<PAGE>
June 30, 1999 . Pacific Select Fund
. Pacific Select Exec
Separate Account of
Pacific Life Insurance Company
Annual
Reports
Pacific Select
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PACIFIC SELECT FUND
<S> <C>
Chairman's Letter.................................................. A-1
Performance Discussion............................................. A-2
Financial Statements:
Statements of Assets and Liabilities............................. B-1
Statements of Operations......................................... B-3
Statements of Changes in Net Assets.............................. B-5
Financial Highlights............................................... B-9
Schedules of Investments and Notes................................. B-13
Notes to Financial Statements...................................... B-80
Special Meeting of Shareholders.................................... B-86
<CAPTION>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
<S> <C>
Financial Statements:
Statement of Assets and Liabilities.............................. C-1
Statement of Operations.......................................... C-3
Statement of Changes in Net Assets............................... C-5
Notes to Financial Statements...................................... C-9
</TABLE>
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
High Govern-
Money Yield Managed ment Aggressive Growth Equity Multi- Large-Cap Mid-Cap
Market Bond Bond Securities Growth Equity LT Income Strategy Value Value
Variable Variable Variable Variable Variable Variable Variable Variable Variable Variable Variable
Account Account Account Account Account Account Account Account Account Account Account
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
Money Market
Portfolio
(7,751 shares;
cost $78,157)... $78,029
High Yield Bond
Portfolio
(4,918 shares;
cost $46,726)... $44,457
Managed Bond
Portfolio
(10,377 shares;
cost $113,687).. $109,640
Government
Securities
Portfolio
(1,969 shares;
cost $21,047)... $20,298
Growth Portfolio
(9,628 shares;
cost $216,744).. $224,244
Aggressive
Equity Portfolio
(1,915 shares;
cost $23,557)... $24,834
Growth LT
Portfolio
(10,326 shares;
cost $209,877).. $331,979
Equity Income
Portfolio
(7,809 shares;
cost $174,509).. $219,087
Multi-Strategy
Portfolio
(8,542 shares;
cost $127,283).. $147,496
Large-Cap Value
Portfolio
(172 shares;
cost $1,888).... $1,991
Mid-Cap Value
Portfolio
(161 shares;
cost $1,739).... $1,808
Receivables:
Due from Pacific
Life Insurance
Company......... 1,871 64 1 148 71 757 363 67 8 38
Fund shares
redeemed........ 1,997
-------------------------------------------------------------------------------------------------------
Total Assets..... 80,026 46,328 109,704 20,299 224,392 24,905 332,736 219,450 147,563 1,999 1,846
-------------------------------------------------------------------------------------------------------
LIABILITIES
Payables:
Due to Pacific
Life Insurance
Company......... 2,001
Fund shares
purchased....... 1,871 64 1 148 71 757 363 67 8 38
-------------------------------------------------------------------------------------------------------
Total
Liabilities...... 2,001 1,871 64 1 148 71 757 363 67 8 38
-------------------------------------------------------------------------------------------------------
NET ASSETS....... $78,025 $44,457 $109,640 $20,298 $224,244 $24,834 $331,979 $219,087 $147,496 $1,991 $1,808
-------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
C-1
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES (Continued)
JUNE 30, 1999 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Bond and Equity Small-Cap Inter- Emerging
Equity Income Index Index REIT national Markets Variable Variable Variable Variable
Variable Variable Variable Variable Variable Variable Variable Account Account Account Account
Account Account Account Account Account Account Account I II III IV
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
Equity Portfolio
(1,206 shares;
cost $34,572)....... $37,111
Bond and Income
Portfolio
(540 shares; cost
$7,032)............. $6,291
Equity Index
Portfolio
(10,252 shares;
cost $248,216)...... $367,986
Small-Cap Index
Portfolio
(268 shares; cost
$2,733)............. $2,892
REIT Portfolio
(64 shares; cost
$697)............... $687
International
Portfolio
(10,840 shares;
cost $170,766)...... $170,168
Emerging Markets
Portfolio
(1,749 shares;
cost $12,841)....... $15,531
Brandes
International
Equity Portfolio
(172 shares; cost
$1,878)............. $2,271
Turner Core
Growth Portfolio
(247 shares; cost
$4,140)............. $4,829
Frontier Capital
Appreciation
Portfolio
(339 shares; cost
$4,981)............. $6,148
Enhanced U.S.
