ANNUAL REPORTS
PHOENIX
THE BIG EDGE CHOICE(R)
PHL VARIABLE
ACCUMULATION ACCOUNT
December 31, 1997
[logo]Phoenix
PHL Variable Insurance Company
<PAGE>
TABLE OF CONTENTS
PHL VARIABLE ACCUMULATION ACCOUNT
<TABLE>
<S> <C>
Money Market Sub-Account
Statement of Assets and Liabilities ......... 2
Statement of Operations ..................... 4
Statement of Changes in Net Assets .......... 6
Growth Sub-Account
Statement of Assets and Liabilities ......... 2
Statement of Operations ..................... 4
Statement of Changes in Net Assets .......... 6
Multi-Sector Fixed Income Sub-Account
Statement of Assets and Liabilities ......... 2
Statement of Operations ..................... 4
Statement of Changes in Net Assets .......... 6
Strategic Allocation Sub-Account
Statement of Assets and Liabilities ......... 2
Statement of Operations ..................... 4
Statement of Changes in Net Assets .......... 6
International Sub-Account
Statement of Assets and Liabilities ......... 2
Statement of Operations ..................... 4
Statement of Changes in Net Assets .......... 6
Balanced Sub-Account
Statement of Assets and Liabilities ......... 2
Statement of Operations ..................... 4
Statement of Changes in Net Assets .......... 6
Real Estate Sub-Account
Statement of Assets and Liabilities ......... 2
Statement of Operations ..................... 4
Statement of Changes in Net Assets .......... 6
Strategic Theme Sub-Account
Statement of Assets and Liabilities ......... 2
Statement of Operations ..................... 4
Statement of Changes in Net Assets .......... 6
</TABLE>
<TABLE>
<S> <C>
Aberdeen New Asia Sub-Account
Statement of Assets and Liabilities ......... 2
Statement of Operations ..................... 4
Statement of Changes in Net Assets .......... 6
Enhanced Index Sub-Account
Statement of Assets and Liabilities ......... 3
Statement of Operations ..................... 5
Statement of Changes in Net Assets .......... 7
Wanger International Small Cap Sub-Account
Statement of Assets and Liabilities ......... 3
Statement of Operations ..................... 5
Statement of Changes in Net Assets .......... 7
Wanger U.S. Small Cap Sub-Account
Statement of Assets and Liabilities ......... 3
Statement of Operations ..................... 5
Statement of Changes in Net Assets .......... 7
Templeton Stock Sub-Account
Statement of Assets and Liabilities ......... 3
Statement of Operations ..................... 5
Statement of Changes in Net Assets .......... 7
Templeton Asset Allocation Sub-Account
Statement of Assets and Liabilities ......... 3
Statement of Operations ..................... 5
Statement of Changes in Net Assets .......... 7
Templeton International Sub-Account
Statement of Assets and Liabilities ......... 3
Statement of Operations ..................... 5
Statement of Changes in Net Assets .......... 7
Templeton Developing Markets Sub-Account
Statement of Assets and Liabilities ......... 3
Statement of Operations ..................... 5
Statement of Changes in Net Assets .......... 7
Notes to Financial Statements ................ 10
</TABLE>
<PAGE>
This annual report for the PHL
Variable Accumulation Account
for the period ended December 31, 1997
contains the financial statements for the
Account's various annuity contracts.
