ICAP PLUS VARIABLE LIFE ACCOUNT ONE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1997
<PAGE>
ICAP PLUS VARIABLE LIFE ACCOUNT ONE
STATEMENT OF NET ASSETS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES COST VALUE
------ ---- -----
<S> <C> <C> <C>
NET ASSETS
Investments in mutual fund portfolio:
Money Market 1,106,859 $1,106,859 $1,106,859
Growth 130,868 2,821,804 3,539,194
Fixed Income 5,233 71,069 69,496
Government and Quality Bond 66,865 904,563 933,643
High Yield 62,150 524,164 520,573
Strategic Multi-Asset 119,720 1,351,118 1,350,623
Multi-Asset 253,003 2,997,728 3,420,923
Capital Appreciation 92,257 2,320,184 2,971,939
Growth and Income 64,426 819,611 1,104,200
Foreign Securities 75,608 852,912 862,078
Natural Resources 16,430 246,980 236,939
Target '98 4,964 61,666 54,962
-----------------------------
Net Assets $14,078,658 $16,171,429
=============================
UNIT
UNITS VALUE VALUE
----- ----- -----
NET ASSETS APPLICABLE TO
OUTSTANDING UNITS OF CAPITAL
Account:
Money Market 58,777.015 $18.831487 $1,106,859
Growth 62,446.167 56.675924 3,539,194
Fixed Income 2,392.696 29.045170 69,496
Government and Quality Bond 30,515.086 30.596101 933,643
High Yield 19,533.019 26,650906 520,573
Strategic Multi-Asset 55,003.962 24.555006 1,350,623
Multi-Asset 120,639.843 28.356493 3,420,923
Capital Appreciation 64,891.833 45.798361 2,971,939
Growth and Income 36,554.673 30.206823 1,104,200
Foreign Securities 58,324.972 14.780596 862,078
Natural Resources 12,806.557 18.501355 236,939
Target '98 2,646.523 20.767692 54,962
-----------
Net assets applicable to
outstanding units of capital $16,171,429
===========
</TABLE>
See accompanying notes to financial statements.
1
<PAGE>
ICAP PLUS VARIABLE LIFE ACCOUNT ONE
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME
Dividend income $391,074
Mortality and expense risk charges and administrative expense (71,005)
----------
Net investment income 320,069
----------
REALIZED AND UNREALIZED GAIN
Realized gain from investment transactions:
Proceeds from sales 5,268,937
Cost of investments sold (4,700,305)
----------
Net realized gain 568,632
Capital gains distribution 1,360,984
----------
Net realized gain from investments 1,929,616
----------
Change in unrealized appreciation on investments:
Unrealized appreciation at end of year 2,092,771
Unrealized appreciation at beginning of year 1,728,392
----------
Net change in unrealized appreciation 364,379
----------
Realized and unrealized gain 2,293,995
----------
INCREASE IN NET ASSETS FROM OPERATIONS $2,614,064
==========
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
ICAP PLUS VARIABLE LIFE ACCOUNT ONE
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Year
Ended Ended
December 31, 1997 December 31, 1996
----------------- -----------------
<S> <C> <C>
OPERATIONS
Net investment income $ 320,069 $ 390,287
Net realized gain from investments 1,929,616 953,428
Net change in unrealized appreciation 364,379 761,812
--------------------------------
Increase in net assets
from operations 2,614,064 2,105,527
--------------------------------
POLICYHOLDER TRANSACTIONS
Purchase payments received 82,539 50,806
Withdrawals and surrenders (1,736,569) (2,413,986)
Exchange purchases 504,223 4,034,184
Exchange surrenders (314,346) (4,011,032)
--------------------------------
Decrease in net assets from
policyholder transactions (1,464,153) (2,340,028)
--------------------------------
INCREASE (DECREASE) IN NET ASSETS 1,149,911 (234,501)
NET ASSETS, beginning of year 15,021,518 15,256,019
--------------------------------
NET ASSETS, end of year $16,171,429 $15,021,518
================================
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
ICAP PLUS VARIABLE LIFE ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
NOTE 1- ORGANIZATION AND OPERATION
ICAP Plus Variable Life Account One (the "Account") is a separate account of
Phoenix Home Life Mutual Insurance Company ("Phoenix Home Life"). The Account is
organized as a unit investment trust registered under the Investment Company Act
of 1940, as amended. In an assumption reinsurance transaction effected February
16, 1991, the Account, and the assets therein, were transferred from Anchor
National Life Insurance Company to Phoenix Home Life which assumed all of the
liabilities, obligations and guarantees of the Account as of that date.
These financial statements include balances allocated by each policyholder to
the variable divisions of the Account and do not include policyholder balances
allocated to the general account of Phoenix Home Life. At December 31, 1997, the
general account includes $2,674,692 of policyholder funds.
The Account has twelve divisions which invest solely in shares of the twelve
portfolios of the Anchor Series Trust (the "Trust"), an open-end diversified
management investment company. The Trust's Growth and Income division is
successor to the investing activities of the Convertible Securities division.
NOTE 2- SIGNIFICANT ACCOUNTING POLICIES
a) Investment Valuation, Transactions and Related Income Recognition
Investments in shares of the Trust are valued using the net asset value
per share of the respective Portfolios of the Trust determined on a daily
basis (each business day of the New York Stock Exchange). Investment
transactions are accounted for on the trade date (date the order to buy or
sell is executed) and dividend income or capital gains distribution from
the Trust is recorded on the ex-dividend date. In determining the net gain
or loss on securities sold, the cost of the securities is determined on
the first-in-first-out basis.
Exchanges between divisions requested by policyholders are recorded in the
new division upon receipt of redemption proceeds.
4
<PAGE>
ICAP PLUS VARIABLE LIFE ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
NOTE 2- SIGNIFICANT ACCOUNTING POLICIES (Continued)
b) Federal Income Taxes
Phoenix Home Life qualifies for federal income tax treatment granted to
life insurance companies under Subchapter L of the Internal Revenue Code.
The operations of the Account are part of the total operations of Phoenix
Home Life and are not taxed separately. The Account is not treated as a
Regulated Investment Company under the Code.
c) Expenses
Phoenix Home Life absorbs certain operating expenses of the Account
including registration fees required for distribution of its policies
under the federal securities laws and state insurance laws.
