<PAGE>
SEMI-ANNUAL REPORT
. PACIFIC SELECT SEPARATE ACCOUNT OF
PACIFIC MUTUAL LIFE INSURANCE COMPANY
[LOGO OF PACIFIC SELECT
APPEARS HERE]
<PAGE>
PACIFIC SELECT SEPARATE ACCOUNT
STATEMENTS OF ASSETS & LIABILITIES
JUNE 30, 1996 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
High
Money Yield Managed Government
Market Bond Bond Securities Growth
Variable Variable Variable Variable Variable
Account Account Account Account Account
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments in Pacific Select Fund:
Money Market Portfolio (22 shares; cost $220)................$ 220
High Yield Bond Portfolio (544 shares; cost $4,983).......... $ 5,176
Managed Bond Portfolio (47 shares; cost $489)................ $ 488
Government Securities Portfolio (31 shares; cost $331)....... $ 314
Growth Portfolio (255 shares; cost $4,001)................... $ 5,004
Growth LT Portfolio (79 shares; cost $1,017).................
Equity Income Portfolio (142 shares; cost $2,170)............
Multi-Strategy Portfolio (64 shares; cost $771)..............
Equity Index Portfolio (115 shares; cost $2,079).............
International Portfolio (257 shares; cost $3,361)............
Receivables:
Fund shares redeemed......................................... 10
-------- -------- -------- -------- --------
TOTAL ASSETS................................................... 220 5,176 488 314 5,014
-------- -------- -------- -------- --------
LIABILITIES
Payables:
Due to Pacific Mutual Life Insurance Company................. 10
Mortality and expense risk fee............................... 1 5 8
-------- -------- -------- -------- --------
TOTAL LIABILITIES.............................................. 1 5 18
-------- -------- -------- -------- --------
NET ASSETS.....................................................$ 219 $ 5,171 $ 488 $ 314 $ 4,996
======== ======== ======== ======== ========
<CAPTION>
Growth Equity Multi- Equity Inter-
LT Income Strategy Index national
Variable Variable Variable Variable Variable
Account Account Account Account Account
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments in Pacific
Select Fund:
Money Market Portfolio (22 shares; cost $220)................
High Yield Bond Portfolio (544 shares; cost $4,983)..........
Managed Bond Portfolio (47 shares; cost $489)................
Government Securities Portfolio (31 shares; cost $331).......
Growth Portfolio (255 shares; cost $4,001)...................
Growth LT Portfolio (79 shares; cost $1,017).................$ 1,237
Equity Income Portfolio (142 shares; cost $2,170)............ $ 2,620
Multi-Strategy Portfolio (64 shares; cost $771).............. $ 886
Equity Index Portfolio (115 shares; cost $2,079)............. $ 2,131
International Portfolio (257 shares; cost $3,361)............ $ 3,633
Receivables:
Fund shares redeemed......................................... 9 3 7
-------- -------- -------- -------- --------
TOTAL ASSETS................................................... 1,237 2,629 886 2,134 3,640
-------- -------- -------- -------- --------
LIABILITIES
Payables:
Due to Pacific Mutual Life Insurance Company................. 9 3 7
Mortality and expense risk fee............................... 1 3 1 1 3
-------- -------- -------- -------- --------
TOTAL LIABILITIES.............................................. 1 12 1 4 10
-------- -------- -------- -------- --------
NET ASSETS.....................................................$ 1,236 $ 2,617 $ 885 $ 2,130 $ 3,630
======== ======== ======== ======== ========
</TABLE>
See Notes to Financial Statements.
