As filed with the Securities and Exchange Commission on October 19, 2001

File Nos. 33-95472 and 811-9082

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 /x/

Post-Effective Amendment No. 8 /x/

and

REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 /x/

Amendment No. 9 /x/

M FUND, INC.
(Exact Name of Registrant as Specified in Charter)

River Park Center
205 S.E. Spokane Street
Portland, Oregon 97202
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: (503) 232-6960

(Name and Address of Agent for Service)

It is proposed that this filing will become effective (check appropriate box)

/ /  immediately upon filing pursuant to paragraph (b)
/ /  on May 1, 2001 pursuant to paragraph (b)
/ /  60 days after filing pursuant to paragraph (a)(1)
/ /  on (date) pursuant to paragraph (a)(1)
/x/  75 days after filing pursuant to paragraph (a)(2)
/ /  on (date) pursuant to paragraph (a)(2) of rule 485.

If appropriate, check the following box:

/ /  this post-effective amendment designates a new effective date for a previously filed post-effective amendment.

M FUND, INC.

PROSPECTUS

JANUARY 2, 2002

Brandes International Equity Fund

Turner Core Growth Fund

Frontier Capital Appreciation Fund

Clifton Enhanced U.S. Equity Fund

Business Opportunity Value Fund

[LOGO]

    As with all mutual funds, the Securities and Exchange Commission has not approved any of M Fund's shares as an investment or determined whether this prospectus is accurate or complete. Anyone who tells you otherwise is committing a crime.

2

INFORMATION ABOUT THE FUNDS

M Fund

    M Fund, Inc. (the Company) is a mutual fund group that currently offers shares in five funds (Funds):

•

Brandes International Equity Fund



•

Turner Core Growth Fund



•

Frontier Capital Appreciation Fund



•

Clifton Enhanced U.S. Equity Fund



•

Business Opportunity Value Fund

    Each Fund is a separate and distinct investment portfolio. These Funds are available through the purchase of variable life insurance policies and variable annuity policies issued by certain insurance companies. Those insurance companies offer other portfolios in addition to offering the Funds. Shares of the Funds are also sold to qualified pension and retirement plans.

This Prospectus should be read along with the prospectus for the applicable insurance or annuity policies.

3

BRANDES INTERNATIONAL EQUITY FUND

The Fund's Investment Goal

Q.

What is the Brandes International Equity Fund's investment goal?



A.

The Fund seeks long-term capital appreciation.

    As with any mutual fund, there is no guarantee that the Fund will achieve its goal.

Its Principal Investment Strategies

Q.

What is the Brandes International Equity Fund's principal investment strategy?



A.

The Fund invests mainly in equity securities of foreign issuers, including common stocks, preferred stocks and securities that are convertible into common stocks. The Fund focuses on stocks with capitalizations of $1 billion or more. The Fund may also invest in emerging market securities.

    The Fund's Sub-Adviser uses the Graham and Dodd "Value Investing" approach. Following this philosophy, the Sub-Adviser views stocks as parts of businesses which are for sale. The Sub-Adviser seeks to purchase a diversified group of these businesses at prices which the Sub-Adviser believes are below their true long-term value.

The Key Risks

    The Brandes International Equity Fund's share price will go up and down which means you could lose money on your investment in the Fund. The Fund's investment performance could be worse than other investments:

•

If the stock market as a whole goes down.



•

Because investments in foreign securities may have more frequent and larger price changes than U.S. securities.



•

Because investments in foreign securities may lose value due to changes in currency exchange rates and other factors.



•

Because emerging market securities involve unique risks, such as exposure to economies less diverse and mature than that of the U.S.



•

Because economic or political changes may cause larger price changes in emerging market securities than other foreign securities.



•

Because the Fund may be more susceptible to economic, political or regulatory changes in any single country or industry than more highly diversified funds.



•

If the stocks in the Fund's portfolio do not grow over the long term as rapidly as expected.

    An investment in the Fund is not a bank deposit and is not insured or guaranteed by the FDIC or any other government agency.

    You can find more information about securities in which the Fund may invest and a more detailed description of risks under the heading Investment Strategies and Risks later in this Prospectus.

The Fund's Performance

    The following information may give some indication of the risks of investing in the Brandes International Equity Fund. It shows changes in the performance of the Fund's shares from year to year since the Fund started.

    The Fund's past performance does not necessarily indicate how it will perform in the future.

4

*

On July 1, 1998, the Fund replaced its previous Sub-Adviser, Edinburgh Fund Managers plc with Brandes Investment Partners LP.

**

The Fund started on January 4, 1996.

    During the period shown in the bar chart, the highest quarterly return was 20.78% (for the quarter ended December 31, 1999) and the lowest quarterly return was -14.31% (for the quarter ended September 30, 1998).

    The performance information shown here does not reflect fees that are paid by the insurance company separate accounts that invest in the Fund. Inclusion of those fees would reduce the total return figures for all periods.

    The table below shows how the Fund's average annual total returns for the periods shown compare to those of the Morgan Stanley Capital International—Europe, Australasia, Far East Index (MSCI EAFE Index). The MSCI EAFE Index is an unmanaged arithmetic, market value-weighted average of the performance of over 900 securities listed on the stock exchanges of: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Malaysia, The Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom. It includes the effect of reinvested dividends, net of foreign taxes withheld, and is measured in U.S. dollars. The index is calculated on a total return basis.

Fund Fees and Expenses:

    This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.

Shareholder Transaction Expenses (fees that you pay directly from your investment):

    There are no fees or sales loads charged to your account when you buy or sell Fund shares.

5

*

Fees and expenses shown are for the year ended December 31, 2000. Future expenses may be different.

    The fee table above does not include the fees and charges associated with variable annuity or variable life insurance products, which are disclosed separately in the prospectuses for those products. Fees and expenses for those products will typically include a sales load and/or a surrender charge as well as other charges for the insurance benefits.

6

TURNER CORE GROWTH FUND

The Fund's Investment Goal

Q.

What is the Turner Core Growth Fund's investment goal?



A.

The Fund seeks long-term capital appreciation.

    As with any mutual fund, there is no guarantee that the Fund will achieve its goal.

Its Principal Investment Strategies

Q.

What is the Turner Core Growth Fund's principal investment strategy?



A.

The Fund invests mainly in common stocks of U.S. companies that the Subadviser believes have strong earnings growth potential.

