<PAGE>
SUPPLEMENT DATED MAY 16, 1997 TO THE
PROSPECTUS FOR PACIFIC SELECT FUND ("THE FUND") DATED MAY 1, 1997
("PROSPECTUS")
NEW PORTFOLIO MANAGER FOR THE INTERNATIONAL PORTFOLIO
Templeton Investment Counsel, Inc. ("Templeton"), the Fund and Pacific
Mutual Life Insurance Company, the Fund's Adviser, have mutually agreed that
Templeton will no longer serve as Portfolio Manager of the International
Portfolio effective May 31, 1997. Morgan Stanley Asset Management Inc.
("Morgan Stanley"), a wholly-owned subsidiary of Morgan Stanley Group Inc.,
will become the Portfolio Manager for the International Portfolio effective
June 1, 1997 pursuant to a portfolio management agreement with the Adviser and
the Fund. The new portfolio management agreement was approved by the Board of
Trustees, including a majority of the Trustees who are not parties to the new
portfolio management agreement or interested persons of such parties, at a
meeting held on May 15, 1997. Variable Contract Owners having an interest in
the International Portfolio will be asked at an upcoming special meeting of
Shareholders to approve the new portfolio management agreement with Morgan
Stanley.
Morgan Stanley's address is 1221 Avenue of the Americas, New York, New York
10020. Morgan Stanley, together with its affiliated asset management
companies, conducts a worldwide portfolio management business and provides a
broad range of portfolio management services to customers in the United States
and abroad. As of February 28, 1997 Morgan Stanley, together with its
affiliated asset management companies, had approximately $176.9 billion in
assets under management as an investment manager or as a fiduciary adviser.
On February 5, 1997, Morgan Stanley Group Inc. and Dean Witter, Discover &
Co. announced that they had entered into an Agreement and Plan of Merger to
form Morgan Stanley, Dean Witter, Discover & Co. Morgan Stanley Group Inc. is
the direct parent of Morgan Stanley. Subject to certain conditions being met,
it is currently anticipated that the transaction will close in mid-1997.
Thereafter, Morgan Stanley will be a subsidiary of Morgan Stanley, Dean
Witter, Discover & Co.
Pacific Mutual Life will pay Morgan Stanley a fee at an annual rate of .35%
based on the average daily net assets of the International Portfolio. The
advisory fee paid to Pacific Mutual Life by the International Portfolio will
not change.
Francine J. Bovich, a Principal of Morgan Stanley, will be primarily
responsible for the day-to-day investment management and implementation of
Morgan Stanley's investment strategy for the International Portfolio. Prior to
joining Morgan Stanley in 1993, Ms. Bovich was a Principal and Executive Vice
President of Westwood Management Corp., a registered investment adviser from
1986-1993. Before joining Westwood, she was a Managing Director of Citicorp
Investment Management, Inc. (now Chancellor Capital Management), where she was
responsible for the Institutional Investment Management group. Ms. Bovich
began her investment career with Bankers Trust Company (1973-1989). She holds
a B.A. in Economics from Connecticut College and an M.B.A. in Finance from New
York University.
Following the assumption of portfolio management duties by Morgan Stanley,
significant portfolio turnover may occur in connection with a restructuring of
the Portfolio's holdings to reflect the management style of Morgan Stanley.
Such restructuring may result in increased transactional costs for the
Portfolio.
PRIOR PERFORMANCE OF COMPARABLE ACCOUNTS MANAGED BY MORGAN STANLEY
The table below sets forth composite performance data relating to the
historical performance of four accounts, including two advisory accounts, one
mutual fund and a pooled trust, managed by Morgan Stanley that have investment
objectives, policies, strategies and risks substantially similar, although not
identical, to those of the Fund's International Portfolio. The composite
includes all of the accounts with assets in excess of $25 million managed by
Morgan Stanley that have substantially similar investment objectives and
policies to those of the Portfolio. The data is provided to illustrate the
past performance of Morgan Stanley in managing substantially
<PAGE>
similar accounts but does not represent the performance of the International
Portfolio. The table below also sets forth the performance of the
International Portfolio and the performance of the Morgan Stanley Capital
International European, Australian and Far East Index ("MSCI EAFE") for the
periods shown. The performance data for the International Portfolio reflects
the Portfolio's fees and expenses.
In comparing the performance of the comparable accounts managed by Morgan
Stanley to the performance of the International Portfolio, it should be noted
that the country weighting of the Morgan Stanley accounts varied in certain
respects from those of the International Portfolio. During the periods shown,
the comparable accounts managed by Morgan Stanley were not invested in
emerging market countries, whereas the International Portfolio frequently
invested in emerging markets. Also, the weighting of securities issued by
companies located in Japan held by the Morgan Stanley accounts was
significantly greater than the weighting of Japanese securities held by the
International Portfolio. It is expected that under Morgan Stanley, the
allocation of assets among various countries for the International Portfolio
will be more closely correlated with the weighting of countries in the MSCI
EAFE Index. Morgan Stanley has advised the Fund that it does make strategic
country weighting allocations away from the EAFE Index in seeking relative
outperformance, but it is expected that Morgan Stanley normally would not
invest in emerging market countries.
The figures shown for Morgan Stanley's composite performance of comparable
accounts are based on gross results that are adjusted to reflect the fees and
expenses of the International Portfolio for the periods shown. The composite
performance figures also reflect the inclusion of any dividends and interest
income received, the deduction of any brokerage commissions, and other related
portfolio transaction expenses which are generally reflected as part of the
cost of a security. The composite data was calculated in accordance with
recommended standards of the Association for Investment Management and
Research ("AIMR"), retroactively applied to all time periods. The composite
investment results are unaudited.