B-1
<PAGE>
PACIFIC SELECT SEPARATE ACCOUNT
STATEMENTS OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 1996 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
High
Money Yield Managed Government Growth Equity Multi- Equity Inter-
Market Bond Bond Securities Growth LT Income Strategy Index national
Variable Variable Variable Variable Variable Variable Variable Variable Variable Variable
Account Account Account Account Account Account Account Account Account Account
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends...................... $ 23 $ 211 $ 20 $ 14 $ 535 $ 5 $ 143 $ 56 $ 17 $ 18
EXPENSES
Mortality and expense risk
fee........................... 4 14 2 1 27 4 9 3 2 7
------- ------- ------- ------ ------- ------ ------- ------- ------- -------
NET INVESTMENT INCOME........... 19 197 18 13 508 1 134 53 15 11
------- ------- ------- ------ ------- ------ ------- ------- ------- -------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss)
from security transactions.... (1) 2 4 (2) 849 13 22 3 13 20
Net unrealized appreciation
(depreciation) on
investments................... 6 (131) (30) (20) (214) 105 3 (30) (22) 157
------- ------- ------- ------ ------- ------ ------- ------- ------- -------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS...... 5 (129) (26) (22) 635 118 25 (27) (9) 177
------- ------- ------- ------ ------- ------ ------- ------- ------- -------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS..................... $ 24 $ 68 $ (8) $ (9) $ 1,143 $ 119 $ 159 $ 26 $ 6 $ 188
======= ======= ======= ====== ======= ====== ======= ======= ======= =======
</TABLE>
See Notes to Financial Statements.
B-2
<PAGE>
PACIFIC SELECT SEPARATE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED JUNE 30, 1996 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
High
Money Yield Managed Government Growth Equity Multi- Equity Inter-
Market Bond Bond Securities Growth LT Income Strategy Index national
Variable Variable Variable Variable Variable Variable Variable Variable Variable Variable
Account Account Account Account Account Account Account Account Account Account
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income ............. $ 19 $ 197 $ 18 $ 13 $ 508 $ 1 $ 134 $ 53 $ 15 $ 11
Net realized gain (loss) from
security transactions ............ (1) 2 4 (2) 849 13 22 3 13 20
Net unrealized appreciation
(depreciation) on investments .... 6 (131) (30) (20) (214) 105 3 (30) (22) 157
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING
FROM OPERATIONS .................. 24 68 (8) (9) 1,143 119 159 26 6 188
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
INCREASE (DECREASE) IN NET
ASSETS FROM POLICY TRANSACTIONS
Transfers--policy charges
and deductions .................. (6) (18) (2) (2) (62) (6) (40) (8) (10) (24)
Transfers in (from other
variable accounts) .............. 11,195 4,963 35 2 3,833 386 202 8 1,899 1,979
Transfers out (to other
variable accounts) .............. (12,381) (3,560) (11) (9) (7,765) (167) (27) (2) (17) (20)
Transfers--other ................. (2) (29) (107) (14) (38) 3 (12) (64)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
NET INCREASE (DECREASE) IN
NET ASSETS DERIVED FROM POLICY
TRANSACTIONS ..................... (1,192) 1,383 22 (38) (4,101) 199 97 1 1,860 1,871
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
NET INCREASE (DECREASE) IN
NET ASSETS ....................... (1,168) 1,451 14 (47) (2,958) 318 256 27 1,866 2,059
NET ASSETS
Beginning of period .............. 1,387 3,720 474 361 7,954 918 2,361 858 264 1,571
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
End of period .................... $ 219 $ 5,171 $ 488 $ 314 $4,996 $ 1,236 $ 2,617 $ 885 $ 2,130 $ 3,630
======= ======= ======= ======== ====== ======= ======= ======= ======= =======
</TABLE>
See Notes to Financial Statements.
