<PAGE>
December 31, 1999 . Pacific Select Fund
. Pacific Select Variable Annuity
Separate Account of
Pacific Life Insurance Company
. Separate Account A 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
Independent Auditors' Report........................................ B-1
Financial Statements:
Statements of Assets and Liabilities.............................. B-2
Statements of Operations.......................................... B-4
Statements of Changes in Net Assets............................... B-6
Financial Highlights................................................ C-1
Schedules of Investments and Notes.................................. D-1
Notes to Financial Statements....................................... E-1
Special Meeting of Shareholders..................................... F-1
PACIFIC SELECT VARIABLE ANNUITY SEPARATE ACCOUNT
Independent Auditors' Report........................................ G-1
Financial Statements:
Statement of Assets and Liabilities............................... G-2
Statement of Operations........................................... G-4
Statement of Changes in Net Assets................................ G-6
Notes to Financial Statements....................................... H-1
SEPARATE ACCOUNT A
Independent Auditors' Report........................................ I-1
Financial Statements:
Statement of Assets and Liabilities............................... I-2
Statement of Operations........................................... I-4
Statement of Changes in Net Assets................................ I-6
Notes to Financial Statements....................................... J-1
</TABLE>
Notes:
Pacific Select Variable Annuity Contract Owners should refer to the
Annual Reports for Pacific Select Fund and Pacific Variable Annuity
Separate Account.
Separate Account A Contract Owners should refer to the Annual Reports
for Pacific Select Fund and Separate Account A.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Pacific Life Insurance Company:
We have audited the accompanying statement of assets and liabilities of
Pacific Select Variable Annuity Separate Account (comprised of the Aggressive
Equity, Emerging Markets, Growth, Bond and Income, Equity, Multi-Strategy,
Equity Income, Growth LT, Mid-Cap Value, Equity Index, Small-Cap Index, REIT,
International, Government Securities, Managed Bond, Money Market, High Yield
Bond and Large-Cap Value Variable Accounts) as of December 31, 1999 and the
related statement of operations for the year then ended and statement of
changes in net assets for each of the two years in the period then ended (as
to the Mid-Cap Value, Small-Cap Index, REIT, and Large-Cap Value Variable
Accounts, for the periods from commencement of operations through December 31,
1999). 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 Pacific Select Variable Annuity Separate Account as of December
31, 1999 and the results of their operations for the year then ended and the
changes in their net assets for each of the two years in the period then ended
(as to the Mid-Cap Value, Small-Cap Index, REIT, and Large-Cap Value Variable
Accounts, for the periods from commencement of operations through December 31,
1999), in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Costa Mesa, California
February 7, 2000
G-1
<PAGE>
PACIFIC SELECT VARIABLE ANNUITY SEPARATE ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
(In thousands)
<TABLE>
<CAPTION>
Aggressive Emerging Bond and Multi- Equity Mid-Cap
Equity Markets Growth Income Equity Strategy Income Growth LT Value
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>
ASSETS
Investments in Pacific
Select Fund:
Aggressive Equity
Portfolio
(11,771 shares; cost
$129,148).............. $171,277
Emerging Markets
Portfolio
(9,199 shares; cost
$80,336)............... $96,373
Growth Portfolio
(1,446 shares; cost
$30,011)............... $43,074
Bond and Income
Portfolio
(6,861 shares; cost
$82,486)............... $76,205
Equity Portfolio
(10,468 shares; cost
$230,299).............. $392,603
Multi-Strategy
Portfolio
(15,142 shares; cost
$221,844).............. $257,111
Equity Income Portfolio
(28,381 shares; cost
$588,774).............. $787,576
Growth LT Portfolio
(31,013 shares; cost
$522,435).............. $1,478,444
Mid-Cap Value Portfolio
(2,780 shares; cost
$29,409)............... $29,186
Receivables:
Due from Pacific Life
Insurance Company...... 141 140 77
Fund shares redeemed... 188 87 465 343 96 726
------------------------------------------------------------------------------------
Total Assets............ 171,465 96,460 43,215 76,345 393,068 257,454 787,672 1,479,170 29,263
------------------------------------------------------------------------------------
LIABILITIES
Payables:
Due to Pacific Life
Insurance Company...... 188 87 465 343 96 726
Fund shares purchased.. 141 140 77
------------------------------------------------------------------------------------
Total Liabilities....... 188 87 141 140 465 343 96 726 77
------------------------------------------------------------------------------------
NET ASSETS.............. $171,277 $96,373 $43,074 $76,205 $392,603 $257,111 $787,576 $1,478,444 $29,186
------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
G-2
<PAGE>
PACIFIC SELECT VARIABLE ANNUITY SEPARATE ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES (Continued)
DECEMBER 31, 1999
(In thousands)
<TABLE>
<CAPTION>
Govern- High
Equity Small-Cap Inter- ment Managed Money Yield Large-Cap
Index Index REIT national Securities Bond Market Bond Value
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>
ASSETS
Investments in Pacific
Select Fund:
Equity Index Portfolio
(22,813 shares; cost
$491,526).............. $876,162
Small-Cap Index
Portfolio
(2,320 shares; cost
$23,843)............... $27,238
REIT Portfolio
(1,769 shares; cost
$18,568)............... $16,965
International Portfolio
(39,748 shares; cost
$593,133).............. $734,693
Government Securities
Portfolio
(15,545 shares; cost
$162,555).............. $157,020
Managed Bond Portfolio
(36,903 shares; cost
$398,013).............. $381,084
Money Market Portfolio
(26,673 shares; cost
$268,394).............. $268,864
High Yield Bond
Portfolio
(23,588 shares; cost
$223,719).............. $207,876
Large-Cap Value
Portfolio
(3,172 shares; cost
$34,560)............... $35,179
Receivables:
Due from Pacific Life
Insurance Company..... 195 51 295 400 521 291 258
Fund shares redeemed.. 9 801
------------------------------------------------------------------------------------
Total Assets............ 876,357 27,247 17,016 734,988 157,420 381,605 269,665 208,167 35,437
------------------------------------------------------------------------------------
LIABILITIES
Payables:
Due to Pacific Life
Insurance Company...... 9 801
Fund shares purchased.. 195 51 295 400 521 291 258
------------------------------------------------------------------------------------
Total Liabilities....... 195 9 51 295 400 521 801 291 258
------------------------------------------------------------------------------------
NET ASSETS.............. $876,162 $27,238 $16,965 $734,693 $157,020 $381,084 $268,864 $207,876 $35,179
------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
G-3
<PAGE>
PACIFIC SELECT VARIABLE ANNUITY SEPARATE ACCOUNT
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(In thousands)
<TABLE>
<CAPTION>
Aggressive Emerging Bond and Multi- Equity Growth Mid-Cap
Equity Markets Growth Income Equity Strategy Income LT Value
Variable Variable Variable Variable Variable Variable Variable Variable Variable
Account Account Account Account Account Account Account Account Account (1)
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends................ $13,598 $323 $2,641 $9,028 $23,508 $22,859 $69,525 $76,144 $62
EXPENSES
Mortality and expense
risk fee................. 1,760 998 301 1,122 4,083 3,351 9,616 12,413 193
----------------------------------------------------------------------------------------
Net Investment Income
(Loss).................... 11,838 (675) 2,340 7,906 19,425 19,508 59,909 63,731 (131)
----------------------------------------------------------------------------------------
NET REALIZED AND
UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss)
from security
transactions............. 186 (6,138) 911 (2,243) 1,347 1,542 3,688 7,190 (172)
Net unrealized
appreciation
(depreciation) on
investments.............. 22,743 41,094 7,070 (13,943) 85,824 (5,575) 23,088 653,422 (223)
----------------------------------------------------------------------------------------
Net Realized and
Unrealized Gain (Loss) on
Investments............... 22,929 34,956 7,981 (16,186) 87,171 (4,033) 26,776 660,612 (395)
----------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN
NET ASSETS
RESULTING FROM OPERATIONS. $34,767 $34,281 $10,321 ($8,280) $106,596 $15,475 $86,685 $724,343 ($526)
----------------------------------------------------------------------------------------
</TABLE>
(1) Operations commenced during 1999 (see Note 1 to Financial Statements).
