<PAGE>
As filed with the Securities and Exchange Commission on March 29, 1996
Registration No. 33-88458
811-8946
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 485BPOS
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [_]
Pre-Effective Amendment No. [_]
Post Effective Amendment No. 1 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [_]
Amendment No. 3 [X]
(Check appropriate box or boxes)
SEPARATE ACCOUNT A
(Exact Name of Registrant)
PACIFIC MUTUAL LIFE INSURANCE COMPANY
(Name of Depositor)
700 Newport Center Drive,
Newport Beach, California 92660
(Address of Depositor's Principal Executive Offices)(Zip Code)
(714) 640-3743
(Depositor's Telephone Number, including Area Code)
Diane N. Ledger
Assistant Vice President
Pacific Mutual Life Insurance Company
700 Newport Center Drive
Newport Beach, California 92660
(Name and address of agent for service)
Copies of all communications to:
John F. Hartigan, Esq. James B. Kimmel, Esq.
Morgan, Lewis & Bockius Morgan, Lewis & Bockius
801 South Grand Avenue 2000 One Logan Square
Los Angeles, CA 90017-4615 Philadelphia, PA 19103-6993
[X] It is proposed that this filing will become effective on April 1, 1996
pursuant to paragraph (b) of Rule 485.
Title of securities being registered: interests in individual flexible premium
variable annuity contracts.
DECLARATION PURSUANT TO RULE 24f-2
Pursuant to the provisions of Rule 24f-2 under the Investment Company Act of
1940, the Registrant hereby declares that an indefinite number or amount of
securities is hereby being registered under the Securities Act of 1933. The
Registrant will file its Notice pursuant to Rule 24f-2 for the fiscal year
ending December 31, 1996, on or before February 28, 1997.
<PAGE>
SEPARATE ACCOUNT A
FORM N-4
CROSS REFERENCE SHEET
PART A
Item No. Prospectus Heading
1. Cover Page Cover Page
2. Definitions SPECIAL DEFINITIONS
3. Synopsis SUMMARY; FEE TABLE
4. Condensed Financial Information YOUR INVESTMENT OPTIONS--Variable
Investment Option Performance;
ADDITIONAL INFORMATION--Financial
Statements
5. General Description of Registrant,
Depositor and Portfolio Companies SUMMARY--What are My Investment
Options?: PACIFIC MUTUAL AND THE SEPARATE
ACCOUNT--Pacific Mutual,--Separate
Account A; YOUR INVESTMENT OPTIONS--Your
Variable Investment Options; ADDITIONAL
INFORMATION--Voting Rights
6. Deductions SUMMARY--What Charges Will I Pay?,--
Can I Change My Investment Options?; FEE
TABLE; HOW YOUR PAYMENTS ARE INVESTED--
Transfers; CHARGES, FEES AND DEDUCTIONS;
WITHDRAWALS--Withdrawal Transaction
Fees; ADDITIONAL INFORMATION--Sales
Commissions
7. General Description of
Variable Annuity
Contracts SPECIAL DEFINITIONS; SUMMARY; WHY BUY A
CONTRACT; PURCHASING YOUR CONTRACT--How
to Apply for your Contract; HOW YOUR
PAYMENTS ARE INVESTED; RETIREMENT
BENEFITS AND OTHER PAYOUTS--
Annuitization, Fixed and Variable
Annuities,--Annuity Periods, Your Annuity
Payments,--Death Benefits; ADDITIONAL
INFORMATION--Voting Rights,--Changes to
Your Contract,--Changes to ALL
Contracts,--Investor Inquiries and
Submitting Forms and Requests,--Timing of
Payments
8. Annuity Period RETIREMENT BENEFITS AND OTHER PAYOUTS
9. Death Benefit RETIREMENT BENEFITS AND OTHER PAYOUTS--
Death Benefits; WITHDRAWALS--Mandatory
Distribution on Death
10. Purchases and Contract Value SUMMARY--How Do I Purchase a Contract;
PURCHASING YOUR CONTRACT; HOW YOUR
PAYMENTS ARE INVESTED; PACIFIC MUTUAL AND
THE SEPARATE ACCOUNT--Pacific Mutual
11. Redemptions SUMMARY--Can I Withdraw My Investment?,
--Can I Return My Contract?; CHARGES,
FEES AND DEDUCTIONS; WITHDRAWALS;
ADDITIONAL INFORMATION--Timing of
Payments
12. Taxes SUMMARY; CHARGES, FEES AND DEDUCTIONS--
Premium Taxes; WITHDRAWALS--Optional
Withdrawals,--Tax Consequences of
Withdrawals; FEDERAL TAX STATUS
13. Legal Proceedings Not Applicable
14. Table of Contents of the
Statement of Additional
Information CONTENTS OF THE STATEMENT OF ADDITIONAL
INFORMATION
PART B
Item No. Statement of Additional Information
Heading
15. Cover Page Cover Page
16. Table of Contents TABLE OF CONTENTS
17. General Information and History Not Applicable
18. Services Not Applicable
19. Purchase of Securities
Being Offered THE CONTRACTS AND THE SEPARATE ACCOUNT--
Calculating Subaccount Unit Values,--
Systematic Transfer Programs
20. Underwriters DISTRIBUTION OF THE CONTRACTS--Pacific
Equities Network
21. Calculation of Performance Data PERFORMANCE
22. Annuity Payments THE CONTRACTS AND THE SEPARATE ACCOUNT--
Variable Annuity Payment Amounts
23. Financial Statements FINANCIAL STATEMENTS
PART C
Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C to this Registration Statement.
<PAGE>
[LOGO of PACIFIC ONE]
PROSPECTUS
FOR
PACIFIC ONE
ISSUED BY
PACIFIC MUTUAL LIFE INSURANCE COMPANY
DATED APRIL 1, 1996
--------------
PROSPECTUS
FOR
PACIFIC SELECT FUND
DATED APRIL 1, 1996
<PAGE>
PACIFIC ONE
AN INDIVIDUAL FLEXIBLE PREMIUM DEFERRED
VARIABLE ANNUITY CONTRACT
ISSUED BY PACIFIC MUTUAL LIFE INSURANCE
COMPANY
MAILING ADDRESS: P.O. BOX 7187
PASADENA, CALIFORNIA 91109-7187
1-800-722-2333
[LOGO of PACIFIC ONE]
This Prospectus describes Pacific One (the "Contract") offered by Pacific
Mutual Life Insurance Company ("Pacific Mutual"). The Contracts provide
purchasers with flexibility in long-term financial planning, including planning
for retirement. Contracts are available both to individuals and under certain
tax-qualified retirement plans. Payout options under the Contracts include
variable annuities funded through Pacific Mutual's Separate Account A (the
"Separate Account") and fixed annuities funded by Pacific Mutual's General
Account.
Fourteen Investment Options are currently available. Each of the thirteen
Variable Investment Options now in effect is a subaccount of the Separate
Account, and provides variable returns by investing in shares of a
corresponding Portfolio of Pacific Select Fund:
Money Market Portfolio Multi-Strategy Portfolio
High Yield Bond Portfolio Equity Portfolio
Managed Bond Portfolio Bond and Income Portfolio
Government Securities Portfolio Equity Index Portfolio
Aggressive Equity Portfolio International Portfolio
Growth LT Portfolio Emerging Markets Portfolio
Equity Income Portfolio
A Fixed Option is also available; it provides a fixed rate of return and is
funded by Pacific Mutual's General Account.
THIS PROSPECTUS PROVIDES INFORMATION THAT YOU SHOULD KNOW BEFORE PURCHASING A
CONTRACT. IN ADDITION, THIS PROSPECTUS IS ACCOMPANIED BY A CURRENT PROSPECTUS
FOR THE PACIFIC SELECT FUND. YOU SHOULD READ BOTH OF THESE PROSPECTUSES
CAREFULLY AND RETAIN THEM FOR YOUR FUTURE REFERENCE.
Additional information about the Contract and the Separate Account has been
filed with the Securities and Exchange Commission in a Statement of Additional
Information ("SAI"), dated April 1, 1996. You may obtain a free copy of the SAI
by writing or calling Pacific Mutual. The information contained in the SAI is
incorporated by reference into this Prospectus. The table of contents for the
SAI appears on page 35 of this Prospectus.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------
THE CONTRACT IS NOT A DEPOSIT OR OBLIGATION OF, OR GUARANTEED OR ENDORSED BY,
ANY BANK. IT IS NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY.
INVESTMENT IN A CONTRACT INVOLVES RISK, INCLUDING POSSIBLE LOSS OF
PRINCIPAL.
---------------
THE CONTRACT IS NOT AVAILABLE IN ALL STATES AND THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY JURISDICTION IN WHICH SUCH AN OFFER MAY NOT BE
MADE LAWFULLY. NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE
ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND THE RELATED
STATEMENT OF ADDITIONAL INFORMATION (OR ANY SALES LITERATURE
APPROVED BY PACIFIC MUTUAL), AND ANY SUCH UNAUTHORIZED INFORMATION
OR REPRESENTATION IS, IF GIVEN OR MADE, NOT TO BE RELIED UPON.
DATED : APRIL 1, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SPECIAL DEFINITIONS........................................................ 4
SUMMARY.................................................................... 7
FEE TABLE.................................................................. 8
WHY BUY A CONTRACT......................................................... 10
YOUR INVESTMENT OPTIONS.................................................... 10
Your Variable Investment Options......................................... 10
Variable Investment Option Performance................................... 12
Your Fixed Option........................................................ 12
PURCHASING YOUR CONTRACT................................................... 12
How to Apply for Your Contract........................................... 12
Making Your Purchase Payments............................................ 13
HOW YOUR PAYMENTS ARE INVESTED............................................. 13
Investing in Variable Investment Options................................. 13
When Your Investment is Effective........................................ 14
Choosing Your Investment Options......................................... 14
Transfers................................................................ 14
CHARGES, FEES AND DEDUCTIONS............................................... 15
Premium Taxes............................................................ 15
Annual Fee............................................................... 15
Waivers and Reduced Charges.............................................. 16
Mortality and Expense Risk Charge........................................ 16
Administrative Fee....................................................... 16
Expenses of Pacific Select Fund.......................................... 16
RETIREMENT BENEFITS AND OTHER PAYOUTS...................................... 17
Selecting Your Annuitant................................................. 17
Annuitization............................................................ 17
Choosing Your Annuity Date ("Annuity Start Date")........................ 17
Default Annuity Date and Options......................................... 18
Choosing Your Annuity Option............................................. 18
Your Annuity Payments.................................................... 19
Death Benefits........................................................... 20
WITHDRAWALS................................................................ 21
Optional Withdrawals..................................................... 21
Mandatory Distribution on Death.......................................... 22
Tax Consequences of Withdrawals.......................................... 23
Short-Term Cancellation Right ("Free Look").............................. 23
PACIFIC MUTUAL AND THE SEPARATE ACCOUNT.................................... 23
Pacific Mutual........................................................... 23
Separate Account A....................................................... 23
FEDERAL TAX STATUS......................................................... 24
Taxes Payable by Contract Owners: General Rules.......................... 25
Qualified Contracts...................................................... 26
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Loans.................................................................... 27
Withholding.............................................................. 29
Impact of Federal Income Taxes........................................... 29
Taxes on Pacific Mutual.................................................. 29
ADDITIONAL INFORMATION..................................................... 30
Voting Rights............................................................ 30
Changes to Your Contract................................................. 30
Changes to ALL Contracts................................................. 31
Investor Inquiries and Submitting Forms and Requests..................... 32
Telephone Transactions................................................... 32
Timing of Payments and Transactions...................................... 33
Confirmations Statements and Other Reports to Contract Owners............ 33
Sales Commissions........................................................ 33
Financial Statements..................................................... 33
THE FIXED OPTION........................................................... 34
General Information...................................................... 34
Guarantee Terms.......................................................... 34
Withdrawals and Transfers................................................ 34
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION........................ 35
APPENDIX A: STATE LAW VARIATIONS........................................... 36
</TABLE>
3
<PAGE>
SPECIAL DEFINITIONS
In this Prospectus, "we," "our" and "us" refer to Pacific Mutual Life
Insurance Company ("Pacific Mutual"); "you" and "your" refer to the Contract
Owner.
Account Value--The amount of your Contract Value allocated to any one of the
Investment Options.
Annual Fee--A $40 fee charged each year on your Contract Anniversary and at
the time of a full withdrawal, if your Contract Value is less than $100,000 on
that date.
Annuitant--A person on whose life annuity payments may be determined. An
Annuitant's life may also be used to determine certain increases in death
benefits, and to determine the Annuity Date. A Contract may name a single
("sole") Annuitant or two ("Joint") Annuitants, and may also name a
"Contingent" Annuitant. If you name Joint Annuitants or a Contingent
Annuitant, "the Annuitant" means the sole surviving Annuitant, unless
otherwise stated.
Annuity Date--Also called the "Annuity Start Date." The date specified in your
Contract or the date you later elect, if any for the commencement of annuity
payments if your Annuitant (or Joint Annuitants) is (or are) still living and
your Contract is in force; or, if earlier, the date that annuity payments
actually begin. You may change your Annuity Date by notifying us as described
in this Prospectus.
Annuity Option--Any one of the income options for a series of payments after
your Annuity Date.
Beneficiary--A person who may have a right to receive the death benefit
payable upon the death of the Annuitant or a Contract Owner prior to the
Annuity Date, or has a right to receive remaining guaranteed annuity payments,
if any, if the Annuitant dies after the Annuity Date.
Business Day--Any day on which the value of the amount invested in a Variable
Investment Option is determined, which currently includes each day that the
New York Stock Exchange is open for trading and on which our administrative
offices are open. The New York Stock Exchange is closed on weekends and on the
following holidays: New York's Day, President's Day, Good Friday, Memorial
Day, July Fourth, Labor Day, Thanksgiving Day, and Christmas Day. We may
choose to close on other holidays, a day immediately preceding or following a
national holiday, or in emergency situations. In this Prospectus, "day" or
"date" means Business Day unless otherwise specified. If any transaction or
event called for under a Contract is scheduled to occur on a day that is not a
Business Day, such transaction or event will be deemed to occur on the next
following Business Day unless otherwise specified. Special circumstances such
as leap years and months with fewer than 31 days are discussed in the SAI.
Each Business Day ends at 4:00 p.m. Eastern Time or the close of the Stock
Exchange, if earlier.
Code--The Internal Revenue Code of 1986, as amended.
Contingent Annuitant--A person, named in your Contract, who will become your
sole surviving Annuitant if your existing sole Annuitant (or both Joint
Annuitants) should die before your Annuity Date.
Contingent Owner--A person, named in your Contract, who may succeed to the
rights of a Contract Owner of your Contract if all named Contract Owners die
before your Annuity Date.
Contract Anniversary--The same date, in each subsequent year, as your Contract
Date.
Contract Date--The date we issue your Contract.
Contract Debt--As of the end of any given Business Day, the principal amount
you have outstanding on any loan under your Contract, plus any accrued and
unpaid interest. Loans are available only on certain Qualified Contracts.
4
<PAGE>
Contract Owner--Generally, a person who purchases a Pacific One Contract and
makes the Purchase Payments. A Contract Owner has all rights in the Contract
before the Annuity Date, including the right to make withdrawals, designate
and change beneficiaries, transfer amounts among Investment Options, and
designate an Annuity Option. If your Contract names Joint Owners, both Joint
Owners are Contract Owners and share all such rights.
Contract Value--At the end of any given Business Day, your Variable Account
Value, plus your Fixed Option Value, plus the amount held in the Loan Account
to secure your Contract Debt.
Contract Year--A year that starts on the Contract Date or on a Contract
Anniversary.
Fixed Option--If you allocate all or a part of your Purchase Payments or
Contract Value to the Fixed Option, such amounts are held in our General
Account and receive interest at rates declared periodically, but not less than
an annual rate of 3%.
Fixed Option Value--The aggregate amount under your Contract allocated to the
Fixed Option.
Fund--Pacific Select Fund.
General Account--Our General Account consists of all assets of Pacific Mutual
other than those assets allocated to Separate Account A or to any of our other
separate accounts.
Guaranteed Interest Rate--The interest rate guaranteed, from time to time, for
amounts allocated to the Fixed Option.
Guarantee Term--The period during which amounts you allocate to the Fixed
Option earn a Guaranteed Interest Rate.
Investment Option--A Subaccount or the Fixed Option.
Joint Annuitant--If your Contract is a Non-Qualified Contract, you may name
two Annuitants, called "Joint Annuitants," in your Application for your
Contract. Special restrictions apply for Qualified Contracts.
Non-Qualified Contract--A Contract other than a Qualified Contract.
Portfolio--A separate series or portfolio of the Fund.
Primary Annuitant--The individual, named in your Contract, the events in the
life of whom are of primary importance in affecting the timing or amount of
the payment under the Contract.
Purchase Payment--An amount paid to us by or on behalf of a Contract Owner, as
consideration for the benefits provided under the Contract.
Qualified Contract--A Contract that qualifies under the Code as an individual
retirement annuity ("IRA"), or a Contract purchased by a Qualified Plan,
qualifying for special tax treatment under the Code.
Qualified Plan--A retirement plan that receives favorable tax treatment under
Section 401, 408, 403(a), 403(b) or 457 of the Code.
SEC--Securities and Exchange Commission.
Separate Account A (the "Separate Account")--A separate account of Pacific
Mutual registered as a unit investment trust under the Investment Company Act
of 1940.
5
<PAGE>
Subaccount--An investment division of the Separate Account. Each Subaccount
invests its assets in shares of a corresponding Portfolio.
Subaccount Annuity Unit--Subaccount Annuity Units (or "Annuity Units") are
used to measure variation in variable annuity payments. To the extent you
elect to convert all or some of your Contract Value into variable annuity
payments, the amount of each annuity payment (after the first payment) will
vary with the value and number of Annuity Units in each Subaccount attributed
to any variable annuity payments. At annuitization (after any applicable
premium taxes and/or other taxes are paid), the amount annuitized to a
variable annuity determines the amount of your first variable annuity payment
and the number of Annuity Units credited to your annuity in each Subaccount.
The value of Subaccount Annuity Units, like the value of Subaccount Units, is
expected to fluctuate daily, as described in the definition of "Unit Value."
Subaccount Unit--Before your Annuity Date, each time you allocate an amount to
a Subaccount, your Contract is credited with a number of Subaccount Units in
that Subaccount; these Units are used, for accounting purposes, to measure
your balance in that Subaccount. The value of Subaccount Units is expected to
fluctuate daily, as described in the definition of Unit Value.
Unit Value--The value of a Subaccount Unit ("Subaccount Unit Value") or
Subaccount Annuity Unit ("Subaccount Annuity Unit Value"). Unit Value of any
Subaccount is subject to change on any Business Day in much the same way that
the value of a mutual fund share changes each day; the fluctuations in value
reflect the investment results, expenses of and charges against the Portfolio
in which the Subaccount invests its assets, and also reflect charges against
the Separate Account. Changes in Subaccount Annuity Unit Values also reflect
an additional factor that adjusts Subaccount Annuity Unit Values to offset our
Annuity Option Table's implicit assumption of an annual investment return of
5%; the effect of this assumed investment return is explained in detail in the
SAI. Unit Value of a Subaccount Unit or Subaccount Annuity Unit on any
Business Day is measured at or about 4:00 p.m., Eastern time, on that Business
Day.
Variable Account Value--The aggregate amount of your Contract Value allocated
to all Subaccounts.
Variable Investment Option--A Subaccount.
6
<PAGE>
SUMMARY
This brief description is only an overview of the more significant features of
your Contract. More detailed information may be found in subsequent sections of
this Prospectus, in the SAI, and in the Contract itself. Endorsements to your
Contract may contain variations from the standardized information in this
Prospectus. In addition, any variations due to requirements particular to your
state or jurisdiction are set forth in supplements attached to or accompanying
this Prospectus. IF ANY CONTRACT ENDORSEMENTS OR SUPPLEMENTAL VARIATIONS TO
THIS PROSPECTUS CONFLICT WITH OTHER INFORMATION IN THE CONTRACT FORM OR IN THIS
PROSPECTUS, THE ENDORSEMENTS AND SUPPLEMENTS CONTROL YOUR CONTRACT.
WHAT IS THE CONTRACT? Pacific One (the "Contract") is a deferred annuity
designed to be a long-term financial planning device, permitting you to invest
on a tax-deferred basis for retirement or other long-range goals, and to
receive a series of regular payments for life or a period of years. See FEDERAL
TAX STATUS.
HOW DO I PURCHASE A CONTRACT? You must invest at least $25,000 to buy a
Contract. After this initial investment you may make additional investments but
you are not required to do so. Your initial investment may be payable in
automatic installments over your first Contract Year. See PURCHASING YOUR
CONTRACT.
WHAT ARE MY INVESTMENT OPTIONS? You select your own Investment Options.
Thirteen of the fourteen Investment Options are Variable Investment Options
available through Separate Account A. Each Variable Investment Option invests
in a corresponding Portfolio of the Fund. We are the investment adviser to the
Fund, and Pacific Mutual and the Fund have retained other portfolio managers
for eleven of the Portfolios. You bear the investment risk associated with the
Variable Investment Options, and you should expect your Contract Value
allocated to these Investment Options and the value of any Subaccount Annuity
Units attributed to any variable annuity payments to fluctuate. See HOW YOUR
PAYMENTS ARE ALLOCATED. The fourteenth option is a Fixed Option, providing a
fixed annual interest rate of at least 3%; the portion of your Purchase
Payments or Contract Value allocated to the Fixed Option is held in our General
Account.
You may select as many Investment Options as you wish. Prior to your Annuity
Date, this selection is made by the Contract Owner(s); after your Annuity Date,
any of the Variable Investment Options may be selected if you choose variable-
dollar annuity payments; this selection may be made by the Annuitant(s).
CAN I CHANGE MY INVESTMENT OPTIONS? You may transfer amounts (subject to
certain restrictions) from one Investment Option to another at any time on or
prior to your Annuity Date; after your Annuity Date, up to four exchanges of
Subaccount Annuity Units may be made in any twelve-month period. You may
transfer amounts automatically using dollar cost averaging, automatic portfolio
rebalancing, or an earnings sweep. See TRANSFERS in this Prospectus and
SYSTEMATIC TRANSFER PROGRAMS in the SAI. Transaction fees may be imposed in the
future for excessive transfers.
WHAT CHARGES WILL I PAY? An Administrative Fee equal to an annual factor
expressed as a decimal (where 1.00 is equal to 100%) of 0.0015, and a mortality
and expense risk charge equal to an annual factor of 0.0125, are charged
against assets held in the Variable Investment Options. Amounts invested in the
Variable Investment Options are also subject to the operating expenses imposed
on the corresponding Portfolio of the Fund. Before you annuitize, an Annual Fee
of $40 is charged each year and at the time of a full withdrawal if your
Contract Value is less than $100,000.
You may also be subject to other fees. See CHARGES, FEES AND DEDUCTIONS.
CAN I WITHDRAW MY CONTRACT VALUE? Generally, you may withdraw all or part of
your Contract Value at any time on or prior to your Annuity Date. Restrictions
are imposed on withdrawals from certain Qualified Contracts. Withdrawals may be
subject to tax and, in certain circumstances, a tax penalty. See WITHDRAWALS
and FEDERAL TAX STATUS.
7
<PAGE>
CAN I RETURN MY CONTRACT? For a limited time, usually about 10 days after you
receive it, you may return your Contract for a refund in accordance with the
terms of its "free look" provision. See SHORT-TERM CANCELLATION RIGHT ("FREE
LOOK").
HOW DO I REACH PACIFIC MUTUAL? You can reach our service representatives
between 6:00 a.m. and 5:00 p.m., Pacific time, at 1-800-722-2333. To send
payments, forms, or requests, see INVESTOR INQUIRIES AND SUBMITTING FORMS AND
REQUESTS.
FEE TABLE
The purpose of this fee table is to assist you in understanding the various
costs and expenses that you will bear directly or indirectly under your
Contract. The table reflects expenses of the Separate Account as well as
expenses of the Fund. In addition to the charges and expenses described below,
premium taxes and/or other taxes may apply. See PREMIUM TAXES in this
Prospectus and the discussion under ORGANIZATION AND MANAGEMENT OF THE FUND in
the Fund's Prospectus and under INVESTMENT ADVISER AND PORTFOLIO MANAGEMENT
AGREEMENTS in the Fund's SAI.
<TABLE>
<S> <C>
CONTRACT OWNER TRANSACTION EXPENSES
Sales Charge Imposed on Purchase Payments........................ None
Deferred Sales Charge............................................ None
Withdrawal Transaction Fee/1/.................................... None
Transfer Fee/2/.................................................. None
ANNUAL FEE/3/.................................................... $40.00
SEPARATE ACCOUNT A ANNUAL EXPENSES
(as a percentage of average daily Account value)
Mortality and Expense Risk Charge................................ 1.25%
Administrative Fee............................................... 0.15%
------
Total Separate Account A Annual Expenses......................... 1.40%
======
</TABLE>
- --------
/1/ We reserve the right to impose a transaction fee of up to $15 in the future
on excess partial withdrawals. See OPTIONAL WITHDRAWALS.
/2/ We reserve the right to impose a transaction fee of up to $15 in the future
on excess transfers. See TRANSFERS.
/3/ This fee will be charged on each Contract Anniversary prior to your Annuity
Date and at the time of a full withdrawal of any Contract Value unless your
Contract Value is at least $100,000 on that date.
8
<PAGE>
PACIFIC SELECT FUND ANNUAL EXPENSES
(AS A PERCENTAGE OF PORTFOLIO AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
OTHER EXPENSES
ADVISORY (AFTER TOTAL
FEE REIMBURSEMENTS) EXPENSES
-------- -------------- --------
<S> <C> <C> <C>
Money Market.................................. .40% .13% .53%
High Yield Bond............................... .60% .17% .77%
Managed Bond.................................. .60% .16% .76%
Government Securities......................... .60% .22% .82%
Aggressive Equity............................. .80% .19% .99%
Growth LT..................................... .75% .19% .94%
Equity Income................................. .65% .18% .83%
Multi-Strategy................................ .65% .19% .84%
Equity........................................ .65% .15% .80%
Bond and Income............................... .60% .20% .80%
Equity Index.................................. .25% .17% .42%
International................................. .85% .27% 1.12%
Emerging Markets.............................. 1.10% .25% 1.35%
</TABLE>
Example: If, at the end of the applicable time period, you withdraw your
entire Variable Account Value or your entire Contract Value, you annuitize,
or you do not withdraw or annuitize, you would pay the following cumulative
expenses on each $1,000 invested, assuming 5% annual return on assets:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Money Market..................................................... $20 $62
High Yield Bond.................................................. $23 $69
Managed Bond..................................................... $22 $69
Government Securities............................................ $23 $71
Aggressive Equity................................................ $25 $78
Growth LT........................................................ $24 $75
Equity Income.................................................... $23 $71
Multi-Strategy................................................... $23 $72
Equity........................................................... $23 $70
Bond and Income.................................................. $23 $70
Equity Index..................................................... $19 $59
International.................................................... $29 $89
Emerging Markets................................................. $28 $87
</TABLE>
THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES; ACTUAL EXPENSES INCURRED IN ANY GIVEN YEAR MAY BE MORE OR LESS THAN
THOSE SHOWN IN THE EXAMPLES. The expenses listed for the Fund Portfolios
reflect current expenses for the year ending December 31, 1995. The Aggressive
Equity and Emerging Markets Portfolios did not begin operations until April 1,
1996 and their estimated "other expenses" reflect the policy, adopted by
Pacific Mutual as Investment Adviser to the Fund, to waive its fees and
reimburse expenses so that operating expenses (exclusive of advisory fees,
additional custodial fees associated with holding foreign securities, foreign
taxes on dividends, interest or capital gains, and extraordinary expenses)
expressed as a decimal are no greater than 0.0025 of average daily net assets
per year. We began this policy in 1989 and intend to continue this policy until
at least December 31, 1997, but may discontinue it after that time. In the
absence of this policy, it is estimated that such expenses for the Emerging
Markets Portfolio would exceed this expense cap in 1996. No reimbursement to
the Portfolio was necessary for the Fund's fiscal year 1995.
The Annual Fee is reflected in the examples, using an assumed Contract Value of
$80,000. No Annual Fee is deducted from annuitized amounts on or after full or
partial annuitization or if your Contract Value is at least $100,000.
9
<PAGE>
WHY BUY A CONTRACT
Your Pacific One Contract (your "Contract") is a deferred annuity that
provides you with flexibility in tax-deferred retirement planning or other
long-term financial planning. You may select among a variety of Variable
Investment Options and a Fixed Option. You may choose to add to your Contract
Value at any time, and your additional investments may be in any amount you
choose (subject to certain limitations). When you annuitize, your Annuitant(s)
will receive a series of variable and/or fixed payments for life or for a
specified number of years.
If you purchase a Contract with after-tax dollars, (a "Non-Qualified
Contract") or if your Contract is purchased through a Qualified Plan or IRA (a
"Qualified Contract"), your earnings on your Contract are not subject to tax
until amounts are withdrawn or distributed (including annuity payments). See
FEDERAL TAX STATUS.
YOUR INVESTMENT OPTIONS
You may choose among fourteen different Investment Options.
YOUR VARIABLE INVESTMENT OPTIONS
Separate Account A, a newly-organized separate account of Pacific Mutual,
currently offers you thirteen "Variable Investment Options" (also called
"Subaccounts"). Each Variable Investment Option invests in a separate
Portfolio of the Fund. Your Variable Investment Options are:
. Money Market Subaccount
. High Yield Bond Subaccount
. Managed Bond Subaccount
. Government Securities Subaccount
. Aggressive Equity Subaccount
. Growth LT Subaccount
. Equity Income Subaccount
. Multi-Strategy Subaccount
. Equity Subaccount
. Bond and Income Subaccount
. Equity Index Subaccount
. International Subaccount
. Emerging Markets Subaccount
10
<PAGE>
What Are Each of These Options?
For your convenience, the following chart summarizes some basic data about
each Portfolio. THIS CHART IS ONLY A SUMMARY. FOR MORE COMPLETE INFORMATION ON
EACH PORTFOLIO, INCLUDING A DISCUSSION OF THE PORTFOLIO'S INVESTMENT
TECHNIQUES AND THE RISKS ASSOCIATED WITH ITS INVESTMENTS, SEE THE ACCOMPANYING
FUND PROSPECTUS. NO ASSURANCE CAN BE GIVEN THAT A PORTFOLIO WILL ACHIEVE ITS
INVESTMENT OBJECTIVE. YOU SHOULD READ THE FUND PROSPECTUS CAREFULLY BEFORE
INVESTING.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
PRIMARY INVESTMENTS
(UNDER NORMAL
PORTFOLIO INVESTMENT OBJECTIVE CONDITIONS) PORTFOLIO MANAGER
==========================================================================================
<S> <C> <C> <C>
Money Market Current income Highest quality money Pacific Mutual
consistent with market securities.
preservation of
capital.
- ------------------------------------------------------------------------------------------
High Yield Bond High level of current Intermediate- and Pacific Mutual
income. long-term high-
yielding lower and
medium quality ("high
risk") fixed income
securities.
- ------------------------------------------------------------------------------------------
Managed Bond Maximize total return Investment grade Pacific Investment
consistent with marketable debt Management Company
prudent investment securities. Will
management. normally maintain an
average portfolio
duration of 3-7 years.
- ------------------------------------------------------------------------------------------
Government Securi- Maximize total return Securities that are Pacific Investment
ties consistent with obligations of or Management Company
prudent investment guaranteed by the U.S.
management. Government, its
agencies or
instrumentalities
(including futures
contracts and options
thereon). Will
normally maintain an
average portfolio
duration of 3-7 years.
- ------------------------------------------------------------------------------------------
Aggressive Equity Capital appreciation. Stocks of small- and Columbus Circle
medium-sized Investors
companies.
- ------------------------------------------------------------------------------------------
Growth LT Long-term growth of Equity securities. Janus Capital
capital consistent Corporation
with preservation of
capital.
