TABLE OF CONTENTS
PHOENIX HOME LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
MONEY MARKET SUBACCOUNT
Statement of Assets and Liabilities...... 2
Statement of Operations.................. 4
Statement of Changes in Net Assets....... 6
GROWTH SUBACCOUNT
Statement of Assets and Liabilities...... 2
Statement of Operations.................. 4
Statement of Changes in Net Assets....... 6
MULTI-SECTOR FIXED INCOME SUBACCOUNT
Statement of Assets and Liabilities...... 2
Statement of Operations.................. 4
Statement of Changes in Net Assets....... 6
STRATEGIC ALLOCATION SUBACCOUNT
Statement of Assets and Liabilities...... 2
Statement of Operations.................. 4
Statement of Changes in Net Assets....... 6
INTERNATIONAL SUBACCOUNT
Statement of Assets and Liabilities...... 2
Statement of Operations.................. 4
Statement of Changes in Net Assets....... 6
BALANCED SUBACCOUNT
Statement of Assets and Liabilities...... 2
Statement of Operations.................. 4
Statement of Changes in Net Assets....... 6
REAL ESTATE SUBACCOUNT
Statement of Assets and Liabilities...... 2
Statement of Operations.................. 4
Statement of Changes in Net Assets....... 6
STRATEGIC THEME SUBACCOUNT
Statement of Assets and Liabilities...... 2
Statement of Operations.................. 4
Statement of Changes in Net Assets....... 6
ABERDEEN NEW ASIA SUBACCOUNT
Statement of Assets and Liabilities...... 2
Statement of Operations.................. 4
Statement of Changes in Net Assets....... 6
ENHANCED INDEX SUBACCOUNT
Statement of Assets and Liabilities...... 2
Statement of Operations.................. 4
Statement of Changes in Net Assets....... 7
ENGEMANN NIFTY FIFTY SUBACCOUNT
Statement of Assets and Liabilities...... 2
Statement of Operations.................. 4
Statement of Changes in Net Assets....... 7
SENECA MID-CAP GROWTH SUBACCOUNT
Statement of Assets and Liabilities...... 2
Statement of Operations.................. 4
Statement of Changes in Net Assets....... 7
GROWTH AND INCOME SUBACCOUNT
Statement of Assets and Liabilities...... 3
Statement of Operations.................. 5
Statement of Changes in Net Assets....... 7
VALUE EQUITY SUBACCOUNT
Statement of Assets and Liabilities...... 3
Statement of Operations.................. 5
Statement of Changes in Net Assets....... 7
SCHAFER MID-CAP SUBACCOUNT
Statement of Assets and Liabilities...... 3
Statement of Operations.................. 5
Statement of Changes in Net Assets....... 7
WANGER U.S. SMALL CAP SUBACCOUNT
Statement of Assets and Liabilities...... 3
Statement of Operations.................. 5
Statement of Changes in Net Assets....... 7
WANGER INTERNATIONAL SMALL CAP SUBACCOUNT
Statement of Assets and Liabilities...... 3
Statement of Operations.................. 5
Statement of Changes in Net Assets....... 7
TEMPLETON STOCK SUBACCOUNT
Statement of Assets and Liabilities...... 3
Statement of Operations.................. 5
Statement of Changes in Net Assets....... 7
TEMPLETON ASSET ALLOCATION SUBACCOUNT
Statement of Assets and Liabilities...... 3
Statement of Operations.................. 5
Statement of Changes in Net Assets....... 8
TEMPLETON INTERNATIONAL SUBACCOUNT
Statement of Assets and Liabilities...... 3
Statement of Operations.................. 5
Statement of Changes in Net Assets....... 8
TEMPLETON DEVELOPING MARKETS SUBACCOUNT
Statement of Assets and Liabilities...... 3
Statement of Operations.................. 5
Statement of Changes in Net Assets....... 8
MUTUAL SHARES INVESTMENTS SUBACCOUNT
Statement of Assets and Liabilities...... 3
Statement of Operations.................. 5
Statement of Changes in Net Assets....... 8
NOTES TO FINANCIAL STATEMENTS............... 11
<PAGE>
This annual report for the PHOENIX
HOME LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
for the period ended December 31, 1998 contains
the financial statements for the Account's
variable universal life policies.
