<PAGE>
SUPPLEMENT DATED JANUARY 1, 1997 TO
THE PROSPECTUS DATED APRIL 1, 1996 FOR THE
PACIFIC SELECT
PACIFIC SELECT EXEC
PACIFIC SELECT CHOICE
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICIES ISSUED BY PACIFIC MUTUAL LIFE INSURANCE COMPANY (EACH A "PROSPECTUS")
Capitalized terms used in this supplement are defined in the Prospectuses
referred to above.
INTRODUCTION
Effective January 1, 1997, a Policy Owner may choose the Investment
Option(s) from which the monthly deduction will be deducted. If no election is
made, the monthly deduction will be made on a prorata basis according to the
Accumulated Value in each Investment Option.
A Policy Owner may choose to allocate net premium payments to two
additional options available under the Policy (the "Investment Options" or
"Variable Investment Options") that are funded through the Variable Accounts of
the Separate Account: The Equity Variable Account and the Bond and Income
Variable Account. A Policy Owner may also transfer Accumulated Value to the
Variable Accounts funding these additional Variable Investment Options. The
Variable Accounts funding the additional Variable Investment Options invest in
the corresponding portfolios ("Portfolios") of Pacific Select Fund ("the Fund"):
the Equity Portfolio and the Bond and Income Portfolio.
In addition to these Investment Options, a Policy Owner may allocate all or
a portion of net premium payments and transfer Accumulated Value to the other
Variable Accounts or the Fixed Account of Pacific Mutual Life Insurance Company
("Pacific Mutual", "we", "us", or "our") described in the accompanying
Prospectus for the Policy or in any supplement to such Prospectus.
Except as described below in relation to the two additional Variable
Investment Options, all features of the Policy and all operational procedures
regarding the Policy remain in effect as described in the Policy's Prospectus.
THE EQUITY PORTFOLIO AND THE BOND AND INCOME PORTFOLIO
The chart below summarizes some basic data about the additional Portfolios
of the Fund. There can be no assurance that any Portfolio will achieve its
objective. More detailed information is contained in the accompanying
prospectus of the Fund, including information on the risks associated with the
investments and investment techniques of each of the Portfolios.
<TABLE>
<CAPTION>
PRIMARY INVESTMENTS
PORTFOLIO OBJECTIVE (UNDER NORMAL CIRCUMSTANCES) PORTFOLIO MANAGER
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Equity Capital appreciation Common stocks and securities Greenwich Street Advisors
convertible into or exchangeable for
common stocks
- ------------------------------------------------------------------------------------------------------------------------------------
Bond and High level of current income Investment grade debt securities Greenwich Street Advisors
Income consistent with prudent
investment management and
preservation of capital
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Pacific Mutual, Investment Adviser to each Portfolio, and the Fund have
engaged another firm to serve as Portfolio Manager for the Equity Portfolio and
the Bond and Income Portfolio under the supervision of Pacific Mutual.
For the year ended December 31, 1995, the total expenses of the Equity
Portfolio and Bond and Income Portfolio were each .80% of the average daily net
assets of the Portfolio.
1
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SUPPLEMENT DATED JANUARY 1, 1997 TO
THE PROSPECTUS FOR PACIFIC SELECT FUND DATED APRIL 1, 1996 ("PROSPECTUS")
The last sentence in the first paragraph under "THE FUND'S PORTFOLIOS AT A
GLANCE" section of the Prospectus is amended to read:
Pacific Mutual has retained other investment advisory firms as Portfolio
Managers for twelve of the Portfolios of the Fund.
The chart under "THE FUND'S PORTFOLIOS AT A GLANCE" section of the Prospectus
is amended by adding:
<TABLE>
<CAPTION>
PRIMARY INVESTMENTS INVESTMENT ADVISOR/
PORTFOLIO OBJECTIVE (UNDER NORMAL CIRCUMSTANCES) PORTFOLIO MANAGER
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Equity Capital appreciation Common stocks and securities Greenwich Street Advisors
convertible into or exchangeable for Division of Smith Barney Mutual
common stocks Funds Management Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Bond and High level of current income consistent Investment grade debt securities Greenwich Street Advisors
Income with prudent investment management Division of Smith Barney Mutual
and preservation of capital Funds Management Inc.
