<PAGE>
SEMI-ANNUAL REPORT
. PACIFIC SELECT EXEC SEPARATE ACCOUNT OF
PACIFIC MUTUAL LIFE INSURANCE COMPANY
[LOGO of PACIFIC SELECT EXEC]
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997 (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
HIGH GOVERN-
MONEY YIELD MANAGED MENT
MARKET BOND BOND SECURITIES GROWTH
VARIABLE VARIABLE VARIABLE VARIABLE VARIABLE
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
--------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments:
Money Market Portfolio (3,837 shares; cost $38,630) ............. $38,552
High Yield Bond Portfolio (2,967 shares; cost $28,993) .......... $29,531
Managed Bond Portfolio (5,725 shares; cost $60,882) ............. $61,252
Government Securities Portfolio (916 shares; cost $9,416) ....... $9,473
Growth Portfolio (6,598 shares; cost $120,776) .................. $147,119
Aggressive Equity Portfolio (531 shares; cost $5,405) ...........
Growth LT Portfolio (5,937 shares; cost $90,504) ................
Equity Income Portfolio (5,104 shares; cost $92,187) ............
Multi-Strategy Portfolio (6,134 shares; cost $82,820) ...........
Receivables:
Due from Pacific Mutual Life Insurance Company .................. 552 39 4 9
Fund shares redeemed ............................................ 18
--------------------------------------------------------
Total Assets ..................................................... 39,104 29,570 61,270 9,477 147,128
--------------------------------------------------------
LIABILITIES
Payables:
Due to Pacific Mutual Life Insurance Company .................... 18
Fund shares purchased ........................................... 551 39 4 9
--------------------------------------------------------
Total Liabilities ................................................ 551 39 18 4 9
--------------------------------------------------------
NET ASSETS ....................................................... $38,553 $29,531 $61,252 $9,473 $147,119
--------------------------------------------------------
<CAPTION>
AGGRESSIVE GROWTH EQUITY MULTI-
EQUITY LT INCOME STRATEGY
VARIABLE VARIABLE VARIABLE VARIABLE
ACCOUNT ACCOUNT ACCOUNT ACCOUNT
--------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments:
Money Market Portfolio (3,837 shares; cost $38,630) .............
High Yield Bond Portfolio (2,967 shares; cost $28,993) ..........
Managed Bond Portfolio (5,725 shares; cost $60,882) .............
Government Securities Portfolio (916 shares; cost $9,416) .......
Growth Portfolio (6,598 shares; cost $120,776) ..................
Aggressive Equity Portfolio (531 shares; cost $5,405) ........... $5,604
Growth LT Portfolio (5,937 shares; cost $90,504) ................ $97,589
Equity Income Portfolio (5,104 shares; cost $92,187) ............ $114,357
Multi-Strategy Portfolio (6,134 shares; cost $82,820) ........... $92,794
Receivables:
Due from Pacific Mutual Life Insurance Company .................. 12 197 61
Fund shares redeemed ............................................ 90
-------------------------------------------
Total Assets ..................................................... 5,616 97,786 114,418 92,884
-------------------------------------------
LIABILITIES
Payables:
Due to Pacific Mutual Life Insurance Company .................... 90
Fund shares purchased ........................................... 12 199 62
-------------------------------------------
Total Liabilities ................................................ 12 199 62 90
-------------------------------------------
NET ASSETS ....................................................... $5,604 $97,587 $114,356 $92,794
-------------------------------------------
</TABLE>
See Notes to Financial Statements
C-1
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
BOND AND EQUITY INTER- EMERGING
EQUITY INCOME INDEX NATIONAL MARKETS
VARIABLE VARIABLE VARIABLE VARIABLE VARIABLE
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments:
Equity Portfolio (39 shares; cost $868) ............................ $898
Bond and Income Portfolio (6 shares; cost $66) ..................... $66
Equity Index Portfolio (6,604 shares; cost $119,322) ............... $155,054
International Portfolio (7,285 shares; cost $100,329) .............. $125,068
Emerging Markets Portfolio (611 shares; cost $6,209) ............... $6,793
Edinburgh Overseas Equity Portfolio (41 shares; cost $401) .........