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
MULTI-SECTOR
MONEY MARKET GROWTH FIXED INCOME
SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ----------
<S> <C> <C> <C>
ASSETS
Investments at cost................................................ $ 29,233,552 $254,437,583 $ 18,020,712
============ ============ ============
Investment in The Phoenix Edge Series Fund, at market.............. $ 29,233,552 $331,086,585 $ 16,340,834
------------ ------------ ------------
Total assets.................................................... 29,233,552 331,086,585 16,340,834
LIABILITIES
Accrued expenses to related party.................................. 17,287 209,893 11,253
------------ ------------ ------------
NET ASSETS............................................................ $ 29,216,265 $330,876,692 $ 16,329,581
============ ============ ============
Accumulation units outstanding........................................ 19,445,741 61,038,521 7,465,200
============ ============ ============
Unit value............................................................ $ 1.502450 $ 5.420786 $ 2.187421
============ ============ ============
STRATEGIC
ALLOCATION INTERNATIONAL BALANCED
SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ----------
ASSETS
Investments at cost................................................ $ 38,006,641 $ 52,877,225 $ 23,277,178
============ ============ ============
Investment in The Phoenix Edge Series Fund, at market.............. $ 42,884,376 $ 59,477,822 $ 27,176,858
------------ ------------ ------------
Total assets.................................................... 42,884,376 59,477,822 27,176,858
LIABILITIES
Accrued expenses to related party.................................. 27,626 38,654 17,606
------------ ------------ ------------
NET ASSETS............................................................ $ 42,856,750 $ 59,439,168 $ 27,159,252
============ ============ ============
Accumulation units outstanding........................................ 12,854,218 25,861,683 12,965,944
============ ============ ============
Unit value............................................................ $ 3.334058 $ 2.298356 $ 2.094661
============ ============ ============
ABERDEEN
REAL ESTATE STRATEGIC THEME NEW ASIA
SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ----------
ASSETS
Investments at cost................................................ $ 4,634,701 $ 6,220,582 $ 2,033,105
============ ============ ============
Investment in The Phoenix Edge Series Fund, at market.............. $ 3,886,791 $ 8,065,971 $ 1,479,400
------------ ------------ ------------
Total assets.................................................... 3,886,791 8,065,971 1,479,400
LIABILITIES
Accrued expenses to related party.................................. 1,214 5,016 983
------------ ------------ ------------
NET ASSETS............................................................ $ 3,885,577 $ 8,060,955 $ 1,478,417
============ ============ ============
Accumulation units outstanding........................................ 3,145,785 4,829,333 2,327,758
============ ============ ============
Unit value............................................................ $ 1.235169 $ 1.669165 $ 0.635131
============ ============ ============
SENECA
ENHANCED ENGEMANN MID-CAP
INDEX NIFTY FIFTY GROWTH
SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ----------
ASSETS
Investments at cost................................................ $11,431,268 $1,490,895 $ 819,776
============ ============ ============
Investment in the Phoenix Edge Series Fund, at market.............. $12,738,930 $1,743,031 $ 949,988
------------ ------------ ------------
Total assets.................................................... 12,738,930 1,743,031 949,988
LIABILITIES
Accrued expenses to related party.................................. 11,879 1,024 555
------------ ------------ ------------
NET ASSETS............................................................ $12,727,051 $1,742,007 $ 949,433
============ ============ ============
Accumulation units outstanding........................................ 9,141,857 1,388,592 801,887
============ ============ ============
Unit value............................................................ $ 1.392173 $ 1.254504 $ 1.184001
============ ============ ============
</TABLE>
See Notes to Financial Statements
2
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
(CONTINUED)
<TABLE>
<CAPTION>
GROWTH SCHAFER
AND INCOME VALUE EQUITY MID-CAP
SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ----------
<S> <C> <C> <C>
ASSETS
Investments at cost................................................ $ 2,982,276 $ 742,160 $ 907,393
=========== =========== ===========
Investment in The Phoenix Edge Series Fund, at market.............. $ 3,334,697 $ 817,347 $ 892,867
----------- ----------- -----------
Total assets.................................................... 3,334,697 817,347 892,867
LIABILITIES
Accrued expenses to related party.................................. 1,932 527 550
----------- ----------- -----------
NET ASSETS............................................................ $ 3,332,765 $ 816,820 $ 892,317
=========== =========== ===========
Accumulation units outstanding........................................ 2,784,908 748,006 1,013,461
=========== =========== ===========
Unit value............................................................ $ 1.196724 $ 1.091997 $ 0.880465
=========== =========== ===========
WANGER WANGER
U.S. INTERNATIONAL TEMPLETON
SMALL CAP SMALL CAP STOCK
SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ----------
ASSETS
Investments at cost................................................ $28,429,006 $10,613,991 $ 26,984
=========== =========== ===========
Investment in Wanger Advisors Trust, at market..................... $31,256,495 $11,219,048 --
Investment in Templeton Variable Products Series Fund, at market... -- -- $ 27,400
----------- ----------- -----------
Total assets.................................................... 31,256,495 11,219,048 27,400
----------- ----------- -----------
LIABILITIES
Accrued expenses to related party.................................. 19,828 7,180 8
----------- ----------- -----------
NET ASSETS............................................................ $31,236,667 $11,211,868 $ 27,392
=========== =========== ===========
Accumulation units outstanding........................................ 21,727,449 9,675,387 27,534
=========== =========== ===========
Unit value............................................................ $ 1.437659 $ 1.158764 $ 0.995090
=========== =========== ===========
TEMPLETON TEMPLETON
ASSET ALLOCATION INTERNATIONAL
SUBACCOUNT SUBACCOUNT
---------- ----------
ASSETS
Investments at cost................................................ $ 37,201 $ 52,253
========= =========
Investment in Templeton Variable Products Series Fund, at market... $ 37,568 $ 53,499