NOTE 3- CONTRACT CHARGES
a) A mortality and expense risk charge is paid by the Account to Phoenix
Home Life. This charge is based upon the value of each division of the
Account and was charged daily at an annual rate of 0.60% through February
8, 1995 and 0.25% thereafter.
b) An administrative expense charge is paid by the Account to Phoenix Home
Life. This charge is based upon the value of each division of the Account
and was charged daily at an annual rate of 0.55% through February 8, 1995
and 0.20% thereafter.
A portion of the administrative charge is attributable to premium taxes
imposed by certain state and local governments with respect to the initial
premium. When an additional premium is paid, Phoenix Home Life deducts a
charge for premium taxes equal to 2.50% of the premium.
c) Phoenix Home Life deducts a charge for the monthly cost of insurance from
the policy's cash value, which provides death benefit protection for the
following policy month.
5
<PAGE>
ICAP PLUS VARIABLE LIFE ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
NOTE 3- CONTRACT CHARGES (Continued)
The monthly cost of insurance is the cost of insurance rate, multiplied by
the net amount at risk for a policy month. The cost of insurance varies by
sex, attained age and rate class. The net amount at risk may be simply
defined as the death benefit less the cash value.
d) In the event that the policy is surrendered during the first eight policy
years, a surrender charge will be deducted. The surrender charge
reimburses Phoenix Home Life for expenses incurred in connection with the
promotion, sale and distribution of the policy. The surrender charge will
be assessed as follows:
PERCENTAGE OF
POLICY YEAR INITIAL PREMIUM
----------- ---------------
1 8%
2 8
3 7
4 7
5 6
6 5
7 4
8 3
9+ 0
No surrender charge will be imposed on death benefits or on additional
premium payments, unless the additional premium in creases the death
benefit, in which event it may be subject to the surrender charge.
e) If a policy is surrendered within the first eight policy years, Phoenix
Home Life deducts any portion of the premium tax and policy issue costs
not recovered through the administration charge, determined as follows:
6
<PAGE>
ICAP PLUS VARIABLE LIFE ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
NOTE 3- CONTRACT CHARGES (Continued)
PERCENTAGE OF
POLICY YEAR INITIAL PREMIUM
----------- ---------------
1 2.82%
2 2.46
3 2.08
4 1.69
5 1.29
6 0.88
7 0.47
8 0.04
NOTE 4- DIVERSIFICATION REQUIREMENTS
Under the provisions of Section 817(h) of the Internal Revenue Code (the
"Code"), a variable life contract, other than a contract issued in connection
with certain types of employee benefit plans, will not be treated as a life
contract for federal tax purposes for any period for which the investments of
the segregated asset account on which the contract is based are not adequately
diversified. The Code provides that the "adequately diversified" requirement may
be met if the underlying investments satisfy either a statutory safe harbor test
or diversification requirements set forth in regulations issued by the Secretary
of Treasury.
The Internal Revenue Service has issued regulations under Section 817(h)
of the Code. Phoenix Home Life believes that the Account satisfies the current
requirements of the regulations and it intends that the Account will continue to
meet such requirements.
7
<PAGE>
ICAP PLUS VARIABLE LIFE ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
NOTE 5--SCHEDULE OF SELECTED PER-UNIT DATA
<TABLE>
<CAPTION>
For Year Ended December 31,
1997 1996 1995 1994 1993
-------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
MONEY MARKET:
Net Unit Value:
- -----------------------------------
Beginning of year $ 17.988143 $ 17.208028 $ 16.381520 $ 15.957504 $ 15.718318
End of year 18.831487 17.988143 17.208028 16.381520 15.957504
----------- ----------- ----------- ----------- ------------
Net increase in net unit value
from operations $ 0.843344 $ 0.780115 $ 0.826508 $ 0.424016 $ 0.239186
=========== =========== =========== =========== ============
Accumulation units outstanding:
- -----------------------------------
End of year 58,777.015 81,684.910 92,859.771 151,272.799 91,265.448
=========== =========== =========== =========== ============
GROWTH:
Net Unit Value:
- -----------------------------------
Beginning of year $ 43.659022 $ 35.061829 $ 27.905315 $ 29.626760 $ 27.808195
End of year 56.675924 43.659022 35.061829 27.905315 29.626760
----------- ----------- ----------- ----------- ------------
Net increase (decrease) in net
unit value from operations $ 13.016902 $ 8.597193 $ 7.156514 ($ 1.721445) $ 1.818565
=========== =========== =========== =========== ============
Accumulation units outstanding:
- -----------------------------------
End of year 62,446.167 61,214.436 77,102.759 99,798.217 122,322.954
=========== =========== =========== =========== ============
FIXED INCOME:
Net Unit Value:
- -----------------------------------
Beginning of year $ 26.670598 $ 26.143156 $ 22.057448 $ 23.059146 $ 21.608890
End of year 29.045170 26.670598 26.143156 22.057448 23.059146
----------- ----------- ----------- ----------- ------------
Net increase (decrease) in net
unit value from operations $ 2.374572 $ 0.527442 $ 4.085708 ($ 1.001698) $ 1.450256
=========== =========== =========== =========== ============
Accumulation units outstanding:
- -----------------------------------
End of year 2,392.696 7,756.393 9,817.121 13,812.583 20,594.972
=========== =========== =========== =========== ============
GOVERNMENT AND QUALITY BOND:
Net Unit Value:
- -----------------------------------
Beginning of year $ 28.054940 $ 27.363761 $ 23.062807 $ 24.061836 $ 22.471310
End of year 30.596101 28.054940 27.363761 23.062807 24.061836
----------- ----------- ----------- ----------- ------------
Net increase (decrease) in net
unit value from operations $ 2.541161 $ 0.691179 $ 4.300954 ($ 0.999029) $ 1.590526
=========== =========== =========== =========== ============
Accumulation units outstanding:
- -----------------------------------
End of year 30,515.086 36,030.560 41,823.525 53,791.870 52,798.823
=========== =========== =========== =========== ============
</TABLE>
8
<PAGE>
ICAP PLUS VARIABLE LIFE ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
NOTE 5--SCHEDULE OF SELECTED PER-UNIT DATA (Continued)
<TABLE>
<CAPTION>
For Year Ended December 31,
1997 1996 1995 1994 1993
------------- ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
HIGH YIELD:
Net Unit Value:
- ---------------------------------
Beginning of year $ 24.056628 $ 21.631502 $ 18.311593 $ 19.390068 $ 16.469796
End of year 26.650906 24.056628 21.631502 18.311593 19.390068