Turner Core Growth Portfolio (31 shares; cost $367) ................
Frontier Capital Appreciation Portfolio (138 shares; cost $1,755) ..
Enhanced U.S. Equity Portfolio (70 shares; cost $846) ..............
Receivables:
Due from Pacific Mutual Life Insurance Company ..................... 6 168 285 21
Fund shares redeemed ...............................................
-----------------------------------------------------------
Total Assets ........................................................ 904 66 155,222 125,353 6,814
-----------------------------------------------------------
LIABILITIES
Payables:
Due to Pacific Mutual Life Insurance Company .......................
Fund shares purchased .............................................. 6 171 286 21
-----------------------------------------------------------
Total Liabilities ................................................... 6 171 286 21
-----------------------------------------------------------
NET ASSETS .......................................................... $898 $66 $155,051 $125,067 $6,793
-----------------------------------------------------------
<CAPTION>
VARIABLE VARIABLE VARIABLE VARIABLE
ACCOUNT ACCOUNT ACCOUNT ACCOUNT
I II III IV
----------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments:
Equity Portfolio (39 shares; cost $868) .............................
Bond and Income Portfolio (6 shares; cost $66) ......................
Equity Index Portfolio (6,604 shares; cost $119,322) ................
International Portfolio (7,285 shares; cost $100,329) ...............
Emerging Markets Portfolio (611 shares; cost $6,209) ................
Edinburgh Overseas Equity Portfolio (41 shares; cost $401) .......... $446
Turner Core Growth Portfolio (31 shares; cost $367) ................. $401
Frontier Capital Appreciation Portfolio (138 shares; cost $1,755) ... $1,911
Enhanced U.S. Equity Portfolio (70 shares; cost $846) ............... $965
Receivables:
Due from Pacific Mutual Life Insurance Company ...................... 7
Fund shares redeemed ................................................ 2
---------------------------------------------
Total Assets ......................................................... 446 401 1,913 972
---------------------------------------------
LIABILITIES
Payables:
Due to Pacific Mutual Life Insurance Company ........................ 2
Fund shares purchased ............................................... 7
---------------------------------------------
Total Liabilities .................................................... 2 7
---------------------------------------------
NET ASSETS ........................................................... $446 $401 $1,911 $965
---------------------------------------------
</TABLE>
See Notes to Financial Statements
C-2
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 1997 (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
HIGH GOVERN-
MONEY YIELD MANAGED MENT
MARKET BOND BOND SECURITIES GROWTH
VARIABLE VARIABLE VARIABLE VARIABLE VARIABLE
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends ................................................ $874 $1,302 $1,970 $231 $14,264
--------------------------------------------------------------------
Net Investment Income ..................................... 874 1,302 1,970 231 14,264
--------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) from security transactions ...... 56 279 254 35 2,441
Net unrealized appreciation (depreciation) on investments. (76) (199) (717) (50) 5,180
--------------------------------------------------------------------
Net Realized And Unrealized Gain (Loss) On Investments .... (20) 80 (463) (15) 7,621
--------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ................................ $854 $1,382 $1,507 $216 $21,885
--------------------------------------------------------------------
<CAPTION>
AGGRESSIVE GROWTH EQUITY MULTI-
EQUITY LT INCOME STRATEGY
VARIABLE VARIABLE VARIABLE VARIABLE
ACCOUNT ACCOUNT ACCOUNT ACCOUNT
------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends ................................................ $4,585 $6,565 $5,924
------------------------------------------------------
Net Investment Income ..................................... 4,585 6,565 5,924
------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) from security transactions ...... $(96) 3,134 1,193 339
Net unrealized appreciation (depreciation) on investments. 133 (2,685) 8,072 2,042
------------------------------------------------------