--------- ---------
Total assets.................................................... 37,568 53,499
LIABILITIES
Accrued expenses to related party.................................. 9 31
--------- ---------
NET ASSETS............................................................ $ 37,559 $ 53,468
========= =========
Accumulation units outstanding........................................ 37,229 51,415
========= =========
Unit value............................................................ $1.008866 $1.039927
========= =========
TEMPLETON MUTUAL SHARES
DEVELOPING MARKETS INVESTMENTS
SUBACCOUNT SUBACCOUNT
---------- ----------
ASSETS
Investments at cost................................................ $ 10,614 $ 53,204
========= =========
Investment in Templeton Variable Products Series Fund, at market... $ 10,670 $ 53,804
--------- ---------
Total assets.................................................... 10,670 53,804
LIABILITIES
Accrued expenses to related party.................................. 5 33
--------- ---------
NET ASSETS............................................................ $ 10,665 $ 53,771
========= =========
Accumulation units outstanding........................................ 10,074 54,032
========= =========
Unit value............................................................ $1.058660 $0.995163
========= =========
</TABLE>
See Notes to Financial Statements
3
<PAGE>
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
MULTI-SECTOR
MONEY MARKET GROWTH FIXED INCOME
SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ----------
<S> <C> <C> <C>
Investment income
Distributions.................................................... $ 982,207 $ 342,838 $ 1,284,827
Expenses
Mortality, expense risk and administrative charges............... 157,449 2,170,154 138,095
----------- ----------- ----------
Net investment income (loss)........................................ 824,758 (1,827,316) 1,146,732
----------- ----------- ----------
Net realized gain (loss) from share transactions.................... -- (127,873) 18,767
Net realized gain distribution from Fund............................ -- 11,409,998 104,945
Net unrealized appreciation (depreciation) on investment............ -- 63,176,153 (2,089,209)
----------- ----------- ----------
Net gain (loss) on investments...................................... -- 74,458,278 (1,965,497)
----------- ----------- ----------
Net increase (decrease) in net assets resulting from operations..... $ 824,758 $72,630,962 $ (818,765)
=========== =========== ==========
STRATEGIC
ALLOCATION INTERNATIONAL BALANCED
SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ----------
Investment income
Distributions.................................................... $ 736,394 $ -- $ 583,227
Expenses
Mortality, expense risk and administrative charges............... 309,722 425,434 184,043
----------- ----------- ----------
Net investment income (loss)........................................ 426,672 (425,434) 399,184
----------- ----------- ----------
Net realized gain (loss) from share transactions.................... (41,194) (52,504) 6,011
Net realized gain distribution from Fund............................ 2,776,286 10,074,498 814,962
Net unrealized appreciation (depreciation) on investment............ 4,003,067 2,276,436 2,783,483
----------- ----------- ----------
Net gain (loss) on investments...................................... 6,738,159 12,298,430 3,604,456
----------- ----------- ----------
Net increase (decrease) in net assets resulting from operations..... $ 7,164,831 $11,872,996 $4,003,640
=========== =========== ==========
ABERDEEN
REAL ESTATE STRATEGIC THEME NEW ASIA
SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ----------
Investment income
Distributions.................................................... $ 200,097 $ 4,366 $ 6,267
Expenses
Mortality, expense risk and administrative charges............... 32,577 44,756 10,002
----------- ----------- ----------
Net investment income (loss)........................................ 167,520 (40,390) (3,735)
----------- ----------- ----------
Net realized gain (loss) from share transactions.................... (25,938) 9,537 13,286
Net realized gain distribution from Fund............................ 4,891 468,250 --
Net unrealized appreciation (depreciation) on investment............ (1,192,311) 1,903,438 (44,106)
----------- ----------- ----------
Net gain (loss) on investments...................................... (1,213,358) 2,381,225 (30,820)
----------- ----------- ----------
Net increase (decrease) in net assets resulting from operations..... $(1,045,838) $ 2,340,835 $ (34,555)
=========== =========== ==========
SENECA
ENHANCED ENGEMANN MID-CAP
INDEX NIFTY FIFTY GROWTH
SUBACCOUNT SUBACCOUNT(1) SUBACCOUNT(2)
---------- ------------- -------------
Investment income
Distributions.................................................... $ 89,559 $ 676 $ 771
Expenses
Mortality, expense risk and administrative charges............... 55,576 4,388 2,272
----------- ----------- ----------
Net investment income (loss) ....................................... 33,983 (3,712) (1,501)
----------- ----------- ----------
Net realized gain (loss) from share transactions.................... (1,698) (2,426) (1,568)
Net realized gain distribution from Fund............................ 535,197 -- --
Net unrealized appreciation (depreciation) on investment............ 1,267,409 252,136 130,212
----------- ----------- ----------
Net gain (loss) on investments...................................... 1,800,908 249,710 128,644
----------- ----------- ----------
Net increase (decrease) in net assets resulting from operations..... $ 1,834,891 $ 245,998 $ 127,143
=========== =========== ==========
</TABLE>
(1) From inception March 3, 1998 to December 31, 1998
(2) From inception March 11, 1998 to December 31, 1998
See Notes to Financial Statements
4
<PAGE>
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED DECEMBER 31, 1998
(CONTINUED)
<TABLE>
<CAPTION>
GROWTH VALUE SCHAFER
AND INCOME EQUITY MID-CAP
SUBACCOUNT(1) SUBACCOUNT(2) SUBACCOUNT(1)
------------- ------------- -------------
<S> <C> <C> <C>
Investment income
Distributions.................................................... $ 12,489 $ 3,183 $ 2,642
Expenses
Mortality, expense risk and administrative charges............... 7,627 2,697 2,556
----------- ----------- ---------
Net investment income (loss)........................................ 4,862 486 86
----------- ----------- ---------
Net realized gain (loss) from share transactions.................... 594 (4,166) 10
Net realized gain distribution from Fund............................ -- -- --
Net unrealized appreciation (depreciation) on investment............ 352,421 75,187 (14,526)
----------- ----------- ---------
Net gain (loss) on investments...................................... 353,015 71,021 (14,516)
----------- ----------- ---------
Net increase (decrease) in net assets resulting from operations..... $ 357,877 $ 71,507 $(14,430)