<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 ........................................... $34,973,345 $114,046,318 $37,679,445
=========== ============ ===========
Investment in The Phoenix Edge Series Fund, at market ......... $34,973,346 $111,911,612 $37,379,700
----------- ------------ -----------
Total assets ................................................. 34,973,346 111,911,612 37,379,700
Liabilities
Accrued expenses to related party ............................. 39,021 125,357 41,358
----------- ------------ -----------
Net assets ..................................................... $34,934,325 $111,786,255 $37,338,342
=========== ============ ===========
Accumulation units outstanding ................................. 32,019,323 77,819,024 29,244,694
=========== ============ ===========
Unit value ..................................................... $ 1.091039 $ 1.436490 $ 1.276756
=========== ============ ===========
Strategic
Allocation International Balanced
Sub-Account Sub-Account Sub-Account
----------- ----------- -----------
Assets
Investments at cost ........................................... $30,150,355 $ 9,403,184 $13,688,463
=========== ============ ===========
Investment in The Phoenix Edge Series Fund, at market ......... $29,513,910 $ 9,271,259 $13,338,670
----------- ------------ -----------
Total assets ................................................. 29,513,910 9,271,259 13,338,670
Liabilities
Accrued expenses to related party ............................. 32,604 10,830 15,591
----------- ------------ -----------
Net assets ..................................................... $29,481,306 $ 9,260,429 $13,323,079
=========== ============ ===========
Accumulation units outstanding ................................. 22,084,578 7,089,271 10,023,529
=========== ============ ===========
Unit value ..................................................... $ 1.334927 $ 1.306260 $ 1.329181
=========== ============ ===========
Aberdeen
Real Estate Strategic Theme New Asia
Sub-Account Sub-Account Sub-Account
----------- ----------- -----------
Assets
Investments at cost ........................................... $11,606,088 $12,745,792 $ 3,469,019
============ ============ ============
Investment in The Phoenix Edge Series Fund, at market ......... $12,860,111 $12,688,144 $ 2,433,232
------------ ------------ ------------
Total assets ................................................. 12,860,111 12,688,144 2,433,232
Liabilities
Accrued expenses to related party ............................. 14,362 14,130 2,649
------------ ------------ ------------
Net assets ..................................................... $12,845,749 $12,674,014 $ 2,430,583
============ ============ ============
Accumulation units outstanding ................................. 7,736,970 10,168,688 3,654,619
============ ============ ============
Unit value ..................................................... $ 1.660307 $ 1.246377 $ 0.665071
============ ============ ============
</TABLE>
See Notes to Financial Statements
2
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1997
(Continued)
<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 ..................................................... $ 4,064,121 $28,526,326 $ 48,244,895
=============== =========== ============
Investment in The Phoenix Edge Series Fund, at market ................... $ 4,124,836 -- --
Investment in Wangers Advisors Trust, at market ......................... -- $28,078,035 $ 61,519,860
--------------- ----------- ------------
Total assets ........................................................... 4,124,836 28,078,035 61,519,860
Liabilities
Accrued expenses to related party ....................................... 4,159 32,817 69,247
--------------- ----------- ------------
Net assets ............................................................... $ 4,120,677 $28,045,218 $ 61,450,613
=============== =========== ============
Accumulation units outstanding ........................................... 3,958,413 20,360,563 34,965,994
=============== =========== ============
Unit value ............................................................... $ 1.040992 $ 1.377428 $ 1.757439
=============== =========== ============
Templeton Templeton
Stock Asset Allocation
Sub-Account Sub-Account
--------------- ----------
Assets
Investments at cost ..................................................... $ 6,576,487 $5,053,505
=============== ===========
Investment in Templeton Variable Products Series Fund, at market ........ $ 6,375,658 $4,927,468
--------------- -----------
Total assets ........................................................... 6,375,658 4,927,468
Liabilities
Accrued expenses to related party ....................................... 7,001 5,481
--------------- -----------
Net assets ............................................................... $ 6,368,657 $4,921,987
=============== ===========
Accumulation units outstanding ........................................... 6,099,799 4,622,079
=============== ===========
Unit value ............................................................... $ 1.044077 $ 1.064886
=============== ===========
Templeton Templeton
International Developing Markets
Sub-Account Sub-Account
--------------- ----------
Assets
Investments at cost ..................................................... $ 4,488,062 $2,940,375
=============== ===========
Investment in Templeton Variable Products Series Fund, at market ........ $ 4,382,855 $2,172,437
--------------- -----------
Total assets ........................................................... 4,382,855 2,172,437
Liabilities
Accrued expenses to related party ....................................... 4,787 2,406
--------------- -----------
Net assets ............................................................... $ 4,378,068 $2,170,031
=============== ===========
