VARIABLE ANNUITIES INVESTMENT GUIDE

Transcription

1 VARIABLE ANNUITIES INVESTMENT GUIDE As of 5/1/17 INVESTMENT AND INSURANCE PRODUCTS ARE: NOT FDIC INSURED NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY NOT A DEPOSIT OR OTHER OBLIGATION OF, OR GUARANTEED BY, THE BANK OR ANY OF ITS AFFILIATES SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED 5/ A

2 This page must be accompanied by the Variable Annuities Investment Guide dated May 2017 Variable Annuity Investment Options Changes: Effective 11/1/17 I. Manager Change Western Asset Management Inflation Strategy changed to Barings Inflation Strategy. II. Net Expense Change Barings Inflation Strategy net expense increased to 1.17%. VAC

3 CONSIDER A PACIFIC LIFE VARIABLE ANNUITY A variable annuity is a long-term contract between you and an insurance company that helps you grow, protect, and manage retirement savings in a tax-advantaged way. It can help you: o Grow retirement savings faster through the power of tax deferral. o Manage your investment strategy by transferring among a diverse selection of investment options free of tax consequences. o Convert your assets to guaranteed, lifetime retirement income. o Leave a financial legacy through a guaranteed death benefit. Our variable annuities also offer features such as asset allocation and optional principal protection. Optional benefits are available for an additional cost. Guarantees, including optional benefits, are subject to Pacific Life s financial strength and claims-paying ability and do not protect the value of the variable investment options, which are subject to market risk. The value of the variable investment options will fluctuate so that shares, when redeemed, may be worth more or less than the original cost. Annuity withdrawals and other distributions of taxable amounts, including death benefit payouts, will be subject to ordinary income tax. For nonqualified contracts, an additional 3.8% federal tax may apply on net investment income. If withdrawals and other distributions are taken prior to age 59½, an additional 10% federal tax may apply. A withdrawal charge also may apply. Withdrawals will reduce the contract value and the value of the death benefits, and also may reduce the value of any optional benefits. Insurance products are issued by Pacific Life Insurance Company in all states except New York and in New York by Pacific Life & Annuity Company. Product availability and features may vary by state.

4 Invest for the Long Term When investing for the long term, there is a way to help manage the market s unpredictable behavior. It s called diversification and it s considered to be an important factor in affecting long-term investment returns. Diversification is based on the fact that different types of assets generally react differently to changes in the markets. By strategically diversifying your investment options among a variety of asset classes, you can help smooth out the impact of market volatility on your portfolio s total return and help reduce the risks of long-term investing. At Pacific Life, we not only believe in diversification, we ve created a way to help make it easier to achieve. We offer a selection of more than: o 100 investment options o 30 well-known and respected investment managers o 40 investment styles o 60 investment options with net fund expenses 1 of less than 1% Your financial advisor has tools to help you assess your financial needs, investment time horizon, and risk tolerance. Use your advisor s help to determine which option or combination of options may be right for you. 1 Net fund expenses are as of the most recent fund prospectus (adjusted for any fee waivers/reimbursements). For more information, including the gross expense ratio, waivers, and/or expense reimbursements, see the applicable fund prospectus. Expenses are subject to change, and there is no guarantee that the advisor will continue to waive and/or reimburse fund fees beyond their current terms as outlined in each fund prospectus. In addition, please refer to the variable annuity product prospectus for additional product fees and charges. Asset allocation and diversification do not guarantee future results, ensure a profit, or protect against loss. 1

