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SUPPLEMENT DATED OCTOBER 1, 1996 TO
PROSPECTUS DATED APRIL 1, 1996 FOR
PACIFIC SELECT EXEC
PACIFIC SELECT CHOICE
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
POLICIES ISSUED BY PACIFIC MUTUAL LIFE INSURANCE COMPANY
Capitalized terms used in this supplement are defined in the prospectuses
referred to above or the M Fund's prospectus.
INTRODUCTION
Effective October 1, 1996, a Policy Owner may choose to allocate net
premium payments to four additional options available under the Policy (the
"Investment Options") that are funded through the Variable Accounts of the
Separate Account: The Edinburgh Overseas Equity Variable Account ("Variable
Account I"), the Frontier Capital Appreciation Variable Account ("Variable
Account II"), the Turner Core Growth Variable Account ("Variable Account III"),
and the Enhanced U.S. Equity Variable Account ("Variable Account IV"). A Policy
Owner also may 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 following corresponding
portfolios ("Portfolios") of M Fund, Inc. ("M Fund"):
Variable Account I: Edinburgh Overseas Equity Fund
Variable Account II: Frontier Capital Appreciation Fund
Variable Account III: Turner Core Growth Fund
Variable Account IV: Enhanced U.S. Equity Fund
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 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.
Except as described below in relation to the four 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.
INFORMATION ABOUT M FUND
M Fund, Inc.
M Fund is a diversified, open-end management investment company registered
with the Securities and Exchange Commission ("SEC") under the Investment Company
Act of 1940. M Fund currently offers four separate Portfolios as Investment
Options under the Policies. Each Portfolio pursues different investment
objectives and policies. The shares of each Portfolio are purchased by us for
the corresponding Variable Account at net asset value, i.e., without sales load.
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All dividends and capital gains distributions received from a Portfolio are
automatically reinvested in such Portfolio at net
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asset value, unless we, on behalf of the Separate Account, elect otherwise. M
Fund shares may be redeemed by us at their net asset value to the extent
necessary to make payments under the Policies.
The chart below summarizes some basic information about each Portfolio of M
Fund offered to the Separate Account. There can be no assurance that any
Portfolio will achieve its objective. More detailed information is contained in
the accompanying prospectus of M Fund, including information on the risks
associated with the investments and investment techniques of each Portfolio of M
Fund.
M FUND'S PROSPECTUS ACCOMPANIES THIS PROSPECTUS SUPPLEMENT AND SHOULD BE
READ CAREFULLY BEFORE INVESTING.
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<CAPTION>
Primary Investments Investment
(under normal Adviser/Portfolio
Portfolio Objective circumstances) Manager
- --------- --------- ------------------- -----------------
<S> <C> <C> <C>
Edinburgh Overseas Long-term capital Common stock and M Financial Invest-
Equity Fund appreciation with common stock equi- ment Advisers, Inc.
reasonable invest- valents of foreign ("MFIA")/Edinburgh
ment risk through issuers, including Fund Managers plc.
active management smaller issuers and
and investment in issuers located in
common stock and small, emerging
common stock equi- markets
valents of foreign
issuers
Turner Core Growth Long-term capital Common stocks that MFIA/Turner
Fund appreciation through show strong earnings Investment Partners,
a diversified port- potential with Inc.
folio of common reasonable market
stocks that show prices
strong earnings
potential with
reasonable market
prices
Frontier Capital Maximum capital Common stock of com- MFIA/Frontier
Appreciation Fund appreciation through panies of all sizes, Capital Management
investment in common with emphasis on Company, Inc.
stock of companies stocks of small-to-
of all sizes, with medium-capitalization
emphasis on stocks companies (i.e.,
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of small-to-medium- companies with market
capitalization capitalization of less
companies than $3 billion)
Enhanced U.S. Equity Above-market total Common stocks of MFIA/Franklin
Fund return through in- companies perceived Portfolio Associates
vestment in common to provide a return Trust
stock of companies higher than that of
perceived to provide the S&P 500 at
a return higher than approximately the
that of the same level of
Standard & Poor's investment risk
500 Composite Stock
Price Index ("S&P
500") at approxi-
mately the same
level of investment
risk as the S&P 500
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THE INVESTMENT ADVISER AND PORTFOLIO MANAGERS
M Financial Investment Advisers, Inc. ("MFIA") serves as Investment Adviser
to each Portfolio of M Fund. MFIA has engaged other firms, as shown in the
chart above, to serve as Portfolio Managers under the supervision of MFIA and M
Fund's Board of Directors.
Pacific Mutual assumes no responsibility for the operation of M Fund or any
Portfolio thereof, or the compliance of M Fund or the Portfolio with any
applicable law.
THE POLICY
All features of the Policy described in its prospectus remain intact.
The following discussion supplements the one included in the Policy's
prospectus under "CHARGES AND DEDUCTIONS - Other Charges."
OTHER CHARGES
M Fund and each of its Portfolios incur certain charges, including the
investment advisory fee, and certain operating expenses. M Fund's expenses
are not fixed or specified under the terms of the Policy, and these
expenses may vary from year to year. The advisory fees and other expenses
are more fully described in the prospectus of M Fund.
We will exercise voting rights attributable to shares of M Fund consistent
with the discussion in the prospectus on "Voting of Fund Shares." The rights we
have as described in the prospectus under "Disregard of Voting Instructions" and
"Substitution of Investments" also apply to M Fund and its Portfolios.
REPORT TO OWNERS
We will send to each Policy Owner any annual and semiannual reports
containing financial statements for M Fund that we receive from that fund.
ILLUSTRATIONS
For the M Fund Portfolios, the investment advisory fees are equivalent to
the following annual rates of the average daily net assets of the Portfolios:
1.05% for the Edinburgh Overseas Equity Fund (subject to breakpoints), 0.45% for
the Turner Core Growth Fund, 0.90% for the Frontier Capital Appreciation Fund,
and 0.55% for the Enhanced U.S. Equity Fund (subject to breakpoints). M Fund
estimates that other expenses of the Portfolios are 0.25% of the average daily
net assets for each of the Portfolios, which amounts to total expenses equal to
the following annual rates of the average daily net assets of the Portfolios:
1.30% for the Edinburgh Overseas Equity Fund, 0.70% for the Turner Core Growth
Fund, 1.15% for the Frontier Capital Appreciation Fund, and 0.80% for the
Enhanced U.S. Equity Fund. If adjusted to include the effect of foreign taxes
on dividends, M Fund estimates that the expenses for the Edinburgh Overseas
Equity Fund would be 1.50%. These estimated expenses reflect the policy of
MFIA, which has voluntarily undertaken to pay operating expenses of M Fund (not
including
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brokerage or other portfolio transaction expenses or expenses of litigation,
indemnification, taxes or other extraordinary expenses) to the extent that such
expenses, as accrued for each Portfolio, from January 5, 1996 (commencement of
operations) through December 31, 1996, exceed 0.25% of that Portfolio's
estimated average daily net assets on an annualized basis. In the absence of
this policy, total expenses would be higher, and there can be no assurance that
MFIA will continue the policy after that date. Upon request, Pacific Mutual will
furnish individualized illustrations reflecting allocation of net premiums to
one or more of the Variable Accounts that each invest in a corresponding
Portfolio of M Fund, which will reflect the estimated expenses described above.
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