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net
unit value from operations $ 2.594278 $ 2.425126 $ 3.319909 $ (1.078475) $ 2.920272
============ ============ ============ ============ ============
Accumulation units outstanding:
- -----------------------------------
End of year 19,533.019 18,471.920 23,297.233 22,225.400 28,857.994
============ ============ ============ ============ ============
STRATEGIC MULTI-ASSET:
Net Unit Value:
- -----------------------------------
Beginning of year $ 21.573438 $ 18.871464 $ 15.452177 $ 16.046587 $ 14.078211
End of year 24.555006 21.573438 18.871464 15.452177 16.046587
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net
unit value from operations $ 2.981568 $ 2.701974 $ 3.419287 ($ 0.594410) $ 1.968376
============ ============ ============ ============ ============
Accumulation units outstanding:
- -----------------------------------
End of year 55,003.962 63,059.798 71,910.358 92,407.508 100,541.984
============ ============ ============ ============ ============
MULTI-ASSET:
Net Unit Value:
- -----------------------------------
Beginning of year $ 23.515858 $ 20.745427 $ 16.687065 $ 17.171904 $ 16.184528
End of year 28.356493 23.515858 20.745427 16.687065 17.171904
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in
net unit value from operations $ 4.840635 $ 2.770431 $ 4.058362 ($ 0.484839) $ 0.987376
============ ============ ============ ============ ============
Accumulation units outstanding:
- -----------------------------------
End of year 120,639.843 130,879.258 150,648.340 159,072.494 173,040.307
============ ============ ============ ============ ============
CAPITAL APPRECIATION:
Net Unit Value:
- -----------------------------------
Beginning of year $ 36.670047 $ 29.438162 $ 21.997082 $ 23.130496 $ 19.326613
End of year 45.798361 36.670047 29.438162 21.997082 23.130496
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net
unit value from operations $ 9.128314 $ 7.231885 $ 7.441080 ($ 1.133414) $ 3.803883
============ ============ ============ ============ ============
Accumulation units outstanding:
- -----------------------------------
End of year 64,891.833 67,921.672 74,106.731 60,646.794 90,692.591
============ ============ ============ ============ ============
</TABLE>
<PAGE>
ICAP PLUS VARIABLE LIFE ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
NOTE 5--SCHEDULE OF SELECTED PER-UNIT DATA (Continued)
<TABLE>
<CAPTION>
For Year Ended December 31,
1997 1996 1995 1994 1993
------------- ------------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C>
GROWTH and INCOME:
Net Unit Value:
- -------------------------------------------
Beginning of year $ 23.563662 $ 19.673868 $ 16.991875 $ 19.021372 $ 15.771764
End of year 30.206823 23.563662 19.673868 16.991875 19.021372
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net unit value
from operations $ 6.643161 $ 3.889794 $ 2.681993 ($ 2.029497) $ 3.249608
============ ============ ============ ============ ============
Accumulation units outstanding:
- -------------------------------------------
End of year 36,554.673 36,254.602 41,324.596 41,919.783 47,948.619
============ ============ ============ ============ ============
FOREIGN SECURITIES:
Net Unit Value:
- -------------------------------------------
Beginning of year $ 15.000130 $ 13.520833 $ 12.071981 $ 12.611983 $ 9.793832
End of year 14.780596 15.000130 13.520833 12.071981 12.611983
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net unit value
from operations ($ 0.219534) $ 1.479297 $ 1.448852 ($ 0.540002) $ 2.818151
============ ============ ============ ============ ============
Accumulation units outstanding:
- -------------------------------------------
End of year 58,324.972 69,214.480 78,097.323 93,950.950 114,527.042
============ ============ ============ ============ ============
NATURAL RESOURCES:
Net Unit Value:
- -------------------------------------------
Beginning of year $ 20.325312 $ 17.900007 $ 15.321133 $ 15.336863 $ 11.393799
End of year 18.501355 20.325312 17.900007 15.321133 15.336863
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net unit value
from operations ($ 1.823957) $ 2.425305 $ 2.578874 ($ 0.015730) $ 3.943064
============ ============ ============ ============ ============
Accumulation units outstanding:
- -------------------------------------------
End of year 12,806.557 16,096.149 25,100.529 30,011.911 21,702.780
============ ============ ============ ============ ============
TARGET '98:
Net Unit Value:
- -------------------------------------------
Beginning of year $ 19.831280 $ 19.207550 $ 16.846404 $ 17.773276 $ 16.161730
End of year 20.767692 19.831280 19.207550 16.846404 17.773276
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net unit value
from operations $ 0.936412 $ 0.623730 $ 2.361146 ($ 0.926872) $ 1.611546
============ ============ ============ ============ ============
Accumulation units outstanding:
- -------------------------------------------
End of year 2,646.523 3,479.259 3,515.671 3,840.433 3,559.732
============ ============ ============ ============ ============
</TABLE>
<PAGE>
ICAP PLUS VARIABLE LIFE ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
NOTE 6 -- POLICYHOLDER TRANSACTIONS
The decrease in net assets from changes in the number of outstanding units was
as follows for the year ended December 31, 1997:
<TABLE>
<CAPTION>
NET EXCHANGE DECREASE
PURCHASE PAYMENTS PURCHASES IN NET ASSETS FROM
AND TRANSFERS AND EXCHANGE WITHDRAWALS POLICYHOLDER
RECEIVED SURRENDERS AND SURRENDERS TRANSACTIONS
----------------- ------------------------- --------------------------- ---------------------------
ACCOUNT UNITS DOLLARS UNITS DOLLARS UNITS DOLLARS UNITS DOLLARS
- ----------------------------- ------- --------- ----------- ------------- ---------- ---------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Money Market 2,254 $42,119 2,719 $ 50,113 (27,881) ($ 513,519) (22,908) ($ 421,287)
Growth 15 868 5,096 249,931 (3,879) (203,806) 1,232 46,993
Fixed Income -- -- (576) (16,242) (4,788) (134,664) (5,364) (150,906)
Government and Quality Bond -- -- (2,030) (61,377) (3,485) (102,285) (5,515) (163,662)
High Yield -- -- 2,948 77,904 (1,887) (49,372) 1,061 28,532
Strategic Multi-Asset 579 14,256 4 (2,334) (8,639) (205,695) (8,056) (193,773)
Multi-Asset 352 9,855 2,643 68,495 (13,234) (345,548) (10,239) (267,198)
Capital Appreciation 108 5,182 (1,260) (13,987) (1,878) (80,767) (3,030) (89,572)
Growth and Income -- -- 2,271 57,780 (1,971) (56,773) 300 1,007
Foreign Securities 345 5,182 (9,749) (149,366) (1,486) (23,607) (10,890) (167,791)
Natural Resources 225 5,077 (2,990) (63,826) (524) (10,907) (3,289) (69,656)