=========== =========== =========
WANGER WANGER
U.S. INTERNATIONAL TEMPLETON
SMALL CAP SMALL CAP STOCK
SUBACCOUNT SUBACCOUNT SUBACCOUNT(3)
---------- ---------- -------------
Investment income
Distributions.................................................... $ 1,133,695 $ 93,297 $ --
Expenses
Mortality, expense risk and administrative charges............... 196,294 74,180 8
----------- ----------- --------
Net investment income (loss)........................................ 937,401 19,117 (8)
----------- ----------- --------
Net realized gain (loss) from share transactions.................... (5,625) 3,286 148
Net realized gain distribution from Fund............................ -- -- --
Net unrealized appreciation (depreciation) on investment............ 857,628 1,051,832 416
----------- ----------- --------
Net gain (loss) on investments...................................... 852,003 1,055,118 564
----------- ----------- --------
Net increase (decrease) in net assets resulting from operations..... $ 1,789,404 $ 1,074,235 $ 556
=========== =========== ========
TEMPLETON TEMPLETON
ASSET ALLOCATION INTERNATIONAL
SUBACCOUNT(3) SUBACCOUNT(4)
------------- -------------
Investment income
Distributions.................................................... $ -- $ --
Expenses
Mortality, expense risk and administrative charges............... 9 31
----------- -----------
Net investment income (loss)........................................ (9) (31)
----------- -----------
Net realized gain (loss) from share transactions.................... (12) 862
Net realized gain distribution from Fund............................ -- --
Net unrealized appreciation (depreciation) on investment............ 367 1,246
----------- -----------
Net gain (loss) on investments...................................... 355 2,108
----------- -----------
Net increase (decrease) in net assets resulting from operations..... $ 346 $ 2,077
=========== ===========
TEMPLETON
DEVELOPING MUTUAL SHARES
MARKETS INVESTMENTS
SUBACCOUNT(5) SUBACCOUNT(6)
------------- -------------
Investment income
Distributions.................................................... $ -- $ --
Expenses
Mortality, expense risk and administrative charges............... 5 33
----------- -----------
Net investment income (loss)........................................ (5) (33)
----------- -----------
Net realized gain (loss) from share transactions.................... 1,117 59
Net realized gain distribution from Fund............................ -- --
Net unrealized appreciation (depreciation) on investment............ 56 600
----------- -----------
Net gain (loss) on investments...................................... 1,173 659
----------- -----------
Net increase (decrease) in net assets resulting from operations..... $ 1,168 $ 626
=========== ===========
</TABLE>
(1) From inception March 3, 1998 to December 31, 1998
(2) From inception March 11, 1998 to December 31, 1998
(3) From inception December 1, 1998 to December 31, 1998
(4) From inception November 18, 1998 to December 31, 1998
(5) From inception November 11, 1998 to December 31, 1998
(6) From inception November 24, 1998 to December 31, 1998
See Notes to Financial Statements
5
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
MULTI-SECTOR
MONEY MARKET GROWTH FIXED INCOME
SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ----------
<S> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss)..................................... $ 824,758 $ (1,827,316) $ 1,146,732
Net realized gain (loss)......................................... -- 11,282,125 123,712
Net unrealized appreciation (depreciation)....................... -- 63,176,153 (2,089,209)
------------ ------------ ------------
Net increase (decrease) in net assets resulting from operations.. 824,758 72,630,962 (818,765)
------------ ------------ ------------
FROM ACCUMULATION UNIT TRANSACTIONS
Participant deposits............................................. 40,115,775 55,187,189 3,021,981
Participant transfers............................................ (21,256,952) 366,385 (1,554,114)
Participant withdrawals.......................................... (7,094,597) (34,006,494) (891,608)
------------ ------------ ------------
Net increase (decrease) in net assets resulting from participant
transactions.................................................. 11,764,226 21,547,080 576,259
------------ ------------ ------------
Net increase (decrease) in net assets............................ 12,588,984 94,178,042 (242,506)
NET ASSETS
Beginning of period.............................................. 16,627,281 236,698,650 16,572,087
------------ ------------ ------------
End of period.................................................... $ 29,216,265 $330,876,692 $ 16,329,581
============ ============ ============
STRATEGIC
ALLOCATION INTERNATIONAL BALANCED
SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ----------
FROM OPERATIONS
Net investment income (loss)..................................... $ 426,672 $ (425,434) $ 399,184
Net realized gain (loss)......................................... 2,735,092 10,021,994 820,973
Net unrealized appreciation (depreciation)....................... 4,003,067 2,276,436 2,783,483
------------ ------------ ------------
Net increase (decrease) in net assets resulting from operations.. 7,164,831 11,872,996 4,003,640
------------ ------------ ------------
FROM ACCUMULATION UNIT TRANSACTIONS
Participant deposits............................................. 6,376,125 10,365,754 4,954,718
Participant transfers............................................ (877,514) (165,682) 123,719
Participant withdrawals.......................................... (5,828,250) (5,751,632) (2,654,908)
------------ ------------ ------------
Net increase (decrease) in net assets resulting from participant
transactions.................................................. (329,639) 4,448,440 2,423,529
------------ ------------ ------------
Net increase (decrease) in net assets............................ 6,835,192 16,321,436 6,427,169
NET ASSETS
Beginning of period.............................................. 36,021,558 43,117,732 20,732,083
------------ ------------ ------------
End of period.................................................... $ 42,856,750 $ 59,439,168 $ 27,159,252
============ ============ ============
ABERDEEN
REAL ESTATE STRATEGIC THEME NEW ASIA
SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ----------
FROM OPERATIONS
Net investment income (loss)..................................... $ 167,520 $ (40,390) $ (3,735)
Net realized gain (loss)......................................... (21,047) 477,787 13,286
Net unrealized appreciation (depreciation)....................... (1,192,311) 1,903,438 (44,106)
------------ ------------ ------------
Net increase (decrease) in net assets resulting from operations.. (1,045,838) 2,340,835 (34,555)
------------ ------------ ------------
