[LOGO] PHOENIX
[GRAPHIC OF A FAMILY]
Flex Edge Success(SM)
Flex Edge
Joint Edge(R)
Annual Reports for:
Phoenix Home Life Variable
Universal Life Account
December 31, 1997
<PAGE>
TABLE OF CONTENTS
PHOENIX HOME LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
<TABLE>
<S> <C>
Money Market Sub-Account
Statement of Assets and Liabilities ......... 2
Statement of Operations ..................... 3
Statement of Changes in Net Assets .......... 4
Growth Sub-Account
Statement of Assets and Liabilities ......... 2
Statement of Operations ..................... 3
Statement of Changes in Net Assets .......... 4
Multi-Sector Fixed Income Sub-Account
Statement of Assets and Liabilities ......... 2
Statement of Operations ..................... 3
Statement of Changes in Net Assets .......... 4
Strategic Allocation Sub-Account
Statement of Assets and Liabilities ......... 2
Statement of Operations ..................... 3
Statement of Changes in Net Assets .......... 4
International Sub-Account
Statement of Assets and Liabilities ......... 2
Statement of Operations ..................... 3
Statement of Changes in Net Assets .......... 4
Balanced Sub-Account
Statement of Assets and Liabilities ......... 2
Statement of Operations ..................... 3
Statement of Changes in Net Assets .......... 4
</TABLE>
<TABLE>
<S> <C>
Real Estate Sub-Account
Statement of Assets and Liabilities ......... 2
Statement of Operations ..................... 3
Statement of Changes in Net Assets .......... 5
Strategic Theme Sub-Account
Statement of Assets and Liabilities ......... 2
Statement of Operations ..................... 3
Statement of Changes in Net Assets .......... 5
Aberdeen New Asia Sub-Account
Statement of Assets and Liabilities ......... 2
Statement of Operations ..................... 3
Statement of Changes in Net Assets .......... 5
Enhanced Index Sub-Account
Statement of Assets and Liabilities ......... 2
Statement of Operations ..................... 3
Statement of Changes in Net Assets .......... 5
Wanger International Small Cap Sub-Account
Statement of Assets and Liabilities ......... 2
Statement of Operations ..................... 3
Statement of Changes in Net Assets .......... 5
Wanger U.S. Small Cap Sub-Account
Statement of Assets and Liabilities ......... 2
Statement of Operations ..................... 3
Statement of Changes in Net Assets .......... 5
Notes to Financial Statements ................ 8
</TABLE>
<PAGE>
This annual report for the Phoenix
Home Life Variable Universal Life Account
for the period ended December 31, 1997 contains
the financial statements for the Account's
variable universal life policies.
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1997
<TABLE>
<CAPTION>
Multi-Sector
Money Market Growth Fixed Income
Sub-Account Sub-Account Sub-Account
---------------- ----------------- ----------------
<S> <C> <C> <C>
Assets
Investments at cost ........................................... $ 16,637,078 $ 223,382,611 $ 16,173,563
============ ============= ============
Investment in The Phoenix Edge Series Fund, at market ......... $ 16,637,078 $ 236,855,460 $ 16,582,895
------------ ------------- ------------
Total assets ................................................. 16,637,078 236,855,460 16,582,895
Liabilities
Accrued expenses to related party ............................. 9,797 156,810 10,808
------------ ------------- ------------
Net assets ..................................................... $ 16,627,281 $ 236,698,650 $ 16,572,087
============ ============= ============
Accumulation units outstanding ................................. 11,538,596 56,320,835 7,200,511
============ ============= ============
Unit value ..................................................... $ 1.441014 $ 4.202684 $ 2.301515
============ ============= ============
</TABLE>
<TABLE>
<CAPTION>
Strategic
Allocation International Balanced
Sub-Account Sub-Account Sub-Account
---------------- --------------- ----------------
<S> <C> <C> <C>
Assets
Investments at cost ........................................... $ 35,170,967 $ 38,821,949 $ 19,629,676
============ ============ ============
Investment in The Phoenix Edge Series Fund, at market ......... $ 36,045,635 $ 43,146,110 $ 20,745,874
------------ ------------ ------------
Total assets ................................................. 36,045,635 43,146,110 20,745,874
Liabilities
Accrued expenses to related party ............................. 24,077 28,378 13,791
------------ ------------ ------------
Net assets ..................................................... $ 36,021,558 $ 43,117,732 $ 20,732,083
============ ============ ============
Accumulation units outstanding ................................. 12,947,264 23,810,180 11,686,186
============ ============ ============
Unit value ..................................................... $ 2.782175 $ 1.810895 $ 1.774067
============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Aberdeen
Real Estate Strategic Theme New Asia
Sub-Account Sub-Account Sub-Account
--------------- ----------------- ---------------
<S> <C> <C> <C>
Assets
Investments at cost ........................................... $ 3,703,960 $ 4,532,000 $ 1,559,523
=========== =========== ===========
Investment in The Phoenix Edge Series Fund, at market ......... $ 4,148,357 $ 4,473,952 $ 1,049,925
