<PAGE>
SEMI-ANNUAL REPORT
.PACIFIC SELECT EXEC SEPARATE ACCOUNT OF PACIFIC LIFE INSURANCE COMPANY
[LOGO OF PACIFIC SELECT EXEC]
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (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 (5,236 shares; cost $52,765) ................. $52,640
High Yield Bond Portfolio (3,997 shares; cost $39,583) .............. $39,008
Managed Bond Portfolio (7,480 shares; cost $80,602) ................. $83,368
Government Securities Portfolio (1,170 shares; cost $12,258) ........ $12,526
Growth Portfolio (8,719 shares; cost $185,117) ...................... $206,427
Aggressive Equity Portfolio (1,080 shares; cost $12,729) ............
Growth LT Portfolio (7,256 shares; cost $118,048) ...................
Equity Income Portfolio (6,635 shares; cost $134,488) ...............
Multi-Strategy Portfolio (7,750 shares; cost $110,653) ..............
Receivables:
Due from Pacific Life Insurance Company ............................. 1,167 5 128
Fund shares redeemed ................................................ 5 8
---------------------------------------------------------
Total Assets ......................................................... 53,807 39,013 83,376 12,531 206,555
---------------------------------------------------------
LIABILITIES
Payables:
Due to Pacific Life Insurance Company ............................... 1 5 8
Fund shares purchased ............................................... 1,167 5 128
---------------------------------------------------------
Total Liabilities .................................................... 1,168 5 8 5 128
---------------------------------------------------------
NET ASSETS ........................................................... $52,639 $39,008 $83,368 $12,526 $206,427
=========================================================
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 (5,236 shares; cost $52,765) .................
High Yield Bond Portfolio (3,997 shares; cost $39,583) ..............
Managed Bond Portfolio (7,480 shares; cost $80,602) .................
Government Securities Portfolio (1,170 shares; cost $12,258) ........
Growth Portfolio (8,719 shares; cost $185,117) ......................
Aggressive Equity Portfolio (1,080 shares; cost $12,729) ............ $13,665
Growth LT Portfolio (7,256 shares; cost $118,048) ................... $156,787
Equity Income Portfolio (6,635 shares; cost $134,488) ............... $166,850
Multi-Strategy Portfolio (7,750 shares; cost $110,653) .............. $127,174
Receivables:
Due from Pacific Life Insurance Company ............................. 8 17
Fund shares redeemed ................................................ 126 281
--------------------------------------------------------
Total Assets ......................................................... 13,673 156,913 166,867 127,455
--------------------------------------------------------
LIABILITIES
Payables:
Due to Pacific Life Insurance Company ............................... 126 281
Fund shares purchased ............................................... 8 17
--------------------------------------------------------
Total Liabilities .................................................... 8 126 17 281
--------------------------------------------------------
NET ASSETS ........................................................... $13,665 $156,787 $166,850 $127,174
========================================================
</TABLE>
See Notes to Financial Statements
C-1
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES (Continued)
JUNE 30, 1998 (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 (384 shares; cost $9,959) ............................ $10,715
Bond and Income Portfolio (159 shares; cost $2,074) ................... $2,088
Equity Index Portfolio (8,514 shares; cost $179,592) .................. $253,783
International Portfolio (9,305 shares; cost $141,113) ................. $161,367
Emerging Markets Portfolio (1,164 shares; cost $11,221) ............... $9,577
Edinburgh Overseas Equity Portfolio (64 shares; cost $649) ............
Turner Core Growth Portfolio (75 shares; cost $1,033) .................
Frontier Capital Appreciation Portfolio (259 shares; cost $3,682) .....
Enhanced U.S. Equity Portfolio (158 shares; cost $2,294) ..............
