[COVER PAGE]
ANNUAL REPORT
PHOENIX
Estate Edge (SM)
PHOENIX HOME LIFE
VARIABLE UNIVERSAL LIFE ACCOUNT
December 31, 1997
[LOGO] PHOENIX
<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
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
Real Estate Sub-Account
Statement of Assets and Liabilities ......... 2
Statement of Operations ..................... 3
Statement of Changes in Net Assets .......... 4
Strategic Theme 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 ................ 6
</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 single premium variable universal life policies.
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1997
<TABLE>
<CAPTION>
Strategic
Money Market Growth Allocation
Sub-Account Sub-Account Sub-Account
-------------- ------------- --------------
<S> <C> <C> <C>
Assets
Investments at cost ........................................... $ 379,893 $ 113,391 $ 2,674
========== ========== ==========
Investment in The Phoenix Edge Series Fund, at market ......... $ 379,893 $ 105,118 $ 2,354
---------- ---------- ----------
Total assets ................................................. 379,893 105,118 2,354
Liabilities
Accrued expenses to related party ............................. 379 41 2
---------- ---------- ----------
Net assets ..................................................... $ 379,514 $ 105,077 $ 2,352
========== ========== ==========
Accumulation units outstanding ................................. 264,296 25,015 845
========== ========== ==========
Unit value ..................................................... $ 1.435943 $ 4.200538 $ 2.782239
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
International Balanced Real Estate
Sub-Account Sub-Account Sub-Account
--------------- ------------- --------------
<S> <C> <C> <C>
Assets
Investments at cost ........................................... $ 25,799 $ 2,352 $ 29,225
========== ========== ==========
Investment in The Phoenix Edge Series Fund, at market ......... $ 24,189 $ 2,352 $ 28,603
---------- ---------- ----------
Total assets ................................................. 24,189 2,352 28,603
Liabilities
Accrued expenses to related party ............................. 2 -- --
---------- ---------- ----------
Net assets ..................................................... $ 24,187 $ 2,352 $ 28,603
========== ========== ==========
Accumulation units outstanding ................................. 13,356 1,326 18,097
========== ========== ==========
Unit value ..................................................... $ 1.810998 $ 1.774067 $ 1.580492
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Strategic Enhanced
Theme Index
Sub-Account Sub-Account
------------- --------------
<S> <C> <C>
Assets
Investments at cost ........................................... $ 615 $ 23,603
========== ==========
Investment in The Phoenix Edge Series Fund, at market ......... $ 551 $ 23,803
---------- ----------
Total assets ................................................. 551 23,803
Liabilities
Accrued expenses to related party ............................. 1 1
---------- ----------
Net assets ..................................................... $ 550 $ 23,802
========== ==========
Accumulation units outstanding ................................. 474 22,332
========== ==========
Unit value ..................................................... $ 1.161310 $ 1.065806
========== ==========
</TABLE>
<TABLE>
<CAPTION>
Wanger Wanger
International U.S.
Small Cap Small Cap
Sub-Account Sub-Account
-------------- -----------
<S> <C> <C>
Assets
Investments at cost .................................... $ 4,828 $ 34,224
========= =========
Investment in Wanger Advisors Trust, at market ......... $ 4,764 $ 34,979
--------- ---------
Total assets .......................................... 4,764 34,979
Liabilities
Accrued expenses to related party ...................... 2 4
--------- ---------
Net assets .............................................. $ 4,762 $ 34,975
========= =========
Accumulation units outstanding .......................... 4,745 26,246
========= =========
Unit value .............................................. $1.003596 $1.332605
========= =========
</TABLE>
See Notes to Financial Statements
2
<PAGE>
STATEMENT OF OPERATIONS
For the period ended December 31, 1997
<TABLE>
<CAPTION>
Strategic
Money Market Growth Allocation
Sub-Account Sub-Account Sub-Account
-------------- ------------- ------------
<S> <C> <C> <C>
Investment income
Distributions .......................................................... $ 788 $ -- $ 14
Expenses
Mortality and expense risk charges ..................................... 167 44 2
------ -------- ------
Net investment income (loss) ............................................ 621 (44) 12
------ -------- ------
Net realized loss from share transactions ............................... -- -- (71)
Net realized gain (loss) distribution from Fund ......................... -- 10,696 369
Net unrealized depreciation on investment ............................... -- (8,273) (320)
------ -------- ------
Net gain (loss) on investments .......................................... -- 2,423 (22)
------ -------- ------
Net increase (decrease) in net assets resulting from operations ......... $ 621 $ 2,379 $ (10)
====== ======== ======
</TABLE>
<TABLE>
<CAPTION>
International Balanced Real Estate
Sub-Account Sub-Account Sub-Account
--------------- ------------- ------------
<S> <C> <C> <C>
Investment income
Distributions ............................................... $ -- $ -- $ 228
Expenses
Mortality and expense risk charges .......................... 1 -- --
-------- ------- ------
Net investment income (loss) ................................. (1) -- 228
-------- ------- ------
Net realized gain distribution from Fund ..................... 1,690 -- 821
Net unrealized depreciation on investment .................... (1,611) -- (622)
-------- ------- ------
Net gain on investments ...................................... 79 -- 199
-------- ------- ------
Net increase in net assets resulting from operations ......... $ 78 $ -- $ 427
======== ======= ======
</TABLE>
<TABLE>
<CAPTION>
Strategic Enhanced
Theme Index
Sub-Account Sub-Account(1)
--------------- ---------------
<S> <C> <C>
Investment income
Distributions .......................................................... $ 1 $ 115
Expenses
Mortality and expense risk charges ..................................... 1 1
-------- ------
Net investment income ................................................... -- 114
-------- ------
Net realized loss from share transactions ............................... (1) --
Net realized gain distribution from Fund ................................ 64 108
Net unrealized appreciation (depreciation) on investment ................ (64) 200
-------- ------
Net gain (loss) on investments .......................................... (1) 308
-------- ------
Net increase (decrease) in net assets resulting from operations ......... $ (1) $ 422
======== ======
</TABLE>
<TABLE>
<CAPTION>
Wanger Wanger
International U.S.