Accumulation units outstanding ........................................... 4,072,117 3,274,727
=============== ===========
Unit value ............................................................... $ 1.075133 $ 0.662660
=============== ===========
</TABLE>
See Notes to Financial Statements
3
<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 .......................................................... $1,245,489 $ 486,351 $1,898,021
Expenses
Mortality, expense risk and administrative charges ..................... 338,151 1,116,736 330,057
---------- ----------- ----------
Net investment income (loss) ............................................ 907,338 (630,385) 1,567,964
---------- ----------- ----------
Net realized loss from share transactions ............................... (11) (24,605) (12,941)
Net realized gain distribution from Fund ................................ -- 16,340,543 857,375
Net unrealized appreciation (depreciation) on investment ................ 1 (1,781,965) (162,539)
---------- ----------- ----------
Net gain (loss) on investments .......................................... (10) 14,533,973 681,895
---------- ----------- ----------
Net increase in net assets resulting from operations .................... $ 907,328 $13,903,588 $2,249,859
========== =========== ==========
Strategic
Allocation International Balanced
Sub-Account Sub-Account Sub-Account
---------- ----------- ----------
Investment income
Distributions .......................................................... $ 486,850 $ 69,646 $ 298,910
Expenses
Mortality, expense risk and administrative charges ..................... 295,475 90,241 129,442
----------- ------------ -----------
Net investment income (loss) ............................................ 191,375 (20,595) 169,468
----------- ------------ -----------
Net realized gain (loss) from share transactions ........................ 17,492 764 (9,031)
Net realized gain distribution from Fund ................................ 3,559,520 820,452 1,383,267
Net unrealized depreciation on investment ............................... (230,816) (256,669) (214,179)
----------- ------------ -----------
Net gain on investments ................................................. 3,346,196 564,547 1,160,057
----------- ------------ -----------
Net increase in net assets resulting from operations .................... $3,537,571 $ 543,952 $1,329,525
=========== ============ ===========
Aberdeen
Real Estate Strategic Theme New Asia
Sub-Account Sub-Account Sub-Account
---------- ----------- -----------
Investment income
Distributions .......................................................... $ 274,998 $ 36,499 $ 95,020
Expenses
Mortality, expense risk and administrative charges ..................... 101,238 118,766 31,144
----------- ------------ -----------
Net investment income (loss) ............................................ 173,760 (82,267) 63,876
----------- ------------ -----------
Net realized gain (loss) from share transactions ........................ 23 (18,155) (23,903)
Net realized gain distribution from Fund ................................ 426,393 1,461,092 1,339
Net unrealized appreciation (depreciation) on investment ................ 954,191 (205,450) (1,037,281)
----------- ------------ -----------
Net gain (loss) on investments .......................................... 1,380,607 1,237,487 (1,059,845)
----------- ------------ -----------
Net increase (decrease) in net assets resulting from operations ......... $1,554,367 $ 1,155,220 $ (995,969)
=========== ============ ===========
</TABLE>
See Notes to Financial Statements
4
<PAGE>
STATEMENT OF OPERATIONS
For the period ended Decemer 31, 1997
(Continued)
<TABLE>
<CAPTION>
Wanger Wanger
Enhanced International U.S.
Index Small Cap Small Cap
Sub-Account(1) Sub-Account Sub-Account
------------------ ------------------ --------------
<S> <C> <C> <C>
Investment income
Distributions .......................................................... $ 19,092 $ 444,004 $ 661,738
Expenses
Mortality, expense risk and administrative charges ..................... 10,646 332,607 573,294
---------------- ------------ -----------
Net investment income ................................................... 8,446 111,397 88,444
---------------- ------------ -----------
Net realized gain (loss) from share transactions ........................ (11,455) 2,114 8,063
Net realized gain distribution from Fund ................................ 17,968 -- --
Net unrealized appreciation (depreciation) on investment ................ 60,714 (1,519,831) 10,309,844
---------------- ------------ -----------
Net gain (loss) on investments .......................................... 67,227 (1,517,717) 10,317,907
---------------- ------------ -----------
Net increase (decrease) in net assets resulting from operations ......... $ 75,673 $(1,406,320) $10,406,351
================ ============ ===========
Templeton Templeton
Stock Asset Allocation
Sub-Account(2) Sub-Account(3)
---------------- ----------------
Investment income
Distributions .......................................................... $ -- $ --
Expenses
Mortality, expense risk and administrative charges ..................... 26,216 21,060
---------------- ------------
Net investment loss ..................................................... (26,216) (21,060)
---------------- ------------
Net realized gain (loss) from share transactions ........................ 121 (615)
Net unrealized depreciation on investment ............................... (200,829) (126,037)
---------------- ------------
Net loss on investments ................................................. (200,708) (126,652)
---------------- ------------
Net decrease in net assets resulting from operations .................... $ (226,924) $ (147,712)
================ ============
Templeton Templeton
International Developing Markets
Sub-Account(2) Sub-Account(2)