Receivables:
Due from Pacific Life Insurance Company ............................... 25 2
Fund shares redeemed .................................................. 264 221 221
------------------------------------------------------
Total Assets ........................................................... 10,979 2,309 254,004 161,392 9,579
------------------------------------------------------
LIABILITIES
Payables:
Due to Pacific Life Insurance Company ................................. 264 221 221
Fund shares purchased ................................................. 25 2
------------------------------------------------------
Total Liabilities ...................................................... 264 221 221 25 2
------------------------------------------------------
NET ASSETS ............................................................. $10,715 $2,088 $253,783 $161,367 $9,577
======================================================
<CAPTION>
Variable Variable Variable Variable
Account Account Account Account
I II III IV
==========================================
<S> <C> <C> <C> <C>
ASSETS
Investments:
Equity Portfolio (384 shares; cost $9,959) ............................
Bond and Income Portfolio (159 shares; cost $2,074) ...................
Equity Index Portfolio (8,514 shares; cost $179,592) ..................
International Portfolio (9,305 shares; cost $141,113) .................
Emerging Markets Portfolio (1,164 shares; cost $11,221) ...............
Edinburgh Overseas Equity Portfolio (64 shares; cost $649) ............ $712
Turner Core Growth Portfolio (75 shares; cost $1,033) ................. $1,223
Frontier Capital Appreciation Portfolio (259 shares; cost $3,682) ..... $3,925
Enhanced U.S. Equity Portfolio (158 shares; cost $2,294) .............. $2,806
Receivables:
Due from Pacific Life Insurance Company ............................... 2 1
Fund shares redeemed ..................................................
------------------------------------------
Total Assets ........................................................... 712 1,223 3,927 2,807
==========================================
LIABILITIES
Payables:
Due to Pacific Life Insurance Company .................................
Fund shares purchased ................................................. 2 1
------------------------------------------
Total Liabilities ...................................................... 2 1
------------------------------------------
NET ASSETS ............................................................. $712 $1,223 $3,925 $2,806
==========================================
</TABLE>
See Notes to Financial Statements
C-2
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 1998 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
High Govern-
Money Yield Managed ment Aggressive Growth Equity Multi-
Market Bond Bond Securities Growth Equity LT Income Strategy
Variable Variable Variable Variable Variable Variable Variable Variable Variable
Account Account Account Account Account Account Account Account Account
========================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends ............................. $1,304 $1,782 $2,992 $522 $20,018 $6,250 $18,139 $10,355
----------------------------------------------------------------------------------------
Net Investment Income .................. 1,304 1,782 2,992 522 20,018 6,250 18,139 10,355
----------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain from security
transactions ......................... 16 177 251 63 6,263 $650 1,663 1,528 1,264
Net unrealized appreciation
(depreciation) on investments ....... (1) (977) (165) (145) (15,176) 639 27,360 1,638 310
----------------------------------------------------------------------------------------
Net Realized And Unrealized Gain
(Loss) On Investments ................ 15 (800) 86 (82) (8,913) 1,289 29,023 3,166 1,574
----------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ............. $1,319 $982 $3,078 $440 $11,105 $1,289 $35,273 $21,305 $11,929
========================================================================================
See Notes to Financial Statements
</TABLE>
C-3
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENT OF OPERATIONS (Continued)
FOR THE PERIOD ENDED JUNE 30, 1998 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Bond and Equity Inter- Emerging
Equity Income Index national Markets Variable Variable Variable Variable
Variable Variable Variable Variable Variable Account Account Account Account
Account Account Account Account Account I II (1) III IV
=====================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends ................................... $ 475 $50 $ 3,191 $11,321 $ 16 $21 $ 8
-------------------------------------------------------------------------------------
Net Investment Income ........................ 475 50 3,191 11,321 16 21 8
-------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) from
security transactions ..................... 246 21 4,136 2,986 (378) $ 3 $ 13 18 26
Net unrealized appreciation
(depreciation) on investments .............. 740 (5) 27,228 6,313 (962) 68 169 26 329
-------------------------------------------------------------------------------------
Net Realized And Unrealized Gain
(Loss) On Investments ...................... 986 16 31,364 9,299 (1,340) 71 182 44 355
-------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ................... $1,461 $66 $34,555 $20,620 $(1,324) $71 $182 $65 $363
=====================================================================================
</TABLE>
(1) Total dividends received in full for the six-month period ended June 30,
1998 was less than $500.