----------- ----------- -----------
Total assets ................................................. 4,148,357 4,473,952 1,049,925
Liabilities
Accrued expenses to related party ............................. 2,644 2,907 695
----------- ----------- -----------
Net assets ..................................................... $ 4,145,713 $ 4,471,045 $ 1,049,230
=========== =========== ===========
Accumulation units outstanding ................................. 2,623,760 3,845,161 1,565,906
=========== =========== ===========
Unit value ..................................................... $ 1.580065 $ 1.162772 $ 0.670046
=========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Wanger
Enhanced International Wanger U.S.
Index Small Cap Small Cap
Sub-Account Sub-Account Sub-Account
--------------- --------------- ----------------
<S> <C> <C> <C>
Assets
Investments at cost ........................................... $ 1,911,997 $ 6,984,952 $ 14,388,061
=========== =========== ============
Investment in the Phoenix Edge Series Fund, at market ......... $ 1,952,250 -- --
Investment in Wanger Advisors Trust, at market ................ -- $ 6,538,176 $ 16,357,922
----------- ----------- ------------
Total assets ................................................. 1,952,250 6,538,176 16,357,922
Liabilities
Accrued expenses to related party ............................. 1,242 4,304 10,425
----------- ----------- ------------
Net assets ..................................................... $ 1,951,008 $ 6,533,872 $ 16,347,497
=========== =========== ============
Accumulation units outstanding ................................. 1,830,791 6,507,413 12,260,968
=========== =========== ============
Unit value ..................................................... $ 1.065664 $ 1.004066 $ 1.333296
=========== =========== ============
</TABLE>
See Notes to Financial Statements
2
<PAGE>
STATEMENT OF OPERATIONS
For the period ended December 31, 1997
<TABLE>
<CAPTION>
Multi-Sector
Money Market Growth Fixed Income
Sub-Account Sub-Account Sub-Account
-------------- --------------- -------------
<S> <C> <C> <C>
Investment income
Distributions ............................................... $787,128 $ 1,274,518 $1,024,853
Expenses
Mortality and expense risk charges .......................... 124,354 1,639,929 110,127
-------- ----------- ----------
Net investment income (loss) ................................. 662,774 (365,411) 914,726
-------- ----------- ----------
Net realized gain (loss) from share transactions ............. 34 (13,683) 4,696
Net realized gain distribution from Fund ..................... -- 36,351,738 401,988
Net unrealized appreciation on investment .................... -- 909,243 18,289
-------- ----------- ----------
Net gain on investments ...................................... 34 37,247,298 424,973
-------- ----------- ----------
Net increase in net assets resulting from operations ......... $662,808 $36,881,887 $1,339,699
======== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
Strategic
Allocation International Balanced
Sub-Account Sub-Account Sub-Account
------------- --------------- ------------
<S> <C> <C> <C>
Investment income
Distributions ................................................... $ 681,837 $ 526,957 $ 561,561
Expenses
Mortality and expense risk charges .............................. 249,583 315,851 145,865
---------- ---------- ----------
Net investment income ............................................ 432,254 211,106 415,696
---------- ---------- ----------
Net realized gain (loss) from share transactions ................. 16,230 (38,944) 7,612
Net realized gain distribution from Fund ......................... 4,395,531 4,047,584 2,259,915
Net unrealized appreciation (depreciation) on investment ......... 604,211 (307,551) 120,786
---------- ---------- ----------
Net gain on investments .......................................... 5,015,972 3,701,089 2,388,313
---------- ---------- ----------
Net increase in net assets resulting from operations ............. $5,448,226 $3,912,195 $2,804,009
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Aberdeen
Real Estate Strategic Theme New Asia
Sub-Account Sub-Account Sub-Account
------------- ----------------- --------------
<S> <C> <C> <C>
Investment income
Distributions .......................................................... $ 91,995 $ 13,601 $ 46,168
Expenses
Mortality and expense risk charges ..................................... 20,395 26,037 11,151
-------- --------- ----------
Net investment income (loss) ............................................ 71,600 (12,436) 35,017
-------- --------- ----------
Net realized gain (loss) from share transactions ........................ 438 2,000 (13,900)
Net realized gain distribution from Fund ................................ 136,883 515,108 791
Net unrealized appreciation (depreciation) on investment ................ 332,563 (66,310) (502,645)
-------- --------- ----------
Net gain (loss) on investments .......................................... 469,884 450,798 (515,754)
-------- --------- ----------
Net increase (decrease) in net assets resulting from operations ......... $541,484 $ 438,362 $ (480,737)
======== ========= ==========
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Wanger Wanger
Enhanced International U.S.
