<PAGE>
ANNUAL REPORT
. PACIFIC SELECT EXEC SEPARATE ACCOUNT OF PACIFIC LIFE INSURANCE COMPANY
[LOGO OF PACIFIC SELECT EXEC]
<PAGE>
DEAR PACIFIC LIFE VARIABLE UNIVERSAL LIFE INSURANCE POLICY OWNER:
We are pleased to share with you the 1997 Annual Report of the Pacific Select
Exec Separate Account ("Separate Account") of Pacific Life Insurance Company
("Pacific Life").
The Separate Account supports your Pacific Life Variable Universal Life
Insurance Policy ("the Policy"). The Separate Account is divided into
subaccounts, called Variable Accounts. A fixed account option is also
available.
Attached are charts of a hypothetical policy for each of the Variable
Universal Life Insurance Policies supported by the Pacific Select Exec Separate
Account, which indicate the Accumulated Values and Cash Surrender Values as of
December 31, 1997, assuming 100% of the net premium payment was allocated to
each Variable Account.
If you have any questions, please contact your Registered Representative, or
call Pacific Life's Marketing Department at our toll free number 1-800-800-7681.
SINCERELY,
/s/ Thomas C. Sutton
THOMAS C. SUTTON
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
PACIFIC LIFE INSURANCE COMPANY
C-1
<PAGE>
PACIFIC SELECT EXEC
The following indicates the Accumulated Values and Cash Surrender Values as
of December 31, 1997, assuming a hypothetical policy was purchased (1) on the
date each Variable Account began operations, and (2) on January 2, 1997, if
later. Also assumed is that 100% of each net premium payment was allocated to
such Variable Account. The Policy is based on an insured male, nonsmoker, age
40, annual premium payments of $10,000 (also Guideline Annual Premium), and a
Level and Initial Death Benefit of $560,323:
<TABLE>
<CAPTION>
VARIABLE ACCOUNTS
----------------------------------------------------------------------------------------------------------------------
MONEY HIGH YIELD MANAGED GOVERNMENT AGGRESSIVE GROWTH EQUITY MULTI-
MARKET BOND BOND SECURITIES GROWTH EQUITY LT INCOME STRATEGY
11/22/88* 1/3/89* 2/1/89* 2/15/89* 2/1/89* 4/8/96* 1/4/94* 1/3/89* 1/3/89*
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(1) POLICY PURCHASED ON DATE VARIABLE ACCOUNT BEGAN OPERATIONS
AV** $97,073.78 $128,271.06 $107,751.08 $103,638.07 $168,297.20 $18,927.64 $50,231.86 $160,275.29 $132,482.73
CSV*** 96,370.82 127,427.51 106,837.23 102,724.22 167,383.35 14,709.86 46,014.09 159,431.73 131,639.18
(2) POLICY PURCHASED ON 1/2/97
AV** 8,542.94 8,912.64 8,987.19 8,946.12 10,868.81 8,534.24 9,119.24 10,640.29 9,843.63
CSV*** 4,325.17 4,694.86 4,769.41 4,728.34 6,651.03 4,316.46 4,901.46 6,422.51 5,625.86
</TABLE>
<TABLE>
<CAPTION>
BOND AND EQUITY INTER- EMERGING VARIABLE VARIABLE VARIABLE VARIABLE
EQUITY INCOME INDEX NATIONAL MARKETS ACCOUNT I ACCOUNT II ACCOUNT III ACCOUNT IV
1/10/97* 1/10/97* 1/31/91* 1/19/89* 4/8/96* 10/11/96* 10/17/96* 10/11/96* 11/18/96*
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(1) POLICY PURCHASED ON DATE VARIABLE ACCOUNT BEGAN OPERATIONS
AV** $9,399.64 $9,700.98 $122,021.16 $113,889.71 $15,449.15 $16,817.42 $19,899.75 $18,424.78 $20,346.90
CSV*** 5,181.87 5,483.20 119,490.49 113,046.15 11,231.38 12,599.64 15,681.97 14,207.00 16,129.12
(2) POLICY PURCHASED ON 1/2/97
AV** * * 11,039.70 9,036.65 7,998.30 8,407.09 10,635.29 10,113.97 11,009.03
CSV*** * * 6,821.92 4,818.87 3,780.53 4,189.32 6,417.52 5,896.19 6,791.26
</TABLE>
PACIFIC SELECT CHOICE
The following indicates the Accumulated Values and Cash Surrender Values as
of December 31, 1997, assuming a hypothetical policy was purchased (1) on the
date each Variable Account began operations, and (2) on January 2, 1997, if
later. Also assumed is that 100% of each net premium payment was allocated to
such Variable Account. The Policy is based on an insured male, nonsmoker, age
40, annual premium payments of $10,000 (also Guideline Annual Premium), and a
Level and Initial Death Benefit of $559,456:
<TABLE>
<CAPTION>
MONEY HIGH YIELD MANAGED GOVERNMENT AGGRESSIVE GROWTH EQUITY MULTI-
MARKET BOND BOND SECURITIES GROWTH EQUITY LT INCOME STRATEGY
11/22/88* 1/3/89* 2/1/89* 2/15/89* 2/1/89* 4/8/96* 1/4/94* 1/3/89* 1/3/89*
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(1) POLICY PURCHASED ON DATE VARIABLE ACCOUNT BEGAN OPERATIONS
AV** $87,127.79 $111,045.50 $93,837.18 $90,413.09 $145,015.41 $13,148.62 $38,383.78 $139,267.04 $115,422.64
CSV*** 86,768.81 110,621.24 93,380.29 89,956.20 144,558.52 12,444.38 36,425.68 138,842.79 114,998.39
(2) POLICY PURCHASED ON 1/2/97
AV** 5,651.12 5,919.06 5,960.64 5,929.19 7,362.63 5,628.98 6,069.21 7,196.54 6,599.78
CSV*** 3,693.03 3,960.96 4,002.55 3,971.10 5,404.53 3,670.89 4,111.11 5,238.44 4,641.68
</TABLE>
<TABLE>
<CAPTION>
BOND AND EQUITY INTER- EMERGING VARIABLE VARIABLE VARIABLE VARIABLE
EQUITY INCOME INDEX NATIONAL MARKETS ACCOUNT I ACCOUNT II ACCOUNT III ACCOUNT IV
1/10/97* 1/10/97* 1/31/91* 1/19/89* 4/8/96* 10/11/96* 10/17/96* 10/11/96* 11/18/96*
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(1) POLICY PURCHASED ON DATE VARIABLE ACCOUNT BEGAN OPERATIONS
AV** $6,295.95 $6,459.43 $102,936.67 $100,912.78 $10,611.20 $11,930.74 $14,120.95 $13,024.30 $14,539.86
CSV*** 4,337.86 4,501.34 101,729.18 100,488.53 9,906.95 11,226.49 13,416.70 12,320.05 13,835.62
(2) POLICY PURCHASED ON 1/2/97
AV** * * 7,480.43 6,055.03 5,325.14 5,581.42 7,154.04 6,802.39 7,442.69
CSV*** * * 5,522.33 4,096.94 3,367.04 3,623.32 5,195.94 4,844.30 5,484.59
</TABLE>
__________________________________________
* Date Variable Account began operations.