See Notes to Financial Statements
C-4
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED JUNE 30, 1998 (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>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income ......................................... $ 1,304 $ 1,782 $ 2,992 $ 522 $ 20,018
Net realized gain from security transactions .................. 16 177 251 63 6,263
Net unrealized appreciation (depreciation) on investments ..... (1) (977) (165) (145) (15,176)
--------------------------------------------------------------
Net Increase In Net Assets Resulting
From Operations ............................................... 1,319 982 3,078 440 11,105
--------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
POLICY TRANSACTIONS
Transfer of net premiums ...................................... 73,557 3,705 6,924 867 15,923
Transfers--policy charges and deductions ...................... (2,682) (1,062) (1,716) (302) (5,400)
Transfers in (from other variable accounts) ................... 114,755 14,082 23,355 3,086 50,537
Transfers out (to other variable accounts) .................... (181,860) (11,448) (18,345) (1,631) (40,218)
Transfers--other .............................................. (4,534) (958) (2,440) (355) (5,509)
---------------------------------------------------------------
Net Increase (Decrease) In Net Assets
Derived From Policy Transactions............................... (764) 4,319 7,778 1,665 15,333
---------------------------------------------------------------
NET INCREASE IN NET ASSETS ..................................... 555 5,301 10,856 2,105 26,438
---------------------------------------------------------------
NET ASSETS
Beginning of Period ........................................... 52,084 33,707 72,512 10,421 179,989
---------------------------------------------------------------
End of Period ................................................. $ 52,639 $ 39,008 $ 83,368 $12,526 $206,427
===============================================================
Aggressive Growth Equity Multi-
Equity LT Income Strategy
Variable Variable Variable Variable
Account Account Account Account
-------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income ......................................... $ 6,250 $ 18,139 $ 10,355
Net realized gain from security transactions .................. $ 650 1,663 1,528 1,264
Net unrealized appreciation (depreciation) on investments ..... 639 27,360 1,638 310
-------------------------------------------------
Net Increase In Net Assets Resulting
From Operations ............................................... 1,289 35,273 21,305 11,929
-------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
POLICY TRANSACTIONS
Transfer of net premiums ...................................... 1,887 14,523 13,570 6,891
Transfers--policy charges and deductions ...................... (418) (4,057) (3,745) (2,572)
Transfers in (from other variable accounts) ................... 7,183 24,596 19,939 5,985
Transfers out (to other variable accounts) .................... (5,465) (20,750) (13,005) (6,209)
Transfers--other .............................................. (284) (3,236) (2,700) (2,202)
-------------------------------------------------
Net Increase (Decrease) In Net Assets
Derived From Policy Transactions .............................. 2,903 11,076 14,059 1,893
-------------------------------------------------
NET INCREASE IN NET ASSETS ..................................... 4,192 46,349 35,364 13,822
-------------------------------------------------
NET ASSETS
Beginning of Period ........................................... 9,473 110,438 131,486 113,352
-------------------------------------------------
End of Period ................................................. $13,665 $156,787 $166,850 $127,174
=================================================
</TABLE>
See Notes to Financial Statements
C-5
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS (Continued)
FOR THE PERIOD ENDED JUNE 30, 1998 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Bond and Equity Inter- Emerging
Equity Income Index national Markets Variable Variable Variable Variable
Variable Variable Variable Variable Variable Account Account Account Account
Account Account Account Account Account I II III IV
===================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income ......................... $475 $50 $3,191 $11,321 $16 $21 $8
Net realized gain (loss) from
