Laws, applicable Massachusetts law and the 1940 Act.
Notwithstanding anything herein to the contrary, neither the Acquiring
Portfolio nor the Acquired Portfolio may waive the conditions set forth in this
paragraph 8.1;
8.2 On the Closing Date, no action, suit or other proceeding shall be
pending or, to its knowledge, threatened before any court or governmental
agency in which it is sought to restrain or prohibit, or obtain damages or
other relief in connection with, this Plan or the transactions contemplated
herein;
8.3 All consents of other parties and all other consents, orders and permits
of Federal, state and local regulatory authorities deemed necessary by the
Acquiring Portfolio or the Acquired Portfolio to permit consummation, in all
material respects, of the transactions contemplated hereby shall have been
obtained, except where failure to obtain any such consent, order or permit
would not involve a risk of a material adverse effect on the assets or
properties of the Acquiring Portfolio or the Acquired Portfolio, provided that
either party hereto may for itself waive any of such conditions;
8.4 The Registration Statement shall have become effective under the 1933
Act and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending,
threatened or contemplated under the 1933 Act; and
8.5 The parties shall have received the opinion of Dechert Price & Rhoads
addressed to the Fund substantially to the effect that, based upon certain
facts, assumptions, and representations, the transaction contemplated by this
Plan shall constitute a tax-free reorganization for Federal income tax
purposes, unless, based on the circumstances existing at the time of the
Closing, Dechert Price & Rhoads determines that the transaction contemplated by
this Plan does not qualify as such. The delivery of such opinion is conditioned
upon receipt by Dechert Price & Rhoads of representations it shall request of
the Fund. Notwithstanding anything herein to the contrary, the Fund may not
waive the condition set forth in this paragraph 8.5.
9. Brokerage Fees And Expenses
9.1 The Acquiring Portfolio represents and warrants to the other that there
are no brokers or finders entitled to receive any payments in connection with
the transactions provided for herein.
9.2 The expenses relating to the proposed Reorganization will be shared so
that half of such costs are borne by the investment adviser to the Acquired and
Acquiring Portfolios and half is borne by the Acquired and Acquiring Portfolios
and will be paid by the Acquired Portfolio and the Acquiring Portfolio pro rata
based upon the relative net assets of the Portfolios as of the close of
business on the record date for determining the shareholders of the Acquired
Portfolio entitled to vote on the Reorganization. The costs of the
Reorganization shall include, but not be limited to, preparation of the
Registration Statement, printing and distributing the
A-9
<PAGE>
Acquiring Portfolio's prospectus and the Acquired Portfolio's proxy materials,
legal fees, accounting fees, securities registration fees, and expenses of
holding shareholders' meetings. Notwithstanding any of the foregoing, expenses
will in any event be paid by the party directly incurring such expenses if and
to the extent that the payment by the other party of such expenses would result
in the disqualification of such party as a "regulated investment company"
within the meaning of Section 851 of the Code.
10. Entire Agreement; Survival Of Warranties
The representations, warranties and covenants contained in this Plan or in
any document delivered pursuant hereto or in connection herewith shall survive
the consummation of the transactions contemplated hereunder. The covenants to
be performed after the Closing shall survive the Closing.
11. Termination
This Plan and the transactions contemplated hereby may be terminated and
abandoned by resolution of the Board of Trustees, at any time prior to the
Closing Date, if circumstances should develop that, in the opinion of such
Board, make proceeding with the Plan inadvisable.
12. Amendments
This Plan may be amended, modified or supplemented in such manner as may be
mutually agreed upon in writing by the authorized officers of the Fund;
provided, however, that following the meeting of the shareholders of the
Acquired Portfolio called by the Fund pursuant to paragraph 5.2 of this Plan,
no such amendment may have the effect of changing the provisions for
determining the number of Acquiring Portfolio shares to be issued to the
Acquired Portfolio Shareholders under this Plan to the detriment of such
shareholders without their further approval.
13. Notices
Any notice, report, statement or demand required or permitted by any
provision of this Plan shall be in writing and shall be given by facsimile,
personal service or prepaid or certified mail addressed to the Fund at
700 Newport Center Drive, Post Office Box 7500, Newport Beach, California
92660, in each case with a copy to Dechert Price & Rhoads, 1775 Eye Street,
N.W., Washington, D.C. 20006, attn: Jeffrey S. Puretz.
14. Headings; Counterparts; Governing Law; Assignment; Limitation Of Liability
14.1 The Article and paragraph headings contained in this Plan are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Plan.
14.2 This Plan shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts without regard to its principles of
conflicts of laws.
14.3 This Plan shall bind and inure to the benefit of the parties hereto and
their respective successors and assigns, but no assignment or transfer hereof
or of any rights or obligations hereunder shall be made by any party without
the written consent of the other party. Nothing herein expressed or implied is
intended or shall be construed to confer upon or give any person, firm or
corporation, other than the parties hereto and their respective successors and
assigns, any rights or remedies under or by reason of this Plan.
14.4 The obligations imposed by this Plan shall not be binding upon any of
the Trustees, shareholders, nominees, officers, agents, or employees of either
party hereto personally, but shall bind only the trust property of such party,
as provided in the Fund's Declaration of Trust. The execution and delivery by
such officers shall not be deemed to have been made by any of them individually
or to impose any liability on any of them personally, but shall bind only the
property of each party.
A-10
<PAGE>
IN WITNESS WHEREOF, the Board of Trustees of the Fund has caused this Plan
to be approved on behalf of the Acquiring Portfolio and the Acquired Portfolio.
PACIFIC SELECT FUND
By: _________________________________
President
A-11
<PAGE>
APPENDIX B
ADDITIONAL INFORMATION REGARDING
THE MANAGED BOND PORTFOLIO
(the Portfolio)
Purchases and Redemptions. Shares of the Portfolio are not sold directly to
the general public. Shares of the Portfolio are currently offered only for
purchase by the Separate Accounts to serve as an investment medium for a
variable annuity or variable life insurance policy (Variable Contract) issued
or administered by Pacific Life or its affiliates. For information on purchase
of a Variable Contract, consult a prospectus for the applicable Variable
Contract.
Shares of the Portfolio may be redeemed on any business day upon receipt of
a request for redemption from the insurance company whose separate account owns
the shares. Redemptions are effected at the per share net asset value next
determined after receipt of the redemption request. Redemption proceeds will
ordinarily be paid within seven days following receipt of instructions in
proper form, or sooner, if required by law. The right of redemption may be
suspended by the Portfolio or the payment date postponed beyond seven days as
described in the Fund's Statement of Additional Information.
Exchanges Among the Portfolios. Owners of a Variable Contract (Variable
Contract Owners) do not deal directly with the Portfolio to purchase, redeem,
or exchange shares of the Portfolio, and Variable Contract Owners should refer
to the Prospectus for the Variable Contract for information on the allocation
of premiums and on transfers of accumulated value among options available under
the Variable Contract.
MANAGEMENT OF THE FUND
Investment Adviser. Pacific Life Insurance Company (Pacific Life) has
overall responsibility for the management of the Portfolio. Founded in 1868,
Pacific Life ranks among the 20 largest life insurance companies in America
based on admitted assets. The Pacific Life family of companies managed $315
billion in assets as of December 31, 1999, making it one of the largest
financial institutions in America.
Pacific Life provides life and health insurance products, group employee
benefits and individual annuities, and offers a variety of investment products
and services to individual businesses and pension plans.
In its role as investment adviser, Pacific Life supervises the management of
the Portfolio. Pacific Life has retained Pacific Investment Management Company
(PIMCO), which has a worldwide market presence and extensive research
capabilities, to manage the Managed Bond Portfolio. Pacific Life oversees and
monitors the performance of PIMCO.
Pacific Life and PIMCO provide their services under agreements that are
reviewed by the Fund's Board of Trustees every year after the first two years,
and can be canceled.
Portfolio Manager. Founded in 1971, PIMCO has nearly 300 clients, including
some of the largest employee benefit plans, endowments and foundations in
America. PIMCO had over $260 billion in assets under management as of December
31, 1999.
PIMCO specializes in the management of fixed income portfolios. It has a
long-term investment philosophy, and uses a variety of techniques, including
software programs it has developed, to help increase portfolio performance
while controlling volatility. PIMCO is a subsidiary of PIMCO Advisors, L.P.,
which is 70% owned by Allianz AG and 30% owned by Pacific Life.
B-1
<PAGE>
FINANCIAL HIGHLIGHTS
The information presented below for the Managed Bond Portfolio has been
audited by Deloitte & Touche LLP, independent auditors.
<TABLE>
<CAPTION>
For the Year Ended December 31,
--------------------------------------------------
1999 1998 1997 1996 1995
---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year............. $ 11.38 $ 11.14 $ 10.75 $ 11.10 $ 9.90
Investment Activities
Net Investment Income........................ 0.59 0.57 0.59 0.59 0.65
Net Realized and Unrealized Gain (Loss) on
Securities.................................. (0.79) 0.40 0.44 (0.15) 1.19
---------- -------- -------- -------- --------
Total from Investment Operations............. (0.20) 0.97 1.03 0.44 1.84
Distributions
Dividends from Net Investment Income......... (0.59) (0.58) (0.60) (0.57) (0.64)
Distributions from Capital Gains............. (0.26) (0.15) (0.04) (0.22) --
---------- -------- -------- -------- --------
Total Distributions.......................... (0.85) (0.73) (0.64) (0.79) (0.64)
Net Asset Value, End of Year................... $ 10.33 $ 11.38 $ 11.14 $ 10.75 $ 11.10
========== ======== ======== ======== ========
Ratios/Supplemental Data
Total Return................................. (1.91%) 9.20% 9.92% 4.25% 19.04%
Net Assets, End of Year (in thousands)....... $1,090,978 $765,989 $468,575 $260,270 $126,992
Ratio of Net Expenses to Average Net
Assets (1).................................. 0.65% 0.66% 0.66% 0.71% 0.76%
Ratio of Gross Expenses to Average Net
Assets (1).................................. 0.66% 0.66% 0.66% 0.71% 0.76%
Ratio of Net Investment Income after Expense
Reductions to Average Net Assets (1)........ 5.68% 5.40% 5.72% 5.71% 6.04%
Ratio of Net Investment Income before Expense
Reductions to Average Net Assets (1)........ 5.67% 5.40% 5.72% 5.71% 6.04%
Portfolio Turnover Rate...................... 374.74% 230.99% 230.87% 386.16% 191.39%
</TABLE>
- --------
(1) Net expenses are after adviser's reimbursements and custodian credits, if
any. Gross expenses used in calculating the ratios of gross expenses to
average net assets and the ratios of net investment income to average net
assets before expense reductions are grossed up by these reimbursements and
credits.
B-2
<PAGE>
APPENDIX C
SUMMARY DESCRIPTION OF BOND RATINGS
The following are excerpts from S&P's description of its bond ratings: BB,
B, CCC, CC, C--predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with terms of the obligation; BB
indicates the lowest degree of speculation and C the highest. D--in payment
default. S&P applies indicators "+," no character, and "--" to its rating
categories. The indicators show relative standing within the major rating
categories.
The following are excerpts from Moody's description of its bond ratings:
Ba--judged to have speculative elements; their future cannot be considered as
well assured. B--generally lack characteristics of a desirable investment.
Caa--are of poor standing; such issues may be in default or there may be
present elements of danger with respect to principal or interest. Ca--
speculative in a high degree; often in default. C--lowest rate class of bonds;
regarded as having extremely poor prospects. Moody's also applies numerical
indicators 1, 2 and 3 to rating categories. The modifier 1 indicates that the
security is in the higher end of its rating category; 2 indicates a mid-range
ranking; and 3 indicates a ranking towards the lower end of the category.
C-1
<PAGE>
APPENDIX D
PACIFIC SELECT FUND PORTFOLIOS
The following is a list of the current Portfolios in the Pacific Select
Fund:
<TABLE>
<CAPTION>
Portfolio
- ---------
<S> <C>
Aggressive Equity Portfolio
Emerging Markets Portfolio
Diversified Research Portfolio
Small-Cap Equity Portfolio (formerly, the Growth Portfolio)
International Large-Cap Portfolio
Bond and Income Portfolio(/1/)
Equity Portfolio
Multi-Strategy Portfolio
Equity Income Portfolio
Growth LT Portfolio
Mid-Cap Value Portfolio
Equity Index Portfolio
Small-Cap Index Portfolio
REIT Portfolio
International Value Portfolio (formerly, the International Portfolio)
Government Securities Portfolio
Managed Bond Portfolio
Money Market Portfolio
High Yield Bond Portfolio
Large-Cap Value Portfolio
</TABLE>
- --------
(1) If approved by shareholders, this Portfolio will be reorganized into the
Managed Bond Portfolio.
D-1
<PAGE>
PART B
PACIFIC SELECT FUND
Statement of Additional Information
June xx, 2000
Acquisition of the Assets and By and in Exchange for Shares of
Liabilities of the the Managed Bond Portfolio
Bond and Income Portfolio (a series of Pacific Select Fund)
(a series of Pacific Select Fund) 700 Newport Center Drive
700 Newport Center Drive Post Office Box 7500
Post Office Box 7500 Newport Beach, CA 92660
Newport Beach, CA 92660
This Statement of Additional Information is available in connection with a
proposed transaction whereby all of the assets and liabilities of the Bond and
Income Portfolio will be transferred to the Managed Bond Portfolio, in exchange
for shares of the Managed Bond Portfolio.
This Statement of Additional Information for the Pacific Select Fund
consists of this cover page and the following documents, each of which was
filed electronically with the Securities and Exchange Commission and is
incorporated herein by reference:
1. The Statement of Additional Information for Pacific Select Fund dated
May 1, 2000.