---------------- ----------------
Investment income
Distributions .......................................................... $ -- $ --
Expenses
Mortality, expense risk and administrative charges ..................... 17,298 11,121
---------------- ------------
Net investment loss ..................................................... (17,298) (11,121)
---------------- ------------
Net realized gain (loss) from share transactions ........................ 2,484 (12,846)
Net unrealized depreciation on investment ............................... (105,208) (767,938)
---------------- ------------
Net loss on investments ................................................. (102,724) (780,784)
---------------- ------------
Net decrease in net assets resulting from operations .................... $ (120,022) $ (791,905)
================ ============
</TABLE>
(1)From inception July 22, 1997 to December 31, 1997
(2)From inception May 5, 1997 to December 31, 1997
(3)From inception May 6, 1997 to December 31, 1997
See Notes to Financial Statements
5
<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) ............................................ $ 907,338 $ (630,385) $ 1,567,964
Net realized gain (loss) ................................................ (11) 16,315,938 844,434
Net unrealized appreciation (depreciation) .............................. 1 (1,781,965) (162,539)
------------ ------------ -----------
Net increase in net assets resulting from operations .................... 907,328 13,903,588 2,249,859
------------ ------------ -----------
From accumulation unit transactions
Participant deposits .................................................... 129,791,265 19,020,238 6,621,512
Participant transfers ................................................... (118,052,959) 30,883,327 14,037,050
Participant withdrawals ................................................. (994,507) (2,970,576) (1,026,256)
-------------- ------------ -----------
Net increase in net assets resulting from participant transactions ...... 10,743,799 46,932,989 19,632,306
-------------- ------------ -----------
Net increase in net assets .............................................. 11,651,127 60,836,577 21,882,165
Net assets
Beginning of period ..................................................... 23,283,198 50,949,678 15,456,177
-------------- ------------ -----------
End of period ........................................................... $ 34,934,325 $111,786,255 $37,338,342
============== ============ ============
Strategic
Allocation International Balanced
Sub-Account Sub-Account Sub-Account
------------- ------------ ------------
From operations
Net investment income (loss) ............................................ $ 191,375 $ (20,595) $ 169,468
Net realized gain ....................................................... 3,577,012 821,216 1,374,236
Net unrealized depreciation ............................................. (230,816) (256,669) (214,179)
-------------- ------------- ------------
Net increase in net assets resulting from operations .................... 3,537,571 543,952 1,329,525
-------------- ------------- ------------
From accumulation unit transactions
Participant deposits .................................................... 4,491,372 1,958,885 3,065,921
Participant transfers ................................................... 7,178,160 3,245,739 3,096,312
Participant withdrawals ................................................. (575,990) (145,413) (584,926)
-------------- ------------- ------------
Net increase in net assets resulting from participant transactions ...... 11,093,542 5,059,211 5,577,307
-------------- ------------- ------------
Net increase in net assets .............................................. 14,631,113 5,603,163 6,906,832
Net assets
Beginning of period ..................................................... 14,850,193 3,657,266 6,416,247
-------------- ------------- ------------
End of period ........................................................... $ 29,481,306 $ 9,260,429 $13,323,079
============== ============= ============
Aberdeen
Real Estate Strategic Theme New Asia
Sub-Account Sub-Account Sub-Account
------------- ------------ ------------
From operations
Net investment income (loss) ............................................ $ 173,760 $ (82,267) $ 63,876
Net realized gain (loss) ................................................ 426,416 1,442,937 (22,564)
Net unrealized appreciation (depreciation) .............................. 954,191 (205,450) (1,037,281)
-------------- ------------- -------------
Net increase (decrease) in net assets resulting from operations ......... 1,554,367 1,155,220 (995,969)
-------------- ------------- -------------
From accumulation unit transactions
Participant deposits .................................................... 2,913,014 2,055,321 979,395
Participant transfers ................................................... 6,386,122 5,362,519 1,374,336
Participant withdrawals ................................................. (135,526) (269,975) (57,020)
-------------- ------------- -------------
Net increase in net assets resulting from participant transactions ...... 9,163,610 7,147,865 2,296,711
-------------- ------------- -------------
Net increase in net assets .............................................. 10,717,977 8,303,085 1,300,742
Net assets
Beginning of period ..................................................... 2,127,772 4,370,929 1,129,841
-------------- ------------- -------------
End of period ........................................................... $ 12,845,749 $ 12,674,014 $ 2,430,583
============== ============= =============
</TABLE>
See Notes to Financial Statements
6
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the period ended December 31, 1997
(Continued)
<TABLE>
<CAPTION>
Wanger Wanger
Enhanced International U.S.