** Accumulated Value: Includes deductions for all policy charges, including
cost of insurance, except surrender charges. Cost of insurance rates vary
depending on age, sex, smoking status, substandard rating, and face amount
(for Pacific Select Exec only).
*** Cash Surrender Value: Includes deductions for all policy charges, including
any underwriting and sales surrender charges that would have been deducted
if the policy had been surrendered on December 31, 1997. Surrender charges
vary by policy.
C-2
<PAGE>
PACIFIC SELECT ESTATE PRESERVER
The following indicates the Accumulated Values and Cash Surrender Values as
of December 31, 1997, assuming a hypothetical policy was purchased (1) on the
date each Variable Account began operations, and (2) on January 2, 1997, if
later. Also assumed is that 100% of each net premium payment was allocated to
such Variable Account. The Policy is based on joint insureds, both male and
female, select-nonsmokers, both age 40, annual premium payments of $10,000 (also
Guideline Annual Premium), and a Level and Initial Death Benefit of $954,483:
<TABLE>
<CAPTION>
VARIABLE ACCOUNTS
----------------------------------------------------------------------------------------------------------------------
MONEY HIGH YIELD MANAGED GOVERNMENT AGGRESSIVE GROWTH EQUITY MULTI-
MARKET BOND BOND SECURITIES GROWTH EQUITY LT INCOME STRATEGY
11/22/88* 1/3/89* 2/1/89* 2/15/89* 2/1/89* 4/8/96* 1/4/94* 1/3/89* 1/3/89*
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(1) POLICY PURCHASED ON DATE VARIABLE ACCOUNT BEGAN OPERATIONS
AV** $100,497.30 $132,608.43 $111,607.85 $107,398.73 $173,700.56 $18,735.90 $50,579.10 $165,637.52 $137,121.67
CSV*** 100,038.84 132,058.28 111,011.85 106,802.73 173,104.56 14,197.14 47,278.18 165,087.36 136,571.51
(2) POLICY PURCHASED ON 1/2/97
AV** 8,491.13 8,854.95 8,930.24 8,890.09 10,775.98 8,484.98 9,058.18 10,551.19 9,770.21
CSV*** 3,539.75 3,903.56 3,978.86 3,938.71 5,824.60 3,533.60 4,106.80 5,599.81 4,818.83
<CAPTION>
BOND AND EQUITY INTER- EMERGING VARIABLE VARIABLE VARIABLE VARIABLE
EQUITY INCOME INDEX NATIONAL MARKETS ACCOUNT I ACCOUNT II ACCOUNT III ACCOUNT IV
1/10/97* 1/10/97* 1/31/91* 1/19/89* 4/8/96* 10/11/96* 10/17/96* 10/11/96* 11/18/96*
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(1) POLICY PURCHASED ON DATE VARIABLE ACCOUNT BEGAN OPERATIONS
AV** $9,330.49 $9,635.56 $124,950.36 $118,202.20 $15,313.59 $16,580.45 $19,620.45 $18,175.58 $20,039.59
CSV*** 4,379.11 4,684.18 123,299.90 117,652.05 10,774.83 11,766.61 14,806.60 13,361.74 15,179.91
(2) POLICY PURCHASED ON 1/2/97
AV** * * 10,945.12 8,969.83 7,944.51 8,352.97 10,552.30 10,035.18 10,917.34
CSV*** * * 5,993.74 4,018.45 2,993.13 3,401.59 5,600.92 5,083.80 5,965.96
</TABLE>
PACIFIC SELECT ESTATE PRESERVER II
The following indicates the Accumulated Values and Cash Surrender Values as
of December 31, 1997, assuming a hypothetical policy was purchased (1) on the
date each Variable Account began operations, and (2) on January 2, 1997, if
later. Also assumed is that 100% of each net premium payment was allocated to
such Variable Account. The Policy is based on joint insureds, both male and
female, select-nonsmokers, both age 40, annual premium payments of $10,000 (also
Guideline Annual Premium), and a Level and Initial Death Benefit of $944,039:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
MONEY HIGH YIELD MANAGED GOVERNMENT AGGRESSIVE GROWTH EQUITY MULTI-
MARKET BOND BOND SECURITIES GROWTH EQUITY LT INCOME STRATEGY
11/22/88* 1/3/89* 2/1/89* 2/15/89* 2/1/89* 4/8/96* 1/4/94* 1/3/89* 1/3/89*
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(1) POLICY PURCHASED ON DATE VARIABLE ACCOUNT BEGAN OPERATIONS
AV** $99,376.76 $131,126.91 $110,361.33 $106,199.33 $171,760.17 $18,526.45 $50,012.17 $163,787.90 $135,590.38
CSV*** 99,376.76 131,126.91 110,361.33 106,199.33 171,760.17 18,526.45 50,012.17 163,787.90 135,590.38
(2) POLICY PURCHASED ON 1/2/97
AV** 8,395.79 8,755.57 8,830.00 8,790.29 10,655.36 8,389.67 8,956.54 10,433.06 9,660.69
CSV*** 8,395.79 8,755.57 8,830.00 8,790.29 10,655.36 8,389.67 8,956.54 10,433.06 9,660.69
<CAPTION>
BOND AND EQUITY INTER- EMERGING VARIABLE VARIABLE VARIABLE VARIABLE
EQUITY INCOME INDEX NATIONAL MARKETS ACCOUNT I ACCOUNT II ACCOUNT III ACCOUNT IV
1/10/97* 1/10/97* 1/31/91* 1/19/89* 4/8/96* 10/11/96* 10/17/96* 10/11/96* 11/18/96*
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(1) POLICY PURCHASED ON DATE VARIABLE ACCOUNT BEGAN OPERATIONS
AV** $9,225.89 $9,527.46 $123,552.31 $116,881.93 $15,142.09 $16,395.90 $19,402.08 $17,973.18 $19,816.84
CSV*** 9,225.89 9,527.46 123,552.31 116,881.93 15,142.09 16,395.90 19,402.08 17,973.18 19,816.84
(2) POLICY PURCHASED ON 1/2/97
AV** * * 10,822.61 8,869.28 7,855.38 8,259.22 10,434.07 9,922.74 10,795.10
CSV*** * * 10,822.61 8,869.28 7,855.38 8,259.22 10,434.07 9,922.74 10,795.10
</TABLE>
_____________________________________
* Date Variable Account began operations.