Target '98 -- -- (364) (7,214) (469) (9,626) (833) (16,840)
----- ------- ------ ----------- ------- ---------- ------- ----------
3,878 $82,539 (1,288) $ 189,877 (70,121) ($1,736,569) (67,531) ($1,464,153)
===== ======= ====== =========== ======= ========== ======= ==========
</TABLE>
<PAGE>
ICAP PLUS VARIABLE LIFE ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
NOTE 7 -- DETAILED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997
A statement of operations by investment division follows for the year ended
December 31, 1997:
<TABLE>
<CAPTION>
Money Fixed Govt. and
Market Growth Income Quality Bond
------------ ---------- ---------- ------------
<S> <C> <C> <C> <C>
NET INVESTMENT INCOME (LOSS):
Dividend income $ 64,573 $ 24,285 $ 10,655 $ 61,662
Mortality and expense risk charges
and administrative expense (5,787) (14,542) (727) (4,465)
----------- --------- --------- ---------
Net investment income (loss) 58,786 9,743 9,928 57,197
----------- --------- --------- ---------
REALIZED AND UNREALIZED
GAIN (LOSS):
Realized gain (loss) from
investment transactions:
Proceeds from sales 1,605,038 599,196 151,632 215,058
Cost of investments sold (1,605,038) (484,101) (151,954) (207,565)
----------- --------- --------- ---------
Net realized gain (loss) -- 115,095 (322) 7,493
Capital gains distribution -- 354,157 -- 3,484
----------- --------- --------- ---------
Net realized gain (loss) from
investments -- 469,252 (322) 10,977
----------- --------- --------- ---------
Change in unrealized appreciation
(depreciation) on investments:
Unrealized appreciation (depreciation)
at end of period -- 717,391 (1,573) 29,080
Unrealized appreciation (depreciation)
at beginning of period -- 376,741 (5,500) 10,784
----------- --------- --------- ---------
Net change in unrealized
appreciation (depreciation) -- 340,650 3,927 18,296
----------- --------- --------- ---------
Realized and unrealized gain (loss) -- 809,902 3,605 29,273
----------- --------- --------- ---------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 58,786 $ 819,645 $ 13,533 $ 86,470
=========== ========= ========= =========
<CAPTION>
Strategic Capital Growth and Foreign
High Yield Multi-Asset Multi-Asset Appreciation Income Securities
---------- ----------- ----------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME (LOSS):
Dividend income $ 51,922 $ 30,934 $ 90,089 $ 3,865 $ 22,178 $ 21,493
Mortality and expense risk charges
and administrative expense (2,092) (6,267) (14,702) (11,890) (4,616) (4,232)
--------- --------- --------- ---------- --------- ---------
Net investment income (loss) 49,830 24,667 75,387 (8,025) 17,562 17,261
--------- --------- --------- ---------- --------- ---------
REALIZED AND UNREALIZED
GAIN (LOSS):
Realized gain (loss) from
investment transactions:
Proceeds from sales 354,907 297,638 420,096 1,042,680 179,986 266,998
Cost of investments sold (355,246) (259,549) (329,915) (811,125) (140,810) (231,015)
--------- --------- --------- ---------- --------- ---------
Net realized gain (loss) (339) 38,089 90,181 231,555 39,176 35,983
Capital gains distribution -- 229,695 439,986 232,818 77 82,374
--------- --------- --------- ---------- --------- ---------
Net realized gain (loss) from
investments (339) 267,784 530,167 464,373 39,253 118,357
--------- --------- --------- ---------- --------- ---------
Change in unrealized appreciation
(depreciation) on investments:
Unrealized appreciation (depreciation)
at end of period (3,592) (495) 423,194 651,756 284,589 9,166
Unrealized appreciation (depreciation)
at beginning of period (1,770) 107,984 418,365 537,283 92,502 153,142
--------- --------- --------- ---------- --------- ---------
Net change in unrealized
appreciation (depreciation) (1,822) (108,479) 4,829 114,473 192,087 (143,976)
--------- --------- --------- ---------- --------- ---------
Realized and unrealized gain (loss) (2,161) 159,305 534,996 578,846 231,340 (25,619)
--------- --------- --------- ---------- --------- ---------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 47,669 $ 183,972 $ 610,383 $ 570,821 $ 248,902 ($ 8,358)
========= ========= ========= ========== ========= =========
<CAPTION>
Natural
Resources Target '98 Total
----------- ---------- ------------
<S> <C> <C> <C>
NET INVESTMENT INCOME (LOSS):
Dividend income $ 3,200 $ 6,218 $ 391,074
Mortality and expense risk charges
and administrative expense (1,412) (273) (71,005)
-------- -------- -----------
Net investment income (loss) 1,788 5,945 320,069
-------- -------- -----------
REALIZED AND UNREALIZED
GAIN (LOSS):
Realized gain (loss) from
investment transactions:
Proceeds from sales 118,594 17,114 5,268,937
Cost of investments sold (105,018) (18,969) (4,700,305)
-------- -------- -----------
Net realized gain (loss) 13,576 (1,855) 568,632
Capital gains distribution 18,393 -- 1,360,984
-------- -------- -----------
Net realized gain (loss) from
investments 31,969 (1,855) 1,929,616
-------- -------- -----------
Change in unrealized appreciation
(depreciation) on investments:
Unrealized appreciation (depreciation)
at end of period (10,041) (6,704) 2,092,771
Unrealized appreciation (depreciation)
at beginning of period 44,281 (5,420) 1,728,392
-------- -------- -----------
Net change in unrealized
appreciation (depreciation) (54,322) (1,284) 364,379
-------- -------- -----------
Realized and unrealized gain (loss) (22,353) (3,139) 2,293,995
-------- -------- -----------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS ($ 20,565) $ 2,806 $ 2,614,064
======== ======== ===========
</TABLE>
<PAGE>
[Price Waterhouse LLP] [logo]
Report of Independent Accountants
February 19, 1998
To the Board of Directors of Phoenix Home Life Mutual Insurance Company
and Policyholders of ICAP Plus Variable Life Account One
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets present fairly, in all
material respects, the financial position of ICAP Plus Variable Life Account
One--Separate Account of Phoenix Home Life Mutual Insurance Company (the
"Account") at December 31, 1997, the results of its operations for the year
then ended and the changes in its net assets for the two years then ended, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Account's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation of
investments at December 31, 1997 by correspondence with the custodians, provide
a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
<PAGE>
RSVP VARIABLE LIFE ACCOUNT ONE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1997
15
<PAGE>
RSVP VARIABLE LIFE ACCOUNT ONE
STATEMENT OF NET ASSETS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
NET ASSETS SHARES COST VALUE
