<PAGE>
SEMI-ANNUAL REPORT
. PACIFIC SELECT EXEC SEPARATE ACCOUNT OF
PACIFIC MUTUAL LIFE INSURANCE COMPANY
[LOGO OF PACIFIC SELECT
EXEC APPEARS HERE]
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF ASSETS & LIABILITIES
JUNE 30, 1996 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
High
Money Yield Managed Government Aggressive
Market Bond Bond Securities Growth Equity
Variable Variable Variable Variable Variable Variable
Account Account Account Account Account Account
--------- --------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in Pacific Select Fund:
Money Market Portfolio (2,223 shares; cost $22,328).. $ 22,284
High Yield Bond Portfolio (1,949 shares;
cost $18,525)....................................... $ 18,542
Managed Bond Portfolio (5,479 shares; cost $57,971).. $ 57,524
Government Securities Portfolio (663 shares;
cost $6,758)........................................ $ 6,759
Growth Portfolio (5,525 shares; cost $94,649)........ $ 108,476
Aggressive Equity Portfolio (824 shares; cost $9,011) $ 8,690
Receivables:
Due from Pacific Mutual Life Insurance Company....... 28 8 94 12
Fund shares redeemed 1,442 15
--------- --------- --------- ---------- ---------- ----------
TOTAL ASSETS 23,726 18,570 57,539 6,767 108,570 8,702
--------- --------- --------- ---------- ---------- ----------
LIABILITIES
Payables:
Due to Pacific Mutual Life Insurance Company......... 1,423 15
Fund shares purchased................................ 28 8 94 12
--------- --------- --------- ---------- ---------- ----------
TOTAL LIABILITIES..................................... 1,423 28 15 8 94 12
--------- --------- --------- ---------- ---------- ----------
NET ASSETS............................................ $ 22,303 $ 18,542 $ 57,524 $ 6,759 $ 108,476 $ 8,690
========= ========= ========= ========== ========== ==========
See Notes to Financial Statements.
</TABLE>
C-1
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF ASSETS & LIABILITIES (Continued)
JUNE 30, 1996 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Growth Equity Multi- Equity Inter- Emerging
LT Income Strategy Index national Markets
Variable Variable Variable Variable Variable Variable
Account Account Account Account Account Account
--------- --------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in Pacific Select Fund:
Growth LT Portfolio (4,695 shares; cost $64,865)..... $ 73,684
Equity Income Portfolio (3,506 shares; cost $58,281). $ 64,600
Multi-Strategy Portfolio (4,448 shares; cost $57,650) $ 61,158
Equity Index Portfolio (4,855 shares; cost $74,831).. $ 89,798
International Portfolio (5,515 shares; cost $71,098). $ 77,994
Emerging Markets Portfolio (72 shares; cost $724).... $ 729
Receivables:
Due from Pacific Mutual Life Insurance Company....... 313 111 70 10 175 4
--------- --------- --------- ---------- ---------- ----------
TOTAL ASSETS.......................................... 73,997 64,711 61,228 89,808 78,169 733
--------- --------- --------- ---------- ---------- ----------
LIABILITIES
Payables:
Fund shares purchased................................ 313 111 70 10 175 4
--------- --------- --------- ---------- ---------- ----------
TOTAL LIABILITIES..................................... 313 111 70 10 175 4
--------- --------- --------- ---------- ---------- ----------
NET ASSETS............................................ $ 73,684 $ 64,600 $ 61,158 $ 89,798 $ 77,994 $ 729
========= ========= ========= ========== ========== ==========
</TABLE>
See Notes to Financial Statements.
C-2
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 1996 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
High
Money Yield Managed Government Aggressive
Market Bond Bond Securities Growth Equity
Variable Variable Variable Variable Variable Variable
Account Account Account Account Account Account
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends........................................ $ 563 $ 843 $ 2,040 $ 259 $ 6,332 $ 2
------- ------- ------- ------- -------- -------
NET INVESTMENT INCOME............................. 563 843 2,040 259 6,332 2
------- ------- ------- ------- -------- -------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) from security
transactions.................................... 75 (124) 36 600
Net unrealized appreciation
(depreciation) on investments................... 18 (575) (2,448) (421) 5,130 (321)
------- ------- ------- ------- -------- -------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS............................ 18 (500) (2,572) (385) 5,730 (321)
------- ------- ------- ------- -------- -------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS........................ $ 581 $ 343 $ (532) $ (126) $ 12,062 $ (319)
======= ======= ======= ======= ======== =======
</TABLE>
See Notes to Financial Statements.