    The Fund's Sub-Adviser uses a bottom-up approach to investing. A bottom-up approach involves selecting stocks based on the perceived strength of individual companies rather than focusing first on industry groups and then selecting stocks within those groups. The Sub-Adviser's style is based on the philosophy that earnings expectations drive stock prices. The Subadviser uses a process that involves a combination of quantitative, fundamental, and technical analyses:

•

Quantitative: A key quantitative tool employed is a proprietary computer model, used to assess a universe of about 5000 companies according to a diverse range of earnings-growth and valuation factors. Those companies ranked highly in the model qualify for further consideration. Once purchased, holdings that deteriorate in the rankings become candidates for sale.



•

Fundamental: Traditional research is performed to determine if the companies under consideration will exceed, meet, or fall short of Wall Street analysts' consensus earnings expectations. This process typically involves discussions with company management, industry experts and competitors in an effort to anticipate changes in the outlook for corporate earnings.



•

Technical: Technical analysis is used to evaluate trends in trading volume and prices of individual stocks. This helps the Subadviser identify attractive entry and exit points. Money flow may act as a leading or confirming indicator.

The Key Risks

    The Turner Core Growth Fund's share price will fluctuate which means you could lose money on your investment in the Fund. The Fund's investment performance could be worse than other investments:

•

If the stock market as a whole goes down.



•

If the market continually values the stocks in the Fund's portfolio lower than the Sub-Adviser believes they should be valued.



•

If the earnings of the growth-oriented companies in which the Fund invests do not grow as rapidly as expected.



•

Due to the Fund's active trading approach, which will increase the costs the Fund's portfolio incurs.



•

Because growth investing emphasizes stock price appreciation over current income from dividends. It is not expected that the Fund will own a substantial amount of securities that pay dividends. Investors in the Fund should not expect dividend income to offset any decline in the prices of portfolio securities.

7

    An investment in the Fund is not a bank deposit and is not insured or guaranteed by the FDIC or any other government agency.

    You can find more information about securities in which the Fund may invest and a more detailed description of risks under the heading Investment Strategies and Risks later in this Prospectus.

The Fund's Performance

    The following information may give some indication of the risks of investing in the Turner Core Growth Fund. It shows changes in the performance of the Fund's shares from year to year since the Fund started.

    The Fund's past performance does not necessarily indicate how it will perform in the future.

*

The Fund started on January 4, 1996.

    During the period shown in the bar chart, the highest quarterly return was 28.11% (for the quarter ended December 31, 1999) and the lowest quarterly return was -18.77% (for the quarter ended December 31, 2000).

    The performance information shown here does not reflect fees that are paid by the insurance company separate accounts that invest in the Fund. Inclusion of those fees would reduce the total return figures for all periods.

    The table below shows how the Fund's average annual total returns for the periods shown compare to those of the Wilshire 5000 Stock Index. The Wilshire 5000 Stock Index is an unmanaged capitalizationweighted stock index that measures the performance of all U.S. based equity securities with readily available price data that are regularly traded on the New York Stock Exchange (NYSE), the American Stock Exchange or the NASDAQ OTC markets.

Fund Fees and Expenses:

    This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.

Shareholder Transaction Expenses (fees that you pay directly from your investment):

    There are no fees or sales loads charged to your account when you buy or sell Fund shares.

8

*

Fees and expenses shown are for the year ended December 31, 2000. Future expenses may be different.

    The fee table above does not include the fees and charges associated with variable annuity or variable life insurance products, which are disclosed separately in the prospectuses for those products. Fees and expenses for those products will typically include a sales load and/or a surrender charge as well as other charges for the insurance benefits.

9

FRONTIER CAPITAL APPRECIATION FUND

The Fund's Investment Goal

Q.

What is the Frontier Capital Appreciation Fund's investment goal?



A.

The Fund seeks maximum capital appreciation.

    As with any mutual fund, there is no guarantee that the Fund will achieve its goal.

Its Principal Investment Strategies

Q.

What is the Frontier Capital Appreciation Fund's principal investment strategy?



A.

The Fund invests in common stock of U.S. companies of all sizes, with emphasis on stocks of companies with capitalizations that are consistent with the capitalizations of those companies found in the Russell 2500.

    The Fund's Sub-Adviser seeks to invest in companies with unrecognized earnings potential. Earnings per share, growth and price appreciation are important factors. Wall Street analysts do not usually follow such small to mid-sized companies widely, and institutional investors do not own a large percentage of them. The investment process combines fundamental research with a valuation model that screens for:

•

dividend valuation



•

equity valuation



•

earnings growth



•

earnings momentum



•

unexpectedly high or low earnings

    Stocks are sold if earnings growth potential is realized, when the fundamental reasons for purchase are no longer valid, or when a more attractive situation is identified.

The Key Risks

    The Frontier Capital Appreciation Fund's share price will fluctuate which means you could lose money on your investment in the Fund. The Fund's investment performance could be worse than other investments:

•

If the stock market as a whole goes down.



•

If the valuation model does not screen stocks as expected.



•

If earnings growth estimates of companies the Fund invests in are not achieved.



•

Because securities of smaller-cap companies may be more thinly traded and may have more frequent and larger price changes than securities of larger cap companies.

    An investment in the Fund is not a bank deposit and is not insured or guaranteed by the FDIC or any other government agency.

    You can find more information about securities in which the Fund may invest and a more detailed description of risks under the heading Investment Strategies and Risks later in this Prospectus.

10

The Fund's Performance

    The following information may provide some indication of the risks of investing in the Frontier Capital Appreciation Fund. It shows changes in the performance of the Fund's shares from year to year since the Fund started.

    The Fund's past performance does not necessarily indicate how it will perform in the future.

*

The Fund started on January 4, 1996.

    During the period shown in the bar chart, the highest quarterly return was 26.17% (for the quarter ended December 31, 1998) and the lowest quarterly return was -21.00% (for the quarter ended September 30, 1998).

    The performance information shown here does not reflect fees that are paid by the insurance company separate accounts that invest in the Fund. Inclusion of those fees would reduce the total return figures for all periods.

    The table below shows how the Fund's average annual total returns for the periods shown compare to those of the Russell 2500 Stock Index. The Russell 2500 Stock Index is an unmanaged capitalization-weighted stock index representing the smallest 2500 stocks, by total market capitalization, in the Russell 3000 Index. The Russell 3000 Index is an unmanaged index that measures the performance of the 3000 largest U.S. companies based on total market capitalization.

Fund Fees and Expenses:

    This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.

Shareholder Transaction Expenses (fees that you pay directly from your investment):

    There are no fees or sales loads charged to your account when you buy or sell Fund shares.

11

*

Fees and expenses shown are for the year ended December 31, 2000. Future expenses may be different.