2. The Financial Statements of the Managed Bond and Bond and Income
Portfolios included in the Annual Report of Pacific Select Fund dated
December 31, 1999, as filed on February 18, 2000.
This Statement of Additional Information is not a prospectus. This Statement
of Additional Information should be read in conjunction with the
Prospectus/Proxy Statement.
A Prospectus/Proxy Statement dated June , 2000 relating to the
Reorganization of the Bond and Income Portfolio may be obtained, without
charge, by writing to Pacific Select Fund at 700 Newport Center Drive,
Post Office Box 7500, Newport Beach, California 92660 or by calling (800) 722-
2333 for variable annuity contract owners and (800) 800-7681 for variable life
insurance policy owners.
<PAGE>
Pro Forma Financial Statements
The following presents financial information on a pro forma basis--assuming
that the Bond and Income Portfolio were combined with the Managed Bond
Portfolio for the period shown. The information below is based on the financial
statements of the Portfolios as of December 31, 1999. The pro forma information
has not been audited.
2
<PAGE>
PACIFIC SELECT FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999 (Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Managed Bond and
Bond Income Pro Forma
Portfolio Portfolio Adjustment Combined
-----------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments, at value......... $1,419,785 $195,932 $1,615,717
Cash.......................... 1 1 2
Receivables:
Dividends and interest....... 11,280 2,626 13,906
Fund shares sold............. 1,917 391 2,308
Securities sold.............. 1,433 1,433
Other........................ 8 8
-----------------------------------------------
Total Assets.................. 1,434,424 198,950 1,633,374
-----------------------------------------------
LIABILITIES
Payables:
Fund shares redeemed......... 11 23 34
Securities purchased......... 340,435 340,435
Accrued advisory fees........ 554 102 656
Accrued custodian fees and
recordkeeping fees.......... 73 12 85
Accrued other................ 37 5 $93 (2) 135
Outstanding options written,
at value (1)................. 1,389 1,389
Forward foreign currency
contracts depreciation....... 160 160
Variation margin.............. 787 171 958
-----------------------------------------------
Total Liabilities............. 343,446 313 93 343,852
-----------------------------------------------
NET ASSETS.................... $1,090,978 $198,637 ($93) $1,289,522
-----------------------------------------------
NET ASSETS CONSIST OF:
Paid-in capital............... $1,151,391 $220,500 $1,371,891
Accumulated undistributed net
investment income............ 697 145 ($93)(2) 749
Accumulated undistributed net
realized loss................ (37,094) (9,941) (47,035)
Net unrealized depreciation on
investments and assets and
liabilities in foreign
currencies................... (24,016) (12,067) (36,083)
-----------------------------------------------
NET ASSETS.................... $1,090,978 $198,637 ($93) $1,289,522
-----------------------------------------------
Shares of beneficial interest
outstanding of $.001 par
value........................ 105,646 17,885 1,351 (3) 124,882
-----------------------------------------------
NET ASSETS PER SHARE.......... $10.327 $11.107 $10.327
-----------------------------------------------
Total Cost on Investments..... $1,440,347 $206,907 $1,647,254
-----------------------------------------------
</TABLE>
(1) Premiums received for the Managed Bond Portfolio were $1,082.
(2) Adjustment represents half of the estimated reorganization costs to be
absorbed by both Portfolios (See Note 5 to Pro Forma Financial Statement).
(3) Adjustment reflects new shares issued, net of retired shares of the Bond
and Income Portfolio (See Note 3 to Pro Forma Financial Statements).
See Notes to Pro Forma Financial Statements
3
<PAGE>
PACIFIC SELECT FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Managed Bond and
Bond Income Pro Forma
Portfolio Portfolio Adjustment (1) Combined
----------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest....................... $59,279 $13,303 $72,582
Other.......................... 1,307 18 1,325
---------------------------------------------
Total Investment Income........ 60,586 13,321 73,907
---------------------------------------------
EXPENSES
Advisory fees.................. 5,736 1,185 6,921
Custodian fees and expenses.... 169 31 200
Recordkeeping fees............. 196 51 247
Trustees' fees and expenses.... 13 3 16
Legal fees..................... 51 10 61
Printing expenses.............. 54 12 66
Other.......................... 85 18 $93 (1) 196
---------------------------------------------
Total Expenses................. 6,304 1,310 93 7,707
Custodian Credits.............. (45) (6) (51)
---------------------------------------------
Net Expenses................... 6,259 1,304 93 7,656
---------------------------------------------
NET INVESTMENT INCOME.......... 54,327 12,017 (93) 66,251
---------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS
Net realized loss from security
transactions.................. (23,361) (6,106) (29,467)
Net realized loss from futures
contracts..................... (16,826) (4,173) (20,999)
Net realized foreign exchange
gain (loss)................... (722) 42 (680)
---------------------------------------------
Net Realized Loss on
Investments and Foreign
Currency Transactions......... (40,909) (10,237) (51,146)
---------------------------------------------
Net unrealized depreciation on
investments................... (26,491) (16,192) (42,683)
Net unrealized depreciation on
futures contracts............. (1,679) (533) (2,212)
Net unrealized foreign exchange
gain (loss)................... (76) 2 (74)
---------------------------------------------
Net Unrealized Loss on
Investments and Foreign
Currency Transactions......... (28,246) (16,723) (44,969)
---------------------------------------------
NET REALIZED AND UNREALIZED
LOSS ON INVESTMENTS AND
FOREIGN CURRENCY
TRANSACTIONS.................. (69,155) (26,960) (96,115)
---------------------------------------------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS..... ($14,828) ($14,943) ($93) ($29,864)
---------------------------------------------
</TABLE>
(1) Adjustment represents half of the estimated reorganization costs to be
absorbed by both Portfolios (See Notes 4 and 5 to Pro Forma Financial
Statements).
See Notes to Pro Forma Financial Statements
4
<PAGE>
PACIFIC SELECT FUND
Pro Forma Managed Bond and Bond and Income Portfolios
Schedule of Investments
December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Principal Amount Market Value
--------------------------------------- ---------------------------------------
Bond and Pro Forma Bond and Pro Forma
Managed Bond Income Combined Security Rate Maturity Managed Bond Income Combined
------------ ------------- ------------ --------------------- -------- -------- ------------ ------------- ------------
<C> <C> <C> <S> <C> <C> <C> <C> <C>
CORPORATE BONDS &
NOTES - 39.42%
Autos & Transpor-
tation - 3.08%
$4,500,000 $4,500,000 AMR Corp 9.000% 09/15/16 $4,736,250 $4,736,250
Continental Airlines
$8,325,000 8,325,000 Inc 9.500% 12/15/01 $8,449,875 8,449,875
DaimlerChrysler North
13,000,000 13,000,000 America Holding 6.670% 09/25/01 12,951,523 12,951,523
DaimlerChrysler North
2,000,000 2,000,000 America Holding 7.450% 02/01/97 1,858,000 1,858,000
375,000 375,000 Federal-Mogul Corp 7.500% 01/15/09 344,001 344,001
2,000,000 2,000,000 Ford Motor Co 7.700% 05/15/97 1,917,542 1,917,542
1,000,000 1,000,000 General Motors Corp 7.400% 09/01/25 955,080 955,080
Hayes Lemmerz
500,000 500,000 International Inc 8.250% 12/15/08 462,500 462,500
500,000 500,000 Lear Corp 9.500% 07/15/06 505,000 505,000
Northwest Airlines
4,431,473 4,431,473 Corp 10.530% 01/15/09 4,960,502 4,960,502
1,000,000 1,000,000 TRW Inc 7.750% 06/01/29 955,526 955,526
7,900,000 7,900,000 + Union Pacific Corp 6.353% 05/22/00 7,885,187 7,885,187
800,000 800,000 United Airlines Inc 9.210% 01/21/17 824,212 824,212
1,650,000 1,650,000 United Airlines Inc 9.560% 10/19/18 1,716,759 1,716,759
1,000,000 1,000,000 United Airlines Inc 10.850% 02/19/15 1,155,520 1,155,520
------------ ------------ ------------
37,943,578 11,733,899 49,677,477
------------ ------------ ------------
Consumer Discretionary - 1.06%
Alaska Communications
375,000 375,000 Holdings Inc 9.375% 05/15/09 364,687 364,687
1,700,000 1,700,000 Amerco 7.200% 04/01/02 1,660,155 1,660,155
250,000 250,000 Chancellor Media Corp 8.000% 11/01/08 251,250 251,250
250,000 250,000 Chancellor Media Corp 8.125% 12/15/07 250,000 250,000
Charter
Communications
250,000 250,000 Holdings 0.000% 04/01/04 147,812 147,812
Charter
Communications
500,000 500,000 Holdings 8.250% 04/01/07 463,750 463,750
900,000 900,000 Fred Meyer Inc 7.450% 03/01/08 875,541 875,541
Hansol Paper Company
600,000 600,000 Ltd 7.078% 05/24/01 600,069 600,069
Intermedia
250,000 250,000 Communications Inc 8.600% 06/01/08 230,000 230,000
700,000 700,000 ITT Corp 6.250% 11/15/00 686,311 686,311
625,000 625,000 ITT Corp 6.750% 11/15/03 579,342 579,342
Lenfest
600,000 600,000 Communications Inc 8.375% 11/01/05 612,156 612,156
News America Holdings
300,000 300,000 Inc 7.250% 05/18/18 272,556 272,556
News America Holdings
2,100,000 2,100,000 Inc 7.750% 12/01/45 1,920,282 1,920,282
1,680,000 1,680,000 Panamsat Corp 6.125% 01/15/05 1,500,589 1,500,589
375,000 375,000 Safety-Kleen Corp 9.250% 05/15/09 364,687 364,687
Tele-Communications
570,000 570,000 Inc 8.250% 01/15/03 588,136 588,136
Time Warner
2,000,000 2,000,000 Entertainment 8.375% 07/15/33 2,084,500 2,084,500
650,000 650,000 ~ Time Warner Pass 6.100% 12/30/01 639,610 639,610
2,260,000 2,260,000 Viacom Inc 7.750% 06/01/05 2,287,052 2,287,052
See Notes to Pro Forma Financial Statements See explanation of symbols on Page 20
</TABLE>
5
<PAGE>
PACIFIC SELECT FUND
Pro Forma Managed Bond and Bond and Income Portfolios
Schedule of Investments (Continued)
December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Principal Amount Market Value
--------------------------------------- ---------------------------------------
Bond and Pro Forma Bond and Pro Forma
Managed Bond Income Combined Security Rate Maturity Managed Bond Income Combined
------------ ------------- ------------ --------------------- -------- -------- ------------ ------------- ------------
<C> <C> <C> <S> <C> <C> <C> <C> <C>
$800,000 $800,000 Waste Management Inc 6.375% 12/01/03 $716,949 $716,949
------------ ------------- ------------
$2,899,834 14,195,600 17,095,434
------------ ------------- ------------
Consumer Staples - 2.43%
500,000 500,000 Aurora Foods Inc 9.875% 02/15/07 509,375 509,375
International Home
500,000 500,000 Foods Inc 10.375% 11/01/06 521,250 521,250
$7,000,000 450,000 7,450,000 J Seagram & Sons 6.250% 12/15/01 6,856,829 440,796 7,297,625
375,000 375,000 Keebler Foods Corp 10.750% 07/01/06 402,814 402,814
13,800,000 13,800,000 Nabisco Inc 6.125% 02/01/33 13,254,141 13,254,141
Philip Morris
340,000 340,000 Companies Inc 7.000% 07/15/05 322,650 322,650
Philip Morris
1,300,000 1,300,000 Companies Inc 7.125% 08/15/02 1,279,702 1,279,702
Philip Morris
200,000 200,000 Companies Inc 7.625% 05/15/02 199,288 199,288
Philip Morris
900,000 900,000 Companies Inc 7.750% 01/15/27 814,780 814,780
Philip Morris
12,230,000 12,230,000 Companies Inc 8.750% 06/01/01 12,398,248 12,398,248
Riverwood
250,000 250,000 International Corp 10.625% 08/01/07 258,750 258,750
1,300,000 1,300,000 RJ Reynolds Tobacco 7.750% 05/15/06 1,151,224 1,151,224
805,000 805,000 Safeway Inc 6.050% 11/15/03 769,860 769,860
------------ ------------- ------------
32,509,218 6,670,489 39,179,707
------------ ------------- ------------