C-3
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF OPERATIONS (Continued)
FOR THE PERIOD ENDED JUNE 30, 1996 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Growth Equity Multi- Equity Inter- Emerging
LT Income Strategy Index national Markets
Variable Variable Variable Variable Variable Variable
Account Account Account Account Account Account
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends....................................... $ 317 $ 2,921 $ 3,612 $ 2,739 $ 678
------- ------- ------- ------- -------
NET INVESTMENT INCOME............................ 317 2,921 3,612 2,739 678
------- ------- ------- ------- -------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain from security
transactions................................... 2,087 452 240 508 167
Net unrealized appreciation
(depreciation) on investments.................. 4,558 244 (1,965) 3,843 5,486 $ 4
------- ------- ------- ------- ------- -------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS........................... 6,645 696 (1,725) 4,351 5,653 4
------- ------- ------- ------- ------- -------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS....................... $ 6,962 $ 3,617 $ 1,887 $ 7,090 $ 6,331 $ 4
======= ======= ======= ======= ======= =======
</TABLE>
See Notes to Financial Statements.
C-4
<PAGE>
PACIFIC EXEC 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 Aggressive
Market Bond Bond Securities Growth Equity
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 .............. $ 563 $ 843 $ 2,040 $ 259 $ 6,332 $ 2
Net realized gain (loss) from
security transactions ............. 75 (124) 36 600
Net unrealized appreciation
(depreciation) on investments ..... 18 (575) (2,448) (421) 5,130 (321)
---------- --------- ---------- ---------- ----------- ----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS .... 581 343 (532) (126) 12,062 (319)
---------- --------- ---------- ---------- ----------- ----------
INCREASE (DECREASE) IN NET
ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums ........... 26,333 3,688 12,717 966 16,252 96
Transfers--policy charges and
deductions ........................ (1,318) (679) (1,238) (285) (3,737) (36)
Transfers in (from other
variable accounts) ................ 16,232 4,039 3,669 1,108 30,709 9,079
Transfers out (to other
variable accounts) ................ (41,596) (3,043) (4,315) (989) (33,024) (89)
Transfers--other ................... (1,107) (397) (467) (169) (1,305) (41)
---------- --------- ---------- ---------- ----------- ----------
NET INCREASE (DECREASE) IN NET
ASSETS DERIVED FROM POLICY
TRANSACTIONS ....................... (1,456) 3,608 10,366 621 8,895 9,009
---------- --------- ---------- ---------- ----------- ----------
NET INCREASE (DECREASE) IN NET
ASSETS ............................. (875) 3,951 9,834 495 20,957 8,690
NET ASSETS
Beginning of year .................. 23,178 14,591 47,690 6,264 87,519
---------- --------- ---------- ---------- ----------- ----------
End of year ........................ $ 22,303 $ 18,542 $ 57,524 $ 6,759 $ 108,476 $ 8,690
========== ========= ========== ========== =========== ==========
</TABLE>
See Notes to Financial Statements.
C5
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
FOR THE PERIOD ENDED JUNE 30, 1996 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Growth Equity Multi- Equity Inter- Emerging
LT Income Strategy Index national Markets
Variable Variable Variable Variable Variable Variable
Account Account Account Account Account Account
-------- ---------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
FROM OPERATIONS
Net investment income .............. $ 317 $ 2,921 $ 3,612 $ 2,739 $ 678
Net realized gain from security
transactions ...................... 2,087 452 240 508 167
Net unrealized appreciation
(depreciation) on investments ..... 4,558 244 (1,965) 3,843 5,486 $ 4
---------- --------- --------- --------- --------- --------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS .......... 6,962 3,617 1,887 7,090 6,331 4
---------- --------- --------- --------- --------- --------
INCREASE (DECREASE) IN NET ASSETS
FROM POLICY TRANSACTIONS
Transfer of net premiums ........... 11,347 13,747 7,770 16,120 13,573 73
Transfers--policy charges and
deductions ........................ (2,436) (1,920) (1,703) (2,302) (2,507) (6)
Transfers in (from other variable
accounts) ......................... 24,610 4,139 1,841 12,203 12,512 674
Transfers out (to other variable
accounts) ......................... (19,700) (3,716) (1,335) (5,338) (7,632) (16)
Transfers--other ................... (858) (983) (1,608) (650) (710)
---------- --------- --------- --------- --------- --------
NET INCREASE IN NET ASSETS
DERIVED FROM POLICY TRANSACTIONS ... 12,963 11,267 4,965 20,033 15,236 725
---------- --------- --------- --------- --------- --------
NET INCREASE IN NET ASSETS .......... 19,925 14,884 6,852 27,123 21,567 729
NET ASSETS
Beginning of year .................. 53,759 49,716 54,306 62,675 56,427
---------- --------- --------- --------- --------- --------
End of year ........................ $ 73,684 $ 64,600 $ 61,158 $ 89,798 $ 77,994 $ 729
========== ========= ========= ========= ========= ========
</TABLE>
See Notes to Financial Statements.