- ------------------------------------------------------------------------------------------
Equity Income Long-term growth of Dividend-paying common J.P. Morgan Investment
capital and income. stock. Management Inc.
- ------------------------------------------------------------------------------------------
Multi-Strategy High total return. Equity and fixed J.P. Morgan Investment
income securities. Management Inc.
- ------------------------------------------------------------------------------------------
Equity Capital appreciation. Common stocks and Greenwich Street
securities convertible Advisors Division of
into or exchangeable Smith Barney Mutual
for common stocks. Fund Management Inc.
- ------------------------------------------------------------------------------------------
Bond and Income High level of current Investment grade debt Greenwich Street
income consistent with securities. Advisors Division of
prudent investment Smith Barney Mutual
management and Fund Management Inc.
preservation of
capital.
- ------------------------------------------------------------------------------------------
Equity Index Investment results Stocks included in the Bankers Trust Company
that correspond to the Standard & Poor's 500
total return Composite Stock Price
performance of common Index (the "S&P 500").
stocks publicly traded
in the U.S.
International Long-term capital Equity securities of Templeton Investment
appreciation. corporations domiciled Counsel, Inc.
outside the U.S.
- ------------------------------------------------------------------------------------------
Emerging Markets Long-term growth of Common stocks of Blairlogie Capital
capital. companies domiciled in Management
emerging market
countries.
- ------------------------------------------------------------------------------------------
</TABLE>
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<PAGE>
The Investment Adviser
We are the investment adviser for the Fund. Pacific Mutual and the Fund have
retained other portfolio managers, supervised by Pacific Mutual, for eleven of
the Portfolios.
VARIABLE INVESTMENT OPTION PERFORMANCE
Historical performance information can help you understand how investment
performance can affect your investment in the Variable Investment Options.
Although the Subaccounts are newly-established and have no historical
performance, each Subaccount will be investing in shares of a Portfolio of the
Fund, and the majority of these Portfolios do have historical performance
data. Performance data include total returns for each Subaccount, current and
effective yields for the Money Market Subaccount, and yields for the other
fixed income Subaccounts. Calculations are in accordance with standard
formulas prescribed by the SEC. Yields do not reflect any charge for premium
taxes and/or other taxes; this exclusion may cause yields to show more
favorable performance. Total returns may or may not reflect Annual Fees or any
charge for premium and/or other taxes; data that do not reflect these charges
may show more favorable performance.
The SAI presents some hypothetical performance data, showing what the
performance of each Subaccount would have been if it had been investing in the
corresponding Portfolio since that Portfolio's inception. The SAI also
presents some performance benchmarks, based on unmanaged market indices, such
as the S&P 500, and on "peer groups," which use other managed funds with
similar investment objectives. These benchmarks may give you a broader
perspective when you examine hypothetical or actual Subaccount performance.
In addition, we may provide you with reports of our ratings both as an
insurance company and as to our claims-paying ability. The SAI presents more
details about these ratings.
YOUR FIXED OPTION
The Fixed Option offers you a guaranteed minimum interest rate on the amounts
you allocate to this Option. Amounts you allocate to the Fixed Option, and
your earnings credited to your Fixed Option Value, are held in Pacific
Mutual's General Account. For more detailed information about the Fixed
Option, see THE FIXED OPTION section in this Prospectus.
PURCHASING YOUR CONTRACT
HOW TO APPLY FOR YOUR CONTRACT
To purchase a Contract, fill out an Application and submit it along with your
initial Purchase Payment to Pacific Mutual Life Insurance Company at P.O. Box
100060, Pasadena, California 91189-0060. If your Application and payment are
complete when received, or once they have become complete, we will issue your
Contract within the next two Business Days. If some information is missing
from your Application, we may delay issuing your Contract while we obtain the
missing information; however, we will not hold your initial Purchase Payment
for more than five Business Days without your permission.
If you already own a deferred annuity or a life insurance policy, you may
purchase a Contract by exchanging your existing contract. You must submit all
contracts to be exchanged when you submit your Application. Call your
representative, or call us at 1-800-722-2333, if you are interested in this
option.
We reserve the right to reject any Application or Purchase Payment for any
reason, subject to any applicable nondiscrimination laws and to our own
standards and guidelines. The maximum age of a Contract Owner for which a
Contract will be issued is 85, which is calculated as of his or her attained
birthday. If there are Joint and/or Contingent Owners, all must be under the
age of 85.
12
<PAGE>
MAKING YOUR PURCHASE PAYMENTS
Making Your Initial Payment
Your initial Purchase Payment must be at least $25,000. You may pay this
entire amount when you submit your Application, or you may choose our pre-
authorized checking plan ("PAC") which allows you to pay in equal monthly
installments over one year (at least $2,000 per month). If you choose PAC, you
must make your first installment payment when you submit your Application.
Further requirements for PAC are discussed in the PAC form.
You must obtain our consent before making an initial or additional Purchase
Payment that will bring your aggregate Purchase Payments over $500,000.
Making Additional Payments
You may choose to invest additional amounts in your Contract at any time. Each
additional Purchase Payment must be at least $1,000.
Forms of Payment
Your initial and additional Purchase Payments may be sent by personal or bank
check or by wire transfer. You may also make additional PAC Purchase Payments
via electronic funds transfer. All checks must be drawn on U.S. funds. If you
make Purchase Payments by check other than a cashier's check, your withdrawal
requests and any refund under the "free look" may be delayed until your check
has cleared.
HOW YOUR PAYMENTS ARE ALLOCATED
CHOOSING YOUR INVESTMENT OPTIONS
You may allocate your Purchase Payments among the thirteen Subaccounts and the
Fixed Option. Allocations of your initial Purchase Payment to the Investment
Options you selected will be effective either on your Contract Date or on your
Free Look Transfer Date. See SHORT-TERM CANCELLATION RIGHT ("FREE LOOK"). Each
additional Purchase Payment will be allocated to the Investment Options
according to your allocation instructions in your Application, or most recent
instructions, if any. We reserve the right, in the future, to require that
your allocation to any particular Investment Option meet a certain minimum
amount.
INVESTING IN VARIABLE INVESTMENT OPTIONS
Each time you allocate your investment to a Variable Investment Option, your
Contract is credited with a number of "Subaccount Units" in that Subaccount.
The number of Subaccount Units credited is equal to the amount you have
allocated to that Subaccount, divided by the "Unit Value" of one Unit of that
Subaccount.
Example: You allocate $3,000 to the Government Securities Subaccount. At
the end of the Business Day your investment allocation is effective, the
value of one Unit in the Government Securities Subaccount is $15. As a
result, 200 Units are credited to your Contract for your $3,000.
Your Variable Account Value Will Change
After we credit your Contract with Subaccount Units, the value of those Units
will usually fluctuate. This means that, from time to time, your investment
allocated to the Variable Investment Options may be worth more or less than
the original Purchase Payments to which those amounts can be attributed.
Fluctuations in Subaccount Unit Value will not change the number of Units
credited to your Contract.
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<PAGE>
Subaccount Unit Values will vary in accordance with the investment performance
of the corresponding Portfolio. For example, the value of Units in the Managed
Bond Subaccount will change to reflect the performance of the Managed Bond
Portfolio (including that Portfolio's investment income, its capital gains and
losses, and its expenses). Subaccount Unit Values are also adjusted to reflect
the Administrative Fee and Risk Charge imposed on the Separate Account.
We calculate the value of all Subaccount Units at or about 4:00 p.m. Eastern
time on each Business Day. The SAI contains a detailed discussion of these
calculations.
WHEN YOUR INVESTMENT IS EFFECTIVE
The day your investment is effective determines the Unit Value at which
Subaccount Units are attributed to your Contract. In the case of transfers or
withdrawals, the effective day determines the Unit Value at which affected
Subaccount Units are debited and/or credited under your Contract. That value
is the value of the Subaccount Units next calculated after your transaction is
effective. Your Variable Account Value begins to reflect the investment
performance results of your new allocations on the day after your transaction
is effective.
Your initial Purchase Payment is ordinarily effective on the day we issue your
Contract. Any additional investment is effective on the day we receive your
Purchase Payment in good form.
TRANSFERS
Once your payments are allocated to the Investment Options you selected, you
may transfer your Contract Value from any Investment Option to any other at
any time and as often as you like. Transfer requests are normally effective on
the Business Day we receive them in good form. If you reside in a state that
requires refund of Purchase Payments under your Free Look Right, transfers may
be made only on or after your Free Look Transfer Date. See Short Term
Cancellation Right ("Free Look").
No fee is currently imposed for transfers among the Investment Options, but we
reserve the right to impose a transaction fee for transfers in the future; a
fee of up to $15 may apply to transfers in excess of 15 in any Contract Year.
Transfers under the dollar cost averaging, and earnings sweep options are
counted toward your total transfers in a Contract Year. Any such fee would be
charged against your Investment Options, including the Fixed Option,
proportionately based on your relative Account Value in each immediately after
the transfer.
We have the right, at our option, to require certain minimums in the future in
connection with transfers; these may include a minimum transfer amount and a
minimum Account Value, if any, for the Investment Option from which the
transfer is made or to which the transfer is made. If your transfer request
results in your having a remaining Account Value in an Investment Option that
is less than such minimum amount, we may transfer that remaining amount to
your other Investment Options in the proportions specified in your current
allocation instructions. We also reserve the right to limit the size of
transfers, to limit the number and frequency of transfers, to restrict
transfers, and to suspend transfers. We reserve the right to reject any
transfer request. Currently, the only restriction is that we will not accept
instructions from agents acting under a power of attorney or otherwise on
behalf of multiple Contract Owners.
Exchanges of your Annuity Units in any Subaccount(s) to any other
Subaccount(s) after annuitization are limited to four in any twelve-month
period. See RETIREMENT BENEFITS AND OTHER PAYOUTS.
Dollar Cost Averaging
Dollar cost averaging is a method in which investors buy securities in a
series of regular purchases instead of in a single purchase. This allows the
investor to average the securities' price over time, and may permit a
14
<PAGE>
"smoothing" of abrupt peaks and drops in price. Prior to your Annuity Date,
you may use dollar cost averaging to transfer amounts, over time, from any
Investment Option with an Account Value of at least $10,000 to one or more
other Investment Options. Detailed information appears in the SAI.
Portfolio Rebalancing
You may instruct us to maintain a specific balance of Variable Investment
Options under your Contract (e.g., 30% in the Equity Index Subaccount, 40% in
the Managed Bond Subaccount, and 30% in the Growth LT Subaccount) prior to
your Annuity Date. Periodically, we will "rebalance" your investment to the
percentages you have specified. Rebalancing may result in transferring amounts
from a Subaccount earning a relatively higher return to one earning a
relatively lower return. The Fixed Option is not available for rebalancing.
Detailed information appears in the SAI.
Earnings Sweep
You may instruct us to make automatic periodic transfers of your earnings from
the Money Market Subaccount or from the Fixed Option to one or more Variable
Investment Options (other than the Money Market Subaccount). Detailed
information appears in the SAI.
CHARGES, FEES AND DEDUCTIONS
PREMIUM TAXES
Depending on (among other factors) your state of residence, a tax may or may
not be imposed on your Purchase Payments at the time your payment is made, at
the time of partial or total withdrawal, at the time any death benefit
proceeds are paid, at annuitization, or at such other time as taxes may be
imposed. Tax rates ranging from 1.0% to 3.5% are currently in effect, but may
change in the future. Some local jurisdictions also impose a tax.
If we pay any taxes attributable to payments ("premium taxes") on your behalf,
we will impose a similar charge against your Contract Value. We normally will
charge you when you annuitize some or all of your Contract Value. We reserve
the right to impose this charge for applicable premium taxes when you make a
full or partial withdrawal, at the time any death benefit proceeds are paid,
or when those taxes are incurred. For these purposes, "premium taxes" include
any state or local premium taxes and, where approval has been obtained,
federal premium taxes and any federal, state or local income, excise, business
or any other type of tax (or component thereof) measured by or based upon,
directly or indirectly, the amount of payments Pacific Mutual has received. We
will base this charge on the Contract Value, the amount of the transaction,
the aggregate amount of purchase payments we receive under your Contract, or
any other amount, that in our sole discretion we deem appropriate.
We may also charge the Separate Account or your Contract Value for taxes
attributable to the Separate Account or the Contract, including income taxes
attributable to the Separate Account or to Pacific Mutual's operations with
respect to the Contract, or taxes attributable, directly or indirectly, to
Purchase Payments. Currently, we do not impose any such charges.
ANNUAL FEE
Pacific Mutual will charge you an Annual Fee of $40 on each Contract
Anniversary prior to the Annuity Date, and at the time you withdraw your
entire Contract Value, less Contract Debt, if your Contract Value is less than
$100,000 on that date. The fee is not imposed on amounts you annuitize or on
payment of a death benefit. The fee reimburses certain of our costs in
administering the Contracts and the Separate Account; we do not intend to
realize a profit from this fee or the Administrative Fee. This fee is
guaranteed not to increase for the life of your Contract.
15
<PAGE>
Your Annual Fee will be charged proportionately against your Investment
Options, including the Fixed Option. Assessments against your Variable
Investment Options are made by debiting some of the Subaccount Units
previously credited to your Contract; that is, assessment of the Annual Fee
does not change the Unit Value for those Subaccounts.
No Annual Fee is charged on payment of a death benefit or on annuitization.
WAIVERS AND REDUCED CHARGES
Officers, directors and employees of Pacific Mutual and our affiliates,
registered representatives and employees of broker/dealers with a current
selling agreement with Pacific Mutual and their affiliates, and employees of
affiliated asset management firms ("Eligible Employees") and immediate family
members of Eligible Employees are eligible for certain waivers and/or credits.
Eligible Employees and their immediate family members may purchase a Contract
without regard to minimum Purchase Payment requirements. In addition, we may
credit an additional amount to the Contract Value of these Contracts. We may
reduce or waive the Annual Fee or credit additional amounts in situations that
reduce the administrative expenses, such as the sale of several Contracts to
the same Contract Owners, sales of large Contracts and group sales or in
situations that reduce selling and/or maintenance costs associated with the
Contracts.
MORTALITY AND EXPENSE RISK CHARGE
Pacific Mutual assesses a charge against the assets of each Subaccount to
compensate for certain mortality and expense risks that we assume under the
Contracts (the "Risk Charge"). The risk that an Annuitant will live longer
(and therefore receive more annuity payments) than we predict through our
actuarial calculations at the time the Contract is issued is "mortality risk."
We also bear mortality risk in connection with death benefits payable under
the Contracts. The risk that the expense charges and fees under the Contracts
and Separate Account are less than our actual administrative and operating
expenses is called "expense risk."
This Risk Charge is assessed daily at an annual rate of 0.0125 of each
Subaccount's assets; this charge may not be increased for the duration of your
Contract. Of this amount, 0.0045 is for assuming expense risk, and 0.0080 is
for assuming mortality risk.
Risk Charges will stop at annuitization if you select a fixed annuity; Risk
Charges will continue after annuitization if you choose any variable annuity,
even though we do not bear mortality risk if your Annuity Option is Period
Certain Only.
Pacific Mutual will realize a gain if the Risk Charge exceeds our actual cost
of expenses and benefits, and will suffer a loss if actual costs exceed the
Risk Charge. Any gain will become part of our General Account; we may use it
for any reason, including covering sales expenses on the Contracts.
ADMINISTRATIVE FEE
We charge an Administrative Fee as compensation for costs we incur in
operating the Separate Account and issuing and administering the Contracts,
including processing Applications and payments, and issuing reports to
Contract Owners and to regulatory authorities.
The Administrative Fee is assessed daily at an annual rate of 0.0015 of the
assets of each Subaccount. This fee is guaranteed not to increase for the life
of your Contract. A relationship will not necessarily exist between the actual
administrative expenses attributable to a particular Contract and the
Administrative Fee paid in respect of that particular Contract.
EXPENSES OF PACIFIC SELECT FUND
Your Variable Account Value reflects advisory fees and other expenses incurred
by the various Portfolios of the Fund, net of any applicable reimbursements.
These fees and expenses may vary. The Fund is governed by its own Board of
Trustees, and your Contract does not fix or specify the level of expenses of
any Portfolio. The Fund's fees and expenses are described in detail in the
Fund's Prospectus and in its SAI.
16
<PAGE>
RETIREMENT BENEFITS AND OTHER PAYOUTS
SELECTING YOUR ANNUITANT
When you submit the Application for your Contract, you must choose a sole
Annuitant or two Joint Annuitants. The Annuitant(s) will receive annuity
payments under your Contract when you annuitize. If you are buying a Qualified
Contract, you must be the sole Annuitant or your Primary Joint Annuitant; if
you are buying a Non-Qualified Contract you may choose yourself and/or another
person. In either case, you may choose a Contingent Annuitant; more
information on these options is set out in the SAI. Except in the case of
certain Qualified Contracts, you will not be able to add or change a sole or
Joint Annuitant after your Contract is issued. You will be able to add or
change a Contingent Annuitant until your Annuity Date or the death of your
sole Annuitant or both Joint Annuitants, whichever occurs first; however, once
your Contingent Annuitant has become the Annuitant under your Contract, no
additional Contingent Annuitant may be named. If you have a Non-Qualified
Contract and wish to name a Joint Annuitant, your younger Annuitant must be
your Primary Annuitant. You may not choose an Annuitant who has (or had)
reached his or her 86th birthday at the time your Contract is (or was) issued.
This restriction applies to Joint and Contingent Annuitants as well as to a
sole Annuitant.
ANNUITIZATION
You may choose both your Annuity Date (or "Annuity Start Date") and your
Annuity Option. At the Annuity Date, you may elect to annuitize some or all of
your Contract Value, less any Contract Debt, any transaction fee, and any
applicable charge for premium taxes and/or other taxes, so long as the net
amount you annuitize is at least $5,000. If you annuitize only a portion of
this available Contract Value, you may have the remainder distributed, less
any Contract Debt, any applicable charge for premium taxes and/or other taxes,
any transaction fee, and any applicable Annual Fee. We will distribute your
Contract Value, less any Contract Debt and any applicable charge for premium
taxes, and/or other taxes, any transaction fee, and any Annual Fee to you in a
single sum if the net amount of your Contract Value available to convert to an
annuity is less than $5,000 on your Annuity Date. Distributions under your
Contract will have tax consequences. You should consult a qualified tax
adviser for information on full or partial annuitization.
CHOOSING YOUR ANNUITY DATE ("ANNUITY START DATE")
You should choose your Annuity Start Date when you submit your Application or
we will apply your default Annuity Date to your Contract.
You may change your Annuity Date by notifying us in writing or other form
acceptable to us. We must have received your written notice at least 10
Business Days prior to the earlier of your old Annuity Date or your new
Annuity Date.
Your Annuity Date cannot be earlier than your first Contract Anniversary and
must occur on or before a certain date: If you have a sole Annuitant, your
Annuity Date cannot be later than his or her 100th birthday; if you have Joint
Annuitants and a Non-Qualified Contract, your Annuity Date cannot be later
than your younger Joint Annuitant's 100th birthday; if you have Joint
Annuitants and a Qualified Contract, your Annuity Date cannot be later than
your own 100th birthday. Different requirements may apply in some states. See
APPENDIX A: STATE LAW VARIATIONS. If your Contract is a Qualified Contract,
you may also be subject to additional restrictions. Adverse federal tax
consequences may result if you choose an Annuity Date that is prior to an
Annuitant's attained age 59 1/2. See FEDERAL TAX STATUS.
If you annuitize only a portion of your Contract Value on your Annuity Start
Date, you may, at that time, have the option to elect not to have the
remainder of your Contract Value distributed, but instead to continue your
Contract with that remaining Contract Value (a "continuing Contract"). If this
option is available, you would then choose a second Annuity Date for your
continuing Contract, and all references in this Prospectus to your "Annuity
Date" would, in connection with your continuing Contract, be deemed to refer
to that second Annuity Date. This option may or may not be available, or may
be available only for certain types of Contracts. You should call your tax
adviser for more information if you are interested in this option.
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<PAGE>
DEFAULT ANNUITY DATE AND OPTIONS
If you have a Non-Qualified Contract and you do not choose an Annuity Date
when you submit your Application, your Annuity Date will be your Annuitant's
100th birthday or your younger Joint Annuitant's 100th birthday, whichever
applies (some states' laws may require a different Annuity Date; see APPENDIX
A: STATE LAW VARIATIONS). If you have a Qualified Contract and fail to choose
an Annuity Date, your Annuity Date will be April 1 of the calendar year
following the year you attain age 70 1/2; if you have already attained age 70
1/2 on the Contract Date, your Annuity Date will be April 1 of the calendar
year following your first Contract Anniversary.
If you have not specified an Annuity Option or do not instruct us otherwise,
at your Annuity Date your Contract Value, less any Contract Debt, any
applicable transaction fee, and any applicable charge for premium taxes and/or
other taxes, will be annuitized (if this net amount is at least $5,000) as
follows: the net amount attributed to your Fixed Option Value will be
converted into a fixed-dollar annuity and the net amount attributed to your
Variable Account Value will be converted into a variable-dollar annuity
directed to the Subaccounts proportionate to your Account Value in each. If
you have a Non-Qualified Contract, or if you have a Qualified Contract and are
not married, your default Annuity Option will be Period Certain Only for five
years. If you have a Qualified Contract and you are married, your default
Annuity Option will be Joint and Survivor Life with survivor payments of 50%
and your spouse will automatically be named your Joint Annuitant.
CHOOSING YOUR ANNUITY OPTION
You make three basic decisions about your annuity payments. First, you must
choose whether you want those payments to be a fixed-dollar amount and/or a
variable-dollar amount. Second, you must choose the form of annuity payments
(see Annuity Options). Third, you must decide how often you want annuity
payments to be made (the "frequency" of the payments). You may not change
these selections after annuitization.
Fixed and Variable Annuities
You may choose a fixed annuity (i.e., with fixed-dollar amounts), a variable
annuity (i.e., with variable-dollar amounts), or you may choose both,
converting one portion of the net amount you annuitize into a fixed annuity
and another portion into a variable annuity.
If you select a fixed annuity, each periodic annuity payment received will be
equal to the initial annuity payment, unless you select a joint and survivor
life annuity with reduced survivor payments and the Primary Annuitant dies.
If you select a variable annuity, you may choose as many Variable Investment
Options for your annuity as you wish; the amount of the periodic annuity
payments will vary with the investment results of the Variable Investment
Options selected. After the Annuity Date, Annuity Units may be exchanged among
available Variable Investment Options up to four times in any twelve-month
period. THE CONTRACTS AND THE SEPARATE ACCOUNT in the SAI explains in more
detail how your Contract converts into a variable annuity.
Annuity Options
Four types of annuity options are currently available under the Contracts,
although additional options may become available in the future.
. Life Only. Periodic payments are made to the Annuitant during his or her
lifetime. Payments stop when the Annuitant dies.
. Life with Period Certain. Periodic payments are made to the Annuitant
during his or her lifetime, with payments guaranteed for a specified
period. You may choose to have payments guaranteed for
18
<PAGE>
anywhere from 5 through 30 years (in full years only). If the Annuitant
dies before the guaranteed payments are completed, the Beneficiary
receives the remainder of the guaranteed payments.
. Joint and Survivor Life. Periodic payments are made during the lifetime
of the Primary Annuitant. After the death of the Primary Annuitant,
periodic payments are made to the secondary Annuitant named in the
election if and as long as such secondary Annuitant lives. You may
choose to have the payments to the surviving secondary Annuitant equal
50%, 66 2/3% or 100% of the payments made during the lifetime of the
Primary Annuitant (you must make this election when you choose your
Annuity Option). Payments stop when both Annuitants die.
. Period Certain Only. Periodic payments are made to the Annuitant over a
specified period. You may choose to have payments continue for anywhere
from 5 through 30 years (in full years only). If the Annuitant dies
before the guaranteed payments are completed, the Beneficiary receives
the remainder of the guaranteed payments.
Frequency of Payments
You may choose to have annuity payments made monthly, quarterly, semi-
annually, or annually. The amount of a variable payment will be determined in
each period on the date corresponding to your Annuity Date, and payment will
be made on the next succeeding day.
Your initial annuity payment must be at least $250. Depending on the net
amount you annuitize, this requirement may limit your options regarding the
period and/or frequency of annuity payments.
If your Contract was issued in connection with a Qualified Plan subject to
Title I of the Employee Retirement Income Security Act of 1974 ("ERISA"), your
spouse's consent may be required when you seek any distribution under your
Contract, unless your Annuity Option is Joint and Survivor Life with survivor
payments of at least 50%, and your spouse is your Joint Annuitant.
YOUR ANNUITY PAYMENTS
Amount of the First Payment
Your Contract contains tables that we use to determine the amount of the first
annuity payment under your Contract, taking into consideration the annuitized
portion of your Contract Value at the Annuity Date. This amount will vary,
depending on the annuity period and payment frequency you select; this amount
will be larger in the case of shorter Period Certain annuities and smaller for
longer Period Certain annuities. Similarly, this amount will be greater for a
Life Only annuity than for a Joint and Survivor Life annuity, because we will
expect to make payments for a shorter period of time on a Life Only annuity.
If you do not choose the Period Certain Only annuity, this amount will also
vary depending on the age of the Annuitant(s) on the Annuity Date and, for
some Contracts in some states, the sex of the Annuitant(s). For fixed annuity
payments, the annuity purchase rates ("income factors") in our tables are
based on an annual interest rate of 3% and the 1983a Annuity Mortality Table
with the ages set back 10 years. If you elect a fixed annuity, fixed annuity
payments will be based on the greater of our current periodic income factors
in effect for your Contract on the Annuity Date which are at least the
guaranteed periodic income factors under the Contract. For variable annuity
payments, the tables are based on an assumed annual investment return of 5%
and the 1983a Annuity Mortality Table with the ages set back 10 years. If you
elect a variable annuity, your initial variable annuity payment will be based
on the applicable variable income factors in our table. A higher assumed
investment return would mean a larger first variable annuity payment, but
subsequent payments would increase only when actual net investment performance
exceeds the higher assumed rate and would fall when actual net investment
performance is less than the higher assumed rate. A lower assumed rate would
mean a smaller first payment and a more favorable threshold for increases and
decreases. If the actual net investment performance is 5% annually, annuity
payments will be level. The assumed investment return is explained in more
detail in the SAI under THE CONTRACTS AND THE SEPARATE ACCOUNT.
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DEATH BENEFITS
A death benefit may be payable on proof of death before the Annuity Date, of
the Annuitant or of any Contract Owner while the Contract is in force. The
Death Benefit will be paid according to the Death Benefit Proceeds section
below.
Defining Our "Death Benefit" Terms
Your Death Benefit Amount as of any day (prior to your Annuity Date) is equal
to the greater of:
. your aggregate Purchase Payments, less any prior partial withdrawals,
including any withdrawal fees, as of that day; or
. your Contract Value as of that day.
Your Guaranteed Minimum Death Benefit Amount is determined as follows: We look
at your Contract as of your fifth Contract Anniversary and as of every fifth
subsequent Contract Anniversary prior to your Annuity Date, that is, the 10th,
15th, etc., (each of these Anniversaries is a "Milestone Date"). For each
Milestone Date, if your Annuitant was living and had not yet reached his or her
76th birthday as of that date, we calculate what your Death Benefit Amount
would have been as of that Milestone Date and adjust this amount by (1) adding
the aggregate amount of any Purchase Payments received by us after that
Milestone Date and (2) subtracting the aggregate amount of any partial
withdrawals, any fees for withdrawals and transfers, any Annual Fees, and any
previous charges for premium taxes and/or other taxes effected since that
Milestone Date. The highest of these adjusted amounts, as of the Notice Date,
is your Guaranteed Minimum Death Benefit Amount. Calculations of any
"Guaranteed Minimum Death Benefit" are only made once death benefit proceeds
become payable under your Contract.
The Notice Date is the day on which we receive proof (in good form) of death
and instructions regarding payment of death benefit proceeds.
The Amount of the Death Benefit: Death of the Annuitant
If the Annuitant dies on or before your fifth Contract Anniversary, or if the
Annuitant had already reached his or her 76th birthday as of your fifth
Contract Anniversary, the death benefit will be equal to your "Death Benefit
Amount" as of the "Notice Date."
If the Annuitant dies after your fifth Contract Anniversary and had not yet
reached his or her 76th birthday as of your fifth Contract Anniversary, the
death benefit will be equal to the greater of:
. your Death Benefit Amount as of the Notice Date; or
. your "Guaranteed Minimum Death Benefit Amount" as of the Notice Date.
The following procedures apply in the event of death of an Annuitant who is not
also a Contract Owner: If your Contract names Joint Annuitants, and only one
Joint Annuitant dies, the surviving Joint Annuitant becomes your sole Annuitant
and the death benefit is not yet payable. If your sole Annuitant dies (or if no
Joint Annuitant survives) and your Contract names a surviving Contingent
Annuitant, he or she becomes the sole Annuitant and the death benefit is not
yet payable.
The Amount of the Death Benefit: Death of a Contract Owner
If a Contract Owner who is not the Annuitant dies before the Annuity Date, the
amount of the death benefit will be equal to your Contract Value as of the
Notice Date.
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Death Benefit Proceeds
The proceeds of any death benefit payable will be the amount of the death
benefit reduced by any charge for premium taxes and/or other taxes and any
Contract Debt. The Death Benefit proceeds will be payable in a single sum or,
if the recipient chooses, as an annuity. Any such annuity is subject to all
restrictions (including minimum amount requirements) as are other annuities
under this Contract; in addition, there may be legal requirements that limit
the recipient's Annuity Options and the timing of any payments. A recipient
should consult a qualified tax adviser before electing to receive an annuity.
Additional provisions apply if your Contract names a Joint or Contingent Owner
or Annuitant, or if the Beneficiary, Joint Owner, or Contingent Owner is your
spouse. Further information about these provisions is contained in the SAI.
WITHDRAWALS
OPTIONAL WITHDRAWALS
You may, on or prior to your Annuity Date, withdraw all or a portion of the
amount available under your Contract, so long as any of your Annuitants is
still living. Except as provided below, withdrawals from your Investment
Options may be made at any time. You may request to withdraw a specific dollar
amount or a specific percentage of an Account Value or your Contract Value,
less Contract Debt. You may choose to make your withdrawal from specified
Investment Options; if you do not specify Investment Options, your withdrawal
will be made from all Investment Options proportionately. Each partial
withdrawal, including pre-authorized withdrawals, must be for at least $1,000.
If your partial withdrawal from an Investment Option would leave a remaining
Account Value in that Investment Option of less than any minimum Account Value
we may require in the future, we have the right, at our option, to transfer
that remaining amount to your other Investment Options on a proportionate
basis relative to your most recent allocation instructions. If your partial
withdrawal leaves you with a Contract Value of less than $1,000, we have the
right, at our option, to terminate your Contract and send you the withdrawal
proceeds described in the next section.
Amount Available for Withdrawal
The amount available to you for withdrawal is your Contract Value, less
Contract Debt, at the end of the Business Day on which your withdrawal request
is effective, less any applicable Annual Fee, any withdrawal transaction fee,
any charges for premium tax and/or other taxes, and your Contract Debt. The
amount we send to you (your "withdrawal proceeds") will also reflect any
required or requested federal and state income tax withholding. See FEDERAL
TAX STATUS.
You assume investment risk on investments in the Subaccounts; as a result, the
amount available to you for withdrawal from any Subaccount may be more or less
than the total Purchase Payments you have allocated to that Subaccount.
Withdrawal Transaction Fees
There is currently no transaction fee for partial withdrawals. However, we
reserve the right to impose a withdrawal transaction fee in the future of up
to $15 for each partial withdrawal (including preauthorized partial
withdrawals) in excess of 15 in any Contract Year. Any such fee would be
charged against your Investment Options, including the Fixed Option,
proportionately based on your Account Value in each immediately after the
withdrawal.
Pre-Authorized Withdrawals
If your Contract Value is at least $10,000, you may select the pre-authorized
withdrawal option, and you may choose monthly, quarterly, semiannual or annual
withdrawals. Each withdrawal must be for at least $1,000. Each pre-authorized
withdrawal is subject to federal income tax on its taxable portion and may be
subject to a 10% tax penalty if you have not reached age 59 1/2. See FEDERAL
TAX STATUS. Additional information and options are set out in the SAI and in
the Pre-Authorized Withdrawal section of your Application.