Index Small Cap Small Cap
Sub-Account(1) Sub-Account Sub-Account
-------------- -------- ----------
Investment income
Distributions .......................................................... $ 9,326 $ 68,447 $ 103,408
Expenses
Mortality and expense risk charges ..................................... 3,926 35,993 67,198
-------------- --------- ----------
Net investment income ................................................... 5,400 32,454 36,210
-------------- --------- ----------
Net realized loss from share transactions ............................... (334) (3,142) (13,408)
Net realized gain distribution from Fund ................................ 8,778 -- --
Net unrealized appreciation (depreciation) on investment ................ 40,253 (450,637) 1,960,796
-------------- --------- ----------
Net gain (loss) on investments .......................................... 48,697 (453,779) 1,947,388
-------------- --------- ----------
Net increase (decrease) in net assets resulting from operations ......... $ 54,097 $(421,325) $1,983,598
============== ========= ==========
(1) From inception July 18, 1997 to December 31, 1997
</TABLE>
See Notes to Financial Statements
3
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the period ended December 31, 1997
<TABLE>
<CAPTION>
Multi-Sector
Money Market Growth Fixed Income
Sub-Account Sub-Account Sub-Account
---------------- ---------------- ---------------
<S> <C> <C> <C>
From operations
Net investment income (loss) ............................................ $ 662,774 $ (365,411) $ 914,726
Net realized gain ....................................................... 34 36,338,055 406,684
Net unrealized appreciation ............................................. -- 909,243 18,289
------------- ------------- ------------
Net increase in net assets resulting from operations .................... 662,808 36,881,887 1,339,699
------------- ------------- ------------
From accumulation unit transactions
Participant deposits .................................................... 29,753,469 51,373,829 3,839,754
Participant transfers ................................................... (24,739,794) 461,474 1,758,903
Participant withdrawals ................................................. (4,583,895) (24,768,747) (1,594,349)
------------- ------------- ------------
Net increase in net assets resulting from participant transactions ...... 429,780 27,066,556 4,004,308
------------- ------------- ------------
Net increase in net assets .............................................. 1,092,588 63,948,443 5,344,007
Net assets
Beginning of period ..................................................... 15,534,693 172,750,207 11,228,080
------------- ------------- ------------
End of period ........................................................... $ 16,627,281 $ 236,698,650 $ 16,572,087
============= ============= ============
</TABLE>
<TABLE>
<CAPTION>
Strategic
Allocation International Balanced
Sub-Account Sub-Account Sub-Account
--------------- --------------- ---------------
<S> <C> <C> <C>
From operations
Net investment income ................................................... $ 432,254 $ 211,106 $ 415,696
Net realized gain ....................................................... 4,411,761 4,008,640 2,267,527
Net unrealized appreciation (depreciation) .............................. 604,211 (307,551) 120,786
------------ ------------ ------------
Net increase in net assets resulting from operations .................... 5,448,226 3,912,195 2,804,009
------------ ------------ ------------
From accumulation unit transactions
Participant deposits .................................................... 6,156,264 9,403,556 3,516,448
Participant transfers ................................................... 1,805,561 284,097 397,233
Participant withdrawals ................................................. (3,655,616) (4,537,485) (2,204,100)
------------ ------------ ------------
Net increase in net assets resulting from participant transactions ...... 4,306,209 5,150,168 1,709,581
------------ ------------ ------------
Net increase in net assets .............................................. 9,754,435 9,062,363 4,513,590
Net assets
Beginning of period ..................................................... 26,267,123 34,055,369 16,218,493
------------ ------------ ------------
End of period ........................................................... $ 36,021,558 $ 43,117,732 $ 20,732,083
============ ============ ============
</TABLE>
See Notes to Financial Statements
4
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the period ended December 31, 1997
(Continued)
<TABLE>
<CAPTION>
Aberdeen
Real Estate Strategic Theme New Asia
Sub-Account Sub-Account Sub-Account
------------- ----------------- --------------
<S> <C> <C> <C>
From operations
Net investment income (loss) ............................................ $ 71,600 $ (12,436) $ 35,017
Net realized gain (loss) ................................................ 137,321 517,108 (13,109)