Index Small Cap Small Cap
Sub-Account(1) Sub-Account Sub-Account
------------------ ---------------- ---------------
<S> <C> <C> <C>
From operations
Net investment income ................................................... $ 8,446 $ 111,397 $ 88,444
Net realized gain ....................................................... 6,513 2,114 8,063
Net unrealized appreciation (depreciation) .............................. 60,714 (1,519,831) 10,309,844
---------------- ------------ ------------
Net increase (decrease) in net assets resulting from operations ......... 75,673 (1,406,320) 10,406,351
---------------- ------------ ------------
From accumulation unit transactions
Participant deposits .................................................... 1,672,794 6,103,151 9,172,386
Participant transfers ................................................... 2,390,678 10,427,408 20,534,319
Participant withdrawals ................................................. (18,468) (1,015,981) (1,728,149)
---------------- ------------ ------------
Net increase in net assets resulting from participant transactions ...... 4,045,004 15,514,578 27,978,556
---------------- ------------ ------------
Net increase in net assets .............................................. 4,120,677 14,108,258 38,384,907
Net assets
Beginning of period ..................................................... -- 13,936,960 23,065,706
---------------- ------------ ------------
End of period ........................................................... $ 4,120,677 $28,045,218 $ 61,450,613
================ ============ ============
Templeton Templeton
Stock Asset Allocation
Sub-Account(2) Sub-Account(3)
---------------- ------------------
From operations
Net investment loss ..................................................... $ (26,216) $ (21,060)
Net realized gain (loss) ................................................ 121 (615)
Net unrealized depreciation ............................................. (200,829) (126,037)
---------------- ------------
Net decrease in net assets resulting from operations .................... (226,924) (147,712)
---------------- ------------
From accumulation unit transactions
Participant deposits .................................................... 2,039,079 2,964,700
Participant transfers ................................................... 4,594,725 2,135,147
Participant withdrawals ................................................. (38,223) (30,148)
---------------- ------------
Net increase in net assets resulting from participant transactions ...... 6,595,581 5,069,699
---------------- ------------
Net increase in net assets .............................................. 6,368,657 4,921,987
Net assets
Beginning of period ..................................................... -- --
---------------- ------------
End of period ........................................................... $ 6,368,657 $ 4,921,987
================ ============
Templeton Templeton
International Developing Markets
Sub-Account(2) Sub-Account(2)
---------------- ----------------
From operations
Net investment loss ..................................................... $ (17,298) $ (11,121)
Net realized gain (loss) ................................................ 2,484 (12,846)
Net unrealized depreciation ............................................. (105,208) (767,938)
---------------- -------------
Net decrease in net assets resulting from operations .................... (120,022) (791,905)
---------------- -------------
From accumulation unit transactions
Participant deposits .................................................... 2,136,967 1,308,608
Participant transfers ................................................... 2,385,768 1,662,130
Participant withdrawals ................................................. (24,645) (8,802)
---------------- -------------
Net increase in net assets resulting from participant transactions ...... 4,498,090 2,961,936
---------------- -------------
Net increase in net assets .............................................. 4,378,068 2,170,031
Net assets
Beginning of period ..................................................... -- --
---------------- -------------
End of period ........................................................... $ 4,378,068 $ 2,170,031
================ =============
</TABLE>
(1)From inception July 22, 1997 to December 31, 1997
(2)From inception May 5, 1997 to December 31, 1997
(3)From inception May 6, 1997 to December 31, 1997
See Notes to Financial Statements
7
<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 (loss) ............................................ $ 448,990 $ (51,201) $ 473,276
Net realized gain ....................................................... -- 3,220,291 445,349