** Accumulated Value: Includes deductions for all policy charges, including
cost of insurance, except surrender charges. Cost of insurance rates vary
depending on age, sex, smoking status and substandard rating.
*** Cash Surrender Value: Includes deductions for all policy charges, including
any underwriting and sales surrender charges that would have been deducted
if the policy had been surrendered on December 31, 1997. Surrender charges
vary by policy.
C-3
<PAGE>
PACIFIC SELECT ESTATE MAXIMIZER (SINGLE INSURED)
The following indicates the Accumulated Values and Cash Surrender Values as
of December 31, 1997, assuming a hypothetical policy was purchased (1) on the
date each Variable Account began operations, and (2) on January 2, 1997, if
later. Also assumed is that 100% of each net premium payment was allocated to
such Variable Account. The Policy is based on an insured male, nonsmoker, age
40, single premium payment of $40,000 (also Guideline Single Premium), and a
Level and Initial Death Benefit of $159,779:
<TABLE>
<CAPTION>
VARIABLE ACCOUNTS
-------------- --------------- ---------------- --------------- ------------------
MONEY HIGH YIELD MANAGED GOVERNMENT
MARKET BOND BOND SECURITIES GROWTH
11/22/88* 1/3/89* 2/1/89* 2/15/89* 2/1/89*
-------------- --------------- ---------------- --------------- ------------------
<S> <C> <C> <C> <C>
(1) POLICY PURCHASED ON DATE VARIABLE ACCOUNT BEGAN OPERATIONS
AV** $52,671.38 $87,432.65 $75,318.45 $71,935.48 $125,579.41
CSV*** 52,671.38 86,232.65 74,118.45 70,735.48 124,379.41
(2) POLICY PURCHASED ON 1/2/97
AV** 41,225.62 42,884.00 43,285.28 43,110.10 51,520.28
CSV*** 37,225.62 38,884.00 39,285.28 39,110.10 47,520.28
<CAPTION>
VARIABLE ACCOUNTS
---------------- ---------------- ---------------- --------------
AGGRESSIVE GROWTH EQUITY MULTI-
EQUITY LT INCOME STRATEGY
4/8/96* 1/4/94* 1/3/89* 1/3/89*
---------------- ---------------- ---------------- --------------
<S> <C> <C> <C>
(1) POLICY PURCHASED ON DATE VARIABLE ACCOUNT BEGAN OPERATIONS
AV** $43,393.14 $74,418.22 $120,487.34 $96,115.22
CSV*** 39,393.14 71,218.22 119,287.34 94,915.22
(2) POLICY PURCHASED ON 1/2/97
AV** 41,271.46 43,808.46 50,497.77 47,028.18
CSV*** 37,271.46 39,808.46 46,497.77 43,028.18
</TABLE>
<TABLE>
<CAPTION>
BOND AND EQUITY INTER- EMERGING VARIABLE
EQUITY INCOME INDEX NATIONAL MARKETS ACCOUNT I
1/10/97* 1/10/97* 1/31/91* 1/19/89* 4/8/96* 10/11/96*
-------------- --------------- ---------------- --------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C>
(1) POLICY PURCHASED ON DATE VARIABLE ACCOUNT BEGAN OPERATIONS
AV** $44,940.04 $46,586.77 $113,628.19 $68,208.93 $37,202.81 $40,118.01
CSV*** 40,940.04 42,586.77 111,628.19 67,008.93 33,202.81 36,118.01
(2) POLICY PURCHASED ON 1/2/97
AV** * * 52,319.43 43,192.69 38,413.30 40,461.72
CSV*** * * 48,319.43 39,192.69 34,413.30 36,461.72
<CAPTION>
VARIABLE VARIABLE VARIABLE
ACCOUNT II ACCOUNT III ACCOUNT IV
10/17/96* 10/11/96* 11/18/96*
--------------- ---------------- ----------------
(1) POLICY PURCHASED ON DATE VARIABLE ACCOUNT BEGAN OPERATIONS
AV** $50,886.93 $49,766.63 $51,611.18
CSV*** * 46,886.93 45,766.63 47,611.18
(2) POLICY PURCHASED ON 1/2/97
AV** 50,684.16 48,204.84 52,265.19
CSV*** 46,684.16 44,204.84 48,265.19
</TABLE>
PACIFIC SELECT ESTATE MAXIMIZER (JOINT INSUREDS)
The following indicates the Accumulated Values and Cash Surrender Values as
of December 31, 1997, assuming a hypothetical policy was purchased (1) on the
date each Variable Account began operations, and (2) on January 2, 1997, if
later. Also assumed is that 100% of each net premium payment was allocated to
such Variable Account. The Policy is based on joint insureds male and female,
nonsmokers, age 40, single premium payment of $40,000 (also Guideline Single
Premium), and a Level and Initial Death Benefit of $271,147:
<TABLE>
<CAPTION>
MONEY HIGH YIELD MANAGED GOVERNMENT
MARKET BOND BOND SECURITIES GROWTH
11/22/88* 1/3/89* 2/1/89* 2/15/89* 2/1/89*
--------------- --------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
(1) POLICY PURCHASED ON DATE VARIABLE ACCOUNT BEGAN OPERATIONS
AV** $54,890.28 $91,150.42 $78,466.25 $74,932.74 $130,947.15
CSV*** 54,890.28 89,950.42 77,266.25 73,732.74 129,747.15
(2) POLICY PURCHASED ON 1/2/97
AV** 41,430.73 43,097.40 43,500.66 43,324.60 51,776.94
CSV*** 37,430.73 39,097.40 39,500.66 39,324.60 47,776.94
<CAPTION>
AGGRESSIVE GROWTH EQUITY MULTI-
EQUITY LT INCOME STRATEGY
4/8/96* 1/4/94* 1/3/89* 1/3/89*
---------------- --------------- ---------------- -----------------
<S> <C> <C> <C>
(1) POLICY PURCHASED ON DATE VARIABLE ACCOUNT BEGAN OPERATIONS
AV** $43,768.83 $75,884.61 $125,671.03 $100,210.73
CSV*** 39,768.83 72,684.61 124,471.03 99,010.73
(2) POLICY PURCHASED ON 1/2/97
AV** 41,476.76 44,026.49 50,749.31 47,262.33
CSV*** 37,476.76 40,026.49 46,749.31 43,262.33
</TABLE>
<TABLE>
<CAPTION>
BOND AND EQUITY INTER- EMERGING VARIABLE
EQUITY INCOME INDEX NATIONAL MARKETS ACCOUNT I
1/10/97* 1/10/97* 1/31/91* 1/19/89* 4/8/96* 10/11/96*
-------------- --------------- ---------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
(1) POLICY PURCHASED ON DATE VARIABLE ACCOUNT BEGAN OPERATIONS