security transactions ....................... 246 21 4,136 2,986 (378) $3 $13 18 26
Net unrealized appreciation
(depreciation) on investments ............... 740 (5) 27,228 6,313 (962) 68 169 26 329
---------------------------------------------------------------------------------
Net Increase (Decrease) In Net
Assets Resulting From Operations ............. 1,461 66 34,555 20,620 (1,324) 71 182 65 363
---------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
POLICY TRANSACTIONS
Transfer of net premiums ...................... 1,047 344 20,829 14,636 1,673 52 97 627 227
Transfers--policy charges and deductions ...... (224) (57) (5,786) (4,061) (325) (21) (33) (124) (59)
Transfers in (from other variable accounts) ... 6,805 2,132 43,364 33,921 5,772 86 226 375 618
Transfers out (to other variable accounts) .... (2,318) (988) (20,384) (29,481) (4,414) (17) (30) (138) (62)
Transfers--other .............................. (246) (94) (6,083) (3,209) (221) 2 (2) 11 (35)
---------------------------------------------------------------------------------
Net Increase In Net Assets
Derived From Policy Transactions .............. 5,064 1,337 31,940 11,806 2,485 102 258 751 689
---------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS ..................... 6,525 1,403 66,495 32,426 1,161 173 440 816 1,052
---------------------------------------------------------------------------------
NET ASSETS
Beginning of Period ........................... 4,190 685 187,288 128,941 8,416 539 783 3,109 1,754
---------------------------------------------------------------------------------
End of Period ................................. $10,715 $2,088 $253,783 $161,367 $9,577 $712 $1,223 $3,925 $2,806
==================================================================================
See Notes to Financial Statements
</TABLE>
C-6
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
(In thousands)
<TABLE>
<CAPTION>
High Govern-
Money Yield Managed ment Aggressive Growth Equity Multi-
Market Bond Bond Securities Growth Equity LT Income Strategy
Variable Variable Variable Variable Variable Variable Variable Variable Variable
Account Account Account Account Account Account Account Account Account
=====================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income ....................... $ 2,072 $ 2,559 $ 3,893 $ 498 $ 14,427 $ 4,656 $ 7,127 $ 7,530
Net realized gain from
security transactions ...................... 94 454 367 96 6,822 $ 101 3,899 3,288 695
Net unrealized appreciation
(depreciation) on investments .............. (121) (335) 1,844 306 15,323 230 1,609 16,626 8,279
-------------------------------------------------------------------------------------
Net Increase In Net Assets Resulting
From Operations ............................. 2,045 2,678 6,104 900 36,572 331 10,164 27,041 16,504
-------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
POLICY TRANSACTIONS
Transfer of net premiums .................... 114,902 6,516 11,008 2,026 28,003 2,091 27,890 20,805 20,699
Transfers--policy charges and deductions .... (4,303) (1,844) (2,926) (587) (9,059) (469) (6,771) (5,873) (4,507)
Transfers in (from other variable accounts) . 133,629 17,591 15,603 5,190 61,551 12,131 34,622 27,826 9,864
Transfers out (to other variable accounts) .. (214,125) (15,732) (11,609) (4,376) (46,874) (7,838) (39,146) (18,793) (5,914)
Transfers--other ............................ (7,489) (1,439) (14,668) (562) (10,114) (104) (5,388) (5,380) (2,426)
-------------------------------------------------------------------------------------
Net Increase (Decrease) In Net Assets
Derived From Policy Transactions ............ 22,614 5,092 (2,592) 1,691 23,507 5,811 11,207 18,585 17,716
-------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS ................... 24,659 7,770 3,512 2,591 60,079 6,142 21,371 45,626 34,220
-------------------------------------------------------------------------------------
NET ASSETS
Beginning of Year ........................... 27,425 25,937 69,000 7,830 119,910 3,331 89,067 85,860 79,132
-------------------------------------------------------------------------------------
End of Year ................................. $ 52,084 $ 33,707 $ 72,512 $10,421 $179,989 $ 9,473 $110,438 $131,486 $113,352
=====================================================================================
</TABLE>
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, 1997
(In thousands)
<TABLE>
<CAPTION>
Bond and Equity Inter- Emerging