------ ---- -----
<S> <C> <C> <C>
Investments in mutual fund portfolio:
Money Market 31,440 $ 31,440 $ 31,440
Growth 3,922 86,884 106,074
Fixed Income 30 428 404
Government and Quality Bond 545 7,476 7,614
High Yield 967 7,943 8,102
Strategic Multi-Asset 10,029 117,780 113,139
Multi-Asset 5,366 66,913 72,558
Capital Appreciation 4,347 113,625 140,042
Growth and Income 570 7,332 9,764
Foreign Securities 2,457 27,583 28,010
Natural Resources 1,970 31,393 28,407
Target '98 328 4,035 3,637
---------------------------------------
Net Assets $502,832 $549,191
=======================================
UNIT
UNITS VALUE VALUE
----- ----- -----
NET ASSETS APPLICABLE TO
OUTSTANDING UNITS OF CAPITAL
Account:
Money Market 2,033.076 $15.464186 $ 31,440
Growth 2,791.174 38.003405 106,074
Fixed Income 20.289 19.909607 404
Government and Quality Bond 358.176 21.258404 7,614
High Yield 380.889 21.271062 8,102
Strategic Multi-Asset 4,333.970 26.105035 113,139
Multi-Asset 2,516.316 28.835143 72,558
Capital Appreciation 2,832.788 49.436071 140,042
Growth and Income 308.032 31.698373 9,764
Foreign Securities 1,765.280 15.866878 28,010
Natural Resources 1,603.345 17.717463 28,407
Target '98 182.958 19.878868 3,637
------------------
Net assets applicable to
outstanding units of capital $549,191
==================
</TABLE>
See accompanying notes to financial statements.
16
<PAGE>
RSVP VARIABLE LIFE ACCOUNT ONE
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME
Dividend income $10,592
Mortality and expense risk charges
and administrative expense (3,516)
----------
Net investment income 7,076
----------
REALIZED AND UNREALIZED GAIN (LOSS)
Realized gain from investment transactions:
Proceeds from sales 150,437
Cost of investments sold (136,783)
----------
Net realized gain 13,654
Capital gains distribution 61,819
----------
Net realized gain from investments 75,473
----------
Change in unrealized appreciation on investments:
Unrealized appreciation at end of year 46,359
Unrealized appreciation at beginning of year 37,524
----------
Net change in unrealized appreciation 8,835
----------
Realized and unrealized gain 84,308
----------
INCREASE IN NET ASSETS FROM OPERATIONS $91,384
==========
</TABLE>
See accompanying notes to financial statements.
17
<PAGE>
RSVP VARIABLE LIFE ACCOUNT ONE
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Year
Ended Ended
December 31, 1997 December 31, 1996
----------------- -----------------
<S> <C> <C>
OPERATIONS
Net investment income $7,076 $9,956
Net realized gain from investments 75,473 71,363
Net change in unrealized appreciation 8,835 7,907
------------------------------------
Increase in net assets from operations 91,384 89,226
------------------------------------
POLICYHOLDER TRANSACTIONS
Purchase payments received 33,157 44,848
Withdrawals and surrenders (147,843) (134,497)
Exchange purchases 21,108 703,622
Exchange surrenders (3,135) (703,622)
------------------------------------
Decrease in net assets from
policyholder transactions (96,713) (89,649)
------------------------------------
DECREASE IN NET ASSETS (5,329) (423)
NET ASSETS, beginning of year 554,520 554,943
------------------------------------
NET ASSETS, end of year $549,191 $554,520
====================================
</TABLE>
See accompanying notes to financial statements.
18
<PAGE>
RSVP VARIABLE LIFE ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND OPERATION
RSVP Variable Life Account One (the "Account") is a separate account of
Phoenix Home Life Mutual Insurance Company ("Phoenix Home Life"). The Account is
organized as a unit investment trust registered under the Investment Company Act
of 1940, as amended. In an assumption reinsurance transaction effected February
16, 1991, the Account, and the assets therein, were transferred from Anchor
National Life Insurance Company to Phoenix Home Life which assumed all of the
liabilities, obligations and guarantees of the Account as of that date.
These financial statements include balances allocated by each policyholder
to the variable divisions of the Account and do not include policyholder
balances allocated to the general account of Phoenix Home Life. At December 31,
1997, the general account includes $23,021 of policyholder funds.
The Account has twelve divisions which invest solely in shares of the
twelve portfolios of the Anchor Series Trust (the "Trust"), an open-end
diversified management investment company. The Trust's Growth and Income
division is successor to the investing activities of the Convertible Securities
division.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
a) Investment Valuation, Transactions and Related Income Recognition
Investments in shares of the Trust are valued using the net asset value
per share of the respective Portfolios of the Trust determined on a daily
basis (each business day of the New York Stock Exchange). Investment
transactions are accounted for on the trade date (date the order to buy or
sell is executed) and dividend income or capital gains distribution from
the Trust is recorded on the ex-dividend date. In determining the net gain
or loss on securities sold, the cost of the securities is determined on
the first-in-first out basis.
Exchanges between divisions requested by policyholders are recorded in the
new division upon receipt of redemption proceeds.
19
<PAGE>
RSVP VARIABLE LIFE ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
NOTE 2- SIGNIFICANT ACCOUNTING POLICIES (Continued)
b) Federal Income Taxes
Phoenix Home Life qualifies for federal income tax treatment granted to
life insurance companies under Subchapter L of the Internal Revenue Code.
The operations of the Account are part of the total operations of Phoenix
Home Life and are not taxed separately. The Account is not treated as a
Regulated Investment Company under the Code.
c) Expenses
Phoenix Home Life absorbs certain operating expenses of the Account
including registration fees required for distribution of its policies
under the federal securities laws and state insurance laws.
NOTE 3- CONTRACT CHARGES
a) A mortality and expense risk charge is paid by the Account to Phoenix Home
Life. This charge is based upon the value of each division of the Account
and is currently charged daily at an annual rate of 0.60% .
b) To cover administrative expenses, Phoenix Home Life deducts $5.00 from the
cash value of a policy on each monthly processing date. This charge is
designed to cover actual administrative expenses incurred by Phoenix Home
Life.
c) Phoenix Home Life deducts a charge for the monthly cost of insurance from
the policy's cash value, which provides death benefit protection for the
following policy month.