Small Cap Small Cap
Sub-Account Sub-Account
--------------- -------------
<S> <C> <C>
Investment income
Distributions .......................................................... $ -- $ --
Expenses
Mortality and expense risk charges ..................................... 2 6
--------- --------
Net investment loss ..................................................... (2) (6)
--------- --------
Net realized loss from share transactions ............................... (1) --
Net unrealized appreciation (depreciation) on investment ................ (64) 755
--------- --------
Net gain (loss) on investments .......................................... (65) 755
--------- --------
Net increase (decrease) in net assets resulting from operations ......... $ (67) $ 749
========= ========
</TABLE>
(1) From inception September 22, 1997 to December 31, 1997
See Notes to Financial Statements
3
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the period ended December 31, 1997
<TABLE>
<CAPTION>
Strategic
Money Market Growth Allocation
Sub-Account Sub-Account Sub-Account
-------------- ------------- ------------
<S> <C> <C> <C>
From operations
Net investment income (loss) ............................................ $ 621 $ (44) $ 12
Net realized gain ....................................................... -- 10,696 298
Net unrealized depreciation ............................................. -- (8,273) (320)
--------- ---------- --------
Net increase (decrease) in net assets resulting from operations ......... 621 2,379 (10)
--------- ---------- --------
From accumulation unit transactions
Participant deposits .................................................... 484,008 101,112 10
Participant transfers ................................................... (99,972) 2,352 2,352
Participant withdrawals ................................................. (5,143) (766) --
--------- ---------- --------
Net increase in net assets resulting from participant transactions ...... 378,893 102,698 2,362
--------- ---------- --------
Net increase in net assets .............................................. 379,514 105,077 2,352
Net assets
Beginning of period ..................................................... -- -- --
--------- ---------- --------
End of period ........................................................... $ 379,514 $ 105,007 $ 2,352
========= ========== ========
</TABLE>
<TABLE>
<CAPTION>
International Balanced Real Estate
Sub-Account Sub-Account Sub-Account
--------------- ------------- ------------
<S> <C> <C> <C>
From operations
Net investment income (loss) ............................................ $ (1) $ -- $ 228
Net realized gain ....................................................... 1,690 -- 821
Net unrealized depreciation ............................................. (1,611) -- (622)
-------- -------- --------
Net increase in net assets resulting from operations .................... 78 -- 427
-------- -------- --------
From accumulation unit transactions
Participant deposits .................................................... 2,067 -- 3,791
Participant transfers ................................................... 22,053 2,352 24,405
Participant withdrawals ................................................. (11) -- (20)
-------- -------- --------
Net increase in net assets resulting from participant transactions ...... 24,109 2,352 28,176
-------- -------- --------
Net increase in net assets .............................................. 24,187 2,352 28,603
Net assets
Beginning of period ..................................................... -- -- --
-------- -------- --------
End of period ........................................................... $ 24,187 $ 2,352 $ 28,603
======== ======== ========
</TABLE>
See Notes to Financial Statements
4
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the period ended December 31, 1997
(Continued)
<TABLE>
<CAPTION>
Strategic Enhanced
Theme Index
Sub-Account Sub-Account(1)
------------- ----------------
<S> <C> <C>
From operations
Net investment income ................................................... $ -- $ 114
Net realized gain ....................................................... 63 108
Net unrealized appreciation (depreciation) .............................. (64) 200
------- -------
Net increase (decrease) in net assets resulting from operations ......... (1) 422
------- -------
From accumulation unit transactions
Participant deposits .................................................... 565 1,339
Participant transfers ................................................... -- 22,053
Participant withdrawals ................................................. (14) (12)
------- -------
Net increase in net assets resulting from participant transactions ...... 551 23,380
------- -------
Net increase in net assets .............................................. 550 23,802
Net assets
Beginning of period ..................................................... -- --
------- -------
End of period ........................................................... $ 550 $23,802
======= =======
</TABLE>
<TABLE>
<CAPTION>
Wanger Wanger
International U.S.