B-3
<PAGE>
PACIFIC SELECT SEPARATE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1995
(In thousands)
<TABLE>
<CAPTION>
High
Money Yield Managed Government
Market Bond Bond Securities Growth
Variable Variable Variable Variable Variable
Account Account Account Account Account
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income...................................... $ 67 $ 254 $ 24 $ 17 $ 14
Net realized gain (loss) from security transactions........ (2) 15 1 (3) 155
Net unrealized appreciation on investments................. 3 304 36 42 1,508
------- ------- ------- ------- -------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS.................................. 68 573 61 56 1,677
------- ------- ------- ------- -------
INCREASE (DECREASE) IN NET ASSETS
FROM POLICY TRANSACTIONS
Transfers--policy charges and deductions*.................. (26) (41) 2 (5) (109)
Transfers in (from other variable accounts)................ 35 47 330 25 1,201
Transfers out (to other variable accounts)................. (1,065) (34) (22) (16) (1,098)
Transfers--other*.......................................... (27) (27) (9) (24) (110)
------- ------- ------- ------- -------
NET INCREASE (DECREASE) IN NET ASSETS
DERIVED FROM POLICY TRANSACTIONS........................... (1,083) (55) 301 (20) (116)
------- ------- ------- ------- -------
NET INCREASE (DECREASE) IN NET ASSETS....................... (1,015) 518 362 36 1,561
NET ASSETS
Beginning of year........................................... 2,402 3,202 112 325 6,393
------- ------- ------- ------- -------
End of year................................................. $ 1,387 $ 3,720 $ 474 $ 361 $ 7,954
======= ======= ======= ======= =======
<CAPTION>
Growth Equity Multi- Equity Inter-
LT Income Strategy Index national
Variable Variable Variable Variable Variable
Account Account Account Account Account
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income...................................... $ 59 $ 20 $ 21 $ 4 $ 20
Net realized gain (loss) from security transactions........ 15 136 32 24 25
Net unrealized appreciation on investments................. 112 451 115 52 111
------- ------- ------- ------- -------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS.................................. 186 607 168 80 156
------- ------- ------- ------- -------
INCREASE (DECREASE) IN NET ASSETS
FROM POLICY TRANSACTIONS
Transfers--policy charges and deductions*.................. (7) (50) (15) (16) (45)
Transfers in (from other variable accounts)................ 688 498 15 473
Transfers out (to other variable accounts)................. (32) (927) (9) (70)
Transfers--other*.......................................... (13) (105) (39) (88)
------- ------- ------- ------- -------
NET INCREASE (DECREASE) IN NET ASSETS
DERIVED FROM POLICY TRANSACTIONS........................... 636 (584) 0 (64) 270
------- ------- ------- ------- -------
NET INCREASE (DECREASE) IN NET ASSETS....................... 822 23 168 16 426
NET ASSETS
Beginning of year........................................... 96 2,338 690 248 1,145
------- ------- ------- ------- -------
End of year................................................. $ 918 $ 2,361 $ 858 $ 264 $ 1,571
======= ======= ======= ======= =======
</TABLE>
*Prior year balances have been restated to conform with current year
presentation.
See Notes to Financial Statements.
B-4
<PAGE>
PACIFIC SELECT SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
The Pacific Select Separate Account (the "Separate Account") is registered
as a unit investment trust under the Investment Company Act of 1940, as amended,
and is currently comprised of twelve subaccounts called Variable Accounts: the
Money Market Variable Account, the High Yield Bond Variable Account, the Managed
Bond Variable Account, the Government Securities Variable Account, the Growth
Variable Account, the Aggressive Equity Variable Account (Note 5), the Growth LT
Variable Account, the Equity Income Variable Account, the Multi-Strategy
Variable Account, the Equity Index Variable Account, the International Variable
Account, and the Emerging Markets Variable Account (Note 5). The assets in each
Variable Account are invested in shares of the corresponding portfolios of
Pacific Select Fund (the "Fund"), each of which pursues different investment
objectives and policies.
The Separate Account was established by Pacific Mutual Life Insurance
Company ("Pacific Mutual") on November 20, 1986 and commenced operations on
January 7, 1988. Under applicable insurance law, the assets and liabilities of
the Separate Account are clearly identified and distinguished from the other
assets and liabilities of Pacific Mutual. The assets of the Separate Account
will not be charged with any liabilities arising out of any other business
conducted by Pacific Mutual, but the obligations of the Separate Account,
including benefits related to variable life insurance, are obligations of
Pacific Mutual.