Net unrealized appreciation (depreciation) .............................. 332,563 (66,310) (502,645)
---------- ---------- ----------
Net increase (decrease) in net assets resulting from operations ......... 541,484 438,362 (480,737)
---------- ---------- ----------
From accumulation unit transactions
Participant deposits .................................................... 1,089,983 1,476,759 522,055
Participant transfers ................................................... 1,984,226 1,197,938 (774,160)
Participant withdrawals ................................................. (357,873) (447,958) (159,479)
---------- ---------- ----------
Net increase (decrease) in net assets resulting from participant
transactions ........................................................... 2,716,336 2,226,739 (411,584)
---------- ---------- ----------
Net increase (decrease) in net assets ................................... 3,257,820 2,665,101 (892,321)
Net assets
Beginning of period ..................................................... 887,893 1,805,944 1,941,551
---------- ---------- ----------
End of period ........................................................... $4,145,713 $4,471,045 $1,049,230
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Wanger
Enhanced International Wanger U.S.
Index Small Cap Small Cap
Sub-Account(1) Sub-Account Sub-Account
---------------- --------------- --------------
<S> <C> <C> <C>
From operations
Net investment income ................................................... $ 5,400 $ 32,454 $ 36,210
Net realized gain (loss) ................................................ 8,444 (3,142) (13,408)
Net unrealized appreciation (depreciation) .............................. 40,253 (450,637) 1,960,796
---------- ---------- ------------
Net increase (decrease) in net assets resulting from operations ......... 54,097 (421,325) 1,983,598
---------- ---------- ------------
From accumulation unit transactions
Participant deposits .................................................... 334,421 2,372,417 3,760,805
Participant transfers ................................................... 1,632,282 4,882,238 11,222,509
Participant withdrawals ................................................. (69,792) (595,864) (1,086,412)
---------- ---------- ------------
Net increase in net assets resulting from participant transactions ...... 1,896,911 6,658,791 13,896,902
---------- ---------- ------------
Net increase in net assets .............................................. 1,951,008 6,237,466 15,880,500
Net assets
Beginning of period ..................................................... -- 296,406 466,997
---------- ---------- ------------
End of period ........................................................... $1,951,008 $6,533,872 $ 16,347,497
========== ========== ============
(1) From inception July 18, 1997 to December 31, 1997
</TABLE>
See Notes to Financial Statements
5
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the period ended December 31, 1996
<TABLE>
<CAPTION>
Multi-Sector
Money Market Growth Fixed Income
Sub-Account Sub-Account Sub-Account
---------------- ---------------- ---------------
<S> <C> <C> <C>
From operations
Net investment income ................................................... $ 548,378 $ 281,274 $ 593,496
Net realized gain ....................................................... -- 11,420,506 326,876
Net unrealized appreciation ............................................. -- 4,791,630 43,393
------------- ------------- ------------
Net increase in net assets resulting from operations .................... 548,378 16,493,410 963,765
------------- ------------- ------------
From accumulation unit transactions
Participant deposits .................................................... 26,004,635 47,202,324 2,811,259
Participant transfers ................................................... (21,268,222) 10,438,285 1,823,625
Participant withdrawals ................................................. (3,701,639) (19,333,192) (1,071,344)
------------- ------------- ------------
Net increase in net assets resulting from participant transactions ...... 1,034,774 38,307,417 3,563,540
------------- ------------- ------------
Net increase in net assets .............................................. 1,583,152 54,800,827 4,527,305
Net assets
Beginning of period ..................................................... 13,951,541 117,949,380 6,700,775
------------- ------------- ------------
End of period ........................................................... $ 15,534,693 $ 172,750,207 $ 11,228,080
============= ============= ============
</TABLE>
<TABLE>
<CAPTION>
Strategic Allocation International Balanced
Sub-Account Sub-Account Sub-Account
---------------------- --------------- ---------------
<S> <C> <C> <C>
From operations
Net investment income ................................................... $ 324,553 $ 245,322 $ 296,076
Net realized gain ....................................................... 1,622,713 747,494 1,394,172