Small Cap Small Cap
Sub-Account Sub-Account
--------------- -------------
<S> <C> <C>
From operations
Net investment loss ..................................................... $ (2) $ (6)
Net realized loss ....................................................... (1) --
Net unrealized appreciation (depreciation) .............................. (64) 755
-------- -------
Net increase (decrease) in net assets resulting from operations ......... (67) 749
-------- -------
From accumulation unit transactions
Participant deposits .................................................... 4,877 9,994
Participant transfers ................................................... -- 24,405
Participant withdrawals ................................................. (48) (173)
-------- -------
Net increase in net assets resulting from participant transactions ...... 4,829 34,226
-------- -------
Net increase in net assets .............................................. 4,762 34,975
Net assets
Beginning of period ..................................................... -- --
-------- -------
End of period ........................................................... $4,762 $34,975
======== =======
</TABLE>
(1) From inception September 22, 1997 to December 31, 1997
See Notes to Financial Statements
5
<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 registered as a unit investment trust under the
Investment Company Act of 1940, as amended. Policies offered by the Account
have a death benefit, cash surrender value and loan privileges. The Account was
established January 1, 1987 and currently consists of twelve Sub-Accounts, that
invest in a corresponding series of The Phoenix Edge Series Fund and Wanger
Advisors Trust ("the Funds"). At December 31, 1997, there were no investments
in the Multi-Sector Fixed Income and the Aberdeen New Asia Sub-Accounts.
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 an
internationally diversified portfolio of 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.
Additionally, 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 .................... $453,999 $74,107
Growth........................... 113,409 18
Strategic Allocation ............ 3,672 927
International ................... 25,810 11
Balanced ........................ 2,352 --
Real Estate ..................... 29,225 --
Strategic Theme ................. 629 14
Enhanced Index .................. 23,615 12
Wanger Advisors Trust:
International Small Cap ......... 4,857 29
U.S. Small Cap .................. 34,224 65
</TABLE>
Note 4--Participant Accumulation Unit Transactions (in units)
<TABLE>
<CAPTION>
Sub-Account
----------------------------------------------------------------------
Money Strategic
Market Growth Allocation International Balanced
------------ ---------- ------------ --------------- ---------
<S> <C> <C> <C> <C> <C>
Units outstanding, beginning of period ......... -- -- -- -- --
Participant deposits ........................... 337,515 24,642 (4) 1,166 --
Participant transfers .......................... (69,634) 560 845 12,196 1,326
Participant withdrawals ........................ (3,585) (187) 4 (6) --
-------- ------- ---- ------- -----
Units outstanding, end of period ............... 264,296 25,015 845 13,356 1,326
======== ======= ==== ======= =====
</TABLE>
6
<PAGE>
PHOENIX HOME LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
Note 4--Participant Accumulation Unit Transactions (in units) (continued)
<TABLE>
<CAPTION>
Sub-Account
----------------------------------------------------------------------
Wanger
Real Strategic Enhanced International Wanger U.S.
Estate Theme Index Small Cap Small Cap
---------- ----------- ---------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Units outstanding, beginning of period ......... -- -- -- -- --
Participant deposits ........................... 2,464 487 1,287 4,793 7,636
Participant transfers .......................... 15,646 -- 21,057 -- 18,741
Participant withdrawals ........................ (13) (13) (12) (48) (131)
------- ---- ------- ------ -------
Units outstanding, end of period ............... 18,097 474 22,332 4,745 26,246
======= ==== ======= ====== =======
</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 75% of a policy's
cash value during the first three policy years and up to 90% of cash value
thereafter, with interest of 8% 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 7.25%. 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 $2,122 during the period 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 fraction of the balance of any
unpaid acquisition expense allowance is deducted from the policy value and paid
to Phoenix.
Phoenix Equity Planning Corporation is the principal underwriter and
distributor for the Account. Phoenix Equity Planning Corporation is reimbursed
for its distribution and underwriting expenses by Phoenix.
An acquisition expense allowance is paid to Phoenix over a ten year period
from contract inception by a withdrawal of units. The acquisition expense
allowance consists of a sales load of 5.5% of the issue premium to compensate
Phoenix for distribution expenses incurred, an issue administration charge of
1.0% of the issue premium to compensate Phoenix for underwriting and start-up
expenses and premium taxes which currently range from 0.75% to 4% of premiums
paid based on the state where the policyowner resides. In the event of a
surrender before ten years, the unpaid balance of the acquisition expense
allowance is deducted and paid to Phoenix.
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 0.50% of the average daily net
assets of the Account for mortality and expense risks assumed.
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.
7
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP [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 statements 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, Strategic Allocation Sub-Account,
International Sub-Account, Balanced Sub-Account, Real Estate Sub-Account,
Strategic Theme 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
8
<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)
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>
[BACK COVER]
[LOGO] PHOENIX
Phoenix Home Life Mutual Insurance Company
101 Munson Street
P.O. Box 810
Greenfield, MA 01302-0810
OL2546 A (2/98) (C) 1998 Phoenix Home Life Mutual Insurance Company
700.04
[RECYCLE LOGO] Printed on Recycled Paper.