See Notes to Financial Statements
G-4
<PAGE>
PACIFIC SELECT VARIABLE ANNUITY SEPARATE ACCOUNT
STATEMENT OF OPERATIONS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 1999
(In thousands)
<TABLE>
<CAPTION>
Govern- High
Equity Small-Cap Inter- ment Managed Money Yield Large-Cap
Index Index REIT national Securities Bond Market Bond Value
Variable Variable Variable Variable Variable Variable Variable Variable Variable
Account Account (1) Account (1) Account Account Account Account Account Account (1)
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends................ $12,778 $415 $624 $28,549 $9,078 $31,226 $10,718 $19,229 $177
EXPENSES
Mortality and expense
risk fee................. 10,160 172 118 7,970 1,760 5,000 2,872 2,822 281
-----------------------------------------------------------------------------------------------
Net Investment Income
(Loss).................... 2,618 243 506 20,579 7,318 26,226 7,846 16,407 (104)
-----------------------------------------------------------------------------------------------
NET REALIZED AND
UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss)
from security
transactions............. 5,531 (108) (49) (8,578) (712) (2,713) (59) (7,338) (321)
Net unrealized
appreciation
(depreciation) on
investments.............. 133,889 3,395 (1,602) 120,690 (10,686) (36,495) 484 (5,264) 618
-----------------------------------------------------------------------------------------------
Net Realized and
Unrealized Gain (Loss) on
Investments............... 139,420 3,287 (1,651) 112,112 (11,398) (39,208) 425 (12,602) 297
-----------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN
NET ASSETS
RESULTING FROM OPERATIONS. $142,038 $3,530 ($1,145) $132,691 ($4,080) ($12,982) $8,271 $3,805 $193
-----------------------------------------------------------------------------------------------
</TABLE>
(1) Operations commenced during 1999 (see Note 1 to Financial Statements).
See Notes to Financial Statements
G-5
<PAGE>
PACIFIC SELECT VARIABLE ANNUITY SEPARATE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999
(In thousands)
<TABLE>
<CAPTION>
Aggressive Emerging Bond and Multi- Equity Mid-Cap
Equity Markets Growth Income Equity Strategy Income Growth LT Value
Variable Variable Variable Variable Variable Variable Variable Variable Variable
Account Account Account Account Account Account Account Account Account (1)
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS
FROM OPERATIONS
Net investment income
(loss).................. $11,838 ($675) $2,340 $7,906 $19,425 $19,508 $59,909 $63,731 ($131)
Net realized gain (loss)
from security
transactions............ 186 (6,138) 911 (2,243) 1,347 1,542 3,688 7,190 (172)
Net unrealized
appreciation
(depreciation) on
investments............. 22,743 41,094 7,070 (13,943) 85,824 (5,575) 23,088 653,422 (223)
----------------------------------------------------------------------------------------------
Net Increase (Decrease)
in Net Assets Resulting
from Operations.......... 34,767 34,281 10,321 (8,280) 106,596 15,475 86,685 724,343 (526)
----------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN
NET ASSETS
FROM POLICY TRANSACTIONS
Transfer of net
premiums................ 9,851 4,049 611 4,797 20,828 14,651 40,452 53,529 2,923
Transfers--policy
charges and deductions.. (1,509) (1,041) (658) (1,531) (3,747) (4,085) (9,972) (12,702) (149)
Transfers in (from other
variable accounts)...... 65,440 39,433 21,675 19,112 68,798 38,155 115,017 289,767 33,955
Transfers out (to other
variable accounts)...... (58,811) (44,466) (10,615) (39,304) (81,732) (69,919) (156,737) (290,099) (6,476)
Transfers--other........ (7,512) (3,363) (3,380) (4,050) (16,557) (16,995) (43,577) (53,331) (541)
----------------------------------------------------------------------------------------------
Net Increase (Decrease)
in Net Assets Derived
from Policy Transactions. 7,459 (5,388) 7,633 (20,976) (12,410) (38,193) (54,817) (12,836) 29,712
----------------------------------------------------------------------------------------------
NET INCREASE (DECREASE)
IN NET ASSETS............ 42,226 28,893 17,954 (29,256) 94,186 (22,718) 31,868 711,507 29,186
----------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Year....... 129,051 67,480 25,120 105,461 298,417 279,829 755,708 766,937
----------------------------------------------------------------------------------------------
End of Year............. $171,277 $96,373 $43,074 $76,205 $392,603 $257,111 $787,576 $1,478,444 $29,186
----------------------------------------------------------------------------------------------
</TABLE>
(1) Operations commenced during 1999 (see Note 1 to Financial Statements).
See Notes to Financial Statements
G-6
<PAGE>
PACIFIC SELECT VARIABLE ANNUITY SEPARATE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 1999
(In thousands)
<TABLE>
<CAPTION>
Govern- High
Equity Small-Cap Inter- ment Managed Money Yield Large-Cap
Index Index REIT national Securities Bond Market Bond Value
Variable Variable Variable Variable Variable Variable Variable Variable Variable
Account Account (1) Account (1) Account Account Account Account Account Account (1)
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS
FROM OPERATIONS
Net investment income
(loss)................ $2,618 $243 $506 $20,579 $7,318 $26,226 $7,846 $16,407 ($104)
Net realized gain
(loss) from security
transactions.......... 5,531 (108) (49) (8,578) (712) (2,713) (59) (7,338) (321)
Net unrealized
appreciation
(depreciation) on
investments........... 133,889 3,395 (1,602) 120,690 (10,686) (36,495) 484 (5,264) 618
------------------------------------------------------------------------------------------------
Net Increase (Decrease)
in Net Assets
Resulting from Operations. 142,038 3,530 (1,145) 132,691 (4,080) (12,982) 8,271 3,805 193
------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN
NET ASSETS
FROM POLICY TRANSACTIONS
Transfer of net
premiums.............. 42,843 2,338 1,329 33,635 9,339 26,796 50,318 10,754 3,484
Transfers--policy
charges and
deductions............ (8,993) (109) (87) (8,135) (2,743) (6,025) (7,769) (4,109) (168)
Transfers in (from
other variable
accounts)............. 170,148 31,322 19,928 554,310 83,788 81,046 986,861 74,733 46,728
Transfers out (to
other variable
accounts)............. (200,853) (9,241) (2,713) (545,148) (35,100) (98,334) (916,177) (103,810) (14,052)
Transfers--other...... (40,801) (602) (347) (32,277) (8,825) (19,936) (39,043) (13,262) (1,006)
------------------------------------------------------------------------------------------------
Net Increase (Decrease)
in Net Assets Derived
from Policy Transactions. (37,656) 23,708 18,110 2,385 46,459 (16,453) 74,190 (35,694) 34,986
------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE)
IN NET ASSETS.......... 104,382 27,238 16,965 135,076 42,379 (29,435) 82,461 (31,889) 35,179
------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Year..... 771,780 599,617 114,641 410,519 186,403 239,765
------------------------------------------------------------------------------------------------
End of Year........... $876,162 $27,238 $16,965 $734,693 $157,020 $381,084 $268,864 $207,876 $35,179
------------------------------------------------------------------------------------------------
</TABLE>
(1) Operations commenced during 1999 (see Note 1 to Financial Statements).