Net Realized And Unrealized Gain (Loss) On Investments .... 37 449 9,265 2,381
------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ................................ $37 $5,034 $15,830 $8,305
------------------------------------------------------
</TABLE>
See Notes to Financial Statements
C-3
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENT OF OPERATIONS (CONTINUED)
FOR THE PERIOD ENDED JUNE 30, 1997 (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
BOND AND EQUITY INTER- EMERGING
EQUITY INCOME INDEX NATIONAL MARKETS
VARIABLE VARIABLE VARIABLE VARIABLE VARIABLE
ACCOUNT(1) ACCOUNT(1) ACCOUNT ACCOUNT ACCOUNT
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends ............................................... $19 $2 $6,065 $2,497
-----------------------------------------------------------------------
Net Investment Income .................................... 19 2 6,065 2,497
-----------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) from security transactions ..... 2 8,516 1,552 $ 58
Net unrealized appreciation on investments .............. 30 10,315 10,735 622
-----------------------------------------------------------------------
Net Realized And Unrealized Gain On Investments .......... 32 18,831 12,287 680
-----------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ............................... $51 $2 $24,896 $14,784 $680
-----------------------------------------------------------------------
<CAPTION>
VARIABLE VARIABLE VARIABLE VARIABLE
ACCOUNT ACCOUNT ACCOUNT ACCOUNT
I II III IV
-------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends ...............................................
-------------------------------------------------------
Net Investment Income ....................................
-------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) from security transactions ..... $ 30 $ (2)
Net unrealized appreciation on investments .............. $45 $44 161 139
-------------------------------------------------------
Net Realized And Unrealized Gain On Investments .......... 45 44 191 137
-------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ............................... $45 $44 $191 $137
-------------------------------------------------------
</TABLE>
(1) Operations commenced on January 10, 1997.
See Notes to Financial Statements
C-4
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE PERIOD ENDED JUNE 30, 1997 (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
BOND AND EQUITY INTER- EMERGING
EQUITY INCOME INDEX NATIONAL MARKETS
VARIABLE VARIABLE VARIABLE VARIABLE VARIABLE
ACCOUNT(1) ACCOUNT(1) ACCOUNT ACCOUNT ACCOUNT
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income .................................... $ 19 $ 2 $ 6,065 $ 2,497
Net realized gain (loss) from security transactions ...... 2 8,516 1,552 $ 58
Net unrealized appreciation on investments ............... 30 10,315 10,735 622
-----------------------------------------------------------------------
Net Increase In Net Assets Resulting From Operations ...... 51 2 24,896 14,784 680
-----------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums ................................. 67 5 12,455 13,131 754
Transfers--policy charges and deductions ................. (14) (2) (3,686) (3,436) (191)
Transfers in (from other variable accounts) .............. 1,096 75 27,344 24,609 4,634
Transfers out (to other variable accounts) ............... (262) (14) (9,911) (19,044) (2,284)
Transfers--other ......................................... (40) (21,244) (2,416) (79)
----------------------------------------------------------------------
Net Increase In Net Assets
Derived From Policy Transactions ......................... 847 64 4,958 12,844 2,834
----------------------------------------------------------------------
NET INCREASE IN NET ASSETS ................................ 898 66 29,854 27,628 3,514
----------------------------------------------------------------------
NET ASSETS
Beginning of Period ...................................... 125,197 97,439 3,279
----------------------------------------------------------------------
End of Period ............................................ $ 898 $ 66 $155,051 $125,067 $ 6,793
----------------------------------------------------------------------
<CAPTION>
VARIABLE VARIABLE VARIABLE VARIABLE
ACCOUNT ACCOUNT ACCOUNT ACCOUNT
I II III IV
-----------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income ....................................