5 DIVERSIFY TO MANAGE MARKET VOLATILITY When your portfolio is invested across major asset classes and investment styles, it can help weather the market s ups and downs, while reducing your exposure to risk. This is demonstrated by the total returns of the diversified portfolio indicated in dark blue in the chart below. Higher Total Returns Lower Source: Morningstar, Inc., Returns assume dividends and capital gains are reinvested and do not include any managerial expenses. The performance data herein represents past performance. Past performance does not guarantee future returns. The category is based on the Russell 1000 Index. The category is based on the Russell 1000 Index. The category is based on the Russell 1000 Index. These three indexes measure the performance of the growth and value styles of investing in large-cap stocks and are constructed to provide a comprehensive and unbiased barometer of the large-cap market. The category is based on the Russell 2500 Index, which measures the performance of both growth and value styles of investing in mid-cap stocks and is constructed to provide a comprehensive and unbiased barometer for the small- to mid-cap segment. The category is based on the MSCI EAFE Index (Morgan Stanley Capital International), which measures the performance of developed stock markets in Europe, Australasia, and the Far East. The category is based on the Bloomberg Barclays Aggregate Bond Index, which includes government, corporate, and mortgage-backed securities, and maturities up to 30 years. The category is based on the BofA Merrill Lynch 3-Month Treasury Bill Index (T bill). The is represented by an equal portion of the previously listed indexes. Index performance is not illustrative of the performance of the diversified funds available through a Pacific Life variable annuity. For performance on Pacific Life investment options, visit Indexes are unmanaged and cannot be invested in directly. 2

6 Diversification 1 may increase the growth potential of your investments while reducing the amount of risk to your portfolio Diversification does not guarantee future results, ensure a profit, or protect against loss. 3

7 CHOICE AND FLEXIBILITY TO HELP YOU REACH YOUR GOALS At the heart of our philosophy is one simple idea: You are an individual. Your specific investment needs, goals, and preferences won t accommodate a one size fits all approach to diversification. That s why we ve built flexibility into our investment lineup. You can: o Use individual investment options to create your own asset allocation portfolio (pages 6 7). o Select among a variety of broadly diversified asset allocation strategies (pages 8 16). o Mix and match any combination of investment options to customize your portfolio the way you choose. Every variable investment option has some degree of risk depending on what it invests in and the strategies it uses. While all variable investment options are subject to market risk, some investment options may experience greater volatility than others. The variable investment options are not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC). It is possible to lose money by investing in these funds. 4

8 In addition to a wide array of asset classes and investment styles to choose from, you and your financial advisor have access to some of the most well-known and respected investment management firms in the industry. Their experience and expertise may help you achieve the greatest growth potential for your variable annuity portfolio. Our investment lineup provides access to the following investment managers: 5

9 INVESTMENT OPTIONS BY ASSET CLASS Net fund expenses are as of the most recent fund prospectus (adjusted for any fee waivers/reimbursements). For more information, including the gross expense ratio, waivers, and/or expense reimbursements, see the applicable fund prospectus. Expenses are subject to change, and there is no guarantee that the advisor will continue to waive and/or reimburse fund fees beyond their current terms as outlined in each fund prospectus. In addition, please refer to the variable annuity product prospectus for additional product fees and charges. Investment Category Manager/Fund Name Morningstar Category (3/31/17) Net Fund Expense (%) - Funds Non- - Funds Equity Funds American Funds IS Bond Fund SM Intermediate-Term Bond 0.88% American Funds IS High- Bond Fund SM High Yield Bond 0.99% American Funds IS US Govt/AAA-Rated Securities Fund SM Intermediate-Term Government Bond 0.86% BlackRock ishares Dynamic V.I. Fund Multi-Sector Bond 0.70% Eaton Vance Floating Rate Loan Bank Loan 0.96% Fidelity VIP Government Money Market Money Market 0.35% Fidelity VIP Strategic Multi-Sector Bond 0.93% Janus Aspen Flexible Bond Intermediate-Term Bond 0.84% Lord Abbett Bond Debenture VC High Yield Bond 0.90% Lord Abbett Total Return VC Intermediate-Term Bond 0.64% Pacific Asset Management Core Intermediate-Term Bond 0.80% Pacific Asset Management Floating Rate Bank Loan 0.91% Pacific Asset Management High Yield Bond High Yield Bond 0.66% PIMCO Inflation Managed Inflation-Protected Bond 0.97% PIMCO Managed Bond Intermediate-Term Bond 0.67% T. Rowe Price Short Duration Bond Short-Term Bond 0.63% Western Asset Management Bond Intermediate-Term Bond 0.64% Western Asset Management Inflation Strategy Inflation-Protected Bond 0.66% American Funds IS Global Bond Fund SM World Bond 1.07% Ashmore Emerging Markets Debt Emerging Markets Bond 1.16% Templeton Global Bond VIP Fund World Bond 0.75% AB Small-Cap Small 0.98% American Century VP Mid Cap 1.02% American Funds IS Blue Chip and Fund SM Large 0.91% American Funds IS Fund SM Large 0.85% American Funds IS - Fund SM Large 0.79% BlackRock Equity Index Large 0.28% BlackRock ishares Equity Appreciation V.I. Fund Large 0.65% BlackRock Large 0.90% BlackRock Small-Cap Index Small 0.56% Boston Partners 0.92% ClearBridge Large 0.83% ClearBridge Variable Aggressive Large 1.05% Fidelity VIP Contrafund Large 0.88% Franklin Rising Dividends VIP Fund Large 0.87% Franklin/BlackRock Small-Cap Equity Small 0.91% Invesco Comstock Large 0.93% Ivy 0.90% Janus Focused Large 0.98% JPMorgan Long/Short Long/Short Equity 2.20% JPMorgan Advantage Large 0.89% Lord Abbett Developing Small 0.83% MFS Large 0.78% Oppenheimer Main Street Core Large 0.68% Scout Investments Equity 0.88% T. Rowe Price Dividend Large 0.89% 6 All investment options may not be available at all firms.