    The fee table above does not include the fees and charges associated with variable annuity or variable life insurance products, which are disclosed separately in the prospectuses for those products. Fees and expenses for those products will typically include a sales load and/or a surrender charge as well as other charges for the insurance benefits.

12

CLIFTON ENHANCED U.S. EQUITY FUND

The Fund's Investment Goal

Q.

What is the Clifton Enhanced U.S. Equity Fund's investment goal?



A.

The Fund seeks above-market total return.

    As with any mutual fund, there is no guarantee that the Fund will achieve its goal.

Its Principal Investment Strategies

Q.

What is the Clifton Enhanced U.S. Equity Fund's principal investment strategy?



A.

The Fund invests in futures contracts on the Standard & Poor's 500 Composite Stock Price Index (the S&P 500 or the Index) to have a 100% exposure to the S&P 500 to try to earn a return equal to that of the Index. These futures contracts do not require a cash outlay (although certain margin requirements must be met) so all of the Fund's assets will be invested in a "cash" portfolio of high quality debt instruments designed to add a small incremental return above that of the Index (and also to meet the margin requirements).

    The Fund's Sub-Adviser uses a combination of the S&P 500 futures contracts and the cash portfolio to create a synthetic enhanced S&P 500 product. The S&P 500 represents a sampling of the stocks of the largest U.S. companies along with stocks of foreign companies that are publicly traded in the United States. The Sub-Adviser closely monitors and manages the equity portion of the Fund to maintain a 100% exposure to the S&P 500 Index. The Sub-Adviser does not leverage the Fund's equity market exposure.

    The cash (or fixed income) investments will consist primarily of:

(1)

A "margin pool" of approximately 5 to 10% of the Fund's assets, invested primarily in short-term money market instruments such as shares of a money market fund (to satisfy variation margin requirement for the S&P 500 futures contracts);



(2)

A "liquidity pool" of approximately 40 to 70% of the Fund's assets, invested primarily in short-term asset backed securities, mortgage backed securities, high grade commercial paper, short-term investment grade corporate bonds rated A or better, (this segment of the cash portfolio is designed primarily for liquidity, and also for a small incremental return); and



(3)

An "enhanced cash pool" of approximately 20 to 50% of the Fund's assets, invested primarily in floating rate mortgage-backed securities, corporate floating rate notes, other variable rate instruments, equity linked notes, index linked notes and market neutral positions (this segment is designed primarily to enhance the overall return of the Fund).

The Key Risks

    The Clifton Enhanced U.S. Equity Fund's share price will fluctuate which means you could lose money on your investment in the Fund. The Fund's investment performance could be worse than other investments:

•

If the stock market as a whole (as represented by the S&P 500) goes down.



•

If the debt or cash equivalent holdings are downgraded, or go into default.



•

If interest rates increase.



•

Due to liquidity or other problems in the futures markets.

13

•

Because of interest rate caps or unanticipated levels of prepayment on the mortgages or other instruments underlying mortgage-backed or asset-backed securities.



•

If the portfolio manager's strategies (especially for the enhanced cash pool) result in losses, instead of the anticipated incremental enhancement of earnings.

    An investment in the Fund is not a bank deposit and is not insured or guaranteed by the FDIC or any other government agency.

    You can find more information about securities in which the Fund may invest and a more detailed description of risks under the heading Investment Strategies and Risks later in this Prospectus.

The Fund's Performance

    The following information may give some indication of the risks of investing in the Clifton Enhanced U.S. Equity Fund. It shows changes in the performance of the Fund's shares from year to year since the Fund started.

    The Fund's past performance reflects results obtained using an investment style that differs considerably from that used by the current portfolio manager and does not necessarily indicate how the Fund will perform in the future.

*

On May 1, 2000, the Fund replaced its previous Sub-Adviser, Franklin Portfolio Associates LLC, with The Clifton Group. The Fund was previously known as the Enhanced U.S. Equity Fund and changed its name to the Clifton Enhanced U.S. Equity Fund effective May 1, 2000.

**

The Fund started on January 4, 1996.

    During the period shown in the bar chart, the highest quarterly return was 20.46% (for the quarter ended December 31, 1998) and the lowest quarterly return as -12.96% (for the quarter ended September 30, 1998).

    The performance information shown here does not reflect fees that are paid by the insurance company separate accounts that invest in the Fund. Inclusion of those fees would reduce the total return figures for all periods.

    The table below shows how the Fund's average annual total returns for the periods shown compare to those of the S&P 500 Stock Index. The S&P 500 Stock Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is an unmanaged market-value weighted index (stock price times number of shares outstanding), with each stock's weight in the Index proportionate to its market value.

14

Fund Fees and Expenses:

    This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.

Shareholder Transaction Expenses (fees that you pay directly from your investment):

    There are no fees or sales loads charged to your account when you buy or sell Fund shares.

*

Fees and expenses shown are for the year ended December 31, 2000. Future expenses may be different.

    The fee table above does not include the fees and charges associated with variable annuity or variable life insurance products, which are disclosed separately in the prospectuses for those products. Fees and expenses for those products will typically include a sales load and/or a surrender charge as well as other charges for the insurance benefits.

15

BUSINESS OPPORTUNITY VALUE FUND

The Fund's Investment Goal

Q.

What is the Business Opportunity Value Fund's investment goal?



A.

The Fund seeks long-term capital appreciation.

    As with any mutual fund, there is no guarantee that the Fund will achieve its goal.

Its Principal Investment Strategies

Q.

What is the Business Opportunity Value Fund's principal investment strategy?



A.

The Fund invests primarily in equity securities of U.S. issuers in the large-to-medium-capitalization segment of the U.S. stock market, including common stocks, preferred stocks and securities that are convertible into common stocks.

    The Fund's Sub-Adviser uses a value investing approach. The Sub-Adviser focuses on company valuation and seeks to identify catalysts for corporate change. These catalysts may include management changes, significant stock repurchases, acquisitions or divestitures, litigation or changes in industry conditions. Once a catalyst for change is identified, the Sub-Adviser purchases the stocks of companies it believes to be undervalued that may benefit from the change.

The Key Risks

    The Business Opportunity Value Fund's share price will go up and down which means you could lose money on your investment in the Fund. The Fund's investment performance could be worse than other investments:

•

If the stock market as a whole goes down.



•

If the stocks the Fund invests in remain inexpensive and do not realize their full value.



•

If the Sub-Adviser does not correctly identify company valuations and/or catalysts.



•

If the catalysts identified by the Sub-Adviser do not produce the expected changes.