Net realized gain (loss) from security transactions ...... $ 30 $ (2)
Net unrealized appreciation on investments ............... $ 45 $ 44 161 139
-----------------------------------------------------
Net Increase In Net Assets Resulting From Operations ...... 45 44 191 137
-----------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums ................................. 41 106 306 159
Transfers--policy charges and deductions ................. (9) (8) (61) (19)
Transfers in (from other variable accounts) .............. 293 245 2,565 438
Transfers out (to other variable accounts) ............... (1) (159) (1,593) (164)
Transfers--other ......................................... (40) (1)
-----------------------------------------------------
Net Increase In Net Assets
Derived From Policy Transactions ......................... 324 184 1,177 413
-----------------------------------------------------
NET INCREASE IN NET ASSETS ................................ 369 228 1,368 550
-----------------------------------------------------
NET ASSETS
Beginning of Period ...................................... 77 173 543 415
-----------------------------------------------------
End of Period ............................................ $446 $401 $1,911 $965
-----------------------------------------------------
</TABLE>
(1) Operations commenced on January 10, 1997.
See Notes to Financial Statements
C-6
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE PERIOD ENDED JUNE 30, 1997 (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
BOND AND EQUITY INTER- EMERGING
EQUITY INCOME INDEX NATIONAL MARKETS
VARIABLE VARIABLE VARIABLE VARIABLE VARIABLE
ACCOUNT(1) ACCOUNT(1) ACCOUNT ACCOUNT ACCOUNT
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income .................................... $ 19 $ 2 $ 6,065 $ 2,497
Net realized gain (loss) from security transactions ...... 2 8,516 1,552 $ 58
Net unrealized appreciation on investments ............... 30 10,315 10,735 622
-----------------------------------------------------------------------
Net Increase In Net Assets Resulting From Operations ...... 51 2 24,896 14,784 680
-----------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums ................................. 67 5 12,455 13,131 754
Transfers--policy charges and deductions ................. (14) (2) (3,686) (3,436) (191)
Transfers in (from other variable accounts) .............. 1,096 75 27,344 24,609 4,634
Transfers out (to other variable accounts) ............... (262) (14) (9,911) (19,044) (2,284)
Transfers--other ......................................... (40) (21,244) (2,416) (79)
----------------------------------------------------------------------
Net Increase In Net Assets
Derived From Policy Transactions ......................... 847 64 4,958 12,844 2,834
----------------------------------------------------------------------
NET INCREASE IN NET ASSETS ................................ 898 66 29,854 27,628 3,514
----------------------------------------------------------------------
NET ASSETS
Beginning of Period ...................................... 125,197 97,439 3,279
----------------------------------------------------------------------
End of Period ............................................ $ 898 $ 66 $155,051 $125,067 $ 6,793
----------------------------------------------------------------------
<CAPTION>
VARIABLE VARIABLE VARIABLE VARIABLE
ACCOUNT ACCOUNT ACCOUNT ACCOUNT
I II III IV
-----------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income ....................................
Net realized gain (loss) from security transactions ...... $ 30 $ (2)
Net unrealized appreciation on investments ............... $ 45 $ 44 161 139
-----------------------------------------------------
Net Increase In Net Assets Resulting From Operations ...... 45 44 191 137
-----------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums ................................. 41 106 306 159
Transfers--policy charges and deductions ................. (9) (8) (61) (19)
Transfers in (from other variable accounts) .............. 293 245 2,565 438
Transfers out (to other variable accounts) ............... (1) (159) (1,593) (164)
Transfers--other ......................................... (40) (1)
-----------------------------------------------------
Net Increase In Net Assets
Derived From Policy Transactions ......................... 324 184 1,177 413
-----------------------------------------------------
NET INCREASE IN NET ASSETS ................................ 369 228 1,368 550
-----------------------------------------------------
NET ASSETS
Beginning of Period ...................................... 77 173 543 415
-----------------------------------------------------
End of Period ............................................ $446 $401 $1,911 $965
-----------------------------------------------------
</TABLE>
(1) Operations commenced on January 10, 1997.