10 Investment Category Manager/Fund Name Morningstar Category (3/31/17) Net Fund Expense (%) Non- Equity Funds Alternative Strategies Funds Sector Funds Asset Allocation/ Balanced Funds American Funds IS Global Fund SM World 1.06% American Funds IS Global and Fund SM World 1.13% American Funds IS Global Small Capitalization Fund SM World 1.24% American Funds IS International Fund SM Large 1.04% American Funds IS International and Fund SM Large 1.18% American Funds IS New World Fund Emerging Markets 1.28% Franklin Mutual Global Discovery VIP Fund World 1.26% Lord Abbett International Core Equity VC Large 0.87% MFS International Large 1.00% Oppenheimer Emerging Markets Emerging Markets 1.20% Oppenheimer Global Fund/VA World 1.02% Oppenheimer International Fund/VA Large 1.25% QS Investors International Small-Cap Small/Mid 1.09% Wellington International Large 0.90% AQR Equity Long/Short Long/Short Equity 1.25% BlackRock ishares Alternative Strategies V.I. Fund Multialternative 0.99% Eaton Vance Global Absolute Return Non-Traditional Bond 1.13% Neuberger Berman Equity Index PutWrite Strategy Option Writing 1.05% PIMCO VIT CommodityRealReturn Strategy Commodity Broad Basket 1.28% PLFA Alternatives Multialternative 1.34% UBS/MCG Currency Strategies Currency 0.90% VanEck VIP Global Hard Assets Fund Natural Resources 1.30% BlackRock Health Sciences Health 1.13% Invesco V.I. Global Real Estate Fund Global Real Estate 1.26% Ivy VIP Energy Equity Energy 1.19% MFS Technology Technology 1.16% MFS Utilities Series Utilities 1.03% Morgan Stanley Real Estate Real Estate 1.06% American Funds IS Asset Allocation Fund SM 50% to 70% Equity 0.79% American Funds IS Capital Builder Fund SM World Allocation 1.04% American Funds IS Global Balanced Fund SM World Allocation 1.24% American Funds IS Managed Risk Asset Allocation Fund SM 50% to 70% Equity 0.90% BlackRock Global Allocation V.I. Fund World Allocation 0.99% BlackRock ishares Dynamic Allocation V.I. Fund Multialternative 0.76% DFA Balanced Allocation 50% to 70% Equity 0.76% Fidelity VIP FundsManager 60% 50% to 70% Equity 0.93% First Trust/Dorsey Wright Tactical Core 30% to 50% Equity 1.30% First Trust/Dow Jones Dividend & Allocation 50% to 70% Equity 1.20% First Trust Multi Allocation 30% to 50% Equity 1.10% Franklin Founding Funds Allocation VIP Fund 70% to 85% Equity 1.10% Franklin VIP Fund 30% to 50% Equity 0.71% Invesco V.I. Balanced-Risk Allocation Fund Tactical Allocation 1.05% Invesco V.I. Equity and Fund 50% to 70% Equity 0.83% Ivy VIP Asset Strategy World Allocation 1.02% Janus Aspen Balanced 50% to 70% Equity 0.89% JPMorgan Insurance Trust Global Allocation World Allocation 1.29% JPMorgan Insurance Trust Builder 30% to 50% Equity 0.93% MFS Total Return Series 50% to 70% Equity 0.88% PLFA Pacific Dynamix Conservative- 30% to 50% Equity 0.59% PLFA Pacific Dynamix Moderate- 50% to 70% Equity 0.59% PLFA Pacific Dynamix 70% to 85% Equity 0.59% PLFA Optimization Conservative 15% to 30% Equity 0.88% PLFA Optimization Moderate-Conservative 30% to 50% Equity 0.93% PLFA Optimization Moderate 50% to 70% Equity 0.99% PLFA Optimization 70% to 85% Equity 1.03% PLFA Optimization Aggressive- 85%+ Equity 1.06% State Street Total Return V.I.S. Fund 50% to 70% Equity 0.86% Eligible for an optional living benefit. 7