FROM ACCUMULATION UNIT TRANSACTIONS
Participant deposits............................................. 1,623,011 1,846,888 497,841
Participant transfers............................................ (313,564) 103,603 124,820
Participant withdrawals.......................................... (523,745) (701,416) (158,919)
------------ ------------ ------------
Net increase (decrease) in net assets resulting from participant
transactions.................................................. 785,702 1,249,075 463,742
------------ ------------ ------------
Net increase (decrease) in net assets............................ (260,136) 3,589,910 429,187
NET ASSETS
Beginning of period.............................................. 4,145,713 4,471,045 1,049,230
------------ ------------ ------------
End of period.................................................... $ 3,885,577 $ 8,060,955 $ 1,478,417
============ ============ ============
</TABLE>
See Notes to Financial Statements
6
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED DECEMBER 31, 1998
(CONTINUED)
<TABLE>
<CAPTION>
SENECA
ENHANCED ENGEMANN MID-CAP
INDEX NIFTY FIFTY GROWTH
SUBACCOUNT SUBACCOUNT(1) SUBACCOUNT(2)
---------- ------------- -------------
<S> <C> <C> <C>
FROM OPERATIONS
Net investment income (loss)..................................... $ 33,983 $ (3,712) $ (1,501)
Net realized gain (loss)......................................... 533,499 (2,426) (1,568)
Net unrealized appreciation (depreciation)....................... 1,267,409 252,136 130,212
----------- ----------- -----------
Net increase (decrease) in net assets resulting from operations.. 1,834,891 245,998 127,143
----------- ----------- -----------
FROM ACCUMULATION UNIT TRANSACTIONS
Participant deposits............................................. 2,291,221 526,600 384,143
Participant transfers............................................ 7,258,586 1,045,208 485,598
Participant withdrawals.......................................... (608,655) (75,799) (47,451)
----------- ----------- -----------
Net increase (decrease) in net assets resulting from participant
transactions.................................................. 8,941,152 1,496,009 822,290
----------- ----------- -----------
Net increase (decrease) in net assets............................ 10,776,043 1,742,007 949,433
NET ASSETS
Beginning of period.............................................. 1,951,008 0 0
----------- ----------- -----------
End of period.................................................... $12,727,051 $ 1,742,007 $ 949,433
=========== =========== ===========
GROWTH SCHAFER
AND INCOME VALUE EQUITY MID-CAP
SUBACCOUNT(1) SUBACCOUNT(2) SUBACCOUNT(1)
------------- ------------- -------------
FROM OPERATIONS
Net investment income (loss)..................................... $ 4,862 $ 486 $ 86
Net realized gain (loss)......................................... 594 (4,166) 10
Net unrealized appreciation (depreciation)....................... 352,421 75,187 (14,526)
----------- ----------- -----------
Net increase (decrease) in net assets resulting from operations.. 357,877 71,507 (14,430)
----------- ----------- -----------
FROM ACCUMULATION UNIT TRANSACTIONS
Participant deposits............................................. 891,760 349,399 538,439
Participant transfers............................................ 2,236,565 431,964 415,611
Participant withdrawals.......................................... (153,437) (36,050) (47,303)
----------- ----------- -----------
Net increase (decrease) in net assets resulting from participant
transactions.................................................. 2,974,888 745,313 906,747
----------- ----------- -----------
Net increase (decrease) in net assets............................ 3,332,765 816,820 892,317
NET ASSETS
Beginning of period.............................................. 0 0 0
----------- ----------- -----------
End of period.................................................... $ 3,332,765 $ 816,820 $ 892,317
=========== =========== ===========
WANGER WANGER
U.S. INTERNATIONAL TEMPLETON
SMALL CAP SMALL CAP STOCK
SUBACCOUNT SUBACCOUNT SUBACCOUNT(3)
---------- ---------- -------------
FROM OPERATIONS
Net investment income (loss)..................................... $ 937,401 $ 19,117 $ (8)
Net realized gain (loss)......................................... (5,625) 3,286 148
Net unrealized appreciation (depreciation)....................... 857,628 1,051,832 416
----------- ----------- -----------
Net increase (decrease) in net assets resulting from operations.. 1,789,404 1,074,235 556
----------- ----------- -----------
FROM ACCUMULATION UNIT TRANSACTIONS
Participant deposits............................................. 9,117,666 3,222,916 1,490
Participant transfers............................................ 6,575,005 1,456,920 25,903
Participant withdrawals.......................................... (2,592,905) (1,076,075) (557)
----------- ----------- -----------
Net increase (decrease) in net assets resulting from participant
transactions.................................................. 13,099,766 3,603,761 26,836
----------- ----------- -----------
Net increase (decrease) in net assets............................ 14,889,170 4,677,996 27,392
NET ASSETS
Beginning of period.............................................. 16,347,497 6,533,872 0
----------- ----------- -----------
End of period.................................................... $31,236,667 $11,211,868 $ 27,392
=========== =========== ===========
</TABLE>
(1) From inception March 3, 1998 to December 31, 1998
(2) From inception March 11, 1998 to December 31, 1998
(3) From inception December 1, 1998 to December 31, 1998
See Notes to Financial Statements
7
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED DECEMBER 31, 1998
(CONTINUED)
<TABLE>
<CAPTION>
TEMPLETON TEMPLETON
ASSET ALLOCATION INTERNATIONAL
SUBACCOUNT(3) SUBACCOUNT(4)
------------- -------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss)..................................... $ (9) $ (31)
Net realized gain (loss)......................................... (12) 862
Net unrealized appreciation (depreciation)....................... 367 1,246
-------- --------
Net increase (decrease) in net assets resulting from operations.. 346 2,077
-------- --------
FROM ACCUMULATION UNIT TRANSACTIONS
Participant deposits............................................. 2,271 4,687
Participant transfers............................................ 35,556 47,443
Participant withdrawals.......................................... (614) (739)
-------- --------
Net increase (decrease) in net assets resulting from participant
transactions.................................................. 37,213 51,391
-------- --------
Net increase (decrease) in net assets............................ 37,559 53,468
NET ASSETS
Beginning of period.............................................. 0 0
-------- --------
End of period.................................................... $ 37,559 $ 53,468