•

If the companies the Fund invests in do not benefit from the expected changes as anticipated by the Sub-Adviser.

    An investment in the Fund is not a bank deposit and is not insured or guaranteed by the FDIC or any other government agency.

    You can find more information about securities in which the Fund may invest and a more detailed description of risks under the heading Investment Strategies and Risks later in this Prospectus.

The Fund's Performance

    As of the date of this Prospectus, the Fund has been in operation for less than one full calendar year and therefore does not report its annual total returns in a bar chart and average total returns in a table.

Fund Fees and Expenses:

    This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.

16

Shareholder Transaction Expenses (fees that you pay directly from your investment):

    There are no fees or sales loads charged to your account when you buy or sell Fund shares.

*

Fees and expenses shown are estimates for the first year of operation. Future expenses may be different.

    The fee table above does not include the fees and charges associated with variable annuity or variable life insurance products, which are disclosed separately in the prospectuses for those products. Fees and expenses for those products will typically include a sales load and/or a surrender charge as well as other charges for the insurance benefits.

17

INVESTMENT STRATEGIES AND RISKS

Can a Fund Depart from its Normal Strategies?

    Each Fund may depart from its normal strategies by taking temporary defensive positions in response to adverse market, economic, political or other conditions. During these times, a Fund may not achieve its investment goals.

Do the Funds Engage in Active Trading of Securities?

    The Turner Core Growth Fund, the Frontier Capital Appreciation Fund, the Clifton Enhanced U.S. Equity Fund and the Business Opportunity Value Fund may engage in active and frequent trading to achieve their investment goals. This high rate of portfolio turnover may increase transaction costs, which would lower the Fund's performance.

Can a Fund Change Its Investment Goal?

    A Fund's investment goal may be changed by a vote of the Company's board of directors without shareholder approval. You would be notified at least 30 days before any change took effect.

Conflicts of Interest

    Certain conflicts of interest may exist between the interests of the variable annuity contract owners, variable life insurance policy owners and plan participants. The Company currently does not believe that ownership by each such type of entity will cause any disadvantage to owners of any of such entities. However, the Board of Directors monitors the Funds to identify any conflicts of interest which may cause such a disadvantage and which cannot be reconciled. If such situations arise, the Board of Directors will decide at that time what action should be taken in response to the conflicts.

Additional Information About the Funds

Brandes International Equity Fund

    The Brandes International Equity Fund will normally invest at least 80% of its total assets in equity securities of issuers located in at least three countries other than the United States. These countries may include, but are not limited to the nations of Western Europe, North and South America, Australia, Africa and Asia.

    Securities will generally be purchased in the form of common stock, American Depositary Receipts (ADRs), European Depositary Receipts (EDRs) or Global Depositary Receipts (GDRs).

    The Fund may invest in any single country or industry up to, at the time of purchase, the greater of:

•

20% of its total assets, or



•

150% of the weighting of such country or industry as represented in the Morgan Stanley Capital International—Europe, Australasia, Far East (MSCI EAFE) Index

    The Fund may also invest up to, at the time of purchase:

•

20% of its total assets in emerging market securities

    The Fund may also:

•

invest in recently organized companies



•

participate in forward foreign currency exchange contracts for purposes of settling trades

18

•

lend portfolio securities

    In seeking out foreign securities for purchase, the Sub-Adviser does not attempt to match the security allocations of foreign stock market indices. Therefore, the Fund's country weightings may differ significantly from country weightings found in published foreign stock indices. For example, the Sub-Adviser may choose not to invest the Fund's assets in a country whose stock market, at any given time, may comprise a large portion of a published foreign stock market index. At the same time, the Sub-Adviser may invest the Fund's assets in countries whose representation in such an index may be small or non-existent. The Sub-Adviser selects stocks for the Fund based on their individual merits and not necessarily on their geographic locations.

Turner Core Growth Fund

    Generally, the Turner Core Growth Fund will be fully invested and will contain between 80 to 120 securities. Portfolio exposure is generally limited to a maximum of 2% in any single issue. However, the Fund may hold up to two times the index weighting of those securities that comprise between 1% and 5% of the S&P 500 Index, and up to 1 ¹ / 2 times the index weighting of those securities that comprise more than 5% of the S&P 500 Index.

    The Fund may invest:

•

up to 10% of the value of its total assets in securities of foreign issuers that are listed on United States exchanges or are represented by American Depositary Receipts (ADRs)



•

in companies with market capitalizations of $500 million or less



•

in recently organized companies

    The Fund may also:

•

keep a portion of assets in cash or cash equivalents pending investment or for liquidity purposes



•

lend its securities

Frontier Capital Appreciation Fund

    The Frontier Capital Appreciation Fund's portfolio is not restricted to any one segment of the market; however, generally a majority of its portfolio will consist of stocks of small- to medium-capitalization companies. The Fund's portfolio will typically consist of 100 to 140 stocks.

    The Fund may invest:

•

up to 10% of the value of its total assets in securities of foreign issuers that are listed on U.S. exchanges or are represented by ADRs



•

in companies with market capitalizations of $500 million or less



•

in recently organized companies

    The Fund may also:

•

keep a portion of assets in cash or cash equivalents pending investment or for liquidity purposes



•

lend its securities

Clifton Enhanced U.S. Equity Fund

    The Fund will normally have a 100% exposure to the S&P 500 by investing in S&P 500 futures contracts.

19

    The Fund may also:

•

invest in individual securities (common stock, equity linked notes, index linked notes, preferred stock and convertible securities) as part of the market neutral enhanced cash pool



•

keep a portion of assets in cash or cash equivalents pending investment or for liquidity or margin requirement purposes



•

lend its securities



•

purchase securities on margin (margin is only used to satisfy futures contracts requirements)



•

invest in options on securities, options on indexes, options on futures contracts and sell covered call options (options and covered call sales would be utilized to create market neutral positions in the enhanced cash pool)



•

purchase warrants



•

invest in short-term asset backed securities, mortgage back securities, high grade commercial paper, short-term investment grade corporate bonds, floating rate mortgage rate notes, corporate floating rate notes, structured notes and other variable rate instruments

Business Opportunity Value Fund

    The Fund typically consists of 50 to 60 equity securities of issuers with capitalizations of $10 billion or more.