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Special Requirements for Full Withdrawals
If you wish to withdraw the entire amount available under your Contract, you
must either return your Contract to Pacific Mutual or sign and submit to us a
"lost contract affidavit."
Special Restrictions Under Qualified Plans
If your Contract was issued under certain Qualified Plans, you may not
withdraw amounts attributable to contributions made pursuant to a salary
reduction agreement (as defined in Section 402(g)(3)(A) of the Code) or to
transfers from a custodial account (as defined in Section 403(b)(7) of the
Code) except in cases of your (a) separation from service, (b) death, (c)
disability as defined in Section 72(m)(7) of the Code, (d) reaching age
59 1/2, or (e) hardship as defined for purposes of Section 401(k) of the Code.
These limitations do not affect certain rollovers or exchanges between
Qualified Plans, and do not apply to rollovers from these Qualified Plans to
an individual retirement account or individual retirement annuity. In the case
of tax sheltered annuities, these limitations do not apply to certain salary
reduction contributions made, and investment results earned, prior to dates
specified in the Code.
Hardship withdrawals under the exception provided above are restricted to
amounts attributable to salary reduction contributions, and do not include
investment results; this additional restriction does not apply to salary
reduction contributions made, and investment results earned, prior to dates
specified in the Code.
Certain distributions, including rollovers, may be subject to mandatory
withholding of 20% for federal income tax if the distribution is not
transferred directly to the trustee of another Qualified Plan, or to the
custodian of an individual retirement account or issuer of an individual
retirement annuity. See FEDERAL TAX STATUS. Distributions may also trigger
withholding for state income taxes. The tax and ERISA rules relating to
Contract withdrawals are complex. You should consult with your tax advisor
before making withdrawals from your Contract Value.
Restrictions Under the Texas Optional Retirement Program
Title 8, Section 830.105 of the Texas Government Code restricts withdrawal of
contributions and earnings in a variable annuity contract in the Texas Option
Retirement Program (ORP) prior to 1) termination of employment in all Texas
public institutions of higher education, 2) retirement, 3) death, or 4) the
participant's attainment of age 70 1/2. A participant in the Texas ORP will
not, therefore, be entitled to make full or partial withdrawals under a
Contract unless one of the foregoing conditions has been satisfied.
Appropriate certification must be submitted to redeem the participant's
account. Restrictions on withdrawal do not apply to transfers of values from
one annuity contract to another during participation in the Texas ORP. Loans
are not available in the Texas ORP.
Effective Date of Withdrawal Requests
Withdrawal requests are normally effective on the Business Day we receive them
in good form. If you make Purchase Payments by check and submit a withdrawal
request immediately afterwards, the payment of your withdrawal request may be
delayed until your check clears.
MANDATORY DISTRIBUTION ON DEATH
If a Contract Owner of a Non-Qualified Contract dies before the Annuity Date,
the entire interest must be distributed within 5 years of death. If a Non-
Qualified Contract has Joint Owners, this requirement applies to the first
Contract Owner to die. Distribution to a designated recipient beginning no
later than 1 year after the Contract Owner's death and continuing over the
recipient's life or a period not exceeding the recipient's life expectancy
will satisfy this distribution requirement. If the Contract Owner was not an
Annuitant but was a Joint Owner and there is a surviving Joint Owner, that
surviving Joint Owner is the designated recipient; if no Joint Owner survives
but a Contingent Owner is named in the Contract and is living, he or she is
the designated recipient. Otherwise, or if the Contract Owner was an
Annuitant, the designated recipient is the Beneficiary; if no Beneficiary is
living, the designated recipient is the Owner's estate. A sole designated
recipient who is the Contract Owner's spouse may elect to become the Contract
Owner (and sole Annuitant if the deceased Contract Owner had been the
Annuitant) and continue the Contract. A Joint or Contingent Owner who is the
designated recipient but not the Contract Owner's spouse may not continue the
Contract but may purchase a new Contract; however, a distribution will be
considered to have been made under the original Contract for federal income
tax purposes.
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TAX CONSEQUENCES OF WITHDRAWALS
Withdrawals, including pre-authorized withdrawals, will generally have federal
income tax consequences, which could include tax penalties. YOU SHOULD CONSULT
WITH A TAX ADVISER BEFORE MAKING ANY WITHDRAWAL OR SELECTING THE PRE-AUTHORIZED
WITHDRAWAL OPTION. See FEDERAL TAX STATUS.
SHORT-TERM CANCELLATION RIGHT ("FREE LOOK")
You may return your Contract for cancellation and a full refund during your
"free look period." Your free look period is usually the 10-day period
beginning on the day you receive your Contract, but may vary if required by
state law. For more information, see APPENDIX A: STATE LAW VARIATIONS. If you
return your Contract, it will be canceled and treated as void from your
Contract Date. You will then receive a refund as follows:
. All of your Purchase Payments allocated to the Fixed Option, and
. your Variable Account Value as of the end of the Business Day on which
we receive your Contract for cancellation, plus a refund of any amounts
that may have been deducted as Contract fees or charges to pay premium
taxes and/or other taxes.
Some states' laws require us to refund your Purchase Payments allocated to the
Variable Investment Options instead of your Variable Account Value. If you
reside in one of these states, the Purchase Payments you have allocated to any
Subaccount will usually be allocated to the Money Market Subaccount during your
free look period; however, different rules may apply depending on your state of
residence. In such cases, we will transfer your Contract Value in the Money
Market Account to your chosen Variable Investment Options at the end of the
15th calendar day after your Contract Date ("your Free Look Transfer Date"). We
reserve the right to extend your Free Look Transfer Date by the number of days
in excess of ten days that your state of residence allows you to return your
Contract to us under the Free Look Provision.
PACIFIC MUTUAL AND THE SEPARATE ACCOUNT
PACIFIC MUTUAL
Pacific Mutual is a mutual life insurance company organized under California
law on January 2, 1868 under the name "Pacific Mutual Life Insurance Company of
California" and reincorporated as Pacific Mutual Life Insurance Company on July
22, 1936. Our operations include both life insurance and annuity products as
well as financial and retirement services. As of the end of 1995, we had over
$44.2 billion of individual life insurance in force and total assets of
approximately $17.6 billion. Together with our subsidiaries and affiliated
enterprises, Pacific Mutual has total assets and funds under management of over
$116.6 billion. We have been ranked according to assets as the 24th largest
life insurance carrier in the nation for 1994. We are authorized to conduct
life insurance and annuity business in the District of Columbia and all states
except New York. Our principal offices are located at 700 Newport Center Drive,
Newport Beach, California 92660.
Our wholly-owned subsidiary, Pacific Mutual Distributors, Inc. ("PMD")
(formerly known as Pacific Equities Network), serves as the principal
underwriter for the Contracts. PMD is located at 700 Newport Center Drive,
Newport Beach, California 92660. PMD and Pacific Mutual enter into selling
agreements with broker-dealers, under which such broker-dealers act as agents
of Pacific Mutual and PMD in the sale of the Contracts.
SEPARATE ACCOUNT A
Separate Account A was established on September 7, 1994 as a separate account
of Pacific Mutual, and is registered with the SEC under the Investment Company
Act of 1940 (the "1940 Act") as a type of investment company called a "unit
investment trust."
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Obligations arising under your Contract are general corporate obligations of
Pacific Mutual. We are also the legal owner of the assets in the Separate
Account.
Assets of the Separate Account attributed to the reserves and other
liabilities under the Contract and other contracts issued by Pacific Mutual
that are supported by the Separate Account may not be charged with liabilities
arising from any other business of Pacific Mutual; any income, gain or loss
(whether or not realized) from the assets of the Separate Account are credited
to or charged against the Separate Account without regard to Pacific Mutual's
other income, gain or loss.
We may invest money in the Separate Account in order to commence its
operations and for other purposes, but not to support contracts other than
variable annuity contracts. A portion of the Separate Account's assets may
include accumulations of charges we make against the Separate Account and
investment results of assets so accumulated. These additional assets are ours
and we may transfer them to our General Account at any time; however, before
making any such transfer, we will consider any possible adverse impact the
transfer might have on the Separate Account. Subject to applicable law, we
reserve the right to transfer our assets in the Separate Account to our
General Account.
The Separate Account is not the sole investor in the Fund. Investment in the
Fund by other separate accounts in connection with variable annuity and
variable life insurance contracts may create conflicts. See MORE ON THE FUND'S
SHARES in the accompanying Prospectus for the Fund.
FEDERAL TAX STATUS
The following summary of federal income tax consequences is based on current
tax laws and regulations, which may be changed by legislative, judicial or
administrative action. The summary is general in nature, and does not consider
any applicable state or local tax laws. We do not make any guarantee regarding
the tax status, federal, state or local, of any Contract or any transaction
involving the Contracts. Accordingly, you should consult a qualified tax
adviser for complete information and advice before purchasing a Contract.
The following rules generally do not apply to variable annuity contracts held
by or for non-natural persons (e.g., corporations) unless such an entity holds
the Contract as nominee for a natural person. If a contract is not owned or
held by a natural person or a nominee for a natural person, the contract
generally will not be treated as an "annuity" for tax purposes, meaning that
the contract owner will be taxed currently on annual increases in account
value at ordinary income rates unless some other exception applies.
Section 72 of the Code governs the taxation of annuities in general, and we
designed the Contracts to meet the requirements of Section 72 of the Code. We
believe that, under current law, the Contract will be treated as an annuity
for federal income tax purposes if the Contract Owner is a natural person or a
nominee for a natural person, and that Pacific Mutual (as the issuing
insurance company), and not the Contract Owner(s), will be treated as the
owner of the investments underlying the Contract. Accordingly, no tax should
be payable by you as a Contract Owner as a result of any increase in Contract
Value until you receive money under your Contract. You should, however,
consider how amounts will be taxed when you do receive them. The following
discussion assumes that your Contract will be treated as an annuity for
federal income tax purposes.
Section 817(h) of the Code provides that the investments underlying a variable
annuity must satisfy certain diversification requirements. Details on these
diversification requirements appear under OTHER INFORMATION ABOUT THE FUND in
the Fund's Prospectus. Pacific Mutual believes the underlying Variable
Investment Options for the Contract meet these requirements. In connection
with the issuance of temporary regulations relating to diversification
requirements under Section 817(h), the Treasury Department announced that such
regulations do not provide guidance concerning the extent to which Contract
Owners may direct their investments to particular divisions of a separate
account. Such guidance may be included in regulations or revenue rulings under
Section 817(d) relating to the definition of a variable contract. Because of
this uncertainty, we reserve the right to make such changes as we deem
necessary or appropriate to ensure
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that your Contract continues to qualify as an annuity for tax purposes. Any
such changes will apply uniformly to affected Contract Owners and will be made
with such notice to affected Contract Owners as is feasible under the
circumstances.
TAXES PAYABLE BY CONTRACT OWNERS: GENERAL RULES
THESE GENERAL RULES APPLY TO NON-QUALIFIED CONTRACTS. AS DISCUSSED BELOW,
HOWEVER, TAX RULES MAY DIFFER FOR QUALIFIED CONTRACTS AND YOU SHOULD CONSULT A
QUALIFIED TAX ADVISER IF YOU ARE PURCHASING A QUALIFIED CONTRACT.
Distributions of net investment income or capital gains that each Subaccount
receives from its corresponding Portfolio are automatically reinvested in such
Portfolio unless we, on behalf of the Separate Account, elect otherwise. As
noted above, you will be subject to federal income taxes on the investment
income from your Contract only when it is distributed to you.
Taxes Payable on Withdrawals
Amounts you withdraw before annuitization, including amounts withdrawn from
your Contract Value in connection with partial withdrawals for payment of
fees, will be treated first as taxable income, to the extent that your
Contract Value exceeds the aggregate of your Purchase Payments (reduced by
non-taxable amounts previously received), and then as non-taxable recovery of
your Purchase Payments.
The assignment or pledge of (or agreement to assign or pledge) any portion of
the value of the Contract for a loan will be treated as a withdrawal subject
to these rules. Moreover, all annuity contracts issued to you in any given
calendar year by Pacific Mutual and any of our affiliates are treated as a
single annuity contract for purposes of determining whether an amount is
subject to tax under these rules. The Code further provides that the taxable
portion of a withdrawal may be subject to a penalty tax equal to 10% of that
taxable portion unless the withdrawal is: (1) made on or after the date you
reach age 59 1/2, (2) made by a Beneficiary after your death, (3) attributable
to your becoming disabled, or (4) in the form of level annuity payments under
a lifetime annuity.
Taxes Payable on Annuity Payments
A portion of each annuity payment you receive under a Contract generally will
be treated as a partial recovery of Purchase Payments (as used here, "Purchase
Payments" means the aggregate Purchase Payments less any amounts that were
previously received under the Contract but not included in income) and will
not be taxable. (In certain circumstances, subsequent modifications to an
initially-established payment pattern may result in the imposition of a
penalty tax.) The remainder of each annuity payment will be taxed as ordinary
income. However, after the full amount of aggregate Purchase Payments has been
recovered, the full amount of each annuity payment will be taxed as ordinary
income. Exactly how an annuity payment is divided into taxable and non-taxable
portions depends on the period over which annuity payments are expected to be
received, which in turn is governed by the form of annuity selected and, where
a lifetime annuity is chosen, by the life expectancy of the Annuitant(s) or
payee(s).
Should annuity payments cease on account of the death of a Contract Owner
before Purchase Payments have been fully recovered, an Annuitant (or in
certain cases the Beneficiary) is allowed a deduction on the final tax return
for the unrecovered Purchase Payments; however, if any remaining annuity
payments are made to a Beneficiary, the Beneficiary will recover the balance
of the Purchase Payments as payments are made. A lump sum payment taken in
lieu of remaining monthly annuity payments is not considered an annuity
payment for tax purposes. The portion of any lump sum payment to a Beneficiary
in excess of aggregate unrecovered Purchase Payments would be subject to
income tax. Such a lump sum payment may also be subject to a penalty tax.
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If a Contract Owner dies before annuity payments begin, certain minimum
distribution requirements apply. If a Contract Owner dies after the Annuity
Date, the remaining interest in the Contract must be distributed at least as
rapidly as under the method of distribution in effect on the date of death.
Generally, the same tax rules apply to amounts received by the Beneficiary as
those set forth above, except that the early withdrawal penalty tax does not
apply. Thus, any annuity payments or lump sum withdrawal will be divided into
taxable and non-taxable portions.
In addition, designation of a Beneficiary who either is 37 1/2 or more years
younger than a Contract Owner or is a grandchild of a Contract Owner may have
Generation Skipping Transfer Tax consequences under section 2601 of the Code.
Certain transfers of a Contract for less than full consideration, such as a
gift, will trigger tax on the investment income in the Contract, and may also
trigger tax penalties and, if applicable, gift tax.
QUALIFIED CONTRACTS
The Contracts are available to a variety of Qualified Plans. Tax restrictions
and consequences for Contracts under each type of Qualified Plan differ from
each other and from those for Non-Qualified Contracts. In addition, individual
Qualified Plans may have terms and conditions that impose additional rules.
THE FOLLOWING IS ONLY A GENERAL DISCUSSION ABOUT TYPES OF QUALIFIED PLANS FOR
WHICH THE CONTRACTS ARE AVAILABLE. IF YOU ARE PURCHASING A QUALIFIED CONTRACT,
YOU SHOULD CONSULT WITH A QUALIFIED TAX ADVISER.
Individual Retirement Annuities ("IRAs")
Contributions to an IRA are subject to limitations. Because your minimum
initial Purchase Payment for a Pacific One Contract is larger than the maximum
annual contribution permitted for an IRA, Pacific One Contracts are available
as IRAs only through a rollover from an existing Qualified Plan.
In addition, distributions from an IRA are subject to certain restrictions.
Failure to make mandatory distributions may result in imposition of a 50%
penalty tax on any difference between the required distribution amount and the
amount actually distributed. A 10% penalty tax is imposed on the amount
includable in gross income from distributions that occur before you attain age
59 1/2 and that are not made on account of death or disability, with certain
exceptions. These exceptions include distributions that are part of a series
of substantially equal periodic payments made over your life (or life
expectancy) or the joint lives (or joint life expectancies) of yourself and
your Joint Annuitant. Distributions of minimum amounts specified by the Code
must commence by April 1 of the calendar year following the calendar year in
which you attain age 70 1/2. Additional distribution rules apply after your
death.
You may rollover funds from an existing Qualified Plan (such as proceeds from
existing insurance policies, annuity contracts or securities) into your IRA if
those funds are in cash; this will require you to liquidate any value
accumulated under the existing Qualified Plan. Mandatory withholding of 20%
may apply to any rollover distribution from your existing Qualified Plan if
the distribution is not transferred directly to your IRA; to avoid this
withholding you should have cash transferred directly from the insurance
company or plan trustee to Pacific Mutual.
Similar limitations and tax penalties apply to tax sheltered annuities,
government plans, and 401(k) and pension and profit-sharing plans.
Tax Sheltered Annuities ("TSAs")
Section 403(b) of the Code permits public school systems and certain tax-
exempt organizations to adopt annuity plans for their employees; Purchase
Payments made on Contracts purchased for these employees are
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excludable from the employees' gross income (subject to maximum contribution
limits). Distributions under these Contracts must comply with certain
limitations as to timing, or result in tax penalties.
Government Plans
Section 457 of the Code permits employees of a state or local government (or
of certain other tax-exempt entities) to defer compensation through an
eligible government plan. Contributions to a Contract in connection with an
eligible government plan are subject to limitations.
401(k) Plans; Pension and Profit-Sharing Plans
Deferred compensation plans may be established by an employer for certain
eligible employees under Sections 401(a) and 401(k) of the Code. Contributions
to these plans are subject to limitations.
LOANS
Certain Qualified Contract Owners may borrow against their Contracts. If yours
is a Qualified Contract issued under Section 401(a), 401(k), 403(a) or 403(b)
of the Code and the terms of your Qualified Plan permit, you may request a
loan from Pacific Mutual, using your Contract Value as your only security.
Loan Procedures
Your loan request must be submitted on our Loan Request Form. You may submit a
loan request at any time after your first Contract Anniversary and before your
Annuity Date. If approved, your loan will usually be effective as of the end
of the Business Day on which we receive all necessary documentation in proper
form. We will forward proceeds of your loan to you within seven calendar days
after the effective date of your loan. A $100 loan administrative fee will be
deducted from your loan proceeds, however we reserve the right to increase
this fee up to a maximum of $500.
In order to secure your loan, on the effective date of your loan, we will
transfer an amount equal to the principal amount of your loan into an account
called our "Loan Account". To make this transfer, we will transfer amounts
proportionately from your Investment Options, based on your Account Value in
each.
As your loan is repaid, a portion, corresponding to the amount of the
repayment, of any amount then held as security for your loan will be
transferred from the Loan Account back into your Investment Options in
accordance with your current allocation instructions.
Loan Terms
You may have only one loan outstanding at any time. The minimum loan amount
must be for at least $1,000, subject to certain state limitations. Your total
Contract Debt at the effective date of your loan, may not exceed the lesser
of:
. 50% of your Contract Value, or
. $50,000 less your highest outstanding Contract Debt during the 12-month
period immediately preceding the effective date of your loan.
You should refer to the terms of your particular Qualified Plan for any
additional loan restrictions. If you have other loans outstanding pursuant to
other Qualified Plans, the amount you may borrow may be further restricted.
You will be charged interest on your Contract Debt at an annual rate, set at
the time of the loan withdrawal, equal to the higher of (a) Moody's Corporate
Bond Yield Average-Monthly Average Corporates (the "Moody's Rate"), as
published by Moody's Investors Service, Inc., or its successor, for the most
recently available calendar
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month or (b) 5%. In the event that the Moody's Rate is no longer available, we
may substitute a substantially similar average rate, subject to compliance
with applicable state regulations. The amount held in the Loan Account to
secure your loan will earn a return equal to an annual rate that is two
percentage points lower than the annual rate of interest charged on your
Contract Debt. Interest charges accrue on your Contract Debt daily, beginning
on the effective date of your loan; earnings on the amount held in the Loan
Account to secure your loan accrue daily beginning on the following day, and
those earnings will be transferred once a year to your Investment Options in
accordance with your current allocation instructions.
Repayment Terms
Your loan, including principal and accrued interest, must be repaid in
quarterly installments. An installment will be due in each quarter on the date
corresponding to the effective date of your loan, beginning with the first
such date following the effective date of your loan.
Example: On May 1, we receive your loan request, and your loan is
effective. Your first quarterly payment will be due on August 1.
Adverse tax consequences may result if you fail to meet the repayment
requirements for your loan. You must repay principal and interest of any loan
in substantially equal payments over the term of the loan. Normally, the term
of a loan will be five years from the effective date of the loan; however, if
you have certified to us that your loan proceeds are to be used to acquire a
principal residence for yourself, you may request a loan term of 30 years. In
either case, however, you must repay your loan prior to your Annuity Date.
You may prepay your loan at any time; if you prepay your entire outstanding
principal, we will bill you for any accrued interest, and your loan will be
considered repaid only when the interest due has been paid.
If a loan payment is not made when due, interest will continue to accrue and
we will declare the entire remaining loan balance in default. At that time, we
will send written notification of the amount needed to bring the loan back to
a current status. You will have sixty (60) days from the date on which the
loan was declared in default (the "grace period") to make the required
payment. If the required payment is not received by the end of the grace
period, the defaulted loan balance plus accrued interest will be withdrawn
from your Contract Value, if amounts under your Contract are eligible for
distribution. If those amounts are not eligible for distribution, the
defaulted loan balance plus accrued interest will be considered a Deemed
Distribution and will be withdrawn when such values become eligible. In either
case, the Distribution or the Deemed Distribution will be considered a
currently taxable event, will be subject to the mandatory 20% federal
withholding and may be subject to the early withdrawal tax penalty.
If there is a Deemed Distribution under your Contract and to the extent
allowed by law, any future withdrawals will first be applied as repayment of
the defaulted Contract Debt, including accrued interest. Any amounts withdrawn
and applied as repayment of loan principle will be withdrawn from the Loan
account. Any amounts withdrawn and applied as repayment of interest due will
be withdrawn from your Fixed and Variable Accounts on a proportionate basis
relative to the Accumulated Value in each account.
Subject to any necessary approval of state insurance authorities, while you
have Contract Debt outstanding, we will treat all payments you send us as
Purchase Payments unless you specifically indicate that your payment is a loan
repayment. Any loan repayments in excess of the amount then due will be
refunded to you, unless such amount is sufficient to pay the balance of your
loan.
Tax and Legal Matters
The tax and ERISA rules relating to Contract loans are complex and, in many
cases, unclear. FOR THESE REASONS AND BECAUSE THE RULES VARY DEPENDING ON THE
INDIVIDUAL CIRCUMSTANCES OF EACH CONTRACT, WE URGE YOU TO CONSULT WITH A
QUALIFIED TAX ADVISER PRIOR TO EFFECTING ANY LOAN TRANSACTION UNDER YOUR
CONTRACT.
Interest paid on your loan under a 401(k) plan or 403(b) tax sheltered annuity
will be considered "personal interest" under Section 163(h) of the Code, to
the extent the loan comes from your pre-tax contributions, even if the
proceeds of your loan are used to acquire your principal residence.
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<PAGE>
WITHHOLDING
Unless you elect to the contrary, any amounts you receive under your Contract
that are attributable to investment income will be subject to withholding to
meet federal and state income tax obligations. The rate of withholding on
annuity payments made to you will be determined on the basis of the
withholding information you provide to us with your Application. If you do not
provide us with required withholding information, we will withhold, from every
withdrawal from your Contract and from every annuity payment to you, the
appropriate percentage of the taxable amount of the payment. Please call us at
1-800-722-2333 with any questions about the required withholding information.
For purposes of determining your withholding rate on annuity payments, you
will be treated as a married person with three exemptions. The rate of
withholding on all other payments made to you under your Contract, such as
amounts you receive upon withdrawals, will be 10%. Generally, there will be no
withholding for taxes until you actually receive payments under your Contract.
Distributions from a Contract under a Qualified Plan (not including an
individual retirement annuity subject to Code Section 408) to an employee,
surviving spouse, or former spouse who is an alternate payee under a qualified
domestic relations order, in the form of a lump sum settlement or periodic
annuity payments for a fixed period of fewer than 10 years are subject to
mandatory income tax withholding of 20% of the taxable amount of the
distribution, unless (1) the distributee directs the transfer of such amounts
in cash to another Qualified Plan or an IRA; or (2) the payment is a minimum
distribution required under the Code. The taxable amount is the amount of the
distribution less the amount allocable to after-tax contributions. All other
types of taxable distributions are subject to withholding unless the
distributee elects not to have withholding apply.
Certain states have indicated that pension and annuity withholding will apply
to payments made to residents. Generally, an election out of federal
withholding will also be considered an election out of state withholding.
IMPACT OF FEDERAL INCOME TAXES
In general, if you expect to accumulate savings over a relatively long period
of time without making significant withdrawals, there should be tax
advantages, regardless of your tax bracket, in purchasing a Contract rather
than, for example, a mutual fund with a similar investment policy and
approximately the same level of expected investment results. This is because
little or no income taxes are incurred by you or by Pacific Mutual while you
are participating in the Subaccounts, and it is generally advantageous to
defer the payment of income taxes, so that the investment return is compounded
without any deduction for income taxes. The advantage will be greater if you
decide to liquidate your investment in the form of monthly annuity payments
after your retirement, or if your tax rate is lower at that time than during
the period that you held the Contract, or both.
TAXES ON PACIFIC MUTUAL
Although the Separate Account is registered as an investment company, it is
not a separate taxpayer for purposes of the Code. The earnings of the Separate
Account are taxed as part of Pacific Mutual's operations. No charge is made
against the Separate Account for our federal income taxes (excluding the
charge for premium taxes) but we will review, periodically, the question of
charges to the Separate Account or your Contract for such taxes. Such a charge
may be made in future years for any federal income taxes that would be
attributable to the Separate Account or to our operations with respect to your
Contract, or attributable, directly or indirectly, to Purchase Payments on
your Contract.
Under current law, we may incur state and local taxes (in addition to premium
taxes) in several states. At present, these taxes are not significant and they
are not charged against the Contract or the Separate Account. If there is a
material change in applicable state or local tax laws, the imposition of any
such taxes upon us that are attributable to the Separate Account or to our
operations with respect to your Contract may result in a corresponding charge
against the Separate Account or your Contract.
29
<PAGE>
ADDITIONAL INFORMATION
VOTING RIGHTS
We are the legal owner of the shares of the Pacific Select Fund Portfolios
held by the Subaccounts, and consequently have the right to vote on any matter
voted on at Fund shareholders' meetings. However, our interpretation of
applicable law requires us to vote the shares attributable to your Variable
Account Value ("your voting interest") in accordance with your directions.
We will pass shareholder proxy materials on to you so that you have an
opportunity to give us voting instructions for your voting interest. You may
provide your instructions by proxy or in person at the shareholders' meeting.
If there are shares of a Portfolio held by a Subaccount for which we do not
receive timely voting instructions, we will vote those shares in the same
proportion as all other shares of that Portfolio held by that Subaccount for
which we have received timely voting instructions. If we hold shares of a
Portfolio in our General Account, and/or any of our non-insurance subsidiaries
hold shares of a Portfolio, such shares will be voted in the same proportion
as other votes cast by all of our separate accounts in the aggregate,
including Separate Account A.
We may elect, in the future, to vote shares of Pacific Select Fund Portfolios
held in Separate Account A in our own right if we are permitted to do so
through a change in applicable federal securities laws or regulations, or in
their interpretation.
The number of Portfolio shares that form the basis for your voting interest is
determined as of the record date set by the Board of Trustees of the Fund. It
is equal to (a) your Contract Value allocated to the Subaccount corresponding
to that Portfolio, divided by (b) the net asset value per share of that
Portfolio. Fractional votes will be counted. We reserve the right, if required
or permitted by a change in federal regulations or their interpretation, to
amend how we calculate your voting interest.
After your Annuity Date, if you have selected a variable annuity, the voting
rights under your Contract will continue during the payout period of your
annuity. The number of shares that form the basis for your voting interest
will be determined as described above, but will decrease throughout the payout
period.
CHANGES TO YOUR CONTRACT
Contract Owner(s) and Contingent Owner
You may change your Non-Qualified Contract at any time prior to your Annuity
Date to name a different Contract Owner or to add a Joint Owner, or to add or
change a Contingent Owner; if yours is a Qualified Contract, you must be the
only Contract Owner, but you may still add or change a Contingent Owner. Your
Contract cannot name more than two Contract Owners (Joint Owners) and one
Contingent Owner at any time. Joint ownership is in the form of a joint
tenancy. The Contract Owner(s) may make all decisions regarding the Contract,
including making allocation decisions and exercising voting rights.
Transactions under jointly owned Contracts require authorization from both
Contract Owners. Transfer of Contract ownership may involve federal income tax
consequences; you should consult a qualified tax adviser before effecting such
a transfer. A change to joint Contract ownership is considered a transfer of
ownership.
Annuitant and Contingent or Joint Annuitant
Your sole Annuitant cannot be changed, and Joint Annuitants cannot be added or
changed, once your Contract is issued. Certain changes may be permitted in
connection with Contingent Annuitants. See SELECTING YOUR ANNUITANT. There may
be limited exceptions for certain Qualified Contracts. Beginning at
annuitization, all decisions regarding the annuity, including allocation
decisions and exercising voting rights, belong to your Annuitant (or, if you
have a Joint and Survivor Life annuity, your Annuitants).
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<PAGE>
Beneficiaries
Your Beneficiary is a person(s) who may receive death benefits under your
Contract. You may change your Beneficiary or add Beneficiaries at any time
prior to the death of the Annuitant. If you have named your Beneficiary
irrevocably, you will need to obtain the Beneficiary's consent before making
any changes. Qualified Contracts may have additional restrictions on naming
and changing Beneficiaries; for example, if your Contract was issued in
connection with a Qualified Plan subject to Title I of ERISA, your spouse must
either be your Beneficiary or consent to your naming a different Beneficiary.
If you leave no surviving Beneficiary, the Annuitant or the Annuitant's estate
will receive any death benefit proceeds under your Contract.
CHANGES TO ALL CONTRACTS
If, in the judgment of our management, continued investment by Separate
Account A in one or more of the Fund Portfolios becomes unsuitable or
unavailable, we may seek to alter the Variable Investment Options available
under the Contracts. We do not expect that a Portfolio will become unsuitable,
but unsuitability issues could arise due to changes in investment policies,
market conditions, or tax laws, or due to marketing or other reasons.
Alterations of Variable Investment Options may take differing forms. We
reserve the right to replace shares of any Portfolio that were already
purchased under any Contract (or shares that were to be purchased in the
future under a Contract) with shares of another Portfolio, shares of another
investment company or series of another investment company, or another
investment vehicle. We may also purchase, through a Subaccount, other
securities for other series or other classes of contracts, and may permit
conversions or exchanges between series or classes of contracts on the basis
of Contract Owner requests. Required approvals of the SEC and state insurance
regulators will be obtained before any such substitutions are effected, and
you will be notified of any planned substitution.
We may add new Subaccounts to Separate Account A, and any new Subaccounts may
invest in Portfolios of the Fund or in other investment vehicles; availability
of any new Subaccounts to existing Contract Owners will be determined at our
discretion. We will notify Contract Owners, and will comply with the filing or
other procedures established by applicable state insurance regulators, to the
extent required by applicable law. We also reserve the right, after receiving
any required regulatory approvals, to do any of the following:
. combine Subaccounts
. delete or substitute Subaccounts
. combine Separate Account A or part of it with another separate account
of Pacific Mutual or any of our affiliates
. transfer Separate Account A assets attributable to the Contracts to
another of our separate accounts
. deregister the Separate Account under the 1940 Act
. operate Separate Account A as a management investment company under the
1940 Act or another form permitted by law
. establish a committee, board or other group to manage aspects of the
Separate Account's operations
. make any changes required by the 1940 Act or other federal securities
laws
. make any changes necessary to maintain the status of the Contracts as
annuities under the Code
. make other changes required under federal or state law relating to
annuities
. suspend or discontinue sale of the Contracts.