See Notes to Financial Statements
G-7
<PAGE>
PACIFIC SELECT VARIABLE ANNUITY SEPARATE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
(In thousands)
<TABLE>
<CAPTION>
Aggressive Emerging Bond and Multi- Equity
Equity Markets Growth Income Equity Strategy Income
Variable Variable Variable Variable Variable Variable Variable
Account Account Account Account Account Account Account
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS FROM
OPERATIONS
Net investment income
(loss)................. ($1,351) ($94) $2,928 $4,534 $12,902 $19,584 $72,151
Net realized gain
(loss) from security
transactions........... (594) (2,090) 844 170 432 503 1,495
Net unrealized
appreciation
(depreciation) on
investments............ 14,242 (20,761) (3,641) 2,159 50,193 16,831 62,895
---------------------------------------------------------------------
Net Increase (Decrease)
in Net Assets Resulting
from Operations......... 12,297 (22,945) 131 6,863 63,527 36,918 136,541
---------------------------------------------------------------------
INCREASE (DECREASE) IN
NET ASSETS FROM POLICY
TRANSACTIONS
Transfer of net
premiums............... 12,309 7,674 268 10,876 25,280 25,828 66,344
Transfers--policy
charges and deductions. (1,370) (617) (1,727) (1,767) (2,406) (4,163) (8,526)
Transfers in (from
other variable
accounts).............. 70,732 32,870 22,124 40,553 72,095 71,299 144,490
Transfers out (to other
variable accounts)..... (55,303) (22,781) (26,174) (24,956) (62,814) (34,651) (130,415)
Transfers--other....... (3,846) (2,090) (3,110) (3,748) (10,562) (11,000) (29,875)
---------------------------------------------------------------------
Net Increase (Decrease)
in Net Assets Derived
from Policy
Transactions............ 22,522 15,056 (8,619) 20,958 21,593 47,313 42,018
---------------------------------------------------------------------
NET INCREASE (DECREASE)
IN NET ASSETS........... 34,819 (7,889) (8,488) 27,821 85,120 84,231 178,559
---------------------------------------------------------------------
NET ASSETS
Beginning of Year...... 94,232 75,369 33,608 77,640 213,297 195,598 577,149
---------------------------------------------------------------------
End of Year............ $129,051 $67,480 $25,120 $105,461 $298,417 $279,829 $755,708
---------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
G-8
<PAGE>
PACIFIC SELECT VARIABLE ANNUITY SEPARATE ACCOUNT
STATEMENT OF CHANGES IN NET ASSETS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 1998
(In thousands)
<TABLE>
<CAPTION>
Govern- High
Growth Equity Inter- ment Managed Money Yield
LT Index national Securities Bond Market Bond
Variable Variable Variable Variable Variable Variable Variable
Account Account Account Account Account Account Account
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS FROM
OPERATIONS
Net investment income.. $19,213 $5,560 $42,212 $5,852 $19,290 $7,087 $19,107
Net realized gain
(loss) from security
transactions........... 6,226 11,175 10,390 246 (45) 290 (2,130)
Net unrealized
appreciation
(depreciation) on
investments............ 249,245 141,236 (28,126) 1,679 8,595 (104) (13,929)
---------------------------------------------------------------------
Net Increase in Net
Assets Resulting from
Operations.............. 274,684 157,971 24,476 7,777 27,840 7,273 3,048
---------------------------------------------------------------------
INCREASE (DECREASE) IN
NET ASSETS FROM POLICY
TRANSACTIONS
Transfer of net
premiums............... 47,975 72,157 50,055 11,336 44,796 122,985 25,852
Transfers--policy
charges and deductions. (6,138) (7,020) (7,345) (1,572) (6,534) (4,690) (3,455)
Transfers in (from
other variable
accounts).............. 161,850 215,168 421,709 63,653 114,652 750,262 83,681
Transfers out (to other
variable accounts)..... (173,187) (199,371) (406,234) (58,438) (64,538) (845,842) (96,843)
Transfers--other....... (25,309) (29,897) (22,361) (7,348) (14,286) (23,344) (10,515)
---------------------------------------------------------------------
Net Increase (Decrease)
in Net Assets Derived
from Policy
Transactions............ 5,191 51,037 35,824 7,631 74,090 (629) (1,280)
---------------------------------------------------------------------
NET INCREASE IN NET
ASSETS.................. 279,875 209,008 60,300 15,408 101,930 6,644 1,768
---------------------------------------------------------------------
NET ASSETS
Beginning of Year...... 487,062 562,772 539,317 99,233 308,589 179,759 237,997
---------------------------------------------------------------------
End of Year............ $766,937 $771,780 $599,617 $114,641 $410,519 $186,403 $239,765
---------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
G-9
<PAGE>
PACIFIC SELECT VARIABLE ANNUITY SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Pacific Select Variable Annuity Separate Account (the "Separate Account")
is registered as a unit investment trust under the Investment Company Act of
1940, as amended, and is currently comprised of eighteen subaccounts called
Variable Accounts: the Aggressive Equity Variable Account, the Emerging
Markets Variable Account, the Growth Variable Account, the Bond and Income
Variable Account, the Equity Variable Account, the Multi-Strategy Variable
Account, the Equity Income Variable Account, the Growth LT Variable Account,
the Mid-Cap Value Variable Account, the Equity Index Variable Account, the
Small-Cap Index Variable Account, the REIT Variable Account, the International
Variable Account, the Government Securities Variable Account, the Managed Bond
Variable Account, the Money Market Variable Account, the High Yield Bond
Variable Account, and the Large-Cap Value Variable Account. The assets in each
Variable Account are invested in shares of the corresponding portfolios of
Pacific Select Fund (the "Fund"), each of which pursues different investment
objectives and policies. The financial statements of the Fund, including the
schedules of investments, are included in Sections B through E of this report
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 Mid-Cap Value Variable
Account, the Small-Cap Index Variable Account, the REIT Variable Account, and
the Large-Cap Value Variable Account. The Mid-Cap Value Variable Account, the
Small-Cap Index Variable Account, and the Large-Cap Value Variable Account
commenced operations on January 4, 1999, and the REIT Variable Account
commenced operations on January 6, 1999.
The Separate Account was established by Pacific Life Insurance Company
("Pacific Life") on November 30, 1989 and commenced operations on July 24, 1990.
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 annuities, are obligations of Pacific Life.
The Separate Account held by Pacific Life represents funds from individual
flexible premium variable accumulation deferred annuity contracts (the
"Contracts"). 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 Fund are valued at the reported net asset values
of the respective portfolios. Valuation of securities held by the Fund is
discussed in the notes to its 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 1999, the Fund declared dividends for each portfolio. The amounts
accrued by the Separate Account for its share of the dividends were reinvested
in additional full and fractional shares of the related portfolio.
3. CHARGES AND EXPENSES
Pacific Life charges the Separate Account daily for mortality and expense
risks assumed with respect to the Contracts funded by the Separate Account at
an annual rate of 1.25% of the average daily net assets of each Variable
Account. Under the Contracts, Pacific Life makes certain deductions from the
net assets of each Variable Account for administrative expenses, contract
maintenance, any state premium taxes, and any 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 annuity contracts funded by
interests in the Separate Account, without remuneration from the Separate
Account.