Because of the differences in computation methods, such as the method or
frequency of reinvesting dividends or measuring gains, the data for the
comparable accounts shown below may not be precisely comparable to performance
data for the International Portfolio. In addition, the performance data for
the advisory accounts and pooled trust included in the composite may not be
representative of the International Portfolio because those accounts are not
subject to the obligation to redeem shares upon request and to meet
diversification requirements, specific tax restrictions and investment
limitations imposed on the Portfolio by the 1940 Act or Subchapter M of the
Internal Revenue Code, which, if imposed, could have adversely affected the
performance. In addition, if the asset size of the comparable accounts varies
from that of the International Portfolio, this might reduce the comparability
of the International Portfolio's performance to that of the comparable
accounts. Moreover, the International Portfolio's current and future
investments are not and will not necessarily be identical to those of the
comparable accounts. Investors should also be aware that the use of a
methodology different from that used to calculate these composite returns
could result in different performance data.
The investment results presented below are not intended to predict or
suggest the returns that might be experienced by the International Portfolio
or an individual investor investing in the International Portfolio.
THE FOLLOWING PERFORMANCE DATA DOES NOT REFLECT THE DEDUCTION FOR SEPARATE
ACCOUNT OR CONTRACT LEVEL CHARGES.
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TOTAL RETURN FOR MSCI EAFE, MORGAN STANLEY COMPARABLE ACCOUNTS
AND INTERNATIONAL PORTFOLIO FOR THE PERIODS SHOWN
<TABLE>
<CAPTION>
MORGAN STANLEY INTERNATIONAL PORTFOLIO
MSCI EAFE ("EAFE") COMPARABLE ACCOUNTS ("MSCA") ("INTERNATIONAL")
---------------------------------- ---------------------------------- ----------------------------------
INCEPTION ROLLING ROLLING INCEPTION ROLLING ROLLING INCEPTION ROLLING ROLLING
MONTHLY TO DATE QUARTER 12 MONTH MONTHLY TO DATE QUARTER 12 MONTH MONTHLY TO DATE QUARTER 12 MONTH
RETURN RETURN** RETURN RETURN RETURN RETURN** RETURN RETURN RETURN RETURN** RETURN RETURN
------- --------- ------- -------- ------- --------- ------- -------- ------- --------- ------- --------
% % % % % % % % % % % %
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
June 1995 -1.75 -1.75 -0.56 -0.56 1.14 1.14
July 6.23 4.36 5.60 5.01 4.30 5.49
August -3.81 0.38 0.38 -0.88 4.10 4.10 -3.10 2.22 2.23
September 1.95 2.34 4.17 0.59 4.72 5.31 1.69 3.95 2.78
October -2.69 -0.41 -4.57 -2.15 2.46 -2.44 -3.08 0.74 -4.50
November 2.78 2.36 1.97 1.71 4.22 0.10 0.78 1.53 0.10
December 4.03 6.49 4.05 2.98 7.36 2.49 1.41 2.96 0.58
- ---------------- ---------------------------------- ---------------------------------- ----------------------------------
January 96 0.41 6.93 7.36 4.15 11.84 9.10 3.14 6.20 7.04
February 0.34 7.29 4.81 -0.15 11.69 7.11 1.77 8.07 7.25
March 2.12 9.57 2.89 1.13 12.96 5.17 0.13 8.22 5.11
April 2.91 12.75 5.45 4.35 17.93 5.38 3.58 12.09 5.55
May -1.84 10.68 3.16 10.68 -0.83 16.96 4.65 16.96 1.11 13.33 4.86 15.07
June 0.56 11.30 1.58 13.28 1.03 18.19 4.55 18.84 0.34 13.72 5.08 14.16
July -2.92 8.04 -4.17 3.53 -4.65 12.65 -4.49 7.20 -2.94 10.38 -1.53 6.24
August 0.22 8.28 -2.16 7.87 0.89 13.68 -2.82 9.13 3.40 14.13 0.71 13.37
September 2.66 11.16 -0.13 8.61 3.19 17.37 -0.73 11.98 1.50 15.84 1.87 13.15
October -1.02 10.02 1.83 10.47 -1.24 15.91 2.82 13.03 1.61 17.71 6.64 18.63
November 3.98 14.40 5.65 11.76 4.69 21.44 6.70 16.37 4.66 23.19 7.94 22.25
December -1.29 12.93 1.59 6.05 0.23 21.75 3.64 13.24 1.86 25.48 8.33 21.89
- ---------------- ---------------------------------- ---------------------------------- ----------------------------------
January 97 -3.50 8.97 -0.95 1.92 -0.42 21.25 4.50 8.23 2.12 28.14 8.87 20.68
February 1.64 10.76 -3.18 3.24 2.10 23.85 1.91 10.68 1.31 29.82 5.38 20.13
March 0.36 11.16 -1.56 1.46 0.40 24.38 2.07 9.88 1.01 31.13 4.49 21.17
April 0.53 11.75 2.55 -0.89 1.08 25.77 3.62 6.40 -0.26 30.79 2.06 16.69
- --------------------------------------------------------------------------------------------------------------------------
1 Year Return to
3/31/97: 1.46% 9.88% 21.17%
Average Annual
Return Since
Inception** to
3/31/97: 5.94% 12.62% 15.91%
Cumulative
Return Since
Inception** to
3/31/97: 11.16% 24.38% 31.13%
1 Year Return to
4/30/97: -0.89% 6.40% 16.69%
Average Annual
Return Since
Inception** to
4/30/97: 5.97% 12.70% 15.02%
Cumulative
Return Since
Inception** to
4/30/97: 11.75% 25.77% 30.79%
</TABLE>
- --------------------------------------------------------------------------------
** Returns are since June 1, 1995, the date the first comparable account
managed by Morgan Stanley began operations.