Equity Income Index national Markets Variable Variable
Variable Variable Variable Variable Variable Account Account
Account (1) Account (1) Account Account Account I II
==================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income ........................ $ 30 $ 11 $ 7,400 $ 4,347 $ 41 $ 8 $ 71
Net realized gain from security transactions . 13 5 12,511 4,938 187 2 7
Net unrealized appreciation (depreciation) on
investments ................................. 16 19 21,545 (62) (644) (4) 31
----------------------------------------------------------------------------------
Net Increase (Decrease) In Net Assets
Resulting From Operations .................... 59 35 41,456 9,223 (416) 6 109
----------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
POLICY TRANSACTIONS
Transfer of net premiums ..................... 466 56 28,526 26,039 2,039 80 172
Transfers--policy charges and deductions ..... (87) (13) (8,168) (7,142) (479) (25) (28)
Transfers in (from other variable accounts) .. 4,237 659 51,709 54,246 10,615 408 537
Transfers out (to other variable accounts) ... (438) (53) (25,760) (45,867) (6,460) (3) (163)
Transfers--other ............................. (47) 1 (25,672) (4,997) (162) (4) (17)
----------------------------------------------------------------------------------
Net Increase In Net Assets
Derived From Policy Transactions ............. 4,131 650 20,635 22,279 5,553 456 501
----------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS .................... 4,190 685 62,091 31,502 5,137 462 610
----------------------------------------------------------------------------------
NET ASSETS
Beginning of Year ............................ 125,197 97,439 3,279 77 173
----------------------------------------------------------------------------------
End of Year .................................. $4,190 $685 $187,288 $128,941 $ 8,416 $539 $ 783
==================================================================================
<CAPTION>
Variable Variable
Account Account
III IV
======================
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income ........................ $ 73 $ 63
Net realized gain from security transactions . 42 7
Net unrealized appreciation (depreciation) on
investments ................................. 222 201
----------------------
Net Increase (Decrease) In Net Assets
Resulting From Operations .................... 337 271
----------------------
INCREASE (DECREASE) IN NET ASSETS FROM
POLICY TRANSACTIONS
Transfer of net premiums ..................... 656 372
Transfers--policy charges and deductions ..... (149) (54)
Transfers in (from other variable accounts) .. 3,409 976
Transfers out (to other variable accounts) ... (1,636) (217)
Transfers--other ............................. (51) (9)
----------------------
Net Increase In Net Assets
Derived From Policy Transactions ............. 2,229 1,068
----------------------
NET INCREASE IN NET ASSETS .................... 2,566 1,339
----------------------
NET ASSETS
Beginning of Year ............................ 543 415
----------------------
End of Year .................................. $ 3,109 $1,754
======================
</TABLE>
(1) For the period from January 10, 1997 (commencement of operations) to
December 31, 1997.
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 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 the
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 schedules of investments, are
either included in Section A of this report or 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
(formerly named Pacific Mutual Life Insurance Company - see Note 1 to Financial
Statements of the Fund on A-67) 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 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 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 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, 1998, the Funds have declared
dividends for each portfolio except for the Aggressive Equity Portfolio and the
Edinburgh Overseas Equity 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 Life makes certain deductions from premiums for sales load and
state premium taxes before amounts are allocated to the Separate Account.
Pacific Life also makes certain deductions from the net assets of each Variable
Account for the mortality and expense risks Pacific Life 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 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.