Net unrealized appreciation (depreciation) .............................. (91,227) 3,401,467 (304,864)
------------ ------------ ------------
Net increase in net assets resulting from operations .................... 1,856,039 4,394,283 1,385,384
------------ ------------ ------------
From accumulation unit transactions
Participant deposits .................................................... 6,031,095 8,480,853 3,636,746
Participant transfers ................................................... 1,002,380 3,847,285 (651,439)
Participant withdrawals ................................................. (2,871,670) (3,414,225) (1,868,673)
------------ ------------ ------------
Net increase in net assets resulting from participant transactions ...... 4,161,805 8,913,913 1,116,634
------------ ------------ ------------
Net increase in net assets .............................................. 6,017,844 13,308,196 2,502,018
Net assets
Beginning of period ..................................................... 20,249,279 20,747,173 13,716,475
------------ ------------ ------------
End of period ........................................................... $ 26,267,123 $ 34,055,369 $ 16,218,493
============ ============ ============
</TABLE>
See Notes to Financial Statements
6
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the period ended December 31, 1996
(Continued)
<TABLE>
<CAPTION>
Aberdeen
Real Estate Strategic Theme New Asia
Sub-Account(1) Sub-Account(1) Sub-Account(2)
---------------- ----------------- ---------------
<S> <C> <C> <C>
From operations
Net investment income ................................................... $ 8,506 $ 910 $ 7,082
Net realized gain ....................................................... 22,646 1,002 919
Net unrealized appreciation (depreciation) .............................. 111,837 8,263 (6,953)
--------- ---------- ----------
Net increase in net assets resulting from operations .................... 142,989 10,175 1,048
--------- ---------- ----------
From accumulation unit transactions
Participant deposits .................................................... 114,179 507,159 137,347
Participant transfers ................................................... 648,017 1,412,288 1,825,934
Participant withdrawals ................................................. (17,292) (123,678) (22,778)
--------- ---------- ----------
Net increase in net assets resulting from participant transactions ...... 744,904 1,795,769 1,940,503
--------- ---------- ----------
Net increase in net assets .............................................. 887,893 1,805,944 1,941,551
Net assets
Beginning of period ..................................................... -- -- --
--------- ---------- ----------
End of period ........................................................... $ 887,893 $1,805,944 $1,941,551
========= ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Wanger
International Wanger U.S.
Small Cap Small Cap
Sub-Account(3) Sub-Account(3)
---------------- ----------------
<S> <C> <C>
From operations
Net investment loss ..................................................... $ (30) $ (65)
Net realized gain ....................................................... -- 29
Net unrealized appreciation ............................................. 3,861 9,066
-------- --------
Net increase in net assets resulting from operations .................... 3,831 9,030
-------- --------
From accumulation unit transactions
Participant deposits .................................................... 8,061 11,399
Participant transfers ................................................... 284,998 447,242
Participant withdrawals ................................................. (484) (674)
-------- --------
Net increase in net assets resulting from participant transactions ...... 292,575 457,967
-------- --------
Net increase in net assets .............................................. 296,406 466,997
Net assets
Beginning of period ..................................................... -- --
-------- --------
End of period ........................................................... $296,406 $466,997
======== ========
(1) From inception May 1, 1996 to December 31, 1996
(2) From inception September 18, 1996 to December 31, 1996
(3) From inception December 18, 1996 to December 31, 1996
</TABLE>
See Notes to Financial Statements
7
<PAGE>
PHOENIX HOME LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
Note 1--Organization
Phoenix Home Life Variable Universal Life Account (the "Account") is a
separate investment account of Phoenix Home Life Mutual Insurance Company
(Phoenix). The Account is offered as Flex Edge and Flex Edge Success for
individual variable life insurance and as Joint Edge for variable first-to-die
joint life insurance. The Account is registered as a unit investment trust
under the Investment Company Act of 1940, as amended, and currently consists of
twelve Sub-Accounts, that invest in a corresponding series of The Phoenix Edge
Series Fund, or Wanger Advisors Trust (the "Funds").