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</TABLE>
The fourth sentence in the "CONDENSED FINANCIAL INFORMATION" section of the
Prospectus is amended to read:
These financial statements have been audited by Deloitte & Touche LLP,
independent public accountants, except for information with respect to the
Equity Portfolio and Bond and Income Portfolio for years prior to 1994, which
was audited by other independent public accountants.
The "FINANCIAL HIGHLIGHTS" section of the Prospectus is amended by adding
the following information:
<TABLE>
<CAPTION>
INVESTMENT ACTIVITIES DISTRIBUTIONS
- ------------------------------------------------------------------------------------------------------------------------------------
Net Asset Distribu-
Year Value, Net Net Realized and Total from Dividends (from In excess of tions (from Return Total
Ended Beginning Investment Unrealized Gain Investment Net Investment Net Investment Capital of Disti-
12/31 of Period Income (Loss) on Securities Operations Income) Income Gains) Capital bution
- ------------------------------------------------------------------------------------------------------------------------------------
EQUITY PORTFOLIO (FORMERLY A SERIES OF PACIFIC CORINTHIAN VARIABLE FUND)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995 $ 14.20 $ 0.05 $ 3.33 $ 3.38 $ 0.06 $ 0.00 $ 0.00 $ 0.00 $ 0.06
1994 14.94 0.32 (0.74) (0.42) 0.32 0.00 0.00 0.00 0.32
1993 14.39 0.22 1.90 2.12 0.22 0.00 0.81 0.54 1.57
1992 14.83 0.19 0.49 0.68 0.19 0.00 0.93 0.00 1.12
1991 11.71 0.33 3.12 3.45 0.33 0.00 0.00 0.00 0.33
1990 12.59 0.56 (0.88) (0.32) 0.56 0.00 0.00 0.00 0.56
1989 10.37 0.82 2.23 3.05 0.83 0.00 0.00 0.00 0.83
1988 10.23 0.56 0.14 0.70 0.56 0.00 0.00 0.00 0.56
1987 14.17 0.36 0.12 0.48 0.38 0.00 4.04 0.00 4.42
1986 12.98 0.38 2.15 2.53 0.40 0.00 0.94 0.00 1.34
1985 10.65 0.34 2.71 3.05 0.39 0.00 0.33 0.00 0.72
- ------------------------------------------------------------------------------------------------------------------------------------
BOND AND INCOME PORTFOLIO (FORMERLY A SERIES OF PACIFIC CORINTHIAN VARIABLE FUND)
- ------------------------------------------------------------------------------------------------------------------------------------
1995 $ 10.42 $ 0.82 $ 2.59 $ 3.41 $ 0.81 $ 0.00 $ 0.00 $ 0.00 $ 0.81
1994 13.05 0.83 (1.87) (1.04) 0.83 0.00 0.53 0.23 1.59
1993 11.70 0.87 1.35 2.22 0.86 0.01 0.00 0.00 0.87
1992 11.69 0.89 0.01 0.90 0.89 0.00 0.00 0.00 0.89
1991 10.27 0.93 1.42 2.35 0.93 0.00 0.00 0.00 0.93
1990 10.93 0.97 (0.66) 0.31 0.97 0.00 0.00 0.00 0.97
1989 10.40 1.00 0.69 1.69 1.00 0.00 0.16 0.00 1.16
1988 10.75 1.01 (0.35) 0.66 1.01 0.00 0.00 0.00 1.01
1987 13.03 1.03 (1.17) (0.14) 1.19 0.00 0.95 0.00 2.14
1986 11.81 1.12 1.36 2.48 0.97 0.00 0.29 0.00 1.26
1985 10.56 1.17 1.50 2.67 1.15 0.00 0.27 0.00 1.42
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Year Net Asset Net Assets, Ratio of Ratio of Net Portfolio
Ended Value, End Total End of Period Expenses to Investment Income Turnover
12/31 of Period Return (in thousands) Average Net Assets to Average Net Assets Rate
- ------------------------------------------------------------------------------------------------------------------------------------