Equity Portfolio
(263 shares; cost
$4,688)............. $5,381
Receivables:
Due from Pacific
Life Insurance
Company.............. 96 45 872 38 9 104 104 2
Fund shares
redeemed............. 4
---------------------------------------------------------------------------------------------------
Total Assets........... 37,207 6,336 368,858 2,930 696 170,272 15,635 2,271 4,831 6,152 5,381
---------------------------------------------------------------------------------------------------
LIABILITIES
Payables:
Due to Pacific
Life Insurance
Company.............. 4
Fund shares
purchased............ 96 45 872 38 9 104 104 2
---------------------------------------------------------------------------------------------------
Total Liabilities...... 96 45 872 38 9 104 104 2 4
---------------------------------------------------------------------------------------------------
NET ASSETS............. $37,111 $6,291 $367,986 $2,892 $687 $170,168 $15,531 $2,271 $4,829 $6,148 $5,381
---------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
C-2
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 1999 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
High Govern-
Money Yield Managed ment Aggressive Growth Equity Multi- Large-Cap Mid-Cap
Market Bond Bond Securities Growth Equity LT Income Strategy Value Value
Variable Variable Variable Variable Variable Variable Variable Variable Variable Variable Variable
Account Account Account Account Account Account Account Account Account Account (1) Account (1)
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends......... $1,587 $1,756 $5,388 $728 $23,889 $2,297 $24,658 $17,288 $10,198 $1
---------------------------------------------------------------------------------------------------------------
Net Investment
Income............ 1,587 1,756 5,388 728 23,889 2,297 24,658 17,288 10,198 1
---------------------------------------------------------------------------------------------------------------
NET REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS
Net realized
gain (loss) from
security
transactions..... 109 (898) 453 34 10,883 517 6,376 4,855 959 1 $5
Net unrealized
appreciation
(depreciation)
on investments... (17) (505) (8,386) (1,221) (5,003) (151) 47,341 4,104 (1,142) 103 69
---------------------------------------------------------------------------------------------------------------
Net Realized and
Unrealized Gain
(Loss) on
Investments....... 92 (1,403) (7,933) (1,187) 5,880 366 53,717 8,959 (183) 104 74
---------------------------------------------------------------------------------------------------------------
NET INCREASE
(DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS... $1,679 $353 ($2,545) ($459) $29,769 $2,663 $78,375 $26,247 $10,015 $105 $74
---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Operations commenced during 1999 (see Note 1 to Financial Statements).
See Notes to Financial Statements
C-3
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENT OF OPERATIONS (Continued)
FOR THE PERIOD ENDED JUNE 30, 1999 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Bond and Equity Small-Cap Inter- Emerging
Equity Income Index Index REIT national Markets Variable Variable Variable Variable
Variable Variable Variable Variable Variable Variable Variable Account Account Account Account
Account Account Account Account (1) Account (1) Account Account I II III IV
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends........... $2,399 $432 $3,475 $1 $3 $7,401 $27 $172
--------------------------------------------------------------------------------------------------------
Net Investment
Income.............. 2,399 432 3,475 1 3 7,401 27 172
--------------------------------------------------------------------------------------------------------
NET REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS
Net realized
gain (loss) from
security
transactions....... 555 (15) 5,229 3 4,139 (987) $25 85 $89 $514
Net unrealized
appreciation
(depreciation)
on investments..... 534 (773) 29,403 159 (10) (4,455) 4,307 325 208 906 144
--------------------------------------------------------------------------------------------------------
Net Realized and
Unrealized Gain
(Loss) on
Investments......... 1,089 (788) 34,632 159 (7) (316) 3,320 350 293 995 658
--------------------------------------------------------------------------------------------------------
NET INCREASE
(DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS..... $3,488 ($356) $38,107 $160 ($4) $7,085 $3,347 $350 $465 $995 $658
--------------------------------------------------------------------------------------------------------
</TABLE>
(1) Operations commenced during 1999 (see Note 1 to Financial Statements).