Each series has distinct investment objectives. The Money Market Series is
a short-term investment fund. The Growth Series is a growth common stock fund.
The Multi-Sector Fixed Income Series is a long-term debt fund. The Strategic
Allocation Series (formerly Total Return) invests in equity securities and long
and short-term debt. The International Series invests primarily in
internationally diversified equity securities. The Balanced Series is a
balanced fund which invests in growth stocks and at least 25% of its assets in
fixed income senior securities. The Real Estate Series invests in marketable
securities of publicly traded Real Estate Investment Trusts ("REITs") and
companies that are principally engaged in the real estate industry. The
Strategic Theme Series invests in securities of companies believed to benefit
from specific trends. The Aberdeen New Asia Series invests primarily in
diversified equity securities of issuers organized and principally operating in
Asia, excluding Japan. The Research Enhanced Index ("Enhanced Index") Series
invests in a broadly diversified portfolio of equity securities of large and
medium capitalization companies within market sectors reflected in the S & P
500. The Wanger International Small Cap Series invests in securities of
non-U.S. companies with a stock market capitalization of less than $1 billion
and the Wanger U.S. Small Cap Series invests in growth common stock of U.S.
companies with stock market capitalization of less than $1 billion.
Policyowners may also direct the allocation of their investments between the
account and the Guaranteed Interest Account of the general account of Phoenix.
Note 2--Significant Accounting Policies
A. Valuation of investments: Investments are made exclusively in the Funds and
are valued at the net asset values per share of the respective Series.
B. Investment transactions and related income: Realized gains and losses
include capital gain distributions from the Funds as well as gains and losses
on sales of shares in the Funds determined on the LIFO (last in, first out)
basis.
C. Income taxes: The Account is not a separate entity from Phoenix and, under
current federal income tax law, income arising from the Account is not taxed
since reserves are established equivalent to such income. Therefore, no
provision for related federal taxes is required.
D. Distributions: Distributions are recorded on the ex-dividend date.
Note 3--Purchases and Sales of Shares of the Funds
Purchases and sales of shares of the Funds for the period ended December
31, 1997 aggregated the following:
<TABLE>
<CAPTION>
Sub-Account Purchases Sales
- ----------------------------------------- -------------- --------------
<S> <C> <C>
The Phoenix Edge Series Fund:
Money Market ........................... $24,741,678 $23,649,364
Growth ................................. 74,873,217 11,780,750
Multi-Sector Fixed Income .............. 7,751,739 2,427,026
Strategic Allocation ................... 11,873,632 2,733,352
International .......................... 14,334,763 4,919,601
Balanced ............................... 6,251,920 1,863,892
Real Estate ............................ 3,551,387 624,453
Strategic Theme ........................ 3,086,981 355,827
Aberdeen New Asia ...................... 1,164,685 1,541,033
Enhanced Index ......................... 1,996,553 84,221
Wanger Advisors Trust:
Wanger International Small Cap ......... 7,495,468 799,948
Wanger U.S. Small Cap .................. 14,506,011 562,538
</TABLE>
Note 4--Participant Accumulation Unit Transactions (in units)
<TABLE>
<CAPTION>
Sub-Account
--------------------------------------------------------------------------------------------
Money Multi-Sector Strategic
Market Growth Fixed Income Allocation International Balanced
-------------- ------------ -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Flex Edge and Flex Edge Success:
Units outstanding, beginning of period . 10,724,432 47,488,023 5,233,038 10,993,304 20,012,736 10,200,782
Participant deposits ................... 19,441,883 12,224,278 1,660,100 2,243,760 4,956,751 1,966,680
Participant transfers .................. (16,331,954) (111,168) 768,740 631,459 76,649 208,481
Participant withdrawals ................ (2,946,179) (5,804,421) (692,262) (1,315,119) (2,354,334) (1,223,284)
------------- ---------- --------- ---------- ----------- -----------
Units outstanding, end of period ....... 10,888,182 53,796,712 6,969,616 12,553,404 22,691,802 11,152,659
============= ========== ========= ========== =========== ===========
Wanger
Strategic Aberdeen Enhanced International Wanger U.S.