EQUITY PORTFOLIO (FORMERLY A SERIES OF PACIFIC CORINTHIAN VARIABLE FUND)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1995 $ 17.52 23.80% $ 108,136 0.80% 0.27% 226.45%
1994 14.20 (2.87)% 73,125 0.96% 2.19% 178.63%
1993 14.94 16.06% 84,791 0.93% 1.52% 229.77%
1992 14.39 6.30% 81,902 0.93% 1.30% 242.37%
1991 14.83 29.77% 107,366 0.91% 2.52% 449.75%
1990 11.71 (2.55)% 178,191 0.86% 4.63% 541.61%
1989 12.59 30.12% 239,478 0.74% 7.01% 621.45%
1988 10.37 7.19% 233,020 0.69% 5.41% 402.26%
1987 10.23 2.18% 254,863 0.68% 2.58% 415.62%
1986 14.17 20.92% 222,945 0.69% 2.75% 334.91%
1985 12.98 30.02% 65,845 0.95% 3.62% 395.09%
- ------------------------------------------------------------------------------------------------------------------------------------
BOND AND INCOME PORTFOLIO (FORMERLY A SERIES OF PACIFIC CORINTHIAN VARIABLE FUND)
- ------------------------------------------------------------------------------------------------------------------------------------
1995 $ 13.02 33.71% $ 56,853 0.80% 6.93% 51.84%
1994 10.42 (8.36)% 34,078 0.93% 7.25% 31.97%
1993 13.05 19.39% 43,223 0.84% 6.86% 41.92%
1992 11.70 8.09% 42,731 0.85% 7.67% 21.99%
1991 11.69 24.32% 59,323 0.78% 8.70% 131.40%
1990 10.27 3.27% 107,921 0.73% 9.35% 43.52%
1989 10.93 17.04% 146,310 0.61% 9.30% 108.64%
1988 10.40 6.37% 161,208 0.61% 10.05% 50.49%
1987 10.75 (2.09)% 194,603 0.55% 9.20% 101.25%
1986 13.03 21.39% 194,814 0.55% 8.71% 202.87%
1985 11.81 27.61% 78,750 0.72% 10.12% 549.28%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The following is added to "THE PORTFOLIOS: INVESTMENT OBJECTIVES AND
POLICIES" section of the Prospectus:
EQUITY PORTFOLIO
INVESTMENT OBJECTIVE. The primary investment objective of the Equity
Portfolio is capital appreciation. Current income is of secondary importance.
INVESTMENT POLICIES. The Portfolio seeks to achieve this objective by
investing primarily in common stocks, or securities convertible into or
exchangeable for common stocks (such as convertible preferred stocks,
convertible debentures, or warrants), which are believed by the Portfolio
Manager to have above-average market appreciation potential. From time to time
the Portfolio Manager will not seek to diversify across a broad spectrum of
industry classifications. Thus, the Portfolio could be invested in fewer
industries or groups of industries than more broad based equity portfolios if,
in the opinion of the Portfolio Manager, the securities selected within those
industries have above-average market appreciation potential. Less
diversification among industries may create an opportunity for higher returns,
but may also result in higher risk of loss because of greater exposure to an
industry or group of industries in a market decline.
Except when in a temporary defensive investment position, the Portfolio
intends to maintain at least 65% of its assets invested in common stocks or
securities convertible or exchangeable for common stocks. The Equity Portfolio
also may invest in U.S. Government securities, corporate bonds, money market
instruments, enter into repurchase agreements, and for temporary defensive
purposes, increase its investment in these securities up to 100% of its assets.