11 TARGET-RISK FUNDS Pacific Dynamix s and Optimization s allow you to match the appropriate fund to your financial objectives, risk tolerance, and time horizon. Each fund is structured as a fund-of-funds (a fund that invests in other underlying funds) that has been diversified to achieve a specific target-risk level, using a strategic mix of multiple asset classes. These funds are managed by Pacific Life Fund Advisors LLC (PLFA). Established in 2007, PLFA provides multi-asset class solutions through its Asset Allocation, Manager Oversight, and Investment Risk Management groups. PLFA is an SEC-registered investment adviser and a wholly owned subsidiary of Pacific Life Insurance Company (Pacific Life). As of March 31, 2017, PLFA managed approximately $37 billion in total assets under management. Asset allocation and diversification do not guarantee future results, ensure a profit, or protect against loss. Better results could be achieved by investing in an individual fund or funds representing a single asset class rather than using asset allocation. A fund-of-funds is subject to its own expenses along with the expenses of the underlying funds. It is typically exposed to the same risks as the underlying funds in which it invests in proportion to the allocation of assets among those underlying funds, among other risks. Each underlying fund has its own investment goal, strategy, and risks. The prospectuses for the underlying funds for Optimization s and Pacific Dynamix s are available at 8

12 PACIFIC DYNAMIX PORTFOLIOS Each Pacific Dynamix is a fund-of-funds that invests in a wide range of index-oriented underlying funds. o Lower Cost: Lower expenses associated with index-based investments can allow a Pacific Dynamix to play a key role in managing the long-term cost of your overall investment portfolio. o Investment Depth and Knowledge: You gain exposure to a wide range of securities that spans across multiple countries and asset classes all managed by respected firms such as: You can view each portfolio s underlying fund holdings as of the most recent quarter-end at Fund Composition (%) as of 3/31/17 1 Objective /Global Focus 2 Pacific Dynamix Conservative Seeks current income and moderate growth of capital Pacific Dynamix Moderate Seeks long-term growth of capital and low to moderate income Pacific Dynamix Seeks moderately high, long-term growth of capital with low current income. Eligible for an optional living benefit. Equity Non- Equity Bonds Other 1 Source: Morningstar, Inc., /Global Focus: Determined by the portfolio composition. A focus fund has more than 60% invested in equity and bonds. A global focus fund has more than 30% invested in non- equity and bonds. Total allocation percentages may not equal 100% due to rounding or omissions of holdings of less than 1%. 9