Real Estate Theme New Asia Index Small Cap Small Cap
---------------- ---------- -------------- ------------- ---------------- -----------
Units outstanding, beginning of period . 661,261 1,662,135 1,908,225 -- 276,887 432,094
Participant deposits ................... 694,118 1,168,665 544,018 279,879 2,032,782 2,821,067
Participant transfers .................. 1,369,217 1,023,653 (839,908) 1,587,831 4,347,440 9,260,836
Participant withdrawals ................ (222,186) (329,249) (153,781) (67,917) (501,136) (756,874)
------------- ---------- ---------- ------------- ----------- -----------
Units outstanding, end of period ....... 2,502,410 3,525,204 1,458,554 1,799,793 6,155,973 11,757,123
============= ========== ========== ============= =========== ===========
</TABLE>
8
<PAGE>
PHOENIX HOME LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Money Multi-Sector Strategic
Market Growth Fixed Income Allocation International Balanced
--------------- ------------- -------------- ------------- -------------- -----------
Joint Edge:
<S> <C> <C> <C> <C> <C> <C>
Units outstanding, beginning of period ..... 524,887 1,887,862 145,848 315,311 891,214 495,615
Participant deposits ....................... 1,559,669 951,327 71,988 125,380 375,497 130,272
Participant transfers ...................... (1,247,797) 168,606 53,880 27,451 65,833 (9,439)
Participant withdrawals .................... (186,345) (483,672) (40,821) (74,282) (214,166) (82,921)
-------------- --------- -------- ------- ----------- --------
Units outstanding, end of period ........... 650,414 2,524,123 230,895 393,860 1,118,378 533,527
============== ========= ======== ======= =========== ========
Wanger
Strategic Aberdeen Enhanced International Wanger U.S
Real Estate Theme New Asia Index Small Cap Small Cap
--------------- --------- -------------- ---------- ---------------- ----------
Units outstanding, beginning of period ..... 19,197 143,329 34,915 -- 11,716 17,668
Participant deposits ....................... 63,663 168,852 54,008 20,878 152,815 212,241
Participant transfers ...................... 58,532 80,865 34,503 12,228 227,435 330,381
Participant withdrawals .................... (20,042) (73,089) (16,074) (2,108) (40,526) (56,445)
-------------- --------- -------- ---------- ------------ --------
Units outstanding, end of period ........... 121,350 319,957 107,352 30,998 351,440 503,845
============== ========= ======== ========== ============ ========
</TABLE>
Note 5--Policy Loans
Transfers are made to Phoenix's general account as a result of policy
loans. Policy provisions allow policyowners to borrow up to 90% of a policy's
cash value with an interest rate set in accordance with the contract due and
payable on each policy anniversary. At the time a loan is granted, an amount
equivalent to the amount of the loan is transferred from the Account to
Phoenix's general account as collateral for the outstanding loan. These
transfers are included in participant withdrawals in the accompanying financial
statements. Amounts in the general account are credited with interest at 2% for
Flex Edge success policies, and 6% for Joint Edge and Flex Edge policies. Loan
repayments result in a transfer of collateral back to the Account.
Note 6--Investment Advisory Fees and Related Party Transactions
Phoenix and its indirect, majority owned subsidiary, Phoenix Equity
Planning Corporation, a registered broker/dealer in securities, provide all
services to the Account.
The cost of insurance is charged to each policy on a monthly basis by a
withdrawal of participant units prorated among the elected Sub-Accounts. The
amount charged to each policy depends on a number of variables including sex,
age and risk class as well as the death benefit and cash value of the policy.
Such costs aggregated $24,715,463 during the year ended December 31, 1997.
Upon partial surrender of a policy, a surrender fee of the lesser of $25
or 2% of the partial surrender amount paid and a partial surrender charge equal
to a pro rata portion of the applicable surrender charge is deducted from the
policy value and paid to Phoenix.