AV** $45,163.78 $46,818.63 $117,437.99 $71,136.00 $37,524.57 $40,366.82
CSV*** 41,163.78 42,818.63 115,437.99 69,936.00 33,524.57 36,366.82
(2) POLICY PURCHASED ON 1/2/97
AV** * * 52,580.07 43,407.73 38,604.48 40,663.07
CSV*** * * 48,580.07 39,407.73 34,604.48 36,663.07
<CAPTION>
VARIABLE VARIABLE VARIABLE
ACCOUNT II ACCOUNT III ACCOUNT IV
10/17/96* 10/11/96* 11/18/96*
--------------- ---------------- --------------
<S> <C> <C>
(1) POLICY PURCHASED ON DATE VARIABLE ACCOUNT BEGAN OPERATIONS
AV** $51,202.82 $50,075.68 $51,952.11
CSV*** 47,202.82 46,075.68 47,952.11
(2) POLICY PURCHASED ON 1/2/97
AV** 50,936.55 48,444.88 52,525.53
CSV*** 46,936.55 44,444.88 48,525.53
</TABLE>
_________________
* Date Variable Account began operations.
** Accumulated Value: Includes deductions for all policy charges, including
cost of insurance, except surrender charges. Cost of insurance rates vary
depending on age and smoking status.
*** Cash Surrender Value: Includes deductions for all policy charges, including
any underwriting and sales surrender charges that would have been deducted
if the policy had been surrendered on December 31, 1997. Surrender charges
vary by policy.
C-4
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Pacific Life Insurance Company
We have audited the accompanying statement of assets and liabilities of the
Pacific Select Exec Separate Account (comprised of the Money Market, High Yield
Bond, Managed Bond, Government Securities, Growth, Aggressive Equity, Growth LT,
Equity Income, Multi-Strategy, Equity, Bond and Income, Equity Index,
International, Emerging Markets, Variable Account I, Variable Account II,
Variable Account III, and Variable Account IV Variable Accounts) as of December
31, 1997 and the related statement of operations for the year then ended (as to
the Equity Variable Account and the Bond and Income Variable Account, for the
period from commencement of operations through December 31, 1997) and statement
of changes in net assets for each of the two years in the period then ended (as
to the Aggressive Equity Variable Account, the Emerging Markets Variable
Account, Variable Accounts I, II, III and IV, for the year ended December 31,
1997 and for the period from commencement of operations through December 31,
1996). These financial statements are the responsibility of the Separate
Account's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of each of the respective Variable Accounts
constituting the Pacific Select Exec Separate Account as of December 31, 1997
and the results of their operations for the year then ended (as to the Equity
Variable Account and the Bond and Income Variable Account, for the period from
commencement of operations through December 31, 1997) and the changes in their
net assets for each of the two years in the period then ended (as to the
Aggressive Equity Variable Account, the Emerging Markets Variable Account,
Variable Accounts I, II, III and IV, for the year ended December 31, 1997 and
for the period from commencement of operations through December 31, 1996), in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Costa Mesa, California
February 6, 1998
C-5
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
(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 (5,180 shares; cost $52,208) ............... $52,084
High Yield Bond Portfolio (3,379 shares; cost $33,305) ............ $33,707
Managed Bond Portfolio (6,511 shares; cost $69,581) ............... $72,512
Government Securities Portfolio (967 shares; cost $10,008) ........ $10,421
Growth Portfolio (7,315 shares; cost $143,503) .................... $179,989
Aggressive Equity Portfolio (847 shares; cost $9,176) .............
Growth LT Portfolio (6,382 shares; cost $99,059) ..................
Equity Income Portfolio (5,373 shares; cost $100,762) .............
Multi-Strategy Portfolio (7,005 shares; cost $97,141) .............
Receivables:
Due from Pacific Life Insurance Company ........................... 135 114 51 240
Fund shares redeemed .............................................. 139
----------- ----------- ----------- ----------- ----------
Total Assets ....................................................... 52,223 33,842 72,626 10,472 180,229
----------- ----------- ----------- ----------- ----------
LIABILITIES
Payables:
Due to Pacific Life Insurance Company ............................. 139
Fund shares purchased ............................................. 135 114 51 240
----------- ----------- ----------- ----------- ----------
Total Liabilities .................................................. 139 135 114 51 240
----------- ----------- ----------- ----------- ----------
NET ASSETS ......................................................... $52,084 $33,707 $72,512 $10,421 $179,989
----------- ----------- ----------- ----------- ----------
<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 (5,180 shares; cost $52,208) ...............
High Yield Bond Portfolio (3,379 shares; cost $33,305) ............
Managed Bond Portfolio (6,511 shares; cost $69,581) ...............
Government Securities Portfolio (967 shares; cost $10,008) ........
Growth Portfolio (7,315 shares; cost $143,503) ....................