C-9
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS (Continued)
(Unaudited)
5. SEPARATE ACCOUNT'S 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 Separate Account's investments in the Funds as of June 30, 1998
were as follows (amounts in thousands):
<TABLE>
<CAPTION>
Variable Accounts
===========================================================================
Govern-
Money High 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 $ 52,208 $33,305 $69,581 $10,008 $143,503 $ 9,176
Add: Total net proceeds from policy transactions 74,576 11,398 12,629 2,993 35,875 6,201
Reinvested distributions from the Funds:
(a) Net investment income 1,304 1,461 1,962 305
(b) Net realized gain 321 1,030 217 20,018
---------------------------------------------------------------------------
Sub-Total 128,088 46,485 85,202 13,523 199,396 15,377
Less: Cost of investments disposed during the period 75,323 6,902 4,600 1,265 14,279 2,648
---------------------------------------------------------------------------
Total cost of investments at end of period 52,765 39,583 80,602 12,258 185,117 12,729
Add: Unrealized appreciation (depreciation) (125) (575) 2,766 268 21,310 936
---------------------------------------------------------------------------
Total market value of investments at end of period $ 52,640 $39,008 $83,368 $12,526 $206,427 $13,665
===========================================================================
<CAPTION>
Growth Equity Multi- Bond and Equity
LT Income Strategy Equity Income Index
===========================================================================
<S> <C> <C> <C> <C> <C> <C>
Total cost of investments at beginning of period $ 99,059 $100,762 $ 97,141 $ 4,174 $ 666 $140,325
Add: Total net proceeds from policy transactions 17,681 18,629 8,059 6,978 2,018 42,231
Reinvested distributions from the Funds:
(a) Net investment income 326 538 1,730 8 47 1,471
(b) Net realized gain 5,924 17,601 8,625 467 3 1,720
---------------------------------------------------------------------------
Sub-Total 122,990 137,530 115,555 11,627 2,734 185,747
Less: Cost of investments disposed during the period 4,942 3,042 4,902 1,668 660 6,155
---------------------------------------------------------------------------
Total cost of investments at end of period 118,048 134,488 110,653 9,959 2,074 179,592
Add: Unrealized appreciation 38,739 32,362 16,521 756 14 74,191
---------------------------------------------------------------------------
Total market value of investments at end of period $156,787 $166,850 $127,174 $10,715 $2,088 $253,783
===========================================================================
<CAPTION>
Inter- Emerging
national Markets I II III IV
===========================================================================
<S> <C> <C> <C> <C> <C> <C>
Total cost of investments at beginning of period $115,000 $ 9,098 $544 $ 762 $2,892 $1,571
Add: Total net proceeds from policy transactions 24,732 5,012 130 319 867 797
Reinvested distributions from the Funds:
(a) Net investment income 821 16
(b) Net realized gain 10,500 21 8
---------------------------------------------------------------------------
Sub-Total 151,053 14,126 674 1,081 3,780 2,376
Less: Cost of investments disposed during the period 9,940 2,905 25 48 98 82
---------------------------------------------------------------------------
Total cost of investments at end of period 141,113 11,221 649 1,033 3,682 2,294
Add: Unrealized appreciation (depreciation) 20,254 (1,644) 63 190 243 512
---------------------------------------------------------------------------
Total market value of investments at end of period $161,367 $ 9,577 $712 $1,223 $3,925 $2,806
===========================================================================
</TABLE>
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, 1998
and the selected accumulation unit information as of June 30, 1998 and December
31, 1997 were as follows:
<TABLE>
<CAPTION>
Variable Accounts
=============================================================================
Govern-
Money High Yield Managed ment Aggressive
Market Bond Bond Securities Growth Equity
=============================================================================
<S> <C> <C> <C> <C> <C> <C>