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, 1999 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
High Govern-
Money Yield Managed ment Aggressive Growth Equity Multi- Large-Cap
Market Bond Bond Securities Growth Equity LT Income Strategy Value
Variable Variable Variable Variable Variable Variable Variable Variable Variable Variable
Account Account Account Account Account Account Account Account Account Account (1)
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCREASE
(DECREASE) IN NET
ASSETS
FROM OPERATIONS
Net investment
income.............. $1,587 $1,756 $5,388 $728 $23,889 $2,297 $24,658 $17,288 $10,198 $1
Net realized
gain (loss) from
security
transactions........ 109 (898) 453 34 10,883 517 6,376 4,855 959 1
Net unrealized
appreciation
(depreciation)
on investments...... (17) (505) (8,386) (1,221) (5,003) (151) 47,341 4,104 (1,142) 103
-------------------------------------------------------------------------------------------------------
Net Increase
(Decrease) in Net
Assets Resulting
from Operations...... 1,679 353 (2,545) (459) 29,769 2,663 78,375 26,247 10,015 105
-------------------------------------------------------------------------------------------------------
INCREASE
(DECREASE) IN NET
ASSETS
FROM POLICY
TRANSACTIONS
Transfer of net
premiums............ 90,449 5,279 8,122 1,655 16,617 2,946 20,208 13,325 6,630 194
Transfers--
policy charges
and deductions...... (3,770) (1,234) (2,326) (464) (5,454) (678) (7,269) (4,850) (2,912) (18)
Transfers in
(from other
variable
accounts)........... 170,099 23,454 33,047 6,192 91,670 15,602 68,573 37,724 11,323 2,108
Transfers out
(to other
variable
accounts)........... (242,031) (25,913) (26,782) (3,329) (102,013) (13,065) (42,320) (32,381) (9,187) (397)
Transfers--
other............... (7,508) (852) (1,740) (446) (6,015) (400) (12,865) (8,845) (2,371) (1)
-------------------------------------------------------------------------------------------------------
Net Increase
(Decrease) in Net
Assets Derived
from Policy
Transactions......... 7,239 734 10,321 3,608 (5,195) 4,405 26,327 4,973 3,483 1,886
-------------------------------------------------------------------------------------------------------
NET INCREASE IN
NET ASSETS........... 8,918 1,087 7,776 3,149 24,574 7,068 104,702 31,220 13,498 1,991
-------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of
Period.............. 69,107 43,370 101,864 17,149 199,670 17,766 227,277 187,867 133,998
-------------------------------------------------------------------------------------------------------
End of Period........ $78,025 $44,457 $109,640 $20,298 $224,244 $24,834 $331,979 $219,087 $147,496 $1,991
-------------------------------------------------------------------------------------------------------
<CAPTION>
Mid-Cap
Value
Variable
Account (1)
-------------------------------------------------------------------------------------------------------
<S>................... <C>
INCREASE
(DECREASE) IN NET
ASSETS
FROM OPERATIONS
Net investment
income..........
Net realized
gain (loss) from
security
transactions........ $5
Net unrealized
appreciation
(depreciation)
on investments...... 69
-------------------------------------------------------------------------------------------------------
Net Increase
(Decrease) in Net
Assets Resulting
from Operations...... 74
-------------------------------------------------------------------------------------------------------
INCREASE
(DECREASE) IN NET
ASSETS
FROM POLICY
TRANSACTIONS
Transfer of net
premiums............ 203
Transfers--
policy charges
and deductions...... (20)
Transfers in
(from other
variable
accounts)........... 1,868
Transfers out
(to other
variable
accounts)........... (318)
Transfers--
other............... 1
-------------------------------------------------------------------------------------------------------
Net Increase
(Decrease) in Net
Assets Derived
from Policy
Transactions......... 1,734
-------------------------------------------------------------------------------------------------------
NET INCREASE IN
NET ASSETS........... 1,808
-------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of
Period..........
-------------------------------------------------------------------------------------------------------
End of Period........ $1,808
-------------------------------------------------------------------------------------------------------
</TABLE>
(1) Operations commenced during 1999 (see Note 1 to Financial Statements).