The monthly cost of insurance is:
i. The cost of insurance rate, multiplied by
ii. The net amount at risk for a policy month.
The cost of insurance varies by sex, attained age and rate class. The net
amount at risk can be simply defined as the death benefit less the cash
value.
20
<PAGE>
RSVP VARIABLE LIFE ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
NOTE 3- CONTRACT CHARGES (Continued)
d) In the event that the policy is surrendered during the first ten policy
years, a surrender charge will be deducted to compensate Phoenix Home Life
for expenses incurred in connection with the promotion, sale and
distribution of the policy. The surrender charge is assessed in full in
the event of a complete surrender and proportionately in the event of a
partial surrender.
During the first two policy years, the surrender charge
is subject to certain sales load limitations imposed by the Securities and
Exchange Commission and, rather than the surrender charge for policy years
3-5, as set forth below, will be limited to the sum of (i) 30% of all
premium payments made during the first two policy years up to one
Guideline Annual Premium (as defined under Rule 6e-3(T)(c)(8) of the
Investment Company Act of 1940), plus (ii) 10% of all premium payments in
the first two policy years in excess of one Guideline Annual Premium, but
not more than two Guideline Annual premiums plus, (iii) 9% of all premium
payments in the first two policy years in excess of two Guideline Annual
Premiums less any surrender charge previously deducted. Thereafter, the
surrender charge is the lesser of (i) 50% of the cumulative premiums paid,
or (ii) the amount specified in each policy's table of surrender charges.
The amounts shown in each policy's table of surrender charges are
calculated at the beginning of each policy year using the following
percentages of the Target Premium (beginning policy year six and
thereafter, percentages at interim months are determined by
interpolation):
BEGINNING OF
POLICY YEAR PERCENTAGE
------------ ----------
3-6 125%
7 100
8 75
9 50
10 25
11+ 0
21
<PAGE>
RSVP VARIABLE LIFE ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
NOTE 3- CONTRACT CHARGES (Continued)
An increase in the initial death benefit (the "Specified Amount") under a
policy is subject to an additional surrender charge upon a surrender of
the policy during the first ten policy years following the increase. A
decrease in the Specified Amount is also subject to a pro-rata share of
the surrender charge.
In addition, Phoenix Home Life imposes a fee on each partial surrender in
an amount equal to the lesser of $25 or 2% of the amount withdrawn to
reimburse Phoenix Home Life for administrative expenses incurred in
processing those surrenders. This fee is deducted from the amount
withdrawn and the balance is paid to the policyholder.
e) Under certain circumstances, upon surrender of a policy, Phoenix Home Life
will deduct a charge to recover certain policy issue costs in an amount
equal to $5 per $1,000 of surrendered Specified Amount not to exceed $750.
This charge is designed primarily to reimburse Phoenix Home Life for
expenses it incurs in processing policy applications, including conducting
medical examinations and determining insurability.
f) Various states and subdivisions impose a tax on premiums received by
insurance companies. These charges vary from state to state. Phoenix Home
Life deducts 2.50% of each premium payment to cover state premium taxes.
NOTE 4- DIVERSIFICATION REQUIREMENTS
Under the provisions of Section 817(h) of the Internal Revenue Code (the
"Code"), a variable life contract, other than a contract issued in connection
with certain types of employee benefit plans, will not be treated as a life
contract for federal tax purposes for any period for which the investments of
the segregated asset account on which the contract is based are not adequately
diversified. The Code provides that the "adequately diversified" requirement may
be met if the underlying investments satisfy either a statutory safe harbor test
or diversification requirements set forth in regulations issued by the Secretary
of Treasury.
The Internal Revenue Service has issued regulations under Section 817(h)
of the Code. Phoenix Home Life believes that the Account satisfies the current
requirements of the regulations and it intends that the Account will continue to
meet such requirements.
22
<PAGE>
RSVP VARIABLE LIFE ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
NOTE 5--SCHEDULE OF SELECTED PER-UNIT DATA
<TABLE>
<CAPTION>
For Year Ended December 31,
1997 1996 1995 1994 1993
-------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
MONEY MARKET:
Net Unit Value:
- -------------------------------------------
Beginning of year $ 14.793740 $ 14.173465 $13.502832 $13.081135 $12.814296
End of year 15.464186 14.793740 14.173465 13.502832 13.081135
------------ ----------- ---------- ---------- ----------
Net increase in net unit value from
operations $ 0.670446 $ 0.620275 $ 0.670633 $ 0.421697 $ 0.266839
============ =========== ========== ========== ==========
Accumulation units outstanding:
- -------------------------------------------
End of year 2,033.076 2,765.451 5,824.154 2,839.094 2,672.627
============ =========== ========== ========== ==========
GROWTH:
Net Unit Value:
- -------------------------------------------
Beginning of year $ 29.319060 $ 23.579667 $18.784956 $19.837747 $18.510815
End of year 38.003405 29.319060 23.579667 18.784956 19.837747
------------ ----------- ---------- ---------- ----------
Net increase (decrease) in net unit value
from operations $ 8.684345 $ 5.739393 $ 4.794711 ($ 1.052791) $ 1.326932
============ =========== ========== ========== ==========
Accumulation units outstanding:
- -------------------------------------------
End of year 2,791.174 3,253.726 2,053.494 5,066.451 1,872.979
============ =========== ========== ========== ==========
FIXED INCOME:
Net Unit Value:
- -------------------------------------------
Beginning of year $ 18.334574 $ 17.999228 $15.182949 $15.787620 $14.703844
End of year 19.909607 18.334574 17.999228 15.182949 15.787620
------------ ----------- ---------- ---------- ----------
Net increase (decrease) in net unit value
from operations $ 1.575033 $ 0.335346 $ 2.816279 ($ 0.604671) $ 1.083776
============ =========== ========== ========== ==========
Accumulation units outstanding:
- -------------------------------------------
End of year 20.289 38.814 68.947 81.681 106.743
============ =========== ========== ========== ==========