======== ========
TEMPLETON
DEVELOPING MUTUAL SHARES
MARKETS INVESTMENTS
SUBACCOUNT(5) SUBACCOUNT(6)
------------- -------------
FROM OPERATIONS
Net investment income (loss)..................................... $ (5) $ (33)
Net realized gain (loss)......................................... 1,117 59
Net unrealized appreciation (depreciation)....................... 56 600
-------- --------
Net increase (decrease) in net assets resulting from operations.. 1,168 626
-------- --------
FROM ACCUMULATION UNIT TRANSACTIONS
Participant deposits............................................. 1,665 4,558
Participant transfers............................................ 7,864 53,136
Participant withdrawals.......................................... (32) (4,549)
-------- --------
Net increase (decrease) in net assets resulting from participant
transactions.................................................. 9,497 53,145
-------- --------
Net increase (decrease) in net assets............................ 10,665 53,771
NET ASSETS
Beginning of period.............................................. 0 0
-------- --------
End of period.................................................... $ 10,665 $ 53,771
======== ========
</TABLE>
(3) From inception December 1, 1998 to December 31, 1998
(4) From inception November 18, 1998 to December 31, 1998
(5) From inception November 11, 1998 to December 31, 1998
(6) From inception November 24, 1998 to December 31, 1998
See Notes to Financial Statements
8
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
MULTI-SECTOR
MONEY MARKET GROWTH FIXED INCOME
SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ----------
<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
=========== ============ ===========
STRATEGIC
ALLOCATION INTERNATIONAL BALANCED
SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ----------
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
9
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED DECEMBER 31, 1997
(CONTINUED)
<TABLE>
<CAPTION>
ABERDEEN
REAL ESTATE STRATEGIC THEME NEW ASIA
SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ----------
<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
========== =========== ===========
WANGER
ENHANCED INTERNATIONAL WANGER U.S.
INDEX SMALL CAP SMALL CAP
SUBACCOUNT(1) SUBACCOUNT SUBACCOUNT
------------- ---------- ----------
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.............................................. 0 296,406 466,997
---------- ---------- -----------
End of period.................................................... $1,951,008 $6,533,872 $16,347,497
========== ========== ===========
</TABLE>
(1) From inception July 18, 1997 to December 31, 1997
See Notes to Financial Statements
10
<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 22
Subaccounts, that invest in a corresponding series (the "Series") of The Phoenix
Edge Series Fund, Wanger Advisors Trust and the Templeton Variable Products
Series Fund (the "Funds").
Each Series has distinct investment objectives. The Money Market Series seeks
to provide maximum current income consistent with capital preservation and
liquidity. The Growth Series seeks to achieve intermediate and long-term growth
of capital, with income as a secondary consideration. The Multi-Sector Fixed
Income Series seeks to provide long-term total return by investing in a
diversified portfolio of high yield and high quality fixed income securities.
The Strategic Allocation Series seeks to realize as high a level of total rate
of return over an extended period of time as is considered consistent with
prudent investment risk by investing in three market segments: stocks, bonds and
money market instruments. The International Series seeks as its investment
objective a high total return consistent with reasonable risk by investing
primarily in an internationally diversified portfolio of equity securities. The
Balanced Series seeks to provide reasonable income, long-term growth and
conservation of capital. The Real Estate Series seeks to achieve capital
appreciation and income with approximately equal emphasis through investments in
real estate investment trusts and companies that operate, manage, develop or
invest in real estate. The Strategic Theme Series seeks long-term appreciation
of capital by investing in securities that the adviser believes are well
positioned to benefit from cultural, demographic, regulatory, social or
technological changes worldwide. The Aberdeen New Asia Series seeks to provide
long-term capital appreciation by investing primarily in diversified equity
securities of issuers organized and principally operating in Asia, excluding
Japan. The Enhanced Index Series seeks high total return by investing in a
broadly diversified portfolio of equity securities of large and medium
capitalization companies within market sectors reflected in the Standard &
Poor's 500 Composite Stock Price Index. The Engemann Nifty Fifty Series seeks to
achieve long-term capital appreciation investing in approximately 50 different
securities which offer the potential for long-term growth of capital. The Seneca
Mid-Cap Growth Series seeks capital appreciation primarily through investments
in equity securities of companies that have the potential for above average
market appreciation. The Growth and Income Series seeks as its investment
objective, dividend growth, current income and capital appreciation by investing
in common stocks. The Value Equity Series seeks to achieve long-term capital
appreciation and income by investing in a diversified portfolio of common stocks
which meet certain quantitative standards that indicate above average financial
soundness and intrinsic value relative to price. The Schafer Mid-Cap Series
seeks to achieve long-term capital appreciation with current income as the
secondary investment objective by investing in common stocks of established
companies having a strong financial position and a low stock market valuation at
the time of purchase which are believed to offer the possibility of increase in
value. 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. The Wanger
International Small Cap Series invests in securities of non-U.S. companies with
a stock market capitalization of less than $1 billion. The Templeton Stock
Series is a capital growth common stock fund. The Templeton Asset Allocation
Series invests in stocks and debt obligations of companies and governments and
money market instruments seeking high total return. The Templeton International
Series invests in stocks and debt obligations of companies and governments
outside the United States. The Templeton Developing Markets Series seeks
long-term capital appreciation by investing in equity securities of issuers in
countries having developing markets. The Mutual Shares Investments Series is a
capital appreciation fund with income as a secondary objective. Policyowners
also may 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.