H-1
<PAGE>
PACIFIC SELECT VARIABLE ANNUITY SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS (Continued)
5. SELECTED ACCUMULATION UNIT** INFORMATION
Selected accumulation unit information for the year ended December 31, 1999
were as follows:
<TABLE>
<CAPTION>
-----------------------
Accumulation
Unit Value
- -------------------------------------------------------------------------------
Number of
Units
At At End Outstanding
Beginning of at End of
Variable Accounts of Year Year Year
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Aggressive Equity $12.25 $15.41 11,118,066
- -------------------------------------------------------------------------------
Emerging Markets 6.73 10.20 9,447,024
- -------------------------------------------------------------------------------
Growth 31.78 46.31 930,230
- -------------------------------------------------------------------------------
Bond and Income 16.00 14.64 5,205,858
- -------------------------------------------------------------------------------
Equity 23.24 31.79 12,348,302
- -------------------------------------------------------------------------------
Multi-Strategy 27.10 28.64 8,975,844
- -------------------------------------------------------------------------------
Equity Income 33.66 37.65 20,917,655
- -------------------------------------------------------------------------------
Growth LT 30.13 58.95 25,077,684
- -------------------------------------------------------------------------------
Mid-Cap Value (1) 10.00 10.40 2,807,437
- -------------------------------------------------------------------------------
Equity Index 35.47 42.24 20,740,677
- -------------------------------------------------------------------------------
Small-Cap Index (1) 10.00 11.79 2,309,897
- -------------------------------------------------------------------------------
REIT (1) 10.00 9.85 1,722,077
- -------------------------------------------------------------------------------
International 16.96 20.58 35,706,570
- -------------------------------------------------------------------------------
Government Securities 18.60 18.01 8,718,907
- -------------------------------------------------------------------------------
Managed Bond 19.42 18.81 20,261,803
- -------------------------------------------------------------------------------
Money Market 13.28 13.77 19,529,634
- -------------------------------------------------------------------------------
High Yield Bond 22.62 22.99 9,042,829
- -------------------------------------------------------------------------------
Large-Cap Value (1) 10.00 11.01 3,194,845
- -------------------------------------------------------------------------------
</TABLE>
** Accumulation Unit: unit of measure used to calculate the value of a
Contract Owner's interest in a Variable Account during the Accumulation
Period.
(1) Operations commenced during 1999 (See Note 1 to Financial Statements).
H-2
<PAGE>
PACIFIC SELECT VARIABLE ANNUITY SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS (Continued)
6. SEPARATE ACCOUNT'S COST OF INVESTMENTS IN THE FUND SHARES
The investment in the Fund shares are carried at identified cost, which
represents the amount available for investment (including reinvested
distributions of net investment income and realized gains) in such shares
after deduction of mortality and expense risk charges (M&E). Total cost and
market value of the Separate Account's investments in the Fund as of
December 31, 1999 were as follows (amounts in thousands):
<TABLE>
<CAPTION>
Variable Accounts
----------------------------------------------------------------
Aggressive Emerging Bond and Multi-
Equity Markets Growth Income Equity Strategy
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total cost of investments at beginning of year $109,664 $92,536 $19,127 $97,798 $221,937 $238,987
Add: Total net proceeds from policy and M&E transactions 41,452 20,862 19,991 7,834 27,414 12,343
Reinvested distributions from the Fund:
(a) Net investment income 323 54 5,296 354 6,698
(b) Net realized gain 13,598 2,587 3,732 23,154 16,161
----------------------------------------------------------------
Sub-Total 164,714 113,721 41,759 114,660 272,859 274,189
Less: Cost of investments disposed during the year 35,566 33,385 11,748 32,174 42,560 52,345
----------------------------------------------------------------
Total cost of investments at end of year 129,148 80,336 30,011 82,486 230,299 221,844
Add: Unrealized appreciation (depreciation) 42,129 16,037 13,063 (6,281) 162,304 35,267
----------------------------------------------------------------
Total market value of investments at end of year $171,277 $96,373 $43,074 $76,205 $392,603 $257,111
----------------------------------------------------------------
<CAPTION>
Equity Growth Mid-Cap Equity Small-Cap
Income LT Value (1) Index Index (1) REIT (1)
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total cost of investments at beginning of year $579,994 $464,350 $521,034
Add: Total net proceeds from policy and M&E transactions 43,089 109,029 $32,137 84,285 $29,310 $18,887
Reinvested distributions from the Fund:
(a) Net investment income 6,629 62 9,118 127 588
(b) Net realized gain 62,896 76,144 3,660 288 36
----------------------------------------------------------------
Sub-Total 692,608 649,523 32,199 618,097 29,725 19,511
Less: Cost of investments disposed during the year 103,834 127,088 2,790 126,571 5,882 943
----------------------------------------------------------------
Total cost of investments at end of year 588,774 522,435 29,409 491,526 23,843 18,568
Add: Unrealized appreciation (depreciation) 198,802 956,009 (223) 384,636 3,395 (1,603)
----------------------------------------------------------------
Total market value of investments at end of year $787,576 $1,478,444 $29,186 $876,162 $27,238 $16,965
----------------------------------------------------------------
<CAPTION>
Inter- Government Managed Money High Yield Large-Cap
national Securities Bond Market Bond Value (1)
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total cost of investments at beginning of year $578,748 $109,489 $390,953 $186,417 $250,343
Add: Total net proceeds from policy and M&E transactions 458,109 61,329 33,446 671,367 42,916 $44,665
Reinvested distributions from the Fund:
(a) Net investment income 4,629 7,113 21,817 10,718 19,229 177
(b) Net realized gain 23,920 1,965 9,409
----------------------------------------------------------------
Sub-Total 1,065,406 179,896 455,625 868,502 312,488 44,842
Less: Cost of investments disposed during the year 472,273 17,341 57,612 600,108 88,769 10,282
----------------------------------------------------------------
Total cost of investments at end of year 593,133 162,555 398,013 268,394 223,719 34,560
Add: Unrealized appreciation (depreciation) 141,560 (5,535) (16,929) 470 (15,843) 619
----------------------------------------------------------------
Total market value of investments at end of year $734,693 $157,020 $381,084 $268,864 $207,876 $35,179
----------------------------------------------------------------
</TABLE>
- --------------------
(1) Operations commenced during 1999 (See Note 1 to Financial Statements).