Financial
Services - 22.02%
2,500,000 2,500,000 AESOP Funding II LLC 6.140% 05/20/06 2,382,487 2,382,487
1,500,000 1,500,000 American General Corp 7.500% 07/15/25 1,439,188 1,439,188
American General
13,100,000 13,100,000 Finance 6.875% 12/14/01 13,066,739 13,066,739
Associates Corp North
4,800,000 4,800,000 ~ America 6.450% 09/15/00 4,786,123 4,786,123
10,500,000 10,500,000 AT&T Capital Corp 5.860% 04/26/02 10,144,858 10,144,858
4,200,000 4,200,000 AT&T Capital Corp 7.110% 09/13/01 4,198,870 4,198,870
1,000,000 1,000,000 BankAmerica Corp 7.200% 09/15/02 1,003,072 1,003,072
500,000 500,000 BankAmerica Corp 7.500% 10/15/02 505,217 505,217
2,500,000 2,500,000 BankAmerica Corp 7.875% 12/01/02 2,550,955 2,550,955
Bear Stearns
8,100,000 8,100,000 Companies Inc 6.150% 03/02/04 7,734,018 7,734,018
Bear Stearns
17,100,000 17,100,000 + Companies Inc 6.636% 11/30/04 17,083,969 17,083,969
1,240,000 1,240,000 Beneficial Corp 6.250% 02/18/13 1,214,254 1,214,254
1,200,000 1,200,000 Capital One Bank 6.480% 06/28/02 1,170,458 1,170,458
5,000,000 2,000,000 7,000,000 Capital One Bank 6.760% 07/23/02 4,904,640 1,961,856 6,866,496
Capital One Financial
3,000,000 3,000,000 + Corp 5.997% 07/28/03 3,020,820 3,020,820
Capital One Financial
8,800,000 8,800,000 Corp 6.438% 02/11/02 8,757,707 8,757,707
Capital One Financial
3,370,000 3,370,000 Corp 6.875% 04/24/00 3,373,943 3,373,943
9,700,000 9,700,000 Chrysler Financial 6.582% 01/30/02 9,688,835 9,688,835
21,000,000 21,000,000 CIT Group Inc 7.125% 10/15/04 20,851,383 20,851,383
1,450,000 1,450,000 CitiCorp 7.200% 06/15/07 1,419,791 1,419,791
1,000,000 1,000,000 CitiCorp 8.000% 02/01/03 1,021,674 1,021,674
See Notes to Pro Forma Financial Statements See explanation of symbols on Page 20
</TABLE>
6
<PAGE>
PACIFIC SELECT FUND
Pro Forma Managed Bond and Bond and Income Portfolios
Schedule of Investments (Continued)
December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Principal Amount Market Value
--------------------------------------- ---------------------------------------
Bond and Pro Forma Bond and Pro Forma
Managed Bond Income Combined Security Rate Maturity Managed Bond Income Combined
------------ ------------- ------------ -------------------- -------- -------- ------------ ------------- ------------
<C> <C> <C> <S> <C> <C> <C> <C> <C>
Conseco Financial
Securitization Corp
$23,158,843 $23,158,843 + Inc 7.350% 10/15/30 $22,927,139 $22,927,139
$600,000 600,000 Conseco Inc 8.500% 10/15/02 $607,351 607,351
Countrywide Capital
775,000 775,000 III 8.050% 06/15/27 737,141 737,141
Countrywide Home
1,500,000 1,500,000 Loans Inc 6.970% 03/28/03 1,483,777 1,483,777
Credit Asset
5,010,800 5,010,800 Receivable LLC 6.274% 10/31/03 4,916,572 4,916,572
Donaldson Lufkin &
2,200,000 2,200,000 Jenrette Inc 6.000% 12/01/01 2,152,456 2,152,456
1,000,000 1,000,000 EOP Operating LP 6.375% 02/15/03 963,920 963,920
2,000,000 2,000,000 Finova Capital Corp 5.875% 10/15/01 1,961,714 1,961,714
7,000,000 7,000,000 Finova Capital Corp 6.450% 11/06/01 6,907,110 6,907,110
First Union National
950,000 950,000 Bank 6.500% 12/01/28 786,753 786,753
Ford Motor Credit
2,900,000 2,900,000 Corp 6.700% 07/16/04 2,840,101 2,840,101
Ford Motor Credit
1,300,000 1,300,000 Corp 7.200% 06/15/07 1,279,418 1,279,418
15,100,000 15,100,000 GMAC 6.335% 04/05/04 15,063,564 15,063,564
14,000,000 14,000,000 + GMAC 6.750% 12/10/02 13,896,204 13,896,204
1,200,000 1,200,000 GMAC 6.850% 06/17/04 1,181,183 1,181,183
2,500,000 2,500,000 GMAC 7.625% 05/05/03 2,538,815 2,538,815
Goldman Sachs Group
8,000,000 8,000,000 ~ Inc 5.797% 12/07/01 8,022,984 8,022,984
8,000,000 8,000,000 GS Escrow Corp 6.312% 08/01/03 7,625,480 7,625,480
2,100,000 2,100,000 GS Escrow Corp 6.750% 08/01/01 2,024,793 2,024,793
3,400,000 3,400,000 Heller Financial Inc 6.433% 04/28/03 3,384,544 3,384,544
5,000,000 5,000,000 Heller Financial Inc 6.460% 06/24/02 5,032,229 5,032,229
4,000,000 4,000,000 Heller Financial Inc 6.500% 07/22/02 3,928,116 3,928,116
Household Financial
14,600,000 14,600,000 Corp 6.000% 05/01/04 13,876,176 13,876,176
Household Financial
15,100,000 15,100,000 Corp 6.355% 08/01/01 15,107,761 15,107,761
Household Financial
800,000 800,000 Corp 7.000% 08/01/03 792,056 792,056
Household
International
1,300,000 1,300,000 Netherlands BV 6.200% 12/01/03 1,255,198 1,255,198
370,000 370,000 HSBC Holdings PLC 7.500% 07/15/09 365,524 365,524
Lehman Brothers
9,600,000 9,600,000 Holding Inc 6.978% 04/02/02 9,643,757 9,643,757
Lehman Brothers
9,900,000 9,900,000 Holding PLC 5.822% 09/03/02 9,817,830 9,817,830
Long Island Savings
1,900,000 1,900,000 Bank 6.200% 04/02/01 1,879,047 1,879,047
Long Island Savings
875,000 875,000 Bank 7.000% 06/13/02 868,515 868,515
500,000 500,000 MBNA Corp 5.572% 08/07/01 499,288 499,288
2,500,000 2,500,000 MBNA Corp 6.450% 02/15/08 2,440,712 2,440,712
7,600,000 7,600,000 MBNA Corp 6.472% 04/25/02 7,554,073 7,554,073
2,000,000 2,000,000 MBNA Corp 6.875% 07/15/04 1,930,074 1,930,074
1,200,000 1,200,000 MediTrust Corp 7.375% 07/15/00 1,134,808 1,134,808
500,000 500,000 Merita Bank PLC 6.500% 04/01/09 458,576 458,576
500,000 500,000 MIC Financing Trust 8.375% 02/01/27 447,323 447,323
National Westminster
530,000 530,000 Bank PLC 7.375% 10/01/09 518,431 518,431
925,000 925,000 NationsBank Corp 6.375% 05/15/05 889,605 889,605
840,000 840,000 NationsBank Corp 7.250% 10/15/25 780,127 780,127
933,621 933,621 NC Financial Trust 5.000% 05/25/28 904,334 904,334
See Notes to Pro Forma Financial Statements See explanation of symbols on Page 20
</TABLE>
7
<PAGE>
PACIFIC SELECT FUND
Pro Forma Managed Bond and Bond and Income Portfolios
Schedule of Investments (Continued)
December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Principal Amount Market Value
--------------------------------------- ---------------------------------------
Bond and Pro Forma Bond and Pro Forma
Managed Bond Income Combined Security Rate Maturity Managed Bond Income Combined
------------ ------------- ------------ --------------------- -------- -------- ------------ ------------- ------------
<C> <C> <C> <S> <C> <C> <C> <C> <C>
$3,200,000 $3,200,000 Newcourt Credit Group 7.625% 06/28/01 $2,256,609 $2,256,609
(Principal in
Canadian Dollar)
Option One Mortgage
$1,000,000 1,000,000 Securities Corp 10.800% 04/25/02 $995,625 995,625
Paine Webber Group
1,700,000 1,700,000 Inc 6.110% 11/27/00 1,698,200 1,698,200
Popular North America
7,200,000 7,200,000 Inc 6.625% 01/15/04 6,932,930 6,932,930
Popular North America
16,500,000 16,500,000 Inc 6.875% 06/15/01 16,402,931 16,402,931
Popular North America
4,600,000 4,600,000 Inc 7.375% 09/15/01 4,600,258 4,600,258
Providian National
1,000,000 1,000,000 Bank 6.650% 02/01/04 942,574 942,574
Salomon Smith Barney
1,000,000 1,000,000 Holdings FRN 6.250% 05/14/02 999,642 999,642
Sears Roebuck
1,866,000 1,866,000 Acceptance Corp 6.630% 07/09/02 1,830,255 1,830,255
1,065,000 1,065,000 Simon Debartolo Group 6.625% 06/15/03 1,016,841 1,016,841
600,000 600,000 Simon Debartolo Group 6.750% 07/15/04 567,463 567,463
UCAR Global
500,000 500,000 Enterprises Inc 12.000% 01/15/05 522,500 522,500
US West Capital
2,280,000 2,280,000 Funding Inc 6.875% 07/15/28 2,004,038 2,004,038
2,000,000 945,000 2,945,000 Wells Fargo & Co 6.625% 07/15/04 1,958,050 925,179 2,883,229
West Pennsylvania
8,500,000 8,500,000 + Funding LLC 6.320% 06/25/03 8,480,035 8,480,035
------------ ------------- ------------
314,564,579 41,273,987 355,838,566
------------ ------------- ------------
Health Care - 0.63%
Columbia/HCA
500,000 500,000 Healthcare Corp 6.730% 07/15/45 465,692 465,692
Columbia/HCA
1,700,000 1,700,000 Healthcare Corp 6.870% 09/15/03 1,583,011 1,583,011
Columbia/HCA
3,650,000 3,650,000 Healthcare Corp 6.875% 07/15/01 3,553,998 3,553,998
Columbia/HCA
400,000 400,000 Healthcare Corp 8.020% 08/05/02 389,833 389,833
Columbia/HCA
4,000,000 4,000,000 Healthcare Corp 8.130% 08/04/03 3,887,652 3,887,652
260,000 260,000 Tenet Healthcare Corp 8.000% 01/15/05 250,250 250,250
80,000 80,000 Tenet Healthcare Corp 8.625% 12/01/03 79,028 79,028
------------ ------------- ------------
9,880,186 329,278 10,209,464
------------ ------------- ------------
Materials & Processing - 0.19%
375,000 375,000 Lyondell Chemical Co 9.875% 05/01/07 384,375 384,375
1,000,000 1,000,000 Norsk Hydro A/S 7.150% 01/15/29 907,514 907,514
250,000 250,000 Nortek Inc 8.875% 08/01/08 238,750 238,750
1,420,000 1,420,000 Owens Corning 7.500% 05/01/05 1,349,924 1,349,924
250,000 250,000 Wesco Distributor 9.125% 06/01/08 236,250 236,250
------------ ------------- ------------
- 3,116,813 3,116,813
------------ ------------- ------------
Other Energy - 2.18%
375,000 375,000 Gulf Canada Resources 9.250% 01/15/04 380,625 380,625
5,600,000 5,600,000 NRG Energy Inc 8.000% 11/01/03 5,549,186 5,549,186
Occidental Petroleum
400,000 400,000 Corp 6.400% 04/01/03 385,545 385,545
Occidental Petroleum
745,000 745,000 Corp 7.200% 04/01/28 669,890 669,890
See Notes to Pro Forma Financial Statements See explanation of symbols on Page 20
</TABLE>
8
<PAGE>
PACIFIC SELECT FUND
Pro Forma Managed Bond and Bond and Income Portfolios
Schedule of Investments (Continued)
December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Principal Amount Market Value
--------------------------------------- ---------------------------------------
Bond and Pro Forma Bond and Pro Forma
Managed Bond Income Combined Security Rate Maturity Managed Bond Income Combined
------------ ------------- ------------ --------------------- -------- -------- ------------ ------------- ------------
<C> <C> <C> <S> <C> <C> <C> <C> <C>
Occidental Petroleum
$595,000 $595,000 Corp 8.450% 02/15/29 $619,280 $619,280
Occidental Petroleum
$1,439,000 1,439,000 Corp 8.500% 11/09/01 $1,469,361 1,469,361
Petroleum Geo
450,000 450,000 Services 7.125% 03/30/28 393,849 393,849
3,000,000 3,000,000 R&B Falcon Corp 6.500% 04/15/03 2,760,000 2,760,000
12,000,000 12,000,000 R&B Falcon Corp 9.125% 12/15/03 11,910,000 11,910,000
Williams Companies
9,700,000 9,700,000 Inc 6.491% 01/30/00 9,701,426 9,701,426
Williams Companies
1,500,000 1,500,000 Inc 7.625% 07/15/19 1,443,473 1,443,473
------------ ------------- ------------
31,775,518 3,507,117 35,282,635
------------ ------------- ------------
Producer
Durables - 0.26%
Crown Castle
750,000 750,000 International Corp 0.000% 05/15/04 472,500 472,500
Packaging Corp of
500,000 500,000 America 9.625% 04/01/09 513,125 513,125
Tyco International
600,000 600,000 Group 5.875% 11/01/04 555,994 555,994
Tyco International
1,720,000 1,720,000 Group 6.375% 06/15/05 1,614,437 1,614,437
Tyco International
700,000 700,000 Group 6.875% 01/15/29 597,926 597,926
500,000 500,000 United Rentals Inc 8.800% 08/15/08 469,375 469,375
------------ ------------- ------------
- 4,223,357 4,223,357
------------ ------------- ------------
Technology - 1.90%
500,000 500,000 Aristar Inc 7.375% 09/01/04 497,758 497,758
British Sky
Broadcasting Group
455,000 455,000 PLC 8.200% 07/15/09 438,177 438,177
Fisher Scientific
500,000 500,000 International 9.000% 02/01/08 481,875 481,875
Huntsman ICI
250,000 250,000 Chemicals 10.125% 07/01/09 260,000 260,000
500,000 500,000 National Power 7.625% 11/15/00 497,675 497,675
1,100,000 1,100,000 Raytheon Co 6.300% 03/15/05 1,036,560 1,036,560
Telewest
500,000 500,000 Communications PLC 0.000% 04/15/04 317,500 317,500
2,250,000 2,250,000 Worldcom Inc 6.400% 08/15/05 2,164,158 2,164,158
23,918,000 23,918,000 Worldcom Inc 8.875% 01/15/06 25,020,237 25,020,237
------------ ------------- ------------
25,517,995 5,195,945 30,713,940
------------ ------------- ------------
Utilities - 5.67%
1,350,000 1,350,000 360 Communication 7.125% 03/01/03 1,348,888 1,348,888
Adelphia
250,000 250,000 Communications Corp 7.875% 05/01/09 225,625 225,625
Adelphia
