<PAGE>
June 30, 1999 . Pacific Select
Separate Account of
Pacific Life Insurance Company
Semi-Annual
Report
Pacific Select
<PAGE>
PACIFIC SELECT SEPARATE ACCOUNT
Financial Statements:
Statement of Assets and Liabilities...................................... 1
Statement of Operations.................................................. 3
Statement of Changes in Net Assets....................................... 5
Notes to Financial Statements............................................... 9
<PAGE>
PACIFIC SELECT SEPARATE ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
High Govern-
Money Yield Managed ment Aggressive Growth
Market Bond Bond Securities Growth Equity LT
Variable Variable Variable Variable Variable Variable Variable
Account Account Account Account Account Account Account
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
Money Market Portfolio (27 shares; cost $272)........... $272
High Yield Bond Portfolio (686 shares; cost $6,380)..... $6,199
Managed Bond Portfolio (68 shares; cost $737)........... $723
Government Securities Portfolio (30 shares; cost $315).. $304
Growth Portfolio (329 shares; cost $5,913).............. $7,666
Aggressive Equity Portfolio (11 shares; cost $121)...... $139
Growth LT Portfolio (92 shares; cost $1,597)............ $2,961
------------------------------------------------------------------------
Total Assets ............................................. 272 6,199 723 304 7,666 139 2,961
------------------------------------------------------------------------
LIABILITIES
Payables:
Mortality and expense risk fee.......................... 1 7 8 3
------------------------------------------------------------------------
Total Liabilities......................................... 1 7 8 3
------------------------------------------------------------------------
NET ASSETS ............................................... $271 $6,192 $723 $304 $7,658 $139 $2,958
------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
1
<PAGE>
PACIFIC SELECT SEPARATE ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES (Continued)
JUNE 30, 1999 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Equity Multi- Equity Inter- Emerging
Income Strategy Equity Index national Markets
Variable Variable Variable Variable Variable Variable
Account Account Account Account Account Account
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
Equity Income Portfolio (121 shares; cost $2,216)... $3,388
Multi-Strategy Portfolio (71 shares; cost $928)..... $1,226
Equity Portfolio (0 shares (1); cost $8)............ $9
Equity Index Portfolio (151 shares; cost $3,324).... $5,403
International Portfolio (271 shares; cost $3,757)... $4,255
Emerging Markets Portfolio (15 shares; cost $139)... $130
-------------------------------------------------------------------
Total Assets ......................................... 3,388 1,226 9 5,403 4,255 130
-------------------------------------------------------------------
LIABILITIES
Payables:
Mortality and expense risk fee..................... 3 1 6 5
-------------------------------------------------------------------
Total Liabilities..................................... 3 1 6 5
-------------------------------------------------------------------
NET ASSETS............................................ $3,385 $1,225 $9 $5,397 $4,250 $130
-------------------------------------------------------------------
</TABLE>
(1) Total shares owned in full as of June 30, 1999 were 303.
See Notes to Financial Statements
2
<PAGE>
PACIFIC SELECT SEPARATE ACCOUNT
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 1999 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
High Govern-
Money Yield Managed ment Aggressive Growth
Market Bond Bond Securities Growth Equity LT
Variable Variable Variable Variable Variable Variable Variable
Account Account Account Account Account Account Account
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends.................................................. $10 $251 $37 $11 $836 $13 $225
EXPENSES
Mortality and expense risk fee............................. 2 22 3 1 24 9
---------------------------------------------------------------------
Net Investment Income........................................ 8 229 34 10 812 13 216
---------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain from security transactions............... 1 2 94 45
Net unrealized appreciation (depreciation) on investments.. (203) (56) (19) 78 3 455
---------------------------------------------------------------------
Net Realized and Unrealized Gain (Loss) on Investments....... (202) (54) (19) 172 3 500
---------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ................................. $8 $27 ($20) ($9) $984 $16 $716
---------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
3
<PAGE>
PACIFIC SELECT SEPARATE ACCOUNT
STATEMENT OF OPERATIONS (Continued)
FOR THE PERIOD ENDED JUNE 30, 1999 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Equity Multi- Equity Inter- Emerging
Income Strategy Equity Index national Markets
Variable Variable Variable Variable Variable Variable
Account Account Account Account Account Account (1)
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends.................................................. $271 $86 $1 $51 $192
EXPENSES
Mortality and expense risk fee............................. 12 4 17 14
------------------------------------------------------------------
Net Investment Income........................................ 259 82 1 34 178
------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss) from security transactions........ 411 9 13 64 35 ($13)
Net unrealized appreciation (depreciation) on investments.. (230) (9) (11) 423 (52) 41
------------------------------------------------------------------
Net Realized and Unrealized Gain (Loss) on Investments....... 181 0 2 487 (17) 28
------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS.................................. $440 $82 $3 $521 $161 $28
------------------------------------------------------------------
</TABLE>
(1) Total dividends received in full for the period were $234.19.