The Equity Portfolio may lend its portfolio securities and enter into short
sales "against the box." Corporate bonds purchased by the Portfolio must be
rated at the time of purchase Aa or better by Moody's or AA or better by S&P,
and commercial paper must be rated at the time of purchase Prime-1 by Moody's or
A-1 by S&P or, if not so rated, must have been issued by a corporation with
corporate bonds outstanding which meet the standards set forth above.
OTHER TECHNIQUES. The Equity Portfolio may sell exchange-listed options
("calls") if the calls are 'covered throughout the life of the option and may
purchase a call on securities only to effect a "closing purchase transaction".
3
<PAGE>
BOND AND INCOME PORTFOLIO
INVESTMENT OBJECTIVE. Provide as high a level of current income as is
consistent with prudent investment management and preservation of capital.
INVESTMENT POLICIES. The Portfolio may invest in any of the following
securities: corporate bonds which are rated Baa or better by Moody's or BBB or
better by S&P; U.S. Government Securities; commercial paper rated Prime-1 or
Prime-2 by Moody's or A-1 or A-2 by S&P or, if not rated by Moody's or S&P,
issued by a corporation having an outstanding debt issue rated Aa or better by
Moody's or AA or better by S&P; negotiable bank certificates of deposit or
banker's acceptances issued by domestic banks (but not their foreign branches)
having, together with branches or subsidiaries, total assets in excess of $2
billion; high dividend-paying common stocks; and warrants. Moody's describes
securities rated Baa as having speculative characteristics and, according to
S&P, fixed income securities rated BBB normally exhibit adequate protection
parameters, although adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal.
Except when in a temporary defensive investment position, the Portfolio
intends to maintain at least 65% of its assets invested in bonds. The Portfolio
may also invest in U.S. Government securities, and money market instruments, and
may enter into repurchase agreements, and for temporary defensive purposes, may
increase its investment in these securities.
OTHER TECHNIQUES. The Bond and Income Portfolio may enter into reverse
repurchase agreements, and lend its portfolio securities.
OTHER INVESTMENT CONSIDERATIONS. The Portfolio may invest significantly in
long-term debt securities, and the average portfolio duration may exceed 10
years. Because long-term bonds generally are subject to greater price
volatility than shorter term debt securities, the value of the Portfolio's
shares is expected to be more volatile than that of other fixed income funds
with shorter average portfolio durations. A discussion of "duration" is
provided in the description of the Managed Bond Portfolio under this section and
in the Statement of Additional Information.
The first paragraph under "Mortgage-Related Securities" in the "SECURITIES
AND INVESTMENT TECHNIQUES" section of the Prospectus is amended to include the
Equity Portfolio and the Bond and Income Portfolio and by adding the following:
The Equity Portfolio and Bond and Income Portfolio may only invest in
mortgage-related securities that are obligations of, or guaranteed by, the U.S.
Government, its agencies, or instrumentalities.
The first paragraph under "Small Capitalization Stocks" in the "SECURITIES
AND INVESTMENT TECHNIQUES" section of the Prospectus is amended to include the
Equity Portfolio.
The last sentence of the first paragraph under "Illiquid and Restricted
Securities" in the "SECURITIES AND INVESTMENT TECHNIQUES" section of the
Prospectus is amended to include the Equity Portfolio and the Bond and Income
Portfolio in the list of Portfolios that may acquire restricted securities.
The first paragraph under "Precious Metals-Related Securities" in the
"SECURITIES AND INVESTMENT TECHNIQUES" section of the Prospectus is amended as
follows:
APPLICABLE PORTFOLIOS: Equity Portfolio, and possibly other Portfolios that
invest in equity securities.
The first paragraph under "Options" in the "SECURITIES AND INVESTMENT
TECHNIQUES" section of the Prospectus is amended by adding the following
sentence to the end of the paragraph:
The Equity Portfolio may write covered call options that are traded on a
national securities exchange with respect to securities comprising 25% of its
aggregate net assets, taken at market value at the time the option is written.