250,000 250,000 Communications Corp 9.375% 11/15/09 246,250 246,250
Adelphia
175,000 175,000 Communications Corp 10.250% 07/15/00 176,963 176,963
Allied Waste North
500,000 500,000 America Inc 7.625% 01/01/06 453,750 453,750
3,100,000 3,100,000 BVPS II Funding Corp 8.330% 12/01/07 3,149,925 3,149,925
Cable & Wireless
255,000 255,000 Communications PLC 6.375% 03/06/03 252,578 252,578
Cable & Wireless
1,000,000 1,000,000 Communications PLC 6.625% 03/06/05 991,361 991,361
600,000 600,000 Calenergy Company Inc 7.230% 09/15/05 587,808 587,808
Cleveland Electric
3,000,000 3,000,000 Illuminating Co 9.200% 06/01/01 3,066,228 3,066,228
</TABLE>
See Notes to Pro Forma Financial Statements
9
<PAGE>
PACIFIC SELECT FUND
Pro Forma Managed Bond and Bond and Income Portfolios
Schedule of Investments (Continued)
December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Principal Amount Market Value
--------------------------------------- ---------------------------------------
Bond and Pro Forma Bond and Pro Forma
Managed Bond Income Combined Security Rate Maturity Managed Bond Income Combined
------------ ------------- ------------ -------------------- -------- -------- ------------ ------------- ------------
<C> <C> <C> <S> <C> <C> <C> <C> <C>
Cleveland Electric-
$4,000,000 $4,000,000 Toledo Edison Co 7.670% 07/01/04 $3,943,480 $3,943,480
$290,000 290,000 CMS Energy Corp 6.750% 01/15/04 $269,081 269,081
750,000 750,000 CMS Energy Corp 7.375% 11/15/00 746,217 746,217
250,000 250,000 Comcast UK Cable 0.000% 11/15/00 239,375 239,375
750,000 750,000 MCI Worldcom Inc 7.750% 04/01/27 766,711 766,711
250,000 250,000 McLeodUSAInc 8.125% 02/15/09 234,375 234,375
MetroMedia Fiber
250,000 250,000 Network Inc 10.000% 12/15/09 257,500 257,500
Metronet
2,700,000 625,000 3,325,000 Communications Corp 0.000% 06/15/03 2,133,000 493,750 2,626,750
Nextel
500,000 500,000 Communications Inc 0.000% 02/15/03 352,500 352,500
Nextel
500,000 500,000 Communications Inc 9.375% 11/15/09 492,500 492,500
Niagara Mohawk Power
550,000 550,000 Corp 6.875% 04/01/03 542,103 542,103
Niagara Mohawk Power
510,366 510,366 Corp 7.000% 10/01/00 510,892 510,892
Niagara Mohawk Power
2,400,000 2,400,000 Corp 7.750% 05/15/06 2,378,453 2,378,453
Niagara Mohawk Power
500,000 500,000 Corp 8.000% 06/01/04 506,668 506,668
500,000 500,000 Orange PLC 8.000% 08/01/08 506,875 506,875
PP&L Capital Funding
6,700,000 6,700,000 + Inc 7.700% 11/15/07 6,567,099 6,567,099
PP&L Transition BD
3,954,223 3,954,223 LLC 6.080% 03/25/03 3,939,177 3,939,177
PP&L Transition BD
1,000,000 1,000,000 LLC 6.410% 03/25/03 993,495 993,495
PP&L Transition BD
1,000,000 1,000,000 LLC 6.600% 03/25/03 993,825 993,825
PP&L Transition BD
1,000,000 1,000,000 LLC 6.720% 03/25/03 988,695 988,695
PP&L Transition BD
1,000,000 1,000,000 LLC 6.830% 03/25/03 994,625 994,625
Public Services
14,300,000 14,300,000 Enterprises 6.521% 06/15/01 14,288,388 14,288,388
1,000,000 1,000,000 Sprint Capital Corp 6.875% 11/15/28 892,160 892,160
650,000 650,000 Sprint Capital Corp 6.900% 05/01/19 594,260 594,260
TCI Communications
5,700,000 5,700,000 Inc 6.120% 02/02/00 5,698,056 5,698,056
375,000 375,000 Telewest PLC 0.000% 10/01/00 351,563 351,563
Texas Utilities
10,000,000 10,000,000 Electric Co 5.940% 10/15/01 9,828,470 9,828,470
Texas Utilities
2,000,000 2,000,000 Electric Co 7.170% 08/01/07 1,954,946 1,954,946
100,000 100,000 Toledo Edison Co 7.460% 04/03/00 100,251 100,251
US West Capital
18,600,000 18,600,000 Funding Inc 6.571% 06/15/00 18,596,168 18,596,168
------------ ------------- ------------
75,280,882 16,373,152 91,654,034
------------ ------------- ------------
Total Corporate
Bonds & Notes
(Cost $644,813,592 -
Pro Forma Combined) 530,371,790 106,619,637 636,991,427
------------ ------------- ------------
MORTGAGE-BACKED
SECURITIES - 33.35%
Collateralized Mortgage
Obligations - 9.88%
American Business
6,000,000 6,000,000 ++ Financial Service 6.455% 09/25/29 5,720,550 5,720,550
American Southwest
Financial Securities
10,328,236 10,328,236 ++ Corp 7.400% 11/17/04 10,342,438 10,342,438
BankAmerica Mortgage
9,333,631 9,333,631 ++ Securities Inc 6.500% 05/25/29 8,476,936 8,476,936
Bear Stearns
Commercial Mortgage
2,500,000 2,500,000 ++ Inc 6.440% 06/16/08 2,344,112 2,344,112
See Notes to Pro Forma Financial Statements See explanation of symbols on Page 20
</TABLE>
10
<PAGE>
PACIFIC SELECT FUND
Pro Forma Managed Bond and Bond and Income Portfolios
Schedule of Investments (Continued)
December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Principal Amount Market Value
--------------------------------------- ---------------------------------------
Bond and Pro Forma Bond and Pro Forma
Managed Bond Income Combined Security Rate Maturity Managed Bond Income Combined
------------ ------------- ------------ ---------------- -------- -------- ------------ ------------- ------------
<C> <C> <C> <S> <C> <C> <C> <C> <C>
Cendant Mortgage
$10,649,079 $10,649,079 ~ + ++ Corp 6.500% 01/18/16 $10,522,621 $10,522,621
Cendant Mortgage
11,858,209 11,858,209 ~ + ++ Corp 6.906% 11/18/28 11,416,335 11,416,335
Chase Mortgage
16,700,000 16,700,000 ++ Financial Trust 6.500% 05/25/29 14,970,798 14,970,798
14,478 14,478 + ++ Citibank 8.000% 07/25/18 14,677 14,677
CitiCorp
Mortgage
$3,900,000 3,900,000 ++ Securities 6.750% 04/25/28 $3,654,748 3,654,748
Commercial
Mortgage
2,500,000 2,500,000 ++ Acceptance Corp 6.490% 05/15/08 2,354,438 2,354,438
ContiMortgage
Home Equity Loan
3,000,000 3,000,000 ++ Trust 6.470% 12/25/13 2,830,605 2,830,605
1,000,000 1,000,000 ++ Countrywide Inc 6.750% 05/25/24 924,745 924,745
30,355 30,355 ++ Countrywide Inc 8.110% 11/25/24 30,683 30,683
DLJ Mortgage
385,171 385,171 ++ Acceptance Corp 6.500% 05/19/29 356,710 356,710
First Union
2,600,000 2,600,000 ++ Lehman Brothers 6.560% 11/18/08 2,460,822 2,460,822
GE Capital
Mortgage
3,214,900 3,214,900 ++ Services Inc 6.250% 12/25/23 2,570,891 2,570,891
GE Capital
Mortgage
5,500,000 5,500,000 ++ Services Inc 6.250% 05/25/29 5,276,067 5,276,067
GE Capital
Mortgage
4,955,500 4,955,500 ++ Services Inc 6.500% 04/25/24 4,779,654 4,779,654
GE Capital
Mortgage
24,107,750 24,107,750 ++ Services Inc 6.500% 05/25/29 21,650,327 21,650,327
GMAC Commercial
Mortgage
15,232,310 15,232,310 ++ Security Inc 0.820% 08/15/23 580,579 580,579
GMAC Commercial
Mortgage
2,200,000 2,200,000 ++ Security Inc 6.700% 03/15/08 2,086,645 2,086,645
Greenwich
Capital
12,468 12,468 ++ Acceptance Inc 7.587% 01/25/22 12,430 12,430
IMC Home Equity
2,500,000 2,500,000 ++ Loan Trust 6.340% 08/20/29 2,390,963 2,390,963
Imperial Savings
& Loan
41,078 41,078 + ++ Association 8.341% 02/25/18 42,156 42,156
Lehman Large
17,120,900 17,120,900 ++ Loan 0.949% 04/12/12 562,791 562,791
Morgan Stanley
Capital
666,903 666,903 ++ Industrial Inc 6.160% 04/03/14 635,322 635,322
Mortgage Capital
8,486,918 8,486,918 ++ Funding Inc 1.580% 11/20/12 590,223 590,223
Norwest Asset
875,291 875,291 ++ Securities Corp 7.500% 03/25/27 847,566 847,566
Residential
Accredited Loans
1,000,000 1,000,000 ++ Inc 7.500% 03/25/27 981,325 981,325
Residential
Funding Mtg
12,500,000 12,500,000 ++ Securities Inc 6.500% 04/25/29 11,216,812 11,216,812
Residential
Funding Mtg
3,873,717 3,873,717 + ++ Securities Inc 6.500% 05/25/29 3,155,948 3,155,948
Resolution Trust
1,422,426 1,422,426 + ++ Corp 9.450% 05/25/24 1,417,270 1,417,270
Salomon Brothers
Mtg Services VII
9,000,000 9,000,000 ++ Inc 5.980% 11/15/29 8,998,425 8,998,425
Securitized
57,751 57,751 ++ Asset Sales Inc 6.500% 11/25/25 57,561 57,561
11,205,265 11,205,265 + ++ Structured Asset 7.668% 01/28/30 11,172,000 11,172,000
Union Planters
4,500,000 4,500,000 ~ ++ Corp 6.800% 01/25/28 4,304,228 4,304,228
------------ ------------- ------------
135,423,272 24,327,129 159,750,401
------------ ------------- ------------
Federal Home Loan Mortgage
Corporation - 13.68%
3,724,000 3,724,000 ++ FHLMC 5.000% 06/15/09 3,191,468 3,191,468
48,000,000 48,000,000 + ++ # FHLMC 5.500% 01/19/30 42,284,880 42,284,880
17,000,000 17,000,000 ++ # FHLMC 6.000% 01/19/20 15,560,270 15,560,270
55,500,000 55,500,000 ++ # FHLMC 6.000% 01/19/30 50,799,705 50,799,705
741,710 741,710 ++ FHLMC 6.500% 11/25/23 631,460 631,460
158,541 158,541 ++ FHLMC 6.770% 05/01/23 162,336 162,336
See Notes to Pro Forma Financial Statements See explanation of symbols on Page 20
</TABLE>
11
<PAGE>
PACIFIC SELECT FUND
Pro Forma Managed Bond and Bond and Income Portfolios
Schedule of Investments (Continued)
December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Principal Amount Market Value
--------------------------------------- ---------------------------------------
Bond and Pro Forma Bond and Pro Forma
Managed Bond Income Combined Security Rate Maturity Managed Bond Income Combined
------------ ------------- ------------ ------------------ -------- -------- ------------ ------------- ------------
<C> <C> <C> <S> <C> <C> <C> <C> <C>
$252,461 $252,461 ++ FHLMC 7.430% 08/01/21 $254,036 $254,036
350,807 350,807 ++ FHLMC 7.430% 02/01/23 353,056 353,056
9,303,591 9,303,591 + ++ FHLMC 7.430% 10/01/23 9,002,205 9,002,205
15,262,670 15,262,670 ++ FHLMC 7.500% 01/15/23 14,823,273 14,823,273
2,550,115 2,550,115 ++ FHLMC 7.500% 09/20/26 2,447,838 2,447,838
7,787,252 7,787,252 ++ FHLMC 7.500% 01/15/27 7,276,175 7,276,175
75,000,000 75,000,000 ++ # FHLMC 7.500% 01/19/30 74,226,750 74,226,750
------------ ------------- ------------
217,821,984 $3,191,468 221,013,452
------------ ------------- ------------
Federal National
Mortgage Associa-
tion - 1.88%
$16,500,000 16,500,000 ++ FNMA 0.000% 10/09/19 3,976,434 3,976,434
482,862 482,862 ++ FNMA 5.824% 05/01/36 471,646 471,646
2,565,604 2,565,604 ++ FNMA 5.850% 01/25/17 2,552,127 2,552,127
4,000,000 4,000,000 ++ FNMA 6.000% 05/18/28 3,606,780 3,606,780
5,000,000 5,000,000 ++ # FNMA 6.000% 01/01/30 4,573,450 4,573,450
2,606,005 2,606,005 ++ FNMA 6.188% 04/01/27 2,572,381 2,572,381
2,000,000 2,000,000 ++ FNMA 6.210% 08/06/38 1,726,886 1,726,886
3,985,326 3,985,326 ++ FNMA 6.500% 05/01/06 3,911,605 3,911,605
536,067 536,067 ++ FNMA 6.667% 01/01/25 538,093 538,093
1,874,560 1,874,560 ++ FNMA 6.677% 01/01/23 1,883,110 1,883,110
2,621,550 2,621,550 ++ FNMA 7.084% 06/01/27 2,600,826 2,600,826
525,797 525,797 ++ FNMA 7.178% 12/01/22 541,753 541,753
2,500,000 2,500,000 ++ FNMA 7.250% 06/20/02 1,306,435 1,306,435
(Principal in New
Zealand Dollar)
72,615 72,615 ++ FNMA 7.399% 11/01/23 73,300 73,300
------------ ------------- ------------
21,024,726 9,310,100 30,334,826
------------ ------------- ------------
Government National
Mortgage Associa-
tion - 7.45%
12,000,000 12,000,000 ++ # GNMA 6.000% 01/25/30 10,912,560 10,912,560
4,594,482 4,594,482 ++ GNMA 6.125% 11/20/23 4,637,066 4,637,066
1,055,192 1,055,192 ++ GNMA 6.125% 10/20/24 1,061,646 1,061,646
5,508,785 5,508,785 ++ GNMA 6.125% 11/20/26 5,563,302 5,563,302
636,825 636,825 ++ GNMA 6.125% 12/20/26 643,093 643,093
1,098,330 1,098,330 ++ GNMA 6.375% 03/20/24 1,108,593 1,108,593
942,309 942,309 ++ GNMA 6.375% 02/20/27 944,427 944,427
12,734,683 12,734,683 ++ GNMA 6.500% 01/20/29 10,111,223 10,111,223
4,900,000 4,900,000 ++ # GNMA 6.500% 01/25/30 4,598,356 4,598,356
3,151,432 3,151,432 ++ GNMA 6.500% 10/01/33 2,882,703 2,882,703
8,475,204 8,475,204 ++ GNMA 6.650% 06/15/02 8,513,342 8,513,342
4,686,096 4,686,096 + ++ GNMA 6.650% 10/15/40 4,497,896 4,497,896
1,117,141 1,117,141 ++ GNMA 6.750% 07/20/25 1,129,915 1,129,915
See Notes to Pro Forma Financial Statements See explanation of symbols on Page 20
</TABLE>
12
<PAGE>
PACIFIC SELECT FUND
Pro Forma Managed Bond and Bond and Income Portfolios
Schedule of Investments (Continued)
December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Principal Amount Market Value
----------------------------------------- -----------------------------------------