Aggressive Equity Portfolio (847 shares; cost $9,176) ............. $9,473
Growth LT Portfolio (6,382 shares; cost $99,059) .................. $110,438
Equity Income Portfolio (5,373 shares; cost $100,762) ............. $131,486
Multi-Strategy Portfolio (7,005 shares; cost $97,141) ............. $113,352
Receivables:
Due from Pacific Life Insurance Company ........................... 39 162 246 51
Fund shares redeemed ..............................................
----------- --------------- ------------- -------------
Total Assets ....................................................... 9,512 110,600 131,732 113,403
----------- --------------- ------------- -------------
LIABILITIES
Payables:
Due to Pacific Life Insurance Company .............................
Fund shares purchased ............................................. 39 162 246 51
----------- --------------- ------------- -------------
Total Liabilities .................................................. 39 162 246 51
----------- --------------- ------------- -------------
NET ASSETS ......................................................... $9,473 $110,438 $131,486 $113,352
----------- --------------- ------------- -------------
</TABLE>
See Notes to Financial Statements
C-6
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES (Continued)
DECEMBER 31, 1997
(In thousands)
<TABLE>
<CAPTION>
Bond and Equity Inter-
Equity Income Index national
Variable Variable Variable Variable
Account Account Account Account
-------- -------- -------- --------
<S> <C> <C> <C> <C>
ASSETS
Investments:
Equity Portfolio (175 shares; cost $4,174) ............................ $4,190
Bond and Income Portfolio (53 shares; cost $666) ...................... $685
Equity Index Portfolio (7,283 shares; cost $140,325) .................. $187,288
International Portfolio (7,956 shares; cost $115,000) ................. $128,941
Emerging Markets Portfolio (889 shares; cost $9,098) ..................
Edinburgh Overseas Equity Portfolio (54 shares; cost $544) ............
Turner Core Growth Portfolio (58 shares; cost $762) ...................
Frontier Capital Appreciation Portfolio (208 shares; cost $2,892) .....
Enhanced U.S. Equity Portfolio (116 shares; cost $1,571) ..............
Receivables:
Due from Pacific Life Insurance Company ............................... 86 15 217 81
--------------------------------------------------
Total Assets ........................................................... 4,276 700 187,505 129,022
--------------------------------------------------
LIABILITIES
Payables:
Fund shares purchased ................................................. 86 15 217 81
-------------------------------------------------
Total Liabilities ...................................................... 86 15 217 81
-------------------------------------------------
NET ASSETS ............................................................. $4,190 $685 $187,288 $128,941
-------------------------------------------------
<CAPTION>
Emerging
Markets Variable Variable Variable Variable
Variable Account Account Account Account
Account I II III IV
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments:
Equity Portfolio (175 shares; cost $4,174) ............................
Bond and Income Portfolio (53 shares; cost $666) ......................
Equity Index Portfolio (7,283 shares; cost $140,325) ..................
International Portfolio (7,956 shares; cost $115,000) .................
Emerging Markets Portfolio (889 shares; cost $9,098) .................. $8,416
Edinburgh Overseas Equity Portfolio (54 shares; cost $544) ............ $539
Turner Core Growth Portfolio (58 shares; cost $762) ................... $783
Frontier Capital Appreciation Portfolio (208 shares; cost $2,892) ..... $3,109
Enhanced U.S. Equity Portfolio (116 shares; cost $1,571) .............. $1,754
Receivables:
Due from Pacific Life Insurance Company ............................... 35 1 1 1
--------------------------------------------------------
Total Assets ........................................................... 8,451 539 784 3,110 1,755
--------------------------------------------------------
LIABILITIES
Payables:
Fund shares purchased ................................................. 35 1 1 1
--------------------------------------------------------
Total Liabilities ...................................................... 35 1 1 1
--------------------------------------------------------
NET ASSETS ............................................................. $8,416 $539 $783 $3,109 $1,754
-------------------------------------------------------
</TABLE>
See Notes to Financial Statements
C-7
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(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 ...................................................... $2,072 $2,559 $3,893 $498 $14,427
-------- --------- -------- --------- ---------
Net Investment Income ........................................... 2,072 2,559 3,893 498 14,427
-------- --------- -------- --------- ---------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain from security transactions ................... 94 454 367 96 6,822
Net unrealized appreciation (depreciation) on investments ...... (121) (335) 1,844 306 15,323
-------- --------- -------- --------- ---------
Net Realized And Unrealized Gain (Loss) On Investments .......... (27) 119 2,211 402 22,145
-------- --------- -------- --------- ---------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ...................................... $2,045 $2,678 $6,104 $900 $36,572
-------- --------- -------- --------- ---------
<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 ...................................................... $ 4,656 $ 7,127 $ 7,530
---------- -------- -------- --------
Net Investment Income ........................................... 4,656 7,127 7,530
---------- -------- -------- --------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain from security transactions ................... $ 101 3,899 3,288 695
Net unrealized appreciation (depreciation) on investments ...... 230 1,609 16,626 8,279
---------- -------- -------- --------
Net Realized And Unrealized Gain (Loss) On Investments .......... 331 5,508 19,914 8,974
---------- -------- -------- --------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ...................................... $ 331 $10,164 $27,041 $16,504
---------- -------- -------- --------
</TABLE>
See Notes to Financial Statements
C-8
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENT OF OPERATIONS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 1997
(In thousands)
<TABLE>
<CAPTION>
Bond and Equity Inter-
Equity Income Index national
Variable Variable Variable Variable
Account (1) Account (1) Account Account
---------------------------------------------------
INVESTMENT INCOME
Dividends ....................................................... $30 $11 $ 7,400 $4,347
---------------------------------------------------
Net Investment Income ............................................ 30 11 7,400 4,347
---------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain from security transactions .................... 13 5 12,511 4,938
Net unrealized appreciation (depreciation) on investments ....... 16 19 21,545 (62)
---------------------------------------------------
Net Realized And Unrealized Gain (Loss) On Investments ........... 29 24 34,056 4,876
---------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ....................................... $59 $35 $41,456 $9,223
---------------------------------------------------
<CAPTION>
Emerging
Markets Variable Variable Variable Variable
Variable Account Account Account Account
Account I II III IV
-------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends ....................................................... $ 41 $ 8 $ 71 $ 73 $ 63
-------------------------------------------------------
Net Investment Income ............................................ 41 8 71 73 63
-------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain from security transactions .................... 187 2 7 42 7
Net unrealized appreciation (depreciation) on investments ....... (644) (4) 31 222 201
-------------------------------------------------------
Net Realized And Unrealized Gain (Loss) On Investments ........... (457) (2) 38 264 208
-------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ....................................... $(416) $ 6 $109 $337 $271
=======================================================
</TABLE>
(1) For the period from January 10, 1997 (commencement of operations) to
December 31, 1997.