4
<PAGE>
The "ORGANIZATION AND MANAGEMENT OF THE FUND" section of the Prospectus is
amended by adding:
WHO IS THE PORTFOLIO MANAGER FOR THE EQUITY PORTFOLIO AND BOND AND INCOME
PORTFOLIO? Greenwich Street Advisors Division of Smith Barney Mutual Funds
Management Inc. ("Greenwich Street Advisors"), a wholly-owned subsidiary of
Smith Barney Holdings Inc., which in turn is a wholly-owned subsidiary of The
Travelers Inc. The Greenwich Street Advisors Division is located at 388
Greenwich Street, 23rd Floor, New York, New York 10013.
The Greenwich Street Advisors Division and its predecessors have been in
the investment counseling business since 1934. Smith Barney Mutual Funds
Management Inc. ("SBMFM") and its predecessors have been providing investment-
advisory services to mutual funds since 1968. As of December 31, 1995, SBMFM
managed approximately $65.5 billion of mutual fund assets.
WHO AT GREENWICH STREET ADVISORS MANAGES THE EQUITY PORTFOLIO AND BOND AND
INCOME PORTFOLIO? George V. Novello is primarily responsible for the day-to-day
management of the Equity Portfolio. Mr. Novello became Managing Director of
Smith Barney Inc. In August 1993. He previously held the same position with
Shearson or its predecessor firms since 1990. Mr. Novello was a Managing
Director and Director of Research for McKinley Allsopp and Gruntal from 1988
through 1990. Mr. Novello received a B.A. from St. John's University. George
E. Mueller, Jr. is primarily responsible for the day-to-day management of the
Bond and Income Portfolio. Mr. Mueller became Director of Smith Barney Inc. in
August 1993. He previously held the same position at Shearson or its
predecessor firms since 1985. Mr. Mueller holds a B.S. from Duquesne University
and a M.B.A. from Pace University.
The fourth and fifth sentences of the following paragraph under the
"ORGANIZATION AND MANAGEMENT OF THE FUND" section of the Prospectus are amended
to read:
HOW MUCH DOES THE FUND PAY FOR THE ADVISORY SERVICES OF PACIFIC MUTUAL AND
THE PORTFOLIO MANAGERS? For the Managed Bond, High Yield Bond, Government
Securities, and Bond and Income Portfolios, the Fund pays .60% of the average
daily net assets of each of the Portfolios. For the Growth, Equity Income,
Equity, and Multi-Strategy Portfolios, the Fund pays .65% of the average daily
net assets of each of the Portfolios.
The fourth paragraph of "What other expenses does the Fund bear?" under
the "ORGANIZATION AND MANAGEMENT OF THE FUND" section of the Prospectus is
amended by adding the following total annualized expenses as a percentage of
average daily net assets for the period ended December 31, 1995:
Equity Portfolio --- .80%, Bond and Income Portfolio --- .80%
The paragraph entitled "Information about Portfolio Turnover" under the
"MORE ON THE FUND'S SHARES" section of the Prospectus is amended by adding the
following information:
The Equity and Bond and Income Portfolios had portfolio turnover rates in
excess of 100% in certain years, which could be considered relatively high.
The following is added to the table under the "TOTAL RETURN" section of the
Prospectus:
<TABLE>
<CAPTION>
Average
Annual
Total
Return
Year Year Year Year Year Year Year Year Year Year Year Year (for all
Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended years
12/31/84 12/31/85 12/31/86 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 shown)
-------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Equity(5) 9.80 30.02 20.92 2.18 7.19 30.12 -2.55 29.77 6.30 16.06 -2.87 23.80 13.74
Bond and 14.76 27.61 21.39 -2.09 6.37 17.04 3.27 24.32 8.09 19.39 -8.36 33.71 13.35
Income(5)
</TABLE>
(5) The performance results of the Equity Portfolio and the Bond and Income
Portfolio are based on the performance of predecessor portfolios (series)
of Pacific Corinthian Variable Fund, which began their first full year of
operations on January 1, 1984 and were acquired by the Fund on December 31,
1994.
5
<PAGE>
Form No. 15-20529-00
6