Pro Forma Pro Forma
Managed Bond Bond and Income Combined Security Rate Maturity Managed Bond Bond and Income Combined
------------ --------------- ------------ ---------------- -------- -------- ------------ --------------- ------------
<C> <C> <C> <S> <C> <C> <C> <C> <C>
$3,874,937 $3,874,937 ++ GNMA 6.750% 07/20/26 $3,904,073 $3,904,073
61,900,000 61,900,000 ++ # GNMA 7.000% 01/25/30 59,772,497 59,772,497
45,611 45,611 ++ GNMA 9.000% 02/15/17 47,801 47,801
19,087 19,087 ++ GNMA 9.500% 08/15/17 20,347 20,347
3,080 3,080 ++ GNMA 9.500% 04/15/18 3,283 3,283
46,403 46,403 ++ GNMA 9.500% 09/15/18 49,467 49,467
14,044 14,044 ++ GNMA 10.000% 05/15/19 15,253 15,253
------------ ------------ ------------
120,416,843 -- 120,416,843
------------ ------------ ------------
Student Loan Mortgage - 0.46%
Student Loan
Mortgage
7,400,000 7,400,000 ++ Association 5.129% 06/30/00 7,397,410 7,397,410
------------ ------------ ------------
Total Mortgage-
Backed
Securities
(Cost
$556,925,756 -
Pro Forma
Combined) 502,084,235 $36,828,697 538,912,932
------------ ------------ ------------
OTHER ASSET-BACKED SECURITIES -
2.69%
Countrywide Home
2,827,054 2,827,054 ++ Loans 6.500% 09/25/13 2,660,781 2,660,781
Cross Country
Master Credit
6,700,000 6,700,000 + ++ Card Trust 6.962% 06/15/06 6,700,000 6,700,000
Ford Credit Auto
6,500,000 6,500,000 ++ Owner Trust 5.770% 11/15/01 6,480,012 6,480,012
Green Tree
$2,700,000 2,700,000 ++ Financial 6.630% 06/01/30 2,420,077 2,420,077
MLCC Mortgage
19,100,000 19,100,000 + ++ Investments 6.842% 01/01/25 19,100,000 19,100,000
Onyx Acceptance
4,300,000 4,300,000 ++ Owner Trust 6.170% 07/15/05 4,207,486 4,207,486
Residential
Asset Securities
276,508 276,508 ++ Corp 5.890% 10/25/27 274,958 274,958
Ryland Mortgage
35,687 35,687 ++ Securities Corp 14.000% 11/25/31 38,169 38,169
Salomon Brothers
Mtg Services VII
1,648,047 1,648,047 + ++ Inc 5.855% 02/25/27 1,644,957 1,644,957
------------ ------------ ------------
Total Other
Asset-Backed
Securities
(Cost
$44,094,574 -
Pro Forma
Combined) 36,898,877 6,627,563 43,526,440
------------ ------------ ------------
U.S. TREASURY INFLATION INDEX
BONDS - 4.19%
U.S. Treasury
Inflation Index
12,724,320 12,724,320 Bond 3.375% 01/15/07 11,996,654 11,996,654
U.S. Treasury
Inflation Index
39,027,479 39,027,479 Bond 3.625% 07/15/02 38,661,597 38,661,597
U.S. Treasury
Inflation Index
9,887,914 9,887,914 Bond 3.625% 01/15/08 9,421,332 9,421,332
U.S. Treasury
Inflation Index
7,894,923 7,894,923 Bond 3.875% 01/15/09 7,633,404 7,633,404
------------ ------------ ------------
Total U.S.
Treasury
Inflation Index
Bonds
(Cost
$68,028,561 -
Pro Forma
Combined) 67,712,987 -- 67,712,987
------------ ------------ ------------
U.S. TREASURY BONDS - 0.36%
U.S. Treasury
500,000 500,000 Bond 7.875% 02/15/21 558,906 558,906
U.S. Treasury
3,600,000 3,600,000 Bond 11.125% 08/15/03 4,131,000 4,131,000
See Notes to Pro Forma Financial Statements See explanation of symbols on Page 20
</TABLE>
13
<PAGE>
PACIFIC SELECT FUND
Pro Forma Managed Bond and Bond and Income Portfolios
Schedule of Investments (Continued)
December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Principal Amount Market Value
--------------------------------------- ---------------------------------------
Bond and Pro Forma Bond and Pro Forma
Managed Bond Income Combined Security Rate Maturity Managed Bond Income Combined
------------ ------------- ------------ -------------------- -------- -------- ------------ ------------- ------------
<C> <C> <C> <S> <C> <C> <C> <C> <C>
$800,000 $800,000 U.S. Treasury Bond 11.250% 02/15/15 $1,130,997 $1,130,997
------------ ------------- ------------
Total U.S. Treasury
Bonds
(Cost $5,942,493 -
Pro Forma Combined) 5,261,997 $558,906 5,820,903
------------ ------------- ------------
STRIPPED COUPON - 0.29%
$12,000,000 12,000,000 FICO 0.000% 03/07/13 4,604,940 4,604,940
------------ ------------- ------------
Total Stripped
Coupon
(Cost $5,345,807 -
Pro Forma Combined) - 4,604,940 4,604,940
------------ ------------- ------------
U.S. TREASURY
STRIPPED - 1.58%
U.S. Treasury
31,450,000 31,450,000 Stripped 0.000% 11/15/18 8,762,190 8,762,190
U.S. Treasury
42,500,000 42,500,000 ** Stripped 0.000% 05/15/20 10,739,155 10,739,155
U.S. Treasury
7,000,000 7,000,000 Stripped 0.000% 08/15/20 1,739,038 1,739,038
U.S. Treasury
24,150,000 24,150,000 Stripped 0.000% 08/15/26 4,299,618 4,299,618
------------ ------------- ------------
Total U.S. Treasury
Stripped
(Cost $29,335,868 -
Pro Forma Combined) - 25,540,001 25,540,001
------------ ------------- ------------
FOREIGN BONDS - 0.86%
Bermuda - 0.02%
Global Crossing
250,000 250,000 Holdings Ltd 9.125% 11/15/06 248,437 248,437
Canada - 0.07%
1,000,000 1,000,000 Hydro Quebec 8.625% 06/15/29 1,093,380 1,093,380
Mexico - 0.77%
2,000,000 2,000,000 Banamex 9.125% 04/06/00 2,004,600 2,004,600
1,290,000 1,290,000 Mexico-PAR 6.250% 12/31/19 1,014,263 1,014,263
9,000,000 480,000 9,480,000 ~ Petro Mexicanos 8.799% 07/15/05 8,831,250 471,000 9,302,250
180,000 180,000 Petro Mexicanos 9.371% 07/15/05 176,625 176,625
------------ ------------- ------------
10,835,850 1,661,888 12,497,738
------------ ------------- ------------
Total Foreign Bonds
(Cost $13,656,439 -
Pro Forma Combined) 10,835,850 3,003,705 13,839,555
------------ ------------- ------------
FOREIGN GOVERNMENT
BONDS - 6.24%
Argentina - 0.46%
49,536 49,536 Province of Tucuman 9.450% 08/01/04 38,551 38,551
See Notes to Pro Forma Financial Statements See explanation of symbols on Page 20
</TABLE>
14
<PAGE>
PACIFIC SELECT FUND
Pro Forma Managed Bond and Bond and Income Portfolios
Schedule of Investments (Continued)
December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Principal Amount Market Value
--------------------------------------- ---------------------------------------
Bond and Pro Forma Bond and Pro Forma
Managed Bond Income Combined Security Rate Maturity Managed Bond Income Combined
------------ ------------- ------------ --------------------- -------- -------- ------------ ------------- ------------
<C> <C> <C> <S> <C> <C> <C> <C> <C>
$770,000,000 $770,000,000 Republic of Argentina 5.500% 03/27/01 $7,436,833 $7,436,833
(Principal in
Japanese Yen)
------------ ------------- ------------
7,436,833 $38,551 7,475,384
------------ ------------- ------------
Brazil - 0.41%
Brazil 'C' Bond Var
$607,818 607,818 Brady 5.000% 04/15/14 450,697 450,697
Brazil Federal
381,000 381,000 Republic 14.500% 10/15/09 423,100 423,100
4,501,800 4,501,800 Republic of Brazil 6.500% 01/01/01 4,451,155 4,451,155
1,410,000 1,410,000 Republic of Brazil 6.937% 04/15/06 1,237,275 1,237,275
------------ ------------- ------------
5,688,430 873,797 6,562,227
------------ ------------- ------------
Bulgaria - 0.04%
830,000 830,000 Bulgaria 2.750% 07/28/12 600,595 600,595
------------ ------------- ------------
Canada - 0.17%
2,495,000 2,495,000 Quebec Province 7.500% 07/15/23 2,439,361 2,439,361
340,000 340,000 Saskatchewan Province 8.500% 07/15/22 371,651 371,651
------------ ------------- ------------
- 2,811,012 2,811,012
------------ ------------- ------------
Chile - 0.46%
8,000,000 8,000,000 Republic of Chile 6.875% 04/28/09 7,430,408 7,430,408
------------ ------------- ------------
Colombia - 0.04%
720,000 720,000 Republic of Colombia 8.625% 04/01/08 630,900 630,900
------------ ------------- ------------
Mexico - 0.88%
13,200,000 13,200,000 United Mexican States 6.000% 04/07/00 13,081,200 13,081,200
1,200,000 1,200,000 United Mexican States 6.767% 06/27/02 1,191,000 1,191,000
------------ ------------- ------------
14,272,200 - 14,272,200
------------ ------------- ------------
New Zealand - 0.33%
New Zealand
3,900,000 3,900,000 Government 7.000% 07/15/09 1,999,423 1,999,423
New Zealand
4,500,000 4,500,000 Government 5.500% 04/15/03 2,257,435 2,257,435
New Zealand
2,000,000 2,000,000 Government 10.000% 03/15/02 1,117,636 1,117,636
(All Principal in
New Zealand Dollar)
------------ ------------- ------------
3,375,071 1,999,423 5,374,494
------------ ------------- ------------
</TABLE>
See Notes to Pro Forma Financial Statements
15
<PAGE>
PACIFIC SELECT FUND
Pro Forma Managed Bond and Bond and Income Portfolios
Schedule of Investments (Continued)
December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Principal Amount Market Value
--------------------------------------- ---------------------------------------
Bond and Pro Forma Bond and Pro Forma
Managed Bond Income Combined Security Rate Maturity Managed Bond Income Combined
------------ ------------- ------------ --------------------- -------- -------- ------------ ------------- ------------
<C> <C> <C> <S> <C> <C> <C> <C> <C>
Panama - 1.26%
Banco LatinoAmericano
$11,300,000 $11,300,000 De Exportaciones 6.150% 05/02/00 $11,253,670 $11,253,670
Banco LatinoAmericano
8,100,000 8,100,000 De Exportaciones 6.950% 03/05/01 8,038,683 8,038,683
$1,053,884 1,053,884 Republic of Panama 7.001% 05/10/02 $1,027,912 1,027,912
30,000 30,000 Republic of Panama 9.375% 04/01/29 28,575 28,575
------------ ------------- ------------
19,292,353 1,056,487 20,348,840
------------ ------------- ------------
Peru - 0.04%
1,000,000 1,000,000 Peru-Flirb 3.750% 03/07/17 625,593 625,593
------------ ------------- ------------
Philippines - 0.07%
Republic of
1,040,000 1,040,000 Philippines 9.500% 10/21/24 1,053,000 1,053,000
------------ ------------- ------------
Poland - 0.04%
500,000 500,000 Poland Par Stepup 3.500% 10/27/00 308,750 308,750
110,000 110,000 Poland Reg'd Rsta 4.000% 10/27/24 72,529 72,529
230,000 230,000 Poland-Bear-PDI 6.000% 10/27/02 203,314 203,314
------------ ------------- ------------
308,750 275,843 584,593
------------ ------------- ------------
Qatar - 0.03%
470,000 470,000 State of Qatar 9.500% 05/21/09 493,829 493,829
------------ ------------- ------------
South Korea - 1.71%
Export Import Bank
3,600,000 3,600,000 Korea 6.500% 11/15/06 3,414,733 3,414,733
Korea Development
135,000,000 135,000,000 Bank 1.875% 02/13/02 1,319,768 1,319,768
(Principal in
Japanese Yen)
Korea Development
3,500,000 3,500,000 Bank 7.125% 09/17/01 3,474,481 3,474,481
Korea Development
6,330,000 6,330,000 Bank 7.375% 09/17/04 6,222,314 6,222,314
Korea Development
10,100,000 10,100,000 Bank 7.900% 02/01/02 10,140,895 10,140,895
Korea National
3,000,000 3,000,000 Housing 8.437% 05/23/01 3,060,000 3,060,000
------------ ------------- ------------
27,632,191 - 27,632,191
------------ ------------- ------------
United Kingdom - 0.30%
TXU Eastern Funding
5,000,000 5,000,000 Corp 6.150% 05/15/02 4,849,550 4,849,550
------------ ------------- ------------
Total Foreign
Government Bonds
(Cost $100,233,696 -
Pro Forma Combined) 90,285,786 10,459,030 100,744,816
------------ ------------- ------------
</TABLE>
See Notes to Pro Forma Financial Statements
16
<PAGE>
PACIFIC SELECT FUND
Pro Forma Managed Bond and Bond and Income Portfolios
Schedule of Investments (Continued)
December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Principal Amount Market Value
--------------------------------------- ---------------------------------------
Bond and Pro Forma Bond and Pro Forma
Managed Bond Income Combined Security Rate Maturity Managed Bond Income Combined
------------ ------------- ------------ --------------------- -------- -------- ------------ ------------- ------------
<C> <C> <C> <S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS - 0.56%
Long Island Power
$1,500,000 $1,500,000 Authority 5.250% 12/01/26 $1,296,996 $1,296,996
New York City Taxable
7,900,000 7,900,000 'B' 6.000% 08/01/01 7,807,230 7,807,230
------------ ------------ ------------
Total Municipal Bonds
(Cost $9,424,908 -
Pro Forma Combined) 9,104,226 - 9,104,226
------------ ------------ ------------
CALL OPTIONS - 0.20%
US Long Bond
Strike @ 98.00 Exp.