See Notes to Financial Statements
C-6
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
HIGH GOVERN-
MONEY YIELD MANAGED MENT
MARKET BOND BOND SECURITIES
VARIABLE VARIABLE VARIABLE VARIABLE
ACCOUNT ACCOUNT ACCOUNT ACCOUNT
------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income ............................................ $ 1,359 $ 1,753 $ 4,145 $ 490
Net realized gain (loss) from security transactions .............. 13 300 (203) 62
Net unrealized appreciation (depreciation) on investments ........ 58 144 (914) (316)
------------------------------------------------
Net Increase (Decrease) In Net Assets Resulting From Operations ... 1,430 2,197 3,028 236
------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums ......................................... 59,965 6,552 21,068 2,042
Transfers--policy charges and deductions ......................... (3,056) (1,528) (2,686) (580)
Transfers in (from other variable accounts) ...................... 64,487 12,323 8,787 2,504
Transfers out (to other variable accounts) ....................... (115,717) (7,278) (8,044) (2,257)
Transfers--other ................................................. (2,862) (920) (843) (379)
------------------------------------------------
Net Increase In Net Assets Derived From Policy Transactions ....... 2,817 9,149 18,282 1,330
------------------------------------------------
NET INCREASE IN NET ASSETS ........................................ 4,247 11,346 21,310 1,566
------------------------------------------------
NET ASSETS
Beginning of Year ................................................ 23,178 14,591 47,690 6,264
------------------------------------------------
End of Year ...................................................... $27,425 $25,937 $69,000 $7,830
------------------------------------------------
<CAPTION>
AGGRESSIVE GROWTH EQUITY
GROWTH EQUITY LT INCOME
VARIABLE VARIABLE VARIABLE VARIABLE
ACCOUNT ACCOUNT (1) ACCOUNT ACCOUNT
-----------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income ............................................ $ 6,582 $ 2 $ 608 $ 3,386
Net realized gain (loss) from security transactions .............. 2,826 (958) 4,372 667
Net unrealized appreciation (depreciation) on investments ........ 12,466 67 5,509 8,024
-----------------------------------------------
Net Increase (Decrease) In Net Assets Resulting From Operations ... 21,874 (889) 10,489 12,077
-----------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM POLICY TRANSACTIONS
Transfer of net premiums ......................................... 29,298 911 24,407 21,368
Transfers--policy charges and deductions ......................... (7,697) (146) (5,343) (4,205)
Transfers in (from other variable accounts) ...................... 54,635 11,133 48,532 18,530
Transfers out (to other variable accounts) ....................... (62,175) (7,395) (39,922) (8,965)
Transfers--other ................................................. (3,544) (283) (2,855) (2,661)
-----------------------------------------------
Net Increase In Net Assets Derived From Policy Transactions ....... 10,517 4,220 24,819 24,067
-----------------------------------------------
NET INCREASE IN NET ASSETS ........................................ 32,391 3,331 35,308 36,144
-----------------------------------------------
NET ASSETS
Beginning of Year ................................................ 87,519 53,759 49,716
-----------------------------------------------
End of Year ...................................................... $119,910 $3,331 $ 89,067 $85,860
-----------------------------------------------
</TABLE>
(1) Operations commenced during 1996.