H-3
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Pacific Life Insurance Company:
We have audited the accompanying statement of assets and liabilities of
Separate Account A (comprised of the Aggressive Equity, Emerging Markets,
Growth, Bond and Income, Equity, Multi-Strategy, Equity Income, Growth LT,
Mid-Cap Value, Equity Index, Small-Cap Index, REIT, International, Government
Securities, Managed Bond, Money Market, High Yield Bond, and Large-Cap Value
Variable Accounts) as of December 31, 1999 and the related statement of
operations for the year then ended and statement of changes in net assets for
each of the two years in the period then ended (as to the Growth, Mid-Cap
Value, Small-Cap Index, REIT, and Large Cap Value Variable Accounts, for the
periods from commencement of operations through December 31, 1999). 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 Separate Account A as of December 31, 1999 and the results of
their operations for the year then ended and the changes in their net assets
for each of the two years in the period then ended (as to the Growth, Mid-Cap
Value, Small-Cap Index, REIT, and Large-Cap Value Variable Accounts, for the
periods from commencement of operations through December 31, 1999), in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Costa Mesa, California
February 7, 2000
I-1
<PAGE>
SEPARATE ACCOUNT A
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
(In thousands)
<TABLE>
<CAPTION>
Aggressive Emerging Bond and Multi- Equity Mid-Cap
Equity Markets Growth Income Equity Strategy Income Growth LT Value
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>
ASSETS
Investments in Pacific
Select Fund:
Aggressive Equity
Portfolio
(16,486 shares; cost
$197,971).............. $239,874
Emerging Markets
Portfolio
(8,687 shares; cost
$69,668)............... $91,007
Growth Portfolio
(1,124 shares; cost
$30,293)............... $33,468
Bond and Income
Portfolio
(9,217 shares; cost
$114,538).............. $102,373
Equity Portfolio
(13,725 shares; cost
$400,521).............. $514,749
Multi-Strategy
Portfolio
(16,764 shares; cost
$279,676).............. $284,653
Equity Income Portfolio
(26,997 shares; cost
$704,281).............. $749,179
Growth LT Portfolio
(31,545 shares; cost
$933,707).............. $1,503,784
Mid-Cap Value Portfolio
(6,928 shares; cost
$71,352)............... $72,728
Receivables:
Due from Pacific Life
Insurance Company...... 1,460 42 146 239 770 563 1,365 2,310 350
------------------------------------------------------------------------------------
Total Assets............ 241,334 91,049 33,614 102,612 515,519 285,216 750,544 1,506,094 73,078
------------------------------------------------------------------------------------
LIABILITIES
Payables:
Fund shares purchased.. 1,460 42 146 239 770 563 1,365 2,310 350
Other Liabilities...... 17 6 3 5 31 16 41 85 6
------------------------------------------------------------------------------------
Total Liabilities....... 1,477 48 149 244 801 579 1,406 2,395 356
------------------------------------------------------------------------------------
NET ASSETS.............. $239,857 $91,001 $33,465 $102,368 $514,718 $284,637 $749,138 $1,503,699 $72,722
------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
I-2
<PAGE>
SEPARATE ACCOUNT A
STATEMENT OF ASSETS AND LIABILITIES (Continued)
DECEMBER 31, 1999
(In thousands)
<TABLE>
<CAPTION>
Govern- High
Equity Small-Cap Inter- ment Managed Money Yield Large-Cap
Index Index REIT national Securities Bond Market Bond Value
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>
ASSETS
Investments in Pacific
Select Fund:
Equity Index Portfolio
(24,341 shares; cost
$774,858).............. $934,876
Small-Cap Index
Portfolio
(6,931 shares; cost
$71,823)............... $81,386
REIT Portfolio
(3,180 shares; cost
$32,322)............... $30,492
International Portfolio
(35,837 shares; cost
$544,366).............. $662,398
Government Securities
Portfolio
(22,750 shares; cost
$238,650).............. $229,795
Managed Bond Portfolio
(48,773 shares; cost
$532,806).............. $503,670
Money Market Portfolio
(53,024 shares; cost
$534,027).............. $534,479
High Yield Bond
Portfolio
(20,400 shares; cost
$187,530).............. $179,781
Large-Cap Value
Portfolio
(11,608 shares; cost
$125,990).............. $128,746
Receivables:
Due from Pacific Life
Insurance Company...... 285 250 355 1,705 1,204 1,352 366 399
Fund shares redeemed... 2,082
-------------------------------------------------------------------------------------
Total Assets............ 935,161 81,636 30,847 664,103 230,999 505,022 536,561 180,147 129,145
-------------------------------------------------------------------------------------
LIABILITIES
Payables:
Due to Pacific Life
Insurance Company...... 2,082
Fund shares purchased.. 285 250 355 1,705 1,204 1,352 366 399
Other Liabilities...... 52 4 2 46 12 28 16 11 6
-------------------------------------------------------------------------------------
Total Liabilities....... 337 254 357 1,751 1,216 1,380 2,098 377 405
-------------------------------------------------------------------------------------
NET ASSETS.............. $934,824 $81,382 $30,490 $662,352 $229,783 $503,642 $534,463 $179,770 $128,740
-------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
I-3
<PAGE>
SEPARATE ACCOUNT A
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(In thousands)
<TABLE>
<CAPTION>
Aggressive Emerging Bond and Multi- Equity Growth Mid-Cap
Equity Markets Growth Income Equity Strategy Income LT Value
Variable Variable Variable Variable Variable Variable Variable Variable Variable
Account Account Account (1) Account Account Account Account Account Account (1)
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends................ $11,007 $244 $19 $9,041 $16,955 $16,963 $40,442 $39,272 $144
----------------------------------------------------------------------------------------------
Total Investment Income... 11,007 244 19 9,041 16,955 16,963 40,442 39,272 144
----------------------------------------------------------------------------------------------
EXPENSES
Mortality and expense
risk fee and
administrative fee....... 1,863 709 33 1,224 3,807 2,875 6,821 8,972 406
Charges for Stepped-Up
death benefit rider...... 13 3 8 38 20 52 97 9
Charges for Premier death
benefit rider............ 12 4 9 41 21 52 92 7
----------------------------------------------------------------------------------------------
Total Expenses............ 1,888 716 33 1,241 3,886 2,916 6,925 9,161 422
----------------------------------------------------------------------------------------------
Net Investment Income
(Loss).................... 9,119 (472) (14) 7,800 13,069 14,047 33,517 30,111 (278)
----------------------------------------------------------------------------------------------
NET REALIZED AND
UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss)
from security
transactions............. (3,644) (2,935) 1 (1,749) (3,885) (390) (1,836) (6,113) (676)
Net unrealized
appreciation
(depreciation) on
investments.............. 34,630 27,733 3,174 (13,506) 97,207 (2,838) 19,213 513,030 1,376
----------------------------------------------------------------------------------------------
Net Realized and
Unrealized Gain (Loss) on
Investments............... 30,986 24,798 3,175 (15,255) 93,322 (3,228) 17,377 506,917 700
----------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN
NET ASSETS
RESULTING FROM OPERATIONS. $40,105 $24,326 $3,161 ($7,455) $106,391 $10,819 $50,894 $537,028 $422
----------------------------------------------------------------------------------------------
</TABLE>
(1) Operations commenced during 1999 (see Note 1 to Financial Statement).
See Notes to Financial Statements
I-4
<PAGE>
SEPARATE ACCOUNT A
STATEMENT OF OPERATIONS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 1999
(In thousands)
<TABLE>
<CAPTION>
Govern- High
Equity Small-Cap Inter- ment Managed Money Yield Large-Cap
Index Index REIT national Securities Bond Market Bond Value
Variable Variable Variable Variable Variable Variable Variable Variable Variable
Account Account (1) Account (1) Account Account Account Account Account Account (1)
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends................ $9,257 $1,198 $977 $15,491 $9,143 $29,337 $15,727 $12,359 $531
-----------------------------------------------------------------------------------------------
Total Investment Income... 9,257 1,198 977 15,491 9,143 29,337 15,727 12,359 531
-----------------------------------------------------------------------------------------------
EXPENSES
Mortality and expense
risk fee and
administrative fee....... 8,260 428 181 5,669 1,979 5,172 4,453 1,940 783
Charges for Stepped-Up
death benefit rider...... 58 7 3 27 14 30 52 12 16
Charges for Premier death
benefit rider............ 60 8 3 32 16 35 52 15 15
-----------------------------------------------------------------------------------------------
Total Expenses............ 8,378 443 187 5,728 2,009 5,237 4,557 1,967 814
-----------------------------------------------------------------------------------------------
Net Investment Income
(Loss).................... 879 755 790 9,763 7,134 24,100 11,170 10,392 (283)
-----------------------------------------------------------------------------------------------
NET REALIZED AND
UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss)
from security
transactions............. (1,581) (227) (115) 7,060 (620) (985) (710) (3,952) (742)
Net unrealized
appreciation
(depreciation) on
investments.............. 111,570 9,563 (1,830) 97,859 (9,772) (32,937) 631 (4,328) 2,756
-----------------------------------------------------------------------------------------------
Net Realized and
Unrealized Gain (Loss) on
Investments............... 109,989 9,336 (1,945) 104,919 (10,392) (33,922) (79) (8,280) 2,014
-----------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN
NET ASSETS
RESULTING FROM OPERATIONS. $110,868 $10,091 ($1,155) $114,682 ($3,258) ($9,822) $11,091 $2,112 $1,731
-----------------------------------------------------------------------------------------------
</TABLE>
(1) Operations commenced during 1999 (see Note 1 to Financial Statement).