32,200,000 32,200,000 03/00 6.500% 10/15/06 3,208,409 3,208,409
------------ ------------ ------------
Total Call Options
(Cost $3,743,25 - Pro
Forma Combined) 3,208,409 - 3,208,409
------------ ------------ ------------
SHORT-TERM INVEST-
MENTS - 10.26%
COMMERCIAL PAPER - 8.10%
19,300,000 19,300,000 CBA Delaware 5.870% 04/03/00 19,007,332 19,007,332
19,300,000 19,300,000 Deutsche Bank Euro CD 5.940% 02/02/00 19,198,096 19,198,096
Deutsche Bank
800,000 800,000 Financial Disc Note 6.040% 02/02/00 795,705 795,705
30,000,000 30,000,000 Gannett Co Inc 5.920% 01/26/00 29,876,667 29,876,667
General Electric
2,600,000 2,600,000 Capital Corp 5.930% 02/22/00 2,577,729 2,577,729
General Electric
5,100,000 5,100,000 Capital Corp 5.980% 02/14/00 5,062,912 5,062,912
1,600,000 1,600,000 Goldman Sachs CP 5.970% 02/09/00 1,589,652 1,589,652
Houston Lighting &
5,500,000 5,500,000 Power 6.220% 02/24/00 5,448,685 5,448,685
Oesterreichische
3,900,000 3,900,000 Kontbk 5.920% 01/25/00 3,884,608 3,884,608
17,600,000 17,600,000 Penney (J.C.) Funding 6.400% 01/26/00 17,521,778 17,521,778
US West Capital
2,100,000 2,100,000 Funding Inc 5.960% 03/24/00 2,071,158 2,071,158
US West Capital
3,500,000 3,500,000 Funding Inc 6.140% 03/24/00 3,450,454 3,450,454
US West Capital
4,200,000 4,200,000 Funding Inc 6.190% 03/24/00 4,140,060 4,140,060
US West Capital
2,200,000 2,200,000 Funding Inc 6.240% 03/24/00 2,168,349 2,168,349
US West Capital
7,100,000 7,100,000 Funding Inc 6.290% 03/24/00 6,997,036 6,997,036
US West Capital
7,100,000 7,100,000 Funding Inc 6.350% 03/24/00 6,996,054 6,996,054
------------ ------------ ------------
Total Commercial
Paper 130,786,275 - 130,786,275
------------ ------------ ------------
U.S. TREASURY BILLS - 0.13%
700,000 700,000 ** U.S. Treasury Bill 4.680% 02/10/00 696,360 696,360
1,440,000 1,440,000 ** U.S. Treasury Bill 5.010% 02/17/00 1,431,062 1,431,062
------------ ------------ ------------
Total U.S. Treasury
Bills 2,127,422 - 2,127,422
------------ ------------ ------------
See Notes to Pro Forma Financial Statements See explanation of symbols on Page 20
</TABLE>
17
<PAGE>
PACIFIC SELECT FUND
Pro Forma Managed Bond and Bond and Income Portfolios
Schedule of Investments (Continued)
December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Principal Amount Market Value
--------------------------------------- ------------------------------------------
Bond and Pro Forma Bond and Pro Forma
Managed Bond Income Combined Security Rate Maturity Managed Bond Income Combined
------------ ------------- ------------ ----------------------- -------- -------- -------------- ------------- ------------
<C> <C> <C> <S> <C> <C> <C> <C> <C>
U.S. TREASURY NOTE - 0.44%
$7,085,000 $7,085,000 ** U.S. Treasury Note 5.500% 02/29/00 $7,089,427 $7,089,427
-------------- ------------- --------------
Total U.S. Treasury Note 7,089,427 - 7,089,427
-------------- ------------- --------------
SECURITIES HELD UNDER
REPURCHASE AGREEMENTS -
1.59%
Goldman Sachs
(Dated 12/31/99,
repurchase price
of $1,600,421;
collateralized
partially by Fannie
Mae - market value
$14,810,020 and due
$1,600,000 1,600,000 11/15/02) 3.159% 01/03/00 $1,600,000 1,600,000
State Street Bank and
Trust (Dated 12/31/99,
repurchase price of
$90,015; collateralized
by U.S. Treasury Notes
- market value $94,950
90,000 90,000 and due 05/15/16) 2.000% 01/03/00 90,000 90,000
State Street Bank and
Trust (Dated 12/31/99,
repurchase price of
$24,022,855;
collateralized by
U.S. Treasury Notes
- market value
$24,484,975 and due
24,018,000 24,018,000 12/31/00) 2.500% 01/03/00 24,018,000 24,018,000
-------------- ------------- --------------
Total Securities
Held Under
Repurchase
Agreements 24,018,000 1,690,000 25,708,000
-------------- ------------- --------------
Total Short-Term
Investments
(Cost
$165,709,924 -
Pro Forma
Combined) 164,021,124 1,690,000 165,711,124
-------------- ------------- --------------
TOTAL
PORTFOLIOS -
MARKET VALUE $1,419,785,281 $195,932,479 $1,615,717,760
-------------- ------------- --------------
TOTAL
PORTFOLIOS -
COST $1,440,347,484 $206,907,384 $1,647,254,868
-------------- ------------- --------------
See Notes to Pro Forma Financial Statements See explanation of symbols on Page 20
</TABLE>
18
<PAGE>
PACIFIC SELECT FUND
Pro Forma Managed Bond and Bond and Income Portfolios
Schedule of Investments (Continued)
December 31, 1999 (Unaudited)
<TABLE>
- -------------------------------------------------------------------------------------------------
Notes to Schedule of Investments
(a) Securities with an
approximate aggregate
market value of
$10,353,909
($9,216,849 for
Managed Bond, and
$1,137,060 for Bond
and Income) have been
segregated with the
custodian to cover
margin requirement for
the following open
futures contracts at
December 31, 1999:
<CAPTION>
Managed Bond Bond and Income Pro Forma Combined
---------------------- ------------------------ ------------------------
Unrealized Unrealized
Number of Unrealized Number of Appreciation Number of Appreciation
Type Contracts Depreciation Contracts (Depreciation) Contracts (Depreciation)
- ----------------------- --------- ------------ --------- -------------- --------- --------------
<S> <C> <C> <C> <C> <C> <C>
90-Day Eurodollar
Futures (9/00) 77 ($96,178) 77 ($96,178)
90-Day Eurodollar
Futures (12/00) 225 (292,329) 225 (292,329)
90-Day Eurodollar
Futures (3/01) 200 (28,574) 200 (28,574)
10-Year JBH TSE GSC
(3/00) 11 (106,775) 11 (106,775)
U.S. Treasury 2-Year
Notes (3/00) 45 (59,362) 45 (59,362)
U.S. Treasury 5-Year
Notes (3/00) 287 $363,469 287 363,469
U.S. Treasury 10-Year
Notes (3/00) 908 (1,568,120) 173 (257,703) 1,081 (1,825,823)
U.S. Treasury 30-Year
Bonds (3/00) 808 (908,852) 381 (1,196,352) 1,189 (2,105,204)
----------- ----------- -----------
($3,060,190) ($1,090,586) ($4,150,776)
----------- ----------- -----------
(b) Transactions in
options for the year
ended December 31,
1999, were as follows:
<CAPTION>
Number of Number of Number of
Contracts Premium Contracts Premium Contracts Premium
--------- ------------ --------- -------------- --------- --------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, December
31, 1998 183 $33,814 183 $33,814
Options Written 9,015 4,444,337 9,015 4,444,337
Options Exercised 265 166,124 265 166,124
Options Expired 4,933 2,054,924 4,933 2,054,924
Options Cancelled in
Closing Purchases 1,398 1,175,232 1,398 1,175,232
--------------------- --------------------- ---------------------
Outstanding, December
31, 1999 2,602 $1,081,871 -- -- 2,602 $1,081,871
--------------------- --------------------- ---------------------
</TABLE>
See Notes to Pro Forma Financial Statements
19
<PAGE>
PACIFIC SELECT FUND
Pro Forma Managed Bond and Bond and Income Portfolios
Schedule of Investments (Continued)
December 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
(c) Forward foreign currency contracts outstanding at December 31, 1999, were summarized as follows:
Managed Bond Bond and Income Pro Forma Combined
------------------------- ------------------------ --------------------------
Principal Principal Principal
Contracts Amount Unrealized Amount Unrealized Amount Unrealized
to Buy or Expiration Covered by Appreciation Covered by Appreciation Covered by Appreciation
Type to Sell Month Contracts (Depreciation) Contracts (Depreciation) Contracts (Depreciation)
------------------------------------------ ------------------------- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CD Sell 5/00 $2,307,003 $(17,124) $2,307,003 $(17,124)
JY Buy 2/00 2,977,383 100,602 2,977,383 100,602
Sell 2/00 5,101,482 (243,637) 5,101,482 (243,637)
------------- -------------- ------------
($160,159) - ($160,159)
------------- -------------- ------------
Principal amount denoted in the indicated
currency:
CD - Canadian Dollar
JY - Japanese Yen
(d) At December 31, 1999, the net unrealized
appreciation (depreciation) of investments
based on cost of investments for Federal
income tax purposes was as follows:
Tax cost basis $1,440,347,484 $206,876,260 $1,647,223,744
-------------- ------------ --------------
Aggregate gross unrealized appreciation for
all investments in which there was an
excess of value over tax cost $3,453,840 $977,218 $4,431,058
Aggregate gross unrealized depreciation for
all investments in which there was an excess
of tax cost over value (24,016,043) (11,920,999) (35,937,042)
-------------- ------------ --------------
Net unrealized depreciation ($20,562,203) ($10,943,781) ($31,505,984)
-------------- ------------ --------------
</TABLE>
- --------------------------------------------------------------------------------
Explanation of Symbols for Schedules of Investments
---------------------------------------------------
~ Securities purchased in a private placement transaction; resale to the
public may require registration.
# Forward buy contract.
+ Securities are valued under procedures established by the Board of
Trustees.
** Securities have been fully/partially segregated with the custodian to cover
margin requirements for open futures contracts as of December 31, 1999.
++ Pass-through security backed by a pool of mortgages or other loans on which
principal payments are periodically made. Therefore, the effective maturity
is shorter than the stated maturity.
- --------------------------------------------------------------------------------
20
<PAGE>
PACIFIC SELECT FUND
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF COMBINATION
On , the Board of Pacific Select Fund (the "Fund") approved
the Plan of Reorganization (the "Reorganization") whereby, subject to approval
by the shareholders of the Bond and Income Portfolio, the Managed Bond
Portfolio will acquire all the assets of the Bond and Income Portfolio subject
to the liabilities of such Portfolio, in exchange for a number of shares
having an aggregate value equal to the aggregate value of the shares of the
Bond and Income Portfolio.