See Notes to Financial Statements
C-7
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
MULTI- EQUITY INTER- EMERGING
STRATEGY INDEX NATIONAL MARKETS
VARIABLE VARIABLE VARIABLE VARIABLE
ACCOUNT ACCOUNT ACCOUNT ACCOUNT (1)
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income ........................................... $ 4,627 $ 3,825 $ 1,980
Net realized gain (loss) from security transactions ............. 356 1,223 564 $ (3)
Net unrealized appreciation (depreciation) on investments ....... 2,459 14,294 12,594 (39)
----------------------------------------------------------------
Net Increase (Decrease) In Net Assets Resulting
From Operations ................................................. 7,442 19,342 15,138 (42)
----------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
POLICY TRANSACTIONS
Transfer of net premiums ........................................ 22,669 31,284 26,068 549
Transfers--policy charges and deductions ........................ (3,698) (5,239) (5,477) (77)
Transfers in (from other variable accounts) ..................... 5,320 30,324 25,962 3,170
Transfers out (to other variable accounts) ...................... (4,577) (11,107) (18,655) (299)
Transfers--other ................................................ (2,330) (2,082) (2,024) (22)
----------------------------------------------------------------
Net Increase In Net Assets Derived From Policy Transactions ...... 17,384 43,180 25,874 3,321
----------------------------------------------------------------
NET INCREASE IN NET ASSETS ....................................... 24,826 62,522 41,012 3,279
----------------------------------------------------------------
NET ASSETS
Beginning of Year ............................................... 54,306 62,675 56,427
----------------------------------------------------------------
End of Year ..................................................... $79,132 $125,197 $97,439 $3,279
----------------------------------------------------------------
<CAPTION>
VARIABLE VARIABLE VARIABLE VARIABLE
ACCOUNT ACCOUNT ACCOUNT ACCOUNT
I(1) II (1) III (1) IV (1)
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income ........................................... $ 6 $ 21 $ 18
Net realized gain (loss) from security transactions ............. 1
Net unrealized appreciation (depreciation) on investments ....... (10) (6) (19)
---------------------------------------------------------------
Net Increase (Decrease) In Net Assets Resulting
From Operations ................................................. (4) 16 (1)
---------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
POLICY TRANSACTIONS
Transfer of net premiums ........................................ 7
Transfers--policy charges and deductions ........................ $ (1) (1) (5) (2)
Transfers in (from other variable accounts) ..................... 78 178 539 418
Transfers out (to other variable accounts) ......................
Transfers--other ................................................ (14)
---------------------------------------------------------------
Net Increase In Net Assets Derived From Policy Transactions ...... 77 177 527 416
---------------------------------------------------------------
NET INCREASE IN NET ASSETS ....................................... 77 173 543 415
---------------------------------------------------------------
NET ASSETS
Beginning of Year ...............................................
---------------------------------------------------------------
End of Year ..................................................... $ 77 $ 173 $ 543 $ 415
----------------------------------------------------------------
(1) Operations commenced during 1996.
See Notes to Financial Statements
</TABLE>
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, is currently comprised of eighteen 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, the Emerging Markets Variable Account, and the Variable Accounts I
through IV. The assets in each of the first fourteen Variable Accounts are
invested in shares of the corresponding portfolios of Pacific Select Fund and
the assets of the last four Variable Accounts are invested in shares of
corresponding portfolios of M Fund, Inc. (collectively, the "Funds"). Each
Variable Account pursues different investment objectives and policies. The
financial statements of the Funds, including the portfolios of investments, are
either included elsewhere in the report or provided separately and should be
read in conjunction with the Separate Account's financial statements.
The Separate Account has organized and registered with the Securities and
Exchange Commission two other Variable Accounts, the Equity Variable Account and
the Bond and Income Variable Account. Both Variable Accounts commenced
operations on January 10, 1997.