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<PAGE>
INVESTOR INQUIRIES AND SUBMITTING FORMS AND REQUESTS
You may reach our service representatives at 1-800-722-2333 between the hours
of 6:00 a.m. and 5:00 p.m., Pacific time.
If you are submitting a purchase or other payment by mail, please send it,
along with your Application if you are submitting one, to:
Pacific Mutual Life Insurance Company
P.O. Box 100060
Pasadena, California 91189-0060
Please send your other forms and written requests or questions to:
Pacific Mutual Life Insurance Company
P.O. Box 7187
Pasadena, California 91109-7187
If you are using an overnight delivery service to send payments, please send
them to:
Pacific Mutual Life Insurance Company
c/o FCNPC
1111 South Arroyo Parkway, First Floor
Pasadena, California 91105
The effective date of certain notices or of instructions is determined by the
date and time on which Pacific Mutual "receives" the notice or instructions.
We "receive" this information only when it arrives, in good form, at the
correct mailing address set out above. Please call us at 1-800-722-2333 if you
have any questions regarding which address you should use.
Purchase Payments after your initial Purchase Payment, transfer requests, and
withdrawal requests we receive before 4:00 p.m. Eastern time (or the close of
the New York Stock Exchange, if earlier) will normally be effective on the
same Business Day that we receive them in "proper form", unless the
transaction or event is scheduled to occur on another day. Generally, whenever
you submit any other form, notice or request, your instructions will be
effective on the next Business Day after we receive them in "proper form"
unless the transaction or event is scheduled to occur on another day. "Proper
form" may require, among other things, a signature guarantee or other
verification of authenticity. Pacific Mutual does not generally require a
signature guarantee unless it appears that your signature may have changed
over time or due to other circumstances. Requests regarding death benefits
must be accompanied by both proof of death and instructions regarding payment
satisfactory to Pacific Mutual. You should call your registered representative
or Pacific Mutual if you have questions regarding the required form of a
request.
TELEPHONE TRANSACTIONS
After your "free look" period, you may make transfer requests by telephone if
you have authorized telephone requests (a "telephone authorization"). A
telephone authorization for a jointly owned Contract must be approved by both
Joint Owners. We cannot guarantee that you will always be able to reach us to
complete a telephone transaction; for example, all telephone lines may be busy
during certain periods, such as periods of substantial market fluctuations or
other drastic economic or market change, or telephones may be out of service
during severe weather conditions or other emergencies. Under these
circumstances, you should submit your request in writing. Transaction
instructions we receive by telephone before 4:00 p.m. Eastern time (1:00 p.m.
Pacific time), (or the close of the New York Stock Exchange, if earlier), on
any Business Day will normally be effective on that day, and we will send you
written confirmation of each telephone transfer.
We have established procedures reasonably designed to confirm that
instructions communicated by telephone are genuine. These procedures may
require any person requesting a telephone transaction to provide certain
personal identification upon our request. We may also record all or part of
any telephone conversation with
32
<PAGE>
respect to transaction instructions. We reserve the right to deny any
transaction request made by telephone. When you make a written request for a
telephone authorization, you authorize us to accept and to act upon
instructions received by telephone with respect to your Contract, and you
agree that, as long as we comply with our procedures, none of Pacific Mutual,
its affiliates, the Fund, or any of their directors, trustees, officers
employees or agents will be liable for any loss, liability, cost or expense
(including attorneys' fees) in connection with requests that are effected in
accordance with your telephone authorization and that we believe to be
genuine. This policy means that you will bear the risk of loss arising out of
your telephone transaction privileges.
TIMING OF PAYMENTS AND TRANSACTIONS
For withdrawals from the Variable Investment Options or for death benefit
payments attributable to your Variable Account Value, we will normally send
the proceeds within seven calendar days after your withdrawal request is
effective or after the Notice Date, as the case may be. Similarly, we will
normally effect transfers from the Variable Investment Options or exchanges of
Subaccount Annuity Units, within seven calendar days after your transfer or
exchange request is effective. We will normally effect periodic annuity
payments on the day that corresponds to the Annuity Date and will make payment
on the following day. Payments or transfers may be suspended for a longer
period under certain abnormal circumstances. These include a closing of the
New York Stock Exchange other than on a regular holiday or weekend, a trading
restriction imposed by the SEC, or an emergency declared by the SEC. For
withdrawals from the Fixed Option, death benefit payments attributable to
Fixed Option Value, or fixed periodic annuity payments, payment of proceeds
may be delayed for up to six (6) months after the request is effective.
Similar delays may apply to transfers from the Fixed Option and to loans. (See
THE FIXED OPTION for more details.)
CONFIRMATIONS, STATEMENTS AND OTHER REPORTS TO CONTRACT OWNERS
Confirmations will be sent out for unscheduled purchase payments and
transfers, loans, loan repayments, unscheduled partial withdrawals, a full
withdrawal, and on payment of any death benefit proceeds. Each quarter prior
to your Annuity Date, we will send you a statement that provides certain
information pertinent to your Contract. These statements disclose Contract
Value, Subaccount values, values under the Fixed Option, transactions made and
specific Contract data that apply to your Contract. Confirmations of your
transactions under the pre-authorized checking plan, dollar cost averaging,
earnings sweep, portfolio rebalancing, and pre-authorized withdrawal options
will appear on your quarterly account statements. Your fourth-quarter
statement will contain annual information about your Contract Value and
transactions. If you suspect an error on a confirmation or quarterly
statement, you must notify us in writing within 30 days from the date of the
first confirmation or statement on which the transaction you believe to be
erroneous appeared. When you write, tell us your name, contract number and
description of the suspected error. You will also be sent an annual and a
semi-annual report for the Separate Account and the Fund and a list of the
securities held in each Portfolio of the Fund, as required by the 1940 Act.
SALES COMMISSIONS
Pacific Mutual pays sales commissions to dealers and other expenses associated
with promotion and sales of the Contracts. We pay compensation directly to
broker-dealers for promotion and sales of the Contract. Registered
representatives earn commissions from the broker-dealers with which they are
affiliated and such arrangements may vary. Broker-dealers may receive
aggregate commissions of up to 2.5% of your aggregate Purchase Payments. Under
certain circumstances and in exchange for lower initial commissions, certain
sellers of Contracts may be paid a persistency trail commission which will
take into account, among other things, the length of time Purchase Payments
have been held under a Contract, and Account Values. A trail commission is not
anticipated to exceed 1.00%, on an annual basis, of the Account Value
considered in connection with the trail commission. We may also pay override
payments, expense allowances, bonuses, wholesaler fees and training
allowances. Registered representatives earn commissions from the broker-
dealers with which they are affiliated and such arrangements may vary. In
addition, registered representatives who meet specified production levels may
qualify, under sales incentive programs adopted by Pacific Mutual, to receive
non-cash compensation such as expense-paid trips, expense-paid educational
seminars, and merchandise.
33
<PAGE>
FINANCIAL STATEMENTS
Pacific Mutual's audited financial statements as of and for the years ended
December 31, 1995 and 1994, are contained in the SAI.
THE FIXED OPTION
GENERAL INFORMATION
All amounts allocated to the Fixed Option become part of our General Account.
Subject to applicable law, we exercise sole discretion over the investment of
General Account assets, and bear the associated investment risk; you will not
share in the investment experience of General Account assets.
Because of exemptive and exclusionary provisions, interests in the Fixed
Option under the Contract are not registered under the Securities Act of 1933
and the General Account has not been registered as an investment company under
the 1940 Act. An interest you have in the Fixed Option is not subject to these
Acts, and Pacific Mutual has been advised that the SEC staff has not reviewed
disclosure in this Prospectus relating to the Fixed Option. This disclosure
may, however, be subject to certain provisions of federal securities laws
relating to the accuracy and completeness of statements made in prospectuses.
GUARANTEE TERMS
When you allocate any portion of your Purchase Payments or Contract Value to
our General Account under the Fixed Option, we guarantee you an interest rate
(a "Guaranteed Interest Rate") for a specified period of time (a "Guarantee
Term") of up to one year. Guaranteed Interest Rates may be reset periodically;
your allocation will receive the Guaranteed Interest Rate in effect on the
effective date of your allocation. The Guaranteed Interest Rate on your Fixed
Option Value will never be less than an annual rate of 3%. Each allocation (or
rollover) you make to the Fixed Option receives a Guarantee Term that begins
on the day that allocation or rollover is effective and ends on your next
Contract Anniversary or, if earlier, on your Annuity Date.
Example: Your Contract Anniversary is January 31. On January 31 of year 1,
you allocate $1,000 to the Fixed Option and receive a Guarantee Term of one
year and a Guaranteed Interest Rate of 5%. On August 1, you allocate
another $500 to the Fixed Option and receive a Guaranteed Interest Rate of
6%. Until January 31, year 2, your first $1,000 earns 5% interest and your
second $500 earns 6% interest. On January 31, year 2, a new interest rate
may go into effect for your entire Fixed Option Value.
All Guaranteed Interest Rates will be expressed as annual rates, and interest
will accrue daily. At the end of each Contract Year, we will roll over your
Fixed Option Value on that day into a new Guarantee Term of one year (or, if
shorter, the time remaining until your Annuity Date) with a new Guaranteed
Interest Rate or Rate(s), unless you instruct us otherwise.
WITHDRAWALS AND TRANSFERS
You may withdraw amounts from your Fixed Option Value, or transfer amounts
from your Fixed Option Value to one or more Variable Investment Options, at
any time on or prior to the Annuity Date; however, if you reside in a state
that requires refund of purchase payments under the Free Look Right, transfers
may only be made on or after your Free Look Transfer Date.
Payments or transfers from the Fixed Option may be delayed, as described under
ADDITIONAL INFORMATION--Timing of Payments; any amount delayed will, so long
as it is held under the Fixed Option, continue to earn interest at the
Guaranteed Interest Rate then in effect until the Guarantee Term in effect has
ended, and the minimum guaranteed interest rate of 3% thereafter, unless state
law requires a greater rate be paid.
34
<PAGE>
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PERFORMANCE................................................................ 1
Total Returns............................................................ 1
Yields................................................................... 2
Performance Comparisons and Benchmarks................................... 2
Insurance Company Rating Information..................................... 3
Separate Account Performance............................................. 4
DISTRIBUTION OF THE CONTRACTS.............................................. 6
Pacific Mutual Distributors, Inc. ....................................... 6
THE CONTRACTS AND THE SEPARATE ACCOUNT..................................... 7
Calculating Subaccount Unit Values....................................... 7
Variable Annuity Payment Amounts......................................... 7
Corresponding Dates...................................................... 9
Age and Sex of Annuitant................................................. 10
Systematic Transfer Programs............................................. 10
Pre-Authorized Withdrawals............................................... 12
Death Benefit............................................................ 12
Joint Annuitants on Qualified Contracts.................................. 13
1035 Exchanges........................................................... 13
Safekeeping of Assets.................................................... 13
Dividends................................................................ 13
FINANCIAL STATEMENTS....................................................... 13
</TABLE>
35
<PAGE>
APPENDIX A:
STATE LAW VARIATIONS
Issue Date--The term "Issue Date" shall be substituted for the term "Contract
Date" for Contracts issued to residents of the Commonwealth of Massachusetts.
Purchase Payments: No minimum initial or subsequent Purchase Payment
requirements will apply to a Contract purchased in connection with the Texas
ORP Retirement Program.
SHORT-TERM CANCELLATION RIGHT ("FREE-LOOK")
VARIATIONS TO THE LENGTH OF THE FREE-LOOK PERIOD. In most states, the Free-
Look period is a 10-day period beginning on the day you receive your Contract.
If you reside in one of the following states on your Contract Date, the Free-
Look period is as specified below:
Colorado (15 days)
Idaho (20 days)
North Dakota (20 days)
If you reside in California and are age 60 or older on your Contract Date, the
Free Look period is 30 days.
STATES THAT REQUIRE US TO REFUND YOUR PURCHASE PAYMENTS ALLOCATED TO THE
VARIABLE INVESTMENT OPTIONS INSTEAD OF YOUR VARIABLE ACCOUNT VALUE. If you
reside in one of the following states on your Contract Date and you exercise
your Free Look right and return your Contract to us within 10 days of your
receipt of your Contract (unless specified otherwise below), we will refund at
least your aggregate Purchase Payments under your Contract that we received:
<TABLE>
<S> <C>
Georgia Oklahoma
Idaho (20 days) South Carolina
Michigan Utah
Nebraska Washington
North Carolina West Virginia
</TABLE>
36
<PAGE>
To receive a current copy of the Pacific One Statement of Additional
Information without charge, complete the following and send it to:
Pacific Mutual Life Insurance Company
Variable Annuities
Post Office Box 7187
Pasadena, CA 91109-7187
Name _________________________
Address ______________________
City _________________________State Zip
Bar Code
- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
<PAGE>
[LOGO of PACIFIC ONE]
Issued By: Principal Underwriter:
Pacific Mutual Life Insurance Company Pacific Mutual Distributors, Inc.
700 Newport Center Drive Member: NASD/SIPC
P.O. Box 9000 700 Newport Center Drive
Newport Beach, California 92660 P.O. Box 9000
Newport Beach, California 92660
Prospectus dated April 1, 1996
<PAGE>
Sponsored by:
[LOGO of PACIFIC MUTUAL]
PACIFIC MUTUAL LIFE INSURANCE COMPANY
Home Office
700 NEWPORT CENTER DRIVE
NEWPORT BEACH, CA 92660
1-800-722-2333
Mailing Address
VARIABLE ANNUITY DEPARTMENT
P.O. BOX 7187
PASADENA, CALIFORNIA 91109-7187
Distributed by:
[LOGO of PACIFIC MUTUAL DISTRIBUTORS, INC.]
Pacific Mutual Distributors, Inc.
MEMBER NASD & SIPC
700 NEWPORT CENTER DRIVE, NB-3
NEWPORT BEACH, CA 92660
1-800-800-7681
FORM NO. 287-6B
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
APRIL 1, 1996
PACIFIC ONE
SEPARATE ACCOUNT A
----------------
Pacific One (the "Contract") is a variable annuity contract issued by Pacific
Mutual Life Insurance Company ("Pacific Mutual").
This Statement of Additional Information ("SAI") is not a Prospectus and
should be read in conjunction with the Contract's Prospectus, dated April 1,
1996, which is available without charge upon written or telephone request to
Pacific Mutual. Terms used in this SAI have the same meanings as in the
Prospectus, and some additional terms are defined particularly for this SAI.
----------------
Pacific Mutual Life Insurance Company
Mailing Address: P.O. Box 7187
Pasadena, California 91109-7187
1-800-722-2333
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PERFORMANCE................................................................ 1
Total Returns............................................................ 1
Yields................................................................... 2
Performance Comparisons and Benchmarks................................... 2
Insurance Company Rating Information..................................... 3
Separate Account Performance............................................. 4
DISTRIBUTION OF THE CONTRACTS.............................................. 6
Pacific Mutual Distributors, Inc. ....................................... 6
THE CONTRACTS AND THE SEPARATE ACCOUNT..................................... 7
Calculating Subaccount Unit Values....................................... 7
Variable Annuity Payment Amounts......................................... 7
Corresponding Dates...................................................... 9
Age and Sex of Annuitant................................................. 10
Systematic Transfer Programs............................................. 10
Pre-Authorized Withdrawals............................................... 12
Death Benefit............................................................ 12
Joint Annuitants on Qualified Contracts.................................. 13
1035 Exchanges........................................................... 13
Safekeeping of Assets.................................................... 13
Dividends................................................................ 13
FINANCIAL STATEMENTS....................................................... 13
</TABLE>
i
<PAGE>
PERFORMANCE
From time to time, our reports or other communications to current or
prospective Contract Owners or our advertising or other promotional material
may quote the performance (yield and total return) of a Subaccount. Quoted
results are based on past performance and reflect the performance of all
assets held in that Subaccount for the stated time period. QUOTED RESULTS ARE
NEITHER AN ESTIMATE NOR A GUARANTY OF FUTURE INVESTMENT PERFORMANCE, AND DO
NOT REPRESENT THE ACTUAL EXPERIENCE OF AMOUNTS INVESTED BY ANY PARTICULAR
CONTRACT OWNER.
TOTAL RETURNS
A Subaccount may advertise its "average annual total return" over various
periods of time. "Total return" represents the average percentage change in
value of an investment in the Subaccount from the beginning of a measuring
period to the end of that measuring period. "Annualized" total return assumes
that the total return achieved for the measuring period is achieved for each
such period for a full year. "Average annual" total return is computed in
accordance with a standard method prescribed by the SEC.
Average Annual Total Return
To calculate a Subaccount's average annual total return for a specific
measuring period, we first take a hypothetical $1,000 investment in that
Subaccount, at its then-applicable Subaccount Unit Value (the "initial
payment") and we compute the ending redeemable value ("redeemable value") of
that initial payment at the end of the measuring period. The redeemable value
reflects the effect of all recurring fees and charges applicable to a Contract
Owner under the Contract, including the mortality and expense risk charge and
the asset-based Administrative Fee, but does not reflect any charges for
applicable premium taxes. The Annual Fee is also taken into account, assuming
an average Contract Value of $80,000. The redeemable value is then divided by
the initial payment and this quotient is taken to the Nth root (N represents
the number of years in the measuring period), and 1 is subtracted from this
result. Average annual total return is expressed as a percentage.
T = (ERV/P)(to the power of (1/N))-1
<TABLE>
<C> <C> <C> <S>
where T = average annual total return
ERV = ending redeemable value
P = hypothetical initial payment of $1,000
N = number of years
</TABLE>
Average annual total return figures will be given for recent one-, five- and
ten-year periods (if applicable), and may be given for other periods as well
(such as from commencement of the Subaccount's operations, or on a year-by-
year basis).
When considering "average" total return figures for periods longer than one
year, it is important to note that the relevant Subaccount's annual total
return for any one year in the period might have been greater or less than the
average for the entire period.
Aggregate Total Return
A Subaccount may use "aggregate" total return figures along with its "average
annual" total return figures for various periods; these figures represent the
cumulative change in value of an investment in the Subaccount for a specific
period. Aggregate total returns may be shown by means of schedules, charts or
graphs and may indicate subtotals of the various components of total return.
The SEC has not prescribed standard formulas for calculating aggregate total
return.
Total returns may also be shown for the same periods that do not take into
account the Annual Fee.
1
<PAGE>
YIELDS
Money Market Subaccount
The "yield" (also called "current yield") of the Money Market Subaccount is
computed in accordance with a standard method prescribed by the SEC. The net
change in the Subaccount's Unit Value during a seven-day period is divided by
the Unit Value at the beginning of the period to obtain a base rate of return.
The current yield is generated when the base rate is "annualized" by
multiplying it by the fraction 365/7; that is, the base rate of return is
assumed to be generated each week over a 365-day period and is shown as a
percentage of the investment. The "effective yield" of the Money Market
Subaccount is calculated similarly but, when annualized, the base rate of
return is assumed to be reinvested. The effective yield will be slightly
higher than the current yield because of the compounding effect of this
assumed reinvestment.
The formula for effective yield is: [(base period return +1)(365/7)-1.
Realized capital gains or losses and unrealized appreciation or depreciation
of the assets of the underlying Money Market Portfolio are not included in the
yield calculation. Current yield and effective yield do not reflect the
deduction of charges for any applicable premium taxes, but do reflect a
deduction for the Annual Fee, assuming an average Contract Value of $80,000.
Other Subaccounts
"Yield" of the other Subaccounts is computed in accordance with a different
standard method prescribed by the SEC. The net investment income (investment
income less expenses) per Subaccount Unit earned during a specified one-month
or 30-day period is divided by the Subaccount Unit Value on the last day of
the specified period. This result is then annualized (that is, the yield is
assumed to be generated each month or each 30-day period for a year),
according to the following formula, which assumes semi-annual compounding:
YIELD = 2[(((a-b)/cd) + 1)(to the power of 6)-1]
<TABLE>
<C> <C> <C> <S>
where: a = net investment income earned during the period by the Portfolio
attributable to the Subaccount.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of Subaccount Units outstanding during
the period that were entitled to receive dividends.
d = the Unit Value of the Subaccount Units on the last day of the
period.
</TABLE>
The yield of each Subaccount reflects the deduction of all recurring fees and
charges applicable to the Subaccount, such as the mortality and expense risk
charge, the asset-based Administrative Fee and the Annual Fee (assuming an
average Contract Value of $80,000), but does not reflect any charge for
applicable premium taxes and/or other taxes.
The Subaccounts' yields will vary from time to time depending upon market
conditions, the composition of each Portfolio and operating expenses of the
Fund allocated to each Portfolio. Consequently, any given performance
quotation should not be considered representative of the Subaccount's
performance in the future. Yield should also be considered relative to changes
in Subaccount Unit Values and to the relative risks associated with the
investment policies and objectives of the various Portfolios. In addition,
because performance will fluctuate, it may not provide a basis for comparing
the yield of a Subaccount with certain bank deposits or other investments that
pay a fixed yield or return for a stated period of time.
PERFORMANCE COMPARISONS AND BENCHMARKS
In advertisements and sales literature, we may compare the performance of some
or all of the Subaccounts to the performance of other variable annuity issuers
in general and to the performance of particular types of variable annuities
investing in mutual funds, or series of mutual funds, with investment
objectives similar to each of the
2
<PAGE>
Subaccounts. This performance may be presented as averages or rankings compiled
by Lipper Analytical Services, Inc. ("Lipper"), the Variable Annuity Research
and Data Service ("VARDS(R)") or Morningstar, Inc. ("Morningstar"), which are
independent services that monitor and rank the performance of variable annuity
issuers and mutual funds in each of the major categories of investment
objectives on an industry-wide basis. Lipper's rankings include variable life
issuers as well as variable annuity issuers. VARDS(R) rankings compare only
variable annuity issuers. The performance analyses prepared by Lipper and
VARDS(R) rank such issuers on the basis of total return, assuming reinvestment
of dividends and distributions, but do not take sales charges, redemption fees
or certain expense deductions at the separate account level into consideration.
In addition, VARDS(R) prepares risk adjusted rankings, which consider the
effects of market risk on total return performance. We may also compare the
performance of the Subaccounts with performance information included in other
publications and services that monitor the performance of insurance company
separate accounts or other investment vehicles. These other services or
publications may be general interest business publications such as The Wall
Street Journal, Barron's, Business Week, Forbes, Fortune, and Money.
In addition, our reports and communications to Contract Owners, advertisements,
or sales literature may compare a Subaccount's performance to various
benchmarks that measure the performance of a pertinent group of securities
widely regarded by investors as being representative of the securities markets
in general or as being representative of a particular type of security. These
benchmarks include the following: (1) the Standard & Poor's 500 Composite Stock
Price Index ("S&P 500"), an unmanaged weighted index of 500 companies that
represent approximately 80% of the market capitalization of the United States
equity markets; (2) the Consumer Price Index ("CPI"), published by the U.S.
Bureau of Labor Statistics, a statistical measure of change, over time, in the
prices of goods and services in major expenditure groups and generally
considered to be a measure of inflation; (3) the Dow Jones Industrial Average
("DJIA"); (4) the Donoghue Money Market Institutional Averages; (5) the Lehman
Brothers Government Corporate Index; (6) the Lehman Brothers Government Bond
Index; (7) the Salomon Brothers High Yield Bond Indexes; and (8) the Morgan
Stanley Capital International's EAFE Index. We may also compare the performance
of the Subaccounts with that of other appropriate indices of investment
securities and averages for peer universes of funds or data developed by us
derived from such indices or averages. Unmanaged indexes generally assume the
reinvestment of dividends or interest but do not generally reflect deductions
for investment management or administrative costs and expenses.
INSURANCE COMPANY RATING INFORMATION
Pacific Mutual may also advertise or report to Contract Owners its ratings as
an insurance company by the A.M. Best Company. Each year, A.M. Best reviews the
financial status of thousands of insurers, culminating in the assignment of
Best's Ratings. These ratings reflect Best's current opinion of the relative
financial strength and operating performance of an insurance company in
comparison to the norms of the life/health industry. Best's Ratings range from
A++ to F. An A++ rating means, in the opinion of A.M. Best, that the insurer
has demonstrated the strongest ability to meet its respective policyholder and
other contractual obligations. A.M. Best publishes Best's Insurance Reports,
Life-Health Edition. The 1995 Edition reported our rating of A+ for financial
position and operating performance as of June 1995.
In addition, the claims-paying ability of Pacific Mutual as measured by the
Standard & Poor's Corporation may be referred to in advertisements or in
reports to Contract Owners. A Standard & Poor's insurance claims-paying ability
rating is an assessment of an operating insurance company's financial capacity
to meet the obligations of its insurance policies in accordance with their
terms. Standard & Poor's ratings range from AAA to D. Our claims-paying ability
rating is AA+, as of August 1994.
We may additionally advertise our rating from Duff & Phelps Credit Rating Co. A
Duff & Phelps rating is an assessment of a company's insurance claims-paying
ability. Duff & Phelps ratings range from AAA to CCC. Duff & Phelps rates the
claims-paying ability of Pacific Mutual as AA+ as of October 1995.
Pacific Mutual may advertise its insurance financial strength rating from
Moody's Investors Service, Inc. Moody's ratings range from Aaa to C. As of
October, 1994, Moody's gave us a rating of Aa3.
3
<PAGE>
SEPARATE ACCOUNT PERFORMANCE
In order to help you understand how investment performance can affect your
Variable Account Value, we are including performance information based on the
historical performance of the Portfolios. The information presented also
includes data representing unmanaged market indices.
The Subaccounts had not yet commenced operations as of December 31, 1995.
Therefore, no historical performance data exist for the Subaccounts. The
following tables represent what the performance of the Subaccounts would have
been, if the Subaccounts had been both in existence and invested in the
corresponding Portfolio since the date of the Portfolio's (or predecessor
series') inception or for the indicated period. Nine of the Portfolios of the
Fund available under the Contract, however, have been in operation since
January 4, 1988 (January 30, 1991 in the case of the Equity Index Portfolio and
January 4, 1994 in the case of the Growth LT Portfolio). Historical performance
information for each of the Equity Portfolio and the Bond and Income Portfolio
is based in part on the performance of that Portfolio's predecessor; each
predecessor series was a series of Pacific Corinthian Variable Fund and began
its first full year of operations January 1, 1984, the assets of which were
acquired by the Fund on December 31, 1994. Because the Subaccounts had not
commenced operations as of December 31, 1995, however, and because the
Contracts were not available during this period, THESE ARE NOT ACTUAL
PERFORMANCE NUMBERS FOR THE SUBACCOUNTS OR FOR THE CONTACT. These are
hypothetical total return numbers that represent the actual performance of the
Portfolios, adjusted for the fees and charges applicable to the Contract. Any
charge for premium taxes and/or other taxes are not reflected in these data,
and reflection of the Annual Fee assumes an average Contract size of $80,000.
THE RESULTS SHOWN IN THIS SECTION ARE NOT AN ESTIMATE OR GUARANTEE OF FUTURE
INVESTMENT PERFORMANCE.
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1995
ALL NUMBERS ARE EXPRESSED AS A PERCENTAGE
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS** 5 YEARS** 10 YEARS INCEPTION**
------ --------- --------- -------- -----------
<S> <C> <C> <C> <C> <C>
Money Market 7/24/90*... 4.00 2.44 2.65 3.91
High Yield Bond
8/16/90*............... 17.11 10.49 14.19 9.77
Managed Bond 9/5/90*.... 17.27 6.75 8.52 8.54
Government Securities
8/22/90*............... 17.05 6.14 7.84 7.98
Growth LT 1/4/94*....... 34.73 22.85
Equity Income 8/16/90*.. 29.73 10.81 12.89 10.80
Multi-Strategy 9/25/90*. 23.38 8.87 11.21 9.84
Equity 1/4/95*.......... 22.02 10.16 12.41 10.86 12.00
Bond and Income 1/4/95*. 31.84 11.90 12.87 10.05 11.56
Equity Index 2/11/91*... 34.90 13.14 13.75
International 8/16/90*.. 8.94 12.38 6.63 6.22
Donoghue MF............. 5.49 4.12 4.55
EAFE.................... 11.21 16.69 9.37 13.62
First Boston............ 17.38 11.39 18.30
LBG/Bond................ 18.33 8.16 9.36 9.38
LBG/C Bond.............. 19.24 8.51 9.80 9.65
Russell 2500............ 31.70 14.94 20.95 13.17
S&P 500................. 37.58 15.34 16.59 14.88
</TABLE>
- --------
* Date Variable Account commenced operations
** The performance of the Equity Income, Multi-Strategy and International
Variable Accounts for a portion of this period occurred at a time when other
Portfolio Managers managed the corresponding Portfolio in which each
Variable Account invests. Effective January 1, 1994, J. P. Morgan Investment
Management, Inc. became the Portfolio Manager of the Equity Income and
Multi-Strategy Portfolios and Templeton Investment Counsel, Inc. became the
Portfolio Manager of the International Portfolio; prior to January 1, 1994,
some of the investment policies of the Equity Income Portfolio and the
investment objective of the Multi-Strategy Portfolio differed.
4
<PAGE>
Tax Deferred Accumulation
In reports or other communications to you or in advertising or sales materials,
we may also describe the effects of tax-deferred compounding on the Separate
Account's investment returns or upon returns in general. These effects may be
illustrated in charts or graphs and may include comparisons at various points
in time of returns under the Contract or in general on a tax-deferred basis
with the returns on a taxable basis. Different tax rates may be assumed.
In general, individuals who own annuity contracts are not taxed on increases in
the value under the annuity contract until some form of distribution is made
from the contract. Thus, the annuity contract will benefit from tax deferral
during the accumulation period, which generally will have the effect of
permitting an investment in an annuity contract to grow more rapidly than a
comparable investment under which increases in value are taxed on a current
basis. The following chart illustrates this benefit by comparing accumulation
under a variable annuity contract with accumulations from an investment on
which gains are taxed on a current basis. The chart shows accumulations on an
initial Purchase Payment or investment of $10,000, assuming hypothetical annual
returns of 0%, 4% and 8%, compounded annually, and a tax rate of 36%. The
values shown for the taxable investment do not include any deduction for
management fees or other expenses but assume that taxes are deducted annually
from investment returns. The values shown for the variable annuity do not
reflect the deduction of contractual expenses such as the Mortality and Expense
Risk Charge, the Administrative Fee and the Annual Fee, any charge for premium
taxes and/or other taxes, or the expenses of an underlying investment vehicle,
such as the Fund. For a description of the charges and expenses under the
Contract, see FEE TABLE and CHARGES, FEES AND DEDUCTIONS in the Prospectus. In
addition, these values assume that the Contract Owner does not surrender the
Contract or make any withdrawals until the end of the period shown. The chart
assumes a full withdrawal, at the end of the period shown, of all Contract
Value and the payment of taxes at the 36% rate on the amount in excess of the
Purchase Payment or investment.
The rates of return illustrated are hypothetical and are not an estimate or
guarantee of performance. Actual tax rates may vary for different taxpayers
from that illustrated and withdrawals by Contract Owners who have not reached
age 59 1/2 may be subject to a tax penalty of 10%.
5
<PAGE>
POWER OF TAX DEFERRAL
$10,000 investment at annual rates of 0.00%, 4.00% and 8.00%, taxed @ 36%
[tax deferred accumulation illustration]
DISTRIBUTION OF THE CONTRACTS
PACIFIC MUTUAL DISTRIBUTORS, INC.
Pacific Mutual Distributors, Inc. ("PMD"), formerly Pacific Equities Network,
an indirect wholly-owned subsidiary of Pacific Mutual, acts as the principal
underwriter of the Contracts and offers the Contracts on a continuous basis.
Pacific Mutual and PMD enter into selling agreements with broker-dealers whose
registered representatives are authorized by state insurance departments to
sell the Contracts.