See Notes to Financial Statements
C-9
<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
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 ......................................... $ 2,072 $ 2,559 $ 3,893 $ 498
Net realized gain from security transactions .................. 94 454 367 96
Net unrealized appreciation (depreciation) on investments ..... (121) (335) 1,844 306
----------------------------------------------------------------
Net Increase In Net Assets Resulting
From Operations ............................................... 2,045 2,678 6,104 900
----------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
POLICY TRANSACTIONS
Transfer of net premiums ...................................... 114,902 6,516 11,008 2,026
Transfers--policy charges and deductions ...................... (4,303) (1,844) (2,926) (587)
Transfers in (from other variable accounts) ................... 133,629 17,591 15,603 5,190
Transfers out (to other variable accounts) .................... (214,125) (15,732) (11,609) (4,376)
Transfers--other .............................................. (7,489) (1,439) (14,668) (562)
---------------------------------------------------------------
Net Increase (Decrease) In Net Assets
Derived From Policy Transactions .............................. 22,614 5,092 (2,592) 1,691
---------------------------------------------------------------
NET INCREASE IN NET ASSETS ..................................... 24,659 7,770 3,512 2,591
---------------------------------------------------------------
NET ASSETS
Beginning of Year ............................................. 27,425 25,937 69,000 7,830
---------------------------------------------------------------
End of Year ................................................... $ 52,084 $ 33,707 $ 72,512 $10,421
===============================================================
<CAPTION>
AGGRESSIVE GROWTH EQUITY MULTI-
GROWTH EQUITY LT INCOME STRATEGY
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 ......................................... $ 14,427 $ 4,656 $ 7,127 $ 7,530
Net realized gain from security transactions .................. 6,822 $ 101 3,899 3,288 695
Net unrealized appreciation (depreciation) on investments ..... 15,323 230 1,609 16,626 8,279
-----------------------------------------------------------
Net Increase In Net Assets Resulting
From Operations ............................................... 36,572 331 10,164 27,041 16,504
-----------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
POLICY TRANSACTIONS
Transfer of net premiums ...................................... 28,003 2,091 27,890 20,805 20,699
Transfers--policy charges and deductions ...................... (9,059) (469) (6,771) (5,873) (4,507)
Transfers in (from other variable accounts) ................... 61,551 12,131 34,622 27,826 9,864
Transfers out (to other variable accounts) .................... (46,874) (7,838) (39,146) (18,793) (5,914)
Transfers--other .............................................. (10,114) (104) (5,388) (5,380) (2,426)
-----------------------------------------------------------
Net Increase (Decrease) In Net Assets
Derived From Policy Transactions .............................. 23,507 5,811 11,207 18,585 17,716
-----------------------------------------------------------
NET INCREASE IN NET ASSETS ..................................... 60,079 6,142 21,371 45,626 34,220
-----------------------------------------------------------
NET ASSETS
Beginning of Year ............................................. 119,910 3,331 89,067 85,860 79,132
-----------------------------------------------------------
End of Year ................................................... $ 179,989 $ 9,473 $110,438 $ 131,486 $ 113,352
===========================================================
</TABLE>
See Notes to Financial Statements
C-10
<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
ACCOUNT (1) ACCOUNT (1) ACCOUNT ACCOUNT ACCOUNT
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income .......................................... $ 30 $ 11 $ 7,400 $ 4,347 $ 41
Net realized gain from security transactions ................... 13 5 12,511 4,938 187
Net unrealized appreciation (depreciation) on investments ...... 16 19 21,545 (62) (644)
-------------------------------------------------------------
Net Increase (Decrease) In Net Assets Resulting
From Operations ................................................ 59 35 41,456 9,223 (416)
-------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
POLICY TRANSACTIONS
Transfer of net premiums ....................................... 466 56 28,526 26,039 2,039
Transfers--policy charges and deductions ....................... (87) (13) (8,168) (7,142) (479)
Transfers in (from other variable accounts) .................... 4,237 659 51,709 54,246 10,615
Transfers out (to other variable accounts) ..................... (438) (53) (25,760) (45,867) (6,460)
Transfers--other ............................................... (47) 1 (25,672) (4,997) (162)
-------------------------------------------------------------
Net Increase In Net Assets
Derived From Policy Transactions ............................... 4,131 650 20,635 22,279 5,553
-------------------------------------------------------------
NET INCREASE IN NET ASSETS ...................................... 4,190 685 62,091 31,502 5,137
-------------------------------------------------------------
NET ASSETS
Beginning of Year .............................................. 125,197 97,439 3,279
-------------------------------------------------------------
End of Year .................................................... $ 4,190 $ 685 $ 187,288 $128,941 $ 8,416
=============================================================
<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 .......................................... $ 8 $ 71 $ 73 $ 63
Net realized gain from security transactions ................... 2 7 42 7
Net unrealized appreciation (depreciation) on investments ...... (4) 31 222 201
-----------------------------------------------
Net Increase (Decrease) In Net Assets Resulting
From Operations ................................................ 6 109 337 271
-----------------------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM
POLICY TRANSACTIONS
Transfer of net premiums ....................................... 80 172 656 372
Transfers--policy charges and deductions ....................... (25) (28) (149) (54)
Transfers in (from other variable accounts) .................... 408 537 3,409 976
Transfers out (to other variable accounts) ..................... (3) (163) (1,636) (217)
Transfers--other ............................................... (4) (17) (51) (9)
----------------------------------------------
Net Increase In Net Assets
Derived From Policy Transactions ............................... 456 501 2,229 1,068
----------------------------------------------
NET INCREASE IN NET ASSETS ...................................... 462 610 2,566 1,339
----------------------------------------------
NET ASSETS
Beginning of Year .............................................. 77 173 543 415
----------------------------------------------
End of Year .................................................... $ 539 $ 783 $ 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-11
<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>
Aggregate 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) For the period from 1996 (commencement of operations) to December 31, 1996.