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 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 Funds are valued at the reported net asset values
of the respective portfolios. Valuation of securities held by the Funds is
discussed in the notes to their 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 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 1997, Pacific Select Fund has declared dividends for each portfolio
except for the Aggressive Equity Portfolio and the Emerging Markets 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., 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. POLICY OWNERS' COST OF INVESTMENTS IN THE FUNDS SHARES
The investment in the Funds shares are carried at identified cost, which
represents the amount available for investment (including reinvested
distributions of net investment income and realized gains). The cost and market
value of total Policy Owners' investments in the Funds as of June 30, 1997 were
as follows (amounts in thousands):
<TABLE>
<CAPTION>
VARIABLE ACCOUNTS
------------------------------------------------------------------------------
HIGH GOVERN-
MONEY YIELD MANAGED MENT AGGRESSIVE
MARKET BOND BOND SECURITIES GROWTH EQUITY
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total cost of investments at beginning of period $ 27,433 $ 25,201 $67,913 $ 7,723 $ 98,748 $ 3,264
Add: Total proceeds from sales of units 40,490 6,464 7,970 2,310 17,591 4,115
Reinvested distributions from the Fund:
(a) Net investment income 874 1,058 1,780 231 164
(b) Net realized gain 244 190 14,100
------------------------------------------------------------------------------
Sub-Total 68,797 32,967 77,853 10,264 130,603 7,379
Less: Cost of investments disposed during the
period 30,167 3,974 16,971 848 9,827 1,974
------------------------------------------------------------------------------
Total cost of investments at end of period 38,630 28,993 60,882 9,416 120,776 5,405
Add: Unrealized appreciation (depreciation) (78) 538 370 57 26,343 199
------------------------------------------------------------------------------
Total market value of investments at end of
period $ 38,552 $ 29,531 $61,252 $ 9,473 $147,119 $ 5,604
------------------------------------------------------------------------------
<CAPTION>
GROWTH EQUITY MULTI- BOND AND EQUITY
LT INCOME STRATEGY EQUITY (1) INCOME (1) INDEX
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total cost of investments at beginning of period $ 79,297 $ 71,762 $71,200 $ 99,779
Add: Total proceeds from sales of units 16,986 17,120 8,036 $ 1,121 $ 79 27,613
Reinvested distributions from the Fund:
(a) Net investment income 459 455 1,408 1 1 1,155
(b) Net realized gain 4,126 6,110 4,516 18 1 4,910
------------------------------------------------------------------------------
Sub-Total 100,868 95,447 85,160 1,140 81 133,457
Less: Cost of investments disposed during the
period 10,364 3,260 2,340 272 15 14,135
------------------------------------------------------------------------------
Total cost of investments at end of period 90,504 92,187 82,820 868 66 119,322
Add: Unrealized appreciation 7,085 22,170 9,974 30 35,732
------------------------------------------------------------------------------
Total market value of investments at end of
period $ 97,589 $114,357 $92,794 $ 898 $ 66 $155,054
------------------------------------------------------------------------------
<CAPTION>
INTER- EMERGING
NATIONAL MARKETS I II III IV
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total cost of investments at beginning of period $ 83,435 $ 3,318 $ 77 $ 177 $ 527 $ 416
Add: Total proceeds from sales of units 19,547 3,747 332 359 2,589 648
Reinvested distributions from the Fund:
(a) Net investment income 401
(b) Net realized gain 2,096
------------------------------------------------------------------------------
Sub-Total 105,479 7,065 409 536 3,116 1,064
Less: Cost of investments disposed during the
period 5,150 856 8 169 1,361 218
------------------------------------------------------------------------------
Total cost of investments at end of period 100,329 6,209 401 367 1,755 846
Add: Unrealized appreciation 24,739 584 45 34 156 119
------------------------------------------------------------------------------
Total market value of investments at end of
period $125,068 $ 6,793 $ 446 $ 401 $ 1,911 $ 965
------------------------------------------------------------------------------
</TABLE>
- ---------------------
(1) Operations commenced on January 10, 1997.