See Notes to Financial Statements
4
<PAGE>
PACIFIC SELECT SEPARATE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED JUNE 30, 1999 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
High Govern-
Money Yield Managed ment Aggressive Growth
Market Bond Bond Securities Growth Equity LT
Variable Variable Variable Variable Variable Variable Variable
Account Account Account Account Account Account Account
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income............ $8 $229 $34 $10 $812 $13 $216
Net realized gain from
security transactions............ 1 2 94 45
Net unrealized appreciation
(depreciation) on investments.... (203) (56) (19) 78 3 455
------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net
Assets Resulting from
Operations....................... 8 27 (20) (9) 984 16 716
------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
FROM POLICY TRANSACTIONS
Transfers--policy charges
and deductions................... (13) (18) (2) (31) (7)
Transfers in (from other
variable accounts)............... 455 104 157 35 370
Transfers out (to other
variable accounts)............... (144) (94) (123) (1) (179) (41)
Transfers--other................. (353) 8 (9) (61) (23)
------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net
Assets Derived from Policy
Transactions..................... (55) 0 23 (1) (236) 299
------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN
NET ASSETS....................... (47) 27 3 (10) 748 16 1,015
------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Period.............. 318 6,165 720 314 6,910 123 1,943
------------------------------------------------------------------------------------------
End of Period.................... $271 $6,192 $723 $304 $7,658 $139 $2,958
------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
5
<PAGE>
PACIFIC SELECT SEPARATE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS (Continued)
FOR THE PERIOD ENDED JUNE 30, 1999 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Equity Multi- Equity Inter- Emerging
Income Strategy Equity Index national Markets
Variable Variable Variable Variable Variable Variable
Account Account Account Account Account Account
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income....................................... $259 $82 $1 $34 $178
Net realized gain (loss) from security transactions......... 411 9 13 64 35 ($13)
Net unrealized appreciation (depreciation) on investments... (230) (9) (11) 423 (52) 41
------------------------------------------------------------------
Net Increase in Net Assets Resulting from Operations ....... 440 82 3 521 161 28
------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
FROM POLICY TRANSACTIONS
Transfers--policy charges and deductions.................... (23) (4) (20) (19) (1)
Transfers in (from other variable accounts)................. 5 923 44 187
Transfers out (to other variable accounts).................. (754) (4) (154) (237) (162) (188)
Transfers--other ........................................... (85) (13) (1) (40) (31) 4
------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Derived
from Policy Transactions.................................... (857) (21) (155) 626 (168) 2
------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS....................... (417) 61 (152) 1,147 (7) 30
------------------------------------------------------------------
NET ASSETS
Beginning of Period ........................................ 3,802 1,164 161 4,250 4,257 100
------------------------------------------------------------------
End of Period............................................... $3,385 $1,225 $9 $5,397 $4,250 $130
------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
6
<PAGE>
PACIFIC SELECT SEPARATE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
(In thousands)
<TABLE>
<CAPTION>
High Govern-
Money Yield Managed ment Aggressive Growth
Market Bond Bond Securities Growth Equity LT
Variable Variable Variable Variable Variable Variable Variable
Account Account Account Account Account Account Account
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income (loss)................... $10 $509 $38 $19 $673 ($1) $55
Net realized gain from security transactions 9 4 1 148 1 14
Net unrealized appreciation (depreciation)
on investments................................ (410) 12 5 (668) 14 636
--------------------------------------------------------------------------------
Net Increase in Net Assets Resulting from
Operations .................................... 10 108 54 25 153 14 705
--------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
FROM POLICY TRANSACTIONS
Transfers--policy charges and deductions....... (9) (39) (5) (1) (71) (9)
Transfers in (from other variable accounts).... 570 116 142 1 443 104 49
Transfers out (to other variable accounts)..... (478) (133) (97) (2) (315) (14) (21)
Transfers--other............................... 8 12 (2) (37) (157) 1 (16)
--------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Derived
from Policy Transactions........................ 91 (44) 38 (39) (100) 91 3
--------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS............ 101 64 92 (14) 53 105 708
--------------------------------------------------------------------------------
NET ASSETS
Beginning of Year............................... 217 6,101 628 328 6,857 18 1,235
--------------------------------------------------------------------------------
End of Year..................................... $318 $6,165 $720 $314 $6,910 $123 $1,943
--------------------------------------------------------------------------------