The Separate Account held by Pacific Mutual represents funds from
individual flexible premium variable life policies. The assets of these accounts
are carried at market value.
The preparation of the accompanying financial statements 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 income and expenses during the reporting period. Actual results could
differ from those estimates.
A.Valuation of Investments
Investments in shares of the Fund are valued at the reported net asset
values of the respective portfolios.
B.Security Transactions
Transactions are recorded on the trade date. Realized gains and losses on
sales of investments are determined on the basis of identified cost.
C.Federal Income Taxes
The operations of the Separate Account will be reported on the Federal
income tax return of Pacific Mutual, which is taxed as a life insurance company
under the provisions of the Tax Reform Act of 1986. Under current tax law, no
Federal income taxes are expected to be paid by Pacific Mutual with respect to
the operations of the Separate Account.
2. DIVIDENDS
During 1996, the Fund has declared dividends for each portfolio. The
amounts accrued by the Separate Account for its share of the dividends were
reinvested in additional full and fractional shares of each related portfolio.
3. CHARGES AND EXPENSES
Pacific Mutual charges the Separate Account daily for mortality and expense
risks assumed with respect to variable life insurance policies funded by the
Separate Account at an annual rate of 0.70% of the average daily net assets of
each Variable Account. Under the policies, Pacific Mutual makes certain
deductions from the net assets of each Variable Account for sales load,
administrative expenses, state premium taxes, cost of insurance and charges for
optional benefits. The operating expenses of the Separate Account are paid by
Pacific Mutual.
4. RELATED PARTY AGREEMENT
Pacific Mutual Distributors, Inc. (formerly known as Pacific Equities
Network), a wholly-owned subsidiary of Pacific Mutual, is the principal
underwriter of variable life insurance policies funded by interests in the
Separate Account, and is compensated by Pacific Mutual.
B-5
<PAGE>
PACIFIC SELECT SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
5. AGGRESSIVE EQUITY VARIABLE ACCOUNT AND EMERGING MARKETS VARIABLE ACCOUNT
The Separate Account has organized and registered with the Securities and
Exchange Commission two new Variable Accounts, the Aggressive Equity Variable
Account and the Emerging Markets Variable Account, under the Investment Company
Act of 1940. There was no operational activity through June 30, 1996 in both
Variable Accounts.
6. SELECTED ACCUMULATION UNIT** INFORMATION
Selected accumulation unit information for the period ended June 30, 1996
were as follows:
<TABLE>
<CAPTION>
High
Money Yield Managed Government
Market Bond Bond Securities Growth
Variable Variable Variable Variable Variable
Account Account Account Account Account
------- -------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
ACCUMULATION UNIT
VALUE:
Beginning $ 14.45 $ 21.16 $ 19.64 $ 18.89 $ 27.60
======== ======== ======== ======== ========
Ending $ 14.75 $ 21.57 $ 19.30 $ 18.43 $ 31.06
======== ======== ======== ======== ========
Number of Units Outstanding at
End of Period 14,871 239,718 25,263 17,022 160,857
<CAPTION>
Growth Equity Multi- Equity Inter-
LT Income Strategy Index national
Variable Variable Variable Variable Variable
Account Account Account Account Account
------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
ACCUMULATION UNIT
VALUE:
Beginning $ 15.28 $ 23.16 $ 21.06 $ 18.26 $ 16.84
======== ======== ======== ======== ========
Ending $ 17.02 $ 24.69 $ 21.70 $ 19.97 $ 18.54
======== ======== ======== ======== ========
Number of Units Outstanding at
End of Period 72,627 105,984 40,797 106,660 195,808
</TABLE>
- -----------
** Accumulation Unit: unit of measure used to calculate the value of a Contract
Owner's interest in a Variable Account during the Accumulation Period.
B-6