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, 1999 (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Bond and Equity Small-Cap Inter- Emerging
Equity Income Index Index REIT national Markets Variable Variable Variable Variable
Variable Variable Variable Variable Variable Variable Variable Account Account Account Account
Account Account Account Account (1) Account (1) Account Account I II III IV
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCREASE
(DECREASE) IN NET
ASSETS
FROM OPERATIONS
Net investment
income............. $2,399 $432 $3,475 $1 $3 $7,401 $27 $172
Net realized
gain (loss) from
security
transactions....... 555 (15) 5,229 3 4,139 (987) $25 85 $89 $514
Net unrealized
appreciation
(depreciation)
on investments..... 534 (773) 29,403 159 (10) (4,455) 4,307 325 208 906 144
------------------------------------------------------------------------------------------------------------
Net Increase
(Decrease) in Net
Assets
Resulting from
Operations.......... 3,488 (356) 38,107 160 (4) 7,085 3,347 350 465 995 658
------------------------------------------------------------------------------------------------------------
INCREASE
(DECREASE) IN NET
ASSETS
FROM POLICY
TRANSACTIONS
Transfer of net
premiums........... 3,243 951 32,094 622 68 15,937 1,750 191 467 644 454
Transfers--
policy charges
and deductions..... (781) (207) (8,768) (30) (7) (4,148) (402) (66) (105) (148) (139)
Transfers in
(from other
variable
accounts).......... 21,799 4,487 62,105 5,012 707 58,165 14,961 354 2,118 914 8,185
Transfers out
(to other
variable
accounts).......... (8,346) (3,535) (47,043) (2,873) (76) (58,272) (13,888) (48) (948) (631) (8,647)
Transfers--
other.............. (358) (331) (11,696) 1 (1) (5,739) (309) (32) (116) (78) (116)
------------------------------------------------------------------------------------------------------------
Net Increase
(Decrease) in Net
Assets Derived
from Policy
Transactions........ 15,557 1,365 26,692 2,732 691 5,943 2,112 399 1,416 701 (263)
------------------------------------------------------------------------------------------------------------
NET INCREASE IN
NET ASSETS.......... 19,045 1,009 64,799 2,892 687 13,028 5,459 749 1,881 1,696 395
------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of
Period............. 18,066 5,282 303,187 157,140 10,072 1,522 2,948 4,452 4,986
------------------------------------------------------------------------------------------------------------
End of Period....... $37,111 $6,291 $367,986 $2,892 $687 $170,168 $15,531 $2,271 $4,829 $6,148 $5,381
------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Operations commenced during 1999 (see Note 1 to Financial Statements).
See Notes to Financial Statements
C-6
<PAGE>
PACIFIC SELECT EXEC SEPARATE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
(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...... $3,392 $3,403 $5,533 $881 $20,232 $5 $6,250 $18,901 $12,030
Net realized gain
(loss) from security
transactions.............. (3) (87) 663 164 10,581 653 5,163 5,470 3,108
Net unrealized
appreciation
(depreciation) on
investments............... 14 (2,165) 1,408 59 (23,983) 1,132 63,381 9,750 5,144
------------------------------------------------------------------------------------------
Net Increase in Net
Assets Resulting from
Operations................. 3,403 1,151 7,604 1,104 6,830 1,790 74,794 34,121 20,282
------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN
NET ASSETS
FROM POLICY TRANSACTIONS
Transfer of net
premiums.................. 164,872 7,612 13,456 2,186 31,972 4,086 29,295 24,939 14,554
Transfers--policy
charges and deductions.... (6,168) (2,255) (3,939) (699) (10,609) (969) (9,146) (7,949) (5,260)
Transfers in (from
other variable
accounts)................. 268,634 34,691 52,698 10,097 89,840 20,958 82,877 46,109 13,875
Transfers out (to other
variable accounts)........ (399,943) (29,075) (36,135) (5,218) (87,886) (16,962) (53,981) (35,074) (17,159)
Transfers--other........... (13,775) (2,461) (4,332) (742) (10,466) (610) (7,000) (5,765) (5,646)