C6
<PAGE>
PACIFIC SELECT EXEC 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
------- ------- ------- ------- -------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
<S> <C> <C> <C> <C> <C>
Net investment income.................................... $ 1418 $ 944 $ 2,208 $ 294 $ 656
Net realized gain (loss) from security transactions...... 31 (92) (141) (41) (1,046)
Net unrealized appreciation on investments............... 65 1,042 4,063 624 16,423
------- ------- ------- ------- -------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS................................ 1,514 1,894 6,130 877 16,033
------- ------- ------- ------- -------
INCREASE (DECREASE) IN NET ASSETS FROM
POLICY TRANSACTIONS
Transfer of net premiums................................. 72,942 5,029 7,113 1,962 25,318
Transfers--policy charges and deductions................. (3,157) (1,065) (1,983) (490) (6,369)
Transfers in (from other variable accounts).............. 29,120 7,781 15,186 2,845 30,352
Transfers out (to other variable accounts)............... (110,816) (6,185) (2,813) (2,390) (22,297)
Transfers--other......................................... (1,021) (242) (508) (449) (2,935)
------- ------- ------- ------- -------
NET INCREASE (DECREASE) IN NET ASSETS
DERIVED FROM POLICY TRANSACTIONS......................... (12,932) 5,318 16,995 1,478 24,069
------- ------- ------- ------- -------
NET INCREASE (DECREASE) IN NET ASSETS...................... (11,418) 7,212 23,125 2,355 40,102
NET ASSETS
Beginning of year........................................ 34,596 7,379 24,565 3,909 47,417
------- ------- ------- ------- -------
End of year.............................................. $23,178 $14,591 $47,690 $ 6,264 $87,519
======= ======= ======= ======= =======
</TABLE>
*Prior year balances have been restated to conform with current year
presentation.
See Notes to Financial Statements.
C-7
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 1995
(In thousands)
<TABLE>
<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...................................... $ 3,592 $ 577 $ 1,401 $ 1,015 $ 1,070
Net realized gain from security transactions............... 1,225 785 71 2,069 574
Net unrealized appreciation on investments................. 3,892 7,737 7,406 10,698 2,646
------- ------- ------- ------- -------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS.................................. 8,709 9,099 8,878 13,782 4,290
------- ------- ------- ------- -------
INCREASE (DECREASE) IN NET ASSETS FROM
POLICY TRANSACTIONS
Transfer of net premiums................................... 12,930 13,169 14,278 11,713 16,778
Transfers--policy charges and deductions*.................. (2,765) (2,773) (2,760) (2,873) (3,967)
Transfers in (from other variable accounts)................ 32,699 16,222 5,601 17,636 25,476
Transfers out (to other variable accounts)................. (8,074) (4,940) (2,670) (6,615) (16,093)
Transfers--other*.......................................... (1,148) (1,283) (1,192) (1,361) (1,211)
------- ------- ------- ------- -------
NET INCREASE IN NET ASSETS
DERIVED FROM POLICY TRANSACTIONS........................... 33,642 20,395 13,257 18,500 20,983
------- ------- ------- ------- -------
NET INCREASE IN NET ASSETS 42,351 29,494 22,135 32,282 25,273
NET ASSETS
Beginning of year.......................................... 11,408 20,222 32,171 30,393 31,154
------- ------- ------- ------- -------
End of year................................................ $53,759 $49,716 $54,306 $62,675 $56,427
======= ======= ======= ======= =======
</TABLE>
*Prior year balances have been restated to conform with current year
presentation.
See Notes to Financial Statements.
C-8
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
The Pacific Select Exec 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 May 12, 1988 and commenced operations on November 22,
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 the related portfolio.
3. CHARGES AND EXPENSES
With respect to variable life insurance policies funded by the Separate
Account, Pacific Mutual makes certain deductions from premiums for sales load
and state premium taxes before amounts are allocated to the Separate Account.
Pacific Mutual also makes certain deductions from the net assets of each
Variable Account for the mortality and expense risks Pacific Mutual assumes,
administrative expenses, cost of insurance, charges for optional benefits and
any sales and underwriting surrender charges. 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.
C-9
<PAGE>
PACIFIC SELECT EXEC 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. Both Variable Accounts
commenced operations on April 8, 1996.
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 Aggressive
Market Bond Bond Securities Growth Equity
Variable Variable Variable Variable Variable Variable
Account Account Account Account Account Account
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
ACCUMULATION UNIT
VALUE:
Beginning $ 14.52 $ 21.74 $ 19.86 $ 19.28 $ 23.89 $ 10.00
======== ======== ======== ======== ======== ========
Ending $ 14.88 $ 22.24 $ 19.59 $ 18.88 $ 26.97 $ 10.62
======== ======== ======== ======== ======== ========
Number of Units Outstanding at
End of Period 1,499,306 833,813 2,937,012 358,007 4,022,216 817,991
<CAPTION>
Growth Equity Multi- Equity Inter- Emerging
LT Income Strategy Index national Markets
Variable Variable Variable Variable Variable Variable
Account Account Account Account Account Account
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
ACCUMULATION UNIT
VALUE:
Beginning $ 15.49 $ 23.72 $ 21.60 $ 20.21 $ 15.55 $ 10.00
======== ======== ======== ======== ======== ========
Ending $ 17.30 $ 25.37 $ 22.33 $ 22.18 $ 17.18 $ 10.34
======== ======== ======== ======== ======== ========
Number of Units Outstanding at
End of Period 4,258,959 2,545,935 2,739,343 4,048,911 4,540,397 70,438
</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.
C-10