Phoenix Equity Planning Corporation is the principal underwriter and
distributor of the Account. Phoenix Equity Planning Corporation is reimbursed
for its distribution and underwriting expenses by Phoenix.
Policies which are surrendered during the first ten policy years will
incur a surrender charge, consisting of a contingent deferred sales charge
designed to recover expenses for the distribution of Policies that are
terminated by surrender before distribution expenses have been recouped, and a
contingent deferred issue charge designed to recover expenses for the
administration of Policies that are terminated by surrender before
administrative expenses have been recouped. These are contingent charges paid
only if the Policy is surrendered (or a partial withdrawal is taken or the Face
Amount is reduced or the Policy lapses) during the first ten policy years. The
charges are deferred (i.e. not deducted from premiums).
Phoenix assumes the mortality risk that insureds may live for a shorter
time than projected because of inaccuracies in the projecting process and,
accordingly, that an aggregate amount of death benefits greater than projected
will be payable. The expense risk assumed is that expenses incurred in issuing
the policies may exceed the limits on administrative charges set in the
policies. In return for the assumption of these mortality and expense risks,
Phoenix charges the Account an annual rate of 0.80% of the average daily net
assets of the Account for mortality and expense risks assumed for Flex Edge and
Joint Edge. For Flex Edge Success, the Account is charged an annual rate of
0.80% for the first fifteen years and 0.25% thereafter.
Note 7--Diversification Requirements
Under the provisions of Section 817(h) of the Internal Revenue Code (the
"Code"), a variable universal life contract, other than a contract issued in
connection with certain types of employee benefit plans, will not be treated as
a universal 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 believes that the Account satisfies the current
requirements of the regulations, and it intends that the Account will continue
to meet such requirements.
9
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[Price Waterhouse LLP logotype] [LOGO]
To the Board of Directors of Phoenix Home Life Mutual Insurance Company and
Participants of Phoenix Home Life Variable Universal Life Account
In our opinion, the accompanying statement of assets and liabilities and the
related statement of operations and of changes in net assets present fairly, in
all material respects, the financial position of the Money Market Sub-Account,
Growth Sub-Account, Multi-Sector Fixed Income Sub-Account, Strategic Allocation
Sub-Account, International Sub-Account, Balanced Sub-Account, Real Estate
Sub-Account, Strategic Theme Sub-Account, Aberdeen New Asia Sub-Account,
Enhanced Index Sub-Account, Wanger International Small Cap Sub-Account and
Wanger U.S. Small Cap Sub-Account (constituting the Phoenix Home Life Variable
Universal Life Account, hereafter referred to as the "Account") at December 31,
1997 and the results of each of their operations and the changes in each of
their net assets for each of the periods indicated, 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 Funds' custodians, provide a reasonable basis for the
opinion expressed above.
/s/ Price Waterhouse LLP
Hartford, Connecticut
February 19, 1998
10
<PAGE>
PHOENIX HOME LIFE
VARIABLE UNIVERSAL LIFE ACCOUNT
Phoenix Home Life Mutual Insurance Company
One American Row
Hartford, Connecticut 06115
Underwriter
Phoenix Equity Planning Corporation
P.O. Box 2200
100 Bright Meadow Boulevard
Enfield, Connecticut 06083-2200
Custodians
The Chase Manhattan Bank, N.A.
1 Chase Manhattan Plaza
Floor 3B
New York, New York 10081
Brown Brothers Harriman & Co.
(International Series, Aberdeen New Asia Series)
40 Water Street
Boston, Massachusetts 02109
State Street Bank and Trust
(Real Estate Series, Enhanced Index Series)
P.O. Box 351
Boston, Massachusetts 02101
Independent Accountants
Price Waterhouse LLP
One Financial Plaza
Hartford, Connecticut 06103
<PAGE>
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<PAGE>
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<PAGE>
[LOGO] PHOENIX
Phoenix Home Life Mutual Insurance Company
101 Munson Street
PO Box 810
Greenfield, MA 01302-0810
[RECYCLE LOGO] Printed on Recycled Paper.
OL 1320K (2/98) (C) 1998 Phoenix Home Life Mutual Insurance Company