Net unrealized depreciation ............................................. -- (104,167) (136,643)
----------- ---------------- --------------
Net increase in net assets resulting from operations .................... 448,990 3,064,923 781,982
----------- ---------------- --------------
From accumulation unit transactions
Participant deposits .................................................... 100,807,056 16,137,985 3,658,318
Participant transfers ................................................... (83,156,951) 28,719,551 10,819,170
Participant withdrawals ................................................. (797,035) (261,356) (138,991)
------------ ---------------- --------------
Net increase in net assets resulting from participant transactions ...... 16,853,070 44,596,180 14,338,497
------------ ---------------- --------------
Net increase in net assets .............................................. 17,302,060 47,661,103 15,120,479
Net assets
Beginning of period ..................................................... 5,981,138 3,288,575 335,698
------------ ---------------- --------------
End of period ........................................................... $23,283,198 $50,949,678 $15,456,177
============ ================ ==============
Strategic
Allocation International Balanced
Sub-Account Sub-Account Sub-Account
----------- --------------- -------------
From operations
Net investment income ................................................... $ 81,294 $ 23,302 $ 60,499
Net realized gain ....................................................... 855,410 77,403 464,572
Net unrealized appreciation (depreciation) .............................. (280,377) 123,310 (134,164)
------------ ---------------- --------------
Net increase in net assets resulting from operations .................... 656,327 224,015 390,907
------------ ---------------- --------------
From accumulation unit transactions
Participant deposits .................................................... 3,603,086 1,016,275 1,688,276
Participant transfers ................................................... 7,602,197 2,297,094 3,646,583
Participant withdrawals ................................................. (52,881) (14,382) (62,505)
------------ ---------------- --------------
Net increase in net assets resulting from participant transactions ...... 11,152,402 3,298,987 5,272,354
------------ ---------------- --------------
Net increase in net assets .............................................. 11,808,729 3,523,002 5,663,261
Net assets
Beginning of period ..................................................... 3,041,464 134,264 752,986
------------ ---------------- --------------
End of period ........................................................... $14,850,193 $ 3,657,266 $ 6,416,247
============ ================ ==============
Aberdeen
Real Estate Strategic Theme New Asia
Sub-Account Sub-Account(1) Sub-Account(2 )
----------- --------------- --------------
From operations
Net investment income (loss) ............................................ $ 25,006 $ (11,691) $ 3,508
Net realized gain (loss) ................................................ 24,120 12,195 (2,679)
Net unrealized appreciation ............................................. 299,093 147,802 1,494
------------ ---------------- ---------------
Net increase in net assets resulting from operations .................... 348,219 148,306 2,323
------------ ---------------- ---------------
From accumulation unit transactions
Participant deposits .................................................... 537,771 1,162,846 190,675
Participant transfers ................................................... 1,009,485 3,078,265 937,753
Participant withdrawals ................................................. (5,358) (18,488) (910)
------------ ---------------- ---------------
Net increase in net assets resulting from participant transactions ...... 1,541,898 4,222,623 1,127,518
------------ ---------------- ---------------
Net increase in net assets .............................................. 1,890,117 4,370,929 1,129,841
Net assets
Beginning of period ..................................................... 237,655 -- --
------------ ---------------- ---------------
End of period ........................................................... $ 2,127,772 $ 4,370,929 $ 1,129,841
============ ================ ===============
</TABLE>
(1)From inception February 15, 1996 to December 31, 1996
(2)From inception September 19, 1996 to December 31, 1996
See Notes to Financial Statements
8
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the period ended December 31, 1996
(Continued)
<TABLE>
<CAPTION>
Wanger Wanger
International U.S.