Pursuant to its selling agreement with Pacific Mutual, PMD receives
compensation in the amount of 2.5% of aggregate Purchase Payments for
distributing the Contracts. Under certain circumstances and in exchange for
lower initial commissions, certain sellers of Contracts may be paid
persistency trail commissions which will take into account, among other
things, the length of time Purchase Payments have been held under the Contract
and Contract Values. A trail commission is not expected to exceed 1.00%, on an
annual basis, of the Contract Value considered in connection with the trail
commission.
In addition, PMD may also receive override payments, expense allowances,
bonuses, wholesaler fees and training allowances.
Broker-dealers may choose from among compensation structures for sales of the
Contracts or may permit their registered representatives to choose on a
Contract-by-Contract basis. Registered representatives earn commissions from
the broker-dealers with which they are affiliated and such arrangements vary.
In addition, registered representatives who meet certain production levels may
qualify, under sales incentive programs adopted by Pacific Mutual, for non-
cash compensation such as expense paid trips, expense paid educational
seminars and merchandise.
6
<PAGE>
THE CONTRACTS AND THE SEPARATE ACCOUNT
CALCULATING SUBACCOUNT UNIT VALUES
The Unit Value of the Subaccount Units in each Variable Investment Option is
computed at or about 4:00 p.m. Eastern Time on each Business Day. The initial
Unit Value of each Subaccount was $10 on the Business Day the Subaccount began
operations. At the end of each Business Day, the Unit Value for a Subaccount
is equal to:
Y x Z
where
(Y) = the Unit Value for that Subaccount as of the end of the preceding
Business Day; and
(Z) = the Net Investment Factor for that Subaccount for the period (a
"valuation period") between that Business Day and the immediately
preceding Business Day.
The "Net Investment Factor" for a Subaccount for any valuation period is equal
to:
(A/B)-C
where
(A) = the "per share value of the assets" of that Subaccount as of the
end of that valuation period, which is equal to: a+b+c
(a) = the net asset value per share of the corresponding Portfolio
shares held by that Subaccount as of the end of that valuation
period;
where
(b) = the per share amount of any dividend or capital gain
distributions made by the Fund for that Portfolio during that
valuation period; and
(c) = any per share charge (a negative number) or credit (a positive
number) for any income taxes and/or any other taxes or other
amounts set aside during that valuation period as a reserve for
any income and/or any other taxes which we determine to have
resulted from the operations of the Subaccount of Contract, and/or
any taxes attributable directly or indirectly, to Purchase
Payments;
(B) = the net asset value per share of the corresponding Portfolio shares
held by the Subaccount as of the end of the preceding valuation
period; and
(C) = a factor that assesses against the Subaccount assets for each
calendar day in the valuation period, the charge for mortality and
expense risks at a rate that is equal on an annual basis to an annual
factor expressed as a decimal (where 1.0 equals 100%) of 0.0125 and
the Administrative Charge at a rate that is equal on an annual basis
to an annual factor of 0.0015 (see Charges, Fees and Deductions).
As explained in the Prospectus, the Annual Fee, if applicable, is assessed
against your Variable Account Value through the automatic debit of Subaccount
Units; the Annual Fee decreases the number of Subaccount Units attributed to
your Contract but does not alter the Unit Value for any Subaccount.
VARIABLE ANNUITY PAYMENT AMOUNTS
The following steps show how we determine the amount of each variable annuity
payment under your Contract.
First: Pay Applicable Premium Taxes
When you convert your Contract Value (less Contract Debt) into annuity
payments, you must pay any applicable charge for premium taxes and/or other
taxes on your Contract Value (unless applicable law requires those taxes to be
paid at a later time). We assess this charge by reducing your Contract Value,
proportionately relative to your Account Value in each Subaccount and in the
Fixed Option in an amount equal to the aggregate amount of the charges. The
remaining amount of your available Contract Value may be used to provide
variable annuity payments. Alternatively, your remaining available Contract
Value may be used to provide fixed annuity payments, or it may be divided to
provide both fixed and variable annuity payments. You may also choose to
withdraw some or all of your remaining Contract Value (less Contract Debt)
less any applicable Annual Fee and charge for premium taxes and/or other
taxes.
7
<PAGE>
Second: The First Variable Payment
We begin by referring to your Contract's Option Table for your Annuity Option
(the "Annuity Option Table"). The Annuity Option Table allows us to calculate
the dollar amount of the first variable annuity payment under your Contract,
based on the amount applied toward the variable annuity. The number that the
Annuity Option Table yields will be based on the Annuitant's age (and, in
certain cases, sex) and assumes a 5% investment return, as described in more
detail below.
Example: Assume a man is 65 years of age at his Annuity Date and has
selected a lifetime annuity with monthly payments guaranteed for 10 years.
According to the Annuity Option Table, this man should receive an initial
monthly payment of $5.79 for every $1000 of his Contract Value (reduced by
applicable charges) that he will be using to provide variable payments.
Therefore, if his Contract Value after deducting applicable charges is
$100,000 on his Annuity Date and he applies this entire amount toward his
variable annuity, his first monthly payment will be $579.00.
Third: Subaccount Annuity Units
For each Subaccount, we use the amount of the first variable annuity payment
under your Contract attributed to each Subaccount to determine the number of
Subaccount Annuity Units that will form the basis of subsequent payment
amounts. First, we use the Annuity Option Table to determine the amount of
that first variable payment for each Subaccount. Then, for each Subaccount, we
divide that amount of the first variable annuity payment by the value of one
Subaccount Annuity Unit (the "Subaccount Annuity Unit Value") as of the end of
the Annuity Date to obtain the number of Subaccount Annuity Units for that
particular Subaccount. The number of Subaccount Annuity Units used to
calculate subsequent payments under your Contract will not change unless
exchanges of Annuity Units are made, (or if the Joint and Survivor Annuity
Option is elected and the Primary Annuitant dies first,) but the value of
those Annuity Units will change daily, as described below.
Fourth: The Subsequent Variable Payments
The amount of each subsequent variable annuity payment will be the sum of the
amounts payable based on each Subaccount. The amount payable based on each
Subaccount is equal to the number of Subaccount Annuity Units for that
Subaccount multiplied by their Subaccount Annuity Unit Value at the end of the
Business Day in each payment period you elected that corresponds to the
Annuity Date.
Each Subaccount's Subaccount Annuity Unit Value, like its Subaccount Unit
Value, changes each day to reflect the net investment results of the
underlying investment vehicle, as well as the assessment of the mortality and
expense risk charge at a rate equal on an annual basis to the annual factor
expressed as a decimal (where 1.0 equals 100%) of 0.0125 and the
Administrative Fee at a rate equal on an annual basis to the annual rate of
0.0015. In addition, the calculation of Subaccount Annuity Unit Value
incorporates an additional factor; as discussed in more detail below, this
additional factor adjusts Subaccount Annuity Unit Values to correct for the
Option Table's implicit assumption of a 5% annual investment return on amounts
applied but not yet used to furnish annuity benefits.
Different Subaccounts may be selected for your Contract before and after your
Annuity Date, subject to any restrictions we may establish. Currently, your
Annuitant(s) may exchange Subaccount Annuity Units in any Subaccount for
Subaccount Annuity Units in any other Subaccount(s) up to four times in any
twelve month period after you annuitize. The number of Subaccount Annuity
Units in any Subaccount may change due to such exchanges. Exchanges following
annuitization will be made by exchanging Subaccount Annuity Units of
equivalent aggregate value, based on their relative Subaccount Annuity Unit
Values.
Understanding the "Assumed Investment Return" Factor
The Annuity Option Table incorporates a number of implicit assumptions in
determining the amount of your first variable annuity payment. As noted above,
the numbers in the Annuity Option Table reflect certain
8
<PAGE>
actuarial assumptions based on the Annuitant's age, and, in some cases, the
Annuitant's sex. In addition, these numbers assume that the amount of your
Contract Value that you convert to a variable annuity will have a positive
investment return of 5% each year during the payout of your annuity; this 5%
is referred to as an "assumed investment return."
The Subaccount Annuity Unit Value for a Subaccount will increase only to the
extent that the investment performance of that Subaccount exceeds its
mortality and expense risk charge, the Administrative Fee, and the assumed
investment return. The Subaccount Annuity Unit Value for any Subaccount will
generally be less than the Subaccount Unit Value for that same Subaccount, and
the difference will be the amount of the assumed investment factor.
Example: Assume the investment performance of a Subaccount is at a rate of
6.40% per year. The Subaccount Unit Value for that Subaccount would
increase at a rate of 5.00% per year (6.40% minus the mortality and expense
risk charge at the annual rate of 1.25% and minus the Administrative Fee at
the annual rate of .15% equals 5.00%), but the Subaccount Annuity Unit
Value would not increase (or decrease) at all. The net investment factor
for that 5% return [1.05] is then divided by the factor for the 5% assumed
investment return [1.05] and 1 is subtracted from the result to determine
the adjusted rate of change in Subaccount Annuity Unit Value:
1.05 = 1; 1-1 = 0; 0 * 100% = 0%
----
1.05
If the investment performance of a Subaccount assets is at a rate less than
6.40% per year, the Subaccount Annuity Unit Value will decrease, even if the
Subaccount Unit Value is increasing.
Example: Assume the investment performance of a Subaccount is at a rate of
4.00% per year. The Subaccount Unit Value for that Subaccount would
increase at a rate of 2.60% per year (4.00% minus the mortality and expense
risk charge at the annual rate of 1.25% and minus the Administrative Fee at
the annual rate of .15% equals 2.60%), but the Subaccount Annuity Unit
Value would decrease at a rate of 2.29% per year. The net investment factor
for that 2.6% return [1.026] is then divided by the factor for the 5%
assumed investment return [1.05] and 1 is subtracted from the result to
determine the adjusted rate of change in Subaccount Annuity Unit Value:
1.026 = .9771; .9771-1 = -0.0229; - 0.229 * 100% = -2.29%
-----
1.05
The assumed investment return will always cause increases in Subaccount
Annuity Unit Values to be somewhat less than if the assumption had not been
made, will cause decreases in Subaccount Annuity Unit Values to be somewhat
greater than if the assumption had not been made, and will (as shown in the
example above) sometimes cause a decrease in Subaccount Annuity Unit Values to
take place when an increase would have occurred if the assumption had not been
made. If we had assumed a higher investment return in our Annuity Option
tables, it would produce annuities with larger first payments, but the
increases in subaccount annuity payments would be smaller and the decreases in
subsequent annuity payments would be greater; a lower assumed investment
return would produce annuities with smaller first payments, and the increases
in subsequent annuity payments would be greater and the decreases in
subsequent annuity payments would be smaller.
CORRESPONDING DATES
If any transaction or event under your Contract is scheduled to occur on a
"corresponding date" that does not exist in a given calendar period, the
transaction or event will be deemed to occur on the following date. In
addition, as stated in the Prospectus, any event scheduled to occur on a day
that is not a Business Day will occur on the next succeeding Business Day.
Example: If your Contract is issued on February 29 in year 1 (a leap year),
your Contract Anniversary in years 2, 3 and 4 will be on March 1.
Example: If your Annuity Date is July 31 and you select monthly annuity
payments, the payments received will be based on valuations made on July
31, August 31, October 1 (for September), October 31, December 1 (for
November), December 31, January 31, March 1 (for February), March 31, May 1
(for April), May 31 and July 1 (for June).
9
<PAGE>
AGE AND SEX OF ANNUITANT
As mentioned in the Prospectus, the Contracts generally provide for sex-
distinct annuity purchase rates in the case of life annuities. Statistically,
females tend to have longer life expectancies than males; consequently, if the
amount of annuity payments is based on life expectancy, they will ordinarily
be higher if an annuitant is male than if an annuitant is female. Certain
states' regulations prohibit sex-distinct annuity purchase rates, and
Contracts issued in those states will use unisex rates. In addition, Contracts
issued in connection with Qualified Plans are required to use unisex rates.
We may require proof of your Annuitant's age and sex before commencing annuity
payments. If the age or sex (or both) of your Annuitant are incorrectly stated
in your Contract, the amount payable will be corrected to equal the amount
that the annuitized portion of the Contract Value under that Contract would
have purchased for your Annuitant's correct age and sex. If the correction is
effected after annuity payments have commenced, and we have made overpayments
based on the incorrect information, we will deduct the amount of the
overpayment, with interest at 3% a year, from any payments due then or later;
if we have made underpayments, we will add the amount, with interest at 3% a
year, of the underpayments to the next payment we make after we receive proof
of the correct sex and/or date of birth.
SYSTEMATIC TRANSFER PROGRAMS
Dollar Cost Averaging
When you request dollar cost averaging, you are authorizing us to make
periodic reallocations of your Contract Value without waiting for any further
instruction from you. You may request to begin or stop dollar cost averaging
at any time prior to your Annuity Date; the effective date of your request
will be the day we receive written notice from you in good form. Your request
may specify the date on which you want your first transfer to be made. If you
do not specify a date for your first transfer, we will treat your request as
if you had specified the effective date of your request. Your first transfer
may not be made until 30 days after your Contract Date, and if you specify an
earlier date, your first transfer will be delayed until one calendar month
after the date you specify. If you request dollar cost averaging on your
Application for your Contract and you fail to specify a date for your first
transfer, your first transfer will be made one period after your Contract Date
(that is, if you specify monthly transfers, the first transfer will occur 30
days after your Contract Date; quarterly transfers, 90 days after your
Contract Date; semi-annual transfers, 180 days after your Contract Date; and
if you specify annual transfers, the first transfer will occur on your
Contract Anniversary). If you stop dollar cost averaging, you must wait 30
days before you may begin this option again.
Your request to begin dollar cost averaging must specify the Investment Option
you wish to transfer money from (your "source account"). You may choose any
one Variable Investment Option or the Fixed Option as your source account. The
Account Value of your source account must be at least $10,000 for you to begin
dollar cost averaging.
Your request to begin dollar cost averaging must also specify the amount and
frequency of your transfers. You may choose monthly, quarterly, semi-annual or
annual transfers. The amount of your transfers may be specified as a dollar
amount or a percentage of your source Account Value; however, the first
transfer must be at least $250. Dollar cost averaging transfers are subject to
the same requirements and limitations as other transfers.
Finally, your request must specify the Investment Option(s) you wish to
transfer amounts to (your "target account(s)"). If you select more than one
target account, your dollar cost averaging request must specify how
transferred amounts should be allocated among the target accounts. Your source
account may not also be a target account.
10
<PAGE>
Your dollar cost averaging transfers will continue until the earlier of (i)
your request to stop dollar cost averaging is effective, or, (ii) your source
Account Value is zero, or (iii) you annuitize. If, as a result of a dollar
cost averaging transfer, your source Account Value falls below any minimum
Account Value we may establish, we have the right, at our option, to transfer
that remaining Account Value to your target account(s) on a proportionate
basis relative to your most recent allocation instructions. You may not use
dollar cost averaging and the earnings sweep at the same time. We may change,
terminate or suspend the dollar cost averaging option at any time.
Portfolio Rebalancing
Portfolio rebalancing allows you to maintain the percentage of your Contract
Value allocated to each Variable Investment Option at a pre-set level prior to
annuitization. For example, you could specify that 30% of your Contract Value
should be in the Equity Index Subaccount, 40% in the Managed Bond Subaccount,
and 30% in the Growth LT Subaccount. Over time, the variations in each
Subaccount's investment results will shift this balance of your Subaccount
Value allocations. If you elect the portfolio rebalancing feature, we will
automatically transfer your Subaccount Value back to the percentages you
specify.
You may choose to have rebalances made quarterly, semiannually or annually
until your Annuity Date; portfolio rebalancing is not available after you
annuitize.
Procedures for selecting portfolio rebalancing are generally the same as those
discussed in detail above for selecting dollar cost averaging: You may make
your request at any time prior to your Annuity Date and it will be effective
when we receive it in good form. If you stop portfolio rebalancing, you must
wait 30 days to begin again. You may specify a date for your first rebalance,
or we will treat your request as if you selected the request's effective date.
If you specify a date fewer than 30 days after your Contract Date, your first
rebalance will be delayed one month, and if you request rebalancing on your
Application but do not specify a date for the first rebalance, it will occur
one period after your Contract Date, as described above under Dollar Cost
Averaging. We may change, terminate or suspend the portfolio rebalancing
feature at any time.
Earnings Sweep
An earnings sweep automatically transfers the Earnings attributable to a
specified Investment Option (the "sweep option") to one or more other
Investment Options (your "target option(s)"). If you elect to use the earnings
sweep, you may select either the Fixed Option or the Money Market Subaccount
as your sweep option. The Account Value of your sweep option will be required
to be at least $10,000 when you elect the earnings sweep. You may select one
or more Variable Investment Options (but not the Money Market Subaccount) as
your target option(s).
You may choose to have earnings sweeps occur monthly, quarterly, semi-annually
or annually until you annuitize. At each earnings sweep, we will automatically
transfer your accumulated Earnings attributable to your sweep option for the
previous period proportionately to your target option(s). That is, if you
select a monthly earnings sweep, we will transfer the sweep option Earnings
from the preceding month; if you select a semi-annual earnings sweep, we will
transfer the sweep option Earnings accumulated over the preceding six months.
Earnings sweep transfers are subject to the same requirements and limitations
as other transfers. For the purpose of determining Earnings, transfers,
withdrawals, and any applicable annual fees, transaction fees, and charges for
premium taxes and/or other taxes imposed on your sweep option will first be
attributed to that sweep option's earnings on a last in, first out basis, and
then to amounts allocated or transferred to that sweep option.
Procedures for selecting the earnings sweep are generally the same as those
discussed in detail above for selecting dollar cost averaging and portfolio
rebalancing: You may make your request at any time and it will be effective
when we receive it in good form. If you stop the earnings sweep, you must wait
30 days to begin again. You may specify a date for your first sweep, or we
will treat your request as if you selected the request's effective date. If
you specify a date fewer than 30 days after your Contract Date, your first
earnings sweep will be delayed
11
<PAGE>
one month, and if you request the earnings sweep on your Application but do
not specify a date for the first sweep, it will occur one period after your
Contract Date, as described above under Dollar Cost Averaging.
If you are using the earnings sweep, you may also use portfolio rebalancing
only if you select the Fixed Option as your sweep option. You may not use the
earnings sweep and dollar cost averaging at the same time. If, as a result of
an earnings sweep transfer, your source account value falls below any minimum
account value we may establish, we have the right, at our option, to transfer
that remaining account value to your target account(s) on a proportionate
basis relative to your most recent allocation instructions. We may change,
terminate or suspend the earnings sweep option at any time.
PRE-AUTHORIZED WITHDRAWALS
You may specify a dollar amount for your pre-authorized withdrawals, or you
may specify a percentage of your Contract Value or an Account Value. You may
direct us to make your pre-authorized withdrawals from one or more specific
Investment Options; if you do not give us these specific directions, amounts
will be deducted proportionately from your Account Value in each Investment
Option.
Procedures for selecting pre-authorized withdrawals are generally the same as
those discussed in detail above for selecting dollar cost averaging, portfolio
rebalancing, and earnings sweeps: You may make your request at any time and it
will be effective when we receive it in good form. If you stop the pre-
authorized withdrawals, you must wait 30 days to begin again. You may specify
a date for the first withdrawal, or we will treat your request as if you
selected the request's effective date. If you specify a date fewer than 30
days after your Contract Date, your first pre-authorized withdrawal will be
delayed one month, and if you request the pre-authorized withdrawals on your
application but do not specify a date for the first withdrawal, it will occur
one period after your Contract Date.
If your pre-authorized withdrawals cause your Account Value in any Investment
Option to fall below any minimum Account Value we may establish, we have the
right, at our option, to transfer that remaining Account Value to your other
Investment Options on a proportionate basis relative to your most recent
allocation instructions. If your pre-authorized withdrawals cause your
Contract Value to fall below $1,000, we may, at our option, terminate your
Contract and send you the remaining withdrawal proceeds.
Each pre-authorized withdrawal is subject to any applicable charge for premium
taxes and/or other taxes, to federal income tax on its taxable portion, and,
if you have not reached age 59 1/2, a 10% tax penalty.
DEATH BENEFIT
Any death benefit payable will be calculated as of the date we receive proof
(in good form) of the Annuitant's death (or, if applicable, the Contract
Owner's death) and instructions regarding payment; any claim of a death
benefit must be made in writing and in proper form. A recipient of death
benefit proceeds may elect to have this benefit paid in one lump sum, in
periodic payments, in the form of a lifetime annuity or in some combination of
these. Annuity payments will begin within 30 days once we receive all
information necessary to process the claim.
If your Contract names Joint or Contingent Annuitants, no death benefit will
be payable unless and until the last Annuitant dies prior to the Annuity Date
or a Contract Owner dies prior to the Annuity Date. If yours is a Qualified
Contract, your Contingent Annuitant or Contingent Owner must be your spouse.
Death of an Annuitant
If a Joint Annuitant who is not a Contract Owner dies prior to the Annuity
Date, the surviving Joint Annuitant becomes your Annuitant. If your Annuitant
is not a Contract Owner and dies, or if there is no surviving Joint Annuitant,
your surviving Contingent Annuitant becomes your Annuitant. If there is no
surviving Contingent Annuitant, the death benefit becomes payable.
Any death benefit payable on the death of your Annuitant is payable to the
surviving Beneficiary. If no Beneficiary survives, any death benefit is
payable to the Owner or Owner's estate.
12
<PAGE>
Death of a Contract Owner
If any Contract Owner dies prior to the Annuity Date while the Annuitant is
still living, a death benefit may be payable. If that Contract Owner was the
sole Annuitant or a Joint Annuitant under the Contract, the death benefit
proceeds will be payable to the surviving Beneficiary, or to the Owner's
estate if no Beneficiary survives. If that Contract Owner was not an Annuitant
under the Contract, the death benefit proceeds will be payable to the
surviving Joint Owner of your Contract, if there is one; if not, the death
benefit will be payable to the surviving Contingent Owner, if there is one; if
not the death benefit will be payable to the surviving Beneficiary; or, if no
Beneficiary survives, to the Owner's estate. If the Joint or Contingent Owner
is the deceased Contract Owner's surviving spouse, he or she may elect to
become the Contract Owner and continue the Contract rather than receive the
death benefit proceeds.
JOINT ANNUITANTS ON QUALIFIED CONTRACTS
If your Contract was issued in connection with a Qualified Plan subject to
Title I of the Employee Retirement Income Security Act of 1974 ("ERISA") and
you change your marital status after your Contract Date, you may be permitted
to add a Joint Annuitant on your Annuity Date and to change your Joint
Annuitant. Generally speaking, you may be permitted to add a new spouse as a
Joint Annuitant, and you may be permitted to remove a Joint Annuitant who is
no longer your spouse. You may call Pacific Mutual for more information.
1035 EXCHANGES
You may make your initial Purchase Payment through an exchange of an existing
annuity contract. To exchange, you must complete a 1035 Exchange form, which
is available by calling your representative or by calling 1-800-722-2333, and
mail the form along with the annuity contract you are exchanging (plus your
completed application if you are making an initial Purchase Payment) to us.
In general terms, Section 1035 of the Internal Revenue Code of 1986, as
amended (the "Code"), provides that you recognize no gain or loss when you
exchange one annuity contract solely for another annuity contract. However,
transactions under Section 1035 may be subject to special rules and may
require special procedures and recordkeeping, particularly if the exchanged
annuity contract was issued prior to August 14, 1982. You should consult your
tax adviser prior to effecting a 1035 Exchange.
SAFEKEEPING OF ASSETS
We are responsible for the safekeeping of the assets of the Separate Account.
These assets are held separate and apart from the assets of our general
account and our other separate accounts.
DIVIDENDS
The current dividend scale is zero and we do not anticipate that dividends
will be paid. If any dividend is paid, you may elect to receive the dividend
in cash or to add the dividend to your Contract Value. If you make no
election, the dividend will be added to your Contract Value. We will allocate
any dividend to Contract Value in accordance with your most recent allocation
instructions, unless instructed. You should consult with your tax adviser
before making an election.
FINANCIAL STATEMENTS
Separate Account A had not yet commenced operations as of December 31, 1995
and therefore no financial statements are included. Pacific Mutual's audited
financial statements as of and for the years ended December 31, 1995 and 1994
are set forth below. These financial statements should be considered only as
bearing on the ability of Pacific Mutual to meet its obligations under the
Contracts and not as bearing on the investment performance of the assets held
in the Separate Account.
The financial statements of Pacific Mutual as of and for the years ended
December 31, 1995 and 1994 have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report appearing herein.
13
<PAGE>
INDEPENDENT AUDITORS' REPORT
Pacific Mutual Life Insurance Company:
We have audited the accompanying statements of financial position of
Pacific Mutual Life Insurance Company as of December 31, 1995 and 1994,
and the related statements of operations and surplus, and of cash flow
for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all
material respects, the financial position of Pacific Mutual Life
Insurance Company as of December 31, 1995 and 1994, and the results of
its operations and its cash flow for the years then ended, in conformity
with accounting practices prescribed or permitted by the Insurance
Department of the State of California and with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
Costa Mesa, California
February 23, 1996
14
<PAGE>
Pacific Mutual Life Insurance Company
STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
December 31,
1995 1994
- ------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
ASSETS
Bonds $ 6,699,489 $ 6,669,853
Preferred stocks 156,097 132,604
Common stocks 54,504 57,874
Unconsolidated subsidiaries 182,040 196,401
Mortgage loans 1,388,743 1,421,182
Real estate 145,178 157,507
Home office properties 48,446 51,419
Policy loans 2,700,544 2,312,455
Cash and short-term investments 262,527 97,745
Investment income due and accrued 135,607 125,534
Premiums due and uncollected, and other assets 295,159 245,243
Separate account assets 5,520,478 3,260,374
- ------------------------------------------------------------------------
TOTAL ASSETS $17,588,812 $14,728,191
- ------------------------------------------------------------------------
LIABILITIES AND SURPLUS
Liabilities
Policy reserves $ 7,204,362 $ 6,476,634
Deposit funds 3,262,340 3,298,915
Other liabilities 686,989 885,638
Asset valuation reserve 191,392 179,006
Separate account liabilities 5,520,478 3,260,374
- ------------------------------------------------------------------------
Total Liabilities 16,865,561 14,100,567
Surplus 723,251 627,624
- ------------------------------------------------------------------------
TOTAL LIABILITIES AND SURPLUS $17,588,812 $14,728,191
- ------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
15
<PAGE>
Pacific Mutual Life Insurance Company
STATEMENTS OF OPERATIONS AND SURPLUS
<TABLE>
<CAPTION>
Years Ended December 31,
1995 1994
- ------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
REVENUES
Premiums, annuity considerations and deposit funds $ 2,919,920 $ 2,180,409
Net investment income 945,546 879,116
Other income 5,685 5,073
- ------------------------------------------------------------------------------
TOTAL REVENUES 3,871,151 3,064,598
- ------------------------------------------------------------------------------
BENEFITS AND EXPENSES
Current and future policy benefits 3,371,448 2,659,601
Operating expenses 309,588 249,018
Premium and other taxes (excluding tax on capital
gains) 35,168 28,705
Dividends to policyowners 16,639 17,162
- ------------------------------------------------------------------------------
TOTAL BENEFITS AND EXPENSES 3,732,843 2,954,486
- ------------------------------------------------------------------------------
INCOME BEFORE FEDERAL INCOME TAXES 138,308 110,112
Federal income taxes 59,470 41,510
- ------------------------------------------------------------------------------
NET GAIN FROM OPERATIONS 78,838 68,602
NET REALIZED CAPITAL GAINS 6,311 12,424
- ------------------------------------------------------------------------------
NET INCOME $ 85,149 $ 81,026
- ------------------------------------------------------------------------------
SURPLUS
Net income $ 85,149 $ 81,026
Other surplus transactions, net 10,478 (36,178)
- ------------------------------------------------------------------------------
Increase in surplus 95,627 44,848
Surplus, beginning of year 627,624 582,776
- ------------------------------------------------------------------------------
SURPLUS, END OF YEAR $ 723,251 $ 627,624
- ------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
16
<PAGE>
Pacific Mutual Life Insurance Company
STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
Years Ended December 31,
1995 1994
- -------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Receipts
Premiums, annuity considerations and deposit
funds $ 2,687,698 $ 1,687,583
Net investment income 927,918 809,791
Allowances and reserve adjustments on reinsurance
ceded 187,380 491,363
Other 13,885 23,862
Payments
Policy benefit payments (1,677,788) (1,408,650)
Net policy loans (388,320) (352,358)
Operating expenses (278,138) (247,437)
Net transfer to separate accounts (1,178,622) (594,284)
Premium and other taxes (41,116) (34,795)
Dividends to policyowners (16,715) (17,319)
Federal income taxes (35,779) (23,995)
- -------------------------------------------------------------------------------
NET CASH FLOW PROVIDED BY OPERATING ACTIVITIES $ 200,403 $ 333,761
- -------------------------------------------------------------------------------
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds
Bonds $ 2,496,486 $ 2,937,210
Stocks 208,235 139,785
Mortgage loans 261,514 390,642
Real estate 21,419 20,163
Other investments 49,089 47,132
Payments for the purchase of
Bonds (2,431,687) (3,673,859)
Stocks (222,678) (126,823)
Mortgage loans (239,355) (230,859)
Real estate (4,716) (17,466)
Other investments (124,164) (114,106)
- -------------------------------------------------------------------------------
NET CASH FLOW PROVIDED BY (USED IN)
INVESTING ACTIVITIES $ 14,143 $ (628,181)
- -------------------------------------------------------------------------------
</TABLE>
(Continued)
See Notes to Financial Statements
17
<PAGE>
Pacific Mutual Life Insurance Company
STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
Years Ended December 31,
<S> <C> <C>
(Continued) 1995 1994
- ------------------------------------------------------------------------------
<CAPTION>
(In Thousands)
<S> <C> <C>
CASH FLOW FROM FINANCING ACTIVITIES
Issuance (repayment) of short-term borrowings $ (49,764) $ 49,764
- ------------------------------------------------------------------------------
NET CASH FLOW PROVIDED BY (USED IN) FINANCING
ACTIVITIES (49,764) 49,764
- ------------------------------------------------------------------------------
Increase (decrease) in cash and short-term
investments 164,782 (244,656)
Cash and short-term investments, beginning of year 97,745 342,401
- ------------------------------------------------------------------------------
CASH AND SHORT-TERM INVESTMENTS, END OF YEAR $ 262,527 $ 97,745
- ------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid $ 18,376 $ 22,120
- ------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
18
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
Pacific Mutual Life Insurance Company ("Pacific Mutual") was established
in 1868 and is organized under the laws of the State of California as a
mutual life insurance company. Pacific Mutual conducts business in every
state except New York.
Pacific Mutual, including its subsidiaries and affiliates, has primary
business segments which consist of life insurance, annuities, pension
products, group employee benefits and investment management and advisory
services. These primary business segments provide products for
individuals and corporations and offer a range of investment products to
institutions and pension plans.
BASIS OF PRESENTATION
Pacific Mutual's financial statements are prepared in accordance with
accounting practices prescribed or permitted by the Insurance Department
of the State of California, which are currently considered generally
accepted accounting principles ("GAAP") for mutual life insurance
companies. Prescribed statutory accounting practices include a variety of
publications of the National Association of Insurance Commissioners
("NAIC"), as well as state laws, regulations, and general administrative
rules. Permitted statutory accounting practices encompass all accounting
practices not so prescribed. The financial statements of Pacific Mutual
are not consolidated with those of its subsidiaries.
The Financial Accounting Standards Board ("FASB") has issued certain
pronouncements effective for 1996 financial statements and thereafter
that will no longer allow statutory financial statements of mutual life
insurance companies to be described as being prepared in conformity with
GAAP.
Upon the effective date of these pronouncements, in order for their
financial statements to be described as being prepared in accordance with
GAAP, mutual life insurance companies and their insurance subsidiaries
will be required to adopt all applicable authoritative GAAP
pronouncements in any general purpose financial statements that they may
issue. Pacific Mutual intends to issue 1996 general purpose financial
statements reflecting the adoption of all applicable GAAP pronouncements.