    The Fund may also:

•

invest up to 10 percent of its total assets in securities of foreign issuers that are listed on U.S. exchanges or represented by American Depository Receipts (ADRs)



•

keep a portion of assets in cash or cash equivalents pending investment or liquidity needs



•

lend its securities



•

purchase warrants

Additional Information About Fund Investments

    Equity Securities.   Equity securities include:

•

common stocks



•

preferred stocks



•

securities convertible into common stocks



•

equity and index linked notes

    American Depositary Receipts (ADRs), European Depositary Receipts (EDRs), and Global Depositary Receipts (GDRs).   ADRs, EDRs and GDRs are securities that represent an ownership interest in a foreign security. They are generally issued by a U.S. bank or trust company and may be sponsored or unsponsored. The issuers of unsponsored ADRs, EDRs and GDRs are not required to disclose certain material information to the holders of such securities.

    Equity and Index-Linked Notes.   Equity-linked notes are notes whose principal amount and/or the rate of interest payable is determined by reference to an underlying equity security. Indexed-linked notes are notes whose principal amount and/or the rate of interest payable is determined by reference to an index.

20

    Foreign Companies.   A foreign company is organized under the laws of a foreign country and:

•

Has the principal trading market for its stock in a foreign country.



•

Derives at least 50% of its revenues or profits from operations in foreign countries or has at least 50% of its assets located in foreign countries.

    Emerging Market Securities.   Emerging market securities are issued by a company that:

•

Is organized under the laws of an emerging market country (any country other than Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Holland, Hong Kong, Italy, Japan, Luxemborg, New Zealand, Norway, Singapore, Spain, Sweden, Switzerland, the United Kingdom and the United States).



•

Has its principal trading market for its stock in an emerging market country.



•

Derives at least 50% of its revenues or profits from operations within emerging market countries or has at least 50% of its assets located in emerging market countries.

    Mortgage-Backed Securities and Asset-Backed Debt Securities.   Mortgage-backed debt securities are secured or backed by mortgages or other mortgage-related assets. Such securities may be issued by such entities as Government National Mortgage Association ("GNMA"), Federal National Mortgage Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC"), commercial banks, savings and loan associations, mortgage banks, or by issuers that are affiliates of or sponsored by such entities. Other asset-backed securities are secured or backed by assets other than mortgage-related assets, such as automobile and credit card receivables, and are issued by such institutions as finance companies, finance subsidiaries of industrial companies, and investment banks.

General Risks of Investing in the Funds

    Market Risk.   A Fund that invests in common stocks is subject to stock market risk. Stock prices in general may decline over short or even extended periods, regardless of the success or failure of a particular company's operations. Stock markets tend to run in cycles, with periods when stock prices generally go up and periods when they generally go down. Common stock prices tend to go up and down more than those of bonds.

    Interest Rate Risk.   A Fund that invests in debt securities is subject to the risk that the market value of the debt securities will decline because of rising interest rates. The prices of debt securities are generally linked to the prevailing market interest rates. In general, when interest rates rise, the prices of debt securities fall, and when interest rates fall, the prices of debt securities rise. The price volatility of a debt security also depends on its maturity. Generally, the longer the maturity of a debt security the greater its sensitivity to changes in interest rates. To compensate investors for this higher risk, debt securities with longer maturities generally offer higher yields than debt securities with shorter maturities.

    Credit Risk.   The debt securities in a Fund's portfolio are subject to credit risk. Credit risk is the possibility that an issuer will fail to make timely payments of interest or principal. Securities rated in the lowest category of investment grade securities (rated BBB by Standard & Poor's Rating Service or Baa by Moody's Investor Service, Inc.) have some risky characteristics and changes in economic conditions are more likely to cause issuers of these securities to be unable to make payments.

    Foreign Investing.   Investing in foreign securities poses unique risks such as fluctuation in currency exchange rates, market illiquidity, price volatility, high trading costs, difficulties in settlement, regulations on stock exchanges, limits on foreign ownership, possibility of expropriation or nationalization, confiscatory taxation, less stringent accounting, reporting and disclosure requirements,

21

and other considerations. In the past, equity and debt instruments of foreign markets have had more frequent and larger price changes than those of U.S. markets.

    Emerging Markets Risk.   Investments in a country that is still relatively underdeveloped involves exposure to economic structures that are generally less diverse and mature than in the U.S. and to political and legal systems which may be less stable. In the past, markets of developing countries have had more frequent and larger price changes than those of developed countries.

    Political Risk.   Political risk includes a greater potential for revolts, and the taking of assets by governments. For example, a Fund may invest in Eastern Europe and former states of the Soviet Union. These countries were under communist systems that took control of private industry. This could occur again in this region or others in which a Fund may invest, in which case the Fund may lose all or part of its investment in that country's issuers.

    Currency Exchange Risk.   Investments that are denominated in currencies other than the U.S. dollar are subject to currency exchange risk. Because the value of the U.S. dollar against other currencies will vary, a decline in the exchange rate would reduce the value of certain portfolio investments. In addition, if the exchange rate for the currency in which a Fund receives dividend or interest payments declines against the U.S. dollar before such interest is paid as a dividend to the Fund's shareholders, the Fund may have to sell portfolio securities to obtain sufficient cash to pay the dividend.

    Futures Contracts.   There are several special risks involved with the use of futures contracts. In particular, the variable degree of correlation between price movements of futures contracts and price movements in the related portfolio position of a Fund could create the possibility that losses on the futures contract will be greater than gains in the value of the Fund's position. The loss from investing in futures transactions that are unhedged or uncovered, is potentially unlimited. In addition, futures markets could be illiquid in some circumstances and a Fund might not be able to close out certain positions without incurring substantial losses.

    Small Company Investment Risk.   Investing in securities of smaller, lesser-known companies involves greater risks than investing in larger, more mature, better known issuers. These increased risks include:

•

an increased possibility of portfolio price volatility



•

more volatile in price than larger-capitalization stocks



•

less certain growth prospects



•

lower degree of liquidity in the markets for such stocks



•

greater sensitivity of smaller companies to changing economic conditions



•

greater business risks resulting from their limited product lines, markets, distribution channels, and financial and managerial resources

    Small Capitalization Stock Risk.   The stock prices of smaller companies may fluctuate independently of larger company stock prices. Thus, small company stocks may decline in price as large company stock prices rise, or rise in price as large company stock prices decline. Investors should, therefore, expect that to the extent a Fund invests in stock of small-capitalization companies, the net asset value of that Fund's shares may be more volatile than, and may fluctuate independently of, broad stock market indices such as the S&P 500. Furthermore, the securities of companies with small stock market capitalizations may trade less frequently and in limited volumes.

22

    Recently Organized Companies.   Investments in recently organized companies have the same risks as small company investments but to a greater degree.