Small Cap Small Cap
Sub-Account Sub-Account
--------------- --------------
<S> <C> <C>
From operations
Net investment loss ..................................................... $ (84,060) $ (125,132)
Net realized gain (loss) ................................................ (7,606) 2,035
Net unrealized appreciation ............................................. 1,063,766 2,984,536
----------- -----------
Net increase in net assets resulting from operations .................... 972,100 2,861,439
----------- -----------
From accumulation unit transactions
Participant deposits .................................................... 4,661,212 5,084,461
Participant transfers ................................................... 8,094,139 13,945,437
Participant withdrawals ................................................. (70,544) (74,992)
----------- -----------
Net increase in net assets resulting from participant transactions ...... 12,684,807 18,954,906
----------- -----------
Net increase in net assets .............................................. 13,656,907 21,816,345
Net assets
Beginning of period ..................................................... 280,053 1,249,361
----------- -----------
End of period ........................................................... $13,936,960 $23,065,706
=========== ===========
</TABLE>
See Notes to Financial Statements
9
<PAGE>
PHL VARIABLE ACCUMULATION ACCOUNT
NOTES TO FINANCIAL STATEMENTS
Note 1--Organization
PHL Variable Accumulation Account (the "Account") is a separate investment
account of PHL Variable Insurance Company (PHL Variable). The Account is
organized as a unit investment trust and currently consists of sixteen
Sub-Accounts, and invests in corresponding series of The Phoenix Edge Series
Fund, Wanger Advisors Trust and the Templeton Variable Products Series Fund
(the "Funds"). The Account is offered as The Big Edge Choice to individuals
(VA4).
Each Series has distinct investment objectives. The Money Market Series is
a pooled 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. The
Templeton Stock Fund invests primarily in common stocks issued by companies,
large and small, in various nations throughout the world, the Templeton Asset
Allocation Fund invests in stocks of companies in any nation, debt obligations
of companies and governments of any nation, and money market instruments, the
Templeton International Fund invests in stocks and debt obligations of
companies and governments outside the United States, and the Templeton
Developing Markets Fund invests primarily in equity securities of issuers in
countries having developing markets. Contract owners may also direct the
allocation of their investments between the Account and the Guaranteed Interest
Account of the general account of PHL Variable through participant transfers.
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 PHL Variable 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 .......................... $59,319,372 $47,653,079
Growth ................................ 64,028,560 1,317,675
Multi-Sector Fixed Income ............. 25,926,738 3,843,969
Strategic Allocation .................. 16,527,484 1,667,324
International ......................... 7,223,324 1,357,413
Balanced .............................. 8,271,880 1,133,483
Real Estate ........................... 10,491,621 715,566
Strategic Theme ....................... 9,248,006 713,531
Aberdeen New Asia ..................... 4,136,551 1,773,084
Enhanced Index ........................ 4,241,748 166,172
Wanger Advisors Trust:
International Small Cap ............... 17,971,146 2,327,346
U.S. Small Cap ........................ 29,926,534 1,813,775
Templeton Variable Products Series Fund:
Stock ................................. 6,700,544 124,178
Asset Allocation ...................... 5,119,234 65,115
International ......................... 4,929,691 444,113
Developing Markets .................... 3,087,876 134,655
</TABLE>
10
<PAGE>
PHL VARIABLE ACCUMULATION ACCOUNT
NOTES TO FINANCIAL STATEMENTS
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>
VA4
Units outstanding, beginning of period . 22,142,319 42,365,475 13,251,869 13,248,885 3,094,533 5,615,835
Participant deposits ................... 121,050,392 14,236,566 5,397,535 3,630,810 1,546,058 2,395,837
Participant transfers .................. (110,248,527) 23,428,243 11,448,849 5,665,807 2,563,105 2,484,161
Participant withdrawals ................ (924,861) (2,211,260) (853,559) (460,924) (114,425) (472,304
------------ ---------- ---------- ---------- --------- ---------
Units outstanding, end of period ....... 32,019,323 77,819,024 29,244,694 22,084,578 7,089,271 10,023,529
============ ========== ========== ========== ========= ==========
</TABLE>
<TABLE>
<CAPTION>
Wanger
Strategic Aberdeen Enhanced International
Real Estate Theme New Asia Index Small Cap
------------- ------------- ------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Units outstanding, beginning of period ......... 1,543,156 4,053,646 1,132,687 -- 9,834,236