GOVERNMENT AND QUALITY BOND:
Net Unit Value:
- -------------------------------------------
Beginning of year $ 19.520774 $ 19.068522 $16.083095 $16.688251 $15.505170
End of year 21.258404 19.520774 19.068522 16.083095 16.688251
------------ ----------- ---------- ---------- ----------
Net increase (decrease) in net unit value
from operations $ 1.737630 $ 0.452252 $ 2.985427 ($ 0.605156) $ 1.183081
============ =========== ========== ========== ==========
Accumulation units outstanding:
- -------------------------------------------
End of year 358.176 573.645 625.426 770.430 934.686
============ =========== ========== ========== ==========
</TABLE>
23
<PAGE>
RSVP VARIABLE LIFE ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
NOTE 5--SCHEDULE OF SELECTED PER-UNIT DATA (Continued)
<TABLE>
<CAPTION>
For Year Ended December 31,
1997 1996 1995 1994 1993
---------- ---------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C>
HIGH YIELD:
Net Unit Value:
- -------------------------------------------
Beginning of year $ 19.227616 $17.370956 $ 14.717391 $15.440855 $ 12.996758
End of year 21.271062 19.227616 17.370956 14.717391 15.440855
----------- ---------- ----------- ---------- -----------
Net increase (decrease) in net unit value
from operations $ 2.043446 $ 1.856660 $ 2.653565 ($ 0.723464) $ 2.444097
=========== ========== =========== ========== ===========
Accumulation units outstanding:
- -------------------------------------------
End of year 380.889 499.086 532.392 602.324 639.342
=========== ========== =========== ========== ===========
STRATEGIC MULTI-ASSET:
Net Unit Value:
- -------------------------------------------
Beginning of year $ 22.969725 $20.122448 $ 16.489482 $17.029956 $ 14.858722
End of year 26.105035 22.969725 20.122448 16.489482 17.029956
----------- ---------- ----------- ---------- -----------
Net increase (decrease) in net unit value
from operations $ 3.135310 $ 2.847277 $ 3.632966 ($ 0.540474) $ 2.171234
=========== ========== =========== ========== ===========
Accumulation units outstanding:
- -------------------------------------------
End of year 4,333.970 5,120.181 5,379.665 5,131.355 4,911.695
=========== ========== =========== ========== ===========
MULTI-ASSET:
Net Unit Value:
- -------------------------------------------
Beginning of year $ 23.952220 $21.162333 $ 17.035823 $17.434654 $ 16.343102
End of year 28.835143 23.952220 21.162333 17.035823 17.434654
----------- ---------- ----------- ---------- -----------
Net increase (decrease) in net unit value
from operations $ 4.882923 $ 2.789887 $ 4.126510 ($ 0.398831) $ 1.091552
=========== ========== =========== ========== ===========
Accumulation units outstanding:
- -------------------------------------------
End of year 2,516.316 2,481.475 2,528.003 2,321.993 2,149.708
=========== ========== =========== ========== ===========
CAPITAL APPRECIATION:
Net Unit Value:
- -------------------------------------------
Beginning of year $ 39.643903 $31.875450 $ 23.835567 $24.928405 $ 20.719304
End of year 49.436071 39.643903 31.875450 23.835567 24.928405
----------- ---------- ----------- ---------- -----------
Net increase (decrease) in net unit value
from operations $ 9.792168 $ 7.768453 $ 8.039883 ($ 1.092838) $ 4.209101
=========== ========== =========== ========== ===========
Accumulation units outstanding:
- -------------------------------------------
End of year 2,832.788 3,513.203 5,335.578 4,074.140 7,054.306
=========== ========== =========== ========== ===========
</TABLE>
24
<PAGE>
RSVP VARIABLE LIFE ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
NOTE 5--SCHEDULE OF SELECTED PER-UNIT DATA (Continued)
<TABLE>
<CAPTION>
For Year Ended December 31,
1997 1996 1995 1994 1993
------------ ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
GROWTH and INCOME:
Net Unit Value:
- -------------------------------------------
Beginning of year $ 24.766119 $20.713463 $ 17.904485 $19.933212 $16.442354
End of year 31.698373 24.766119 20.713463 17.904485 19.933212
----------- ---------- ----------- ---------- ----------
Net increase (decrease) in net unit value
from operations $ 6.932254 $ 4.052656 $ 2.808978 ($ 2.028727) $ 3.490858
=========== ========== =========== ========== ==========
Accumulation units outstanding:
- -------------------------------------------
End of year 308.032 362.620 396.508 566.021 442.653
=========== ========== =========== ========== ==========
FOREIGN SECURITIES:
Net Unit Value:
- -------------------------------------------
Beginning of year $ 16.124989 $14.558725 $ 13.009004 $13.498582 $10.419874
End of year 15.866878 16.124989 14.558725 13.009004 13.498582
----------- ---------- ----------- ---------- ----------
Net increase (decrease) in net unit value
from operations ($ 0.258111) $ 1.566264 $ 1.549721 ($ 0.489578) $ 3.078708
=========== ========== =========== ========== ==========
Accumulation units outstanding:
- -------------------------------------------
End of year 1,765.280 2,332.263 2,544.163 5,767.871 3,397.264
=========== ========== =========== ========== ==========
NATURAL RESOURCES:
Net Unit Value:
- -------------------------------------------
Beginning of year $ 19.494075 $17.188761 $ 14.721818 $14.640952 $10.829847
End of year 17.717463 19.494075 17.188761 14.721818 14.640952
----------- ---------- ----------- ---------- ----------
Net increase (decrease) in net unit value
from operations ($ 1.776612) $ 2.305314 $ 2.466943 $ 0.080866 $ 3.811105
=========== ========== =========== ========== ==========
Accumulation units outstanding:
- -------------------------------------------
End of year 1,603.345 1,528.981 1,169.412 789.773 753.350
=========== ========== =========== ========== ==========
TARGET '98:
Net Unit Value:
- -------------------------------------------
Beginning of year $ 19.007934 $18.440731 $ 16.184859 $16.981960 $15.352606
End of year 19.878868 19.007934 18.440731 16.184859 16.981960
----------- ---------- ----------- ---------- ----------
Net increase (decrease) in net unit value
from operations $ 0.870934 $ 0.567203 $ 2.255872 ($ 0.797101) $ 1.629354
=========== ========== =========== ========== ==========
Accumulation units outstanding:
- -------------------------------------------
End of year 182.958 209.843 237.588 265.694 292.976
=========== ========== =========== ========== ==========
</TABLE>
25
<PAGE>
RSVP VARIABLE LIFE ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
NOTE 6 -- POLICYHOLDER TRANSACTIONS