See Notes to Financial Statements
C-12
<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
---------- ------------ ---------- ----------
</TABLE>
(1) For the period from commencement of operations to December 31, 1996. The
Emerging Markets Variable Account commenced operations on April 8,1996,
Variable Account I and Variable Account III commenced operations on October
11, 1996, Variable Account II commenced operations on October 17, 1996 and
Variable Account IV commenced operations on November 18, 1996.
See Notes to Financial Statements
C-13
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
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 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 elsewhere in this report or provided separately and should be
read in conjunction with the Separate Account's financial statements.
During the year ended December 31, 1997, the Separate Account organized and
registered the Equity Variable Account and the Bond and Income Variable Account
with the Securities and Exchange Commission under the Investment Company Act of
1940. Both Variable Accounts commenced operations on January 10, 1997.
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-66) 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 1997, the Funds have declared dividends for each portfolio except for
the Aggressive 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,
is the principal underwriter of variable life insurance policies funded by
interests in the Separate Account, and is compensated by Pacific Life.
C-14
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS (Continued)
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 December 31,
1997 were as follows (amounts in thousands):
<TABLE>
<CAPTION>
VARIABLE ACCOUNTS
--------------- --------------- --------------- -----------
GOVERN-
MONEY HIGH YIELD MANAGED MENT
MARKET BOND BOND SECURITIES
--------------- --------------- --------------- -----------
<S> <C> <C> <C> <C>
Total cost of investments at beginning of year $ 27,433 $ 25,201 $ 67,913 $ 7,723
Add: Total net proceeds from policy transactions 111,337 13,326 18,004 4,096
Reinvested distributions from the Fund:
(a) Net investment income 2,072 2,315 3,703 498
(b) Net realized gain 244 190
--------------- --------------- --------------- -----------
Sub-Total 140,842 41,086 89,810 12,317
Less: Cost of investments disposed during the year 88,634 7,781 20,229 2,309
--------------- --------------- --------------- -----------
Total cost of investments at end of year 52,208 33,305 69,581 10,008
Add: Unrealized appreciation (depreciation) (124) 402 2,931 413
--------------- --------------- --------------- -----------
Total market value of investments at end of year $ 52,084 $ 33,707 $ 72,512 $ 10,421
--------------- --------------- --------------- -----------
<CAPTION>
-------------- ---------------
AGGRESSIVE
GROWTH EQUITY
-------------- ---------------
<S> <C> <C>
Total cost of investments at beginning of year $ 98,748 $ 3,264
Add: Total net proceeds from policy transactions 50,029 10,365
Reinvested distributions from the Fund:
(a) Net investment income 327
(b) Net realized gain 14,100
-------------- ---------------
Sub-Total 163,204 13,629
Less: Cost of investments disposed during the year 19,701 4,453
-------------- ---------------
Total cost of investments at end of year 143,503 9,176
Add: Unrealized appreciation (depreciation) 36,486 297
-------------- ---------------
Total market value of investments at end of year $ 179,989 $ 9,473
-------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
Growth Equity Multi-
LT Income Strategy Equity (1)
--------------- --------------- --------------- -----------
<S> <C> <C> <C> <C>
Total cost of investments at beginning of year $ 79,297 $ 71,762 $ 71,200
Add: Total net proceeds from policy transactions 29,507 29,622 22,282 $ 4,587
Reinvested distributions from the Fund:
(a) Net investment income 530 1,017 3,014 12
(b) Net realized gain 4,126 6,110 4,516 18
--------------- --------------- --------------- -----------
Sub-Total 113,460 108,511 101,012 4,617
Less: Cost of investments disposed during the year 14,401 7,749 3,871 443
--------------- --------------- --------------- -----------
Total cost of investments at end of year 99,059 100,762 97,141 4,174
Add: Unrealized appreciation 11,379 30,724 16,211 16
--------------- --------------- --------------- -----------
Total market value of investments at end of year $110,438 $131,486 $113,352 $ 4,190
--------------- --------------- --------------- -----------
<CAPTION>
Bond and Equity
Income (1) Index
-------------- ---------------
<S> <C> <C>
Total cost of investments at beginning of year $ 99,779
Add: Total net proceeds from policy transactions $ 721 53,891
Reinvested distributions from the Fund:
(a) Net investment income 10 2,490
(b) Net realized gain 1 4,910
-------------- ---------------
Sub-Total 732 161,070
Less: Cost of investments disposed during the year 66 20,745
-------------- ---------------
Total cost of investments at end of year 666 140,325
Add: Unrealized appreciation 19 46,963
-------------- ---------------
Total market value of investments at end of year $ 685 $ 187,288
-------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
Inter- Emerging
national Markets I II
--------------- --------------- --------------- -----------
<S> <C> <C> <C> <C>
Total cost of investments at beginning of year $ 83,435 $ 3,318 $ 77 $ 177
Add: Total net proceeds from policy transactions 43,255 9,168 502 723
Reinvested distributions from the Fund:
(a) Net investment income 2,251 41 8 68
(b) Net realized gain 2,096 3
--------------- --------------- --------------- -----------
Sub-Total 131,037 12,527 587 971
Less: Cost of investments disposed during the year 16,037 3,429 43 209
--------------- --------------- --------------- -----------
Total cost of investments at end of year 115,000 9,098 544 762
Add: Unrealized appreciation (depreciation) 13,941 (682) (5) 21
--------------- --------------- --------------- -----------
Total market value of investments at end of year $128,941 $ 8,416 $ 539 $ 783
--------------- --------------- --------------- -----------
<CAPTION>
III IV
-------------- ---------------
<S> <C> <C>
Total cost of investments at beginning of year $ 527 $ 416
Add: Total net proceeds from policy transactions 3,713 1,343
Reinvested distributions from the Fund:
(a) Net investment income 73 50
(b) Net realized gain 13
-------------- ---------------
Sub-Total 4,313 1,822
Less: Cost of investments disposed during the year 1,421 251
-------------- ---------------
Total cost of investments at end of year 2,892 1,571
Add: Unrealized appreciation (depreciation) 217 183
-------------- ---------------
Total market value of investments at end of year $ 3,109 $ 1,754
-------------- ---------------
</TABLE>
_______________________________________
(1) For the period from January 10, 1997 (commencement of operations) to
December 31, 1997.