See Notes to Financial Statements
I-5
<PAGE>
SEPARATE ACCOUNT A
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999
(In thousands)
<TABLE>
<CAPTION>
Aggressive Emerging Bond and Multi- Equity Mid-Cap
Equity Markets Growth Income Equity Strategy Income Growth LT Value
Variable Variable Variable Variable Variable Variable Variable Variable Variable
Account Account Account (1) Account Account Account Account Account Account (1)
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS
FROM OPERATIONS
Net investment income
(loss).................. $9,119 ($472) ($14) $7,800 $13,069 $14,047 $33,517 $30,111 ($278)
Net realized gain (loss)
from security
transactions............ (3,644) (2,935) 1 (1,749) (3,885) (390) (1,836) (6,113) (676)
Net unrealized
appreciation
(depreciation)
on investments.......... 34,630 27,733 3,174 (13,506) 97,207 (2,838) 19,213 513,030 1,376
------------------------------------------------------------------------------------------------
Net Increase (Decrease)
in Net Assets Resulting
from Operations.......... 40,105 24,326 3,161 (7,455) 106,391 10,819 50,894 537,028 422
------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN
NET ASSETS
FROM POLICY TRANSACTIONS
Transfer of net
premiums................ 88,790 27,326 7,420 46,800 209,295 130,265 324,733 537,255 43,903
Transfers--policy
charges and deductions.. (771) (219) (954) (1,376) (1,606) (3,255) (3,219) (172)
Transfers in (from other
variable accounts)...... 302,466 83,479 23,912 51,971 231,529 95,476 263,720 623,496 49,079
Transfers out (to other
variable accounts)...... (256,009) (67,969) (976) (41,222) (146,087) (64,152) (135,153) (381,447) (19,515)
Transfers--other........ (5,553) (2,570) (52) (3,973) (11,269) (8,608) (19,087) (26,933) (995)
------------------------------------------------------------------------------------------------
Net Increase in Net
Assets Derived
from Policy Transactions. 128,923 40,047 30,304 52,622 282,092 151,375 430,958 749,152 72,300
------------------------------------------------------------------------------------------------
NET INCREASE IN NET
ASSETS................... 169,028 64,373 33,465 45,167 388,483 162,194 481,852 1,286,180 72,722
------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Year....... 70,829 26,628 57,201 126,235 122,443 267,286 217,519
------------------------------------------------------------------------------------------------
End of Year............. $239,857 $91,001 $33,465 $102,368 $514,718 $284,637 $749,138 $1,503,699 $72,722
------------------------------------------------------------------------------------------------
</TABLE>
(1) Operations commenced during 1999 (see Note 1 to Financial Statement).
See Notes to Financial Statements
I-6
<PAGE>
SEPARATE ACCOUNT A
STATEMENT OF CHANGES IN NET ASSETS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 1999
(In thousands)
<TABLE>
<CAPTION>
Govern- High
Equity Small-Cap Inter- ment Managed Money Yield Large-Cap
Index Index REIT national Securities Bond Market Bond Value
Variable Variable Variable Variable Variable Variable Variable Variable Variable
Account Account (1) Account (1) Account Account Account Account Account Account (1)
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS FROM OPERATIONS
Net investment income
(loss)................... $879 $755 $790 $9,763 $7,134 $24,100 $11,170 $10,392 ($283)
Net realized gain (loss)
from security
transactions............. (1,581) (227) (115) 7,060 (620) (985) (710) (3,952) (742)
Net unrealized
appreciation
(depreciation)
on investments........... 111,570 9,563 (1,830) 97,859 (9,772) (32,937) 631 (4,328) 2,756
----------------------------------------------------------------------------------------------------
Net Increase (Decrease) in
Net Assets Resulting from
Operations................ 110,868 10,091 (1,155) 114,682 (3,258) (9,822) 11,091 2,112 1,731
----------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS FROM POLICY
TRANSACTIONS
Transfer of net premiums. 395,995 41,900 17,118 243,746 108,700 224,863 757,671 75,908 79,473
Transfers--policy charges
and deductions........... (3,777) (335) (175) (2,253) (2,267) (3,390) (2,704) (1,376) (496)
Transfers in (from other
variable accounts)....... 306,445 47,031 18,804 2,838,332 129,637 204,075 3,650,322 101,532 72,696
Transfers out (to other
variable accounts)....... (155,527) (16,218) (3,648) (2,714,285) (50,154) (97,369) (3,971,792) (79,897) (22,245)
Transfers--other......... (27,645) (1,087) (454) (18,096) (6,472) (17,370) (75,612) (6,922) (2,419)
----------------------------------------------------------------------------------------------------
Net Increase in Net Assets
Derived from Policy
Transactions.............. 515,491 71,291 31,645 347,444 179,444 310,809 357,885 89,245 127,009
----------------------------------------------------------------------------------------------------
NET INCREASE IN NET
ASSETS.................... 626,359 81,382 30,490 462,126 176,186 300,987 368,976 91,357 128,740
----------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Year........ 308,465 200,226 53,597 202,655 165,487 88,413
----------------------------------------------------------------------------------------------------
End of Year.............. $934,824 $81,382 $30,490 $662,352 $229,783 $503,642 $534,463 $179,770 $128,740
----------------------------------------------------------------------------------------------------
</TABLE>
(1) Operations commenced during 1999 (see Note 1 to Financial Statement).