------------------------------------------------------------------------------------------
Net Increase in Net
Assets Derived from
Policy Transactions........ 13,620 8,512 21,748 5,624 12,851 6,503 42,045 22,260 364
------------------------------------------------------------------------------------------
NET INCREASE IN NET
ASSETS..................... 17,023 9,663 29,352 6,728 19,681 8,293 116,839 56,381 20,646
------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Year.......... 52,084 33,707 72,512 10,421 179,989 9,473 110,438 131,486 113,352
------------------------------------------------------------------------------------------
End of Year................ $69,107 $43,370 $101,864 $17,149 $199,670 $17,766 $227,277 $187,867 $133,998
------------------------------------------------------------------------------------------
</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, 1998
(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....... $507 $147 $4,853 $11,985 $117 $87 $52 $21 $154
Net realized gain
(loss) from security
transactions............... 369 19 11,629 5,435 (1,951) 8 96 (64) 183
Net unrealized
appreciation
(depreciation) on
investments................ 1,989 13 43,404 (10,085) (935) 72 460 44 366
------------------------------------------------------------------------------------
Net Increase (Decrease)
in Net Assets Resulting
from Operations............. 2,865 179 59,886 7,335 (2,769) 167 608 1 703
------------------------------------------------------------------------------------
INCREASE (DECREASE) IN
NET ASSETS
FROM POLICY TRANSACTIONS
Transfer of net
premiums................... 2,976 1,056 44,705 28,077 3,183 238 408 1,305 1,358
Transfers--policy
charges and deductions..... (633) (197) (12,955) (8,359) (663) (62) (93) (245) (156)
Transfers in (from
other variable
accounts).................. 17,627 6,550 108,028 71,891 27,300 749 2,159 1,700 1,697
Transfers out (to other
variable accounts)......... (8,527) (2,820) (73,002) (64,225) (25,040) (97) (880) (1,374) (481)
Transfers--other............ (432) (171) (10,763) (6,520) (355) (12) (37) (44) 111
------------------------------------------------------------------------------------
Net Increase in Net
Assets Derived from
Policy Transactions......... 11,011 4,418 56,013 20,864 4,425 816 1,557 1,342 2,529
------------------------------------------------------------------------------------
NET INCREASE IN NET
ASSETS...................... 13,876 4,597 115,899 28,199 1,656 983 2,165 1,343 3,232
------------------------------------------------------------------------------------
NET ASSETS
Beginning of Year........... 4,190 685 187,288 128,941 8,416 539 783 3,109 1,754
------------------------------------------------------------------------------------
End of Year................. $18,066 $5,282 $303,187 $157,140 $10,072 $1,522 $2,948 $4,452 $4,986
------------------------------------------------------------------------------------
</TABLE>
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 twenty-two 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 Large-Cap Value Variable Account, the
Mid-Cap Value Variable Account, the Equity Variable Account, the Bond and
Income Variable Account, the Equity Index Variable Account, the Small-Cap
Index Variable Account, the REIT 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 eighteen 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 B of this report or provided separately and should
be read in conjunction with the Separate Account's financial statements.
The Separate Account has organized and registered with the Securities and
Exchange Commission four new Variable Accounts: the Large-Cap Value Variable
Account, the Mid-Cap Value Variable Account, the Small-Cap Index Variable
Account, and the REIT Variable Account. The Large-Cap Value Variable Account,
the Mid-Cap Value Variable Account, and the Small-Cap Index Variable Account
commenced operations on January 8, 1999, and the REIT Variable Account
commenced operations on January 19, 1999.