See Notes to Financial Statements
</TABLE>
7
<PAGE>
PACIFIC SELECT SEPARATE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 1998
(In thousands)
<TABLE>
<CAPTION>
Equity Multi- Equity Inter- Emerging
Income Strategy Equity Index national Markets
Variable Variable Variable Variable Variable Variable
Account Account Account (1) Account Account Account
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income (loss)................... $406 $96 ($1) $53 $337
Net realized gain (loss) from security
transactions.................................. 86 33 97 50 ($29)
Net unrealized appreciation (depreciation)
on investments................................ 235 47 13 780 (184) (19)
-------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations...................... 727 176 12 930 203 (48)
-------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
FROM POLICY TRANSACTIONS
Transfers--policy charges and deductions....... (55) (8) (1) (42) (50) (3)
Transfers in (from other variable accounts).... 32 11 150 131 95 79
Transfers out (to other variable accounts)..... (118) (6) (193) (187) (129)
Transfers--other............................... (57) (100) (13) (26) 2
-------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Derived
from Policy Transactions....................... (198) (103) 149 (117) (168) (51)
-------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS........... 529 73 161 813 35 (99)
------------------------------------------------------------------------------
NET ASSETS
Beginning of Year.............................. 3,273 1,091 3,437 4,222 199
-------------------------------------------------------------------------------
End of Year.................................... $3,802 $1,164 $161 $4,250 $4,257 $100
-------------------------------------------------------------------------------
</TABLE>
(1) For the period from May 12, 1998 (commencement of operations) to December
31, 1998.
See Notes to Financial Statements
8
<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 fourteen 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, the Growth LT Variable
Account, the Equity Income Variable Account, the Multi-Strategy Variable
Account, the Equity Variable Account, the Bond and Income Variable Account, the
Equity Index Variable Account, the International Variable Account, and the
Emerging Markets Variable Account. There was no operational activity in the
Bond and Income Variable Account through June 30, 1999. 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 financial statements of the Fund, including the
schedules of investments, are provided separately and should be read in
conjunction with the Separate Account's financial statements.
The Separate Account was established by Pacific Life Insurance Company
("Pacific Life") 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 Life. The assets of the Separate Account will not be
charged with any liabilities arising out of any other business conducted by
Pacific Life, but the obligations of the Separate Account, including benefits
related to variable life insurance, are obligations of Pacific Life.
The Separate Account held by Pacific Life represents funds from individual
flexible premium variable life insurance policies. The assets of the Separate
Account 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. Valuation of securities held by the Fund is
discussed in the notes to its financial statements.
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 Life, 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 Life with respect to the
operations of the Separate Account.
2. DIVIDENDS
During the six months period ended June 30, 1999, the Fund 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 the
related portfolio.
3. CHARGES AND EXPENSES
Pacific Life 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 Life 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 Life.
4. RELATED PARTY AGREEMENT
Pacific Mutual Distributors, Inc., a wholly-owned subsidiary of Pacific Life,
serves as principal underwriter of variable life insurance policies funded by
interests in the Separate Account, without remuneration from the Separate
Account.
9
<PAGE>
PACIFIC SELECT SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS (Continued)
(Unaudited)
5. SEPARATE ACCOUNT'S COST OF INVESTMENTS IN THE FUND SHARES
The investment in the Fund shares are carried at identified cost, which
represents the amount available for investment (including reinvested
distributions of net investment income and realized gains) in such shares after
deduction of mortality and expense risk charges (M&E). The cost and market
value of total Separate Account's investments in the Fund as of June 30, 1999
were as follows (amounts in thousands):
<TABLE>
<CAPTION>
Variable Accounts
----------------------------------------------------------------
Money High Yield Managed Government
Market Bond Bond Securities Growth
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total cost of investments at beginning of period $318 $6,147 $678 $306 $5,239
Add: Total net proceeds from policy and M&E transactions 314 31 54 34
Reinvested distributions from the Fund:
(a) Net investment income 10 251 20 7
(b) Net realized gain 17 4 836
---------------------------------------------------------------
Sub-Total 642 6,429 769 317 6,109
Less: Cost of investments disposed during the period 370 49 32 2 196
---------------------------------------------------------------
Total cost of investments at end of period 272 6,380 737 315 5,913