See Notes to Financial Statements
I-7
<PAGE>
SEPARATE ACCOUNT A
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
(In thousands)
<TABLE>
<CAPTION>
Aggressive Emerging Bond and Multi- Equity Growth
Equity Markets Income Equity Strategy Income LT
Variable Variable Variable Variable Variable Variable Variable
Account Account Account Account Account Account Account
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS
FROM OPERATIONS
Net investment income
(loss).................. ($509) $29 $1,460 $2,387 $4,259 $11,971 $2,280
Net realized loss from
security transactions... (878) (511) (33) (797) (196) (1,109) (779)
Net unrealized
appreciation
(depreciation)
on investments.......... 6,570 (5,677) 754 15,831 6,826 21,490 55,209
----------------------------------------------------------------------
Net Increase (Decrease)
in Net Assets Resulting
from Operations.......... 5,183 (6,159) 2,181 17,421 10,889 32,352 56,710
----------------------------------------------------------------------
INCREASE (DECREASE) IN
NET ASSETS FROM
POLICY TRANSACTIONS
Transfer of net
premiums................ 27,495 11,607 23,998 52,894 51,866 105,957 73,268
Transfers--policy
charges and deductions.. (66) (69) (237) (205) (403) (508) (916)
Transfers in (from other
variable accounts)...... 36,664 14,814 29,038 50,510 51,532 109,598 87,236
Transfers out (to other
variable accounts)...... (15,288) (5,129) (7,359) (20,443) (11,701) (34,858) (42,906)
Transfers--other........ (1,850) (893) (1,379) (3,056) (3,563) (7,186) (4,496)
----------------------------------------------------------------------
Net Increase in Net
Assets Derived
from Policy Transactions. 46,955 20,330 44,061 79,700 87,731 173,003 112,186
----------------------------------------------------------------------
NET INCREASE IN NET
ASSETS................... 52,138 14,171 46,242 97,121 98,620 205,355 168,896
----------------------------------------------------------------------
NET ASSETS
Beginning of Year....... 18,691 12,457 10,959 29,114 23,823 61,931 48,623
----------------------------------------------------------------------
End of Year............. $70,829 $26,628 $57,201 $126,235 $122,443 $267,286 $217,519
----------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
I-8
<PAGE>
SEPARATE ACCOUNT A
STATEMENT OF CHANGES IN NET ASSETS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 1998
(In thousands)
<TABLE>
<CAPTION>
Govern- High
Equity Inter- ment Managed Money Yield
Index national Securities Bond Market Bond
Variable Variable Variable Variable Variable Variable
Account Account Account Account Account Account
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS
FROM OPERATIONS
Net investment income.. $1,009 $7,334 $1,516 $5,999 $2,906 $4,740
Net realized loss from
security transactions.. (574) (21,623) (110) (30) (58) (494)
Net unrealized
appreciation
(depreciation)
on investments......... 41,753 19,632 498 2,685 (180) (3,466)
-------------------------------------------------------------
Net Increase in Net
Assets Resulting
from Operations......... 42,188 5,343 1,904 8,654 2,668 780
-------------------------------------------------------------
INCREASE (DECREASE) IN
NET ASSETS FROM
POLICY TRANSACTIONS
Transfer of net
premiums............... 123,814 92,350 21,303 87,821 351,065 39,962
Transfers--policy
charges and deductions. (884) (747) (488) (815) (1,089) (545)
Transfers in (from
other variable
accounts).............. 126,137 777,506 36,728 89,179 835,702 46,475
Transfers out (to other
variable accounts)..... (45,516) (735,908) (20,846) (25,326) (1,039,166) (25,511)
Transfers--other....... (7,270) (5,863) (1,507) (6,242) (16,394) (4,715)
-------------------------------------------------------------
Net Increase in Net
Assets Derived from
Policy Transactions..... 196,281 127,338 35,190 144,617 130,118 55,666
-------------------------------------------------------------
NET INCREASE IN NET
ASSETS.................. 238,469 132,681 37,094 153,271 132,786 56,446
-------------------------------------------------------------
NET ASSETS
Beginning of Year...... 69,996 67,545 16,503 49,384 32,701 31,967
-------------------------------------------------------------
End of Year............ $308,465 $200,226 $53,597 $202,655 $165,487 $88,413
-------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
I-9
<PAGE>
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Separate Account A (the "Separate Account") is registered as a unit
investment trust under the Investment Company Act of 1940, as amended, and is
currently comprised of eighteen subaccounts called Variable Accounts: the
Aggressive Equity Variable Account, the Emerging Markets Variable Account, the
Growth Variable Account, the Bond and Income Variable Account, the Equity
Variable Account, the Multi-Strategy Variable Account, the Equity Income
Variable Account, the Growth LT Variable Account, the Mid-Cap Value Variable
Account, the Equity Index Variable Account, the Small-Cap Index Variable
Account, the REIT Variable Account, the International Variable Account, the
Government Securities Variable Account, the Managed Bond Variable Account, the
Money Market Variable Account, the High Yield Bond Variable Account, and the
Large-Cap Value Variable Account. The assets in each Variable Account are
invested in shares of the corresponding portfolios of Pacific Select Fund (the
"Fund"), each of which pursues different investment objectives and policies.
The financial statements of the Fund, including the schedules of investments,
are included in Sections B through E of this report 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 five new Variable Accounts: The Growth Variable Account,
the Mid-Cap Value Variable Account, the Small-Cap Index Variable Account, the
REIT Variable Account, and the Large-Cap Value Variable Account. The Mid-Cap
Value Variable Account, the Small-Cap Index Variable Account, the REIT
Variable Account, and the Large-Cap Value Variable Account commenced
operations on January 4, 1999. The Growth Variable Account commenced
operations on October 1, 1999.
The Separate Account was established by Pacific Life Insurance Company
("Pacific Life") on September 7, 1994 and commenced operations on January 2,
1996. 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 annuities, are obligations of Pacific
Life.
The Separate Account held by Pacific Life represents funds from individual
flexible premium variable accumulation deferred annuity contracts (the
"Contracts").
The preparation of the accompanying financial statements requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the reported
amounts of income and expenses during the reporting period. Actual results
could differ from those estimates.
A. Valuation of Investments
Investments in shares of the Fund are valued at the reported net asset values
of the respective portfolios. Valuation of securities held by the Fund is
discussed in the notes to its 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 1999, the Fund declared dividends for each portfolio. The amounts
accrued by the Separate Account for its share of the dividends were reinvested
in additional full and fractional shares of the related portfolio.
3. CHARGES AND EXPENSES
Contracts currently being sold include the Pacific Portfolios, Pacific One
and Pacific Value. Pacific Value Contracts started on January 4, 1999 and have
three different death benefit options: the Standard Death Benefit (without
Rider), the Stepped-Up Death Benefit Rider, and the Premier Death Benefit
Rider. The charges for each rider are deducted at the separate account level
and affect the daily accumulation unit values. The charge for the optional
death benefit rider for Pacific One and Pacific Portfolios are deducted
annually at the contract level whereby units are redeemed and the daily
accumulation unit values are not affected. Pacific Life charges the Separate
Account daily for mortality and expense (M&E) risks assumed, administrative
costs incurred in operating the Separate Account and issuing and administering
the Contracts, and additional death benefit rider charges for Pacific Values
Contract Owners who purchased one of the optional riders. These
J-1
<PAGE>
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (Continued)
charges are assessed daily at the following annual rates of the average daily
net assets of each Variable Account:
<TABLE>
<CAPTION>
With
Stepped-Up With Premier
Without Death Benefit Death Benefit
Rider Rider Rider
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
M&E Risk Charge.................... 1.25% 1.25% 1.25%
Administrative Fee................. 0.15% 0.15% 0.15%
Death Benefit Rider Charge None 0.20% 0.35%
---- ---- ----
Total Annual Expenses.............. 1.40% 1.60% 1.75%
---- ---- ----
</TABLE>
Under the Contracts, Pacific Life makes certain deductions from the net
assets of each Variable Account for contract maintenance, any state premium
taxes, and any 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 annuity contracts funded by interests
in the Separate Account, and is compensated by Pacific Life.