C-10
<PAGE>
PACIFIC SELECT EXEC 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, 1997 and
the selected accumulation unit information as of June 30, 1997 and December 31,
1996 were as follows:
<TABLE>
<CAPTION>
VARIABLE ACCOUNTS
------------------------------------------------------------------------------
MONEY HIGH YIELD MANAGED GOVERNMENT AGGRESSIVE
MARKET BOND BOND SECURITIES GROWTH EQUITY
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total units outstanding at beginning of period 1,797,662 1,071,818 3,332,577 394,531 4,060,628 306,793
Increase (decrease) in units resulting from
Policy transactions:
(a) Transfer of net premiums 3,219,135 122,668 316,962 55,340 447,825 72,100
(b) Transfers--policy charges and deductions (125,658) (36,120) (67,337) (15,136) (136,792) (17,441)
(c) Transfers in (from other variable accounts) 3,518,632 350,048 258,078 170,416 699,009 506,583
(d) Transfers out (to other variable accounts) (1,922,986) (282,087) (245,658) (44,300) (400,906) (328,115)
(e) Transfers--other (4,021,989) (63,827) (713,330) (93,963) (445,310) (13,292)
------------------------------------------------------------------------------
Sub-Total 667,134 90,682 (451,285) 72,357 163,826 219,835
------------------------------------------------------------------------------
Total units outstanding at end of period 2,464,796 1,162,500 2,881,292 466,888 4,224,454 526,628
------------------------------------------------------------------------------
Accumulation Unit Value: At beginning of period $15.26 $24.20 $20.70 $19.85 $29.53 $10.86
At end of period $15.64 $25.40 $21.26 $20.29 $34.83 $10.64
Growth Equity Multi- Bond and Equity
LT Income Strategy Equity (1) Income (1) Index
------------------------------------------------------------------------------
Total units outstanding at beginning of period 4,879,333 3,031,251 3,255,044 5,062,679
Increase (decrease) in units resulting from
Policy transactions:
(a) Transfer of net premiums 780,637 386,396 293,278 6,446 530 464,944
(b) Transfers--policy charges and deductions (179,728) (90,274) (86,693) (1,335) (162) (137,741)
(c) Transfers in (from other variable accounts) 1,046,779 510,135 263,312 104,267 7,260 1,053,207
(d) Transfers out (to other variable accounts) (1,162,588) (125,293) (115,414) (24,125) (1,334) (211,656)
(e) Transfers--other (288,952) (267,937) (142,061) (3,695) (1,027,038)
------------------------------------------------------------------------------
Sub-Total 196,148 413,027 212,422 81,558 6,294 141,716
------------------------------------------------------------------------------
Total units outstanding at end of period 5,075,481 3,444,278 3,467,466 81,558 6,294 5,204,395
------------------------------------------------------------------------------
Accumulation Unit Value: At beginning of period $18.25 $28.32 $24.31 $10.00 $10.00 $24.73
At end of period $19.23 $33.20 $26.76 $11.01 $10.45 $29.79
Inter- Emerging
national Markets I II III IV
------------------------------------------------------------------------------
Total units outstanding at beginning of period 5,140,103 333,810 7,649 17,011 51,927 41,571
Increase (decrease) in units resulting from
Policy transactions:
(a) Transfer of net premiums 656,819 70,711 4,054 10,650 30,882 16,646
(b) Transfers--policy charges and deductions (172,284) (17,832) (963) (729) (5,740) (1,817)
(c) Transfers in (from other variable accounts) 1,204,752 430,526 29,423 23,193 237,643 42,173
(d) Transfers out (to other variable accounts) (771,589) (205,778) (70) (14,756) (103,789) (15,536)
(e) Transfers--other (275,381) (10,085) 1 5 (45,310) 5
------------------------------------------------------------------------------
Sub-Total 642,317 267,542 32,445 18,363 113,686 41,471
------------------------------------------------------------------------------
Total units outstanding at end of period 5,782,420 601,352 40,094 35,374 165,613 83,042
------------------------------------------------------------------------------
Accumulation Unit Value: At beginning of period $18.96 $9.82 $10.08 $10.18 $10.46 $9.97
At end of period $21.63 $11.30 $11.12 $11.34 $11.54 $11.63
</TABLE>
- ----------------------
(1) Operations commenced on January 10, 1997.
** Accumulation Unit: unit of measure used to calculate the value of a Policy
Owner's interest in a Variable Account during the accumulation period.
C-11