Participant deposits ........................... 1,964,393 1,772,054 1,113,053 1,636,488 4,131,765
Participant transfers .......................... 4,316,625 4,568,384 1,471,124 2,339,793 7,065,542
Participant withdrawals ........................ (87,204) (225,396) (62,245) (17,868) (670,980)
--------- --------- --------- --------- ---------
Units outstanding, end of period ............... 7,736,970 10,168,688 3,654,619 3,958,413 20,360,563
========= ========== ========= ========= ==========
</TABLE>
<TABLE>
<CAPTION>
Templeton Templeton
Wanger U.S. Templeton Asset Templeton Developing
Small Cap Stock Allocation International Markets
--------------- ------------- ------------ --------------- -------------
<S> <C> <C> <C> <C> <C>
Units outstanding, beginning of period ......... 16,756,995 -- -- -- --
Participant deposits ........................... 5,895,771 1,884,079 2,706,808 1,929,062 1,428,502
Participant transfers .......................... 13,394,539 4,251,937 1,944,708 2,165,760 1,857,056
Participant withdrawals ........................ (1,081,311) (36,217) (29,437) (22,705) (10,831)
---------- --------- --------- --------- ---------
Units outstanding, end of period ............... 34,965,994 6,099,799 4,622,079 4,072,117 3,274,727
========== ========= ========= ========= =========
</TABLE>
Note 5--Investment Advisory Fees and Related Party Transactions
PHL Variable and its affiliate, Phoenix Equity Planning Corporation, a
registered broker/dealer in securities, provide all services to the Account.
PHL Variable assumes the risk that annuitants as a class may live longer
than expected (necessitating a greater number of annuity payments) and that its
expenses may be higher than its deductions for such expenses. In return for the
assumption of these mortality and expense risks, PHL Variable charges the
Sub-Accounts the daily equivalent of 0.40%, 0.85% and 0.125% on an annual basis
for mortality, expense risks and daily administrative fees, respectively.
As compensation for administrative services provided to the Account, PHL
Variable additionally receives $35 per year from each contract, which is
deducted from the Sub-Account holding the assets of the participant, or on a
pro rata basis from two or more Sub-Accounts in relation to their values under
the contract. Such fees aggregated $130,179 for the period ended December 31,
1997.
Phoenix Equity Planning Corporation is the principal underwriter and
distributor for the Account. PHL Variable reimburses Phoenix Equity Planning
Corporation for expenses incurred as underwriter.
On surrender of a contract, contingent deferred sales charges, which vary
from 0-7% depending upon the duration of each contract deposit, are deducted
from the proceeds and are paid to PHL Variable as reimbursement for services
provided. Contingent deferred sales charges deducted and paid to PHL Variable
aggregated $235,977 for the period ended December 31, 1997.
Note 6--Distribution of Net Income
The Account does not expect to declare dividends to participants from
accumulated net income. The accumulated net income is distributed to
participants as part of withdrawals of amounts in the form of surrenders, death
benefits, transfers or annuity payments in excess of net purchase payments.
Note 7--Diversification Requirements
Under the provisions of Section 817(h) of the Internal Revenue Code (the
"Code"), a variable annuity contract, other than a contract issued in
connection with certain types of employee benefit plans, will not be treated as
an annuity 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 the Treasury.
The Internal Revenue Service has issued regulations under Section 817(h)
of the Code. PHL Variable believes that the Account satisfies the current
requirements of the regulations, and it intends that the Account will continue
to meet such requirements.
11
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[Price Waterhouse LLP logotype] [LOGO]
To the Board of Directors of PHL Variable Insurance Company and
Participants of PHL Variable Accumulation 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, 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, Wanger U.S. Small Cap Sub-Account, Templeton Stock Sub-Account,
Templeton Asset Allocation Sub-Account, Templeton International Sub-Account and
Templeton Developing Markets Sub-Account (constituting the PHL Variable
Accumulation 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
12
<PAGE>
PHL VARIABLE ACCUMULATION ACCOUNT
PHL Variable 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>
[logo]PHOENIX
PHL Variable Insurance Company
Phoenix Home Life Mutual Insurance Company
101 Munson Street
PO Box 810
Greenfield, MA 01302-0810
PHL Variable Insurance Company
Statutory Home Office: Hartford, Connecticut
OL 2232 A (2/98) (C)1998 Phoenix Home Life Mutual Insurance Company
700.04
[recycled logo] Printed on Recycled Paper.