    Securities Lending.   The Funds may loan their securities to institutions, such as broker-dealers, and must be secured by collateral at least equal to the market value of the loaned securities. The collateral may be in the form of cash, cash equivalents, or U.S. Government securities. A Fund may experience a loss or delay in the recovery of its securities if the institution it loaned securities to breaches its agreement with the Fund. A Fund will not loan more than one-third of the value of its assets.

MANAGEMENT OF THE FUNDS

Investment Adviser

    M Financial Investment Advisers, Inc., (the Adviser) located at River Park Center, 205 SE Spokane Street, Portland, Oregon 97202, is the investment adviser of the Company and its Funds. The Adviser has been registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the Advisers Act) since November 1995. As of June 30, 2001, the Adviser had approximately $280 million in assets under management, all of which were the assets of the Company.

    The Adviser began managing the Company at its commencement of operations (January 4, 1996).

    The Adviser is responsible for selecting Sub-Advisers who have shown good investment performance in their areas of expertise. The Board of Directors of the Company supervises the Adviser's management of the Sub-Advisers. The Company has received an Order from the Securities and Exchange Commission (SEC) that allows the Adviser to change a Sub-Adviser, or change the terms of a sub-advisory contract, without shareholder approval. The Adviser has the ultimate responsibility to oversee the Sub-Advisers and to recommend their hiring, termination, and replacement. The Adviser also supervises the various other service providers to the Company, including the custodian, transfer agent, administration agent, and accounting services agent. In addition, the Adviser makes sure the Company complies with applicable legal requirements and also that each Fund's investment objective, policies and restrictions are followed.

    Each Fund pays the Adviser a fee for its services. Out of this fee, the Adviser pays each Sub-Adviser a fee for its services. The Adviser's fee is 0.15% higher than what it pays the Sub-Advisers.

*

As of December 31, 2000, the Business Opportunity Value Fund had not commenced operations. The Fund will pay the Adviser at the following rates: 0.65% of first $50 million; 0.60% of next $50 million; 0.55% of next $100 million; 0.50% on amounts above $200 million. The fee will be calculated quarterly as a percentage of average daily net assets.

**

Prior to May 1, 2000, the Fund was managed by Franklin Portfolio Associates LLC.

23

    The Adviser has agreed to pay any expenses (other than advisory fees, brokerage or other portfolio transaction expenses or expenses for litigation, indemnification, taxes or other expenses) exceeding 0.25% of that Fund's annualized average daily net assets, as accrued for each Fund through December 31, 2001.

Sub-Advisers

    The Sub-Advisers make the day-to-day decisions regarding buying and selling specific securities for a Fund. Each Sub-Adviser manages the investments held by the Fund it serves according to the applicable investment goals and strategies.

Brandes Investment Partners, L. P. (Brandes)
11988 El Camino Real, Suite 500, San Diego, California 92191-9048

Sub-Adviser to the Brandes International Equity Fund

    Effective July 1, 1998, Brandes became the Sub-Adviser to the Brandes International Equity Fund. Brandes has been registered as an investment adviser with the SEC since 1974. As of December 31, 2000, Brandes managed approximately $50 billion of assets.

    The Brandes Fund is team-managed by an investment committee, whose members are senior portfolio management professionals of the firm.

Turner Investment Partners, Inc. (Turner)
1235 Westlakes Drive, Suite 350, Berwyn, Pennsylvania 19312

Sub-Adviser to the Turner Core Growth Fund

    Turner has provided investment advisory services to investment companies since 1992. Turner has been registered as an investment adviser with the SEC since 1990. As of December 31, 2000, Turner managed approximately $10.1 billion of assets.

    A team of investment professionals comprising an investment committee manages the Turner Fund. Robert E. Turner, John Hammerschmidt, Mark Turner and Christopher K. McHugh are members of the committee. Robert E. Turner, CFA, Chairman and Chief Investment Officer of Turner, is lead manager. Mr. Turner founded Turner in 1990. Prior to 1990, he was Senior Investment Manager with Meridian Investment Company. He has 20 years of investment experience. John Hammerschmidt, Senior Equity Portfolio Manager of Turner, joined Turner in 1992. Prior to 1992, he was Vice President in Government Securities Trading at S.G. Warburg. He has 18 years investment experience. Mark Turner, Vice Chairman of Turner, is co-manager of the Turner Fund. Mr. Turner co-founded Turner in 1990. Prior to 1990, he was Vice President and Senior Portfolio Manager with First Maryland Asset Management. He has 19 years of investment experience. Christopher K. McHugh, Senior Equity Portfolio Manager of Turner, is co-manager of the Turner Fund. Mr. McHugh joined Turner in 1990. Prior to 1990, he was a Performance Specialist with Provident Capital Management. He has 15 years of investment experience.

Frontier Capital Management Company, LLC (Frontier)
99 Summer Street, Boston, Massachusetts 02110

Sub-Adviser to the Frontier Capital Appreciation Fund

    Frontier's investment process combines its fundamental in-depth research effort with a proprietary computer model to identify areas of investment opportunity. Frontier has been registered as an investment adviser with the SEC since January 1981. As of December 31, 2000, Frontier managed approximately $4.8 billion of assets.

24

    Michael A. Cavarretta, CFA, is the person primarily responsible for the day-to-day management of the Fund's investment portfolio. Mr. Cavarretta holds a B.S. degree from the University of Maine and an M.B.A. degree from Harvard Business School. He joined Frontier in 1988 and has served as sole portfolio manager for Frontier's capital appreciation portfolios since 1991. Prior to attending Harvard Business School, Mr. Cavarretta was employed as a Financial Analyst with General Electric Company (1981-1986).

The Clifton Group (Clifton)
309 Clifton Avenue, Minneapolis, Minnesota 55403

Sub-Adviser to the Clifton Enhanced U.S. Equity Fund

    Effective May 1, 2000, Clifton became the Sub-Adviser to the Clifton Enhanced U.S. Equity Fund. Clifton, founded in 1973, offers enhanced equity and fixed income products and asset allocation overlay management strategies. Clifton had $18.7 billion in assets under management as of December 31, 2000. Clifton has significant expertise in the use of derivatives within its investment products and risk management is a primary emphasis of all its investment strategies.