C-15
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS (Continued)
6.TRANSACTIONS IN SEPARATE ACCOUNT UNITS AND SELECTED ACCUMULATION UNIT **
INFORMATION
Transactions in Separate Account units for the year ended December 31, 1997
and the selected accumulation unit information as of December 31, 1997 and 1996
were as follows:
<TABLE>
<CAPTION>
VARIABLE ACCOUNTS
-----------------------------------------------------------------------
GOVERN-
MONEY HIGH YIELD MANAGED MENT
MARKET BOND BOND SECURITIES
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total units outstanding at beginning of year 1,797,662 1,071,818 3,332,577 394,531
Increase (decrease) in units resulting from
policy transactions:
(a) Transfer of net premiums 7,332,882 256,430 517,251 99,445
(b) Transfers--policy charges and deductions (274,716) (72,698) (136,476) (28,791)
(c) Transfers in (from other variable accounts) 8,912,985 744,710 758,585 240,788
(d) Transfers out (to other variable accounts) (14,035,300) (666,562) (568,112) (200,607)
(e) Transfers--other (490,883) (60,970) (717,810) (25,763)
----------------------------------------------------------------------
Sub-Total 1,444,968 200,910 (146,562) 85,072
----------------------------------------------------------------------
Total units outstanding at end of year 3,242,630 1,272,728 3,186,015 479,603
----------------------------------------------------------------------
----------------------------------------------------------------------
Accumulation Unit Value: At beginning of year $15.26 $24.20 $20.70 $19.85
At end of year $16.06 $26.48 $22.76 $21.73
----------------------------------------------------------------------
<CAPTION>
--------------------------------
AGGRESSIVE
GROWTH EQUITY
--------------------------------
<S> <C> <C>
Total units outstanding at beginning of year 4,060,628 306,793
Increase (decrease) in units resulting from
policy transactions:
(a) Transfer of net premiums 812,716 189,799
(b) Transfers--policy charges and deductions (260,869) (42,787)
(c) Transfers in (from other variable accounts) 3,420,209 1,117,526
(d) Transfers out (to other variable accounts) (2,758,765) (720,928)
(e) Transfers--other (595,259) (9,566)
--------------------------------
Sub-Total 618,032 534,044
--------------------------------
Total units outstanding at end of year 4,678,660 840,837
--------------------------------
--------------------------------
Accumulation Unit Value: At beginning of year $29.53 $10.86
At end of year $38.47 $11.27
--------------------------------
</TABLE>
<TABLE>
<CAPTION>
GROWTH EQUITY MULTI-
LT INCOME STRATEGY EQUITY (1)
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total units outstanding at beginning of year 4,879,333 3,031,251 3,255,044
Increase (decrease) in units resulting from
policy transactions:
(a) Transfer of net premiums 1,453,920 639,734 756,562 40,729
(b) Transfers--policy charges and deductions (351,905) (177,390) (168,112) (7,611)
(c) Transfers in (from other variable accounts) 2,392,868 2,011,731 815,061 375,727
(d) Transfers out (to other variable accounts) (2,568,247) (1,473,786) (539,476) (39,428)
(e) Transfers--other (353,490) (421,911) (221,300) (4,231)
----------------------------------------------------------------------
Sub-Total 573,146 578,378 642,735 365,186
----------------------------------------------------------------------
Total units outstanding at end of year 5,452,479 3,609,629 3,897,779 365,186
----------------------------------------------------------------------
----------------------------------------------------------------------
Accumulation Unit Value: At beginning of year $18.25 $28.32 $24.31 $10.00
At end of year $20.25 $36.43 $29.08 $11.47
----------------------------------------------------------------------
<CAPTION>
BOND AND EQUITY
INCOME (1) INDEX
--------------------------------
<S> <C> <C>
Total units outstanding at beginning of year 5,062,679
Increase (decrease) in units resulting from
policy transactions:
(a) Transfer of net premiums 4,994 972,808
(b) Transfers--policy charges and deductions (1,147) (279,773)
(c) Transfers in (from other variable accounts) 57,435 3,558,114
(d) Transfers out (to other variable accounts) (3,737) (1,811,915)
(e) Transfers--other 71 (1,805,725)
--------------------------------
Sub-Total 57,616 633,509
--------------------------------
Total units outstanding at end of year 57,616 5,696,188
--------------------------------
--------------------------------
Accumulation Unit Value: At beginning of year $10.00 $24.73
At end of year $11.89 $32.88
--------------------------------
</TABLE>
<TABLE>
<CAPTION>
INTER- EMERGING
NATIONAL MARKETS I II
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total units outstanding at beginning of year 5,140,103 333,810 7,649 17,011
Increase (decrease) in units resulting from
policy transactions:
(a) Transfer of net premiums 1,256,235 196,931 7,660 15,681
(b) Transfers--policy charges and deductions (344,327) (46,049) (2,403) (2,375)
(c) Transfers in (from other variable accounts) 2,634,912 1,014,227 42,342 52,906
(d) Transfers out (to other variable accounts) (2,220,624) (612,170) (1,263) (21,044)
(e) Transfers--other (241,927) (15,352) (1,685) (2,195)
----------------------------------------------------------------------
Sub-Total 1,084,269 537,587 44,651 42,973
----------------------------------------------------------------------
Total units outstanding at end of year 6,224,372 871,397 52,300 59,984
----------------------------------------------------------------------
----------------------------------------------------------------------
Accumulation Unit Value: At beginning of year $18.96 $9.82 $10.08 $10.18
At end of year $20.72 $9.66 $10.31 $13.06
----------------------------------------------------------------------
<CAPTION>
III IV
--------------------------------
<S> <C> <C>
Total units outstanding at beginning of year 51,927 41,571
Increase (decrease) in units resulting from
policy transactions:
(a) Transfer of net premiums 56,619 32,122
(b) Transfers--policy charges and deductions (12,514) (4,516)
(c) Transfers in (from other variable accounts) 309,339 87,218
(d) Transfers out (to other variable accounts) (157,101) (22,938)
(e) Transfers--other (4,897) (951)
--------------------------------
Sub-Total 191,446 90,935
--------------------------------
Total units outstanding at end of year 243,373 132,506
--------------------------------
--------------------------------
Accumulation Unit Value: At beginning of year $10.46 $ 9.97
At end of year $12.77 $13.23
--------------------------------
</TABLE>
---------------------------------------------------
(1) For the period from January 10, 1997 (commencement of operations) to
** 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-16