The Separate Account was established by Pacific Life Insurance Company
("Pacific Life") 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, 1999, the Funds declared
dividends for each portfolio except for the Mid-Cap Value Portfolio, the
Brandes International Equity Portfolio, the Frontier Capital Appreciation
Portfolio, and the Enhanced U.S. 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, 1999 were as follows (amounts in thousands):
<TABLE>
<CAPTION>
Variable Accounts
-----------------------------------------------------------------------------------
Govern-
Money High Yield Managed ment Aggressive Growth Equity
Market Bond Bond Securities Growth Equity LT Income
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total cost of
investments at
beginning of period $69,218 $45,134 $97,525 $16,677 $187,167 $16,338 $152,516 $147,393
Add: Total net proceeds
from policy
transactions 108,975 14,087 19,492 4,700 46,490 10,277 38,765 17,368
Reinvested
distributions from
the Funds:
(a) Net investment
income 1,587 1,756 2,831 462 649
(b) Net realized gain 2,557 266 23,889 2,297 24,658 16,639
-----------------------------------------------------------------------------------
Sub-Total 179,780 60,977 122,405 22,105 257,546 28,912 215,939 182,049
Less: Cost of
investments disposed
during the period 101,623 14,251 8,718 1,058 40,802 5,355 6,062 7,540
-----------------------------------------------------------------------------------
Total cost of
investments at end of
period 78,157 46,726 113,687 21,047 216,744 23,557 209,877 174,509
Add: Unrealized
appreciation
(depreciation) (128) (2,269) (4,047) (749) 7,500 1,277 122,102 44,578
-----------------------------------------------------------------------------------
Total market value of
investments at end of
period $78,029 $44,457 $109,640 $20,298 $224,244 $24,834 $331,979 $219,087
-----------------------------------------------------------------------------------
<CAPTION>
Multi- Large-Cap Mid-Cap Bond and Equity Small-Cap
Strategy Value (1) Value (1) Equity Income Index Index (1) REIT (1)
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total cost of
investments at
beginning of period $112,643 $16,061 $5,250 $212,820
Add: Total net proceeds
from policy
transactions 7,137 $1,941 $1,826 18,915 2,356 36,604 $3,107 $738
Reinvested
distributions from
the Funds:
(a) Net investment
income 1,635 1 12 172 1,913 1 3
(b) Net realized gain 8,563 2,387 260 1,562
-----------------------------------------------------------------------------------
Sub-Total 129,978 1,942 1,826 37,375 8,038 252,899 3,108 741
Less: Cost of
investments disposed
during the period 2,695 54 87 2,803 1,006 4,683 375 44
-----------------------------------------------------------------------------------
Total cost of
investments at end of
period 127,283 1,888 1,739 34,572 7,032 248,216 2,733 697
Add: Unrealized
appreciation
(depreciation) 20,213 103 69 2,539 (741) 119,770 159 (10)
-----------------------------------------------------------------------------------
Total market value of
investments at end of
period $147,496 $1,991 $1,808 $37,111 $6,291 $367,986 $2,892 $687
-----------------------------------------------------------------------------------
<CAPTION>
Inter- Emerging
national Markets I II III IV
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total cost of
investments at
beginning of period $153,283 $11,689 $1,454 $2,467 $4,191 $4,437
Add: Total net proceeds
from policy
transactions 30,386 6,945 536 1,752 1,081 2,074
Reinvested
distributions from
the Funds:
(a) Net investment
income 1,200 27
(b) Net realized gain 6,201 172
---------------------------------------------------------------
Sub-Total 191,070 18,661 1,990 4,391 5,272 6,511
Less: Cost of
investments disposed
during the period 20,304 5,820 112 251 291 1,823
---------------------------------------------------------------
Total cost of
investments at end of
period 170,766 12,841 1,878 4,140 4,981 4,688
Add: Unrealized
appreciation
(depreciation) (598) 2,690 393 689 1,167 693
---------------------------------------------------------------
Total market value of
investments at end of
period $170,168 $15,531 $2,271 $4,829 $6,148 $5,381
---------------------------------------------------------------
</TABLE>
- -------------------
(1) Operations commenced during 1999 (See Note 1 to Financial Statements).