INVESTMENTS
Bonds qualifying for amortization are carried at amortized cost; all
other bonds are carried at prescribed values. Preferred stocks are
principally stated at amortized cost. Unaffiliated common stocks are
carried at market value. Investments in unconsolidated subsidiaries are
reported on the equity method of accounting, except for Pacific
Corinthian Life Insurance Company ("PCL") (Note 2) which is carried at
cost.
Mortgage loans and policy loans are stated at unpaid principal balances.
Real estate is valued at the lower of depreciated cost or market, less
related mortgage debt. Real estate is depreciated using the straight-line
method over 30 years.
Short-term investments generally mature within a year and are carried at
amortized cost which approximates estimated fair value.
The Asset Valuation Reserve ("AVR") is computed in accordance with a
prescribed formula and is designed to stabilize surplus against valuation
and credit-related losses for certain invested assets. Changes to the AVR
are reported as direct additions or deductions from surplus. The Interest
Maintenance Reserve ("IMR"), included in other liabilities on the
accompanying statements of financial position, results in the deferral of
after-tax realized capital gains and losses attributable to interest rate
fluctuations on fixed income investments. These capital gains and losses
are amortized into investment income over the remaining life of the
investment sold. The IMR was $25.3 million and $13.1 million as of
December 31, 1995 and 1994, respectively.
19
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Net realized capital gains and losses are determined on the specific
identification method and are presented net of federal capital gains tax
of $18.5 million and $(2.3) million and transfers to the IMR of $22.6
million and $(.4) million for the years ended December 31, 1995 and 1994,
respectively.
Derivatives which qualify for hedge accounting are valued consistently
with the hedged items. Realized hedged gains and losses on fixed income
contracts are deferred and amortized over the average life of the related
hedged assets or insurance liabilities. Realized gains and losses on
equity securities, which are marked to market, are recognized
immediately. Derivatives which do not qualify for hedge accounting are
valued at market value through surplus while still held and when realized
through income.
On November 15, 1994, Pacific Financial Asset Management Corporation
("PFAMCo"), a wholly-owned, subsidiary of Pacific Mutual, and five of its
subsidiaries (Pacific Investment Management Company and subsidiaries,
Parametric Portfolio Associates, Inc., Cadence Capital Management
Corporation, NFJ Investment Group, Inc. and Blairlogie Capital Management
Limited) entered into an agreement and plan of consolidation with Thomson
Advisory Group L.P., a Delaware limited partnership with publicly traded
units, to merge into a newly capitalized partnership named PIMCO Advisors
L.P. Collectively, PFAMCo and various of its subsidiaries beneficially
own approximately 42% of the outstanding general and limited partner
units of PIMCO Advisors L.P. as of December 31, 1995 and 1994. Net cash
distributions received on these units are recorded as income as permitted
by the Insurance Department of the State of California.
On December 21, 1995, Pacific Mutual completed a subsidiary
reorganization in which PFAMCo became a direct, wholly-owned subsidiary
of Pacific Mutual. Prior to that PFAMCo was a wholly-owned second-tier
subsidiary of Pacific Mutual. The intermediate company, Pacific Financial
Holding Company ("PFHC") and certain of its assets and liabilities were
merged into PFAMCo in connection with this reorganization. The remaining
assets were merged into Pacific Mutual which consisted of investments in
subsidiaries as follows: Pacific Equities Network, PM Group Life
Insurance Company and PFAMCo.
POLICY RESERVES AND DEPOSIT FUNDS
Life insurance reserves are valued using the net level premium method,
the Commissioners' Reserve Valuation Method, or other modified reserve
methods.
Reserves for individual annuities are maintained principally on the
Commissioners' Annuity Reserve Valuation Method. Group annuity contract
reserves are valued using the net single premium method.
The liability for deposit funds, including guaranteed interest contracts,
is based primarily upon and is not less than the policyowners' equity in
their deposit accounts, including credited interest.
REVENUES AND EXPENSES
Premiums are recognized as income over the premium paying period.
Deposits made in connection with annuity contracts are recognized as
revenue when received. Investment income is recorded as earned.
Expenses, including policy acquisition costs, such as commissions, and
Federal income taxes are charged to operations as incurred.
DIVIDENDS
Dividends are provided based on dividend formulas approved by the Board
of Directors and reviewed for reasonableness and equitable treatment of
policyowners by an independent consulting actuary.
20
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FEDERAL INCOME TAXES
Pacific Mutual is taxed as a life insurance company for Federal income
tax purposes. Pacific Mutual's income tax return is consolidated with all
its includable domestic subsidiaries except PCL. The amount of Federal
income tax expense includes an equity tax calculated by a prescribed
formula that incorporates a differential earnings rate between stock and
mutual life insurance companies. Under prescribed statutory accounting
practices, deferred tax assets and liabilities are not recorded. The
difference between the effective tax rate and the statutory tax rate of
35% for 1995 and 1994 is primarily due to certain policy acquisition
costs being deferred and amortized over a ten-year period for tax
purposes, reserve differences, non-taxable investment income and the
equity tax.
OTHER SURPLUS TRANSACTIONS
Other surplus transactions consist primarily of unrealized capital gains
and losses, changes in nonadmitted assets, and changes in the AVR.
SEPARATE ACCOUNTS
Separate account assets are recorded at market value and the related
liabilities represent segregated contract owner funds maintained in
accounts with individual investment objectives. The investment results of
separate account assets generally pass through to separate account policy
owners and contract owners.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value of financial instruments disclosed in Notes 3
and 4 have been determined using available market information and
appropriate valuation methodologies. However, considerable judgment is
required to interpret market data to develop the estimates of fair value.
Accordingly, the estimates presented may not be indicative of the amounts
Pacific Mutual could realize in a current market exchange. The use of
different market assumptions and/or estimation methodologies could have a
significant effect on the estimated fair value amounts.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
practices prescribed or permitted by regulatory authorities and generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to the 1995
financial statement presentation.
2. REHABILITATION OF FIRST CAPITAL LIFE INSURANCE COMPANY
Pursuant to a five-year rehabilitation agreement approved by a California
Superior Court and the Insurance Department of the State of California in
July 1992, Pacific Mutual, through its wholly-owned subsidiary, PCL, will
facilitate the rehabilitation of First Capital Life Insurance Company
("FCL"). In accordance with the rehabilitation agreement, insurance
policies of FCL were restructured and assumed by PCL on December 31,
1992.
The rehabilitation agreement provides for the holders of restructured
policies to share in a substantial percentage of the unallocated surplus
of PCL at the end of the rehabilitation period. Policyholders have the
option to surrender their restructured policies with reduced benefits
during this five-year period. During the rehabilitation
21
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
2. REHABILITATION OF FIRST CAPITAL LIFE INSURANCE COMPANY (CONTINUED)
plan period, PCL is prohibited from issuing new insurance policies. At
the end of the rehabilitation period, PCL will merge into Pacific Mutual,
with Pacific Mutual as the surviving entity. Substantially all of the
assets and certain of the liabilities of FCL were assumed by PCL on
December 31, 1992, pursuant to an assumption reinsurance agreement and
asset purchase agreement.
In accordance with the rehabilitation agreement, PCL was capitalized by a
cash contribution of $8.3 million from Pacific Mutual and a $45 million
certificate of contribution provided by a wholly-owned subsidiary of
Pacific Mutual for a total of $53.3 million initial capitalization.
In the event PCL is unable to pay contract benefits, Pacific Mutual is
obligated to contribute funds to pay those benefits in accordance with
the rehabilitation agreement.
3. INVESTMENTS IN DEBT SECURITIES
The statement value, gross unrealized gains and losses and estimated fair
value of bonds and redeemable preferred stocks ("debt securities"),
including short-term investments, are shown below. The estimated fair
value of publicly traded securities was based on quoted market prices.
For securities not actively traded, estimated fair values were provided
by independent pricing services specializing in "matrix pricing" and
modeling techniques. Pacific Mutual also estimates certain fair values
based on interest rates, credit quality and average maturity or from
securities with comparable trading characteristics.
<TABLE>
<CAPTION>
Gross Unrealized Estimated
Statement ----------------- Fair
Value Gains Losses Value
---------------------------------------------
(In Thousands)
<S> <C> <C> <C> <C>
December 31, 1995:
U.S. Treasury securities and
obligations of U.S. government
authorities and agencies $ 147,436 $ 28,214 $ 175,650
Obligations of states, political
subdivisions and foreign
governments 452,273 66,960 $ 3,064 516,169
Corporate securities 3,901,979 442,497 46,539 4,297,937
Mortgage-backed securities 2,438,052 116,650 10,106 2,544,596
Redeemable preferred stock 89,191 2,840 2,472 89,559
---------------------------------------------
Total $7,028,931 $657,161 $ 62,181 $7,623,911
---------------------------------------------
December 31, 1994:
U.S. Treasury securities and
obligations of U.S. government
authorities and agencies $ 216,201 $ 1,064 $ 37,113 $ 180,152
Obligations of states, political
subdivisions and foreign
governments 321,798 5,371 16,309 310,860
Corporate securities 3,771,271 104,311 160,712 3,714,870
Mortgage-backed securities 2,475,472 28,472 81,111 2,422,833
Redeemable preferred stock 81,026 343 5,031 76,338
---------------------------------------------
Total $6,865,768 $139,561 $300,276 $6,705,053
---------------------------------------------
</TABLE>
22
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
3. INVESTMENTS IN DEBT SECURITIES (CONTINUED)
The statement value and estimated fair value of debt securities as of
December 31, 1995 by contractual repayment date of principal are shown
below. Expected maturities may differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties.
<TABLE>
<CAPTION>
Estimated
Statement Fair
Value Value
----------- -----------
(In Thousands)
<S> <C> <C>
Due in one year or less $ 445,645 $ 449,283
Due after one year through five years 1,319,487 1,426,373
Due after five years through ten years 1,409,209 1,542,228
Due after ten years 1,416,538 1,661,431
----------- -----------
4,590,879 5,079,315
Mortgage-backed securities 2,438,052 2,544,596
----------- -----------
Total $ 7,028,931 $ 7,623,911
----------- -----------
</TABLE>
Proceeds from sales of investments in debt securities were $1.4 billion
and $1.5 billion for the years ended December 31, 1995 and 1994,
respectively. In 1995 and 1994, gross gains of $36 million and $30
million and gross losses of $14 million and $43 million, respectively,
were realized on those sales.
4. FINANCIAL INSTRUMENTS
The estimated fair values of Pacific Mutual's financial instruments,
including debt securities, are as follows:
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
Statement Estimated Statement Estimated
Value Fair Value Value Fair Value
-----------------------------------------------
(In Thousands)
<S> <C> <C> <C> <C>
Assets:
Debt securities
(Note 3) $ 7,028,931 $ 7,623,911 $ 6,865,768 $ 6,705,053
Preferred and common
stocks 121,420 139,613 109,458 116,993
Mortgage loans 1,388,743 1,500,000 1,421,182 1,452,596
Policy loans 2,700,544 2,700,544 2,312,455 2,312,455
Derivative financial
instruments:
Interest rate swaps 1,068 3,379 121 (24,809)
Other 18,008 30,649 2,672 (2,822)
Liabilities:
Guaranteed interest
contracts 2,375,898 2,459,323 2,635,356 2,614,961
Deposit liabilities 876,276 899,393 897,743 859,469
Annuity liabilities 308,742 311,441 220,026 223,423
Other derivative fi-
nancial instruments 2,373 1,490 2,270 2,128
Surplus:
Contribution certifi-
cates 149,596 157,688 149,593 124,313
</TABLE>
23
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
4. FINANCIAL INSTRUMENTS (CONTINUED)
The following methods and assumptions were used to estimate the fair
values of these financial instruments as of December 31, 1995 and 1994:
PREFERRED AND COMMON STOCKS
The estimated fair values are based on quoted market prices or dealer
quotes.
MORTGAGE LOANS
The estimated fair value of the mortgage loan portfolio is determined by
discounting the estimated future cash flows, using a year-end market rate
which is applicable to the yield, credit quality and average maturity of
the composite portfolio.
POLICY LOANS
The statement value of policy loans is a reasonable estimate of their
fair value.
GUARANTEED INTEREST CONTRACTS AND DEPOSIT LIABILITIES
The estimated fair values of fixed-maturity guaranteed interest contracts
are estimated using the rates currently offered for deposits of similar
remaining maturities. The estimated fair values of deposit liabilities
with no defined maturities are the amounts payable on demand.
Pacific Mutual has issued PRO GIC and Diversifier GIC contracts to plan
sponsors totaling $914 million as of December 31, 1995, pursuant to the
terms of which the plan sponsor retains direct ownership and control of
the assets related to these contracts. Pacific Mutual agrees to provide
benefit responsiveness in the event that plan benefit requests exceed
plan cash flows. In return for this guarantee, Pacific Mutual receives a
fee which varies by contract. Pacific Mutual sets the investment
guidelines to provide for appropriate credit quality and cash flow
matching.
ANNUITY LIABILITIES
The fair value of annuity liabilities approximates statement value and
primarily includes policyholder deposits and accumulated credited
interest.
DERIVATIVE FINANCIAL INSTRUMENTS
Pacific Mutual utilizes certain derivative financial instruments to
diversify its business risk and to minimize its exposure to fluctuations
in market prices, interest rates, or basis risk. Pacific Mutual has also
set aside a corporate total return portfolio utilizing derivative
financial instruments. These instruments include interest rate and
currency swaps, asset swaps, credit derivatives, forwards, options held,
options written, and futures contracts, and involve elements of credit
risk and market risk in excess of amounts recognized in the accompanying
financial statements. The notional amounts of those instruments reflect
the extent of involvement in those various types of financial
instruments. The estimated fair values of these instruments are based on
market or dealer quotes. Pacific Mutual determines, on an individual
counterparty basis, the need for collateral or other security to support
financial instruments with off-balance sheet credit risks.
24
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
4. FINANCIAL INSTRUMENTS (CONTINUED)
Options and Floors
------------------
Pacific Mutual uses options and floors to hedge against fluctuations in
interest rates and in its corporate total return portfolio. Cash
requirements on options held are limited to the premium paid by Pacific
Mutual at acquisition. Pacific Mutual uses written options on a limited
basis consisting primarily of covered calls. Gains and losses on covered
calls are offset by gains and losses on the underlying position. Options
and floors held are reported as assets and options written are reported
as liabilities. As of December 31, 1995, the notional amount of options
held and options written approximated $1.3 billion and $30 million,
respectively. As of December 31, 1994, the notional amount of options
held and options written approximated $1.5 billion and $42 million,
respectively. Option contracts mature during 1996 through 2007.
Interest Rate Swap Contracts
----------------------------
Pacific Mutual has entered into interest rate swap contracts to reduce
the impact of changes in interest rates on its variable short-term and
long-term investments. These contracts effectively change the interest
rate exposure on variable rate notes to fixed rates which range from 1.9%
to 8.9% as of December 31, 1995, and from 1.9% to 8.6% as of December 31,
1994. Interest rate swap contracts mature during 1996 through 2013. As of
December 31, 1995 and 1994, interest rate swap contracts outstanding with
financial institutions had a total notional amount of $656 million and
$411 million, respectively.
Asset Swap Contracts
--------------------
Pacific Mutual has entered into an asset swap contract to reduce interest
rate risk by shortening both the duration and maturity of one of its
fixed rate investments. The asset swap contract matures during 1998. As
of December 31, 1995, the asset swap contract had a notional amount of
$10 million.
Credit Derivatives
------------------
Pacific Mutual uses credit derivatives to take advantage of market
opportunities. As of December 31, 1995 and 1994, the notional amount of
credit derivatives outstanding approximated $90 million and $66 million,
respectively. Credit derivatives mature during 1996 through 2000.
Foreign Currency Exchange Contracts
-----------------------------------
Pacific Mutual enters into foreign currency exchange contracts that are
used to hedge against fluctuations in foreign currency-denominated assets
and related income. Gains and losses on such agreements offset currency
gains and losses on the related assets. As of December 31, 1995 and 1994,
the notional amount of foreign currency exchange contracts approximated
$15 million and $35 million, respectively. Foreign currency exchange
contracts expire during 1998 and 1999.
Future Contracts
----------------
Pacific Mutual uses exchange-traded futures contracts for asset and
liability management of fixed maturity securities and insurance
liabilities and for hedging market fluctuations on equity securities.
Price changes on futures are settled daily through the daily margin cash
flows. As of December 31, 1995 and 1994, the notional amounts of futures
contracts were $340 million and $163 million, respectively. The notional
amounts of the contracts do not represent future cash requirements, as
Pacific Mutual intends to close out open positions prior to expiration.
25
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
4. FINANCIAL INSTRUMENTS (CONTINUED)
CONTRIBUTION CERTIFICATES
The estimated fair value of contribution certificates is based on market
quotes.
5. CONCENTRATION OF CREDIT RISK
Pacific Mutual manages its investments to limit credit risk by
diversifying its portfolio among various security types and industry
sectors. The credit risk of financial instruments is controlled through
credit approvals, limits and monitoring procedures. Real estate and
mortgage loan investments are diversified by geographic location and
property type. Management believes that significant concentrations of
credit risk do not exist.
Pacific Mutual is exposed to credit loss in the event of nonperformance
by the other parties to the interest rate swaps contracts and other
derivative securities. However, Pacific Mutual does not anticipate
nonperformance by the counterparties.
6. UNCONSOLIDATED SUBSIDIARIES
Pacific Mutual's subsidiary operations primarily include other life and
health insurance and investment management and advisory services. As of
December 31, 1995 and 1994, subsidiary assets were $4.5 billion and
liabilities were $4.3 billion as of December 31, 1995 and $4.2 billion as
of December 31, 1994.
Revenue and net income, including PCL, were $908 million and $63 million
for the year ended December 31, 1995, and $1.1 billion and $75 million
for the year ended December 31, 1994. Dividends from subsidiaries totaled
$64.7 million and $2 million for the years ended December 31, 1995 and
1994, respectively. Earnings of subsidiaries, excluding PCL, and
excluding capital gains, are included in net investment income.
7. BORROWINGS
Pacific Mutual borrows for short-term needs by issuing commercial paper.
Approximately $50 million was outstanding as of December 31, 1994,
bearing an interest rate of 5.86%, and was repaid in January, 1995. There
were no borrowings outstanding as of December 31, 1995.
In addition, Pacific Mutual had available a revolving credit facility
totaling approximately $250 million as of December 31, 1995 and 1994.
There were no borrowings outstanding as of December 31, 1995 and 1994.
8. CONTRIBUTION CERTIFICATES
Pacific Mutual has $150 million of Contribution Certificates (the
"Certificates"), also referred to as Surplus Notes, outstanding at an
interest rate of 7.9% maturing on December 30, 2023. Interest is payable
semiannually on June 30 and December 30. The Certificates may not be
redeemed at the option of Pacific Mutual or any holder of the
Certificates. The Certificates are unsecured and subordinated to all
present and future senior indebtedness and policy claims of Pacific
Mutual. Each payment of interest on and the payment of principal of the
Certificates may be made only out of Pacific Mutual's surplus and with
the prior approval of the Insurance Commissioner of the State of
California. In accordance with accounting practices prescribed or
permitted by the Insurance Department of the State of California, the
Certificates are not part of the liabilities of Pacific Mutual and are
included in surplus.
26
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
9. REINSURANCE
Pacific Mutual has reinsurance agreements with other insurance companies
for the purpose of diversifying risk and limiting exposure on larger
risks. For the years ended December 31, 1995 and 1994, individual life
and annuity premiums assumed were $16 million and $20 million and
premiums ceded were $339 million and $363 million, respectively. Amounts
recoverable from reinsurers for individual life and annuities include
reinsured and paid claims of $8 million and $13 million as of December
31, 1995 and 1994, respectively. Policy benefits payable are net of
reinsurance recoveries of $8 million and $4 million at December 31, 1995
and 1994, respectively.
Pacific Mutual also reinsures substantially all of its group life and
health business with a subsidiary insurance company. Premiums of $72
million and $90 million, and benefits of $53 million and $70 million were
ceded during the years ended December 31, 1995 and 1994, respectively.
Amounts payable to the subsidiary under this agreement were $6 million
and $8 million as of December 31, 1995 and 1994, respectively.
To the extent that the assuming companies become unable to meet their
obligations under these treaties, Pacific Mutual remains contingently
liable. However, Pacific Mutual does not anticipate nonperformance by
these assuming companies.
10. PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS
PENSION PLAN
Pacific Mutual maintains a defined benefit pension plan covering eligible
employees and agents. In 1995, Pacific Mutual accrued $2.5 million in
pension expense that will be funded in 1996 based on the latest actuarial
valuation report. No expense or contributions were made during 1994
because of the funded status of the plans and related income tax
considerations. Accumulated benefits and net assets available for
benefits as of the latest valuation dates (January 1, 1995 and April 1,
1994) are as follows:
<TABLE>
<CAPTION>
1995 1994
-------------------
(In Thousands)
<S> <C> <C>
Actuarial present value of accumulated benefits:
Vested $ 92,966 $ 88,122
Nonvested 392 1,115
-------------------
Total $ 93,358 $ 89,237
-------------------
Net assets available for benefits $ 107,530 $ 111,089
-------------------
</TABLE>
The above present values were determined using an assumed discount rate
of 8.5% in 1995 and 1994.
POSTRETIREMENT HEALTHCARE AND LIFE INSURANCE PLANS
Pacific Mutual sponsors a defined benefit health care plan and a defined
benefit life insurance plan ("The Plans") that provide postretirement
benefits for all eligible retirees and their dependents. Generally,
qualified employees may become eligible for these benefits if they reach
normal retirement age, have been covered under Pacific Mutual's policy as
an active employee for a minimum continuous period prior to the date
retired, and have an employment date before January 1, 1990. The Plans
contain cost-sharing features such as deductibles and coinsurance and
require retirees to make contributions which can be adjusted annually.
Pacific Mutual's
27
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
10. PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS (CONTINUED)
commitment to qualified employees who retire after April 1, 1994 is
limited to specific dollar amounts. Pacific Mutual reserves the right to
modify or terminate The Plans at any time. As in the past, the general
policy is to fund these benefits on a pay-as-you-go basis. The amount of
benefits paid under The Plans for the years ended December 31, 1995 and
1994 was approximately $1.7 million for both years.
Pacific Mutual utilizes the accrual method of accounting for the costs of
The Plans as prescribed by the Insurance Department of the State of
California and amortizes its transition obligation of $26.7 million over
twenty years.
Components of net periodic postretirement benefit cost are as follows (In
Thousands):
<TABLE>
<CAPTION>
Years Ended December 31,
1995 1994
---------------------------
<S> <C> <C>
Service cost $ 177 $ 186
Interest cost 1,921 1,790
Amortization (260) (260)
---------------------------
1,838 1,716
Recognized transition obligation-net 1,336 1,337
---------------------------
Net periodic postretirement benefit cost $ 3,174 $ 3,053
---------------------------
</TABLE>
The following table presents The Plans' funded status reconciled with
amounts recorded in other liabilities on Pacific Mutual's statement of
financial position (In Thousands):
<TABLE>
<CAPTION>
1995 1994
------------------
<S> <C> <C>
Accumulated postretirement obligation:
Retirees $ 20,936 $ 20,580
Fully eligible active plan participants 1,695 1,346
Other active plan participants 2,290 2,455
------------------
24,921 24,381
Fair value of plan assets 0 0
------------------
Unfunded accumulated postretirement
obligation 24,921 24,381
Unrecognized net gain 878 942
Prior service cost 1,589 1,849
Unrecognized transition obligation-net (22,720) (24,056)
------------------
Accrued postretirement benefit liability $ 4,668 $ 3,116
------------------
</TABLE>
The assumed health care cost trend rate used in measuring the accumulated
benefit obligation was 10% for 1995 and 11% for 1994, and is assumed to
decrease gradually to 5% in 2003 and remain at that level thereafter. The
amount reported is materially affected by the health care cost trend rate
assumptions. If the health care cost trend
28
<PAGE>
Pacific Mutual Life Insurance Company
NOTES TO FINANCIAL STATEMENTS
10. PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS (CONTINUED)
rate assumptions were increased by 1%, the accumulated postretirement
benefit obligation as of December 31, 1995 and 1994 would be increased by
10.9% and 11.2%, respectively. The effect of this change would increase
the aggregate of the service, interest and amortization cost components
of the net periodic benefit cost by 11.4% and 13.6%, respectively.
The discount rate used in determining the accumulated postretirement
benefit obligation is 7% and 8% for 1995 and 1994, respectively.
11. INVESTMENT COMMITMENTS
Pacific Mutual has outstanding commitments to make investments in bonds
and other invested assets as follows (In Thousands):
<TABLE>
<CAPTION>
Year ended December 31:
-----------------------
<S> <C>
1996 $ 179,551
1997-2000 88,698
2001 and thereafter 32,091
---------
Total $ 300,340
---------
</TABLE>
12. LITIGATION
Pacific Mutual and its subsidiaries are respondents in a number of legal
proceedings, some of which involve extra-contractual damages. In the
opinion of management, the outcome of these proceedings is not likely to
have a material adverse effect on the financial position of Pacific
Mutual.
--------------------------------------------------------------------------
29
<PAGE>
FORM NO. 288-6B
<PAGE>
Part C: OTHER INFORMATION
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements
Part A: None
Part B:
(1) Registrant's Financial Statements
None
(2) Depositor's Financial Statements
Audited financial statements dated as of December 31,
1995 included in Part B include the following for
Pacific Mutual:
Statements of Financial Position
Statements of Operations and Surplus
Statements of Cash Flow
Notes to Financial Statements
Audited financial statements dated as of December 31,
1994 included in Part B include the following for
Pacific Mutual Life Insurance Company:
Statements of Financial Position
Statements of Operations and Surplus
Statements of Cash Flow
Notes to Financial Statements
(b) Exhibits
1. (a) Resolution of the Board of Directors of Pacific
Mutual authorizing establishment of Separate
Account A and Memorandum establishing Separate
Account A.*
(b) Memorandum Establishing Two New Variable Accounts -
Aggressive Equity and Emerging Markets Portfolios
II-1
<PAGE>
2. Not applicable
3. (a) Distribution Agreement between Pacific Mutual and
Pacific Mutual Distributors, Inc., formerly
Pacific Equities Network ("PEN")
(b) Form of Selling Agreement between Pacific Mutual,
PEN and Various Broker-Dealers*
4. (a) Form of Individual Flexible Premium Variable
Accumulation Annuity Contract**
(b) Qualified Plan Loan Endorsement*
(c) Individual Retirement Annuity Rider*
(d) Qualified Pension Plan Rider*
(e) 403(b) Tax-Sheltered Annuity Rider*
(f) Section 457 Plan Rider*
(g) Endorsement for 403(b) Texas Optional Retirement
Program (ORP)*
(h) Qualified Plan Loan Endorsement (Draft)
5. (a) Application Form for Individual Flexible Premium
Variable Accumulation Annuity Contract**
(b) Variable Annuity PAC APP*
(c) Application/Confirmation Form**
6. (a) Pacific Mutual's Articles of Incorporation*
(b) By-laws of Pacific Mutual*
7. Not applicable
8. (a) Fund Participation Agreement*
(b) Addendum to Fund Participation Agreement (to add
Growth LT Series)*
(c) Addendum to Fund Participation Agreement (to add
Equity and Bond and Income Series)*
(d) Addendum to Fund Participation Agreement (to add
Aggressive Equity and Emerging Markets Portfolios)
9. Opinion and Consent of legal officer of Pacific Mutual
as to the legality of Contracts being registered.*
II-2
<PAGE>
10. (a) Consent of Deloitte & Touche LLP
(b) Powers of Attorney*
11. Not applicable
12. Not applicable
13. Performance Calculations
14. Inapplicable
15. Inapplicable
16. Inapplicable
17. Financial Data Schedules
- --------------
* Included in Registrant's Form Type N-4/A, Accession No. 0000898430-95-002620
filed on October 19, 1995 and incorporated by reference herein.
** Included in Registrant's Form Type N-4/A, Accession No. 0000898430-95-002620
filed on December 13, 1995 and incorporated by reference herein.
Item 25. Directors and Officers of Pacific Mutual
<TABLE>
<CAPTION>
Positions and Offices
Name and Address with Pacific Mutual
<S> <C>
Thomas C. Sutton Director, Chairman of the Board,
and Chief Executive Officer
Harry G. Bubb Director and Chairman Emeritus
Glenn S. Schafer Director and President
Richard M. Ferry Director
Donald E. Guinn Director
Ignacio E. Lozano, Jr. Director
Charles A. Lynch Director
Dr. Allen W. Mathies, Jr. Director
Charles D. Miller Director
Donn B. Miller Director
Jacqueline C. Morby Director
J. Fernando Niebla Director
Susan Westerberg Prager Director
Richard M. Rosenberg Director
James R. Ukropina Director
</TABLE>
II-3
<PAGE>
<TABLE>
<S> <C>
Raymond L. Watson Director
Edward Byrd Vice President and Controller
David R. Carmichael Senior Vice President and General
Counsel
Audrey L. Milfs Vice President and Corporate
Secretary
Lynn C. Miller Executive Vice President
Marilee Roller Senior Vice President
Khan T. Tran Vice President and Treasurer
</TABLE>
______________________________
The address for each of the persons listed above is as follows:
700 Newport Center Drive
Newport Beach, California 92660
Item 26. Persons Controlled by or Under Common Control with Pacific
Mutual or Separate Account A
The following is an explanation of the organization chart of
Pacific Mutual's subsidiaries:
PACIFIC MUTUAL, SUBSIDIARIES & AFFILIATED ENTERPRISES
LEGAL STRUCTURE
Pacific Mutual Life Insurance Company has a 40% ownership of
American Maturity Life Insurance Company, a 50% ownership of
Pacific Mezzanine Associates, L.L.C., and is the parent
company of Pacific Financial Asset Management Corporation,
Pacific Mutual Realty Finance, Inc., Pacific Mutual
Distributors, Inc. (formerly known as Pacific Equities
Network), PM Group Life Insurance Company (an Arizona
corporation), and Pacific Corinthian Life Insurance Company.
Subsidiaries of Pacific Financial Asset Management
Corporation include: PMRealty Advisors Inc. and PIMCO
Advisors L.P. (a Delaware Limited Partnership which is 42%
owned). Subsidiaries of Pacific Mutual Distributors, Inc.
include: Mutual Service Corporation (a Michigan corporation),
along with its subsidiary Advisors' Mutual Service Center,
Inc. (a Michigan corporation); and United Planners' Group,
Inc. (an Arizona corporation which is 95.2% owned consisting
of 100% of Class A and 79.3% of Class B of the corporation's
common stock), along with its subsidiary United Planners'
Financial Services of America (an Arizona Limited
Partnership). Subsidiaries of Pacific Corinthian Life
Insurance include: World-Wide Holdings Limited (a United
Kingdom corporation which is 72.4% owned), including its
subsidiaries World-Wide Reassurance Company Limited (a United
Kingdom corporation) and World-Wide Reassurance Company (BVI)
Limited (a British Virgin Islands corporation). All
corporations are 100% owned unless otherwise indicated. All
entities are California corporations unless otherwise
indicated.
II-4
<PAGE>
Corporation include: PMRealty Advisors Inc. and PIMCO
Advisors L.P. (a Delaware Limited Partnership which is 42%
owned). Subsidiaries of Pacific Corinthian Life Insurance
Company include: World-Wide Holdings Limited (a United
Kingdom corporation which is 72.4% owned), including its
subsidiaries World-Wide Reassurance Company Limited (a United
Kingdom corporation) and World-Wide Reassurance Company (BVI)
Limited (a British Virgin Islands corporation). All
corporations are 100% owned unless otherwise indicated. All
entities are California corporations unless otherwise
indicated.