Add: Unrealized appreciation (depreciation) (181) (14) (11) 1,753
---------------------------------------------------------------
Total market value of investments at end of period $272 $6,199 $723 $304 $7,666
---------------------------------------------------------------
Aggressive Growth Equity Multi-
Equity LT Income Strategy Equity
----------------------------------------------------------------
Total cost of investments at beginning of period $108 $1,035 $2,402 $858 $149
Add: Total net proceeds from policy and M&E transactions 370 22
Reinvested distributions from the Fund:
(a) Net investment income 11 14
(b) Net realized gain 13 225 260 72 1
---------------------------------------------------------------
Sub-Total 121 1,630 2,695 944 150
Less: Cost of investments disposed during the period 33 479 16 142
---------------------------------------------------------------
Total cost of investments at end of period 121 1,597 2,216 928 8
Add: Unrealized appreciation 18 1,364 1,172 298 1
---------------------------------------------------------------
Total market value of investments at end of period $139 $2,961 $3,388 $1,226 $9
---------------------------------------------------------------
Equity Inter- Emerging
Index national Markets
------------------------------------
Total cost of investments at beginning of period $2,597 $3,709 $150
Add: Total net proceeds from policy and M&E transactions 747 32 26
Reinvested distributions from the Fund:
(a) Net investment income 27 31
(b) Net realized gain 24 161
----------------------------------
Sub-Total 3,395 3,933 176
Less: Cost of investments disposed during the period 71 176 37
----------------------------------
Total cost of investments at end of period 3,324 3,757 139
Add: Unrealized appreciation (depreciation) 2,079 498 (9)
----------------------------------
Total market value of investments at end of period $5,403 $4,255 $130
----------------------------------
</TABLE>
10
<PAGE>
PACIFIC SELECT SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS (Continued)
(Unaudited)
6. TRANSACTIONS IN SEPARATE ACCOUNT UNITS AND SELECTED ACCUMULATION UNIT **
INFORMATION
Transactions in Separate Account units for the period ended June 30, 1999
and the selected accumulation unit information as of June 30, 1999 were as
follows:
<TABLE>
<CAPTION>
Variable Accounts
--------------------------------------------------------------------
Money High Yield Managed Government
Market Bond Bond Securities Growth
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total units outstanding at beginning of period 19,262 238,261 29,885 13,791 154,387
Increase (decrease) in units resulting from
policy transactions:
(a) Transfers--policy charges and deductions (756) (600) (98) (22) (689)
(b) Transfers in (from other variable accounts) 25,942 3,444 6,553 7 793
(c) Transfers out (to other variable accounts) (8,236) (3,126) (5,111) (27) (4,028)
(d) Transfers--other (20,058) 245 (372) (11) (1,402)
-------------------------------------------------------------------
Sub-Total (3,108) (37) 972 (53) (5,326)
-------------------------------------------------------------------
Total units outstanding at end of period 16,154 238,224 30,857 13,738 149,061
-------------------------------------------------------------------
Accumulation Unit Value: At beginning of period $16.48 $25.88 $24.08 $22.78 $44.76
At end of period $16.80 $25.99 $23.42 $22.13 $51.37
-------------------------------------------------------------------
Aggressive Growth Equity Multi-
Equity LT Income Strategy Equity
--------------------------------------------------------------------
Total units outstanding at beginning of period 10,759 62,601 87,745 35,445 14,925
Increase (decrease) in units resulting from
policy transactions:
(a) Transfers--policy charges and deductions (4) (203) (510) (106) (10)
(b) Transfers in (from other variable accounts) 11,132 108
(c) Transfers out (to other variable accounts) (1,235) (16,658) (115) (14,083)
(d) Transfers--other (717) (1,872) (398) (72)
-------------------------------------------------------------------
Sub-Total (4) 8,977 (18,932) (619) (14,165)
-------------------------------------------------------------------
Total units outstanding at end of period 10,755 71,578 68,813 34,826 760
-------------------------------------------------------------------
Accumulation Unit Value: At beginning of period $11.43 $31.03 $43.33 $32.85 $10.81
At end of period $12.93 $41.33 $49.19 $35.16 $12.27
-------------------------------------------------------------------
Equity Inter- Emerging
Index national Markets
--------------------------------------
Total units outstanding at beginning of period 113,573 183,341 14,939
Increase (decrease) in units resulting from
policy transactions:
(a) Transfers--policy charges and deductions (506) (820) (35)
(b) Transfers in (from other variable accounts) 22,890 1,921 9,456
(c) Transfers out (to other variable accounts) (5,886) (6,998) (9,492)
(d) Transfers--other (992) (1,367) 162
--------------------------------------
Sub-Total 15,506 (7,264) 91
--------------------------------------
Total units outstanding at end of period 129,079 176,077 15,030
--------------------------------------
Accumulation Unit Value: At beginning of period $37.42 $23.22 $6.69
At end of period $41.81 $24.14 $8.66
--------------------------------------
</TABLE>
- -----------------------------
** Accumulation Unit: unit of measure used to calculate the value of a Policy
Owner's interest in a Variable Account during the accumulation period.
11