The Reorganization will be accounted for as a tax-free merger of investment
companies. The pro forma financial statements are presented for the
information of the reader and may not necessarily be representative of what
the actual combined financial statements would have been had the
Reorganization occurred at December 31, 1999. The unaudited pro forma
statement of assets and liabilities and schedule of investments reflect the
financial position of the Managed Bond Portfolio and the Bond and Income
Portfolio (collectively, the "Portfolios") at December 31, 1999. The unaudited
pro forma statement of operations reflects the results of operations of the
Portfolios for the year ended December 31, 1999. These statements have been
derived from the Portfolios' respective books and records utilized in
calculating daily net asset value at the dates indicated above for the
Portfolios under generally accepted accounting principles. The historical cost
of investment securities will be carried forward to the surviving entity and
results of operations of the Managed Bond Portfolio for pre-combination
periods will not be restated.
The pro forma statement of assets and liabilities, statement of operations,
and schedule of investments should be read in conjunction with the historical
financial statements of the Fund incorporated by reference in the Statements
of Additional Information.
2. SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies are in conformity with
generally accepted accounting principles for investment companies. The
preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates.
A. Portfolio Valuation
The net asset value per share is calculated separately for each Portfolio.
The net asset value per share is determined by dividing the value of each
Portfolio's net assets by the number of outstanding shares of the Portfolio.
Portfolio securities are valued and the net asset value per share is
determined at or about 4:00 p.m. New York City time on each day the New York
Stock Exchange is open.
Portfolio securities for which market quotations are readily available are
stated at market value. Market value is determined on the basis of last
reported sales price, or, if no sales are reported, the mean between the
representative bid and asked quotations obtained from a quotation reporting
system or from established market makers. In other cases, securities are
valued at their fair value as determined in good faith pursuant to procedures
established by the Board of Trustees of the Fund (such valuation methods were
used for approximately 14% of the Managed Bond Portfolio's investments at
December 31, 1999).
B. Securities Transactions and Investment Income
Securities transactions are recorded on a trade date basis. Dividend income
is recorded on the ex-dividend date or, for certain foreign dividends, as soon
as the Portfolio becomes aware of the dividends. Interest income is recorded
on the accrual basis. Realized gains and losses from securities transactions
are recorded on the basis of identified cost.
C. Foreign Currency Translation
Foreign securities, which are not traded in U.S. currency, are recorded in
the financial statements after translation to U.S. dollars based on the
applicable exchange rates at the end of the period. Related dividends,
interest and withholding taxes are accrued at the rates of exchange prevailing
on the respective dates of such transactions. Pursuant to U.S. Federal income
tax regulations, the Fund computes the effect of changes in foreign exchange
rates from the fluctuations arising from changes in market prices on the sale
of foreign currency denominated debt obligations. This foreign exchange
component of the net gains or losses realized on the sales and maturities of
such debt obligations is treated as ordinary income or loss for Federal income
tax purposes.
The Fund isolates that portion of the results of operations resulting from
changes in foreign exchange rates on investments from the fluctuations arising
from changes in market prices of securities held. Such fluctuations are
reported as net realized and unrealized foreign exchange gain or loss.
Reported net realized foreign exchange gains and losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, the difference between the
amounts of dividends, interest, and
21
<PAGE>
PACIFIC SELECT FUND
NOTES TO PRO FORMA FINANCIAL STATEMENTS (Continued)
(Unaudited)
foreign withholding taxes recorded on the Fund's books, and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in the value of assets and
liabilities, including investments in securities at the period-end, resulting
from changes in the exchange rate. Reclassification has been made relating to
foreign exchange gains or losses from the net unrealized depreciation on
investments and assets and liabilities in foreign currencies to the
accumulated undistributed net investment loss in the accompanying statement of
assets and liabilities.
D. Federal Income Taxes
The Fund's policy is to comply with the requirements of the Internal Revenue
Code, as amended, that are applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no Federal income tax provision is required.
Net capital loss carryovers and post-October 31 capital losses, if any, at
December 31, 1999, are available to offset future realized capital gains and
thereby reduce future capital gains distributions. Post-October 31 foreign
currency losses, if any, will offset future net investment income and thereby
reduce future ordinary income distributions. The approximate net capital loss
carryovers and post-October capital losses and foreign currency losses
deferred for the Portfolios at December 31, 1999 were as follows:
<TABLE>
<CAPTION>
Net
Capital
Loss
Carryover Expiration
------------- -------------
<S> <C> <C>
Managed Bond $39,104,787 2007
Bond and Income 8,971,288 2007
------------
Pro Forma - Combined $48,076,075
<CAPTION>
Post-
Post- October
October Foreign
Capital Currency
Loss Deferral Loss Deferral
------------- -------------
<S> <C> <C>
Managed Bond $944,167
Bond and Income 944,082 $48,047
------------ ------------
Pro Forma - Combined $1,888,249 $48,047
</TABLE>
After the Reorganization, the net capital loss carryovers and post-October
capital losses of the Bond and Income Portfolio will be available to the
Managed Bond Portfolio to offset its capital gains, although the amount of
these losses which may offset the Managed Bond Portfolio's future capital
gains in any given year may be limited.
E. Futures Contracts
The Portfolios may use futures contracts to manage their exposure to the
stock markets and to fluctuations in interest rates and foreign currency
values. Initial margin deposits are made upon entering into futures contracts
and can be either cash or securities. During the period a futures contract is
open, changes in the value of the contract are recognized as unrealized gains
or losses by marking-to-market on a daily basis to reflect the market value of
the contract at the end of each day's trading. Variation margin receivables or
payables represent the difference between the unrealized appreciation and
depreciation on the open contracts and the cash deposits made on the margin
accounts. When the contract is closed, the Fund records a realized gain or
loss equal to the difference between the proceeds from the closing transaction
and the Fund's cost of the contract. The primary risks associated with the use
of futures contracts are the possibility of illiquid markets or imperfect
correlation between the value of the instruments and the underlying
securities, or that the counterparty will fail to perform its obligations.
Futures contracts are valued at the settlement price established each day by
the board of trade or exchange on which they are traded.
F. Options on Futures Contracts
The Managed Bond Portfolio wrote options on interest rate futures contracts
during the year ended December 31, 1999. When the Portfolio writes (sells) an
option, an amount equal to the premium received is recorded as an asset with
an equal liability which is marked-to-market based on the option's quoted
daily settlement price. Any fluctuation in the value of such an instrument is
recorded as unrealized appreciation or depreciation until terminated, at which
time realized gains and losses are recognized. The purposes of using options
on futures contracts include hedging exposure to rising interest rates while
retaining capital gain potential from falling rates and capitalizing on
anticipated changes in market volatility. These investments involve, to
varying degrees, elements of market risk and risks in excess of the amount
recognized in the statements of assets and liabilities. Risks may include an
imperfect correlation between the changes in the market values of the
securities held by the Portfolio and the prices of futures options, an
illiquid secondary market for the instruments, or the inability of
counterparty to perform.
G. Forward Foreign Currency Contracts
The Managed Bond Portfolio may enter into forward foreign currency contracts
for the purpose of hedging against foreign exchange risk arising from the
Fund's
22
<PAGE>
PACIFIC SELECT FUND
NOTES TO PRO FORMA FINANCIAL STATEMENTS (Continued)
(Unaudited)
investment in foreign securities. These contracts are marked-to-market daily
at the applicable translation rates and any result of unrealized appreciation
or depreciation is recorded in the Portfolio's financial statements. The
Portfolio records realized gains or losses at the time the forward contract is
closed. A forward contract is extinguished through a closing transaction or
upon delivery of the currency. Risks may arise upon entering these contracts
from the potential inability of counterparty to meet the terms of their
contracts and from unanticipated movements in the value of a foreign currency
relative to the U.S. dollar or other currencies.
3. CAPITAL SHARES
The pro forma net asset value per share assumes additional shares of the
Managed Bond Portfolio were issued in connection with the proposed acquisition
of the Bond and Income Portfolio as of December 31, 1999. The number of
additional shares issued was calculated by dividing the net asset value of the
Bond and Income Portfolio by the net asset value per share of the Managed Bond
Portfolio.
4. PRO FORMA OPERATING EXPENSES
The accompanying pro forma financial statements reflect changes in Portfolio
shares if the Reorganization had taken place on December 31, 1999. Based upon
the fact that the Portfolios each have the same advisory fee at an annual rate
of 0.60% of the Portfolio's average daily net assets and most of the
Portfolios' other expenses (including recordkeeping, trustees, legal, audit,
printing, and proxy and shareholder meeting cost) are allocated among the
Portfolios in proportion to their relative average daily net assets, the
reduction in total operating expenses assuming Managed Bond Portfolio's
expense structure was in effect for the year ended December 31, 1999, was
considered immaterial to the Portfolios.
5. REORGANIZATION COST
Reorganization costs are estimated at approximately $185,000 and half of
these costs are included in the pro forma statement of operations as an
adjustment. These costs represent the estimated expense of both Portfolios
carrying out their obligations under the Reorganization and consist of
management's estimate of legal fees, accounting fees, printing costs and
mailing charges related to the proposed Reorganization. Pacific Life will bear
half the cost of the Reorganization. The Portfolios will bear the other half
of the expenses relating to the proposed Reorganization, including, but not
limited to, the costs of the proxy solicitation and any necessary filings with
the Securities and Exchange Commission, which will be allocated ratably on the
basis of their relative net asset values immediately before closing of the
Bond and Income Portfolio.
---------------
23
<PAGE>
PACIFIC SELECT FUND
The undersigned owner of a variable life insurance policy or variable annuity
contract (collectively, "variable contracts") issued or administered by Pacific
Life Insurance Company ("Pacific Life") and funded by separate accounts of
Pacific Life hereby instructs Pacific Life, on behalf of the pertinent separate
accounts, to vote the shares of the Bond and Income Portfolio of the Pacific
Select Fund, (the "Fund") attributable to his or her variable contract at the
special meeting of shareholders of the Fund to be held at 2:00 p.m., Pacific
time, on August 23, 2000, at 700 Newport Center Drive, Newport Beach,
California, 92660, and at any adjournment thereof, as indicated below with
respect to the matters referred to in the proxy statement for the meeting, and
in the discretion of Pacific Life upon such other matters as may properly come
before the meeting or any adjournment thereof.
THIS VOTING INSTRUCTION IS SOLICITED BY THE BOARD OF TRUSTEES OF THE FUND. The
Board of Trustees recommends a vote FOR the proposal.
XXXXXX X XXXXXXXXXXX X
Please date and sign. All
designated owners of the
variable contract(s) shown
must sign hereon. If as an
attorney, executor, trustee,
guardian or other
representative or as an
officer of a corporation or
partnership, please add title
as such. Receipt of the
Notice of Meeting and Proxy
Statement is hereby
acknowledged.
Dated _________ , 2000
______________________________
______________________________
Signature(s) of contract
owner(s)
- -------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT!
TO VOTE ELECTRONICALLY GO TO OUR WEBSITE: HTTPS://VOTE.PROXY-DIRECT.COM
TO VOTE BY TELEPHONE CALL: 1-800-597-7836
YOUR VOTING CONTROL NUMBER: XXX XXXX XXXX XXX
- -------------------------------------------------------------------------------
Voting Instructions--Please Select One Of These Voting Methods:
Vote by Paper Ballot: Please read your proxy statement including the proposal.
- ---------------------
Vote by filling in the appropriate box on the ballot which represents your vote
on the proposal. Please sign and return your ballot in the enclosed return
envelope. Only voting instructions received at the address shown on the envelope
will be counted.
Vote by Telephone or Electronically: If you wish to vote by telephone or
- ------------------------------------
electronically, see enclosed instructions.
Portfolio
- ---------
Bond and Income Portfolio XXXXXX.XXXX
The voting instruction will be voted as marked. IF NOT MARKED, THIS VOTING
INSTRUCTION WILL BE VOTED FOR THE PROPOSAL. If you do not vote or this voting
instruction is not returned properly executed, your votes will be cast by
Pacific Life on behalf of the pertinent separate account in the same
proportion as it votes shares held by that separate account for which it has
received instructions. PLEASE MARK VOTES AS IN THIS EXAMPLE: [_]
I. To approve a Plan of Reorganization providing for the acquisition of all of
the assets and liabilities of the Bond and Income Portfolio by the Managed
Bond Portfolio.
FOR AGAINST ABSTAIN
Bond and Income Portfolio [_] [_] [_]
YOU MAY VOTE ELECTRONICALLY, BY TELEPHONE OR BY MAIL. IF YOU VOTE BY MAIL, ONLY
SIGNED AND DATED VOTING INSTRUCTIONS RECEIVED AT THE ADDRESS SHOWN ON THE
ENCLOSED ENVELOPE WILL BE COUNTED!
<PAGE>
YOUR VOTE IS IMPORTANT!
And now you can Vote on the Phone or Internet.
<TABLE>
<S> <C>
Vote by Internet: Read your Proxy Statement and the proposal. Go to our
website: https://vote.proxy-direct.com and follow the on-screen directions. You
-----------------------------
will use the control number listed in the box on your voting instructions to access
and vote on the proposal.
Vote by Telephone: Read your Proxy Statement and the proposal. Using a touch
tone telephone, dial our toll free automated number at 1-800-597-7836. You will
Graphic of telephone and keypad here use your control number listed in the box on your voting instructions to access
and vote on the proposal. You may register your vote 24 hours a day.
After dialing, you will be asked to enter your control number. You will then hear that
you have reached the Pacific Select Fund telephone voting site.