Item 27. Number of Contractholders
Five (5)
Item 28. Indemnification
(a) The Distribution Agreement between Pacific Mutual and
PEN provides substantially as follows:
Pacific Mutual hereby agrees to indemnify and hold
harmless PEN and its officers and directors, and
employees for any expenses (including legal expenses),
losses, claims, damages, or liabilities incurred by
reason of any untrue or alleged untrue statement or
representation of a material fact or any omission or
alleged omission to state a material fact required to be
stated to make other statements not misleading, if made
in reliance on any prospectus, registration statement,
post-effective amendment thereof, or sales materials
supplied or approved by Pacific Mutual or the Separate
Account. Pacific Mutual shall reimburse each such person
for any legal or other expenses reasonably incurred in
connection with investigating or defending any such
loss, liability, damage, or claim. However, in no case
shall Pacific Mutual be required to indemnify for any
expenses, losses, claims, damages, or liabilities which
have resulted from the willful misfeasance, bad faith,
negligence, misconduct, or wrongful act of PEN.
PEN hereby agrees to indemnify and hold harmless Pacific
Mutual, its officers, directors, and employees, and the
Separate Account for any expenses, losses, claims,
damages, or liabilities arising out of or based upon any
of the following in connection with the offer or sale of
the contracts: (1) except for such statements made in
reliance on any prospectus, registration statement or
sales material supplied or approved by Pacific Mutual or
the Separate Account, any untrue or alleged untrue
statement or representation made; (2) any failure to
deliver a currently effective prospectus; (3) the use of
any unauthorized sales literature by any officer,
employee or agent of PEN or Broker; (4) any willful
misfeasance, bad faith, negligence, misconduct or
wrongful act. PEN shall reimburse each such person for
any legal or other expenses reasonably incurred in
connection with investigating or defending
II-5
<PAGE>
any such loss, liability, damage, or claim.
(b) The Form of Selling Agreement between Pacific Mutual,
PEN and Various Broker-Dealers provides substantially as
follows:
Pacific Mutual and PEN agree to indemnify and hold
harmless Selling Broker-Dealer and General Agent, their
officers, directors, agents and employees, against any
and all losses, claims, damages or liabilities to which
they may become subject under the 1933 Act, the 1934
Act, or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a
material fact or any omission to state a material fact
required to be stated or necessary to make the
statements made not misleading in the registration
statement for the Contracts or for the shares of Pacific
Select Fund (the "Fund") filed pursuant to the 1933 Act,
or any prospectus included as a part thereof, as from
time to time amended and supplemented, or in any
advertisement or sales literature approved in writing by
Pacific Mutual and PEN pursuant to Section IV.E. of this
Agreement.
Selling Broker-Dealer and General Agent agree to
indemnify and hold harmless Pacific Mutual, the Fund and
PEN, their officers, directors, agents and employees,
against any and all losses, claims, damages or
liabilities to which they may become subject under the
1933 Act, the 1934 Act or other federal or state
statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are
based upon: (a) any oral or written misrepresentation by
Selling Broker-Dealer or General Agent or their
officers, directors, employees or agents unless such
misrepresentation is contained in the registration
statement for the Contracts or Fund shares, any
prospectus included as a part thereof, as from time to
time amended and supplemented, or any advertisement or
sales literature approved in writing by Pacific Mutual
and PEN pursuant to Section IV.E. of this Agreement, (b)
the failure of Selling Broker-Dealer or General Agent or
their officers, directors, employees or agents to comply
with any applicable provisions of this Agreement or (c)
claims by Sub-agents or employees of General Agent or
Selling Broker-Dealer for payments of compensation or
remuneration of any type. Selling Broker-Dealer and
General Agent will reimburse Pacific Mutual or PEN or
any director, officer, agent or employee of either
entity for any legal or other expenses reasonably
incurred by Pacific Mutual, PEN, or such officer,
director, agent or employee in connection with
investigating or defending any such loss, claims,
damages, liability or action. This indemnity agreement
will be in addition to any liability which Broker-Dealer
may otherwise have.
II-6
<PAGE>
Item 29. Principal Underwriters
(a) PEN also acts as principal underwriter for Pacific
Select Separate Account, Pacific Select Exec Separate
Account, Pacific Select Variable Annuity Separate
Account and Pacific Select Fund.
(b) For information regarding PEN, reference is made to Form
B-D, SEC File No. 8-15264, which is herein incorporated
by reference.
(c) PEN retains no compensation or net discounts or
commissions from the Registrant.
Item 30. Location of Accounts and Records
The accounts, books and other documents required to be
maintained by Registrant pursuant to Section 31(a) of
the Investment Company Act of 1940 and the rules under
that section will be maintained by Pacific Mutual at 700
Newport Center Drive, Newport Beach, California 92660.
Item 31. Management Services
Not applicable
Item 32. Undertakings
The registrant hereby undertakes:
(a) to file a post-effective amendment to this registration
statement as frequently as is necessary to ensure that
the audited financial statements in this registration
statement are never more than 16 months old for so long
as payments under the variable annuity contracts may be
accepted, unless otherwise permitted.
(b) to include either (1) as a part of any application to
purchase a contract offered by the prospectus, a space
that an applicant can check to request a Statement of
Additional Information, or (2) a post card or similar
written communication affixed to or included in the
prospectus that the applicant can remove to send for a
Statement of Additional Information, or (3) to deliver a
Statement of Additional Information with the Prospectus.
(c) to deliver any Statement of Additional Information and
any financial statements required to be made available
under this Form promptly upon written or oral request.
Additional Representations
II-7
<PAGE>
(a) The Registrant and its Depositor are relying upon
American Council of Life Insurance, SEC No-Action
Letter, SEC Ref. No. 1P-6-88 (November 28, 1988) with
respect to annuity contracts offered as funding vehicles
for retirement plans meeting the requirements of Section
403(b) of the Internal Revenue Code, and the provisions
of paragraphs (1)-(4) of this letter have been complied
with.
(b) The Registrant and its Depositor are relying upon Rule
6c-7 of the Investment Company Act of 1940 with respect
to annuity contracts offered as funding vehicles to
participants in the Texas Optional Retirement Program,
and the provisions of paragraphs(a) - (d) of the Rule
have been complied with.
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has caused this Post-Effective
Amendment No. 1 to the Registration Statement on Form N-4 to be signed on its
behalf by the undersigned thereunto duly authorized in the City of Newport
Beach, and the State of California on this 29th day of March, 1996.
SEPARATE ACCOUNT A
(Registrant)
By: PACIFIC MUTUAL LIFE INSURANCE COMPANY
By:
Thomas C. Sutton*
Chairman and Chief Executive Officer
By: PACIFIC MUTUAL LIFE INSURANCE COMPANY
(Depositor)
By:
Thomas C. Sutton*
Chairman and Chief Executive Officer
*By: /s/ Sharon A. Cheever
--------------------------
Sharon A. Cheever
as attorney-in-fact
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 1 to the Registration Statement has been signed by the following
persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
Thomas C. Sutton* Director, Chairman of the Board ____________, 1996
and Chief Executive Officer
Glenn S. Schafer* Director and President ____________, 1996
Harry G. Bubb* Director and Chairman Emeritus ____________, 1996
Richard M. Ferry* Director ____________, 1996
</TABLE>
II-9
<PAGE>
<TABLE>
<S> <C> <C>
Donald E. Guinn* Director ____________, 1996
Ignacio E. Lozano, Jr.* Director ____________, 1996
Charles A. Lynch* Director ____________, 1996
Dr. Allen W. Mathies, Jr.* Director ____________, 1996
Charles D. Miller* Director ____________, 1996
Donn B. Miller* Director ____________, 1996
Jacqueline C. Morby Director ____________, 1996
J. Fernando Niebla* Director ____________, 1996
Susan Westerberg Prager* Director ____________, 1996
Richard M. Rosenberg Director ____________, 1996
James R. Ukropina* Director ____________, 1996
Raymond L. Watson* Director ____________, 1996
Edward Byrd* Vice President and Controller ____________, 1996
*By: /s/ Sharon A. Cheever
----------------------- March 29, 1996
Sharon A. Cheever
as attorney-in-fact
</TABLE>
II-10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR THE PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000935823
<NAME> PACIFIC ONE
<SERIES>
<NUMBER> 1
<NAME> MONEY MARKET PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 94,486
<INVESTMENTS-AT-VALUE> 94,486
<RECEIVABLES> 1,533
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 96,019
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 70
<TOTAL-LIABILITIES> 70
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 95,975
<SHARES-COMMON-STOCK> 9,579
<SHARES-COMMON-PRIOR> 9,390
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (26)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 95,949
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5,737
<OTHER-INCOME> 0
<EXPENSES-NET> 512
<NET-INVESTMENT-INCOME> 5,225
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 5,225
<EQUALIZATION> (34)
<DISTRIBUTIONS-OF-INCOME> (5,251)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 25,344
<NUMBER-OF-SHARES-REDEEMED> 25,679
<SHARES-REINVESTED> 524
<NET-CHANGE-IN-ASSETS> 1,799
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 386
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 512
<AVERAGE-NET-ASSETS> 96,579
<PER-SHARE-NAV-BEGIN> 10.03
<PER-SHARE-NII> 0.54
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.55
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.02
<EXPENSE-RATIO> 0.53
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR THE PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000935823
<NAME> PACIFIC ONE
<SERIES>
<NUMBER> 2
<NAME> HIGH YIELD BOND PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 80,122
<INVESTMENTS-AT-VALUE> 82,571
<RECEIVABLES> 1,896
<ASSETS-OTHER> 10
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 84,477
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 52
<TOTAL-LIABILITIES> 52
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 80,958
<SHARES-COMMON-STOCK> 8,622
<SHARES-COMMON-PRIOR> 2,843
<ACCUMULATED-NII-CURRENT> 29
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 989
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,449
<NET-ASSETS> 84,425
<DIVIDEND-INCOME> 82
<INTEREST-INCOME> 4,868
<OTHER-INCOME> 0
<EXPENSES-NET> 413
<NET-INVESTMENT-INCOME> 4,537
<REALIZED-GAINS-CURRENT> 990
<APPREC-INCREASE-CURRENT> 3,249
<NET-CHANGE-FROM-OPS> 8,776
<EQUALIZATION> 795
<DISTRIBUTIONS-OF-INCOME> (4,508)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,807
<NUMBER-OF-SHARES-REDEEMED> 2,500
<SHARES-REINVESTED> 472
<NET-CHANGE-IN-ASSETS> 59,087
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 319
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 413
<AVERAGE-NET-ASSETS> 53,315
<PER-SHARE-NAV-BEGIN> 8.91
<PER-SHARE-NII> 0.76
<PER-SHARE-GAIN-APPREC> 0.88
<PER-SHARE-DIVIDEND> 0.76
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.79
<EXPENSE-RATIO> 0.77
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR THE PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000935823
<NAME> PACIFIC ONE
<SERIES>
<NUMBER> 3
<NAME> GOVERNMENT SECURITIES PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 65,905
<INVESTMENTS-AT-VALUE> 66,685
<RECEIVABLES> 4,523
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 71,208
<PAYABLE-FOR-SECURITIES> 11,369
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 72
<TOTAL-LIABILITIES> 11,441
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 57,506
<SHARES-COMMON-STOCK> 5,511
<SHARES-COMMON-PRIOR> 2,229
<ACCUMULATED-NII-CURRENT> 56
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,107
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,098
<NET-ASSETS> 59,767
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,422
<OTHER-INCOME> 1
<EXPENSES-NET> 309
<NET-INVESTMENT-INCOME> 2,114
<REALIZED-GAINS-CURRENT> 2,863
<APPREC-INCREASE-CURRENT> 1,330
<NET-CHANGE-FROM-OPS> 6,307
<EQUALIZATION> 300
<DISTRIBUTIONS-OF-INCOME> (2,184)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,681
<NUMBER-OF-SHARES-REDEEMED> 608
<SHARES-REINVESTED> 209
<NET-CHANGE-IN-ASSETS> 38,278
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (1,630)
<GROSS-ADVISORY-FEES> 227
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 309
<AVERAGE-NET-ASSETS> 37,860
<PER-SHARE-NAV-BEGIN> 9.64
<PER-SHARE-NII> 0.58
<PER-SHARE-GAIN-APPREC> 1.19
<PER-SHARE-DIVIDEND> 0.57
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.84
<EXPENSE-RATIO> 0.82
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR THE PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000935823
<NAME> PACIFIC ONE
<SERIES>
<NUMBER> 4
<NAME> MANAGED BOND PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 124,306
<INVESTMENTS-AT-VALUE> 126,608
<RECEIVABLES> 3,557
<ASSETS-OTHER> 14
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 130,179
<PAYABLE-FOR-SECURITIES> 3,021
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 166
<TOTAL-LIABILITIES> 3,187
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 121,763
<SHARES-COMMON-STOCK> 11,440
<SHARES-COMMON-PRIOR> 5,376
<ACCUMULATED-NII-CURRENT> 127
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,377
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,725
<NET-ASSETS> 126,992
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5,892
<OTHER-INCOME> 4
<EXPENSES-NET> 655
<NET-INVESTMENT-INCOME> 5,241
<REALIZED-GAINS-CURRENT> 5,734
<APPREC-INCREASE-CURRENT> 3,716
<NET-CHANGE-FROM-OPS> 14,691
<EQUALIZATION> 1,230
<DISTRIBUTIONS-OF-INCOME> (5,400)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,715
<NUMBER-OF-SHARES-REDEEMED> 1,157
<SHARES-REINVESTED> 506
<NET-CHANGE-IN-ASSETS> 73,773
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (3,071)
<GROSS-ADVISORY-FEES> 519
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 655
<AVERAGE-NET-ASSETS> 86,713
<PER-SHARE-NAV-BEGIN> 9.90
<PER-SHARE-NII> 0.65
<PER-SHARE-GAIN-APPREC> 1.19
<PER-SHARE-DIVIDEND> 0.64
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.10
<EXPENSE-RATIO> 0.76
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000935823
<NAME> PACIFIC ONE
<SERIES>
<NUMBER> 5
<NAME> GROWTH PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 120,022
<INVESTMENTS-AT-VALUE> 129,567
<RECEIVABLES> 1,048
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 130,616
<PAYABLE-FOR-SECURITIES> 494
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 381
<TOTAL-LIABILITIES> 875
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 111,305
<SHARES-COMMON-STOCK> 6,988
<SHARES-COMMON-PRIOR> 5,468
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (20)
<ACCUMULATED-NET-GAINS> 8,911
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9,545
<NET-ASSETS> 129,741
<DIVIDEND-INCOME> 1,309
<INTEREST-INCOME> 509
<OTHER-INCOME> 0
<EXPENSES-NET> 862
<NET-INVESTMENT-INCOME> 956
<REALIZED-GAINS-CURRENT> 8,911
<APPREC-INCREASE-CURRENT> 14,638
<NET-CHANGE-FROM-OPS> 24,505
<EQUALIZATION> 76
<DISTRIBUTIONS-OF-INCOME> (976)
<DISTRIBUTIONS-OF-GAINS> (13)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,533
<NUMBER-OF-SHARES-REDEEMED> 2,071
<SHARES-REINVESTED> 58
<NET-CHANGE-IN-ASSETS> 48,290
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 13
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 709
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 862
<AVERAGE-NET-ASSETS> 109,161
<PER-SHARE-NAV-BEGIN> 14.90
<PER-SHARE-NII> 0.15
<PER-SHARE-GAIN-APPREC> 3.67
<PER-SHARE-DIVIDEND> 0.15
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.57
<EXPENSE-RATIO> 0.79
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR THE PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000935823
<NAME> PACIFIC ONE
<SERIES>
<NUMBER> 6
<NAME> EQUITY INCOME PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 187,217
<INVESTMENTS-AT-VALUE> 204,936
<RECEIVABLES> 1,636
<ASSETS-OTHER> 214
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 206,786
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 133
<TOTAL-LIABILITIES> 133
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 177,898
<SHARES-COMMON-STOCK> 11,351
<SHARES-COMMON-PRIOR> 5,343
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (18)
<ACCUMULATED-NET-GAINS> 11,054
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 17,719
<NET-ASSETS> 206,653
<DIVIDEND-INCOME> 2,852
<INTEREST-INCOME> 281
<OTHER-INCOME> 0
<EXPENSES-NET> 1,070
<NET-INVESTMENT-INCOME> 2,063
<REALIZED-GAINS-CURRENT> 12,389
<APPREC-INCREASE-CURRENT> 19,133
<NET-CHANGE-FROM-OPS> 33,585
<EQUALIZATION> 430
<DISTRIBUTIONS-OF-INCOME> (2,080)
<DISTRIBUTIONS-OF-GAINS> (55)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,041
<NUMBER-OF-SHARES-REDEEMED> 1,161
<SHARES-REINVESTED> 128
<NET-CHANGE-IN-ASSETS> 131,570
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (1,280)
<GROSS-ADVISORY-FEES> 841
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,070
<AVERAGE-NET-ASSETS> 129,701
<PER-SHARE-NAV-BEGIN> 14.05
<PER-SHARE-NII> 0.26
<PER-SHARE-GAIN-APPREC> 4.16
<PER-SHARE-DIVIDEND> 0.26
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.21
<EXPENSE-RATIO> 0.83
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR THE PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000935823
<NAME> PACIFIC ONE
<SERIES>
<NUMBER> 7
<NAME> MULTI-STRATEGY PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 128,088
<INVESTMENTS-AT-VALUE> 137,459
<RECEIVABLES> 1,790
<ASSETS-OTHER> 74
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 139,323
<PAYABLE-FOR-SECURITIES> 4,722
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 100
<TOTAL-LIABILITIES> 4,822
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 118,536
<SHARES-COMMON-STOCK> 9,471
<SHARES-COMMON-PRIOR> 6,747
<ACCUMULATED-NII-CURRENT> 30
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6,564
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9,371
<NET-ASSETS> 134,501
<DIVIDEND-INCOME> 1,237
<INTEREST-INCOME> 3,096
<OTHER-INCOME> 1
<EXPENSES-NET> 839
<NET-INVESTMENT-INCOME> 3,495
<REALIZED-GAINS-CURRENT> 7,345
<APPREC-INCREASE-CURRENT> 11,136
<NET-CHANGE-FROM-OPS> 21,976
<EQUALIZATION> 272
<DISTRIBUTIONS-OF-INCOME> (3,457)
<DISTRIBUTIONS-OF-GAINS> (12)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,300
<NUMBER-OF-SHARES-REDEEMED> 838
<SHARES-REINVESTED> 262
<NET-CHANGE-IN-ASSETS> 55,354
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (776)
<GROSS-ADVISORY-FEES> 650
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 839
<AVERAGE-NET-ASSETS> 100,215
<PER-SHARE-NAV-BEGIN> 11.73
<PER-SHARE-NII> 0.45
<PER-SHARE-GAIN-APPREC> 2.47
<PER-SHARE-DIVIDEND> 0.45
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.20
<EXPENSE-RATIO> 0.84
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR THE PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000935823
<NAME> PACIFIC ONE
<SERIES>
<NUMBER> 8
<NAME> INTERNATIONAL PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 175,732
<INVESTMENTS-AT-VALUE> 184,405
<RECEIVABLES> 1,345
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 185,750
<PAYABLE-FOR-SECURITIES> 3,343
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 208
<TOTAL-LIABILITIES> 3,551
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 171,521
<SHARES-COMMON-STOCK> 14,090
<SHARES-COMMON-PRIOR> 6,360
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (1,286)
<ACCUMULATED-NET-GAINS> 3,299
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8,665
<NET-ASSETS> 182,199
<DIVIDEND-INCOME> 2,889
<INTEREST-INCOME> 735
<OTHER-INCOME> 0
<EXPENSES-NET> 1,354
<NET-INVESTMENT-INCOME> 2,270
<REALIZED-GAINS-CURRENT> 3,100
<APPREC-INCREASE-CURRENT> 6,427
<NET-CHANGE-FROM-OPS> 11,797
<EQUALIZATION> 1,864
<DISTRIBUTIONS-OF-INCOME> (3,358)
<DISTRIBUTIONS-OF-GAINS> (58)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9,290
<NUMBER-OF-SHARES-REDEEMED> 1,823
<SHARES-REINVESTED> 263
<NET-CHANGE-IN-ASSETS> 106,228
<ACCUMULATED-NII-PRIOR> 51
<ACCUMULATED-GAINS-PRIOR> 8
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,031
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,354
<AVERAGE-NET-ASSETS> 121,321
<PER-SHARE-NAV-BEGIN> 11.94
<PER-SHARE-NII> 0.33
<PER-SHARE-GAIN-APPREC> 0.91
<PER-SHARE-DIVIDEND> 0.25
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.93
<EXPENSE-RATIO> 1.12
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR THE PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000935823
<NAME> PACIFIC ONE
<SERIES>
<NUMBER> 9
<NAME> EQUITY INDEX PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 115,791
<INVESTMENTS-AT-VALUE> 137,077
<RECEIVABLES> 648
<ASSETS-OTHER> 28
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 137,754
<PAYABLE-FOR-SECURITIES> 203
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 32
<TOTAL-LIABILITIES> 235
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 111,798
<SHARES-COMMON-STOCK> 7,880
<SHARES-COMMON-PRIOR> 3,119
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (9)
<ACCUMULATED-NET-GAINS> 4,558
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 21,172
<NET-ASSETS> 137,519
<DIVIDEND-INCOME> 1,861
<INTEREST-INCOME> 254
<OTHER-INCOME> 6
<EXPENSES-NET> 330
<NET-INVESTMENT-INCOME> 1,791
<REALIZED-GAINS-CURRENT> 4,554
<APPREC-INCREASE-CURRENT> 16,956
<NET-CHANGE-FROM-OPS> 23,301
<EQUALIZATION> 288
<DISTRIBUTIONS-OF-INCOME> (1,800)
<DISTRIBUTIONS-OF-GAINS> (6)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,687
<NUMBER-OF-SHARES-REDEEMED> 1,039
<SHARES-REINVESTED> 113
<NET-CHANGE-IN-ASSETS> 96,907
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 10
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 195
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 330
<AVERAGE-NET-ASSETS> 79,109
<PER-SHARE-NAV-BEGIN> 13.02
<PER-SHARE-NII> 0.34
<PER-SHARE-GAIN-APPREC> 4.43
<PER-SHARE-DIVIDEND> 0.34
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.45
<EXPENSE-RATIO> 0.42
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR THE PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000935823
<NAME> PACIFIC ONE
<SERIES>
<NUMBER> 10
<NAME> GROWTH LT PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 177,754
<INVESTMENTS-AT-VALUE> 198,622
<RECEIVABLES> 3,005
<ASSETS-OTHER> 16
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 201,643
<PAYABLE-FOR-SECURITIES> 543
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 315
<TOTAL-LIABILITIES> 858
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 180,342
<SHARES-COMMON-STOCK> 14,221
<SHARES-COMMON-PRIOR> 4,443
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (427)
<ACCUMULATED-NET-GAINS> 164
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 20,706
<NET-ASSETS> 200,785
<DIVIDEND-INCOME> 634
<INTEREST-INCOME> 1,438
<OTHER-INCOME> 0
<EXPENSES-NET> 1,058
<NET-INVESTMENT-INCOME> 1,014
<REALIZED-GAINS-CURRENT> 12,228
<APPREC-INCREASE-CURRENT> 18,562
<NET-CHANGE-FROM-OPS> 31,804
<EQUALIZATION> 181
<DISTRIBUTIONS-OF-INCOME> (815)
<DISTRIBUTIONS-OF-GAINS> (12,566)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 12,137
<NUMBER-OF-SHARES-REDEEMED> 3,322
<SHARES-REINVESTED> 963
<NET-CHANGE-IN-ASSETS> 151,411
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (125)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 845
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,058
<AVERAGE-NET-ASSETS> 113,131
<PER-SHARE-NAV-BEGIN> 11.11
<PER-SHARE-NII> 0.10
<PER-SHARE-GAIN-APPREC> 3.96
<PER-SHARE-DIVIDEND> 0.10
<PER-SHARE-DISTRIBUTIONS> 0.95
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.12
<EXPENSE-RATIO> 0.94
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR THE PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000935823
<NAME> PACIFIC ONE
<SERIES>
<NUMBER> 11
<NAME> EQUITY PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 96,129
<INVESTMENTS-AT-VALUE> 107,853
<RECEIVABLES> 372
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 108,226
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 90
<TOTAL-LIABILITIES> 90
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 88,141
<SHARES-COMMON-STOCK> 6,174
<SHARES-COMMON-PRIOR> 5,149
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (62)
<ACCUMULATED-NET-GAINS> 8,332
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11,725
<NET-ASSETS> 108,136
<DIVIDEND-INCOME> 606
<INTEREST-INCOME> 326
<OTHER-INCOME> 0
<EXPENSES-NET> 697
<NET-INVESTMENT-INCOME> 235
<REALIZED-GAINS-CURRENT> 9,658
<APPREC-INCREASE-CURRENT> 7,633
<NET-CHANGE-FROM-OPS> 17,526
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (296)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,728
<NUMBER-OF-SHARES-REDEEMED> 723
<SHARES-REINVESTED> 20
<NET-CHANGE-IN-ASSETS> 35,011
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (1,326)
<GROSS-ADVISORY-FEES> 565
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 697
<AVERAGE-NET-ASSETS> 87,146
<PER-SHARE-NAV-BEGIN> 14.20
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 3.33
<PER-SHARE-DIVIDEND> 0.06
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.52
<EXPENSE-RATIO> 0.80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
CONSOLIDATED SCHEDULE OF FINANCIAL DATA
FOR THE PERIOD ENDING DECEMBER 31, 1995
</LEGEND>
<CIK> 0000935823
<NAME> PACIFIC ONE
<SERIES>
<NUMBER> 12
<NAME> BOND AND INCOME PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 49,701
<INVESTMENTS-AT-VALUE> 55,907
<RECEIVABLES> 993
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 56,901
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 48
<TOTAL-LIABILITIES> 48
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 51,130
<SHARES-COMMON-STOCK> 4,368
<SHARES-COMMON-PRIOR> 3,269
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (484)
<ACCUM-APPREC-OR-DEPREC> 6,207
<NET-ASSETS> 56,853
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,297
<OTHER-INCOME> 0
<EXPENSES-NET> 339
<NET-INVESTMENT-INCOME> 2,958
<REALIZED-GAINS-CURRENT> 294
<APPREC-INCREASE-CURRENT> 8,971
<NET-CHANGE-FROM-OPS> 12,223
<EQUALIZATION> 35
<DISTRIBUTIONS-OF-INCOME> (2,958)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,501
<NUMBER-OF-SHARES-REDEEMED> 650
<SHARES-REINVESTED> 248
<NET-CHANGE-IN-ASSETS> 22,775
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (778)
<GROSS-ADVISORY-FEES> 255
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 339
<AVERAGE-NET-ASSETS> 42,695
<PER-SHARE-NAV-BEGIN> 10.42
<PER-SHARE-NII> 0.82
<PER-SHARE-GAIN-APPREC> 2.59
<PER-SHARE-DIVIDEND> 0.81
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.02
<EXPENSE-RATIO> 0.80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
EXHIBIT 99.1(b)
Memorandum Establishing Two New Variable Accounts -
Aggressive Equity and Emerging Markets Portfolios
<PAGE>
OFFICE MEMORANDUM [Logo of Pacific Mutual]
DATE February 8, 1996
TO Mr. Glenn S. Schafer
FROM Ms. Diane N. Ledger
SUBJECT Authorization of the Establishment of the Variable Accounts that will
each invest in corresponding underlying Emerging Markets and Aggressive
Equity Portfolios of Pacific Select Fund
The addition of the Emerging Markets Portfolio and Aggressive Equity Portfolio
to Pacific Select Fund was approved by the Board of Trustees of the Fund on
November 17, 1995. The objective of the Emerging Markets Portfolio is to seek
long-term growth of capital. The objective of the Aggressive Equity Portfolio
is to seek capital appreciation.
The Board of Trustees of Pacific Select Fund also approved the appointment of
Blairlogie Capital Management to serve as the Portfolio Manager of the Emerging
Markets Portfolio and Columbus Circle Investors to serve as the Portfolio
Manager of the Aggressive Equity Portfolio.
On behalf of Pacific Mutual Life Insurance Company, the following is hereby
authorized:
The establishment of two additional Variable accounts within each of the
Pacific Select, Pacific Select Exec, Pacific COLI, Pacific Select Variable
Annuity and Separate Account A Separate Accounts. Each of the Variable
Accounts is to invest exclusively in shares of its corresponding underlying
portfolio of the Pacific Select Fund.
Authorized by: /s/ GLENN S. SCHAFER Date: February 8, 1996
Glenn S. Schafer
President and Director
<PAGE>
EXHIBIT 99.3(a)
Distribution Agreement between Pacific Mutual
and Pacific Equities Network ("PEN")
<PAGE>
DISTRIBUTION AGREEMENT
AGREEMENT made as of the 2nd day of January, 1996, by and between Pacific Mutual
Life Insurance Company, a California company, ("Pacific Mutual") on its own
behalf and on behalf of its Separate Account A (the "Separate Account"), and
Pacific Equities Network, a California corporation ("PEN").
WHEREAS, Pacific Mutual has established and maintains the Separate Account, a
separate investment account, for the purpose of selling variable annuity
contracts ("Contracts") to commence after the effectiveness of the Registration
Statement relating thereto filed with the Securities and Exchange Commission on
Form N-4 pursuant to the Securities Act of 1933, as amended (the "1933 Act"),
through PEN, acting as general agent of Pacific Mutual;
WHEREAS, the Separate Account is or will be registered as a unit investment
trust under the Investment Company Act of 1940 (the "1940 Act");
WHEREAS, PEN is registered as a broker-dealer under the Securities Exchange Act
of 1934 (the "1934 Act") and is a member of the National Association of
Securities Dealers, Inc. ("NASD"); and
WHEREAS, Pacific Mutual desires to retain PEN as the distributor and principal
underwriter to provide for the sale and distribution to the public of any
Contracts issued by Pacific Mutual and funded by interests in the General
Account of Pacific Mutual and in the Separate Account and PEN is willing to
render such services;
NOW THEREFORE, in consideration of the mutual promises and covenants hereinafter
set forth, the parties agree as follows:
1. Principal Underwriter. Pacific Mutual hereby appoints PEN, during the term
of this Agreement, subject to the registration requirements of the 1933 Act and
the 1940 Act and the provisions of the 1934 Act, to be the distributor and
principal underwriter for the sale of any Contracts to the public in each state
and other jurisdiction in which the Contracts may be lawfully sold. Pacific
Mutual also appoints PEN as its independent general agent for sale of its
Contracts (including any riders which Pacific Mutual may make available in
connection therewith or any contracts for which the Contracts may be exchanged
or converted) and for sale of such other annuity contracts or insurance
contracts as Pacific Mutual may, from time to time, authorize in writing by
amendment hereto. PEN shall offer the Contracts for sale and distribution at
premium rates set by Pacific Mutual.
Notwithstanding any other provision of this Agreement, it is understood and
agreed that Pacific Mutual shall at all times retain the ultimate responsibility
for and control of all functions performed pursuant to this Agreement, and for
marketing any and all Contracts, and reserves the right to direct, approve or
disapprove any action hereunder taken on its behalf by PEN.
1. Selling Agreements. PEN is hereby authorized to enter into separate written
agreements, on such terms and conditions as PEN determines are not inconsistent
with this Agreement, with such
<PAGE>
organizations which agree to participate as a general agent and/or broker-dealer
in the distribution of the Contracts and to use their best efforts to solicit
applications for Contracts. Any such broker-dealer (hereinafter "Broker") shall
be both registered as a broker-dealer under the 1934 Act and a member of the
NASD. Except as provided in Section 3 hereof, PEN shall be responsible for
ensuring that Broker and its agents of representatives and general agent and its
sub-agents soliciting applications for Contracts shall be duly and appropriately
licensed, registered and otherwise qualified for the sale of any such Contracts
(and the riders and other contracts offered in connection therewith) under the
annuity laws and any applicable blue sky laws of each state or other
jurisdiction in which such Contracts may be lawfully sold and in which Pacific
Mutual is licensed to sell such Contracts. Pacific Mutual shall undertake to
appoint Broker's qualified agents or representatives and general agent's sub-
agents as life insurance agents of Pacific Mutual, provided that Pacific Mutual
reserves the right to refuse to appoint any proposed representative, agent, or
sub-agent, or once appointed, to terminate such appointment. PEN shall be
responsible for ensuring that Broker and general agent supervise its agents,
representatives, or sub-agents.