    Jack L. Hansen, CFA and Richard E. Ballsrud, CFA, share primary responsibility for the day-to-day management of the Fund's investment portfolio. Mr. Hansen is senior portfolio manager and a principal of Clifton. His responsibilities include portfolio management, research and product development. Since joining Clifton in 1985, Mr. Hansen has played a leading role in the research and development of Clifton's enhanced equity index, enhanced cash and risk management programs. Mr. Hansen earned a BS in finance and economics from Marquette University and a MS in finance from the University of Wisconsin, Madison. Mr. Ballsrud is senior portfolio manager and a principal of Clifton. He is responsible for portfolio management and the development and implementation of Clifton's fixed income and money market investment strategies. Prior to joining Clifton in 1984, Mr. Ballsrud spent ten years with two subsidiaries of The St. Paul Companies managing fixed income, money market and convertible securities in life insurance, pension and mutual fund portfolios. Mr. Ballsrud holds a BS in business administration from Mankato State University and an MBA in finance from the University of Minnesota.

Iridian Asset Management LLC (Iridian)
276 Post Road West, Westport, Connecticut 06880-4704

Sub-Adviser to the Business Opportunity Value Fund

    Effective January 2, 2002, Iridian became the Sub-Adviser to the Business Opportunity Value Fund. Iridian has been registered as an investment adviser with the SEC since 1995. As of September 30, 2001, Iridian managed approximately $10.3 billion of assets.

    David L. Cohen, Principal, and Harold J. Levy, Principal, share primary responsibility for the day-to-day management of the Fund's investment portfolio. Prior to joining Iridian in 1996, Mr. Cohen worked seven years as a portfolio manager with Arnold and S. Bleichroeder, Inc., one year as a portfolio manager with Furman Selz Maer Dietz & Bierney, and three years as a portfolio manager with W.R. Family Associates. Mr. Cohen holds a B.A. in economics from Vassar College, an MBA from New York University and a JD from the University of Miami School of Law. Before joining Iridian in 1996, Mr. Levy worked over eleven years as a portfolio manager with Arnold and S. Bleichroeder, Inc. Mr. Levy holds a BA in Economics from Wesleyan University and an MBA from University of Chicago.

Similar Funds

    The Funds are not available for purchase directly by the general public, and are not the same as other mutual fund portfolios with very similar or nearly identical names that are sold directly to the public. However, the investment objectives and policies of certain Funds may be very similar to the investment objectives and policies of other mutual fund portfolios that are managed by the Sub-Advisers. Nevertheless, the investment performance and results of each Fund may be lower, or higher, than the investment results of such other (publicly available) portfolio. There can be no assurance, and no representation is made, that the investment results of any of the Funds will be comparable to the investment results of any other mutual fund portfolio, even if the other portfolio is also managed by the Fund's Sub-Adviser, has the same investment objectives and policies, and has a very similar name.

25

INVESTING WITH M FUND

Choosing the Appropriate Funds to Match Your Goals

    Investing well requires a plan. We recommend that you meet with your financial adviser to plan a strategy that will best meet your financial goals. Your financial adviser can help you buy a variable annuity or variable life insurance contract that will allow you to choose the Funds.

Purchasing Shares

    You cannot buy shares of the Funds directly. You can invest indirectly in the Funds through your purchase of a variable annuity or variable life insurance contract. You should read this Prospectus and the prospectus of the variable annuity or variable life insurance contract carefully before you choose your investment options.

    The variable annuity and variable life insurance contracts are issued by separate accounts of various insurance companies. The insurance companies buy Fund shares for their separate accounts based on the instructions that they receive from the contract owners.

Market Timers

    The Funds are designed as long-term investments, and they are not designed or appropriate for market timers or others that use programmed, large, or frequent transfers. Such transfers can be disruptive to proper portfolio management and harmful to other investors in the Fund. Therefore, the Company reserves the right to reject any transfer or purchase order if, in the Company's judgment, the portfolio or other investors would potentially be adversely affected.

Selling Shares

    To meet various obligations under the contracts, the insurance company separate accounts may sell Fund shares to generate cash. For example, a separate account may sell Fund shares and use the proceeds to pay a contract owner who requested a partial withdrawal or who canceled a contract. Proceeds from the sale are usually sent to the separate account on the next business day. The Fund may suspend sales of shares or postpone payment dates when the New York Stock Exchange (NYSE) is closed (other than weekends or holidays), when trading on the NYSE is restricted, or as otherwise permitted by the SEC.

Pricing of Fund Shares

    Each Fund's share price, also called net asset value (NAV), is determined as of the close of trading, normally 4:00 p.m. New York time, on each day when the NYSE is open. The NYSE is scheduled to be open Monday through Friday throughout the year, except for certain federal and other holidays. The Fund calculates the NAV by dividing the total value of its net assets by the number of its shares outstanding.

    The value of each Fund's securities and assets, except certain short-term debt securities, is based on their market values. Certain exceptions follow:

•

Short-term debt securities that mature in 60 days or less are valued by the amortized cost method, which approximates market value.



•

Investments for which market quotations are not readily available are valued at their fair value as determined by the Board of Directors, or under their supervision.



•

Securities mainly traded on a non-U.S. exchange are generally valued according to the latest closing values on that exchange prior to the closing of the NYSE. However, if an event which

26

may change the value of a security occurs after the time that the closing value on the non-U.S. exchange was determined, the Board of Directors may decide to value the security based on fair value. This may cause the value of the security on the books of the Fund to be significantly different from the closing value on the non-U.S. exchange and may affect the calculation of a Fund's NAV.

•

Because portfolio securities that are primarily listed on non-U.S. exchanges may trade on weekends or other days when a Fund does not price its shares, a Fund's NAV may change on days when shareholders will not be able to buy or sell shares.

DISTRIBUTIONS AND TAXES

    Each of the Funds intends to distribute to its shareholders substantially all of its income and capital gains, if any, on an annual basis.

Tax Information

    Because you do not own shares of the Funds directly, your tax situation is not likely to be affected by a Fund's distributions. The separate accounts in which you own a variable annuity or variable life insurance contract, as the owner of the Fund's shares, may be affected. Please refer to the prospectus for the variable annuity or variable life insurance contract for tax information regarding those products.

PERFORMANCE INFORMATION

Other Account Performance

    Each of the Funds has investment objectives, policies and strategies that are substantially similar to those employed by the Funds' Sub-Advisers with respect to certain other accounts or other investment companies which they manage ("Other Accounts"). The performance information derived from these Other Accounts may be relevant to prospective investors. The Funds' performance may vary from the respective Other Account information because its investments will vary from time to time and will not be identical to the past portfolio investments of the Other Accounts.