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, 1999 and
the selected accumulation unit information as of June 30, 1999 were as follows:
<TABLE>
<CAPTION>
Variable Accounts
----------------------------------------------------------------------------------------------
Govern-
Money High Yield Managed ment Aggressive Growth Equity
Market Bond Bond Securities Growth Equity LT Income
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total units outstanding
at beginning of period 4,086,161 1,598,243 4,098,497 722,500 5,054,100 1,392,776 7,088,988 4,153,101
Increase (decrease) in
units resulting from
policy transactions:
(a) Transfer of net
premiums 5,294,432 196,119 332,058 70,808 396,681 215,855 508,610 267,445
(b) Transfers--policy
charges and deductions (220,697) (45,853) (95,087) (19,851) (130,203) (49,665) (182,947) (97,351)
(c) Transfers in (from
other variable
accounts) 9,956,792 871,308 1,351,128 264,934 2,188,354 1,143,059 1,725,901 757,161
(d) Transfers out (to
other variable
accounts) (14,167,346) (962,680) (1,094,983) (142,432) (2,435,259) (957,187) (1,065,140) (649,923)
(e) Transfers--other (439,439) (31,618) (71,134) (19,070) (143,589) (29,348) (323,810) (177,494)
----------------------------------------------------------------------------------------------
Sub-Total 423,742 27,276 421,982 154,389 (124,016) 322,714 662,614 99,838
----------------------------------------------------------------------------------------------
Total units outstanding
at end of period 4,509,903 1,625,519 4,520,479 876,889 4,930,084 1,715,490 7,751,602 4,252,939
----------------------------------------------------------------------------------------------
Accumulation Unit Value:
At beginning of period $16.91 $27.14 $24.85 $23.74 $39.51 $12.76 $32.06 $45.24
At end of period $17.30 $27.35 $24.25 $23.15 $45.48 $14.48 $42.83 $51.51
<CAPTION>
Multi- Large-Cap Mid-Cap Bond and Equity Small-Cap
Strategy Value (1) Value (1) Equity Income Index Index (1) REIT (1)
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total units outstanding
at beginning of period 3,899,102 1,208,588 407,552 7,178,724
Increase (decrease) in
units resulting from
policy transactions:
(a) Transfer of net
premiums 185,654 18,190 19,231 203,813 74,903 715,368 61,970 6,236
(b) Transfers--policy
charges and deductions (81,526) (1,656) (1,880) (49,095) (16,289) (195,436) (2,952) (595)
(c) Transfers in (from
other variable
accounts) 317,065 197,237 176,998 1,370,005 353,256 1,384,305 498,947 64,824
(d) Transfers out (to
other variable
accounts) (257,240) (37,097) (30,165) (524,522) (278,272) (1,048,566) (286,062) (6,988)
(e) Transfers--other (66,452) (158) 110 (22,514) (26,160) (260,706) 86 (105)
----------------------------------------------------------------------------------------------
Sub-Total 97,501 176,516 164,294 977,687 107,438 594,965 271,989 63,372
----------------------------------------------------------------------------------------------
Total units outstanding
at end of period 3,996,603 176,516 164,294 2,186,275 514,990 7,773,689 271,989 63,372
----------------------------------------------------------------------------------------------
Accumulation Unit Value:
At beginning of period $34.37 $10.00 $10.00 $14.95 $12.96 $42.23 $10.00 $10.00
At end of period $36.91 $11.28 $11.01 $16.97 $12.22 $47.34 $10.63 $10.84
<CAPTION>
Inter- Emerging
national Markets I II III IV
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total units outstanding
at beginning of period 7,183,483 1,425,050 127,998 167,752 342,807 304,588
Increase (decrease) in
units resulting from
policy transactions:
(a) Transfer of net
premiums 735,042 220,668 13,916 24,206 47,005 24,627
(b) Transfers--policy
charges and deductions (191,331) (50,696) (4,820) (5,437) (10,798) (7,518)
(c) Transfers in (from
other variable
accounts) 2,682,617 1,886,341 25,772 109,675 66,798 443,888
(d) Transfers out (to
other variable
accounts) (2,687,547) (1,751,107) (3,504) (49,097) (46,108) (468,957)
(e) Transfers--other (264,651) (38,874) (2,289) (6,026) (5,735) (6,270)
-----------------------------------------------------------------------
Sub-Total 274,130 266,332 29,075 73,321 51,162 (14,230)
-----------------------------------------------------------------------
Total units outstanding
at end of period 7,457,613 1,691,382 157,073 241,073 393,969 290,358
-----------------------------------------------------------------------
Accumulation Unit Value:
At beginning of period $21.88 $7.07 $11.89 $17.57 $12.99 $16.37
At end of period $22.82 $9.18 $14.46 $20.03 $15.60 $18.53
</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.
(1) Operations commenced during 1999 (See Note 1 to Financial Statements).
C-11