2. Life Insurance Agents. Pacific Mutual shall be responsible for ensuring
that Broker and its agents or representatives and general agent and its sub-
agents meet all qualifications and hold any licenses or authorizations that may
be required for the solicitation or sale of any Contracts under the insurance
laws of the applicable jurisdictions.
3. Suitability. Pacific Mutual desires to ensure that Contracts will be sold
to purchasers for whom the Contract will be suitable. PEN shall take reasonable
steps to ensure that the various representatives of Broker and sub-agents of
general agents shall not make recommendations to an applicant to purchase a
Contract in the absence of reasonable grounds to believe the purchase of the
Contract is suitable for such applicant. While not limited to the following, a
determination of suitability shall be based on information furnished to a
representative or sub-agent after reasonable inquiry of such applicant
concerning the applicant's other security holdings, retirement and investment
objectives, financial situation and needs, and the likelihood that the applicant
will continue to make any premium payments contemplated by the Contracts and
will keep the Contract in force for a sufficient period of time so that Pacific
Mutual's acquisition costs are amortized over a reasonable period of time.
4. Conformity with Registration Statement and Approved Sales Materials. In
performing its duties as distributor, PEN will act in conformity with the
registration statement and with the instructions and directions of Pacific
Mutual, the requirements of the 1933 Act, the 1940 Act, the 1934 Act, and all
other applicable federal and state laws and regulations. PEN shall not give any
information nor make any representations, concerning any aspect of the Contract
or of Pacific Mutual's operations to any persons or entity unless such
information or representations are contained in the registration statement and
the pertinent prospectus filed with the Securities and Exchange Commission, or
are contained in sales or promotional literature approved by Pacific Mutual.
PEN will not use and will take reasonable steps to ensure Broker will not use
any sales promotion material and advertising which has not been previously
approved by Pacific Mutual.
5. Applications. Completed applications for Contracts solicited by such Broker
through its agents or representatives or by general agent through its sub-agents
shall be transmitted directly to Pacific
<PAGE>
Mutual. All payments under the Contracts shall be made by check to Pacific
Mutual or by other method acceptable to Pacific Mutual, and if received by PEN,
shall be held at all times in a fiduciary capacity and remitted promptly to
Pacific Mutual. All such payments will be the property of Pacific Mutual.
Pacific Mutual has the sole authority to approve or reject such applications or
payments and maintains ultimate responsibility for underwriting. Anything in
this Agreement to the contrary notwithstanding, Pacific Mutual retains the
ultimate right to control the sale of the Contracts and to appoint and discharge
life insurance agents of Pacific Mutual.
6. Standard of Care. PEN shall be responsible for exercising reasonable care
in carrying out the provisions of this Agreement.
7. Reports and Records. PEN shall be responsible for maintaining and
preserving accurate records relating to matters pertaining to this Agreement and
the Broker and general agent and their agents, representatives or sub-agents who
are licensed, registered and otherwise qualified to sell the Contracts, as
required by applicable laws and regulations, or as Pacific Mutual may reasonable
request for its own record-keeping or accounting purposes; calculating and
furnishing the fees payable to Brokers or general agents; and for furnishing
periodic reports to Pacific Mutual as to the sale of Contracts made pursuant to
this Agreement. The books, accounts and records of Pacific Mutual, the Separate
Account and PEN shall be maintained so as to clearly and accurately disclose the
nature and details of the transactions.
8. Investigation and Procedures. PEN and Pacific Mutual agree to cooperate
fully in any regulatory investigation or proceeding or judicial proceeding
arising in connection with any Contracts distributed under this Agreement. PEN
further agrees to furnish regulatory authorities with any information or reports
in connection with such services which may be requested in order to ascertain
whether the operations of Pacific Mutual and the Separate Account are being
conducted in a manner consistent with applicable laws and regulations. PEN and
Pacific Mutual further agree to cooperate fully in any securities regulatory
investigation or proceeding with respect to Pacific Mutual, PEN, their
affiliates and their agents or representatives to the extent that such
investigation or proceeding is in connection with any Contracts distributed
under this Agreement. Without limiting the foregoing:
(a) PEN will be notified promptly of any customer complaint or notice of any
regulatory investigation or proceeding or judicial proceeding received by
Pacific Mutual with respect to PEN or any agent, representative, or sub-agent of
a Broker or general agent or which may affect Pacific Mutual's issuance of any
contract sold under this Agreement; and
(b) PEN will promptly notify Pacific Mutual of any customer complaint or notice
of any regulatory investigation or proceeding received by PEN or its affiliates
with respect to PEN or any agent, representative, or sub-agent of a Broker or
general agent in connection with any Contract distributed under this Agreement
of any activity in connection with any such contract.
In the case of a customer complaint, PEN and Pacific Mutual will cooperate in
investigating such complaint and any response will be sent to the other party to
this Agreement for approval not less than five business days prior to its being
sent to the customer or regulatory authority, except that if
<PAGE>
a more prompt response is required, the proposed response shall be communicated
by telephone, telegraph or telecopier.
1. Indemnification. Pacific Mutual hereby agrees to indemnify and hold
harmless PEN and its officers and directors, and employees for any expenses
(including legal expenses), losses, claims, damages, or liabilities incurred by
reason of any untrue or alleged untrue statement or representation of a material
fact or any omission or alleged omission to state a material fact required to be
stated to make other statements not misleading, if made in reliance on any
prospectus, registration statement, post-effective amendment thereof, or sales
materials supplied or approved by Pacific Mutual or the Separate Account.
Pacific Mutual shall reimburse each such person for any legal or other expenses
reasonably incurred in connection with investigating or defending any such loss,
liability, damage, or claim. However, in no case shall Pacific Mutual be
required to indemnify for any expenses, losses, claims, damages or liabilities
which have resulted from the willful misfeasance, bad faith, negligence,
misconduct, or wrongful act of PEN.
PEN hereby agrees to indemnify and hold harmless Pacific Mutual, its officers,
directors, and employees, and the Separate Account for any expenses, losses,
claims, damages, or liabilities arising out of or based upon any of the
following in connection with the offer or sale of any Contract: 1) except for
such statements made in reliance on any prospectus, registration statement or
sales material supplied or approved by Pacific Mutual or the Separate Account,
any untrue or alleged untrue statement or representation made; 2) any failure to
deliver a currently effective prospectus; 3) the use of any unauthorized sales
literature by any officer, employee, agent, or sub-agent of PEN, Broker or
general agent; or 4) any willful misfeasance, bad faith, negligence, misconduct
or wrongful act. Pen shall reimburse each such person for any legal or other
expenses reasonably incurred in connection with investigating or defending any
such loss, liability, damage, or claim.
Promptly after receipt by a party entitled to indemnification ("Indemnified
Party") of notice of the commencement of any action, if a claim for
indemnification in respect thereof is to be made against Pacific Mutual or PEN
("Indemnifying Party") such Indemnified Party will notify Indemnifying Party in
writing of the commencement thereof, but failure to notify the Indemnifying
Party of any claim shall not relieve it from any liability which it may have to
the person against whom such action is brought otherwise than on account of this
Agreement contained in this Section 10. The Indemnifying Party will be entitled
to participate in the defense of the Indemnified Party, but such participation
will not relieve such Indemnifying Party of the obligation to reimburse the
Indemnified Party for reasonable legal and other expenses incurred by such
Indemnified Party in defending himself.
1. Agent of Pacific Mutual or Separate Account. Any person, even though also
an officer, director, employee, or agent of PEN, who may be or become an
officer, director, employee, or agent of Pacific Mutual or the Separate Account
shall be deemed, when rendering services to Pacific Mutual or the Separate
Account or acting in any business of Pacific Mutual or the Separate Account, to
be rendering such services to or acting solely for Pacific Mutual or the
Separate Account and not as an officer, director, employee, or agent or one
under the control or direction of PEN even though paid by PEN. Likewise, any
person, even though also an officer, director, employee, or agent of Pacific
Mutual or the Separate Account, who may be or become an officer, director,
employee, or agent of
<PAGE>
PEN shall be deemed when rendering services to PEN or acting in any business of
PEN to be rendering such services to or acting solely for PEN and not as an
officer, director, employee, or agent or one under the control or direction of
Pacific Mutual or the Separate Account even though paid by Pacific Mutual or the
Separate Account.
2. Books and Records. It is expressly understood and agreed that all
documents, reports, records, books, files, and other materials relating to this
Agreement and the services to be performed hereunder shall be the sole property
of Pacific Mutual and the Separate account and that any such property held by
PEN shall be held by PEN only as agent, during the effective term of this
Agreement. This material shall be delivered to Pacific Mutual upon the
termination of this Agreement free from any claim or retention of rights by PEN.
During the term of this Agreement and for a period of three years from the date
of termination of this Agreement, PEN will not disclose or use any records or
information and will regard and preserve as confidential all information related
to the business of Pacific Mutual or the Separate account that may be obtained
by PEN from any source as a result of this Agreement and will disclose such
information only if Pacific Mutual or the Separate Account has authorized such
disclosure, or if such disclosure is expressly required by applicable federal or
state regulatory authorities. PEN further acknowledges and agrees that, in the
event of a breach or threatened breach by it of the provisions of this Section
12, Pacific Mutual will have no adequate remedy in moneys or damages and,
accordingly, Pacific Mutual shall be entitled in its discretion to seek an
injunction against such breach. However, no specification in this Agreement of
a specific legal or equitable remedy shall be construed as a waiver or
prohibition against any other legal or equitable remedy in the event of a breach
of a provision of this Agreement.
3. Employees. PEN will not employ, except with the prior written approval of
the Commissioner of Insurance of the State of California, in any material
connection with the handling of the Separate Account's assets any person who, to
the knowledge of PEN:
(a) in the last 10 years has been convicted of any felony or misdemeanor arising
out of conduct involving embezzlement, fraudulent conversion, or
misappropriation of funds or securities, or involving violations of Sections
1341, 1342, or 1343 of Title 18, United States Code; or
(b) within the last 10 years has been found by any state regulatory authority to
have violated or has acknowledged violation of any provision of any state
insurance law involving fraud, deceit, or knowing misrepresentation; or
(c) within the last 10 years has been found by any federal or state regulatory
authorities to have violated or have acknowledged violation of any provision of
federal or state securities laws involving fraud, deceit, or knowing
misrepresentation.
4. Termination. This Agreement shall terminate automatically upon its
assignment without the prior written consent of both parties. This Agreement
may be terminated at any time, for any reason, by either party on 60 days'
written notice to the other party, without the payment of any penalty. Upon
termination of this Agreement, all authorizations, rights and obligations shall
cease except the obligation to settle accounts hereunder, including commissions
on premiums subsequently received for Contracts in effect at time of
termination, and the agreements contained in Sections 9 and 10
<PAGE>
hereof.
5. Regulation. This Agreement shall be subject to the provisions of the 1940
Act and the 1934 Act and the rules, regulations and rulings thereunder, and of
the applicable rules and regulations of the NASD, and applicable state insurance
law and other applicable law, from time to time in effect, and the terms hereof
shall be interpreted and construed in accordance therewith.
6. Independent Contractor. PEN shall act as an independent contractor and
nothing herein contained shall constitute PEN or its agents, officers or
employees as agents, officers, or employees of Pacific Mutual in connection with
the sale of any Contract.
7. Notices. Notices of any kind to be given to PEN by Pacific Mutual or the
Separate account shall be in writing and shall be duly given if mailed, first
class postage prepaid, or delivered to PEN at 700 Newport Center Drive, Newport
Beach, California 92660, or at such other address or to such individual as shall
be specified by PEN. Notices of any kind to be given to Pacific Mutual or the
Separate Account shall be in writing and shall be duly given if mailed, first
class postage prepaid, or delivered to them at 700 Newport Center Drive, Post
Office Box 9000, Newport Beach, California 92660, at or at such other address or
to such individual as shall be specified by Pacific Mutual.
If any provisions 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.
1. Entire Agreement; Amendments. This Agreement (a) sets forth the entire
understanding of the parties with respect to the subject matter hereof; (b)
incorporates and merges any and all previous agreements, understandings, and
communications, oral or written; and (c) may not be modified, amended, or waived
except by a written instrument duly executed by the party against whom such
modification, amendment, or waiver is sought to be enforced.
2. Counterparts. This Agreement may be executed in any number of counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument.
3. Governing Law. This Agreement shall be construed and enforced in accordance
with and governed by the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
PACIFIC MUTUAL LIFE INSURANCE COMPANY
By: /s/ T C SUTTON
____________________________________
Chairman and Chief Executive Officer
ATTEST:
/s/ AUDREY L. MILFS
__________________________________________
<PAGE>
Secretary
PACIFIC EQUITIES NETWORK
By: /s/ GERALD W. ROBINSON
____________________________________
President
WITNESS:
/s/ AUDREY L. MILFS
__________________________________________
<PAGE>
QUALIFIED PLAN LOAN ENDORSEMENT
This Endorsement is part of your Contract and should be attached to it. All
terms of the base Contract which do not conflict with this Endorsement's terms
apply to this Endorsement. In the event of any conflict between the terms of
this Endorsement and the terms of the Contract, the terms of this Endorsement
shall prevail over the terms of the base policy.
IF YOUR CONTRACT OFFERS THE GUARANTEED INTEREST OPTIONS, AMOUNTS ALLOCATED TO
THOSE OPTIONS ARE NOT ELIGIBLE TO PARTICIPATE IN CONTRACT LOANS AND WILL NOT BE
CONSIDERED WHEN MAKING PROPORTIONATE TRANSFERS TO OR FROM THE LOAN ACCOUNT.
Adverse tax consequences may result if you fail to meet the repayments
requirements for your loan. The tax and ERISA rules relating to Contract loans
are complex and in many cases unclear. For these reasons, and because the rules
vary depending on the individual circumstances of each Contract, WE ADVISE THAT
--------------
YOU CONSULT WITH A QUALIFIED TAX ADVISER before exercising the loan provisions
- ----------------------------------------
of your Contract.
CONTRACT LOANS
If your Contract is issued under a Qualified Plan under code Section 401 or 403
and your Qualified Plan permits, you may request a loan using your Contract
Value as the only security.
LOAN PROCEDURES - Your loan request must be submitted on our Loan Request Form.
You may submit a loan request at any time after your first Contract Anniversary
and before your Annuity Date. If approved, your loan will be effective as of
the end of the Business Day on which we receive the Loan Request Form. We will
normally forward proceeds of your loan to you within seven days after the
effective date of your loan. A $100 loan administrative fee will be deducted
from your loan proceeds, however we reserve the right to increase this fee up to
a maximum of $500.
LOAN ACCOUNT - On the effective date of your loan, we will transfer an amount
equal to the principal amount of your loan into an account called the Loan
Account. We will transfer amounts to the Loan Account proportionately from your
Investment Options based on your Account Value in each. We will credit interest
on amounts in the Loan Account at a rate equal to an annual rate that is two
percentage points lower than the annual loan interest rate charged on your loan.
Interest earned will accrue daily beginning on the day following the effective
day of the loan. The interest credited will be transferred from the Loan
Account to the Investment Options once a year according to your most recent
allocation instructions.
As your loan is repaid, the amount of the repayment will be transferred back to
your Investment Options in the same proportion as your most recent allocation
instructions.
LOAN TERMS - You may have only one loan outstanding at any time. The minimum
loan amount is $1,000 and the maximum loan amount is the least of:
. 50% of your Contract Value; or
. $50,000 less your highest outstanding Contract Debt during the 12-month
period immediately preceding the effective date of your loan.
You should refer to the terms of your particular Qualified Plan for any
additional loan restrictions. If you have other loans outstanding pursuant to
other Qualified Plans, the amount you may borrow may be further restricted.
<PAGE>
LOAN INTEREST RATE - You will be charged interest on your Contract Debt at an
annual rate, set at the time the loan is made, equal to the higher of 5% or the
Moody's Corporate Bond Yield Average-Monthly Corporates, as published by Moody's
Investors Service, Inc., or its successor, for the most recently available
calendar month.In the event that the Moody's Corporate Bond Yield Average
Monthly Corporates is no longer published, we will use a substantially similar
average as established by regulation within the state in which this Contract is
delivered.
Interest charged will accrue daily beginning on the day your loan is effective.
We will notify you of the current Loan Interest Rate when you make a Contract
loan.
REPAYMENT TERMS - You must repay principal and interest of any loan within five
years after its effective date. If you have certified to us that your loan
proceeds will be used to acquire a principal residence for yourself, you may
request a loan for thirty years. In either case, you must repay your loan prior
to your Annuity Date.
Your loan, including principal and accrued interest, must be repaid in quarterly
installments. An installment will be due each quarter on the date corresponding
to your loan effective date, beginning with the first such date following the
effective date of your loan. You may prepay your loan at any time. If you
prepay your entire outstanding principal, we will bill you for any accrued
interest. Your loan will be considered repaid only when the interest due has
also been paid.
Subject to any necessary approval of state insurance authorities, we will treat
all payments you send us as purchase payments unless you specifically indicate
that your payment is a loan repayment. Any repayments in excess of the amount
then due will be refunded to you, unless such amount is sufficient to pay the
balance of your loan.
If a loan payment is not made when due, interest will continue to accrue and we
will declare the entire remaining loan balance in default. At that time, we
will send written notification of the amount needed to bring the loan back to a
current status. You will have sixty (60) days from the date on which the loan
was declared in default (the "grace period") to make the required payment. If
the required payment is not received by the end of the grace period, the
defaulted loan balance plus accrued interest will be withdrawn from your
Contract Value, if amounts under your Contract are eligible for distribution. If
those amounts are not eligible for distribution, the defaulted loan balance plus
accrued interest will be considered a Deemed Distribution and will be withdrawn
when such values become eligible for Distribution. In either case, the
Distribution or the Deemed Distribution will be considered a currently taxable
event, will be subject to the mandatory 20% federal withholding and may be
subject to the early withdrawal tax penalty.
If there is a Deemed Distribution under your Contract and to the extent allowed
by law, any future withdrawals will first be applied as repayment of the
defaulted Contract Debt, including accrued interest. Any amounts withdrawn and
applied as repayment of loan principle will be withdrawn from the Loan Account.
Any amounts withdrawn and applied as repayment of interest due will be withdrawn
from your Investment Options on a proportionate basis relative to the Account
Value in each account.
We reserve the right to amend the provisions of this rider in order to comply
with changes in the Code or changes in interpretations of the code.
PACIFIC MUTUAL LIFE INSURANCE COMPANY
<PAGE>
EXHIBIT 99.8(d)
ADDENDUM TO FUND PARTICIPATION AGREEMENT
----------------------------------------
(to add Aggressive Equity and Emerging Markets Portfolios)
<PAGE>
ADDENDUM TO PARTICIPATION AGREEMENT
-----------------------------------
The Participation Agreement, made the 6th day of November, 1992 and
subsequently amended on January 4, 1994 and August 15, 1994, by and between
PACIFIC MUTUAL LIFE INSURANCE COMPANY (the "Company"), a life insurance
company domiciled in California, on its behalf and on behalf of the segregated
asset accounts of the Company listed on Exhibit A to this Agreement (the
"Separate Accounts"); Pacific Select Fund (the "Fund"), a Massachusetts
business trust; and Pacific Equities Network ("Distributor"), a California
Corporation (the "Agreement") is hereby amended by the addition of the
provisions set forth in this Addendum to the Agreement ("Addendum"), which
is made this 20th day of November, 1995.
WITNESSETH:
WHEREAS, the Fund is authorized to issue separate classes of shares of
beneficial interest ("Shares") each representing an interest in a separate
portfolio of assets known as a "series" and each series has its own
investment objective, policies, and limitations; and
WHEREAS, the Fund is available to offer shares of one or more of its
series to separate accounts of insurance companies that fund variable
life insurance policies and variable annuity contracts ("Variable
Contracts"); and
WHEREAS, the Fund currently consists of twelve separate series
designated as the Money Market Portfolio, Managed Bond Portfolio, High
Yield Bond Portfolio, Government Securities Portfolio, Growth Portfolio,
Equity Income Portfolio, Multi-Strategy Portfolio, International
Portfolio, Equity Index Portfolio, Growth LT Portfolio, Equity Portfolio
and Bond and Income Portfolio (each referred to as a "Series" in the
Agreement, and hereinafter referred to as a "Portfolio"); and
WHEREAS, the Fund intends to establish two additional Portfolios to
be designated as the Emerging Markets Portfolio and Aggressive Equity
Portfolio; and
NOW THEREFORE, in consideration of the mutual promises and covenants
contained in this Addendum, it is agreed between the parties hereto as
follows:
The Agreement is amended by replacing the second paragraph
with the following language:
"WHEREAS, the Fund is available to offer shares of one or more
of its Portfolios to separate accounts of insurance companies that
fund variable life insurance policies and variable annuity contracts
("Variable Contracts") and to serve as an investment medium for
Variable Contracts offered by insurance companies that have entered
into participation agreements substantially similar to this
agreement ("Participating Insurance Companies"), and the Fund is
comprised of multiple separate Portfolios, and other Portfolios may
be established in the future; and"
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be
executed by their officers designated below on the date written above.
PACIFIC SELECT FUND
Attest: /s/ AUDREY L. MILFS By: /s/ THOMAS C. SUTTON
Name: Audrey L. Milfs Name: Thomas C. Sutton
Title: Secretary Title: President
PACIFIC EQUITIES NETWORK
Attest: /s/ AUDREY L. MILFS By: /s/ GERALD W. ROBINSON
Name: Audrey L. Milfs Name: Gerald W. Robinson
Title: Secretary Title: President, Director & CEO
Attest: /s/ AUDREY L. MILFS By: /s/ EDWARD R. BYRD
Name: Audrey L. Milfs Name: Edward R. Byrd
Title: Secretary Title: CFO & Treasurer
PACIFIC MUTUAL LIFE INSURANCE COMPANY
Attest: /s/ DIANE N. LEDGER By: /s/ THOMAS C. SUTTON
Name: Diane N. Ledger Name: Thomas C. Sutton
Title: Assistant Vice President Title: Chairman and CEO
Attest: /s/ DIANE N. LEDGER By: /s/ GLENN S. SCHAFER
Name: Diane N. Ledger Name: Glenn S. Schafer
Title: Assistant Vice President Title: Chief Financial Officer
<PAGE>
EXHIBIT B
MONEY MARKET PORTFOLIO
MANAGED BOND PORTFOLIO
GOVERNMENT SECURITIES PORTFOLIO
HIGH YIELD BOND PORTFOLIO
GROWTH PORTFOLIO
GROWTH LT PORTFOLIO
EQUITY INCOME PORTFOLIO
MULTI-STRATEGY PORTFOLIO
EQUITY PORTFOLIO
BOND AND INCOME PORTFOLIO
EQUITY INDEX PORTFOLIO
INTERNATIONAL PORTFOLIO
EMERGING MARKETS PORTFOLIO
AGGRESSIVE EQUITY PORTFOLIO
<PAGE>
EXHIBIT 99.13
Schedules for Computation of
Performance Quotations
<PAGE>
PACIFIC ONE ANNUITY SEPARATE ACCOUNT
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
AVERAGE INITIAL PREMIUM = $80,000
ANNUAL TO DECEMBER 31, 1995
<TABLE>
<CAPTION>
Money Managed Gov't High Yield Equity
Market Bond Securities Bond Income
<S> <C> <C> <C> <C> <C>
Start Date 12/30/94 12/30/94 12/30/94 12/30/94 12/30/94
Beginning AUV $1.32 $1.66 $1.60 $1.82 $1.77
Ending AUV (12/31/95) $1.38 $1.95 $1.87 $2.13 $2.30
Days 364 364 364 364 364
Admin Charge (0.0125%) $1.53 $1.62 $1.61 $1.61 $1.70
Contract Charge ($40.00) $0.50 $0.50 $0.50 $0.50 $0.00
Ending ERV $1,040.03 $1,172.75 $1,170.49 $1,171.08 $1,297.28
AATR Account Value* 4.00% 17.27% 17.05% 17.11% 29.73%
<CAPTION>
Multi- Equity Bond &
Strategy Index Intern'l Growth LT Equity Income
<S> <C> <C> <C> <C> <C> <C>
Start Date 12/30/94 12/30/94 12/30/94 12/30/94 12/30/94 12/30/94
Beginning AUV $1.73 $1.41 $1.50 $1.12 $3.24 $2.87
Ending AUV (12/31/95) $2.14 $1.90 $1.64 $1.51 $3.97 $3.78
Days 364 364 364 364 364 364
Admin Charge (0.0125%) $1.66 $1.73 $1.56 $1.73 $1.65 $1.71
Contract Charge ($40.00) $0.50 $0.00 $0.50 $0.00 $0.50 $0.00
Ending ERV $1,233.78 $1,348.96 $1,089.39 $1,347.29 $1,220.21 $1,318.42
AATR Account Value* 23.38% 34.90% 8.94% 34.73% 22.02% 31.84
</TABLE>
LAST THREE YEARS ENDING DECEMBER 31, 1995
<TABLE>
<CAPTION>
Money Managed Gov't High Yield Equity
Market Bond Securities Bond Income
<S> <C> <C> <C> <C> <C>
Start Date 12/31/92 12/31/92 12/31/92 12/31/92 12/31/92
Beginning AUV $1.27 $1.59 $1.56 $1.57 $1.68
Ending AUV (12/31/95) $1.38 $1.95 $1.87 $2.13 $2.30
Days 1,093 1,093 1,093 1,093 1,093
Admin Charge (0.0125%) $4.62 $4.85 $4.80 $5.21 $4.92
Contract Charge ($40.00) $1.50 $1.50 $1.50 $1.00 $1.00
Ending ERV $1,075.14 $1,216.37 $1,195.57 $1,348.71 $1,360.77
AATR Account Value* 2.44% 6.75% 6.14% 10.49% 10.81%
<CAPTION>
Multi- Equity Bond &
Strategy Index Intern'l Growth LT Equity Income
<S> <C> <C> <C> <C> <C> <C>
Start Date 12/31/92 12/31/92 12/31/92 n/a 12/31/92 12/31/92
Beginning AUV $1.65 $1.30 $1.15 $2.95 $2.69
Ending AUV (12/31/95) $2.14 $1.90 $1.64 $3.97 $3.78
Days 1,093 1,093 1,093 1,093 1,093
Admin Charge (0.0125%) $4.88 $5.03 $5.66 $5.08 $5.12
Contract Charge ($40.00) $1.00 $1.00 $0.00 $1.00 $1.00
Ending ERV $1,290.24 $1,448.26 $1,419.15 $1,336.70 $1,401.18
AATR Account Value* 8.87% 13.14% 12.38% 10.16% 11.90%
</TABLE>
DOLLAR VALUES ARE PER $1,000 OF INITIAL PREMIUM
**Average Annual Total Return of Account Value=[{(ERV + SURR CHRG)/1000}
(1/Years)]-1
<PAGE>
PACIFIC ONE ANNUITY SEPARATE ACCOUNT
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
AVERAGE INITIAL PREMIUM = $80,000
LAST FIVE YEARS ENDING DECEMBER 31, 1995
<TABLE>
<CAPTION>
Money Managed Gov't High Yield Equity
Market Bond Securities Bond Income
<S> <C> <C> <C> <C> <C>
Start Date 12/31/90 12/31/90 12/31/90 12/31/90 12/31/90
Beginning AUV $1.20 $1.28 $1.27 $1.09 $1.24
Ending AUV (12/31/95) $1.38 $1.95 $1.87 $2.13 $2.30
Days 1,824 1,824 1,824 1,824 1,824
Admin Charge (0.0125%) $8.00 $9.39 $9.23 $11.13 $10.29
Contract Charge ($40.00) $2.50 $1.00 $1.50 $0.50 $0.00
Ending ERV $1,139,95 $1,505.19 $1,458.54 $1,941.13 $1,833.80
AATR Account Value* 2.65% 8.52% 7.84% 14.19% 12.89%
<CAPTION>
Multi- Equity Bond &
Strategy Index Intern'l Growth LT Equity Income
<S> <C> <C> <C> <C> <C> <C>
Start Date 12/31/90 n/a 12/31/90 n/a 12/31/90 12/31/90
Beginning AUV $1.25 $1.18 $2.19 $2.05
Ending AUV (12/31/95) $2.14 $1.64 $3.97 $3.78
Days 1,824 1,824 1,824 1,824
Admin Charge (0.0125%) $9.98 $8.61 $10.46 $10.23
Contract Charge ($40.00) $0.50 $1.50 $0.00 $0.50
Ending ERV $1,701.03 $1,378.40 $1,794.80 $1,832.14
AATR Account Value* 11.21% 6.63% 12.41% 12.87%
</TABLE>
LAST TEN YEARS ENDING DECEMBER 31, 1995
<TABLE>
<CAPTION>
Money Managed Gov't High Yield Equity
Market Bond Securities Bond Income
<S> <C> <C> <C> <C> <C>
Start Date n/a n/a n/a n/a n/a
Beginning AUV
Ending AUV (12/31/95)
Days
Admin Charge (0.0125%)
Contract Charge ($40.00)
Ending ERV
AATR Account Value*
<CAPTION>
Multi- Equity Bond &
Strategy Index Intern'l Growth LT Equity Income
<S> <C> <C> <C> <C> <C> <C>
Start Date n/a n/a n/a n/a 12/31/85 12/31/85
Beginning AUV $1.39 $1.43
Ending AUV (12/31/95) $3.97 $3.78
Days 3,650 3,650
Admin Charge (0.0125%) $26.16 $23.78
Contract Charge ($40.00) $1.00 $1.50
Ending ERV $2,804.40 $2,606.33
AATR Account Value* 10.86% 10.05%
</TABLE>
DOLLAR VALUES ARE PER $1,000 OF INITIAL PREMIUM
**Average Annual Total Return of Account Value=[{(ERV + SURR CHRG)/1000}
(1/Years)]-1
<PAGE>
PACIFIC ONE ANNUITY SEPARATE ACCOUNT
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
AVERAGE INITIAL PREMIUM = $80,000
FROM INCEPTION TO DECEMBER 31, 1995
<TABLE>
<CAPTION>
Money Managed Gov't High Yield Equity
Market Bond Securities Bond Income
<S> <C> <C> <C> <C> <C>
Start Date 1/4/88 1/4/88 1/4/88 1/4/88 1/4/88
Beginning AUV $1.00 $1.00 $1.00 $1.00 $1.00
Ending AUV (12/31/95) $1.38 $1.95 $1.87 $2.13 $2.30
Days 2,916 2,916 2,916 2,916 2,916
Admin Charge (0.0125%) $14.40 $17.08 $16.73 $16.88 $18.05
Contract Charge ($40.00) $2.00 $1.00 $1.00 $1.50 $1.00
Ending ERV $1,358.51 $1,924.70 $1,846.93 $2,105.11 $2,269.37
AATR Account Value* 3.91% 8.54% 7.98% 9.77% 10.80%
<CAPTION>
Multi- Equity Bond &
Strategy Index Intern'l Growth LT Equity Income
<S> <C> <C> <C> <C> <C> <C>
Start Date 1/4/88 1/30/91 1/4/88 1/4/94 1/2/84 1/2/84
Beginning AUV $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Ending AUV (12/31/95) $2.14 $1.90 $1.64 $1.51 $3.97 $3.78
Days 2,916 1,794 2,916 724 4,379 4,379
Admin Charge (0.0125%) $17.59 $10.17 $15.54 $3.51 $39.70 $37.36
Contract Charge ($40.00) $1.00 $0.50 $1.50 $0.50 $0.50 $0.50
Ending ERV $2,116.72 $1,884.03 $1,619.69 $1,504.10 $3,894.11 $3,714.11
AATR Account Value* 9.84% 13.75% 6.22% 22.85% 12.00% 11.56%
</TABLE>
DOLLARS VALUES ARE PER $1,000 OF INITIAL PREMIUM
**Average Annual Total Return of Account Value=[{(ERV + SURR CHRG)/1000}
(1/Years)]-1