11
<PAGE>
PHOENIX HOME LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
NOTE 3--PURCHASES AND SALES OF SHARES OF THE FUNDS
Purchases and sales of shares of the Funds for the period ended December 31,
1998 aggregated the following:
<TABLE>
<CAPTION>
SUBACCOUNT PURCHASES SALES
- ---------- --------- -----
<S> <C> <C>
The Phoenix Edge Series Fund:
Money Market................................................................... $31,853,252 $19,256,778
Growth......................................................................... 49,284,935 18,102,090
Multi-Sector Fixed Income...................................................... 5,350,134 3,521,752
Strategic Allocation........................................................... 8,277,641 5,400,772
International.................................................................. 22,081,567 7,973,787
Balanced....................................................................... 5,741,504 2,100,013
Real Estate.................................................................... 2,362,768 1,406,089
Strategic Theme................................................................ 2,670,131 991,086
Aberdeen New Asia.............................................................. 1,098,420 638,124
Enhanced Index................................................................. 9,931,894 410,925
Engemann Nifty Fifty........................................................... 1,727,380 234,060
Seneca Mid-Cap Growth.......................................................... 899,775 78,430
Growth and Income.............................................................. 3,124,752 143,071
Value Equity .................................................................. 812,090 65,764
Schafer Mid-Cap................................................................ 956,377 48,994
Wanger Advisors Trust:
U.S. Small Cap................................................................. 15,711,241 1,664,671
International Small Cap........................................................ 4,491,053 865,300
Templeton Variable Products Series Fund:
Stock.......................................................................... 45,944 19,108
Asset Allocation............................................................... 37,827 614
International.................................................................. 75,110 23,719
Developing Markets............................................................. 30,632 21,135
Mutual Shares Investments...................................................... 67,242 14,097
</TABLE>
NOTE 4--PARTICIPANT ACCUMULATION UNIT TRANSACTIONS (IN UNITS)
<TABLE>
<CAPTION>
SUBACCOUNT
----------------------------------------------------------------------------------------
MONEY MULTI-SECTOR STRATEGIC
MARKET GROWTH FIXED INCOME ALLOCATION INTERNATIONAL BALANCED
------ ------ ------------ ---------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
FLEX EDGE & FLEX EDGE SUCCESS
Units outstanding, beginning of period 10,888,182 53,796,712 6,969,616 12,553,404 22,691,802 11,152,659
Participant deposits................. 25,232,325 10,943,361 1,612,375 1,983,152 4,321,346 1,820,359
Participant transfers................ (13,413,441) 21,924 (641,776) (310,963) (9,321) 703,668
Participant withdrawals.............. (3,942,355) (6,691,981) (794,000) (1,864,672) (2,401,968) (1,282,042)
----------- ---------- --------- ---------- ---------- ----------
Units outstanding, end of period..... 18,764,711 58,070,016 7,146,215 12,360,921 24,601,859 12,394,644
=========== ========== ========= ========== ========== ==========
MONEY MULTI-SECTOR STRATEGIC
MARKET GROWTH FIXED INCOME ALLOCATION INTERNATIONAL BALANCED
------ ------ ------------ ---------- ------------- --------
JOINT EDGE
Units outstanding, beginning of period 650,414 2,524,123 230,895 393,860 1,118,378 533,527
Participant deposits................. 1,247,784 930,424 109,413 131,317 304,285 133,364
Participant transfers................ (1,005,432) 64,060 23,533 11,609 33,078 1,554
Participant withdrawals.............. (211,736) (550,102) (44,856) (43,489) (195,917) (97,145)
----------- ---------- --------- ---------- ---------- ---------
Units outstanding, end of period..... 681,030 2,968,505 318,985 493,297 1,259,824 571,300
=========== ========== ========= ========== ========== =========
SENECA
STRATEGIC ABERDEEN ENHANCED ENGEMANN MID-CAP
REAL ESTATE THEME NEW ASIA INDEX NIFTY FIFTY GROWTH
----------- ----- -------- ----- ----------- ------
FLEX EDGE & FLEX EDGE SUCCESS
Units outstanding, beginning of period 2,502,410 3,525,204 1,458,554 1,799,793 0 0
Participant deposits................. 1,037,325 1,263,895 687,377 1,725,325 400,612 252,441
Participant transfers................ (280,388) 31,327 219,381 5,787,200 992,193 513,395
Participant withdrawals.............. (319,584) (450,102) (194,425) (458,191) (54,757) (26,335)
----------- ---------- --------- ---------- ---------- ---------
Units outstanding, end of period..... 2,939,763 4,370,324 2,170,887 8,854,127 1,338,048 739,501