The increase (decrease) in net assets from changes in the number of outstanding
units was as follows for the year ended December 31, 1997:
<TABLE>
<CAPTION>
NET EXCHANGE INCREASE (DECREASE)
PURCHASE PAYMENTS PURCHASES IN NET ASSETS FROM
AND TRANSFERS AND EXCHANGE WITHDRAWALS POLICYHOLDER
RECEIVED SURRENDERS AND SURRENDERS TRANSACTIONS
----------------- ----------------- ------------------------- -------------------------
ACCOUNT UNITS DOLLARS UNITS DOLLARS UNITS DOLLARS UNITS DOLLARS
- ----------------------------- ------- --------- ------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Money Market 86 $ 1,306 121 $ 1,799 (940) ($13,979) (733) ($10,874)
Growth 107 3,575 245 7,659 (815) (29,822) (463) (18,588)
Fixed Income -- -- -- -- (19) (353) (19) (353)
Government and Quality Bond 25 507 -- -- (240) (4,744) (215) (4,237)
High Yield 27 550 -- -- (145) (2,874) (118) (2,324)
Strategic Multi-Asset 428 10,528 76 1,799 (1,290) (32,714) (786) (20,387)
Multi-Asset 160 4,304 -- -- (125) (3,400) 35 904
Capital Appreciation 141 6,115 90 3,598 (911) (41,224) (680) (31,511)
Growth and Income 18 507 -- -- (72) (2,026) (54) (1,519)
Foreign Securities 230 3,827 41 656 (838) (13,221) (567) (8,738)
Natural Resources 90 1,762 124 2,462 (140) (2,789) 74 1,435
Target '98 9 176 -- -- (36) (697) (27) (521)
----- ------- --- ------- ------ --------- ------ --------
1,321 $33,157 697 $17,973 (5,571) ($147,843) (3,553) ($96,713)
===== ======= === ======= ====== ========= ====== ========
</TABLE>
26
<PAGE>
RSVP VARIABLE LIFE ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
NOTE 7 -- DETAILED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997
A statement of operations by investment division follows for the year ended
December 31, 1997:
<TABLE>
<CAPTION>
Money Fixed Govt. and Strategic
Market Growth Income Quality Bond High Yield Multi-Asset
---------- --------- --------- ------------ ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME (LOSS):
Dividend income $ 1,593 $ 849 $ 35 $ 491 $ 815 $ 2,854
Mortality and expense risk charges
and administrative expense (190) (692) (3) (49) (49) (717)
-------- -------- --------- --------- --------- ---------
Net investment income (loss) 1,403 157 32 442 766 2,137
-------- -------- -------- --------- --------- ---------
REALIZED AND UNREALIZED
GAIN (LOSS):
Realized gain (loss) from
investment transactions:
Proceeds from sales 13,392 33,011 357 4,944 2,813 32,224
Cost of investments sold (13,392) (27,586) (365) (4,939) (2,697) (31,625)
-------- -------- -------- --------- --------- ---------
Net realized gain (loss) -- 5,425 (8) 5 116 599
Capital gains distribution -- 12,383 -- 28 -- 21,188
-------- -------- -------- --------- --------- ---------
Net realized gain (loss) from
investments -- 17,808 (8) 33 116 21,787
-------- -------- --------- --------- --------- ---------
Change in unrealized appreciation
(depreciation) on investments:
Unrealized appreciation (depreciation)
at end of period -- 19,190 (24) 138 159 (4,642)
Unrealized appreciation (depreciation)
at beginning of period -- 7,889 (45) (41) 212 3,366
-------- -------- -------- --------- --------- ---------
Net change in unrealized
appreciation (depreciation) -- 11,301 21 179 (53) (8,008)
-------- -------- -------- --------- --------- ---------
Realized and unrealized gain (loss) -- 29,109 13 212 63 13,779
-------- -------- -------- --------- --------- ---------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 1,403 $ 29,266 $ 45 $ 654 $ 829 $ 15,916
======== ======== ======== ========= ========= =========
<CAPTION>
Capital Growth and Foreign Natural
Multi-Asset Appreciation Income Securities Resources Target '98 Total
------------- -------------- ------------ ------------ ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME (LOSS):
Dividend income $ 1,926 $ 223 $ 195 $ 922 $ 325 $ 364 $ 10,592
Mortality and expense risk charges
and administrative expense (401) (909) (57) (235) (192) (22) (3,516)
-------- ---------- --------- --------- ------- ------- ---------
Net investment income (loss) 1,525 (686) 138 687 133 342 7,076
-------- ---------- --------- --------- ------- ------- ---------
REALIZED AND UNREALIZED
GAIN (LOSS):
Realized gain (loss) from
investment transactions:
Proceeds from sales 3,447 41,232 2,293 13,215 2,802 707 150,437
Cost of investments sold (2,884) (35,223) (1,874) (12,794) (2,650) (754) (136,783)
-------- ---------- --------- --------- ------- ------- ---------
Net realized gain (loss) 563 6,009 419 421 152 (47) 13,654
Capital gains distribution 9,408 13,412 1 3,533 1,866 -- 61,819
-------- ---------- --------- --------- ------- ------- ---------
Net realized gain (loss) from
investments 9,971 19,421 420 3,954 2,018 (47) 75,473
-------- ---------- --------- --------- ------- ------- ---------
Change in unrealized appreciation
(depreciation) on investments:
Unrealized appreciation (depreciation)
at end of period 5,645 26,417 2,433 427 (2,986) (398) 46,359
Unrealized appreciation (depreciation)
at beginning of period 4,924 12,876 689 5,929 1,999 (274) 37,524
-------- ---------- --------- --------- ------- ------- ---------
Net change in unrealized
appreciation (depreciation) 721 13,541 1,744 (5,502) (4,985) (124) 8,835
-------- ---------- --------- --------- ------- ------- ---------
Realized and unrealized gain (loss) 10,692 32,962 2,164 (1,548) (2,967) (171) 84,308
-------- ---------- --------- --------- ------- ------- ---------
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS $ 12,217 $ 32,276 $ 2,302 ($ 861) ($ 2,834) $ 171 $ 91,384
======== ========== ========= ========= ======= ======= =========
</TABLE>
27
<PAGE>
[Price Waterhouse LLP] [logo]
Report of Independent Accountants
February 19, 1998
To the Board of Directors of Phoenix Home Life Mutual Insurance Company
and Policyholders of RSVP Variable Life Account One
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets present fairly, in all
material respects, the financial position of RSVP Variable Life Account
One--Separate Account of Phoenix Home Life Mutual Insurance Company (the
"Account") at December 31, 1997, the results of its operations for the year
then ended and the changes in its net assets for the two years then ended, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Account's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits, which included confirmation of
investments at December 31, 1997 by correspondence with the custodians, provide
a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
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