13 PORTFOLIO OPTIMIZATION PORTFOLIOS Optimization s are managed by a dedicated multi-asset class solutions team and offer one-step diversification. The funds offer: o One-Step Diversification: Each Optimization is a fund-of-funds diversified among multiple asset classes, providing you with a core asset-allocation solution to help meet your financial goals. o A Dedicated Team that Manages Multi-Asset Class Solutions: PLFA manages and oversees each fund through a multi-step process that includes: Asset allocation Manager research Investment risk management o Target-Risk Funds to Fit Your Needs: The Optimization s range in investment style from conservative to aggressive-growth to help match your risk tolerances and investment goals. 10

14 You can view each portfolio s underlying fund holdings as of the most recent quarter-end at Fund Composition (%) as of 3/31/17 1 Objective /Global Focus 2 Optimization Conservative Seeks current income and preservation of capital Optimization Moderate- Conservative Seeks current income and moderate growth of capital Optimization Moderate Seeks long-term growth of capital and low to moderate income Optimization Seeks moderately high, long-term capital appreciation with low current income Optimization Aggressive Seeks high, long-term capital appreciation. Eligible for an optional living benefit. Equity Non- Equity Bonds Other 1 Source: Morningstar, Inc., /Global Focus: Determined by the portfolio composition. A focus fund has more than 60% invested in equity and bonds. A global focus fund has more than 30% invested in non- equity and bonds. Total allocation percentages may not equal 100% due to rounding or omissions of holdings of less than 1%. 11

15 ASSET ALLOCATION FUNDS Not all investment managers adopt the same discipline in their approaches to asset allocation. Pacific Life variable annuities offer a variety of asset-allocation funds across multiple investment disciplines from well-known and respected Fund Composition (%) as of 3/31/17 1 Summary /Global Focus 2 American Funds IS Asset Allocation Fund SM The Asset Allocation Fund primarily invests in a diversified portfolio of stocks and bonds. However, it may invest up to 15% of its equity assets in non- companies and up to 25% of debt securities in bonds rated non-investment grade, which are sometimes referred to as junk bonds. Up to 5% of the Fund s assets may be invested in debt securities of issuers outside the American Funds IS Capital Builder Fund SM American Funds IS Capital Builder Fund SM has two primary investment objectives. It seeks to provide a level of current income that exceeds the average yield on stocks generally and to provide a growing stream of income over the years. The Fund seeks to provide above-average current income and a growing stream of income from investments in income-providing securities, including established companies that pay high current income or have strong prospects for dividend growth. American Funds IS Global Balanced Fund SM American Funds IS Global Balanced Fund aims to provide long-term growth of capital, conservation of principal, and current income by investing in stocks and bonds from around the world. Typically, stocks account for at least 45% of assets, and bonds at least 30% of assets. American Funds IS Managed Risk Asset Allocation Fund SM American Fu American Funds IS Managed Risk Asset Allocation Fund SM invests in shares of an underlying fund, American Funds IS Asset Allocation Fund SM. It seeks to provide lower volatility and reduce downside risk relative to the underlying fund through the managed risk strategy operated by a subadvisor, Milliman Financial Risk Management. The underlying fund primarily invests in a diversified portfolio of stocks and bonds. The managed risk strategy primarily uses exchange-traded futures contracts to seek to manage volatility by adjusting the Fund s effective exposure to equities. During extreme market volatility, the exchange-traded futures contracts could significantly reduce the Fund s exposure to stocks, which could limit the Fund s gains in rising markets. 12 Eligible for an optional living benefit. Equity Non- Equity Bonds Other 1 Source: Morningstar, Inc., /Global Focus: Determined by the portfolio composition. A focus fund has more than 60% invested in equity and bonds. A global focus fund has more than 30% invested in non- equity and bonds. Total allocation percentages may not equal 100% due to rounding or omissions of holdings of less than 1%.