    The charts below show actual performance information for M Fund and performance information derived from historical performance of the Other Accounts of Brandes, Turner, Frontier, Clifton and Iridian. The performance figures for the Brandes International Equity Composite, the Frontier Capital Appreciation Composite, the Turner Tax-Exempt Equity Composite, the Clifton Enhanced S&P Composite and the Iridian Private Business Value/Large Cap Equity Composite represent the actual calendar year performance results of the comparable Other Accounts net of M Fund management fees. The performance of these Other Accounts is not M Fund performance and should not be considered as an indication of the future performance of the respective Funds. Please note that performance for the Business Opportunity Value Fund is not included in the first chart below because the Fund commenced operations on January 2, 2002.

27

    These figures also do not reflect the deduction of any insurance fees or charges that are imposed in connection with the sale of variable life insurance and variable annuity policies by the Participating Insurance Companies. Investors should refer to the separate account prospectus describing the life insurance policies and variable annuity contracts for information pertaining to these insurance fees and charges.

(1)

M Fund, Inc. inception date was January 4, 1996. Since inception returns are average annual total returns.

(2)

Average annual total return for the period from January 1, 2001 through June 30, 2001.

(3)

Brandes Investment Partners, L.P. replaced Edinburgh Fund Managers plc as the sub-adviser effective July 1, 1998.

(4)

The Clifton Group replaced Franklin Portfolio Associates LLC as the sub-adviser effective May 1, 2000.

*

Returns for 2001 are for the six months ended June 30, 2001 and are not annualized.

^

3 year, 5 year, 10 year and Since Inception returns are average annualized total returns through June 30, 2001.

+

Inception dates for the Brandes International Equity Composite, Turner Tax-Exempt Equity Composite, Frontier Capital Appreciation Composite, Clifton Enhanced S&P Composite and Iridian Private Business Value/Large Cap Equity Composite are 6/30/90, 3/31/90, 1/1/87, 1/1/90 and 1/1/96 respectively.

See accompanying Notes to M Fund and Other Account Performance Information.

28

Notes to M Fund and Other Account Performance Information

    1.  Returns for the M Fund are net of management fees and operating expenses. Returns for the Brandes International Equity Composite, the Turner Tax-Exempt Equity Composite, the Frontier Capital Appreciation Composite, the Clifton Enhanced S&P Composite and the Iridian Private Business Value/Large Cap Equity Composite are net of M Fund management fees: 0.80%, 0.45%, 0.90%, 0.44% and 0.65%, respectively. The operating expenses for all Other Accounts, which may be different from those of M Fund, have been deducted from the returns of the above referenced composites.

    2.  Returns of the Other Accounts are based on accounts managed using substantially similar investment objectives, policies and strategies and are based on the following: returns for Brandes Investment Partners' Other Accounts are those of the manager's International Equity Composite; returns for Turner Investment Partners' Other Accounts are those of the manager's Turner Tax-Exempt Equity Composite; returns for Frontier Capital Management's Other Accounts are those of the manager's Capital Appreciation Composite; returns for The Clifton Group's Other Accounts are those of the manager's Enhanced S&P Composite; returns for Iridian Asset Management LLC's Other Accounts are those of the manager's Private Business Value/Large Cap Equity Composite.

    3.  Returns of the Other Accounts are based on accounts that collectively have substantially higher net assets than that of the Funds. The Funds commenced operations on January 4,1996 and, therefore, are smaller than the managers' established accounts.

    4.  Returns for the Brandes International Equity Composite, the Turner Tax-Exempt Equity Composite, the Frontier Capital Appreciation Composite, the Clifton Enhanced S&P Composite and the Iridian Private Business Value/Large Cap Equity Composite are based on accounts that are not subject to certain investment limitations, diversification requirements, and other restrictions imposed by the Investment Company Act of 1940, as amended, (the 1940 Act) and the Internal Revenue Code of 1986, as amended (the Code), which, if applicable, may have adversely affected the performance results.

    5.  The Morgan Stanley Capital International EAFE (MSCI EAFE) Index is an unmanaged index consisting of more than 900 securities listed on exchanges in European, Australasian and Far Eastern markets and includes dividends and distributions, but does not reflect fees, brokerage commissions or other expenses of investing. The Wilshire 5000 Equity Index is a capitalization weighted stock index representing all domestic common stocks traded regularly on the organized exchanges. The Wilshire 5000 Index is the broadest measure of the aggregate domestic stock market. The Russell 2500 Index is a capitalization weighted stock index representing the bottom 500 stocks in the Russell 1000 Index and all stocks in the Russell 2000. The S&P 500 Stock Index is a capitalization weighted index of 500 large stocks, representing approximately 70% of the broad U.S. equity market. The stocks represent the largest companies in 88 industries. The S&P 500 Index is calculated on a total return basis, which includes reinvestment of gross dividends before deduction of withholding taxes. The Russell 1000 Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values.

    6.  Performance returns for the Other Accounts may have been extracted from performance information that has been prepared and presented in compliance with the Association for Investment Management and Research (AIMR) Performance Presentation Standards. Reports on such preparation and presentation are available to the investor upon request.

29

FINANCIAL HIGHLIGHTS

    The financial highlights tables are intended to help you understand each Fund's financial performance for the period of the Fund's operation. Certain information reflects results for a single Fund share. The total returns in the table represent the rate that an investor would have earned or lost on an investment in the Fund (assuming reinvestment of all dividends and distributions). These total return figures do not reflect any fees or charges deducted from the insurance company separate account or from the variable annuity or life insurance policies, which, if reflected, would result in lower total return figures. Please note that financial highlights for the Business Opportunity Value Fund are not included because the Fund commenced operations on January 2, 2002.

    The Company's financial statements and report of PricewaterhouseCoopers LLP, independent accountants, included in the Annual Report to Shareholders for the Company's fiscal year ended December 31, 2000 are incorporated by reference into the Statement of Additional Information, as are the Company's financial statements included in the Semi-Annual Report to Shareholders for the six months ended June 30, 2001. The information contained in the Semi-Annual Report has not been audited by PricewaterhouseCoopers LLP. The following data should be read in conjunction with such financial statements, related notes, and other financial information contained in the Annual Report and Semi-Annual Report. The Annual Report and Semi-Annual Report contain additional performance information about the Funds and are available without charge and upon request by calling (888) 736-2878.

30

(a)

Fund commenced operations on January 4, 1996

*

Not annualized

**

Annualized for periods less than one year

#

Amount represents less than $0.01

31

(a)

Funds commenced operations on January 4, 1996

*

Not annualized

**

Annualized for periods less than one year

#

Amount represents less than $0.01

32

(a)

Funds commenced operations on January 4, 1996

*

Not annualized

**

Annualized for periods less than one year

33