Total units outstanding at beginning of period 3,242,630 1,272,728 3,186,015 479,603 4,678,660 840,837
Increase (decrease) in units resulting from
policy transactions:
(a) Transfer of net premiums 4,530,739 133,356 298,915 39,235 391,375 153,537
(b) Transfers--policy charges and deductions (165,081) (39,468) (74,089) (13,660) (132,140) (33,823)
(c) Transfers in (from other variable accounts) 6,993,412 501,022 975,337 125,335 1,147,534 564,912
(d) Transfers out (to other variable accounts) (11,130,833) (400,678) (764,659) (62,448) (897,571) (430,768)
(e) Transfers--other (277,650) (33,564) (101,703) (13,630) (122,969) (22,385)
-----------------------------------------------------------------------------
Sub-Total (49,413) 160,668 333,801 74,832 386,229 231,473
-----------------------------------------------------------------------------
Total units outstanding at end of period 3,193,217 1,433,396 3,519,816 554,435 5,064,889 1,072,310
=============================================================================
-----------------------------------------------------------------------------
Accumulation Unit Value: At beginning of period $16.06 $26.48 $22.76 $21.73 $38.47 $11.27
At end of period $16.48 $27.21 $23.69 $22.59 $40.76 $12.74
-----------------------------------------------------------------------------
<CAPTION>
Growth Equity Multi- Bond and Equity
LT Income Strategy Equity Income Index
=============================================================================
<S> <C> <C> <C> <C> <C> <C>
Total units outstanding at beginning of period 5,452,479 3,609,629 3,897,779 365,186 57,616 5,696,188
Increase (decrease) in units resulting from
policy transactions:
(a) Transfer of net premiums 623,344 338,100 222,881 81,485 28,415 577,861
(b) Transfers--policy charges and deductions (174,926) (93,538) (83,431) (17,149) (4,713) (160,168)
(c) Transfers in (from other variable accounts) 973,642 417,231 162,356 506,407 175,452 1,112,504
(d) Transfers out (to other variable accounts) (816,807) (254,436) (176,782) (164,567) (81,522) (508,134)
(e) Transfers--other (127,383) (52,825) (62,666) (17,537) (7,840) (151,639)
-----------------------------------------------------------------------------
Sub-Total 477,870 354,532 62,358 388,639 109,792 870,424
-----------------------------------------------------------------------------
Total units outstanding at end of period 5,930,349 3,964,161 3,960,137 753,825 167,408 6,566,612
=============================================================================
-----------------------------------------------------------------------------
Accumulation Unit Value: At beginning of period $20.25 $36.43 $29.08 $11.47 $11.89 $32.88
At end of period $26.44 $42.09 $32.11 $14.21 $12.47 $38.65
-----------------------------------------------------------------------------
Inter- Emerging
national Markets I II III IV
=============================================================================
<S> <C> <C> <C> <C> <C> <C>
Total units outstanding at beginning of period 6,224,372 871,397 52,300 59,984 243,373 132,506
Increase (decrease) in units resulting from
policy transactions:
(a) Transfer of net premiums 642,949 178,571 4,684 6,994 48,209 15,767
(b) Transfers--policy charges and deductions (178,696) (34,640) (1,832) (2,289) (9,446) (4,068)
(c) Transfers in (from other variable accounts) 1,379,993 610,009 7,599 15,262 26,156 42,329
(d) Transfers out (to other variable accounts) (1,188,741) (462,810) (1,464) (2,117) (7,771) (4,355)
(e) Transfers--other (129,393) (23,171) 257 (141) 675 (2,458)
-----------------------------------------------------------------------------
Sub-Total 526,112 267,959 9,244 17,709 57,823 47,215
-----------------------------------------------------------------------------
Total units outstanding at end of period 6,750,484 1,139,356 61,544 77,693 301,196 179,721
=============================================================================
-----------------------------------------------------------------------------
Accumulation Unit Value: At beginning of period $20.72 $9.66 $10.31 $13.06 $12.77 $13.23
At end of period $23.90 $8.41 $11.57 $15.75 $13.03 $15.61
-----------------------------------------------------------------------------
</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.
C-11