16 investment managers. Talk with your financial advisor about the discipline or combination of disciplines that can help meet your investment goals. Fund Composition (%) as of 3/31/17 1 Summary /Global Focus BlackRock Global Allocation V.I. Fund BlackRock Global Allocation V.I. Fund seeks to provide a solid foundation for investors long-term investment portfolios by delivering broad diversification across stocks, bonds, and cash and investing across the globe. BlackRock ishares Dynamic Allocation V.I. Fund BlackRock ishares Dynamic Allocation V.I. Fund seeks total return by investing in exchange-traded funds (ETFs) that implement various investment strategies by taking long or short positions in a broad range of asset classes. The Fund expects to invest between 20% and 80% of its portfolio in equity ETFs, between 10% and 70% of its portfolio in fixed-income ETFs, and up to 30% of its portfolio in ETFs that employ alternative investment strategies. DFA Balanced Allocation DFA Balanced Allocation is a fund-of-funds that seeks long-term growth of capital and low to moderate income. The Fund invests in underlying and international equity and fixed-income funds managed by Dimensional Fund Advisors LP, and utilizes a transparent and disciplined approach that cost-effectively targets higher expected returns that are consistent across asset classes Fidelity VIP FundsManager 60% Fidelity VIP FundsManager 60% is an actively managed fund-of-funds that provides exposure to a wide range of asset classes, styles, and sectors by investing in Fidelity retail and institutional mutual funds Eligible for an optional living benefit. Equity Non- Equity Bonds Other 13

17 ASSET ALLOCATION FUNDS (cont.) Fund Composition (%) as of 3/31/17 1 Summary /Global Focus 2 First Trust/ Dow Jones Dividend & Allocation First Trust/Do First Trust/Dow Jones Dividend & Allocation seeks to provide total return by allocating among dividend-paying stocks and investment-grade bonds. The Fund will focus on investing in approximately 50% dividend-paying equities selected from the Dow Jones Total Market Index, approximately 50% investment-grade bonds of issuers included in the Dow Jones Corporate Bond Index SM, investment-grade bonds of issuers included in the Dow Jones Industrial Average, and government and agency securities. First Trust Multi Allocation The First Trust Multi Allocation seeks to achieve its objective by following a strategic and tactical asset allocation process that provides diversified exposure to investment-grade and non-investment-grade debt markets. The Fund will invest among nine income-generating, diversified asset classes: High Dividend Paying Equities, Preferred Securities, Master Limited Partnerships, Real Estate Investment Trusts, High Yield Bonds, Senior Loans, Corporate Bonds, Mortgage Backed Securities, and Treasury Inflation-Protected Securities. These asset classes provide a broader scope of investment opportunities that can offer higher yield and meaningful diversification relative to traditional bond strategies. First Trust/Dorsey Wright Tactical Core The investment objective of the First Trust/Dorsey Wright Tactical Core (the Fund) is to provide total return. The Fund will have minimum and maximum allocations to four asset classes. The Fund seeks to achieve its investment objective by investing, under normal conditions, at least 80% of its net assets (plus any investment borrowings) in ETFs and cash and cash equivalents that comprise the Dorsey Wright Tactical Tilt Moderate Core Index (the Index). The Index will utilize the Dorsey Wright Dynamic Asset Level Investing (DALI) asset-allocation process developed by Dorsey Wright & Associates (DWA) to allocate assets over the four asset classes in the maximum and minimum allocations noted above. The process evaluates the four asset classes and ranks them from strongest to weakest based on their Relative Strength score. Franklin Founding Funds Allocation VIP Fund Franklin Founding Funds Allocation VIP Fund seeks capital appreciation through a diversified, value-oriented approach investing in a fixed allocation of three Franklin Templeton mutual funds, Franklin VIP Fund, Franklin Mutual Shares VIP Fund, and Templeton VIP Fund, that specifically target stocks and bonds trading at a discount to their true worth. The Fund seeks income as a secondary goal. Eligible for an optional living benefit. Equity Non- Equity Bonds Other 14 1 Source: Morningstar, Inc., /Global Focus: Determined by the portfolio composition. A focus fund has more than 60% invested in equity and bonds. A global focus fund has more than 30% invested in non- equity and bonds. Total allocation percentages may not equal 100% due to rounding or omissions of holdings of less than 1%.