5. SELECTED ACCUMULATION UNIT** INFORMATION
Selected accumulation unit value (AUV) and unit information for the year
ended December 31, 1999 were as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Pacific Portfolios and
Pacific One Contracts Pacific Value Contracts (2)
-------------------------- ----------------------------------------------------------------
With Stepped-Up With Premier
Death Benefit Death Benefit
Without Rider Rider Rider
------------------ ------------------ ------------------
Number of Number of Number of Number of
AUV At Units AUV at AUV At Units Units Units
Begin- AUV at Outstanding Begin- End Outstanding AUV at Outstanding AUV at Outstanding
ning of End of at End ning of of at End End of at End End of at End
Variable Accounts Year Year of Year Year Year of Year Year of Year Year of Year
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aggressive Equity $12.19 $15.31 11,134,505 $12.08 $15.31 2,693,949 $15.28 1,187,774 $15.26 652,132
- ------------------------------------------------------------------------------------------------------------------
Emerging Markets 6.70 10.14 6,758,343 6.86 10.14 1,402,085 10.12 447,467 10.11 367,265
- ------------------------------------------------------------------------------------------------------------------
Growth (1) 17.98 23.01 837,054 17.98 23.01 408,463 22.96 127,055 22.93 82,497
- ------------------------------------------------------------------------------------------------------------------
Bond and Income 12.07 11.03 6,883,171 12.02 11.03 1,288,156 11.01 676,749 10.99 437,536
- ------------------------------------------------------------------------------------------------------------------
Equity 18.85 25.76 13,292,054 18.84 25.76 3,439,581 25.71 2,057,306 25.67 1,201,244
- ------------------------------------------------------------------------------------------------------------------
Multi-Strategy 15.17 16.01 12,744,327 15.17 16.01 2,954,761 15.98 1,342,973 15.95 743,434
- ------------------------------------------------------------------------------------------------------------------
Equity Income 18.10 20.22 26,156,874 18.12 20.22 6,027,438 20.18 3,105,130 20.15 1,773,940
- ------------------------------------------------------------------------------------------------------------------
Growth LT 19.84 38.74 24,739,519 19.95 38.74 7,721,645 38.67 4,155,805 38.61 2,209,196
- ------------------------------------------------------------------------------------------------------------------
Mid-Cap Value (1) 10.00 10.38 3,539,541 10.00 10.38 1,971,054 10.36 946,912 10.34 554,927
- ------------------------------------------------------------------------------------------------------------------
Equity Index 19.88 23.64 28,123,841 19.85 23.64 6,697,369 23.59 2,977,811 23.56 1,760,747
- ------------------------------------------------------------------------------------------------------------------
Small-Cap Index (1) 10.00 11.77 3,538,845 10.00 11.77 1,911,936 11.75 823,250 11.73 643,554
- ------------------------------------------------------------------------------------------------------------------
REIT (1) 10.00 9.86 1,859,366 10.00 9.86 764,770 9.84 279,529 9.83 189,692
- ------------------------------------------------------------------------------------------------------------------
International 13.29 16.10 30,366,865 13.58 16.10 7,083,724 16.06 2,226,612 16.04 1,483,916
- ------------------------------------------------------------------------------------------------------------------
Government Securities 11.80 11.41 13,720,231 11.79 11.41 4,451,455 11.38 1,179,644 11.37 799,190
- ------------------------------------------------------------------------------------------------------------------
Managed Bond 11.99 11.60 31,653,501 11.98 11.60 7,609,552 11.58 2,514,911 11.56 1,648,514
- ------------------------------------------------------------------------------------------------------------------
Money Market 11.16 11.55 27,967,969 11.17 11.55 11,370,911 11.53 3,966,774 11.51 2,979,275
- ------------------------------------------------------------------------------------------------------------------
High Yield Bond 11.95 12.13 11,078,968 11.97 12.13 2,139,827 12.10 941,781 12.09 665,249
- ------------------------------------------------------------------------------------------------------------------
Large-Cap Value (1) 10.00 10.99 5,648,927 10.00 10.99 3,196,813 10.97 1,810,506 10.95 1,063,376
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
** Accumulation Unit: unit of measure used to calculate the value of a
Contract Owner's interest in a Variable Account during the Accumulation
Period.
(1) Operations commenced during 1999 (See Note 1 to Financial Statements).
(2) Pacific Value Contracts commenced operations on January 4, 1999 (see Note
3 to Financial Statements).
J-2
<PAGE>
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (Continued)
6. SEPARATE ACCOUNT'S COST OF INVESTMENTS IN THE FUND SHARES
The investment in the Fund shares are carried at identified cost, which
represents the amount available for investment (including reinvested
distributions of net investment income and realized gains) in such shares
after deduction of mortality and expense risk, administrative charges, and
additional death benefit rider charges, if any (M&E). Total cost and market
value of the Separate Account's investments in the Fund as of December 31,
1999 were as follows (amounts in thousands):
<TABLE>
<CAPTION>
Variable Accounts
-----------------------------------------------------------------
Aggressive Emerging Bond and Multi-
Equity Markets Growth (1) Income Equity Strategy
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total cost of investments at beginning of year $63,560 $33,024 $55,863 $109,221 $114,635
Add: Total net proceeds from policy and M&E transactions 313,234 85,937 $31,411 68,187 343,845 168,523
Reinvested distributions from the Fund:
(a) Net investment income 244 19 5,420 353 5,438
(b) Net realized gain 11,007 3,621 16,602 11,525
-----------------------------------------------------------------
Sub-Total 387,801 119,205 31,430 133,091 470,021 300,121
Less: Cost of investments disposed during the year 189,830 49,537 1,137 18,553 69,500 20,445
-----------------------------------------------------------------
Total cost of investments at end of year 197,971 69,668 30,293 114,538 400,521 279,676
Add: Unrealized appreciation (depreciation) 41,903 21,339 3,175 (12,165) 114,228 4,977
-----------------------------------------------------------------
Total market value of investments at end of year $239,874 $91,007 $33,468 $102,373 $514,749 $284,653
-----------------------------------------------------------------
<CAPTION>
Equity Growth Mid-Cap Equity Small-Cap
Income LT Value (1) Index Index (1) REIT (1)
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total cost of investments at beginning of year $241,615 $160,484 $260,033
Add: Total net proceeds from policy and M&E transactions 466,599 863,009 $82,702 538,713 $77,733 $33,927
Reinvested distributions from the Fund:
(a) Net investment income 4,654 39,272 144 6,858 344 913
(b) Net realized gain 35,788 2,399 854 64
-----------------------------------------------------------------
Sub-Total 748,656 1,062,765 82,846 808,003 78,931 34,904
Less: Cost of investments disposed during the year 44,375 129,058 11,494 33,145 7,108 2,582
-----------------------------------------------------------------
Total cost of investments at end of year 704,281 933,707 71,352 774,858 71,823 32,322
Add: Unrealized appreciation (depreciation) 44,898 570,077 1,376 160,018 9,563 (1,830)
-----------------------------------------------------------------
Total market value of investments at end of year $749,179 $1,503,784 $72,728 $934,876 $81,386 $30,492
-----------------------------------------------------------------
<CAPTION>
Govern-
Inter- ment Managed Money High Yield Large-Cap
national Securities Bond Market Bond Value (1)
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total cost of investments at beginning of year $180,069 $52,683 $198,866 $165,674 $91,840
Add: Total net proceeds from policy and M&E transactions 2,805,315 187,539 321,077 3,435,673 125,707 $140,316
Reinvested distributions from the Fund:
(a) Net investment income 2,512 7,476 21,221 15,727 12,359 531
(b) Net realized gain 12,979 1,667 8,116
-----------------------------------------------------------------
Sub-Total 3,000,875 249,365 549,280 3,617,074 229,906 140,847
Less: Cost of investments disposed during the year 2,456,509 10,715 16,474 3,083,047 42,376 14,857
-----------------------------------------------------------------
Total cost of investments at end of year 544,366 238,650 532,806 534,027 187,530 125,990
Add: Unrealized appreciation (depreciation) 118,032 (8,855) (29,136) 452 (7,749) 2,756
-----------------------------------------------------------------
Total market value of investments at end of year $662,398 $229,795 $503,670 $534,479 $179,781 $128,746
-----------------------------------------------------------------
</TABLE>
- --------------------
(1) Operations commenced during 1999 (See Note 1 to Financial Statements).
J-3