You will be prompted to enter your vote using the instructions listed below:
. To vote FOR Proposal I, press 1
. To vote AGAINST, press 9
. To ABSTAIN, press 0
Once you have completed your vote, you will be asked to confirm your selection.
REMEMBER!
. READ YOUR PROXY STATEMENT.
PL Logo . HAVE YOUR VOTING INSTRUCTION FORM AND CONTROL NUMBER.
. IF YOU VOTE BY PHONE OR INTERNET DO NOT RETURN YOUR VOTING
INSTRUCTION FORM. ---
THANK YOU FOR VOTING
</TABLE>
<PAGE>
PART C
OTHER INFORMATION
Item 15. Indemnification
---------------
Reference is made to Article V of the Registrant's Amended and Restated
Declaration of Trust.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 ("Act") may be permitted to Trustees, officers and controlling persons
of the Registrant by the Registrant pursuant to the Declaration of Trust, or
otherwise, the Registrant is aware that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by any Trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such Trustee, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
Item 16. Exhibits
--------
(1) (A) Amended and Restated Agreement and Declaration Of Trust/6/
(B) Instruments Defining Rights of Holders of Securities/1/
(2) By-Laws of Registrant/6/
(3) Not Applicable
(4) Form of Agreement and Plan of Reorganization is included herein.
(5) See Exhibits 1 and 2
(6) (A) Investment Advisory Agreement/1/
(B) Portfolio Management Agreement--Goldman Sachs Asset Management/4/
(C) Portfolio Management Agreement--Pacific Investment Management
Company
(D) Addendum to Portfolio Management Agreement--Goldman Sachs/7/
<PAGE>
(7) (A) Distribution Agreement/6/
(8) Not Applicable
(9) (A) Custodian Agreement/1/
(B) Custodian Agreement Fee Schedule/3/
(10) Not Applicable
(11) Form of Opinion and Consent of Counsel
(12) Form of Opinion and Consent of Counsel supporting tax matters and
consequences
(13) Not Applicable
<PAGE>
(14) Consent of Independent Auditors
(15) Not Applicable
(16) Powers of Attorney/7/
(17) Not Applicable
- --------
(1) Included in Registrant's Form Type N1A/A, Accession No. 0000898430-95-
002464 filed on November 22, 1995 and incorporated by reference herein.
(2) Included in Registrant's Form Type N1A/A, Accession No. 0000898430-96-
000275 filed on February 1, 1996 and incorporated by reference herein.
(3) Included in Registrant's Form Type N1A/B, Accession No. 0001017062-97-
000728 filed on April 25, 1997 and incorporated by reference herein.
(4) Included in Registrant's Form Type N1A/A, Accession No. 0001017062-98-
000424 filed on March 2, 1998 and incorporated by reference herein.
(5) Included in Registrant's Form Type N1A/A, Accession No. 0001017062-98-
001954 filed on September 4, 1998 and incorporated by reference herein.
(6) Included in Registrant's Form Type N1A/A, Accession No. 0001017062-00-
000474 filed on February 16, 2000 and incorporated by reference herein.
(7) Included in Registrant's Form Type N1A/B, Accession No. 0001017062-00-
000983 filed on April 26, 2000 and incorporated by reference herein.
Item 17. Undertakings
------------
(1) The undersigned registrant agrees that prior to any public re-offering
of the securities registered through the use of a prospectus which is a part of
this registration statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) of the Securities Act, 17 CFR
230.145(c), the re-offering prospectus will contain the information called for
by the applicable registration form for re-offerings by persons who may be
deemed underwriters, in addition to the information called for by the other
items of the applicable form.
(2) The undersigned registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to the
registration statement and will not be used until the amendment is effective,
and that, in determining any liability under the 1933 Act, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be
deemed to be the initial bona fide offering of them.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, this registration statement has been
signed on behalf of the registrant in the city of Newport Beach and the state of
California on the 17th day of May.
PACIFIC SELECT FUND
On behalf of the Managed Bond Portfolio
By:
____________________________________
Glenn S. Schafer*
President
*By: /s/ DIANE N. LEDGER
_______________________________
Diane N. Ledger
as attorney-in-fact
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, this registration statement has
been signed below by the following persons in the capacities and on the dates
indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Chairman and Trustee May 17, 2000
- ------------------------------------ (Chief Executive Officer)
Thomas C. Sutton*
Vice President and Treasurer May 17, 2000
- ------------------------------------ (Vice President and Treasurer)
Brian D. Klemens*
President May 17, 2000
- ------------------------------------ (President)
Glenn S. Schafer*
Trustee May 17, 2000
- ------------------------------------
Richard L. Nelson*
Trustee May 17, 2000
- ------------------------------------
Lyman W. Porter*
Trustee May 17, 2000
- ------------------------------------
Alan Richards*
Trustee May 17, 2000
- ------------------------------------
Lucie H. Moore*
* By: /s/ DIANE N. LEDGER May 17, 2000
- ------------------------------------
Diane N. Ledger
as attorney-in-fact
</TABLE>
<PAGE>
Exhibit 6(c)
Portfolio Management Agreement -
Pacific Investment Management Company
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
<PAGE>
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
. 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 1940 Act) 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
<PAGE>
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
- ------------------------------ -----------------------------------
PACIFIC INVESTMENT
MANAGEMENT COMPANY, LLC
Date: May 5, 2000 By
- ------------------------------ -----------------------------------
PACIFIC SELECT FUND
Date: May 5, 2000 By
- ------------------------------ -----------------------------------
<PAGE>
EXHIBIT (11)
OPINION AND CONSENT OF DECHERT PRICE & RHOADS
[FORM OF OPINION]
Dechert Price & Rhoads
1775 Eye Street, N.W.
Washington, DC 20006-2401
May 8, 2000
Pacific Select Fund
700 Newport Center Drive
Newport Beach, California 92660
Re: Pacific Select Fund, on behalf of the Managed Bond Portfolio
Dear Gentlepersons:
We have acted as counsel to Pacific Select Fund, a Massachusetts business
trust (the "Fund"), and we have a general familiarity with the Fund's business
operations, practices and procedures. You have asked for our opinion regarding
the issuance of shares of the Managed Bond Portfolio, a series of the Fund, in
connection with the acquisition by the Managed Bond Portfolio of the assets of
the Bond and Income Portfolio, which will be registered on a Form N-14
Registration Statement (the "Registration Statement") to be filed by the Fund
with the Securities and Exchange Commission.
We have examined originals or certified copies, or copies otherwise
identified to our satisfaction as being true copies, of various corporate
records of the Fund and such other instruments, documents and records as we
have deemed necessary to render this opinion. We have assumed the genuineness
of all signatures, the authenticity of all documents examined by us and the
correctness of all statements of fact contained in those documents.
On behalf of the foregoing, it is our opinion that the shares of the Fund
being registered under the Securities Act of 1933 in the Registration Statement
have been duly authorized and will be legally and validly issued, fully paid
and non-assessable by the Fund upon transfer of the assets of the Bond and
Income Portfolio pursuant to the terms of the Plan of Reorganization included
in the Registration Statement.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to all references to our firm therein.
Very truly yours,
<PAGE>
EXHIBIT (12)
[DECHERT PRICE & RHOADS LETTERHEAD]
FORM OF OPINION
May __, 2000
Board of Directors
Pacific Select Fund
700 Newport Center Drive
Post Office Box 9000
Newport Beach, California 92660
Dear Ladies and Gentlemen:
You have requested our opinion regarding certain Federal income tax
consequences to the Bond and Income Portfolio ("Acquired Portfolio"), a
separate series of the Pacific Select Fund (the "Fund"), a Massachusetts
business trust, to the holders of the shares of Acquired Portfolio (the
"Acquired Portfolio Shareholders"), and to the Managed Bond Portfolio
("Acquiring Portfolio"), a separate series of the Fund, in connection with the
proposed transfer of substantially all of the properties of Acquired Portfolio
to Acquiring Portfolio in exchange solely for voting shares of common stock of
Acquiring Portfolio ("Acquiring Portfolio Shares"), followed by the
distribution of such Acquiring Portfolio Shares received by Acquired Portfolio
in complete liquidation and termination of Acquired Portfolio (the
"Reorganization"), all pursuant to the Plan of Reorganization (the "Plan")
dated as of [May] __, 2000 between the Fund on behalf of Acquired Portfolio and
on behalf of Acquiring Portfolio.
For purposes of this opinion, we have examined and rely upon (1) the Plan,
(2) the Form N-14, dated [June] __, 2000 and filed by Acquiring Portfolio on
said date with the Securities Exchange Commission, (3) the facts and
representations contained in the letter dated on or about the date hereof
addressed to us from the Fund on behalf of Acquiring Portfolio, (4) the facts
and representations contained in the letter dated on or about the date hereof
addressed to us from the Fund on behalf of Acquired Portfolio, (5) the facts
and representations contained in the letter dated on the closing date of the
Reorganization to be addressed to us from the Fund on behalf of Acquiring
Portfolio, (6) the facts and representations contained in the letter dated on
or
<PAGE>
about the closing date of the Reorganization to be addressed to us from the Fund
on behalf of Acquired Portfolio, and (7) such other documents and instruments as
we have deemed necessary or appropriate for purposes of rendering this opinion.
This opinion is based upon the Internal Revenue Code of 1986, as amended
(the "Code"), United States Treasury regulations, judicial decisions, and
administrative rulings and pronouncements of the Internal Revenue Service, all
as in effect on the date hereof. This opinion is conditioned upon the
Reorganization taking place in the manner described in the Plan and the Form N-
14 referred to above.
Based upon the foregoing, it is our opinion that:
1. The acquisition by Acquiring Portfolio of substantially all of the
properties of Acquired Portfolio in exchange solely for Acquiring
Portfolio Shares followed by the distribution of Acquiring Portfolio
Shares to the Acquired Portfolio Shareholders in exchange for their
Acquired Portfolio shares in complete liquidation and termination of
Acquired Portfolio will constitute a reorganization within the meaning
of section 368(a) of the Code. Acquired Portfolio and Acquiring
Portfolio will each be "a party to a reorganization" within the meaning
of section 368(b) of the Code.
2. Acquired Portfolio will not recognize gain or loss upon the transfer of
substantially all of its assets to Acquiring Portfolio in exchange
solely for Acquiring Portfolio Shares except to the extent that Acquired
Portfolio's assets consist of contracts described in section 1256(b) of
the Code ("Section 1256 Contracts"); Acquired Portfolio will be required
to recognize gain or loss on the transfer of any such Section 1256
contracts to Acquiring Portfolio pursuant to the Reorganization as if
such Section 1256 contracts were sold to Acquiring Portfolio on the
effective date of the Reorganization at their fair market value. We do
not express any opinion as to whether any accrued market discount will
be required to be recognized as ordinary income. Acquired Portfolio will
not recognize gain or loss upon the distribution to its shareholders of
the Acquiring Portfolio Shares received by Acquired Portfolio in the
Reorganization.
3. Acquiring Portfolio will recognize no gain or loss upon receiving the
properties of Acquired Portfolio in exchange solely for Acquiring
Portfolio Shares.
4. The aggregated adjusted basis to Acquiring Portfolio of the properties
of Acquired Portfolio received by Acquiring Portfolio in the
reorganization will be the same as the aggregate adjusted basis of those
properties in the hands of Acquired Portfolio immediately before the
exchange.
<PAGE>
5. Acquiring Portfolio's holding periods with respect to the properties of
Acquired Portfolio that Acquiring Portfolio acquires in the transaction
will include the respective periods for which those properties were held
by Acquired Portfolio (except where investment activities of Acquiring
Portfolio have the effect of reducing or eliminating a holding period
with respect to an asset).
6. The Acquired Portfolio Shareholders will recognize no gain or loss upon
receiving Acquiring Portfolio Shares solely in exchange for Acquired
Portfolio shares.
7. The aggregate basis of the Acquiring Portfolio Shares received by a
Acquired Portfolio Shareholder in the transaction will be the same as
the aggregate basis of Acquired Portfolio shares surrendered by the
Acquired Portfolio Shareholder in exchange therefor.
8. An Acquired Portfolio Shareholder's holding period for the Acquiring
Portfolio Shares received by the Acquired Portfolio Shareholder in the
transaction will include the holding period during which the Acquired
Portfolio Shareholder held Acquired Portfolio shares surrendered in
exchange therefor, provided that the Acquired Portfolio Shareholder held
such shares as a capital asset on the date of Reorganization.
We express no opinion as to the federal income tax consequences of the
Reorganization except as expressly set forth above, or as to any transaction
except those consummated in accordance with the Plan.
Our opinion as expressed herein, is solely for the benefit of Acquired
Portfolio, the Acquired Portfolio Shareholders, and the Acquiring Portfolio,
and unless we give our prior written consent, neither our opinion nor this
opinion letter may be quoted in whole or in part or relied upon by any other
person.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the references to this firm in the Tax Section.
In giving this consent, we do not admit that we come within the category of
persons whose consent is required under Section 7 of the Securities Act of
1933, as amended, or the rules and regulations of the Securities Exchange
Commission thereunder.
Very truly yours,
Dechert Price & Rhoads
<PAGE>
EXHIBIT 14
INDEPENDENT AUDITORS' CONSENT
Pacific Select Fund:
We consent to the incorporation by reference in this Registration Statement of
the Pacific Select Fund on Form N-14 of our report dated February 7, 2000
appearing in the Annual Report of the portfolios comprising the Pacific Select
Fund as of and for the respective periods ended December 31, 1999 and to the
reference to us under the heading "Financial Highlights" in the Proxy
Statement/Prospectus, which is part of this Registration Statement.
Deloitte & Touche LLP
Costa Mesa, CA
May 17, 2000