18 Fund Composition (%) as of 3/31/17 1 Summary /Global Focus 2 Franklin VIP Fund Franklin VIP Fund follows a value-oriented investment philosophy seeking income and long-term capital appreciation potential by investing in dividend-paying stocks, convertible securities, and bonds. The Fund s flexible investment approach allows for potential attractive opportunities across market cycles. Invesco V.I. Balanced-Risk Allocation Fund Invesco V.I. Balanced-Risk Allocation Fund s primary objective is to build a portfolio that may perform well in diverse economic environments while balancing the amount of risk contributed by its exposure to the equity, fixed-income, and commodity markets. Actual allocation will vary based on the manager s view of risk associated with each asset class. The Fund also may utilize leverage to increase exposure to certain asset classes. The use of leverage may be subject to additional risk. Invesco V.I. Equity and Fund Invesco V.I. Equity and Fund seeks to build wealth and manage risk through ownership of large companies the team feels are poised to benefit from positive business developments, while minimizing risk through comprehensive diversification of stocks, bonds, and convertible bonds. Ivy VIP Asset Strategy Ivy VIP Asset Strategy is not restricted to predefined percentages in any asset class, which is a hallmark of its flexible mandate. The Fund may allocate from 0 to 100% of its assets among stocks, bonds, and short-term instruments of issuers around the globe, as well as investments in precious metals and those with exposure to foreign securities. Janus Aspen Balanced Janus Aspen Balanced seeks an optimal balance of asset-class opportunities, dynamically allocating across the equity and fixed-income markets using integrated, firm-wide research. The Fund does not have a static 60/40 allocation between equities and bonds; it has the ability to vary from 35% to 65% equities to adapt to market conditions. Eligible for an optional living benefit. Equity Non- Equity Bonds Other 15

19 ASSET ALLOCATION FUNDS (cont.) Fund Composition (%) as of 3/31/17 1 Summary /Global Focus The Fund seeks to maximize long-term total return. JPMorgan Insurance Trust Global Allocation It invests in a broad range of equity, fixed-income and alternative asset classes in the and other markets throughout the world, both developed and emerging. Investment insights are developed through top-down macro views combined with bottom-up views of JPMorgan asset-class specialists globally. JPMorgan Insurance Trust Builder The Fund seeks to maximize income while maintaining prospects for capital appreciation. It invests in income-producing securities, including debt and equity securities, from both developed and emerging markets. The management team has wide latitude to allocate the Fund s assets among strategies and asset classes MFS Total Return Series MFS Total Return Series invests in a 60/40 mix of equities and fixed-income securities; the Fund seeks to provide above-average income with a reasonable opportunity for capital appreciation. It aims for lower volatility compared to a portfolio invested entirely in stocks. State Street Total Return V.I.S. Fund State Street Total Return V.I.S. Fund is an asset-allocation fund for investors seeking long-term appreciation through a globally diversified portfolio. The Fund maintains a strategic allocation to and international equities and fixed income, and will tactically reallocate among asset classes based on market fundamentals and valuations. Eligible for an optional living benefit. Equity Non- Equity Bonds Other If you ve decided that a Pacific Life variable annuity is right for you, the next decision is how to allocate your contract value among the investment options. With the help of your financial advisor, you can choose an investment strategy that best fits your retirement goals. Pacific Life s variable annuities also offer optional living benefits for an additional cost. To be eligible, your contract must be allocated according to the investment allocation requirements that the Company has in effect, which are subject to change. See the prospectus for more details. All optional benefits are subject to availability (including state availability) Source: Morningstar, Inc., /Global Focus: Determined by the portfolio composition. A focus fund has more than 60% invested in equity and bonds. A global focus fund has more than 30% invested in non- equity and bonds. Total allocation percentages may not equal 100% due to rounding or omissions of holdings of less than 1%.

20 AWARD-WINNING CUSTOMER SERVICE 1 Pacific Life provides support to help you achieve your retirement goals. Personal Customer Service (800) (800) in New York Call our toll-free number to access account information via our automated line or to speak directly with an annuity specialist. Website Go online and select Annuities under the heading Client Account Sign-In to view your account information. 1 Recipient of multiple DALBAR Service Awards since Refer to for more information regarding awards, certification, and rankings.