=========== ========== ========= ========== ========== =========
</TABLE>
12
<PAGE>
PHOENIX HOME LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
SENECA
STRATEGIC ABERDEEN ENHANCED ENGEMANN MID-CAP
REAL ESTATE THEME NEW ASIA INDEX NIFTY FIFTY GROWTH
----------- ----- -------- ----- ----------- ------
<S> <C> <C> <C> <C> <C> <C>
JOINT EDGE
Units outstanding, beginning of period 121,350 319,957 107,352 30,998 0 0
Participant deposits................. 113,951 161,092 85,676 148,090 14,103 75,052
Participant transfers................ 13,592 56,807 (1,658) 142,233 39,696 26,849
Participant withdrawals.............. (42,871) (78,847) (34,499) (33,591) (3,255) (39,515)
------- ------- ------- ------- ------ -------
Units outstanding, end of period..... 206,022 459,009 156,871 287,730 50,544 62,386
======= ======= ======= ======= ====== =======
GROWTH VALUE SCHAFER WANGER WANGER TEMPLETON
AND INCOME EQUITY MID-CAP U.S. INTERNATIONAL STOCK
---------- ------ ------- ---- ------------- -----
FLEX EDGE & FLEX EDGE SUCCESS
Units outstanding, beginning of period 0 0 0 11,757,123 6,155,973 0
Participant deposits................. 588,751 193,279 400,967 5,947,597 2,569,304 1,584
Participant transfers................ 2,152,823 523,931 607,611 4,569,528 1,144,508 26,379
Participant withdrawals.............. (117,030) (22,598) (34,699) (1,637,206) (825,549) (436)
--------- ------- ------- ---------- --------- ------
Units outstanding, end of period..... 2,624,544 694,612 973,879 20,637,042 9,044,236 27,527
========= ======= ======= ========== ========= ======
GROWTH VALUE SCHAFER WANGER WANGER TEMPLETON
AND INCOME EQUITY MID-CAP U.S. INTERNATIONAL STOCK
---------- ------ ------- ---- ------------- -----
JOINT EDGE
Units outstanding, beginning of period 0 0 0 503,845 351,440 0
Participant deposits................. 73,871 31,173 34,931 509,418 270,057 0
Participant transfers................ 104,626 32,233 16,146 278,250 111,481 7
Participant withdrawals.............. (18,133) (10,012) (11,495) (201,106) (101,827) (0)
--------- ------- ------- ---------- --------- ------
Units outstanding, end of period..... 160,364 53,394 39,582 1,090,407 631,151 7
========= ======= ======= ========== ========= ======
TEMPLETON TEMPLETON MUTUAL
ASSET TEMPLETON DEVELOPING SHARES
ALLOCATION INTERNATIONAL MARKETS INVESTMENTS
---------- ------------- ------- -----------
FLEX EDGE & FLEX EDGE SUCCESS
Units outstanding, beginning of period 0 0 0 0
Participant deposits................. 2,343 4,538 1,493 4,698
Participant transfers................ 35,402 44,851 8,537 53,945
Participant withdrawals.............. (620) (617) (31) (4,611)
------ ------ ----- ------
Units outstanding, end of period..... 37,125 48,772 9,999 54,032
====== ====== ===== ======
TEMPLETON TEMPLETON MUTUAL
ASSET TEMPLETON DEVELOPING SHARES
ALLOCATION INTERNATIONAL MARKETS INVESTMENTS
---------- ------------- ------- -----------
JOINT EDGE
Units outstanding, beginning of period 0 0 0 0
Participant deposits................. 0 0 75 0
Participant transfers................ 121 2,719 0 0
Participant withdrawals.............. (17) (76) (0) (0)
------ ------ ----- ------
Units outstanding, end of period..... 104 2,643 75 0
====== ====== ===== ======
</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.
13
<PAGE>
PHOENIX HOME LIFE VARIABLE UNIVERSAL LIFE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
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 Subaccounts. 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 $30,323,330 during the year ended December 31, 1998. 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.
14
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[PricewaterhouseCoopers 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 each of the subaccounts: Money
Market, Growth, Multi-Sector Fixed Income, Strategic Allocation, International,
Balanced, Real Estate, Strategic Theme, Aberdeen New Asia, Enhanced Index,
Engemann Nifty Fifty, Seneca Mid-Cap Growth, Growth and Income, Value Equity,
Schafer Mid-Cap, Wanger U.S. Small Cap, Wanger International Small Cap,
Templeton Stock, Templeton Asset Allocation, Templeton International, Templeton
Developing Markets and Mutual Shares Investments (constituting the Phoenix Home
Life Variable Universal Life Account, hereafter referred to as the "Account") at
December 31, 1998, 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 audit. We conducted our
audit 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
audit, which included confirmation of investments at December 31, 1998 by
correspondence with fund custodians or transfer agents, provide a reasonable
basis for the opinion expressed above.
[PricewaterhouseCoopers signature]
PricewaterhouseCoopers LLP
Hartford, Connecticut
February 17, 1999
15
<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.
40 Water Street
Boston, Massachusetts 02109
State Street Bank and Trust
P.O. Box 351
Boston, Massachusetts 02101
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
One Financial Plaza
Hartford, Connecticut 06103