21 Talk to your financial advisor today about a Pacific Life variable annuity and the available investment options. Pacific Life, its affiliates, their distributors, and respective representatives do not provide tax, accounting, or legal advice. Any taxpayer should seek advice based on the taxpayer s particular circumstances from an independent tax advisor or attorney. Pacific Life is a product provider. It is not a fiduciary and therefore does not give advice or make recommendations regarding insurance or investment products. Only an advisor who is also a fiduciary is required to advise if the product purchase and any subsequent action taken with regard to the product are in their client s best interest. This material must be preceded or accompanied by the product prospectus. Contact your financial advisor or visit for more information, including product and underlying fund prospectuses that contain more complete information about Pacific Life and a variable annuity s risks, charges, limitations, and expenses, as well as the risks, charges, expenses, and investment goals of the underlying investment options. Read them carefully before investing. Under current law, a nonqualified annuity that is owned by an individual is generally entitled to tax deferral. IRAs and qualified plans such as 401(k)s and 403(b)s are already tax-deferred. Therefore, a deferred annuity should be used only to fund an IRA or qualified plan to benefit from the annuity s features other than tax deferral. These include lifetime income, death benefit options, and the ability to transfer among investment options without sales or withdrawal charges. Although some funds may have names or investment goals that resemble retail mutual funds managed by the same money manager, these funds may not have the same underlying holdings or performance as the retail mutual funds. Investment results may be higher or lower. Pacific Life and Pacific Select Distributors, LLC, are not affiliated with American Century Investment Services, Inc., American Funds Distributors, Inc., BlackRock Distributors, Inc., Fidelity Distributors Corporation, First Trust s L.P., Franklin Templeton Distributors, Inc., Invesco Distributors, Inc., Ivy Distributors, Inc., Janus Distributors LLC, JPMorgan Distributor Services, Inc, Legg Mason Investor Services, LLC, Lord Abbett Distributor LLC, MFS Fund Distributors, Inc., Neuberger Bergman Management LLC, OppenheimerFunds Distributor, Inc., PIMCO Investments LLC, State Street Global Markets, LLC, VanEck Securities Corporation, BlackRock Investment Management, LLC, Dimensional Fund Advisors LP and SSgA FM, SSgA, Milliman Financial Risk Management and Morningstar Investment Management LLC, or the products each distributes (where applicable). Pacific Life Fund Advisors LLC (PLFA), a wholly owned subsidiary of Pacific Life Insurance Company, is the investment adviser to the Optimization s and Pacific Dynamix s and is responsible for determining the asset allocation mix for each fund. PLFA also does business under the name Pacific Asset Management and manages certain funds under that name. Third-party trademarks and service marks are the property of their respective owners. Pacific Life refers to Pacific Life Insurance Company and its affiliates, including Pacific Life & Annuity Company. Insurance products are issued by Pacific Life Insurance Company in all states except New York and in New York by Pacific Life & Annuity Company. Product availability and features may vary by state. Each insurance company is solely responsible for the financial obligations accruing under the products it issues. Insurance product and rider guarantees, including optional benefits and any fixed crediting rates or annuity payout rates, are backed by the financial strength and claims-paying ability of the issuing insurance company and do not protect the value of the variable investment options. They are not backed by the broker/dealer from which this annuity is purchased, by the insurance agency from which this annuity is purchased, or any affiliates of those entities, and none makes any representations or guarantees regarding the claims-paying ability of the issuing insurance company. Variable insurance products, as well as shares of the Pacific Select Fund, are distributed by Pacific Select Distributors, LLC (member FINRA & SIPC), a subsidiary of Pacific Life Insurance Company (Newport Beach, CA) and an affiliate of Pacific Life & Annuity Company, and are available through licensed third parties A Mailing addresses: Pacific Life Insurance Company P.O. Box 2378 Omaha, NE (800) In New York, Pacific Life & Annuity Company P.O. Box 2829 Omaha, NE (800)